^{page 122 note 1} See, e.g., Gore-Browne, para. 28.4; Gower, pp. 616–630; Pennington, pp. 730–742; and also Wedderburn, , “Shareholders' Rights and the Rule in Foss v. Harbottle” [1957] C.L.J. 194, [1958] C.L.J. 93Google Scholar; Rider, , “Amiable Lunatics and the Rule in Foss v. Harbottle” [1978] C.L.J. 270Google Scholar; Wedderburn, , “Minority Shareholders and Directors' Duties” (1978) 41 M.L.R. 569Google Scholar; Mason, , “Ratification of the Directors' Acts: An Anglo-Australian Comparison” [1978] 41 M.L.R. 161Google Scholar; Prentice, , “Self-Serving Negligence and the Rule in Foss v. Harbottle” (1979) 43Conveyancer 47Google Scholar; Boyle, , “Minority Shareholders' Suits for Breach of Directors' Duties” (1980) 1Company Lawyer 3Google Scholar; Sealy, , “A Setback for the Minority Shareholder” [1982] C.L.J. 247Google Scholar; Baxter, , “The Role of the Judge in Enforcing Shareholder Rights” [1983] C.L.J. 96Google Scholar.

^{page 122 note 2} North-West Transportation Co. Ltd v. Beatty (1887) 12 App. Cas. 589, 593–594.

^{page 122 note 3} Prudential Assurance Co. Ltd v. Newman Industries Ltd (No. 2) [1981] Ch. 257.

^{page 122 note 4} North-West Transportation Co. Ltd v. Beatty, supra, at pp. 593–594.

^{page 122 note 5} See Foss v. Harbottle (1843) 2 Hare 461 itself.

^{page 122 note 6} See generally, Halsbury's Laws of England, 4th ed., Vol. 1, paras. 756–769; and Bowstead on Agency (15th ed., by F. M. B. Reynolds, 1985), pp. 51–84. The leading company law case is Irvine v. Union Bank of Australia [1877] 2 App. Cas. 366 (P.C.) where the general meeting was held able to ratify the directors' acts in borrowing in excess of the limit imposed on their powers by a provision in the company's articles, the company's power to borrow being unrestricted. See also Grant v. United Kingdom Switchback Rlys Co. (1888) 40 Ch. D. 135.

With the ratification of directors' breaches of duty no question of the subsequent granting of authority arises. Where the breach of duty sought to be ratified concerns either a contract entered by the directors with a third party in breach of their duty of loyalty, or involves a breach of the directors' duty of care and skill, the directors in both cases will generally be within their powers in performing the acts complained of, but in doing so they will be in breach of their equitable and/or legal duties. Where the “ratification” relates to the voidable exercise of a corporate power, the analogy with ratification stricto sensu is closer, but the legal incidents are still distinct. If the directors make an undisclosed profit by causing the company to contract with them, or exercise a power of allotment in breach of their fiduciary duties, the powers exercised are within their actual authority and will bind the company, unless the company is able to exercise its right to rescind. Consequently, even where ratified, the acts are performed by the directors, not by the company exercising its primary powers. The so-called “ratification” applies to the consequences of the breach of duty and does not itself effect the exercise of power. The distinction is brought out by a comparison of the first instance and Court of Appeal judgments in Bamford v. Bamford [1970] Ch. 212.

^{page 123 note 7} Gore-Browne, para. 27.21.1; Palmer, Vol. 1, para. 64–25; Pennington, p. 737; and see Bamford v. Bamford [1970] Ch. 212.

^{page 123 note 8} Below, pp. 127–130.

^{page 123 note 9} [1967] 2 A.C. 134n.

^{page 123 note 10} Ibid., 150.

^{page 124 note 11} [1982] Ch. 204.

^{page 124 note 12} Ibid., 220.

^{page 124 note 13} (1978) 58 A.L.J.R. 399.

^{page 124 note 14} (1843) 2 Hare 461.

^{page 125 note 15} Para. 27.21.1; a similar statement is also found in Boyle, and Birds, Company Law (1983) pp. 606–607Google Scholar.

^{page 125 note 16} [1961] 1 A.C. 554.

^{page 125 note 17} Palmer, Vol. 1, para. 64–25.

^{page 125 note 18} Pennington, p. 737.

^{page 125 note 19} Gower, pp. 618 and 620.

^{page 126 note 20} See, e.g., SirPollock, Frederick, Principles of Contract (13th ed., 1950) p. 150Google Scholar.

^{page 126 note 21} (1602) 5 Co. Rep. 117a.

^{page 126 note 22} (1884) 9 App. Cas. 605.

^{page 126 note 23} See British Russian Gazette and Trade Outlook Ltd v. Associated Newspapers Ltd [1933] 2 K.B. 616, 643–645, per Scrutton L.J.; 650–654 per Greer L.J. Also Chitty, , The Law of Contracts (25th ed., 1983), Vol. 1, para. 1471Google Scholar; Salmond, and Williams, , The Law of Contracts (2nd ed., 1945), 496–497Google Scholar.

^{page 126 note 24} De Bussche v. Alt (1878) 8 Ch. D. 286, 314; Culling v. Duncan (1906) 8 N.Z.L.R. 668, 674.

^{page 126 note 25} See Cross v. Sprigg (1849) 6 Hare 652 (equitable release of legal right); Stackhouse v. Barnston (1805) 10 Ves. 454 (equitable release of equitable right).

^{page 126 note 26} (1805) 10 Ves. 454.

^{page 126 note 27} Ibid., at pp. 465–466.

^{page 126 note 28} Ibid., at p. 466. Ashburner, , Principles of Equity (2nd ed., 1933), pp. 498–500Google Scholar cites this passage as supporting the validity of a gratuitous release, on the grounds that it contemplates that a gratuitous release would be effective provided that it was not in the form of a mere expression of intention not to sue, i.e. that it was not merely promissory. It is, however, clear from the remainder of the paragraph that this is not what was intended by the Master of the Rolls: unless supported by consideration, a “waiver” has no more effect in equity than in law.

^{page 127 note 29} See Brunyate, , Limitation of Actions in Equity (1932), pp. 199–200Google Scholar; Snell, , Principles of Equity (28th ed., 1982), p. 293Google Scholar. See also Ashburner, Principles of Equity, pp. 498–500; Meagher, , Gummow, and Lehane, , Equitable Doctrines and Remedies (2nd ed., 1984), pp. 753–754Google Scholar, who argue in support of a wider principle allowing the gratuitous release of accrued equitable rights generally. The cases cited, however, do not support this principle: Stackhouse v. Barnston (1805) 10 Ves. 453 has already been referred to; the remainder all deal with the equitable right to elect between rescinding and affirming a voidable transaction, and not with the defendant's personal liability. It is well established that affirmation, with full knowledge, will bind the affirming party to a voidable transaction without the need for consideration: see De Bussche v. Alt (1878) 8 Ch. D. 286; Wright v. Vanderplank (1856) 8 De G.M. & G. 133; Mitchell v. Homfray (1882) 8 Q.B.D. 587; and Allcard v. Skinner (1886) 36 Ch. D. 145; and see below, pp. 136–147.

^{page 127 note 30} Limitation of Actions in Equity, pp. 199–200.

^{page 127 note 31} (1863) 32 Beav. 221.

^{page 127 note 32} (1871) L.R. 13 Eq. 36.

^{page 127 note 33} (1896) 20 L.T.N.S. 508.

^{page 127 note 34} (1881) 44 L.T. 467.

^{page 127 note 35} (1839) 3 Beav. 72.

^{page 127 note 36} (1818) 3 Swans. 1.

^{page 127 note 37} Ibid., at p. 64.

^{page 127 note 38} (1855) 5 De G.M. & G. 233.

^{page 127 note 39} Ibid., at p. 251.

^{page 127 note 40} [1967] 2 A.C. 134n.

^{page 127 note 41} In both cases it was held that the cestui que trust did not have the necessary knowledge: see Walker v. Symonds (1818) 3 Swans. 1, 73; Burrows v. Walls (1855) 5 De G.M. & G. 233, 253.

^{page 128 note 42} (1818) 3 Swans. 1.

^{page 128 note 43} (1878) 8 Ch. D. 286.

^{page 128 note 44} Ibid., at p. 314.

^{page 128 note 45} Ibid.

^{page 128 note 46} Above, p. 125.

^{page 128 note 47} (1805) 10 Ves. 454.

^{page 129 note 48} (1854) 5 H.L. Cas. 185.

^{page 129 note 49} Idem.

^{page 129 note 50} Major v. Major (1852) 1 Drew. 165, and see Sheridan, , “Equitable Estoppel Today” (1952) 15 M.L.R. 325, 332–333CrossRefGoogle Scholar.

^{page 129 note 51} A director may, for example, have expended on a holiday moneys he had previously set aside to meet his potential liability to the company.

^{page 129 note 52} See generally Central London Property Trust Ltd v. High Trees House Ltd [1947] K.B. 130; Ajayi v. R. T. Briscoe (Nigeria) Ltd [1964] 3 All E.R. 556 (P.C.); Tool Metal Manufacturing Co. Ltd v. Tungsten Electric Co. Ltd [1955] 2 All E.R. 657 (H.L.) and Woodhouse A.C. Israel Cocoa Ltd S.A. v. Nigerian Produce Marketing Co. Ltd [1972] A.C. 741.

^{page 129 note 53} Brikom Investments Ltd v. Carr [1979] Q.B. 467, 482–485; Scandinavian Trading Tanker Co. A. B. v. Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 1 All E.R. 301, 304–305: but cf. Fontana N.V. v. Mautner (1979) 254 E.G. 199. Detriment is a prerequisite of actionable promissory estoppel and is to be measured at the moment when the representor proposes to resile from the representation. This is also the position in Australia: Legione v. Hateley (1983) 57 A.L.J.R. 292 (H.C.A.).

^{page 129 note 54} See Meagher, Gummow and Lehane, Equitable Doctrines and Remedies, p. 400; and see Ajayi v. R. T. Briscoe (Nigeria) Ltd, supra: and the observations of Megarry, J. in Re Vandervell's Trusts (No. 2) [1974] 1 All E.R. 47, 75Google Scholar.

^{page 129 note 55} See, for example, Ajayi v. R. T. Briscoe (Nigeria) Ltd, supra.

^{page 130 note 56} (1843) 2 Hare 461; 64 E.R. 189.

^{page 130 note 57} See, e.g., Gray v. Lewis (1873) L.R. 8 Ch. App. 1035, per James, L.J.; Burland v. Earle [1902] A.C. 83, 93Google Scholar; Edwards v. Halliwell [1950] 2 All E.R. 1064, 1066–1067per Jenkins, L.J.Google Scholar; Prudential Assurance Co. Ltd v. Newman Industries Ltd (No. 2) [1982] Ch. 204. 213–217.

^{page 130 note 58} The exact lines of the division of power between the Board and the general meeting are not clear but, it would seem that, as a matter of business efficacy, the power to institute proceedings against the directors for breach of their duties to the company as directors must remain vested in the general meeting and not be transferred to the directors as an ordinary power of management (See Art. 70, Table A, Companies (Tables A-F) Regulations 1985). This would seem to be a satisfactory way of distinguishing Shaw & Sons (Salford) Ltd v. Shaw [1935] 2 K.B. 113 (C.A.) for in that case, although the proceedings were against the directors, they were not for breach of duty to the company qua directors.

^{page 130 note 59} See MacDougall v. Gardiner (1875) 1 Ch. D. 13, 25per Mellish, L.J. As Pennington notes at p. 586Google Scholar, this principles does not rest on the separate legal personality limb, since it applied equally to unincorporated common-law companies: Re Norwich Yarn Co., exp. Bignold (1856) 22 Beav. 143Google Scholar.

^{page 131 note 60} [1956] Ch. 565.

^{page 131 note 61} Ibid., at p. 576.

^{page 131 note 62} [1978] 2 All E.R. 89.

^{page 131 note 63} [1956] Ch. 565.

^{page 131 note 64} (1843) 2 Hare 461.

^{page 132 note 65} [1983] Ch. 258. See Dawson, , “Acting in the Best Interests of the Company–For whom are the Directors ‘Trustees’?” (1984) 11 N.Z.U.L.R. 68Google Scholar, and Wedderburn, , “Multinationals and the Antiquities of Company Law” (1984) 47 M.L.R. 87Google Scholar.

^{page 132 note 66} Ibid., at p. 280.

^{page 133 note 67} Ibid., at pp. 280–281.

^{page 133 note 68} His Lordship also noted (at p. 281) that in a differently constituted Court of Appeal in Re Horsley & Weight Ltd [1982] Ch. 442Google Scholar, both Cumming-Bruce L.J. (at p. 455) and Templeman L.J. (at p. 457) had previously expressed doubts about the ability of the general meeting to excuse themselves from their misfeasance (but cf. Buckley L.J. p. 453). The dicta must, however, be of doubtful authority for the propositions expressed for two reasons. First, their Lordships may have come to this conclusion only because the directors were in control. Secondly, they must now be doubted because like the Multinational Gas case the “ratification” was prospective and that case is authority that there is no breach of duty and no misfeasance if the directors have acted with the assent of all the shareholders, albeit that they are the shareholders.

^{page 133 note 69} Ibid., at p. 281.

^{page 133 note 70} [1932] 2 Ch. 46.

^{page 134 note 71} [1983] Ch. 258, 281.

^{page 134 note 72} [1985] B.C.L.C. 237.

^{page 134 note 73} The union is capable of suing in its own name (Trade Union and Labour Relations Act 1974, s.2(l)(c)) and the rule in Foss v. Harbottle applies to proceedings brought in respect of wrongs done to it: Cotter v. National Union of Seamen [1929] 2 Ch. 58; Edwards v. Halliwell [1950] 2 All E.R. 1064.

^{page 134 note 74} [1985] B.C.L.C. 237. 254–255.

^{page 135 note 75} The application of the principle to the particular case before the learned judge, however, is (with respect) questionable. A distinction must be made between an ultra vires misapplication of funds and a mere breach of duty. To allow the majority to control the bringing of proceedings in respect of the ultra vires acts of directors would be a radical extension of the rule in Foss v. Harbottle beyond the limits recognised by the authorities: see, e.g., Edwards v. Halliwell [1950] 2 All E.R. 1064. The result would be that a minority shareholder could only sue in respect of an ultra vires act if he could bring the case within the “fraud on the minority” exception to the rule. If the minority shareholder could not succeed in establishing this (and the burden of doing so would be on him), he would lose altogether the protection afforded to him by the company's memorandum of association.

^{page 135 note 76} Although in the following pages reference is made only to the company law cases, the analysis is equally applicable to the earlier trustee cases, if “cestui que trust” is substituted for “company” and “trustee” for “director.”

^{page 135 note 77} At least where the property in equity is the company's: see below, pp. 139–143 and the cases cited at n.98.

^{page 135 note 78} See Regal (Hastings) Ltd v. Gulliver [1967] 2 A.C. 134n; Boardman v. Phipps [1967] 2 A.C. 46.

^{page 136 note 79} Dorchester Finance Co. Ltd v. Stebbing (Unreported, July 1977, Ch. D., Foster J.), noted in (1980) 1 Company Lawyer 38.

^{page 136 note 80} See above, pp. 124–126.

^{page 136 note 81} See, e.g., Prudential Assurance Co. Ltd v. Newman Industries Ltd (No. 2) [1982] Ch. 204.

^{page 136 note 82} [1956] Ch. 565.

^{page 136 note 83} [1978] Ch. 406.

^{page 136 note 84} Such as selling the property–see Re Cape Breton Co. (1885) 29 Ch.D. 795.

^{page 136 note 85} The company may, of course, lose the right to set a contract aside if restitutio in integrum is no longer possible: Lagunas Nitrate Co. v. Lagunas Syndicate [1899] 2 Ch. 392; or if third parties have acquired rights for value: Re Leeds and Hanley Theatres of Varieties Ltd [1902] 2 Ch. 809.

^{page 136 note 86} See, e.g., Ormes v. Beadel (1860) 2 De G. F. & J. 333; Clough v. L. & N. W. Rly (1871) L.R. 7 Ex. 26, 34. And see the cases cited at n.29 above dealing with the affirmation by a cestui que trust of voidable transactions entered into by a trustee.

^{page 136 note 87} Above, pp. 131–136.

^{page 137 note 88} Hogg v. Cramphorn Ltd [1967] Ch. 254; Bamford v. Bamford [1970] 1 Ch. 212.

^{page 137 note 89} Re Cape Breton Co. (1885) 29 Ch. D. 795; Erlanger v. New Sombrero Phosphate Co. (1878) 3 App. Cas. 1218.

^{page 137 note 90} See Hogg v. Cramphorn Ltd [1967] Ch. 254; Bamford v. Bamford [1970] Ch. 212.

^{page 137 note 91} [1970] Ch. 212.

^{page 137 note 92} Ibid., at pp. 237–238.

^{page 138 note 93} Ibid., at p. 238.

^{page 138 note 94} Ibid.

^{page 138 note 95} [1967] Ch. 254.

^{page 138 note 96} [1970] Ch. 212, 238.

^{page 138 note 97} Ibid.

^{page 139 note 98} See Re Cape Breton Co. (1885) 29 Ch. D. 795, followed by the Court of Appeal in Ladywell Mining Co. v. Brookes (1887) 35 Ch. D. 400 and approved by the House of Lords in Cook v. Deeks [1916] 1 A.C. 554, 563–564 and in Jacobus Marler Estates Ltd v. Marler (1913) 85 L.J.P.C. 167n. The decision has been followed by the Privy Council in Burland v. Earle [1902] A.C. 83, 99Google Scholar and is implicit in the advice of the Board in North-West Transportation Co. Ltd v. Beatty (1887) 12 App. Cas. 589; and by the High Court of Australia in Tracy v. Mandalay Ply Ltd (1952) 88 C.L.R. 215, 241Google Scholar.

^{page 139 note 99} [1916] 1 A.C. 554.

^{page 139 note 1} (1885) 29 Ch. D. 795.

^{page 139 note 2} Ibid., at pp. 805–806, per Cotton L.J.; at pp. 811–812, per Fry L.J.

^{page 140 note 3} Ibid., at pp. 805–806.

^{page 140 note 4} Ibid., at pp. 811–812.

^{page 140 note 5} The view expressed by DrXuereb, , “Re Cape Breton Revisited” (1986) 18 Bracton L.J. 31, 34Google Scholar that Fry L.J.'s analysis rested on “affirmation” is, it is submitted, accordingly not sustainable.

^{page 140 note 6} Fry L.J.'s analysis is consistent with the majority's rejection of an independent right to an account of profits, but both may be doubted. The latter for the reasons set out below, the former on the grounds that the breach of duty results in a voidable, not a void, transaction. Both in law and in equity such a transaction, including any profit element, is valid until rescinded. Consequently the profits are “made” by the director though he may be required either to make restitution after rescission or, if a subsequent court were to acknowledge such a liability, to account for them to the company.

^{page 140 note 7} Ibid., at p. 809.

^{page 141 note 8} Keech v. Sandford (1726) Sel. Cas. Ch. 61; Ex p. James (1803) 8 Ves. 337; and see Jones, , “Unjust Enrichment and the Fiduciary's Duty of Loyalty” (1968) 84 L.Q.R. 472Google Scholar. This principle was applied by the House of Lords in the Regal (Hastings) case [1967] 2 A.C. 134n, 137–138, 144–145, 155–156, in relation to directors' unauthorised profits on contracts with third parties.

^{page 141 note 9} See the cases cited at n.98; but cf. the view of Wright, J. in Re Lady Forrest (Murchison) Gold Mine Ltd [1901] 1 Ch. 582Google Scholar, expressing a preference for Bowen L.J.'s analysis but considering himself constrained by authority from following it.

^{page 141 note 10} For these reasons, the argument of DrXuereb, , “Re Cape Breton Revisited” (1986) 18 Bracton L.J. 31Google Scholar, that there was no liability to account because there had been an affirmation of the transaction, cannot be sustained. It is restitutio in integrum that follows rescission, not an account of profits. Accordingly, it is not open to Dr Xuereb to argue in favour of what he describes as the “narrow ratio” of Re Cape Breton, viz., that affirmation made rescission and account impossible, but not account with rescission: the majority in Re Cape Breton held, however much this may be open to criticism (see text above), that no right to an account arose. This point is made clear by Cotton L.J. in the subsequent decision of the Court of Appeal in Ladywell Mining Co. v. Brookes (1887) 35 Ch. D. 400. Perhaps unfortunately, therefore, “affirmation” cannot provide a means for reconciling Re Cape Breton with the “secret profits” cases as Dr Xuereb argues.

^{page 141 note 11} [1902] A.C. 83.

^{page 141 note 12} (1887) 12 App. Cas. 589.

^{page 141 note 13} Ibid. at pp. 593–594.

^{page 142 note 14} This is also consistent with Jenkins, L.J.'s well-known exposition of the rule in Foss v. Harbottle and its exceptions in Edwards v. Halliwell [1950] 2 All E.R. 1064, 1066–67Google Scholar, where he twice refers to the alleged wrong as a “transaction,” and speaks of the possibility of the “transaction” being confirmed by the majority, but not of the release of the wrongdoers from personal liability.

^{page 143 note 15} [1967] 2 A.C. 134n.

^{page 143 note 16} As to its operation in the law of torts, see Clerk, and Lindsell, , Torts (15th ed., 1982), pp. 81–102Google Scholar; Halsbury's Laws of England, 4th ed., Vol. 34, paras. 62–63; and Jaffey, , “Volenti non fit injuria” [1985] C.L.J. 87Google Scholar. On the operation of waiver in the law of contract, see Cheshire, and Fifoot, , “Central London Property Trust Ltd v. High Trees House Ltd” (1947) 63 L.Q.R. 283Google Scholar, and Dugdale, and Yates, , “Variation, Waiver and Estoppel: A Re-Appraisal” (1976) 39 M.L.R. 681Google Scholar. Unless given pursuant to a contract, the consent or waiver is revocable in its application to future conduct by the giving of reasonable notice to the party who benefits from it; save that, if the party cannot resume his position or if the termination would cause injustice to him, it may be binding: see Halsbury's Laws of England, 4th ed., Vol. 16, para. 1471.

^{page 143 note 17} As, for example, a solicitor's charging clause in a will: see Re Llewellin's Will Trust [1949] 1 All E.R. 487.

^{page 143 note 18} See, e.g., Letang v. Ottawa Electric Rly Co. [1926] A.C. 725, 731 (tort); and Boulting v. A.C.T.T. [1963] 2 Q.B. 606, 636–637 (equity).

^{page 143 note 19} Halsbury's Laws of England, 4th ed., Vol. 9, para. 573.

^{page 143 note 20} This includes disclosing the otherwise impermissible nature of the action for which the approval is sought: Winthrop Investments Ltd v. Winns Ltd [1975] 2 N.S.W.L.R. 66, per Samuels J.A.; Russell Kinsela Pry Ltd (in liq.) v. Kinsela (1984) 8 A.C.L.R. 384.

^{page 143 note 21} As an alternative, it would seem that the unanimous agreement of all the shareholders having the right to attend and vote at a general meeting given informally will suffice: see Re Duomatic Ltd [1969] 2 Ch. 365, 373, applied in the Multinational Gas case, [1983] Ch. 258, 290 per Dillon L.J. It has also been suggested that the board may have the power to release one of their number from his duties: see, for example, Palmer at para. 64.25. The difficulty with this view is the general rule that a company is entitled to the unbiased advice of every director, so that even if the director seeking the release refrained from voting the resolution would still be invalid: Imperial Mercantile Credit Association v. Coleman (1871) 6 Ch. App. 558, 567–568. While a case such as Queensland Mines Ltd v. Hudson (1978) 58 A.L.J.R. 399 would appear, to the contrary, to confer this power on the remaining members of the board, that case is probably explicable on the grounds that there the directors were also all the shareholders. Suitably worded articles would, however, seem capable of altering this general rule to confer the power of release on the non-interested directors. An example is art. 84(3) in Table A of the First Schedule of the Companies Act 1948 which, inter alia, allows a director to hold another office or place of profit under the company on such terms as the directors may determine. Generally, however, the Table A articles dealing with directors' duties require only disclosure to the board and not, additionally, the obtaining of the board's consent. This is also true of the new art. 85 in Table A of the Companies (Tables A to F) Regulations 1985 which does not even subject the directors' exclusion from liability to the contrary directions of the company: compare the new art. 85(a) with art. 78, Table A, First Schedule, Companies Act 1948.

^{page 144 note 22} See, e.g., the dicta of the House of Lords in Regal (Hastings) Ltd v. Gulliver [1967] 2 A.C. 134n, 155, 157 per Wright, LordGoogle Scholar, and in Boardman v. Phipps [1967] 2 A.C. 46, 109per Hodson, LordGoogle Scholar, 117 per Lord Guest; and also: New Zealand Netherlands Society “Oranje” Inc. v. Kuys [1973] 2 All E.R. 1222 (P.C.), 1226per Wilberforce, Lord(consent to profit from office)Google Scholar; Winthrop Investments Ltd v. Winns Ltd [1975] 2 N.S.W.L.R. 666, 674per Glass, J.A., 681Google Scholarper Samuels J. A. (consent to improper purpose); Queensland Mines Ltd v. Hudson (1978) 52 A.L.J.R. 399; Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd [1983] Ch. 248 (consent to exercise of less than commercial prudence).

^{page 144 note 23} For a recent judicial discussion of this issue, see the decision of Vinelott, J. in Movitex Ltd v. Bulfield (1986) 2 B.C.C. 99,403 at pp. 99,429–99,432Google Scholar.

^{page 144 note 24} See, e.g., the cases cited in n.22 above and see Instone, , “The Scope of the Companies Act 1948, Section 205” (1982) 98 L.Q.R. 548Google Scholar, though the contrary argument is made by Gregory, , “Section 205 of the Companies Act 1948–A Reply” (1983) 99 L.Q.R. 194Google Scholar. As to the efficacy of such articles both in relation to equitable and common law duties, see Imperial Mercantile Credit Association v. Coleman (1871) L.R. 6 Ch. App. 558 and Costa Rica Ry Co. Ltd v. Forwood [1900] 1 Ch. 746 (both dealing with an exemption from the equitable duty to avoid conflicts of interest and duty); and Re Brazilian Rubber Plantations and Estates Lid [1911] 1 Ch. 425 and Re City Equitable Fire Insurance Co. Ltd [1925] 1 Ch. 407 (both dealing with an exemption from liability in negligence). As to the effect of S.310 in avoiding duty-exempting provisions in a company's articles see Gregory, , “The Scope of the Companies Act 1948, Section 205” (1982) 98 L.Q.R. 413Google Scholar; Parkinson, , “The Modification of Directors' Duties” [1981] J.B.L. 355 (insofar as the provision excludes the duty of care and skill)Google Scholar; Birds, , “The Permissible Scope of Articles Excluding the Duties of Company Directors” (1976) M.L.R. 394Google Scholar; and contra, Gower, pp. 601–602 and Gore-Browne, para. 27.21.3.

^{page 144 note 25} [1973] 2 All E.R. 1222 (P.C.).

^{page 145 note 26} Ibid., at p. 1226.

^{page 145 note 27} [1983] Ch. 258. See above, pp. 132–135.

^{page 145 note 28} Ibid., at pp. 501–502.

^{page 145 note 29} Ibid., at p. 502.

^{page 145 note 30} Ibid., at pp. 501 per Lawton L.J., 519 per Dillon L.J. This aspect of the judgment is discussed by Dawson, , “Acting in the Best Interests of the Company—For whom are the Directors ‘Trustees’?” (1984) 11 N.Z.U.L.R. 68, 75–77Google Scholar; and by Wedderburn, , “Multinationals and the Antiquities of Company Law” (1984) 47 M.L.R. 87, 88Google Scholar.

^{page 145 note 31} Cf. the view expressed by Baker, , “Disclosure of Directors' Interests in Contracts” [1975] J.B.L. 181, 190Google Scholar, which must now be rejected.

^{page 145 note 32} [1983] Ch. 258, 290.

^{page 146 note 33} Though it appears never to have been the subject of judicial consideration, the limits of the company's powers to release its directors from their duties would seem in principle to be coincidental with the limits of the principle of majority rule as it applies to directors' liability after breach. Just as the majority cannot prevent a minority from suing in respect of a fraud on the minority, nor should the majority be able to authorise the directors to perform acts which would otherwise amount to a fraud in this way. However, after the Multinational Gas case, and the rejection of the view that a solvent company owes duties to its creditors, there would seem to be nothing in principle to stop the unanimous vote of the shareholders from authorising conduct which would be a fraud on the minority if there were a minority, provided their actions were not ultra vires the company or otherwise illegal. Despite the views expressed by Cumming-Bruce, and Templeman, L.JJ. in Re Horsley & Weight Ltd [1982] Ch. 442Google Scholar, discussed in n.68 above, and adopted by Cooke, J. in the New Zealand Court of Appeal in Nicholson v. Permakraft (N.Z.) Ltd [1985] 1 N.Z.L.R. 242Google Scholar, the position taken by the Court of Appeal in the Multinational Gas case, and more recently in Rolled Steel Products (Holdings) Ltd v. British Steel Corporation [1986] Ch. 246Google Scholar, is that only those transactions which amount to a fraud on the creditors are beyond the control of the unanimous vote of the shareholders (at least to authorise in advance).

^{page 146 note 34} Palmer, Vol. 1, para. 64–25.

^{page 146 note 35} (1978) 52 A.L.J.R. 399.

^{page 146 note 36} [1973] 2 All E.R. 1222.

^{page 146 note 37} Palmer, Vol. 1, para 64–25.

^{page 147 note 38} Above, pp. 127–130.

^{page 147 note 39} See s.36, Companies Act 1985 as to the form of deed under seal.

^{page 147 note 40} See, e.g., Boardman v. Phipps [1967] 2 A.C. 46; Burland v. Earle [1902] A.C. 83, 93.

^{page 147 note 41} Provided always, of course, that the entering of such compromises was within the vires of the company which would, presumably, require the compromise to be bona fide: see Re Hall Garage Ltd [1982] 3 All E.R. 1016.

^{page 147 note 42} Though not nominal.

^{page 147 note 43} (1912) 56 S.J. 272; also Gray v. New Augarita Porcupine Mines Ltd [1952] 3 D.L.R. 1 (P.C.).

^{page 148 note 44} Gore-Browne, para. 27.21.4.

^{page 148 note 45} See above, p. 134.

^{page 148 note 46} [1985] 3 All E.R. 52.

^{page 148 note 47} Ibid., at pp. 85–86 per Slade L.J., with whom Lawton L.J. concurred; pp. 93–94 per Browne-Wilkinson L.J.

^{page 148 note 48} [1932] 2 Ch. 46.