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(Solved) kindly please assist me in editing my case brief...meant to be


kindly please assist me in editing my case brief...meant to be for 850 words please


Page 1 of 3

 


 

Josephine Lupiga S3464154 1026/LAW2406/OJD210 AUSTRALIAN COMPANY LAW

 


 

ASSESSMENT 1 - CASE BRIEF

 

Industrial Equity Ltd v Blackburn (1977) 137 CLR 567

 

This is a case where the High Court continued to afford the separate entity doctrine emanated

 

from the acclaimed decision of the House of Lords of UK in Salomon v Salomon & Co Ltd1.

 

FACTS / PROCEDURAL HISTORY

 

In August 1976, Blackburn (?the shareholders?) of the Industrial Equity Ltd (?the company?)

 

made an application to the Equity Division.2 The shareholders addressed a summon to the

 

company and to its directors entreating to overturn the special dividend resolution made by the

 

board of directors of the company. The shareholders? contended that the resolution made by

 

the board on the special dividend was not ?authorized? by the articles of association and that a

 

dividend paid apart from being taken as a result of a profit was not in accordance to section

 

376 (1) of the Companies Act 1961.3

 

Justice Needham upheld the shareholders? contentions. His Honour stipulated the importance

 

of a profit in a financial year in declaration of a dividend. His Honour cited in Re Spanish

 

Prospecting Co Ltd4 that a company ?cannot declare a dividend out of alleged profits which?do

 

not and cannot?without more?appear in the balance sheet?? 5

 

In May 1977, the company made an appeal to the Supreme Court of New South Wales ? Court

 

of Appeal.6 The company brought up before the court that the trial judge (Needham J) was in

 

error in holding that special dividend declared on 30 October 1975 was to be charged towards

 

the profits in 30 June 1975. Accordingly, the company asserted that the dividends were meant

 

to be charged against the profit to the subsequent year and that the shareholders failed to

 

prove the accuracy of the profit available on the 30 October to which the special dividend

 

should come from.

 

1

 


 

[1897] AC 22 cited in Industrial Equity v Blackburn [1977] 137 CLR 567, 577(Mason J)

 

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2

 


 

Blackburn v Industrial Equity Ltd (1976) 2 ACLR 8

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/results/enhdocview.do?

 

docLinkInd=true&ersKey=23_T23753716014&format=GNBFULL&startDocNo=1&resultsUrlKey=0_T23753716058&backKey=20_T23753716059&csi=267688&docNo=4&scrollToPosition=488>.

 


 

3

 


 

Industrial Equity Ltd v Blackburn (1977) 2 ACLR 421, 423 (Glass JJA)

 

LexisNexis <http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/search/enhRunRemoteLink.do?A=0.37735822004698005&service=citation&langcountry=AU&backKey=20_T23753759040&linkInfo=F

 

%23AU%23ACLR%23vol%252%25sel1%251977%25page%25421%25year%251977%25sel2%252%25decisiondate%251977%25&ersKey=23_T23753759013>.

 


 

4

 


 

[1911] 1 Ch 92 cited in Blackburn v Industrial Equity (1976) 2 ACLR 8

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/results/enhdocview.do?

 

docLinkInd=true&ersKey=23_T23753716014&format=GNBFULL&startDocNo=1&resultsUrlKey=0_T23753716058&backKey=20_T23753716059&csi=267688&docNo=4&scrollToPosition=488>.

 


 

5

 


 

Blackburn (1976) 2 ACLR 8, 8 (Needham J).

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/results/enhdocview.do?

 

docLinkInd=true&ersKey=23_T23753716014&format=GNBFULL&startDocNo=1&resultsUrlKey=0_T23753716058&backKey=20_T23753716059&csi=267688&docNo=4&scrollToPosition=488>.

 


 

6

 


 

Industrial Equity Ltd (1977) 2 ACLR 421

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/search/enhRunRemoteLink.do?A=0.37735822004698005&service=citation&langcountry=AU&backKey=20_T23753759040&linkInfo=F%23AU

 

%23ACLR%23vol%252%25sel1%251977%25page%25421%25year%251977%25sel2%252%25decisiondate%251977%25&ersKey=23_T23753759013>.

 


 

jxl

 


 

Josephine Lupiga S3464154 LAW1204/2404/OJD160: AUSTRALIAN PROPERTY LAW Page 2 of 3

 


 

Glass JJA however did not find any error with the previous judgment at the trial court. His

 

Honour cited the reasoning?s made by Buckley J in Dimbula Valley (Ceylon) Tea Co Ltd v

 

Laurie7 where he refused to attend to the Scottish Court of Session?s decision on the case Ex

 

Parte Wesburn Sugar Refineries Ltd8 claiming that ?it would be illegal to distribute as profits an

 

unrealised surplus due to the appreciation of assets?? 9 His Honour further pointed out that,

 

?the company?s accounts for the year 1974-75 when scrutinized in the light of relevant

 

provisions, disclose no profits from which the dividend in question could have been lawfully

 

declared??10

 

Because the company?s appeal to the New South Wales Supreme Court had failed, the

 

company made an appeal to the High Court on November 1977.

 

ISSUES AT THE HIGH COURT

 

The appellants? (Industrial Equity Ltd - the holding or the parent company) arguments in this

 

Court pointed to the consolidated accounts of its group of companies for the year ending 30

 

June 1975 ascertaining that sufficient group profits were available to meet for the payments of

 

dividend. The issue is then whether the reference to the profits stated in the article of

 

association be also a reference to the profits of the holding or parent company proposing

 

payments of dividend deriving from the profit of its group of companies.

 

The appellants also cited section 162 of the Companies Act which claims that both the

 

preparation and circulation of group accounts may amount to suggest as a group profit, in other

 

words for relevant purposes, the profit of the groups are also the profit of the company. 11

 

HOLDING

 

The High Court noted that the accounting provisions available in Articles of Association did not

 

operate to disclaim separate legal entity of group members of the holding company. To further

 

this notion, the word ?profits? Mason J referred to various cases like Lee v Neuchatel Asphalte

 


 

7

 


 

[1961] 1 Ch 353 cited in Industrial Equity Ltd v Blackburn (1977) 2 ACLR 421, 426 (Glass JJA)

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/search/enhRunRemoteLink.do?A=0.37735822004698005&service=citation&langcountry=AU&backKey=20_T23753759040&linkInfo=F%23AU

 

%23ACLR%23vol%252%25sel1%251977%25page%25421%25year%251977%25sel2%252%25decisiondate%251977%25&ersKey=23_T23753759013>.

 


 

8

 

9

 


 

Ibid.

 

Ibid.

 


 

10

 


 

Ibid, 427 (Glass JJA)

 

LexisNexis

 

<http://www.lexisnexis.com.ezproxy.lib.rmit.edu.au/au/legal/search/enhRunRemoteLink.do?A=0.37735822004698005&service=citation&langcountry=AU&backKey=20_T23753759040&linkInfo=F%23AU

 

%23ACLR%23vol%252%25sel1%251977%25page%25421%25year%251977%25sel2%252%25decisiondate%251977%25&ersKey=23_T23753759013>.

 


 

11

 


 

Industrial Equity Ltd v Blackburn [1977] 137 CLR 567, 576 (Mason J)

 

BarNet Jade

 

<https://jade.io/article/66695>.

 


 

jxl

 


 

Josephine Lupiga S3464154 LAW1204/2404/OJD160: AUSTRALIAN PROPERTY LAW Page 3 of 3

 


 

Co.12, Verner v General and Commercial Investment Trust 13 etc. and noted that ?in all the

 

cases it has been assumed?principles refers exclusively to the profits of the company?none

 

appeared to be profits of subsidiary companies where the article of association was

 

applied??14

 

His Honour further pointed to Walker v Wimborne15 where he stated that ?in the absence of

 

contract creating additional right?creditors of company A which is a subsidiary company of the

 

group of company 16can look only to that company for payments of their debts and cannot look

 

to company B for payment??

 

Mason J reiterated that the whole argument all led up to the provision of article 129 of the

 

article of association and to section 376(1) of the Company Act. Article 129 carry out to deny a

 

company the power to make prohibited payments. 17 Section 376(1) exclusively refers to the

 

profits of the company and not to the profits of the group. His Honour further stated that on his

 

opinion, ?the dividend declared by the company for the year ending 30 June 1975 out of the

 

profits of the company were already inadequate?even these profits were earned after that

 

date the source of the dividend declared were not coming from that profits. On the other hand,

 

if an evidence was made available to support the idea that the directors approved and declared

 

the provision of the special distribution of the dividends, his Honour considered the action of

 

the directors to be ultra vires.18

 

JUDGEMENT

 

The appeal was dismissed with cost.

 


 

12

 


 

(1889) 41 Ch D1 cited in Industrial Equity Ltd v Blackburn [1977] 137 CLR 567, 577 (Mason J)

 

BarNet Jade

 

<https://jade.io/article/66695>.

 


 

13

 

14

 


 

Ibid.

 

Ibid.

 


 

15

 


 

[1976] HCA 7 cited in Industrial Equity Ltd v Blackburn [1977] 137 CLR 567, 577 (Mason J).

 

BarNet Jade

 

<https://jade.io/article/66695>.

 


 

16

 


 

Ibid (Mason J 578)

 

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<https://jade.io/article/66695>.

 


 

17

 


 

Ibid (Mason J at 576)

 

BarNet Jade

 

<https://jade.io/article/66695>.

 


 

18

 


 

Ibid, 580 (Mason J)

 

BarNet Jade

 

<https://jade.io/article/66695>.

 


 

jxl

 


 

 


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