Malayan Banking Ltd v Raffles Hotel Ltd

• Jurisdiction: Singapore
• Judgment Date: 22 December 1965
• Date: 22 December 1965
• Docket Number: Civil Appeal No 1 of 1965
• Court: Federal Court (Singapore)

Malayan Banking Ltd

Plaintiff

and

Raffles Hotel Ltd

Defendant

[1965] SGFC 11

Tan Ah Tah ACJ

,

F A Chua J

and

J W D Ambrose J

Civil Appeal No 1 of 1965

Federal Court

Companies–Memorandum and articles of association–Person who was not member of a company appointing a director of the company pursuant to power purportedly contained in company's articles of association–Whether person who was not member of company could acquire rights under articles–Whether appointment as director of company valid–Section 22 (1) Companies Ordinance (Cap 174, 1955 Rev Ed)

The plaintiff/respondent assigned the reversion of a lease of a part of a land on which the Raffles Hotel stood to the defendant/appellant, subject to all the covenants and conditions contained in the original lease. Clause 14 of the original lease provided that the lessee could not assign or sublet the premises without first obtaining the lessor's consent. Further, if the assignee or sublessee was a limited company, the articles of the company had to contain a provision that from time to time during the continuation of the demise, the lessor could appoint a director of the assignee or sublessee. Any director so appointed could not be a person interested in or connected with any business of a similar nature to the lessee.

Article 77 of the respondent's articles of association empowered the lessor and its assigns to appoint themselves or any other person as director of the respondent. The appellant, purporting to act pursuant to the power contained in Art 77, appointed itself by a resolution of its directors to be a director of the respondent.

The respondent commenced the present action seeking a declaration that Art 77 had to be read in conjunction with cl 14 of the original lease. As the appellant's subsidiary owned more than 65% of the issued share capital in Goodwood Park Hotel Ltd, which carried on the business of operating and managing hotels in Singapore, the respondent contended that the appellant's appointment of itself as the respondent's director was invalid. In the alternative, the respondent sought a declaration that the appellant could not act as a director of the respondent and an injunction to restrain the appellant from acting as such a director. The trial judge gave judgment for the respondent. The appellant appealed.

Held, dismissing the appeal:

Clause 14 of the original lease did not confer any contractual right on the appellant to appoint a director for the respondent. The articles of association did not, as between the company and a person who is not a member, constitute a contract of which that person could take advantage. Thus Art 77 of the respondent's articles of association was not binding on the respondent as between the respondent and an outsider, and the appellant could not take advantage of the power purportedly given by Art 77. The appellant's appointment as a director of the respondent was invalid: at [14] to [17].

Hickman v Kent Or Romney Marsh Sheep Breeders' Association [1915] 1 Ch 881 (refd)

Scott v Frank J Scott (London) Ltd [1940] Ch 794 (refd)

Treloar v Biggs (1874) LR 9 Ex 151 (refd)

Companies Ordinance (Cap 174, 1955Rev Ed)s 22 (1) (consd)

Companies Act 1929 (c 23) (UK)s 14

G S Hill (Rodyk & Davidson) for the defendant/appellant

S E Teh (Allen & Gledhill) for the plaintiff/respondent.

J W D Ambrose J

1 The question raised by this appeal is whether the defendant company's appointment of itself as a director of the plaintiff company in exercise of the power purporting to be given to it by the plaintiff's articles of...