Case Study Loch Vs John Blackwood Ltd

CASE REVIEW

1.0        NAME OF CASE

LOCH v. JOHN BLACKWOOD LTD (1924) AC 783

2.0        NAME OF COURT INVOLVE

Reversed by West Indian Court of Appeal

Restored by Privy Council

3.0        NAME OF DEFENDANT AND PLAINTIFF

      Defendant is Mr. Mc Laren

      Plaintiff is Mrs. Loch and Rodger.

4.0        TYPE OF THE CASE

Wind up and dissolution of the company on the just and equitable ground due to the justifiable loss of confidence of the minority shareholders.

5.0        ISSUE OF THE CASE

Do Mrs. Loch and Rodger who is the holder of minority shares of the company succeed to wind up the company on the just and equitable ground?

6.0        FACT OF THE CASE

According to the case of LOCH VS JOHN BLACKWOOD LTD. (1924) AC 783 , Mc Laren is the managing director of the company. He holds one share. Mrs. Mc Laren and other two nominees who are also the directors hold the major part of the company's shares. The minor part of shares was hold by Mrs. Loch and Rodger. They are lack of confidence in the management of the company’s affairs. They argued that Mc Laren fail to held general meeting, the profit and loss account are not declare to plaintiff , the report is not sent in term of articles of the company, and also the regulations which are related to audit are not abidance. So they asked for the petition to wind up the company. According to Lord Shaw, the purpose of the Mc Laren to do so, in order to let the plaintiff who filing the petition felt to be ignored. Mc Laren wanted to buy out the share which holds by minority shareholders at lower price if compare to market price.  

7.0        JUDGEMENT OF THE CASE

In accordance to Privy Council, there was a justifiable lack of confidence in the reliable of the majority shareholder. So, the company was ordered to be wind up.

Other than that, Lord Shaw also stated that the lack of confidence must relate to directors in their conduct of the company’s affairs. So, the company was ordered to be wind up.

8.0        RATIO RECIDENDI (the reason for deciding)

The reason for court to decide is acceptable. This is because Mrs. Loch and Rodger argued that Mc Laren failed to held general meeting, the profit and loss account of company are not declare to plaintiff, the report is not sent in term of articles of the company, and also the regulations which are related to audit are not abidance by the company. They are lack of confidence in the management of the company’s affairs.

9.0        SUGGESTION CASE/SUPPORTED CASE

Suggestion case that have been chosen is RE SURREY GARDEN VILLAGE TRUST LTD [1965] 1 W.L.R 974 Chancery Division.

Two Industrial and Provident Societies was formed with the objectives to enhance the interests of their members as owners and occupies of what were originally agricultural smallholdings near Croydon, and to protect the rural area. The petition was brought by the members who holding the minority vote. They wanted to sell their land for the development by commercial builders (‘Wates”) to earn a consideration profit. They claimed that it was just and equitable to wind up the societies. There was a justifiable lack of confidence in the management. The objectives of societies were unable to achieve. However the court refused the petition. According to the court, the petitioners’ real purpose was extraneous to the interest of the members.