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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Smith v Butler  EWCA Civ 314 (15 March 2012)
Cite as:  WLR(D) 96,  EWCA Civ 314,  Bus LR 1836
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION) LEEDS DISTRICT REGISTRY
HIS HONOUR JUDGE BEHRENS
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIMER
MR JUSTICE RYDER
| PHILIP JOHN SMITH
|- and -
|JAMES CARL BUTLER
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr Neil Berragan (instructed by DLA Piper UK LLP) for the Respondent
Hearing date : 15 December 2011
Crown Copyright ©
Lady Justice Arden:
The Primary Issue
The primary issue: the powers of a managing director
"A company whose business has many details to be attended to requires a manager with considerable powers. He may either be one of the directors appointed as managing director or be actually appointed as the manager, and such powers may be delegated to him by the board as the articles allow, or, if they are silent, such as in a similar business would usually be entrusted to a managing director or manager.
[T]he exact status and powers of a managing director depend both upon the articles which confer a power on the board to appoint a managing director and upon the terms of the contract by which he is employed. The failure of the board to intervene where the managing director has exceeded his authority may imply ratification. Although he must be a director, his status as managing director derives from his appointment by the board to this office. He is thus both a director and, as managing director, an employee of the company."
"The directors may delegate .... to any managing director or any director holding any other executive office such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered…"
"[Counsel submitted that] Mr Radford's capacity as managing director imbued him with powers over and above those enjoyed by a non-managing director, notwithstanding that there was no evidence that any powers had been delegated to Mr Radford as managing director. He submitted to me that a managing director, ex virtute officii, had the power to institute proceedings. I do not find that in any way a matter which the articles in Table A provide for. The managing director of a company is not under the articles given any powers over and above other directors in relation to the business of the company. As I say and as reg 72 makes clear, in a particular case the managing director may have powers over and above those enjoyed by his co-directors because they may have delegated those powers to him and, if they have done, so be it. There being in the present case no such delegation, in my view, reg 72 does not assist the plaintiff company."
Consequential issue (1): indemnification of the Company for its costs of the proceedings
"acted honestly and reasonably, and that having regard to all the circumstances of the case (including those connected with his appointment) he ought fairly to be excused, the court may relieve him, either wholly or in part, from his liability on such terms as it thinks fit."
Consequential issue (2): did the judge err when he made an order convening a general meeting of the Company with a quorum of one?
Disposal of this appeal
Lord Justice Rimer:
Mr Justice Ryder: