Nokes v Doncaster Amalgamated Collieries Ltd
[1940] A.C. 1014(Judgment by: Lord Thankerton)
Between: Nokes - Appellant
And: Doncaster Amalgamated Collieries Ltd - Respondent
Judges:
Viscount Simon LC
Lord Atkin
Lord ThankertonLord Romer
Lord Porter
Subject References:
MASTER AND SERVANT
Contract of service
Company
Reconstruction or amalgamation
Order by Court for transfer of property rights, powers and liabilities of transferor company to transferee company
Whether employee bound by transfer
Legislative References:
Companies Act, 1929 (19 & 20 Geo. 5, c. 23) - s. 154
Judgment date: 1 August 1940
Judgment by:
Lord Thankerton
My Lords, I have had the privilege of considering the written opinions of my noble and learned friends Lord Atkin and Lord Romer; I find myself in agreement with the opinion of Lord Atkin, and regret that I feel bound to differ from Lord Romer's opinion, as also from the decision of both courts below.
The decision of the appeal turns on the proper construction of head (a) of the matters referred to in s. 154, sub-s. 1, of the Companies Act, 1929, namely, "the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company," and of s. 154, sub-s. 2, which provides,
"Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the Order, be transferred to and become the liabilities of, the transferee company, and, in the case of any property, if the order so directs, freed from any charge which is by virtue of the compromise or arrangement to cease to have effect."
In sub-s. 4 property and liabilities are defined in wide terms.
The construction which has prevailed in the courts below clearly involves that the right which a third party would otherwise have to prohibit a transfer by the transferor company, is at the mercy of the Court under this section. That necessarily involves an extension of the rights of the transferor company, and the corresponding extinction of a third party's rights. Lord Halsbury's remarks in Leach v. Rex, [F17] quoted by my noble and learned friend, appear to me to be directly in point. The point that raises the difficulty is the word "transferred." If it had been intended to effect a substitution of the transferee company in room and stead of the transferor company it would have been easy so to express it, but Parliament has not done so.
This particular difficulty has not been mentioned or dealt with in the courts below, which appear to have been most impressed with the width of the definition of property and liabilities. I confess that the width of the definition does not impress me as favouring either construction, for, even if the word "transferred" had been qualified by such a phrase as "so far as transferable by the transferor company," the wide definition would have been equally necessary and appropriate. We are then left to a series of ingenious implications from other provisions in the section in order to give to the word "transferred" a meaning which I do not consider to be its natural meaning.
If it had been intended to extinguish the rights of third parties, that should have been done "by a clear definite and positive enactment, not by an ambiguous one such as the section relied upon in this case"; per Lord Atkinson in Leach's case. [F18] I cannot believe that this matter was considered by Parliament; clearly the main object of these provisions which were first introduced in s. 54 of the Companies Act of 1928, was to facilitate the amalgamation of companies and to avoid the payment of duties on a whole series of deeds of transfer, etc.
It cannot be gainsaid that the rights of third parties which would be overridden or extinguished by the respondents' construction are, in many cases, of material importance and value. I will only add one illustration to those instanced by my noble and learned friend Lord Atkin. In the case of mineral leases it has long been settled in Scotland that a lease excluding assignees unless approved of by the landlord, has the same force with an unqualified exclusion; the tenant has no right under such a clause to require the landlord to justify his refusal, neither, if he does assign a reason, is that subject to the review of the Court: Duke of Portland v. Baird & Co.; [F19] Bell's Princ. s. 1218. In the Duke of Portland's case Lord Justice Clerk Inglis, after referring to the delectus person' involved in certain leases, says: [F20]
"But I think that both the clause and the subject with which we are dealing suggest a great many other considerations on the part of the landlord than the mere consideration whether a particular assignee or subtenant is an eligible man. It may in a mining district like this be at one time a very beneficial proceeding for the landlord under such a lease to take an assignee, and to take an assignee of a particular character - an assignee or a subtenant who will work out the minerals very rapidly. It may at another time be his interest to receive no assignee at all, or only an assignee or subtenant whose command of capital, or whose enterprise, is not such as to be likely to produce a very rapid working-out of the minerals. There is a great competition and a great complication of interests in such districts.
There are a great many things to be considered in the interest of a mineral proprietor besides the mere solvency or sufficiency of the tenants in his mineral leases; and I should say it is difficult to understand that a landlord in making a lease of this kind should not have these interests in his eye when he arranges with his tenant under what conditions assignation or subtack is to be allowed. Can anything be more natural - or, I should say, more expedient - for the landlord, than that he should hold in his hand the power, not of rejecting this or that assignee or subtenant, but of determining absolutely, and with a view to his own wishes and interests only, whether at any particular time there shall be an assignation or subtack at all?"
In the absence of explicit provision to that effect, I am unable to find in the terms of s. 154 anything to deprive the mineral landlord of such a right.
Since writing this opinion I have had the privilege of considering the opinion just delivered by my noble and learned friend on the Woolsack, and the opinion of my noble and learned friend Lord Porter, with both of which I agree, as also in the motion proposed by the Lord Chancellor.