Rolfe & Anor v Bernard Samuel Rolfe Tulsesense Ltd

A director appointed by the board under article 95 of the 1948 Table A holds office only until the next annual general meeting and must then be re-elected. Informal shareholder assent can operate under the Duomatic principle only where the relevant shareholders objectively assent to a matter the general meeting could effect. A purely internal decision is insufficient. The assent must also be attributable to the shares concerned: a person acting as trustee or executor is not taken to assent for trust-held shares without an objectively apparent intention to do so, and one of several beneficial owners will ordinarily not suffice. Persistent informality or failure to follow the articles does not itself vary or disapply them. A director’s resignation is not conditional on a permanent shareholder appointment merely because the replacement is said to be made in his stead.

The claimants sought a declaration that Wayne Rolfe had ceased to be a director of Tulsesense at the annual general meeting held on 18 December 2008. Bernard Rolfe had resigned as a director in August 2007, and Wayne had subsequently been appointed by Rita Anderson, then the company’s sole remaining director. Wayne was not re-elected at the 2008 annual general meeting.

The claimants relied on article 95 of the 1948 version of Table A. Bernard contended that Wayne had instead been appointed indefinitely by the shareholders under article 94 through the Duomatic principle. Alternatively, he argued that article 95 had been modified or disapplied, or that his resignation was conditional on Wayne’s permanent appointment.

Disposition. The court granted a declaration that Wayne ceased to be a director of Tulsesense on 18 December 2008. The company therefore had no directors.

1. Article 95 appointment. Bernard resigned in August 2007. Rita was then the sole director and had power under article 95 of the 1948 version of Table A to appoint Wayne to fill the vacancy. The appointment was not shown to have been made under article 94 or by informal shareholder assent. Article 95 limited the appointment to the period ending at the next annual general meeting. Since Wayne was not re-elected at that meeting, his office ended.
2. Duomatic principle. The principle stated in Re Duomatic Ltd [1969] 2 Ch 365, and summarised in EIC Services Ltd v Phipps [2004] 2 BCLC 589, was applied with qualifications. Assent must concern a matter the general meeting could effect and must be objectively discernible from material or conduct. A merely internal decision is insufficient.
3. Shares held in different capacities. Bernard and Wayne did not intend or purport to assent for the share Bernard held as executor. The court was willing to assume, without deciding, that beneficial ownership could in an appropriate case satisfy Duomatic requirements. Ordinarily, however, one of several beneficial owners cannot assent for all unless decision-making had been entrusted to that person. Domoney v Godinho [2004] 2 BCLC 15 and Shahar v Tsitsekkos [2004] EWHC 2659 (Ch) were considered. In re Gee & Co (Woolwich) Ltd [1975] 1 Ch 52 was distinguished because it concerned joint legal holders.
4. Other arguments. Re Express Engineering Works Ltd [1920] 1 Ch 466 did not assist because Rita had power to appoint Wayne as director and there was no evidence that she intended to act as a shareholder. Long-standing failure to follow the articles did not prove their modification or disapplication; Ho Tung v Man On Insurance Company Ltd [1902] AC 232 was not analogous. Bernard’s resignation was not conditional on a permanent shareholder appointment, since the parties had attached no importance to the method or tenure of the appointment.