TMI Blog1933 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ans, Texas and Pacific Junction Railway, In re [1890] 60 LJ. Ch. 221 and the second the case of English, Scottish and Australian Chartered Bank, In re [1893] 62 LJ Ch. 825 . In the first of these cases, it is true, Lindley, L. J., observed [60 L. J. Ch., at p. 225 ; (1891) 1 Ch., at p. 239] : " The Court must look at the scheme and see... whether the scheme is a reasonable one or whether there is any reasonable objection to it, or such an objection to it as that any reasonable man might say that he could not approve of it." I think that those phrases, which were contained in a judgment which had not been reserved, do not represent exactly what the Lord Justice intended. I prefer, as representing the view of the Court of Appeal, the language in the statement of Bowen, L. J., that [60 L.J. Ch., at p. 228; (1891) 1 Ch., at p. 243]: "A reasonable compromise must be a compromise which can, by reasonable people conversant with the subject, be regarded as beneficial to those on both sides who are making it," and he added, to explain that, "...I have no doubt at all that it would be improper for the Court to allow an arrangement to be forced on any class of creditors, if the arrangemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arrangement Act, 1870, was passed, in the majority of cases all the persons concerned with an arrangement could go to the meeting, listen to what was said, and vote for or against the arrangement according to the views which they were persuaded to take. In these days, in many of the cases that come before me, only a fraction of the persons who are concerned could get into the room where the meeting is proposed to be held, and in the great majority of cases the proxies given to the directors before the meeting begins have in effect settled the question of the voting once for all. It is perhaps not unfair to say that in nearly every big case not more than 5 per cent, of the interests involved are present in person at the meeting. It is for that reason that the Court takes the view, that it is essential to see that the explanatory circulars sent out by the board of the company are perfectly fair, and, as far as possible, give all the information reasonably necessary to enable the recipients to determine how to vote. I am assuming, of course, that, following the usual procedure, explanatory circulars are sent out, because, I may observe, there is nothing in the Act to render them essen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance in many cases besides this one, as to the power of members of the class to vote by proxy. Section 153 simply says that a majority in number representing three-fourths in value of the creditors or class of creditors or members or class of members, as the case may be, present and voting either in person or by proxy at the meeting, may agree to a compromise or arrangement. It is wholly silent as to the nature of the instrument appointing the proxy. We all know that there are two forms in use; there is a general proxy which may appoint a person to vote as he may think fit, and there is a special proxy which may be a proxy to vote for or against, as the case may be, a particular resolution. In what I am going to say in reference to proxies and proxy forms, I am confining my observations to the cases before me, namely, to the cases where the companies are not in winding up, where there is no rule of Court applicable to the matter, and where neither the articles of association of the company nor the provisions of the trust deed to secure debentures have any application. It may be pointed out that in 1870 a proxy was simply an agent to vote ; no deed was necessary for the appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Companies Arrangement Act, 1870, fortified the Court in making an order providing for special forms of proxies. There are two practice notes which further have to be considered. In the first one, Vaughan Williams, J., directed that ([1896] W. N., at p. 59): " Proxy papers to be used at meetings to consider schemes of arrangement under the Act of 1870" that is, the Joint Stock Companies Arrangement Act " should follow the office form settled by the judge, which empowers the proxy 'to vote for me and in my name [blank] the said scheme,, either with or without modification as my proxy may approve,' and contains opposite the blank a marginal note as follows : 'If for insert "for." If against insert "against" and strike out the words after "scheme" and initial such alterations.'" Plainly that is a direction in reference to companies in winding up, because the Joint Stock Companies Arrangement Act, 1870, referred only to those cases. A good many years later Swinfen Eady, J., directed that ([1910] W.N., at p. 154): "In order to insure the issue of proper forms of proxies for meetings ordered to be summoned under Section 120 of the Companies (Consolidation) Act, 1908" a reproduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er persons to whom the proxies are to be given will apparently be entitled to use their own judgment in the matter, and that may be precisely the thing which the person giving the proxy does not desire. I may mention as an illustration that the scheme may, as one of the schemes before me does, give compensation to directors for what is called loss of office. I can conceive members of the class wishing to vote in favour of the scheme only if it omitted that provision. In order to do that, if they cannot attend the meeting themselves, they must make out a special form of proxy. A somewhat different question arises as to the time at which lodgment of the proxies should have been made. It is not necessary for me to decide whether when the office form of proxy is used it must be lodged within the time mentioned in the note on the proxy or it will be bad, though I may add that I see grave objection to the view that if lodged too late it will be bad. I can at least see no sufficient ground for holding that the notes on the form settled in Chambers which, so far as I can see, are not notes made with any judicial authority, preclude other forms from being used, if first presented at the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enable the chairman before the meeting commences to know the result of the meeting, and I can see the disadvantages of such a course. Sitting here I have come across several cases where members of the class have come to a meeting and have been told by the chairman that whatever they say and however they vote he has in his pocket sufficient proxies to carry the resolution, and in many cases my belief is that members of the class have then gone away without voting at all, so that the Court has no reliable evidence as to the strength of the opposition. In my opinion, proper proxies may be used at the meeting whether lodged before it or not. There has been a good deal of discussion in Dormans' Case on the question whether the meetings were properly held under the chairmanship of Mr. Mitchell, and whether, in any case, the resolution ought not for that reason to be regarded as not having been properly passed. The evidence was conflicting. The voting was by cards, which I do not think were in a satisfactory form, and the chairman left the meeting before the cards had been counted. That, I think, is a matter of very little importance. It is more serious to consider the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular at all. Perhaps I may remark in passing that that is an additional reason for coming to the conclusion that a member of a class has a right to appoint a general proxy because, if no explanatory circular is sent, he may be quite unable to understand or form an opinion as to which way he should vote in the matter without attending the meeting, which, in a case such as I have here, is an impossible course, since there are 9,000 shareholders in this particular class. Of course there is not a room in the Cannon Street Hotel, where the meetings were held, and probobly there is not a room in London where they could attend and vote. The practice being to send out an explanatory circular in such a case, it is, in my opinion, the duty of the Court very carefully to scrutinise the circular when the matters involved are matters of considerable difficulty and doubt. In a case of great complexity it is true that not every relevant fact can be stated. I apprehend that if the circular were to assume such a length as to state all the relevant facts in Dormans' petition it would be so lengthy as to defeat its own object. That is not to say, however, that the creditors or the members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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