Case Conference - Spotless Ltd
Vince is employed by Spotless Ltd as the company solicitor and later bought shares in the company, the articles of association included a provision stating that the company shall award Vince an annual pay rise of 15% of his salary for the next five years.
However the company proposes not to award Vince pay rise for the year 2006/2007 on the grounds that it is not bound by the provision in the articles, as Vince was not a member.
Vince wishes to sue Spotless Ltd which he cannot as he is employed by Spotless Ltd as a company solicitor therefore an outsider in his capacity as a solicitor, this can be seen in Eley v Positive Government Security Life Assurance (1876) solicitor brought an action for breach of contract against company and Court of Appeal stated that action failed because there was no contract between the company and Eley under articles. He was an outsider in his capacity as a solicitor even though he was also a member.
Before Vince gives Spotless Ltd to court, he should go through arbitration because Article 2 states that "any dispute between a member and the company relating to the articles shall first be referred to arbitration" which is to avoid expense, delay and adverse publicity arising out of litigation between members.
Under Companies Act 1985 s14 which states that articles when registered bind the company and its members as if they had been signed and sealed by each member and contained covenants by each member to observe their provisions although no right given by the article to a member in a capacity other than that of member, e.g. solicitor, can be enforced against the company. The articles are not a contract with outsiders by merely with the members in respect of their rights as members.
Vince is employed by Spotless Ltd as the company solicitor and later bought shares in the company, the articles of association included a provision stating that the company shall award Vince an annual pay rise of 15% of his salary for the next five years.
However the company proposes not to award Vince pay rise for the year 2006/2007 on the grounds that it is not bound by the provision in the articles, as Vince was not a member.
Vince wishes to sue Spotless Ltd which he cannot as he is employed by Spotless Ltd as a company solicitor therefore an outsider in his capacity as a solicitor, this can be seen in Eley v Positive Government Security Life Assurance (1876) solicitor brought an action for breach of contract against company and Court of Appeal stated that action failed because there was no contract between the company and Eley under articles. He was an outsider in his capacity as a solicitor even though he was also a member.
Before Vince gives Spotless Ltd to court, he should go through arbitration because Article 2 states that "any dispute between a member and the company relating to the articles shall first be referred to arbitration" which is to avoid expense, delay and adverse publicity arising out of litigation between members.
Under Companies Act 1985 s14 which states that articles when registered bind the company and its members as if they had been signed and sealed by each member and contained covenants by each member to observe their provisions although no right given by the article to a member in a capacity other than that of member, e.g. solicitor, can be enforced against the company. The articles are not a contract with outsiders by merely with the members in respect of their rights as members.
