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GAZETTE
NOVEMBER 1978
ratified must have purported to act
for the principal; secondly, at the
time the act was done the agent
must have had a competent
principal; and thirdly, at the time
of the ratification the principal
must be legally capable of doing
the act himself'.
This left the second of the
defendant's contentions to be dealt
with, namely that the whole
transaction was voidable under
Section 60 of the Companies Act.
This Section, with one exception,
prohibits a company from financing,
by either direct or indirect means, the
purchase of its own shares (Sub-
section (1)) and also provides (Sub-
section (14) that a transaction in
breach of the prohibition is voidable
at the instance of the company
against any person, whether a party
to the transaction or not, who has
notice of the facts which constitute
the breach.
In the High Court the defendant
had contended that as the purpose for
which the loan was to be used (and
was in f a c t u s e d) was in
contravention of Section 60 and that
the plaintiff knew of this, the
transaction was accordingly voidable
at the instance of the company
against the plaintiff under subsection
(14). The defendant relied on several
matters which would constitute
constructive notice, principally (a)
the failure of the plaintiff, until almost
a year after the loan negotiations
which occurred in 1973, to inspect or
get a copy of the relevant folio which
would have shown that the defendant
was registered as owner since 1967;
(b) that in the details supporting the
loan application the estimate for
stamp duty on the underlying
transaction was calculated at 1%
(appropriate to a transfer of shares
and totally inconsistent with a
transfer of property having the value
of the defendant's lands and the hotel
premises erected on them); and, (c)
that planning permission had been
granted to the defendant for
development of part of the lands in
1972. The plaintiff had denied that it
knew the loan proceeds were to be
used for the purchase of the shares of
the defendant company or that it
knew, when making the advance, that
the defendant already owned the
lands in question and contended that
it understood the loan moneys were
to be used in purchasing and
developing the lands. The matters
specified by the defendant constituted
constructive notice which had no
application to a commercial
transaction.
In the High Court, McWilliam, J.
had been referred to, and expressed
himself in agreement with, a passage
from the judgment in
Manchester
Trust
v.
Furness
[1895] 2 QlB. 539
in which, at page 545, Lindley, LJ.
said —
"As regards the extension of the
equitable doctrines of constructive
notice to commercial transactions,
the courts have always set their
faces resolutely against it. The
equitable doctrines of constructive
notice are common enough in
dealing with land and estates with
which the court is familiar, but
there have been repeated protests
against the introduction into
commercial transactions of
anything like an extension of these
doctrines and the protest is
founded on perfect good sense. In
dealing with estates in land title is
everything, and it can be leisurely
investigated; in commercial
transactions possession is
everything and there is no time to
investigate title; and if we were to
extend the doctrine of constructive
notice to commercial transactions
we should be doing infinite
mischief and paralysing the trade
of the country".
However, McWilliam, J. had felt that
there must be some limit to the extent
to which a person "may fail to accept
information available to him or fail to
make inquiries normal in his line of
business so as to leave himself in the
position that he has no notice . . . " .
On the facts of the case the High
Court .considered that the plaintiff
had reached such a limit (of ignoring
facts and failing to pursue enquiries)
as would justify the Court in holding
that the plaintiff "should have had
notice of the purpose for which the
money was to be applied".
Held
(per Kenny, J.) (2) reversing
the decision of the High Court that
the criteria applied and matters relied
upon by the trial judge in reaching his
conclusion as regards notice for the
purpose of subsection (14) of Section
60 were the criteria of constructive
notice. The distinction between
actual
notice and
constructive
notice
must not be blurred. What the
defendant had to prove, and the onus
was on it to do so, was that the
plaintiff had, at the time it lent the
money, notice of the fact that the
loan proceeds were to be used in
financing the purchase of the
defendant company's own shares.
The notice referred to in the
subsection is
actual
notice and not
constructive notice. There was
nothing in the evidence to suggest
that the plaintiff or any of its officials
knew that any part of the advance
was to be applied to the purchase of
shares in the defendant company and
what they did not know did not lead
to a conclusion that they must have
inferred that the money was to be
applied for that purpose. Notice
subsequently received was irrelevant.
The Supreme Court therefore
discharged the order of the High
Court and made an order directing
the defendant forthwith on service of
the order to deliver possession of the
lands in question to the plaintiff or its
nominee.
Bank of Ireland Finance v. Rockfldd
Limited — Supreme Court (per
Kenny J., with O'Higgins, CJ.,
Henchy, J. Griffin and Parke, JJ.)
— Unreported — 28 July 1978.
FAMILY LAW
1. Adoption Act 1952, Section 40
with Section 3, not unconstitutional
by tracing Mood relationship of an
illegitimate child through the mother
only and by giving authority over the
movement and placing of that child
to the natural mother, or a relative of
hers, only.
2. There are rights to free movement
within the State, and to free
movement outside the State through
the provision of a passport, subject to
public order and the common good of
the State and to international
agreements existing at any given
time. These rights existed equally to
the legitimate and the flleghnate and
provisions of the Adoption Act
denying their availability to an
i l l e g i t i ma te
c h i ld
we re
unconstitutional.
The first named prosecutor was an
Irish citizen aged twenty-two years
and unmarried. In October, 1977 she
gave birth to a baby girl, S.D., of
whom she stated in her affidavit that
the second-named prosecutor, R.D.,
was the father. The first-named
prosecutor did not at present intend
to mar ry the second-named
prosecutor, who was a Nigerian
national studying in this country and
resident since November 1975. The