Ashbury Railway Carriage and Iron Co Ltd v Riche
Encyclopedia
Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653 is a UK company law case, which concerned the objects clause of a company.
Its importance has been diminished as a result of the Companies Act 2006
s 31, which allows for unlimited objects for which a company may be run. Furthermore, any limits a company does have in its objects clause has no effect whatsoever for people outside a company (s 39 CA 2006), except as a general issue of authority of the company's agents.
’s memorandum, clause 3, said its objects were ‘to make and sell, or lend on hire, railway-carriages…’ and clause 4 said activities beyond needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway in Belgium. Later, the company repudiated the agreement. Riche sued, and the company pleaded the action was ultra vires.
chamber being equally divided, the decision of the court below was affirmed.
Blackburn J said,
. Lord Cairns LC said,
Its importance has been diminished as a result of the Companies Act 2006
Companies Act 2006
The Companies Act 2006 is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. It had the distinction of being the longest in British Parliamentary history: with 1,300 sections and covering nearly 700 pages, and containing 16 schedules but it has since...
s 31, which allows for unlimited objects for which a company may be run. Furthermore, any limits a company does have in its objects clause has no effect whatsoever for people outside a company (s 39 CA 2006), except as a general issue of authority of the company's agents.
Facts
Incorporated under the Companies Act,1869, the Ashbury Railway Carriage and Iron Company LtdAshbury Railway Carriage and Iron Company Ltd
The Ashbury Carriage and Iron Company Limited was a manufacturer of railway rolling stock founded by John Ashbury in 1837 at Knott Mill in Manchester, England, near the original terminus of the Sheffield, Ashton-under-Lyne and Manchester Railway...
’s memorandum, clause 3, said its objects were ‘to make and sell, or lend on hire, railway-carriages…’ and clause 4 said activities beyond needed a special resolution. But the company agreed to give Riche and his brother a loan to build a railway in Belgium. Later, the company repudiated the agreement. Riche sued, and the company pleaded the action was ultra vires.
Exchequer Court
The judges of the exchequerExchequer
The Exchequer is a government department of the United Kingdom responsible for the management and collection of taxation and other government revenues. The historical Exchequer developed judicial roles...
chamber being equally divided, the decision of the court below was affirmed.
Blackburn J said,
House of Lords
The House of Lords, agreeing with the three dissentient judges in the Exchequer Chamber, pronounced the effect of the Companies Act to be the opposite of that indicated by Mr Justice Blackburn. It held that if a company pursues objects beyond the scope of the memorandum of association, the company's actions are ultra viresUltra vires
Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...
. Lord Cairns LC said,