Articles provided that certain special shares gave their holders a right to appoint two directors of the company. C purchased some of these voting shares, but fell into financial trouble and later sold them. Issue was whether directors appointed by C were required to vacate office one C sold his shares. Held:
· Courts will imply terms into articles where this merely makes express what they would have reasonably been taken to mean against relevant background.
· Court only has power to ascertain the meaning of the articles as a whole.
Ø And NOT individual terms.
· Thus courts can imply terms in fact based upon meaning of articles as a whole.
· Therefore “relevant background” includes:
i) Scheme of Articles themselves
ii) To a very limited extent, background facts that third parties involved with the company would reasonably have known
· On facts, anyone reading document as a whole would have reasonably understood that directors were required to vacate office.
Ø Therefore terms could be implied to this effect.