Beck v Weinstock [2013] HCA 15: Preference or Ordinary Shares

In a related case to the recent decision of the High Court in Weinstock v Beck [2013] HCA 14, the High Court has further decided that an appeal by Beck regarding the sale of preference shares in hte litigated company should be dismissed in the case of Beck v Weinstock [2013] HCA 15.

LW Furniture was incorporated in 1971.  Its articles of association provided for several different classes of shares, including C class shares.  In 1971, eight C class shares were issued to Mrs Hedy Weinstock.  The company issued other preference shares having the same rights as the C class shares, but never issued any ordinary shares.  Mrs Weinstock died in 2004 and, after her death, the company sought to redeem the C class shares for one dollar each.  As executor of the estate of Mrs Weinstock, Mrs Beck claimed that the C class shares were not redeemable because they were not preference shares.

The Appeals

In the Supreme Court of New South Wales, Hamilton AJ held that the C class shares were not validly issued as preference shares because there were no other shares on issue over which they had preference.

On appeal, the Court of Appeal held that the C class shares were preference shares and had been validly redeemed.  By special leave, Mrs Beck appealed to the High Court.

The High Court Decision

The High Court unanimously dismissed the appeal.  The High Court held that the C class shares were preference shares and the redemption of shares was valid.

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