Attorney-General of Belize v Belize Telecom Ltd - Case Summary

Attorney-General of Belize v Belize Telecom Ltd [2009] UKPC 10

Whether term regarding director’s vacating office could be implied into company articles

Facts

The Belize government established a company to take over the country’s telecommunications services. The articles of association provided the holder of the ‘special’ share who also owned 37.5% of the share capital, could appoint directors. Belize Telecom (BT) purchased the ‘special’ share, the requisite share capital and appointed directors. BT then went into financial difficulties and ceased to hold the 37.5% share. The articles made no provision for the removal of these appointed directors, and the attorney-general sought a declaration that a term should be implied into the articles that such appointed directors should vacate office.

Issues

BT argued that since the articles were silent as to the removal of the appointed directors, they were irremovable, unless they chose to resign. BT contended the court had no power to introduce new terms into the articles of association. The attorney general argued it would be absurd if there was no means of removing such appointed directors and, where a director is appointed by virtue of a specific shareholding, it should be an implied term that when there is no longer such a shareholding in existence, that director should resign.

Decision/Outcome

The term was successfully implied into the contract. When considering whether terms are implied, the court cannot imply terms simply to make a contract more reasonable or more efficient. The court should consider the construction of the agreement as a whole, and discern what the contract as a whole means. If the agreement is silent as to a particular provision, it can be implied only if the court finds the parties must have intended it to be incorporated.