Conflict of interest voids self-serving set-off against share liability; valid corporate authority is required.

A director or managing agent who is personally interested in a proposed arrangement cannot validly vote on it, and a self-serving corporate set-off is ineffective without proper authority. Here, the appellant and his brother were interested in the meeting said to authorise advances, so their votes could not count and the remaining director alone could not confer valid approval. Although a company may lawfully agree to set off a debt against future share calls, that result depends on valid corporate action taken without conflict of interest. The attempted adjustment of the appellant's debt against his unpaid share liability was not binding, and he remained liable as a contributory.

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Issues: Whether the appellant could validly set off the amount due to him by the company against the unpaid amount on his shares and thereby avoid being placed on the list of contributories.

Analysis: The appellant was both a director and the managing agent of the company and was therefore in a fiduciary position. At the meeting which purported to authorise advances under Article 29, the appellant and his brother were personally interested and could not vote. The remaining director, acting alone, could not validly authorise the transaction, and the quorum requirement was not satisfied by interested directors for the purpose of conferring authority on a self-serving arrangement. A company may agree to set off a debt against future calls, but that can only be done by lawful authority and through proper corporate action. The attempted adjustment of the appellant's debt against his share liability was not binding on the company.

Conclusion: The set-off was invalid and the appellant remained liable as a contributory.

Ratio Decidendi: A director who is personally interested in a proposed arrangement cannot vote upon it, and a self-serving set-off of corporate indebtedness against share liability is ineffective unless authorised by a valid corporate decision taken without conflict of interest.

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