Alun Dufoo (Petitioner) v Jean-paul Tolaini and Others
| Jurisdiction | England & Wales |
| Judge | Stephen Jourdan |
| Judgment Date | 04 December 2013 |
| Neutral Citation | [2013] EWHC 3806 (Ch) |
| Docket Number | PETITION NO 3275/2012 |
| Court | Chancery Division |
| Date | 04 December 2013 |
[2013] EWHC 3806 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
In The Matter Of Quiet Moments Limited
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
Strand, London, WC2A 2LL
Stephen Jourdan QC
sitting as a Deputy High Court Judge
PETITION NO 3275/2012
Ben Shaw (instructed by Memery Crystal LLP) for the Petitioner
Jean-Paul Tolaini, the First Respondent, in person
Ruth den Besten and Gareth Tilley (instructed by Gardner Austin LLP) for the Second and Third Respondents
Hearing dates: 7–11 October 2013
Stephen Jourdan QC:
Introduction
These proceedings relate to a company called Quiet Moments Limited ("QML"). There are 100 issued shares in QML. At the moment, they are all registered in the name of Jean-Paul Tolaini (often referred to in the documents as "JP"). There is a dispute as to the entitlement to those shares. One of the individuals who claims to be entitled to shares, Mr Alun Dufoo, seeks an order for the winding up of QML under s.122(1)(g) of the Insolvency Act 1986 on the ground that "the court is of the opinion that it is just and equitable that the company should be wound up".
QML has only one asset — a right to a share in the profits from the development of a building at 6 Upper Brook Street in Mayfair. 6 Upper Brook Street was purchased in October 2011 by Bridleway Limited, a company in the McLaren group of companies ("McLaren"), with a view to redeveloping it. McLaren was introduced to the property by a company called C Group Developments Limited ("C Group"), which in turn was introduced to the property by QML. There is an agreement between McLaren and C Group for C Group to receive a share of the profits from the development. There is also an agreement, dated 14 March 2012 ("the Profit Sharing Agreement"), between C Group and QML for QML to receive in turn a share those profits. The parties' estimates as to what the ultimate share of profit which will be paid to QML under the Profit Sharing Agreement have varied. However, clearly there has been thought to be enough money at stake for the right to share in it to matter a great deal to the parties.
The issues
QML was incorporated in May 2008, and either then, or at some point subsequently, the one subscriber share was issued to Mr Tolaini. On 7 September 2008, 99 shares with a par value of £1 each were issued, with 73 allotted to Mr Tolaini and 26 to Mr Dufoo. That left Mr Tolaini with 74 shares and Mr Dufoo with 26. They were both appointed as directors.
Mr Dufoo says that, before that happened, in early September 2008, he agreed with Mr Tolaini that Mr Dufoo would be allotted half the shares in the company, and he is therefore entitled, as against Mr Tolaini, to half the shares in QML. Mr Tolaini denies that. This is the first issue for me to decide ("the 50/50 Issue").
In January 2010, Mr Dufoo executed a stock transfer form, transferring his 26 shares to Mr Tolaini, and gave the form to Mr Tolaini. This was because Mr Dufoo thought he might separate from his civil partner, and wished to protect his assets. Mr Dufoo says he told Mr Tolaini to do nothing with the form. Mr Tolaini says he was asked to register the shares in Mr Tolaini's name and did so. Mr Dufoo now seeks an order transferring the 26 shares back to him. Mr Tolaini makes no claim to these shares himself. But he is concerned because of a claim to these shares made by the liquidator of a company called Morlan Limited ("Morlan"). This was Mr Dufoo's company — he owned all the shares in it. It traded as Hogarths. It went into creditors voluntary liquidation on 13 May 2010. Bernard Hoffmann and Ian Yerrill of Gerald Edelman were appointed joint liquidators. Mr Yerrill, one of the liquidators, has asserted that the 26 shares were paid for using Morlan's money, so the shares belong to Morlan. However, Morlan is not a party to these proceedings. What should be done about the 26 shares? That is the second issue for me to decide ("the Morlan Issue").
In March 2011, Mr Tolaini asked Mr John Pannell, the Third Respondent, to lend money to QML. Over the course of the next few months, Mr Pannell paid a total of £60,000 to QML, and he procured the trustee of his pension fund, DA Phillips & Co Limited ("DAP"), to pay £20,535.48. Mr Tolaini agreed to transfer 9 of his shares to DAP. On about 6 October 2011, a written shareholders' agreement was entered into by Mr Dufoo, Mr Tolaini and DAP ("the Shareholders Agreement"). This said that the 100 shares in QML were held as to 26 by Mr Dufoo, as to 9 by DAP and as to 65 by Mr Tolaini.
The third issue I have to decide relates to the terms on which that money was paid. Mr Pannell and DAP say that there was a binding agreement between Mr Pannell, Mr Tolaini and QML under which:
(a) QML is liable to repay the principal £60,000 to Mr Pannell and £20,535.48 to DAP.
(b) QML is liable to pay Mr Pannell one third of the amount payable to QML in respect of the development of 6 Upper Brook Street, less the principal of £80,535.48, with a guaranteed minimum amount payable of £130,000 (including the principal).
(c) QML and Mr Tolaini are jointly liable to ensure that this £130,000 is paid directly to Mr Pannell by C Group.
(d) DAP is entitled as against Mr Tolaini to require him to transfer 9 shares to DAP, and Mr Pannell is entitled as against Mr Tolaini to require him to transfer 26 shares to Mr Pannell, in both cases to be held as security for payment of the amounts specified above, and to be transferred back to Mr Tolaini on payment of the amounts due.
Mr Tolaini originally denied this. But shortly before the trial, he entered into a settlement agreement with Mr Pannell and DAP in which he accepted Mr Pannell and DAP's case on this point.
Mr Dufoo originally concurred with Mr Pannell and DAP's position on this issue. But on the first day of the trial he amended his pleadings, with my permission, to take up the position previously adopted by Mr Tolaini. He says that, although there were negotiations about terms of that kind, no binding agreement was ever reached. Therefore the money is repayable on demand, without interest. I have to decide whether there was a binding agreement between Mr Pannell, QML and Mr Dufoo as to the terms on which the £80,535.48 was paid and, if so, what those terms were and, if nothing was agreed, what the position is ("the Loan Terms Issue").
The fourth issue arises out of the Shareholders Agreement ("the Shareholders Agreement Issue"). I set out the terms of this below. It imposes obligations on the parties and, if a shareholder commits a material breach of those obligations, allows for the compulsory acquisition of their shares by the other shareholders if the defaulting shareholder fails to remedy the breach within 28 business days of notice to remedy the breach being served by all the other shareholders. Mr Dufoo says that Mr Tolaini committed material breaches of the Shareholders Agreement which entitle Mr Dufoo to require Mr Tolaini to transfer all Mr Tolaini's shares to Mr Dufoo at subscription value i.e. £1 per share. He accepts that no notice was served requiring breaches to be remedied. But he says the breaches were irremediable so no notice was needed. He says that, in any event, he is entitled to damages for the breaches. Mr Tolaini says that Mr Dufoo committed material breaches which entitled Mr Tolaini to require all Mr Dufoo's shares to be transferred to Mr Tolaini at £1 per share. He too accepts that no notice was served requiring breaches to be remedied. Neither party contends that the right to require shares to be transferred at subscription price is void as a penalty. Thus it is necessary to decide if there were material breaches on either side and whether the absence of a notice to remedy is fatal to the claims.
The fifth issue is this. In his closing speech, Mr Shaw, counsel for Mr Dufoo, applied for permission to amend Mr Dufoo's Points of Claim to allege that Mr Dufoo is entitled to 36 shares, based on evidence from Mr Tolaini that he had agreed, in early 2012, to transfer Mr Dufoo an additional 10 shares. Mr Tolaini opposed that application. I need to decide whether to permit that amendment and, if I do permit it, whether the claim is a good one ("the 36 Shares Issue").
The sixth issue is whether I should make an order for the winding up of QML ("the Winding Up Issue"). Mr Dufoo says that I should, because the shareholders do not trust each other, and it is desirable that an independent third party should have charge of getting in the money which will, in due course, be payable by C Group and distributing it. Mr Pannell and DAP are neutral on this issue. Mr Tolaini opposes the application because a liquidator will charge fees, which may be substantial, and he suggests that once the shareholding issue is sorted out, the parties will be able to agree between them on a method of collecting and distributing the money. It was accepted by Mr Tolaini that QML operated as a quasi-partnership between Mr Tolaini and Mr Dufoo and that, as a result, they owed each other duties of good faith. He also accepted that Mr Dufoo had standing to present the petition. Both of those concessions seemed to me right on the basis of the undisputed facts and the authorities cited.
At the trial, Mr Dufoo was represented by Mr Shaw, and Mr Pannell and DAP by Ms Den Besten and Mr Tilley. Mr Tolaini appeared in person. He had been represented by solicitors and counsel until about 3 weeks before the trial, but was unable to afford to pay for them to represent him at the trial.
The witnesses
The following witnesses gave oral evidence at the trial:...
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