Barrie Peter Bridge v Keith Daley and Others
| Jurisdiction | England & Wales |
| Judge | Judge Hodge QC |
| Judgment Date | 17 June 2015 |
| Neutral Citation | [2015] EWHC 2121 (Ch) |
| Docket Number | Case No: 3LV30344 |
| Court | Chancery Division |
| Date | 17 June 2015 |
[2015] EWHC 2121 (CH)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LIVERPOOL DISTRICT REGISTRY
Liverpool Civil & Family Courts
35 Vernon Street
Liverpool L2 2BX
His Honour Judge Hodge Qc
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: 3LV30344
BARRIE BRIDGE appeared in person
SEB ORAM (instructed by Birketts LLP) appeared on behalf of the 7 th Defendant
HUGH MIALL (instructed by Marshalls Solicitors) appeared on behalf of the 1 st, 2 nd, 3 rd and 5 th Defendants
(Approved in London on 17 July 2015 without reference to any documents and without checking any references or citations)
This is my substantive extemporary judgment on the hearing of Mr Barrie Peter Bridge's application for permission to continue a derivative claim against the four remaining individual defendants — Mr Keith Daley, Mr John Wilson, Mr Noah Franklin and Mr Simon Acland —on behalf of Elektron Technology plc, a company in which Mr Bridge holds 1.83 per cent of the shares. The company is a public limited company listed on the Alternative Investment Market of the Stock Exchange.
On this application Mr Bridge appears as a litigant as a person; Mr Hugh Miall (of counsel) appears for the four remaining individual defendants, instructed by Marshalls; and Mr Seb Oram (of counsel) appears for the company, instructed by Birketts.
In an extemporary judgment I delivered before the luncheon adjournment yesterday (Tuesday 16 June 2015), dismissing in part an application by Mr Bridge to rely upon further evidence in support of his application, I set out the procedural and the evidential background to the present application. I do not propose to repeat those matters in this extemporary judgment. This judgment should be read in conjunction with the extemporary judgment I delivered yesterday.
I have previously delivered two other extemporary judgments in this matter. The first was on Wednesday 1 October 2014 when this application to continue the derivative claim first came before me sitting in Liverpool. At that time the representation for the defendants was as it is today; but on that occasion Mr Bridge was not a litigant in person but was represented by Mr Graeme Halkerston, instructed by DMH Stallard. Mr Bridge dispensed with the services of those solicitors and has been a litigant in person since about the end of November 2014. Mr Bridge had been a litigant in person at the time that he issued the present claim form on 27 November 2013.
The other extemporary judgment I have delivered was in London on 26 January 2015 when I gave case management directions intended to lead to the hearing which was listed for a day and a half, with half a day set aside for pre-reading, commencing yesterday. In fact, because of the need to address Mr Bridge's application to rely upon further evidence, the half day set aside for pre-reading was taken up with that application, and I had to content myself with some three hours pre-reading before the matter came on at 10.30 yesterday.
It is appropriate at this point, and against the evidential and procedural background I summarised in my judgment of yesterday, to address the legal background to the present application. As Lewison J explained in his judgment in the case of Iesini v Westrip Holdings Ltd [2009] EWHC 2526 (Ch), reported at [2011] 1 BCLC 498, at paragraph 73, a new statutory code has replaced the old common law derivative action. A derivative claim may now only be brought under the Companies Act 2006. A derivative claim is one in which the cause of action is vested in the company but where the claim is brought by a member of the company.
By section 260 (3) a derivative claim may be brought only in respect of a cause of action arising from an actual or proposed act or omission involving negligence, default, breach of duty or breach of trust by a director (which includes a former director of the company).
By section 261 (1):
"A member of a company who brings a derivative claim… must apply to the court for permission… to continue it."
By section 261:
"(2) If it appears to the court that the application and the evidence filed by the applicant in support of it do not disclose a prima facie case for giving permission (or leave), the court -
(a) must dismiss the application, and
(b) may make any consequential order it considers appropriate.
(3) If the application is not dismissed under subsection (2), the court -
(a) may give directions as to the evidence to be provided by the company, and
(b) may adjourn the proceedings to enable the evidence to be obtained.
(4) On hearing the application, the court may -
(a) give permission (or leave) to continue the claim on such terms as it thinks fit,
(b) refuse permission (or leave) and dismiss the claim, or
(c) adjourn the proceedings on the application and give such directions as it thinks fit."
One of the issues that has been raised is whether the court has already taken the view that Mr Bridge has disclosed a prima facie case for being given permission. That is because at the first procedural hearing in this case before Deputy District Judge Green on 25 February 2014 the Deputy District Judge listed the application for permission to continue the claim before a High Court judge. I am by no means satisfied that in so doing the Deputy District Judge proceeded on the footing that Mr Bridge had already disclosed a prima facie case for being given permission for the purposes of section 261(2). My reason for that doubt is that the first of the Deputy District Judge's procedural directions was for the claimant to file and serve any further evidence on which he intended to rely. That suggests to my mind that the District Judge was not already satisfied on the evidence that he had seen to date that a prima facie case had been disclosed. I can understand why the Deputy District Judge may have directed the filing and service of further evidence by the claimant because, since Mr Bridge was then a litigant in person, it is not entirely easy to follow the two sets of Particulars of Claim on which he was seeking to place reliance.
Be that as it may, it seems to me that I should proceed in the way in which His Honour Judge Pelling QC had proceeded in the case of Stimpson v Southern Private Landlords' Association [2009] EWHC 2072 (Ch), reported at [2010] BCC 387. At paragraph 3 of his judgment in that case Judge Pelling said that in the proceedings before him the first stage had not taken place and there had been instead just the contested hearing before him, at which all parties had been represented, and for which a substantial volume of written evidence had been filed by all parties. Although the defendants had suggested that the judge should stick to the two-stage process and start by asking himself whether a prima facie case had been made out, Judge Pelling considered that to be unduly elaborate in the circumstances of the case. He preferred to approach the application by reference to section 263 of the 2006 Act as if the case had been considered initially because that reflected the procedural as well as the practical reality and would yield a fair and proper result. It seems to me that that was a pragmatic approach which I should adopt in the present case, and I proceed to do so.
I therefore turn to the provisions of section 263 of the Companies Act 2006 which govern the question whether permission is to be given. By subsection (2):
"Permission… must be refused if [so far as material for present purposes] the court is satisfied-
(a) that a person acting in accordance with section 172 (duty to promote the success of the company) would not seek to continue the claim."
That is a mandatory ground for refusing permission.
By subsection (3):
"(3) In considering whether to give permission (or leave) the court must take into account, in particular—
(a) whether the member is acting in good faith in seeking to continue the claim;
(b) the importance that a person acting in accordance with section 172 (duty to promote the success of the company) would attach to continuing it;
(c) where the cause of action results from an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be-
(i) authorised by the company before it occurs, or
(ii) ratified by the company after it occurs;
(d) where the cause of action arises from an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company;
(e) whether the company has decided not to pursue the claim;
(f) whether the act or omission in respect of which the claim is brought gives rise to a cause of action that the member could pursue in his own right rather than on behalf of the company."
I emphasise that those are matters which the court is directed to have regard to in particular, but they are not exhaustive.
By subsection (4), in considering whether to give permission the court is required to have particular regard to any evidence before it as to the views of members of the company who have no personal interest, direct or indirect, in the matter. That is the statutory framework within which this court must operate.
I have already referred to Lewison J's decision in the Iesini case. At paragraph 79 Lewison J said that in order for a claim to qualify as a derivative claim at all the court must be in a position to find that the cause of action relied on in the claim arose from an act or...
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