Bradley Birkenfeld v Joel Edward Denton
| Jurisdiction | England & Wales |
| Judge | Briggs |
| Judgment Date | 04 March 2022 |
| Neutral Citation | [2022] EWHC 436 (Ch) |
| Docket Number | Case No: CR-2019-008597 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 436 (Ch)
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
COMPANIES COURT
Rolls Building
Fetter Lane
London
EC4Y 1NL
CHIEF INSOLVENCY AND COMPANIES COURT JUDGE Briggs
Case No: CR-2019-008597
Edward Davis QC (instructed by SIMONS MUIRHEAD BURTON LLP) for the Petitioner
Siward Atkins QC (instructed by TLT LLP) for the First, Second, Third and Fifth Respondents
Andrew Ashe in-person
Hearing dates: 1–8 February 2022
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Prospect Quay sits east of Wandsworth Park, on what was once a coal depot. In 1997 Peter Banks established a Marina for house boats (the “Marina”). The Marina now has moorings for 18 residential vessels. They are mostly substantial in size. The average vessel at the Marina is between 80ft to 100ft long and 23.5ft wide. Prospect Moorings 2013 Limited (the “Company”) holds a head licence granted by the Port of London Authority (“the PLA Head Licence”).
This case concerns two substantial vessels, the Caracoli and Sanctum. It is alleged that Mr Denton, the first Respondent and owner of Sanctum, and Mr Robinson, the third Respondent and owner of Caracoli, moored their residential vessels to the Marina without prior boat approval, and due to a failure to meet rules have not been granted boat approval.
The major issue concerns balustrades on the upper deck of the vessels. Thin balustrades joined by wire at a certain distance are said to be acceptable on the upper deck. The balustrades that have caused the dispute are joined with panes of glass. On Caracoli there is a small gap between each pane of glass and the stanchion through which wind may pass, but the gap is not significant. It is said that glass mists (the term “steams up” has been used) in certain weather conditions, reducing the view for other boat owners, and wind forces acting on the glass increase the risk of damage to the Marina.
The form of the objection taken by Mr Birkenfeld as petitioner, is that the first to fifth Respondents (who he has referred to as the “cabal”) breached their duties as directors. He says that as directors, “they have applied rules inconsistently, or have ignored them altogether, and, worse, they have done so with the clear intent to advance their own self-interests, which is ultimately detrimental to all the shareholders in the Company”.
To obtain the relief Mr Birkenfeld has made this petition claiming that the actions (or inactions) of the Respondents as directors have been prejudicial to members of the Company and the prejudice is unfair.
Background
I can take some of the background to the Marina and the Company from the uncontentious parts of the pleadings and licences.
The River Thames is subject to 41 river works licences for residential use, accommodating about 280 houseboats, clustered in 11 areas on the tidal parts of the Thames. The earliest licence dates to 1972. Half of the licensees have just one or two boats on the river works, many of which are owner-occupied, or the houseboat is rented out; only five licences are for large sites, some of which are commercially operated, charging annual mooring fees. Some moorings are provided on a long-term sub-licence; a few are occupied by large multi-tenanted houseboats.
Prospect Reach Limited (“Prospect Reach”) obtained a river works licence from the Port of London Authority (“PLA”) to operate the Marina in July 1997. The earliest recorded sub-licence was made in August of that year between Prospect Reach and Paul Childs, who obtained rights under the sub-licence to berth 3 at the Marina. This berth is now occupied by Caracoli. At trial the sub-licence dated 21 August 1997 has been referred to as “the Childs Licence”. The Childs Licence was assigned, with consent of Prospect Reach, to Mr and Mrs Robinson for a sum of £366,000 on 16 April 2012.
In June 2003 the PLA Head Licence was assigned by Prospect Reach to Prospect Moorings Limited. Prospect Moorings Limited was incorporated by Mr Banks. He was its sole director and shareholder.
As well as his interest in the Marina, Mr Banks was involved in the development of the quayside to construct apartments and other amenities. The evidence, that has not been contradicted, is that Mr Banks was concerned to ensure compliance with the river works licence and jealously guarded against the admission of a vessel that may reduce the value of the land and water developments where boat designs were unsympathetic to the mooring. This was achieved by including a clause within sub-licences “in the interests of conserving the visual amenities of the Marina” requiring an applicant to produce “to the Company on application for a mooring detail of the design appearance and air draught of the vessel to be moored”. Prospect Moorings Limited controlled the grant of sub-licences (and therefore the admission onto a berth) to new applicants.
The Company was incorporated in December 2012 by Mr Nicholson. He was its first director and, at the time, the sole shareholder.
The Company's objects are to oversee the ownership and management of the Marina, and to hold safe the Marina as an investment for the benefit of the holders of berths or moorings, as well as the other objects more fully set out in article 2.1 of the Company's articles of association.
Although sub-licences had been granted by Prospect Moorings Limited, the licensees were not shareholders in that company. Mr Nicholson explained that it was his aim to provide a more democratic Marina where the licensees would have a greater say in its management. The Company's constitution allotted licensees a share: one share for each berth.
It was not until October 2014 that the PLA Head Licence was assigned to the Company.
The Childs Licence was the operative licence after the Company took the head licence, but variations of the licence were soon produced. The grant of a sub-licence in the form of the Childs Licence provided permission “during the continuance of this Licence to place and maintain within the Marina for the sole purpose of mooring the vessel or other such vessel in substitution as the Company may approve in writing in consultation with the Marina Residents Association…”. The Marina Residents Association (“MRA”) comprised the licensees.
The MRA:
“shall consist of one representative for each boat owner who shall have one vote in the residents association and the company shall have one representative who shall have two votes.”
It is agreed between the parties that the procedure to approve a vessel is different from the grant of a sub-licence. A feature of the Childs Licence is that the approval decision was for the Company alone. The Company was provided with the power to approve a vessel in writing in consultation with the MRA. It was not obliged to take account of any opinion given by any member of the MRA or the MRA as a collective, save where the MRA unanimously approved a vessel. In such a case the Company could not unreasonably refuse to approve a vessel. It could be said that unreasonable refusal was contemplated and the Company was entitled to act unreasonably unless the MRA unanimously voted in favour of a vessel mooring at the Marina. By the licence the Company was not enjoined to reject an application where the MRA did not want a vessel on the Marina.
Mr Nicholson gave evidence that the Childs Licence was negotiated with Mr Banks, who wanted to have as much control over approvals as possible. He explained that the consultation requirement was a very small concession that resident vessel owners should be entitled to have a say, even if that say was ignored. Mr Banks was not attracted by the idea of being under an obligation to have regard to the MRA, where the MRA was a diverse group of boat owners who may have diverse views: Paragraph 4(iv) provides:
“In the interests of conserving the visual amenities of the Marina to present the Company on application for a mooring details of the design appearance and air draught of the vessel to be moored within the Marina…and it shall be in the Company's discretion in consultation with the Marina Residents Association as to whether such a vessel shall be allowed to moor within the Marina PROVIDED ALWAYS that the Company shall not unreasonably withhold such approval in the event that such application carries the unanimous approval of the MRA.”
There were e-mail exchanges between Mr Snell and the first and third Respondents as to the meaning of the proviso. Mr Snell says he understood it to mean that approval required unanimous consent by members of the MRA. The importance of this is that his understanding informed his thinking regarding the approval of the vessels owned by Mr and Mrs Robinson and Mr and Mrs Denton. The e-mail traffic at the time demonstrates that Mr Snell was deaf to an alternative view that the proviso only operated to trigger an obligation on the Company not to unreasonably withhold approval if all members of the MRA approved a vessel.
The first meeting of the board of directors was held on 6 October 2014. Mr Nicholson was the sole director and shareholder. Twelve boat owners were present. Mr Nicholson expressed the view that this was a good turnout. The principal business was the allotment of shares. Of the allotments it is notable that Mr and Mrs Robinson were allotted one share (they did not...
To continue reading
Request your trial