Burberry Group Plc v Richard Charles Fox-Davies
| Jurisdiction | England & Wales |
| Judge | Mr. Registrar Briggs |
| Judgment Date | 09 February 2015 |
| Neutral Citation | [2015] EWHC 222 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 3433 of 2013 |
| Date | 09 February 2015 |
[2015] EWHC 222 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Mr. Registrar Briggs
Case No: 3433 of 2013
Mr. Andrew Thornton (instructed by Slaughter and May) for the Claimant
Mr. Timothy Collingwood (instructed by New Media LLP) for the Defendant
Hearing dates: 20 January 2015
Introduction
On 9 May 2013 Burberry Group Plc (the "Company") made an application to the court for relief pursuant to section 117(3) of the Companies Act 2006 (the "Act"). The application followed a request made by Richard Fox-Davies ("RFD") for a copy of the register of members in accordance with section 116 of the Act. RFD is not himself a member of the Company. His stated reason for the request to inspect or make a copy of the Company's register of members is to assist and allow shareholders who may otherwise be unaware of their entitlements to reassert ownership or recover the benefit of their property.
Summary
The letter dated 27 March 2013 was an invalid request. Accordingly time did not begin to run from the date of receipt pursuant to section 117(1) of the Act.
The inspection or copy of the register of members sought by RFD is for an improper purpose. The purpose stated by RFD is not the real purpose. The Company is directed not to comply with the request.
Background
The Company was incorporated in England & Wales on 30 October 1997. It is a well-known British luxury fashion brand which was established in 1856. On 18 July 2002 the Company was floated and registered as a public company.
The Company's most recent articles of association were adopted on 15 July 2010 and contain a clause to deal with untraced shareholders. In short the clause provides that after taking certain precautions to trace the missing shareholder, the Company may by a mechanism set down in the articles, sell the shares. The Company may use the proceeds but is obliged to account to the missing shareholder who is entered as a creditor in the accounts:
"The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale any certificated shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if:
a. the shares have been in issue either in certified or uncertified form throughout the period of twelve years prior to the date of the publication of the advertisements……….and at least three dividends in respect of the shares have become payable and no dividend in respect of those shares has been claimed; and
b. the Company has caused advertisements to be published in both a national newspaper and in a newspaper circulating in the area in which the last known postal address of the member or the postal address at which service of notice of its intention to sell the said shares; and
c. during such period of twelve years and the period of three months following the publication of such advertisements the Directors in office at the end of such period of three months are not then aware that the Company has received any communication from such a member or person.
…..The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled…for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company.
On 12 February 2013 the Company appointed ProSearch Asset Solutions Limited ("PS") to undertake an asset reunification programme in relation to 'gone-away' shareholders. PS was initially appointed on an exclusive 12 month contract but all the parties now agree that PS's contract has been extended and they continue to carry out their obligations according to the agreement with the Company. Specifically PS is engaged to carry out investigations and use its best endeavours to establish the current contact details of shareholders who have not collected their dividends and have been referred to in the hearing as the 'lost members'. Once PS has established contact the identity of the lost member is verified and that lost member is provided with a claim form. In order to start its searches PS has access to the Company's register of members.
The services provided by PS are charged to the lost member once that lost member makes a valid claim through PS. The charges are 12.5% of the outstanding cash, shares, dividends or accumulated interest due to the lost member. A further fee is due if the lost member requires a new share certificate. However, the lost member is given the option of contacting the Company direct to deal with any claim. In such circumstances PS makes no charge. The letter of engagement with PS provides that when undertaking its tracing activities it will:
7.1. comply with its obligations under the Data Protection Act 1998;
7.2. keep all information disclosed confidential;
7.3. not use the information disclosed to it for any purpose other than the performance of its agreed services.
The lay out and content of the claim form to be sent out by PS to lost members is agreed with the Company. It states that the 'records held by [the Company] show that dividends have been sent to you and remain uncashed. The Company is therefore concerned that you may not have received these dividends or have moved away from the address on their records….'. The lost member is told the number of shares held, the cash entitlements and provided with options as to what should be done with his or her interest.
The evidence is that PS has been successful in tracing lost members since its engagement. In her third witness statement the Company secretary, Catherine Sukmonowski, explains:
"ProSearch continue with their efforts to identify 'gone away' shareholders and to reunite them with their entitlements. As at the date of this witness statement approximately 30 per cent of "gone away" shareholders (representing 50% of the total value of unclaimed entitlements) have recovered their entitlements. Importantly, approximately 55 per cent of these shareholders have made their claims directly to the Company or the Registrar rather than using ProSearch's services. This means that such shareholders were able to recover the full value of their entitlement without having to pay a fee to ProSearch to do so.
I understand from ProSearch that this is a very good rate of recovery. It also reflects the Company's commitment to reunite 'gone away' shareholders with their entitlements in a manner which it believes to be in the best interests of its shareholders."
The Defendant established a business known as Trust Property Researches ("TPR") in 1995. TPR is a tracing agency and one of its activities is tracing lost members in public quoted companies. RFD operated separate companies under the TPR trading name in Malaysia, Singapore, Australia and New Zealand. He was involved in European companies carrying the same trading name. In his evidence he says that his interests are presently confined to the shores of the UK but provides an example of his early day business:
"When I first established TPR I was primarily interested in shareholdings that had been unclaimed for some considerable period usually as the result of the demise of the shareholder. The first share register that I investigated was that of Shell Transport and Trading. I was able to identify a number of shareholdings owned by members of the French Aristocracy who had been deceased for some considerable time and using the service of a Paris-based genealogy partnership, we were able to trace their heirs and provide them with the means to claim ownership of the shareholdings of their deceased ancestors."
RFD is also a director and shareholder of a company incorporated in Gibraltar known as Interum Limited. The business of Interum and TPR is connected. RFD explains in his evidence that Interum is registered under the Data Protection Act 1998 and incorporated for the purpose of acquiring, controlling and protecting data obtained by TPR. A flow-chart featured on the former TPR website explained that Interum collates the information received from TPR to identify lost company members. The collated information is then made available to "locally owned-companies or individuals in the relevant countries". He describes the locally owned-companies as 'specialist researchers' who assist him. He says:
"I will provide [the specialist researchers] with the name and last known address of the shareholders that I wish them to attempt to trace……I engage the researchers on the basis that they will share in any fee I can negotiate and consequently I will provide them with my approximation of the value of the shareholdings so that they can assess how much time and effort to expend on tracing the shareholder. I do not identify the shareholding in any way."
I am unclear how the first and last sentences of the above evidence can be reconciled if the name of the shareholder is provided to the researcher unless it is purely a matter of not disclosing the number or class of shares held. Further, if the researcher is successful he/she contacts the lost member and offers terms.
The 'specialist researchers' appear to be independent and therefore are not controlled by RFD/Interum or TPR. The evidence provided by RFD fails to show or identify:
13.1. the researchers;
13.2. what methods are employed by the researchers in their quest to identify lost members;
13.3. how information provided to the researchers is kept confidential by them; and
13.4. whether the researchers are bound by confidentiality terms.
RFD's fee-structure as explained to the court, is less favourable than that of PS...
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