Chong and Others v Alexander and another
| Jurisdiction | England & Wales |
| Judge | Richard Spearman |
| Judgment Date | 08 April 2016 |
| Neutral Citation | [2016] EWHC 735 (Ch) |
| Docket Number | Claim No: HC-2014-3187 |
| Court | Chancery Division |
| Date | 08 April 2016 |
[2016] EWHC 735 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
RE: WILLOW COURT (HARROW) LIMITED (Company No 03307963)
Royal Courts of Justice Strand, London, WC2A 2LL
Richard Spearman Q.C.
(sitting as a Deputy Judge of the Chancery Division)
Claim No: HC-2014-3187
and
Wendy Parker (instructed by J.E. Kennedy & Co) for the Claimants
Tom Carpenter-Leitch (instructed by Forsters LLP) for the Defendant
Hearing dates: 18–22 January 2016
Richard Spearman Q.C.:
Introduction
This case concerns disputes, which form part of a long and unhappy history which has resulted in many other proceedings, between the long leaseholders of various flats in a small block in Harrow called Willow Court. The Claimants, for whom Ms Parker appeared, are the long leaseholders of flat 3 (Mr Chong), flat 6 (Mrs Patel), flat 8 (Mr and Mrs Khagram) and flat 9 (Mrs Chehabi). The Defendant, whose real name is Mrs Bhambani but who is also known by the name in which she has been sued (Mrs Alexander), and for whom Mr Carpenter-Leitch appeared, is the long leaseholder of flat 4. The Part 20 Defendant (the Company) is the owner of the freehold of the block. There is also in existence a management company called Willow Court Management Company (1985) Limited (the Management Company). I shall adopt this terminology, although when quoting documents I may use the terminology which they contain (even if that results in describing the same individuals differently at different times).
The issues on the claim
According to the Particulars of Claim, the Claimants seek the following relief:
(i) "An order requiring the Defendant to concur in and to take in a timeous
manner all reasonable steps necessary to secure the transfer and register the Transfer of the shares from Mr and Mrs Budhdev, formerly of Flat 5 Willow Court, to Mr Shah in accordance with the executed stock transfer form" (paragraph 8.1) ("the Transfer of Shares Issue").
(ii) "A declaration that the Defendant's refusal to consent (at an extraordinary
general meeting (EGM) of the Company convened by the Claimants pursuant to section 303 of the Companies Act 2006, which meeting was held on 10 December 2013) to the appointment of the Claimants and each of them as directors (the Claimants and each of them being members of the Company) pursuant to Article 15 of the Company's Memorandum and Articles of Association, is unreasonable; alternatively, that the conditions attached to that refusal, subsequently notified to the Claimants in March 2014 are unreasonable; and, that the Claimants are entitled to lawfully requisition such a meeting without regard to the conditions asserted by the Defendant; and, to appoint the Claimants as the said directors in accordance with Article 15, aforesaid" (paragraph 8.2) ("the Appointment of Directors Issue").
(iii) "Such Orders as may be necessary to secure that the Claimants and their
agents have access to the Register of Members of the Company" (paragraph 8.3) ("the Register of Members Issue").
(iv) "An order that the Defendant pays the costs of and incidental to this
application" and "Such further or other relief as appropriate" (paragraphs 8.4 and 8.5).
By the time of the hearing in front of me, it was common ground that the shares which form the subject of the Transfer of Shares Issue had been transferred to the sometime long leaseholder of flat 5 (Mr Shah), and that Mrs Alexander had exhibited a copy of the Register of Members of the Company to one of her witness statements in these proceedings and had therefore afforded the Claimants access to that Register. Accordingly, all that remained for me to decide in respect of the Transfer of Shares Issue and the Register of Members Issue was who should pay the costs of those issues.
In addition, in circumstances which are discussed in greater detail below, the Appointment of Directors Issue was resolved in the course of the trial. Therefore, by the end of the trial all I had to decide in respect of that issue was the question of costs.
The issues on the counterclaim
According to paragraph 21 of her Counterclaim, Mrs Alexander seeks the following relief:
(i) Declarations that:
(a) the Acquisition Agreement is binding upon the Claimants, Mrs Alexander and the Company;
(b) each holder of a block of 10 shares has been since 1997, and is now, entitled to enjoy the freeholder's financial rights in respect of one associated flat and in particular (aa) the Claimants in respect of flats 3, 6, 8 and 9 respectively and (bb) Mrs Alexander in respect of flats 1, 2, 4, 7 and 10;
(c) Mrs Alexander is entitled to receive for herself all future ground rents and lease extension premia in respect of flats 1, 2, 7 and 10; and
(d) the Company holds the freehold of the block for itself and for the parties upon trust in the above terms.
(ii) Further declarations that the Annual General Meeting of the Company held on 13 February 2014:
(a) was quorate; and
(b) validly passed the resolutions appearing in the minutes of that meeting.
(iii) "Such further or other relief as the Court may deem appropriate" and "Costs".
The claims for relief made by Mrs Alexander require some explanation.
There are 10 flats at Willow Court. These flats were let from 1985 under 99 year leases. Those leases included provision for the Management Company, which was to lease the common parts of the block and to manage the block, and in which each long leaseholder was to hold, and still does hold, 10% of the share capital.
In or about 1996, an opportunity arose for the leaseholders to purchase the freehold of the block, and the Company was established for this purpose. However, 5 of those leaseholders were unable or unwilling to contribute to the funds which were needed to finance that purchase (although it seems that they were willing to express an interest in the purchase in order to achieve the percentage required to trigger the leaseholders' entitlement to purchase the freehold). Mrs Alexander agreed to make up the shortfall. In the result, Mrs Alexander contributed 60% of the purchase monies, and she was allotted 60 of the 100 issued and allotted shares in the Company. The 4 other long leaseholders who contributed to that purchase were the then leaseholders of flats 5, 6, 8 and 9, and they each contributed 10% of the purchase price and were each allotted 10 of those shares. By these means, the freehold was acquired by the Company in March 1997.
The trial bundles include the current Memorandum and Articles of Association of the Company, which are stated to have been adopted by Special Resolution passed on 5 February 1997, and a copy of that Special Resolution, which is signed by R. Bhambhani as Chairman, and which is stated to have been passed at an Extraordinary General Meeting of the Company which was duly convened and held on that date.
Those Articles of Association of the Company include the following:
"5. The only persons eligible to be members of the Company shall be the subscribers to these Articles and the lessees of Flats contained in the property known as Willow Court, Fulbeck Way, Harrow, HA2 6LH (hereinafter called "the Building") or their Personal Representatives and their Successors in title. Save as aforesaid no shares may be allotted or issued except with the previous sanction of a Special Resolution of the Company in General Meeting.
6. Shares shall be transferred and may only be transferred upon or immediately before a change in the ownership of the Flat in respect of which they are held and to the person becoming or about to become upon such change the owner of the Flat.
7. The price to be paid on the transfer of shares shall in default of agreement between the Transferor and the Transferee be the nominal value of such shares.
8. If the holder of a share refuses or neglects to transfer it in accordance with these Articles the Chairman for the time being of the directors, or, failing him, one of the Directors duly nominated by resolution of the Board for that purpose, shall forthwith be deemed to be the duly appointed Attorney of that holder with full power in his name and on his behalf to execute complete and deliver a transfer of the share to the person to whom it should be transferred thereunder and the Company may receive and give a good discharge for the purchase money and enter the name of the Transferee in the Register of Members as the holder by transfer of that share.
9. If more than one person is jointly the owner of a Flat those persons shall jointly hold the corresponding share in the Company but shall have only one vote in right of such share whether as members or Directors which shall be cast by the Holder whose name first appears in the Register of Members …
11. In the event of a permitted holder ceasing to be a tenant of a flat contained in the Building (a) he shall not be entitled to exercise any of the powers of a member of the Company (b) he shall cease to be a Director of the Company and (c) in default of his executing a transfer of his share within one month after such event the Directors may authorise some person to transfer the share to any other person qualified to be the permitted holder thereof
…
13. The number of Directors shall not be less than one nor more than seven … The qualification shall be the holding of one share in the Company …
15. The provisions of Table A as to appointment rotation and removal of Director (sic) shall not apply. All the members of the Company for the time being shall be its Directors … provided also that any one of any two or more joint holders of a share shall be entitled to hold...
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