Fisher v Cadman and Others
| Jurisdiction | England & Wales |
| Judge | Mr Philip Sales |
| Judgment Date | 14 June 2005 |
| Neutral Citation | [2005] EWHC 377 (Ch) |
| Docket Number | Case No: 3290/2002 |
| Court | Chancery Division |
| Date | 14 June 2005 |
[2005] EWHC 377 (Ch)
Mr Philip Sales (Sitting as a Deputy Judge of the High Court)
Case No: 3290/2002
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Davenport (instructed by Watkins, Stuart and Ross) for the Petitioner
Respondents in Person
Hearing dates: 11 th—17 th January 2005
Judgment Approved by the court
For handing down
(subject to editorial corrections)
Mr Philip Sales
These proceedings involve an application for relief under ss. 459 and 461 of the Companies Act 1985 ("the 1985 Act"), or in the alternative for an order to wind up Cadman Developments Limited ("CDL") on the just and equitable ground under s. 122(1)(g) of the Insolvency Act 1986.
At the hearing before me, the Petitioner, Mrs Fisher, was represented by Mr Davenport of Counsel. Mr Cedric Cadman and Mr Rodney Cadman appeared as litigants in person, representing themselves and CDL.
The background to the dispute is a sad breakdown in family relationships. Mrs Fisher is the older sister of Cedric Cadman and Rodney Cadman. They are all now in their sixties. It was clear at the hearing before me that there have been episodes in the past between them that have generated a good deal of ill-feeling and upset. Fortunately, I have not found it necessary for this judgment to resolve all the points of dispute between them which have affected their relations with each other. I have concentrated on those matters which appear to me to be relevant for the fair resolution of these proceedings. I would like to record that all of Mrs Fisher, Cedric Cadman and Rodney Cadman conducted themselves during the hearing with dignity and restraint, notwithstanding that at times matters were raised which were clearly upsetting for them.
CDL was set up by their father, James Cadman, in 1961 as the vehicle for his building and property development business (it was originally called Ernest S. Ireson Ltd, and changed its name in 1971). At about the same time as CDL was formed, James Cadman moved from the West Midlands to Stamford in Lincolnshire, which is the main place where the business of CDL was carried on. Mrs Fisher remained with her family living in the West Midlands. Cedric and Rodney Cadman moved with their father and established themselves in Lincolnshire. They both worked with their father in CDL's business. Certainly after the move to Lincolnshire, Mrs Fisher had no role in the business.
In 1969, Cedric and Rodney Cadman set up another building and property development company of their own, Cadman Homes Ltd ("CHL"). Their father, James, made a small investment in this company, and their fathers-in-law made more substantial investments in it. Mrs Fisher's evidence in relation to this, which I accept, was that James Cadman was unhappy about this development, since it would involve a diversion of at least some of Cedric and Rodney Cadman's energies from the affairs of CDL. However, Cedric and Rodney continued to work in the business of CDL as well as in the business of CHL. The two companies entered into transactions with each other over the years.
Cedric and Rodney Cadman were the sole directors of CHL at all material times. They were also directors of CDL at all material times. James Cadman and his wife, Edith, were also directors of CDL until their respective deaths. James Cadman died on 18 January 1994. Edith Cadman died on 7 August 1997.
Until his death, James Cadman was the majority shareholder in CDL and maintained a firm grip on the company. Cedric and Rodney Cadman also held shares in the company. In 1983 James Cadman transferred 200 shares in CDL to Mrs Fisher as a gift. After James Cadman's death, his shares devolved upon his children (377 shares each) and his wife (1,875 shares). After Edith Cadman died, her shares were divided equally between the children (625 shares each).
As at the date of the petition (February 2002) and to date, Mrs Fisher owned 1,002 shares (33.3% of CDL), Cedric Cadman owned 999 shares (33.29%) and Rodney Cadman owned 986 shares (32.8%). The remaining few shares (21 in total) had been transferred to others, the spouses and children of Cedric and Rodney Cadman.
These shareholdings may be contrasted with those in CHL: Cedric Cadman 9,263 shares (which, together with an additional 4,221 shares held by his wife and children, amounted to 44.9% of the company); Rodney Cadman 9,463 shares (which, together with an additional 3,081 shares held by his wife, amounted to 41.8% of the company); and Mrs Fisher 1,114 shares (which she inherited from Edith Cadman on her death, amounting to 3.7% of the company). (The remaining 2,858 shares in CHL, 9.5% of the company, are owned by a Mrs P. Culley). It can be seen that Mrs Fisher's interest in CDL is very much more substantial than her interest in CHL.
James Cadman's sons, in effect, worked for him within CDL's business, and also pursued their own business interests with CHL. It appears that there were a number of successful building and housing developments for CDL over the years. At the same time, the company acquired a portfolio of properties which were held by it for a long period without being developed. At the time of James Cadman's death, the portfolio of such properties comprised:
1. 56 St Martins, Stamford. This was acquired by CDL in about 1972. In the end, it was sold in 2002 with completion of the sale in early 2003. It was sold for £295,000 together with a sum of £5,000 for an associated right of way.
2. 6 Conduit Road, Stamford.
3. A plot of land at Empingham Road, Stamford.
4. A single garage at King's Road, Stamford. From at least the early 1990s onwards, this was the only property in CDL's portfolio which was let. It brought in a small sum of a few hundred pounds each year. The letting was to the same person throughout.
5. Access road to site at Ketton, near Stamford. This is a road leading to an estate of houses previously developed by CDL. Cedric and Rodney Cadman's evidence, which I accept, was that there were rights of way for the estate over this road, and that it has for practical purposes no value.
6. 50 The Crescent, Hagley. This is a property acquired in the West Midlands, close to where Mrs Fisher lived. James Cadman and his wife would use it to stay in sometimes, in effect as a holiday home. No works of improvement or maintenance were done to it over many years.
7. 4 Church Lane, Stamford. This was acquired by CDL in about 1972, and like 56 St Martins it was sold in 2002 with completion in early 2003. It was sold for £167,500.
The Memorandum of Association of CDL included the following objects:
"To carry on, develop and turn to account the business of builders and contractors carried on by James Cecil Cadman at Stamford …' (clause 3(A));
To carry on business as builders, contractors [etc] … and to undertake the erection or demolition, construction, maintenance, repair, decoration and cleansing of buildings, erections, constructions and works of all kinds." (clause 3(B));
"To carry on any other trade or business whatsoever which can, in the opinion of the Board of Directors, be advantageously carried on by the Company in connection with or as ancillary to any of the above businesses or the general business of the Company." (clause 3(C)); and
"To purchase, take on lease or in exchange, hire or otherwise acquire and hold for any estate or interest any lands, buildings, easements, rights, privileges [etc] … and any real or personal property of any kind necessary of convenient for the purposes of or in connection with the Company's business …' (clause 3(D)).
CDL's Articles of Association were adapted from those set out in Table A to the Companies Act 1948 ("Table A"). The provisions in CDL's Articles which are of particular relevance for the present proceedings are as follows:
i) Article 47 of Table A: "The company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; and not more than fifteen months shall elapse between the date of one annual general meeting of the company and that of the next. … The annual general meeting shall be held at such time and in such place as the directors shall appoint." This provision reflects the general legal requirement for the holding of an AGM now contained in s. 366 of the 1985 Act.
ii) Article 58 of Table A: "At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or after the declaration of the result of the show of hands) demanded—… (c) by any member of members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting …'.
iii) Article 67 of Table A: "On a poll votes may be given either personally or by proxy." The entitlement of a member to appoint a proxy to attend and vote at a meeting of the company, and (in the case of a private company such as CDL) also to speak at the meeting, is also confirmed by s. 372(1) and (3) of the 1985 Act.
iv) Article 68 of Table A: "The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing …. A proxy need not be a member of the company."
v) Article 69 of Table A: "The instrument appointing a proxy … shall be deposited at the registered office of the company … not less than 48 hours before the time for holding the meeting or adjourned meeting, at which the person named in the instrument proposes to vote, or, in the case of a poll, not less than 24 hours before the taking of the...
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