Global Port Services (scotland) Limited Against Global Energy (holdings) Limited And Others
| Jurisdiction | Scotland |
| Judge | Lord Bracadale,Lady Smith,Lord Menzies |
| Neutral Citation | [2015] CSIH 42 |
| Date | 29 May 2015 |
| Docket Number | P522/14 |
| Court | Court of Session |
| Published date | 29 May 2015 |
EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
[2015] CSIH 42
P522/14
Lord Menzies
Lady Smith
Lord Bracadale
OPINION OF THE COURT
delivered by LADY SMITH
in the Petition of
GLOBAL PORT SERVICES (SCOTLAND) LIMITED
Petitioners and Respondents;
against
GLOBAL ENERGY (HOLDINGS) LIMITED AND OTHERS
Respondents and Reclaimers:
Petitioners and Respondents: Sandison QC; Harper Macleod LLP
Respondents and Reclaimers: Dunlop QC; Davidson Chalmers LLP (for Stronachs LLP, Aberdeen)
29 May 2015
Introduction
[1] This reclaiming motion arises from a petition for an order for production of documents under section 1 of the Administration of Justice (Scotland) Act 1972 (“the 1972 Act”) and the issue is about the proper construction of a clause in a contract between nine parties, including a number of the shareholders in Global Port Services Limited (“GPS”) and, also, GPS itself. The contract is entitled “Shareholders’ Agreement” and it was signed by all parties on 4 October 2013.
[2] Moray Firth Services Company Limited (“MFS”) is a shareholder in GPS and was a party to the Shareholders’ Agreement. Although GPS is named in the petition as being the petitioner, it is not disputed that these proceedings have not been raised by GPS. They have in fact been raised by MFS.
[3] MFS say that they are entitled to raise proceedings in the name of GPS, relying on the terms of clause 5.2 of the Shareholders’ Agreement; the Temporary Lord Ordinary agreed. The respondents say that they have no such right; properly interpreted, clause 5.2 cannot, they say, be read as conferring it.
Background
[4] Port Services (Invergordon) Limited (“PSI”) and Global Logistics Services Limited (“GLS”) were both in the business of providing logistics services but they decided to merge their logistics businesses and formed GPS; it was incorporated on 14 August 2013. MFS is the successor to PSI. GLS was part of the Global Energy Group of which the first respondent is the holding company. Its interests are now represented by the fifth respondents (“GMOL”). We were advised that all of the respondents are ‘Global’ companies.
[5] MFS owns 38,000 issued A ordinary shares of £0.01 each in GPS. GMOL owns 51,000 issued B ordinary shares of £0.01 each in GPS. A shares and B shares rank parri passu in all respects (see: clause 13.1 of the Articles of Association). There are other shareholders.
[6] The respondents entered into a 5 year “Logistics Contract” with GPS in terms of which they all agreed to purchase certain logistics services exclusively from GPS during that period. MFS allege that some or all of them are in breach of that contract and say that they intend to raise proceedings against them seeking damages and/or interdict. To that end, they wish to recover various documents from the respondents which, they say, will show that some or all of them have been purchasing logistics services covered by the Logistics Contract from suppliers other than GPS.
Letter from MFS to GPS
[7] By letter dated 28 March 2014, entitled:
“Global Port Services (Scotland) Limited
Action for breach of the Logistics Contract”
MFS wrote to GPS referring to the Shareholders’ Agreement and stating:
“Pursuant to the terms of inter alia clause 5.2 of the Shareholders’ Agreement, we MFS, being the only party required to give written approval to GPS raising any action or demand against GEHL and any Customer ( as defined in the Logistics Contract) in respect of breaches of the Logistics Contract, hereby direct and instruct GPS to raise an application against GEHL and all Customers to the Logistics Contract in terms of Section 1 of the Administration of Justice (Scotland) Act 1972 with a view to recovering all documents within the possession of GEHL and the said Customers which show the extent to which Logistics Services ( as defined in the Logistics Contract) have been purchased from other suppliers in breach of the Logistics Contract as the first step in the formal enforcement of the Company’s rights under the Logistics Contract.”
[8] The same day, Stephen Clark, who is a director of both MFS and GPS, called a meeting of the directors of GPS and gave notice of an agenda to include discussion of the breaches of the Logistics Contract, the steps that GPS required to take to enforce and protect its rights under that contract and a proposed resolution that the company should raise proceedings under the 1972 Act. The meeting took place but that resolution was not passed. Nor has the board of GPS passed any resolution authorising MFS to raise such proceedings in its name or ratifying MFS having done so.
The Shareholders’ Agreement
[9] The parties to the Shareholders’ Agreement are not, in fact, all shareholders in GPS but nothing turns on that. It is sufficient, for present purposes, to note that the parties include GPS, MFS, GMOL and the first respondents.
[10] Clause 5 – in which GPS is referred to as “the Company” - is in the following terms:
“5.1 Each party shall procure that the Company shall not, without the prior written approval of GMOL and MFS, carry out any of the Reserved Matters.
5.2 Any action or demand by the Company against any or all of : GMOL, MHM, GEHL, GLS, HSL or RJM or any Customer (as defined in the Logistics Contract) in respect of (i) the acquisition by the Company of the entire issued share capital of GLS; (ii) the acquisition by the Company of the business and assets of GLS and/or HSL on or after Completion; and/or (iii) any breach or termination of the Logistics Contract and/or (iv) any breach of the MacGregor Family Restrictive Covenant Letter, shall require the prior written approval of MFS only.
5.3 Any action or demand by the Company against PSI in respect of the acquisition by the Company of the business and assets of PSI shall require the prior written approval of GMOL only.
5.4 MFS shall be entitled at any time to appoint directors to the board of GLS without the consent of the other Shareholders (subject to the following proviso) or the Company: provided that the same restrictions that apply to the appointment of a director by MFS pursuant to clause 6.4, shall apply equally in respect of the appointment by MFS or directors to the Board of GLS.
5.5 Each party hereby consents, for the purposes of this Agreement, to the Company entering into the Hive- Up Agreement ( as defined in the Share Swap Agreement) upon satisfaction of the Trigger Event (as defined in the Share Swap Agreement.”
[11] The “Reserved Matters” referred to in clause 5.1 are set out in Part 1 of the Schedule to the Agreement. They are 23 in number and cover important powers including the issuing of shares, the declaration of a dividend, altering the Articles of Association, selling or disposing of the whole of the business of GPS, the incurring of capital expenditure in excess of £1m, and the alteration or waiver of the Logistics Contract “in any respect”.
[12] The chairman of GPS requires to be a “GMOL Director” (clause 6.3) and the first and, we understand, current, chairman (Roderick James MacGregor) is a member of the “MacGregor Family” referred to in part (iv) of clause 5.2.
[13] The board of GPS must be a minimum of two and no more than four persons and must be made up of an equal number of GMOL and MFS directors (clause 6.2). Each of GMOL and MFS are entitled to appoint a director but any appointment of a director by MFS, other than in the case of three named individuals, “shall require the prior written approval of GMOL” and any appointment of a director by GMOL “shall require the prior written approval of MFS”( clause 6.4). In either case, such approval is not to be unreasonably withheld or delayed (clause 6.4). Mr Sandison did not suggest that MFS had any right to appoint their chosen director if GMOL did not provide such approval. The chairman has a casting vote in the event of an equality of votes at any meeting (clause 6.3).
[14] Clause 6.1 of the Shareholders’ Agreement provides for the supervision and management of GPS by its board of directors but subject to a proviso:
“6.1 The Board has responsibility for the supervision and management of the Company and its Business, subject to clause 5.”
[15] That means that it is not enough that the board of GPS resolves to carry out any of the activities detailed as reserved matters in part 1 to the Schedule; clause 5.1 provides that it must, before implementing any such resolution, obtain the prior written approval of both GMOL and MFS. Clause 5.1 goes no further than that. It does not, for instance, empower GMOL and MFS to declare a dividend, to sell or dispose of GPS’s business or to waive the Logistics Contract – all of which are reserved matters - in any respect. It confers no rights on GMOL or MFS beyond the right to veto certain activities which the board would otherwise be minded to carry out. Senior counsel instructed by MFS, Mr Sandison QC, did not demur from that. However, in his submission, clause 5.2 requires to be construed differently.
Submissions on construction of clause 5.2 of the Shareholders’ Agreement
[16] As Mr Dunlop QC, senior counsel for the respondents explained, they read clause 5.2 in the same way as clause 5.1. That being so clause 5.2 cannot, they say, be read as conferring on MFS any right to raise an action in the name of GPS or to, thereafter, control and direct the litigation. That would, he submitted, be an extreme and odd proposition. It would mean that MFS could ignore the will of GPS entirely irrespective of a contrary resolution by the board, that MFS could proceed in the face of direct opposition by GPS to the use of its name, that GPS would be obliged to cede all control of the litigation to MFS, that GPS would become liable to meet any award of expenses...
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