Houldsworth Village Management Company Ltd v Keith Barton
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lord Justice Floyd,Lord Justice Coulson,HHJ Hodge |
| Judgment Date | 29 July 2020 |
| Neutral Citation | [2020] EWCA Civ 980 |
| Date | 29 July 2020 |
| Docket Number | Case No: A3/2019/2750 |
| Court | Court of Appeal (Civil Division) |
[2020] EWCA Civ 980
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
COMPANIES COURT (ChD)
HHJ Hodge QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Floyd
Lady Justice Asplin
and
Lord Justice Coulson
Case No: A3/2019/2750
Justin Bates and Alice Richardson (instructed by PM Legal Services) for the Appellant
Robert Sterling (instructed by Public Access) for the Respondent
Hearing date: 21 July 2020
Approved Judgment
This appeal is concerned with the right of members of a company to inspect the current register of members under section 116 of the Companies Act 2006 (“the Act”). The respondent (“Mr Barton”) owns the long lease of an apartment in a building known as Victoria Mill in Reddish, Stockport. He made a section 116 request to the appellant (“Houldsworth”), which is the management company of Victoria Mill. In his request he stated that the reason that he wished to inspect the register of members was to seek a general meeting of members of Houldsworth with a view to removing the current directors and also the current managing agent of Victoria Mill appointed by the board. Houldsworth applied to the court for a direction (under section 117 of the Act) that it did not have to comply with the request, because the grounds on which it was made were not “proper” ones. By an order dated 10 October 2019 HHJ Hodge QC, sitting as a judge of the High Court (“the judge”), accepted an undertaking by Mr Barton to contact his fellow members only for the purpose stated in his request, but otherwise declined to make the order sought by Houldsworth. Instead, the judge directed Houldsworth, pursuant to section 117(5) of the Act, immediately to comply with the request. He did, however, grant a stay of execution so as to allow Houldsworth to make an application for permission to appeal to this court. Permission to appeal was granted by Newey LJ on 17 February 2020.
Victoria Mill is described as an apartment complex made up of 180 residential flats which are held on long leases. The three parties to the leases are the landlord, the leaseholder and Houldsworth, which is a leaseholder-owned management company. Mr Barton owns the lease of Apartment 93 and is a member of Houldsworth.
Houldsworth is a company limited by guarantee. Its purposes are set out in clause 3.1.1 of its memorandum of association:
“To acquire, hold, manage and administer the freehold or leasehold of the three apartment buildings located or to be located on the west side of Houldsworth Street and Harrogate Road, Reddish, Stockport including without limitation to the generality of the foregoing any common area, roads, accessways, footpaths, parking areas, drains, sewers, lighting, security and associated facilities … either on its own account or as trustee, nominee or agent of any company or person.”
Given that Houldsworth did not, as sometimes occurs, acquire any freehold or leasehold interests, the relevant object of Houldsworth is, in practical terms, “to … manage and administer the freehold or leasehold” including, without limitation, any common area, roads, accessways, footpaths, parking areas, drains, sewers, lighting, security and associated facilities. In the usual way, Houldsworth provides these services to the leaseholders in return for service charges. Houldsworth does not provide these services itself, but appoints a managing agent to do so. The current managing agent, appointed in August 2012, is Living City Asset Management Limited.
On 3 May 2019 Mr Barton sent a written request to Houldsworth under section 116 of the Act to inspect the current register of members including the following statement of purpose:
“I wish to contact my fellow members with a view to seeking a general meeting of members and proposing resolutions to remove and replace the existing directors and the managing agent. The information will not be disclosed to any other person”
Houldsworth took the view that Mr Barton's request was not made for a proper purpose and applied to the court on 14 May 2019 in order to seek a direction not to comply with the request under section 117(3)(a) of the Act.
Houldsworth's Part 8 claim was supported by three witness statements of Ian Macdonald, a director of Houldsworth. In his first witness statement Mr Macdonald explained that Houldsworth's responsibilities to manage the building arose under the terms of the lease. He recognised that Houldsworth was also a company limited by guarantee, that its affairs as a corporate entity were separately governed by its articles of association and by company legislation, and that the occupational leaseholders (including Mr Barton) were members of the company.
Mr Macdonald went on to say that he did not consider Mr Barton's purpose to be a proper purpose because his concerns were centred on matters relating to Houldsworth and its roles and responsibilities under the tripartite leases, “ rather than … the conduct of corporate affairs”. He explained that Living City was engaged as managing agent for Victoria Mill to undertake the day-to-day performance on behalf of Houldsworth “ in relation to the management functions [Houldsworth] holds regarding Victoria Mill”. He expressed the view that Mr Barton's actions were motivated “ by the desire to interfere with matters relating to the management of the building, as opposed to company matters (to which section 116 relates)”.
Mr Macdonald expanded on these views in his second witness statement, where he expressed the view that Mr Barton's purpose was not a proper one, for two separate reasons. The first, narrow reason was that, according to Mr Macdonald, Mr Barton's stated purpose of calling a general meeting to remove the directors and the managing agent was, in itself, improper because there were other, more appropriate methods to achieve this result. In support of this ground he asserted that the appointment of managing agents “is not a decision for members to make” and that “therefore provision of the register of members would do nothing to aid [Mr Barton's] desires in that regard.” He continued that “ The true purpose behind [Mr Barton's] request is to exercise greater control over [Houldsworth's] management responsibilities at Victoria Mill, which arises under the terms of the occupational leases and is not linked to [Houldsworth's] corporate affairs.”
The second, broader reason advanced by Mr Macdonald was that Mr Barton's “real motive” was to remove the current directors in order to further his own interests and cause disruption at Victoria Mill. He said that this was supported by what he described as a “ long history of non-payment of service charges, unjustified litigation with no merit and a strong desire to take over the management functions at various developments in which he owns leasehold properties.” His second witness statement went on to recount details of previous litigation between Mr Barton and Houldsworth, and to refer to a previous case involving the management company of a different building, Pandongate House, which had resulted in a direction under section 117(3) of the Act that that management company should not comply with a request by Mr Barton.
Houldsworth's application under section 117 was also supported by a witness statement from Mr Damiano Rea, a director of the managing agent appointed by the management company of Pandongate House, recounting the history of the engagement between the Pandongate House management company and Mr Barton. As reliance is placed by Houldsworth on the decision of HHJ Kramer in that case, it will be necessary to return to it later in this judgment.
Mr Barton, in his evidence, joined issue with Mr Macdonald and Mr Rea. He pointed out that he had achieved a measure of success for himself and other leaseholders in the only litigation involving Houldsworth, and had benefited leaseholders in other ways.
Statutory framework
The rights to inspect and take copies of the register are set out in section 116 of the Act:
“(1) The register and the index of members' names must be open to the inspection — (a) of any member of the company without charge, and (b) of any person on payment of such fee as may be prescribed.
(2) Any person may require a copy of a company's register of members, or of any part of it, on payment of such fee as may be prescribed.
(3) A person seeking to exercise either of the rights conferred by this section must make a request to the company to that effect.
(4) The request must contain the following information – (a) in the case of an individual, his name and address; (b) in the case of an organisation, the name and address of an individual responsible for making the request on behalf of the organisation; (c) the purpose for which the information is to be used; and (d) whether the information will be disclosed to any other person, and if so—
(i) where that person is an individual, his name and address,
(ii) where that person is an organisation, the name and address of an individual responsible for receiving the information on its behalf, and
(iii) the purpose for which the information is to be used by that person.”
The rights and obligations of a company on receipt of a request under section 116 are contained in section 117 of the Act:
“(1) Where a company receives a request under section 116 (register of members: right to inspect and require copy), it must within five working days either—
(a) comply with the request, or
(b) apply to the court
(2) If it applies to the court it must notify the person making the request.
(3) If on an application under this section the court is satisfied that the inspection or copy is not sought for...
To continue reading
Request your trial
-
Sir Henry Royce Memorial Foundation v Mark Gregory Hardy
...journalism might be another example.” 49 I should also bear in mind that, in Houldsworth Village Management Co Ltd v Barton [2020] EWCA Civ 980, Floyd LJ (with whom Asplin and Coulson LJJ agreed) said: “18. The court in Burry and in Fox-Davies gave some examples of purposes which would nor......
-
Sir Henry Royce Memorial Foundation v Mark Gregory Hardy
...however set out passages from Fox-Davies v Burberry plc [2017] EWCA Civ 1129 and Houldsworth Village Management Co Ltd v Barton [2020] EWCA Civ 980. They contain no decision or even commentary of mine. The defendant cannot appeal against my decision on the basis that what the Court of App......