Ionut Cosmin Onea v Taiwo Ayoyunde Alegbe
| Jurisdiction | England & Wales |
| Judge | Greenwood |
| Judgment Date | 06 October 2023 |
| Neutral Citation | [2023] EWHC 2451 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2022-003204 |
In the Matter of Contingent & Future Technologies Limited (Company No. 120350038)
And in the Matter of the Companies Act 2006
[2023] EWHC 2451 (Ch)
INSOLVENCY AND COMPANIES COURT JUDGE Greenwood
Case No: CR-2022-003204
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Rolls Building
Royal Courts of Justice
7 Rolls Buildings
London EC4A 1NL
Mr Alexander Halban (instructed by DWF Law LLP) for the Petitioner
Mr Daniel Lightman KC and Mr Mark Baldock (instructed by Claremont Litigation Limited) for the First and Second Respondents
Hearing dates: 13–14 July 2023
This judgment was handed down remotely at 4.00pm on 6 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
ICC JUDGE
[A] Introduction
Section 994 of the Companies Act 2006 provides for a “ member of a company” to apply to the court by petition for an order in circumstances where the affairs of the company have been conducted in a manner unfairly prejudicial to his interests as a member. On 21 September 2022, Mr Cosmin Onea presented such a petition (“ the Petition”) in respect of the affairs of the Third Respondent, Contingent & Future Technologies Limited (“ the Company”). This is my judgment on an Application dated 27 October 2022, made by the First and Second Respondents, respectively, Mr Taiwo Alegbe and Mr Rajpal Wilkhu, represented by Mr Daniel Lightman KC and Mr Mark Baldock of counsel, to strike out and/or stay the Petition in whole or in part, fundamentally on the basis that Mr Onea — as he accepts — is not, and was not when the Petition was presented, a registered member of the Company.
The Company is a supply chain technology company, which provides customers with tools for procurement decision making. It was incorporated on 5 June 2019 and its “ founders” were Mr Onea, Mr Alegbe and Mr Wilkhu. On incorporation, of its 1,000,000 issued shares, Mr Onea and Mr Wilkhu each held 30%, and Mr Alegbe held 40%; each was a member. On 12 October 2021, the Company purported to dismiss Mr Onea as an employee for gross misconduct, and it removed him from office as a director. In addition, it resolved to treat him as a “ Bad Leaver” under its Articles of Association, as a result of which his shares were automatically converted into “ Deferred Shares” and transferred to Mr Wilkhu in return for their nominal value, a negligible sum. As a further result, on 15 December 2021, Mr Onea was removed from the Company's register of members; he therefore ceased to be, and has not since then been, one of its members.
Mr Onea denies that these steps were properly or lawfully taken. His case is that his dismissal and exclusion, and ultimately the transfer of those shares which he was entitled to retain, were wholly unjustified, and amongst other things comprised conduct of the Company's affairs which was unfairly prejudicial to his interests as a member. Within the present proceedings on the Petition, he therefore seeks, in addition to relief under section 994, certain other declarations and orders concerning his shareholding, and in consequence, an order under section 125 of the Companies Act 2006 that the Company's register of members be rectified with retrospective effect, to show him as a member holding 120,000 ordinary (“ Good Leaver”) shares in the Company at all material times since before the presentation of the Petition. Although not identical, and although certain other significantly less serious allegations of unfairly prejudicial conduct are also made, the alleged grounds for rectification of the register of members (ultimately, that Mr Onea was not in fact a “ Bad Leaver”) are therefore substantially similar, and certainly very closely linked, to those alleged in support of the unfair prejudice claim (that he was unfairly dismissed, excluded, and critically, that he was wrongfully deprived of his “ Good Leaver” shares, which he seeks now to compel Mr Alegbe and/or Mr Wilkhu to buy from him at a fair value under section 994).
In addition, are two other sets of proceedings.
4.1. First, on 8 November 2021, the Company began proceedings against Mr Onea in the Chancery Division of the High Court (“ the Confidentiality Proceedings”) claiming relief in respect of alleged breaches of confidentiality and unauthorised access to the Company's IT systems. Messrs Alegbe and Wilkhu are not parties to the Confidentiality Proceedings, which are listed for a five-day trial in a window between 30 October and 10 November 2023. In the meantime, by virtue of an order made by Ms Joanne Wicks QC (sitting as a Deputy Judge of the High Court) on 27 June 2022 (on the return date of an interim injunction made on 9 November 2021 on the Company's application on short notice to Mr Onea) the statements of case are not to be provided to any non-party. Accordingly, they were not in the evidence or materials before me, although as explained further below, I was referred to a case summary and list of principal issues which I understood to have been produced for the purposes of a CCMC before Deputy Master Teverson on 9 September 2022.
4.2. Second, on 28 January 2022, Mr Onea brought a claim in the Employment Tribunal claiming, amongst other things, constructive unfair dismissal (“ the Employment Proceedings”). On Mr Onea's application, on 11 July 2023, by Order of Heather Williams J, the Employment Proceedings were stayed pending the outcome of the Petition and the Confidentiality Proceedings.
In those circumstances, by their Application, Messrs Alegbe and Wilkhu apply:
5.1. first, to strike out the Petition in its entirety because Mr Onea is not a member of the Company, and therefore does not have standing to present a petition under section 994 of the 2006 Act; it was argued that in consequence the Petition discloses no reasonable grounds for bringing the claim, and is bound to fail; on the same basis, the Applicants seek summary judgment on the whole claim under CPR Part 24;
5.2. second, alternatively, to strike out the Petition in its entirety as an abuse of the court's process because:
5.2.1. when he presented the Petition, Mr Onea knew that he was not a member, and therefore knew that he lacked standing; and/or,
5.2.2. it is an abuse to apply for rectification of the Company's register of members under section 125 of the 2006 Act by means of a petition presented under section 994, rather than by means of a Part 8 Claim Form, issued in accordance with paragraphs 2 and 5 of CPR PD 49A; and/or,
5.2.3. it is an abuse by means of an unfair prejudice petition under section 994 to advance a claim made primarily against the company, which is only ever a nominal party to such proceedings, with correspondingly limited freedom and entitlement to incur legal costs in that capacity;
5.3. third, again alternatively but on the same bases, to strike out paragraphs (1)-(4) of the Prayer (which concern rectification and its consequences) and, as in Re Starlight Developers Ltd, Bryan v Arpan [2007] EWHC 1660 (Ch), to stay the remainder of the Petition whilst directing Mr Onea to commence rectification or other appropriate proceedings in order first to establish his standing as a member, subject to a condition that a failure to commence such proceedings within a limited period would result in the automatic dismissal of the Petition;
5.4. and finally, alternatively, to stay the Petition pending the determination of the Confidentiality Proceedings. Given the Order of Heather Williams J referred to in the previous paragraph, a second further alternative, that the Petition be stayed pending the outcome of the Employment Proceedings, was not pursued.
In opposition to the Application, in essence, Mr Alexander Halban of counsel, appearing on behalf of Mr Onea, argued that the Application is arid, contrary to authority, and that the relief sought based on Mr Onea's lack of standing would involve a substantial waste of time and costs in service of no real practical or valuable purpose. In his submission, the court should direct a “ preliminary issue” (but in effect a split trial) as prefaced at paragraph 71 of the Petition (“ If and to the extent that any Respondent disputes [his] standing …”) at the first stage of which it should determine the overlapping and closely linked questions of Mr Onea's standing and whether or not the Company's affairs have been conducted in a manner unfairly prejudicial to his interests as a member (as for example did Roth J, without comment on this issue, critical or otherwise, in Re I Fit Global Ltd, Blunt v Jackson [2013] EWHC 2090 (Ch), following a direction made previously by Registrar Derrett).
As to the Confidentiality Proceedings, Mr Halban said that to stay the Petition pending their outcome would be “ plainly wrong”, both because no restriction has been imposed by any order made in those Proceedings on the use of confidential materials by Mr Onea in these unfair prejudice proceedings, and because many of the issues raised in the present proceedings – for example, whether or not Mr Onea was validly dismissed – are simply not raised in the Confidentiality Proceedings. In any event, those Proceedings will be concluded long before any trial in the unfair prejudice proceedings.
On Mr Onea's case, the Application therefore raises issues of discretionary case management, to be resolved in accordance with the overriding objective.
The remainder of this judgment is divided as follows:
9.1. at paragraphs 10–39, I set out the factual and procedural background to the dispute and Application;
9.2. at paragraphs 40–106, insofar as relevant, I set out the applicable legal principles in...
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...section 125 of the 2006 Act: Re I Fit Global Ltd [2013] EWHC 2090 (Ch), [2014] 2 BCLC 116; Re Contingent and Future Technologies Ltd [2023] EWHC 2451 (Ch). If the court took the view that consent sufficient to engage the Duomatic principle was not present, the only consequence was that neit......