Jewson v Heatspace Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Rimer,MR JUSTICE RIMER |
| Judgment Date | 25 June 2007 |
| Neutral Citation | [2007] EWHC 3139 (Ch) |
| Court | Chancery Division |
| Date | 25 June 2007 |
| Docket Number | Case No: HC07C01315 |
[2007] EWHC 3139 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Rimer
Case No: HC07C01315
Mr Timothy Becker appeared on behalf of the Claimant
Mr Stephen Lennard appeared on behalf of the Defendant
This is a judgment on an application that I heard last Tuesday, 19 June 2007. It is one by which the claimant, Phillippa Jewson, asks for a continuation in modified terms of injunctions earlier granted by Blackburne J and Pumfrey J, which, as modified, I have continued pending this judgment.
The story is as follows. On 9 May the claimant applied to Blackburne J for an injunction restraining the defendants, Heatspace Limited and John Wright, from dealing with the proceeds of the sale by Heatspace of the issued shares in Eastfield Management Limited to Select Service Partner Limited. The application was made without notice to either respondent of its date or time, although the claimant had informed them on the morning of the previous day, 8 May, that, absent the giving of a requested undertaking, she would be applying that afternoon for injunctive relief, which in the event she did not. The application was supported by her statement of 8 May. She there said that she was a director and shareholder of Heatspace and that the purpose of her application was to restrain any distribution of certain company funds to her co-directors and shareholders until the size of her own shareholding and the amount of the outstanding directors' loans were quantified.
By way of background, the claimant explained in her evidence that Heatspace was incorporated in 2000 and that, at the first board meeting held on 4 October, it was resolved that she, Mr Wright (the sole principal in Wright & Co, solicitors), Robert Robinson and Michael Napier would be directors. Each was to have 25 of the 100 £1 issued shares. Each was also to lend Heatspace £150,000, or £600,000 in all. The claimant did not explain the nature of Heatspace's business, but it appears that it was intended to operate in the property field.
In February 2001 Heatspace used the £600,000 so lent to buy Eastfield Management Company Limited, Eastfield's main asset being the head lease of commercial premises at the Old Parcel Office Richmond Station (“the premises”). The purchase price of Eastfield was £600,000. Following the purchase, all four Heatspace directors also became directors of Eastfield.
The matter then became complicated when the four directors agreed that a new company, Richmond and Surrey Auctions Limited (“Richmond”), would run the premises. The claimant disclaims knowledge of the legal arrangement that Richmond had with Eastfield, although one might think that she ought to know what it was, but she says that she agreed to run Richmond on terms that she would receive no remuneration for doing so, but would instead be rewarded by receiving an additional 25 shares in Heatspace. She says that, to that end, a board resolution of Heatspace was passed in June 2001 awarding her the further shares but, despite that, she still does not have them. Her assertion to be entitled to such further shares is now disputed, but for present purposes I accept that she has at least a good arguable case for an entitlement to them. It is supported by a letter dated 21 January 2002 from Mr Wright to Mr Alesbury of Pumphrey Kennedy, Heatspace's accountants, enclosing a copy of some board minutes of 27 June 2001 and asking him to arrange for the issue of a further 25 Heatspace shares to the claimant, so making her shareholding 50 out of a total of 125, or 40%. That letter was, however, less than clever, because the enclosed board minutes were those of Richmond, as Mr Alesbury pointed out in his reply to Mr Wright, correctly explaining to him that the issue of further shares in Heatspace was a matter for the directors of Heatspace rather than for those of Richmond. Mr Alesbury had, however, no qualms about producing a like resolution for the directors of Heatspace to sign, although I presume they did not sign it.
At an unidentified later date Richmond went into voluntary liquidation. The claimant says that at that point her own company, Kew Auctions Limited (“Kew”), took a tenancy at will of the premises, paying £1,000 a week. Her evidence is that she paid this to Eastfield, so giving Eastfield a rental profit of about £25,000 a year. She says the arrangement was to continue for two and a half years.
The claimant then refers to certain further events that occurred in 2001 and 2002, when the four Heatspace directors agreed that they would finance the purchase of two shops in Richmond Hill for £300,000. They were to lend the money to Heatspace, which would purchase and then re-sell the shops at a profit. When that happened the loans would be repaid and the remaining profit would be applied in paying off the four original loans totalling £600,000 that the directors had made when Heatspace was first established.
The claimant says that the Richmond Hill shops were duly purchased and then sold for £700,000. She says she then “received back my original loan monies plus some profit element from [Mr Wright] who acted as conveyancing solicitor in the purchase and sale.” She cannot remember the exact amount. I understand her reference to “my original loan monies” to be to the loan she provided towards the Richmond Hill purchases, not to her original £150,000 loan. Her evidence provides no assistance as to the amount of the “profit element,” which I understand to be a reference to whatever distribution was made after the repayment of the loans made for the purchase of the two shops.
The claimant then continued, with similar imprecision, by saying that she has recently discovered that the directors' loans “may well not have been reduced by the Richmond Hill sales.” I understand her there to be referring to the original loans totalling £600,000, although one might think that she would at least have some idea of whether, or to what extent, her own loan had been repaid. She says she has tried to obtain the information from Mr Wright, but none has been forthcoming. She says its importance is that “it affects the level of monies to be returned to me and my fellow directors by virtue of the amounts to be repaid as directors' loans before there is a division of the profits according to our shareholdings, which in my case now appears to be challenged.”
The claimant then explained the present position as follows. In December 2006 Kew ceased trading from the premises. She says she had paid £70,000 to Eastfield in advance rent, but is aware that only £20,000 has been applied in payment of rent. She does not know what has happened to the remaining £50,000 and she says Mr Wright will not tell her. I have difficulty in understanding what that evidence means. She then explained the particular matter that led to these proceedings. On 1 May 2007 she received notice of a board meeting to be held on 2 May, at which a sale by Heatspace of Eastfield to Select Service Partner Limited was to be voted on. Her response was to inform Mr Wright that she did not propose to attend the meeting. She asserted in her letter that her share of the net proceeds should be not less than 40%, and she assessed the net proceeds to be £400,000 less a retention of £20,000 and less costs. She made it clear that she did not intend to lend any co-operation to the proposed sale of Eastfield.
On 8 May a firm of solicitors wrote on her behalf to Wright & Co. They were Cooper & Whiteman, although their role in this litigation is a mystery to me. Mr Becker, counsel for the claimant, described them as acting merely as a “postbox” and he appears to have done all the letter writing, drafting and litigating himself, a matter which was subjected to criticism by Mr Lennard, counsel for Heatspace. The essence of the letter was that Mr Wright had made it clear that Heatspace did:
“… not recognise the substantial Director's loan made to [Heatspace] by our client at the time of Eastfield's acquisition of the lease of the Richmond property, nor are they prepared to acknowledge the additional shares in Heatspace due to our client pursuant to a further agreement between the parties. As a result, you have made it clear to us that our clients [sic] will not receive reimbursement in respect of her Director's loans and payment in respect of her shareholding in Heatspace upon the company's sale of its shares in Eastfield.”
The letter invited Heatspace's undertaking by 1 pm on 8 May not to make any distribution of the Eastfield sale proceeds pending resolution of the dispute, failing which the claimant would that afternoon seek injunctive relief in the Chancery Division.
The response from Wright & Co on the same day was that the sale proceeds would be held to Heatspace's order and distributed as resolved upon by the directors and shareholders, the writer adding his understanding that Heatspace would “pay some of the directors' loans before any form of dividend can be paid….” The writer invited the claimant to produce “documentary evidence of any payments made on the original acquisition of the shares by Heatspace in Eastfield and she should produce this evidence without further delay.” The undertaking that the claimant had requested was not offered. The sense of the reply was, therefore, that Heatspace did not recognise the claimant's original loan contribution as £150,000, and her claim to the extra 25 shares in Heatspace is also in dispute. Later in the day, Mr Wright, on...
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Thelma Paraskevaides v Citco Trust Corporation Ltd
...the appellants of the continuation of the injunction. P.S. Refson & Co Ltd v Saggers and another [1984] 1 WLR 1025 considered; Jewson v Heatspace Ltd [2007] EWHC 3139 (Ch) considered. 6. On an application for an interim injunction, the applicant must demonstrate that there is a serious is......
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Thelma Paraskevaides v Citco Trust Corporation Ltd
...the appellants of the continuation of the injunction. P.S. Refson & Co Ltd v Saggers and another [1984] 1 WLR 1025 considered; Jewson v Heatspace Ltd [2007] EWHC 3139 (Ch) considered. 6. On an application for an interim injunction, the applicant must demonstrate that there is a serious is......