Lucy Jane McCallum-Toppin v Alistair Bruce McCallum-Toppin
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 29 January 2019 |
| Neutral Citation | [2019] EWHC 46 (Ch) |
| Docket Number | Case No: CR-2016-007340 |
| Court | Chancery Division |
| Date | 29 January 2019 |
[2019] EWHC 46 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: CR-2016-007340
In the Matter of AMT Coffee Limited
And in the Matter of the Companies Act 2006
Nigel Dougherty and Chantelle Staynings (instructed by BDB Pitmans LLP) for the Petitioners
Thomas Elias (instructed by Forsters LLP) for the First Respondent
Matthew Morrison (instructed by Blake Morgan LLP) for the Second Respondent
Timothy J Walker (instructed by Freeths LLP) for the Third Respondent
The Fourth Respondent did not appear, and was not represented
Hearing dates: 19–30 June, 3, 20 July 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is my judgment on the trial of the petition in these proceedings under s 994 of the Companies Act 2006, complaining of conduct unfairly prejudicial to the interests of the petitioners. In the petition, the petitioners seek an order for the purchase of their shares in the fourth respondent, AMT Coffee Limited (“the Company”). The petition is based in particular on allegations that the first three respondents (the only surviving directors of the Company) have been paid excessive remuneration, that the Company has failed to give consideration to payment of any or any adequate dividends, and that the first two respondents have enjoyed substantial interest-free and unsecured credit facilities. The petition is defended on its merits.
This is a family company, and all the family members have the same surname, McCallum-Toppin. So, for speed and clarity, but without intending any disrespect, I will generally refer to those family members by their given names. The Company was incorporated on 28 September 1993. Four ordinary shares were issued, one each to three brothers, Angus, Allan (the second respondent) and Alistair (the first respondent), and one to their father, Alexander. Alexander died in February 2001, when his share vested in his widow Anna (the third respondent). In April 2003, three new “A” ordinary shares (non-voting) were allotted, one each to Angus, Allan and Alistair. Those seven shares remain the only shares in issue.
In December 2006, tragically, Angus died of cancer at the age of only 45 years. He was married to Lucy, the first petitioner, and they had two small children, Alexander and Abbi. His will appointed Lucy and Allan as his executors and trustees, and gave his shares in the Company directly to Lucy and his children equally, but contingently on their attaining the age of 25 years. (The children were then and are still minors.) The residue of his estate was given on certain trusts. Lucy and Allan obtained a grant of probate to Angus's estate in May 2007.
In October 2014 Master Teverson in this Division of the High Court made an order under s 50 of the Administration of Justice Act 1985, removing Allan as an executor and appointing Philip Weaver, a partner in the firm of Pitmans LLP, then acting for the Company, as personal representative in his place. But in July 2015 a deed of appointment and removal of trustees was executed, whereby Mr Weaver was to retire as a trustee of the will of Angus, and a family friend, Julie Bryan, was appointed as a trustee of the will trusts in his place. Finally, on 15 June 2018, Morgan J made another order under section 50, removing Philip Weaver as personal representative and appointing Julie Bryan in his place. On 20 June 2018 I held, on an application by the petitioners to re-re-amend the petition, that the action was properly constituted and the petitioners had standing to bring it. I therefore gave permission to the petitioners to amend their petition further to reflect the current position.
The petition was originally issued on 8 November 2016, amended pursuant to the order of Chief Registrar Baister dated 10 April 2017, and then re-amended pursuant to the order of Mr MH Rosen QC dated 21 March 2018, and re-re-amended following my own order of 20 June 2018. From the beginning, the petitioners have been Lucy and Julie Bryan. In the opening words of the petition as re-re-amended they are now stated to be acting “in their capacity as the Trustees of Angus McCallum-Toppin's Will Trust, which incorporates their status as both executors and trustees of the Will”. Paragraph 3 of the petition in its final form states at the end that
“References in this Petition to ‘the Trustees’ are to the executors and/or Trustees of Angus's Will Trust at the relevant time”.
And paragraph 3.5, inserted on re-re-amendment, states as follows:
“By an Order of the High Court dated 15 June 2018 (and with immediate effect), the second Petitioner was appointed as joint personal representative in place of Mr Weaver.”
Section 994 of the Companies Act 2006 relevantly provides as follows:
“(1) A member of a company may apply to the court by petition for an order under this Part on the ground–
(a) that the company's affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or
(b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.
(2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company.
[…].”
Angus during his life was a member of the Company. He accordingly would have had standing to present a petition under s 994(1). After his death, the shares still being registered in his name, the executors of his will (Lucy and Allan) were not without more members of the Company. But Angus's shares had been transmitted to them as such executors by operation of law. They therefore had standing to present a petition under s 994(2). However, Allan was then replaced by Mr Weaver by order of this court under s 50 of the 1985 Act. And Mr Weaver himself has now been replaced as personal representative by Ms Bryan (the second petitioner). In my written judgment on the petitioners' application to re-re-amend ( [2018] EWHC 1562 (Ch), [2018] WTLR 531), I held that the estate of Angus had been transferred ultimately so as to be vested in Lucy and Julie Bryan. The trial has proceeded on that basis.
Witnesses
At the trial of this petition, the following witnesses who had made witness statements (or expert reports) were tendered for cross-examination: Lucy McCallum-Toppin, Philip Weaver, Alistair McCallum-Toppin, Allan McCallum-Toppin, Anna McCallum-Toppin, David Brooks, Stuart Baxter and Paul Norris. In addition, I also had a witness statement from Catherine McCallum-Toppin (Allan's wife), without her being tendered for cross-examination. A hearsay notice was served in respect of this statement.
I give here my impressions of the witnesses who were cross-examined before me.
The first petitioner, Lucy McCallum-Toppin, found it hard to give evidence. She was slow and quiet, and quite often reluctant to answer questions. It was clear that she had forgotten about a considerable number of the events in which, according to the documents produced, she had been concerned. She was often confused, and changed her evidence from one sentence to another. At the same time, there were matters that she remembered with great clarity. She was prepared to agree with the position as shown by the documents to which she was referred. In my view, she was trying hard to tell the truth as she recalled it. However, where there were no documents to corroborate her evidence, I do not think I can place much reliance on her memory by itself.
Philip Weaver, a practising solicitor since 1982, specialising in commercial and corporate law, was a business-like and straightforward witness. He gave his evidence in a calm and clear way, and cross-examination made little impact on his evidence, which was precise and to the point. Of course, his involvement in this matter dates only from 2011, but I am satisfied that he was telling the truth in what he told me.
The first respondent, Alistair McCallum-Toppin, was a self-confident, urbane and intelligent witness. He did not argue with the documents placed before him, or take silly points. There was no beating about the bush with him. When he thought he had done something wrong in the past, he said so. When he thought he had been right, he said that too. That was, in fact, most of the time. Despite frequent protestations that he was neither a lawyer nor an accountant, and that he relied on professional advice in taking the steps that he did, he nonetheless gave the impression of being in complete control. Cross-examination made little impression on him. In my view he told me what he thought was the truth throughout. But I think he has convinced himself that he was in the right, and sees past events in that light. As a result, I cannot rely on everything he says.
His brother Allan, the second respondent, was quite different. Where Alistair had been sure he was right, Allan was now very sorry for what he had done wrong, or for what he had been unable to do that in his view he should have done. Allan gave me the impression of being a textbook middle child, seeking always to reconcile the quite different visions of the eldest and...
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