Lucy Jane McCallum-Toppin v Alistair Bruce McCallum-Toppin
| Jurisdiction | England & Wales |
| Judge | HHJ,Paul Matthews |
| Judgment Date | 21 June 2018 |
| Neutral Citation | [2018] EWHC 1562 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2016-007340 |
| Date | 21 June 2018 |
[2018] EWHC 1562 (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 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 date: 19 June 2018
This is my judgment on an application to re-re-amend the petition in these proceedings under s 994 of the Companies Act 2006, complaining of conduct unfairly prejudicial to the interests of the petitioners. The application has come on for hearing and decision at the outset of the trial of the petition. 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 directors of the company) have been paid excessive remuneration, that the company has failed to pay 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. But there is a preliminary issue, which the petitioners seek to address by way of the application to amend.
The preliminary issue is whether the petitioners have standing to sue at all. 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 refer to those family members by their given names. The company was incorporated on 29 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. He 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.
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.
The devolution thereafter of the estate is of some importance. 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 executor and appointing Philip Weaver, a partner in the firm of Pitmans LLP, then acting for the estate of Angus, as personal representative and trustee in Allan's 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. Then, just last Friday, 15 June 2018, Morgan J made another order under section 50, removing Philip Weaver as personal representative and appointing Julie Bryan in his place.
The petition was 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. From the beginning, the petitioners have been Lucy and Julie Bryan. In the opening words of the petition they are stated to be acting “in their capacity as the Trustees of Angus McCallum-Toppin's Will Trust”. In paragraph 3 of the petition the devolution of the estate of Angus was recited, in substance as already set out in the previous paragraph. However, when the petition was first amended in April 2017 an allegation that the second petitioner had been appointed joint personal representative of the estate (in addition to trustee of the will) by the deed of 14 July 2015 was removed. Paragraph 3 of the petition in its current (and unamended) form states at the end that
“References in this Petition to ‘the Trustees’ are to the Trustees of Angus's Will Trust at the relevant time”.
Consequent upon the order of Morgan J made last Friday, the petitioners have applied by notice dated 18 June 2018 to amend further their petition, so as to plead the position of the second petitioner as personal representative of the estate of Angus. In what follows, the words in italics are the words proposed to be added.
(1) The opening words of the petition, describing the capacities in which the petitioners present the petition would be amended to read
“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.”
(2) A new paragraph 3.5 would be inserted, 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.”
(3) The words at the end of paragraph 3 would be amended so as to read:
“References in this Petition to ‘the Trustees’ are to the executors and/or Trustees of Angus's Will Trust at the relevant time”.
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).
Section 50(1)(a) of the 1985 Act relevantly provides that
“the court may in its discretion … appoint a person (in this section called a substituted personal representative) to act as personal representative of the deceased in place of the existing personal representative or representatives of the deceased or any of them.”
But the Act is silent on what happens in such a case to the estate of the deceased that was formerly vested in the executors. In the present case there is no evidence of any assurance from the original executors Lucy and Allan to Lucy and Mr Weaver, or now from them to Lucy and Ms Bryan. I should say that pre-emption provisions in the articles of association apply to transfers of shares in this company (see article 6). Their existence may explain why no express transfer of the shares appears to have taken place since the death of Angus. The question is thus whether, on the making of an order under s 50, there is an automatic transmission of the estate of the deceased from the old to the new personal representative, without the need for any form of assurance.
As I say, there is nothing in the Act itself which states that an order has this effect. Nor is there anything in the Act conferring jurisdiction on the court in making an order at the same time to vest the estate in a new personal representative. I am not aware of any authority, or even any commentary, on the Act, which deals with this question. Mr Dougherty, having had only a slight opportunity to carry out research in response to my question, was unable to find any either. He did refer me to Goodman v Goodman [2014] Ch 186, a decision of Newey J (as he then was) but that does not deal with this point at all.
However, in principle I consider that the making of the order (at all events, saving provision in that order to the contrary) does have the effect of vesting the estate in the new and continuing personal representatives (and divesting the old). Ex hypothesi the personal representative being removed from office will have had the estate of the deceased vested in him or her by operation of law. It cannot be supposed that the legislature in these circumstances would have enabled the transfer of the powers and duties of the personal representative to another person and yet deliberately left the estate vested in the (now) former personal representative. After all, the court is making this order so that other persons can carry on the...
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