Mellor v Mellor
| Jurisdiction | England & Wales |
| Date | 1992 |
| Court | Chancery Division |
Company - Receiver - Costs and remuneration - Dispute over beneficial ownership of company's shares - Receiver appointed by court before trial - Receivership discharged by consent - Receiver's costs and remuneration - Whether receiver entitled to lien for costs and remuneration over all receivership assets - Whether lien surviving discharge of receivership
The plaintiff issued a writ in February 1991 following a dispute between himself and his son, the first defendant, concerning the true beneficial ownership of the issued share capital, as between themselves, of the second defendant company. On 8 March 1991 the plaintiff obtained an interlocutory order for the appointment of a receiver and manager, without security, of the second defendant and its subsidiary companies, the third to tenth defendants, and their businesses. The order included a provision enabling the receiver to recover from the second defendant any of his costs and expenses in respect of any of the subsidiary companies to the extent that such a company was itself unable to satisfy such costs.
On 22 March the plaintiff obtained a consent order discharging the order granted on 8 March in its entirety thus rendering the receivership defunct. In October 1991 the receiver, having been given leave to intervene, was granted an order for determination of his costs and remuneration by the master.
On the question as to how the receiver's entitlement to his costs and remuneration was to be satisfied: —
Held, that, whereas the court had no jurisdiction by interlocutory order to make any of the defendants personally liable, a receiver appointed by the court had a right to be indemnified in respect of his costs and remuneration out of all the assets subject to the receivership, not merely those in his possession; that that right was not extinguished by the discharge of the receivership and the consequent return of the assets, and the receiver's lien over the assets could exist independently of actual possession or a continuing right to possession; and that, accordingly, the receiver was entitled to an order charging all the assets available to him during the currency of his receivership with the amount of his costs and remuneration; and that, further, he was entitled to an order charging the second defendant's assets with such of his costs and remuneration as were irrecoverable under his lien over the property of the other corporate defendants, since it was on the faith of an order having that effect that he had acted as receiver after 8 March (post, pp. 524F–G, 527D–528C).
The following cases are referred to in the judgment:
Bignell, In re, Bignell v. Chapman [
Boehm v. Goodall [
Chanel Ltd. v. F. W. Woolworth & Co. Ltd. [
Evans v. Clayhope Properties Ltd. [
Harris v. Sleep [
Newsgroup Newspapers Ltd. v. Mirror Group Newspapers (1986) Ltd. [
The following additional case was cited in argument:
Davy v. Scarth [
MOTION
On 28 February 1991 the plaintiff, Terence Edward Mellor, issued a writ against the first to thirteenth defendants, Paul Mellor, Amexpark Ltd., Pendragon Foods Ltd., Old Defensible Barracks Ltd., Tinilor Ltd., Mekatek Ltd., Hillside Farm Foods Ltd. (in liquidation), Cavendish Property Development & Management Ltd., Royal Silverware (1840) Ltd., S. & B. (1985) Ltd., Kay Stephanie Mellor, Tracy Elizabeth Mellor and Ellen Jane Handley. The claim arose out of a dispute between the plaintiff and his son, the first defendant, as to the true beneficial ownership of the issued share capital of the second defendant alleged to be the holding company of the third to tenth defendants. On the same day, on the plaintiff's ex parte application, Millett J. granted certain injunctive relief including an Anton Piller order and directed, inter alia, that Peter Alfred Howard Powell was to be appointed receiver/manager, without giving security, until 8 March 1991 of the second to tenth defendants inclusive and of their businesses. On 8 March, inter partes, Millett J. ordered, inter alia, the appointment of Mr. Powell as receiver. On 22 March 1991 Warner J. made a consent order, on the plaintiff's motion, discharging Millett J.'s order of 8 March in its entirety. On 23 July 1991 Mummery J., on the plaintiff's motion, ordered that the receiver be given leave to intervene on that motion. On 3 October 1991, on the receiver's own motion, Vinelott J. made an order, inter alia, that the receiver's costs and remuneration should be determined by the master. On his motion the receiver also sought, inter alia, orders that the second to tenth defendants should pay the receiver's costs and remuneration; that those costs and remuneration should be recoverable by the receiver from the defendant companies' property which should stand charged with them until payment thereof; and that the costs and remuneration should be recoverable by the receiver from the second defendant to the extent that any of the third to tenth defendants was itself unable to satisfy them out of its own resources. Those questions, inter alia, were ordered by Vinelott J. to be heard as a motion by order.
The facts are stated in the judgment.
Leslie Michaelson for the receiver.
Mark Blackett-Ord for the first to sixth and the eighth to twelfth defendants.
The seventh defendant did not appear and was not represented.
The plaintiff did not appear and was not represented.
24 January. MICHAEL HART Q.C. read the following judgment. The question raised by the principal motion before me concerns the entitlement of a receiver appointed by the court to remuneration for his services for acting as such during the currency of his appointment. The issue arises in the context of a dispute between a father, the plaintiff, and his son, the first defendant, as to the true beneficial ownership of the issued share capital of what has been described before me as a holding company of a group of companies which, it is common ground, had been founded by the father but which had been under effectively the sole direction and management of the son since in or about 1988. The son was, however, assisted in this management by an old acquaintance of his father, a Mr. Howard Richard Morris.
The so-called holding company, Amexpark Ltd., is the second defendant in these proceedings. I say “so-called,” because it is not clear that the shares in all the others of the group of companies are in fact beneficially owned by Amexpark Ltd. Nothing, however, turns on this for present purposes.
Prior to June 1988, there were two issued shares in Amexpark Ltd., one in the name of the father and one in the name of the son. In June 1988, transactions took place as a result of which, on the face of the share register, the father was divested of any interest in Amexpark Ltd., which was thereafter owned as to 98 per cent. by the son, 1 per cent. by his sister, Kay Stephanie Mellor, the eleventh defendant, and as to the remaining 1 per cent. by another sister, Tracy Elizabeth Mellor, the twelfth defendant.
I should record that it is common ground between the father and the son that, whatever the true beneficial ownership as between themselves of Amexpark Ltd., a former friend of the father, Mrs. Handley, also has or at any rate at one time had a beneficial interest. This fact may, however, be set on one side so far as concerns the matters with which I have to deal.
It is relevant to mention that the father had for a period of years been dependent on alcohol to the extent that he claimed he was not able to manage his affairs. That incapacity he attributes also to a concurrent addiction to Librium, Valium and sleeping pills. That is the background, he says, to his decision in 1987 or 1988 to hand over the management of the business to his son, with the assistance of Mr. Morris.
By late 1990, relations between the son and Mr. Morris had become strained to such a degree that Mr. Morris resigned from the business with effect from the year end. On 28 February 1991, the father issued the writ in this action and applied on the same day to Millett J. for ex parte relief. In addition to the second defendant, Amexpark Ltd., the defendants to the writ included all the companies then identified by the father as being members of the group.
In essence, the father's case was that the one share originally held by the son in Amexpark Ltd. had at all material times been held by him as nominee for the father and that the transactions in June 1988 had been effected entirely without his knowledge. In the affidavit he swore in support of the ex parte application, he touched on the manner by which those transactions might have been accomplished in the following passage, at paragraph 10:
“By way of illustration I understand that my son may have some document purporting to be an admission by me that I have no claims to ownership or control of any of these companies or businesses. I do not know whether such a document may exist although I certainly have no recollection of signing any such document but it is possible that the first defendant, who would visit me from time to time at Grassmore where I lived after leaving Eastfield Cottage bringing whisky along for me, may have procured my signature at some time to such a document. However, I certainly never intended to sign such a document or to relinquish or abandon my ownership of a large and valuable business and group of companies.”
In addition, he deposed to a number of matters which were said to support his suspicion that the son was...
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