Michael Standing v Lee Power
| Jurisdiction | England & Wales |
| Judge | Nicholas Thompsell |
| Judgment Date | 15 June 2021 |
| Neutral Citation | [2021] EWHC 1744 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. PT-2019-000964 |
[2021] EWHC 1744 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (CHD)
Nicholas Thompsell
(Sitting as a Deputy Judge of the Chancery Division)
Claim No. PT-2019-000964
Claim No. PT2021-000482
Mr Colin West QC appeared on behalf of the Claimants instructed by Hanover Bond Law.
Ms Hannah Thornley appeared on behalf of the Defendants instructed by Terrells Solicitors LLP.
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.
A. INTRODUCTION
This hearing, which was held remotely via Microsoft Teams, has dealt with matters concerning three related disputes:
(a) a dispute between Mr Michael Standing and Mr Lee Power as to the basis on which Mr Power is holding shares in Swinton Reds 20 Limited (“ SR20”), the top company in the chain of companies holding interests in Swindon Town Football Club (the “ Club”), and more specifically whether he holds part of this shareholding on trust for Mr Standing;
(b) a dispute between Axis Football Investments Ltd (“ Axis”) and Mr Power as to whether Mr Power is precluded from bringing about any sale of interests in the Club, or any of the chain of companies holding the Club otherwise than through selling his shares in SR20 in compliance with the pre-emption procedure for transfer of shares set out in the articles of association of SR20 (the “ Articles”); and
(c) a dispute between Axis and SR20 and Mr Power relating to the effect of notices served under the processes in the Articles to be followed on a transfer of shares.
The first two of these disputes are long-running actions proceeding under Part 7 of the Civil Procedure Rules (“ CPR”) and this is but one of a number of interlocutory hearings relating to them. These two actions have been the subject of a formal joinder of action so that they are considered together.
The third of these disputes, although part and parcel of the ongoing commercial differences between Mr Standing and Axis on the one hand and Mr Power on the other hand, is a new dispute, having been put on foot by means of a Part 8 Claim Form issued on 28 May 2021.
Ahead of this hearing, I had the benefit of being able to consider skeleton arguments by Ms Hannah Thornley for Mr Power and SR20, and of Mr Colin West QC on behalf of Mr Standing and Axis. Ms Thornley and Mr West have represented their clients at this hearing and I am grateful, as ever, for their thoughtful and learned arguments.
There have been various matters that the court has dealt with in this hearing and they may be summarised as follows:
(a) The Pre-Emption Claim: By the Part 8 Claim Form, Axis has applied for declaratory and/or injunctive relief in relation to a purported acceptance of an offer notice (as defined in the Articles) served on it following the service of a transfer notice (as defined in the Articles) by Mr Power.
(b) The Amendment Application: By an Application made in June, the Claimants have applied to amend their Particulars of Claim.
(c) The Restriction Issue: Whether the provisions in a settlement agreement between Axis and (1) Mr Power, (2) SR20, and (3) Seebeck 87 Limited (“ Seebeck”) scheduled to a Tomlin order made by Master Kaye on 18 November 2020 (the “ Settlement Agreement”) prevent a sale of the Club; and, if they do, whether there is a fetter on the Claimants' discretion to refuse consent to a sale of the Club and whether the Court should insist on their enforcement.
(d) The Quick Sale Application: Prior to the last hearing the Claimants sought an order under CPR rule 25.1(1)(c)(v) for the sale of shares by Mr Power to Axis, by means of an application dated 11 May 2021 and a later clarificatory note dated 16 May 2021.
(e) The Expedited Timetable: The timetable for trial on the first two actions mentioned above, now that this is to be held on an expedited basis.
The court in addition had been requested to consider whether injunction orders made by Morgan J on 31 March 2021 (the “ March injunction”), and an earlier injunction also ordered by Morgan J in November 2019, (the “ 2019 injunction”), each as subsequently confirmed and extended on various occasions should be continued or further amended.
These matters are considered below.
B. THE PRE-EMPTION CLAIM
Background
The basic facts underlying the Pre-emption Claim are not in dispute.
(a) On 17 May 2021, Mr Power gave notice (the “ Transfer Notice”) to SR20 of his intention to sell all 85 of his shares in SR20 at a price of £2,500 per share pursuant to the pre-emption rights in article 23 of the Articles.
(b) On 25 May 2021, SR20 sent to an offer notice offering to sell 13 shares (representing 15% of 85 shares) at a price of £2,500 per share (the “ Offer Notice”), pursuant to the Articles.
(c) On 28 May 2021, Axis served a notice of acceptance (the “ Notice of Acceptance”) purporting to accept a purchase of 85 shares on the bases that:
(i) the Offer Notice must be construed or rectified to be consistent with the Articles, which require all of the shares to be offered to Axis; or
(ii) alternatively, on the basis that Axis had a right under Article 23.8 of the Articles to take up additional shares in excess of its offered proportion, and was exercising that right.
On 28 May 2021, Axis issued and filed the Part 8 Claim Form supported by a witness statement of Edward William Parladorio dated 28 May 2021. This was the same day as Axis's Notice of Acceptance and only three days after the Offer Notice itself. These documents were sent on that day by registered and first-class post to SR20 and email to Mr Power and to their solicitors. However, the Claim Form was only formally served on 3 June 2021 owing to a delay in its being sealed by the court.
By the Claim Form, Axis has sought declaratory and/or injunctive relief that: (1) the Notice of Acceptance was valid in relation to all of 85 shares owned by Mr Power; or (2) SR20 is obliged to issue an Offer Notice to Axis in respect of all 85 shares. Axis sought appropriate declaratory or injunctive relief accordingly.
Axis applied to the court for directions for this matter to be listed to be heard at the hearing that had already been scheduled for 15 June 2021 to deal with the other matters which were due to be heard on that date. Mr Power, via his counsel, Ms Thornley, resisted this on the basis that Mr Power and SR 20 needed more time to compile evidence and consider the matters under question.
I considered this matter on paper and exchanged emails with Counsel about this. Although I considered that there was urgency to consider this application, and that this application needed to be considered before the other important matters to be dealt with at this hearing could be properly considered, I initially hesitated to order that this be heard at the requested date of 15 th June. I hesitated because under CPR rule 8.3, the Defendants had 14 days to file their acknowledgement of service. Although they would have been aware of the claim and the issues involved for at least this period, the sealed version of the claim was not received back from the court until Tuesday, 1 June 2021 and so they would not have had the formal service for the full 14 days. Whilst this would be within the court's power, I was reluctant to give them less time to serve their acknowledgement than would be the normal expectation under CPR rule 8.3. I explored the possibility of a slightly later hearing to deal with everything and found that this would not be practical for two or three weeks as a result of counsels' other commitments.
Having considered the further representations of both counsel on paper I decided that I would hear this matter at this hearing on the 15 th June. In coming to that decision I took account of various factors which included the following:
(a) SR20 and Mr Power had in fact signed an Acknowledgement of Service of the application on 10 June 2021, so it was clear that they did not need the full 14 days to do this.
(b) Within the form of Acknowledgement, the Defendants had been given an opportunity to object to the Part 8 process being applied and they did not take that opportunity by ticking the box to register any such objection.
(c) Under CPR rule 8.5, a defendant who wishes to rely on written evidence must file it with his acknowledgement of service and the Defendants in this case had not filed any such written evidence.
(d) It seemed to me that the question in issue related principally to a question of construction of the Articles and did not require any witness evidence. Whilst Ms Thornley had suggested that she thought the matter was unsuitable for Part 8 as there would be a need for evidence, she was unable to point to any particular evidence that I thought would be pertinent to the question.
(e) It seemed to me that there was urgency in regularising the position of SR20 and of the Club. The court had seen evidence about the unsatisfactory financial position of the Club and there was no doubt that the continuing uncertainty was bad for it. I did not see any benefit in delaying the resolution of this limited question for any longer than was necessary.
Should I deal with this Claim at this hearing?
Ms Thornley, in her skeleton argument and in oral argument before me at this hearing has repeated her...
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