Minmar (929) Ltd v Khalastchi
| Jurisdiction | England & Wales |
| Judge | The Chancellor |
| Judgment Date | 08 April 2011 |
| Neutral Citation | [2011] EWHC 1159 (Ch) |
| Docket Number | Case No: 1951 of 2011 |
| Court | Chancery Division |
[2011] EWHC 1159 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
The Chancellor
Case No: 1951 of 2011
Mr M Green QC (instructed by Clyde and Co LLP) appeared on behalf of the Claimants
Ms M Shekerdemian (instructed by Isadore Goldman) appeared on behalf of the Defendants
Mr A Gourgey QC (instructed by Fladgate LLP) appeared on behalf of the Interveners
This an application by Mr Paul Chohan, a director of Minmar (929) Limited, for an order setting aside the appointment of Mr Kalatschi and Mr Atkins, insolvency practitioners with Harris Lipman LLP, as administrators of Minmar purportedly made on 16 March 2011 by the first three interveners, Clemantine Limited, Grantday Limited and Osterwood Limited, to whom I shall refer as "the Intervening Directors", under paragraph 22(2) in Schedule B1 to the Insolvency Act 1986. The interests of the fourth intervener, Baleday Ltd, will become apparent later. At the start of the hearing I directed that all four interveners should be added as defendants to the application.
The administration of Minmar pursuant to the appointment was stayed by order of Lewison J made ex parte on 18 March 2011 and continued by Arnold J on 25 March 2011. The formal respondents, the administrators, are neutral but need to know whether they are duly appointed or not. Thus the dispute is between Mr Chohan who claims that the administrators were not validly appointed and the four interveners who claim that they were; but, even if they were not, they contend that Mr Chohan has no standing to complain. Each side has filed a number of substantial witness statements, not all of which are relevant to the issues I have to determine, to which some substantial exhibits are attached.
Minmar was incorporated in January 2010 to carry on gambling businesses. Rockstone Securities Limited was its only shareholder and, at that stage, Mr Malizia was its only director. Later Mr Mark Harris and Mr Paul Chohan were made additional directors. There are a number of provisions in the Articles of Association to which I should refer. They are Articles 8, 9, 10, 12, 14, 18, 20 and 21. Article 8 is headed "Directors to take decisions collectively" and 8.1 provides:
"The general rule about decision-making by directors is that any decision of the directors must be either a majority decision at a meeting or a decision taken in accordance with Article 9."
I omit 8.2
Article 9 is headed "Unanimous decisions" and reads as follows:
"9.1 A decision of the directors is taken in accordance with this Article when all Eligible Directors indicate to each other by any means that they share a common view on a matter.
9.2 Such a decision may take the form of a resolution in writing, signed by each Eligible Director (whether on the same or one of several copies) or to which each Eligible Director has otherwise indicated agreement in writing.
9.3 A decision may not be taken in accordance with this Article if the Eligible Directors would not have formed a quorum at a directors' meeting."
Article 10 is headed "Calling a directors' meeting" and provides:
"10.1 Any director may call a directors' meeting by giving notice of the meeting to the directors or by authorising the company secretary (if any) to give such notice.
10.2 Notice of any directors' meeting must indicate: (a) its proposed date and time; (b) where it is proposed to take place; and (c) if it is anticipated that directors participating in the meeting will not be in the same place, how it is proposed that they should communicate with each other during the meeting.
10.3 Notice of a directors' meeting must be given to each director but need not be in writing."
I omit 10.4.
Article 12 deals with the quorum for directors' meetings and provides in Article 12.2:
"The quorum for directors' meetings shall be one Eligible Director if the Company has only one director and two Eligible Directors if the Company has more than one director."
Then in Article 14, 14.1 provides:
"Subject to the Articles, a decision is taken at a directors' meeting by a majority of the votes of the Eligible Directors who are participating and each Eligible Director participating in a directors' meeting has one vote."
Then Article 18, which is headed "Records of decisions to be kept", reads as follows:
"The directors must ensure that the Company keeps a record, in writing, for at least ten years from the date of the decision recorded: (a) of every unanimous or majority decision in whatever form taken by the directors …"
I need not read (b).
Article 20 is headed "Appointment of directors" and continues in 20:
"Methods of appointing directors
20.1 Any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director: (a) by ordinary resolution; or (b) by a decision of the directors."
Finally, in Article 21(f) it is provided that a person ceases to be a director as soon as:
"(f) notification is received by the Company from the director that the director is resigning from office as director, and such resignation has taken effect in accordance with its terms."
In order lawfully to carry on a gambling business, it is necessary to have both an operating licence granted by the Gambling Commission and a premises licence granted by the Local Authority in respect of each place where the gambling activity is to be carried on. Under sections 159 and 188 of the Gambling Act 2005, a premises licence may only be granted or transferred to a holder of an operating licence.
In October 2010, Minmar obtained an operating licence and entered into negotiations with a number of companies then in administration, collectively called Agora, for the acquisition of their gambling businesses. It expected to obtain finance from a third party. In the event, such finance was not forthcoming and the assets of Agora were acquired by the fourth intervener, Baleday Limited. That company had been incorporated on 17 November 2010 and it was and is effectively controlled by Mr Toby Hunter.
On 30 November or 1 December, it matters not which, 2010 three relevant agreements were concluded. The first was an Asset Sale Agreement made between Agora and Baleday whereby the former sold to the latter its gambling businesses for £6 million, of which £1.5 million had in fact been paid by Minmar as a non-refundable deposit and was taken into account. The second was an Option Agreement made between DS2 Limited, the parent company of Baleday, and Minmar Properties Limited, conferring on the latter the option to acquire the shares in Baleday for £10 million payable by weekly instalments of £48,077 each commencing on 1 December 2011. The third was an Operator Agreement made between Baleday and Minmar whereby the latter operated the business of the former under its own operator and premises licences and paid the net profits to Baleday for credit to its liability under the Option Agreement.
I comment that both the Operator and the Option Agreements were extended, both in writing and orally, from time to time down to 26 February 2011 and then both of them expired. They were effectively alternatives to each other.
On 3 December 2010 there was concluded what is called the Rockstone Option Agreement made between Rockstone Securities Limited, as owner of the shares in Minmar, and Boliari (UK) Limited, a company owned by Mr Papourov, a Bulgarian national. As varied on 3 February 2011, in consideration of £199,999, Rockstone granted to Boliari an option to buy its shares in Minmar on written notice and payment of £1. The Rockstone Option provided for payment to Rockstone of a 50 per cent profit share in the event of any resale by Boliari for more than £200,000. In addition, as varied, it included the following material terms:
"4.4 Upon entering into this Agreement the Grantor agrees that, until the exercise or expiry of the Option [for such period as is reasonably necessary after the exercise of the option], it will execute such further documents and do such further acts and things (insofar as it may be reasonably able and empowered to do so) as shall be necessary for the purpose of transferring the Option Shares to the Purchaser [and/or registering the Option Shares in the name of the Purchaser] and/or to preserve the rights and/or value of the Option Shares including for the avoidance of doubt [so far as it is able] passing such resolutions as the Purchaser shall direct [at the Purchaser's cost, taking steps to remove or appoint directors of the Company at the behest of the Purchaser] provided that nothing in this clause shall oblige the Grantor to become a party to any litigation or arbitration proceedings without prior written consent from the Grantor."
Then in clause 6.1 it is provided:
"The Grantor undertakes to the Purchaser that for so long as the Option Shares are registered in the name of the Grantor, it will exercise its voting rights and all other rights relating to the Option Shares strictly in accordance with the written directions of the Purchaser."
On 17 February 2011 Rockstone, at the request of Mr Papourov, purported to suspend Mr Malizia as a director of Minmar on grounds of gross misconduct. It is not suggested that this had any direct effect on his directorship. On 26 February 2011, £1 million had been paid by Minmar to Baleday under the Operator Agreement in...
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