Mr Waleed Abouraya (suing on behalf of himself and all other shareholders in the Second Defendant other than the First Defendant) v Ms Anja Sigmund and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards |
| Judgment Date | 13 February 2014 |
| Neutral Citation | [2014] EWHC 277 (Ch) |
| Docket Number | Case No: HC13B04134 |
| Court | Chancery Division |
| Date | 13 February 2014 |
[2014] EWHC 277 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
DERIVATIVE CLAIM
Royal Courts of Justice
Rolls Building
Fetter Lane
London, EC4A 1NL
Mr Justice David Richards
Case No: HC13B04134
Daniel Lightman and Thomas Elias (instructed by Asserson Law Offices) for the Claimant
David di Mambro and Henry Day (instructed by Kidd Rapinet LLP) for the First Defendant
Hearing date: 30 January 2014
Introduction
This is an application for permission to continue this action against the first defendant as a derivative claim on behalf of and for the benefit of the second and third defendants. Permission is also sought pursuant to CPR 6.36 to serve the claim form out of the jurisdiction on the second defendant at its registered office in Hong Kong.
The claimant, Waleed Abouraya, and the first defendant, Anja Sigmund, are the only members of the second defendant, Triangle Metals & Minerals Trading Limited (Triangle HK), a company incorporated in Hong Kong. Each of them is registered as the holder of one ordinary share. The third defendant, Triangle Metals & Minerals Limited (Triangle UK), is a company incorporated in England and is a wholly owned subsidiary of Triangle HK. The claimant and the first defendant, who I will call the defendant, are the only directors of Triangle HK and the defendant is the only director of Triangle UK.
Triangle HK was incorporated in October 2001 by the claimant and two other investors. In or about January 2003, the other two investors ceased any involvement in Triangle HK and since then the only registered shareholders have been the claimant and the defendant. Until quite recently, the claimant maintained that the defendant held her share as his nominee, but he now accepts that she has at all times since 2003 beneficially owned the share registered in her name.
Triangle UK was incorporated in January 2002 and has at all times been wholly owned by Triangle HK. Triangle HK has always been a holding company, and Triangle UK has carried on the business of trading in metals and other commodities. Working capital for the business was provided by the claimant or companies under his control but he was not actively involved in the day to day management of the business, which was the responsibility of the defendant. He was never a director of Triangle UK while she has at all times since 2003 been its managing director. Between January 2004 and January 2012, there was a second, non-executive director of Triangle UK.
Following discussions between the claimant and the defendant in the course of 2010, Triangle Metals & Minerals GmbH (Triangle Switzerland) was incorporated in Switzerland as, and has remained, a wholly owned subsidiary of Triangle HK. The claimant's own evidence as to the reasons for the establishment of Triangle Switzerland is: "We decided to establish a Swiss company because Anja wanted to move to Switzerland and because of the tax benefits this corporate structure would bring….Anja is and has been at all relevant times the sole director of Triangle Switzerland."
The claims advanced in these proceedings all relate to alleged misappropriations of funds belonging to Triangle UK and the alleged diversion of a business opportunity available to Triangle UK. It is alleged that the defendant procured these various misappropriations and the diversion of the business opportunity. Except for some minor sums, it is not, however, alleged that the funds were misappropriated, or that the business opportunity was diverted, to the defendant personally or to entities owned by her. The claimant accepts that the payments were made to Triangle Switzerland. Any loss to Triangle UK resulting from these payments involved a corresponding gain to Triangle Switzerland, and therefore involved no loss to Triangle HK or to the claimant in his capacity as a shareholder of Triangle HK. Likewise, the contract which the defendant was negotiating, it appears on behalf of Triangle UK, was in fact made with Triangle HK and then assigned to Triangle Switzerland. The only personal gains to the defendant alleged in the particulars of claim are limited benefits conferred on the defendant by Triangle Switzerland, to which I shall later return.
The reason why the claimant is nonetheless seeking to bring these proceedings to recover the payments and the benefit of the contract for Triangle UK is that he claims to be a creditor of Triangle UK. He and a company controlled by him have issued proceedings in the Queen's Bench Division of the High Court for recovery of the sums alleged to be due (the QB action). As well as being the obvious inference from the facts, the claimant's purpose is made clear by him in his evidence. He states at paragraph 60 of his witness statement in support of the present application:
" If permission is not given for me to continue these derivative proceedings, Triangle UK will be left without any means of recovering money which properly belongs to it. As I have explained in paragraph 7 above, I am already engaged (with my company, MEBPC) in litigation against Triangle UK in order to recover sums of money loaned to it which it now refuses to acknowledge or repay. Unless Anja is forced to restore sums which she has misappropriated to Triangle UK, Triangle UK is likely to be unable to meet any judgment against it in favour of me or MEBPC in the [QB action]."
Again, at paragraph 68, he states:
" I wish to compel her to reimburse Triangle UK the monies which ought now to be in Triangle UK's coffers as quickly as possible. This would enable Triangle UK to pay its debtors – including (in the event that judgment is entered against it in the [QB action]) MEBPC and me."
I should here say that there is no evidence of any other claims against Triangle UK, still less any evidence of any debts going unpaid.
The trial of the QB action is listed in a 5-day window commencing on 12 May 2014, with an estimate of 4-5 days. If permission to continue the present proceedings is granted, the claimant seeks directions to enable the trial of these proceedings to take place at the same time as the trial of the QB action and before the same judge. Directions are proposed for statements of case, disclosure and service of witness statements over the next 2 months to enable this matter to be ready for trial in May.
A further unusual and important feature of the present proceedings is that there is a dispute between the claimant and the defendant as to whether the claimant holds his share for the defendant absolutely. I will set out the relevant facts in a little more detail below but, in summary, it is not in dispute that the claimant agreed in writing to transfer his share to the defendant for consideration and that he unilaterally halted the process designed to register the transfer of his share to her. The dispute is whether, as the claimant alleges, the contract for the sale of his share was conditional on the repayment by Triangle UK of sums which he alleged were due to him or to his company. If the claimant is wrong in his contention, it follows that, as the contract is specifically enforceable, the beneficial interest in the share has passed to the defendant and the interest of the claimant is limited to an unpaid vendor's lien. The lien is of no significance since the agreed price was $1. Although the contract may be governed by the law of Hong Kong, there is no material distinction between its law and English law on this issue.
This is an important factor in considering whether to give permission for the claimant to continue with his derivative claim. I would regard it as close to inconceivable that the court would give permission for a nominee shareholder to proceed with a derivative action against the wishes of the beneficial owner of the share. In such circumstances, the nominee shareholder has no legitimate interest in the proceedings. Mr Lightman, counsel for the claimant, was unable to suggest any ground on which the court would give permission in such circumstances.
Before turning to the relevant facts in the present case, I shall deal in general terms with the applicable legal principles.
Relevant legal principles
It is common ground that the claims made in these proceedings are not "derivative claims" for the purposes of the statutory framework for derivative claims contained in Part 11 of the Companies Act 2006. For the purposes of proceedings in England and Wales, a derivative claim is defined by section 260(1) as a claim "by a member of a company (a) in respect of a cause of action vested in the company, and (b) seeking relief on behalf of the company." The present proceedings do not fall within this definition for two reasons. First, the claimant is not a member of Triangle UK, the company in which the relevant causes of action are vested and on behalf of which relief is sought. The only member of Triangle UK is Triangle HK. Secondly, Triangle HK is not "a company" for the purposes of these provisions, which are restricted to companies incorporated in the United Kingdom under the present or former Companies Act or the equivalent legislation in Northern Ireland: section 1 Companies Act 2006. It follows that none of the detailed provisions contained in section 263 for determining whether permission should be given for the commencement or continuation of a derivative claim applies to these proceedings.
It is also common ground that the English court nonetheless has jurisdiction to entertain a derivative claim in the...
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Table of Cases
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