Petition Of Thomas Orr And Another For Orders Under The Companies Act 2006 In Respect Of D.s. Orr & Sons (holdings) Limited And D.s. Orr & Sons Limite
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2013] CSOH 116 |
| Date | 09 July 2013 |
| Docket Number | P1769/08 |
| Published date | 10 July 2013 |
| Court | Court of Session |
| Year | 2013 |
| OUTER HOUSE, COURT OF SESSION | |
| [2013] CSOH 116 | |
| P1769/08 | OPINION OF LORD DOHERTY in the Petition of (1) THOMAS ORR and (2) JAMES ORR Petitioner; for orders under section 996 of the Companies Act 2006 in respect of D. S. ORR & SONS (HOLDINGS) LIMITED and D.S. ORR & SONS LIMITED ________________ |
Petitioner: Howlin QC, McColl; Lindsays
Second respondent: Party
Third respondent: Party
Fourth respondent: Party
9 July 2013
Introduction
[1] The first petitioner is Thomas Orr. The second petitioner is James Orr. The first respondent is D.S. Orr & Sons (Holdings) Limited ("Holdings"). The second respondent is Duncan Stewart Orr. The third respondent is Andrew Orr. The fourth respondent is Janet Orr. The fifth respondent is D.S. Orr & Sons Limited ("Orr"). The sixth respondent is Raj Jandoo. The petitioners and the second, third and fourth respondents are siblings.
[2] The Orr family have for many years carried on the business of farming, principally at Sunwick Farm and Greenwood Farm in Berwickshire and at Randerston Farm in Fife. From 1965 the business had been carried on through Orr. Prior to a reorganisation in 2002/3 each of the petitioners and the second and third respondents held 23% of the ordinary shares in Orr and the fourth respondent held the remaining 8%. The directors of Orr were the petitioners and the second and third respondents.
[3] In 2002/3 the family reorganised the businesses. The reorganisation was implemented by means of a series of agreements (being a Reorganisation Agreement, a Share Exchange Agreement and a Sale/Purchase Agreement) which were entered into on 14 February 2003 and were effective from 30 September 2002. Four new companies were incorporated, one for each of the farming businesses (J. Orr & Company limited ("JO"), T Orr & Company Limited ("TOCL") and Sunwick Farm Limited ("Sunwick") and a fourth company, Holdings, as a non-trading holding company for the three farming companies and Orr. Orr and the three farming companies became wholly owned subsidiaries of Holdings. The farm farmed by each of the farming companies was sold to it by Orr. Certain property interests (the "retained property") were retained by Orr. In order to ensure that each of the three separate farming businesses was controlled and managed by the individual, or group of individuals, who had managed it before the reorganisation the shares in Holdings were subdivided into "A", "B", and "C" class shares, each class of shares conferring upon its holder or holders control of the relevant farming business. The shares were allotted in proportions which replicated precisely the proportions in which the issued shares of Orr had been held. The first petitioner was allotted 41,430 "A" shares; the second petitioner was allotted 41,430 "B" shares; the second respondent was allotted 41,430 "C" shares; the third respondent was allotted 41,430 "C" shares; and the fourth respondent was allotted 14,280 "C" shares. The retained property comprised a terrace of cottages, the former farmhouse and relative ground at Randerston Farm; two fields at Overton Farm; a right of pre-emption over land at Riggonhead, Tranent; a right to share in any development uplift at Sunwick and Greenwood Farms; a right to share in any development uplift at Randerston Farm; a right to share in any development uplift at Overton farm; and a right to share in any development uplift at Kingsbarns Golf Course, Fife. In terms of clause 7.1 of the Sale/Purchase Agreement JO has a right of pre-emption should Orr wish to dispose of all or any part of the retained property. In terms of clause 7.3 Orr requires the prior consent of JO to sell retained property.
[4] In terms of the articles of Orr the quorum necessary for the transaction of directors' business is two. In the event of an even division in voting the chairman has a second, or casting, vote.
[5] Disputes developed between the petitioners on the one hand and the second and third respondents on the other hand as to the management of Orr and Holdings. The petitioners and the second and third respondents were the directors of Orr. Each had a single vote at board meetings. Because the board was equally divided, it proved impossible to elect a chairman.
[6] On 24 October 2008 the petitioners presented the present petition for orders under the Companies Act 2006, section 996.
The petitioners' averments
[7] In view of the history of the proceedings, and the way matters developed at the hearing, it is appropriate to set out material parts of the petitioners' averments. (Those averments include several typographical and grammatical errors). The petitioners aver:
"The March 2008 Interdict proceedings
15. That in March 2008 matters reached a critical point. On or about the 13th March 2008 the petitioners raised interdict proceedings against Holdings, Orr and the second, third and fourth respondents. This sought interdict in respect of two extraordinary general meetings requisitioned by the second, third and fourth respondents, one of Holdings and the other of Orr and scheduled for 14 March 2008. Notice of the meetings was received by the petitioners on or about 14 February 2008 and, taken together, indicated that at each meeting a resolution for the removal of the petitioners as directors of Holdings and of Orr would be considered...
16. That as a result of that petition formal undertakings were given to the court by Orr and the second, third and fourth respondents. The second, third and fourth respondents undertook that they would not, either in person or by means of proxy, move the resolutions to remove the petitioners from the office of director of Holdings at the meeting on 14th March 2008. The fifth respondent, Orr, also undertook not to hold an extraordinary general meeting on the 14th March 2008 to remove the petitioners as directors of Orr...
17. That the extraordinary general meetings of Holdings and Orr did not take place on the 14th March 2008 and the resolutions to remove the petitioners as directors of Holdings and of Orr were not moved...
The Board meetings of 17 March 2008
18. That the petitioners had attended a board meeting of Orr on 21 February 2008 where it was inter alia resolved to fix 17 March 2008 as the date of the next board meeting of Orr. A board meeting for Holdings was also set down for 11 a.m. on 17 March 2008 with the board meeting for Orr at 2 p.m. the same day. No notice of these meetings was issued and no agenda or notice of any resolutions was intimated to the petitioners in respect of either board meeting. The petitioners understood that these meeting would be routine meetings to discuss the ongoing business of Orr and Holdings. Explained and averred that prior to reorganisation in 2002 the business of the petitioners and of the second, third and fourth respondents was conducted in a fairly informal manner, often by way of telephone calls among the parties. Following reorganisation in 2002 and in particular following the involvement of the sixth respondent, company business was conducted more formally and agendas and resolutions were intimated...
19. That the petitioners attended with their solicitor Anthony Murray of Lindsays, Solicitors at 10.55 a.m. on the 17th March 2008 for board meeting of Holdings. They were called in to the meeting at approximately 11.20am. It became apparent that the meeting had already commenced. The meeting degenerated into argument and Mr Murray was later advised by Mr Mark Ralston (a solicitor and partner in the firm of Messrs Wright & Crawford, Paisley who were at the time the company secretary of Orr) that it was to be considered null and void...
20. That the petitioners thereafter attended with their solicitor Anthony Murray at 2pm on 17 March 2008 for the scheduled board meeting of Orr. The meeting was convened and an agenda was provided at the meeting. The agenda is produced. The meeting was chaired by a Mr Ralston. The first item on the agenda was the interdict proceedings referred to in statement 15 above. Given the petitioners role in those proceedings they were asked to leave the board meeting whilst the interdict proceedings were discussed. They agreed to do so. Thereafter the meeting concluded without either of the petitioners or Mr Murray being invited to re-join the meeting. Mr Ralston on leaving the meeting advised Mr Murray that no further business had been conducted at the meeting...
The 19 March 2008 Orr board meeting
21. That the further board meeting of Orr took place as scheduled at 12 noon on 19 March 2008. No agenda or notice of any resolutions were intimated to the petitioners. The meeting was chaired by Mr Ralston. The second petitioner attended that meeting. The first petitioner was unwell and unable to attend the meeting. The first part of the meeting was a continuation of an emergency board meeting of Orr of 10 March 2008. Because of the absence of the first petitioner it was agreed that the meeting be adjourned to 30 April 2008...
22. That the parties reconvened at 12 noon to continue the Orr board meeting of 17 March 2008 referred to above. The first petitioner was not present. An agenda was provided at the meeting. At the conclusion of the meeting, under "AOCB" the board resolved to fix a further board meeting for 30 April 2008. The third respondent then indicated that he had further business to raise. After some discussion the chairman allowed the third respondent to proceed...
23. That the third respondent proposed inter alia a resolution to confirm the appointment of Janet Orr, the fourth respondent, as a director of Orr...
24. That the second respondent seconded the resolution to appoint Janet Orr a director. A vote was taken and the second and third respondents voted in favour of the resolution. The second petitioner voted against the resolution to appoint Janet Orr a director as he considered that her appointment as a director would shift the balance of power on the board in favour...
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