Oxford Legal Group Ltd v Sibbasbridge Services Plc

Hearing date: 29 February 2008

This is an appeal from an order made on 9 October 2007 by Mr Justice Kitchin on applications made in proceedings brought by The Oxford Legal Group Limited (“OLG”) against Sibbasbridge Services Limited (“SBS”) and Mr Christian Hoyer Millar. OLG and Mr Hoyer Millar are the directors of SBS.

The claim in the proceedings – which were commenced on 6 March 2007 – was for an order that OLG be entitled to inspect the accounting records of SBS under section 222 of the Companies Act 1985. A defence to that claim was served on 17 April 2007. On 23 April 2007 OLG issued an application notice seeking summary judgment on the grounds that the defendants had no reasonable prospect of successfully defending the claim and that there was no other reason why the proceedings should go to trial. On 25 April 2007 the defendants issued an application notice seeking an order that the particulars of claim be struck out as disclosing no cause of action; and that the claim be transferred to the Companies Court for hearing with the petition (No 4941 of 2005) under section 459 of the 1985 Act then pending in relation to the affairs of SBS.

By his order of 9 October 2007, the judge dismissed both the application for summary judgment and the application to strike out. But he acceded to the defendants' application to the extent of ordering the claim to be transferred to the Companies Court to be heard with the pending petition. OLG appeals from that order. Permission to appeal was granted by this Court (Lord Justice Rimer) on 24 January 2008.

The appeal is listed with an application, made in section 9 of the respondents' notice filed on 8 February 2008, for leave to adduce further evidence. That evidence takes the form of a witness statement made by the respondents' solicitor to which are exhibited (i) a judgment of Mr Registrar Rawson delivered on 14 June 2007 following a directions hearing in the section 459 petition, (ii) draft points of defence in the petition and (iii) a note of the judgment of Mr Justice Norris, delivered on 31 January 2008, on appeal from the order made by Mr Registrar Rawson. A transcript of that judgment, [2008] EWHC 265 (Ch) has also been made available. In so far as the additional evidence relates to material events which have occurred since the order of 9 October 2007 (but not otherwise) I would admit it.

The section 459 petition

The present appeal must be set in the context of the section 459 petition (now section 994 of the Companies Act 2006). The circumstances in which that petition came to be presented are described in the opening paragraphs of the judgment of Mr Justice Norris to which I have just referred:

“[2] … Sibbasbridge Services PLC ('SBS') was incorporated in 1994 with an authorised share capital of £100,002 divided into £1 ordinary shares. The petitioner, Mr Hoyer Millar, is the registered holder of 50,000 shares. 50,000 shares were originally registered in the name of a Mr Brooks, a solicitor and businessman, but in 1998 he caused the shares registered in his name to be transferred to a company incorporated in the Isle of Man but administered in Jersey called Valemarket Limited which subsequently changed its name to Saccary Limited. The other two shares were registered in the name of Battlebridge Group Limited ('BBG') another company connected with Mr Brooks.

[3] In 2005 Mr Hoyer Millar presented a petition under section 459 in relation to what he said was unfair prejudice caused to him as shareholder in SBS arising out of activities of Mr Brooks or companies controlled by him. SBS was essentially a holding company, holding shares in a Singaporean company called 3DM Worldwide Plc. The petition alleged that Mr Brooks had dishonestly diverted that shareholding from SBS to another company which Mr Brooks controlled and that when complaint of this then was made only one half of the shares so diverted were restored to SBS.

[4] The petition also alleged that Mr Brooks had entered into a shareholder's agreement under which the common understanding as to the way in which the affairs of SBS were to be conducted was on the basis of complete equality and that one of the two shares vested in BBG belonged beneficially to Mr Hoyer Millar or his nominee but that Mr Brooks or his companies were refusing to transfer it.

[5] Thirdly, the petition alleged that SBS had carried out services for [3DM Worldwide ('3DMW')] for which it was owed over £100,000 but that Mr Brooks directly or indirectly was refusing to permit SBS to recover that money from 3DMW (of which he also had control).

[6] The petition finally alleged that a situation of deadlock existed which rendered it equitable to grant relief under section 461… .”

The judgment goes on to describe the relief sought in the petition:

“[6] … The relief sought in the petition was that the petitioner be permitted to buy the shares then registered in the names of BBG and of Saccary, at a fair value to be determined by the court (or by an independent valuer) with no discount to reflect a minority holding, but with an adjustment to reflect the loss suffered by SBS as a result of the unfairly prejudicial conduct.

[7] The alternative relief sought was an order that BBG and Saccary buy Mr Hoyer Millar's shares at a fair value with no discount for a minority holding and with a premium to reflect the loss suffered as a result of the matters of unfair prejudice. Further consequential relief was sought.”

The petition came before Mr Registrar Rawson for directions in April 2007. The directions which he gave are contained in an order dated 14 June 2007.Paragraph 3 of that order is in these terms:

“It is Ordered that … (3) The Petitioner or his nominee shall purchase and the 1 ^st and 2 ^nd Respondents shall sell their 50% Shareholding in the 3 ^rd Respondent for a sum equal to one half of the net asset value of the 3 ^rd Respondent as at 30 September 2006, such value to be determined by the court.”

In that context, the petitioner is Mr Hoyer Millar; the 3 ^rd respondent is SBS; and the 1 ^st and 2 ^nd respondents are, respectively, BBG and Saccary, companies controlled by – or, at the least, connected with – Mr Kenneth Brooks; as described by Mr Justice Norris in the passage of his judgment to which I have just referred. The basis for the direction in paragraph 3 of the order of 14 June 2007 was the Registrar's finding – recorded in the form of a declaration at the beginning of the order – that:

“… an agreement was reached between the Petitioner and the First and Second Respondents on 4 December 2006 that (1) the 1 ^st Respondent would pay the costs of the Petition to the date of the agreement and (2) the Petitioner would buy and the 1 ^st and 2 ^nd Respondents would sell their shareholding in the 3 ^rd Respondent ('the Agreement')”

The appeal before Mr Justice Norris was an appeal from the Registrar's order of 14 June 200Mr Justice Norris dismissed that appeal. The position, therefore, is that the petition is proceeding to a trial – fixed, we were told, for hearing in June 2008 – on the basis that the principal issue is as to what price is to be paid by Mr Hoyer Millar for the shares held in the names of BBG and Saccary: that is to say, for the shares controlled by Mr Brooks. The questions whether there is to be a share purchase and who is to be the purchaser have been determined by the December 2006 agreement and the June 2007 order. When the price has been determined – for which the order of 14 June 2007 provides – Mr Hoyer Millar or his nominee will become the registered owner of all the shares in SBS. He is, as it seems to me, already the beneficial owner of those shares; subject to any lien which BBG and Saccary may have to secure payment of the purchase price.

As I have said, the directions hearing which led to the order of 14 June 2007 was before the Registrar in April 2007: after the date of the agreement of 4 December 2006 and at or about the time when the applications in the present proceedings were issued. The important link between those applications and the petition is that OLG is said to be the nominee or creature of Mr Brooks. That is not, I think, denied: at least, not denied in the context of proceedings for summary judgment. It was the subject of a finding by Mr Bernard Livesey QC, sitting as a Deputy Judge of the High Court in the Chancery Division in yet further litigation between Mr Hoyer Millar and Mr Brooks, in a judgment, [2006] EWHC 1588 (Ch), delivered on 29 June 2006. In passages at paragraphs [19] and [21] of that judgment – to which Mr Justice Kitchin referred at paragraphs [14] and [15] of his judgment in the present proceedings, [2007] EWHC 2265 (Ch) – Mr Livesey described the position in these terms:

“[19] On 1 ^st June 1998 Mr Brooks resigned as a director of SBS and arranged for Oxford Legal Group Limited ('OLG') to replace him as his nominee as director. OLG...