Re Bugle Press Ltd; Application of H.C. Treby; Re Houses and Estates Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE HARMAN |
| Judgment Date | 11 November 1960 |
| Judgment citation (vLex) | [1960] EWCA Civ J1111-1 |
| Date | 11 November 1960 |
| Court | Court of Appeal |
[1960] EWCA Civ J1111-1
The Master of the Rolls (Lord Evershed)
Lord Justice Harman and
Lord Justice Donovan
In The Supreme Court of Judicature
Court of Appeal
MR RALPH INSTONE (instructed by Messrs Blakeney & Co.) appeared as Counsel for the Appellants.
SIR MILNER HOLLAND, Q.C. and MR MORRIS FINER (instructed by Mr Henry E. Goodrich) appeared as Counsel for the Respondent.
: I shall follow the example set by Mr Justice Buckley in delivering a single Judgment in the two cases before us, namely, those entitled in the matter of Bugle Press Ltd. and in the matter of Houses and Estates Ltd. It is not in doubt that all relevant facts in the two cases are entirely analogous and I shall therefore follow the example of the learned Judge and also Mr Instone in making my necessary references to facts and documents from the Bugle Press case.
The appeal comes before us as a result of an application by originating summons made at the suit of Mr Treby asking for a declaration that the respondents, Jackson & Shaw (Holdings) Ltd. were neither entitled nor bound to acquire the applicant's shares in Bugle Press Ltd. — and I am quoting from the terms of the application which also find their place in the order -"upon the terms of the scheme or contract dated the 14th July, 1959, notwithstanding that it", that is the scheme or contract, "has been approved by nine-tenths of the shareholders of Bugle Press Ltd".
The essential facts are set out In Mr Treby's affidavit and I can summarise them as follows. Bugle Press Ltd. was incorporated in the month of January 1950 and its business has, we understand, been that of the publication of a magazine devoted in large measure, if not entirely, to advertisement for the sales of second-hand cars and other like matters. The authorised and issued share capital of the company is 10,000 shares of £1 each fully paid, of which 9,000 have been at all material times held in equal moieties by George Douglas Shaw and Henry Robert Jackson who are the two directors of the company. The remaining 1,000 shares have at all material times been held by Mr Treby. The company to which I have already referred, Jackson & Shaw (Holdings) Ltd. was registered in September 1958 and its only members and directors are the same two persons whom I have mentioned, George Douglas Shaw and Henry Robert Jackson. There is not any doubt, and indeed Mr Instone freely conceded, that the purpose of the formation of this company was in order that the mechanics of Section 209 of the Companies Act 1948 might be invoked. By a letter, being Exhibit H.C.T.2 to Mr Treby's affidavit of the 14tb July, 1959, it was stated by the solicitors acting for Jackson & Shaw (Holdings) Ltd. that that company was proposing to make an offer to purchase the whole of the issued share capital of Bugle Press Ltd. The letter continued: "To this end, there have been given facilities for an independent firm of accountants to value the said shares. This has been done by Messrs Price Waterhouse & Co. and their figures are £100,000 as to Bugle Press Ltd. and £2,000 in respect of Houses and Estates Ltd. In consequence, their offer will be in each of these figures to the shareholders of the two companies respectively. It is a known fact that Messrs Jackson and Shaw, the holders of 90 per cent. of the issued capital in each instance, will accept this offer. Your client" — that is Mr Treby — "would receive should he accept" as regards Bugle Press Ltd. £10,000, and then there is a reference to a suggested procedure designed to avoid unnecessary stamp duty.
That offer having been declined, the company, Jackson & Shaw Ltd., to whom I will refer henceforth as the transferee company (anticipating my reference to Section 209) proceeded to invoke the terms of that section with a view to obtaining by compulsion what they had failed to obtain by agreement, namely, the acquisition of Mr Treby's 1,000 shares at the price suggested of £10,000. When you look at the section you find a reference to a four months period and a two months further period thereafter In actual fact the time which was adopted for taking the various steps was not in strict accordance with that indicated In the section and certain other formal steps were taken to get over that difficulty. For the purposes of this case no point was taken of there being any ineffectiveness in what was done by reason of the failure at any stage to observe the strict time limits indicated in the section.
With that introduction I can now turn to the language of the section Itself. It will be recalled that the section reenacts with some, but immaterial, variations a similar provision which was for the first time part of the limited company legislation in Section 155 of the Companies Act of 1929. Subsection (1) reads, so far as relevant, as follows: "Where a scheme or contract involving the transfer of shares in a company (in this section referred to as 'the transferor company') to another company (in this section referred to as 'the transferee company') has", and then there is a reference to this time limit which I omit, "been approved by the holders of not less than nine-tenths in value of the shares whose transfer is involved (other than shares already held at the date of the offer by, or by a nominee for, the transferee company or its subsidiary) the transferee company may, at any time….give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares, and when such a notice is given the transferee company shall, unless on an application made by the dissenting shareholder….the court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which, under the scheme or contract, the shares of the approving shareholders are to be transferred to the transferee company". There follows a proviso which Mr Instone very properly read to us but which I shall not read for the purposes of this Judgment though I do not forget it or its importance as part of the mechanics of the section.
As I have said, the transferee company invoked the power given by that section and the matter then came on an application by Mr Treby by originating summons before Mr Justice Buckley. The conclusion of that learned Judge is summarised In the paragraph at the top of the last page of the transcript of his Judgment: "In my view the onus which I consider rests upon the respondent" — the respondent means the transferee company — "has not been discharged, and having regard to the unusual nature of this case — unusual in this sense that Messrs Jackson and Shaw are 90 per cent. shareholders and are themselves In subtance the transferee company — I think this is certainly a case in which the Court ought to 'order otherwise' within the meaning of the section. In my judgment Mr Treby ought not to be compelled to sell his shares at the proposed price in these circumstances" In fairness to Mr Instone's argument I shall read one earlier passage of the Judgment which I find at page 6: "Whether, in such a case, if the Court were fully satisfied that the price offered to the minority shareholders was a fair price to be offered for their shares, the section ought to be allowed to operate...
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