Re BW Estates Ltd
| Jurisdiction | England & Wales |
| Judge | Judge Purle |
| Judgment Date | 22 July 2016 |
| Neutral Citation | [2016] EWHC 2156 (Ch) |
| Court | Chancery Division |
| Date | 22 July 2016 |
| Docket Number | No. 8446 of 2013 |
[2016] EWHC 2156 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Priory Courts
33 Bull Street
Birmingham B4 6DS
His Honour Judge Purle, QC
(Sitting as a Judge of the High Court)
No. 8446 of 2013
In the Matter of BW Estates Limited
And in the Matter of the Insolvency Act 1986
Mr. W. Edwards (C) instructed by Tenet Compliance & Litigation Ltd. appeared on behalf of the Applicants.
Mr. M. Weaver (C) instructed by Cameron Legal appeared on behalf of the Respondents.
( )
The Applicants are Judgment creditors, and have been since November 2012, in the sum of £2.4 million approximately of a Mr. Robert Williams.
Mr. Robert Williams was found to be the beneficial owner of at least 75 per cent of the issued share capital of BW Estates Limited ("the company") registered (at the time) in the name of his son, Mr. David Williams. The Applicants obtained a Charging Order over that beneficial interest. It is probable that Mr. Robert Williams is or was also beneficial owner of the remaining 25 per cent. He also became bankrupt following the judgment against him.
Having obtained a Charging Order over the 75 per cent of the shares, subsequently in June of last year, by agreement with the Trustees in Bankruptcy of Mr. Robert Williams, the Applicants acquired full legal title to the shares. They, therefore, are the 75 per cent shareholders and are now in control of the company. Mr. David William executed stock transfer forms to transfer his bare legal title to the Applicants.
Formerly, the company was or was purportedly in administration. Mr. Robert Williams was a disqualified director and, although the evidence strongly indicates that he was in reality in control of the company, the sole de jure director from 2009 onwards was Mr. David Williams, who as I have said is Mr. Robert Williams' son.
As sole de jure director, Mr. David Williams made what purported to be a directors' appointment of administrators following a purported meeting of the directors of the company which took place on the 28 th August 2013, the appointment finally being made on the 11 th September 2013.
It is said that the board meeting resolving to proceed in that way was inquorate because under the Articles of Association of the company, a sole director had power merely to convene a general meeting or appoint an additional director. Subject to that, the requisite quorum for a directors' meeting was two. There is no doubt that as a statement of fact that is a correct description of what the Articles said.
In addition, the quorum for a shareholders' meeting was also two.
Belvedere Investment Company Limited ("Belvedere") was an Isle of Man corporation which was dissolved in October 1996. It became, in succession to Mrs. Williams (the wife of Mr. Robert Williams) the registered shareholder of the remaining 25 per cent of the shares. As, however, it was dissolved, there was no-one who could in practice exercise any of the voting rights attached to the shares.
In a judgment given on the 2 nd March 2015 ("the Cooke judgment") in previous proceedings between the same parties, Judge Cooke noted the administrators' appointment on the 11 th September 2013 and the fact that the appointment was made by Mr. David Williams as director, without any application to the Court. The Cooke judgment also recorded that the Applicants "do not now contend that the appointment of the administrators was invalid".
The issue before Judge Cooke related to the administrators' remuneration. The Applicants brought that application as creditors of the company, having acquired by assignment in July 2014 the debt formerly owed by the company to its solicitors, Lewis Onions. As such creditors by assignment they had standing to challenge the remuneration within the administration.
Prior to the Cooke judgment, the same Judge on the 21 st May 2014 dealt with two applications, one by the administrators for directions and one brought by the Applicants as interveners. The upshot was that Judge Cooke directed that the administrators convene a meeting of creditors and present revised proposals to bring the administration to an end and pass control back to the directors. Mr. David Williams had by the time of that meeting been removed as a director and the Applicants appointed in his place, so that the company was now under the Applicants' control. An order in the Applicants' favour for their costs of the administrators' application for directions to be paid as part of the costs of the administration was also made.
The order made following the Cooke judgment of March 2015 is under appeal. Judge Cooke directed an assessment of the administrators' remuneration, whereas the Applicants were seeking a direction that the administrators should have no or a substantially reduced remuneration because (it was said) the administrators had not done a satisfactory job and had not earned any remuneration, or remuneration of the order claimed.
In advancing those contentions, the Applicants scrutinised in detail the entirety of the conduct of the administration, including the circumstances in which the administrators came to be appointed and how they came to conclude, which was a pre-condition of their appointment, that the administration purpose was likely to be achieved. Criticisms were made about that. Those criticisms are not for me. They were for Judge Cooke to consider and may hereafter be considered by the Court of Appeal.
What is striking, and relevant to what I have to decide, is that there was ultimately no challenge to the administration as such.
The Applicants before me have changed tack and are now seeking in effect to produce the result they always wanted, which is to disentitle the administrators to remuneration, but by a different route.
My instinctive reaction, I am bound to say, is that this smacks at best of an abuse of process. I say "at best", because it seems to me also that, strictly speaking, the decisions of Judge Cooke, one of which is under appeal, but the other of which, the decision of 21 st May 2014, is not, create issue estoppels. They proceed on the basis that the administrators were validly appointed, and costs order were made, including one in the Applicants' favour, on that basis.
Apart from issue estoppel, the Applicants have the difficulty of persuading the court that they should be allowed now to present an argument which was open to them but which they did not previously pursue. It is that element which smacks of abuse, as a party is normally expected to advance all of his case as a whole and not in separate instalments.
Accordingly, it seems to me that the Applicants face an enormous hurdle on those grounds alone. However, that has not been the principal basis upon which the Court has heard argument.
Mr. Weaver for the former administrators or purported administrators, however one chooses to describe them, contends that as Mr. David Williams had since 2009 been operating as sole de jure director, conducting the entirety of the business of the company, that operated as a variation of or departure from the Articles authorising a sole director to do everything which a board of two directors might do. Factually, that is well-founded and it appears to have been the approach also of Mr. Robert Williams.
The Applicants' case has always been that Mr. Robert Williams was the person calling the shots and therefore the person in accordance with whose directions Mr. David Williams as sole de jure director was accustomed to act, even during the period of Mr. Robert Williams' disqualification.
Judge Cooke in paragraph 3 of the Cooke Judgment said this: "It is the Applicants' position that Mr. Robert Williams has, however, continued to be the effective controlling mind and director of the company throughout".
There can be little doubt that the appointment of administrators in September 2013 occurred with the full consent or acquiescence of Mr. Robert Williams. True it is that the formal documents were executed by Mr. David Williams and that the meeting records him alone of the directors as being present on 28 th August 2013. Also present at that meeting, I should mention, was a representative of the solicitors for the company (from whom the Applicants derive their status as creditors) and a representative of the administrators' firm, as well as (by telephone) one of the administrators, but not Mr. Robert Williams.
Nonetheless, there was, as late as the 19 th July 2013, a meeting to discuss the financial positon of the company and what should be done, attended by Mr. Robert Williams, along with one of the administrators (Mr. Turpin), the same representative of the company's solicitors, and Mr. David Williams. At that meeting the prospect of administration as a likely eventuality was raised. The meeting concluded, according to a contemporaneous note of Mr. Turpin: "It is considered appropriate to place the company into administration, to take control of the company's affairs and protect the interests of all creditors generally".
Accordingly, there is no doubt that Mr. Robert Williams informally approved of the process. It may also be said that as a de facto director, his approval cured any deficiency in the process, there being in reality two directors, as required by the Articles, not one. It...
To continue reading
Request your trial
-
Inderjit Singh Bhullar v Jatinderjit Singh Bhullar and Others
...at the same time, so that assent given on separate occasions will suffice, referring me to the observations of HHJ Purle QC in Re BW Estates Ltd (No 2) [EWHC] 2156 (Ch) at [40] – [41]. 96 Mr Chaisty and Mr Grantham also refer me to s. 239(6)(a) Companies Act 2006, which makes clear that not......
-
Re BW Estates Ltd (No 2); Randhawa and Another v Turpin and Another (No 2)
...Sukinder Randhawa, creditors of the company, BW Estates Ltd, against the refusal by Judge Purle, QC, sitting as a High Court judgeUNK([2017] 1 BCLC 240) of their application for a declaration that the appointment of joint administrators, Andrew Turpin and Matthew Hardy, was invalid. Mr Rich......
-
Sprout Land Holdings Ltd ((in Administration))
...by an inchoate board, the result was that the appointment was invalid; the administrators have also very fairly drawn my attention to Re BW Estates Ltd [2016] EWHC 2156 (Ch). With all respect, one can well see why that might be so. The administration process is one which is prescribed by s......
-
No Second Bite Of Cherry For Applicants Challenging A Company's Administration
...conduct supported such an amendment. The administration was therefore valid and the application failed. Re BW Estates Limited [2016] EWHC 2156 (Ch) The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific...
-
Informal shareholder resolutions: the Duomatic principle considered
...The Court of Appeal may, therefore, in due course clarify the uncertainties highlighted by the case. Randhawa & Ors v. Turpin & Anor [2016] EWHC 2156 (Ch) Richard BarhamCandice ChapmanDavid...