Re Jermyn Street Turkish Baths Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE BUCKLEY |
| Judgment Date | 05 May 1971 |
| Judgment citation (vLex) | [1971] EWCA Civ J0505-1 |
| Docket Number | No. 0037 of 1969 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 May 1971 |
[1971] EWCA Civ J0505-1
Lord Justice Russell
Lord Justice Buckley and
Lord Justice Cairns
In The Supreme Court of Judicature
Court of Appeal
On Appeal From The High Court of Justice
Chancery Division
Companies Court
(Mr. Justice Pennycuick)
MR. J. L. HARMAN, Q. C. and MR. P. BAKER (instructed by Messrs. Wedlake, Letts & Birds, Solicitors, London, Agents for Messrs. Rowberry, Morris & Co., Solicitors, Reading) appeared on behalf of the Respondents (Appellants)
MR. A. BALCOMBE, Q. C. and MR. P. J. MILLETT (instructed by Messrs. Coward, Chance & Co., Solicitors, London) appeared on behalf of the Petitioners (Respondents).
Lord Justice Buckley will deliver the judgment of the Court.
This is an Appeal from a decision of the Vice-Chancellor on a Petition under the Companies Act, 1948 S. 210 relating to a company called The Jermyn Street Turkish Baths Ltd. The Company was incorporated on 25th November, 1946 with an authorised capital of £1,000 divided into 1,000 shares of £1. each. Initially 100 only of these shares were issued. 50 shares were subscribed for by, and allotted and issued to each of James Isaac Stealey and Joseph Aaron Littman (whom we will call "Mr. Stealey" and "Mr. Littman"), both of whom are now dead. Soon after incorporation the Company acquired at the cost of £12,500 the business of another company, Savoy Turkish Baths Ltd., as a going concern. The assets so acquired included leasehold premises at Nos. 91 and 92, Jermyn Street and 12, Duke of York Street, London, the goodwill of the vendor company's business of a Turkish bath at the Jermyn Street premises and of a ladies' Turkish bath at the Duke of York Street premises, and the plant, fixtures and fittings at both establishments. This purchase was financed by means of loans from Mr. Stealey and Mr. Littman to the Company and by borrowing from the bank. For this purpose Mr. Stealey and Mr. Littman each lent £3,000 to the Company and guaranteed the bank overdraft to a maximum amount of £8,500. The Company carried on the Turkish bath businesses at Jermyn Street and Duke of York Street and also for a time conducted a Turkish bath in Brighton. It also owned and managed residential flats over the Jermyn Street Turkish bath.
On 19th May, 1952 the Respondent Mrs. Josephine Peskoff, who was then an employee in the "business of the Company, bought for £4,000 from Mr. Stealey his 50 shares in the Company and the sum of £2,080 then standing to the credit of Mr. Stealey's loan account with the Company. Down to this date Mr. Stealey and Mr. Littman had been the only directors of the Company. On the 20th May, 1952 Mr. Stealey resigned his directorship and Mrs. Peskoff was appointed a director in his place. On 21st August 1953 Mr. Littman died. At the time of his death the amount standing to his credit on his loan account with the Company was £2,936.
At this time the Company was suffering from an acute shortage of cash. The balance sheet at 31st March, 1953 shows current liabilities amounting to £20,557, made up of sundry creditors £9,177, bank overdraft (secured by the deposit of the title deeds of the leasehold property) £7,538, current taxation £3,842. The figure for sundry creditors included the balances on the directors' loan accounts. Against these liabilities, the current assets amounted to no more than £2,102 in value, including only £45 cash in hand. The Company's leasehold properties were still shown in the balance sheet at cost, nothing having been written off in respect of amortisation. The trading account for the 12 months ended 31st March, 1954 shows a loss of £1,737, after taking into account a sum of £1,494 in respect of defalcations by an employee of the Company. The balance sheet at 31st March, 1954 shows current liabilities amounting to £19,131 and current assets valued at £763.
On 26th September, 1953 Mrs. Peskoff appointed her son Michael Peskoff a director of the Company, but he never acquired his share qualification and accordingly he ceasedto be a director on 26th November, 1953 without, so far as we are aware, ever acting as a director of the Company.
Hitherto the registered office of the Company had been at 78, New Bond Street, which was the office from which Mr. Littman conducted his many business interests. On 23rd October 1953t Mrs. Peskoff purported to resolve as a director of the Company that the registered office of the Company to removed to the Jermyn Street premises of the Company.
The auditors of the Company were at all relevant times a firm of chartered accountants, Messrs. Silver Altman & Co., who had also acted for Mr. Littman during his lifetime in relation to many of his business affairs. On 21st November, 1953 Mr. Silver, the senior partner in Silver Altman & Co., and an estate agent named Bourner were appointed administrators pendente lite of Mr. Littman's estate. The solicitor acting for them in that capacity was a Mr. Tobin. A solicitor named Rowberry, practising in Gloucester, was at all relevant times advising Mrs. Peskoff. On 16th December, 1953 Mr. Rowberry wrote to a Mr. Biddle, an employee in the Littman office at 78, New Bond Street, who had acted as secretary of the Company, a letter in the following terms: "Dear Mr. Biddle, Savoy Turkish Baths. I have been consulted by Mrs. Porter" - that is, Mrs. Peskoff - "with reference to the financial position of this Company, and I have had a talk to the bank manager, and I have also investigated the Company's financial position.
"I find that there is a very large sum of money owing to creditors, including the revenue, and that up to £8,000 is required to put matters in order. I shall be obliged if you will let me know as soon as possible, and in any case withinthe next few days what amount Mr. Littman's executors or anyone else interested in the Company on his behalf is able to put up by way of additional capital.
"The position is that for a number of years the directors, Mr. Stealey and Mr. Littman, did not deal with the Company's trading accounts, with the result that a very heavy taxation liability amounting I believe to £4,000 or £5,000 was built up, and since the death of Mr. Stealey Mrs. Porter has been struggling to pay this as a result of which although this particular debt has been substantially reduced other creditors have increased.
"It is quite clear that the business is at present undercapitalised, and I shall be very glad if you will let me hear from you as soon as possible".
There was no written reply to that letter but Mr. Biddle's evidence was that, although he did not recall the conversation, he probably said something to Mr. Rowberry to the effect that there was no money available and that Mr. Rowberry and Mrs. Peskoff would have to manage as best they could. Mr. Rowberry's evidence was to the effect that Mr. Biddle told him that Mrs. Peskoff should not expect Mr. Littman's representatives to provide further funds. In these circumstances Mrs. Peskoff consulted Mr. Rowberry about the terms on which she could safely put further monies into the Company. Mr. Rowberry in his reply stressed that it must be borne in mind that even £2,000, which was the amount which he hoped Mrs. Peskoff would be able to raise from the bank, would not put the Company in a sufficiently strong position to pay off its creditors, and there could be no guarantee, even if thismoney were put in and then paid out to creditors, that someone would not take proceedings which would enforce liquidation, almost certainly resulting in the loss of Mrs. Peskoff's present investment together with any further money which she put into the Company. His letter continues as follows: "I regard these considerations as so vital that I am not willing to advise you to put in more money unless you get such security as is available. On this point Mr. Bond" - he was the bank manager - "admittedly does not see eye to eye with me because he thinks that the issuing of a Debenture to you might well bring pressure from the Company's creditors. This is a point which undoubtedly has weight and it has to be borne in mind, but I have given it all the consideration that I can and I am of opinion that this is a risk which must be taken.
"I should with this in mind advise you to reduce the payments to the revenue to £150 a month to see if you get away with it, and to retain as much as possible of the £2,000 in hand for say four to six weeks after taking the Debenture so that you could use it so far as necessary to meet any creditors who might become alarmed at the issuing of the Debenture. Subject to this my advice is that you increase the share capital of the Company by say 250 £1 shares, taking up the shares in your own name and paying £250 for them.
"I would also advise you to obtain payment of the £2,000 which is owing to you by the Company and to pay this back to the Company - it is a book-keeping transaction mainly - on security of a Debenture for £2,000. The other £1,750 (assuming that you could borrow £2,000 from the Bank and will have paid £250 of it for the shares) you would also lend tothe Company upon a separate Debenture.
"This would give you such security as is available in the difficult circumstances which exist, and whether or not the protection proved in the long run to be adequate I should have the satisfaction of knowing that you had taken all the precautions that you could".
Later on he adds: "I must warn you not to put any more money into the Company until you have given all these proposals very careful consideration, and even then you must not put in any money until the Shares and Debentures are issued to you".
On 11th January, 1954 Mrs. Peskoff appointed Mr. Arthur Charles Woodley, an employee of the Company,...
To continue reading
Request your trial
-
Re Bird Precision Bellows Ltd
... ... Equally, if the order provided, as it did in the Jermyn Street Turkish Baths case, for the purchase of the shares of the ... ...
-
Ng Sing King and Others v PSA International Pte Ltd and Others (No 2)
...added] In a similar vein, Buckley LJ, in delivering the judgment of the English Court of Appeal in Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184, defined oppression in the following manner at In our judgment, oppression occurs when shareholders, having a dominant power in a company......
- Beh Chun Chuan v Paloh Medical Centre Sdn Bhd and Others
-
Low Peng Boon v Low Janie and Others and Other Appeals
...the Companies Act has been stated in several cases. It is sufficient to refer to the following. In Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184, 199; [1971] 1 WLR 1043, 1059-1060 (which was a decision on s 210 of the United Kingdom Companies Act 1948) Buckley LJ delivering the jud......
-
The statutory unfair prejudice remedy for minority shareholder protection in Pakistan. Difficulties of section 290 of the Companies Ordinance 1984
...All E R 444; Re: A Company (1983) 2 All E R 36; Clemens v. Clemens Bros.Ltd (1976) 2 All E R 268; Re: Jermyn Street Turkish Baths Ltd. (1971) 3 All ER 184; Re: FiveMinutes Car Wash Service Ltd (1966) 1 All E R 242; Re: Lundie Brothers Ltd. (1965) 2 All E R692; Bellador Sil Ltd (1965), 1 All......
-
'n Regsvergelykende ondersoek. Hoofstuk 3
...van die Companies Act 1948 het vereis dat “affairs ...are beingconducted ...” (eie beklemtoning). In Re Jermyn Street Turkish BathsLtd [1971] 1 WLR 1042; [1971] 3 All ER 184 is vereis dat optrede ’n“chain of events” moet daarstel wat ten tye van die instel van die aksiemoet bestaan.115 Toll......