Re Legal Costs Negotiators Ltd

JurisdictionEngland & Wales
Judgment Date28 May 1998
Date28 May 1998
CourtChancery Division

Chancery Division

Before Peter Goldsmith, QC

In re Legal Costs Negotiators Ltd

Company - conduct of company's affairs - jurisdiction of court re complaints

Complaints about conduct of companies

The jurisdiction of the court under section 459 of the Companies Act 1985 was generally limited to cases involving complaints about the way the company's affairs were being conducted through the use of, or failure to use powers in relation to the conduct of the company's affairs provided by the company's constitution. Nor would the court proceed with a section 459 petition in respect of conduct which had already been remedied.

Mr Peter Goldsmith, QC, sitting as a deputy judge of the Chancery Division, so held in a reserved judgment allowing an application by Brian Peter Hateley, the respondent to a petition brought by Jeffrey Vernon Morris, Samir Kumar Thaker and Paul Ian Turner, under section 459 of the 1985 Act, for an order that the petition be struck out on the grounds that it disclosed no reasonable cause of action or was frivolous vexatious and/or an abuse of the process of the court.

Mrs Laura Garcia-Miller for the respondent; Mr Matthew Collings for the petitioner.

HIS LORDSHIP said that, unusually for a section 459 petition, the petitioners were the majority shareholders in the company, holding 75 per

cent of its ordinary share capital and controlling the company's board. The respondent held the remaining 25 per cent.

On January 1, 1997 the company, which carried on business, inter alia, as legal costs negotiators and legal costs draftsmen, became the vehicle by which the petitioners and respondent carried on a business which they had formerly carried on in partnership.

By June 1997 there had been a falling out of the parties. The petitioners alleged that the respondent, who was responsible for the accounting function of the company, had failed to carry out his responsibilities in important respects, and had thereby violated the mutual trust and confidence between contributories upon which the company was based.

By letter dated June 6, 1997 they purported to dismiss him summarily from employment. In the face of a proposed resolution by the petitioners at an extraordinary general meeting to remove him from office, the respondent resigned as a director of the company with effect from July 10, 1997.

Since July 1997 the respondent had had no control over the way the company's affairs had been conducted other than as a minority shareholder, although the...

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