Richard Charles Fox-davies v Burberry Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice David Richards,Sir Patrick Elias,Lord Justice Longmore |
| Judgment Date | 26 July 2017 |
| Neutral Citation | [2017] EWCA Civ 1129 |
| Docket Number | Case No: A3/2015/0676 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 July 2017 |
[2017] EWCA Civ 1129
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
REGISTRAR BRIGGS
3433 of 2013
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Longmore
Lord Justice David Richards
and
Sir Patrick Elias
Case No: A3/2015/0676
Timothy Collingwood (instructed by New Media LLP) for the Appellant
Andrew Thornton (instructed by Slaughter and May) for the Respondent
Hearing date: 15 December 2016
Judgment Approved
Introduction
It is common for a company to lose touch with some of its shareholders because they do not notify the company of changes of address, with the result that the company cannot communicate with those shareholders and dividends go unclaimed.
The appellant carries on the business of tracing lost members of companies and, for a fee or commission, reuniting them with their shares. In furtherance of this business, he requested a copy of the register of members of the respondent company Burberry PLC (Burberry), under section 116 of the Companies Act 2006. Burberry refused to supply it and applied under section 117 for a direction that it should not comply with the request. After a contested hearing, Registrar Briggs made the direction sought by Burberry. The appellant appeals with permission granted by the Registrar.
The statutory framework
Every member of a company is required to supply his name and address to the company, and every company is required to maintain a register of members containing their names and addresses, the dates on which they were registered as members and the number of shares held by them: section 113.
The register must be kept available for inspection either at the company's registered office or some other place of which notice is given to the Registrar of companies: section 114.
The rights to inspect and take copies of the register are set out in section 116:
(1) The register and the index of members' names must be open to the inspection—
(a) of any member of the company without charge, and
(b) of any person on payment of such fee as may be prescribed.
(2) Any person may require a copy of a company's register of members, or of any part of it, on payment of such fee as may be prescribed.
(3) A person seeking to exercise either of the rights conferred by this section must make a request to the company to that effect.
(4) The request must contain the following information—
(a) in the case of an individual, his name and address;
(b) in the case of an organisation, the name and address of an individual responsible for making the request on behalf of the organisation;
(c) the purpose for which the information is to be used; and
(d) whether the information will be disclosed to any other person, and if so—
(i) where that person is an individual, his name and address,
(ii) where that person is an organisation, the name and address of an individual responsible for receiving the information on its behalf, and
(iii) the purpose for which the information is to be used by that person.
The rights and obligations of a company on receipt of a request under section 116 are contained in section 117:
(1) Where a company receives a request under section 116 (register of members: right to inspect and require copy), it must within five working days either—
(a) comply with the request, or
(b) apply to the court
(2) If it applies to the court it must notify the person making the request.
(3) If on an application under this section the court is satisfied that the inspection or copy is not sought for a proper purpose—
(a) it shall direct the company not to comply with the request, and
(b) it may further order that the company's costs (in Scotland, expenses) on the application be paid in whole or in part by the person who made the request, even if he is not a party to the application.
(4) If the court makes such a direction and it appears to the court that the company is or may be subject to other requests made for a similar purpose (whether made by the same person or different persons), it may direct that the company is not to comply with any such request.
The order must contain such provision as appears to the court appropriate to identify the requests to which it applies.
(5) If on an application under this section the court does not direct the company not to comply with the request, the company must comply with the request immediately upon the court giving its decision or, as the case may be, the proceedings being discontinued.
A refusal or failure to permit inspection or provide a copy as required under section 116, otherwise than in accordance with an order under section 117, is an offence on the part of the company and every officer in default: section 118(1). Additionally, by section 118(3), the court may by order compel an immediate inspection or direct that the required copy be provided.
Section 119 creates two further offences. First, it is an offence for a person knowingly or recklessly to make in a request under section 116 a statement that is misleading, false or deceptive in a material particular: section 119(1). Secondly, it is an offence for a person in possession of information obtained by the exercise of the rights conferred by section 116 to do anything that results in the information being disclosed to another person or to fail to do anything with the result that the information is disclosed to another person, knowing or having reason to suspect that person may use the information for a purpose that is not a proper purpose: section 119(2).
It is apparent from these provisions that they seek to balance two interests that may conflict. The first is the interest of both members of the company and the public at large in being able to know the identity of the members of companies and the extent of their shareholdings. As well as facilitating communications between shareholders, the ownership and control of companies is a matter of legitimate public interest (although access to the register of members may in practice be of limited effect in this regard, given the ability to hold shares through nominees). That interest extends also to the addresses of members so that communications may, in appropriate circumstances, be sent to them.
The second is the interest in protecting members from abuse of the right of access to their personal information as members of a company. While the first interest is promoted by the right of access granted to members of the company and all members of the public by section 116(1) and (2), the second interest is protected by the requirements of section 116(4) as to the contents of a request for inspection or a copy of the register and by the power of the court under section 117 to direct a company not to comply with a request if satisfied that the inspection or copy is not sought for a proper purpose. Both interests are recognised by the offences created by sections 118 and 119.
The protection of the interests of members is directed at two concerns. The first concerns the extent to which information about members obtained under section 116 will be disseminated. Thus, section 116(4)(d) requires the request to give the details there specified of the persons to whom the information will be disclosed. The second concerns the purpose of the request, which must be stated in the request (section 116(4)(c)). If the purpose is ruled improper by the court under section 117, the company will be directed not to comply with the request.
These provisions of the 2006 Act, and in particular section 117, were considered by this court in In re Burry & Knight Ltd [2014] EWCA Civ 604, [2014] 1 WLR 4046 ( Burry & Knight). The request for inspection and copies of the register was made by a member, who stated in his request three purposes, one of which was "to write to shareholders and trustees detailing my written concerns about past conduct of directors which remain relevant". While that might normally be a proper purpose for requesting a copy of the register, it was held not to be so in the particular circumstances of the case, because (a) the court at first instance found as a fact that his real purpose was to harass other members and (b) as held by this court, his purpose was in any event improper because he was intending to ventilate stale claims in communications that would be of no real value to his fellow members.
In the course of her judgment (with which Briggs and Christopher Clarke LJJ agreed in short concurring judgments), Arden LJ noted at [17] that in enacting section 117, which changed the previously unrestricted right of access to a register of members, Parliament had not adopted the final recommendation of the Steering Group of the Government's Company Law Review to limit the purposes of a request to a prescribed list but had "left the words "proper purpose" at large for the courts to work out in the conventional way, using the context and on a case by case basis". Parliament intended to leave the meaning of "proper purpose" open for the courts to determine, and not to limit or define it.
Arden LJ gave important guidance on the application of section 117, to which I will later return.
The facts
Like many companies with publicly-traded shares, Burberry has a significant number of registered shareholders for whom it has no current address (lost members).
Burberry has included in its articles of association provisions enabling it to sell the shares of lost members at the best price reasonably obtainable at the time of sale, subject to compliance with a number of conditions including advertisements. The company must pay the net proceeds of sale to the former shareholder, if claimed.
In 2013,...
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