Sprout Land Holdings Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Court | Chancery Division |
| Judge | Prentis |
| Judgment Date | 08 February 2019 |
| Neutral Citation | [2019] EWHC 807 (Ch) |
| Docket Number | Case No: CR-2018-009907 |
| Date | 08 February 2019 |
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INSOLVENCY AND COMPANIES LIST
The Rolls Building,
7 Rolls Building, Fetter Lane, London,
EC4A 1NL
INSOLVENCY AND COMPANIES JUDGE Prentis
Mr Mohammed appeared on behalf of the Defendant
Ms Bowmaker appeared on behalf of the Respondent
Ms Piper (instructed by Clarion Solicitors) appeared on behalf of the Administrators
(As Approved)
JUDGE I decided earlier this afternoon that the written resolution purportedly passed on 19 November 2018 appointing Mrs Morris as a director was incapable of doing so, because it failed to comply with the requirements set out under the Companies Act 2006. The parties, having risen for a period to discuss their consequent positions, have asked me to determine this afternoon the effect of that on the administration.
They do so against the backdrop of two powerful recent decisions by successive chancellors. They are Minmar (929) Ltd v Khalastchi and Another [2011] EWHC 1159 (Ch), a decision of Chancellor Morritt, and that of Melodious Corporation [2015] EWHC 621 (Ch) of the current chancellor. In each case it was found that where a purported appointment had been made 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 statute. The company's internal processes in terms of appointing its directors are likewise prescribed by statute in the way I have already gone into. Administrators cannot be casually appointed or essentially appointed save in complete compliance with the statutory provisions. That has not happened here.
My attention has been drawn to section 161 of the Companies Act as perhaps affording a way through. On its face it validates acts of a person acting as a director of a company notwithstanding that a defect in their appointment is afterwards discovered, or that they were not entitled to vote on the matter.
I say straight away that I consider myself bound by the decisions of the chancellors and must follow those. That is a matter of established court precedent. Even had 161 been cited to them, I cannot see that it would make a difference here. That is first of all because, as I have already described, the schemes with which we are engaged are simply not capable of being qualified by section 161. They are their own schemes. Secondly, it would seem to me very difficult to reach a conclusion...
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