Stansell Ltd and another v Co-operative Group (CWS) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Longmore,Lord Justice Jacob |
| Judgment Date | 09 May 2006 |
| Neutral Citation | [2006] EWCA Civ 538 |
| Docket Number | Case No: A3/2005/1866 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 May 2006 |
[2006] EWCA Civ 538
Lord Justice Mummery
Lord Justice Longmore and
Lord Justice Jacob
Case No: A3/2005/1866
HC04CO3681
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION
MR JUSTICE BLACKBURNE
Royal Courts of Justice
Strand, London, WC2A 2LL
MR DAVID MABB QC (instructed by Tods Murray LLP) for the Appellant
MR JOHN ROSS QC (instructed by Squire & Co) for the 1 st Respondent
Industrial and provident societies
The Co-operative Group (CWS) Limited (CWS) is a society registered under the Industrial and Provident Societies Act 1965 (the 1965 Act) . Like other societies registered under the 1965 Act it is incorporated with limited liability. It has a registered name by which it may sue and be sued, perpetual succession and a common seal, but it is not a company registered under the Companies Acts and, in significant respects, it is different from a company.
During the 19 th century many bona fide co-operative societies and other industrial and provident societies were formed. Their purpose was to make profits from the personal participation and exertions of their members ("industrial") and to apply the profits in making provision for their members' future ("provident") . Acting together in a business-like and self-help way for the mutual benefit of members was a laudable activity encouraged and facilitated by legislators. There was a series of Industrial and Provident Societies Acts-1852, 1855, 1862, 1867, 1876 and 1893. There were parallel developments in similar legislation governing friendly societies, building societies and trade unions.
There are now about 8,300 industrial and provident societies. In general, they are subject to simpler procedures and less formal regulation than registered companies, which are governed by legislation of ever increasing complexity, much of it needed to protect the public.
The dispute in outline
A dispute about the effect of the 1965 Act has arisen in this case from the wish of CWS to sue the respondent, Stansell Limited, formerly called Stansell (Builders) Limited (Stansell) , for alleged breach of its obligations under a building contract entered into on 17 April 1990. The contract, which was in a JCT Standard Form, was for the construction of a regional distribution centre/ warehouse at Chelston Business Park, Taunton Vale in Somerset. The construction of the works was completed on 13 December 1990. Since then there have been incidents of flooding at the Distribution Centre, but Stansell denies that they were the result of any breach of the terms of the contract by it.
Stansell disputes CWS's right to sue it on the building contract for two reasons: first, CWS was not a party to the building contract; and, secondly, CWS cannot rely on an assignment of the benefit of the building contract to it on account of an express prohibition against assignment in clause 18.1.1 of the building contract-
"Neither the Employer nor the Contractor shall, without the written consent of the other, assign this Contract."
Stansell, which is the "Contractor" mentioned in the clause, has never even been asked for its consent to the assignment of the building contract to CWS.
The other party to the building contract with Stansell was Co-operative Retail Services Limited (CRS) . CRS was also registered under the 1965 Act, but its registration was cancelled by the Registrar on 13 April 2000 and it ceased to exist as a registered society.
The circumstances in which cancellation of the registration of CRS took place are central to CWS's claim that it validly acquired from CRS the right to sue Stansell on the building contract.
In brief, the circumstances are these. At a duly convened general meeting of CRS on 4 March 2000 a special resolution was passed pursuant to section 51 of the 1965 Act to transfer the whole of its property and assets and all its engagements to CWS, at that time called the "Co-operative Wholesale Society Limited". The transfer was in consideration of CWS issuing to each member of the CRS paid up shares in the CWS equal in value to the amount standing to the credit of the member in the share account of the member in the register of members of CRS on the date on which the transfer of engagements becomes effective.
On 8 March 2000 CWS undertook, by resolution of its Committee of Management, to fulfil the engagements of CRS. The special resolution of CRS, which was confirmed at a general meeting on 25 March 2000, was duly registered by the Registrar on 28 March. It took effect on 2 April 2000. Cancellation of the registration of CRS, on the grounds that the society had ceased to exist following the transfer of its engagements, took place on 13 April 2000 under section 16 of the 1965 Act. Section 16 (7) provided that, as from the date of publication of the notice of cancellation of a society's registration the society ceased to be entitled to any of the privileges of the 1965 Act as a registered society
"but without prejudice to any liability actually incurred by the society which may be enforced against it as if the cancellation had not taken place."
Stansell was not notified by CRS or CWS of the proposed resolution to transfer engagements. No attempt was made by CRS or CWS to obtain Stansell's consent to the proposed assignment to CWS of CRS's rights under the building contract. The first that Stansell knew of the transfer was when its solicitors received a letter dated 16 June 2000 notifying them, after CRS had applied to be removed from the register and after the registration of CRS had been cancelled, of the transfer of engagements and of the building contract to CWS.
The only outstanding issue under the building contract is whether or not Stansell has fulfilled its design obligations. CWS wishes to pursue the claim. It served an arbitration notice on Stansell very shortly before the expiration of the 12 year limitation period.
Issues on appeal
The two issues decided by Blackburne J in his judgment of 22 July 2005 are brought to this court on an appeal by CWS. The judge granted permission to appeal under section 69(8) of the Arbitration Act 1996, his decision having itself been given on an appeal from an arbitrator under that Act.
It is sufficient for CWS's purposes to succeed on either issue in order to establish its right to sue Stansell for breach of the building contract. The judge decided the case against CWS on both issues.
1) Statutory construction: does a transfer of engagements effected pursuant to section 51(1) of the 1965 Act override a prohibition against assignment such as clause 18.1.1? Blackburne J observed that overriding the contractual clause must mean that section 51(1) operated as if either the clause prohibiting assignment were not a term of the building contract or as if Stansell's consent under the clause was given to the transfer of the contract.
2) Contractual construction: did section 51(1) operate to cause the benefit of the building contract (in particular the right to bring proceedings against Stansell) to become vested in CWS in circumstances which did not amount to an assignment within the intendment of clause 18.1.1? This issue turns on the meaning of "assign" in clause 18.1.1 and proceeds on the assumption that section 51 does not operate to override the contractual prohibition against assignment.
Section 51 confers on a society registered under the 1965 Act the power to make a transfer of its engagements to another registered society-
"51(1) Any registered society may by special resolution transfer its engagements to any other registered society which may undertake to fulfil those engagements; and if that resolution approves the transfer of the whole or any part of the society's property to that other society, the whole or, as the case may be, that part of the society's property shall vest in that other society without any conveyance or assignment."
Section 51 is in a group of sections headed "Amalgamations, transfers of engagements and conversions." The sections enable or authorise societies by special resolution to amalgamate (section 50) , to transfer engagements between societies (section 51) and to convert into, amalgamate with or transfer engagements to a company (section 52) . They differ from the provisions in the Companies Acts governing the amalgamation and reconstruction of companies. (They are unaffected by the Industrial and Provident Societies Act 2002, which confers powers on the Treasury to modify certain provisions of the legislation for the purpose of assimilating the law relating to companies and the law relating to industrial and provident societies.)
As Mr David Mabb QC, who appeared for CWS, carefully explained in a wealth of detail on the legislative history, the provisions affecting merger of and transfer of engagements between industrial and provident societies are reflected in similar provisions concerning building societies, friendly societies and trade unions. In general, the procedures are simple, formalities are kept to a minimum and regulation is light: no notification to third parties is required; no confirmation is needed from any court or regulatory body; and there are no solvency requirements
The provisions are subject to savings for the rights of creditors of a society in section 54 to the effect that amalgamations or transfers of engagements
"shall not prejudice any right of a creditor of any registered society which is a party thereto."
It has...
To continue reading
Request your trial
-
London & South Eastern Railway Ltd and another v British Transport Police Authority [Administrative Court]
...who would have to pay substantial additional amounts did not. 34. Mr Ross relied on Stansell Ltd v Cooperative Group (CWS) LtdWLR[2006] 1 WLR 1704. That was a case in which existing contractual rights were, he submitted, overridden despite the existence of no clear power to do so. The relev......
- Affin Bank Bhd v Mohd Kasim Ibrahim
-
R (London & South Eastern Railway Ltd) v British Transport Police Authority
...those three (the claimants and Arriva) who would have to pay substantial additional amounts did not. 34 Mr Ross relied on Stansell Ltd v Cooperative Group (CWS) Ltd [2006] 1 W.L.R. 1704. That was a case in which existing contractual rights were, he submitted, overridden despite the existenc......
-
Midlands Co-operative Society Ltd v HM Revenue and Customs
...Midlands) registered in accordance with the 1965 Act. 7 Section 51(1) of the 1965 Act was considered by this court in Co-operative group (CWS) Limited v Stansell Limited [2006] 1 WLR 1704 In that case, the industrial and provident society had entered into a contract for the construction of......