Wilton UK Ltd (Suing on Behalf of Itself as Shareholder in Banks Mount Oswald Ltd, The Fifth Defendant) v John Michael Shuttleworth
| Jurisdiction | England & Wales |
| Judge | Davis-White |
| Judgment Date | 01 May 2018 |
| Neutral Citation | [2018] EWHC 911 (Ch) |
| Docket Number | Case No: C30LS697 |
| Court | Chancery Division |
| Date | 01 May 2018 |
[2018] EWHC 911 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LEEDS
INSOLVENCY AND COMPANIES LIST (ChD)
Leeds Combined Court Centre
1 Oxford Row, Leeds LS1 3BY
HIS HONOUR JUDGE Davis-White QC
(SITTING AS A JUDGE OF THE CHANCERY DIVISION)
Case No: C30LS697
Mr Gregory Pipe (instructed by Clarion Solicitors Limited) for the Claimant
Mr James Ayliffe QC (instructed by Ward Hadaway) for the 1 st–4 th Defendants
The 5 th Defendant was not represented and did not appear
Hearing dates: 23–24 January 2018
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His Honour Judge Davis-White QC:
Introduction
On this resumed hearing the questions before me are:
i) Whether permission to continue company derivative proceedings should now be given pursuant to s263 Companies Act 2006 (“ CA 2006”);
ii) Whether retrospective permission should be granted to begin the proceedings, thereby validating certain procedural steps that have been taken in the proceedings without permission of the court, namely service of the proceedings and service of particulars of claim.
In my earlier judgment ( [2017] 2195 (Ch)), I had to determine the validity, potential validity, or otherwise, of service of the claim form and particulars of claim in the CPR Part 7 claim before me. The claim form was issued on 9 November 2016. The proceedings had been brought as a derivative claim pursuant to Chapter 1 of Part 11 of the CA 2006. The claim is launched for the benefit of the 5 th defendant, Banks Mount Oswald Limited (“ BMO”). As such it is a nominal defendant. Unless the context otherwise requires, references in this judgment to the defendants are to the 1 st to 4 th defendants, excluding BMO.
Service of the claim form and particulars of claim had taken place at the latest by 8 March 2017. However, the circumstances were that permission of the Court to continue the proceedings had not been first obtained in accordance with, and as required by, s261 CA 2006 and CPR r19.9A.
At the time of the hearing before me, in August 2017, the period of four months during which service of the claim form was permitted had long expired. I described the claim as then statute barred by the Limitation Act 1980, so that new proceedings could not successfully be commenced. As will become apparent, that may have been an oversimplification but was substantially true. The conclusion that I reached (see paragraph [79]) was that service in this case was not valid but that the court has jurisdiction to validate it retrospectively. This is so, I held, whether the default is to be viewed as a default under the CA 2006 (which is my preferred view of what it was) or a procedural error under CPR Part 19.
This is the resumed hearing of the three applications before me on the earlier occasion. As I then explained, they are three in number:
5.1 an application by the claimant dated 9 November 2016, issued at the same time as the claim form, asking the court for permission to continue the proceedings, and for an extension of 6 weeks from its date for service of the particulars of claim. This application was, at the claimant's request, not initially listed for a hearing and only became so more recently;
5.2 an application by the defendants dated 3 April 2017 seeking a declaration that the court has no jurisdiction to try the current Part 7 claim and setting aside service of both the claim form and particulars of claim; and
5.3 a further application of the claimant dated 23 June 2017 seeking interim permission to continue the claim up and until determination on an inter-parties basis of its applications dated 9 November 2016 and 23 June 2017, and an order that the claim form and particulars of claim are deemed served on 8 March 2017.
Representation before me on this resumed hearing was as before. Mr Pipe appeared for the claimant and Mr Ayliffe QC for the defendants. I am again grateful to both of them for their submissions, both written and oral. After the hearing before me I received further written submissions from Mr Ayliffe QC (dated 23 February 2018) and Mr Pipe (dated 5 March) on the relevance of Barton v Wright Hassall [2018] UKSC 12 to the applications before me. Pursuant to my request to all parties, dated 18 April 2018, I received further written submissions in relation to the case of Roberts v Gill referred to below.
The written evidence before me comprised, on behalf of the Claimant, two witness statements of Mr Wilkes (see below) and three witness statements of Mr Young of Clarion, Solicitors for the Claimant. As regards the defendants, the evidence comprised two witness statements of Mr Glassford, of Ward Hadaway, solicitors for the defendants.
The Part 7 Derivative Claim
Although I set out brief details of the claim made in my earlier judgment, I repeat that summary with some further detail so that this judgment can be self-standing. The time for filing a defence has not yet arrived and the essentials of the claim are contested.
In brief terms, the claim relates to an opportunity to acquire and develop the site of the Mount Oswald Golf Club in Durham (the “ Site”).
The claimant company, Wilton UK Limited (“ Wilton”) is indirectly owned (by way of a holding company, Wilton UK Holdings Limited) by a Mr David Wilkes (“ DW”) and a Mr Trevor Charlton (“ TC”).
In about early 2006, TC and DW became aware that the owner of the Site, North of England Estates Limited (“ NEE”) was interested in selling the Site. They did not have the financial resources to purchase and develop the site and so looked for a joint venture partner. However, they made what they assert to be valuable contact with NEE which was of value to a potential joint venture partner.
Ultimately, in their search for a joint venture partner, DW and TC made contact with directors of companies within the Banks group of companies.
The Banks group of companies is a group of mining, development and renewable companies, ultimately owned by the third defendant, Mr Banks and his family interests. In the Particulars of Claim the term “Banks” is used to describe all or any of the relevant Banks companies with any involvement in the Site and matters relating thereto and I use the same description unless the context otherwise requires.
Mr Banks was the group chairman of the Banks' companies and the managing director of the fourth defendant, Banks Group Limited (“ BGL”). He held the controlling equity shareholding in BGL. He was also a director of the other Banks group companies referred to below. The first defendant, Mr Shuttleworth (from about August 2008, managing director of Banks Property Limited (“ BPL”)) was one of the persons with whom the claimants say that they were in negotiations over a joint venture.
There is a dispute as to when arrangements were made and whether particular arrangements or understandings were in any event contractually binding or of legal effect. The claimant says that a joint venture agreement was entered into in about August/September 2006. The express terms of the joint venture (defined in the pleading as “Contract 1”) were that:
“in consideration of TC and DW introducing the opportunity to develop the site to Banks, Banks TC and DW would be joint venturers in the development of the Site and would share the profits, after costs and interest on costs, on a 50:50 basis”.
The defendants deny this, though as I understand it they do not deny that, at this time and following, there were ongoing negotiations about entry into a joint venture agreement. The claimant alleges that variations to Contract 1 were later made, but I need not go into those.
In October 2006 a conditional sale agreement (“ Option 1”) was entered into between NEE and BGL under which, in the event of planning permission for the Site being obtained, NEE would become bound to sell the Site to BGL for £18 million. A non-refundable deposit of £350,000 was paid under Option 1. Under Option 1 BGL was obliged to apply for planning permission in respect of the Site. If such permission was not obtained by 23 October 2008, either party could terminate Option 1. This deadline was subsequently extended by agreement on 23 April 2010.
Planning permission and the finalisation of entry into formal agreements giving effect to a joint venture between TC and DW on the one hand, and the Banks group of companies on the other hand, were, in the meantime, pressed on with.
By August 2008, the details of implementation of the joint venture were agreed. The joint venture company was to be the fifth defendant, BMO, for whose benefit the current proceedings are sought to be continued. BMO was to be owned 50% by the Claimant and 50% by another Banks' company, BPL. Each of the Claimant and BPL would have the right to appoint 2 directors to the board of directors of BMO. Until planning permission was granted BPL would have the right to appoint one of its directors as chair and such chair would have a second casting vote at board and general meetings. BGL was to enter into a sub-sale agreement with BMO,...
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