Wilton UK Ltd (suing on Behalf of Itself as Shareholder in Banks Mount Oswald Ltd, the Fifth Defendant) v John Michael Shuttleworth and Others
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Davis-White |
| Judgment Date | 04 September 2017 |
| Neutral Citation | [2017] EWHC 2195 (Ch) |
| Docket Number | Case No: C30LS697 |
| Court | Chancery Division |
| Date | 04 September 2017 |
[2017] EWHC 2195 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION LEEDS DISTRICT REGISTRY
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 first to fourth defendants
The fifth defendant did not appear and was not represented
Hearing dates: 15 August 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Davis-White QC (SITTING AS A JUDGE OF THE CHANCERY DIVISION)
His Honour Judge Davis-White QC:
Introduction
The issue that I have to determine is as to the validity, potential validity, or otherwise, of service of a claim form and particulars of claim in a CPR Part 7 claim. Service took place in proceedings brought as a derivative claim pursuant to Chapter 1 of Part 11 of the Companies Act 2006 (" CA 2006"). 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. The period of four months during which service of the claim form was permitted has now long expired. The claim is now statute barred by the Limitation Act 1980 so that new proceedings cannot now successfully be commenced. Is the service that occurred valid; if not, can the court now retrospectively validate it?
The argument before me has focussed on three main possibilities: (a) that service is invalid and incapable of being validated at this stage by the Court; (b) that service is valid, unless and until the court sets it aside and (c) that service is invalid, but the court has jurisdiction to validate it by the grant of permission, with retrospective effect, to continue the proceedings.
If I decide that the position is either the second or third of the possibilities outlined above, then there will have to be a further hearing to determine how the court should exercise its jurisdiction on the facts of this case.
These issues arise in the context of an application by the first to fourth 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. There is also before me an application by the claimant dated 9 November 2016, issued at the same time as the claim form. It asked the court for permission to continue the proceedings. However, it was, at the claimant's request. not originally listed for a hearing. There is also a further application dated 22 June 2017 before me seeking permission to continue the claim up and until determination of the two applications of the claimant and an order that the claim form and particulars of claim are deemed served on 8 March 2017.
These three applications were listed for a day's hearing before me. The time estimate was inadequate. Having heard argument on the issues that I am now giving judgment on, I had to adjourn the remaining issues arising under the application to be argued on another date. The first to fourth defendants invited me to give judgment on the points of law that I am now dealing with on the basis that if I decided the matter one way then the entire proceedings will come to an end and there will be no need for the resumed hearing. If, on the other hand, I decided that, as a matter of law, service was, or was capable of being rendered, valid, then the parties would know that sooner rather than later and any further judgment would take less time to prepare. The claimant initially invited me not to give judgment on the relevant issues at this stage. It was suggested that my assessment of the law might alter once I had heard argument on matters going to the exercise of my discretion (if there was one). On further reflection, the claimant indicated that it did not strongly oppose the course of my giving judgment before hearing further argument on the applications. Having considered the matter I am satisfied that my judgment is on a self-contained area and that it is appropriate to hand it down at this stage, largely for the reasons advanced by the first to fourth defendants (the "Relevant Defendants") as outlined above. Accordingly, this is a judgment on a preliminary issue within the applications.
Before me, Mr Pipe appeared for the claimant and Mr Ayliffe QC for the Relevant Defendants. I am grateful to both of them for their submissions, both written and oral.
The Part 7 Claim
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 third defendant, 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 claimant says that TC and DW 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 Relevant Defendants deny this, though as I understand it they do not deny that there were ongoing negotiations about entry into a joint venture agreement.
In October 2006 a conditional contract, which the parties have referred to as "option 1" for convenience (" Option 1") was entered into by NEE and BGL under which, in certain circumstances, NEE would become bound to sell the Site to BGL for £18 million. The price of the Option 1 was £350,000. Under the final terms of Option 1, BGL was obliged to apply for planning permission in respect of the Site. If such permission was not obtained by October 2007 (later extended by agreement to 23 April 2010), either party could terminate Option 1.
An application for 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 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, Banks Mount Oswald Limited (" 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 a sub-sale agreement with BMO, effectively giving BMO the benefit of Option 1. BMO would in turn reimburse BGL for the costs incurred to date on the project. The claimant and BPL would each lend 50% of the sums required to enable BMO to do this. The further seeking of planning permission and the other development works would be carried out under contract with and for BMO. That work would be undertaken by another Banks' group company, Banks Development Limited (" BDL"). Separate agreements were entered into to give effect to these arrangements on 7 August 2008, including a shareholders' agreement, a sub-sale agreement, loan agreements and a services agreement.
Economic conditions became hostile. The deadline for obtaining planning permission under Option 1 passed without permission having been obtained. NEE terminated the Option.
Both TC and DW on the one hand and the Banks' group on the other hand remained interested in a joint venture to acquire and develop the Site. As with Option 1, negotiations to acquire an option from NEE and the negotiation of detailed joint venture terms continued in parallel.
The negotiations with NEE were ultimately successful. BGL entered into a new option agreement with NEE on 16 November 2010. For a price of £5 million it acquired a right exercisable within 4 years from 31 January 2011 to acquire the Site for a price of £10 million (less the option fee price of £5 million).
Negotiations over a detailed suite of documents for the implementation of a joint venture agreement did not reach a successful conclusion. Again, TC/DW were expected...
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