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St Philips Commercial

St Philips Commercial

St Philips is delighted to announce that the Lord Chief Justice has appointed Naomi Candlin as a Deputy District Judge to sit on the Midland Circuit.

Re Sprout Land Holdings Limited: Tighe v Fraser-Peters

Iqbal Mohammed acted for one of two directors of a deadlocked company, where one director resolved to appoint administrators through the appointment of a third director by a members’ written resolution. The Judge held that the director was invalidly appointed, rendering the directors' meeting inquorate; subsequently invalidating the resolution to appoint administrators.

Background

The Company was incorporated to invest trust monies belonging to B and was directed by the Applicant and Respondent, who, along with B, held a share each. In 2018, the directors’ relationship broke down and the board was deadlocked. 

On 17 November 2018, the Respondent met with B and obtained her signature on a written resolution appointing her as a director, with both agreeing that the purpose of the new appointment was to enable the Company to enter administration. 

On 19 November 2018, the Respondent emailed the Applicant at 10.24 “requesting” that Company “circulates... a written resolution to appoint” B as Director and giving notice “of a director’s meeting to be held at noon today... by conference call.” 

The email failed to attach any resolution and gave 90 minutes’ notice of a directors’ meeting. The Applicant refused to attend on ground of insufficient notice, but the Respondent signed the resolution the same day and, with B, resolved to appoint administrators. Subsequent to its passage, the text of the resolution was posted to the Applicant. 

The Application and hearing

The Applicant applied for a declaration that both appointments were invalid. Before ICC Judge Prentis, Iqbal Mohammed argued that the appointment of B as director was invalid and, as a result, the appointment of administrators by one director was also invalid. 

Counsel for Respondent and the joint administrators argued that the appointment of the director was in accordance with the Model Articles and the Companies Act. Further, the Act did not require circulation of the resolution to all members at the same time or before it was passed. Alternatively, even if B was appointed invalidly, her decision (and/or the inquorate decision of the Respondent) to appoint administrators was valid under s. 161, Companies Act 2006, which states: 

“The acts of a person acting as a director are valid notwithstanding that it is afterwards discovered—(a) that there was a defect in his appointment… (d) that he was not entitled to vote on the matter in question.” 

Iqbal disputed that this provision applied to the appointment of administrators at all. 

Decision

ICC Judge Prentis gave two judgments. Firstly, he held that the appointment of B was invalid as there was wholesale non-compliance with s. 293 Companies Act 2006, which required circulation of the resolution to all members by the Company; circulation after passage was insufficient. Further, there was no consideration of the resolution by the Company under s. 292 and a general failure to propose, consider or circulate the resolution in accordance with Chapter 2 of the Act. 

After further submissions, he gave a second judgment invalidating the appointment of administrators. He held that under model articles 8(4) and 11(1), there was no quorum to transact any business, let alone appoint administrators. 

Considering that Aidniantz v Sherlock Holmes International Society Limited [2016] EWHC 1392 (Ch) and commentary in Palmer’s Company Law both suggested that section 161 intended to protect third parties dealing with the Company, this section could not provide a route to ignoring the requirement for a quorate meeting for out of court appointments, per Minmar v Khalastchi [2011] EWHC 1159 (Ch). 

The Applicant obtained declaratory relief and a costs order; with the Administrators seeking an indemnity and costs from the Respondent. 

Comment

This unreported decision is interesting for two reasons. Firstly, it deals with one of the many attempts made by deadlocked boards to appoint directors, this time through a members’ resolution. It shows that great care should be taken in ensuring that the Companies Act is complied with, and that reliance on “advice” alone will not justify non-compliance. Secondly, it shows that section 161 will not easily be applied to cure invalid appointments to overcome the requirement in Minmar, and nor will administrators be treated as third parties for the purposes of s. 161 as, after all, administrators are agents of the Company not third parties.

Amit was instructed by James Keates and Sarah Teal of Shoosmiths LLP on behalf of the directors of Oddbins, in four conjoined applications to obtain administration orders. 

The applications came during a difficult trading period following the Christmas spike in alcohol sales. With Duff and Phelps also providing the directors with business and strategy advice, the team presented a compelling case before HHJ Cooke in the High Court in Birmingham for placing the companies into administration, with the hope of achieving a better return for creditors.

We are proud to announce that four of our members have been shortlisted for awards at the Birmingham Law Societys Legal Awards 2019.

In the category of ‘Barrister of the Year’, Employment specialist, Elizabeth Hodgetts along with Business & Property Group members, Anthony Verduyn and Iqbal Mohammed, have all been named in the final five nominees for this prestigious award. In addition, Sophie Garner has been nominated for the Pro Bono Award in recognition of her contribution to Pro Bono/charity work during 2018.

This years awards will be held at the International Convention Centre on March 14th and a full list of nominees can be found here.

Head of St Philips Business & Property Group, James Morgan QC, who was instructed by Osborne Clarke LLP, successfully acts for Northampton Borough Council in obtaining a £2.3m judgment against Anthony and David Cardoza arising out of their conduct as directors of Northampton Town Football Club.

Following a highly publicised 10-day trial in July 2018 in which the defendants denied all wrongdoing, HHJ Barker QC today handed down judgment in favour of the Council finding that the former directors had acted in breach of their fiduciary duties and were liable to compensate the Council as assignee of the Football Club. He also granted the Council relief under s.423, Insolvency Act 1986 in relation to the transfer by David Cardoza to his wife of his interest in their former domestic property.

A full copy of the judgment can be found here.

Date & Time: 26/03/2019 | 9:30am - 5:00pm (registration 9:00am)
CPD: 5
Cost: £150 +VAT

Speakers

James Morgan QC: Brexit and Insolvency: The Cliff-Edge or the Smooth Transition?

John Randall QC: The Acrobatic Director – Walking the Tightrope in the Distressed Company

Professor Peter Walton and Chris Umfreville – Aston University: Latest Developments on Pre-Packs and CVA’s

Marc Brown: CryptoCurrency in Insolvency

Andrew Charman: Conflicts of Interest and Abuse of Power: Office Holder Claims against Delinquent Directors

Amit Gupta, Ali Tabari & Rob Mundy: A Case Study on Administration

John Aldis, Kirsty White & Natalie Kearney: Recent Cases – An Update

Booking terms

A VAT invoice will be sent to you upon receipt of your booking form/details. All invoices for this seminar must be paid by no later than Tuesday 19th March 2019. Unfortunately we are unable to take online payments at this time.

Confirmation of registration

If you have not received confirmation of your registration 7 days before the conference, please telephone 0121 246 7000 to confirm that your registration form has been received.

Substitute delegates

Substitute delegates will be accepted at any time – please telephone 0121 246 7000 to let us know the name of the substitute.

Cancellation

Provided that notice is received at least 48 hours before the seminar, the seminar fee will be refunded less a £20 (+VAT) administration charge.

CPD Accreditation

Under the Law Society’s CPD scheme and the Bar Council’s New and Established Practitioners’ Programme the conference is accredited with 5 CPD points (Training reference:1846).

St Philips Chambers is delighted to announce that Iqbal Mohammed, a member of our Business & Property Group, has been appointed to serve a 3-year term as a governor of the Birmingham Metropolitan College corporation; Birmingham’s largest Further Education provider with 10 campuses across the city. Birmingham Metropolitan College includes the landmark Matthew Bolton College campus and Sutton Coldfield College.

Iqbal’s appointment is the latest example of St Philips Chambers’ enduring commitment to local education, access to the bar and the city of Birmingham. Every year since 2011, St Philips has hosted the Bar Council’s “How to get to the Bar” annual legal conference, in partnership with Aston University to promote the bar to A-Level students who have an interest in law. In addition, several members of chambers volunteer as governors for local schools.

On Thursday 15th November, Marc Brown was invited to speak at a conference hosted by Aston University, to reflect on the impact of the Enterprise Act 2002 reforms on UK insolvency proceedings and also consider the potential for further reform.

Marc presented a paper from a practitioners point of view entitled ‘An evolution of the Enterprise Act 2002?’ alongside other guest speakers including; Professor David Millman of Lancaster University, Professor Andrew Keay of University of Leeds and Associate Professor David Brown of Adelaide University.

Marc Brown

The conference was a huge success and we would like to thank Aston University for their kind invitation and hospitality.

Judgement was today handed down by the Supreme Court of the United Kingdom in the case of Regency Villas Title Ltd and others v Diamond Resorts (Europe) Ltd and others [2018] UKSC 57. John Randall QC and Marc Brown, instructed by Shakespeare Martineau to represent the committee of the many members of Regency Villas Owners’ Club and its trust company, learned that by a majority of 4-1 the Supreme Court had dismissed their opponents’ appeal, and allowed their own cross-appeal, in this hard fought case. 

John Randall QC commented “When you buy a time-share week or two in the Kent countryside with a view to playing golf, swimming and enjoying a variety of the other recreational facilities available on the neighbouring estate (Broome Park), you do not expect to find yourself a party to legal proceedings in the High Court, never mind the Court of Appeal and ultimately the Supreme Court, with all the risks and uncertainties that litigation inevitably involves.

As the majority judgment states, this is the first time the highest court in our land has considered the extent to which the right to the free use of sporting and recreational facilities provided in a country club environment may be conferred upon the owners and occupiers of an adjacent timeshare complex by the use of freehold easements. The Supreme Court has roundly endorsed this ‘new species of easement’, observing that whatever may have been the attitude in the past to ‘mere recreation and amusement’, recreational and sporting activity of the type exemplified by the facilities at Broome Park is so clearly a beneficial part of modern life that the common law should support structures which promote and encourage it.

The only matter for regret is that the passing of the trial judge, the late and much missed Judge Purle QC, earlier this year has deprived him of the pleasure of reading a Supreme Court judgment which prefers his view of the grant in issue to that of the Court of Appeal."

The full judgement and press summary can be found here

For further information, please contact Senior Clerk, Justin Luckman via This email address is being protected from spambots. You need JavaScript enabled to view it. or 0121 246 7050.

On Wednesday 24th October 2018 we attended the Birmingham Business and Property Court Users Group Meeting, chaired by Mrs Justice Carr and Mr Justice Birss. The meeting also had the honour of being attended by Sir Terence Etherton, the Master of the Rolls, along with Lord Justice Flaux, and was well attended by local solicitors and members of the Bar.  

A number of current issues were discussed with some useful observations made which we thought may be of interest to our clients and so below is a summary of what was discussed. Many thanks to our new pupil, Natalie Kearney, for putting the minutes together. 

CE-Filing 

A member of staff from The Rolls Building attended and gave an update on the nationwide roll-out of the CE-Filing system. They confirmed that the roll-out is forecast to last a further 2 years, with QBD next in line as it has the oldest legacy systems. The regional Business and Property Courts (BPC) are to follow QBD. 

We were told that the technical build is scheduled to be complete by Christmas, with the internal release to staff and judges in January 2019. They are at this stage unable to provide a definite date for switching on the external element, however it was thought that the roll-out in QBD and the BPC should take around 2 months each and therefore it would probably be rolled out around March/April 2019. 

The Practice Directions for the Rolls Building and the QBD are done. It is expected that the PD for the BPC are to be substantially the same. 

CE-File will not be mandatory from its initial release; however, the aim is for it to be mandatory for professionals after a phasing-in period, but not for litigants in person. 

Updates on this will follow. 

Reform Programme 

Master of the Rolls, Sir Terence Etherton also confirmed that this is part of an ongoing reform programme, running until 2022. The aim is to improve the system beyond e-filing, hopefully with the aim of running paperless trials. This would not be possible on the CE-Filing system as designed so it will require the development of a new system. 

Specialist Lists – Intellectual Property 

Mr Justice Birss confirmed that early next year the aim is to introduce the IPEC list into regional BPC and there is a process underway currently to identify judges willing to have training. The first cases to be heard are likely to be small claims track trials. 2 DJs in Birmingham have already volunteered to undertake the necessary training. 

Specialist BPC DJs 

More DJs are to be added soon and recruitment is under way for DDJs. 

Birmingham has seen a significant increase in insolvency work, which may reflect the fact that the Insolvency PD changed in July 2018, with Birmingham a centre for specialised insolvency work. This means that there is a need for specialist DJs. 

Shorter and Flexible Trials Scheme 

This was piloted in the Rolls Building and is now permanent in all BPC. There appears to have been little uptake, although the shorter trials scheme has been more successful than the flexible trials scheme. The benefits are that a hearing date can be obtained more quickly, and appeals can also be expedited and Mrs Justice Carr was keen to see in increase in its uptake. 

Urgent Applications 

Concerns have been raised by Judges as to the limited information they receive when an urgent application is received at the counter. Quite often they simply have the signed application and that inappropriate applications are being made (e.g. applications without notice when notice should have been given). 

A new 2-page form is going to be introduced that will ask for additional information to be supplied about the urgent application, which will be handed to the Judge for them to decide if the application is urgent. This is intended to prevent inappropriate applications and was introduced successfully by HHJ McCahill QC in Bristol. 

Turnaround Times 

Issue is currently operating a 2-day turnaround. 

Correspondence and Orders are at 11 October 2018 at present. 

There have been some staffing changes which are impacting turnaround times, but new members of staff are joining the team and it is expected that the new CE-Filing system will reduce the turnaround time further. 

Disclosure Pilot 

James Morgan QC raised two concerns, both of which were discussed at the first or our Disclosure Breakfast Seminars that took place earlier that day :

1. The pilot is said to apply to new and existing claims from 1 January 2019, however what does this mean for CCMCs listed in the first weeks of January? The new rules require the completion of disclosure forms and there will not be time for these to be completed prior to the hearings from 1 January 2019.

a. Mrs Justice Carr and Mr Justice Birss confirmed that parties should begin completing the relevant disclosure review documents as soon as possible, ready to comply in January 2019, even though the pilot is not yet in force. There was some suggestion that words to that effect should be included on the notices being sent out by the courts, however the advice was to complete the forms regardless of whether any such wording was on the notices.

2. The pilot will only work if DJs are given proper time to read the disclosure review documents prior to any CCMC, therefore were there provisions being made for the DJs to have extra reading time?

a. DJ Ingram raised concerns that increased reading time would impact the number of effective CCMCs it would be possible for the courts to hear. 

b. It was agreed that DJs would probably need more time to review the DRDs.

DJ Ingram asked that details of any seminars on the new disclosure pilot be provided to her to pass on to any other DJs as some judges had not been able to attend earlier training, She duly attended our seminar in chambers on the 1st November. 

Sir Terence Etherton confirmed that the aim for the pilot is that the disclosure scheme will eventually roll-out beyond the BPC to apply to all civil litigation. 

Appeals Query

Marc Brown had become aware that the current procedural rules mean that an appeal can only be heard by a full-time High Court Judge, not deputies or those sitting as s9 Judges. This presents a difficulty on circuit due to the number of available full-time High Court Judges. He questioned whether this was a matter to be referred to the Rules Committee. 

This is apparently an issue that has been considered in depth and is a question for the heads of the division. It is believed that the position is as Marc described and that there is to be a review to take place of the procedure in the next 4 months. 

We hope you find this of use. 

James Morgan QC and Justin Luckman

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