30th Apr 2021

Chloe Shuffrey, (instructed by Astraea Legal) for the First Defendant

Introduction

1.  This is my judgment on an application made by the claimant by application notice dated 1 February 2021 for permission to continue a derivative claim on behalf of the second defendant against the first defendant. Such claims are governed by sections 260-264 of the Companies Act 2006, and CPR rules 19.9-19.9F and the Practice Direction to Part 19. Initially, and as required by section 261(2), I considered on paper, and without any material from the defendants, whether it appeared to the court that the application and evidence in support did not disclose a prima facie case for giving permission. It did not so appear, and so on 18 March 2021 I gave directions under section 261(3) for the hearing of the application. I also granted an interim injunction (to hold the status quo) over until the hearing took place. The hearing took place on 20 April 2021 remotely, using the MS Teams video-conferencing program.

2.   I set out the background to the claim in my written reasons accompanying the directions of 18 March. I repeat here the first four paragraphs of those reasons:

“1. The claimant issued a claim form in the County Court at Gloucester to make a derivative claim on behalf of Capital Investment Centre Ltd (“the company”) against the first defendant. The claimant and the first defendant are equal 50% shareholders, and the only two directors, of the company, the second defendant. The first defendant is the company secretary. The claimant claims that the first defendant is in breach of his director duties under ss 172 and 175 of the Companies Act 2006. The County Court at Gloucester properly transferred the claim to Bristol.

2. The matter arises because the company carries on business at 177 Barton Street, Gloucester (“the property”), which is also the registered office of the company. The claimant claims that there is some sort of tenancy vested in the company giving it the right to occupy the property, but it is not clear exactly what. No allegation is made of any particular kind of tenancy, eg periodic or for a fixed term, and no documents relating to the tenancy are in evidence, except a notice to which I shall come.

3. A copy of the freehold title as registered at HM Land Registry shows that as at 2 February 2021 the freehold was vested in one Martin Friedman, of Salford. However, the particulars of claim allege that in 2020 the claimant and the first defendant discussed whether the freehold could be purchased by the company. They go on to allege that on 29 September 2020 the first defendant bought the freehold for himself, rather than for the company. On 14 December 2020 the first defendant served a notice under s 25 of the Landlord and Tenant Act 1954, giving notice to end the company’s tenancy on 30 June 2021, and opposing the grant of a new tenancy.

4. On behalf of the company, the claimant seeks a declaration that the first defendant holds the freehold on trust for the company, an account of profits from the purchase and an order for payment of anything found due, an order that the company be permitted to buy and that the first defendant sell the property, an injunction to restrain the first defendant from dealing with the property other than transferring it to the company, an order that the s 25 notice be withdrawn or treated as withdrawn, damages, interest and costs.”

3. At paragraph 52 of the particulars of claim, the claimant gives particulars of the loss and damage said to have been suffered by the company:

“(1) The loss of the Property freehold and in particular the increase in value since the transfer to the First Defendant and increased development and commercial value.

(2) Loss of Company value.

(3) Rental, service charge and other sums paid by the Company to the First Defendant for the lease, use and occupation of the Property from the date of transfer to the First Defendant.

(4) Loss of goodwill and business profits since the said date of transfer.”

Click here to read the full judgment


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