BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY DIVISION
Rolls Building, Fetter Lane, London, EC4A 1NL |
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B e f o r e :
(sitting as a Deputy Judge of the High Court)
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(1) BOSTON TRUST COMPANY LIMITED (2) BOSTON FIDUCIARY MANAGEMENT LIMITED (in their capacities as trustees of Erutuf Trust) (suing on behalf of Erutuf Trust and all other shareholders in Tellisford Limited other than VOC Trustee Limited) |
Claimants |
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(1) SZERELMEY LIMITED (2) SZERELMEY (GB) LIMITED (3) SZERELMEY RESTORATION LIMITED (4) TELLISFORD LIMITED (5) GORDON VERHOEF (6) SZERELMEY (UK) LIMITED (7) LONDON STONE LIMITED (8) HERITAGE HOUSE (YORK) LIMITED (9) TUSK HOLDINGS LIMITED (10) HARE AND RANSOME JOINERY LTD |
Defendants |
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Mr Stuart Adair (instructed by Brachers LLP) for the First to Third Defendants
Mr Timothy Carlisle (instructed by Woodroffes Solicitors) for the Fifth Defendant
Mr Ulick Staunton (instructed by Thomson Snell & Passmore LLP) for the Sixth Defendant
Hearing date: 21 May 2020
Draft judgment provided on 22 May 2020
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HTML VERSION OF JUDGMENT
Crown Copyright ©
Stephen Houseman QC (sitting as a Deputy Judge of the High Court):
INTRODUCTION
RELEVANT BACKGROUND
Permission Application
(i) I concluded that Boston, despite demonstrating that they are the trustees of Erutuf, lack standing to pursue this derivative action at common law in current circumstances; whilst recognising the possibility that this position may change if they were to prevail to a relevant extent in the Rectification Claim: see paragraphs 105 to 121 (addressing Issue 1).(ii) I further concluded that, subject to the threshold standing issue, Boston would and should have permission to pursue this derivative action on behalf of the Operating Companies as against Mr Verhoef and the Recipient Companies. I found that all other conditions for pursuit of a derivative claim in respect of the Alleged Wrongdoing were satisfied to the relevant standard of proof/satisfaction: see paragraphs 123 to 163 (addressing Issues 2 to 12 on the assumed premise identified in paragraph 122).
(iii) I deferred any consideration of Boston's ancillary application for a costs indemnity ("Costs Indemnity Application"): see paragraphs 5, 76 & 161(iii).
(iv) I invited the parties' submissions as to an appropriate form of order to reflect the substantive outcome (paragraph 165). In this context, I observed (at paragraphs 163 and 164) that there was ostensible merit in ordering conditional permission or a temporary stay in a case such as this, particularly in light of the inchoate position as to standing. These observations implicitly assumed without deciding there was jurisdiction to grant conditional permission or a stay in light of my conclusion as to Boston's current lack of standing.
Rectification Claim
(i) A stock transfer form dated 18 May 2020 by which FT Limited (formerly Isle of Man Financial Trust Limited) acting by its liquidator ("Original Trustee") purports to transfer the A Shares to Mr Andrew Douglas Ash and Mr Alexander Fleming McNee (together, "Replacement Trustees") of the same address as the Original Trustee.(ii) A stock transfer form dated 19 May 2020 by which the Replacement Trustees purport to transfer the A Shares to Boston, identifying each corporate entity by name, company number and common address.
(iii) The October 2018 B Shares Transfer Form amended to identify the two corporate entities comprising "The Trustees of the Erutuf Trust", namely the First Claimant and the Second Claimant, and re-executed by Mr Maughan on 18 May 2020. I refer to this as the "May 2020 B Shares Transfer Form".
SCOPE OF JURISDICTION UNDER CPR 19.9(4)
EXERCISE OF DISCRETION UNDER CPR 19.9(4)
(1) In order to obtain conditional permission must Boston show that there is at least a real prospect of rectifying the Tellisford Register retrospectively from a date prior to commencement of these proceedings on 1 October 2019?(2) Does the Rectification Claim have a sufficient prospect of success to the extent required in light of (1) above?
(3) What is the effect, if any, of Boston's Election prior to and at the April Hearing?
(1) Retrospective Rectification
(i) Substantive Prognosis. This burden of proof/satisfaction accords with what I called the "interlocutory burden" applicable to grant of permission: see paragraphs 60(ii) and 61 to 64 of the 7 May Judgment. The lower standard referred to by Briggs J (as he then was) in Starlight (above) is to be understood in its own different procedural context, namely striking out an unfair prejudice petition commenced as of right.(ii) Temporal Prognosis. This gives effect to what Harman J called "a reasonable opportunity" in Birch v Sullivan (see paragraph 67 above). It is necessary to avoid an open-ended conditionality, otherwise the derivative action would potentially go stale or become oppressive whilst kept in the procedural air lock of CPR 19.9(4).
(iii) Potential Prejudice. In so far as distinct from (ii) above, an inquiry as to potential prejudice to the defendants forms part of or reflects the balancing exercise within the court's so-called "wrap around" discretion applicable to grant of permission: see paragraphs 60(iv), 91-92 and 102 of the 7 May Judgment.
(2) Rectification Claim: Threshold Prospects
(3) Boston's Election
Discretion: Overall Assessment
DISPOSITION
PERMISSION TO APPEAL
Note 1 By similar oversight the title page of the 7 May Judgment states that the hearing took place on 22-23 March 2020 rather than 22-23 April 2020. [Back]