Companies - reasons for declaring the dissolution of the company void
Before : |
A. J. Olsen Esq., Lieutenant Bailiff, and Jurats Blampied and Ramsden |
IN THE MATTER OF HUNTERS INVESTMENTS LIMITED
AND IN THE MATTER OF ARTICLE 213 OF THE COMPANIES (JERSEY) LAW 1991, AS AMENDED
Advocate H. Sharp Q.C. for the Representor.
judgment
the Lieutenant bailiff:
1. On 4th December, 2020, the Court on an ex parte Representation declared the dissolution of Hunters Investments Limited ('the Company') void and ordered its reinstatement to the Jersey Register of Companies. We now provide reasons for our decision.
2. The Company is a Jersey limited liability company incorporated on 25th March, 1996. It was dissolved on 23rd December 2014.
3. Advocate David John Banks ('the Representor') was a director of and a shareholder in the Company at the time of its dissolution. He presented a Representation seeking orders setting aside the dissolution and reinstating the Company pursuant to Article 213 of the Companies (Jersey) Law 1991, as amended ('the Law'), so that it could pursue those which he described as valuable civil claims.
4. Prior to the dissolution of the Company, the Representor held 16 of its 100 issued shares. The other 84 were held by Crican Holdings Limited as nominee on bare trust as to 12.35% each for Geoffrey George Crill ('Mr. Crill') Carol Canavan, Nuno Santos-Costa, Paul Harben, Dionne Gilbert and Damian James, and as to 9.9% for Jane Sappé ('Mrs. Sappé). All these persons were partners or former partners in the law firm that was formerly known as Crill Canavan, as was the Representor, and all were directors of the Company.
5. Article 213 (1) of the Law provides as follows:
"Where a company has been dissolved under this Law ... the court may at any time within 10 years of the date of the dissolution, on an application made for the purpose by:
(a) a liquidator of the company; or
(b) any other person appearing to the court to be interested,
make an order, on such terms as the court thinks fit, declaring the dissolution to have been void..."
6. The Representor clearly appears to be interested and is thus entitled to bring the present application. All those persons identified at paragraph 4 above, having been both directors of and shareholders in the Company, are also interested persons for the purpose of Article 213 (1) (b).
7. This Court clearly has a discretion, in the words of Collins JA in In The Matter of Independent Maritime Services Limited [1996] JLR 294 ('Maritime') at page 305 "... to determine what party, if any, should be convened..." The English Court of Appeal went somewhat further in the recent case of Fakhry v Padgen [2020] EWCA Civ 1207 ('Fakhry'), Richards LJ saying at paragraph 80:
"In my judgment, it was essential for the court [below] to have considered whether and, if so, how the members should be consulted. The failure to do so was a failure to have regard to a material consideration which should have been central to the court's decision."
8. We therefore considered whether the persons identified at Paragraph 4 above should be convened. In the event, for reasons to which we shall come, we decided not to convene any of them.
9. The Representation sets out in some detail the Company's potential claims and various allegations against five prospective defendants, one of whom/which is Mr. Crill. We noted the claims and allegations, but is neither necessary nor appropriate to rehearse them here. As Harman J said in Re Portafram Ltd. [1986] BCLC 533 ('Portafram') at page 534:
"The making of the order [for reinstatement] does not determine whether the applicant has a claim against the company or the company has a claim against a third party... all that is required is that the claim should not be merely shadowy..."
This passage was cited with approval by Hoffman LJ, as he then was, in Stanhope Pension Trust Ltd. v Registrar of Companies (2) (1994) 1 BCLC at 635-636 and by Collins JA in Maritime at page 300.
In our judgment the potential claims that the Company may have against the five intended defendants are not merely shadowy. That, as it seems to us, is as far as the test goes; the bar is not set high.
10. Mrs. Sappé supported the application. During the morning preceding the hearing of the Representation, Advocate Sharp produced copies of e-mails from all the parties referred to at Paragraph 4 above, with the exception of Mr. Crill, indicating that they did not oppose, or did not intend to appear in response to, the prayers of the Representation. It was on this basis that we decided that it was not necessary for them to be convened.
11. We then turned to the question of whether or not to convene Mr. Crill, whose legal advisers had indicated in a letter dated 12th November, 2020, that he opposed, or may oppose, the application. Advocate Sharp urged us to make the order without convening him on four grounds. We take each of these grounds in turn.
(i) There was an overwhelming majority (namely 87.65%) of shareholders who either wished the order to be made or did not oppose it. In Fakhry, the Court of Appeal indicated at paragraph 94 of its judgment that when a court considers it appropriate in its discretion to seek the views of the other interested persons, a majority view should ordinarily be followed by the court. It is hard to fault the logic of this indication.
(ii) Mr. Crill is a proposed defendant. Whilst making it as pellucid as we possibly can that we have formed no view and make no comment upon the claims that the Company might have against any of the five prospective defendants, in our judgment this was a fair submission. Indeed, in the words of Harman J in Portafram at page 534:
"It ... seems to me that a third party who merely wants to say that the applicant has no claim against the company or that the proceedings which the revived company proposes to bring against him have no prospect of success should not be entitled to intervene in the application."
(iii) There was a danger that at any hearing following a convening order this Court could find itself getting involved in the merits of the potential claims that the Company might have against, inter alia, Mr. Crill. Advocate Sharp conceded that this was not his strongest point. We agree.
(iv) Mr. Crill can still apply to set aside the order for reinstatement; he did not need to be convened or to be given liberty to apply in order to do so.
We decided not to convene Mr. Crill for these reasons, neither in the circumstances did we feel it necessary to give him liberty to apply.
12. This being an ex parte application, counsel had, "a duty of full and frank disclosure to the court of all material facts..."[i] In compliance with that duty, Advocate Sharp drew to our attention (a) that we must consider whether or not to convene other parties to the application, (b) Mr. Crill's expressed opposition to the making of the order and the possible grounds therefor including (c) a potential argument that the Representor as a minority shareholder had the ability to bring litigation prior to the dissolution of the Company, but did not do so, this for reasons that were explained to us in the affidavit evidence. We duly took these matters into consideration.
13. We also noted certain undertakings provided by the Representor and that both the Comptroller of Revenues and the Jersey Financial Services Commission had provided written expressions of 'no objection' to the proposed reinstatement.
14. We therefore declared the dissolution of the Company void, ordered its reinstatement and made certain consequential orders as set out in the Act of Court.
Authorities
Companies (Jersey) Law 1991, as amended.
In The Matter of Independent Maritime Services Limited [1996] JLR 294.
Fakhry v Padgen [2020] EWCA Civ 1207.
Re Portafram Ltd. [1986] BCLC 533.
Stanhope Pension Trust Ltd. v Registrar of Companies (2) (1994) 1 BCLC