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Cite as: [2004] ScotCS 21
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Liddell v. LAW Holdings & Ors [2004] ScotCS 21 (30 January 2004)
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OUTER HOUSE, COURT OF SESSION |
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P1830/03
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OPINION OF LORD McEWAN in the cause IAN LIDDELL Pursuer; against L. A. W. HOLDINGS LIMITED AND OTHERS Defender:
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Act: Mrs Delibegovic-Broome, Advocate; McClure Naismith for Petitioner
Alt: Kinroy; Boyds for Respondents
16 December 2003
[1] I granted interim interdict in this amended Petition on 16 December 2003. The matter is now the subject of a reclaiming motion. I was asked to write a Note for your Lordships on 7 January. I requested the process and the written note read out by me on the 16th. My note is now missing from the Process and cannot be found. The productions were made available to me on 12 January when I was on circuit.
[2] It was advised that the first respondent is a Group of Companies wholly owned by the second respondent, whose only shareholders are the third and fourth respondents. Until 2 November 2000 the petitioner was a shareholder in the first respondent. The whole dispute has arisen because of a share purchase agreement (called the S. P. A.) entered into between the Petitioner and the second and the fourth respondents of the above date. (Production 3). That is a lengthy and complex document and I will return to it. The Petitioner believes than the security for his rights under the S. P. A. was to be a property called Cadzow House and which is now to be sold to his prejudice. In these circumstances the Petition is brought.
[3] Mrs Delibegovic-Broome in opening referred me to the S. P. A. indicating that it provided for immediate then deferred payments dependent partly on a date when a completed balance sheet (C. B. S.) was finished and later payments relating to coal extraction and based on tonnage. She accepted that a C. B. S. did not exist due to the parties being in dispute about valuations, so the debt due was in part contingent.
[4] Cadzow House was the only business asset and if it were sold to pay unspecified creditors her client's claim would be forever lost. She pointed out that at this stage, the Court, in advance of proof, should not enquire closely into the nature of the contingent objection. She referred me to Mitchell v Scott (1881) 8R 875 and Wilson v Wilson 1981 SLT 101. The whole agreement was made on the basis that the asset would be there, and selling the property now is not in the ordinary course of business. If the property was sold the respondents would not be in a position to fulfill their obligations to the petitioner.
[5] In reply Mr Kinroy analysed the S. P. A. in great detail. He also told me that Cadzow House was owned by one of the group companies of the first respondent viz. Law Mining Group Limited. Unless the property was sold the company would go into liquidation. There was no need for the property. The staff who worked there could work from home and carry on the business of the company by means of computers. He referred me in general terms to obligations within groups of companies under reference to Pennington's Company Law (8th ed) 913/5. The respondents had bought a company which had been overvalued. That accounted for the delay in finalising the C. B. S. It would in their opinion reveal a minus figure and that would result in no deferred payment.
[6] There were debts due to the Inland Revenue and Customs and Excise of £300,000. The fourth respondent had arranged to pay these from his own borrowed funds and the deadline was 23 December 2003. That left other creditors pressing to liquidate; hence the need to sell Cadzow House. That was in the ordinary course of business (Counsel referred me to Stroud's Judicial Dictionary 1819). On the balance of convenience if interim interdict was granted there would be nothing for anyone.
[7] In my view the prayer of the Petition is significantly clear and specific, and can leave the respondents in no doubt what is sought. I do not think that at this stage of the cause it is useful or helpful to undertake a detailed analysis of the S. P. A. or to speculate as to what value would be shown in the C. B. S. Unless there is some agreement the expert who is to finalise the document will never be able to act and fix what was called the "finalisation date". The S. P. A., looked at even superficially defines then redefines all important matters. Everything is endlessly refracted. It is a subject for proof and not for discussion in interim interdict. Where I think the petitioners prima facie case succeeds is in what was said at the end of the argument.
[8] That reveals the balance of convenience in his favour. The respondents were unwilling or unable to tell me who were the creditors, what status of preference they had, if any, and what were their names and the nature of the debt. Nor could I be told to which of the Group Companies they related. In that situation I cannot be clear that they are in any better position than the petitioner. There is no dispute that there is a clear intention to sell the asset (Production 2) and in my opinion it is necessary and appropriate to prevent this at this stage.
[9] For those reasons I granted the orders sought.
[10] I should add something on the cases. Mitchell v Scott is not a case about interdict, but it was referred to for what was said at p. 879 about contingent creditors and how their rights cannot be ignored, due to the fundamental rules of equity. I see no reason to disregard what seems to me to be this commonsense view. Here the other competing creditors are unknown and not named. Wilson was a case of divorce and the Lord Ordinary was considering a future claim. By statute, interdict was allowed and by analogy the Lord Ordinary took the view that he could grant inhibition. In a sense here also the claim of the petitioner is properly described as in the future.