Act: S Wolffe, Q.C.; Simpson & Marwick, W.S. (for the Petitioner)

Alt: McIlvride; Brodies LLP (for the Second and Third Respondents)

3 June 2009

[1] In these proceedings the petitioner sought orders under sections 459 and 461 of the Companies Act 1985 in respect of R M Supplies (Inverkeithing) Limited ("the Company"). The second and third respondents, who are brothers, lodged answers to the petition in which they opposed the remedies sought. The petitioner, the compearing respondents and certain other persons are directors of the Company. The Company's shareholding comprises 3,000 ordinary shares of £1 each. The petitioner holds 1,500 shares and the compearing respondents 750 shares each.

[2] The issues between the parties, broadly speaking, were (1) whether, as the petitioner contended, the affairs of the company had been conducted in a manner which was unfairly prejudicial to his interests as a shareholder in the Company, (2) if they had been so conducted, whether the petitioner should have the relief he sought, namely, the right to buy out the shares of the compearing respondents - they contended that they should have the right to buy out his shares - and (3) at what price the shares should be acquired. After sundry procedure, including proof, the Lord Ordinary, having been satisfied that the petitioner had made good his contention and should have the remedy he sought, on 17 February 2009 pronounced an interlocutor in the following terms:

"17 February 2009 Lord Glennie

The Lord Ordinary, having considered the cause;

(1) Finds and Declares that the petitioner or, at his option, R M Supplies (Inverkeithing) Limited (hereinafter called 'the Company'), whichever of them is so chosen being referred to herein as 'the purchaser', is entitled to purchase the whole shares of the second respondent in the Company at a price of £1,652,890.25 and the whole shares of the third respondent in the Company at a price of £1,652,890.25 within six months of the date of this interlocutor;

(2) Orders the second respondent, within seven days after the purchaser has intimated to him his or its intention to tender to him his share of the price, to deliver to the purchaser, in exchange for his share of the price, duly completed stock transfer forms in respect of his shares in the Company;

(3) Orders the third respondent, within seven days after the purchaser has intimated to him his or its intention to tender to him his share of the price, to deliver to the purchaser, in exchange for his share of the price, duly completed stock transfer forms in respect of his shares in the company;

(4) Continues the petition to a date to be fixed to consider such other orders as may be necessary in connection with the sale and purchase of the said shareholdings; and

(5) Continues the cause in respect of all questions of expenses."

[3] In paragraph [65] of his Opinion of even date the Lord Ordinary recorded that the Dean of Faculty, senior counsel for the petitioner, had helpfully handed up a proposed interlocutor, identifying the terms of the order sought if the Lord Ordinary was in the petitioner's favour. Mr Johnston, senior counsel for the compearing respondents, is recorded as not having raised any points as to the form of order, which the Lord Ordinary stated that he proposed in the main to follow. The Lord Ordinary then identified heads 1, 2 and 3 of what was thereafter contained in the interlocutor. The Lord Ordinary continued:

"However, rather than, as suggested, attempt to anticipate precisely what may happen and what further orders may be required ancillary to the above, I will also make the following order:

(4) Continues the petition to a date to be fixed to consider such other orders as may be necessary in connection with the sale and purchase of the said shareholdings.

I shall reserve all questions of expenses."

[4] No steps were taken by the compearing respondents to reclaim, with or without leave, against that interlocutor. On 12 May 2009 parties again appeared before the Lord Ordinary. The Minute of Proceedings for that day records the following:

"The following matters were agreed among the Petitioners, and Second and Third Respondents (hereinafter collectively known as 'the Parties') and the following undertakings were given with the intention of being recorded in the Minute of Proceedings of the By Order hearing on 12 May 2009, namely:

Agreement of figures for Management charges to enable outstanding Accounts of the Company to be finalised

1. That the Petitioner and the Second and Third Respondents were and are agreed that for the purposes of finalising the accounts of the First Respondents (hereinafter 'the Company') for the years to 2005, 2006, 2007, 2008 and 2009, the total management charges to be paid in respect of the provision of services by the Petitioner and the Second and Third Respondents to the Company for each of the said years are the figures as set out in respect of each of those years (under the entry 'Directors' remuneration') in Figure 6 of the Report of Iain Webster dated 12 January 2009 (no. of Process), and that the figure for each of the said years set out is to be divided equally among the Petitioner, the Second Respondent and the Third Respondent. Accordingly, the entry for Management Charges for each of the said years to be inserted in the Company's Accounts, is agreed as follows:

such figures in each case to be exclusive of VAT.

Payment of Second and Third Respondents' one-third proportion of Management Charges upon completion

2 That the Parties were and are agreed that the management charges for the years ended 31 January 2005 through the period ended 31^st January 2009 referable to, or payable in respect of, the provision of services of the Petitioner to the Company are £365,000. The management charges for the said years ended 31 January 2005 through 31 January 2009 payable to Thomas Muir (Metals) limited in respect of the provision of the services of the Second Respondent to the Company total £365,000. The management charges for the said years ended 31 January 2005 through 31 January 2009 payable to Thomas Muir (Haulage) Limited in respect of the provision of the services of the Third Respondent to the Company total £365,000.

3 The Petitioner undertakes to procure (i) payment of the said sum of £365,000 plus VAT to Thomas Muir (Metals) Limited and (ii) payment of the said sum of £365,000 plus VAT to Muir (Haulage) Limited, and to do so upon receipt of the duly completed stock transfer forms relative to the shares of the Second and Third Respondents in the Company.

4 That the Petitioner confirms his intention that, in the event he exercises the option to purchase the shares of the Second and Third Respondents within six months of 17 February 2009, as provided for in the first numbered paragraph of the Court's interlocutor of 17^th February 2009, or that, by agreement of the Second and Third Respondents, the Petitioner exercises the said option by means of a new company, he shall exercise that option in respect of the shares of both the Second and Third Respondents within the said six month period. For the avoidance of doubt it is recognised by the Parties that the said option to purchase the shares of the Second and of the Third Respondents does not require to be exercised simultaneously.

Immediate registration by the Board of the Company of stock transfer forms relative the transfer of the shares of the Second and Third Respondents in the Company

5 That the Second and Third Respondents each undertakes to cooperate with the Petitioner in effecting the immediate approval by the Board of the Company of the registration of the stock transfer forms transferring their respective shares in the Company to, or at the direction of, the Petitioner and that they each undertake to take or consent to any ancillary steps to facilitate the holding a meeting of the Board of Directors of the Company for that purpose.

Resignation of the Second and Third Respondents as directors of the Company upon receipt of the price paid in respect of his shareholding

6 That the Second Respondent undertakes that upon delivery of a duly executed stock transfer form in respect of his respective shareholding in the Company he will tender his resignation as a director of the Company with effect from that date.

7 That the Third Respondent undertakes that upon delivery of a duly executed stock transfer form in respect of his respective shareholding in the Company he will tender his resignation as a director of the Company with effect from that date.

Vehicle for purchase of the shares of the Second and Third Respondents

8 That the Petitioner undertakes not to use the Company as the purchaser of the shares of the Second and Third Respondents in the Company, but that by agreement with the Second and Third Respondents he may use a new company set up by him for that purpose."

The Lord Ordinary's interlocutor of that date was in the following terms:

"12 May 2009 Lord Glennie

Act: Dean of Faculty; S Wolffe Alt: McIlvride

The Lord Ordinary, having heard counsel By Order, and in respect of the various undertakings recorded in the Minute of Proceedings, makes no further order meantime."

[5] On 1 June 2009 (that is, within 21 days of the interlocutor of 12 May) the compearing respondents enrolled a motion for review of the Lord Ordinary's interlocutor of 12 May. That motion was opposed by the petitioner as incompetent.

[6] Rule 38.3(2) of the Rules of Court provides:

"An interlocutor disposing, either by itself or taken along with a previous interlocutor, of -

...

(b) the whole merits of the cause whether or not the question of expenses is reserved or not disposed of,

may be reclaimed against, without leave, within 21 days after the date on which the interlocutor was pronounced."

[7] Mrs Wolffe on behalf of the petitioner contended before us that the interlocutor of 12 May did not, either of itself or taken along with the interlocutor of 17 February, dispose of the whole merits of the cause. It was not dispositive. The only dispositive interlocutor was that of 17 February which had disposed of the whole merits of the cause. That interlocutor had not been reclaimed against within the prescribed time limit. Although there had been discussion and ultimately agreement between the parties (as recorded in the Minute of Proceedings of 12 May) in relation to management charges, these charges had not been a matter in issue for determination by the Lord Ordinary; the parties had in advance of the proof repaid these charges to the Company. Reference was made to paragraph [28] of the Lord Ordinary's opinion. The petitioner and his funders had had concerns about securing registration of stock transfers and about resignation of the compearing respondents as directors. These concerns (which did form part of the merits of the cause but were concerned only with the mechanics of implementation) had occasioned the case being put out By Order on 12 May but had been resolved by agreement between the parties. The compearing respondents had also then raised a concern about a perceived risk that the petitioner might purchase the shares of only one of the compearing respondents; but the Lord Ordinary had made it plain that the remedy already granted to the petitioner involved the purchase of the shares of both compearing respondents and this likewise had been reflected in the parties' agreement. The court accordingly on 12 May had not required to decide anything and had not decided anything. The interlocutor of 17 February not having been timeously reclaimed against, the petitioner had acted on the basis that it was final.

[8] Mr McIlvride for the compearing respondents submitted that the interlocutor of 17 February had not dealt with the whole merits of the cause. Reliance was placed in particular on paragraph 4 of it and on the Lord Ordinary's explanation in paragraph [65] of his Opinion for including that paragraph. That envisaged that there might be further orders bearing on the merits. Had the parties not reached agreement on 12 May, including agreement on the management charges, the Lord Ordinary would have addressed their dispute and made an appropriate order. The combined effect of the interlocutors of 17 February and 12 May had been to dispose of the whole merits of the cause. The reclaiming motion was competent.

[9] We refused the reclaiming motion as being, in our view, incompetent. The interlocutor of 12 May was not in any relevant sense dispositive. No order was made in it disposing of any part of the merits of the cause. Even if the matter of regulation of management charges formed any part of the merits of the cause, which we seriously doubted, in the event the Lord Ordinary did not on 12 May make any disposition in relation to that matter. The circumstance that the interlocutor of 17 February continued the petition to consider "such other orders as may be necessary in connection with the sale and purchase of the said shareholding" did not, in our view, entail any deferment of the disposal of the whole merits of the cause. Such an order might never be necessary - as in the event proved to be the case. In any event, any such orders would be "ancillary" (or executory) only. The possibility that they might be required did not prevent the interlocutor of 17 February being itself reclaimable under Rule 38.3(2)(b).