Firm news and coverage

Reported cases

Summary: In proceedings under s994 Companies Act 2006 for unfair prejudicial conduct. which had been struck out on the grounds that the defendant company had never been notified of them and had no knowledge of the petition, the issue for the court was the liability in costs of three law firms to innocent parties arising from their breach of warranty of authority to act for the company. The firms had purported to act for a respondent to the petition where they had no authority to do so. It was held that they should pay the greater part of the costs incurred by the petitioner and the respondent in relation to an application by the latter to have the petition set aside as against it. The costs would be payable on the indemnity basis.

Topics: Breach of warranty of authority; Costs; Indemnity basis; Solicitors; Unfairly prejudicial conduct

 

Summary: The court was required to consider the extent to which petitioners needed to adduce evidence to establish unfair prejudice sufficient to found relief under s994 Companies Act 2006 against respondents whose defence had been struck out.

Topics: Amendments; Civil evidence; Minority shareholders; Relief; Striking out; Unfairly prejudicial conduct

 

Summary: Where a Companies Act 2006 s.994 petition did not contain any allegations of unfairly prejudicial misconduct against a (deceased) respondent to the petition, references to his estate in the prayer for relief were struck out. The executrix of an estate applied for an order striking out references to the deceased in the prayer for relief and particulars of claim to a s.994 Companies Act 2006 petition. The petitioner made allegations of unfairly prejudicial conduct against a number of respondents, but did not make any allegations of misconduct against the deceased. The only allegation was that the deceased held 5% of the B class shares in the fourth respondent company. The petitioner claimed relief that the deceased purchased all of the petitioner’s shares in the company, jointly and severally with the first respondent. The court ordered that references to the deceased should be struck out on the basis that no allegations of unfairly prejudicial conduct were made against him and consequently, there was no prospect of obtaining the relief sought from the estate. Secondly, it was found that the relief sought was so manifestly excessive that no court would grant it.

Topics: Company law, Civil procedure, Relief, Petitions, Striking out, Unfairly prejudicial conduct

 

Summary: Following an ‘unless’ order for failure to comply with a freezing order, the defendants were debarred from defending their claim. They made an application for relief from sanctions but this was dismissed. Two months later, on the day the trial was due to start, the defendants made a second application for relief from sanctions, purporting to provide full disclosure. The deputy judge discharged the debarring order. The Court of Appeal restored the debarring order on the basis that, as the first application had already been refused, CPR r3.1(7) applied and the deputy judge therefore could not have allowed the second application unless there had been a “material change of circumstances” (which there had not). The defendants appealed this decision but the appeal was dismissed by the Supreme Court.  The fact that the defendant subsequently complied with the unless order could not amount to a material change of circumstances for the purposes of a second application.

Topics: Civil procedure, disclosure, non-compliance, relief from sanctions, unless orders

 

Summary: : Derivative actions – not just restricted to members.

In early 2013, we successfully acted for Universal Project Management Services Ltd (“UPMS”) in a ground breaking case in which a parent company was granted permission to bring a “double derivative” claim on behalf of one of its subsidiaries. Up until this decision, a widely held view, and one shared by Lord Millett, one of the leading judges of this generation, was that following the passing of the Companies Act 2006, there could be no claim on behalf of a company by one or more members of its holding company, where its shareholder was subject to wrongdoer control. Lord Millett’s view was that “for the first time in more than 150 years an alleged injustice would be without redress. The moral for would-be fraudsters is simple: choose an English company and be careful to defraud its subsidiary and not the company itself.” However, the decision my Briggs J in the UPMS case addresses what was perceived to be a major gap in the protection that company law affords against fraud, namely the right for a claim to be brought on behalf of a company’s subsidiary when its board and immediate shareholder are both controlled by a wrongdoer. All those who run or operate joint ventures with third parties can now breathe a little easier as this potential loophole for fraudsters has now been firmly shut.

Topics: Derivative claims; Limited liability partnerships; Locus standi

 

Summary: Pensions Ombudsman or Court?

In the first reported case of its kind, the High Court held that the issue of proceedings by an employer to determine a dispute regarding the amount of member’s pension entitlement prior to the conclusion of its internal dispute resolution procedure was not an abuse of process, even though it deprived the member of having the dispute resolved by the Pensions Ombudsman. Following a dispute regarding the amount of his pensions entitlement, Dr Lamb (the Fourth Defendant) invoked the Claimants’ internal dispute resolution procedure. Prior to the resolution of that procedure, the Claimants, for whom we acted, issued proceedings in the High Court seeking a declaration that Dr Lamb was not entitled to the enhanced pension he alleged he was entitled to. Dr Lamb subsequently applied to have the claim struck out as an abuse of process. The High Court dismissed Dr Lamb’s application on the basis that even if the motive in issuing proceedings was a tactical one in preventing the member from bringing a complaint to the Pension Ombudsman, that did not constitute an abuse of process. The Claimants were quite open about their motive for issuing proceedings, namely to seek costs from Dr Lamb in the event they were successful and to have evidence tested orally. However, in the absence of malice, their motive was irrelevant. In addition, the court could not discern any statutory preference for complaints to be dealt with by the Pensions Ombudsman over the court.

Topics: Abuse of process; Internal dispute resolution procedures; Occupational pensions; Pre-action protocols; Prospective costs orders; Striking out

 

Summary: Privy Council Guidance on Wrotham Park damages

In what is now a seminal case on the interpretation of Wrotham Park damages, we acted for the Claimant, Pell Frischmann Engineering Limited (“PFE”). PFE brought claims for breach of contract, conspiracy and misuse of confidential information against the Defendants. At first instance, the Royal Court of Jersey awarded damages to PFE in the sum of £500,000. On appeal regarding the quantum of damages, the Jersey Court of Appeal upheld the award of damages as being an appropriate sum. However, on further appeal to the Privy Council, PFE was successful in obtaining an award for damages in the sum of $2.5million plus interest. The judgment provides much needed guidance on the interpretation of Wrotham Park damages, a topic previously fraught with confusion. The case, which ran for 6 years and ultimately secured the backing of all 5 Privy Council judges, is also a prime example of how belief in a case, together with the tenacity to pursue it through the appeal courts, can yield a great and more importantly, just, result.

Topics: Breach of confidence; Contracts for services; Jersey; Measure of damages; Privy Council

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