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CASES |
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Existence of a Partnership See CLM ¶17+, ¶550 Roger Marsh v Simon Marsh & Anor [2010] EWHC 1563 (Ch) Where a partnership has existed it is possible to trace assets of that partnership into a successive company. However, with no partnership agreement in place, the court will look to the historic dealings of the company in order to establish whether a partnership existed. This case involved RM, the father of SM, appealing to the court to trace assets of the alleged partnership, SMS, into a new company, TCIL, which SM had incorporated without the involvement of RM. RM claimed that SMS had been a partnership between himself and SM. However, the court found that in key documentation of SMS, the company details described SM as being a ”sole proprietor” and, when asked by the court, RM had declared that he would not have been prepared to stand by any legal obligation to pay an indebtedness of SMS should SM have failed to pay. In doing this he denied one of the key constituents of a partnership. The court held that there was a great deal of difference between a father helping his son set up a business and a father and son entering into business together as a partnership. Although SM may have received help and guidance from RM in filing VAT returns and sourcing custom, this did not amount to a partnership in the face of the contrary evidence. Accordingly, the appeal was dismissed. Bills of Sale Acts do not apply to companies See CLM ¶4638 Online Catering Limited v Acton and anor [2010] EWCA Civ 58 The Court of Appeal has recently clarified the position in relation to the registration of certain charges by companies. Companies are bound by the provisions of the CA 2006, which states that charges created by an instrument or document, where executed by an individual and which require registration as a bill of sale, must be registered at Companies House (s 860 CA 2006). The Court of Appeal confirmed that the Bills of Sale Acts, which require bills of sale executed by individuals to be registered with the High Court, are confined to individuals and do not apply to companies. Therefore, charges entered into by companies will not require separate registration at the High Court as a bill of sale. Indemnity for costs in derivative claims See CLM ¶7127 Stainer v Lee and others [2010] EWHC 1539 (Ch) In a recent case, the High Court granted an indemnity for the applicant's costs when granting him permission to proceed with a derivative claim (i.e. proceedings brought on behalf of the company by a shareholder) but limited this by placing a financial cap on the amount of costs covered by it. Shareholders wishing to bring such claims must apply to court for permission to continue with it. This is known as the “filter stage” as it ensures that only genuine claims continue. The indemnity was capped in this case because it was granted at the filter stage, and the amount of recovery on behalf of the company was at that time uncertain. The court confirmed that the applicant would be at liberty to apply to extend the scope of the indemnity if necessary. Notice of appointment of administrator when time barred See CLM ¶8762+ Re Cornercare Ltd [2010] EWHC 893 (Ch) A company, wishing to make an out of court appointment of an administrator is required to do so within the time permitted by the IA 1986 following the filing of a notice of their intention to do so. If the permitted period expires, a fresh notice of intention to appoint can be filed at court to restart the brief window in which the appointment can be made. C Ltd was in financial difficulties and its directors had filed at court a notice of their intention to appoint an administrator using the out of court procedure. The legislation provides that no appointment can be made after 10 business days from the date at which the notice of intention to appoint had been filed (para 28(2) Sch B1 IA 1986). However, C Ltd did not appoint an administrator within the allotted 10 days. Despite this fact the directors applied to the court for a declaration that they could still appoint an administrator, or alternatively, apply for an administration order. The court held that, in this case, they were satisfied that there was a genuine reason for C Ltd’s failure to appoint an administrator within the permitted time. Whilst no appointment could be made pursuant to the original notice due to its expiry, a fresh notice of intention to appoint could be filed at court instead, thereby restarting the 10-day window. However, the court made it clear that it was not approving of successive filings of intentions to appoint administrators where there was no real intention to do so, particularly if the primary intention was simply to obtain the benefit of a moratorium. Electronic delivery of statutory notices See CLM ¶8780+ Gould and anor v Itmo Advent Computer Training Ltd and anor [2010] EWHC 459 (Ch) Electronic delivery of statutory notices was held to be permissible in instances where there is no uncertainty about whether the emails would reach the recipients. This case involved an educational services company in financial difficulties. The company’s clients where students who, as part of their contract with the company, were obliged to give their email addresses. Many of these students were creditors to the company as they had paid in advance for the company’s services. The administrators were required to send out a notice of their appointment to the student creditors and wished to do so by email. As such, the administrators applied to the court for a ruling that they would be permitted to send the notices electronically. The legislation requires notices to be “sent” to the relevant parties. The court held that, in this case, as there was certainty as to the email addresses of the creditors, sending the notices using electronic means could properly fall within the meaning of the Act. Appeal to set aside a CVA due to unfair prejudice See CLM ¶9513+ Mourant & Co Trustees Ltd and anor v Sixty UK Limited (in administration) and ors [2010] EWHC 1890 (Ch) Where a CVA does not show parity between creditors, is unfairly prejudicial to certain creditors and/or there has been a material irregularity in the conduct of the CVA, the court has the power to set aside the arrangement. In this case the applicant, M Ltd, was the landlord of S UK Ltd, which was in financial difficulties. S UK Ltd sought to establish a CVA between itself, as a tenant and M Ltd, which had the benefit of a third party guarantee, to require M Ltd to forsake its guarantee even though it was neither the company who was proposing the arrangement or a party to it. S UK Ltd’s administrators arranged the CVA so that all creditors would be fully repaid but M Ltd would receive £300,000 as full compensation for their liability and would be required to give up the guarantee given by S UK Ltd’s parent company. M Ltd appealed against the CVA on the basis that it was unfairly prejudicial to it as the sum proposed by the administrators was based on numerous flawed assumptions and was not a correct reflection of the liability owed to it. Further, it was the only creditor who was required to accept a substitute for its contractual rights. The court held that it was both unreasonable and unfair to require M Ltd to give up its guarantee and to force it to do so, especially when the solvency of the guarantor was not an issue, would be to undermine the commercial function of the guarantee. In addition, the sum proposed by the administrators was unfair and amounted to a dereliction of the administrators’ duties. As such the CVA was set aside and the administrators were reported to the professional bodies to which they were answerable. |
