Law reports

Law reports

COMPANY

Power of directors to bind company - decision by one-man board meeting in breach of company's articles invalid

Smith v Henniker-Major & Co: CA (Lords Justice Schiemann, Robert Walker and Carnwath): 22 July 2002

The claimant was a shareholder, chairman and one of three directors of a company, SPDL.

He claimed that the other two directors had diverted the company's business to another company and that the defendant solicitors had wrongfully accepted a retainer on behalf of another company when already instructed by SPDL.

In 1998, believing that he had power under the company's articles to act alone, he resolved to assign SPDL causes of action to himself personally and executed an assignment on behalf of the company.

He issued proceedings against the defendants who claimed that the assignment was ineffective because the board meeting was inquorate.

In 2001, the claimant entered into a deed with SPDL purporting to ratify the 1998 assignment and introducing new terms.

Mr Justice Rimer held that the assignment was invalid and that the 1998 deed did not ratify the assignment retrospectively.

He refused an application to amend the pleadings to rely on the 2001 deed.

The claimant appealed.

David Mabb QC and Julian Gun Cuninghame (instructed by Fosters) for the claimant; Christopher Symons QC and Daniel Gerrans (instructed by Mills & Reeve, Norwich) for the solicitors.

Held, dismissing the appeal (Lord Justice Robert Walker dissenting on the construction of section 35A of the Companies Act 1985), that section 35A was intended to protect third parties dealing with companies, but the words a 'person dealing with a company' in the section were wide enough to include a director; that the claimant was not simply a director dealing with the company, but as chairman of the company it was his duty to ensure that the constitution of the company was properly applied, yet he was personally responsible for the error; that he could not rely on his own error to turn his own decision, which had no validity under the company's constitution, into a decision of 'the board'; and that since the 2001 deed contained additional provisions, it could not operate as a retrospective ratification of the assignment, nor would permission to amend be given.

CRIMINAL

Drugs - confiscation order - matrimonial home subject of ancillary relief application - judge making property adjustment order in matrimonial proceedings - receiver not to be directed to realise defendant's interest in house

HM Customs and Excise and Another v MCA and Another; A v A: CA (Lords Justice Schiemann and Judge and Mr Justice Wall): 22 July 2002

After the husband was convicted of drug trafficking and sentenced to a term of imprisonment, the commissioners sought to enforce an unsatisfied confiscation order under section 29 of the Drug Trafficking Act 1994.

The wife meanwhile sought a property adjustment order under section 24 of the Matrimonial Causes Act 1973 for the transfer of the husband's interest in the former matrimonial home and two insurance policies to her.

In conjoined proceedings Mr Justice Munby exercised his discretion to make an order under the 1973 Act.

The commissioners appealed.

Andrew Bird (instructed by Solicitors for the Commissioners); Christopher Hames (instructed by Gosling & Wilkinson, Weybridge) for the wife.

The husband did not appear.

Held, dismissing the appeal, that there was nothing in the provisions of either the 1973 Act or the 1994 Act which required the court to hold that either statute took priority over the other when both were invoked in relation to the same property; that both statutes conferred discretion on the court, the exercise of which would depend on the facts of each case; that it was not axiomatic that to enforce an order under the 1994 Act would be more in the public interest than to make a property adjustment order under the 1973 Act; that the assumption that the 1994 Act excluded the operation of the 1973 Act would be capable of leading to an injustice which parity between the statutes would prevent; that it was found in the proceedings under the 1994 Act that Mrs A had no knowledge of her husband's criminal activities, nor was any part of the equity in the house or the insurance policies acquired with proceeds of drug trafficking; and that if the commissioners were to succeed, a substantial injustice would be done to Mrs A.

Using false instrument and furnishing false information - false invoices used to claim against trust moneys - not necessary for Crown to prove absence of legal entitlement to moneys

Attorney-General's Reference (No 1 of 2001): CA (Lord Justice Kennedy, Mr Justice Curtis and Mr Justice Pitchford): 11 July 2002

The defendants had apparently obtained payment from a trust fund by virtue of false claims to expenses.

They were charged with (1) using a false instrument contrary to section 3 of the Forgery and Counterfeiting Act 1981 and (2) furnishing false information contrary to section 17(1)(b) of the Theft Act 1968.

At trial the defendants relied on their claim that part of the trust money was intended for their own use as they pleased and submitting that the prosecution could neither (on count 1) demonstrate the relevant 'prejudice' in the absence of gain or advantage; nor (on count 2) prove that the money obtained on the false invoice was not in fact the defendants' money.

The judge, accepting those submissions, directed acquittal.

The Attorney-General referred to the court the questions whether, on charges under section 3 of the 1981 Act or section 17(1)(b) of the 1968 Act, where the accused had used a false instrument or furnished false information with a view to obtaining money or other property, it was necessary for the prosecution to prove that the accused had no legal entitlement to the money or other property in question.

David Perry (instructed by Treasury Solicitor) for the Attorney-General.

The acquitted parties did not appear and were not represented.

Held, answering the question in the negative, that there was no burden of the kind suggested; that the fact that there might have been a claim of right to a share in the trust fund did not mean that the trustees were not prejudiced by being induced to authorise and execute payment on the invoice in reliance on the false document; that the prejudice must have been that intended by the defendants; and that the fact that the defendants might have had a valid claim on the fund, and that some of the moneys should not have been placed in it, did not alter what they were doing, which was dishonestly making use of a false invoice to substantiate a claim for expenses, and thus extract a cheque from the trustees, thereby seeking to obtain hard cash as opposed to a mere right to claim.

DEFAMATION

Defendants seeking trial of preliminary issues including qualified privilege - judge rejecting application - no rule of practice that court should direct such issues to be heard in advance of main trial of defamation action

Macintyre v Phillips and others: CA (Lords Justices Brooke and Dyson and Mr Justice Wall): 24 July 2002

The claimant brought an action for libel.

At a case management conference the defendants applied for direction of a trial of preliminary issues on the question of qualified privilege and malice.

Mr Justice Gray rejected the application and also refused to allow an amendment of their defence to rely on similar fact evidence.

The defendants appealed.

Mark Warby QC and Jacob Dean (instructed by Farrer & Co) for the defendants; Andrew Caldecott QC and Manuel Barca (instructed by Goodman Derrick) for the claimant.

Held, dismissing the appeal, that there was no rule of practice arising from dicta in Loutchansky v Times Newspapers Ltd (No 2) [2002] 2 WLR 640, paragraph 41, that courts should direct issues of qualified privilege to be heard in advance of the main trial of defamation; that the judge at a case management conference retained his discretion to give the directions he considered to be appropriate for the management of the individual case; and that, in the circumstances, the judge had not been wrong to refuse the trial of preliminary issues.

DISCRIMINATION

Racial discrimination - evidence of discriminatory acts not in originating application - appeal tribunal remitting case for consideration by different tribunal for findings on those acts - appeal tribunal having no jurisdiction

Ahuja v Inghams; CA (Lords Justice Kennedy, Mummery and Sedley): 10 July 2002

The applicant claimed damages for racial discrimination against her employers, alleging acts of discrimination for spanning two years.

In its notice of appearance the employer stated that the acts complained of related to a period more than three months before the filing of the originating application contrary to section 68(1) of the Race Relations Act 1968.

At a preliminary hearing, a trainee legal representative appearing for the applicant conceded that she would rely only on an incident that took place within the three months prior to the filing of the application.

Neither the applicant's witness statement nor her evidence at the hearing, when she appeared in person, referred to that concession.

The employment tribunal dismissed the application.

The Employment Appeal Tribunal allowed the applicant's appeal and directed a rehearing by another tribunal of the question whether the two incidents referred to in the witness statement amounted to less favourable treatment.

The employers appealed.

Harji Grewal (instructed by Cox Clitheroe) for the employers; Joe Sykes (instructed by Austin Kola Fitzpatrick) for the claimant.

Held, allowing the appeal, that the appeal tribunal had no jurisdiction to direct a tribunal to consider alleged acts of racial discrimination referred to in the witness statement or evidence alone, but not referred to in the originating application.

EMPLOYMENT

Transfer of undertaking - continuous employment - staff employed by local authority seconded to and later transferred to City Technical Colleges retaining continuity of employment

Astley and others v Celtec Ltd: CA (Lords Justice Schiemann and Laws and Mr Justice Jackson): 19 July 2002

The applicants were civil servants, employed by the Department of Employment (DoE), who had elected to be seconded to work in a TEC in 1990 when the TECs were established over a period permitted to take up to six years from 1990.

In 1993, they resigned from the civil service and became employees of the TEC, continuing to do the same work as before.

They sought to establish that there had been a relevant transfer within the meaning of regulation 3 of the Transfer of Undertakings (Protection of Employees) Regulations 1981 (TUPE) (SI 1981 No 1794) and the Acquired Rights Directive 77/187/EC with the result that a statutory novation of their contracts of employment arose so that they would be regarded as having continuous service from the date of the commencement of their employment as civil servants notwithstanding the change of employer.

The majority of the Employment Appeal Tribunal considered that the crucial issue was when the undertaking was transferred.

It held that the transfer took place on a particular date.

It was probably completed in September 1990 and certainly long before 1993 when the applicants resigned from the civil service.

They concluded that, although the applicants had, throughout the relevant period, continued doing the same jobs in the same building, their continuity of employment had been broken.

The applicants appealed.

Gavin Millar QC (instructed by Russell Jones & Walker) for the applicants; John Bowers QC (instructed by Mace & Jones, Manchester) for Celtec.

Held, allowing the appeal, that the skills of the applicants formed part of the undertaking that was transferred to the TEC; that those skills were available to the TEC whether the applicants resigned immediately from the civil service or whether they preferred to be seconded initially; that the wording of articles 1 and 3 of the directive was sufficiently wide to embrace a transfer of a business taking place over a period of time, even extending to several years; and that as a matter of policy there was no reason to deprive of their accrued rights those who throughout the relevant time continued to work for the relevant business.

HOUSING

Housing benefit - accommodation shared with student - student ignored in apportioning liability to pay rent on claim by other occupant

Naghshbandi v Camden London Borough Council and Others: CA (Lords Justice Schiemann and Laws and Mr Justice Jackson): 19 July 2002

A family of five adults, one of whom was a full-time student, shared a flat.

The father claimed housing benefit calculated on the basis of a quarter of the rent.

He appealed against a decision of Mr Justice Rafferty that he was entitled only to benefit based on one-fifth of the rent.

Paul Stagg (instructed by Straker Holford & Co) for the claimant; Nathalie Lieven (instructed by Camden Legal Services) for the respondents; Nigel Giffin (Treasury Solicitor).

Held, dismissing the appeal, that housing benefit was payable in respect of liability to pay rent, and in calculating the amount of liability, the rent of shared accommodation was apportioned among the occupants; that where five people shared accommodation and one of them was a student not eligible for housing benefit by virtue of regulation 48A of the Housing Benefit (General) Regulations 1987 (SI No 1971/1987) (as inserted by the Social Security (Students Loans and Miscellaneous Amendments) Regulations 1990 (SI No 1549/1990)), the liability in respect of rent of one of the others claiming benefit was taken to be one-fifth of the rent, not one-quarter; and that the student, who was not a 'person' liable to pay rent within regulation 6(1)(a) of the 1987 regulations, was not to be taken into account and was excluded from the calculation.

MOBILE HOME

Licensed site - occupier bolting porch extension to home - not losing statutory protection

Howard v Charlton: CA (Lords Justice Ward, Clarke and Carnwath): 25 July 2002

Under the terms of a written agreement, the occupier took up residence in a mobile home on a licensed site.

She added a porch extension to one side that became used as part of her home.

Disagreements arose between her and the new site owner who, in ensuing litigation, sought possession of the occupier's home on the ground that because of the extension it had lost its essential quality of mobility and was thus no longer afforded protection by the Mobile Homes Act 1983.

The judge held that the porch did not change the character of the structure which remained a mobile home and refused a possession order.

The site occupier appealed.

Kelvin Rutledge (instructed by Turbervilles with Nelson Cuff, Uxbridge) for the site owner; Linda Pearce (instructed by Bassets, Gillingham) for the occupier.

Held, dismissing the appeal, that section 29 of the Caravan Sites and Development Act 1960 defined 'mobile home'; that if a home subject to an agreement ceased to be a mobile home statutory protection would be lost; that private law matters between occupier and site owner were subject to control under sections 1, 2 and 3 of the Mobile Homes Act 1983; and that the judge was entitled to find that the extension was within the agreed terms and the occupier's right to station the home on the site could not be terminated by the site owner.

PRACTICE

Libel proceedings - claim struck out as abuse of process because proceedings conducted not to vindicate a right but so as to cause expense harassment or commercial prejudice - conduct of proceedings including initiation of claim

Wallis v Valentine: CA (Lords Justice Peter Gibson and Potter and Sir Murray Stuart-Smith): 18 July 2002

The claimant brought proceedings in libel against the defendants.

The deputy judge gave summary judgment against him in on a question raised in the particulars of claim, on the basis that there was no publication to other persons, and struck out the whole claim as an abuse of process.

The claimant appealed.

David Price, solicitor-advocate, and John Samson (instructed by David Price Solicitors) for the claimant; Jacob Dean (instructed by Peter Carter-Ruck and Partners) for the defendants.

Held, dismissing the appeal, that the court could strike out a claim as an abuse of the process of the court on the basis of the 'conduct of the proceedings' where a claim had been initiated not so as to vindicate a right but was to cause expense, harassment or commercial prejudice beyond that normally encountered in the course of properly conducted litigation; that at the interlocutory stage the test was an objective one; that the overriding objective under part 1 of the Civil Procedure Rules 1998 was relevant and, although the judge should not usurp the jury's function, he was bound to look at the case at its highest from the point of view of the claimant and ask himself the relevant questions arising when considering the overriding objective; and that, accordingly, the judge had been correct to strike out the claim.

PROFESSIONS

Solicitor moving to defendant firm - risk of disclosure of information relating to former client fanciful - injunction restraining defendant firm from acting for existing client not to be granted

Koch Shipping Inc v Richards Butler (a firm): CA (Lords Justice Ward, Tuckey and Clarke): 22 July 2002

P, a solicitor of integrity, was a partner in JP, a firm instructed by the applicant company involved in protracted arbitration proceedings.

P left JP and joined the defendant firm of solicitors which was instructed by another party to the same arbitration.

She admitted possession of relevant confidential information relating to the applicant and she agreed not to discuss or communicate with the defendants' case handlers but refused to undertake to work other than at the defendants' offices.

The judge held there was a real risk of inadvertent disclosure by P of confidential information and imposed an injunction restraining the defendants from acting for its client in the arbitration.

The defendants appealed.

Jonathan Hirst QC and Clare Ambrose (instructed by Richards Butler) for the defendants; Angus Glennie QC and Malcolm Jarvis (instructed by Jackson Parton) for the applicant company.

Held, allowing the appeal, that the relevant legal principles were laid down in Bolkiah (Prince Jefri) v KPMG [1999] AC 222; that each case turned on its own facts; that the risk of an experienced solicitor of integrity indirectly or inadvertently letting slip relevant confidential information about a former client was not a real risk but a fanciful one; and that the judge had erred in the circumstance in imposing the injunction.

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