Minority shareholders have limited influence over the direction a company takes, but they do have rights and, as a High Court ruling showed, the law can move extremely quickly to ensure that they are not trampled upon.
A corporate minority shareholder in a real estate investment company objected to its controlling shareholders’ proposals to issue new shares and loan notes. The day before the proposals were due to be considered at a directors’ meeting, the minority shareholder applied to the Court for an emergency injunction.
In arguing that the planned meeting would not be quorate, the minority shareholder pointed to the company’s articles of association, which required that board meetings be attended by at least four directors, one of whom had to be nominated by the minority shareholder.
It was also submitted that the proposals, if passed, would breach the terms of a shareholder agreement which required that the minority shareholder’s written consent be obtained before certain actions could be taken. Those included the allotment, issue, buyback or redemption of any share or loan capital, or the granting of any options.
In granting the injunction sought, the Court found that the balance to be struck was very one-sided and that the minority shareholder had by some margin passed the threshold of establishing a serious issue to be tried. Were the meeting to go ahead, there was a real risk that the minority shareholder's interests would be unfairly prejudiced, within the meaning of Section 994 of the Companies Act 2006.
The controlling shareholders had not established that they or the company would suffer any real prejudice due to the meeting’s postponement. On the other side of the balance, the effect on the minority shareholder were the proposals to be passed would be irreversible. An award of damages would therefore not be an adequate remedy for any prejudice it might suffer.
The minority shareholder undertook to pay appropriate damages to the company and the controlling shareholders if the injunction subsequently turned out to have been wrongly granted. The Court noted that that undertaking could be relied upon in that the minority shareholder had a positive balance sheet of 26.9 billion euros.
A criminal conviction is always a serious matter and all the more so for professionals who are expected to show the highest standards of integrity and honesty. A doctor who avoided paying more than £40,000 in child maintenance by lying to the Child Support Agency (CSA) found that out to his cost.
In an attempt to avoid paying maintenance in respect of his son, the locum GP told the CSA that he was abroad, busy setting up a company, or not working in the UK. He was in fact earning an income in excess of £200,000 a year in the UK. After the truth emerged, he was convicted of fraud by false representation and received a 20-month suspended prison sentence.
He subsequently referred himself to the General Medical Council, also disclosing for the first time that he had previously been convicted of failing to provide a breath specimen after being stopped by the police on suspicion of drink driving, an offence for which he received 60 hours of unpaid work and a two-year driving ban.
In considering his case, the Medical Practitioners’ Tribunal (MPT) found in respect of the fraud offence that he had shown limited insight into his sustained dishonesty. His behaviour was ruled fundamentally incompatible with his role as a doctor and the MPT directed his removal from the medical register.
In dismissing his challenge to that sanction, the High Court noted that dishonesty on the part of a doctor is always an extremely serious matter, at the top end of the spectrum of gravity of misconduct. The MPT was more than entitled to conclude that his persistent dishonesty rendered his removal inevitable.
Failing to put your affairs in order in your declining years is an invitation to conflict and needless expense after you are gone. Exactly that happened in the case of a pensioner who was still embroiled in a property development partnership with her son when she died at the age of 91.
Although intellectually active, the woman suffered from arthritis and was increasingly frail in her final years. However, her partnership with her son was only dissolved on her death. After disputes over money subsequently broke out within the family, the executors of her estate launched proceedings against her son.
In ruling on the matter, the Court found that there was a single partnership between mother and son, rather than two or three in relation to separate developments. A property that the son claimed was an asset of the partnership was declared to have been beneficially owned solely by his mother.
Another property was ruled a partnership asset, although it was held in the son’s sole name. No steps had been taken to equalise the partnership assets in the years before his mother’s death and the Court found that the son had overdrawn certain of his entitlements from the business. The Court’s ruling means that the son will be required to reimburse substantial sums to his mother’s estate.
Race discrimination in the workplace is not always overt, or even conscious, but judges are always on the alert to spot instances of stereotypical prejudice, as a Court of Appeal ruling strikingly showed.
The case concerned a black photographer who was called into her manager’s office out of the blue and told that she was being dismissed on grounds of redundancy. She immediately alleged that her race was the real reason for her dismissal, but he stridently asserted that that was a vile and entirely unjustified accusation.
Months later, after the photographer had launched Employment Tribunal (ET) proceedings, her manager stated for the first time that the true reason for her dismissal was that he suspected her of stealing stock. He said that he had preferred to give an apparently innocent reason for dispensing with her services – redundancy – in order to minimise any potential confrontation.
In ruling on the matter, the ET found that the manager had protested too much and intimidated the photographer. In awarding her over £27,000 in damages, it described evidence that she was a thief as flimsy and inferred that there was a racial element which had caused or contributed to her dismissal. The employer’s challenge to that decision was later dismissed by the Employment Appeal Tribunal.
In rejecting the employer’s appeal against that outcome, the Court acknowledged that it was a borderline case. However, it noted that the ET would have been well aware that some misguided people do, not always consciously, have prejudices against black people which predispose them to suspect misconduct.
The Court found that the manager’s persistence in lying about the true reason for the photographer’s dismissal was a defensible basis for the ET’s conclusion. If he genuinely believed that she was guilty of theft, he may plausibly have been influenced in reaching that conclusion, so hastily and on so little evidence, by a stereotypical prejudice based on her race.
The mere fact that a development proposal may encounter difficulties and eventually prove undeliverable does not generally justify a refusal of planning permission. The High Court made that point in breathing new life into plans to construct a whole new neighbourhood of 1,200 homes.
In promoting the project, the would-be developer emphasised a shortfall in housing land in the area and that 30 per cent of the new homes would be affordable. The local authority, however, refused consent, citing traffic congestion and air quality concerns. After a public inquiry, the Secretary of State for Housing, Communities and Local Government followed the advice of one of his planning inspectors and confirmed the refusal of planning permission.
In upholding the developer’s challenge to that decision, however, the Court found that a crucial part of the Secretary of State’s decision was something of a muddle. He had irrationally focused on concerns that the project would be undeliverable because the developer did not own playing fields through which a key access to up to 700 homes was proposed to run.
The Court noted that, as a general rule, the question of whether a proposal can be implemented is irrelevant to the decision whether to grant permission. There is no legal requirement that consent must be refused unless a developer commits itself to implementing a proposal. Doubts about the scheme’s deliverability were thus not a material consideration which should have weighed in the balance.
The Court rejected the developer’s argument that, by engaging in unrecorded and informal conversations with objectors to the proposal during the inquiry and a site visit, the inspector had given an appearance of bias. The refusal of planning permission was nevertheless quashed and the Secretary of State was directed to consider the matter afresh in the light of the Court’s ruling.
Officials wield great power over people’s lives and it is fundamental to a democratic society that, where they reach unreasonable decisions, they are held to account. The First-tier Tribunal (FTT) did just that in coming to the aid of a grandmother whose car was seized after she was accused of tobacco smuggling.
The car was stopped by a customs officer as it passed through the UK Control Zone in Coquelles, France. On board were discovered 19.96 kilos of hand-rolling tobacco and almost 2,000 cigarettes. Both the goods and the car were seized. Following a review, an officer acting on behalf of the Director of Border Revenue (DBR) refused to restore the vehicle to its owner.
In upholding the woman’s challenge to that outcome, the FTT noted the substantial quantity of tobacco involved. Despite her protestations to the contrary, the goods were deemed not to be for personal use. However, the FTT accepted her evidence that there had been no intention to sell the goods for profit once they had been brought into Britain.
In ruling the reviewing officer’s decision unreasonable, the FTT found that the woman had answered the customs officer’s questions frankly and that no attempt had been made to conceal the goods from view. She had also been unaware of the amount of rolling tobacco on board, it having been bought by other members of her family who were also in the car. The DBR was directed to perform a fresh review of the woman’s request for restoration of her vehicle in the light of the FTT’s ruling.
No amount of money can ever fully compensate for the loss of a loved one in an avoidable accident, but it can at least soften the financial blow. In one case, the bereaved widow and children of a builder who died whilst working on a high-rise building won £450,000 in damages.
The man, aged in his 50s, was engaged in fitting glazing panels to the building’s 17th floor when a heavy pane of glass fell on him, causing fatal injuries. After lawyers launched proceedings on his family’s behalf, the property development company for which he was working at the time admitted liability for the accident.
Following negotiations, the company agreed to a lump-sum settlement of the claim. Of the damages total, £25,000 was paid to the man’s 17-year-old daughter and £7,865 to his adult daughter from a previous relationship. The remainder was remitted to his widow. The High Court approved the settlement, which reflected the widow’s and children’s loss of financial dependency upon the deceased.
The difference between an extension and an annexe to an existing building may appear slight, but it can have crucial tax implications for charities. The issue was raised by a case in which a church won the right to a substantial VAT rebate.
In order to make the rather austere-looking church more welcoming, a modern glass and aluminium building was added to one of its side walls. The church argued that it was an annexe and that goods and services supplied by builders and others in connection with its construction thus benefited from VAT zero-rating.
HM Revenue and Customs (HMRC), however, decided that it was an extension and that the relevant goods and services were therefore subject to standard rate VAT. It was submitted that the church could not benefit from provisions of the Value Added Tax Act 1994 which confer zero-rating on annexes intended solely to be used for charitable purposes.
In ruling on the dispute, the First-tier Tribunal (FTT) noted that the new building shares a wall with the church, but that direct access between them is confined to a single set of fire escape doors which can only be opened from the church side. The contemporary design of the new building is strikingly different to that of the church and it is self-contained in that it has its own main entrance, toilets and canteen facilities.
The new building, the FTT found, is a supplementary structure that cannot be viewed as an extension in that it lacks any ability to be used for any common activities with the church or an existing church hall. It was thus an annexe and the church was entitled to reclaim VAT paid on the relevant goods and services.