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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Sir Henry Royce Memorial Foundation v Hardy [2021] EWHC 714 (Ch) (26 March 2021) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2021/714.html Cite as: [2021] EWHC 714 (Ch) |
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BUSINESS AND PROPERTY COURTS IN BRISTOL
INSOLVENCY AND COMPANIES LIST (ChD)
2 Redcliff Street, Bristol, BS1 6GR |
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B e f o r e :
(sitting as a Judge of the High Court)
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Sir Henry Royce Memorial Foundation |
Claimant |
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- and - |
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Mark Gregory Hardy |
Defendant |
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The Defendant appeared in person
Hearing dates: 19 January 2021
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Crown Copyright ©
Covid-19 Protocol: This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to BAILII on the date shown at 10:30 am.
HHJ Paul Matthews :
Introduction
Procedure
Witness statements
Listing
Publicity
Witnesses
Burden of proof
Facts found
"Cherishing the Legacy Providing a safe and accessible home at the Hunt House for the archives, memorabilia and artefacts from the life and history of Sir Henry Royce and the old Rolls-Royce company. Promoting the Ideals To support excellence in engineering by a programme of awards, lectures, exhibitions and events to stimulate interest in engineering issues."
"5.2. An annual general meeting must be held in each subsequent year in November or such other time as the Directors may decide, not more than 15 months may elapse between successive annual general meetings which must be held within six months of the end of the Company's Financial Year."
However, in 2019 the annual general meeting was not held in November, as usual. On 27 January 2020, the claimant wrote to all except six of its members about the arrangements for its 2019 annual general meeting.
"This mailing is the first of two that you will receive over the next three weeks concerning our forthcoming Annual General Meeting and voting to elect members to the Board of Trustees/Directors for the [claimant]. Included with this letter is the notice of the forthcoming Annual General Meeting to be held at the Hunt House on 11 March 2020 at 5.00pm, which is being sent to all those who have signed members' guarantee form and have supported the work of the [claimant] through donation.
The Trustees regret that the original AGM date scheduled in November last had to be postponed because of the difficulties being experienced in getting final figures and supporting paperwork for certain fairly major expenditure. As the treatment of this affected the final figures it was impossible to get the accounts examined in time for the printing deadline so advice was sought and a decision made to cancel. The examined and approved accounts will be filed well within the timescale demanded by the Charity Commission and Companies House and your personal copy will arrive in the second mailing with a voting form.…"
"TO ASK THE MEMBERS TO JOIN IN A REQUEST FOR THE CONVENING OF A SPECIAL MEETING OF THE MEMBERS for the following purposes:
1. For the Directors to explain why they failed to convene an Annual General Meeting of the company in 2019 contrary to Article 5.2 which requires it to be convened within six months of the end of the Company's financial year end which was 30th June 2019.
2. To produce to the meeting a copy of the audited accounts for the year ended 30th June 2019 and to answer questions on matters included in those accounts.
3. To remove from office the five following five directors [sic] of the company on the grounds of their gross negligence as Directors of [the claimant] arising from their misconduct and/or misfeasance as directors of [the Club] that has caused irreparable harm to [the claimant] as more fully set out in my attached Witness Statement prepared for [club] reasons but is hereby incorporated by reference.
- The names of those directors are:
- IAN HICK
- LESLEY [sic] ROBOTHAM
- WILLIAM DUNCAN FEETHAM
- ALLAN EDWARD FOGG
- JANE ELIZABETH PEDLAR [sic]".
"Included with this mailing, concerning the rescheduled Annual General Meeting to be held at the Hunt House on 11 March 2020 before the evening lecture, are the AGM notice; a voting form for the election of Trustee Directors (only enclosed for those eligible to vote) and a copy of the Annual Accounts and Report."
On the evidence before me, I am satisfied that this letter enclosed a notice of the annual general meeting for 11 March 2020, a letter relating to the nomination of director trustees and a board nomination form, together with a copy of the financial statements (accounts and report) for the year ended 30 June 2019.
"inadvertently omitted from my request the statement that I would not be making the information available to any other person. I confirm that this was an oversight on my part and that I have no intention of making the information available to any other person. Please ensure that the Court is aware of this and the prior email from your client.
I think I made that clear to your clients Mr Baker when I met him yesterday and explained matters in more detail that then led to my email to the Company Secretary to offer further clarification of where I thought there might be an overall solution to the various conflicts of interest."
"I accept his [Mr Baker's] recollection and that is why I used the word 'think'."
On the evidence I am satisfied that the defendant did not tell Mr Baker at their meeting on 12 February 2020 that by an oversight he had omitted a necessary statement in his letter of request. I am also satisfied that the first email of 12 February 2020 had indeed been sent in error. On 18 February 2020, as I have mentioned, the claimant issued the claim form in this case.
The law
Relevant statutory provisions
"116. Rights to inspect and require copies
(1) The register and the index of members' names must be open to the inspection—
(a) of any member of the company without charge, and
(b) of any other person on payment of such fee as may be prescribed.
(2) Any person may require a copy of a company's register of members, or of any part of it, on payment of such fee as may be prescribed.
(3) A person seeking to exercise either of the rights conferred by this section must make a request to the company to that effect.
(4) The request must contain the following information—
(a) in the case of an individual, his name and address;
(b) in the case of an organisation, the name and address of an individual responsible for making the request on behalf of the organisation;
(c) the purpose for which the information is to be used; and
(d) whether the information will be disclosed to any other person, and if so—
(i) where that person is an individual, his name and address,
(ii) where that person is an organisation, the name and address of an individual responsible for receiving the information on its behalf, and
(iii) the purpose for which the information is to be used by that person."
"117. Register of members: response to request for inspection or copy
(1) Where a company receives a request under section 116 (register of members: right to inspect and require copy), it must within five working days either—
(a) comply with the request, or
(b) apply to the court.
(2) If it applies to the court it must notify the person making the request.
(3) If on an application under this section the court is satisfied that the inspection or copy is not sought for a proper purpose—
(a) it shall direct the company not to comply with the request, and
(b) it may further order that the company's costs (in Scotland, expenses) on the application be paid in whole or in part by the person who made the request, even if he is not a party to the application.
(4) If the court makes such a direction and it appears to the court that the company is or may be subject to other requests made for a similar purpose (whether made by the same person or different persons), it may direct that the company is not to comply with any such request.
The order must contain such provision as appears to the court appropriate to identify the requests to which it applies.
(5) If on an application under this section the court does not direct the company not to comply with the request, the company must comply with the request immediately upon the court giving its decision or, as the case may be, the proceedings being discontinued."
"118. Register of members: refusal of inspection or default in providing copy
(1) If an inspection required under section 116 (register of members: right to inspect and require copy) is refused or default is made in providing a copy required under that section, otherwise than in accordance with an order of the court, an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
(3) In the case of any such refusal or default the court may by order compel an immediate inspection or, as the case may be, direct that the copy required be sent to the person requesting it."
"119. Register of members: offences in connection with request for or disclosure of information
(1) It is an offence for a person knowingly or recklessly to make in a request under section 116 (register of members: right to inspect or require copy) a statement that is misleading, false or deceptive in a material particular.
(2) It is an offence for a person in possession of information obtained by exercise of either of the rights conferred by that section—
(a) to do anything that results in the information being disclosed to another person, or
(b) to fail to do anything with the result that the information is disclosed to another person,
knowing, or having reason to suspect, that person may use the information for a purpose that is not a proper purpose.
(3) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both)."
Relevant caselaw
"6. The statutory provisions dealing with inspection of share registers are now to be found in sections 113 to 120 of the Companies Act 2006 ("CA 2006"). Sections 116, 117, 119 and 120 are new. The other sections are derived from previous statutory provisions, some of which date from the Companies Act 1862.
7. The Companies Act 2006 ('the CA 2006') in general requires every company to keep a register of its members, showing (in the case of a company having a share capital) for each member his name and address, the date he was registered as a member or ceased to be a member and the number and class of his shares and the amount paid up on those shares.
8. Persons other than the company may have a legitimate interest in accessing the information in the register. A member may, for instance, need the information in the register because he wants to obtain support from other members to requisition a general meeting of the company. A member of the public may need the information in order to investigate whether the board has issued shares improperly, for example by issuing them to their associates.
9. Accordingly, statute confers rights to inspect and take copies of the information in the register of members. Under the Companies Act 1985, section 356, anyone could obtain access to the register and a copy of it. However, there was evidence that some people were abusing this right and seeking the information in order to harass the members.
10. So since 2006 these rights have been qualified. In the CA 2006, Parliament has sought to provide some protection for members against improper requests by enabling the company to obtain a court order preventing access if the request fails a 'proper purpose' test. Accordingly under the CA 2006:
- the person who wants access to the register must make a request for access which states the purpose of the request (section 116);
- the company may within 5 days apply to the court for an order relieving it from any obligation to comply with the request, and
- the court has no option: it must make this order if it is satisfied that the request is not made for a proper purpose (section 118).
11. This is a major change in the law. Formerly, the law regarded the right of a shareholder to access the share register as an incident of his property right in his share, and did not inquire into his motives for wanting access: see Davies v Gas Light and Coke Co [1909] 1 Ch 248."
"15. I start with the mischief to which section 117(3) of the CA 2006 was directed. Ms Lexa Hilliard QC, for Dr Knight, pointed out that Margaret Hodge MP, Minister in charge of the Bill at that stage, spoke during the committee stage of the Companies Bill leading to the CA 2006 of abuse of the right to inspect the share register.
16. These abuses were the subject of recommendations by the Steering Group of the Department of Trade and Industry's Company Law Review ('the CLRSG'), of which I was a member. Section 117 was enacted following acceptance by the Department of those recommendations. In its Modern Company Law For A Competitive Economy: Final Report (www.dti.gov.uk/cld/review.htm), the CLRSG pointed out that the right of access to share registers was abused by, for instance, bounty hunters or people who sought to use the names and addresses for advertising purposes.
17. The principal recommendation made by the CLRSG on this point was that the Companies Act should restrict access to the share register. The CLRSG went on to recommend an approach not wholly dissimilar to the approach in the Australian Corporations Law. Under that Law, the applicant has to make his application in a prescribed form, and must set out in it each of the purposes for which he seeks access (section 117(3A) (c)). None of the purposes must be a proscribed purpose, and the proscribed purposes include such matters as requesting a donation from a member. The CLRSG recommended that purposes of access be limited to some (different) prescribed purposes (see Final Report, paragraph 11.44). However, Parliament has not identified any purposes as improper. Thus it has left the words 'proper purpose' at large for the courts to work out in the conventional way, using the context and on a case by case basis. I therefore agree with the Registrar that Parliament intended to leave the meaning of 'proper purpose' open for the courts to determine, and not to limit or define it."
Invalid request
"2. The appellant carries on the business of tracing lost members of companies and, for a fee or commission, reuniting them with their shares. In furtherance of this business, he requested a copy of the register of members of the respondent company Burberry PLC (Burberry), under section 116 of the Companies Act 2006. Burberry refused to supply it and applied under section 117 for a direction that it should not comply with the request. After a contested hearing, Registrar Briggs made the direction sought by Burberry. The appellant appeals with permission granted by the Registrar."
"31. … Section 116(4) is clear that the request 'must contain' the information specified in the sub-section, and section 117(1) requires a company to comply with 'a request under section 116'. The statutory scheme strongly suggests that this is a mandatory requirement and that a company is not obliged to comply with a request that does not contain the necessary information. It is hard to see that paragraphs (a) and (b) could be anything other than mandatory. Paragraph (c) is essential to enable the company to form a view whether the requester's purpose is proper and so decide how to proceed under section 117. As to paragraph (d), the appellant's own submission is that it is directed at enabling the company to assess the purpose. In any event, it would be very odd if compliance was mandatory as regards paragraphs (a) to (c) but not paragraph (d). Substantial compliance with section 116(4) might suffice, but in this case there was a wholesale failure to comply with paragraph (d)."
"29. … As to the possibility that it may later become unexpectedly necessary to disclose the information to some other person, the requirement speaks as at the time the request is made."
On this basis, a request is either valid or invalid at the time it is made. Its status ought not to change depending on what happens later.
Not a proper purpose
"18. The Registrar held, and I agree, that the words "proper purpose" should be given their 'ordinary, natural meaning'. He held that a proper purpose ought generally, in the case of a member, to relate to the member's interest in that capacity and to the exercise of shareholder rights. I agree with this approach, provided the last 'and' is read as 'and/or', (as is clear from a later reference in the Registrar's judgment).
19. It is not possible to provide an exhaustive definition of what is a proper purpose. The Registrar held that a court might have regard to a guidance note, issued by the Institute of Chartered Secretaries and Administrators ('ICSA'), when deciding what constitutes a proper purpose but that such guidance is non-binding and non-exhaustive. I agree: the ICSA guidance might well provide useful guidance in a particular case since it distills the experience of its members. It gives as one example of a purpose that, in the view of the working group responsible for the guidance note ought to be regarded as proper, 'shareholders ... wanting to contact other shareholders about matters relating to the company, their shareholding or a related exercise of rights…'. The examples of improper purpose include: 'any representation or communication to members that the company considers would threaten, harass or intimidate members or would otherwise be an unwarranted misuse of the member's personal information…'.
20. Where there were multiple purposes - some proper and some not - the Registrar held that 'a proper purpose is not necessarily tainted by being coupled to an improper purpose'. I agree. As I explain in Part A, section 3 below, in these circumstances, the court may, as the Registrar did, make an order on terms."
"82. I do not consider that the court can be satisfied that the purpose of the request is a proper one simply because it is satisfied that one of several purposes is a proper purpose (leaving aside de minimis purposes). The contrary conclusion would undermine the protection which the no-access provision was intended to give. In my judgment, the right approach is to read the words 'a proper purpose' in section 117(3) as including 'proper purposes' where there is more than one of them. Thus the court would have to make a no-access provision order if any one of the purposes was improper."
"47. First, the test of whether a purpose is improper is objective, in the sense that it is made by the court on the basis of its evaluation of the purpose. The ICSA guidance is correct that the company must form its own view about the propriety of the requester's purpose if it is to decide under section 117(1) to refuse a request, but on the ensuing application to the court, it is for the court to reach its own view. The court's decision does not depend on the company's subjective view nor is the court reviewing the company's decision. [ … ]
48. Second, I agree that the test as to whether a purpose is proper does not depend on whether it is in the interests of shareholders. It is not mentioned in the Act as a determining factor, and I see no reason to imply it. It is not difficult to think of several examples of requests that have nothing to do with the interests of shareholders individually or as a class. Indeed, the ICSA guidance gives examples: requests for the purposes of credit or identity checks or general statistical research or enforcing judgments. In appropriate cases, investigative journalism might be another example."
"18. The court in Burry and in Fox-Davies gave some examples of purposes which would normally be proper. One example of a proper purpose given by Arden LJ in Burry at [8] was if a member needed the information in the register because he or she wanted to obtain support from fellow members to requisition a general meeting of the company. Likewise in Fox-Davies at [36] David Richards LJ said that a member who wanted to obtain support to requisition a general meeting 'will generally have a proper purpose, except on unusual facts such as those in [Burry] itself'. In Burry the court was able to conclude that the request was made to pursue stale and unsubstantiated allegations against the directors which it was 'very difficult to conceive' that he could ever prove, and accordingly it was right to refuse access."
Fear of misuse by the defendant
Conclusion