Branch v Bagley & Ors

A claim should be struck out only where it is clear that there is no prospect of success. On an application for permission to appeal against a strike-out, the question is whether any allegation has even a chance of establishing an entitlement to relief. A shareholder’s being out of pocket through company expenditure, where all shareholders are in the same position, does not constitute unfair prejudice under section 459 of the Companies Act 1985. A personal sense of grievance, strong disagreement, or an unsupported allegation does not create an arguable case. Where the claim is hopeless, permission to appeal should be refused.

Anthony Branch presented a petition under section 459 of the Companies Act 1985 concerning Oasis (Poole) Management Limited, a company limited by guarantee. Following a two-day hearing, David Richards J struck out the petition on 10 March 2004. Mr Branch applied in person for permission to appeal. He challenged the form of the order, the authenticity of the judgment, the application of section 310, the finding that he had suffered no unfair prejudice, and the treatment of an allegation of anti-Semitism. The central issue was whether any matter raised in the petition or evidence had a realistic chance of supporting relief under section 459.

Application refused. Lord Justice Neuberger treated the application as requiring careful scrutiny because striking out an originating claim prevents a full trial. Nevertheless, the court should strike out a hopeless claim and should not encourage further expenditure on an appeal with no real prospect of success.

1. The relevant question was whether any allegation relied on by Mr Branch had even a chance of persuading the court to wind up the company or grant other relief under section 459 of the Companies Act 1985. The lower court had asked whether he could reasonably anticipate such relief. Its negative conclusion was plainly correct.
2. Mr Branch was in the same position as every other shareholder and was out of pocket only to the extent of his share of the company’s expenditure. That loss was not unfair prejudice. Treating ordinary company expenditure as unfair prejudice whenever a shareholder felt financially affected would give the expression an impermissibly broad meaning.
3. The court accepted the lower court’s conclusion that the relevant qualification in subsection (3) applied to the prohibition in subsection (2) of section 310. The challenge to that reasoning was unarguable.
4. The allegation of anti-Semitism provided no arguable basis for the petition. Related defamation proceedings had to take their own course and did not advance the present application.
5. Feelings of grievance arising from a dispute among shareholders, even where the parties lived in the same block and the dispute affected their homes, did not establish a reasonable prospect of section 459 relief. Permission to appeal was therefore refused.

• Court of Appeal (Civil Division): In [2004] EWCA Civ 806, Lord Justice Neuberger refused Mr Branch’s application for permission to appeal.
• High Court, Chancery Division: David Richards J struck out Mr Branch’s petition on 10 March 2004.