Branch v Bagley & Ors

On an application to strike out a petition under section 459 of the Companies Act 1985, the court must determine whether the allegations disclose a sustainable basis for relief. A company’s articles need not require proposed directors’ names to appear in the notice convening a general meeting where the statutory or Table A timetable instead provides for notice of proposed candidates separately. A general meeting may therefore validly appoint directors without naming them in the meeting notice. Serious allegations of dishonesty, fraud, defamation or bad faith require an evidential and legally relevant foundation. Allegations unrelated to unfair prejudice cannot sustain a section 459 petition. The petition was struck out as misconceived and vexatious.

The petitioner was a member and leaseholder of a company limited by guarantee managing a residential complex. He challenged the validity of director appointments, the company’s accounts and financial arrangements, indemnities for legal costs, and the conduct of the managing agent and directors.

The respondents applied to dismiss or strike out the amended petition under CPR Part 3.4 and, alternatively, sought summary judgment under Part 24. The petitioner also applied for the appointment of a receiver. The central legal issue was whether the notices convening general meetings had to state the names of proposed directors.

1. Disposition. The amended petition disclosed no sustainable basis for relief under section 459 of the Companies Act 1985. It was struck out under CPR Part 3.4. The petitioner’s application for a receiver was dismissed. No order was made on the separate application by Mr Owens.
2. Director appointments. Neither the Companies Acts nor the company’s articles required the names of prospective directors to appear in the notice convening a general meeting. The wording of article 8(a), read with articles 12(f) and 12(g), was consistent with the timetable for notifying the company of a proposed candidate and notifying members separately. The same analysis applied to Table A regulations 38, 76, 77 and 78.
3. The requirement for at least 21 clear days’ notice of an annual general meeting, or of an extraordinary general meeting at which directors were to be appointed, concerned the length and general content of the notice. It did not require candidates’ names to be included in that notice. The appointments made in 2002 and 2003 were therefore not invalid on that ground. The court also noted that section 371 could have been used to direct a meeting if a serious doubt had existed.
4. Accounts and company funds. The allegations concerning false accounting, fraudulent accounts, improper custody of funds and unauthorised expenditure were unparticularised or unsupported. The managing agents could maintain the company’s books and operate designated client accounts. Proposed expenditure which created no liability or commitment at the relevant accounting date did not have to be included in the accounts; see Schedule 4 paragraph 12(b).
5. Indemnities and other allegations. Article 22(a) was subject to section 310. A company could indemnify directors against costs of defending proceedings only within the limits of section 310(3)(b)(i). Any earlier payment caused no unfair or material prejudice on the evidence. Defamation and threatening conduct had no place in this petition, and the allegations were devoid of merit. The extreme and unfounded allegations rendered the proceedings vexatious.

First-instance decision. No appellate history is stated in the judgment.