Caldero Trading Ltd v (1) Beppler & Jacobson Ltd & Ors

A compromise of proceedings generally settles the matters actually in dispute, but it does not waive a separate, admitted contractual right unless the compromise clearly does so. The construction of a settlement must therefore distinguish disputed claims from obligations which exist independently and have been expressly acknowledged. A provision treating partly paid shares as fully paid for valuation purposes does not, without more, transfer or extinguish the existing obligation to pay them up. The principle against abuse of process in Johnson v Gore Wood & Co does not prevent later enforcement of an admitted contractual right where proceedings were unnecessary to establish that right.

Caldero Trading Limited petitioned for relief under section 994 of the Companies Act 2006 or, alternatively, for the winding up of Beppler & Jacobson Limited under section 123 of the Insolvency Act 1986. The petition was compromised by an order requiring Leibson Corporation to purchase Caldero’s shares at fair value, with the investment issue left for determination.

Caldero later paid £87,501 in response to a demand for payment up of its partly paid shares and sought reimbursement from Leibson and Igor Lazurenko. The respondents argued that the compromise had settled all matters, including any obligation to pay up the shares, and that the later claim was an abuse of process. The central issue was whether the compromise waived or otherwise affected an admitted contractual obligation.

1. Claim allowed. The respondents were ordered to reimburse Caldero £87,501, subject to Caldero issuing a pro forma application because the petition itself contained no claim for that sum.
2. The respondents had expressly acknowledged in their skeleton argument that it was and remained their responsibility to ensure that Caldero’s shares were fully paid. That acknowledgement confirmed an existing contractual obligation and left no live issue requiring determination in the petition.
3. The compromise was directed to Caldero’s complaints about the conduct of the company’s affairs and the resulting relief. It did not expressly waive the separate contractual obligation to pay up the shares. A waiver could not be inferred merely because the compromise did not repeat that obligation.
4. The provision in the Newey Order that Caldero’s shares were to be treated as paid up was directed to valuation. It required the expert to value the shares as fully paid and did not impose the burden of payment on Caldero or release the respondents from their obligation.
5. The principle in Johnson v Gore Wood & Co, concerning abuse of process where a claim could have been raised in earlier proceedings, did not apply. Caldero had no need to bring proceedings to establish an admitted right, and there was no suggestion at the time of settlement that the respondents would refuse to perform it.
6. The respondents therefore remained liable to pay up the shares while Caldero remained the registered holder and were liable to reimburse the sum paid.

This was a first-instance decision. The judgment referred to an earlier decision in the same litigation, [2013] EWHC 2191 (Ch), concerning the investment issue. Permission to appeal that earlier decision had been granted, but the appeal had not been heard.