Kings Court Trust Ltd & Ors v Lancashire Cleaning Services Ltd

Executors named in a will may bring proceedings concerning a deceased member’s shares before obtaining probate. Ordinarily, however, a company has sufficient cause to defer registration until probate or letters of administration are produced. Under Companies Act 2006, section 125, the court may order rectification before probate where the circumstances are exceptional, including where the company has no officer able to act and delay threatens its survival. The court may also make ancillary directions enabling the applicants to enter the rectification themselves. Dispensing with service is permissible under CPR 6.16 where there is no company officer capable of receiving service and the circumstances justify that course.

The claimants were the executors named in the will of the deceased sole shareholder and director of the defendant company. Probate had not yet been granted, and one executor initially had not been joined. The company had no surviving director or secretary, its bank account was frozen, and urgent payment of wages and liabilities was required. The claimants sought rectification of the register of members under section 125 of the Companies Act 2006, permission to make the entries themselves, dispensing with service, and consequential notice to the registrar. The central issue was whether rectification could be ordered before probate in these exceptional circumstances.

The court granted the Part 8 claim and ordered rectification of the company’s register.

1. Standing before probate. Relying on Re Goodman [2013] EWHC 758 (Ch), reported at [2014] Ch 186, the court held that the claimants could bring the proceedings before proving the will. An executor derives title from the will, although a company would ordinarily require production of a grant before registering executors.
2. Section 125. Ordinarily, refusal to register executors without a grant would involve neither sufficient cause for omission nor default or unnecessary delay. The court may nevertheless consider all the circumstances when deciding whether the statutory conditions for rectification are met.
3. Exceptional circumstances. Here, the company had no director, secretary or other officer able to act. Its account was frozen, wages and liabilities were imminent, and delay pending probate risked irreparable damage. The court therefore found that unnecessary delay was occurring and that section 125 of the Companies Act 2006 should be exercised before probate.
4. Ancillary and procedural orders. The court ordered the three claimants to be entered as holders of the shares and the deceased’s name to be removed. Under the ancillary power in section 125(2), the claimants could make the entries immediately. Notice of rectification had to be given to the registrar under section 125(4). Service was dispensed with under CPR 6.16 because no company officer could receive it.

The judge stressed that the circumstances were wholly exceptional and that the decision was not a precedent for ordinary cases in which the company retains officers able to await probate.