Williams & Ors v Russell Price Farm Services Ltd

The claim was a Part 8 application under section 125 of the Companies Act 2006 for rectification of the defendant company's register of members so that the executors named in the deceased's will could be entered as members. The court held that, in exceptional and urgent circumstances, an application under s125 was open to executors even before probate had been obtained where there was "unnecessary delay" in entering the fact of the deceased having ceased to be a member and that rectification was necessary to avoid imminent and irreparable harm to the company. The decision relied on the court's jurisdiction under s125(3) to decide title and on the prior authority of Kings Court Trust Ltd v Lancashire Cleaning Services Ltd. The order was made only after the claimant executors gave undertakings not to renounce probate, to apply for probate promptly using reasonable efforts, and to pay necessary taxes so that probate could issue.

Background and parties:

• The deceased, who was sole shareholder and director of Russell Price Farm Services Ltd, died on 8 March 2020. His will appointed the three claimants as executors and left 90% of the shares and the residuary estate to two named beneficiaries. The company carried on a seasonal farm-contracting business.
• Because the deceased had been sole shareholder and director, on his death the shares passed by operation of law to the executors but their names were not on the register of members. The Articles incorporated Table A (regulations 29 to 31) and contained no provision allowing executors to appoint directors where the sole director and shareholder had died.

Nature of the application and procedural posture:

The claim was issued on 26 March 2020 under CPR Part 8 seeking an order under section 125 Companies Act 2006 to rectify the register of members so the executors could be entered and the company could appoint directors. The defendant did not appear; the application was dealt with on paper. An order was made on 7 April 2020 and these are the reasons.

Issues framed:

• Whether the court had jurisdiction under s125 where executors had not yet obtained probate.
• Whether there was "unnecessary delay" in entering on the register the fact that the deceased had ceased to be a member such as to justify rectification.
• Whether it was appropriate to make an order in urgent circumstances where the company had no director in office and its bank would not operate the company account, placing the business at risk.

Court's reasoning and subsidiary findings:

• The court interpreted s125 literally and held that the existence of "unnecessary delay" in entering the fact of the deceased's ceasing to be a member opens the jurisdiction to order rectification; the court may decide title under s125(3).
• The facts showed urgency: the company account was effectively frozen by the bank, creditors were owed approximately 110,064.99 at the date of the evidence, the business was seasonal and imminently required funds to meet planting contracts and other obligations, and there was no provision enabling appointment of directors without rectification.
• The court followed the approach and reasoning in Kings Court Trust Ltd v Lancashire Cleaning Services Ltd, distinguishing that case only on factual points (there probate had been applied for; here no application had yet been made) and noting that a company secretary was present here.
• The judge required undertakings from the claimant executors because they had not yet applied for probate: that they would not renounce probate, would apply as soon as possible using reasonable efforts, and would pay necessary taxes so that probate could issue. Those undertakings addressed the court's concern that the executors might otherwise remain on the register without obtaining probate.

Result: The court ordered rectification of the register after receiving the undertakings.

First instance: The court ordered rectification of the register under section 125 Companies Act 2006 and made the application succeed. The judge found that "unnecessary delay" in entering the fact of the deceased having ceased to be a member existed given the exceptional urgency (frozen bank account, significant unsecured creditors, seasonal business needs) and that s125(3) empowered the court to decide title and rectify the register. The order was made conditional upon undertakings from the claimant executors not to renounce probate, to apply for probate promptly using reasonable efforts, and to pay necessary taxes so that probate could issue.