Business Mortgage Finance 4 Plc & Ors v Hussain & Ors

Directors and other office-holders cannot be created by unilateral assertion or by resolutions passed by persons lacking the relevant constitutional power. Acts undertaken in such purported capacities are invalid and ineffective.

The court may order removal of inaccurate or unauthorised Companies House material under Companies Act 2006 section 1096 where the statutory conditions are met. It may rectify a company’s PSC register under section 790V where an entry was made without sufficient cause.

Final quia timet injunctions require a real risk that an actionable wrong will be committed. The court may frame relief broadly enough to prevent repetition and circumvention, but the terms must remain sufficiently definite and proportionate to the demonstrated risk.

The claimants brought two related Part 8 claims concerning securitisation companies and their assets. They alleged that the defendants had purported to appoint themselves, or associated persons and companies, as directors, trustees, receivers, company secretaries, servicers, advisers and shareholders.

The defendants had made filings at Companies House, issued market announcements, sought to interfere with bank accounts and purported to forfeit and sell shares held by BMF Holdings Ltd. The court had to determine whether the appointments and consequential acts were valid, whether the Companies House and PSC registers should be corrected, and whether declaratory and final injunctive relief should be granted.

1. Disposition. Both claims succeeded. The court granted declarations, ordered removal and rectification of Companies House material, and granted final injunctions, subject to refinement of the draft wording.
2. The defendants had not been appointed as directors. Under articles 70 and 71 of the Issuers’ Articles of Association, appointment required an ordinary resolution of the shareholders or action by the existing directors. A purported resolution of noteholders was ineffective. Since the defendants were never directors, they lacked authority to remove the original directors, make filings, call or forfeit shares, sell them, or act for the Issuers.
3. Under section 1096 of the Companies Act 2006, material deriving from an invalid, ineffective, unauthorised or factually inaccurate act could be removed. The registered-office changes, company-secretary filings, director filings and purported noteholder resolutions satisfied that test. The statutory conditions concerning damage and competing interests were also met.
4. Under section 790V of the Act, the PSC registers were rectified. BMF Holdings remained the majority shareholder and PSC. Highbury never acquired the Issuers’ shares. It could not rely on purported ratification because it had not first acquired shareholder status.
5. The court had jurisdiction to grant declarations under CPR 40.20.1. The declarations had practical utility because the defendants’ conduct had created confusion in the market and among persons dealing with the securitisations.
6. Quia timet relief was justified. There was a real and substantial risk of further unlawful interference, having regard to the defendants’ repeated conduct, disregard of earlier orders, threatened harm, and the difficulty of repairing the resulting confusion and costs. The injunctions could restrain acting alone or in combination, and causing or procuring others to act, with permitting conduct covered only where the defendant could prevent it.
7. The proposed restraints concerning noteholder status and beneficial interests required narrower drafting because the wider concept of beneficial interest could be contestable. The court granted permission to apply for appropriate variations, while leaving the need for any paper determination to the judge hearing the application.

First-instance decision. The judgment does not state any subsequent appellate history.