Zahir Aziz v B & S Partnership Limited & Ors.

A claim to rectify a company’s register of members is discretionary. The court may refuse relief because of delay, prejudice, or the claimant’s failure to perform conditions underlying the alleged shareholding. A transfer in breach of a share-transfer restriction may nevertheless pass legal and equitable title where the articles contain no sufficiently clear prohibition and the transfer has been acquiesced in or unanimously approved. The tort of causing loss by unlawful means requires intended loss, narrowly construed unlawful means, and interference with a third party’s freedom to deal with the claimant. Conspiracy to injure by lawful means requires a predominant purpose to injure. Directors and shareholders do not, merely in those capacities, owe fiduciary duties to individual shareholders.

The claimant sought rectification of the register of members of B & S Partnership Ltd under Companies Act 2006, section 125. He alleged that a share registered in his name had been transferred to Bhandari & Co Ltd without his authority and later transferred to other shareholders. He also claimed damages for unlawful means, conspiracy, and breach of fiduciary duty.

The defendants contended that the claimant had voluntarily transferred the share in 2009, that the claim was barred by delay or limitation, and that the later sale had been entered into without notice of his allegations. The central issues were whether the 2009 transfer was valid, whether rectification or damages should be granted, and whether the pleaded economic torts or fiduciary-duty claim was established.

1. Rectification. The claim was dismissed. The evidence established that the claimant voluntarily transferred his share to Bhandari & Co Ltd in 2009. He had not contributed to the acquisition or upkeep of the property, had not occupied it, and had treated the share as having no real value while seeking to protect other assets from creditor action.
2. Rectification under section 125 of the Companies Act 2006 is discretionary and is not available as of right. Even if the claimant had not authorised the transfer, relief would have been refused for delay, the prejudice to others, and his failure to perform the obligations on which the allotment of the share had been predicated. Any compensation claim was also time-barred under section 128.
3. Article 9. The transfer restriction had been acquiesced in by the claimant and consented to by the other shareholders, engaging the principle in Re Duomatic. In any event, article 9 did not contain the clear prohibition on passing title found in Hunter v Hunter and Re Coroin Ltd. Bona fide purchasers for value without notice had acquired title.
4. Economic torts. The unlawful-means claim failed because there was no unlawful interference with a third party’s freedom to deal with the claimant and no intention to cause him loss. The unlawful-means conspiracy claim failed for the same reasons, including absence of knowledge or intention. The lawful-means conspiracy claim failed because the predominant purpose of the transaction was not to injure the claimant.
5. Fiduciary duty and limitation. The defendants, as directors or shareholders, owed no fiduciary duty to the claimant personally. Any tort or fiduciary-duty claim concerning the 2009 registration was also barred by sections 2 and 21(3) of the Limitation Act 1980; section 32 did not postpone limitation.
6. The claim was dismissed in its entirety. A short consequentials hearing was to be listed if necessary.