Re B&S Partnership Ltd

The claimant sought rectification of the register of members under section 125 of the Companies Act 2006 to restore a one issued share said to have been improperly transferred in 2009, together with alternative damages and related tort and equitable causes of action. The judge analysed the Companies Act provisions (notably s125 and the argument as to s128(1)), the company articles (article 9 pre-emption restriction), and the law on economic torts, conspiracy and fiduciary duties.

On the facts the court rejected the claimant’s account. The judge found that the claimant did not contribute to the acquisition or upkeep of the property, that contemporaneous documents (including a signed stock transfer) and other evidence supported a voluntary transfer of the share to Bhandari & Co in 2009, and that the claimant’s evidence was unreliable in key respects. The alleged 2019 discovery was rejected. As a matter of discretion the court would not order rectification, and alternative causes of action (economic torts, conspiracy, breach of fiduciary duty) failed on the facts and/or were time-barred.

Background and parties: The claimant, Mr Zahir Aziz, a former solicitor, sued B & S Partnership Limited and several individuals seeking rectification of the company register to record that he held one issued share. The defendants included Mr Riaz Ahmad, Mr Amir Mohammed Salim ("Mr Salim junior"), Bhandari & Co Ltd and Mrs Sanita Bhandari. The company owned Lord House, an office building; four issued shares had been treated as split between the occupants.

Nature of the claim/application: (i) Primary relief: rectification of the register of members under section 125 Companies Act 2006 (with damages alternatively). (ii) Additional claims: damages for alleged breach of fiduciary duty and "unlawful interference" arising from the 2009 transfer to Bhandari & Co and the later registration and sale of shares in 2020; economic torts including causing loss by unlawful means, conspiracy to injure (by lawful and unlawful means).

Procedural posture: First instance trial in the Insolvency and Companies List (Chancery). The claim commenced in 2020, the defendants were joined and the matter proceeded to a multi-day trial with contested witness evidence and documentary material.

Issues framed: (i) Whether the 2009 transfer of the claimant’s share was valid or whether the register should be rectified; (ii) whether the claim was time-barred by section 128(1) CA 2006 or otherwise defeated by limitation or delay; (iii) construction and effect of article 9 pre-emption provisions and reliance on Re Duomatic; (iv) whether any of the tort or fiduciary causes of action were established; (v) credibility of key witnesses and weight of contemporaneous documents (including the so-called Dean transaction papers and stock transfer forms).

Court’s reasoning and conclusions:

• The judge made detailed credibility findings: the claimant’s evidence was rejected in material respects (inconsistencies, tendency to falsify or backdate documents, and selective memory). Other witnesses (the Salim brothers and Mrs Bhandari) were generally accepted.
• The contemporaneous documents, including a signed stock transfer form and the 2007 "Dean" transaction papers, supported that the claimant had participated in transfers or arrangements over time and had taken steps to divest or regularise shareholdings when facing financial difficulty. The judge found it probable that the share was transferred to Bhandari & Co in 2009 and not held on trust for the claimant.
• Even if the legal operation of s128(1) was arguable, the remedy under s125 is discretionary and may be refused for delay; the judge would in any event decline rectification in the claimant’s favour because of his delay, conduct and failure to have performed the obligations upon which the allotment had been predicated.
• Article 9 did not provide a ground for rectification: the article was not an absolute bar to the passing of title and any restriction had been effectively waived or rendered inoperative by the parties’ conduct (Re Duomatic principle). Further, bona fide purchasers had since acquired interests without notice.
• All tort and equitable claims failed: there was no established "unlawful means" or intention to injure, no actionable interference with a third party, no conspiratorial intent, and no fiduciary duty owed by the directors to the claimant as an individual. Relevant limitation periods also barred alternate claims insofar as they accrued long before proceedings.

The judge therefore dismissed the claim in its entirety and listed a short hearing to deal with consequential matters.

The claim is dismissed. The court found on the evidence that the claimant voluntarily transferred his share to Bhandari & Co in 2009 (the signed stock transfer and contemporaneous material being persuasive), rejected the claimant’s account of a 2019 discovery, and concluded that rectification under section 125 CA 2006 would be refused in the exercise of the court’s discretion because of delay and the claimant’s conduct. The alternative tort and fiduciary claims also failed on the facts and/or were time-barred.