The Panel on Takeovers and Mergers v Richard Gary Balfour-Lynn & Ors

The court granted the Panel's Part 8 application under section 955 of the Companies Act 2006 to make orders to secure compliance with rulings of the Panel's Hearings Committee (as upheld by the Takeover Appeal Board). The key legal principle was that the court has a broad discretion under section 955 to make any order it thinks fit to secure compliance with a rule-based requirement, and that discretion must be exercised having regard to public policy objectives of the Code. The court applied previous authorities (in particular Panel on Takeovers and Mergers v King and the principles in Datafin) and balanced factors favouring enforcement (a thorough Executive investigation, a properly constituted Committee hearing, admissions by defendants and the Appeal Board decision) against factors that might weigh against enforcement (the defendants' bankruptcies and claims of impecuniosity). The court concluded that inability to pay alone did not outweigh the public interest in enforcement and that, notwithstanding potential bankruptcy issues as to provability of the liability, a section 955 order should be made to promote the Code's policy of fair treatment of shareholders.

Background and parties: The Panel, an independent body charged with administering the City Code on Takeovers and Mergers, brought a Part 8 claim under the Companies Act 2006 seeking orders under section 955 to secure compliance with Hearings Committee rulings directed at three former MWB Group Holdings Plc directors. The Committee had found that the defendants acted in concert in 2009-10 in breach of Rule 9 of the Code, that a false market was created, and had directed joint and several payments totalling £44,846,510.92 (comprising fees, third-party expenses and compensation).

Procedural posture: The Committee issued a Ruling (22 December 2023) and a Supplemental Ruling (16 February 2024) setting payment stages; the Takeover Appeal Board upheld the Committee's decision on 26 July 2024. The present hearing was an application to the High Court under section 955 to secure compliance with those rulings; it was not an appeal against the substantive findings.

Issues framed:

• Whether the court should exercise its discretion under section 955 to make orders securing compliance with the Panel's rulings;
• How to balance factors favouring enforcement against factors weighing against enforcement, in particular the effect of two defendants having been adjudged bankrupt and the relevance of impecuniosity;
• Whether any liability arising from the Panel's rulings is provable in the bankruptcy estates of the adjudged bankrupt defendants (a matter not fully argued before the court).

Court's reasoning: The judge held that the statutory discretion under section 955 is wide and must be exercised in light of the public policy underpinning the Code (fair treatment of shareholders and equality of treatment). The court identified factors that favour making an order (thorough investigation, the Committee hearing, admissions or non-admissions, the Appeal Board's confirmation) and factors that might weigh against enforcement (subsequent material changes of circumstance, insolvency of an offeror or provability issues). The court rejected the submission that impecuniosity alone should normally prevent enforcement, noting authority in King that refusing enforcement for inability to pay would undermine the Panel's purpose. Although the bankruptcy status of two defendants could weigh heavily against making an order (because bankruptcy generally requires proof of pre-existing debts in the estate), the court was not satisfied on the limited material before it that this point should prevent a section 955 order. The judge therefore made orders to secure compliance and directed service of the judgment on the trustees in bankruptcy so they can consider provability and seek directions.

Relief granted: Orders under section 955 were made to secure payment in accordance with the Committee's Supplemental Ruling; the Panel was to serve the judgment on the trustees-in-bankruptcy and was given carriage of the order.

The court made orders under section 955 of the Companies Act 2006 to secure compliance with the Panel's Hearings Committee rulings (as upheld by the Takeover Appeal Board). The judge exercised the court's broad discretion in favour of enforcement, concluding that public policy and the factors supporting enforcement outweighed the defendants' insolvency and impecuniosity arguments, while directing the Panel to serve the judgment on trustees in bankruptcy so they may address provability issues.

The Hearings Committee issued a Ruling (22 December 2023) and a Supplemental Ruling (16 February 2024). The Committee's direction was upheld on appeal to the Takeover Appeal Board on 26 July 2024. The present High Court hearing was a section 955 enforcement application and not an appeal against the Appeal Board decision.