Maggie Otto & Ors v Inner Mongolia Happy Lamb Catering Management Company Limited

A petitioner must establish the statutory standing required by Companies Act 2006, even where the respondent has admitted that the petitioner is a shareholder. An admission cannot overcome evidence showing that the petitioner lacks standing.

Applications to withdraw admissions under CPR 14.5 require a balanced assessment of all the listed circumstances. The court may permit withdrawal where the admission concerns a fundamental gateway issue and the underlying evidence establishes that it is incorrect.

A late amendment seeking rectification of a share register may be refused where the proposed case is unclear, inadequately particularised, requires absent parties to be joined, or cannot proceed without restoration of a dissolved registered shareholder.

The petitioners brought proceedings under section 994 of the Companies Act 2006 concerning alleged unfair prejudice in the affairs of HLHP Oriental Food Limited and HLHP Bayswater Limited. Claims concerning HLHP Birmingham Limited, and certain claims concerning Bayswater, had been abandoned.

At the start of trial, the respondents applied to withdraw admissions that several petitioners were members of the relevant companies. The petitioners applied to amend the petition to seek declarations concerning share ownership and rectification of the companies’ registers.

The applications raised questions about statutory standing, the withdrawal of admissions, the scope and procedure of rectification proceedings, and whether the proposed claims could fairly and practically be tried at that stage.

1. Withdrawal of admissions. The respondents were permitted to withdraw their admissions concerning the petitioners’ shareholdings in Oriental and Bayswater. CPR 14.5 requires the court to consider all the specified circumstances, including the reason for withdrawal, new evidence, party conduct, prejudice, the stage reached, prospects of success and the interests of justice. The factors are not hierarchical and must be balanced in accordance with the overriding objective, as explained in Tut v Ministry of Defence [2023] EWHC 2834 (KB) and Woodland v Stopford [2011] EWCA Civ 266.
2. The petitioners’ lateness points were powerful, but were outweighed by the fact that standing was a fundamental gateway issue. Under sections 994 and 112 of the Companies Act 2006, the court had to be satisfied that the petitioners were entitled to petition. An admission could not establish standing where the register and absence of stock transfer forms demonstrated that the petitioners were not members. Section 770 also prevented registration of a share transfer without a proper instrument, subject to exceptions that were irrelevant here.
3. Proposed rectification amendment. Permission to amend was refused. The proposed claims were inadequately particularised and, in material respects, contradicted the petitioners’ existing case and evidence. The evidence did not clearly identify the transactions or legal mechanisms by which the petitioners had acquired their shares.
4. The proposed claim could not fairly proceed at trial because disclosure and witness evidence had not addressed the necessary issues. Persons whose registered holdings would be affected would need to be joined. In particular, In Touch Investment Holding Limited was the registered holder of shares claimed by several petitioners, but had been dissolved and would first need to be restored. The trial could not proceed without resolving those matters.
5. Section 125(3) permits the court, on a rectification application, to decide questions relating to title, consistently with Re Hoicrest Ltd [2001] 1 BCLC 194. That does not remove the need for legal title to be acquired before rectification can be ordered. The contrary reasoning in Nilon v Westminster Investments SA [2015] BCC 521 was persuasive but could not displace the binding Court of Appeal authority. The applications were therefore determined as above, with the consequences for the trial to be addressed with counsel.