Bellvue Port Services (Waterford) Ltd v Companies Act
| Jurisdiction | Ireland |
| Judge | Ms. Justice Butler |
| Judgment Date | 01 July 2022 |
| Neutral Citation | [2022] IEHC 416 |
| Court | High Court |
| Docket Number | [2021/29 COS] |
In the Matter of Bellvue Port Services (Waterford) Limited
and
In the Matter of Section 173 of the Companies Act 2014
[2022] IEHC 416
[2021/29 COS]
THE HIGH COURT
Company – Register of members – Rectification – Applicant seeking rectification of the register of members of a company by entering the name of the applicant as the owner of ordinary shares in the company – Whether the applicant’s application was improperly constituted
Facts: The applicant, Tougher Oil Distributors, applied to the High Court under s. 173 of the Companies Act 2014 for rectification of the register of members of Bellevue Port Services (Waterford) Ltd (the company) by entering the name of the applicant as the owner of 50 ordinary shares in the company (the disputed shares). Additional relief was sought directed at setting aside decisions made by the directors of the company reflected in correspondence issued by the solicitors for the respondents, Amber Petroleum Unlimited Company (Amber) and Fitzgerald Otto 2019 Unlimited Company (Otto), on 8th and 12th February 2021. The applicant was opposed by the respondents both substantively and also on a number of procedural grounds. The respondents contended that the application was improperly constituted because the company was not named as a respondent. The respondents also asserted that Amber should not have been included as a respondent because it was no longer the holder of the disputed shares. It was contended that the relief sought was not suitable for summary disposition on affidavit.
Held by Butler J that the application could be properly and fairly disposed of on a summary basis. In circumstances where there appeared to be a strong community of interest between Amber and Otto and both companies were represented by the same legal team, she did not consider that the joinder of Amber in addition to Otto was a legal error or a matter which should have any bearing on the outcome of the application. In circumstances where the applicant expressly offered to join the company as a formal party to the application and the respondents declined to engage with that offer, she was of the view that the continued reliance on that point by the respondents was a purely technical strategy devoid of substantive merit. She did not find that the applicant had established that the registration of the transfer which took place in 2013 and the consequential removal of the applicant’s name from the register of members of the company was without sufficient cause.
Butler J refused the relief sought under s. 173 of the 2014 Act. It did not seem to Butler J that the additional relief added anything to the claim overall.
Relief refused.
JUDGMENT of Ms. Justice Butler delivered on the 1 st day of July, 2022
. This judgment deals with the applicant's application under s. 173 of the Companies Act 2014 for rectification of the register of members of Bellevue Port Services (Waterford) Ltd (“the company”) by entering the name of the applicant as the owner of 50 ordinary shares in the company (“the disputed shares”). Additional relief is sought directed at setting aside decisions made by the directors of the company reflected in correspondence issued by the solicitors for the respondents on 8 th and 12 th February 2021. Although I will refer to this correspondence in due course, it does not seem to me that the additional relief adds anything to the claim overall. If the applicant succeeds in establishing an entitlement to the rectification of the register in the manner sought, the contents of the correspondence will become largely irrelevant.
. The applicant is opposed by the respondents both substantively and also on a number of procedural grounds. The respondents contend that the application is improperly constituted because the company is not named as a respondent. The respondents also assert that the first respondent (Amber) should not have been included as a respondent because it is no longer the holder of the disputed shares. It is contended that the relief sought is not suitable for summary disposition on affidavit. In order to understand the substantive dispute between the parties, it will be necessary to look at the history of interactions between them in some detail.
. In brief, the respondents claim that Amber accepted an offer to purchase the applicant's shares which, under the terms of a shareholders' agreement entered into between those two parties, was deemed to have been made on the applicant entering into examinership in November 2012. The respondents claim that a sum of €50 was paid for the shares and that the cheque and a completed stock transfer form were sent to the examiner in January 2013. Through inadvertence and because at that time the shares had no value, the stock transfer form was not registered until 2021. Nonetheless, the respondents contend that Amber has been the beneficial owner of the shares since 2013. Amber has since transferred its entire shareholding in the company to Otto, the second respondent.
. The applicant disputes the respondents' claim on two main grounds. Firstly, the applicant contends that the conduct of Amber since 2013 is not consistent with the claim it now makes to have purchased the shares. Instead, for a number of reasons, its conduct is more consistent with a belief that the applicant remained the owner of the shares. Secondly, the applicant argues that the purported purchase of its shares in the company in 2013 did not comply with the terms of the shareholders' agreement on foot of which the purchase allegedly took place. Consequently, the applicant asserts that the purchase relied on by the respondents was of no legal effect.
. In looking at these issues, I propose to set out a chronological history of the company and of the interactions between the parties as regards the company. In the context of this chronology, it will be necessary to examine the relevant provisions of the shareholders' agreement under which the purported transaction took place. I will consider the procedural issues raised by the respondents and then, if appropriate, I will determine the substantive issue as regards the ownership of the disputed shares.
. The company was incorporated on 11 th December 2006. As its name suggests, it was intended to be the vehicle for a joint venture between the applicant and Amber for the development of an oil terminal/ storage depot for the transport of oil through the port of Waterford. The incorporation of the company was accompanied by the applicant and Amber entering into a shareholders' agreement on 22 nd December 2006. Under the shareholders' agreement, the total issued share capital of the company was 100 shares and each of the applicant and Amber held 50 shares. Under a subsequent amendment to the shareholders' agreement provision was made for the conversion of a shareholder's shares from ordinary to preference shares in the event that the shareholder was unable to discharge their financial obligations under the agreement.
. The joint venture progressed and, in April 2007, the company acquired for the sum of €6,500,000 approximately 36 acres of land at Waterfront Port for the intended development. The purchase price and associated costs were funded primarily by a bank loan. As the company was not trading and had no income, each of the shareholders advanced funds to the company to enable it to discharge its obligations under the loan. Clearly, the timing was not auspicious and, shortly after the purchase of the site, the country suffered an economic crash and went into recession. Although the agreement was that funding was to be advanced by both shareholders, by 2011, the applicant was unable to meet its obligations and stopped making monthly repayments. Amber continued making payments until the loan was repaid in full in 2021.
. The difficulties experienced by the applicant were not limited to making repayments on this loan. In his affidavit, Mr. Fitzgerald, formerly a director of Amber and currently a director of Otto, states that, in June 2011, he was advised by a former director of the applicant (Mr. Tougher) that the applicant's assets had come under the control of NAMA and other banks. Ultimately, an examiner was appointed to the applicant in October 2012, which appointment was confirmed by court order in November 2012. The respondents claim that the appointment of the examiner triggered a provision in the shareholders' agreement under which the applicant was deemed to have offered shares in the company for purchase by Amber and that Amber accepted that offer. I will return in a moment to the relevant terms of the shareholders' agreement and the steps taken by the parties. At this point, it is relevant to note that Mr. John O'Regan, a director of the applicant and the deponent of its affidavits in this application, acquired an interest in the applicant following the conclusion of the examinership (which ended on 19 th February 2013). Mr. O'Regan avers that “that asset” – which I have taken to mean the applicant's shares in the company which, in turn, owned the property at Waterford Port – formed part of the reason for his investment in the applicant. The court has no information as to when the former principal of the applicant divested himself of his shareholding in the applicant or ceased to be a director of the applicant. The respondents complain that the applicant has not put any material from the examinership before the court and, consequently, that the court cannot draw any conclusions as to the outcome of the examinership including as to Mr. O'Regan's investment in the applicant.
. The terms of the shareholders' agreement...
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