9911796707
TMI Blog1970 (6) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise." The relief in fact sought on this petition is an order that the personal respondents, Mr. Nazar Achoury, whom I will call Nazar, and his son George Achoury, whom I will call George, may be ordered to purchase the petitioner's shares in the respondent company, Westbourne Galleries Ltd. Alternatively, the petitioner asks for a winding up order. It is common ground that the company is solvent. The petitioner and the personal respondents are of Persian origin. For many years the petitioner and Nazar have been engaged in the business of carpet dealers, and that is the business of the company. In 1945, Nazar and Mr. Fahimian were dealing in carpets in Nottingham under the style of "Oriental Carpet Company," and in that year the petitioner joined them in partnership as a one-third partner. In 1946 Mr. Fahimian left to set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gton Church Street, because Nazar wanted the Westbourne Grove premises for his own purposes. Nazar has always had a number of business interests outside the company including that of an antique dealer, while the petitioner's sole business enterprise was, until the matter complained of in these proceedings, with the company. His part in the management of the company's affairs has consisted mainly in selling carpets in the shop. The business of the company consists in part of dealing in Persian carpets and in part in dealing with other floor carpets, for example, English Wilton carpets. The Persian carpet part of the business accounts, I understand, for about 50 per. Cent. of it and the other floor coverings for the other 50 per cent. Paragraph 7 of the petition says and it is not disputed: "The majority of the Persian carpets which the company sells are bought in Persia by...Nazar, who spends many weeks of each year in Persia. He buys them in his own name and up to 1965 his practice was to invoice such carpets to the company and enter them in the company's books at a figure representing cost price plus transport, the customs duty, purchase tax, and other expenses, with a percent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r himself unreasonable and improper profits both on his sales of carpets to the company and through the subsidy in effect provided by the company for his antique business. Your petitioner has protested against his conduct but owing to the majority of the shares held by ...Nazar and [George] your petitioner's protest has had no effect. 11. At a general meeting of the company held on January 15, 1969, your petitioner was removed as secretary of the company, and it was further resolved to sell the lease of the company's premises at 209 Kensington Church Street... In due course through your petitioner's endeavours a purchaser was found, but ...Nazar thereupon refused to conclude the transaction contrary to the said resolution and to the interests of the company. 12. By a notice dated June 30, 1969, purporting to be issued by order of the board an extraordinary general meeting of the company was convened for July 29, 1969, for the purpose of passing an ordinary resolution removing your petitioner from his office as a director of the company. Your petitioner received no notice of the purported board meeting at which the said order was purported to have been made, and the said notice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and management of the company's affairs. But this lack of confidence must be grounded on conduct of the directors, not in regard to their private life or affairs, but in regard to the company's business. Furthermore the lack of confidence must spring not from dissatisfaction at being outvoted on the business affairs or on what is called the domestic policy of the company. On the other hand, wherever the lack of confidence is rested on a lack of probity in the conduct of the company's affairs, their the former is justified by the latter, and it is under the statute just and equitable that the company be wound up." Mr. Balcombe on behalf of the respondents, while not, as I understand it, disputing that this is a partnership case, submits that the removal of a director under the powers conferred by the articles under section 184 of the Act of 1948 is never itself a ground for a winding up order even in a partnership case. He concedes further that if I should find a lack of probity, especially in relation to the other complaints relied on, the requirement of oppression in section 210 would be satisfied. I turn then to the cases which were cited to me. In the Yenidje Tobacco Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t form an opinion of what was being and what is being done. I find that the company is a private company in the fullest possible sense, and that the petitioner and the respondent hold the capital of the company substantially in equal shares. On the authorities, and particularly in In re Yenidje Tobacco Co. Ltd. s case ( supra ) I am bound now to consider the position in the same way as I should consider it if the question arose as to the right of one of two partners in a private partnership to have the partnership dissolved. The same circumstances which entitle a partner to require the dissolution of the partnership entitle a person who is equally interested with one other person in a company to have that company wound up on the ground that the circumstances render it just and equitable. That, I think, is the effect of In re Yenidje Tobacco Co. Ltd. s case ( supra ) and I think that the principles apply here. I take that case, not because the facts in it exactly agree with those in this case, but because of the principles there laid down, where the statement of the law in Lindley on Partnership is applied to a company. " After considering the facts, Crossman J. said at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal in In re Yenidje Tobacco Co. Ltd. s case ( supra ) and followed recently in Davis Collett Ltd. [1935] Ch. 693 ; 5 Comp. Cas. 467 by Crossman J. Whether it be a matter of articles of association or articles of partnership the rights of the parties are determined by those articles, and the question whether it is right for me applying here the principles of partnership to the question of dissolution to wind up this company or not largely depends on what are the contractual rights of the parties as determined by the articles of association in this case. Accordingly, when I come to consider the allegations which are made in the petition, I must be guided by what are the legal rights of the parties as determined by the bargain into which they entered." That was not a case of the exclusion of a partner from the partnership business, but one where a. deceased partner's successors were trying to succeed to his position as a working partner. A case which was one of the exclusion of a director is In re Lundie Brothers Ltd. [1965] 1 W.L.R. 1051 ; 35 Comp. Cas. 827 , a case of my own. I said, at page 1055 : "I propose to consider first whether the facts of this case are such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. The trouble, I think, was that the Lundie brothers were too inclined to regard the business as their business, in a way perhaps not unnaturally. They started the business; they were responsible for the formation of the company, and the company bore their name. But in law the petitioner had an equal right in the business as being in substance a partner in it." Then a little later on I said, at page 1057 : "As I have said, I am satisfied that the petitioner has made out a case for saying that he is entitled to a winding up order on a just and equitable ground. But that does not mean that he is entitled to succeed in so far as his claim rests on section 210 of the Companies Act, 1948. He has to go further and satisfy me that at the date of the presentation of this petition the affairs of the company were being conducted in a manner oppressive to him as a member of the company. 'As a member of the company' means, of course, as a shareholder of the company. The distinction between the sort of case which a petitioner has to make out in order to establish a claim for dissolution on a just and equitable ground, in a partnership case, and the sort of case which he has to est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office, notwithstanding anything in its articles or in any agreement between it and him." Mr. Balcombe submitted that In re Yenidje Tobacco Co Ltd. s case ( supra ) was based on deadlock, which admittedly does not apply here, and he referred to what Warrington L.J. said, at page 435 : "... the court has in more cases than one expressed the view that a company may be wound up if, for example, the state of things is such that what may be called a deadlock has been arrived at in the management of the business of the company. I am prepared to say that in a case like the present, where there are only two persons interested, where there are no shareholders other than those two, where there are no means of overruling by the action of a general meeting of shareholders the trouble which is occasioned by the quarrels of the two directors and shareholders, the company ought to be wound up if there exists such a ground as would be sufficient for the dissolution of a private partnership at the suit of one of the partners against the other. Such ground exists in the present case. I think, therefore, that it is just and equitable that the company should be wound up." But, although Warrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n In re Cuthbert Cooper Sons Ltd. [1937] Ch. 392, 398 ; [1938] 8 Comp. cas. 131 that I have already read. Mr. Balcombe based his submission on In re Cuthbert Cooper and Sons Ltd. [1966] 1 W.R.L. 514 ; 36 Comp. Cas. 497 and on In re Expanded Plugs Ltd. s case ( supra ). It is to be noticed that In re Expanded Plugs Ltd. was not a case of the removal of a director. Mr. Balcombe then referred to In re Chase Plastics Ltd. which is recorded only in (1966) 110 Sol. J. 564, and that is not a very satisfactory report. The case concerned a petition to wind up a company, the petitioner's complaint being that his service agreement as manager had been wrongly terminated and that he was being unjustly excluded from the business of the company. The report discloses that the petitioner had been handed a letter saying that a board meeting had dismissed him not only from his position as manager, but also as a director. Pennycuick J. said, at page 565 : "So far as could be seen there was nothing to prevent a properly constituted board from terminating E's employment. If that termination were a breach of contract E would have a claim to damages but it would afford no ground for a wind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, wholly failed to prove the allegations in paragraph 8 of the petition. I pass to the next complaint, namely, that the company is improperly being made to subsidise Nazar's antique business at 209 Kensington Church Street, with the result that the company is making a loss in those premises in the region of 1,500, a year. It is common ground that the company pays the expenses of those premises, which amount to about 3,000 a year. It is also common ground that Nazar maintains a display of antiques mainly, I think, Persian ceramics at the premises. Nazar maintains that they are an attraction to the shop, that they lure in customers and encourage the sale of the Persian carpets which are kept there. The petitioner denies this, but it seems to me that this is a question about which opinions may honestly differ. If in fact that use of the premises for the sale of antiques were involving the company in substantial loss the position might be different; but, in my judgment, the petitioner has again wholly failed to prove that this is the case. One of his difficulties in substantiating the allegation arises from the fact that the buyers of the carpets sold in the main shop include pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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