Konstantin Kamenetskiy & Ors v Vitali Zolotarev & Ors (Re Variti Management Services Limited)
[2023] EWHC 2619 (Ch)
Jeremy Sinclair Clarke & Anor v Yasmin Azim Lakha & Ors (Re Bramber Road Management Limited)
18 January 2024
[2024] EWHC 51 (Ch)
High Court
Imagine four neighbors sharing a garden and a company to manage it. They disagreed about who's in charge of the company. The judge decided that over time, everyone agreed on a simpler way to choose who's in charge, and that the people who were trying to take over did it the wrong way, breaking the rules.
Key Facts
- •Bramber Road Management Limited (the Company) manages a small office development.
- •Two members (Claimants) sued other unit owners (Defendants) over control of the Company.
- •The Company's share register was inconsistently updated.
- •Disputes arose over board meetings, director appointments, and share transfers.
- •A key dispute revolved around a 1984 planning restriction limiting occupation of units to unconnected parties.
- •Defendants denied Claimants' entitlement to be registered members for Unit 3 and the appointment of Mr. Lawson as a director.
Legal Principles
Articles and memorandum of a company bind each member.
s15 Companies Act 1985 and s33 Companies Act 2006
Articles of association are construed like contracts.
Towcester Racecourse Limited v The Racehorse Association Limited [2002] EWHC 2141 (Ch)
Company articles can be amended by agreement, including informal agreement or acquiescence.
s. 33 CA 2006, Cane v Jones [1980] 1 WLR 1451, Ho Tung v Man on Insurance Company Ltd [1902] AC 232
Duomatic principle: if all members with voting rights agree to a course of action, a formal resolution isn't needed.
s281(4) CA 2006, EIC Services Ltd v Phipps [2003] BCC 931
For Duomatic principle, shareholders must have full knowledge.
EIC Services Ltd v Phipps [2003] BCC 931
Directors' failure to exercise a right of refusal within a reasonable time results in the loss of that power.
Re Swaledale Cleaners Ltd [1968] 1 WLR 1710 (CA); Re Inverdeck Ltd [1998] BCC 256
A director is entitled to notice of meetings.
John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 (CA)
Members do not have the power to alter the articles or direct the directors except by special resolution.
s.21(1) CA 2006 and Regulation 70 of Table A
Outcomes
Each unit owner (registered member) has the right to appoint one director.
The court found that the articles were amended by conduct over time, allowing each unit owner to appoint a director by notice to the company.
Claimants are entitled to be registered as members for Unit 3.
The Defendants missed the two-month deadline to refuse the share transfer; the planning restriction was misconceived.
Mr. Lawson's appointment as a director was valid.
The Claimants, as members, were entitled to appoint Mr. Lawson by notice to the Company.
The June 2021 resolution was invalid.
It lacked proper authority, lacked necessary votes and was improperly passed.
The November 2021 board resolution was invalid.
Mr. Lawson, a director, was excluded from the meeting.
The November 2018 board meeting was valid and its resolutions were validly passed.
The court rejected the Defendants' objections regarding notice, venue change, quorum, and the absence of Mrs. Lakha and Ms. Hutchison.
Mrs Lakha and Ms Hutchison's claims to have been appointed directors at a 2011/12 members' meeting were rejected.
Their evidence was inconsistent with other evidence and lacked credibility.
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