Schofield v Schofield & Ors [2011] EWCA Civ 154

Case No B2/2010/1093

[2011] EWCA Civ 154

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM NORWICH COUNTY COURT

MR RECORDER CHANDLER

9KL02021

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 25/02/2011

Before

LORD JUSTICE MAURICE KAY

VICE PRESIDENT OF THE COURT OF APPEAL

LORD JUSTICE THOMAS

LORD JUSTICE ETHERTON

Between

NEIL DAVID SCHOFIELDAppellant

(1) LEE NEIL SCHOFIELDRespondents

(2) AVENUE ROAD DEVELOPMENT LIMITEDRespondent

(3)ADMINISTRATOR FOR AVENUE ROAD DEVELOPMENT LTDRespondent

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

David Berry Solicitor Advocate acting for Appellant

Lee Schofield represented himself

Mark Watson-Gandy (instructed by Harrison Clark) for Administrator of Avenue Road Developments Limited

Hearing Hearing dates : 26th January 2011

Judgment

LORD JUSTICE ETHERTON :

Introduction

[1]This is an appeal in proceedings by the Appellant, Neil Schofield, for a declaration that he is the sole director of Avenue Road Developments Limited (“the Company”) and that his son, Lee Neil Schofield (“Lee”), has been removed as a director of the Company. Lee, the Company and Nikolas Garth Rimes, who was appointed by Lee to be the administrator of the Company, are defendants to the proceedings and respondents to the appeal. The appeal is against the order of Mr Recorder Chandler in the Norwich County Court on 8 February 2010 dismissing the claim and ordering the Appellant to pay 80 per cent of Lee’s costs of the proceedings.

[2]The point which arises for decision on the appeal is a short one. It arises out of a meeting which took place on 2 October 2009 at the offices of Neil’s solicitors, Berry & Walton, attended by the Appellant, Lee and the Appellant’s solicitor, Mr Berry (“the meeting”). The Appellant claims that the meeting was an EGM of the Company, at which Lee was removed as the sole director of the Company and the Appellant was appointed the sole director. The Appellant claims that the meeting was effective to achieve that result because, although it was not called with the 14 days notice required by the Companies Act 2006 (“CA 2006”) sections 305(4) and 307(1), he, representing Reggiesco Ltd (“Reggiesco”), the holder of 99.9 per cent of the shares in the Company, and Lee, as the owner of the remaining share, agreed, or are to be regarded as having agreed, to treat the meeting as valid and effective. In short, the Appellant invokes the so-called “Duomatic” principle, named after Re Duomatic Ltd

[1969] 2 Ch 365

The background

[3]The background facts relevant to the appeal can be stated very shortly.

[4]There were, as I have said, two shareholders in the Company. Reggiesco, which was registered in Belize, held 999 shares and Lee held one share. The Appellant was the sole director and fifty per cent shareholder of Reggiesco. Sara Garry (“Ms Garry”), who was formerly married to the Appellant, was the only other shareholder of Reggiesco. She was also its company secretary.

[5]Prior to the meeting Lee was the sole director of the Company.

[6]On 3 September 2009 the Appellant served notice on Victoria Elizabeth Schofield, Lee’s sister, as the Company’s Secretary, requiring a meeting of the Company to appoint Greg Schofield as a director and to remove Lee as a director. The Appellant was described in the notice as acting “For and on behalf of Reggiesco”. It is common ground that notice was intended to be a requisition pursuant to CA 2006 section 303.

[7]On 4 or 5 September 2009 Lee and his sister passed a resolution appointing Firefox Associates (UK) LLP (“Firefox”) to be the Company’s Secretary in her place.

[8]On 9 September 2009 Firefox gave notice to the members, including Reggiesco, of the annual general meeting of the Company to be held on 8 October 2009. An amended notice of the AGM was sent on 20 September 2009. One of the items notified as business to be considered at the AGM was Lee’s removal as a director of the Company.

[9]On 22 September 2009 Berry & Walton sent Lee a letter saying that they were instructed by their clients, Reggiesco, in respect of Reggiesco’s requisition of an EGM. They said, among other things, that they were satisfied that the requisition was entirely valid and Lee ignored it at his peril as to a claim for breach of his duties as a director, and that it was the wish of Reggiesco that Lee should resign forthwith.

[10]In his reply dated 24 September 2009, which he addressed to Mr Berry, Lee asked whether Mr Berry had taken instructions from only one of the two directors of Reggiesco (a reference to the Appellant), and whether Mr Berry could confirm that he also represented the other director of Reggiesco, and, if he could not so confirm, whether Mr Berry would not have a conflict of interest.

[11]Berry and Walton replied, under Mr Berry’s reference, on 28 September 2009 saying that they did not act for Ms Garry, and had nothing more to say about the internal affairs of, or about acting for, “our client company”. The letter also said if Lee had not resigned sooner, an EGM would be held at their offices on 2 October 2009; that he could attend in person or by proxy; and that the business would be to consider a motion to remove Lee from office as director and to elect a suitable replacement. The Appellant claims that was a notice calling a general meeting of the Company pursuant to CA 2006 section 305, the Company having failed to convene a meeting pursuant to the requisition under CA 2006 section 303.

[12]The Appellant’s claim is that the EGM took place at the meeting at Berry & Walton’s offices on 2 October attended by himself, Lee and Mr Berry. The Appellant’s position was then and has been at all times since then that he attended the meeting as the fully authorised representative of Reggiesco, and everything he did at the meeting was in that capacity. He relies on the following events at the meeting: Lee proposed a motion that the meeting be adjourned to 8 October 2009, when the Company’s AGM was due to take place; Lee voted in favour of the motion but it was defeated by the Appellant’s votes; the Appellant proposed a motion that Lee be removed as a director; Lee voted against that motion, but it was passed by the Appellant’s votes; the Appellant proposed a motion that he be appointed a director of the Company; Lee voted against that motion, but it was passed by the Appellant’s votes.

[13]A form was filed at Companies House on 5 October 2009 of the appointment of the Appellant as a director. Lee denies that it was filed by him or with his knowledge.

[14]Lee refused to acknowledge the validity of the motions and resolutions to remove him as a director of the Company and to appoint the Appellant as a director. The AGM of the Company was purportedly held on 8 October 2009, which Lee attended as director of the Company. Minutes of the AGM recorded that “he felt that his power[s] were stripped from him” at the meeting on 2 October 2009 “without following procedures”. As to the appointment of the Appellant as a director, the minutes of the AGM recorded as follows:

“Mr Neil David Schofield has appointed himself director on the 5th October but his appointment and his authority is in dispute as he is not an official of the company and has not proof to be a shareholder of Reggiesco Limited. It was decided that Neil David Schofield will remain appointed director until all legal enquiries on his authority have been conducted and the dispute can be resolved.”

[15]Lee purported to appoint Mr Rimes as administrator of the Company on 13 January 2010 pursuant to paragraph 22 of Schedule B1 of the Insolvency Act 1986.

[16]The Appellant commenced the present proceedings on 17 December 2009 when the Claim Form and the Particulars of Claim were served.

The Judgment

[17]The trial took place on paper only, that is to say without any oral evidence, on 8 February 2010. The nub of the Recorder’s judgment was that the meeting on 2 October 2009 took place without the requisite 14 days notice; it was an informal meeting to talk about the resolution to be proposed at the AGM on 8 October 2009 for Lee’s removal as a director; Lee’s conduct at the meeting did not mean that he accepted that the meeting had been properly convened; accordingly, because the meeting was not properly convened, neither Lee’s removal as a director, nor the appointment of the Appellant as a director, were valid and so the Appellant’s claim failed. The critical parts of the judgment are as follows. “11. … Section 307 of the current Companies Act provides that 14 days notice of a general meeting needs to be given, unless shorter notice is agreed by the majority of those entitled to attend the meeting and vote, and that must mean that in the case of there being only two shareholders, there can only be a shorter notice of any extraordinary general meeting, or a general meeting, if they both agree and that makes perfect commonsense, if I may say so, because it does mean that it prevents in the case of there being only two shareholders, one shareholder being able to ride completely roughshod over the other by calling meetings at short notice and thus disadvantaging the other person concerned.12. It is, therefore, argued on behalf of, well by, effectively, by Mr Lee Schofield, that the meeting was not validly convened because he never agreed to shorter notice and the alternative argument canvassed on the other side is well, what was he doing there if he did not agree that there was to be a meeting at shorter notice. Well, the answer to that is that it was an informal meeting to talk about the resolution that was to be proposed at a later meeting, on the 8th October, when the resolution for removal was listed as an agenda item on the notice of the annual general meeting.

13. It is plain to me that he must at least have been aware at the meeting that it was what it is purported to be by his father because he is reported to have proposed the motion that the meeting be adjourned, upon which I have said he was outvoted. Now, that does not necessarily mean that he had accepted the meeting was properly convened. It certainly might mean that he was trying to prevent the meeting from arriving at any decision at all until, to put it in simple terms, he had had an opportunity to consider his position, but then he was outvoted on the other substantive motions; that does not mean that he accepts that the meeting was properly convened.

14. The convening of that meeting, it seems to me, is critical to the disposal of both of these claims and it seems to me that there cannot be any proper basis upon which I can conclude that that meeting was validly convened because there is no dispute that 14 days notice was not given. There is no evidence that both the people entitled to attend and to vote at that meeting agreed to shorter notice. There is a real dispute as to whether shorter notice was actually given, to which any agreement could have been attached as it were by Lee, because his case is he did not receive it.

15. I cannot, therefore, on the evidence, conclude that the meeting which took place on the 2nd September was either called on 14 days notice or took place on shorter notice with the agreement of Lee, which is what I have to find before I can find the business of the meeting to have been properly conducted, and having concluded, as I have, that by reason of failure to comply with Section 307 of the Companies Act, the meeting was not properly convened, it follows that I cannot find that his removal from office was valid and his replacement by his father was valid and so the claim fails because the claim is for exactly that. Obviously I cannot grant an injunction without granting the declaration so the claim for a declaration fails and the claim for an injunction fails.”

The appeal

[18]The Appellant sought permission to appeal on three grounds. Permission has been given for only one, as follows:

“3.1 The Learned Judge should not have found as he did that Lee Schofield’s presence at the company was other than acquiescence in short notice. In accordance with the principles of Section 312 of the Companies Act 2006 alternatively in the case of Re Duomatic Limited namely, that if it can be shown that all the shareholders at a General Meeting assent to the same matter, that assent is as binding as a resolution in a General Meeting. And further the acquiescence by a shareholder with knowledge of the matter is as good as actual consent. Silence by a shareholder at a meeting is as good as acquiescence and establishes consent. 3.2 There was simply no evidence that Lee Schofield had protested at the meeting as to the short notice. The only evidence was that he was silent as to the point. Silence in such a circumstance can only be construed as acquiescence which equals consent.”

[19]Following the grant of permission to appeal, Arden LJ gave permission on 22 December 2010 for Lee to put in evidence on the appeal a transcription by JP French Associates, forensic speech and acoustics consultants, of a recording made by Lee of the meeting.

[20]Mr Berry has acted for the Appellant on the appeal, and has made oral submissions on his behalf. In view of Mr Berry’s participation in the meeting, and the importance of what took place at the meeting on the outcome of the proceedings and this appeal, Mr Berry’s role as professional advocate for the Appellant on the hearing of the appeal, owing duties to the Court, was, as I think he himself recognised, not ideal.

[21]The Appellant’s case is, quite simply, that this is a situation in which the Duomatic principle clearly applies. Re Duomatic Ltd

[1969] 2 Ch 365

concerned the validity of payments made to directors of a company for their personal benefit, even though none of the directors had contracts of service, no resolution had ever been passed authorising them to receive remuneration, and they were not entitled to remuneration under the company’s articles. On the liquidator’s application for repayment of the payments, Buckley J held that certain of the payments were to be treated as properly authorised because they were made with the full knowledge and consent of all the holders of voting shares in the company at the relevant times. Buckley J (at page 372B) endorsed the following statement of the principle by Astbury J in Parker and Cooper Ltd v Reading

[1926] Ch 975

at 984:

“Now the view I take of both these decisions is that where the transaction is intra vires and honest, and especially if it is for the benefit of the company, it cannot be upset if the assent of all the corporators is given to it. I do not think it matters in the least whether that assent is given at different times or simultaneously.”

[22]Buckley J stated the principle his own words, as follows (at page 373C):

“.... I proceed upon the basis that where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be.”

[23]Mr Berry referred us to Re Home Treat Ltd

[1991] BCLC 705

, in which Harman J said that, in this context, acquiescence is as good as actual consent. He said (at page 709):

“The decisions show that the law is that the consent of all members expressed together is as good as a special resolution. It is also clear that acquiescence by shareholders with knowledge of the matter is as good as actual consent. In this case the silence of Mr Mohanan is, in my view, as good as acquiescence and establishes that he as much as his wife had assented by conduct to this change in the objects of the company.”

[24]Mr Berry referred to the following statement of the principle in the judgment of Mummery LJ in Monecor (London) Limited v Euro Brokers Holdings Limited

[2003] EWCA Civ 105

“62. I see nothing in the circumstances of the present case to exclude the Duomatic principle. It is a sound and sensible principle of company law allowing the members of the company to reach an agreement without the need for strict compliance with formal procedures, where they exist only for the benefit of those who have agreed not to comply with them. What matters is the unanimous assent of those who ultimately exercise power over the affairs of the company through their right to attend and vote at a general meeting. It does not matter whether the formal procedures in question are stipulated for in the Articles of Association, in the Companies Acts or in a separate contract between the members of the company concerned. What matters is that all the members have reached an agreement. If they have, they cannot be heard to say that they are not bound by it because the formal procedure was not followed. The position is treated in the same way as if the agreed formal procedure had been followed. …”

[25]Mr Berry relied upon the decision of the Court of Appeal in Re Express Engineering Works Limited

[1920] 1 Ch 466

as authority that the Duomatic principle applies where the invalid transaction is purportedly conducted at a directors’ meeting, provided all the shareholders were present the meeting. That case concerned the sale of property to the company by its directors in consideration of the issue to them of debentures agreed at a meeting described in the minutes as a board meeting. The articles provided that no director should vote in respect of any contract or arrangement in which he might be interested. On an application by the liquidator, it was held that the issue of the debentures was not invalid. Warrington LJ said (at pages 470-471):

“It happened that these five directors were the only shareholders of the company, and it is admitted that the five, acting together as shareholders, could have issued these debentures. As directors they could not but as shareholders acting together they could have made the agreement in question. It was competent to them to waive all formalities as regards notice of meetings, etc., and to resolve themselves into a meeting of shareholders and unanimously pass the resolution in question. Inasmuch as they could not in one capacity effectually do what was required but could do it in another, it is to be assumed that as business men they would act in the capacity in which they had power to act. In my judgment they must be held to have acted as shareholders and not as directors, and the transaction must be treated as good as if every formality had been carried out.”

[26]Mr Berry also referred to Isle of Wight Railway Company v Tahourdin

[1883] Ch D 320

, but I cannot see that case assists the resolution of this issue on this appeal.

[27]Mr Berry submitted that, by attending the meeting on 2 October 2009, putting forward a resolution for the adjournment of the meeting, voting on that resolution, and voting on the resolutions to remove him as a director and to appoint the Appellant as director, Lee was actively agreeing to the transaction of those items of the Company’s business at the meeting and hence its validity for that purpose, or, at the least, he acquiesced in the validity of the meeting.

[28]Mr Berry submitted that, if Lee had wished to maintain an objection to the meeting, he should simply not have attended or left, so that the meeting would have been inquorate.

[29]In that connection, Mr Berry drew an analogy with Barron v Potter

[1914] 1 Ch 895

. In that case there were two directors, but the conduct of the company was at a standstill as one of the directors, Canon Barron, refused to attend any board meeting with the other director, Mr Potter. Mr Potter sent by post to Canon Barron notice of a board meeting to be held at the company’s offices. Before that notice was received, Canon Barron travelled by train to Paddington station in London, where he was met on the platform by Mr Potter, who purported to hold a board meeting there and then, and, by his casting vote, to appoint three additional directors of the company. Warrington J held that there had not been a board meeting because Canon Barron had never received notice of the meeting, and had come with the fixed intention of not attending any such meeting, and he was therefore not there in the capacity of a director, and so the meeting was inquorate.

[30]Mr Berry also relies on the minutes of the AGM on 8 October 2009 in which the Appellant’s directorship was acknowledged (quoted above). That acknowledgment, he submitted, is only consistent with Lee having accepted at the meeting on 2 October 2009 that the motions at the meeting were validly and effectively proposed and voted upon. He referred to Re Bailey, Hay & Co Ltd

[1971] 3 All ER 693

as authority that shareholders may, by their subsequent conduct, be deemed to have assented to the validity of a company meeting called with inadequate notice. In that case three of the shareholders attended a meeting of the company at which a resolution to wind up the company was passed, and in respect of which they abstained from voting. Having discovered within two weeks of the meeting that the notice convening the meeting had been one day short, they raised no objection to the liquidation at that stage and co-operated with the liquidator’s investigation of the company’s affairs. It was only three and a half years later, when the liquidator claimed a declaration that certain payments made to one of those shareholders constituted a fraudulent preference, that they contended that the company had never been in liquidation due to the inadequacy of the notice of the meeting. Rejecting that contention, Brightman J said (at page 701g):

“What these corporators did and did not do after 9th December 1965 down to 12th December 1969 when they swore their affidavits disclosing this defence points, in my view, to one conclusion only. The conclusion is that they outwardly accepted the resolution to wind up as decisively as if they had positively voted in favour of it. If corporators attend a meeting without protest, stand by without protest while their fellow-members purport to pass a resolution, permit all persons concerned to act for years on the basis that resolution was duly passed and rule their own conduct on the basis that the resolution is an established fact, I think it is idle for them to contend that they did not assent to the purported resolution.”

Discussion

[31]The citations of those cases by Mr Berry are all apposite, but, contrary to his submission, they inevitably lead to the conclusion that the Duomatic principle has no application to the meeting on 2 October 2009 in Mr Berry’s offices.

[32]What all the authorities show is that the Appellant must establish an agreement by Lee to treat the meeting as valid and effective, notwithstanding the lack of the required period of notice. Lee’s agreement could be express or by implication, verbal or by conduct, given at the time or later, but nothing short of unqualified agreement, objectively established, will suffice. The need for an objective assessment was well put by Newey J in the recent case of Rolfe v Rolfe

[2010] EWHC 244 (Ch)

at [41], as follows:

“... I do not accept that a shareholder’s mere internal decision can of itself constitute assent for Duomatic purposes. I was not referred to any authority in which it had been decided that a mere internal decision would suffice. Further, for a mere internal decision, unaccompanied by outward manifestation or acquiescence, to be enough would, as it seems to me, give rise to unacceptable uncertainty and, potentially, provide opportunities for abuse. A company may change hands or enter into an insolvency procedure; in either event, it is desirable that past decisions should be objectively verifiable. In my judgment, there must be material from which an observer could discern or (as in the case of acquiescence) infer assent. The law applies an objective test in other contexts: for example, when determining whether a contract has been formed. An objective approach must, I think, also have a role with the Duomatic principle.”

[33]It is perfectly plain that objectively there never was unqualified agreement by Lee to the validity of the meeting or the Company’s business which was purportedly transacted during the course of it.

[34]Lee is a young man with no legal qualifications. He came alone to the meeting against a background in which, so far as he was concerned, the Company’s AGM had already been called for 8 October 2009 and one of the items on the agenda for the AGM was the issue of his removal as a director. This led the Recorder to conclude that, so far as Lee was concerned, the meeting was an informal meeting to talk about the resolution that was to be proposed in due course on 8 October.

[35]Whether or not that was a correct inference, what is clear is that Lee came to the meeting in the belief that neither the Appellant, nor Berry & Walton, were authorised to act for Reggiesco, and also having received advice from Firefox that inadequate notice had been given for an EGM on 2 October 2009. The former point had been raised by Lee himself in his letter dated 24 September 2009 to Mr Berry. The reason for that query raised by Lee was that he was in possession of a letter dated 8 September 2009 from his mother, Ms Garry, addressed “To whom ever it may concern”, with the heading “Re: Reggiesco Ltd”, and signed by her as “[Secretary] for and on behalf of Reggiesco Ltd”, in which she expressed her full support for Lee as managing director of the Company. The material part of Ms Garry’s letter was as follows:

“Please be advised that I, Sara Elizabeth Garry [formally Schofield] formally give notice that in my capacity as Company Secretary of the above mentioned company give my clear and unequivocal support to Mr Lee Neil Schofield in his capacity as Managing Director of Avenue Road Development Ltd .... Avenue Road Development Ltd is a wholly owned UK subsidiary company of Reggiesco Ltd. This letter represents a vote of confidence in Mr Lee Neil Schofield’s ability to manage the assets of Avenue Road Development Ltd. In addition to my position as Company Secretary I also own a 50% stake in Reggiesco Ltd. Until such times as a board meeting is held at the Reggiesco’s registered office dictates otherwise. It is also within my remit to clarify that I am in full agreement with the Board Resolution passed by Avenue Road Development Ltd on the 5th September 2009 appointing Firefox Resourses LLP to the position of Company Secretary. ...”

[36]At the time of the meeting Lee was also in possession of a copy of a letter dated 30 September from Firefox to Mr Berry, which, among other things, queried which company had called for an EGM on 2 October 2009, and, if it was Reggiesco, requested sight of the board resolution calling for Lee’s removal, and stated that Lee and Firefox enjoyed the support of Ms Garry, a director and shareholder of Reggiesco, and referred to the attached supporting letter from her dated 8 September 2009. The letter also stated that the statutory notice for the EGM had not been given. The material part of Firefox’s letter was as follows: Please be advised that, to assure corporate governance, Mr Lee Schofield has appointed Firefox Associates [UK] LLP as the company secretary for Avenue Road Development Ltd as appears on the register at Companies House. A letter from you addressed to Mr Lee Schofield has been brought to our attention purporting to call an “EGM” on the 2nd October 2009. Please clarify which company is calling the meeting is it Reggiesco Ltd or Avenue Road Development Ltd? If it is Avenue Road Development Ltd then who authorised the meeting? As company secretary why were we not given the statutory 28 days notice under section 304 [1b] the companies act? I also bring your attention to the section 312 of companies act 2006 – removal of directors. If you are acting for Reggieco Ltd then please let us have sight of the board resolution calling for the removal of Mr L Schofield details of who is being appointed in his place and the certificate of good standing from the Belize Registered office. Also be aware that Mr Lee Schofield and Firefox Associates LLP enjoy the support of Miss Garry who is both a director and major shareholder of Reggiesco Ltd – see attached board resolution dated 5th September 2009 and supporting letter dated 8th September 2009. You should also be aware of the statutory notice of AGM under section 304 the companies act 2006 sent to all concerned [a copy was served on Mr N Schofield by hand] and a notice was sent to Reggiesco’s registered in Belize City – this meeting is set for the 8th of October 2009 at noon. We are anxious for comments.”

[37]Neither Ms Garry’s letter of 8 September 2009 nor Firefox’s letter of 30 September 2009 was mentioned by the Recorder in his judgment. Mr Berry confirmed to us that they were among the documents before the Recorder. Mr Berry initially told us that it was not accepted, on behalf of the Appellant, that either Ms Garry’s letter or Firefox’s letter was seen by Mr Berry or the Appellant before or at the meeting. Mr Berry accepted that Lee had handed over some documents at the meeting, but Mr Berry said they were taken back by Lee at the end of the meeting and he could not recall what they were. It is quite clear, however, from the transcription of Lee’s recording of the meeting, as Mr Berry eventually accepted, that both letters were presented by Lee at the meeting, and that he specifically requested that their contents be addressed by the Appellant, and that the Appellant did indeed examine them.

[38]Furthermore, and critically, not only was Lee’s first action at the meeting to hand over to Mr Berry those letters and the notice of the AGM called for 8 October 2009 and the amended notice, but, after the various resolutions had been proposed and voted upon, he again referred to the letters, saying (as recorded in the transcription):

“(There are) questions raised which I think (we) really would like you to respond to.”

They were not addressed or answered.

[39]This provides the proper context and explanation for Lee’s conduct at the meeting. He had no legal adviser with him, and was not himself a lawyer. The only lawyer present was Mr Berry, who assumed a directional role at the meeting. Having seen the notice calling the AGM on 8 October, Mr Berry explained, on behalf of the Appellant, that it was too late to prevent the Appellant being in a position to continue to hold the EGM and that the Appellant wished to proceed with the EGM there and then. Mr Berry asked Lee if he wished to propose the adjournment of the meeting until 8 October. Lee said he did because, although his father had said that Reggiesco was calling the meeting, there was the letter from Ms Garry. Mr Berry put the motion, and it was defeated by the Appellant’s votes. Mr Berry then put the proposal to remove Lee as a director, which was carried by the Appellant’s votes. The proposal was then put for the appointment of the Appellant as a director, and that was carried by the Appellant’s votes. Mr Berry then said that “it would be proper now to appoint a chairman” and asked the Appellant whether he was proposing himself, to which the Appellant assented. That proposal was again carried by the Appellant’s votes. Mr Berry then said that he took it that the Appellant wanted to cancel the AGM called for 8 October. The Appellant agreed and so proposed, and that was again carried by the Appellant’s votes. It was at that point in the meeting that Mr Berry suggested to the Appellant that Lee be invited to bring forward any other issues, and Lee responded by seeking answers to the questions raised in Firefox’s letter of 30 September.

[40]As that resume makes clear, Lee was throughout maintaining his objection to any EGM on 2 October 2009 both because he did not accept that, in the light of Ms Garry’s letter, the Appellant had authority to act on behalf of Reggiesco, and for the other reasons, including lack of notice, given in Firefox’s letter of 30 September. Mr Berry orchestrated the proceedings at the meeting. Lee, deferring to him as the only lawyer present, responded to each of the resolutions suggested by Mr Berry both to Lee (the adjournment) and to the Appellant (removal of Lee as a director, appointment of the Appellant as a director, appointment of the Appellant as chairman, and adjournment of the AGM called for 8 October). It was never suggested to Lee by Mr Berry that, if Lee wished to maintain his objection to the meeting, he should simply leave so that the meeting would be inquorate. Instead, it was Mr Berry who suggested to Lee that he could propose that the meeting be adjourned to the AGM on 8 October. It is an obvious inference that, by putting that proposal and voting on it, Lee, far from agreeing the validity of the meeting and the business conducted at it, believed that it was the way to maintain his objection to it.

[41]Lee’s participation at the meeting was, therefore, conditional. His position throughout was that the meeting had not been properly called, but, if and insofar as (contrary to his stated position) it was a valid meeting, he responded to the various proposals suggested by Mr Berry in the way that he did. That was not an agreement by Lee, as shareholder, to treat the meeting and the resolutions passed at the meeting as valid and effective. There was no objective agreement by him within the Duomatic principle.

[42]Nor is that conclusion undermined by the minutes of the AGM on 8 October 2009 which referred to the appointment of the Appellant as a director. That entry in the minutes referred to the Appellant’s appointment of himself as a director, not at the meeting on 2 October, but on 5 October, the date on which the relevant forms were sent to Companies House. There is no evidence that those forms were sent by or with the knowledge of Lee or anyone acting on his behalf or on behalf of the Company. Further, the entry makes quite clear that acknowledgment of the Appellant’s directorship was dependant on the outcome of legal inquiries into the Appellant’s authority.

Conclusion

[43]For those reasons, I would dismiss this appeal. LORD JUSTICE THOMAS

[44]I agree. LORD JUSTICE MAURICE KAY

[45]I also agree.