Jordan & Anor v Roberts & Ors [2009] EWHC 2313 (Ch)

Case No 8047/08

[2009] EWHC 2313 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

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

Date 21 September 2009

Before

Mr. GEORGE BOMPAS QC

sitting as a Deputy Judge of the High Court

Between

CYNTHIA JORDANClaimants

KIM FAZZANIClaimant

SHEILA ROBERTSDefendants

SUZANNE BINNSDefendant

HOME ASSISTANCE SERVICES LTDDefendant

Duncan Kynoch (instructed by WGS Solicitors) for Claimants

Geoffrey Goldkorn (of Goldkorn Mathias Gentle Page) for First & Second Defendants

Hearing Hearing dates : 6, 7, 8, 9, 10, 16, 17, 21 & 23 July 2009

Judgment

The Deputy Judge:

Introduction

[1]This is an application by the Claimants, Mrs Cynthia Jordan and Mrs Kim Fazzani, pursuant to section 359 of the Companies Act 1985 (to be repealed from 1 October 2009 by, and replaced by section 125 of, the Companies Act 2006) for rectification of the register of members of the Third Defendant, a company called Home Assistance Services Ltd (“the Company”). They claim to be shareholders, each holding 10 shares out of an authorised share capital of £100 divided into 100 ordinary shares of £1 each. They also claim to be directors. As to this, they ask for declaratory and injunctive relief aimed at preventing their exclusion from the Company’s offices and at ensuring the recognition of their status as shareholders and directors.

[2]On 18 August 2008 the First and Second Defendants, Mrs Sheila Roberts and Ms Suzanne Binns (whom together I shall call “the Defendants”, the Company not having been represented at the trial), ejected the Claimants from an office in Harrow used by the Company, and sought to prevent the Claimants from continuing to work for the Company.

[3]The Defendants’ pleaded case, although not the case first put forward in correspondence, was that the Claimants are neither shareholders nor directors. This is because, so it is pleaded, their appointments as directors were terminated by Mrs Roberts on 15 August 2008, and their “20% shareholding in the Company reverted back to the Company”. As explained later, the pleaded claim in relation to the Claimants’ shares was dropped shortly before the trial.

[4]The Defendants’ pleaded claim is for rectification of the Company’s register of members to reflect an issued share capital of 80 shares held as to 51 by Mrs Roberts and as to 29 by Ms Binns. They also claim declaratory and injunctive relief against the Claimants. In particular they claim an injunction to prevent the Claimants from purporting to act as directors or shareholders and from entering the Company’s premises or using its equipment.

[5]As appears from what I have to record, the short involvement of the Claimants and the Defendants together in the Company has been marked by continuous feuding. In these proceedings very serious allegations of misconduct have been made on either side. The cost, not only in money, of carrying on these proceedings is altogether disproportionate to what is at stake in the Company. The pity is that, unless the parties can find some way of working together or disengaging amicably, none of the parties is likely to gain much from all this beyond the prospect of further litigation.

Conclusion

[6]My conclusion is that the issued share capital consists of 40 shares, the Claimants each holding 10, Mrs Roberts holding 10, Ms Binns holding 9 and a Ms Viviane Barker holding the remaining share. Ms Barker’s share and one of the shares held by Ms Binns are fully paid, with the remaining shares being unpaid.

[7]I also conclude that there are three directors, namely each Claimant and Mrs Roberts, these three having been the Company’s only directors since 19 May 2008 when Ms Binns resigned as a director.

[8]In the light of these conclusions I will hear further argument as to whether or not any injunctive relief is needed. My provisional view is that there is no need for an injunction. As matters stand the Claimants are together a majority of the directors and may decide who should have the right to take the Chair at general meetings of the Company and thereby exercise any casting vote necessary to break any deadlock. The Company’s Articles of Association expressly incorporate most of the Regulations in Table A in the Schedule to the Companies (Tables A to F) Regulations 1985, and these so far as material give the majority of the Board the right to choose their chairman (Regulation 91), give that chairman the right to take the Chair at general meetings (Regulation 42) and give the chairman of the meeting a second or casting vote (Regulation 50). Given this, the Claimants are in a position, without any further assistance from the Court, to prevent the Defendants from bringing about any changes in the Company’s share capital or board.

Background

[9]In this part of this judgment I set out the essential history of the parties’ involvement with the Company, making certain findings but also explaining the principal points which are hotly disputed and on which I need to make a decision. I shall then set out my appraisal of the evidence, and give my reasons for the conclusion which I have just summarised. I should add that in this judgment I make reference to various provisions of the Companies Act 1985. At the time of the material events it was those provisions which were applicable, even though the Companies Act 2006 had been passed and was in the process of being brought into force by a series of statutory instruments.

[10]The Company was incorporated in 2000. It has only ever been in a small way of business. I have already made reference to certain provisions of its constitution. Also relevant are the following. i) Article 4 contains provisions of a familiar type dealing with share issues. The unissued shares are to be under the control of the Directors (sub-clause (1)). The directors are expressed to be given authority for the purposes of section 80 of the Companies Act 1985 (“the 1985 Act”) to allot relevant securities (sub-clause (2)). This authority is expressed to have been given in respect of the authorised capital at the date of incorporation (that is £100, that still being the amount of the authorised capital), and to have lasted only until the fifth anniversary of the Company’s incorporation in the absence of any renewal (sub-clause (3)). ii) Regulation 81 in Table A applies, providing for directors to vacate office by, among other matters, resigning by notice to the Company.

[11]In early 2007 the Company was more or less dormant, its two directors and shareholders (with one share each) being Ms Binns and Ms Barker. According to the Company’s annual report and accounts for the year ended 31 December 2006 the Company had net liabilities of £4,617 (its assets consisting of some £22,000 cash at bank and its liabilities consisting in effect of a director’s loan of approximately £25,000). The Company had no income other than a small amount of interest; its main expenditure was on administrative expenses, giving rise to loss of some £5,000. According to the directors’ report the Company’s principal activity was that of providing services to older people to live at home. The directors were Ms Binns and Ms Barker, Ms Binns being the secretary.

[12]Ms Binns and Ms Barker have long had a close personal relationship. By 2007 Ms Barker’s health was not good. It was decided between these two that Ms Barker would retire and that Ms Binns would look for someone else to join with her in the Company.

[13]Ms Binns had for some time worked as a social care management consultant for social care commissioners and providers with the voluntary, private and statutory sectors. She and a Mr Tian Yeo were the participants in a company called Alpha EMS (UK) Ltd which provided social care management and accountancy services, Mr Yeo being an accountant. He was to join the Company for his accountancy expertise; and it was contemplated that he would become a director and might have a shareholding.

[14]Also, as it seems, Ms Binns had come to know Mrs Roberts. Mrs Roberts had had a dozen years’ experience in domiciliary care; and Ms Binns says that they both shared the ambition of developing a business in the provision and management of social and healthcare services.

[15]Thus it was that by April 2007 Ms Binns had the intention that the Company should register as a domiciliary care agency with the Commission for Social Care Inspection (“CSCI”).

[16]On 17 April 2007 Ms Barker ceased to be a director of the Company. On the same day Mrs Roberts and Mr Yeo were appointed to be directors. Also on the same day the Company entered into an agreement with Ms Barker by which the Company agreed to pay £23,000 to Ms Barker within 14 days of demand and to pay interest in the meantime on the 25 January each year.

[17]During the trial the Company’s original Combined Register was produced to the Court, this Combined Register containing various of the statutory registers required for the Company, including the Register of Members. The Register of Members (taken with the pages which had had unissued share certificates and stubs for noting the issue of the certificates) records Ms Barker as having on 19 January 2001 become a shareholder, with a holding of one share which was the subject of certificate number 1, on a transfer from the original subscriber. It records her as having ceased to be a member on 17 April 2007, a note recording “share transferred to company”. Ms Binns is recorded has having held one share, the subject of certificate number 2, from 10 January 2002.

[18]In evidence were copies of these two certificates, each carrying an endorsement (referred to later in this judgment) made on 4 March 2008. Neither certificate was sealed, so far as can be told from the copies in evidence. Each bears the legend “Given under the Common Seal of the Company (or executed by the Company by the signatures of the following officers)”.

[19]Mr Geoffrey Goldkorn, appearing on behalf of the Defendants and addressing himself in particular to the absence of any sealing on certificates number 5 and 7 (to which I refer later), made a submission to the effect that this legend on the certificates was erroneous in failing to have regard to Regulation 6 in Table A, which is expressed as requiring every share certificate to be sealed with the Company’s seal. It would surprise me if any of the parties had ever been aware of that particular provision in Table A so that that provision had been a material factor. But, as it happens, at the relevant time (January 2008) section 36A(4) of the 1985 Act (inserted by the Companies Act 1989) was in force and provided that any document signed by a director and the secretary or any two directors of a company had the same effect as if executed under the common seal.

[20]Share certificate number 3 was dated 17 January 2008. I refer to it later. It reflected, as it seems to me, the issue of eight new shares to Ms Binns and a transfer to her of Ms Barker’s original share, that share having apparently, according to the Register of Members, been surrendered to the Company on 17 April 2007. Although the Register of Members in the original Combined Register shows for these nine shares as the date of allotment or entry of transfer the date 17 April 2007, I conclude that there had been no such allotment or transfer to Ms Binns until 17 January 2008. As it seems to me, the date of 17 April 2007 in the Register of Members must have been entered much later. As to this, the Annual Return for 2007 signed by Ms Binns on 16 January 2008 and on that day returned to the Registrar of Companies records that at 19 December 2007 (the date to which the Return was made up) there was only one issued share in the Company’s capital.

[21]Accordingly, in my judgment this Register of Members, taken with the accompanying record of share certificates, makes it plain that from 17 April 2007 until 17 January 2008 the Company had at the most two members, Ms Binns holding one share and either the Company or (if there had been no surrender or transfer of her share to the Company) Ms Barker in respect of one share, and no other members, there being only two shares in issue.

[22]In particular, the record of the entries in the Combined Register is clear in showing that there had not in fact been any issue of shares to Mrs Roberts before 17 January 2008; and no shares were ever issued to Mr Yeo. The Register of Members does contain ledgers opened for each of Mrs Roberts and Mr Yeo, apparently on 17 April 2007, but no shares are recorded as having been issued to or held by either of them until after 2007.

[23]As to Ms Barker, the Combined Register contains entries to the effect that either on 12 March 2007 or on 17 April 2007 her one share was “transferred to Company”, later (on 17 January 2008) being transferred or reissued to Ms Binns. However, no instrument of transfer was put in evidence in respect of Ms Barker’s transfer of the share.

[24]On 17 April 2007 (it is said by the Defendants but denied by the Claimants) a further written agreement was prepared and signed, this time between Ms Binns (identified as “Shareholder B”) and Mrs Roberts (identified as “Shareholder A”), with Ms Barker signing as a witness. This Agreement, which I shall call “the SPA”, was headed “Shareholders Protective Agreement”. The Defendants rely on the SPA as a cornerstone in their opposition to the Claimants’ proceedings.

[25]At the time it was made, as Mrs Roberts told me (but the Claimants denied), she and Ms Binns had reached an oral agreement that Mrs Roberts was to have 51% of the Company’s share capital, and Ms Binns 29%. The percentage, I think, was intended to refer to the existing share capital when issued: that is to say, of the then authorised capital of £100 divided into 100 shares Mrs Roberts was to hold 51 shares and Ms Binns was to hold 29. It is a feature of this case that the parties frequently referred to percentage shareholdings apparently intending to refer to numbers of issued shares (that is percentages of the authorised share capital of £100 divided into 100 shares).

[26]The SPA was seemingly made at a time when no shares had been issued or transferred to Mrs Roberts. It contains no reference to the oral agreement, unless it is by the opening words:

“This agreement supersedes all other previous agreements and affords protection to the major shareholders and provides stability for the Company”

. What the SPA goes on to set out is a system of rights for Mrs Roberts and Ms Binns collectively and individually. There is a question whether, if the SPA was made, it was effective to change the Company’s constitution or whether it operated only as a contract between Mrs Roberts and Ms Binns. This question I deal with later. The SPA should be read in full with this question in mind.

[27]The principal terms of the SPA, which was expressed to take effect from 17 April 2007 and to continue until superseded by agreement between Mrs Roberts (described as Shareholder A) and Ms Binns (described as Shareholder B) are as follows: i) The parties are to have “all rights under the Articles of Association”, including those in relation to the issue and transfer of shares. ii) “Shareholder A and Shareholder B singularly or severally may exercise all the powers and authorities vested in the Directors by the Company’s Articles of Association … Any other Shareholders will be appointed as subordinate directors and will have no rights to exercise any powers and authorities vested in the Directors by the Company’s Articles of Association …” iii) “Shareholder A and Shareholder B have the right to terminate or appoint directors as they see fit with the exception of removing Shareholder A or Shareholder B from the list of Directors unless either Shareholder A or Shareholder B resigns from the Company”. iv) There is provision for shares of any shareholder to be transferred to Shareholders A and B or the Company, as Shareholders A and B should agree, “in the event of the death or incapacity due to ill health or resignation or termination of employment of a Shareholder...” The shares of Mrs Roberts or Ms Binns are to pass to the other. v) “In the event of Shareholder A or Shareholder B resigning from the Company there will be a ‘cooling off’ period of up to 12 weeks during which period they may be automatically reinstated to their respective positions within the Company and their entitlement to shares reinstated. In the event of either Shareholder … returning to the Company after a period of incapacity or reinstatement following resignation. A meeting will be held between Shareholder A and Shareholder B to determine arrangements for the transfer back of all or such proportion of shareholder as agreed between Shareholder A and B.” vi) Provision is made for Shareholders A and B to have an emergency meeting, if they see that any other shareholders “are conducting themselves in such manner as would reasonably be assumed to be detrimental to the interest of the Company and/or the interests in the Company of Shareholder A or B”. This meeting is to decide what should be done, with possible courses including the buying out of the shares of the other shareholders.

[28]An insurance proposal for the Company from April 2007 describes the Company’s business as being about to start on 23 April 2007 and to be that of “domiciliary care service provider – provision of practical and personal care to service users in their own homes and escorting them on local trips…”.

[29]According to Ms Binns, the Company’s CSCI registration as a Domiciliary Care Service Provider was granted on 6 July 2007. Minutes of a meeting of the Company’s Board held on that date record the three directors as present, and add the following text “Discussed shareholding between Directors – 40% Sheila Roberts, 30% Suzanne Binns, 30% Tian Yeo”. The document goes on to explain that this differed from “original agreement proposed with Paragon Community Services Ltd, as originally 40% Sheila / 40% Suzanne / 20% Tian as accounting services and payroll services were going to be put through Alpha EMS UK Ltd, and Suzanne and Tian would have equalised out their profits through Alpha. Alpha was no longer going to be used. Suzanne has agreed to transfer the 10% to Tian.”

[30]Minutes of a meeting of the Company’s Board held on 12 July 2007 record an agreement that the three directors, that is the Defendants and Mr Yeo, would collectively provide £30,000 of working capital by way of loan in proportions 40%, 30% and 30% between Mrs Roberts, Mr Yeo and Ms Binns.

[31]The Claimants had been working at the time for a company called Carehome Selection Ltd. This company was engaged by Harrow Primary Care Trust to assist with the selection of care agencies for the Trust’s clients. However the company’s contract was due to come to an end later in 2007.

[32]The time came during 2007 when Mrs Roberts started talking with the Claimants about the possibility of their joining with her in a business involving the Company. Mrs Jordan dated the first discussion to about February 2007, at a time when Mrs Roberts was still working for Breslin Nursing Agency and before she had given up that position to work for the Company. Mrs Roberts dated the first discussion to March 2007, when what was contemplated was a bid to Harrow Primary Healthcare Trust by the Company for the provision of a care brokerage service. She says that that bid was made and had come to nothing by July 2007, by which time the decision had been made by herself, Ms Binns and Mr Yeo for the Company to concentrate on the provision of domiciliary care. However conversations continued with the Claimants, in particular with a view to having the Company cleared by Carehome Selection to take referrals of clients from the Healthcare Trust.

[33]By the end of August 2007 at the very latest there was in existence within the Company a document which reads as follows:

“In order to supply working Capital for the Company we would offer shareholding on the following basis The authorised capital of the Company is 100 shares at a nominal value of £1 each. Each share will attract equal distribution of net profits after tax. 10% Company shareholding would require an investment of 10,000 GBP. It is intended that the issued and paid up Capital of the Company will be 50 shares of £1.00 each. It is envisaged that there will be 5 directors who initially provide 10,000 GPB each and in return are allocated a 10% shareholding. Shares to be allotted as and when the 10,000GBP and the nominal value of the shares are also paid up ie. 10 times £1.00. It is envisaged that 50 shares (50% of Company shares) will be retained within the Company at this stage to ensure that the Company retains sufficient share of profits to enable increased working capital for growth. This means that no more than 50% of net profits after tax will be distributed amongst the 5 shareholders. The 10,000GBP will be credited to the individual director’s loan account and will be non-interest bearing. The working capital loan accounts will be repayable at a later date from the retained earnings of the Company at such time as is agreed by all shareholders. However, the authorised share capital of £100 or any paid up capital, or portion, or amount will not be repayable – unless the shareholding is surrendered to or purchased back by the Company.”

[34]A copy of this document was given to each of the Claimants by Ms Binns during the course of a discussion about their joining the Company. On the copies handed over Ms Binns wrote in manuscript “Should you wish to join the Company Home Assistance Services Ltd as a Director we would be able to offer directorship and shareholding on the above basis”. There is an issue as to whether the document was handed over at a meeting on 6 September 2007 (as the Claimants say) or in November 2007 (as the Defendants say). Mrs Roberts’ evidence is that there was a discussion with the Claimants in early September 2007, but that what was discussed was a business association involving the Claimants becoming franchisees rather than members and directors of the Company.

[35]On 4 October 2007 there was a meeting of the Board of the Company (the Defendants and Mr Yeo) at which the Claimants were present. Minutes of this meeting record that a “pre-meeting discussed Kim and Cynthia becoming directors and shareholders in the future. They will be allotted one share each when K&C become Directors in the meantime voting rights will be held by Sheila to allow their votes to be considered”.

[36]Following this meeting materials were sent to enable the Claimants to become involved with the Company in anticipation of the termination of their own employment with Carehome Selections later in the year.

[37]On 29 October 2007 a further meeting of the Company’s Board was held, the Claimants being present (although not yet directors) along with the Defendants and Mr Yeo. Minutes of this meeting, made by Ms Binns, record that “the meeting was called as an emergency meeting by Suzanne”, that “Suzanne was considering her position as responsible Individual and Registered Manager within the Company”, and that “Suzanne had concerns insofar as [Mrs Roberts] was not responding to calls, requests for meetings were ignored, there was no communication between [Mrs Jordan, Mrs Fazanni, Mrs Roberts] and herself”.

[38]The minutes appear to record a series of complaints being made and concerns being expressed by each of Mrs Roberts and Ms Binns, most of these being directed at the other. By way of example Mrs Roberts is recorded as having stated that “she was the one who was unsupported and questioned how it must have felt for her given the amount of hours she’d been putting in for the Company … to receive a text saying that [Ms Binns] was considering resigning …”.

[39]There are two specific points to note in connection with these minutes. The first is that it over the period from late 2007 until May 2008 it was almost routine for Ms Binns at or in advance of meetings to threaten to resign from positions within the Company (for example as director, or secretary). These minutes are the first indication of this.

[40]Second, the minutes contain a passage recording that “the board asked [Ms Binns] whether she knew what was required for [a CSCI] inspection and questioned whether [she] had ever been at one”. This continues by recording that the Claimants “expressed anxieties over them joining the company. They had been led to believe everything was in place and it was not. They did not know if they wanted to be involved … [and] expressed that [Ms Binns] did not seem to know what was needed …”. On the basis of this passage it was suggested on behalf of the Defendants that at the meeting it was the Claimants, not Mrs Roberts, who were critical of Ms Binns, and that it was the Claimants who were throughout the cause of misunderstanding and ill-feeling within the Company. Undoubtedly there was friction within the Company. Undoubtedly, also, Ms Binns was the subject of much criticism, as was Mr Yeo until his departure in early 2008. The Defendants say it was the Claimants who engineered this, and did so with a view to maximising their interest in the Company.

[41]It is not necessary for me to reach any conclusion as to whether or not the involvement of the Claimants was some sort of catalyst affecting the behaviour of others, or was intentionally so; although I very much doubt that that it was. What I am clear about is that from October 2007 onwards Mrs Roberts’ relationship with Ms Binns was strained and that frequently Mrs Roberts was openly critical of Ms Binns. The meeting of 29 October 2007 was such an occasion; so also were the meetings of 14 December 2008, 17 and 27 February 2008 and 19 May 2008 to which I refer later.

[42]On 26 November 2007 the Claimants stopped working for Carehome Selection.

[43]On 14 December 2007 there was a further board meeting, the same persons being present as before. By now the Company had had the CSCI inspection. There are different minutes for this meeting. One version was prepared by Ms Binns, at the end of February 2008 it is said. This is a very long document, covering five pages of single spaced text in a small font. The other version (which I shall call “the Challenged 14 December Minutes”) is said by the Defendants (but denied by the Claimants) to have been made more or less contemporaneously by a Mrs Kathy Sheehan, who had then just become an employee of the Company. It too is a long document.

[44]Both sets of minutes contain an extensive narrative of what appears best to be described as bickering between Ms Binns and Mrs Roberts. Both contain an indication that again Ms Binns threatened to resign. Importantly both contain an indication that there had been various discussions as to shareholding sizes, none of which (if carried into effect) would have been consistent with the 51% and 29% holdings for Mrs Roberts and Ms Binns said to have been agreed by 17 March 2007.

[45]Thus Ms Binns’ minutes record Mrs Roberts as having “said that the share holding was originally 40:40:20 then 40:30:30 then 10:10:10:10:10 [and that she] … is not happy with the shareholding arrangement [and] does not see why someone who only does policies and procedures and tendering should have the same shares/money as someone working their socks off”. The Challenged 14 December Minutes record Mrs Roberts as having “stated that a number of share options were discussed with [Mr Yeo] including 60/30/10, 40/40/20, Cynthia & Kim asked perhaps the shares could be 10% x 5 plus the remaining 50% in the pot”.

[46]The critical difference between the two versions of what transpired on 14 December 2007 is that the Challenged 14 December Minutes contain, but Ms Binns’ minutes do not, an assertion to the effect that Mrs Roberts stated that “she will remain majority shareholder, and this was not open to discussion”, and also a mention, in relation to Ms Binns’ seeming decision at the meeting to resign as a director, that Mrs Roberts “would take over full control of the company as agreed in their agreement”. These passages are relied upon by the Defendants as confirming both that the SPA was then in existence and known to the Claimants, and that the Defendants had indeed made the oral agreement of early 2007 concerning their relative shareholdings.

[47]At about the time of the 14 December 2007 meeting Ms Binns had prepared and provided to Mrs Roberts a letter in which Ms Binns stated that on receiving £23,000 said to be owed to her by the Company she would tender her resignation from all her positions within the Company, including as Director, and would leave at Mrs Roberts’ discretion. Shortly after the meeting, as appears from what was said in minutes of a meeting on 10 January 2008, Mrs Roberts provided to Ms Binns a letter in which she wrote “further to the Board meeting … confirming the termination of your employment” with the Company and stipulating that without the agreement of the Company’s Board Ms Binns should not enter the Company’s premises. No reference was made in this letter to the provisions of the SPA which might have been relevant (for example as to share transfer and as to right of reinstatement) on termination of Ms Binns’ employment.

[48]It is said by the Defendants, but denied by the Claimants, that there was a further meeting between the parties on 4 January 2008 at a pub in Harrow. The Defendants say that a minute (“the Challenged 8 January Minutes”) was made shortly after the meeting by Ms Binns from manuscript notes made by her and by Mrs Roberts. This purports to be minutes of a meeting described as having taken place on 8 January 2008. The Claimants deny that this document was contemporaneous, and deny that it accurately reflects anything discussed at any meeting, whether on 4 January 2008 or at another time.

[49]The Challenged 8 January Minutes contain a preamble which appears to me surprisingly critical of the Claimants and their commitment to the Company, and continues with the following:

“Kim and Cynthia were interested in discussing the shareholding. Sheila and Suzanne wanted to discuss the roles and responsibilities as shareholding had already been agreed to be allocated at 10% for Kim and 10% for Cynthia. Kim and Cynthia wanted to know whether they would get additional shares from Tian’s shareholding if he left the Company. Kim stated that she couldn’t stand working with Tian … Sheila said it was necessary to schedule the original agenda for today for some time this week in order that all director’s roles and responsibilities can be discussed alongside salary rates and employment contracts. … Sheila and Suzanne confirmed that they are intending to continue with their original roles within the Company according to their original agreement. Any additional distribution of shares is not open for discussion at this time.”

[50]The conclusion of the Challenged 8 January Minutes is to record that “It was agreed to meet on 10th January 2008 at Acton”.

[51]In early January 2008, by 5 January, it was expected that there would be a meeting of the Company’s Board, the Claimants being present, to be held on 8 January 2008. In the event the parties did not meet on 8 January, the meeting being on 8 January at about lunch time cancelled and afterwards rearranged for 10 January 2008. In particular on about 5 January 2008 Ms Binns prepared an agenda for a meeting on 8 January 2008 for consideration by Mrs Roberts, and at about that time and in anticipation of the Claimants’ appointment as directors steps were taken to prepare appropriate forms 288(a).

[52]For the meeting the agenda included as item 2 of the business of the meeting “appointment of directors” and as item 3 “allotment of shares to shareholders and shareholding agreement”, a sub-heading to this item being “reinstatement of voting rights in accordance with shareholding distribution and standard voting requirements”.

[53]There are two different minutes of this meeting. One version was prepared by Ms Binns on about 14 January 2008 and sent by email to Mrs Roberts. The other (“the Challenged 10 January Minutes”) is said by the Defendants to have been prepared by Mrs Sheehan more or less contemporaneously and to have been circulated at a further meeting on 17 January 2008.

[54]Ms Binns’ minutes record, for item 2 on the agenda, “the agreement of the existing Directors with the appointment of two additional Directors [the Claimants] from 26th November 2007 was ratified by the Board …[and] will be informed to Companies House on the Annual Return. …” This note goes on to record “It was agreed without dissent that the letter given to Suzanne Binns on the 21st December 2007 signed by Sheila Roberts and Tian Yeo be formally withdrawn”. This appears to be a reference to the letter which I have already referred to as having been given to Ms Binns following the 14 December 2007 meeting.

[55]Ms Binns’ minutes also record a discussion about directors’ roles and responsibilities, with a conclusion that each of the parties was to receive an annual salary of £35,000. It should be noted that the roles of the Claimants as described in these minutes made no reference to sales: according to these minutes responsibility for sales seems to have been attributed to Mrs Roberts, with the Claimants’ responsibilities to be “Care co-ordination, Staff recruitment, Office cover in Harrow, Staff supervision, Long hours carry responsibility for on-call.”. Mr Yeo’s salary was not agreed, according to the minutes; but Mrs Roberts was proposing a salary of £25,000 for him (as it was put “a £10k reduction from previous salaried position as everyone else was receiving a lot less than their market potential”) and that he should consider no shareholding.

[56]Ms Binns’ minutes record that agenda item 3 was not agreed, but noted that the Board “considered 10% ordinary shares to be allotted to [each of the parties]. The level of shareholding for Tian Yeo could not be discussed until the level of salary had been agreed …”.

[57]The Challenged 10 January Minutes, for agenda item 2, contain the following text:

“Appointment of directors. Cynthia and Kim voted onto board as of January 16th. Forms to be sent off. All confirmed letter previously given to Suzanne Binns to be withdrawn”

. The material difference between this version of the discussion at the meeting and that set out in Ms Binns’ version is that the directors’ appointment, clearly decided upon without any apparent qualification as to the nature of the directorship or conditions upon which the Claimants were becoming directors, was that the appointment was to take effect on 16 January 2008 as opposed to the 26 November 2007 date stated in Ms Binns’ version. Yet, to judge from the way in which the forms 288 were actually completed and sent off to Companies House, as I explain later, it seems to me more likely that Ms Binns’ version is a more accurate reflection of the actual decision.

[58]Under agenda item 2 the Challenged 10 January Minutes continued with the following, which is not reflected in Ms Binns’ minutes:

“Allotment of shares discussed. Chair person Sheila Rpberts (sic) indicated that she would remain the majority share holder. Now agreed that shares would be divided up under new agreement provided to Kim and Cynthia (no money has to be put in).”

Also in the Challenged 10 January Minutes it was provided that the roles of the Claimants would be “Sales/Supervisions/Co-ordinating/Recruitment/ Committed to long hours.”

[59]It is said by the Defendants, but denied by the Claimants, that at this meeting the Claimants were each given letters, separately addressed but otherwise identical, which were headed “Re: Terms of Employment”; and it is said that the “new agreement” referred to in the Challenged 10 January Minutes had some reference to this. Mrs Roberts’ written evidence was that at the meeting the Claimants “agreed its terms namely that they would begin employment with the Company on the 4th February 2008, with subordinate director status for a 10% shareholding … These agreed Terms also state a 12 month probationary period. Should their employment be withdrawn or they resign from the Company within this period the shareholding would revert back to the Company.” And she continued in her written evidence that confirmation that this “new agreement” had been reached was set out in the Challenged 10 December Minutes under agenda item 2.

[60]Each letter began as follows:

“Following on from discussions in September/November 2007 and our meeting on the 08th January 2008, for which we met to discuss your further interest in becoming Directors and shareholders of [the Company]. It was explained to you and for your interest the terms in which Shareholder A and Shareholder B would offer employment as a Director and Shareholder with the company. We write in confirmation of this”

[61]After this each letter identified Mrs Roberts and Ms Binns as Shareholder A and Shareholder B, specifying their respective shareholdings as 51% and 29%. The letter continued by making reference to “the original offer discussed in November” as having been “based on a 10% Shareholding in return for a required investment by way of a Director’s loan of £10,000”, pointing out that this offer had been declined and that “you suggested a maximum 10% share holding based upon the work you can bring into the company and full time employment as sales Directors”. The letter then set out seven terms to be agreed to by the addressee of the letter, and stated that a copy of the SPA “currently in force between Shareholder A and Shareholder B is enclosed for your information”.

[62]The letter added at the end that “you will be appointed as subordinate Directors and have a limited input on the running of the Company”. It concluded by indicating an intention for Ms Binns to make available for Mr Yeo, should he wish to take a shareholding as Director of Finance, “10% share holding currently held by shareholder B”. This last was intended to convey, as it appears to me, that out of Ms Binns’ holding of 29% (or 29 shares), she would transfer to Mr Yeo some 10 shares if he so wished.

[63]The seven terms were as follows: i) “Your employment will begin on 4th February 2008” ii) “You agree to a 12 month probationary period” iii) “Your wage will be £500 per month for the first year of employment and your first pay date shall be end March 2008” iv) “Dividend Payments will be paid yearly” v) “Dividend Payments will be in line with your 10% shareholding” vi) “As wanted by yourselves the share certificates will be issued in February, I am unsure why you requested them to be dated November 2007, however please note that the certificate will hold no authority until it is stamped with the company seal this will be carried out at the end of your probationary period” vii) “If for any reasons the Company Home Assistance Services, Shareholder A and Shareholder B agree to end your employment within the 12 month probationary period, all rights of shares will revert back to the company”.

[64]Apart from the reference to the “new agreement” in the Challenged 10 January Minutes there is nothing to be found in any minutes of the meeting of 10 January 2008 which suggests any discussion, much less agreement, of the specific terms in the Terms of Employment letters, or which conveys that the appointment of the Claimants was to be only as “subordinate” directors within the contemplation of the SPA and the Terms of Employment letters.

[65]According to Mrs Roberts’ in her oral evidence, at a further meeting of the Company’s directors on 17 January 2008 “everything” was agreed. I revert to Mrs Roberts’ evidence on this point later. By 17 January, and following the meeting on 10 January, forms 288(a) were completed in respect of each of the Claimants, the forms showing the relevant Claimant to have been appointed as a director of the Company on 26 November 2007. The forms were each signed by the relevant Claimant and dated with that date, and were also signed by Ms Binns and similarly dated. They were received at Companies House on 17 January 2008. It is apparent that Ms Binns’ minutes of the meeting on 10 January are more accurate, or at any rate more complete, than the Challenged 10 January Minutes in recording that the Claimants’ appointments were agreed by the Directors to be from November 2007.

[66]At the meeting on 17 January 2008 Ms Binns had copies of her minutes of the 10 January 2008 meeting available. She had copied these to Mrs Roberts by email on 14 January, along with an iteration of the agenda prepared for that meeting, for approval prior to circulation; but it is said by the Defendants that at the meeting on 10 January Ms Binns had not been the “official note taker” or “taker of the minutes”, and that Mrs Roberts told her that her draft was unnecessary. Nevertheless, copies of her minutes were provided to the other Directors. This I say because(a) the Claimants have in their possession copies with a manuscript date of 17 January 2008, this manuscript having been have been made by Mr Yeo, and

(b) Ms Binns said in her oral evidence that she arrived at the meeting equipped with several copies of her minutes.

[67]For the 17 January 2008 meeting the agenda differed from that used for the meeting which had been first fixed for 8 January and had been adjourned to 10 January in that an additional item had been inserted as item 1, and all the remaining items had been renumbered accordingly. The additional item was “Minutes of Last Meeting”. In addition adjustments had been made to take account of the items dealt with at the previous meeting. Thus the item for “Allotment of Shares to Shareholders and Shareholding Agreement” remained; but in place of “Appointment of Directors” the agenda now referred to “Directors Salaries” and specified under this item only “consideration of salary for Tian Yeo”.

[68]Yet again there are two sets of minutes for the meeting, one made by Ms Binns at the end of February 2008 and the other (“the Challenged 17 January Minutes”) said by the Defendants to have been made by Mrs Sheehan on or shortly after 17 January 2008. Both sets of minutes make reference to minutes of the previous meeting (a formality that is more or less unique to the 17 January minutes); but while Ms Binns’ minutes state “Minutes of Last Meeting - Circulated to all those present”, the Challenged 17 January Minutes say “Suzanne Binns opens the meeting. … The last meeting was discussed. The minutes supplied by K Sheehan. Sheila Roberts said that the idea for this meeting is to bring things together, to tie up lose ends …”

[69]Both minutes record that Mr Yeo was subjected to considerable criticism by others of the Directors and that a vote of no confidence in him was taken and passed by a majority. Ms Binns’ minutes record his having then said that he was resigning. Taken with a memorandum typed at the end of the minutes it appears that Mr Yeo’s termination was treated as having been agreed with immediate effect, whether or not there was to be a hand-over period.

[70]The Challenged 17 January Minutes give a slightly different picture, indicating that after a vote against Mr Yeo had been passed, he was asked if he wanted to continue working for a salary. The document continues “Tian said that by the end of February he would leave the Company. Chair of the Board did offer him a position more tenable to him but he declined. He replied he would leave with dignity”. In other words the Challenged 17 January Minutes are somewhat ambiguous, it not being clear as to whether or not Mr Yeo was resigning immediately from his office as director, or whether he was only indicating an intention to do so at the end of February 2008.

[71]On 5 February 2008 a form 288(b) was received at Companies House recording the termination of Mr Yeo’s appointment as a director, this termination having been on 17 January 2008. The form was signed by Ms Binns, apparently on 17 January 2008. Further, on 7 March 2008 a form signed by each of the four parties was sent to the Company’s bank confirming that Mr Yeo’s directorship was terminated on 17 January 2008.

[72]There was another important matter dealt with by Ms Binns’ minutes. These contain, under a heading “Allotment of shares to shareholders and shareholding agreement”, the text “Each Director (Suzanne Binns / Kim Fazzani / Sheila Roberts / Cynthia Jordan) to be awarded 10% or (sic) ordinary shares each. Voting rights were then reinstated in Accordance with shareholding distribution and standard voting requirements”. The “reinstatement of voting rights” I take to be a reference to what had been discussed at the 4 October 2007 meeting concerning the voting rights attaching to the Claimants’ shares.

[73]As to this matter of the allotment and issue of shares the Challenged 17 January 2007 Minutes record “Confirmed the new agreement 10% shares now to be issued to Kim and Cynthia under the agreement and all other shares to be shared by Sheila and Suzanne, Sheila remaining Majority Holder.” There was no reference to the reinstatement of voting rights. Importantly, there was no reservation of shares for Mr Yeo: in effect the Challenged 17 January 2007 Minutes record a decision to issue 10 shares to each of the Claimants and to issue the remaining unissued shares to the Defendants, the majority being issued to Mrs Roberts.

[74]This reference in the Challenged 17 January Minutes to the “new agreement” is significant: it is the only reference in either set minutes of the meeting of that day to what, according to Mrs Roberts, was agreed on that day: it was at that meeting, said Mrs Roberts in her oral evidence, that the Claimants agreed to the SPA and the Terms of Employment.

[75]At the meeting four share certificates were completed and signed. Certificate number 5, in respect of 10 shares (numbered 21 to 30), was made in respect of Mrs Jordan, being signed by each of Mrs Fazanni and Mrs Roberts as directors and Ms Binns as Secretary, and being dated 17 January 2008. Certificate 6, for shares numbered 31 to 40 was similarly completed in respect of Mrs Roberts, the signing directors being the Claimants with Ms Binns signing as Secretary. Certificate 7 for shares numbered 11 to 20 was similarly completed in respect of Mrs Fazzani, the signing directors being Mrs Jordan and Mrs Roberts with Ms Binns signing as Secretary. Certificate 3 was completed for Ms Binns, the signing directors being the Claimants. The certificate appears to have been drawn initially to comprise nine shares, namely Ms Barker’s share (which had been numbered 1) and eight new shares numbered 3 to 10. That at any rate is what is indicated by the certificate stub. However the certificate appears to have been adjusted to be for ten shares and to have had a reference to Ms Binns' original share (which had been numbered 2) added.

[76]Mrs Roberts said in her oral evidence that her certificate was at the time sealed, where (supposedly to give effect to what was agreed in the Terms of Employment as to the provision of unsealed share certificates, albeit in February and not January) the certificates for the Claimants were not sealed. At the hearing I was shown the original of her certificate which did indeed have the impression of what appeared to be the Company’s seal. I was not shown the originals of the Claimants’ certificates or, for that matter, the originals of any other certificates. In view of the concession made by the Defendants about the Claimants now being the holders of the 10 shares each which had been the subject of their share certificates, this detail concerning the way Mrs Roberts’ and the Claimants’ respective share certificates were dealt with on 17 January 2008, may not matter much.

[77]Nevertheless I should record my disbelief of Mrs Roberts’ evidence on the point. As I explain later, I do not believe that the Terms of Employment were known to, much less agreed with, the Claimants on 17 January 2008, and I do not believe that on 17 January 2008 there was any distinction between the way in which the various share certificates were dealt with. I return to this point. It is to be noted that in none of the minutes made of meetings or discussions in January or February 2008 is there any reference to the absence of sealing of the Claimants’ share certificates, or the sealing of Mrs Roberts’ share certificate, even when the documents record excuses being made for the failure to make returns of allotments in respect of the shares dealt with on 17 January.

[78]Finally, certificate 4 was partially made up in respect of Mrs Fazanni’s shares but for some reason was not completed, presumably being superseded by certificate 7. This incomplete certificate was still in the original Combined Register when produced to the Court; but others were not, the Combined Register nevertheless containing information about the certificates recorded on the stubs remaining as part of the Combined Register.

[79]No entry was made in the Register of Members itself, in respect of the shares dealt with on 17 January 2008 whether for Mrs Roberts or either of the Claimants. On the other hand: i) the entry for Ms Binns showed her as holding ten shares, including “one share transferred from Company after returned by V Barker. Investment £4,000 loan”; and ii) the Register of Applications and Allotments shows(a) each of the Claimants as having applied for ten shares on 26 November 2007 and as having been allotted that number on 17 January 2008 with a deposit of £10 being paid and nothing further payable, and

(b) each of Ms Binns, Mr Yeo and Mrs Roberts as having applied for shares on 23 October 2007. As to these, Mrs Roberts is recorded as having at some unspecified time deposited £10 and been allotted ten shares, and Ms Binns as having been allotted nine shares (ie including Ms Barker’s share but excluding her original share) on 17 January 2008 and having made a deposit totalling £8 in respect of the eight new shares.

[80]Until February 2008 the Company had as its offices one room in a block of serviced offices in Acton. In the office there were three desks, each having a desktop computer. Mr Yeo worked at one of these desks, having more or less exclusive use of one computer: on this he ran the software for a proprietary data processing system used for the management of the Company’s business, this computer containing both that software and the relevant data. I was told that Mrs Sheehan and Ms Binns worked at the other two desks with their associated computers, and that when Mrs Roberts had to work in the office she would use whatever desk might be available.

[81]In January 2008 it was understood that Mrs Fazzani would be away on holiday later in the month, and that therefore it had been agreed that the Claimants would start to work full time for the Company from early February 2008. Also it was agreed that they would work from a new office which would be taken on in Harrow.

[82]On 4 and 5 February 2008 Ms Binns prepared for the Claimants’ use at the Harrow office a USB memory stick, downloading data and software from Mr Yeo’s computer and also downloading data from the computer at her desk. This memory stick was then handed over to the Claimants. On it were copies of the minutes of the 12 July 2007 board meeting and of the August 2007 document referred to earlier (the file name for the latter being “shareholding distribution.doc”). There was also a copy of a resignation letter made by Ms Binns on 14 December 2007. Importantly, there was a copy of Ms Binns’ minutes of the 10 January 2008 meeting (this being named “HAS Board Meeting 10th January2008 2pm.doc”), apparently created on 14 January 2008. Also relevant for present purposes were copies of three agendas, one created on 5 January 2008 and called “HAS Board Mtg agenda 8th January 2pm.doc”; one apparently created on 14 January 2008 and called “HAS Board Mtg agenda 10th January 2pm.doc”; and the third created on 17 January 2008 and called “HAS Board Mtg agenda 17th January 2pm.doc”. Two of these files, the 10 January minutes and the 17 January agenda, were it seems copies of what had been sent by email to Mrs Roberts on 14 January 2008. There were no copies of any other board meeting minutes or agendas; and there were no copies of the SPA or the Terms of Employment letters.

[83]During the first part of February 2008 arrangements were made for allocating equipment in the Acton office between Alpha EMS, the Company and individual owners (principally Ms Binns). As it appears, the business of Alpha EMS had been conducted from the Acton office, and certain of the equipment there was properly that of Alpha EMS, Mr Yeo or Ms Binns. Under this agreement assets agreed to be those of Alpha EMS or its directors were in some cases to be sold to the Company and the remainder were to be removed during February 2008: a handover period until the end of February was contemplated for certain administrative support services which were still being provided by Mr Yeo.

[84]On 12, 13 and 14 February 2008 there were meetings of the Company’s directors, the first apparently at the Acton office and the second and third at the Harrow office. These are recorded in minutes made by Ms Binns at the end of February 2008. At the first two of these meetings it appears that Mr Yeo wanted to resume his directorship, but that this was refused, and it was also agreed that his services should not be retained as an employee but that he could offer to provide services as a consultant.

[85]At the third of the meetings there was discussion of two draft documents, namely “the shareholding agreement and director’s Service Agreement templates brought to the meeting by Suzanne”. As to this, the minutes record, “Suzanne stated that the reason the 10% shares had not yet been notified to Company House was that Sheila had told her not to issue them because they should not be issued until the shareholding agreement and roles and responsibilities were agreed”. The minutes go on to explain that various suggestions for the templates were agreed in principle, but that Mrs Roberts had further matters she wanted covered and would circulate later. They conclude with the following:

“It was agreed that to allay any fears for the share holding not being issued and in the light of Tian’s departure that 25% shares be distributed to each of the Directors without the need for the shareholding agreement to be in place. Suzanne to print off form from Companies House.”

[86]The template shareholders’ agreement and the template director’s service agreement were standard form documents designed as precedents to be adjusted as appropriate. The shareholders’ agreement used the style “Shareholder A”, “Shareholder B” and so on to refer to parties to the agreement. The copy produced for these proceedings carries various manuscript annotations, possibly made during the 14 February 2008 meeting. No annotations were made in the places where the template contemplated that the shareholders’ shareholdings would be specified, and the template contained no indication that any directors or shareholders were to be “subordinate”.

[87]In her oral evidence, although not in her written evidence, Mrs Roberts said, as an explanation for the fact that now the parties were discussing making a shareholders’ agreement so soon after the Claimants had joined the Company (on the Defendants’ case) on the terms of the SPA and the Terms of Employment, that the Terms of Employment were not final, not having been signed, and that the proposed shareholders’ agreement was to cover what should happen once the Claimants’ probationary period provided by the Terms of Employment came to an end.

[88]During the second half of February 2008 there was tension among the parties, leading to a meeting on 27 February.

[89]Before this, on 17 or 18 February 2008 there appears to have been a meeting at which Mrs Roberts presented a “long grievance report”, this being directed at Ms Binns who was asked to respond to complaints in the report. The minutes of the meeting made by Ms Binns contain the following: “The Board considered that given the breakdown of trust with board members and Suzanne Binns what options were available to allow working relationships”.

[90]It is said by the Defendants but denied by the Claimants, that a day or two later on 19 February 2008, there was a further meeting, proceedings at this meeting being recorded in a minute typed by Mrs Sheehan. These minutes (“the Challenged 19 February minutes”) record Mrs Sheehan as present for “minutes”, although Mrs Roberts’ evidence was that Mrs Sheehan simply typed up the minutes from notes taken by Ms Binns and herself. According to the Challenged 19 February minutes there was discussion and agreement about the conduct of the Company’s financial function, this now to be from the Harrow office and managed by Mrs Fazzani. The minutes further record an agreement “that Kim and Cynthia take with them today the remaining financial files that had been prepared by Tian Yeo for the purpose of the above”. Also the minutes contain the following:

“The shareholding was discussed. Sheila stated that she was unhappy about the discussion regarding possible 25% shareholding and that she was not in agreement. Suzanne stated that she was not happy either with the 25% shareholding and was feeling under some duress to register the shares as Kim had continued to pressure her to re-issue all the Company shares with equal distribution. Suzanne also made some suggestion that she had been approached by Kim and Cynthia of (sic) attempted collusion between Directors. The meeting concluded with the agreement of 10% shareholding issued to Cynthia and Kim as per the original agreement. Because of the pressure Suzanne informed the meeting that she had pencilled in the allotment of shares in the register as she had been led to believe by Kim and Cynthia that Sheila was in agreement with the 25% shareholding, so the company register would have to be amended. It was agreed that this would be done.”

[91]In the Register of Applications and Allotments in the Combined Register are four entries recording applications and allotments on 18 February 2008 for 15 shares each for each of the Claimants and the Defendants, the entries showing £15 as the amount of the deposit for each allotment with nothing further payable.

[92]On 19 February 2008 a quantity of the Company’s records and documents was transported from the Acton office to the Harrow office. It is also clear that at about the same time, whether as part of the records transported (as the Claimants say) or in some other way (as the Defendants say) the Combined Register was passed over to the Harrow office where it was in the immediate control of the Claimants.

[93]On 3 March 2008 two forms 88(2) were received at Companies House in respect of share issues by the Company. One, completed and signed by Ms Binns apparently on 29 February 2008, shows each of the Claimants as having had an allotment of 25 shares, with Ms Binns having an allotment of 23 shares. The second, signed by Mrs Roberts and with a date of 28 February 2008, shows allotments of 10 shares to each of the Claimants and Mrs Roberts.

[94]A third form 88(2) return of allotments was received by Companies House on 14 March 2008. This form, signed by Mrs Roberts with a date of 28 February 2008, was for 41 shares for herself and 27 for Ms Binns. However, Mrs Roberts agreed in cross-examination that there had not been any meeting of the Company’s Board on 28 February 2008; indeed, her oral evidence was that the decision as to the allocation of these shares had been made in January 2008.

[95]There are minutes of the meeting of 27 February 2008 prepared by Ms Binns shortly afterwards and before the dates of the various returns of allotments. The minutes, which run to several pages record the meeting as having started with a litany of complaints being made about Ms Binns, to which Ms Binns responded point by point. One of the complaints was of “not sending off the allotment of shares information to Company House within the required time periods”.

[96]In relation to this complaint Ms Binns’ defence, according to the minutes, is that she had been told by Mrs Roberts not to send off the return for “the 10% each allotment of shares form as she had been wrong to issue the share certificates as the item on shareholding agreement had not been finalised and linked to the agreed roles and responsibilities”. She also explained that she did not have an address for Mrs Roberts. The minute continues: “Since it had been agreed to issue 25% shares each, I had ensured that all directors information was completed on the form by each director in turn and when I went to complete the rest I discovered that SR/CJ/KF had removed the documentation from the registered office along with the company register. I had immediately telephoned [Mrs Roberts] to be told she would give it back the next day. It still had not been returned. [Mrs Fazzani] said that this should not prevent [Ms Binns] from filling out another. [Ms Binns] reiterated it was still her intention to register the allotment of shares but would need their address information again. [Mrs Fazzani] wanted to know why the word of a single director took precedence over the decision of the board. [Ms Binns] said it was because [Mrs Roberts] had given her reasons that the decision to award the shares should not have been done until the shareholding agreements were agreed and that I had acted outside the board agreement to issue the share certificates”.

[97]The minutes record the meeting as having continued with Ms Binns being subject to a barrage of criticism. It records that at 2pm she had to leave the meeting to move her car; also that at 3pm she had to leave the meeting “in response to a comment made by [Mrs Roberts] that [she] should stop her filthy lies”, being telephoned by Mrs Roberts on the second occasionfor Mrs Roberts to “reiterate” a decision of the Board as to how she should conduct herself. The minutes further record Ms Binns’ seeking, and not being given, confirmation that the Directors wanted her continued involvement with the Company, instead being “set a project ‘to prove herself’”. The last passage of the minutes recorded that Ms Binns was “to produce the minutes of all the board meetings within the next 24 hours.” This was in response to a request from Mrs Roberts which, in her oral evidence, Mrs Roberts said was in fact a request for minutes of “all decision-making meetings”.

[98]The 24 hour deadline just referred to was a mistake for, or was changed to, 48 hours. At all events on 29 February 2008, in the afternoon, Mrs Roberts sent Ms Binns an electronic message in the following terms, with copies going to the Claimants:

“As you are aware after the meeting on the 27/02/08, where several concerns were raised – you were asked 2 concentrate on IP projects – and asked 2 produce the minutes of all previous board meetings ‘you assured the board that these would be available within 48 hes’ as you have not yet produced them could you please inform of the reason?”

[99]The message continued by making criticism of Ms Binns and then said:

“…you are now notified to cease all duties covered in this role [of company secretary], you are also advised that under no circumstance should you attempt to submit any information to companies house or attempt to alter add or delete any documentation belonging to [the Company] – A meeting to discuss these concerns will be held ASAP, you will be notified in writing.”

By the time this message was sent at least one, and probably two, return of allotment forms 88(2) had been sent off to Companies House. And one of those, that for the allotment of 73 shares, was sent by Ms Binns.

[100]On the evening of the same day Ms Binns sent out an email to which she attached files containing scanned copies of various documents, principally minutes of a number of board meetings. These documents included her minutes of the 10 January 2008 meeting as well as of the meetings of 12 July and 4 October 2007 (referred to earlier in this judgment). The electronic files attached to the email were labelled as “Board meeting 12-07-08” (sic), “meeting with cynthia and kim re future shareholding”, “board minutes 04-10-07”, “board minutes 10-01-08” and “board meeting 14-02-08”. The “meeting with cynthia and kim” document was the document with the 6 September 2007 manuscript date, but excluded the manuscript additions.

[101]On 4 March 2008 there was a meeting between the parties at the Harrow office. At this meeting the word “Void” was written across the face of three share certificates, numbers 1, 2 and 3, and the endorsement was dated 4 March 2008 and signed by both Mrs Roberts and Ms Binns. As already explained, certificate 1 was in respect of Ms Barker’s one share, Ms Barker being named as the registered holder; certificate 2 was in respect of Ms Binns’ original share (identified as share number 2); certificate 3 was in respect of 10 shares, namely the same shares as had been the subject of the two previous certificates and a further 8 shares, and was dated 17 January 2008.

[102]The Claimants say that at this meeting Ms Binns resigned her positions with the Company and sought to surrender her shares by this process of endorsement of share certificates. The Defendants say that during the course of the meeting the certificates were found in a cupboard, and the endorsement was to show that the certificates had by now been replaced with a fresh certificate.

[103]At some time after late February 2008 at the earliest a second Combined Register came to be written up by the Defendants: their evidence to me was that this was because the original Combined Register was being withheld by the Claimants. The Register of Applications and Allotments within the second Combined Register shows for the 10 shares which had been the subject of certificate number 3 the note “Voided 04/03/08”. The Register records applications on 18 February 2008 for each of the parties to have 25 shares (Ms Binns, rather, having 23), with allotments to the Claimants and Ms Binns being made on 29 February 2008, but contains a note against the entry for the applications, “Incorrect filing needs amendment at Companies House”.

[104]These entries of 18 February 2008 follow entry number 7 but are together unnumbered. The next entries, 8 and 9, are in respect of applications of 17 April 2007 (a year earlier), with the relative allotments being shown on 17 April 2007 and 28 February 2008. These are for 41 shares for Mrs Roberts and 19 for Ms Binns; and they are noted as “Filed at Companies House 14/03/08”. Then entry number 10 is dated both 19 December 2001 and 17 April 2007, with an allotment date of 17 January 2008, and is for 10 shares for Ms Binns, being described as “reissue of shares for lost certs, old 2+3+10”.

[105]In the Register of Members in the second combined register the Claimants are recorded as having been members, with 10 shares each, from 17 January 2008 until 15 August 2008. Mrs Roberts is recorded as having held 10 shares from 17 January 2008 until 28 February 2008, when a further 41 were allotted to her. Ms Binns is recorded as having held 10 shares dealt with in certificate number 3 from 9 January 2001, with a further 19 being acquired on 28 February 2008 and having been the subject of certificate 9. There is no reference to a certificate no.10 in this entry in the Register of Members, even though the Register shows apparently a transfer of all Ms Binns’ 29 shares to Mrs Roberts on 19 May 2008 with a transfer back on 14 July 2008 and with the re-transferred shares being the subject of certificates 3 and 9.

[106]However the second Combined Register contains three apparently completed share certificates still attached to the relative stubs. These are numbered 8 to 10. Each is signed by Mrs Roberts and Ms Binns as Directors, with Ms Binns also signing as Secretary. Each is dated 28 February 2008. Each carries the legend “Given under the Common Seal of the above Company … OR under the signatures of a director and the secretary or alternatively two directors of the company in accordance with the provision of section 36A(4) of the Companies Act 1985, there being no requirement for a common seal”. Certificate number 8 is for 41 shares held by Mrs Roberts; number 9 for 19 shares held by Ms Binns; and number 10 for 10 shares, numbered 1 to 10, held by Ms Binns, the stub containing a note that this was a “Reissue of shares 1, 2, 3-10. Reissue of certs 2 + 3”.

[107]There are two other entries of note in the second Combined Register. The Register of Directors records Mr Yeo as having resigned or retired as a director on 17 January 2008; and it records Ms Binns as having resigned or retired as a director on 19 May 2008, being “reinstated” on 14 July 2008. And there is also an entry in the Combined Register in Mrs Roberts’ hand recording Ms Binns as having ceased to be Secretary on 29 February 2008 (the date of Mrs Roberts’ message to her). This note Mrs Roberts said she had made after the event. Her oral evidence was that she had merely directed Ms Binns that she would now take sole responsibility for any dealings as regards shares with Companies House, not that she was placing any greater restriction on Ms Binns responsibilities as company secretary.

[108]At the end of February and beginning of March 2008 two different forms were prepared for the use of the Company’s bank, Lloyds TSB, these forms being for making changes to the Company’s mandate. One form has signatures of each of the Claimants and Mrs Roberts, all made it would seem on 26 February 2008. In respect of each the legend appears “Beneficial Owner” (with 25% as the beneficial holding) and “Director”; and in Mrs Roberts’ case the legend “Chair Person” has been super-inscribed. Her evidence was that in her case she had inserted the 25% figure for her beneficial shareholding. This form shows that the Claimants and Mrs Roberts are to be new signatories. It shows Mr Yeo and (it would seem) Ms Binns being removed as signatories. However, it bears the signature of Ms Binns, with a date of 19 February 2008, as the then existing authorised signatory confirming the changed mandate; and there is a signature of the Bank Manager, Mr Graham Durrant, dated 11 March 2008. The copy of this form was obtained by the Claimants from the Bank in April 2009.

[109]The second of the two forms is much the same as the first, except that the date for the signatures of each of the Claimants is 7 March 2008 and of Mrs Roberts is 6 March 2008. It too shows Mr Yeo and Ms Binns as ceasing signatories. It appears to have been signed by Ms Binns on 6 March 2008 as the then authorised signatory confirming the changes. It does not have any endorsement from the Bank.

[110]Also on 6 March 2008 there came to be prepared the form to which I have already referred as having been faxed to the Company’s bank on 7 March 2008, to confirm that Mr Yeo had ceased to be a director on 17 January 2008.

[111]After 4 March 2008 Ms Binns continued to work for the Company much as she had before, except that she was no longer an authorised bank signatory. The Claimants say that what happened was that a day or so after the 4 March meeting Ms Binns wanted to resume her position with the Company, and Mrs Roberts and Mrs Fazanni agreed to this.

[112]In the middle of April 2008 Ms Binns sent to Mrs Roberts an email attaching drafts of a shareholders’ agreement (being a word-processed revision of the February 2008 template), a “Directors Service Agreement Harrow” and a “Directors Service Agreement Acton”. The draft Shareholders Agreement recited that Mrs Roberts was “the registered and beneficial holder of [FIFTY-ONE] shares of the Company issued as fully paid”, with corresponding recitals for Ms Binns and each of the two Claimants but with holdings of 29, 10 and 10 shares respectively.

[113]On 1 May 2008 the Claimants together with Mrs Roberts met at the Harrow office with Mr Durrant, the Company’s bank manager, and a Mr Ian Mitchell, a commercial financial adviser with the Company’s bank. Mr Mitchell made contemporaneous notes of the meeting, at which he discussed among other matters the shareholdings in the Company and the need for a shareholders’ agreement. For each of the three members of the Company present he noted that they had either 10 shares or 10%. He noted that if those three members held 30% of the issued shares between them, there was 70% outstanding. He then noted that Ms Binns was possibly a member, with either 2 shares or 2% or “gone/out”. He also made the following note “HAS – Sheila to confirm actual holding”.

[114]Mr Mitchell gave oral evidence at the trial. His evidence, which I accept, was that the Claimants and Mrs Roberts appeared to be alarmed to learn from him that Ms Binns might be still entitled to participate in any value there might be in the Company. His understanding from them was that they were to look for a way that she should not be part of the Company (if necessary being bought out), and that she had resigned and returned several times. His understanding was also that there was not at the time any shareholders’ agreement between the Company’s shareholders.

[115]Mrs Roberts was asked about this meeting. She said Mr Mitchell was wrong in the evidence to which I have just referred. Further, she said that what Mr Mitchell noted came from the Claimants, and she was alarmed at the meeting to hear the Claimants saying it; but she explained that she felt unable to contradict at the time what they were saying, because she did not see that it would have been appropriate in the circumstances of the meeting.

[116]On 19 May 2008 there was a meeting between the Claimants and the Defendants. A tape recording was made of this meeting. There is an issue as to whether or not the Defendants knew that the meeting was being recorded. A transcription has been made of the recording.

[117]When she came to the meeting Ms Binns had with her a letter already prepared. This, addressed to Mrs Roberts, announced that Ms Binns was resigning with immediate effect and demanded payment within 7 days of a loan of £4,000 loan to the Company. Ms Binns gave as her reason for her resignation “a breakdown of communications between board members”. In her letter she added “for clarities (sic) sake I am resigning from all of my positions within the Company – namely, Director, Secretary, and Responsible Individual and Registered Manager”. This letter she handed over in the course of the meeting. At the conclusion of the meeting a form 288(b) was completed in the presence of the remaining Directors to show the termination of Ms Binns’ office as director and secretary and was signed by Mrs Fazanni. This was then sent to Companies House where it was received on 21 May 2008.

[118]There were two other letters, both dated 19 May 2008 and both addressed (in different styles) to Mrs Roberts, which have at some time been signed by Ms Binns. It is said by the Defendants but denied by the Claimants that these letters were also handed over by Ms Binns on 19 May. These two letters, I conclude, were not in fact contemporaneous with the dates they bear and were not brought into being until much later. i) One is headed “Re Transfer of my shareholding under the Protective Shareholding (sic) Agreement” and says simply “Further to my resignation today I am writing to confirm that I will be transferring my Shareholding in full to yourself as per our Protective Shareholding Agreement”. ii) The second is a long document which has been described as her “Grievance Letter”. This contained numerous allegations of bullying and harassment of Ms Binns by the Claimants, but with no criticism being made of Mrs Roberts’ conduct. The last two paragraphs contained the following:

“The actions and conduct of Kim and Cynthia I believe have been detrimental to the company in terms of their ability to run a registered service effectively … as we are continually being sidetracked to discuss either your or my commitment to the Company or in my case having my work performance questioned. It appears to me that we have both been manipulated. I suspect this is being done in order to take control of the Company given their continued insistence on equal shareholding status despite both you and I having informed them that there is no intention to distribute to them any more than 10% as per the original agreement. I would ask you to be vigilant to ensure that the future of the company is secure. I tendered my resignation on a number of occasions due to the bullying and continued harassment and on this occasion I am not able to rally my resources immediately to ask that I be considered to return immediately to work. As per our protective shareholders agreement I will reserve my right to be contacted in 12 weeks to identify if I am at that stage wishing to return to the company. At this time I need to recover from the stress that the whole process has caused me to endure.”

[119]A stock transfer form was signed by Ms Binns, being expressed to transfer 29 shares to Mrs Roberts for a consideration of £29. The 29 shares were the 10 shares which had been issued by 17 January 2008 and the further 19 dealt with by the supposed allotment of 28 February 2008. This form was dated 23 May 2008. Contained in the second Combined Register is a further stock transfer form for the 29 shares, this time signed by Mrs. Roberts and in favour of Ms Binns with a date of 14 July 2008.

[120]By July 2008 relations between the Claimants and Mrs Roberts were difficult, and there seems to have been a measure of jockeying for advantage in relation to formal control the Company. So, for example, on 30 June 2008, unknown to the Claimants, Mrs Roberts lodged with the Registrar of Companies a form 88(2) showing herself as the allottee of 29 shares. By this form she was seeking to show herself as the holder of Ms Binns’ shares which had been the subject of the stock transfer form dated 23 May 2008. In contrast, on 2 July 2008 Mrs Fazanni sent off to the Registrar of Companies two forms 169, each showing that the Company had on 4 March 2008 purchased one share from Ms Binns for £1.

[121]There were several meetings during July 2008 between these three protagonists. There are notes of a meeting on 3 July 2008 made by Mrs Roberts, but which the Claimants said they had not seen. The tenor of the notes is apparent from the opening text:

“Although no agenda had been supplied to S Roberts she opened the meeting with concerns regarding the large number of dissatisfied calls to Acton Office from care staff regarding late wage payments, inaccurate pay and inconsistencies in payment dates”

. The notes describe Mrs Fazzani’s response to this to be “by rolling her eyes, abrupt manner informing care staff are always paid at the same interval every week”. Notes were also made by Mrs Roberts of a meeting on 9 July 2008, and these were discussed at the meeting on 30 July 2008 which I need to mention.

[122]By the middle of July 2008 there was a further meeting arranged, ultimately fixed be held on 21 July 2008. However, by about 18 July 2008 Mrs Fazzani had sought from Mr David Allen of an entity called Legal-E LLP (which, confusingly, was not a qualified legal adviser) about her rights and obligations as shareholder and director. By this time Mrs Fazzani was of the view that she was under attack by Mrs Roberts, and that Mrs Jordan was not necessarily to be counted on as a support.

[123]Mr Allen wrote a letter to Mrs Roberts on 18 July 2008 in which he said that he had seen the Combined Register: it was apparent from what he was saying that he believed there to be at the least uncertainty, and perhaps disagreement, about the correct holdings of shares in the Company. Mrs Roberts replied immediately by telephone, and (according to Mr Allen’s next letter of 18 July) explained that “the object of the meeting was a disciplinary hearing arising out of concerns you had regarding Kim’s conduct ‘over the past couple of weeks’”.

[124]The meeting did not take place on 21 July 2008. On that day Mrs Roberts sent to Mrs Fazzani a letter saying that the Company “formally requests the return of the Combined Company Register that you have in your possession”, with a threat that failure to ensure the safe return of the Register within the next 48 hours would result in legal proceedings.

[125]On 29 July 2008, in advance the meeting which was by then refixed for the following day, Mrs Roberts sent a message to the Claimants with an agenda. The business was to be minutes of last meeting; work performance issues; conduct; duties, roles and responsibilities; and finance. And in the evening of 29 July 2008 Mrs Roberts sent a further message, after dealing with other matters she concluded “formal request – please ensure I have available to me the company tape recorder – for the purpose of taking minutes at the meeting tomorrow.”

[126]A recording was made of the meeting on 30 July 2008, as each of those present knew and intended. The meeting appears to have been acrimonious. It must have been lengthy. There was a great deal of argument. Much of the meeting was heated and seems to have involved Mrs Roberts making complaints about the conduct of Mrs Fazzani, the latter defending herself vigorously.

[127]At one point during the meeting it appears that Mrs Roberts was seeking to remind the Claimants that the minutes provided by Ms Binns at the meeting on 4 March 2008 had been disparaged by the Claimants for inaccuracy. At another there was reference by Mrs Roberts to Mrs Sheehan having prepared minutes of a meeting, this being in the context of an assertion by (it would seem) Mrs Roberts that “Kim was going to do sales”, agreement on this point allegedly having been minuted. It may be that this was a reference to the Challenged 10 January Minutes. The Claimants say that this was the first they knew of any minutes having been prepared, or being said to have been prepared, by Mrs Sheehan.

[128]On 13 August 2008 Mrs Roberts sent Mrs Fazzani a letter in which she told her that there was to be a disciplinary hearing on 22 August 2008 to hear numerous charges, including charges of assaulting and bullying Ms Binns, removing the Company’s original Combined Register and refusing to allow the Company to have access to it, bringing the Company into disrepute, and “collusion” in that she had “secretly acted and conspired with Cynthia Jordan and Suzanne Binns resulting in the deceitful and illegal registration of company shares in an attempt to take control of the company.”

[129]By 15 August 2008 the Claimants had consulted solicitors, and sent to Mrs Roberts a notice summoning a meeting of the Company’s directors to consider moving the Company’s registered office, “the unauthorised and purported issue of shares”, and dismissing Mrs Roberts as a director. She responded by filing at Companies House forms 288(b) showing the Claimants as having resigned, and on 18 August 2008 removing them from the Company’s office in Harrow.

[130]Thereafter at the end of August and in early September 2008 there was correspondence between solicitors for the parties and battle lines were drawn, proceedings being started on 18 September 2008. On the Claimants’ side it was said in this correspondence that they held 20 out of the 30 issued shares in the capital of the Company, Ms Binns’ 10 shares having been surrendered to the Company on 4 March 2007. On the other side it was being said that Mrs Roberts was the majority shareholder, having acquired Ms Binns’ shares, that the best way forward would be for the Claimants’ shares to be purchased “by the remaining director” (which must in the context have been a reference to Mrs Roberts and must have conveyed that her then solicitors did not believe Ms Binns to be a director) or by the Company, and that in any case the Claimants had failed to pay for their shares a consideration of £10,000 which they ought to have paid for their shares, which were “only … 20% of the Company”.

[131]Shortly before the proceedings were started the Claimants’ solicitors sent to Mrs Roberts’ solicitors a draft of the witness statement intended to be made on behalf of the Claimants. In response, by a letter dated 17 September 2008, Mrs Roberts’ solicitors enclosed a number of documents which, it was pointed out, had not been referred to by the Claimants. These documents were the SPA, the Terms of Employment, the Challenged Minutes (with the possible exception of the Challenged 8 January Minutes) and “Notice of Directors Board Meeting and Shareholders Meeting”: versions of all or most of these documents were included in electronic copies on three floppy discs which were later provided by the Defendants as having been loaded with the electronic documents at about the time paper versions were made, this being at about the dates the paper versions bear. These discs were forensically examined by an expert in these proceedings.

[132]Also enclosed with the letter of 17 September 2008 but not included in electronic form on the floppy discs were copies of the Grievance Letter, Ms Binns’ second letter dated 19 May 2008 referring to the SPA, and certain correspondence from 31 July 2008 and mid-August 2008.

[133]Of the three floppy discs, one contains only the electronic copies of four of the five Challenged Minutes, there being no electronic version of the Challenged 8 January Minutes on this disc. The second floppy disc contains only an electronic copy of a version of the SPA. The third contains only an electronic version of the Terms of Employment addressed to Mrs Fazzani; an electronic version of the Challenged 8 January Minutes (labelled “General Meeting 080108.doc”); and two iterations of the agenda for the 10 January 2008 meeting, one for a meeting on 8 January 2008 (and labelled “Board Meeting Agenda 080108.doc”), and the other for a meeting on 10 January 2008 (and labelled “Board Meeting Agenda 100108.doc”).

The Witnesses

[134]Each of the parties gave written and oral evidence, as did Mr Mitchell, Ms Barker and Mrs Sheehan.

[135]The Claimants impressed me as witnesses of truth. That is not to say that their memory was always perfect or their evidence always accurate. However I have no doubt that their evidence was honestly given and was generally speaking reliable. Where on the key issues there is conflict with the evidence of the Defendants, I prefer the evidence of the Claimants.

[136]A variety of matters were relied upon by Mr Goldkorn to support his submission that I should not attach weight to the Claimants’ evidence. It is not necessary to consider each of these in detail. It is, nevertheless, appropriate to say something about two or three.

[137]At the conclusion of the 10 January 2008 board meeting the forms 288(a) which I have already described were completed in respect of the Claimants’ appointments as directors, and on 16 January the forms were sent by Ms Binns to the Registrar of Companies at the same time as the Company’s Annual Return. The forms did not merely convey that the appointments took effect on 26 November 2008 (the date when the Claimants stopped working for Carehome Selection), but also that the forms were on that same day signed by each of the Claimants and Ms Binns.

[138]In her first statement in these proceedings, made on 16 September 2007, Mrs Jordan stated that on 26 November 2007 the Claimants had been appointed as directors; and she said that “the Form 288a appointing us a directors was signed by [Ms Binns] on 26th November 2007 but may have been filed at a later date”. And she went on to say that the appointments were ratified at the meeting on 10 January 2008, referring for this to Ms Binns’ minutes of the meeting. Mrs Fazanni made a statement on 16 September 2008 in which she confirmed what Mrs Jordan had said.

[139]In their oral evidence, however, the Claimants both accepted that the forms 288a had been made in January 2008, not in November 2007.

[140]As it seems to me the evidence of Claimants given in their original witness statements was mistaken as to the time when they and Ms Binns signed the Forms 288, and also as to the fact that there was backdating to confirm that the appointment had taken place at a date earlier than it had been formally resolved upon.

[141]However it also seems to me that Ms Fazzani was right when she said, as she did under cross-examination, that the appointment of the Claimants as directors had been under discussion long before January 2008. From the documents it is clear that by early October it was determined that the Claimants were to join the Company as directors. So much appears from the fact that they were present at the meetings of the Company’s Board held in October and December 2007 of which there are minutes, as well as from what is stated in the minutes of the meeting of 4 October 2007. Plainly also Ms Binns in her version of the minutes of the 14 December 2007 meeting (by which date the Claimants had stopped working for Carehome Selection) described the Claimants as being present at the meeting as directors; and even the Challenged 14 December Minutes draw no distinction between those present as directors and those who were merely in attendance.

[142]Under those circumstances I can understand why in January 2008 there was agreement among the parties that the Claimants would be taken to have been appointed as directors on 26 November 2008 as the date when they were free to join the Company.

[143]In conclusion on this particular point I am satisfied that the Claimants were not intentionally giving misleading evidence as to their appointment as directors or as to the time when the Forms 288 were signed: the mistake in their statements was, I think, caused by imperfect memory and confusing documents provided to the Claimants’ solicitors before the proceedings were started rather than from a sinister purpose of intentionally misleading.

[144]A second point concerns the document handed by Ms Binns to the Claimants on either 6 September 2007 (the Claimants’ case) or in November 2007 (the Defendants’ case). In their written evidence made on 16 September 2008 the Claimants exhibited a copy of the document with a manuscript date, and described the document as a letter dated 6 September 2007. In fact the date was added long after 6 September 2007: in cross-examination it was said by Mrs Jordan (and I accept) that the date was added when the document was provided to solicitors for the purposes of these proceedings.

[145]The Defendants, on the other hand, say that the date was added with a view to misleading the Court and to bolstering an argument that the Terms of Employment was a document created long after January 2008. The connection with the Terms of Employment is that the latter conveys that it was in November 2007 that “the original offer … based on a 10% Shareholding in return for a required investment by way of Directors’ loan of £10,000” was made by the Defendants. That does not sit easily with the idea that the document in question was produced to the Claimants in September 2007, as the 10% for a £10,000 loan was the proposal in the document which the Claimants had dated 6 September 2007.

[146]As it happens I think that by November 2007 the 10% for £10,000 proposal was no longer being discussed. After all, by November 2007 the Claimants had been present at two board meetings of the Company, at one of which there had been an open dispute between Mrs Roberts and Ms Binns and with Ms Binns threatening to resign: it would have been most surprising for such a meeting to have taken place, unless by then it was reasonably certain that the Claimants were already on their way to becoming part of the Company as directors and stakeholders.

[147]More likely, as it appears to me, is that in September 2007 the 10% for £10,000, which resembled what had been discussed among Mrs Roberts, Mr Yeo and Ms Binns in July 2007, had been put forward and rejected by the Claimants, as the Claimants say; that by October 2007, as reflected in the minutes, the agreement was that the Claimants would become directors and would each have one share, but that they were not for the time being to have voting rights in respect of their shares; and that in December 2008, as reflected in Ms Binns’ minutes of the meeting of 14 December 2008, it was being contemplated that the Claimants might have a shareholding which was equal to that of the other shareholders, although Mrs Roberts was indicating a wish to have a larger, indeed majority, holding.

[148]Reverting to the date of 6 September 2007 added to the document, I think that the mistake in the Claimants’ written evidence in the way in which the document was described was the product of haste and lack of care in the preparation of the Claimants’ initial evidence rather than anything more sinister, and do not believe that this mistake makes the Claimants’ evidence unreliable in all its essentials.

[149]Related to the document is the meeting which the Defendants say was held in a Harrow pub on 4 January 2008 and became the subject of the Challenged 8 January Minutes. As to this, the position of the Claimants was in my judgment to accept that between 14 December 2007 and 10 January 2008 there were a number of discussions between the parties, including at a pub in Harrow. Mr Goldkorn submitted that they nevertheless persisted in the case that there had been no such discussion on 4 January 2008, and that materials produced at the trial by Ms Binns in the form of a receipt for four drinks at a Harrow coffee shop in the afternoon of 4 January, a parking ticket for that day from 12.30 to 5.15 pm and copy text messages on her mobile phone (including one seemingly sent to Mrs Fazanni at 2 pm with the words “am in pub”) showed that there the parties had indeed met in the pub on 4 January 2008.

[150]Although I think that it is possible that the four parties did meet up in Harrow on 4 January 2008, whether in a pub or a coffee shop or both, I also think that Mr Goldkorn on behalf of the Defendants was making too much of the Claimants’ evidence on the point. What matters is whether the Challenged 8 January Minutes are accurate in recording a meeting at which reference was made to the “original agreement” between the Defendants, and also in what it records concerning a discussion of shareholdings in the Company. I am satisfied that the Claimants are correct in saying that the minutes are not accurate, and that there was no meeting at about that time at which there was the alleged reference or discussion.

[151]Of course the minutes are admittedly inaccurate in representing that there was a meeting on 8 January 2008. But, as I find, insofar as they purport to be minutes of a “General Meeting” or a indeed a meeting of the Directors of the Company they are also inaccurate: although the document records Mr Yeo as giving apologies for his absence, I do not believe that the meeting was notified as a general or board meeting and in that sense was not a “meeting” so much as an informal discussion. It was only later, with the generation of the Challenged 8 January Minutes, that the discussion was sought to be clothed by the Defendants with formality.

[152]Under the circumstances I do not accept, as suggested by Mr Goldkorn, that the Claimants have persisted in giving evidence which they know to be wrong concerning the subject of the Challenged 8 January Minutes. I should also record my conclusion, that the last substantive paragraph of the Challenged 8 January Minutes does not accurately reflect anything said to the Claimants by the Defendants on 4 January 2008. This I explain in further detail later in this judgment.

[153]In contrast with the Claimants, it is my judgment that the Defendants have given as their evidence stories which they believed would assist their case rather than evidence which they believed to be true.

[154]Mrs Roberts is articulate and persuasive, with an extremely forceful, indeed domineering, personality. She seemed to me to be someone who is used to having her way, and would not let anyone or anything obstruct her. My conclusion, for reasons I explain, is that not only has she lied on numerous important issues, but that she has put forward as authentic documents which were made up to support a false case.

[155]At this juncture I give an example of the way in which, as I see it, Mrs Roberts was willing to tailor her evidence to meet difficulties in her case. i) As I have pointed out, it was Mrs Roberts’ written evidence that the Claimants agreed to the SPA and the Terms of Employment on 10 January 2008, when the Claimants’ appointment as directors was voted upon at a board meeting. ii) However, this evidence faced the difficulty that Ms Binns’ minutes of that meeting made it clear that a critical part of the package dealt with by the SPA and the Terms of Employment, namely the position of the Claimants as shareholders, was in terms not agreed. This matter had been item 3 on the agenda for that meeting. Further, the probability is that the issue of shares (item 4 on the agenda for the meeting of 17 January 2008) was only agreed at the 17 January 2008 meeting, as reflected in Ms Binns’ minutes and consistent with the Challenged 17 January Minutes, as it was on that day that the relevant share certificates were processed. iii) Accordingly it was Mrs Roberts’ oral evidence that at the 17 January 2008 meeting “everything” was agreed . This “everything” included the Claimants’ agreement of the Terms of Employment and acceptance of the SPA. iv) This, however, does not sit comfortably with the fact that at the meeting in mid-February 2008 the parties had a discussion about the template shareholders’ agreement, a discussion which could have been expected to be irrelevant if the parties had just agreed to the SPA and the Terms of Employment. v) In her written evidence Mrs Roberts had dealt with this by suggesting, irrelevantly and mistakenly, that that template shareholders’ agreement discussed in February had made reference to her having a 51% shareholding, and by saying that in any case the discussion had been directed simply at getting an agreement signed by with the Claimants “setting out their roles and responsibilities”. vi) However the minutes of the meeting of 14 February 2008, minutes which Ms Binns made only a couple of weeks after the meeting, and the form of the template agreements in fact referred to in those minutes, make it perfectly obvious that there was a discussion at that time about the terms of a shareholders’ agreement contemplated between the parties, and that that discussion was a central discussion during the meeting. vii) Mrs Roberts’ oral evidence on the point, in contrast with her written evidence, was that there was discussion about the making of a shareholders’ agreement, but that this was with a view to making an agreement which would cover the time after the “probationary” period contemplated by the Terms of Employment had come to an end. viii) That suggestion in my judgment makes no sense, as any such period in the Terms of Employment was immaterial to the SPA, which purported to be permanent and to provide indefinitely, “until superseded by agreement between Shareholder A and Shareholder B”, for the regulation of the Company. In other words, if the SPA had been “agreed” with the Claimants on 17 January, by its own terms it would continue to apply even after the 12 months’ probationary period referred to in the Terms of Employment.

[156]A second example concerns Mrs Roberts’ evidence about the meeting with Mr Durrant and Mr Mitchell in May 2008. She agreed in cross-examination that she made no mention to those gentlemen of the fact that the Claimants were only subordinate directors, but went on to explain that at the meeting the Claimants as two new employees were being introduced to the Bank. But it was also her evidence that the Claimants were only subordinate, as provided in the Terms of Employment and by the SPA. Thus it was, said Mrs Roberts, that Mr Mitchell had been able, as he said in his evidence, to have at the meeting a discussion with the Claimants and Mrs Roberts about the need to have a shareholders’ agreement, and to believe that no such agreement existed.

[157]As it seems to me this evidence of Mrs Roberts’ concerning the position of the Claimants and the way in which they were being introduced to the Bank is simply false. As appears from Mr Mitchell’s evidence, the Claimants were presented to the Bank, as they had been at the end of February, as directors and shareholders of the Company, not as in some manner “subordinate” directors or “probationary” shareholders who were in reality mere employee. If they were in substance merely employees on the terms of the SPA and the Terms of Employment, I can see no sensible reason for the Claimants and Mrs Roberts to have wasted the time of Mr Durrant and Mr Mitchell in discussing the need for a shareholders’ agreement.

[158]The point I have just mentioned is reinforced, as I see it, by the fact that there is no document, apart from the SPA and the Terms of Employment, which contains any reference to the appointment of the Claimants as directors being only as “subordinate” directors; and all the contemporaneous documents, are inconsistent with their office as directors being subordinate to Mrs Roberts and Ms Binns and having “no rights to exercise any powers and authorities vested in the Directors by the Company’s Articles of Association” or as having only “a limited input on the running of the Company”.

[159]Ms Binns is completely different from Mrs Roberts. Where Mrs Roberts is forceful, Ms Binns appeared to me weak and vulnerable. Having heard her give evidence over several days, I could well accept that others dealing with her might sense that she would not stand up for herself. I conclude that until her departure in May 2008 Ms Binns was bullied by Mrs Roberts, whether or not she was also bullied by either or both of the Claimants, especially following the departure of Mr Yeo; that later, after June 2008 and probably only in the second half of July or early August 2008, Mrs Roberts saw in Ms Binns an ally who could be used to help remove the Claimants who were by then challenging Mrs Roberts’ controlling position within the Company; and that Ms Binns has assisted Mrs Roberts in presenting a bogus case.

[160]In short I reject the Defendants’ submission, that a finding should be made that the Claimants’ conduct was “deceitful and manipulative” and that I should believe the Defendants’ evidence.Rather, those adjectives are applicable to the Defendants’ conduct.

[161]Mrs Sheehan’s evidence, primarily directed at showing that her minutes were contemporaneous and reasonably to be relied upon as accurate, I reject. It was obvious from her cross-examination that she was most uncomfortable to be giving evidence at all, protesting that she was only an employee of the Company. Her discomfort I find was because she was not giving evidence which was truthful, and because she was putting forward as her evidence statements which she thought were expected of her by the Defendants.

[162]Finally I would say that I found Ms Barker’s evidence of no assistance. Her evidence was simply directed to the proposition that she had made her loan agreement with the Company on 17 April 2007, and (more importantly) that on that same date she had signed the SPA as a witness to the Defendants’ signatures on the document. Her written evidence had been prepared for her, she said, by Ms Binns. Although I accept that she was sincere when she said that her written evidence was her evidence as to what had happened, and although I accept that she did at some time sign as the SPA as a witness, I do not think that she can now remember when that was, however much she may believe that she can.

[163]I have approached the evidence keeping in mind the submission made by Mr Goldkorn that the gravity of the allegations is such that strong evidence should be before the Court if the allegations are to be established on the balance of probability. He referred to Re B (Children)(Care Proceedings: Standard of Proof)(CAFCASS intervening)

[2008] UKHL 35

[2009] 1 AC 11

. In that case the House of Lords reiterated that there is a single civil standard of proof, namely the balance of probabilities; however it was held, yet again, that where particularly serious allegations are made which are inherently improbable the evidence to support the allegations should be convincing if the burden of proof is to be discharged.

The issues of law

[164]There are two principal legal issues. The first concerns the requirements for there to have been successful surrenders or transfers to the Company of Ms Barker’s share and of Ms Binns’ shares. This question arises because Ms Barker’s single share was purportedly acquired by the Company, probably during 2007, and then purportedly re-issued or transferred to Ms Binns on 17 January 2008; and on the Claimants’ case Ms Binns’ shares were in March 2008 surrendered to the Company. I disregard the question, which in view of the Defendants’ concession no longer arises, whether the Claimants’ shares were in August 2008 surrendered or transferred to the Company or the Defendants.

[165]Second is the question arising in relation to the SPA, assuming that it was ever made, namely whether the SPA was effective to modify the Company’s constitution as set out in its Articles of Association (as, for example, was the case in Cane v Jones

[1980] 1 WLR 1451

), or whether it was simply a private arrangement between Mrs Roberts and Ms Binns.

[166]In my judgment the purported surrenders or transfers of Ms Binns’ shares could not have been effective so as to involve either the cancellation of the shares in question or the Company becoming their holder, unless the shares in question were fully paid; otherwise each was contrary to the prohibition in section 143 of the 1985 Act.

[167]That provision sets out a general prohibition, in the case of any company limited by shares, against any acquisition of the company’s own shares, and further provides that any prohibited acquisition is void. For the prohibition not to apply the acquisition must be within a recognised exception.

[168]By their Counsel, Mr Duncan Kynoch, the Claimants submitted that both in the case of Ms Barker’s share and in the case of Ms Binns’ shares the relevant exception is to be found in the opening words of section 143(3) of the 1985 Act:

“A company limited by shares may acquire any of its own fully paid shares otherwise than for valuable consideration …”

. In relation to this exception the notes to section 143 contained in Buckley “Companies Acts”, in particular note 143.20, explain that a company limited by shares may acquire by gift fully paid shares, and may hold the shares by being registered as the holder.

[169]Apart from the exception to which I have just referred, there are no other available exceptions in sub-section 143(3): These are applicable to acquisitions of unpaid and partly paid, as well as fully paid, shares. In particular the only reference to surrenders is in paragraph (d), which provides for “the acceptance of shares surrendered in lieu [sc of forfeiture], in pursuance of the articles, for failure to any sum payable in respect of the shares”.

[170]On behalf of the Defendants Mr Goldkorn submitted that the relevant section 143(3) exception cannot apply. Specifically, as he submits, there is no evidence that any sums were ever paid to the Company in payment of the nominal amount of any shares. Mr Kynoch, on the other hand, submitted that in the present case the nominal amount of the shares was just that, and that any payment up of that nominal amount was de minimis and therefore the absence of payment (assuming there to be no evidence of payment) was insufficient to take the acquisition of the shares outside the exception.

[171]In relation to the two shares held at the outset by Ms Barker and Ms Binns the evidence before the Court consists of the Company’s records, notably in the form of audited accounts to 31 December 2006 and the first Combined Register. These convey that the two shares were fully paid. There is no positive evidence to contradict the inference that what is stated in the records was correct.

[172]It follows, I think that in principle there was no objection arising out of section 143 to the Company having at some time acquired Ms Barker’s share; and on that basis I can see that, by analogy with the old law concerning the re-allotting of forfeited shares which are partly paid (see Morrison v Trustees, Executors and Securities Insurance Corp (1899) 68 LJ Ch 11), on a re-allotment by the Company no further amount would have needed to be paid by Ms Binns.

[173]The difficulty, as it seems to me, is that there is in fact no worthwhile evidence as to there having been any acquisition of Ms Barker’s share by the Company. Specifically, for reasons I explain, I do not believe that it was open to Ms Barker simply to surrender her share to the Company or for the Company to treat the share as surrendered or forfeited. Moreover, apart from the single entry in the original Combined Register, there is no evidence to say when or how the Company might have acquired the share. As to that entry, I had no evidence of there having ever been any instrument of transfer made by Ms Barker in respect of her share, and I do not believe that there was any instrument of transfer.

[174]In short, I believe that Ms Barker has remained throughout the holder of the share. Of course, she may well be happy to treat herself as holding the share on trust for her partner, Ms Binns, who plainly came to regard herself as entitled to the share. But that, as it seems to me, is essentially a matter between Ms Barker and Ms Binns.

[175]It follows from this that I do not believe that Ms Binns was the holder of Ms Barker’s share on 4 March 2008, so that (as submitted by Mr Goldkorn in his closing argument) Ms Binns was not then in a position to surrender or transfer that share to the Company or anyone else so as to cause the then holder, Ms Barker, to cease to be a member.

[176]In relation to Ms Binns’ original share that is not, of course the position. As that share is to be taken to have been fully paid up, as I find, it was possible for the share to have been acquired by the Company in March 2008, section 143 of the 1985 Act providing no obstacle.

[177]On the other hand on 17 January 2008 a further eight shares were issued to Ms Binns. Were they fully paid so as to be capable of falling within the exception against the section 143 prohibition discussed above? And what is to be concluded in relation to the shares issued to the Claimants and to Mrs Roberts on 17 January 2008?

[178]It was put to Mrs Fazanni, and she agreed, that she did not make any payment in respect of the nominal amount of her 10 shares. In agreement with the submission made by Mr Goldkorn on behalf of the Defendants, I conclude that none of the parties paid anything for the shares issued on that day. Strictly speaking, therefore, the shares remain unpaid. The endorsements on the relevant share certificates and in the original Combined Register do not affect this conclusion, as there can be no question of the Company being estopped as against the parties from contending for the true position.

[179]I also reject Mr Kynoch’s submission, for which he cited no authority, that because the amount in question was small the shares can be treated as fully paid for the purposes of the section 143(3) exception, even if strictly they were unpaid. His submission, so far as I can see, would involve rewriting the section 143(3) exception so that in those cases where the Court considers the amounts unpaid to be sufficiently small the exception was to apply, the shares being treated as fully paid for the purpose of the exception.

[180]But even if, contrary to my conclusion, the 40 shares in issue from 17 January 2008 had all been fully paid, that is not the end of this particular issue. As it seems to me, the relevant shares could not simply have been surrendered to the Company. That would typically involve a process by which the Company’s issued share capital was reduced, if the surrender of the share involved its cancellation rather than transfer to the Company. And of course reductions of share capital are prohibited unless carried out in accordance with certain prescribed formalities. A reason for this is that in the case of an unpaid or partly paid share there is a possible loss of capital to meet claims of creditors; and in the case of fully paid shares the amount of the cancelled capital on a lawful reduction and cancellation may become an amount capable of being applied against realised losses or, as appropriate, distributed unless there is some relevant statutory restriction (for example such as that which used to arise under section 170 of the 1985 Act dealing with amounts to be credited to capital redemption reserve; compare also section 148(4) of the 1985 Act).

[181]In connection specifically with section 143 of the 1985 Act there is a point which reinforces my view that subsection (3) does not itself provide for shares in a private company to be acquired by being surrendered or cancelled, rather than for the private company to be able to become the holder of the shares or the beneficiary of a trust of the shares held by someone else. As to this it may be noted that sections 146 to 148 dealing with cases where public companies – not private companies – acquire their own shares, expressly provide machinery to enable acquired shares to be cancelled. There is no corresponding machinery provided for private companies.

[182]Rather, if the relevant shares were to have been acquired by the Company in a way which would have resulted in the original shareholder ceasing to hold the share they would have had to be transferred to the Company by the shareholder. The difficulty with this is that section 183 of the 1985 Act made it unlawful for any transfer of shares to be registered in the absence of any proper instrument of transfer being delivered to the Company. Whatever else may be controversial about the events of 4 March 2008, it is clear that no instrument of transfer was made by Ms Binns to transfer any shares to the Company. In other words the shares could not on that day have come to be held by the Company.

[183]There is, nevertheless a final point to consider. As it seems to me a holder of a share, whether or not fully paid, can make a gift of the share by constituting himself or herself a trustee of the share for the intended donee. In principle there is no reason why the beneficiary should not be the company itself. In the case of a partly paid share the obligation to pay up the share would remain with the holder, the donor trustee, so that the rules requiring the maintenance of share capital would not be contravened.

[184]There is then a factual question for my decision. This I deal with in the next part of this judgment. It is whether on 4 March 2008 Ms Binns made an apparently imperfect gift of her shares to the Company in circumstances in which, despite the absence of completion of all the formalities needed to vest the shares in the Company, the gift is to be treated as completely constituted (compare, for example, Pennington v Waine

[2002] EWCA Civ 227

;

[2002] 1 WLR 2075

[185]The second question, concerning the effect of the SPA on the Company’s constitution, only arises if(a) the SPA was indeed made between Ms Binns and Mrs Roberts, and

(b) at that time Ms Barker had ceased to be a member of the Company so that Ms Binns was the sole member of the Company. In particular Mrs Roberts was not then a member; and if Ms Barker was a member, her signature on the SPA was not to signify her agreement to the SPA but only that she had witnessed the other signatories signing the document.

[186]In my judgment the SPA was simply an agreement between Ms Binns and Mrs Roberts concerning the way in which from time to time they would separately and together exercise their powers as shareholders and directors of the Company, and as to the terms on which as between themselves they will agree to the introduction of any new members or officers to the Company. The fourth paragraph of the SPA is a clear example of such a provision. This, and the absence of any clear indication that the Articles of Association were by the SPA being amended so as thereafter to provide for such matters as share pre-emption, junior or “subordinate” directors, and so forth, leads me to the conclusion that the SPA was essentially a private agreement between the parties to it, and could not directly affect the rights or duties of persons becoming officers or members of the Company after the making of the SPA in the absence of some further appropriate agreement with those persons or some amendment to the Company’s constitution being duly resolved upon.

The issues of fact

[187][The position of the Claimants as shareholders and directors] I deal first with the status of the Claimants, including the question whether (assuming Ms Binns still to hold the shares she was thought to hold after immediately after 17 January 2008) they hold 20% or 50% of the Company’s issued shares.

[188]I am satisfied that by the time of the meeting on 17 January 2008 the Company had five directors, namely the Claimants, the Defendants and Mr Yeo. At that meeting, as I find, it was decided by the directors to issue to each Claimant 10 new ordinary shares, and also to issue that number to Mrs Roberts. It was also decided to issue 8 new shares to Ms Binns, Ms Binns in addition having Ms Barker’s share issued to her. At the meeting not only were the shares allotted but the issue of shares was intended to be effected, entries being made in the Register of Applications and Allotments in the original Combined Register and Share Certificates being signed and handed over: by this process those present intended to constitute the four parties as the holders of the 39 shares.

[189]Also at the meeting Mr Yeo resigned as a director, so that from then on the Company had four directors until such time afterwards as any of the Claimants or Defendants ceased to be directors.

[190]Until shortly before the start of the trial the position of the Defendants was, as mentioned, that the Claimants’ had ceased to be holders of their 10 shares. The argument was that when they were removed from the Harrow office in August 2008 their shares were surrendered back to the Company; and entries in the Register of Members in the second Combined Register made by one or other of the Defendants reflect this. The basis for the argument was either that the issue of shares was subject to the SPA with its pre-emption provisions, or that the issue was provisional and subject to the 12 month probationary period provided by clause 7 of the Terms of Employment.

[191]In a letter written shortly before the trial the Defendants’ Solicitors stated that the argument that the Claimants’ shares “reverted back to the Company” was no longer to be pursued, it being accepted that each Claimant now holds 10 shares. This was said to be because it was accepted now that “by reason of the return of allotment which they agreed and by reason of the manner in which your clients were treated, there was an outright allotment of 10 shares to each of the Claimant”.

[192]The Defendants’ position was refined in their Skeleton Argument for the trial, which stated that “Ds accept that there was a variation of the terms of engagement by conduct or alternatively that Ds are estopped from denying that Cs are each entitled to 10% of the Company”.

[193]Nevertheless, I think it still appropriate to consider the Defendants’ original case, not only because there may be costs implications but also because the matters relied upon in relation to the claim concerning the Claimants’ shares are also relevant to the Defendants’ shareholdings. First, the concession concerning “10% of the Company” is expressly a concession that the Claimants each hold 10 shares out of an issued share capital of 100 shares; it is not a concession that they hold 10 shares out of an authorised capital of 100 shares of which only 40 have been issued. Second, the Defendants have not dropped their claim that “pursuant to the right to do so under the [SPA]and the Terms of Employment the Second Defendant … terminated the appointment of both Claimants as directors …”, or for injunctive relief in relation to the Claimants holding themselves out as directors.

[194]I find that there were never any relevant pre-emption provisions agreed with the Claimants or applicable to their shares, whether flowing from the SPA or from the Terms of Employment, and that therefore there is no question of any variation of contract with the Claimants or estoppel which arises. I have no doubt that, if the SPA was in fact made before the middle of 2008, it was never communicated to the Claimants; and I find that the Terms of Employment were never communicated to the Claimants. On the contrary, I am satisfied that these documents were made up to justify the supposed reinstatement of Ms Binns as a director following her departure in May 2008, to support the removal of the Claimants as shareholders and directors, and to justify the allotment of the 60 extra shares to Mrs Roberts and Ms Binns over and above Ms Binns’ original share and the 39 other shares dealt with on 17 January 2008.

[195]I have already drawn attention to the material difference between Ms Binns’ minutes of the meeting of 10 January 2008 and the Challenged 10 January Minutes. The former are known to have been in existence shortly after 10 January 2008. An electronic copy of those minutes (as well as of the minutes of the 12 July 2007 meeting) was included onto the material downloaded on the USB drive in February 2008; and at the end of that same month Ms Binns, when asked to produce the minutes of all meetings, sent by email an electronic version of her minutes of the 10 January meeting. This is despite the fact that on the Defendants’ case her minutes of the meeting were in mid-January 2008 rejected by Mrs Roberts in favour of the Challenged 10 January Minutes, the latter rather than Ms Binns’ minutes being considered at the 17 January 2008 meeting so that her minutes had been superseded and were nothing more than her own aide memoire as to what had transpired at the meeting.

[196]In short, Ms Binns’ minutes were contemporaneous and were still being given out by her in February 2008 despite having been supposedly superseded. I see no reason to doubt that they are a fair record of what had been discussed and agreed on 10 January 2008.

[197]More importantly, I simply cannot understand how, if the Terms of Employment were on 10 January 2008 produced to the Claimants and discussed and agreed at that day’s meeting, as described in the Challenged 10 January Minutes (accepting for this purpose that reference to the “new agreement” was to the Terms of Employment), Ms Binns could have omitted that very important matter from her version of the minutes. In other respects her minutes are full and detailed; but her minutes contain simply no reference to either the proposition that Mrs Roberts would always have a 51% shareholding, with Ms Binns having a 29% shareholding, or that their shareholdings (referred to in those proportions in the Terms of Employment) and those of the Claimants would be “divided up under the new agreement” .

[198]There are other points which suggest to me that the Terms of Employment were not, as the Claimants say, produced to them. I give a number of examples. i) The Terms of Employment, supposedly created on about 9 January 2008, mysteriously refer to a meeting on 8 January 2008, when no meeting had taken place on that day. Such a mistake would have been surprising in a document made so soon after 8 January, the date of the supposed meeting at which the principles reflected in the Terms of Employment had been discussed. ii) The Terms of Employment stipulated for a wage of £500 per month for the first year of employment, when the agreement recorded by Ms Binns in her minutes as being reached on the very same day as the terms of Employment was for the Claimants to have £35,000 per annum without any reference to an initial £500 per month. iii) The Terms of Employment provided for the Claimants’ share certificates to be issued only in February 2008, yet only a few days later this provision was disregarded and the share certificates were issued on 17 January 2008. Further, the certificates bore that date, not a date of November 2007, as referred to in the Terms of Employment. What was backdated to November 2007 was the appointment of the Claimants as directors. iv) The Terms of Employment, reflecting the SPA, stated that the Claimants were to be appointed as “subordinate Directors and have limited input on the running of the company”; yet no reference was made to their directorships being “subordinate” when Ms Binns’ minutes recorded that on 10 January 2008 the Claimants’ appointments were ratified by the Board, and at no time thereafter in any of the contemporaneous documents was there any reference to the Claimants’ directorships being subordinate and to their occupying the position of, in effect, mere employees.

[199]Ms Binns’ minutes of 10 January 2008 do not stand alone. At the end of February 2008, when she circulated her version of minutes of the meeting of 17 January 2008, she was clear that Mr Yeo resigned at the meeting and that each of the four remaining directors, that is each of the four parties, was agreed “to be awarded 10% or (sic) ordinary shares”. In the context this is a reference to 10 shares out of the authorised capital of 100 shares, the aggregate of 40 shares being the only issued shares.

[200]Mrs Roberts’ evidence was that at the 17 January 2008 meeting Mr Yeo did not resign as a director; rather, he is said by her to have “agreed to take time to think about his position”. Based on this it is her further evidence that until the end of February 2008 she and Ms Binns were unable to finalise all filings of shares with the Registrar of Companies, as it was still undecided how the shares would be divided up having regard to the possibility that Mr Yeo would become a shareholder.

[201]I do not accept this. In my judgement Mr Yeo did resign at the meeting and his resignation was accepted and became effective. It was for this reason that the form 288 was filed to show his resignation and that in the document provided to the Company’s bank in March 2008 the date of 17 January 2008 was given as the termination date. Also, of course, Ms Binns’ minutes of the meeting of 17 January 2008 show Mr Yeo to have resigned on that date.

[202]So also, I am sure that at the meeting on 17 January 2008 there was no question of Mrs Roberts or Ms Binns having, or being agreed to be entitled to have, a larger shareholding than the 10 shares each which the parties were then provided with. If in fact Ms Binns was then to be entitled to have a 29% holding, or Mrs Roberts was to have a majority shareholding (both points asserted in the Challenged 17 January minutes), Ms Binns would not in my judgment have made the record which she did in her version of the minutes. I have no doubt that on this particular point what she recorded was accurate, and that the decision made on 17 January 2008 was that both she and Mrs Roberts were each to have 10 shares and not some greater holding.

[203]On the point I have just referred to my view is confirmed by what was said at the meetings on 14 and 27 February 2008. Mrs Roberts, following the meeting on 17 January 2008, had a change of heart about the shareholdings in the Company and had instructed Ms Binns not to “issue” the “10% shares” and not to notify their issue to the Registrar of Companies. Of course, she had no authority to give such an instruction, as the Company’s Board had already resolved upon the issue and had caused it to be implemented. But, significantly, an issue of 10 shares to each shareholder was plainly decided upon in January, not an issue of 10 shares to each of the Claimants and some greater holdings to the Defendants. The action of the parties in completing share certificates on 17 January 2008 is to my mind unequivocal confirmation of this. If there were to have been some greater holdings for the Defendants (as suggested by the Defendants), with a reservation of shares for Mr Yeo pending clarification of his position, still there was ample unissued capital which could have been held back for Mr Yeo while issuing further shares to each of the Defendants to ensure that they held a majority.

[204]I have already, earlier in this judgment, rejected the suggestion, put forward by Mrs Roberts in her evidence, that on 17 January 2008 the Defendants’ share certificates were sealed with the Company seal but that the Claimants’ certificates were not in order to show that the Claimants were being awarded only provisional allotments. i) This particular point appears to have been dropped by the concessions made by the Defendants shortly before the trial. ii) In my judgment the point was rightly dropped. If the absence of sealing had had the significance which was sought to be suggested, there is still no worthwhile explanation for: a) the failure of the Defendants to make any return of allotments in respect of the issue of their shares, dealt with on 17 January 2008, until the end of February 2008 (when, in the event, returns were also made in respect of the Claimants’ shares); b) the absence of any reference to the provisional nature of any allotments of shares and issue of unsealed share certificates in the minutes made by Ms Binns of the meetings of 14 and 27 February 2008, when the failure to make appropriate returns of allotments was being discussed; or c) the statements made by the Defendants to the Bank at the end of February 2008 to the effect that each of the Claimants was beneficial owner of 25% of the Company’s issued shares (as would be the case if each Claimant held beneficially 10 shares out of a total issued share capital of 40 shares).

[205]I also reject the suggestion, put forward by the Defendants, that the decision as to shareholdings and the issue of shares was in some way deferred at the end of January and in the first half of February 2008 pending a resolution of continuing discussions with Mr Yeo as to his possible reinstatement as a director and as to his becoming a shareholder. The issue of 10 shares to each of the parties left ample unissued share capital for Mr Yeo to have been issued a suitable shareholding, should an agreement have been reached with him. This too is made clear from the minutes of the 14 February 2008 meeting. But in any case there is no trace in Ms Binns’ minutes of any such reservation having been made at the meeting on 17 January 2008.

[206]I have rejected the Challenged 10 January Minutes and the Challenged 17 January Minutes as giving on the material points an accurate record of what transpired at the meetings on 10 and 17 January 2008. And I have rejected the SPA and Terms of Employment as documents which were at the time provided to or discussed with the Claimants.

[207]As will have become apparent from that I have already said in this judgment, I find that there was no agreement ever made with the Company or with the Claimants for the Company to issue to either Mrs Roberts or Ms Binns more than 10 shares. If in early 2007 any agreement had been made between Mrs Roberts and Ms Binns, as contended for by the Defendants, it was never an agreement to which the Company was party, and was superseded during the course of subsequent discussions with Mr Yeo: that is the explanation for the reference in such documents as Ms Binns’ minutes of the 14 December 2007 meeting to there having been originally agreed shareholdings of “40:40:20 then 40:30:30 then 10:10:10:10:10”. I revert to this point in connection with the various returns of allotments of February and March 2008.

[208]I have already drawn attention to the material difference between Ms Binns’ minutes of the 14 December 2007 meeting and the Challenged 14 December Minutes. Notably the latter, but not the former, suggest that at the time Mrs Roberts was already and would remain majority shareholder, with an assertion that “Sheila pointed out that she will remain majority shareholder, and this was not open to discussion”. Although Mrs Roberts may well have had the ambition of becoming the majority shareholder in the Company (in the sense of having the largest single shareholding, or possibly in the sense of holding more than half of the issued shares), in my judgment she was not at the time the majority shareholder and had no agreement with Ms Binns, Mr Yeo or the Claimants that she would.

[209]Further, if in fact the SPA was made in April 2007, as contended by the Defendants, it was never agreed to or binding on the Claimants: it had been overtaken by subsequent discussions and agreements. Notably, it was not referred to at all during February 2008, when (as appears from the minutes of the meetings on 14 and 27 February 2008) there was discussion between the parties about the need for a shareholders’ agreement. Indeed, at those meetings the position was being advanced by the Defendants that there was at the time no extant shareholders’ agreement and that that was an obstacle to the issue of shares to the Claimants. Similarly there was no reference to the SPA during the May 2008 discussion with Mr Durrant and Mr Mitchell, when the desirability of having a shareholders’ agreement was pointed out by Mr Mitchell.

[210]I have reached these conclusions without having to find, as submitted by the Claimants, that any of the SPA, the Terms of Employment or the Challenged 14 December Minutes, the Challenged 10 January Minutes and the Challenged 17 January Minutes were created long after the event as forgeries designed to support a false case. It is sufficient that the first two of these documents were not provided to the Claimants, and the latter (whenever made) were inaccurate.

[211]Nevertheless, I should record my conclusion that these documents were not contemporaneous with the dates they bear.

[212]In the case of the SPA there exists an electronic version. It differs from the printed and signed version in that(a) the Company’s logo in the heading of each page is differently placed, and

(b) the electronic version does not contain, where the printed version does contain, what appears to be a formatted header on each page containing the text “Shareholders Protective Agreement”. The electronic version exists only on a floppy disc. What was said by the Defendants was that this was generated on a lap-top computer belonging to Ms Binns in April 2007, was saved to the floppy disc during a recovery when the computer had failed while the document was being created, and that after further editing to the formatting (and only the formatting) in the header the electronic version was saved to hard drive (not to the floppy disc), printed and executed. The floppy disc, containing only the electronic version of the recovered document (but with the final editing), was along with a hard copy of the document provided by Ms Binns to Mrs Roberts when the latter asked for a copy of the SPA shortly afterwards; and Mrs Roberts kept the floppy disc in her bag (in contrast with the floppy disc which contained the Terms of Employment), which was kept in the Acton office) until it was produced in mid 2008 for the purposes of these proceedings. Mrs Roberts in her oral evidence said she did not know why she wanted the electronic copy. On the floppy disc the document bears the label “Shareholders Agreement on Headed Paper.doc”; and by the metadata embedded in the document it purports to have been created on 17 April 2007 in the morning, without being modified or even accessed at any time after 17 April 2007.

[213]The Defendants say that the electronic version of the document corroborates the evidence in relation to the signed version, that the SPA was in existence on 17 April 2007 and was indeed signed on that date. However, the joint expert who examined the electronic version explained that forensic examination of the relevant computer system on which the electronic version was created would be necessary to establish the authenticity of that version. And it was Ms Binns’ evidence that the relevant lap-top computer “had been disposed of at some time during 2007 … in the household rubbish”. In other words it is perfectly possible that that the electronic version was created on a computer which had been manipulated to produce a version with misleading metadata.

[214]As it seems to me, the real purpose for which the SPA was made was to justify the proposition that in August 2008 Mrs Roberts was in a position to oust the Claimants from their office as directors and their position as shareholders, and importantly for this that despite her resignation as a director of the Company in May 2008 Ms Binns had again become a director by August 2008 notwithstanding the absence of any resolution of the Company or its directors or agreement with the Claimants. After all, as members and directors of the Company their involvement was in principle necessary for any effective resolution: and it is clear that they were never consulted about any such reinstatement. As Mr Kynoch pointed out, the provisions of the SPA relating to the right of reinstatement are most remarkable and make little sense in any ordinary shareholders’ agreement.

[215]More generally, however, I do not believe that the discussions among the parties and Mr Yeo over the second half of 2007 and in early 2008 could have proceeded as they did if the SPA had ever been in existence and effective. And even if that is wrong and the SPA might have become an historical relic by the end of 2007, that is hardly likely to have been the case in July 2007 when there were the meetings of 6 and 12 July. Quite simply, apart from the Terms of Employment themselves and Ms Binns’ two challenged letters of 19 May 2008, there is no contemporaneous document which gives any unequivocal indication of the SPA having ever existed.

[216]There is a further oddity about the SPA. Mrs Roberts explained in her oral evidence that the absence of any reference to the fact of the agreement, already supposedly made with Ms Binns, for Mrs Roberts to have a majority shareholding (51% of the Company’s share capital) was because the purpose of the SPA was to give Mrs Roberts control as to the detail of shareholdings. This evidence was obviously mistaken, as the SPA rather has the effect of giving Mrs Roberts and Ms Binns control together and separately.

[217]The SPA was not created on Ms Binns’ desktop computer in the Acton office. It may therefore be easily explicable that it was not included in the electronic documents downloaded from that computer to the UBS drive in February 2008. The same is not the case with the challenged minutes. Electronic copies of those documents (with the exception of the Challenged 8 January minutes) are to be found on a single floppy disk produced by the Defendants in the course of these proceedings. The electronic copies were labelled respectively “Minutes of Meeting 14122008.doc”, “Minutes of Meeting 10012008.doc”, “Minutes of Meeting 17012008.doc” and “Board Meeting 19022008.doc”. These are the minutes which are said to have been made by Mrs Sheehan from notes taken by her at the relevant meeting. The metadata for these electronic copies purports to show that the electronic copies were made at or shortly after the dates of meetings. The copies were seemingly made on Ms Binns’ desk top computer at the Acton office (the one on which her version of the minutes of the 10 January 2008 meeting was saved). However that computer is no longer available for forensic examination, having (it is said by the Defendants) been disposed of with office rubbish in February or March 2008. If electronic versions were saved to the computer’s hard-drive, none of the versions were downloaded onto the USB drive in February 2008.

[218]The Defendants’ case was that the Challenged Minutes (other than the Challenged 8 January Minutes, said to have been typed by Ms Binns) were made by Mrs Sheehan, and were in each case made shortly after the relevant meeting. I do not accept this. The label given to the electronic version of the Challenged 14 December Minutes is inappropriate for an electronic document created in December 2007 rather than one created after the event in 2008. Importantly, in her oral evidence Mrs Sheehan said that this style of label used for the Challenged 14 December Minutes, with the legend “14122008” to signify the document’s date, was not hers; and that evidence was not only applicable to those minutes with their inapt date, but also to the other minutes as well.

[219]Further, there are statements in the Challenged Minutes which I cannot reconcile with what is known to have happened. By way of example in the Challenged 14 December Minutes the conclusion of the document concerns Ms Binns’ resignation letter and Mrs Roberts’ reaction. What is recorded is that Ms Binns wrote out her resignation letter but refused to hand it over, saying that she was going to type it; and Mrs Roberts is recorded as having said that she did not want Ms Binns’ resignation. Ms Binns’ minutes record that “Sheila said that she wanted 100% control of the Company and that she will give Suzanne the £23,000 owing of the shareholding if this meant Suzanne would resign. SB agreed to this…”. Ms Binns’ resignation letter appears to have been created on the evening of 14 December 2008, if the time set out in the file on the USB drive is correct. What is important on this point is that Mrs Roberts’ letter to Ms Binns, written as it was after the meeting and withdrawn by agreement on 10 January 2008, makes no sense if Mrs Roberts had explained to Ms Binns at the meeting that she did not want Ms Binns’ resignation.

[220]I should just add, on this point, that Mrs Roberts in her oral evidence denied having asked for Ms Binns resignation, as recorded in Ms Binns’ minutes of the meeting of 14 December 2007. Indeed, Mrs Roberts also said in her oral evidence that she had not sent the letter of December 2007 concerning Ms Binns resignation. On these points I reject Mrs Roberts’ evidence: I do not think that Ms Binns would have made a mistake in what she set out in her document. This consideration, taken with what was set out in both versions of the minutes of the meeting of 10 January 2008 leads me to the conclusion that Mrs Roberts had indeed sent to Ms Binns the letter concerning the latter’s resignation.

[221]On a different floppy disk is an electronic version of the Challenged 8 January minutes. This file was typed by Ms Binns, according to the Defendants, and (as mentioned) is labelled “General Meeting 080108.doc”. It purports to have been made on the morning of 9 January 2008 on the same desk top computer as the documents just referred to. Plainly when the file was made the author was setting out to write up minutes of a meeting on 8 January, not 4 January. The version of the one of the Terms of Employment documents on the same floppy disc also purports to have been created on the same computer on the morning of 9 January 2008 and refers to discussions at “our meeting on 08th January 2008, for which we met to discuss your further interest in becoming Directors and shareholders…”

[222]If these documents were genuine and created on 9 January 2008, the mistaken date is really inexplicable. Someone who went to the trouble on 9 January 2008 to write up minutes of a meeting on 4 January at which she had been present, or to prepare an agreement referring to discussion at the meeting, would have been hardly likely to make the mistake of attributing the meeting to the immediately preceding day. Also, as it seems to me, if the documents, in particular the Challenged 8 January Minutes, had been created on Ms Binns’ desktop computer in the Acton office in January 2008, they would have been copied by Ms Binns to the USB drive provided to the Claimants in February 2008: there was no possible reason for including Ms Binns’ supposedly rejected minutes of the 10 January meeting while omitting her minutes of the 4 January meeting. Conversely, I think it improbable that electronic versions of those documents, along with others of the disputed documents would have been preserved on floppy discs which contain almost nothing else.

[223]There is a further troubling feature of the Challenged 8 January Minutes. As I have said earlier when describing the document, there is reference in the document to “the original agenda”. The only agenda which has been put forward for any meeting in the first half of January 2008 is the agenda which I have previously described, this having had iterations first for a meeting on 8 January and then for a meeting on 10 January, and in a final adjusted version for the meeting on 17 January. No iteration of that agenda (or any other) now exists for a meeting on 4 January, and the earliest that any iteration of that agenda can have been created appears to be 5 January (an agenda for a meeting to be held on 8 January). This gives some support for my conclusion concerning the Challenged 8 January Minutes as a document created longer after the meeting than 9 or 10 January: the author appears to have believed that that meeting had been summoned by the agenda for the meeting proposed for 8 January, when as history reveals it cannot have been.

[224]Finally, the last sentence of the Challenged 8 January Minutes makes sense if the author believed that the meeting had been held on 8 January, but not if the author was writing up the minutes on 9 January from notes made at or just after the meeting on 4 January. Quite simply the minutes cannot have been an accurate record of what was arranged at the meeting on 4 January 2008, assuming one took place then.

[225]Mrs Roberts and Ms Binns gave an explanation for the inapt dates on the Challenged 8 January Minutes and the Terms of Employment. Ms Binns made notes of the meeting on 5 January 2008, so she said, which were on 9 January 2009 made by her into the Challenged 8 January Minutes in the process of which she made a reference, as she claims to remember, to “yesterday’s meeting”. Mrs Roberts then used the Challenged 8 January Minutes when typing the Terms of Employment, and therefore made the mistaken reference in that document (so the Defendants say) to a discussion on 8 January.

[226]I do not believe this. I think the explanation is that suggested by the Claimants, that the Challenged 8 January Minutes and the Terms of Employment were made long afterwards by someone who mistakenly thought that there had been a meeting on 8 January 2008 and who sought to fabricate a record of what was supposed to have happened at that meeting.

[227]It has not been possible to subject to forensic examination the computer on which the Challenged 8 January Minutes or the Terms of Employment were created, as according to the Defendants that was the computer on which the other Challenged Minutes were created and which was disposed of in February or early March 2008 with the office rubbish.

[228]One of the challenged documents in relation to which no electronic copy at all exists is Ms Binns’ “grievance letter” dated 19 May 2008. The explanation for the absence of any electronic copy is because, according to Ms Binns, this document was created by her on a further laptop which was damaged beyond repair in May 2008 and then disposed of by her in her household rubbish. In her first witness statement she said that the laptop used for this document was that used for the SPA; but later she said that the SPA had been created on a different, older, laptop which she had disposed of much earlier.

[229]Whether or not the document was created on a laptop which has been disposed of, I find that the document did not exist on 19 May 2008. The document is striking, and in my judgment implausible as a document created by Ms Binns on 19 May 2008, in that it contains criticism only of the Claimants and their conduct in relation to Ms Binns, in particular in bullying and picking on her, and none whatsoever of Mrs Roberts. Yet it is apparent that Mrs Roberts had at various times been at the least unsupportive of Ms Binns and critical and disrespectful of her. As an example, Mrs Roberts had to admit in the face of Ms Binns’ minutes of the meeting of 27 February 2008 that she had at that meeting asked Ms Binns “to stop her filthy lies”.

[230]The events of the end of February and early March 2008 require further consideration both in relation to the Claimants’ claim concerning the surrender of Ms Binns’ shares (including Ms Barker’s share), and in relation to the Defendants’ claim to hold between them 80 shares in the capital of the Company.

[231]By the time of the meeting on 27 February 2008 the Claimants were anxious and upset that the issue of their shares had not yet been the subject of any return to the Registrar of Companies. An attempt was made by Mrs Roberts to fob them off with the suggestion that the issue of shares, or at any rate the making of a return of allotments to the Registrar of Companies, was dependent on there being an extant shareholders’ agreement. The Claimants did not accept this.

[232]Meanwhile, at that meeting as well as at the meeting on 14 February 2008 Ms Binns had formed the view that further shares were now to be issued to each shareholder so that each held 25 shares out of a total of 100 issued shares (rather than 10 out of a total of 40). That may have been a misunderstanding on her part, which she nevertheless carried into the minutes she made of those meetings.

[233]It was following this meeting that the three forms 88(2) (returns of allotments) came to be made. Part of the explanation, I have no doubt, is that by the conclusion of the meeting on 27 February 2008 Ms Binns was isolated and defensive, having been the subject of extensive criticism at the meeting. Mrs Roberts in particular was extremely dissatisfied with Ms Binns, a dissatisfaction evident from not only from the minutes of the meeting on 27 February but also from her message to Ms Binns of 29 February 2008. Hardly surprisingly, as it seems to me, Ms Binns must have felt upset and betrayed. By way of example, in her oral evidence she made clear the frustration she felt at having to produce all the minutes, which she understood to include writing up all the minutes, in very short order following the meeting on 27 February.

[234]The first of the forms 88(2), that dealing with 30 shares (10 for each of the Claimants and 10 for Mrs Roberts) was made by Mrs Roberts in conjunction with the Claimants to allay any anxiety or mistrust on the part of the Claimants: the Claimants could see that they and Mrs Roberts were each getting the shares (and no more) to which they were entitled, while Ms Binns was being left to sort herself out.

[235]The second form 88(2), that for 73 shares made by Ms Binns, was produced on 29 February 2008 because the latter was giving effect to what she mistakenly thought to be issues of 25% holdings, the holdings being 25% of the issued and authorised capital: these purported issues she had already noted in the first Combined Register, in the Register of Applications and Allotments, as being made on 18 February 2008, although no share certificates had been issued at that time. However in this case Ms Binns was leaving Mrs Roberts to sort herself out. Also, in her own case Ms Binns stated the allotment to be of only 23 shares, as she already held her original share and was treating herself as having acquired Ms Barkers’ share from the Company by a transfer.

[236]The case which appears from Ms Binns’ evidence is that a similar form 88(2) had been made by Ms Binns, under pressure from the Claimants, in the middle of February 2008, had been left in the first Combined Register when that was taken to the Harrow office on 19 February 2008, and had then been held over Ms Binns’ head by the Claimants when they demanded of Ms Binns that they should be recorded as having holdings of 25 shares each, and that in the event she gave in and submitted the form 88(2) on 29 February 2008. I do not accept any of this. As I see it, the form, which unquestionably was signed by Ms Binns on 29 February 2008, was in all probability completed and submitted by her following the meeting on 27 February 2008 and in an attempt to resolve the criticism of her discussed at item 5 of her minutes of that meeting.

[237]The third form 88(2), that for 68 shares made by Mrs Roberts, was in my judgment made some time after 4 March 2008, shortly before the date when it was received at Companies House: if it had been made (as it purports to have been) on 28 February 2008, I would have expected to it to have been sent at abut that time and received (as the other forms were) by about 3 March 2008.

[238]As I explain, I accept the Claimants’ evidence that on 4 March 2008 there was a meeting at which Ms Binns sought to resign her positions with the Company and to give up her shareholding (then comprising in fact just 10 shares, there having been by then no further issue of shares or share certificates to her). I accept further their evidence that shortly after the 4 March 2008 meeting there was a reconciliation between Ms Binns and Mrs Roberts. What then happened, as I find, was that Mrs Roberts decided that it was appropriate for her to have a majority shareholding. Considering that the Claimants held 10 shares each out of the issued capital, and knowing that in her case (but not in the case of Ms Binns) a return of allotments had been made in respect of the shares issued in January 2008, she made a further return of allotments to cover a purported issue of 41 shares to herself (to give her a holding of 51 shares) and a purported issue of shares to Ms Binns to cover both 8 of those issued to her in January 2008 and a further 19 to give Ms Binns an aggregate holding (having regard to Ms Binns’ original share and also having regard to Ms Barker’s share) of 29 shares.

[239]Mrs Roberts sought in evidence to suggest that this form 88(2) was in fact made by her on 28 February 2008, although she had delayed for a while sending in the form until she had satisfied herself that Ms Binns’ form 88(2) had not been recorded on the Company’s file with the Registrar of Companies. I reject this evidence. There is no sensible reason for Mrs Roberts to have included for herself 10 shares on one form and 41 on another, if both were made on the same day and reflected issues of shares which had genuinely been made by then. But there was no genuine issue of the 41 shares. In particular there was no meeting of the Board of the Company on 28 February 2008, and no issue of the 41 shares was resolved upon or agreed to by the Company or its Directors on that day or on any previous occasion. Indeed, that point is reflected in the bank mandate form signed by Mrs Roberts.

[240]The treatment of Ms Binns’ shares in this form 88(2) is also inexplicable in a document made on 28 February 2008. Mrs Roberts’ oral evidence was that the allocation of any shares to Ms Binns had been omitted from the form signed by her showing no allotment to Ms Binns because there might have been a need for the shares elsewhere, not that they had all been dealt with on the form 88(2) recording allotments of 68 shares and signed by Mrs Roberts on the same day. If, however, what Mrs Roberts said were correct, that second form might have been expected to contain no allocation of shares for Ms Binns, or at any rate an allocation of fewer than the 27 recorded.

[241]I have described earlier in this judgment the entries in the second Combined Register. My conclusion is that at some date after 4 March 2008 this Combined Register was made up by the Defendants to reflect inter alia the purported issues of the additional shares to the Defendants. This would have included the preparation of share certificates 8 and 9, these significantly being signed only by the Defendants (in contrast with the Defendants’ certificates 3 and 6). It is also significant that it is share certificate 10 (again signed only by the Defendants), a certificate which one would expect to have been made after certificates 8 and 9, which is in respect of Ms Binns’ original 10 shares.

[242]Specifically, I reject the evidence of Mrs Sheehan that she witnessed Ms Binns and Mrs Roberts writing up the second Combined Register on 28 February 2008 and writing out replacement certificate 10 and certificates 8 and 9 “for the shares that were outstanding to them as agreed in the 17th January meeting and as witnessed and documented by me in the Minutes of that date”. If the second Combined Register had been dealt with in this way on 28 February 2008, Ms Binns could not possibly have completed and returned the form 88(2) of the following day.

[243]This brings me to the Challenged 19 February Minutes. This contains a narrative in which Ms Binns is recorded as having said that she had written up the first Combined Register in relation to holdings of 25 shares each for the four parties, having done this under pressure from the Claimants and in the mistaken belief that Mrs Roberts agreed. Again, as it seems to me, if there had ever been such a discussion, Ms Binns could not have acted as she did on 29 February 2008. I simply do not believe that there was such a discussion on 19 February; and I believe that any document which sought to record such a discussion as having taken place must have been created after the event.

[244][The position of Ms Binns] I can now deal specifically with the question which has been raised by the Claimants concerning the position of Ms Binns as a shareholder. This depends largely on the events of 4 March 2008. At that time she held the one share which she had held for many years. She was believed to hold a further share, being the share held originally by Ms Barker. She had also had an allotment of a further eight shares made in her favour on 17 January 2008. These ten shares I refer to in this part of this judgment as “Ms Binns’ shares”, although for reasons I have explained already I have concluded that Ms Barker still held her one share. Of Ms Binns’ Shares eight were unpaid.

[245]On 4 March 2008 there was an important meeting. Without doubt there was further bickering at the meeting. Without doubt, because this is admitted by Ms Binns, the latter said that she had considered resigning from the Company, and that she might have to resign if working relations did not improve given all the harassment she was experiencing and bullying to which she was subject. Undoubtedly during the meeting the originals of certificates 1, 2 and 3 were produced and endorsed with the word “void” and signed by Ms Binns and Mrs Roberts, and copies of these certificates were then made for and given to the Claimants. The issue is whether she went further and did resign and in the process gave up her shareholding so as to cease to be a member of the Company, her holding being either cancelled or coming to be held by the Company.

[246]I do not accept the Defendants’ evidence, that the three certificates were endorsed as they were because they were found by chance in a cupboard during the course of the meeting and were known to be redundant by reason of a replacement certificate already having been given to Ms Binns on 28 February 2008. I do not believe that there was any such replacement certificate then in existence, much less known of by the Claimants. I do not believe that, even had there been such a certificate, the parties would have dealt with the three original certificates in the way they were if by chance they were found. After what she had been through at the meetings of 17 and 27 February 2008, and after the terms in which she had been written to by Mrs Roberts on 29 February 2008, Ms Binns would in my judgment have been ready as the Claimants say to resign her positions with the Company and tender the share certificates for cancellation. And my conclusion is that that is just what she did. This is confirmed by the fact that from about this time Ms Binns ceased to be an authorised signatory on the Company’s bank account, the three other parties replacing her.

[247]However, this finding of fact does not conclude the issue. In particular the position with Ms Binns’ shares following the 4 March 2008 meeting became in my judgment a matter of some confusion. This is because shortly after 4 March 2008 she was reinstated into the Company, however provisional that reinstatement may have seemed. i) This had the result that she resumed her office as director: the remaining three directors accepted that she should continue as a director of the Company. Therefore she was a director until her undoubted and accepted resignation on 19 May 2008. ii) The reinstatement was not so straightforward as regards her shareholding. Rather, as it seems to me, from the perspective of the Claimants no return of allotments had been made and Ms Binns had given up her right to the new shares allotted to her on 17 January 2008. In their eyes, therefore, Ms Binns had at most her original share and that of Ms Barker. This is the explanation for the suggestion made in early May 2008 to Mr Mitchell, that Ms Binns held 2% or 2 shares, and for Ms Fazanni’s sending of the Forms 169 in July 2008 purporting to show the purchase of those shares (and no other shares) in March 2008. Her shareholding was dependent, in the view of the Claimants, upon her reinstatement becoming permanent (which, in the event, did not happen once Ms Binns again resigned in May 2008). iii) While I therefore accept the Claimants’ evidence, that in the disputes with Mrs Roberts which developed in July and August 2008 they believed that together they held two thirds of the Company’s issued capital against Mrs Roberts’ one third, Ms Binns having given up her shareholding rights, I also conclude that they were mistaken.

[248]For reasons I have explained earlier in this judgment, I am sure that on 4 March 2008 Ms Binns’ shares were neither surrendered to the Company and cancelled nor transferred to the Company so as to be held by the Company. The shares had been issued to Ms Binns, and she remained the holder.

[249]I also conclude that Ms Binns did not attempt to make a gift of her shares to the Company which is to be viewed as having been perfected or which it would be inequitable for Ms Binns to resile from. As to the first point, while Ms Binns may have intended on 4 March 2008 to sever her connection with the Company and may have written the words “void” on her share certificates with that in mind, I do not think that her intention went so far as being to make a present of her shares to the Company. In contrast with the Pennington case to which I have already referred, there was no instrument of transfer ever executed by Ms Binns; and there is no evidence that in seeking to sever her connection with the Company and give up her shares she intended to give her shares, or expressed an intention to give her shares, to any particular person whether the Company or all or any of the parties, or to make herself a trustee for any person.

[250]Further, in contrast with the Pennington case, there is no basis for saying that it would be unconscionable to allow Ms Binns to refuse to complete a gift of the shares. On the contrary, within two or three days of the meeting on 4 March 2008 the other parties had accepted that Ms Binns should be allowed to rejoin the Company; and in my judgment that rejoining involved her continuing with her standing both as shareholder and as a director.

[251]In relation to the position of Ms Binns there is still the question whether she remains a director of the Company. As to this, the time came when, on 19 May 2008, Ms Binns resigned as a director of the Company, and her resignation was accepted by the remaining directors.

[252]At that time, on 19 May 2008, there was no further discussion about Ms Binns’ shares with the remaining directors. The Defendants say that a few days later, on 23 May, Mrs Roberts and Ms Binns spoke and that Mrs Roberts said that she did not want to accept Ms Binns’ resignation but that nevertheless she took the transfer of Ms Binns’ shares “for the time being until I returned to work”. I doubt whether this conversation took place. Rather, as it seems to me, it would have been only later, after late July 2008, that Mrs Roberts and Ms Binns had any sort of reconciliation. In particular Ms Binns took no part in any of the Company’s affairs during July 2008, so far as appears from the contemporaneous documents before the Court, and was not present at any of the directors’ meetings during July 2008 of which there are notes or records. Indeed, the distinct impression I gain from the records of those meetings is that she had by then ceased to have anything to do with the Company so far as the other three parties were concerned.

[253]But, whether or not the conversation of 23 May 2008 took place, I think no reliance can be placed on that conversation by the Defendants as having resulted in Ms Binns’ reinstatement as a director. It was not then open to Mrs Roberts to reinstate Ms Binns as a director without either the agreement of the Claimants or an appropriate resolution of the Company in general meeting or by its directors. No such agreement or resolution is alleged by the Defendants, who instead rely upon the supposed powers given to Mrs Roberts by the SPA and Terms of Employment. Accordingly, Ms Binns office as director came to an end on 19 May 2008, and she has not since been reappointed.

Postscript

[254]It was suggested in submissions by Mr Goldkorn that an appropriate order to make would be for a valuation and buy out of shares. Such an order would no doubt be a way of putting an end to disputes between the parties. However, there is no jurisdiction for the Court, in the proceedings as constituted at present, to make such an order. It remains to be seen whether the parties will be able to find a practical and equitable resolution of their differences without further recourse to law.

[255]Meanwhile, it would be helpful if the parties’ representatives can prepare between them a draft form of order to give effect to this judgment, for example as to rectification of the Company’s register of members in the original Combined Register and as to any declaratory relief. Any areas of disagreement can be resolved when the judgment is handed down. At that time I will hear argument on costs, as well as any submissions which might be made concerning injunctive relief.