“58. As regards the need for oral evidence, Mr Ashworth reminded us that it is well-settled practice that if a court finds itself faced with conflicting statements on affidavit evidence, it is usually in no position to resolve them, and to make findings as to the disputed facts, without first having the benefit of the cross-examination of the witnesses. Nor will it ordinarily attempt to do so. The basic principle is that, until there has been such cross-examination, it is ordinarily not possible for the court to disbelieve the word of the witness in his affidavit and it will not do so. This is not an inflexible principle: it may in certain circumstances be open to the court to reject an untested piece of such evidence on the basis that it is manifestly incredible, either because it is inherently so or because it is shown to be so by other facts that are admitted or by reliable documents. Mr Ashworth referred us in support to Re Hopes (Heathrow) Ltd, Secretary of State for Trade and Industry v. Dyer and others[2001] 1 BCLC 575 , at 581 to 582 (Neuberger J). He also referred us to paragraphs 17 and 18 of the judgment of Mummery LJ in Doncaster Pharmaceuticals Group Ltd and Others v. The Bolton Pharmaceutical Company 100 Ltd[2006] EWCA Civ 661 , which provides a reminder of the caution the court should exercise in granting summary judgment in cases in which there are conflicts of fact which have to be resolved before judgment can be given. Mr Ashworth said that these principles apply equally to the case in which the evidence is given by witness statement rather than by affidavit, and I agree.”
“Lee Bryan referred to Mark Steventon-Smith’s email dated03 February 2022 timed at 17:40 were Mark Steventon-Smith advised that NRG are not a contract partner of Rushbrooke. Lee Bryan requested written confirmation from NRG that it has no contractual relationship with the Company nor has it ever had a contractual relationship with the Company. Mark Steventon-Smith confirmed the statement to be correct and that NRG would provide written confirmation by close of play today.”
“I understand that you purport to act for Rushbrooke UK Ltd in a matter before the High Court in Bristol with reference to CR-2022-BRS-000042. You are aware that I am a co-director of Rushbrooke UK Ltd and, in that capacity, I herewith disinstruct you to act any further in the above matter. You also purport to act for Mark Steventon-Smith and therefore cannot also act for the Company as plainly a potential conflict of interest arises. … I require you to abandon this application forthwith as it is an abuse of process … Please confirm, by return, that you will cease forthwith to act in this matter … In addition to the above, your firm is aware Rushbrooke UK Ltd is unable to pay its bills as they fall due and is therefore insolvent. You know this because invoices that you rendered to the Company were not paid by the Company (because it has inadequate funds) but by Mark Steventon-Smith personally … ”
“I had no prior knowledge of this Application until after it was made. It has never been discussed with me by my co-director Mr Steventon-Smith nor did he discuss with me the instruction of [NRG] to make this Application or at all.”
“22. In my capacity as a director of Rushbrooke, I have dis-instructed NRG as I consider the Application that has been made to be an abuse of process and predicated on a false witness statement … For example, Mr Steventon-Smith says at paragraph 34 of his witness statement that the company is successful and solvent. It is neither. 23. Rushbrooke presently has cash at bank in the sum of£89,743.19 and overdue creditors amounting to at least£142,374.67 up to28 February 2022 . I therefore suspect that the true indebtedness of the company as of30 April 2022 is circa£160,000 as fixed costs accrue with no means of discharging them. I am aware that the Company could raise invoices in the sum of c£36,000 . The company is therefore, to the best of my knowledge, unarguably insolvent and becomes increasingly insolvent daily. 24. The Company is similarly not successful. Mr Steventon-Smith has attached to his witness statement the Company’s accounts for the year ended30 April 2020 . However, he was supplied with draft accounts for the period ending30 April 2021 which show that the Company lost£42,000 . … ”
“6. Following the instigation of proceedings against Mr Bryan, Mr Bryan emailed the company’s staff on 29th of November 2021 to advise that he was stepping back from Rushbrooke and that he would be limiting his role to that of Shareholder and Director … 7. Mr Bryan did not communicate this to me at any time which I believe to be odd and concerning. I was sent a copy of this email by staff members which is how I found out this information … 8. The staff were obviously concerned as Mr Bryan was the primary contact for all of Rushbrooke’s clients, he delegated work streams, was responsible for invoicing work out, managing the staff and was point of contact for the vast majority of the clients of the Company. 9. As stated above at paragraph 7, Mr Bryan did not communicate to me that he was stepping back from his duties to the Company. He put no plan in place to hand over the outstanding workload, he did not inform clients of his intentions to step back from the Company he stopped invoicing client’s for work undertaken - he abandoned all his responsibilities and he did not inform me of this. As a Director of the company I struggle to comprehend how Mr Bryan could think that these actions were in the best interests of the Company. I have had to attempt to pick up the pieces and the fallout resulting from Mr Bryan’s actions. 10. Mr Bryan, by his own admission has effectively walked away from the Company. Whilst he asserted that he intended to carry on as a Director of the Company, his actions, I would argue, speak otherwise. [ … ] 13. I have asked for updates but he has refused to engage with me. I have done my best to look into the current position but because I do not have access to Mr Bryan’s files or computer systems, I am completely reliant on his cooperation, which he refuses to provide – this, to my understanding are not the actions of someone who states that they are still acting as a Director. 14. It is clear that Mr Bryan has completely abandoned the Company, not just as an employee, but as a Director, he has refused to assist in any meaningful way in relation to the issues facing the Company, he has ignored letters sent to his home address by HMRC, has refused to engage with the Company accountants, is assisting a company attempting to force the company into liquidation – these are not the actions of a person purporting to act as a Director of a company, 15. It is for this reason that I believe that I have the authority to be able to bring this application before the court, without having to have first sought Mr Bryan’s prior agreement. I am attempting to protect the Company and serve its best interest. I consider that because I genuinely believe that Mr Bryan has completely abandoned the company and does not have its best interests at the forefront of his mind, that he is not been acting as director should.”
“1. On 01 October, I met with Mark. He gave me a letter from a firm of solicitors that he claimed were acting for Rushbrooke. As I have not agreed to the appointment of legal representation for the Company, it is unclear to me how these solicitors are actually instructed. The letter contained a threat of legal proceedings against me for damages in excess of£7.0m . Aside from the absurdity of the claim, the Company could not afford to run such litigation and pursuit of it would cause the Company to become insolvent. Understandably, I therefore wanted to ensure that I had equal control over the Company’s bank account (as a co-director I am entitled by law to such equal control). [ … ] 2. I can imagine that [the company’s bank] could be persuaded to release salary payments if the directors both agreed. However, until I understand the background to the threatened litigation and the appointment of solicitors purportedly by the Company and the costs which might have already been incurred, I will not know if the Company is in fact insolvent. I need full clarification of the Company’s position to avoid any possible inadvertant preferential treatment of creditors. 3. In the prevailing circumstances, any director acting prudently would want full clarity of the company’s That position before accepting the account should be un-frozen. [ … ] As of01 December 2021 , I have decided to limit my role to just that of director and shareholder of the company.”
“I do not read reg 70 as empowering a single director, where there is a board of directors, to institute proceedings without reference to his co-directors. I believe that reg 70, in its proper intent, means that the power to manage the company (and in this respect the business of the company (to use the wording of reg 70) must include the institution of proceedings in its name) is a power to be exercised by the board of directors. I do not believe that such business, and in particular the institution of such proceedings, can be carried on by a single director acting, as it were, as the board of directors.”
“[Counsel] submitted to me that a managing director, ex virtute officii, had the power to institute proceedings. I do not find that in any way a matter which the articles in Table A provide for. The managing director of a company is not under the articles given any powers over and above other directors in relation to the business of the company. As I say and as reg 72 makes clear, in a particular case the managing director may have powers over and above those enjoyed by his co-directors because they may have delegated those powers to him and, if they have done, so be it. There being in the present case no such delegation, in my view, reg 72 does not assist the plaintiff company.”
“It is for these reasons that I hold, on what I call this ‘preliminary issue’, that these proceedings were instituted without authority. In those circumstances, there not being in this case in contemplation any board meeting … which might ratify ab initio what had been done, I take the view that this action has to be struck out and not merely stayed, and that is the order which I make.”
“[48] This is of course bizarre. If Pertemps have behaved wrongly their appointed directors prevent Fusion from rectifying the wrong it will suffer caused by two of its own directors. There are of course ways to circumvent this. First the other shareholders and directors Messrs Seear, Hopkins and Butcher could present a s 459 petition and seek relief to protect Fusion's position in that petition. It could have been done by counter-application in existing petitions. Second they could have brought a Foss v Harbottle application and sought appropriately a Wallersteiner v Moir order to protect the costs. I adverted to this in the two previous hearings and suggested this was a matter of resolving the authority issue. No such applications have been made and Mr Collings boldly in his final submissions before me on19 April 2005 said ‘Fusion stands on its position on authority’ (albeit reserving the right if the draft judgment was against him to try and cure the position afterwards). [49] It must be borne in mind, in my view, that blocking of a legitimate cause of action Fusion might bring by Messrs Bacon and Watts given their conflict would in my view be a breach of the fiduciary duty of directors that they owe to Fusion. It cannot be right that they take advantage of their own breach of duty in blocking a legitimate challenge against a company in which they are also interested. The Courts will not allow such a position to happen. [50] It seems to me plain that Pertemps acknowledged there would be people who would represent Fusion defensively in the proceedings that it brought. That was despite there being no Board resolution. [51] For the present proceedings equally it seems to me clear that it was contemplated that somebody would represent Fusion to fight the issues. … [ … ] [54] Nevertheless in addition to the letter of31 December 2004 there are significant matters in the correspondence which show that it was plainly contemplated that Maxwell Batley should be allowed to receive instructions to raise a point on behalf of Fusion. As Rimer J observed it cannot be right to allow Pertemps to blow hot and cold on the issue. Having considered that Maxwell Batley were Fusion's solicitors for the purpose of the letter of31 December 2004 and that letter itself having contemplated an injunctive application to prevent it being implemented, it can only have been on the basis that they well know that Fusion would continue to instruct Maxwell Batley, through the instructions of Messrs Seear and Hopkins, to ensure Fusion was given a fair opportunity to challenge Pertemps' actions. [ … ] [56] I therefore accept Mr Collings' submission that proceedings were properly authorised as against Pertemps to challenge to the letter of31 December 2004 .”
“23. Mr Dougherty [for the appellant] distinguishes the decision of Mr Andrew Machin QC, sitting as a deputy judge of the High Court of Justice, Chancery Division, in Mitchell & Hobbs at 108. In that case, the essential conclusion of the judge was that, in the absence of any evidence about the delegation of powers, neither the managing director nor any single director could authorise the commencement of proceedings without a board resolution. 24. Both parties rely on the decision of Peter Smith J in Fusion Interactive Communication Solutions Ltd v Venture Investment Placement Ltd (No 2)[2005] 2 BCLC 571 at [44] to [58]. In that case, Peter Smith J applied the essential conclusion in Mitchell & Hobbs. Mr Dougherty submits that Peter Smith J also upheld a further principle, namely that directors acting in breach of duty could not claim that other directors lacked authority to commence proceedings to remedy the breach without the approval of a board resolution. Mr Berragan submits that those observations were obiter and that the ratio of this case was merely that on appropriate facts individual directors acting without the authority of a board can have implied authority to commence proceedings. [ … ] 34. The decision in Mitchell & Hobbs has to be seen in the context of its particular facts. The company was a small private company with two directors and three shareholders (the directors and the company secretary). The company secretary withdrew a small sum from the company's bank account and put it in a safe place in order to prevent one of the directors from dissipating it. That director then caused the company to sue the secretary. The result in the case is, therefore, hardly surprising. 35. Part of the judge's reasoning in Mitchell & Hobbs, however, was that since there was no express delegation of powers to the managing director he had no greater powers than any single director. He held: ‘[Counsel submitted that] Mr Radford's capacity as managing director imbued him with powers over and above those enjoyed by a non-managing director, notwithstanding that there was no evidence that any powers had been delegated to Mr Radford as managing director. He submitted to me that a managing director, ex virtute officii, had the power to institute proceedings. I do not find that in any way a matter which the articles in Table A provide for. The managing director of a company is not under the articles given any powers over and above other directors in relation to the business of the company. As I say and as reg 72 makes clear, in a particular case the managing director may have powers over and above those enjoyed by his co-directors because they may have delegated those powers to him and, if they have done, so be it. There being in the present case no such delegation, in my view, reg 72 does not assist the plaintiff company.’ 36. In my judgment, the last sentence that I have quoted goes too far. The managing director has certain powers by implication from his office. Even in a small company those powers will often include power to commence proceedings unless the board has expressly or by implication decided that such proceedings should not be taken or would be likely not to ratify the commencement of proceedings. In Mitchell & Hobbs, there were two directors who had fallen out with each other. As in this case one of the directors had sufficient shares to bring about the removal of the other. The warring directors would probably not agree that the board should ratify the commencement of the proceedings. The actual decision in the case was, therefore, correct. Moreover, it is important to note that the application in Mitchell & Hobbs was for summary judgment, and so no witnesses were heard. The judge could not, therefore, take the more obvious course of inquiring whether the director who had authorised the commencement of proceedings had acted in the best interests of the company as opposed to his own personal interest. 37. Fusion Interactive Communication Solutions Ltd again turns on its particular facts. The facts were such that the judge could draw an inference that two of the company's directors (one of whom was the managing director) had power to commence proceedings on behalf of the company. The judge's holding that a managing director had no implied power to commence proceedings was, therefore, not essential to his conclusion. This case does not, therefore, establish the wider principle for which Mr Dougherty contends (see paragraph 24, above).”
“There being in the present case no such delegation, in my view, reg 72 does not assist the plaintiff company”
“The duty imposed by this section has effect subject to any enactment or rule of law requiring directors, in certain circumstances, to consider or act in the interests of creditors of the company.”