John Palmer & Anor v P1 Pit Stop Limited & Ors [2026] EWHC 1924 (Ch)

[2026] EWHC 1924 (Ch)Case No CR-2021-001428
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF P1 PIT STOP LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
Venue Royal Courts of Justice Rolls Building, Fetter Lane London EC4A 1NLDate 31 July 2026
Before
DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE PARFITT
Between
(1) JOHN PALMERClaimants(2) MAGNA SECRETARIES LIMITEDClaimant(1) P1 PIT STOP LIMITEDDefendants(2) HOWARD FORLANDDefendant(3) ELAINA FORLANDDefendant(4) MYLES BEERMANDefendant
Mr Palmer (the First Claimant) appeared in person for in personMr Forland (the Second Defendant) appeared in person for Second, Third and Fourth Defendants for The Second Claimant did not attend and was not representedHearing Hearing dates: 17 & 18 March 2026
JUDGMENT

Deputy Insolvency and Companies Court Judge Parfitt:

[1]By this claim, started by Part 8 Claim Form on 6 August 2021, the Claimants seek to have the register of members of the First Defendant company P1 Pit Stop Limited (the “Company”) rectified under s. 125 of the Companies Act 2006 (“CA 2006”).[2]Section 125 CA 2006 provides as follows: 125 Power of court to rectify register(1) If a company's register of members— (a) does not include information that it is required to include, or (b) includes information that it is not required to include, the person aggrieved, or any member of the company, or the company, may apply to the court for rectification of the register.(2) The court may either refuse the application or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved.(3) On such an application the court may decide any question relating to the title of a person who is a party to the application to have his name entered in or omitted from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or expedient to be decided for rectification of the register.(4) In the case of a company required by this Act to send a list of its members to the registrar of companies, the court, when making an order for rectification of the register, shall by its order direct notice of the rectification to be given to the registrar.[3]The Company is a necessary party to these proceedings, but the substance of the dispute is between the Claimants and the Second, Third and Fourth Defendants. Together, they are all the possible shareholders in the Company. The First Claimant, Mr Palmer, appeared before me in person; the Second Defendant, Mr Forland, also appeared in person on his own behalf and on behalf of the Third and Fourth Defendants who are respectively his wife and his stepson. The Second Claimant, Magna Secretaries Limited (“Magna”) did not appear and was not represented.

Two preliminary jurisdictional questions

[4]Before turning to the facts, it is necessary to address two preliminary jurisdictional questions.[5]The first concerns the court’s power to create a register from scratch under s. 125 CA 2006. In breach of its obligations under s. 113 CA 2006, but as is regrettably common in practice, the Company does not have a register of members at all, and has never had one. It has filed annual returns and confirmation statements at Companies House, which are supposed to reflect what is shown in a register of members, but for this company the reflection is an illusion: there is no register which can be reflected.[6]The Claimants effectively seek a declaration as to what the Company’s register of members should look like, and the creation by court order of a register of members reflecting that declaration. Couched in terms of s. 125(1) CA 2006, the Company’s failure to have a register of members at all means that all the information which the register is required to include is not included in its register, and this is the foundation for the statutory power of rectification even though there is no document which forms “its register”.[7]Curing this problem by creating a fresh register has been frequently held to fall within the powers of the court under s. 125 CA 2006, relying on the decision of Vinelott J in Re Data Express Ltd (unreported, The Times 27 April 1987). In Data Express there was once a register of members, but it had been accidentally thrown away and destroyed. The court approved a replacement register under its power of rectification. It seems to me that if the court has the power to recreate a destroyed register, it can create a register from scratch. What the court is doing in each case is materially the same: a register is created where there was previously no register. If the non-existence of the register is no bar to its rectification, it does not seem to me that it makes any difference whether there has ever been a register in the past. Accordingly, in my judgment, the statutory power of rectification exists whether or not there has ever been a register of members and the court has the power to do what the Claimants seek in the present case.[8]The second jurisdictional question relates to the court’s ability to resolve questions of fact in proceedings under s. 125 CA 2006. As will be discussed below, this is a case where there is a substantial dispute between the parties as to whose names should be included in the reconstituted register.[9]The apparent width of s. 125(3) CA 2006 is, perhaps, misleading. Although the statute provides that on an application under the section “the court may decide any question relating to the title of a person who is a party to the application to have his name entered in or omitted from the register”, there have been cases in which the court has declined to exercise the power under s. 125 CA 2006 where there are disputes of fact. The court has instead required questions of title to be established first by a separate claim between the relevant parties seeking declarations which are then summarily enforced, if necessary, via the power which is now in s. 125 CA 2006 (for example, In re Greater Britain Products Development Corporation Ltd (1924) 40 TLR 488 at 489). That strict approach accords with the limitations of the procedure under Part 8 of the Civil Procedure Rules which is the appropriate way in which to commence an application under s. 125 CA 2006, because the Part 8 procedure is not designed to allow a trial of disputed facts.[10]However, it has been recognised that taking a strict line may lead to the unnecessary duplication of costs and excessive delay, contrary to the overriding objective, and the Court of Appeal has approved a more flexible approach, in appropriate cases, with disputes of fact able to be resolved first by appropriate case management directions within the same set of proceedings in accordance with Part 7 of the CPR: see Re Hoicrest Ltd, Keene v Martin [2000] 1 WLR 414 at 420-421.[11]In the later Privy Council decision of Nilon Limited v Royal Westminster Investments S.A. [2015] BCC 521 the decision in Re Hoicrest was held to be wrong insofar as it suggests that a claim for rectification of the register (whether under s. 125 CA 2006 or in equivalent BVI legislation) can do anything other than determine legal title to shares. Lord Collins held that, for example, the procedure cannot be used by a person whose right to inclusion in the register of members arises via an equitable remedy of specific performance of a contract such as a share purchase agreement.[12]However, as noted in the later Privy Council decision in Chen v Ng [2017] UKPC 27, where all the relevant parties join in litigation which concerns questions on which the legal right to registration depend, the fact that the action may have originally invoked the court’s power to rectify the register of members does not deprive the court of jurisdiction to resolve the dispute actually put before it by the parties (see paragraphs [24]-[26]). Thus Hoicrest’s encouragement of active case management to resolve the real dispute between the parties which can then lead to determination of an application to rectify the register is still an approach which works, and which continues to align firmly with the overriding objective. Further, as noted by Zacaroli J in Otto v Inner Mongolia Happy Lamb Catering Management Company Limited [2024] EWHC 497 (Ch) at [59], the Court of Appeal decision in Hoicrest remains binding on me, however persuasive the contrary view of the Privy Council in Nilon may be.

Procedural matters

[13]Consistently with Hoicrest and Chen v Ng, there has been active case management in the present case, to enable all the interested parties to put before the court their case on the issues which will lead to the court being able to rectify the Company’s register of members by creating a register from scratch. By a consent order approved by ICC Judge Mullen on 24 March 2023, the present proceedings were transferred to Part 7; directions were given for the parties’ positions to be pleaded out; and a two-day trial was ordered to be listed.[14]The originally listed trial was adjourned, and was eventually heard over two days in March 2026. By that stage, Mr Palmer and Mr Forland were both acting in person. Unfortunately, and despite the court’s repeated and express directions, neither side took it upon themselves to lodge a trial bundle for the hearing before me. Instead, a collection of documents was provided by each side attached to emails sent to the court shortly before or even during the course of the trial. Those documents did not represent a complete run of the material which had been filed during the course of the proceedings and did not even include the parties’ Points of Claim and Points of Defence.[15]One consequence of this failure to comply with the court’s directions is that in preparing this judgment I have reviewed the entire court file from the very start of these proceedings to ensure that I have dealt with all the points which have been raised over the five years that this litigation has been proceeding, whether or not the parties addressed me on them during the hearing. That is one of the reasons for the extended time it has taken to produce this judgment.[16]The trial proceeded by way of submissions only and there was no cross-examination by either litigant of their opponent. It seemed to me that this was an appropriate departure from what would normally occur in a trial, particularly in circumstances where(i) there was no trial bundle, so the parties could not take one another to a common set of documents and fairly ask questions,(ii) none of the other makers of witness statements attended the trial besides Mr Forland and Mr Palmer, so that the only person capable of being cross-examined was the opposing cross-examiner,(iii) the relevant events occurred at least five years and up to ten years previously so that documentary evidence was likely to carry much greater weight than oral evidence,(iv) the parties had not had an opportunity to focus on the critical issues for resolving this claim (as opposed to the wider shareholder dispute which forms the background to these proceedings, about which they each sought to make submissions), and(v) Mr Palmer and Mr Forland were acting in person and were not experienced in conducting cross-examination. Allowing the two individuals to cross-examine one another would not have assisted with the just disposal of these proceedings but might have led to a disorderly, intemperate trial with an increase in the hostility between the two sides.[17]As it was, Mr Palmer had real difficulty in refraining from interrupting Mr Forland’s submissions, despite repeated warnings, and came very close to being subjected to a sanction to enable Mr Forland to have a fair opportunity to put his case. On the second day of the trial, having had a final warning the day before, Mr Palmer did allow Mr Forland to address the court without undue interruption. I am satisfied that over the course of the trial each side was given a fair opportunity to put their case.

Background and Companies House records

[18]The Company was incorporated on 29 August 2014 as a private limited company under CA 2006. Its registered office is now at 85 Great Portland Street, London. The Company adopted the model articles for private companies on its incorporation.[19]The Company was set up by Mr Palmer and Mr Forland, who knew each other prior to the Company’s incorporation.[20]The sole de iure director of the Company since incorporation has been Mr Forland; this is reflected in the records at Companies House.[21]There is a disagreement about why Mr Palmer was not also made a director on incorporation. Mr Palmer pleaded that it is because he has difficulties dealing with administrative matters due to his dyslexia. The Points of Defence disputed this, noting that Mr Palmer is a director of other companies. It is apparent that Mr Palmer has, on occasion, acted as if he is a director of the Company. Mr Palmer also alleges that there were “several occasions” (including at a meeting in Selfridges in 2017) when Mr Forland promised to made Mr Palmer a director. Mr Forland, for his part, has “no recollection” of the alleged conversations. It is not necessary for me to resolve this issue to determine the present claim.[22]Before setting out the competing evidence and arguments of the parties as to the proper shareholding position, I will set out what the documents filed at Companies House record. The numerous inconsistences, apparent factual mistakes and mathematical errors in the documents filed by the Company at Companies House demonstrate the utility of a register of members, and the problems which can be caused when a company lacks this foundational documentary record.[23]The documents at Companies House record that on incorporation, the Company had three shareholders: Mr Forland, Mr Palmer, and Mr Russell Marmon. Their names were entered on the Company’s memorandum of association and electronically authenticated. The Form IN01 filed at Companies House on the Company’s incorporation shows the following information about shareholdings:(a) Mr Forland was allotted 200 shares with a nominal value of £0.20, paying up £0.10 per share and with £0.10 unpaid per share.(b) Mr Palmer was also allotted 200 shares with a nominal value of £0.20, paying up £0.10 per share and with £0.10 unpaid per share.(c) Mr Marmon was allotted 100 shares with a nominal value of £0.20, paying up £0.10 per share and with £0.10 unpaid per share.(d) In total, 500 shares were issued, with an aggregate nominal value of £0.10 per share and £0.10 unpaid per share. The aggregate nominal value of the 500 issued shares was £100. Mathematically, based on each share being paid up as to £0.10 and unpaid as to £0.10, half of the aggregate nominal value was paid up (£50) and half (£50) was unpaid.[24]Contrary to the information in its IN01 and some of the subsequent annual returns and confirmation statements, the Company’s first set of accounts for the period ended 31 August 2015, filed at Companies House on 8 June 2016, show at Note 2 that the Company’s share capital was made up of “500 Ordinary Shares of 20p each”, described as “allotted, called up and fully paid” share capital, amounting to £100 in total. Despite this entry, immediately below and as part of the same note it is recorded that “On incorporation 500 ordinary shares of £0.10 pence each were allotted and fully paid at par for cash consideration to provide working capital.” This is inconsistent with the text immediately above: depending on which statements are regarded as accurate, it is possible that the shares had a nominal value of £0.20 and were fully paid, or that they were partly paid, or they had a nominal value of £0.10 and were fully paid, in which case the value of the share capital was wrongly recorded at £100 rather than £50.[25]The Company’s first annual return was filed at Companies House on 9 January 2015. This contained a statement of capital and a full list of shareholders which were identical to the information in the Company’s incorporation filings (and thus differed from the accounts for the period ended 31 August 2015).[26]The Company filed its next annual return on 9 November 2015. This recorded that there remained 500 shares, with £0.10 paid up and £0.10 unpaid on each, but that Mr Marmon’s 100 shares had been transferred on 8 November 2015 to Mr Palmer. Mr Palmer was shown as holding 300 shares; Mr Forland continued to be shown as holding 200. Again, this information is inconsistent with the accounts for the period ending 31 August 2015.[27]The Company’s next annual return was filed on 7 March 2016. This now recorded 1,000 shares as having been issued, with an aggregate nominal value of £1,000, made up of £0.10 paid up and £0.10 unpaid on each share. An error occurred here in the mathematics: 1,000 shares of £0.20 should lead to an aggregate nominal value of £200. With £0.10 paid up per share, the total paid up capital should have been shown as £100, not £1,000. The details of shareholders on this annual return were as follows:(a) Mr Forland was still shown as holding 200 shares.(b) Mr Palmer was shown as holding 250 shares, having transferred 50 shares on 6 March 2016.(c) Elaina Forland, the Third Defendant, was shown as holding 50 shares (presumably the 50 transferred by Mr Palmer). Elaina Forland (“Mrs Forland”) is Mr Forland’s wife.(d) Magna was shown as holding 500 shares.[28]The Company’s accounts for the period ended 31 August 2016, which were filed on 30 May 2017, recorded the Company’s share capital as being 500 fully paid shares of £0.20 each with an aggregate value of £100. The accounts did not, therefore, reflect the allotment of shares to Magna; and they showed all the shares as being fully paid. The figures in the accounts were, at least, mathematically consistent with themselves.[29]The Company filed a confirmation statement on 20 March 2017 which did not include a full list of shareholders, but did record Magna as the person with significant control. A new mathematical or factual error appeared in the statement of capital section of this confirmation statement. The Company was shown as having 1,000 shares in issue, with an aggregate nominal value of £1,000 and an aggregate amount unpaid of £1,000 (i.e. the shares each had a nominal value of £1, and no share capital had been paid up at all).[30]On 14 March 2018 the Company filed a confirmation statement with no updates.[31]On 22 October 2018 the Company filed a confirmation statement with updates. This confirmation statement recorded the following shareholdings:(a) Mr Forland continued to hold 200 shares. He was separately shown as holding 410 shares, making 610 shares in total.(b) Mr Palmer was shown as holding 240 shares, being shown as having transferred 10 shares on 16 October 2018 (which were then recorded as being held by Mr Forland).(c) Mrs Forland continued to hold 50 shares, but was separately shown as holding a further 50 shares, making 100 shares in total.(d) Magna was shown as holding no shares, having transferred all of its shares on 16 October 2018. 400 of its 500 shares went to Mr Forland; 50 of its shares to Mrs Forland; and 50 shares to the Fourth Defendant Myles Beerman (“Mr Beerman”). Mr Beerman is Mr Forland’s stepson.(e) Mr Beerman was thus shown as holding 50 shares.[32]The overall position, based on this confirmation statement, was that Mr Palmer had 240 shares (24%), and Mr Forland or members of his family had 760 shares (76%). Magna had none.[33]The Company’s subsequent confirmation statements, filed on 5 November 2019, 5 November 2020, 24 December 2021, 23 December 2022, 5 November 2023, 29 October 2024 and 31 October 2025 recorded no updates to this position.[34]The Company filed micro-accounts for the periods from 31 August 2017. These recorded that the Company had no “Called up share capital not paid”, but did not separately record any sum for the Company’s paid-up share capital.[35]The parties’ pleaded case diverges from the documents filed at Companies House. Mr Palmer alleges that the Company’s share capital on incorporation was £100, divided into 1,000 shares of £0.10 each, with 500 being issued (200 to each of Mr Palmer and Mr Forland, and 100 to Mr Marmon). Mr Forland admits this, save that he alleges that Mr Marmon “lost interest and agreed the shares would be taken back”. It appears Mr Forland means that Mr Marmon’s shares would be taken back by Mr Forland and Mr Palmer, equally, rather than taken back by the Company. Mr Marmon was, after all, a subscriber to the Company’s memorandum of association and was accordingly deemed to be a member of the Company pursuant to s. 112 CA 2006. This is essentially supported by a witness statement by the Company’s accountant, Jackie Withey, who states her understanding that Mr Marmon’s shares were passed to Mr Palmer and Mrs Forland.[36]Neither Mr Palmer or Mr Forland chose to explain why the Company’s next annual return following Mr Marmon’s departure showed his entire holdings of 100 shares in Mr Palmer’s name, and neither of them relied upon this as being significant or even correct. It seems to me that this was either an intermediate step or a mistake, and that the true position was that Mr Marmon transferred his shares to Mr Palmer and Mr Forland equally. The date on which this occurred is most likely to have been 8 November 2015, as shown in the 9 November 2015 annual return.[37]Pausing at 8 November 2015, then, the parties are agreed that the Company’s register of members should have shown Mr Forland and Mr Palmer each holding 250 shares of £0.10, each fully paid. The Company’s paid up share capital should have been £50 made up of 500 shares of £0.10. There is no agreement between the parties about what happened next save for Mrs Forland acquiring 50 of Mr Forland’s shares. I am satisfied that any order under s. 125 CA 2006 should proceed from this agreed starting point.

The issues

[38]Mr Palmer claims that the true position is that shown in the 7 March 2016 annual return: he should have 250 shares, Magna should have 500 shares, Mr Forland should have 200 shares, and Mrs Forland 50 shares. All the shares should be fully paid shares of £0.10, so that the Company has a total share capital of £100. He contends that the transfers recorded in the Company’s confirmation statement on 22 October 2018 were unauthorised and invalid.[39]Mr Palmer contends that Magna holds its 500 shares on trust for him (and only for him). The effect would be that Mr Palmer is beneficially entitled to 75% of the shares in the Company and effectively controls it. The existence of the trust arrangements is not something which would be reflected in the Company’s register of members, which records the legal position only. But Mr Palmer’s assertion that Magna holds its shares on trust for him rather than on its own behalf is a relevant factual matter which needs to be taken into account, given that Mr Forland does not accept that Magna is entitled to any shares at all.[40]Mr Forland’s primary position is that the 22 October 2018 confirmation statement records the correct position: he says Mr Palmer is entitled to 24% of the shares, Mr Forland’s side is entitled to 76% of the shares, and Magna has no entitlement. However, Mr Forland accepted during his submissions that had it not been for the dispute between him and Mr Palmer over a transaction involving a property at Gainsborough (described in more detail below), he would have been prepared to transfer back shares to Mr Palmer to re-establish equality between the two sides. He said that equality was what was originally agreed, but that after the Gainsborough incident he did not want Mr Palmer as a 50% shareholder.[41]Given that there was equality between the two sides prior to Magna being recorded in the annual returns as holding shares, there are two critical questions, which need to be addressed in this[42]Mr Palmer’s pleaded position is that Magna was issued with 500 shares to hold on trust for him. There is a typographical error in the Points of Claim, which asserts that Mr Forland holds these 500 shares on trust for Mr Palmer. Mr Forland pleads to this erroneous position in his Points of Defence, but goes on to deny that Mr Forland would ever have agreed to an arrangement by which Mr Palmer ended up with 75% of the shares.[43]My assessment of the factual position based on the evidence filed by the parties and the submissions of Mr Forland and Mr Palmer is as follows. With Mr Marmon having pulled out of the Company in late 2015, Mr Forland and Mr Palmer sought to find alternative investors. Mr Palmer found two individuals, whose first names were Ray and Gordon. Although their surnames appear in the Points of Defence, the parties and the contemporaneous documents referred to them only as Ray and Gordon, and I will do the same in this judgment without meaning any disrespect. These individuals were supposed to provide an investment into the Company in exchange for a 50% shareholding in the Company, which would have had the result that the Company was split four equal ways between Ray, Gordon, Mr Palmer and Mr Forland. This was essentially agreed at the trial by Mr Palmer and Mr Forland.[44]Ray and Gordon did not, in the end, provide the investment they were supposed to. Nor did Mr Palmer supply Mr Forland with their full details, to allow shares to be allotted to them. On 21 January 2016, Mr Forland sent Mr Palmer an email complaining that he had been “repeatedly” asking for Ray and Gordon’s details. The email warned that Ray and Gordon would lose their tax advantages if their details were not provided.[45]A critical contemporaneous document is an email sent by Mr Palmer to Mr Forland on 5 May 2020. The email was written during the early days of the Covid-19 pandemic, primarily for Mr Palmer to raise a complaint about Mr Forland “switching off my phone and email at the start of lockdown”. It was apparent during his oral submissions that this was something which Mr Palmer continues to feel strongly about. For the purposes of the present proceedings, however, the most important parts of the email are the following extracts, which deal with the consequences of Ray and Gordon not having made their investments:
“…About 18 months ago you took back the Investors 50% share and did not pay anything for it plus you were supposed to give me 26% of that which you still have NOT transferred. I want these transferred to me as I have given this project P1 1000% no one could say anything else! … “What do you want to do going forward, I am a 50% shareholder and you said in your email that you want to terminate our business relationship, so what do you want to do about my share? … “Put aside what you think of me now we need to get this resolved like men or if not tell me how much you want to buy my 50% for!”
[46]This email is strong supporting evidence from Mr Palmer himself that he considered himself entitled to 50% of the shares, with Mr Forland (or, presumably, his family) entitled to the other half. Mr Forland identified a further email sent by Mr Palmer on 14 May 2020 to Mr Forland in which he again asked about “a deal for my 50% shares”, in the same way as the 5 May 2020 email.[47]Mr Palmer’s pleaded case was that Magna held its 500 shares on trust solely for him. This pleading is inconsistent with these contemporaneous emails. It is inconsistent with the arrangements described above in which two new investors were to receive these 500 shares, with Mr Palmer and Mr Forland at all times remaining equal with one another. Mr Palmer’s position was that if Ray and Gordon did not put in the new investment, Mr Palmer could deal with the 500 shares as he wished. It does not seem to me that there is any contemporaneous documentary evidence to justify this position, and it conflicts with such evidence as there is.[48]During his submissions on the first day of the trial, and for the first time in the five years that these proceedings have been on foot, Mr Palmer alleged that there was a written deed of trust pursuant to which Magna held the 500 shares on trust for him. I asked him to obtain a copy of that document overnight, after which I would consider what I ought to do about it. On the second day of the trial, Mr Palmer explained that he had made enquiries and regretted to say that he had been mistaken about the existence of this document. There was no deed of trust after all.[49]Mr Born, an accountant and the director of Magna, provided a witness statement in support of the claim (Magna, of course, being one of the two claimants, and the joint Points of Claim having been authorised by both claimants). Despite Magna being an active party, Mr Born did not attend the trial or instruct anyone to appear for Magna. In his witness statement, he says this:
“5. This witness statement was drafted with the assistance of counsel, following a video interview with myself. I have gone through it and made sure it reflects my recollection of events. 6. Magna Secretaries Ltd is a non-trading company. It offers a service whereby it holds shares on trust for individuals. We have such an arrangement with John Palmer, in that Magna Secretaries Ltd holds shares in P1 Pit Stop Ltd on trust for John Palmer. If he decides at some point in the future that he wants to hold these shares himself, we will transfer them to him.”
[50]Although the trial did not involve Mr Palmer and Mr Forland cross-examining one another (which, in my judgment, was an appropriate derogation from the normal trial process for the reasons described above), there was no opportunity for either party to cross-examine any of the other witnesses. Had Mr Born attended the trial, I would have been minded to allow his cross-examination by Mr Forland. Certainly, I would have wanted Mr Born to be shown the relevant contemporaneous documentary material and to have a chance to explain any discrepancies between those documents and the trust arrangements which he described in his witness statement.[51]The directions order of ICC Judge Mullen dated 24 March 2023, which was entered by consent, provided that “all witnesses on whose written statements the parties rely shall attend trial to give oral evidence, if not excused.” Mr Born was not excused from attendance.[52]It seems to me that I can give Mr Born’s witness statement very little weight in these circumstances. There is no contemporaneous documentary evidence to support the existence of the trust arrangements. On the contrary, there is substantial documentary evidence indicating that Magna was at best a temporary repository for shares intended for Ray and Gordon, and Mr Palmer’s view after Ray and Gordon failed to invest was that the Company was held 50-50 between him and Mr Forland (as shown in his 5 May 2020 and 14 May 2020 emails).[53]In his oral submissions, Mr Palmer explained the 5 May 2020 email as having been written when he was “on the back foot”, coming when the Gainsborough issue had arisen, he was complaining about his phone and email access being cut off, and the Covid-19 pandemic was in its early and most serious stage. I take these points on board, but it seems to me that the contemporaneous statements in the May 2020 emails have the firm ring of truth about them. They cannot be fairly read as suggesting that the 50-50 position was a compromise.[54]Shortly after these May 2020 emails, perhaps after having taken advice from Mr Born of Magna that the Magna shares could not have been transferred without a stock transfer form executed by Magna, Mr Palmer (and/or Magna) began to claim an entitlement to the 500 shares. The change in approach became apparent in a letter dated 29 May 2020 written by Mr Born of Magna to the board of the Company (that is, Mr Forland) asking to see the stock transfer forms executed by Magna which led to its 500 shares being transferred “or an admission by you that you have perpetrated a fraud on me”. In the letter Mr Born referred to “my and [Mr Palmer’s] ability to remove you as a director, and to start a derivative action against you both civilly and criminally in the name of the Company.”[55]For reasons which will become apparent later in this section of the judgment, I consider that Mr Born’s allegations of fraud and his threats of criminal and civil litigation in relation to Magna’s shares were overstated.[56]A particular step Mr Palmer and Magna then tried to take was to pass a written resolution to appoint Mr Palmer and Mr Born as additional directors of the Company. This would have given Mr Palmer and Mr Born control of the Company’s board, able to outvote Mr Forland two to one. Mr Palmer and Mr Born (acting on behalf of Magna) purported to indicate their assent to a written resolution to that effect dated 14 July 2020, on the basis that because they together held more than 50% of the shares in the Company, they could pass such a resolution.[57]While the validity of this document is not something which is central to the determination of this claim, it is referred to in Mr Palmer’s witness statement and has been the subject of a trenchant solicitor’s letter from Mr Palmer’s former lawyers dated 29 July 2020. The underlying analysis in this letter, repeated in Mr Palmer’s witness statement, is wrong. It may assist the parties in any future part of their dispute to know why. The reason is that because this resolution was not circulated by the Company, it was not a valid written resolution in accordance with Part 13 CA 2006. Written resolutions must be circulated by a company (i.e. by the company’s board of directors), not by its members, even if they represent a majority. While the requisite percentage of members can require a Company to circulate a written resolution (under s. 292 CA 2006, with the process of circulation described in s. 293 CA 2006), the members cannot short-circuit the process and circulate the resolution themselves.[58]In his witness statement, Mr Palmer refers to s. 293(7) CA 2006, which provides that the validity of any resolution, if passed, is not affected by a failure to comply with s. 293 CA 2006. Mr Palmer’s argument is that this means that a written resolution can be passed even if it is not circulated by a company at all, but the shareholders themselves simply gather the requisite number of signatures. This is a misreading of s. 293(7) CA 2006, which validates resolutions despite a failure in the circulation procedure. It does not mean that there need be no circulation at all; this obligation arises under s. 292 CA 2006, which is not within the scope of s. 293(7) CA 2006 (which expressly blesses defects in the procedure under s. 293 CA 2006 alone, and not a failure to comply with s. 292 CA 2006). This was the conclusion reached in Re Sprout Land Holdings [2019] EWHC 806 (Ch) at [30] by ICC Judge Prentis. The same conclusion was reached in Kamenetsky v Zolotarev [2023] EWHC 2619 (Ch) per ICC Judge Barber, confirming that in the absence of circulation by the directors, there was “no ‘self-help’ mechanism enabling the shareholders to circulate the resolutions themselves” (at [79]).[59]These judgments represent, in my view, correct statements of the law. The result is that the resolution was not validly passed in accordance with the written resolution procedure in CA 2006. This invalidity is separate from the question whether Magna and Mr Palmer were, as they claimed, the holders of 75% of the Company’s shares and thus eligible to vote and carry any written resolution.[60]Returning to the question of the Magna shares, I have carefully considered the appropriate analysis for what occurred in the light of all the evidence and the parties’ pleadings. There is no suggestion by any party that Magna was ever beneficially entitled to the 500 shares: this is not the Claimants’ case. One possibility is that Magna was allotted shares (for which it did not pay), on the understanding that it would either transfer them to Ray and Gordon or, if their money was not provided, that it would hold them for Mr Palmer and Mr Forland equally in accordance with the previous position. In that situation, Magna itself would have been required to pay the subscription price for the shares. Magna’s willingness to perform this role, particularly given its present position that it has only ever had an agreement with Mr Palmer, would have to be based on inferences from the circumstances, but there is no direct documentary support for it.[61]Another possibility is that Magna was only to hold the shares on behalf of Mr Palmer. However, for the reasons described above, I am not satisfied that this is the correct position on the documentary evidence. Mr Forland submitted that he had gone back carefully through his emails looking for any document which might suggest that he had agreed to Mr Palmer having 75% of the Company, without success. Mr Palmer, too, was unable to produce any such document.[62]An alternative analysis is that no shares were ever allotted to Magna: on this analysis, the confirmation statements were only written up to show Magna as a shareholder in anticipation of shares being allotted (and issued) when Ray and Gordon provided their investment. This would be consistent with the purpose for which the shares would have needed to have been allotted: to raise money from investors. They were for Ray and Gordon, and if Ray and Gordon’s investment did not happen, the purpose of the allotment would fall away.[63]This is consistent with the essential thrust of the Points of Defence, in which it is alleged that following a falling out between Mr Palmer and the investors, Mr Palmer told Mr Forland to “reverse the share transfers out” of Magna. Mr Forland pleads that he did this by spreading the shares among members of his family (discussed further below). He could equally have reversed the process by treating the allotments as having not been effective at all.[64]There is no evidence that Magna ever agreed to subscribe for the shares itself, and no evidence that it paid the Company for them. Of course, the nominal value of the shares was de minimis. But Magna’s failure to tender even this minimal sum strongly indicates that it never agreed to become a member of the Company.[65]There is also no indication in the contemporary documents that Magna agreed to subscribe for shares at all. Instead, following Mr Forland’s chasing email of 21 January 2016 in which he sought Ray and Gordon’s details, Mr Palmer sent an email on 7 March 2016 with the subject line “Shares”, the body of which read (in full) “Magna Secretaries Limited (3 London Wall Buildings, London EC2M 5PD). Reg 04456693.” There was no accompanying or explanatory text. This email was sent on the same day that Mr Forland filed the annual return which listed Magna as a shareholder for the first time. Its purpose must have been to allow the annual return to be completed. It did not come from Magna, and there does not seem to have been any contemporaneous communication from Magna indicating that it wished to subscribe for shares in the Company (whether for Ray and Gordon, or for Mr Palmer, or at all). Equally, the Company (through Mr Forland) never offered to allot shares to Magna; and there are no communications between the Company and Magna about the allotment.[66]It seems to me that this evidence, or the lack of it, is the key to the correct analysis. To become a member of a company, a person must either be a subscriber to the company’s memorandum of association or be a person who has agreed to become a member (and whose name is entered in the company’s register of members). Shares are allotted pursuant to a contract of allotment between the company and the incoming shareholder by which the shareholder agrees to subscribe for shares on the terms of the contract of allotment; the allotment takes effect when the member has acquired an unconditional right to have their name entered in the company’s register of members (by section 558 CA 2006).[67]On this analysis, it does not seem to me that there was a contract of allotment with Magna in relation to the 500 shares. Magna never agreed to become a member of the Company. It did not agree to pay the subscription price for the shares, and does not seem to have paid the price. At most, Magna’s involvement was a staging post in a potential allotment which had the investment by Ray and Gordon as a condition precedent; but it does not seem that matters even progressed as far as this. Had their investment come to fruition, Ray and Gordon would have entered into a contract of allotment with the Company entitling them to have their names entered into the Company’s register of members. But this never happened.[68]It follows that no shares were allotted to Magna, and the 500 shares which were recorded in the Company’s annual returns from 7 March 2016 onwards were never allotted or capable of being registered in any person’s name. The Claimants are not entitled to have the Company’s register of members rectified to show Magna as the holder of these 500 shares and the ultimate rectified register will exclude them.

The transfers shown in the 22 October 2018 confirmation statement

[69]Mr Forland’s explanation for the transfers shown in the 22 October 2018 confirmation statement was as follows. He said he transferred the 500 Magna shares because Ray and Gordon had not provided their investment after all. His evidence was that Mr Palmer agreed to this at the time. He said he transferred these shares to himself or members of his family, and also 10 of Mr Palmer’s 250 shares, so that Mr Palmer would hold less than 25% of the shares in the Company. He said the reason he did this was that he needed to provide details to the Company’s bankers for any shareholder with 25% or more of the Company’s shares. He accepted that this arrangement led to him holding 260 shares on trust for Mr Palmer, namely half the 500 Magna shares and the ten additional shares transferred from Mr Palmer.[70]Mr Forland’s account of the trust arrangements is supported by contemporaneous emails, albeit post-dating the inception of the trust arrangement. In an email of 28 October 2019 Mr Forland told Mr Palmer that “Currently, you have 24% of the shares and I am holding 26% for you on trust”. In the same email, Mr Forland explained that “I had to reduce your shareholding to below 25% because Barclaycard would not process any application until it had checked you out.” It is not clear from this email whether Mr Palmer already knew that Mr Forland was holding shares on trust for him, or why, but it does appear (at least) that Mr Palmer did not immediately object to what had taken place. It is also not clear whether Mr Forland executed a stock transfer form in relation to Mr Palmer’s shares, or whether he would have been entitled to do so on Mr Palmer’s behalf. Without a proper instrument of transfer (such as a stock transfer form), legal title to Mr Palmer’s shares could not be transferred to Mr Forland (pursuant to s. 770(1)(a) CA 2006).[71]Later, in January 2020 Mr Forland asked Mr Palmer by email to whom Mr Palmer would like the 260 shares transferred. There was then some discussion in emails between Mr Forland and Mr Palmer about the transfer of the shares to members of Mr Palmer’s family, which was similar to what Mr Forland had earlier done by causing Mrs Forland and Mr Beerman to hold part of the shares he would otherwise have been entitled to (subject, of course, to such shares having been allotted in the first place). The evidence shows that there was no real dispute at this stage that to the extent that Mr Forland’s side held more than 50% of the Company’s shares, the surplus had to be returned to Mr Palmer’s side. Whenever Mr Palmer found out about what had happened, it appears that Mr Palmer was content to have had his shares held by Mr Forland and moved back at this stage.[72]In the light of the non-allotment of the 500 shares to Magna, the transfers in the 22 October 2018 confirmation statement would need to be reworked. Prior to these transfers, there were only 500 shares in issue, with 250 held by Mr Palmer, 200 by Mr Forland, and 50 by Mrs Forland. As described above, this is the starting position agreed by the parties. Taking this as the starting point, the only transfer shown in the 22 October 2018 confirmation statement which could have occurred was the transfer of the ten shares which previously belonged to Mr Palmer. These could be moved to Mr Forland, albeit they would not reduce Mr Palmer’s entitlement below 25% given that there were 500 fewer shares than everybody believed. These ten shares are the only shares which can have been moved around, because none of the other shares had been allotted.[73]To transfer legal title in the ten shares, as noted above, a proper instrument of transfer would have needed to have been lodged with the Company. I have not seen any evidence of a proper instrument of transfer. If there was a proper instrument of transfer, the result, at this stage, would have been Mr Palmer holding 240 shares, Mr Forland holding 210 shares, and Mrs Forland holding 50 shares. This would have been an imbalance from the previous 50-50 position, but (according to Mr Forland’s emails) the 10 surplus shares were held on trust by Mr Forland for Mr Palmer. This was about to be resolved through transfers to members of Mr Palmer’s family in the early months of 2020.[74]The parties then fell out with one another, abruptly and dramatically. Mr Forland described 2 March 2020 as the turning point. This turning point was his justification for his primary position at trial that Mr Palmer should not be entitled to have more than 240 shares (representing, as Mr Forland believed, 24% of the Company’s shares), and should not even get back the shares which Mr Forland had previously said Mr Forland was holding on trust for Mr Palmer.[75]What happened on 2 March 2020 was that Mr Forland found out about the “Gainsborough transaction”. The exact details of what occurred, and why, are not relevant to this claim. In this judgment I provide a summary, without making any findings of fact. It appears Mr Palmer caused the Company to acquire a property at Gainsborough in a back-to-back transaction in which the property would be bought and sold for the same price simultaneously. Mr Palmer was not a de iure director of the Company, but claimed during his submissions at the trial that he thought he was, or ought to be (given the promises made to him), or that the whole affair came from him using the wrong email address on an entirely separate transaction which had nothing to do with the Company. Whatever the real reason, Mr Forland says that having found out what Mr Palmer had done, Mr Forland grudgingly agreed to adopt the transaction on the Company’s behalf to avoid any difficulties. Because the transaction involved an immediate sale of the purchased property at the same price, there was no financial harm to the Company.[76]Subsequently, Mr Forland discovered that Mr Palmer had arranged for the seller of the Gainsborough property to pay Mr Palmer a substantial commission on the sale. Mr Forland says he was horrified to discover this and his evidence was that Mr Palmer did not initially tell him the truth about it when confronted. This seems to have resulted in a complete change in his attitude to Mr Palmer, and to have caused Mr Forland to investigate what else Mr Palmer had been doing using his Company email account. One consequence has been that Mr Forland caused the Company to sue Mr Palmer for the disgorgement of the commission, and Mr Palmer brought a counterclaim of some sort. These proceedings, including the counterclaim, were compromised by a Tomlin order on 20 August 2024 pursuant to which Mr Palmer agreed to pay the Company £150,000 plus costs to be assessed if not agreed. Two instalment payments of £10,000 each have been made by Mr Palmer, and a third party debt order has been obtained by the Company resulting in just over £2,000 being received, but there is a substantial outstanding balance to the Company.[77]The details of this claim, and other aspects of the wider dispute, are not relevant to this claim under s. 125 CA 2006. The reason they are not relevant is that there is no provision in the Company’s articles, or in CA 2006, or under the general law, which permits a shareholder (or a director or a company) to expropriate the shares of another shareholder because of wrongdoing. Whatever the rights or wrongs of what Mr Palmer did, it could not justify the position taken by Mr Forland that Mr Palmer had thereby forfeited his entitlement to shares which Mr Forland had previously been holding on Mr Palmer’s behalf.[78]I therefore decline to make any findings about the Gainsborough matter, or any other aspect of the dispute which has arisen between the parties since 2020. I do so while acknowledging that the present claim for rectification of the Company’s register of members may well be part of an emerging shareholder dispute between Mr Forland and Mr Palmer. It is not open to me to resolve that dispute in these proceedings.[79]Instead, my function is to exercise a discretion to rectify the Company’s register of members in accordance with my findings as to who is entitled to have their names entered onto the register. I will exercise my discretion and restore the equality between the two sides in the rectification order which I will make. It is clear that equality represents the underlying agreement between Mr Forland and Mr Palmer. I have not seen any proper instrument of transfer effecting a change in the legal title to the ten shares which Mr Forland said he transferred from Mr Palmer in order to satisfy Barclaycard. On the balance of probabilities, it appears to me that Mr Palmer has retained legal title to his original 250 shares all along. I am satisfied that the only person with a legal right to be registered as the holder of these 250 shares is Mr Palmer.[80]The result will be that the two sides are once again holding an equal proportion of the Company’s shares. This reflects their original situation and, in my judgment, represents the appropriate outcome following the determination of this claim.

Disposition

[81]I will order the rectification of the Company’s register of members to show the following entries. Mr Forland provided service addresses for himself and Mrs Forland after circulation of the draft judgment. I have assumed Mr Palmer’s service address is the same address as he gave on his witness statement dated 1 March 2026.[82]In an appropriate case, the court can make an order with retrospective effect: Re Sussex Brick Co[1904] 1 Ch 598. It seems to me that this is a case in which it is appropriate to record the members as having been registered on the dates they ought to have been entered into the register, had there been a register. Mr Palmer and Mr Forland were subscribers who have been members since incorporation. I have treated Mrs Forland’s entitlement as arising on the date shares were transferred to her according to the 7 March 2016 annual return.[83]This table sets out the information required to be recorded in a register of members for a company whose members are individuals, pursuant to ss. 113 and 113A CA 2006: NAME SERVICE ADDRESS NUMBER OF SHARES CLASS AND NOMINAL VALUE AMOUNT PAID DATE REGISTERED AS MEMBER John Palmer [REDACTED] 250 Ordinary shares of £0.10 £25 29 August 2014 Howard Forland 85 Great Portland Street, London W1W 7LT 200 Ordinary shares of £0.10 £20 29 August 2014 Elaina Forland 85 Great Portland Street, London W1W 7LT 50 Ordinary shares of £0.10 £5 6 March 2016[84]Any order rectifying the register of members of a company of this type must direct that notice of the court’s order be given to Companies House pursuant to s. 125(4) CA 2006.[85]When I circulated this judgment in draft, I invited the parties to agree, if possible, a form of order including an appropriate arrangement as to the costs of these proceedings. Agreement has not been possible. On the handing down of judgment, I will make an order dealing with the rectification of the Company’s register of members and reserving consequential matters. I will deal with those consequential matters following written submissions to be CE-filed simultaneously by 4pm on the day 28 days after this judgment is handed down. If any party wishes to have consequential matters resolved at a hearing rather than determined on paper, they should make that clear in their written submissions and I will consider whether directions ought to be given for such a hearing.

order

(a) What, exactly, were the arrangements with Magna?(b) What effect, if any, should be given to the transfers of shares recorded in the 22 October 2018 confirmation statement? Magna