Branch v Bagley & Ors

LORD JUSTICE NEUBERGER: Mr Anthony Branch applies today in person for permission to appeal against the decision of David Richards J given on 10th March 2004. In his judgment, which was reserved following a two-day hearing on 10th and 17th December 2003, the judge gave characteristically full and careful reasons for his decision to strike out Mr Branch's petition, which was brough under section 459 of the Companies Act 1985, and related to a company called the Oasis (Poole) Management Limited, a company limited by guarantee.

It is inappropriate for me to go into the history of the matter in any detail because, as Mr Branch said in his succinct, clear and moderate oral submissions, the judge has clearly and fairly set out the facts and issues, albeit subject to certain possible exceptions which Mr Branch wishes to rely on, and the judgment is more than capable of speaking for itself.

I emphasise the succinct, clear and moderate way in which Mr Branch made his submissions because the judge did fairly strongly and adversely criticise Mr Branch in paragraph 48 of his judgment, and some of Mr Branch's written material, which I have seen, did contain some very strong allegations. It is only fair to him that I record that the submissions he has made this morning have not suffered in any way from the qualities or characteristics which were identified by the judge.

To strike out a petition, to strike out any originating claim, is a strong thing to do because, effectively, it prevents a litigant having a full trial and, particularly in these days of consciousness of human rights, it is a course taken only where it is clear that there is no prospect of success. Therefore, any appeal against a strike-out application must be looked at very carefully. Nonetheless, where it is right to strike out a claim the Court should undoubtedly strike it out. Not only is it unfair on the Respondent that he should suffer the stress, delay and cost of a hopeless claim hanging over his head, but it does the Applicant, in this case Mr Branch, no favours to encourage him to think that he has a prospect of success and to encourage him to spend money and incur liability for the costs of the other side if his claim is, in fact, hopeless. To strike out his hopeless claim, although he may find it difficult to believe, would involve being cruel to be kind.

The question for me is whether there is any prospect of the decision of David Richards J being reversed on the ground that one or more allegations relied on by Mr Branch stands a chance, and it need be no more than a chance, of success in persuading the Court to wind up the company or give other relief pursuant to the section 459 petition.

In paragraph 16 of his judgment David Richards J set out in summary terms the grounds relied on by Mr Branch. Mr Branch has summarised his case on those issues in his very helpful skeleton argument, which runs, in my bundle, from pages 12 to 16.

The points which Mr Branch has concentrated on in making his submission this morning are as follows:

First, briefly, the Order made by the judge was wrongly drawn up as referring to the Insolvency Act 1986. I see nothing in that point. The effect of the order is clear.

The second point is that there are reasons for thinking that this judgment, which I have as an approved (and plainly handed down) judgment, dated 10th March, and recorded in my copy as received 5th April 2004, Progress Civil Appeals Office, does not in fact represent David Richards J's judgment. Mr Branch very fairly accepts that that is an extraordinary submission, but I freely accept that extraordinary things can happen.

If a litigant has cause to believe that what appears to be a copy of the judges's judgment is in fact not the judge's judgment, the obvious thing is to contact the judge's clerk with a copy of the judgment and ask him whether or not the belief is correct. I have no doubt that the first person to take steps to ensure something is done about such a problem and that the matter is put right and the world notified about it would be the judge himself. I understand from Mr Branch that David Richards J's clerk was contacted and nothing happened. I therefore proceed in the confident assumption that the judgment does indeed represent the judge's judgment.

It is fair to say that Mr Branch has drawn to my attention one or two points to support his belief in this connection. Thus, there is a reference to paragraph 35, to the respondents being "appalled to be described as anti-Semitic". Yet in the transcript of the evidence, the respondents did not deal with it. Mr Branch accepts that this may have been taken from a witness statement, put in by one of the Respondents, or, as does happen from time to time, the judge may have misremembered. In fairness to David Richards J, I emphasise I am not suggesting that he did, but it is, having seen the documentation, a possibility. Mr Branch has also drawn to my attention the defamation proceedings in this issue. They must take their course. I say nothing about them, but they do not take matters further in this case.

Next, Mr Branch says that section 310, which is helpfully set out in David Richards' J judgment at paragraph 42, would be something of a 'dead letter' if the Judge's decision in this case is right. I do not see that. The prohibition is expressed in terms in section (2) of section 310 and is subject to the very important section in sub-section (3). The judge considered sub-section (3) and came to the conclusion that it applied, and to my mind it is impossible to criticise that view.

Mr Branch is particularly concerned about the observations of the judge that "Mr Branch cannot demonstrate any unfair prejudice to himself." (See paragraph 43) In my judgment, the Judge was entirely right. Mr Branch was in the same position as every other shareholder. He was naturally out of pocket to the extent of his share of the £24,922, the same as every other shareholder. "Out of pocket" is not "unfair prejudice" within the meaning of that expression, as used by the judge, otherwise it would mean that in any case where the company spent money a shareholder could say he felt an unfair prejudice. This is not the occasion in which to go into the precise meaning of "unfair prejudice" because I have not been taken to the authorities, and it would anyway be rash today in an interlocutory application. I am quite satisfied that, while Mr Branch may have suffered what he characterised as "prejudice", it is not "unfair prejudice".

So far as the allegation of anti-Semitism is concerned, the judge said in paragraph 45 that he "need only say that the allegation provides no arguable basis for this petition." On the basis of what I have seen, I agree.

More generally, the trouble for Mr Branch is, it seems to me, twofold. The first is that where there are a number of people involved in owning or running a company, indeed where there are only two, it is possible for there to be a falling-out and strong feeling to be engendered. Those who have a majority vote will use it in any way they can to get what they want, and that will lead to a feeling of injustice and disappointment on the part of the minority shareholder, in this case Mr Branch. Secondly, in the context of a company where all the shareholders are tenants in the same block of flats, this problem is likely to be exacerbated because (a) the parties all live near each other and see each other, and (b) the outcome affects their homes. So the sort of disagreement that has arisen in the present case often causes feelings of unfair treatment on the part of the minority and, where it is in the context of a block of flats, the feelings are likely to be exacerbated.

It is clear that at times Mr Branch has let his feelings run away with him and, in fairness to him, I should say that, having seen many such cases in and out of court, he is by no means exceptional in this way.

But nonetheless, the fact remains that I should decide this application on the basis of the law and in my mind, in his very full and careful judgment, to which, in general, Mr Branch has given credit and paid tribute, David Richards J dealt with this case adequately and came, to my mind, to what was the right -- not merely the right, but the only -- conclusion. Although Mr Branch may have an understandable sense of grievance and unfair treatment, the question for this Court is, as David Richards J said, are there grounds upon which Mr Branch could reasonably anticipate relief under section 459 as a result of the matters set out in his petition and evidence. The answer given by the judge was no, and in my view he was plainly correct.

There is no real prospect of that view being successfully challenged by Mr Branch in the Court of Appeal. This is a case where, to engage the expression I used earlier, I should be cruel to be kind. It would do no favours to Mr Branch to allow his appeal. He would merely incur further costs and have to pay the costs of the other side and it would end in disappointment. Therefore I refuse this application.