The principal issue on this appeal concerns section 117(3) of the Companies Act 2006 (“the CA 2006”) (“the no-access provision”). This enables the court in certain circumstances to make an order (“a no access order”) directing a company not to comply with a request for inspection of its register of members. In this case, the request for access was made by a member of the respondent companies, namely the appellant, Dr Martin Knight (“Dr Knight”). Mr Registrar Baister, sitting in the Chancery Division, Companies Court, found that Dr Knight had made this request for a mixture of proper and improper purposes. He made a no-access order on terms. In consequence, he made the following orders:

Dr Knight now appeals against those orders. Parts (A) and (B) of this judgment deal with Dr Knight’s appeal against the orders (A) and (B) above respectively. There is no cross-appeal as to the Registrar’s finding that the purpose of writing to shareholders about share valuation (“the share valuation purpose”) was a proper purpose.

For the reasons given below, I conclude as follows:

Save as regards the share valuation question, Dr Knight’s proposed communication was of no real value to his fellow shareholders. Alternatively Dr Knight’s real purpose (with that exception) was to harass other shareholders, as found by the Registrar. On either basis, the purpose is not a proper one within the no-access provision.

Insofar as Dr Knight sought access for the unchallenged proper purpose of the share valuation question, the terms contained in the Registrar’s order effectively gave him that access since the respondent companies undertook to circulate to the shareholders a letter from him. The Registrar was entitled to make an order in that form.

The Registrar was also entitled to make an order removing any obligation on the companies to comply with any similar future request for the same improper purpose.

However, I would allow the appeal as to indemnity costs on the basis that Dr Knight’s conduct after the deciding to withdraw his request, on which the Registrar relied, did not reach the threshold of unreasonableness necessary for indemnity costs.

The no-access provision is new and this is the first opportunity which this court has had to consider when the court should prevent access to a company’s register of members. By “access” I mean a request for either inspection or a copy. Under the CA 2006, a person may make either request.

Before turning to Parts (A) and (B) of this judgment I shall briefly outline the relevant statutory provisions, including the new no-access provision. As the respondents are companies limited by shares, I will refer to the register of members as the “share register”.

The statutory provisions dealing with inspection of share registers are now to be found in sections 113 to 120 of the Companies Act 2006 (“CA 2006”). Sections 116, 117, 119 and 120 are new. The other sections are derived from previous statutory provisions, some of which date from the Companies Act 1862.

The Companies Act 2006 (“the CA 2006”) in general requires every company to keep a register of its members, showing (in the case of a company having a share capital) for each member his name and address, the date he was registered as a member or ceased to be a member and the number and class of his shares and the amount paid up on those shares.

Persons other than the company may have a legitimate interest in accessing the information in the register. A member may, for instance, need the information in the register because he wants to obtain support from other members to requisition a general meeting of the company. A member of the public may need the information in order to investigate whether the board has issued shares improperly, for example by issuing them to their associates.

Accordingly, statute confers rights to inspect and take copies of the information in the register of members. Under the Companies Act 1985, section 356, anyone could obtain access to the register and a copy of it. However, there was evidence that some people were abusing this right and seeking the information in order to harass the members.

So since 2006 these rights have been qualified. In the CA 2006, Parliament has sought to provide some protection for members against improper requests by enabling the company to obtain a court order preventing access if the request fails a “proper purpose” test. Accordingly under the CA 2006:

the person who wants access to the register must make a request for access which states the purpose of the request (section 116);

the company may within 5 days apply to the court for an order relieving it from any obligation to comply with the request, and

the court has no option: it must make this order if it is satisfied that the request is not made for a proper purpose (section 118).

This is a major change in the law. Formerly, the law regarded the right of a shareholder to access the share register as an incident of his property right in his share, and did not inquire into his motives for wanting access: see Davies v Gas Light and Coke Co [1909] 1 Ch 248.

Section 119 creates two new offences: (1) to include in a request under section 116 a statement that is materially misleading, false or deceptive; and (2) to disclose information obtained pursuant to such a request to a person when he knows or ought to suspect that the information will be used for an improper purpose.

Section 120 deals with notification of the last date on which alterations were made to the share register, and alterations not reflected in the index of members. Section 120 is not material to this case.

The material statutory provisions are set out in the Annex to this judgment.

I start with the mischief to which section 117(3) of the CA 2006 was directed. Ms Lexa Hilliard QC, for Dr Knight, pointed out that Margaret Hodge MP, Minister in charge of the Bill at that stage, spoke during the committee stage of the Companies Bill leading to the CA 2006 of abuse of the right to inspect the share register.

These abuses were the subject of recommendations by the Steering Group of the Department of Trade and Industry’s Company Law Review (“the CLRSG”), of which I was a member. Section 117 was enacted following acceptance by the Department of those recommendations. In its Modern Company Law For A Competitive Economy: Final Report (www.dti.gov.uk/cld/review.htm), the CLRSG pointed out that the right of access to share registers was abused by, for instance, bounty hunters or people who sought to use the names and addresses for advertising purposes.

The principal recommendation made by the CLRSG on this point was that the Companies Act should restrict access to the share register. The CLRSG went on to recommend an approach not wholly dissimilar to the approach in the Australian Corporations Law. Under that Law, the applicant has to make his application in a prescribed form, and must set out in it each of the purposes for which he seeks access (section 117(3A) (c)). None of the purposes must be a proscribed purpose, and the proscribed purposes include such matters as requesting a donation from a member. The CLRSG recommended that purposes of access be limited to some (different) prescribed purposes (see Final Report, paragraph 11.44). However, Parliament has not identified any purposes as improper. Thus it has left the words “proper purpose” at large for the courts to work out in the conventional way, using the context and on a case by case basis. I therefore agree with the Registrar that Parliament intended to leave the meaning of "proper purpose" open for the courts to determine, and not to limit or define it.

The Registrar held, and I agree, that the words "proper purpose" should be given their “ordinary, natural meaning." He held that a proper purpose ought generally, in the case of a member, to relate to the member's interest in that capacity and to the exercise of shareholder rights. I agree with this approach, provided the last “and” is read as “and/or”, (as is clear from a later reference in the Registrar’s judgment).

It is not possible to provide an exhaustive definition of what is a proper purpose. The Registrar held that a court might have regard to a guidance note, issued by the Institute of Chartered Secretaries and Administrators (“ICSA”), when deciding what constitutes a proper purpose but that such guidance is non-binding and non-exhaustive. I agree: the ICSA guidance might well provide useful guidance in a particular case since it distills the experience of its members. It gives as one example of a purpose that, in the view of the working group responsible for the guidance note ought to be regarded as proper, “shareholders ... wanting to contact other shareholders about matters relating to the company, their shareholding or a related exercise of rights…”. The examples of improper purpose include: “any representation or communication to members that the company considers would threaten, harass or intimidate members or would otherwise be an unwarranted misuse of the member's personal information…”.

Where there were multiple purposes - some proper and some not - the Registrar held that “a proper purpose is not necessarily tainted by being coupled to an improper purpose”. I agree. As I explain in Part A, section 3 below, in these circumstances, the court may, as the Registrar did, make an order on terms.

The reference in section 117(3) to “proper purpose” involves the court first finding what the purpose of the request is. Normally, this will be found in the request itself but Parliament has not stated that the court is restricted to the purpose as stated in that document.

The Registrar held, and I agree, that on a section 117(3) application, the onus is on the claimant company to demonstrate to the court that it should be satisfied that the request is for an improper purpose. “Satisfied” means satisfied on a balance of probabilities. From this it follows that it is not enough that the purpose is capable of being, or may possibly be, an improper one if the court is not satisfied that it is in fact improper.

It is paradoxical that the first case in this court under the new section 117 should not be about access to the share register by a member of the public but by a member seeking access to the share register for the purpose of communicating with other shareholders on company business. When Eversheds came on the record in these proceedings as the solicitors for Dr Knight, they contended that this was not the sort of case in which Parliament intended that the companies should be able to obtain orders preventing them from giving access to their registers. However, section 117(3) clearly applies to requests from members as well as requests from members of the public, such as journalists.

Unless a company obtains an order under section 117(3) it must comply with a request for access and a criminal penalty is imposed for non-compliance by section 118. This is an important signal that Parliament attached importance to the exercise of the right of access to the share register. I agree with the Registrar that the way the statutory provisions are framed reflects a strong presumption in favour of shareholder democracy and a policy of upholding principles of corporate transparency and good corporate governance. I also agree with the Registrar that these factors point in favour of the court exercising its discretion “sparingly and with circumspection” where requests are made by shareholders to communicate with fellow shareholders. The reasons for this are obvious. If a member cannot communicate with fellow members, it puts the board into a very strong position. The corporate governance of a company is accordingly weakened. The relationship between the board and the shareholders cannot operate as it is intended to operate with the shareholders monitoring the activities of the directors. In my judgment, it would require a strong case to prevent access for these reasons.

Moreover, it is in principle for shareholders to assess whether a communication is of value to them and what action they should take. Parliament cannot in my judgment be taken to have intended the court to take a view about just how far the information which the member seeking access wishes to give him is information of value. This would involve the court making a commercial judgment as to the merits of the requesting member’s view and would lead to satellite litigation which would delay a decision on access. In some cases, however, it will be obvious that the information is of no value, as where the information is already known to members or simply nonsense. But if the court is in any doubt, it should not make a no-access order.

The structure of section 117(3) also shows that it is not for the court to rule out access on discretionary grounds, for instance, that the company might be embarrassed. (In any event, there is usually action which companies can take to prevent any reputational loss, such as writing to the shareholders to put their side of the case, as happened here.) If the court cannot conclude that it is satisfied that access is not sought for an improper purpose, the member has a right to access under section 117(5).

The policy behind section 117(3) is that access is to be refused where a person is disqualified by his purpose. Thus the court is not necessarily required to be satisfied that there is no substance in (say) allegations of misconduct which the applicant makes against the company if his purpose in pursuing those allegations is not a proper purpose within the no-access provision.

Self-evidentially the application should where possible be heard summarily. Exceptionally the court will not be able to deal with the application justly on the basis of witness statements, but will have to order cross-examination and consider whether a direction for a speedy trial is appropriate.

Where a member seeks access to the share register so he can communicate with other members, it seems to me that proposed communication must, if it is to be for a proper purpose, be relevant in some way to the members’ interests as members of the company.

The court can couple a no-access order with an order that the company should not comply with other requests for a similar purpose: see section 117(4).

Counsel helpfully researched whether there was any helpful case law in other jurisdictions. The court’s original request was related to Australia but counsel extended their researches to Hong Kong and India. They found little case law in this field. Moreover, the parallel statutory provisions were not the same as section 117(3). In those circumstances, while expressing my appreciation to counsel, I do not propose to refer to the cases they found.

I shall divide this Part of the judgment into three sections as follows:

The respondent companies are family companies in the fourth generation. Both companies were set up by the same two families, the Burry family and the Knight family. They continued to be run by representatives of both families. The principal business is running holidays parks. Together they have a turnover of about £30 million a year and they employ some 450 people. The shares are held by members of the two families, including those who are not involved in running the companies’ business. B & K has 11 members, and Hoburne has 28 members.

The directors include members of each family and also some directors who are not members of either family. Dr Knight was a director for about 13 years until he resigned in May 2000. He holds about 9% of the shares in B & K and about 6% of the shares in Hoburne. His mother is Mrs Judith Anne Knight, who for many years was a director of B & K, but she resigned on 30 September 2012. The executive Chairman of both companies was for many years Mr Robert John Burry but he also resigned on 30 September 2012.

Dr Knight has certain historic complaints about the conduct of the companies’ businesses. In short, they concern events in the 1980s and 1990s and Dr Knight has been pursuing them since the 1990s with a long period of inactivity (about ten years) when he was silent on these matters.

In particular, Dr Knight complains that in the 1990s the directors employed a handy man, Mr Downer, to work on their own homes. He was paid by the companies and there is an allegation that he was paid without declaration of tax or national insurance. This matter came to a head when Dr Knight’s mother suffered a riding accident. It appears that she made a claim for compensation which included a claim that she had had to employ Mr Downer. Mrs Knight initially told Dr Knight that she had been persuaded by the Chairman and another director, Mr John Osman, to drop her claim because the claim for recovery of Mr Downer’s wages would be embarrassing to the companies. Dr Knight states that he has an email from his sister and a letter from a former director, supporting his version of events but the latter has not yet been disclosed. The allegation would be difficult to prove as Dr Knight’s mother has withdrawn the allegation which she originally made.

On Dr Knight’s case, the directors took very substantial remuneration, and the benefits to each family were disproportionate. For example, Dr Knight has produced some figures which show that in 1988 B & K paid the Chairman over £500,000 as remuneration. In that year B & K’s profits were some £3.5 million and dividends of about £200,000 were paid. At the relevant time B & K sold properties with planning permission which it had obtained for one of its farms. However, Dr Knight was himself a director of both companies when remuneration was paid and the accounts disclosed the amount paid to directors in the year under review. When Dr Knight made his allegation, the companies took professional advice from their solicitors and auditors, and on the basis of their advice, they rejected any allegation of impropriety. The companies say that they incurred significant expense in taking this advice. Dr Knight copied his letters detailing irregularities and sent it to the companies and to the Inland Revenue, but the Inland Revenue has taken no steps. Dr Knight contends that the Chairman of the companies was a dominating character.

In 2001, Dr Knight asked for an independent investigation of the improprieties which he alleged. This was refused. However Dr Knight then declined to take part in an investigation in any event. He said he had sufficient evidence to prove his case in court. He wanted the directors involved to admit their wrongdoing to the board. In April 2002 Dr Knight made his first request for a copy of the share register but subsequently he effectively withdrew any threat of action. He offered to sell his shares but then decided not to go through with that.

In 2009, after being silent about his complaint for about 7 years, Dr Knight revived substantially the same allegations as before. On 20 January 2009 he wrote a long letter to the companies’ auditors complaining about historical matters.

He complained of tax evasion with regard to £200,000 worth of benefits spread to directors. He also made the same allegations about Mr Downer. He explained that his mother had changed her mind about supporting him. He further said that the Chairman had said that he would sue his father for libel for suggesting that he was dishonest. Dr Knight stated that he considered that it would be appropriate to reopen investigations into the conduct of the directors to determine who is acting dishonestly and who has denied this and misled other board members, share holders and auditors as well as the Inland Revenue. He referred to having witnessed other matters and heard further allegations that raised further widespread concerns including matters likely to be affecting the current accounts in terms of depressing the profits and inflating benefits to directors.

Dr Knight concluded:

For nearly three years after this, Dr Knight did not write to the companies, the directors of the companies or their auditors.

On 20 January 2012, Dr Knight again requested a copy of the register of members of B & K, alleging that the Chairman had acted dishonestly, that he was a liar and a bully and that he had acted as an untrustworthy trustee.

Dr Knight stated that, if Mr Burry did not admit that he acted dishonestly, he would

After that Dr Knight asked for a full register of members stating that his purpose was to communicate his concerns with the other shareholders.

On 14 February 2012, Dr Knight wrote to the company asking for copies of the register of members and stating his purposes pursuant to section 116 of the Companies Act 2006 in the following terms:

to study the current shareholders of both companies…

to write to shareholders and trustees detailing my written concerns about past conduct of directors which remain relevant…

to raise my concerns about the proposed method of valuation of the shares which fails to require a valuation of the assets of the companies. I also intend to advise shareholders to join a group to obtain advice from an expert accountant and lawyer on matters arising for the future.” (bullet points added)

Dr Knight confirmed these purposes in a witness statement containing a statement of truth.

On the facts the Registrar found that Dr Knight’s purpose in the two first bullet points in paragraph 29 above was improper. The share valuation purpose in the third bullet point was a proper purpose. Faced with the problem of multiple purposes – some good, some bad – the Registrar held that the companies were not bound to comply with the request, provided they gave undertakings to the court to circulate to shareholders a letter from Dr Knight about the share valuation purpose.

Each respondent gave an undertaking as follows:

On those undertakings, the Registrar directed that neither of the respondent companies should comply with Dr Knight’s request.

The Registrar further directed, pursuant to section 117(4), that the respondent companies need not comply with future similar requests made by Dr Knight for copies of or inspection of their registers of members.

We admitted further evidence on the appeal as to what happened after the Registrar’s order. The following is a summary of that evidence. On 1 March 2013, the respondents sent a letter from Dr Knight to members of both companies in accordance with their undertaking to the court. The letter principally criticised the fact that the articles of the companies dealing with transfer did not provide for any up-to-date valuation of the shares. When the companies sent Dr Knight’s letter to members, however, they did so under cover of a letter from the board of each of the companies stating why they had not proposed any change to the article dealing with the method by which shares were to be valued under the articles when the pre-emption articles were invoked with a supporting letter from the companies’ auditors. The evidence further states that no member contacted the respondent companies in response to Dr Knight’s letter. In addition, Dr Knight and Mrs Knight, his wife, failed to take the opportunity to meet fellow shareholders by attending the annual general meeting of Hoburne on 20 April 2013, and neither of them voted in person or by proxy at the that meeting. They received and retained substantial interim and final dividends from Hoburne.

I start with the Registrar’s approach. The Registrar did not reject any part of Dr Knight’s request because it was misconceived in law but because he essentially found that Dr Knight’s real purpose was not that asserted in his request but that of conducting a vendetta against members of the two families.

The Registrar began with the first purpose put forward by Dr Knight namely “to study the current shareholding of both companies”. He found that the general conduct of Dr Knight persuaded him that this was “simply window dressing designed to disguise other purposes which are more suspect and therefore not proper” (judgment, paragraph 61). The Registrar noted that his conclusion was reinforced by Dr Knight’s stated intention to write “to shareholders and trustees detailing my concerns about past conduct of directors which remain relevant” (judgment, paragraph 61).

The Registrar noted that the reference to trustees was not explained, but this point is immaterial (judgment, paragraph 62).

The Registrar went on to hold that the past conduct relied on by Dr Knight could only be the allegations he had previously made about remuneration and benefits in kind which I have summarised above. He described both allegations as “stale”. The remuneration allegation was first raised at the end of 1999/beginning of 2000. The Registrar held that any cause of action might well be statute-barred but he did not rule out the possibility of continuing breaches of duty which might mean that that was not so. The benefits in kind allegation was first raised in 2000. Dr Knight had contacted the Inland Revenue who had taken no action and so the Registrar was prepared to assume that they found “nothing untoward” (judgment, paragraph 65). He noted that the defendant had not produced any evidence about the Inland Revenue’s reaction. The Registrar noted also that neither allegation had anything to do with Hoburne.

The Registrar then concluded that Dr Knight’s evidence was “very thin”. He went on “the defendant’s failure [to give any substance when asked to do so] either to the companies or to this court, speaks volumes and leads to the inference, which I draw, that his allegations lack substance and that his real intention in seeking the registers is to make mischief, which cannot be a proper purpose” (judgment, paragraph 67).

The Registrar accepted that it was not appropriate to conduct a “mini-trial” on applications under section 117, but nonetheless he thought that a defendant should produce some material to enable it to form some view “about the seriousness and the bona fides of the concerns giving rise to his request for access to the register and so as to merit the attention of shareholders (as opposed to bothering them with private family matters which can be of no concern to them and from which they are entitled to be shielded)” (judgment, paragraph 67).

The Registrar then took delay into account. I have summarised the nature of that delay above. The Registrar said that he was not convinced by Dr Knight’s explanation that he was busy with his family in the seven-year gap: “All the defendant had to do was to write a letter, copy it and send it out. That would have been neither onerous nor costly” (judgment, paragraph 68). The Registrar held that renewal of the request on which Dr Knight had failed to act in the past “points to his wanting to make mischief by resurrecting stale and unsubstantiated allegations as opposed to entering into bona fide discussion with other shareholders on matters of current and legitimate concern to them” (judgment, paragraph 68). In relation to delay, it is to be noted that the Registrar was not saying that the request was improper because it was delayed but that the delay indicated what he found the defendant’s motive to be.

The Registrar then considered Dr Knight’s conduct over the years. He found that the correspondence “provides ample justification for Ms Stonefrost’s contention that the defendant is really embroiled in a family vendetta and seeks the registers to further it.” He continued:

The Registrar then considered the basis on which he was drawing his conclusions. He considered that he was making findings on the basis that Dr Knight had provided no evidence for his concerns and that he was not making findings about his honesty or the reality of the purposes which he had set out. So the Registrar concluded as follows:-

Ms Hilliard’s first submission was that the Registrar should not have made findings on matters in dispute as to a party’s purpose where that party has put in a witness statement containing a statement of truth which states that his purpose was otherwise in the absence of cross-examination. Although Ms Hilliard did not produce any authorities to support her proposition, it was not challenged by Ms Stonefrost. If authority were needed, the example can be taken of Re Smith Fawcett & Co Limited [1942] Ch 304 at 308-309. However, as that authority indicates, it may be possible to make such findings in clear cases. For example, there may be contemporaneous documentary evidence containing admissions which cannot seriously be disputed. I note that Briggs and Christopher Clarke LJJ, whose judgments I have read in draft, make this point. As Christopher Clarke LJ points out, whether cross-examination is required will depend on the circumstances and the requirements of fairness. The statutory offence created by section 119(1) and the statement of truth forming part of the Dr Knight’s written statement are added reasons for the court being mindful of the possible need for cross-examination in this area.

Ms Hilliard submits that the Registrar made findings about Dr Knight’s motives which were on her submission neither justified nor ones which ought to have been made on the documents. Ms Hilary Stonefrost, for B&K and Hoburne, submits that the Registrar was entitled to make the findings he did simply on the documents.

The need for cross-examination is not a point which the Registrar considered in the course of his very thorough judgment. My initial view was that Ms Stonefrost’s submission was not sustainable. However, as Christopher Clarke LJ points out, the Registrar drew inferences from the failure to bring forward any evidence. Dr Knight had in the past received information from his sister, (an email), his mother and a director (unnamed) and there was evidence in the respondents’ annual accounts that the directors’ remuneration had been very large. Since then, his best witness, his mother, has withdrawn her allegations. Nonetheless, Dr Knight had not produced any fresh evidence. I agree that the failure to bring forward more evidence is a powerful point. It is inconsistent with Dr Knight’s avowed purpose to persuade other shareholders to seek a remedy for past wrongs. If that was his purpose, he would surely have sought to put some more material in evidence and to provide in his written statement some explanation for the delay. As it is, this contains simply a bare statement of his purpose. The inference of improper purpose which the Registrar drew was on that basis so strong that he could draw it despite the witness statement containing a statement of truth unless there was other evidence to rebut this inference.

Were there circumstances to rebut the inference from Dr Knight’s failure to produce any evidence? Ms Hilliard submits that this appeal is about shareholder democracy. She asserts that the proper purpose in this case to study the shareholdings in their proper proportions and to see if shareholdings have changed hands and who would be receptive to Dr Knight’s points. She further submits that Dr Knight essentially raises corporate governance issues and wishes to have access to the register of members for detailing concerns about the past conduct of directors which remain relevant. Ms Hilliard accepts that Dr Knight became less temperate but submits that this was because he was given the “brush off”.

Ms Hilliard submits that, if Dr Knight had access to the register, shareholders might have said that they were not concerned or persuaded. He could have taken steps to bring a derivative action or an unfair prejudice petition. He does not want to derail the company. Ms Hilliard submits that Dr Knight should have been encouraged to contact other shareholders. She relies on the fact that access between shareholders is a matter expressly within ICSA guidance note.

Ms Hilliard realistically accepts that Dr Knight may not be able to pursue his allegations but, if there are any irregularities continuing, he would like to be to pursue them. Even though he does not now have support from those people who originally informed him that irregularities are taking place, it cannot be said that he is lying or that the improprieties had not taken place. The delay is substantial but she submits not so serious that access should have been stopped.

Ms Hilliard submits that there is no evidence that Dr Knight wanted to harangue his fellow shareholders and certainly not to harass them in the sense made in the Protection from Harassment Act 1997. He is an educated person and wants to see shareholders share his concerns. Ms Hilliard accepts that there is an acrimonious dispute here and that, if all Dr Knight wished to do was to vindicate his own integrity, then that would not be a proper purpose. But she submits he wants access for the purpose of the affairs of the company. She submits that the correspondence shows that he only talks about the way in which the companies are run.

Ms Stonefrost submits that this court should reach the same conclusions as the Registrar. She submits that the short point is that Dr Knight is trying to vindicate his own integrity.

The riding accident giving rise to the allegation of benefits in kind occurred in the early 1990s. Ms Stonefrost relies on the fact that, while Dr Knight says Mrs Knight was persuaded by one of the directors not to sue anyone because it would involve disclosing matters to the Inland Revenue, Mrs Knight now says that that is not what she said.

Ms Stonefrost relies on the ten-year delay and on the fact that Dr Knight did not write to shareholders in 2000 or 2002. He then went quiet for about seven years. When he revived the matter it is again just about Mr Downer and the old remuneration issue. She submits that the allegations are not explained. On her submission, they have to be seen in the context of this family vendetta between Dr Knight and the family and his mother. This is supported by the fact that Dr Knight had the share register for some time and did nothing. All this justifies the conclusion which the Registrar reached. The allegations are very serious and stale. Pursuing this sort of vendetta can divide families and destabilise the company. Therefore the purpose was not a proper one.

In addition, Ms Stonefrost submits that Dr Knight did not attend the most recent annual general meetings of the respondent companies. She contends that his non-attendance on these occasions raises serious doubts as to whether he really did want to get in touch with shareholders.

In my judgment, the simple fact is that the information which Dr Knight seeks to convey to fellow members about his benefits in kind and directors’ remuneration is not now apt to confer any benefit on the members. Dr Knight is essentially making his third attempt to pursue matters which are now very stale. Moreover, no corporate purpose in pursuing these matters is asserted by Dr Knight. There is virtually no reference in the correspondence to any ongoing effect of the defaults of which Dr Knight complains. In addition, there is very little reference in the documentation (as opposed to Ms Hilliard’s submissions) to any damage which the companies suffered as a result of the defaults of which he complains or that these defaults might now result in the repayment of any benefit which the directors received. Since the complaints are about matters which happened in the 1990s, while it may once have been possible to prove them, it is very difficult to conceive that Dr Knight could ever prove these matters now that Mrs Knight has changed her mind about supporting his case. There are also indications in the correspondence that Dr Knight’s aim in the past has been to obtain an admission from the directors about improprieties and to seek a voluntary settlement with the Revenue. He was asking the board to do what in his judgment was morally right rather than to obtain improvements in corporate governance.

While Dr Knight had previously suggested a voluntary settlement with the Revenue, which might have avoided penalties, he had copied his letters of complaint to the directors of the companies to the Revenue and the Revenue had taken no interest. There is therefore no indication that there is any risk now of penalties from the Revenue.

In those circumstances I am satisfied that Dr Knight’s purpose is not a proper one in so far as he seeks access to the share registers in order to pursue with other shareholders his long-standing benefits in kind and remuneration allegations. If there was anything in these points, he would have circulated shareholders about these matters before now. Dr Knight’s purpose of wanting to study shareholdings of the other members adds nothing since that purpose can only sensibly be for the purpose of obtaining support for some proposal.

The conclusion that I have reached is in this instance outside the examples in the ICSA guidance note.

My conclusions are independent of any inference about Dr Knight’s motive as drawn by the Registrar but I am satisfied that he was entitled to draw that inference. There is nothing to rebut the inference which can be drawn for Dr Knight’s failure to take steps over many years.

Before moving to the next section, I shall deal with Dr Knight’s objection to the order which the Registrar made under section 117(4). Ms Hilliard submits that the Registrar goes into little detail as to why Dr Knight should be subjected to this further restriction. Ms Hilliard submits that it would prevent any similar requests, even any that were legitimate.

Under section 117(4) the request must be for a purpose similar to that which the court has found under section 117(3). It is implicit that that similar purpose must be improper. I consider that Miss Hilliard is correct to submit that in future the order should identify in a recital the nature of the similar purpose so as to make this clear, which did not happen in this case.

That does not mean that the order should be set aside. In my judgment, the making of this order was a matter for the Registrar’s direction. Having set out the facts in great detail, he weighed up the risk of further similar requests for an improper purpose and decided that he should make this order. In my judgment, he was entitled to make that order and his exercise of discretion could not be set aside as either wrong in principle or perverse.

The Registrar was satisfied that there was a proper purpose for this share valuation question. He therefore was faced with a problem of multiple purposes – one proper and the others not.

I do not consider that the court can be satisfied that the purpose of the request is a proper one simply because it is satisfied that one of several purposes is a proper purpose (leaving aside de minimis purposes). The contrary conclusion would undermine the protection which the no-access provision was intended to give. In my judgment, the right approach is to read the words “a proper purpose” in section 117(3) as including “proper purposes” where there is more than one of them. Thus the court would have to make a no-access provision order if any one of the purposes was improper.

With the encouragement of counsel, the Registrar resolved the difficulty by following the decision of this court in Pelling v Family Need Fathers Limited[2002] BCLC 645.

In that case, this court held that it was open to the court under section 353(6) of the Companies Act 1985, the predecessor to section 117, to make an order which enabled a party to communicate with shareholders but at the same time permitted the company to keep the details of the shareholders on the register private. Mummery LJ giving the judgment of this court, held that this was possible. He held at paragraph 23(v):

The Registrar considered that Dr Knight should not be allowed to make direct contact with further shareholders. He was satisfied that he would not do so in appropriate or measured terms, by which in the context I understand him to mean that he feared that Dr Knight would bring extraneous matter into the letter (see paragraph 70 of his judgment). Accordingly he directed that any draft letter from Dr Knight to his fellow shareholders should be drafted by his solicitors and approved by the companies’ solicitors or the court. The companies should then agree to send it to the shareholders and forward any reply to Dr Knight or his solicitors, omitting the shareholders’ contact details unless the shareholder gave specific consent to those being passed on. He specifically stated that he saw no reason why the companies should not add their own letter if they wished to do so. The Registrar specifically ruled that the letter should not refer to the allegations about remuneration or benefits in kind.

It is obviously possible that a shareholder seeking access to the register of members has more than one purpose. The court may be satisfied that some of those purposes are proper but that some are not. Minor additional purposes of no consequence can, of course, be disregarded as de minimis. As I have explained, the Registrar held that the application for access was not “tainted” by there being an improper purpose.

There is a need for clarity here. This court made the order in Pelling under the earlier legislation which gave the court a discretion to refuse access to the share register. Now, under section 117(3) access will take place unless the court is positively satisfied that the purpose is not a proper one. However, a purpose may be improper not only because of the end it seeks to achieve, but also because of the way in which it seeks a proper purpose. Thus a person making the request for a proper purpose may also have an improper purpose if he wants to use the opportunity to communicate matters which were not relevant to shareholders’ interests (for example, as to how to make payments to some extraneous organisation). In my judgment, the Pelling order accordingly still works under section 117(3) in this situation. Moreover it may well be appropriate to use it because it will enable the communication for the proper purpose to be “policed”. That is what I understand the Registrar meant by the good purpose not being “tainted” by the bad, and I agree with his ruling as to the law.

I would thus reject Ms Hilliard’s submission that an order cannot now be made as it was in Pelling. I do not accept her submission that the Pelling order wrongly restricts access for a proper purpose. The answer to this point is that on the contrary it enables access for a proper purpose to take place because if a Pelling order could not be made the court would be bound to conclude that it was satisfied that access would not be for a proper purposes.

I need not deal with the respondents’ notice as Ms Stonefrost accepts that it does not arise if a Pelling order can still be made.

There would be other ways of achieving the same end as in Pelling, such as by the court accepting an undertaking from the person making the request for access as to the purpose for which he would use the information obtained. Any such undertaking would be backed up by the criminal sanction on misuse of that information in section 119.

Ms Hilliard submits that, if the purpose of communication is proper, a more proportionate and consistent way of dealing with the problem is that the company should make the share register available to the shareholder on his undertaking not to use it for any purpose which was improper. Ms Hilliard submits that, to follow Pelling, the court would be restricting communication between shareholders and that communication is therefore less likely to be effective.

Ms Stonefrost has no objections to an undertaking and she cannot foresee any reason why her clients would have objected to it.

However that may be, in my judgment, the choice of form of order was a matter for the exercise by the Registrar of his discretion. Ms Hilliard has not shown any error of principle, or perversity, on his part. Accordingly, in my judgment, the Pelling order he made should stand (unless both parties consent to its variation).

The Registrar not only ordered Dr Knight to pay the respondents’ costs; he also ordered the costs to be paid on an indemnity basis. Dr Knight appeals against the second part of this order.

In broad terms costs are awarded on an indemnity basis when the court in its discretion considers that the conduct of the paying party was out of the norm: see, for example, Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnston[2002] EWCA Civ 879. The conduct may involve impropriety. Alternatively, the conduct may be unreasonable to a high degree and may include refusal to accept a reasonable offer of settlement.

Thus, the Registrar had to consider Dr Knight’s conduct and whether it was highly unreasonable. The Registrar focused on Dr Knight’s defence of the application and his failure to compromise the matter. He gave his reasons for awarding indemnity costs in a second judgment, which he gave on 7 March 2013. The material passage is as follows:

Ms Hilliard in her submissions concentrates on the efforts which Dr Knight made to withdraw from this litigation. On 13 March 2012, Dr Knight filed his acknowledgment of service. On 15 March 2012, Dr Knight wrote to the respondents’ solicitors saying that he had now got details of shareholders and some addresses from Companies House and other places. He therefore proposed that the respondents withdrew their litigation and that in turn he stopped corresponding on past matters. He proposed that the litigation be withdrawn on terms that each party paid its own costs. He sent a copy of his letter to the Companies Court. He wrote:

On 20 April 2012, the Respondents’ solicitors replied. The letter was marked without prejudice save as to costs. The letter enclosed a draft settlement agreement between Dr Knight and each company. The letter stated that those agreements were based on the proposals set out in Dr Knight's letter, including his agreement not to raise the previous allegations. It stated that the respondents would as a gesture of goodwill limit their claims for costs against to a contribution of £5,000.

The letter was inconsistent with Dr Knight’s proposal. He had offered to withdraw the request on the basis that B & K and Hoburne paid their own costs. The draft settlement agreements also stated that the respondent companies were not obliged to comply either with the request Dr Knight had already made or “a similar request.” They also provided that the auditors of B & K and Hobourne would decide whether Dr Knight had come into possession of fresh information which justified him in contacting shareholders. Dr Knight’s undertaking, as set out by the respondents in the draft settlement agreements, extended not just to communications with shareholders but also to communications about his complaints with company officers.

Eversheds then came on the record as Dr Knight’s solicitors. They took the point that the draft settlement agreements were excessive.

The respondents’ solicitors, Rawlins Davy, replied on 15 May 2012. They explained that the draft consent order and draft settlement agreements were designed to achieve a comprehensive settlement of the issues in dispute between the parties. They complained about the circulation of defamatory and wholly unsubstantiated allegations, which Dr Knight had failed to substantiate. They offered to agree to a consent order on terms that Dr Knight paid the costs to date or alternatively that their clients entered into settlement agreements in the form previously drafted on the basis that each side pay its own costs. In June 2012, Rawlins Davy offered a mediation.

Dr Knight agreed to the mediation but stated that in his view his mother and Mr John Burry should attend with a further possibility of his own father attending as well. Rawlins Davy rejected that proposal.

On 11 September 2012, Rawlins Davy eventually sent consent orders providing for no order as to costs and further draft settlement agreements principally containing agreement to the consent orders.

Eversheds rejected this proposal. They stated that their costs were now about £14,000 plus VAT. They sought payment of Dr Knight’s costs, which was declined.

Ms Hilliard submits that the respondents wanted to get more out of the settlement than Dr Knight was bound to offer.

Ms Stonefrost submits that the whole application was an abuse of process. Dr Knight already had the information and his purpose in requiring access to the share register was improper because he had obtained his object. The settlement agreements reflected his offer. There was an offer of mediation. His proposal for mediation was intended to continue the vendetta in the correspondence.

In my judgment, when Dr Knight withdrew his request, the respondent companies did not need to take any significant further step in these proceedings. They should have sought an order from the court that they were no longer obliged to comply with the request because it had been withdrawn. They may have obtained an order for costs. However, no further costs would have been incurred. Instead the respondents sought to obtain more than Dr Knight had offered or was bound to agree to.

In those circumstances, in my judgment, it was not open to the Registrar to hold that Dr Knight’s conduct of his defence of the proceedings unreasonable or out of the norm for the purposes of the rule for indemnity costs. I would therefore allow the appeal on (B).

I would dismiss the appeal against the Registrar’s order under section 117(3) of the CA 2006 ((A) in paragraph 1 above). Dr Knight’s purpose in circulating shareholders with details of past irregularities was not a proper purpose because this communication could not confer anything of value on fellow shareholders, alternatively because the real purpose was to harass fellow shareholders, as found by the Registrar. I would make no order on the respondents’ notice.

However, I would allow the appeal against his order for indemnity costs ((B) in paragraph 1 above). Dr Knight’s conduct after deciding to withdraw his request, on which the Registrar relied, was not unreasonable for this purpose.

I agree with the order proposed by my Lady. I also agree with her analysis of the reason why, regardless whether Dr Knight was pursuing a vendetta or seeking to vindicate his integrity over that of other members of the family, his main purpose in seeking to circulate shareholders was not a proper one. The allegations which he was seeking to resurrect were very stale and their further investigation could have been of no possible benefit to the companies or to their shareholders, or indeed to him in his capacity as shareholder.

I have not been persuaded that the Registrar was wrong to reach the conclusions which he did reach about Dr Knight’s motivation, relying for that purpose upon his very careful and detailed analysis of the documents, rather than upon cross examination. I agree with my Lady that the court will not lightly make serious findings of bad faith or dishonesty against a party who denies them and who has not been cross examined, but there are cases where the documents make the position so clear that this may properly be done. This has for long been the case in relation to summary judgment, where the decisive question is whether a trial is necessary to enable the court to decide whether the party seeking judgment is entitled to it.

Applications under Section 117(1)(b) ought if possible to be dealt with summarily rather than after the delay and expense of a trial, not least because a long delay in the obtaining of a copy of the register of members may itself be destructive of the alleged proper purpose of the person seeking it. While there may be cases where a trial is necessary, and a speedy trial if at all possible, this should be the exception rather than the rule.

In the present case I consider that the Registrar was entitled to form the view which he did about Dr Knight’s motivation, based upon the extensive documentary history of his intermittent pursuit of his allegations over many years. His finding was not, on my reading, one of dishonesty or bad faith, but rather that Dr Knight had become sadly obsessed with what was at heart a family dispute, and had altogether lost sight of the interests of the companies or their shareholders in connection with it. They were serious findings, but involved the careful avoidance of any decision about the underlying rights and wrongs of the matters which Dr Knight was seeking to resurrect.

Finally, I agree with my Lady in relation to the continuing utility of the Pelling type of order where there appears to the court to be a mix of proper and improper purposes, and in relation to the costs of the proceedings until and including the hearing before the Registrar.

I agree (a) with the order proposed by my Lady and my Lord; (b) as to the continuing applicability and utility of a Pelling type of order in cases of proper and improper purposes; and (c) in relation to the costs of the proceedings below.

If a company applies to the court under section 117 (1) of the 2006 Act it will be for it to establish on the balance of probabilities that inspection is not being sought for a proper purpose. I agree with what my Lord has said about the need, if possible, for such an application to be dealt with without a trial (mini or otherwise) although that on occasion may be necessary. I do not, however, accept that, in the absence of cross examination it is not open to the court to reach findings as to purpose or motivation. If that were so, some form of trial might in many cases be obligatory, not least because a conclusion that inspection is sought for an improper purpose is itself a conclusion of fact. Whether a court is prepared to make such a finding without cross examination must depend on all the circumstances, the evidence that has been filed, the improper purpose or motivation asserted and the fairness or otherwise of making any finding if no cross examination has taken place. The court will no doubt be reluctant to make any finding of dishonesty or bad faith in the absence of cross examination but, even then, in appropriate circumstances, it may not be unfair to do so.

In the present case the Registrar drew the inference from Dr Knight’s failure to give any substantial evidence when asked to do so that his intention in seeking the registers was “to make mischief”: [67]. In [68] he said that Dr Knight’s failure to act in the past pointed to the same conclusion. In [69] he referred to the correspondence as justifying the contention that Dr Knight was really embroiled in “a family vendetta” and sought the registers in order to further it. In [70] he referred to Dr Knight’s quest to “vindicate his own integrity”. But in the same paragraph he indicated that he was not making findings of fact and that it would be wrong, without hearing oral evidence, to find that there was nothing in the matters Dr Knight had raised or to decide who in the two families was more or less truthful than anyone else. However, in [71] he stated that there was ample justification for the contention that Dr Knight simply wanted to harass the shareholders with the same unfounded allegations. There is thus a degree of ambiguity as to what exactly he was finding.

The Registrar was not, as I understand him, making any finding that Dr Knight was dishonest or acting in bad faith. What he did find was that Dr Knight’s purpose in seeking information was in order to advance very stale allegations, which he had pursued with an intermittent obsession, leaving them in abeyance for extended periods. He did not find as a fact that there was no truth at all in the historic allegations about remuneration and benefits of kind but held that they were not substantiated by the evidence before him which was “very thin” [67]; and that the absence of such substantiation was indicative of an improper purpose, variously described in the phrases italicised above.

In my judgment, the advancement of those allegations was, for the reasons explained by my Lady, without value or utility to the company or its shareholders; and the request for inspection of the registers, made with a view to advancing them, was not, a proper purpose.

In those circumstances it is unnecessary to determine whether or not Dr Knight’s purpose should properly be characterised as one of making mischief, pursuing a vendetta, or vindicating his own integrity. However, I agree with my Lady and my Lord that it was open to the Registrar to reach the conclusion, which those three descriptions reflect, that Dr Knight had become obsessed with the dispute to which his allegations had given rise and which he was intent on pursuing even though its resolution would not be of value or concern to the company or its shareholders and that that was an improper purpose.