Alvona Developments Ltd. v The Manhattan Loft Corporation (AC) Ltd. & Anor [2005] EWHC 1567 (Ch) (19 July 2005)

Alvona Developments Ltd. v The Manhattan Loft Corporation (AC) Ltd. & Anor [2005] EWHC 1567 (Ch) (19 July 2005)

Where there is a substantive agreement between shareholders restricting the exercise of majority rights regarding board composition, the court will not exercise its discretion under section 371 Companies Act 1985 to override that agreement at the summary judgment stage, especially where disputed facts require determination at trial.

Citation
[2005] EWHC 1567 (Ch)
Parties
Claimant: Alvona Developments Limited; First Defendant: The Manhattan Loft Corporation (AC) Limited; Second Defendant: Powis Assets Limited
Jurisdiction
England and Wales
Judgment Date
19 July 2005
Procedural Posture
Part 8 Claim / Summary Judgment Application / Application for Summary Judgment Under Part 24 and Application Under Section 371 Companies Act 1985
Outcome
Application dismissed
Legal Topics
Section 371 Companies Act 1985, Deadlock in Company Management, Shareholder Agreements, Quorum Provisions, Majority Shareholder Rights, Board Composition
Company Law Section 371 Companies Act 1985 Deadlock in Company Management Shareholder Agreements Quorum Provisions Majority Shareholder Rights Board Composition

Case Brief

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Parties

Alvona Developments Limited

Claimant

The Manhattan Loft Corporation (AC) Limited

First Defendant

Powis Assets Limited

Second Defendant

Procedural Posture

Part 8 Claim / Summary Judgment Application / Application for Summary Judgment Under Part 24 and Application Under Section 371 Companies Act 1985

Legal Issues

  1. 1 Whether the court should order a general meeting under section 371 Companies Act 1985 overriding quorum provisions and alleged shareholder agreement
  2. 2 Whether an alleged oral agreement between shareholders restricting board composition constitutes a substantive right preventing the use of section 371
  3. 3 Whether summary judgment should be granted to the claimant in light of disputed facts

Ratio Decidendi

Where there is a substantive agreement between shareholders restricting the exercise of majority rights regarding board composition, the court will not exercise its discretion under section 371 Companies Act 1985 to override that agreement at the summary judgment stage, especially where disputed facts require determination at trial.

Court Disposition

Application dismissed

Orders

  • Claimant's application for summary judgment and for an order under section 371 Companies Act 1985 is dismissed.