Faulkner & Anor v Bennett & Ors

Faulkner & Anor v Bennett & Ors

The 1997 resolution, although amounting to expropriation, was passed in good faith for the benefit of the company as a whole, given the club’s unique nature and purpose. The claimants genuinely believed in a custom requiring share transfer upon ceasing membership. No reasonable person could say the resolution was not for the company’s benefit, and the Allen v Gold Reefs principle was not infringed. Relief sought by the claimants is granted, restricted to fully paid-up members of five years at dissolution.

Parties
Claimant: Herbert Gordon Faulkner; Claimant: James Albert Turner; Defendant: Harry Bennett; Defendant (discontinued): Jonathan Mills; Defendant: The Warrington Club (1906) Limited; Defendant: Doris Sowerbutts
Jurisdiction
England and Wales
Judgment Date
20 December 2011
Procedural Posture
Civil (part 8 Claim) / Judgment After Trial
Outcome
Claim allowed; declarations and directions granted as sought by claimants, subject to restriction to fully paid-up members of five years at dissolution.
Legal Topics
Alteration of Articles of Association, Fraud on the Minority, Expropriation of Shares, Shareholder Rights, Winding Up of Company, Distribution of Assets
Company Law Equity Alteration of Articles of Association Fraud on the Minority Expropriation of Shares Shareholder Rights Winding Up of Company Distribution of Assets

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Parties

Herbert Gordon Faulkner

Claimant

James Albert Turner

Claimant

Harry Bennett

Defendant

Jonathan Mills

Defendant (discontinued)

The Warrington Club (1906) Limited

Defendant

Doris Sowerbutts

Defendant

Procedural Posture

Civil (part 8 Claim) / Judgment After Trial

Legal Issues

  1. 1 Whether the 1997 resolution expropriating shares at par value was valid under the Allen v Gold Reefs of West Africa Ltd principle
  2. 2 Whether the resolution was bona fide for the benefit of the company as a whole
  3. 3 Whether there was a custom or practice requiring transfer of shares to trustees upon ceasing club membership

Ratio Decidendi

The 1997 resolution, although amounting to expropriation, was passed in good faith for the benefit of the company as a whole, given the club’s unique nature and purpose. The claimants genuinely believed in a custom requiring share transfer upon ceasing membership. No reasonable person could say the resolution was not for the company’s benefit, and the Allen v Gold Reefs principle was not infringed. Relief sought by the claimants is granted, restricted to fully paid-up members of five years at dissolution.

Court Disposition

Claim allowed; declarations and directions granted as sought by claimants, subject to restriction to fully paid-up members of five years at dissolution.

Orders

  • Declaration that the 1997 resolution was valid.
  • Declaration that the 810 issued shares are held for the benefit of club members at dissolution who were fully paid-up for a minimum of five years.