Hunter v Senate Support Services Ltd & Ors

Hunter v Senate Support Services Ltd & Ors

The directors' decision to forfeit the claimant's shares was voidable because they failed to consider alternative courses of action and proceeded on a mistaken belief that forfeiture was inevitable, neglecting to exercise genuine discretion as required by the articles. The claimant had locus standi to challenge the forfeiture, and the resolutions for forfeiture and transfer to Servicespan Limited must be set aside.

Parties
Claimant: Keith Lindsay Hunter; Defendant: Senate Support Services Limited; Defendant: Acquire Services Limited; Defendant: Eat Dot Limited; Defendant: Servicespan Limited
Jurisdiction
England and Wales
Judgment Date
17 May 2004
Procedural Posture
Civil / Judgment
Outcome
Claimant succeeds on the issue of flawed forfeiture; forfeiture and transfer resolutions set aside.
Legal Topics
Share Forfeiture, Directors' Duties, Estoppel, Corporate Governance, Rectification of Register
Company Law Equity Share Forfeiture Directors' Duties Estoppel Corporate Governance Rectification of Register

Case Brief

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Parties

Keith Lindsay Hunter

Claimant

Senate Support Services Limited

Defendant

Acquire Services Limited

Defendant

Eat Dot Limited

Defendant

Servicespan Limited

Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Whether the claimant's shares in the subsidiaries were fully paid up or agreed to be so credited
  2. 2 Whether the subsidiaries are estopped by representation or convention from denying the shares were fully paid up
  3. 3 Validity of directors' decisions to make calls and forfeit shares

Ratio Decidendi

The directors' decision to forfeit the claimant's shares was voidable because they failed to consider alternative courses of action and proceeded on a mistaken belief that forfeiture was inevitable, neglecting to exercise genuine discretion as required by the articles. The claimant had locus standi to challenge the forfeiture, and the resolutions for forfeiture and transfer to Servicespan Limited must be set aside.

Court Disposition

Claimant succeeds on the issue of flawed forfeiture; forfeiture and transfer resolutions set aside.

Orders

  • Servicespan Limited to re-transfer the forfeited shares to the claimant
  • Registers of members of Senate Support Services Limited, Acquire Services Limited, and Eat Dot Limited to be rectified to show the claimant as holder of the shares