Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
	[2013] CSOH 151
A688/10	OPINION OF LORD KINCLAVEN in the cause AMANDA URQUHART Pursuer; against (1) GLENHAVEN VENTURES, (2) WEST LARKIN LIMITED, (3) TERESA DONALDA SWEENEY, and (4) NANCY GAIL GEORGESON Defenders: ________________

Pursuer: Sandison QC; Currie Gilmour & Co (for Murchisons Law, Inverness)

Defenders: Wilkinson, Solicitor Advocate; Cannons Law Partnership

10 September 2013

Introduction and overview

[1] This is an ordinary action in which the pursuer seeks production and reduction of a share transfer form. The pursuer also has conclusions for declarator and interdict - all as set out in more detail below.

[2] The case came before me for debate in relation to parties' preliminary pleas.

[3] Mr Wilkinson appeared for all of the defenders. He opened the debate and invited me to dismiss the action essentially for the reasons contained in the defenders' notes of argument (no 21 and 25 of process).

[4] Mr Wilkinson invited me to sustain the third and fourth pleas-in-law for each of the four defenders. He also invited me to sustain the tenth plea for the first defenders; the eighth plea for the second defenders; the ninth and tenth pleas for the third defender; and the ninth and tenth pleas for fourth defender.

[5] In response, Mr Sandison who appeared for the pursuer invited me to reject all of the defenders' submissions for the reasons outlined below.

[6] Mr Sandison also advanced counter-arguments for the pursuer. He invited me to sustain the pursuer's first plea-in-law to the extent and for the reasons outlined in his amended note of argument (no 26 of process) at paragraphs A(b), A(c) and A(d).

[7] There was no need for Mr Sandison to dwell on paragraph A(a) of his note as the defenders did not insist upon the averments in answers 4 and 5 which had been the subject of challenge.

[8] At an earlier stage in his submissions, Mr Sandison also suggested that I should sustain the pursuer's second plea-in-law and grant decree de plano as first concluded for - as suggested in his note of argument at paragraph B. However, towards the end of the debate Mr Sandison accepted that the better course, if the action was to proceed, would be to put the case out By Order so that the court could be addressed as to further procedure. It was not disputed that that would be the sensible course.

[9] I have taken into account everything that was said during the debate.

[10] In short, in my opinion, the pursuer's submissions prevail for the reasons and to the extent outlined below.

[11] I would outline my reasons in more detail as follows.

The conclusions of the summons

[12] In the first conclusion, the pursuer seeks "production and reduction of a pretended share transfer form purporting to transfer one ordinary share in the second defenders from Owen James Sweeney to 'Glenhaven Ventures'"- of which production no 7/2 bears to be a copy.

[13] In the second conclusion the pursuer seeks "declarator that the pursuer holds the beneficial interest in the one ordinary share in the second defenders formerly held by Owen James Sweeney".

[14] In the third conclusion the pursuer seeks "declarator that the Annual Returns submitted to the Registrar of Companies on behalf of the second defenders for the periods to 28 September 2006, 28 September 2007, 28 September 2008 and 28 September 2009 are false insofar as they state or imply that 'Glenhaven Ventures' was, during the said periods, the holder of that share in the said company which had previously been held by Owen James Sweeney."

[15] In the fourth conclusion the pursuer seeks "interdict against the third and fourth defenders from taking any action as purported officers of the second defenders without leave of the Court or the prior consent of the pursuer until final disposal of the action; and for such interdict ad interim."

The closed record

[16] It might be helpful to set out the pleadings in some detail. The debate involved detailed consideration of the parties averments as set out in the closed record (no 28 of process) as amended by the minute of amendment for the defenders (no 27 of process). The position adopted by all four defenders was substantially the same. There were also amendments made during the debate as recorded in the interlocutors.

[17] So far as relevant, the pleadings as amended on 27 April 2012 were in the following terms:

"1. The pursuer is Amanda Urquhart, residing at [a stated address in Inverness]. The defenders are, firstly, 'Glenhaven Ventures', a claimed partnership having an accommodation address c/o HLB Gibro, 4 Giro's Passage, Gibraltar; secondly, West Larkin Limited, a company incorporated in Scotland under registered number SC146651 and having its Registered Office at the Arisaig Hotel, Arisaig, Inverness-shire PH39 4NH; thirdly, Teresa Donalda Sweeney, residing at [a stated address in Inverness]; and fourthly, Nancy Gail Georgeson, residing at [a stated address in Inverness] The second, third and fourth defenders are respectively domiciled within the meaning of the Civil Jurisdiction and Judgments Act 1982 at the address stated for each. On the basis of the information and material provided on behalf of the defenders about 'Glenhaven Ventures', the pursuer believes and avers that no such partnership in fact exists, or at least that it did not exist in October 2005; esto it does currently exist, it is believed to be domiciled either at its said accommodation address in Gibraltar, or alternatively in Inverness.

...

Ans. 1 for First Defenders Admitted quoad the first defender under the explanation that the first defender's correct designation and name is Glenhaven Ventures, which is a partnership of which the partners are Bernard Joseph Sweeney, who lives in Sotogrande, Spain, and the third defender.

...

2. The Company was incorporated (as Larkin Brae Horse Farm Limited) on 23 September 1993. It has an authorised share capital of 100 ordinary shares of £1 each, of which two such shares have been issued. The third defender claims to be the sole director of the Company, having purportedly been appointed as a director on 30 September 2009. The fourth defender claims to be the secretary of the Company, having purportedly been appointed as such on 26 October 2006. With reference to the defenders' averments in answer, admitted that the Company is a private limited company. Quoad ultra the defenders' averments in answer are denied.

Ans. 2 for First Defenders Admitted, under exception of the word 'purportedly' where it occurs in the condescendence. Explained and averred that the Company is a private limited company.

...

3. Until 8 October 2005 one of the issued shares in the Company was held by Owen James Sweeney and the other by his brother Joseph Alexander Sweeney. It is claimed on behalf of the Company that, on that date, each of those individuals transferred his share to an entity called 'Glenhaven Ventures', with an address at HLB Gibro, 4 Giro's Passage, Gibraltar. Each of the Sweeney brothers was a director of the Company, and Owen Sweeney was secretary of the Company, until they both resigned from all of those said offices with effect from 18 April 2006. Each is now disqualified from holding office as a director or officer of any company in the United Kingdom. The third defender is another member of the Sweeney family. The fourth defender is the wife of Owen Sweeney. The defenders' averments in answer are believed to be true.

Ans. 3 for First Defenders Admitted. Bernard Joseph Sweeney and the third defender are husband and wife, and are the parents of Owen and Joseph Sweeney.

...

4. The estates of Owen Sweeney were sequestrated with effect from 8 December 2006. The Accountant in Bankruptcy was appointed the permanent trustee on his sequestrated estates. The trustee's agent, William Young CA of Ritson Young, Chartered Accountants, Nairn, made various enquiries into the validity of the apparent transfer of the share in the Company formerly held by Owen Sweeney to 'Glenhaven Ventures'. He was provided by Owen Sweeney with a copy of a purported share transfer form effecting the transfer in question, but it was unstamped and bore no note of any purported consideration for the transfer. The trustee's agent was dissatisfied with the genuineness of the material and information provided, and requested an original or certified copy of the share transfer form, and certain further information, from Mr Sweeney and the Company, but was provided with neither. On 10 June 2008 he wrote to the fourth defender as purported secretary of the Company, noting that he was satisfied in the absence of any response to his queries that no genuine transfer of the share had taken place, requiring the title of the permanent trustee to the share to be recorded in the Company's share register, and further requisitioning a meeting of the Company to consider his motion for its liquidation. No response to those communications was received by him. ... The second defenders are called upon to state on record their practice in 2005 in relation to the filling and preservation of share transfer forms relating to shares in them, and in what circumstances a purported copy, but not the original, form in issue is claimed to remain available. Their failure to do so will be founded upon. At the time of the purported transfer, the Registered Office of the Company was at the offices of, and its routine administration carried out by, Parkhill Associates (now Parkhill Associates (Scotland) Limited) of East Parkhill, Springhill Avenue, Airdrie, Lanarkshire ML6 6DY.

Ans. 4 for First Defenders ... Of the two transfers referred to by the pursuer, that of Owen Sweeney was open to challenge under section 34 of the Bankruptcy (Scotland) Act. By choosing not to challenge that transfer the trustee is held to have acquiesced in the transfer. She is held to have accepted that the shares did not vest in her and was therefore personally barred from purporting to transfer it.

...

Ans. 4 for Second Defender Not known and not admitted. Objection is taken to satisfying production of the share transfer form. With the passage of time this has been lost or unintentionally discarded.

...

5. On 1 June 2010, the Accountant in Bankruptcy, (acting through her said agent) as permanent trustee on the sequestrated estates of Owen Sweeney, executed a share transfer form in relation to the share in the Company held by or on behalf of Owen Sweeney, transferring that share to the pursuer in return for a consideration of £5,000. A copy of the stamped transfer form is produced herewith and referred to for its terms. The pursuer has made further enquiries to attempt to ascertain the precise nature of 'Glenhaven Ventures'. The only address ever provided for that claimed entity is an accommodation address at a firm of company registration agents in Gibraltar, where no such entity has ever carried on any business. No such entity has ever been registered on any business register in the United Kingdom, Gibraltar or Spain. No contemporaneous documents exist showing or tending the show that any such entity ever existed or carried on the business which it is claimed 'Glenhaven Ventures' carried out, or at least that it existed or carried out any business in or around October 2005. The only information ever provided by the defenders about the claimed entity was provided under compulsion of an interlocutor of this Court, they having refused to provide any such information voluntarily. It is claimed by the defenders that the entity is the holder of both the issued shares in the Company, which shares have a very considerable value in consequence on the value of the land owned by the Company, but it is claimed to have acquired those shares for no consideration, and never to have kept, far less provided to HMRC or any other person, any books or accounts. The claimed partners in the entity are the parents of Owen James Sweeney and Joseph Alexander Sweeney. Any transfer of his respective share in the Company by Owen and/or Joseph Sweeney would, standing the value of that share, have attracted a considerable CGT liability for those individuals, in default of payment of which by him the liability would have passed to 'Glenhaven Ventures' and its partners as donees. In the whole circumstances condescended upon, the pursuer believes and avers that no such entity as 'Glenhaven Ventures' existed on or around 8 October 2005, the pursuer believes and avers in light of the foregoing circumstances that any apparent share transfer from Owen Sweeney to it on or around 8 October 2005 was a sham transaction conceived and executed in contemplation of the prospect of the bankruptcy of Owen Sweeney so as fraudulently to create the impression that his share in the Company was beneficially owned by 'Glenhaven Ventures' whereas in fact it continued to be held by Glenhaven Ventures entirely to his order. In either case, the beneficial interest in the said share was at the date of Owen Sweeney's sequestration held by or for him, and vested accordingly in the permanent trustee in his sequestration by whom it was transferred as condescended upon to the pursuer.

...

Ans. 5 for first defenders Admitted that the address in Gibraltar is that of company registration agents, HLB Gibro, which is the corporate arm of Perez Rodriguez, solicitors and barristers. Admitted that Glenhaven Ventures is not registered in Gibraltar. Explained and averred that there is no requirement to register a business name or partnership in the United Kingdom. ... Explained and averred that Mr Young never, at any time, advised the Accountant in Bankruptcy of the existence of, or the problem with, the alleged share that he purported to transfer to the pursuer. Nor did he ever seek her instructions or authority with regard to the share. Consequently she could not, and did not, authorise or instruct Mr Young to carry out the actions that he did. As her alleged agent, he was bound to seek instructions, and act in accordance with whatever instructions she issued to him. On that basis any transfer purported to have been made by or on behalf of the Accountant in Bankruptcy was null and void. ... Quoad ultra denied. Explained and averred that until the raising of this action, the Company, Owen Sweeney, and the first, third and fourth defenders were unaware that the trustee had purported to transfer a share. ... The pursuer is called upon to aver the circumstances in which she became aware that the trustee purported to hold a share for sale, in West Larkin Limited and the circumstances in which she came to effect a purported bargain with the trustee relative to that share. She is further called upon to set out her basis of value for the consideration of £5,000, and to state whether she was made aware that the trustee's purported share transfer had not been registered. Her failure to do so will be founded on. Esto the share held by Owen Sweeney was transferred as part of a scheme as averred by the pursuer, which is denied, the pursuer does not fall within the class of persons entitled in law to reduce such an alienation. The Bankruptcy (Scotland) Act 1985 provides:
Section 34(1) Where this subsection applies, an alienation by a debtor shall be challengeable by-
(a) any creditor who is a creditor by virtue of a debt incurred on or before the date of sequestration, or before the granting of the trust deed or the debtor's death, as the case may be; or
(b) the permanent trustee, the trustee acting under the trust deed or the judicial factor, as the case may be.
Such a remedy as is enacted by that Act was available to the permanent trustee who chose not to take it. In any event if such a claim had arisen, the statutory defences of section 34(4)(a) and (b) would have been established.

...

6. In terms of the relevant company legislation in force from time to time, the Company was obliged to make an Annual Return to the Registrar of Companies every year. In respect of the periods to 28 September 2006, 28 September 2007, 28 September 2008 and 28 September 2009, an Annual Return was submitted to the Registrar of Companies on the Company's behalf. The said Annual Returns were required by statute to include details of the names and addresses of the Company's members and the number of shares held by each during the period to which it related. Each of the said Annual Return documents submitted to the Registrar of Companies on behalf of the Company stated (or implied by reference to an earlier such document) in the section dealing with the details of the Company's shareholders, that 'Glenhaven Ventures' held that share in the Company which had previously been held by Owen Sweeney. In the circumstances condescended upon, those statements were untrue. They continued to be untrue. Copies of the said Annual Return documents are produced herewith and referred to for their terms. Not known and not admitted how, why or by whom the first defenders came to be referred to as 'Glenhaven Ventures'. With reference to the defenders' averments in answer, admitted that the pursuer did not, prior to raising the present action, seek registration of her ownership of her share by the Company. Quoad ultra the defenders' averments in answer are denied.

Ans. 6 for First Defenders Admitted that the Company was obliged to make annual returns as condescended upon, and that the Company made such returns. Quoad ultra denied. Explained and averred that said annual returns are true and accurate. Explained and averred that the pursuer has not sought to register her share transfer with the Company in accordance with Part 21 of the Companies Act 2006. Esto she has a beneficial interest in the said share as condescended upon, which is denied, she has no right or interest to seek rectification of the Register of Companies. Pursuer's averments insofar as not coinciding herewith are denied.

...

8. Further, the pursuer is reasonable apprehensive that, unless restrained from doing so, the third and fourth defenders are likely to take action as purported officers of the Company to her detriment as the holder of the beneficial interest in the said share, as by issuing more of the authorised share capital or by selling, disposing of, or burdening the property of the Company. Such action would be consistent with the apparent aim of the various transactions or apparent transactions condescended upon, namely the maintenance of control of the Company and its assets by or for the Sweeney brothers notwithstanding the existence of legal obstacles thereto. The mechanism by which the third and fourth defenders came to occupy their purported positions as officers of the Company is not apparent from the public records of the Company. The Company is dormant, and its business consists merely in the passive holding of interests in land. The interest which the Company holds in 9.56 acres of thereby of land at Woodside Croft, Leachkin Brae, Inverness, has been valued as worth up to £1.5 million with vacant possession and consent for residential development. In the circumstances condescended upon, the pursuer seeks the decree of interdict fourth concluded for. Having regard to the balance of convenience, the decree fourth concluded for should also be granted ad interim."

The pleas-in-law

[18] The relevant pleas-in-law for the first defenders are:

"3. The pursuer's averments being irrelevant, et separatim, lacking in specification, the action should be dismissed.

4. The pursuer's averments being irrelevant, et separatim, lacking in specification, should not be admitted to proof.

...

10. The action as laid by the pursuer being incompetent, in respect that there are no declaratory conclusions seeking to establish the non-existence of the first defenders as an entity as 8^th October 2005, or Esto the first defenders did exist as an entity as at 8^th October 2005, that the first defenders held a share in the second defender for the behoof of Owen Sweeney, should be dismissed."

The relevant pleas-in-law for the second defenders are:

"3. The pursuer's averments being irrelevant, et separatim, lacking in specification, the action should be dismissed.

4. The pursuer's averments being irrelevant, et separatim, lacking in specification, should not be admitted to proof.

...

8. The action as laid by the pursuer being incompetent, in respect that there are no declaratory conclusions seeking to establish the non‑existence of the first defenders as an entity as at 8^th October 2005, or Esto the first defenders did exist as an entity as at 8^th October 2005, that the first defenders held a share in the second defender for the behoof of Owen Sweeney, should be dismissed."

The relevant pleas-in-law for the third defender are:

"3. The pursuer's averments being irrelevant, et separatim, lacking in specification, the action should be dismissed.

4. The pursuer's averments being irrelevant, et separatim, lacking in specification, should not be admitted to proof.

...

9. The conclusion for production and reduction, having as its object the reduction of a share transfer form in which the third defender has no interest, is incompetent as directed against the third defender.

10. The action as laid by the pursuer being incompetent, in respect that there are no declaratory conclusions seeking to establish the non-existence of the first defenders as an entity as at 8^th October 2005, or Esto the first defenders did exist as an entity as at 8^th October 2005, that the first defenders held a share in the second defender for the behoof of Owen Sweeney, should be dismissed."

The relevant pleas-in-law for the fourth defender are:

"3. The pursuer's averments being irrelevant, et separatim, lacking in specification, the action should be dismissed.

4. The pursuer's averments being irrelevant, et separatim, lacking in specification, should not be admitted to proof.

...

9. The conclusion for production and reduction, having as its object the reduction of a share transfer form in which the third defender has no interest, is incompetent as directed against the third defender.

10. The action as laid by the pursuer being incompetent, in respect that there are no declaratory conclusions seeking to establish the non-existence of the first defenders as an entity as at 8^th October 2005, or Esto the first defenders did exist as an entity as at 8^th October 2005, that the first defenders held a share in the second defender for the behoof of Owen Sweeney, should be dismissed."

The relevant pleas-in-law for the pursuer are:

"1. The defenders' averments in answer being irrelevant et separatim being lacking in specification, they should not be remitted to probation, and decree de plano should be pronounced.

2. None of the defenders having produced the pretended share transfer form condescended upon, decree of reduction should be pronounced as first concluded for contra non product.

3. The pretended share transfer form purporting to transfer one ordinary share in the second defenders from Owen James Sweeney to 'Glenhoven (otherwise 'Glenhaven') Ventures' not recording any genuine transfer of the said share, all as condescended upon, it should be produced and reduced as first concluded for."

Productions

[19] Although there was no joint minute of agreement, the following items were referred to during the debate, namely:

7/1 Articles of Association, particularly article 1 and 14;

7/2 Copy Stock Transfer Form from Owen Sweeney to Glenhaven Ventures;

7/7 Copy purported instrument of appointment of agent by the permanent trustee dated 13 December 2006;

7/8 Affidavit dated 8 March 2011;

7/9 Share Certificate;

7/10 Letter dated 15 March 2011; and

7/11 Letter dated 17 February 2011.

Authorities

[20] I was also referred to the following authorities:

Cases

1. Duke of Argyll v Campbeltown Coal Co. 1924 SC 844, at pages 850 to 853;

2. Myles v City of Glasgow Bank 1879 SC 718, at pages 725 to 726;

3. In re W. Key & Son Ltd [1902] 1 Ch 467, at page 467;

4. Stevenson v Wilson 1907 SC 445;

5. National Bank of Scotland Glasgow Nominees Limited v Adamson and Others 1932 SLT 492, at pages 494 to 496;

6. Hay's Trustees v Young (1877) 4 R 398, at page 401; and

7. Law v Law's Trustees 1903 SLT 155.

Textbooks

8. Gloag & Henderson The Law of Scotland (12^th Edition 2008), pages 1118 to 1120;

9. William W McBryde Bankruptcy (3^rd edition), pages 365 to 366; and

10. David M Walker The Law of Civil Remedies in Scotland (1974), pages 146 - 147 and 227.

Statutes

11. Companies Act 2006 (Volume IV Parliament House Book - Division I);

12. Companies Act 2006 (c 46) section 1096;

13. The Companies Act 2006 (Commencement No 8, Transitional Provisions and Savings) Order 2008, bringing into force sections 1093 to 1098 (correction or removal of material on the register); and

14. Companies (Tables A to F) (Amendment) Regulations 1985 as amended by SI 1985/1052 particularly Table A, Article 24 relating to "Transfer of Shares" and Articles 29 to 30 relating to "Transmission of Shares".

Section 1096 of the Companies Act 2006 (c 46)

[21] Section 1096 of the 2006 Act relates to rectification of the register under court order and provides inter alia that:

"(1) The registrar shall remove from the register any material - ...

(b) that a court declares to be factually inaccurate or to be derived from something that is factually inaccurate, or forged,

and the court directs should be removed from the register."

Article 24 and articles 29 to 31 of Table A

[22] It might also be helpful to set out the terms of those articles, for ease of reference, namely:

"TRANSFER OF SHARES ...

24 The directors may refuse to register the transfer of a share which is not fully paid to a person of whom they do not approve and they may refuse to register the transfer of a share on which the company has a lien. They may also refuse to register a transfer unless -

(a) it is lodged at the office or at such other place as the directors may appoint and is accompanied by the certificate for the shares to which it relates and such other evidence as the directors may reasonably require to show the right of the transferor to make the transfer;

(b) it is in respect of only one class of shares; and

(c) it is in favour of not more than four transferees.

TRANSMISSION OF SHARES

29 If a member dies the survivor or survivors where he was a joint holder, and his personal representatives where he was a sole holder or the only survivor of joint holders, shall be the only persons recognised by the company as having any title to his interest; but nothing herein contained shall release the estate of a deceased member from any liability in respect of any share which had been jointly held by him.

30 A person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced as the directors may properly require, elect either to become the holder of the share or to have some person nominated by him registered as the transferee. If he elects to become the holder he shall give notice to the company to that effect. If he elects to have another person registered he shall execute an instrument of transfer of the share to that person. All the articles relating to the transfer of shares shall apply to the notice or instrument of transfer as if it were an instrument of transfer executed by the member and the death or bankruptcy of the member had not occurred.

31 A person becoming entitled to a share in consequence of the death or bankruptcy of a member shall have the rights to which he would be entitled if he were the holder of the share, except that he shall not, before being registered as the holder of the share, be entitled in respect of it to attend or vote at any meeting of the company or at any separate meeting of the holders of any class of shares in the company."

The defenders' position

[23] The defenders' position, as outlined in their note of argument (no 21 of process) and their supplementary note of argument (no 25 of process) and modified during the debate, was to the following effect:

"1. The pursuer has failed to plead a relevant title to the disputed share:

(a) The pursuer's title to sue is founded on her averred beneficial ownership of a share in the Company. That is said to devolve from the averred vesting of the share in the trustee (the Accountant in Bankruptcy). The pursuer produces and founds on the share transfer form (6/1 of process). This is signed not by the trustee, but by a Mr Young who is described as 'an agent' of the trustee. There is no averment to say how he came to be appointed, by whom he was appointed, or the terms and extent of his agency mandate, and, crucially, whether he had, as agent, the power to enter into the transaction and sign the share transfer form.

(b) Shares in the Company are transmitted and transferred in accordance with a company's Articles of Association. The pursuer has not produced the Company's Articles, and does not offer to prove that the purported transfer of the share from the trustee to herself was carried out in the manner prescribed in the Articles. In so failing to produce and aver, she has failed to plead an effectual and lawful devolution of the share from the trustee to herself, and as such to relevantly plead title and interest to bring this action. Reference was made to section 33 of the Companies Act 2006, Table A, Article 30, (set out above), Myles v City of Glasgow Bank 1879 SC 718, at pages 725 to 726, and Stevenson v Wilson 1907 SC 445.

(c) The pursuer has no title to bring an action seeking a remedy as Third concluded for (declarator that the annual returns are false). She is not a member of the Company, and she does not aver that she seeks or intends to seek membership. Not being a member, not having sought, and not intending, to become a member she has no interest in the annual returns of the Company. In any event the remedy as Third concluded for is academic and ineffectual, and of no practical purpose. Statutory remedies exist for such a rectification under the Companies Act 2006 (c.f. National Bank of Scotland Glasgow Nominees Limited v Adamson and Others 1932 SLT 492, at pages 494 to 496).

(d) The pursuer has failed to relevantly aver title to bring a case of interdict. In particular the pursuer has failed to offer to prove that the defenders owe her any duties, the apprehended breach of which requires the protection of interdict. Reference was made to Hay's Trustees v Young (1877) 4 R 398, at page 401, and Walker The Law of Civil Remedies in Scotland (1974) page 227.

2. The pursuer's pleadings are irrelevant:

(a) In Article 2 of Condescendence, the words 'purportedly', where they appear twice, should be deleted. There is no averred basis anywhere in the pursuer's pleadings to support the use of these words. The authenticity of the appointment of director and secretary is not impugned by the pursuer.

(b) In Article 3, the third and fourth sentences (at letter B) are irrelevant ("Each of ... United Kingdom.").

(c) In Article 4, at page 8 C, the sentence: 'Not known and not admitted when or why the second defender's books and registers were altered...' should be deleted. This averment is irrelevant as there is no averment in the action that there was any such alteration.

(d) In Article 5, at page 13D, the averment that 'no such entity has ever been registered on any business register in the UK, Gibraltar or Spain.' is irrelevant. There is also an averment that the partnership has not produced accounts or documentation. The pursuer does not offer to prove any foreign law. Accordingly, the partnership law of Gibraltar and Spain is presumed to be the same as Scottish law, which does not require a partnership to be registered, or produce accounts or documentation.

(e) In Article 5, at page 14 A-B: the averments regarding CGT liability is so unspecific as to be irrelevant. Therefore, on the basis of this and the preceding point, there is no sufficiently relevant specification in support of the pursuer's averment that 'she believes and avers that no such entity as Glenhaven Ventures existed on or around 8 October 2005.' The pursuer's case to this effect should not be admitted to probation.

(f) In Article 5 there is no factual basis for the esto case (at page 14B) that even if Glenhaven did exist at the material time, then Glenhaven held the share 'in trust' for Owen Sweeney. The esto case should be deleted. In addition, these averments are so lacking in specification as to be irrelevant. The pursuer offers to prove a fraudulent transaction but has no sufficiently specific averments in support thereof. The pursuer offers to prove that, if Glenhaven Ventures exist and holds the share, they do so for the behoof of Owen Sweeney. However, the pursuer makes no averment whatsoever specifying the purported trust between Glenhaven Ventures and Owen Sweeney. Both the offer to prove fraud by Owen Sweeney and the trust relationship between him and Glenhaven Ventures are wholly unspecified and without any foundation, and should not be admitted to probation. (c.f. William W McBryde Bankruptcy (3^rd edition), pages 365 to 366)

(g) Articles 6 and 7, with the exception of the last three sentences of Art.6, are wholly irrelevant, as there is no averred factual basis for the proposition that the content of the annual returns was false at the material times. No averment is made as to how the Court is to treat the transfer of the share of Joseph Alexander Sweeney, which remains unaffected by this court action. The pursuer does not aver what is to take the place of the annual returns she seeks to condemn. In any event, correction of the public register of companies can only be effected by invoking sections 1096 to 1098 of the Companies Act 2006 (which came into force of 1 October 2009 - The Companies Act 2006 (Commencement No 8, Transitional Provisions and Savings) Order 2008).

(h) The whole of Article 8 falls to be deleted as irrelevant. The pursuer does not offer to prove any facts which are likely to lead to a reasonable apprehension on her part that the Company's officers may take action to her detriment. Nor does she aver any duty allegedly owed to her. The sentence beginning 'The mechanism by which the third and fourth defender.....' is wholly irrelevant. Company directors are appointed by ordinary resolution of the company in accordance with article 78 of the Articles of Association (Table A) A company secretary is appointed by the directors under article 99 thereof. Accordingly the mechanism by which a company's officers are appointed will never be apparent from the public records of a company.

3. The pursuer's pleadings are also lacking in specification in the following instances and accordingly the averments concerned should not be admitted to probation:

(a)    In Article 2, the words "purportedly" where they appear twice;

(b)    In Article 3, the third and fourth sentences at letter B ("Each of ... United Kingdom.");

(c)     In Article 4, the averment that Mr Young made 'various enquiries...'; and

(d) In Article4, at page 8A, the averment 'and certain other information.' What information?

4. The first, second and third conclusions, as directed against the third and fourth defenders, are irrelevant in that the third and fourth named defenders have no interest in the subject matter of the first, second and third conclusions. The proper contradictors to the first three conclusions are those parties having a real and genuine interest to resist these conclusions, being the first defender, as the party claiming beneficial ownership of the share which is the subject matter of the first three conclusions, and Owen James Sweeney, as the party who will be deemed to be holding the share in trust for the pursuer in event that decree is granted in terms of the first two conclusions. Since the third and fourth defenders, not contradictors to the first, second and third conclusions, the action, at least in so far as directed against them, is irrelevant.

5. The whole of the pursuer's averments at Article 8 of Condescendence are irrelevant, or at least wholly lacking in specification, so as to instruct the case of interdict against the third and fourth defenders as fourth concluded for. In particular, the pursuer has failed to offer to prove that the third and fourth defenders owe her any duties the apprehended breach of which requires the protection of interdict. In any event, the pursuer fails to make any averment of acts or omissions by the third and fourth defenders which could be the foundation of any reasonable apprehension on the part of the pursuer, that the third or fourth defenders may interfere with her rights. Accordingly, the interdict action directed against the third and fourth named defenders, is wholly irrelevant. Furthermore, the third and fourth defenders are sued in their personal capacities rather than their capacities as officers of the second defender, thereby rendering the action against them irrelevant.

6. The pursuer's principal contention, in support of her conclusions, is as follows:-

'In the whole circumstances condescended upon, the pursuer believes and avers that no such entity as 'Glenhaven Ventures' existed on or around 8^th October 2005 and that there was, accordingly, no transfer of any shares in the company to any such entity at or around that time.' (page 14 of Closed Record at para B).

However, all of the pursuer's averments in purported support of this contention (to be found at Article 5 of Condescendence) are wholly irrelevant.

In any event, since the whole foundation of the pursuer's principal case is predicated upon the non-existence of the first defenders on or around 8^th October 2005, then the pursuer ought to have proceeded by way of an appropriate declaratory conclusion as to the non-existence of the first defenders. Without such an appropriate declaratory conclusion, the action should be dismissed as irrelevant.

Furthermore, the third plea-in-law for the pursuer, in not narrating which of the two alternative grounds upon which the genuineness of the transfer is being impugned, fails to constitute a distinct legal proposition. As such, the pursuer's third plea-in-law should be repelled as being irrelevant.

7. The pursuer's Esto contention, in support of her conclusions, is as follows:-

'Esto 'Glenhaven ventures' did exist on or around 8^th October 2005, the pursuer believes and avers in light of the foregoing circumstances that any apparent share transfer from Owen Sweeney to it on or around 8^th October 2005 was a sham transaction conceived and executed in contemplation of the prospect of the bankruptcy of Owen Sweeney so as fraudulently to create the impression that his share in the company was beneficially owned by 'Glenhaven Ventures' whereas in fact it continued to be held entirely to his order. In either case, the beneficial interest in the said share was at the date of Owen Sweeney's sequestration, by whom it was transferred as condescended upon to the pursuer.' (Page 14 of Closed Record at para B-D).

Accordingly, the pursuer's Esto case is to the effect that if Glenhaven Ventures did exist on or around 8^th October 2005, and consequently the share transfer was effective, then since that date Glenhaven Ventures have held the share in Trust for Owen Sweeney. However, the pursuers make no averment of any facts or document constituting the alleged Trust. The pursuer has failed to make any averment on the constitution of any constructive trust by operation of law. Without such averments the pursuer's Esto Trust case is wholly irrelevant.

In any event, since the whole foundation of the pursuer's Esto Trust case is predicated upon Glenhaven Ventures holding the share in trust for Owen Sweeney, then the pursuer ought to have proceeded by way of an appropriate declaratory conclusion as to the existence of the Trust. Without such an appropriate declaratory conclusion, the action should be dismissed as irrelevant.

Furthermore, the third plea-in-law for the pursuer, in not narrating which of the two alternative grounds upon which the genuineness of the transfer is being impugned, fails to constitute a distinct legal proposition. As such, the pursuer's third plea-in-law should be repelled as being irrelevant.

8. The pursuer's case, as first concluded for, is irrelevant since the pursuer makes no averment that any of the defenders was or is under a duty to have retained the share transfer form."

The pursuer's position

[24] The pursuer's position, as outlined in her note of argument (no 26 of process), was to the following effect:

"A. The pursuer insists upon her first plea-in-law to the extent and for the reasons following:

(a)       [No longer relevant as the averments complained of in this paragraph

were not insisted upon by the defenders.]

(b) The averments of the first and fourth defenders in Answer 4 to Condescendence (at page 10) and Answer 5 (at page 20) relative to the claim that the failure of Owen Sweeney's trustee in sequestration (or her agent Mr Young) to exercise the powers and remedies available under the Bankruptcy (Scotland) Act 1985 amount to either acquiescence or personal bar in the purported transfer of the shares in the second defenders to the first defenders are either irrelevant or so lacking in specification as not to be suitable for probation.

There are, for example, no averments of anything that might amount to a representation on the part of the trustee or Mr Young that any right to challenge the transfer had been abandoned, no averments of any facts from which it might be inferred that it would be unfair to permit the trustee (still within the applicable prescriptive period) to raise such a challenge, and no averments that any representation, action or inaction on the part of the trustee was relied upon by any of the defenders in doing or omitting to do any act whatsoever.

Further, since this action proceeds, not on the hypothesis that the purported share transfer to the first defenders was capable of being reduced as a gratuitous alienation, but rather on the basis of an allegation that the purported transfer either never took place at all or was, at most, a sham transaction which did not operate to transfer the beneficial interest in the share in question from Owen Sweeney, the averments about the susceptibility or otherwise of the transfer to reduction as a gratuitous alienation are irrelevant in a more obvious sense; they simply have nothing to do with the disposal of the subject-matter of the action.

(c) The averments of the first defenders in Answer 5 (at page 15) relative to the claimed nullity of the transfer on behalf of the Accountant in Bankruptcy of the beneficial interest in the share in dispute to the pursuer are irrelevant, or at least so lacking in specification as not to be fit to be remitted to probation.

The apparent basis of the first defenders' position in this regard is the bare assertion that the Accountant in Bankruptcy did not authorise or instruct Mr Young to transfer the right in the share. Although that assertion is denied (and the pursuer has been unable to discover any basis upon which it could responsibly be made on behalf of the first defenders), the first defenders' argument in this regard depends on the suggestion that Mr Young's general authority to act on behalf of the Accountant in Bankruptcy as the trustee in sequestration of Owen Sweeney was limited to such an extent as to require him to seek express approval of all or at least some acts carried out by him on her behalf. The first defenders not offering to prove that any such limitation on his general authority existed, their averments about a claimed lack of specific authorisation are irrelevant. It was suggested that No 7/7 of process shows that he had the power absent any limitation.

(d) The averments of all the defenders in Answers 5 and 6 to Condescendence relative to the claimed lack of title of the pursuer to raise and insist on the action are irrelevant and should be refused probation. The respective second pleas-in-law for each of the defenders should also be repelled accordingly.

The first defenders' averment that the pursuer is not a person entitled to make a challenge to the purported share transfer in their favour in terms of s.34 of the Bankruptcy (Scotland) Act 1985 is irrelevant in the context of an action which is not based on that section.

All the defenders' averments that the failure of the pursuer to seek to register the share transfer in her favour with the second defenders results in a lack of title or interest on her part to seek rectification of the Register of Companies are irrelevant. The pursuer is a person claiming to be beneficially entitled to the share in question and is as a result has both title and interest to seek to have rectified a public register (on the face of which members of the public would be entitled to transact) which bears to record that that share is held by a person other than her, the author of her title to it, or a person holding the share on her behalf. (National Bank of Scotland Glasgow Nominees Limited v Adamson and Others 1932 SLT 492, Lord Moncrieff at page 494-496.)

B. The pursuer also seeks the sustaining of her second plea-in-law and the grant of decree as first concluded for, for the following reasons:

The second defenders are called upon in Article 4 of Condescendence to state on Record their practice in 2005 in relation to the filing and preservation of share transfer forms relating to shares in them, and likewise to state in what circumstances a purported copy, but not the original, from is issued and is all that is claimed to remain available.

No answer to these calls has been stated by the second defenders; they content themselves (in Answer 4) with the sparsest averment of a general casus amissionis, that the form has been 'lost or unintentionally discarded'. In these circumstances, there being no production of the document which it is sought to have reduced, and no explanation (or at least no explanation which the Court ought to hold satisfactory in the circumstances) for the failure to produce it having been advanced, decree for its reduction should be granted as first concluded for contra non producta."

Discussion

[25] I have taken into account everything said on behalf of the pursuer and all the defenders. Having done so, in my opinion, the pursuer's submissions prevail.

[26] In the whole circumstances, having heard counsel, I am satisfied that I should sustain the pursuer's first plea-in-law but only to the limited extent of excluding from probation the averments challenged in paragraph A(b) of the pursuer's note of argument (no 26 of process). Quoad ultra the pursuer's first plea in law will be refused in hoc statu.

[27] I shall repel the defenders' preliminary pleas insofar as they seek dismissal based on alleged irrelevancy and/or incompetency and insofar as they seek to exclude averments of the pursuer from probation. In other words:

·      I shall repel the fourth and the tenth pleas-in-law for the first defenders;

·      I shall repel the fourth and the eighth pleas-in-law for the second defender;

·      I shall repel the fourth, the ninth and the tenth pleas-in-law for the third defender; and

·      I shall repel the fourth, the ninth and the tenth pleas-in-law for the fourth defender.

[28] I have reached those conclusions essentially for the reasons outlined by Mr Sandison.

[29] I am not prepared to sustain the defenders' general pleas to the relevancy. Instead, the third plea-in-law for each of the four defenders will simply remain standing meantime pending further procedure.

[30] The central question in relation to relevancy is whether the pursuer has averred sufficient factual material from which it might be inferred that the Glenhaven Ventures did not exist and/or that the transfer (of which no 7/2 of process bears to be a copy) was a sham as at 8 October 2005.

[31] On those issues, and having regard to the detailed averments contained in the amended closed record (mentioned above), I am satisfied that the pursuer's averments are sufficiently relevant and specific to successfully resist the defenders motion for dismissal at debate. The pursuer has averred enough. Her averments require to be taken pro veritate at this stage. It cannot be said that the pursuer must necessarily fail.

[32] I have already set out the pleadings in some detail above. I have borne in mind, in particular the pursuer's averment in Article 5 as supplemented by article 3 in relation to members of the Sweeney family. On a fair reading of the pleadings, as amended, the pursuer's case does not depend on the correctness or otherwise of Mr Young's thought processes or assumptions. It depends on the pursuer's averments to the effect that Glenhaven Ventures did not exist and/or that the transfer (of which no 7/2 of process bears to be a copy) was a sham as at 8 October 2005.

[33] In my opinion, the pursuer's averments are sufficiently specific. They would support the conclusion that there was a false pretence (or a form of device which deceives) with a practical result and prejudice to the true owner of the share.

[34] The pursuer's case is essentially a circumstantial one which falls to be approached in large measure as a jury question. However, it is adequately set out in averment. Whether the pursuer eventually succeeds in proving her case is, of course, a different matter. If the pursuer were to prove her averments it seems to me that it would be open to a court to draw the inference if so minded that Glenhaven Ventures did not exist.

[35] In relation to the relevancy of the pursuer's alternative case of sham transfer, I also agree with Mr Sandison. The circumstances set out by the pursuer in her averments, as amended, are capable of giving rise to that inference after proof. If that is proved, the share would be held in trust. The pursuer's case is not that there has been a gratuitous alienation or a fraudulent preference in bankruptcy. The action proceeds on the basis of an allegation that the purported transfer either never took place at all or was, at most, a sham transaction which did not operate to transfer the beneficial interest in the share in question from Owen Sweeney. At this stage, on averment, it cannot be said that the pursuer must necessarily fail. The pursuer's use of the word "purportedly" on record seems reasonable and appropriate in the circumstances.

[36] The operative declarators sought by the pursuer in the second and third conclusions of the summons are, in my view, appropriate. There is no need for any additional preliminary declaratory conclusion. This is not an action seeking decree in an extraordinary removing - as was the case in Duke of Argyll v Campbeltown Coal Co. 1924 SC 844 (see pages 850 to 853) where a preliminary declaratory was considered convenient and expedient.

[37] In any event, in the present case, it is not said that the defenders would suffer any prejudice, or that the court would be presented with any undue aggravation of the difficulties of the case, by the absence of such an additional conclusion (c.f. the Lord President Duke of Argyll v Campbeltown Coal Co. at page 851).

[38] In relation to the defender's submissions about failure to comply with the Articles of Association, I agree with the pursuer that article 30 of Table A does not impose a relevant restriction. The beneficial interest in a share is, quite simply, an item of moveable property. The validity or otherwise of the transfer falls to be governed by general principles of law rather than the Articles of Association. The mode of transfer is by assignation. In any event, the provisions of Table A (which I have set out above) draw a distinction between "transfer of shares" and "transmission of shares". Article 30 deals with transmission. Transmission covers the situation where a change of entitlement to a share has occurred, not as a result of a voluntary transfer, but as a result of an involuntary act namely death or bankruptcy. I agree with the pursuer that the provisions of article 30 are facilitative of transmission. They do not express any relevant limitation on entitlement to transfer. In my opinion, the defenders submissions based on the Articles of Association are not well founded. They were also, in part, speculative.

[39] In my opinion, the defenders' submissions challenging the competency of the third conclusion of the summons are not well founded. The important point to bear in mind is that the pursuer is simply not seeking rectification of any register at the moment. All she is seeking is a judicial determination of the matters set out in her pleadings. If the pursuer is granted a remedy she can seek rectification at that stage. In other words, a mechanism for rectification exists but the pursuer has not yet reached the stage of using it. Rectification of the register is not a pre-requisite to obtaining a decree in the present case but if the court pronounces a decree the register can be rectified thereafter.

[40] I can see no incompetency in the pursuer seeking decree in terms of her third conclusion. This is not just a case of an alleged "domestic irregularity" of the sort mentioned by Lord Moncrieff in National Bank of Scotland Glasgow Nominees Limited v Adamson and Others 1932 SLT 492 at pages 494. In any event, at page 496, Lord Moncrieff goes on to refer to the position of "an intending member of the company" and "one claiming to become a member as transferee of shares in the company". In more general terms, the public have an interest in the accuracy of an annual return and pursuer is a person who is alleging a beneficial interest in a share. In my opinion the pursuer is entitled to seek declarator.

[41] In my view, the pursuer's third plea in law is adequately stated. It is supported by the factual averment and it gives fair notice of the points taken. It is an appropriate formulation of relevant legal principle. I shall leave the pursuer's third plea in law standing.

[42] I have also considered the defenders' remaining submissions in relation to relevancy, competency and alleged lack of specification. Suffice it to say that I agree with the pursuer on those matters. The defenders submissions not well founded and fall to be rejected.

[43] I would summarise my views on the remaining issues as follows:

[44] There is sufficient on averment to justify convening all four defenders.

[45] There is no need for the pursuer to aver a duty, on the part of the defenders, to retain the share transfer form which she seeks to reduce.

[46] The present case seeks production and reduction of a "pretended share transfer form". That is a different situation from the one discussed by the Lord President in Stevenson v Wilson 1907 SC 445, at page 455, which concerned annulling a bargain with a view to relieving a registered owner from future liability.

[47] The pursuer has averred a sufficient basis for interdict. There is no basis for recalling the interim interdict which was granted on 15 October 2010. It is a protective measure pending final disposal of the action. In any event, there has been no material change in circumstances.

[48] In relation to the first conclusion, the court may, exceptionally, hold production to be satisfied by production of a copy of the deed concerned. Law v Law's Trustees 1903 SLT 155 and Walker's Civil Remedies at page 146-147. There has, as yet, been no order to satisfy production made by the court or intimated.

[49] There are questions of fact and degree still to be resolved but as indicated during the debate it may be, in light of my decision, that for aught yet seen certain matters can be agreed.

[50] Averments of doubtful relevancy are suitable for proof before answer with the remaining pleas-in-law still standing. That applies, for example, to the averments challenged by the pursuer in her note of argument at paragraphs A(c) and A(d).

[51] The defenders can object if the pursuer tries to lead evidence seeking to give additional more specific content to the very general narrative averments in article 4 about "various enquiries" and "certain other information".

[52] In the result, as suggested by counsel, I shall put the case out by order so that the court can be addressed as to further procedure.

Decision

[53] In the whole circumstances, and for the reasons outlined above, I shall pronounce an interlocutor along the following lines:

• I shall refuse the motion of the defenders seeking dismissal of the action;
• I shall repel the fourth and tenth pleas-in-law for the first defenders;
• I shall repel the fourth and eighth pleas-in-law for the second defenders;
• I shall repel the fourth, ninth and tenth pleas-in-law for the third defender; and
• I shall repel the fourth, ninth and tenth pleas-in-law for the fourth defender;
• I shall sustain the first plea-in-law for the pursuer to the limited extent of excluding from probation the following averments of the first and fourth defenders, namely:
• In Answer 4 (on page 10 of the Record) by deleting from the words "Of the two transfers ..." (in line 19 of said page) to the words "... purporting to transfer it." (in line 26); and
• In Answer 5 (on page 20 of the Record) by deleting from the words ""Esto the share held ..." (in line 8 of said page) to the words "...would have been established." (in line 24).
• Quoad ultra I shall refuse the first plea-in-law for the pursuer in hoc statu.
• I shall appoint parties to be heard By Order on Thursday 3 October 2013 at 10.00 am to determine further procedure.
• I shall reserve meantime any question of expenses.