Prestigic (Wisley) Nominees Ltd v JTC Management and Others

CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Fisher,Milner
Judgment Date14 May 2012
Neutral Citation[2012] JRC 97
Date14 May 2012

[2012] JRC 97




J. A. Clyde-Smith, Esq., Commissioner, and Jurats Fisher and Milner.

Prestigic (Wisley) Nominees Limited Company
(1) JTC Management Limited
(2) Wharf Land Investments (Jersey) Limited
(3) The Green Light Property Fund Limited
(4) Thames Ltd
(5) Wisley (Jelly) Nominees Ltd
(6) Hilex Limited
(7) Maximilian Zu Furstenburg
(8) Persistency Private Equity Limited
(9) Sonia Land
(10) Arlington Special Situations Fund Limited
(11) Rose Nominees Limited
(12) Alexandrina Investments Limited
(13) DPM Design Consultants Holdings Ltd
(14) Wisley Investments Holdings Limited

Advocate S. J. Young for the Representor.

Advocate J. D. Kelleher for the Second Respondent.


Companies (Jersey) Law 1991.

Companies Act 1985.

Hollington QC, Shareholders Remedies (6th ed.).

Pacific Investments Limited -v- Christensen & Others [1995] JLR 250.

Re Saul D Harrison & Sons plc (1994) B.C.C. 475.

Gamlestaden Fastigheter AB -v- Baltic Partners Limited, Boleat, De Figueiredo and Bailey [2007] JLR 393.

Re Chime Corp. Limited [2004] 7HKCFAR 546.

Grace -v- Biagioli, Titanium Electrode Products Ltd. Re [2006] BCC 85.

O'Neill -v- Philips [1999] 1 WLR 1092.

Foss -v- Harbottle (1834) 2 HARE 461.

Re Charnley Davis Ltd (No 2) [1990] BCC 605.

Waddington Ltd -v- Chan [2008] 11 HKCFAR 370.

Khan -v- Leisure Enterprises [1997] JLR 313.

MacDougal -v- Gardiner (1875) 1 Ch 13.

Cook -v- Deeks [1916] 1 AC 554.

Edge -v- Pensions Ombudsman [2000] Ch 602.

Companies — reasons for dismissal of representor's application for an order under Article 143.



On 6 th February, 2012, the Court dismissed the representor's application under Article 141 of the Companies (Jersey) Law 1991 (“the Companies Law”) for an order under Article 143 and we now give our reasons.


The second respondent, Wharf Land Investments (Jersey) Limited (“the Company”) was incorporated in Jersey on 7 th September, 2006, as an investment vehicle to acquire the freehold interest in a substantial site in England for the purposes of development. The Company was owned initially by an English incorporated company, Wharf Land Investments Limited (“Wharf Land”), which was in turn owned by Douglas John Maggs (“Mr Maggs”), a well-known property investor.


Funds to purchase the site were raised from a number of investors, one of whom was the representor (“Prestigic”). Investors acquired a minimum of four units of £25,000 each comprising one issued share in the Company and 24,999 loan notes of £1 each. Prestigic holds 2.84% of the shares in the Company and associated loan notes. The remaining shareholders in the Company have been convened to these proceedings, but their views having been canvassed at an EGM of the Company held on 11 th October, 2011, they did not participate in the hearing.


The site was acquired by the Company for £23,158,144 (including stamp duty and legal professional fees) on 11 th December, 2006, using a combination of shareholder equity and bank financing.


The project to develop the site is complex, not assisted by the advent of the recession in England and is still in the planning phase. The Company had a banking facility of some £9.9M, which had been extended to February 2012, and negotiations for its further extension were in progress at the time of the hearing. The Company had a bank balance of some £397,000. The application therefore came at a critical time for the Company.


The first respondent, JTC Management Limited (“JTC”) carries on a trust company business in Jersey and provides directors, a company secretary and company administration services to the Company.


On 3 rd January, 2007, the Company entered into a property management services agreement with Wharf Land, pursuant to which Wharf Land acts as property adviser to the Company and is entitled to 50% of the profits of the Company, net of certain expenses. Wharf Land is not an investor or shareholder in the Company; its only interest being through this agreement.

Article 141


Article 141(1) of the Companies Law is in the following terms:-

“141 Power for member to apply to court

(1) A member of a company may apply to the court for an order under Article 143 on the ground that the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members (including at least the member) or that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.”


In its representation Prestigic raises three complaints, namely, certain payments made by the Company, the level of the fees charged by JTC and the lack of an audit, which it submits showed that the Company's affairs are being or have been conducted in a manner which is unfairly prejudicial both to its interests and the interests of the members generally. As Mr Young for Prestigic made clear, it is the payments that lay at the heart of the application.

The payments


Between 12 th February, 2007, and 24 th September, 2008, the directors of the Company authorised payments to a number of entities totalling £1,522,050, for which there is no apparent justification (bar one relatively small payment) beyond the invoices. The largest element, namely £1,012,501, was paid to a Gibraltarian company named Shoehorn Limited, since dissolved, on invoices which referred to commission for corporate finance services on the acquisition of the site, when there is apparently no record of the Company receiving any such services. Other payments have been made to entities apparently associated with Mr Maggs, when the information memorandum given to investors provided that there would be no such dealings.


The position of the directors, as made clear in the affidavit of Philip Burgin (“Mr Burgin”) a group director of JTC and a director of the Company, is that the payments were made in good faith and in reliance on Wharf Land's implicit representations that they were bona fides and properly due. Beyond the invoices, the directors are unable therefore to provide any further information; that must come from Wharf Land.


These payments were included in the financial statements of the Company for the period 7 th September, 2006, to 31 st July, 2007, (and subsequently) under the heading “Commissions paid”. As Adrian Richard Goldsmith (“Mr Goldsmith”), a director of Prestigic, makes clear in his affidavit of 9 th June, 2011, he had been pressing the Company unsuccessfully for some three years for a full explanation. The Company has in turn been pressing Wharf Land but to no avail.


It is alleged by Prestigic that in authorising these payments the directors acted in breach of their fiduciary and statutory duties to the Company to act honestly and in good faith in the best interests of the Company and have failed to exercise the care and skill of a reasonably prudent person in comparable circumstances. At the hearing, Mr Young made it clear that it was not being alleged that the directors had acted dishonestly or in bad faith or that they or JTC had benefited in any way from the payments.


As we shall see shortly, the overwhelming majority of the shareholders have resolved that the payments were made properly and in the interests of the Company.



In its amended representation, Prestigic pleads further that “It appears that the Company has likely lost monies taken by JTC in fees which fees ought properly to be the subject of independent inquiry”. In its particulars of claim, it asserts that the directors of the Company, for whom JTC is vicariously liable, are liable to account for the fees, or such part of them as are determined to be repayable, by reason of the payments made in breach of their duties. The total fees from 7 th September, 2006, to December 2010 amount to in excess of £425,000, which include charging the Company for dealing with the requests made by Mr Goldsmith for an explanation as to the payments. Mr Goldsmith asserts that Mr Burgin told him that JTC would absorb itself the fees in dealing with his requests. Mr Burgin denies any such agreement. In its prayer, Prestigic seeks an inquiry into what fees JTC should properly have charged for the provision of directors and administration services to the Company.


As acknowledged by Mr Young, the Court had no evidence to show to what extent, if any, excessive fees have been charged by JTC or what level of fees would, objectively, be reasonable for the work undertaken, the scale of which we had no ability to assess. Mr Young did not refer to this complaint in his skeleton argument and devoted little time to it in his oral submissions. In reality, this complaint could only be regarded as ancillary to the complaint in relation to the payments.


Mr Young did question in passing the arrangement by which JTC's invoices are first submitted to Wharf Land for approval before being paid out of Company funds, an arrangement that apparently goes back to the time when Wharf Land was the only shareholder. It was not suggested, and it would not seem to us to be practicable, for JTC's invoices to be submitted to all of the shareholders for approval before payment and the shareholders have an opportunity to challenge the same when the accounts are put before them at the AGM. In the circumstances it is probably the only practical arrangement that could be put in place to ensure that there was outside scrutiny of the fees rendered by JTC; Wharf Land through its profit share having as much of an interest as the shareholders in ensuring that they are reasonable.



Prestigic alleges that the directors of the Company have failed to have the accounts of the Company audited as it says is required by Article 31.2 of the Articles of...

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2 cases
  • EVIC v Greater Europe
    • Jersey
    • Royal Court
    • 1 August 2012
    ...Limited (FSD Nos 87 and 219 of 2010, unreported, 4th January 2011) . Astec (BSR) plc [1998] 2 BCLC 556 . Prestigic -v- JTC and Others [2012] JRC 097 . Grace -v- Biagioli, Titanium Electrode Products Ltd. Re [2006] BCC 85 . O'Neill -v- Philips [1999] 1 WLR 1092 . Re Bird Precision Bellows L......
  • Prestigic (Wisley) Nominees Ltd v JTC Management and Others
    • Jersey
    • Royal Court
    • 8 June 2012
    ...unsuccessful application under Article 141(1) of the Companies (Jersey) Law 1991. The judgment of the Court is dated 14 th May, 2012, (JRC 097). I will refer to the representor as “Prestigic”, the first respondent as “JTC” and the second respondent as “the Company” and generally use the def......

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