Kings Court Trust Ltd & Ors v Lancashire Cleaning Services Ltd

Factual and Procedural Background

This opinion concerns a Part 8 claim brought urgently before the court regarding a private company, Company A, following the death of its sole shareholder and director on 28th February 2017. The original claimants, two executors of the deceased’s estate, sought an order under section 125 of the Companies Act 2006 to rectify the company’s register of members by substituting the deceased’s name with theirs and to appoint a director, as the company had no surviving directors or company secretary. The company’s bank account was frozen, threatening its ability to pay wages and creditors, and a potential sale was at risk. Probate had not yet been granted at the time the claim was issued on 11th April 2017. The claimants applied for the court to dispense with service of the claim form due to the absence of company officers. After an initial hearing and an adjournment to supplement evidence, the court considered the claimants’ application supported by witness statements from their solicitor.

Legal Issues Presented

1. Whether the court can order rectification of the company’s register of members under section 125 of the Companies Act 2006 in the absence of a grant of probate.
2. Whether the court can dispense with service of the claim form on the company given there are no company officers to serve.
3. The extent of the court’s discretion to decide questions relating to the title of persons seeking registration as members in exceptional circumstances.

Arguments of the Parties

Appellant's Arguments

• The claimants, as executors named in the deceased’s will, are entitled to be registered as shareholders despite the absence of a grant of probate.
• The absence of any company officers prevents the claimants from registering themselves or appointing a director without a court order.
• The company’s articles and relevant company law support the claimants’ position that shares have devolved to them by operation of law.
• Relying on the case Re Goodman, it was submitted that the term "personal representative" includes an executor who has not yet proved probate, and title vests immediately upon death.
• Given the urgency due to the company’s frozen bank account and imminent financial obligations, it is necessary to dispense with service and expedite the hearing.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Re Goodman [2013] EWHC 758 (Ch), [2014] Ch 186	Definition of "personal representative" includes executors who have not yet proved probate; title vests immediately on death.	The court accepted that claimants could bring proceedings and seek registration despite no grant of probate yet, relying on this authority.

Court's Reasoning and Analysis

The court acknowledged the usual position that companies require production of a grant of probate or letters of administration before registering executors as members. However, it recognized that the court has a statutory power under section 125 of the Companies Act 2006 to rectify the register where there is default or unnecessary delay. The court noted that in normal circumstances, omitting a deceased member from the register until probate is granted is justified and not a default.

In this case, the circumstances were exceptional: the company had no directors or secretary, the deceased was the sole shareholder and director, and the company’s bank account was frozen, threatening imminent financial collapse. The court found that unnecessary delay was occurring in entering the executors on the register, and only the court could rectify this situation.

The court accepted the claimants’ evidence that an application for probate had been lodged and was likely to be granted, and that the claimants were entitled to be registered as shareholders. It held that the court’s power under section 125 includes the ability to order the claimants to make the necessary entries themselves, as there was no company officer able to do so.

Given the absence of any company officers, the court found it appropriate to dispense with service of the claim form under CPR 6.16 due to the exceptional circumstances. The court emphasized that this decision was specific to the facts and should not be treated as precedent for ordinary cases where the company still has functioning officers.

Holding and Implications

The court’s final decision was to GRANT the claimants’ application, ordering:

• Dispensation of service of the claim form on the company.
• Rectification of the company’s register of members by removing the deceased’s name and entering the three claimants as the holders of the shares.
• Permission for the claimants to make the necessary entries on the register themselves immediately.
• Requirement that the claimants notify the registrar of companies of the rectification within seven days.
• No order for costs was made.

The court stressed that this order was made due to the exceptional circumstances, including the company’s lack of officers and the urgent financial situation, and does not create a precedent for routine cases where probate has not yet been granted but the company remains operational with officers.