184 All England Law Reports [1971] 3 All ER Re Jermyn Street Turkish Baths Ltd COURT OF APPEAL RUSSELL, BUCKLEY AND CAIRNS 15 gth, roth, 11th, rath, 15th, 16th, 17th Marcu, sth MAY 1971 Company ~ Oppression ~ Conduct amounting to oppression ~ Shareholders having dominant power in company ~ Exercise of power to procure that something done or not done in conduct of company's affairs that is unfair to minority shareholders ~ Element of constraint on minority shareholders - Director managing company's affairs injecting further capital into company in order to avoid possible liquidation ~ Issue of debentures and shares to director ~ Issue giving director majority shareholding in company - Company becoming prosperous as result of director's efforts ~ Director drawing excessive remuneration - No dividends paid to other shareholders - Whether conduct of affairs of company amounting to oppression - Companies Act 1948, 210. ‘The company was incorporated in 1946, the issued share capital of 100 £1 shares being jointly owned by S and L who were the only directors. Both $ and L lent money to the company from time to time and L guaranteed its bank overdraft of some £8,500. In 1952 $ sold his shareholding and assigned the debt due to him from the company to P who became a director. L died in 1953 when the company owed him some £2,900; its current liabilities including bank overdraft, various debts and tax liability then amounted to over £20,000, and its assets totalled some £1,700. In December 1953 P, through her solicitor, sought financial assistance for the company from L’s administrators pendente lite but she was told that no cash would be forthcoming. In January 1954 P appointed W a director of the company and at a board meeting they passed a resolution to issue a further 100 {x shares to P for cash and one share to W, it being agreed by a further resolution that P would lend the company £1,000 to be secured by a debenture. The shares were allotted and debentures duly issued with the result that P had a 75 per cent interest and L's estate a 25 per cent interest in the company. L’s administrators learned of these events shortly afterwards through P's solicitor on whose advice P had acted throughout. At a further board meeting held in October 1955 it was resolved that P should be chairman and managing director at a salary of £1,560 and W should be secretary and manager at a salary of £780, and also that P and W should receive bonuses of 20 per cent and 5 per cent respectively if the company’s receipts were in excess of £30,000 per annum. In March 1960 a new grant of administration of L’s estate was made to the petitioners in the present proceedings; they were not registered as members of the company until November 1961. In March 1960 draft accounts of the company up to 31st March 1959 were adopted subject to the deletion of the debt due to L’s loan account because the debt was not acknowledged, and in June, the business having greatly prospered under the direction of P and W, the bank overdraft was paid off and L’s guarantee was can- celled. During the 9 years ending 31st March 1961 the company paid over £41,000 in directors’ and management fees; during the following nine years to 31st March 1970 P received remuneration amounting to £108,000. At no time between the death of L and the presentation of the petition were notices of general meetings given and no dividends were ever paid to the administrators of L’s estate. All the company’s books were, however, made available to them from November 1961. On 6th May 1969 L's administrators presented a petition under s 210% of the Companies Act 1948 alleging a Section 210, so far as material, provides: ‘@) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members (including himself)... (Continued at foot of p 185)CA Re Jermyn Street Turkish Baths Ltd 185 that the company’s affairs were being conducted in an oppressive manner and praying that cither P and W should be ordered to sell their shares to the petitioners or that P and W should be ordered to purchase the petitioners’ shares, the terms to be fixed by the court. Held - (i) The affairs of a company could only be said to have been being conducted in a manner oppressive to some part of the members of the company where share- holders, having a dominant power in the company, cither exercised that power to procure that something was or was not done in the conduct of the company’s affairs or procured by an express or implied threat of an exercise of that power that some- thing was not done in the conduct of the company’s affairs; to amount to oppression such conduct must be unfair or “burdensome, harsh and wrongful’ to the other members of the company or some of them and lack that degree of probity which they were entitled to expect in the conduct of the company’s affairs; oppression must import that the oppressed were being constrained to submit to something which was unfair to them as the result of some overbearing act or attitude on the part of the oppressor (see p 199 ¢ to f, post); dictum of Viscount Simonds in Scottish Co-operative Wholesale Society Ltd v Meyer [1958] 3 All ER at 71 and Re H R Harmer Ltd [1958] 3 All ER 689 applied. Gi) On the facts of the present case it could not be said that the conduct of the company’s affairs by P and W had been oppressive to the petitioners for the following reasons— (a) P’s position as majority sharcholder had never had any bearing on her remunera- tion as a director nor was there any indication that it had been used to influence the petitioners in the way they had acted; the mere fact that a director drew remunera- tion to which he was not legally entitled, or in excess of that to which he was legally entitled, would not in itself amount to oppression (see p 199 f and p 200 c, post); (b) the allotment of shares and issue of debentures to P all formed part and parcel of an arrangement entered into bona fide for the benefit of the company under which P received the shares and debentures as additional security for her injections of cash into the company (see p 198 a to c, post); (iii) although L’s estate had received no distribution of capital or profits since L’s death, it had benefited greatly from the way in which P had run the company, since L’s guarantee had been discharged without any cost to the estate and the estate's shareholding, which was worthless at L’s death, had greatly increased in value (see p 200 g and h, post); (iv) the deletion from the company's books of L’s credit on his loan account with the company could not be regarded as oppressive in any way for even if it were a good debr, it was statute-barred long before the presentation of the petition (sec P 200 j to p 201 a, post). Decision of Pennycuick J [1970] 3 All ER 57 reversed. (Continued from p 184) may make an application to the court by petition for an order under this section. ‘@) If on any such petition the court is of opinion— (a) that the company's affairs are being conducted as aforesaid; and (b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise,”186 All England Law Reports [1971] 3 All ER Notes For the alternative remedy to winding-up in cases of oppression, see 6 Halsbury’s Laws (3rd Edn) 542, 543, para 1044. For the Companies Act 1948, s 210, see 5 Halsbury's Statutes (3rd Edn) 280. Cases referred to in judgment Harmer (H R) Ltd, Re [1958] 3 All BR 689, [1959] : WLR 62, Digest (Cont Vol A) 185, 5700b. Scottish Co-operative Wholesale Society Ltd v Meyer [1958] 3 All ER 66, (1959] AC 324, [1958] 3 WLR 4o4, Digest (Cont Vol A) 185, 57004. Appeal This was an appeal by the respondents, Josephine Peskoff, Arthur Charles Woodley and Michael Peskoff, who were present and sometime directors of Jermyn Street © ‘Turkish Baths Ltd, against an order of Pennycuick J, dated 13th May 1970 and reported [1970] 3 All ER 57, made on the petition of David Gerald Littman, Peter Walter Littman, Roama Lillian Spears and Barbara Littman Greenfield, under s 210 of the Companies Act 1948, in which he held that the affairs of the company had been conducted in an oppressive manner and ordered that the respondents should buy the petitioners’ shares in the company. ‘The facts are set out in the 0 judgment of the court. Jeremiah Harman QC and Paul V Baker for the respondents. AJ Balcombe QC and P J Millett for the petitioners. Cur adv vult sth May. BUCKLEY LJ read the judgment of the court at the invitation of Russell LJ. This is an appeal from a decision of Pennycuick J! on a petition under the Companies Act 1948, s 210, relating to a company called Jermyn Street Turkish Baths Ltd. The company was incorporated on 25th November 1946 with an authorised capital of £1,000 divided into 1,000 shares of £1 each. Initially 100 only of these shares were issued. Fifty shares were subscribed for by, and allotted and issued to each of f James Isaac Stealey and Joseph Aaron Littman (whom we will call ‘Mr Stealey’ and “Mr Littman’), both of whom are now dead. Soon after incorporation the company acquired at the cost of £12,500 the business of another company, Savoy Turkish Baths Ltd, as a going concern. The assets so acquired included leaschold premises at 91 and 92 Jermyn Street and 12 Duke of York Street, London, the goodwill of the vendor company’s business of a Turkish bath at the Jermyn Street premises and of g a ladies’ Turkish bath at the Duke of York Street premises, and the plant, fixtures and fittings at both establishments. ‘This purchase was financed by means of loans from Mr Stealey and Mr Littman to the company and by borrowing from the bank. For this purpose Mr Stealey and Mr Littman each lent £3,000 to the company and guaranteed the bank overdraft to a maximum amount of £8,500. The company carried on the Turkish bath businesses at Jermyn Strect and Duke of York Street and also for a time conducted a Turkish bath in Brighton. It also owned and managed residential flats over the Jermyn Street Turkish bath, On r9th May 1952 the respondent, Mrs Josephine Peskoff, who was then an em- ployee in the business of the company, bought for {4,000 from Mr Stealey his 50 shares in the company and the sum of £2,080 then standing to the credit of Mr Stealey’s loan account with the company. Down to this date Mr Stealey and Mr Littman had been the only directors of the company. On 20th May 1952 Mr Stealey resigned his directorship and Mrs Peskoff was appointed a director in his place. On 2ist August 1953 Mr Littman died. At the time of his death the amount standing to his credit on his loan account with the company was £2,936. 1 [1970] 3 All ER 57, [1970] 1 WLR 1194CA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 187 Ac this time the company was suffering from an acute shortage of cash. The balance sheet at 31st March 1953 shows current liabilities amounting to £20,557, made up of sundry creditors £9,177, bank overdraft (secured by the deposit of the title deeds of the leasehold property) £7,538, current taxation 3,842. The figure for sundry creditors included the balances on the directors’ loan accounts. Against these liabi- lities, the current assets amounted to no more than £2,102 in value, including only £45 cash in hand. The company’s leasehold properties were still shown in the balance sheet at cost, nothing having been written off in respect of amortisation. The trading account for the 12 months ended 31st March 1954 shows a loss of £1,737, after taking into account a sum of £1,494 in respect of defalcations by an employee of the company. The balance sheet at 31st March 1954 shows current liabilities amounting to £19,131 and current assets valued at £763. On 26th September 1953 Mrs Peskoff appointed her son Michael Peskoff a director of the company, but he never acquired his share qualification and accordingly he ceased to be a director on 26th November 1953 without, so far as we are aware, ever acting as a director of the company. Hitherto, the registered office of the company had been at 78 New Bond Street, which was the office from which Mr Littman conducted his many business interests. On 23rd October 1953 Mrs Peskoff purported to resolve as a director of the company that the registered office of the company be removed to the Jermyn Street premises of the company. ‘The auditors of the company were at all relevant times a firm of chartered account- ants, Messrs Silver Aluman & Co, who had also acted for Mr Littman during his lifetime in relation to many of his business affairs. On 21st November 1953 Mr Silver, the senior partner in Silver Altman & Co, and an estate agent named Bourner were appointed administrators pendente lite of Mr Littman’s estate. ‘The solicitor acting for them in that capacity was a Mr Tobin. A solicitor named Rowberry, practising in Gloucester, was at all relevant times advising Mrs Peskoff. On x6th December 1953 Mr Rowberry wrote to a Mr Biddle, an employee in the Littman office at 78 New Bond Street, who had acted as secretary of the company, a letter in the following terms: “Dear Mr, Biddle, Savoy Turkish Baths. I have been consulted by Mrs. Porter [ie Mrs Peskoff] with reference to the financial position of this Company, and Thave had a talk to the Bank Manager, and I have also investigated the Company's financial position. I find that there is a very large sum of money owing to creditors, including the Revenue, and that up to £8,000 is required to put matters in order. I shall be obliged if you will let me know as soon as possible, and in any case within the next few days what amount Mr. Littman's executors or anyone else interested in the Company on his behalf is able to put up by way of additional capital. The position is that for a number of years the directors, Mr. Stealey and Mr. Littman, did not deal with the Company's trading accounts, with the result that a very heavy taxation liability amounting I believe to £4,000 or {£5,000 was built up, and since the death of Mr. Stealey Mrs. Porter has been struggling to pay this as a result of which although this particular debt has been substantially reduced other creditors have increased. It is quite clear that the business is at present under capitalised, and I shall be very glad if you will let me hear from you as soon as possible,’ There was no written reply to that letter but Mr Biddle’s evidence was that, although , he did not recall the conversation, he probably said something to Mr Rowberry to the effect that there was no money available and that Mr Rowberry and Mrs Peskoff would have to manage as best they could. Mr Rowberry’s evidence was to the effect that Mr Biddle told him that Mrs Peskoff should not expect Mr Littman’s representa- tives to provide further funds, In these circumstances Mrs Peskoff consulted Mr Rowberry about the terms on which she could safely put further moneys into the company. Mr Rowberry in his reply stressed that it must be borne in mind that even188 All England Law Reports [1971] 3 All ER {2,000 which was the amount which he hoped Mrs Peskoff would be able to raise from the bank, would not put the company in a sufficiently strong position to pay off its creditors, and there could be no guarantee, even if this money were put in and then paid out to creditors, that someone would not take proceedings which would enforce liquidation, almost certainly resulting in the loss of Mrs Peskoff’s present investment together with any further money which she put into the company. His letter continues as follows: ‘I regard these considerations as so vital that I am not willing to advise you to put in more money unless you get such security as is available. On this point Mr Bond he was the bank manager] admittedly does not see eye to eye with me because he thinks that the issuing of a Debenture to you might well bring pressure from the company’s creditors. This is a point which undoubtedly has weight and it has to be borne in mind, but I have given it all the consideration that I can and I am of opinion that this is a risk which must be taken. ‘Ishould with this in mind advise you to reduce the payments to the revenue to £150 a month to see if you get away with it, and to retain as much as possible of the £2,000 in hand for say four to six weeks after taking the Debenture so that you could use it so far as necessary to meet any creditors who might become alarmed at the issuing of the Debenture. Subject to this my advice is that you increase the share capital of the Company by say 250 £1 Shares, taking up the Shares in your own name and paying £250 for them. ‘would also advise you to obtain payment of the £2,000 which is owing to you by the Company and to pay this back to the Company—it is a book-keeping transaction mainly—on security of a Debenture for £2,000. The other £1,750 (assuming that you could borrow £2,000 from the Bank and will have paid £250 of it for the shares) you would also lend to the Company upon a separate Debenture. “This would give you such security as is available in the difficult circumstances which exist, and whether or not the protection proved in the long run to be adequate I should have the satisfaction of knowing that you had taken all the precautions that you could . . . I must warn you not to put any more money into the Company until you have given all these proposals very careful considera- tion, and even then you must not put in any money until the Shares and Debentures are issued to you.” On 11th January 1954 Mrs Peskoff appointed Mr Arthur Charles Woodley, an em- ployee of the company, to be a director of the company in the place of her son who had then ceased to occupy that office. At this time the indebtedness of the company was of the order of £21,000, including the amounts due on the directors’ loan accounts. Mrs Peskoff raised the largest sum she could on the security of her own personal assets, but this did not amount to more than {[1,100. Ata board meeting held on 28th January 1954, and attended by Mrs Peskoff and Mr Woodley, 100 shares of the company were allotted to Mrs Peskoff and one to Mr Woodley. These shares were allotted for cash at par. At the same meeting it was agreed that on Mrs Peskoff being repaid the sum of [2,080 owing to her on the Stealey Joan account she would lend the sum of £2,000 to the company on a debenture at Gper cent. It was further agreed that Mrs Peskoff would lend the company a further sum of £1,000 on another debenture at 6 per cent. Mrs Peskoff agreed not to recall the £2,000 loan for three years except in the event of her death in the meantime or on the company going into liquidation or of a receiver being appointed or a judgment being entered against the company. The {1,000 loan was to be repayable on seven days’ notice. At the same meeting Mr Woodley was appointed secretary of the com- pany in the place of Mr Biddle. According to the company’s books Mrs Peskoff received £2,080 from the company on agth January 1954, and on the same day paid £2,000 to the company, and on 3oth January 1954 she paid £1,100 to the company.CA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 189 ‘Two debentures in the sums of £2,000 and {[1,000 respectively were executed in her favour. The effect of the allotment to Mrs Peskoff of too new shares of the company was to increase her shareholding in the company (ignoring Mr Woodley’s one share) from a 50 per cent interest to a 75 per cent interest. It reduced the Littman estate interest in the company from a 50 per cent interest to a a5 per cent interest. Neither the administrators pendente lite nor the firm of Silver, Altman & Co were told in any formal way of these steps by Mrs Peskoff or by anyone on her behalf. Mr Rowberry however told Mr Biddle unofficially about them, and on 4th February 1954 Mr Biddle wrote to Mr Bourner, one of the administrators, in the following terms: ‘Dear Mr. Bourner, re Jermyn Street Turkish Baths Ltd. Ihave heard unofficially from Mr. Rowberry of Gloucester, who acts for Mrs. Peskoff (generally known as “Miss Porter”) who was Mr. Littman’s Co-Director, that she has put further capital into the Company and I believe, issued further shares to herself. She has also appointed a new Director and I understand that I have been displaced as Secretary of the Company and her own nominee appointed. I gather from the conversation that the Littman part control of the business no longer exists and whilst I do not wish to suggest that anything improper has been done by Miss Porter, Ido think some investigation from the administrators angle is advisable here, so that the Estates interest, can be watched. On 9th February 1954 a search of the company’s file at the Companies Registry was made by a representative of Silver, Altman & Co. At this time the company’s file disclosed the appointments of direc:ors which had taken place and the change in the company’s office, but no information was yet available on the file with regard to the allouments of shares to Mrs Peskoff and Mr Woodley. ‘The note of the search ends with the following passage: ‘It is difficult to see what action the administrators can take in this case. They are not members of the company and as the Directors have power to refuse to register transfers they, the Directors, may prevent the administrators from becoming members by refusing to register a Letter of Request. If in the event of their becoming members the administrators find themselves in a minority and are of the opinion that the affairs of the company are being conducted in an oppressive manner they could apply to the court under Section 210 Companies ‘Act, 1948. It may be that the solution would be for the administrators, in their capacity as Creditors, to have the company wound up.” It is clear from this that the search was made either on the administrators’ behalf or with a view to advising them, and that the information given by Mr Rowberry to Mr Biddle had reached Silver, Altman & Co and the administrators. On rith February 1954 Mrs Peskoff wrote to Mr Rowberry telling him that a Mr Morris, who was a partner in Silver, Altman & Co, had telephoned her to say that it had been drawn to his notice that certain changes had been happening at the baths, that a new director had been appointed and also that Mrs Peskoff now held more shares. She said that Mr Morris expressed surprise that this had been done without Mr Silver or Mr Bourner being informed. On the same day an employee of Silver, Altman & Co recorded in a note that the following amounts were banked into the company's account: on 29th January 1954, by cheque from Mrs Peskoff, {'2,000; on 3oth January 1954 by cheque from Mrs Peskoff, {/1,100, and that a cheque had been drawn on the j company’s account in favour of Mrs Peskoff on 29th January 1954 for £2,080. On 23rd February 1954 Mrs Peskoff wrote to Mr Morris with reference to her earlier conversation with him to which I have referred, in the following terms: ‘L feel that when I first raised the matter of the Company's difficulties some months ago, the seriousness of the position was hardly appreciated, and I was told that I could not receive any assistance from Mr. Littman’s administrators.190 All England Law Reports (1971] 3 All ER Ina very difficult position I was forced to seek advice, which I obtained from Mr. Rowberry, and he approached the administrators through Mr. Biddle without success. In these circumstances I had no alternative, if1 was to save the Company, but to act in accordance with Mr. Rowberry’s advice, (and everything that I have since done has been with his advice and guidance) and in the circumstances I feel Tmust continue to do so. I cannot therefore discuss any matters unless suggestions are first put to him so that he may advise me.’ On 1st March 1954 Mr Silver wrote to his co-administrator, Mr Bourner, a letter in which he set out the results of the investigations made by his firm which I have men- tioned. This letter proceeds: ‘If as Mr. Biddle intimates the remaining Share Capital of the Company has been issued to Mrs. Peskoff or any Nominee of hers it appears that legally there was nothing to prevent her doing this neither was there anything to prevent her appointing an additional director. If the unissued Share Capital has in fact been allotted to Mrs. Peskoff or her Nominee then she has control of the Company. I quite agree that this lady's actions are most reprehensible but there are never- theless certain courses of action open to us. (1) The Company owed Mr. J. A. Littman £2,936. Immediate application for repayment of this money could be made. (2) The late Mr. J. A. Littman guaranteed the Bank overdraft amount- ing to £8,500. Withdrawal of this Guarantee would be extremely embarrassing to say the least of it to the Company and Mrs. Peskoff. (3) I believe that appli- cation could be made to the Court for an Order to wind up the Company on the grounds that oppressive action has been taken by Mrs. Peskoff. Through my Partner, Mr. Mortis, 1 have been endeavouring to contact Mrs. Peskoff but without success and I have very recently received a letter copy of which I enclose herewith, It rather looks to me as if Mr. Rowberry is the man to see, but I feel that we ought to discuss this with Mr. Tobin first. I am having a word with Mr. ‘Tobin about the matter and no doubt an early appointment can be arranged amongst which this, together with many other important matters, can be discussed.” On x1th March 1954 a copy of this letter was sent to Mr Tobin by Mr Silver with a covering letter in which Mr Silver confirmed that Mr Tobin would be taking immedi- ate action in the matter and asked Mr Tobin to let him know as quickly as possible what steps he proposed to take. Mr Silver saw Mr Tobin on the following day, when he understood that Mr Tobin would be getting in touch with Mr Rowberry. On 29th March 1954 Mr Silver wrote to Mr Tobin saying ‘Please let me know immedi ately what the position is as both Mr. Bourner and myself are very concerned about it’. A further meeting between Mr Silver and Mr Tobin took place on 30th March 1954, and on and April 1954 Mr Silver wrote to Mr Tobin as follows: ‘Further to our meeting on the 3oth March, I confirm that you were going to take the following steps in connection with the above matter. (1) Call in the Loan due by the Company to the Estate. (2) Withdraw the Guarantee of the Company's Bank Overdraft. (3) Make application for the winding up of the Company. I should be glad to hear from you regarding the progress made as soon as possible. Early in April 1954 Mr Rowberry had a conversation with Mr Louis Littman, a son of the deceased Mr Littman and a beneficiary under the latter's will. Mr Louis Littman is by profession a solicitor. Mr Rowberry evidently discussed with Mr Louis Littman on this occasion the steps which Mrs Peskoff had taken with regard to the company. ‘On 2and November 1954 Mr Silver wrote to Mr Tobin referring to his previous correspondence regarding the company and asked Mr Tobin to let him know as quickly as possible what steps Mr Tobin had taken in the matter and the presentCA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 191 position. The letter concludes, ‘Mr, Bourner is very anxious about the position as I am’. Mcantime on 3rd November 1954 Mrs Peskoff and Mr Woodley had purported to hold an annual general meeting of the company. There were present at the meet- ing Mrs Peskoff and Mr Woodley and, in attendance, Mr Morris. No notice of this meeting had been given in any form to the administrators of Mr Littman’s estate. ‘This was a defect in the calling of the meeting, for the company’s regulations require notice of every general mecting to be given to every person entitled to a share in consequence of the death of a member who, but for his death, would be entitled to receive notice of the meeting (see cll 106 and 107 of Table A, 1929, which apply to this company). The minutes of this meeting erroneously record that Mr Rowberry had pointed out that as the shares of Mr Lituman had not been transferred or the title of his administrators registered with the company there was no person to whom notice of the meeting could be given. What Mr Rowberry had advised in fact was to the effect that as the administrators had not becn registered as holders of the Littman shares they were not entitled to attend or vote at the meeting. Nothing significant happened at this general meeting. Mr Rowberry subsequently advised that it should be re- convened on proper notice but this was in fact never done. On r4th March 1955 Mr Tobin for the first time took some action in the matter. He wrote to the company’s bank manager asking to be informed of the amount of the company's indebtedness to the bank. On the same day he wrote to the company requesting payment within 14 days of the sum of £2,936 owing on Mr Littman’s loan account. On 18th March 1955 Mr Tobin suggested to the bank manager that they should meet Mrs Peskoff with a view to discussing the acquisition by her of the Litt- man interest in the company. Nothing came of this proposal at this stage. Ata board meeting held on 7th October 1955 at which Mrs Peskoff and Mr Woodley were present, the following three resolutions purport to have been passed: (10) Resolved that the following directors’ appointments as from 1st. January 1955 be and are hereby confirmed: (1) Mrs. J. Peskoff to be chairman and manag- ing director at a salary of £1,560 per annum; (2) Mr. A. C. Woodley to be secre- tary and manager at a salary of £780 per annum. (11) Resolved that in addition to the salaries provided above, the directors be paid such reasonable expenses as may be incurred on the company’s business; and bonuses as hereinafter provided. (12) Resolved that bonuses be paid on the turnover of the company (net cash receipts) in excess of £30,000 per annum, the Brighton Baths receipts being excluded from the total receipts, as follows: Mrs. J. Peskoff to receive a bonus of twenty per cent, and Mr. A. C. Woodley a bonus of five per cent of the excess receipts as above, and that such bonuses shalll be payable in respect of the financial year ending 31st. March 1955 and for each successive year as long as the respective directors shall hold the above offices and, in the event of retirement from office shall be calculated to the date of retirement.’ These resolutions, except possibly that relating to Mr Woodley's remuneration as secretary and manager, were ultra vires the directors, since the regulations of the company require directors’ remuneration to be fixed by the company in general meeting On and December 1955 Mrs Peskoff wrote to Silver, Altman & Co a letter in which she said that neither of the directors was willing to append an unqualified signature to _ the company’s accounts for the year ended 31st March 1954. The letter goes on: “As you know, there are several items in the accounts brought forward from previous years and of which the present directors have no specific knowledge. In particular, the sum shewn in the books as owing to the estate of the late Mr. J. A. Littman has already been disputed with his administrators and in the circumstances no signature can be given which can be construed as to the accept- ance of this as a liability.”192 All England Law Reports [1971] 3 All ER This debt had not been previously disputed in any of the documents before the court, but it had been discussed between Mrs Peskoff, Mr Woodley and Mr Rowberry. Mrs Peskoff and Mr Woodley had suggested that Mr Littman made unrecorded drawings on the company’s funds in his lifetime and that it was possible or probable that this debt was no longer due to him from the company. This may have been communiv- ated orally to the administrators or to Silver, Altman & Co but there is no evidence of this. Between November 1956 and April 1957 there were some occasional sporadic attempts by Mr Rowberry and Mr Tobin to meet to discuss the matter, all of which seem to have been abortive. The matter then went to sleep entirely until February 1959. On oth February 1959 Mr Louis Littman wrote a letter to Mr Rowberry, which seems to constitute a personal and informal approach, saying that the administrators were feeling that it was time to have the question of the Turkish Baths sorted out, and suggesting that he and Mr Rowberry and Mrs Peskoff might have a preliminary chat. Such a meeting took place on rath March 1959, at which it seems Mr Woodley was also present. The position regarding the company was discussed. Mention was made of Mr Littman’s loan account, and Mr Louis Liteman’s attendance note record ing what took place at the meeting contains this statement: “This figure, however, appears to be an arbitrary one fixed by the accountants after a study of the books which they found largely incomprehensible.” ‘This appears to relate to the figure standing to the credit of Mr Littman on the loan account at his death, but it is not clear whether Mr Louis Littman is recording what he was told by others present at the meeting or information which he had himself obtained elsewhere. ‘The position with regard to the shareholdings was made plain to Mr Louis Littman. On 20th May 1959 Mr Rowberry wrote to Mr Louis Littman promising that he should receive copies of the trading accounts and balance sheets of the company. On 25th May 1959 Mr Rowberry wrote to Mr Louis Littman as follows: ‘Ifind the Accountants are some two weeks in arrears with the accounts, but the Directors have asked them to get the accounts done as quickly as possible, and to supply you with copies of the same for whichever years you require. I will have the Leases copied as you wish and send them to you. I did not know even until now who were the Executors or Administrators of the Estate or what happened about the lost Will, but if either the Executors or the Court wish to have the whole of the facts before them I was told some time ago that there was some question of a substantial sum of money being owing by each of the former Directors of the Company. IfI remember correctly this had not been adequately recorded, and certainly I should not for myself seck to pursue the point, but you ought to know that itis there, and probably one of the shareholders who was not a Director at the time knows something about it.” On 23rd July 1959 Mr Louis Littman wrote to Mr Rowberry saying that the ad- ministrators were so inundated with work in respect of the Littman estate and other matters that he doubted whether they would have sufficient time in the next two or three weeks to meet and discuss the questions relating to the company. Mr Rowberry replied to the effect that he would leave the matter with Mr Louis Littman until the latter had arrived at some conclusion with the administrators. There the matter rested for a considerable time. On 25th March 1960 a new grant of administration of Mr Littman’s estate was made in favour of four of his children other than Mr Louis Littman. Mr Silver and Mr Bourner thereupon ceased to be administrators pendente lite. Mr Louis Littman thenceforth acted as solicitor for the estate. Meanwhile at a board meeting held on rsth July 1959 Mrs Peskoff and Mr Woodley resolved that the commission payable in accordance with the minute of 1st January 1955 be amended to be on receipts in excess of £'24,000 per annum as from 1st OctoberCA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 193 1958 in lieu of receipts in excess of £30,000 per annum as previously resolved. ‘The reason for this was that they had closed the ladies’ baths in Duke of York Street, the turnover at which was of the order of £6,000 per annum. The effect of this resolution therefore was to maintain the commission received by Mrs Peskoff and Mr Woodley at approximately the same level as obtained theretofore. In April 1956 Mr Morris ceased to act as the representative of Silver, Altman & Co for the purpose of audits of the company’s accounts and his place was taken by a Mr Goldwater also of Silver, Altman & Co. At a directors’ meeting held on 28th March 1960, at which Mrs Peskoff and Mr Woodley were present and Mr Goldwater was in attendance, draft accounts of the company for the three years ended 31st March 1959 were presented and provisionally adopted subject to the following resolution: “That the sum previously shewn in the accounts as due to the late J. A. Littman be deleted from the accounts for the year ending March 31st, 1959 and all subsequent years as the debt is not acknowledged.” In April 1960 Mrs Peskoff by written entry in the minute book signed by herself pur- ported to allot one share in the company to her son Michael and to appoint him to be an additional director of the company as from 17th October 1960. This allotment and this appointment were technically invalid because these steps were not taken at a board meeting at which a quorum of directors was present. The business of the company prospered under the direction of Mrs Peskoff and Mr Woodley and by June 1960 they had managed to pay off the bank overdraft. On 29th June 1960 the bank manager wrote to Mr Louis Littman informing him that the guarantee by the late Mr Littman of the company’s overdraft had been cancelled. On rath July 1961 Mr Louis Littman wrote to Mr Rowberry in the following terms: ‘Dear Mr. Rowberry, re: Savoy Turkish Baths. A great many of the difficulties connected with the Administration of my father’s estate have now been dealt with, and the Administrators are now at leisure todeal with some of the minor matters. In short, they are ready to tackle the problems connected with the Savoy Turkish Baths. You will remember that when we last discussed these matters, which was about two years ago, it was decided that I should have the opportunity of examin- ing the leases and the accounts of the company before meeting you with a view to finally agreeing how we should proceed. ‘The books of the company are with Messrs. Silver, Altman & Co., and they will require a formal authority from the company for the Administrators to view the books. Would you be kind enough to write to them and give this authority on behalf of the directors.” Mr Rowberry arranged with Mr Woodley for Silver, Altman & Co to be given the required authority and wrote to Mr Littman drawing attention to the fact that no grant of representation of Mr Littman’s estate had been registered with the company. On 8th November 1961 Messrs Silver, Altman & Co sent a copy of the grant of administration of 25th March 1960 to the company, asking that the administrators should be registered in the company’s books. At the same time they asked for formal confirmation that it would be in order for them, Messrs Silver, Altman & Co, to supply Mr Louis Littman as solicitor for the estate with copies of the company's accounts. On arst November 1961 Mr Woodley wrote to Silver, Altman & Co saying that the administrators had been duly registered in the company’s books and author- ising Silver, Altman & Co to supply copies of accounts to Mr Louis Littman together with any information concerning them as might be requested. On 23rd November 1961 copies of the company’s accounts for the five years ended 31st March 1960 were sent by Silver, Altman & Co to Mr Louis Littman, No transfer of the shares registered in Mr Littman’s name into the names of the administrators was registered in the company’s register of members. The names of the administrators were noted, at the head of the page containing registration of Mr Littman as a shareholder, as194 All England Law Reports [1971] 3 All ER administrators of his estate. In the court below? the question was raised whether the administrators were ever registered as members of the company, but this point has not been pursued in this court, Counsel for the respondents has been content to treat the administrators as duly registered members of the company as from 21st November 1961 or thereabouts. At about this time a detailed investigation of the position was conducted in the offices of Silver, Aleman & Co evidently with a view to advising Mr Louis Littman. The validity of the allotment of shares to Mrs Peskoff and of the issue to her of deben- tures was considered. So also was the position with regard to the commission payable to the directors, and with regard to the balance on Mr Littman’s loan account. With regard to the latter the contemporary note is in these terms: ‘It would appear that even if Mr. J. A. Littman’s debt is not statute barred the substance of the transactions giving rise to the indebtedness may have to be proved as Mrs. Peskoff denies the validity of the debt although she signed the balance sheet dated 31/3/55 in which the debt was included in sundry creditors.” As to the commissions, three significant entries appear in the contemporary note. First the note states: “The bonus scheme for directors’ remuneration appears to have been devised by S.A. & Co.’; secondly, the directors’ remuneration is referred to as follows: ‘Directors’ Remunerations Mrs. Peskoff [1,650 pa. Mr. Woodley {780 p.a. Plus bonus system on advice of Mr. Morris’; and another entry relating to the same matter contains this note: ‘Bonus system (per Mr. W. in consult. with S.M,)’. Itis clear that the representative of Silver, Altman & Co who conducted this examina- tion had full access to all the company’s books. On sth November 1962 copies of the company's accounts for the years ended 31st March 1953 and 1960 were sent by Silver, Altman & Co to Mr Peter Littman, one of the administrators. There was no further activity on the part of the administrators until a meeting which took place on rath December 1962. There were present at this meeting Mr Louis Littman and Mr Peter Littman, Mr Tobin and Mr Silver, that member of Mr Silver's staff who had conducted the investigation in May 1962, Mr Rowberry, Mrs Peskoff and Mr Woodley. Mr Louis Littman on behalf of the administrators expressed concern about the issue of roo shares to Mrs Peskoff and about the amount of remuneration which the directors had received, whereas the shareholders had received no dividend throughout the whole period under discussion. Mr Louis Littman, on behalf of the Littman estate, maintained that the estate was entitled to half the value of the enterprise plus compensation for having received no profit from the company for so long. No reference was made to Mr Litt man’s loan account or the deletion of the amount of £2,936 as a debt due by the company to the Littman estate. The discussion seems to have proceeded on the basis that the whole matter could be disposed of by way of an amicable compromise. It was decided that the administrators should instruct an estate agent and surveyor to inspect the build- ings and the leases with a view to giving Mr Silver an idea of their value so that Mr Silver should be in a position to estimate the total value of the company’s business as itstood, Some correspondence between Mr Rowberry and Mr Louis Littman followed this meeting and on 11th April 1963 Mr Louis Littman informed Mr Rowberry that he had, subject to agreement of their fee, instructed a firm of estate agents to proceed with their valuation of the leascholds. Nothing further happened until sth June 1964 when, in the course of a letter to Mr Rowberry, Mr Louis Littman wrote: ‘Incidentally, when are we going to settle the question of Jermyn Street Turkish Baths Ltd? We are close to the point of winding up the Estate and this matter must be dealt with soon.” 2 [1970] 3 All ER 57, [1970] 1 WLR 1194CA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 195 Mr Rowberry replied pointing our that the matter had been left with Mr Louis Littman to obtain valuations. As nothing happened, Mr Rowberry wrote to Mr Louis Littman on rath August 1964 saying that he would like to have a discussion with him to see whether they could reach some arrangement about the company. Shortly before 8th October 1964 Mr Rowberry attempted to make an appointment to see Mr Louis Littman on this matter. On 8th October 1964 Mr Louis Littman wrote to Mr Rowberry a letter (wrongly dated ath September 1964) informing him that he had ceased to act as solicitor for the administrators and that their present solicitors were Messrs Coward, Chance & Co. On 15th October 1964 Mr Louis Littman sent Mr Rowberry a copy of a valuation of the company made by Mr Silver on 3oth January of that year. Messrs Coward, Chance & Co made no approach to Mr Rowberry or to Mrs Peskoff until 26th May 1967, when they wrote to Mr Rowberry suggesting that they should now endeavour to settle the matter. Mr Rowberry in reply expressed himself as ready to meet Messrs Coward, Chance & Co, but nothing further occurred until 18th September 1968 when Mr Lock of Messrs Coward, Chance & Co, wrote Mr Rowberry a letter complaining of the amount of remuneration which the directors had received and putting forward a proposal that the Littman estate should acquire Mrs Peskoff’s shares in the company on terms set out in the letter. This letter con- tained no complaint about the allotment of 100 shares to Mrs Peskoff, nor did it make any reference to the Littman loan account. We were told that following this letter a meeting took place between the parties or their representatives but that no agreement was reached. There was no further correspondence or meeting before the petition was issued on 6th May 1969. We must now go back to the year 1961 to deal with an important change which then took place in the management of the company’s business, Mrs Peskoff, Mr Woodley and his wife were shareholders in a company called Nevilles Turkish Baths Ltd (which we will call ‘Nevilles’). ‘This company had then recently disposed of a business of a Turkish bath at or near London Bridge. Ata meeting of the com- pany, whether a directors’ meeting or a general meeting is not clear, held on 19th January 1961 Mrs Peskoff and Mr Woodley resolved that Nevilles should be appointed managing agents of the company’s Turkish baths in Jermyn Street as from rst January 1961. This arrangement was carried into effect by a formal agreement between the company and Nevilles dated 3rd March 196 whereby Nevilles agreed to transfer to the company the goodwill and connection of the business formerly carried on at London Bridge and undertook to use its best endeavours to introduce the customers and former customers of Nevilles to the company. The company appointed Nevilles to be general managers and controllers of the company’s Turkish bath in Jermyn Street and of the hairdressing and allied businesses carried on therewith but not of the flats and apartments belonging to the company situate above the company’s premises in Jermyn Street. The appointment was to take effect from 1st January 1961 and to continue for the term of two years and thereafter from year to year until determined. Nevilles were to receive by way of remuneration £1,440 per annum and 5 per cent of the gross receipts of the business. Nevilles were to have complete management and control of the business of which they were appointed managers and were to appoint and remunerate out of their own funds competent persons to carry out their duties under the agreement. Mr Woodley ceased to be a director of the company and Mrs Peskoff ceased to be a director of Nevilles. The company’s business had prospered under the management of Mrs Peskoff. ; Inthe year to 31st March 1953 the total receipts were just under £30,000; by the year ended 31st March 1957 they had incteased to over £40,000 and remained around that figure for the next four years. During the period from ist April 1962 to 31st March 1967 they had increased by degrees to slightly over £75,000 a year. During the nine years ended 31st March r96r the company paid in directors’ fees, management fees and management expenses a little over £41,000. During the nine years to 31st March 1970 Mrs Peskoff received remuneration amounting to a little over £108,000196 All England Law Reports [1971] 3 All ER and Nevilles, who had no other business apart from the management of the company’s ‘Turkish baths, received profits amounting to £13,524. Throughout this period the company never paid any dividend on its shares. ‘What purported to have been annual general meetings of the company were held from time to time, at some of which accounts of the company were approved or placed before the meeting. Neither before nor after November 1961 was notice of any of these meetings given to the personal representatives of Mr Littman. From time to time at directors’ meetings bonuses were voted to Mr Woodley which were in addition to his bonuses, so called, payable under the resolution of 7th October 1955. The petition was presented by Mr Littman’s administrators under the companies Act 1948, s 210, on 6th May 1969. The principal matters complained of in it are (a) that the registered office of the company was irregularly removed from 78 New Bond Street to the Jermyn Street premises; (b) that the allotment of 100 shares to Mrs Peskoft was not made bona fide for the benefit of the company but for the purposes of giving her control of the company and to increase her share in the equity; (c) that the directors had no power to award themselves remuneration; (d) that the directors resolved to delete the debit of £2,936 on Mr Littman’s loan account from the com- pany’s accounts although no part of the sum had been paid by the company; (e) that no notices of company meetings were given to the personal representatives of Mr Littman; (f) that since the year 1953 the whole of the company’s earnings had been applied in the payment of purported fees, remuneration and bonuses or otherwise for the benefit of Mrs Peskoff and Mr Woodley and no dividend had been paid on the company’s shares, and that neither the administrators pendente lite nor the petitioners had received any benefit from the company in respect of Mr Lituman’s shares. The petition goes on to allege that the company’s principal fixed assets are (a) its leasehold property in Jermyn Street, the lease of which is due to expire on 25th March 1973, (b) its furniture fixtures and fittings and (c) the goodwill of the company’s business, which could be gravely damaged by a winding up of the company. The petition further alleges that in a winding-up of the company it would not necessarily be possible to recompense the petitioners for the wrongs suffered by them at the hands of Mrs Peskoff and Mr Woodley since 1953. The petition prays that either (1) Mrs Peskoff, Mr Woodley and Michael Peskoff should sell their shares in the company to the petitioners on terms to be fixed by the court or alternatively (2) Mrs Peskolt, Mr Woodley and Michael Peskoff or one or more of them, should be ordered to pu chase the petitioners’ shares in the company on terms to be fixed by the cour Alternatively the petition asks for a winding-up of the company. Thave set out the facts of the case in so much detail because much reliance has been placed by the respondents on the delay on the part of the petitioners and their predecessors in title in pursuing such remedies as may have been open to them in respect of the matters of which they complain. Pennycuick J in his judgment found the following facts: ‘After the death of Mr Littman, Mrs Peskoff found that the company was in a parlous condition; it had debts amounting to something like £20,000, including substantial debts to the Revenue and to outside creditors, and the amounts owing on loan account to herself, and the personal representatives of Mr Littman. Mrs Peskoff was successful by her exertion and business acumen in pulling the business of the company round, and during the 1960s it was converted from an insolvent concern, which might have been wound up on a creditors’ petition at any time, into an extremely prosperous concern. It has made considerable profits for a number of years, and now has a substantial balance of assets over liabilities. ‘That redounds much to the credit of Mrs Peskoff, and no one says otherwise.” He went on to find that in 1954 cash was urgently required to meet the liabilities of 3. [1970] 3 All ER at 60, (1970) 1 WLR at 1199 hCA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 197 the company and that the administrators, when approached by Mrs Peskoff (in fact by Mr Rowberry on her behalf), mentioning a figure of £8,000 as being required by the company, and inviting them to make an advance, were unwilling to do so. ‘The judgment proceeds*: ‘In the event, Mrs Peskoff advanced a much lesser sum, namely £1,000, and was able to keep the company afloat with that further advance. She did not at any time mention to the administrators this much smaller figure or suggest an advance by them on that footing. On asth January 1954, Mrs Peskoff took a debenture for £2,000 to secure money already owing to her, which represents, as Tunderstand it, the loan which she had taken over from Mr Stealey. In addition, she took a debenture for (1,000 to secure the new money which she was then putting up. So far, no complaint is made against her. But, in addition, she and Mr Woodley, as the directors of the company, then issued a further 100 shares to Mrs Peskoff and one share to Mr Woodley. It is not suggested that these shares were worth more than par at the date of issue, but the effect of issuing the shares was to increase Mrs Peskoff’s interest in the company from one-half to three- quarters, with a corresponding reduction in the proportionate interest of Mr Littman’s estate.” Later in his judgment Pennycuick J dealt with the allotment of these shares in the following terms*: ‘In the course of her cross-examination it became clear to my mind beyond doubt that Mrs Peskoff and Mr Woodley, when they issued these new shares, did not do so in good faith for the benefit of the company. It is quite true that in 1954 the company needed money, and Mrs Peskoff quite properly advanced {1,000 of new money against debentures. But the sole purpose of issuing the new shares was not to raise another trifling sum, namely £100, but to increase Mrs Peskof’s interest in the company as against the interest of Mr Littman’s estate. It never entered the heads of Mrs Peskoff and Mr Woodley that they were concerned to advance the benefit of the company or the shareholders collectively. On the con- trary, their sole motive was to benefit themselves at the expense of the remaining shareholders. That that is the true view is borne out, if any corroboration is needed, by the form the resolution took. It will be remembered that the resolu- tion to issue ror shares came first, in complete isolation from the resolution to raise further finance by the issue of the new debenture. Unfortunately, on this point Mrs Peskoff was advised by Mr Rowberry, who thought, apparently, that this was a perfectly proper and effective course for her to take. I do not doubt that Mr Rowberry acted in perfectly good faith, but I must say that I think it was very unfortunate advice for him to have given her.’ We feel unable to accept this view. The fact that the allotment of the shares and the creation of the debentures are dealt with in distinct and separate resolutions seems to us to establish nothing. The company was in dire need of cash. Mr Rowberry and Mrs Peskoff had been told that no money would be available from the Littman estate and that they would have to manage as best they could, or to that effect. It is true that in his letter of 16th December 1953 Mr Rowberry mentioned a figure of £8,000 as the amount required ‘to put matters in order’. Itis also true that the administrators pendente lite were never told that Mrs Peskoff was putting up no more than {/1,r00. Ic is manifest, however, that Mr Rowberry thought that the latter sum was likely to be insufficient to float the company off the rocks successfully, and that Mrs Peskoff was taking a considerable risk in putting this additional money into the company. 4 [1970] 3 All ER at 60, [1970] 1 WLR at 1199, 1200 5 [1970] 3 All ER at 66, [1970] 1 WLR at 1206, 1207198 All England Law Reports [1971] 3 All ER ‘The response to Mr Rowberry’s approach to the administrators had not been such as to encourage any further application to them for financial assistance. In our judgment, it is clear from the evidence, and particularly from the contemporary documents, that the allotment of the shares and the issue of the debentures constituted what, in modern parlance, may be called ‘a package deal’. It seems clear that Mr Rowberry would not have advised Mrs Peskoff to put any more money into the company except ‘on the terms that she claimed an additional stake in the equity. In the event the gamble was successful. But for this timely injection of a comparatively small sum of cash, it is highly probable that the company would have been put into compulsory liquidation. The allotment of the shares, in our view, formed part and parcel of the arrangement under which this injection of cash was made. With respect to Pennycuick J, we see no good grounds for holding that the arrangement was not one entered into in good faith for the benefit of the company. It was an arrangement of a kind which, if the lender and the company had been negotiating at arm’s length, the lender might very well have insisted on. It is true that neither Silver, Altman & Co nor the administrators were told anything about the proposal before the allotment was made, but Mr Biddle was told of it within a week and he passed the information on to Mr Bourner promptly. This does not indicate any sinister intention on Mrs Peskoff’s part. In our judgment, the allotment of 100 shares to Mrs Peskoff and, so far as it is material, the allotment of one share to Mr Woodley, which was necessary to qualify him as a director, were legitimate acts done in good faith in the interests of the company and were not oppressive in any sense. Pennycuick J rightly recognised’ that the issue of these shares in 1954 did not constitute oppressive conduct continuing in operation in the present tense at the date of the presentation of the petition. He expressed the view, however, that it re- presented the first of a chain of events which continued right up to the presentation of the petition, the most important of which was Mrs Peskofi’s taking excessive remuneration. We can discover no link between the issue of the shares and the voting or taking of the remuneration. | The voting power attached to the shares was not used in any way to procure the remuneration, nor was any threat to use those voting powers employed to discourage the petitioners or their predecessors in title from taking any step that they might choose with regard to the remuneration. The same observation applies, we think, to anything else which could be said to form a link in the ‘chain of events’ referred to by Pennycuick J, which he did not particularise. The terms of s 210 make it clear that the oppression complained of must be operative at the time when the petition is launched. It follows, in our judgment, that, even if we were wrong in the view that we have formed about the character of the issue of the shares, it would not form a basis for relief under the section. Moreover, the administrators pendente lite were aware of the allotment from about 4th February 1954 and the petitioners, through Mr Louis Littman, were aware of it from the time when they became administrators in March 1960. No effective protest was ever made about the allotment at any time before presentation of the petition, nor was any step taken to challenge its validity. This was not in any way due to the acts or attitude of Mrs Peskoff. It seems to us strange in these circumstances that the petitioners should assert in May 1969 that what took place more than 15 years earlier was an act of oppression or a link in a chain of oppressive acts, ‘We now turn to the consideration of the position relating to the directors’ re- muneration. Before Pennycuick J counsel for the petitioners accepted that the remuneration taken up to and including the year ended 31st March 1961 should not be treated as having been excessive, and with that view Pennycuick J himself agreed. He held, however, that after the making of the agreement with Nevilles 6 [1970] 3 All ER at 66, (1970] 1 WLR at 1207cA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 199 the remuneration taken by the directors of the company as such was grossly in excess of any reasonable return for their services in conducting the affairs of the company. Before us counsel for the respondents has not sought to deny that in the later years of the story Mrs Peskoff did take excessive remuneration. If for seven years the remun- eration received under the resolution of 7th October 1955 was not excessive, it cannot, we think, be suggested that the resolution itself was an oppressive act. Counsel for jp the petitioners suggests that it carried the seeds of oppression, and that oppression arose as soon as the remuneration received by Mrs Peskoff became excessive. He disclaims any suggestion that the resolution was itself an oppressive act, but he says that Mrs Peskoff acted oppressively by continuing to draw commission under the resolution after the year ended 31st March 1961. We are not concerned in this case to consider whether the minority shareholders could succeed either in misfeasance proceedings against the directors or in a minority shareholders’ action in the name of the company. We are concerned only to con- sider whether the affairs of the company were, when the petition was presented being conducted in a manner oppressive to some part of the members of the company. ‘What does the word ‘oppressive’ mean in this context? In our judgment, oppression occurs when shareholders, having a dominant power in a company, either (1) exercise that power to procure that something is done or not done in the conduct of the company’s affairs or (2) procure by an express or implicit threat of an exercise of that power that something is not done in the conduct of the company’s affairs; and when such conduct is unfair or, to use the expression adopted by Viscount Simonds in Scottish Co-operative Wholesale Society Ltd v Meyer? ‘burdensome, harsh and wrongful” to the other members of the company or some of them, and lacks that degree of probity which they are entitled to expect in the conduct of the company’s affairs: see Scottish Co-operative Wholesale Society Ltd v Meyer and Re H R Harmer Ltd8. We do not say that this is necessarily a comprehensive definition of the meaning of the word ‘oppressive’ in s 210, for the affairs of life are so diverse that it is dangerous to attempt a universal definition. We think, however, that it may serve as a sufficient definition for the present purpose. Oppression must, we think, import that the ¢ oppressed are being constrained to submit to something which is unfair to them as the result of some overbearing act or attitude on the part of the oppressor. If a director of a company were to draw remuneration to which he was not legally entitled or in excess of the remuneration to which he was legally entitled, this might no doubt found misfeasance proceedings or proceedings for some other kind of relief, but it would not, in our judgment, of itself amount to oppression. Nor would the fact that the director was a majority sharcholder in the company make any difference, 9 unless he had used his majority voting powers or retain the remuneration or to stifle proceedings by the company or other shareholders in relation to it. Messrs Silver, Altman & Co must have been aware of the resolution of 7th October 1955 when auditing the accounts of the company for the years ending 31st March 1955 and 1956. Mr Morris was then carrying out the audit on behalf of the firm, and these accounts were produced at an annual general meeting of the company held on zoth February 1957 at which Mrs Peskoff, Mr Woodley and Mr Morris were all present. Express reference is made to the commission arrangements in the inspection notes recording the investigation of the company's books by a representative of Silver, Altman & Co in April 1962. At the meeting held on 12th December 1962 Mr Louis Littman complained that the directors for some years had taken out the whole of the company's profits for directors’ fees. Mr Louis Lituman had received copies of the company’s accounts for all the years from 1953 to 1960 in the months of November and December 1961. He also received from Silver, Altman & Co in January 1964 particulars of the directors’ remuneration and management fees in 7 (1958) 3 All BR 66 at 71, [1959] AC 324 at 342 8 [1958] 3 All BR 689, [1959] 1 WLR 62200 All England Law Reports [1971] 3 All ER cach of the three years ended 31st March 1961, 1962 and 1963. There was never any attempt on the part of Mrs Peskoff and Mr Woodley to disguise from the administra- tors the fact that they were drawing remuneration by way of commission under the resolution of 7th October 1955, subject in due course to the amendment contained in the resolution of rsth July 1959, Indeed it is right to say that throughout the whole history Mr Rowberry acting on Mrs Peskoff’s behalf was willing to make full dis- closure to the administrators of any relevant material. Never in the whole course of the intermittent discussions which have taken place over the years has it been suggested on behalf of the administrators that the resolution of 7th October 1955 was ultra vires the directors, nor have Mrs Peskoff and Mr Woodley ever been called on to discontinue taking commission or to reduce the rate of their commission. Such negotiations as have taken place have always been with the view to one side buying out the other. Tin these circumstances it seems to us that Mrs Peskoff’s position as majority share- holder in the company has never had any bearing on her remuneration as a director, nor is there any indication that it has been used to influence the administrators in the way they have acted. In these circumstances, in our judgment, the petitioners fail to make out any case of oppression in this respect. Moreover, knowing the manner in which Mrs Peskoff was being remunerated as a director of the company, the administrators have allowed this state of affairs to continue for many years during which Mrs Peskoff has devoted the whole of her professional time to the management of the company's affairs, and has not sought employment elsewhere. In these circumstances we feel grave doubts whether, even if we had thought that the petitioners had successfully shown that Mrs Peskoff’s conduct had been oppressive in some degree, it could be said that the circumstances were such that, but for the fact that a winding up order might unfairly prejudice the petitioners, it would be just and equitable to wind the company up. Sec s 2x0 (2) (b). Since however in our view the administrators fall at the hurdle of oppression, it is unnecessary to consider whether they could have negotiated this second hurdle. Before leaving this part of the case we would add this. Paragraph 33 of the petition alleges that since the year 1953 the whole of the company’s earnings have been applied in the payment of purported fees, remuneration and bonuses or otherwise for the benefit of Mrs Peskoff and Mr Woodley, and that since 1953 no dividend has been paid on the company’s shares and neither the administrators pendente lite nor the petitioners have received any benefits from the company in respect of Mr Littman’s shares. While it is true that no dividend has been paid and that the Littman estate has received no benefit from the company in the sense of receiving any distribution of capital or profits, it is certainly not true that the Littman estate has not benefited from Mrs Peskoft’s efforts. Substantial sums derived from the carrying on of the business have been re-invested in the business, the company's financial position has been enormously improved, the bank overdraft has been eliminated and Mr Litt- man’s guarantee has been discharged without any cost to his estate, and, whereas at Mr Littman’s death his shares in the company must have been worthless or very nearly so, they must now have a substantial value notwithstanding that they now constitute a minority shareholding in the company. In this connection it is worth recording that in 1965 Messrs Coward, Chance & Co on the administrators’ behalf received the agreement of the Inland Revenue to certain calculations resulting in Mr Litcman’s shares in the company being treated for death duty purposes as having been worthless at his death and the debt of £2,936 as having then been worth only 751. Tae deletion from the company's books of the credit in favour of Mr Littman of £2,936 on his loan account can have had no effect on the liability, if any, of the com- pany to his estate in this respect; nor could this deletion constitute oppression of anyone in the capacity of a member of the company. ‘This action cannot, in our judgment, be regarded as having been in any way oppressive. The debt, if a goodCA Re Jermyn Street Turkish Baths Ltd (Buckley LJ) 201 one, was statute-barred long before the petition was presented and, notwithstanding that s 210 confers a very wide discretion on the court as to the form of relief to be granted under the section, we cannot agree that it was right to take this sum into account as the learned judge did in granting relief under the section. Even if the directors were right (and as to this we express no opinion) in their view that the administrators have not at any time been registered members of the company, the directors were mistaken in omitting to give notice of meetings of the company to the administrators. If this could be regarded as an act of oppression, which in our opinion it cannot, it would not, we think, justify an order that one side should buy the shares of the other. So drastic a remedy would go far beyond what is necessary to put an end to this particular form of oppression. _ In this court no reliance has been placed on the change of the company’s registered office. For these reasons we are unable to agree with Pennycuick J in thinking that the petitioners are entitled to succeed in this matter. In these circumstances it is unneces- sary to consider the extremely elaborate order which Pennycuick J made, no doubt in part at the invitation of the parties. On analysis it produces some startling results, particularly in its fiscal effects. We allow this appeal and dismiss the petition. Appeal allowed. Leave to appeal to the House of Lords refused. On 4th July the appellate committee of the House of Lords dismissed the petitioners’ petition for leave to appeal. Solicitors: Wedlake, Letts & Birds, agents for Rowberry, Morris & Co, Reading (for the respondents); Coward, Chance & Co (for the petitioners). SA Hatteea Esq Barrister. National Westminster Bank Ltd v Allen and another QUEEN'S BENCH DIVISION WALLER J and, rath yuty 1971 Execution - Charging order ~ Interest in land ~ Property held legally and beneficially by joint tenants ~ Joint tenants jointly liable on judgment debt ~ Charging order on their legal interest in the property - Administration of Justice Act 1956, s 35 (1). The defendants, husband and wife, were the joint tenants of a house. They had two. joint accounts with their bank, both of which were overdrawn. The bank obtained judgment for the amount by which they were overdrawn and subsequently applied for a charging order on the defendants’ house under s 35 (1)? of the Administration of Justice Act 1956. The master refused to make an order on the ground that he had no power to do so in the case of land which was jointly owned since an interest in the proceeds of the sale of and was not an ‘interest in land’ within s 35 (1). The bank appealed. Held - The appeal would be allowed; the defendants were joint tenants of the house holding on trust for sale and jointly entitled to the beneficial interest in the house; jas such, they were entitled to charge their legal interest in the house and accordingly, since they were jointly liable on the judgment debt, it was proper to make a charging order on their legal interest in the house (see p 203 d and g, post). Dictum of Vaisey J in Hawks v McArther (1951] 1 AI ER at 25 applied. Irani Finance Ltd v Singh [1970] 3 All ER 199 distinguished. @ Section 35 (1) is set out at p 202 g, post