A legal dispute which erupted over a large residential development has finally reached its conclusion.

In light of a recent judgement, despite owning 66 leases out of 104 within a Manchester based residential development, in executive decisions CJS Investments LLP is set to have the same input as those who hold only one share.

Lawrence House Management Company (LHMC) acts as the management company of New Lawrence House on Shawheath Close, a development comprised of 104 flats on leases of 125 years each. The leases were granted between 2009 and 2010 by the original developer – JCS Homes Ltd – but made LHMC a party to each.

At odds are three claimants and six defendants, and among the latter is CJS Investments LLP. Some 66 of the leases are held by CJS Investments LLP. It was stated that “each flat is held on the basis that a member owns one share in the company”.

Meetings were held on the 7th April and 11th April this year, where the voting system was disputed by which decisions are made in LMHC: “The appellants contended for one vote per member, whilst the respondents contended for one vote per share,” reads the docket.

The appeal is over the previous judge's reaching the conclusion that it should be one vote per share. The Court of Appeal contends that, indeed, the one owner of the 66 flats – if he or she gets a single vote – would get routinely outvoted by the others even though he owns most shares in the company.

The judgement refers to a long history of legal precedents, a series of notable clauses in LMHC's corporate constitution – which provided an equal distribution of power across all participating individuals or each “dwellingholder”, rather than allocating a proportional weight to each individual's size of ownership – and the Court's subjective interpretation.

Mr Warwick QC, the barrister for the respondents put forth a sequence of arguments including – for example, the concept of if the majority of dwelling holders voted decisively in favour of a “heavy expenditure”, the majority stakeholders would be “powerless to prevent it”. He went on to dissect each of the articles in the company's managerial rulebook.

Lord Justice Floyd “was not impressed by any of the arguments advanced by Mr Warwick”. He continued: “It was for the respondents to make out a case of commercial absurdity and, in my judgment, they have not done so.”

The appeal was then granted unanimously by Lady Justice Macur and Lord Justice Briggs.
 
Justice Briggs added: “There can unfortunately be a fine dividing line between that which appears commercially unattractive and even unreasonable and that which appears nonsensical or absurd.”