CLARIFICATION OF STATEMENT IN THE WSRA JOURNAL No 169
As an ex Association member I find it is very disappointing to see inaccurate information being published in the WSRA Journal. If I was still an Association member I would expect to have the situation regarding the litigation fully explained in clear and precise terms including the risks. I am referring to the Acting Chairman’s latest report regarding the Association share litigation in the latest issue of the WSRA Journal. This is not just the opinion of Mike Sherwood but that of all the trustees; Robin White, Diana Ricketts-Tanner, Geoff Garfield, Mike Lea, John Glover and Nigel Power.
The original verbal agreement between Four One Six 0 Ltd and the unincorporated WSRA (body that existed before the current WSRA charity was formed) was as follows:-
The written agreement referred to in the Journal is only an agreement to purchase shares at a discounted rate and covered nothing else. The unincorporated WSRA may have intended to fetter the locomotive to the WSR using the powers given them in the Four One Six 0 Ltd Articles but that fell away when they became a different entity and the Articles were not changed to reflect the new entity.
When the 10 year period of the original verbal agreement expired, Four One Six 0 Ltd had carried out its obligations to the unincorporated WSRA that had now ceased to exist. After the second heavy overhaul the WSR plc offered the company another 10 year period of hire. The company was not obliged to take this offer because it had honoured the original 10 year agreement but accepted a further 10 year period of hire to the WSR Plc.
What was not explained in the Journal article was the copy of the share certificates were the original certificates issued to the unincorporated WSRA under the written agreement, it is a matter of fact that the unincorporated WSRA purchased Four One Six 0 Ltd shares and were issued share certificates. When these shares were sold in 2015 by the WSRA charity the certificates were returned to Four One Six 0 Ltd as required by company law. These certificates then became void and new ones were issued to the new purchasers and the register of Four One Six 0 Ltd shareholders at Companies House was amended. The new purchasers (Paul Johnson and I) were not aware that the original WSRA charity trustees had neglected to transfer the shares to the now official charity as required by Company Law.
For what possible reason would the acting chairman Mr Sherwood not wish to supply members with a clear unambiguous explanation.
What is being forgotten here is that Four One Six 0 Ltd is an independent company. So for the WSRA charity to act in the manner they have in the last few years towards us is an utter disgrace and reflects the type of personalities you do not want running a main support group.
LOOKING BACK IN TIME
Looking back to 5 years ago when the Reform Group was first spawned, Mike Sherwood who was a leading light in its ranks, stated on the 5th of November 2015 @ 4.30pm "Simply for the avoidance of doubt it has never been the intention to hand over the assets of WSRA to anybody, our campaign has been about poor governance, poor management".
Well, I don’t know if Mike Sherwood was in the inner circle at the time but that was definitely the driving ambition that Robin White was pursuing five years before to remove the WSRA assets.
Now, five years on Mike Sherwood along with Robin White and the other trustees have done exactly the opposite, they have handed over all the assets of the WSRA to the West Somerset Railway Plc. To date these assets have not even been paid for, months have passed since the debt should have been settled. The accusation of “POOR GOVERNANCE ” that Mike Sherwood stated in 2015 rings a little hollow but what about “POOR MANAGEMENT” or even total incompetence. Was there no contract for the sale of these assets or was the whole thing done on the nod. One thing is for sure the charities assets were never safe in the current trustee's hands or anything else for that matter.
What is interesting is that to date no exact figures have been published for the sale price of the Williton site.
Many of you might find it hard to swallow but the old trustees were right about a lot of this and did try to warn you all but not many were listening. I hope some of you are listening now!
29th June 2020
A SHAREHOLDERS VIEW ON THE CURRENT WSR SITUATION
According to one article (there are three) in a recent edition of Steam Railway, the current West Somerset Railway ‘Family’ is viewed by the Somerset County Council as a fractious concern.
To quote, ”Lack of unanimity”. Surprise, surprise. The much promoted buzz word, Family, is given a tongue in cheek mention. It always reminded me of “for the greater good”,
chanted by the town cabal in the film Hot Fuzz.
It has emerged that an application by Mr Jones-Pratt to purchase the track bed has recently been put before the County Council, with Mike Sherwood, Acting Chair of the WSRA , supported by others agreeing that this would ensure the future of the Railway. Ironic really when you consider that in their previous form, as the Reform Group they vehemently condemned a move to do that in 2014.
As a long standing member of the WSRA , thirty years plus, I am also a minor shareholder of 4160, and one of the then happy band that first restored her. My main concern therefore is for the future of this Locomotive.
It would be a disaster if the disputed shares of 4160 should fall into the hands of the Association, only to be then offered to the Jones-Pratt Railway. Everything else has. Therefore I am happy for her to be safe on South Devon. I would encourage other minor shareholders to consider this as the best option.
Recently I put these views to Mike Sherwood and queried his decision to again to put the issue of the disputed shares (worthless ay present) to the vote at the next AGM. I asked him how much it has cost the Association in legal fees pursuing this pointless vendetta, (no answer) and with the Railway ‘Family’ tottering on the financial brink, wasn’t it time to bring it to an end.
The other two articles in Steam Railway also depict the present WSR in a very poor light. The bullying of the S&D group is truly sad. I do not recognise it as the same Railway I joined all those years ago.
REPLY TO WSRA CHAIRMAN’S STATEMENT TO MEMBERS ABOUT 4160 LTD
The Board of 4160 Ltd has once again found it necessary to correct misrepresentations published by the WSRA Acting Chairman Mike Sherwood and the Trustees on their web site.
It is incumbent on all involved parties, as responsible directors to inform their members of the true facts and not to conflate information for gain, this would enable members to make informed decisions based on fact rather than falsehoods.
The statement claimed that Mike Crees and Paul Johnson’s solicitor deliberately asked for mediation to buy time to enable the Board of 4160 Ltd to negotiate a contract is incorrect. Their solicitor did not go “silent”. There have been periods of inactivity on the part of both parties in this matter, some of them very lengthy indeed as far as WSRA is concerned.
Mike Crees and Paul Johnson’s solicitor has written to the WSRA solicitor to correct the disinformation published by the acting chairman Mr Sherwood, see below their solicitors communication.
On another matter Mr Sherwood stated that Mike Crees had refused mediation, this is also incorrect. Last year Mr Sherwood approached Mike Crees and Paul Johnson by e-mail, suggesting arranging an ‘informal discussion’ regarding a dispute that he stated they had. Mr Sherwood stipulated that any such discussion must be held under what is known as "without prejudice” rules. The reasoning for this stipulation was queried by Mike Crees as to why it was needed as he felt it was preferable to have an open honest conversation to allow both parties to move forward. However, Mr Sherwood insisted, so that was how it was left. At no point did Mike Crees “refuse” mediation, this is false. At no point was it suggested he were entering mediation only an informal discussion, so what was a proposed discussion has now turned into mediation. This appears to be mediation by stealth on the part of the WSRA and Mr Sherwood.
In the light of the recent announcement by the West Somerset Plc that they are considering making 45 paid staff redundant in the next two months, the Four One Six O board have made the right decision to sign a contract with the 5542 Group where the locomotive 4160 has a much better future. If as Mr Sherwood suggests the WSRA would help fund the completion of the overhaul allowing the locomotive to run on the WSR, who would have finished rebuilding 4160 at Minehead with no staff? Who would run the railway with no staff?
The WSRA trustees seemed to be a little out of touch with events, even though they have been in office for a number of years. Under their stewardship their other locomotive 4561 has not been advanced a great deal. Also the Manor which they bought a numbers of years ago is still languishing in a Swindon shopping centre. How on earth do the WSRA trustees expect to take on 4160 and bring it back into traffic?
Four One Six 0 Ltd
COMMUNICATION FROM 4160 SOLICITOR TO WSRA SOLICITOR IN RESPONSE TO WSRA CHAIRMANS STATEMENT
On a separate issue, I have been sent a copy of the letter that your client’s chairman has sent to its members. It is unhelpful in that it misrepresents a number of things:
1. There are no Preference Shares in 4160. WSRA claims to own 28,120 50p Association Shares (which are not preference shares but a class of ordinary share) out of a total share capital of 94,339 shares (i.e. 29.8%).
2. WSRA has no right of any nature, whether or not it owns the Association Shares, to have 4160 “running on WSR metals”. That is entirely a matter for 4160’s board of directors. There is not any commitment between 4160 and the Association in relation to Locomotive 4160 running on the West Somerset line that was not discharged many years ago.
3. The fact that WSRA had no prior knowledge of the arrangements with 5542, which were concluded at the end of January apparently, was for reasons of commercial confidentiality. 5542 were in negotiations with West Somerset Railway PLC which could have been jeopardised by such knowledge becoming public. It was at 5542’s request that the arrangement was kept confidential. It is obvious that WSRA had no right to this knowledge and would not have had any right to it even if it had owned the Association Shares. Even if it had owned the Association Shares and had appointed a director to the board of 4160, that director’s duty of confidentiality would have prevented him/her from disclosing the proposed transaction with 5542 to WSRA without the permission of the board of 4160.
4. WSRA is not under any obligation to try to obtain ownership of shares that it never owned. There is no obligation on WSRA to own part of, or to fund, 4160. If WSRA had any beneficial interest in the Association Shares (which is not accepted) it validly sold that interest to my clients, and I have no doubt that the trustees at the time will confirm that that was their intent. If it comes to it, which I sincerely hope it won’t) I have very little doubt that an expert in valuing this sort of asset will conclude that my clients either paid full value or overpaid for the Association Shares. Even if WSRA had owned a saleable interest in the Association Shares, the sale of ownership of a minority holding in 4160 does not offend WSRA’s charitable objects. (Indeed, one does wonder about the propriety of WSRA, as a charity, giving funds and assets to West Somerset Railway PLC, a commercial organisation, which is what I understand it does.)
5. It is a falsehood that I “went silent”. There have been periods of inactivity on the part of both parties in this matter, some of them very lengthy indeed as far as WSRA is concerned.
6. As far as I can make out, WSRA has not yet informed its membership that it never actually had legal title to the Association Shares and that the whole of WSRA’s initial case was founded upon the false premise that it was the legal owner of the shares.
CORRECTION TO WSRA CHAIRMAN’S STATEMENT
The Board of Directors would like to correct a factually inaccurate statement made by the current Chairman of the WSRA in the latest Association Journal where he stated that the alleged Association Shares carried double voting rights. These shares do not have double voting rights, as stated in our Articles of Association, Section 3 a) “a holder of Association Shares shall have one vote for each Association Share”. This is also stated on the 4160 Ltd page at Companies House. It was also inferred in the Chairman’s report that the Association shares were gifted to the WSRA, this is not the case. These shares were purchased by the unincorporated Association which was wound-up prior to the company named WSRA and the WSRA charity being formed and registered.
4160 Ltd Articles of Association were written in October 1991, three years before the WSRA Company and Charity were created, therefore, these articles to not refer to the current company or charity as it stands today but only refer to the disbanded unincorporated Association. In company law the current Association do not have title to the Association shares as they did not exist when the shares were first purchased. The members who ran the unincorporated WSRA omitted to transfer on a Stock Transfer Form, as company law requires, the shares to the new WSRA Company or Charity.
It is important to be fully aware of the legal details as outlined above in order to understand the complexity of the situation. Any statement needs to be accurate otherwise the facts disappear into fiction.
6th February 2020
“LACK OF TITLE ” EXPLAINED
Since our last posting we have been approached by a considerable number of 4160 shareholders and association members asking for clarification as to exactly why the WSRA did not have title to Four One Six O Ltd shares. Below are statements sent to the WSRA’s lawyers that sets out exactly why, in company law, they did not have title to the shares.
“It is clear that it has never had any legal title to the Association Shares as they were all allotted before WSRA came into existence, and (leaving aside for the moment the legal position, which is that an unincorporated association cannot own shares in its own name as it has no legal personality) no stock transfer form has ever been received by 4160 transferring the Association Shares from the now wound-up unincorporated West Somerset Railway Association (UWSR) to WSRA. Please explain, with reference to the law, how it is that you believe the WSRA became a member of 4160 in respect of the Association Shares. Shares are transferred on stock transfer forms, not by resolutions of committees of unincorporated associations. In this regard we refer you to s770 of the Companies Act 2006. The status quo ante is not as your client wishes to represent it.
As to whether UWSR could ever have been a member of 4160, we refer you to s112 of the Companies Act 2006 (which re-enacts s26(2) of the Companies Act 1948). Only a person who agrees to be a member and whose name is entered in the register of members can be a member of a company. UWSR was not a “person” within the meaning of the section.
If a representative of UWSR were to seek rectification of the register of members of 4160 vesting the Association Shares in a member of UWSR as trustee for UWSR, that would fail, given that the object of the trust (i.e. the members of UWSR) no longer exist. If the beneficiary were to be WSRA, the provisions of Article 22.b) ii) would not apply and the necessary certificate could not be given as there would have been a change in beneficial ownership. In any event, as UWSR was wound up in 1995, it is difficult to see how anyone can have the authority to seek such a rectification on behalf of a group of non-existent beneficiaries. We do not see that there is any conceivable basis for WSRA making an application of rectification of the register in its own favour as it has no absolute right to be registered as a member of 4160. That registration is subject to the discretion of the board of 4160 under Article 23.
Even if that hurdle could be overcome and a successful application for rectification were to be made, WSRA will then have to request the resultant trustee for UWSR in respect of the Association Shares to transfer them to WSRA. The transfer would, of course, be governed by the articles of association of 4160. Because the transfer would be to someone other than another trustee for UWSR (because WSRA is not the same as UWSR), it would be up to the board of 4160 to decide whether or not to register WSRA as a member of 4160, in respect of the Association Shares, again under Article 23. There are no circumstances at all in which a certificate as required by Article 22 b) ii) could be given as, on your own argument, the Association Shares were originally held (by whom it is unclear) for the benefit of UWSR and your client wishes the beneficial ownership to be transferred to WSRA, a different beneficial owner.”
Paul Whitehouse, in his recent article in the WSRA journal, has not mentioned anything regarding the lack of title to these shares. This new aspect is very important. We are somewhat surprised that the WSRA’s experienced London lawyers and their own in house legal Trustee did not check the facts, with reference to title, prior to embarking on expensive litigation.
RECENT PUBLIC STATEMENT
Mr Whitehouse in a recent article in the Autumn Railway Journal has made various statements which are misleading. Four One Six 0 Ltd does not believe that such matters should be discussed in public when they are the subject of legal proceedings. Four One Six 0 Ltd does not propose to comment publicly on these legal proceedings while litigation is in progress.
However, we would like to set the record straight on other matters raised in the article. We do not disagree that the group calling themselves the WSRA (prior to it becoming a charity and therefore unincorporated) helped 4160 come into traffic but prior to this a lot of work had been done and a lot of money invested by the Plymouth based shareholders and others around the country. In the heritage railway world many locomotives have been brought into traffic by agencies, societies and associations, they move around in the heritage railway world without problems. This particular verbal arrangement between the unincorporated WSRA and Four One Six 0 ltd was originally negotiated by Chris Dowrick nearly 30 years ago. The terms were that the unincorporated WSRA was to help the locomotive get into traffic and in return it would run for 10 years on the West Somerset Railway. In fact, it ran for 20 years, 10 years over the original agreed time. The reason we know this is because Paul Johnson was a Director and Mike Crees was alternate Chairman around this time to the late Malcom Rowe. The current Chairman of the WSRA (the charity) has no knowledge of these arrangements as he was not involved with the railway at this time.
Also, it is a matter of fact that 28% of shares in a company is NOT a controlling interest, only 51% is a controlling interest, so the statement “nearly a controlling interest” that was made in the article is mathematically inaccurate. So an extra 22% of shares would be NEEDED to even get close to control of the company, nearly double the figure of 28%. For the record no one person has a controlling share in Four One Six 0 Ltd as stated on the Companies House web site.
The locomotive would have run for a third 10 year contract on the WSR if Mike Crees and Paul Johnson had not been the subject of abusive, defamatory and totally incorrect statements made by WSRA Trustees in public.
Leaving aside the unhealthy relationship with the WSRA, no board of any company would consider making a long term contractual arrangement with the WSR Plc whilst it is going through very serious financial problems and at worst they will have to file for bankrupcy.
4160’s success as a company is down to the fact that we have a business plan that looks 10 year ahead, so from the start of a contract the locomotive has to earn money for the next heavy overhaul and this mean placing it with a financially viable operator.
Information has very recently come to light that the current WSRA (the Charity) actually had no legal title to the “Association shares” whatsoever according to company law! Also the unincorporated WSRA mentioned in the Four One Six 0 Ltd Articles of Association is not the same WSRA (the Charity) that operates today. These Articles were written before the Charity was registered so as far as the law is concerned they are two different entities that just happen to have the same name.
4160 IN MINATURE
Hornby are about to reproduce 4160 in 00 gauge and will be available in October this year. We look forward to seeing it available to the public and hope that it’s not as expensive to maintain as the real thing.