I have worked with Andrew over a number of years on a variety of complex commercial disputes. I have consistently found him to be efficient, responsive, bright, commercial in his approach, well-prepared, excellent with the clients and tenacious when in Court. Highly recommended.
Unfair Prejudice
Relief from unfair prejudice
Shareholder disputes arising out of conduct resulting in unfair prejudice to minority shareholders are commonplace but with the right specialist and experienced advice they can be practically and cost effectively resolved or even avoided in the first place.
What is a shareholder dispute?
A shareholder dispute is a dispute between the participants in a company. They are most frequently encountered in relation to private limited companies. They involve conflict between shareholders and directors who are often one and the same.
When does a shareholder dispute arise?
A shareholder dispute can arise at any time, for a multitude of reasons and often come entirely out of the blue. They tend to arise most frequently either when things are going well for the company and its shareholders and directors become greedy or when things are going less well and finances get tight and tensions rise.
What causes a shareholder dispute?
Sometimes it is personal animosity. Other times it is an actual or threatened misappropriation of funds or business opportunities. Often it involves exclusion of one director or shareholder from the affairs of the company, from its premises or from access to information relating to the company and its business. Such conduct generally results in unfair prejudice being suffered by the minority shareholder.
What to do if you face a shareholder dispute resulting from such unfair prejudice?
When you such face unfair prejudice a dispute between shareholders or directors is likely to arise and you need the services of a specialist and experienced shareholder disputes lawyer. Efficient shareholder dispute resolution and obtain relief from the unfair prejudice suffered depends critically on:
- Obtaining experienced and specialist advise from an expert in shareholder disputes
- Avoiding damage to the underlying business
- Opening effective dialogue between the majority shareholders and minority shareholders
- Protecting interests and preventing further unfair prejudice
- Employing all available shareholder dispute resolution processes and procedures
- Early practical and cost effective action
Why instruct Andrew Marsden when faced with unfair prejudice and a resulting shareholder dispute?
I am a true specialist barrister with 30 years of experience of resolving shareholder disputes and director disputes. I know how to use the terms of the articles of association of the company and any shareholders’ agreement to prevent further unfair prejudice and protect both minority shareholders and majority shareholders and their interests. I am highly experienced in negotiation, mediation and, if necessary, the litigation of shareholder disputes under section 994 Companies Act 2006. I am ranked in the first tier of specialist barristers operating in the field of shareholder dispute resolution and obtaining relief from unfair prejudice.
What assistance can I provide?
The following issues frequently arise and I can answer your queries regarding:
- How you resolve a shareholder dispute
- How to avoid unfair prejudice
- Protecting your interests
- Deadlocked or 50:50 companies
- Director and shareholder powers
- Removal of directors and shareholders
- Rights of minority shareholders
- Directors duties
- Access to books, records and information
- Misconduct by and claims against directors and shareholders
How to instruct me efficiently and cost effectively to avoid further unfair prejudice and in the resolution of your shareholder dispute?
You can instruct me directly and cost effectively under the Bar Council’s Direct Access scheme. My fees are reasonable, entirely transparent and often significantly less than those of solicitors. I avoid endless and unproductive correspondence. You should expect practical, cost effective and fast progress in avoiding further unfair prejudice and towards resolution of your shareholder dispute.
Free initial advice on avoiding further unfair prejudice and resolving shareholder disputes
So, whether you are a minority shareholder or a majority shareholder, if you’re experiencing unfair prejudice and facing a shareholder dispute do give me a call on 07718 883094 on a no obligation / no fee basis, or email me at: andrew.marsden@commercialchambers.org to discuss how I might assist in resolving your shareholder dispute.
Tom Read Partner, Temple Bright
Resolving shareholder, director and partnership disputes
Sections 994 of the Companies Act 2006 enables a shareholder in a company who is being treated in an ‘unfairly prejudicial’ way to seek relief from the court. The court has similar powers in respect of partnerships.
Typically, these cases involve companies with relatively small numbers of shareholders. The shareholders are usually also directors. The shareholders/directors will generally have fallen out with each other. The unfairly prejudicial conduct often takes the form of an exclusion of one shareholder/director by another from the affairs of the company. On other occasions, it arises because of misappropriation by one shareholder/director of property or funds belonging to the company or of a business opportunity that might have been enjoyed by the company. In other cases, it can involve wrongful dealings in shares, improper dividends, salary or other payments or other improper conduct of the company’s affairs.
The court has very wide powers to control the conduct of the affairs of the company and its shareholders/directors. Such proceedings regularly result in the court ordering one shareholder/director to purchase the shares of another at a value determined by the court to be fair in all the circumstances.
As a specialist barrister, I provide commercial, practical and cost effective resolution of these matters through my highly experienced specialist barrister’s advice, representation, negotiation and mediation.
Resolving commercial agency disputes
The Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”) regulate relations between commercial agents and their principals.
A commercial agent is a self-employed intermediary who negotiates or concludes sales or purchases of goods on behalf of his principal. The Regulations provide potentially valuable entitlement to ‘indemnity’ or ‘compensation’ on the termination of a commercial agency. They set out duties owed between commercial agents and their principals. They contain provisions relating to the remuneration of commercial agents, the termination of commercial agencies and the validity of certain restrictive covenants.
I provide commercial, practical and cost-effective resolution of these matters through my highly experienced specialist barrister’s advice, representation, negotiation and mediation.”
About Andrew Marsden
Andrew is a is included in the prestigious Chambers 100 marking him out as one of the top 100 barristers in the country and one of the very best in his field. He is also ranked in the first tier of Chambers and Partners and the Legal 500.
Andrew has also been shortlisted several times as Barrister of the Year by the Bristol law society.
Andrew is authorised to accept instructions directly from clients without the involvement or cost of a solicitor under the Bar Council’s Direct Public Access scheme. Further details of that scheme can be found here.
Andrew is committed to resolving disputes between people in business together. He thinks of his specialist practice as one of “commercial divorce” without “throwing the baby out with the bath water”. He works tirelessly in his client’s very best interests. His approach is commercial, practical and cost effective and the service he provides is first class, personal, modern and accessible.
Andrew is a keen amateur boxer. His other interests include skiing, horse riding, off-road motor cycling, wakeboarding, cognac and the piano.
Expertise and qualifications
Expertise
- Commercial Dispute Resolution
- Company Law (particularly shareholder disputes)
- Partnership Law
- Agency Law (including commercial agency)
- Mediation
Qualifications
- Called to the Bar: 1994 (Lincolns Inn)
- LLB (Business Law (1st class)), Bachelor of Civil Law (Oxon)
- Experienced CEDR accredited mediator
- Professional Memberships: Commercial Bar Association, Chancery Bar Association
Recommendations
Chambers 100
Andrew is included in Chambers 100 where they say
“Andrew Marsden is amongst the very best juniors practising on the Western Circuit. He has a broad commercial practice and wins especial praise for his work in the company and partnership sphere… Commentators say that he is ‘an approachable barrister, with a keen eye to the commercial priorities of a case, who is ready to challenge and question the evidence before him.
Chambers UK
Andrew is “very in-tune with the needs of his commercial clients.” He has “in-depth expertise in corporate, partnership and commercial law disputes.” His approach is considered “sensible, very clear and extremely helpful.” He has an “unfailingly commercial approach and excellent cross-examination skills.” An “extremely articulate and forceful advocate”, “one of the best pound-for-pound commercial barristers in town.” “Tenacious and thoughtful” and possessed of “great people skills”, solicitors appreciate his “close, hands-on involvement in cases”.
His “clear, incisive advice.” Commended for his “client-friendly manner” and “trenchant advice and assiduous approach”, it has been said that “he has an air of gravitas about him, and a good manner with clients.” “He will make a very good judge one day.” He is a “deeply impressive barrister who prepares fully, is fantastic with documents and is commercially minded.”
He is “a commercially focused barrister who is excellent on his feet.” He “impresses across a broad range of disputes, including partnership, corporate and contractual issues.” Andrew is “technically spot-on” and is known for taking a “sensible and pragmatic approach” to his work. “He gives clear and compelling advice.” He “thinks things through to the nth degree.” A “renowned shareholder dispute specialist.”
He is “one of the leading authorities on commercial agency.” He provides “targeted and transparent advice.” He is “always very commercially aware and gets to the nub of the issue at hand.” He “never misses a point.”
Legal 500
“The Legal 500 describes him as someone who “leaves no stone unturned”, has “a strong following for commercial matters”, is “extremely thorough in preparation”, “provides an excellent standard of service”, “gives good advice and follows it through” and is “an excellent, commercially minded advocate who should go to the top.”
Fees
Andrew and his clients either agree fixed fees for specific pieces of work to be carried out by him (e.g. a fixed fee for a written or oral opinion/advice or for his preparation, attendance and advocacy at the hearing of an application/a trial) or agree that Andrew should charge by reference to the time that a particular piece of work takes him to complete.
When a fixed fee is agreed that fee will cover all of Andrew’s services required to carry out the specific piece of work that he is instructed to deal with. If Andrew is asked to carry out further work there will need to be a further agreement with regard to his fees for that further work.
Andrew calculates his fees by reference to an hourly rate of £475 (ex vat). He charges the same for his services whether he is instructed through a solicitor or directly by the client under the Direct Public Access scheme.
Andrew does not usually accept work on a conditional fee basis.
A client may also have to pay solicitors’ fees or expert witnesses’ fees (if such services are required). Court fees will be payable if proceedings need to be issued. In appropriate cases there may be further costs associated with Alternative Dispute Resolution procedures (e.g. mediation).
The extent of any such costs cannot reliably be estimated until the precise extent of those services has been identified in any particular case. Andrew will be able to advise as to the extent of any such additional costs when fully appraised of the nature of the particular matter.
Frequently asked questions
What is section 994 of the Companies Act 2006?
It is the section of the Companies Act 2006 which confers on the court the power to grant relief from unfair prejudice or unfairly prejudicial conduct of the affairs of a company.
Who may seek relief from unfair prejudice or unfairly prejudicial conduct?
Shareholders can seek relief from unfair prejudice or unfairly prejudicial conduct of the affairs of a company.
How do I seek relief from unfair prejudice or unfairly prejudicial conduct?
In order to obtain relief from unfair prejudice of unfairly prejudicial conduct of a companies affairs you can present a petition to the court.
What is unfairly prejudice or unfairly prejudicial conduct?
Unfair prejudice or unfairly prejudicial conduct involves the conduct of the affairs of a company contrary to the agreement or understanding between the participants in the company that formed the basis for their participation in the company.
What are examples of unfair prejudice or unfairly prejudicial conduct?
Unfair prejudice or unfairly prejudicial conduct often involves:
- conduct in breach of duties owed by directors
- exclusion from participation in the conduct of the company’s affairs
- failure to provide accounts or other information
- misappropriation of money or assets
- misappropriation of business opportunities
- excessive remuneration
- wrongful issues or dealings in shares in the company
- wrongful dividend payments or a refusal to pay dividends
- acting in bad faith
How quickly can I stop unfair prejudice or unfairly prejudicial conduct of the affairs of my company?
The court can quickly grant interim injunctions to prevent continuing unfair prejudice or unfairly prejudicial conduct of a company’s affairs.
What form of relief will be ordered if I have suffered unfair prejudice or the affairs of the company have been conducted in a manner unfairly prejudicial to my interests?
The perpetrator of unfair prejudice or unfairly prejudicial conduct of the affairs of a company will usually be ordered to purchase your shares at their fair value but the court may make orders as to the conduct of the affairs of the company in the future.
How will the fair value of my shares be determined?
The fair value of your shares will be determined as the market value of that shareholding after adjustment has been made for the consequences of the unfair prejudice of unfairly prejudicial conduct of the affairs of the company.
How will the company be valued?
Usually a company is valued on the basis of a suitable multiple of its future maintainable profits together with the value of any assets it holds surplus to those required in the conduct of its business.
Will a discount be applied in determining fair value to reflect the minority status of my shareholding?
A discount will only be applied to reflect a minority shareholding if it is considered fair to apply one and will generally not be applied if the relationship is considered one in the nature of a partnership or a quasi partnership.
What evidence will I need as to the value of my shareholding?
Generally you will need your accounts and a report from an expert valuer.
What can I do if I am facing a wrongful petition for relief from unfair prejudice or unfairly prejudicial conduct?
You can apply to strike out the claim or petition or make application for summary dismissal of the petition.
What can I do if I have made a fair offer to purchase the other participant’s shareholding?
Again, you can apply to strike out the claim or petition.
Can I get advice directly from a specialist barrister without going through a solicitor?
You can under the Bar Council’s Direct Access scheme and its generally cheaper than going through a solicitor.
How can I find out more information and get advice about unfair prejudice or unfairly prejudicial conduct of the affairs of my company?
Call Andrew Marsden on 07718 883094, a specialist and recognised leader in the field with over 30 years of experience in resolving business disputes.
Shareholder Protection from Unfair Prejudice: Case and Statute Citator 2023
Part 30 of the Companies Act 2006 enables a shareholder in a company who is being treated in an ‘unfairly prejudicial ’way to seek relief from the court. Typically, these cases involve companies with relatively small numbers of shareholders. Those shareholders are usually also directors and may be the only directors of the company.
The shareholders / directors will generally have fallen out with each other. The unfairly prejudicial conduct often takes the form of an exclusion of one shareholder / director by another from the affairs of the company.
On other occasions, it arises because of the misappropriation by one shareholder / director of property or funds belonging to the company or of a business opportunity that might have been enjoyed by the company.
In other cases it might take the form of wrongful dealings with shares, improper dividends, salary or other payments or other improper conduct of the company’s affairs.
This legislation gives the court very wide powers to control the conduct of the affairs of the company and its shareholders / directors. Such proceedings regularly result in the court ordering that one shareholder / director should purchase the shares of another at a value determined by the court to be fair in the circumstances.
This citator reflects the law as at 1 March 2023
Statutory Basis 4
Member’s statutory right to petition for relief from unfair prejudice
Section 994 Companies Act 2006
Secretary of State’s statutory right to petition for relief from unfair prejudice
Section 995 Companies Act 2006
Court has unlimited power to make such order as it sees fit for giving relief in respect of unfair prejudice
Section 996 Companies Act 2006
A petition presented under section 459 Companies Act 1985 will be treated as continued under section 994 Companies Act 2006 where it continues after 1 October 2007
Hawkes v Cuddy & others [2007] EWHC 2999
The right to petition under section 994 Companies Act 2006 is probably not an inalienable statutory right. Rather, it can probably be limited or removed by contractual agreement (e.g. by articles or LLP agreement) or otherwise
Re Vocam Europe [1998] BCC 396
Exeter City FC Ltd v The Football Conference Ltd [2005] I BCLC 238
Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855
Flanagan v Liontrust Investment Partners LLP [2015] EWHC 2171
Heart of Midlothian Football Club Plc v Scottish Football League Ltd [2020] CSOH 68
Applies to UK companies and limited liability partnerships (unless excluded from an LLP under terms of LLP agreement)
Section 1 Companies Act 2006
Limited Liability Partnerships (Application of Companies Act 2006) Regulation 2009 (SI 2009)
Flanagan v Liontrust Investment Partners LLP [2015] EWHC 2171
Definition of ‘member’
Section 112 Companies Act 2006
Re Nuneaton Borough AFC Ltd [1989] 5 BCC 377
Re a Company (No 007828 of 1985) [1986] 2 BCC 98,951
Re a Company (No 003160 of 1986) [1986] BCC 99,276
Re Quickdome Ltd [1988] BCLC 370
Jaber v Science & Info Tech Ltd [1992] BCLC 764
Re a Company (No: 00506 of 1995) (unreported) 29 June 1995
Atlasview Ltd v Brightview Ltd [2004] EWHC 1056
Baker v Potter [2005] BCC 855
Re McCarthy Surfacing Ltd [2006] EWHC 832
Kaneria v Kaneria LTL 10 August 2015
Re FSC Andrews Ltd [2015] EWHC 4042
Re Motion Picture Capital Ltd [2021] EWHC 2504
Grewal v Chackraborty [2021] WN 05346593
The jurisdiction under section 994 Companies Act 2006 appears to be open to a person who was a member of the relevant company at the time that the petition was issued even if that person does not continue to be a member thereafter
Re Motion Picture Capital Ltd [2021] EWHC 2504
A person not yet registered as a member but to whom shares have been transferred or transmitted by operation of law may petition
Section 112 Companies Act 2006
Section 994(2) Companies Act 2006
Re Quickdrome Ltd [1988] BCLC 370
Harris v Jones [2011] EWHC 1518
(1) Hamilton and (2) Dowers v (1) Brown and (2) C & MB Holdings Ltd [2016] EWHC 191
Usually it is a minority shareholder who seeks relief but a majority shareholder can also in certain circumstances complain of unfair prejudice
Re Baltic Real Estate Ltd [1992] BCC 629
Re Baltic Real Estate Ltd (No.2) [1993] BCLC 503
Re Legal Costs Negotiators Ltd [1999] BCC 547
Parkinson v Eurofinance Group Ltd [2001] 1BCLC 720
Re Ravenhart Service (Holdings) Ltd [2004] 2 BCLC 376
McMonagle v Harvey [2021] EWHC 1374
Re Macom GmbH (UK) Ltd [2021] EWHC 1661
In case of limited liability partnerships, provision of section 994 Companies Act 2006 can be excluded by unanimous agreement of members
Limited Liability Partnerships (Application of Companies Act 2006) Regulation 2009 (SI 2009/1804) Reg 48
No power to order that a co-respondent (who is not also a petitioner) should have his shares purchased by fellow respondents guilty of unfairly prejudicial conduct
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Procedure
Separate petition for each company in respect of which unfair prejudice is alleged is usually (but not always) required
Re a Company [1984] BCLC 307
Davies v Pro-tect GRP Enclosures Limited 17 December 2019 (unreported)
Statutory provision as to form of proceeding, procedure for presentation of petition, service and return of petition
The Companies (Unfair Prejudice Applications) Proceedings Rules 2009
The statutory procedure is important and the court has no power to dispense with the requirement to comply with The Companies (Unfair Prejudice Applications) Proceedings Rules 2009
Re Osea Camp Sites Limited [2005] 1WLR 760
Evans v Eurokey Properties Limited [2020] EWHC 1047
Form of petition
Rule 3 and the Schedule to The Companies (Unfair Prejudice Applications) Proceedings Rules 2009 (SI 2009 No: 2469)
Civil Procedure Rules Practice Direction 49A
Failure to proceed by petition cannot be remedied under CPR and will be struck out
Cooke v Cooke [1997] 2 BCLC 28
Who should be joined in the petition?
Re a Company (No: 007281 of 1986) [1987] 3 BCC 375
Re a Company (No: 005287 of 1985) [1986] 1 WLR 281
Re BSB Holdings Ltd [1992] BCC 915
Re Baltic Real Estate Ltd [1992] BCC 629
Re Saul D Harrison & Sons Plc [1995] BCLC 14
Supreme Travels Ltd v Little Olympian Each-Ways Ltd [1994] BCC 947
Lowe v Fahey [1996] 1 BCLC 262
Re Ravenhart Service (Holdings) Ltd [2004] 2 BCLC 696
Apex Global Management Ltd v FI Call Ltd [2013] EWHC 1652
Parties cases are defined by the petition and, in turn, any points of claim and points of defence ordered
Re Luddite Brothers Ltd [1965] 1 WLR 1051
Re Fildes Brothers Ltd [1970] 1 WLR 592
Re Tecnion Investments Ltd [1985] BCLC 434
Re Coroin [2012] EWHC 2343
Re Pedersen (Thameside) Ltd [2017] EWHC 3406
Allegations of unfair prejudice need to be pleaded with precision and should be restricted to allegations as to the conduct of the affairs of the company
Re Unisoft (3) [1994] 1 BCLC 609
Re McKillen [2012] EWHC 521
Re Tobian [2013] BCC 98
Re Kings Solutions Limited [2021] EWCA Civ 1943
Griffiths v Griffiths [2023] EWHC 175
The petition and all statements of case must make it clear which limb of section 994 is being relied upon and must contain a concise statement of the facts relied upon to make out the case
Re Kings Solutions Limited [2021] EWCA Civ 1943
Griffiths v Griffiths [2023] EWHC 175
A respondent may have the petition struck out as against him if no relief will be granted against him and he will not be affected by an order
Supreme Travels Ltd v Little Olympian Each-Ways Ltd [1994] BCC 947
Re a Company (No: 004415 of 1996) [1997] 1 BCLC 479
It is permissible to plead the personal conduct of the respondents or third parties only if there is a causal connection between that conduct and some act or omission of the company or conduct of its affairs.
Re Kings Solutions Limited [2021] EWCA Civ 1943
Griffiths v Griffiths [2023] EWHC 175
A prayer for a winding up should not be included where inappropriate
Civil Procedure Rules Practice Direction 49A in respect of applications under the Companies Act 1985 and the Insurance Companies Act 1982 para 9(1)
Re a Company (No: 004415 of 1996) [1997] 1 BCLC 479
Civil Procedure Rules 1998 (as amended) apply save to the extent that they may be inconsistent with the Companies Act 2006 or the Companies (Unfair Prejudice Applications) Proceedings Rules 2009 (SI 2009 No: 2469)
Rule 2(2) of the Companies (Unfair Prejudice Applications) Proceedings Rules 2009 (SI 2009 No: 2469)
Civil Procedure Rules Practice Direction 49A
Leave required to serve petition outside of jurisdiction
Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460
Re Harrods (Buenos Aires) Ltd [1991] BCC 249
Re Baltic Real Estate Ltd [1992] BCC 629
Apex Global Management Ltd v FI Call Ltd [2013] EWHC 1652
On return day the court will give directions for progress of petition (statements of case, preliminary issues, mediation, disclosure, witness statements, expert evidence, restrictions on advertising the petition, etc)
Re a Company (No: 002015 of 1996) [1997] 2 BCLC 1
Re Rotadata Ltd [2000] BCLC 122
The court may be persuaded to engage in early active case management (e.g. giving directions that deal early with principal issues which might serve to dispose of the case)
Re Rotadata Ltd [2000] BCLC 122
May be directions for split trial to determine whether there had been any unfair prejudice before costs of valuation are incurred
In the matter of Annacott Holdings Ltd [2012] EWCA Civ 998
In the matter of LCM Wealth Management Ltd LTL 22/1/2013
If company is in insolvent liquidation the petitioner must first show that, but for the alleged wrongdoing, his shares would have had value
Maidment v Attwood [2012] EWCA Civ 998
Generally proceedings are in public
Re FI Call Ltd [2013] EWHC 223
Advise provided to the company itself will not be subject to privilege and will therefor be disclosable to all shareholders
Re Hydosan Ltd [1991] BCC 19
The courts encourage early expert valuation on a joint basis to promote the chances of settlement and the avoidance of costs and in practice may order early disclosure on the issue of valuation to promote the prospects of early settlement
Re Company (No. 006834 of 1988) (1989) 5 BCC 218
North Holdings Ltd v Southern Tropics Ltd [1999] 2 BC LC 625
Re Clearsprings (Management) [2003] EWHC 2516
Where parties agree to sale at a price to be determined by an expert the court will not generally interfere with that valuation if it is reached in accordance with his instructions
Premier Telecom Communication Group Ltd v Webb [2014] EWCA Civ 994
The court will not compel a victim of unfair prejudice to bring a claim for relief pursuant to section 994-996 Companies Act 2006 where the victim does not wish his shares to be acquired and wishes to pursue a derivative action
Hook v Sumner LTL 27/11/2015
Judgment in default under CPR Part 12 is not available as petitioner is not “entitled’ to any particular relief
Re Bankside Hotels Ltd [2018] EWHC 1035
Summary judgment procedure of CPR Part 24 is available
Re Bankside Hotels Ltd [2018] EWHC 1035
Even if a respondent is debarred from defending the petitioner nevertheless still has to prove his case through evidence adduced to the court upon which the respondent may cross examine
Re Full Cup International Trading Ltd [1995] BCC 682
Re B & G Care Homes Ltd [2016] BCC 615
Re BanksideHotels Ltd [2018] EWHC 1035
The courts have shown a degree of enthusiasm for the arbitration of claims under section 994 Companies Act 2006 and a willingness to uphold the enforceability of arbitration clauses (even though the full range of reliefs might not be available in an arbitration (e.g. ordering a winding up))
Fulham v Richards [2012] Ch 333
The Disclosure Pilot provided for under PD51U CPR 1998 applies to claims for relief under section 994 Companies Act 2006 even if the petition was presented before the commencement of the Disclosure Pilot
See Note from Chief Insolvency and Companies Court Judge February 2020
UTB LLC v Sheffield United Limited [2019] EWHC (Ch) 914
In practice it is often the case that Extended Disclosure under the Disclosure Pilot is ordered in accordance with Extended Disclosure Model D (often with “narrative documents”) and sometimes even Model E)
Revised automatic directions tailored to deal with the requirements of the Disclosure Pilot Scheme have been issued in respect of petitions presented in the Business and Property Courts in London
Where the relief sought by the petitioner might affect other shareholders in the company it is a matter of case management as to whether those others should actually be joined to the proceedings or simply given notice of the proceedings
Re Hut Group Limited [2020] EWHC 5
A claim alleging unfairly prejudicial conduct of a company’s affairs based on alleged breaches by a director of duties owed to the company which are alleged to have affected the petitioner’s interests as a shareholder will not necessarily (but may) be characterised as, in substance, a derivative action requiring the court’s permission to continue the claim. That is particularly likely where the claim is in substance a complaint about conduct affecting the petitioner shareholder’s interest in the company rather than the company itself. It is also particularly likely where the relief sought would not be available in a derivative claim
Re Charley Davies Limited [No2} [1990] BCC 605
Re Chime Corporation Ltd [2004] 2HKLRD 922
Re Hut Group Limited [2020] EWHC 5
Ntzegkoutanis v Kimionis [2022] EWHC 3178
The new requirements imposed by Practice Direction 57AC relating to witness statements for use at trial apply to witness statements to be used at trial of unfair prejudice petitions where that witness statement was signed on or after 6 April 2021
Para 1. Practice Direction 57AC
Allegations of unfairly prejudicial conduct often extends to an examination of discussions, agreement and conduct that took place some time before its examination and witnesses recollection can be unreliable so that caution should be shown in placing too much weight on the oral testimony of witnesses and greater reliance should be placed on inferences to be drawn from documentary evidence, admitted and known facts
Gestmin SGPS S.A. V Credit Susie Limited [2013]
EWHC 3560 (Comm)
Smith v Smith [2022] EWHC 1035
In many cases a determination as to whether there has been unfairly prejudicial conduct will involve an evaluative decision by the judge at first instance and any appeal of that decision may be difficult as the appeal court will not seek to carry out the balancing task afresh but merely ask whether the trial judge’s decision was wrong by reason of some identifiable flaw in his treatment of the issues to be decided
Re Sprintroom Ltd [2019] EWCA Civ 932
Interim injunctions and applications and security for costs
Interim relief not available under section 996 Companies Act 2006 before unfair prejudice is established but interim injunctions may be available under Supreme Court Act 1981 on
American Cyanamid principles. The court may order interim injunctive relief both against those alleged as responsible for the unfairly prejudicial conduct, against the company concerned itself and against alleged recipients of that company’s assets. The court may also appoint interim receivers in appropriate circumstances and give directions as to the holding of meetings of the company pending determination of the petition
Re a Company (No: 00596 of 1986) [1986] 2 BCC 99,063
Re Posgate & Denby (Agencies) Ltd [1986] 2 BCC 99,352
Re a Company (No: 004175 of 1986) [1987] 3 BCC 41
Re a Company (No: 004502 of 1988) [1991] BCC 234
Re Sticky Fingers Restaurant Ltd [1991] BCC 754
Re a Company (No 00330 of 1991) [1991] BCLC 597
Re Mountforest Ltd [1993] BCC 565
Re Tottenham Hotspur Plc [1994] 1 BCLC 655
Re a Company (No: 003061 of 1993) [1994] BCC 883
Re Whitchurch Insurance Consultants Ltd [1994] BCC 51
Re BML Group Ltd [1994] BCC 502
Lunn v All Starr Video Ltd [1993] 137 SJ 108
Wright, Petitioners [1997] BCC 198
Wilson-Davies v Kirk [1997] BCC 770
Corbett v Corbett [1998] BCC 93
Trident European Fund v Coats Holdings Ltd [2003] EWHC 2471
Re Premier Electronics (GB) Ltd [2002] 2 BCLC 634
Re Ravenhart Service (Holdings) Ltd [2004] 2 BCLC 376
Williams v Brinkmann [2004] EWHC 601
Re Canterbury Travel (London) Ltd [2010] All ER (D) 133
Wendy Palmer v Mr Loveland Starlight Diamond Setters Hatton Garden Jewellers 2017 WL 04552554
Homes of England Ltd v Horsham Holdings Ltd [2019] EWHC 2429
Loveridge v Loveridge [2020] EWCA Civ 1104
Re Solid Star Ltd [2022] WL 02916556
Courts are reluctant to impose a director on a company by interim injunction
Pringle v collard [2007] EWCA 1075
Mission Capital plc v Sinclair [2010] 1 BCLC 304
Interim injunctions ordinarily should not be imposed which have the effect of placing one member in control of the company or group pending trial even if that member has previously been the “driving force” behind the business particularly where that member is a minority shareholder
Loveridge v Loveridge [2020] EWCA Civ 1104
Interim orders may be refused if sufficient undertakings are given as to the future conduct of the company
Pringle v Callard [2007] EWCA Civ 1075
Security for costs may be ordered
CPR 25.12 and 25.13
Re Unisoft Group Ltd [1992] BCC 494 and [1994] BCC 11
Re Tottenham Hotspur Plc (unreported) July 1993
In the matter of Auger Investments Ltd [2012] EWHC 94
Re Tonstate Group Limited [2020] EWHC 328
Not usually proper for respondents to use company funds to defend a petition
Re Sherborne Park [1986] 2 BCC 99,528
Re Kenyon Swansea [1987] 3 BCC 259
Re Crossmore Electrical and Civil Engineering Ltd [1989] 5 BCC 37
Re a Company (No 005685 of 1988) [1989] 5 BCC 79
Re Hydrosan Ltd [1991] BCC 19
Re Milgate Developments Ltd [1991] BCC 24
Re a Company (No: 004502 of 1988) [1991] BCC 234
Re a Company (No: 001126 of 1992) [1993] BCC 325
Corbett v Corbett [1998] BCC 93
Cas (Nominees) Ltd v Nottingham Forest Plc [2002] BCC 145
Arrow Trading & Investments v Edwardian Group Ltd [2003] EWHC 2863
Pollard v Pollard and others LTL 26/09/2007
Apex Global Management Ltd v F1 Call Ltd [2013] EWHC 1652
Gott v Hague [2020] EWHC 1473
Koza Ltd Hamid Akin Ipek v Koza Altin [2021] EWHC 786
No advertising of petition without court’s direction
Companies (Unfair Prejudice Applications) Proceedings Rules 2009 (SI 2009/2469 Rule 6)
Re a Company [1997] 2 BCLC 1
Interim disclosure orders available against parties and non-parties
Re TPD Investments Ltd LTL 22 January 2016
Court may order that an account should first be taken in respect of or in respect of consequences of alleged unfairly prejudicial conduct before there is a determination as to whether there has in fact been unfairly prejudicial conduct
Re GO DPO EU Compliance Ltd [2021] EWHC 1765
Nature of Unfair Prejudice
Unfair prejudice may consist of acts or omissions committed in the past, being currently committed or which are anticipated
Re Gorwyn Holdings Ltd [1985] 1 BCC 99,479
Re a Company [1987] BCLC 141
Re Kenyon Swansea Ltd [1987] 3 BCC 259
Re a Company (No: 00314 of 1989) [1990] BCC 221
Lloyd v Casey [2002] 1 BCLC 454
Unfair prejudice must comprise conduct of the company’s affairs or be an act or omission of the company or an act or omission on its behalf
Section 994(1) Companies Act 2006
Re a Company (No: 001761 of 1986) [1987] BCLC 141
Re Kenyon Swansea Ltd [1987] 3 BCC 259
Re Piccadilly Radio Plc [1989] 5 BCC 692
Re a Company (No: 00314 of 1989) [1990] BCC 221
Re a Company (No: 002470 of 1988) [1992] BCC 895
Re Unisoft Group Ltd (No 3) [1994] 1 BCLC 609
Re Leeds United Holdings Plc [1997] BCC 131
Re a Company (No: 00709 of 1992) [1997] 2 BCLC 739
Hawks & Cuddy (No. 2) [2007] EWHC 2999
Sikorski v Sikorski [2012] EWHC 1613
Re Coroin [2012] EWHC 2343
Graham v Every [2015] 1 BCLC 41
Loveridge v Loveridge [2020] EWCA Civ 1104
Re Kings Solutions Group Limited [2021] EWCA Civ 1943
Re Cardiff City Football Club (Holdings) Ltd [2022] EWHC 2023
An objective approach is to be applied in determining whether there has been unfairly prejudicial conduct of a companies affairs. The question to be asked is whether a reasonable bystander observing the consequence of the conduct complained of would regard that conduct as unfairly prejudicial to the petitioner’s interests as a shareholder
Re RA Noble & Sons (Clothing) Ltd [1983] BCLC 273
Smith v Smith [2022] EWHC 1035
Cooper v Dnata Catering Services Limited [2022] EWHC 2216
Actions taken by a shareholder or even by a third party may give rise to actionable unfair prejudice where they are combined with acts or omissions or other conduct on the part of the company but the clear link or causal connection between the actions of the shareholder/third party and the acts or omissions or other conduct on the part of the company should be pleaded in the petition
Blackmore v Richardson (1 November 2004, Unreported)
Graham v Every [2015] 1 BCLC 41
Li Guozhu v New Century Iatrical Management Lts [2018] HKCFI 868
Loveridge v Loveridge [2020] EWCA Civ 1104
The affairs of a company may include the affairs of its subsidiaries
Nicholas v Soundcraft Electronics Ltd [1993] BCLC 360
Gross v Rackind [2005] 1 WLR 3505
Hawkes v Cuddy & others [2007] EWHC 2999 and [2009] EWCA Civ 291
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
A failure to transfer shares in accordance with an alleged agreement may not involve the conduct of the affairs of the company
Kaneria v Kaneria LTL 10 August 2015
Conduct complained of is ordinarily that of controllers of the company
SCWS v Meyer [1959] AC 324
Re Bovey Hotel Ventures Ltd (unreported), 31 July 1981
Re R A Noble (Clothing) Ltd [1983] BCLC 273
Re a Company (No: 05287 of 1985) [1986] I WLR 281
Re Blue Arrow Plc [1987] BCLC 585
Re a Company (No: 002470 of 1988) [1992] BCC 895
Re Saul D Harrison & Sons Plc [1995] BCLC 14
Albion Energy Limited v Energy Investments Global BRL [2020] EWHC 301
The affairs of the company may in practice be conducted by not only its directors or some of its directors but also by its senior management
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
The ‘unfairly prejudicial’ conduct of the affairs of the company need not necessarily be carried on by persons acting as agents of those against whom relief is sought. Rather, it is sufficient if the unfairly prejudicial conduct is sufficiently attributable to those against whom relief is sought that it is ‘fair’ that relief should be given against them
F&C Alternative Investments (Holdings) Ltd v Barthelemy & others [2011] EWHC 1731
‘Unfairness’ to be judged by ordinary meaning of the word and does not require infringement of legal rights. Keeping promises and honouring agreements are the ‘watchwords’
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
Re BSB Holdings Ltd (No 2) [1996] 1 BCLC 155
Re Marchday Group [1998] BCC 800
O’Neill v Phillips [1999] 1 WLR 1092
Both ‘unfairness’ and ‘prejudice’ need to be individually and objectively established
Re R A Noble (Clothing) Ltd [1983] BCLC 273
Re a Company (No: 008699 of 1985) [1986] 2 BCC 99,024
Re Ringtower Holdings Plc [1989] 5 BCC 82
Re a Company (No: 002470 of 1988) [1992] BCC 895
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
Re Blackwood Lodge [1997] BCC 434
Re Guidezone Ltd [2001] BCC 692
Rock (Nominees) Ltd v RCO Holdings Plc (in liquidation) [2004] BCC 466
Re Baumler (UK) Ltd [2005] 1 BCLC 92
Hawks v Cuddy [2007] EWHC 2999 and [2009] EWCA Civ 291
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Cusack v Holdsworth [2016] EWHC 3084
Re TPD Investments Limited [2017] EWHC 657
Loveridge v Loveridge [2020] EWCA Civ 1104
Re Cintep Development Ltd [2020] EWHC 3210
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
The petitioner must still establish both “unfairness” and “prejudice” even if the respondent fails to file a defence or enters a non admission
Re Bird Precision Bellows Ltd [1986] Ch 658
Re a Company (No. 004175 of 1986) [1987] BCLC 574
Re BanksideHotels Ltd [2018] EWHC 1035
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Unfair Prejudice involves a visible departure from the standards of fair dealing and a violation of the conditions of fair play onwhich every shareholder who entrusts his money to a company is entitled to rely
Jenkins Committee’ s Report
Saul D Harrison [1995] 1 BCLC 14
Whether conduct is to be considered fair or unfair is to be determined judicially upon the application of rational principles
O’Neill v Phillips [1999] 1 WLR 1092
The prejudice suffered must be substantial
Re Metropolis Motorcycles [2005] 1 BCLC 520
“Prejudice” is not to be too narrowly or technically construed but is to be considered in context and to be regarded as a flexible and open-textured concept
O”Neill v Phillips [1999] 1 BCLC 1
Re Tobian Properties Limited [2012] 2 BCLC 567
The prejudice suffered can be either financial prejudice (e.g. prejudicial to the value of the petitioners shares or otherwise financially prejudicial to the petitioner) or otherwise prejudicial in character (e.g. disregarding of the rights of the shareholder)
Re Cronin Ltd [2012] EWHC 2343
Gandesha v Gandesha [2019] EWHC 1717
Petitioner’s interests in his capacity as a member must be affected by the conduct complained of though a court may take a relatively wide view as to whether a person interests in his capacity as a member are affected (e.g. affecting interests as creditor in respect of a loan made at same time as investment in shares may suffice)
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
Re Alchemea Ltd [1998] BCC 964
Re a Company (No: 00709 of 1992) [1997] 2 BCLC 739
Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] 4 All ER 164, PC
Hawks v Cuddy [2007] EWHC 2999 and [2009] EWCA Civ 291
Gandesha v Gandesha [2019] EWHC 1717
Loveridge v Loveridge [2020] EWCA Civ 1104
Birkenfeld v Denton and others [2022] EWHC 436
C.f. Re Cardiff City Football Club (Holdings) Ltd [2022] EWHC 202
If the company is insolvent the petitioner will generally have to establish that his shares would have had value but for the wrongdoing of the respondents (though if the petitioner was also a lender to the company at the time he acquired his shares prejudice to his ability to recover that debt might also suffice)
Maidment v Attwood [2012] EWCA Civ 998
Gamlestaden Fastigheter AB v Baltic Partners Ltd [2007] 4 All ER 164, PC
Generally the petitioner will need to establish (a) breach of the terms on which he agreed that the affairs of the company should be conducted; (b) that equitable considerations (i.e. those referred to in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360), arising either at the commencement of the relationship or subsequently, make it unfair for those conducting the affairs of the company to rely upon their strict legal rights; or (c) that the board of directors has exceeded the powers vested in them, have exercised their powers for an illegitimate or ulterior purpose or have acted in breach of the duties owed by them as directors
Cobden Investments ltd v RWM Langport Ltd [2008] EWHC 2810
Gandesha v Gandesha [2019] EWHC 1717
Re Audas Group Ltd [2019] EWHC 2304
Loveridge v Loveridge [2020] EWCA Civ 1104
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
Faulkner and others v Vollin Holdings Limited and others [2021] EWHC 787
Kathryn Ma Wai Fong v Wong Kie Yik and others [2022] UKPC 14
Schichuang Xie v Qingheng Meng and others [2022] EWHC 1819
Durose v Tagco BV [2022] EWHC 3000
Of primary importance in identifying rights and interests of members are the memorandum and articles of association, any shareholders’ agreements and the duties imposed upon directors by law and pursuant to statute. Conduct in breach of those agreements or duties may well involve unfairly prejudicial conduct and vice versa
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
O’Neill v Phillips [1999] 1 WLR 1092
In the matter of Coroin Ltd [2013] EWCA Civ 781
In the matter of LCM Wealth Management Ltd [2013] 3957
Arbuthnott v Bonnyman [2015] EWCA Civ 536
Gandesha v Gandesha [2019] EWHC 1717
Re Audas Group Ltd [2019] EWHC 2304
Loveridge v Loveridge [2020] EWCA Civ 1104
Re Cintep Development Ltd [2020] EWHC 3210
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
Faulkner and others v Vollin Holdings Limited and others [2021] EWHC 787
Schichuang Xie v Qingheng Meng and others [2022] EWHC 1819
In the absence of any quasi partnership, if a person acts in accordance with express agreements reached relating to the company, even if that conduct prejudicial, affects the interests of a shareholder, that conduct is unlikely to constitute unfairly prejudicial conduct of the affairs of the company contrary to that shareholder’s interests as shareholder
Durose v Tagco BV [2022] EWHC 3000
The extent of the obligations imposed by an express or implied duty of “good faith” depends upon the proper meaning to be applied to that express or implied duty of “good faith”. The meaning to be applied depends on the context in which the duty is imposed. Considerable caution is to be exercised before interpreting such a clause as inhibiting shareholders from changing the articles of association of a company or removing people from the board of directors of a company as those matters were not cast in stone at the time of incorporation of a company. Clauses imposing a duty of “good faith” are to be interpreted by deducing the shared aims of the parties which are to be objectively ascertained from the contract’s express and implied terms. Actual dishonesty was not generally a necessary requirement of a breach of a duty of “good faith”. A duty of “good faith” does not generally impose a particularly “demanding” obligation. A duty to act in “good faith” merely prohibits conduct that reasonable and honest people would regard as commercially unacceptable.
Re Coroin Ltd (No 2) [2014] BCC 14
Unwin v Bond [2020] EWHC 1768
Faulkner v Vollin [2022] EWCA Civ 1371
Re Compound Photonics Group Ltd[2022] EWCA Civ 1371
A shareholders’ agreement may often be properly categorized as a “relational contract” into which may be implied a duty requiring the parties to act in “good faith” towards each other
Yam Seng v International Trade Corp [2013] 1 CLC 662
In certain cases unfair prejudice may arise despite the absence of any breach of a legal right or duty. Where a company is in the nature of a ‘quasi partnership’, unfair prejudice may be found where a shareholder, though not acting in breach of any legally enforceable agreement or duty, uses the rules in a manner which equity regards as contrary to good faith. In such ‘quasi partnership’ cases equitable considerations make it unfair for the majority to rely on their strict legal rights. In such ‘quasi partnership’ cases unfair prejudice may exist where there is a failure to fulfil a ‘legitimate expectation’ of a member arising from an understanding or nonlegally binding agreement between members which would make it unjust, unfair or inequitable were the majority permitted to enforce their strict legal rights. Such a ‘legitimate expectation’ might be, for example, that the member should continue to be employed as a director or otherwise be allowed to participate in management of the company whilst he holds shares in the company
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Re a Company (No: 00477 of 1986) [1989] 5 BCC 82
Re J.E. Cade & Son Ltd [1992] BCLC 213
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
Re R&H Electric Ltd v Haden Bill Electrical Ltd [1995] 2 BCLC 280
Re Leeds United Holdings Plc [1997] BCC 131
Quinland v Essex Hinge Co Ltd [1997] BCC 53
Re a Company (No: 00709 of 1992) [1997] 2 BCLC 739
Third v North East Ice & Cold Storage Co Ltd [1998] BCC 242
Re Astec (BSR) Plc [1998] BCLC 556
O’Neill v Phillips [1999] 1 WLR 1092
Mears v R Mears & Co (Holdings) Ltd [2002] 2 BCLC 1
Grace v Biagioli [2006] 2 BCLC 70
In the matter of Gate of India (Tynemouth) Ltd [2008] EWHC 959
Dashfield v Dashfield [2009] 1 BCLC 220
Oak Investment Partners xii Ltd Partnership v Martin
Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
Croly v Good [2010] EWHC 1
Khoshkou v Cooper [2014] EWHC 1087
Apex Global Management Ltd v F1 Call Ltd [2015] EWHC 3269
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Re MigrationSolutions Holdings Ltd [2016] EWHC 523
Re TPD Investments Limited [2017] EWHC 657
Waldron v Waldron [2019] EWHC 115
Re Audas Group Ltd [2019] EWHC 2304
Starling v The Climbing Gym Limited [2020] EWHC 1833
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Faulkner and others v Vollin Holdings Limited and others [2021] EWHC 787
McMonagle v Harvey [2021] EWHC 1374
Smith v Smith [2022] EWHC 1035
Kathryn Ma Wai Fong v Wong Kie Yik and others [2022] UKPC 14
It is unlikely that any such informal agreements or ‘legitimate expectations’ will exist in relation to listed public companies
Re Blue Arrow [1987] BCLC 585
Re Astec (BSR) Plc [1998] BCLC 556
A company may start out as a quasi partnership but later cease to operate as such (e.g. following the admission of new participants) and vice versa
Re a Company (No: 005134 of 1986) [1989] BCLC 383
Re McCarthy Surfacing Ltd [2008] EWHC 2279
Fowler v Gruber [2010] IBCLC 563
Croly v Good [2010] EWHC 1
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715
Where a company’s affairs are conducted on a very informal basis (eg. Lack of meetings, resolutions, minutes) that may indicate a common understanding on all sides that the articles of association do not represent the complete and exhaustive statement of how the relationship between the participants should be conducted and may therefore indicate circumstances where strict insistence upon enforcement of the terms of the articles and company law generally might still involve unfairly prejudicial conduct of the affairs of the company
Fisher v Cadman [2006] 1 BCLC 499
Such informal agreements or ‘legitimate expectation’ might seemingly possibly exist between some but not necessarily all shareholders
Waldron v Waldron [2019] EWHC 115
Relations between the participants in a company that is to be considered in the nature of a quasi partnership must be sufficiently personal rather than purely professional
Wootliff v Ruston-Turner [2017] EWHC 3129
Of itself, an irretrievable breakdown in relations or a loss of trust and confidence may not constitute unfairly prejudicial conduct
(cf in context of true partnerships) Re Yenidje Tobacco Ltd [1916] 2 Ch 426 (particularly at 430)
Re Westbourne Galleries [1973] AC 360 (particularly at 379)
Re a Company (No: 007623 of 1984) [1986] 2 BCC 99,191
Re a Company (No: 004377 of 1986) [1986] 1 WLR 102
O’Neill v Phillips [1999] 1 WLR 1092
Re Phoenix Office Supplies Ltd [2003] 1 BCLC 76
McKee v O’Reilly [2003] EWHC 2008
Re Jayflex Construction Ltd [2004] 2 BCLC 145
Re Baumler (UK) Ltd [2005] 1 BCLC 92
Grace v Biagiolli [2005] EWCA Civ 1222
Racking v Gross [2004] EWCA Civ 815
Hawks v Cuddy [2007] EWHC 2999 and [2009] EWCA Civ 291
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
In the matter of Hart Investment Holdings Ltd [2013] EWHC 2067
Apex Global Management v FI Call Ltd [2013] EWHC 1652 and [2015] EWHC 3269
Re Lloyds Autobody Ringway Limited [2018] EWHC 2336
Badyal v Badyal [2019] EWCA Civ 1644
Wrongful conduct by directors in a quasi partnership is unlikely to be considered “unfair” if the other quasi partners have behaved in the same way on the understanding that there will later be a process of accounting and equalisation
Re Jayflex Constructions Ltd [2003] EWHC 2008
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
The jurisdiction does not afford the court the power to make a purchase order in the absence of unfairly prejudicial conduct. It does not afford a “no fault divorce” jurisdiction. In other jurisdictions there is a move towards extending the court’s jurisdiction to permit a court to make a purchase order as an alternative to an order for the winding up of the company where it is “just and equitable” to do so
O’Neill v Phillips [1999] 1 WLR 1092
Evenstar [2006] 3 S.L.R.(R.) 827
Ting Shwu Ping v Scanone Pte Ltd [2016] SGCA 65 (CA (Sing))
Badyal v Badyal [2018] EWHC 68
In determining whether there has been any unfairly prejudicial conduct the cultural background to the company and its participants may be relevant
Rahman v Malik [2008] 2 BCLC 403
Generally mere mismanagement will not constitute unfair prejudice though it might in extreme cases
Re Elgindata Ltd [1991] BCLC 959
Re a Company (No: 002470 of 1988) [1992] BCC 895
Re Macro (Ipswich) Ltd [1994] BCC 781
Fisher v Cadman [2006] 1 BCLC 499
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
F&C Alternative Investments (Holdings) Ltd v Barthelemy & others [2011] EWHC 1731
Cooper v Dnata Catering Services Limited [2022] EWHC 22
The existence of a ‘deadlock’ situation within the company is, on its own, unlikely to amount to unfair prejudice
Hawks v Cuddy [2009] 2 BCLC 427
The petitioner’s own conduct (e.g. conduct that involves a breach by the petitioner of the duties that he himself owes in his capacity as a director of the company) may result in ‘prejudicial’ conduct not being ‘unfair
Re London School of Electronics Ltd [1986] Ch 211
Re Ringtower Holdings plc [1989] 5 BCC 82
Mears v R Mears & Co (Holdings) Ltd [2002] 2 BCLC 1
Woolwich v Milne [2003] EWHC 414
Baker v Potter [2005] BCC 855
Blackmore v Richardson [2005] EWCA Civ 1356
Grace v Biagioli [2006] BCC 85
Kelly v Hussain [2008] EWHC 1117
Re Flex Associates Ltd [2009] EWHC 3690
(c.f. Shah v Shah [2010] EWHC 313)
Interactive Technology Corp Ltd v Ferster [2016] EWHC 2896
Corran v Butters [2017] EWHC 2294
Dinglis v Dinglis [2019] EWHC 1664
Badyal v Badyal [2019] EWCA Civ 1644
Starling v The Climbing Gym Limited [2020] EWHC 1833
The conduct need not result in a reduction in the value of the petitioner’s shares
McGuiness, Petitioners [1988] 4 BCC 161
R A Noble & Sons (Clothing) Ltd [1993] BCLC 273
It is unlikely that unfairly prejudicial conduct will be made out where one participant voluntarily chooses to cease to have involvement in the business and affairs of the company even if that is contrary to an agreement or understanding reached and which formed the basis of their participation
McMonagle v Harvey [2021] EWHC 1374
If a majority shareholder excludes a minority shareholder from participation in the business and affairs of the company as a result of that minority shareholder’s misconduct it is unlikely that the majority shareholder will be entitled to relief in the form of a purchase order as the exclusion will probably have resolved any continuing unfairly prejudicial conduct
Re Legal Costs Negotiators Ltd [1999] BCC 547
McMonagle v Harvey [2021] EWHC 1374
Directors must act fairly as between different classes of shareholders
Re BSB Holdings Ltd (No 2) [1996] 1 BCLC 155
Proceedings under s994 Companies Act 2006 are not subject to any particular limitation period but delay in bringing proceedings may be a bar to relief if the petitioner is aware of unfairly prejudicial conduct but delays in making complaint in respect of it
Re D.R. Chemicals Ltd [1989] 5 BCC 39
cf Price v Rawlings (unreported)
Re Grandactual Ltd [2006] BCC 73
Re FSC Andrews Ltd [2015] EWHC 4042
Re Edwardian Group Limited [2018] EWHC 1715
Routledge v Skerritt [2019] EWHC 573
Evans v Eurokey Properties Limited [2020] EWHC 1047
Re Cherry Hill Skip Hire Limited [2022] EWCA Civ 531
In the absence of evidence to the contrary a shareholder is entitled to assume that the affairs of the company are being managed properly by its directors in accordance with their duties and the memorandum and articles of association and the fact that he may not have issued proceedings is not to be taken as acquiescence
Re Cherry Hill Skip Hire Limited [2022] EWCA Civ 531
If member acquiesces in conduct that may deprive the conduct of ‘unfairness’
Fisher v Cadman [2005] EWHC 377
Re Sunrise Radio [2010] 1 BCLC 367
Re K R Hardy Estates Limited [2016] BCC 367
Waldron v Waldron [2019] EWHC 115
Re AMT Coffee Ltd [2019] EWHC 46
On the other hand, if a petitioner fails to object to matters disclosed in published accounts (e.g. excessive remuneration) that failure, on its own, is unlikely to prevent him asserting that that matter involves unfairly prejudicial conduct
Maidment v Attwood [2012] EWCA Civ 998
Although a petitioner must be a member when petition is presented, he may rely on events prior to his becoming a member
Lloyd v Casey [2002] 1 BCLC 454
It is for the petitioner to prove the existence of unfairly prejudicial conduct of the affairs of the company
Fowler v Gruber [2010] 1 BCLC 210
Examples of unfairly prejudicial conduct
A director acting in breach of the duties that he owes to the company and thereby acting contrary to an express or implied agreement to conduct the affairs of the company in accordance with the duties owed as directors (e.g by exceeding the powers vested in him or by exercising those powers for an ulterior purpose or by exercising those powers otherwise than in the best interests of the company as a whole)
Re D. R. Chemicals Ltd [1989] 5 BCC 39
Re Saul D Harrison & Sons plc [1995] 1 BCLC 14
Re BSB Holdings (No. 2) [1996] 1 BCLC 155
CAS (Nominees) Ltd v Nottingham Forest plc [2002] BCC 145
Re McCarthy Surfacing Ltd [2008] EWHC 2279
In the matter of Southern Counties Fresh Food Ltd [2008] EWHC 2810
Oak Investment Partners XII Ltd Partnership v Martin Broughtwood and others [2009] EWHC 176 & [2010] EWCA Civ 23
Re Tobian Properties [2012] EWCA Civ 998
Re Addbins Ltd [2015] EWHC 3161
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Ferster v Ferster [2016] EWCA Civ 717
Wootliff v Ruston-Turner [2017] EWHC 3129
Re Last Lion Holdings Ltd [2018] EWHC 2347
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
McMonagle v Harvey [2021] EWHC 1374
Failure to act in accordance with express agreement (whether contained in the memorandum or articles of association, a shareholders ’agreement or otherwise) or with an implied agreement or informal understanding
O’Neill v Phillips [1999] 1 WLR 1092
Re Cintep Development Ltd [2020] EWHC 3210
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
Failure to act in accordance with an express or even an implied provision in a shareholders’ agreement requiring the parties to act in “good faith” towards one another
Yam Seng v International Trade Corp [2013] 1 CLC 662
Re Corbin Ltd (No 2) [2014] BCC 14
Faulkner and others v Vollin Holdings Limited and others [2022] EWCA Civ 1371
cf Unwin v Bond [2020] EWHC 1768
Exclusion from participation in management of a company that is in the nature of a ‘quasi partnership’ or where there is an agreement, understanding or legitimate expectation that the petitioner should be entitled to participate in the company is likely to amount to unfairly prejudicial conduct in absence of sufficient reasons justifying exclusion (e.g. breaches by that person of duties that he owes as a director of the company)
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Re Flex Associates Ltd [2009] EWHC 3690
Croly v Good [2010] EWHC 1
Shah v Shah [2010] EWHC 313
Lantsbury v Hauser [2010] EWHC 390
Amin v Amin [2010] EWHC 827
Fowler v Grubar [2010] 1 BCLC 563
Shepherd v Williamson [2010] EWHC 2375
Williams v Williams & others LTL 12/10/11
Harris v Jones [2011] EWHC 1518
Re Abbington Hotel Ltd [2011] EWHC 635
Williams v Williams LTL 12/10/11
In the matter of I Fit Global Ltd [2013] EWHC 2090
In the matter of Insurance & Finance Consultants Ltd [2014] EWHC 2206
Flanagan v Liontrust Investment Partners LLP [2015] EWHC 2171
Re TPD Investments Limited [2017] EWHC 657
Corran v Butters [2017] EWHC 2294
VB Football Assets v. Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Badyal v Badyal [2018] EWHC 68
Sudicka v Morgan [2019] EWHC 311
Re Sprintroom Ltd [2019] EWCA Civ 932
Re Audas Group Ltd [2019] EWHC 2304
Starling v The Climbing Gym Limited [2020] EWHC 1833
Shehata v Mansfield Hotel Ltd [2021] EWHC 630
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
cf. Faulkner and others v Vollin Holdings Limited and others [2022] EWCA Civ 1371
Re GO DPO EU Compliance Ltd [2021] EWHC 1765
Smith v Smith [2022] EWHC 1035
Starling v The Climbing Gym Ltd [2020] EWHC 1833
Shichuang Xie v Qingheng Meng and other[2022] EWHC 1819
Re Greenfrost Limited [2023] EWHC 5
Even where a shareholder is not involved in the day to day management of the business and affairs of the company if he is not informed of matters having a fundamental effect on the company that may amount to exclusion
Whitelock v Henderson [2009] BCC 314
Re Foundry Miniatures [2017] 2 BCLC 489
An exclusion from the business and affairs of the company brought about as a result of a breakdown in trust and confidence resulting from the respondent’s own conduct is unlikely to be justified and so may constitute unfairly prejudicial conduct
Re Via Services Ltd [2014] EWHC 3069
Not all the elements identified in the Ebrahimi case as being characteristics of a “quasi partnership” are required to be present before a finding of “quasi partnership” is made
Chu v Lau [2020] UKPC 24
In the absence of specific agreement between the shareholders that they should be entitled to continued employment with the company for so long as they hold shares in the company, dismissal of petitioner from a position as an employee of a company generally does not amount to unfairly prejudicial conduct of the affairs of a company unless the dismissal of the petitioner from their position as an employee is made in breach of a contractual duty of good faith, done for ulterior purposes or is done to promote the person dismissing’s own sectional interests
Re Audas Group Ltd [2019] EWHC 2304
Starling v The Climbing Gym Limited [2020] EWHC 1833
But if the company is not a “quasi partnership” and there is no such agreement or understanding exists then removal of a minority shareholder from his position as a director may not amount to unfairly prejudicial conduct
Third v North East Ice & Cold Storage Co Ltd [1998] BCC 242
Michel v Michel [2019] EWHC 1378
Dinglis v Dinglis [2019] EWHC 1664
Starling v The Climbing Gym Limited [2020] EWHC 1833
Faulkner v Vollin Holdings Ltd EWCA Civ 1371
Any agreement as to participation in conduct or management of a company’s affairs might not enure for the benefit of successors/heirs
Kathryn Ma Wai Fong v Wong Kie Yik and others [2022] UKPC 14
But if the petitioner resigns his directorship voluntarily there may be no obligation to reappoint
Re Flex Associates Ltd [2009] EWHC 3690
Kaneria v Kaneria LTL 10 August 2015
Removal of a company’s auditor from office on grounds of divergence of opinion on matters of accounting treatment or audit procedures or for any other improper grounds is deemed to involve unfair prejudice
Section 994(1A) Companies Act 2006
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Refusal to permit audit
Interactive Technology Corp Ltd v Ferster [2016] EWHC 2896
Excessive remuneration or drawings from the company
Re Cumana [1986] 2 BCC 99,453 and [1986] BCLC 430
Grace v Biagioli [2005] EWCA Civ 1222
Re Campbell Irvine (Holdings) Ltd [2006] EWHC 406
Re McCarthy Surfacing Ltd [2008] EWHC 2279
In the matter of Sunrise Radio Ltd [2009] EWHC 2893
Croly v Good [2010] EWHC 1
Maidment v Attwood [2012] EWCA Civ 998
Re Blue Index Ltd [2014] EWHC 2680
Re CF Booth Ltd [2017] EWHC 457
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Rembert v Daniel [2018] EWHC 388
Re The Edwardian Group Ltd [2018] EWHC 1715
Re AMT Coffee Limited [2019] EWHC 46
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
The issue as to what comprises reasonable remuneration in any particular circumstance is an issue suitable for expert evidence but expert evidence in this regard will only be admitted if it is robust, necessary, it is sufficiently relevant and its admission would be proportionate
British Airways plc v Spencer [2015] EWHC 2477
Re AMT Coffee Limited [2019] EWHC 46
The court may be able to assess what is reasonable remuneration in any particular case as a matter of fact on the evidence before it and on the basis of material of which the court is able to take judicial notice and without any admissible expert evidence
Re AMT Coffee Limited [2019] EWHC 46
Failure to hold meetings or holding “sham” meetings
McGuinness, Petitioners [1988] 4 BCC 161
Nuneaton Borough AFC Ltd [1989] 5 BCC 792
Re Ghyll Beck Driving Range Ltd [1993] BCLC 1126
Fowler v Gruyere [2010] BCLC 563
LCM Wealth Management Ltd [2013] EWHC 3957
Refusal to conduct business of company in accordance with agreement or agreed policy
Re Abbington Hotel Ltd [2011] EWHC 635
Khoshkhou v Cooper [2014] EWHC 1087
Birdi v (1) Specsavers Optical Group Ltd; (2) Singh; (3) Dartford Visionplus Ltd and (4) Dartford Specsavers Ltd [2015] EWHC 2870
Failure to permit a shareholder involvement in decisions relating to matters reserved by terms of a shareholders’ agreement to shareholders is likely to involve unfairly prejudicial conduct of the affairs of the company
Re Audas Group Ltd [2019] EWHC 2304
Interference with agreed management structure and operational procedures
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
Failure properly to pay dividends
Re a Company (No. 00370 of 1987) ex p Glossop [1988] 1 WLR 1068
Re Sam Weller & Sons Ltd [1989] 5 BCC 810
Re Saul D Harrison & Sons Plc [1995] 1 BCLC 14
Re a Company (No: 004415 of 1996) [1997] 1 BCLC 479
Re Metropolis Motorcycles Ltd [2006] EWHC 364
In the matter of Gate of India (Tynemouth) Ltd [2008] EWHC 959
Re McCarthy Surfacing Ltd [2008] EWHC 2279
Croly v Good [2010] EWHC 1
J & S Insurance and Financial Consultants Ltd [2014] EWHC 2206
Re CF Booth Ltd [2017] EWHC 457
Corran v Butters [2017] EWHC 2294
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Re AMT Coffee Limited [2019] EWHC 46
Rutledge v Skerritt [2019] EWHC 573
Misapplication of or misappropriation of company funds, property or opportunities or ‘expropriation of the minority’
Re Stewarts (Brixton) Ltd [1985] BCLC 4
Re London School of Electronics Ltd [1986] Ch 211
Re Cumana Ltd [1986] BCLC 430
Re Elgindata Ltd [1991] BCLC 959
Re LittleOlympian Each-Ways Ltd (No 3) [1995] 1 BCLC 636
Re McCarthy Surfacing Ltd [2008] EWHC 2279
In the matter of Allied Business and Financial Consultants Ltd [2009] EWCA Civ 751
In the matter of Sunrise Radio Ltd [2009] EWHC 2893
Re Flex Associates Ltd [2009] EWHC 3690
Croly v Good [2010] EWHC 1
Sethi v Patel [2010] EWHC 1830
Lantsbury v Hauser [2010] EWHC 390
In the matter of Annacott Holdings Ltd [2013] EWCA Civ 119
In the matter of Hart Investment Holdings Ltd [2013] EWHC 2067
Thomas v Dawson [2015] EWCA Civ 706
In the matter of Husbands Bosworth Properties Ltd [2015] EWHC 1928
Hook v Sumner LTL 27/11/2015
Patel v Ferdinand (unreported) 14 July 2016
Interactive Technology Corp Ltd v Ferster [2016] EWHC 2896
Cusack v Holdsworth [2016] EWHC 3084
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Rembert v Daniel [2018] EWHC 388
Badyal v Badyal [2018] EWHC 68
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715
Re The Edwardian Group Ltd [2018] EWHC 1715
Sudicka v Morgan [2019] EWHC 311
Williams Rhys Williams (Bangor) Limited [2020] EWHC 2624
McMonagle v Harvey [2021] EWHC 1374
Re GO DPO EU Compliance Ltd [2021] EWHC 1765
Re International Automotive Engineering Projects Lyd Ltd [2022] EWHC 1751
Re Greenfrost Limited [2023] EWHC 5
May be difficult to establish a misappropriation of business opportunities if there is a finding of agreement to discontinue trading
Ahmadifard v McCullough (Unreported July 2014)
If a director places himself in a position where the interests of his company conflict or may conflict with his other interests that may involve him in breach of the duties he owes as a director and involve unfairly prejudicial conduct of the affairs of his company
Re International Automotive Engineering Projects Ltd [2022] EWHC 1751
Provision of loans on preferential terms (e.g interest free or unsecured)
Re AMT Coffee Limited [2019] EWHC 46
Dinglis v Dinglis [2019] EWHC 1664
Wrongful use of company’s trading name
Maidment v Attwood [2012] EWCA Civ 998
Unfair calls on shares
Re a Company (No: 008126 of 1989) [1992] BCC 542
Re D.R. Chemicals Ltd [1989] 5 BCC 39
Randall v S & F (Quarries) Ltd (unreported) 12 October 1994
Re Regional Airports Ltd [1999] 2 BCLC 30
Dalby v Bodilly [2004] EWCA 307
Selective or otherwise improper share issues
Re a Company (No: 007623 of 1984) [1986] 2 BCC 99,191
Re a Company (No: 0026712 of 1984) [1985] BCLC 80
Re D.R. Chemicals Ltd [1989] 5 BCC 39
Randall v S & F (Quarries) Ltd (unreported) 12 October 1994
Re Regional Airports Ltd [1999] 2 BCLC 30
Dalby v Bodilly [2004] EWCA 307
In the matter of Gate of India (Tynemouth) Ltd [2008] EWHC 959
In the matter of Sunrise Radio Ltd [2009] EWHC 2893
Lantsbury v Hauser [2010] EWHC 390
In the matter of Zetnet Ltd [2011] EWHC 1518
In the matter of I Fit Global Ltd [2013] EWHC 2090
Re TPD Investments Limited [2017] EWHC 657
Ma Wai Fong v Kie Yik [2022] UKPC 14
C.f. Re Cardiff City Football Club (Holdings) Ltd [2022] EWHC 202
Heywood v Freakley [2022] EWHC 2762
Potentially an alteration of voting rights attaching to shares but not if done legally permissible and done for proper commercial objective
Kathryn Ma Wai Fong v Wong Kie Yik and others [2022] UKPC 14
Failure to act in accordance with pre-emption provisions in articles of association or otherwise wrongfully diluting the petitioner’s shareholding in the company
Graham v Every [2014] EWCA Civ 191
Preventing a sale of shares at highest value
Re a Company (No: 8699 of 1985) [1986] BCLC 382
Seriously diminishing or jeopardising the value of the petitioner’s shares
(1) Hamilton and (2) Dower v (1) Brown and (2) C & MB Holdings Ltd [2016] EWHC 191
Re Last Lion Holdings Ltd [2018] EWHC 2347
Wrongful refusal to register a transfer of shares
Holman v Adams Securities Ltd [2010] EWHC 2421
Graham v Every [2014] EWCA Civ 191
Re Last Lion Holdings Ltd [2018] EWHC 2347
Transfers of shares or transfers of control of shares may not amount to unfairly prejudicial conduct unless specifically prohibited by agreement between the shareholders
In the matter of Coroin Ltd [2013] EWCA Civ 781
Failure by directors to disclose and obtain proper approval to matters involving potential or actual of conflicts of interest
Re Allied Business and Financial Consultants Ltd [2009] EWCA Civ 751
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Failure to provide proper information as to company’s affairs
Re a Company (No 008699 of 1985) [1986] 2 BCC 99,024
Re R A Noble (Clothing) Ltd [1983] BCLC 273
Randall v S & F (Quarries) Ltd (unreported) 12 October 1994
In the matter of Sunrise Radio Ltd [2009] EWHC 2893
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Rembert v Daniel [2018] EWHC 388
Re Audas Group Ltd [2019] EWHC 2304
Improper accounting and record keeping or accounting deficiencies
Fowler v Gruyere [2010] BCLC 563
Apex Global Management Ltd v F1 Call Ltd [2015] EWHC 3269
Gray v Braid Group (Holdings) Ltd [2015] CSOH 146
Ignoring board decisions or allowing persons not appointed or disqualified from acting as directors to manage the affairs of the company
Re H.R. Harmer Ltd [1959] 1 WLR 62
(1) Hamilton and (2) Dower v (1) Brown and (2) C & MB Holdings Ltd [2016] EWHC 191
Denigrating conduct particularly in the context of a “quasi partnership” such as to render it unrealistic to expect the participants to continue in business together
Apex Global Management Ltd v F1 Call Ltd [2015] EWHC 3269
Wrongful registration of new members
Re Piccadilly Radio Plc [1989] 5 BCC 692
Failure to permit proper financial management
Thomas v Dawson [2015] EWCA Civ 706
Failure to permit proper remuneration of management
Thomas v Dawson [2015] EWCA Civ 706
Failure to disclose conflicts of interest
Ashdown v Griffiths [2015] EWHC 3131
Estera Trust (Jersey ) Ltd v Singh [2018] EWHC 1715
Denigration of one quasi partners by another such as to make their constructive continuation in the business unrealistic
Re Fi Call [2015] EWHC 3269
Permitting a bankrupt former director to continue in the management of the affairs of a company contrary to Company Directors Disqualification Act 1986 s11
(1) Hamilton and (2) Dowers v (1) Brown and (2) C & MB Holdings Ltd [2016] EWHC 191
Committing criminal offences
Bermuda Cablevision Ltd v Colica Trust Co Ltd [1997] BCC 982
Physical violence
In the matter of Home & Office Fire Extinguishers Ltd [2012] EWHC 917
Threats to wind up
In the matter of TPL Holdings Ltd 25.3.14
Unsubstantiated threats of applications for committal for contempt of court or for perjury
Interactive Technology Corp Ltd v Ferster [2016] EWHC 2896
Unilaterally withdrawing or failing to provide agreed funding for the project for which the company was formed or in breach of the minority shareholder’s reasonable expectations whether derived from formal or informal agreement or from the quasi partnership nature of the company and the joint venture that it was intended to pursue
Re Cintep Development Ltd [2020] EWHC 3210
What relief will be ordered?
No limit on types of order court may make to give relief in respect of matters complained of
Section 996 Companies Act 2006
Re Bird Precision Bellows [1986] Ch 658
Re Nuneaton Borough AFC Ltd (No.2) [1991] BCC 44
Re J.E.Cade& Son Ltd [1992] BCLC 213
Supreme Travels Ltd v Little Olympian Each-Ways Ltd [1994] BCC 947
cf Re Full Cup Int Trading Ltd [1998] BCC 58
Grace v Biagioli [2005] EWCA Civ 1222
Hawks v Cuddy [2009] EWCA Civ 291
Sikorski v Sikorski [2012] EWHC 1613
In the matter of Hart Investment Holdings Ltd [2013] EWHC 2067
Thomas v Dawson [2015] EWCA Civ 706
The court only has jurisdiction to grant any relief if unfairly prejudicial conduct of the company’s affairs is admitted or proved
Re Bird Precision Bellows [1986] Ch 658
Re a Company (No: 004175 of 1986) [1987] BCLC 574
Caldero Trading Ltd v Beppler & Jacobson Ltd [2013] EWHC 2191
The court may make an order for relief in a form not sought by the petitioner
Hawkers v Cuddy [2008] BCC 390 and [2010] BCC 597
Even if unfairly prejudicial conduct is established there is no entitlement to relief. Rather, relief will only be granted if it is considered fair and appropriate that relief should be granted
Re Bird Precision Bellows Ltd [1986] Ch 658
Pro finance Trust SA v Gladstone [2002] 1 WLR 1024
Grace v Biagioli [2005] EWCA Civ 1222
Re BanksideHotels Ltd [2018] EWHC 1035
Re Prospect Place (Wimbledon) Management Company Limited [2022] EWHC 76
The court assesses the appropriateness of any particular remedy as at the date of the hearing rather than at the date of the presentation of the petition and so can take account of conduct after the presentation of the petition but before the hearing
Re Hailley Group Ltd [1992] BCC 542
Grace v Biagioli [2005] EWCA Civ 1222
The court will not grant relief where it will serve no substantially useful purpose
Re a Company (No: 008126 of 1989) [1992] BCC 542
Re Full Cup Int. Trading Ltd [1998] BCC 58
Re Hailey Group Ltd [1993] BCLC 459
Re Prospect Place (Wimbledon) Management Company Limited [2022] EWHC 76
The remedy is not limited merely to one reversing or putting right the immediate conduct which has justified the making of the order. Rather, the court is entitled to look at the realities and practicalities of the overall situation, past, present and future.
Grace v Biagioli [2006] BCC 85
Re Prospect Place (Wimbledon) Management Company Limited [2022] EWHC 76
Court will grant the minimum remedy to repair the misconduct and unfair prejudice suffered and prevent it happening in the future. So, in an appropriate case, the court might refuse a purchase order where sufficient relief can be provided through an alternative order
Re Bird Precision Bellows [1986] Ch 658
Fexuto Pty Ltd v Bosnjak Holdings Ltd (1998) 28 ACSR 688
Re Legal Costs Negotiators Ltd [1999] BCC 547
Rural v Lopmand (2003) 47 ACSR 514
Grace v Biagioli [2006] BCC 85
Re Metropolis Motorcycles Ltd [2006] 364
Hawks v Cuddy [2007] EWHC 2999 and [2009] EWCA Civ 291
Re TPD Investments Limited [2017] EWHC 657
The question of what relief is appropriate should be addressed in light of all the facts as they exist as at the date of the order rather than those that pertained at the date of the presentation of the petition
Grace v Biagioli [2006] BCC 85
The remedy ordered will be one that is “fair” and “appropriate” in the circumstances and will seek to avoid unjust enrichment to any of the parties
Re Regional Airports Ltd [1999] 2 BCLC 30
Grace v Biagioli [2005] EWCA 1222
Re Sunrise Radio Ltd [2009] EWHC 2893
F & C Alternative Investments (Holdings) Ltd v
Barthelemy [2012] Ch 613
Re TPD Investments Limited [2017] EWHC 657
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
The court may refuse to grant any relief where relief has already been obtained in respect of the consequences of the unfairly prejudicial conduct suffered
Re Kenyan Swansea Ltd (1987) 3 BCC 259
Re Estate Acquisition & Development Ltd [1995] BCC 338
Weatherley v Weatherley [2018] EWHC 3201
Court will only grant relief that is proportionate to the unfairly prejudicial conduct of which the petitioner complains and will not use the order to inflict punishment for bad behaviour
Re Phoenix Office Supplies Ltd [2003] BCC 11
Hawkers v Cuddy [2008] BCC 390
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Relief may be granted against any current members of the company or persons involved in the conduct of the affairs of the company but particularly against those who bear responsibility for the unfair prejudice suffered
Re Baltic Estate (No. 1) [1993] BCLC 498
Re LittleOlympian Each-Ways Ltd (No.3) [1995] 1BCLC 636
Croly v Good [2011] BCC 105
Shah v Shah [2011] WTLR 519
The court may order relief against persons who are not members of the company
Re BSB Holdings Ltd [1992] BCC 915
Apex Global Management Ltd v Fi Call Ltd [2014] Bcc 286
In certain circumstances the court might even order relief against past members
Re Company (No. 005287 of 1985) [1986] BCLC 68
Conduct of the petitioner may affect the relief which the court thinks fit to grant
Re London School of Electronics Ltd [1986] Ch 211
Richardson v Blackmore [2006] BCC 276
Interactive Technology Corp Ltd v Ferster [2016] EWHC 2896
Relief will only be granted in respect of matters complained of
Re Legal Costs Negotiators Ltd [1999] BCLC 171
Court may order relief in a form that the petitioner does not seek or desire
Hawks v Cuddy [2009] EWCA Civ 291
In considering the appropriate remedy the court will take account of the interests of all shareholders, creditors and even third parties (e.g. joint venturers with the company), customers and the public generally
Hawkers v Cuddy [2008] BCC 390
Re Asia Television [2015] 1 HKLRD 607
The court may take into account the hardship that a particular type of order would represent to the respondents but whether it will be prepared to do so is likely to depend on the degree of misconduct on the part of the respondent
Re a Company (No: 002612) [1986] 2 BCC
Re Scitec Group Ltd [2011] 1 BCLC 277
The courts have emphasised that in may cases there is much to be said for a “clean break” between the parties
Re Elgindata Ltd (No 1) [1991] BCLC 959
Re Clearspring Management Ltd [2003] EWHC 2516
In appropriate cases relief may be provided by an order granting a remedy against nonmembers
Re a Company (No: 005287 of 1985) [1986] BCLC 68
Re LittleOlympian Each-Ways Ltd [1994] 2 BCLC 420, 429
F&C Alternative Investments (Holdings) Ltd v Barthelemy & others [2011] EWHC 1731
Apex Global Management Ltd v FI Call Ltd [2013] EWHC 1652
Re TPD Investments Limited [2017] EWHC 657
Relief may take the form of an order requiring the rectification of registers (e.g. as to shareholdings)
Lantsbury v Hauser [2010] EWHC 390
Relief may be ordered in the form of suitable injunctive orders being made
Re Last Lion Holdings Ltd [2018] EWHC 2347
The court may make an order regulating the future conduct of the company’s affairs (e.g. as to the calling of meetings
Re Harmer [1959] 1 WLR 62
McGuiness v Bremner Plc (1988) 4 BCC 161
Re Macom GmbH [2021] EWHC 1661
In a suitable case relief may take the form of an order requiring the perpetrators to pay the company damages in respect of losses suffered but it is unclear whether the court can order the perpetrator to pay the victim damages directly
The Brightview 2004] BCC 542
Re Chime Corp Ltd [2004] HKFCA 8
Re LehmanBrown Ltd [2013] HKEC 357
Re Last Lion Holdings Ltd [2018] EWHC 2347
It is doubtful whether the court has power to order a winding up of the company under section 994 Companies Act 2006
Re Full Cup International Trading Ltd [1995] BCC 682
Hawkers v Cuddy [2008] BCC 390 & [2010] BCC 597
Court even has power to order a division of the company’s assets though such an order may involve significant issues in practice (e.g. as regards creditors and third parties)
Bhullar v Bhullar (unreported 10 May 2002)
Court may order an account of profits including and account as against a third party joined to the proceedings for this purpose
Clark v Cutland [2004] 1 WLR 783
Anderson v Hogg [ 2002] S.C. 190
Bhullar v Bhullar (unreported) 10 May 2002
Gamlestaden v Baltic Partners [2007] Bus LR 1521
Often relief given by ordering the respondent to buy out the petitioner at a ‘fair value’ with the price fixed by court in light of expert valuation evidence
Re Bird Precision Bellows Ltd [1986] Ch 658
Re London School Of Economics Ltd [1986] Ch 211
Re D.R. Chemicals Ltd [1989] 5 BCC 39
Re Nuneaton Borough AFC Ltd [1989] 5 BCC 792
Re Nuneaton Borough AFC Ltd (No.2) [1991] BCC 44
Re Elgindata [1991] BCLC 959
Re Regional Airpots Ltd [1999] 2 BCLC 30
Grace v Biagioli [2005] EWCA Civ 1222
Sethi v Patel [2010] EWHC 1830
Shah v Shah [2011] EWHC 1902
Kohli v Lit [2013] EWCA Civ 667
Re Sunrise Radio [2014] 1 BCLC 427
CF Booth Ltd [2017] EWHC 457
Re TPD Investments Limited [2017] EWHC 657
Ashdown v Griffin [2017] EWHC 2601
VB Football Assets v Blackpool Football Club (Properties) Limited [2017] EWHC 2767
Re Edwardian Group Ltd [2018] EWHC 1715
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Re ICamera Ltd [2021] EWHC 1762
Overman v Collins [2021] EWHC 2298
Smith v Smith [2022] EWHC 1035
In cases of relatively modest unfair prejudice a buyout order may be considered disproportionate
VB Football Assets v Blackpool Football Club (Properties) Ltd [2017] EWHC 2767
Where a purchase order is made and the petitioner is also owed money by the company then usually the company is also ordered to repay the debt owed
Re a Company (No: 00789) [1991] BCLC 267
Re Ghyll Beck Driving Range [1993] BCLC 1126
R & H Electric Ltd v Hayden Bill Electrical Ltd [1995] BCC 958
Gamlestaden v Baltic Partners [2007] BCC 272
Reliable expert evidence as to value provided by a jointly instructed expert or unchallenged reliable expert evidence provided by an expert instructed by only one party is likely to be accepted by the court
Coopers Payen Limited v Southampton Container Terminal Ltd [2004] 1 Lloyds Rep 331
Ashdown v Griffin [2017] EWHC 2601
In an appropriate case the court may make an order permitting the petitioner to purchase the respondent’s shareholding
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
Lantsbury v Hauser [2010] EWHC 390
Thomas v Dawson [2015] EWCA Civ 706
Godchild v Taylor [2018] EWHC 2946
Ordinarily a court is unlikely to order a majority shareholder to cede control to a minority shareholder but there is no universal rule preventing the court from making an order that permits a minority shareholder from purchasing a majority shareholder’s interest it that is fair and appropriate on the facts of the particular case
Re Bird Precision Bellows [1986] Ch 658
Re a Company (No: 003843 of 1986) [1987] 3 BCC 624
Re a Company (No: 006834 of 1988) [1989] 5 BCC 218
Re Ringtower Holdings (1989) 5 BCC 82
Re Company (No. 00789 of 1987) [1990] BCLC 384
Re Baltic Real Estate (No.1) [1993] BCLC 498
Re A Company (No. 00836 of 1995) [1996] BCC 432
Re Brenfield Squash Rackets Club Ltd [1996] 2 BCLC 184
Nuneaton Borough AFC Ltd [1989] 5 BCC 792
Oak Investment Partners xii Ltd Partnership v Martin Boughtwood and others [2009] EWHC 176 and [2010] EWCA Civ 23
Apex Global Management Ltd v FI Call Ltd [2013] EWHC 1652
Gray v Braid Group Holdings Ltd [2017] SC 409
Goodchild v Taylor [2018] EWHC 2946
McMonagle v Harvey [2021] EWHC 1374
In an appropriate case the court may also order a non-party’s shares to be purchased
Re Abbington Hotel Ltd [2011] EWHC 635
In considering whether to make a purchase order and the terms of the order itself the court might be prepared to consider the hardship that such an order might cause to a respondent
Re Company (No. 002612 of 1984) [1986] 2 BCC
But impecuniosity of the proposed purchaser may be considered irrelevant
Re Company (No. 002612 of 1984) [1986] 2 BCC
Re Cumana Ltd [1986] BCLC 430
Sethi v Patel [2010] EWHC 1830
Re TPD Investments Limited [2017] EWHC 657
An interim payment or payment on account can be ordered
Ferguson v Maclennan Salmon Co Ltd [1990] BCC 702
Re Clearspring Management [2003] EWHC 2516
Dalby v Bodilly [2004] EWCA 3078
In the matter of Annacott Holdings Ltd [2011] EWHC 3180
Buyout price to be ‘fair’
Re Bird Precision Bellows Ltd [1984] 1 Ch 419, [1986] Ch 658
Eurofinance v Parkinson [2001] BCC 551
Re Sunrise Radio Ltd [2009] EWHC 2893
Sethi v Patel [2010] EWHC 1830
In the matter of Annacott Holdings Ltd LTL 23/5/12
Chilukuri v RP Explorer Master Fund [2013] EWCA Civ 1307
Re Blue Index Ltd [2014] EWHC 2680
Re Addbins Ltd [2015] EWHC 3161
Birdi v (1) Specsavers Optical Group Ltd; (2) Singh; (3) Dartford Visionplus and (4) Dartford Specsavers Ltd [2015] EWHC 2870
Re C F Booth [2017] EWCA 457
Wann v Birkinshaw [2017] EWCA Civ 84
Re TPD Investments Limited [2017] EWHC 657
Edgar v Munro [2017] EWHC 1814
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715
Re AMT Coffee Ltd [2019] EWHC 46
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Smith v Smith [2022] EWHC 1035
“Fair value” is often measured by reference to “market value” subject to necessary adjustments to take account of unfairly prejudicial conduct
Wann v Birkinshaw [2017] EWCA Civ 84
Re TPD Investments Limited [2017] EWHC 657
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
“Market value” comprises price that would be agreed assuming a hypothetical willing (but not anxious of forced) seller and buyer
Holt v Holt [1990] 1 WLR 1250
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Generally and “earnings/income” basis of valuation is more appropriate where the business of the company comprises a going concern
Re Bird Precision Bellows [1984] Ch 419
Buckingham v Frances [1986] 2 All ER 738
CVC v Demarco Almeida [2002] BCC 684
Where an “earnings/income” basis of valuation is appropriate the value is likely to be assessed by the application of either an analysis of “future cash flows” (if available) and a notional required rate of return on capital invested or, more usually by forecasting “future annual maintainable profits” and applying an appropriate “multiple”
Gillatt v Sky Tevevision [2000] BCLC 103
Re Sunrise Radio [2014] 1 BCLC 427
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
“Future annual maintainable profits” are to be assessed from the perspective of a hypothetical purchaser. Moreover, the relevant question is what would that hypothetical purchaser assess those “future annual maintainable profits” to be
Re Sunrise Radio [2014] 1 BCLC 427
The appropriate “multiplier” is likely to be identified following reliance on information published by accountancy firms on prices achieved on sales of comparable unquoted (or sometimes even quoted) companies
Re Planet Organic [2000] BCC 610
In an appropriate case allowance may be made by selecting the appropriate “multiplier” for the potential for growth or the risk of contraction of a market if that has not already been taken into account when determining “future annual maintainable profits”
Re Bodaibo (1992) 10 ACLC 351
Any property, assets or funds that are surplus to the requirements of the business of the company will be added back to any “market value” determined by reference to an “earnings/income” basis
Re Scitec Group [2012] EWHC 661
Allowance may also have to be made for any specific liabilities that would be paid off on completion of the hypothetical sale
Wann v Birkinshaw [2017] EWCA Civ 84
It the business of the company is intrinsically dependent on an individual who might possibly leave the company in the future that risk should also be reflected in the market valuation of the company whether in the form of a reduced “multiplier” or and increase in the “required rate of return”
Re Eurofinance Group Ltd [2001] BCC 551
Vadori v AAV Plumbing 77 ACSR 616
Re Scitec Group [2012] EWHC 661
An “asset” based approach to valuation may be more appropriate if the company is not trading, comprises an investment vehicle or has profits that do not represent an economic return on capital invested
Dean v Price [1954] Ch 409
Shah v Shah [2012] WTLR 165
Where an “asset” based valuation is appropriate it still may not be appropriate to value the company on the basis of its ‘break up” value rather than its value as a whole
Shah v Shah [2012] WTLR 165
The court is expected to take a pro-active approach to the determination of share values and may, therefore, use its case management powers to give directions requiring early preparation of and/or exchange of expert evidence regarding value
North Holdings v Southern Tropics [1999] BCC 746
Re Clearsprings (Management) [2003] EWHC 2516
Valuation is very often the subject of expert evidence but experts will carry greater conviction if the expert has personal practical experience in buying and selling companies and is not just simply a professional expert witness
Re Sunrise Radio Ltd [2011] EWHC 3821
Court retains a wide power to disregard the views of expert valuers and to apply its own view of what is fair, reasonable and sensible in all the circumstances
Re Bird Precision Bellows [1986] Ch 658
Re Planet Organic Ltd [2000] BCC 610
In the case of a going concern the ”fair value” of the shares to be purchased should usually be valued on the date on which they are ordered to be purchased although the court has a discretion to order another date for valuation if “fairness” requires
Profinance Trust SA v Gladstone [2001] EWCA Civ 1031
Re C F Booth Ltd [2017] EWHC 457
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715
Re AMT Coffee Ltd [2019] EWHC 46
Re Dinglis Properties Ltd [2019] EWHC 3327
McMonagle v Harvey [2021] EWHC 1374
An earlier date for valuation may be considered appropriate if there is a significant deterioration in the fortunes of the company following or as a result of the purchaser’s conduct
Re Cumana Ltd [1986] BCLC 430
If the court determines that in a particular case the appropriate date for valuation of the petitioner’s shareholding should be a date earlier than the date of judgment it might possibly but not inevitably also order interest to be payable on that price from that earlier date depending on the cause of the delay in obtaining relief
Section 25 Senior Courts Act 1981
Pro finance Trust SA v Gladstone [2002] 1 WLR 1024
Re Clearsprings (Mangement) [2003] EWHC 2516
Re Southern Counties Fresh Foods Ltd [2010] EWHC 3334
Re Annacott Holdings Ltd [2012] EWHC 1662
Re Goldshine Development Ltd [2013] 5 HKLRD 318
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715 and [2019] EWHC 873
Once a valuation date has been determined the court is unlikely to order any adjustment to be made to the value as at that date or the valuation date itself in light of supervening events (eg. Covid-19 pandemic)
Joiner v George [2003] BCC 298
Re Blue Index [2014] EWHC 2680
Dinglis v Dinglis [2020] EWHC 1363
In absence of a market for the company’s shares the buyout price is to reflect ‘fair value’ in the context of a sale between the actual participants
Eurofinance v Parkinson [2001] BCC 551
If there is a “marriage value” in the combining of the shares of the vendor and the purchaser then the court may order that that “marriage Value” should be shared between the vendor and the purchaser
Re Eurofinance Group Ltd [2001] BCC 551
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715 and [2019] EWHC 873
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Basis of valuation should be ‘fair’ to all parties
CVC/Opportunity Equity Partners Ltd v Demario Almeida [2011] 2 BCLC 108
Re TPD Investments Limited [2017] EWHC 657
Share valuation is an art not a science
Joiner v George [2003] BCC 298
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
Valuations based simply on the application of valuation theory rather than based on or supported by verifiable evidence in the form of, comparators is likely to carry less weight and conviction with the court
Taylor v Cobham & Lifemarque Ltd [2009] EWHC 2650
Re Sunrise Radio [2011] EWHC 3821
Wann v Birkinshaw [2017] EWCA Civ 84
Once valuation has been attempted the court must always stand back and assess its view against the commercial reality and business common sense
Chilukuri v RP Explorer Master Fund [2013] EWCA Civ 1307
Buyout price to take account of reduction in share value as a consequence of unfairly prejudicial conduct
Re D.R. Chemicals Ltd [1989] 5 BCC 39
Sethi v Patel [2010] EWHC 1830
Kohl v Lit [2013] EWCA Civ 667
Re Blue Index Ltd [2014] EWHC 2480
Re C F Booth Ltd [2017] EWHC 457
Evidence of what transpired after the relevant date of valuation may be considered
Edgar v Munro [2017] EWHC 1814
Once a “proportional” value has been identified a “discount” or, indeed, a “premium” may need to be applied to that “proportional” value in order to identify the “fair value”
CVC Demarco Almeida [2002] BCC 684
A “discount” to the “proportional” value may be appropriate where the shareholding was acquired purely as an investment particularly where the shareholding was initially acquired at a “discount” reflective of the minority status of the shareholding in question
Re Company (No. 007623 of 1984) [1986] BCLC 362
Re DR Chemicals Ltd (1989) 5 BCC 39
Re Macro (Ipswich) Ltd [1994] 2 BCLC 354
Re Planet Organic [2000] BCC 610
In order to identify the “fair value” an adjustment will generally be required to the “market value” to reflect the consequences of any unfairly prejudicial conduct that is established (unless the unfairly prejudicial conduct has no tangible effect of the value of the shareholding)
Scottish Wholesale Co-operative Society v Meyer [1959] AC 324
Lloyd v Casey [2002] 1 BCLC 454
Re Annacott Holdings Ltd [2012] EWCA Civ 998
cf Re Home & Office Fire Extinguishers Ltd [2012] EWHC 917
Historically, in “quasi partnership” cases there was generally no discount applied to reflect the minority status of the petitioner’s shareholding whereas in non ‘quasi partnership’ cases there were conflicting authorities as to whether a discount should be applied. The more modern approach seems to be that in all cases the price ordered to be paid should be “fair”. In practice this seems generally to mean that no discount is applied whether the company is in the nature of a “quasi partnership” or not unless some specific feature of the case justifies application of a discount to determine the ‘fair value’ of the shareholding (e.g. where the minority shareholding was gifted/acquired at a discount)
Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
Re Bird Precision Bellows Ltd [1984] Ch 658
Re D.R. Chemicals Ltd [1989] 5 BCC 39
Re a Company (No: 005134 of 1986) [1989] BCLC 383
Re Company (No. 00789 of 1987) [1990] BCLC 384
Verdi v Abbey Leisure [1990] BCLC 342
Howie v Crawford [1990] BCC 330
Re Elgindata Ltd [1991] BCLC 959
Ex parte Holden [1991] BCC 241
Re Ghyll Beck Driving Range [1993] BCLC 1126
Quintana v Essex Hinge Co Ltd [1997] BCC 53
Re Planet Organic Ltd [2000] 1 BCLC 366
CVC Opportunity Equity Partners Ltd v Demarco Almeida [2002] 2 BCLC 108
Phoenix Office Supplies Ltd v Larvin [2002] EWCA Civ 1740
Re Jayflex Construction Ltd [2003] EWHC 2008
Strahan v Wilcock [2006] EWCA Civ 13
Re Campbell Irvine (Holdings) Ltd (No.2) [2006] EWHC 583
Irvine v Irvine (No.2) [2007] 1 BCLC 445
Re McCarthy Surfacing Ltd [2008] EWHC 2279
Re Sunrise Radio Ltd [2010] I BCLC 367
Croly v Good [2010] EWHC 1
In the matter of Home & Office Fire Extinguishers Ltd [2012] EWHC 9
Re Blue Index Ltd [2014] EWHC 2680
Re Addbins Ltd [2015] EWHC 3161
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715
Re Edwardian Group Ltd [2018] EWHC 1715
Re Lloyds Autobody Ringway Ltd [2018] EWHC 2336
Re AMT Coffee Ltd [2019] EWHC 46
Re Sprintroom Ltd [2019] EWCA Civ 93
Dinglis v Dinglis [2019] EWHC1664
Re Scientific Management Associates [2019] NSWSC 1643
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
McMonagle v Harvey [2021] EWHC 1374
Smith v Smith [2022] EWHC 1035
It may be inappropriate to apply a “discount” to reflect the minority status of the relevant shareholding if the facts of the matter are such that that shareholder is likely to have been entitled to an order for the winding up of the company on the “just and equitable” basis
Dinglis v Dinglis [2019] EWHC 1664
A “discount” may be appropriate in valuing a minority interest in a non-quasi partnership case if the vendor himself acquired his interest at a discount and vice versa
Re Blue Index [2014] EWHC 2680
Both in quasi-partnership and non-quasipartnership cases, identification of the “fair” value may involve applying a premium to the proportionate value (e.g. where the purchaser acquires a 25%, 50% or 75% interest in the company)
Re Eurofinance Group Ltd [2001] BCC 551
Re Sunrise Radio [2009] EWHC 2893
Estera Trust (Jersey) Limited v Singh [2018] EWHC 1715 and [2019] EWHC 873
The shares should be valued on the basis of the value of them to the person ordered to purchase them rather than their value to an independent third party
Cherry Tree Investments Ltd v Landmain [2012] EWCA Civ 33
Re Eurofinance Group Ltd [2001] BCC 551
Re Edwardian Group Ltd [2018] EWHC 1715
Re Dinglis Properties Ltd [2019] 3327
The order may allow the purchaser a period of time (and even an opportunity to apply for an extension of that period if required) within which to purchase the petitioner’s shareholding (e.g. to raise required funding for the purchase, or in cases where real hardship might result)
Re TPD Investments Limited [2017] EWHC 657
Estera Trust (Jersey) Limited v Singh [2019] EWHC 873
Re Gallium Funds Solutions Group Ltd [2021] EWHC 765
If payment for the shares is to be delayed then interest may be awarded on the price that is to be paid
Estera Trust (Jersey) Limited v Singh [2019] EWHC 873
If the evidence available to the court indicates that the petitioner’s shares are worthless the court may direct that the only relief available to the petitioner is an order that he should be permitted but not obliged to transfer his shares to the respondent for a nil consideration
Ashdown v Griffin [2017] EWHC 2601
Generally, notional sale costs should be taken into account in determining the “fair value” of the shareholding
Atwood v Maidment [2013] EWCA Civ 119
Wann v Birkinshaw [2017] EWCA Civ 84
Re TPD Investments Limited [2017] EWHC 657
Ordinarily the court will not grant the petitioner an option to purchase the respondent’s shareholding in the event that the respondent fails to purchase the petitioner’s shareholding in accordance with the court’s order
Re TPD Investments Limited [2017] EWHC 657
If the articles of association or a relevant shareholders’ agreement provide a method of “fair” or “market” valuation for certain purposes (e.g. in the event of the shareholder ceasing to be employed by the company) then historically there was a tendency for the courts to apply that agreed methodology though more recently such agreed methodologies are not considered binding unless the precise circumstances contemplated by the articles or agreement actually pertain
Re Company (No. 004377 of 1986) [1987] 1 WLR 102
Virility v Abbey Leisure [1990] BCLC 342
Re Company (No. 00330 of 1991) [1991] BCC 241
(cf Isaacs v Belfield Furnishings Ltd [2006] 2 BCLC 705
Re LCM Wealth Management Ltd [2013] EWHC 3957
Gray v Braid Group (Holdings) [2016] CSIH 68
When the petition may be struck out
Petition may be struck out (ie under CPR Pt 3.4) or dismissed summarily (ie under CPR Pt 24) if no real prospect of success or it is plain and obvious that the relief claimed will not be granted
Civil Procedure Rules Part 3 and Part 24 apply
Re Unisoft Ltd (No. 3) [1994] 1 BCLC 609
Re Legal Costs Negotiators Ltd [1999] BCLC 171
Evans v Eurokey Properties Ltd [2020] EWHC 1047
King v Kings Solutions Group Ltd [2020] EWHC 2861
Loveridge v Loveridge [2021] EWCA Civ 1697
Zedra Trust v The Hut Group [2021] EWCA Civ 904 and [2023] EWHC 65
Before the trial of the matter the court should exercise careful control over the matters which a party can raise in an unfair prejudice petition
Re Unisoft Ltd (No. 3) [1994] 1 BCLC 609
King v Kings Solutions Group Ltd [2020] EWHC 2861
Re Coroin Ltd (No. 2) [2013] EWCA Civ 781
Graham v Every [2015] 1 BCLC 41
It may amount to an abuse of process for a person to issue a petition in circumstance where there has been unfair prejudice if the articles of association or shareholders’ agreement contains a mechanism for offering his shares to the other shareholders at a fair price and for calculating the fair price unless that person has first utilised that procedure
Re a Company (No: 07623 of 1984) [1986] 2 BCC 99,191
Re a Company (No: 004377 of 1986) [1987] 1 WLR 102
Re Castleburn Ltd [1989] 5 BCC 652
Re BenfieldGreig Group Plc [2002] BCC 256
Re Belfields Furnishings Ltd [2006] EWHC 183
No abuse if impropriety affects value or valuation
Re a Company (No: 006834 of 1988) [1989] 5 BCC 218
North Holdings Ltd v Southern Tropics Ltd [1999] BCC 746
cf Fuller v Syracuse Ltd [2001] BCC 806
Re C F Booth [2017] EWHC 457
No abuse if mechanism for fixing price is not fair
Re a Company (No: 004377 of 1986) [1986] 1 WLR 102
Re Abbey Leisure Ltd [1990] BCC 60
Re a Company (No: 00330 of 1991) [1991] BCC 241
Re Copeland & Craddock Ltd [1997] BCC 294
O’Neill v Phillips [1999] 1 WLR 1092
North Holdings Ltd v Southern Tropics Ltd [1999] BCC 746
Re C F Booth Ltd [2017] EWHC 457
Issue of petition may amount to an abuse of process even though there has been unfair prejudice if it is clear that the petitioner will have to sell his shares to the respondent and the petitioner has unreasonably rejected a reasonable offer to purchase his shares at a fair price
Re a Company (No: 003843 of 1986) [1987] 3 BCC 624
Re a Company (No: 003096 of 1987) [1988] 4 BCC 80
O’Neill v Phillips [1999] 1 WLR 1092
North Holdings Ltd v Southern Tropics Ltd [1999] BCC 746
West v Blanchet [2000] 1 BCLC 795
Apcar v Aftab [2001] EWCA Civ 859
Wyatt v Frank Wyatt & Son Ltd [2003] EWHC 520
Isaacs v Belfield Furnishings Ltd [2006] All ER (D) 216
Hawks v Cuddy [2007] EWHC 2999 and [2009] EWHC Civ 291
Re Sprintroom Limited [2019] EWCA Civ 932
Cheyne v Alfred Cheyne Engineering Limited [2021] CSOH 17
Strike out may be available where it is “clear and obvious” that relief will not be granted against the offering party beyond that which he has offered
Bankside Hotels [2018] BCC 617
Re Sprintroom Limited [2019] EWCA Civ 932
Cheyne v Alfred Cheyne Engineering Limited [2021] CSOH 17
But that may not be the case where there is uncertainty as to who should buy out whom, or the offer to purchase does not comprise one that provides all the advantages that the petitioner might reasonably expect to achieve from issuing a petition
Apcar v Aftab [2001] EWCA Civ 859
Harbourne Nominees Ltd v Karvaski [2011] EWHC 2214
Cheyne v Alfred Cheyne Engineering Limited [2021] CSOH 17
There is conflicting authority as to whether to be a ‘fair offer’ it must be unconditional and capable of a binding acceptance
O’Neill v Phillips [1999] 1 WLR 1092
Re Flex Associates Ltd [2009] EWHC 3690
Shepherd v Williamson [2010] EWHC 2375
(c.f. Re Sprintroom Ltd [2019] EWCA Civ 932)
What constitutes a “fair offer”
O’Neill v Phillips [1999] 1 WLR 1092
Apcar v Aftab [2001] EWCA Civ 859
Harbourne Road Nominees Ltd v Karvaski [2011] EWHC 2214
Cheyne v Alfred Cheyne Engineering Limited [2021] CSOH 17
An offer will only be considered a “fair offer” if it provides for a fair date for the valuation to be made at
Re London School of Economics Ltd [1986] Ch 211
CVC Opportunity Equity Partners Ltd v Demarco [2002] BCLC 108
Re Annacott Holdings Limited [2013] EWCA Civ 119
Cheyne v Alfred Cheyne Engineering Limited [2021] CSOH 17
Issues as to alleged wrongful conduct may be reserved to the court and dealt with as preliminary issues or exceptionally left to the independent valuer’s determination
Re Clearsprings (Management) Ltd [2003] EWHC 25
It may amount to an abuse of process if the actions complained of amount only to breaches of duties owed by directors such that the appropriate method of complaint would be by means of a derivative action rather than by an unfair prejudice petition
Re Chime Corp Ltd [2004] 3 HKLR 922
cf Re Brightview Ltd [2004] BCC 542
Petition may be struck out where it relates to matters taking place after the petitioner has sold his beneficial interest in the company’s shares
Re FSC Andrews Ltd [2015] EWHC 4042
No abuse if valuer is not independent
Re Boswell & Co (Steels) Ltd [1989] 5 BCC 145
Re BenfieldGreg Group Plc [2002] BCC 256
Solicitors who fail to advise of the need to make a fair offer to avoid a finding of unfairly prejudicial conduct may be held negligent
Magical Marketing Ltd v Ware & Kay [2013] EWHC 59
Petition may also be struck out if it comprises an attempt to raise issues the same as or similar to those raised in an earlier petition which the petitioner has failed to prosecute
Treetop Investment LLC v Falmouth House Freehold Co Ltd [2017] EWHC 674
Uncertain whether petition will be stayed in face of an agreement to arbitrate
Re Vocam Europe Plc [1998] BCC 396
Eurotunnel v Balfour Beatty [1992] 2 Lloyd’s Rep 7
Sheldon v D F Keane (unreported) 21 March 2003
Exeter City AFC Ltd v Football Conference Ltd [2005] 1 BCLC 238
