s.994
Re London School of Economics - the petitioner does not need to come with clean hands. A petitioner's own misconduct is not in itself a reason for rejecting the petition.
Re a Company - it does not give a former member standing to a petition.
Re Quickdome Ltd - a company had been bougt off the shelf. The original members had executed transfers of their shares without naming the transferees. The purchaser never registered any share transfers and when one of them petitioned under s 994 she could not prove any agreement that she should be a shareholder. It was held that the dispute over who should be the shareholder has to be settled before a petition under s949 could be presented.
No limitation period applies to a petition for the relief of unfairly prejudice. But in Re Grandactual Ltd, the court did not grant relief because the events has happened 9 years ago.
Cost of proceedings
The litigation cost is high because of the length, unpredictability of management, lawyers need to deal with the whole history of the company in detail, so as to build up an overall picture of the prejudice, and this is counted by equally extensive evidence and cross-examiniation from the other side.
Re Frediana Music Co Ltd - occupied 165 days of court time.
Re Elgindata Ltd - cost easily exceeds the value of assets being fought over
Interest of members
- Gamelestadan Fastigheter AB v Baltic Partners - company was a joint venture. A member give a loan to the company, to provide it with working capital, is an interest of the member which may be the subject of an unfair prejudice petition.
- Re Unisoft Group - dispute among members about dealings in their shares cannot involve unfairly prejudicial conduct of the company
- Re Sam Weller and Sons ltd - member may have different interests even if their rights as members (as defined in the articles) are the same.
Unfairly prejudicial
Re Noble and Sons (Clothing) , Re Elgindata - s994 cannot be limited to cases in which the value of members' shareholdings has been seriously diminished or jeopardised.
O'Neill v Phillips -
Re Carrington Viyella plc - an infrigement of a member's right under the articles may not in itself be unfairly prejudicial. s994 was not intended to cover trivial or technical infringements of the article
Unwritten agreements
Re Elgindata Ltd - even in a private company, if the petitioner became a member of the company by virtue of a complex set of formal written agreements, it will be assumed that the petitioner's rights and expectations are defined exhaustively in those agreements
The type of unwritten agreements that the court will usually recognise is the agreement that the petitioner will not be removed from his or her directorship despite the provision of CA 2006l s 168.
O'Neill v Phillips - legitimate expectation.
Re Carrington Viyella plc - the court will only take into account understandings between the members, not a belief by some members that other will be externally constrained to act in a partcular way (pls read fact, dont understand)
Fisher v Cadman - members of a quasi-partnership may agree or acquiesce in, operation of the company in a way that does not comply with the rquirements of its article of association.
Re J E Cade and Son Ltd - the court will only enforce what is actually agreed, they will not try to create a better agreement - the court will not supplment them with further rights and obligations to accord with its own concept of fairness.
Re a Company - a member cannot complain about conduct in accordance with the constitution, unless they can show that there is bad faith
Examples of conduct
Re London School of Economics -
Exclusion from a quasi-partnership company
Re Ghyll Beck Driving Range Ltd - dismisssal of a member of a quasi-partnership company from a directorship is capable of being unfairly prejudicial conduct
Woolwich v Milne - but dismissal would not be unfair if it was caused by the petitioner's own misconduct
Grace v Biagioli - a breach of the mutual understanding is not unfair if it is to protect the company from conduct which is detrimental to the company or its assets
Mears v R Mears and Co - a director who is dismissed is not unfairly prejudiced by more lenient treatment of a fellow director who is equally culpable.
O'Neill v Phillips - the petitioner has lost confidence in the only other shareholder and director. But the action by the other director is not unfair, so no ground for relief.
Re Baulmer (UK) Ltd - the petitioner's loss of confidence in his fellow director was caused by that director's breach of fiduciary duty and underhand behaviour, which was unfairly prejudicial, so that relief could be ordered.
Is conduct unfairly prejudiced only if it breaches an agreement?
Orders the court may make
s 996 (a) - (e): regulate affairs, refrain, civil proceedings, not to alter articles, buy-out
Re J E Cade and Sons - the petitioner must specify the relief sought
Hawkes v Cuddy - court is not limited to giving the relief asked for by the petitioner
Re Little Olympian Each ways Ltd - the court has jurisdiction to make orders against persons who are not members of the company or who are not involved in the conduct complained
Purchase share orders - court will not order any person other than the company or its member to buy shares (Re Lilttle Olympian Each-ways Ltd)
An offer is not reasonable if the offeror cannot finance it (West v Blanchet (??))
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