“… determining whether the Company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of the Petitioner as a member of the Company and/or an actual or proposed act or omission of the Company (including an act or omission on its behalf) is or would be so prejudicial, but, if so, not determining the appropriate relief, if any, to be granted to the Petitioner (which issue shall only be determined following the Liability Trial).”
“If the Petitioner is successful at the Liability Trial, the issue of relief shall be determined at a separate hearing, directions for which will be given at the handing down of judgment following the Liability Trial.”
“A member of a company may apply to the court by petition for an order under this Part on the ground– (a) that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.”
“… prejudice is not limited to cases where there is an actual, or potential diminution in the value of the petitioner’s shareholding. Rather, it may extend to a breakdown in the relationship of trust and confidence amongst shareholders as a result of the respondent’s conduct of the company’s affairs and failures of good administration…Where a petitioner has a right to be consulted and involved in the management of the company as a condition of his investment, he may not suffer any financial loss if he is excluded from such consultation and involvement; but he may nevertheless suffer unfair prejudice because he is being denied the full benefit of his investment in the company.”
“…To my mind it was manifestly conduct on [the respondent’s] part which was unfairly prejudicial to [the petitioners’] interests, and that notwithstanding the fact that, as a result of pressure arising from these proceedings, the accounts of the company were retrospectively adjusted to counteract the benefit that [the respondent] had improperly received”
“[Parliament] chose this concept to free the court from technical considerations of legal right and to confer a wide power to do what appeared just and equitable. But this does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given by the courts must be based upon rational principles… Although fairness is a notion which can be applied to all kinds of activities, its content will depend upon the context in which it is being used. Conduct which is perfectly fair between competing businessmen may not be fair between members of a family… In the case of section 459 [the predecessor to s.994], the background has the following two features. First, a company is an association of persons for an economic purpose, usually entered into with legal advice and some degree of formality. The terms of the association are contained in the articles of association and sometimes in collateral agreements between the shareholders. Thus the manner in which the affairs of the company may be conducted is closely regulated by rules to which the shareholders have agreed. Secondly, company law has developed seamlessly from the law of partnership, which was treated by equity… as a contract of good faith. One of the traditional roles of equity, as a separate jurisdiction, was to restrain the exercise of strict legal rights in certain relationships in which it considered that this would be contrary to good faith. These principles have, with appropriate modification, been carried over into company law. The first of these two features leads to the conclusion that a member of a company will not ordinarily be entitled to complain of unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted. But the second leads to the conclusion that there will be cases in which equitable considerations make it unfair for those conducting the affairs of the company to rely upon their strict legal powers. Thus unfairness may consist in a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith.”
“… In addition, the terms on which the parties agreed to do business together include by implication an agreement that any party who is a director will perform his duties as a director. Primary among these duties are the seven duties now codified in ss.171 to 177 of theCompanies Act 2006 . Under these duties, a director must act in the way which he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. There is also the well-known duty to avoid conflicts of interest and duty: a director must avoid a situation in which he has an interest which conflicts with that of the company. Six out of seven of these duties are fiduciary duties, that is, duties imposed by law on persons who exercise powers for the benefit of others. Non-compliance by the respondent shareholders with their duties will generally indicate that unfair prejudice has occurred.”
“… the content of fairness is contextual. It is also flexible and open-textured. It is capable of application to a large number of different situations…”
“… The foundation of it all lies in the words " just and equitable " and, if there is any respect in which some of the cases may be open to criticism, it is that the courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The "just and equitable" provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be “sleeping” members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.”
“… The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that, if broken, the conclusion, must be that the association must be dissolved [that being a winding-up case]. And the principles on which he may do so are those worked out by the courts in partnership cases where there has been exclusion from management.”
“Furthermore it is now more important you allow and not keep blocking my access so I can study the company situation which is my right and is only now practicle [sic] from the registered office. I urge you to adhere to your obligations.”
“… There will be no information given across other than accounts. I want you and Joe out of my hair…”
“Jim and I discussed taking dividends from the Company at some point in the mid-2000s. We did not rule out taking dividends, at an appropriate time in the future; but we agreed that, for the time being, we would leave money in the Company, to allow it to grow. For a similar reason, we took no salary from the Company either. I was happy with this arrangement, at this stage, because Jim and I were each taking a salary from Mixit and benefitting from the Company’s growth.”
“All business shall be deemed special that is transacted at an extraordinary general meeting, and also all that is transacted at an annual general meeting, with the exception of declaring a dividend, the consideration of the accounts, balance sheets, and the reports of the directors and auditors, the election of directors in the place of those retiring and the appointment of, and the fixing of the remuneration of, the auditors.”
“114. The company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the directors.” “115. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company.”
“123 The directors shall cause proper books of account to be kept with respect to:— (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place; (b) all sales and purchases of goods by the company ; and (c) the assets and liabilities of the company. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the company's affairs and to explain its transactions.” “124. The books of account shall be kept at the registered office of the company, or, subject to section 147 (3) of the Act, at such other place or places as the directors think fit, and shall always be open to the inspection of the directors.”
“A fiduciary, as steward of his principal’s property or affairs, to whom he owes a duty of loyalty, has the responsibility to account for and explain what has happened in relation to them (and, if necessary, the principal is entitled to ask for a formal account without the need to show any breach of duty, as Lord Millett NPJ explained in Libertarian at para 167). The decision of the majority of this court in Rukhadze (above) that the equitable obligation to account for profits is a duty and not just a remedy is consistent with this responsibility. The principle in In re Brogden, Carruthers and Libertarian that the fiduciary has the onus of explaining what has happened and establishing that no loss has in fact occurred has developed in recognition of this fundamental aspect of the fiduciary relationship. It also recognises that there is typically information asymmetry as between fiduciary and principal, with the fiduciary being in possession of all the relevant facts.”
“… it was incumbent upon the Sheikh, if he wished to rely upon the 2017 Asset and Liability Transfer in diminution of the loss apparently caused to the Company by his misappropriation of the 891K shares, to prove that he played no significant part in, and derived no significant benefit – at the expense of the Company – from that transfer. This he made no attempt to do, either at trial or in the Court of Appeal…”
“In my judgment, any suggestion that the Petitions should be dismissed on similar grounds to those in O’Neill v Phillips [i.e. because there has been an offer to buy the petitioner’s shares] falls at the first hurdle: there is no evidence of any firm commitment by Tudor to buy Joy’s shares and no agreement has been reached over the mechanism to be used to value them. The offer discussed by Lord Hoffmann in O’Neill v Phillips at 1106D had been made pursuant to an undertaking to the court in terms scheduled to a consent order. It was to purchase the shares at a price to be agreed or in default fixed by a chartered accountant as valuer. There is no similar binding offer in this case; rather, it has been repeatedly emphasised on behalf of Tudor that his offer to purchase is subject to contract and that certain points remain to be worked out…”