"The primary remedy sought by the Petitioners is for orders requiring the Respondents or any one or more of them to purchase their shares at a fair value without a discount and on the basis or on the assumption that the company has its assets restored to it and/or is compensated for the breaches of duty and other matters pleaded herein."
"Alternatively, the unfairly prejudicial conduct of the Respondents, excluding the Company and SRL, entitles the Petitioners to damages/compensation. In that event, the Petitioners claim the above losses as damages and/or equitable compensation in the same sum or any other sum as determined by the court."
"The company has suffered loss and damage by reason of the foregoing, and the Petitioners have likewise reflectively suffered loss in their capacity as shareholders as well as parties to the JVS agreement."
"The Petitioners further seek on behalf of the Company an account of profits against each of Mr Mangat, WGH and Queslett in respect of each of their interests in the Birmingham development, including without limitation in respect of …"
"It is asserted that by reason of the facts and matters set out above, Mr Mangat, Mr Dhillon and Guardian have and are conducting the affairs of the company in a manner which is unfairly prejudicial to the interests of the company's members including the Petitioners. Furthermore, each of WGH and Queslett have been involved in, assisted or otherwise knowingly benefitted from the facts and matters which have constituted the unfair prejudice, including and in particular in respect of the misappropriation of monies used for the purposes of the Birmingham development."
"1. That the Respondents or any of them do purchase the Petitioners' shares in the Company at a fair value to be determined by this court or an independent valuer without discount and after the Respondents have returned to the Company the sums, property and assets of the Company that have been taken, diverted or appropriated as above pleaded or have paid damages/compensation to the Company or accounted to the Company for all profits made by them in breach of duty or which they have received or valued on the basis that it is deemed that the value of such claims is treated as an asset of the company, ignoring whether or not it has or will be received or recovered by the company. 2. Alternatively that the Respondents do pay damages and/or equitable compensation in the sum of at least£3,220,000 or such other sums as the court may determine. 3. An account of profits in favour of the Company as aforesaid. 4. All accounts, inquiries, directions and other relief as necessary."
"10. To the extent necessary, permission to bring a derivative claim on behalf of the Company. In the event that any heads of relief not recoverable by the Petitioners in their own right, or the court determines that the same should be properly recovered by the Company."
"shall file and serve their amended Points of Defence"
"… a diminution in the value of a shareholding or in distributions to shareholders, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, is not in the eyes of the law damage which is separate and distinct from the damage suffered by the company, and is therefore not recoverable. Where there is no recoverable loss, it follows that the shareholder cannot bring a claim, whether or not the company's cause of action is pursued. The decision had no application to losses suffered by a shareholder which were distinct from the company's loss or to situations where the company had no cause of action."
"The shareholder does not suffer any personal loss. His only 'loss' is through the company, in the diminution in the value of the net assets of the company ... The plaintiff's shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property."
"… where a company suffers actionable loss, and that loss results in a fall in the value of its shares (or in its distributions), the fall in share value (or in distributions) is not a loss which the law recognises as being separate and distinct from the loss sustained by the company. It is for that reason that it does not give rise to an independent claim to damages on the part of the shareholders."
"Summarising the discussion to this point, it is necessary to distinguish between (1) cases where claims are brought by a shareholder in respect of loss which he has suffered in that capacity, in the form of a diminution in share value or in distributions, which is the consequence of loss sustained by the company, in respect of which the company has a cause of action against the same wrongdoer, and (2) cases where claims are brought, whether by a shareholder or by anyone else, in respect of loss which does not fall within that description, but where the company has a right of action in respect of substantially the same loss."
"… As a shareholder (and unlike a creditor or an employee), he does, however, have a variety of other rights which may be relevant in a context of this kind, including the right to bring a derivative claim to enforce the company's rights if the relevant conditions are met, and the right to seek relief in respect of unfairly prejudicial conduct of the company's affairs."
"…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 ... 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."
"As was made clear in those cases, the terms on which a member agreed that the affairs of a company should be conducted will usually be found in the articles of association, any shareholders' agreements, the fiduciary (now statutory) duties of directors and the principles of law which limit the power of a majority of members to bind the minority by resolutions in general meeting. There may be cases, such as those discussed by Lord Wilberforce in Re Westbourne Galleries Ltd[1973] AC 360 at p.379, where the particular circumstances of the case, normally involving the personal relations between the members of a small company, may subject the exercise of legal powers to equitable restrictions going beyond the articles, agreements and rules of law. However, such cases are not the norm. As Lord Wilberforce said, the company 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 range of relief available to the court where unfair prejudice is established is very broadly stated in section 996, as confirmed by the authorities which, as Vos J (as he then was) said in Apex Global Management ltd v FI Call Ltd[2013] EWHC 1652 (Ch) ,[2014] BCC 286 , 'all speak with one voice. They show that ss.994-996 provide a wide and flexible remedy…'. Section 996(1) provides that the court 'may make such order as it thinks fit for giving relief in respect of the matters complained of' and, expressly without prejudice to the generality of that power, section 996(2) specifies in five paragraphs orders that the court may make, including regulating the conduct of the company's affairs in the future, requiring the company to alter its articles, requiring the company to do particular acts or to refrain from doing such acts, and providing for the purchase of any member's shares by other members or by the company. Whether any order should be made, and if so what order, is left to the discretion of the court."
"In the course of oral argument, it emerged that there are two substantial elements to the complaint: first, that the taking of the£5.24 million loan represented a breach of the terms of the Investment Agreement, and secondly that, after May 2002, no proper efforts were made to refinance the loan on less precarious terms."
"In my judgment, these allegations are hopeless. As a matter of legal analysis, it may well be true to say that the source of the principal complaint may be traced to, and characterised as, a breach of contract under the Investment Agreement. It may also be true to say that the facts alleged in the Petition are capable of also amounting to pleadings of deceit or breach of fiduciary duty. However, the unfair prejudice which is pleaded in the Petition plainly involved acts and omissions of the company: Brightview took the£5.24 million loan, and then failed to refinance it. Those are self-evidently acts and omissions of the company which, if they are proved and if they are found to have been unfairly prejudicial, are capable of grounding a complaint under s.459."
"However, there is in my judgment ample material on which the trial judge may come to the conclusion that the matters pleaded in the petition, if proved, constitute unfairly prejudicial conduct for which the A Directors were sufficiently responsible to justify substantive relief being granted against them."
"… an illustration of a case where the court was prepared to countenance relief being granted against respondents who were not shareholders …"
"The Applicants said that the claim for damages is based solely on the alleged breaches of fiduciary duty by the A Directors; that the directors are not alleged to have acted in breach of any duty owed directly to the shareholders; that any duty which they breached was therefore owed only to Brightview; that Brightview was therefore the only proper claimant; and that any diminution in the value of the Barton Parties' shares as a result of any breach of duty was purely reflective of the loss (if any) suffered by the company. This became known as the 'reflective loss argument'."
"They do not purport to lay down any principle governing the exercise of the court's power under s.459."
"By contrast, the law reports are full of cases in which Petitioners have complained successfully under s.459 about unfairly prejudicial conduct which has involved a majority shareholder stripping out the company's assets. Indeed, the Director Applicants cited one such case themselves, albeit for a different proposition, namely Re Little Olympian Each-Ways[1994] 2 BCLC 420 ; Re a Company(No.005287 of 1985)[1986] BCLC 68 ;[1986] 1 WLR 281 is another example. In Re a Company (No. 005287 of 1985)[1986] BCLC 68 at 71;[1986] 1 WLR 281 , at 284D-H, Hoffmann J (as he then was) held in terms that a petition could properly be brought so as to recover for shareholders a loss that had been sustained by the company. In Saul D. Harrison & Son plc[1995] 1 BCLC 14 at 18c-d, the same judge (then in the Court of Appeal) made the point even more clearly, by saying that one of the purposes of s.459 was to outflank the rule in Foss v. Harbottle (1843) 2 Hare 461; 67 ER 189. If the reflective loss argument was well founded, it is difficult to see how these cases could have been decided as they were."
"Treating the matter as one of statutory interpretation, rather than authority, there is no justification for reading into s.459 a restriction to the effect that a Petitioner can only complain if the unfairly prejudicial conduct does not involve a breach by any directors of their duties to the company. Equally, as a matter of interpretation, there is no justification for imposing an absolute bar on the types of relief that the court might award at trial in relation to unfairly prejudicial conduct which happens also to involve a breach by directors of their duties to the company. Indeed, any such interpretation of s.459 would appear to run counter to its express wording, which refers to unfair prejudice 'to the interests of its members generally' …"
"Mr Ntzegkoutanis alleges in paragraph 26 of the petition that Mr Kimionis breached duties that he owed to the Company as a director in procuring or permitting the transfer of the Company's business and assets to Coinomi Cyprus and Coinomi BVI. In paragraph 30, Mr Ntzegkoutanis asserts that as a result of the misappropriations which he contends took place: '30.1 Coinomi Cyprus and Coinomi BVI are liable to the Company as knowing recipients in respect of such of its assets as they received and hold all such assets and their proceeds on constructive trust for the Company. 30.2 Further or alternatively, Coinomi Cyprus and Coinomi BVI dishonestly assisted Kimionis' breaches of fiduciary duty to the Company referred to in paragraph 26 above and are liable to the Company on that basis.'"
"The Petitioner therefore prays as follows: 32.1 for an order that Kimionis do sell his shares in the Company to the Petitioner, at a valuation reflecting the losses caused to the Company by his conduct; 32.2 for an order that the First, Third and Fourth Respondents [i.e. Mr Kimionis, Coinomi Cyprus and Coinomi BVI], as applicable, do account and/or pay damages to, and/or compensate the Company in respect of their gains and the Company's losses resulting from the conduct complained of in this Petition; 32.3 for declarations of constructive trust in favour of the Company in respect of such property in the hands of the First, Third and Fourth Respondents as properly belongs to the Company; 32.4 in the alternative and to the extent necessary, the Petitioner seeks authorisation to pursue such litigation on behalf of the Company as may be necessary to vindicate its interests and obtain compensation and/or other remedies pursuant to the conduct complained of in this Petition …"
"It is a rare and exceptional case which the court will permit to proceed by way of an unfair prejudice petition when it would otherwise be brought by way of a derivative claim, because to permit the case to proceed by way of an unfair prejudice petition subverts the regime (now the statutory regime) which imposes limitations on making derivative claims. In deciding whether the case before it is exceptional, the court will focus on the relief claimed and ought only to permit the case for that relief to proceed by way of an unfair prejudice petition if, at the earliest stage of the proceedings, the court is satisfied at least that that relief can be conveniently adjudicated on as part of the unfair prejudice petition proceedings. If the court is not so satisfied, to the extent of the relief in issue, the case will be an abuse of process and ought not to be permitted to proceed."
"One difficulty which the Judge saw with that contention [i.e. the absolute bar contention] was that it might be said that 'a Petitioner making a claim which could be pleaded as a derivative claim, makes it, in a case such as this, not relying on the company's cause of action but on their statutory right, given by s.994, to bring a petition for unfairly prejudicial conduct' …"
"More specifically, there was authority for the proposition that redress benefiting the company could potentially be granted on an unfair prejudice petition. Thus, in Lowe v Fahey[1996] 1 BCLC 262 at 268, Charles Aldous QC, sitting as a Deputy High Court Judge, declining to strike out such a petition, observed at 268 that 'where … the unfairly prejudicial conduct involves the diversion of company funds, a Petitioner is entitled as a matter of jurisdiction to seek an order under s 461 [i.e. a predecessor of section 996 of the 2006 Act] for payment to the company itself not only against members, former members or directors allegedly involved in the unlawful diversion, but also against third parties who have knowingly received or improperly assisted in the wrongful diversion'. In Clark v Cutland[2003] EWCA Civ 810 ,[2003] 3 All ER 733 ,[2004] 1 WLR 783 , His Honour Judge Norris QC (as he then was) had at first instance given judgment against a director in favour of the company in respect of money taken from it without authority in the sum of£1,150,753 in unfair prejudice proceedings: see paragraphs 2 and 3 of Arden LJ's judgment. Far from casting doubt on the legitimacy of that, the Court of Appeal went further, holding that the company was entitled to trace payments into the hands of the trustees of a pension fund to which some of the money had been paid. Moreover, Arden LJ expressed the 'provisional view' that, 'although the relief sought is claimed under section 461, it is sought for the benefit of the company and … it is, therefore, open to Mr Clark [i.e. the Petitioner] to seek an order against the company for payment to him of any costs incurred by him on this appeal' …"
"55. My own view is that the relevant legal principles can be summarised as follows as a matter of the law of England and Wales: i) The Court has power to grant relief in favour of the company on an unfair prejudice petition. The Hong Kong Court of Final Appeal said as much in Chime, and in Baltic Partners the Privy Council confirmed that 'an order for payment of damages to the company whose affairs have allegedly been conducted in an unfairly prejudicial manner can be sought and made in an unfair prejudice application'. Fi Call, Hut Group and Taylor Goodchild are to similar effect; ii) At least generally, the Court should not in unfair prejudice proceedings make an order for relief in favour of the company unless the order corresponds with an order to which the company would have been entitled had the relevant allegation been successfully prosecuted in an action by the company (or in a derivative action in the name of the company) (to adapt slightly a point which Lord Scott made in Chime); iii) It can potentially be an abuse of process for a Petitioner to claim relief in favour of the company by way of unfair prejudice petition. I cannot envisage any circumstances in which a petition claiming only such relief would be proper. The right course in such a case would surely be for the Petitioner to issue a claim form and seek permission to proceed with it pursuant to Part 11 of the 2006 Act. A petition could also be struck out as an abuse of process if, although it included a claim for relief which was available only in unfair prejudice proceedings (such as an order for the purchase of shares), it could be discerned that the Petitioner was not genuinely interested in obtaining such relief and was, instead, trying to bypass the filter for which Part 11 of the 2006 Act provides; iv) Where, on the other hand, an unfair prejudice petition seeks both relief in favour of the company and relief that would not be available in a pure derivative claim, and the Petitioner appears to be genuinely interested in obtaining the latter, I do not think that it would ordinarily be appropriate to strike out either the petition or any part of the relief sought. It is not difficult to conceive of a situation in which it would make sense for a Petitioner to include in an unfair prejudice petition a claim for, say, an order for a Respondent to buy or sell shares and an order for a payment to be made to the company on the basis of a breach of duty by a Respondent. In such a case, it would 'not seem … to be very convenient' 'from a practical point of view' (to echo Hoffmann J in Re a Company (No. 005287 of 1985) to insist that the claim for relief in favour of the company be the subject of a separate claim form. Even supposing that, on the particular facts, it would make more sense for the order in favour of the company to be pursued in a distinct derivative claim, it seems to me that it would rarely be right to deem the petition or any relief sought in it to be abusive if all the heads of relief were being pursued otherwise than to evade the requirements of Part 11 of the 2006 Act. As Judge Eyre QC remarked in Hut Group, 'the same acts can be both mismanagement which is unfairly prejudicial to a minority shareholder and misconduct in breach of a director's duties and causing harm to the company'. If a Petitioner considers, for example, that such facts could warrant a share purchase order or, failing that, at least the grant of relief in favour of the company, I should not have thought that it would be improper to claim both in an unfair prejudice petition. As Vos J said in Apex v Fi Call, sections 994-996 of the 2006 Act 'provide a wide and flexible remedy' and '[a]rtificial limitations should not be introduced to reduce the effective nature of the remedy introduced by ss.994-996'; v) Where in unfair prejudice proceedings a Petitioner asks for relief in favour of the company as well as relief that could only be granted on an unfair prejudice basis, case management issues should be addressed. The best course may be for all the issues to be dealt with at the same time, in a single hearing. Sometimes, however, it could be desirable for matters relating to a claim for relief in favour of the company to be deferred either entirely or in part. It might, for example, be advantageous to determine at the main hearing whether a Respondent was liable to the company for a breach of duty but to defer any issue as to quantum. I do not myself share the view that a Court should not 'allow a prayer in the petition for payment by the Respondent director of compensation or of restitution to the company to stand unless it is clear at the pleading stage that a determination of the amount, if any, of the director's liability at law to the company can conveniently be dealt with in the hearing of the petition' (to quote Lord Scott in Chime, at paragraph 62). To my mind, the mere fact that it might not be 'clear at the pleading stage that a determination of the amount, if any, of the director's liability at law to the company can conveniently be dealt with in the hearing of the petition' would not render a claim for compensation to be paid to the company in respect of such a liability abusive, but would rather call for case management; vi) I do not, with respect, consider that what the Judge called 'the Chime approach' represents the law in this jurisdiction. In particular, I do not think that it is only a 'rare and exceptional case' that the Court 'will permit to proceed by way of an unfair prejudice petition when it would otherwise be brought by way of a derivative claim', nor that the Court 'ought only to permit the case for that relief to proceed by way of an unfair prejudice petition if, at the earliest stage of the proceedings, the court is satisfied at least that that relief can be conveniently adjudicated on as part of the unfair prejudice petition proceedings'."
"In order to achieve a fair result, the court may but need not necessarily order adjustments to be made to the valuation of a Petitioner's shares. The courts have adopted a flexible attitude and the valuation can be adjusted to reflect the effect on the company of all or any wrongs which the wrongdoer respondents have committed against it. So, for example, it can order to be added back into (or in the case of a purchase of a respondent's shares by a petitioner deducted from) the valuation sums removed from the company by way of costs improperly spent on proceedings, excessive director's remuneration or other payments, excessive management charges or sums reflecting losses to the company occasioned by the unfairly prejudicial conduct."
"As regards paragraph (5) of the prayer for relief, the Respondents submit that, as the directors did not owe Zedra any fiduciary or statutory duties, there is no basis for an award of compensation to be paid by the directors to Zedra [the Petitioner]. This is not a sustainable argument. Zedra's complaint is of conduct by the directors which was unfairly prejudicial to its interests as a member. The relevant conduct took the form of alleged breaches by the directors of their statutory duties. This formulation of unfair prejudice is entirely in line with the approach adopted by this court in Re Saul D Harrison & Sons plc and by the House of Lords in O'Neill v Phillips. It is not dependent on showing a fiduciary or statutory duty owed by directors to shareholders personally. Once unfair prejudice is established, the court has the wide powers to grant relief conferred by section 994, as discussed above, and they plainly include the power to order wrongdoing directors to pay compensation to the Petitioner."