Unfair Prejudice Claim

Hewetts is pleased to have acted for The Nags Head pub in Reading in defending a spurious petition for unfair prejudice brought by a minority shareholder.

The petition involved examination of a novel point of law, namely whether the Companies (Tables A to F) Regulations 1985 ((SI 1985/805) Sch.1 para.85) is compatible with the Companies Act 2006 ss.175 with regard to conflicts of interest. It involved a trial in the High Court to determine the merits of the petitioner’s contentions that (i) his removal as a director was unfairly prejudicial to him as a shareholder under s.994 of the Companies Act 2006, and (ii) that his involvement in the running of a competing pub down the road was not a breach of his duties as director.

The Court found completely in favour of the respondents (being the pub and the other shareholders) on all points, holding that:

• The petitioner’s involvement in the running of the rival pub was in manifest conflict with his duties as a director of The Nags Head.
• At no stage was it approved by the other directors, not least because they were never provided with full and open information as to the nature of his involvement.
• Since the conflict was serious, ongoing and unexplained, the petitioner’s removal as a director was justified, and any prejudice he may have suffered thereby could not be described as unfair.

A transcript of the Judgment can be found here. (Case report reproduced from the British Company Cases series by kind permission of Thomson Reuters UK)

Hewetts specialise in partner, director and shareholder disputes, working toward settlement if possible, but fighting in court if needed. For any such disputes please contact Oliver Kew at o.kew@hewetts.co.uk

Published on 14/04/2020