Martin Hague & Anor v David Hague & Ors
[2024] EWHC 1469 (Ch)
Giannis Ntzegkoutanis v Georgios Kimonis & Ors
12 December 2023
[2023] EWCA Civ 1480
Court of Appeal
A shareholder sued another shareholder for misusing company assets. The judge said the shareholder couldn't sue this way. The appeals court said he could, as long as he wasn't just trying to avoid proper procedures for company lawsuits.
Key Facts
- •Giannis Ntzegkoutanis and Georgios Kimionis each held half the shares in Coinomi Limited.
- •A dispute arose over the ownership and management of Coinomi Limited and its assets, with allegations of misappropriation by Kimionis.
- •Ntzegkoutanis filed an unfair prejudice petition seeking various reliefs, including orders against Kimionis, Coinomi Cyprus, and Coinomi BVI.
- •The Judge struck out claims for compensation and constructive trust against Kimionis.
- •Ntzegkoutanis appealed the Judge's decision.
Legal Principles
The court has the power to grant relief in favour of the company in unfair prejudice proceedings.
Chime, Baltic Partners, Fi Call, Hut Group, Taylor Goodchild
Generally, the court should not grant relief in favour of the company unless it corresponds with what the company would have been entitled to in a derivative claim.
Chime
It can be an abuse of process to use an unfair prejudice petition to circumvent the derivative claim procedure.
Chime, various other cases
Derivative claims can only be brought under Chapter 1 of Part 11 of the 2006 Act or pursuant to an order in unfair prejudice proceedings.
Section 260(2) of the 2006 Act
Unfair prejudice petitions are concerned with mismanagement, while derivative actions address misconduct. The same acts can be both.
Charnley Davies, Hut Group
Outcomes
The appeal was allowed.
The Judge erred in applying the 'Chime approach', which is not part of English law. The petition genuinely sought relief for Ntzegkoutanis's own benefit and for the benefit of the company, and didn't improperly circumvent the derivative claims procedure.
The application to strike out paragraphs 32.2 and 32.3 of the petition was dismissed.
The claims for compensation and constructive trust were not abusive and could be conveniently adjudicated as part of the petition.