Mantir Singh Sahota v Albinder Singh Sahota & Ors
[2024] EWHC 2165 (Ch)
Khadim Hussain v Allah Hussain & Ors
1 December 2023
[2023] EWHC 3080 (Ch)
High Court
A family fought over a business. One member claimed they were unfairly shut out of decisions. The judge said they weren't, because they also weren't cooperating. The appeal court agreed, saying there wasn't enough proof of being unfairly treated.
Key Facts
- •Khadim Hussain (Khadim) appealed a dismissal of his petition under section 994 of the Companies Act 2006 against Allah Hussain, Tanvier Hussain, Shahzad Hussain, and KTA Group Ltd.
- •Khadim and Allah were equal shareholders in KTA Group Ltd., a family-run business.
- •A dispute arose concerning alleged excess takings by Allah and Tanvier and Khadim's exclusion from management.
- •Shahzad Hussain was appointed as a director, leading to Khadim's claims of unfair prejudice.
- •Evidence included board meeting minutes, emails, and witness testimonies.
- •Allegations included improper purpose in Shahzad's appointment, lack of transparency in board decisions, and exclusion from management.
Legal Principles
Section 994 of the Companies Act 2006 allows a member to petition the court if the company's affairs are conducted in a manner that is unfairly prejudicial to the interests of its members.
Companies Act 2006
Fairness is a flexible concept but must be applied in a principled manner.
Case Law
A petitioner's wrongdoing can be relevant in two ways: it may render the respondent's prejudicial conduct not unfair, or it may justify refusing relief to the petitioner.
Interactive Technology Corporation Ltd v Ferster [2016] EWHC 2896 (Ch)
Prejudice can encompass financial damage, exclusion from management, or disregard of member's rights.
Re Coroin (No 2) [2012] EWHC 2343
Mere lack of trust in the majority shareholder does not suffice for a section 994 claim; actual or threatened prejudicial acts must be demonstrated.
Re Astec (BSR) plc [1999] BCC 59
Breaches of fiduciary duty, even without financial loss, can be unfairly prejudicial if they damage trust and proper administration.
Estera Trust (Jersey) Ltd v Singh [2018] EWHC 1715 (Ch)
Outcomes
The appeal was dismissed.
The Judge's findings were not perverse or based on insufficient evidence. Khadim failed to demonstrate unfair prejudice arising from his exclusion from management, particularly given his own actions and the lack of demonstrable financial loss.
The Judge found Shahzad's appointment was for proper purposes.
The Judge considered the breakdown in family relations and the need for objectivity and improved corporate governance. He discounted Khadim's claims of spite and collusion.
The Judge found Khadim was not unfairly excluded from management.
The Judge determined Khadim had largely chosen not to engage in board meetings and that the changes in the bank mandate and hiring procedures were not unfairly prejudicial in the absence of evidence of misuse.