Peter Charles Willoughby v Eric Martin Cole & Anor
[2024] EWHC 1410 (Ch)
Benjamin Karl Lakey v Nathan Levi Ashley Jordan Macabuag & Ors
19 July 2023
[2023] EWHC 1800 (Ch)
High Court
Two guys started a company. They fought. One guy got fired for doing bad things. He sued, but lost because he really did do bad things, even though the company wasn't perfect in how it fired him.
Key Facts
- •Benjamin Lakey (Petitioner) and Nathan Macabuag co-founded Mitt Wearables Limited (Mitt) to develop a medical prosthesis.
- •Lakey was appointed a director and shareholder of Mitt.
- •A funding round of £300,000 was secured with new investors.
- •The relationship between Lakey and Macabuag deteriorated, leading to Lakey's suspension and eventual termination.
- •Macabuag incorporated Koalaa Limited, transferring Mitt's assets and employees.
- •Lakey brought an unfair prejudice petition under section 994 Companies Act 2006 (CA06).
Legal Principles
Unfair prejudice petition under section 994 CA06 requires showing prejudice to a member that is unfair.
Companies Act 2006
Trivial or technical infringements of articles do not give rise to petitions under section 994.
Re Saul D Harrison & Sons plc [1994] BCC 475
A member of a company is not ordinarily entitled to complain of unfairness unless there has been a breach of the terms on which the company's affairs should be conducted.
O’Neill v Phillips [1999] 1 WLR 1092
A company may by ordinary resolution remove a director before the expiration of their period of office.
Companies Act 2006
At common law, dismissal may be effected without good cause, but an action may lie if the dismissal is in breach of contract.
Harvey on Industrial Relations and Employment Law
Gross misconduct is any conduct sufficiently serious to justify termination without notice.
Re Twenty Twenty Productions Ltd, 14 February 2003
A breach of fiduciary duty will constitute gross misconduct.
Mortimore: Company Directors (2017)
Outcomes
Lakey's unfair prejudice petition dismissed.
Lakey's allegations of a premeditated scheme to remove him were unsubstantiated. His actions, including unauthorized access to company data, constituted gross misconduct justifying termination. The process leading to his dismissal, while not perfect, was substantively fair.