Mark Lee Hilliard v Carl Anthony Jordan & Anor
[2024] EWHC 2366 (Ch)
Jagit Singh Gill v Amarjeet Signh Gill & Ors
15 November 2024
[2024] EWHC 2876 (Ch)
High Court
Three brothers fought over their family business. One brother was unfairly kicked out. The judge made the other brothers buy him out at a fair price, plus extra money for what he lost.
Key Facts
- •Three brothers, Jagjit (Jack), Amarjeet (Sam), and Tarlochan (Rick) Gill, had disagreements regarding their company, Micrologic Property Holdings Limited (MPHL).
- •Jack petitioned for MPHL's winding-up on a just and equitable basis or a buy-out order due to unfairly prejudicial conduct by Sam and Rick.
- •MPHL was a quasi-partnership, with the brothers having equal rights to management and benefits.
- •Sam and Rick removed Jack as a director in 2020 without following proper procedure.
- •Jack claimed unfair prejudice due to his removal, loss of income, and lack of access to company information.
- •Expert valuations were conducted on MPHL's properties and shares.
- •The court considered various claims for compensation including unpaid salary, lost dividends, and profits from potential property developments.
Legal Principles
A member of a company can apply to the court for an order if the company's affairs are conducted unfairly prejudicial to their interests.
Companies Act 2006, section 994(1)
The court can make an order for relief, including a share purchase order, if a petition under Part 994 is well-founded.
Companies Act 2006, section 996(1) and (2)(e)
To engage section 994 relief, there must be conduct that caused unfair prejudice to a member.
Re Saul D Harrison & Sons plc [1994] BCC 475, 489; Re OS3 Distribution Ltd [2017] EWHC 2621 (Ch)
Unfairness usually requires a breach of the terms on which the company's affairs were to be conducted (articles of association or alternative agreements).
O’Neill v Phillips [1999] 1 WLR 1092
A just and equitable winding-up may be ordered in cases of functional deadlock or irretrievable breakdown in trust and confidence in quasi-partnerships.
Lau v Chu [2020] UKPC 24
The court can order a winding-up if it is just and equitable, but not if another remedy is available and the petitioner is acting unreasonably.
Insolvency Act 1986, section 125(2)
Section 996 relief is flexible but must be fair and proportionate.
Profinance Trust SA v Gladstone [2001] EWCA Civ 1031
Outcomes
Sam and Rick's removal of Jack as a director was unfairly prejudicial.
It breached the quasi-partnership agreement granting equal management rights, was procedurally flawed, and caused substantial prejudice to Jack.
A buy-out order was granted, rather than a winding-up order.
A buy-out is a more appropriate and less costly remedy in this case of unfair prejudice, and pursuing winding-up would be unreasonable under section 125(2).
Sam and Rick must buy Jack's shares at £656,000 (value as of March 29, 2022) plus interest.
This reflects the going-concern value of Jack's shares, agreed upon by the parties as per expert valuation.
Additional compensation was awarded for unpaid salary and wrongful legal fee and other expenses.
To compensate for loss of income and other financial prejudice caused by Sam and Rick’s actions.
Jack's claim for a share of development profits was dismissed.
The expert valuations already factored in potential development profits. There was no separate legal basis for this claim.
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