Kerrie Heywood v Kevin Freakley & Ors.
[2022] EWHC 2762 (Ch)
Joanne Brierley v Christopher Howe & Anor (Re 36 Bourne Street Ltd)
6 November 2024
[2024] EWHC 2789 (Ch)
High Court
A business partner sued another for unfair treatment, claiming they were promised a bigger share of the company. The judge threw out that part of the lawsuit because it was based on a private agreement between the partners, not something the company itself did wrong. The judge said the lawsuit needed to focus on things the *company* did that were unfair.
Key Facts
- •Joanne Brierley (Petitioner) filed a Section 994 petition against Christopher Howe (Respondent) and 36 Bourne Street Ltd.
- •The petition alleges unfair prejudice, constructive trust, and proprietary estoppel regarding Brierley's claimed 49% shareholding.
- •Howe applied to strike out sections E1 and E2 of the petition, which detail Brierley's shareholding and dividend claims.
- •The dispute centers around several alleged oral agreements between Brierley and Howe regarding Brierley's shareholding in 36 Bourne Street Ltd.
- •Howe transferred 10% of his shares to Brierley in 2018, but disputes further agreements for a 49% shareholding.
Legal Principles
CPR 3.4(2)(a) allows striking out a statement of case if it discloses no reasonable grounds for the claim.
CPR 3.4(2)(a)
CPR 3.4(2)(b) allows striking out a statement of case if it is an abuse of court process or obstructs justice.
CPR 3.4(2)(b)
In Section 994 unfair prejudice claims, the acts complained of must be an act or omission of the company or conduct of its affairs.
Companies Act 2006, Section 994(1)(a)
A personal agreement between shareholders does not automatically constitute 'conduct of the company's affairs' unless causally linked to an act or omission affecting the company.
Graham v Every [2014] EWCA Civ 191, Primekings v King [2021] EWCA Civ 1943
The power to strike out should be used sparingly and only in plain and obvious cases.
Hughes v Richards
In quasi-partnership cases, the court considers the legitimate expectations of the parties and whether the conduct was unfairly prejudicial.
O’Neill v Phillips [1998] BCC 405, [1999] 1 WLR 1092
Outcomes
Sections E1 and E2 of the petition were struck out.
The claims regarding shareholding and dividends were considered personal arrangements between the Petitioner and Respondent, not conduct of the company's affairs, failing to meet the threshold for Section 994. The misfeasance allegations were also lacking in particularity.