Mark Lee Hilliard v Carl Anthony Jordan & Anor
[2024] EWHC 2366 (Ch)
Sally Ann Gibbins v John Peter Francis Tierney & Ors
1 August 2024
[2024] EWHC 2004 (Ch)
High Court
A mom and her son and his girlfriend ran a business together. The son and girlfriend misused company money and kicked the mom out. The judge made the son and girlfriend buy out the mom's share of the business at its value before they did the bad things.
Key Facts
- •Petitioner (mother) and Respondents (son and partner) ran a cosmetic business as a quasi-partnership.
- •Respondents used company funds to purchase a property for their personal benefit without Petitioner's consent.
- •Respondents excluded Petitioner from company management and diverted business to another company.
- •Respondents failed to engage in court proceedings.
- •Petitioner brought an unfair prejudice petition under Section 994 of the Companies Act 2006.
Legal Principles
Unfair prejudice requires both unfairness and prejudice within the context of company law.
Re Tobian Properties Limited [2013] Bus L R 753
Prejudice can encompass financial damage, loss of management participation, and disregard of member rights.
Re Coroin Limited [2012] EWHC 2342 (Ch)
In quasi-partnerships, where a petitioner has been unfairly excluded, no minority discount should apply when valuing shares.
re Bird Precision Bellows Ltd [1984] Ch 419
Share valuation in unfair prejudice cases should be fair and often at a date before the prejudicial conduct.
Profinance Trust SA v Gladstone [2002] 1 WLR 1024
Section 994(1) of the Companies Act 2006 allows a member to apply to the court for an order if the company’s affairs are being conducted unfairly prejudicial to their interests.
Companies Act 2006
Section 996 CA 2006 allows the court to make orders for giving relief in respect of matters complained of, including ordering the purchase of shares.
Companies Act 2006
Outcomes
Petition granted. Respondents ordered to purchase Petitioner's shares.
Respondents' conduct was found to be unfairly prejudicial to the Petitioner. They wrongfully excluded her from the company, used company funds for personal gain, diverted business, and failed to engage with the court proceedings.
Valuation date set at 1 August 2020.
This date predates the unfairly prejudicial conduct and is around the time the Petitioner was excluded from management. An earlier date was considered fair given the circumstances.
No minority discount applied to share valuation.
The company was a quasi-partnership, and the Petitioner was unfairly excluded from management.
Respondents ordered to pay Petitioner's costs.
Respondents failed to engage in the proceedings.
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