Friday 17 December 2021

UK: England and Wales: unfair prejudice claims - personal acts and a causal connection

Judgment was given earlier today in Primekings Holding Ltd v King (Re Kings Solutions Group Ltd) [2021] EWCA Civ 1943. The court was required to consider whether, and if so in what circumstances, it was permissible to include in a statement of case in a section 994 petition allegations of personal conduct by the respondents which were not, of themselves, within the scope of Section 994 of the Companies Act 2006. Lord Justice Snowden, with whom Lords Justice Nugee and Green agreed, stated (at paras. [66]-[67]):

Although designed to overcome some of the limitations which beset the oppression remedy under section 210 of the Companies Act 1948, neither section 459 of the Companies Act 1985 nor Section 994 were drafted on the basis that a shareholder could simply complain, for example, that "a course of conduct in relation to the company" had unfairly prejudiced his interests. The potential breadth of what is now Section 994 has been limited and kept within manageable bounds by the express statutory requirements that the acts complained of must either (i) be an act or omission of the company, or (ii) be conduct of the company's affairs rather than acts done in the conduct of a shareholder's personal affairs.

Satisfaction of these requirements should not be overlooked or minimised. Petitions and statements of case in unfair prejudice cases should make it clear which limb of Section 994 is being relied upon and should contain a concise statement of the facts upon which the petitioner relies to make out that requirement. On the basis of the majority judgments in Graham v Every [2015] 1 BCLC 41, it may be legitimate for a concise statement of personal acts of the respondents which are causally connected to an act or omission of the company, or causally connected to conduct of the company's affairs, to be included to support the primary allegation. There is, however, no such justification for allowing other allegations of personal conduct of the respondents, which are not causally connected to an act or omission of the company, or not causally connected to conduct of the affairs of the company, to be included in a statement of case under Section 994. "

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