Brown v Bray & Anor [2019] EWHC 2304 (Ch) (29 August 2019)

Brown v Bray & Anor [2019] EWHC 2304 (Ch) (29 August 2019)

The court found that the affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to Mr Brown's interests, particularly through his removal as director and employee without provision for the fair value of his shares, in breach of the quasi-partnership understanding and shareholders' agreement. The court rejected the respondents' claim for specific performance of the transfer provisions at nominal value and held that Mr Brown was entitled to relief under s.994 Companies Act 2006.

Citation
[2019] EWHC 2304 (Ch)
Parties
Petitioner: Philip Brown; First Respondent: Stephen Bray; Second Respondent: Philip Sharp; Third Respondent: Audas Group Limited
Jurisdiction
England and Wales
Judgment Date
29 August 2019
Procedural Posture
Unfair Prejudice Petition Under Companies Act 2006 S.994 / Trial of Liability Only
Outcome
Petition for unfair prejudice upheld; counterclaim for specific performance dismissed
Legal Topics
Unfair Prejudice, Shareholder Disputes, Quasi Partnership, Share Valuation, Director Removal, Breach of Shareholders' Agreement
Company Law Insolvency Unfair Prejudice Shareholder Disputes Quasi Partnership Share Valuation Director Removal Breach of Shareholders' Agreement

Case Brief

Summary, issues, holding and outcome

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Parties

Philip Brown

Petitioner

Stephen Bray

First Respondent

Philip Sharp

Second Respondent

Audas Group Limited

Third Respondent

Procedural Posture

Unfair Prejudice Petition Under Companies Act 2006 S.994 / Trial of Liability Only

Legal Issues

  1. 1 Whether the affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to the interests of the petitioner under s.994 Companies Act 2006
  2. 2 Whether the company was a quasi-partnership giving rise to legitimate expectations for the petitioner
  3. 3 Whether the removal of the petitioner as director and employee without provision for fair value of shares was unfairly prejudicial

Ratio Decidendi

The court found that the affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to Mr Brown's interests, particularly through his removal as director and employee without provision for the fair value of his shares, in breach of the quasi-partnership understanding and shareholders' agreement. The court rejected the respondents' claim for specific performance of the transfer provisions at nominal value and held that Mr Brown was entitled to relief under s.994 Companies Act 2006.

Court Disposition

Petition for unfair prejudice upheld; counterclaim for specific performance dismissed

Orders

  • Respondents to purchase petitioner's shares at a fair value to be determined
  • No order for specific performance of share transfer at nominal value