Profile Partners Ltd, Re [2020] EWHC 1473 (Ch) (08 June 2020)

Profile Partners Ltd, Re [2020] EWHC 1473 (Ch) (08 June 2020)

The court held that the respondents were in threatened breach of contractual undertakings and the company law principle prohibiting use of company funds in shareholder disputes. The counterclaims and defence were inextricably linked to the shareholder dispute, and no adequate apportionment of costs was shown. There was a serious issue to be tried, damages would not be adequate, and the balance of convenience and preservation of the status quo favoured granting the injunction.

Citation
[2020] EWHC 1473 (Ch)
Parties
Applicant/petitioner: Michael Gott; First Respondent: Rune Hauge; Second Respondent: Lisa Davey; Third Respondent: Profile Sport and Media Limited; Fourth Respondent: Profile Holdings Limited; Fifth Respondent: Profile Partners Limited (England and Wales); Sixth Respondent: Profile Partners Limited (Guernsey); Seventh Respondent: Profile Partners GmbH & Co. KG; Eighth Respondent: Profile Partners Verwaltungsgesellschaft MBH; Ninth Respondent: Guernsey Resources Group Limited
Jurisdiction
England and Wales
Judgment Date
08 June 2020
Procedural Posture
Section 994 Companies Act 2006 Unfair Prejudice Petition and Application for Interim Injunctive Relief / Interim Application for Injunction Pending Trial
Outcome
Injunction granted
Legal Topics
Unfair Prejudice, Minority Shareholder Protection, Interim Injunctions, Misuse of Company Funds, Directors' Duties, Shareholder Disputes
Company Law Equity Unfair Prejudice Minority Shareholder Protection Interim Injunctions Misuse of Company Funds Directors' Duties Shareholder Disputes

Case Brief

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Parties

Michael Gott

Applicant/petitioner

Rune Hauge

First Respondent

Lisa Davey

Second Respondent

Profile Sport and Media Limited

Third Respondent

Profile Holdings Limited

Fourth Respondent

Profile Partners Limited (England and Wales)

Fifth Respondent

Profile Partners Limited (Guernsey)

Sixth Respondent

Profile Partners GmbH & Co. KG

Seventh Respondent

Profile Partners Verwaltungsgesellschaft MBH

Eighth Respondent

Guernsey Resources Group Limited

Ninth Respondent

Procedural Posture

Section 994 Companies Act 2006 Unfair Prejudice Petition and Application for Interim Injunctive Relief / Interim Application for Injunction Pending Trial

Legal Issues

  1. 1 Whether the respondents are in threatened breach of contractual undertakings restricting use of company funds in shareholder litigation
  2. 2 Whether company funds may be used to defend or counterclaim in s.994 proceedings between shareholders
  3. 3 Whether payment of consultancy invoices to a controlling shareholder is a misuse of company assets

Ratio Decidendi

The court held that the respondents were in threatened breach of contractual undertakings and the company law principle prohibiting use of company funds in shareholder disputes. The counterclaims and defence were inextricably linked to the shareholder dispute, and no adequate apportionment of costs was shown. There was a serious issue to be tried, damages would not be adequate, and the balance of convenience and preservation of the status quo favoured granting the injunction.

Court Disposition

Injunction granted

Orders

  • Respondents restrained from using funds of the Fifth to Eighth Respondents to defend the s.994 petition or pay legal/professional costs related to the dispute or counterclaims
  • Respondents restrained from paying the disputed consultancy invoices to Mr Hauge pending trial