Zedra Trust Company (Jersey) Ltd v The Hut GroupLtd & Ors [2021] EWCA Civ 904 (15 June 2021)

Zedra Trust Company (Jersey) Ltd v The Hut GroupLtd & Ors [2021] EWCA Civ 904 (15 June 2021)

The petition discloses an arguable case of unfair prejudice regarding co-sale rights but no prospect of relief due to their removal for all shareholders. Allegations of bad faith and improper purpose regarding share issues are unsustainable as pleaded, lacking sufficient factual basis. Claims for compensation are not barred by reflective loss as the alleged loss is suffered by Zedra personally. The court has power to grant wide remedies under s.996, but cannot make orders that would breach rights of non-party shareholders. Paragraph (4) of the prayer for relief is struck out; paragraph (5) is retained subject to amendment.

Citation
[2021] EWCA Civ 904
Parties
Petitioner/respondent: Zedra Trust Company (Jersey) Limited; Respondents/appellants: The Hut Group Limited & Others
Jurisdiction
England and Wales
Judgment Date
15 June 2021
Procedural Posture
Appeal From High Court (business and Property Courts, Insolvency and Companies List) / Court of Appeal Judgment on Application to Strike Out Unfair Prejudice Petition
Outcome
Appeal allowed in part; paragraph (4) of the prayer for relief struck out; paragraph (5) retained subject to amendment; remainder of petition not struck out.
Legal Topics
Unfair Prejudice, Shareholder Rights, Directors' Duties, Share Dilution, Variation of Class Rights, Reflective Loss, Remedies Under Companies Act 2006
Company Law Insolvency Law Unfair Prejudice Shareholder Rights Directors' Duties Share Dilution Variation of Class Rights Reflective Loss +1 more

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Parties

Zedra Trust Company (Jersey) Limited

Petitioner/respondent

The Hut Group Limited & Others

Respondents/appellants

Procedural Posture

Appeal From High Court (business and Property Courts, Insolvency and Companies List) / Court of Appeal Judgment on Application to Strike Out Unfair Prejudice Petition

Legal Issues

  1. 1 Whether the petition discloses an arguable case of unfair prejudice under s.994 Companies Act 2006
  2. 2 Whether claims for restoration of co-sale rights and issue of shares are sustainable remedies
  3. 3 Whether claims for compensation are barred by reflective loss

Ratio Decidendi

The petition discloses an arguable case of unfair prejudice regarding co-sale rights but no prospect of relief due to their removal for all shareholders. Allegations of bad faith and improper purpose regarding share issues are unsustainable as pleaded, lacking sufficient factual basis. Claims for compensation are not barred by reflective loss as the alleged loss is suffered by Zedra personally. The court has power to grant wide remedies under s.996, but cannot make orders that would breach rights of non-party shareholders. Paragraph (4) of the prayer for relief is struck out; paragraph (5) is retained subject to amendment.

Court Disposition

Appeal allowed in part; paragraph (4) of the prayer for relief struck out; paragraph (5) retained subject to amendment; remainder of petition not struck out.

Orders

  • Paragraph (4) of the prayer for relief struck out
  • Paragraph (5) retained subject to amendment