Boughtwood v Oak Investment Partners XII, Ltd Partnership

Boughtwood v Oak Investment Partners XII, Ltd Partnership

The judge's findings that Mr Boughtwood engaged in unfairly prejudicial conduct by overstepping his agreed management role, refusing to accept reasonable investment, and staging a coup were unassailable. Oak's minor disclosure breaches caused no prejudice. The fair outcome was for Oak to buy out Mr Boughtwood. The valuation of shares must reflect the Liquidation Preference in QED's Articles, but the valuer retains discretion as to the value of ordinary shares even if QED's value is below the preference threshold.

Parties
Appellant/respondent to Petition: Martin Boughtwood; Respondent/appellant to Cross Petition: Oak Investment Partners XII, Limited Partnership
Jurisdiction
England and Wales
Judgment Date
28 January 2010
Procedural Posture
Civil Appeal (companies/unfair Prejudice) / Appeal From High Court (chancery Division) to Court of Appeal; Judgment on Appeal
Outcome
Appeal against the order of 6 February 2009 dismissed; appeal against paragraph 4 of the valuation instructions dismissed; appeal against paragraph 14 of the valuation instructions allowed.
Legal Topics
Unfair Prejudice, Quasi Partnership, Shareholder Disputes, Valuation of Shares, Directors' Duties, Disclosure Obligations
Company Law Equity Unfair Prejudice Quasi Partnership Shareholder Disputes Valuation of Shares Directors' Duties Disclosure Obligations

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 7 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

Martin Boughtwood

Appellant/respondent to Petition

Oak Investment Partners XII, Limited Partnership

Respondent/appellant to Cross Petition

Procedural Posture

Civil Appeal (companies/unfair Prejudice) / Appeal From High Court (chancery Division) to Court of Appeal; Judgment on Appeal

Legal Issues

  1. 1 Whether the conduct of Mr Boughtwood was unfairly prejudicial to Oak under section 994 of the Companies Act 2006
  2. 2 Whether Oak's conduct was unfairly prejudicial to Mr Boughtwood
  3. 3 The scope of equitable obligations in a quasi-partnership company

Ratio Decidendi

The judge's findings that Mr Boughtwood engaged in unfairly prejudicial conduct by overstepping his agreed management role, refusing to accept reasonable investment, and staging a coup were unassailable. Oak's minor disclosure breaches caused no prejudice. The fair outcome was for Oak to buy out Mr Boughtwood. The valuation of shares must reflect the Liquidation Preference in QED's Articles, but the valuer retains discretion as to the value of ordinary shares even if QED's value is below the preference threshold.

Court Disposition

Appeal against the order of 6 February 2009 dismissed; appeal against paragraph 4 of the valuation instructions dismissed; appeal against paragraph 14 of the valuation instructions allowed.

Orders

  • Mr Boughtwood to sell and transfer his QED shares to Oak at a fair price determined by an independent valuer, taking into account the Liquidation Preference.
  • Valuer to have discretion to ascribe value to ordinary shares even if QED's value is below £10,299,930.