McMonagle v Harvey & Ors

McMonagle v Harvey & Ors

Both Mr Harvey and Mr McMonagle engaged in conduct that was unfairly prejudicial to the other. Mr Harvey breached his duties by diverting business and making unauthorised withdrawals, destroying the relationship of trust and confidence. Mr McMonagle unfairly excluded Mr Harvey and extracted company funds via salary and overtime. The company was a quasi-partnership. The fair remedy is a buy-out of Mr Harvey’s shares by Mr McMonagle at a minority discount, valued as at 3 April 2018, with adjustments for unauthorised payments and assets. Claims relating to BISL, chattels, and further expenses must be brought by the company in separate proceedings.

Parties
Petitioner: Timothy McMonagle; First Respondent: Lee Harvey; Second Respondent: Tracey McMonagle; Third Respondent: Maria Harvey; Fourth Respondent: Integrated Control Solutions (Eastern) Limited
Jurisdiction
England and Wales
Judgment Date
21 May 2021
Procedural Posture
Unfair Prejudice Petition and Cross Petition Under Section 994 Companies Act 2006 / Judgment on Liability
Outcome
Petition and cross-petition allowed in part. Order for buy-out of Mr Harvey’s shares by Mr McMonagle at minority discount, valued as at 3 April 2018, with accounting for unauthorised payments and assets. Claims regarding BISL, chattels, and expenses to be brought by the company in separate proceedings.
Legal Topics
Unfair Prejudice, Quasi Partnership, Director's Duties, Share Valuation, Minority Discount, Exclusion From Management, Breach of Fiduciary Duty
Company Law Unfair Prejudice Quasi Partnership Director's Duties Share Valuation Minority Discount Exclusion From Management Breach of Fiduciary Duty

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Parties

Timothy McMonagle

Petitioner

Lee Harvey

First Respondent

Tracey McMonagle

Second Respondent

Maria Harvey

Third Respondent

Integrated Control Solutions (Eastern) Limited

Fourth Respondent

Procedural Posture

Unfair Prejudice Petition and Cross Petition Under Section 994 Companies Act 2006 / Judgment on Liability

Legal Issues

  1. 1 Whether the affairs of Integrated Control Solutions (Eastern) Limited were conducted in a manner unfairly prejudicial to the interests of Mr McMonagle or Mr Harvey as members
  2. 2 Whether the company was a quasi-partnership
  3. 3 Whether Mr Harvey breached his duties as director by diverting business and making unauthorised withdrawals

Ratio Decidendi

Both Mr Harvey and Mr McMonagle engaged in conduct that was unfairly prejudicial to the other. Mr Harvey breached his duties by diverting business and making unauthorised withdrawals, destroying the relationship of trust and confidence. Mr McMonagle unfairly excluded Mr Harvey and extracted company funds via salary and overtime. The company was a quasi-partnership. The fair remedy is a buy-out of Mr Harvey’s shares by Mr McMonagle at a minority discount, valued as at 3 April 2018, with adjustments for unauthorised payments and assets. Claims relating to BISL, chattels, and further expenses must be brought by the company in separate proceedings.

Court Disposition

Petition and cross-petition allowed in part. Order for buy-out of Mr Harvey’s shares by Mr McMonagle at minority discount, valued as at 3 April 2018, with accounting for unauthorised payments and assets. Claims regarding BISL, chattels, and expenses to be brought by the company in separate proceedings.

Orders

  • Mr Harvey’s shares to be bought out by Mr McMonagle at a minority discount, valued as at 3 April 2018.
  • Mr Harvey to account for and repay unauthorised withdrawals and payments for personal benefit.