Prescott v Potamianos & Anor

Prescott v Potamianos & Anor

The exclusion of Dr Potamianos from management was unfairly prejudicial as the company was a quasi-partnership and his conduct, while in breach of fiduciary duty regarding the source code, was not so serious as to justify total exclusion or removal as director. The offers made by Mr Prescott to buy out Dr Potamianos's shares were not reasonable or binding so as to defeat the petition. The buy-out should be at full pro rata value without discount, and a balancing payment reflecting the agreed profit-sharing arrangement was appropriate.

Parties
Appellant / Respondent: Edwin John Prescott; Appellant / Respondent: Aristides George Potamianos; Respondent: Sprintroom Limited
Jurisdiction
England and Wales
Judgment Date
06 June 2019
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Mr Prescott's appeal dismissed; Dr Potamianos's appeal allowed in part
Legal Topics
Unfair Prejudice, Quasi Partnership, Minority Shareholder Rights, Share Valuation, Directors' Duties, Remedies for Unfair Prejudice
Company Law Equity Unfair Prejudice Quasi Partnership Minority Shareholder Rights Share Valuation Directors' Duties Remedies for Unfair Prejudice

Case Brief

Summary, issues, holding and outcome

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Parties

Edwin John Prescott

Appellant / Respondent

Aristides George Potamianos

Appellant / Respondent

Sprintroom Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether exclusion of Dr Potamianos from management was unfairly prejudicial under s.994-996 Companies Act 2006
  2. 2 Whether Dr Potamianos's conduct disentitled him to relief for unfair prejudice
  3. 3 Whether offers made by Mr Prescott to buy out Dr Potamianos's shares were reasonable and defeated the petition

Ratio Decidendi

The exclusion of Dr Potamianos from management was unfairly prejudicial as the company was a quasi-partnership and his conduct, while in breach of fiduciary duty regarding the source code, was not so serious as to justify total exclusion or removal as director. The offers made by Mr Prescott to buy out Dr Potamianos's shares were not reasonable or binding so as to defeat the petition. The buy-out should be at full pro rata value without discount, and a balancing payment reflecting the agreed profit-sharing arrangement was appropriate.

Court Disposition

Mr Prescott's appeal dismissed; Dr Potamianos's appeal allowed in part

Orders

  • Buy-out of Dr Potamianos's shares at full pro rata value without discount
  • Balancing payment to BDL for profit share as per agreed ratio