Brown v Bray & Anor

Brown v Bray & Anor

The affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to Mr Brown by dismissing him as employee and director, excluding him from management and information, and breaching the Shareholders Agreement regarding reserved matters. The Board's requirement for a compulsory Transfer Notice was itself made in breach of good faith and fairness, and Mr Brown's breach of confidentiality was substantially outweighed by the Respondents' misconduct.

Parties
Petitioner: Philip Brown; Respondent: Stephen Bray; Respondent: Philip Sharp; Respondent: Audas Group Limited
Jurisdiction
England and Wales
Judgment Date
29 August 2019
Procedural Posture
Petition for Relief Under Section 994 Companies Act 2006 / Liability Determination
Outcome
Claim for unfair prejudice succeeds; Respondents' counterclaim for specific performance fails subject to further submissions.
Legal Topics
Unfair Prejudice, Shareholder Rights, Good Faith, Directors' Duties, Shareholders' Agreements, Compulsory Share Transfer, Confidential Information
Company Law Contract Law Equity Unfair Prejudice Shareholder Rights Good Faith Directors' Duties Shareholders' Agreements +2 more

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Parties

Philip Brown

Petitioner

Stephen Bray

Respondent

Philip Sharp

Respondent

Audas Group Limited

Respondent

Procedural Posture

Petition for Relief Under Section 994 Companies Act 2006 / Liability Determination

Legal Issues

  1. 1 Whether the affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to the interests of Philip Brown
  2. 2 Whether breaches of the Shareholders Agreement and Articles occurred
  3. 3 Whether the Board's requirement for a Transfer Notice was valid

Ratio Decidendi

The affairs of Audas Group Limited were conducted in a manner unfairly prejudicial to Mr Brown by dismissing him as employee and director, excluding him from management and information, and breaching the Shareholders Agreement regarding reserved matters. The Board's requirement for a compulsory Transfer Notice was itself made in breach of good faith and fairness, and Mr Brown's breach of confidentiality was substantially outweighed by the Respondents' misconduct.

Court Disposition

Claim for unfair prejudice succeeds; Respondents' counterclaim for specific performance fails subject to further submissions.

Orders

  • Respondents to purchase Mr Brown's shares at fair value (prima facie entitlement)
  • Order dispensing with requirement for Mr Brown to comply with Transfer Notice (subject to further submissions)