McMonagle v Harvey & Ors [2021] EWHC 1374 (Ch) (21 May 2021)

McMonagle v Harvey & Ors [2021] EWHC 1374 (Ch) (21 May 2021)

Both Mr McMonagle and Mr Harvey engaged in conduct amounting to unfair prejudice under s.994. Mr Harvey breached director duties by diverting business, competitive trading, and unauthorised withdrawals. Mr McMonagle and Mrs McMonagle increased remuneration and excluded Mr Harvey, also constituting unfair prejudice....

Source-derived case information.

Citation
[2021] EWHC 1374 (Ch)
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 Companies Act 2006 S.994 / Judgment on Liability
Outcome
Petition and cross-petition both succeed in part. Order for purchase of Mr Harvey's shares by Mr McMonagle without minority discount, valuation as at December 2017. Both parties to account for unauthorised withdrawals and payments.
Legal Topics
Unfair Prejudice, Quasi Partnership, Director Duties, Valuation of Shares, Minority Discount, Breach of Fiduciary Duty
Company Law Shareholder Disputes Unfair Prejudice Quasi Partnership Director Duties Valuation of Shares Minority Discount Breach of Fiduciary Duty

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Summary, issues, holding and outcome

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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 Companies Act 2006 S.994 / Judgment on Liability

Legal Issues

  1. 1 Whether the affairs of ICS were conducted in a manner unfairly prejudicial to the interests of Mr McMonagle or Mr Harvey
  2. 2 Whether ICS was a quasi-partnership
  3. 3 Whether Mr Harvey breached director duties by competitive trading and unauthorised withdrawals

Ratio Decidendi

Both Mr McMonagle and Mr Harvey engaged in conduct amounting to unfair prejudice under s.994. Mr Harvey breached director duties by diverting business, competitive trading, and unauthorised withdrawals. Mr McMonagle and Mrs McMonagle increased remuneration and excluded Mr Harvey, also constituting unfair prejudice. ICS operated as a quasi-partnership; therefore, no minority discount applies to share valuation. Valuation date is end of December 2017, reflecting Mr Harvey's exclusion. Both parties must account for unauthorised withdrawals and payments. Mr Harvey's shares to be purchased by Mr McMonagle at a price determined by expert valuation as at December 2017, without minority discount,...

Court Disposition

Petition and cross-petition both succeed in part. Order for purchase of Mr Harvey's shares by Mr McMonagle without minority discount, valuation as at December 2017. Both parties to account for unauthorised withdrawals and payments.

Orders

  • Mr Harvey's shares to be purchased by Mr McMonagle at expert-determined price as at December 2017, without minority discount.
  • Adjustments to purchase price for sums owed to ICS by Mr Harvey and Mr McMonagle.