Pettie & Ors v Thomson Pettie Tube Products Ltd & Ors [2000] ScotCS 298 (29 November 2000)

Pettie & Ors v Thomson Pettie Tube Products Ltd & Ors [2000] ScotCS 298 (29 November 2000)

The directors' decision to allot shares at par, significantly below their true value, in the face of protest and without commercial justification, was a breach of fiduciary duty and constituted unfairly prejudicial conduct under s.459 of the Companies Act 1985. The prejudice was not justified by equal invitation to subscribe or alleged past practice.

Citation
[2000] ScotCS 298
Parties
Petitioners: Jasper William Pettie and Others; Respondents: Thomson Pettie Tube Products Limited and Others
Jurisdiction
Scotland
Judgment Date
29 November 2000
Procedural Posture
Petition for Interdict and Orders Under Companies Act 1985 S.461 / Judgment on Liability, Proof Appointed on Remedy
Outcome
Petitioners' second and third pleas-in-law upheld; proof appointed on remedy.
Legal Topics
Unfair Prejudice, Share Allotment, Directors' Fiduciary Duties, Minority Shareholder Protection
Company Law Unfair Prejudice Share Allotment Directors' Fiduciary Duties Minority Shareholder Protection

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Parties

Jasper William Pettie and Others

Petitioners

Thomson Pettie Tube Products Limited and Others

Respondents

Procedural Posture

Petition for Interdict and Orders Under Companies Act 1985 S.461 / Judgment on Liability, Proof Appointed on Remedy

Legal Issues

  1. 1 Whether the directors' allotment of shares at par, below market value, to themselves and others, constituted unfairly prejudicial conduct under s.459 of the Companies Act 1985.

Ratio Decidendi

The directors' decision to allot shares at par, significantly below their true value, in the face of protest and without commercial justification, was a breach of fiduciary duty and constituted unfairly prejudicial conduct under s.459 of the Companies Act 1985. The prejudice was not justified by equal invitation to subscribe or alleged past practice.

Court Disposition

Petitioners' second and third pleas-in-law upheld; proof appointed on remedy.

Orders

  • Finding of unfairly prejudicial conduct against respondents.
  • Proof to be heard on the question of remedy.