In an unfair prejudice petition under section 994 of the Companies Act 2006, the petitioner may need to establish, amongst other things, that: (1) he was excluded from participation in the management of the company/removed as a director; and (2) that such exclusion/removal was unjustified by any conduct by the petitioner.

This article will focus on the second of those 2 elements, namely justification for exclusion from participation in the management of the company/removal as a director. What types of (mis)conduct by the petitioner, will render the exclusion from participation in the management of the company/removal, justified?

Identifying whether or not misconduct justified exclusion from participation in management of the company/removal, can be central to a case. Since, where the exclusion from participation in the management of the company/removal, was/is justified, the petitioner on an unfair prejudice petition will not be entitled to relief/a remedy[1].

This article will consider: (1) Re Flex Associates Ltd (also known as Flex Associates Ltd v Hussain, Hussain v Cooke) [2009] EWHC 3690 (Ch) ('Flex') - Mr David Donaldson QC sitting as a deputy High Court Judge; (2) Kelly v Hussain [2008] EWHC 1117 (Ch) ('Kelly') - HHJ Purle QC sitting as a Judge of the High Court; (3) Re Sprintroom Ltd (also know as Potamianos v Prescott) [2019] EWCA Civ 932; [2019] BCC 1031 ('Sprintroom') - Court of Appeal - McCombe LJ, Leggatt LJ and Rose LJ; (4) Mears v R Mears & Co (Holdings) Ltd [2002] 2 BCLC 1 ('Mears') - Laddie J; (5) Re Company (No.005685 of 1988) (No.2) [1989] BCLC 427 ('Company 5685'), also reported as Re Ringtower Holdings Plc (1989) 5 BCC 82 ('Ringtower') - Peter Gibson J; (7) Grace v Biagioli [2005] EWCA Civ 1222; [2006] BCC 85 ('Grace') - Court of Appeal - Mummery LJ; Mance LJ; Patten J); and (8) Woolwich v Milne [2003] EWHC 414 (Ch) ('Woolwich') (Sir Donald Rattee sitting as a Judge of the High Court)

Unfair Prejudice 

Unfair prejudice petitions are brought under section 994 of the Companies Act 2006 (the predecessor provision was section 459 of the Companies Act 1985[2a]). Section 994 and the basic requirements for a section 994 petition were conveniently and shortly summarised in Loveridge v Loveridge [2020] EWCA civ 1104 (set out in a footnote[2b]). For present purposes, it is sufficient to refer to Flex, and the deputy High Court Judge's statement, at paragraph 27, that:

'Under section 459/994 a petitioning shareholder must establish that the affairs of the company were conducted in a manner unfairly prejudicial to his interests as a member.'

Within this, a number of issues can arise:

(1) did the petitioner/shareholder hold a legitimate expectation that he/she would participate in the running and management of the company ('right to participate in management'), and that he/she would not be unfairly excluded from such participation?[2c]

(2) was the petitioner/shareholder, subsequently excluded from the running and management of the company?

(3) was such exclusion justified? As HHJ Purle QC sitting as a judge of the High Court in Kelly said, at paragraph 16:

'Exclusion...does not necessarily of itself amount to unfair prejudice. It is certainly prejudicial, but it will not be unfair if...the conduct of the Petitioners was deserving of exclusion.'

In Sprintroom, the first instance judge quoted, at paragraph 386 (Court of Appeal judgment, paragraph 63) from the book Hollington on Shareholders Rights, 8th edn, wherein the authors state:

'There will...be cases where the excluded minority has brought his exclusion upon himself by his own wrongful or unconscionable conduct. The courts then have to wrestle with the individual facts of particular cases to determine whether the majority were justified in excluding the minority …'

So, it will be wrongful/inequitable conduct for:

(a) the shareholders to bargain that share ownership would come with participation in management of the company;

(b) a shareholder to be excluded from participation in management of the company;

(c) where such exclusion cannot be justified, and (there is an an additional point)

(d) without giving the excluded shareholder the opportunity to remove his capital on reasonable terms.  

Sometimes, the issue of justified or unjustified exclusion, is framed as being that the petitioners misconduct brought to an end the 'quasi-partnership' between the parties and the petitioner's right to participate in management. But this re-framing of the question, is just another way of posing the same question[3a]: was the exclusion justified?

Whether exclusion from participation in the management of the company/removal, was/is justified (or fair), is judged objectively - by reference to whether the '...disinterested reasonable bystander would regard such removal as unfair...' (Woolwich). In Woolwich, the judge said:

'...the question of unfairness has to be judged by an objective standard (see Re Guidezone Limited [2000] BCLC 321 at 355C). If the circumstances and manner of removal of [the petitioner/former director] from the board of the company were such that a disinterested reasonable bystander would regard such removal as unfair, it is immaterial that the respondents might genuinely have considered that they were acting fairly.'

Circumstances - Circumstances of serious misconduct

It will assist to consider some instances where petitioner/shareholder conduct has (or has not) justified exlusion/removal. Here is a non-exhaustive list[3b] of some different types of serious misconduct, which appear in the authorties:

(1) Diverting business to rival company

In Flex, a unfair prejudice petition (under section 459 of the Companies Act 1985 ('1985 Act')) failed, because, amongst other things, the exclusion was justified. Prior to the material events, the company Flex Associates had 3 directors and 4 shareholders (the 4th shareholder was entitled to be a director, but had waived that entitlement). The petitioner was a director/shareholder, who had, unbeknowst to the other 2 directors, set up a rival company with the 4th shareholder. The petitioner had then planned, and taken various steps towards implementing that plan, to diverted work away from Flex Associates and to the rival company (paragraph 48)[4]. Further, there was 'a clear attempt to obtain potential business for the benefit of [the petitioner and 4th shareholder] rather than Flex.' (paragraph 55).

As to the petitioner's actions, the deputy High Court Judge in Flex said, at paragraph 55:

'The petitioner's] actions...ran fundamentally counter to the co-operative understanding on which the company had been operated ... and on which the petition is based. Whether taken separately or together, they made it in my judgment wholly inequitable that [the other 2 directors] should have been required to accept [the petitioner's] continued participation in the management of the company. They would in other words have justified the [other 2 directors; Flex Associates] in excluding him from such participation. Any such exclusion would not have constituted unfair prejudice and would not have constituted a proper basis for an order under section 459.'

(2) Secret negotiations to acquire business from rival company

In Grace, the Court of Appeal refused (Court of Appeal, paragraph 70) to interfere in the first instance judge's judgment on part of an unfair prejudice petition, that the petitioner's removal as a director of a company (so excluding him from participation in the management of a company) had been justified due to the petitioner's actions.

The petitioner was one of four director/shareholders of a company. The petitioner had learnt that a rival company intended to dispose of its business in a certain part of the world. Without telling the other directors, and via an agent, the petitioner had made secret enquiries about the position. While differences between the petitioner vis-a-vis, the other directors had '...made it sensible or even necessary, to seek out alternative opportunities for the future...' (Court of Appeal, paragraph 69), in this instance, the petitioner had '...set about this in an underhand and secretive manner and began to negotiate the purchase of a related business which ...would have placed him in a position of conflict with his duties as a director towards [the company].' (Court of Appeal, paragraph 69).  The petitioner's pleas that the negotiations had never reached fruition, did not recover the situation. The Court of Appeal (giving a single judgment) said, at paragraph 70:

'[The petitioner's] response to this is that the negotiations never reached fruition, which is true, but what justified his dismissal as a director was his willingness to embark on such negotiations without any prior disclosure or discussion with his fellow directors and shareholders and his attempts to conceal the existence of the negotiations by making statements in emails, which were either untrue when made, or at the very least became untrue and remained uncorrected. We agree with the judge's finding that this conduct justified his dismissal as a director...'

The Court of Appeal further added that the petitioner's actions could not be 'excused by reference to' (Court of Appeal, paragraph 70) a wrong committed by the other directors, in respect to manipulating payment of a dividend such that the petitioner would not receive his rightful share.

(3) Theft of Company Money

In Kelly, a unfair prejudice petition (under section 994 of the Companies Act 2006) failed, because, amongst other things, the exclusion was justified. Prior to the material events, the company Principal Housing had 3 directors and 4 shareholders (the 4th shareholder participated in the running and management (a 'quasi partner' (paragraph 26)) but was not a 'de jure director', nor (was it determined) that she was a 'de facto director' either (paragraph 12)). The petitioners were: (1) one of the directors/shareholders (1/6th); and (2) the 4th shareholder (1/6th). The petitioners were husband (director/shareholder) and wife (4th shareholder) respectively. 

After information was discovered: (1) the second petitioner (4th shareholder) was dismissed from her role in Principal House (paragraph 15), and (2) the first petitioner was dismissed and removed as director of Principal House (paragraph 15). It was accepted that these dismissals/removals were intended to exclude both of them from the participation and management of the company (paragraph 15). The key question was then: was this exclusion unfair?

The first petitioner was excluded after it was revealed that he had been keeping company money. The details are that:

(1) Principal House owned a property, against which an electricity company had inadvertently opened an electricity account in the first petitioner's name, rather than Principal House;

(2) when Principal House overpaid the electricity company on electricity bills, this had generated a right to a refund. That the refund had been paid, to the account holder first petitioner. The first petitioner had then 'banked those on his own account and did not tell anyone' (paragraph 30);

(3) when this was discovered, the first petitioner '...freely admitted that that is what he had done' (paragraph 30) and at trial '...did not demur from the description of that as theft.' (paragraph 30);

(4) the quantum of the refunds was 'approximately £150 in total' (paragraph 29);

As to the quantum, the judge in Kelly said:

(1) 'I do not think that what the refunds amounted to really matters at all.' (paragraph 29); and that,

(2) '...it did happen on a number of occasions and it seems to me to point to a level of dishonesty which is wholly unacceptable, however trivial individual amounts may seem.' (paragraph 31)

The first petitioner's attempt at excusing his behaviour failed. His excuse was that '...he was merely practising a range of frauds, which he had been tutored in by [the other 2 directors] themselves at the outset.' (paragraph 32). The judge in Kelly reasoned, at paragraph 32:

'I cannot accept this (even if true) as any answer to the thefts of these monies. It is said by [the first petitioner] that he was tutored in the massaging of accounts so as to not to demonstrate too much profit, presumably so as to minimise the tax bill and also so as to facilitate the extraction of payments for [another person]. Even if all of that is correct, none of that amounts in any way to an authority to [the first petitioner] to extract funds from the company, however small, for his own benefit, save possibly to the extent that they may be debited to his loan account, which these sums were not. [The first petitioner] was the person who kept the records of the details of the loan account, as indeed he kept all company records on his laptop.'

Based on this, the judge in Kelly concluded, at paragraph 33 that '...the discovery of these thefts justified [the first petitioner's] dismissal and exclusion.'

A separate allegation in Kelly against the first petitioner, was that he had used '...company funds to pay personal tax bills, without debiting that expenditure to his loan account.' (paragraph 33). The judge in Kelly concluded that this was '...another act of dishonesty which would have justified his dismissal.' (paragraph 33). 

For completeness, a second excuse also failed. The first petitioner claimed the other 2 directors sought to blackmail him, by threatening to go to the police unless the petitioners transferred their shares to the other 2 directors, for free. On this, the judge said 'I do not think that this could possibly be an answer to the dismissal by the company of [the first petitioner] or indeed [the second petitioner]' (paragraph 34 - as to the second petitioner, see below as to what this relates to) and that this did not undermine the appropriateness of their dismissal (paragraph 38)[5]

(4) Unauthorised cancelling of a contract with an important client

In Kelly, Principal House ran properties to house asylum seekers. Of the c.80 properties, about 50% were within a certain Local Authority's jurisdiction, 'though a relatively small number of asylum seekers (either 10 or 12...) came from the Local Authority itself' (paragraph 18). The day after a pivotal meeting with the Local Authority (at which the Local Authority had levied criticisms of Principal House), the second petitioner (who was not a director but a quasi-partner (paragraph 26)) wrote an 'intemperate and inappropriately worded' (paragraph 25) letter to Local Authority: (1) criticising the Local Authority's conduct; and (2) accusing the Local Authority of incompetence; and, importantly, (3) asserting that Principal House had decided to dispense with the Local Authority's services. In relation to (3), as the Local Authority described (paragraph 24) and the judge found (paragraph 25), this required the Local Authority to move extremely vulnerable children out of the properties - without regard for the implications of this for these children's lives. A decision the Local Authority later described as 'shameful' (paragraph 24). The Judge described the letter was described as 'extremely damaging' (paragraph 23).

In advance of writing the letter, the second petitioner was found to have consulted the first petitioner (i.e. her husband; paragraphs 22 and 23) on it, but the decision to notify the Local Authority that Principal House were dispensing with its services, was '...not a decision which [second petitioner] could appropriately make without reference to anyone else...' (paragraph 20). To make matters worse, the letter '...was signed in the names of the three directors, two of whom knew nothing about it' (paragraph 25). Later, the other 2 directors became aware of the letter, and at a meeting of all participants, the second petitioner was dismissed (paragraph 25). Was the decision to exclude the second petitioner from her participatory role/capacity in Principal House justified? yes. The judge in Kelly said that the second petitioner 'was justifiably dismissed' (paragraph 27)

(5) Lying to fellow directors about very serious matter

In Kelly, the first petitioner gave assurances to the other 2 directors, that he had not been privy to the 'extremely damaging' letter his wife, the second petitioner, had sent to the Local Authority (i.e before it was sent). The judge found that he had been consulted on it (paragraphs 22 and 23), and so, in effect, he had lied. The judge found that the first petitioner '...could have been dismissed on this ground.'[6]

(6) Dispute between director and company over ownership of assets

In Sprintroom, the Court of Appeal refused to interfere with a first instance judge's decision in an unfair prejudice petition case, that a petitioner conduct had not justified his removal as a company director (Court of Apeal paragraph 53/first instance decision, paragraph 396). 

The petitioner ('AP') was a 40% shareholder in a company called Sprintroom, which owned 100% of the shares in Sprint Electric Ltd ('SEL'). A Mr Edwin Prescott ('EP') held the other 60% of Sprintroom. Both AP and EP were directors of Sprintroom and SEL. A dispute broke out between SEL and AP, as to who owned the source code to certain software that had been developed. SEL claimed it owned the source code ('Source Code claim'); AP claimed he owned it (wrongly, as it later turned out). The complaint about AP's conduct, was as to AP's  '...attitude to SEL’s claim to the source code and his conduct in the face of it' (paragraph 60). The Court of Appeal (giving a single judgment), at paragraph 62, quoted the first instance judge's summary (first instance decision, paragraph 261) of AP's duties to SEL in the face of the Source Code Claim:

'When it became apparent that SEL on the one hand and [AP and AP's service company] on the other had a difference of understanding as to the rights to the Source Code, and when SEL asked where it was and how SEL could access it, I consider that [AP] was not entitled to act in a manner that was detrimental to SEL by being evasive or misleading, including by dissembling as to those matters. SEL was entitled to be provided with a candid statement of his position, so that it had an opportunity to decide how to respond to it, for example by working round his denial of rights and access.' [bold added]

The Court of Appeal, at paragraph 62, recorded what the first instance judge said:

'In my opinion, [AP] is unable to justify acting in this way by relying either on the terms of the Contracts or on any genuine disagreement that he may have had with SEL’s stance as to ownership of, and rights of access, to the Source Code. He was in a position to behave as he did because he alone knew what Source Code had been created and where it was stored, and he alone had that knowledge because of the trust that had been placed in him by SEL with regard to those matters. He was using that knowledge, obtained by him in that way, for his own ends, seeking to gain an advantage for himself in his wrangling with [EP] and other SEL personnel. All this was contrary to the duties that he owed to SEL, and was detrimental to SEL for the reasons that I have identified above.'

In response, SEL set up a Sub-Committee to consider the 'difficult issues relating to [AP]' (first instance decision, paragraph 394; Court of Appeal judgment, paragraph 66).

However, the first instance judge found that, it was not right to say that '...the fault in this case lies by any means all on one side' (first instance decision, paragraph 393; Court of Appeal judgment, paragraph 66)[7]

Though, while wrong, and a breach of AP's directors duties to SEL, the first instance judge said that he did not consider: 

'...[AP's] conduct was so serious as to justify his exclusion from management altogether, as effectively happened by the formation of a Sub-Committee which although inspired by the need to consider and deal with issues concerning the source code was ‘formed … to run the business generally whilst such issues were ongoing’, and still more by his removal as a director.

...the dispute over the source code ... justified the establishment of a Sub-Committee for the purposes initially identified.. (i.e. ‘to consider the difficult issues relating to [AP]’). In my judgment, that was sufficient to address that issue, and to enable [AP] to continue to be involved in management ...in spite of its existence and while SEL took legal advice as to SEL’s position and potential remedies.

In fact, the sub-committee assumed a wider role, which had the effect of excluding [AP] more generally, which I do not accept to have been justified because the source code dispute was ‘inextricably intertwined’ with all of SEL’s other business.” (first instance decision, paragraph 394-5; Court of Appeal judgment, paragraph 66)

The Court of Appeal, at paragraph 80 said, as the first instance decision:

'Ultimately the judge concluded that, although the conduct of [AP] in relation to the source code dispute justified excluding him from all matters relating to the source code, his conduct was not so serious as to justify excluding him from management altogether and subsequently removing him as a director'[8]

Speaking generally, in Sprintroom, the Court of Appeal stated, at paragraph 82, that:

(1) it had been referred to: (1) Mears (2) Company 5685/Ringtower; (3) Grace; (4) Flex (5) Kelly; (6) Woolwich,

(2) these are cases where the '...courts have held that exclusion of a participant from management has been held to be justified on the grounds of breach of duty by the excluded party.' (Court of Appeal, paragraph 82).

(3) there can be different types of misconduct/breach of duty; involving different levels of seriousness.

The Court of Appeal in Sprintroom contrasted some of the more serious instances, with that in Sprintroom itself, at paragraph 83:

'All concerned different types of misconduct/breaches of duty, and some were much more serious involving, e.g. dishonesty (including forgery and theft), bribery, secret negotiation with a competitor or diverting business to a rival. All involved secretive and/or dishonest conduct.'

Whereas:

''Here...[AP] engaged in an open and bona fide dispute as to ownership of certain intellectual property rights. The position that he took was ultimately held to have been wrong and he was found to have acted at one stage in the development of the dispute in a way that was unhelpful, evasive and in breach of his fiduciary duty to SEL. ... however...there is no rule of law that every breach of fiduciary duty will necessarily render exclusion from management fair: it is always a question of fact and degree.'

As stated, the Court of Appeal declined to interfere in the first instance judge's decision that AP's exclusion from all participation in the management of the company, had been unjustified.

(7) Forgery, Deception, Bribery and the Misuse of Money belonging to another

In Mears, the former managing director (the petitioner[9]) of a parent company (R Mears) and (sub)subsidiary company (Cogent)(paragraph 7; ) brought unfair prejudice proceedings, in respect to his removal from participation in the management of R Mears and Cogent (the petitioner was dismissed as director from Cogent (paragraph 14) and resigned as director of the R Mears but after being told he'd otherwise be removed (paragraph 14)). The respondents issued a (reverse) summary judgment application, arguing the unfair petition had '...no real prospect of success and there is no other reason why the matter should proceed to trial.' (paragraph 26). In particular for present purposes, the respondents argued (successfully - paragraph 57) that there were no real prospects of the petitioner establishing that the prejudice the petitioner sustained from his removal as director, was unfair (paragraph 27).

The justification put forward, for the petitioner's removal from office was the petitioner's participation in what was called, the Reachim Affair. In short, the Reachim Affair involved the petitioner, using money belonging to another, to bribe an employee (Mr Dudak) of another firm, with a view to work being directed towards Cogent/R Mears. Cogent had received overpayment from a company called Reachim (about £108,000 - 'the Funds'). The petitioner had prevented the Funds being repaid (telling the relevant department to 'sit' on it), or otherwise being dealt with for 6 years, though the petitioner knew the Funds did not belong to Cogent. The petitioner then procured Mr Dudak, a former employee of Reachim, to create and send false documentation to Cogent, purporting to be from Reachim, seeking repayment of the Funds. The petitioner knew Mr Dudak was not then an employee of Reachim and the requests were false (indeed Reachim had ceased to exist). The petitioner knew the Funds were to be paid by Cogent into an account which the petitioner actually controlled (paragraph 20). Then 'The funds were to be used at least in part to bribe Mr Dudek to procure business from [Mr Dudak's (new) firm] for Cogent.' (paragraph 20). When the Funds were sent by Cogent and received in the (petitioner controlled) account, 50% was forward to Mr Dudak, and the other 50% just sat in the account (and was later recovered).

Reachim Affair was discovered when a colleague confessed, and the petitioner admitted his part. Further details of the Reachim Affair can be found in the footnote[10].

While accepting that the 'method used for passing the funds to Mr Dudek was...“deceptive”', the petitioner claimed he had been unjustifiable excluded from participation in management of R Mears.

As the the general position, Laddie J said, at paragraph 34:

'I cannot see how [the petitioner] can hope to succeed in arguing that his dismissal from the [R Mears] was unfair. He was the chief executive. He hatched a plan which involved forgery, deception, bribery and the misuse of money which he knew did not belong to [R Mears]. ...It is beyond argument that such behaviour justified his removal from office.'

The petitioner had argued two factors renders his exclusion unfair. The petitioner had said, it was unfair because:

(1) the colleague who confessed, had not been removed as a director. The colleague had 'assisted the transaction whereby the funds were eventually sent to ... bank account purportedly for Reachim but in reality under [the petitioner's] control, knew of what was going on, but kept quiet...' until he confessed (paragraph 21);

(2) 'the other directors of the Company had already resolved to get rid of him and that the discovery of the Reachim affair and its timing was, from their point of view, fortunate and provided them with a convenient pretext upon which to put into operation their pre-existing plan.' (paragraph 33)

As to these arguments, Laddie J said:

(1) he was willing to assume, for argument (this was a reverse summary judgment application), that the colleague was 'equally guilty as [the petitioner]' (paragraph 33) - but 'even if [the colleague] was treated disproportionately lightly, that can have no bearing on whether the treatment of [the petitioner] was unfair.' (paragraph 34);

(2) 'Nor is it an answer to say that the other directors were motivated by an unjust prior decision to remove him from office. If the penalty imposed on him by [R Mears] was not an unfair way of conducting its affairs, it does not become unfair because some of the directors would have tried to remove him from office unfairly if he had not behaved improperly.' (paragraph 34);

Laddie J concluded 'In my view it is impossible to argue that to sack [the petitioner] for these admitted improper actions was unfair.' (paragraph 34)

Company 5685/Ringtower is another case about an excluded petitioner having paid bribes. In Company 5685/Ringtower, a father and son (the 'petitioners') brought an (unmeritorious) unfair prejudice petition proceedings, alleging they had been wrongly excluded from participation in management (by not being appointed directors when they should have been). The unfair prejudice petition was struck out. For present purposes, only the father petitioner's position is relevant. The father petitioner (but not the son) admitted having paid bribes to one of the company's main customer's buyers ((1989) 5 BCC 82 at 87). The Judge it was 'certain' (at 94) that had he been appointed a director, he would have been dismissed from the company (when he was dismissed from (another company) Ringtower):

'In my judgment it is simply unarguable that the dismissal of [the father petitioner] was wrongful. He does not dispute that he did give bribes to the [customer's] buyer and that this continued after the sale of the [a group]. That conduct plainly permitted Ringtower to dismiss him under...his service agreement as being serious misconduct, an act of fraud or dishonesty and an act which might bring Ringtower and its subsidiaries into disrepute.' (at 94)

Dismissing a plea that another person had said that such bribes could continue, the judge in Company 5685/Ringtower said, at 94:

'In my judgment the court will not listen to such a plea from a man guilty of such disgraceful conduct any more than it would listen to a complaint from one highwayman against another.' [11]

(8) Mistreating staff to extent of seriously jeopardizing the efficient conduct of that business 

In Woolwich, the unfair prejudice petition (under section 459 of the 1985 Act) failed. The petitioner had been removed as a director of the company and the petitioner claimed this exclusion was unjustified. Sitting as a High Court Judge, Sir Donald Rattee disagreed, holding that his dismissal/exlusion had been justified because of the petitioner's own conduct. The judge said:

'If it had not been for his own conduct, which led to his removal, I think that removal would probably have been unfair, but the fact is that he was not removed for no reason. He was removed because his fellow shareholders and directors concluded, and ... they were well entitled to conclude, that [the petitioner's] continued involvement in the management of the company's business, whether as director or employee, placed the efficient conduct of that business in serious jeopardy, in that he was treating staff in the production management department in a wholly inappropriate way, and this despite his fellow directors having made plain to him on more than one occasion that such treatment risked damage to the company's business, and having instructed him to bring criticisms of the production management department's performance to [a different director], to whom the board had given primarily responsibility for the organisation of that department.

[The petitioner] had made plain at the directors' meeting ... that, even if his employment were terminated, he would continue to regard himself as entitled to intervene in questions of the performance of the production management team by virtue of his position as a director. In those circumstances it seems to me that [the petitioner] brought his removal from the board on himself. His conduct was the cause of the breakdown of the original relationship of mutual confidence between him and his fellow shareholders, and I can see nothing unfair in his removal in the interests of the company's business.'

Later he said, 'In my judgment in all the circumstances which I have described, no fair-minded disinterested bystander would have found anything unfair in [the petitioner's] removal from the board.' 

SIMON HILL © 2023*

BARRISTER

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole, or the Copyright holder. No attempt has been made to provide an exhaustive review/account of the law in this area. *Copyright is owned by Barrister Search Limited.