Myerson’s Recent Successes in Unfair Prejudice Petitions

In the past year the specialist commercial litigation team at Myerson Solicitors has acted for numerous clients in respect of bringing unfair prejudice claims pursuant to Section 994 of the Companies Act 2006.

Very recently the team has been successful in settling three long running shareholder dispute matters.

In each case, Myerson represented clients who were minority shareholders in privately owned companies within the sectors of hospitality, manufacturing, and property development. The remedy sought by the clients was, principally, the purchase of their shares in the companies at fair value and to reflect the unfair prejudice suffered.

Following extensive pre-action correspondence, in 2020 / 2021 Myerson issued three petitions in the Business and Property Courts of the High Court of Justice in Manchester. In doing so Myerson engaged leading counsel Lisa Linklater KC to assist with strategic advice on merits, drafting the petitions and representing the clients at procedural hearings including costs and case management conferences and interim application hearings.

The petitions involved in summary as follows:

1. A minority shareholder inherited from her late husband shares in companies specialising in aluminium casting products. Following the death of her husband the client was excluded from the management of the affairs of the companies, received no dividends and was removed as a statutory director. Furthermore, client suspected, and it was subsequently established after disclosure, that profits from one of the companies were being diverted to another company by the charging of management fees which had a prejudicial impact on the value of the client’s shares.
2. A minority shareholder in a successful pub business based in central London. The client set up a pub and restaurant with his business partner. It turned out to be an overnight success and very profitable. The client later discovered numerous instances of unfairly prejudicial conduct by his business partner including the failure of his business partner to register his shareholding in the company; exclusion from negotiations relating to the lease of the company's premises; and the levying of management charges against the company without any commercial justification for such charges.
3. A minority shareholder in a property development business based in Manchester. The client personally invested significant sums of money as a shareholder loan and capital investment in the company for the return of shares. It transpired that following the development of properties the companies allegedly did not make a profit. Upon querying why that was the client was quickly excluded from all financial information pertaining to the profits made from the property developments and was denied access to bank statements to verify the profitability of the companies. It later transpired that the shareholders utilised the profits made to repay various loans that they had made to the company plus large amounts of interest on those loans without accounting to the client for those payments or giving due consideration to the client’s loan which was not paid in complete disregard to his rights as a shareholder and quasi-partner in the business.

Each case involved experts share valuation evidence and in one of the petitions the court ordered the parties instruct a single joint expert to ascribe fair value to the petitioner’s shares.

The cases were complex and required strategic advice at different stages including advice on the unfair prejudice pleaded including whether the companies were in fact quasi-partnerships; amendments to the statements of case following disclosure; considerations over whether the Trial should be split; expert valuation evidence, the bases of valuation and questions to the experts; applications for pre-disclosure / specific disclosure; and preparing witness evidence for Trial pursuant to the requirements under CPR 57AC.

Two of the petitions were listed for Trial in February 2023. Those petitions settled shortly before Trial at mediation (with assistance from counsel and a specialist commercial mediator). One of the petitions settled through other alternative dispute resolution. Myerson was involved extensively in the settlement negotiations and in drafting the settlement agreements. Myerson’s specialist corporate department assisted with the drafting and completion of the share purchase documentation (which included share buyback agreements).

These cases demonstrate the depth of experience Myerson’s commercial litigation team when it comes to complex shareholder litigation, and they highlight the successes achieved by the team on behalf of its clients.

The feedback Myerson has received from its clients has been extremely positive.

Mrs C said :

“ Myersons was highly recommended to us by a family friend. Who had previous dealing with them and had been very impressed and very satisfied with the outcome.

From the outset and initial contact, we have always had immediate responses to emails and telephone calls. Nothing ever seemed too much and everyone we spoke to from Myersons were all very polite, professional and honest.

Robert Brothers was our direct contact about the case. He was always very kind, sympathetic and helped guide us reassuringly along the way as this was not an experience we had ever had to deal with before. It was a very upsetting and a difficult time for us all having lost our Husband/Father. He always had such empathy and allowed us time if we needed it during teams calls. We were very impressed with the way Robert could remember everything from the case. We had given him vast amounts of information and he could retain all of it and recall it during conversation and teams calls. It’s an impressive skill.

Robert was always willing to deal with my daughter and son to relieve me of any pressure and upset. They were invaluable and it helped me get through this difficult time.

Adam Maher was always very kind, supportive and helpful with this case. He was a valuable support and brought a great wealth of knowledge during the meetings and on the mediation day. On mediation day Adam and Robert made us all feel incredibly secure and reassured us that we had a strong case and they were very confident of a good outcome for us. On the day we felt well guided and provided the very best of communication.”

Mr D said :

“ Robert and Adam were great from beginning to end. They got up to speed very quickly with the case after taking over from my previous lawyer who I had not had such a great experience with. They were always very quick to deal with matters that arose and kept me well informed along the way. Robert was also very good at putting my mind at ease when stressful situations arose. If I ever had to do anything like this again, which I would definitely rather not, I wouldn't hesitate to work with  Robert and Adam again.”