Bee Tee Alarms , Re

Exclusion of a minority shareholder is not, by itself, unfair prejudice where the respondent has made a reasonable offer for the shareholder’s shares. In such circumstances, the exclusion will not ordinarily justify a petition under section 459. A petition may be struck out as an abuse of process where it omits a material reasonable offer and alleges exclusion without such an offer. An offer to purchase shares is not necessarily an offer to compromise the petition, particularly where it is accompanied by a warning that proceedings will be struck out.

Bee Tee Alarms Limited was owned by a brother and sister, each of whom was also involved in its management. Following a breakdown in their relationship, the sister alleged exclusion from management and other conduct amounting to unfair prejudice. The brother had made an offer to purchase her shares at a price later treated by her as reasonable, following an expert valuation. She nevertheless issued a petition and subsequently sought to characterise her acceptance of the earlier offer as a compromise of the proceedings.

The respondent applied to strike out the petition. The central issues were whether the reasonable offer removed the alleged unfairness and whether the parties had compromised the petition.

1. Petition struck out. The petition was an abuse of process because, when issued, a reasonable offer to purchase the petitioner’s shares had been made and remained capable of acceptance. The petition did not refer to that offer or allege exclusion without a reasonable offer.
2. The court applied the principle stated by Lord Hoffmann in Re A company, ex parte Kremer [1989] BCLC 365 and reaffirmed in O’Neill v Phillips [1999] 1 WLR 1092: the relevant unfairness lies not in exclusion alone, but in exclusion without a reasonable offer. Where such an offer has plainly been made, exclusion as such is not unfairly prejudicial and the petition may be struck out.
3. The court did not need to decide whether the offer remained open when the petitioner purported to accept it. That issue could arise in subsequent proceedings.
4. The alternative application to stay the petition was refused. The share-purchase offer was not an offer to compromise the proceedings. It had been accompanied by a warning that proceedings would be struck out, and there was therefore no settlement of the petition even if the offer had later been accepted.