Re I Fit Global Limited

The court tried two preliminary issues in an unfair prejudice petition under section 994 of the Companies Act 2006: (1) whether Mr Blunt was ever a shareholder of I Fit Global Ltd and if so in what proportion, and (2) whether the facts alleged, if he were a shareholder, amounted to unfair prejudice. The judge found that Mr Blunt and Ms Beverley Jackson agreed in April 2010 that the company would operate as a joint venture and that Mr Blunt would hold 50% of the issued share capital (50 of 100 shares). The court accepted contemporaneous documents and tax returns showing dividend payments to Mr Blunt, and rejected Ms Jackson's evidence that he was never a shareholder.

The judge concluded that Mr Blunt was excluded from management from November 2011 following his dismissal and that, on the basis of the company's quasi-partnership character, that exclusion constituted unfair prejudice within the meaning of section 994. The court granted permission to seek rectification of the register and indicated it would hear the parties on further orders and directions, relying on the court's power to order retrospective rectification if appropriate.

This was a first instance hearing of two preliminary issues in a petition for relief under section 994 of the Companies Act 2006 brought by Mr Nigel Blunt against Ms Beverley Jackson, Mr Ian Jackson and I Fit Global Ltd.

• Nature of the claim/application: Petition for unfair prejudice (s.994) and a declaration of shareholding, with consequential relief including rectification of the register and potential buy‑out under s.996(2)(e).
• Parties and posture: Petitioner Mr Blunt; respondents Ms Beverley Jackson, Mr Ian Jackson and the company. The trial was of preliminary issues ordered by Registrar Derrett. There had been overlapping employment tribunal proceedings which the court would not revisit. Disclosure and witness service were materially deficient and the court enforced orders for exchange of evidence.
• Issues framed by the court: (i) Was Mr Blunt ever a member (shareholder) of the company and, if so, what shareholding did he hold? (ii) If he was a shareholder, did the respondents' conduct amount to unfair prejudice under s.994?

Facts and evidence: The company formed in April 2010 trading in imported fitness equipment ceased trading in May 2012. The judge found serious failures to keep corporate records (no register of members, no share certificates), conflicting annual returns, and informal corporate practice. Material documents included a 22 June 2010 letter to the bank stating a 50/50 share split and a 15 December 2011 letter from NGS indicating Mr Blunt sought to sell shares; the court also relied on Mr Blunt's tax returns and accountants' computations showing dividend receipts.

Reasoning and conclusions: The judge accepted Mr Blunt's evidence as honest and rejected Ms Jackson's account. The combination of contemporaneous documentation, dividend treatment in tax returns, the NGS correspondence and the company bank payments led the court to infer an agreement that Mr Blunt held fifty of a notional one hundred shares. The court found that after Mr Blunt's dismissal and removal as director in November 2011 he was excluded from management of what was a quasi‑partnership; such exclusion amounted to unfair prejudice under s.994. The court granted permission to seek rectification of the register (invoking the court's power to order retrospective registration) and reserved further directions including valuation and possible s.996(2)(e) relief.

At first instance the court determined the preliminary issues in favour of the petitioner. The judge found that Mr Blunt was a shareholder of I Fit Global Ltd holding 50 of 100 shares and that, by at the latest November 2011, he had been unfairly prejudiced within section 994 by exclusion from management of the quasi‑partnership. The court granted permission to seek rectification of the register and directed the parties to be heard on further orders and directions.