Pinfold v Ansell & Ors

The petitioner brought a s 994 Companies Act 2006 petition complaining that the company's affairs had been conducted in a manner unfairly prejudicial to his interests as a 49% shareholder. The court held that the company was operated as a quasi-partnership and that equitable considerations arising from the parties' prior association and their understanding as to management participation gave rise to an expectation that the petitioner would continue to participate in management.

Because the petitioner was unjustifiably excluded from participation and later removed as a director, the petition was well founded on unfair prejudice grounds. The court declined to treat disagreements about commercial strategy as themselves amounting to unfair prejudice. The appropriate remedy was an order that the respondent shareholders purchase the petitioner's shares. The court fixed valuation at the date of the petitioner's expulsion (30 June 2012) on grounds of fairness and awarded a buy-out price of £309,000 (50% of the company valuation at that date). No supplemental interest award was made.

Background and parties:

• The petitioner, Keith Pinfold, held 49% of the shares in Foundry Miniatures Ltd; the first respondent, Bryan Ansell, held 50% and the second respondent, Diane Ansell, 1%. The petitioner alleged the company was run as a quasi-partnership and that, after he had effectively run the business for years, he was excluded from participation and removed as a director in mid-2012.
• The respondents denied that a quasi-partnership existed and said the petitioner had voluntarily retired from day-to-day management; they nonetheless wished to buy his shares and argued valuation should be at the date of petition or the date of order without adjustment.

(i) Nature of the claim: A petition under s 994 Companies Act 2006 seeking relief for unfairly prejudicial conduct and an order that the respondents purchase the petitioner's shares (a buy-out) or, alternatively, relief in such terms as the court thought fit.

(ii) Issues framed by the court:

1. Whether the company should be characterised as a quasi-partnership giving rise to equitable expectations of management participation;
2. Whether the respondents' conduct in excluding the petitioner and subsequently removing him as a director was unfairly prejudicial to his interests as a member;
3. Whether various acts complained of (payments to family members, appointment of family staff, alleged mismanagement and breaches of articles) amounted to unfair prejudice;
4. The appropriate remedy and the correct date and basis for valuation of the petitioner's shares.

(iii) Court's reasoning and conclusions:

• The judge applied the principles in Ebrahimi v Westbourne Galleries and found that equitable considerations were present: a personal relationship, an understanding that both shareholders would participate in management and restrictions on realistic exit. The parties had previously cooperated in Games Workshop, shared benefits on sale and arranged property and distributions in a partnership-like manner.
• The exclusion of the petitioner from management and his later removal as director was a breach of the understanding underlying the quasi‑partnership and therefore unfairly prejudicial. By contrast, mere disputes about commercial strategy and subsequent operational changes were commercial judgments and not, by themselves, unfairly prejudicial.
• The court considered disputed items such as payments to the controlling shareholder's father and salary paid to the controlling shareholder's wife. The payments to the father were treated as a pre-existing family arrangement that the petitioner had accepted when joining and therefore not unfair to him; salary paid to the wife was regarded as a diversion of shareholder distributions and, in assessing fairness, should be borne by the controlling shareholder, though on the valuation approach adopted no adjustment was required.
• On remedy the court ordered the respondents to buy the petitioner's shares. Applying the authorities on valuation dates (notably Profinance), the judge exercised discretion to value the shares at the date of the petitioner's expulsion (30 June 2012) for reasons of fairness to the petitioner and because the post-expulsion course conferred advantage on the wrongdoers. The single joint expert valuation produced a company value that yielded a buy-out price of £309,000 (50% of the 30 June 2012 valuation). No separate award equivalent to interest was ordered.

The judgment therefore granted relief under s 994 in the form of a buy‑out priced at the expulsion date, limited other adjustments and refused an additional compensatory interest award.

The petition under s 994 Companies Act 2006 was well founded. The court found the company to be a quasi-partnership and that the petitioner's exclusion and removal were unfairly prejudicial. The appropriate remedy was an order that the respondents purchase the petitioner's shares. The shares were valued at 30 June 2012 (the date of exclusion/expulsion) and the buy-out price fixed at £309,000 (50% of the joint expert valuation). No supplemental interest award was made.