Yusuf v Yusuf & Anor

A company member may establish unfair prejudice through cumulative failures of corporate housekeeping, financial irregularities, failures to provide information, and conflicts of interest. Loss of trust and confidence alone is insufficient. The court must apply fairness judicially and may grant wide, prospective relief that remedies the unfair prejudice. Where a company’s affairs are deadlocked, relief may include an independently controlled sale of company property and subsequent share transfers. A purported share transfer which merely instructs that formal transfer documents be prepared is not itself an effective transfer. A trust document must demonstrate an immediate intention to create a trust; an instruction to prepare a future document may fail that requirement.

The proceedings comprised a Chancery claim and an unfair-prejudice petition concerning the family-owned company Pekalp Properties Limited. Sueda Yusuf claimed a beneficial 25% shareholding, enforcement of a February 2015 agreement, and related relief. Tanju Yusuf and the company brought a Part 20 claim alleging that Sueda and Askin Ozerin held sale proceeds and other funds on trust for the company. The petitioners sought relief under the Companies Act 2006, including regulation of the company’s affairs, accounts, and a share purchase or sale.

The issues included the validity of an alleged transfer of Sueda’s shares, the effect of a 2003 trust document concerning a Cypriot subsidiary, the February 2015 agreement, financial irregularities, directors’ conflicts, and the appropriate relief.

1. Shareholding. Sueda’s original 25% shareholding was beneficially hers. The January 2009 letter was an instruction to prepare transfer documentation, not a transfer. It did not state the number of shares, consideration, or establish that the directors had approved it as a transfer. Sueda therefore remained entitled to a 25% interest in PPL (paras [87]–[96]).
2. Cyprus trust and sale proceeds. The 2003 Trust Document did not demonstrate an immediate intention to create a trust. It was an instruction to prepare a future document and was not signed by Sueda and Isfendiyar in their personal capacities. Even if a trust had arisen, the parties’ subsequent conduct was inconsistent with its continuation and it had fallen away by 2014. The sale proceeds were therefore not held on trust for PPL. Pekalp Cyprus owed PPL £1,249,284, for which Tanju and Askin had to account, while the balance of PPL’s Cyprus investment had to be accounted for by Tanju.
3. February 2015 agreement. Sueda and Tanju entered into a binding agreement on 27 February 2015. It was not conditional on repayment of the Cyprus proceeds. Tanju was required to transfer the Catalkoy villa, pay £100,000 towards the mortgage, meet the continuing utility-bill obligation, and perform the other agreed obligations. Specific performance was ordered for the villa; damages were to be assessed for the other breaches.
4. Unfair prejudice. The cumulative failure to provide accounts and information, hold meetings, maintain proper share records, account for company funds, and address conflicts of interest was both unfair and prejudicial. Breakdown of trust and confidence alone would not suffice. Tanju’s conduct in relation to company money, Church Road, and dealings with the trading companies breached the equitable standard applicable under sections 994 and 996 of the Companies Act 2006 (paras [135]–[170]).
5. Relief. Relief had to be fair, equitable, and prospective. It was to include an independently controlled process testing the best obtainable price for Church Road, potentially followed by a sale of shares between the parties. No minority discount was appropriate where the purchaser would obtain control or a cash-backed company. An account was required to regularise the company’s financial affairs. The Part 20 claim otherwise failed (paras [171]–[181], [186]).