Loveridge and others v Loveridge (No 1)

The Court of Appeal considered two interlocutory regimes in parallel partnership and company litigation between members of the Loveridge family. The court applied principles governing interim injunctive relief (American Cyanamid approach) together with the statutory tests in sections 994 and 996 of the Companies Act 2006 and the just and equitable winding up ground in section 122(g) of the Insolvency Act 1986 and the dissolution rule in section 32 of the Partnership Act 1986.

The court held that the judge below was wrong to infer an equitable constraint or "legitimate expectation" that the petitioner would retain sole management of the companies: the pleaded history did not support a free-standing equitable right to be immune from removal under the companies' constitutions, and therefore there was not an arguable case under section 994. The judge had also erred in granting broad interim company relief which effectively placed a minority shareholder in exclusive control of the companies pending trial.

In relation to the partnerships, because the Riverside and Redstone partnerships had been validly dissolved by notice, the appellate court reallocated interim management pending winding up (placing Ivy and Alldey in sole charge of Riverside, Michael in sole charge of Redstone, and Lesa in sole charge of Oversley Mill) and discharged the judge’s earlier unitary-control orders as inappropriate. The company injunctions were discharged because the petitioner lacked an arguable unfair prejudice case in respect of most companies and the just and equitable ground added nothing material on the facts.

Background and parties

The Loveridge family operated caravan park businesses through five companies and three oral partnerships at will. The dispute arose after family breakdown in 2019, including heated confrontations and a contested £1.25m withdrawal by Michael from the bank account of Bewdley Caravan Sales Limited to buy a site personally (Weir Meadow). Michael sued in the Companies Court under sections 994 and 996 CA 2006 and sought a just and equitable winding up under section 122(g) IA 1986; he also obtained interim orders in parallel partnership proceedings concerning the winding up of three partnerships (Riverside, Redstone and Oversley Mill).

Procedural posture

• The interim orders below placed Michael in sole control of the partnerships and companies until trial; the judge accepted undertakings from Michael, restrained the other family members from interfering and restrained pursuit of a statutory demand issued by Sales.
• The judge refused permission to appeal but the Court of Appeal granted permission (Carr LJ, 25 June 2020), stayed the company injunction (6 July 2020) and heard the appeals in July 2020. The Court of Appeal gave judgment on 24 August 2020.

Nature of the applications and issues

• Company proceedings: whether there was an arguable unfair prejudice petition under s.994 CA 2006 or an arguable just and equitable case to wind up, and whether interim relief placing Michael in effective sole control of the companies was justified.
• Partnership proceedings: how the partnerships should be managed pending winding up or trial, and whether the judge was right to place unitary control in one party rather than separate arrangements per partnership.

Court’s reasoning

• On the companies: the court concluded the petition did not credibly establish an equitable constraint or "legitimate expectation" that Michael could not be removed from management; the pleaded facts showing Michael as the later driving force in expansion did not entitle him to entrenched rights immune from the company constitution. There was no sufficiently arguable unfair prejudice claim in respect of several companies; the misappropriation allegation (the £1.25m withdrawal) meant Michael lacked an arguable defence to a company claim for breach of fiduciary duty, and the judge should not have restrained the statutory demand or effectively put the minority in control pending trial.
• On the partnerships: because Riverside and Redstone were dissolved by Michael’s notice, interim relief had to be tailored to pending winding up. The judge’s unitary-control approach and reliance on the "driving force" of Michael was misplaced; the partnerships are separate and the court reallocated day-to-day control of the three partnerships to those best suited locally (Ivy and Alldey – Riverside; Michael – Redstone; Lesa – Oversley Mill).

Remedy and outcome

• The court discharged the judge's company injunctions and reasons; it allowed the partnership appeal and replaced the judge's partnership order with a tailored replacement order allocating interim control to different family members per partnership. The discharge was suspended briefly to permit agreement on required undertakings and cross-undertakings.

The appeals were allowed in part. The Court of Appeal discharged the judge's wide interim orders in the company proceedings because the petition did not present an arguable case of equitable constraint or unfair prejudice in relation to most companies and because the judge was wrong to place the minority shareholder in effective control pending trial; the court held the statutory and equitable tests (ss.994 and 996 Companies Act 2006; s.122(g) Insolvency Act 1986) were not met on the evidence. In the partnership proceedings the appeal was allowed and the judge’s order discharged and replaced with a tailored interim regime allocating day-to-day control of Riverside to Ivy and Alldey, of Redstone to Michael and of Oversley Mill to Lesa, the discharge being suspended briefly to permit agreement on undertakings.

Appeal from HHJ McCahill QC in the Business and Property Courts, Birmingham (Claim Nos CR-2020-BHM-000301 and CR-2020-BHM-00019). The judge below made interim orders in partnership and company proceedings (7 April 2020 and 28 May 2020). Permission to appeal was initially refused by the judge but granted by Carr LJ on 25 June 2020; Carr LJ stayed the company injunction and expedited the appeals on 6 July 2020. The Court of Appeal heard the appeals (remote hearing 29 July 2020) and delivered judgment on 24 August 2020 ([2020] EWCA Civ 1104).