Evans v Eurokey Properties Ltd & Anor

An unfair-prejudice claim must be commenced by petition in accordance with the statutory procedure. A claim form cannot replace that mandatory gateway, and procedural rules cannot cure the failure. Relief under section 996 of the Companies Act 2006 is available only where the court is satisfied that a petition under the relevant Part is well founded. In the absence of such a petition and finding, the court has no discretion to grant relief. The court may also refuse to entertain a claim brought many years after the complained-of events, particularly where relief remains discretionary. A judgment debt against a company does not survive its winding up and dissolution, and cannot itself establish entitlement to relief against a director or shareholder.

The claimant sought an order requiring the second defendant to purchase shares in Eurokey Properties Ltd at a specified fair value. He issued a Part 8 claim form referring to an alleged earlier unfair-prejudice petition and a default judgment against the company.

The claimant produced only a draft petition and no evidence that it had been presented, determined, or followed by an order granting relief. The court therefore considered whether the claim was procedurally competent, whether section 996 relief was available without a well-founded petition, and whether the claim was in any event too late.

1. Claim struck out. The claim form was struck out on three independent grounds.
2. Under sections 994 and 996 of the Companies Act 2006, an unfair-prejudice application must be made by petition. The petition is the statutory gateway to the court’s jurisdiction to grant relief. The requirement is mandatory and cannot be dispensed with through CPR 3.10. The court followed In re Osea Road Camp Sites Ltd [2005] 1 WLR 760.
3. There was no evidence that the draft petition had ever been presented or that the court had been satisfied that it was well founded. Without that finding, section 996 conferred no discretion to make an order giving relief. The default judgment obtained against the company was not an unfair-prejudice judgment and did not establish a right to relief against the second defendant.
4. The judgment debt did not survive the company’s winding up and dissolution. The claimant’s remedy in respect of that debt was, if applicable, proof in the liquidation.
5. Even if the first two grounds were wrong, the court would not entertain proceedings brought nearly ten years after the alleged events. The court followed Re Grandactual Ltd; Hough and others v Hardcastle and others [2005] EWHC 1415, recognising that unfair-prejudice relief is discretionary and that substantial delay may justify refusing to countenance the proceedings.
6. Costs were indicated to follow the event under CPR 44.2. The claimant was indicated to be liable for the second defendant’s costs, subject to assessment if not agreed.