Evans v Eurokey Properties Ltd & Anor

The court struck out a Part 8 claim which sought an order under section 996 of the Companies Act 2006 for the purchase of the claimant's shares on the basis that the statutory procedure for unfair prejudice petitions had not been followed and there was no evidence that any petition had been presented or determined. The judgment applied the mandatory requirement that unfair prejudice claims proceed by petition under sections 994/995 and 996 and the Companies (Unfair Prejudice Applications) Proceedings Rules 2009, following the reasoning in Re Osea Road Camp Sites Ltd that the petition mechanism is the sole statutory gateway. The judge also found no evidence that any successful petition or order existed, noted that the only judgment produced was a default judgment against the company which would not survive liquidation and the company had been dissolved, and concluded that the proceedings were fatally procedurally flawed. As an alternative ground the court would in any event have refused to countenance proceedings so long after the alleged events, applying the approach in Re Grandactual Ltd. Costs were indicated against the claimant.

Background and parties: The claimant, Mr Clifford Bryan Evans, issued a Part 8 claim on 1 March 2020 against Eurokey Properties Limited and Mr Martyn Redman seeking relief said to arise from an unfair prejudice petition and an order under section 996 of the Companies Act 2006 requiring purchase of his shares at a fair value. Eurokey had ceased trading in 2008/2009, was wound up in 2011 and dissolved in 2013. The claimant relied on a draft petition and a default judgment obtained in 2010 against the company.

Nature of the application: The claimant sought the court to administer the remedy under section 996 of the Companies Act 2006 (share purchase) on the basis that unfair prejudice had been "established." The Part 8 claim form and supporting witness statement were defective in several respects, including absence of a statement of truth.

Issues framed:

• Whether there was any evidence that an unfair prejudice petition had been presented to and determined by the court;
• Whether the Part 8 proceedings complied with the statutory requirement that such relief be sought by petition in accordance with the Companies (Unfair Prejudice Applications) Proceedings Rules 2009;
• Whether, if procedural defects were excused, the court should nonetheless decline to entertain stale proceedings arising nearly ten years after the events.

Court's reasoning and conclusions: The court reviewed authorities establishing that the statutory petition procedure is mandatory and is the sole gateway to unfair prejudice relief (referencing In re Osea Road Camp Sites Ltd). The judge found no evidence that the draft petition had ever been presented, no court file, no return date or directions as required by the Rules, and no order establishing unfair prejudice. The document produced was a default judgment against the company, not a petition-based determination, and a judgment debt would not survive the company's winding up and dissolution. Consequently the claim was struck out as procedurally fatally flawed for failure to proceed by petition under the Rules and the Companies Act. As an alternative and independent ground, the court would have refused to entertain such delayed proceedings, applying Re Grandactual Ltd. The Second Defendant was identified as the successful party and an order for costs against the claimant was indicated.

Procedural and contextual observations: The judgment emphasised the mandatory nature of the petition procedure for unfair prejudice claims, the importance of compliance with the Companies (Unfair Prejudice Applications) Proceedings Rules 2009, and the court's discretion to refuse relief in respect of old events. The judgment was delivered in writing following a remote hearing and invited the parties to agree the final order.

First instance: The Part 8 claim form dated 1 March 2020 is struck out and the claim dismissed. Rationale: there is no evidence that an unfair prejudice petition was presented or determined so the court lacked the prerequisite basis to make orders under section 996; the proceedings were procedurally flawed for failure to bring a petition as required by statute and the Rules; and, alternatively, the court would in any event not countenance such delayed proceedings under the principles applied in Re Grandactual Ltd. Costs were indicated to follow the event in favour of the Second Defendant.