Taylor Goodchild Ltd v Taylor & Anor

Res judicata and Henderson v Henderson abuse of process are distinct doctrines. A later company claim is not necessarily barred merely because related shareholder proceedings have already determined overlapping facts. The court must assess whether the later claim could and should have been raised earlier, applying a broad merits-based evaluation of all the circumstances.

In unfair prejudice proceedings involving a small private company, the court should, where possible, resolve all outstanding disputes and create a clean break. A party who seeks a buy-out valuation without disclosing an intended subsequent claim may be prevented from pursuing that claim later as an abuse of process.

The claimant company followed earlier unfair prejudice proceedings brought by Mr Goodchild against Mr Taylor under section 994 of the Companies Act 2006. Barling J found breaches of duty and ordered Mr Goodchild to buy Mr Taylor’s shares for £170,500, using expert valuations which did not determine the treatment of Mr Taylor’s overdrawn director’s loan account or the value of business diverted to a new company.

The company later claimed repayment of the loan account, recovery of work-in-progress receipts and an account of profits. Mr Taylor and his company sought strike-out and summary judgment, arguing res judicata, Henderson v Henderson abuse of process and lack of a realistic prospect of success.

1. Summary judgment. The court applied the principles summarised in Easyair v Opal Telecom [2009] EWHC 339 (Ch). The DLA Claim had a realistic prospect of success and required factual investigation. It was therefore inappropriate to determine it summarily.
2. The DLA Claim. The claim in debt could not have been brought by the company in the earlier petition while the directors were deadlocked and the company was only a nominal respondent. Nor was it clear that Mr Goodchild could have advanced the issue as unfair prejudice. The issue had been raised before Barling J, who expressly left it unresolved. Pursuing the DLA Claim was therefore not an abuse of process.
3. Cause of action and issue estoppel. The shareholder’s unfair prejudice claim and the company’s claims for compensation and an account of profits were different causes of action. Any issue estoppel arising from findings against Mr Taylor operated to prevent him challenging those findings, not to prevent the company relying on them.
4. Henderson v Henderson. The court applied the broad, merits-based assessment described in Johnson v Gore Wood & Co [2002] 2 AC 1 and the practical guidance in Aldi Stores Ltd v WSP Group Plc [2007] EWCA Civ 1260. The company could have sought compensation and an account against Mr Taylor and STL in the petition under the wide powers in section 996 of the Companies Act 2006. The relevant facts and the possibility of further claims were known, yet the earlier court was not told that such claims might follow the buy-out.
5. The valuation approach implied that the company would not later recover the diverted work-in-progress or profits. Allowing those claims after Mr Taylor’s shares had been bought without accounting for them would undermine finality, impose a potentially penal double liability and defeat the clean-break objective identified in unfair prejudice proceedings. The WIP Claim and Account of Profits Claim were accordingly struck out. The other applications were dismissed.

Not an appeal. The judgment determined an application in proceedings following an earlier unfair prejudice petition. The earlier judgment was given by Barling J on 20 July 2018, cited as [2018] EWHC 2946 (Ch); no appeal was brought from it.