Intermedia Productions Ltd & Anor v Pate & Ors

A petition under Companies Act 2006, section 994, is inappropriate where the alleged prejudice consists of reliance on invalid share transactions and the petitioner can assert majority control or seek rectification or declaratory relief. The court should not determine share ownership conclusively, or grant declarations affecting absent interested parties, without proper joinder and service. A familial relationship does not by itself establish a quasi-partnership or equitable constraints. The necessary relationship of trust and confidence must be proved. Technical defects in appointing or removing directors will not ordinarily justify section 994 relief where the acts can be ratified or an adequate declaratory remedy is available.

The petitioners sought relief under section 994 of the Companies Act 2006 in relation to Ashia Centur Ltd. They alleged that the company was a quasi-partnership, that the respondents had improperly altered the shareholdings, appointed directors and removed Mr Patel as a director, and had failed to provide information.

The central dispute concerned the validity and effect of allotments and transfers of shares between 1998 and 2010. The petitioners ultimately argued that the register showed only two issued shares, or alternatively that a 2007 shareholding arrangement and associated equitable constraints existed. The court had to decide whether section 994 relief was available and whether it should determine share ownership or related issues concerning absent parties.

1. Petition dismissed. No declaration as to share ownership or other relief was granted, apart from costs.
2. The petition was fundamentally flawed. If the petitioners were majority shareholders, their complaint was that the respondents relied on invalid corporate steps. They could assert their control and, if necessary, seek rectification of the register or declaratory relief. That did not constitute unfair prejudice requiring intervention under section 994. This was supported by Re Legal Costs Negotiators Ltd [1999] 2 BCLC 171 and Re Baltic Real Estate Ltd (No 2) [1993] BCLC 503.
3. The court found that Mr Patel had approved, and had been instrumental in, the 2003 allotment. The later annual returns purporting to alter the shareholdings in 2006 were ineffective and were supported by false documents. The 2010 and subsequent returns reflected an agreement among some parties, but could not determine the true entitlement of all persons with a possible interest.
4. The court declined to declare that Mr Patel and Ms Shah held the only issued shares. Ms Shah and Rajendra’s estate had not been properly served or represented, and Nyconnit Jersey raised further unresolved issues. A declaration affecting absent interested parties would be inappropriate.
5. The alleged 2007 Understandings were not established. Although a familial relationship can in some cases contribute to a quasi-partnership and equitable constraints, the necessary trust and confidence was absent here. The court relied on Fisher v Cadman [2006] 1 BCLC 499, Rahman v Malik [2008] 2 BCLC 404 and Estera Trust (Jersey) Ltd v Singh [2019] 1 BCLC 171.
6. Any technical challenge to the appointment or removal of directors did not justify section 994 relief. The acts could potentially be ratified by the majority, and declaratory relief concerning their validity was an adequate alternative remedy.

First-instance decision. The judgment does not state any prior appellate decision.