In the matter of Simmonds Transport Limited: Andrew Simmonds v Jeremy Paul Wilson & Ors.

A petition under Companies Act 2006, section 994, requires conduct of the company’s affairs which is both prejudicial and unfair. In a family company operated as a quasi-partnership, equitable understandings may qualify strict legal rights, including rights to management participation and the economic benefit of dividends. Unfair prejudice may arise from a cumulative course of conduct, including exclusion from information or management, unjustified suspension of dividends and costs imposed to diminish the value of a member’s interest. Relief is assessed at the hearing, but the valuation date must be fair on the facts. A buyout may be ordered without a minority discount where the petitioner has been excluded from a quasi-partnership business, although a petitioner is not automatically entitled to a no-fault exit.

Andrew Simmonds presented petitions under section 994 of the Companies Act 2006 concerning Simmonds Transport Limited and STA Vehicle Centres Ltd. He alleged that the companies were family businesses operated as quasi-partnerships and that the respondents had unfairly prejudiced him by excluding him from management, withholding information, suspending dividends, imposing unjustified charges and attempting to place STA into voluntary liquidation.

The respondents disputed the alleged understandings, denied most wrongdoing and contended that Andrew had voluntarily withdrawn from the businesses. The petitions were tried together. The central issues were whether the companies were quasi-partnerships, whether the complained-of conduct was unfairly prejudicial, the beneficial ownership of STA, and the appropriate valuation and remedy.

1. Petitions well-founded. The court held that STL and STA were quasi-partnership companies. Their family and personal relationships, mutual confidence, expectations of management participation and restrictions on share transfers justified equitable considerations alongside the companies’ constitutional documents.
2. Conduct not initially unfairly prejudicial. Andrew was not driven from the businesses in June 2018 by a proved plot to remove him. The Codex transactions and vehicle purchases were commercial decisions in which he had acquiesced, or which could have been approved by the continuing directors. His illness and early absence were not shown to have been caused by the respondents.
3. Cumulative exclusion and financial pressure. From late 2018 and 2019, the respondents’ conduct became unfairly prejudicial. Threats to suspend dividends and recover alleged overpayments were intended to apply pressure. The later suspension of dividends, coupled with increased salaries for the remaining shareholder-directors, unjustifiably deprived Andrew of the economic benefit of the established remuneration arrangement. His removal as a director formed part of a creeping exclusion from the company.
4. In STA, management charges were arbitrary and unjustified, with no proper consideration of commercial value or consultation with Andrew. Filing accounts without his approval, while he remained a director, disregarded his management rights and the requirements of the Companies Act 2006. The attempted voluntary liquidation was ineffective without a quorate board meeting but contributed to the destruction of STA’s business.
5. STA’s shares were held beneficially for STL’s shareholders in proportion to their STL holdings. Andrew’s interests in both companies were therefore to be purchased as at 5 September 2019, without a minority discount. The experts were directed to finalise the price consistently with the judgment, including adjustment of STA’s management charges to the earlier level. Further directions were reserved concerning the mechanics of purchase and Paul’s position.

First-instance decision following the joint trial of two petitions. The judgment records no prior appellate decision.