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

This is a first instance hearing of two petitions under section 994 Companies Act 2006 alleging unfair prejudice by reference to exclusion from management, diversion of company resources and conduct inconsistent with the parties' quasi‑partnership expectations. The court held that STL was a quasi‑partnership and that, while some early complaints (notably over the Codex transaction and certain vehicle purchases) were not unfairly prejudicial, there was a course of conduct from late 2018 culminating in the suspension of dividends, loading of costs onto STA, and steps to liquidate STA which together unfairly prejudiced the petitioner.

The judge relied on the statutory framework in ss.994 and 996 CA 2006 and considered equitable principles applicable to quasi‑partnerships (Ebrahimi and related authorities). The court appointed a litigation friend for a potentially protected respondent (Paul), validated prior steps and directed a buyout of the petitioner’s 25% shareholdings in STL and STA without a minority discount, valuing those interests as at 5 September 2019 with specified adjustments (notably capping management recharges to STA at the prior year level and expert valuation to be finalised).

Background and parties

The petitioner, Mr Andrew Simmonds, brought two linked petitions under section 994 CA 2006: one concerning Simmonds Transport Limited ("STL") and one concerning STA Vehicle Centres Ltd ("STA"). The respondents included Mr Jeremy Paul Wilson, Mr Richard Mark Jones, Mr Mark Simmonds, Mr Neil Simmonds, Mr Paul Simmonds and STL itself. The petition alleged that the companies were run on a quasi‑partnership basis and that the petitioner had been unfairly prejudiced by exclusion from management, diversion of corporate resources (notably expenditure on Codex Print Solutions Ltd and vehicle purchases), unjustifiable suspension of dividends and the loading of costs on to STA, together with an attempt to place STA into liquidation.

Procedural posture

• The petitions were tried together. The court considered issues of capacity in relation to Paul Simmonds, appointed a litigation friend (Ms Donna Holmes) after a capacity assessment and validated prior steps taken in the proceedings so that the trial could proceed.
• Expert valuation evidence was permitted and the parties filed and gave evidence from valuation experts; a jointly instructed surveyor reported on property value.

Nature of relief sought

The petitioner sought relief under s.996 CA 2006, principally a buy‑out of his shareholdings on a willing buyer / willing seller basis without a minority discount and other relief to remedy unfair prejudice.

Issues framed by the court

1. Whether STL and STA were quasi‑partnerships or otherwise of a nature giving rise to equitable restraints on majority conduct.
2. Whether the respondents' conduct (attempts to exclude, denial of access to company systems, purchases and loans to Codex, vehicle purchases, suspension of dividends, management charges and the attempted liquidation of STA) amounted to conduct of the companies' affairs unfairly prejudicial to the petitioner.
3. Where unfair prejudice was made out, what relief should be granted and the appropriate valuation date and methodology for a buyout.

Key findings and reasoning

• STL was found to be a quasi‑partnership founded on family relationships and mutual expectations of participation in management; the Shareholders' Agreement formalised but did not negate the equitable expectations.
• The court found no sufficient evidence that the petitioner was pushed from the business in June 2018: his period of absence began for genuine health reasons and there was contemporaneous friendly communication which undermined the allegation that his absence was caused by an active plot to remove him.
• Codex transactions and certain vehicle purchases were not unfairly prejudicial: the judge accepted that the Codex venture was discussed and acquiesced in and that end‑of‑lease purchases were commercially arguable and could have been approved by a majority under the Shareholders' Agreement.
• From late 2018 and especially by November 2019 the respondents adopted measures (threats to suspend and then suspension of dividends, changes in remuneration policy increasing directors' salaries while dividends were withheld, withholding access to company systems and a pattern of loading costs onto STA) which the court regarded as punitive or retaliatory and collectively unfairly prejudicial to the petitioner’s interests as a member.
• STA’s shares were held on trust for the shareholders of STL in proportions corresponding to the STL shareholdings; the court treated STA as part of the wider family business and as a quasi‑partnership vehicle for the principal shareholders.
• The court concluded that the cumulative effect of conduct (removal as director, suspension of dividends, denial of information, inflated management recharges and attempted liquidation) justified relief under s.996 and that an order for purchase of the petitioner’s 25% interests in both companies was appropriate.

Remedy and valuation

The judge directed a buyout of the petitioner’s 25% holdings in STL and STA, without a minority discount, to be valued as at 5 September 2019 (the date proceedings were commenced) and ordered that experts finalise the purchase price. The court also ordered that management recharges to STA be capped at the level of the year ending 30 April 2018, with an expert adjustment method to populate the corresponding months up to the valuation date.

Contextual comments

The judgment emphasised the application of equitable principles in family‑run companies that are quasi‑partnerships and noted the unfortunate breakdown of family relations; it validated procedural protections for a potentially protected respondent and directed expert clarification of valuation issues.

This is a first instance judgment granting relief to the petitioner. The court found that STL and STA were quasi‑partnerships and that the petitioner had been unfairly prejudiced by conduct culminating in the suspension of dividends, loading of costs onto STA and an attempted liquidation of STA. The remedies ordered included a compulsory buyout of the petitioner’s 25% interests in STL and STA without a minority discount, valuing those interests as at 5 September 2019, and directions for experts to finalise the purchase price and appropriate adjustments. The court appointed a litigation friend for the respondent Paul and validated prior steps consistent with his protection.