Bridgen v Bridgen and others

The petition was brought under section 994 of the Companies Act 2006, with relief sought under section 996. The court held that parts of the petitioner’s allegations of unfair prejudice against the first respondent, Paul Bridgen, in respect of AB Produce Trading Limited were well founded and then proceeded to determine remedies. The judge resolved complex factual and accounting disputes about diversion of PLC resources to a family partnership, identifying eleven discrete issues for forensic accountants and valuers to address (including subcontract pricing, staff time, vehicle repairs, fuel and plant usage).

Key legal principles applied were: (i) the court's wide discretionary remedial power under section 996 CA 2006; (ii) a petitioner's misconduct is relevant to remedy only if it is sufficiently serious and has a nexus to the unfair prejudice or otherwise justifies withholding relief; and (iii) remedies must be proportionate, prospective and aimed at putting right and preventing the unfair prejudice.

On the facts the judge found an aggregate loss to PLC from the unfairly prejudicial conduct of £451,820.30, and that the fair way to achieve a clean break was an order that the petitioner, Andrew Bridgen, purchase the first respondent’s ABPT shares subject to specified safeguards (including offers by Andrew to buy other minority holdings and a valuation adjustment of 44.4% of PLC’s loss to be borne by Paul’s share valuation). The court set out detailed directions and provisional valuation adjustments rather than attempting every arithmetical computation itself.

Background and nature of the proceedings

The petitioner, Andrew James Bridgen, presented three section 994 CA 2006 petitions (AB Produce Trading Limited, Bridgen Investments Limited and AB Farms Limited) alleging that company affairs were or had been conducted in a manner unfairly prejudicial to his interests. At the liability hearing the judge found the BIL and ABF petitions not well founded, dismissed the claims against two minority respondents, but found some allegations against Paul Bridgen in relation to ABPT (insofar as they concerned diversion of PLC resources to a family partnership) were well founded. This judgment determined remedies under section 996 for the elements found to be unfairly prejudicial.

Relief sought and issues for determination

• Petitioner sought relief under section 996 CA 2006, principally a buy‑out of shares to achieve a clean break or alternatively monetary relief/compensation to the company.
• The court framed accounting and valuation issues (the “11 Issues”) for expert forensic accountants and valuers: profits on three subcontracts (Cemex and two Biffa contracts), losses to PLC from use of the Partnership rather than third party contractors, staff time and salary costs, maintenance and repair of Partnership vehicles and equipment carried by PLC, taxation and insurance costs, and various fuel usages and capital/operational adjustments. The court also required expert valuation evidence on ABPT equity and share values, with potential adjustment for losses found to have been caused to PLC.

Evidence and approach

Both parties relied on competing expert accountancy and valuation evidence (Mr Bell for the petitioner and Mr Lewis for the first respondent), with joint reports and supplemental figures following the remedies hearing. The judge assessed credibility of factual and expert evidence, accepted many expert adjustments but preferred particular methodologies on an issue‑by‑issue basis where reasoned.

Court’s reasoning and findings

• The judge found (after detailed accounting analysis) that PLC had suffered aggregate losses of £451,820.30 as a result of Paul causing the Partnership to use PLC’s resources without proper disclosure or reimbursement. The judge identified which items did and did not give rise to material loss and which did not require adjustment when valuing shares (for example, some subcontract profits were disregarded because they were not materially different from third party market rates).
• On remedy the judge applied established authorities on section 994/996: remedies must be proportionate, prospective and tailored to put right the unfair prejudice and secure a practical clean break where possible; petitioners’ misconduct is relevant only where sufficiently serious and connected to the unfair prejudice or otherwise justifies withholding or varying relief. The judge concluded that Andrew’s unrelated misconduct, though criticised, did not have a nexus with Paul’s unfair prejudice and therefore should not defeat relief.
• The judge considered alternatives (no remedy; ordering Paul to reimburse PLC directly; ABPT buy‑back of Andrew’s shares) and concluded that the appropriate remedy was to order that Andrew purchase Paul’s 44.4% holding in ABPT, subject to safeguards to minimise prejudice to other minority shareholders and to avoid destructive conflict between the interlinked companies (including Andrew offering to purchase other minority holdings in ABPT/BIL at fair value and a valuation adjustment reflecting 44.4% of the losses incurred by PLC).

Practical outcome: The judge directed further expert calculations to implement his findings and provided a provisional valuation methodology and numerical estimate to determine the purchase price (including a deduction of 44.4% of PLC’s losses from the value of Paul’s shares). The judgment therefore determines issues of fact and law and sets out the operative remedial framework to be implemented.

At first instance the court awarded a partial remedy under section 996 CA 2006. Having found certain allegations of unfair prejudice by Paul Bridgen in relation to ABPT well founded and having quantified PLC’s losses arising from diversion of resources (£451,820.30), the court concluded that the appropriate remedial order to achieve a practical clean break was to require the petitioner, Andrew Bridgen, to buy the first respondent’s ABPT shares (44.4% holding) subject to safeguards. The court explained that the purchase price for Paul’s shares should be adjusted to reflect 44.4% of the quantified PLC loss and gave detailed directions for valuation and consequential calculations rather than attempting all arithmetic itself. The judge rejected the submission that Andrew’s unrelated misconduct should deny him relief because it lacked a sufficient nexus to the unfair prejudice found.