Jagit Singh Gill v Amarjeet Signh Gill & Ors

A member must show substantial and unfair prejudice to the member’s interests. In a family company operated as a quasi-partnership, agreed rights of management and participation may supplement the articles. Removing a quasi-partner without following the agreed and statutory process may be unfairly prejudicial, even where the remaining shareholders believe removal is in the company’s interests. The remedy under Companies Act 2006, section 996 must be fair and proportionate. Where a full-value share purchase order provides an adequate alternative remedy, pursuing a winding-up may be unreasonable under Insolvency Act 1986, section 125(2).

The petitioner and his two brothers were equal shareholders and directors of a property company established as a family quasi-partnership. The petitioner was purportedly removed as a director in March 2020 without complying with the articles or section 168 of the Companies Act 2006. A later shareholders’ resolution formally removed him.

He alleged unfair prejudice and sought either a just and equitable winding-up or an order requiring his brothers to purchase his shares. The issues included whether the quasi-partnership continued, whether his exclusion and related financial consequences were unfairly prejudicial, and which remedy was appropriate.

1. Liability. The company remained a quasi-partnership. Differing levels of involvement did not terminate the arrangement, which was founded on mutual trust and confidence and equal rights of management and benefit. The petitioner’s removal breached those arrangements. The belief that removal was in the company’s best interests did not justify it.
2. The removal also failed to comply with section 168 of the Companies Act 2006 and article 19. The petitioner suffered substantial prejudice through loss of agreed oversight, access to company information and accounts, participation in approval of statutory accounts, and equal remuneration and other disbursements. Other broadly pleaded complaints were not made out.
3. Relief. The breakdown in trust and confidence justified relief, but this was not a case of deadlock. A full-value buy-out provided an adequate alternative remedy, making pursuit of a winding-up unreasonable under section 125(2) of the Insolvency Act 1986.
4. The respondents were ordered to purchase the petitioner’s shares at £656,000, with £12,234, £500, compensatory remuneration for February 2021 to March 2022, and 5% interest. They were also to indemnify him regarding the 38 Waltham Avenue guarantee if release could not be obtained. The development-profit claim was dismissed.