Peter Waddell Holdco Limited & Anor v Bluebell Cars Holding Limited & Ors

A company may participate substantively in an unfair prejudice petition where it has an independent interest to protect. The governing question is whether participation and expenditure are necessary or expedient in the interests of the company as a whole. The court begins with a rebuttable distaste for such participation, placing a heavy evidential burden on the company. Shared interests with a shareholder do not disqualify participation if the company’s own interests are genuinely engaged. In concurrent English proceedings before the same court, a case-management stay is governed by the interests of justice and the overriding objective.

The judgment concerned two interlinked proceedings arising from a dispute over control of a substantial motor-dealership group. The claimants brought a Part 7 claim challenging notices by which an investor sought to exercise contractual control rights and also presented an unfair prejudice petition under section 994 of the Companies Act 2006. The petition alleged that the affairs of the holding company had been conducted unfairly and sought, among other relief, restoration of contractual rights and provision of information.

The applications concerned proposed amendments alleging that the holding company’s directors acted improperly by causing the company to file substantive points of defence and support the investor’s position, the company’s future participation in the petition, and a stay of the Part 7 claim pending determination of the petition.

1. Amendments. Permission was refused, in their current form, for amendments alleging that TopCo acted improperly merely by filing points of defence. PWHL had agreed to that course and the agreement had been embodied in a consent order. Any allegation that the filing itself constituted misfeasance or unfair prejudice was fanciful and had no real prospect of success. The realistic-prospect test requires a prospect which is realistic rather than fanciful and carrying some degree of conviction.
2. The court distinguished between filing a defence and the manner in which it was framed. TopCo had an independent position on the validity of notices served on it and on matters concerning relief sought against it. It was arguable that, in limited respects, its pleading had gone beyond protecting its own interests. PWHL could reconsider and reformulate the amendments.
3. The applicable principles, derived particularly from Re a Company (No 001126 of 1992), were that there is no absolute prohibition on a company participating in or funding its participation in a section 994 petition. The question is whether participation is necessary or expedient in the interests of the company as a whole. The court begins with a rebuttable distaste and a heavy burden lies on the company. Directors must act in the company’s best interests under section 172 of the Companies Act 2006. Shared interests with a shareholder do not themselves establish impropriety.
4. TopCo was not to be restricted from further participation or from amending its defence. Its substantial trading business had interests independent of Investor’s interests. Restricting its participation would also make joint management of the Part 7 claim and petition unworkable and could unfairly bind TopCo to findings made without its full participation.
5. The stay application was refused. Under CPR 3.1(2)(f), the question was whether a stay served the interests of justice within the overriding objective. The “rare and compelling circumstances” formulation was not appropriate for concurrent English proceedings in the same court. The Part 7 claim and petition were ordered to proceed together, and the Part 7 claim was transferred to the Insolvency and Companies List. Costs and consequential directions were left for further agreement or hearing.