John Seneschall v Trisant Foods Limited & Ors

The court granted remedial relief to the petitioner following its earlier liability judgment. The petition under s.994 Companies Act 2006 was upheld and the court ordered relief under s.996 designed to achieve a clean break: the petitioner’s shares were to be treated as purchased at a value of nil as at 30 November 2019, and the petitioner was to be indemnified or compensated so as to be released from personal guarantees and security given for the company’s borrowings. The court refused an award described as a 12‑month termination payment.

On the tort claim, the court awarded damages for the unlawful means conspiracy limited to legal fees and costs connected with the disciplinary process and Employment Tribunal proceedings, but rejected the claim for compensation for losses said to arise from the Reward Loan and rejected the claim for lost earnings.

The court (i) rejected the petitioner’s proposed remedial methodology based on a hypothetical commercial negotiation or counterfactual, (ii) accepted the single joint expert’s valuation evidence that the company and the petitioner’s shares had no positive value at the valuation date, and (iii) allocated liability for the s.996 relief and conspiracy damages: Market Fresh and Mr Marshall were jointly and severally liable for the full s.996 relief; Ms Jones was liable only to the extent of her 15% shareholding; no s.996 relief was ordered against Mr McCormick; conspiracy damages were ordered against the individual respondents (other than the company) jointly and severally.

This is the remedies judgment following an earlier liability trial in which the court found that the company’s affairs had been conducted in a manner unfairly prejudicial to the petitioner under s.994 Companies Act 2006 and that the other respondents had engaged in an unlawful means conspiracy to exclude him.

Background and relief sought

• The petitioner sought a share purchase order under s.996 (or alternatively a sale of shares to him), adjustments to valuation to reflect misfeasance, compensation or indemnities in respect of personal guarantees and security (notably the Reward Loan), and damages for conspiracy including legal costs and lost earnings.
• The respondents pleaded that the company had been insolvent and that the shares were valueless; they also denied causation in respect of liquidation and challenged quantum and pleading of particular heads of loss.

Issues for decision

• Whether the court should adopt the petitioner’s proposed counterfactual approach (a hypothetical November 2019 negotiated clean‑break) to determine both form and quantum of relief.
• The correct date and method for valuing the petitioner’s shares and whether expert valuation evidence should be conclusive.
• Whether relief in respect of the petitioner’s personal guarantees and security was open to him under s.996.
• Whether conspiracy damages should be awarded for: (a) liabilities under the Reward Loan; (b) legal fees; and (c) lost earnings.

Court’s reasoning and conclusions

• The court rejected the petitioner’s broad counterfactual approach as a principled matter and as impractical: relief under s.996 must be fashioned by reference to what is fair in all the circumstances rather than by recreating what the parties might have agreed in an imagined negotiation.
• The court selected 30 November 2019 as the valuation date because that was when the respondents’ plan to exclude the petitioner began to unfold and from which he was increasingly excluded from company affairs.
• The single joint expert (instructed under the court’s directions) analysed available contemporaneous forecasts and accounts and concluded the company had nil or nominal value on all conventional bases (earnings multiple, DCF, asset basis); the court accepted that opinion. The court emphasised that the August 2019 forecast was unreliable for DCF purposes and that the terms on which Market Fresh invested could not be used to value the petitioner’s shares as if they were a sale of his shares.
• Accordingly the court ordered relief equivalent to purchase of the petitioner’s shares at a nil price as at 30 November 2019 and ordered relief (payment or indemnity) to free him from personal guarantees and security for the company’s borrowings; the termination payment claim was refused.
• On conspiracy, the court allowed damages for reasonable legal fees incurred in defending the disciplinary process and pursuing tribunal claims (accepting the nexus to the conspiracy and that such expenses are recoverable) but rejected claims tied to the Reward Loan and the substantial claimed lost earnings because those losses were not shown to have been caused by the conspiracy on the pleaded and proved counterfactuals.
• Liability for the s.996 relief was allocated: Market Fresh and Mr Marshall jointly and severally for the whole relief; Ms Jones only to the extent of her 15% shareholding; no s.996 relief against Mr McCormick. Damages for conspiracy were ordered against the respondents (other than the company) jointly and severally.

The judgment explains the court’s reasons for rejecting speculative or post‑trial attempts to reframe causation and valuation, underlines the wide but principled nature of s.996 relief, and stresses the importance of reliable contemporaneous evidence for valuation (notably the limits of DCF where forecasts are demonstrably unreliable).

This first instance Remedies Trial judgment granted substantial relief to the petitioner. The court ordered relief under s.996 Companies Act 2006 equivalent to the purchase of the petitioner’s shares at a nil price as at 30 November 2019 and ordered compensation/indemnities releasing him from personal guarantees and security. The court refused an award described as a 12‑month termination payment. It awarded conspiracy damages limited to legal fees incurred in the disciplinary/Employment Tribunal process but rejected claims for Reward Loan losses and for claimed lost earnings. The court rejected the petitioner’s proposed counterfactual valuation approach, accepted the joint expert valuer’s assessment that the company and shares had no positive value at the valuation date, and allocated liability as follows: Market Fresh and Mr Marshall jointly and severally for the s.996 relief, Ms Jones only to the extent of her 15% shareholding, no s.996 relief as against Mr McCormick; conspiracy damages were awarded against the individual respondents (other than the company) jointly and severally. The remedies were granted to effect a fair clean break and to neutralise the effect of the respondents’ unfairly prejudicial and conspiratorial conduct.