John Seneschall v Trisant Foods Limited & Ors

Relief under Companies Act 2006, s 996 is directed to remedying established unfair prejudice fairly and proportionately. The court has a wide and flexible discretion, but must exercise it judicially and rationally. It is not required to construct a hypothetical commercial bargain between the parties or to apply tortious “but for” principles to the whole remedy. A clean break, including a share purchase order and relief from personal guarantees, may be appropriate even where the shares have no value and the company has subsequently entered liquidation. Damages for unlawful means conspiracy remain compensatory: actual loss and a nexus with the conspiracy are required, although the assessment need not be mathematically precise.

The petitioner had previously succeeded in establishing unfair prejudice under s 994 of the Companies Act 2006 and unlawful means conspiracy against the respondents. The liability judgment was reported as [2023] EWHC 1029 (Ch). The present hearing concerned remedies following a split trial.

The petitioner sought a share purchase order, compensation or indemnities for personal guarantees and security, a termination payment, and conspiracy damages for liabilities under a refinancing loan, legal fees and lost earnings. The central issues were the permissible scope of relief under s 996, the use of a proposed hypothetical “counterfactual” negotiation, valuation of the shares, causation of losses, and the allocation of liability between the respondents.

1. Relief under s 996. The court’s powers under s 996 of the Companies Act 2006 are wide and flexible. They are compensatory rather than punitive and must be exercised judicially, rationally, fairly and proportionately. The court may fashion relief not specifically sought, provided the opposing parties have fair notice and procedural fairness is preserved.
2. The court rejected the submission that the whole remedy should be determined by asking what the particular parties would probably have negotiated in late 2019. Counterfactual reasoning used in tort or contract to establish factual causation does not determine the scope of relief for unfair prejudice. The court must assess the remedy by reference to the reality and practicalities of the overall situation, including circumstances at the hearing.
3. The appropriate remedy was a clean break. The petitioner was entitled to relief equivalent to the purchase of his shares, valued as at 30 November 2019, together with compensation or indemnification releasing him from personal guarantees and security given for the company’s business borrowing. The shares had nil value. A termination payment was refused because it depended on the rejected counterfactual and lacked an evidential or contractual basis.
4. The valuation date was selected because November 2019 marked the inception of the exclusion plan, after which the petitioner lost control, information and responsibility for the company’s affairs. The company was not shown to have been inevitably doomed at that date. Its later liquidation did not defeat relief, although relevant evidence could be considered insofar as it illuminated value at the valuation date.
5. The s 996 relief was ordered jointly and severally against Market Fresh and Mr Marshall, against Ms Jones to the extent reflecting her 15% shareholding, and not against Mr McCormick.
6. Conspiracy damages. Damages for unlawful means conspiracy are “at large” in the sense that exact quantification is unnecessary, but actual damage and a causal nexus with the conspiracy remain essential. The petitioner could recover legal fees directly attributable to the dishonest suspension, disciplinary process and dismissal. His claims concerning the refinancing liabilities and lost earnings failed because the pleaded counterfactual was legally wrong and he did not establish that the conspiracy caused those losses.
7. The conspiracy damages were awarded jointly and severally against the respondents other than the company. Further submissions were reserved on the form of order, costs and consequential matters.

First-instance remedies judgment following the liability judgment reported as [2023] EWHC 1029 (Ch). No appeal history was stated.