Richard Padun v Neil Dickinson & Anor

The court considered three petitions under section 994 of the Companies Act 2006 alleging unfair prejudice and sought to determine preliminary applications by the First Respondent to strike out or obtain reverse summary judgment. The judge found that the petitions in respect of the two subsidiaries, Arcstream Ltd and Philharmonic Audio Visual Limited, must be dismissed because the pleaded transfers of those subsidiaries’ shares were inconsistent with the evidence that IMG remained the owner and no lawful transfer or consideration had been shown. The petition in respect of Interactive Media Group Limited was permitted to proceed, but stayed for a limited period with detailed directions because there was insufficient evidence at the summary stage to conclude that IMG’s shares had no value and further investigation and valuation material was necessary.

The court also identified potential defaults by the directors (misappropriation of subsidiary shares, false Companies House filings, failure to keep share registers and apparent disregard for creditors) and directed that the judgment be sent to IMG’s liquidator and the Insolvency Service for their consideration.

Background and parties. The petitioner, Mr Richard Padun, brought three section 994 Companies Act 2006 petitions concerning IMG and two of its subsidiaries, Arcstream Ltd and Philharmonic Audio Visual Limited. The First Respondent, Mr Neil Dickinson, applied to strike out the petitions or obtain reverse summary judgment under the Civil Procedure Rules on grounds including that the subsidiaries’ shares had no value to the petitioner and that the petitioner was not a member of those subsidiaries.

Nature of the application and issues. The applications before the court were: strike out under CPR 3.4(a) and reverse summary judgment under CPR Part 24. The principal legal issues were (i) whether the petitioner was a member of Arcstream and Philharmonic such as to have standing under s.994 CA; (ii) whether IMG’s financial position meant its shares had no value so that the unfair prejudice claim could not succeed; and (iii) the appropriate procedural case management steps, including whether the petitions should be dismissed at this stage.

Facts and procedural posture. The judgment summarises material corporate events: IMG purchased Philharmonic in April 2021 and was the sole subscriber for Arcstream in 2019. Companies House filings recorded various shareholdings and later purported transfers and confirmations alleging transfers of the subsidiaries’ shares to Mr Padun and Mr Dickinson. The petitioner alleges wrongful exclusion from management on 17 March 2022 and pleads that the respondents treated the subsidiaries’ shares and dividends as their own and carried out manoeuvres to remove trading businesses from IMG before liquidation.

Court’s reasoning and subsidiary findings. The court held that because there was no evidence of lawful transfer or consideration and no proper member registers, the petitioner could not establish membership of the two subsidiaries; petitions relating to Arcstream and Philharmonic were dismissed (and the petitioner elected to discontinue them). As to IMG, although evidence showed significant creditor indebtedness and cash-flow problems, the available evidential material was insufficient to conclude at the summary stage that IMG’s shares had no value as at the relevant valuation date (taken to be 17 March 2022). Important valuation issues were identified: the need to determine group assets and liabilities at that date, the relevance of subsidiaries’ values, and whether sale of parts of the group would maximise value.

Relief and case management. The court declined to grant reverse summary judgment in favour of the First Respondent on the IMG petition. Instead, the IMG petition was allowed to continue but was stayed for three months to permit the petitioner to obtain documents, seek permission to amend the petition to plead valuation and prejudice with supporting material, and otherwise pursue disclosure and valuation evidence. The court also ordered that the judgment be sent to the liquidator and the Insolvency Service to consider potential director defaults and any insolvency-related steps.

At first instance the court dismissed the petitions relating to Arcstream Ltd and Philharmonic Audio Visual Limited because the petitioner could not establish lawful membership or share ownership and there was no evidence of consideration for the alleged transfers. The petition relating to Interactive Media Group Limited was allowed to proceed but was stayed for three months with directions to enable the petitioner to obtain material and, if justified, amend the petition to plead a non-nominal valuation; the judge concluded that there was insufficient evidence at the summary stage to hold that IMG shares had no value and that further investigation was a compelling reason to permit the petition to continue. The court also directed that the judgment be sent to IMG’s liquidator and the Insolvency Service to consider possible defaults by directors.