Oncoqr ML GmbH v Frederick Jacobs & Ors

A company may be wound up on just and equitable grounds where its management is functionally deadlocked or, if it is a quasi-partnership, where the relationship of mutual trust and confidence has irretrievably broken down. Deadlock is assessed at trial and includes a forward-looking assessment of whether the business can realistically continue. The remedy remains one of last resort, but a proposed alternative must be realistic and the petitioner must have acted unreasonably in failing to pursue it. The clean-hands doctrine does not require complete blamelessness. Relief is barred only where the petitioner’s misconduct has a sufficiently close connection with the relief sought, including where the petitioner was the sole cause of the deadlock or breakdown.

Oncoqr ML GmbH, a 50% shareholder of TYG Oncology Ltd, petitioned for TYG’s winding up under section 122(1)(g) of the Insolvency Act 1986. The petitioner relied on functional deadlock and an irretrievable breakdown of trust and confidence in a company said to be a quasi-partnership.

The respondent directors opposed the petition, alleging breaches of fiduciary and statutory duties, misuse of company funds and lack of clean hands. They proposed resignation, restructuring and buy-out alternatives. The central issues were whether TYG was functionally deadlocked, whether it was a quasi-partnership suffering a breakdown of mutual confidence, whether alternative remedies were realistically available, and whether the petitioner’s conduct barred relief.

1. Disposition. The petition was granted. TYG was ordered to be wound up and a liquidator appointed. Either functional deadlock or loss of trust and confidence was independently sufficient.
2. Functional deadlock. Deadlock concerns the company’s management rather than general decision-making. It is assessed at the date of trial and is forward-looking. The question was whether the directors could realistically continue in business and reach the unanimity required by the Articles. Excluding conflicted directors could not realistically resolve the problem where ordinary future decisions would still require cooperation between irreconcilable factions.
3. Quasi-partnership. The indicators identified in Ebrahimi are not a strict legal test. TYG had been founded on personal relationships of trust and confidence, an expectation of participation in management and equal benefit. The absence of an executed shareholders’ agreement or an apparent share-transfer restriction did not prevent the company being treated as a quasi-partnership.
4. Loss of confidence. The parties’ relationship had completely broken down. They could not realistically be expected to work together again. The petitioner was not solely responsible for that breakdown.
5. Alternative remedies. Winding up is a remedy of last resort. The proposed alternatives were raised too late, unsupported by evidence, or unrealistic. A buy-out lacked valuation evidence, and resignation or restructuring did not provide a practical solution.
6. Clean hands. The alleged 2019–2022 payments did not establish breaches of sections 172, 175 or 177. Transactions between TYG and OncoQR or S-TARget fell within section 177 rather than section 175, and the directors’ interests were known or ought to have been known to the other directors. The court made no determination on the legitimacy of the December 2022 payments. Even if improper, they were symptoms rather than causes of the breakdown and lacked the necessary close connection with the winding-up relief.