Jane Griffiths & Anor v Barbara Wheatley & Ors

On summary judgment, an unfair prejudice petition must disclose a realistic prospect of success and reasonable grounds for relief. Shareholders do not ordinarily have a right to company information for valuing or selling their shares, nor a unilateral right to appoint themselves as directors. Equitable expectations arising from a quasi-partnership are personal to the participants unless a contrary intention is established, and do not ordinarily devolve with an estate. Allegations of excessive family remuneration require a factual foundation identifying the roles, remuneration and alleged excess. An isolated, modest historic loan, repaid within months, will not ordinarily sustain a petition without pleaded prejudice and a legal basis for challenge.

The petitioners presented an unfair prejudice petition under Companies Act 2006, section 994, concerning Wall Lag (Wales) Limited. They alleged improper transactions, the employment of family members on sinecures, refusal to provide financial information, refusal to appoint Jane Griffiths as a director, and an allegedly unauthorised loan to Alison Gomm. Applications were made for summary judgment or strike-out, relief from sanction, and permission to amend the Points of Claim. The central issues were whether the petition disclosed reasonable grounds and had a realistic prospect of success, and whether the proposed amendments altered that conclusion.

1. Relief from sanction. The petitioners’ late evidence was admitted. The three-fold test in Denton was satisfied, and relief from sanction was granted.
2. Summary judgment test. Applying the guidance in Easyair Ltd v Opal Telecom Ltd, as approved in AC Ward & Sons Ltd v Catlin (Five) Ltd, the court considered whether the petition had a realistic, rather than fanciful, prospect of success. The court avoided a mini-trial but could determine a short legal issue where the evidence and submissions were sufficient.
3. Unfair prejudice. Under section 994 of the Companies Act 2006, unfair prejudice could arise from a causative breach of the company’s constitution or contractual commitments, or, in a quasi-partnership, repudiation of an understanding founded on mutual confidence, trust and good faith. Any expectation that the original participants would manage the business was personal to them and did not ordinarily pass to their successors or estates.
4. Information and appointment allegations. The petitioners had no formal constitutional, contractual or statutory right to the requested management information or to appointment as directors. The Articles gave no individual member a right to inspect company records beyond statutory rights or authorisation. The circumstances did not establish an equitable expectation entitling them to information for share valuation or to board appointment. Re Regional Airports Ltd was distinguishable because the shareholders there had been expected to participate personally in management.
5. Remaining allegations. The sinecure allegations were speculative and lacked essential particulars. The £6,500 loan to Mrs Gomm was a single historic transaction, repaid within six months, with no pleaded prejudice or identified proper commercial terms. Member approval was unnecessary under section 207(1) of the Companies Act 2006 because the amount was below £10,000.
6. The petition had no realistic prospect of success and disclosed no reasonable grounds. Summary judgment was entered for Mrs Wheatley and Mrs Gomm. The amendment application was dismissed. The court stated that it would alternatively have struck out the petition under CPR 3.4.