Sheila Burdett v David William Burdett & Anor

The court tried the preliminary issue of liability on an unfair prejudice petition under section 994 (Companies Act 2006) and a separate property claim concerning 72 High Street. The judge conducted a careful factual assessment of disputed directors' minutes relied on by the defendant and concluded the contemporaneous minutes (including the 13/11/15 minute) were genuine. On that basis the court held that an agreement recorded on 13 November 2015, that if a director died before the company was dissolved their shares should be transferred as recorded, meant the petitioner had no sustainable unfair prejudice claim.

The court also decided the competing claims about 72 High Street on ordinary trust principles. It found that the house was purchased for Jeffrey and that the major contributions by other family members were treated as gifts within the family arrangement, so that David's claim to a beneficial interest failed. The judge applied the Duomatic principle to decisions about the sale to Ashley and the formation and funding of Thornbridge, concluding those transactions were not unfairly prejudicial to Jeffrey. The court refused late applications to strike out the defence on abuse/ disclosure grounds.

This judgment resolves two interrelated first-instance disputes between relatives who ran a family coach business. The petitioner (Sheila), as personal representative of her late husband Jeffrey, brought an unfair prejudice petition concerning the affairs of Burdetts Coaches Limited; the defendant (David), Jeffrey’s brother, counterclaimed and brought a separate claim asserting beneficial interests over the family home, 72 High Street.

Background and procedural posture

• The unfair prejudice preliminary issue was tried as the question whether the petitioner had suffered unfair prejudice; relief was reserved for a later hearing.
• The judge also tried the 72 High Street property claim. Evidence was given over several hearing days, including contested evidence about the authenticity of a suite of typed minutes which, if genuine, recorded family agreements affecting share ownership and the distribution of family assets.

Relief sought

• Sheila sought a s.994 petition alleging Burdetts had been “hollowed out” and that she (as Jeffrey’s personal representative) had standing to pursue an unfair prejudice petition.
• David sought declarations/orders that 72 High Street was held on trust for him (or alternatively a resulting trust or loan repayment) and sought an order that Sheila transfer Jeffrey’s Burdetts shares to David in accordance with the 13/11/15 agreement.

Issues framed and decided

• Whether the minutes relied on by David were genuine and, if so, whether they recorded binding agreements which defeated Sheila’s petition.
• The correct ownership / trust analysis for 72 High Street (constructive trust, resulting trust, or gift/loan).
• Whether transactions with Ashley Travel Limited and Thornbridge Estates Limited were unfairly prejudicial or in breach of directors’ duties.
• Procedural applications including late strike-out submissions and whether disclosure non-compliance justified striking out the defence.

Court’s reasoning

• The judge analysed the provenance, text and surrounding circumstances of the disputed minutes and concluded they were genuine contemporaneous documents (including the 13/11/15 minute). The court allowed fraudulent/forgery issues to be tested orally in cross-examination as part of deciding the preliminary issue, relying on overriding objective considerations and prior authorities on procedure.
• Because the 13/11/15 minute recorded an agreement that, on death prior to dissolution, the deceased director’s shareholding should be transferred as recorded, the petitioner (as personal representative) would have been required by that agreement to transfer Jeffrey’s shares to David. On that factual basis Sheila lacked a substantive unfair prejudice case and the petition failed.
• In relation to 72 High Street the judge found the house had been acquired for Jeffrey and that the material contributions from family members were consistent with family gifts and an understood arrangement to keep wealth within the family. There was no reliable evidence of a contemporaneous declaration of trust or enforceable loan; accordingly David’s proprietary claims failed.
• The Duomatic principle was applied to the family decisions about Ashley and Thornbridge: the court found Jeffrey knew of and accepted those arrangements so they were not unfairly prejudicial.
• Late strike-out/abuse submissions were not entertained as a basis to decide the case against David because the judge found no deliberate disclosure fraud; at worst there had been careless compliance.

This is a first instance determination. The court dismissed the unfair prejudice petition brought by the petitioner because the disputed minutes (including the 13/11/15 minute) were found to be genuine and recorded an agreement by which Jeffrey's shareholding should be transferred to David on his death, so Sheila (as personal representative) had no sustainable unfair prejudice claim. On the separate 72 High Street claim the court dismissed David's proprietary claims: the house was held by Jeffrey (legal and beneficial) and the contributions made by family members were treated as gifts/within the family arrangement rather than giving rise to a trust or loan enforceable by David. The court ordered that, on the counterclaim, Sheila must transfer Jeffrey's shares in Burdetts to David for nil consideration in accordance with the 13/11/15 agreement, the effect of which the judge treated as contractually binding.