Parminder Singh Dosanjh v Vallipuram Balendran & Anor, (Re Webb Estate Developments Ltd)

A just and equitable winding-up may be ordered where a company is subject to functional deadlock or where mutual trust and confidence in a corporate quasi-partnership has irretrievably broken down. The remedy is exceptional and ordinarily one of last resort, but it is not available only where every other remedy has failed.

The court must consider whether the petitioner is entitled to relief, whether winding-up would be just and equitable if no other remedy existed, and whether the petitioner has unreasonably failed to pursue another available remedy. The burden shifts to the respondent on the final question. Petitioner misconduct may bar relief where it caused the breakdown, but ordinary blameworthiness or imperfect conduct will not necessarily do so.

The petitioner and first respondent were equal shareholders and directors of Webb Estate Developments Ltd, a real-estate company operating as a corporate quasi-partnership. The petitioner sought compulsory winding-up on the just and equitable ground, relying on functional deadlock and an irretrievable breakdown of trust and confidence.

The respondent accepted the quasi-partnership relationship and the breakdown of trust and confidence, but alleged that the petitioner’s conduct caused the difficulties, that unapproved accounts deprived him of equitable relief, and that alternative remedies, including a share purchase, were available.

The central issues were whether the statutory grounds were established and whether the petitioner was acting unreasonably in seeking winding-up instead of pursuing another remedy.

1. Disposition. The Company was ordered to be wound up by the court. The petitioner was entitled to relief on both functional deadlock and breakdown of trust and confidence.
2. Applicable framework. The court applied the three-stage analysis under Insolvency Act 1986, section 125(5): whether the petitioner was entitled to relief; whether winding-up would be just and equitable in the absence of another remedy; and whether the petitioner had unreasonably failed to pursue another available remedy. The burden lay on the petitioner at the first two stages and shifted to the respondent at the third.
3. Deadlock and breakdown. The parties could not agree the treatment or accuracy of the Company’s accounts, the management of properties, liabilities, tax matters or proposed transactions. Their inability to agree on fundamental matters meant that the Company could not function. The breakdown in trust and confidence was irretrievable, and either ground independently justified relief.
4. Alternative remedy. The petitioner was not unreasonable in seeking winding-up. The respondent’s proposed share purchase was contingent, unrealistic on the evidence and likely to generate further disputes. A compulsory liquidation might produce a lower return, but that possibility did not establish a realistic alternative.
5. Conduct and clean hands. The petitioner had improperly filed accounts stating that they had been approved by the board. That conduct did not bar relief because it was not the cause of the breakdown and reflected his attempt to prevent the Company being struck off. The respondent’s undisclosed personal interest in a proposed property purchaser materially destroyed any remaining trust and confidence.
6. Directors’ payments. The monthly payments were not expenses. The March 2020 email exchange amounted to agreement under the articles that they should be treated as repayments of directors’ loans. That agreement did not resolve the wider dispute over the accuracy of the accounts.
7. Consequential matters, including costs, were to be agreed or determined at a short further hearing.