gunnercooke partner Khaled Moyeed successfully defends client against an unfair prejudice petition

gunnercooke Dispute Resolution Partner, Khaled Moyeed has secured the dismissal of an unfair prejudice petition following a two-day trial at Central London County Court. The petition was brought under section 994 of the Companies Act 2006 on unfair prejudice.

The impugned conduct related to the filing of a confirmation statement showing Khaled’s client, the First Respondent as the sole shareholder in the company.  The Petitioner argued that the parties had previously agreed that he would continue to be a 50% shareholder. This was disputed by the First Respondent.

District Judge Hart held that the Petitioner had acquiesced to the filing itself.  Importantly, the Judge further accepted that (even if the Petitioner’s case about the prior agreement had been correct), the filing of a confirmation statement which deliberately mis-stated the company’s ownership would not have amounted to “inherently prejudicial” conduct capable of justifying a share buy-out order. 

The case provides a helpful insight into the nature of the s.994 jurisdiction in circumstances where the impugned conduct is not alleged to have caused any financial loss.

The court accordingly discharged a freezing order that had been in place against the First Respondent since October 2021, with significant damages under the cross-undertaking later being awarded by consent.

Khaled Moyeed said, “I had been representing the client for 18 months defending against the petition which involved a rather complex set of disputed facts between the parties. Although formerly business partners, the parties had fallen out leading to several parallel proceedings such as a freezing injunction, a separate winding up petition related to a separate company as well as the unfair prejudice petition. I juggled the competing interest of the different proceedings bringing the matter to a successful end. It is a massive relief for my client who can now focus fully on continuing to grow his business.” Khaled Moyeed is a dispute resolution partner who specialises in resolving complex civil, commercial and charity disputes through litigation, arbitration or mediation. To contact him or read more about his practice, click here.