Charles Fussell & Co LLP was instructed to act on behalf of five of six respondents (the fifth being conflicted) in respect of an unfair prejudice petition presented under s994 Companies Act 2006 (the "Petition").
The facts giving rise to the Petition are relatively complex and concern a family-run business which dates back to 1952. Up until about 1984, the business ran as a partnership between the father and three of their five sons. Each of the father and the three sons held an equal 25% shareholding in the company which owned the Hotel (the "Company"). Of the two remaining sons, one was too young to join the business and the other – the Petitioner in this matter – had chosen to pursue a career elsewhere. In 1984, the partnership purchased a hotel in Central London (the "Hotel").
In 1986, the Petitioner chose to start working in the Hotel. Over time, he became further involved in the business and, in 1992, demanded a share in it. It was agreed between the four existing shareholders that each shareholder would give the Petitioner 10% (albeit one shareholder thought he was to give 2.5%) of his interest the Hotel and/or the Company upon the sale of the Company or Hotel, but the mechanism for providing this interest to the Petitioner was not agreed. Very little further action was taken in respect of the Petitioner's interest thereafter. This became known as the "10% Agreement".
In about 2009, a dispute arose between the Petitioner on the one hand and his brothers on the other. The Petitioner resigned effective 2 February 2010, and subsequently presented an unfair prejudice petition citing failure to recognise the additional 10% shareholding in the Company agreed in 1992, together with making various other allegations of unfairness. The Respondents defended the action by stating that first, the agreement in 1992 had not been intended to have any legal effect and was simply a gentlemen's agreement between family members. The Petition was split thereafter so that issue of the 10% Agreement was to be decided prior to any further allegations of unfair prejudice.
The issues in the Preliminary Issue became whether the Respondents, or any of them, were subject to an obligation as a matter of equity to recognise the Petitioner's alleged entitlement to further shares under the 10% Agreement and, if so, what formed the basis of that obligation. A further question arose as to whether or not any such obligation could be said to be the affairs of the Company in any event.
The matter was heard at trial between March and May 2015 before Martin Mann QC, sitting as a Deputy Judge in the Chancery Division. The Petitioner was unsuccessful on all issues in the Preliminary Issue, with the judge finding that none of the Respondents was obliged to recognise the Petitioner's alleged entitlement to any further interest in the Company. The 10% Agreement was too uncertain to be considered a contract, and the Petitioner had been forced to abandon any trust arguments throughout the course of the trial. Absent any other legal basis, the court found that there could be no obligation on the respondents under s994 Companies Act to transfer any interest in the Company to the Petitioner.
Charles Fussell & Co LLP continues to act for the First to Fourth and Sixth Respondents in relation to pursuing their costs of the action, further to the costs that were awarded to them upon judgment.
Charles Fussell and Elizabeth Stoppelmoor continue to be involved in this matter.