The High Court recently entered a ‘reverse’ summary judgment against two petitioners who were, in the court’s view, principally seeking information for the purposes of valuing their shares in a private company.
In this article, partner Alex Lerner and paralegal Giovanni Manca review the decision in Jane Griffiths & Anor v Barbara Wheatley & Ors [2025] EWHC 1843 (Ch).
Background
Mrs Griffiths and Mrs Jones (the “Petitioners”) brought an unfair prejudice petition pursuant to section 994 of the Companies Act 2006 in respect of Wall Lag (Wales) Limited (the “Company”), a company incorporated in 1977 as a business supplying and installing cavity wall insulation. The petition was brought against other shareholders, including the three directors, and the Company itself (the “Respondents”).
For many years, the Company was operated by a Mr Griffiths and a Mr Wheatley. Mr Wheatley passed away in 2023, shortly before Mr Griffiths passed away in 2024. Following Mr Griffiths’ death, there were discussions between Mrs Griffiths (one of the Petitioners) and Mrs Wheatley (one of the Respondents) in relation to the acquisition and disposal of the shares held in the names of Mr and Mrs Griffiths.
Mrs Wheatley made an offer for the shares but, in short, Mrs Griffiths said that absent “a comprehensive set of both financial and legal information relating to the entire business”, she would be unable to make an informed decision on the offer. There followed correspondence between the parties, with Mrs Wheatley offering to provide an independent valuer with the information required to enable Mrs Wheatley to purchase the relevant shares at their fair value so long as Mrs Griffiths committed to the transaction.
The allegations
Mrs Griffiths was unsatisfied with Mrs Wheatley’s proposal and this, in turn, prompted the Petitioners to bring their petition. The petition advanced four core allegations of unfairly prejudicial conduct:
- the failure to give Mrs Griffiths access to the Company’s financial records (the “Information Allegation”),
- the refusal to appoint Mrs Griffiths as a director (the “Appointment Allegation”),
- the misapplication of Company funds on the employment of “friends and family on sinecures” (the “Sinecure Allegation”), and
- that funds had been advanced to Mrs Gomm (one of the Respondents) without board approval and on non-commercial terms (the “Directors Loan Allegation”).
The application
The Respondents applied for a ‘reverse’ summary judgment (ie, a summary judgment application made by a respondent/defendant, rather than one made by a petitioner/claimant), alleging that the Petitioners had no realistic prospect of establishing their case. In the alternative, the Respondents also contended that there was no legal basis for the petition and/or that it was an abuse of process.
The decision
HHJ Halliwell concluded that the Petitioners’ real object was to achieve a sale of their shares at the best obtainable price and, therefore, that their grievances were rooted mainly in the Information Allegation and the Appointment Allegation. As to those allegations, he found that:
- The Petitioners had not identified special circumstances requiring the directors of the Company to provide them with information beyond their strict rights under the Company’s articles of association; and
- The Petitioners had not identified a recognised basis to show that Mrs Griffiths was entitled to be appointed as a director, nor that, owing to the failure of the Company to appoint Mrs Griffiths as a director, one or more shareholders had suffered unfair prejudice.
As to the other allegations, HHJ Halliwell found that the Sinecure Allegation was, at best, speculative, in that it was without substantial factual foundation. The Directors Loan Allegation was based on a single historic transaction of limited pecuniary value. On its face and in isolation, it did not amount to unfairly prejudicial conduct capable of sustaining an unfair prejudice petition.
HHJ Halliwell therefore entered summary judgment against the Petitioners. He said that if he had not done so, he would have been minded to strike out the petition.
Conclusion
Reading between the lines, it is apparent that the Petitioners may have thought that threatening and/or commencing a petition would generate leverage such that they could obtain the information they had been requesting to value their shares. In the event, however, the Petitioners hurriedly issued proceedings that fell flat because they lacked foundation. Indeed, proceedings could have been avoided altogether if the Petitioners had engaged with Mrs Wheatley’s proposal to use an independent valuer. Most likely, the Petitioners now find themselves in a worse position than if they had not issued the proceedings at all.
This decision shows the importance of carefully investigating and properly particularising allegations of unfair prejudice. It also shows the importance, in the context of corporate disputes, of taking a careful and considered strategic view of all options (and not only litigation-focused options) before threatening and/or issuing proceedings.
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