Jurisdiction(s):
United Kingdom

Unfair prejudice petitions: summary judgment and strike-out where reliance on historic, waived misconduct—Willoughby v Cole [2024] EWHC 1410 (Ch), England and Wales

Published on: 08 October 2024

Published by a LexisNexis Dispute Resolution expert

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Article summary

Willoughby v Cole and another [2024] EWHC 1410 (Ch)

What are the practical implications of this case?

It is not uncommon for minority shareholder-directors to be removed from office under CA 2006, s 168. However, when taking that course, the majority faces the very real possibility of an unfair prejudice petition and a compelled share purchase, which may inflate the valuation of the minority’s interest. As a result, majority owners often try to defend a director’s exclusion by pointing to every logged lapse, however old or insignificant, in an effort to blunt any assertion of unfairness. This judgment is a clear reminder that such misconduct must be both material and recent. Substantial but historic wrongdoing can be treated as forgiven—and hence relied on to support an unfairness claim—where it was known to, and waived by, the majority. The converse holds true as well. Timing and substance therefore matter. The key lesson from the case is therefore that misconduct must be substantive, not stale, and must be properly notified to the director affected...

What was the background?

Simply Naturals Ltd was founded in 2001 by Peter Willoughby...

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