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Unfair prejudice petitions: Court of Appeal (England and Wales) refuses strike-out where based on directors’ breaches; strikes out unparticularised bad faith allegations (Zedra Trust v The Hut Group)

Published on: 18 June 2021

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Re Hut Group Ltd; Zedra Trust Company (Jersey) Ltd v The Hut Group Ltd [2021] EWCA Civ 904

What are the practical implications of this case?

The Court of Appeal, in this decision, reaffirmed two central principles. First, when evaluating whether directors’ conduct, representing breaches of their fiduciary and statutory obligations to the company, amounts to conduct that is unfairly prejudicial to the petitioner, the critical enquiry is not to whom those duties are owed, but whether the complained‑of conduct unfairly prejudiced the petitioner in his capacity as a shareholder; if so, it is conduct capable of establishing unfair prejudice. Second, allegations of bad faith akin to fraud must be supported by the proper pleading of credible, cogent primary facts that sustain those allegations, either expressly or by reasonable inference drawn from them. Bare assertions or generalised averments of bad faith, advanced without pleaded primary facts capable of establishing bad faith,...

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