Davies v O’Keeffe & Ors (Re Greenfrost Ltd & PMO Property Ltd) [2023] EWHC 5 (Ch)

Charlie Newington-Bridges was instructed by Aaron and Partners LLP, to act for Ms Davies (‘the Petitioner’) in respect of her s994 Companies Act 2006 unfair prejudice petition to the High Court seeking a buy-out of shares in two companies worth c. £1m in the case of Davies v O’Keeffe & Ors (Re Greenfrost Ltd & PMO Property Ltd) [2023] EWHC 5 (Ch). 

The Petitioner and the First Respondent were both directors and shareholders in two companies, Greenfrost Limited (‘GFL’) and PMO Property Limited (‘PMO’). The former is concerned with quarrying and the latter is a property development business. GFL was acquired by an industrial group for c. £2m.

During the course of c.3 months post-acquisition, the Petitioner’s case was that some of the proceeds of sale were dissipated by the First Respondent or transferred to companies of which the First Respondent was the sole or controlling shareholder and director. The Petitioner was subsequently also removed as a director of GFL without her consent or knowledge, although after an unlawful means conspiracy claim was brought against the First Respondent she was, by consent, restored as a shareholder.

The First Respondent also sought to obtain charges against PMO’s assets without the Petitioner’s knowledge or consent. It was alleged during the trial that he had forged board minutes to suggest that the Petitioner had given consent.

By her petition, the Petitioner sought: (i) a buy-out order in relation her holdings in GFL and PMO; or alternatively (ii) an account and enquiries in relation to the funds of both companies. However, the latter was not pursued at trial because the First Respondent, in control of the companies’ records and accounts, had provided only limited disclosure in two separate claims relating to the same matters.

In his judgment HHJ Jarman KC sitting in the High Court, held in relation to the withdrawals by the First Respondent that he was not satisfied with the explanation of what had happened to those monies. In those circumstances, he could not be satisfied that the monies were used to pay debts or for any proper purpose of GFL. The withdrawals therefore amounted to a misuse of those monies and a failure to consult or inform the Petitioner.

He further held that the subsequent sale of the Petitioner’s share in GFL by the First Respondent, the appointment of a third party in her stead as a director and the failure to give any proper information about this, was clearly conduct relating to the affairs of GFL which was unfairly prejudicial to the Petitioner.

Finally, the loans secured on the assets of PMO amounted to a misuse of those assets and the failure to consult or inform the Petitioner about them amounted to exclusion of her from these decisions. All of this conduct was unfairly prejudicial to the Petitioner’s interest in PMO.

Accordingly, the petition was made out and the Judge granted the buy-out remedy sought in the Petition.

A link to the judgment can be found here.