Dinglis v Dinglis, Re Dinglis Properties Ltd
28 Jun 2019
The petitioner alleged he had suffered unfair prejudice as a minority shareholder at the hands of his father, who held or controlled a majority interest in what was claimed to be a “family company”.
The court rejected the petitioner’s arguments that the company was a quasi-partnership and found that there was no relevant understanding that the petitioner and his sister would remain directors of the company. The court also found that the petitioner’s conduct would have justified his exclusion from management and that events after that point would have caused any understandings as had been relied upon to have come to an end without unfairness to the petitioner.
Liability was established on the basis that following the petitioner’s exclusion from management there had been breaches of duty by the first respondent as a director of the company, which were likely to be repeated in the context of the breakdown of family relationships. A share purchase at a discount was ordered on that basis.
The judgment contains a valuable analysis of the allegations that need to be pleaded and proved to found a claim that a company, even when owned and run by members of a family, is a quasi-partnership and how subsequent events (including a petitioner’s conduct) may cause any equitable constraints on the majority to end or not be breached by excluding the minority from management.
The judgment also contains detailed consideration of the relationship between the duties of a director under ss.172, 175 and 177 of the Companies Act 2006 and the elements needed to show a breach of each of those distinct duties. The decision provides clear authority for the first time that s.175 and s.177 are mutually exclusive.
Mark Hubbard and Kristina Lukacova appeared for the Respondents.