Colmer vs Orr

This case concerned the procedural requirements for bringing an unfair prejudice claim under the Companies Act 2006.

TLDR:

• Dispute over procedural requirements for unfair prejudice claims.
• Defendant argued claims must be brought by petition.
• Court ruled in favor of the defendant, striking out the claim.

The plaintiff, represented by Mr. Orr KC and Mr. Morgan, issued a writ on 4 August 2020 claiming relief for various breaches, including an unfair prejudice claim under section 994 of the Companies Act 2006. The defendants, represented by Mr. Colmer KC and Ms. Rowan, argued that such claims must be brought by petition, not by writ.

The defendants issued a summons on 23 March 2021 to strike out parts of the writ, and on 24 June 2021, Master Hardstaff stayed the unfair prejudice claim. The defendants appealed this decision, leading to the current proceedings.

The key issue was whether the failure to bring the unfair prejudice claim by petition rendered the proceedings fatally flawed. The court examined section 994 of the Companies Act 2006, which states that a member of a company may apply to the court by petition for relief.

The defendants argued that the statutory requirement to bring such claims by petition was mandatory, citing the case of Re Osea Camp Sites [2005] 1 All ER 820. The plaintiffs contended that the use of 'may' in section 994 was permissive, not mandatory, and relied on statutory interpretation principles and Order 102 rule 4 of the 1980 Rules.

The court agreed with the defendants, finding that the statutory requirement to bring unfair prejudice claims by petition was mandatory. The court held that the use of 'may' in section 994 related to the right to apply to the court, not the means of application, which must be by petition.

The court also found that the procedural rules did not override the statutory requirement, and the failure to use the prescribed statutory mechanism rendered the proceedings fatally flawed. Consequently, the court struck out the unfair prejudice claim.

Legal representatives: Mr. Colmer KC and Ms. Rowan for the defendants/appellants, Mr. Orr KC and Mr. Morgan for the plaintiff/respondent.

Judicial Panel: McBride J

Case Citation Reference: [2023] EWHC 1234 (Ch)