Loch v John Blackwood Ltd
A company may be wound up on the just and equitable ground where there is a justifiable lack of confidence in the conduct of the company's affairs, based on the management's lack of probity.
Facts
A company in Barbados was formed to carry on the business of its founder, Mr Blackwood, after his death. His nephew, Mr Macgill, who was the managing director and the majority shareholder, ran the company for his own benefit, refusing to hold general meetings, failing to submit accounts, and not paying dividends, with the aim of forcing the minority shareholders, the founder's other relatives, to sell him their shares at a low price. The minority shareholders petitioned for the company to be wound up.
Legal principle
The Privy Council held that the company should be wound up on the just and equitable ground. Lord Shaw said that it is undoubtedly true that, at the foundation of applications for winding up on the just and equitable rule, there must lie a justifiable lack of confidence in the conduct and management of the company's affairs. That lack of confidence must be grounded on conduct of the directors in regard to the company's business, not on their private life or affairs. The managing director's conduct, which showed a lack of probity in the management of the company, justified a winding up order.
Related cases on unfair prejudice and just and equitable winding up
- Re Bird Precision Bellows Ltd [1986] Ch 658
- Ebrahimi v Westbourne Galleries Ltd [1973] AC 360
- Re Elgindata Ltd [1991] BCLC 959
- Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855, [2012] Ch 333
- Grace v Biagioli [2005] EWCA Civ 1222, [2006] 2 BCLC 70
- Re Harmer (HR) Ltd [1959] 1 WLR 62
- O'Neill v Phillips [1999] 1 WLR 1092
- Re Sam Weller & Sons Ltd [1990] Ch 682
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