CR-2022-BRS-000101 - [2025] EWHC 2291 (Ch)

I can briefly summarise the main elements of the petition for present purposes as follows. In the Introduction (section 1), it is made clear that the current draft is intended completely to replace the earlier petition and draft amended petitions ([1]), and that, except in the case of the second petitioner, the petitioners accept that “there have been no executed stock transfer forms nor issued share certificates” in their favour. Instead those petitioners rely on “equitable entitlements to shares set out hereinbelow” ([5]).

This is amplified in section 2 when they say that “A beneficial and/or equitable entitlement to shares is sufficient locus standi under section 994” ([6]). However, and as noted above, at the hearing before me the active respondents accepted that all the petitioners satisfied the formal requirements for standing to present a petition under section 994 in respect of the sixth respondent. The position of the fourth petitioner in relation to the eighth respondent is different. Both sides accepted that the fourth petitioner could not show registered ownership of shares in the eighth respondent. So, the “equitable entitlement” argument was still being run, but only in relation to the fourth petitioner, and then only in relation to the eighth respondent. But then it appeared that a stock transfer form in favour of the fourth petitioner had been lodged with the eighth respondent. I will come back to that.

Section 3 of the petition describes the active respondents to the petition. The first respondent was established in China in 2016 by the fourth respondent. It created the “Happy Lamb” brand of restaurants. The second and third respondents are shareholders in both the first respondent and the eighth respondent. The second respondent is also a franchisee of the Happy Lamb brand. The fifth respondent is or was head chef for the sixth respondent, and owns shares in that company, as well as formerly owning shares in the eighth respondent.

Section 4 explains that in 2017 the second respondent separately approached the first and second petitioners to ask if either would like to be involved in the establishment of Happy Lamb restaurants in the UK and Europe. There were subsequent discussions between them, and ultimately it was decided that the first and second petitioners should establish and run the UK restaurant business. The petitioners say that assurances were given as to the shareholdings which the first and second petitioners should have in the sixth respondent, and that the first petitioner should be appointed as a director. Cooperation agreements were entered into in 2017 and 2018. They further say that the sixth respondent was in the nature of a quasi-partnership of the UK business. In addition, they say that the sixth respondent has been run by the active respondents as de facto directors or ultimate decision-makers.

Section 5 explains that the claim mainly focuses on the conduct of the active respondents. It says that “they have used promises of shareholdings in order to manipulate those establishing the business in the UK, by promising, awarding and confiscating shares in a capricious manner as it suits them” ([26]). It also says that “where it is not possible herein to attribute historic unfairly prejudicial conduct to any one person, the conduct is alleged to have been performed by or on behalf of [the sixth respondent] by any one or all of [the five respondents] (but in particular, [the fourth]) and, by inference, to have been supported by the others” ([27]).

Section 6 sets out the particulars of unfairly prejudicial conduct in separate subsections by reference to the first and fifth petitioners, the second petitioner, the third petitioner and the fourth petitioner.

Section 7 makes further allegations of what it calls “further apparently unfair conduct of [the sixth respondent]’s affairs” ([30]). These include the payment of substantial sums of money from the sixth respondent to the first, second and fourth respondents and to two law firms engaged by the active respondents. It is alleged that the sixth respondent has paid the legal fees of the active respondents. Another allegation is of the payment of a substantial sum in 2023 from the sixth respondent to a company belonging to the fifth respondent. It is noted that the active respondents claim that this has been repaid, but there is no evidence of this.

Section 8 contains the prayer of the petition. The remedies sought include (i) declarations as to the petitioners’ “respective equitable shareholdings, based on proprietary estoppel and/or common intention constructive trusts”, (ii) orders or directions needed to transfer or register shares, (iii) any rectification of the register that may be needed, and (iv) “share purchase orders, without discount, under section 996 of the Companies Act 2006, based on formal valuations of [the sixth respondent] and in the case of [the fourth petitioner], [the eighth respondent], with credit to be given for any sums already received”. Of these remedies, (iv) is commonly, if not almost invariably, sought in unfair prejudice petitions, and I can see that there may possibly be circumstances in which (iii) might be asked for. But I have never previously encountered an unfair prejudice petition in which remedies of the nature of (i) and (ii) are sought.