High Court Allows Wrongful Dismissal Claim to Proceed Under a S994 Petition for Unfair Prejudice

Mr Registrar Briggs, sitting in the High Court, has deemed the relief available pursuant to a Section 994 (Unfair Prejudice) Petition is wide enough to include relief for wrongful dismissal.

In the case of Wootliff v Rushton-Turner [2016] EWHC 2802 (Ch) the Claimant faced a Strike-Out Application of the part of his Petition, under Section 994 of the Companies Act 2006, which alleged wrongful dismissal. However, the Registrar considered, in the context of a quasi-partnership, that the Claimant was able to plead a claim for wrongful dismissal within his Petition for relief for unfair prejudice in his capacity as a shareholder. It was held that "there could be no real objection to [the claims] being heard together" where the issues arise out of the same facts (as will almost inevitably be the case).

The Court appeared to be particularly persuaded by the wording of Section 996 of the Companies Act 2006 which deals with the powers of the Court to grant relief and states that the Court "may make such order as it thinks fit for giving relief in respect of the matters complained of".

Why Is This Important?

Before this decision, there was no authority from the Court that dealt directly with a challenge to a claim for wrongful dismissal in the context of an unfair prejudice petition. This is despite the fact that where a company is a quasi-partnership (being a limited company operating, in effect, as a partnership between the shareholders), exclusion from management is one of the most frequently cited bases of a shareholder being unfairly prejudiced. Such exclusion will often take the form of dismissal from the shareholder's management role (normally as a Director) which may, independently of his capacity as a shareholder, if he or she was an employee, give rise to a wrongful dismissal claim.

A Claimant may now, with greater confidence, be able to include a claim for wrongful dismissal as part of an unfair prejudice petition. Such a claim will be treated as a distinct claim and therefore a Claimant need not be faced with having to pursue a wrongful dismissal claim separately via an Employment Tribunal or separate civil proceedings against the company.

For further guidance on unfair prejudice petitions see our Guide to Section 994 Petitions  which can be found here.