Graham v Every [2014] EWCA Civ 191

Court: Court of Appeal

Facts: The parties operated a joint venture “ice bar” through Below Zero London Ltd. G was removed as a director after relations with the defendants broke down. Defendants sold their 26.6% shareholding to E without offering G a pro rata share as required by the pre-emption clause in the shareholders’ agreement. G filed a petition for unfair prejudice, arguing that the company was a quasi-partnership.

Held: The Court of Appeal reinstated the unfair prejudice claim, recognizing that the non-compliant share transfer breached G’s pre-emption rights and interfered with how the parties had agreed to manage the company. Vos LJ emphasized that while the share purchase itself was not an act of the company, it was part of the company’s overall affairs, thus potentially leading to unfair prejudice.

💡Leveluplaw: In quasi-partnerships, breaches of pre-emption clauses can significantly affect the management and operation of the company, thus constituting unfair prejudice.