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Fair Rules for Unfair Prejudice Claims – Primekings & Ors v King & Ors [2021] EWCA Civ 1943


By Sam Knight, Underwriter

(Estimated reading time: 1 minute 23 seconds)

In Primekings v King the Court of Appeal recently confirmed the validity of the approach in Graham v Every [2015] 1 BCLC 41, [2014] EWCA Civ 191 to tackling unfair prejudice claims under s994 Companies Act 2006.

It must now be shown that there is a ‘causal connection’ between the personal actions of a shareholder or third party, and some other act or omission constituting conduct of the company’s affairs for such matters to be pleaded as unfair prejudice under s994. What this means is that, as in Primekings v King, unfair prejudice claims must be confined to their proper scope.

As Lord Justice Snowden said at [63]: ‘the principle that statements of case should only set out the facts that go to make up each essential element of the cause of action relied upon is particularly relevant to pleadings in unfair prejudice petitions’. Essentially, the court has given itself a new lease of life to strikeout elements of unfair prejudice claims that do not rely on a ‘causal connection’ as outlined above.

Arguably, this has made drafting statements of case for unfair prejudice claims far stricter, lest your client face a strikeout application. On the other hand, the court is reining in unfair prejudice claims and keeping them on the straight and narrow, giving effect to the actual wording of the statute and what it was designed to protect.

Interim applications are part-and-parcel of modern day civil litigation and can result in a serious adverse costs risk mounting against your client.

Temple’s commercial ATE policies are fully retrospective from their inception, covering the entire adverse costs risk accumulated throughout the lifetime of the case and reassuring your clients that they are properly protected.