5 Key Business Disputes Cases From 2025

Building and running a business can be challenging and stressful, especially if you are not on the same page as your business partners. Disagreements can distract from you from the things that will help your business grow and succeed and, if those disagreements become more fundamental, they can threaten the future of the business itself.

I have picked out five cases decided by the courts in 2025 and summarised some key takeaways for business owners who are involved in disputes with their business partners, or considering their duties, and are looking for potential solutions.

What is unfair prejudice? – Davidson v Pinz Bowling Ltd

A dispute arose between two shareholders of a joint venture (JV) who had agreed to operate a business under a brand name owned by one of the shareholders, Pinz. Pinz also agreed to provide management services to the JV.

Pinz threatened to withdraw the permission to use its brand name, and the management services it was providing, at short notice, and argued that the JV's accounts therefore had to include a disclosure that the company could not continue to operate on a going concern basis. The Davidsons disagreed and the JV therefore could not file its accounts on time. As a result, the JV could not renew its insurance for its premises and was forced to close. There was also a disagreement about what Pinz could charge for the management services.

The Davidsons alleged that Pinz was engaging in unfairly prejudicial conduct and asked the court to order that Pinz buy their shares at fair value (a common remedy in unfair prejudice cases). The court agreed and held that Pinz's real motivation behind its threats was to force the Davidsons out of the business.

Pinz's shareholders were also directors of the JV, and there was a conflict between their fiduciary duties to the JV and Pinz's own interests as owners of the brand. Pinz's directors' threats had breached their duties to the JV as, if they had followed through with them, the JV could not continue to operate.

The court clarified two important aspects of the test for unfair prejudice:

1. What constitutes 'unfairly prejudicial' conduct is to be assessed objectively, by asking whether a 'reasonable person' would consider it unfair.
2. The conduct must be both 'unfair' and 'prejudicial' to the applicant's interests as a shareholder. Prejudice is often measured by a reduction in the value of the shareholding, however, as we will see from the next case, this is not always the case.

Key takeaway: you may have a remedy if your business partner has acted 'unfairly prejudicially'. Their conduct must be both unfair and prejudicial, and 'unfair' conduct is what a 'reasonable person' would consider to be unfair.

Unfair prejudice does not need financial loss – Saxon Woods Investments Limited v Costa

Saxon Woods was a minority shareholder in Spring Media Investments Limited (SMI). One of SMI's directors was Mr Costa, who also (indirectly) held a controlling shareholding in SMI. SMI's shareholders' agreement required the shareholders to work together in good faith towards the sale of SMI by a particular date and to consider all opportunities for a sale in good faith. Saxon Woods alleged that Mr Costa delayed the sale and therefore breached the shareholders' agreement, and that this constituted 'unfairly prejudicial' conduct as well as a breach of his fiduciary duties.

The court found that Mr Costa had both delayed the sale and had misled the board by hiding the fact that he was not working to achieve it. The court agreed that this was 'unfairly prejudicial' conduct. Mr Costa had not necessarily caused Saxon Woods a financial loss, but had caused it to lose the opportunity to benefit from a sale in accordance with the shareholders' agreement. This was 'prejudice', even if it was not certain that the sale would have taken place. The court ordered that Saxon Woods' shares in SMI be bought out.

The court also made two points that directors should have in mind:

1. Directors are required to act honestly towards the company, and misleading their fellow directors will almost always be a breach of their fiduciary duty to act in the way they consider, in good faith, to be most likely to promote the success of the company for the benefit of its shareholders.
2. Shareholders can define what they consider to be 'success of the company for their benefit' by setting out objectives in their shareholders' agreement. If directors fail to act towards those objectives, they may be in breach of duty.

Key takeaways

• 'Prejudice' does not require an actual financial loss and can include the loss of an opportunity.
• Directors may breach their fiduciary duties if they make decisions contrary to a shareholders' agreement.
• Directors are required to act honestly towards the company.

Not just for minority shareholders – Ronnan and another v Stansfield and another

The shares in a company that operated a nightclub were owned by a Mr Stansfield (45%) and the Ronnans (55%). They were also the company's three directors, and Mr Stansfield operated the nightclub day-to-day. The Ronnans alleged that he had taken the lease of the premises in his own name and not the company's name. They also alleged that he closed the nightclub without consulting them and then allowed a company owned by his brother to operate from the premises.

The Ronnans therefore alleged unfair prejudice on the part of Mr Stansfield, on the basis that they had been excluded from the company's management and that Mr Stansfield had misused company assets for the benefit of his brother's company, notwithstanding that they were the majority shareholders.

The court did not find in their favour in this particular case and held that the Ronnans could have used their position as a majority of the company's directors to vote to take action against Mr Stansfield, and possibly also his brother and his company. They therefore had another route open to them to bring the prejudice to an end. However, where it is practically impossible for a majority shareholder to use their control of the company to seek a remedy in this way, then they may be able to resort to unfair prejudice proceedings.

The court gave two specific hypothetical examples. One where a majority shareholder might be prevented from exercising their votes by the company's Articles of Association or other such restrictions in a shareholders' agreement. The second being where the company has been left without the funds to take forward legal action by the wrongdoing. The court therefore left the door open for majority shareholders to seek remedies for the unfairly prejudicial conduct of the minority in certain circumstances.

Key takeaway: while remedies for unfair prejudice generally exist to protect minority shareholders from abuse by the majority, they are available to majority shareholders where it is impossible for them to take any other action.

Just and equitable winding up – Dosanjh v Balendran (in re Webb Estate Developments Ltd)

Mr Dosanjh and Mr Balendran owned and managed a real estate management and development business. On the face of it, the dispute between them concerned how they should treat certain payments made to both of them in the company's accounts. Mr Dosanjh argued that they should be treated as repayments of directors' loans and Mr Balendran argued that they were in fact for reimbursing expenses. They could not agree on the company's accounts and they both unilaterally filed their own conflicting accounts.

However, their disagreements were more wide-ranging. They also disagreed over the sale of one of the company's properties, and it turned out that Mr Balendran had concealed the fact that his proposed buyer was in fact a company in which he was a 50% shareholder. He had also allegedly created backdated invoices for services provided to the business by his own company. For his part, Mr Balendran accused Mr Dosanjh of refusing to accept accountancy advice and generally making decisions without consulting him.

The court decided to wind the company up on the basis that it was 'just and equitable' to do so. This is generally considered a 'remedy of last resort' and the court will look for alternatives, such as ordering that one shareholder buy out the other(s). However, where there is 'functional deadlock' and the parties are unable to agree on fundamental functional matters and the company cannot progress, there may be no other option. Similarly, where the relationship of trust and confidence between those participating in the business has irretrievably broken down, it may be just and equitable to wind the company up.

Key takeaway: where you and your business partner are functionally deadlocked and there is no longer a relationship of trust and confidence, you may be entitled to wind the company up on the basis that it is 'just and equitable' to do so.

The dangers of being a director 'in name only' – Stacks Living Ltd and others v Shergil and another

Mr Shergill had been the sole appointed director of a company, except for a brief period where his partner Miss Smith had been the sole director. The companies failed to pay non-domestic rates and were put into liquidation following a winding up petition by the local authority.

The liquidators then brought a claim against Miss Smith, alleging that she had breached her fiduciary duties by allowing the company to make unexplained payments to both of them while she was the director and for wrongful trading (in short, failing to minimise potential loss to the company's creditors in circumstances where she should have concluded that there was no reasonable prospect of the company avoiding insolvency).

Miss Smith defended the claims on the basis that Mr Shergill was solely responsible for the management of the company, had acted as a de facto director, and had 'prevailed upon her' to accept the appointment. She admitted that she had had no involvement in the company's business. She was what is known as a 'director in name only'.

The court found that Miss Smith had acted in breach of her fiduciary duties by failing to keep herself informed about the company's business and affairs, at the very least, and by failing to keep proper records. Had she done either of those things, then she would have discovered that the company was unable to pay the non-domestic rates and that it was inevitable the company would enter an insolvency process. She could not avoid liability for wrongful trading by delegating responsibility for the company's management to Mr Shergill.

A further point for directors from this case: while section 1157 of the Companies Act 2006 allows the court to relieve directors from liability where they have acted 'honestly and reasonably', the court held that it is, by definition, unreasonable for a director to be completely inactive.

Key takeaway: directors are under a duty to inform themselves about the company's business and affairs, and they cannot delegate their responsibilities entirely to other directors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.