High Court of Ireland Decisions

1. These proceedings have been initiated by the petitioner to wind up Murph's Restaurant Ltd (hereinafter called the company). At the time of the filing of the petition, my copy of which does not bear any date, the petitioner appears to have been a director of the company. He had been served with a notice calling an extraordinary general meeting of the company on 12 March 1979 for the purpose of considering a resolution that the petitioner be removed from office as a director of the company. There were three directors and the petitioner has objected that he was not given any notice of the meeting of the board at which it was decided to convene the extraordinary general meeting. It is unlikely that this is very material, even if correct. It appears that the meeting called for 12 March did not take place and it may be assumed that the petitioner is still a director. It is admitted that the petitioner has been refused any participation in the affairs of the company as a director and he also alleges that the other directors are attempting to purchase his shares at a gross undervalue. The three directors are the only shareholders in the company and they have equal shareholdings. In correspondence prior to the issue of the petition it was stated on behalf of the petitioner that the petition for winding up was being filed pursuant to the provisions of s. 213 (g) of the Act.

2. The present motion is brought on behalf of the company for an order restraining the petitioner from advertising the petition.

3. A company may be wound up by the court if...

4. An application to the court for the winding up of a company shall be by petition presented, subject to the provision of this section, either by the company or by any creditor or creditors (including any contingent or prospective creditor or creditors), contributory or contributories, of by all of any of these parties, together or separately, so, however, that - (e) a petition for winding up on the grounds mentioned in paragraph (g) of s. 213 may be presented by any person entitled to bring proceedings for an order under s. 205,

5. Any member of a company who complains that the affairs of the company are being conducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or any of the members (including himself), or in disregard of his or their interests as members, may apply to the court for an order under this section,

6. The section then makes provision for remedies other than winding up.

7. It has been urged on behalf of the company that the advertisement of the petition would greatly damage the company, that the matters complained of by the petitioner are such as could properly be dealt with under the provisions of s. 205, that the petition is not presented in good faith, and that it is a case in which the court would, under the provisions of s. 213 (g), dismiss a petition to wind up on the grounds that proceedings under s. 205 would be more appropriate. I was referred to the case entitled Re a Company [1894] 2 Ch 394 as authority for the proposition that I have jurisdiction to restrain the advertisement of the petition if it is not presented in good faith but for the purpose of putting pressure on the company.

8. For the petitioner it is argued that his co-directors are trying to acquire his shares on unfavourable terms and that, if any of the matters complained of could be a ground for winding up, this application should be refused. I was referred to the case of Bryanstone Finance Ltd v de Vries (No.2) [1976] Ch 63. I was also referred to the case of Mann v Goldstein [1968] 1 WLR 1091 in support of the proposition that pursuing a valid claim in a normal manner is not an abuse of the process of the court even though it is done with personal hostility and. with some ulterior motive.

9. It occurs to me that some confusion may have been caused in the minds of both parties by the reference in the correspondence to s. 213 (g). This paragraph and s. 205 apply only to members of a company as members. Apart from the allegations in para. 13 of the petitions, which are not grounded on any facts, the petition is based on facts which prejudice the petitioner in his capacity as director. Although there has been an offer to purchase the petitioner's shares, this did not arise until the petitioner had threatened to issue his petition to have the company wound up on the ground that he was being deprived of his rights as a director and there does not appear to have been a threat of any sort to the petitioner's shareholding or to his rights as a member .

10. On the other aspect of the case, it is perfectly clear that the directors are at loggerheads and that the petitioner has been deprived of all his functions as director. This appear to be a case, similar to that of Re Lundie Bros Ltd [1965] I WLR 1051, in which, in substance, a partnership exists between the three persons carrying on the business of the company together and that, prima facie, the petitioner would have been entitled to a dissolution of the partnership if it were a partnership and not a company, and that, accordingly, he has a bona fide claim to have a company wound up.

11. On the views I have taken that the petition is based on the petitioner's office as director and as to the application of s. 205 and s. 213 (g), it does not appear to me to be open to the court to dismiss the petition on the grounds that proceedings under s. 205 would be more appropriate.

12. Under these circumstances, I will refuse the application to restrain the petitioner from advertising the petition, although it may well be that the petitioner should consider whether it is to his advantage to proceed with his petition or not.

13. I should add that I would be hesitant to restrain the advertisement of a petition if the circumstances were not such that I should also restrain any further proceedings on the petition, as was done in the case of Re a company .

14. Murph's Restaurants Ltd is a private company which was incorporated on 17 January 1972 with a share capital of 3,000 ordinary shares of £1 each of which 2,400 are fully paid up. There are only three shareholders namely Brian Suiter, Kevin O'Driscoll and G. Murph O'Driscoll who are also directors of the company. The present value of the assets of the company is estimated by the company's accountant to be little short of £190,000. Brian Suiter has petitioned the court purusant to s. 213 of the Companies Act, 1963 to order that the company be wound up on the grounds that the affairs of the company are being conducted and the powers of the directors being exercised in a manner which is oppressive to him and in disregard of his interests and also that it is just and equitable so to order. The company on the hearing of this petition is represented by the other two shareholders/directors Kevin and Murph O'Driscoll, who on their part claim that the petitioner has been removed from the position of director for good reason and that it would be neither in the interests of the company nor just nor equitable to wind up the company. Each of the three shareholders/directors, to whom I shall refer hereafter as Brian, Kevin and Murph, and the company's accountant gave evidence on the hearing of the petition which was amended by consent to include a claim by Brian, the petitioner, for alternative relief under s. 205 of the 1963 Act. .

15. Prior to the formation of the company Brian worked as a computer salesman in IBM Ltd in which Kevin was also employed and they were close friends. They discussed the idea of setting up as a joint venture a snack bar business and engaging Kevin's brother Murph, who was then not in any employment, to manage the business. After three or four months discussion, this company was incorporated following agreement that Brian and Kevin would advance £800 each as capital and that each would advance a further £400 on behalf of Murph so that all three would be equal partners. It was agreed that Murph would not be required to refund those two advances made on his behalf but would give equivalent value in his whole time attention to the business while Kevin and Brian remained in their salaried employments. Within three years Kevin also became whole-time engaged in the work of the company, but Brian retained his employment having moved from IBM Ltd to Honeywell Ltd and then to Memory Ireland Ltd with whom he was general manager at a salary of about £10,000 per annum from 1976 until he too became whole-time engaged in the company in June 1977. Up to that time neither Kevin nor Murph was in receipt of an annual income as high as that which Brian was receiving in his employment.

16. The business of the company had commenced as a sandwich bar at 99 Lower Baggot Street, Dublin and next a delicatessen and cold foods shop was opened in Suffolk Street, Dublin. The company opened a hot food restaurant with wine licence at Bachelor's Walk, Dublin and later engaged in contract catering before opening a restaurant in Cork in October 1977. In 1978 premises were acquired adjoining the Baggot Street premises and the range of catering there extended. Although the registered office of the company is at Lower Baggot Street the offices used by the directors as head office are at Bachelor's Walk. At each of the branches of the business the company employs either a manager or manageress and other necessary staff. .

17. The business of the company of its nature involved long working hours, and in the earlier years, while expanding, the returns from the business provided Murph and later Kevin with a reasonable annual income but little profit. In 1976 after the Bachelor's Walk branch of the business was established the company became profitable. By 1977 all aspects of the company were going well and the company became significantly profitable. The company did not hold annual meetings nor have annual accounts prepared nor were there regular or formal board meetings of directors nor minutes nor other formal company records kept. Brian, Kevin and Murph met every Monday night for management meetings and had their meals in the company premises and met regularly over lunch and the affairs of the company were conducted and the decisions taken at the Monday night meetings and the informal meetings. No dividends were paid on shares nor fees paid to directors and salaries were paid by regular drawings against estimated annual amounts finally determined at the end of the year. In addition to these, however, each of the three of them could and did take from cash at the Baggot Street premises sums up to £200 per month in respect of which no record was kept. This was described in evidence by one of the witnesses as 'slush money'. Regular sums of money were taken out of cash of the business and paid into building society accounts in the names or variations of the names of one or other of the three in different branches of building societies but these did not appear in the company's accounts. Special care was taken to ensure that the salaries, cash receipts and the value of perquisites including the use of cars were equated so as to ensure that at all times equality was maintained as between the three of them. The services of qualified accountants, Messrs Kidney & Co., were first engaged in March 1977 but the accountants were not aware of the cash drawings or building society deposits.

18. The decision to open a branch of the business in Cork was taken early in 1977. According to Murph his brother Kevin tried to persuade Brian to give up his employment and to come into the company business whole-time. This Brian agreed to do in June 1977 on the basis that he would look after the Cork business and would have the same salary and drawings as each of the other two. Brian said his sole job 'was to ensure that Cork got off the ground properly' and the Cork branch opened on 12 October 1977. According to Murph the Cork business exceeded expectations, and within 18 months the business there was almost as good as at Bachelor's Walk which they considered the best of the branches. The accountant said it would be difficult to say which of the two, Cork or Bachelor's Walk, is the more profitable. In or about November 1977 the three directors contemplated investing company money in property development and through Messrs Lisney made two bids which were not accepted for the purchase of a former hotel known as Strawberry Hill on Vico Road, Dalkey. 1978 was a most significant year. In March of that year Kevin and Murph without telling Brian made a very much higher bid for Strawberry Hill than did the company the previous November and after negotiations in April and May purchased this property for themselves about the end of May. In connection with this property and its development by conversion and construction into three separate dwellings they borrowed about £190,000. One of the dwellings is occupied by the parents of Kevin and Murph, another is occupied by Murph and his wife, and the third is intended for Kevin or for resale. In connection with this development both Kevin and Murph gave a lot of time which otherwise would have been devoted to the business of the company. During the summer of 1978 an expansion of the business at 99 Lower Baggot Street under the direction of an architect was undertaken by the company which by reason of restricted working area and hours rendered the work more difficult for the contractor and more expensive for the company than had been anticipated. In the autumn of that year Brian purchased a house in Cork and in connection with it devoted time which otherwise would have been given to the business of the company. When Kevin and Murph purchased Strawberry Hill and informed Brian of their purchase it was agreed that a record of time taken away from the company business on that account should be recorded so that Brian should be allowed the equivalent time off at a future date if the occasion arose. It was later agreed that the purchase by Brian of a house in Cork gave rise to such an occasion. On 6 August 1978 Kevin drew and signed a cheque payable to himself for the sum of £15,681.02. This cheque was drawn on the. company's bank account in Cork. On 28 September Kevin signed another cheque drawn on the company's Cork bank account payable to himself for the sum of £9,318.98. These two sums toghether make up a sum of £25,000 which is an amount Kevin and Murph say Brian agreed could be borrowed by them from the company in the financing of the Strawberry Hill project. They did not tell Brian anything about the cheques at the times they were drawn nor did the cheques show for what purpose they were drawn and no explanation was given for the determination of the amount for which each or either cheque was drawn. Brian says he agreed they could borrow £10,000 from the company and pay to him the amount of interest thereon at the rate of one-third of the rate they would have had to pay to a finance company. Kevin and Murph say that Brian proposed this idea to them to reduce their liability for interest and agreed that the amount should be £25,000 at a rate of 15% for interest and Brian would be paid 5% on that. Kevin and Murph at Christmas 1978 took a three and a half week holiday in Florida which extended into January 1979.

19. According to Murph's evidence he and Kevin had arrived at a decision on 2 February 1979 that they did not want Brian working in the company, and on Saturday afternoon, 3 February 1979, they handed him notice to this effect. These comprised a letter on company notepaper signed by Murph as secretary in the following terms:

20. Holyrood Castle

21. I send you herewith a copy of a notice which has been received by Murph's Restaurants Ltd of a resolution which, as appears from the said notice, is intended to be moved at the general meeting of the company convened for 12 March 1979.

22. Your attention is drawn to the provisions of s. 182 of the Companies Act, 1963.

23. I also enclose formal notice of the calling of the meeting referred to above.

24. Yours faithfully

25. The enclosure referred to therein was also on company notepaper signed by Murph as secretary and reads as follows:

26. Murph's Restaurant Ltd

27. TAKE NOTICE that we, the undersigned, being shareholders in the company, intend at the next general meeting of Murph's Shareholders Ltd to move a resolution that Mr Brian E. Suiter a director of the said company be removed from his office of director .

28. Dated 2 February 1979.

29. G. Murph O'Driscoll

30. Kevin O'Driscoll

31. No meeting was held on 12 March 1979 nor had there been a meeting of the board or of the directors/shareholders convened or held on or prior to 3 February 1979 at which a decision was taken either to hold a meeting on 12 March 1979 or to propose a resolution as stated. In the course of his evidence Murph said 'I am told I am the secretary of the company. This is a recent development. We did not keep minutes'. He described this meeting of3 February when the notices were handed to Brian as being 'pretty much a non-meeting'. He said 'we handed Brian the legal documents. He studied them and asked why. We said we had been through all the specifics. The basic reason is you are not performing your job satisfactorily. I can't remember what he said. There were long periods of silence'. The same occasion was described by Kevin in his evidence as follows:

32. The evidence given by Brian was that he had got a phone call to say they wanted to have a meeting urgently on Saturday, 3 February 'and when we met I was handed these notices. There hadn't been anything about this at any previous meeting; It came as a shock. I got no explanation and was advised to see a solicitor'. He denied that there was any mention of 'unsatisfactory performance'. He said that 'at the end I said, 'Do you want me to resign?' with a smile on my face as it hadn't reached that stage'. In his evidence Murph referred to this and said it was not at this February meeting but at a meeting the previous March, 1978 when Brian asked, 'Do you want me to resign?' and it was said in seriousness and that he and Kevin in reply said, 'No, we would rather see you improve in the work you are doing'. Having regard to the course of the affairs throughout 1978 involving many undertakings and continued dealings between the three which necessarily involved mutual confidence and trust I do not believe Murph is correct and I accept Brian's evidence in relation to this meeting of 3 February 1979.

33. From seeing Kevin and Murph in the witness box and observing the way in which they gave their evidence I have no confidence in the reliability of their evidence. I have a strong feeling they were withholding or avoiding evidence on material matters, but I make no attempt to take into account or speculate upon what they omitted. The particular area in which this is most significant and most obvious is on all references to financial matters including the earnings and expenses of the company and their own incomes, expenses and financial arrangements.

34. I have no doubt that prior to 3 February 1979 Kevin and Murph had decided that they should, were entitled to, and would, dismiss Brian from the employment of the company and that in respect of his salary and term of notice he was in the position of an employee of the company whose services could be dispensed with peremptorily but legally by giving him three months salary in lieu of notice. I draw no inference from the forms of the documents presented to Brian and the statements made to him as he gave in evidence (which I believe) as to whether or not Kevin and Murph had gone to the trouble of taking legal advice on this matter. It is clear from the evidence that from 3 February 1979 the previous relationship essential to the continued association between Brian on the one part and Kevin and Murph on the other had effectively come to an end. Subsequent events have made this position irretrievable.

35. The cause for this is attributed by Brian to an agreement on the part of Kevin and Murph to take over Brian's interests and to exclude him completely from the company at a time when the company and Kevin and Murph had achieved considerable prosperity and great prospects for further success. The cause for this is attributed by Kevin and Murph to matters of complaint of which they gave the following evidence. Brian had been put in charge of the Cork branch which opened on 12 October 1977 and Kevin and Murph used to pay visits together to the Cork branch from time to time to get their own view of things there. By January 1978 they began to realise that the sort of problems which arose, as expected after opening the new branch, were continuing and were not being resolved, such as, quality of food, purchasing of stock, hygiene, and financial control. The policy and standards achieved in the Dublin branches were not being observed. These different matters used to be mentioned at the regular meetings in Dublin after their periodic trips.

36. There were three meetings held at which Kevin and Murph raised with Brian matters of complaint. Apart from the latest of these held on 3 February 1979 previous to which Kevin and Murph had agreed they wanted Brian out, as Murph put it, they held meetings in March 1978 and November 1978. They said they complained to Brian at the March meeting that the quality of food in Cork 'was disastrous'; that he should not have left the purchase of food and cutlery to be done by the manager; that there was no proper control of cash and the paper work from Cork was unsatisfactory .They say that they told him he showed marked lack of responsibility or of co-operation and that he had deceived them. As to the former the only example given was that when they would phone the Cork branch from Dublin at lunch time Brian would not be there and he would not phone back until after 4 p.m. As to the alleged deception they gave two instances. One was that he gave a false explanation of being unable to get a flight to London as his reason for not coming over there for a meeting with them when called there by them. The other was that when asked to get an estimate for work to be done at the Cork branch he said he had had a meeting with a builder called Weldon and this was found to be untrue. In relation to the meeting in November 1978 they said they were getting pretty fed-up with things in Cork where a third manager was then starting, the first having left voluntarily and the services of the second having been dispensed with. These managers were engaged by Kevin and Brian, and presumably the third was engaged shortly after the second was dismissed. Many of the matters of complaint deposed to in the affidavit of Kevin were not substantiated in oral evidence.

37. Brian's evidence about these matters was that at the various meetings it was normal and usual that they used criticise each other roundly and matters of supposed complaint would be accepted and explained. He felt that Kevin and Murph used come down on the Cork branch together and go through it 'with a fine comb' and consequently faults were always to be found. He said he was always accessible when required and that the figures for the Cork branch showed that the performance was satisfactory.

38. On this last aspect it is significant that in relation to the purchase by Kevin and Murph of Strawberry Hill for which £25,000 was borrowed from the Cork branch Kevin said in his evidence that at that time 'the Cork account was running at a surplus to that extent' and 'these monies were available as profits and not required for running Cork'. Contrary to what Kevin swore in his affidavit both Kevin and Murph gave evidence that when they decided to buy Strawberry Hill for themselves and negotiated the purchase they did not tell Brian. This was in the period March/April 1978, but they did tell him after they had made the contract. When they did so they discussed with him the arrangements about keeping records of their time away from the company and devoted to work at Strawberry Hill and the arrangements about making a borrowing from the company so as to save two-thirds of finance company rates of interest on loans.

39. It is quite clear from the evidence taken as a whole and from practically every aspect of evidence relating to the different events and the conduct of the affairs of this company that Brian, Kevin and Murph were equal partners in a joint venture, and that the company was no more than a vehicle to secure limited liability from possible losses and to provide a means of earning and distributing profits to their best advantage with minimum disclosure. The company was never conducted in accordance with statutory requirements nor in accordance with normal regular business methods. The directors received no fees, the shareholders received no dividends, and all three directors/shareholders received by mutual agreement exactly the same income from the earnings of the company adjusted according to profitability in the form of drawings recorded as salary, drawings from cash unrecorded, credit deposits of cash in building societies' accounts, perquisites of meals and cars, and various expenses for purely personal purposes in respect of all of which strict equality was always maintained. This was achieved, and could be achieved, only by a relationship of mutual confidence and trust and active open participation in the management and conduct of the affairs of the company particularly in the irregularity or informality of its corporate quality of existence. The co-operation of the brothers, Kevin and Murph, in a close personally related venture such as this is understanding, particularly as Murph who had been unemployed was thereby provided with employment and a career for which he has proved himself eminently suited. But the participation of Brian was achieved through his personal friendship with Kevin acquired while working in employment very different from this class of business and through the persuasion exercised by Kevin. Brian was persuaded to and did give up regular employment with what was then a very good annual salary and attendant security to take his chances in participation in a business for which he did not appear to have had any of the working skills associated with catering. So far as the company is concerned he appears to have no more than 800 shares of nominal value of £1 upon which no dividends are payable with no right to offer them to the public or to dispose of them save in accordance with the approval of one or both of the other two directors. It is said that he remains a director, but without fees, and is being and will be denied any active participation in the affairs of the company. He is being and has been treated by his two co-directors as if he was an employee of theirs liable to be and purported to have been dismissed by them peremptorily and not under any colour or regular exercise by directors of their powers under the articles of asssociation of the company. The action of Kevin and Murph on 3 February 1979 was entirely irregular, and no attempt has been made to take or confirm this action in regular manner on behalf of the company. The action of Kevin and Murph on 3 February was not and could not be accepted in law as an action of the company. The action of Kevin and Murph on 3 February was a deliberate and calculated repudiation by both of them of that relationship of equality, mutuality, trust and confidence between the three of them which constituted the very essence of the existence of the company. The action of Kevin and Murph on 3 February 1979 deprived Brian of a livelihood, and not simply of an investment, which he was induced by their representations to take and in so doing to abandon to his irretrievable loss a secure means of livelihood in a career for which, judging by his progress, he must have had some considerable aptitude. The justification offered by evidence for the action of Kevin and Murph on 3 February was their dissatisfaction with his performance of duties allotted to him by them which they described as of a working director . But the evidence shows that the matters of exemplification are all within the normal range of duties of a manager, and related to a branch of the business from which two successive managers were replaced during the period to which their complaints related. Their own evidence also shows that during the same period the business of that branch had shown profitability beyond their expectations, and sufficed in a period of less than twelve months to provide a surplus income large enough to afford them a significant amount of capital on loan for a private investment. Whatever cause of complaint or fault Kevin and Murph may have found in Brian it did not relate to the talents or qualifications which he had shown, and must have been known to them to have had, at the time he was induced to join with them in a venture of strictly drawn equality.

40. In his petition Brian asks that the company be wound up under paragraphs (f) and(g) of s. 213 of the Companies Act, 1963. In reply Kevin and Murph on behalf of the company submit that Brian has been deprived of his directorship for good reason and as a shareholder can be afforded sufficient relief under s. 205 of the Act by allowin2 them to purchase his shares at a valuation. It is also submitted that it would not be in the best interests of the company to have it wound up, because, in the course of compulsorily winding up, the assets of the company would not meet the liabilities and Brian could gain nothing from it, and because his interest as a shareholder has not been affected he is not entitled to an order under s. 213. As to the matter of his removal from directorship I am satisfied from the evidence that the reasons advanced are neither good nor sufficient and are wholly inadequate to justify that action. But the evidence further discloses that the purported removal was irregular and ineffective in law. Furthermore it is clear from the evidence that in the conduct of the affairs of the company the directors did not exercise their powers in a regular manner so far as the company is concerned, and the purported exclusion of Brian by Kevin and Murph in an irregular and arrogant manner is undoubtedly oppressive. As to the matter of what would be the best interests of the company and the consequences of an order for winding up, evidence was given on behalf of the company by Mr Kidney who is the accountant for the company. He was first engaged by the company about March 1977. On instructions he prepared a draft balance sheet for the company as of 3 February 1979 from information obtained from the books of the company and given to him by Kevin and Murph. He estimated the assets (including the presumed repayment of the £25,000 loan) to be £189,672 and the liabilities to be £185,829. He expressed the opinion that in a winding up of the company under court order the apparent net balance could not be achieved because all assets would not realise the estimated values and consequently there would be no surplus or dividend for shareholders. He had not included monies in building societies' accounts and he was not aware of the 'siphoning off of funds'. From my observation and assessment of the evidence of Kevin and Murph I believe they would not be as truthful and forthcoming when instructing the accountant as the court would require them to be in order to be in a position to place reliance on the opinion of the accountant founded on their information to him.

41. It is clear from the evidence that there is no form of order of the nature indicated in s. 205 (3) which could bring to an end the matters complained of by Brian in the proceedings or which could regulate the affairs of the company for the future. It appears to me that the circumstances in which by order under s. 205 the court may direct the purchase of the shares of a member by other members or by the company are circumstances in which the court would do so 'with a view to bringing to an end the matters complained of by the person applying to the court. It is my opinion that in this case with the fundamental relationship between Brian, Kevin and Murph sundered that proceedings under s. 205 would not in any circumstances be appropriate.

42. In the course of argument and submissions I was referred to the judgment of the House of Lords in England in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 in support of the claim of the petitioner Brian to have the company wound up on the grounds that such order would be just and equitable. It was relied upon also in answer to the contentions of the company, per Kevin and Murph, that Brian is not entitled to such an order on the grounds that there was no disregard of his interests as a member, that he had nothing to gain as a contributory, that there was no lack of probity or unfair dealing on their part, that their conduct was based on their concern for the welfare of the company and to ensure that business would prosper, and that it would not be in the best interests of the company, its staff, customers or creditors that it be wound up.

43. The claim before the House of Lords was by one of three directors/shareholders of a limited company for an order to have the company wound up pursuant to s. 222 (f) of the English Companies Act, 1948, the wording of which corrresponds exactly with s. 213 (1) of the Companies Act, 1963. I find the opinions delivered in the course of this judgment in the House of Lords very helpful because of the statements of principle the application of which depends upon the facts under consideration. I have accordingly set out first the facts in the case before me from which it can be seen where they may be distinguishable from those in the case to which the House of Lords judgment relates. But that judgment reminds us that the principles of equity which are applicable in every court of law are the same and should be given application in the like manner in cases affecting the commercial relations of companies, in which rules of law tend to be technical and rigid, as much as in cases of personal relations between private individuals.

44. Having regard to the contentions advanced on behalf of Kevin and Murph I think it appropriate to quote the following passage from the report of the speech of Lord Wilberforce in Ebrahimi v Westbourne Galleries Ltd [ 1973] AC 360:

45. For some 50 years, following a pronouncement by Lord Cottenham LC [ Spackman, ex parte (1849) 1 Mac and G 170, 174] in 1849, the words 'just and equitable' were interpreted so as only to include matters ejusdem generis as the preceding clauses of the section, but there is now ample authority for discarding this limitation. There are two other restrictive interpretations which I mention to reject. First, there has been a tendency to create categories or headings under which cases must be brought if the clause is to apply. This is wrong. Illustrations may be used, but general words should remain general and not be reduced to the sum of particular instances. Secondly, it has been suggested, and urged upon us, that (assuming the petitioner is a shareholder and not a creditor) the words must be confined to such circumstances as to affect him in his capacity as shareholder. I see no warrant for this either. No doubt, in order to present a petition, he must qualify as a shareholder, but I see no reason for preventing him from relying upon any circumstances of justice or equity which affect him in his relations with the company, or, in a case such as the present, with the other shareholders.

46. One other signpost is significant. The same words 'just and equitable' appear in the Partnership Act, 1892 s. 25, as a ground for dissolution of a partnership and no doubt the considerations which they reflect formed part of the common law of partnership before its codification. The importance of this is to provide a bridge between cases under s. 222 (f) of the Act of 1948 and the principles of equity developed in relation to partnerships (at p. 374).

47. Before proceeding further with consideration of the speech of Lord Wilberforce it would be helpful to refer at this stage to what was said by Lord Cross of Chelsea:

48. In some of the reported cases in which winding up orders have been made those who opposed the petition have been held by the court to have been guilty of a 'lack of probity' in their dealings with the petitioners (at p. 383).

49. He then cites two examples and then goes on to say:

50. Having explained why he takes that view he goes on to say:

51. People do not become partners unless they have confidence in one another and it is of the essence of the relationship that mutual confidence is maintained. If neither has any longer confidence in the other so that they cannot work together in the way originally contemplated then the relationship should be ended -unless, indeed, the party who wishes to end it has been solely responsible for the situation which has arisen. The relationship between Mr Rothman and Mr Weinberg [the names of parties in the case under his then consideration] was not, of course, in form that of partners; they were equal shareholders in a limited company. But the court considered that it would be unduly fettered by matters of form if it did not deal with the situation as it would have dealt with it had the parties been partners in form as well as in substance.

52. Turning again to the speech of Lord Wilberforce I draw attention to the nature of the submissions made to the court in that case as summarised in the speech of Lord Wilberforce and the manner in which he expressed his opinion on these matters following examination of a number of cases dealing with the partnership features of companies. He then says:

53. My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed. The foundation of it all lies in the words 'just and equitable' and, if there is any respect in which some of the cases may be open to criticism, it is that the courts sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more then a mere legal entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable' provision does not, as the respondents suggest, entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust or inequitable, to insist on legal rights, or to exercise them in a particular way (at p. 379).

54. Lord Wilberforce then gives examples of circumstances in which relations of a special personal character may be essential to the members of a company with particular reference to mutual confidence. He goes on to say:

55. My Lords, this is an expulsion case, and I must briefly justify the application in such cases of the just and equitable clause. The question is, as always, whether it is equitable to allow one (or two) to make use of his legal rights to the prejudice of his associate(s). The law of companies recognises the right, in many ways, to remove a director from the board. S. 184 of the Companies Act 1948 confers this right upon the company in general meeting whatever the articles may say. Some articles may prescribe other methods: for example, a governing director may have the power to remove (compare in Wondoflex Textiles Pty. Ltd, In re [1951] VLR 458). And quite apart from removal powers, there are, normally provisions for retirement of directors by rotation so that their re-election can be opposed and defeated by a majority, or even by a casting vote. In all these ways a particular director-member may find himself no longer a director, through removal, or non-re-election: this situation he must normally accept, unless he undertakes the burden of proving fraud or mala fides . The just and equitable provision nevertheless comes to his assistance if he can point to, and prove, some special underlying obligation of his fellow member(s) in good faith, or confidence, that so long as the business continues he shall be entitled to management participation, an obligation so basic that, if broken, the conclusion must be that the association must be dissolved. And the principles on which he may do so are those worked out by the courts in partnership cases where there has been exclusion from management (see Const v Harris [1824] Tur. and Rus. 496,525) even where under the partnership agreement there is a power of expulsion (see Blisset v Daniel (1853) 10 Hare 493; Lindley on Partnership 13th ed. (1971) pp. 331, 595) (at p. 380).

56. I make one final quotation from this speech which concludes as follows:

57. I must deal with one final point which was much relied on by the Court of Appeal. It was said that the removal was, according to the evidence of Mr Nazar , bona fide in the interests of the company; that Mr Ebrahimi had not shown the contrary; that he ought to do so or to demonstrate that no reasonable man could think that his removal was in the company's interest. This formula 'bona fide in the interests of the company' is one that is relevant in certain contexts of company law and I do not doubt that in many cases decisions have to be left to majorities or directors to take which the courts must assume had this basis. It may, on the other hand, become little more than an alibi for a refusal to consider the merits of the case, and in a situation such as this it seems to have little meaning other than 'in the interests of the majority'. Mr Nazar may well have persuaded himself, quite genuinely, that the company would be better off without Mr Ebrahimi, but if Mr Ebrahimi disputed this, or thought the same with reference to Mr Nazar, what prevails is simply the majority view. To confine the application of the just and equitable clause to proved cases of mala fides would be to negative the generality of the words. It is because I do not accept this that I feel myself obliged to differ from the Court of Appeal (at p. 381).

58. I accept the statements of principles given in the Lords' speeches in that case as the correct guidance for my consideration of the questions before me on this petition.

59. Reverting now to the facts: there is only one answer to the question: Was Brian lawfully removed from the office of director of this company? Was this not a business in which all three engaged on the basis that all should participate in its direction and management? Was it an abuse of wrongfully or mistakenly arrogated power and a breach of the good faith which these three partners owed to each other to exclude him from all participation in the business of the company? To these questions there can be only an affirmative answer. Even if the intended resolution for his removal had been proposed in a regular manner, and even if the resolution had been considered at a regularly convened meeting what justification could have been offered to support it? The only matters of complaint of their nature were such that they probably could have been resolved by a temporary spell of personal attention by one of the other directors more experienced in that area of work; But the facts belie the complaints. The business at the Cork branch was exceeding expectations and seemed likely to outstrip the business of the best branch in Dublin and provided support for private investment for the partners making the complaints. The action of Kevin and Murph on 3 February 1979 was wholly unjustified as well as being irregular. But by that action, and in their evidence relating to it, they made it clear that they did not regard Brian as a partner but simply as an employee. Their refusal to recognise any status of equality amounted to a repudiation of their relationship on which the existence of the company was founded. By ceasing to be a director Brian would lose not director's fees for there were none, nor dividends on his shares for there were none, but his very livelihood consisting of an equal share of all capital and profits and active participation in direction and management of the company.

60. I am satisfied that the petitioner has made out a case for a winding up order, and has shown that proceedings under s. 205 would not be appropriate. A liquidator will be appointed and notice of the presentation of the petition and the making of the winding up order will be advertised. The petitioner will have his costs of the hearing to be borne by Kevin and Murph and the company will bear such of its own costs as are not related to those of Kevin and Murph.