Unfair prejudice petitions: when will the court use an historic share valuation date?

The High Court’s decision in Chave v Farnsworth [2026] EWHC 970 (Ch) shows how acting on a genuinely held suspicion of wrongdoing by expelling a fellow shareholder can lead to a finding of unfair prejudice. It also illustrates when shares may be valued at a date before the court’s order.

The early stages of a shareholder dispute can be decisive. A shareholder who suspects wrongdoing may feel compelled to act quickly, particularly where there is concern that business, assets or opportunities are being diverted. Suspicion, however genuinely held, is not proof. If steps are taken to exclude a co-owner before the facts have been properly established, they may themselves amount to unfairly prejudicial conduct.

Chave v Farnsworth concerned Essex and East London Van Services Ltd (the Company), a small owner-managed company in which Kevin Chave and Adam Farnsworth held the voting shares equally and were the only directors. Their relationship deteriorated after Mr Chave’s son became involved in a new van-servicing business. Mr Farnsworth believed that Mr Chave, members of his family and a colleague had conspired to establish a competitor, undermine the Company and reduce the value of his shares. He excluded Mr Chave from the Company, while Mr Chave petitioned the court and Mr Farnsworth brought a cross-petition alleging that the exclusion was justified.

The court found no conspiracy. Although Mr Chave had allowed his son to use a dormant company and had given him general advice, that did not justify Mr Farnsworth’s response. Without first raising his concerns with Mr Chave, Mr Farnsworth caused letters to be sent accusing him and others of conspiracy, theft, fraud and computer misuse. He then changed locks and passwords, removed Mr Chave’s access to the Company’s systems and premises, and told staff that he had been removed from the business. He declined offers to discuss matters and treated his suspicions as established fact. The Company’s trading activities were subsequently moved to another company owned by Mr Farnsworth, and it ceased to operate as a going concern.

Excluding a co-owner from a small business may amount to unfair prejudice and give the excluded shareholder a legal right of action. It will not be unfair where there is a good reason for the exclusion. Here, however, the evidence did not establish a good reason: Mr Farnsworth’s suspicions were not justified and he had acted too hastily. The fact that he honestly believed he had been wronged did not alter the court’s objective assessment. Mr Chave’s petition therefore succeeded, and Mr Farnsworth’s cross-petition failed.

The usual remedy following a successful unfair prejudice petition is an order requiring the wrongdoing shareholder to buy the other shareholder’s shares. Shares are normally valued at the date of the court’s order, but the court can select another date where the usual approach would not produce a fair outcome. In this case, Mr Farnsworth’s actions had seriously reduced the Company’s value. A valuation at the date of the order would therefore have left Mr Chave bearing the financial consequences of the conduct about which he complained.

The figures showed why the date mattered. The jointly instructed expert valued the Company as a going concern at £669,965 on 1 May 2023, making Mr Chave’s 44% shareholding worth £294,785. By 18 November 2023, after the Company had ceased trading as a going concern, the same holding was worth £64,448 before adjustments. The court ordered Mr Farnsworth to purchase Mr Chave’s shares for £294,785, using the earlier date because it preceded the unfairly prejudicial conduct. This prevented Mr Farnsworth from benefiting from the reduction in value caused by his own actions and provided Mr Chave with a fair remedy.

Mr Chave wasn’t successful on all fronts, however. He had also sought additional compensation for lost salary, but the court refused this because the earlier valuation already compensated him for the relevant loss and a further award would amount to double recovery.

How we can help

Chave v Farnsworth shows that decisions taken at the outset of a shareholder dispute can determine both the merits of a later petition and the value of the remedy. Justin McConville advises shareholders and companies on unfair prejudice petitions and related disputes, acting for both petitioners and respondents. If you require advice about a developing dispute, please contact Justin or another member of the Cripps commercial disputes team.