The Court of Appeal, in determining issues of liability on an unfair prejudice petition brought pursuant to section 994 of the Companies Act 2006, notably concluded that the section 172 requirement that a director acts in good faith includes a requirement that they act honestly towards the company (drawing on the Supreme Court’s discussion of dishonesty in Ivey v Genting Casinos [2017] UKSC 67).
The petition was brought by Saxon Woods Investments Limited and related to the affairs of Spring Media Investments Limited (“the Company”), of which Mr Costa was chairman.
The Court of Appeal agreed with the judge’s findings that the Company, contrary to the exit provisions set out within the shareholders agreement, had failed to work in good faith towards an exit and failed to give good faith consideration to opportunities for an exit as a result of Mr Costa’s conduct.
Construction of articles was central in the Court of Appeal coming to these conclusions, and parallels can be drawn with the case of Syspal Capital Limited v Truman and Another [2025] EWCA Civ 469. The Case Digest for Syspal can be found here: https://lnkd.in/p/e2hrXiDY.
However, they allowed the petitioner’s appeal against the judge’s decision that Mr Costa had not acted in breach of his fiduciary duties under s172(1) and s174 of the Companies Act 2006 on the basis that the judge’s approach to s172 deprived the phrase “in good faith” of all meaning and was, therefore, wrong.
Read the full judgment here.
