Ronnan v Stansfield – An Unfair Prejudice Petition Case

Control of the Company Means You Can’t Rely on an Unfair Prejudice Petition

In October 2021, Sean and Celia Ronnan and Richard Stansfield incorporated Rumour Bar & Club Limited to open a bar and nightclub on York Street in Clitheroe, Lancashire. It was very much a joint venture as Mr Ronnan largely funded the refurbishment, Mrs Ronnan handled the design and fit-out, and Mr Stansfield took charge of day-to-day operations, including securing the lease and the all-important licence. All three were directors, and profits were to be split according to their shareholdings: 55% to the Ronnans between them, 45% to Stansfield. 

Over £100,000 went into fitting the place out and the club opened in August 2022 with major success. 

Then the relationship broke down, and on 3 June 2023 Stansfield closed the club abruptly and cut the Ronnans out of any further decision-making. It was also alleged that Stansfield had failed to properly fulfil his day-to-day running obligations, and that the Ronnans were locked out of the company’s trade cash accounts and its Zettle card-payment account.  

Shortly afterwards, a separate company controlled by Stansfield’s brother, Truth Nightlife Limited, moved into the same premises and began running a strikingly similar business, reportedly even using Rumour’s own trading accounts to buy fixtures and fittings for the new venture. 

The Ronnans’ case, when they issued an unfair prejudice petition in December 2023, was that Stansfield had taken the lease in his own name without telling them. He had then  threatened to sell the lease and cancel the licence unless they paid him £25,000, Whenthey refused, Stansfield effectively handed the entire business to his brother’s company, leaving Rumour Bar & Club as an empty shell.

For more information, please read the full case on Ronnan & Anor v Stansfield & Anor [2025] EWHC 2034 (Ch)

Can Majority Shareholders Bring an Unfair Prejudice Petition?

Section 994 of the Companies Act 2006 lets a shareholder petition the court where a company’s affairs have been run in a way that’s unfairly prejudicial to its members (an unfair prejudice petition). In practice, it is almost always deployed by minority shareholders against a controlling majority who is squeezing them out or abusing its power. It exists to protect those who have no other way of stopping conduct that is harming the value of their shareholding. 

The Ronnans, though, held the majority of the shares and a majority on the board. Their argument was that this technical control meant nothing in practice as Stansfield had the industry know-how and had seized physical control of the business, leaving them powerless to intervene however many board resolutions they might pass. 

At first instance, District Judge Matharu accepted there was at least an arguable case that the Ronnans had been rendered powerless, and declined to strike the petition out before trial, but Stansfield appealed. 

The Appeal Decision – The Company is the Correct Claimant

Mr Justice Fancourt, sitting as Vice-Chancellor of the County Palatine of Lancaster, allowed the appeal and struck the petition out entirely. 

His reasoning drew heavily on the Court of Appeal’s earlier decision in Re Legal Costs Negotiators Ltd [1999] 2 BCLC 171, which established that unfair prejudice petitions exist to remedy situations where a shareholder has no other way of stopping abuse of control, not to compensate a majority who simply chose not to use the powers already available to them.  

Where shareholders hold voting control, and especially where they also control the board, they can generally direct the company itself to take action. 

The judge accepted that a majority petition isn’t automatically barred as earlier case law recognised exceptions where a shareholders’ agreement or unusual voting structure genuinely ties the majority’s hands. But short of that kind of legal impediment, a majority shareholder has to show it was practically impossible, not merely difficult, to use its own control to fix the problem. 

The Ronnans could have called a board meeting and authorised the company to sue Stansfield, sought an injunction over the bank accounts, or removed him as a director using their voting majority. None of that happened; instead they waited more than six months before issuing any court proceedings. As the judge noted, the correct claimant for the wrongs alleged was the company itself, and only if the company genuinely couldn’t bring that claim would the Ronnans, as shareholders, have suffered unfair prejudice.

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