Stevens v Kyte – Two Directors Force Out the Third

GSK Electrical Services Limited began in 2006, when two electricians, Gary Stevens and Stephen Kyte, left their old employer to go into business together. They held one share each. The company took off quickly, and in 2010 they brought in a third director, Mark Handford, who had worked with them both before.

The shares were reorganised so that each man held a third. In 2013 some shares moved to their wives, so that each household held one-third. The wives were not involved in the work.

All three men were directors and employees. They paid themselves small salaries and took most of their income as dividends. There was no shareholders’ agreement and nothing was written down beyond the company’s standard articles.

Mr Stevens worked mostly on site and acted as the company’s qualified supervisor, signing off completed installations through the National Inspection Council for Electrical Installation Contracting (NICEIC). That role mattered, because most of GSK’s work needed theis certification. Mr Kyte and Mr Handford spent more time in the office and ran the administration.

For more information, please read the full case on Stevens v Kyte (Re GSK Electrical Services Ltd) [2026] EWHC 1231 (Ch)

A Friendship That Went Quiet

By 2014, Stevens and Kyte were no longer speaking. In evidence, each gave different reasons. Kyte blamed a row between their wives over a cancelled dinner. However, Tthe judge preferred the Stephens’ version. She found that Kyte had indirectly let it be known that he no longer wanted to work with Stevens and that a confrontation between the two men on Kyte’s driveway followed.

The silence lasted years, with the two communicating through Handford. The business kept growing, and the arrangement held largely because Handford sat between them. When he announced in February 2021 that he planned to retire, everything fell apart.

The Meeting, the Recording and the Hidden Camera

The three men met in the company’s office on 11 February 2021. Stevens secretly recorded it, which gave the court an agreed transcript of what was said. Handford was blunt. He said the other two could not work together. Stevens suggested they might manage if everyone was kept in the loop. They agreed to take advice from the company’s accountants.

After the meeting, Stevens installed a hidden CCTV camera above the directors’ desks. It recorded both video and audio. It stayed there until Kyte found it on 16 April 2021. Kyte told Handford but said nothing to Mr Stevens. Stevens also kept quiet.

The Judge commented upon the installation of the camera as being a serious breach of trust, whilst also noting that Stevens had installed it because he suspected the others were plotting against him and the documents showed he was right.

The Plan Behind the Scenes

It turned out that the others had been plotting for months. In August 2020, Handford had sought legal advice on “director and shareholder issues”. In October 2020, he asked the accountants to value the Stevens’ stake, and the draft valuation came back at an estimated £175,000. Nobody mentioned the valuation at the February meeting and Stevens knew nothing about it, even though the three had agreed to consult the accountants together.

After the meeting, Kyte and Handford went to the company’s accountants on their own and asked what it would cost to buy the Stevens out, compared with a liquidation. The answers were an estimated £125,000 on a liquidation and £158,000 on a sale.

In May 2021, a firm of HR advisers relayed an offer of £55,000 for Stevens’ shares plus a £30,000 settlement payment. Mr Stevens took advice, refused and asked for an independent valuation. A process was agreed that month, with an audit and a valuation to follow, paid for by the company. But it moved slowly. The dividend due in April 2021 was not paid, and a later one was cut. Kyte’s explanation of cash flow problems was not supported by the evidence.

Dismissal, Removal and an Email About Squeezing

By summer 2021, Kyle and Handford were actively looking for grounds to remove Stevens. They asked their HR advisers whether they could stop dividends, pay themselves more salary and dismiss Stevens. They seized on a supposed failure to answer an email from the NICEIC. In fact he had replied, and Handford had not checked with the right person.

An email to an employee about unissued invoices said it could be “listed in his termination letter”. They also accused him of deliberately cutting a colleague’s access to the certification software but that turned out to be a recurring glitch that happened when his office computer was switched off.

On 30 September 2021, they dismissed Stevens for gross misconduct over the camera, with no disciplinary process. In November, a general meeting removed him as a director. The wives voted for it, including Mrs Stevens, who hoped it would free her husband to earn a living elsewhere.

The most damaging evidence came from their solicitor. She wrote that the “good news” was that Mr Stevens was now neither employee nor director. She wrote that his position was ” is in a very weak tactical position (as we planned)”, and that he might be “squeezed enough to agree a number for his shares that suits you very well”. She also discussed tactics to protect GSK from an unfair prejudice claim based on the new salaries and stopped dividends.

Cross-Petitions

Mr and Mrs Stevens petitioned under s.994 of the Companies Act 2006, claiming unfair prejudice. Kyte, Handford and their wives cross-petitioned to wind the company up on just and equitable grounds. Both sides agreed that winding up was a last resort, because the company was profitable and successful.

The trial ran for five days in February and March 2026 before Saira Salimi, sitting as a Deputy High Court Judge. All the main witnesses were found to be unreliable in some way, so she relied on the documents.

What the Judge Decided

The Judge handed down her decision on 29 May 2026. She found unfair prejudice and ordered Kyte and Handford to buy the Stevenses’ shares. The respondents said the hidden camera justified everything. She accepted it was a gross breach of trust, but found it was not the real reason for Mr Stevens’ removal. The valuation inquiries predated it by months, and the directors only chose to rely upon it when the agreed valuation process dragged on.

She found they had decided by October 2020 to remove him “at as low a price as could be achieved”. She treated the switch from dividends to salaries as a deliberate attempt to pressure him into selling below value. The cross-petition was dismissed, and she held the respondents could not retreat from the pleaded case that GSK was a quasi-partnership.

On valuation, the experts were far apart. At 22 November 2021, the petitioners’ expert said £2.1 million and the respondents’ expert said £835,000. At 31 March 2025, the figures were £580,000 and £289,000. The judge refused to use the earlier date. The fall in value was not shown to be down to Mr Stevens’ departure, and she called the Stevenses’ position a “one-way bet”. The respondents’ final offer of £296,400 in September 2025 was not obviously unreasonable. She applied no minority discount, because GSK was a quasi-partnership and both sides had faults.

She preferred neither expert overall and told them to agree a figure on her findings. If the final price is below the £296,400 offer, the Stevenses face costs consequences for refusing it.