Quasi-partnership breakdown leads to unfair prejudice ruling in divorced shareholders case

The High Court's recent judgement in Lecaille v National Parking Enforcement Limited provides valuable insights into unfair prejudice claims within quasi-partnerships, particularly where personal relationships have deteriorated following divorce.

Case background

Jonathan and Julie Lecaille incorporated National Parking Enforcement Limited in 2012 as equal shareholders whilst married. The company operates parking enforcement services using CCTV surveillance. Following their 2016 separation and 2018 divorce, both parties brought competing section 994 petitions alleging unfairly prejudicial conduct.

ICC Judge Burton identified the company as a quasi-partnership despite Ms Lecaille's denial, noting the informal understanding between the parties regarding roles and management participation, with duties of good faith, trust and cooperation extending beyond their divorce.

Successful unfair prejudice claims

The court found Ms Lecaille's conduct constituted unfair prejudice through several key breaches:

Denigration and workplace disruption: Ms Lecaille's behaviour included shouting at Mr Lecaille before approximately fifteen employees whilst calling him a narcissist and distributing personal correspondence. Her pattern of sending offensive emails from work accounts describing him in "angry, rude and intentionally offensive terms" rendered continuation of the quasi-partnership unrealistic.

Financial misconduct: Without warning, Ms Lecaille withdrew £35,000 (essentially draining the company account) imposing extraordinary conditions for repayment including Mr Lecaille's disqualification as director or psychiatric assessment. Despite undertaking not to make further unauthorised withdrawals, she continued using company funds for personal expenses including train tickets and Amazon purchases.

Operational failures: Ms Lecaille unilaterally cancelled 9,000 parking charge notices without proper evaluation, potentially costing £270,000. She also failed to pursue 32,000 PCNs pending litigation after August 2021, representing approximately three years' worth of enforcement opportunities.

Systems interference: Acting "out of anger," Ms Lecaille terminated access to the company's Xero accounting system for Mr Lecaille and the accountants, disrupting financial management for several weeks.

Rejected counter-allegations

The court dismissed most of Ms Lecaille's counter-petition claims:

Mr Lecaille's establishment of SSL (selling CCTV equipment) was distinguished from the company's parking enforcement business, with different services and regulatory constraints preventing overlap. His temporary use of company funds for SSL (later repaid) constituted technical breach but without unfair prejudice.

Claims regarding exclusion from company systems were rejected as justified protective measures given Ms Lecaille's demonstrated potential for damage during periods of "unrestrained anger."

The court noted Ms Lecaille's "profound suspicion" and determination to ensure Mr Lecaille's decisions "backfired," finding no evidence of campaigns to remove her from the business.

Key legal principles

The judgement reinforces several important precedents:

• Quasi-partnership duties survive divorce where business relationships continue
• Personal grievances cannot infect professional responsibilities without consequences
• Directors' conduct is assessed objectively - good intentions don't prevent unfairness findings
• Exclusion from management may be justified where conduct threatens business interests
• Share sale negotiations between shareholders don't constitute "company affairs" under section 994

Practical implications

The case demonstrates how personal relationship breakdown can poison business relationships, with courts willing to find unfair prejudice where one party allows personal animosity to override professional obligations. The judgement emphasises that quasi-partnership duties require constructive engagement regardless of personal feelings.

Ms Lecaille's shares will be valued at the date of the purchase order rather than the earlier £2.5 million third-party offer she refused, highlighting the risks of litigation strategy over commercial resolution.

The decision provides clear guidance on distinguishing legitimate business decisions from prejudicial conduct in quasi-partnership disputes, particularly valuable for practitioners advising on shareholder relationships following personal relationship breakdown.