Unfair prejudice petition succeeds in Re BS Enterprises over below-market pub rent to family companies

The High Court has found in favour of a petitioning shareholder in an unfair prejudice claim concerning a Brierley Hill public house, holding that the company's sole other director conducted its affairs to the advantage of businesses owned by herself and a family member, at the company's expense.

In Re BS Enterprises Limited [2026] EWHC 1851 (Ch), ICC Judge Greenwood considered a petition brought under section 994 of the Companies Act 2006 by Amrik Singh Saini against Inderjit Kaur Pandher, his former business partner's widow. Mr Saini and Ms Pandher's late husband, Jagdeep Bhader, had jointly acquired and renovated a property known as The Thorns Inn, intending to profit equally both from its ownership through the company and from operating a pub and restaurant there through a separate trading vehicle. Their arrangement was never formalised in writing. Relations between the two men deteriorated during 2016, and shortly before Mr Bhader's unexpected death in November of that year, they reached an informal understanding that he would buy out Mr Saini's interest, with Mr Saini stepping back from day to day involvement in the meantime.

Following Mr Bhader's death, Ms Pandher, supported by his relatives, assumed practical control of the enterprise. The original operating company was dissolved in 2017 without Mr Saini's knowledge, and the pub was subsequently run through two companies owned respectively by Ms Pandher and her cousin, in which Mr Saini held no interest. Extended negotiations over buying out Mr Saini's stake, conducted intermittently over several years, never reached agreement. Mr Saini's case was that the property had been let to the connected operating companies at substantially below market rent, without formal lease terms, to his detriment as a shareholder in the property-holding company.

Expert evidence established a current market rent of around £65,000 per annum, with earlier years assessed at broadly similar levels, against which the sums recorded as having been paid fell well short in most years, alongside utility costs the company bore itself rather than the operating tenants. ICC Judge Greenwood found Ms Pandher's evidence unsatisfactory in several respects, including an implausible claim to recall a private family email from a decade earlier and a materially misleading account, given through solicitors, of her relationship with her cousin who owned one of the operating companies. He concluded there had been no genuine attempt to secure a market rent or address the plain conflict of interest arising from Ms Pandher's ownership of one of the tenant companies, and that this amounted to a breach of her duties under sections 172 and 174 of the Companies Act 2006, conducted without Mr Saini's consent or acquiescence.

The judgement rejected, however, Mr Saini's separate case that a personal "quasi-partnership" understanding survived Mr Bhader's death, holding that any such understanding, along with the equitable constraints it generated, came to an end on his death and could not bind Ms Pandher. Notwithstanding that finding, ICC Judge Greenwood held the unfair prejudice ground was made out on the rent and conflict of interest issues alone. He indicated that a clean break, likely involving a share purchase order, represented the fair outcome, with a further hearing to be listed to determine the precise terms of relief in the absence of agreement between the parties.