4.4.5.1 Introduction

The open ended term "unfairly prejudicial" has invoked endless judicial commentary and academie discussions. "Unfairly prejudicial" is deliberately imprecise language which was chosen by Parliament because the earlier attempt in s. 210 of CA 1948 to provide a similar remedy had been unsuccessful.1 The word "oppressive" in s. 210 was interpreted as "burdensome, harsh and wrongful", which led to the impression that only actual illegality or invasion of legal rights was covered by this remedy.2 In the belief that this remedy should not have been so narrowly construed, the Jenkins Committee on Company Law consequently recommended the term - "unfairly prejudicial", hoping for a broader scope which also included oppressive conduct that was not illegal.3 This approach, despite its wider scope of minority protection, has lead the courts to a "voyage of discovery" of new standards to define `unfairly prejudicial' because their familiar touchstones, such as "unlawfulness" or "illegalities" are no longer helpful. As we shall see in the later analysis, the development of the terras legitimate expectations' and "equitable constraints"; are by far the most respected achievement by the courts.

Lord Wilberforce believed that s. 994 was not subject to any confinement to the existing case law and the categories of unfair prejudice should remain open. In his opinion, "it would be impossible, and wholly undesirable, to define the circumstances in which these considerations (in s.994) may arise."4 I fully respect his idea: to maintain the effectiveness of this remedy, general words should remain general, and I also agree that unfairly prejudicial conduct should be reviewed on a case by case basis. The analysis in this chapter is nevertheless conducted by categorizing cases. It examines unfairly prejudicial acts in the following situations: breach of articles of associations and shareholder agreements, exclusion from management, increase of issued share capital, amendment of articles of association, breach of director's duties, excessive remuneration and non-payment of dividends. There are two reasons justifying such a case categorization approach. Firstly, it can help to identify the sorts of actual situations in which a successful suit can be brought under s. 994 and those which cannot be brought under this section.5 Secondly, petitions should be reviewed case by case with broad discretion for judges, but this does not mean no guidelines can be given for every category of cases. Such guidelines are of value in offering a correct approach to understanding the application.6 If not properly applied, such a flexible remedy as s. 994 would become oppression itself.7