BLP - SGS 15/16 Internal Disputes

Question 1

Pedley v Inland Waterways Association Ltd (1977)

Answer 1

Directors are not bound to place the removal resolution on the agenda for consideration at a forthcoming general meeting.

Question 2

What is a Bushell v Faith clause?

Answer 2

A Bushell v Faith clause in the articles of association may give a director, who is also a shareholder, weighted voting rights at a general meeting at which a s.168 CA 2006 resolution is proposed.

Question 3

What is a transfer provision?

Answer 3

A transfer provisions would require the director to transfer his shares to the other shareholders if he is removed as a director

Question 4

Can you use a shareholders’ written resolution to remove a director?

Answer 4

No, the procedure cannot be used - see s.288(2)(a) CA 2006.

Question 5

What is the rule in Bersel Manufacturing Co Ltd v Berry [1968]?

Answer 5

If the articles state that a director can be removed by other directors - this is permissible.

Question 6

What is an order of discharge?

Answer 6

An order by a court of law saying that a person or company that is bankrupt is no longer responsible for paying back its debts.

Question 7

What is the rule in Foss v Harbottle (1843)?

Answer 7

In any action in which a wrong is alleged to have been done to a company, the proper claimant is the company itself.

Question 8

Eley v Positive Government Security Life Assurance Co Ltd (1875)

Answer 8

Any rights which are not membership rights should be set out in a separate contract (such as a shareholders’ agreement) and not in the articles of association.

Question 9

Bratton Seymour Service Co. v Oxborough [1992]

Answer 9

a company’s articles are deemed to be a complete

contract and the court will not imply any terms into them whether to create business efficacy or otherwise.

Question 10

Re Guidezone Limited [2000]

Answer 10

The court will determine whether there has been unfair prejudice by applying the reasonable bystander (objective) test.

Question 11

Ebrahimi v Westbourne Galleries Ltd [1973]

Answer 11

Shareholders may have a legitimate expectation that
they be involved in the management of the company, and the prevention of such involvement may equate to unfairly prejudicial conduct.

Question 12

Maidment v Attwood and Others [2012]

Answer 12

It was found that the director had breached his duties by fixing his remuneration by reference to his own interests which amounted to unfairly prejudicial conduct under s. 994.

Question 13

O’Neill and another v Philips and others [1999]

Answer 13

Breach of the articles of association will amount to unfair prejudice.

Question 14

What is an independent contractor?

Answer 14

Independent contractors are individuals who set up
business on their own account and provide services to others under a contract for services.

Independent contractors work under a contract for
services rather than a contract of service. They are sometimes referred to as freelance workers or self employed.

Question 15

What is an employee?

Answer 15

Employees are usually required to work regular hours, on tasks set by the employer, at a set location and for a fixed salary.

According to the s.230(1) ERA 1996, an employee is an individual who has entered into, or works under (or where the employment has ceased, worked under) a contract of employment.

Question 16

What is a worker?

Answer 16

A hybrid between an independent contractor and an employee.

Question 17

What are some important statutes related to employment Law?

Answer 17

1. Equality Act 2010
2. Employment Rights Act 1996
3. Transfer of Undertakings (Protection of Employment) Regulations 2006
4. National Minimum Wage Act 1998
5. Working Time Regulations 1998
6. Public Interest Disclosure Act 1998

Question 18

What tests are used to determine if an individual is an employee?

Answer 18

1. the personal service test;
2. the control test;
3. mutuality of obligation test; and
4. other factors – economic reality and integration tests.

Question 19

What is wrongful dismissal?

Answer 19

A claim for wrongful dismissal arises where the employer has dismissed the employee in breach of the terms of the employment contract by, for example, failing to give the employee any or sufficient notice.

Question 20

What is a summary dismissal?

Answer 20

It is when an employee has committed a very serious breach of contract, and the employer dismisses them without notice.

Question 21

What is a payment in lieu of notice clause?

Answer 21

This clause allows the employer to pay the

employee rather than require the employee to work during their notice period.

Question 22

What are the five potentially fair reasons for dismissal?

Answer 22

1. Capability
2. Conduct
3. Redundancy
4. Statutory illegality
5. Some other substantial reason

Question 23

What are the three remedies for an employee unfairly dismissed?

Answer 23

1. Re-instatement
2. Re-engagement
3. Compensation

Question 24

What are the three scenarios in which a business can make redundancies?

Answer 24

1. the business is shut down altogether
2. the place of business where the employee works is shut down; or
3. there is a reduction in the need for employees.

Question 25

What are the three types of restrictive covenant?

Answer 25

1. Non-competition
2. Non-dealing
3. Non-solicitation/poaching

Question 26

What is a ‘restraint of trade’ provision?

Answer 26

A provision which restrains an employee from earning a living in the future. Such a provision would be void and unenforceable.

Question 27

Factors in determining the reasonableness of a restrictive covenant.

Answer 27

• The duration of the restraint
• The geographical scope of the restraint
• The needs/interests of the business
• The duties of the employee
• The interest that the business is seeking to protect and whether a lesser restriction would suffice.

Question 28

What is constructive dismissal?

Answer 28

This occurs where it is the employee who leaves the job but he is compelled to do so by the conduct of the employer.

Question 29

What is gardening leave (or administrative leave)?

Answer 29

The practice whereby an employee leaving a job—having resigned or otherwise had their employment terminated—is instructed to stay away from work during the notice period, while still remaining on the payroll.

Question 30

Re a Company No 00477 of 1986 [1986]

Answer 30

The court held that the interests of a member who had risked his capital in the business of a small private company may extend to the legitimate expectation that he will continue to be employed as a director, so that his dismissal will be unfairly prejudicial to his interests as a member.

Question 31

Russell v Northern Bank Development Corp Ltd [1992]

Answer 31

The House of Lords held that a private shareholders’ agreement could not fetter a company’s statutory powers but could bind the voting rights of those parties to the agreement.