Jul 2026
In Re Sandycombe Development Ltd [2026] EWHC 1776 (Ch), the English High Court (Cawson J) refused to strike out an unfair prejudice petition, holding that the rule against reflective loss does not bar a petitioner from seeking the statutory remedy, even where the loss claimed is reflective of loss suffered by the company. The Court also reiterated that in principle it is permissible (in England at least) for an unfair prejudice petition to seek both personal relief and relief in favour of the company.
As explained below, the decision is likely to be relevant to unfair prejudice claims in the BVI.
Background and Relief Claimed in the Petition
Sandycombe Development Limited was a special purpose vehicle for a property development in England. The petitioners were minority shareholders who had invested via a joint venture shareholders’ agreement (JVSA). The Company failed in 2024, rendering their shares worthless, and the petitioners alleged that those responsible for the management of the Company had diverted Company funds to unrelated developments via associated companies, amounting to breaches of fiduciary duty, breach of the JVSA, and unfairly prejudicial conduct.
The petition sought: (i) a share buy-out at fair value reflecting restoration of the Company’s assets; (ii) alternatively, equitable compensation; (iii) an account of profits in favour of the Company; and (iv) as a fallback, permission to bring a derivative claim.
The Respondents applied to strike out the petition, contending (among other things) that: (1) the rule against reflective loss and proper claimant rule barred the personal claims; and (2) that the petition impermissibly mixed personal, corporate and contingent derivative claims.
What Were the Legal Principles and Decision by Cawson J?
In relation to the interplay between the rule against reflective loss and unfair prejudice claims, Cawson J noted that in Marex Financial Ltd v Sevilleja [2020] UKSC 31, Lord Reed PSC had expressly recognised (at [83]) that, even in cases where the rule on reflective loss potentially applies, shareholders retain “a variety of rights” including the statutory right to seek relief for unfairly prejudicial conduct. Further, in Atlasview Ltd v Brightview Ltd [2004] EWHC 1056 (Ch), the English High Court had confirmed that reflective loss does not provide a bar to an unfair prejudice claim.
In the circumstances, Cawson J refused to strike out the personal claims in the petition on the basis that the rule against reflective loss was not engaged.
In respect of the submission that the petition also impermissibly sought to pursue relief that could only be sought via a derivative claim, the Respondents attempted to rely upon on the decision of the Hong Kong Court of Final Appeal in Re Chime Corp Ltd, Nina Kung v Tan Man Kou (2004) HKCFA 73. In that case, Lord Scott had expressed the view that it is not generally appropriate for a court, on an unfair prejudice petition, to permit a claim to proceed which could otherwise be brought by way of a derivative claim. However, Cawson J noted that in Re Coinomi Ltd [2023] EWCA Civ 1480, the English Court of Appeal (after reviewing various authorities in England) had refused to follow Re Chime Corp Ltd, and had instead confirmed that in England and Wales an unfair prejudice petition can seek both personal relief and relief for the company, so long as the former is genuinely sought. It is simply a case management issue as to how the different reliefs are determined.
In light of that decision, Cawson J also refused to strike out those parts of the petition seeking relief for the company, on the basis that the alternative personal relief was being genuinely sought.
What is the Relevance to the BVI?
As the Eastern Caribbean Court of Appeal has previously approved and followed Atlasview, the decision in Sandycombe (and the cases it refers to) is likely to reinforce the established position in the BVI on the interplay between reflective loss and unfair prejudice petitions.
However, in relation to the second issue in Sandycombe, namely whether relief on behalf of a company can properly be sought in an unfair prejudice claim (as opposed to via a derivative claim), the EC Court of Appeal has not yet (as far as we’re aware) had to determine whether to follow the approach in Re Coinomi Ltd, or adopt the approach of the Hong Kong Court in Re Chime Corp Ltd.
It is right to say that the decision in Re Chime Corp Ltd has previously been cited in at least two first instance BVI decisions (one of which followed it). It was also referred to by the EC Court of Appeal in Malitskiy v Oledo Peteroleum Ltd BVIHCMAP2013/0006 – but the Court ultimately decided the appeal on a different point. However, given the criticisms that have been made of Re Chime Corp Ltd., and the way in which the English authorities have moved on since then, it seems more likely than not that if and when the issue arises again the BVI Court and the EC Court of Appeal will follow the approach of the English Court of Appeal in Re Coinomi Ltd.