Robert Archbald Gilchrist Sinclair (Appellant) v Ian Charles Domaille and 3 others (Respondents) (Guernsey)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

JCPC/2025/0066

Jurisdiction

Guernsey

Parties

Appellant(s)

Robert Sinclair

Respondent(s)

Ian Domaille, Deborah Guillou, Mark Bright and Artemis Holdings Limited

Issue

Did the directors of a company breach their duties when they issued new shares resulting in a beneficial owner and co-shareholder ceasing to be a beneficial owner, either because (i) the issuance did not pursue a proper purpose, and/or (ii) they did not have regard to the market value of the company when determining the share price?

Facts

This appeal relates to a resolution of the Board of Directors of Artemis Holdings Limited (“AHL”) on 27 August 2021 to dilute the appellant’s shareholding in that company (“the dilution”). Mr Sinclair and Mr Domaille are beneficial owners and co-shareholders of AHL. They were both appointed as Directors of AHL on 23 July 2008. Mr Sinclair ceased to be a Director on 16 July 2019. Mr Domaille remains a Director, alongside Ms Guillou and Mr Bright. AHL had an authorised share capital of £10,000 divided into 1,000,000 ordinary shares of £0.01 each, all of which had been issued, until 27 August 2021. In the period running up to this date, AHL had operational difficulties including being unable to open a bank account on behalf of a client for over a year, which required due diligence documents to be provided by Mr Domaille and Mr Sinclair. Mr Sinclair had ongoing ill-health which he stated affected his memory. On 19 July 2021, the respondents’ advocates advised Mr Sinclair’s advocate that if signed documentation was not provided by him by 23 July 2021, they would have to assume that he was either unable or unwilling to act. Further, AHL reserved the right to take all steps within its power to remove Mr Sinclair from any positions he holds. On 29 July 2021, the respondents’ advocates notified Mr Sinclair’s advocate that the Board of AHL intended to meet to consider a proposal to issue new shares so as to reduce his shareholding below 25%, such that he would cease to be considered a beneficial owner or controller. On 5 August 2021, the respondents’ advocates confirmed that they intended to proceed. On 17 August 2021, a further letter noted that Mr Sinclair had again failed to provide the requested documentation. On 27 August 2021, a resolution of the Board of Directors of AHL diluted Mr Sinclair’s shareholding in the company. Ms Guillou and Mr Bright resolved to issue 975k shares to Mr Domaille at a price of £0.26 per share. Mr Domaille paid consideration of £0.01 per share, a total of £9,750, settled by way of a loan of £9,750 from AHL to Mr Domaille. The effect was that Mr Sinclair’s shareholding was reduced from 49.27% to 24.94% and Mr Domaille’s shareholding was increased from 50.73% to 75.06%. Mr Sinclair brought a claim under the Companies (Guernsey) Law 2008 sections 349(1) and 350, contending that the dilution was unfairly prejudicial. In the alternative, he pursued a derivate claim (a claim brought by a holder of ownership interests in an entity on behalf of the entity against its board of directors) under which he sought an order for damages payable by the Directors to AHL. On 29 November 2024, the Royal Court of Guernsey held that there was no basis for the unfair prejudice claim and dismissed it. On 10 April 2025, the Guernsey Court of Appeal held that the Royal Court was wrong in holding that Mr Sinclair suffered no prejudice, but nevertheless the appeal must be dismissed. Mr Sinclair now appeals to the Judicial Committee of the Privy Council.