Grace v Grace

In the matter of Grace v Grace, the plaintiffs, who were shareholders in three companies, sought a winding up order on the grounds of oppression and the just and equitable principle. The defendants, who were also shareholders and directors, opposed the winding up of two of the companies but did not object to the winding up of the third. The court was required to decide whether the appointment of a provisional liquidator for the two companies in question was appropriate, given the circumstances of the case.

The court considered the nature of the dispute and the likelihood of the plaintiff's case succeeding. It was found that there was a seriously arguable case that the plaintiff should be entitled to control of two of the companies, but not the third. The court also noted that a "buy-out order" was more likely than a winding up order, but that there was a significant risk that company resources would be expended on the defence of the majority shareholders. The court held that the appointment of a provisional liquidator was appropriate, given the potential for the majority shareholders to dissipate company assets in the defence of the winding up application.

The court emphasised the importance of the probable destination of future control of the companies in making its decision. The court found that the risk of dissipation of company assets outweighed the risk of prejudice to the minority shareholders, and that the appointment of a provisional liquidator was necessary to protect the companies' assets. The court made a final winding up order in respect of the third company, but did not appoint a provisional liquidator for the other two companies, given the defendants' consent to the winding up order.

In summary, the court found that the appointment of a provisional liquidator was appropriate in this case, given the risk of dissipation of company assets and the probable destination of future control of the companies. The court made a final winding up order in respect of the third company, but did not appoint a provisional liquidator for the other two companies, given the defendants' consent to the winding up order.