O’Neill v Phillips
 1 WLR 1092 ** See above - important case: showing that court taken a
narrow view on
what constitute unfair prejudice
But some commentators said the court
to take a broader view --> which approach should be
preferred? (reflection question)
The respondent (P) held all of the shares and was its sole director. Subsequently, the petitioner (O), was
employed by the company. P was impressed by O's ability and promoted O. Later on, O received 25% of the
company's shares and O was made a director. O was informed by P that O would take over the management
of the company's business and O would also receive 15% of the profits.
Subsequently, P retired from the board, O became the sole director, and company's managing director.
For a while, the company was profitable; subsequently, the company becomes unprofitable, so obviously P
was very unhappy with O's management.
P used his majority voting right to appoint himself as the MD and P took over the management of the
company. O was informed that he would no longer receive 15% of the profits; his entitlement would limit to
his salary and dividends from his 25% shareholding
O commenced a petition alleging unfairly prejudicial conduct on the part of P.
House of Lord held:
P's conduct would have been unfair if he had used his majority voting power to exclude O from the business
But P had not done so
He had simply revised the terms of O's remuneration
P refusal to allot additional shares, as part of the proposed incentive scheme, was not unfair because the
negotiation between them was not completed; and there were no contractual undertaking
And the court also held that P's decision to revise O's profit sharing arrangement did not amount unfair
prejudice because O's entitlement to the 15% of company's profit was never formalised and it was
additional upon O's running of the business. Since the condition was no longer fulfilled because P had to