£3.4m LLP member whistleblowing claim permitted to proceed

Losses resulting from expulsion following whistleblowing can be very substantial, and there is no statutory limit on the amount of compensation that can be awarded.

But in some cases the expulsion of the whistleblower may:

  • be based (at least on the face of the expulsion documentation) not on the whistleblowing, but on different, lawful grounds, or
  • be achieved by way of resolution of the other members under the terms of the LLP deed, under provisions requiring no grounds to be stated.

In such circumstances it may be argued by the continuing LLP members that the chain of causation between the whistleblowing and the whistleblower’s loss brought about by the expulsion of the whistleblower has been broken, and that accordingly no recoverable loss arises.

The Court of Appeal decision earlier this year in Wilsons Solicitors & others v Roberts brings such scenarios sharply back into focus.

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The advantages of derivative claims over unfair prejudice petitions

An LLP member or company shareholder:

  • who is in the minority and thus outvoted, and
  • whose co-proprietors have misused or misappropriated business assets (including the misdirection of corporate opportunities),

may in some circumstances be able to pursue a claim against his co-proprietors on behalf of the LLP or company (even though the LLP or company is otherwise controlled by the misbehaving majority), in order to seize back the assets and/or to recover compensation for the LLP or company. Furthermore the LLP or company might well be ordered, at the outset of the claim, and throughout the conduct of the claim, to pay most of the member/shareholder’s legal costs incurred in bringing the claim.

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The evolution of the partnership and the predator partner

(This article was first published on the Kluwer Mediation Blog on 7 March 2017)

…the typical all-powerful and largely irreplaceable partner of yore has evolved to become a powerless, placeholder partner, keeping the chair warm for the next incumbent of his post. He is the counterpoint to, and the prey of, the predator partner.

This has radically altered how many partnership disputes, especially in the professions, tend to arise and are resolved.

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Comments on the Chancellor’s Autumn Statement 2016

"This risks being a cutting off nose to spite face moment" The Chancellor’s Autumn Statement on 23 November 2016 brought unwelcome news for anyone trading through a partnership or LLP, and especially for professional firms. Profit-sharing His statement to the effect,...

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