I had similar situation with my old MD and he treated everyone like a piece of *hit. I didnt stand for it and stood up to him from day one and he never tried again - typical of bullies, there just cowards and pick on people who are weaker (or in the workplace, pick on people who they know cant answer back)
If you leave, I think you can claim constructive dismissal as he has made your working environment in such a way that you have no option than to leave. This would only work if you went to the MD and he didnt change the situation.