James Robert Hersov v Energy Research Lab Ltd
[2024] EWHC 2604 (Ch)
Peter Waddell Holdco Limited & Anor v Bluebell Cars Holding Limited & Ors
25 June 2024
[2024] EWHC 1627 (Ch)
High Court
A shareholder fight in a big car dealership! One shareholder (HoldCo) took control and fired another (Waddell), citing bad behavior and poor performance. The fired shareholder sued to get his job back, but the judge said the risk of problems if he returned was too high. The judge found there were questions about if the firing was legal, but it was too risky to put the fired shareholder back in charge while those questions were answered.
Key Facts
- •Peter Waddell (Claimant) sold a minority interest in his car dealership business ('Big Motoring World') to Freshstream Investment Partners LLP.
- •A Securityholders' Deed (SHD) governs the relationship between Waddell and Freshstream (HoldCo, the Defendant).
- •HoldCo exercised 'Step-in Rights' (SIRE) and 'Material Default Event' (MDE) clauses in the SHD, removing Waddell as a director.
- •Waddell claims HoldCo's actions breached the SHD and were detrimental to the business.
- •Waddell sought interim injunctions to restrain HoldCo and reinstate his rights and directorship.
- •Waddell abandoned the directorship reinstatement request but sought appointment of a new non-executive director and/or alternative remedies.
- •The court considered the validity of the SIRE and MDE notices, the adequacy of damages, and the balance of convenience.
Legal Principles
Interim injunction principles from *American Cyanamid v Ethicon* [1975] UKHL 1.
American Cyanamid v Ethicon [1975] UKHL 1
Contractual interpretation of the SHD, including clauses 9 (SIRE), 19 (MDE), and 28 (modification/waiver).
Securityholders' Deed (SHD)
Good faith, reasonableness, and proper purpose in exercising contractual rights.
Implied in contract
Natural justice in disciplinary proceedings.
Implied in contract/common law
Principles regarding the preservation of the status quo pending litigation (*Re a Company* [1985] BCLC 80).
Re a Company [1985] BCLC 80
No oral modification doctrine from *Rock Advertising v. MWB Business Exchange Centres Ltd* [2018] UKSC 24
Rock Advertising v. MWB Business Exchange Centres Ltd [2018] UKSC 24
Outcomes
Application for interim injunctions dismissed.
While serious issues to be tried exist regarding the validity of the SIRE and MDE notices, the balance of convenience strongly favors the defendants. The risk of irreparable harm to the company from Waddell's reinstatement outweighs the potential harm to Waddell.
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