Tactus Holdings Limited v Philip Mark Jordan & Ors
[2024] EWHC 399 (Comm)
Bailey Ahmad Holdings Limited v Bells Holdings Limited
13 November 2023
[2023] EWHC 2829 (Comm)
High Court
Two business partners disagreed about whether one had broken their agreement. One partner tried to use a loophole to force the other to sell their shares. The judge said the agreement didn't allow that, so the case was dismissed. The judge told them to try to work it out without a court case because it would be very expensive.
Key Facts
- •Bailey Ahmad Holdings Ltd (Claimant) owns 40% and Bells Holdings Ltd (Defendant) owns 60% of Omer & Company Accountants Ltd.
- •Dispute arises from alleged breaches of a Shareholders' Agreement (dated 31 July 2019) by the Defendant.
- •Claimant seeks a declaration that it can rely on a 'Defaulting Shareholder' mechanism in the Articles of Association and Agreement based on its honest belief of a breach, regardless of whether a breach actually occurred.
- •Agreement contains an English law and jurisdiction clause.
- •Defendant argues Claimant acted in bad faith and that there was no breach.
Legal Principles
Contractual interpretation: Courts interpret contracts according to their natural and ordinary meaning.
None explicitly cited, but implicit throughout the judgment.
Part 8 procedure: A Part 8 claim is appropriate for declarations, but the claim must have arguable merit.
CPR Part 8
Court's case management powers: Courts have powers to summarily dismiss claims lacking arguable merit.
CPR (inherent powers)
Expert determination: Expert determination is only applicable where the contract specifies trigger events.
Barclays Bank plc v Nylon Capital LLP [2011] EWCA Civ 826 (mentioned but not directly applied)
Outcomes
Claimant's Part 8 claim summarily dismissed.
Claimant's construction of the Articles of Association, which allows reliance on a 'Defaulting Shareholder' mechanism based solely on a belief of breach (regardless of its accuracy), is not arguable. The contract clearly requires an actual material breach to trigger the mechanism.
Parties urged to pursue alternative dispute resolution (ADR).
High cost and complexity of litigation outweigh the relatively low value of the dispute.
Future litigation (if any) should not be in the Commercial Court, but rather the County Court.
The Commercial Court is inappropriate for a low-value shareholder dispute of this nature.