Dashfield & Anor v Davidson & Ors

Dashfield & Anor v Davidson & Ors

Article 14 imposed a mandatory obligation on the estate to transfer the deceased shareholder's shares to the company at a price based on the audited accounts for the last completed financial year prior to death. The company was required to take reasonable steps to procure that those accounts were audited before the auditors certified the value. The estate was legally obliged to sell at the price derived from the 2003 audited accounts, not the lower 2002 accounts. No contract, joint venture, or equitable consideration suspended article 14, and no unfair prejudice was established.

Parties
Claimant/part 20 Defendant: Brenda Mary Dashfield; Claimant/part 20 Defendant: John Leslie Shepherd; Defendant/part 20 Claimant: Nigel John Davidson; Defendant/part 20 Claimant: Noel Edward Ruddy; Part 20 Defendant: Kenneth Ian Woodbury; Part 20 Defendant: Jack Prowting
Jurisdiction
England and Wales
Judgment Date
18 March 2008
Procedural Posture
Civil (company Law) / Judgment After Trial on Agreed Issues
Outcome
Claim allowed in part
Legal Topics
Articles of Association, Pre Emption Rights, Share Valuation, Unfair Prejudice, Implied Terms
Company Law Equity Articles of Association Pre Emption Rights Share Valuation Unfair Prejudice Implied Terms

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Parties

Brenda Mary Dashfield

Claimant/part 20 Defendant

John Leslie Shepherd

Claimant/part 20 Defendant

Nigel John Davidson

Defendant/part 20 Claimant

Noel Edward Ruddy

Defendant/part 20 Claimant

Kenneth Ian Woodbury

Part 20 Defendant

Jack Prowting

Part 20 Defendant

Procedural Posture

Civil (company Law) / Judgment After Trial on Agreed Issues

Legal Issues

  1. 1 Whether the estate of a deceased shareholder was legally obliged to transfer shares to the company under article 14 and at what price
  2. 2 Whether article 14 imposed mandatory obligations or a discretionary option
  3. 3 Whether the valuation should be based on the last audited accounts before death or the most recent available

Ratio Decidendi

Article 14 imposed a mandatory obligation on the estate to transfer the deceased shareholder's shares to the company at a price based on the audited accounts for the last completed financial year prior to death. The company was required to take reasonable steps to procure that those accounts were audited before the auditors certified the value. The estate was legally obliged to sell at the price derived from the 2003 audited accounts, not the lower 2002 accounts. No contract, joint venture, or equitable consideration suspended article 14, and no unfair prejudice was established.

Court Disposition

Claim allowed in part

Orders

  • The price at which Mr Peet’s personal representatives were bound to sell was £442,479, not £243,648.
  • The difference of £198,831 plus pro rata interest is to be paid out of the retention fund to the current personal representatives of Mr Peet.