Dear & Anor v Jackson [2013] EWCA Civ 89 (22 February 2013)

Dear & Anor v Jackson [2013] EWCA Civ 89 (22 February 2013)

The Agreement, drafted by legally advised parties, expressly addresses the use of PCH II's shares for appointment and removal of directors but is silent on removal by directors under Article 88(e). It is not necessary for commercial workability to imply terms preventing removal by directors, nor is it obvious the parties would have agreed to such terms. The implication sought would impermissibly re-write the contract and fetter directors' powers beyond the express bargain. Therefore, the appeal is allowed and the implied terms are not incorporated.

Citation
[2013] EWCA Civ 89
Parties
Appellant/defendant: Patrick Giles Gauntlet Dear; Appellant/defendant: Reade Eugene Griffith; Respondent/claimant: Alexander Edward Jackson
Jurisdiction
England and Wales
Judgment Date
22 February 2013
Procedural Posture
Appeal / Court of Appeal Judgment
Outcome
Appeal allowed
Legal Topics
Implied Terms, Shareholder Agreements, Directors' Powers, Corporate Governance
Contract Law Company Law Implied Terms Shareholder Agreements Directors' Powers Corporate Governance

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Parties

Patrick Giles Gauntlet Dear

Appellant/defendant

Reade Eugene Griffith

Appellant/defendant

Alexander Edward Jackson

Respondent/claimant

Procedural Posture

Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether implied terms in a shareholders' agreement prevent removal of a director under company articles
  2. 2 Whether clause 5 and clause 7 of the Agreement require parties not to invoke Article 88(e) of TFG's Articles to remove Mr Jackson as director

Ratio Decidendi

The Agreement, drafted by legally advised parties, expressly addresses the use of PCH II's shares for appointment and removal of directors but is silent on removal by directors under Article 88(e). It is not necessary for commercial workability to imply terms preventing removal by directors, nor is it obvious the parties would have agreed to such terms. The implication sought would impermissibly re-write the contract and fetter directors' powers beyond the express bargain. Therefore, the appeal is allowed and the implied terms are not incorporated.

Court Disposition

Appeal allowed

Orders

  • The appeal is allowed; the implied terms are not incorporated into the Agreement; the order of Briggs J is set aside.