Cream Holdings Ltd v Davenport [2011] EWCA Civ 1287 (09 November 2011)

Cream Holdings Ltd v Davenport [2011] EWCA Civ 1287 (09 November 2011)

The Articles of Association, properly construed, do not require full disclosure of information as a condition precedent to agreeing the TPA's terms of engagement. There is an implied obligation on the parties to co-operate and not unreasonably withhold consent to the appointment of the TPA on reasonable terms. Mr Davenport's refusal to sign the engagement letter on the grounds of incomplete disclosure was unreasonable and in breach of this implied duty. The machinery for valuation is workable and not void for uncertainty or as an agreement to agree.

Citation
[2011] EWCA Civ 1287
Parties
Claimant/respondent: Cream Holdings Limited; Defendant/appellant: Stuart Davenport
Jurisdiction
England and Wales
Judgment Date
09 November 2011
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division, Companies Court) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Share Valuation, Pre Emption Rights, Articles of Association, Implied Terms, Expert Determination
Company Law Share Valuation Pre Emption Rights Articles of Association Implied Terms Expert Determination

Case Brief

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Parties

Cream Holdings Limited

Claimant/respondent

Stuart Davenport

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division, Companies Court) to Court of Appeal

Legal Issues

  1. 1 Whether the appointment of a Third Party Accountant (TPA) for share valuation under the Articles required agreement on terms of engagement by all parties
  2. 2 Whether the transferor (Mr Davenport) could withhold consent to the TPA's appointment pending full disclosure of information
  3. 3 Whether there is an implied duty to co-operate in agreeing reasonable terms for the TPA's appointment

Ratio Decidendi

The Articles of Association, properly construed, do not require full disclosure of information as a condition precedent to agreeing the TPA's terms of engagement. There is an implied obligation on the parties to co-operate and not unreasonably withhold consent to the appointment of the TPA on reasonable terms. Mr Davenport's refusal to sign the engagement letter on the grounds of incomplete disclosure was unreasonable and in breach of this implied duty. The machinery for valuation is workable and not void for uncertainty or as an agreement to agree.

Court Disposition

Appeal dismissed

Orders

  • Order of the High Court affirmed subject to deletion of clause 19.1 (termination power) from the TPA's terms of engagement