Cusack v Holdsworth & Anor

Cusack v Holdsworth & Anor

There was a binding understanding between the parties to demerge the company, and actions taken in furtherance of this understanding were not unfair or prejudicial except for the unauthorised pension payment and the diversion of contracts prior to the end of the agreed demerger period. The pension payment was a breach of duty and unfairly prejudicial to Mr Cusack. The appropriate remedy is a share purchase order with adjustments for the unauthorised payment and any relevant set-offs.

Parties
Petitioner: John Cusack; First Respondent: James Holdsworth; Second Respondent: Quantum Survey Management Limited
Jurisdiction
England and Wales
Judgment Date
29 November 2016
Procedural Posture
Petition for Relief From Unfair Prejudice Under Companies Act 2006 S.994 / Judgment After Trial
Outcome
Petition allowed in part; directions for share purchase order and adjustments for unauthorised payment and contract diversion; further submissions invited on remedy.
Legal Topics
Unfair Prejudice, Directors' Duties, Shareholder Agreements, Company Demerger, Breach of Fiduciary Duty
Company Law Unfair Prejudice Directors' Duties Shareholder Agreements Company Demerger Breach of Fiduciary Duty

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Parties

John Cusack

Petitioner

James Holdsworth

First Respondent

Quantum Survey Management Limited

Second Respondent

Procedural Posture

Petition for Relief From Unfair Prejudice Under Companies Act 2006 S.994 / Judgment After Trial

Legal Issues

  1. 1 Whether the Shareholder Agreement (SHA) was agreed and binding
  2. 2 Whether university fees were authorised by the company
  3. 3 Whether the pension payment to Mr Holdsworth was authorised

Ratio Decidendi

There was a binding understanding between the parties to demerge the company, and actions taken in furtherance of this understanding were not unfair or prejudicial except for the unauthorised pension payment and the diversion of contracts prior to the end of the agreed demerger period. The pension payment was a breach of duty and unfairly prejudicial to Mr Cusack. The appropriate remedy is a share purchase order with adjustments for the unauthorised payment and any relevant set-offs.

Court Disposition

Petition allowed in part; directions for share purchase order and adjustments for unauthorised payment and contract diversion; further submissions invited on remedy.

Orders

  • Mr Holdsworth to sell his shares to Mr Cusack at a value adjusted for the unauthorised pension payment and any set-offs.
  • Valuation date set as the last day of the relevant period (end of extended accounting period).