Gaetano Ltd v Obertor Ltd [2009] EWHC 2653 (Ch) (29 October 2009)

Gaetano Ltd v Obertor Ltd [2009] EWHC 2653 (Ch) (29 October 2009)

Clause 21.1 of the Shareholders Agreement permits either shareholder to serve a deadlock/exit notice 'at any time', and the notice served by Gaetano was valid. No alternative solution was agreed within the 30-day period to preclude the deadlock procedure. Obertor's counterclaim is unsustainable as it alleges only breaches by directors, not by Gaetano, and any loss claimed is reflective of company loss. Specific performance is the appropriate remedy as damages are inadequate for the transfer of shares in an unquoted company.

Citation
[2009] EWHC 2653 (Ch)
Parties
Claimant: Gaetano Limited; Defendant: Obertor Limited
Jurisdiction
England and Wales
Judgment Date
29 October 2009
Procedural Posture
Commercial Contract Dispute (summary Judgment and Counterclaim) / High Court (chancery Division) Summary Judgment Application and Counterclaim Strike Out
Outcome
Claim allowed; counterclaim struck out.
Legal Topics
Shareholders Agreement, Deadlock/exit Clauses, Specific Performance, Reflective Loss, Summary Judgment, Directors' Duties
Contract Law Company Law Equity Shareholders Agreement Deadlock/exit Clauses Specific Performance Reflective Loss Summary Judgment +1 more

Case Brief

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Parties

Gaetano Limited

Claimant

Obertor Limited

Defendant

Procedural Posture

Commercial Contract Dispute (summary Judgment and Counterclaim) / High Court (chancery Division) Summary Judgment Application and Counterclaim Strike Out

Legal Issues

  1. 1 Whether Gaetano validly exercised the deadlock/exit procedure under clause 21 of the Shareholders Agreement
  2. 2 Whether Obertor was obliged to purchase Gaetano's shares at the specified price
  3. 3 Whether Obertor's counterclaim discloses any reasonable grounds and/or is sustainable in law

Ratio Decidendi

Clause 21.1 of the Shareholders Agreement permits either shareholder to serve a deadlock/exit notice 'at any time', and the notice served by Gaetano was valid. No alternative solution was agreed within the 30-day period to preclude the deadlock procedure. Obertor's counterclaim is unsustainable as it alleges only breaches by directors, not by Gaetano, and any loss claimed is reflective of company loss. Specific performance is the appropriate remedy as damages are inadequate for the transfer of shares in an unquoted company.

Court Disposition

Claim allowed; counterclaim struck out.

Orders

  • Specific performance ordered: Obertor to purchase Gaetano's shares in PDA at €3.95 million.
  • Counterclaim by Obertor struck out as disclosing no reasonable grounds.