Watson & Ors v watchfinder.co.uk Ltd

Watson & Ors v watchfinder.co.uk Ltd

Clause 3.1 does not confer an unconditional right of veto; the discretion to refuse consent must be exercised in accordance with the Braganza Duty, i.e., not arbitrarily, capriciously, or unreasonably. Watchfinder failed to properly exercise its discretion, as the board's decision was made without adequate consideration of relevant factors, particularly the introduction of Beringea as an investor, and was influenced by mistaken beliefs and personal interests. Therefore, consent is deemed to have been given, entitling the Claimants to specific performance of the Option Agreement.

Parties
Claimant: Marcus Watson; Claimant: Rob Hersov; Claimant: Twysden Moore; Defendant: Watchfinder.co.uk Limited
Jurisdiction
England and Wales
Judgment Date
25 May 2017
Procedural Posture
Civil / Judgment
Outcome
Claim for specific performance allowed; Claimants succeed.
Legal Topics
Share Option Agreements, Implied Terms, Exercise of Discretion, Specific Performance
Contract Law Company Law Share Option Agreements Implied Terms Exercise of Discretion Specific Performance

Case Brief

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Parties

Marcus Watson

Claimant

Rob Hersov

Claimant

Twysden Moore

Claimant

Watchfinder.co.uk Limited

Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Whether Clause 3.1 of the Option Agreement gives Watchfinder an unconditional right of veto
  2. 2 Whether the discretion under Clause 3.1 is subject to an implied duty not to exercise it unreasonably, capriciously or arbitrarily
  3. 3 What is the proper target of the discretion under Clause 3.1

Ratio Decidendi

Clause 3.1 does not confer an unconditional right of veto; the discretion to refuse consent must be exercised in accordance with the Braganza Duty, i.e., not arbitrarily, capriciously, or unreasonably. Watchfinder failed to properly exercise its discretion, as the board's decision was made without adequate consideration of relevant factors, particularly the introduction of Beringea as an investor, and was influenced by mistaken beliefs and personal interests. Therefore, consent is deemed to have been given, entitling the Claimants to specific performance of the Option Agreement.

Court Disposition

Claim for specific performance allowed; Claimants succeed.

Orders

  • Specific performance of the Option Agreement; Claimants entitled to 5% of Watchfinder shares at £150,000 purchase price.
  • Consequential matters to be addressed at handing down of judgment.