Watson & Ors v watchfinder.co.uk Ltd [2017] EWHC 1275 (Comm) (25 May 2017)

Watson & Ors v watchfinder.co.uk Ltd [2017] EWHC 1275 (Comm) (25 May 2017)

Clause 3.1 of the Option Agreement did not confer an unconditional right of veto on Watchfinder. The board's discretion to grant or withhold consent to the exercise of the share option was subject to an implied term that it must not be exercised capriciously, arbitrarily or unreasonably. On the facts, the board failed to properly consider the relevant matters and did not exercise its discretion in a meaningful or rational way. Therefore, the refusal of consent was invalid and the Claimants were entitled to specific performance of the share option agreement.

Citation
[2017] EWHC 1275 (Comm)
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
Claim for Specific Performance of a Share Option Agreement / High Court Trial Judgment
Outcome
Claim allowed
Legal Topics
Share Options, Specific Performance, Implied Terms, Exercise of Contractual Discretion, Board Consent in Share Agreements
Contract Law Company Law Share Options Specific Performance Implied Terms Exercise of Contractual Discretion Board Consent in Share Agreements

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 6 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Marcus Watson

Claimant

Rob Hersov

Claimant

Twysden Moore

Claimant

Watchfinder.co.uk Limited

Defendant

Procedural Posture

Claim for Specific Performance of a Share Option Agreement / High Court Trial Judgment

Legal Issues

  1. 1 Whether Clause 3.1 of the Option Agreement gave Watchfinder an unconditional right of veto over the exercise of the share option
  2. 2 Whether the discretion to refuse consent under Clause 3.1 was subject to a requirement not to act capriciously, arbitrarily or unreasonably
  3. 3 Whether the board's discretion was properly exercised in this case

Ratio Decidendi

Clause 3.1 of the Option Agreement did not confer an unconditional right of veto on Watchfinder. The board's discretion to grant or withhold consent to the exercise of the share option was subject to an implied term that it must not be exercised capriciously, arbitrarily or unreasonably. On the facts, the board failed to properly consider the relevant matters and did not exercise its discretion in a meaningful or rational way. Therefore, the refusal of consent was invalid and the Claimants were entitled to specific performance of the share option agreement.

Court Disposition

Claim allowed

Orders

  • Specific performance of the Option Agreement: Watchfinder is ordered to allot 5% of its issued share capital to the Claimants upon payment of the option price of £150,000.