Terry & Ors v Watchstone Ltd

Terry & Ors v Watchstone Ltd

The board of directors of Watchstone Limited did agree to indemnify the claimants for tax liabilities and associated costs arising from the sale, the indemnity was not a substantial non-cash asset under section 190 of the Companies Act 2006, was granted to the claimants in their capacity as shareholders, and was approved by a resolution of the members; thus, section 190 was not contravened and the claim succeeds.

Parties
Claimant: Robert Simon Terry; Claimant: Louise Tracey Terry; Claimant: The Trustees of the RT Accumulation and Maintenance Trust; Claimant: The Trustees of the RT Life Interest Trust; Defendant: Watchstone Limited
Jurisdiction
England and Wales
Judgment Date
16 November 2018
Procedural Posture
Commercial / Judgment
Outcome
claim allowed, counterclaim dismissed
Legal Topics
Director Indemnity, Substantial Property Transaction, Companies Act 2006, Shareholder Approval, Tax Liability
Company Law Contract Law Director Indemnity Substantial Property Transaction Companies Act 2006 Shareholder Approval Tax Liability

Case Brief

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Parties

Robert Simon Terry

Claimant

Louise Tracey Terry

Claimant

The Trustees of the RT Accumulation and Maintenance Trust

Claimant

The Trustees of the RT Life Interest Trust

Claimant

Watchstone Limited

Defendant

Procedural Posture

Commercial / Judgment

Legal Issues

  1. 1 Whether the board of Quindell Limited (Watchstone Limited) agreed to indemnify the claimants for all tax liabilities and associated costs arising from the sale of shares
  2. 2 Whether such indemnity constituted a substantial property transaction under section 190 of the Companies Act 2006 requiring shareholder approval
  3. 3 Whether the indemnity was a non-cash asset within the meaning of the Act

Ratio Decidendi

The board of directors of Watchstone Limited did agree to indemnify the claimants for tax liabilities and associated costs arising from the sale, the indemnity was not a substantial non-cash asset under section 190 of the Companies Act 2006, was granted to the claimants in their capacity as shareholders, and was approved by a resolution of the members; thus, section 190 was not contravened and the claim succeeds.

Court Disposition

claim allowed, counterclaim dismissed

Orders

  • Claimants entitled to payment of £1,025,620.20 under the indemnity
  • Counterclaim for repayment of £3,135,816 dismissed