Kilbey -v- Grafters Ltd and Ors [2014] JRC 255 (22 December 2014)

Kilbey -v- Grafters Ltd and Ors [2014] JRC 255 (22 December 2014)

The Court found that Grafters was operated as a quasi-partnership, and Mr Kilbey had a legitimate expectation to participate in management. His removal as director and exclusion from management, without a fair offer for his shares and in the absence of a signed shareholders' agreement, was unfairly prejudicial under Article 141. The respondents' offer for his shares was not at fair value and was not made in good faith. Mr Kilbey's subsequent conduct in removing company data was improper but did not disentitle him to relief. The appropriate remedy is an order requiring Mr Baker and Mr Jones to acquire Mr Kilbey's shares at fair value, to be determined by an independent expert, without a...

Citation
[2014] JRC 255
Parties
Applicant: Neil Kilbey; First Respondent: Grafters Limited; Second Respondent: James Baker; Third Respondent: Hugh Jones; Party Cited (counterclaim): Manual Labour Solutions Limited
Jurisdiction
Jersey
Judgment Date
22 December 2014
Procedural Posture
Company Law / Unfair Prejudice Petition / Final Judgment After Trial
Outcome
Petition allowed in part; order for buy-out of Mr Kilbey's shares at fair value; counterclaim for damages for data misuse dismissed.
Legal Topics
Unfair Prejudice, Shareholder Remedies, Quasi Partnership, Valuation of Shares, Director Removal
Company Law Equity Unfair Prejudice Shareholder Remedies Quasi Partnership Valuation of Shares Director Removal

Case Brief

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Parties

Neil Kilbey

Applicant

Grafters Limited

First Respondent

James Baker

Second Respondent

Hugh Jones

Third Respondent

Manual Labour Solutions Limited

Party Cited (counterclaim)

Procedural Posture

Company Law / Unfair Prejudice Petition / Final Judgment After Trial

Legal Issues

  1. 1 Whether the affairs of Grafters Limited were conducted in a manner unfairly prejudicial to Mr Kilbey's interests as a member under Article 141 of the Companies (Jersey) Law 1991
  2. 2 Whether Mr Kilbey is entitled to an order requiring Mr Baker and Mr Jones to acquire his shares at fair value
  3. 3 Whether Mr Kilbey was an employee or quasi-partner

Ratio Decidendi

The Court found that Grafters was operated as a quasi-partnership, and Mr Kilbey had a legitimate expectation to participate in management. His removal as director and exclusion from management, without a fair offer for his shares and in the absence of a signed shareholders' agreement, was unfairly prejudicial under Article 141. The respondents' offer for his shares was not at fair value and was not made in good faith. Mr Kilbey's subsequent conduct in removing company data was improper but did not disentitle him to relief. The appropriate remedy is an order requiring Mr Baker and Mr Jones to acquire Mr Kilbey's shares at fair value, to be determined by an independent expert, without a...

Court Disposition

Petition allowed in part; order for buy-out of Mr Kilbey's shares at fair value; counterclaim for damages for data misuse dismissed.

Orders

  • Mr Baker and Mr Jones are required to acquire Mr Kilbey's shares in Grafters Limited at a fair value to be determined by an independent expert, without a minority discount.
  • The parties are to agree on the appointment of an independent expert to value the shares; in default, the Court will appoint.