Simmers v. Innes [2005] ScotCS CSOH_92 (11 July 2005)

Simmers v. Innes [2005] ScotCS CSOH_92 (11 July 2005)

The pursuer failed to exercise the buy-out option in accordance with the strict requirements of the shareholders' agreement. No agreement was reached between the parties as to the basis of the valuation or the remit to the valuer, and the valuation obtained was not a joint valuation as required. The absence of an agreed remit was fatal to the operation of the buy-out mechanism. The defender was not in breach of any obligation to cooperate, as the agreement required consensus on the valuation process. Accordingly, the pursuer was not entitled to implement of the buy-out provisions.

Citation
[2005] ScotCS CSOH_92
Parties
Pursuer: Arthur William Simmers; Defender: James Grigor Innes
Jurisdiction
Scotland
Judgment Date
11 July 2005
Procedural Posture
Commercial Action (implement of Shareholders' Agreement) / Proof Before Answer (outer House, Court of Session)
Outcome
Action dismissed
Legal Topics
Shareholders' Agreements, Buy Out Options, Valuation Disputes, Good Faith Obligations, Company Winding Up, Implementation of Contractual Provisions
Contract Law Company Law Commercial Law Shareholders' Agreements Buy Out Options Valuation Disputes Good Faith Obligations Company Winding Up +1 more

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Parties

Arthur William Simmers

Pursuer

James Grigor Innes

Defender

Procedural Posture

Commercial Action (implement of Shareholders' Agreement) / Proof Before Answer (outer House, Court of Session)

Legal Issues

  1. 1 Whether the pursuer validly exercised the buy-out option under the shareholders' agreement
  2. 2 Whether the valuation mechanism in the agreement was properly implemented
  3. 3 Whether the absence of agreement on the basis of valuation frustrated the buy-out

Ratio Decidendi

The pursuer failed to exercise the buy-out option in accordance with the strict requirements of the shareholders' agreement. No agreement was reached between the parties as to the basis of the valuation or the remit to the valuer, and the valuation obtained was not a joint valuation as required. The absence of an agreed remit was fatal to the operation of the buy-out mechanism. The defender was not in breach of any obligation to cooperate, as the agreement required consensus on the valuation process. Accordingly, the pursuer was not entitled to implement of the buy-out provisions.

Court Disposition

Action dismissed

Orders

  • The pursuer's action for implement of the buy-out provisions is refused.
  • No order for specific implement or damages is made.