Gray & Ors, Re Braid Group (Holdings) Ltd [2015] ScotCS CSOH_146 (30 October 2015)

Gray & Ors, Re Braid Group (Holdings) Ltd [2015] ScotCS CSOH_146 (30 October 2015)

The court found that while there were failures in disclosure of conflicts of interest and improper removal of auditors, the company was not a quasi-partnership and most actions complained of did not amount to unfair prejudice. However, the removal of auditors and certain failures in disclosure were unfairly prejudicial under section 994.

Citation
[2015] ScotCS CSOH_146
Parties
Petitioner: Nigel Gray; Petitioner: Mrs Lily-Ann Gray as trustee of The Gray Trust; Respondent: Braid Group (Holdings) Limited; Respondent: Mr Allan Leddra; Respondent: Mr Andrew Watson; Respondent: Mr Shane Watson; Respondent: Mr Jeffrey Prowse; Respondent: Mr Richard Bagley; Respondent: Mr Garry Russell; Respondent: Trustees of a private pension fund of Mr Allan Haldane
Jurisdiction
Scotland
Judgment Date
30 October 2015
Procedural Posture
Petition Under Companies Act 2006 Sections 994 and 996 / Judgment After Proof (trial)
Outcome
Petitioners partially succeed; court finds some unfairly prejudicial conduct and grants relief under section 996.
Legal Topics
Unfair Prejudice, Shareholder Disputes, Directors' Duties, Quasi Partnership, Removal of Auditors, Conflict of Interest
Company Law Unfair Prejudice Shareholder Disputes Directors' Duties Quasi Partnership Removal of Auditors Conflict of Interest

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Parties

Nigel Gray

Petitioner

Mrs Lily-Ann Gray as trustee of The Gray Trust

Petitioner

Braid Group (Holdings) Limited

Respondent

Mr Allan Leddra

Respondent

Mr Andrew Watson

Respondent

Mr Shane Watson

Respondent

Mr Jeffrey Prowse

Respondent

Mr Richard Bagley

Respondent

Mr Garry Russell

Respondent

Trustees of a private pension fund of Mr Allan Haldane

Respondent

Procedural Posture

Petition Under Companies Act 2006 Sections 994 and 996 / Judgment After Proof (trial)

Legal Issues

  1. 1 Whether the affairs of Braid Group (Holdings) Limited were conducted in a manner unfairly prejudicial to the interests of some members under Companies Act 2006 section 994
  2. 2 Whether the company was a quasi-partnership giving rise to enhanced participation rights
  3. 3 Whether there was improper diversion of business, failure to disclose conflicts, or exclusion from management

Ratio Decidendi

The court found that while there were failures in disclosure of conflicts of interest and improper removal of auditors, the company was not a quasi-partnership and most actions complained of did not amount to unfair prejudice. However, the removal of auditors and certain failures in disclosure were unfairly prejudicial under section 994.

Court Disposition

Petitioners partially succeed; court finds some unfairly prejudicial conduct and grants relief under section 996.

Orders

  • Order for purchase of petitioners’ shares at a fair value to be determined by the court.
  • Directions for valuation of BGHL and calculation of share price.