Hale v Waldock, Court of Appeal - Chancery Division, March 06, 2006, [2006] EWHC 364 (Ch)

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Hale v Waldock, Court of Appeal - Chancery Division, March 06, 2006, [2006] EWHC 364 (Ch)

Neutral Citation Number: [2006] EWHC 364 (Ch)

Case No: 5179 OF 2002

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 06/03/2006

IN THE MATTER OF METROPOLIS MOTORCYCLES LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 1985

Before :

MR JUSTICE MANN

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Between :

| |ANDREW CORBYN HALE |Petitioner |

| |- and - | |

| |IAN THOMAS WALDOCK | |

| |METROPOLIS MOTORCYCLES LIMITED |Respondents |

MR. P. GRIFFITHS (instructed by Monro Fisher Wasbrough) for the Petitioner.

MRS. E. TALBOT RICE (instructed by Matthew Arnold Baldwin) for the First Respondent.

The Second Respondent was not represented.

Hearing dates: 4th, 5th, 6th, 7th, 10th, 11th, 12th, 13th, & 17th October 2005

1st November 2005

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Judgment

Mr Justice Mann :

Introduction

1. This is a petition brought under Section 459 of the Companies Act 1985 by Mr Andrew Hale, a shareholder in a company known as Metropolis Motorcycles Limited. The other shareholder is the first respondent, Mr Ian Waldock. Mr Hale owns 42% of the share capital; Mr Waldock owns 58%. Mr Hale’s complaint is a familiar one in these petitions, namely that he has been excluded from management and from financial benefit in the company, and he says that that is unfair in the circumstances. It is slightly unusual in that he says the unfairness starts in the circumstances in which he became a shareholder in the company in the first place. In order to deal with all this it is necessary to go back into the history of the relationship between Mr Hale and Mr Waldock.

The Background and the Facts

2. In the factual account that follows any recited fact should be taken as being a finding of fact unless the contrary appears from the context. In making my findings I have taken into account my assessment of the credibility of the witness which I deal with in a later section of this judgment.

3. Both Mr Hale and Mr Waldock had an initial background in the motorcycle trade. They went into partnership with each other in 1989, trading as Scootabout Sales. This partnership lasted about 5 years, when they entered into a new partnership with a Mr Batcheler, trading under the name Metropolis Motorcycles Limited. The shares of Mr Waldock, Mr Hale and Mr Batcheler in the partnership were 51%, 38% and 11% respectively. The partnership’s business was motorcycle sales, maintenance, servicing and repairs. They each had their own prime areas of responsibility in the business. Mr Waldock directed and controlled the business and he ran the sales department. Mr Hale ran the rider training department. Mr Batcheler ran the service and spares side of the business. Apparently with an eye to the future, the company was incorporated in 1994. It had 100 shares and the shares were allotted in the same proportion as the partnership shares, that is to say 51, 38 and 11 shares to the three shareholders respectively. However, nothing was done about transferring the business of the partnership into the company for some years (until 2001) as will appear. In August 1997 Mr Hale’s day to day involvement in the partnership got much less, because he moved to Wales for personal and domestic reasons. In fact, there were discussions about his complete withdrawal from the partnership, and a draft deed of retirement was prepared. However, in April 1998 Mr Hale came back on the scene and asked to come back into the business. It was agreed he would have certain slightly different areas of responsibility. His return precipitated Mr Batcheler’s retirement from the partnership. He wished to move on, and was in fact not entirely happy about Mr Hale’s return. Mr Waldock negotiated the terms on which Mr Batcheler left; Mr Hale had little or nothing to do with them. Mr Batcheler’s interest was acquired by Mr Waldock and Mr Hale, so that Mr Waldock and Mr Hale acquired 57.3% and 42.7% of the partnership respectively (later rounded to 58% and 42% respectively) and Mr Batcheler’s shares in the company were transferred so that the same 58/42 per cent division obtained.

4. The partnership prospered. By 1998 it had over 100 employees and a turnover of £10m, which Mr Hale says was the largest turnover of a motorcycle shop in the UK. New premises were acquired. One of those new premises were premises at Northfields Avenue, Ealing. A new shop was opened there. The freehold was actually acquired during the time that Mr Hale was less active...

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