Peter Waddell Holdco Limited & Anor v Bluebell Cars Holding Limited & Ors (November Judgment)

The court determined a series of interlocutory applications in linked Part 7 proceedings and an unfair prejudice petition under section 994 of the Companies Act 2006 concerning control of the Big Motoring World group. Key legal principles applied were (i) the heavy onus on directors who cause a company to spend its funds defending what is essentially a shareholder dispute (drawing on Crossmore and Re a Company (No 001126 of 1992)), (ii) the test whether company participation is necessary or expedient in the interests of the company itself (the company’s independent interest or being "touched in its corporate capacity"), and (iii) case management powers to try related proceedings together rather than grant a stay. The court refused to treat the mere filing of points of defence by TopCo as misfeasance or unfair prejudice because PWHL and Mr Waddell had expressly agreed and a consent order permitted TopCo to file a defence. The court held that some pleaded allegations that TopCo overstepped the mark in the form of its defence may be arguable but the proposed amendments as drafted lacked sufficient particularity; permission to amend in the contested form was refused and PWHL was directed to reconsider and re-draft. The application to stay the Part 7 claim was refused and the Part 7 claim was ordered transferred to the Insolvency and Companies List so both proceedings can be case managed and tried together.

This judgment addresses applications in two interlinked sets of proceedings concerning control of the Big Motoring World group. The principal actors are PWHL and Mr Waddell (claimants/petitioner) and Investor (Bluebell Cars Holding Limited), TopCo (Bluebell Cars TopCo Limited) and certain directors. The dispute arose after Investor served step-in and other notices under a securityholders deed (SHD) and caused an investigation that led to Mr Waddell's suspension, removal as director and dismissal as an employee. PWHL started a Part 7 claim challenging the validity of notices including the March SIRE and MDE Notices and seeking injunctive and declaratory relief and reinstatement; subsequently PWHL presented a section 994 petition alleging unfairly prejudicial conduct by Investor and seeking relief including restoration of rights under the SHD and valuation relief.

The applications decided included (i) permission to amend the petition and points of claim to add allegations that TopCo's directors improperly caused TopCo to file substantive points of defence (the "TopCo Defence Allegations"), (ii) whether TopCo should be restrained or limited in participating further in the petition, and (iii) whether the Part 7 claim should be stayed pending the petition.

Issues framed by the court included whether TopCo had an independent interest to justify spending company funds on a substantive defence (applying the principles in Crossmore and Re a Company (No 001126 of 1992)), whether the pleaded allegations had a realistic prospect of success, and how the court should case manage two overlapping English proceedings.

The court reasoned that: (i) the filing of a substantive defence by TopCo was permitted by express agreement between the parties and a consent order, and so an allegation that filing per se was misfeasance or unfairly prejudicial had no realistic prospect of success; (ii) some aspects of the form and content of TopCo’s defence might arguably go beyond TopCo's independent interests and could give rise to an arguable case of breach of duty or unfair prejudice, but the proposed amendments were insufficiently particularised and entangled with the non-arguable plea that mere filing was wrongful; (iii) in the particular factual matrix TopCo has realistic independent interests to protect in the petition (for example regarding the conduct of the independent investigation and disclosure under the SHD) and so should be allowed to participate and to amend its defence; and (iv) a stay of the Part 7 claim was not justified because joint case management and trial of the Part 7 claim and the petition is the proportionate and efficient route. The court ordered transfer of the Part 7 claim to enable single-list case management and reserved costs.

The court refused permission for the contested amendments in their present form that sought to characterise the mere filing of TopCo's points of defence as misfeasance or unfairly prejudicial conduct, on the basis that that particular claim had no real prospect of success given PWHL's prior agreement and the consent order. The court recognised that certain particularised complaints about the form of TopCo’s defence might be arguable, but directed PWHL to re-draft those allegations with greater particularity if it wishes to pursue them. The court refused to restrict TopCo from active participation in the petition and refused to stay the Part 7 claim; instead it ordered the Part 7 claim transferred to the Insolvency and Companies List so both proceedings can be case managed and tried together. Costs were reserved for subsequent determination.