Syspal Capital Limited v Christopher John Truman & Anor

The construction of a company’s articles is a question of law. The articles must be read as a whole, in light of reasonably ascertainable company and membership circumstances and commercial common sense. A reference to an Employee Member continuing in that capacity may refer to the general capacity of being employed, rather than the particular role that has ended. A deemed transfer notice is therefore triggered only when the member ceases to be employed by the group as an employee, director or consultant, and continues in none of those capacities. A lower market-value mechanism is not triggered merely because one listed role ends while another continues.

Syspal Capital Limited held 76% of Syspal Holdings Limited, while Christopher Truman held 24%. The Articles contained pre-emption provisions for an Employee Member and differentiated between Fair Value and Market Value. Mr Truman ceased employment with group subsidiary Syspal Limited on 10 October 2022 but remained a director of SHL until resigning on 24 May 2023.

Roth J held that the deemed transfer notice under Article 11.3 arose only on the resignation as director, so the shares were to be priced at Fair Value: [2024] EWHC 1561 (Ch). Syspal Capital appealed on the construction of whether Mr Truman continued in that capacity when he remained employed in another capacity. The central issue was whether the provision was triggered by cessation of any one role or only by cessation of employment in all the listed capacities.

1. Appeal dismissed. Zacaroli LJ gave the judgment, with Birss LJ and Asplin LJ agreeing. The issue was interpretation of Article 11.3, not a finding of fact. Contractual interpretation is a question of law. Meaning was to be ascertained from the Articles as a whole, extrinsic facts reasonably ascertainable from the company’s constitution and public filings, and commercial common sense.
2. The singular expression that capacity was capable of referring to the single capacity of being employed, whether as an employee, director or consultant. It did not require continuation in the particular role which had ended. The better and more commercially sensible construction was therefore that Article 11.3 was triggered only when an Employee Member ceased to be employed in any of the listed capacities by any Group Company.
3. The construction advanced by Syspal Capital produced commercially surprising results. It would impose a forced transfer on a member who ceased to be an employee but remained a director, or ceased to be a director but remained employed. It would also make the consultant limb otiose where an employee changed status to consultant. Article 9.2 provided limited support for the same construction.
4. Article 10.4.3 established Fair Value as the default position. Article 10.4.2 was the exception applying Market Value to a deemed transfer under Article 11.3 arising for a reason other than death, permanent incapacity or retirement at 65. The ability to receive Fair Value was a benefit to the outgoing member.
5. Re a Company (No. 004377 of 1986) [1987] 1 WLR 102 and Shanda Games Ltd v Maso Capital Investments Ltd [2020] UKPC 2 did not assist. They demonstrated possible drafting or valuation approaches but did not determine the meaning of these Articles. The alternative implied term proposed by Mr Truman was not necessary to decide, although the judge below would have rejected it. The shares were accordingly to be priced at Fair Value.

1. Court of Appeal (Civil Division) — Appeal dismissed on 14 April 2025.
2. High Court (Chancery Division) — Roth J held on 24 June 2024 that the deemed transfer notice arose on Mr Truman’s resignation as director of SHL and that the shares were to be priced at Fair Value: [2024] EWHC 1561 (Ch).