 |
| Re Tottenham Hotspur plc | |
|---|---|
| Court | Chancery Division, Companies Court |
| Decided | 14 June 1993 |
| Citation(s) | [1994] 1 BCLC 655 |
| Case opinions | |
| Sir Donald Nicholls VC | |
| Keywords | |
| Unfair prejudice | |
Re Tottenham Hotspur plc [1994] 1 BCLC 655 is a UK company law case concerning unfair prejudice under s 459 of the Companies Act 1985, now s 994 Companies Act 2006.
In 1993 both Mr Alan Sugar and Mr Terry Venables had a 50-50 interest in Tottenham Hotspur plc. They agreed Mr Sugar would be the chairman and Mr Venables would be the chief executive. Subsequently, there was a rights issue. 48% of Tottenham Hotspur plc's shares were held by Amshold Ltd by Mr Sugar. 23% were controlled by Mr Venables through Edennote plc. Mr Sugar had a majority of voting shares. Mr Sugar and Mr Venables fell out. Mr Venables was removed from his position as chief executive through a majority vote on the board of directors. Mr Venables, through Edennote plc began a s 459 petition, on the basis that both had been under agreement from 1991 that he would participate in management, and that Mr Sugar had breached this agreement by taking control of the company. Edennote alleged that it had a legitimate expectation that Mr Venables would participate in the affairs of the company on the basis of shared control even after the rights issue.
| "For long the law has recognised that in most cases contracts for personal service cannot sensibly be made the subject of orders for specific performance. If parties can no longer work together, no order of the court can change the position. The greater the mutual trust required by the contract, the less desirable it is to attempt to keep the parties harnessed together." |
| Specific performance when mutual trust ceases |
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Unfair prejudice in United Kingdom, company law is a statutory form of action that may be brought by aggrieved shareholders against their company. Under the Companies Act 2006 the relevant provision is s 994, the identical successor to s 459 Companies Act 1985. Unfair prejudice actions have generated an enormous body of cases, many of which are called "Re A Company", with only a six-digit number and report citation to distinguish them. They have become a substitute for the more restrictive conditions on a "derivative action", as an exception to the rule in Foss v Harbottle. Though not restricted in such a way, unfair prejudice claims are primarily brought in smaller, non-public companies. This is the text from the Act.
s 994 Petition by company member
(1) A member of a company may apply to the court by petition for an order under this Part on the ground—
(2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law, as they apply to a member of a company.
(3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, "company" means—
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