High Court Rules Stobart Directors Rigged AGM Vote
Stobart’s claims on ‘conspiracy’ and expenses rejected
Andrew Tinkler calls for Warwick Brady and fellow directors to resign
Following a two-week trial in November 2018, the Judge (HHJ Russen) has found that Iain Ferguson, Warwick Brady, Andrew Wood and John Coombs have breached their fiduciary duties to Stobart Group by using company funds to gerrymander a vote at the July 2018 AGM in their favour. The Judge ruled that all four directors had acted for “improper purposes” by trying to manipulate the vote.
Mr Tinkler said: “In light of the Judge’s findings, Mr Brady, Mr Ferguson, Mr Coombs and Mr Wood have no place on the Board of Stobart Group and they should all step down without further delay.”
Following the Judge’s ruling, Stobart Group has failed with two of the three claims brought against Mr Tinkler. There was no unlawful means conspiracy involving Mr Tinkler, as Stobart had claimed in Court and in the many months preceding the hearing. In adopting a highly aggressive strategy to retain Mr Ferguson as Chairman, Stobart Group directors thought it acceptable to bring spurious claims against several people, including Neil Woodford, CBE, playing fast and loose with their reputations. They are apparently unapologetic about this.
The Court also found that the £4m expenses claim against Mr Tinkler, extensively aired in the media, was one which should never have been made and had no proper place within the alleged grounds for his dismissal.
Mr Tinkler is also pleased that the Court has rejected the completely baseless allegations that he breached his fiduciary duties by seeking to enrich himself at the expense of the Company, and that he conspired to injure the Company in some way. The judgment records that Mr Tinkler was motivated by his genuine belief that the proposed changes in management would be for the long-term benefit of the Company. As the judge pointed out, no sensible answer could be given to the question of why such a shareholder would act with the intention of harming the Company. The Judge has rightly rejected the allegation that Mr Tinkler and others “conspired to injure” the Company.
Mr Tinkler firmly believes that the expenses and conspiracy claims should never have been brought, and represented a shameful waste of shareholder funds by a board of directors whose only interest lies in guaranteeing their own positions. It is likely that millions of pounds of shareholder money have been wasted by bringing this claim against Mr Tinkler. It is notable that the findings by the Judge follow closely on from a ruling by Mr Justice Philips in relation to another claim brought by Stobart Group against Mr Tinkler. That claim was struck out on the grounds that the Company sought to create a claim out of nothing, at significant cost to the shareholders.
Mr Tinkler is also pleased that the judgment recognises that the key actions of the other directors in seeking to affect the outcome of the AGM were wrong. In particular that:
- The 29 May RNS which made various public allegations against Mr Tinkler was “unwise”, “inappropriate” and contained allegations which were ill-founded and “inflammatory”. [paras 788-9]
- Mr Brady accepted that the Ryanair contract announced on 13 June 2018 (the day before Mr Tinkler was sacked) was on non-standard terms, contrary to what shareholders were told in the RNS released to the market on that day and in the video interview posted on YouTube and on the Company’s website. [para 642-3] https://www.youtube.com/watch?v=zxDIIs8ux4w
- Mr Ferguson, Mr Brady, Mr Coombs and Mr Wood all breached their fiduciary duties by transferring 5.3 million shares to the Employee Benefit Trust on 21 June 2018, shortly before the AGM, for the primary purpose of ensuring that they would be voted in favour of Mr Ferguson [para 865]. Mr Ferguson was re-elected on 6 July 2018 by a tiny majority of votes (51.44%). As Mr Brady’s emails at the time revealed, he considered that “2% is a lot in our game”. The cost of moving those shares out of Treasury is likely to run into millions of pounds
These findings vindicate Mr Tinkler’s concerns about other members of the Board, which he expressed at the time. As a result, fellow shareholders will now have very serious questions about the suitability of the above-mentioned directors to continue as directors of a publicly listed company where members of the Board have been:
- Willing to disregard the basic rules of company law and seek, in effect, to rig a vote at the AGM and keep themselves in power
- Willing to advance through the press and in Court proceedings very serious false allegations of dishonesty which the Judge concluded should never have been made
As a director and shareholder, Mr Tinkler is disappointed that the Court concluded that as a matter of law he was obliged not to speak directly with key shareholders about the developing situation in early 2018, and not to write openly to shareholders and employees as he did. His view was that, in those difficult circumstances, transparency and openness with shareholders was absolutely essential. This was particularly so given the public statement made by the rest of the Board, which the Court has found to be “inappropriate”. At that time shareholders were eager for information, and indeed the proxy advisers Glass Lewis expressed the view that Mr Tinkler should have shared more “substantive information” with shareholders. Mr Tinkler intends to appeal against the Court’s conclusions that as a matter of law he was not permitted to speak out in this way.
Mr Tinkler believes that it is now time for him to move on from being directly involved in the day-to-day management of the Company. At Stobart a new Board should be put in place so that the Company can thrive again. Mr Tinkler firmly believes that Mr Ferguson, Mr Brady, Mr Coombs, and Mr Wood should not and cannot remain in post in light of the Judge’s findings. Mr Tinkler will continue to exercise his rights as a responsible shareholder.
Mr Tinkler is proud of the Company and its employees, with whose support he built a £2m business into a PLC with a value of £1bn when he stepped down as CEO in 2017. He is both disappointed and concerned as the Company’s third largest shareholder that this value has more than halved under Mr Ferguson and Mr Brady’s tenure.
Tony Langham +44 (0) 7979 692287
Tom Baldock +44 (0) 7860 101715