Re Tottenham Hotspur plc

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.

Facts

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 Sugar got the board to tell Mr Venables, "You're fired"). 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.

Judgment

"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

Sir Donald Nicholls VC held that the contract between Mr Venebles and Tottenham as chief executive had certainly come to an end. Even if Mr Venebles had a good breach of contract claim, no specific performance order (ie for Mr Venebles to remain on the board) had been sought, and the court would not in any case grant such an order. He emphasised that where a contract required mutual trust and confidence, and that trust had broken down, it would be very unlikely that an order would be made to keep belligerent parties bound together with one another in business.

He further held there was nothing to indicate that Mr Veneble's rights were regulated by anything but the company's constitution alone, including the right of the board to hire and fire in the normal way (see now s 168 Companies Act 2006). It was inappropriate in this situation to override the board's majority decision, which would merely be prolonging the inevitable that Mr Venebles would be removed.

Sir Donald Nicholls VC's decision went as follows.

See also

  • Re Blue Arrow plc [1987] BCLC 585
  • Fulham Football Club Ltd v Cabra Estates plc