Gray and Others, petitioners

CourtCourt of Session (Outer House)
JudgeLord Tyre
Neutral Citation[2015] CSOH 146
Docket NumberP560/13
Published date30 October 2015
Date30 October 2015


[2015] CSOH 146



In the petition of



Orders pursuant to sections 994 and 996 of the Companies Act 2006 in respect of


Petitioners: Sandison QC, MacColl; Brodies LLP

Second, Third and Fourth Respondents: Lord Davidson of Glen Clova QC, G R Middleton; CMS Cameron McKenna LLP

Fifth Respondent: Party

Eighth Respondents: D Thomson; Russel & Aitken LLP

30 October 2015

Table of Contents



1 - 3

Factual background to the application

4 - 18

The petitioners’ complaints

19 - 21

The meaning of “unfairly prejudicial conduct”

22 - 25

Assessment of witnesses

26 - 38

Existence of relationship of quasi-partnership

39 - 41

Diversion of business from PPEL

42 - 55

The management and auditing of Braid Asia

56 - 77

Exclusion of the first petitioner from management

78 - 81

The bribery investigations

Introduction: the CFT account

82 - 85

The CFT investigation

86 - 100

The Sapesco investigation

101 - 107

Findings in fact: CFT

108 - 127

Findings in fact: Sapesco

128 - 131

Conduct of investigations and disciplinary proceedings

132 - 140

Summary: finding of unfairly prejudicial conduct


Valuation of BGHL

142 - 152

Order for relief

153 - 161

The fifth respondent

162 - 165

The sixth and seventh respondents


The eighth respondents

167 - 168



[1] This is an application for orders under section 996 of the Companies Act 2006 on the ground that the affairs of Braid Group (Holdings) Limited (“BGHL”) have been conducted in a manner that was unfairly prejudicial to the interests of some of its members. The petitioners are, firstly, Mr Nigel Gray (“Mr Gray”) and, secondly, Mr Gray and Mrs Lily‑Ann Gray as trustees of The Gray Trust. The first respondent is BGHL itself. The second to eighth respondents are shareholders in BGHL. They are, respectively, Mr Allan Leddra, Mr Andrew Watson, Mr Shane Watson, Mr Jeffrey Prowse, Mr Richard Bagley, Mr Garry Russell, and the trustees of a private pension fund of Mr Allan Haldane. Andrew Watson and Shane Watson are not related to one another.

[2] I heard 24 days of evidence between 18 March and 20 July 2015. Not all of the respondents were represented or participated in the proof other than as witnesses. The petitioners and the second to fourth respondents were represented throughout by senior and junior counsel, and the fifth respondent, Mr Prowse, appeared throughout in person. At the close of the proof I received written submissions and heard oral argument on behalf of the petitioners, the second to fourth respondents and the eighth respondents, and by Mr Prowse in person. Brief written submissions were also lodged by Mr Bagley and by Mr Russell.

[3] The tasks of the court in an application under sections 994 and 996 are, firstly, to decide whether conduct that is unfairly prejudicial to the interests of a petitioner has been proved, and, secondly, if and only if such conduct has been proved, to make such order as it thinks fit for giving relief in respect of the matters complained of. In this case, the parties were at issue as to (i) whether conduct unfairly prejudicial to the interests of the petitioners had been established, and, if so, (ii) the value of BGHL and (iii) the price at which it would be fair and equitable to require the company – or any or all of the second to fourth respondents – to purchase the petitioners’ shares.

Factual background to the application
Group structure
[4] BGHL was incorporated in Scotland on 22 March 2006. It is the ultimate parent of a number of companies incorporated in various countries throughout the world. Its principal subsidiary is Braid Logistics (UK) Limited (“Braid UK”). Braid UK was incorporated in Scotland on 4 June 1971 under its former name of John S Braid & Co Limited, to carry on a shipping and warehousing business that had been conducted since the 1950s by an unincorporated body. BGHL was formed to facilitate a management buy-out of John S Braid & Co Limited following the death in 2003 of its chairman and principal shareholder, Steven Braid. BGHL and Braid UK have their head office in Glasgow.

[5] Braid UK in turn has a number of subsidiaries. For present purposes I need mention only three. The first of these is Braid Logistics Asia Pte Limited (“Braid Asia”), a company incorporated in Singapore, in which Braid UK has a 57% shareholding. Of the remaining shares, 28% are owned by Mr Leddra and the remaining 15% by three employees of Braid Asia. The second is SARL Braid Logistics Europe (“Braid Europe”), a company incorporated in France of which Braid UK owns 80% and Mr Bagley 20%. The third is Braid Logistics Australia Pty Limited, a company incorporated in Australia of which Braid UK owns 80% and Shane Watson 20%.

[6] BGHL also has a 30% holding of shares in a company called Pro-flex Packaging Europe Limited (“PPEL”). 60% of PPEL’s shares are owned by Pro-flex Packaging Company Limited (“PPCL”), a company incorporated in the British Virgin Islands, with the remaining 10% belonging to a Mr Elson Koh. Until November 2014, 60% of PPCL’s shares were owned by Mr Leddra, 15% by Mr Gray, 5% by Andrew Watson, and the remainder by Singapore employees. PPCL has a wholly-owned subsidiary, Pro-flex Packaging (UK) Limited (“PPUK”) which was incorporated in 2009.

Group business activities
[7] BGHL’s principal activity is to be the holding company of a group carrying on business in a number of divisions. The activities of the group include bulk liquid ISO tank operations, bulk liquid flexitank operations, project forwarding incorporating agency and chartering, international export and import freight forwarding, and road transport and warehousing. In recent years the largest share of the group turnover and profit has been derived from its flexitank operations. Flexitanks are large polyethylene bags which fit into shipping containers and can be used to transport non-hazardous liquids. Most of the flexitanks used by Braid group members are manufactured by PPCL and its subsidiaries.

The management buy-out
[8] Prior to the death of Steven Braid, 76% of the shares in John S Braid & Co Ltd were owned by him or by members of his family. The other 24% were owned by Mr Gray. Mr Gray had joined the company in 1973 as a water clerk, and during the years following he assisted Steven Braid in diversifying the business of the company into inter alia container shipping and freight forwarding. He became a director and shareholder in 1978. The business subsequently diversified further into transport and warehousing and into ISO tank operating.

[9] Until 1996, the directors of John S Braid & Co Ltd were Steven Braid, his wife Mrs Gay Braid, and Mr Gray. Mr Haldane, who is a chartered accountant, joined the company as its secretary in 1984 from the accountancy firm Spicer Watson, who were the company’s auditors. He was appointed finance director in 1996. Steven Braid’s shares passed on his death in 2003 to members of his family. His son and daughter joined the board but, along with Mrs Gay Braid, played no active part in the running of the company. In about 2005 the Braid family members expressed an interest in selling their controlling interest in the company. Mr Gray entered into negotiations with them regarding a management buy-out (“MBO”) in which Mr Haldane would also participate. The family wished to explore the alternative of a sale of the business within the trade. They received financial advice from Mr Iain Webster CA and brought in first Mr Ian Boyd and subsequently Mr Maurice McBride as non-executive chairman. One of Mr McBride’s first actions was to recommend the removal of Mr Haldane as finance director, and at a board meeting in May 2006 Mr Haldane was removed without notice, on the ground that he had a conflict of interest and so was not providing the information required by the family to decide which sale option was most favourable. The price demanded by the Braids for their shares increased. Mr Gray continued to negotiate a MBO and invited a number of members of the management of Braid businesses in the United Kingdom and overseas to participate. The minimum investment required from any participant was £100,000. Additional loan funding was to be obtained from the Royal Bank of Scotland.

[10] It is convenient at this point to introduce the members of management, in addition to Mr Haldane, who accepted Mr Gray’s invitation to participate.

  • Mr Leddra worked during the early 2000s for a bulk liquid transportation company called Logis.Based in Singapore, he promoted the development of polyethylene flexitanks which were manufactured for Logis by a German company called Büscherhoff.Logis got into financial difficulty and Mr Leddra sought a partner to manufacture flexitanks in Asia.In about April 2002, Mr Leddra was put in contact with Mr Gray, who expressed an interest on behalf of John S Braid & Co Ltd in the supply, though not the manufacture, of flexitanks.Braid Asia was incorporated, with the shareholdings set out above.Steven Braid regarded investment in flexitank manufacture as too risky for John S Braid & Co Ltd, and so when PPCL was incorporated to manufacture flexitanks, shareholdings of 15% were taken instead by Steven Braid and Mr Gray personally (but paid for by John S Braid & Co Ltd).The staff for Braid Asia were recruited locally by Mr Leddra, mainly among former Logis employees.
  • Shane Watson is an Australian citizen who began working in shipping and logistics in 1981.In about October 2002, he met Mr Gray to discuss co-operation between John S Braid & Co Ltd and the Australian company by whom he was employed.A joint venture company was formed.Following a takeover in 2005, the Australian...

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