Keith Pinfold (Petitioner) v Bryan Charles Ansell and Others
| Jurisdiction | England & Wales |
| Judge | Hhj David Cooke |
| Judgment Date | 21 April 2017 |
| Neutral Citation | [2017] EWHC 889 (Ch) |
| Date | 21 April 2017 |
| Court | Chancery Division |
| Docket Number | Case No: 8221 of 2014 |
[2017] EWHC 889 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
Bull Street, Birmingham B4 6DS
HHJ David Cooke
Case No: 8221 of 2014
In the matters of the Companies Act 2006
And in the matter of Foundry Miniatures Ltd
Giles Gunstone (directly instructed) for the Petitioner
Malcolm Chapple (instructed by Nelsons) for the Respondents
Hearing dates: 17–20 January 2017
Introduction
This is the petition of Mr Pinfold pursuant to s 994 Companies Act 2006, in which he alleges that the affairs of the third respondent Foundry Miniatures Ltd ("Foundry" or "the Company") have been conducted in a manner unfairly prejudicial to his interests as a shareholder. Mr Pinfold has a 49% shareholding. The remaining shares are held by the first respondent Mr Ansell (50%) and his wife, the second respondent (1%). Mr Pinfold contends that since he became a shareholder at the end of 1999 the Company was operated as a quasi-partnership. He was effectively running its business single handed from about 2003 as a result of Mr Ansell's ill health. However from about 24 June 2012 he was excluded from participation (and later removed) as a director and Mrs Ansell took over the running of the business, introducing various members of her family as employees. Since then he says the turnover and profitability of the business have collapsed as a result of changes introduced by Mrs Ansell. He seeks an order that Mr & Mrs Ansell should buy out his shares at a value which is either determined as at the date he was excluded or, if at a later date, adjusted so as to cancel out what he says are the adverse effects of the decisions he complains of.
Mr & Mrs Ansell's position (if I refer to "the Respondents" it is to them, although the Company is added as a nominal respondent) is that the Company was not a quasi-partnership, that Mr Pinfold voluntarily retired from day to day management of the business and had no entitlement to remain as a director, so that he has no legitimate complaint that he was prevented from acting as such and later removed. They deny all the allegations of conduct said to amount to unfair prejudice. They do however wish to purchase Mr Pinfold's shares and initially invited me to make such an order even if I rejected those allegations. If any order for sale is made, their contention is that the valuation should be at the date of presentation of the petition (for which they have obtained evidence) or alternatively at the date of the court's order, but in either case without any adjustment as sought by Mr Pinfold.
At the opening of the trial I ruled that I would only have jurisdiction to make an order for sale, and so to determine the terms of sale, if I found that some at least of the allegations of unfair prejudice were made out, so that the petition could be held to be "well founded" (Companies Act 2006 s 996(1)). Thus, if I find entirely for the Respondents on the allegations of unfair prejudice, the petition would simply have to be dismissed and the parties would have to agree terms if the sale they all wish for is to proceed.
The business of the Company is in the manufacture of moulded metal military figures which are sold in some cases to collectors but mostly to enthusiasts who use them for war gaming. It is a specialised market, and I hope the parties and others involved in it will forgive what will no doubt be my incomplete descriptions of it and the operations involved, which are intended only for background understanding of this judgment and the legal issues in the case.
The company produces two broad categories of models, referred to as "historical" and "fantasy" figures. Historical figures may be representations of individual known persons, or more generally of soldiers of a given period, army or unit. Precise and historically accurate detail may be very important to buyers. Fantasy figures are imaginary characters. There may be many figures made in a range with a common theme, such as figures from a particular army, or a set of related fantasy figures.
The process of creating each figure begins with artwork; a drawing or sketch of the intended figure. From that a modeller produces an original model. That model is used to create a "master mould". The master mould is then used to create a master model. The master model is in turn used to create a "production mould", and the production mould is used to make models sold to the public.
The production mould is thus used many times over for casting production models. In time it becomes worn by use and the precision of finish of the resultant models deteriorates. From time to time therefore new production moulds are made from the original master models, or a new master model is cast, from which new production moulds are made. The master mould is thus used much more rarely and so preserves its quality, potentially for a long period.
Generally the manufacturer will have one, or a small number, of each of the models it produces painted by professional model painters. These "painted models" are used for catalogue photographs and/or for display purposes in showrooms or at exhibitions. The figures sold to the public are unpainted metal castings, which the buyers then paint themselves.
Mr Ansell is a very well known personality in the war gaming world, with a high profile among collectors and enthusiasts as a designer and maker of models. Mr Pinfold has no such background, but is an accountant by profession. The two men met quite some time ago and Mr Pinfold was invited to become a shareholder in a company Mr Ansell then owned called Games Workshop Ltd. Mr Ansell, who concedes he is only interested in the process of producing the best model soldiers in the world, acknowledges that he needed someone like Mr Pinfold to run his accounts and business administration. Mr Pinfold acquired a minority shareholding in Games Workshop and the two men worked together to build that company up and sell it. That sale was in 1991, for a total of just under £9m.
Mr Pinfold's position is that although Mr Ansell insisted on having a majority of the shares such that he had formal control, the two of them agreed that they would be treated as equal partners in the event of a sale. It is common ground that after the sale Mr Ansell made a payment to Mr Pinfold of over £665,000, the effect of which was to equalise the amounts they received for their shareholdings.
After the sale, Mr Ansell retained a number of valuable motor cars that, it appears, had been purchased using cash produced by Games Workshop and at some point transferred into his personal name. It is common ground he has subsequently sold a number of these cars and paid half the proceeds, an amount of about £200,000, to Mr Pinfold. Other cars are still held by Mr Ansell. Mr Ansell's case is that there was no agreement or understanding between them as to equality and all these payments were entirely voluntary gifts on his behalf. He denies any obligation to Mr Pinfold in respect of the cars he retains (no claim is made in these proceedings about those cars).
The general nature of the relationship is relevant background to the issues in this case however, and given the accepted facts in my view Mr Pinfold's case of an informal understanding of equality of benefit on a sale is more likely to be correct. It is not in my view likely that Mr Ansell would have made payments as large as he has, calculated so as to achieve equality of outcome, other than to honour an arrangement he had previously made, whether or not it was regarded as legally enforceable.
It is also relevant to note that Mr Ansell received other benefits in conjunction with the sale. He was allowed to keep a large number of painted models owned by Games Workshop, which he added to his personal collection of several thousand such models kept at his home. The master and production moulds for ranges of fantasy figures which the purchaser was not interested in producing were transferred to a company called Guernsey Foundry Ltd (Mr Ansell was living in Guernsey at the time). Guernsey Foundry Ltd began to manufacture those ranges, from premises in Nottingham. Its work was mostly carried on or controlled by Mr Ansell's father, Clifford Ansell, but it appears that it was not very successful.
For a number of years after 1990, Mr Ansell and Mr Pinfold had little if any business contact. Mr Ansell lived in Guernsey and Mr Pinfold in Spain. In 1999 however Mr Ansell asked Mr Pinfold to become involved in his business again. They both agreed that it needed the accountancy and administrative expertise Mr Pinfold could provide. According to Mr Pinfold, in a series of meetings with Mr Ansell it was agreed the business would be transferred from Guernsey Foundry Ltd to the Company, which would honour all its debts and obligations, Mr Ansell would have a majority holding, "because of my obsessional paranoia", but they would run it as they had Games Workshop with Mr Ansell dealing with creative input and marketing and Mr Pinfold with accounts and administration. The aim he said was to build it up for sale, and it was specifically agreed that on sale they would share the proceeds equally, as they had with Games Workshop. In the meantime, they would each participate in management in their respective roles, and be remunerated only by dividend. Mrs Ansell was to be a director and company secretary but not actively involved save as assistant to her husband.
The business of Guernsey Foundry was transferred to the Company for £1. Mr Pinfold paid £50,000 and 49 shares were issued to him on 31 December 1999. He was appointed a director, though not until December...
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