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Big Motoring World founder Peter Waddell has won his High Court unfair prejudice petition against private equity investor Freshstream over his ousting from the used automobile supermarket group.
Nevertheless, despite that victory, the judge concluded that Waddell’s conduct justified his dismissal for gross misconduct from his role as chief executive of Big Motoring World in 2024.
In a judgment delivered today, Mr Justice Marcus Smith found that Freshstream and other parties had orchestrated a plan to remove Waddell (pictured, left) permanently from effective control of Big Motoring World without exercising its option to accumulate a majority stake.
The court also found that Freshstream director Reza Fardad and Big Motoring World chairman Laurence Vaughan breached their duties as directors in reference to Waddell’s removal.
After Waddell was removed, Vaughan later became chief executive.
Judge finds orchestrated plan
The judgment stated: “I actually have found the formation and execution of a pre-conceived and orchestrated plan which worked backwards from Freshstream’s aim of achieving everlasting control of, and Mr Waddell’s removal from, the business without having to exercise the decision option”.
Waddell founded Big Motoring World within the Eighties and remained chief executive after Freshstream acquired a minority shareholding within the business in 2022 as he planned for his retirement. Peter Waddell Holdco retained a majority stake, while Freshstream received an option to accumulate control of the business at an agreed price.
In March 2024, Freshstream exercised rights under the businesses’ shareholder agreement to remove Waddell from the management and control of Big Motoring World.
It issued two notices based on alleged financial underperformance before launching an investigation into allegations concerning Waddell’s conduct. A cloth default notice was subsequently issued and disciplinary proceedings resulted within the termination of Waddell’s employment as chief executive.
The High Court has now held that the investigation notice and material default notice were invalid.
Freshstream and the opposite respondents had denied throughout the trial that Waddell’s removal was the results of a coordinated plan, arguing that decisions were taken in response to concerns concerning the company’s performance and his conduct.
But Justice Smith has found otherwise.
Peter Waddell’s misconduct amounted to breach of contract
The judge found Freshstream and parties pursued a deliberate technique to remove Waddell “come what may”, and doubted whether Laurence Vaughan (pictured, right) genuinely believed the explanations set out within the dismissal letter, and believed he didn’t properly consider whether summary dismissal was appropriate.
Nevertheless, the judge said those flaws didn’t support Waddell’s wrongful dismissal claim because, looking objectively on the facts, Waddell’s own misconduct amounted to repudiatory breach of contract.
Various claims of bullying and offensive behaviour were made against Waddell throughout the trial, a few of which the judge accepted, some not. However the judgement found that the pattern of behaviour demonstrated a failure of leadership expected of a CEO.
He noted that a few of the behaviour might have been tackled earlier.
The court has not yet determined the treatment for Peter Waddell Holdco, which can be considered during a separate trial.
The judgment due to this fact doesn’t at this stage determine what compensation, share purchase order or other type of redress could follow.
Justin Michaelson, partner at Quinn Emanuel, acting for Waddell, said: ‘This judgment should function a salutary lesson to non-public equity funds and their investors who consider they will manoeuvre against portfolio firms in this fashion behind closed doors and expect the courts to overlook it.
“Big Motoring World is Mr Waddell’s creation; the corporate means every part to him.”
A representative of Big Motoring World commented: “We’re glad that the court has determined that Big Motoring World was entitled to remove Mr Waddell as its CEO. We’ll all the time act to guard our team members and ensure Big Motoring World has an open and supportive culture.
“Our outstanding management team will now consider continuing to deliver record results and to grow the business for the good thing about all shareholders”.
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This Article First Appeared At www.am-online.com
