Andrew Simmonds v Jeremy Paul Wilson: Re Simmonds Transport Ltd – An Unfair and Prejudicial Conduct Case

Unfair and prejudicial conduct. A classic minority shareholders petition in a family business

This is the story of the Simmonds family and what happened when the business their father built became the thing that destroyed the relationship between the four sons who took over. 

Where It All Started

Geoffrey Simmonds founded his haulage business in 1972. Over the following decades it grew into a freight transport, logistics and warehousing operation based in Shropshire, eventually incorporated as Simmonds Transport Limited (STL). By the time his sons were running it, STL had an annual turnover exceeding £12 million. 

Geoffrey had four sons: Andrew, Mark, Neil and Paul. Paul had significant cognitive difficulties, and Geoffrey’s intention was that Paul would be included and given a stake and a role in the business. The other three brothers took active roles in the business. Mark became managing director, Neil worked in sales and Andrew ran the fleet, alongside his brother Mark. A connected company called STA Vehicle Centres Ltd (STA), was established to handle the maintenance and compliance for STL’s vehicles. 

Jeremy Wilson, a long-standing director, and Richard Mark Jones, a professional finance director, completed the senior team. The shares in STL were divided between the five of them: Andrew, Mark and Neil held 25% each, Jeremy 20%, and Paul the remaining 5%. 

For years, it worked. The business was run informally where board meetings were infrequent and loosely minuted, major decisions were taken in corridor conversations or after the formal business of a meeting had concluded, and the directors were paid primarily through monthly dividends rather than salaries. The business was not as a company should. But then again, it was a family business, conducted on the basis of trust and such scenarios are not uncommon. 

The First Crack

In late 2017, a management consultant called Christopher Goode was brought in to conduct a review of the business. From the outside, this looked like a sensible decision but from Andrew’s perspective, it felt like something else entirely. He became convinced that Mark, Jeremy and Goode were using the review as cover to remove him and his brother Neil from the board, to consolidate their power. 

He raised this with Mark directly, in a private email in January 2018. He told Mark he felt “deeply hurt and angry”, that he believed the review was a “smokescreen”, and that he no longer trusted his brother to run the company “ethically and honestly”. He said he wanted to sell his 25% stake and named a price. 

Mark, by his own account, cried when he read it. He called Andrew and, over the months that followed, tried to get things back on track. Whatever had been said between them, it did not hold. By June 2018, Andrew had stopped coming into work. 

The Email That Ended a Brotherhood

In the summer of 2018, Andrew was unwell and came to the point where his GP signed him off. The texts between him and his brothers during that period did not read like a family at war. Mark checked in every few days. Andrew replied. They saw each other in person. They went on a caravan holiday together at the end of July.  

Then, in September 2018, something changed. Andrew sent a formal email to Mark where he said his position in the company had become “untenable”. He wanted £800,000 for his shares in STL, and £200,000 for STA. The friendly text exchanges stopped almost immediately. 

Blogs

The Grievance and What Followed

A formal grievance procedure was invoked and an independent HR consultant investigated. Andrew told the investigator that he could not see himself returning to the business while the current management remained in place. The investigation did not uphold his grievances and he appealed but the appeal was dismissed. 

Running alongside this process was a different kind of conduct. 

In December 2018, Andrew received a letter telling him that the company intended to stop paying his dividends and to seek to recover what it called “overpayments” already made. The company’s accounts at the time showed profits of over £130,000 and reserves approaching £1.1 million. The financial justification for cutting off Andrew’s income was thin to say the least. His solicitors pushed back, and the threat was temporarily withdrawn. 

The following February, an emergency board meeting was called. The minutes painted a picture of a business under pressure. Although the accounts filed for that same period would later tell a different story.

Locked Out, Removed and Cut Off

In August 2019, the draft petition arrived with Andrew’s formal legal claim that he had been unfairly prejudiced as a shareholder. Within days, his passwords to the company’s IT systems were changed, he was locked out of the servers, his email, and the accounts software. When he asked for access, he received a letter explaining that, as he was on sick leave, he had no need of it and that providing it might be harmful to his health. 

Days after that, Andrew received notice that a resolution would be put to a general meeting to remove him as a director of both STL and STA. The meeting took place on 9 October 2019. Andrew was removed from STL. The STA meeting was inquorate, so the resolution could not be passed there. 

In November 2019, the board resolved to suspend dividends entirely, for at least two years. The stated reasons were Brexit, a trading downturn, and the costs of litigation. At the same meeting, the remaining shareholder-directors (Mark, Neil and Jeremy) were given salaries of up to £50,000 a year. The filed accounts for the year ending March 2020 would subsequently record that their remuneration had increased from around £44,000 to over £105,000. The company described its trading as stable and its cash position as strong. 

Andrew, who had built his income around the monthly dividends that had been the lifeblood of this quasi-partnership for years, received nothing. 

What the Judge Concluded

The case was heard over eight days in 2022, with final submissions in July of that year. ICC Judge Mullen handed down his judgment in February 2023. 

He found that Andrew had not been driven from the business by a plot or by deliberate exclusion in 2018 as the friendly texts and shared holidays made that case impossible to sustain. But he found clearly that from late 2018 onwards, the other directors had deployed tactics that were unfairly prejudicial to Andrew’s rights as a shareholder. 

Andrew was ordered to be bought out at a price reflecting the value of his 25% stake in both companies as at 5 September 2019, without any minority discount, with management charges to STA to be capped at their historical level.  

The purchase price was to be finalised by the expert accountants, whose approaches to valuation the judge assessed at length.

IPJSC United Compant Rusal v Whiteleave Holdings Ltd – A Case About D...Chimbganda v Kundodyiwa – An Unfair Prejudice Petition and Derivative...