Benjamin Daniel Sparks & Anor v Emma Ashton Thomas & Ors [2026] EWHC 1173 (Admin)

[2026] EWHC 1173 (Admin)Case No CR-2024-CDF-000024
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN WALES
INSOLVENCY AND COMPANIES LIST (ChD)
In the matter of Ngage Holdings Limited
And in the matter of the Companies Act 2006
Venue Cardiff Civil and Family Justice Centre, 2 Park Street, Cardiff CF10 1ETDate 15/05/2026
Before
HIS HONOUR JUDGE JARMAN KCSitting as a judge of the High Court
Between
BENJAMIN DANIEL SPARKSPetitionersEMMA LOUISE SPARKSPetitionerEMMA ASHTON THOMASRespondentsJAMES SCOTT THOMASRespondentASHTON JAMES HOMES INCRespondentNGAGE HOLDINGS LIMITEDRespondentMr Richard Ascroft and Mr Zachariah Pullar (instructed by JCP Solicitors) for PetitionersMr Charles Newington-Bridges (instructed by Darwin Gray LLP) for RespondentsHearing Hearing dates: 9,10, 11, 12, 13, 15, 17 February 2026
Approved JudgmentHIS HONOUR JUDGE JARMAN KCThis judgment was handed down remotely at 10.30am on 20 May 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

HHJ JARMAN KC:

[1]The petitioners are husband and wife, as are the first and second respondents. The fourth respondent (Ngage), incorporated in February 2020, conducts business through wholly owned subsidiaries Ngage Resourcing Limited (Resourcing), which resources workers for rail and construction industries, Graft Contracting Limited (GCL) which provides civil engineering services in such industries, and Custom Workwear Limited (CWL) which provides clothing for such workers. Mrs Thomas and Mr Sparks are the directors of those companies, save for GCL of which Mrs Thomas is now the sole director, but until May 2024 her husband was a co-director. The shares in Ngage are owned as to 50% between Mr and Mrs Sparks, and as to the remaining 50% by the third respondent (Ashton) as from April 2022, a company incorporated in Canada under the ownership/control of Mr and Mrs Thomas.[2]Mr and Mrs Sparks claim that the conduct of Ngage and its subsidiaries has caused unfair prejudice by excluding Mr Sparks, by misapplying monies or assets belonging to Resourcing or GCL and by diverting business from GCL. They seek a share purchase order and an order for the release of Mr Sparks from a personal guarantee in favour of Bibby Financial Services Ltd (Bibby), which supplied credit protection to Resourcing.[3]The first and second respondents accept that Mr Sparks was suspended from management but say this was because of investigation into allegations of his sexual misconduct with junior members of staff at office premises or in hotels paid for by Resourcing. The respondents say that Mr Sparks knew of and approved financial dealings for Mr and Mr Thomas to set up a company in Canada. They say that Resourcing failed not because of competing business but because clients and staff did not want to work with Mr Sparks, who caused Bibby to cease providing credit protection, and because of his suspension for misconduct.[4]Ashton also claims against Mr Sparks that his conduct, as raised by way of defence, has caused it unfair prejudice and seeks relief including share purchase orders. In particular, it relies on the sexual misconduct and misappropriation of funds referred to above, failing to account for sponsorship fees, and jeopardising relations between Resourcing and its staff, suppliers, financiers and clients. Alternatively, it is claimed, and not in issue, that the directors and shareholders of Ngage are now in deadlock and that it is just and equitable to wind up Ngage on that basis. Section 122(1)(g) of the Insolvency Act 1986 provides that a company may be wound up by the court if the court is of the opinion that it is just and equitable that the company should be wound up.[5]24 issues of fact were identified by the parties for determination, although by the end of the hearing some of these were no longer in issue. The parties were agreed at that point that the most serious issues to be determined were in relation to the allegations of sexual misconduct against Mr Sparks, which is the primary reason the respondents give to justify his suspension (and exclusion), the allegations that he alienated clients and staff, and whether GCL business was diverted.

Background

[6]The background was the subject of some 8000 pages of documentary evidence, and very detailed written and oral evidence and submissions, not all of which is necessary to repeat or deal with expressly here. It is particularly important in a case such as this to keep to the confines of the issues which the parties themselves have chosen to litigate as particularised in the petition and counter petition. I summarise only that part of the background which may assist in understanding or determining those issues.[7]From a relatively young age, Mr and Mrs Thomas had built up businesses, through various companies, related to construction and work on the rail network. Mrs Thomas focused on the administrative and financial side of the businesses whilst Mr Thomas focused on site work. Through hard work the businesses became successful. In due course, Mr Thomas developed a wish to relocate to North America. Mr Sparks’ background was in business development and recruiting, but he had no experience in the rail industry. He met Mr and Mrs Thomas in early 2020 through a mutual client. Soon afterwards he began working for them in one of their businesses as an operations director.[8]In January 2021, Mr Sparks was employed by Resourcing and in May that year became a director of that company and of Ngage. On 25th of that month Mr and Mrs Thomas and Ngage entered into a shareholders’ agreement with him. Mr and Mrs Thomas accept that by then they were impressed by his hard work and commitment and his alignment with their ethos. By clause 4.1 of the shareholders agreement he was entitled to be appointed as a director of Resourcing and Ngage for so long as he holds shares in Ngage. By clause 4.3 he was given responsibility for the day-to-day supervision and management of the operational affairs of Resourcing and Ngage.[9]Such responsibility was given with a view to Mr and Mrs Thomas relocating, which they did to Canada some two weeks later. They kept in touch with Mr Sparks by phone and email. In early 2022, they set up two companies in Canada. The first was Ngage Construction Inc, the shares in which were held equally by Mr Sparks and Mr Thomas to buy, renovate and sell a dwelling there. The second was Ashton, to which in April 2022 Mr Thomas transferred his shares in Ngage.[10]It is during this period when Mr and Mrs Thomas now say that Mr Sparks alienated staff and clients and financiers of Ngage and their subsidiaries. He accepts that he had what he terms a different managerial style to Mrs Thomas, and she for her part accepts that her style was somewhat relaxed. She returned to Wales in March 2023 and her husband followed shortly afterwards.[11]On 20 October 2023, Mrs Thomas suspended Mr Sparks as an employee of Resourcing pending her investigation into allegations of sexual misconduct. The suspension was lifted for a short time but reimposed on 2 November 2023 after attempts to agree a consensual parting of the ways failed. After her investigation, Mrs Thomas produced a report on her findings on 24 November 2023. It was a very detailed report running to some 26 pages with documents annexed. No challenge is made to that report.[12]In its summary, Mrs Thomas concluded that there were facts to support the allegations of sexual misconduct and that Mr Sparks had thereby exposed Ngage to claims of sexual harassment. There were grounds to suspect witness intimidation in the investigation but that required more investigation. She recommended that he should face a disciplinary hearing conducted by an external human resources consultant. One was appointed, but as indicated below, this consultant withdrew. There are issues as to the reasons, but it is not in dispute that Mr Sparks raised an issue about impartiality.[13]No disciplinary hearing has been held into these matters. By email dated 5 June 2024, Mrs Thomas informed Mr Sparks that she thought that any disciplinary hearing would be futile as it was inconceivable that they could work together in the future.[14]Mr Sparks claims therefore that he has been prevented from meaningful participation in the management of Ngage or its subsidiaries since October 2023. He further relies on misapplications of company monies and other assets as further instances of unfairly prejudicial conduct.[15]On 29 January 24 Graft Rail Ltd (Graft Rail) was incorporated by Mr and Mrs Thomas’ daughter who was 17 years of age at the time. Ms Thomas was then its only director and shareholder upon its incorporation. Mr Sparks claims that this was to divert business, but they say their daughter intended it to establish a training academy. Vehicles were transferred from GCL to a company owned and/or controlled by Mr Thomas, which he says was justified because of an unpaid bonus due to him from GCL. On 21 May 2024 he resigned as a director of GCL and the next day was appointed a director of Graft Rail. His daughter then transferred all its share capital to him and resigned as director.[16]Mr Sparks claims that from about July 2024 Graft Rail was in competition with Resourcing and eventually took on staff formerly employed by Resourcing (and by GCL) and used its telephone number and office premises. These facts are not in dispute, but Mr and Mrs Thomas say that Resourcing was in dire financial circumstance because of the conduct of Mr Sparks as alleged by them and could no longer trade. On 3 December 2024 Resourcing ceased trading and Mr Sparks and Resourcing’s remaining staff were made redundant. He had been receiving £732 per month salary, and, until January 2024 monthly drawings from Ngage of £20,000. Mr Thomas had been receiving a similar amount of drawings during this time although he had not been a shareholder since 2020.[17]Two former employees were called by the respondents to give evidence that they had sexual relations with Mr Sparks, something which he now denies. Before this evidence was called I reminded the parties that the court in these proceedings is a court of law, not of morals, and that the claims before the court are based on company and insolvency law. That was accepted by the parties. In their closing submissions, Mr Ascroft and Mr Pullar submitted that it was not necessary to make factual determinations on this issue unless the conduct alleged could jeopardise the businesses of Ngage and its subsidiaries. From Mr Sparks’ perspective, the issue is whether the exclusion was objectively justified.[18]Mr Newington-Bridges, for the respondents, accepted in closing submissions that the court may not have to make determinations on the details of the alleged sexual misconduct. He accepted that the question is whether that conduct put the businesses in jeopardy. He submitted that from Mr Sparks’ point of view, the question was whether Mrs Thomas who conducted investigations into such conduct did so fairly. She concluded that the allegations should be determined by an independent professional, and one was identified, but withdrew after Mr Sparks raised concerns about impartiality. Accordingly no final determination was made, but the suspension continued.

Legal principles

[19]The petition and the cross petitions are brought under the Companies Act 2006, section 994 of which provides:
“A member of a company may apply to the court by petition for an order under this Part on the ground- (a) that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of the members generally or of some part of its members (including at least himself), or (b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.”
[20]It is not in dispute that Mr and Mrs Sparks and Ashton are members of Ngage within the meaning of this provision.[21]If the requirements of that section are satisfied, section 996(1) provides that the court may make such order as it thinks fit for giving relief in respect of the matters complained of. Subsection 996(2) provides:
“Without prejudice to the generality of subsection (1), the court's order may— (a) regulate the conduct of the company's affairs in the future; (b) require the company— (i) to refrain from doing or continuing an act complained of, or (ii) to do an act that the petitioner has complained it has omitted to do; (c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; (d) require the company not to make any, or any specified, alterations in its articles without the leave of the court; (e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company's capital accordingly.”
[22]The principles to be applied were essentially agreed before me, and were helpfully dealt with in counsels’ skeleton arguments. The leading authority on the operation of the predecessor of that section is O' Neill v Phillips [1999] 1 WLR 1092. Lord Hoffmann set out the applicable principles. A useful summary was given by The Court of Appeal in Grace v Biagioli [2005] EWCA Civ 1222 as follows:
“(1) The concept of unfairness, although objective in its focus, is not to be considered in a vacuum. An assessment that conduct is unfair has to be made against the legal background of the corporate structure under consideration. This will usually take the form of the articles of association and any collateral agreements between shareholders which identify their rights and obligations as members of the company. Both are subject to established equitable principles which may moderate the exercise of strict legal rights when insistence on the enforcement of such rights would be unconscionable; (2) It follows that it will not ordinarily be unfair for the affairs of a company to be conducted in accordance with the provisions of its articles or any other relevant and legally enforceable agreement, unless it would be inequitable for those agreements to be enforced in the particular circumstances under consideration. Unfairness may, to use Lord Hoffmann's words, "consist in a breach of the rules or in using rules in a manner which equity would regard as contrary to good faith": see p.1099A; the conduct need not therefore be unlawful, but it must be inequitable; (3) Although it is impossible to provide an exhaustive definition of the circumstances in which the application of equitable principles would render it unjust for a party to insist on his strict legal rights, those principles are to be applied according to settled and established equitable rules and not by reference to some indefinite notion of fairness; (4) To be unfair, the conduct complained of need not be such as would have justified the making of a winding-up order on just and equitable grounds as formerly required under s.210 of the Companies Act 1948; (5) A useful test is always to ask whether the exercise of the power or rights in question would involve a breach of an agreement or understanding between the parties which it would be unfair to allow a member to ignore. Such agreements do not have to be contractually binding in order to found the equity; (6) It is not enough merely to show that the relationship between the parties has irretrievably broken down. There is no right of unilateral withdrawal for a shareholder when trust and confidence between shareholders no longer exist. It is, however, different if that breakdown in relations then causes the majority to exclude the petitioner from the management of the company or otherwise to cause him prejudice in his capacity as a shareholder.”
[23]In In re Coroin Ltd [2013] EWCA Civ 781, Arden LJ, giving the lead judgment of the Court of Appeal, said this at [15] to [17]:
“The expression "unfairly prejudicial" has been subject to extensive judicial interpretation. There needs to be both prejudice and unfairness. Prejudice does not mean that there has to be financial loss. It may be enough to show that the rights of the petitioning member have been infringed without showing that that led to any financial loss. In order to show unfairness, Mr McKillen had to demonstrate unfairness stemming from a breach of a legal right conferred by the articles or the shareholders' agreement: see generally O'Neill v Phillips [1999] 2 BCLC 1. In one category of case, that is where the company is formed on the basis of a personal relationship between the shareholders, the court is able to subject legal rights to equitable considerations. However, the judge held that Coroin did not fall into that category of case and there is no appeal on that point.”
[24]Where a petitioner has agreed to or acquiesced in the conduct relied upon, that may render such conduct not unfair, see Re Sprintroom Ltd [2019] EWCA Civ 932. At [71], the Court of Appeal emphasised that the court is engaged in an evaluative exercise in determining whether exclusion is justified. It was not in dispute before me that such a determination should be made on all the circumstances known to the court, even if they were not the reason for the exclusion. In Waldron v Waldron [2019] EWHC 115 (Ch), Eyre J said at [49]:
“Moreover, it would be wrong as a matter of principle to impose a requirement of causal connexion before account can be taken of an excluded party's conduct when addressing the fairness or unfairness of an exclusion. The exercise for the court is to determine whether conduct which was prejudicial to the party complaining was unfairly so. In the context of exclusion that involves a determination of whether the exclusion was unfair. That determination is an objective one as I have already explained and is not dependent on the subjective intention with which particular acts were done. The objective nature of this exercise indicates that the court should undertake it in the light of all the circumstances known to the court. Fairness or unfairness is to be determined in the light of those circumstances seen as a whole. Just as a genuine belief by a party that he or she was acting properly in excluding another party is not determinative of the question and does not prevent a finding of unfairness so an exclusion is not to be regarded as having been unfair if circumstances existed warranting the exclusion. This is so even if those circumstances were not known at the time of the exclusion or were not the reason for it. The existence or otherwise of a causal connexion between a petitioner's conduct and his or her exclusion is likely to be a factor relevant to the court's consideration of the fairness of the exclusion. If particular circumstances were not the cause of an exclusion then it is likely to be harder for a respondent to argue that those circumstances justified the exclusion particularly if they were known at the time and even more so when they had occurred some time before the exclusion.”
[25]The expression “company’s affairs” within the section should be construed liberally (see, for example, Re Neath Rugby Ltd (No 2), Hawkes v Cuddy [2009] 2 BCLC 427 at [50]).[26]In this case, Mr and Mrs Sparks rely in particular upon the provisions of the shareholders agreement set out in paragraph 8 above, rather than equitable principles. Where parties agree to do business together there is an agreement that any party who is a director will perform his duties as a director (see for example, Re Tobian Properties Ltd [2012] EWCA Civ 998, Arden LJ at [22]).[27]In both the petition and the counterpetition, it is also pleaded that the conduct relied upon amounted to breaches of duties as directors imposed by the 2006 Act. Such duties require directors to act in accordance with the company’s constitution and only to exercise powers for the purposes for which they were conferred (section 171); to act in the way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (section 172); to exercise reasonable care, skill and diligence (section 174); and to avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company (section 175).[28]Conduct of a parent company is capable of amounting to conduct of its subsidiaries’ affairs, and vice versa, see Minority Shareholders, Law, Practice and Procedure, Joffe et al, 7th ed, [5.48] and [5.52-5.58].[29]Fancourt J in Re Edwardian Group Ltd [2019] 1 BCLC 171 considered, on very different facts, justification of removal of a shareholder as an employee without an offer to buy shares at a price. After citing O’Neill v Phillips, he continued at [412]:
“...However, a number of authorities establish that, in certain circumstances, the removal of a quasi-partner without making such an offer can be objectively justified. Those circumstances are, essentially, where the quasi-partner has brought his removal on himself by conduct that objectively justified the other members in excluding him in that way: see per Nourse J in Re R.A. Noble & Sons (Clothing) Ltd [1983] BCLC 273 at 292. 413. Lack or loss of competence in business affairs, a breakdown of the relationship of trust and confidence and even personal misbehaviour do not of themselves justify exclusion without a fair offer. The court does not indulge in what Lord Hoffmann once referred to as a "contest of virtue". Nor can removal without a fair offer be justified solely on the grounds of what the majority consider to be in the best interests of the company: per Lord Wilberforce in Ebrahimi at p.381. 414. In Re a company No. 002470 of 1988, ex p. Nicholas [1992] BCC 895 , Harman J held that the exclusion of a quasi-partner was not unfair where the partner was responsible for friction and difficulties in the conduct of the company's business such that management relations had broken down. In Woolwich v Milne [2003] EWHC 414 (Ch) , Sir Donald Rattee held that Mr Woolwich was not unfairly excluded where, by doing specific matters that he had previously agreed not to do, he placed the efficient conduct of the business of the Company in jeopardy and posed "a significant threat to the future well-being of the company's business" (p.48). 415. The authorities do not establish any bright line between what does and does not justify exclusion without an offer, but it is clear that the conduct in question must be misconduct in the affairs of the company, not merely personal misconduct. It must be so serious as to undermine the basis for the equitable considerations that bound the parties. The right approach, in my judgment, is to ask whether the exclusion without a fair offer is proportionate and justified by the misconduct in question, but bearing in mind that incompetence, mere misconduct and a breakdown of confidence are not sufficient to justify removal without a fair offer.”
[30]In that case, Fancourt J ordered purchase of the shares of the member whose interest had been unfairly prejudiced, on the basis of what was a fair price in all the circumstances. At [639-640] he set out his approach to a fair price. “639. The authorities are replete with references to "discounted" and "non-discounted" bases of valuation. A "non-discounted" basis of valuation is a valuation of the entirety of the company, which is then apportioned pro rata between the shareholders. A "discounted" basis of valuation is generally taken to refer to the market value of the minority shareholding, valued separately, which is generally less – sometimes much less – than a pro rata share of total shareholder value. The market value may depend not just on the size of the holding but on the content of the company's articles of association. For example, pre-emption rights in favour of existing shareholders, giving them the right to acquire shares at the same price offered in the market by a would-be purchaser, will suppress the market value of the shares. Absent such a provision, the market value may be very significantly higher, particularly if the holding in question would be of special value to another shareholder. Further, a 2% shareholding will be considerably more valuable to an existing shareholder with 49% or 74% of a company's shares than it will be to an outside investor. 640. Any basis of valuation selected must be fair in all the circumstances. It must also provide a remedy that is proportionate to the unfair prejudice suffered by the Petitioners. The prejudice suffered by the Petitioners is, ultimately, that the value of their shares has been suppressed. They could be sold in the market, subject to the other shareholders' rights of first refusal, but the value of the shares will have been affected, not just because there is no benefit from the Expotel shareholding but because of the conduct of the directors, sc. their willingness to treat minority shareholders unfairly, as I have found. A valuation of the shares at their true market value, reflecting the pre-emption rights in the Company's articles, will therefore lock in the prejudice that the Petitioners have suffered, rather than grant relief from it. That would be unfair. Correspondingly, a sale of the shares to JS or the Company at such a valuation will give the purchaser a significant windfall benefit from the unfairly prejudicial conduct, as the purchaser will obtain the shares at a price depressed by virtue of that conduct.”[31]As to the date of valuation, the starting point is the date when the share purchase order is made. In Profinance Trust SA v Gladstone [2002] 1 WLR 1024 the Court of Appeal said this at [60-61]:
“60. The starting point should in our view be the general proposition stated by Nourse J in In re London School of Electronics Ltd [1986] Ch 211 , 224: “Prima facie an interest in a going concern ought to be valued at the date on which it is ordered to be purchased.”
That is, as Nourse J said, subject to the overriding requirement that the valuation should be fair on the facts of the particular case. 61. The general trend of authority over the last 15 years appears to us to support that as the starting point, while recognising that there are many cases in which fairness (to one side or the other) requires the court to take another date. It would be wrong to try to enumerate all those cases but some of them can be illustrated by the authorities already referred to.”

Exclusion of Mr Sparks

[32]In general terms, it is not disputed that Mr Sparks has been excluded from management since October 2023 by his suspension as an employee of Resourcing and the institution of disciplinary proceedings, both of which decisions were taken by Mrs Thomas rather than by the board of that company, which includes Mr Sparks as well. This meant that he could not access emails, software or accounting platforms or bank statements. Locks were changed at the offices. He was told not to attend site or to have contact with staff or clients. He was not generally involved in decision making. He remained a director, but not an acting one.[33]There were several letters passing between them on 20 October 2023. In one, Mrs Thomas said:
“I refer to our meeting today at which I explained that you were to be suspended from work pending an investigation into an allegation of gross misconduct, as detailed in the letter dated today that I handed to you. Further to our subsequent discussion, the company acknowledges that your role is integral to its operations. Accordingly, on reflection, rather than suspend you at this time, the company has decided that it would be appropriate to allow you to work from home until further notice.”
[34]By letter dated 2 November 2023 from Mrs Thomas to Mr Sparks, this was said; “We agreed on Friday 20 October 2023 that you would work from home during the course of our investigation provided that you complied with instructions not to attend the workplace or client sites and not to attempt to discuss this matter with any employee or other business contacts of Ngage. We agreed this arrangement in recognition of the fact that your role is important to Ngage’s operations and in the hope that this would allow you to continue performing key tasks while also protecting Ngage’s staff and the integrity of the investigation. However, we have now been given additional cause for concern over the last few days by further information provided to us during the course of the investigation, which has given us reason to believe that remaining in your role at present could pose a risk to the wellbeing of other employees. In addition, your compliance with the homeworking arrangements which have been imposed on you has also been a cause for concern. Specifically, you have been sending me screenshots of emails and messages instead of copying me in, you have attempted to persuade me to allow you to attend sites when it has clearly not been appropriate for you to do so, and you have delayed sending me the contact information of a client so that I can resolve an issue the client raised with you.”[35]The terms of the suspension were then set out, and included the following; “1. Your IT access has been suspended with immediate effect. 2. You must not attend Ngage’s offices or client sites during your suspension. 3. You must not attempt to contact any employees, clients, or other business contacts of Ngage whatsoever, whether by email, phone or other means. 4. If you are contacted by WhatsApp, text, or other message by any client or other business con-tact of Ngage, you must not return this contact but must immediately forward it to me. Your emails will also be redirected to me. If you are contacted by phone or other verbal means by a client or business contact then you must not answer the call or return the message but should immediately inform me so that I can return the contact.”[36]Mr Sparks was invited by Mrs Thomas to attend a board meeting of Resourcing on 21 February 2024. That meeting was attended by him and Mrs Thomas and lasted 50 minutes. It was recorded and there is a transcription. It is clear that Mr Sparks asked many question on operational matters, which Mrs Thomas answered. She was concerned with such matters as cashflow, bad debt protection and uplifts on rates paid to self employed contractors. She said that cash flow difficulties hit from time to time and that payment of dividends should be delayed. When she referred to bonuses, salaries and dividends of working directors Mr Sparks asked who these were and she replied that as he was suspended, she was the only working director. He asked what was happening with the investigation to which she replied that he would be told in due course.[37]He said that he was in limbo and asked if she would like him to get back involved in the company to which she replied simply “no.” He also referred to bad debt protection and was concerned about the guarantees which they had each given, which he thought was for £200,000 but she responded that it was £400,000. He asked for documentation about that and she replied that it would have been sent, to which he responded that that was to his work email to which had no access. She then said that she would have a look, adding later that she would let him know if anything pressing arose.[38]Not every detail of exclusion relied upon by him was accepted by Mr and Mrs Thomas. Mrs Thomas relies on the bank statements which she sent to Mr Sparks in April 2024, amongst other matters. The focus of their case, unsurprisingly, was very much upon whether exclusion was justified. Even assuming, for present purposes, that limited access was given as Mrs Thomas says, I am satisfied that Mr Sparks has effectively been excluded from supervision and day to day management, and of most if not all important decisions, of Ngage and Resourcing since the beginning of November 2023. The tenor of the board meeting in February 2024 gives some support to that finding.[39]The respondents say that Mr Sparks sabotaged the disciplinary process by, amongst other things, wanting to take his evidence directly to the home of the HR consultant and by questioning impartiality. That consultant did not give written or oral evidence. By email dated 14 March 2024, to the solicitors for Mr and Mrs Thomas, the consultant dealt with several matters, one of which was that Mr Sparks had raised a connection on the consultant’s previous website between those solicitors and the consultant’s firm. The consultant continued that if she were to conduct the hearing scheduled for the following week, “that may well prejudice your client’s position” which she was not prepared to do. She said that she was withdrawing. Mrs Thomas confirmed that to Mr Sparks shortly after and said she would be in touch soon.[40]Mr Sparks emailed her on 21 May 2024 saying that he had heard nothing and asking for an update. He received no reply and so sent a chasing email on 29 May and received one on 1 June from Mrs Thomas saying they were reviewing and would respond shortly. She did so on 5 June saying that a disciplinary hearing would be futile. She referred to the issue of the shareholding and that they should await a valuation which was being obtained. The letter included this passage. “Regardless of the outcome, it is inconceivable that we can work together in the future. What little trust may have existed was destroyed by your actions with the bank and any reasonable person would conclude that the position is irretrievable. In these exceptional circumstances, it would be legitimate for the Company to terminate your employment, with notice or a payment in lieu of notice, without a hearing on the ground of “some other substantial reason.””[41]In her witness statement in these proceedings, Mrs Thomas accepts that they were told that they could try to set up another disciplinary hearing but says that she thought it was likely that Mr Sparks would sabotage it and so they decided not to. She also says in her witness statement that there were talks about share purchase and that subsequent correspondence made it clear that they “wanted a clean break from one another.” She refers to allegations that Mr Sparks was then making against her and her husband that they had committed fraud and his refusal to sign a debt protection agreement.[42]I am not satisfied that Mr Sparks’ behaviour in relation to the HR consultant went further than a concerned, perhaps overly concerned, approach as to how his evidence should or would be dealt with, so as to amount to sabotage. In my judgment, the primary reason for his continued exclusion was the realisation that the three wanted a clean break from each other. After the cancellation of the disciplinary proceedings, the continued exclusion was not put on the basis of sexual misconduct but primarily because of allegations that Mr Sparks was making to the bank. Misconduct[43]The allegations of sexual misconduct, which are denied, may be summarised for present purposes as follows. The first allegation came to light after rumours circulated amongst staff in 2023, and concerned a young member of staff called Ms Flynn. She says that the relationship was consensual and lasted about a month. She says that sexual relations took place in office premises and in hotels while on company business. She described it as a fling and accepts that she was in other relationships at the time. This prompted investigation and another allegation was made by a Ms Jones that she had a consensual relationship with Mr Sparks which ended before she ceased her employment in the businesses some two years before in September 2021. Mrs Thomas, to her credit, accepted in cross-examination that no member of staff raised any concerns to her about this latter allegation and that it did not give rise to adverse affects on Ngage.[44]In circumstances where no disciplinary proceedings were concluded on these issues, albeit Mrs Thomas was given the option of doing so, in my judgment it is unnecessary, and perhaps undesirable, that I should make factual determinations upon them in these proceedings. This is essentially because in my judgment, even if well founded, they amount to personal misconduct rather than conduct in the affairs of Resourcing or Ngage. It is noteworthy that there were no complaints about this at the time or any indication that this risked damage to the business. No employment claims arising from such conduct have been indicated. It is now asserted that this alleged affair was part of the reason some members of staff left. I will deal with this issue later in this judgment.[45]Related to this issue, it is also alleged that Mr Sparks spent company money on hotels and expenses in furtherance of his relationship with Ms Flynn rather than principally for company business. As Mrs Thomas accepted in cross examination, this amounts to no more than some £1500. This should be seen in the context of Mrs Thomas’s admission in cross-examination that the expenses regime in the business was lax and that she and her husband claimed personal expenses on Resourcing and GCL of substantially more than this figure. Exclusion in my judgment is not proportionate to any such expenditure by Mr Sparks. Misappropriation[46]There are further alleged misappropriations of monies by Mr Sparks belonging to Resourcing. He accepts that in March 2021 he received £10,000 cash by way of the proceeds of sale which he had arranged of a tipper truck belonging to a company, Ngage Rail Limited, through which Mr and Mrs Thomas had previously run part of their business. He says that he informed Mr and Mrs Thomas of that by text and when an issue arose as to whether this should be paid into the company bank account Mrs Thomas replied “no chance,” and that he then split the money with her. She accepts that he did so inform her of the money, and accepts that she replied “no chance” when it was suggested that this should be paid into the company bank account. In cross-examination she said that this was something of a joke. She denies receiving half of this money, but accepts that this was not followed up.[47]It is noteworthy that this occurred before Ashton acquired its shares in Ngage. Even if, as Mrs Thomas claims, she did not receive half of this money, in my judgment it is clear she was complicit in the money not going into that company’s bank account.[48]By the time of the hearing before me, a schedule had been drawn up of some 520 transactions, subsequently reduced to 420, of challenged expense claims of Mr Sparks totalling some £50,000. These include small claims of £20 or less and claims which were made in 2021. Mr Sparks has given his comments on this schedule. This is in the context that Mrs Thomas accepts that she had a casual approach to expenses, and that Mr Sparks wanted to put this on a more formal basis. The employee who dealt with expenses was Kyrsta James, but Mrs Thomas accepted in cross-examination that she drew up this schedule on the basis that Mr Sparks had not provided documentary evidence for the challenged transactions. She accepted that he then disclosed further documentation, which is why the challenged transactions were reduced. That exercise was carried out not by her but by her solicitors.[49]She accepted that although some of the remaining transactions were not covered by paperwork, there was other evidence of them in contemporaneous text messages and in photographs of client hospitality. She also accepted that some of the hotel expenses claimed, including for workers, was “plausible” but said she would need more time to review the documentation supplied by Mr Sparks. She added that the “frame of mind we are in makes you question everyone.” She couldn’t say that any of it was false but would need more time to review. She also accepted that the company had much documentation which may be relevant which had not been disclosed, including internal control sheets, and that hotel companies would issue paper and electronic statements of bookings which are no longer available.[50]A large number of the challenged transactions relate to fuel. She accepted that other staff members might use Mr Sparks’ company card for fuel because of their personal cash flow issues, and that Mr Sparks might use his personal card if the limit on the company card had been reached. There were a number of different cards for fuel for different companies, and Kyrsta James would attempt to attribute the expenditure on them to the right company, but this was not a simple process. Again Mrs Thomas accepted that some of these challenged transactions might be legitimate but that she “would have to check.”[51]These candid responses of Mrs Thomas to questions about this schedule cause me to be cautious about accepting any of it. Indeed, I am not satisfied that it is safe to do so. In my judgment that part of the respondents’ case is not made out.[52]There are similar difficulties about company cash allegedly retained by Mr Sparks whilst the Thomases were in Canada, in the sums of £800, £800 and £400, and £4000 sponsorship money. Mrs Thomas did not deal with this in her witness statement and could not shed any further light in her oral evidence, save to say that this is based on what she was told by Kyrsta James when she came back from Canada. However there is no documentary evidence concerning these sums and no follow up was made about them.[53]Kyrsta James, when she gave her evidence, did not throw a great deal more light on this. She said that Mr Sparks did keep company monies and she informed Mrs Thomas of this when she got back from Canada, but she could not remember figures and said that she may have overlooked these allegations when making her witness statement. In my judgment the evidence on these sums is not such as to support a finding that any of them were misappropriated by Mr Sparks. Relations with staff[54]Next I turn to the allegation that the conduct of Mr Sparks jeopardised relations between Resourcing and its staff. Mrs Thomas said in her oral evidence that when she returned from Canada, some of the staff told her that they hated working with him. When it was put to Mr Thomas in cross-examination that Mr Sparks may have had a different management style to him and his wife but he remained an asset for business, he replied that Mr Sparks was “making money.”[55]The respondents called about eight former members of staff of Resourcing who in their witness statements and in oral evidence said how difficult Mr Sparks was to work with, and some added that that is why they left that employment. However, most accepted in cross-examination that their text messages to and from him during their working relationship were civil and professional and in some cases, friendly and jocular. The reason which they gave for this was that such difficulties were not appropriate to raise in text messages.[56]Perhaps the most stark example is Kyrsta James. In her written and oral evidence she said that she did not trust Mr Sparks from the start, and that there was something about him that she could not put her finger on. When it was put to her that she subsequently planned to go into business with him, after some initial prevarication, she accepted that they talked about setting up a payroll company which was incorporated in June 2022 with herself and Mrs Sparks as shareholders. When asked why she was prepared to go with him, she replied that she didn’t know how to answer that, before adding that it was just a business and that it would be a while before they went anywhere with it. In my judgment that explanation is not impressive. It is likely that she was prepared to do so because she saw a good business opportunity and a good associate in Mr Sparks. She says that she offered her resignation because of him but accepts that she then withdrew it.[57]Andrew Mason says that he left his employment because of Mr Sparks’ micromanagement. However, contemporary text messages, including between Mr Sparks and the Thomases suggest that he was struggling to develop relationships with clients and no concerns were raised about micromanagement. In his resignation letter to Mr Thomas, he said that he had enjoyed working there, and that there had been ups and downs but that was the nature of the business. He had no regrets and there were no hard feelings.[58]Christopher Thomas also refers to micromanagement, which he says caused him stress. In his oral evidence he accepted that he had issues with reliability and at one point said that Mr Sparks was sympathetic at times but not always. He said that there was a lot of frustration in trying to source workers for the rail network. He did not recall Mr Sparks trying to find him other work but accepted that text messages put to him showed this to be the case. He accepted that after leaving he may have met up with Mr Sparks for a chat.[59]One of the criticisms which Ashleigh Jones makes is that Mr Sparks took refreshments to workers on site which she thought was “a bit of a show.” She accepts that Mr and Mrs Thomas raised issues about her performance but says that she thought that was on the basis of what Mr Sparks was telling them. She accepts however that she made mistakes but “the clients were complimentary.” She initially tendered her resignation in November 2022 giving reasons unrelated to the conduct of Mr Sparks. She resigned again, some seven months after his suspension, citing concerns about his turning up at work or at her home, but accepts that he did not and that she assumed that he would not return to work. She went to work for Graft Rail.[60]Klare Walton says there were rumours about Mr Sparks and Ms Flynn which made things awkward but did not affect her work and that she did not voice any concerns because she thought she was overthinking things. She was going to leave in September 2023 for better pay but she stayed on and she enjoyed working for Resourcing. She did leave to work for Graft Rail some nine months after Mr Sparks’ suspension and says that she was concerned in case he was angry that she had given a statement in the course of the investigation into his conduct.[61]Ryan Evans worked on site and had little if any contact with Mr Sparks. He said that part of his reason for leaving Resourcing and going to work for Graft Rail, was that he was told by Mr and Mrs Thomas of limited business opportunities because Mr Sparks was refusing to sign the Bibby credit protection agreement. However, Bibby was not referred to in his witness statement and he accepted in cross-examination that he did not know of arrangements with them.[62]Ms Jones left prior to Ashton’s membership in Ngage. Contemporary texts suggest that she did so because of her own performance issues. Ms Flynn was also suspended on full pay at the same time as Mr Sparks and left to take another job. The evidence of Liam Ronan and the written evidence only of Lewis Ayling took these issues little further.[63]I accept that some members of staff found the new and full on management style of Mr Sparks challenging at times after being used to the more casual style of Mr and Mrs Thomas over many years. In my judgment, having regard to the contemporary messaging and the concessions made in cross-examination, the conduct of Mr Sparks in this regard did not go beyond this and did not amount to conduct in the affairs of Ngage or its subsidiaries which caused unfair prejudice to the interests of members. Relations with clients[64]The Respondents make similar allegations in respect of relationship with clients and Bibby. There is an allegation that Mr Sparks overcharged one client, BAM Nuttal, by some £30,000. Mrs Thomas in her oral evidence said that strong accusations were made by that client against Mr Sparks, although this was not mentioned in her witness statement. She was not able to say how this figure was calculated and accepted that she did not put this to Mr Sparks. She says that substantial business was lost as a result. Mr Sparks accepts that there was an overcharge of £2385. A credit note was given, after which there was no issue. I am not satisfied that the overcharging went beyond this.[65]There are then allegations that Mr Sparks had caused disputes with clients Siemens and Alun Griffiths over uplifts in hourly wages paid to workers. There are no contemporaneous documents on how such uplifts were to be dealt with. The respondents called Frank Camilleri as a witness to deal with the Siemens dispute but it emerged from his evidence that he was a sub-contractor to Siemens. He did not initiate any issue about this but said that Mrs Thomas rang him when she got back from Canada and he told her that Siemens was considering terminating the relationship. In his witness statement dated October 2025, he said that the market for these businesses was the worst he had seen for 26 years, but it was not clear from his statement when this downturn started.[66]In respect of Alun Griffiths, one of Resourcing’s largest clients, the respondents called Adam Bracegirdle, this client’s site manager. He said he would not deal with Ngage after this dispute, but he accepted that he was not involved in resourcing issues and said that he was not speaking on behalf of Alun Griffiths. He said this involved only one worker as far as he was aware.[67]Mrs Thomas in cross-examination accepted that she would expect Mr Sparks to attempt to maximise profits but not at the expense of relationship with clients. She accepted that he informed her of this dispute and suggested a meeting on site to discuss the issue. They asked her husband to attend. She understood that the worker concerned had apologised to Mr Sparks for emails which he sent to Mr Sparks concerning the dispute.[68]I accept that such disputes took place, which may well have resulted in loss of business. However, I am not satisfied that the evidence concerning either of these disputes supports a finding that Mr Sparks’ conduct in relation to them amounted to prejudice that was unfair. Graft Rail[69]Mr Sparks also alleged breaches of duties on the part of Mrs Thomas as director of Ngage, Resourcing and GCL of sections 171, 172 and 175 of the 2006 Act in failing to inform him of the establishment of Graft Rail, intended to compete with Resourcing and GCL, as it eventually did. He alleges that Mr Thomas whilst a director of GCL intended to form Graft Rail to compete with that GCL.[70]Their daughter Grace Thomas was called to give evidence about the formation of Graft Rail. She was 17 years old at the time and had been working for Ngage. She said that she saw a gap in the market for a training business and it was her idea to set up the company. She didn’t know about the advantages of setting up a company. She had not done this before. She had help from Kyrsta James. She said she could not remember a lot about it. She could not remember identifying any training courses or who to train. She could not remember doing any costings or forecasts. She could not remember about getting accreditation, but said Kyrsta James helped with this. She gave up her shareholding because the project was going nowhere and she spoke to her father. It was too much for her and she didn’t want to move it forward so she resigned as a director. Her parents and Kyrsta James gave some supporting evidence, and her parents denied, when it was put to them in cross-examination, that this company was set up as another potential vehicle for business.[71]There is little documentary evidence about that accreditation, but what little there is appears to suggest that this was obtained as early as February 2024. The domain name Graftrail.com was registered on 14 March 2024, which is the same day that a payment was made from Mr Thomas’ bank account to a website hosting service. The following day and two days later payments were made from GCL’s bank account to a website design service. There is no evidence that GCL had a website at that time, and when Mr Thomas was asked about these payments in cross-examination he was not clear what they were for. He said that he decided to leave GCL after Mr Sparks had caused its bank account and that of Resourcing to be frozen in early April 2024 but they were unfrozen by 24 April 2024, about a month before he resigned as a director of GCL. It is admitted that shortly after his resignation, GCL cease to trade. In my judgment it is likely that he made this decision much earlier, and that it was probably related to the failure to agree terms with Mr Sparks in October 2023[72]Giving due allowance for her youth and the passage of time, Grace Thomas’ lack of recall about any important detail of setting this business is, in my judgment, highly surprising if it was her idea and her project, even if she had help. It is more likely in my judgment that her parents were more involved in this project then they now recall, with one eye, at least, to creating a vehicle for business in case Resourcing ceased trading. Graft Rail was in due course approved to deal with several of Resourcing’s clients, and as indicated above subsequently former employees went to work for Graft Rail, who used Resourcing’s phone line (they say inadvertently), offices and a similarly coloured logo. It is likely that some business was diverted, but the evidence does not allow a more accurate assessment of how much.[73]Mr and Mrs Thomas admit that vehicles belonging to GCL were transferred to Mr Thomas (Mr Sparks says a company belonging to him), in lieu of a bonus they say they agreed should be paid to Mr Thomas. Their evidence about that bonus is curious. The value of the vehicles and cash payments amount to some £475,000. They rely upon a minute of a board meeting dated 28 March 2023, of which the meta data suggests was created on New Year’s Day 2024. An email to Mr Sparks on 20 April 2023 makes no mention of the agreed bonus, although they now say he agreed to this, something which he denies. In the points of defence to the petition this is dealt with somewhat oddly by saying that “it is denied” that Mr Sparks did not give consent. In my judgment, given the unsatisfactory nature of the documentation said to be contemporary, it is unlikely that he did agree to such a bonus. The evidence of Mr and Mrs Thomas in this regard causes me to be cautious about accepting their evidence in relation to Graft Rail.[74]In my judgment, the developments which in the event occurred in the transfers from GCL and Resourcing are likely to have been in the mind of Mr Thomas, as future possibilities if not likelihoods, whilst he was still a director of GCL, and his intentions and actions during such directorship constituted a breach of his duties as director.[75]It is likely in my judgment that Mrs Thomas was aware of such intentions and actions of her husband at the time. She did not disclose any of this information to Mr Sparks as her co-director in Resourcing and in my judgment this did amount to a breach of her duty as director of that company in the way alleged. Other breaches of directors’ duties[76]Given my findings above on the main allegations in the petition, the remainder of the allegations assume lesser importance and can be dealt with relatively briefly.[77]There are other alleged breaches against Mrs Thomas in using Resourcing’s monies for personal use in Canada or other uses of no benefit to Resourcing, or by using GCL resources to work on a property owned by a company in which she and her husband were the shareholders. I have already made reference to the personal leisure expenditure in the context in which it was put, namely by evaluating the allegation that Mr Sparks spent company monies on his personal use.[78]There has been no proper disclosure of documents relating to monies loaned by Resourcing to Ngage Construction Inc or the proceeds of sale of the dwelling in Canada. Mr Sparks accepts that he agreed to the loan, and accepts that there were discussions with Mr and Mrs Thomas about the possibility of their setting up a similar business to Resourcing in Canada. He also accepts that the original intention was to develop the dwelling. However, he says that after the loan was agreed he was not made aware of any further details about it or how it, or the proceeds of sale were dealt with, although he accepted in cross-examination that Mrs Thomas informed him that there had been a downturn in the housing market there and that the property would have to be sold. He said he could not recall discussions Resourcing paying personal expenses of the Thomas family in Canada, and that such expenses were not paid in the UK. Mr and Mrs Thomas say that he was aware of these details and agreed to the payment of personal expenses. Payments for such expenses were shown on Resourcing’s bank statements but he says he did not look at these. In my judgment, it is likely that Mr Sparks was made aware at the time of more than he now recalls about the property and the loan and of the payment of personal expenses and, at the least, acquiesced in such payments. Beyond that, I am not satisfied it is appropriate to make findings or draw inference on these matters.[79]It is admitted that at the beginning of 2024, Resourcing paid wages owed by GCL and borrowed monies from GCL. Mr and Mrs Thomas say Mr Sparks agreed to this, something which he denies. However, they also say that these monies were properly accounted for, something which is “not admitted” by Mr Sparks in the reply to points of defence. It is unlikely, given the timing, that he did so agree, but it is also likely that these were properly accounted for.[80]Mr Sparks also says that he saw GCL vehicles being used for works and waste removal at a site known as Forge Side owned by Mr and Mrs Thomas. They say the vehicles and materials were stored there. There is no documentation in relation to this issue, which did not loom large in the evidence. I am not satisfied that what Mr Sparks recalls he saw went beyond what the Thomases say. They accept a van was transferred to Mr Thomas but say that that was properly deal with by way of Mrs Thomas’ directors loan account. I am not persuaded otherwise. The counter petition[81]As for the counter petition, I have already dealt with allegations of sexual misconduct, misuse of Resourcing’s funds, and jeopardising relations with its staff and clients. It is further alleged that Mr Sparks caused the bank accounts of Ngage and Resourcing to be frozen and for the credit limits under the Bibby arrangements to be reduced.[82]It is not in dispute that he caused the former on 10/11 April 2024. He says that shortly beforehand Mrs Thomas sent him the bank statements for January, February and March from which he saw large payments were being made to a credit card. He spoke to the credit company who told him that Resourcing did not have a facility and he asked them to stop taking payments which they did. He saw other payments which were far larger than he had seen before and made the bank aware of this. They told him to report the transactions which he did. Mrs Thomas says she had to make frantic efforts with the bank to allow its payroll to be paid, but she succeeded in doing so. Wages were paid for the two weeks of the frozen account.[83]As for Bibby, it reduced limits following withdrawal of bad debt protection in respect of Alun Griffiths which Mrs Thomas told Mr Sparks about at the board meeting on 21 February 2024. Mr Sparks says he refused to sign an amended agreement with Bibby in April 2024 because he had not been given relevant financial information.[84]There was little if any evidence to contradict that of Mr Sparks on these issues and I accept it. His actions should be seen in the context that he had been excluded from management of Resourcing for some months with incomplete information about its financial situation and with potential liability under his personal guarantee. I accept that it is likely that this caused difficulties in securing new business, but in my judgment his conduct in this respect did not amount to unfair prejudice of members’ interests.[85]However, for the reasons given above, his exclusion and the setting up of Graft Rail did amount to conduct which unfairly prejudiced his interests. I do not accept that it would be fair and equitable simply now to wind up Ngage. Even if there were a surplus available to him, which is not entirely clear, that is likely to have been affected by the unfair prejudice. In my judgment the fair and proportionate remedy is an order that Mr and Mrs Sparks’ shareholding is purchased. Relief[86]Each side in these proceedings instructed an expert forensic accountant to give an opinion on various valuations to assist the exercise to determine a fair price. Each provided a very detailed report and a joint statement of agreement and disagreement. Each was called to give contemporaneous oral evidence and they were given an opportunity to have a further meeting to see if issues could be further narrowed, which did bring forth more agreement.[87]Each agreed that the value of Ngage had decreased significantly between the date of the exclusion of Mr Sparks and the date of their respective reports (mid August to mid September 2025). There was a considerable difference in their figures, with the petitioners’ expert, Mr Mesher, giving a value of £12.3 million as at 1 November 2023 and £200,000 as at the date of his report, whereas the figures of the respondents’ expert, Mr Isaacs, were £3.88-£4.831 million and nil respectively.[88]Each of the parties blame the other side for this decline. Mr Mesher in his report set out the results of some research he had carried out in respect of the business in which Ngage and its subsidiaries were engaged. He concluded that government upgrading of the rail network expanded in 2022-2023 giving a slight climb in profits for such businesses during that year, despite significant increases in materials and wages. I accept that evidence.[89]In my judgment on the evidence there is likely to be more than one reason for the decline referred to above. The primary reasons are likely to be the exclusion of Mr Sparks after he had been in day to day control for over two years, the subsequent breakdown in trust between him and Mr and Mrs Thomas, and the setting up of Graft Rail. However, it is likely that there were contributory factors such as the down turn in the market, the disputes with clients referred to above, and the difficulties with the Bibby agreement.[90]The experts refer to professional valuations carried out at the time the parties were negotiating for a sale of the shares of Mr and Mrs Sparks. These in turn were based on professional forecasts obtained by Resourcing. Mr Mesher considers that both Ngage and its accountants considered the forecasts to be reliable at the time, However, he notes that forecasts of 25 October were prepared after Mrs Thomas instructed the forecasters to “reverse engineer a valuation acceptable to them.” Mr Isaacs says that he was instructed by Mrs Thomas that this was intended to tempt Mr Sparks to sell his shares. In my judgment little reliance can be placed on that forecast. Mr Isaacs says that the forecasts as a whole are not reliable, because they show levels of profit not seen before. As to the other forecasts, in my judgment Mr Mesher is entitled to place some reliance on them for the reason he gives.[91]Mr Mesher notes clause 3.11(j) of the shareholders agreement which provides:
“(j) If the shareholders cannot agree a price for a share transfer, the Accountants shall determine the Fair Value of the Sale Shares, with Fair Value meaning “valuing each of the Sale Shares as a proportion of the total value of all the issued Shares without any premium or discount being attributable to the percentage of the issued share capital of Holdings which they represent.”
It also assumes a going concern (if it has been carrying on as such) and that the sale is to be on arm’s length basis between a willing buyer and willing seller (Clause 9.6 and definitions at Clause 1.2).”[92]One of the valuations which the experts were asked to make was the value of Ngage as at 1 November 2023. They agree that the approach to be adopted is to apply multiplier to the maintainable EBITDA, which they also agreed in the sum of £1,195,000. As for the multiplier, their respective figures are 6 and in the range 4.5 to 6. They agreed that there few comparables to the type of business which Ngage through it subsidiaries undertook, and that led Mr Mesher to look at larger companies. Mr Isaacs says the reduction to be applied from larger companies to smaller companies is 42% which would give a multiplier of 5. In my judgment that reasoning and figure is fair and reasonable and I accept it.[93]There is then a disagreement as to whether the multiplier should further be reduced by at least 20%, as Mr Isaacs says, to reflect the fact that Ngage was not part of the Network Rail Framework and that it was in crisis at this point. It is common ground however, that clients were part of this framework. Mr Mesher points out that his figures were based on performance without being part of that framework and that there had been significant growth and the parties were forecasting further growth. The latter is a question of fact for the court. As I have indicated, when asked whether Mr Sparks’management style affected business, Mr Thomas replied that he was making money. I have accepted the evidence of a down turn in the market and of cash flow difficulties by February 2024. For the reasons given by Mr Mesher it is not appropriate to further reduce the multiplier because Ngage was not on the framework which he refers to. Nor is it fair to make a further reduction in relation to market downturn and cashflow difficulties which are likely to have arisen, or arisen substantially after November 2023.[94]The experts agree that whether a debt of £1.6million from Ashton was realisable is a matter for the court and if it was realisable at this time then it should be included as an asset of Ngage. In her written evidence Mrs Thomas says this arises from the transfer of Mr Thomas’ shares in Resourcing for tax reasons. The value attributed to the shares was £1.1 million and this was shown as a debt owed to Resourcing. Ashton had no assets and this debt was written off in 2023. She says that Mr Sparks knew about this, and agreed to it and that he wanted to transfer some of his shares to his wife for tax reasons. He accepts that he did discuss the latter transaction with Mrs Thomas, but denies knowing about the share transfer of Mr Thomas. In my judgment, it is likely that this was discussed between them on the context of share transfers of both Mr Thomas and Mr Sparks for tax reasons. In any event, I am satisfied that this debt was not realisable in November 2023.[95]The experts also agree that the net debt adjustment at £198,000. They also agree the valuation of GCL at this time of £300,000 and of CWL at nil.[96]The next disagreement is whether there should be a minority discount. It is now common ground that whether equitable considerations applied to the relationship of the shareholder does not affect, or substantially affect, the issue of discount. Mr and Mrs Sparks on the one hand and Ashton on the other are equal shareholders. In my judgment the reasoning of Fancourt J in Edwardian applies to the facts of this case. By purchasing the shares of Mr and Mrs Sparks, Ashton will have 100% of the shares. In determining what is a fair price, it is not appropriate to apply a minority discount in this case. That will enable Mr Sparks to repay his directors loan account.[97]There is disagreement about the net asset basis of valuation of the current value of Ngage and about discounted cash flow. It is not necessary for me to deal with these issues. In my judgment it is the value at the date of exclusion at the beginning of November 2023 which is the fair and appropriate date of valuation in this case. The starting point referred to above would, in my judgment, produce an unfair result. It would take into account the decline which has occurred since, which I have found is primarily due to the exclusion of Mr Sparks, the consequent breakdown in the relationship between him and Mr and Mrs Thomas, and the setting up of Graft Rail.[98]The experts agreed that some matters referred to by them, were matters for the court. I hope I have dealt with those matters in this judgment. I invite the parties to agree the price for the purchase of the shares, with the help of their respective experts if necessary, taking my findings into account.[99]The possibility that Mr Sparks may be pursued under this personal guarantee was not something which was canvassed in detail before me. If that remains a realistic possibly, then in my judgment as part of the relief which it is fair and proportionate to grant should be an order that he should be indemnified in this respect.[100]The parties should file a draft order, agreed as far as possible, within 14 days of hand down of this judgment, together with written submissions on any matters which cannot be agreed. I will then determine such matters on the basis of written submissions, unless it appears that a further short hearing is necessary.[101]I am grateful to counsel and the solicitors on both sides for their assistance in this case.