Term To Require Cooperation Implied Into Articles

Cream Holdings Limited v Davenport [2011] EWCA Civ 1287

Davenport's departure from Cream triggered pre-emption provisions under which he had to offer his shares for sale to Cream's other shareholders. Under the articles, the fair value of the shares was to be determined by agreement or if not agreed by a third party accountant. Davenport refused to sign the accountant's letter of engagement, principally because of alleged absence of full financial disclosure by Cream. The High Court Judge rejected Davenport's argument that he was entitled to full financial disclosure as a condition precedent to the appointment of the accountant. He held that a term should be implied into the articles and that the transferor of shares would cooperate with the appointment of an accountant and not unreasonably refuse to agree the terms of engagement. Davenport appealed.