Context: Warwick, a minority shareholder, intended to sell his shares. Leeder agreed but disputes arose, leading Warwick to refuse the sale.
Initial Decision: The Superior Court dismissed Leeder's application to compel the sale, ruling that Leeder had repudiated the share-purchase agreement.
Key Issues on Appeal
Nature of the Share-Purchase Transaction:
Whether it was a standalone contract capable of being repudiated.
Repudiation:
Whether Leeder’s actions amounted to repudiation of the agreement.
Court’s Analysis
Standalone Contract:
The Court of Appeal found that the share-purchase transaction under the Unanimous Shareholders’ Agreement (USA) was indeed a standalone contract. This reversed the lower court's ruling which had characterized it as part of the broader USA.
Repudiation by Leeder:
Valuation Non-Compliance: Leeder’s failure to adhere to the valuation procedures stipulated in Article 12 of the USA (e.g., use of GAAP, including TDI settlement in financial statements).
Independence of Valuator: Leeder unilaterally appointed Cushman & Wakefield without consulting Warwick, violating the requirement for a mutually agreed independent valuator.
Decision
The Court of Appeal dismissed Leeder's appeal, upholding that:
The share-purchase agreement was a standalone contract.
Leeder’s breaches were serious and amounted to repudiation.
Warwick was entitled to retain his shares.
Conclusion
The Court confirmed that Leeder's breaches undermined the very foundation of the share-purchase agreement, thereby justifying Warwick's refusal to proceed with the sale.
The parties were given the opportunity to submit further arguments on costs. The document does not specify a total monetary award.
