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Employment Law Speed Read – 14/05/18

This week we look at a case which reiterates the importance of having a well drafted shareholders' agreement.

Signia Wealth Ltd v Vector Trustees Ltd & Ors

In Signia Wealth Ltd v Vector Trustees Ltd & Ors, the High Court found that the Claimant had been constructively unfairly dismissed when she was offered onerous terms to stay on in the business, before her disciplinary hearing had been held.


Ms Dauriac was a former financial adviser to the billionaire Phones 4u founder, Mr Caudwell. Mr Caudwell and Ms Dauriac developed a strong professional relationship and a personal friendship, which included sharing family holidays, regular dinners and invitations to other social engagements. Ms Dauriac convinced Mr Caudwell to invest in a new wealth management company with her, in which she would also work.

By 2014, a whistleblower reported concerns into several matters involving Ms Dauriac (including her expenses, conflict of interests in investments and management style), and an investigation eventually began into her expenses in late 2014.

At Ms Dauriac’s behest there were attempts to change previously submitted expense sheets which were discovered. Ultimately, Ms Dauriac was alleged to have been dishonest in relation to claiming nearly £30,000 expenses.

Mr Caudwell approved an offer to be made to her including (but not limited to) requirements that she:

  • Admit that expenditure of a personal and inappropriate nature had been incurred by her at company expense.
  • Repay those expenses in full.
  • Admit that the exercise undertaken to modify the expense claims was undertaken at her behest.
  • Agree to seek help for what appeared to be her psychological problems.
  • Agree to underwrite the profit shortfall which would be incurred by the business in 2014 – for which she should take out a loan.
  • Relinquish responsibility for the day-to-day management of the business and focus purely on growing the client base and retaining existing clients.

After consideration, Ms Dauriac did not accept the offer. She was suspended and invited to a disciplinary hearing to consider the expense allegations. By agreement, it was decided that the external world would be told that she had resigned. Then, in advance of the disciplinary hearing, she claimed constructive unfair dismissal. She relied upon an alleged:

  • Failure to commence the investigation promptly.
  • Failure of due process and a rush to conclude the investigation.
  • Pre-disposition against Ms Dauriac, in the sense of running the inquiry to a pre-determined conclusion.
  • Offer with onerous terms to Ms Dauriac as the price of staying at Signia.

She was treated as a ‘bad leaver’ under the shareholders’ agreement and her 49% stake in the business was bought for a nominal £2. Ms Dauriac asserted that, under the agreement, if she had been constructively unfairly dismissed, then she should be a good leaver and paid the market value for her shares. She subsequently brought court proceedings, claiming 20 million pounds.

High Court

The Court held that Ms Dauriac was a “remarkably unsatisfactory” witness for a number of reasons including that: she gave long and generally not very responsive answers to questions; she tended to be argumentative, combative and aggressive in her answers; she was prone to exaggeration; her memory of events did not appear to be especially good; and on a number of occasions the evidence she gave appeared to be more based upon what Ms Dauriac thought would improve her case than on genuine recollection.

The Court rejected the allegations about the investigation and/or disciplinary process as breach of the implied term of trust and confidence.

However, it accepted that the offer of onerous terms to Ms Dauriac, in order to stay at the business, in advance of any disciplinary finding, was a clear breach of the implied term of trust and confidence. In relation to the alleged wrongful expenses, the Court found that “Ms Dauriac deliberately made expense claims that she knew were not proper claims” and that the company had the right to terminate her employment, even though it had not exercised that right before she resigned. Therefore she was correctly classed as a bad leaver.

With regards to share price, the Court found that under the wording of the shareholders agreement there had been no exit as defined (linked to sale rather than an individual leaving) and so she should have received the lower of Fair Value and Issue Price. After assessment these values were £40,000 in respect of Class B Shares and £471,510 in respect of the Class C shares.

Therefore the Court awarded Ms Dauriac £511,510, less the nominal price that she was paid in relation to her shares.


This case reiterates the importance of having a well drafted shareholders’ agreement.  Further, it shows that employers should be careful about making any offers when a disciplinary process may be warranted.

Offers can be made, but employers need to ensure that they do so as part of a carefully planned process to prevent any suggestions of prejudgment.

If you have any questions on the above and how it will affect you, please do not hesitate to get in touch with a member of our employment team.

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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