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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Tinkler v Ferguson & Ors  EWCA Civ 819 (15 May 2019)
Cite as:  EWCA Civ 819
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ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
MEDIA & COMMUNICATIONS LIST
THE HONOURABLE MR JUSTICE NICKLIN
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LADY JUSTICE SHARP
THE RIGHT HONOURABLE LORD JUSTICE BEAN
| WILLIAM ANDREW TINKLER
|- and -
|1) IAIN GEORGE THOMAS FERGUSON
2) WARWICK BRADY
3) JOHN DAVID FRANCIS COOMBS
4) RICHARD JOHN LAYCOCK
5) ANDREW RICHARD WOOD
Andrew Caldecott QC (instructed by Herbert Smith Freehills) for the Respondents
Hearing dates: 3rd April 2019
Crown Copyright ©
Lord Justice Longmore:
"STOBART GROUP LIMITED.
("Stobart Group" or "the Company")
Update on Annual General Meeting and possible Board changes
 On 25th May 2018 the Company announced that the Board has been advised by Andrew Tinkler, Executive Director, that he will be voting at the AGM against the re-election of Iain Ferguson, as a Director and Chairman of the Company.
 The Company also announced that the Ongoing Board* confirmed that it had full confidence in Mr Ferguson, both as a Director and as Chairman, and would therefore be recommending to shareholders that they vote in favour of Mr Ferguson's re-election.
 The Ongoing Board would like to provide shareholders with some context for this regrettable situation. It is committed to the highest standards of corporate governance and believes that challenge, scrutiny and robust debate in boardrooms are part of the effective oversight of management and the decision-making process.
 Under this commitment the Board has been forced to address a number of challenges posed by Mr Tinkler in the recent past. The Board has, throughout these challenges, sought to balance the benefits of harnessing Mr Tinkler's entrepreneurial talent whilst maintaining strong corporate governance on behalf of, and in order to create significant shareholder returns for, all investors.
 The Ongoing Board had considered it in the best interests of the Company and its shareholders as a whole, at least until Mr Tinkler's move against Mr Ferguson, to seek to resolve these challenges through negotiation and discussion. However, the Ongoing Board no longer considers, in light of Mr Tinkler's position, such a course of action to be possible. It deeply regrets that Mr Tinkler has destabilised the Group through his actions at this crucial time for the business and urges all shareholders to support the re-election of Mr Ferguson at the forthcoming AGM.
 Further, the Ongoing Board believes that a vote against the re-election of Mr Ferguson would weaken the Company's corporate governance and would not be in the best interests of shareholders:-
 It would dilute the robustness and the diversity of opinion on the Board, which contains strong, varied expertise drawn from experience working with leading public and private companies;
 It would impact the Group's planned growth strategy and its ability to optimise shareholder returns;
 It would create instability. The Board had worked together effectively to provide a strong basis for growth, which is reflected in the Group's successful performance. During Mr Ferguson's chairmanship both Andrew Tinkler and Warwick Brady have benefited from a stable platform that has allowed the Company to deliver a total shareholder return of 185% in the three years to 28th February 2018 and provide £74.1m to shareholders through dividends and buybacks in the financial year ended 28th February 2018.
 Background to current composition of the Board.
 Between 2007 and 2013 Stobart Group received criticism for its corporate governance, principally in relation to engaging in perceived related party transactions. The Company also experienced a number of boardroom changes, in particular in relation to the role of Chairperson. Between 2007 and 2013 Stobart Group shares reached a peak price of 183p per share.
 As a result the Company put in place a structure for improved governance and oversight:-
 Mr Ferguson was appointed as Chairman and Andrew Wood as Non-Executive Director in 2013 and additional Non-Executive Directors, John Coombs and John Garbutt, were appointed in 2014;
 Mr Ferguson confirmed his remit with key shareholders before appointment which was to:-
 regularise governance, particularly regarding related party transactions;
 fix the balance sheet;
 clarify the future strategy;
 plan management succession.
 In mid-2016 Mr Tinkler:-
 advised Mr Ferguson he wanted to organise a successor CEO;
 requested Mr Ferguson to support as positive introduction into the business for Warwick Brady.
 In June 2017, and following six months as Deputy CEO, Mr Brady was appointed CEO, with the unanimous support of the Board.
 On Mr Brady's appointment, Mr Ferguson committed to Mr Brady and the Board to continue as Chairman until 2020 to ensure stability and a positive transition.
 He also supported Mr Tinkler's wish to remain as an Executive Director and to establish Stobart Capital as an independently owned business outside the Stobart Group, whilst harnessing Mr Tinkler's entrepreneurial skills for the benefit of the Group.
 Management's achievements
 The Company has achieved much since the stabilisation of its governance arrangements:-
 the structured sale of Eddie Stobart has resulted in cash proceeds to the Group so far of in excess of £300m over two partial disposals in 2014 and 2017, and gearing reducing significantly to stand at some 9% at 28 February 2018;
 £112.5m of dividends have been paid to shareholders since 1st March 2015;
 £74.1m has been returned to shareholders in the financial year ended 28 February 2018, including dividends of £58.1m and net share buybacks of £16.0m;
 the total shareholder return over the three years to 28 February 2018 is 185% including capital growth, dividends and share buybacks of £16.0m;
 Under Mr Brady, there is a clear strategy for growth:-
 core focus on execution of the Energy Division business plan and the development of the Aviation Division, particularly London Southend Airport;
 both core operating divisions have ambitious growth plans beyond delivery of previous targets;
 the Board's ambition is to double the value of the business by 2022;
 divestment of non-core assets and investments over the next 18 months to support the dividend until they are replaced by cashflows from operating divisions.
 Professional management teams are in place at key operating divisions to drive the business forward.
 Mr Tinkler
 The Board has been forced to address a number of challenges posed by Mr Tinkler in the recent past, including:
 settlement of contractual issues arising from a previous related party transaction when Mr Tinkler was CEO;
 a proposed selective buyback of part of his stake in the Company;
 a proposed additional ex-gratia bonus for him of shares then worth some £8m;
 a proposed buy-out of the Company when the share price was in the range of 100p to 120p;
 a proposed related party transaction associated with the recent aborted airline transaction.
 Mr Tinkler's threat to vote against the Chairman presents a number of serious risks:-
 significant Board resignations, both Executive and Non Executive (Mr Wood and Mr Coombs have now already confirmed that they will resign from the Board if Mr Ferguson is not re-elected);
 sponsor and independent broker resignation;
 operational management destabilisation and distraction;
 potentially weakened corporate governance;
 potential adverse market response and risk to shareholder value.
 Mr Tinkler is no longer key to delivery of the current management's operational strategy. His focus, during the 50% of his time which is committed to the Stobart Group, is on the non-operating divisions. The balance of his time is spent on his separate vehicle Stobart Capital, although:-
 he is now in dispute with the co-founder of that business;
 in its first year Stobart Capital has so far not generated any significant transactions for Stobart Group.
 Ongoing Board support for Mr Ferguson
 As announced on 25 May 2018, all of the Ongoing Board confirm that they have full confidence in Mr Ferguson, both as a Director and as Chairman, and will therefore be recommending to shareholders that they vote in favour of Mr Ferguson's re-election.
 Warwick Brady, CEO said: "Stobart Group now has a clear and focused strategy to drive growth in our core operating divisions in order to double the value of the business by 2022. The strategy was co-created between Andrew Tinkler and myself. I have been very clear that Stobart Group needs a stable board and management team to support the execution of this plan, underpinned by strong and effective corporate governance.
 On my appointment as CEO, as part of working with Andrew Tinkler, we all agreed that Iain Ferguson would remain in his role through to 2020, and our strategy for the growth of the business was unanimously validated by the Board. It's in the interest of the shareholders' (sic) that we continue to have stable leadership across the business and the ability to deliver our ambitions, as was the case when Andrew Tinkler was CEO."
 * The Ongoing Board comprises all of the Directors other than Mr Tinkler who are offering themselves for election or re-election at the AGM. As announced in the 2018 Preliminary Statement of Results, John Garbutt, the other Non-Executive Director, had decided to step down at the AGM."
a. Mr Tinkler had acted in breach of his duties as a director of [Stobart] by deliberately destabilising the Board at a crucial time for the business and/or
b. Mr Tinkler had done so for selfish and self-interested reasons, to protect his own position, following his history of improper conduct and poor corporate governance which included forcing the Board to deal with unwarranted challenges including:-
i. the settlement of financial issues arising from a previous related party transaction when he was CEO; and/or
ii. a proposed selective buy back of part of his stake in Stobart; and/or
iii. a proposed additional ex-gratia bonus for him of shares then worth some £8 million; and/or
iv. a proposed buy-out of Stobart when the share price was in the range of 100p to 120p; and/or
v. a proposed related party transaction associated with a recent aborted airline transaction; and/or
vi. his failure to successfully manage Stobart Capital;
c. in the premises Mr Tinkler has repeatedly shown himself to be so lacking in integrity that he is unfit to hold the office of company director.
a. the meaning of the words complained of for the libel claim;
b. whether the meanings advanced by the Claimant are "reasonably available meanings" for the purposes of the malicious falsehood claim; and
c. whether the meanings the court finds the words to bear for the libel claim are:-
i. fact or opinion; and/or
ii. seriously defamatory of the Claimant (for the purposes of s.1 Defamation Act 2013).
"Disagreement, even vigorously so, with the management decisions of a company does not suggest, without more, a lack of integrity or unfitness. One can be a very difficult, even disruptive, element in a boardroom and still act with integrity. This is a forced meaning and not part of the natural and ordinary meaning. The Announcement is not capable, in my judgment, of conveying a suggestion that that the Claimant lacked integrity or was unfit to be a director."
"a. The Claimant had presented a series of challenges to the Board of Stobart which included those set out in  to , the most recent of which was his opposition to the re-election of Iain Ferguson as Chairman of Stobart.
b. A vote to remove the current Chairman would weaken Stobart's corporate governance, create instability, present a number of serious risks to Stobart, identified in  to , and would not be in the best interests of the shareholders.
c. The Claimant's behaviour was disruptive; and, in relation to the challenges identified in (a) unreasonable and his opposition to the re-election of the Chairman was regrettable and risked destabilising Stobart."
"40. Meaning (a) is factual and not defamatory of the Claimant in a natural and ordinary meaning. None of the matters identified in  to  of the Announcement suggests misconduct on behalf of the Claimant. It is not defamatory to say of someone that he has presented a series of challenges to the board of a company.
41. Meaning (b) is an expression of opinion. It only indirectly refers to the Claimant and, in my judgment, not in a way that is capable of being defamatory of him at common law. To express the opinion that a suggested course is in the best interests of shareholders does not carry with it that those who are not prepared to support it are therefore acting not in the best interests of the shareholders. That is a non-sequitur.
42. Meaning (c) is also an expression of opinion. Readers of the Announcement will readily recognise and appreciate that this was the view of the "Ongoing Board". The fact that it was contained in an RNS does not prevent it from being seen as an expression of opinion. Indeed, whilst an RNS would be expected to contain facts (and the Announcement does so), that does not exclude the possibility that it will also contain expressions of opinion.
44. Applying the Thornton common law test … I consider that meaning (c) is defamatory. It is an imputation that has at least a tendency substantially to affect, in an adverse manner, the attitude of other people towards him.
45. However, I do not consider that the allegation is of such serious[ness] as to raise the inference of serious harm [to] reputation (or the likelihood thereof) under s.1 of the Defamation Act 2013."
1) failed to take due account of the proper context of the announcement;
2) wrongly concluded that parts of Mr Tinkler's pleaded meanings were inferred opinion;
3) wrongly concluded that Mr Tinkler's integrity and fitness to be a director were not being questioned;
4) wrongly concluded that none of the matters in - of the Announcement suggested misconduct on his part;
5) wrongly concluded that meanings (b) and (c) were expressions of opinion;
6) wrongly concluded that meaning (b) only referred indirectly to Mr Tinkler and was not capable of being defamatory;
7) wrongly concluded that meaning (c) was not serious enough to raise an inference of serious harm pursuant to section 1 of the 2013 Act; and
8) wrongly found that Mr Tinkler's pleaded meanings were not reasonably available meanings of the words complained of.
"… the trial judge's conclusion should not be lightly set aside but if an appellate court considers that the meaning that he has given to the statement was outside the range of reasonably available alternatives, it should not be deterred from so saying by the use of epithets such as "plainly" or "quite" satisfied … if the appellate court would just prefer a different meaning within a reasonably available range, then it should not interfere."
"(1) The governing principle is reasonableness. (2) The hypothetical reasonable reader is not naïve, but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking, but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non-defamatory meanings are available. (3) Over-elaborate analysis is best avoided. (4) The intention of the publisher is irrelevant. (5) The article must be read as a whole, and any 'bane and antidote' taken together. (6) The hypothetical reader is taken to be representative of those who would read the publication in question. (7) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which, 'can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation …' (see Eady J in Gillick v Brook Advisory Centres approved by this court  EWCA Civ 1263 at para 7 and Gatley on Libel and Slander (10th ed), para 30.6). (8) It follows that 'it is not enough to say that by some person or another the words might be understood in a defamatory sense'. Neville v Fine Arts Co  AC 68 per Lord Halsbury LC at 73."
Imputation of impropriety
"a. The claimant destabilised the Board at a crucial time for the business; and/or
b. The claimant required the Board to deal with challenges, including
i. the settlement of financial issues arising from a previous related party transaction when the claimant was CEO;
ii. a proposed selective buy-back of part of the claimant's stake in [Stobart];
iii. a proposed additional ex-gratia bonus for the claimant of shares then worth some £8 million;
iv. a proposed buy-out of Stobart when the share price was in the range of 100p to 120p; and/or
v. a proposed related party transaction associated with a recent aborted airline transaction."
Lady Justice Sharp:
Lord Justice Bean: