Big Motoring World founder Peter Waddell has won his High Court unfair prejudice petition against private equity investor Freshstream over his ousting from the used car supermarket group.
However, despite that victory, the judge concluded that Waddell’s conduct justified his dismissal for gross misconduct from his role as chief executive of Big Motoring World in 2024.
In a judgment delivered today, Mr Justice Marcus Smith found that Freshstream and other parties had orchestrated a plan to remove Waddell (pictured, left) permanently from effective control of Big Motoring World without exercising its option to acquire a majority stake.
The court also found that Freshstream director Reza Fardad and Big Motoring World chairman Laurence Vaughan breached their duties as directors in connection with Waddell’s removal.
After Waddell was removed, Vaughan later became chief executive.
Judge finds orchestrated plan
The judgment stated: “I have found the formation and execution of a pre-conceived and orchestrated plan which worked backwards from Freshstream’s aim of achieving permanent control of, and Mr Waddell’s removal from, the business without having to exercise the call option”.
Waddell founded Big Motoring World in the 1980s and remained chief executive after Freshstream acquired a minority shareholding in the business in 2022 as he planned for his retirement. Peter Waddell Holdco retained a majority stake, while Freshstream received an option to acquire control of the business at an agreed price.
In March 2024, Freshstream exercised rights under the companies’ shareholder agreement to remove Waddell from the management and control of Big Motoring World.
It issued two notices based on alleged financial underperformance before launching an investigation into allegations concerning Waddell’s conduct. A material default notice was subsequently issued and disciplinary proceedings resulted in the termination of Waddell’s employment as chief executive.
The High Court has now held that the investigation notice and material default notice were invalid.
Freshstream and the other respondents had denied during the trial that Waddell’s removal was the result of a coordinated plan, arguing that decisions were taken in response to concerns about the company’s performance and his conduct.
But Justice Smith has found otherwise.
Peter Waddell’s misconduct amounted to breach of contract
The judge found Freshstream and parties pursued a deliberate strategy to remove Waddell “come what may”, and doubted whether Laurence Vaughan (pictured, right) genuinely believed the reasons set out in the dismissal letter, and believed he did not properly consider whether summary dismissal was appropriate.
Nevertheless, the judge said those flaws did not support Waddell’s wrongful dismissal claim because, looking objectively at the facts, Waddell’s own misconduct amounted to repudiatory breach of contract.
Various claims of bullying and offensive behaviour were made against Waddell during the trial, some of which the judge accepted, some not. But the judgement found that the pattern of behaviour demonstrated a failure of leadership expected of a CEO.
He noted that some of the behaviour could have been tackled earlier.
The court has not yet determined the remedy for Peter Waddell Holdco, which will be considered during a separate trial.
The judgment therefore does not at this stage determine what compensation, share purchase order or other form of redress could follow.
Justin Michaelson, partner at Quinn Emanuel, acting for Waddell, said: ‘This judgment should serve as a salutary lesson to private equity funds and their investors who believe they can manoeuvre against portfolio companies in this way behind closed doors and expect the courts to overlook it.
“Big Motoring World is Mr Waddell’s creation; the company means everything to him.”
A representative of Big Motoring World commented: “We are glad that the court has determined that Big Motoring World was entitled to remove Mr Waddell as its CEO. We will always act to protect our team members and ensure Big Motoring World has an open and supportive culture.
“Our outstanding management team will now concentrate on continuing to deliver record results and to grow the business for the benefit of all shareholders”.
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