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A 17-year dispute: Roadchef workers win legal battle against DAC Beachcroft client over employee shares

Hundreds of workers at motorway service operator Roadchef are set to share a windfall after a 17-year long legal battle against the company’s former chief executive regarding an employee share option scheme.

More than 600 people working for Roadchef, which has 21 service stations in England, Wales and Scotland, were due to benefit after former managing director Patrick Gee, who led the 1983 buyout of the firm, decided to allocate them around 20% of the company’s shares in the mid-80s. Gee died, however, before the scheme was completed and his successor, Timothy Ingram Hill was accused of cheating staff out of millions of pounds by disregarding Gee’s wishes. When Roadchef was bought out in 1998 by Delek, an Israeli multinational, the shares made Ingram Hill almost £27m.

Bankrolled by Harbour Litigation Funding, the claim involved the 1998 transfer of shares in Roadchef between two trusts, EBT1 and EBT2. EBT1 operated an employee share ownership plan for the benefit of employees while EBT2 was used to provide share incentives to senior management. The dispute brought to court concerned the circumstances in which the senior management trustees granted options over the shares to Ingram Hill personally, who served in several high powered positions at the company over a period of time including as managing director, chairman and chief executive.

Hardwicke Chambers trio Nigel Jones QC, PJ Kirby QC and Emily Betts were instructed by Capital Law for the claimant, while Fountain Court Chambers duo Michael Brindle QC and Giles Wheeler were instructed by DAC Beachcroft for the defendants.

The claimant argued that transfer of shares from EBT1 to EBT2 was void and that the transfer made was in breach of trust or breach of fiduciary duty owed to the beneficiaries of EBT1. There were further allegations that Ingram Hill dishonestly assisted in the breach, as he received the shares in the knowledge that they had been transferred in breach.

Having considered whether or not the transfer of the shares was entirely valid, void or voidable, in January 2014 Justice Proudman found that, irrespective of any wrongdoing on the part of Ingram Hill, the transfer was void as it was outside the power of the trustees. Proudman held that the claimant could therefore void the transfer of the shares. The High Court also found Ingram Hill liable for breach of fiduciary duty as he did not obtain the informed consent of other directors because he did not tell them he intended to secure the options over the shares.

The success for the claimants at trial ultimately led to a settlement between the parties. In a statement today (2 February), Capital Law said: ‘The terms of the settlement with Timothy Ingram Hill (and others, including his wife, Mrs Ingram Hill) remain confidential. The Roadchef Employee Benefits Trustees Limited will now undertake negotiations with HMRC and other parties to determine precisely how much money will be available for distribution. They will continue to work to administer the trust as swiftly as possible so that the beneficiaries can receive their respective share without further undue delay.’