Grounds for invalidating a shareholder agreement

Posted by / 01-Oct-2019 18:25

Grounds for invalidating a shareholder agreement

Since July 2013 employees are required to pay an issue fee and a hearing fee (up to £1,200) before they can enforce their individual rights against an employer.

Nowadays it is not unusual for an employee to have to wait over 12 months before a case is heard by a tribunal and he receives judgement - hardly “cheap” or “quick”!

The insurer commenced proceedings seeking rescission of the settlement agreement (or damages for deceit in the alternative).

It alleged that it had been induced to enter into the agreement by the employee’s fraudulent misrepresentations, in the form of statements as to his condition in his pleadings and witness statements.

It also said that cases where an employee’s choice of accepting a lump sum settlement or drawing Social Security benefits while pursuing an unfair dismissal claim did not amount to economic duress.

The claimant persuaded a tribunal that his employer had withheld payment prior to the settlement negotiations and that the consequent “economic inducement” to accept a sum less than his full entitlement was sufficient to amount to duress and thereby invalidated the settlement agreement.

The EAT said that tribunal proceedings provided an employee with a practical alternative to settling a claim so there was no “absence of practical choice” in this case and he was not entitled to rely on a plea of economic duress.

However, the assertions by the EAT in Sphiks, that the tribunal provided a are no longer sustainable.

The County Court considered that this requirement was satisfied; the insurer undoubtedly took into account in its settlement deliberations the fact that the claimant’s assertions would be put before the court and the risk that they would be believed.

In that sense, they influenced the insurer’s decision to settle on the terms it did.

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They were not suggesting that a party could be induced by a statement if it was not in fact misled.