Decades
long differences between two branches of the Gough Family are back in the
courts with legal skirmishing over the ongoing appointment of Ben Gough as
managing director of Gough Holdings.
Married twice, the founder of the Gough Gough
& Hamer business empire left two families in an uneasy alliance as
co-owners of Gough Holdings Ltd with the O.T. Gough branch (representing
descendants of his first marriage) and the B.T. Gough branch (representing the
second). Gough Holdings deals in heavy
industrial machinery and holds some very valuable distributorships including
Caterpillar and Hyster brands.
Trustees of the O.T. Gough branch asked the
courts to rule on the effect of the Gough Holdings company constitution as it
applied to appointing and removing the company’s directors. This was aimed squarely at Mr Ben Gough,
managing director of Gough Holdings and a member of the B.T. Gough branch.
Evidence was given that the two families
dispute whether a co-governing trust structure set up in the late 1980s is
still operative. This dispute goes
before the High Court later in 2015. In
a preliminary move, trustees of the O.T. Gough branch asked for a declaratory
ruling on the effect of a default constitution which will come into effect if
the later court hearing decides the co-ownership trust has come to an end.
There has been bad blood between the two family
branches for decades. The court was told
that back in the 1980s family infighting was so bad that Caterpillar threatened
to pull its business from Gough unless Gough family members were barred from
acting as employee, director or trustee of either of the two co-owning family
trusts. In response, the co-governing
trust which is now in dispute was set up.
The narrow legal question before the Court of
Appeal was the application of a rule in the Gough Holdings constitution which
states “no person shall be appointed director” who is a Gough family member
unless all shareholders agree. Any one
shareholder has a right of veto. The
Court was asked does “appoint” mean only the initial appointment of a director
or does it extend to the term of appointment.
Could a shareholder veto both a proposed appointment and an existing
appointment? The Court of Appeal ruled
the right of veto applies only to the act of appointing a director. It cannot be used to remove an existing
director should the default constitution become operative.
Satterthwaite
v. Gough Holdings – Court of Appeal (29.04 15)
15.039