This morning (Wednesday 22 December), Mr Justice Warren gave judgment in the highly publicised Gadget Shop litigation, in which Bevan Brittan LLP acted for well known entrepreneur, Chris Gorman.

The judge dismissed the petition brought by Freeserve founder Peter Wilkinson and UBS trader Jon Wood against Chris Gorman and Scottish entrepreneur Sir Tom Hunter, a month after the 12 day trial drew to a close.

Wilkinson's claim was that in 2003, Chris Gorman and Sir Tom diverted a business opportunity from the Gadget Shop, in which they were all shareholders, by buying Birthdays (the high street card retailer) themselves for £60 million.  He claimed that their acquisition of Birthdays was unfairly prejudicial to his interests as a shareholder in the Gadget Shop.  Mr Wilkinson was seeking an order that his shares in the Gadget Shop be purchased by Mr Gorman and Sir Tom, valued as though the Gadget Shop had purchased Birthdays in 2003.  He claimed his shares in the combined business  were  worth approximately £100 million.

Commenting on the outcome, commercial litigation partner Tim Boyce who lead the Bevan Brittan team said: "We are delighted to have helped Chris defeat this claim so resoundingly.  He can now put this episode behind him and focus again on what he does best - building and running great businesses.

The judge has found in favour of Chris and Sir Tom on every single important issue of fact and law. On every occasion where there was a conflict of evidence, he has preferred their account to that of Wood and Wilkinson. The crux of Wilkinson's and Wood's case was that in 2003 the shareholders had all agreed, as their written shareholders agreement required, before an acquisition could be made, that the Gadget Shop would buy Birthdays. Chris has always said that this never happened. The judge has agreed with him and has been very critical indeed of Wilkinson's and Wood's evidence on that point

There will be a hearing in January 2006 to determine how much of Chris Gorman's costs Mr Wilkinson and Mr Wood must pay - given the terms of the judgment, we will be applying for indemnity costs.”

The judgment clarifies the duties owed by directors of companies who are also shareholders.

The judge concludes that where the shareholders have the right to determine whether or not their company should make an acquisition, the interests of a director who is also a such a shareholder will not conflict with the interests of the company if he decides that the company should not make the acquisition.