Kranidiotes v Paschali & Anor

When a court is asked to replace a jointly appointed expert, proportionality and case-management considerations must be balanced against the parties’ rights under any binding order or agreement governing the expert’s task. The court should determine the effect and terms of the relevant order, whether the proposed valuation method complies with it, whether the expert misunderstood the instructions, and whether replacement or remission is legally available. An application is not necessarily governed by the restrictive approach applicable to ordinary case-management appeals where the issue concerns contractual or other substantive rights created by the order.

The petitioner, a minority shareholder in Ecocolor Limited, brought proceedings under section 459 of the Companies Act 1985. The parties agreed that the first respondent would purchase the petitioner’s shares at the appropriate market value. A jointly appointed expert proposed valuing the shares without investigating allegations that company assets had been transferred to an associated group.

The High Court terminated the expert’s appointment and ordered that a substitute expert be appointed. The first respondent sought permission to appeal, arguing that the original expert’s proposed approach complied with the order and that the judge had impermissibly revisited earlier directions. The central issue was whether the judge had properly addressed the legal effect of the orders and the expert’s instructions.

1. Permission granted. The application raised an arguable issue concerning the parties’ rights under the consent order of 30 March 2000, rather than merely an issue of case management.
2. The expression “appropriate market value” was capable of requiring the valuation to reflect the correct number of shares and did not mean a fair value fixed independently by the court. The consent order appeared, at least arguably, to have substantially the effect of a contract.
3. Although the judge was entitled to consider proportionality, the overriding objective and the cost of expert investigation, he arguably failed to determine the prior legal questions. Those questions included whether the parties had made a binding agreement, what its terms were, whether the expert’s proposed method complied with them, and whether the expert had misunderstood his instructions.
4. It was also arguable that the judge had not adequately considered whether replacement of the expert was authorised, or whether the matter should instead be remitted for further directions. The court therefore granted permission to appeal, with costs in the appeal.

• Court of Appeal (Civil Division): Permission to appeal granted against the order of His Honour Judge Weeks QC dated 24 August 2000.
• High Court, Chancery Division, Bristol District Registry: The jointly agreed expert valuer was removed and a substitute expert was ordered to be appointed.