Cas (Nominees) Ltd & Anor v Nottingham Forest Plc & Ors

Under section 459 of the Companies Act 1985, prejudice is a broad concept. Financial loss is one form of prejudice but is not a necessary requirement. Whether relevant prejudice exists depends on the evidence, the facts, the complaints made and the remedy sought.

On an application for permission to appeal, a fact-sensitive conclusion reached after careful consideration of expert evidence will ordinarily have no real prospect of being reversed. Procedural fairness, complexity and public interest may nevertheless justify standing over the permission application so that the issues can be considered together by a properly constituted appellate court.

Minority shareholders in Nottingham Forest Plc petitioned under section 459 of the Companies Act 1985, challenging a transaction involving the company and seeking relief. Mr Justice Hart dismissed the petition, finding no unfair prejudice. He also held that no measurable financial loss had been established and indicated that, if required, the compulsory purchase price would be no higher than 13.25 pence per share.

The claimants renewed their application for permission to appeal. The single Lord Justice considered that the proposed appeal had no real prospect of success on the prejudice issue, but directed an oral hearing before the Court of Appeal. The central issue was whether permission should be granted or the application stood over so that unfairness and prejudice could be considered together.

1. Application stood over. Permission to appeal was not granted at this hearing. The application was stood over with a direction that, if permission were later granted, the appeal should immediately follow.
2. The court accepted that, under section 459 of the Companies Act 1985, financial loss is only one form of prejudice. The section does not require loss or damage measurable in monetary terms. Relevant prejudice depends on the evidence, the facts, the nature of the complaints and the remedy sought.
3. Nevertheless, the case had been presented at trial on a financial basis. The judge had carefully considered expert evidence and concluded that the loss of the ability to block a special resolution had caused no measurable financial loss. An appeal against that fact-sensitive conclusion had no real prospect of success.
4. The court considered it procedurally unfair to determine the permission application on prejudice alone. The alleged unfairness and the alleged prejudice were connected, the case was complex and substantial, and the court had not received the respondents’ normal skeleton arguments. The court should have the opportunity to consider the issues in the round.
5. Part 52.3(6) of the Civil Procedure Rules permits account to be taken of another compelling reason, including procedural fairness, complexity and public interest, where appropriate. Although the court did not grant permission under that provision, those considerations supported standing over the application. The eventual hearing was directed to be before three judges, including two Chancery Lords Justices, with full skeleton arguments.

• Court of Appeal (Civil Division): Application for permission to appeal from Mr Justice Hart’s order was stood over. Permission was not granted at the hearing; directions were given for a future hearing, with any appeal to follow immediately if permission were granted.
• High Court (Companies Court): Mr Justice Hart dismissed the section 459 petition on 5 April, finding no unfair prejudice and, alternatively, no measurable financial loss.