Nugent & Anor v Benfield Greig Group Plc & Ors

Summary judgment should be granted only where the claim has no real prospect of success. The prospect must be realistic rather than fanciful. In an unfair-prejudice petition, evidence that an external valuer’s independence may have been compromised by earlier advisory work for the company can establish a real prospect of success. The court need not finally determine whether the complaint is properly characterised as a breach of good faith, a failure to appoint an independent valuer, or another wrong at that stage. Where fresh evidence and proposed amendments materially change the case, the appellate court should assess the revised case afresh.

The appellants, executors of a deceased director, presented a petition under section 459 of the Companies Act 1985 concerning the compulsory transfer and valuation of his shares. The petition alleged, among other matters, that the appointed valuer was not independent and that the valuation process caused unfair prejudice. Mrs Justice Arden granted summary judgment for the respondents in the High Court. On appeal, the appellants relied on further disclosure, fresh evidence and a proposed re-re-amendment of the petition. The central issue was whether the revised allegations had a real prospect of establishing unfair prejudice.

Lord Justice Aldous gave the leading judgment. Lord Justices Mummery and Kay agreed.

1. The appeal was allowed. The case was remitted to the Companies Court so that the appellants could apply to re-re-amend their petition.
2. The summary-judgment application was governed by the test stated by Lord Woolf MR in Swain v Hillman [2000] 1 All ER 91: the respondents had to establish that the petition had no real prospect of success, meaning that the prospect was realistic rather than fanciful. Because the fresh evidence and proposed pleading had materially altered the case considered by Arden J, the Court of Appeal had to apply that test afresh.
3. The disclosed documents provided a reasonable argument that the appointed valuer was not independent. The valuer had previously advised the company on a tax valuation and had also advised it on another related matter. It was arguable that this earlier work restricted the valuer’s ability to approach the later valuation independently.
4. At the summary-judgment stage, it was unnecessary to decide whether the alleged failing amounted to a breach of good faith, breach of an obligation to appoint an independent valuer, or another legal wrong. The important point was that the allegations gave the appellants a real prospect of establishing unfair prejudice under section 459 of the Companies Act 1985.
5. The court expressed no conclusion on the remaining allegations. The respondents were ordered to pay the appellants’ costs in the Court of Appeal, with costs below to be costs in the petition.

1. Court of Appeal (Civil Division) allowed the appeal and remitted the matter to the Companies Court for an application to re-re-amend the petition: [2001] EWCA Civ 397.
2. High Court of Justice, Chancery Division (Arden J) granted summary judgment for the respondents and dismissed the petition.