Attwood v Maidment & Ors

Relief for unfair prejudice under Part 30 of the Companies Act 2006 must be tailored to the facts and must fairly remedy the prejudice. Where company assets have been transferred by one shareholder, a buy-out may be valued immediately before the transfers, with interest added to reflect the delay. A pro rata shareholding should not automatically be discounted for lack of control where the fair counterfactual is a liquidation distributing assets rateably. The court has jurisdiction under section 996 and CPR 25.7(1)(c) to order an interim payment towards the consideration payable under a share buy-out order. Such relief remains discretionary and may be ordered where a substantial sum will ultimately be payable.

The judgment concerned the further hearing of two unfair-prejudice petitions. At the trial, judgment had been given for Allan Attwood on his petition concerning Annacott Holdings Limited, while Geoffrey Maidment’s petition concerning Tobian Properties Limited had been dismissed: [2011] EWHC 2186 (Ch). The court now determined the appropriate relief, an application by Mr Attwood for an interim payment, directions for valuation evidence, and costs.

The central issues were the valuation date and basis for the buy-out of Mr Attwood’s 50 per cent shareholding, whether the court could order an interim payment before the final price was determined, the appropriate expert evidence, and the incidence and basis of costs.

1. Relief and valuation. The appropriate remedy was an order requiring Mr Maidment to buy Mr Attwood’s 50 per cent shareholding in Annacott. The company was to be valued as at 1 October 2005, immediately before the transfers of its properties began. This avoided both under-compensating Mr Attwood and over-penalising Mr Maidment by treating the properties as if they had remained in Annacott.

2. Interest should be added to the value of Mr Attwood’s shares from the valuation date. The rate was reserved for determination after further evidence. The court rejected a discount for lack of control. The fair counterfactual was that Annacott should have been liquidated, producing a rateable distribution of its net assets. A discount would therefore fail to give effect to the compensatory purpose of the order. The court applied the principle stated by Lord Blackburn in Livingstone v Rawyards Coal Company (1880) 5 Appeal Cases 25 at 39.

3. Interim payment. Section 996 of the Companies Act 2006 conferred jurisdiction to order an interim payment as part of relief where the court had decided that one member should purchase another’s shares. CPR 25.7(1)(c) was also satisfied because the eventual buy-out would require payment of a substantial sum of money. The court adopted the reasoning of the Inner House in Ferguson v Maclennan Salmon Company Limited [1990] BCC 707, and was reinforced by the approach in Re Clearsprings (Management) Limited [2003] EWHC 2516. CPR 25.9 did not prevent the judge from exercising that jurisdiction.

4. An interim payment of £500,000 was ordered. The sum was significantly below the minimum likely to be due, and Mr Attwood had an immediate need for funds. Arrangements were to be made to protect the shares from third-party claims pending completion of the buy-out.

5. Separate property valuation experts were directed because of the significance and historic complexity of valuing 46 properties. A single joint expert was appropriate for share valuation. Mr Maidment was ordered to pay the costs of both petitions on the standard basis. There was no order for costs against Sarah Maidment.

This was a further first-instance hearing following the trial judgment in the same proceedings, reported at [2011] EWHC 2186 (Ch). No appellate history is stated.