Attwood v Maidment & Ors

The court determined remedies on two unfair prejudice petitions brought under section 994 (Part 30) of the Companies Act 2006. The Judge ordered a buy-out of the petitioner Mr Attwood’s 50% shareholding in Annacott Holdings Ltd, to be valued as at 1 October 2005, with no discount for lack of control. The court held it had jurisdiction under section 996 of the Companies Act 2006 and CPR to make an interim payment and ordered an interim payment of £500,000. The court reserved the precise rate of interest on the buy-out sum for determination after further evidence. The court directed separate expert valuers on property for each party and a single joint expert on share valuation; and ordered that Mr Maidment pay the costs of both petitions on the standard basis, with no order for costs against Miss Sarah Maidment.

Background and nature of the proceedings: These are two petitions for unfair prejudice under s.994 (Part 30) of the Companies Act 2006 concerning Annacott Holdings Limited and Tobian Properties Limited. Following a 12-day trial (reported at [2011] EWHC 2186 (Ch)), the court had previously found unfairly prejudicial conduct and ordered judgment for Mr Attwood on the Annacott petition and dismissed Mr Maidment’s petition in relation to Tobian. The present hearing determined relief, interim payment and costs, and gave directions for further expert evidence.

Relief sought: A buy-out of Mr Attwood’s 50% shareholding in Annacott; an interim payment towards the anticipated buy-out sum; directions as to expert valuation evidence; and orders as to costs.

Issues framed by the court:

• On what basis and date should Annacott be valued for a buy-out order?
• Whether a discount should apply to reflect Mr Attwood’s lack of control as a non-director shareholder.
• Whether the court has jurisdiction under s.996 and the Civil Procedure Rules to order an interim payment prior to a final buy-out order and, if so, whether it should exercise that discretion and in what amount.
• Directions for expert evidence (single joint expert or separate experts for property and shares).
• Allocation and basis of costs, including the position of Miss Sarah Maidment.

Court’s reasoning and conclusions: The Judge concluded that the fairest way to redress the unfair prejudice was to value the company as at 1 October 2005 (the date immediately before Mr Maidment began transferring properties to himself) rather than to ignore the transfers or to value at the date of hearing, and to make no discount to Mr Attwood’s 50% holding despite his lack of control. The court accepted that interest should run from the valuation date but reserved the precise rate for determination after further evidence because the appropriate rate could not be sensibly fixed without further submissions and expert material. The Judge held that section 996 of the Companies Act 2006 and CPR provisions (including CPR 25.7/23.7 and CPR 25.9) gave the court jurisdiction to order an interim payment; in the exercise of discretion an interim payment of £500,000 was ordered to address Mr Attwood’s immediate needs. On expert evidence the court directed separate property valuers for each party (given the difficulty of historic valuation across many London properties) and a single joint expert for share valuation. On costs, having weighed the parties’ conduct and findings on credibility, the court ordered Mr Maidment to pay the costs of both petitions on the standard basis, but made no order for costs against Miss Sarah Maidment.

This first-instance court allowed Mr Attwood’s unfair prejudice petition in relation to Annacott and ordered a buy-out of his 50% shareholding to be valued as at 1 October 2005 with no discount for lack of control; interest is to be awarded from that date but the rate is reserved for determination after further expert evidence. The court held it had jurisdiction under s.996 of the Companies Act 2006 and the Civil Procedure Rules to award an interim payment and exercised that discretion to order payment of £500,000. The court directed separate property valuation experts for each party and a single joint expert for share valuation. Costs of both petitions were awarded to Mr Attwood (and, where appropriate, Miss Heard) to be paid by Mr Maidment on the standard basis; no costs were ordered against Miss Sarah Maidment.