Global Gaming Ventures (Group) Ltd & Anor v Global Gaming Ventures (Holdings) Ltd & Anor

The Court of Appeal allowed an appeal against Arnold J's refusal to order immediate disclosure of documents and information relating to the financing, operation and sale process of a casino business. The court held that where urgent relief would otherwise be rendered academic by an imminent sale, the strength of the applicant's underlying contractual and statutory rights must be weighed more closely when considering interim mandatory disclosure. The court found that clause 5.1 of the shareholders' agreement imposed a positive obligation on the respondent company to provide information to its shareholders about material developments in the group's financial and business affairs, including the proposed sale of the company's only material asset.

The court accepted that questions remained about the extent to which documents relating to group subsidiaries properly formed the books and records of the holding company and that director inspection rights under the Companies Act 2006 s.388 and at common law raised factual issues. However, the judge below had erred in treating the request for disclosure as being disclosable only if it were not likely to cause damage; instead the contractual obligation to disclose under clause 5.1 was not contingent on the applicant's purpose. On the facts the appellants' purpose (to monitor and, if necessary, challenge the receivers' sale process) was not shown to be improper. The appeal was therefore allowed and disclosure ordered of the requested documents.

Background and parties:

• The dispute concerned a casino at Victoria Gate, Leeds. Global Gaming Ventures (Group) Limited ("Group") and Mr Wollenberg were the appellants. Global Gaming Ventures (Holdings) Limited ("Holdings") and Mr Herd were the respondents.
• Developments borrowed under a facilities agreement from Summit Partners (GGV) Sarl and Holdings and the operating subsidiary Leeds guaranteed the loan; a debenture over the shares permitted Summit to appoint receivers on default.
• The shareholders entered a shareholders' agreement containing clause 5.1, obliging Holdings to provide shareholders with information relating to the Group and to keep them informed of material developments.

Procedural posture and relief sought:

• The appellants issued a Part 8 claim and sought urgent interim mandatory relief (inspection and copies) of a defined set of ‘‘Requested Documents’’ to monitor and police the receivers' accelerated sale of the shares in Developments.
• Arnold J dismissed the interim application on the basis that disclosure risked causing irremediable prejudice (potentially derailing the sale and harming the companies and the respondents) and that the balance of convenience favoured refusal.
• The appellants appealed to the Court of Appeal.

Issues framed:

1. Whether there was a serious issue to be tried as to directors' common law and statutory rights of inspection (Companies Act 2006 s.388) and the scope of those rights;
2. Whether documents relating to subsidiaries (Developments and Leeds) fell within the disclosure obligations of Holdings under the shareholders' agreement;
3. Whether the disclosure was sought for an improper purpose (such that disclosure should be refused); and
4. Which test should apply to urgent applications for mandatory disclosure when the subject matter (a sale) would otherwise be concluded before trial—ordinary Cyanamid balance of convenience or a modified approach considering the applicant's likelihood of success (per NWL Ltd v Woods).

Court's reasoning and decision:

• The Court of Appeal accepted that there were arguable rights of inspection under statute and common law but that factual questions about ownership and affiliation of documents could not be finally determined on the interim evidence.
• Given the imminent, time-limited sale process, the court held that the judge should have taken into account the strength of the appellants' case (not merely ruled on which course would cause less irremediable prejudice) in the manner indicated by NWL Ltd v Woods.
• The court interpreted clause 5.1 as imposing a positive, non-discretionary obligation on Holdings to provide material information about significant developments to shareholders (including matters relating to Developments and Leeds where those matters were material to the Group), regardless of the requester's intended use.
• The court concluded that the appellants' stated purpose—to monitor and, if necessary, challenge the receivers' sale process—was not an improper purpose that justified refusing disclosure. The judge below had therefore misapplied the balance of convenience and erred in his exercise of discretion.
• The court allowed the appeal and ordered disclosure of the Requested Documents. It declined to order immediate disclosure of additional documents requested subsequently without a further hearing.

Appeal allowed. The Court of Appeal held that Arnold J erred by applying the ordinary Cyanamid balance of convenience without sufficiently weighing the appellants' likelihood of success given the imminent sale; clause 5.1 of the shareholders' agreement created a positive obligation on Holdings to provide material information to shareholders which was not contingent on the applicant's purpose; factual issues about the precise scope of company books and records remained unresolved but the appellants' purpose was not shown to be improper; accordingly the judge's exercise of discretion was wrong and disclosure of the requested documents was ordered.

Appeal from Arnold J in the Chancery Division of the High Court: Arnold J dismissed the interim application by order dated 20 September 2017 (reported at [2017] EWHC 2381 (Ch)). The Court of Appeal (Patten LJ, Kitchin LJ, Floyd LJ) allowed the appeal on 30 January 2018 [2018] EWCA Civ 68.