Joseph v LEBC Group Ltd

A contractual valuation described as final and binding does not necessarily prevent a claim for damages where the alleged loss results from the other party’s breach in supplying inaccurate or incomplete information to the valuer. At an interlocutory stage, a claim should not be struck out as incapable of proof unless the defect is clear and obvious. Summary judgment is inappropriate where factual or expert evidence may establish breach, causation or loss. The court may also consider whether the valuation is a nullity because the valuer was given improper information or instructions.

The claimant founded and operated a healthcare insurance intermediary business acquired by the defendant. Under a bonus agreement, the claimant became entitled to a bonus calculated by reference to the fair value of the business. A valuer appointed under the agreement produced a non-speaking valuation, on which the defendant paid the claimant.

The claimant alleged that the defendant had failed to provide the valuer with accurate and complete information concerning recurring revenue. She claimed damages, alternatively relief based on a substituted valuation. Before serving a defence, the defendant applied to strike out the claim under CPR rule 3.4(2) or obtain summary judgment under CPR rule 24.2(a)(i). The central issues were whether the claim was legally defective or incapable of proof and whether the binding valuation machinery prevented the claim.

1. Applications dismissed. The claim was neither plainly defective nor an abuse of process, and had a real prospect of success at trial.
2. The applicable strike-out jurisdiction is exceptional. A claim should be struck out as incapable of proof only in a clear and obvious case. At an interlocutory stage, before full investigation and discovery, that conclusion will rarely be safe.
3. Summary judgment was also inappropriate. The court must consider the evidence reasonably expected at trial and should hesitate before finally determining an issue where fuller factual or expert investigation could affect the result. The alleged failure to provide relevant information was plainly a triable issue.
4. The binding effect of clause 4.8 did not necessarily defeat the claim. The claimant was not seeking to challenge an error made by the valuer on the information supplied. Her case was that the valuation was affected by the defendant’s breach of clause 4.4 and corresponding implied obligations to provide accurate and complete information. That distinction meant the claim did not necessarily circumvent the contractual valuation machinery.
5. There was a real possibility that factual and expert evidence could show that the business would have received a higher valuation if accurate information had been supplied. Whether the alleged breaches caused loss, and the amount of that loss, required a trial. The contention that the claim was logically incapable of proof was unsupported by the expert evidence necessary to determine it.
6. The claimant’s pleaded case included a claim for damages, notwithstanding imperfect drafting. The court also accepted that the alleged implied terms were capable of being established, applying the reasoning in Parry v Edwards Geldard (No. 2) concerning improper information or instructions given to a valuer. The question whether the valuation was a nullity also required full argument.

Not stated in the judgment.