McCallum-Toppin & Anor v Toppin & Ors

Where unfair prejudice has been established but the amount of excessive remuneration cannot be quantified, the court’s power to grant relief remains discretionary. A further quantum hearing is inappropriate where the petitioner had a full opportunity to prove quantum at trial and failed because the evidence was inadmissible. A further hearing may be appropriate where liability and quantum were properly separated and procedural fairness supports remittal.

Shares should generally be valued at the judgment date, as close as possible to the sale, unless sufficiently good reasons justify an earlier date. A modest, unresolved remuneration issue may be referred to expert determination. The expert’s decision may be binding without requiring reasons.

The petitioners had succeeded at trial under Companies Act 2006, section 994. The court found unfairly prejudicial conduct through excessive directors’ remuneration, failure properly to consider dividends, and directors’ loan accounts. In the earlier judgment, reported at [2019] EWHC 46 (Ch), the court contemplated an order requiring the first and second respondents to buy the petitioners’ shares.

This judgment addressed the consequential relief. The issues were whether excessive remuneration could be quantified at a further hearing, the appropriate valuation date, how later remuneration should be determined, whether an expert should give reasons, and the parties’ costs.

1. Further quantum hearing. The court had found excessive remuneration but had been unable to quantify it because all expert evidence had been ruled inadmissible. The petitioners had nevertheless attempted to prove both liability and quantum at trial. A second attempt would be procedurally unfair. The circumstances differed materially from Re Tobian Properties Ltd, where the company was insolvent and liability and quantum had properly been separated. The excessive-remuneration issue therefore could not be remitted for a further quantum hearing.
2. Scope of the earlier relief decision. The earlier finding that the shares should be sold without a minority discount did not determine the whole remedy. It did not exclude later valuation work concerning the directors’ loan accounts.
3. Valuation date. The general rule was that shares should be valued at the judgment date, because that date is closest to the actual sale. The existence of audited accounts for an earlier period, together with possible cost savings, did not provide a sufficiently good reason to depart from that rule.
4. Later remuneration. Remuneration and pension contributions from the beginning of 2017 to judgment had not previously been decided. They were to be certified and determined by an expert, rather than through a further court process, because the sums appeared modest and a proportionate procedure was required.
5. Expert determination. The expert was to act as an expert, not an arbitrator. The determination would be binding save for fraud, bias, or manifest and material error. Reasons were not required.
6. Costs. The petitioners were the successful parties. The first and second respondents were jointly and severally liable for the proceedings’ costs. The third respondent was liable only for costs incurred against her.

The judgment followed the court’s earlier first-instance decision under [2019] EWHC 46 (Ch), in which the petition under section 994 had succeeded and the court indicated that a share purchase order should be made. This judgment determined the consequential relief, valuation and costs.