Dinglis v Dinglis & Ors

A final order fixing the valuation date of shares should be varied only on proper grounds, having regard to the strong public interest in finality and the undesirability of giving a litigant two bites at the cherry. A subsequent market change does not justify variation where it represents a risk inherent in the order sought and made. The broad remedial discretion under Companies Act 2006, section 996, does not permit a post-valuation-date adjustment for later events where the valuation date remains fixed.

The application arose from unfair prejudice proceedings concerning a minority shareholding in Dinglis Properties Ltd. The court had ordered the respondents to acquire the petitioner’s shares and subsequently fixed 25 July 2019 as the valuation date. Following the Coronavirus pandemic, the respondents sought permission to argue that the share value should be reduced to reflect losses occurring between that date and the valuation trial.

The application relied on the court’s discretion under section 996 of the Companies Act 2006 and the power under CPR rule 3.1(7) to vary or revoke an order. The central issue was whether the valuation date, or the permitted adjustments, could be revisited because of the intervening pandemic and its effect on the company’s property business.

1. The respondents’ application was dismissed. The order fixing 25 July 2019 as the valuation date was a final order determining a significant part of the proceedings. It had followed extensive litigation, was intended to be final, and had not been appealed.
2. CPR rule 3.1(7) applies in principle to final as well as interim orders, but its exercise is much more restricted in relation to final orders. The usual guidance includes a material change of circumstances or a material misstatement of the facts on which the order was based. Finality, the avoidance of a second bite at the cherry, and the need not to undermine the appellate process remain important considerations.
3. The Coronavirus pandemic was an extraordinary event and a significant change in general conditions. Nevertheless, the relevant change was the materialisation of a market risk inherent in the valuation order. The respondents had pressed for an early valuation date and had thereby accepted the risk that property values might subsequently rise or fall. That did not create the unfairness required to reopen the order.
4. The same conclusion applied even if the order were treated as interim, or if CPR rule 3.1(7) did not apply because the order was made under the statutory jurisdiction rather than under the CPR.
5. Section 996 gives the court a broad and continuing discretion to fashion relief which is fair and equitable. That discretion requires attention to the practical reality of the parties’ position, but it could not justify adjusting a valuation calculated at a date which had already been finally fixed. Without varying that date, a reduction based on later events made no logical sense as a matter of law.
6. It was not unfair or inequitable that the respondents might have to pay a price calculated by reference to July 2019 even if the company’s value had later diminished. The proposed adjustment was therefore not properly arguable.