Kevin Geoffrey Dodson & Anor v Christopher Richard Shield & Ors

Permission to appeal requires a good arguable point with a reasonable prospect of success, but factual challenges face particular difficulty. A quasi-partnership remains fact-sensitive even where shareholders have detailed contractual arrangements.

For an unfair-prejudice purchase order, the usual valuation date is only a starting point. The court may select another date where fairness and proportionality require it. The valuation must reflect the facts and uncertainties existing at the chosen date; later success or failure is irrelevant, although project risks may require a secondary adjustment. No minority discount may be appropriate where diversion of the company’s only business opportunity effectively excludes the minority.

The petitioners brought an unfair-prejudice petition concerning International Automotive Engineering Projects Ltd. The substantive judgment found a quasi-partnership, treated diversion of a turnkey project and technical-library issues as relevant to prejudice and valuation, and selected 28 April 2015 as the valuation date.

The respondents sought permission to appeal on four grounds, principally challenging factual findings and the treatment of the quasi-partnership, project diversion and technical library. The court also considered a stay pending appeal, valuation pleadings, the valuation date and whether a discount should be applied.

1. Permission to appeal refused. The four grounds had no reasonable prospect of success and there were no other substantial reasons to grant permission. The quasi-partnership issue was fact-sensitive and was not precluded by detailed shareholder obligations. The project-diversion and fiduciary-duty grounds principally concerned valuation rather than underlying unfair prejudice. The technical-library ground involved interacting factual questions.
2. Stay granted. The proceedings were stayed pending the final outcome of any Court of Appeal proceedings because the likely delay was limited and continuing expert work risked duplication.
3. Valuation date. The valuation date for a purchase order is discretionary. The date on which the shares are sought to be purchased is the general starting point, but fairness to both parties and proportionality to the remedy are overriding considerations. The court selected 28 April 2015, when the unfair prejudice crystallised and the parties’ relationship effectively ended.
4. The valuation was based on the facts existing at that date. Later success or failure of the project was irrelevant, but uncertainties and risks required a secondary adjustment.
5. No discount. Although the petitioners retained their shares, diversion of the company’s only business opportunity had practically excluded them. The usual no-discount rule for quasi-partnership cases therefore applied.

This was a first-instance decision on permission to appeal and related case-management issues. The substantive judgment had been handed down earlier by the same judge; its citation is not stated in the judgment.