Kevin Geoffrey Dodson & Anor v Christopher Richard Shield & Ors

The application was for permission to appeal the Court's earlier substantive unfair prejudice judgment and for interlocutory directions including whether the first instance proceedings should be stayed, the valuation date, and how expert valuation evidence should proceed. The judge refused permission to appeal on all four grounds offered because they were predominantly fact-based and lacked reasonable prospects of success. The judge granted a stay of first instance proceedings pending any appeal, on the basis that the Court of Appeal could determine an appeal quickly and to avoid wasted expert work. The judge fixed the valuation date as 28 April 2015, applying the principle that the valuation date is a matter of judicial discretion and should be fair to both parties (drawing on Ming Shu Hung, Profinance Trust SA v Gladstone and Dinglas). The judge held that no discount should be applied to the Petitioners' share valuation because the corporate diversion of the sole project was, in practical effect, equivalent to exclusion of the minority in a quasi-partnership.

This was an interlocutory hearing in which the petitioners sought permission to appeal from a substantive unfair-prejudice decision earlier in the year and the court considered consequential case-management issues. The petitioners are Kevin Geoffrey Dodson and Murry Dodson; the respondents include seven individual respondents and International Automotive Engineering Projects Limited. The substantive dispute concerned diversion of a turnkey engine-manufacturing project and the use/ownership of technical libraries alleged to be of substantial value to the project.

The court summarised the four grounds advanced for appeal: (1) challenge to the finding of a quasi-partnership on the basis that the shareholder agreement governed the parties' relations; (2) challenge to findings about diversion of the project; (3) alleged breach of fiduciary duty in diverting the project to a third party (CGI); and (4) factual criticisms about the treatment and ownership of the technical libraries. The judge explained that most grounds were essentially factual and therefore had little prospect of success on appeal, so permission to appeal was refused.

The judge then addressed whether to stay the first instance proceedings pending any appeal. Noting the Court of Appeal's improved expedition, the judge concluded that a relatively short stay (pending final outcome of any appeal, likely within six months if permission were granted) was appropriate to avoid wasted expert work should the appeal succeed in whole or in part. The judge gave directions that the petitioners must, within four weeks of the Court of Appeal's determination, set out the amounts they claim and any conceded percentage deductions for secondary adjustments.

On valuation issues the court adopted the legal principles from Ming Shu Hung, Profinance Trust SA v Gladstone and Dinglas: the general rule is valuation at the date of purchase order but the court has discretion to choose a fair date. The judge decided the valuation date should be 28 April 2015 as the date when the unfair prejudice crystallised. The court acknowledged that valuation required an initial unadjusted figure and then a secondary adjustment to reflect uncertainties (including project risks in the People’s Republic of China). Finally, the judge held that no minority discount should apply because, although the petitioners remained shareholders, the diversion of the company's only business was tantamount to exclusion in a quasi-partnership.

Permission to appeal was refused because the four grounds were predominantly matters of fact and lacked reasonable prospects of success. The court granted a stay of the first instance proceedings pending the outcome of any appeal to avoid wasted expert work and because the Court of Appeal could determine the matter expeditiously. The valuation date was fixed as 28 April 2015 and no minority discount was to be applied to the Petitioners' share valuation on the basis that the diversion of the company's sole project had the effect of excluding the minority in a quasi-partnership.