Oluremi Akim Agbaje v The Robert Frew Medical Company Limited

The statutory power to award simple interest under section 35A(1) of the Senior Courts Act 1981 is broad, but applies only in proceedings for recovery of a debt or damages. A claim for specific performance or determination of a contractual share value does not qualify where no debt is legally owed.

Where a share vendor is unwilling to participate, the company may transfer the shares as attorney, hold the purchase money on trust without interest, and make payment conditional on delivery of the share certificate. Interest is also unjustified where the claimant’s own refusal of payment caused the delay. Costs should reflect the real issue decided.

Dr Agbaje, a former partner in a medical practice, held shares in the company owning the practice premises. Following his expulsion, the company transferred his shares under a contractual pre-emption mechanism. A dispute arose about the correct valuation and payment process.

The High Court determined the share value at £21,188 as at 18 April 2009 and ordered payment: [2022] EWHC 1373 (Ch). It subsequently awarded interest and made a costs order: [2022] EWHC 2273 (Ch). The company appealed, raising the jurisdiction to award interest under section 35A(1) and the proper allocation of costs.

1. Disposition. The appeals were allowed. The High Court’s interest decision could not stand because it proceeded on erroneous assumptions about concessions, breach and conversion.

2. Interest jurisdiction. The power under section 35A(1) of the Senior Courts Act 1981 is broad. “Debt” may include any sum recoverable at common law, in equity or under statute. However, the power remains confined to proceedings for recovery of a debt or damages. The approach in The Aldora [1978] QB 748, BP Exploration Co (Libya) Ltd v Hunt (No 2) [1982] 2 AC 352, Sempra Metals Ltd v Inland Revenue Commissioners [2007] UKHL 34 and Odyssey Aviation Ltd v GFG 737 Ltd [2019] EWHC 1980 (Comm) supported that analysis.

3. Contractual mechanism. Under clause 11, valuation precedes the offers, allocation and completion of the share sale. Where the vendor is unwilling to participate, clause 11.4.4 permits the company to transfer the shares as the vendor’s attorney, give a good discharge for the purchase money and hold it on trust without interest. The vendor becomes entitled to payment upon delivery of the share certificate. Dr Agbaje had not delivered his certificate, so no debt was owed to him. His claim was in substance for specific performance and determination of value, not recovery of a debt. The order for immediate payment was technically beyond the judge’s power, although the company did not oppose it.

4. Alternative discretion. Even if jurisdiction existed, interest would not have been justified. The purpose of statutory interest is to compensate a claimant kept out of money to which he is entitled. Dr Agbaje’s refusal to accept the offered payment, followed by his receipt of a lower valuation, meant that his own conduct caused the delay.

5. Costs. The judge’s order was plainly wrong. The real issue was valuation, and the company succeeded on that issue. Dr Agbaje obtained less than the amount offered and the expert report was required because he refused to accept the company’s valuation. The criticism of the company for conversion was also unjustified because the conversion claim had been struck out. Dr Agbaje was ordered to pay the company’s costs, subject to costs already dealt with by undisturbed orders.

• Court of Appeal (Civil Division): [2023] EWCA Civ 702. Allowed the company’s appeals against the interest and costs orders.
• High Court of Justice, Business and Property Courts, Business List (ChD): [2022] EWHC 1373 (Ch). Determined the value of the shares and ordered payment. The court later awarded interest in [2022] EWHC 2273 (Ch) and made a consequential costs order.