Preparing to Launch

Mr Griffin was a minority shareholder in a company called Hi2 Limited, who considered that he was subject to unfairly prejudicial conduct at the hands of the majority shareholder, Mr Wainwright. 

Mr Griffin pursued matters and a petition was duly served under the provisions of Section 994, Companies Act 2006. That petition was then compromised by a settlement agreement dated 23 June 2015. Some of the essential components of the settlement agreement were: 

• The minority shareholdings would be purchased at a price to be determined by an independent expert; 
• That expert was to appoint property valuers to value two very material assets, the Boathouse and another property;
• The valuation of each minority holding was to be at a discount to reflect their minority status;
• Any sums deemed to be appropriated wrongly by Mr Wainwright were to be treated as an amount owing to Hi2 Limited;
• The expert determination was to be delivered in the form of a non-speaking report, with reasons for the conclusions therefore not being stated;
• The valuation was to be as at 30 June 2015.

Casting Off

The parties each made representations to the valuer and there were several rounds of responses and further comments. In the meantime the property valuers had concluded that the value of the Boathouse was £1.65 million and the other property was valued at £1.6 million. 

There was some complexity relating to the usage of the Boathouse: it was a commercial property but which was being used as residential accommodation, in the form of various flats. Judges are not given to hyperbole and flights of purple prose. It is therefore of some note that the Judge commented rather pointedly: “It is regrettable that Mr Wainwright gave such contradictory information to the expert and [the property valuers] regarding the use of The Boathouse.”

By 17 February 2016 the expert told the parties that she had completed her Determination. In accordance with normal practice that Determination would be released to the parties on the payment of the fees. Mr Wainwright was unable to pay the fees on the basis that neither he nor the company had the requisite funds (these fees were eventually settled by a loan by Mr Griffin to Mr Wainwright).

Rough Weather

The barometer therefore seemed to be set fair for the Determination to be concluded and for the parties to resolve their differences. However, this was not to be: in early March Mr Griffin notified the expert that the Boathouse had been put on the market by Foxtons at £4.5 million. There then followed a series of exchanges and telephone conversations between the expert and Mr Griffin.
 
Mr Wainwright later had a number of complaints relating to the Determination; one was that he had not been informed of these exchanges and had not been given the opportunity to comment. 

The expert prudently went back to the property valuers with these new facts: was this new information sufficient to make them reconsider their views? They were not to be swayed by this crosswind; they stated that their conclusion remained that the value was £1.65 million. 

The Determination was sent to the parties by the valuer on 17 May 2016. Despite the valuation being non-speaking, the valuer felt obliged to explain the latest developments: “Shortly after the valuation date, in I believe, July 2015, The Boathouse property was transferred out of Hi2 at a value of around £1.3 million. It was put on the market with Foxtons at £4.5 million in around March 2016 after I had confirmed on 17 February 2016 to the parties that my determination was completed but before my determination was released as I had not been paid in full. There appears to have been no material changes to the property and no change in the planning status since the valuation date.”

The valuer then decided that this should be addressed in the form of a transfer of assets which prejudiced the minority; she therefore adjusted her conclusions accordingly. 

The Storm Breaks

It is well established that parties are bound by Determinations to the extent that they agree to be bound. They only agree to be bound in the terms set out in the letter of instruction to the professional undertaking the Determination. 

It is quite understandable that any expert valuer might rapidly grow weary of the various circumlocutions of Mr Wainwright. The hearts of mere mortals would be liable to sink at the thought of seeking further representations from such a source. However this proved fatal to the Determination which was holed below the water line on two counts: 

• The value included for the Boathouse was not the amount of the professional property valuation as anticipated in the instructions;
• There was procedural unfairness in not seeking representations from Mr Wainwright regarding the marketing of the property for £4.5 million.

The Judge concluded that the Determination of 17 May 2016 was to be set aside.