Kevin Geoffrey Dodson and Another v Christopher Richard Shield and Others [2023] EWCA Civ 1391

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BIRMINGHAM
COMPANIES AND INSOLVENCY LIST
Recorder Adrian Jack (sitting as a Deputy Judge of the High Court)
[2023] EWCA Civ 1391Case No Case No: CA-2022-002376Venue Royal Courts of Justice, Strand, London, WC2A 2LL
Between
Kevin Geoffrey Dodson and AnotherRespondentsChristopher Richard Shield and OthersAppellants
Before
Lord Justice LewisonLady Justice KingLord Justice BirssMax Mallin KC, Richard Clegg (instructed by Shakespeare Martineau LLP) for the AppellantsAvtar Khangure KC (instructed by Trowers & Hamlins) for the RespondentsHearing dates: Wednesday 25 & Thursday 26 October 2023
[1]This judgment was handed down remotely at 10.30am on 27 November 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. Lord Justice Birss: This appeal relates to an unfair prejudice petition under s994(1) of the Companies Act 2006. The petition was brought by two shareholders in the company, International Automotive Engineering Projects Ltd ("IAEP"). The petitioners were Kevin Dodson and his son Murry Dodson. The respondents to the petition were the other shareholders (as well as the company itself), including Christopher Shield, Charles Cattaneo and David Cotterill.[2]The judge, Recorder Adrian Jack, sitting in Birmingham, found that the company was a quasi-partnership and held that two grounds of unfair prejudice were established, one relating to a technical library and the other to diversion of a project. The judge also held that those two matters were breaches of fiduciary duty. He rejected a third ground of unfair prejudice (failure to negotiate). The judge granted relief, in effect ordering the respondent shareholders to pay the successful petitioners the purchase price for their minority shareholding, without a minority discount, and valued as at 28 April 2015. The appellants sought permission to appeal on six grounds. Lewison LJ gave permission on all grounds.[3]Some of the grounds overlap and it is convenient to see the appeal as involving five essential issues. In the order I propose to deal with them, they are as follows. The first issue (ground 1) is whether IAEP was a quasi-partnership. The second and third issues (grounds 2, 3 and 4) are a series of points relating to the findings on the technical library, and then to the findings on diversion, respectively. These include both unfair prejudice and breach of fiduciary duty. The fourth issue (ground 6) challenges the absence of a minority discount relating to the share value, and the fifth and final issue (ground 5) relates to the valuation date chosen by the judge. Background[4]The company was set up to exploit an opportunity concerning a set of manufacturing lines belonging to the car maker BMW which it had been using to make an engine called the NG4. By March 2012 Mr Cotterill and Mr Dodson were working together in an informal joint venture to acquire the set from BMW with a view to selling the whole thing to a buyer in China. This opportunity arose because BMW was stopping production of the NG4 and was going to dispose of its machinery. The plan was to buy the machinery at a low price consistent with it being scrapped by BMW, and then sell the set of lines together on a "turnkey" basis whereby, once the lines were installed, the seller would ensure that the buyer could start engine production immediately.[5]There were six individual production lines in the set:(1) crankshaft,(2) cylinder head,(3) cylinder block,(4) conrod,(5) camshaft and(6) assembly and testing. Lines 1, 2, 3 and 6 were at a BMW plant at Hams Hall near Birmingham. Lines 4 and 5 were in Austria. An individual production line might be 170 metres long comprising more than 60 distinct machines.[6]Mr Dodson and Mr Cotterill had tried to buy lines 1, 2 and 3 from BMW directly in 2011 but that failed. Instead BMW agreed to sell the three lines to a metal dealer called Stuckenberger, which had in turn sold them to a machine dealer called Pagus. The first sale to Stuckenberger was of line 1, in May 2012.[7]By August 2012 the joint venture had acquired possession of line 1 and placed it in their storage facility in Oldbury, Birmingham, however there were problems with funding. The purchase price had not yet been paid. Mr Cattaneo introduced Mr Cotterill and Mr Dodson to Mr Shield, and as a result the company IAEP was incorporated and a set of four agreements were entered into, all dated 2 nd October 2012. The agreements were a shareholders' agreement (the "SHA"), an option agreement, a facility agreement, and a debenture. Nothing turns on the debenture.[8]The shareholders were nine individuals, including Mr Dodson and his son, Mr Cotterill and his son, Mr Cattaneo, Mr Shield and three other men, Neil Collins, John Rock and Nicholas Coulborn. The parties to the SHA were all the shareholders and a company called Shield Engineering (Syston) Ltd ("SES"). SES was Mr Shield's company. The SHA provided that all nine individuals would be directors of IAEP. At clause2.1 the SHA defined the "Business" of IAEP as the design, sale and implementation of turnkey automotive engineering projects on an international basis. Clause2.2 defined the first project as the acquisition of the BMW lines in question and subsequent design, sale and implementation of a turnkey automotive manufacturing facility. Each party to the SHA was required by clause2.3 to use its reasonable endeavours to promote and develop the Business to the best advantage of IAEP. The SHA also contained a prohibition on competition, a whole agreement clause, a no partnership clause and a good faith clause. I will return to the SHA below.[9]The option agreement was between SES and IAEP. It granted a 15 month option to IAEP, expiring on 2 January 2014, whereby IAEP could buy such of BMW lines 1 to 3 as SES might own. The price for a line would be the sum of two amounts. One was essentially double whatever price SES had paid to acquire the line, subject to costs. The other was the amount of a loan which SES was going to make to IAEP. The loan was provided for in the facility agreement. SES was to lend IAEP £1.5m, to be used by IAEP as working capital and to cover operational costs.[10]Also relevant are the (bespoke) Articles of Association of IAEP. At clause 17 they contain provisions relating to the transfer of shares and the "Fair Value" to be applicable to them.[11]Pausing here, the plan for the project was that SES would purchase lines 1-3 from Pagus (a purchase price for all three of about £2.1 million was contemplated). Then SES would hopefully purchase the remaining lines in due course if BMW sold them. IAEP then had an option to purchase the lines from SES. SES's loan would fund IAEP's business and IAEP would find a buyer for a turnkey project. The significance of the turnkey aspect was that IAEP had the skills available to implement a turnkey installation based on these lines.[12]The main decision makers in IAEP were Mr Cotterill, Mr Dodson and Mr Shield. The day to day management of IAEP was to be by Mr Cotterill, on the engineering side, and Mr Dodson, on the sales and commercial side. Mr Cotterill had a company called DNA Technologies UK Ltd which would provide services to IAEP. Mr Cotterill's son Alan was a mechanical engineer and worked on the technical side of DNA Technologies. Mr Dodson had a company called Key Technical Solutions which would also provide services to IAEP. Mr Dodson's son Murry worked at Key. Mr Rock was a director of Key, with a focus on logistics. Mr Collins was a very experienced technical engineer and confined himself to the technical side of IAEP's business. Mr Coulborn dealt with logistics and Mr Cattaneo was a financial adviser. Mr Shield was an experienced businessman and the wealthiest of the respondents. He and his company SES had the financial resources to enter into the arrangements discussed above, buying the lines and enter into the facility agreement.[13]Two possible customers for the project were identified, Beijing Automotive International Corporation and Infinity Max. The latter was a BVI company backed by interests in China. As it turned out the negotiations progressed with Infinity Max.[14]By November 2012 Pagus acknowledged payment by SES for lines 1 and 2 and title to those lines passed to SES. At some point later line 3 was acquired, with title passing to SES. By February 2013 it was still hoped that lines 4, 5 and 6 would become available reasonably soon.[15]In addition to the machinery comprising the lines, the parties all knew that a very substantial quantity of technical information such as operating manuals and plans would be needed in addition to the machines themselves if they were to be installed as a turnkey system. The broad term "technical library" was used at trial and in the judgment for this kind of information. One of the appellants' points on appeal is about the lack of specificity of that expression. I will use the term in the way the judge did but come back to that issue below. A major issue at trial and on appeal is about the ownership of the technical libraries. In any event in this period, as recorded in an email dated 14 January 2013 from Mr Cotterill, Mr Dodson secured BMW's agreement to supply the complete technical manual archive for lines 1 to 3, as well as operating programs. The email was referred to as the "jubilatory" email (judgment [149]), reflecting Mr Cotterill's obvious happiness at what had happened. The material was sent to the Oldbury storage facility. Mr Dodson's case at trial was that this set of material belonged to IAEP.[16]After a letter of intent from Infinity Max in February 2013, in April 2013 Infinity Max, IAEP and SES signed heads of agreement to buy the lines from IAEP, transport and install them in China and have them installed on a turnkey basis for a price of £58 million. The terms were non-binding save for an exclusivity period until June, extendable for 28 days if IAEP could show title to line 4, 5 and 6. The exclusivity fee was £½ million, which had to be repaid if by that date IAEP was unable to demonstrate it had title to sell lines 4 to 6. In a contemporary document Mr Dodson calculated the profit from this deal would be about £19 million.[17]By June 2013 IAEP, having drawn down all it could under the facility agreement, had used all available cash to fund DNA and Key. The date of availability of lines 4, 5 and 6 had slipped. Relations between the shareholders deteriorated. As the judge found and is not challenged on appeal, by July 2013 Mr Dodson started to be excluded from the business. Also at that time a new individual Stephen Murphy became involved, with his consultancy company, later called CGI.[18]In August 2013 SES advanced the money to repay the exclusivity payment to Infinity Max. Shortly after that Infinity Max offered to buy lines 1 to 3 from SES directly. In September Infinity Max's English solicitors (Rosenblatts) sent a detailed letter before action making an approx. £6 million fraud claim against IAEP, SES and Messrs Dodson, Cotterill, Cattaneo and Shield. Nevertheless as the judge noted, all the witnesses at trial who were involved with this agreed that Infinity Max was still interested in finalising a deal and that this was, as the judge held, at [51], "merely" a very hard nosed negotiating strategy. So it proved when Infinity Max, via its solicitors, sent a letter in November 2013 setting out various proposals for a deal. One option was in effect a turnkey deal with IAEP for £58 million.[19]Also in November 2013 Mr Shield circulated a document entitled "Project Bavaria Review and Future Plan". This summarised the reasons for lack of a deal up to that point, including errors in strategy but mainly a failure to control lines 4 to 6. The document proposed a new arrangement based on a new company "IAEP 2" with no shareholding by Key (i.e. Mr Dodson) and no future involvement by Key. Mr Murphy would be managing director of IAEP 2 and SES would have 51% of the shares. The original IAEP company would receive £1 million, so as to benefit the original shareholders. This plan was not taken forward.[20]By December 2013 line 4 had been shipped to Oldbury and sold to SES via Stuckenberger and Pagus, but it was now clear there was no possibility of a deal with Infinity Max before the option agreement expired, which happened on 2 January 2014. At that point the solicitors Shakespeares, acting for IAEP and SES, wrote to Mr Dodson stating that SES could sell the lines without IAEP's approval.[21]A Shakespeares memorandum, dated 14 January 2014 addressed the question whether "we" could remove Mr Dodson, Murry Dodson and Mr Rock as directors and shareholders. The author concluded that if they were removed as directors, the SHA meant they could be reappointed and that there was no means of forcing a share sale.[22]The fine detail of what took place for the rest of 2014 is not relevant. Three matters are worth highlighting. In April 2014 there was a board meeting of IAEP but nothing was agreed. The judge held that for practical purposes this was the last meeting of IAEP ([77]). Second in June 2014 Mr Cotterill was appointed a director of Mr Murphy's company CGI. At that time it had minimal assets and was conducting minimal business. Third, at various times in 2014 there were disputes about ownership of the technical library. At that time Mr Dodson claimed the documentation he had collected belonged to Key rather than IAEP. He later changed his position. His case after that and in any event at trial, was that the material belonged to IAEP.[23]In January 2015 there was another board meeting of IAEP, with all nine directors. Mr Shield said that SES was going forward with a company other than IAEP. Later that year two contracts were entered into with Infinity Max. The first (11 February 2015) was a sale contract between SES and Infinity Max to sell and ship the six lines, including the technical library. One clause in the contract (Sch 7) released IAEP and Messrs Dodson, Cotterill, Cattaneo and Shield from all claims in the Rosenblatts' letter before action. The second contract was dated 28 April 2015 and is between Infinity Max, SES and CGI. This is a turnkey agreement. It was based on heads of agreement signed on 11 February. The total price to be paid by Infinity Max was £58 million (£41m in the sale contract and £17m in the turnkey contract).[24]The judge held ([91]) that at some point after 3 rd March 2015 Mr Shield caused the technical library which Mr Dodson had physically obtained from BMW to be removed from Oldbury and sent to China for use in installing the lines.[25]What else actually took place pursuant to these contracts is, as the judge put it, quite obscure. Mr Shield said that SES only just broke even. The judge did not make any findings on the matter.[26]The s994 petition was issued on 20 September 2020. It sought an order that the appellants (as they now are) be ordered to buy the petitioners' shares at fair value, on the grounds of unfair prejudice. The three grounds of unfair prejudice relied on have been mentioned already. The appellants' points of defence disputed all three grounds, and the matter went to trial before the judge in May 2022. The judgment[27]The judge's judgment accurately summarised the background and circumstances. The summary above is based on it. Next, at [94] the judgment set out s994 itself and then referred to O'Neill v Phillips [1999] 1 WLR 1092 and to a passage in Hollington on Shareholders' Rights (9 th Ed), both of which are directed to the concept of quasi-partnerships.[28]As the judgment noted from [109] onwards, the judge heard oral evidence from Mr Dodson, Mr Shield, Mr Cattaneo, Mr Cotterill, Mr Collins, Mr Rock and Mr Alan Cotterill. Mr Murry Dodson had given a witness statement but was not cross-examined. He gave unchallenged evidence of a conversation involving Mr Cotterill and Mr Murphy in June/July 2013 at Oldbury which, to put it neutrally, bears out the idea that from this time Mr Dodson was being excluded from the business.[29]In terms of the witnesses, the judge found Mr Dodson to be a careful witness whose evidence was borne out by the contemporaneous documents. He noted Mr Dodson's change of position on ownership of the technical library but did not find that was a reason to doubt Mr Dodson's overall honesty. The judge identified Mr Shield as an astute businessman but overall treated his evidence with caution, and found Mr Cotterill to be an unsatisfactory witness. In relation to the other witnesses, the judge held that Mr Cattaneo had little relevant evidence to give; found Mr Collins to be an honest witness particularly in relation to the technical library; found Mr Rock was an honest witness albeit mistaken on certain matters which are now irrelevant; and noted that Alan Cotterill had little relevant evidence to give. Mr Coulborn had not been able to attend trial due to a sudden health issue but the judge gave his evidence on ownership of the technical libraries no weight for various reasons not challenged on appeal.[30]I mention all this because aspects of the appellants' case relate to findings of fact made by the judge, particularly in relation to the technical library and diversion.[31]Turning to the factual issues, the judge addressed an allegation of overcharging by Mr Dodson which had formed a significant part of the dispute between Mr Dodson and Mr Cotterill from mid-2013 and afterwards. The judge accepted Mr Dodson's evidence and rejected the allegation of breach of fiduciary duty on his part. There is no appeal from this aspect.[32]The judgment turns to the technical libraries at [140] holding that there are three copies of the technical library. The first copy exists because a manual and software were kept with the given machine itself. I will call this material the "individual machine material". The second is a complete set of manuals which the judge referred to as the shopfloor copy, kept in the engineer's office on the shop floor which included not just individual manuals but plans for installing the whole line (the "shopfloor library"). The third is an archive set of all technical documentation both physical and electronic kept by BMW in secure storage (the "archive library"). Note that only the latter two copies contained the overall plans, or putting it another way, as the judge held at [171]:
"The shopfloor and the archive libraries included the documentation for the commissioning or recommissioning of whole lines. Thus, these two libraries contained materials which were not available in the individual libraries attached to those machines which were sold. I find they were of real value to an end-purchaser such as Infinity Max and a company, like CGI, which needed to commission the lines."
[33]The appellants' case before the judge was that SES acquired title to all three copies - the individual machine material, the shopfloor library and the archive library. In summary the judge held (at [153]) that SES did acquire title to the individual machine material but not to the shopfloor library nor the archive library. Title to the latter two belonged to the company, IAEP. This was in part based on Mr Collins' evidence who had been called by the appellants but whose oral testimony supported the petitioners.[34]Next, at [155] to [163] the judge addressed the question whether IAEP was a quasi-partnership and concluded that it was. As mentioned already this is the first issue to be resolved on the appeal and will be addressed below.[35]At [164] to [170] the judge considered and rejected the failure to negotiate ground of unfair prejudice. This does not need to be considered further.[36][171] to [173] address the technical library ground of unfair prejudice. The judge held that both Mr Shield and Mr Cotterill were aware that the true ownership of the shopfloor library and the archive library was with IAEP and that giving the shopfloor library to SES and CGI was a breach of fiduciary duty (see also [177]-[178]), and caused prejudice to the petitioners which was unfair. These conclusions are challenged on appeal.[37]Next at [174] to [176] the judgment considers the allegation of diversion. The three conclusions are: that the project was effectively dead from October 2013; that after the option expired in January 2014 there could have been no objection to SES simply selling the lines it owned; but nevertheless that despite the two previous conclusions, it was a breach of the non-competition and business promotion clauses of the SHA for SES and the respondents to enter into a turnkey arrangement with Infinity Max using CGI as the vehicle for the turnkey agreement. That caused prejudice to the Dodsons and that prejudice was unfair ([176]). This is the third issue on the appeal.[38]At [177]-[178] the judge addressed fiduciary duty (albeit it had already been mentioned in relation to the technical library). Noting that no meeting of the directors (formal or informal) had ratified the transfer of the technical library or permitted CGI to carry out the turnkey project, the judge held that the breaches which had been found relating to the technical library and diversion were also breaches of fiduciary duty by the appellants, who were all directors of IAEP.[39]Finally, after dealing with and rejecting a point on delay and acquiescence the judge summarised his conclusions at paragraph 186.[40]The consequentials hearing took place on 22 nd November 2022. At that stage two further important decisions were made. The judge held that the valuation of the shareholding should be without a minority discount, essentially because the company was a quasi-partnership; and held that the date for valuation should be 28 th April 2015 because that, being the date of the turnkey contract between CGI, SES and Infinity Max, was the date the unfairness crystallised. The fourth issue and fifth issues on the appeal relate to these to decisions respectively. The issues on the appeal (1) Quasi-partnership[41]The concept of a quasi-partnership is not a formal legal category, unlike a partnership, rather it is a term used in the context of company law, often but not only when dealing with unfair prejudice petitions under Section 994 of the Companies Act 2006 or its predecessors. The idea is that the circumstances give rise to what was called in argument an equitable overlay in addition to rights and obligations arising from company law and the applicable contracts. In Fisher v Cadman [2005] EWHC 377 (Ch) at [84] the term used was "equitable constraints". The passages cited by the judge from Lord Hoffmann's speech in O'Neill v Phillips (at pp 1098-99 and 1101) make the same point and tie it into the history of company law.[42]A notable feature of O'Neill v Phillips is the recognition that unfairness under s994 can consist in a breach of the rules on which the affairs of the company are to be conducted or in using those rules in a manner which equity would regard as contrary to good faith. The latter would only arise in a quasi-partnership case. The former will be capable of applying in any case even if there is no quasi-partnership. A curiosity in the present case is that the judge held that the proven acts of the appellants complained of were breaches of contract (the SHA) and of fiduciary duty. Further equitable constraints did not come into the matter. At first sight one might wonder why the quasi-partnership issue matters on this appeal, but the role it played in the minority discount issue is a sufficient reason to deal with it.[43]The judge's approach to identifying whether a quasi-partnership existed was based on applying three hallmarks which he derived from the Hollington textbook, but which in turn come from the speech of Lord Wilberforce in Ebrahim v Westbourne Galleries [1973] AC 360 at 379. In summary they are: an association formed or continued on the basis of a personal relationship of mutual trust and confidence, an agreement or understanding that the shareholders will participate in the conduct of the business, and restriction on the transfer of members' interest in the company so that if confidence is lost he cannot take out his stake and go elsewhere. It is clear that this is not an exhaustive list and it is also clear, as the Hollington textbook put it in the passage quoted by the judge, that the norm is that relations between shareholders are purely commercial and subject to no equitable restraints, whether borrowed from the law of partnership or not.[44]A common situation in which a quasi-partnership has been found arises when there is a blurring of a key distinction in company law between the investing owners of the company and the managers of that company's business. The former are the shareholders and the latter are the directors. The role of shareholder does not in and of itself give rise to legal or equitable duties. Without more the shareholders' relationships with one another will be purely commercial in nature. Subject to the Articles of Association and any other shareholders agreement, shareholders owe no duties to each other or to the company. The reason the s994 jurisdiction exists is to mitigate this to some extent by providing minority shareholders with a remedy against unfair prejudice to their interests by the majority. By contrast the role of director carries with it fiduciary duties to further the company's interests and avoid conflicts of interest. Blurring the two roles of owner and manager makes the company look more like a partnership, but in my judgment whether partnership-like equitable duties are to be imported will still depend on a careful examination of the alleged source of those duties.[45]Re Edwardian [2018] EWHC 1715 (Ch) was a case of a company which at least at one time had been family owned and managed. However Fancourt J rejected the petitioners' case that it was a quasi-partnership at the relevant time (1993) on the basis that even if there had been a quasi-partnership beforehand, by 1991 a shareholders agreement had been entered into by all shareholders which contained a whole agreement clause. It was "expressly on the basis that all previous agreements and arrangements, written oral or implied, between the parties or any of them in relation to the Company or the matters referred to in the Agreement were deemed to have been cancelled" ( Re Edwardian [157]). The judge also noted in the same paragraph that quasi-partnership was inconsistent with the banks, by 1993, owning 90% of the share capital. In [156] the judge had also observed that with a large professional management team as the business had by the relevant period, it was "far from a typical quasi-partnership, where there is personal management of the business by the shareholders based on trust and confidence between them."[46]Turning to the present case, the judge approached the question in three steps. The first step was to observe the no partnership clause in the SHA (clause 21), which provides:
"The Parties to this agreement are not in partnership with each other and there is no relationship of principal and agent between them."
[47]This was held not to be inconsistent with there being a quasi-partnership because while a company is not, as a matter of law, a partnership of the shareholders, that does not prevent a company from being a quasi-partnership (citing Ebrahimi ). As paragraph [156] put it:
"156 […] It necessarily follows that a term which says the shareholders are not in partnership does not prevent the company being a quasi-partnership. Indeed the expression quasi-partnership is more of a metaphor: the company is not a partnership but the relations between those interested in the company are more akin to those of partners."
[48]The second step was to focus on the whole agreement clause 17.1 in the SHA. This clause provides:
"17.1 This agreement, and any documents referred to in it or executed contemporaneously with it, constitute the whole agreement between the Parties and supersede all previous arrangements, understandings and agreements between them, whether oral or written, relating to their subject matter."
[49]These terms meant that the exercise was solely one of interpreting the documents executed on 2 nd October 2012. The relationship between the parties had to be found in those documents (judgment [159]. Therefore even though some of the shareholders had a relationship beforehand that was irrelevant.[50]The third step was to examine the effect of the documents. Here the decision was that, taken as a whole, the clauses created a relationship which was a quasi-partnership. The main features relied on were: the obligation to use reasonable endeavours to promote the Business (clause 2.3), the non-compete clause 7.1 (which was held to bind SES), the good faith obligation at clause 22, the fact that all the shareholders were entitled to be directors, and the fact that there was "no means of forceable buy-out so if a 'member is removed from management, he cannot take out his stake and go elsewhere'" ([159]). I will refer to these clauses compendiously as the other clauses. The terms of the other clauses are all set out in the judgment at [22].[51]A separate issue was whether the quasi-partnership relationship as found survived beyond the end of the option period on 2 January 2014, but there is no need to address that.[52]In my judgment the conclusion reached is not right. The starting point is the whole agreement clause. It is similar in scope to the clause in Re Edwardian . Like the judge in the present case I agree that that clause as drafted precludes any reliance on what happened before the agreements were entered. It rules out any previous conduct as a basis for finding any legal or equitable relationship between the parties over and above the agreed terms. I agree that it follows that the analysis must start with the agreed terms. That is not a promising start to find equitable constraints over and above the agreed terms.[53]Seen in that light the no partnership clause 21 is striking. The parties have agreed that the contracts will govern their relationship, and one of the terms is that they are not in a partnership. Now of course in one sense, as the judge noted, it is a truism because a company is not a partnership of the shareholders anyway, however to read the clause in such a narrow sense is to rob it of contextual force. Seen with the whole agreement clause, this is a clear indication that an objective construction of the intention of the parties to these agreements was not to import concepts of a partnership as a source of obligations on top of what they have expressly agreed.[54]The next relevant point is to note a feature which is not present in this case. There was and remains no suggestion that anything which happened after the agreements were signed amounted to a promise or understanding or any other basis for equitable constraints on the parties' behaviour. The issue stands or falls on the terms of the agreements.[55]In these circumstances, whatever the effect of the other clauses might be, those terms in this context are not capable of giving rise to some further extra-contractual equitable constraints on the parties. I would accept that there is some resemblance between these other clauses, taken together and read out of context, and a partnership but it is only a resemblance. Located within the contractual framework present here, they simply cannot create further obligations on top of their own terms.[56]That is sufficient to allow the appeal on the finding of a quasi-partnership. In relation to the points of detail taken about the other clauses, there is no need to address them at this stage. The appellants contended the good faith clause, read in context, did not go nearly as far as the judge held. They may well be right but it is not necessary to grapple with that. At the risk of repetition, even if those clauses in isolation might be said to define a partnership-like relationship, they cannot have the effect of creating a quasi-partnership here. Technical Library[57]On appeal the appellants submit that the judge was wrong(i) to find that the shopfloor and archive copies of the technical library were not owned by SES,(ii) to find that the shopfloor library had been given to SES and CGI for no consideration,(iii) to find that the shopfloor copy of the technical library had a substantial value and was owned by the company IAEP, and(iv) to find that giving the shopfloor library away to CGI and/or SES caused unfair prejudice to the petitioners. The appellants also submit that the judge was wrong to find that making the technical library available to CGI and/or SES was a breach of fiduciary duty or caused unfair prejudice.[58]An important dimension to the appellants' case is the submission that the judge's findings are imprecise and do not delve into the detail of what exactly the libraries consisted of, and what was done with what, to support the conclusions reached. Counsel for the appellants' contended that this court was in a position to grapple with sufficient detail to allow the appellants' appeal on this topic but also maintained that if need be the matter would need to be remitted to make appropriate findings of fact. A particular point was that the judgment does not address the library material for lines 4 or 5.[59]The petitioners support the judge's findings for the reasons he gave, denying the appellants' submissions. In terms of the level of detail, the respondents submitted that the judge dealt with matters at the level of specificity which he was presented with at trial by both sides and that it was a sufficient basis for the judgment. The focus of the trial was not lines 4 or 5 but lines 1 to 3.[60]Starting with the question of ownership, the judgment at [140] identifies three sets of material: the individual machine material, the shopfloor library and the archive library. In terms of lines 4 and 5, judgment [141] notes that there was no evidence about shopfloor or archive copies of the libraries for lines 4 and 5 and that the witness evidence was about the technical libraries at Hams Hall. The judge's reference to Hams Hall here makes sense because lines 4 and 5 were not at Hams Hall, but were in Germany and Austria respectively. Therefore on this aspect of the appeal there is no need to consider lines 4 and 5 any further.[61]Given that the other lines (i.e. lines 1, 2, 3 and 6) were at Hams Hall ([9]) and given the distinction between the shopfloor and archive libraries on the one hand, which contained plans and commissioning information for installing a line, and the individual machine material on the other hand, which did not ([140]), it follows that properly understood the classification of the material in the categories the judge used is a coherent and sensible approach.[62]The reasons for the finding that while the individual machine material belonged to SES, the shopfloor and archive libraries belonged to IAEP are in [140] to [153]. In summary the reasons are these. The property in issue is property to physical chattels, no issue about intellectual property rights arises ([143]). The appellants' case before the judge as to why title to the shopfloor and archive libraries passed to SES (judgment [144]) was because it was understood that the contracts in the chain from BMW to Stuckenberger to Pagus to SES included a term that property in all three libraries passed (with no reference to German law). There was no difficulty about physical property in the individual machine material – which was after all physically kept on the machine. That passed to SES with the machine itself ([145]). In terms of software the machines also had hard disk drives, which were not wiped ([142]).[63]However for the shopfloor and archive libraries, they were not physically ancillary to the machines nor was possession in them passed at the same time the machines were removed. This is [146] and there is no challenge to these factual findings. Therefore as the judge rightly held, the only way the appellants argument on title could succeed was if there was a suitable contractual term, but there was no such express term in the relevant contracts and therefore the appellants must rely on an implied term ([146]). At [147] the judge accurately summarised the appellants' case as being based on Mr Shield's suggestion in evidence that it was so well understood in the industry that property would pass that there was no need to spell it out, and that business efficacy required it because otherwise the machines could not be reinstalled save at disproportionate cost.[64]The judge rejected this case for three reasons. First [148] he found that Stuckenberger was primarily a dealer in scrap and therefore had no need for the shopfloor or archive libraries (and in fact no need for the individual machine material either but that did not matter). Therefore business efficacy did not justify an implied term. Second he found that BMW did not actually sell all the machines for a given line. As the judge then put it:
"[148] … BMW did not sell all the machines from the various lines. Particularly in line 1 it kept machines back. Mr Collins accepted (transcript, day 7, p 50) that in such cases "
BMW would not release the manuals in any form because the machines were being re-purposed for another use, so we didn't have those." Thus there would be gaps. The respondents' case is that all of the shopfloor library and all of the archive library passed, but this is inconsistent with what Mr Collins is saying. Obtaining all the shopfloor and the archive libraries would have to be done in some other way (which is what happened: see the next paragraphs)." [ judge's emphasis ][65]Third, the judge also noted that Mr Shield's evidence was inconsistent with what actually occurred, making the point that if SES could have demanded the archive library as of right from BMW, the effort Mr Dodson had taken to acquire it in January 2013, and the "jubilatory" email congratulating him, would not have been necessary.[66]On the face of these are solid reasons supporting the judge's conclusion, particularly given the judge's negative views of the evidence of key witnesses for the appellants, Mr Shield and Mr Cotterill.[67]On appeal the appellants focussed on the submission that the judge should have but had failed to deal with three emails, two between Stuckenberger and BMW dated 22 August 2014, 28 August 2014 and a third from BMW to Mr Cotterill dated 18 December 2020. These emails were said to "indisputably show" (skeleton [77]) that, so far as BMW was concerned, the shopfloor library passed to Stuckenberger when it acquired the lines whether by express term, implied term or by convention.[68]The judge's task was to make findings and give sufficient reasons for them. What would be sufficient is entirely context dependent. In my judgment these emails provide no good reason to overturn the judge's findings of fact on this issue. The emails do not indisputably show anything relevant. They all derive from a time well after Mr Dodson had been excluded and when ownership of the technical library material was in dispute. Even at face value they are written in general terms applicable to everything and are therefore inconsistent with the oral evidence of Mr Collins that he did not get manuals for the machines which BMW kept back because BMW would not release them. No oral evidence to which our attention has been drawn was given about these emails. There is no reason to assume the judge simply overlooked them. Rather they can be seen as part of Mr Shield's case about ownership which the judge did consider with care and rejected. By the same token, these emails do not undermine the judge's findings at [172] that Messrs Shield and Cotterill knew that the shopfloor and archive libraries belonged to IAEP.[69]Therefore the judge's finding at [153], that the shopfloor library and archive library belonged to IAEP, stands.[70]Moreover the finding at [171] that the shopfloor library and archive library had real value was plainly right for the reason given, i.e. that they contained information useful for commissioning lines which was not available in the individual machine material.[71]The judgment makes two findings about technical libraries being given away. At [91] the judge held that what must have been archive library material at Oldbury was taken from there and sent to China. The paragraph does not use the word "archive" but the finding was concerned with "the technical library which Mr Dodson had physically obtained from BMW", which is the archive library. Then at [172], the finding is that the shopfloor library was made available to SES and CGI.[72]In the declarations set out in the final order following trial (and see [172] and summary paragraph [186]), the judge expressed his findings as being that the shopfloor library was made available to SES and CGI "at no cost". That conclusion is unimpeachable. There is no suggestion that either SES or CGI paid anything to IAEP for any technical library.[73]By contrast, at [173] the judgment describes the shopfloor library as having been given away "for no consideration" and the point taken on appeal is that the agreement whereby SES transferred the technical library to Infinity Max included a term releasing IAEP from the approx. £6 million claim threatened against it by Infinity Max in September 2013. Therefore it is contended that the judge was wrong to say that no consideration was given to IAEP. In this context the appellants also refer to a valuation put on the technical library in 2015 of £4.9 million.[74]As far as I am aware IAEP was not a party to either contract with Infinity Max. Whether the release from Infinity Max was capable of amounting to consideration received by IAEP for a technical library does not matter in any event because IAEP never ratified a transaction in which any library was to be used by SES or CGI or given to SES for sale on to Infinity Max on any basis. IAEP never ratified the transfer.[75]The focus therefore turns to the judge's findings of breach of fiduciary duty by the relevant directors of IAEP and of unfair prejudice. This starts at [172] where the judge found that Mr Shield knew the shopfloor and archive libraries belonged to IAEP, rejecting his evidence to the contrary. Given the judge's views on Mr Shield and the findings on the technical libraries which I would uphold (above) there is no good reason to overturn that finding. The judge there also concluded that Mr Cotterill was aware of the true ownership of those libraries and the judge notes Mr Collins' evidence that they were IAEP's. Given their roles in all that went on, the conclusion that giving the shopfloor library to SES and CGI was a breach of fiduciary duty is unsurprising and unimpeachable. Here the judgment does not identify individual directors but the conclusion manifestly applies at least to Messrs Shield, Cotterill and Collins. The fact whatever was done was at no cost to SES and CGI and that the transaction was never ratified by IAEP is sufficient for this purpose. The appellants are entitled to make the point that [173] uses the term "no consideration" but as I have explained that does not assist them.[76][173] also found that the giving away the shopfloor library caused prejudice to the petitioners which was unfair. These conclusions are stated shortly but nevertheless I can see no reason to overturn them. Giving away property of real value to the company for no cost to the recipients is plainly capable of being prejudicial when it arises in circumstances in which the petitioners had been excluded from the affairs of the company, and that is, objectively, unfair. (The judge had recognised that the test for unfairness was objective at [97] citing Re Saul D Harrison & Sons Ltd [1995] 1 BCLC 14 at p18.)[77]The judgment returns to fiduciary duty at [177]-[178] but here the technical library and diversion issues are addressed together and it will be more convenient to address these paragraphs in one go once the issues specific to the appeal on diversion have been considered. Diversion[78]The petitioners complained of diversion of the turnkey project to a third party. It is helpful to start by having in mind the distinction (see above at paragraph 8) between the project which the SHA referred to as the "first project" at clause 2.2 and the "Business" of IAEP defined in 2.1. The former is the BMW project, characterised by the acquisition of the lines by IAEP for onward sale on a turnkey basis, and the latter is a wider concept. The judge had this distinction in mind – see [1] and [157] of the judgment.[79]The judgment addresses diversion at [174] to [176]. The first finding was to accept that when the option lapsed, on 2 January 2014, the position was that SES, which already owned the lines at the time and would have been obliged to sell them to IAEP if the company had ever been able to exercise the option, was free to sell the lines. As part of this conclusion the judge found, as he put it, that by the previous October 2013 "the project as at that date was effectively dead".[80]Then at [175] the judge held that this fact – that the project was dead and that SES was entitled to sell the lines after 2 January 2014 – did not answer the gravamen of the allegation of diversion. The judgment continues as follows: [175] … There were two reasons CGI rather than IAEP signed the turnkey agreement with Infinity Max on 11th February 2015 and 28th April 2015. Firstly, Mr Shield and Mr Cotterill wanted Mr Dodson replaced by Mr Murphy. Secondly Mr Shield would have a larger shareholding in CGI than in IAEP. The respondents (apart from Mr Rock) acquiesced in that. "[176] There could, I agree, have been no objection to SES just selling the lines it owned. What, however, is contrary to the SHA is SES and the respondents entering into a turnkey arrangement with Infinity Max, using CGI as the vehicle for the turnkey agreement. That was in my judgment a breach of the non-competition and business promotion clauses in the SHA. It caused prejudice to the Dodsons and that prejudice was unfair."[81]The appellants point out that paragraph [175] is wrong because Mr Shield did not have a shareholding in CGI. The petitioners suggest that this is a minor slip by the judge because there was indeed a proposal for Mr Shield to have a larger shareholding, but it related to shares in the IAEP 2 company suggested as a way forward in the latter part of 2013, but that never eventuated. The petitioners are probably right about how the judge came to make this slip but the appellants are also entitled to make the point they do since it undermines the second reason advanced by the judge in [175]. However it leaves the first reason standing.[82]The appellants assert (skeleton paragraph 47) there was no evidential basis for ascribing these motives to Mr Shield and Mr Cotterill. I do not agree. That inference was plainly open to the judge from all the material in this case, which included, simply as examples, the conversation involving Mr Cotterill and Mr Murphy (of CGI) in June/July 2013 which involved Mr Murphy replacing Mr Dodson, and Mr Shield's "Project Bavaria" proposal in November 2013 which involved a new company IAEP 2 which would exclude Mr Dodson and had Mr Murphy managing sales (which was Mr Dodson's role).[83]The appellants also submit that even if Mr Shield and/or Mr Cotterill did want Mr Dodson replaced, there is no basis for attributing that motive to Infinity Max or CGI. That is certainly true as far as Infinity Max is concerned, but the judgment makes no such finding and it would be irrelevant. I doubt it matters whether CGI itself could be said to have such a motive (the judgment does not say that either) but whatever the position of Mr Murphy himself might have been (he did not give evidence) in fact by February /April 2015 Mr Cotterill had been a director of CGI since June 2014.[84]Finally there is the position of the other appellants (save for Mr Rock). The last sentence of [175] (quoted above) deals with that very briefly, holding the relevant respondents acquiesced in CGI signing the turnkey agreement rather than IAEP. The appellants submit there are no relevant findings in respect of each appellant to which relevant principles of law are applied to reach the conclusion and that in reaching this conclusion the court made "erroneous assumptions (rather than findings) of fact (including that Mr Shield had any shareholding in CGI)"(skeleton [52]).[85]Also relevant is paragraph 177 in which

the judge said this:

"[177] … The main actors, Mr Shield and Mr Cotterill, decided what should happen and Mr Catteneo, Alan Cotterill, Mr Collins and Mr Coulborn went along with it. All of them continued to work for CGI in the roll-out of the project and acquiesced in the diverting of the project to CGI…"
[86]The reasoning in the judgment on the position of the other appellants is brief. Nevertheless the appellants' submissions challenging that reasoning are undermined by two things. First the only specific point taken by the appellants is the erroneous reference to Mr Shield's shareholding. However as I have explained that error does not undermine the judge's crucial conclusion that the reason the turnkey project went ahead with CGI instead of IAEP was that Messrs Shield and Cotterill wanted to replace Mr Dodson with Mr Murphy. Second, nothing has been advanced on this appeal to show that any of the other appellants, who were directors of IAEP, i.e. Messrs Cattaneo, Alan Cotterill, Collins or Coulborn did anything at all to resist or object to what was happening. As the judge held, they went along with it. In my judgment the finding that they acquiesced to what happened was open to the judge. There is a distinct challenge to the finding about who worked for CGI but I will return to that.[87]The next critical findings are in [176]. They are that SES and the appellants breached two clauses in the SHA by entering into a turnkey arrangement with Infinity Max using CGI as the vehicle for the turnkey agreement. The appellants contend that there is a "fundamental lack of reasoning and analysis" here and argue that the finding ignores the reality that(i) the company IAEP was unable to deliver the project and(ii) SES as owner of the lines could deal with them as it thought fit and could engage whatever agents and sub-contractors it required to realise the assets and recoup its investment. Along the same lines, in oral submissions counsel for the appellants submitted that the reality of the position by January 2014 was not just that the "project" was dead but that the business of the company itself was dead. Therefore there could be no diversion because there was nothing to divert.[88]To address these submissions I will start with the finding that what took place amounted to breach of the non-competition clause of the SHA by SES and the appellants. There is no doubt the appellants, as shareholders in IAEP, were within the scope of the non-competition clause at 7.1, which provides as follows: "7.1 Subject to clause 7.2, none of the Shareholders shall (other than with the consent of the Board (such consent not to be unreasonably withheld or delayed)) for so long as they hold any Shares, carry on or be employed or engaged, concerned or interested in any business which is in competition with any part of the Business of the Company (as described in clause 2.1), including any developments in the Business after the date of this agreement." [ The exceptions to clause7.1 set out in clause7.2 involve opportunities offered to the company which the board determines not to pursue and the activities of Messrs Cotterill and Dodsons' respective companies Key and DNA. The exceptions do not mention SES. ][89]The argument is that this clause 7.1 only applies to shareholders and thus SES, which was a party to the agreement but not a shareholder, was not bound by it. The judgment does not address this distinction in this context, but the respondents to the appeal submitted that SES was indeed bound by the non-competition clause because although clause 7.1 only refers to shareholders, clause 7.3 made clear that it was an obligation binding on SES as well as a party. Clause 7.3 provides:
"7.3 The undertakings in this clause are given by each Shareholder and Shield to all of the Parties and apply to actions carried out by each Party (or any of its subsidiaries) in any capacity and whether directly or indirectly, on the Party's (or subsidiary's) own behalf, on behalf of any other person or jointly with any other person."
[90]I agree that the "undertakings in this clause" refers to the non-competition provision in clause 7.1. There is no other sensible candidate. In this clause 7.3 the term "Shield" refers not to Mr Shield – who was a shareholder and party to the SHA in his own right – but to his company SES. It is not clear cut but I would hold that taken as a whole and in context the contract does mean that SES is bound by the non-competition obligation. After all Mr Shield himself would be bound by it.[91]The next question in relation to the scope of the clause is to identify with what it was that the appellants were obliged not to compete. The clause is drafted by reference to the "Business" of the company, i.e. in effect turnkey projects in general rather than simply the first project in particular. Therefore the fact that the ultimate turnkey arrangement was not the same as the first project, because IAEP had not acquired the lines and was not selling them, is irrelevant. The 2015 deal with Infinity Max was plainly a turnkey project.[92]Was that Business dead as at January 2014? The judge made no such finding and I do not accept the appellants' submission to that effect made in this court. The fact that a turnkey agreement with Infinity Max was ultimately entered into within just over a year indicates that the prospects of such a deal existed. Throughout that period IAEP had valuable assets, i.e. the shop floor and archive technical libraries. Those assets were the source of the information needed to install the lines on a turnkey basis. For at least as long as it held those libraries, IAEP had a commercial purpose. As the judge found, the reason the deal did not progress via IAEP was because Mr Shield and Mr Cotterill wanted to exclude Mr Dodson. That did not mean IAEP's Business was dead.[93]Thus in my judgment, as the judge held in [176], once the option had expired SES was indeed free simply to sell the lines but it was not free to enter into a turnkey arrangement with Infinity Max, which is what it did do. SES was a party to both contracts with Infinity Max which together comprised the turnkey arrangement. The judge's characterisation of what happened as being that CGI was used as the vehicle for the turnkey agreement was apt and open to him in all these circumstances. Infinity Max was not simply buying lines from SES. The appellants contend that there were no, as they put it, "turnkey obligations" created for SES. However it is not possible to resolve that on appeal, and I note that the petitioners contend that by 28 April 2015, the date of the turnkey agreement, SES had received funds from Infinity Max for CGI.[94]The individual appellants were not parties to those contracts, as the appellants point out, and so they criticise the use of the term "entering into" in [176] to describe both what SES did with Infinity Max and what the individuals did. I believe what the judge meant here was that the involvement of appellants in the deal with Infinity Max which was ultimately done means that they committed breaches of the non-competition clause. That is what "entering into" was referring to when applied to the individual appellants. Those individuals, particularly Mr Shield and Mr Cotterill, plainly were closely involved in setting up the turnkey arrangement with Infinity Max and as such they were carrying on or being "employed or engaged, concerned or interested in any business which is in competition with any part of the Business". Those are the terms of clause 7.1 of the SHA and so the judge was right and entitled to find that at least those two appellants committed breaches of the non-competition clause.[95]What of the other appellants aside from Mr Shield and Mr Cotterill – i.e. Messrs Collins, Coulborn, Alan Cotterill, Mr Rock and Mr Cataneo?[96]Judgment [177] found that all of the appellants worked for CGI in the relevant period. There is no evidence to which I have had my attention drawn that Mr Shield himself actually worked for CGI and I doubt he did, but nothing turns on that on appeal. There is nothing surprising about the finding in relation to Mr Cotterill given that he was a director of CGI at that time, but again nothing turns on that on appeal.[97]What of the other appellants? The appellants contend there was no evidence to support the conclusion that they "all" worked for CGI, arguing that the petitioners only alleged that Mr Cotterill, Mr Collins and Mr Coulborn worked for CGI. On that basis, now ignoring Mr Shield and Mr Cotterill, the issues relate to the finding about Messrs Collins, Coulborn, Rock, Cattaneo and Alan Cotterill.[98]We were also told by counsel for the petitioners that Mr Cotterill had accepted that all of the appellants save for Mr Shield and Mr Cattaneo had worked for or with CGI but their exact roles and benefits had not been disclosed by the appellants. The petitioners also referred on appeal to evidence of Mr Shield that all the relevant appellants (and Mr Cotterill) benefitted from the sale to Infinity Max by being paid an income and a bonus. Given there is no suggestion they worked for SES, this evidence does support the inference that they worked for CGI because why else would they be paid. It shows that they were "employed or engaged, concerned or interested" in a business which was in competition with IAEP's business.[99]It is often easy on appeal to wish that a judgment contained more reasoning on this or that point, which is apparent with hindsight, but in this case I do believe it would have been helpful for the judgment to have contained a more explicit analysis of the respective positions of SES and the individuals concerned. Nevertheless I would dismiss the appeal against the finding that these individuals did work for CGI in this period. There was evidence to support the judge's finding, albeit it was thin.[100]I would therefore dismiss the appeal against the finding of breach of the non-competition clause by the appellants.[101]The other finding in [176] was breach of the business promotion clause 2.3. This required each party to use its reasonable endeavours to promote and develop the Business to the best advantage of IAEP. The appellants submitted that there is no basis for this conclusion (skeleton [58]) but its case on this is simply to repeat the point about the alleged lack of "turnkey obligations" on SES and the assertion that the characterisation of CGI as a vehicle for the turnkey agreement used by SES or the appellants was not open to the court below. I have dealt with both points already and will add only this. Even taking reasonable endeavours obligation at its lowest, the appellants have identified no endeavours at all which any of them took to promote and develop the business of IAEP at the relevant time. That absence is all the more stark given that the technical libraries belonging to IAEP were of real value for a turnkey project. In my judgment the judge's finding, tersely expressed though it was, that CGI was use as the vehicle for a turnkey agreement with Infinity Max, demonstrated that all the appellants (and SES) were in breach of the business promotion clause.[102]At the end of [176] the judge held that this diversion caused prejudice to the Dodsons and was unfair. Again the conclusions are terse but having identified diversion of the turnkey arrangement away from the company in which the petitioners were shareholders, those findings were open to the judge. All the more so when what happened also involved giving away relevant assets of the company (the technical libraries). Breach of fiduciary duty[103]Judgment paragraphs [177]-[178] are headed "breach of fiduciary duty", albeit the matter had already been addressed to some extent. They addressed submissions that the breaches of contract already identified are also breaches of fiduciary duty by the appellants. The judge decided that no formal or informal meeting of the directors was held to ratify the transfer of the shopfloor technical library or to permit CGI to carry the turnkey project forward. The position of the individuals was addressed distinguishing between the main actors Mr Shield and Mr Cotterill, who made the decisions and the other appellants (save for Mr Rock) who went along with it and continued to work for CGI in the roll out of the project. The judge held that they were all in a position of conflict between their duties as directors of IAEP and their function in CGI. Judgment [178] deals with the absence of possible defence under s175(6) of the Companies Act, which allows for the authorisation by unconflicted directors of a waiver of a director's duty to avoid a conflict. As the judge observed, that never happened and could not have happened because the unconflicted directors, at least Mr Dodson and Murry Dodson could have outvoted the only other relevant director Mr Rock even if he had been minded to waive the conflict.[104]The appellants' submissions on appeal on this topic are: i) There was no evidence that "all" of the appellants worked for CGI. ii) There is a complete lack of analysis how any of the appellants acquiesced in the diversion; iii) There is a complete lack of analysis how there is a breach of duty in relation to the technical library and a failure to identify the duty breached. If there was a transfer of the library to SES it was likely to be in the best interests of the company. iv) The term "turnkey" obscures the fundamental difference in character between the business opportunity (which failed) in which IAEP sought to pursue which was to acquire the lines and sell them as an integral part of a turnkey project, and what happened which was that SES sold the lines directly and CGI entered into a distinct turnkey agreement. Therefore the way things turned out was so different in character to the business opportunity which IAEP sought to pursue that there is no breach of fiduciary duty on the principle that a director would not fall foul of their fiduciary obligations where the director's company has no financial interest in the dealings which the competitor company pursues (citing Commonwealth Oil & Gas Co Ltd v Baxter [2009] CSIH 75 at [77]). v) Relying on Re Coroin [2012] EWHC 2343 (Ch) at [631], even if there was a breach of fiduciary duty, if such a breach does not give rise to any adverse financial consequences it is likely to be difficult for a petitioner to establish relevant prejudice, particularly where the acts are breaches of duties owed to the company rather than to shareholders individually. This applies because after the option expired, the company IAEP had no right to purchase the lines.[105]Starting with the law, the fiduciary duty relied on by the petitioners in this case relates to the duty to avoid conflicts of interest (s175(1) of the Companies Act 2006) and the engagement by a director in a business which competes with the business of the company they direct. As has been explained many times before, the elements of fact and degree which determine whether the duty has been breached will vary infinitely (see Sedley LJ cited in [77] of Commonwealth Oil & Gas ).[106]The petitioners point to s175(2) of the 2006 Act (below) and submit it is a complete answer to the appellants' Commonwealth Oil & Gas point. The statute provides: (2) This applies in particular to the exploitation of any property, information or opportunity (and it is immaterial whether the company could take advantage of the property, information or opportunity).[107]I agree with the petitioners. The appellants' submission based on Commonwealth Oil & Gas is that since, as they assert, IAEP could never have entered into the arrangements SES and CGI entered into as they turned out, there could be no conflict. However by s175(2), the fact the company IAEP could not take advantage of the company's property (the shopfloor library) is immaterial to the case against the appellants that they exploited that property of the company by giving it to businesses which were in competition with IAEP, namely CGI and SES.[108]Turning to the specific points, the first two, about working for CGI and acquiescence, have been rejected above. Most of the third point, on the technical library, has been considered above and rejected. The remaining point is the argument that the transfer of the company's property to SES was likely to be in the best interests of the company, however that suggestion is fatally undermined by the failure of the appellants' case in this court that the technical library had no real value, and by the absence of a ratification by the board of IAEP of any transfer. Moreover the judgment makes no finding about the value of the release of the Infinity Max fraud claim in the Infinity Max agreements and there is no basis on which to draw a conclusion in the appellants' favour on appeal.[109]The fourth point, with the reference to Commonwealth Oil & Gas has been addressed already as a matter of principle by reference to s175(2).[110]On the fifth and final point, I accept for the purposes of argument the submission made based on Re Coroin , that if a breach really did not generate any adverse financial consequences then identifying a prejudice could well be difficult. The problem is that it is simply not this case. The fact that SES was entitled to sell the lines does not mean it was entitled to participate in a turnkey arrangement nor does it mean that IAEP did not own assets of value in a turnkey context, i.e. the shopfloor and archive libraries. Those assets were given away. Moreover if the £58 million overall price paid by Infinity Max had even a prospect of leading to the £19 million profit predicted by Mr Dodson in 2013, then there is plainly a sufficient adverse financial consequence to justify a finding of unfair prejudice with an enquiry to follow.[111]I would therefore dismiss the grounds of appeal insofar as they relate to challenges to the findings of breach of the SHA and breaches of fiduciary duty by each of the appellants and challenges to the conclusions of unfair prejudice. Minority discount[112]A minority discount is a discount applied to the value of shares which represent a minority stake in the company. The theory is that because the minority stake does not give control of the company, the value of the stake will be lower than the figure which would be derived by applying a simple pro rata fraction of the overall value of 100% of the shares. So for example the value of a 40% shareholding would be less than 40% of the value of the company as a whole, and the difference is the minority discount.[113]The judge directed that the valuation of the petitioners' shares should be undertaken without applying a minority discount. The reasoning ([31]-[33]) proceeded from common ground that in a quasi-partnership case the starting point was no minority discount. The judge held that since the reality of the matter at the time the project was diverted to CGI, was that the only business of the company was the prospect of entering the turnkey project, once that diversion happened that was for all practical purposes the same as having a minority shareholder excluded from the company and so the usual quasi-partnership rule should apply.[114]The appellants contend the judge was wrong to apply no minority discount, particularly in a case, as here, where there is no quasi-partnership. They submit that Strahan v Wilcox [2006] BCC 320 at [17] (per Arden LJ) is authority for the proposition that "exceptional" circumstances must exist for there to be no discount. The appellants also rely on Irvine v Irvine [2007] 1 BCLC 445 in which Blackburne J held that a minority shareholding which had none of the characteristics of a quasi-partnership should be valued for the purposes of a share purchase order "for what it is", with a discount for its minority status. The petitioners (respondents on the appeal) contend that a minority discount is not appropriate in this case, citing Re Bird Precision Bellows [1984] Ch 419 (HC) and [1986] Ch 658 (CA) and a number of more recent High Court decisions ( Re Sunrise Radio [2009] EWHC 2893 (Ch) , Re Blue Index [2014] EWHC 2680 (Ch) and Re Lloyds Autobody Ringway Ltd [2018] EWHC 2336 (Ch) at [113]). Reference was also made in argument to Lord Hoffmann in O'Neill v Phillips at 1107 D-E.[115]The purpose of the exercise is to value the shareholding of a successful petitioner under s994. The question arises because the petitioner has established that unfair prejudice has taken place and the court has decided that the remedy is to require the respondents to purchase the petitioner's shares. As Lord Hoffmann put it in O'Neill v Phillips , the offer must be " to purchase the shares at a fair value " while as Oliver LJ put it in Re Bird Precision Bellows the relevant section confers on the court " a very wide discretion to do what is considered fair and equitable in all the circumstances of the case, in order to put right and cure for the future the unfair prejudice which the petitioner has suffered at the hands of the other shareholders. "[116]These principles are not confined to companies found to be quasi-partnerships, they are entirely general. How they apply in a given case will depend on all the circumstances. A line of reasoning deployed to explain why a valuation without a minority discount is fair in a quasi-partnership case is by analogy with the position of a partner in a real partnership (e.g. Strahan v Wilcox [17]). That reason would not apply in a case which was not a quasi-partnership. However it is not the only basis on which the absence of a minority discount can be justified. A different reason, applied by HHJ Purle QC in Re Sunrise Radio at [305] and [308] is that the wrongdoing majority shareholder(s) in that case ought not to be unjustly enriched by the application of a discount. This reasoning does not depend on the existence of a quasi-partnership.[117]The statement of Arden LJ in [17] of Strahan v Wilcox , with which both Richards and Mummery LJJ agreed, and on which the appellants rely, is that unlike in case of a quasi-partnership relationship:
"It is difficult to conceive of circumstances in which a non-discounted basis of valuation would be appropriate where there was unfair prejudice for the purposes of the 1985 Act but such a relationship did not exist. However, on this appeal I need not express a final view on what those circumstances might be."
[118]However, as the judge in Re Blue Index Ltd (Mr Hollington QC) later pointed out, this observation was obiter and conflicts with an earlier (obiter) observation of Lord Hoffmann in O'Neill v Phillips that "special circumstances" would be required to order a minority discount. There Lord Hoffmann was speaking generally and was not referring only to quasi-partnerships.[119]In my judgment the true position is no more or less than that identified by Lord Hoffmann and Oliver LJ, i.e. that the purpose is to identify fair value in all the circumstances and the court has a wide discretion. In many cases no discount will be an appropriate remedy for unfairness irrespective of whether or not the relationship was a quasi-partnership, but in other cases may be appropriate. Definitive statements which can be interpreted as a general rule for a given type of case which would need to be rebutted are not helpful because they do not reflect the range of circumstances which will arise.[120]Turning to the facts, since I would allow the appeal on quasi-partnership, which was the basis of the judge's approach, the matter will need to be considered afresh. That takes me to a very important factor, namely the provisions in the applicable contracts and the articles of association. Amongst other things, clause 10 of the SHA provided that no transfer of shares was permitted or required unless provided for by the articles of association. Clause 17 of the Articles relates to transfer of shares. By clause 17.6, subject to irrelevant exceptions, there are restrictions on sale of the shares. The important one for present purposes is that the shares can only be sold at "Fair Value" which is defined in clause 17.10 as:
"17.10 The Fair Value shall be the price which the Experts shall certify in their opinion to be the fair value at that date as between a willing seller and a willing buyer at arms length on a going concern basis but disregarding the number of Shares offered for sale or the proportion they form of the total number of issued Shares or of any class of Shares. Such determination shall be final and binding on the shareholders (in the absence of fraud or manifest error)."
[121]Counsel for the appellant rightly pointed out that this definition did not mean that the price would necessarily be one any real buyer would be prepared to pay, which is correct. However that does not undermine the significance of this definition in the present case. The definition builds into the concept of "Fair Value" a requirement for no minority discount. That is exactly what the words "disregarding the number of Shares offered for sale or the proportion they form of the total number of issued Shares …" mean. The articles define the Fair Value as being the pro rata value of the petitioners' shares applied to the whole value of all the shares, and not applying any discount referrable to the proportion the petitioners shareholding represents as a fraction of all the shares in the company.[122]That is a powerful reason why the fair valuation of the petitioners' shares in this case should be carried out without a minority discount. The fact the parties' relationship was not a quasi-partnership is irrelevant. I can think of no other aspects of the circumstances which would justify a different order. This ground of the appeal is dismissed. Valuation date[123]The appellants contend that after the contracts between SES, CGI and Infinity Max were signed on 11 February and 28 April 2015, as things turned out the turnkey solution failed. The appellants wish to rely on this to establish that IAEP's project, if it had gone ahead, would have failed in the same fashion and that in turn ought to be reflected in the value of the petitioners' shareholding. They contend that the valuation date chosen by the judge, which was 28 April 2015, was designed to preclude that argument.[124]The authorities were reviewed in Profinance Trust SA v Gladstone [2002] 1 WLR 1024 at [60-62]. Prima facie the shares ought to be valued at the date they are to be purchased but that is subject to the overriding requirement that the valuation should be fair.[125]The decision on this was made at the consequentials hearing. The judge's reasoning adopted the general Profinance approach of starting from the prima facie position, then reaching the conclusion that the earlier date which was chosen was the appropriate in the circumstances. The reason given was because "this was the date the unfairness crystallised". It is not clear whether this meant the judge was seeking to preclude the argument which the appellants contend they are entitled to advance, but that does appear to be what was intended by the petitioners. To select a date in order to preclude such an argument by the appellants, on the facts of this case, would not be fair. They are entitled to seek to prove, if they can, that in fact the Infinity Max turnkey opportunity was not worth as much as had been hoped, with a consequential impact on the fair value of the petitioners' shareholding in IAEP. By the same token the petitioners do not have to accept that assertion. Even if it is true, as the appellants' assert, that the project as they ran it barely broke even, the petitioners may be able to show that this is not probative of the value of what would have happened had the petitioners not been unfairly prejudiced. Valuing the shares as at the date of the petition or the date of the consequential order makes clear that such arguments are open to both sides. As far as I am aware it makes no difference which of those dates is chosen. I would hold it should be the date of the petition. Lady Justice King:[126]I agree.

Lord Justice Lewison:

[127]I also agree.

Cited in 1 later judgment