Case studies

Expert prerogative in shareholder dispute


In situations where parties have agreed that their dispute will be determined by an expert, the courts have no authority to tell the expert what to do.

Two brothers had fallen out. One held a minority stake in the family company and the other – for whom we acted - the majority stake. They had already agreed that the company would buy out the minority shares at a price to be determined by an independent expert valuer.

During this process, the valuer indicated that she would exclude a particular stream of income from the value of the company. The minority shareholder objected and issued proceedings for a declaration that the income should be included.

We succeeded in having this claim dismissed and were awarded costs. The court regarded the claim as misconceived. The parties had agreed that there was to be a private valuation by one named person and the application was effectively asking for the valuation process to be carried out by the court.

Unless otherwise agreed by the parties, it was the expert's role to form her own view. This included making difficult decisions, even if they were outside her area of expertise. Exceptionally, the court would have jurisdiction to interfere but only to give effect to the parties' agreement. If the valuer had failed to carry out her instructions, the court could appoint a replacement because the machinery of the valuation had broken down.


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Penningtons Manches LLP

Penningtons Manches LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority. San Francisco is an associated office.

Penningtons Manches LLP