Financial Technology Ventures II (Q) LP and Ors v ETFS Capital Limited and Tuckwell [2021] JCA 176 (29 June 2021)

Companies - appeal against judgment of Royal Court dated 26 January 2021

[2021]JCA176

29 June 2021

	Before :		Jonathan Crow, Q.C., President; Lord Anderson of Ipswich K.B.E., Q.C., and; David Perry, Q.C..
Between		(1) Financial Technology Ventures II (Q), LP & Others		Appellants
And		(1) ETFS Capital Limited		First Respondent
And		(2) Graham Tuckwell		Second Respondent

Advocate N. A. K. Williams for the Appellants.

Advocate S. J. Alexander for the First Respondent.

Advocate R. A. B. Gardner for the Second Respondent.

JUDGMENT

CROW JA:

Introduction

Outline

1. This is the judgment of the court on an appeal by the Plaintiffs and a cross-appeal by the Second Defendant ("Mr Tuckwell") against the judgment of the Royal Court (MacRae, Deputy Bailiff, and Jurats Olsen and Christensen) dated 26 January 2021.

2. In short summary, the Plaintiffs' principal claim at trial was based on allegations of unfair prejudice. They sought an order pursuant to Articles 141 and 143 of the Companies (Jersey) Law 1991, as amended ("the Companies Law"), requiring either the First Defendant ("the Company") or Mr Tuckwell to purchase their shares in the Company. In the alternative, the Plaintiffs sought an order to wind up the Company on the just and equitable ground pursuant to Article 155 of the Companies Law (although from the pleadings that had appeared to be their primary claim).

3. Following a four-week trial in October and November 2020, the Royal Court gave judgment with admirable speed and in commendable detail within two months. The court ordered either Mr Tuckwell or the Company to purchase the Plaintiffs' shares at their net asset value ("NAV") as at 13 November 2020 (being the last day of the trial) less a 20% minority discount. The Plaintiffs now appeal against the imposition of that discount and also against the date of the valuation. In response, Mr Tuckwell cross-appeals against the buy-out order. The Plaintiffs' contingent response to that cross-appeal is to seek a winding-up order in the event that the buy-out order is overturned.

The Royal Court's findings

4. The Royal Court's findings of fact are set out in §88 - 367 of its judgment. For the purpose of explaining the issues in this appeal, we will do no more than summarise the salient features.

5. The Company was incorporated in this jurisdiction in 2004. Its original business was in the development and management of exchange-traded products (i.e. publicly listed securities that track an index, commodity or basket of assets like an index fund, but trade like a stock on an exchange).

6. At the time of the trial, Mr Tuckwell was the majority shareholder with 55% of the issued share capital. A company owned by him and his wife owned a further 3%. The Plaintiffs are all private equity funds which between them owned 35%. The First and Second Plaintiffs (together "FTV") owned 22%. The Third to Sixth Plaintiffs (together "Millennium") owned 10%. The Seventh Plaintiff ("Susquehanna") owned 3%. The remaining shareholders (in total, about 42) were former employees and executives.

7. FTV's initial investment in the Company of $10 million was made in late 2006. This is addressed principally in §88 - 110 of the Royal Court judgment. The following findings of fact have particular significance for this appeal: (i) FTV is a sophisticated investor. (ii) It invested more than Mr Tuckwell particularly wanted. (iii) The terms on which FTV agreed to invest were negotiated between professionals. (iv) The parties' agreement was recorded in detail in writing, partly in a shareholders agreement dated 20 October 2006 ("the Shareholders Agreement"), and partly by the adoption of revised Articles of Association. (v) Under the terms of the Shareholders Agreement, FTV (as the Preferred Shareholder) had a right to nominate a director, and a right to block any significant change in the nature of the Company's business. (vi) Under the terms of the Articles, FTV was entitled at any time after 1 September 2011 to redeem in full all of its Preferred Shares at a pro rata valuation. (vii) The Preferred Shares could be converted into Ordinary Shares after the expiry of three years from the adoption of the new Articles of Association, subject to a complicated conversion ratio which was dependent on the amount of the Company's assets under management ("AUM") at the time of conversion (the higher the AUM, the higher the conversion price, and hence the fewer Ordinary Shares would be issued). (viii) There was no contractual obligation on Mr Tuckwell or the Company to pursue a Liquidity Event (defined as a 'Qualified Public Offering', a 'Sale of the Company' or a winding-up). (ix) It was "more or less accurate" to say that FTV bought its shares in the Company "at a discount of one sort or another" (Royal Court judgment, §322). (x) When FTV made its initial investment, it held various expectations as to future liquidity, but none imposed or could be argued to have imposed a contractual or any other duty on the part of the Company or Mr Tuckwell to pursue either an initial public offering ("IPO") or a sale of the Company (§110 of the Royal Court judgment).

8. FTV converted its Preferred Shares into Ordinary Shares in late 2009. This development is addressed in §115 - 123 of the Royal Court judgment. We draw particular attention to the following findings of fact: (i) The conversion was effected at the earliest contractually permissible date. (ii) As a result, FTV obtained a far larger number of Ordinary Shares than it would have done had it waited until a later IPO or sale of the Company. (iii) The inevitable consequence of the conversion was that FTV lost (a) its contractual entitlement to nominate a director, (b) its contractual right to a pro rata exit after five years and (c) its contractual right to block any significant change in the nature of the Company's business. (iv) FTV was fully aware of that consequence and it took the decision to convert the Preferred Shares into Ordinary Shares (as one of its witnesses said) because "economically it was in our best interest to convert" at that time (§119 of the Royal Court judgment). (v) Mr Tuckwell resented FTV's conduct in doing so.

9. FTV sold about one third of its shareholding to Millennium and Susquehanna in 2011 ("the Secondary Sales"). This is addressed in §124 - 148 of the Royal Court judgment. The following findings of fact are particularly significant: (i) The shareholding which FTV offered for sale was professionally marketed. (ii) Millennium and Susquehanna were provided with information by FTV, and they also conducted due diligence directly with the Company. (iii) They were aware that an IPO was possible but not certain. (iv) They were aware that they were buying Ordinary Shares with no liquidity preference for which there was "no market". (v) It was "more or less accurate" to say that Millennium and Susquehanna bought shares in the Company "at a discount of one sort or another" (Royal Court judgment, §322 and also §131 - 132). (vi) Since the Secondary Sales were made for the benefit of FTV, and since the due diligence absorbed a substantial amount of time for the Company's executives, Mr Tuckwell suggested to FTV that it should make a contribution towards compensating the executives for their efforts. That suggestion was characterised by FTV's witnesses as an improper attempt by Mr Tuckwell to extract money from FTV for his own personal gain. (vii) The Secondary Sales went ahead without FTV making any such contribution. (vii) Having invested US$10 million in 2006, FTV sold one third of its stake to Millennium and Susquehanna under the Secondary Sales for US$64 million. (viii) Mr Tuckwell resented the fact that FTV had been able to realise part of its investment in this way and thereafter suffered from 'liquidity envy'.

10. During 2011 and 2012, the prospect of an IPO was explored along with various sale opportunities, but in the event none of them completed. This is addressed in §149 - 156 of the Royal Court judgment. The following findings of fact are important for this appeal: (i) In October 2011, without discussing the matter at Board level, Mr Tuckwell unilaterally decided to abandon the idea of an IPO because he was concerned that his own shares would be locked up while FTV might achieve further liquidity at what, in his view, would be his expense. (ii) Nevertheless, there was no pleaded allegation that the abandonment of the IPO involved any wrongdoing by Mr Tuckwell, or any unfair prejudice to the Plaintiffs. (iii) The attempts to sell the Company failed, but the Royal Court made no findings as to whether Mr Tuckwell was in any way to blame.

11. There was a certain amount of evidence and argument at trial regarding the remuneration purportedly paid to Mr Tuckwell by way of Long Term Incentive Plans ("LTIPs"). This is addressed in §157 - 173 of the Royal Court judgment. For the purpose of this appeal, the following findings of fact are relevant: (i) The LTIP awarded to Mr Tuckwell for 2010 was duly approved by the Board. (ii) The LTIPs for 2011 and 2012 were not duly approved by the Board. (iii) Those LTIPs were cancelled. (iv) As a result, the Plaintiffs cannot claim to have suffered any prejudice (whether unfair or otherwise). (v) Nevertheless, the dispute over Mr Tuckwell's remuneration led to a further deterioration in his relationship with FTV.

12. In 2012, after the abandonment of the IPO and the failure of the sale process, Mr Tuckwell put forward a scheme under which certain executives (including initially himself) would be able to realise some of their shareholdings. FTV alleged at trial that this proposal involved Mr Tuckwell abusing his powers as a director by preferring his own personal interests. The issue is addressed in §174 - 189 of the Royal Court judgment. For the purpose of this appeal, the following findings of fact bear emphasis: (i) The proposal was advanced at least in part because some of the executives received lower remuneration from the Company than they could expect elsewhere, an arrangement they had been willing to accept because of the anticipated rewards through an IPO or sale, which failed to materialise. (ii) The independent directors were prepared to support Mr Tuckwell's proposed participation in the arrangements. (iii) Nevertheless, following a threat of litigation from FTV, Mr Tuckwell withdrew the suggestion that he should participate, and in the event he did not. (iv) None of this involved any unfair prejudice against the Plaintiffs' interests as members of the Company.

13. In the course of the discussions summarised above, Mr Tuckwell informed Mr Cukier (FTV's representative on the Board) that he was going to remove him as a director. He duly requisitioned a general meeting for that purpose and Mr Cukier was removed on 27 September 2012. FTV alleged at trial that this was done in retaliation for FTV's refusal to pay compensation for the due diligence in relation to the Secondary Sales, and for FTV's opposition to Mr Tuckwell's participation in the executive liquidity scheme. This is addressed in §180 and §190 - 195 of the Royal Court judgment, which noted that the removal of Mr Cukier was not alleged to have involved any breach of duty by Mr Tuckwell, nor any unfair prejudice to the Plaintiffs.

14. In June 2011, a parcel of 17,633 shares in the Company was transferred from Mr Tuckwell to the Tuckwell Foundation (a charitable entity) and the transfers were registered. This is addressed in §196 - 213 of the Royal Court judgment, which made the following findings of fact: (i) It was common ground at trial that the share transfers involved a breach of the Shareholders Agreement. (ii) Millennium and Susquehanna were willing to waive the breach when they found out about it in 2013. (iii) The independent directors considered that FTV ought to waive the breach too. (iv) One of the independent directors (Mr Armour) along with representatives of Millennium and Susquehanna tried persuading FTV to waive the breach. (v) FTV refused to waive the breach. (vi) As a result, Mr Tuckwell accepted that the transfers were void. (vii) The transfers were accordingly reversed in the Company's books. (viii) Even if the transfers had been sustained, they would not have caused the Plaintiffs any prejudice (whether unfair or otherwise).

15. Between 2013 and 2016, commodity prices were such that a sale of the Company would have been unrealistic. By 2017, however, the situation had improved and by March / April 2018 Mr Tuckwell had successfully negotiated a sale of the greater part of the Company's business. The three main constituent elements of the Company's business (referred to as the 'European ETC Business', the 'European ETF Business' and the 'US Business' respectively) were sold in separate transactions ("the Sales") to three unrelated purchasers - WisdomTree Investments Inc ("WisdomTree"), Legal & General Investment Management (Holdings) Limited and Aberdeen Asset Management Inc. The Sales involved the disposal of assets representing 98% of the Company's revenue and 97% of its AUM. All that the Company retained was a relatively small Australian business. The aggregate consideration for the Sales was about $626 million, roughly half of which was in cash together with 30 million shares in WisdomTree. The Plaintiffs made no complaint about the price (§258 of the Royal Court judgment). There was, however, a dispute at trial as to whether the Sales constituted a Liquidity Event within the meaning of the Shareholders Agreement and the Articles of Association. The Royal Court concluded in §214 - 227 of its judgment that (i) the Sales did not involve a Liquidity Event as so defined, and (ii) it would have made no difference to the outcome of the proceedings even if the Sales had involved a Liquidity Event, because no contractual consequences would have followed as a result.

16. In outline, the Plaintiffs' complaint at trial was that (i) the decision not to distribute the proceeds of sale, (ii) the forced resignation of the independent directors, (iii) the fundamental change in the Company's business and (iv) Mr Tuckwell's refusal to purchase (or facilitate the purchase of) the Plaintiffs' shares other than at 44% discount all formed part of a scheme by Mr Tuckwell to drive the Plaintiffs out of the Company at the best possible price for him and not at a fair price to the Plaintiffs. The Royal Court stated (in §228 of its judgment) that it broadly accepted that case "as it is supported by the contemporaneous documentation and the evidence that we heard from the key witnesses, in particular Mr Tuckwell".

17. The first element in the Plaintiffs' complaint is addressed in detail in §229 - 272 of the Royal Court judgment. For the purpose of this appeal, it is sufficient to record the following findings of fact: (i) In the lead-up to the planned Sales, Mr Tuckwell intentionally gave the Plaintiffs the impression that there would be a pro rata distribution of the proceeds. (ii) In particular, Mr Tuckwell provided a spreadsheet for the proposed sale to WisdomTree ("the 2017 spreadsheet") which reflected a pro rata value for all shareholders in the Company (§242 - 243 of the Royal Court judgment). (iii) Mr Tuckwell was "deliberately misleading the Plaintiff shareholders" (§244 of the Royal Court judgment) when he told them on 11 November 2017 that he would go through a draft Distribution Agreement the next day: he did not intend to do so. (iv) Although WisdomTree initially asked for shareholder approval of the proposed sale, Mr Tuckwell persuaded them to dispense with that requirement by procuring the Company to give an indemnity against any subsequent shareholder claims ("the WisdomTree Indemnity"). The WisdomTree Indemnity was not discussed at Board level, as it should have been. Giving the indemnity was not in the Company's interests. (v) Mr Tuckwell deliberately avoided discussing any details regarding the distribution of the proceeds of the anticipated Sales at Board meetings on 12 - 13 November 2017, but he was prepared to see the Minutes include a reference to "equitable treatment of shareholders in [the] distribution of assets" (Royal Court judgment, §267). (vi) The Board's decision to postpone the discussion of any distribution was an act of the Company which was led by Mr Tuckwell. His conduct was unfair and also involved a breach of duty, because he was putting his own interests before those of the other shareholders (§272 of the Royal Court judgment).

18. The Plaintiffs' second main complaint was that Mr Tuckwell forced the two independent directors to resign because of their concern for the treatment of the minority shareholders. This is addressed in §273 - 307 of the Royal Court judgment. The relevant findings of fact for present purposes are these: (i) During the last quarter of 2017 and the first quarter of 2018, there were numerous exchanges involving Mr Tuckwell, the independent directors and the Plaintiffs' representatives discussing the prospect of jointly instructing a valuer, and the concepts of 'fair value', 'equitable treatment' and minority discounts. (ii) The independent directors believed that all shareholders should be treated equally on a distribution. (iii) Mr Tuckwell was aware of his fiduciary duties and specifically of the need to treat shareholders fairly, but he did not consider that that meant they were all entitled to a pro rata distribution. (iv) Mr Tuckwell wanted the independent directors to be removed before any Board decision was made regarding a distribution. (v) Once the Sales were completed, Mr Tuckwell asked both of the independent directors to resign, which they did. (vi) In asking the independent directors to resign, Mr Tuckwell was acting in his capacity as Chairman and as such this was an act of the Company (§304 of the Royal Court judgment). (vii) Mr Tuckwell was not acting in the best interests of the Company as a whole and was exercising his powers as a director to benefit himself and to prejudice the interests of the minority shareholders, placing his own interests above those of the Company.

19. The Plaintiffs' next main complaint was that Mr Tuckwell failed to distribute the proceeds of the Sales and instead caused the Company to embark on a new line of business similar to private equity investment. This is addressed in §283 - 285 and §308 - 319 of the Royal Court judgment, where the main factual findings are these: (i) Mr Tuckwell accepted that this was a completely different business from what the Company had been doing when the Plaintiffs invested. (ii) Mr Tuckwell accepted that the Plaintiffs would have had no desire to be invested in private equity funds, being private equity investors themselves. (iii) In January 2018, Mr Tuckwell told Mr Cukier that his heirs would be dead before FTV ever saw a penny, and if they wanted any liquidity it would only be on the basis of a huge discount. (iv) Mr Tuckwell had lost any objectivity in his attitude to FTV, and this ultimately coloured the way he wished to treat the other minority shareholders. (v) Mr Tuckwell now treats the Company as his 'family office', in the sense that he alone takes the investment decisions and, in the event of any disagreement at Board level, he uses his casting vote to override the only other director. (vi) The change in the Company's business involved an act of the Company. (vii) That change of business was unfair in that it involved a breach of duty by Mr Tuckwell, who preferred his own interests to those of the other shareholders. (viii) The Plaintiffs have been prejudiced because their shares are now unmarketable.

20. The Plaintiffs' next main complaint was that Mr Tuckwell has refused to contemplate a share purchase other than at a significant discount. The essential facts are not in dispute. By the autumn of 2017, Mr Tuckwell undoubtedly intended that the Plaintiffs would only be able to liquidate their investments at a substantial discount. What separates the parties is their respective attitudes to entitlement. For his part, Mr Tuckwell considers that the majority shareholder in a company is entitled to outvote the minority. He regards majority rule as a fact of business life, and one that was well known to the Plaintiffs when they invested, and when they converted their Preferred Shares into Ordinary Shares. He considers that the 'fair value' of a minority shareholding can and should reflect the fact that it is a minority shareholding. For their part, the Plaintiffs consider that they were and are entitled to expect a return on their investment calculated by reference to a pro rata proportion of the aggregate value of the Company as a whole.

21. These issues are discussed in §320 - 352 of the Royal Court judgment. The following findings deserve emphasis:

a. In §334 - 344, the Royal Court recorded Mr Tuckwell's evidence that he wanted to pay FTV "the minimum price that [he] could legally pay them" (our emphasis). To that end, he instructed KPMG to provide advice on an appropriate discount for a minority interest in the Company, and the instructions he prepared for KPMG were reasonably accurate, although some criticism could be made of some of the detail. (The Royal Court dismissed the Plaintiffs' objection that Mr Tuckwell should have instructed Ernst & Young ("EY"), who had provided some advice six years earlier.) KPMG advised that the appropriate discount would be in the range between 36% and 50%, which Mr Tuckwell averaged out at 44%.

b. Having received the KPMG report, Mr Tuckwell offered to buy the shares of Millennium and Susquehanna at US$1,400 each, representing a NAV of US$2,500 per share subject to the 44% discount. The KPMG report was not provided to them, and there was no offer to negotiate. They were given five days to accept. It was subsequently apparent from the pleadings that Mr Tuckwell's intention was that the Company would be the purchaser. As such, the offer made to Millennium and Susquehanna was an offer made by the Company.

c. The Royal Court held that the offers made to the Plaintiffs to purchase their shares at a discount were unfair "in that they were breaches of the duties owed to the Company and without regard to the interests of the Company or the interests of the shareholders as a whole" (§349 of the Royal Court judgment).

d. Finally, the Royal Court held that the Plaintiffs would be able to establish that the offer caused them prejudice if they could show that the 44% discount was excessive.

22. In August 2019, Mr Tuckwell informed the Board that he intended to move back to live in Australia while retaining control over the Company. The Plaintiffs' complaint in this regard was that the move exposed the Company to the risk of Australian corporation tax, which it would not otherwise have incurred; that they as shareholders would be exposed to the risk of Australian tax on dividends; and that Mr Tuckwell was thereby in breach of his service contract which required him to work from Jersey. After taking advice, Mr Tuckwell then restructured the business, interposing a UK subsidiary which (the Plaintiffs complained) exposed the business to UK tax which would not otherwise have been incurred, and also reduced their oversight at Board level in the Company. In May 2020, Mr Tuckwell also caused his service contract to be retroactively terminated with effect from 1 September 2019. These issues are addressed in §353 - 367 of the Royal Court judgment, where it held that: (i) the Plaintiffs had failed to adduce any expert evidence to demonstrate that the Company was in fact exposed to Australian tax: although the court does not say so, we were also informed that the Plaintiffs adduced no expert evidence to demonstrate that they, as shareholders, were in fact liable for any Australian tax on dividends either; (ii) as a result, no prejudice could be demonstrated (unfair or otherwise); (iii) nevertheless, Mr Tuckwell was reckless in moving to Australia before having established the tax implications of doing so.

Conclusions on unfair prejudice in the Royal Court

23. Based on the factual findings outlined in §17 - 22 above, the Royal Court concluded at §463 that there had been unfair prejudice in the conduct of the Company's affairs involving breaches of duty by Mr Tuckwell. Specifically, the Royal Court held (at §464 of its judgment) that, from the time when the Sales were first in prospect, Mr Tuckwell "pursued a scheme designed to drive the Plaintiffs out of the Company at the lowest possible price" which he attempted to achieve by (i) leading the Plaintiffs to believe that there would be a pro rata distribution of the proceeds of sale (as held in §242 of its judgment); (ii) repeatedly postponing discussion of the issue of distribution of the proceeds of sale (as held in §272 of the judgment); (iii) securing the removal of the independent directors, who had made it clear they wanted to ensure that all shareholders were treated fairly (as held in §273 - 307 of the judgment); (iv) unilaterally changing the business of the Company after the Sales were completed, leaving the Plaintiffs locked in with little ability to deal with their shares (as held in §308 - 319 of the judgment); and (v) making an offer to buy the Plaintiffs' shares at a discount "pursuant to a process that was flawed, and in any event different from the one that he had promised the Plaintiffs that he would pursue" and at a discount that was excessive (as held in §320 - 352, §432 and §451 - 453 of the judgment).

24. The Royal Court also concluded (in §465 of its judgment) that the Plaintiffs had suffered financial prejudice (i) consisting of "the fact that the Plaintiffs are now, in accordance with Mr Tuckwell's wishes, locked in to a new private Company with shares that are much less marketable than they were, owing to the new business which Mr Tuckwell has deliberately pursued, without regard to the interests of shareholders apart from himself" and (ii) by virtue of Mr Tuckwell having offered to purchase the Plaintiffs' shares at a price "which on any view is far too low, and has been pitched at that level in order to punish FTV and to secure maximum advantage to himself".

The remedies ordered by the Royal Court

25. Having concluded that there had been unfair prejudice to the Plaintiffs, the Royal Court proceeded to consider the various issues in dispute between the parties as to the appropriate nature of a buy-out order. The first of these was the valuation date. The Plaintiffs said that the valuation should be conducted by reference to the date of the Sales in the first third of 2018. In response, Mr Tuckwell said that it should be conducted as at the date of the trial. This dispute is addressed in §368 - 371 of the Royal Court judgment. Having considered relevant authority, the court held that (i) the starting point was generally that any valuation should be conducted by reference to the date of the trial; (ii) a different date could be chosen, depending on the circumstances of any given case; (iii) in this case, it would be unfair to Mr Tuckwell to conduct the valuation by reference to the date of the Sales, because the shares in WisdomTree had fallen in value since then, and that was not his fault; (iv) in the circumstances, the valuation should be conducted by reference to the last day of the trial, namely 13 November 2020.

26. The next issue concerned the basis of the valuation. As to that, the parties' expert witnesses at trial agreed that a net asset valuation was appropriate for the Company as a whole, and that any valuation of the Plaintiffs' shares should treat them as a single block, rather than as separate holdings. There was, however, a disagreement about the application of a minority discount and also as to whether the valuation should include a premium to reflect the marriage value to Mr Tuckwell of acquiring effectively absolute control over the Company. The Royal Court considered these issues in §372 - 418, §423 - 432 and §440 - 453 of its judgment. For present purposes, its key findings were as follows: (i) the object of any valuation under Article 143 is to achieve a fair outcome which is proportionate to the unfair prejudice which a plaintiff has suffered; (ii) in that context, there are no inflexible rules as to whether a minority discount should or should not be applied; (iii) generally, though not invariably, a minority discount could be expected, other than in relation to quasi-partnership companies, which this was not; (iv) the valuation exercise did not involve a hypothetical sale in the open market, nor did it involve a sale by an unwilling vendor: it involved valuing a minority holding which was held by a shareholder who was keen to sell (albeit only at what he regarded as the right price); (v) the purchaser was neither unwilling nor was he a speculative, incoming investor, but rather was the existing majority shareholder whose purchase of the shares would enhance his control over the Company (for example, by enabling him to pass special resolutions); (vi) the question whether a discount had been applied to the price paid by Millennium and Susquehanna did not provide much guidance, because in 2011 an IPO had seemed both likely and imminent, which was not the position now; (vii) the fact that the majority of the Company's assets were now held in cash did not materially affect the valuation: what mattered more was the marketability of the shares being valued, not the liquidity of the underlying assets owned by the Company; (viii) the fact that minority shareholders enjoy certain statutory protections only takes the Plaintiffs so far, because the fact remains that what is being valued is a minority shareholding; (ix) the fact that there would be a pro rata distribution on a winding-up is irrelevant to the valuation process under Article 143, because winding-up is an entirely distinct remedy; (x) absent shareholder agreement or a court order, there was no immediate likelihood of any realisation of the shares; (xi) the Plaintiffs were very unlikely to find an external buyer who was prepared to pay NAV, or even near NAV; (xii) the prejudice suffered by the Plaintiffs in this case was "ultimately, that the value of their shares has been suppressed, one way or another" (§443 of the Royal Court judgment); (xiii) there was much in the submission made by Mr Tuckwell that FTV in particular were seeking to regain the rights they surrendered when they converted their Preferred Shares into Ordinary Shares; (xiv) taking account of all the circumstances of the case and the expert evidence adduced by the parties, the starting point for the minority discount was 40%, which was reduced to 20% in order to reflect the marriage value to Mr Tuckwell in acquiring effectively absolute control over the Company.

27. The other specific valuation issue that was addressed by the parties' expert witnesses at trial was the valuation of the WisdomTree shares. Specifically, the dispute was whether the valuation should be subject to a 'blockage discount' reflecting the time it would take to sell a large block of shares without unduly depressing the price, or (by contrast) whether the valuation should be uplifted to reflect the premium that might be available on the sale of a significant shareholding. So far as this issue was concerned, the underlying facts were not in dispute. The Company holds the equivalent of 30 million WisdomTree common shares, and the evidence at trial was that approximately 1.5 million shares were traded per day on Nasdaq. On that basis, Mr Tuckwell's expert (Mr Cliff) considered that the Company could only sell 150,000 shares a day without moving the market. The Plaintiffs' expert (Mr Matthews) disagreed and suggested that a premium could be applied instead, although ultimately he considered that either a discount or a premium was arguable and the possibility of either should be regarded as cancelling each other out. The Royal Court addressed the disagreement between the experts in §419 - 422, §433 - 439 and §454 of its judgment. It held that neither a discount nor a premium should be applied to the market price as at 13 November 2020, resulting in a valuation of US$117 million.

28. Finally on valuation, it emerged after trial that the parties' experts disagreed as to the valuation of the shares now owned by the Company or its subsidiaries, other than the shares in WisdomTree ("the portfolio companies"). The Royal Court had not heard evidence or argument on that issue and accordingly was unable to resolve it (see §442 of its judgment).

29. For these reasons, the Royal Court ordered Mr Tuckwell or the Company to purchase the Plaintiffs' shares at NAV as at 13 November 2020, less a minority discount of 20%. Further directions were given for the agreement or judicial assessment of the value of the portfolio companies.

30. In relation to winding-up, the Royal Court held (in §455 - 462 of its judgment) that (i) the Company was solvent, it had assets and future prospects, and it had employees and directors who were committed to its success; and (ii) the only reason why the Plaintiffs were seeking a winding-up order was to realise their investment, which was a remedy available by virtue of the unfair prejudice route. The Royal Court accordingly decided that winding-up was not the appropriate remedy, but it gave the Plaintiffs leave to apply to renew their application for winding-up if the share purchase did not complete by 30 April 2021.

The parties' positions on appeal

31. The Plaintiffs filed a Notice of Appeal on 19 February 2021, challenging (i) the 20% minority discount, (ii) the valuation date of 13 November 2020 and (iii) the directions given for the valuation of the portfolio companies. The Plaintiffs sought instead a buy-out order with no minority discount and with a valuation either as at 17 May 2018 (shortly after the Sales), or 26 January 2021 (the date of judgment), or 13 November 2020 (the last day of the trial).

32. Mr Tuckwell filed a Respondent's Notice on 4 March 2021, seeking (i) the dismissal of the Plaintiffs' unfair prejudice claim in its entirety, alternatively (ii) a variation of the buy-out order (a) applying a minority discount of 43.8% to the NAV of the Company as at 13 November 2020, (b) applying a blockage discount of 20.3% to the value of the WisdomTree shares and (c) valuing the portfolio companies by reference to Mr Cliff's calculations in the experts' Joint Supplemental Statement dated 2 December 2020.

33. For its part, the Company has maintained an essentially neutral stance, save that it invites the court not to make a winding-up order.

The Appeal Against the Findings of Unfair Prejudice

Introduction

34. Although it arises by way of cross-appeal, it is logical to start with Mr Tuckwell's argument that the Royal Court ought not to have made the findings it did as to unfair prejudice. If that argument were to succeed, then no issues as to valuation would arise.

35. Mr Tuckwell's arguments may be grouped broadly under three headings:

a. First, he says that the Royal Court's findings were based in part on matters which had not been pleaded and/or were not supported by the evidence and/or were contradicted by the evidence and/or were not put to Mr Tuckwell in cross-examination (the latter complaint being particularly objectionable, he says, in light of the gravity of some of those findings).

b. Second, he says that the Royal Court made various findings of unfair prejudice which were not open to it on the law in circumstances where (as was common ground) this was not a quasi-partnership company, and/or that the Royal Court misapplied the law by failing properly to analyse whether the necessary elements were present in relation to each matter in respect of which the court ruled that there had been unfair prejudice.

c. Third, he says that the findings of unfairness were based in part on a misunderstanding and/or misapplication of the law on directors' duties.

36. It is accordingly convenient to start with some observations on the applicable law.

Overturning findings of fact & exercises of discretion

37. As to findings of primary fact, it is well established that:

a. in order for an appellate court to overturn a finding of primary fact in the court below, it must be satisfied that the decision was wrong and there was no evidence which could have supported it: CSS v. Nautech Services Ltd [2015] JCA 021, at §18; Pell Frischmann v. Bow Valley Iran Ltd [2008] JCA 146, at §108;

b. this court fully recognises and respects the advantages that a trial court enjoys by virtue of sitting through the entire trial process, particularly when it has had the opportunity to consider oral testimony, the terms in which that testimony is couched and the demeanour of the witnesses: McGraddie v. McGraddie [2013] UKSC 58, at §3 - 4; CSS Ltd v. Nautech, at §17;

c. it is salutary to keep in mind all of the numerous justifications for this approach explained in Fage UK Ltd v. Chobani UK Ltd [2014] FSR 29, at §114 - 115, but in this case we would draw particular attention to the fact that the trial court will have had regard to the whole sea of evidence presented to it, not all of which will necessarily have been expressly referred to in the judgment, and the significance of those matters which are discussed in the judgment below may not always convey the same weight when reviewed on appeal as they did to the trial court;

d. these principles have particular force in this jurisdiction, where the jurats decide the facts: Pell Frischmann, at §109 - 110;

e. finally, we also remind ourselves that a trial court is not required to deal with every piece of evidence or every argument presented to it.

38. In relation to appeals against the exercise of a discretion, or the exercise of an evaluative judgment, this court will only intervene if the court below has erred in law, or if it has failed to take into account a material factor or taken into account an immaterial factor, or if it has reached a decision which is plainly wrong (i.e. one that is irrational, in the sense that no reasonable decision-maker could have reached it). This approach is well recognised as a matter of general law. More specifically, it is clearly illustrated in relation to appeals against orders made in the context of unfair prejudice proceedings by decisions such as Re Cumana Ltd [1986] BCLC 430, at 437f - g; Hawkes v. Cuddy [2010] BCC 597, at §80; Re Sprintroom Ltd [2019] BCC 1031, at §76 - 78; and Biogen Inc v. Medeva Plc [1997] RPC 1, at 45.

Pleadings - the law

39. Mr Tuckwell submits in this court that it was not open to the Royal Court "to find a case which has not been pleaded" (§9 of his Contentions in Support of his Cross-Appeal, "CSCA"). In support of this proposition, he cites Al-Medenni v. Mars UK Ltd [2005] EWCA Civ 1041, at §21; and Satyam Enterprises v. Burton [2021] EWCA Civ 287, at §36 - 38.

40. We entirely accept that proposition in the abstract. Nevertheless, it is important to recognise properly what the authorities mean and, more broadly, to recognise the true function and hence the appropriate content of pleadings.

41. The appeal in Satyam arose in circumstances where the trial judge had made a finding that certain assets were held on trust in circumstances where that formed no part of the pleaded case of either party, and the possibility had not been raised at trial at all. The observations of the Court of Appeal in Al-Medenni arose in circumstances where the trial judge had rejected the claimant's account of how she had sustained an accident and substituted his own theory which had not been pleaded by either side and had only been raised as a possibility by the judge in the course of oral closings - in other words, after the evidence was complete and far too late for it to have been addressed properly at trial. Those are clear cases where a trial judge has determined the dispute on a basis which formed no part of the trial process.

42. Turning more generally to the function of pleadings, it is stating the obvious to say that, as between the parties inter se, they are intended to identify the issues in dispute, so that each side knows what case it has to meet and what evidence it needs to adduce at trial. As between the parties (on the one hand) and the court (on the other), the function of pleadings is to provide the court with an appropriate tool for understanding the case it has to decide and for managing the proceedings in the run-up to trial, and during the trial process. In order properly to fulfil those functions, it is critically important that pleadings should always avoid (at one extreme) including an unnecessary torrent of detail which may obscure the essential issues, and (at the other extreme) pleading the case in such exiguous terms that the court and the other side are uncertain as to the basis on which the case is being put: Three Rivers DC v. Governor & Company of the Bank of England [2003] 2 AC 1, at §49 - 51.

43. That explains the governing provisions of rule 6/8 of the Royal Court Rules, 2004. Paragraphs (1) and (6) provide as follows (emphasis added):

"(1) Subject to the provisions of this Rule, every pleading must contain, and contain only, a statement in summary form of the material facts on which the party pleading relies for that party's claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits.

...

(6) A party may in pleadings raise any point of law."

44. As the underlining indicates, we consider it important to emphasise that the Rules require that (i) facts are pleaded, not evidence; (ii) only material facts are pleaded, not all incidental facts; and (iii) points of law may be pleaded, but do not always have to be.

45. It is also important to emphasise that rule 6/15 confers a power on the court, either of its own motion or on application by a party, to make an order requiring a party to clarify any matter in dispute in the proceedings or give additional information in relation to any such matter. Accordingly, if in any case a litigant genuinely does not understand some part of the case against him, he can apply to the court for an order under rule 6/15 to clarify that matter. If he fails to do so (whether through inadvertence or as a result of a deliberate, tactical choice) and if the trial court subsequently bases its decision on a finding which can properly be said to have been raised on the pleadings, albeit not prominently or perfectly clearly, it may not lie in the litigant's mouth to say on appeal that he did not realise that was the case being put against him. Litigants should not be tempted to adopt Nelsonian blindness in the hope of being able to shut out inconvenient issues at trial. Conversely, we wish to say nothing to encourage Delphic pleading. Each side is expected to set out its case both clearly and succinctly in its pleading. If it is in any doubt about the other side's case, it is expected to seek clarification.

46. These observations have particular significance in relation to a claim under Article 141 of the Companies Law. The concept of 'unfair prejudice' is notoriously protean. That being the case, it is all the more important in these cases that it should be pleaded with absolute clarity, so that both the parties and the court are entirely clear as to precisely what acts or omissions are said to be prejudicial, and precisely why that prejudice is said to be unfair. It would be most regrettable if practitioners were to import into this jurisdiction a practice which developed early in England & Wales under s. 75 of the UK Companies Act 1980 and has persisted since then in some quarters of 'pleading' a claim based on unfair prejudice in the form of an extended narrative. We would in that regard adopt the observations in Re Tecnion Investments Ltd [1985] BCLC 434, at 441; and Re G&G Properties Ltd [2020] 1 BCLC 1, at §35. A claim under Article 141 should be set out with all the rigour, in terms of precision and concision, of any other pleading.

47. Finally in this context, we would observe that, at the remedy stage in any unfair prejudice proceedings, the court is entitled to have regard to any aspect of the facts as found about the history of the company and the relationship between its shareholders inter se, and between them and the directors, including those occurring after the issue of the claim and those which may fairly be found by the court even though not necessarily pleaded: see Ming v. Ming [2021] UKPC 1, at §14.

Directors' duties - the law

48. A significant part of the Plaintiffs' case and of the Royal Court's judgment was based on supposed breaches by Mr Tuckwell of his fiduciary duties as a director of the Company. Save in one respect, there was no significant difference between the parties as to the applicable law. The two principal relevant duties can be summarised briefly:

a. First, a director owes a duty to exercise his powers as such honestly in what he believes to be the best interests of the company (for convenience, "the duty of good faith"). This is a principle of fidelity, and the test is applied subjectively. In other words, the question is whether the director did, at the time he performed the impugned act, honestly believe that he was doing what he did in the interests of the company as a whole. This duty derives both from Article 74(1)(a) of the Companies Law and from the general law.

b. Second, a director owes a duty to exercise his powers as such for the proper purposes for which those powers were conferred on him. Under this heading, the question is not whether the director acted honestly. It is entirely possible for a director to perform his functions conscientiously in what he genuinely believes to be the best interests of the company, but nevertheless to act in breach of his duty to exercise his powers for proper purposes. It is a matter of law for the court to decide as to the proper purpose for which any given power is conferred on the directors, and it is a matter of fact for the court to identify the substantial purpose for which the specific power was in fact exercised in any given case. This duty is reflected in decisions such as Howard Smith v. Ampol Petroleum Ltd [1974] AC 821.

49. In describing the framework for analysing whether there has been a breach of a director's duty to exercise his powers for proper purposes, the court in Extrasure Travel Insurances Ltd v. Scattergood [2003] 1 BCLC 598, at §92, suggested a four-part test which involved identifying (i) the power whose exercise is in question, (ii) the proper purpose for which that power was delegated to the directors, (iii) the substantial purpose for which it was in fact exercised, and (iv) whether that purpose was proper. For the avoidance of doubt, the court was putting that forward as an analytical framework. It was not suggesting (contrary to the contention advanced on behalf of Mr Tuckwell) that a judgment must necessarily be defective if those questions are not recited and answered seriatim on the face of the judgment.

50. For the avoidance of doubt, this is obviously not intended as an exhaustive description of a company director's duties, nor is it even a complete account of every aspect of the duties that were canvassed in the course of argument in this appeal. For example, there was also some debate about the content and classification of a director's duty to avoid conflicts of interest. Nevertheless, we consider that the determination of the appeal turns on the question whether Mr Tuckwell acted in breach of either of the two duties summarised above.

51. The one aspect of a director's duties on which the parties disagreed was the question whether there is a duty to act fairly as between different groups of shareholders within the same class, or only as between different classes of shareholders (§5.2 of the Respondent's Notice and §89(d) of the Plaintiffs' Contentions in Response to the Cross-Appeal). The debate centred on Mills v. Mills (1938) 60 CLR 150 where the court observed, at 164, that directors are required to act not only in respect of the company's relations with third parties, but also in relation to matters which affect the members inter se. It then proceeded to illustrate that point by discussing a situation in which the interests of different classes of shareholders might conflict. In that situation, the court suggested that the question for the directors was not what was in the interests of the company as a whole, but "a question of what is fair as between different classes of shareholders". Based on that language, Mr Tuckwell contends that the duty is only engaged where there are different classes of shareholder, not in a case (such as this) where there is only one class of shares.

52. We reject that contention, both on the authorities and also as a matter of principle:

a. The authorities do not support Mr Tuckwell's contention. The decision in Mills v. Mills was not purporting to lay down any narrowly-defined duty which is owed only as between different classes of shareholder. Rather, it was simply illustrating the duty on a director to exercise his powers fairly with one example. In the later case of Mutual Life Insurance Co of New York v. The Rank Organisation Ltd [1985] BCLC 11, at 21g - h, the court expressed the principle in entirely general terms, as a "time honoured rule that the directors' powers are to be exercised ... fairly as between different shareholders". The decision in that case was dealing with a situation in which there was only one relevant class of shareholder, although different groups of shareholders in that class were in different factual positions (as it happens, because of their place of residence). The rule was not expressed in terms of a duty to act fairly as between different classes of shareholder. Mutual Life v. Rank was subsequently cited with approval in Re BSB Holdings Ltd (№ 2) [1996] 1 BCLC 155, at 247d - i.

b. As a matter of principle, it is important to recall that a director owes his duties to the company, and not to the members as such (other than in exceptional circumstances, which do not apply here). There is a danger of losing sight of that important principle if one engages in any discussion about a supposed duty to act fairly as between shareholders (whether shareholders of the same class or shareholders of different classes), if that discussion is being conducted in terms of a director's fiduciary duties. Accordingly, the better view is that there is no free-standing, discrete legal duty on directors to act fairly as between shareholders (whether of the same class or of different classes). Rather, there are the general duties outlined in §48 above (along with other general duties, such as the duty of care and the duty to avoid conflicts of interest and undisclosed profits). In practice, those duties may find expression in the need to act fairly as between shareholders or classes of shareholder. For example, if a director exercises his powers as such intentionally for the purpose of benefiting one class of shareholders in preference to another class of shareholders, that is (depending on the facts) capable of constituting a breach of his duty to exercise his power for a proper purpose, or to exercise his power in what he believes to be the interests of the company. Similarly, if a director exercises his power as such for the purpose of benefiting one interest group within a single class of shareholders to the disadvantage of another interest group within the same class, that is equally capable (depending on the facts) of constituting a breach of one or more of his general duties. That being the position, there is no need to try fashioning a separate and substantive legal duty to act fairly as between shareholders, and accordingly the debate about whether any such duty should apply only as between different classes of shareholder or between different interest groups within the same class of shareholders is misplaced. Our analysis in this regard is fortified by the fact that, having stated the 'rule' (as quoted above) in Mutual v. Rank Organisation, the court then proceeded immediately to illustrate and support its decision by reference to Howard Smith v. Ampol, which is founded on a director's duty to exercise his powers for a proper purpose. Similarly, Re BSB Holdings cites Mutual v. Rank Organisation and then immediately afterwards Howard Smith v. Ampol.

53. For the avoidance of doubt, the foregoing discussion addresses the legal scope of a director's duties when exercising his power as such. For the reasons discussed below, in the context of a claim under Article 141, it is not a precondition to success that a plaintiff must establish that any director has acted in breach of duty. Thus, in the context of a claim under Article 141, if it has been established that a director has exercised his power with partiality, intending to benefit one interest group within a single class of members to the disadvantage of another interest group within the same class, ultimately the relevant question is whether that conduct is unfairly prejudicial, not whether it constitutes a breach of fiduciary duty in its own right.

Unfair prejudice - the law

General principles

54. The parties have drawn our attention to certain relevant case-law in this jurisdiction on unfair prejudice proceedings, namely Robertson v. Slous [2002] JLR 361 and Re Grafters Ltd [2015] (1) JLR 144. Our attention has also been drawn to a wealth of English case-law, running chronologically from Scottish Co-operative Wholesale Society Ltd v. Meyer [1959] AC 324, via O'Neill v. Phillips [1999] 1 WLR 1092 to Re The Stratos Club Ltd [2020] EWHC 3485 (Ch), with numerous other cases cited along the way, together with a substantial amount of professional commentary, notably various passages from Chivers, The Law of Majority Shareholder Power (2^nd ed., 2017) and Hollington on Shareholders' Rights (9^th ed., 2020). It is not our purpose to try synthesising or summarising all this English authority or commentary (none of which is binding) but rather to derive from it and from the case-law in this jurisdiction the key propositions which we consider represent the law of Jersey.

55. The three constituent elements of a claim under Article 141 are to be found in the legislation itself. It is convenient to start by identifying them and, given the separate roles of the judge and the jurats, it may be helpful also to classify the nature of the decision which a trial court will need to take on each element:

a. The complaint must be directed at the conduct of the company's affairs or an actual or proposed act or omission of the company. The question whether any particular act has been performed is self-evidently one of fact. The capacity in which any given act is performed will be one of mixed fact and law.

b. The plaintiff must establish that the matters complained of are prejudicial to his interests as a member of the company. Prejudice in some other capacity is not relevant. The question whether there has been any prejudice is one of fact. The capacity in which it is suffered (i.e. whether as a member or otherwise) is one of mixed fact and law.

c. The prejudice must be unfair. That is an evaluative judgment, involving both issues of fact and law.

56. Each of these three elements requires some further analysis.

Conduct of the company's affairs

57. Dealing first with the conduct of a company's affairs:

a. The conduct must be that of the company. Acts or omissions of a person who happens to be a shareholder or a director of the company will not suffice, unless they can properly be classified as acts or omissions (or proposed acts or omissions) of the company.

b. The conduct of a company's 'affairs' is a concept which is broad enough to embrace any matter which can properly be brought before the board of directors or the members in general meeting: Re Coroin Ltd (№ 2) [2013] 2 BCLC 583, at §628 - 629.

Prejudice

58. Turning to the second element:

a. The concept of prejudice should not be too narrowly or technically construed: O'Neill v. Phillips, at §27.

b. Prejudice may be financial (for example, a diminution in or serious jeopardy to the value of the plaintiff's shares), but it does not have to be.

c. The Plaintiffs cited a passage in Hollington, in §7-29 (at p. 218), which says this: "Justifiable loss of confidence in the probity of the company's management is prejudice in itself". As a matter of principle, we would accept that a justifiable loss of confidence in the probity of a company's management is capable of constituting prejudice. However, even that statement needs to be understood in the relevant jurisprudential context. The concept of a 'justifiable loss of confidence in management' derives from the case-law on just and equitable winding-up, which is discussed in §271 - 272 below. In that context, it is not sufficient for a shareholder simply to assert that he disagrees with the commercial judgment of the controlling director/s. In order to establish a sufficiently justifiable loss of confidence in the probity of management, a shareholder has to establish some sufficiently relevant and serious breach of duty or breach of ordinary standards of business fair dealing on the part of management. This is illustrated by the authorities on which the proposition in Hollington is based. Re Elgindata (№ 1) [1991] BCLC 959 was a case concerning breach of duty which involved a misapplication of company assets. Re Edwardian Group Ltd [2018] EWHC 1715 (Ch) also involved substantial breaches of fiduciary duty, the effect of which was to deprive shareholders of important information to which they were entitled and to cover up wrongdoing by the management. It was in those circumstances that the court found in each case that there was prejudice. Neither decision purports to lay down any generally applicable proposition of law to the effect that a justifiable loss of confidence in management will necessarily and of itself always constitute prejudice. Nor do we consider that any such general proposition could logically be sustained. If, for example, there has been a justifiable loss of confidence in management because there have been serious breaches of fiduciary duty, then that may well be a reason for regarding it as prejudicial, but the answer to the question will always be context specific and it will almost invariably depend upon a combination of factors (e.g. the cumulative effect of there having been a breach of duty, together with the financial impact on the company or the shareholders of that breach, and the resultant loss of confidence in management).

d. Conversely, it should also be recognised that a breach of duty does not necessarily result in prejudice. For example, a director may act in breach of his duty to avoid conflicts of interest, but if the company suffers no financial loss as a result then the bare breach of duty may not of itself constitute prejudice.

59. The contextual and evaluative nature of the question whether any prejudice has been suffered in any given case is an important consideration when assessing the role of an appellate court in any appeal against a ruling by a trial court under Article 141.

Unfairness

60. Turning finally to unfairness, the parties cited a large number of authorities, including specifically: Re Saul D Harrison & Sons Plc [1994] BCC 475, at 488H - 489C, 499C - 500H; and O'Neill v. Phillips, at 1095C - D & 1098D - 1099H. We derive the following propositions of Jersey law from the language of the relevant provisions of the Companies Law and from those passages in the English decisions which we consider should be followed here:

a. The question whether there has been unfairness in any given case will always be context specific. As a result, exactly the same conduct may be regarded by the court as being entirely fair if it occurs between arms' length commercial entities but thoroughly unfair if it occurs between family members or close business associates whose working relationship has been established on the basis of mutual trust and cooperation.

b. Whilst a rational and judicial approach must always be taken to any assessment of unfairness, the test is always and only one of unfairness. For that reason, we are not persuaded that any assistance is to be gained from glossing the statutory wording, or substituting different language from that chosen by the legislator. For example, terms such as 'inequitable conduct' or conduct which is 'contrary to good faith' either replicate the statutory test, in which case they add nothing, or (more likely) they import a different test by reference to analogies with other areas of the law, in which case they distort the statutory test.

c. The question whether there has been any unfairness cannot be determined by reference to any finite list of factual situations. In Jean v. Murfitt (Jersey Unreported, 11 December 1996) Bailhache B said that the concepts of justice and equity under Article 155 of the Companies Law "cannot be confined within the four corners of specific instances" and the same can properly be said of unfairness under Article 141.

d. The test of unfairness involves a process of evaluation on which different conclusions can reasonably be reached on the same facts by different decision-makers - a consideration which is particularly relevant in the context of an appeal.

e. The test is objective. In other words, a plaintiff does not have to prove that any conduct was deliberately intended to be unfair. Conversely, the fact that the affairs of a company have been conducted in manner which was intended to disadvantage a particular shareholder or group of shareholders does not of itself prove that the conduct was, objectively, unfair. For example, if a minority shareholder has acted in a way that is damaging to the company's interests, it may well not be unfair for the company to take appropriate responsive action.

f. Many companies are commercial undertakings. As such, it is only natural to expect the participants to define the terms under which they choose to interact principally by reference to legally enforceable rights and obligations. Such rights and obligations will invariably be found at least in a company's Articles of Association and in the directors' duties under the general law, but they may also be embodied in shareholders' agreements, subscription or loan agreements, employment contracts and other legally binding arrangements between the parties. Any inquiry as to whether there has been unfair prejudice is therefore likely to start by considering whether some legally enforceable right or obligation has been violated.

g. The more detailed and comprehensive the express contractual arrangements are between the parties, the more likely it is that the court will regard those arrangements as defining exhaustively the criteria by reference to which the question of fairness should be applied.

h. Having said that, and having identified the parties' legal rights and duties as the likely starting point for most inquiries, it is important to repeat that the test is one of unfairness, not unlawfulness. A breach of a legal right or duty may constitute unfairness, but a finding of unfairness is not necessarily dependent on establishing a violation of any legal right or duty.

i. Since the test is always context specific, it can be dangerous to try drawing too much assistance from the facts of previously decided cases in which a court has been satisfied that unfair prejudice has been established. Such an approach generates the risk of thinking in terms of established categories of unfair prejudice, and then seeking to decide subsequent cases by reference to the question whether they fall within those pre-determined categories. That is the wrong approach.

61. Once again, it is important to keep in mind the contextual and evaluative nature of test of unfairness when assessing the role of an appellate court.

The remedy

62. If, in any case, the court finds that there has been unfair prejudice, "it may make such order as it thinks fit for giving relief in respect of the matters complained of" under Article 143 of the Companies Law. There is accordingly both a discretion in the court whether to grant any relief at all, and there is also an evaluative judgment to be made as to the nature and content of the appropriate remedy, assuming some relief is to be granted. This is an important consideration for two reasons:

a. First, it is relevant to a proper understanding of the trial court's function specifically in relation to buy-out orders. In fixing the price at which a plaintiff's shares are to be acquired, the court is not conducting a 'valuation' as such. In other words, it is not performing an objective, mathematical exercise dictated by the expert evidence and by reference to accountancy principles alone. Instead, it is conducting an evaluation. In other words, it is performing a remedial function involving a judgment call which is made in light of all the circumstances of the case and by reference to principles of fairness: see, for example, Scottish Cooperative Wholesale Society v. Meyer, at 366; and In re Bird Precision Bellows Ltd [1986] Ch 658, at 668H - 669H.

b. Second, the nature of the trial court's function under Article 143 is also relevant when it comes to assessing the role of an appellate court which is called upon to review any judgment made at trial in exercise of that function.

'Quasi-partnerships' and 'legitimate expectations'

63. Finally in relation to the law on unfair prejudice, it may be convenient to clarify the meaning and significance of the terms 'quasi-partnership' and 'legitimate expectations'. These terms have some relevance both to the anterior question whether there has been any unfair prejudice and, if so, to the subsequent assessment by the court of the appropriate remedy.

64. The term 'quasi-partnership' owes its origin to the landmark ruling in Ebrahimi v. Westbourne Galleries [1973] AC 360. The valuable observation in Lord Wilberforce's speech (at 379A - G) was that, in deciding whether to exercise its discretionary power to wind up a company on the just and equitable ground, the court is entitled to look at the reality of the human and business relationships which lie behind the legal personality of the company. For example, if a pre-existing partnership business has been continued through the vehicle of a limited liability company, in which those who were previously partners become shareholders and directors instead, then in assessing whether it is just and equitable to wind the company up, the court will take into account the quasi-partnership nature of participants' mutual relations. In that situation, it may be relevant that the relationship between them has irretrievably broken down. Similarly, even if there has been no pre-existing partnership, where a joint venture company is formed on the basis of a relationship of mutual trust and confidence between a small number of individuals, perhaps on the understanding that they will each contribute money and/or management skills and/or technical expertise to the business, and on that basis they will each share in running the company and participate in its profits, then the court will take those circumstances into account when deciding whether it is just and equitable to wind the company up if the relationship between its corporators has irretrievably broken down and one or more shareholder / director has been excluded.

65. Similar principles have naturally been transposed to the court's assessment of whether any particular conduct does, or does not, constitute unfair prejudice. If, for example, a small, private company has been formed on the basis of an understanding that each shareholder / director will participate in the management and profitability of the company, then it may (depending on the circumstances) be unfairly prejudicial if one of them is subsequently excluded from management and/or from any share in the profits without a fair offer being made to buy his shares, even if the understanding on which the company was formed has no contractual force and even if the majority shareholder/s are, under the Articles and as a matter of general company law, legally entitled to exclude the minority shareholder from management and to withhold dividends, and they are under no legal compulsion to purchase his shares. The court's willingness to take into account such non-binding understandings reflects the fact that the statutory remedy is available in respect of 'unfair' prejudice, and not just 'unlawful' prejudice.

66. In Saul D Harrison, Hoffmann J tried to capture the concept by referring to 'legitimate expectations' (an expression he borrowed from public law). The word 'expectation' reflected the fact that the court was willing to take into account understandings and arrangements that were not independently legally binding as contracts. The word 'legitimate' reflected the fact that, in exercise of its power in relation to unfair prejudice, the court would not take into account all and any hopes and aspirations a member might harbour.

67. Neither Westbourne Galleries nor Saul D Harrison said anything radically new at the time, but flowing as they did from the pens of Lord Wilberforce and Hoffmann J they were expressed in terms of vigour and clarity that made them instantly memorable. And, as a result, each case then produced unintended consequences. The decision in Westbourne Galleries spawned the idea that the outcome of any claim based on unfair prejudice depends (both in terms of liability and in terms of the appropriate relief) on whether or not the relevant company can be classified as a quasi-partnership. And the decision in Saul D Harrison encouraged the notion that such claims would succeed or not depending on whether the claimant could establish a 'legitimate expectation' if not a legal right. Neither notion should gain traction in this jurisdiction.

68. The term 'quasi-partnership' is a convenient short-hand, but like many other such labels it disguises as much as it reveals. Most importantly, it should be recognised that the expression 'quasi-partnership' is not a term of art. It does not identify a single category of company with an exhaustive list of qualities. Rather, it is a broad, descriptive term which embraces a range of different factual situations, as Lord Wilberforce's speech expressly recognised. Nor should the court even be thinking in terms of different categories of company when it is applying the test of unfair prejudice under Article 141. The test is open-textured and fact specific, and the court should resist any temptation to adopt a formulaic approach. The exercise of the court's adjudicative function depends on an evaluation of all the circumstances of each case, not on whether a company can be classified in the 'quasi-partnership' box. There will be many situations in which the court would be entirely free to find unfair prejudice not involving a breach of any legal right or duty in circumstances where the company could not on any view be described as a quasi-partnership.

69. It is equally dangerous to think in terms of a specific category of supposed 'legitimate expectations'. That expression may provide a useful generic label which describes the wide range of understandings and arrangements which are not legally binding as contracts, but which the court is nevertheless prepared to take into account in assessing whether there has been unfair prejudice in any given case. But the descriptive label should not be allowed to replace the true content of the underlying test. The underlying test is supplied, and supplied only, by the statutory wording. A finding of unfairness in any given case is not dependent on establishing either (i) a breach of a legal right of duty, or (ii) a breach of a legitimate expectation or of some quasi-partnership arrangement. On the contrary, the court is fully entitled to reach the conclusion that there has been unfair prejudice in the absence of either.

The scope & nature of the issues on appeal

70. In the course of its review of the law on unfair prejudice, the Royal Court said (in §39 of its judgment) that "Mr Tuckwell was right ... to criticise the Plaintiffs' case as laden ... with 'expectations' which were not founded in rights provided for in the Shareholders' Agreement, Articles of Association or the general law". It then said this: "Accordingly, the Plaintiffs ... were wrong to rely on their 'legitimate expectation' in circumstances akin to those in O'Neill v. Phillips, in which Lord Hoffmann had expressed the view that such considerations are unhelpful in the context of company law and in any event, in our view, has [sic] no application to the facts of this particular case." In §43 it then added that "on the facts of this case there is no room for equitable considerations".

71. The Plaintiffs have adopted a restrained approach to their appeal. In particular, they have not sought to challenge the Royal Court's ruling in §39 and §43 of its judgment, presumably on the basis that they accept it is for the trial court to decide which considerations are in play when it comes to assessing unfair prejudice in any given case. Accordingly, the Plaintiffs have presented their arguments in this court on the basis that, in order to uphold the Royal Court's findings of unfair prejudice, they have to uphold the Royal Court's finding that Mr Tuckwell's conduct involved breaches by him of fiduciary duty.

72. This court respects the approach which the Plaintiffs have adopted in this appeal and the issues will be decided on that basis. Nevertheless, we do not entirely understand why the Royal Court reached the conclusions it did in §39 and §43 of its judgment. Lord Hoffmann did not say in O'Neill v. Phillips that the concept of 'legitimate expectations' was "unhelpful". Rather, at 1102B - F, he simply expressed regret at having borrowed that particular label to describe the broad range of equitable considerations which the court is fully entitled (indeed, required) to take into account when deciding whether conduct which is strictly lawful may nevertheless be unfairly prejudicial. Furthermore, as is apparent from our discussion of the law above, the mere fact that a company is not a quasi-partnership does not mean that equitable considerations are inapplicable. In the circumstances, it would have been open to the Royal Court in this case to take into account matters other than breach of duty by Mr Tuckwell when assessing whether there had been any unfair prejudice.

Mr Tuckwell's appeal - introduction

73. The case which the Royal Court accepted (notably in §228 and §320, and in §464 - 465 of its judgment) was that Mr Tuckwell had pursued a scheme designed to drive the Plaintiffs out of the Company at an unjustifiably low price through a course of conduct comprising the five elements summarised in §23 above.

74. Mr Tuckwell's appeal seeks to persuade us that the Royal Court's five findings of unfair prejudice (i) failed to recognise that this was not a quasi-partnership company, (ii) reflected a failure to understand the nature of a company director's duties, (iii) were founded in part on matters that had not been pleaded and/or were not evidenced and/or were not put to Mr Tuckwell, (iv) failed properly to apply Article 141, which requires an analysis (which Mr Tuckwell says the Royal Court failed to perform) of whether the three elements outlined in §55 above were present in relation to each of the five instances of unfair prejudice on which the court's judgment was founded, and (v) failed to recognise that those three elements were not present in relation to any of those five findings. We will deal with the first two complaints separately, and then address each of the allegations numbered (iii) to (v) above in relation to each of those five findings in turn.

Not a quasi-partnership company

75. As a matter of principle, the fundamental flaw in Mr Tuckwell's legal argument is his failure to recognise the true breadth of the court's jurisdiction under Article 141. He says (in §12 of his CSCA) that, unless a company is a quasi-partnership, "The legal rights of the parties are the starting and end point of any consideration of unfairness in unfair prejudice cases" (emphasis in the original). It will be apparent from the discussion of the relevant legal principles set out in §54 - 69 above that we would reject that argument. It represents an attempt to impose an unjustified fetter on the broad evaluative power conferred by Article 141, and to do so by reference to an unjustifiable, category-based approach. As a matter of principle, the Royal Court would have been fully entitled to reach the conclusion that there had been unfair prejudice irrespective of whether there were any breaches of the Plaintiffs' legal rights or of Mr Tuckwell's legal duties, and irrespective of whether this was a quasi-partnership company.

76. Nevertheless, as noted above, the Royal Court's judgment proceeded on the basis that equitable considerations were inapplicable on the facts of this case. There has been no appeal against that ruling. It is accordingly necessary to consider whether the Royal Court's findings can be sustained on their own terms, i.e. on the basis that Mr Tuckwell acted in breach of duty.

Director's duties

77. Mr Tuckwell's argument in this court was based on three assertions: (i) first, that "the primary duty on a director (that in Article 74(1) ...) ... is subjective" (§44 of his CSCA, repeated in §55 and elsewhere); (ii) second, that the only pleaded allegation of a breach of fiduciary duty was that Mr Tuckwell was in breach of the duty to act in good faith in the best interests of the Company; and (iii) third, that there was in any event no basis for a finding that Mr Tuckwell was in breach of his duty to exercise his powers for proper purposes. We reject all three arguments.

78. As to the first, it is both wrong and also irrelevant. It is wrong, because there is no hierarchy of importance as between a director's various fiduciary duties. It is irrelevant because, even if there were such a hierarchy, it would make no difference to the outcome of any given case whether a director were to be found guilty of a breach of a 'primary' fiduciary duty or of a 'secondary' fiduciary duty: either would involve a breach of fiduciary duty.

79. As to Mr Tuckwell's second argument, it is entirely clear from §2.3, §2.4, §2.10 and §6.2(b) of the Amended Order of Justice and from the compendious allegation of breach in §11.2(c), and most particularly from the specific allegation in §12.8, that the Plaintiffs were expressly alleging (among other things) a breach by Mr Tuckwell of his duty to exercise his powers for proper purposes. We will not lengthen this judgment with extensive quotations from the pleadings, but by way of illustration §2.10 expressly alleged that Mr Tuckwell "exercised his powers as director ... for an improper purpose".

80. As to Mr Tuckwell's third argument under this heading, we consider that there was ample justification for the Royal Court to reach the conclusion that, in pursuing the scheme as he did, Mr Tuckwell was acting in breach of his duty to act for proper purposes. If a director exercises his powers as such deliberately for the purpose of preferring the interests of one section of shareholders against the interests of another section of shareholders, a trial court is entitled to reach the conclusion that he has acted for improper purposes. That is particularly so where, as here, there are two aggravating factors - one being that the shareholder whose interests the director happens to prefer is himself, and the other being that the reason why the director chose to act as he did was substantially out of spite, in order to disadvantage one section of shareholders as potential vendors of their shares. This does not require any finding from the court that the director has taken decisions which he knows are positively damaging to the commercial interests of the company as a whole. Rather, it is concerned with the question whether the director has taken decisions which may, in themselves, be perfectly capable of generating profits for the company, but where the substantial purpose for which he took them was to deliver a preferential outcome for one shareholder or group of shareholders over another.

81. In this case, since the Royal Court held that Mr Tuckwell exercised his powers as a director in order to disadvantage the Plaintiffs as potential vendors of their shares, it was fully entitled to conclude that he had acted for an improper purpose. And there was a wealth of evidential material to support its conclusion in this regard - most of it coming from Mr Tuckwell himself, who made no secret of his purpose in acting as he did. A few examples will suffice: (i) At a Board meeting in 2010, Mr Tuckwell said to Mr Cukier: "stand in my way and I will make sure FTV never gets paid". (ii) In an email in May 2011 to the Company's CFO, Mr Tuckwell said that a sale of the Company's assets (as opposed to a sale of its shares) would leave cash in the Company "So FTV can pay us to run that for a few years". (iii) In a meeting with Mr Cukier in January 2018, Mr Tuckwell said that "his heirs would be dead before FTV ever saw a penny, but he could out wait FTV and that if FTV wanted any liquidity that it would be on the basis of a huge discount". (iv) At a Board meeting on 14 March 2018, he said "do not underestimate my negativity towards FTV given what they have done to us. They have contributed bugger all to us over all these years. They have caused us an enormous amount of grief."

82. We will now deal with each of Mr Tuckwell's arguments, outlined in §74(iii) to (v) above, in relation to each of the five instances of unfair prejudice on which the judgment below is founded, as summarised in §23 above.

(a) Leading the Plaintiffs to believe there would be a pro rata distribution

(a)(i) Introduction

83. The first specific instance of unfair prejudice is the Royal Court's finding, set out in §231 - 272 and summarised in §464(i)(a) of its judgment, that in November 2017 Mr Tuckwell led the Plaintiffs to believe that there would be a pro rata distribution of the proceeds of sale once the assets of the Company had been sold.

84. In addition to the various complaints listed in §74 above, Mr Tuckwell also makes two further specific complaints in relation to this finding:

a. He says that the court below was confused between the 2017 spreadsheet and a different spreadsheet which had been produced in 2011. This alleged confusion is said to be apparent from the draft version of its judgment which was circulated to the parties before the formal hand-down, which included a paragraph referring to witness evidence that addressed the 2011 spreadsheet as if it were dealing with the 2017 spreadsheet.

b. Mr Tuckwell also says that the court below wrongly attributed to the Plaintiffs the supposed beliefs of the independent directors whose knowledge and belief should not properly be attributed to the Plaintiffs.

(a)(ii) Was the allegation pleaded?

85. Mr Tuckwell's main complaint under this heading is that there was no pleaded allegation that he induced the Plaintiffs to believe that there would be a pro rata distribution of the proceeds of sale.

86. In our judgment, he is right. In §7.10 of the Amended Order of Justice, the Plaintiffs alleged that Mr Tuckwell had told them in November 2017 that WisdomTree had imposed a requirement for shareholder consent as a condition of any proposed sale. The pleading then said this: "The Plaintiffs indicated in response that they were not willing to provide such consent without ... an agreed plan to distribute the proceeds of the Sales to shareholders ... Mr Tuckwell asked Mr Chee to work with the Plaintiffs to prepare such a proposal." In §7.13, the Plaintiffs outlined certain exchanges that then followed between them and Mr Tuckwell, and they alleged that Mr Bernstein (of FTV) told Mr Tuckwell that "FTV would first require ... an agreed plan to give liquidity to shareholders following the WisdomTree Sale (consistent with what had been previously communicated)". However, in §7.15 the Plaintiffs then alleged that Mr Tuckwell "proceeded unilaterally to agree, on behalf of the Company, that the Company would provide ... the WisdomTree Indemnity" and also that an additional $4.5 million of the sale proceeds would be held in escrow, and that he did so "in order to avoid having to provide the Plaintiffs with the commitments regarding liquidity being sought". In §7.20, the Plaintiffs alleged that, immediately before the Board meeting on 13 November 2017, "FTV suggested that the Board should ensure that the proceeds of the Sales were passed to shareholders pro rata as quickly as possible". In §7.21, the Plaintiffs alleged that Mr Chee (a director of the Company and former partner at Millennium) told Mr Tuckwell that he shared FTV's concerns, but that "Mr Tuckwell declined Mr Chee's invitation to discuss the matters and instead said that FTV's request for engagement and clarity on a liquidation plan would be addressed at a later date".

87. That being the state of the pleadings, it is apparent that, far from alleging that Mr Tuckwell induced the Plaintiffs to believe that there would be any distribution from the sale proceeds, let alone a pro rata distribution, their pleaded case was quite the reverse. They alleged that Mr Tuckwell specifically refused to give any such assurances or even to discuss what would happen to the proceeds of sale, and they further alleged that he agreed to the WisdomTree indemnity and to the retention of a further $4.5 million in escrow in order to obviate the need to obtain shareholder consent for the WisdomTree sale.

(a)(iii) Was the court below entitled to reach its conclusions in light of the pleadings?

88. The second question is whether the Royal Court was therefore precluded from deciding that Mr Tuckwell led the Plaintiffs to believe that there would be a pro rata distribution (as alleged in §12 and §14 of the Respondent's Notice).

89. In our judgment, it was not. The court below was required to reach its conclusions as to what happened at the time based on the all the evidence that was deployed before it at the trial. The fact that, in doing so, it decided that Mr Tuckwell had led the Plaintiffs to believe that there would be a pro rata distribution when that specific matter was not pleaded brings this case nowhere near to the authorities on which Mr Tuckwell sought to rely. As noted above, those were cases in which, for example, the court had resolved a dispute on the basis of a cause of action that was not pleaded or argued. The situation here is that the cause of action was clearly identified, and the Plaintiffs' case was founded on a course of conduct over a period of time involving a specified objective on the part of Mr Tuckwell and a specified outcome that was said to be unfairly prejudicial to the Plaintiffs. The fact that they did not specifically plead every single instance forming part of that course of conduct and illustrating that intention and contributing to that outcome on which the Royal Court ultimately founded its judgment cannot lead to the conclusion that the court below was unable to decide this evidential issue as it did. In our judgment, Mr Tuckwell's argument under this heading misunderstands the function of pleadings, and the role of a trial court.

90. In support of his argument, Mr Tuckwell makes a specific complaint that the 2017 spreadsheet was not mentioned in the Amended Order of Justice. That is immaterial to the question in hand, because pleadings are not meant to recite the evidence. More generally, as noted above, it was entirely clear from the pleadings that one of the issues at trial was going to be the content and effect of the exchanges between Mr Tuckwell (on the one hand) and representatives of the Plaintiffs and the other directors (on the other) in November 2017. Indeed, it was specifically alleged in §7.21 of the Amended Order of Justice that, at the 13 November meeting, Mr Tuckwell had said that he was "in favour of the Company buying back shares in order to provide shareholders with liquidity once the transaction had closed". As such, it was apparent that the indications Mr Tuckwell gave at the time as to the application of the proceeds of sale would form part of the subject matter at trial.

91. In this regard, it is important to recognise that it was clear from the matters canvassed in the Plaintiffs' witness statements (which were obviously served before trial) that numerous witnesses were going to give evidence on what they understood Mr Tuckwell to have been indicating in November 2017 as to the likely application of the proceeds of sale. In particular, (i) Mr Bernstein's witness statement said (at §44) that the 2017 spreadsheet "set out the waterfall of the proceeds from the sale of EFTS's assets which Mr Tuckwell had described"; (ii) the witness statement Mr Burstein (of Millennium) said (at §93) that the 2017 spreadsheet "notably calculated a 'per share' value on a pro rata basis"; (iii) the witness statement of Mr Wolfe (of Susquehanna) said (in §69) that the spreadsheet "provided for a pro rata allocation of value to every share with no discount applied. This is what would be expected to happen ... The provision of the Excel worksheet by Mr Tuckwell gave me some reassurance that a pro rata distribution of some kind would be made after all".

92. That being the position, Mr Tuckwell cannot pretend either that the circumstances leading up to the Board meetings over 12 - 13 November, or the events that occurred during those Board meetings, or the Plaintiffs' understanding of his intentions regarding the proceeds of sale, did not form a legitimate part of the subject matter of the trial, or that he was taken by surprise at trial or in the judgment below when consideration was given to what he had said at the time about the possible application of the proceeds of sale.

93. In this connection, it is important to recognise that Mr Tuckwell's Skeleton Argument for trial specifically stated, at §12, that he would object to any cross-examination which went beyond the pleaded issues. The point was repeated in oral openings. In the event, there was no objection to the cross-examination of Mr Tuckwell in relation to what he had said in the lead-up to the November 2017 Board meetings. On that basis, the Royal Court was both entitled and required to draw whatever conclusions on the facts it considered appropriate.

94. Furthermore, the Royal Court was fully alive to the challenges Mr Tuckwell made by reference to the issues raised by the pleadings, and it addressed itself appropriately to those challenges by reference to the relevant case-law in §84 - 87 of its judgment and specifically again in §347.

95. Turning finally to the alleged confusion between the 2017 spreadsheet and the earlier 2011 spreadsheet, there is nothing in this argument. A paragraph which was said to display such confusion appeared in the draft judgment, but it was deleted before the judgment was finalised. An appeal can only be brought against a judgment as it stands in its final form, and it is simply not open to a litigant to try sustaining an appeal on the basis that the court below somehow took into account a matter (the deleted paragraph) which does not appear in its judgment.

96. In all the circumstances, the Royal Court was fully entitled to decide that Mr Tuckwell led the Plaintiffs to believe that there would be a pro rata distribution from the proceeds of sale even though that specific issue was not pleaded - so long as there was some evidence to support its conclusion, which is the next issue.

(a)(iv) Was the court below entitled to reach the conclusions it did in light of the evidence?

97. The third question is whether the Royal Court's findings were open to it on the evidence. In this regard, Mr Tuckwell has directed our attention to certain evidence (some of which is recorded in the Royal Court judgment itself) which, he says, demonstrates that he did not lead anyone to believe that there would be any distribution, let alone a pro rata distribution of the proceeds of sale after the Company's assets had been sold. In particular, he drew our attention to the email exchange in June 2017, quoted in §233 of the Royal Court judgment, which recorded him as having said that "he'd hold the $700m in the Company, and run the Company as a family office investing in PE opportunities". He also referred to the finding in §235 of the Royal Court judgment, which recorded him having said in November 2017 that he "did not want to specify how the shareholders would receive liquidity following the Sales". And he referred us to the note of a call on 10 November 2017, quoted in §239 of the Royal Court judgment, which recorded him as saying that he "doesn't want to specify how the liquidation will happen," "doesn't want to do distributions of proceeds due to tax implications" and "wants to buy out shareholders at different prices". The same note said that Mr Tuckwell was "Very wishy washy on timing and discounts".

98. All of this was relevant material on which Mr Tuckwell could and did rely at trial in support of his position that he did not lead he Plaintiffs to believe that there would be any distribution of the proceeds of sale. Nevertheless, the Royal Court referred in detail, at §242 & 243 of its judgment, to the 2017 spreadsheet, which was sent by Mr Tuckwell to Mr Burstein, and was then forwarded to Mr Chee and the representatives of the other two main minority shareholders. The Royal Court had before it the witness evidence mentioned in §91 above giving the testimony of Mr Bernstein, Mr Burstein and Mr Wolfe in relation to that spreadsheet. It noted that the spreadsheet set out an enterprise value for the main components of the Company's business and, crucially, the bottom line was labelled "Per share value", attributing a pro rata value per share. When giving evidence, Mr Tuckwell accepted that, for the purpose of the spreadsheet, "all the shares are valued the same". He also said he could understand the evidence of Mr Goldman (of Susquehanna) that the spreadsheet "implies that we get our dollars back - plus a few nickels."

99. The court below also referred to Mr Chee's evidence to the effect that, on a call on 10 November 2017, Mr Tuckwell agreed to sign a "distribution document". It also referred, in §241 of its judgment, to Mr Chee's evidence that Mr Tuckwell did not give any indication that the sale proceeds would be used other than for the purpose of a pro rata distribution to the shareholders. It referred again to Mr Chee's evidence in §247 - 249 of its judgment, saying that "it was his assumption that the distribution of shares and the proceeds of cash would be distributed pro-rata once ancillary issues were resolved". Finally, it referred at length to the discussions at the Board meetings over 12 - 13 November 2017, at which one of the independent directors said that FTV had wanted something in the minutes about "equitable treatment of shareholders in distribution of assets" and Mr Tuckwell is recorded as saying "I think what you have just said is fine".

100. One specific allegation made by Mr Tuckwell (in §14 of the Respondent's Notice) is that the suggestion that he led the Plaintiffs to believe that there would be a pro rata distribution from the proceeds of sale "was only proposed by the Court itself to Mr La Ruffa". We reject that allegation for the reasons outlined in §91 and §98 - 99 above.

101. We have not attempted to summarise all the evidence that was available at trial, or even all of the evidence recorded in the Royal Court judgment. But the summary outlined above is sufficient to demonstrate that it cannot sensibly be suggested that there was no evidence to support the Royal Court's finding that Mr Tuckwell created the impression that there would be a pro rata distribution of the proceeds of sale, or that its finding was perverse or manifestly contrary to the weight of the evidence. Another tribunal of fact might possibly have reached a different conclusion on the evidence, but that is true in many cases and it is not the function of this court to speculate as to what its own opinion would have been had we been the trial judges. Our function is to apply the test in §37 above. Applying that test, there is no credible basis for suggesting that the Royal Court's ruling on this point can properly be overturned.

102. One final aspect of Mr Tuckwell's argument in this context was more of a legal quibble than an evidential point. He said that the Royal Court's finding failed to differentiate between the Plaintiffs, and also involved an erroneous approach to attribution. The specific question was, he said, whether Mr Tuckwell had led each of the Plaintiffs to believe that there would be a pro rata distribution. In that context, it was irrelevant, he said, to consider what Mr Chee or the independents directors believed. In our judgment, this argument is misplaced. Strict questions of attribution may be relevant where, for example, a claim in tort is being pursued, and it becomes necessary to determine whether any particular act or state of mind on the part of a natural person should be treated in law as the act or state of mind of a legal person. But Article 141 does not operate at that level of legal fastidiousness. The question of unfair prejudice is a broad one, and if (as the Royal Court was entitled to find) Mr Tuckwell created the impression that there was to be a pro rata distribution, then it was entitled to take that factor into account in making its overall assessment, without forming any nice judgments as to whether Mr Chee's knowledge or belief, or that of Mr Bernstein, or Mr Burstein, or Mr Wolfe, or that of the independent directors, should be attributed in law to each of the Plaintiffs. That is particularly so where (as here) it was part of the Plaintiffs' pleaded case (at §7.10 of the Amended Order of Justice) that Mr Tuckwell asked Mr Chee "to work with the Plaintiffs" to prepare a proposal for distribution. That being the position, the question for the trial court was not a legal one (of attribution) but rather an evidential one (of what was in fact said, and what impression was in fact generated).

(a)(v) Act or omission of the Company

103. The fourth question is whether the Royal Court was entitled to conclude that there was, in relation to these matters, any relevant act or omission of the Company, within the meaning of Article 141. Mr Tuckwell says that, even if he did lead the Plaintiffs to believe that there would be a pro rata distribution of the proceeds of sale, that would have involved action by him in his personal capacity, not conduct of the Company's affairs.

104. There are two separate answers to that argument:

a. First, it is wrong on the facts. In our judgment, the Royal Court was fully entitled to conclude that the question of what the Company would do with the proceeds of sale, whether by means of finalising the Distribution Agreement or otherwise, were matters that could properly be considered either at Board level, or in general meeting, or both - indeed, it would need to have been so considered. As such, the court below was entitled (indeed, it was correct) to conclude that this conduct related to the conduct of the Company's affairs. (We would also mention in passing in this context that Mr Tuckwell's complaint (in §13 of the Respondent's Notice) that the Royal Court failed to differentiate between (on the one hand) a distribution and (on the other) a buy-back leads nowhere: the fact is that the question of what to do with the proceeds of sale plainly involved the affairs of the Company, irrespective of the mechanisms that might have been adopted for any return of the shareholders' investments.)

b. Second, and in any event, it is wrong in principle for Mr Tuckwell to salami-slice the issues in the claim and interrogate each one separately to see whether, viewed in isolation, the Royal Court was entitled to reach the conclusion that it constituted an act or omission of the Company. The essence of the Plaintiffs' complaint was that Mr Tuckwell caused the Company to realise almost all of its assets and fundamentally alter its business, and that he has locked the Plaintiffs into an investment they did not choose and do not want. As the Royal Court rightly observed (in §320 of its judgment) the Plaintiffs' allegations "need to be looked at collectively as part of a scheme designed to induce the Plaintiffs to sell their shares at an unwarranted discount" (emphasis added). In the context of that overall narrative, not every single step taken by Mr Tuckwell needed to be categorised as an act or omission of the Company. So long as the overall course of conduct satisfied that test - which it plainly did - then the Royal Court was fully entitled to treat the claim overall as having satisfied the requirements of Article 141.

(a)(vi) Prejudice

105. The fifth argument Mr Tuckwell advances is that, even if he did lead the Plaintiffs to believe that there would be a pro rata distribution, nevertheless no prejudice flowed from that (mis)representation. The fact that there has not been any such distribution is (he says) simply a reflection of the hard facts of commercial life with which the Plaintiffs, as sophisticated investors, would have been well familiar - namely, that Mr Tuckwell has majority control in the Company. In any event, the Plaintiffs are not 'locked in' (says Mr Tuckwell): on the contrary, they are free to sell their shares for whatever price a purchaser is willing to pay.

106. In our judgment, this argument is both wrong and also misguided.

a. It is wrong because the Royal Court's finding (in §272 of its judgment) that Mr Tuckwell acted in breach of his duty in this regard is unassailable. The Royal Court was entitled (indeed, it was correct) to conclude that this specific conduct constituted one part of his overall scheme, as outlined in §23 above, and that it involved a breach by him of his duty to exercise his powers for proper purposes. If it were necessary to identify exactly which power was being exercised in this regard, it would be a (controlling) director's ability to inform his fellow directors (and through them the members) of the business plans of the Company with regard to the application of its assets.

b. Mr Tuckwell's argument is wrong also because, in context, his conduct contributed to the Plaintiffs' justifiable loss of confidence in the probity of his management.

c. Mr Tuckwell's argument is also misguided because, for the reasons given in §104 above, the true position is that, in seeking to establish that his scheme caused prejudice, the Plaintiffs did not need to establish that each individual step in the implementation of that scheme caused separate prejudice. Irrespective of whether Mr Tuckwell's misrepresentation, viewed in isolation, was prejudicial, the fact is that it formed part of the course of conduct pursuant to which there was, in the event, no distribution. The Royal Court was fully entitled to reach the conclusion that a failure to distribute the proceeds of sale to shareholders involved prejudice to the Plaintiffs. As noted above, the concept of prejudice under Article 141 is not necessarily limited only to situations in which the financial value of the company as a whole has been diminished. A shareholder is also entitled to complain if the value to him of his investment is diminished, and in the context of a person who has acquired shares as an investment, his ability to realise the value of that investment forms an important part of his interests as a member.

107. There was some debate in this court as to the precise nature of the duty that the Royal Court held had been broken. The Plaintiffs contended (in §91 of their Contentions in Response to Mr Tuckwell's Cross-Appeal) that the Royal Court decided, in §272 of its judgment, that Mr Tuckwell was in breach of his duty of good faith, and they sought to sustain that finding. For his part, Mr Tuckwell contended that there was no proper basis for the Royal Court to have made any such finding, not least (he says) because it was never put to him that he acted in a way that he did not believe was in the Company's interests. Notwithstanding the positions taken by the parties, this court is not persuaded that, in §272 of its judgment, the Royal Court was in truth making a finding of a breach by Mr Tuckwell of his duty of good faith. The language it used in that paragraph is admittedly not entirely clear. It says this: "Mr Tuckwell was putting his own interests above those of other shareholders and breaching his duty to act in the best interests of the company as a whole" (emphasis added). In other words, the Royal Court was not saying that Mr Tuckwell acted in a way that he knew was not in the interests of the Company. Taking due account of the passages underlined, and in the context of the judgment as a whole, we read §272 as a finding (with which we would agree) that Mr Tuckwell acted in breach of his duty to exercise his powers for proper purposes, for the reasons set out in §51 - 52 and §80 - 81 above. We do not read §272 as a finding that Mr Tuckwell acted in breach of his duty of good faith. Furthermore, we express no view on the question whether the Royal Court would have been entitled to find that Mr Tuckwell acted in breach of that duty. In any event, it makes no difference to the outcome of this appeal whether, properly understood, the Royal Court judgment does include a finding that Mr Tuckwell acted in breach of his duty of good faith, or whether (if it did) the Royal Court was entitled to make that finding. The fact remains that the Royal Court found, and was fully entitled to find, that Mr Tuckwell exercised his powers for improper purposes.

108. In relation to the question of prejudice, Mr Tuckwell also advanced two additional arguments: he said that (i) any representation he may have made was not legally binding, and (ii) the Plaintiffs did not take any action in reliance on it. In our judgment, these arguments do not advance his appeal. The Plaintiffs' case was not based on actionable misrepresentation or estoppel (cf §19.2 of the Respondent's Notice). That being so, the fact that Mr Tuckwell (or, for that matter, the Company) incurred no legally binding obligation to facilitate a distribution, and the fact that the Plaintiffs took no action in reliance on the assurances they had been given, do not lead to the conclusion that the Royal Court was compelled to reject the allegation of prejudice.

109. Mr Tuckwell also says (in §15.4 of the Respondent's Notice) that there was no allegation that the Plaintiffs might have applied to restrain the proposed Sales. On that basis, he says that (i) the Royal Court should not have suggested (in §233 of its judgment) that he presumably became aware of such a risk, and (ii) the Royal Court should not have 'speculated' (as he says it did in §259 of its judgment) that he was concerned that the Plaintiffs might issue proceedings to restrain the Sales. He also contends that there was in any event no basis on which the Plaintiffs could properly have obtained an injunction to restrain the Sales, which represented excellent value for the Company's assets. We do not consider that these arguments assist Mr Tuckwell. Indeed, it was part of his own pleaded case (in §93(1) of his Amended Answer) that FTV "sought to leverage WisdomTree's requirement for [shareholder] consent, by refusing to grant it" and that it was "trying to block the sale" without such consent. In the circumstances, the Royal Court was fully entitled to reach the conclusions it did in §233 and §259 of its judgment. The relevant question in this context was not whether, if the Plaintiffs had applied for an injunction at the time, it would have been granted. Rather, the question was what Mr Tuckwell did, and whether (cumulatively) it caused prejudice to the Plaintiffs.

110. Finally under this heading, Mr Tuckwell attacks the observation made in §327 of the Royal Court judgment that the Plaintiffs' beliefs that there would be a pro rata distribution "were not mere 'expectations'." We do not understand Mr Tuckwell's complaint in this regard. As already noted, the Royal Court had clearly held (in §39 and §43 of its judgment) that there was no room for equitable considerations or legitimate expectations in this case. It held that the claim based on unfair prejudice would stand or fall depending on whether the Plaintiffs could establish a breach by Mr Tuckwell of any legal duty. In that context, having found that Mr Tuckwell led the Plaintiffs to believe that there would be a pro rata distribution, the Royal Court was simply making clear that it was not going back on what it had said in §39 and §43 of its judgment, in the sense that it was not making a finding of unfair prejudice based on any supposed legitimate expectation that there would be a pro rata distribution. It is clear from the judgment as a whole that the findings of prejudice were based on the breaches of duty by Mr Tuckwell. The Royal Court was simply making that point clear in §327 of its judgment, and Mr Tuckwell has nothing to complain about in that regard.

(a)(vii) Unfairness

111. Finally under this heading, Mr Tuckwell says that his conduct in this regard did not involve any unfairness.

112. His principal argument under this heading is the one that has already been addressed in §108 above, namely that any representations he may have made as to the distribution of the proceeds of sale did not give rise to any enforceable legal rights (see §41 of his CSCA). In our judgment, that is irrelevant to the issue of unfairness. Furthermore, the Royal Court was both entitled and required to reach an overall conclusion whether the implementation of Mr Tuckwell's scheme was unfair to the Plaintiffs. It did not have to assess, in isolation, whether each step was unfair.

113. Mr Tuckwell's other main argument was that his conduct in this regard did not involve any breach of fiduciary duty as a director. We reject that argument too, for the reasons already explained.

(b) Postponing discussion of the distribution

(b)(i) Introduction

114. Mr Tuckwell's second challenge is to the finding made by the Royal Court in §272 of its judgment and summarised in §464(i)(b), that he deliberately postponed any discussion of the distribution of the proceeds of sale. He makes the same complaints about this finding as those summarised in §74 above. In addition, he says that this finding is inconsistent with the previous one: he says that he cannot simultaneously have led the Plaintiffs to believe that there would be a pro rata distribution if he was also postponing any discussion of exactly that issue.

115. It is convenient also to deal under this heading with a related complaint by Mr Tuckwell (in §20 of the Respondent's Notice), namely that the Royal Court should not have found (at §244 of its judgment) that he was guilty of deliberately misleading the Plaintiffs when he said (as he did in an email on 11 November 2017) that the draft Distribution Agreement which had been prepared by Millennium's solicitors would be discussed the next day in the Board meeting.

(b)(ii) Alleged inconsistency

116. We will deal with the allegation of inconsistency first. In our judgment, it is misplaced. There was nothing inconsistent in the Royal Court finding that Mr Tuckwell led the Plaintiffs to believe that there would be a pro rata distribution while at the same time postponing any discussion of exactly when and how that distribution would be implemented. Those two separate questions are neatly illustrated by the lengthy quotation from Mr Chee's evidence in §247 of the Royal Court judgment.

(b)(iii) The pleading

117. Mr Tuckwell's next complaint is that there was no pleaded allegation that he postponed discussion of any distribution of the sale proceeds. In our judgment, there was. In §7.21 of the Amended Order of Justice, the Plaintiffs made exactly that allegation. They said that, at the Board meeting on 13 November 2017, Mr Tuckwell "declined Mr Chee's invitation to discuss the matters and instead said that FTV's requests for engagement and clarity on a liquidation plan would be addressed at a later date."

118. As to the separate finding that Mr Tuckwell deliberately intended to mislead the Plaintiffs in relation to the question whether, on 11 November 2017, he intended to discuss the draft Distribution Agreement the next day, it is a matter of record that no such allegation was pleaded. That is not surprising, because the Plaintiffs would not have known, when the pleadings were drafted, what Mr Tuckwell's subjective intentions were at the time. It would have been quite improper for them to have made an allegation that he deliberately misled them when they had no sufficient evidential basis for doing so. The question then arises whether the Royal Court was accordingly precluded from making a finding that Mr Tuckwell did indeed deliberately mislead the Plaintiffs. We will deal with that next.

(b)(iv) Was the Royal Court precluded from finding that Mr Tuckwell deliberately misled the Plaintiffs?

119. In our judgment, it was not - essentially for the reasons outlined in §88 - 96 above. The question of what Mr Tuckwell's actual plans were and what the Plaintiffs were told at the time clearly formed part of the evidential subject matter of the trial. If (as it emerged) the Royal Court took the view that Mr Tuckwell deliberately misled the Plaintiffs in this regard, then it was fully entitled (indeed, it was required) to make that finding in its judgment even though no pleading of that specific matter had been made. The court could not simply have refrained from expressing a view on it.

120. In this context, it is important to recognise that the judgment below specifically records, in §244, that it was put to Mr Tuckwell in cross-examination that he never intended to go through the draft distribution agreement the next day, and that "Mr Tuckwell did not give a clear answer to that question." On that basis, it was plainly open to the Royal Court to make the finding that it did, particularly in light of the point made in §93 above.

121. We fully recognise that allegations of dishonesty should be pleaded, and we would not wish this judgment to be interpreted as encouraging any relaxation of that principle. In particular, a party should not be entitled to spring an allegation of dishonesty on the other side at trial without warning. Nevertheless, the fact remains that a trial court is inevitably faced with a wealth of evidential material and its task is to decide what happened. Particularly in relation to matters which are peculiarly within the knowledge of one party, such as subjective intentions, an opposing party may not know until trial what was in the other side's mind. That being so, it would be artificial, and it would also impede the fair resolution of disputes, if the trial court were precluded from making findings on individual factual issues solely on the basis that there was no specific pleading on that point.

122. These considerations have particular force in the present case where (as will be apparent from §126 below) Mr Tuckwell is not, in the event, suggesting that the Royal Court should have concluded that, on the evening of 11 November 2017, he did have the intention of discussing distribution the next day. As such, his objection under this heading is more formal than substantive.

(b)(v) The evidence

123. The next question is whether it was open to the Royal Court to make the findings it did on the evidence. In our judgment, it plainly was.

124. As to the allegation that Mr Tuckwell postponed discussion about the distribution of the proceeds of sale, the extracts from the Board meetings on 12 - 13 November 2017, quoted in §250 - 252 and §259 - 267 of the judgment below, provide ample material for its finding.

125. Of more concern to Mr Tuckwell was the specific finding at §244 of the Royal Court judgment that he never intended to go through the Draft Distribution agreement at the meeting on 12 November 2017, and that he was "deliberately misleading the Plaintiff shareholders when he suggested that he intended to do so". In our judgment, it was plainly open to the Royal Court to make this finding too. It is a matter of record that Mr Tuckwell wrote in an email on 11 November 2017: "We'll go through the doc tomorrow if that's OK." That was a clear statement of his intention at the time. In light of the fact that Mr Tuckwell declined to have that discussion the very next day, and in light of his whole course of conduct as to dealing with the proceeds of sale, there was plainly an evidential basis for the Royal Court to decide that, in writing that email, he was deliberately misleading the Plaintiffs. As noted above, the point was specifically put to Mr Tuckwell, and the court below found his answer unconvincing.

126. Mr Tuckwell's challenge in this court was not that he did intend, on the evening of 11 November 2017, to have that discussion the next day, but rather that he only gave an informal indication of his intention to do so in a "casual email" (§21 of his Respondent's Notice) and that there was "no obligation to have discussed the draft Distribution Agreement" (§23.2 of the Respondent's Notice). In other words, he was claiming that the words he wrote should not have been treated as a representation: he was not suggesting that, if the court below was correct in regarding his email as a representation, that representation was true. On that basis, we reject his appeal on this issue. The Royal Court was fully entitled on the evidence to reach the conclusion that Mr Tuckwell had made a representation and that, in doing so, he deliberately misled the Plaintiffs.

(b)(vi) Attribution & conduct of the Company's affairs

127. In relation to this issue, Mr Tuckwell made essentially the same points as before in relation to attribution, and also in relation to the question whether there was any act or omission of the Company. We give the same answers as in §102 - 104 above. As it happens, Mr Tuckwell acknowledged (in §42 of his CSCA) that any deferral of consideration being given to a distribution of the proceeds of sale was a decision of the Company, but (he contended) it was "entirely informal and not a relevant act of the Company". The question of formality is neither here nor there, in terms of deciding whether it was or was not an act or omission of the Company; and the question whether the act was 'relevant' falls to be considered only in terms of whether prejudice was caused and, if so, whether it was unfair.

(b)(vii) Prejudice

128. Mr Tuckwell's next argument is that the Royal Court was not entitled to conclude that the Plaintiffs had suffered any prejudice, and (he says) the Royal Court failed to do what it said in §272 that it was going to do - namely, to revisit at a later stage in its judgment the question whether any prejudice was indeed suffered as a result of this postponement.

129. There is nothing in these complaints. (i) The Royal Court did revisit the question of prejudice, in §465 of its judgment, albeit very succinctly. (ii) For the reasons already discussed, there was no need for serial findings of prejudice in relation to each step of the journey. (iii) The Royal Court was fully entitled to reach the conclusion that the overall result of Mr Tuckwell's conduct was prejudicial, as explained in §105 - 110 above.

(b)(viii) Unfairness

130. Finally under this heading, Mr Tuckwell says that the Royal Court was wrong to find (as it did in §272 of its judgment) that the postponement of any consideration of a possible distribution of the sale proceeds was unfair in that Mr Tuckwell thereby acted in breach of duty as a director. We reject that argument for the reasons already given in §111 - 113 above.

(c) The removal of the independent directors

(c)(i) Introduction

131. The third main target of Mr Tuckwell's attack is the finding in relation to the removal of the independent directors (Dr Birch and Dr FitzGerald). This is dealt with in §273 - 307 of the Royal Court judgment, and summarised in §464(i)(c). The essential facts are not in dispute. Mr Tuckwell wrote to the independent directors in his capacity as Chairman of the Company inviting them to resign. The Company drafted their letters of resignation, which contained terms as to payment which only the Company could agree. The independent directors signed those letters of resignation. It is not disputed that these matters are fully pleaded in the Amended Order of Justice.

(c)(ii) Conduct of the Company's affairs

132. The first question is whether the Royal Court was wrong to conclude that this involved any conduct of the affairs of the Company. In our judgment, it was not. The composition of the board is one of the key aspects of a company's affairs. A letter written by the Chairman is clearly an act done on behalf of the Company. The explicit threat made in that letter to remove the directors by ordinary resolution was a proposed act of the Company in general meeting.

(c)(iii) Prejudice

133. The second question is whether the Royal Court was wrong to conclude that the removal of the independent directors caused any prejudice. There are several closely related aspects to the answer:

a. First, it was Mr Tuckwell's own evidence that he wanted the independent directors to go because he "felt they might try to push [him] where [he] did not want to go" in terms of agreeing a pro rata distribution to shareholders (quoted in §275 of the Royal Court judgment). His argument before this court was that the independent directors could not procure any such distribution without his agreement, and hence their removal did not materially disadvantage the Plaintiffs as shareholders. That argument does not sit well with the evidence he gave at trial (recorded in §280 of the Royal Court judgment), where he accepted that a Board resolution to implement a capital return plan could have been passed, and that he could have been outvoted by the two independent directors at Board level. But in any event, the question in this court is not whether the independent directors could have legally compelled a pro rata distribution in the face of opposition from Mr Tuckwell. Rather, the question in this court is whether it was outside the reasonable bounds of the Royal Court's evaluative judgment to regard the Plaintiffs as having been 'prejudiced' as a result of the removal of the independent directors, within the meaning of Article 141. In our judgment, the Royal Court was fully entitled to take the expansive view of prejudice that it did, and the best evidence in support of that view was Mr Tuckwell's own avowed wish to remove the independent directors because of his concern that they would act as effective advocates for the Plaintiffs' cause.

b. Since the removal of the independent directors formed part of the overall scheme implemented by Mr Tuckwell, as outlined in §23 above, the Royal Court was entitled to regard his conduct in this regard as involving a breach of his duty to exercise his powers as a director for proper purposes (as it did in §306 of its judgment).

c. Furthermore, the removal of the independent directors was part of the overall scheme implemented by Mr Tuckwell which cumulatively caused the Plaintiffs justifiably to lose confidence in the probity of his management.

d. Finally, as previously noted, the question whether any individual steps on the road caused prejudice should not be assessed in isolation. It is the cumulative effect of Mr Tuckwell's behaviour overall that needs to be assessed. That is what the Royal Court did, and their conclusions in relation to the removal of the independent directors cannot be faulted in this court.

134. The language used by the Royal Court in §306 of its judgment to describe Mr Tuckwell's breach of duty in this regard is similar to that used by it in §272 to describe his breach of duty in relation to the two previous headings of unfair prejudice. It says, in §306, that Mr Tuckwell was "not acting in the best interests of the Company as a whole and was exercising his powers as a director to benefit himself and prejudice the interests of the minority shareholders, placing his own interests above those of the Company". Again, this could have been more happily expressed but, for the same reasons as discussed in §107 above, we read this as a finding that Mr Tuckwell acted in breach of his duty to exercise his powers for proper purposes. We do not read it as a finding that Mr Tuckwell was acting in a way that he knew was not in the interests of the Company, and we do not read it as a finding that he acted in breach of his duty of good faith. We express no view on whether the Royal Court would have been entitled to make a finding that Mr Tuckwell acted in breach of that particular duty. But it makes no difference to the outcome of this appeal in any event.

(c)(iv) Unfairness

135. The final question under this heading is whether the Royal Court was entitled to reach the conclusion that the prejudice caused by the removal of the independent directors was unfair, and in particular whether it involved any breach of duty by Mr Tuckwell. In our judgment, it was, for the reasons already given.

(d) Unilateral change in the Company's business

(d)(i) Introduction

136. The next target of Mr Tuckwell's challenge is the Royal Court's finding in relation to the change in the Company's business. This is addressed in detail in §308 - 319 of the Royal Court judgment, and summarised in §464(i)(d). Here again, the underlying facts are not in dispute. Once the Sales had completed, the underlying business of the Company was changed "dramatically" (as Mr Tuckwell himself put it in his letter requesting the independent directors to resign). Instead of developing and managing exchange-traded products, the Company was thereafter sitting on a block of WisdomTree shares, a significant sum in cash and, after a time, a number of investments in the portfolio companies. Mr Tuckwell accepted that this was "a completely different business" from before (§308 of the Royal Court judgment). It was "not his vision or the Plaintiffs' vision when they invested" in the Company (§308 of the Royal Court judgment).

137. Several of the issues that have been discussed in the earlier sections of this judgment do not arise under this heading. In particular, it is common ground that this complaint was fully pleaded in the Amended Order of Justice, and there is no dispute that the change of business involved conduct of the Company's affairs.

(d)(ii) Prejudice & unfairness

138. The main question on appeal under this heading is whether the Royal Court was entitled to conclude that the change was prejudicial, and unfairly so. These are the core issues in the whole case, and they are inextricably linked. In essence, the parties' competing arguments are these:

a. Mr Tuckwell says that (i) this was not a quasi-partnership company; (ii) the Royal Court rejected (in §39 of its judgment) any suggestion that the Plaintiffs had any legitimate expectations; (iii) under the Shareholders Agreement and the Articles, FTV had originally enjoyed a contractual right to veto any significant change of business and, subject to the terms of those agreements, they had had a contractual right to a pro rata distribution so long as they remained Preferred Shareholders: but they surrendered those rights with their eyes open when they converted the Preferred Shares into Ordinary Shares, and they did so for profit; (iv) thereafter they had no legal right to veto any change of business direction, and there was no other legal restraint under the Company's constitution as to its business direction; (v) the Plaintiffs are sophisticated investors, and they knew full well that, as minority, ordinary shareholders in a private company, they would have no control over management, no right to redemption, no guaranteed exit, and no assurance that their shares would be acquired other than at a discount. In all the circumstances, they cannot now complain that it is unfairly prejudicial for them to be left in exactly that position.

b. For their part, the Plaintiffs say that: (i) they invested in a company which developed and managed exchange-traded products with a view to achieving a realisation of their investment within a reasonably short period of time; (ii) that business has been sold, and the proceeds of sale are available for distribution; (iii) nevertheless, Mr Tuckwell has thwarted the Plaintiffs' hopes by refusing to implement any form of distribution; (iv) furthermore, he has compounded the Plaintiffs' grievances by deliberately structuring the Company's current affairs in such a way that their shares are less marketable than they were previously; (v) moreover, in conducting himself as he has, Mr Tuckwell has acted in breach of fiduciary duties as a director.

139. In determining the issues in this appeal, it is important to keep in mind the fact that this is an appeal. We are not hearing the trial, so we are not forming our own judgment as to whether, if we had been the trial judges, we would have concluded that the Plaintiffs had established unfair prejudice. Rather, the question for this court is whether it was outside the bounds of the broad, evaluative power conferred on the Royal Court by Article 141 to conclude that there was unfairly prejudicial conduct. In our judgment it was not.

140. Assuming (as we do, for the purpose of this appeal) that it was necessary for the Royal Court to reach the conclusion that Mr Tuckwell acted in breach of his fiduciary duties, we consider that there were ample grounds for doing so in relation to the change of business. In this regard, we do not read §465 of the judgment below as a finding that Mr Tuckwell exercised his powers with a view to causing financial harm to the Company, or that he did not believe that the Company would be able to make money from the new investments he was selecting. In other words, it is not a finding of a breach of the duty of good faith. Rather, it is a finding that Mr Tuckwell exercised his power for an improper purpose, namely to disadvantage the Plaintiffs as potential sellers, and to advantage himself as the potential (direct or indirect) purchaser of their shares.

141. Mr Tuckwell's argument on appeal is not to deny his hostility towards FTV, but rather to say that he is the majority shareholder, he is the controlling director and, so long as he was not deliberately damaging the Company financially, he was entitled to take it in whatever direction he chose. In our judgment, that answer overlooks (i) the fact that Mr Tuckwell owed a duty to exercise his powers for proper purposes and (ii) the fact that, in assessing whether any conduct which involved a breach of duty thereby caused unfair prejudice, the court below was fully entitled to take into account all the matters on which the Plaintiffs sought to rely (as summarised in §138(b) above) irrespective of whether any equitable considerations were in play.

a. As to the first point, for the reasons discussed above, the Royal Court was fully entitled to reach the conclusion (as it did in §465 of its judgment) that Mr Tuckwell acted in breach of that duty because he exercised those powers for the substantial purpose of benefiting himself and exacting revenge on shareholders he had come to resent. We do not read §319 of the judgment below as a finding that Mr Tuckwell acted in breach of his duty of good faith. The Royal Court said that, in changing the nature of the Company's business, he "plainly preferred the interests of one shareholder (his interests) to those of the other shareholders". We read this as a finding that he acted in breach of the duty to exercise his powers for proper purposes. We would in this context also repeat the observations made in §134 above.

b. As to the second point, the Royal Court was fully entitled to reach the conclusion that, in the overall circumstances of this case, Mr Tuckwell's breaches of duty had resulted in unfair prejudice, bearing in mind the overall purpose of the venture in which the Plaintiffs invested, the vision (to use Mr Tuckwell's word) of both the Plaintiffs and Mr Tuckwell himself in the period 2006 to 2011, and the fundamental alteration in the Company's business after mid-2018, along with the cumulative effect of all the matters summarised in §464 of the judgment below. In doing so, the Royal Court was not giving effect to any 'legitimate expectation' that there would be a liquidation event, nor was it proposing that Mr Tuckwell as a director owed any kind of duty to the Plaintiffs as minority shareholders to distribute the proceeds of sale, or purchase their shares. Rather, it was making a rounded assessment of all the material adduced at trial and reaching an evaluative conclusion that was well within the scope of its statutory discretion as to whether the breaches of duty by Mr Tuckwell had caused unfair prejudice.

142. One specific issue relating to prejudice that was debated before us was whether the Royal Court was entitled to reach the conclusion (as it did in §319 of its judgment) that one of the prejudicial consequences of the change in the Company's business was that the Plaintiffs' shares were less marketable as a result. There can be no dispute that this issue was specifically pleaded (in §2.7 and §12.7 of the Amended Order of Justice). However, Mr Tuckwell's contention on appeal is that there was no evidence to support it, and that there never was a market for the Plaintiffs' shares (before or after the Sales), other than at a significant discount. We disagree. The Royal Court was fully entitled to take into account the fact that, while the Company was still pursuing its original business, FTV was able to sell a substantial proportion of its shares to Millennium and Susquehanna in the Secondary Sales. As such, there was evidence on which the Royal Court could readily conclude that, at that stage, there was a market for the shares. As to the evidence of their reduced marketability after the change in direction, in January 2018 Mr Tuckwell himself produced a document headed The Future of EFTS Securities Ltd, which said this: "It is recognised that many of the current shareholders have an expectation of the company providing them with liquidity for their shares, given the small likelihood of secondary market demand." Mr Tuckwell's evidence at trial was that "the reality is that no one wold sensibly buy these shares at anything other than, you know, 10 cents in the dollar" and "I don't think there's much hope of them being sold to a third party". That being the evidential position, and applying the test outlined in §37 - 38 above, there is no basis on which this court can properly overturn the judgment below on this point.

(e) Making a flawed offer for the Plaintiffs' shares

(e)(i) Introduction

143. The final target of Mr Tuckwell's challenge is the finding that (i) he made an offer for the Plaintiffs' shares which was based on a valuation process that departed from the one he had agreed to adopt, and (ii) in any event, the offer he made was far too low. These issues are addressed in detail in §290 - 303 and §320 - 352 of the Royal Court judgment, and summarised in §464(i)(e).

(e)(ii) Pleading

144. Mr Tuckwell's first and main argument under this heading is that there was no pleaded allegation to support the findings in §290 - 303, §328 or §351 of the Royal Court judgment that he reneged on an agreement to arrange for a valuation to be conducted by a jointly-instructed expert. Specifically in §297 and §303 of its judgment, the Royal Court held that Mr Tuckwell agreed, at a Board meeting on 14 March 2018, that there would be jointly-instructed expert valuation of the Company's shareholdings. This finding was then repeated in §464(i)(e) of the judgment.

145. On the face of the pleading, there was no allegation that Mr Tuckwell had agreed to a joint valuation at the Board meeting on 14 March 2018 (or at any other time). The Board meeting on that day was mentioned in §7.23 - 7.29 of the Amended Order of Justice, and in §97 - 99A of Mr Tuckwell's Amended Answer, but the Plaintiffs' pleaded allegation was no more than that there was some discussion of a possible buy-back. They did not allege in the pleading that Mr Tuckwell agreed to a joint valuation report.

146. Nevertheless, we do not consider that this undermines the judgment below in any material respect. First, Mr Tuckwell's argument to the contrary again displays a misunderstanding of the function of pleadings and the duties of a trial court.

a. In this case, the overall thrust of the Plaintiffs' case was entirely clear from the pleadings, specifically from §9.1 of the Amended Order of Justice which alleged that Mr Tuckwell had "treated the Company's business as his own and sought to transform the Company into, in effect, his personal investment vehicle" and "sought to use the fact of his doing so to pressure the Plaintiffs to sell the shares to him or to the Company ... at a substantial and entirely unjustified discount".

b. Specifically in the context of the allegation that Mr Tuckwell was seeking to use his control over the Company in order to enhance both the justification for a minority discount and also the rate of that discount, Section 10 of the Amended Order of Justice sets out the Plaintiffs' case under the heading: "Mr Tuckwell's refusals to distribute the proceeds of the Sales, attempts to reinvest and demand for a minority discount" and Section 11 develops it further under the heading: "Mr Tuckwell's attempt to force the Plaintiffs to sell their shares at a substantial discount".

c. It was in the context of those overarching allegations that the Royal Court's approach to the specific discussions held at the March 2018 Board meeting needs to be judged. As noted above, the Board meeting was pleaded, and the Plaintiffs also specifically alleged in §7.29 of the Amended Order of Justice that there were discussions at the meeting about the possibility of a buy-back.

147. Viewed against that pleaded background, the Royal Court was both entitled and bound to reach its conclusions on the evidence as to what was said by Mr Tuckwell at that meeting, and in particular whether he agreed to the idea of a jointly-instructed valuation expert.

148. The second reason for rejecting Mr Tuckwell's appeal by reference to this issue is that the question whether he did, or did not, agree to a joint valuation formed only one subsidiary part of one specific issue relating to unfair prejudice. The main substantive point under this heading was the Royal Court's finding that the offer he made for the Plaintiffs' shares was far too low. In that context, the question whether he also arrived at that unfairly low valuation by means of a process which was itself unfair was entirely incidental. The main point was that he made an unfairly low offer. As such, Mr Tuckwell's complaint in this regard goes nowhere.

(e)(iii) The evidence

149. In any event, we consider that the Royal Court was fully entitled to conclude on the evidence that Mr Tuckwell did agree to a jointly-instructed valuation expert.

150. On this issue, the Royal Court noted, in §292 of its judgment, that at the Board meeting on 14 March 2018, Mr Chee had suggested that "a better route would be for the expert to be jointly instructed" and it recorded Mr Tuckwell's response as having been "that he was happy with this" and that he said: "I'm not wanting this to be an adversarial process". In §297 of its judgment, the court below noted that "Mr Tuckwell repeated that he was happy for there to be a third-party value established by a jointly commissioned report."

151. It cannot therefore be suggested that there was no evidence to support the Royal Court's conclusion, at §303 of its judgment, that "The takeaway of the Plaintiffs from this meeting ... would have been that the shares were to be valued by a jointly instructed expert" or that that conclusion was perverse or against the weight of the evidence. Applying the test outlined in §37, there is no proper basis for this court to overturn the finding below on this issue.

(e)(iv) Conduct of the Company's affairs

152. Mr Tuckwell's next main argument is that the relevant conduct was in any event his, not that of the Company. We reject that argument, essentially for the reasons outlined in §104 above. Furthermore, in our judgment the Royal Court was entirely justified in reaching the conclusions it did, specifically in §347 of its judgment, that any offers made by Mr Tuckwell to the Plaintiffs would have involved resorting to the Company's own resources to fund the purchase and for that specific reason also it involved conduct of the Company's affairs.

(e)(v) Prejudice

153. In relation to prejudice, Mr Tuckwell's main argument is that he never made any binding offer to acquire the Plaintiffs' shares, and that no legally enforceable rights arose from his conduct. Whilst that is correct, it is also immaterial. The court below was not constrained to find unfair prejudice only where there was a violation of some independent contractual obligation to acquire the Plaintiffs' shares. The offer that he made at an unfairly low valuation represented the culmination of the whole scheme Mr Tuckwell had implemented, as summarised in §23 above, and for the reasons already discussed, the Royal Court was fully entitled to regard it as involving a breach of duty by Mr Tuckwell.

154. Mr Tuckwell also makes a related, secondary point, saying that the Royal Court proceeded "as if" he had an obligation to purchase the Plaintiffs' shares that was "fair" when he was under no such obligation (§4 & §50.4 of the Respondent's Notice). In our judgment, that objection misunderstands the Royal Court's judgment and the nature of its ruling under Article 141. The substance of the judgment below was that the Plaintiffs had suffered prejudice as a result of an accumulation of factors, including the sale of the Company's assets, the change of business direction, and the refusal to buy the Plaintiffs' shares or otherwise distribute the proceeds of sale other than at an unjustifiably discounted price. That was not tantamount to a finding that Mr Tuckwell was under any legally binding obligation to purchase the Plaintiffs' shares. Instead, it was simply a finding that, since Mr Tuckwell had chosen not to make an offer which the court below regarded as fair in the circumstances then obtaining, that was one of the elements that went to make up the prejudice overall.

(e)(vi) Unfairness

155. The main issue in relation to unfairness under this heading is whether the Royal Court was entitled to conclude that the offer made by Mr Tuckwell to procure the purchase of the Plaintiffs' shares at a 44% minority discount was far too low. In our judgment, it was fully entitled to reach that conclusion. The reasons are given separately below in the context of the arguments on valuation.

Other findings of the Royal Court challenged by Mr Tuckwell

Introduction

156. Mr Tuckwell has made a large number of other complaints about the Royal Court's findings. Having already disposed of his complaints in relation to those findings on which the Royal Court specifically relied in support of its ruling on unfair prejudice, we do not consider that his other complaints advance his appeal. Nevertheless, in the interests of completeness, we will deal briefly with the three principal points.

Conduct occurring before the Sales

157. Mr Tuckwell says (in §3.2 of his Respondent's Notice) that the Royal Court "should not have taken into consideration any conduct which was not unfairly prejudicial conduct (for example matters found at [121], [146], [183], [194], [315] and [363]". Objection is also taken (in §8 - 10 of his Respondent's Notice) to the Royal Court's findings in §147, §154, and §208 - 209 of its judgment. There is nothing in these objections, for three reasons:

a. First, it is entirely clear from the language of §463 of the judgment below that the Royal Court did not take into account any of the matters identified in §121, §146 - 147, §154, §183, §194 or §208 - 209 of its judgment in reaching the conclusion that there had been unfair prejudice. Rather, the court said expressly in §463 that its finding of unfair prejudice was based exclusively on the matters summarised in §227 - 352 of its judgment. To that extent, Mr Tuckwell's complaint is simply misplaced.

b. Second and in any event, in order for the court below to decide whether any of the matters about which complaint was made were prejudicial, and unfairly so, it inevitably had to consider the full course of the parties' interactions, and it would be absurd to suggest that it was required to omit from its judgment any findings of fact (such as Mr Tuckwell's long lasting antipathy towards FTV) simply on the basis that it did not, in and of itself, constitute unfair prejudice.

c. Finally, if and to the extent that Mr Tuckwell is seeking to suggest that the Royal Court reached a finding of unfair prejudice on the basis that he had acted with malicious intent towards FTV (i.e. that the court applied a subjective test, as if the question were one of unkind prejudice, rather than unfair prejudice) we reject that reading of the judgment below. It is clear from any fair reading of the judgment as a whole that the Royal Court correctly applied an objective and evaluative assessment of whether there had been prejudice, and whether it was unfair.

The WisdomTree Indemnity

158. Mr Tuckwell objects (in §24 of his Respondent's Notice) that the Royal Court was not entitled to find (as he says it did in §246 of its judgment) that he acted in breach of duty in causing the Company to enter into the WisdomTree Indemnity.

159. The first question is whether this issue was pleaded. The Plaintiffs' allegation (in §7.15 of the Amended Order of Justice) was that Mr Tuckwell agreed to the WisdomTree Indemnity and to the retention of an extra $4.5 million in escrow "in order to avoid having to provide the Plaintiffs with the commitments regarding liquidity being sought". They did not add "and Mr Tuckwell thereby acted in breach of duty". Accordingly, on the face of the pleading, the constituent elements of a breach by Mr Tuckwell of the duty to exercise his powers for proper purposes were set out, although the legal conclusion that there was accordingly a breach of duty was not pleaded.

160. The next question is to examine what the Royal Court decided. It is not obvious from §246 of the judgment below (i) whether the Royal Court was saying that there was any breach of duty in this regard, or (ii) if so, whether the breach of duty was committed by entering into the WisdomTree Indemnity or only by making the ancillary agreement to leave an extra $4.5 million in escrow. All it said in §246 was that "that decision was not in the interests of the Company".

161. We have some sympathy with Mr Tuckwell's objection to the Royal Court's finding that Board approval was not given to the WisdomTree Indemnity, because Mr Tuckwell gave evidence (in §269 - 270 of his first witness statement) that such approval was given, and he was not cross-examined on it.

162. The next question is whether this gives Mr Tuckwell any grounds for appeal. In our judgment it does not -

a. partly because it is not obvious that there was any finding by the court below of a breach of duty;

b. partly because the provision of the WisdomTree Indemnity and the additional escrow amount were not listed as specific instances of unfair prejudice on which the judgment below was founded, as is apparent from their absence from §464 of the judgment; and

c. partly because even if, on a correct reading of §246 of the judgment below, the Royal Court did indeed make a finding that Mr Tuckwell acted in breach of duty in this regard, we consider that it would have been fully entitled to do so. It was clear from the pleadings that the reasons for which the indemnity was given formed part of the subject matter of the trial. It was clear from Mr Tuckwell's own pleading (see §109 above) that his enthusiasm for avoiding any need to obtain shareholder approval for the sale to WisdomTree was prompted by his desire to avoid giving the Plaintiffs any opportunity to force him to agree terms for distributing the proceeds of sale by threatening to withhold such consent. In the circumstances, the fact that Board approval may in fact have been given to the WisdomTree Indemnity would not have prevented the Royal Court from regarding this episode as another element in the overall scheme which (for the reasons set out above) involved Mr Tuckwell using his powers as a director for improper purposes, even if the same transaction was also approved by other Board members who did not thereby act in breach of duty.

The position of non-party shareholders

163. Mr Tuckwell made two related complaints (in §6 of his Respondent's Notice) about the Royal Court's attitude to minority shareholders who were not parties to the proceedings. (i) He submitted that the Royal Court "improperly sought to cause Mr Tuckwell to make an offer during trial, including as to non-parties". This is a reference to certain remarks made by the learned Deputy Bailiff at the beginning and the end of the trial to the effect that the court "would expect Mr Tuckwell in the course of his evidence to say now at what price he would be prepared to buy out the minority shareholders ... We would also invite there to be confirmation that that would extend to persons who are not parties to these proceedings". (ii) He also submitted that the Royal Court "ought not to have made the comments that it did in the final sentence of [471]." The final sentence of §471 only makes sense in the context of the paragraph as a whole:

"Finally, notwithstanding the orders that we have made, there will remain a number of small shareholders in the Company who were not parties to these proceedings. As they were not parties, they do not benefit from the Court's decision. The Court would find it difficult to understand Mr Tuckwell's motives if, following this judgment, he were not to make a proposal to all shareholders who are not party to these proceedings to purchase their shares on the basis set out in this judgment - assuming that they wish to have those shares purchased by Mr Tuckwell or the Company."

164. It is apparent from these remarks that the court below was concerned for the position of those smaller minority shareholders who did not have the same financial resources as the Plaintiffs to bring litigation in order to vindicate their rights. Some nineteen (largely indirect) minority shareholders had signed a letter dated 2 September 2020 asking the court below to fashion its remedy in such a way as to enable them to realise their shares. In the circumstances, the court below was understandably concerned to do what it could to encourage finality and to discourage further litigation, and it chose to do so by giving an indication that, since the Plaintiffs had succeeded, it would be difficult for Mr Tuckwell to justify any different treatment of the other minority shareholders.

165. In our judgment, whilst it may have been unnecessary and possibly undesirable for the court below to have made these remarks, we do not consider that they undermine the judgment in any material respect. Observations made in the course of oral argument are likely to be irrelevant in this court unless either they are so grave as to found an appeal based on allegations of a bias (which is not this case) or if the remarks then form a substantive part of the ratio in the judgment (which is again not this case, as is apparent from the full text of §471). For these reasons, Mr Tuckwell's complaint in this regard goes nowhere.

Issues on Valuation

Introduction

166. Five issues were raised in the appeal and the cross-appeal in relation to the valuation of the Plaintiffs' shares:

a. The Plaintiffs contend that no minority discount should have been applied.

b. Mr Tuckwell contends that a higher rate of minority discount should have been applied.

c. Mr Tuckwell contends that a blockage discount ought to have been applied in valuing the Company's shares in WisdomTree.

d. There is a dispute over the correct approach to the valuation of the portfolio companies.

e. The Plaintiffs contend that the Royal Court was not entitled to select the valuation date it did.

167. Before turning to deal with each of these issues in turn, it is convenient first to consider the applicable legal principles in relation to the Royal Court's function under Article 143, and the nature of this court's role on appeal.

The law

Introduction

168. As noted in §62 above, the nature and content of any remedy granted under Article 143 is a matter for the trial court. That dictates the grounds on which this court will intervene.

Valuation, evaluation and appeals

169. In order to assess the force of the Plaintiffs' arguments on appeal, it is important to start by recognising the nature of the specific exercise on which the Royal Court was engaged when fixing the price at which the Plaintiffs' shares were to be acquired. The Plaintiffs' Notice of Appeal describes the valuation by the court below as involving "the exercise of its discretion" (§1 of their Notice of Appeal). In our judgment, that is broadly correct. The court was certainly exercising a discretion in deciding whether to order a buy-out in the first place, and it was also exercising an evaluative judgment (which might conveniently be described as a 'discretion') when fixing the price at which any such buy-out should be effected.

170. This point bears emphasis. In one sense it is potentially misleading to talk about the 'valuation' of a plaintiff's shares in the context of Article 143, because the court's task under this provision is not a purely objective or scientific one. Rather, its function is essentially remedial and evaluative, and various elements in the exercise (principally, the appropriate date for the valuation, and the question whether any, and if so what, discount should be applied) are matters of judgment which depend on the court's assessment of the fairness of the case.

171. That being the nature of the Royal Court's function, the Plaintiffs are correct in recognising the hurdle they now have to jump on appeal in order to persuade this court to substitute a pro rata valuation. In particular, they must show that the Royal Court took into account irrelevant considerations, ignored relevant ones, or otherwise reached a decision which no reasonable court properly directing itself on the law could have reached. Mr Tuckwell faces the same hurdle in seeking to persuade us to increase the rate of discount.

172. We would observe in this context that if, in any case, an appellant can demonstrate that the court below entirely failed to take into account a material factor, that is liable to provide a solid basis of advancing an appeal. By contrast, if the court below expressly took into account some specific factor and an appellant is seeking to argue that it should have been given more weight, that is a line of argument which is far less likely to succeed. It is axiomatic that the weight to be attached to the various relevant factors which fall to be taken into account in the exercise of a court's evaluative judgment is pre-eminently a matter of the first instance tribunal. If a relevant factor has been taken into account, an appellate court is highly unlikely to overturn the judgment below on the supposed ground that it was given insufficient weight. This is because there are no objective or other reliable criteria for dictating how much weight any particular factor should have carried in any particular circumstance, or what outcome it should have produced, either alone or taken together with any other relevant factors.

Minority discount

173. One of the specific issues that is frequently addressed by a trial court in fashioning a buy-out order is whether a minority discount ought to be applied. There is a considerable body of English case-law on this issue, much of which was cited to us, including In re Bird Precision Bellows Ltd, O'Neill v. Phillips, CVC/Opportunity Equity Partners Ltd v. Demarco Almeida [2002] BCC 684, Strahan v. Wilcock [2006] 2 BCLC 555, Irvine v. Irvine [2007] 1 BCLC 445, Re Sunrise Radio Ltd [2009] EWHC 2893 (Ch), Re Blue Index Ltd [2014] EWHC 2690 (Ch), Re Addbins Ltd [2015] EWHC 3161 (Ch), Re Lloyds Autobody Ringway Ltd [2018] EWHC 2336 (Ch), Re Sprintroom Ltd, Shanda Games Ltd v. Maso Capital Investments Ltd [2020] BCC 466 (which in turn refers to Short v. Treasury Commissioners [1948] 1 KB 116, affirmed [1948] AC 534), and Re AMT Coffee Ltd [2020] 2 BCLC 50 (citing Re McCarthy Surfacing Ltd [2009] 1 BCLC 622). We were also referred to a certain amount of case-law from other jurisdictions, including Re Mason & Intercity Properties Ltd (1987) OJ № 448, Dynasty Pty Ltd v. Coombs (1995) 138 ALR 64, M Yovich & Sons Ltd v. Yovich [2001] NZCLC 262,490, Robertson, Re Order under s. 459 of the Companies Act 1985 [2009] CSOH 23, Joint v. Program IT Pty Ltd [2020] VSC 867 and Senda International Capital Ltd v. Kiri Industries Ltd [2020] SGCA 01. Finally, our attention was drawn to the commentary in Hollington on Shareholders' Rights, at §8-51, §8-52 and §8-56, and in Chivers, The Law of Majority Shareholder Power, at §9.19 & §9.25.

174. As before, we do not propose to review the individual cases (none of which are binding) or the commentary, nor do we propose to analyse which observations made in the various decisions to which we have been referred truly formed part of the ratio or only comprised obiter dicta. Instead, we simply propose to distil a number of clear legal principles from the authorities, and to mention some of the factors that are capable of being taken into account in deciding whether or not to apply a minority discount in this jurisdiction:

a. There are no inflexible rules as to whether a minority discount should be applied in any given case. It is always a matter of judgment in light of all the relevant circumstances. That reflects the very nature of the court's statutory jurisdiction.

b. If a buy-out order is being made in relation to a quasi-partnership company, that is capable of being regarded as a powerful factor in favour of a pro rata valuation: but it will only constitute one relevant factor, and the existence of other factors may lead the court to apply a discount even if the company can properly be described as a quasi-partnership.

c. If the plaintiff was entitled to participate in the ownership and management of a company, and he would have preferred to continue participating in ownership and management, but he has been excluded involuntarily and he is only seeking a buy-out order reluctantly, that is also capable of being regarded as a relevant factor in favour of a pro rata valuation, irrespective of whether the company can properly be classified as a quasi-partnership.

d. The question whether a plaintiff's shares were acquired as a pure investment (rather than as part of a joint venture, a family business or a quasi-partnership in which he was participating in management) is also capable of being relevant in deciding whether they should subsequently be bought out at a discount, particularly if the shares were originally purchased at a discount.

e. The court is entitled to take into account the question whether the majority shareholder has deliberately used his control for the purpose of forcing the minority to sell their shares at a disadvantageous price.

175. In identifying the various specific factors mentioned above, we are not encouraging trial courts to adopt a formulaic approach, nor are we suggesting that there is a finite list of factors which must always be taken into account and which should be presumed to produce one outcome or another in terms of applying (or not applying) a minority discount. Rather, we are simply illustrating the kind of factors which are capable of being taken into account.

176. Some judges have said that minority shareholdings ought generally to be valued by reference to what they are - namely, minority shareholdings, which are unattractive to external purchasers. Adopting that approach would militate generally against applying a pro rata valuation. Some other judges have said that there is a general rule that there should be no minority discount in unfair prejudice cases. It is fair to observe that the case-law on which the Plaintiffs sought to rely in support of that proposition is generally dealing with the concept of fairness in the specific context of quasi-partnership or joint venture companies, in which it may well be fair not to apply a discount: see for example Bird Precision Bellows, at 667E - 668F; O'Neill v. Phillips, at 1107A - D; and Strahan v. Wilcock, at §28 - 29. More generally, a high proportion of unfair prejudice claims which come to trial are likely to involve such quasi-partnership and joint venture companies, in which it may well be fair to apply a pro rata valuation. But the numerical frequency of such cases in practice should not lead to the belief that there is, as a matter of principle in all cases, a starting presumption in favour of a pro rata valuation which then needs to be displaced in order for a minority discount to be applied.

177. In conclusion, we do not consider that a trial court should start with any presumption either in favour of a pro rata valuation or in favour of applying a minority discount. Under Article 143, the court is required to make such order as it thinks fit for giving relief in respect of the matters complained of in the particular context of the case in hand, and we would deprecate any attempt to impose presumptions one way or the other. Each case will need to be decided on its own facts, by reference to a combination of factors which is likely to be unique to that case.

Valuation date

178. The other issue with which a trial court will have to grapple is the appropriate valuation date. As the court observed in Robertson v. Slous, at §29, there will be numerous options to choose from, including the date of the unfair prejudice, the date when the proceedings were issued, the date of trial, the date when the valuation is conducted, or the date of any order.

179. Again, there are no fixed rules. In every case, there will be competing considerations. For example, a valuation by reference to the date of intended transfer might be considered fair because it will reflect most closely the value of what the plaintiff is in fact selling. On the other hand, a valuation by reference to a date falling before any unfair prejudice occurred might be considered fair because it may insulate the plaintiff from any diminution in the value of his shares attributable to the unfairly prejudicial conduct. On the other hand, a valuation as at the date of trial might be considered fair because that is the date at which the plaintiffs' rights under Article 141 are vindicated.

180. In Re London School of Electronics [1986] Ch 211, at 224, Nourse J suggested that an interest in a going concern ought prima facie to be valued at the date on which it is ordered to be purchased. That was approved as a starting point, and also as reflecting the general trend of authority since 1986, by the English Court of Appeal in Profinance Trust SA v. Gladstone [2002] 1 WLR 1024, at §60 - 61. In saying so, the court there expressly recognised that in many cases fairness (to one side or the other) will require the court to choose another date, and also warned that a successful plaintiff was not entitled to demand whichever valuation date happened to give him the best exit price.

181. That final observation is important. The concept of fairness requires a balance to be struck. The bare fact that the court has found unfair prejudice does not lead to the conclusion that all considerations of fairness to a defendant must then be wholly disregarded, or that the valuation date (or any other disputed issue on valuation) must be resolved on the most preferential terms in favour of the plaintiff.

Should a minority discount have been applied?

Introduction

182. The Plaintiffs' case is that the Royal Court should have ordered the buy-out at a pro rata valuation.

183. The starting point is to recognise that the Plaintiffs do not (nor could they) contend that the Royal Court applied the wrong legal test in deciding whether or not to apply a discount. In §443 of the judgment below, the Royal Court observed that there is no presumption either for or against a discount being applied, and that each case needs to be decided by reference to its own particular circumstances. That is the correct test.

184. As noted above, the Plaintiffs accordingly need to demonstrate that, in applying the correct legal test, the Royal Court nevertheless took into account irrelevant considerations, ignored relevant considerations or "reached a decision which no reasonable court properly directing itself as to the law could have reached" (§1 of their Notice of Appeal). That is a high threshold, and we reject at the outset any suggestion that no reasonable court could have reached the conclusion that the Royal Court did in this case. That leaves the question whether the court below ignored relevant factors, or took into account irrelevant factors.

Did the Royal Court ignore & reward Mr Tuckwell's conduct?

185. The Plaintiffs' first and main point (§1(a) of the Notice of Appeal) is that the court below found that Mr Tuckwell had pursued a scheme designed to "drive the Plaintiffs out of the Company at the lowest possible price" (quoting the Royal Court Judgment at §464) and on that footing they say that the only appropriate basis for the valuation of their shares was "at their full value as a rateable proportion of the value of the whole of the Company" (§27(a) of their Contentions in Support of their Appeal, "CSA") and that any other order would "allow Mr Tuckwell to benefit from his unfairly prejudicial conduct" (§28 of their CSA).

186. In our judgment, that argument fails for three reasons:

a. First, it is a non sequitur. The fact that Mr Tuckwell wanted to pay the Plaintiffs the lowest price possible cannot logically lead to the conclusion that the only rational outcome was therefore for the Royal Court to make a buy-out order at a pro rata valuation.

b. Second, and in any event, the court below did not ignore the fact that Mr Tuckwell's plan was to drive the Plaintiffs out at the lowest possible price. Indeed, that was expressly the basis on which the Royal Court found there to have been unfair prejudice in §464 of its judgment, and it was expressly recognised (in §446 - 447 of its judgment) when the court below was deciding whether or not to apply a minority discount. In particular, the Royal Court stated (in §446 of its judgment) that the Plaintiffs' shares should be valued "taking into account ... the fact that Mr Tuckwell will benefit from this transaction" and it recognised (in §447 of its judgment) that "it could be said that any discount ... has the effect of benefiting the majority shareholder who has unfairly prejudiced the minority". It was for that very reason that (in §447 - 452 of its judgment) the Royal Court reduced the scale of the minority discount from 40% to 20% by reference to the marriage value accruing to Mr Tuckwell. In the circumstances, it cannot be suggested that the Royal Court ignored the benefit to Mr Tuckwell arising from his own conduct.

c. That being the position, the Plaintiffs could only succeed on this issue if they could demonstrate that the only reasonable conclusion for the Royal Court to have reached, taking account of the benefit to Mr Tuckwell, was to have ordered a buy-out with no discount at all. In our judgment, any such argument must necessarily fail. As already noted, the jurisdiction under Article 143 cannot be reduced to a mechanical formula under which unfair prejudice which leads to some benefit to the wrong-doer must in all cases automatically lead to a pro rata valuation. Indeed, the suggestion that Mr Tuckwell would 'benefit' from his conduct if he acquired the Plaintiffs' shares at anything other than a pro rata valuation begs the very question in issue. It would only be a 'benefit' to Mr Tuckwell not to apply a discount if the court had held (or ought to have held) that the Plaintiffs were entitled to a pro rata price in the first place, which is the very issue in dispute.

Is there an analogy with partnership law & a winding-up order?

187. The Plaintiffs' next main argument is to say that: (i) the reason why no minority discount is generally applied in relation to quasi-partnership companies is because an analogy is being drawn with true partnerships (§35 of their CSA); (ii) in a true partnership, when one partner leaves, the partnership is dissolved, and on dissolution each partner is entitled to his proportionate share; (iii) in this case, the Royal Court held that it would have been open to it to make a winding-up order; (iv) on a winding-up, any surplus would have been distributed pro rata to the members; (v) on that basis, the Plaintiffs contend that they are entitled to a buy-out order at a pro rata. In our judgment, this ingenious argument fails for any of the following reasons:

a. The Plaintiffs' argument in this court proceeded as if they were presenting their case at trial, i.e. as if the question whether to apply a minority discount were at large. That is obviously not the position. The court below has already made its decision, and this court has to decide whether the threshold test for successfully appealing against that evaluative judgment has been satisfied. The Plaintiffs cannot satisfy that test simply by urging on us one of the arguments that they deployed in the court below. In our judgment, the threshold test is simply not satisfied. There is no basis for saying that the court below ought to have accepted the Plaintiffs' argument based on analogy, or that that argument necessarily leads to only one outcome.

b. In any event, as will be apparent from §262 - 263 below, we do not read the Royal Court judgment as having concluded that a winding-up order would have been made if the buy-out remedy were not available.

c. Furthermore, it is common ground that this was not a quasi-partnership company. In our judgment, it is stretching the analogy too far to argue that a pro rata valuation ought to have been applied to a non-quasi-partnership company even if a winding-up order might have been appropriate. Analogies can be dangerous. If a direct comparison were to be drawn with the situation that would arise on a winding-up, then the court would have been constrained to value the Company on a break-up basis.

188. Notwithstanding what was said in CVC at §41 - 42, we are in any event not entirely convinced by the analogy with partnership law on which the Plaintiffs' whole argument under this heading was based. There is a significant distinction between a true partnership and a quasi-partnership company. In a true partnership, the partnership assets are jointly owned by the partners. They are automatically entitled to a rateable proportion of those assets on a dissolution because the partnership assets are their assets. By contrast, no shareholder has any legal or equitable interest in the company's own assets. Instead, a shareholder owns shares in the company, and each share is itself a piece of transferable property, a fasciculus of rights (as it was once described) which has value only by reference to the particular content of those rights and the particular circumstances of their potential exercise in any specific case. As Lord Wilberforce himself warned in Westbourne Galleries, at 380, one should not press the 'quasi-partnership' analogy too far: a partnership is a partnership governed by partnership law, and a company is a separate legal person governed by company law. We would accordingly doubt whether it is helpful to try drawing from the dissolution of a true partnership any analogy as to what should happen in exercise of the court's statutory power in relation to companies under Article 143. But, having said that, we found our decision on the points set out in §187 above.

Liquidity event

189. The Plaintiffs' next main argument is that the Royal Court ignored or gave insufficient weight to its own finding that the Sales were in common parlance a 'liquidity event' and that the Plaintiffs anticipated, and Mr Tuckwell led them to believe, that a pro rata distribution of the proceeds would be made (§1(a)(ii) of the Notice of Appeal).

190. In our judgment, the Plaintiffs cannot make good this complaint:

a. The fact that the Sales might be described non-technically as a 'liquidity event' is expressly recorded in §227 of the judgment below. As such, the Plaintiffs cannot say that it was ignored.

b. Nor can the Plaintiffs contend that this factor was given insufficient weight - not least because it is impossible to suggest that the court below ought to have given it any specific, quantifiable weight, or that it ought to have led to any specific conclusion.

c. Furthermore, the reason why it was not given any greater weight is evident from the findings in the court below. In particular, the Plaintiffs are sophisticated investors, and their investments were governed by detailed written agreements; the fact that the Sales did not constitute Liquidity Events as defined in those written agreements, and as such did not trigger any contractual rights on the part of the Plaintiffs, was a relevant factor in the overall assessment; although the Plaintiffs may have entertained certain non-contractual expectations as to their anticipated exit from the investment, those expectations did not give rise to any legally enforceable rights or any equitable considerations capable of overriding or qualifying the express contractual rights of the parties (see for example §36, §39, §43 and §110 of the Royal Court judgment).

Not a quasi-partnership company

191. The next matter on which the Plaintiffs seek to rely (in §1(b) of the Notice of Appeal, and §32 - 48 of their CSA) is the 'fact' (as they contend) that the Royal Court decided to impose a minority discount because the Company was not a quasi-partnership.

192. In our judgment, this complaint fails. The Royal Court's overall approach is apparent from §443 of its judgment. In particular, it rightly recognised that its task was to make an overall assessment based on all the circumstances of the case. In that context, it is entirely correct to say (as the Royal Court did in §374 of its judgment) that the status of a company as a quasi-partnership is a factor in favour of a pro rata buy-out order. It is also entirely correct to say (as the Royal Court did in §445 of its judgment) that this Company was not, and is not, a quasi-partnership. In that context -

a. All that the Royal Court was saying in §445 was that there was, in the circumstances of this case, an absence of a factor which would, if present, have militated strongly in favour of a pro rata buy-out order. In other words, the court below was not saying that a minority discount would be applied because the Company was not a quasi-partnership. Rather, it was simply saying that the fact that the Company was not a quasi-partnership meant that there was lacking one of the features which in other cases might well have led to a discount being disapplied.

b. Further, the fact that the Company was not a quasi-partnership was only one of an accumulation of numerous factors which the Royal Court (rightly) took into account in deciding to apply a discount.

Was the Royal Court wrong to treat the Plaintiffs as "voluntary sellers"

193. The Plaintiffs' next main argument (in §1(c) of the Notice of Appeal) is that the Royal Court was wrong to treat the Plaintiffs as 'voluntary sellers' (as it did in §443 of its judgment).

194. We reject this argument. Indeed, it is almost perverse of the Plaintiffs to advance it. Their entire case at trial was based on an assertion that they were entitled to expect Mr Tuckwell to facilitate an exit from their investment. In other words, they positively wanted to realise their shares. The only argument was over the appropriate price. This was not a situation (which often occurs in other unfair prejudice proceedings) where two warring parties both wish to remain involved in the management and ownership of an ongoing business, and one has been involuntarily excluded and is reluctantly being forced to ask the court for a buy-out order: CVC, at §40, provides a classic example. In this case, the whole basis of the Plaintiffs' claim was that they wanted liquidity, but were involuntarily locked in. They cannot therefore establish that, in valuing their shares, the Royal Court exceeded the reasonable bounds of its discretion by taking into account the fact that they positively wanted to realise their investment.

195. The Plaintiffs attempted to address this contradiction in their argument by acknowledging that they wished to exit the Company, but saying (in §57 of their CSA) that "they only wished to exit at a fair price". In our judgment, that misses the point on which the Royal Court relied. No claimant in any case of unfair prejudice will ever want to have his shares bought out at an unfair price. The point which the Royal Court made was that the Plaintiffs in this case positively wanted to realise their investment. They were not being involuntarily ejected from a company in which they wished to remain invested. That was an entirely legitimate consideration for the Royal Court to take into account in applying a discount.

Did the Royal Court ignore the availability of winding-up?

196. The Plaintiffs' next argument (in §1(d) of the Notice of Appeal) is that, in applying a minority discount, the Royal Court failed to have regard to its own finding (in §461 of its judgment) that "it would be open to us to order that the Company be wound up". The Plaintiffs' argument is that, on a winding-up, the surplus assets are distributed to the members pari passu and so, by analogy, the buy-out order in this case ought to have been made pro rata.

197. In our judgment, this argument fails too, both because it is based on a misunderstanding of what the Royal Court was saying, and also because it is in any event wrong in principle:

a. In §461, what the court meant was that, if regard were to be had only to the various breaches of duty by Mr Tuckwell and the financial prejudice suffered by the Plaintiffs, then a winding-up order might have been appropriate. But the court then went on, in §462, to make an express finding that a winding-up order would not be just and equitable for a combination of reasons, of which the availability of a buy-out order was only one. The application for a winding-up order was accordingly refused in §468 of the judgment. As such, there was no internal inconsistency in the judgment in ordering a buy-out at a discount. The question of winding-up is addressed in more detail in §260 et seq. below.

b. In any event, as a matter of principle, the fact that any surplus would be distributed pari passu in a winding-up does not necessarily provide an answer to the question whether a minority discount should be applied in granting different relief, namely a buy-out order under Article 143. The Plaintiffs relied in this regard on Re Sunrise Radio Ltd, at §301 - 302, and Blue Index, at §55, but neither case is authority for any inflexible rule of law. All they say is that, if a claimant would otherwise be entitled to a just and equitable winding-up order, that is capable of being a relevant factor in deciding whether to apply a minority discount. They do not say that, in all cases, the hypothetical availability of a winding-up order must automatically lead to a pro rata valuation. For this reason, it cannot be said that the Royal Court in this case erred in principle.

c. Furthermore, we would also observe that it is well recognised that a fair valuation of shares in the context of a notionally negotiated sale between a willing seller and a willing purchaser might well produce a lower figure than would be obtained on a winding-up, and this is one of the features recognised in Virdi v. Abbey Leisure Ltd [1990] BCLC 342 (albeit that was a case where the valuation would have been conducted by an expert, not by the court).

The nature of the Company's underlying assets

198. The Plaintiffs' next argument (in §59 - 60 of their CSA) is that the Royal Court wrongly disregarded the nature of the Company's underlying assets. They contend that, following the Sales, the Company was "essentially a holding vehicle for the proceeds".

199. In our judgment, this argument must be rejected. It cannot be suggested that the Royal Court ignored the nature of the Company's underlying assets, because the very basis on which it decided what was a fair valuation (in §446 - 447 of its judgment) was expressed by reference to the unfair prejudice which Mr Tuckwell had perpetrated - namely, to have completed the Sales but not distributed their proceeds to the members.

200. The Plaintiffs' argument in this regard was not assisted by the two cases on which they relied. First, they cited DJM Nominees Pty Ltd v. The Nutrition Bar Pty Ltd [2016] VSC 436, at §37 - 38, in support of their argument that a minority discount ought not to be applied where a company's assets are principally in cash. However, we do not consider that that decision provides their argument with any support in this appeal:

a. The decision in that case did not lay down any rule of universal application requiring all companies' shares to be valued pro rata if their assets are principally in cash. Rather, the decision simply illustrates the fact that the nature of a company's underlying assets is capable of affecting the basis of valuation for its shares.

b. In any event, the assets of this Company are not principally in cash. There is a significant holding of WisdomTree shares which are roughly equivalent in value to the cash (approximately $350 million each) and there are also the investments in the portfolio companies (worth either $37.7 million or $74.4 million, depending on whose expert evidence is to be preferred).

201. The Plaintiffs also sought to draw support from the decision in Virdi v. Abbey Leisure where a company's business had come to an end and its assets consisted almost entirely of cash. But that case provides them with no assistance either, because it was concerned with the question whether a winding-up petition should be struck out. If anything, the case is unhelpful to the Plaintiffs on valuation because (as noted in §197(c) above) it recognised that the claimant in that case might get less for his shares on a buy-out than he would in a winding-up because a minority discount might properly be applied in valuing his shares for the purpose of a buy-out (albeit not by the court).

Fictional market value

202. The Plaintiffs' next argument (in §68 - 70 of their CSA) is that the Royal Court made an error of principle in valuing the Plaintiffs' shares "on the basis of any fictional market value or market transaction". This is an attack on the approach taken in §447 of the Royal Court judgment, adopting that in Estera Trust (Jersey) Ltd v. Singh [2019] 1 BCLC 171, at §651, where the judge ordered a buy-out at "the price that would be likely to be agreed between commercially-minded but reasonable persons in the actual positions of [the parties] in notional arm's length negotiations, having regard to any marriage value that would be released on such a sale and purchase." The Plaintiffs contend that this was an erroneous approach because their shares were not being bought in a market transaction by an outsider, but by Mr Tuckwell pursuant to a judicial remedy.

203. In our judgment, there is nothing in this line of argument. The Royal Court was exercising an evaluative judgment, and it was fully alive to the nature of its task. There is no rule of principle that positively required it to ignore the price that might reasonably be negotiated in notional arms' length negotiations, any more than there was a rule of principle that positively required it to adopt such a price. The Royal Court was fully entitled to choose the approach it did, and the fact that another court in another case chose to do likewise provides relevant support.

Attempting to recover the benefit of contractual entitlements

204. The Plaintiffs' next argument (in §1(e) of the Notice of Appeal) is that the Royal Court was wrong (in §444 of its judgment) to give any weight to Mr Tuckwell's submission that FTV were attempting to regain the contractual entitlement to a pro rata distribution which they had surrendered when they converted their Preferred Shares into Ordinary Shares.

205. In our judgment, this argument fails too:

a. First, it cannot be said that this was an entirely irrelevant consideration. The forensic point that was made on behalf of Mr Tuckwell at trial was that FTV were sophisticated investors; they were at one stage contractually entitled to a pro rata repurchase; they had foregone that entitlement with their eyes open because it suited them economically at the time; they were now seeking, through litigation, to obtain the pro rata distribution to which they were no longer contractually entitled; in circumstances where the test of unfairness is generally to be answered by reference to the parties' legally enforceable rights, it was an entirely fair point to make that FTV were attempting to have their cake (through the conversion) and still eat it (by means of a non-discounted valuation under Article 143).

b. Second, once it is recognised (as it must be) that this was not an irrelevant consideration in the context of the court's assessment of the appropriate basis for a buy-out order, there is no justification for saying that the Royal Court gave it too much weight. What can be said is that §444 of the judgment below contains one passing reference to this issue: it can hardly be said to have been central to the court's reasoning.

206. In this context, the Plaintiffs also point out that neither Millennium nor Susquehanna ever held Preferred Shares, so the court below was wrong to have taken account of the historical fact of the conversion of FTV's Preferred Shares in relation to the valuation of their shares. There is nothing in that complaint:

a. The Royal Court's observation (in §444 of its judgment) is directed towards FTV.

b. It was common ground (see §446 of the Royal Court judgment) that the Plaintiffs' shares should be valued as a single block representing 35% of the Company. Fairness required that the same approach to the valuation of all the Plaintiffs' shares should be adopted, otherwise Millennium and Susquehanna would have risked the prospect of even heavier discounts being applied to their smaller proportionate holdings. The fact that neither of them had ever held Preferred Shares could not logically put them in a better or different position from FTV in terms of the valuation.

The Plaintiffs as sophisticated investors

207. The Plaintiffs' final argument in relation to the minority discount (in §1(f) of the Notice of Appeal) is that the Royal Court was wrong to place reliance (as it did in §445 of its judgment) on the fact that "the Plaintiffs have long known the consequences of being minority shareholders in a private company". The Plaintiffs say that this is a non sequitur because minority shareholders have the protections afforded by Articles 141, 143 and 155 of the Companies Law.

208. In our judgment, this argument is illogical and in any event it cannot provide the Plaintiffs with any assistance in support of their argument that the Royal Court was wrong in principle to apply a minority discount:

a. The argument is illogical because it seeks to rely on the mere existence of the statutory remedy under Articles 141 and 143 as itself an argument for dictating the appropriate nature and content of any such remedy in this case.

b. The Plaintiffs' argument is in any event misplaced. In reaching its decision as to what order to make under Article 143, the Royal Court was fully entitled to take into account the fact that the Plaintiffs were sophisticated operators who were well aware of the dynamics of corporate life, and were well capable of negotiating and surrendering express contractual protections for their interests. The fact that they had originally secured a contractual entitlement to a pro rata buy-out was ample evidence of that fact; and, as noted above, the fact that they had surrendered that entitlement when they converted their Preferred Shares into Ordinary Shares, fully aware of the consequences of doing so, was capable of being taken into account in the Royal Court's overall assessment of what order it thought fit to make under Article 143.

Conclusion

209. For these reasons, we would dismiss the Plaintiffs' appeal against the Royal Court's decision to apply a minority discount.

The rate of the minority discount

Introduction

210. Mr Tuckwell sought to persuade this court that if, contrary his main argument on the cross-appeal, there is to be any buy-out order, then it should be on the basis of a discount of 43.8%. This was derived from his expert witness's starting point of a 55% discount, and then reducing it by taking into account the marriage value of the Plaintiffs' shares in Mr Tuckwell's hands. We will deal first with the starting point for the appropriate rate of a minority discount.

The starting point for the discount

211. The expert witnesses were far apart on this issue: Mr Cliff (for Mr Tuckwell) said it should be 55%, while Mr Matthews (for the Plaintiffs) said it should be at most 5%. The Royal Court chose 40%. Mr Tuckwell's principal argument was to say boldly that the court below "erred in failing to follow the expert evidence of Mr Cliff in all respects" because it had "(correctly) rejected the evidence of Mr Matthews in all almost all [sic] respects" (§59 of the Respondent's Notice), and that "the Court below had no basis whatever for finding anything other than what Mr Cliff suggested as to the discount" (in §86 of his CSCA).

212. We reject this argument:

a. As a general matter, no trial court is bound by the evidence of an expert witness, and the assessment of competing expert evidence is a matter of judgment. In cases involving valuation, the figure arrived at by the trial court "may well lie somewhere in between those advanced by the rival experts": Capita Alternative Fund Services (Guernsey) Ltd v. Drivers Jonas (a firm) [2012] EWCA Civ 1417, at §43(i). Mr Tuckwell may not like it, but the fact remains that the Plaintiffs called a suitably qualified expert who disagreed with Mr Cliff's figure of 55%.

b. As noted above, the specific exercise for the court under Article 143 is not one of valuation in any event (i.e. it was not an issue on which either side's expert valuer could be judged 'right' or 'wrong'). In the circumstances, and contrary to the whole thrust of Mr Tuckwell's contentions on this issue, the task facing the court below was not simply to select whose expert evidence it preferred.

c. Finally, Mr Tuckwell is wrong to say that the Royal Court accepted almost the entirety of Mr Cliff's evidence. On the contrary, it rejected his evidence on at least three key points, including not only the appropriate level of minority discount to be applied to the Plaintiffs' shares but also the appropriate marriage value and the question whether to apply a blockage discount to the Company's shares in WisdomTree.

213. We would also add this. In reaching its conclusion as to the appropriate starting figure for the minority discount, the Royal Court derived assistance from a number of authorities, as it was entitled to do. These authorities also serve to illustrate the range of different considerations that a court can properly take into account in this context. For example, in §381 - 384 of the Royal Court judgment, it considered the decision in Fowler v. Gruber [2010] 1 BCLC 563. In that case, at §188, the court took into account the starting figure at which HMRC would have opened negotiations for the valuation of a minority shareholding for the purposes of probate, and took a figure of 40%. In §385 - 388 of its judgment, the Royal Court discussed the decision in Re CF Booth Ltd [2017] EWHC 457 (Ch). In that case, at §146 - 152, the court relied on a fact sheet issued by the Association of Chartered Certified Accounts and fixed on a discount rate of one-third. In §389 - 400 of its judgment, the Royal Court discussed Estera, where the court started with a discount rate of 45% which was then reduced by splitting equally between the claimant and the respondent the marriage value of the shares in the respondent's hands.

214. Mr Tuckwell criticises the Royal Court's reliance on Estera which (he says) was based on expert evidence in that case, whereas (he says) the Royal Court "plucked its own figure from the air" (§90 of his CSCA). We reject that argument, both for the accumulation of reasons summarised in §212 above, and also because in exercise of its evaluative judgment under Article 143 the Royal Court was fully entitled to derive assistance from the levels of discount applied in other cases.

The marriage value

215. Applying an 'equitable value' approach, Mr Cliff accepted that Mr Tuckwell "would immediately recognise a significant uplift in value from the Plaintiffs' shareholdings as the shares in his control would not attract the same sizeable minority discount as those same shares when held by the Plaintiffs" (§5.11.2 of his report dated 12 August 2020). This was referred to as the 'marriage value'. Mr Cliff said it should be 25%. Mr Matthews discussed the principle of a marriage value in §7.77 - 7.81 of his report of 12 August 2020, but he did not put a specific value to it, preferring instead to balance a number of different factors (e.g. the minority shareholders' inability to influence the timing of any distribution, and Mr Tuckwell's potential willingness to pay an uplift in order to acquire a greater level of control) in arriving at an overall figure for the minority discount.

216. The Royal Court decided that the marriage value should be fixed at 20%.

217. In this court, Mr Tuckwell contended that the court below "erred in applying the marriage value that it did" in §452 of its judgment (§62 of the Respondent's Notice) because Mr Tuckwell already had almost total control of the Company even before acquiring the Plaintiffs' shares (§62.1 of the Respondent's Notice) and there was no evidence to support any value being attached to his acquiring the ability to pass special resolutions (§62.3 of the Respondent's Notice). On that basis, Mr Tuckwell objects that the Royal Court was wrong in applying the marriage value it did.

218. Mr Tuckwell's argument is principally based on the following interpretation of the Royal Court's approach to this issue: "The apparent suggestion is that Mr Tuckwell would have been prepared to pay very significantly more than any outside shareholder because he would move from 60% ... to 85%" (§91 of his CSCA). In our judgment, that contention is misplaced. Indeed, it misinterprets the approach of Mr Tuckwell's own expert. As is apparent from the passage from §5.11.2 of Mr Cliff's report quoted in §215 above, the rationale for reducing the minority discount by reference to the marriage value was not based on any hypothetical negotiated price that might be agreed between Mr Tuckwell and the Plaintiffs. Rather, it was a number which reflected the increased value in Mr Tuckwell's hands of the shares that the Plaintiffs were going to sell.

219. In any event, we consider that the marriage value selected by the Royal Court was well within the range of its statutory judgment under Article 143, and we reject Mr Tuckwell's argument under this heading.

Discount applied to Mr Tuckwell's shares

220. Mr Tuckwell's other argument was that there was no basis for the 10% discount applied to Mr Tuckwell's shares in §453 of the Royal Court judgment (§62.2 of the Respondent's Notice). Mr Tuckwell objects that the rationale for this discount was that, prior to the acquisition of the Plaintiffs' shares, Mr Tuckwell could not pass special resolutions, but (he complained) "There was no expert evidence that this was of any significance as to value" (§92 of his CSCA).

221. In our judgment, this argument fails too. The inability of a shareholder with less than the requisite majority to pass a special resolution is a fact of commercial life, and expert evidence is not required for the purpose of attributing some significance to that fact. In any event, Mr Tuckwell himself had commissioned a valuation for tax purposes in July 2011, and on that occasion EY had applied a discount of 10% "to reflect the fact that Mr Tuckwell holds less than 100% ... and to recognise the limited marketability inherent in the equity interest". This was relied upon in Mr Matthews' report, and was discussed in cross-examination, as noted in §414 of the Royal Court judgment. The judgment in Estera referred (at §106 and §119) to guidance showing a discount between 0% and 15% for a shareholding of 50 - 75%.

222. For these reasons, there is no basis for suggesting that the Royal Court erred in applying the 10% discount.

Conclusion

223. In conclusion, we dismiss Mr Tuckwell's cross-appeal in relation to the rate of the minority discount to be applied.

Blockage discount to the WisdomTree shares

224. Mr Tuckwell's next argument is that the Royal Court should have applied a blockage discount of 20.3% to the Company's shares in WisdomTree.

225. Once again, his first line of argument (in §60.1 of the Respondent's Notice) was to say that the court below ought to have accepted Mr Cliff's expert evidence on this point because "Mr Matthews's evidence was correctly rejected by the Court in almost every other respect". In our judgment, there is simply no force in that argument for the reasons already explained in §212(c) above.

226. Mr Tuckwell's second argument was to say that the Plaintiffs' expert had "put forward no cogent reasons as to why the WisdomTree shares specifically might command a premium, still less one sufficient to eliminate the blockage discount which he accepted there would be" not least because the Plaintiffs' expert had "failed to calculate or estimate either the blockage discount or the premium he suggested" (§60.2 of the Respondent's Notice). There is nothing in this argument:

a. The court below was fully entitled to accept the expert evidence on behalf of the Plaintiffs that there was a realistic prospect that the Company's block of WisdomTree shares might command a premium. In particular, Mr Matthews made one general point and one specific point in his report dated 12 August 2020: (i) in §5.17, he noted that, as a general matter, a large block of shares can command a premium, particularly if an investor was interested in acquiring a large tranche of shares, and (ii) in §5.18, he quoted an extract from the Board minutes of the Company in March 2020, recording Mr Tuckwell having said that "he continued to expect [WisdomTree] to be taken over and best value would be obtained in that future transaction".

b. In any event, the judgment below was not based on a mathematical calculation that the exact amount of the likely premium would be equal to, and would therefore exactly cancel out, the exact same amount of the likely blockage discount. Rather, the judgment below was that there was a potential for a premium and there was also a potential for a blockage discount, and that the existence of those two potentialities meant that, in assessing a fair price to be paid under Article 143, the court should simply disregard both.

227. Mr Tuckwell's third argument was that the court below failed to take properly into consideration the "stringent limits/obligations applying to the Company's holding of the WisdomTree shares, including that they could not vote more than 9.99% of the overall WisdomTree shares" and as a result the court below failed to appreciate that any premium would have been less than would otherwise have applied to a 17.5% block (§60.3 of the Respondent's Notice). His fourth and final argument was that the court below gave no, or no proper reasons for disregarding the quantum of the blockage discount suggested by Mr Cliff (§60.4 of the Respondent's Notice). Both of these arguments are rejected for the same reasons as in §226.

The valuation of the portfolio companies

228. The next issue on valuation concerns the Royal Court's direction that the valuation of the portfolio companies should be agreed by the parties or, in default of agreement, should be determined by the Master on assessment (§3 of the Notice of Appeal).

229. The basis of the Plaintiffs' complaint on this point is that there was (they said) no issue at trial between the parties' expert witnesses as to the appropriate basis for the valuation of the portfolio companies. The Plaintiffs contend before us that the basis of the valuation had been agreed in §A15 of the experts' Joint Statement, dated 11 September 2020. As a result (they say) there was no cross-examination at trial of either expert on the valuation of the portfolio companies and "in their closing submissions the parties accepted that there was no issue for the Royal Court to resolve as the experts were to apply the valuation provided by the Company" (§115(d) of the Plaintiffs' CSA). It was, said the Plaintiffs, only after the trial that Mr Tuckwell's expert "reverted to the methodology that had been used in his original expert report of valuing the Portfolio Companies on the basis of their revenues" (§115(e)(ii) of the Plaintiffs' CSA), producing a valuation of $37.7 million, as against the Plaintiffs' expert valuation of $74.4 million. The Royal Court observed (in §442 of its judgment) that it "did not hear argument or evidence" on this difference of opinion, which is why it directed the valuation to proceed by way of agreement, alternatively to be determined by the Master. The Plaintiffs contend in this court that the reason why the Royal Court did not hear evidence or argument on this issue was that the valuation methodology had been agreed, and that the Royal Court should accordingly have rejected the volte face by Mr Tuckwell's expert. For these reasons, the Plaintiffs invite this court to vary the order of the court below by setting aside the order for a valuation by agreement or assessment by the Master, and substituting instead the valuation given by the Plaintiffs' expert in the Supplemental Joint Statement dated 2 December 2020, namely US$74.4 million.

230. In response, Mr Tuckwell submits that the court below should have accepted the valuation of the portfolio companies court as calculated by his expert, Mr Cliff, in the experts' Supplemental Joint Statement (§(3)(c) of the Respondent's Notice).

231. In order to resolve this dispute, we need to assess what (if anything) was in fact agreed in the Joint Statement on which the Plaintiffs rely. That assessment needs to be undertaken in light of the extent to which the experts disagreed in their original reports, each dated 12 August 2020. In §5.26 of Mr Matthews' original report, he gave his valuation of the portfolio companies (among other assets) explaining that the values "are as set out in the 'June 20 Investment Report'" which was a report prepared and supplied by the Company. In §3.4.27 - 3.4.66 of his report, Mr Cliff gave a valuation of the portfolio companies on what he described as a 'fair value' basis (as well as a 'liquidation value' for two of them, for reasons that do not concern us).

232. The experts' Joint Statement says, at §A15, that they agree that, if the court requires a current valuation of the Company's holdings in the portfolio companies, "it would be appropriate to value [those holdings] by reference to the value of these assets as presented in the Company's management accounts, investment reports or financial statements at a date close to the new valuation date". The Joint Report then adds that the experts also agree that, in those circumstances, "it would be appropriate for them to be provided with the supporting explanations relating to [the Company's] valuations of the portfolio companies that they could then review". The question is whether the Plaintiffs can credibly rely on this statement as expressing an agreement between the experts as to the correct approach to valuing the portfolio companies.

233. In our judgment, they cannot. This is made explicit in Part C of the Joint Statement, which is headed: 'Remaining Areas of Disagreement'. In that section, §C8 identifies "Value of portfolio companies" as an "Issue on which the experts disagree". Specifically, it states that the area of disagreement is the "approach to be adopted by the Experts in their valuations". It explains that, "While Mr Matthews and Mr Cliff agree that their respective valuations should be updated to reflect the most recent information available at the date of trial" there are extensive disagreements between them as to the correct approach to the valuation of the portfolio companies.

234. Even without the clarification provided by Part C of the Joint Statement, we would not have interpreted §A15 as expressing any agreement between the experts as to the appropriate valuation methodology. (i) In the first place, §A15 says nothing about valuation methodologies. (ii) Second, it is clear that the experts were not saying that they agreed that the values given for the portfolio companies in the Company's management accounts etc. were simply to be adopted as the true valuation of those assets. If that had been their meaning, then there would have been no point in adding that it was appropriate for them to be provided with the supporting explanations relating to the Company's valuations of the portfolio companies "that they could then review". If the values in the Company's management accounts etc. were simply to be accepted at face value, then there would have been no purpose in reviewing the explanations for those values.

235. Accordingly, when the experts said that they agreed that it would be appropriate to value the Company's shares in the portfolio companies "by reference to the value of these assets as presented in the Company's management accounts, investment reports or financial statements at a date close to the new valuation date" (emphasis added) what they meant was that they were agreeing that any future valuation exercise should be conducted in light of (i.e. informed by) those values, and no more. Mr Cliff made clear in cross-examination that "We have not agreed on the approach" (Day 17, p. 99, line 16).

236. For these reasons, we dismiss the Plaintiffs' appeal on this issue.

The valuation date

Introduction

237. As noted above, the Royal Court decided that the valuation should be conducted as at 13 November 2020, the last day of the trial. In this court, the Plaintiffs contend that the court below should have selected 17 May 2018, after completion of the Sales. Their fall-back was 26 January 2021, the date of the judgment below.

238. Before turning to the detail of their argument, it is again important to start by recognising the nature of their complaint. Here, the Plaintiffs are saying (in §2 of their Notice of Appeal) that the Royal Court failed to take into account relevant considerations (including, it is said, the court's own findings), took into account irrelevant considerations, and reached a decision which no reasonable court properly directing itself as to the law could have arrived at. In other words, the Plaintiffs are facing the same high threshold as they are in relation to their argument on the minority discount.

239. The Plaintiffs have not explained why specifically 17 May 2018 is the right date, rather than any other date after completion of the Sales. They say no more than that it is "shortly after the Sales" (§73 of the CSA). Mr Tuckwell asserts (in §4.1 of his Response to the Appellants' Contentions ("RAC")) that 17 May 2018 has been chosen opportunistically by the Plaintiffs because "this date was the high point of the value of the WisdomTree shares which, following the Sales, were the Company's main non-cash asset".

Valuation before the unfair prejudice

240. The Plaintiffs' principal argument under this heading is that the Royal Court ignored or gave insufficient weight to the fact that fairness required the valuation to be conducted by reference to 17 May 2018 as that would have put the Plaintiffs in the position they would have been in but for the unfairly prejudicial conduct (§2(a)(iv) and §2(c) of the Notice of Appeal).

241. In our judgment, this argument fails. As the Royal Court rightly recognised, there is no single model for valuation in unfair prejudice cases. The court's task is evaluative, taking into account the whole history of the parties' interactions and (where relevant) subsequent events. It cannot be said, as a matter of universally applicable legal principle, that the only right outcome is to order a valuation as at a date preceding all the unfairly prejudicial conduct. That being the position, the most that can be said is that the Royal Court could have chosen 17 May 2018: but it cannot be said that it was demonstrably wrong to choose 13 November 2020.

Mr Tuckwell's scheme

242. The next factor which the Plaintiffs say was ignored, or given insufficient weight, is the fact that the Royal Court had found that Mr Tuckwell had pursued a scheme designed to drive the Plaintiffs out of the Company at the lowest possible price in order to punish FTV and secure maximum advantage for himself (§2(a)(i) & §2(b) of the Notice of Appeal). In our judgment, for the reasons already discussed above in relation to the discount issue, the Plaintiffs cannot establish either that the Royal Court ignored this issue or failed to give it sufficient weight.

Locking the Plaintiffs into an illiquid investment

243. The next factor which the Plaintiffs say was ignored, or given insufficient weight, was the fact that the Royal Court had found that the result of the scheme, and Mr Tuckwell's intention in adopting it, was to leave the Plaintiffs after the Sales locked into a private company with shares that were virtually illiquid (§2(a)(ii) & §2(b) of the Notice of Appeal).

244. In our judgment, this complaint fails too. It was precisely on the basis of this finding that the Royal Court reached the conclusions that it did: the matter was not ignored, and the Plaintiffs have no plausible basis for saying that the court below gave it insufficient weight.

245. The Plaintiffs seek to bolster their argument by analogy with various decisions in other cases (such as Re Via Sevis Ltd [2014] EWHC 3069 (Ch) and Re Phoenix Contracts (Leicester) Ltd [2010] EWHC 2375) where, in the context of wrongful exclusion from management, a claimant's shares have been valued by reference to a date preceding his exclusion, on the basis that he has had no control over the company's management since his exclusion. In our judgment, those cases do not provide a relevant analogy or any support for the Plaintiffs' argument, because the Plaintiffs in this case have never had any role in management. Furthermore, the Plaintiffs' argument in this regard yet again fails because it assumes that there is some principle of law to be extracted from cases that were simply decided on their facts.

Decline in the value of the Company & fairness to Mr Tuckwell

246. The next factor which the Plaintiffs say was ignored, or given insufficient weight, is the fact that the value of the Company, and hence the value of the Plaintiffs' shares, declined over the period since the Sales during which the Plaintiffs were locked into the Company (§2(a)(iii) and §2(b) of the Notice of Appeal).

247. In our judgment, this complaint fails too. The Royal Court expressly recognised that the Plaintiffs were locked into an illiquid investment (§465 of its judgment). It also expressly recognised that the value of the Company had declined since the Sales because the value of the WisdomTree shares had declined. However, the court also held that that fall in value was not attributable to Mr Tuckwell (§370 of its judgment). Although they seek to qualify their concession, the Plaintiffs expressly recognise (in §85 of their CSA) that the fall in the value of the WisdomTree shares was not attributable to Mr Tuckwell. The fact that Mr Tuckwell was not managing WisdomTree and in that sense was not responsible for any decline in its value is, in our judgment, an entirely legitimate factor for the court below to have taken into account in reaching the overall conclusion that it would be unfair to him to fix the valuation date by reference to the date of the Sales.

248. The Plaintiffs' counter-argument is that they were locked into their investment involuntarily, and if they had received a distribution in May 2018 they would have been insulated from any subsequent decline in WisdomTree's value. That is a perfectly plausible line of argument in support of fixing the valuation date in early 2018: but it cannot begin to prove that that was the only reasonable date to choose. The question in this court is not whether the Plaintiffs had a perfectly plausible line of argument at trial for trying to persuade the Royal Court to fix the valuation by reference to 17 May 2018. Rather, the only two relevant questions now are: (i) whether the Royal Court ignored a relevant consideration: in relation to this issue, it did not; (ii) whether the Royal Court reached a conclusion which no court properly applying the law could reasonably have reached: in our judgment, the Plaintiffs cannot get anywhere near crossing that high threshold.

249. In particular, there is no justifiable basis for the Plaintiffs' argument (in §73(a)(i) and again in §83 of their CSA) that the Royal Court wrongly 'prioritised' its view of what would be fair to Mr Tuckwell "over what would give relief to the Plaintiffs and put them in the position they would have been in had it not been for the unfairly prejudicial conduct". In truth, the Royal Court did not prioritise anything over anything else. Instead, it did what it was meant to do, which was to balance a large number of competing considerations, and produce a reasoned conclusion. The Plaintiffs' argument is essentially that fairness to them required the Royal Court to discount any considerations of fairness to Mr Tuckwell entirely. That is not the law.

250. The Plaintiffs' final argument under this heading (in §85 - 86 of their CSA) is that, although the fall in the value of the WisdomTree shares was not attributable to Mr Tuckwell, the resulting fall in the value of the Company was attributable to him because it was his decision to retain the shares following the end of the lock-ups and not to hedge against the risk of a fall in value. In our judgment, there is nothing in this argument. It is simply another way of presenting the case for saying that the Royal Court might fairly have taken into account the diminution in value of the Company resulting from the fall in the WisdomTree shares as supporting a conclusion that the valuation date ought to be fixed as at May 2018. But it comes nowhere near establishing in this court that that was the only date reasonably open to the Royal Court.

Change in the nature of the Company's business

251. The Plaintiffs' next argument is that the Royal Court "misdirected itself in failing to conclude that the extent of the change in the nature of the Company's business was such that an early valuation date was required" (§94 of their CSA). They rely in this regard on Profinance v. Gladstone, at §37, §56 and §61(i) & (ii); Re Grafters Ltd, at §151; Re OC Transport Services Ltd (1984) 1 BCC 99,068, at 99,074; and Pinfold v. Ansell [2017] EWHC 889 (Ch).

252. We reject this argument. Once again, the case-law on which the Plaintiffs rely does not lay down any inflexible rules. For example, Profinance v. Gladstone at §61 (cited with approval in this jurisdiction in Grafters at §151) says that the general starting point is to order a valuation as at the date of the purchase order, although the fact that a company has changed its business significantly since then "may" require an earlier valuation date: it does not (nor could it) suggest that a significant change in a company's business must always dictate any earlier valuation date. We would also observe that the decision in OC Transport Services was taken by reference to the particular facts of that case. It is, in any event, a thoroughly unsatisfactory decision on which to place any reliance, because (bizarrely) the valuation date was decided before the trial of the action.

253. In light of the authorities and as a matter of principle, there is no basis for suggesting that the Royal Court in this case misdirected itself on this point.

Valuation as at 26 January 2021

254. The Plaintiffs' fall-back argument (in §2(e) of the Notice of Appeal) is that the valuation date should have been 26 January 2021, being the date of the court's judgment, as opposed to 13 November 2020, being the last date of the trial. They contend that (i) there was no determination of unfair prejudice as at the end of the trial; (ii) the valuation ought in principle to be conducted as close as possible to the date of the intended sale in order to reflect the value of what is being bought and sold; (iii) there was no principled reason to fix the valuation date on 13 November 2020, and indeed there had been an increase of US$48.6 million in the value of the WisdomTree shares between that date and 26 January 2021 from which Mr Tuckwell should not be permitted to profit; and (iv) the reasons given in §371 of the Royal Court judgment for rejecting the date of the order were irrelevant and/or wrong.

255. As to the latter point, the Royal Court noted that neither party had argued for the date of the court's order. In our judgment, that was an entirely reasonable factor for the court to have taken into account. It is apparent from subsequent events that the Plaintiffs' change of heart is not founded on any matter of legal principle but rather on an opportunistic attempt to share in the uplift in the value of the WisdomTree shares which happens to have occurred since trial. If the value of those shares had gone down in the meantime, it seems highly unlikely that the Plaintiffs would have been troubling this court with any argument ostensibly based on legal principle. The Plaintiffs' response to that imputation is, in a sense, to embrace it and try to make a virtue of it. They say that Mr Tuckwell should not be entitled to 'profit' from his wrongdoing by taking the benefit of the uplift in value of the WisdomTree shares. But that argument is not a ground for impugning the Royal Court's decision on this issue. That decision was taken at the time it was, before any uplift occurred, and it was (rightly) taken on the basis that it was a matter of chance whether the value would go up or down after trial. The court decided (entirely reasonably) that it should not gamble with the parties' fortunes by deferring the valuation date.

256. The Royal Court also noted that the expert evidence had not addressed the valuation as at the date of the judgment - inevitably, because the experts would not have known when judgment would be given, nor would they have been able to give a reliable, prospective valuation in any event. Again, this was in our judgment an entirely legitimate consideration for the Royal Court to have taken into account, and the Plaintiffs have no basis for criticising it. Any trial court will endeavour to achieve finality by deciding the issues in dispute as far as it can, and it will do so by reference to the evidence then available, including expert evidence. That is what the Royal Court did in this case.

257. Finally, the Royal Court noted that there might have been some debate about whether the appropriate date was the day when judgment was handed down or the day when a court order was formally made following any further consequentials hearing. Again, we regard that as another legitimate and logical factor for the Royal Court to have taken into account. It also serves to illustrate the range of possible outcomes that were reasonably open to the court below, and the opportunity for further argument that might have been stimulated, depending on whether the shares went up or down. Indeed, the very fact that the Plaintiffs are advancing alternative dates for valuation in this appeal serves only to demonstrate that there was no single 'correct' valuation date: rather, the Royal Court had a range of options open to it, and it exercised its judgment in light of all the circumstances.

Conclusion

258. For the reasons set out above, we would dismiss the Plaintiffs' appeal in relation to the valuation date.

Interest

259. If the court had shifted the valuation date to May 2018, the Plaintiffs would have sought an order for interest to compensate them for having been kept out of their money since then (§2(d) of the Notice of Appeal). As we are not overturning the Royal Court's judgment in relation to the date of valuation, this issue does not fall to be determined.

WINDING-UP

Introduction

260. In the event that this court were to reverse the decision below on unfair prejudice and discharge the buy-out order, the Plaintiffs ask that the Company should instead be wound up on the just and equitable ground. Mr Tuckwell's response is to say that the court below was wrong to say that it could have made a winding-up order. As noted above, the Company itself also objects to the making of such an order.

261. In light of our ruling on unfair prejudice and the buy-out order, this issue does not arise. Nevertheless, we will briefly set out our views on the matter, because it was fully argued, the matter may go further, and the observations we propose to make may be of assistance in other cases in future.

The Royal Court judgment

Did the Royal Court decide in favour of winding-up?

262. It is convenient to start with an analysis of the Royal Court's judgment on this issue. In §461, it said that, in view of its findings on breach of duty and unfair prejudice, "it would be open to us to order that the Company be wound up on the just and equitable basis" (emphasis added). The use of the conditional mood ("would be open to us") was both deliberate and significant. In §462, the Royal Court then listed a string of arguments raised by the Company as to why a winding-up order would not be appropriate, including the fact that the Company was solvent, it continued to trade and had prospects in view, it was investing in new businesses, it had employees and directors who were committed to its success, and the reason why the Plaintiffs wanted to wind up the Company was in order to secure an exit, but there was an alternative remedy available to achieve that outcome. Although these matters were listed as arguments made by the Company, it is apparent that the Royal Court accepted them, both as being true and also as militating against the making of a winding-up order. This is apparent from the passage immediately following: "Accordingly, we have concluded that it would not be just and equitable to grant a winding up of the Company" (emphasis added). On that basis, §468 of the judgment below states that "The application to wind up the Company ... is refused."

263. It is therefore apparent from the combined effect of §461 - 462 and §468 that the Royal Court was not saying that it would have made a winding-up order but for the availability of a remedy under Article 143. Rather, it was saying that, for a combination of reasons, a winding-up order was not appropriate. The availability of a buy-out order was one of those reasons, but (contrary to the submission made in §123 of the Plaintiffs' CSA) it was by no means the only one.

Should the Royal Court have given leave to apply?

264. Having decided not to make a winding-up order, the Royal Court then added, in §462 of its judgment, that the Plaintiffs were "given leave to apply to renew their application to wind up the Company on the just and equitable basis" if the share buy-out was not concluded within four months. The first observation to be made about this direction is that it reinforces the view expressed in §263 that the Royal Court was not saying that a winding-up order would have been made but for the availability of a buy-out remedy. If that had been the court's conclusion, then it would have indicated that a winding-up order would be made if the buy-out did not complete within the stipulated timetable: but instead the court below merely gave leave to renew the application.

265. More importantly, however, we are not persuaded that this was an appropriate direction for the Royal Court to give, either as a matter of principle or in the particular circumstances of this case:

a. As a matter of principle: (i) at any trial, the court should in general dispose of all the issues and either grant or refuse all the relief sought on the basis of the material adduced at trial by the parties: whereas it might be expedient in some situations to grant relief in the form of an unless order, it is in general inexpedient to grant any party an opportunity to reopen the argument on a future occasion, when the circumstances might well have changed since trial; (ii) more specifically, it is undesirable for a winding-up application to hang over a company indefinitely or longer than strictly necessary.

b. In the particular circumstances of this case, those considerations have special force: (i) here, substantive relief was granted following the trial (namely, the buy-out order) and if there was subsequently any default in complying with the court's order in that regard then the appropriate remedy would have been to compel compliance through the court's normal enforcement powers, rather than to allow any party to return to court and seek different relief; (ii) in the event that there was any default in completing the share buy-out and the Plaintiffs had sought to avail themselves of the opportunity to restore the matter with a view to reviving their application for a winding-up order, there would at that stage have been an opportunity for further argument of indeterminate scope as to whether, in the circumstances then obtaining, a winding-up order was appropriate: the court below did not say that it would make a winding-up order if the share buy-out was not completed within the stipulated timetable, so if the matter had been restored at a later date then the issues would have been at large as to whether any such order should be made in the (presumably changed) circumstances then obtaining.

266. For these reasons, it was not appropriate for the court below to have made the further direction it did, giving the Plaintiffs leave to renew their application to wind up the Company on the just and equitable ground. Nevertheless, the fact that that direction was given does not affect the outcome of this appeal.

The law

Introduction

267. Before reviewing the parties' contentions in this appeal, it is first necessary to set out a brief analysis of the applicable legal principles.

268. There is a considerable degree of overlap between the legal principles applicable to the court's power to grant a winding-up order on the just and equitable ground, and the court's power to grant relief in respect of unfair prejudice. Nevertheless, there are some significant differences. Most importantly, a plaintiff does not have to demonstrate unfair prejudice to his interests as a member in order to persuade the court to make a winding-up order on the just and equitable ground: a wider range of relevant considerations is available: Hawkes v. Cuddy [2010] BCC 597, at §104. Conversely, the fact that a plaintiff may be able to prove that there has been unfair prejudice to his interests as a member does not necessarily lead to the conclusion that it would be just and equitable to wind up the company, not least because the remedy under Article 155 gives the company its quietus whereas a buy-out order under Article 143 leaves the company intact. As such, the court's willingness to grant one remedy does not necessarily dictate the answer to the question whether it will be willing to grant the other. Accordingly, we reject Mr Tuckwell's argument (in §72 of his CSCA) that "If the conduct cannot justify a buy-out, it certainly cannot justify a winding up."

269. We have already referred, in §64 above, to the decision in Westbourne Galleries which established the principle that, in deciding whether to exercise its power to wind up a company on the just and equitable ground, the court will look behind the legal personality of a company and will take into account the true nature of the relationships between the individual corporators. Taking that approach, there may be circumstances in which the conduct of a controlling shareholder or director involves no breach of law, but nevertheless leads to the conclusion that it would be just and equitable to wind up the company.

270. The circumstances which may lead the court to reach such a conclusion cannot be exhaustively defined. It would be wrong to attempt any such definition. It would also be potentially misleading to adopt a rigidly category-based approach. Nevertheless, some themes emerge and some useful guidance can be derived from the decided cases which serve to illustrate the kind of situations in which the court has in the past been satisfied that a winding-up order is just and equitable.

Justifiable loss of confidence & partiality

271. For example:

a. It has been found that such an order can be made where there has been a justifiable loss of confidence in the probity of the management of a company, particularly where the controlling director treats the business as his own: see for example Loch v. John Blackwood Ltd [1924] AC 783, at 788, cited with approval in Westbourne Galleries, at 367F - G and again more recently in Chu v. Lau [2020] UKPC 24, at §24 and §90.

b. It has also been held that a winding-up order can be made where a minority shareholder has justifiably lost confidence in the impartiality or probity of the company's management: see Thomson v. Drysdale [1925] SC 311, at 315.

c. It has also been said that conduct deliberately calculated to 'freeze out' a minority shareholder, driving him to sell his shares at an undervalue, is capable of justifying a winding-up order: see Re Wondoflex Textiles Pty Ltd [1951] VLR 458, at 468, citing Re James Lumbers Co Ltd [1926] 1 DLR 173, at 188.

272. We would add three observations on this line of authority which are relevant to the present appeal:

a. First, it is important to recognise that Loch v. John Blackwood was not a quasi-partnership case, nor was it one in which there was any deadlock in management. Furthermore, although the facts of Thomson v. Drysdale and of Wondoflex Textiles might have justified a finding that they involved quasi-partnership companies, that was not the basis on which they were decided. All of these decisions were based on entirely general statements of principle that any shareholder in any company is entitled to expect its affairs to be managed with probity and in accordance with basic principles of fair dealing: see also Baird v. Lees (1924) SC 83, at 92, and Re Sunrise Radio, at §4.

b. Second, the use of the word 'probity' in Loch v. John Blackwood, and its conjunction with the word 'impartiality' in Thomson v. Drysdale, were both deliberate and significant. The courts did not confine their observations to cases involving actionable breaches of a director's duty, or of actual dishonesty: see also Westbourne Galleries, at 379C - E and 381H. A want of probity and a lack of impartiality are broader concepts than either breach of fiduciary duty or dishonesty, although they may well include both. In particular, the word 'probity' embraces concepts both of honesty and of decency.

c. Third, the question whether any particular conduct constitutes a sufficient want of probity or lack of impartiality such as to justify a winding-up order on the just and equitable ground will always be context-specific: Re San Imperial Corp Ltd (№ 2) (1980) HKC 463, at 467G - 468H. In other words, a plaintiff has no enforceable legal right to demand a winding-up order in circumstances where he has justifiably lost confidence in the probity or impartiality of management: but the court is entitled to take into account any such loss of confidence when exercising its judgment whether it is just and equitable to wind up the company.

Change of business

273. It has also been held that it may be just and equitable to wind up a company in circumstances where either -

a. it is in a state which could not have been contemplated by the parties when the company was formed and/or where those in control of the company have acted in a way that cannot fairly be regarded as having been within the contemplation of the parties when they first became members: see Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426, at 432, Wondoflex Textiles, at 467, and Westbourne Galleries, at 376C - F and 378E - H; or

b. an event occurs which puts an end to the basis of the association between the shareholders, such that the minority can reasonably say it did not agree to the maintenance of the association in the circumstances: see Virdi v. Abbey Leisure, at 346d - f, and O'Neill v. Phillips, at 1101H - 1102B.

274. Although the facts of both Yenidje Tobacco and Wondoflex Textiles involved companies which could properly be described as quasi-partnerships, the relevance of these considerations is not confined to such companies. We note in passing that the Plaintiffs cited Re Tivoli Freeholds Ltd [1972] VR 445, at 468 - 469, in support of this proposition (i.e. that these considerations are not confined to quasi-partnerships). We would, however, regard that as a fragile authority in support of the proposition, because it is a first instance decision; the point was not directly addressed in that case; and the authority cited was in any event Wondoflex Textiles, which was itself a quasi-partnership case. Nevertheless, for the reasons already discussed, it would in our judgment be wrong in principle to adopt a category-based approach, applying certain considerations to quasi-partnership companies and rigidly excluding their application to others. The better approach is for the court to make an assessment of the circumstances overall and to determine whether it is just and equitable to wind up the company. Taking that approach, the court is fully entitled to take into account (among other things) the question whether the minority shareholders have, through no choice of their own, found themselves invested in a company which is fundamentally different from that in which they originally acquired shares. If that is the position, the court is not necessarily bound to make a winding-up order, but it may be entitled to do so.

The parties' arguments

275. In this court, the Plaintiffs' main argument is that a winding-up order is fully justified in circumstances where (i) Mr Tuckwell has pursued a scheme aimed at driving them out of the Company and enabling him to acquire their shares at a substantial discount, particularly where (as here) the Royal Court held that he had been guilty of various breaches of his fiduciary duty as a director, and (ii) Mr Tuckwell has deliberately turned the Company into an entirely different undertaking from what it was before, knowing that the Plaintiffs have no desire to be invested in other private equity funds.

276. Mr Tuckwell's main arguments in response to the application for a winding-up order are these:

a. there was no proper pleading of any want of probity or lack of honesty on his part capable of supporting a finding of any justifiable loss of confidence in the probity of management;

b. there had in any event been no breach of duty by him, or any other wrongs capable of giving rise to any justifiable loss of confidence in the probity of management;

c. there was no basis on which the court could properly reach the conclusion that it was just and equitable to wind up the Company in light of the evidence regarding its continuing obligations with regard to the World Gold Council and Mr Tuckwell.

277. The Company's own argument against the making of a winding-up order is based on the contention that winding-up is an exceptional remedy which should only be granted as a last resort, and should be refused here because:

a. the Company is a solvent, viable enterprise which directly employs 16 people (and, through its portfolio investments, it indirectly employs 186 people) and has AUM of $480 million;

b. the holders of the majority of the Company's shares are opposed to a winding-up;

c. the Company is looking to continue its growth and is optimistic about its future;

d. in circumstances where a buy-out order is available under Article 143, a winding-up order should not be made;

e. the possibility that winding-up might trigger a liability to the World Gold Council and Mr Tuckwell personally is another reason not to make an order, in circumstances where the liquidator could not accelerate equivalent payments from WisdomTree.

The nature & scope of the issues in this court

278. Before determining the issues raised by these various arguments, it is important first to clarify the nature and scope of the issues in this court.

279. The court below did not make a winding-up order against which the Company and Mr Tuckwell are now appealing. Conversely, the Plaintiffs are not appealing against the Royal Court's refusal to make a winding-up order, because their primary position is that the Royal Court was right to make the buy-out order. It would only be if we were to set aside that buy-out order that the Plaintiffs would, in the alternative, be seeking a winding-up order. This is significant because, as already noted, at least one of the reasons why the Royal Court did not make a winding-up order was because it considered that the buy-out order was available. Accordingly, any decision on winding-up in this court would be being taken on an entirely different basis from that in the court below. By definition, the decision here could only arise on the basis that a buy-out order was not available. It is therefore apparent that, if this court were to determine the claim for winding-up, it would not be conducting an appellate review of the correctness Royal Court's ruling on this issue. Rather, it would be exercising its jurisdiction under Article 12(3) of the Court of Appeal (Jersey) Law 1961 to decide for itself whether to make a winding-up order.

280. This is significant because it impacts on the scope and nature of the available arguments. The Royal Court held, in §61 of its judgment, that a winding-up order could only be made on the just and equitable ground in this case if the Plaintiffs could demonstrate that Mr Tuckwell was guilty of a breach of duty or a breach of the Shareholders Agreement. That finding presumably related back to the earlier finding in §39 and §43 of the judgment where, in the context of unfair prejudice, the court had held that the Plaintiffs had not proved the existence of any equitable considerations or legitimate expectations which would render it unconscionable for Mr Tuckwell to exercise his strict legal rights as majority shareholder. The Plaintiffs did not appeal either against the ruling in §39 and §43 (in relation to unfair prejudice) or that in §61 (in relation to winding-up).

281. Nevertheless, the Plaintiffs now seek to contend (in §130 of their CSA) that the Royal Court was wrong to say what it did in §61 of its judgment. They contend that: "A lack of fair dealing, or a violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled to rely, will suffice" for just and equitable winding-up. It will be apparent from the discussion of the law set out above that, as a matter of principle, and subject to one refinement, we would broadly accept that contention. The refinement is that it should say "may suffice" not "will suffice".

282. If this had been an appeal by the Plaintiffs against the Royal Court's refusal to make a winding-up order, and if (as is the case) the Plaintiffs had not appealed against the ruling in §61 of the Royal Court judgment, the argument in §130 of their CSA would not have been open to them. However, in the circumstances in which the argument on winding up would arise in this court, we would be taking our own decision on whether to make a winding-up order, and we would be free to apply what we regard as the correct test, as outlined in §268 - 274 above. For that reason, we are not constrained by the Royal Court's ruling in §61, or by the Plaintiffs' decision not to appeal against that ruling.

This court's ruling

Loss of confidence in management

283. In our judgment, the Plaintiffs' arguments on loss of confidence are to be preferred. There was no dispute about the fact that they had in fact lost confidence in the probity and impartiality of Mr Tuckwell's management of the Company. Accordingly, the only question under that heading is whether their loss of confidence was (i) justifiable and (ii) sufficient to prompt a just and equitable winding-up order.

284. In our judgment it was, for two main reasons, even if regard is had only to the matters on which the Royal Court's finding of unfair prejudice was based (i.e. the five matters summarised in §464 of the judgment, and in §23 above):

a. Although it is not a precondition to the making of an order under Article 155, in our judgment it is clear that Mr Tuckwell has acted in breach of his fiduciary duties as a director of the Company, for the reasons outlined above.

b. Even without regard to those breaches of duty, Mr Tuckwell's conduct in managing the business of the Company as he has, with a view to forcing the Plaintiffs to sell their shares at a significant discount, is sufficient to justify the Plaintiffs' loss of confidence.

285. Furthermore, the question whether the Plaintiffs' loss of confidence in the probity and impartiality of Mr Tuckwell's management was justified and was capable of prompting a winding-up order must also be answered in light of his conduct overall. In this context, the Plaintiffs are entitled to rely on matters which served to undermine their confidence in Mr Tuckwell's management, irrespective of whether that conduct constituted unfairly prejudicial conduct within Article 141, and Mr Tuckwell is wrong to say (as he does in §18 of his CSCA) that the Royal Court "should not have" made any findings on these matters. In particular, the Plaintiffs are entitled to rely on the fact that the Royal Court found that:

a. Mr Tuckwell had demanded a contribution from FTV in relation to the Secondary Sales in such a manner as to "exert unreasonable pressure on FTV" (§146 of the judgment below);

b. Mr Tuckwell caused the Company to abandon its plans for an IPO for personal reasons and without bringing the matter to the Board (§154 of the judgment below);

c. Mr Tuckwell caused himself to be awarded shares pursuant to a share incentive plan which had not been properly approved by the Board (§168 of the judgment below);

d. Mr Tuckwell's removal of Mr Cukier from the Board was "part of his revenge upon FTV for refusing to make a 'contribution' to the Company's executives in the secondary sales process" (§194 of the judgment below);

e. Mr Tuckwell's transfer of shares to and from the Tuckwell Foundation involved breaches of the Shareholders Agreement (§196 and §209 of the judgment below);

f. Mr Tuckwell breached his service agreement by moving to Australia (§358 of the judgment below) and he was reckless in doing so without taking tax advice in advance (§359 and §367 of the judgment below);

g. Mr Tuckwell's behaviour in muting the lines of Mr Burstein and Mr Wolfe during the course of the Board meeting on 19 August 2019 was "grossly inappropriate" (§362 of the judgment below).

286. Leaving Mr Tuckwell's conduct to one side, the justice and equity of making a winding-up order must also be judged in light of the whole history of the parties' business relations. As to that, in summary:

a. Although Mr Tuckwell clearly resented the fact that FTV insisted on investing more than he wanted them to, the fact remains that they made a significant investment in the Company which contributed materially to its growth and success.

b. Although Mr Tuckwell clearly resented both the fact that FTV converted its Preferred Shares at an opportune moment and also that FTV subsequently realised a significant profit by selling a proportion of its shares to Millennium and Susquehanna, the fact remains that FTV was contractually entitled to take both those steps and its conduct cannot be regarded in any way as lacking in probity or as disentitling it to relief under Article 155.

c. The Plaintiffs' shareholdings represent a significant proportion of the Company's issued share capital. Inconsequential shareholdings are not necessarily to be disregarded, but in the overall exercise of the court's discretion the size of a plaintiff's interest in a company is capable of being taken into account.

Change in the Company's business

287. It is common ground that the Plaintiffs now find themselves as shareholders in a company whose business is nothing like what it was when they invested, and they would not have agreed to invest had they known that this is what it would become. It is no answer for Mr Tuckwell to say (as he does) that he is legally entitled to change the Company's business and that the Plaintiffs have no legally enforceable right to stop him. The applicable test under s. 155 is justice and equity, not pure legality. In circumstances where Mr Tuckwell has fundamentally changed the Company's direction and he has done so in breach of fiduciary duty, that is a relevant matter which the court is entitled to take into account in deciding whether to make a winding-up order under Article 155.

The views of other shareholders

288. The Plaintiffs rely on a letter dated 2 September 2020 'signed' by 19 minority 'shareholders' in support of a winding-up order. In fact, the names of these 'shareholders' were typed (not written in manuscript) and two of the 'signatories' subsequently contacted the Royal Court directly saying that they had not given authority for their names to be added to the letter. Furthermore, the Company points out that the majority of the signatories are not direct shareholders, and the court has not been given any evidence as to the wishes of the remaining shareholders (of whom there are over 20).

289. In our judgment, it does not particularly matter whether the views expressed in the letter of 2 September 2020 are those of registered members or beneficial owners. Either way, they are the views of those with an economic ownership of the Company who have an interest in the making of a winding-up order. Nevertheless, (i) those who actually authorised the letter to be sent in their name do not represent a majority of the non-party shareholders; (ii) it is not apparent that any systematic or reliable process was adopted for canvassing the views of the non-party shareholders generally; and (iii) the wishes of the majority of non-party shareholders are unknown to the court.

290. In the circumstances, this court cannot take into account any actual or possible views of the non-party shareholders in deciding whether it would be just and equitable to make a winding-up order.

The Company's liabilities in respect of the World Gold Council

The Plaintiffs' arguments

291. One of the Plaintiffs' subsidiary arguments in this appeal is that, in declining to make a winding-up order, the court below "appears to have placed significance on the deferred consideration payable by the Company to the World Gold Council ... and Mr Tuckwell" (§139 of their CSA, emphasis added) and that it "appears to have regarded that possibility as a potential impediment to winding up" (§142, emphasis added).

292. The background to this issue needs to be outlined briefly before these objections are addressed.

293. At trial, neither party had sought to persuade the Royal Court that the deferred consideration payable by the Company to the World Gold Council and to Mr Tuckwell was a relevant factor in deciding whether a winding-up order should be made. Nevertheless, the crystallisation of that liability was discussed by Mr Cliff in his expert evidence on valuation, and the Royal Court mentioned it (in §455 - 461 of its judgment) in the course of its discussion on whether to make a winding-up order.

294. The deferred consideration is described in more detail in §111 - 113 of the Royal Court judgment. In summary, the liability derived from the Company's acquisition of a gold product in July 2008 from Gold Bullion Holdings, a company owned by the World Gold Council and Mr Tuckwell personally. Following that acquisition, and pursuant to a Settlement Agreement entered into in 2011, the Company was obliged to pay the World Gold Council and Mr Tuckwell a quantity of gold biannually until December 2057. Following the Sales, WisdomTree was obliged to pay a (broadly) equivalent amount to the Company.

295. For the purpose of calculating a 'liquidation value' for the Company as at May 2018 (as he was instructed to do), Mr Cliff was instructed (in §24 of the letter of instruction from Mr Tuckwell's solicitors dated 16 June 2020) that, in the event of a winding-up, the Company would be required to discharge the present value of its liabilities to the World Gold Council and to Mr Tuckwell under the Settlement Agreement, but that the equivalent liabilities owed by WisdomTree to the Company could not be accelerated.

296. Mr Cliff's evidence in this regard was discussed by the Royal Court in the course of its judgment, but (i) in §459, it recorded the fact that Mr Cliff himself "had not seen all the relevant underlying documentation but was giving evidence on his understanding of his instructions"; (ii) in §457, it said that "the issue was not explored with any of the witnesses as to fact, not least Mr Tuckwell, who would have been best placed to deal with it" (a point also made in §114 of its judgment); (iii) in §458, it explained that the court "was never shown the relevant contractual provisions as between the Company and WisdomTree or any other documents relevant to this issue, still less did [it] receive submissions upon them"; and (iv) in §461, when summarising the factors to be taken into account against the making of a winding-up order, it did not mention the possible crystallisation of any liability to the World Gold Council or to Mr Tuckwell, nor did it mention the potential loss of the counter-payments from WisdomTree.

297. For these reasons, we reject the Plaintiffs' argument that the Royal Court took these matters into account in deciding whether to make a winding-up order. It did not take them into account, and it explained why not.

The arguments of Mr Tuckwell & the Company

298. In this court, both Mr Tuckwell and the Company sought to rely on the possible crystallisation of these liabilities and the potential loss of the payments from WisdomTree as grounds for resisting a winding-up order. Mr Tuckwell contended that he was entitled to do so, notwithstanding the fact that the issue had not been pleaded (§6.27 of his RAC). That argument sits awkwardly with his insistence that every factual matter on which the Plaintiffs seek to rely should have been specifically pleaded.

299. In our judgment, it would be quite wrong for this court to try taking into account the potential impact of a winding-up order on the Company's liabilities to the World Gold Council and to Mr Tuckwell. This is not just because the issue was not pleaded: it is also because there was no relevant evidence before the trial court or before this court. If Mr Tuckwell and the Company had wanted this issue to be taken into account they would have had to lead evidence on it at trial, which they did not do. Even now, the point is advanced on behalf of Mr Tuckwell purely on the basis of assertion and inference (§6.28 of his RAC). In the circumstances, the court below was entirely right to leave it out of account, and this court cannot take it into account either.

300. For completeness, we would also mention that, in order to deal with any potential problems relating to the Company's liabilities to the World Gold Council and Mr Tuckwell in this regard, the Plaintiffs raised, as a fall-back argument, the possibility of allowing the Company to wind down its business gradually (rather than formally and immediately winding it up), or alternatively allowing the Company an extended period in which to complete the winding-up so as to generate the optimum outcome for stakeholders, in the latter regard relying on Re Charles Le Quesne (1956) Ltd [2011] JRC 155. These might well have provided powerful answers to any properly-founded attempt by Mr Tuckwell or the Company to rely on the crystallisation of the liabilities owed to the World Gold Council and Mr Tuckwell as a ground for resisting a winding-up order; but, as explained, no such answers are necessary.

Conclusion

301. For the reasons set out in §283 - 300 above, if we had set aside the buy-out order, we would then have concluded that it was just and equitable to make a winding-up order.

CLOSING REMARKS

302. For the reasons given in this judgment, we dismiss all of the Plaintiffs' grounds of appeal and all of Mr Tuckwell's grounds of cross-appeal. If we had set aside the buy-out order, we would have made a winding-up order under Article 155.

303. Before concluding, we would observe that the task of the court below would have been considerably easier if the parties had taken a more streamlined approach, particularly in their pleadings. The Order of Justice, Answers and Reply occupied about 140 pages (not including various requests for further information etc.). They were discursive and argumentative, rather than being rigorous and focused, as they should have been. It is the function of pleadings in a case such as this to identify, as succinctly as possible, precisely which acts are said to be unfairly prejudicial, what prejudice is said to have been suffered, and exactly why it is unfair. The court does not propose to be prescriptive about the appropriate length of pleadings, because it fully recognises that different cases require different levels of detail. But in order for any case to be argued and determined within manageable bounds, the parties' legal representatives need to identify precisely what is in issue, and why. Particularly in the context of a jurisdiction such as that under Article 141, there is an understandable temptation to treat every email as forming a relevant part of the story. But, as Hoffmann J said in Re a Company № 007623 of 1984 (1986) 2 BCC 99,191, at 99,196: "the very width of the jurisdiction means that unless carefully controlled it can become a means of oppression". That was said in relation to the substantive scope of the court's jurisdiction to grant relief, but it is equally true of the manner in which cases are presented and argued.

304. Similar observations can be made regarding the written argument in this appeal. The Notices of Appeal and the Respondent's Notice together ran to nearly 60 pages, and the written contentions occupied about 225 pages (not including various tables and annexes, dramatis personae and chronologies). We were also referred to the written submissions at trial, which occupied a further 350 pages. In total, the appeal bundles occupied more than 3,600 pages (not including a further 3,500 pages of authorities). This is partly a reflection of the size of the trial, which is entirely understandable, but for the future we would expect appellants and respondents to keep their written arguments within a very much shorter range. As part of that process, we would also encourage the parties' legal representatives to consider very carefully the extent to which it is realistic to invite this court to reverse findings of fact and evaluative judgments made by the court below.

305. Finally, we would observe that the convention of respecting professional courtesies has developed for good reasons. One of the many values in having legal professionals to conduct litigation is to ensure that disputes which might otherwise descend into unseemly rancour are conducted dispassionately and in a civilised tone. Irrespective of how strongly a lay client may disagree with the findings of a trial court, it is one of his lawyer's functions to ensure that his case is presented with professional respect. There is a distinction, which should always be observed, between (on the one hand) presenting an argument forcefully and (on the other) expressing an argument in language which is, frankly, offensive. We regret to say that the arguments presented on behalf of Mr Tuckwell failed to observe that distinction. This court is not assisted by being told that any findings of the court below are "nonsense", "pure invention," "bizarre" or "extraordinarily petty," nor does it advance a litigant's case for his legal representatives to suggest that the court below "did a sloppy job" or that it "went off on a frolic of its own" and was "making it up as it went along" and that it "plucked its own figure from the air". We do not expect to see that kind of language used again.

Authorities

Financial Technology Ventures II (Q) LP and Ors v ETFS Capital Limited and Tuckwell [2021] JRC 025.

CSS v Nautech Services Ltd [2015] JCA 021.

Pell Frischmann v. Bow Valley Iran Ltd [2008] JCA 146.

McGraddie v. McGraddie [2013] UKSC 58.

Fage UK Ltd v. Chobani UK Ltd [2014] FSR 29.

Re Cumana Ltd [1986] BCLC 430.

Hawkes v. Cuddy [2010] BCC 597.

Re Sprintroom Ltd [2019] BCC 1031.

Biogen Inc v. Medeva Plc [1997] RPC 1.

Al-Medenni v. Mars UK Ltd [2005] EWCA Civ 1041.

Satyam Enterprises v. Burton [2021] EWCA Civ 287.

Three Rivers DC v. Governor & Company of the Bank of England [2003] 2 AC 1.

Re Tecnion Investments Ltd [1985] BCLC 434.

Re G&G Properties Ltd [2020] 1 BCLC 1.

Ming v Ming [2021] UKPC 1.

Howard Smith v. Ampol Petroleum Ltd [1974] AC 821.

Extrasure Travel Insurances Ltd v. Scattergood [2003] 1 BCLC 598.

Mills v. Mills (1938) 60 CLR 150.

Mutual Life Insurance Co of New York v. The Rank Organisation Ltd [1985] BCLC 11.

Re BSB Holdings Ltd (№ 2) [1996] 1 BCLC 155.

Robertson v. Slous [2002] JLR 361.

Re Grafters Ltd [2015] (1) JLR 144.

Scottish Co-operative Wholesale Society Ltd v. Meyer [1959] AC 324.

O'Neill v. Phillips [1999] 1 WLR 1092.

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	Jersey Unreported Judgments
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Financial Technology Ventures II (Q) LP and Ors v ETFS Capital Limited and Tuckwell [2021] JCA 176 (29 June 2021) URL: http://www.bailii.org/je/cases/UR/2021/2021_176.html Cite as: [2021] JCA 176

Jersey Unreported Judgments