Home Information Cases David Alastair Bruce v (1) Todd Lee Carpenter & others (2006)

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David Alastair Bruce v (1) Todd Lee Carpenter & others (2006)

Summary

Where parties had chosen to select an expert method it was not open to the court to interfere, save where the expert machinery had broken down.

Facts

The applicants (C) applied to strike out that part of a claim of the respondent shareholder (B) relating to the valuation of his shareholding in the fourth applicant company (T). The first to third applicants and the respondents were shareholders in T, which managed a non-profit making company. They had entered into a compromise agreement whereby T would pay B for his shareholding, the value of which was to be determined by an arbitrator (V) in the terms of her letter of engagement. V started her expert valuation of B's shareholding and an issue arose as to whether T was entitled to be paid certain income. V decided that resolution of that issue involved the interpretation of a clause in the compromise agreement, which, she maintained, was outside her area of expertise. V communicated her concerns to the parties. B issued the instant proceedings for a declaration that for the purpose of valuing his shares in T in accordance with the terms of the compromise agreement, V was obliged to take the income into account. B contended that the court could interfere where there had been a breakdown in the process of expert valuation. C argued that the court did not have the jurisdiction to interfere with an expert valuation by imposing its own view on a particular aspect of the valuation.

Held

When an expert took on the task of valuation, it was his role to form his own view and make difficult decisions, even if they were outside his area of expertise. It was open to an expert to indicate to the parties the difficulties he faced and it was then up to the parties as to whether they wished the expert to continue or whether they introduced another element that would assist him. The parties had chosen V as an expert, allowing her to form her own views and to give a result without having to provide a reason. The fundamental difficulty with B's claim was that, in entering into the compromise agreement he had agreed to a method of valuation, namely a private valuation by one named person, and now he required part of that process to be carried out by the court in a manner that was the total antithesis of a private expert valuation. If the court interfered it would be doing the opposite of the agreement between the parties. Where parties had chosen to select an expert method then recourse to the courts was non-existent save where the expert machinery had broken down, Sudbrook Trading Estate Ltd v Eggleton (1983) 1 AC 444 HL applied. It was not open to the court to give the relief sought by B and the proper course was to strike that part of his claim out.

Judgment accordingly

Chancery Division
John Jarvis QC
Judgment date
29 November 2006
References

​29/11/2006