Caselaw Digest
Caselaw Digest

Saxon Woods Investments Limited v Francesco Costa (Re Spring Media Investments Limited)

24 August 2023
[2023] EWHC 2154 (Ch)
High Court
Imagine a business dispute between shareholders. One shareholder wants the other to buy them out because of broken promises. Both sides changed their stories multiple times, making more information needed. The judge said the first shareholder could get most of the info they wanted but not all of what the second shareholder wanted, because they hadn't explained their requests fully. Importantly, the judge decided the company couldn't hide information because they weren't really the target of the lawsuit; it was mostly between the shareholders.

Key Facts

  • Saxon Woods Investments Ltd. (petitioner) seeks an order under Section 994 of the Companies Act 2006 for Francesco Costa (first respondent) to purchase its shares in Spring Media Investments Ltd.
  • The dispute arises from Spring Media's alleged breach of a Shareholders' Agreement (SHA) clause regarding an 'Exit' strategy by a specified date.
  • Saxon Woods alleges Costa, as director and chairman, is primarily responsible for the breach and acted in breach of his director's duties.
  • Costa denies breach, claiming compliance with the SHA and relying on advice from advisors.
  • Both parties made substantial amendments to their pleadings, leading to applications for further disclosure.
  • The trial is scheduled to commence in a five-day window from October 9, 2023, with a time estimate of 18 days.

Legal Principles

Powers of the court to make further orders for disclosure following inadequate compliance or to vary existing orders.

Practice Direction 57AD, paragraphs 17 and 18

Reasonableness and proportionality of disclosure orders, considering factors such as complexity of issues, importance of the case, likelihood of probative documents, number of documents, ease and expense of searches, financial position of parties, and need for expedition.

Practice Direction 57AD, paragraph 6.4

Necessity of disclosure for the just disposal of the proceedings (for varying an order).

Astra Asset Management UK Ltd. v Musst Investments LLP [2020] EWHC 1871 (Ch)

Importance of disclosure, especially in cases with serious allegations of misconduct, while avoiding a 'no stone unturned' approach.

Ventra Investments v Bank of Scotland [2019] EWHC 2058b (Comm)

General rule against a company asserting privilege against its shareholders, with an exception for hostile litigation.

Sharp v Blank and others [2015] EWHC 2681 (Ch); Re Hydrosan Ltd [1991] BCC 19; CAS Nominees Ltd v Nottingham Forest FC Plc [2001] 1 All ER 954; Arrow Trading and Investments Est 1920 and another v Edwardian Group Ltd [2004] EWHC 1319 (Ch)

Outcomes

Granted Petitioner's application for further disclosure on various issues, including expanding the date range and adding search terms.

The substantial amendments to the pleadings justified the need for additional disclosure to cover the expanded timeframe and newly implicated individuals. The court considered the disclosure reasonable and proportionate, necessary for a just disposal of the case, and not a 'fishing expedition'.

Ordered Mr. Costa to provide details regarding access to an email account for potential further disclosure.

The court found insufficient evidence that the account was inaccessible or irrelevant to the proceedings, considering the timeframe and potential communication.

Refused Respondent's application for two new issues of disclosure.

New Issue 1 was deemed duplicative of existing disclosure orders; New Issue 2's requested date range was not supported by the pleadings, although the court granted a more focused order to address concerns about a lack of documentation regarding Mr. Loy's control of Saxon Woods.

Rejected the Company's assertion of privilege against disclosure.

The court found that the letters relied upon by the Company did not demonstrate a threat of hostile litigation against the Company. The threatened actions were seen as primarily against directors and other shareholders, making the Company a nominal defendant.

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