Charlotte Langmead v Richard Andrew & Anor

Master Pester : Introduction

1. These are Part 8 proceedings relating to a shareholders’ agreement dated 31 January 1999 (“the Agreement”). The Claimant (“Ms Langmead”) and the First Defendant (“Mr Andrew”) are parties to the Agreement. Ms Langmead is a shareholder in the Second Defendant (“the Company”). Ms Langmead and Mr Andrew are brother and sister.

2. Ms Langmead owns 47% of the shares in the Company. Until 2 July 2024, Mr Andrew was the other shareholder in the Company, holding 53%, although his shares are now, apparently, owned by his wife.

3. The Company is a property investment company which owns a large number of properties. It now holds 157 residential properties, and three commercial properties. Perhaps importantly in terms of the factual matrix, the Company has many more assets today than when the Agreement was entered into.

4. It is common ground that, on 16 May 2024, Mr Andrew served a purchaser’s notice (“the Notice”) on Ms Langmead. The Notice required Ms Langmead to sell to him 108,000 shares in the Company (being all the shares held by her in the Company), with a Disposal Date of 31 August 2024.

5. By her claim form, Ms Langmead seeks a declaration that the terms of the Agreement have not been complied with, and an order that the Company produce (i) interim profit and loss accounts, in accordance with clause 6(i) of the Agreement, and (ii) calculations in writing in accordance with clause 6(ii) of the Agreement showing the market values of each of the Company’s tangible assets and investments and the deductions proposed for sale costs and tax.

6. Mr Andrew denies that Ms Langmead is entitled to the relief sought. In his acknowledgment of service, he seeks (i) a declaration that the requirements of the Agreement have been complied with (ii) an order that Ms Langmead be required to effect the necessary steps to transfer her shareholding in the Company to Mr Andrew.

7. The Company has indicated that it intends to adopt a neutral position in these proceedings.

8. There are other disputes between the parties. Ms Langmead was removed as director of the Company on 28 March 2023 (she says against her wishes) by Mr Andrew in his capacity as majority shareholder in the Company. However, those other disputes are not relevant to the issues I have to determine in these proceedings, although they do serve to underline the high degree of distrust between the parties. The evidence

9. The parties have exchanged a large volume of evidence, as follows. I have two witness statements from Ms Langmead in support of her claim. I have a witness statement from Mr Andrew, and a witness statement from Patrick Hamilton (the company secretary of the Company) and John Hazelwood (the Company’s director) in response.

10. Since these proceedings began, Mr Andrew has voluntarily provided further material relating to the properties owned by the Company, in the form of a schedule showing values for each of the Company’s properties and subsequently two valuation reports.

11. Ms Langmead has also issued an application, dated 1 October 2025 (only 5 business days before the hearing) seeking permission to put in evidence an expert report regarding the values of the properties held by the Company. A witness statement of Joshua Fineman, Mr Andrew’s solicitor, was filed in response to that application.

12. At the hearing before me, that application for expert evidence was not pursued, although I should say that I have considered the evidence in support of and in response to that application. The parties proceeded on the footing that I should determine the substantive Part 8 claim. The parties can then take stock and decide what to do about the outstanding application for expert evidence. The Agreement

13. The parties to the Agreement are Mr Andrew, John Hazelwood, Ms Langmead, and the Company. The material provisions for present purposes are as follows: “ WHEREAS …

3. [Mr Roe, Mr Spiller and Mr Owen] have agreed to sell their shares in [the Company] at a price…which price has been calculated by reference to the net asset value of the Company at the 31 December 1998 as adjusted by substitution of the estimated net disposal proceeds of properties owned by the Company at that date for the book cost of those properties (less related tax liabilities).

4. [Mr Andrew] is desirous of retaining his shareholding in [the Company] in the long term…

5. [Mr Andrew] is willing to purchase in the future the shares in [the Company] owned by [Mr Hazelwood and Ms Langmead], provided that he is able to call upon [Mr Hazelwood and Ms Langmead] to sell to him their said shares on three months notice given at any time and at a price calculated in a manner identical to that at which [Mr Roe, Mr Spiller and Mr Owen] have agreed to sell their shares. NOW IT IS AGREED AS FOLLOWS: …

4. [Mr Andrew] shall be entitled to serve a Purchaser’s Notice on [Ms Langmead] at any time requiring [Ms Langmead] to sell [Mr Andrew] some or all of the shares in [the Company] owned by [Ms Langmead] subject to the provisions of paragraph 5 hereof.

5. The following provisions shall apply to…every Purchaser’s Notice served in accordance with the foregoing paragraphs hereof. (a) …a Purchaser’s Notice shall specify both the number of shares to which the said notice relates and the date upon which the purchase or sale shall take place (“the Disposal Date”), provided that such date shall be not less than three months after the date of the said notice. (b) The price per share (“the Share Price”) payable by [Mr Andrew] to [Ms Langmead]…shall be calculated in accordance with the provisions of paragraph 6 hereof. …

6. The Share Price shall be calculated as follows: (i) [The Company] shall produce a projected interim profit and loss account and balance sheet as at the Disposal Date and this shall be prepared on the same basis as the Company’s audited accounts have previously been prepared. (ii) The net assets of [the Company] as disclosed by the aforesaid projected interim accounts shall be adjusted by:- (a) deducting therefrom the original book cost of any tangible assets or investments held by the Company and (b) adding thereto the market values of such tangible assets or investments, but after deducting from such market values:- (i) the costs which could be reasonably expected to be incurred if those items were disposed of in an orderly unenforced manner and (ii) any additional corporation tax which would be payable as a result of such disposal. (iii) The resultant adjusted net assets of [the Company] shall be divided by the number of shares then in issue and the resultant figure shall be the sale price per share. (iv) In the event of any disagreement between the Vendor and Purchaser of the shares over any of the calculations required to establish Share Price in the manner prescribed above, the auditors of the Company shall determine such calculations to be used. …”

14. Clauses 4 to 6 establish a procedure whereby Mr Andrew can acquire Ms Langmead’s shares in the Company by going through the following steps: (1) Mr Andrew must serve a Purchaser’s Notice on Ms Langmead, specifying (i) the number of shares to which the notice relates and (ii) the Disposal Date, such date to be not less than three months after the date of the notice: clause 5(a). (2) Next, the price per share payable by Mr Andrew is to be “calculated” in accordance with the provisions of clause 6: see clause 5(b). The calculation involves: (a) the production of “… a projected interim profit and loss account and balance sheet as at the Disposal Date” (“the Interim Accounts”) The Interim Accounts must be prepared “… on the same basis as the Company’s audited accounts have previously been prepared”: clause 6(i). (b) The net assets of the Company as disclosed by the Interim Accounts are to be “adjusted” by deducting therefrom the original book cost of any tangible assets or investments held by the Company, but adding thereto the market values of tangible assets or investments, less any costs reasonably expected to be incurred and any additional tax which would be payable on a disposal of the said properties: clause 6(ii); (c) The “resultant adjusted net assets” of the Company are to be divided by the number of shares then in issue and the resultant figure is the sale price per share: clause 6(iii). (3) In the event of any disagreement over any of the calculations required to establish Share Price, then “the auditors of the Company shall determine such calculations to be used”: clause 6(iv).

15. Mr Andrew says that this process has been gone through. Ms Langmead says that the Defendants have not followed the procedure set out in clause 6 in any meaningful respect. Background

16. On 16 May 2024, Mr Andrew served the Notice. The Disposal Date specified in the Notice was 31 August 2024.

17. The next step was to obtain an audit of the 2023 accounts. The last audit of the Company had been carried out in 2012. There was a period of delay, while the parties sought to identify and appoint new auditors. The Company’s existing auditors declined to act, citing a conflict of interest as they also audited companies associated with Ms Langmead. Mr Andrew and Mr Hamilton then wished to instruct Carpenter Box. The correspondence suggests that Ms Langmead was considering the suitability of the appointment of Carpenter Box, but the Company then went ahead without the express agreement of Ms Langmead and appointed TC Group, on or about 8 July 2024, to audit the consolidated accounts for the Company for the year ended December 2023.

18. TC Group completed its audit on 22 August 2024. In the Notes to the Financial Statements, it is stated that “Investment property is carried at fair value determined annually by the directors on the basis of information provided by third party professionally qualified valuers or other suitable market experts …” (emphasis added). The fair value given for “Investment property”, at 31 December 2023 was £22,585,000. The audit was provided to Ms Langmead on 23 August 2024.

19. The parties’ solicitors, Payne Hicks Beach LLP (“PHB”) for Ms Langmead, and DWF Law LLP (“DWF”) for Mr Andrew, exchanged correspondence regarding the production of the Interim Accounts. On 24 September 2024, DWF provided the Interim Accounts for the period ending with the Disposal Date. The Interim Accounts included a balance sheet as at 31 August 2024 and December 2023. DWF’s letter explained that, according to the Interim Accounts and the calculations provided for at clause 6 of the Agreement, the sale price per share was £29.1511. This meant that the purchase price in respect of Ms Langmead’s shares was £3,148,319. The letter enclosed a stock transfer form effecting the transaction, and asked Ms Langmead to complete it as soon as possible, and in any event by 4pm on Monday 30 September 2024.

20. In her witness statement filed in support of her Part 8 claim, Ms Langmead explains that she did not think that these accounts were prepared in accordance with clause 6 of the Agreement. She complains that the accounts were prepared using new accounting methods (which she says might be reasonable in themselves) but which do not comply with the terms of the Agreement. She goes on to say that she finds it difficult to avoid the conclusion that the Defendants have presented the accounts in a way to avoid giving her more specific information about the values of the Company’s assets.

21. By letter dated 11 October 2024, PHB wrote to DWF, claiming that the process under clause 6 of the Agreement had not been complied with, and requesting a complete list of the Company’s assets and investments, together with the market value of each and the deductions applied to each.

22. On 18 October 2024, DWF refused to supply the information requested. In response, by letter dated 25 October 2024, PHB repeated its request for a list of the Company’s assets and investments, the market value of each, and the deductions applied to each.

23. On 1 November 2024, Mr Andrew wrote to TC Group. After referring to the Agreement, he indicated that: “… I have concluded, following repeated correspondence from my sister’s lawyer and the position they have adopted that there is now disagreement over the share price calculations. Accordingly, in the event of any disagreement, as per [the Agreement], I wish to instruct TC Group, as the company’s auditors, to undertake the necessary work, as set out in the agreement, to determine the share price from the interim accounts prepared for the period ending 31 August 2024. …”

24. In response, on 12 November 2024, PHB wrote directly to the auditors, explaining that Ms Langmead was “… not in a position to confirm whether or not she disagrees with the calculations unless and until she is provided with the information about them to which she is entitled”. PHB continued that the instructions from Mr Andrew on 1 November 2024 were inappropriate and in breach of the Agreement, and the auditors were told not to take any further steps to follow them.

25. On 18 December 2024, TC Group determined that the appropriate share price under the option was £3,144,960, that the Company assets are recorded at fair value within the financial statements, and that the valuation was £29.12 per share. These figures were slightly lower than the comparable figures provided in September 2024. Mr Hamilton, in his witness statement, says that this was a result of “… the check work undertaken by the TC Group” resulting in “amendments/corrections”.

26. On 31 December 2024, Ms Langmead commenced these proceedings.

27. On 31 March 2025, Mr Andrew provided an itemised valuation of the assets of the Company in an asset schedule to Ms Langmead.

28. On 15 August 2025, Mr Andrew provided two valuations reports to Ms Langmead regarding the Company’s assets, one of the Company’s residential properties (prepared by Gerald Eve, and dated 5 December 2024), and the second of the Company’s commercial properties (prepared by Vail Williams, and dated 2 September 2024). Legal principles

29. This dispute concerns the construction of the Agreement. I was referred to a number of very familiar authorities about the general approach of the court to the interpretation of contracts: Mannai Investment Co Ltd v Eagle Star [1997] AC 749 at 776 (the famous “blue paper” example provided by Lord Hoffmann); Arnold v Brittan [2015] UKSC 36 ; and Wood v Capita Insurance Services Ltd [2017] UKSC 24 . The following passage in the recent decision of the Court of Appeal in JP Morgan International Finance Limited v Werealize.com Ltd [2025] EWCA Civ 57 ; [2025] BCC 570 , at [21], provides a useful summary, not least because that was a case about a call option provision in a shareholders’ agreement: “i) Where the parties have used unambiguous language the court must apply it: Rainy Sky SA v Kookmin Bank [2011] UKSC 50 , [2011] 1 WLR 2900 at [23] . ii) Commercial common sense should not be invoked to undervalue the importance of the language of the provision which is to be interpreted. Save in a very unusual case, the meaning of a provision is to be found in its language: Arnold v Britton [2015] UKSC 36 , [2015 AC] 1619 at [17] . iii) Business common sense is useful to ascertain the purpose of a provision and how it might operate in practice. But in the tug o' war of commercial negotiation, business common sense can rarely assist the court in ascertaining on whose side the centre line marking on the tug o' war rope lay, when the negotiations ended: Wood v Capita Insurance Services Ltd [2017] UKSC 24 , [2017] AC 1173 at [28] . Moreover, business common sense must be considered from the perspective of both parties to the contract; not just one of them : BMA Special Opportunity Hub Fund Ltd v African Minerals Finance Ltd [2013] EWCA Civ 416 at [24] . iv) A court should be wary of assuming that it knows what is or is not commercially sensible where the language points to a clear answer. Parties who have chosen clear language in which to express their bargain can be assumed to have intended the result and therefore not to have regarded it as one that has no commercial or economic rationale : Palladian Partners LLP v The Republic of Argentina [2024] EWCA Civ 641 at [59] . v) A court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be an imprudent one for one of the parties to have agreed: Arnold v Britton at [20] . vi) In the case of a sophisticated and complex agreement, prepared with the assistance of skilled professionals, textual analysis is likely to be the principal tool of interpretation: Wood v Capita Insurance Services Ltd at [13] . vii) But even in such a case, negotiators may not achieve a logical and coherent text, because of conflicting aims, different drafting styles or deadlines which require compromise: Wood v Capita at [23]. In complex documents of the kind in issue there are bound to be ambiguities, infelicities and inconsistencies. An over-literal interpretation of one provision without regard to the whole may distort or frustrate the commercial purpose: Re Sigma Finance Corp [2009] UKHL 2 , [2010] BCC 40 at [35] . viii) It is trite both that a provision in a formal document should be considered in the context of the document as a whole and that one would in principle expect words and phrases to be used consistently in a carefully drafted document, absent a reason for giving them different meanings: Barnardo's v Buckinghamshire [2018] UKSC 55 , [2019] ICR 495 at [23] .”

30. Counsel for Ms Langmead referred me to United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services [1968] 1 WLR 74 , at 81, as authority for the proposition that a unilateral contract or obligation, such as an option in a lease, does not bind the promisor unless and until the conditions specified in it, whether trivial or substantial, have been fulfilled. Of course I accept that. The only note of caution I would add here is that I do not think that it adds anything to the analysis to say that exercise of an option must be “strictly” complied with. There is no special rule to be used when construing option agreements. Nor is there any basis for saying that one interprets an option provision against the party seeking to exercise it.

31. Counsel for Mr Andrew relied on the first instance decision in Nugent v Benfield Greig [2000] BCLC 488 , a decision of Arden J as she then was. This involved an attempt to imply terms into a company’s articles of association. Arden J rejected this attempt, as the suggested terms were not required as a matter of necessity. However, I am dealing not with articles of association, but with an ordinary commercial contract. It seems to me more difficult to imply terms into articles of association. Discussion and analysis

32. Turning to the Agreement itself, it is clear from the recitals that the parties to the Agreement envisaged that Mr Andrew would have the option of buying out the other shareholders, and the other shareholders were in principle willing to sell. The Agreement contemplates a willing buyer / willing seller. What the parties bargained for was a straightforward mechanism whereby the shares in the Company would be valued by the auditors and then change hands. If there were disputes between the parties regarding the value of the shares, then the auditors were empowered to resolve any such “disagreement”.

33. It follows from that that the words “disagreement … over any of the calculations required to establish Share Price …” in clause 6(iv) must be construed widely. This is because it is the auditors who have the final say (absent any allegation of bad faith, or not obeying their instructions, as to which there is no suggestion). Clause 6(iv) is a species of expert determination clause, and it makes no sense, and is not supported by the wording of the Agreement, to have the auditors empowered to determine certain “disagreements” but not others. I also note the use of the word “any” before “calculations”.

34. It also follows from the way in which the word “calculations” is used in the Agreement (see Recitals 4 and 5, and clauses 5(b) and 6(iv)) that this does not mean a simple mathematical totting up of figures. One does not need auditors to do this: see in this regard Jones v Sherwood [1992] 1 WLR 277 , at p. 42. Instead, the auditors are given a wide remit to determine the price for the shares. In so far as Ms Langmead suggests that it was an express, alternatively implied, term of the Agreement that she be provided with extensive valuation evidence as to the market value of the Company’s individual assets, I do not consider that this is supported by the terms of the Agreement. The Agreement operates perfectly well without the need to imply any such terms.

35. With those preliminary points in mind, I turn now to the specific complaints raised by Ms Langmead. Essentially, three separate points are taken.

36. First , there is a timing point. Ms Langmead complains that, because Mr Andrew did not provide a sale price until 24 September 2024, which is after the Disposal Date, there has not been compliance with clause 6(i) and/or clause 6(ii). The sub-clauses refer to the production of “ projected interim profit and loss accounts” and “ projected interim accounts” (emphases added). If these accounts are produced after the Disposal Date, then they are no longer “projected”. It would follow from that that the process is invalidated, and there has been no binding determination. Mr Andrew and the Company need to start again.

37. I am unable to accept that the production of the Interim Accounts after the Disposal Date has the drastic effect of invalidating the option process, for the following reasons: (1) There is no dispute that the Notice was valid when served. No objection is raised to the validity of the Notice in the Claim Form, and no objection was taken to the service of the Notice at the time. (2) On a straightforward reading, the Agreement envisages that the Interim Accounts will be produced before the Disposal Date. However, nowhere in the Agreement does it say that any delay in the production of the accounts, however trivial, means that the Notice becomes invalid. (3) It is then said that in this case the accounts were delivered too late. However, the Interim Accounts were provided for the period ending with the Disposal Date. The Disposal Date therefore becomes the effective valuation date. There is nothing in the Agreement that prevents completion by sale once the price has been determined, even if this is after the Disposal Date. (4) I accept that it is not open to the party who serves a Purchaser’s Notice to sit on their hands for an extended period of time, without causing the Company to produce Interim Accounts. In this case however the delay was minimal. Counsel for Ms Langmead submits that such an approach to the application of clause 6 would introduce unacceptable uncertainty into the operation of the option provision. At what point, he asks rhetorically, would the period of delay be deemed to be too lengthy? I do not find that it is necessary to answer that hypothetical question. The reference to “projected” and the length of time between the Disposal Date as specified in the Purchase Notice (31 August 2024) and when the Interim Accounts were produced (24 September 2024) is not such to have the draconian and wholly uncommercial effect of invalidating the Purchase Notice, and requiring the parties to go back to square one. (5) There was delay in appointing the auditors to begin the process of preparing the Interim Accounts, which required that an audit be carried out first. The delay was not the fault of either party. (6) Counsel for Ms Langmead also relies on an email exchange between Mr Andrew and Ms Langmead on 7 June 2024. It is said that this exchange shows that Mr Andrew misunderstood what was required, in that Mr Andrew suggested that the Share Price “cannot” be calculated and provided to Ms Langmead until September (that is, after the Disposal Date). However, whatever Mr Andrew may have thought, this does not affect the construction of the words used when deciding what clause 6 requires. (7) Finally, Counsel for Ms Langmead at one stage in oral submission said that he was not saying that the Notice was itself a nullity, but that the unilateral contract in the form of the option has not yet been formed because Mr Andrew has not complied with the other requirements. However, it is noticeable that when one looks at the relief sought by Ms Langmead (“An Order that the Company produce … (i) interim profit and loss accounts in accordance with clause 6(i) of the Agreement”) that Ms Langmead is explicitly conceding that those accounts may be produced validly after the Disposal Date.

38. Counsel for Mr Andrew says that Ms Langmead has in any event waived, or is estopped from raising at this stage, any right to challenge the Purchase Notice on this ground. He points out that in the letter from PHB, dated 23 August 2024, it was stated in terms that there was “… no reason why that date [that is, the proposed Disposal Date of 31 August 2024] cannot be postponed to allow that process [that is, the process of calculating the share price under clause 6 of the Agreement] to be undertaken in an orderly way and within a reasonable timeframe …”. That letter closes by stating that that PHB look forward to receiving copies of the interim profit and loss account and balance sheet referred to “… as soon as they are available”. There was no suggestion in that letter that the production of the interim accounts after 31 August 2024 would necessarily invalidate the whole process.

39. Strictly speaking, I do not think that necessarily gives rise to an estoppel, but it does seem to me a waiver of any right (were such to exist, which in my view it does not) for Ms Langmead to insist on the production of the interim accounts before the Disposal Date.

40. The first challenge to the validity of the option process therefore fails.

41. Second , Ms Langmead complains that clause 6 requires the calculation of the sale price in a certain way and not simply the presentation of a fait accompli to the seller. Clause 6(i) expressly requires that the Interim Accounts be prepared “… on the same basis as the Company’s audited accounts have previously been prepared”. The submission is that this means that the Interim Accounts must be drawn up in the same manner as Company’s audited accounts dated 31 March 1998, that is, the audited accounts which were the most recent as at the date of the Agreement. Further, Ms Langmead says that clause 6 envisages a mechanism whereby the seller receives information about the market value of the Company and its assets “… in a form that allows the seller to “interrogate” the sale price and to make her own submissions on price”.

42. However, the evidence of Mr Hamilton (the company secretary) is that accounting standards have changed since 1999 and in particular the way that real estate is to be valued has changed. Whilst previously the value of investment properties could be recorded on a historic or book cost basis, section 16 of FRS 102 (which came into effect on 1 January 2019) requires that investment properties be remeasured to “fair value at each reporting period”. That means that the accounting standards now in force exclude the book cost approach and includes “fair value”. Ms Langmead has not challenged this part of Mr Hamilton’s evidence.

43. On Mr Andrew’s case, no further adjustments under clause 6(ii) were required to the Interim Accounts, because the 2023 Accounts and the Interim Accounts were prepared in accordance with modern accounting standards, which require that property investments be accounted for in the manner for which the Agreement actually provides.

44. In her reply evidence, Ms Langmead submits that “… [I]t cannot be correct to assert … that a change in accounting standard requirements overrides the terms of the Agreement (including the substitution exercise it requires) such that compliance is no longer necessary …”

45. I do not accept Ms Langmead’s submissions on this point. Accounting standards change over time. It would indeed be perverse to interpret the words “… on the same basis as the Company’s audited accounts have previously been prepared …” to mean “… on the basis of the accounting standards in force in 1999”.

46. Counsel for Ms Langmead referred me to Lloyds TSB Foundation for Scotland v Lloyds Banking Group plc [2013] UKSC 3 ; [2013] 1 WLR 366 . That case involved a deed of covenant executed in 1986 whereby the pursuer (this was an appeal from Scotland to the Supreme Court), a charitable foundation, was entitled to payment of the greater of a specified minimum amount or of a fixed percentage of the group’s pre-tax profits as defined by the deed. “Pre-tax profits” and “pre-tax losses” were defined by reference to the audited accounts. In January 2005 accounting practice changed, in a way which had not been foreseen by the parties. The Supreme Court held that, having regard to the factual landscape, matrix and aim of the 1997 deed and its predecessors, the deeds (when made) could only have been concerned with the realised profits or losses before taxation for the relevant accounting period, and that the change in accounting practice was outside the parties’ original contemplation. The language used in the deeds had to be construed in the light of the parties’ original intentions and purposes and the novel element introduced by the 2005 change had to be excluded.

47. What the Lloyds TSB Foundation for Scotland case demonstrates is that the effect of a change in accounting standards is a matter of construction. The 2005 change to accounting practice at issue in that case was (according to the uncontradicted expert evidence) “unthinkable” when the covenant was entered into. No one has suggested to me that the changes to accounting standards introduced in 2019 were “unthinkable”. I do not consider that this case requires, in every situation, the application of historic accounting standards.

48. In any event, the language of clause 6 says something different. The projected interim profit and loss account and balance sheet as at the Disposal Date is to be prepared “… on the same basis as the Company’s audited accounts have previously been prepared”. The previous audited accounts were prepared in accordance with the relevant accounting standards in force at that time. On a straightforward and natural construction this means that that the Interim Accounts are to be prepared in accordance with whatever relevant accounting standards are then in force. Clause 6(i) does not provide that the Interim Accounts “… shall be prepared on the basis of the accounting standards used in the preparation of the last audited accounts prior to the date of this Agreement (ignoring any changes to those accounting standards from time to time).”

49. Ms Langmead also points at what happened on the previous occasion when clause 6 was invoked and shareholders were bought out, both in 1998 (so immediately before the Agreement) and in 2006 and 2007. In 1998, market valuations were, judging from a letter dated 10 December 1998, obtained and provided to the seller (a Mr DJ Owen) – although there is no evidence of the valuations themselves. There is nothing wrong with that, but the question for me is a different one, namely, whether there is an obligation to provide valuation evidence to the seller under the Agreement. The Agreement itself does not include, expressly or otherwise, a requirement on the part of the Company to provide extensive valuation evidence to the seller. It is noticeable that the schedule to that same letter includes two short lines of information, showing (i) the Company’s net worth per projected accounts at the disposal date and (ii) two single line items for “Estimated unrealised gain on unsold properties after selling costs” and “tax on gain after indexation”, and then the value per share. In so far as Recital 3 refers to the sale to Mr Owen, all the recital states is that the sale of shares will take place “at a price … calculated by reference to the net asset value of the Company as at 31 December 1998 as adjusted by substitution of the estimated net disposal proceeds of properties owned by the Company at that date for the book cost of those properties (less related tax liabilities)”. It does not say anything about the provision of detailed valuation evidence to the vendor.

50. As to the sales in 2006 and 2007, it appears from the evidence of Mr Hazelwood (a director of the Company, who also sold shares in 2006) that the procedure followed at that time did not even involve the sending of a notice under the Agreement. It therefore does not seem that the provisions of the Agreement were followed particularly closely. It is of no aid to the construction of the Agreement, as it postdates the entry into the Agreement.

51. Another point taken by Ms Langmead’s counsel was to submit that both the valuation and the determination by TC Audit show the “fair value” for the Company’s assets. The Agreement, however, refers to “the market values of such tangible assets or investments”. Sometimes, as a matter of law, “fair value” and “market value” are considered different things: see Ingram v Ahmed [2016] EWHC 1536, at [83] and following (a decision of Proudman J). This was a case involving relief under s. 284 of the Insolvency Act 1986 (headed, “Restrictions on dispositions of property”). Proudman J in that case was considering whether the transfer of shares was or not at an undervalue. I note, in passing, that the use of “fair value”, which Proudman J held was the appropriate measure to use in valuing the shares at issue, resulted in a higher value being given to the shares than the use of “market value”.

52. The current accounting standards in force require that investment properties be remeasured to “fair value” at each reporting date. There is then this guidance: “The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date.”

53. It is unclear to me whether this is any different in practice from “market value”. However, that is a matter for the auditors. I note in this context that when PHB first wrote to TC Group, by letter dated 12 July 2024, when TC Group had only just been appointed, PHB made the point that the directors’ determination of “fair value” should be “… carefully scrutinised as part of the audit …”. The auditors are the parties appointed to resolve these questions.

54. Ultimately, if Ms Langmead wishes to assert that the auditors should be using a “market value” for the Company’s assets, then it is for her to make that point to the auditors. That is a disagreement between the parties. The auditors can then determine whether that makes any difference in practice on the facts of this case.

55. Third , there is a challenge relating to the operation of clause 6(iv). This provides that “… [I]n the event of any disagreement between the Vendor and Purchaser of the shares over any of the calculations required to establish Share Price … the auditors of the Company shall determine such calculations to be used”. There was a preliminary disagreement between the parties as to what is meant by “calculation” in this context. Counsel for Ms Langmead submitted that calculation was a word with a narrow application, that is, simply the totting up of figures. Counsel for Mr Andrew submitted that, in the context of the Agreement, the word was being used to mean determining or fixing the share price. As I have indicated earlier in this judgment, the latter meaning is in fact the correct meaning, in the context of the Agreement, but the auditors must take into account the disagreements between the parties.

56. Ms Langmead says that the provision for referring disagreements to the auditors was never triggered, because in fact she did not disagree with the calculation: she says that she was simply not being presented with the information to which she was entitled to confirm whether “… I agree or disagree with the proposed Share Price”. Ms Langmead, in substance, did disagree with the Share Price. It is not consistent with the framework of the Agreement and clause 6 in particular for Ms Langmead to sit on her hands and to assert that she neither agrees nor disagrees.

57. However, when Mr Andrew wrote to the auditors by letter dated 1 November 2024 he did not in fact refer any “disagreements” to the auditors for resolution. He simply stated that there was disagreement over the calculations, and then indicated that he wished to instruct TC Group “… to undertake the necessary work, as set out in the agreement, to determine the share price from the interim accounts …”.

58. This instruction to the auditors does not follow the requirements of clause 6(iv). The auditors’ function under clause 6(iv) is to determine “such calculations to be used”, in the event of any disagreement “over any of the calculations required to establish Share Price”. As I have indicated above, “calculations” is being used in the Agreement in a somewhat unusual way, although the basic idea is clear. However, the auditors were set the wrong task or, at best, their instructions were incomplete. It is correct that the Agreement does not say expressly that Ms Langmead is entitled to make representations to the auditors as regards her disagreements. However, it seems plain to me that there is such a right. Before the auditors can determine “such calculations”, they need to know what the disagreement is.

59. Therefore, the auditors have not yet produced a binding determination of the price to be paid for Ms Langmead’s shares. As to the scope of the disagreement, it seems to me that this is principally whether “fair value” is anything other than “market value”, having regard to accounting standards and the valuations obtained by the Company. It is that issue which the auditors should have been asked to determine, by Mr Andrew and Ms Langmead, in November and December 2024. Mr Andrew says that Ms Langmead had the opportunity to identify her points of disagreement and indicate what they were to the auditors, and failed to do so. However, that does not detract from the fact that the auditors were sent the wrong or incomplete instructions by Mr Andrew in November 2024.

60. To that extent, the terms of the Agreement have not been complied with. Conclusion

61. Since these proceedings have started, Ms Langmead has been supplied by the Company with additional information regarding the valuations of the investment properties. Even if Ms Langmead was not (as she says) in a position properly to set out her disagreements in late 2024, she is now. For example, she has expressed concern about the value attributed to one of the Company’s investment properties at Solent Park. It has also been pointed out on her behalf that the “market value” figures used in the Gerald Eve valuation report are higher than the figures used to establish the share price offered by Mr Andrew. The disagreement between the parties appear to revolve around Ms Langmead’s suggestion that “market value” (which is what is referred to in clause 6(ii)(b) of the Agreement) is different from “fair value” as used by the auditors, but this is a matter to be resolved by the auditors under clause 6(iv).

62. I will hear from Counsel as to what further declarations or directions may be required, in light of this judgment. My initial view is that Ms Langmead and Mr Andrew should each now write to TC Group, setting out their disagreements within an appropriate timeframe as regards the value of the investment properties. It is then for the auditors to resolve any disagreement and determine the “calculations” to be used to establish Share Price.