High Court

Peter Smith J, in a lengthy judgment held that the petition would be refused. Although some of the conduct by RCO constituted a breach of fiduciary duty, Rock Nominees had not discharged the burden of proof to show that the shares were transferred at an undervalue. The evidence suggested, including a report from a financial expert that Rock Nominees called, that the price did reflect a premium for "synergies". Moreover, Peter Smith J was inclined to draw adverse inferences from some of the murkier omissions in the evidence that Lord Ashcroft had given.

Euphemistically this practice — which I understand is a not unheard of practice in the City — is described as "greenmail". The proper word to my mind is blackmail. It is the kind of thing which brings the City into disrepute ... Where matters are dealt with in speculation and profits are made, which are then gathered offshore, when there is no merit and no exposure to the kind of risks associated with companies, that to my mind is not legitimate.

Court of Appeal

Potter LJ, Jonathan Parker LJ and Sir Swinton Thomas dismissed the appeal. They held that although the directors had breached their fiduciary duties, Rock Nominees had not suffered prejudice because the best price had been achieved. ROC could not have compelled ISS (UK) Ltd to pay more because only ISS (UK) Ltd was attracted by the potential cost saving. Furthermore, as majority shareholder ISS (UK) Ltd was able to place RCO in members' voluntary liquidation and at any time force a sale of assets on the open market.