Background
Richard Padun petitioned under section 994 of the Companies Act 2006 concerning Interactive Media Group Ltd (IMG), in which he and Neil Dickinson were directors and shareholders. Padun alleged that, after excluding him from management in March 2022, Dickinson orchestrated the insolvency of IMG and its trading subsidiaries and diverted their business and assets to Arcstream Systems Ltd, thereby extracting value from IMG at Padun’s expense. Dickinson denied that allegation and maintained that the companies were genuinely insolvent.
An earlier judgment found IMG cash-flow insolvent as of 17 March 2022 but held that the evidence was insufficient to determine whether Padun’s shares nevertheless had value, principally because IMG’s ownership of its subsidiaries had initially been misunderstood. After being directed to identify a valuation, Padun sought extensive disclosure relating to IMG, its subsidiaries, Arcstream Systems, Loop Associates Ltd and other entities, covering financial, banking, customer, payroll, contractual and asset records over broad periods.
The disclosure application was made against Dickinson alone. Although Padun received management accounts, cash-flow material, bank statements and other accounting information in 2024, he continued to seek additional categories of documents, including records concerning periods after several companies had entered liquidation and records of companies against which no substantive case was pleaded.
The Court’s Holding
ICC Judge Barber dismissed the specific disclosure application. Padun failed to establish a prima facie case that the documents sought beyond those already disclosed were relevant to a pleaded issue and were, or had been, within Dickinson’s possession or control. Some requested documents did not exist as discrete records, some had already been provided, and others were controlled by the relevant liquidators.
The court held that the accounts and related documents already disclosed for IMG and its subsidiaries for 2020 through 2022 should suffice for the limited exercise of assessing whether Padun had a real prospect of establishing that his IMG shares possessed value around his exclusion on 17 March 2022. Padun had not coherently pleaded or evidenced the conduct, valuation effect and methodology needed to justify broader post-exclusion or “add-back” disclosure.
The requests were also insufficiently tied to the pleadings, excessively broad and disproportionate to the sums at stake. Having repeatedly been given opportunities to narrow and justify the application, Padun instead widened it and pursued it in a manner the court characterized as unreasonable and vexatious. Granting relief therefore would not accord with the overriding objective.
Key Takeaways
- A party seeking specific disclosure must define each document category carefully and show its relevance to the pleaded factual issues, proportionality and the opposing party’s control.
- In an unfair-prejudice valuation dispute, requests for post-event records or an “add-back” valuation require a coherent case identifying the alleged conduct, its effect on share value and the proposed valuation methodology.
- Specific disclosure will not be ordered for documents already produced, records that do not exist, or materials controlled by nonparties such as liquidators.
Why It Matters
The judgment underscores that specific disclosure is not a mechanism for investigating an unpleaded theory or constructing a new head of loss. Even where a shareholder needs financial information to establish that shares in an insolvent company retained value, requests must remain anchored to the pleaded case and a defined valuation exercise.
It also illustrates the procedural consequences of persistently pursuing expansive requests after receiving substantial disclosure and repeated opportunities to narrow the application. Courts may treat that conduct as unreasonable and vexatious when assessing proportionality, the overriding objective and costs.