The High Court has refused Donegal Investment Group plc’s application for further discovery in a dispute over the value of its 30% shareholding in ELST, holding that the requested documents did not meet the strict test for post-discovery material.
The application sought three categories of documents: communications by respondents about ELST’s value with a view to securing finance; documents about the proposed Tunnel Tech South capital expenditure project, including material shared with Santander Bank; and reports by the company’s auditors or accountants referring to the company’s value or the petitioner’s shares.
The share valuation is to be determined as at 30 June 2016, a date fixed by the Court of Appeal. The earlier valuation judgment was overturned on appeal and the valuation issue remitted to the High Court for rehearing. The Court of Appeal separately ordered the respondents to buy the petitioner’s 30% shareholding at a price to be determined by the High Court. The Supreme Court later upheld the Court of Appeal’s decision on valuation, and the Court of Appeal refused a subsequent application to change the valuation date.
Donegal Investment Group argued that circumstances had materially changed and that the documents might reveal a discrepancy between the valuation advanced in court and values discussed with financial backers. It also said the Santander communications could show whether the Tunnel Tech South project had been presented as earnings-enhancing. The respondents said the valuation date had not changed; only the trial date had.
Justice Brian McGovern said the court’s power to order discovery of documents created after the original discovery process was complete was limited and should be used sparingly. Citing the Supreme Court’s decision in *Bula Ltd. v. Tara Mines (No. 5)*, he said an applicant must identify documents and establish significant, important relevance of a specified kind. The judgment also referred to authorities on valuing shares at a fixed date, including the general rule that later events are excluded except where they help assess what could reasonably have been forecast at the valuation date.
The judge found categories 1 and 3 too broad and was not satisfied they were necessary. He said a possible discrepancy between figures given to the court and values discussed with financial institutions was not enough to justify the exceptional order. He found all three categories too general, despite their references to financing communications and the specific Tunnel Tech South project. The applicants could still adduce expert evidence on the company’s value as at 30 June 2016.
The court refused the discovery relief. The judgment does not determine the company’s value or the price payable for the petitioner’s shares.