Private Equity in UK Law

Equitable interests were strictly not proprietary in character, but rights in personam. Although they have developed a proprietary character, they are not enforceable against all the world. The purchaser for value without notice is not bound. In the field of property law, equity is a potent protection of private rights, operating upon the conscience of those who have notice of their existence. But this is no reason for extending it into the public law of planning control, which binds everyone.

The common law or, more precisely, courts of equity have long afforded protection to the wrongful use of private information by means of the cause of action which became known as breach of confidence. The breach of confidence label harks back to the time when the cause of action was based on improper use of information disclosed by one person to another in confidence. The confidence referred to in the phrase 'breach of confidence' was the confidence arising out of a confidential relationship.

But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events.

Since the hearing in the Court of Appeal, Opportunity has amended its pleadings in the action in the Grand Court. It now pleads an oral agreement that if Mr Demarco should cease for any reason to be employed by the Company as a deal-maker he would relinquish his interest in the Company "at its then value". It also pleads that, so long as he was so employed, he would be incrementally entitled to become a 3.5% shareholder over a period of five years.

One can see here a reflection of the principles governing the measure of damages recoverable in cases of this kind.

That question is not, in my judgment, a simple choice between a pro rata share of the Company's overall value and the market value of the shares. Those are, as it were, the two extremes of price that could be ordered to be paid, but between them there are various possibilities for specifying a basis of valuation that results in a fair price as between these minority shareholders and the Respondents against whom relief is granted.

On the question of an enforceable contract or not, it is for the parties to decide at what stage they wish to be contractually bound. To use the vivid phrase of Lord Bingham (as Bingham J) the parties are "masters of their contractual fate". 17 They can agree to