Transactions under the whip: dominating proceedings

It is a long-established principle of English law that a contract cannot be enforced if one of the parties entered into it as a result of duress from the other. However, in a recent court case the judge had to consider an interesting twist on the notion.

Relationship breakdown

The issue arose in the case of Stephen Dawson and Laura Bell and the unravelling of their business interests following the breakdown of their personal relationship and the termination of their business relationship.

Dawson and Bell were the shareholders and directors of Adwelsh Media Limited, a company that created videos with a female domination theme that were made available to subscribers of a website in return for a monthly subscription fee. Before the incorporation of the company, Dawson had been a client of Bell’s domination services but, over time, their relationship turned from that of ‘supplier and customer’ to a more personal one and eventually into a
business partnership.

After a number of years, their personal and business relationship broke down and Dawson relinquished his interest in the company by transferring his shares to Bell. Dawson subsequently alleged that the contract by which he had given up his shares in the company should be set aside by the court on the grounds that he had been forced to enter into it under duress.

Judge Havelock-Allan QC observed that: “Assessing the credibility of a claimant who has a fetish for female domination and claims to have been the victim of duress and intimidation by his female partner is not easy. Assessing the credibility of a defendant who denies threatening behaviour, but who has made a career as a dominatrix and appearances in female domination videos is not
easy, either.”

The judge’s task was made all the more difficult in the light of his conclusion that neither Bell nor Dawson was a “wholly believable witness”.

Ultimately, it was concluded that there had not been any duress but the judge went on to consider the value of the company, which led to the instruction of forensic accountants.

Opposite number

I was instructed as an expert accountancy witness on behalf of Dawson and valued the business within a range that had a mid-point of £812,700. This compared with the valuation by my opposite number that had a range with a mid-point of £32,000.

Due to the large discrepancy, the judge spent considerable time ruling on a number
of issues.

In common with most small owner-managed businesses, Adwelsh Media Limited did not pay its directors a salary at open-market rates. Accordingly, for assessment purposes, valuation theory dictates that a notional deduction should be made for the estimated cost that would be incurred by a hypothetical purchaser to hire someone to take on the roles and duties of the directors.

Unsurprisingly, there was little published data available as to the ranges of remuneration payable to on-screen dominatrices, which presented a degree of evidential difficulty to the experts and the
judge alike.

Similarly, Bell alleged that she had made available to the company a large volume of costumes as well as specialist and bespoke equipment that belonged to her personally, and which a hypothetical purchaser of the company would have
to replace.Once again, the assessment of the associated hire costs was far from straightforward and necessitated a degree of online research that was frustrated by the corporate firewalls specifically designed to restrict access to the very information that was required in this case.

It was these sorts of issues that led to the very large disparity between my estimate of the value of the company and that of my opposite number.

Ultimately, Judge Havelock-Allan QC was largely persuaded by my evidence and concluded that a valuation in a range with a mid-point of £530,100 was appropriate; a figure more than sixteen times that was advocated by Bell’s
expert accountant. SJ

 Roger Isaacs is a forensic partner at Milsted Langdon

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