The Ball Family – Indemnities for Costs in Derivative Actions

Re Arnbrow Ltd; Re Westridge Estates Ltd Leslie v Ball (2023) EWHC 1771 (Ch)

This case started because two brothers transferred valuable holiday parks to their own companies at a suspiciously low price, leaving family shares worth less than they should be. In the 2023 High Court case of Leslie v Ball (Re Arnbrow Ltd and Westridge Estates Ltd), minority shareholder Mary Leslie sued her brother Robert and her late brother Norman’s widow Melanie over alleged fiduciary breaches dating back to 2008.

Notwithstanding the grievous injustices allegedly done by some to their family members, the case is of interest in relation to the court’s view about granting indemnities for costs in derivative actions.

For more information, you can read our full article on Derivative Claims.

The Family and the Companies

After the Second World War, the Ball family built up a construction and property business, eventually owned through a holding company called Bullen Estates, which later gave rise to two key companies: Arnbrow Ltd (Ambrow) and Westridge Estates Ltd (Westbridge). Mary Leslie (through a family trust), and her brothers Robert and Norman each effectively held a third of the economic interest in the relevant side of the group.

Initially, Arnbrow held three valuable holiday park sites; Pondwell, Tollgate and Salterns on the Isle of Wight. Over time, share restructurings led to Westridge becoming the holding company for Arnbrow, with Mary and her trust, Robert, and (later) Norman’s widow Melanie each owning one third of Westridge’s shares. Mary was never involved in management, whereas Robert and Norman were the active directors in the property businesses.

If you would like more information, you can read the full case on Re Arnbrow Ltd; Re Westridge Estates Ltd Leslie v Ball [2023] EWHC 1771 (Ch)

The 2008 Land Transfers

In June 2008, Arnbrow transferred the three key holiday park sites to three special‑purpose companies (SPVs) owned by Robert and Norman personally. Mary and the trust later claimed these transfers were made at no value or at a gross undervalue for Robert and Norman’s personal benefit. Mary and her trust relied on a much higher later valuation suggesting the sites could be worth many millions more than the 2008 price.

Robert denied wrongdoing, relied on an earlier professional valuation that supported the 2008 price, and said the deals had been approved by their father when a director, for proper commercial reasons.

Mary and her trust claimed the three holiday park sites were worth at least £16.9 million in total, based on a March 2021 CBRE desktop valuation that factored in their development potential despite limitations like no site inspection. Yet in June 2008, Arnbrow sold them to Robert and Norman’s SPVs for just £2.275 million, with payment deferred via loans back to the SPVs that weren’t fully repaid until 2022.

Robert countered with a contemporary 2008 Gully Howard valuation supporting the lower price at around £1.935 million (including the sites and a pub), arguing it reflected the properties’ poor condition, restrictive leases, and limited planning permissions at the time, while dismissing the CBRE figure as unreliable hindsight.

Two Claims Issued on the Same Day

In December 2021, Mary and a co‑trustee issued two sets of proceedings simultaneously: a double derivative claim (on behalf of Westridge and Arnbrow) and an unfair prejudice petition (for their own benefit as shareholders).

The derivative claim alleged breaches of fiduciary duty by Robert and Norman in causing Arnbrow to transfer the three sites at an undervalue and then benefiting from later sales and restructurings.

The unfair prejudice petition alleged that Westridge was a quasi‑partnership and that Mary had been excluded and treated unfairly, including by failures to cause Arnbrow to unwind the 2008 transfers or sue for breaches of duty. More importantly, the petition expressly incorporated the allegations from the derivative claim and sought a buy‑out of Mary’s shares at a price uplifted to reflect the loss supposedly suffered by Westridge via Arnbrow.

The Application for an Indemnity for Costs

Later, Mary applied for a pre-emptive court order requiring Arnbrow or Westridge to indemnify her for both her past and future legal costs in pursuing the derivative claim up to a review point after disclosure, as well as any adverse cost orders she might face if she lost.

The defendants opposed this, contending the derivative claim was unnecessary since the unfair prejudice petition already encompassed the same issues and relief, all costs overlapped with Mary’s personal petition for her direct benefit, and forcing the company to fund her would create unfairness by pitting her against fellow shareholders with company money on one side and their own resources on the other.

Why the Court Refused Indemnity

The judge refused a pre-emptive indemnity after weighing fairness. The unfair prejudice petition and derivative claim overlapped almost completely, as the petition incorporated the same 2008 transfer allegations and relied on the failure to remedy them as prejudicial conduct, meaning the core facts and issues would be litigated twice.

Granting indemnity would create unfairness and inequality, letting Mary fight with company funds while Robert and Melanie use their own (despite equal shareholdings), skewing the shareholder dispute where costs are typically at each party’s risk.

Why This Case Matters

Mary could not secure an indemnity for her derivative claim costs precisely because she brought, and heavily relied on, an unfair prejudice petition that sought personal relief based on the identical alleged wrongdoing. The court saw this as a shareholder dispute where each party bears their own cost risk, not a pure company-benefiting action warranting company-funded indemnity.

By intertwining the claims, with the petition demanding a buy-out uplift tied to Arnbrow’s supposed losses, Mary effectively made the litigation serve her personal financial gain, rendering it unfair to burden company assets (and the other shareholders’ interests) with her expenses.

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