Profinance Trust SA v Gladstone (2001)
The court had jurisdiction under s.461 Companies Act 1985 to make an order for the equivalent of interest, although that power should be exercised with great caution. The judge had erred in the exercise of his discretion by choosing the date of presentation of the petition rather than the date of the share purchase order as the appropriate valuation date.
Appeal by the petitioner ('P') from an order of Kim Lewison QC by which, on P's petition under s.459 Companies Act 1985, he ordered the respondent ('G') to purchase P's 40 per cent minority shareholding in Americanino Ltd ('the Company') for £46,400. The petition was presented in December 1997 and came on for hearing in March 2000. At that hearing, G conceded that there had been unfair prejudice justifying a share purchase order in favour of P. The parties produced an agreed experts' report as to the value of the Company at five different dates, including December 1997 (£80,000) and March 2000 (£215,000). The only issue for the judge, therefore, was as to the appropriate valuation date. The judge ordered a sale at £46,400, calculated as 40 per cent of £80,000 uplifted by 45 per cent to compensate for the delay in P receiving the money and being able to lay it out in some other investment opportunity. By this appeal P contended that the judge: (i) erred in law in believing that he had jurisdiction to include an element of interest or quasi-interest in the purchase price; and (ii) erred in the exercise of his discretion in taking the appropriate valuation date as the date of presentation of the petition.
(1) The judge was right to conclude that an order for the equivalent of interest was not beyond the powers of the court under s.461(1) of the Act, albeit that the power was one that should be exercised with great caution. The discretion conferred by that section was very wide, and was not limited to the particular powers enumerated in s.461(2). (2) The judge had erred in opting for the date of presentation of the petition as the appropriate valuation date. The starting point was the general proposition enunciated by Nourse J in Re London School of Economics (1986) Ch 211 that prima facie an interest in a going concern ought to be valued at the date on which it was ordered to be purchased. On the facts of the case there was no reason for departing from that general proposition. (3) In all the circumstances the court would exercise the judge's discretion afresh, and would order G to buy P's shares at £86,000, ie 40 per cent of £215,000.
Appeal allowed. Order accordingly.
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