Kohli v Lit & Ors

In valuing shares under a prior judgment, the court may correct arithmetical errors and make consequential adjustments required by its valuation methodology. Where valuation proceeds by a price-earnings multiple, liabilities should not ordinarily be deducted unless the evidence shows that they affect the valuation or would be repayable on the hypothetical sale. A party seeking to introduce further expert evidence after the evidential hearing must show proper justification; an opportunity to comment on the existing evidence does not ordinarily require the hearing to be reopened. Completion and payment directions may reflect the time allowed for an appeal, but financial difficulty alone does not justify delaying enforcement.

The judgment concerned consequential issues arising from the court’s earlier valuation of Geeta Kohli’s shareholding in Sunrise Radio Ltd. The court corrected an arithmetical error, deducted a redemption fee and an allowance for partly paid shares, and removed the valuation attributed to Kismat Radio. The respondents argued that further net liabilities should be deducted and sought permission to appeal. They also sought to recall their expert to address the claimant’s valuation schedule. The central issues were the proper application of the previously adopted valuation methodology, whether the evidential hearing should be reopened, the completion date, permission to appeal and costs.

1. Valuation adjustments. The court corrected the earlier arithmetic and deducted the £250,000 redemption fee because the earlier valuation had proceeded on the footing that the relevant Allied Irish Bank debt would be repaid on a hypothetical sale. A further deduction of approximately £9,000 was made for the unpaid portion of the claimant’s shares. Kismat Radio was removed from the valuation and assigned a nil value.
2. Net liabilities. The valuation was based on a price-earnings multiple. The evidence did not establish that liabilities other than the Allied Irish Bank debt would be repayable on completion or should affect the valuation. The court therefore declined to revisit its earlier ruling and made no further deduction for net indebtedness. Any different refinancing or substitution of debt would require evidence addressing the circumstances and significance of that debt.
3. Further evidence. The application to recall the respondents’ expert was refused. The claimant’s schedule was based on evidence already before the court, and the respondents had had an opportunity to comment on it. The respondents were seeking to introduce new evidence after the evidential hearing, and there was no procedural error or sufficient justification for reopening the evidence.
4. Orders. Completion was ordered 21 days after judgment, corresponding to the period for seeking permission to appeal. Financial difficulty did not justify keeping the claimant out of her money. Interest was ordered from completion at the judgment rate. Permission to appeal was refused because the court had made a fact-based assessment using the essential methodology of the experts. The individual respondents were ordered to pay two-thirds of the claimant’s costs to the liability judgment and all of her costs thereafter, with interest on the recoverable costs.

The judgment was a further first-instance decision following the court’s earlier judgment on the valuation of the claimant’s shareholding. The respondents sought permission to appeal, which was refused.