Attwood v Maidment & Ors

In fixing a fair purchase price for shares under a buy-out order, valuation evidence is a means to the fair result rather than a strait-jacket. A discount should reflect only factors properly relevant to the particular valuation exercise. A discount based partly on an inappropriate portfolio element could not stand unchanged. The court could use post-valuation evidence to make the tax position more certain, while allowing for the timing of the tax payment. The court also retained a broad discretion to allow deferred payment for shares. That discretion had to be exercised consistently with fairness, proportionality, expedition and the saving of expense under the Civil Procedure Rules 1998. A late request to revisit interest, unsupported by sufficient evidence and unfairly raised, was refused.

This was a further hearing concerning the affairs of Annacott Holdings Limited. The court had previously ordered Mr Geoffrey Maidment to buy Mr Allan Attwood’s 50 per cent shareholding and had adjourned consequential issues. The present hearing addressed the purchase price, interest, and the timing of payment. The court also dealt with an application concerning unilateral notices at the Land Registry, which was resolved by agreement. The central questions were what discount, if any, should be applied to the agreed net asset value, whether the interest rate should be revisited, and how much time should be allowed for payment.

1. Purchase price. The court rejected the continued use of the expert’s 50 per cent discount. One constituent element, reflecting the reduced value of a portfolio sold as a portfolio, had already been held irrelevant. The valuation exercise was directed towards achieving a fair purchase price between the parties, and valuation evidence was not a strait-jacket.
2. The court nevertheless considered that ignoring all inherent corporation tax liability would overcompensate the petitioner. It adopted the actual tax paid, £214,711, while allowing for the fact that payment occurred after the valuation date. A round discount of £200,000 was substituted for the expert’s discount of £423,653. The resulting value of the petitioner’s 50 per cent interest was £1,685,107 before that discount.
3. Case management and interest. A further adjournment for another valuation report and further evidence would be inconsistent with the overriding objective. The court referred to active case management under CPR 1.4(2)(i) and (l), including dealing with issues on the same occasion and ensuring that the trial proceeded quickly and efficiently. The invitation to revisit interest was rejected because the additional material would not have altered the conclusion and was raised too late for the petitioner to answer it fairly.
4. Timing of payment. The court had a wide discretion to permit deferred payment for shares. The first £500,000 was to be paid within 14 days. The balance was to be paid within three months, by 15 October 2012. Mr Maidment was given permission to apply on notice, supported by evidence, if that date proved unduly optimistic.

This was a further hearing in the same first-instance proceedings. The judgment records an earlier judgment delivered on 23 May 2012 under [2012] EWHC 1662 (Ch), following which consequential issues were adjourned. The present court determined those consequential issues.