Queensgate Place Limited v Solid Star Limited (Remedies Judgment)

The court exercised its wide discretionary jurisdiction under section 996 Companies Act 2006 to grant a buy‑out remedy for unfair prejudice found in the earlier Liability Judgment ([2023] EWHC 2277 (Ch)). The judge treated the appropriate valuation as a counterfactual assessment of the net proceeds that would have been available to members had the remaining properties been sold at market value on 29 October 2020, deducted third‑party liabilities and equalised shareholder loan balances. The court awarded a share purchase price of £7,081,468 plus simple interest at 1% above Bank of England base rate from 29 October 2020, subject to credit for any sums recovered by the petitioner from the liquidation. The order apportioned liability between the respondents (Prakash, Viking and Minesh), made them jointly and severally liable in defined proportions and left the share transfer unexecuted until specified payments or distributions occurred. The court declined to reduce the remedy on limitation grounds, treating limitation as an argument that should have been pleaded earlier but permitting delay to be taken into account; ultimately the court found the stale partial repayments were not the effective cause of the petitioner’s ultimate loss.

Background and parties:

• The dispute concerns the redevelopment of a Kensington hotel into flats and mews houses by Solid Star Limited (SSL), a joint venture owned equally by Viking World Investments SA (Viking) and Queensgate Place Limited (QPL). Directors Prakash and Minesh Bhundia controlled SSL; QPL was owned by Alhaji (and later his son Sagir).
• QPL petitioned under section 994 Companies Act 2006 alleging unfair prejudice; in the Liability Judgment ([2023] EWHC 2277 (Ch)) the court found that Viking and Prakash had caused unfair prejudice in several respects and that Minesh was liable by reason of his abdication of governance duties.

Nature of the application:

• Remedies hearing to determine the appropriate relief under section 996 Companies Act 2006. QPL sought an order requiring the respondents to purchase its shares in SSL at a valuation reflecting QPL’s loss. Respondents disputed aspects of remedy, valuation, apportionment and raised limitation points following recent Court of Appeal authority.

Issues framed by the court:

1. Whether a share purchase (buy‑out) order remained available despite SSL’s insolvency and the timing of the petition.
2. The appropriate valuation date and method for assessing QPL’s loss.
3. Whether limitation principles (in light of THG Plc v Zedra Trust Co (Jersey) Ltd [2024] EWCA Civ 158) barred or should reduce parts of QPL’s claim.
4. The allocation and apportionment of liability among Prakash, Viking and Minesh and consideration of respondents’ means.
5. Whether tax (Corporation Tax) adjustments should affect the counterfactual calculation.

Court’s reasoning and decision:

• The court accepted it retained jurisdiction to order a buy‑out despite subsequent insolvency, applying authorities on section 996 and considering fairness. Rejected using the April 2017 agreement date for valuation because QPL’s own repudiation by a director (Mr Ugboma) made that date unfair to respondents.
• The judge adopted a counterfactual valuation approach: value SSL as if the six properties transferred to PX1 had instead been sold on the open market, deduct costs of sale, third‑party liabilities paid by PX1, and then equalise shareholder loan balances to identify surplus distributable to members. The chosen valuation date was 29 October 2020; market values from Mr Alford (MRICS) were adopted.
• On that basis QPL’s notional distribution would have been £7,081,468. Interest at 1% above Bank of England base rate from 29 October 2020 is to be added. Any amounts recovered by QPL in SSL’s liquidation will be credited against the award.
• Limitation: the Court of Appeal’s THG decision introduced limitation points which were not pleaded at liability stage; the judge held it was not open belatedly to raise Limitation Act defences going to liability but allowed the respondents to rely on delay as a remedial consideration. The judge determined the staleness of certain repayments did not alter the remedy because the primary cause of loss was the PX1 transfers and ensuing liabilities.
• Apportionment: the purchase price is payable as follows — Prakash, Viking and Minesh are jointly and severally liable for 45.7% of the total; Prakash and Viking are jointly and severally liable for the remaining 54.3%. Between the wrongdoers the judge assessed culpability for contribution as 10% Minesh and 90% Prakash/Viking. The share transfer remains unexecuted until payment or final liquidation distribution.
• The court directed that parties be permitted to address the potential impact of Corporation Tax on the counterfactual figures before finalising the order.

The petition succeeded. The court ordered a buy‑out of QPL’s shares in SSL at a notional price of £7,081,468 plus simple interest at 1% above the Bank of England base rate from 29 October 2020, subject to credit for any sums recovered by QPL in SSL’s liquidation. Liability for that purchase price was apportioned: Prakash, Viking and Minesh jointly and severally liable for 45.7% and Prakash and Viking jointly and severally liable for 54.3%. Between the respondents, contribution was to be assessed at 10% Minesh and 90% Prakash/Viking. The share transfer is to remain unexecuted until payment or final liquidation distribution. The court invited submissions on the effect (if any) of Corporation Tax on the counterfactual calculations.

The judgment follows and implements findings made in an earlier liability judgment in the same proceedings: Queensgate Place Ltd v Solid Star Ltd & Others [2023] EWHC 2277 (Ch), in which unfair prejudice was established. No other appellate history is stated in the judgment.