Queensgate Place Limited v Solid Star Limited & Ors (No 3) (Consequential Matters)

This judgment determined consequential matters after earlier findings of unfair prejudice in respect of Solid Star Limited under section 994 of the Companies Act 2006. The court adopted a counter-factual approach to valuation on a members' winding up and determined that a corporation tax allowance should be made when calculating the petitioner’s loss; in light of limited records the judge assumed a 30% chargeable gain with corporation tax at 19%, and reduced the counter-factual distributions accordingly. The resulting purchase price for the petitioner’s shares was adjusted and allocated between the respondents (45.8% payable by the Fourth Respondent, Minesh Bhundia; 54.2% payable by Viking World Investments SA and Prakash Bhundia jointly).

On costs the court applied the general rule in favour of the successful petitioner, but made specific departures: costs against Minesh on the standard basis (with one narrowly defined exception), and indemnity costs against Viking and Prakash up to the date of the Liability Judgment because of concealment and non‑disclosure. A payment on account of costs of £500,000 was ordered jointly and severally. The interim freezing orders were continued. The court left detailed assessment issues and detailed revision of the costs budget to the costs judge.

Background and procedural posture: This was a written‑submissions judgment dealing with consequential matters arising from three prior decisions in the same proceedings: a January 2023 decision refusing summary judgment, the judge's September 2023 Liability Judgment finding unfair prejudice against the Second, Third and Fourth Respondents, and the July 2024 Remedies Judgment fixing the form of relief. The petitioner sought consequential orders following the Remedies Judgment; all parties made written submissions.

Nature of the application: The court was asked to resolve (i) whether and how corporation tax should be accounted for in the counter‑factual valuation underpinning the buy‑out remedy; (ii) adjustment and allocation of the purchase price and shares between respondents; (iii) costs consequences including a late revised costs budget, basis of taxation and payment on account; and (iv) continuation of interim freezing orders.

Issues framed:

• whether a deduction for corporation tax should be made from the counter‑factual sale proceeds and, if so, the appropriate measure;
• the resulting adjustment to the amounts payable to the petitioner and apportionment between respondents;
• the effect of a late updated costs budget and the appropriate basis and allocation of costs between the parties;
• whether to order a payment on account of costs; and
• whether interim freezing orders should continue.

Court’s reasoning and conclusions: The court accepted that some corporation tax would have been payable on the hypothetical sales but, given the absence of reliable accounts, rejected both the petitioner’s submission to make no deduction and the respondent’s higher historical percentages as unreliable. The judge adopted a pragmatic assumption of a 30% chargeable gain with tax at 19%, and treated 50% of the notional tax liability as reducing the amount payable to the petitioner on the buy‑out. This produced revised sums and an allocation of liability: total purchase price £6,682,278; Minesh liable for 45.8% and Viking/Prakash for 54.2% (jointly and severally), with priorities for set‑offs from any liquidation recoveries.

On costs the judge applied the general rule in favour of the successful petitioner. Minesh was to pay costs on the standard basis (with a limited carve‑out for the summary judgment application), but indemnity costs were awarded against Viking and Prakash up to the Liability Judgment because of concealment and non‑disclosure. The late updated costs budget was not approved by the judge and the detail was left to the costs judge; nonetheless, a £500,000 payment on account was ordered. Interim freezing orders were renewed as a precaution. The parties were directed to agree a final order giving effect to the judgments.

The court adjusted the Remedies Judgment to make a corporation tax allowance (assuming a 30% chargeable gain with tax at 19%), reduced the amounts payable to the petitioner accordingly, fixed the total purchase price for QPL's shares at £6,682,278 and allocated liability 45.8% to Minesh Bhundia and 54.2% jointly to Viking World Investments SA and Prakash Bhundia. Costs were awarded to the petitioner under the general rule; Minesh to pay on the standard basis (with a limited exception) and Viking and Prakash to pay indemnity costs up to the Liability Judgment because of concealment/non‑disclosure. A payment on account of £500,000 was ordered and interim freezing orders were continued. The judge left detailed budget revision and assessment matters to the costs judge.

Not an appeal. The judgment followed earlier interlocutory and final decisions in the same proceedings: a 20 January 2023 decision of HHJ Jarman KC dismissing an application for summary judgment ([2023] EWHC 93 (Ch)); the judge's own Liability Judgment dated 20 September 2023 ([2023] EWHC 2277 (Ch)); and the judge's Remedies Judgment dated 17 July 2024 ([2024] EWHC 1816 (Ch)).