Lewis v Clarke & Anor [2020] EWHC 1975 (Ch) (28 July 2020)

Lewis v Clarke & Anor [2020] EWHC 1975 (Ch) (28 July 2020)

The fair value of Ms Lewis's 50% shareholding is to be determined by crediting her with two years of dividends at £26,000 per year (for the period 1 September 2017 to 1 September 2019), plus a further sum for anticipated future dividends, calculated by applying a 1.5 multiplier (£19,500), resulting in a total valuation of £45,500, reflecting both historic and prospective profits, but discounted for lease uncertainty. The court rejected both a pure net asset valuation and a four-year dividend approach as unfair in the circumstances.

Citation
[2020] EWHC 1975 (Ch)
Parties
Petitioner: Claire Lewis; First Respondent: Philip Clarke; Second Respondent: Solent Garage Services Limited
Jurisdiction
England and Wales
Judgment Date
28 July 2020
Procedural Posture
Unfair Prejudice Petition Under Companies Act 2006 S.994 / Judgment on Share Valuation and Purchase Order
Outcome
Petition allowed; order for purchase of petitioner's shares by first respondent at determined value.
Legal Topics
Unfair Prejudice, Share Valuation, Minority Shareholder Rights, Business Transfer, Remedies Under Companies Act 2006 S.996
Company Law Insolvency Unfair Prejudice Share Valuation Minority Shareholder Rights Business Transfer Remedies Under Companies Act 2006 S.996

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Parties

Claire Lewis

Petitioner

Philip Clarke

First Respondent

Solent Garage Services Limited

Second Respondent

Procedural Posture

Unfair Prejudice Petition Under Companies Act 2006 S.994 / Judgment on Share Valuation and Purchase Order

Legal Issues

  1. 1 What is the fair value of the petitioner's 50% shareholding in Solent Garage Services Limited following a finding of unfair prejudice?
  2. 2 What is the appropriate methodology and date for share valuation in the circumstances of business transfer and lease uncertainty?

Ratio Decidendi

The fair value of Ms Lewis's 50% shareholding is to be determined by crediting her with two years of dividends at £26,000 per year (for the period 1 September 2017 to 1 September 2019), plus a further sum for anticipated future dividends, calculated by applying a 1.5 multiplier (£19,500), resulting in a total valuation of £45,500, reflecting both historic and prospective profits, but discounted for lease uncertainty. The court rejected both a pure net asset valuation and a four-year dividend approach as unfair in the circumstances.

Court Disposition

Petition allowed; order for purchase of petitioner's shares by first respondent at determined value.

Orders

  • Mr Clarke to purchase Ms Lewis's 50% shareholding in Solent Garage Services Limited for £45,500.
  • Parties to communicate to resolve payment terms in light of practical realities.