Estera Trust (Jersey) Ltd & Anor v Singh & Ors [2019] EWHC 873 (Ch) (08 April 2019)

Estera Trust (Jersey) Ltd & Anor v Singh & Ors [2019] EWHC 873 (Ch) (08 April 2019)

The price payable for the petitioners' shares is the market value of their holding plus 50% of the marriage value released by combining their shares with those of the controlling shareholder, calculated as A + 0.5*(C-(A+B)), where A is the market value of the petitioners' shares, B is the value of JS's holding, and C is the value of the combined holding. The C tranche must be valued as an aggregate holding, not as a sum of parts. The court prefers the petitioners' expert's hotel valuations (excluding the portfolio premium), finds no portfolio premium is justified, and applies an 18.7% discount for the minority holding. No £30m working capital deduction is made. Adjustments for breaches of...

Citation
[2019] EWHC 873 (Ch)
Parties
Petitioner: Estera Trust (Jersey) Limited; Petitioner: Herinder Singh; Respondent: Jasminder Singh; Respondent: Verite Trust Company Limited; Respondent: Jemma Trust Company Limited; Respondent: Edwardian Group Limited; Respondent: Jasminder Singh and Herinder Singh (as trustees of the English Trusts)
Jurisdiction
England and Wales
Judgment Date
08 April 2019
Procedural Posture
Company/shareholder Petition (unfair Prejudice) / Valuation and Determination of Price Following Liability Judgment
Outcome
Petitioners' valuation approach substantially upheld; price for shares determined per judgment formula and directions.
Legal Topics
Unfair Prejudice, Share Valuation, Minority Shareholder Rights, Fiduciary Duties, Remedies for Breach of Duty
Company Law Equity and Trusts Valuation Unfair Prejudice Share Valuation Minority Shareholder Rights Fiduciary Duties Remedies for Breach of Duty

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Parties

Estera Trust (Jersey) Limited

Petitioner

Herinder Singh

Petitioner

Jasminder Singh

Respondent

Verite Trust Company Limited

Respondent

Jemma Trust Company Limited

Respondent

Edwardian Group Limited

Respondent

Jasminder Singh and Herinder Singh (as trustees of the English Trusts)

Respondent

Procedural Posture

Company/shareholder Petition (unfair Prejudice) / Valuation and Determination of Price Following Liability Judgment

Legal Issues

  1. 1 What is the fair price to be paid for the petitioners' minority shareholding in Edwardian Group Limited?
  2. 2 How should the 'marriage value' be calculated when shares are combined into a controlling block?
  3. 3 Should a portfolio premium be applied to the hotel asset valuations?

Ratio Decidendi

The price payable for the petitioners' shares is the market value of their holding plus 50% of the marriage value released by combining their shares with those of the controlling shareholder, calculated as A + 0.5*(C-(A+B)), where A is the market value of the petitioners' shares, B is the value of JS's holding, and C is the value of the combined holding. The C tranche must be valued as an aggregate holding, not as a sum of parts. The court prefers the petitioners' expert's hotel valuations (excluding the portfolio premium), finds no portfolio premium is justified, and applies an 18.7% discount for the minority holding. No £30m working capital deduction is made. Adjustments for breaches of...

Court Disposition

Petitioners' valuation approach substantially upheld; price for shares determined per judgment formula and directions.

Orders

  • JS and Edwardian Group Limited must purchase the petitioners' shares at the determined price, calculated as A + 0.5*(C-(A+B)), using the petitioners' expert's hotel valuations (excluding portfolio premium), with an 18.7% minority discount, and including notional asset adjustments for breaches of duty.
  • No portfolio premium to be applied.