Estera Trust (Jersey) Ltd v Singh & Ors [2019] EWHC 2039 (Ch) (26 July 2019)

Estera Trust (Jersey) Ltd v Singh & Ors [2019] EWHC 2039 (Ch) (26 July 2019)

The court refused to order the proposed buy-out structure involving a Jersey NewCo as it constituted aggressive tax avoidance, would unjustifiably interfere with the respondents' rights, and there was no compelling reason in fairness or public policy to compel reluctant parties to enter into such a scheme solely for...

Source-derived case information.

Citation
[2019] EWHC 2039 (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
26 July 2019
Procedural Posture
Minority Shareholder Petition Under Companies Act 2006 S.994 / Post Trial Application for Variation of Buy Out Order (quantum and Implementation)
Outcome
Application refused
Legal Topics
Unfair Prejudice, Minority Shareholder Remedies, Tax Avoidance, Court's Discretion in Structuring Buy Out Orders, Relief Against Mistake
Company Law Tax Law Unfair Prejudice Minority Shareholder Remedies Tax Avoidance Court's Discretion in Structuring Buy Out Orders Relief Against Mistake

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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

Minority Shareholder Petition Under Companies Act 2006 S.994 / Post Trial Application for Variation of Buy Out Order (quantum and Implementation)

Legal Issues

  1. 1 Whether the court should order a buy-out structure designed solely to avoid tax liability for the petitioners
  2. 2 Whether the court has jurisdiction to vary the buy-out structure after judgment but before the order is perfected
  3. 3 Whether the proposed scheme constitutes aggressive tax avoidance

Ratio Decidendi

The court refused to order the proposed buy-out structure involving a Jersey NewCo as it constituted aggressive tax avoidance, would unjustifiably interfere with the respondents' rights, and there was no compelling reason in fairness or public policy to compel reluctant parties to enter into such a scheme solely for the petitioners' tax benefit.

Court Disposition

Application refused

Orders

  • Petitioners' application for a Jersey NewCo structure is dismissed
  • Buy-out to proceed as previously ordered, with short period for petitioners to seek on-shoring clearance for the Lily Trust before completion