Key Facts
- •Mr. Wells, a minority shareholder in Transwaste Recycling and Aggregates Ltd (TRAL), sought to sell his shareholding.
- •A valuation by TRAL's auditor, Mr. Clark, was disputed by Mr. Wells.
- •Mr. Wells issued a Petition under s.994 Companies Act 2006 claiming unfair prejudice.
- •The court found Mr. Wells had been unfairly prejudiced due to Mr. Clark's failure to use up-to-date information in his valuation.
- •A new valuation was ordered, with September 2015 as the valuation date.
- •The court considered whether to award Mr. Wells interest on the purchase price for the delay in payment.
Legal Principles
In successful s.994 Companies Act 2006 cases, awarding interest (or quasi-interest) is linked to the valuation date of the Petitioner's shareholding.
Case law
The general rule is that a Petitioner is not entitled to pre-judgment interest if they have been the owner of the shares and entitled to derive value from them.
Elliott v. Planet Organic Ltd [2000] BCC 610
The general position does not express an invariable rule; in some cases, it may be appropriate to award the equivalent of pre-judgment interest under s.994.
Profinance Trust SA v. Gladstone [2001] EWCA Civ. 1031
Fairness dictates analysis of who is responsible for delays in payment, and an assessment of culpability.
This case
Outcomes
Mr. Wells was awarded quasi-interest on the eventual purchase price of his shareholding.
Mr. Wells was deprived of the use of the purchase price due to delays caused by both parties; the court sought a fair middle ground.
Quasi-interest was awarded for the period between April 2016 and June 2018.
This period represents the estimated time it would have taken to resolve the valuation issue if Mr. Wells had not pursued other claims that ultimately failed.
The interest rate was set at 1% above the Bank of England base rate.
This was chosen due to the lack of evidence presented by Mr. Wells regarding a specific rate and to be cautious.