4.4.7.2 Valuation date

As the Bennett v. Bennett case shows, not only different valuation methods but also different dates for a valuation can cause the results to vary greatly. 1 It was agreed in this case that there are three options for the valuation date: 1) 30 June 1997 — the date when Paul Bennett, a minority shareholder with a 30 per cent shareholding, lelt the company Abtech as a director, 2) 23 February 2000 — the date the petition was filed onder section 459 of the Act, 3) 9 May 2002 — the date when the purchase order was made. According to the suggested dates, the petitioner's shareholding was valued respectively at 540,777, 361,000 and 334,250 pounds. These numbers are far apart. Consequently, the court in the UK is also faced with the issue of deciding which date is a reasonable date for the valuation. Lord Danning and Judge Vinelott proposed that the petition date should be the valuation date because the petitioner stood out to sue against the unfair prejudicial conduct on that day, and the basis for cooperation was gone.2 Later, by weight of precedents, the law on the date of valuation was reviewed and summarized in the decision of the Court of Appeal in Profinance v. Gladstone,3 and the date of the purchase order was recommended as the presumptive valuation date:

In the Bennett v. Bennett case, the court adopted the presumption suggested above, and the particular facts in this case also supported such a choice decisively. In this case, the date of valuation of the petitioner's shares was the date of the purchase order because after he left the board of the company A, the petitioner, a minority shareholder with a 30 per cent shareholding, was engaged by a competing business to assist the competing business with his inside knowledge of A's customers, so this affected the profitability of company A. Consequently, the petitioner's conduct since he had left A made it unfair to A to choose an early valuation date.4 The overriding rule here is, as in the valuation method: to ensure that the minority receives fair value on a case by case basis. An earlier valuation is sometimes better if the miscount has reduced the value of the company. At times, a later valuation date may be better if the minority was excluded from sharing in the new plans or potential profits, while the company's value is on the rise. Courts generally reject the average of a twostage valuation, however, because the objective in a valuation should be "economy and expedition, even if this carries the possibility of a rough edge for one side or the other (and both parties in this respect take the same risk) compared with a more elaborate procedure".5

As stated in the review of Profinance Trust SA v. Gladstone: "the general trend of authority over the last 15 years appears to us to support that (the date of the purchase order) is the starting point," the date of valuation is a matter of discretion. Robert Walker LJ has summarized some indications given by previous authorities that an earlier date may be appropriate in the following circumstances:6

In sum, the overriding principle is the same as onder the oppression remedy in the US, that the price must be fair on the facts of the particular case. But the two jurisdictions do not share the same starting point. In the US, the presumption is the petition date, whereas in the UK, it is the date of the purchase order. Since there is no hard and fast rule; any presumption can be departed from based on the special circumstances of a case. What really matters, therefore is the advantages and disadvantages of each option,7 which are then combined with the facts of the case to achieve a fair result.