New cases suggest British Common Law may be emphasizing 'fairness'

BVWire–UKIssue #2-1
May 7, 2019

case law analysis
buyout, common law, high court, fairness standard

‘Common law is shifting under our feet, so this is an interesting time to do valuations in contentious situations, whether it’s a family or nonfamily situation,’ Andrew Strickland told BVWire—UK recently. Strickland, who follows UK legal decisions carefully in his practice, also spoke on the topic to a group of 80 UK business valuators at last month’s ICAEW business valuation special interest group’s spring meeting. He particularly notes two new High Court cases: Yusef v Yusef and Another [2019] EWHC 90, and McCallum-Toppin and McCallum-Toppin [2019] EWHC 46. The first ‘ground-breaking case has almost shaken me to the core,’ says Strickland, with his usual understated wit. ‘Three brothers run coffee shops in rail stations. The brothers couldn’t work together at all. One of the brothers died, and his widow brought a case that the other brothers were spending excessively,’ he explained. In the end, the court disallowed a buyout discount, ‘and did not even consider whether this was a quasi-partnership.’ Looking to a ‘fairness’ standard, the court found the conduct was unfairly prejudicial not just because of a failure to consider dividends, but also because of excessive director’s remuneration and extensive use of directors’ loan accounts. It concluded a sale at a discounted value would present an undeserved windfall to the purchasing respondents.
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