Court of Appeal—fundamental principle of shareholding valuation (Chilukuri v RP Explorer)

Article summary

DR analysis: In overturning the judge’s valuation of over $US 5 million for a disputed shareholding, the Court of Appeal reiterated the fundamental principle of valuation: ‘that things are to be taken as they are in reality on the valuation date, except to the extent that the exercise requires a departure from reality’. While accepting that their decision may appear to fall short of doing subjective justice between the parties, the Court of Appeal did not hesitate in replacing the judge’s substantial valuation with an award of nominal damages only, on the basis that, on a proper valuation, it was difficult to imagine any reasonably prudent and well-advised prospective purchaser paying anything for the disputed shareholding.