Follow the recipe: Begum v Hossain

An expert detemination case our forensic accounting team worked on

Following a dispute in respect of the Indian restaurant they jointly owned and operated, Ms Begum and Ms Hossain entered into an expert determination process whereby Ms Hossain agreed to purchase Ms Begum’s shareholding at a price determined by an independent valuer.

As is typical in expert determinations, the valuation was to be final and binding on the parties.

Whilst there was no question about the valuer’s expertise or his overall methodology, a subsequent dispute arose because he failed to take into account hand written notes of takings achieved by the restaurant which were not included in its accounts.  These notes were specifically referred to in his instructions.

The Court concluded that, although the hand written takings had not been disclosed for tax purposes, they would have been taken into account by a willing buyer and willing seller in respect of the valuation of the shares.  In failing to consider the hand written takings, the Court concluded that the valuer had materially departed from his instructions and the valuation must therefore be set aside.

Expert determination can be a cost effective and swift dispute resolution tool, particularly in respect of disputes of a technical nature.  That said, it is extremely important to ensure the instructions given to the expert are well considered, clear and agreed between the parties.  Putting the ingredients into the letter of instruction without being explicit as to which need to be used means the end result may not turn out as expected.

Begum v Hossain [2015] EWCA Civ 717

For more information

For more information please contact:
Kate Hart, or call us on:

01483 416232