The Supreme Court has dismissed an appeal by Danbywiske over the valuation of Donegal Investment Group plc’s shares in Elst, leaving in place an order referring the valuation issue back to the High Court.
The appeal concerned the method used to value the shares, and the limits on appellate courts reviewing findings based on expert evidence. The underlying order requiring Danbywiske to buy Donegal’s shares had already been made. The shareholding was ultimately determined to be 30%, and the purchase price was €26,228,571. The valuation judgment under appeal had calculated figures on an assumed 35% shareholding; the difference reflected the stake size, not a separate valuation issue.
In September 2014, the High Court set a price of €30.6 million for a 35% shareholding. It used a market-based approach and applied an EBITDA multiplier of 6.1. The Court of Appeal overturned that price decision in 2016 and remitted the valuation issue to the High Court. Danbywiske then appealed to the Supreme Court.
The Supreme Court said a trial judge may adopt a valuation method that differs from those proposed by the experts, provided the judgment gives a rational explanation grounded in the evidence or logic. Appellate courts must give significant deference to trial judges who heard the expert evidence, while still being able to examine whether the reasons for a finding withstand scrutiny.
The Supreme Court found that the High Court judgment did not adequately explain why the trial judge used a 6.1 multiplier. The figure appeared to come from adjusting a basket of transaction comparables to include Walkro, but the judgment did not explain why that basket was used on its own or how other comparables, including the quoted company Hokuto, were treated. The court said it could not safely infer the reasons for the approach from the judgment or the course of the case.
The Supreme Court therefore upheld the Court of Appeal’s decision to allow the appeal and refer the valuation issue back to the High Court, and dismissed Danbywiske’s further appeal. Its decision addressed the valuation method and reasoning; it did not set a new share price.