For the purposes of the hypothetical sale, the valuer must envisage that there is an imaginary willing seller. In other words someone who is not anxious or reluctant to sell and, although happy to remain a shareholder, is prepared to sell if offered a reasonable price. It emerges from the case law that this means the best price obtainable.
Winter (Sutherland's Trustees) v IRC [1963] AC 235:
"(s.7(5))... simply prescribes, as the criterion for value, price in the open market as between a willing seller and a willing buyer which is a familiar basis of valuation."
Lord Guest at page 369
In re Crossman HL [1937] AC 26:
"If the duty of the Commissioners is, as I think, to estimate the price the property as at the time of the deceased's death would fetch in the open market, if it were to be offered for sale, it is unnecessary to inquire by whom the property would hypothetically have to be offered. "
Lord Blanesburgh at page 50
In re Lynall CA [1969] 3 WLR 984:
"Of course, the hypothetical vendor may be a director, but he equally well may not be a director. One must, therefore, only endow him with the characteristic which must necessarily belong to all hypothetical vendors, namely, that of owning the block of shares in question. "
Cross L J at page 995
"It is true that the so called willing vendor is a person who must sell: he cannot simply call off the sale if he does not like the price...."
Harman L J at page 986
(Shares and Assets Valuation (SAV) does not accept that this means a forced sale, but only that the sale must take place for the purposes of the statutory hypothesis, and it cannot be called off simply because one party cannot get his price.)
Salomon v Commrs of Custom & Excise [1966] 2 AER 340:
"In my view, the notional seller... is, as is contended on behalf of the Commissioners, a seller whose object is to get the highest available price."
Megaw J at page 345
Ellesmere (Earl) v IRC [1918] 2 KB 735:
"... price is the best possible price that is obtainable."
Sankey J at page 740
The notional purchaser is also a willing party to the transaction who is judicially recognised as being a prudent person who would not rush into the sale without first obtaining the fullest possible information concerning the company.
In re Crossman HL [1937] AC 26:
"... it appears from the judgement (in the Court of Appeal) that Lord Plender 'did not exclude anybody or include anybody in particular; he considered the matter generally.' In my opinion that is the right way in which to arrive at the value in the open market."
Hailsham L C at page 43
In re Lynall CA [1969] 3 WLR 984
"it is true that the so called willing vendor is a person who must sell ...; but there must be on the other side a willing purchaser, so that the conditions of the sale must be such as to induce in him a willing frame of mind."
Harman L J at page 986
Findlay's Trustees v IRC [1938] 22 ATC 437:
"... the purchaser is a person of reasonable prudence, who has informed himself with regard to all the relevant facts such as the history of the business, its present position, its future prospects and the general conditions of the industry...."
Lord Fleming at page 440
Re Holt [1953] 1 WLR 1488:
"I think the kind of investor who would purchase shares in a private company of this kind, in circumstances which preclude him disposing of his shares freely whenever he should wish ... would be different from any common kind of purchaser of shares on the Stock Exchange, and would be rather the exceptional kind of investor, who had some special reason for putting his money into shares of this kind."
Danckwerts J at page 1501
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