Gillatt v Sky Television [2000] 1 All ER (Comm) 461
Clause requiring valuation by accountant essential and integral to contract
Facts
The respondent (S) transferred shares in a private company (TAS) to a wholly owned subsidiary. The appellant (G) was the founder of TAS. A contract was made in relation to the shares under which G (by virtue of his sole ownership of a company, M) was entitled to 55% of the market value of TAS.
Issues
The contract provided for the determination by an independent chartered accountant of the share value. G made a claim against S which was dismissed on the basis that he had failed to appoint an accountant. The court held that the requirement to appoint an accountant was an essential and integral part of the contract and the court could not intervene. G appealed. On appeal, G relied on the case of Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 and argued that the mechanism for the ascertainment of the purchase price was a subsidiary and non-essential part of the contract.
Decision/Outcome
The Court of Appeal dismissed G’s appeal. The ordinary meaning of the relevant clause suggested that valuation by an accountant was an essential and integral part of the definition of the payment to which M (and therefore G) was entitled on the sale of the shares in TAS. The decision as to the most appropriate basis of valuation was within the discretion of the appointed accountant. Accordingly, valuation by the accountant was not simply a fall-back mechanism in the case of dispute resolution. This was not a case where the mechanism for the ascertainment of the purchase price had broken down as between the parties and therefore the case of Sudbrook should be distinguished.
283 words
Updated 19 March 2026
This case summary remains accurate. Gillatt v Sky Television Ltd [2000] 1 All ER (Comm) 461 is a Court of Appeal decision that has not been overruled or materially affected by subsequent legislation or case law. The legal principles described — concerning when a contractual valuation mechanism is essential and integral rather than merely subsidiary, and the continued application of Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 — remain good law. The distinction drawn between cases where a valuation mechanism has broken down and cases where it simply has not been invoked continues to be applied by courts when construing price-determination clauses in contracts. No statutory changes have altered the underlying common law position on this point. The summary is suitable for general reference, though students should note that the precise construction of any given clause will always depend heavily on its particular wording.
