Barclays Bank Plc v Christie Owen & Davies Ltd (t/a Christie & Co) [2016] EWHC 2351 (Ch)

“In my view, had the Hypothetical Sanctioner known the true combined market value of the Great Yarmouth Arcades, he would not have sanctioned the Treasury Loan of £1.9 million. As set out above … the total lending by the Bank to the Company (including the Treasury Loan) was to be £2,703,000. On the basis of a combined security value of £3.2 million (as opposed to £4.2 million) the Bank’s total lending would have had a loan to value ratio of approximately 84% (£2,703,000 million divided by £3.2 million x 100). This was 17% more than the 67% loan to value ratio limit set out in Mr Cox’s sanction decision. Therefore this would not have been sufficient security for the Bank’s total lending to the Company.” (4) Mr Mark Dembicki, a bank manager employed by Barclays, who was its relationship manager with the Borrower from January 2007 until 8 October 2010. He gave a detailed account of the history of his dealings with the Thurstons, based in large part on the contents of contemporary documents which I rehearse below. His witness statement included evidence to exactly the same effect as Mr Sturt’s evidence quoted above, as well as the following further evidence (at [186]-[188]): “The sole purpose of the Treasury Loan was to enable the Company to purchase the Flamingo. The purchase price of the Flamingo was £1.6 million and a further sum of £200,000 was required in order to make the necessary alterations and improvements to combine the Flamingo with the Circus Circus Arcade and the Golden Nugget Arcade. In these circumstances, it is also highly unlikely that the Bank would have considered and agreed to a loan application for a lesser sum of money or that the Company would have sought a loan for a lesser sum. This is primarily because the Company did not have sufficient funds available to it at that time, and those funds would have needed to be in the region of £559,000, to contribute towards the purchase price of the Flamingo. If the purchase of the Flamingo was no longer viable, the Bank would not have lent to the Company by way of an equity release in respect of 21-23 Marine Parade and, in any event, it is highly unlikely that any such loan application would have been made by the Company as its sole motivation for seeking a loan from the Bank in 2007 was to enable the purchase of the Flamingo.”

“In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

“Using a multiplier of 5 and the net profit gives the following values: for 2004, £2.2 million; 2003, £2.35 million; 2002-2004 £2.13 million; and 2003-2004, £2.3 million. Assuming 2005 as a whole will be 11% down on 2004 gives a value of £2 million and 2003-2005 £2.08 million and 2003-2005 (sic) £2.09 million”

“Whilst I have requested this increase through to a review in April 07, this will be the catalyst for me to fully review all facilities now as I am looking to re-structure the existing overdrafts for Circus Leisure and the Golden Nugget, which effectively act as loans, together with some of the Thurston UK o/d hardcore to commercial mortgage”

“Seasonal repayments of Capital & Interest totalling £9,260.89 in the months of April, May, June, July, August and September, commencing April 2007”

“Request for new commercial mortgage of £1.8m to assist with the purchase of a further amusement arcade (Flamingo) for £1.6m and £200k re: improvements and alterations to the property”

“Mark, thank you for this application which we have discussed. New facilities sanctioned subject to the following conditions: 1) Satisfactory prof. valuation of the security portfolio including new acquisition. Valuer to confirm value of Flamingo on acquisition and post refurb spend … Copies of valuations to us. 2) Loan of £1.9M to be available which includes re-scheduling £100k of hardcore o/d. Term of 17 years including 2 yr CRH. 3) Second charge on PDH to be taken to support Thurston’s PG. 4) Special Condition: A reduction in company borrowing of £300k is to be achieved within 12 months of initial loan drawdown from sale of property in Spain. 5) Max LTV of 67% or lower dependent on valuations. 6) Min. of £1.6m of loan to be hedged for min. 10 years. 7) Keyman cover of min. £250k each to be pursued for John and Kim Thurston”

“The Borrower shall ensure that the maximum total borrowing of Thurston UK Limited shall not at any time exceed 67% of the Property Value of the four properties held (Loan to Value Percentage)”

“They appear to have little regard for the implications of their investment spend on operational cash flow and need to be reined in from their apparent spending spree”

“Whilst there is no doubt that the value of our security has been affected by trading and economic conditions, there is a very dependent link between the property and the business in maintaining this value. The property would simply have very little alternative use given its location … Thus for now, it is in our best interest to continue to support the business until a comprehensive IBR is concluded.”

“As the business is unsustainable at current levels, it seems that a sale is inevitable. There are serious concerns over management abilities which does not promote any debt forgiveness possibilities”

“It has frequently been observed that the process of valuation does not admit of precise conclusions, and thus that the conclusions of competent and careful valuers may differ, perhaps by a substantial margin, without one of them being negligent: see for instance the often quoted judgment of Watkins J in Singer & Friedlander Ltd v John D. Wood [1977] 2 EGLR 84 at 85G; and the House of Lords in the Banque Lambert case [1997] AC 191 at 221F–G. That has led to the courts adopting a particular approach to claims of negligence on the part of valuers. In the general run of actions for negligence against professional men “it is not enough to show that another expert would have given a different answer … the issue … is whether [the defendant] has acted in accordance with practices which are regarded as acceptable by a respectable body of opinion in his profession: Zubaida v Hargreaves [1995] 1 EGLR 127 at 128A– per Hoffmann LJ, citing the very well-known passage in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 at 587.”

“There is, as I have said, a permissible margin of error, the ‘bracket’ as I have called it. What can properly be expected from a competent valuer using reasonable care and skill is that his valuation falls within this bracket.”

“It would not be enough for Craneheath to show that there have been errors at some stage of the valuation unless they can also show that the final valuation was wrong.”

“the plaintiff will by that stage have discharged an evidential burden. It will be for the defendant to show that, notwithstanding that the valuation is outside the range within which careful and competent valuers may reasonably differ, he nonetheless exercised the degree of care and skill which was appropriate in the circumstances.”

“145. Before considering the evidence relating to valuation, it is necessary to consider the question of "range". In this context, there is a relatively large body of authority that addresses the approach to be adopted by the Court when considering the question of negligent valuation. These authorities are not always easy to reconcile. Lewison J considered the issue in Goldstein v Levy Gee [2003] PNLR 35 and his approach has subsequently been followed in at least two further cases: Dennard v PricewaterhouseCoopers LLP[2010] EWHC 812 (Ch) and K/S Lincoln v CB Richard Ellis Hotels Ltd[2010] PNLR 31 (TCC). From these, the following propositions can be drawn: i) The process of valuing real property has strong subjective elements; it is an art not a science and not every error of judgment amounts to negligence. This leads to the concept of 'the bracket', or "the permissible margin of error": see per Watkin J. in Singer & Friedlander v John D Wood & Co [1977] 2 EGLR 84 at 85G-H and 86. "Pinpoint accuracy in the result is not, therefore, to be expected by he who requests the valuation. There is, as I have said, a permissible margin of error, the 'bracket' as I have called it. What can properly be expected from a competent valuer using reasonable care and skill is that his valuation falls within this bracket." ii) It is a necessary pre-condition to liability that the final valuation figure is shown to be "wrong", that is, 'outside the bracket': see per Buxton LJ in Merivale Moore plc v Strutt & Parker [2000] PNLR 498 at 515-517. "A valuation that falls outside the permissible margin of error calls into question the valuer's competence and the care with which he carried out his task: ibid. But not only if, but only if, the valuation falls outside that permissible margin does that enquiry arise...To find that his valuation fell outside the "bracket" is, as held by this court in Craneheath and also, I consider, by the House of Lords in Banque Lambert, a necessary condition of liability, but it cannot in itself be sufficient." iii) Where the Court is considering whether a valuation in itself is negligent, the claimant must normally show, not only that the valuer fell in some way below the standards to be expected of a reasonably competent professional, but also that the valuation fell outside the range within which a reasonably competent valuer could have valued the asset. If the valuation is within the range, then the valuation will not be found to have been negligent even if some aspect of the valuation process can be criticised as having fallen below reasonably competent standards. iv) In each case the Court must assess what it regards as being the competent valuation and what it regards as the being the size of the permissible range. In each case, both are findings that will depend on the particular facts of the case. The assessment of range should not be approached mechanistically. v) Where the valuation is made up of a number of different aspects, a different methodology may have to be adopted in relation to different aspects because of the nature of the particular valuation process with which the Court is dealing. In general, the bracket should be assessed by arriving at a bracket for each of the variables rather than only for those variables that are alleged (or found) to have been negligently assessed: see Vos J in Dennard at paragraph 91 following Lewison J's interpretation of Merivale Moore at paragraph 63 of his judgment in Goldstein. vi) As summarised in K/S Lincoln v CB Richard Ellis at paragraph 183, for a standard residential property, the margin of error may be as low as plus or minus 5 per cent; for a valuation of a one-off property, the margin of error will usually be plus or minus 10 per cent; if there are exceptional features of the property in question, the margin of error could be plus or minus 15 per cent, or even higher in an appropriate case. However, a range of 14.5% to 23% has been described as "absurd" (see Staughton LJ in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd [1996] 1 EGLR 119 @ pp 120/121). vii) Even if the valuation is outside the range, the professional may escape liability if he can prove that he exercised reasonable skill and care. If the valuation is found to fall within the range, the claimant will still be entitled to succeed if it can demonstrate that it has suffered loss as a result of negligent advice given in the course of, or in addition to, the valuation process. i) The process of valuing real property has strong subjective elements; it is an art not a science and not every error of judgment amounts to negligence. This leads to the concept of 'the bracket', or "the permissible margin of error": see per Watkin J. in Singer & Friedlander v John D Wood & Co [1977] 2 EGLR 84 at 85G-H and 86. "Pinpoint accuracy in the result is not, therefore, to be expected by he who requests the valuation. There is, as I have said, a permissible margin of error, the 'bracket' as I have called it. What can properly be expected from a competent valuer using reasonable care and skill is that his valuation falls within this bracket." ii) It is a necessary pre-condition to liability that the final valuation figure is shown to be "wrong", that is, 'outside the bracket': see per Buxton LJ in Merivale Moore plc v Strutt & Parker [2000] PNLR 498 at 515-517. "A valuation that falls outside the permissible margin of error calls into question the valuer's competence and the care with which he carried out his task: ibid. But not only if, but only if, the valuation falls outside that permissible margin does that enquiry arise...To find that his valuation fell outside the "bracket" is, as held by this court in Craneheath and also, I consider, by the House of Lords in Banque Lambert, a necessary condition of liability, but it cannot in itself be sufficient." iii) Where the Court is considering whether a valuation in itself is negligent, the claimant must normally show, not only that the valuer fell in some way below the standards to be expected of a reasonably competent professional, but also that the valuation fell outside the range within which a reasonably competent valuer could have valued the asset. If the valuation is within the range, then the valuation will not be found to have been negligent even if some aspect of the valuation process can be criticised as having fallen below reasonably competent standards. iv) In each case the Court must assess what it regards as being the competent valuation and what it regards as the being the size of the permissible range. In each case, both are findings that will depend on the particular facts of the case. The assessment of range should not be approached mechanistically. v) Where the valuation is made up of a number of different aspects, a different methodology may have to be adopted in relation to different aspects because of the nature of the particular valuation process with which the Court is dealing. In general, the bracket should be assessed by arriving at a bracket for each of the variables rather than only for those variables that are alleged (or found) to have been negligently assessed: see Vos J in Dennard at paragraph 91 following Lewison J's interpretation of Merivale Moore at paragraph 63 of his judgment in Goldstein. vi) As summarised in K/S Lincoln v CB Richard Ellis at paragraph 183, for a standard residential property, the margin of error may be as low as plus or minus 5 per cent; for a valuation of a one-off property, the margin of error will usually be plus or minus 10 per cent; if there are exceptional features of the property in question, the margin of error could be plus or minus 15 per cent, or even higher in an appropriate case. However, a range of 14.5% to 23% has been described as "absurd" (see Staughton LJ in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd [1996] 1 EGLR 119 @ pp 120/121). vii) Even if the valuation is outside the range, the professional may escape liability if he can prove that he exercised reasonable skill and care. If the valuation is found to fall within the range, the claimant will still be entitled to succeed if it can demonstrate that it has suffered loss as a result of negligent advice given in the course of, or in addition to, the valuation process. 146. Whatever the range may be, the Court must still form a view as to what the correct valuation would have been (i.e. the figure which it considers most likely that a competent valuer would have put forward). If that "correct valuation" falls outside the appropriate range of the actual valuation, damages will be assessed by reference to that figure. It follows that in such circumstances the damages should not be limited to the excess over the highest valuation which would not have been negligent. The reason for this approach was explained by Lord Hoffman in Banque Bruxelles S.A v Eagle Star [1997] AC 198, at p221E-222A. This approach has been criticised. In particular, it has been suggested that this method of assessing damages diverges from the normal rule (at least in contract cases) that the party in breach of contract is assumed to have performed the contract in the manner most favourable to himself and that the application of this method may give rise to a conclusion which is not "comfortable": see Lewison J in Goldstein at paragraph 46 of his Judgment. However, as acknowledged by Lewison J, the ruling of the House of Lords is clear and is supported by a line of authority.”

“My Lords, in 1990 the appellant advanced £1,050,000 on the security of land valued by the respondents at £1.5m. The advance represented 70 per cent. of valuation. The judge found that the land had been negligently overvalued, and that the true value of the land at the date of the advance was only £1m. In 1994, following a catastrophic collapse of the property market, the appellant realised its security for £435,000, thereby incurring a loss of £615,000. After taking into account interest paid by the appellant and payments received from the borrower together with a sum of £40,000 which the appellant conceded was deductible because of a failure on its part to mitigate its loss, the overall loss on the transaction amounted to £611,748. The amount of the overvaluation (£500,000) was less than this, and accordingly this latter sum would have represented the amount of damages recoverable by the appellant in the absence of contributory negligence on its part: see Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 and Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627. The judge made two findings of contributory negligence. He found that the appellant was negligent in making the loan without having obtained from the borrower information required by its own form. The judge also found that the appellant was imprudent in advancing as much as 70 per cent. of valuation. He did not make any finding on the amount which a prudent mortgage lender would have advanced, whether 65 per cent. or 60 per cent. of valuation, but he expressed himself in terms which showed that, of the two items of contributory negligence, he considered the overlending to be much the more potent cause of loss. Having found that the appellant had itself contributed to the loss, the judge applied a broad brush to the assessment of damages. Taking both findings of contributory negligence together, he assessed their combined contribution to the loss at 20 per cent. There is no appeal from this assessment, though it is to be observed that, in respect of the second and more serious finding of contributory negligence, there was no need to apply a broad brush; the consequences of advancing too high a proportion of valuation can be precisely calculated. 5 per cent of £1.5m is £75,000; for every 5 per cent of valuation which the appellant advanced in excess of what was prudent it increased its loss by that amount. Having thus found that 20 per cent of the loss or damage (£611,748) which the appellant had suffered as a result of the transaction was the result of its own fault, the judge awarded damages of £489,398. This figure represented 80 per cent of £611,748 and, being less than the amount of the overvaluation, represented a loss which was entirely within the scope of the respondents' duty of care.”

“It is necessary to recapitulate what this House has laid down in relation to the assessment of damages in cases of the present kind. Two calculations are required. The first is a calculation of the loss incurred by the lender as a result of having entered into the transaction. This is an exercise in causation. The main component in the calculation is the difference between the amount of the loan and the amount realised by enforcing the security. The second calculation has nothing to do with questions of causation: see Nykredit at p. 1638 per Lord Hoffmann. It is designed to ascertain the maximum amount of loss capable of falling within the valuer's duty of care. The resulting figure is the difference between the negligent valuation and the true value of the property at the date of valuation. The recoverable damages are limited to the lesser of the amounts produced by the two calculations. It is to be observed that neither amount is an element or component of the other. Either may be the greater, for they are the results of completely different calculations. In mathematical terms, they bear the same relationship to each other as a-b does to c-d. The figure produced by the second calculation is simply the amount of the overvaluation. It is not the loss or any part of it, and cannot be equated with the amount of the loss sustained by the lender in consequence of the overvaluation. The two are the same only in a case where the lender has advanced 100 per cent. of valuation. Section 1(1) of the Law Reform (Contributory Negligence) Act 1945 applies "where any person suffers damage as the result partly of his own fault and partly of the fault of another". The appellant submits that, as a result of the respondents' negligent overvaluation, it suffered damage of £500,000, and that it is inappropriate to reduce the damages in order to reflect fault on its part which played no part in their breach of duty. Now if the premise were correct, viz. that the £500,000 represented all or any part of the damage suffered by the appellant, then the conclusion would follow. But, as I have already pointed out, it is not correct. The £500,000 is merely the amount of the overvaluation. The damage which the appellant suffered as a result of the transaction which they entered into in consequence of the overvaluation is not £500,000 but £611,748. This is the damage referred to in section 1(1). This damage was due to the insufficiency of the security. The sufficiency of any security, however, depends on a combination of two factors: the value of the security and the amount of the advance. If the respondents had given a lower valuation, or if the appellant had lent a lower proportion of valuation, then in either case the appellant's loss would have been less. Accordingly, the loss of £611,748 which the appellant suffered was partly as a result of its own fault and partly of the fault of the respondents within the meaning of section 1(1) of the Act. … Where the lender's negligence has caused or contributed directly to the overvaluation, then it may be appropriate to apply the reduction to the amount of the overvaluation as well to the overall loss. Where, however, the lender's imprudence was partly responsible for the overall loss but did not cause or contribute to the overvaluation, it is the overall loss alone which should be reduced, possibly but not necessarily leading to a consequential reduction in the damages. When the consequences of the lender's imprudence cannot be calculated, the judge will have to do the best he can to assess the parties' respective contributions. But the court should not speculate when it can calculate.”

“The Experts are agreed that they would typically expect the Arcades to be valued by reference to EBITDA but that in accordance with RICS Guidance on Comparable Evidence, other suitable methodologies or combinations thereof can be used if there is evidence that they are used in the market or if there is better available evidence which might support a more robust valuation on such other basis. The Experts are agreed that a valuer should seek to obtain the best evidence available and weight it accordingly.”

“The task of the valuer is to assess the fair maintainable level of trade [hereafter, for short, “FMT”] and future profitability that can be achieved by a Reasonably Efficient Operator of the business upon which a potential purchaser would be likely to place an offer”

“I have been assisted in the research and collation of information for the preparation of this Report by Simon Hooper MSc MRICS who is an Associate Director at Lambert Smith Hampton in their Valuation Division and he has worked under my supervision.”

“You must…State if any other individual or party has carried out any examination, measurement, test, experiment or survey that you have used for your expert witness report; their relevant experience, knowledge, expertise and qualifications; the nature, extent and methodology of the activity; and whether or not the work was carried out under your supervision. Explain any implication on the evidence.”

“During the course of your enquiries you may be made aware that other documents exist which might be of relevance but which might not be available. In such circumstances, where applicable, you may need to consider taking further action to secure the necessary factual information.” (6) Mr White failed to carry out adequate enquiries of the resources available to him. For example, the Flamingo 2005 sales brochure contained an extract of an ES valuation report dating from 2002, but Mr White did not ask Mr Hooper, who presented this brochure to him, if he could obtain the complete ES 2002 report. Mr White would have had access to this report in his department at ES up to at least until September 2014 when he left to set up his own business. The revelation of these matters, and taking into account that Mr White would probably have supervised Mr Hooper for this 2002 valuation of the Flamingo, is directly contradictory to the assertion in paragraph 3.1 of Mr White’s statement that he “initially” dealt with the Arcades in February 2010. (7) Mr White did not consider the significance of the George St valuations conducted by ES in 2004/2005, although he was content to rely on Mr Hooper’s research which led to him relying on the 2005 sale transaction of that property as his other comparable for the purposes of the present claim. Mr White admitted he had not asked Mr Hooper about these reports before the details of the George St comparable were questioned by Mr Berridge, although he could have done so. Mr White accepted he could have got hold of these reports earlier, and that he did not know if in fact Mr Hooper had referred to or relied upon them. The significance of those reports, and the information contained in them, and the need to produce them, should have been obvious to both Mr White and Mr Hooper. (8) As a result of this attitude, the Court cannot be convinced that Mr White and Mr Hooper have properly searched for or provided all the relevant information that would have been available to them, so as to be able to confirm (as Mr White nevertheless does by his expert’s declaration) that: “…all facts which I regard as being relevant to the opinions which I have expressed and that attention had been drawn to any matter which would affect the validity of those opinions”

“sometimes there is less evidence than others and sometimes you have to take a view”

“This is a very direct approach which reflects the usual position that evidence of turnover is significantly more readily available in the market than detailed evidence of business accounts. Turnover is the key determinant of value because profit expressed as EBITDA is a product of the estimation of REO/FMT turnover which is always the starting point in any valuation of a trading property. Operators can apply a “rule of thumb” percentage profit to turnover in order estimate likely EBITDA and from that, they can then calculate a provisional value for the business.”

“This makes the devaluation of the sale inherently unreliable as with hindsight, the 2005 Purchaser may not have realised that the level of trade as achieved by the vendor was unachievable in his hands and had he known that turnover would reduce to a maintainable level of £475,000, I cannot assume that would he have paid £2.1m for it.”

“I am also influenced by the evidence of a formal Impairment review undertaken by the 2005 purchaser which resulted in a substantial write off of goodwill which is evidence that the purchaser may have overpaid for the asset.”

“… there was an actual arm’s length sale at £2.1m and not merely a valuation by GVA Grimley … logically [the 2005 purchaser] must have treated the £2.1m sale price as representing a multiple of profit which was actually achievable by a REO. No rational person would pay a sale price which they actually believed was inflated by personal goodwill or by overtrading and which they would never be able to reproduce. Therefore the ratio between the sale price and the EBITDA of £365,000 will devalue to a typical multiplier, even if ultimately it transpires that there was overtrading or personal goodwill, at which point there will be a proportionate correction to both multiplicand and capital value. So long as the EBITDA and sale price are perceived to represent a REO, a sale may happen, the ratio will hold true, and for the purposes of deriving an EBITDA multiplier, it is only the ratio that matters.”

“… I do not place significant weight upon the overall multiplier adopted as I now know that the arcade required refurbishment and that the night club covenant was very poor. My underlying concern about the comparability of this property to the subject Arcades remains in that this is a dual use property which incorporated a high risk significant rental stream and the subject properties are principally arcades which did not require refurbishment with ancillary accommodation over only which offered a materially more secure income stream. For these reasons I do not consider Hastings to be a good comparable.”

“Valuing a property that has just been sold Where the sale of a property has just been agreed, it might be thought that there is little scope for the valuer's art; that the value is demonstrated by the sale price. But this will only be so if the property has been freely and competently marketed on the open market. The possibility will always exist that a seller may for one reason or another not have achieved the full market value of his property, or that a buyer may have been prevailed on to agree to pay more that the market value of the property. For these reasons a bank that is requested to advance money for the purchase of a property on the security of the property to be purchased will normally require a valuation of the property in question. All the experts were agreed that where a property has just been sold, the sale is potentially the most cogent evidence of the open market value of that property. Provided that the property was properly exposed to the market and competently marketed, the market price will demonstrate the market value. The experts were also agreed that the fact that the property has just been sold does not relieve the valuer of the need to consider comparables. The conclusion that the valuer draws from comparables will be part of the material upon which he bases his valuation. If the comparables suggest a value that differs significantly from the sale price agreed, the valuer has to consider all the evidence in order to decide why the discrepancy exists.”

“I do therefore place significant weight on the 2007 sale of the Flamingo as being an arm’s length transaction between parties with knowledge of the arcade market and I also consider that it is supported by the earlier 2005 sale outcome. In my opinion both sales support the Christie valuation figure for the Flamingo of £1,500,000.”

“It was the job of the valuer to make sure that their valuation reflected the market value, not the agreed purchase price offered by the adjoining owner. I have had a number of occasions where I have done a valuation which has been significantly lower than the agreed price, often resulting in a renegotiation between the parties to reflect the valuation reported.”

“I consider the 2007 sale to have substantially more weight than the 2005 sale because it is evidence of actual market value at the valuation date at a Fair Maintainable level of turnover whereas the 2005 sale was predicated upon a turnover very substantially in excess of that which is agreed between the Experts as fairly maintainable in 2007. The actual sale date also precedes the relevant valuation date by two years. The 2005 sale is not truly comparable because it was predicated upon a much higher level of turnover.”

“In this case, the general “rule of thumb” for this type of leisure asset is that operators expect to achieve an average 50% net profit margin and expect to sell at an EBITDA multiplier of 6.”

“It is not in dispute that [CCGN] has a significantly greater trading area and has a much higher REO/FMT of £850,000 than Flamingo (£475,000). Whilst each individual expenditure head will not exactly arithmetically reflect this differential, I consider that as a general cross check each individual expense for [CCGN] might be expected to be higher than for Flamingo by an amount which can be expected to bear some relationship to the level of turnover which is 79% higher. [CCGN] also has 328 machines which is the primary income source whereas the smaller Flamingo has 181 machines and again [CCGN] has 55% more machines. This measure can be applied as a “rule of thumb” test on each area of disagreement when undertaking this cross check.”

“Yes, in 2007, we were in the middle of the subprime boom, banks were lending money to people without even checking if they had a pulse: just give them the money.”

“So do you accept that if the bank hadn’t been willing to lend them the whole of the purchase price, they could have made up a portion of the purchase price themselves?”

“Well, it’s possible, it’s just pure speculation, I’ve no idea.”

“Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage”

“… if there were doubts over the integrity of the Thurstons the facilities would not have been provided.”

“A reduction in company borrowing of £300k is to be achieved within 12 months of initial loan drawdown from sale of property in Spain”

“In the circumstances, a reasonably competent lender might have asked for a certified statement [i.e. of assets and liabilities, not income] if there were doubts over the integrity of the customer, however, if there were doubts over the integrity of the Thurstons the facilities would not have been provided.”