No. 11578 of 2008
Neutral citation number: [2012] EWHC 1662 (Ch)

IN THE HIGH COURT OF JUSTICE 
CHANCERY DIVISION
COMPANIES COURT

The Rolls Building
Fetter Lane
London EC4A 1NL
Wednesday, 23rd May 2012
Before:

HIS HONOUR JUDGE HODGE QC
sitting as a Judge of the High Court

IN THE MATTER OF ANNACOTT HOLDINGS LIMITED

AND IN THE MATTER OF THE COMPANIES ACT 2006
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B E T W E E N :

	ALLAN ATTWOOD	Petitioner

-  and -

		GEOFFREY MAIDMENT & ORS	Respondents
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Transcribed by BEVERLEY F. NUNNERY & CO
Official Shorthand Writers and Tape Transcribers
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MR. ANDREW CLUTTERBUCK (instructed by Stockler Brunton) appeared on behalf of the Petitioner.

MR. THOMAS GRANT and MR. JAMES SHEEHAN (instructed by Macfarlanes LLP) appeared on behalf of the Respondents.
J U D G M E N T
JUDGE HODGE QC:

1.	This is my third judgment relating to the affairs of Annacott Holdings Limited, petition number 11578 of 2008.  It is divided into seven chapters as follows: (1) Introduction. (2) The Hearing. (3) The Mortgage Borrowings. (4) The Valuation of the Properties. (5) The Valuation of the Shares. (6) Quasi-Interest. (7) Conclusion.  I should, however, make it clear that the content of each separate chapter has informed the judgment as a whole.

CHAPTER 1 - INTRODUCTION
2.	This judgment should be read in conjunction with, and as a sequel to, my two previous judgments on the petition.  In my first extemporary judgment, delivered at the end of a 12-day trial on Friday 29th July 2011 and bearing the neutral citation reference [2011] EWHC 2186 (Ch), I upheld the claims of the petitioner, Mr. Attwood.  He holds 2,500 of the 5,000 issued shares in Annacott Holdings Limited.  I upheld his claim that the affairs of that company had been conducted in a manner that was unfairly prejudicial to his interests.  The effective respondent to the petition was, and is, Mr. Geoffrey Maidment, who is the company’s sole director and holds 2499 of its shares, with the remaining one issued share being held by Mr. Maidment’s sister, Miss Sarah Maidment, who is the other individual (and nominal) respondent to the petition.  

3.	Following a further hearing on 22nd September 2011 I delivered a second extemporary judgment which bears the neutral citation reference [2011] EWHC 3180 (Ch) in which, amongst other matters, I determined the issue of the relief to which Mr. Attwood should be entitled following the successful outcome of his petition.  

4.	By paragraph 1 of my order last September I declared that Mr. Attwood was entitled, by way of relief on the Annacott petition, (i) to have his 2,500 shares in Annacott Holdings Limited (the company) purchased by Mr. Maidment at a price calculated on the basis of the valuation of those shares as at 1st October 2005, with no discount applied to reflect Mr. Maidment’s position as sole director of the company and the lack of control of the company afforded by the fact that Mr. Attwood’s shares are a 50 per cent shareholding; (ii) to be paid by Mr. Maidment a sum of money calculated as if it were interest on the purchase price since 1st October 2005 (therein and hereinafter referred to as “the quasi-interest”).   Paragraph 2 of my order directed that there should be a further hearing to determine, first, a purchase price, and, secondly, the rate at which, and the basis upon which, the quasi-interest was to be calculated, and its amount.  On 7th February 2012 the Court of Appeal (comprising Arden and Moses LJJ) dismissed an application by Mr. Maidment to appeal my substantive decision on the hearing of the unfair prejudice petition, with costs.  

CHAPTER 2 – THE HEARING
5.	This is the hearing directed by paragraph 2 of my order of 22nd September 2011.  At this hearing, Mr. Attwood has been represented (as he was at both hearings last year) by Mr. Andrew Clutterbuck of counsel.  Mr. Maidment has been represented (as he too was last year) by Mr. Thomas Grant of counsel, leading Mr. James Sheehan of counsel.  In paragraph 3 of my September judgment, I had given various directions for the purposes of the instant hearing, including (i) provision for each party to call the expert evidence of one surveyor on the issue of property valuation; (ii) for an accountant to give evidence on the issue of the valuation of Mr. Attwood’s shares as a single joint expert; and (iii) for the parties to file and exchange witness evidence of fact relating to the issue of quasi-interest.  Those directions were supplemented by further directions I made, first, in an email dated 28th February 2012, and, secondly, by an order (made on the court’s own initiative and without a hearing) on 12th March 2012.  

6.	The hearing was listed for three days in London, beginning on Monday 14th and ending on Wednesday 16th May.  In the event, even though the court sat early on two mornings on those days, the evidence and submissions were not concluded until about 4.25 on the afternoon of the fourth day, Thursday 17th May.  Even then, the oral closing submissions of counsel had to be guillotined.  Prior to the hearing beginning, I had received, and read, written skeleton arguments from both parties’ counsel, in each case dated 10th May 2012.  Due to pre-existing official commitments since the court rose on Thursday 17th May, I have been unable to deliver judgment until today, the afternoon of Wednesday 23rd May.  Those commitments have also prevented me from preparing any written judgment; and this oral judgment is less polished than I would otherwise have wished.

7.	By the time this matter came on for hearing, the documentation put before me extended to no less than nine files of papers.  Witness statements had been submitted by Mr. Maidment and his sister, Sarah, in the form of a ninth witness statement from Mr. Maidment and a second witness statement from Miss Maidment, in each case dated 19th March 2012.  Mr. Maidment’s witness statement addressed three issues: first, whether, at the valuation date, there still remained outstanding mortgages on three of the 46 properties which formed the company’s principal assets, namely 117 Green Pond Close E17, 103A Mount Pleasant Lane E5, and 38 Grange Park Road E10, those mortgages in each case being in favour of Clydesdale Bank plc; secondly, the condition of all of the 46 properties at the valuation date; and, thirdly, the difficulties experienced in recovering possession of certain of the properties from the assured shorthold tenants.  Miss Maidment’s second witness statement addressed the second and third of those issues.  Both witnesses gave evidence before me on the morning of the first day.  Although the evidence of Mr. Maidment and his sister had not been sanctioned by the terms of my September order, Mr. Clutterbuck took no objection to the evidence being before the court, subject to cross-examination.  Mr. Maidment gave evidence for about an hour and 25 minutes in total, which included a challenging cross-examination by Mr. Clutterbuck which lasted for about 45 minutes.  Miss Maidment gave evidence for about 40 minutes and was subjected to a probing cross-examination by Mr. Clutterbuck. 

8.	In accordance with the terms of my September order, I also received written evidence on the issue of the appropriate rate to be awarded by way of quasi-interest.  For Mr. Attwood, I received evidence in the form of a witness statement from Mr. Christopher John Waldon dated 2nd March 2012.  He is an assistant solicitor with Stockler Brunton, Mr. Attwood’s solicitors.  He gave evidence of the different interest rates payable on personal loans, first of sums up to £5,000, and, secondly, of sums up to £10,000.  For Mr. Maidment, the evidence on the quasi-interest issue came in the form of a witness statement from Mr. Iain Mackie, a partner in the firm of Macfarlanes, Mr. Maidment’s solicitors.  His witness statement, also dated 2nd March 2012, gave evidence of interest rates payable on instant access, on-line, and everyday savings accounts.  Both witnesses also gave evidence of Bank of England and bank base rates over the applicable period.  Neither of those two witnesses was required to attend for cross-examination.  

9.	In addition to the evidence of witnesses of fact, there was evidence from the two property valuation experts, Mr. Alastair Mason FRICS for Mr. Attwood and Mr. John Christopher Roe ICIOB, FNAEA for Mr. Maidment.  Mr. Mason’s initial report was dated 1st December, and Mr. Roe’s was dated 13th December 2011.  Mr. Roe then responded to written questions submitted to him on 8th February 2012.  Both experts then met and signed their first joint statement on 9th March 2012.  Following my order of 12th March, both experts prepared supplemental written reports.  In the case of Mr. Mason, his report was dated 26th March, and Mr. Roe’s was dated the following day.  The experts then signed a second joint statement dated 18th April 2012.  Both property experts gave evidence before me.  Mr. Mason gave evidence on the afternoon of day one, continuing until about 2.45 on the afternoon of day two; his evidence lasted for about six hours in total, of which about five and a half hours represented cross-examination by Mr. Grant.  Mr. Roe gave evidence for about six hours in total, from about 2.45 on the afternoon of day two to about 3.30 on the afternoon of day three; of that about five hours comprised cross-examination by Mr. Clutterbuck.
  
10.	The single joint expert on share valuation was Mr. Michael Taub; he is a chartered accountant and a forensic accounting partner in the firm of RSM Tenon.  His report was dated 5th April 2012, although he has since updated at least one of his schedules.  Indeed, that schedule was further updated after I had concluded the hearing last week.  He gave evidence beginning at about 3.45 on the afternoon of day three until just before 12.30 on the afternoon of day four.  He was questioned first by Mr. Clutterbuck, for Mr. Attwood, for about 25 minutes; he was then questioned on behalf of Mr. Maidment by Mr. Grant for about an hour and 45 minutes; Mr. Clutterbuck then asked Mr Taub further questions arising from Mr. Grant’s questioning for about ten minutes.  

11.	Closing speeches lasted from about 12.30 on the early afternoon of day four until close of business on that day.  Mr. Clutterbuck addressed me first for about 30 minutes before lunch and about 25 minutes after lunch; Mr. Grant then responded for about an hour and 30 minutes; and Mr. Clutterbuck then replied for about ten minutes.  Mr. Grant then addressed me very briefly in rejoinder.  Since he had already had more than an appropriate share of the available time for closing speeches, I declined his offer to submit further written submissions after I rose last Thursday since it seemed to me that that would not have been fair to Mr. Attwood:  Mr. Grant had already addressed me at greater length than Mr. Clutterbuck.  If Mr. Grant had felt that he had had insufficient time to develop his submissions on what Mr. Grant referred to as “the injustice of departing from a break-up approach to share valuation”, then it seemed to me that that was because that was how he had chosen to use the limited time available to him on what was, in fact, the extra day that had been allotted to the hearing over and above its three-day estimate.  Whilst Mr. Grant may have been unable to deliver his submissions at the length he would otherwise have liked, I am satisfied that he was able to make his point about what he described as “the injustice of approaching the matter otherwise than on a break-up, liquidation basis” sufficiently clearly for me to be able to follow his point.  

CHAPTER 3 – THE MORTGAGE BORROWINGS
12.	I can deal with this issue quite shortly.  Mr. Maidment’s evidence on the point is to be found at paragraphs 5 through to 15 of his ninth witness statement.  It is also relevant to consider paragraphs 70 to 72 of Mr. Maidment’s amended first witness statement, together with the documents exhibited to Mr. Maidment’s latest witness statement which are to be found at dividers 21, 22 and 23 of bundle F, relating to a re-mortgage of the three relevant properties with Mortgage Trust Limited.  That re-mortgage, referred to as such in terms by the acting solicitors (Barnes & Partners) in a letter of 5th December 2005, had been completed the previous Friday, 2nd December 2005.  The issue was addressed in closing speeches.  Mr. Grant, for Mr. Maidment, submitted that there was, first, clear evidence of a Clydesdale Bank mortgage at some time in 2005; secondly, there was clear evidence that Mr. Maidment, on behalf of Annacott, had re-mortgaged the three properties with Mortgage Trust Limited, that re-mortgage being completed on 2nd December 2005; thirdly, the solicitors acting, Barnes & Partners, had described the Mortgage Trust advance in terms of a “re-mortgage”; fourthly, Mr. Maidment’s business model for Annacott had been always to have properties on mortgage, and to re-mortgage them from time to time to raise additional funds on the security of the properties as they increased in value.  Mr. Grant invited me to accept that the Clydesdale Bank mortgages on these three properties had been redeemed less than two months before their re-mortgage with Mortgage Trust, and therefore after the relevant valuation date of 1st October 2005.  Mr. Clutterbuck submitted that the documents did not show any mortgage borrowings on the three properties at the valuation date.  Mr. Maidment was effectively the accounting party, and it was for him to produce any relevant documents.  He reminded me that I had previously found Mr. Maidment to be an unreliable and, indeed, in certain respects, an untruthful, witness.  On the basis of those submissions Mr. Clutterbuck invited me to find that Mr. Maidment had not discharged the burden of establishing that the three properties were subject to mortgages at the relevant valuation date, which would, of course, affect their net value, reducing it from the point of view of Mr. Maidment.

13.	Mr. Maidment has been cross-examined on the issue.  He acknowledged, at the end of that part of his cross-examination, that the evidence as to the existence of the mortgages was not one hundred per cent complete.  However, earlier in his evidence, he had explained that the reason why he had not been able to unearth the relevant documentation was that he had not dealt with Clydesdale Bank for a number of years.  In re-examination, he explained that he had stopped dealing with Clydesdale Bank at the end of 2005 so he no longer had any Clydesdale Bank file.  Later, he said that he was sure that he had paid the money off directly to Clydesdale Bank at the end of the relevant month in order to avoid incurring any further monthly interest charge to that financial institution.  He explained that the whole idea of his business model had been to replace one mortgage with another.  He explained to me that he had checked the relevant current account statements and they did not disclose any monies going out of the current account, and therefore he inferred that the monies must have gone out of the deposit account.  He explained that, before this particular re-mortgage, there had been further re-mortgages with Mortgage Trust over other properties so there had been some spare cash available, which was why he thought there was money in the deposit account.  He explained that he had received a few further advances from Mortgage Trust at the beginning of October.  He was asked by the court how sure he was that the redemption of the Clydesdale Bank mortgages had taken place after 1st October 2005.  He said that the business model from the outset had been to have mortgages on all of the properties.  That, he said, was how buy to let property investment worked.  At no point did Annacott not have mortgages on its properties.  The reason for that was in order to be able to set-off the interest on the mortgages against the rental income from the properties.  That produced an advantageous tax situation.  Mr. Grant asked a further question arising out of that, and Mr. Maidment explained that he had looked for the bank statements relating to the deposit account for the relevant period but that he no longer had them.  

14.	Although I have disbelieved Mr. Maidment on other issues, I am prepared to accept his evidence on this point.  I do so essentially for two reasons.  First, that it is consistent with Mr. Maidment’s whole approach of re-mortgaging properties to raise further finance, and of always ensuring that properties were mortgaged, so that mortgage interest could be set-off against rental income for tax purposes; and, secondly, because the absence of the relevant documentation has been explained by Mr. Maidment to my satisfaction.  A letter from Macfarlanes to Stockler Brunton of 2nd November 2011 (at bundle G pages 107 to 108) explains how much was outstanding on the three mortgages at the valuation date.  It explains that a recently disclosed spreadsheet showed the sums outstanding on the two mortgages as at 28th February 2005.  Two statements of account showed the sums being repaid each month and the interest incurred.  Mr. Maidment had used that as the basis for calculating what must have been outstanding as at 1st October 2005.  The resulting figure is £155,455.38.  That calculation was not challenged in evidence, and I accept it.  I accept that as the amount outstanding on those three properties by way of mortgage at the relevant valuation date.

CHAPTER 4 – THE VALUATION OF THE PROPERTIES 
15.	The resolution of this particular issue largely depends upon my assessment of the two valuers and their expert opinion evidence.  I turn first to Mr. Roe.  As I have indicated, he gave evidence for some six hours in total, of which five hours represented cross-examination, with one hour in re-examination.  I found his evidence to be deeply unsatisfactory.  He accepted that he had no formal professional qualifications as a valuer.  Mr. Clutterbuck rightly did not seek to suggest that Mr. Roe was incapable of giving expert opinion evidence as to property values; rather he submitted that the lack of professional qualification went to the weight of Mr. Roe’s evidence and not to its admissibility.  Mr. Clutterbuck accepted that Mr. Roe had experience of property valuation, although he had no relevant professional valuation qualifications.  Mr. Clutterbuck submitted that Mr. Roe’s evidence should be accorded little weight where it was in conflict with that of Mr. Mason.  He identified a number of relevant factors in his closing submissions.  In relation to property 12 (123B Lower Clapton Road), he submitted that Mr. Roe had confused the discount to be allowed from the starting-point valuation for condition of the property with any discount to be allowed for the property’s location.  Mr. Roe accepted that he should not have allowed any discount for location when arriving at his starting-point valuation.  Having made a deduction of £20,000 for condition, Mr. Roe, in cross-examination, accepted that £12,000 of that should properly have been attributed to problems of access to the property, resulting in a deduction of only £8,000 on account of condition.  Mr. Clutterbuck submitted that Mr. Roe had refused to accept the inevitable consequence of that when he needed to do so in the case of a number of other properties.  Mr. Clutterbuck submitted that Mr. Roe had only his experience to rely upon, and that his actual comparables gave him no real assistance at all in the task of valuing the subject properties.  Mr. Clutterbuck was particularly critical of Mr. Roe’s use of comparables in the form of Victorian houses when valuing flats, and his use of a flat in a high-rise block when valuing the subject properties, which were not similarly situated.  Mr. Clutterbuck was particularly critical of the comparable evidence used by Mr. Roe when valuing property number 21 (189A Mare Street).  In his first report, Mr. Roe had valued by reference solely to one bid at auction.  Moreover, in applying that “comparable”, he had had to make an adjustment for the fact that the property included a shop, and he had had to deduct his own estimate of the value of the shop to arrive at his comparable valuation as a flat.  Mr. Clutterbuck stigmatised this as “not even educated guesswork”.  He submitted that sometimes Mr. Roe’s comparables were wholly useless.  On several occasions he had relied upon bids at auction which had not even been accepted.  He submitted that Mr. Roe had been rigid in refusing to learn lessons from Mr. Mason’s comparables; even when he had accepted their relevance, he had refused to adjust his pre-existing valuations.  A good example of that was to be found in property number 25 (26 Lyneham Walk).  In short, Mr. Clutterbuck submitted that Mr. Roe had simply not found very many good comparables.  Mr. Mason had produced 109 comparables; Mr. Roe had relied upon 70, of which 6 were merely auction bids, so that there were only 64 actual comparable transactions.  In relation to his adjustments for condition, Mr. Clutterbuck submitted that Mr. Roe’s adjustments looked arbitrary.  He had never been able to justify in detail his round figure adjustments for condition.  He had placed reliance on photographs of the properties taken by Miss Hastings without justification.  Miss Hastings’s recollection of the dates when those photographs were taken was said to have been “dismal” when she was cross-examined on the subject.  Moreover, Mr. Roe’s evidence was wholly deficient as to how he had dated the photographs because it was only the index to bundle F which identified the properties.  That also identified the dates when the photographs were said to have been taken; but Mr. Roe did not accept that he had seen that index.  I think even Mr. Grant had to accept that Mr. Roe had in fact been provided with the index to assist in considering the photographs.  Mr. Clutterbuck also criticised Mr. Roe for having relied upon Mr. Maidment’s statements as to the condition of the properties.  These were very brief.  Mr Roe had made no adjustments to his views on condition when presented with the very much more detailed statement as to condition from Miss Maidment, in the form of her second witness statement and the schedule attached to it.  Mr. Clutterbuck submitted that Mr. Mason’s approach to the issue of condition was the right one.  A valuer should only make deductions on account of condition when he has satisfactory evidence justifying such deductions.  Mr. Roe’s failure to make any adjustments to his condition deductions in the light of Miss Maidment’s schedule of condition was said to cast doubt on the whole of his thought processes.  Mr. Clutterbuck also made the point that, at least in the period of the first three months after the relevant valuation date, Mr. Roe’s values were significantly below the transfer prices at which Mr. Maidment had transferred certain of the subject properties to himself.  For all of those reasons, Mr. Clutterbuck invited me to disregard Mr. Roe’s evidence where it was at variance with that of Mr. Mason.  

16.	Mr. Grant faced an uphill struggle in sustaining Mr. Roe’s value as an expert valuation witness.  In closing, Mr. Grant accepted that Mr. Roe had not been particularly comfortable in the witness box, and that at times his evidence had been unclear.  However, Mr. Grant submitted that Mr. Roe knew the area inside out.  It was perfectly fair for him to have used auction comparables when a lot of the subject properties had themselves been acquired by Annacott by way of auction purchase.

17.	In my judgment, I should not accept Mr. Roe’s evidence in preference to that of Mr. Mason except where I am satisfied that Mr. Mason’s evidence is itself open to valid criticism.  Generally I noted a tendency on the part of Mr. Roe to “waffle” in his evidence.  I found parts of his evidence to defy both common sense and also valid market evidence.  I identify the following specific instances where I found Mr. Roe’s evidence to be particularly deficient.  

18.	First, his discount of £10,000 per flat, making £30,000 in total, for the condition of property number 18 (71 Digby Road) was plucked out of the air.  He abandoned it on the second day of his cross-examination, after he had thought about it overnight.  

19.	Second, as I have already mentioned when addressing Mr. Clutterbuck’s submissions, property number 12 (123B Lower Clapton Road): £12,000 of Mr. Roe’s £20,000 deduction for condition was in fact referable to problems of access.  His condition reduction was therefore reduced down to £8,000, resulting in a base valuation of £135,500 rather than £123,500.  

20.	Third, I found Mr. Roe to be careless in his second report when addressing property 39 (63 Albion Estate).  He omitted any reference to “no central heating” in his second report when this had been included within his first report: contrast pages 122 and 297 of bundle D3.  In cross-examination, in answer to a question from the bench, Mr. Roe admitted that this had been a mistake.  

21.	Fourth, number 39, 63 Albion Estate again.  That has now been agreed at £170,000 as a starting-point valuation.  That was in fact Mr. Mason’s starting-point and Mr. Roe has now accepted it.  No less than 16 properties out of the 46 had their starting-point valuations agreed by the time of the second joint statement.  In all, Mr. Roe agreed Mr. Mason’s starting point for four of those 16 properties (numbers 30, 39, 43 and 44).  Two of the others were agreed closer to Mr. Mason’s figure than Mr. Roe’s (namely 40 and 42).  The remaining ten now agreed starting-point valuations I accept represented a compromise between the two valuers’ respective positions.  However, the fact is that Mr. Roe had to retreat on six of the 16.  I bear that in mind as an example of a willingness on his part to make appropriate concessions; but nevertheless concessions he did have to make.  

22.	Fifth, Mr. Roe said that he had taken Miss Maidment’s more detailed comments on condition into account, but that quantitatively they made no difference to Mr. Roe’s previous views on condition.  That position was expressed in a letter written to the court by Macfarlanes on 21st March 2012 (at page 270 of bundle G).  When explaining the short statement from Miss Maidment, Macfarlanes said that that amplified Mr. Maidment’s comments as to condition.  Their understanding was said to be that this material corroborated the material which was already before Mr. Roe in relation to the condition of the properties, and would not have any impact upon his existing valuation evidence.  Indeed, Mr. Roe has confirmed that this is the case.  Mr. Roe did indeed confirm that that was the position in his evidence; but it seems to me that that really makes no sense.  If one looks, by way of example, at property 25 (26 Lyneham Walk), one can contrast Mr. Maidment’s comment in his schedule at B208, which was simply “poor condition, ex local authority property”, with the much more detailed observations by Miss Maidment at B234: 
“House on estate in high crime area, required metal security gate on front door, floors and walls very worn and dirty, bathroom with no window, had skylight which leaked and was mouldy, rubbish dumped around the estate, kitchen units falling apart, leak in downstairs WC, damaged flooring”.  

Despite that, Mr. Roe made the same end valuation of £126,000, including the same £10,000 deduction: compare pages 39 and 288 of D3.  

23.	Sixth, Mr. Roe made the same standard deduction notwithstanding differences in the comments on condition made by Mr Maidment.  One can take properties 25 through to 27.  At page B208, 25 was said to be in poor condition, ex local authority property; 26 was said to be in very poor condition, persistently leaking flat roof; 27 was said to be poor condition with damp problems.  However, looking at page 287 of bundle D3, Mr. Roe made the same standard £10,000 deduction.  That was a matter about which I questioned Mr. Roe.  I queried why, with differing descriptions of condition, Mr. Roe should have made the same standard £10,000 deduction.  His answer was: 
“Because I was very aware of the type and nature of the properties and of the disrepair.  I’m taking the situation very much in the round.”  

I did not find that to be a satisfactory answer.  

24.	Seventh, it seemed to me that there was a failure on the part of Mr. Roe properly to analyse comparable evidence.  I take as an example property number 22 (Flat 1, 2 Crossway).  When valuing that property, Mr. Roe made a deduction of 2.5 per cent to reflect the short lease term of 80.25 years unexpired.  There can be no issue taken with that deduction as a matter of principle; but when arriving at his valuation before deduction of £113,500 (which, after deduction, was reduced to £110,663), Mr. Roe relied principally upon the comparable transaction in the same property of Flat 2, 2 Crossway, which he describes as being a similar flat to the subject property.  That was sold for £113,000 (leasehold) on 28th November 2005, shortly after the valuation date.  It was put quite properly to Mr. Roe that surely, if the two flats were in the same property, they should have had co-terminous lease termination dates, and therefore an adjustment should have been made to the value of the comparable property before relying on it as a comparable:  Mr. Roe should have made a deduction of 2.5 per cent on the comparable property before using it to form his pre-adjusted valuation of the subject property, yet he had not done so.  It was put by the court to Mr. Roe that he had not adjusted his comparable for the co-terminous lease, but instead had made an inappropriate adjustment to the valuation of the subject property to reflect the short term.  Mr. Roe’s answer was: “There is that possibility, yes”.  

25.	Eighth, Mr. Roe’s comparables for number 2 (12 Downs Road) were poor.  Two were studio flats, evidence of which was based on a single conversation with a representative of Holden Matthews Estate Agents which had taken place almost seven years before Mr. Roe made his first report.  He had no relevant analysis showing how he had adjusted those comparables.  Indeed, in evidence he accepted that he had no mathematical calculations.  

26.	Ninth, I reject Mr. Roe’s often repeated mantra that “the mode of occupation of a property puts its stamp, or imprint, on the interior of the property”.  This was a constant refrain throughout Mr. Roe’s evidence.  He was asked: “Are you saying that all 46 properties are not in the same market as physically identical properties next door owned by an owner/occupier?”  His answer was in the affirmative.  He was asked if there was any professional literature to support that supposition.  His answer was that the professional literature only provides a general guide; “valuers like us are at the cutting edge”.  Mr. Clutterbuck said, “So the answer is no”; and Mr. Roe confirmed that, but he said that he was “very confident” in his experience.  He accepted that owner/occupied properties gave some degree of help, but he said that they were less than satisfactory as a comparable: one could derive only “some assistance” from owner/occupied properties.  Mr. Roe went on to say that he had had regard to the comparables put forward by Mr. Mason, but that he had had to weigh them in the balance because he had had to look at the relevant market.  He acknowledged that he had not adjusted any of his figures for any of those comparables except, no doubt, in relation to the 16 now agreed properties.  

27.	I focused Mr. Roe upon Mr. Mason’s comparables for property 2 (12 Downs Road).  The first of those was Powerscroft Road, which had been offered for sale at £225,000 and had sold for £215,000.  My question was along the lines that whilst I could see that someone who had looked at Powerscroft Road, which was clearly in a superior condition - being described in the sales particulars from Mr. Mason’s own firm (Bunch & Duke) as being a very well presented maisonette - would certainly not be prepared necessarily to offer precisely that price for 12 Downs Road, nevertheless they might well be prepared to offer considerably more than Mr. Roe’s own valuation of 12 Downs Road, for which Mr. Roe had taken £125,000 as a starting-point.  Mr. Roe would not accept that.  He said that it was not just looking at differences in the physical state; it was the imprint and mode of occupation.  However, Mr. Roe also acknowledged that he did not know whether the other flats within 12 Downs Road were owner/occupied or buy to let flats themselves.  I just could not accept the validity of Mr. Roe’s reasoning.  As I have said, not only was Mr. Roe’s reasoning not supported by Mr. Mason, but Mr. Roe himself accepted that it was not supported by reference to any professional literature.  Nor, indeed, was it supported by sales particulars that were in evidence.  Certain of the sales particulars, such as the comparables at Powerscroft Road and Cricketfield Road for Property 2, and Shacklewell Lane (property number 11), were specifically identified as being of interest to young professional couples or first time buyers; but others of Mr. Mason’s comparables were addressed to both owner/occupiers and buy to let purchasers.  In that regard I would refer to the comparables at Ashbourne Court for property number 4, Chatsworth Court for property number 11, Grand Union Crescent for number 18, Swanfield Street for number 14, two of the comparables at Thant Close for number 15, and Victoria Park Road for number 21.  Mr. Mason’s evidence seemed to me to be far more credible.  When it was put to him that there was a different market between owner/occupied properties, like Powerscroft Road, and a property which would be of interest to a buy to let property investor, Mr. Mason said that he did not agree: it assumed that a buy to let investor would only buy the worst of properties. Such an investor would buy the best property he could afford.  A buy to let investor had to compete in the same market with owner/occupiers.  There was no sub-class of property which was only suitable for the buy to let investor.  He always had to compete with owner/occupiers.  It seems to me that Mr. Roe’s evidence, differing from that, was contrary to common sense.  If one is looking to buy, one is not concerned with how the property is presently owned or occupied by the seller.  As I say, Mr. Roe’s evidence was not supported by anything other than his own assertion, founded upon his own experience.  

28.	Tenth, Mr. Roe placed undue, and inappropriate, reliance upon Victorian house comparables when valuing flats.  That was a recurrent theme.  An example is to be found with property number 4 (9 Derby Court).  Mr Roe was cross-examined about that.  He said that he had made adjustments for the fact that those comparables on which he was relying were Victorian houses.  He said that those comparables put a cap on the value of flat properties.  He then said that he could not find any flat comparables for number 4 at all; yet he said that he and his firm regularly practised in Hackney.  It was at that point that Mr. Clutterbuck made the point that, unlike Mr. Mason, who had produced a number of comparables based upon sales effected by his own firm, Mr. Roe had not produced a single comparable from his own firm, which was the well-known firm of Drivers & Norris, based in Holloway.  Mr. Roe said that that firm appealed to a very wide inner urban area, that he very regularly visited the area of these subject properties, and that he had looked through his firm’s records when searching for comparables; yet he had not produced a single comparable from those records.  In my judgment, that either shows that his firm does not have relevant experience in the market or – and more likely – that any comparables that would have been thrown up by his firm would not have been very helpful to Mr. Roe for the purposes of his valuation exercise.  Mr. Mason relied, in relation to property 4, on the comparable at Ashbourne Court.  That was in terms said in the agent’s particulars to be ideally suited for a first time buyer, a family, or a buy to let investor.  Initially, Mr. Roe’s evidence was that it would be more suitable for the owner/occupier market.  He said that the photographs did not depict a property suitable for an investment property.  He was then taken to another of Mr. Mason’s comparables, Orwell Court, and it was put to him that the kitchen depicted in the photograph at page 156 was in fact eminently the sort that would not appeal to an owner/occupier and, on Mr. Roe’s view, would therefore be more suitable for a buy to let investor.  Mr. Roe had, grudgingly I thought, to concede that that was indeed the case.  It was pointed out to Mr. Roe that the property particulars described Orwell Court as “chain free”.  Mr. Roe accepted that that might indicate that it was an investment property.  A fourth comparable was put to him, 10 Nye Bevan Estate.  Mr. Roe said that he would not reject it as a comparable; it should be considered.  He said that he did consider it, but it had not affected his view of valuation.  He did not consider it sufficiently significant.  It was pointed out to him that that particular property had apparently been offered for sale for £177,000 yet had been sold for £8,000 more, namely £185,000.  Mr. Roe accepted that that certainly showed that the property was attractive.  It was put to him that it had nevertheless made no difference to his original valuation.  All he could say – and he said it twice - was that he had “considered” it.  I did not find any of that evidence to be satisfactory.  It seemed to me that it was an example of Mr. Roe simply disregarding relevant but, from his client’s case, unhelpful, contrary comparable evidence.

29.	Eleventh, I was deeply unimpressed with Mr. Roe’s use of the “comparable” of Flat 2, Shoreditch House, N1, which was in a tower block.  The evidence produced by Mr. Roe showed that this had been offered for sale at auction first by Streathams, in July 2005, when it had failed to reach its reserve, the last bid being £121,000.  The property was then placed in a second auction with Savills, in December 2005, when it sold for £125,000.  The property was at both times said to be vacant; and in the latter description was described as “unmodernised”.  Clearly it was a property which the seller wished to dispose of.  It may therefore not have been a particularly helpful comparable, even in relation to subject properties situated in tower blocks, which these properties were not.  Nevertheless, Mr. Roe used this comparable, situated in N1 in Hoxton, for properties not only in N1 (see property 5) but also E8 (see properties 11, 21 and 32) and E2 (see property 14).  

30.	Twelth, property number 5 (8 Follingham Court), another property for which Mr. Roe had used 2 Shoreditch House as a comparable.  Mr. Mason’s comparables were put to him.  Mr. Roe said that they had not changed his valuation.  He said that they were very different from his comparables, and that he considered his own comparables to be more relevant.  I have no doubt whatsoever that Mr. Mason’s comparables should have been considered by Mr. Roe; they were far more relevant than Mr. Roe’s own comparables, and they should have led Mr. Roe to re-visit and adjust his valuation.  The comment I put in my notebook at the time I was listening to this part of Mr. Roe’s evidence was “rubbish”.  

31.	Thirteenth, Mr. Roe placed an inappropriate over-reliance on a single sale at auction of 85 Shacklewell Lane as a comparable.  That comparable was addressed, in limited detail, at page 167 of bundle D3.  I accept Mr. Mason’s description of that transaction as being “out of kilter” with all the other market evidence.  

32.	Fourteenth, Mr. Roe’s valuation in some cases was even lower than the Base Property Specialists’ marketing recommendations.  For example, property number 11 (38B Shacklewell Lane): Mr. Roe valued that at £108,000 in its assumed condition, yet in April 2006 Base were recommending that it should be sold for £125,000.  The second example is 12 Downs Road (property number 2).  In November 2005 Base Property Specialists were recommending that it should be marketed at £130,000; Mr. Roe’s valuation was £115,000.  

33.	Fifteenth, there are Mr. Roe’s deductions for condition.  Property 31 (795A Lea Bridge Road): Mr. Roe’s starting point valuation was £112,500.  That was £17,500 less than the mortgage valuation made on 23rd March 2006 after any necessary works had been carried out to the property (see E61).  A second example is property 18 (71 Digby Road).  On 27th September 2005 Mr. Robinson valued the property at £360,000; Mr. Roe’s valuation in its assumed condition was £315,000, although it has to be acknowledged that Mr. Roe later adjusted that valuation upwards to £345,000 after cross-examination.  

34.	Sixteenth, property number 21 (189A Mare Street): in his first report (at page 71) Mr. Roe’s only comparable was a bid at auction (which was not accepted) for not only a flat but also a shop.  Mr. Roe was asked about that.  The point was made that it was only a bid, and therefore there had been no “willing seller”.  Mr. Roe’s evidence was that the RICS recognise bids, and that it was still relevant evidence.  He was then asked how he knew that the shop element of the sale should be valued at £87,500.  He said that he knew the area, and he knew the property, very well, and he had drawn the valuation from his experience.  However, in answer to questions from the bench, he acknowledged that he had known neither the unexpired term of the lease of the shop nor the rent payable thereunder.  When those points were made to him, his response was that one got a “general feel” for shop values.  Again, my comment at the time in my notebook was “nonsense”.  

35.	Seventeenth, number 25 (26 Lyneham Walk).  This was a property on a council estate constructed within the previous 30 years, yet Mr. Roe used Victorian houses by way of a comparable.  That was despite the fact that there were other comparables available on the same (local authority) Linzell Estate.  When Mr Mason was asked about Mr. Roe’s use of his comparables for 26 Lyneham Walk, his evidence was that he did not follow the logic behind valuing, as Mr. Roe had done, on the basis of Victorian house comparables when there was other comparable evidence on the same estate.  Mr. Roe steadfastly refused to make any adjustments to his own original valuation to reflect Mr. Mason’s comparables.  When asked about his use of Victorian terraced houses as comparables for 26 Lyneham Walk, he said that he had not been able to find any ex-council comparables.  He was asked if he had looked, and he said he had.  That answer demonstrates that either Mr. Roe was not looking in the right place, or that he did not like what he found.  

36.	Eighteenth, Mr. Roe also used Victorian house comparables for property 9 (5 Hatton Court) when the adjoining property, 3 Hatton Court, had been sold for £175,000 only six months before the valuation date.  In relation to that, Mr. Mason had said that those comparables were there, whatever adjustments might need to be made to them.  All of Mr. Roe’s comparables for that property were Victorian houses, as to which there was no relationship between them and the subject property.  There was plenty of evidence of sales of flats in the area, and it was not necessary to look at different sorts of property.  

37.	Nineteenth, I accept that Mr. Roe did not apply comparable evidence properly.  He relied wholly upon his own experience; and his deductions for condition were wholly arbitrary, round figures.  

38.	Twentieth, Mr. Roe’s evidence that one should offer all 46 properties as a single portfolio, without even considering whether they should be broken down into smaller portfolios, seemed to me to defy common sense.  It was contrary to Mr. Mason’s evidence.  It seemed to me quite clear that it must be easier to find seven purchasers prepared to pay £1 million for a smaller portfolio than to find one purchaser prepared to pay £7 million for a diverse portfolio of 46 properties; yet Mr. Roe would not accept that it was better to seek to obtain 5 per cent more for breaking down the portfolio of properties in that way.  

39.	Finally, although I have no need to place particular reliance upon it, I note – as Mr. Clutterbuck mentioned in closing – that of the nine transfers of portfolio properties that Mr. Maidment made to himself in the three months after the valuation date, no less than seven of Mr. Roe’s comparable valuations for those properties came out at less than the transfer prices.  I note that in my first judgment I had found that Mr. Maidment had purchased those properties for less than market value: see paragraphs 95 and 165 through to 173.

40.	Those are my reasons for finding Mr. Roe’s evidence to be much less than satisfactory.

41.	I now turn to Mr. Mason’s evidence.  He gave evidence for six hours, of which about five and a half hours consisted of cross-examination by Mr. Grant.  Mr. Mason did have appropriate professional qualifications.  He said that he was experienced in the area.  He said that 60 per cent of his work was in Hackney, and that 60 to 70 per cent of that work involved lower value residential properties.  I do, however, note that Mr. Mason practised as a valuer, and not in selling properties, and that he did not undertake valuations for mortgage lenders.  A lot of his work, he said, related to undertaking valuations in surveyors’ negligence cases.  I bear that forensic experience in mind when I come to assess his performance in the witness box.  Mr. Grant attached considerable weight to Mr. Mason’s inappropriate adoption of an outdated definition of “open market value”.  That was set out at paragraph 3.02 (on page 41) of Mr. Mason’s first report.  He referred to the definition of “open market value” set out in the Red Book, which was said to be defined as follows: 
“An opinion of the best price at which the sale of an interest in property would have been completed unconditionally for cash consideration on the date of valuation, assuming: (a) a willing seller; (b) that, prior to the valuation date, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale; (c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation; (d) that no account is taken of any additional bid by a prospective purchaser with a special interest; and (e) that both parties to the transaction had acted knowledgably, prudently and without compulsion.”

42.	Mr. Grant made the point that that definition of “open market value” had been superseded by a new definition of “market value” with effect from 1st May 2003.  That new definition was in the following terms: 
“The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion.”

43.	Mr. Grant made much of the fact that Mr. Mason had used a superseded definition of “open market value”.  However, Mr. Grant did produce a series of frequently asked questions and answers produced by the Royal Institution of Chartered Surveyors.  In answer to the question: “Are there any significant differences between ‘open market value’ and ‘market value’?” the answer was: 
“The wording is very different and the market value definition considerably shorter but there should be no difference in a valuation of a property using either definition.  A property valued by reference to OMV would produce the same figure if valued using the MV definition.”

44.	Mr. Roe accepted in evidence that there was no material difference between the two bases of valuation.  I note that in his written skeleton argument prepared for this hearing at paragraph 29.4 (on page 9), Mr. Grant had himself adopted, without any criticism, the superseded definition of “open market value”.  I am sure that Mr. Grant did not do so with any view of catching Mr. Mason out; he did so because Mr. Grant, too, accepted that there really was no practical difference between the two definitions.  

45.	Despite this lapse, I found Mr. Mason to be a far more impressive witness than Mr Roe.  In his written skeleton argument (at paragraphs 20 to 25), Mr. Grant had made a number of observations on Mr. Mason’s comparables, which he expanded upon, and supplemented, in his oral submissions before me.  In doing so Mr. Grant sought to make good his criticisms by reference to particular properties.  Thus, in relation to paragraph 20, he cited property 31 (795A Lea Bridge Road).  In relation to paragraph 21, he made reference to property 6 (St Michael’s Court), and to 64 Henshaw Street as a comparable, which was in a more desirable location than the subject property.  In relation to paragraph 22, Mr. Grant relied, by way of example, upon property number 2 (12 Downs Road) and the Powerscroft Road comparable.  In relation to paragraph 24, Mr Grant cited by way of example property number 3 (27A Blurton Road).  In relation to paragraph 25, Mr. Grant made reference to property number 26 (267 Glyn Road) and the comparable 37 Rushmore Road.  I have borne all of those submissions in mind, as they were amplified in Mr. Grant’s oral closing.

46.	Mr. Grant, having made his submission that Mr. Mason had deployed entirely the wrong definition of “market value”, also made the criticism that he had attached no importance to market valuations, saying that they only provided a comfort for lenders when in fact that was clearly contrary to the RICS mortgage valuation criteria.  In that regard I was taken to appendix 3.2 (headed “RICS Mortgage Valuation Specification”) and, in particular, to sub-paragraphs 2.2 and 5.1.1, and the basis of mortgage valuation.  Mr. Grant accepted that Mr. Mason had been fluent in his evidence; but he said that his fluency was that of the advocate on behalf of his client, who had been hired to provide the highest possible valuation.  He criticised Mr. Mason for resisting any reasonable attempt to move from his position.  Mr. Grant placed particular reliance on Mr. Mason’s valuation of number 6 (St Michael’s Court), where Mr. Mason had adopted, by way of comparable evidence, a property in a tree-lined street that was patently superior, but which was used in support of a valuation of a subject property at a higher level.  Mr. Grant said that, despite this being pointed out to him, Mr. Mason would not accept that he had got it wrong.  He refused to accept obviously sensible and unanswerable propositions.  

47.	Mr. Clutterbuck, by way of contrast, described Mr. Mason’s evidence as “extremely useful”.  In relation to that particular property, Mr. Mason had acknowledged that the valuation exercise had been a “difficult” one.  Generally, Mr. Clutterbuck extolled Mr. Mason’s exemplary use of a good range of comparables.  He said that Mr Mason had been unmoved in cross-examination in relation to his deductions for condition.  He had produced compelling reasons for rejecting Mr. Roe’s comparables; and Mr. Clutterbuck said, with a forensic flourish, that that was exemplified by the fact that Mr. Grant had not taken Mr. Mason to any of Mr. Roe’s comparables in the course of cross-examination.  That, Mr. Clutterbuck said, is an indication of the ease with which Mr. Mason had been able to dispose of Mr. Roe’s comparables, and the difficulty which Mr. Roe (and his client) had in answering Mr. Mason’s own comparables.

48.	Like Mr. Clutterbuck, I do regard it as telling that Mr. Grant did not seek to address any of Mr. Roe’s comparables when he cross-examined Mr. Mason.  I am satisfied that that is because, as Mr. Clutterbuck submits, Mr. Mason’s comparables are far more relevant, helpful, and compelling than Mr. Roe’s own comparable evidence.  I find that Mr. Mason’s expert opinion evidence of base values is much better supported by his comparable evidence; and, except in one case, that of property number 26 (267 Glyn Road), that Mr. Mason’s base valuations are not affected by Mr. Roe’s comparables to any material degree.  Mr. Roe said that the evidence was that the property market had been stable in 2005: see page 11 of his first report.  I find that Mr. Mason’s evidence that there were no rapid increases in property values between November 2005 and August 2006 is supported, at least in relation to one area of Hackney, by the comparable evidence to which Mr. Mason referred in relation to property number 2: the comparable evidence of 42 and 44 Leabank Square.  In relation to those properties, one was sold in November 2005 for £178,000; the other was sold in August 2006 for just under £180,000, an increase of just over 1 per cent during that period (November 2005 to August 2006).

49.	Having said all that, however, in my judgment Mr. Mason has tended to produce base valuations that are slightly higher than his comparable evidence would seem to me to support.  Of the 13 properties which I think were explored in cross-examination of Mr. Mason, it seems to me that only one – number 32 – is exactly supported by his comparable evidence.  It does seem to me that, when analysing his comparables, Mr. Mason has slightly – and I do say slightly – overvalued the subject properties.  It seems to me that the following adjustments are appropriate:  Property number 2 (12 Downs Road) should go down from £200,000 to £190,000, a reduction of 5 per cent; property 3 (27A Blurton Road) should go down from £175,00 to £155,000, a reduction of 12.9 per cent (that is the highest reduction); property number 4 (9 Derby Court) should go down from £190,000 to £180,000, a 5.5 per cent reduction; property number 5 (8 Follingham Court) should go down from £225,000 to £215,000, a reduction of 4.65 per cent; property number 6 (6 St Michael’s Court) should go down from £375,000 to £355,000 a reduction of 5.6 per cent (and similar reductions should be made for the other St Michael’s Court properties).  It does seem to me that, as Mr. Mason acknowledged, the St Michael’s Court properties are very difficult to value.  However, it also seem to me that Mr. Mason’s comparable of 64 Henshaw Street was a very different, and a superior, property, yet it was sold for less than Mr. Mason’s valuation.  Despite that being pointed out to him, Mr. Mason refused to reconsider his view.  In that, it does seem to me that Mr. Grant is justified in his criticism that Mr. Mason was guilty of obduracy.  It seems to me that it would have been appropriate to have valued property number 6 at £355,000, and the same for the other St. Michael’s Court properties.  Property number 9 (5 Hatton Court) it seems to me should go down from £175,000 to £165,000, a reduction of 6 per cent; property 11 (38B Shacklewell Lane) should go down from £190,000 to £180,000, a reduction of 5.5 per cent; property 18 (71 Digby Road) should go down from £465,000 to £450,000, a reduction of 3.3 per cent, on the footing that each flat should have been valued at £150,000 rather than £155,000; property number 25 (26 Lyneham Walk) should go down from £235,000 to £225,000, a reduction of 4.4 per cent; property number 26 (267 Glyn Road) should go down from £260,000 to £240,000, a reduction of 8.3 per cent (in that regard I place particular reliance upon Mr. Roe’s two Glyn Road comparables; it seems to me that sufficient account of those was not taken by Mr. Mason); property 27 (9A Horton Road) should go down from £270,000 to £250,000, a reduction of 8 per cent; property 31 (795A Lea Bridge Road) should go down from £150,000 to £140,000, a reduction of 7.1 per cent; it seems to me that property 32 (107A Shacklewell Lane) was correctly valued at £140,000.  

50.	Those, I think, were the only properties specifically put to Mr. Mason.  The average reduction seems to me to be a little under 6 per cent.  It may be necessary for further submissions as to whether a similar reduction should be applied to other properties which were not put to Mr. Mason, but in relation to which there is no agreement between him and Mr. Roe.  That may be justified on the footing that the cross-examination of Mr. Mason proceeded on a sample property basis.  As I say, the average basic overvaluation was around about 6 per cent.

51.	On the issue of condition, I accept the submission that Miss Maidment in her evidence has tended to exaggerate the negative features of the properties within the portfolio.  I find her recollection and descriptions to have been coloured, and distorted, by her dislike of the properties and the chore of managing them, and also by her desire to do what she could to support her brother.  In relation to property number 17, I find the photograph at F18 (which is said to have been taken in March 2006, and which if taken, as the evidence was, by Miss Hastings, must have been taken after the end of 2005, and thus after the valuation date) to be very difficult to reconcile with Miss Maidment’s description of that property in her exhibited schedule.  When that was put to Miss Maidment in cross-examination, all she could say, by way of explanation, was that the ceiling must have fallen down again.  If the date of the photograph is accurate, I find it difficult to reconcile with Miss Maidment’s description of the condition of the property six months earlier.  In relation to property number 18, I find Miss Maidment’s description difficult to reconcile with the mortgage valuation (in the form of a further advance report) dated 27th September 2005 from Mr. Robinson.  He valued 71 Digby Road at £360,000 as of 27th September 2005; and, when asked to indicate factors adverse, or otherwise likely to affect rental demand over the following 12 months, he said that none was likely to affect the rental demand over the next 12 months.  He said that the property had undergone conversion to three self-contained flats in which there were minor snagging issues that still remained within the property.  He said his valuation was based on the combined value of each of the individual flats.  He recommended no retention from the further advance, and no change in valuation after any essential repairs or proposed works.  I find that difficult to reconcile with Miss Maidment’s description, in her schedule, of the condition of the flats within that property in her schedule.  In answer to questions from the bench, Miss Maidment said that she remembered the name of a valuer called Robinson at SPS Surveyors, although she could not remember which properties he had valued.  She did, however, remember arranging to meet him at a property.

52.	In relation to property number 23 (38 Grange Park Road), I find it difficult to reconcile Miss Maidment’s description at page 233 of bundle 3 with Mr. James’s mortgage valuation at E44 of 12th October 2005.  According to Miss Maidment, the property was in a dilapidated state, located on a busy road with no parking; major damp problems, particularly in the bathroom; bathroom cold with paint peeling; tiles falling off; very old avocado suite; kitchen units deteriorating from damp; decoration and floors in very bad condition; damp patches on walls; smell of damp coming from basement; sash windows rotten; communal hallway tatty; building and communal hallway not maintained; garden overgrown with huge brambles.  Valuing the property for Mortgage Trust, Mr. Peter James, who describes himself as a Fellow of the Royal Institution of Chartered Surveyors, on 12th October 2005 – thus less than a fortnight after the valuation date – described the property as being in a fair condition for its age and construction.  He noted that high level damp readings were recorded to the front and rear of the property, and that timbers in contact might be defective; a specialist timber and damp contractor should investigate fully and provide a report and estimate for any remedial works necessary; some evidence of rot to the skirting within the bathroom was noted.  However, he recommended no retention.  He valued the property in its present condition at £115,000, and ascribed to it a valuation, following essential repairs as described, of £118,000.  I find that evidence probably the most helpful that I have in relation to the impact on values of the condition of the properties.  Effectively, Mr. James was attributing a reduction in value due to condition of £3,000, equating to 2.5 per cent.  I note, in passing, that Mr. Mason himself allowed a reduction of £3,000 on account of this particular property’s condition: see page 106 of his second report.  I also note that Miss Maidment’s evidence was treated as of limited value by Mr. Roe.  I have already referred to Macfarlanes’ letter to the court of 21st March 2012 at G270.  That was confirmed by Mr. Roe in evidence.  

53.	I do not consider that I can discount entirely Miss Maidment’s evidence, which derives support from that of her brother, given that I do not consider her to be either a dishonest, or an entirely unreliable, witness.  However, it does seem to me that I cannot accept the full extent of her evidence.  Indeed, as Mr. Clutterbuck pointed out, Miss Maidment does not have any expert appreciation of the extent to which disrepair may impact upon a property in valuation terms.

54.	Mr. Clutterbuck submitted that Mr. Mason’s approach on condition was the right one: a valuer should only make deductions on account of condition where he has satisfactory evidence supporting that.  However, it does seem to me that Mr. Mason has perhaps taken an unduly strict approach to the requirement of proof of satisfactory evidence of condition before he is prepared to make any deduction at all.  Doing the best I can, and placing particular reliance on what I consider to be the most important piece of contemporaneous evidence, in the absence of any other satisfactory evidence, it seems to me that the proper approach is to adopt a 2.5 per cent discount from starting valuations on account of condition generally throughout the portfolio, except where either (1) Mr. Roe himself is satisfied that no, or any lesser, deduction is appropriate, or (2) Mr. Mason himself is satisfied that a deduction greater than 2.5 per cent is justified.

55.	I turn now to the issue of deduction for assured shorthold tenancies (ASTs).  That was addressed by Mr. Mason at paragraph 4.01 of his first report (at page 45 of bundle D1).  Mr. Mason said that it was his experience, and a generally accepted valuation principle, that to reflect risk, and a required profit, investors would require a discount from vacant possession values of between 5 and 10 per cent for investments to reflect assured shorthold tenancies.  However, he made the point that he would only consider that to be the case where the ASTs still had the majority of their term to run.  The shorter the unexpired term of the AST, the lower would be the percentage discount available to the investor.  Going on, at page 46, he said that at six months the property could not realistically be offered with vacant possession, so owner/occupiers were again removed from the market.  He then went on to express the opinion that the vendor would only entertain accepting a discount of a maximum of 2.5 per cent where the unexpired term was six months.  He said that to put that into context, and by way of example, the vendor of a property worth say, £200,000, and subject to an AST with 12 months unexpired, might well be prepared to sell to an investor at a discount from vacant possession value of, say, 7.5 per cent, i.e. £15,000.  If, on the other hand, the AST had only six months unexpired, then the vendor would be unlikely to accept such a large discount because he had the option to act prudently and wait for a few months to enable him to move into the owner/occupier market and obtain the full vacant possession value.  It was possible, to continue the previous example, that he would be prepared to sell at a modest discount, say 2.5 per cent (or £5,000), rather than wait the extra few months before going to the market.

56.	This matter was addressed by Mr. Grant at paragraph 29 of his skeleton argument.  It was explored in cross-examination of Mr. Mason.  It was put to him that he was assuming, first, that at the end of the AST the tenant would leave.  Mr. Mason’s response was that it was proper to assume that the tenant would not break the law, although he acknowledged that everyone had experienced tenants not leaving at the end of an assured shorthold tenancy.  It was, secondly, put to him that he was assuming that the tenant would continue paying the rent until he left.  Mr. Mason’s answer was that one accounted for the risk of non-continuation of payment of rent when capitalising the yield.  I did not see how that related to the point which he was then addressing.  It was, thirdly, put to him that he was assuming that the tenant would leave the property in a reasonable condition.  Mr. Mason acknowledged that tenants do leave properties in a shambles, requiring expenditure in excess of any rental deposit.  Mr. Grant developed the points he had made at paragraph 29 of his skeleton in closing.  He described Mr. Mason’s evidence on this aspect of the case as “very unsatisfactory”.  He said that he was proceeding on the basis that the tenant would deliver up possession at the contractual term date, although he conceded that, in fact, that did not always happen.  Secondly, he was assuming that the tenant would continue paying the rent when that also did not always happen.  Thirdly, he was assuming that the tenant would deliver up the property in good order when that did not always happen.  Mr. Grant made the point that by selling subject to an existing assured shorthold tenancy, a prudent vendor would be offloading all of those risks onto the purchaser.  He criticised Mr. Mason for emphasising, and focussing upon, the needs of the willing vendor, to the exclusion of the concerns of the willing buyer.  He said that that may have been because there was no reference to the concept of a “willing buyer” in Mr. Mason’s adopted, but superseded, definition of “open market value”. Finally, Mr. Grant said that Mr. Mason’s approach contradicted the assumption of a sale of a property at the valuation date, which was fundamental to both definitions of “open market” and “market” values.  

57.	I accept Mr. Grant’s criticisms.  Indeed, it seems to me that Mr. Mason’s evidence, which I have set out, is internally inconsistent.  At one point he appears to acknowledge that, with a six months assured shorthold tenancy in place, the property will not appeal to the owner/occupier market; but he then seeks to get out of the consequence of that by suggesting that a deduction of only 2.5 per cent is justified.  The difficulty here, in valuation terms, is that one simply does not know, in the case of any particular property, either (1) how long the assured shorthold tenancy had still to run before it was due to come to an end, and (2) anything about the characteristics, or performance, of the existing tenant.  Doing the best I can, it seems to me that the appropriate discount to be made for the existence of an assured shorthold tenancy, in the case of each property, is a 7.5 per cent discount.

58.	I then turn to the issue of portfolio discount.  This was addressed at paragraph 3 of Mr. Mason’s second report (at page 103 of bundle D1).  He elaborated upon it in the course of his cross-examination.  He said that normally one would allow a 10 per cent discount for the sale of a single portfolio of properties.  In the instant case, that would result in a £600,000 to £800,000 discount.  Given that level of discount, Mr. Mason’s view was that it would be prudent to look at the best way of offering the properties for sale, to see if that discount could be minimised.  One could do that by “prudent lotting”, not just in terms of geographical location, but also by reducing the size of each lot to what he referred to as “bite-sized chunks”.  That would increase the market for sale to a significantly larger number of purchasers.  One could put the properties for sale in auction, and one should seriously consider doing that.  Mr. Mason said that he had had experience of prudent lotting on three occasions.  It was put to him that the proper way to market would be by way of the sale of a single portfolio.  Mr. Mason would not accept that.  He indicated that by prudent lotting, there was the potential for a saving of between £600,000 and £800,000; and that any prudent purchaser would look at that possibility.  Mr. Clutterbuck, in closing, submitted that Mr. Mason’s evidence on that point was really unchallengeable, and that it should lead Mr. Taub to re-visit his 50 per cent portfolio discount in the light of that.  Mr. Clutterbuck made the point that if – as was Mr. Roe’s concern – a small rump of properties remained, it would still be possible to put those up for sale in the next convenient auction.  Mr. Grant addressed the concept of a portfolio discount at paragraphs 30 to 34 of his written skeleton.  I have borne all that he has to say there in mind.

59.	On the issue of a portfolio discount, it seems to me that I should prefer Mr. Mason’s evidence to that of Mr. Roe.  I do so essentially because Mr. Mason’s evidence on this point seems to me to accord with common sense.  If there is to be a portfolio discount at all, it seems to me that one should adopt a percentage discount of 5 per cent and not 10 per cent.

60.	The final issue on property valuation I have to resolve is the level of selling costs.  On this I accept Mr. Mason’s evidence.  When offering all 46 properties for sale, whether as a single portfolio or as a smaller number of individual portfolios, it seems to me that estate agents would be prepared to accept the instruction, because of the potential size of the commission, for a fee of 1 per cent; and that solicitors would charge no more than half a per cent on the sale of the portfolio properties. 

CHAPTER 5 – THE VALUATION OF THE SHARES
61.	Here there was very little challenge to Mr. Taub’s general approach.  The main area of contention centred upon paragraph 4.19 of Mr. Taub’s share valuation report.  That related to the discount for tax and other factors.  At paragraph 4.19, Mr. Taub said that, in his view, the value of Annacott is not necessarily the same as the aggregate value of its net assets for two principal reasons: (1) In the event of Annacott selling its portfolio of properties at the valuations arrived at by the valuers, a liability to tax would arise.  However, such a liability would only arise if the actual properties were sold, and the potential amount should be discounted in order to reflect the time value of money.  (2) Even in the absence of a contingent tax liability, a portfolio of properties will normally attract a lower value than the aggregated value of the individual properties.  

62.	At paragraph 4.20, Mr. Taub said that, in his experience, there was no standard formula for arriving at the appropriate level of adjustment: 
“However, based on my experience and judgment, I consider it reasonable to assume a total discount equivalent to 50 per cent of the contingent corporation tax liabilities that would arise on the sale of the properties”.  

In cross-examination by Mr. Grant, it became apparent that Mr. Taub had also included the selling costs within his 50 per cent discount; and that he had included selling costs at an assumed level of 3 per cent.  I have found that the selling costs would be half that; and therefore it may be that Mr. Taub needs to re-visit his aggregate 50 per cent deduction.  

63.	Mr. Grant subjected Mr. Taub’s adoption of only a 50 per cent discount to a considerable degree of challenge in his cross-examination.  I am satisfied that Mr. Taub was not shaken in his evidence by that cross-examination, and that if a discount of this kind is appropriate at all, then the court should adopt Mr. Taub’s discount of 50 per cent, subject to any adjustment to reflect the fact that I have found that selling costs would be less than he had assumed, and that the portfolio discount may also be less than he had assumed because it should only be 5 per cent.  The basis of Mr. Taub’s evidence was that a prudent owner of the company would not have to sell the properties; the shareholders could sell their shares without selling the properties, and the directors of the company could raise cash by re-mortgaging the properties, rather than selling them.  As I say, that position was maintained by Mr. Taub in cross-examination despite serious challenge by Mr. Grant.  Mr. Grant submitted that the appropriate course, given the company’s business model, would have been to have taken a 100 per cent discount.  Mr. Taub did not agree.  It was put to him that the two discounts he had identified in paragraph 4.19 were entirely different conceptually.  Mr. Taub initially accepted that.  He said that neither of them was capable of any scientific calculation whatsoever.  It was a broad brush.  All a valuer could do would be to make a deduction which made him feel that the resulting figure was reasonable, and that was what he had done.  I intervened and said that, whilst the two deductions might be conceptually different, they both seemed to me to be affected by the same consideration, namely how a prudent management and direction of the company would be likely to behave in terms of dealing with the company’s properties.  Mr. Taub accepted that that was absolutely right; and he said that the 50 per cent discount was intended to reflect both factors.

64.	Mr. Grant had addressed this issue at paragraphs 44 to 47 of his original skeleton, and Mr. Clutterbuck at paragraphs 29 to 30.  As I say, if a discount is appropriate at all, then I would accept Mr. Taub’s evidence on this, subject to such revisions as he might make in the light of this judgment.  However, it seems to me that it is not appropriate to make any discount against the valuation of Mr. Attwood’s shares for either their lack of marketability or for the fact that what is being sold is a portfolio of properties.  In my September judgment, I gave my reasons for saying that there should be no discount for lack of control.  The issue of any alternative, or further, discount, for lack of marketability of the shares, was not raised before me in September.  Had it been, I would have rejected the submission for precisely the same reasons that I rejected the submission that there should be any discount for lack of control of the company.  It seems to me that, if there were to be a discount on the grounds of lack of marketability in respect of Mr. Attwood’s 50 per cent, then there should be an equal discount on the grounds of lack of marketability for Mr. Maidment’s 50 per cent share in the company.  The result would be that the aggregate values of those two equal share holdings would be less than the net value of the company’s assets.  It seems to me that that would not reflect the reasoning that led me to adopt a share valuation approach to the remedy in the present case.  Mr. Grant stressed that the reason why I had found that there should be a buy-out order was because I was satisfied that what should have happened in this case is that the company should have been wound up, and the company’s assets liquidated.  It seems to me that that finding does not justify a valuation of Mr. Attwood’s shares on a liquidation, or break-up, basis when liquidation or break-up is not what in fact has happened to the company.  What happened to the company was that Mr. Maidment transferred the properties to himself.  He apparently retains them to this day.  I say that because, at the July hearing, undertakings were given whereby notice of any property transfers would be given to Mr. Attwood or his solicitors; and I am told that no such notice has been given.  Mr. Clutterbuck also made the point that when one looks to see what has actually happened, by reference to the company’s accounts, for the year ending 28th February 2006, some £148,000 corporation tax was paid (see C27, page 335); for the following tax year, ending 28th February 2007, some £66,711 of corporation tax was paid (see C27, page 350); and in the following year there was no corporation tax paid at all (see C27, page 365).  It may be that there should be some discount to reflect the corporation tax that was actually paid by the company as a result of the property transfers to Mr. Maidment.  What allowance should be attributed to that discount should be referred to Mr. Taub.  However, subject to that, it seems to me that, notwithstanding all the submissions of Mr. Grant, there should be no further discount, either for the lack of marketability of Mr. Attwood’s shares, or for the sale of the properties as a portfolio.

65.	One must look at the reasons that I gave in my September judgment for proceeding with a valuation of Mr. Attwood’s shares at all, and, on the footing that there was to be such a valuation, on the basis that I then prescribed.  At paragraph 11 of my September judgment, I said that it seemed to me that I had to temper the relief to be granted in this case to its specific facts.  I found support for that in the observations of His Honour Judge Purle QC in the case of Sunrise Radio Limited where, at paragraph 305, Judge Purle had said that the court must make the most suitable order to suit the facts of the particular case before it.  The court must do what is fair.  Having expanded upon the position at paragraph 11, I said that it seemed to me that the share ownership of Annacott should have been addressed by Mr. Attwood and Mr. Maidment no later than some time immediately after the end of 2003.  Instead, it was not until October 2005 that Mr. Maidment embarked upon a process of transferring Annacott’s assets to himself.  He should not have done that.  What he should have done was either to have reached an accommodation with Mr. Attwood or, if he could not do so, to have taken steps to liquidate Annacott.  At paragraph 13, I said that it seemed to me that it would be over-compensating Mr. Attwood, and unfairly penalising Mr. Maidment for his conduct in transferring the properties to himself, for me simply to proceed to a valuation of Annacott on the footing that it had retained those 46 properties.  The fact is that Mr. Maidment had transferred them to himself.  What he should have done was to have reached agreement with Mr. Attwood or, if he could not have done so, to have taken steps to secure the liquidation of Annacott.  It would be penalising Mr. Maidment for his unfair conduct unduly harshly if I were to ignore the transfers and proceed as though Annacott still retained the properties.  The most appropriate way of addressing Mr. Maidment’s conduct was to take a valuation of Annacott on the basis of the state of affairs that had pertained immediately before Mr. Maidment began the transfer of the properties to himself.  If I were to do that, it seemed to me only fair that Mr. Attwood should also be awarded the equivalent of interest on the amount applicable to the value of his shares as at 1st October 2005.  At paragraph 18, I said that the appropriate way to redress the unfair prejudice suffered by Mr. Attwood as a result of Mr. Maidment’s conduct was to order a buy-out on the basis of values as of October 2005, together with quasi-interest.  I said that I had had regard to the overriding principle applicable to the assessment of damages generally: that a sum of money should be awarded which would put the party – in this case Mr. Attwood – who had been injured in the same position as he would have been in if he had not sustained the unfair prejudice for which he was now receiving his compensation or reparation.  

66.	It is true that I referred to what should have happened; but it does not follow from what should have happened that I should undertake a valuation of Mr. Attwood’s shares on a basis which assumes that that had in fact happened, closing my eyes to what in reality had happened, namely a transfer of the properties to Mr. Maidment.  At paragraph 19, I indicated that the purpose of the buy-out order was to remedy the unfair prejudice suffered by Mr. Attwood.  I said that it would be remarkable for him to get less, and still more remarkable for Mr. Maidment to get more, than their pro rata 50 per cent values, reflected by their 50 per cent shareholdings in the company.  I expressed myself to be satisfied that, in the circumstances of the particular case, the only fair course was to require Mr. Attwood’s 50 per cent shareholding to be valued on an undiscounted basis.  It was for those reasons that I rejected the idea that there should be any discount to reflect Mr. Attwood’s lack of control, bearing in mind Mr. Maidment’s position as the director of the company. 

67.	For all of those reasons, it seems to me that it would be wrong to proceed to value Mr. Attwood’s shares having regard either to their lack of marketability, or on the basis that all of the properties are being sold as a single portfolio.  I am reinforced in that view by the submissions of Mr. Clutterbuck, and the authority to which he referred in support.  In closing, Mr. Clutterbuck submitted that the key here was Lord Millett’s speech in the case of CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] UKPC 16, reported at [2002] BCC 684.  Mr. Clutterbuck submitted that the aim was to reach the fair value for the shares as between the parties to the proceedings.  Valuation was a tool, but it was not a straitjacket.  Mr. Grant objected that this was unfair.  He submitted that it would result in over-compensation to Mr. Attwood if his shares were valued otherwise than on a break-up basis.  I fail to see why that is the case given that the company has not in fact been broken up; rather Mr. Maidment has acquired its assets for his own benefit.  As I say, I derive support for that from the authority cited by Mr. Clutterbuck of CVC v Demarco.  That was a case where a minority shareholder had been excluded from the management of a company.  The majority refused to offer to purchase the minority’s shares for more than their liquidation value.  On the legislation that applied in the Cayman Islands, the only remedy available to the minority shareholder was to petition for the company’s winding-up on the “just and equitable” ground.  At first instance, an injunction had been granted to restrain presentation of a winding-up petition, but that injunction had been discharged on appeal; and the Privy Council dismissed a challenge to the Court of Appeal’s decision.  The basis upon which the Privy Council proceeded, in an opinion delivered by Lord Millett, was that the amount that the petitioner would obtain in respect of his share on a winding-up might represent the least it could be worth to him, but it did not represent the fair value as between the parties.  The fairness of the offer should be judged by reference to what would happen if it were to be accepted, not if the offer were to be refused.  It was said that the petitioner’s interest in the joint venture could not be determined by a sale of his shareholding to his co-venturers unless the price reflected his share in the underlying business.  The subject-matter of the notional sale, which formed the basis of the valuation, was, therefore, not the petitioner’s minority holding but the entire share capital of the company.  The majority’s offer to purchase the minority’s interest at a valuation based on the company’s break-up, or liquidation, value was held to fall far short of a fair offer, and failed to remedy the petitioner’s complaint.  On that ground, the majority was not entitled to restrain the presentation of a winding-up petition.  

68.	At paragraph 37, Lord Millett identified essentially three possible bases on which a minority holding of shares in an unquoted company could be valued.  At paragraph 38, he said that which of those should be adopted as the appropriate basis of valuation depended on all the circumstances.  He emphasised that the choice must be fair to both parties, and that it was difficult to see any justification for adopting the break-up, or liquidation, basis of valuation where the purchaser intended to continue to carry on the business of the company as a going concern.  It was said that that would give the purchaser a windfall at the expense of the seller.  At paragraph 46, it was said that the amount which the petitioner would obtain in respect of his shares on a winding-up represented the least that they could be worth to him, but it did not represent their fair value as between the parties.  The fairness of the offer should be judged by reference to what would happen if it were accepted, not if it were refused.  At paragraph 55, it was said that if the majority wanted to continue to carry on the company’s business as a going concern without the minority, it must offer to pay the minority the going concern value of his interest.  If the majority was unwilling to pay him more than the break-up, or liquidation, value of the minority’s interest, then the court might order that the company be wound up.  That would not obtain more for the minority than he had already been offered, but it would achieve a fair and just result between the parties by ensuring that they were treated equally.  It seems to me that all of that justifies an approach to valuation that ignores a break-up, or liquidation, of the company’s 46 properties.  It also justifies an approach which ignores any discount that might otherwise apply for marketability of the shares.  I should add that Mr. Taub, in any event, rejected the propriety of any discount for marketability in the course of a share valuation exercise of the present kind.  In short, I reject such a discount, first, because it is inconsistent both with the reasoning underlying my September judgment and with principle and authority.  Secondly, the rejection of such a discount is supported by the expert evidence of Mr. Taub.  Thirdly, and if necessary, it is supported by common sense: if there is to be a discount for Mr. Attwood’s 50 per cent shareholding, there should also be a discount for Mr. Maidment’s 50 per cent; and, as I say, that would result in the 100 per cent of the shares being worth less than the company’s net value as a whole.

CHAPTER 6 – QUASI-INTEREST
69.	Given the time of the day, I will deal with this more shortly than I otherwise might.  The issue of quasi-interest was addressed in Mr. Clutterbuck’s skeleton argument at paragraphs 31 to 38, and in Mr. Grant’s skeleton argument at paragraphs 52 and following.  Those submissions were fleshed out in the course of closing submissions.  For Mr. Attwood, Mr. Clutterbuck submits that the authorities demonstrate that interest should be awarded at the rate applicable to borrowers, and not the lower rate available to those lending money.  In support of that proposition, Mr. Clutterbuck relies principally upon the judgment of Rix LJ in the case of Jaura v Ahmed [2002] EWCA Civ 210.  I was taken to that judgment; the relevant passage begins at paragraph 18.  Reference is there made to the earlier case of Tate & Lyle Food & Distribution Limited v GLC [1982] 1 WLR 149.  In that case, the court awarded interest by reference to borrowing rates, the appropriate rate awarded being 3 per cent over base rate from time to time; although at paragraph 25 Rix LJ expressed the strong suspicion that even that figure did insufficient justice to Mr. Jaura.  At paragraph 26 Rix LJ said: 
“It is right that defendants who have kept small businessmen out of money to which a court ultimately judges them to have been entitled should pay a rate which properly reflects the real cost of borrowing incurred by such a class of businessmen. The law should be prepared to recognise, as I suspect evidence might well reveal, that the borrowing costs generally incurred by them are well removed from the conventional rate of 1% above base (and sometimes even less) available to first class borrowers.”

70.	On the basis of that authority, Mr. Clutterbuck submits that up to the consistent reduction in base rates that took effect from about 31st October 2008, I should award a rate of base rate plus 3 to 4 per cent; and that after that date I should adopt a fixed rate of 8 per cent per annum.  Mr. Grant says that I should adopt the rate applicable to an investor or lender.  He begins by reminding me that at paragraph 32 of his judgment in the case of Profinance Trust SA v Gladstone [2001] EWCA Civ 1031, [2002] 1 WLR 1024 (which is the case that established the jurisdiction to award quasi-interest in unfair prejudice cases), Robert Walker LJ emphasised that the power to make such an award of interest is one that should be exercised with great caution.  Mr. Grant submitted that the award of interest must be compensatory.  Here, Mr. Attwood has not produced evidence that he has suffered any specific loss.  He submitted that Mr. Attwood had been paying himself substantial sums of money by way of remuneration from Tobian Properties Limited.  He has adduced no evidence that he himself had been borrowing.  Mr. Grant distinguished Jaura on the footing that there an actual loss had been suffered by reason of an actual breach of duty.  Money had not been paid over in default of an obligation to make payment.  He made the point, by reference to paragraph 17 of Rix LJ’s judgment, that Jaura’s expenditure had actually been financed by borrowing.  Mr. Grant also laid great emphasis upon the fact that Mr. Attwood was said to have made a deliberate and calculated decision to hold back action to liquidate Annacott whilst the going continued to be good with the other company, Tobian.  He submitted that, in the present case, the delay was to be measured in terms of years, from 2003 through to December 2008.  As to the relevance of delay, Mr. Grant took me to paragraph 55 of the judgment of Jackson J in the case of Claymore Services Limited v Nautilus Properties Limited [2007] BLR 452.  Mr. Grant submitted that the court had to do justice in this case between the parties.  Mr. Grant took me to the decision of Warren J in the case of Southern Counties Fresh Foods Limited [2010] EWHC 3334 (Ch).  He submitted that it would appear from the judgment in that case that Warren J had awarded interest calculated by reference to saving rates, and not borrowing rates.  Mr. Grant also relied upon the decision of His Honour Judge Humphrey Lloyd QC in the case of Amstrad plc v Seagate Technology Incorporated [1997] 86 BLR 34 in support of the proposition that the court should only award interest at a rate appropriate to lenders.  

71.	I derive little assistance from the various authorities identified by Mr. Grant.  The case of Claymore Services v Nautilus Properties was a claim for sums due under a building contract.  The Amstrad case was one where interest at lenders’ rates was adopted because the receiving party had substantial cash deposits and, on the facts, the receiving party was to be treated as a lender and not as a borrower.  In the case of Southern Counties Fresh Foods Limited the only evidence from either party to the proceedings would appear to have related to savings rates and not borrowers’ rates: see paragraphs 97 to 99.  

72.	Here, it does not seem to me that I am helped by the witness evidence adduced by either party.  So far as borrowing rates are concerned, the only evidence I have from Mr. Attwood relates to small sums of money being advanced on an unsecured basis, which is wholly different from the sort of award to which interest is to be applied in the present case.  So far as Mr. Maidment’s evidence is concerned, I only have evidence in relation to instant access or electronic banking accounts.  The low rates of interest spoken to in the evidence do not accord with my own experience of the rate of interest that one would earn if one were to be placing a substantial sum of money on deposit with no access for a substantial period of time, which seems to me to be the appropriate analogy to be adopted in the present case.  

73.	I have to start by identifying whether the appropriate rates here are borrowing rates or lending rates.  Again, I have to try and do justice as between the parties.  It seems to me that the question of deliberate delay in bringing proceedings is not necessarily the right way to look at the matter.  As Mr. Clutterbuck pointed out, it was only when Mr. Attwood began to investigate the position, after the liquidation of Tobian, that he came to appreciate that properties had been transferred out of Annacott into Mr. Maidment’s own name.  It is not really a question of delay in terms of bringing a remedy on the part of someone who knew that a remedy was available to him.  However, it does seem to me that Mr. Attwood’s attitude is highly relevant to the basis upon which interest should be awarded.  Again, it seems to me appropriate to go back to my judgment of last September.  At paragraph 12, I held that Mr. Attwood had done nothing to address the position in relation either to Annacott or to Tobian because it had simply suited him to leave matters as they were, so as not, effectively, to rock the boat in relation to the company, Tobian, of which he was the 75 per cent shareholder.  At paragraph 15, I indicated that I should not have simply to attempt to pluck a rate of interest out of the air.  It was on that footing that I considered it to be more appropriate for both parties to be allowed to adduce evidence on the appropriate rate of interest.  I acknowledged that to adopt Mr. Clutterbuck’s rate of 8 per cent per annum, bearing in mind actual interest rates since October 2005, might be unduly harsh to Mr. Maidment.  I simply reserved the issue of interest, having made it clear that, in principle, it should attach to the appropriate buy-out price of Mr. Atwood’s shares.  In the event, as I have said, and for the reasons I have given, I do not find the actual evidence of interest rates that have been provided to me to be at all helpful, whether one adopts the investment or the borrowing basis.  At the time I delivered my September judgment, I had not been addressed on the question whether interest should be awarded on a borrowing, or a lending, basis.  It seems to me here that the appropriate basis must be an investment, or lending, basis.  Mr. Attwood chose to leave his monies invested in Annacott.  In those circumstances, it would be wrong for him to be awarded interest on a borrowing basis, particularly in the absence of direct evidence of whether he had been borrowing money, and, if so, at what rates.  It seems to me that the appropriate basis for an award of interest should be on the lending, or investment, basis.  Mr. Attwood has regrettably not chosen to adduce evidence himself of what rate of interest he would have earned.  The only evidence comes from Mr. Maidment; and, as I have indicated, it seems to me the evidence he has produced is of unduly low rates of interest which do not represent what a prudent investor, with money of the level we are talking about, would have earned had the monies been placed on deposit.

74.	I am left, therefore, with little better guidance than I was in September.  Doing the best I can, and based upon my own experience and knowledge, and bearing in mind that base rates have been kept artificially low in order to promote the general interests of the economy and, as a result, have resulted in better deals being around for investors than there might have been if base rates were at a higher level, it seems to me that the appropriate rate to take is a rate of 2 per cent above base up to 31st October 2008 and a slightly higher rate of 3 per cent above base thereafter.  That, it seems to me, is the best I can do on the available evidence.

CHAPTER 7 – CONCLUSION
75.	This judgment has now lasted about three hours.  Clearly I have not succeeded in sewing up all the relevant matters.  I have tried to give an indication of the base valuations to be adopted in relation to those properties where Mr. Mason was cross-examined; and I have tried to give guidance as to what sort of discount from his base valuations may be appropriate to take as starting valuations for the other properties.  I have indicated a general level of discount for condition; I have indicated a general level of discount for the existence of an assured shorthold.  I have said what rate of discount I would have applied for a portfolio sale if I had considered such a discount to be appropriate.  I have indicated what percentage I would have adopted for selling costs, again had I considered that to be appropriate.  I have indicated that I would not have allowed any discount for marketability.  It seems to me that Mr. Taub has to re-visit all his figures.  He now knows what the mortgage borrowings were; he now knows what the property values were, and they are not the same on which he has proceeded, even in his most recent schedule.  He will, when he receives a transcript of this judgment, have the benefit of my views on portfolio discount.  It does seem to me that it may well be that there should be a small discount to reflect the fact that the properties were actually  sold to Mr. Maidment, resulting in a relatively modest charge to corporation tax.  All I think I can do is to leave it to Mr. Taub to re-visit all the figures in the light of my judgment.  I make it clear that what I have in mind is a mathematical re-visitation, rather than a fundamental reconsideration of the whole matter.  What I would suggest is that a transcript of this oral judgment is obtained and submitted to Mr. Taub.  If points remain outstanding, an attempt should be made to address them by agreement between the parties or, if necessary, by reference to me on paper.  However, if matters still remain outstanding after all of that, then I would propose that the matter is brought back before me when I am sitting in London for three and a half weeks from 25th June, on a date convenient to both counsel.  If it cannot be accommodated in London during that period, then I am afraid a journey may have to be made up to Manchester for me to deal with any remaining outstanding matters there.