Cobden Investments Ltd v RWM Langport Ltd & Ors

Following the handing down of my judgment, the parties now seek further orders and directions concerning the relief to be granted.

Following agreement between the parties, I have made an order for the purchase by RWM of CIL’s shares in SCFF with a valuation date of 31 December 2008.

The experts will need to adjust their previous valuations. For instance, certain figures will need to be brought up to date in order to reflect the position as at the valuation date. More importantly, adjustments may need to be made to reflect my findings of fact. There are two ways in which these findings could affect the amount to be paid for the shares. The first is to reflect, in effect by way of compensation, matters relating to the past; the second is to reflect, going forward, the impact which my findings have on the profitability of SCFF and thus on the value of its shares.

Quantum schedules were prepared by Mr Grantham and Ms Gread for trial which identified the areas which they considered relevant to their valuation exercise. Mr Weatherill and Mr Griffiths have helpfully used these schedules to ascertain precisely where the parties are in agreement or in dispute. They have addressed detailed submissions in their skeleton argument under each disputed area; Mr Joffe and Mr Collingwood have responded to that skeleton and I have received further written and oral submissions focusing on the remaining areas of dispute.

Mr Weatherill has identified a number of areas where he says that further expert evidence should be admitted. This evidence is to come from one expert whom he describes as a cow expert and from another whom he describes as an electricity expert. He wishes the cow expert to give evidence about the opportunities which would have been available for SCFF to trade in cows to the extent which I have indicated in the judgment and about the fair level of kill fees; and he wishes the electricity expert to give evidence about the appropriate allocation of electricity charges in respect of the quarter chiller. He also wishes to adduce further evidence about the appropriate level of the lamb procurement fees, and further evidence from Mr Fisher. Clearly he must be allowed to adduce further factual evidence, including from Mr Fisher, in order to bring the material before the court and available to the experts up-to-date to the valuation date. So far as Mr Fisher is concerned, Mr Joffe was concerned that he should not now be allowed to give expert evidence since he did not, in the first place, give evidence as an expert witness. Mr Weatherill does not disagree with that approach; he accepts that Mr Fisher was only a witness of fact but says that the additional evidence which he is to give will be (a) factual and (b) updating. If that is all that is to be done, there can be no objection and I accordingly allow further evidence from him to be adduced. If what he says goes beyond the area that Mr Weatherill has indicated, objection can be taken at a further hearing.

So far as any further factual evidence is concerned, Mr Joffe submits that CIL should not be permitted to adduce any further evidence in order to remedy any deficiencies in its evidence that were exposed in the judgment. He says that CIL had every opportunity to call at trial all of the available evidence in support of its extensive allegations. He has referred me to the decision of Mr Philip Sales QC (now Sales J) in his supplementary judgment in Fisher v Cadman [2005] EWHC 2424given on 14 June 2005 where he identified the principles relevant to the admission of further evidence.

The factual background in Fisher v Cadman needs to be borne in mind. After the handing-down of the judgment, two of the respondents, Cedric and Rodney Cadman, commenced a search of the documents relating to the company which were located in its registered office in the hope of finding some additional material which they might introduce as evidence in an effort to show that the judge was wrong in relation to the findings of fact set out in the judgment. Some further material was unearthed. They claimed that this further material should be admitted as evidence and the hearing on the merits re-opened. This was an attempt, it needs to be emphasised, to introduce new evidence to show that the judge was wrong in his findings of fact, evidence which should and could have been searched for before the trial and made available if it was to be relied on.

In paragraph 4 of his judgment, Mr Sales said this:

“It is common ground that the Court has jurisdiction to re-open a hearing on the merits and admit new evidence after an approved judgment has been handed down, before the court's final order has been made. The legal position is helpfully set out in the judgment of Pumfrey J in Navitaire Inc v Easyjet Airline Co. Ltd [2005] EWHC 0282 (Ch), at [36]–[39], and I was also referred to the notes in CPR 40.2.1. The jurisdiction to re-open a trial at this stage is one to be exercised sparingly and only in exceptional cases. It is in the public interest and the interest of litigants as a whole that there should be a reasonable degree of finality in litigation, and the principles governing the exercise of this jurisdiction have been developed with that consideration firmly in mind.”

The judge then stated his view that guidance, by way of analogy, can be derived from the principles governing the admission of new evidence upon an appeal to the Court of Appeal, set out by Denning LJ in Ladd v Marshall [1954] 1 WLR 1489 at 1491.

Applying those criteria, the judge refused to allow the additional evidence. That is hardly surprising given the nature of the evidence sought to be adduced, the time at which it was sought to be adduced and the purpose for which it was being adduced, namely to seek to persuade the judge to change his mind.

Mr Joffe says that I should likewise refuse to admit any further factual evidence in the present case other than purely updating material. He also says that further expert evidence should not be allowed to fill the gaps in the evidence, which is needed to establish the quantum of compensation in areas where, according Mr Weatherill, it ought to be paid.

Mr Joffe also submits that, in relation to the compensation claims generally, CIL must be content with the evidence which has already been adduced and that, in an unfair prejudice petition, it is not the case that every little element of potential financial adjustment has to be gone into. An unfair prejudice petition is not an action for an account by the company against its directors or those responsible for its management. Unfair prejudice is what has to be established in order to ground a petition; but once established, it is for the court to determine in its discretion what a just and proportionate remedy is in all the circumstances. He refers to Lord Hoffmann’s speech in O’Neill where, in the context of offers to purchase shares so as to avoid the need for continuing with a petition he said this:

“Thirdly, the offer should be to have the value determined by the expert as an expert. I do not think that the offer should provide for the full machinery of arbitration or the half-way house of an expert who gives reasons. The objective should be economy and expedition, even if this carries the possibility of a rough edge for one side or the other (and both parties in this respect take the same risk) compared with a more elaborate procedure. This is in accordance with the terms of the draft Regulation 119: Exit Right recommended by the Law Commission: see Appendix C to the report, p. 133.”

Lawrence Collins J referred to this passage without disapproval in Clearsprings Ltd [2003] EWHC 2556 at paragraph 25.

The same should apply, on Mr Joffe’s argument, to a valuation which is in fact carried out by valuers following a court order and, in the event of dispute, the court itself should be willing to adopt a rough edge approach in order to achieve economy and expedition. I accept that there is something in the point but by the time a petition has been heard in full and at the length of the present case, the words “economy” and “expedition” may seem somewhat foreign. Mr Joffe concludes that the rough edge approach leads to the conclusion that I should not admit any further evidence. The problem with that approach is that I cannot fully judge just how rough the edges are without knowing what the evidence might establish.

Mr Weatherill submits that not only do I have jurisdiction to admit further evidence, but also that the just and proportionate response is that I should do so. He submits that consideration of the principles explained by Mr Sales do not lead to Mr Joffe’s conclusion. He makes two inter-related points.

Firstly, he points out that my order will be for an order for the sale of CIL’s shares at a valuation which is, ultimately, in the control of the court. The court will fix the price, in the absence of agreement, in the light of all the evidence. He submits that the court should have available to it the best available evidence of that value and should not be restricted to the evidence adduced at trial.

Secondly, he submits that unfair prejudice petitions are already very expensive to conduct and that petitioners and their advisers cannot be expected to cover in their evidence every permutation and combination of possible findings by the court which could necessitate a huge amount of expert evidence to deal with each possible result. I suppose he could, by way of analogy, point to the common form or order in trust or partnership disputes for the taking of an account by the court. But against that, Mr Joffe could reasonably point to another analogy which is a claim for damages in, for instance, a professional negligence action. In the absence of a split trial of liability and damages, a claimant must bring all of his evidence to the court at trial and cannot then, almost as of right, supplement it on the damages assessment.

These analogies are not, in the end, of help; unfair prejudice petitions are in a class of their own. In the end, the issues are ones of fairness and justice and of proportionality. Indeed, it is those very aspects which underlie, under the CPR regime, the modern approach, albeit in the light of Ladd v Marshall principles, as explained by Mr Sales.

I do not doubt the correctness of what Mr Sales says in paragraph 4 of his judgment in Fisher v Cadman. Further, the analogy he draws is a helpful one where the trial judge is being asked to reopen his decision and thus possibly avoid the need for an appeal with an order for retrial were the Court of Appeal to admit the new evidence on Ladd v Marshall principles: see paragraph 37 of Navitaire Inc. v Easyjet Airline Co. Ltd citing Stewart v Engel [2000] 1 WLR. 226 and Townsend v Achilles (unreported 1 July 2000).

However, it must be remembered that his observations and those of Pumfrey J relate to cases where it was sought to introduce new evidence in order to reverse the findings already made. In other cases it is no doubt the case that the court should be cautious about admitting further evidence after a long hearing has finished, even before judgment is given, but whether to do so is very much a matter for the discretion of the court having regard to the overriding objective and is not governed by Ladd v Marshall criteria.

Similarly, in the present case, I do not regard myself as required to apply those criteria. This is not a case where I am being asked to admit new evidence to reverse findings which I have already made. It is sought to adduce the new evidence to fill some of the gaps which I had identified, the purpose being to enable me to achieve as fair a result as possible as between the parties particularly so far as concerns the purchase price of the shares. I do not consider that I can, a priori, say that CIL can or cannot adduce further evidence; rather, I need to address each aspect separately. I therefore propose to address the various pieces of new evidence which Mr Weatherill wishes in due course to adduce aspect by aspect. I intend to be cautious about what I do admit: it would not be right simply to allow CIL to adduce whatever further evidence it thinks might be helpful to its case on valuation and compensation. But whilst being cautious, it is right that I should admit further evidence if to do so would further the overriding objective to deal with the case justly. In that context, proportionality is important as will be the additional cost of adducing further evidence if that evidence could and should have been dealt with at trial.

My approach takes account, I consider, of Mr Weatherill’s submissions that CIL cannot be expected to have addressed every possible permutation and combination of possible conclusions which the judge might reach. My approach also reflects, I consider, Mr Joffe’s counter-submission that CIL has had every opportunity to adduce all of its evidence and has indeed put before the court a mass of material much of which he would no doubt say is immaterial; it would not be right to take a course which would increase the already huge costs. In deciding whether or not to admit it, I will take account of Mr Joffe’s “rough edge” submissions which, I acknowledge, have considerable force.

There is one further point which is common to a number of the outstanding areas of dispute. Mr Joffe correctly points out that the petition was not an action for breach of fiduciary duty against the RWM Directors or an action for an account against them or RWM. He submits that, in relation to matters which I have rejected as amounting to unfair prejudice, I should also reject any claim for compensation or adjustment in the purchase price to reflect those matters even where I have held that RWM should have accounted in some way for a benefit it received. I reject that submission insofar as it is one of principle. It is a submission which, I consider, is to be dealt with separately in relation to each relevant matter.

In the light of all of that, I now turn to the individual areas identified in the schedules prepared by the experts and on which my rulings are required (including rulings about further evidence).

2007 estimate: As Mr Weatherill says, this might better be described as “maintainable earnings”. The experts did not disagree on the final figure under this heading but this was on the basis of the Period 13 management accounts for 2007. Accounts have now been prepared for the period ended 31 December 2007 and further accounts to 31 December 2008 should shortly be available (if indeed they are not available by the time of this judgment). It seems to me that the experts ought to take the new figures into account given that the valuation date is now fixed at the end of 2008. If they cannot agree a figure, they will need to come back to court. Other adjustments may need to be made to reflect the matters discussed below.

SCS and SBO recharges: it should be possible for these to be dealt with now that the valuation date is agreed.

Trading in cows: This is the largest area of dispute between the parties.

Mr Weatherill refers to my judgment at paragraphs 430 to 432. He records me as holding, as I did in paragraph 432, that SCFF lost the opportunity to make a profit on the sale of bone-in meat and the opportunity to start building a base to re-establish the cow trading which JHC had previously carried on. But what I said in paragraph 430 must not be overlooked, namely that the trade actually carried on may not have been of great significance and may not even have been very profitable although that did not prevent RWM’s actions amounting to unfair prejudice. Further, I said that the opportunity might have formed a springboard from which SCFF could develop a successful export trade but that this was speculation.

Mr Weatherill draws attention to the agreement between the experts that RWM’s profits from trading cows bone-in was £70 per cow in 2006 and £50 in 2007. These figures were based on a review of sample costings provided by Mr Carswell, a review which disclosed sales of 4,630 or so cows in 2006 and 4,706 or so in 2007. On those figures, profits would have been £327K odd and £235K odd for 2006 and 2007. Mr Weatherill submits that the review suggests that had SCFF had the opportunity to trade in cows during and after 2006, it could have expected to make significant profits.

He therefore asks for CIL to be allowed to adduce the evidence of an “expert in cow trading” to give evidence as to the number of cows that SCFF might have expected to sell bone-in. He relates that to the recommencement of the trade which JHC had previously carried on and the possible development from that springboard. That on any footing goes considerably further than could be justified by reference to what I said. The unfair prejudice did not relate to a failure to recommence the trade previously carried on by JHC: it related only to the taking of opportunities which should have been brought to the attention of the SCFF board. Further, although the trade might have formed a springboard, success was, I considered, no more than speculation.

Mr Joffe says that I cannot now substitute for a finding of speculation a finding effectively that a profitable trade would have been established. He says that such a finding faces serious obstacles in the light of Matthew’s own evidence. I referred at paragraph 430 to Matthew’s attitude to trading cows. He was quite clear that he was totally opposed to killing cows for RWM on a fee basis; his position was that cows should be dealt with only on a traded basis. Mr Joffe put to him a number of scenarios. Typical is this exchange:

“Q. Let's assume that the Romford Wholesale bought 500 cows for boning out but it doesn't need that many?

A. Graham ordered them on a traded basis or a contract kill fee basis?

Q. He ordered them on a contract kill basis, and Graham Heffer says that in fact they don't need 500 they need 300, would Southern Counties take 200 off Romford Wholesale's hands and trade them? Would that be acceptable?

A.

No. No scenarios where Romford would have cows on a contract kill fee basis would be acceptable. Southern Counties should be trading in all the cows.”

It is necessary to be very careful about what Matthew is actually saying in this passage. Mr Joffe would have me understand Matthew’s answers as meaning that he would have rejected the 200 cows for trading by SCFF. It is not clear to me that Matthew can be understood that way. This question – and the same goes for the other scenarios put to Matthew – was whether what Mr Joffe was putting would be acceptable. Matthew’s consistent answer was that it would not be acceptable: but this was because he would not accept any arrangement under which SCFF would be killing cows for a fee rather than dealing on a traded basis. The scenario put by Mr Joffe was unacceptable not because Matthew did not want SCFF to have the 200 cows but because he would not find acceptable an arrangement under which RWM took the 300 cows. He was not asked whether he would in fact want SCFF to take the 200 cows even in the context of an arrangement which he clearly did find unacceptable. In other words, Mr Joffe’s question could be taken as asking “Is an arrangement under which RWM takes 300 cows for its own use and SCFF gets the other 200 acceptable” to which Matthew’s answer is “No” for the reason that the 300 cows should be traded and not killed for a fee.

All of that suggests that Matthew has never said that he would refuse point blank to allow SCFF to trade in cows at all so long as RWM was doing so. But against that suggestion, it can be pointed out that Matthew refused to consider test trades so long as SCFF was killing cows for a fee. Further, I have already concluded at paragraph 449 of my judgment that the RWM Directors cannot be held responsible for the absence of trading in cows (with third parties subject to the qualification expressed in that paragraph relating to cows which should have been offered to SCFF in accordance with 431).

In any case, RWM’s own cow trade was short-lived in fact and there are now no excess cows which it sells bone-in. There is a new customer base purchasing bone-out, which business RWM is entitled to conduct; the complaint if any (and it is not part of this complaint) is that SCFF is contract killing cows for RWM. The springboard argument is, as I see it, extremely weak since it would depend on CIL being able to show that SCFF would have a viable cow trade if only there had been brought to the SCFF board the opportunity to trade bone-in the cows which RWM in fact traded bone-in. This would be in a current situation where the springboard – the excess cows which RWM did not need for its own bone-out business – had ceased to exist as there are now no excess cows. The allegedly viable business would therefore depend on precisely that business (a) which SCFF did not in fact pursue and (b) for the absence of which I have held RWM cannot be held responsible.

Further, Matthew’s general attitude would appear to have been that there should be no cow trading unless and until RWM recognised that there should be no killing for a fee. The board as a whole could have overruled him but the prospect of its doing so must have been next to non-existent since the RWM Directors would also have taken some persuading.

The position may be different in relation to actual trades which took place and which should have been offered to SCFF and which the RWM Directors and Matthew, whatever may have been his attitude, should have procured for SCFF. But this would give rise only to an issue of compensation and not an issue of valuation going forward.

In all these circumstance, I reject Mr Weatherill’s application to call an expert in cow trading (whatever such an individual may be).

For the past, my decision is that SCFF should be compensated for bone-in cow sales by RWM in 2006 and 2007. This compensation is to take the form of an account by RWM of the profits made from this part of its business. This is a matter for the experts who will no doubt wish to consider whether they need to go beyond the samples which they have already considered (showing according to Mr Weatherill a profit per cow of £70 in 2006 and £50 per cow in 2007). I accordingly make the direction which Mr Joffe suggests and which Mr Weatherill agrees that the experts assess the net profits earned by RWM therefrom and the appropriate amount of compensation. Although unfair prejudice was established, that was to be found in the failure to bring the matter to the board of SCFF for proper consideration. I am entitled to apply broader equitable principles in considering whether any compensation should be awarded, otherwise CIL will be deprived of any financial relief in respect of the unfair prejudice.

Increase in kill fee cows and bulls: On the evidence before me at trial I decided (see paragraph 510 of my judgment) that a failure to agree a larger kill fee for cows and bulls was not unfairly prejudicial conduct. I was not persuaded on the evidence before me that the fee was in fact too low. I agree with Mr Joffe that this is a matter on which CIL is not entitled to adduce further evidence which could and should have been made available at trial. It would be difficult for me to accept such evidence as establishing a right to compensation because the kill fee should have been higher without at the same time saying that, contrary to my finding at trial, the failure was also undue prejudice. This is an aspect where Ladd v Marshall criteria are of relevance. Those criteria are not met. No further evidence should be allowed.

Electricitycharges: At trial, I decided that there was insufficient evidence to resolve this issue in a principled way. But it is a matter which ought to be comparatively easy to resolve. It will be recalled that the uncertainty arose from two factors: first which chillers were being used by SCFF and RWM respectively and second, the basis for attributing 73% of the meter reading to the chillers used by SCFF. As to the first, I have held that the quarter chiller was used by RWM, which I think resolves the question of who used what. As to the second, once it has been established who is responsible for what, it should not be difficult to ascertain (at least on the basis of current use of equipment on site) what proportion of the electricity is in fact used by whom. Mr Weatherill says this can easily be dealt with by an expert – a qualified electrician could attach additional meters to the supply for a test period in order to measure the percentage of the electricity used by the chillers. I have no evidence about how easy this would be to carry out. It does not seem to me that, in principle, it should be difficult or expensive or a cause of anything other than minor inconvenience. If that is right, it seems to me to be an entirely proportionate response to this uncertainty to resolve it in the way Mr Weatherill suggests. If in fact it is a more difficult or more intrusive exercise than I expect it to be, RWM can bring this aspect back again for me to rule on. For the present, I consider that Mr Weatherill’s proposal is fair and sensible and likely to produce a just result. This is a rough edge which CIL should be allowed to smooth. I accordingly allow this further evidence to be adduced. I hope that RWM will be able to agree appropriate access without the need for directions from the court.

I will give further directions if the parties are unable to agree a suitable protocol for the provision of the relevant further evidence to the valuers. I would hope that a joint expert could be agreed, but if that cannot be done CIL’s expert should report, giving RWM’s expert the opportunity to respond. If it proves impossible to obtain further evidence which is of real help, then I will determine the apportionment on the basis of the evidence already before the court doing, in the hallowed phrase, the best I can.

I will return to whether and if so how these charges should be reflected in the EBITDA and in a compensatory adjustment for the past when dealing with the recharges which RWM seeks to raise.

Effluent plant: I held that RWM should pay the lower of the cost of discharging direct into the sewer and a proportion of the overall cost based on volumes of water discharged. Mr Joffe accepts that “in future” in the absence of evidence from RWM, it must pay the latter amount, something which he says is for the experts to take into account in their valuation. The adjustment “in future” will, as with electricity charges, be reflected in SCFF’s EBITDA. There remains, again, the question of adjustment for the past. The issue was raised fairly and squarely in September 2006. I consider it appropriate that an adjustment should be made to the valuation to reflect this fair apportionment as from 25 September 2006, the date on which complaint was first made.

There may be an issue about SBO disposal. Mr Joffe takes issue with Mr Fisher’s figures for effluent and disposal costs. Mr Fisher showed these in his report (at paragraph 1.67). Mr Fisher was clearly proceeding on the basis that all of the costs comprised in his figure of £1,248,486 in that paragraph were costs of the plant otherwise his observations in paragraph 1.68 do not make sense: what he says there is that the re-charge for the effluent and disposal costs should be on the basis of water usage as all the water for the site goes through the effluent plant. However, Mr Joffe says that the figures include costs other than those of the plant. He submits that it is clear from my judgment that it is only the costs of the plant which should be rechargeable to RWM as part of the costs of the plant. It is correct that I was dealing in the relevant part of my judgment only with the costs of the plant; I was attempting to answer how the cost should be apportioned between SCFF and RWM. However, it is also clear from paragraph 744 that I was proceeding on the basis that the cost of the plant was the £1,248,486 referred to in Mr Fisher’s report. I was not then aware of any evidence, and am not aware today of any evidence, which suggests that some part of that figure was not in fact a cost of the plant. SBO recharges were, in any case, a separate issue (Issue 10 in the Joint Report of Mr Grantham and Ms Gread) so it would be surprising to find that costs attributable to SBO disposal would have found their way into the effluent plant costs. In any case, if the effluent plant was used as part of the process of SBO disposal, the cost of that use is part of the cost of the effluent part which falls to be treated in the same way as any other costs of running the plant.

Mr Joffe says this: “It is clear from the joint statement of Mr Fisher and Mr Grantham (section (3)….that they are disagreed as to whether the costs of the plant include the costs of SBO disposal”. However, the only reference to SBO disposal in that section is this: “Disagreed on whether costs associated with the effluent plant and SBO disposal, which are incurred by the Company, should be recharged to Romford Wholesale”. That, however, is not – at least so far as I can see – directed at a suggestion that part of Mr Fisher’s figure is not a cost of running the effluent plant at all. Rather, the disagreement is whether Mr Grantham was right in his approach that RWM should not pay anything towards the cost of the effluent plant because the water used by the boning hall could be discharged direct to the sewers without using the effluent plant.

Mr Weatherill says that he does not understand the point, describing it as a spanner in the works and expressing the hope that Mr Fisher and Mr Grantham can reach agreement. I hope they can too. In principle, if amounts have been included by Mr Fisher which do not form part of the costs incurred in relation to the effluent plant, they should not have been included. Since I am allowing Mr Weatherill to introduce further evidence, it is only right that Mr Joffe should, on this point, be afforded the same opportunity. He may accordingly adduce further evidence to establish as a matter of fact that Mr Fisher’s figure includes elements of cost which are not costs attributable to the effluent plant at all.

Subject to that, the costs of the plant from 25 September 2006 should be apportioned between SCFF and RWM pro rata to the volumes of water used as set out in Mr Fisher’s report at paragraph 1.68.

As with electricity charges, I will return to whether and if so how these costs should be reflected in the EBITDA and in a compensatory adjustment for the past when dealing with the recharges which RWM seeks to raise.

Insurance: I held at paragraph 743 of my judgment that there should be an adjustment of £23,000 pa in favour of SCFF. Likewise, this adjustment should be reflected in maintainable earnings. I do not understand there to be any ongoing dispute about this item.

Licence fees: It is now common ground that some licence fee should be paid in respect of the various areas of land which I dealt with from 21 February 2006. Mr Joffe put forward a compromise position: the experts are to be directed to apply a figure of £18,952 as the licence fee payable from 21 February 2006 for the disputed areas including the quarter chiller. Mr Weatherill has agreed that figure. Since 21 February 2006 pre-dates the date (29 August 2006) from which Mr Weatherill was contending as the very latest date from which a fee for use of the quarter chiller should be paid, Mr Joffe’s proposal, agreed to by Mr Weatherill, disposes of this issue. It is now for the experts to reflect that fee in their valuations.

There remains open the question of whether and if so how elements of account in the other direction ought to be taken into account in respect of the past. Mr Weatherill said in his skeleton argument that it would be helpful if it could be clarified whether or not those elements do in fact cancel each other out. Mr Joffe says that I should simply direct the experts to adopt the approach of taking into account, against the now-agreed licence fee, those elements of account operating in RWM’s favour, a submission to which Mr Weatherill responds by repeating his original plea for assistance. There also remains the question whether, and if so how, the elements of account in each direction should be reflected in the maintainable earnings of SCFF. The elements of account which are relied on by RWM are those which are dealt with under the next section, “Recharges”.

Recharges: If, as I have held, SCFF is entitled to a licence fee, RWM seeks, for the past, to obtain contribution from SCFF for various items of expenditure in respect of which, according to Robin, RWM would have sought payment if it had understood that it was itself to be liable for an occupation fee. These cross-charges relate to employment costs of RWM employees who carry out work for the benefit of SCFF without a proportion of their salaries being recharged to SCFF. The impact of these items on maintainable earnings is more complex as will be seen.

It will be remembered that I have rejected the “give and take” argument. But at the same time, I have not rejected the proposition that RWM should be entitled to raise charges for past services or that RWM is not entitled to argue that the cost of provision of services for which no charge was made in the past should be reflected in maintainable earnings. However, what I said in paragraph 718 of my judgment is not to be read as a licence for RWM to draw up a list of possible recharges and then to seek to set them off against all the heads of compensation in respect of the past.

It is helpful, I think, to record how the post-judgment submissions on this have developed. In his skeleton argument, Mr Weatherill submitted that, if RWM does not have to pay a licence fee, RWM should not be entitled to cross-charge for services rendered. He remarked that, although not pleaded as a defence to CIL’s trespass claims or service charge claims, it was Robin’s evidence that the give and take related to RWM’s occupation of parts of the premises and so, he submits, RWM should not be allowed to move the goal posts further. By that, I understand him to mean that RWM should not be allowed to set off any recharges against any other claims which CIL has established against RWM. What Robin actually said in relation to his failure to request contribution from SCFF to the cost of shared staff etc was this:

“Instead the only explanation I can offer is that as it developed over time and given that a number of the staff concerned were occupying premises owned by SCFF for which no charge was made, I think I simply regarded it as part of the general "give and take" between RWML and SCFF. However now that I see that the proportion of the salaries attributable to SCFF amount to some £197,657 per annum whilst the "rent" that the Cobdens are claiming should be charged amounts annually to £43,041, it is clear that SCFF gets the better end of the bargain”.

This is the only reference in his witness statement to “give and take”: no wider, general, “give and take” is identified. Indeed, I have rejected such a “give and take” argument. I should also mention that Robin referred to the use by Richard Phelps and his procurement staff of around 7 or 8 to a double portacabin that according to him, but denied by Matthew, is situated on part of the land leased to RWM. He said that RWM had not sought to charge SCFF a rent for this, despite the fact that RWM paid for the double portacabin and also paid for the installation of air-conditioning. No figure is put on the value of that use. Given that procurement was being effected largely if not exclusively for the benefit of RWM and given CIL’s complaints about the level of the procurement fee, it is far from clear that any cross-charge would, in principle, be appropriate even if I were to reject Matthew’s evidence about the site of the portacabin. Mr Joffe has not relied on this. I do not consider it any further.

Mr Weatherill went on to say that, if RWM wished to argue that these recharges in respect of employees should be taken into account in any valuation, it must prove its case in a more formal manner. The relevant employees would, he said, need to be called and to be cross-examined.

Mr Joffe responded in his skeleton argument that RWM was under no obligation to provide services and facilities to SCFF which it was currently providing at no cost. He submitted that RWM is entitled to reasonable compensation for providing such services through a recharge to SCFF and that any valuation of CIL’s shares in SCFF should reflect such recharge. I think that there were two parts of that submission: firstly, going forward, the EBITDA should reflect the recharge which would need to be made in the future; and secondly, that some adjustment should be made for the past, even if only to reduce or extinguish any liability for licence fees and possibly other claims which SCFF has against RWM. He suggested that the experts should be entitled in determining their valuation to reflect what in their expert opinion is an appropriate cost to SCFF for these services and facilities.

He also pointed out that the calling of the various employees to give evidence was disproportionate. It was precisely to avoid this exercise that a barrister was appointed to interview them, something which he did twice because CIL was dissatisfied with some of the material produced first time round. I think he is right to say that these witnesses should not be called. I consider that, for better or worse, the parties have to live with the results of the exercise carried out by the barrister (which were summarised in Mr Joffe’s written closing submissions at trial). This is one of those “rough edges” which are inherent in an exercise of the sort now being undertaken.

In a subsequent note and in his oral submissions, Mr Joffe submitted that the question of shared expenses cuts both ways. For example, CIL has sought to reapportion RWM’s contributions to shared expenses paid for by SCFF (eg electricity, effluent plant); in the same way, RWM should be entitled to set off against the compensation resulting from such reapportionment a due proportion of shared expenses paid for by RWM (eg employee costs). This, he says, was a point taken at the SCFF board meeting on 29 August 2006.

He also addressed briefly an argument on behalf of CIL that to allow RWM to obtain a benefit from charges which it has not previously charged would be unfair because the kill fee was set at a time when no such charges were made and were hence not reflected in the fee; the fee, it should be remembered, was set at an amount designed to provide a certain level of profit for SCFF. Mr Joffe says that this point too cuts both ways: the kill fee was set at a time when RWM did not have to pay for the additional costs claimed by CIL eg licence fees.

Mr Weatherill responded to all this in writing and orally. He submits that it is unjust for RWM now to raise charges for these services going back over the years when SCFF is not entitled to do so. Whilst accepting that the question of recharges was raised at the board meeting referred to by Mr Joffe, he emphasises that this was not until August 2006 and that it was raised only in answer to the allegation that RWM was occupying areas outside the premises demised by the Lease. There is, he says, nothing to suggest that the cost of services provided by RWM was part of some more general “give and take” for any other benefit enjoyed by RWM at the expense of SCFF.

As to maintainable earnings, he then considers the position of the hypothetical purchaser who would look carefully at the taking advantage of the services provided by RWM employees; a purchaser would look carefully at the services provided by two employees referred to by Matthew. I note that the barrister’s interviews of the staff and the production of his evidence post-dates Matthew’s evidence. The barrister’s evidence is independent and grounded on the result of his interviews. I consider that it is his evidence rather than Matthew’s which should be relied on as far as it goes.

Finally, Mr Weatherill returns to his point about the kill fee. He says that if RWM is now going to charge SCFF for services rendered, there will be an adverse effect on the profits. However, in making that submission, he does not address Mr Joffe’s point that SCFF will have the benefit of such licence fees for the past as I might direct to be taken into account (and I might add of a reduction of expenditure in electricity charges and effluent and disposal costs).

There are thus two main issues to resolve. The first is what account should be taken of the recharges claimed in fixing the EBITDA; the second is what if any adjustment should be made to reflect the compensation claimed by CIL on behalf of SCFF and the recharges claimed by RWM for the past ie for the period ending 31 December 2008 being the valuation date.

Dealing first with maintainable earnings, it is important at this stage to recognise the common methodology of the experts which, on the basis of the accounts which they used, showed maintainable earnings of £905K. These accounts did not of course reflect the claims and recharges discussed above. If it is right to adopt this methodology – and by saying that I do not intend to cast any doubt on the appropriateness of the valuation technique which the experts have adopted – then one must be extremely careful about what adjustments to make to give effect to counter-factual matters, ie what should or might have happened.

It should be noted that, although he has produced figures for the various elements of charge and recharge, Mr Grantham considers that none of these adjustments (in either direction) impacts on his assessment of maintainable earnings since, on his view, it would be reasonable to assume that the MoU when renegotiated would leave the current position on foot. His rationale for that approach is that these aspects should be considered in conjunction with any discussions about the appropriate level of kill fee. This is a highly pragmatic approach and attractive for its simplicity

Ms Gread appears to consider that maintainable earnings should reflect not only the elements of account in favour of SCFF (ie licence fee, electricity charges, effluent costs) but also elements of account in the other direction ie the recharge in respect of employment costs. This position at the time of her Joint Report with Mr Grantham can be seen from her table (see Appendix 1 to the Joint Report) showing credit items for electricity, effluent and licence fees and a debit item (of £78K) for recharges. That figure is derived from Mr Fisher (producing a figure of £77,514), Mr Grantham’s corresponding figure being £192,157. Mr Grantham in fact contends for an even larger figure of £226K to take account of claims in respect of the canteen and the laboratory. However, I am not prepared to take account of either of those elements of adjustment since there is far more to them than has been addressed by Mr Grantham. If there is a rough edge in this litigation, that adjustment is one of them; and it is certainly not one to which I propose to set to work to smooth with file and sandpaper.

Mr Grantham bases his figure for recharges on the evidence of Mr Carswell. He addresses the evidence contained in Matthew’s third witness statement. He notes that Matthew disputes the percentages adopted by Mr Carswell for apportionment commenting that some adjustment appears to be accepted but noting also that no costing of the recharges using these percentages has been undertaken. I do not think that matters. The experts can do that once the appropriate percentages are determined.

So far as concerns Mr Carswell’s percentages, Mr Grantham says that he has reviewed the evidence from the barrister who had been instructed to interview the individuals who had supplied information to Mr Carswell and Matthew. He carried out a recalculation on the basis of that information which is to be found in Appendix 5 to the Joint Report and which results in the figure of £192,157 which I have mentioned. This, I note, is the figure for 2006. In carrying out this exercise, Mr Grantham also took account of information from Mr Carswell (also provided to Mr Fisher) providing detailed support for his recharges. Mr Grantham still considers Mr Carswell’s figure to be reasonable.

Mr Fisher has reached a different result. He has done so, however, on the basis of instructions to use different allocations of time/costs to SCFF. I find that to be a very curious instruction to have been given unless I, in turn, were to be provided with the evidence which would justify the alternative instruction. The important evidence before the court is that of the barrister who was instructed precisely to avoid disproportionate cross-examination of the witnesses. I have already dealt with this aspect. I consider that Mr Grantham’s figure of £192K should replace Mr Fisher’s figure of £78K in Ms Gread’s calculation subject to the following point.

The point is this: Matthew asserted in his third witness statement that certain costs included in the recharge figure calculated by Mr Carswell had already been recharged by RWM to SCFF. Mr Grantham’s view, after a thorough review, is that Matthew is incorrect subject to one item which Mr Grantham identifies. I simply do not have the material on which to resolve this issue myself nor have I been addressed on it. Mr Fisher has not challenged Mr Grantham’s view so far as I am aware. I propose to take no account of this point.

There is one other point. Matthew says that Mr Alexander is paid by SCFF but works for a considerable part of his time for RWM. Unless that is challenged, it is something which ought also to be reflected in the charges and cross-charges.

I have thus far been focussing on the quantum of the recharge which RWM could justify. The question then is whether, and if so how, any of the adjustment in each direction should be dealt with in the valuation. Mr Grantham would ignore all of them for the reason I have explained. As it happens, on his figures, that was an approach which was beneficial to CIL since there would have been a reduction in maintainable earnings of £159K had all of these matters been taken into account: see Appendix 1 to the Joint Report of Mr Grantham and Mr Fisher. Whilst I do not know the precise figures which the parties will reach in the light of my judgment and this further judgment, it looks pretty much to me as though taking account of all the charges and recharges, the recharge payable to RWM would slightly exceed the total of the charges payable to SCFF. It might be said that Mr Grantham’s approach therefore remains beneficial to CIL.

However, if I understand Mr Weatherill’s submissions correctly, he says that maintainable earnings should reflect the proper apportionment of electricity charges, effluent costs and the licence fee; but in the other direction recharges should be reflected, at the very most, by a set-off in respect of the licence fee but nothing else. He says that if anything more were allowed, it would undermine the basis on which the kill fee was set; it would be wrong to reduce the maintainable earnings by reference to the recharge without at the same time increasing it by reference to a notional increase in the kill fee. That approach might be said to be inconsistent with the approach of Ms Gread who has, as already pointed out, brought into account the full amount of the recharge (adopting Mr Fisher’s figure). However, her table includes an adjustment reflecting an increase in the kill fee (on CIL’s instructions) to £60 so that, taking the two elements together, a true assessment of SCFF’s position going forward is produced.

In that context, my judgment shows that there is nothing to support the figure of £60 – indeed I commented that there was nothing to demonstrate that even the lower £50 figure would be fair. Given that that figure cannot be supported as an element of her calculation of maintainable earnings, it may be that Ms Gread would take a different view about the inclusion of the recharges in that calculation; alternatively she might consider it appropriate to assume some other increase in the kill fee if the recharges are to be included. Some support for that approach can be found in Mr Joffe’s own submissions at trial. As noted at paragraph 759(h) of my judgment, he reminded me that where costs had increased (eg the pay increase in 2005) that was reflected in an increase in the kill fee: the RWM Directors were open to any reasoned and cogent argument why the kill fees should be increased.

In his skeleton argument, Mr Joffe said that Mr Grantham and Ms Gread should be entitled in determining their valuation to reflect what in their expert opinion is an appropriate cost to SCFF for these services. They do not necessarily have to adopt an amount equal to that which results from the apportionment of employment costs actually incurred to date. I agree that this is a matter for the experts. At this stage, they have not expressed a view on the issue of maintainable earnings in the light of the findings which I made in my earlier judgment nor, of course, have they taken account of the additional rulings I am making in this judgment. They should be given the opportunity to do so taking account of more recent accounts (if available) than those on which they based their valuations. Each of them will no doubt reflect carefully on the contents of my earlier judgment and this judgment. In particular, Ms Gread needs to consider whether Mr Grantham’s pragmatic approach might not be the best approach as a matter of expert valuation technique; conversely, Mr Grantham needs to consider whether he needs to qualify that approach in some way.

I turn now to the adjustment in respect of the past (ie up to 31 December 2008). It is important to note that Mr Joffe does not seek any reduction in the valuation on the footing that recharges actually exceed (as they might) the total adjustment resulting from licence fees, electricity charges and effluent and disposal costs. But he does seek to set off that total against the total owing to SCFF. I have already described Mr Weatherill’s submissions about the extent to which Mr Joffe should be entitled to rely on this point.

In my judgement, it is right to allow a set-off against licence fees an amount in respect of the employment cost recharge which I have discussed. That set-off is to be allowed only in relation to employment costs over the same period as the licence fee is payable. Since, as I understand it, the recharge over that period exceeds the licence fee, no adjustment falls to be made to the valuation in respect of the licence fee.

Mr Joffe submits that, in principle, there is no difference between licence fees and the other elements of cost claimed by CIL on behalf of SCFF when it comes to set-off against employment costs. The recharge claim as a set-off against electricity charges and effluent costs must be viewed against two relevant factors. Firstly, there was no suggestion that these charges and costs should be linked, in effecting adjustments to the valuation, to the recharge for employment costs until it came to submissions at the further hearing. This is in contrast with RWM’s stated position in relation to licence fees. Secondly, employment costs contained within the recharge did not feature in the setting of the kill fee; that fee was set at a level to provide SCFF with a reasonable level of profit, a level which would not be obtained if the recharge were to be admitted.

So far as concerns electricity, it has always been the case that RWM should contribute to the electricity charges. The apportionment which applied for a considerable time was based on a rough and ready assessment of what each company used: it was intended to be a fair reflection of the actual enjoyment. Thus it started at 50/50, and then moved, probably in about 1997, to 44/44/12 when Southern Cull Services commenced operations. This was at about the time when the kill fee had been set at £42 so that it cannot be suggested, in my view, that the kill fee was set at a level which recognised that SCFF would be paying, in the future, more than its fair share of electricity charges. As I noted in paragraphs 735ff of my judgment, relevant changes in electricity use have taken place as time passed. The apportionment no longer reflects a rough and ready assessment of what each company uses but simply remains as the historic apportionment previously agreed. Although, as appears from paragraphs 741 and 742 of my judgment, I did not consider that this aspect of the case gave rise to unfair prejudice, I do not consider that it would be fair to SCFF – or rather to CIL – to refuse to allow any adjustment at all for underpaid contributions to electricity charges. I propose to allow an adjustment from 2 April 2007 when the details of charging were first supplied in response 92 of Responses to the Request for Further Information.

So far as concerns effluent and disposal costs, there is, it seems to me, a material distinction between these costs and licence fees. But there is also a material distinction between those costs and electricity charges.

As to the first distinction, RWM’s use of the facility has directly increased the amount which SCFF has had to pay to the water authority. This cost is not, in any way, a cost of SCFF’s business but is, or ought to be recognised as, a cost of RWM’s business. In contrast, the use of SCFF’s land has not resulted in any extra cost to SCFF. Rather, the position is that, in fairness in the context of an adjustment to the valuation, RWM ought to account for its enjoyment of the land as part of its business (with a set-off in relation to the employment cost recharge). There is, so it seems to me, a real difference between allowing recovery of an expense actually incurred on a service provided to RWM (electricity and effluent disposal) and recovery of what is in effect restitution for the use of the various parcels of land concerned.

As to the second distinction, it does not appear that RWM ever agreed to contribute proportionately to the costs of running the facility; it simply used it without objection from SCFF although it did contribute to certain chemical costs. In contrast with electricity charges, therefore, it cannot be said that, when the kill fee was fixed at £42, RWM was paying its fair share (albeit ascertained on a rough and ready basis) of these costs.

I have found this a very finely balanced question so far as concerns effluent costs. In the end, the balance comes down, in my judgment, in favour of allowing adjustment to reflect the costs incurred in providing this facility from 25 September 2006 (when the issue was first raised by the Cobden Directors solicitors) until 31 December 2008. However, unlike the position in relation to electricity charges, RWM should be allowed to set-off the employment recharges over the same period to the extent that they are not set off against licence fees.

My conclusions are these. An adjustment should in principle be made to reflect the notional licence fee from 26 February 2006 to 31 December 2008 and the share of the cost of the effluent plant attributable to RWM on the basis that costs are apportioned according to the amount of water discharged from 25 September 2006 to 31 December 2008. However, against those adjustments is to be allowed the recharge for employment costs over the same periods ascertained in accordance with the evidence of the barrister who interviewed employees on site. So far as electricity charges are concerned, there should be an adjustment to reflect the proportion of electricity used by RWM ascertained as I have directed over the period 2 April 2007 to 31 December 2008. No set off of the recharge in respect of employment costs is to be allowed.

As to the quantum of the set off, it has not been suggested that, for the past, such quantum should be other than an appropriate percentage of the overall employment costs actually incurred. Matthew, it is true, has made certain criticisms which I have dealt with and rejected. Accordingly, the actual apportionment should be effected in accordance with the results of the interviews conducted by the barrister whose evidence I have already referred to.

RWM Dorset procurement fees: At paragraph 622 of my judgment I concluded that I had no evidence about what a reasonable procurement fee would have been at any particular time. I could not take account of some larger notional fee in addressing the value of SCFF or how this conduct, assuming it to be unfairly prejudicial conduct, should be reflected in money terms. I said that I thought that RWM had a valid point when it claimed that the pleading (and I add, the evidence) was inadequate to enable them to know what revisions ought to have been made.

I did not elaborate on the concept of a reasonable procurement fee because it was not necessary for me to do so. My use of the word reasonable was, perhaps, inapposite not least because what may seem reasonable to RWM Dorset – namely a fee which produces some return for SCFF given that it has to incur all of its fixed costs in any event – may not seem reasonable to SCFF itself which would no doubt consider it far more reasonable that the costs should be shared on an objective basis eg relating the salary costs of fieldsmen to time spent on RWM Dorset business and SCFF business respectively.

What I really had in mind, however, was the level of fee which it would be appropriate to assume, for the purposes of the valuation, SCFF would have received had the question of a revision in the fee been properly addressed by the board of SCFF and a negotiation carried out with RWM Dorset. It is the loss of that fee which SCFF has suffered by reason of the failure to negotiate. I discussed in my judgment the obligations of the RWM Directors in their involvement in dealings between RWM and SCFF; I consider that similar considerations apply as between RWM Dorset and SCFF. Accordingly, in any negotiation, RWM Dorset would be entitled to negotiate in its own interests. This in turn gives rise to similar difficulties as were addressed by me in considering paragraph 39(15) of the Petition relating to termination and renegotiation of the MoU.

In contrast with the case in relation to the MoU (where I had evidence on behalf of RWM that it was not prepared to negotiate, leading me to consider the position in what was a high-stake game of poker where one side (RWM) knew the other side’s cards) I have not had the advantage of evidence tested by cross-examination of the Board of RWM (or others who would be responsible for the conduct of any negotiation) in relation to RWM Dorset’s attitude to negotiation. However, according to Mr Joffe, RWM Dorset has responded to changing conditions in the past and allowed a revision of the procurement fee. It is not, I think, to be assumed that it would not at any time in the past up to 31 December 2008 have renegotiated in good faith.

Mr Weatherill submits that as a matter of principle SCFF should at least be entitled to the cost which RWM Dorset would incur if it were to procure its own sheep, thus putting RWM Dorset in as good a position as it could expect to be. He says that the calculation of this cost is best dealt with by Mr Fisher, Ms Gread and Mr Grantham on evidence from Mr Carswell and Mr Phelps. Alternatively, he invites me to determine that a reasonable board of directors would have agreed a revised procurement fee by discounting Mr Phelps’ figure of £1,600 per week in his “Lamb Procurement Costs” document which I discussed at paragraph 606 of my judgment arriving at a figure of at least £1,175 per week and perhaps as much as £1,400 per week.

I should add that, although explained by Mr Phelps as a negotiating figure in cross-examination, it formed the basis of Ms Gread’s valuation, no doubt because she saw it as the best evidence available of what a reasonable procurement fee would be. She had no reason to think that the figures in that document were other than correct and RWM produced no evidence at trial to say that the figures were wrong. Mr Grantham did not suggest to Ms Gread that the basis of her calculation was wrong; where he disagreed with her was in whether there should be an adjustment at all.

As to Mr Phelps’ paper, I should perhaps record that it arrives at the figure of £1,593 per week for costs attributable to RWM Dorset by apportioning to it 40% of the total fixed costs incurred by SCFF in relation to procurement. Mr Phelps was not asked whether the underlying figures were negotiating figures or whether the description of the £1,593 as a negotiating figure simply reflected his willingness to discuss the percentage attributable to RWM Dorset.

As to Mr Weatherill’s submissions, Mr Joffe says that I should not allow any further evidence on this issue to be adduced, his reasons being the same as I have already dealt with. For reasons already given, I consider that I do have a discretion to admit further evidence. As to the suggestion that I should myself assess a revised fee on the basis of Mr Phelps’ letter and document, he says that this is not evidence at all or, at best, it is only evidence of Mr Phelps’ negotiating position and not evidence of what a reasonable procurement fee would have been or what a reasonable board of directors would have agreed as a revised fee. And as to the suggestion that the parties would at least have met in the middle, he says that there is no evidential basis for that and that nothing was put in evidence or put to RWM’s witnesses in cross-examination.

I reject Mr Weatherill’s submission that RWM Dorset should pay at least as much as the cost it would incur if it were to procure its own sheep. That can no doubt be seen as a reasonable result from SCFF’s perspective but it does not necessarily reflect – and may exceed – the amount which would have been arrived at by negotiation.

So far as concerns Mr Weatherill’s alternative submission that I should assess a reasonable fee myself, there is considerable force in Mr Joffe’s objections. Even if I can take Mr Phelps’ underlying figures as evidence of the total cost, there is nothing in the evidence – or at least nothing has been brought to my attention – to show what a fair allocation of cost would be even on a time-apportioned basis. I do not consider that I can do what Mr Weatherill invites me to do in terms of assessing the reasonable fee. Indeed, for me to do so would, so it seems to me, be directly contrary to what I said in paragraph 622 of my judgment.

I can, however, admit further evidence if I consider that is the fair course. In that context, I note what Mr Grantham says in his report in paragraphs 5.3.44 to 5.3.50. He relies very much on two factors in expressing the view that it is was reasonable not to include an amount in respect of a failure to increase the procurement fee. The first is that the “procurement fee “is incremental income” for the Company”. [Actually what Mr Phelps said was that £536 of the £750 was incremental income, but I am sure Mr Grantham appreciated that.] The second is that the Company “subsequently agreed to the fee of £750 per week”. As to those reasons, the first takes no account - indeed it could not – of what Mr Phelps said in evidence which was something rather different from (although not inconsistent with) his witness statement; as recorded in my judgment, he regarded the £750 as woefully inadequate in 2002 and continued to do so up to the time when he gave his evidence. As to the second, what Mr Grantham does not record and may have overlooked is that the £750 was described as a contribution towards salaried fieldsmen and other costs, it was described as a minimum contribution and was subject to review – upwards only as I have held – in 6 months’ time. Moreover, I have held that the failure of the RWM Directors to seek a review was unfairly prejudicial conduct. In the light of those factors and in the light of my judgment that an increase in procurement fees should have been sought, Mr Grantham himself might well wish to revise his views.

In these circumstances, it would, in my judgment, be wrong if the valuers were not able to re-address the issue. I do not at this stage wish to be prescriptive about what they should and should not do, although I may have to be in due course. It does seem to me that they should each be able to address on the basis of further enquiries and evidence made available to them the amount of the level of procurement fee or fees which they consider should form the basis of their valuation. In my judgment, any notional increase should be taken account of only in respect of the period from the start of January 2005 (as to which see paragraph 620 of my judgment). It may be that they would consider it in principle correct to adopt Mr Phelps’s approach of apportioning the overall cost of SCFF’s procurement exercise; if so, they would then need to make an assessment about the result of a negotiation against the background of such apportionment; but that is a matter for them.

I am conscious that this exercise could itself be lengthy and costly. In the interests of saving costs and proportionality, and given that this aspect was not fully addressed by CIL at trial, I gave RWM this option. It may elect, in respect of the period from the start of January 2005, for the valuers to effect their valuation on the basis of a procurement fee of £1,175 per week. This is a figure half way between £750 and £1,600 (rounding Mr Phelps’ figure) and it is a figure at the low end of Mr Weatherill’s submitted range (and he of course asks for the adjustment over a longer period than that which I am prepared to allow). RWM has rejected this option.

It is therefore for the valuers to determine how the fee (whether some amount ascertained by them or by the court) should be reflected in the adjustments which they consider should be made to the valuation to arrive at a fair value for the shares. This will include an adjustment to the “2007 estimate” line (see Document C (B) 653) relevant to the ascertainment of maintainable earnings.

Supply Agreement: I did not, in my judgment, deal fully with the consequences of the failure by RWM to observe the terms of the Supply Agreement. Mr Joffe suggests that it is not a matter to be dealt with by financial compensation since I indicated that a purchase order was appropriate. However, the two remedies are not incompatible and I certainly intended that the price to be paid for the shares should reflect and correct to some extent the detriment suffered by SCFF as a result of such non-observance. If I did not make it clear in the judgment (which I think I did) I do so now.

In paragraph 593 of my judgment I referred to finance costs. These include interest and bank charges. Mr Joffe refers to my findings that the RWM Directors acted innocently (see paragraph 592) and that the unfairness identified by me was that it would not be fair for SCFF to bear the finance costs. Further, the Cobden Directors (see paragraph 587) did more than simply allow others to implement the credit terms and were actively involved in that they signed cheques both from RWM Dorset to SCFF and from SCFF to farmers. The relief he says should take account of those facts and also of the fact that the complaint was not raised, according to him, until 25 September 2006.

Mr Weatherill has taken that as a submission by Mr Joffe which is tantamount to suggesting that there should be no financial adjustment notwithstanding that the arrangement was entirely beneficial to RWM Dorset. He says that there should be no question of penalising SCFF on account of the failure to object by the Cobden Directors. I do not read Mr Joffe’s submission that way although I would reject such a submission were it made. However, Mr Joffe is correct to say that account should be taken of the factors which he identifies, just as I should take account of the fact that Robin knew (as he admitted in cross-examination) the true effect of the Supply Agreement in about May 2007 and yet did nothing to correct the position, defending the Petition even on this point.

Accordingly, Mr Joffe submits that the appropriate relief is financial compensation to SCFF in an amount commensurate with the additional financing charges incurred in extending credit terms to RWM Dorset, compensation which should be calculated only from 25 September 2006 given that the RWM Directors acted innocently and the Cobden Directors were involved. Unsurprisingly, Mr Weatherill submits that there should be no such temporal limitation and that to impose one would be unfair to CIL.

Mr Weatherill submitted that there should also be a working capital adjustment to reflect the incorrect operation of the Supply Agreement. Mr Joffe identifies two possible scenarios in this context:

He suggests that paragraph (b) reflects more accurately my findings; and reflects also the fairness of the situation because termination of the Supply Agreement (on the assumption that SCFF is compensated for finance costs and thereby suffers no unfairness) would unfairly disrupt RWM Dorset’s business and would also be detrimental to SCFF.

I have to confess to seeing considerable difficulty in that last submission. The point surely is that SCFF should be put as nearly as possible in the position which it would have been in if RWM Dorset had traded on the terms on which it was entitled to trade and had not imposed on SCFF credit terms which SCFF was not obliged to accept. Further, I consider that I am entitled to proceed on the basis that RWM Dorset would have traded on the terms of the Supply Agreement had it appreciated the true meaning of that Agreement. Had it done so, SCFF’s own working capital requirements would have been less – at the very least, it would have needed to carry the debt for a shorter period and possibly it would have needed to do so for no time at all. There are therefore, as with other elements of the working out of the financial consequences of the share purchase, two aspects – the past and the future.

For the past, SCFF has suffered financial detriment as a result of paying finance charges which it should not have had to pay. That can only be corrected by the payment of compensation to SCFF or, if one prefers to put it this way, by an adjustment to the purchase price of the share so that the price reflects their value had compensation in fact been paid.

As I have said, Mr Joffe submits that this compensation should run only from 25 September 2006. Mr Weatherill sees no reason to impose any temporal limitation; indeed, he would say that if such a limitation were imposed, then the unfair prejudice in respect of earlier periods would remain without a remedy.

In my judgment, compensation should run only from the time when complaint was first made about the credit terms, namely 25 September 2006: see Rosenblatt’s letter of that date. There is not, I consider, any inconsistency in that approach with my finding (see paragraph 592 of my judgment) that there was unfair prejudice in failing properly to implement the terms of the Supply Agreement. Just as it is possible for an order under section 996 to reflect matters requiring financial adjustment even though they do not amount to unfair prejudice, so too it is permissible to make an order which does not reflect, in financial terms, every element of unfair prejudice. The finding of unfair prejudice in relation to this issue played its part in the formation of my preliminary view (adopted by the parties) that a share sale order was appropriate; it does not necessarily follow that financial compensation must be made for the entire period over which the Supply Agreement was incorrectly implemented; that is particularly so given the opportunities which the Cobden Directors had to raise the issue and their failure to do so notwithstanding that the point was one they were well aware of as long ago as 2000 (see paragraph 588 of my judgment).

Accordingly, the valuers should reflect in their valuations this element of compensation from 25 September 2006 to 31 December 2008. If the figures are not already in evidence, this is an area where the balance of justice is, in my judgment, in favour of allowing further evidence to be adduced. I would hope and expect that between them Mr Carswell, Mr Phelps, Mr Fisher, Ms Gread and Mr Grantham will be able, on the basis of SCFF’s own accounts and information from the bank, to be able to agree figures.

I should add this point. It is to be assumed that SCFF would have received payment only at the same time as SCFF paid the farmers. In other words, it is to be assumed that SCFF would not incur any finance costs in the purchase of sheep but nor would it make a profit from the sheep trade (rather than the procurement).

For the future, to the extent that maintainable earnings reflect trading between RWM Dorset and SCFF under the Supply Agreement, it should be assumed that that trade is conducted in accordance with the terms of the Supply Agreement and not on the basis of credit terms which I have held to be unfair. As with historic compensation, it is to be assumed that SCFF would have received payment only at the same time as SCFF paid the farmers. This will result in SCFF’s drawings on its banking facilities being reduced as compared with the previous practice since it will no longer need to carry borrowings to cover the period between payment of farmers and subsequent receipt of the purchase price from RWM Dorset. I believe that can be properly categorised as a reduction in SCFF’s working capital requirement. Mr Joffe suggests that this will result in a disruption to RWM Dorset’s business. I do not see why that should be so: the Supply Agreement can continue according to its terms with RWM Dorset either paying farmers direct or paying SCFF as soon as it pays the farmers.

Haulage charges: I fear there may be some confusion on the part of RWM. I dealt with haulage charges in paragraphs 624 to 629 of my judgment. There are two different sets of charges involved. It is true, as Mr Joffe points out, that Mr Carswell explained that some charges related to a period before it had been agreed that haulage charges should be recovered. But that is not so in relation to the set of charges referred to in paragraph 629 which Mr Carswell accepted remains outstanding. If it has not been taken into account (whether or not in fact paid) in the valuations, it should be, although it is a matter for Ms Gread and Mr Grantham to decide whether it in fact has any impact on the valuation.

Rent review: I dealt at some length with rent review in paragraphs 719ff of my judgment. I concluded that the failure to implement the 1998 and 2003 rent reviews was not unfairly prejudicial conduct. I did add that I was not ruling out the possibility that SCFF could seek some financial recompense based on the breach of duty or the self-dealing or no-profit rules; I said that this was not a matter which I was willing to decide on this Petition in the absence of evidence to show that a rent review would have resulted in any increase in rent. That was not an invitation to Mr Weatherill to adduce such further evidence. He, in any case, says that there is evidence on which I can rely to establish that an increased rent would have been obtained.

In that respect, Mr Weatherill refers to the evidence of Mr Hicks and Mr Foot. In his skeleton argument, he suggests that those two gentlemen reached an agreement about the rent for the leased area and the disputed areas in 2008, agreeing that the rent for the property demised by the lease was £70,000 pa. I should add that that figure was agreed in the context of dispute about the appropriate licence fee: neither expert addressed the issue of market rental value under the Lease in the detail which one might expect in the context of an actual or notional rent review. Be that as it may, the agreement is compelling evidence that as at the appropriate date for the 2008 rent review, a substantial increase over the initial rent of £30,000 pa could be expected. I shall return to this in a moment.

What Mr Hicks and Mr Foot did not agree was the open market rent under the Lease in 1998 or 2003. The nearest one comes to evidence on that is a short passage in Mr Hicks’ report where he expresses a view about the open market rental value of the demised premises together with the disputed areas. His figures for 1998 and 2003 were £66,500 pa and £75,000 pa respectively as compared with an agreed figure of £90,000 pa for 2008. Mr Hicks put the comparable figure for the initial rent in 1994 at £37,000 pa compared with the actual initial rent of £30,000 pa. There is nothing in the material which has been brought to my attention or which I have found which contains Mr Foot’s views on these 1998 and 2003 values.

Mr Weatherill submits that it is reasonable to infer from Mr Hicks’ evidence that the board of SCFF acting reasonably in 1998 and 2003 would have agreed that an increased rent be sought and that any further evidence for the basis of the valuation can be dealt with by Mess Hicks and Foot.

Mr Joffe, in his skeleton argument, submits that CIL failed to establish that a rent review would have resulted in an increased rent and that it should not be allowed a further attempt to do so. What I actually said, as referred to above, is that financial recompense was not something I was prepared to decide in the absence of evidence that a rent review would have resulted in any increase in rent. In saying that, I had not focused on the evidence of Mr Hicks which I have just mentioned or indeed of the agreed values for 2008. I did not make a finding nor shut out Mr Weatherill from seeking to adduce further evidence even though what I said was not an invitation to do so.

But even if the evidence did establish that an increase in the rent would have been achieved, it does not follow that any compensation is due. Indeed, insofar as compensation turns on a breach of fiduciary duty, I would not direct any adjustment to the purchase price on account of it, not least because the Cobden Directors were as much to blame for the absence of implementation of the rent review as the RWM Directors. Further, there does not appear to have been any attempt on the part of the Cobden Directors to implement or insist on the implementation of the rent review even after making complaint about the failure.

But that is not an end of the matter because Mr Weatherill says that the 1998 and 2003 rent reviews remain operable (or at least remained operable as at 31 December 2008 which is the valuation date). A purchaser of CIL’s shares in SCFF would, he says, take account of the value which SCFF could obtain by operating the rent review. That he says (correctly) has nothing to do with unfair prejudice; it is simply that a purchaser would have the right to see the rent reviews for 1998 and 2003 implemented giving rise to an entitlement to rent and interest.

Mr Joffe correctly identifies the limited reliance which can properly be placed on Mr Hicks’ evidence even on the agreed figures for 2008 arrived at by Mr Hicks and Mr Foot. Mr Hicks does not state a figure for the open market rental of the demised premises in 1998 or 2003; and the figures agreed by him and Mr Foot were agreed for a very different purpose. However, contrary to Mr Joffe’s submission, I do consider that the evidence establishes quite clearly that the open market value in 2008 was significantly in excess of the initial rent in 1994. Further, I am entitled to infer, and do infer, from Mr Hicks’s evidence that the rent in both 1998 and 2003 would have been well in excess of the initial rent, although I accept that it would not be safe to determine any figure as representing that market rent on the basis of Mr Hicks’ evidence so far.

There is, I must add, one other factor to be borne in mind. It is that Ms Gread and Mr Grantham did not include in their respective reports anything to reflect the possibility of retrospective rent reviews; indeed, I do not think that the EBITDA reflected the possibility of an increased rent on a rent review in 2008. It is not that they could not agree on a figure; rather it was that no rental valuation material was provided to them for them to incorporate into their reports. This was so even though my order dated 16 October 2007 envisaged expert evidence from one expert share valuer and one rental expert the latter of whom might, I would have thought, have been expected to be instructed in relation to all rental aspects which the parties wished to raise.

I should also add, for completeness, that in his thorough submissions Mr Joffe has not suggested that it is now too late to invoke the 1998 or 2003 rent reviews or that SCFF is now estopped from doing so. Nor has he submitted that, if a retrospective review were allowed, it would render unfair any of the other financial adjustments which CIL claims should be made in its favour.

Although Mr Weatherill is basing this part of his case simply on a valuation point rather than as compensation in respect of unfair prejudice, the overall object of the exercise being undertaken is to establish the appropriate price at which RWM should be obliged to buy-out CIL. The question is not therefore simply one of valuation but goes wider and raises the question of the extent to which the value of an asset (in this instance the freehold subject to the Lease) should be reflected in the price which the purchaser is obliged to pay. In my judgment, it is appropriate to adopt a middle course. I direct that no account should be taken of the 1998 rent review but that account should be taken of the 2003 rent review. I make this direction in relation to the 1998 rent review because the review date is long ago and during the entirety of the period until the next review date in 2003, the Cobden Directors as much as the RWM Directors were at fault in taking steps to implement the review. In relation to the 2003 review, the position is different. The length of time from the review date to the time when complaint was made about the failure to implement it was much shorter and, more importantly, the period during which the reviewed rent would be payable was still running. A refusal on my part to allow the review to be taken into account would in effect be to prevent SCFF from obtaining the benefit of the review even in respect of the period after the complaint was raised. I could, I suppose, allow the review to take place but only award compensation from a date later that the review date but I perceive no merit in that course.

Accordingly, Ms Gread and Mr Grantham should take account, in their valuation, of a notional increase in the assets of SCFF as at 31 December 2008 to reflect the increased rent which would have been received since the 2003 review date if the review had been implemented, together with interest. It is a matter for them how that increase in SCFF’s assets flows through to the share valuation. As to ascertaining the rental value, see my observations below concerning the 2008 rent review.

In my main judgement, I said that there was no reason at all why the 2008 rent review should not be implemented provided, of course, that SCFF’s advice is that it would be likely to obtain an increase: if expert advice is to the contrary, it is a waste of everyone’s time and money to proceed. In adding that proviso, I had not taken into account the agreement of Mr Hicks and Mr Foot in their joint report. I accept entirely Mr Joffe’s submission that these values were agreed in the context of establishing the appropriate licence fee for the disputed areas, and that a more careful analysis and fuller consideration would need to be given in the context of a formal rent review. Be that as it may, it appears to me that the views expressed by the experts constitute incontrovertible evidence that substantial increase over the initial rent of £30,000 pa would be achieved if the rent review provisions were to be operated. At the time of the Petition, there had been no failure to operate the rent review; and, in the context of the ongoing litigation, it is not altogether surprising that it has not been implemented subject, however, to this point. In their letter dated 16 January 2009, DLA Piper (for RWM) wrote to Rosenblatt (for CIL) on a number of points recording that they had already said in correspondence that so far as the 2008 rent review was concerned, the appropriate way to deal with it would be for the board of SCFF to initiate a review under the lease which the RWM Directors would have to support.

There is considerable force in that last point and were SCFF and RWM still in their old ownership, I think that that would be an appropriate course. Whether such a review would have been completed even by the date of this judgment had it been implemented in say January, I do not know. But what is now known is that RWM has become the owner of SCFF and an actual rent review is not realistically going to take place. In any event, there had been no review by the valuation date, 31 December 2008, so, unless and until a subsequent actual review were to take place, the valuers could only act on the basis of valuation evidence rather than a rent review determination.

In my judgment, Ms Gread and Mr Grantham should take account, in their valuation of the shares in SCFF, of the 2008 rent review. I gave RWM this option. It can accept Mr Hicks’ figure of £70,000 pa; or it can implement a notional rent review. RWM has rejected this option. Accordingly, Ms Gread and Mr Grantham should assume that a review to the level of rent provided for in the Lease (as to which see the Fourth Schedule for assumptions and disregards) had taken place by 31 December 2008 and should also recognise in their valuation as an asset of SCFF the increased rent (plus interest) which it should have received from the review date.

Ms Gread and Mr Grantham are not rental experts. But Mr Hicks and Mr Foot are, or at least I assume they are. Ms Gread and Mr Grantham need to take account of the notional rent reviews. Mr Joffe suggests that a third-party surveyor be appointed to conduct these notional reviews, with Mr Foot and Mr Hicks representing RWM and SCFF respectively in the notional review. CIL is prepared to accept that course provided that a without prejudice meeting is held between Mr Hicks and Mr Foot before the appointment of a third-party to attempt to agree the figures and that, only failing agreement, should the third party be appointed. I consider that to be a reasonable attitude on the part of CIL and will make directions accordingly. I ought to qualify Mr Hicks’ position slightly. Although I have referred to a notional rent review, the parties interested in the result are RWM and CIL rather RWM and SCFF. The correct course is for Mr Hicks to represent CIL rather than SCFF and for the third-party to take account of the input of Mr Hicks as though he, Mr Hicks, were representing the landlord under the Lease – whether one treats the case as one where CIL is the notional landlord or as one where the third party treats Mr Hicks’ input as though he were, counterfactually, representing SCFF seems to me to make no difference.

Late payment of debtors – Trading Agreement, Supply Agreement, the MoU: In paragraphs 305ff of my judgment I dealt with late payment under the Trading Agreement. I concluded that breaches of the Trading Agreement could not be relied on as free-standing matters of unfairly prejudicial conduct in the light of the fact that the MoU had subsequently been entered into. But I also concluded that such breaches could be taken account of, together with breaches of the MoU to establish unfairly prejudicial conduct, alternatively they could be taken account of in deciding the appropriate remedy if breaches of the MoU amounting to unfairly prejudicial conduct were established. Mr Weatherill accordingly submits that starting the calculation of compensation from 7 November 2000, the date of the MoU (as Mr Joffe says would be correct), would be inconsistent with my earlier findings. I disagree with that last proposition; breach of the Trading Agreement is something which I would have been entitled to take account of in deciding whether to order a share sale. It does not follow that, having ordered such a sale, I must logically go on to award compensation in respect of the period of the Trading Agreement.

In my judgment, compensation should be calculated as from 7 November 2000 as Mr Joffe submits. It would, I think, be wrong to go further than that given (i) the MoU superseded the Trading Agreement (ii) the Cobden Directors did not assert, after the date of the MoU and before issue of the Petition, that RWM should compensate SCFF for the late payment and (iii) the Trading Agreement came to an end more than 6 years before the issue of the Petition so that a claim that RWM should compensate SCFF in effect for breach of the Trading Agreement would be a claim brought, through the medium of the Petition, more than 6 years after the accrual of any cause of action against RWM. I hope that Mr Fisher, Ms Gread and Mr Grantham will be able to effect the necessary adjustments to the valuation in the light of this determination and that part of the main judgment dealing with late payment under the MoU (see paragraphs 462ff). That compensation is not, of course, restricted to the aspect dealt with in paragraph 486 but should reflect the wider points made in the judgment.

As to the future, maintainable earnings should be assessed on the footing that RWM will comply with the terms of the MoU ie that it will pay on time. Accordingly, the “payment on Friday/bank credit on Monday” point must be taken account of: it is to be assumed that payment will have reached SCFF’s account on the Friday whether by a cheque credited on that day, or by a BACs transfer or in some other way. This aspect will impact on the borrowing requirements of SCFF and thus on the figure for working capital. This is a matter for Ms Gread and Mr Grantham.

For the avoidance of doubt, I must emphasize that the point on the banking of cheques was not that signatories might not be available on Friday with the result that the cheque could not be banked until Monday. The point was that a cheque delivered on Friday would not be credited to SCFF’s account until Monday or Tuesday. The subsequent introduction of a regime under which a BACs transfer is made on Monday or Tuesday fails to address the real point. Payment must reach the account on Friday, not on Monday or Tuesday.

Mr Weatherill says that the calculation should reflect not only interest (as indicated in paragraph 486 of my judgment), but also unnecessary bank overdraft arrangement fees and other charges incurred by SCFF. This is not an aspect which was raised in Ms Gread’s report. I am not at all clear that, even in principle, the valuation should reflect anything other than interest since it must be doubtful that RWM could have been made liable to SCFF for anything other than interest. In the exercise of my discretion in relation to the appropriate relief on this Petition, I decline to order any adjustment to reflect banking charges other than interest.

So far as concerns the Supply Agreement, any compensation due as a result of the credit given in respect of the payment for sheep will be reflected under the heading previously discussed; there is no separate issue of late payment. Mr Weatherill does not make a different point namely that there has been late payment of the procurement fee.

Surplus Assets: There is one remaining issue about surplus assets. This has come to light following the sending out of this judgment in draft when I raised a number of issues, including this issue, for comment.

It concerns a property known as Pound Farm. Pound Farm is owned by SCFF but is not currently used in connection with the business carried on by it. There has been a dispute about whether this property should feature in the valuation of the shares in SCFF since it was not agreed by RWM that it was a “surplus asset” for valuation purposes.

I did not deal with the issue of surplus assets in my main judgment. I am afraid I must simply have overlooked it among the many points which I had to deal with. When it came to the post-judgment hearing, Pound Farm was not discussed. It was mentioned in passing, and described as a surplus asset, in Mr Weatherill’s and Mr Griffith’s written submissions dated 19 January 2009 for that hearing but no submissions at all were made either in that note or orally about the figure at which it should be shown in the accounts. Mr Weatherill points out that no mention at all was made of Pound Farm by Mr Joffe and Mr Collingwood in their skeleton argument for that hearing nor in later oral and written submissions. Mr Weatherill remarks that the point evidently escaped the attention of everyone.

The issue of surplus assets was, however, dealt with in Mr Weatherill’s written closing submissions for the main hearing at paragraph 10.4. Ms Gread included in her valuation a figure of £171,000 for surplus assets, being the value placed by her on Pound Farm (£135,000) together with the amount of certain rent due from SCS to SCFF (£36,000). Although Mr Grantham took the view that Pound Farm was not a surplus asset, RWM now accepts that it is a surplus asset so that it must feature in some way in the valuation.

The issue which remains is the value at which Pound Farm should be brought into the valuation. The figure of £135,000 was the purchase price of Pound Farm. What Ms Gread noted in her report is that its value “is likely to have appreciated since its purchase; however, I have not included any upside as I do not have reliable estimates of incremental value”. This was not a point which Mr Weatherill pursued in his closing submissions where he wrote that Pound Farm was a surplus assets “and the whole of the £171,000 should be added to the value of the business”.

Mr Weatherill now submits that the value which should be accorded to Pound Farm for the purposes of the acquisition of CIL’s share in SCFF at a fair value should be the current open market value and not its historical cost. He submits that I should take judicial notice of the increase in value of agricultural land and the farmhouse and buildings between 2000 and the end of 2008 (the valuation date). He submits that the experts should take account of further evidence of the existing use value of Pound Farm at that date, noting that Ms Gread evidently appreciated that further evidence would be needed.

I am certainly not prepared to take judicial notice of the fact that agricultural land values (let alone that the value of Pound Farm) have increased as Mr Weatherill submits. However, I would be entirely unsurprised to find that that is the case and am prepared to proceed on the basis that the value of Pound Farm might well have increased.

Mr Weatherill acknowledges, as he must, further evidence will therefore be needed if a higher value than £135,000 is to be placed on Pound Farm. But he submits that steps should be taken to ascertain the value at the end of 2008; that would, he says, be a just, fair and proportionate response, requesting the appointment of a single joint expert to perform the task. After all, the object of the whole exercise is to ascertain the price at which it would be fair for RWM to acquire CIL’s shares in SCFF.

To allow this course would, according to him, accord with my approach and decision in relation to electricity charges, the only purpose of an objection to this course being to enable RWM to acquire the shares at other than a fair value. It is said that this is also the course I took in relation to rent reviews and that if the point had not been missed, a revaluation would have been appropriate to bring matters up to date in accordance with paragraph 3 above.

Those last submissions must be viewed with some care. The issue of electricity charges was fully aired at the main hearing and had formed a matter of complaint. Similarly, the absence of a rent review had been a matter of complaint and it is to meet that complaint that I consider the appropriate relief to be to allow a notional review to take place. Further, I do not think that a revaluation of Pound Farm is within the letter or spirit of what I have said at paragraph 3 above. That was concerned with updating information to reflect changes since the preparation of evidence for the hearing. There was not in that evidence any indication, even on a rough and ready basis, of the value which CIL would seek to place on Pound Farm. Indeed, Ms Gread stated explicitly, as I have already mentioned, that she had “no reliable estimates of incremental value”. The position in relation to the value of Pound Farm bears only the most superficial resemblance, in my view, with the position in relation to electricity charges and rent review.

As Mr Joffe reminds me, Mr Grantham had originally included Pound Farm as a surplus asset at £135,000 if, contrary to his view, it was a surplus asset. He was cross-examined about Pound Farm and, in the context of that questioning it was suggested to him that “it’s an asset worth £135,000 that could be realised for that figure” with which he agreed. He was further asked whether he disagreed with Ms Gread’s figure of £135,000 to which he replied that he did not disagree. Ms Gread herself was not cross-examined about value either since she was nowhere asserting a higher value. Indeed, she is not a land valuer and would have had to rely on expert input from someone else, so cross-examination of her on this issue might be thought to have little point.

Apart from Ms Gread’s reservation in her report, the question of the value of Pound Farm, in contrast with its status as a surplus asset, was not raised at any time in these proceedings until this judgment was sent in draft to the parties. Mr Joffe submits that this is not because the valuation point was overlooked but because it was not an issue between the parties. The question of valuation is one to which CIL was alive long ago; its own expert explicitly flagged the issue in her report. Nonetheless, CIL’s case was presented, and cross-examination by Mr Weatherill proceeded, without any reservation or qualification, on the basis of a value of £135,000.

Notwithstanding that this issue of valuation is not necessarily to be treated in the same way as electricity charges and rent review, I am of the view that CIL should, even at this late stage, be allowed to make good its contention that Pound Farm is worth considerably more than its acquisition cost, several years ago, of £135,000. This property has a significant value and, other things being equal, it is only fair that CIL should receive a price for its shares which reflect the ownership of the property by SCFF. It does not seem to me that RWM will suffer any prejudice as a result of a fair value being placed on Pound Farm (other, of course, than the prejudice of not having the chance to acquire it at an undervalue). It would be a disproportionate response to refuse to allow CIL to establish a full value in the context of the further working-out of the consequences of my judgment and in particular the ascertainment of a fair price for the shares. It seems to me that, if and to the extent that the Court should express some disapproval about the late introduction of this element of the claim, it should be reflected in the additional costs which the parties will incur in relation to ascertaining the full value.

Mr Weatherill suggests that a single joint expert should be appointed for the task. This chimes with Mr Joffe’s approach to the notional rent view. Unless Mr Joffe raises some objection to this course which can be communicated to me after the handing-down of this judgment, I would propose that a direction to that effect be included in the order, the terms of which the parties are attempting to agree. As with the rent review, I consider that an attempt should be made, on a without prejudice basis, for the experts (presumably Mr Foot and Mr Hicks again, but if not then some other valuation experts) to agree the value.