PROVING THINGS 68: CLAIM £4,177,782 RECEIVE £46,815: LEASE SAID SOONEST MENDED
If you are looking for a graphic example of a failure to prove damages you may well find it in the decision of Martin Rodgers QC in the Upper Tribunal (Lands) Chamber today in Bishop v Transport for London  UKUT 405. The claimants sought £4,177,782 but received £46,815.
Transport for London had compulsory purchased land upon which the claimants and their family had operated businesses from for many years. The claimants were directors of a scrap metal company that operated from the site and had a lease until 2031.
THE CLAIM IN EXCESS OF £4 MILLION
The Tribunal observed that the claim was for in excess of £4 million. Made by the directors of the company that operated from the premises.
“The claimants now seek compensation totalling £4,177,782, principally representing the remuneration which they say they would otherwise have received from MRS in the period from their quitting the Reference Land on 13 September 2013 until the contractual date of expiry of their lease in 2031”
THE NATURE OF THE CLAIM
“On this basis the claimants claim lost income from the date of cessation of the business carried on by MRS on 13 September 2013 until the expiry of their lease, which they estimated at £4,024,260 in the statement of case served with the notice of reference lodged with the Tribunal on 28 January 2016. That figure was based on a joint five year weighted average income for the claimants of £277,861 discounted by 2% a year to reflect early receipt, but without any discount or allowance for risks.
Mr Warwick QC, who represented the claimants, did not open his case as a claim for the specific sum pleaded in the statement of case, but instead invited the Tribunal to find that the claimants were entitled to a “substantial capital sum” to compensate them for the loss of the income stream they would have continued to receive.
The pleaded claim for lost remuneration was not supported by the claimants’ forensic accountancy expert, Mr Norman Cowan, nor by Mr Warwick in his closing submissions. Mr Cowan proposed an alternative joint annual income of £187,740, discounted at 2% for the remaining term of the lease, while Mr Warwick QC invited the Tribunal to find such figure for annual income as appeared reasonable to it on the totality of the evidence, to which it should apply a multiplier of its own choosing to reflect all relevant risks (Mr Warwick suggested a multiplier of four).
The claimants also claim three additional sums: loss of income prior to 13 September 2013 of £43,206; expenses incurred in vacating the reference land of £56,513 (plus VAT); and a loss £53,803 sustained as a result of the early disposal of equipment. The total value of the pleaded claim was £4,177,782 which was reduced by Mr Warwick QC in closing to an unquantified (but nevertheless substantial) sum.”
The claimants are brothers and were referred to throughout the proceedings as Nigel and Max; both gave evidence in support of the claim. Further evidence was given by one of Max’s sons, also Max Bishop (known as Max Jr), and by Mr Mark Bowler, a business advisor to the Bishop family, and Mr Michael Wevill, who had worked as a self-employed representative of MRS between September 2012 and June 2013.
Expert evidence on waste management issues was given by Mr Duncan Wemyss, formerly a director of the British Secondary Metal Association and Secretary of the Motor Vehicle Dismantlers Association, on behalf of the claimants, and by Mr Rainer Zimmann MCIWM, CEng, an Associate Director of Ove Arup & Partners Ltd, on behalf of TfL. Forensic accountancy evidence was given for the claimants by Mr Cowan, a partner in Wilder Coe LLP, Chartered Accountants and Forensic Accountants, and for TfL by Mr Mark Jennings ACA, a Senior Manager with RGL Forensics.
EVIDENCE AS TO LOSS
The Tribunal considered the evidence before it.
Both Nigel Bishop (who was aged 67 when the Reference Land was taken) and Max Bishop (then aged 56) began working in the family scrap metal business as soon as they were old enough to do so, and it has been their livelihood all of their working lives. They each informed us that they worked full time in the business at Bishop’s Yard, for five and a half days a week, including in the later years when the business was undertaken by SELV and MRS. Neither of them was terribly specific about the functions they performed.
In his witness statement Max said that he and his brother took management roles and that he was in charge of marketing and keeping the business “modern” while Nigel worked in the yard. In his oral evidence he explained that he worked from two offices at the yard, was responsible for health and safety, dealt with incidents in the yard and made himself available to be consulted by Mr and Mrs Reid. He had very few dealings with customers and had no real familiarity with the financial side of the business which he left to the company accountant.
Nigel Bishop confirmed that he had worked in the yard itself and from an office by the weighbridge; he looked after machinery and kept production moving but had nothing to do with paperwork or accounts.
The very clear impression we were given was that the claimants depended very heavily on others, particularly the Reids, for the management and direction of their companies.
Despite their full time engagement in the business neither Nigel nor Max had a written contract of employment or any formal service agreement. Each was paid a salary by the various companies, but Max told us that he left decisions on the amount of that salary to the accountant and he was unable to explain the basis on which their remuneration was determined. Nigel, on the other hand, explained that he and his brother decided between them how much they ought to be paid from time to time: if the business was doing well, they would do well; conversely, if the business was down, their incomes also went down. We do not fully accept either Max or Nigel’s evidence on these points. Plainly the brothers decided how much they should be paid, and did not leave it to the undirected discretion of their accountant, but in doing so they appear to have had very little regard for the performance of the business.
The result of the claimants’ remuneration decisions was that over a period of five years from April 2008 to March 2013 the claimants received payments totalling £1,619,755 from the various companies operating from Bishop’s Yard. They received similar, though not identical sums, with Max taking home about £55,000 more than Nigel over the five year period. Their combined income was subject to significant annual variations: in2008/09 totalling £650,697; in 2009/10, £126,517; in 2010/11, £308,158; in 2011/12, £332,210; and in 2012/13, £202,173.
When expressed as a weighted average the claimants’ employment income in the five years before the acquisition of the Reference land was £277,861 a year. For the three years before the acquisition it was £263,183 pa. The calculations behind these figures were agreed and they were used by the claimants as the basis of their pleaded claim, but they were not seriously advanced by Mr Cowan or Mr Warwick as a realistic projection of the claimants’ future income. Mr Cowan calculated a more conservative figure of £187,740 as a maintainable income, but it was not clear to us on what that figure was based.
The annual accounts of the three companies were drawn up to 30 June each year and so do not precisely overlap with the claimants’ tax returns from which their remuneration figures are derived, but the accounting experts agreed that the periods were sufficiently close to permit useful comparison. In almost the same five year period, from July 2008 to June 2013 the three companies sustained total aggregate losses before tax of £1,111,719. Performance fluctuated somewhat, with profits being made in two of the five years, as follows: in 2008/09, a loss of £286,388; in 2009/10, a profit of £108,375; in 2010/11, a profit of £41,776; in 2011/12, a loss of £171,118; and finally in 2012/13, a loss of £804,364.
Since the reference periods do not coincide no precise comparison between the income of the brothers and the performance of their companies is possible; it must also be acknowledged that about six weeks of the accounting year 2012/13, in which the largest loss was made, fell after the date on which notice of entry was served by TfL. Nevertheless, precision is not necessary to enable the broad conclusion to be drawn from these figures that the remuneration which the claimants chose to pay themselves was unrelated to the profitability of the enterprises carried on from Bishop’s Yard.
ASSESSMENT OF THE LOSS
The Tribunal considered the evidence and found that, in fact, the companies were failing in any event. The directors’ remuneration was being obtained at the expense of company creditors. No loss was established on the evidence.
“The rival approaches to the assessment of compensation
The principal disagreement between the parties concerned whether, at the date of acquisition of the Reference Land, there was any sustainable business capable of supporting the payment of a continuing income to Max and Nigel.
Mr Warwick QC, on behalf of the claimants, argued that although the family businesses had had various ups and downs, there was a history of many decades of continuous and successful use which had provided a significant income to the brothers. If the Lease had not been compulsory acquired those businesses would have continued in one form or another, as would that income. Bishop’s Yard was well located and had the benefit of a waste management licence which rendered it of particular value. The claimants were, Mr Warwick submitted, canny businessmen who had adapted to changing circumstances and by 2012 had the benefit of the enthusiasm, intelligence and new ideas brought by Max Jr. But for the CPO, the business would have thrived.
The picture presented on behalf of TfL was rather different. Mr Jennings, the respondent’s accountancy expert, described the claimants’ mode of operation as one in which the underlying scrap metal operations had continued throughout but had been punctuated by the liquidation of the companies which had carried on the trade followed by the transfer of that trade to successor phoenix companies. That is a fair characterisation which was not seriously disputed by Mr Warwick. He nevertheless submitted that, but for the acquisition of the Reference Land, the pattern noted by Mr Jennings would (at worst) have continued, resulting in the claimants’ continuing to receive an income from one company or another for the remaining term of the Lease, or at least for some part of it. The assessment of future loss was always difficult, Mr Warwick submitted, but that was no reason for awarding no compensation or only a nominal sum.
Mr Williams challenged the cornerstone of the claimants’ case, that the history of payments made in the past could be used with confidence to predict the future. On the contrary, he argued, the brothers’ previous remuneration had been paid by different companies in different trading circumstances, so the past could not be viewed as a reliable guide to their future income. Moreover, the drawings made by the brothers from the various businesses had contributed to the successive failures of their companies each of which had been pursued by HMRC. They had no contractual entitlement or agreement for the payment of any particular sum, and it was therefore for them to demonstrate by credible evidence that the future performance of MRS or some flock of phoenix companies would have been sufficient to remunerate the brothers at all.
While Mr Williams is correct in principle that it is for a claimant before the Tribunal to prove the loss claimed, it is important that the evidential hurdle should not be fixed at an unrealistic height. Loss is to be proven on the balance of probability. Where the loss depends on the notional performance of a business which has been discontinued, the Tribunal must do its best to assess what is more likely to have happened had the circumstances been different. That cannot be a precise exercise, but that it not a reason for awarding nothing and it is irrelevant that the necessary assessment involves an element of speculation. At the end of his submissions Mr Warwick invited the Tribunal to award a lump sum, which he did not quantify but invited us to assess, which would take into account all of the risks and contingencies and would reflect the value to the claimants of the opportunity to continue to run businesses from the Yard. We accept that it is open to us to take that approach, which relates closely to the approach the market would have taken to the value of the lease had it been offered for sale following the discontinuance of the business. We do not accept Mr Williams’ submission that it is necessary for the claimants to establish precisely what sums they would have received, for what services, from whom and for what period, before they can be entitled to any sum in compensation.
The claim for lost remuneration
Although we received a very substantial amount of detailed evidence concerning the performance of the claimants’ companies it is not necessary for us to describe it in detail; nor is it necessary for us to consider the significance of the claimants’ inability, or failure, to produce much of the accounting information that both experts agreed was required. The need for a detailed autopsy of the claimants’ businesses was largely overtaken by an agreement reached between the accountancy experts, Mr Cowan and Mr Jennings that, as at 13 May 2013, the date on which the notice of entry was delivered, MRS would not have been able to continue to trade without successfully implementing a turnaround plan devised by Mr Bowler. In his closing submissions Mr Warwick acknowledged, as had Mr Cowan in cross-examination, that by the time the notice of entry was received MRS was set to go into liquidation.
The basis for this consensus can be summarised briefly.
The total liabilities of BBS at the point of liquidation in October 2011 are unknown, but by that time it had extended its overdraft facility to £441,000 and the renewal of its time to pay arrangement had been refused by HMRC.
Between April 2009 and July 2012 SELV built up debts to HMRC of £385,000 and total liabilities of £690,000 before it too went into liquidation.
Despite having acquired the assets of the business conducted by BBS and SELV, while escaping their liabilities, in the year ending June 2013 MRS made an operating loss of £804,364. The family’s original core trade in general ferrous and non-ferrous metal had been in decline since before 2009, and SELV’s participation in the car scrappage venture had been an unsuccessful attempt to diversify away from it. When MRS attempted to refocus on the former core business it was no longer available and the annual quantity of waste received at the Yard declined from 18,400 tonnes in 2011 to 12,500 tonnes in 2012 and to 2,200 tonnes in the first quarter of 2013. The proportion of non-ferrous waste metal received at the site (which provides greater potential profit margins) also declined from 22% in 2008 to 15% in 2012.
The unsustainability of three successive companies and the consensus between the accounting experts that MRS could not have continued to trade without successfully implementing a major turnaround enables us substantially to accept the thrust of TfL’s case that the previous ability of BBS, SELV, and MRS to fund the claimants’ remuneration cannot be regarded as evidence that sufficient funds would continue to be generated at Bishop’s Yard into the future. BBS in September 2011 and SELV in July 2012 had both failed for reasons entirely unconnected to the acquisition of the Reference Land, while MRS was on the brink of failure when the notice of entry was received. A wholly different operating model would have been required to enable the business (or any comparable business) to trade successfully from the Yard into the future.
That model or “turnaround plan” was described in the evidence of Mr Cowan. He attributed it to Mr Bowler who had first become involved in the business of MRS in about September or October 2012. Mr Cowan understood the plan to have had two elements, comprising the acquisition of additional sources of scrap metal through the efforts of a commission remunerated “sales force” (although their task was to buy scrap metal rather than to sell it) and an overhead reduction programme. He believed that the need to control and reduce costs had not initially been part of Mr Bowler’s brief and, as far as Mr Cowan was aware, he did not become involved in that aspect of the business until after the departure of Mr and Mrs Reid (in June and August 2013).
For his part Mr Bowler regarded the transformation of MRS as comprising a corporate rebranding exercise designed by Max Bishop Jr and implemented in August or September 2012, with which he was not particularly involved, and the expansion of the supply of scrap metal by the recruitment of new representatives. He confirmed that he had had no previous experience of the scrap metal business and described his participation as “high level stuff – not day to day involvement”. He had not produced a business plan or any other document describing or explaining the measures he hoped to implement and the only document we were shown for which he had been responsible was a presentation intended for use in the recruitment of the new reps. The only evidence of active involvement by Mr Bowler was in the selection of those reps.
The intended size of the new team of reps remains unclear; Mr Bowler suggested 10 while Max Jr thought 25. Mr Bowler told us that he had expected that it would take twelve to eighteen months from his arrival in September 2012 before the success of his new commission driven model could be assessed. A new rep might, as Mr Bowler put it, “knock on doors for six months before getting any business”. That was confirmed by the evidence of Mr Michael Wevill, who had been recruited by Mr Bowler as a rep for MRS and worked in that capacity from about September 2012 until June 2013. He confirmed that there was strong competition for commercial sources of waste and business was very slow in 2012. His earnings had peaked at £1,000 in one month in 2013 and £600 in another (this represented his sole remuneration from MRS, from which he was expected to meet his own expenses). After less than a year he found another job and left, although his departure seems to have been unrelated to the compulsory acquisition of the Yard, of which he had been unaware.
Such steps as may have been taken under the guidance of Mr Bowler and Max Jr to address the performance of MRS before the notice of entry were unsuccessful. The reliance on self-employed reps to source new business certainly had not produced any improvement in the throughput of scrap metal at Bishop’s Yard as reported quarterly to the Environment Agency by the time MRS went into liquidation. Throughput declined in every quarter from Q4 2011, and between Q3 2012 (before the commission model was introduced) to Q4 2012 (after) it fell from 2,818 tonnes to 2532 and then to 2,204 in Q1 2013.
Detailed monthly profit and loss accounts exist for July to November 2012 together with annual accounts for the year to 30 June 2013. These show that average monthly sales were declining while costs and average monthly losses increased. The average monthly wage bill was £43,867 in the five months to November 2012 but had risen to £58,736 for the twelve months to June 2013. Net liabilities accrued at an average rate of £48,760 in the five month period but this increased to an average of £67,030 for the full year.
Mr Bowler made no mention in his own witness statement or oral evidence of any involvement on his part in devising a cost reduction programme in 2012 or 2013. At a much later date he had collaborated with Mr Cowan in identifying costs which might have been reduced, but that was solely for the purpose of preparing evidence for use in these proceedings.
It was clear to us that little or no serious consideration had been given to the achievement of any reduction in costs before the service of the notice of entry on 13 May 2013 and that the sole focus of the claimants and their staff after that date was on running the business down. Thus, while the turnaround plan described by Mr Cowan included substantial cost reductions, those reductions were notional and their identification was a theoretical exercise undertaken by Mr Cowan and Mr Bowler.
We are entirely satisfied that the measures introduced by Mr Bowler to source additional supplies of scrap metal had brought no improvement in the business of MRS by May 2013. The proposition that the company, or a successor, would have been able to continue to remunerate the claimants at the rate of £187,740 a year suggested by Mr Cowan, or at some different rate, is therefore wholly dependent on the evidence of Mr Cowan about the prospective performance of the business but for the service of the notice of entry.
One fundamental difficulty with Mr Cowan’s evidence on the future performance of the business was that, as he acknowledged, he has no operational experience of the scrap metal industry and was dependent on the completeness and accuracy of the information provided to him; as he himself said in oral evidence “I am just an accountant putting some figures together, Mr Bowler had the knowledge”. Mr Cowan relied on Mr Bowler for his assessment of savings which could have been made and additional income which could have been generated but Mr Bowler himself had very little direct experience in the scrap metal business (and none before September 2012) and he offered no evidence of his own in support of the assumptions made by Mr Cowan. The foundations of Mr Cowan’s assessment were therefore never established by credible evidence.
Mr Cowan’s approach, based on his discussions with Mr Bowler, was to adjust the accounts for the year to June 2013 by assuming additional income of £150,000 and a reduction in costs of £776,294 to produce a notional swing of £926,294 from loss to profit. Revenues were then assumed to grow by 5% a year for the first five years and to continue growing at a slower rate for the remainder of the Lease.
The apparent justification for adding £150,000 to the income actually achieved in the last year of trading was that the Yard had closed to new business almost immediately on receiving the notice of entry; had this not occurred, an additional month’s income could have been generated before the year end on 30 June 2013. As Mr Williams pointed out, and Mr Cowan agreed, a notional increase in income ought to have been accompanied by an increase in the cost of sales, but none was made. Mr Cowan was unable to comment on the amount by which the cost of sales would have had to increase to produce £150,000 in additional income, but he acknowledged that some allowance was required. He reiterated that he would look to Mr Bowler for such “inside knowledge”. Mr Williams, relying on Mr Jennings’ evidence, suggested that an additional month’s costs (at 82% of turnover) would add £122,850 to the costs side of the assessment, producing a net improvement of £27,150 rather than the £150,000 assumed by Mr Cowan.
The assumption of 5% growth in turnover per annum from July 2013 was said by Mr Cowan to have been provided to him by Mr Bowler. To project growth of 27% over 5 years against a background of a real fall in the combined revenues of all the family businesses of 33% in 2011-2012 and a further 20% in 2012 – 2013 was optimistic and there was nothing in the evidence of Mr Cowan or Mr Bowler to suggest to us that it was remotely achievable. It is true, as Mr Zimmann’s evidence demonstrated, that some scrap metal sites within a 50km radius of the Reference Land which might be regarded as the claimants’ competitors for commercial waste, succeeded in increasing their throughput, but the general picture, as he explained, was that scrap metal prices (particularly for light iron, the staple of the claimants’ intended core business) were in significant decline from 2011. Overcapacity in Chinese steel manufacturing, led to dumping of steel in Europe with a resulting drop in the value of scrap material for recycling. Nothing in the evidence we heard suggests that the claimants were equipped to prosper in that environment.
Mr Cowan’s projections included even more startling costs savings totalling £776,294 per annum. Once again these were based on discussions with Mr Bowler, but were not supported by any evidence given by Mr Bowler. As these adjustments were entirely theoretical we do not need to consider each of them in detail but will refer to two examples.
Mr Cowan assumed that it would have been possible to reduce the annual wage bill by £362,331 (from £791,473). He said that this would be achieved by making Mr and Mrs Reid redundant without any replacement, despite them being in day to day control of the Yard and the administration of the business, while the number of staff working in the Yard would be reduced from ten to five with other redundancies “at managerial level”. Mr Cowan had no independent view of his own on the figures he had been given by Mr Bowler, beyond suggesting that they “did not seem unreasonable”, but the evidence of the waste management experts suggested that a reduction on this scale would have been impossible. Mr Wemyss’s evidence was that 20-25 employees would be appropriate for a facility the size of the Bishop’s yard while Mr Zimmann thought 20 staff would be sufficient. Mr Cowan’s assumption that the business could increase its turnover with fewer than half that number was baseless.
Mr Cowan also deducted the sum of £4,495 paid as commission to the self-employed reps in 2012-13 in his projected accounts and made no allowance at all for the commission which MRS would have had to pay under Mr Bowler’s operating model. The reps were recruited on the basis that they could receive commission of £50,000-£80,000 a year, but even assuming this to have been hopelessly optimistic (as Mr Wevill’s experience suggests), there was bound to be a significant obligation to pay commission if projected growth in revenue was to be achieved. When this was put to him Mr Cowan responded that, as the commission would be a proportion of the cost of metal purchased, it was not necessary to add it as an employment expense, but he acknowledged that he had made no such adjustment to the costs of purchases. He also suggested that the commission would be related to the margin which the reps achieved below the maximum price they were permitted to pay, but this was at odds both with the presentation prepared by Mr Bowler and the experience described by Mr Weevil.
Many other examples of unjustified or unexplained assumptions were canvassed by Mr Williams in cross examination and itemised in his closing submissions. We accept his submission that the adjustments made by Mr Cowan to the historic performance of MRS purportedly as a result of Mr Bowler’s turnaround plan were not supported by reliable evidence and the prosperity Mr Cowan predicted for the company and its directors was not credible. Nothing in the evidence on behalf of the claimants gave us any reason to believe that, but for the compulsory acquisition of the Reference Land, MRS could have survived beyond its actual date of liquidation in September 2013, let alone until the expiry of the lease in 2031.
Nor do we consider it credible to suggest that on the inevitable insolvency of MRS in 2013 having made a loss of £804,000 in the year to 30 June (the third such insolvency in little over three years), the claimants would simply have been able to continue trading behind the veil of yet another company – “Bishop Newco” as Mr Warwick described it in his closing submissions. Mr Cowan’s assumptions about the future performance of MRS ignored its accumulated liabilities, and have been shown even on that basis to be unsupportable; there is no reason to think some other corporate wrapper around the same imaginary enterprise would have been any more successful. In any event, as Mr Warwick acknowledged, repeated insolvency is not a risk free option for company directors. HMRC were creditors of MRS for unsatisfied VAT, corporation tax and PAYE liabilities totalling £145,000; the comparable liabilities of SELV had totalled almost £385,000; the indebtedness of BBS to HMRC is not known but it was the Revenue’s refusal to allow yet more time to pay which precipitated its collapse. In view of that very recent history of repeated insolvency the brothers would at the very least have been at risk of investigation for possible breaches of their fiduciary duties as directors in causing or allowing their companies to trade while unable to meet their liabilities.
Max Bishop told us that the brothers decided to cease trading on the day they received the notice of entry on 13 May 2013. MRS was insolvent at that point and made no further payments to the brothers after June 2013 despite disposing of all of the stocks of scrap metal at the Yard. There is no evidence to suggest that, but for the CPO, any further payments could properly have been made.
In summary, in later years at least the very substantial remuneration which the claimants had drawn from their failed businesses was at the expense of the creditors of those businesses and no credible evidence has been provided to explain how any business conducted from the Yard could have continued to sustain those drawings. We were invited by Mr Warwick to assess a sum we considered to be fair compensation for the claimants’ loss of remuneration. As we are satisfied that the claimants could not have continued to authorise payments to be made to themselves for longer than they actually did without being in breach of their duties as directors we assess that sum at nil. The claimants’ loss of remuneration was not caused by the acquisition of the Reference Land (the first of the Shun Fung requirements). Their business was both unprofitable and unsustainable long before the notice of entry was given.
We have not yet found it necessary to say anything about mitigation of the loss of remuneration. Mr Williams suggested that there was no evidence that any serious search had been made for alternative premises from which to conduct the business, but since the business was unsustainable we do not think that matters. Max Bishop gave evidence of perfunctory inquiries which he had made with local property agents when the notice of entry was received, but no evidence was led by TfL to suggest that alternative sites were available, nor did it argue that the claimants should have remained in possession of the Reference Yard when they had the opportunity to do so in July 2013.
Mr Williams cross-examined the claimants on their failure to seek alternative employment or directorships. Since the liquidation of MRS Max Bishop has worked for one day a week as a consultant to a company in which he and his brother have an interest and which runs a golf club, but has not otherwise sought to replace the time he formerly spent in the family business with remunerative work. If Max had had a sustainable claim for lost remuneration from the Reference Land, credit would have had to be given against it for the income he received from the consultancy he took up, which he acknowledged he would have been unable to do had he continued at the Yard. Nigel Bishop, who was 68 in 2013, has not sought alternative employment. Given their age and their reliance on others (the Reids and Mr Bowler) to manage their businesses we do not think it likely that a more determined search by the claimants would have provided additional employment opportunities capable of replacing the income they had previously derived from Bishop’s Yard. They chose to hand over the opportunity to continue a business on the adjoining freehold land (about 13% of the total area) to Max Jr and his cousin, but it was not a success in their hands. We can see no reason why it would have been more successful in the hands of the claimants.”
OTHER HEADS OF DAMAGE
The claimants failed to establish two other heads of claim, but did establish one claim for the costs of vacating the land.
“The claimants made three other claims.
The first claim was in respect of expenditure of £39,013 (plus VAT) said to have been incurred in vacating the Reference Land. This claim was supported by invoices, all but one of which were addressed to Max and Nigel Bishop (the exception was addressed to Mr Bowler and related to the removal of equipment which is the subject of the final head of claim). The fact that costs of that order had been incurred was not in issue, as Mr Williams agreed in his closing submissions; the question for the Tribunal was whether the costs had been incurred by the claimants or by one of their companies.
In a preliminary joint statement signed by Mr Cowan and Mr Jennings on 9 December 2016 they agreed that further information was required to enable them to consider whether the costs of vacating the site had been incurred by the claimants personally or by some other entity. Mr Cowan agreed to obtain that information, but appears not to have been successful. In their final joint statement dated 19 May 2017 Mr Cowan and Mr Jennings agreed that no evidence had yet been provided to them demonstrating that the claimants had incurred the claimed costs. That remained the position at the close of the claimants’ case, no further evidence having been given in support of this element of the claim by either of the claimants or anyone with relevant knowledge.
Although the evidence in support of this claim is therefore limited to the invoices addressed to the claimants themselves, which are agreed to have been paid, we are satisfied that the claim has been made out. Most of the invoices were addressed to the claimants personally and the were paid between December 2013 and February 2014, after MRS had gone into liquidation. The evidence indicates that Max and Nigel Bishop were anxious to clear the site and hand it over to TfL, before pursuing the £7.4m claim for compensation which had already been submitted on their behalf by Mr Mackenzie. Mr Warwick suggested that the claimants had been wary that TfL might look for ways to avoid taking possession or paying compensation, and we can see that that might well have encouraged to the claimants to clear the site. Had the business simply gone into liquidation in the middle of 2013 without the notice of entry having been served, there would have been no such incentive for the claimants to spend their own money on exiting the site. On balance we are prepared to accept that the cost of clearance was met by them, and we therefore allow this element of the claim totalling £46,815 ( inclusive of VAT).
The second additional claim relates to the quarter’s rent which fell due pursuant to the Lease on 29th September 2013. This was £17,500 plus VAT, a personal liability of the claimants which they paid. The claimants were not in a position to make any beneficial use of the site after the discontinuance of business by MRS, but possession was not finally taken by TfL until February 2014.
This part of the claim fails for the same reasons as the claim for lost remuneration. The business of MRS would have failed in any event, and losses which are the consequence of that failure were not caused by the compulsory acquisition. The company was not in a position to reimburse the claimants’ expenditure on rent in September 2013, and the fact that the continuing liability was brought to an end by TfL’s subsequent entry does not mean that the loss represented by that expenditure was caused by the entry.
The final claim is in respect of a loss said to have been made on the sale of assets belonging to the claimants which had been used in the business of MRS and had had to be disposed of to a dealer, JMC Recycling Systems Limited (“JMC”). These assets were described in a schedule from JMC as a depollution rig and tanks, a depollution tower, a 995 litre petrol tank (which we take to have been used in the depollution process) and an Orca car baler. The sale price of the first three pieces of equipment, which had been sold, was said to be £52,000 as against an estimated value of all four items of £104,350. After allowing for sale costs the claimants claimed a total loss of £53,803.50.
The evidence in support of this claim was weak. Neither Max nor Nigel Bishop gave any evidence about the ownership or disposal of the equipment. Mr Cowan explained that the assets of BBS had been sold to SELV in October 2011 for £80,000. The assets of SELV were sold to Max Bishop in March 2012 for £40,000. It is not known whether these included the items which subsequently appeared in the JMC schedule. It is known that an Orca car crusher and equipment described as a “depollution system” were listed in the September 2013 register of fixed assets of another family company, Benton Plant Ltd (“BPL”), as having been acquired by it in August 2010 and April 2009 respectively. This caused Mr Cowan to conclude that all of the plant and machinery held at Bishop’s Yard belonged either to Max Bishop or to BPL.
Evidence was also given about the equipment by Mr Wemyss who said that JMC had sold the Orca baler to Australia and the depollution equipment to Turkey. No source was given for this information, which appears in part at least to contradict the information provided by JMC to the claimants (that the Orca car baler had not been sold). When it was suggested to him that JMC would have obtained the market value for the equipment it sold Mr Wemyss agreed.
In our judgment the claimants have failed to establish any loss arising from the sale of the plant and machinery for two reasons. First, because it has not been established that any of the assets belonged to Max or Nigel. The evidence suggests all four items belonged to BPL, and the highest the claimants are able to put their case is that it belonged either to Max Bishop or to BPL. Secondly, it has not been established that the assets were sold at a loss. Mr Wemyss and Max Jr agreed that JMC were experienced brokers who were best placed to achieve full value for the equipment. The sale was not forced by the need to vacate the yard (so as to result in a diminished price), since the equipment was removed by JMC to its own premises in August 2013 where it was stored (and the Orca baler reconditioned) until a buyer was found during 2014. There is therefore no reason to believe that either of the claimants sustained any loss under this head of claim.
On our findings the sole head of claim for which the claimants are entitled to compensation is in respect of their expenditure totalling £46,815 in clearing the site. That may seem a harsh or at least a surprising conclusion, since the claimants have been dispossessed of land which their family has occupied as lessees for several generations. But by the time the land was required for the Crossrail project the businesses carried on from the land had repeatedly failed and, on investigation, it has become clear that the cause of the claimants’ loss was not the acquisition but the fragility of the enterprise from which they had derived their income. Whether the lease itself might have had a value, or whether any claim might have been made by MRS, are not questions which we have been asked to consider.”
RELATED POSTS: THE PROVING THINGS SERIES
- Proving things 1: Civil Evidence Act notices will not cut it
- Proving things 2: evidence to support a claim for damages must be pitch perfect.
- Proving things 3: the complete absence of evidence means the court will not speculate
- Proving things 4: Witnesses who just aren’t there.
- Proving things 5: witness statements and failing on causation.
- Proving things 6: “That’s what I always do” & proving causation.
- Proving things 7: If you don’t prove a loss you don’t get an order.
- Proving things 8: a defendant must prove that a failure to wear a seatbelt made a difference.
- Proving things 9: the role of experts
- Proving things 10: “He said, she said”: the difficulties of recollection.
- Proving things 11: Lies, damn lies and…
- Proving things 12: That oral contract is not worth the paper its written on.
- Proving things 13: Loss, there was no loss.
- Proving things 14: proving mitigation of loss
- Proving things 15: damages and evidence: going back to College
- Proving things 16: if you don’t prove it you don’t get it.
- Proving things 17: Heads of damage that were “entirely bogus”
- Proving things 18: Damages; Car hire; Proof & Summary Judgment
- Proving things 19: prove service or you could be caught out.
- Proving things 20: allegations of improper conduct have to be prove
- Proving things 21: when the whole process of investigation is flawed
- Proving things 22: damages, mitigation part 36 (and bundles).
- Proving things 23: serving important evidence late
- Proving things 24: Damages & the “But for test”: when it gets really complexProving things 24: Damages & the “But for test”: when it gets really complex
- Proving things 25: Attempts to smuggle in witness statements do not help (and carry no weight).
- Proving things 26: distinguishing between what you can remember and what you now think you did.
- Proving things 27: Burdens of proof, hearsay evidence and… attempted murder.
- Proving things 28: make unwarranted personal attacks and use a “mud-slinging” expert: that always ends well.
- Proving things 29: Make sure the witness evidence deals with the relevant issues
- Proving things 30: Office Gossip Proves Nothing: The importance of the source of information and belief.
- Proving things 31: witnesses tend to remember what they want to remember.
- Proving things 32: Damages claim struck out as unsustainable: application to amend refused.
- Proving things 33: causation and the burden of proof in claims against solicitors.
- Proving things 34: There is no primer for scuttlers: when your ship doesn’t come in.
- Proving things 35: Reconstruction, documents & memory.
- Proving things 36: credibility and contemporaneous documents.
- Proving things 37: An approach to damages that was “fundamentally deficient throughout”.
- Proving things 38: Proving inability to pay on a security for costs application.
- Proving things 39: You can spend £10 million in costs and still not prove your case.
- Proving things 40: No evidence – no loss.
- Proving things 41: Proving damages – you are not going to get a second bite of the cherry.
- Proving things 42: silence does not prove inducement.
- Proving things 43: How the Court decides: a Primer.
- Proving things 44: Findings of Fact, Walter Mitty and Witness Training.
- Proving things 45: If you can’t prove loss the defendant is going to get summary judgment.
- Proving things 46: Late theories advanced by experts rarely help.
- Proving things 47: Fire in the loft: it wasn’t the mouse man at all.
- Proving things 48: valves, floods, models and causation.
- Proving things 49: it is difficult to prove damages when the opinion evidence in your witness statement has been struck out.
- Proving things 50: to prove breach of contract you first have to prove that there was a contract.
- Proving things 51: No evidence of loss – no damages
- Proving things 52: Solicitor’s negligence action fails on all counts: no negligence and no loss.
- Proving things 53: dishonesty some of the times doesn’t mean dishonesty all of the time.
- Proving things 54: getting £2 in damages after claiming £15 million.
- Proving things 55: I’ll say it again: No evidence – no damages.
- Proving things 56: A judge will not speculate when things could have been proven.
- Proving things 57: Lease said soonest mended: claim for substantial damages fails (and guess the reason)
- Proving things 58: Failure to prove causation leads to award of nominal damages.
- Proving things 59: To get special damages you have to plead them and prove them.
- Proving things 60: Putting seaweed out of the window and the judge who was even-handedly offensive
- Proving things 61: More on social media: Facebook Entries & witness credibility.
- Proving things 62: “Totally unsatisfactory evidence” at trial fails to prove special damages.
- Proving things 63: “Law Society fails to prove it made a loss”
- Proving things 64: Absence of strong and stable evidence leads to damages award of £2.00
- Proving things 65: Assumptions are not evidence (if the Court of Appeal has to ask for the matter to be made simple you are in serious trouble).
- Proving things 66: It all comes down to the credibility of witnesses: where there’s a will there’s a way.
- Proving things 67: The difficulties when witnesses depart from their statement: multiple inconsistencies damage credibility