Property, Chancery & Commercial, Other Areas of Law
True market value and rejected expert valuation evidence

What happens when the judge rejects the figures provided by opposing experts? Is the claimant then unable to prove loss? The Court of Appeal recently grappled with this issue in Capita Alternative Fund Services v Drivers Jonas [2012] EWCA Civ 1417. This case concerned the valuation of a factory outlet shopping centre (“FOC”) at Chatham Dockyard. The Claimants called two experts, P, who provided evidence about the FOC’s ability to attract consumer spend (a “CACI” analysis) and B, who used P’s CACI analysis to produce a total value. The Defendant called S, who provided a valuation, arguing that a CACI analysis was unnecessary. 

The judge decided that the Defendant was negligent in not obtaining a CACI analysis and calculated that the FOC had a market value of £44.8m. He awarded the Claimants damages of £18.05m. In reaching his market value figure, the judge rejected the evidence of the Defendant’s expert, S. He also found the evidence of P, the Claimant’s CACI expert, of “no real assistance” and he rejected B’s evidence as flawed insofar as it relied upon P’s CACI evidence. Given these findings, the Defendant not surprisingly appealed this decision, arguing that there was no basis for the judge reaching the figure he did.
The Court of Appeal by a majority (Moore-Bick and Gross LJJ) rejected this argument. The essential issue was whether the “collapse” of P’s evidence left the judge with a rational and evidential basis upon which he could determine a figure for damages. In concluding that he had a rational basis, the majority observed that the judge formed the view that the Claimant’s principal witness, B was an “impressive witness” whose views were based not only on the (discredited) CACI evidence but also on B’s own experience and expert analysis. In those circumstances the judge was entitled to reach the decision he did.
Gross LJ emphasised the point that a judge was never bound by expert evidence (even undisputed expert evidence). In a typical valuation case, the judge’s figure might lie somewhere in between those advanced by the rival experts.
Moore-Bick LJ observed that it is “sometimes said that the court must do its best on the material before it” and this reflected the courts’ “general reluctance…to send a claimant away empty-handed”. No doubt this observation will prove reassuring to claimants. Nevertheless he accepted that the “court cannot conjure facts out of the air. There must be some evidence to support it.” This observation no doubt reflects common experience that in the vast majority of cases there is always going to be some material upon which a court could calculate market value. Nevertheless in a small number of cases the evidence may be so discredited that a court cannot even do that.





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