Claim No HC07CC00779
Neutral Citation Number: [2008] EWHC 1963 (Ch)
IN THE HIGH COURT OF JUSTICE  
CHANCERY DIVISION

Royal Courts of Justice
The Strand
London WC2A 2LL 

18th July 2008
Before:
SIR DONALD RATTEE
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BETWEEN:
Craig Guy McKinlay
Claimant
‑v‑
Nexia Smith & Williamson Audit Limited
Defendant
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 (Transcript of
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Mr J Allcock (instructed by Nabarro LLP) appeared on behalf of the Claimant.
Mr B Pilling (instructed by Barlow Lyde & Gilbert LLP) appeared on behalf of the Defendant.
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Judgment
1.	SIR DONALD RATTEE:  Yes, do either of you want to say something before I start?  
2.	MR PILLING:  My Lord, I was merely going to introduce my learned friend Mr Allcock who is here in place of Mr Aldridge, who, as my Lord knows, has to be somewhere else.
3.	SIR DONALD RATTEE:  Yes, thank you.   
JUDGMENT 
4.	SIR DONALD RATTEE:  In this action the claimant seeks damages for alleged negligent breach of duty by the defendant, in making a valuation of his minority shareholding in a company called L&M Food Group Limited ("L&M") for the purposes of a sale of those shares by the claimant pursuant to a provision of L&M's articles of association.   
5.	At a late stage of the proceedings, that is to say, in closing submissions by counsel for the defendant, the defendant has admitted negligence, but still disputes liability for damages on a ground that I will explain a little later.  
6.	L&M was at all material times engaged in the business of buying and selling food products, in particular poultry and pork, which, having bought it, L&M sold on without making it into other food products.  
7.	The claimant became employed by L&M in 1989.  He became a director of L&M in May 1997.  Prior to becoming a director he had, in December 1996, acquired a small holding of shares in L&M, namely 1,005 class B ordinary shares, for a consideration of £250 per share.  
8.	At all times material to the issues I have to decide, the share capital of L&M was held as follows; the A and B shares carrying equal voting rights.  All 3,800 A shares, which represented 18.9 per cent of the company's issued shares, were, and had since 1990 been, held as a venture capital investment by Norwich Union Life and Pension Funds Limited ("Norwich Union"). 
9.	The B shares were held as follows; the figures in brackets showing the percentage which each holding represented of the whole of the company's issued shares: 7,905 (39.3 per cent) by a Mr Wallace, L&M's managing director; 5,522 (27.5 per cent) by Mr Dicker, a director of L&M; 1,625 (7.1 per cent) by a Mr Muench, another director of L&M; 243 (1.2 per cent) by L&M Food Group Trustee Company Limited ("Trustco"); 1,005 (5 per cent) by the claimant.  
10.	Trustco was wholly owned by L&M and its directors were Mr Wallace and Mr Dicker.  It was set up by L&M to perform the role of trustee of an intended employee share option scheme, which apparently never became fully operative.  There is no other evidence of the nature of the trust on which it held its shares, which it acquired from Mr Wallace at the price of £620 per share in March 2001, the whole of the purchase price being borrowed from L&M.  
11.	The shares were Trustco's only asset.  Although there is no evidence before the court as to the nature of the trust on which that asset is held, it was common ground before me that it is held on subsisting trusts which impose fiduciary duties on Trustco, and there was no suggestion that it is, or ever has been, held by Trustco on a bare trust for a beneficiary or beneficiaries absolutely entitled to it.  
12.	Norwich Union's holding of A shares was acquired by it in 1990 as part of a transaction which included a shareholders' agreement, which gave Norwich Union certain rights in relation to L&M, not enjoyed by the B shareholders.  These gave Norwich Union the right to nominate a director, a right of veto on directors and management service contracts, a right to insist on certain limits on L&M's borrowing, and a right of veto on certain disposals and acquisitions, investments and restructuring by the company.  Norwich Union also became entitled to require that L&M's articles of association should include a requirement that the company should pay a dividend each year of 40 per cent of its post‑tax profits.  The articles were amended to include such a provision.
13.	The claimant left the board and the workforce of L&M on 15th December 2003, in somewhat acrimonious circumstances, the details of which do not matter for present purposes.  As a result of his leaving, he became subject to the terms of Article 37(B) of L&M's articles of association.  That provides, so far as material, as follows:
	"If any member holding Ordinary Shares being a Director shall cease to be a Director of the Company or being an employee shall cease to work for the Company the Directors shall where the Director or employee, as the holder of ... Ordinary Shares ... require such member within six months of such member so ceasing to serve or procure the service of a Transfer Notice pursuant to Article 31(B) in respect of all Ordinary Shares held by such Director or employee on the date of such Transfer Notice ... in default of service of any Transfer Notice as aforesaid such notice shall be deemed to have been served on the expiry of such six month period."
14.	 Article 37(C) provides, so far as material, as follows:
	"In the event that a Transfer Notice is served or deemed to have been served hereunder the specified price of the shares in respect of which the Transfer Notice is served shall be deemed to have been fixed at such price as the Auditors shall report to be the fair value thereof.  For this purpose the fair value means the price per share which the shares might reasonably be expected to fetch on a sale between a willing seller and a willing purchaser in the open market.  In so reporting the Auditors shall be considered to be acting as experts and not as arbitrators ...  Upon receipt the Directors shall immediately give notice of the fair value to the holder of the shares in respect of which the Transfer Notice is served and to each of the other holders of shares in the Company."
15.	Article 31 gives the other shareholders the right to buy the shares of the retired director or employee at a price so fixed by the auditor's report.  The claimant did not serve a Transfer Notice on his leaving L&M, and accordingly such a notice was deemed to have been served on the expiration of six months after his ceasing to be a director, namely 15 June 2004.  
16.	The defendant acted as L&M's auditor from February 2002 until 25 August 2005.  It was instructed by L&M to carry out the valuation of the claimant's shares pursuant to Article 37.  On 14 December 2005 the defendant produced a report assessing the value of the claimant's shares as at that date as being £76 per share, making a total for all the claimant's shares of £76,380. 
17.	Hardly surprisingly the claimant challenged the correctness of this valuation, not least because it was made as at the wrong date.  L&M eventually agreed with the date point, and the defendant was instructed to produce a valuation as at 15 June 2004, the date on which the claimant was deemed to have served the Transfer Notice.
18.	At first the defendant maintained that the change of date made no made no difference to the valuation.  However it later withdrew the original valuation, and, on 6 April 2005, issued a new non‑speaking valuation certifying that the value of the claimant's shares as at 15 June 2004 was £128 per share, giving a value for the whole of the claimant's holding of £128,640.  Those shares were transferred to other shareholders at that price, although the claimant continued his challenge to the correctness of the valuation, which led him eventually to start this action against the defendant, alleging that the defendant's negligence in making its valuation has caused him actionable loss.
19.	Before considering the claimant's case I should mention two further facts which have featured significantly in the contentions of the parties before me.  
20.	Firstly, in June 2005 Norwich Union sold its shares in L&M to that company itself at a price of £473.49 per share, including a notional dividend for 2005 of £49.75 per share.  This was equivalent to a price ex dividend of £423.94.  
21.	Secondly, on 11 July 2006 a company called LAMEX Group Limited acquired all the issued shares in L&M for a consideration of £30,031,000.  That consideration was not all payable in cash, but was made up as to approximately one third cash, one third preference shares in the acquiring company, and one third loan notes.  An expert valuation witness called by the defendant expressed the view, which was not really challenged, that the cash value of the consideration was probably about £22 million.
22.	It is the claimant's case that the defendant was negligent in various respects in carrying out its duty to value the claimant's shares, and that, as a result, the value certified by the defendant as the value of those shares on 15 June 2004 was less than any figure that any reasonable valuer acting properly could have certified.  It is the claimant's case that the proper value of his shares as at 15 June 2004 was in fact £635 per share, instead of the defendant's figure of £128 per share, and the claimant seeks damages equal to the difference between the amount he in fact received for the sale of his shares at the defendant's valuation and the amount he would have received at £635 per share.  
23.	The defendant denied negligence right up to its counsel's closing submissions.  However in those submissions counsel for the defendant conceded, as indeed he had to, on the evidence that had been given, that the defendant had been negligent in failing to take two factors into account which might have had a bearing on the value of the claimant's shares as at 15 June 2004.  
24.	The first of those two factors was the sale of shares in L&M to Trustco in 2001 at the price of £620 per share.  In fact the evidence shows that at all material times after that sale its holding of L&M shares, its only asset, was shown in Trustco's accounts as having a value of £620 per share, and that the defendant as auditor of Trustco, suggested no qualification of its accounts in this respect.
25.	The second factor which the defendant now admits it was negligent not to take into account is the possibility of making an adjustment to the amount of dividends declared by L&M in the past to take account of certain exceptional charges against L&M's profits.
26.	However, although the defendant now admits negligence, it contends that this gives rise to no liability on its part, because, according to it, the value it ascribed to the claimant's shares, albeit negligently, was within the range of values that a reason valuer acting properly could have adopted.  
27.	Counsel for the defendant relied on a decision of the Court of Appeal in Merivale Moore Construction Limited ‑v‑ Strutt and Parker (a Firm) [2000] PNLR 498.  In that case the Court of Appeal held, in the case of an allegedly negligent valuation of land, that, before a valuer could be held liable for negligence, it had to be shown not only that he had acted negligently in the process of making his valuation, but that the figure certified by the valuation fell outside the range of values that could have been reached by a reasonable valuer acting properly.
28.	I have to say that I do not find it easy to understand why, in principle, a valuer in the position of the defendant, who is shown to have acted in negligent breach of duty in making his valuation, with the result that his valuation is lower than it would have been if he had been guilty of no negligence, should not be liable for damages equal to the amount by which it is lower regardless of whether another valuer, acting reasonably, could have reached the lower figure.  
29.	However both parties agreed that I am bound by the decision of the Court of Appeal to reject the present claim, unless I am satisfied that the £138 per share figure certified by the admittedly negligent defendant was lower than that which could have been certified by any reasonable valuer acting properly.  In any event, as will appear later in this judgment, I am satisfied that no reasonable valuer, acting properly, could have certified as low a figure as £128 per share, so the point of law is not material in this case.
30.	I have read and heard a considerable amount of detailed and complex evidence from two experts in the valuation of shares in unquoted companies.  One expert, a Mr Taub, called by the claimant, gave evidence to the effect that, in his opinion, the value of the claimant's shares in L&M, as at 15 June 2004, was £635 per share.  In the course of his cross‑examination he produced a schedule showing that, in his opinion, the range of values that could reasonably have been adopted by a valuer was from a low of £408 per share to a high of £777 per share.
31.	The other expert witness, a Mr Thornton, called by the defendant, expressed the view that: 
	"In the light of their knowledge of the company and their assessment of risk, [the defendant] produced a conservative, but not unreasonable, valuation of £128 per share.  I consider that this valuation is at or near the bottom of a reasonable range of values for the claimant's shareholding and that a value of £190 per share is at the top end of the range of values which a reasonably competent valuer in [the defendant's] position could have reached." 
32.	One reason for these wide ranges of possible values is the inevitable lack of certainty in the valuation of a minority holding of shares in an unquoted company, as was the claimant's holding in L&M.  There is no easily ascertainable market value of such a holding.  Its valuation will depend on a number of factors involving the exercise of judgment by the valuer, such as the amount of dividends that can reasonably be expected by a purchaser to be maintained on the shares in the future, the percentage dividend yield that a purchaser would require to see on his capital investment in buying the shares, given that he will have no certainty of any sale of the company as a whole to release capital to him, and the likelihood, if any, of such a sale materialising in fact.
33.	One of the factors which the defendant relies on as depressing the value of the claimant's shares is the fact that, in a period of some three years prior to 15 June 2004, the dividends declared by L&M were significantly lower than dividends declared in earlier years, by reason of difficult trading conditions caused by factors including foot and mouth disease in animals, a public scare about the effect of antibiotics on pork, and an outbreak of SARS disease in part of the territory where L&M did business.  
34.	The claimant, on the other hand, claims that the defendant took too much account of these factors by looking only at the dividends declared by L&M in the three years prior to the valuation date, when, in fact, evidence available at that date suggests that the depressive factors I have mentioned had become significantly less effective by 15 June 2004.  
35.	In relation to another of the factors I have mentioned as giving rise to uncertainty in the valuation of a shareholding such as that of the claimant, namely the prospects of a sale of the company as a whole, the claimant relies on the evidence of his expert witness, Mr Taub, to the effect that, in his view, it would have been reasonable for a purchaser of the claimant's shares on 15 June 2004 to have taken the view that there was a 50 per cent chance of a sale of the company as a whole in the foreseeable future.  This would obviously justify a higher valuation of the shares than would have been appropriate had there been no such prospect.  
36.	The defendant contends that Mr Taub's view on this point, which he ascribed to the hypothetical purchaser of the claimant's shares, is unreasonably sanguine.  I mention these points as showing that there is inevitably considerable scope for differing conclusions by differing reasonable valuers in valuing a small minority holding in an unquoted company such as was that of the claimant.
37.	As I have said, the defendant, by his closing submissions, admitted negligence in the two respects I have mentioned.  This admission was clearly realistic, having regard to the evidence.  It makes it unnecessary for me to deal with the various other heads of negligence alleged by the claimant, for it is common ground that, since the defendant was guilty of negligence in making its valuation, the first issue I have to determine is whether the figure produced by that valuation, namely £128 per share, was within the range of values which could properly have been reached by a reasonably competent valuer.
38.	If it was, the claimant's claim fails.  If it was below the lower limit of that range, then I have to determine what, on the evidence, I consider to have been the value of the claimant's shares as at 15 June 2004.  
39.	As appears from what I have already said, on the first issue I am satisfied that the defendant's valuation was below the lowest point of the range of values that any reasonable valuer, acting properly, could have determined.  This was the view expressed by Mr Taub, the expert valuer called by the claimant, whom I found a careful, fair and convincing witness.  
40.	In his report the defendant's expert witness, Mr Thornton, expressed the view that the defendant's valuation was within, but at or near the bottom of, the reasonable range.  However in the course of his cross‑examination he appeared to accept that, if it should be the case that the defendant negligently failed in its valuation to take into account factors which would have increased its valuation, then he, Mr Thornton, would take the view that that valuation was below the lower end of the reasonable range.  
41.	I say Mr Thornton "appeared to accept" that, because I did find that on this and some other aspects of his evidence under cross‑examination it was not easy to ascertain exactly what his view was.  However it seems necessarily to follow from his view that the defendant's valuation was at the lower end of the reasonable range that, if it failed to take account of factors which a reasonable valuer, acting properly, would have taken into account, and which would have increased the valuation, then the actual valuation must have been below the reasonable range.
42.	In my judgment, had the defendant taken into account the factors it now admits it negligently failed to take into account, it would have reached a valuation significantly higher than £128 per share.  It follows, even from Mr Thornton's evidence, that that value was below the range of values that could properly have been arrived at by a reasonably competent valuer.  Therefore, I have to determine what the true value of the claimant's shareholding in L&M was as at 15 June 2004.
43.	Obviously, in determining this question I have to take careful account of the evidence of the expert witnesses, to which I shall return a little later in this judgment.  However, I must also have well in mind the fact that, in 2001, the directors of Trustco thought it appropriate to raise and pay for a much smaller holding of shares in L&M than that of the claimant a price equal to £620 per share, and, even more significantly, that at all material times thereafter the Trustco's shares were shown as worth £620 per share in its accounts, which the defendant itself, as auditor of Trustco, approved without qualification.  
44.	The defendant and its expert witness, Mr Thornton, sought to justify the defendant's approval of such value, notwithstanding the defendant's own valuation of the claimant's shares as worth only £128 per share, on the basis that in considering the carrying value of Trustco's shareholding in L&M for the purpose of Trustco's accounts, the defendant would properly have adopted a very different process of valuation from that appropriate to an assessment of the open market value of the claimant's shares in L&M as at 15 June 2004.  
45.	I found Mr Thornton's evidence in support of this alleged justification for the startling difference between the two valuations very difficult to understand, and wholly unconvincing.  In my judgment, it is impossible to reconcile the two, and I cannot accept that the defendant could possibly properly have approved the figure of £620 per share in Trustco's accounts, while, at the same time, certifying a market value of a minority holding of shares in L&M at the extraordinarily different figure of £128 per share.  
46.	I find this inconsistency symptomatic of what I find to have been the defendant's negligent willingness, in carrying out its valuation duties under Article 37 of L&M's articles of association, to submit to pressure from the directors of L&M to keep the valuation of the claimant's shares as low as they could, which clearly, in my judgment, led to a failure on the part of the defendant to keep a proper independent balance between the interests of the remaining directors of L&M on the one hand and the interests of the claimant on the other.  
47.	To return to the expert evidence, both Mr Taub and Mr Thornton agreed that it was necessary, at least as part of the process of valuation for the purposes of Article 37, to value of the claimant's shares on a dividend yield basis, and that this involved forming a view, firstly, as to the level of maintainable dividends to be expected in future from the shares, and secondly, as to the rate of dividend yield, which the hypothetical open market purchaser would except from his investment in purchasing the shares.  The higher the rate of dividend yield, the lower will necessarily be the resulting valuation.
48.	I heard a lot of conflicting evidence on the correct approach to calculating the appropriate level of maintainable dividends.  I preferred the evidence on this of Mr Taub to that of Mr Thornton.  However, although they adopted different methods of reaching a figure for maintainable dividends, in fact their conclusions were not far apart, in that Mr Taub considered a figure of £33.83 per share to be correct, whereas Mr Thornton took a figure of £37.81 per share in producing his top of the reasonable range valuation.
49.	On the choice of rate of dividend yield to be expected by the hypothetical purchaser, Mr Taub and Mr Thornton were much further apart.  Mr Taub thought a rate of 7 per cent appropriate, whereas Mr Thornton thought that a rate of up to 20 per cent could be justified.  This difference is one of the factors that resulted in Mr Taub's conclusion on the value of the shares, £635 per share, being so much higher than the top figure within Mr Thornton's range of what he considered would be reasonable valuations, namely £189 per share.  
50.	However there is another significant difference in the approach adopted by Mr Taub from that adopted by Mr Thornton, which causes their valuations to be so far apart, and that is their respective views on what effect should be given to the possibility, as at 15 June 2004, of a sale or flotation of L&M as a whole in the reasonably near future, with a resultant return to the hypothetical purchaser of the claimant's shares of his capital investment in the purchase.  
51.	Mr Thornton thought it was not reasonable in a valuation as at 15 June 2004 to attach any significant weight to such a possibility.  Hence he thought that the hypothetical purchaser would look at his investment as one that would produce a return only in the form of dividends and not capital appreciation, because the purchaser would not have any expectation of a return of capital, giving the inevitably limited marketability of a small minority holding of shares in an unquoted company.
52.	Mr Taub, on the other hand, thought a purchaser as of 15 June 2004 would think there was a 50 per cent prospect of a sale or flotation of the whole company within the reasonably near future, given the nature of its share structure, management and business.  
53.	In this regard, Mr Taub placed considerable weight on a letter dated 24 November 2003 from Mr Phillip Wallace, the managing director shareholder of L&M, to Mr Nick Wallis, of the defendant, which included the following statement by Mr Phillip Wallace:
	"With both of us [that is, Mr Wallace and his fellow shareholder and director Mr Dicker, who between them held a majority of the B shares in L&M] coming to the last ten years or so of our day to day trading involvement, I am sure that the long term future for the key traders is to buy the company from the existing shareholders at some point in the future, perhaps with the assistance of Norwich Union." 
54.	With reference to this passage in this letter, Mr Taub says in his report:
	"In my view, if the willing buyer and the willing seller had been aware of Mr Wallace's stated attitude, they are likely to have applied a higher probability to the likelihood of sale or flotation than continued ownership." 
55.	The way Mr Taub took this factor into account in his valuation was as follows.  He valued the claimant's shareholding in L&M firstly on a dividend yield only basis, which produced a figure of £480,000, and then on the basis of a pro rata share of what Mr Taub considered the likely proceeds of a sale or flotation of L&M as a whole, which produced a figure of £796,000.  Then, to reflect his view of a 50 per cent prospect of sale or flotation as at 15 June 2004, Mr Taub took an average of the two valuation figures, which produces a figure of approximately £638,000 as the value of the claimant's shareholding, or £635 per share.  
56.	I found Mr Taub's justification for his approach much more convincing than Mr Thornton's justification for his.  That Mr Taub's approach with regard to the prospect as at 15 June 2004 of a sale or flotation of L&M as a whole was reasonably realistic was borne out by the sale of the whole company to LAMEX Group Limited in 2006, which I have mentioned earlier in this judgment.  This gives rise to the question how far it is permissible for a valuer or the court, in making a valuation as at a date prior to the valuation, to take account of events that happened after that date. 
57.	On this question I was referred to Buckingham v Francis, Douglas & Thompson [1986] 2 All E.R. 738, in which Staughton J was concerned with the valuation of shares of a private company as a going concern, as at 24 March 1981.  At pages 738 to 739 of the report Staughton J set out certain matters which were common ground between the parties before him.  One of those, which he numbered 6, was as follows:
	"The company must be valued in the light of the facts that existed at 24th March 1981.  (Little or nothing turns on the question of whether facts which existed but were not then ascertained or ascertainable should be taken into account).  But regard may be had to later events for the purpose only of deciding what forecasts for the future could reasonably have been made on 24th March 1981."
58.	Clearly, the case is no authority for the legal correctness of this proposition, but the parties in this case accept that I should proceed on the footing that it represents the true position, and I do so.  
59.	It follows that I can take account of the fact that all the shares in L&M were sold together in 2006 as supporting the reasonableness of Mr Taub's view that the possibility of such a sale should be taken into account in a valuation as at 15 June 2004, and that that possibility should be regarded as having had as much as an even chance of becoming reality.  In the light of this I am satisfied that Mr Taub's view was a reasonable one to adopt in making the necessary valuation as at 15 June 2004.  He also convinced me that his method of taking this possibility of sale or flotation into account, namely taking an average of the value of the claimant's shareholding purely on a dividend yield basis on the one hand and the likely capital return that holding would pursue on a sale or flotation of the whole of L&M on the other hand, was a reasonable one to adopt.
60.	What, then, of the experts' widely differing views on the rate of dividend yield which a hypothetical purchaser of the claimant's shareholding would require?  This is, of course, an essential ingredient of any valuation based purely on dividend yield.  As I have said a little earlier, Mr Taub thought a rate of 7 per cent reasonable, whereas Mr Thornton thought a rate of up to 20 per cent reasonable.  
61.	Again, I found Mr Taub's evidence on this point far more convincing than that of Mr Thornton.  In the course of his cross‑examination Mr Thornton sought to justify the high rate of dividend yield chosen by him on the ground that the hypothetical purchaser of the claimant's shares would be looking to his investment only for dividend income, and would not believe it carried any hope of capital appreciation, since he would not attach any weight to the mere possibility of a sale or flotation of L&M in the short term future.  It follows from my acceptance of Mr Taub's contrary view that a purchaser would attach considerable weight to that possibility, which in fact materialised in 2006, that I think Mr Thornton's view on this wrong, and therefore no justification for the very high rate of dividend yield chosen by him.  
62.	Mr Taub's justification for his 7 per cent rate I found convincing, and I am satisfied that his choice of this rate was reasonable.  It is to be noted that it is much nearer to the view originally adopted by Mr Hamilton of the defendant for the purpose of the defendant's valuation, ie that the appropriate rate was between 8 and 10 per cent, than is the view of Mr Thornton.  
63.	In summary, I found Mr Taub's reasoning for his valuation of £635 per share convincing, despite being subjected to intense and very lengthy cross‑examination, which did not cause him to change his conclusion, and I accept that conclusion as correct.  
64.	The defendant contended that I should take the view that there must have been some fundamental error in Mr Taub's valuation, because, in June 2005, Norwich Union sold its 18.9 per cent holding in L&M to the company itself for only £423.94 per share ex‑dividend.  The defendant submitted that the Norwich Union holding in L&M should have been worth more per share than that of the claimant, because of the rights conferred on Norwich Union by the shareholders' agreement entered into when it acquired its shares.  
65.	On the basis of the hindsight principle which I have explained by reference to Buckingham v Francis [1986] 2 AER 738 is common ground in this case, as in that, I cannot take the fact relating to the sale by Norwich Union in 2005 into account in making a valuation as at 15 June 2004, but I can take that sale into account to see whether it gives any support to, or casts any doubt on, forecasts for the future made by Mr Taub in making his valuation.
66.	Mr Taub himself, in his evidence, naturally accepted that, if the price paid to Norwich Union was, in fact, as at least one L&M document described it, the market value of Norwich Union's shareholding in June 2005, Mr Taub's valuation of the claimant's shares as at June 2004 must be wrong.  However he expressed the firm view that if it was intended to be the open market value at the time, the price paid to Norwich Union must have been based on an erroneous valuation.  
67.	I obviously do not have available any such details of how the Norwich Union sale price was arrived at between it and L&M or how any valuation for that purpose was made to enable me to assess the validity of such valuation.  That being so, I cannot compare the merits of the valuation process used in making that valuation with that used by Mr Taub, of which I do have very full and convincing evidence.  
68.	Counsel for the claimant pointed out that the price per share paid to Norwich Union is comparatively close to the £478 per share dividend yield valuation made by Mr Taub, and that the difference between the Norwich Union sale price and Mr Taub's final valuation figure of £635 per share may well be explicable on the basis that Norwich Union, or its valuer, took no account of the prospects of a sale or flotation of L&M as a whole, whereas Mr Taub, as I find rightly, in the light of the 2006 sale to LAMEX Group Limited, considered that considerable account should be taken of such prospect.  I think this is a perfectly plausible explanation of the difference between the Norwich Union sale price and Mr Taub's valuation.  As I say, the 2006 sale has proved Mr Taub right in his view.  In the light of the present paucity of evidence relating to the circumstances surrounding the Norwich Union sale, the bare facts of the sale and its price do not cause me to reject Mr Taub's convincing justification for his valuation, which I therefore adopt.
69.	Thus, in my judgment, the value of the claimant's shares required by Article 37 of L&M's articles of association to be ascertained as at 15 June 2004, was, at that date, £635 per share.  The defendant can hardly have any valid objection to this conclusion, as it is remarkably close to the £620 per share which the defendant itself, as auditor of Trustco, had approved in the accounts of Trustco for the period including 15 June 2004.  
70.	Accordingly the claimant's claim succeeds, and he is entitled to judgment for the difference between the £128,640 received by him as the purchase price of his shares and £638,175 which he should have received on the basis of a value of his holding in L&M of £635 per share.  Such difference I calculate as being £509,535.  
71.	I will hear counsel as to the form of order I should make to give effect to this conclusion.
72.	Yes, who is going to say something?
73.	MR PILLING:  I am grateful, my Lord.  
74.	My Lord, in terms of the order, as your Lordship knows Mr Aldridge is unavailable today.
75.	SIR DONALD RATTEE:  Yes.
76.	MR PILLING:  He and I discussed the issues of interest and costs and matters of that sort, and our proposal was that we would, having had a opportunity to digest your Lordship's judgment, we would attempt to agree a form of order, and send it to your Lordship. 
77.	In the event that there is any difficulty between us as to any particular term, then it might be necessary to return to your Lordship, and ‑‑  
78.	SIR DONALD RATTEE:  Yes, well, I am perfectly content to do that.  I can make an order on the terms to be agreed between counsel and lodged and if they are agreed, I don't need to be troubled; if they are not agreed, then ‑‑ I shall not be sitting any more this term, but maybe it can be dealt with in writing.  
79.	I will be happy to receive in writing any submissions either or both of you want to make. 
80.	MR PILLING:  That is very helpful, my Lord, and I hope there would not be any need to trouble your Lordship.
81.	SIR DONALD RATTEE:  I mean, rate of interest and all that is agreed is it?  
82.	MR PILLING:  My Lord, no, because we were going to wait and see what the terms of your Lordship's judgment were first.
83.	SIR DONALD RATTEE:  Are you content that, if we leave it on the basis that I make a order in terms to be settled by and agreed between counsel and lodged with the associate, if there is any difficulty in reaching the agreement, well, then, either or ‑‑ well, it will have to be both ‑‑ one of you can make written submissions to me and the other will have a opportunity to put in similar written submissions, and I will make a decision and issue it in writing if I can.  If not, then we may have to wait until we can fix a hearing date some time next term.
84.	MR PILLING:  My Lord yes.
85.	SIR DONALD RATTEE:  Is that all right? 
86.	MR ALLCOCK:  I am content with that, my Lord.  
87.	SIR DONALD RATTEE:  Yes.
88.	MR PILLING:  My Lord, there is one other matter.  Obviously I have just been listening to your Lordship's judgment, and I did not know what exactly the terms were going to be.  Were I to seek permission to appeal, my Lord, I would obviously like, in the first instance, to make that application to your Lordship.  
89.	I think it is appropriate that I should consult with my clients on that, rather than make an application off the cuff.  
90.	I think that the, if I understand part 52 of the civil procedure rules correctly, I think that procedure requires that I ask your Lordship to adjourn this hearing, because, if I make a application for permission to your Lordship, it has to be at the hearing at which the decision was made, and if your Lordship adjourns this hearing ‑‑  
91.	SIR DONALD RATTEE:  Can we not deal with it on the basis that ‑‑ how are we going to deal with that then?  Because I shall not be able to hear it. 
92.	MR PILLING:  Well, my Lord it may be that I make no application.
93.	SIR DONALD RATTEE:  I think that you ‑‑ I am perfectly happy to treat you as making the application.  It is an application which I shall not accede to, because I do not consider that there is any realistic prospect of success on appeal on the basis that this was a decision based on the evidence. 
94.	MR PILLING:  Perhaps that is the tidiest way ‑‑  
95.	SIR DONALD RATTEE:  That is probably the best way of dealing with it, because otherwise it is going to be very difficult to reconvene a hearing with me. 
96.	MR PILLING:  I can see that.  My Lord, in that case, could I ask you to fill out the slip of paper that ‑‑ 
97.	SIR DONALD RATTEE:  Yes, of course I will.  
98.	MR PILLING:  I am grateful.
99.	SIR DONALD RATTEE:  Anything else?  
100.	MR ALLCOCK:  Nothing further.
101.	SIR DONALD RATTEE:  No, very well, well, thank you. 
(The court concluded at 11.15 am)