England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/12/2007

Mr Justice Jack :

1. This judgment relates to damages and it follows my judgment on liability delivered on 11 May 2007. In that judgment I set out the background to the action in some detail. I refer to it, and will do no more at the start of this judgment than is necessary to make it comprehensible.
2. The Malmesbury Estate owns land adjacent to Bournemouth International Airport, which is used by the Airport for car parking. The revenue obtained by airports from parking charges, either while passengers are delivered to or collected from an airport – short stay, or until they return – long stay, is an important part of the airport's finances. The parking revenue may be very substantial. The importance of parking revenue is particularly great where the airlines using the airport are low cost airlines which negotiate low charges for the airport's use and so the airport has to find revenue from elsewhere. That is the case with Bournemouth. The relevant land belonging to the Estate is immediately across the Airport Road from the passenger terminal. The Airport including the Airport Road, a private road, is owned by Bournemouth International Airport Limited – 'BIA', which is a subsidiary of Manchester Airport Group.
3. The land in question originally consisted of three grass fields, which have been called A, B and C, and the car park on them is called 'car park 1'. Fields A and B are let to BIA under a lease dated 14 August 2002. It runs for 24 years from that date, that is, to 13 August 2026. The rent in respect of Field A is £9,000 per annum with reviews at 5 yearly intervals linked to the percentage increase in BIA's seasonal ticket parking charges. In August 2002 the field was then being used for car parking under an earlier lease dated 20 January 2000 running until 8 July 2005, which was surrendered. The field was laid out as a car park with a gravel surface and no tarmac roadways or automated ticket system. BIA planned to, and early in 2003 did, spend a substantial sum putting in those improvements. Field B lay immediately to the north of A. At this time it was not yet in use for parking and was grass. The rent was to be £300 per annum until the field was used for parking, and was then be pro rata by acreage with that for Field A. BIA was obliged to bring it into use as a car park by 8 July 2005. Field C was also a grass field not yet in use for parking. It lies immediately to the east of A and B. It was first let to BIA under a lease dated 28 November 2003, which like the 2002 lease of Fields A and B terminates on 13 August 2026. The rent was £375 per annum until the land was developed as a car park, and then pro rata by acreage with Field A. Planning consent for the use of the area covered by Fields A and B for car parking had been granted on 12 August 1992. There was no permission in respect of Field C. It was a term of the lease for Field C that BIA would use all reasonable endeavours to obtain planning consent for use as a car park as soon as the appropriate needs case could be established. Consent was granted by Christchurch Borough Council on 31 August 2007. There is other land at the Airport, which land is owned by BIA and is used for car parking. In particular, there is a small car park next to the terminal, called 'car park 3', which is a short stay car park. More important, there is an area to the north of Field B which is used for both long and short stay, called 'car park 2'. It is about a quarter of the size of Fields A and B.
4. The claimants include the Earl of Malmesbury, and are those who may properly represent the interests in the settled land which includes Fields A, B and C. I have referred to them as 'the Estate'. The defendants are Strutt & Parker. The Estate was represented in the negotiation of the leases to which I have referred by Mr Richard Ashworth, a consultant of the firm. It was alleged by the Estate that Mr Ashworth had been negligent in representing and advising the Estate in respect of the three leases, primarily in that he had not negotiated for and obtained a turnover rent, that is to say, a rent which was a proportion of BIA's net car parking income from the land. I held that Mr Ashworth had been negligent in that respect in relation to the 2002 and 2003 leases, but not in relation to the 2000 lease. I had then to decide what turnover rent, by way of percentage, Mr Ashworth would most likely have obtained if he had pursued the issue as I had held he should. This task was made difficult by the positions taken by the parties and their failure to address arguments in respect of any realistic figure. The claimants contended that BIA would have agreed a rent of 80% of net turnover. I regarded that as wholly unrealistic given in particular BIA's need of the parking income to support its aviation business. Strutt & Parker's position was that BIA would not have agreed to a turnover rent at all, and that, in any event, the claim for 80 per cent had no credibility. I held that the appropriate figure was 10 per cent. So, in short, what the Estate lost by reason of the negligence was a right to 10 per cent of the net car parking income from the land in question over the period of the leases.
5. I mention for completeness that there were originally two further defendants. In my judgment on liability I dismissed the Estate's claim against the solicitors who had advised the Estate. I later awarded them indemnity costs against Strutt & Parker, and against the Estate. Strutt & Parker had brought the firm into the action (together with the relevant partner) as Part 20 defendants. The Estate had later added the firm as a defendant to its claim, largely adopting the allegations made by Strutt & Parker.
6. When the action came on for trial, beginning on 5 February 2007, it was intended to be a trial of all issues – both liability and damages. The Estate claimed by way of damages the sums which it asserted would have been paid to it each year by way of turnover rent, with interest in respect of past sums, and with discounts for early receipt in respect of future sums. It thus adopted the same approach as is taken with claims for loss of earnings in personal injury actions. This was not challenged on behalf of Strutt & Parker until the service of their counsel's written submissions shortly before the trial began. It was there asserted by Mr Timothy Lamb Q.C. that the proper measure of any loss was the loss in capital value of the interests in the land in question, valued at the dates of the causes of action accrued. That involved in essence a comparison of the capital values of the two actual leases with the capital values of two hypothetical leases with 10 per cent turnover provisions. This approach is sometimes called 'the breach date rule'. I held that the correct measure of damage was that proposed by Strutt & Parker. The question is plainly difficult: I refer to the division in the House of Lords in Golden Strait Corporation v Nippon Yusen KubishkaKaisha [2007] UKHL, [2207] 2 WLR 691. I also held that there was no sufficient reason to choose any dates for the assessment other than the dates of the leases: paragraph 191 of the judgment.
7. Because the question of assessing the damages on a valuation basis arose so late, the parties had prepared no evidence for the assessment of damages on that basis. They had prepared evidence in relation to a loss of income basis. It was however agreed between counsel during the course of the trial that I should determine some issues which were relevant to that but otherwise I should also leave the question of damages on that basis for future determination.
8. Following the delivery of the judgment it was submitted on behalf of the Estate that when I came to assess damages I should assess them on both bases because any appeal court could then see what the differences were, and, if the Estate was successful on appeal, there would be no need to have a further hearing as to damages. This course was resisted on behalf of Strutt & Parker. In a ruling handed down on 15 May 2007 I held that that the better course was to assess the damages on both bases.
9. Without the dramatic growth in passengers using the Airport since 2001 it is doubtful whether this litigation would have occurred. It certainly would not have been fought as it has. So it is as well to set out the figures at an early stage. They were set out from 1990 to 2002 in Mr West's report of 26 July 2007. I will omit 1991 to 1994, and will add the subsequent years:

1990 137,000 passengers per annum

1995 92,000

1996 157,000

1997 269,339

1998 315,537

1999 279,029

2000 275,198

2001 265,758

2002 394,810

2003 464,517

2004 499,096

2005 838,856

2006 964,442

The figures up to and including 2005 are set out in Ms Congdon's report of 23 November 2006. I have taken the 2006 figure from the revised Schedule 1 to Mr Taub's report of 8 October 2007.

The capital value assessment

10. Each party called four experts, namely a surveyor/valuer, an expert on discount and risk, an accountant, and a passenger and car park earnings forecaster. The values provided by Mr Robert Fourt of Gerald Eve & Co on behalf of the Estate for the hypothetical leases with 10 per cent turnover rents were these:

2002 lease (Fields A and B) £3 million to 3.5 million

2003 lease (Field C) £300,000 to 400,000.

Those provided by Mr Simon West of Cowling & West on behalf of Strutt & Parker were:

2002 lease £400,000 to 500,000

2003 lease £27,500 to 32,500.

The differences are startling. They stem mainly from differences as to the likely number of passengers and car park users which purchasers of the leases might have foreseen in 2002 or 2003, and as to the discount which purchasers might have applied to take account of risk. The valuations of the existing leases were closer:

2002 Mr Fourt £150,000 Mr West £135,000

2003 £25,000 £25,000

It was agreed between counsel during the damages hearing that I should split the difference as to the value of the existing 2002 lease and take it as £142,500. So, in respect of the values of the existing leases there is now agreement.

11. The leases which have in fact been granted have no unusual features save that the rent reviews are tied to the rise in BIA's season tickets. It was agreed that this feature is not of much importance. So it is not surprising that the valuations were close in the case of the actual 2002 lease, and are the same in respect of the actual 2003 lease. In contrast, the assessment of the hypothetical 10 per cent turn over rents here does provide an unusual and difficult task. That is plain and is not in dispute. The assessment of the value of a turnover rent is substantially more difficult than that of a rent which is a stated money sum adjustable in one of the ways which are typical in rent review provisions. It is not that turnover rents are, or were, uncommon. They may be a modern phenomenon, but they are regularly used for car parks, retail outlets, hotels and other properties. The more predictable the income, the easier the task. The past history, if there is one, of the venture in question may or may not be a good guide. If the business is stable, the task is easier. If it is expected to expand, particularly if it is expected to expand rapidly, the task is the more difficult.
12. It might, indeed, be said here that the court faces an impossible task. For how can the court assess, or at least assess with any confidence, the hypothetical values of leases in 2002 and 2003 when those assessments are based on car park earnings up to 2026? It must be accepted that the task is beset with difficulty. Nonetheless the Estate has suffered a loss which has to be assessed. The law is well familiar with the difficulties that can arise in such situations. One situation where it commonly arises is where an assessment is required of the lost earnings over the life of someone who has been incapacitated as a child. The court has simply to do the best it can.
13. I raise a matter simply to dispose of it. Should the valuations be of the leases, hypothetical and actual, or of the whole of the Estate's interest in the land, namely its interest as landlord in the leases and in the freehold reversion following the termination of the leases? All concerned have proceeded on the former basis. That must be right for two reasons, which on analysis may really be but one. The first is that there is no allegation that the negligence has affected the values of the freehold reversions. So it is right to look only at the values of the leases. The second is that, if the values of the freehold reversions are included, they are the same in each case, that is, hypothetical and actual, and so they disappear from the comparison.
14. The value of an item is often expressed as the price it may be expected to fetch between a willing buyer and a willing seller. If there is a ready market for the item in question, such as is the case with quoted shares and many commodities including metals, the price, the value, can be found by looking at the market at the appropriate moment. It does not follow that if the item had been sold at that moment a bargain would have been struck at precisely that price. There is always an element of the hypothetical in a valuation. Here, it has to be imagined that the leases were put up for sale at the dates they were entered into and sold. The actuality is that the sales would themselves have taken some time to secure. But nonetheless the prices which might have been obtained are the relevant prices for the assessment of damages on this basis. The best offer is the offer which gets the sale, and so it sets the value. A valuer must exercise prudence but must not be over-cautious: if he is, his client's bid will be too low. What are often referred to as 'special purchasers' must be left out of account. Such a purchaser is one who will pay more than others because he has a special interest in acquiring the item, which interest is peculiar to himself. Likewise there must be left out of account hypothetical offers made by those who are foolish, over-optimistic, ill-advised and so on.
15. Something was made on behalf of the Estate of the possibility that BIA might be a purchaser. There is no evidence to suggest that BIA might have been a purchaser, nor is there any to suggest that BIA would not – save that the money would probably have had to come from Manchester Airport Group. What is more important is that there is no reason to think that BIA would have paid any more than the value of the leases. If BIA had been willing to pay more, they might be a special purchaser. But, either way, there is no reason to take particular account of BIA as a potential purchaser.
16. In the hypothetical exercise it is important to identify the market, that is, the general identity of potential purchasers, to whom the property is to be offered. At one point it seemed that there might be a difference between the parties as to this, in that the Estate was suggesting a national market, perhaps primarily to be found in London, and Strutt & Parker were suggesting a market local to Bournemouth. But in his evidence Mr West stated that, if instructed, he would have marketed the leases both nationally and locally. In so far as it is relevant, I consider that, if the Estate had obtained leases with 10 per cent turnover rents and had wanted to sell the leases, the strong probability is that the Estate would have instructed a London-based property agent to market them. That is because of the high value the Estate would have put on the leases, the sophistication required to market them given their characteristics, and the wider circle of purchasers that such an agent might provide. In my view the appropriate market against which to assess these leases is clearly the national market.
17. The valuation of property very often involves the use of 'comparables', that is, the prices obtained on the market for similar, or somewhat similar, properties. Where the main element of a rent is a proportion of the net revenue of an activity, the use of comparables may be more difficult because it is harder to find them, and also more complex because one potential income stream has to be compared with another. It was agreed that there were no comparables which might be used here.
18. It was agreed that a valuer instructed to advise a purchaser of the hypothetical turnover rent leases would have sought assistance from others in respect of particular matters arising as part of the valuation. The primary such matter was the likely income from the leases by way of turn-over rent. Both sides approached that by way of a forecast of the likely passenger numbers in each year, from which was deduced the likely numbers of cars and so the likely income. The Estate instructed Mr Douglas McWilliams, and Strutt & Parker instructed Ms Louise Congdon. Mr McWilliams was instructed for the purposes of the damages assessment. Ms Congdon had been instructed in connection with the original trial and gave evidence at that trial. She had constructed a computer model into which appropriate data, for example, passenger numbers, could be fed, and which then provided figures for annual income. The model was accepted on behalf of the Estate as an appropriate tool, and has been used by both sides. There have been some modifications to the model as time has passed, but that remains the position. The disputes are mainly as to the figures to be fed into it. It is common ground that a potential purchaser would have instructed a forecaster with appropriate experience and that a computer model similar to that constructed by Ms Congdon would have been constructed. The cost would not have been disproportionate. Mr Fourt did not consider that a potential purchaser would have instructed an expert to advise on discount. Mr West thought it likely. Each side also called expert evidence from accountants, but it was not suggested that independent expert accountants would necessarily have been instructed by a potential purchaser of the hypothetical leases.
19. With those general observations I can come to the valuations made in this case. Mr Robert Fourt was instructed on behalf of the Estate. He is a chartered surveyor, and is a partner in Gerald Eve & Co, a substantial national firm based in London with six other offices in England. He has a degree in land administration, and a master's degree in the science of property investment. He has experience relating to car parks including car parks at airports. He named a substantial number of entities of different types, to which he would have marketed the leases if he had been instructed. He was instructed, amongst other instructions, that in relation to passenger forecasts he should have regard to the evidence prepared by Mr McWilliams and Ms Congdon. In section 4 of his report dated 27 July 2007 he reviewed a number of matters relating to the Airport and regional airports. In section 5 he considered the leases and the planning position. Section 6 gave an overview of the market. He referred to it being common knowledge in September 2002 that airport car park revenues were forecast to rise by 7 per cent per annum on a medium and long term (10 years) basis driven by the growth in low cost airline passenger numbers and the opportunity to raise car park prices. In section 7 he set out his valuation methodology, including his key considerations. His 'general valuation' approach included determining the point at which the car park income effectively stabilised in real, without inflation, terms, because the car parks would have become substantially full. His valuation was divided into two parts, the value up to stabilisation, and the value thereafter. That is a complexity which, as I was invited to do by Mr Anthony Speaight QC on behalf of the Estate, I can and will put on one side. His valuation implied an overall discount rate of 10.25%, as I explain in paragraph 26 below. In that first report he arrived at a figure of £4 to 4.5 million for the hypothetical leases for the 2002 lease and £600,000 to £800,000 for the hypothetical 2003 lease. In reaching those valuations he used the figures provided for car park earnings by Mr McWilliams. He was then asked to review his valuations to take account of revised figures provided by Mr McWilliams and a revised discount rate calculated by Professor Matysiak, the Estate's expert as to discount for risk. In his report of 8 October 2007 he provided the figures I have set out. He used his own figure for yield, 5.7 per cent, and Professor Matysiak's figure for discounting to present value of 8.9 per cent. In his oral evidence he emphasised the growth of low cost airline traffic in 2002, and that there was a keen property market moving into untraditional areas with an interest in car parks, particularly airport car parks. He thought that the potential future of the Airport was more important than its past. In his reports he had given little weight to the Airport's past, and he had not referred to information derived from BIA's accounts.
20. Mr Simon West is a chartered surveyor and a partner in Cowling & West, surveyors and property consultants in Bournemouth. He has been in private practice in the area since 1978, primarily engaged with commercial and industrial property. He has a considerable familiarity with the Airport. Mr West gave evidence at the first trial. There is an obvious contrast between Mr West and Mr Fourt. They each have their considerable strengths, and both impressed me.
21. In his report dated 26 July 2007 Mr West stated that the income streams to be generated under the hypothetical leases by way of turnover rents were subject to a very high degree of uncertainty, and that therefore a prudent valuer would adopt a very cautious approach to them. For this reason he advocated the unusual step of providing a range of values instead of giving the value as a single figure. Mr Fourt had done the same. Mr West stated that the valuer would need assistance as to (1) the likely layout of car parking on site in order to establish the number of spaces; (2) passenger forecasting; (3) car park costs, construction and maintenance; and (4) the financial impact of the risks identified by the valuer. He pointed to the state of the land – a gravel surface in respect of Field A, grass in respect of B and C, and no automated ticket system. It is convenient to insert here that I am satisfied that a purchaser of the 2002 lease would have accepted that roadways were to be provided on Field A with an automated ticket system by the spring of 2003. However, I accept that a purchaser would have been more encouraged if the car park had actually been tarmacked and the ticket system in place. Mr West set out the passenger numbers between 1990 and 2002. He also set out the trading results of BIA between 1993 and 2002, which showed that in 1993 and 1995 the company had made a loss. He referred to the business having in effect two divisions – a property division concerned with the renting of property on the land owned by BIA either within the perimeter of the actual airport or adjacent to it, much of which is not related to activity on the airport, and the airport business. Historically the former business had supported the latter. I illustrated this in paragraph 8 of my earlier judgment. Mr West referred to the position of Field C, a field in green belt land with no planning consent for car parking use. He referred to my finding in paragraph 199 that the appropriate figure for the court to take for the upward rise in car park prices was 4.5 % per annum. He thought that a prudent valuer would take a lower figure. Mr West listed a number of factors which he considered could have a profound effect on the income stream, so the exercise of projecting car park revenues carried a high degree of uncertainty. He referred to: (1) acts of terror; (2) environmental issues; (3) government policy to reduce car use; (4) the possibility of the terminal being moved with consequential changes to parking arrangements pursuant to the planning consent obtained by BIA dated 18 October 2001; (5) the availability of other land within the Airport for car parking; (6) the historic volatility of airline activity at the Airport; (7) changes to car parking charges in 2002 and 2003; (8) the green belt designation; (9) the possibility of BIA ceasing to trade (which he treated as slight); (10) the fact that the road running alongside the Estate's land was owned by BIA with no right of access to it or over it held by the Estate; and, last, (11) the possibility that BIA might cease to use the Estate's land for parking. All of these are negative factors. Mr West did not list any positive factors. One positive factor would be that, if the leases were acquired on the basis of a cautious forecast, there would be a very real possibility that the forecast would be exceeded.
22. Because Mr West lays considerable emphasis on these negative factors and because I consider that, if they are examined, it appears that some of them would carry little weight with a valuer, I will look at each of them. (1) Terrorism: the terrible events of 9 September 2001 had not prevented a surge in the growth of low cost air traffic nationally, but an on-going deterioration in security due to terrorism would be detrimental. (2) Environmental factors: what Mr West had in mind was in particular noise, which I do not think would have affected a purchaser: the Airport is where it is and those under the flight path have unfortunately to suffer - the issue of night flights does not arise. (3) Government policy to reduce car use: drivers have been very resistant to curbs on their driving, and there is no real option but to travel to the Airport by car unless one is going to Bournemouth by train. (4) The planning consent of 18 October 2001: I will return to this important point. (5) The availability of land for parking elsewhere on the Airport: this would have been a factor in BIA's decision to agree to a turn-over rent of 10 per cent, and by agreeing to that rent BIA would have decided not to construct a car park elsewhere with in particular the associated costs of bussing; that is information which could have been provided to purchasers by the Estate, and it would have made a valid point; but the purchasers may not have been wholly reassured. (6) Historic volatility: there was very little historic evidence to show that passenger numbers were going to increase very substantially; the surge or explosion as Mr McWilliams described it, only became apparent nationally at about the start of 2002; a purchaser might well have felt that in respect of Bournemouth airport he would be taking a good deal on trust. (7) The changes to parking charges in 2002 and 2003: the charges were low compared with elsewhere and the changes did not suggest that the charges could be increased substantially. (8) Green belt: I do not think that this would have affected a purchaser's view. Fields A and B had planning consent; Field C did not, which is a separate issue; the Estate's land was sited adjacent to the terminal and other administration buildings – it was very well placed. (9) the risk of BIA's insolvency: Mr West pointed to BIA's considerable asset base and put the risk as 'at least a possibility'; in my view it would be seen as remote. (10) The Airport Road: the position as to the Airport Road would have been an important factor in a negotiation between the Estate and BIA about a turnover rent; it would have been important there because BIA's control of the road meant that, if the Estate did not let the land to BIA, neither the Estate nor a third party could run a car park on the land because there would have been no right of access to the terminal; while BIA continued to use the land as a car park the ownership of the road was of no importance; the 2002 lease required BIA to keep the land in a condition suitable for use as a car park; it would no doubt have been a provision of a lease with a turnover rent that BIA should operate a car park on the land; so on analysis this point adds nothing to the possibility that BIA might cease to operate the airport, which is similar to, though not the same as, the risk of BIA's insolvency. (11) BIA ceasing to use the land as a car park: it would have been difficult to envisage a scenario in which this might happen.
23. In my first judgment I held in paragraph 197 that in 2001 the chances of obtaining planning consent for parking on Field C were 75 per cent. The main reason was that it was immediately adjacent to Fields A and B and so, if a need for a further parking area could be shown, it was the obvious site despite being green belt land. The issue in the present valuation exercise is not as to what the chances actually were at the relevant dates, but how they would have been assessed by a valuer at those dates for the purpose of his valuation. In paragraph 10.4 of his report of 26 July 2007 Mr West first stated that the only value to be attributed to Field C was as agricultural land. After referring to my finding of a 75 per cent chance in 2001, he stated that a valuer would only attribute a very limited value to that chance, and a lender would not lend anything to finance the purchase of a lease of Field C until planning consent had been obtained. Mr West here reflects the view stated in his first report of 24 November 2006 where in paragraph 6.4.3 he said 'In my opinion, it would seem inappropriate at the present time to attribute any commercial value to Field C.' I consider that a valuer would inevitably have recognised that Field C had a real commercial value (as opposed to agricultural value): that is not to say that he would have not have discounted the value to take account of the lack of planning consent.
24. Mr West referred to the projected car park revenues calculated by Ms Congdon as being her best estimate of the revenues but he records that she considered that there should be a reduction for overstatement in the range of 17 to 56 per cent. He then referred to the work of Mr Ian Rowson as to discount rates, stating that Mr Rowson had taken account of the risks he, Mr West, had listed but not of the overstatement in Ms Congdon's figures, nor of the asymmetric risk posed by the October 2001 planning consent. He recorded Mr Rowson's conclusions that a discount rate of 17 per cent was appropriate in respect of the 2002 lease revenues, and that 25% was appropriate for the 2003 lease revenues. He said that there was a 'huge degree of uncertainty attached to' the revenue projections and to the assessment of discount rates, and a valuer would have to adopt a very cautious approach. He considered that the high level of risk would have restricted the potential purchasers to speculators. That is not a view shared by Mr Fourt.
25. The values which Mr West provided in his report of 26 July 2007 were subsequently modified in his report 5 October to take account of changes in the information provided to him, and he provided the figures which I have already set out. He also set out how his calculations had been done. He used a discount rate of 17 per cent for the turnover rents in respect of Fields A and B, and 25 percent in respect of Field C. Those rates had been calculated by Mr Rowson. It was Mr West's view that the risks that he foresaw in relation to the revenues justified those levels of discount. There was thus in effect a qualitative assessment of risk by Mr West and a quantitative one by Mr Rowson. Mr West assumed that Ms Congdon's model overstated revenues by either 17 or 6 per cent. He made a deduction of 5 per cent for asymmetric risk, namely the effect of the 2001 planning consent. The 17 per cent overstatement gave a value for the 2002 lease of £424,484 and 6 per cent gave £475,651, and so he gave the value as £400,000 to £500,000. Field C came out at £30,054 or £31,406, and he gave the value as £27,500 to £32,500. Using a figure of 6% for overstatement the total turnover rents to be discounted on the figures used by Strutt & Parker were £3,123,637 (Fields A and B – see E2 page 627) and £696,770 (Field C – see E2 page 628, total of bottom line). On Strutt & Parker's figures significant turnover rent for Field C became payable substantially later than on the Estate's figures.
26. Apart from the differences between the valuations of Mr Fourt and Mr West which arise from the differences in the calculations of revenue, there are three important sources of difference. One is as to discount rate. One is whether a reduction should be made to take account of the suggested tendency of Ms Congdon's model to overstate revenue. One is whether a reduction should be made for asymmetric risk. The comparison between the two valuations was very much simplified by Mr Speaight in his opening. Mr West's valuations were supported by schedule prepared by Mr David Stern, the accountant instructed by Strutt & Parker. These took the hypothetical turnover rents for each year calculated by Ms Congdon and discounted them in accordance with the discount rates advised by Mr Rowson, namely 17 per cent for Fields A and B and 25 per cent for Field C. It has been calculated that the equivalent figure to be used on that basis for Mr Fourt's calculations is 10.25 per cent for both leases. So that is the crucial difference between them as to discount.
27. The annual sums forecast to be received as turnover rent require to be discounted for two reasons. One is that they are to be received in the future, and so require to be discounted to arrive at a present value. The second is that the income is uncertain: I mean that, although the assessment of the amount represents what the rent is most likely to be, it may turn out to be more, or, more importantly less. Because of that uncertainty, which I can refer to as the commercial risk, a purchaser of the income would require a discount to reflect his assessment of that risk. I include within this the risk of the payer, BIA, becoming insolvent.
28. I heard some highly technical evidence from Professor Matysiak and Mr Rowson as to the assessment of risk and discount rates. It was apparent that the calculation of the risk inherent in the turnover rent revenue stream was complex and difficult. I use "calculation" to refer the processes they went through, and I contrast it with a qualitative assessment formed by simply looking at the nature of the risk in the way that Mr West did in his report. I do not think it is necessary or appropriate in this judgment to attempt a critique of the evidence as to Beta and associated matters, which were considered at length by Professor Matysiak and Mr Rowson. Parts of it, I suspect, are some way from the reality of the discussions which might have taken place between a hypothetical purchaser and his valuer. Standing back and looking at all the evidence which I heard as a whole, I am satisfied that Mr Fourt's valuations do not take sufficient account of the history of Bournemouth Airport and the limited statistical evidence in 2002 and 2003 that the Airport had put its troubles behind it and was on a path of assured growth. An example of his over-optimistic approach was his view that the take-over of Buzz by Ryan Air in early 2003 and the resulting cancellation of Buzz's intended flights from Bournemouth was not a negative event but that comfort could be found in Buzz's interest. I do not consider that a valuer instructed to assist a potential purchaser of the hypothetical leases would have taken the same view as Mr Fourt as to risk, and therefore as to discount rate. I add that it also seems to me that a potential purchaser, an entity involved and experienced in commercial property, would itself been capable of forming a view on risk, and would not have taken as favourable a view as Mr Fourt.
29. Mr Lamb submitted that I should reach that conclusion and that, if I did, I should adopt Mr West's valuations because the Estate's case had been shown to be unreliable and Strutt & Parker's case was the alternative. He submitted that the valuations stood or fell as a whole.
30. If the experts on each side had not been so far apart, there would be greater force in Mr Lamb's submission. However, they are a long way apart on many matters, and it is a fair comment that the evidence is largely polarised according to which party they represent. (There is a striking exception to this where Mr McWilliams has accepted Ms Congdon's suggestion that one third of long stay parkers might be diverted by BIA from the car park on the Estate's land, car park 1, to car park 2 on BIA's land in order to save BIA turnover rent. This is a point which Mr McWilliams might have argued, but he thought it was valid and he accepted it.) So it would be wrong for me to adopt the whole of Strutt & Parker's case because I had found that one part, albeit an important part, of the Estate's case did not represent what a valuer would have done at the relevant time. I do, however, of course accept that the valuations have to be looked at as a whole in the sense that one part may affect another. That is most plainly so in the relation between the prediction of the elements of the revenue calculations, especially passenger numbers, and discount for risk. If the passenger numbers have been projected on a very cautious basis, the risk and so discount for risk is reduced. The reverse is the case if they have been projected on an optimistic basis.
31. It was submitted on behalf of the Estate that Mr Rowson's assessment of risk and the appropriate discount factor is too high. It was based on a Beta of 2.5, that is two and a half times the norm. I agree that this is a high figure. But I think that rather than attempting my own adjustment to it, I should accept his figure for discount in respect of Fields A and B – 17 per cent, and remember that it does make a generous allowance for risk. But I do not think that I should accept his figure for Field C – 25 per cent. I consider that this figure is too high for two reasons. First, as will appear, I think that a valuer would have proceeded on the basis that Field C would come into use and would begin to provide a substantial rent sooner as the Estate's calculations show rather than later as Strutt & Parker's calculations show. The income would have been much more immediate and in that sense more certain. The fact that it is also more valuable because it has a greater 'present value' is a separate point. Second, I do not think that the hypothetical valuer would have taken such a pessimistic view of the chances of Field C getting planning permission as is suggested on Strutt & Parker's side. That, however, is nonetheless a factor that requires a higher discount rate for Field C than for A and B. I have to take a figure, and 20 per cent seems to me appropriate in the context of all the evidence I received. The rates should be applied in the same way as they were applied in Mr Stern's calculations. Mr Rowson saw these calculations. He did not say that Mr Stern had got it wrong. It was not suggested at the trial that Mr Stern had got it wrong.
32. The evidence and particularly the submissions concentrated on the discount for the commercial risk. There was also some difference as to how the 'risk free rate' should be calculated. I refer to paragraph 21 of Mr Rowson's report of 5 October 2007. I accept the view there expressed by Mr Rowson. This is in effect incorporated in my conclusion in the preceding paragraph.
33. It is as well that I record that I have looked again at the evidence of Mr Theophilus relating to his look at the Airport's car parks in 2000 on behalf of NCP to see if NCP should purchase them. The main car park in use then was car park 2 (and probably also car park 3). He concluded the car parks were not well run or controlled. He referred to, inter alia, the need for surfacing and automated ticketing. NCP did not take it forward by doing a full appraisal for these among other reasons including the sale of NCP. This was a very different situation to that pertaining to the notional sale of the Estate's interests in its leases in August 2002 and November 2003. NCP's interest in the car parks confirm that there was an interest in the taking over of regional air port car parks, and to that extent supports the evidence of Mr Fourt. It also supports the approach of Mr West in looking to see what the situation was at the specific airport.
34. I move to the projections of passenger numbers prepared by Mr McWilliams and Ms Congdon. A table shows the size of the differences. For this purpose I use Mr McWilliams' Appendix 4, table 1, report of 27 July 2007 (low assumptions), and Ms Congdon's table 3 in her report of the same date.

	McWilliams	Congdon	(Actual)
2006/7	603,943	494,806	(936,030)
2007/8	672,992	528,048
2010/11	931,217	642,026
2015/16	1,600,000	879,813
2020/21	2,115,829	1,212,715
2026/27	2,958,784	1,828,329

Ms Congdon's figures are by financial years, and Mr McWilliams' by calendar years, and the figures have been the subject of recalculation since: but the scale of the differences is plain. The passenger numbers become of much less importance once they are large enough to fill Fields A, B and C for most of the time. On the Estate's evidence that would happen in about 2014.

35. The starting point for Mr McWilliams' figures is the forecast for passenger numbers contained in the Department of Transport's Consultation Paper dated July 2000, which forecast between 1.6 and 2 million passengers per annum passing through Bournemouth in 2015 and between 3.7 and 5.1 million in 2030. The figures he derived from this were in line with a projection which he had done for the Association of British Travel Agents in October 2001. Ms Congdon suggested that his use of these figures was inappropriate because the consultation paper's purpose was to test what would happen if regional airports grew strongly. But the Paper does not suggest that the forecast's were anything other than the Department's best effort to produce accurate estimates without a bias. Ms Congdon had quoted the Consultation Paper figures in her report of 23 November 2006. She had not suggested there that they were other than a best estimate. Ms Congdon also suggested that the anticipated growth was in part anticipated to be provided by overspill from airports such as Heathrow due to limited capacity. How far that would happen, Ms Congdon rightly said, would depend on whether such airports were permitted to build new runways. She said, again rightly, that there was little evidence in 2002 and 2003 of such an overspill benefiting Bournemouth. On the other hand there was the surge in low cost travel on which Mr McWilliams greatly relied, and which was not anticipated in the Consultation Paper.
36. Ms Congdon sought to support her own figures by reference to work she had done when employed by Manchester Airport Group in the latter part of 2000 in connection with the Group's purchase of BIA in February 2001. I am satisfied that the passenger numbers there considered were intentionally forecast on a cautious and pessimistic basis. I refer to the report at D2.4.3707, the cross-examination of Ms Congdon at Day 2 pages 76 to 89 and the documents there referred to. This was not the only occasion when I thought that Ms Congdon was fighting her clients' corner. In view of a comment made on behalf of Strutt & Parker on the last sentence when seen in draft, I should make it clear that I do not suggest that Ms Congdon had "deliberately manipulated her figures in order to mislead the court". I refer to the tendency of experts on occasion to align themselves with their client's cause.
37. The outcome is that I find that Mr McWilliams' figures for passenger numbers are figures which it is appropriate to use in the valuations. I think that the combination of those figures with Mr Rowson's figures for discount for risk achieves a balance which reflects what a purchaser would have been advised in 2002 and 2003, and on which a purchaser would have been prepared to buy. I bear in mind that Mr Rowson accepted in evidence (Day 4, pages 25 and 26) that, if the car park became effectively full sooner than Ms Congdon had calculated, his assessment of the discount rate for risk would have been lower. If Mr McWilliams' figures are used, that happens. But I do not think that this should cause me to reduce Mr Rowson's rate of 17 percent. For in my judgment it is the combination of Mr Rowson's cautious assessment of risk with Mr McWilliams' figures for passengers that reflects what a purchaser would have been prepared to pay and gives the value.
38. Mr Lamb submitted that it would be wrong for me not to accept Ms Congdon's forecast because I had accepted her figures in my May judgment (paragraph 194). She was there putting forward a forecast on a different basis, namely one based on what she knew at the time of that forecast. I think that when she has taken herself back to 2002 and 2003 she has been over-pessimistic.
39. The passenger number figures derived by Mr McWilliams which should be used for the purpose of the valuations are his weighted average between his high and low assumptions forecasts. This average appears on the table in his third and fourth reports which are based on the accompanying electronic spread sheets which contain recalculations done on a financial year basis rather than a calendar year basis. There is now agreement that the starting point should be Ms Congdon's 2002/3 spread sheets adjusted appropriately.
40. That leaves a number of differences between the parties which are of lesser significance. There are other differences which have been said to be of no importance, and I will not refer to them. I will take the points of significance from Mr Speaight's list of issues introduced at the start of this trial.
41. The first such matter of significance is the capacity of the car park as it would have been assumed to be in 2002 or 2003. In August 2002 it was not known how BIA was going to lay out the car park. It was in fact laid out in a manner which did not utilise the land fully. It appears that the designer took as his base line the dividing line between Fields A and B, which was on something of a diagonal, the combination of the fields being approximately rectangular. This had left two untidy corners. That was not to be known at the time of the 2002 lease but it would have been observable at the time of the 2003 lease because the car park in Field A had then been laid out. I accept from the evidence that I have heard that without an indication that there was to be wasted space a valuer would have proceeded on the basis of 200 cars per acre. But he would have been concerned that some space might be required for landscaping in accordance with the planning permission. The Estate's valuations use 1920 spaces for Fields A and B and 835 spaces for C, totalling 2755. Strutt & Parker use 1352 and 670 spaces respectively, totalling 2022. Strutt & Parkers' figures use the present number of spaces in A and B, and the number shown on the Airport's Master Plan for C. Taking account of the evidence I heard on this point I think that a prudent valuer would in the circumstances have used a figure of less than 200 cars per acre, and would most likely have taken 80 per cent of that. That will give 1536 spaces for Fields A and B, and 668 for Field C, total 2204.
42. Ms Congdon took the charge for a typical 8 day stay in the car park in August 2002 as £31.20. Unfortunately in a report prepared under pressure of time she had used a figure of £38. Mr McWilliams adopted that figure. After the mistake had been pointed out he tried to sustain £38 on the grounds that the charge of £31.20 was low in comparison with other airports and the charge could be expected to rise once Field A was tarmacked and the automated ticket system installed. I consider that a valuer would have taken the actual current figure and allowed for increases to it by his provision for annual tariff inflation or growth. Mr McWilliams' approach incorporates an unnecessary element of speculation and arises from his attempt to justify a figure arising from a mistake.
43. I have mentioned Mr McWilliams' agreement with Ms Congdon that, in order to reduce the turnover rent it would have to pay, BIA would have succeeded in diverting one third of the long stay car park users to its own car park 2. Mr McWilliams suggests that in order to achieve this BIA would have introduced a modest increase in the long stay charges for Fields A and B. He has calculated a figure of £1.20 as at 2002. I think that, if it is assumed that the valuer would have taken the course Ms Congdon and Mr McWilliams are here agreed on, it is right to see what adjustment to the prices would have followed from it. I think that the valuer would have concluded that BIA was more likely to raise the charge for Fields A and B rather than to adopt a lower figure for car park 2: the object is to make money, and I think that the tariff could easily stand a modest increase. The situation in which this would first have occurred is not before July of 2005. It is appropriate to take a figure of £1.37 from July 2005 which allows for an appropriate inflation of the calculated figure of £1.20 (3 years at 4.5% p.a.).
44. There is a further issue as to where those who worked on the Airport either for BIA or for other companies providing services at or near the terminal might park. Some of them might park for free, others would pay a charge much reduced from that payable by passengers, perhaps by means of a season ticket. If they parked on the Estate's land that would reduce the revenue and the turnover rent because they would be filling up spaces. Mr McWilliams gave evidence that he would have expected the hypothetical leases which provided for the turnover rents to have provisions to protect the Estate by ensuring this did not happen. There was no consideration at the first trial of what the detailed provisions of those leases might have been, nor was such consideration then necessary. In my view it would have been essential for the Estate to have such provisions, and I do not think that BIA could have objected. It is really a matter of good faith. Car park 2 was available for the employees. So the valuer would have known that there was not a problem with employees. I record that this was the basis on which Mr McWilliams proceeded : see paragraph 3.11 of his fourth report (E2 page 391F).
45. Mr McWilliams has used a figure of 7 per cent for inflation of parking charges. Mr Fourt supported 7 per cent based on his knowledge of the industry. Ms Congdon has used 3 per cent. At the first trial I heard evidence as to tariff growth. There was little disagreement between Mr Stewart and Mr Theophilus that the car park industry used 5 per cent to predict the upward rise. Because this was ahead of general inflation I considered that it would lead to a growing resistance and took 4.5%. That was the figure which I thought appropriate to be taken at the time of the judgment. I have now to decide what figure a valuer would have used in 2002 or 2003. I consider that the valuer's train of thought might well have been that, once the passenger numbers built up, the tariff could be increased substantially so it caught up with other regional airports but that it would then slow again. Bearing in mind the evidence I heard in both trials I consider that Mr McWilliams' 7 per cent year on year is too high. I find that in 2002 and 2003 a valuer would most likely have taken the figure of 4.5 per cent per annum as one which would over the years reflect the likely increases. I think that Ms Congdon has taken too pessimistic a view.
46. For her calculations in relation to 2002 and 2003 Ms Congdon has used a figure for passengers per car of 1.9. The relevant calculation gives a figure of 1.87. If that is used, it will be to the Estate's advantage. To take it to three figures is almost certainly stretching beyond the margin of error of the calculation, but that does not make it unfair to either party to use it rather than a rounded up or rounded down figure which rounding disadvantages one party or the other. But that is not the test. The test is what would the valuer have done. It is probable that he would have rounded up the figure to 1.9
47. Ms Congdon has worked on the basis that short stay parkers will have a pattern such that each space used by them is notionally occupied three times a day. Mr McWilliams accepts the figure of three for the early years but suggests that at 1million passengers per annum it should be increased to 4, at 2 million to 5, and at 3 million to 6. This is a sophistication which was not included in Mr McWilliams' first report. It is opposed by Ms Congdon on factual grounds relating to the pattern of flights at Bournemouth. I do not think that it would have featured in a valuation prepared in 2002 or 2003.
48. The next issue is as to whether the notional valuer would have made a deduction from the revenues produced by the model by reason of a perceived tendency to overstate. Ms Congdon suggested that between 17 and 6% should be deducted. Ms Congdon referred to this as 'noise'. The history of this as it developed through the litigation was visited by Mr Speaight in his cross-examination of Ms Congdon on Day 2 at pages 139 to 162, and he returned to the topic on the following day. The origin is that it was found that Ms Congdon's model overstated income for 2002/3, 2003/4 and 2004/5 compared with BIA's figures for the actual income. Those years are not of course relevant to the calculation of turnover rent because that would not have begun until 2005. But the crucial question is whether it would have occurred to a valuer who had employed a forecaster to make a computer model, that he should make a percentage deduction because the model provided an over-estimate. There is no reason for that. He would be aware that the model was imperfect and might over-estimate or might under-estimate, but it would be the best the forecaster could do. There would be no figures with which to carry out a 'validation' exercise. Ms Congdon suggested in her evidence to me that she would have known as a valuer in 2002 that BIA would have been discounting tickets for parking, and that a percentage reduction was required for that. She could have built that into her first calculations, but she did not. In my view no deduction is to be made on account of a perceived or presumed tendency to over-estimate revenue.
49. I return to the issue of the planning consent granted to BIA to build a new terminal a little to the west of the existing terminal with a short stay car park to the immediate south of it. It was Mr West's view that as this was not a factor considered by Mr Rowson in assessing risk and discount rates, a deduction of 5 per cent should be made to take account of it. Mr West's view was that if the new terminal and short stay car park was constructed this might have the result that Fields B and C would not be brought into use. Enquiries in 2002 and 2003 would have shown that BIA then had no immediate plans to build the new terminal. BIA had shown its intention as to Fields A, B and C by the long leases it had taken. Further the documentation relating to the planning application shows in the environmental statement what the intention as to car parking was if the new terminal went ahead. The long stay car park would be on Field A and the short stay would be to the south of the new terminal. Car park 2, the car park on BIA's land to the north of Fields A and B, would go. That would be to the advantage of the Estate for two reasons. Field A would be purely long stay parking, rather than a mixture of short and long stay. Long stay is the more remunerative. Secondly, BIA would lose the possibility of attracting passengers away from the Estate's land onto car park 2, which is something which was factored in by Ms Congdon to reduce substantially the revenue providing the turnover rent. So I do not think that Mr West was right to conclude that the 2001 planning consent was a threat to the car park revenues, and that therefore a valuer would have made a further percentage reduction for asymmetric risk.
50. On the basis of the finding which I have made, I do not think that it is relevant, but I will say that I do not think that a valuer in 2002 or 2003 would have taken any account of the possibility of the car parking space being increased by the construction of decking by BIA.
51. I record that the Estate accepts the figures and dates suggested by Mr Stern on behalf of Strutt & Parker for capital expenditure provided that the capital in respect of Field C should be taken as being incurred in 2008. Strutt & Parker accept the proviso. It is also now agreed that the surveyors' valuation of base rents can be split.
52. Lastly, I must deal with a submission made by Mr Lamb in relation to Field C. It was to this effect, that once Fields A and B had been let on the actual terms on which they were let, there was very little chance of obtaining a turnover rent for Field C, and that the damages should be reduced to take account of that. This was the first time that this submission had been made. Mr Lamb said that it was to be found on page 23 of his written opening submissions for the first trial. He there wrote : 'If the 2003 letting to BIA should have followed a 2002 letting on [turnover] terms, then again one has to question whether a turnover rent would have been agreed for what was grazing land.' I do not recollect any subsequent submission that, if the Estate had secured a lease with a turnover rent for Fields A and B, there would have been any difficulty with Field C. On the contrary, the case proceeded on the basis that, if liability was established in respect of the 2000 lease (which it was not), the 2002 and 2003 leases would follow likewise, and the same with 2003 if liability was established in respect of 2002 (which it was). But be all this as it may, I held at the first trial that, if Mr Ashworth had not been negligent, the probability was that the Estate would have obtained a lease for Field C with a turnover rent of 10 per cent. That conclusion can only be attacked in the Court of Appeal. It is not something that can somehow be brought into the damages assessment.

The loss of earnings assessment

53. I approach this on the basis that the court should make its best assessment as at today's date of the rents receivable from the actual leases and the hypothetical non-negligent leases over their terms. This is to be done as a matter of probability, that is to say, the court is looking at the figures which it assesses to be the most probable or likely. The approach is the same as that in a personal injury case where the court is assessing lost earnings.
54. In a document provided at the start of the present trial, headed 'Loss of Earnings – 2007 Basis "Eligible turnover"', Mr Speaight set out the Estate's agreement to the calculation by Ms Congdon of car park revenues on this basis in a series of spread sheets which he identified, subject to a number of disputed adjustments. So I have only to consider those adjustments.
55. The first is the addition of a price enhancement of £1.20 as the means of diverting a third of long stay passengers to car park 2. I have already considered this in relation to the capital value assessment, and have held that it is appropriate. The question is here different, namely what would BIA have done, rather than what would a valuer have thought BIA would have done. But my answer is the same. The same methodology should be applied, mutatis mutandis, as to increase.
56. The Civil Aviation Authority's survey of 2005 gives figures for numbers of passengers per car of 1.81, and for average duration of long stay parking of 7.1 days. These appear to be the most up-to-date figures and should be used. I heard no argument to the contrary.
57. Mr McWilliams contends that the number of short stay parkers per day should be increased as the flight numbers increases. I have had to consider this in the context of what a valuer would do in the context of the capital value assessment. I held that a valuer would not have taken account of it. In the present context I have to decide whether it is in fact occurring and whether it will in fact occur in the future. Ms Congdon referred to the pattern of flights through the day as a reason for it not occurring at all. It seems to me inevitable that there will be some increase. I think that Mr McWilliams' suggested increases do not take account of Ms Congdon's point and overestimate the likely increase. He had no data relating to airport car parks. Increases of half those he suggests should be used.
58. I have considered the question of employee parking in relation to the capital value assessment, and concluded that the hypothetical turnover leases would have had a term preventing free or cheap parking on the Estate's land. That finding governs the position here.
59. It is submitted on behalf of Strutt & Parker that a reduction of up to 17 per cent should be made because of a suggested tendency in Ms Congdon's model to over-estimate revenue. A similar point arose in connection with the capital value assessment, but here the issue is rather different. It can now be seen how the model has performed over a number of years, a process which has been referred to as validation. It has been carried out both by Ms Congdon and by Mr Taub on behalf of the Estate. It was accepted by Mr Lamb that because of mistakes as to the figures used Ms Congdon's validation could not be relied on. The exercise carried out by Mr Taub shows that the model's calculation of car park revenue understates the revenue for 2005/6 and 2006/7 by 12 and 3 per cent respectively if Ms Congdon's figures are used. If the Estate's higher figures are used, it produces an understatement of 8 per cent for 2005/6 and an overstatement of 2 per cent for 2006/7. Mr Taub did a further exercise which took account of the fact that the model calculates only passenger revenues and BIA's figures will include any revenues for non-passenger parking, for example staff. That came out with an understatement of 7 per cent for 2005/6 and an overstatement of 4 per cent for the partial year, 2006/7. It is not suggested on either side that a model of this nature can be expected to be any more accurate than that. The consequence is that validation shows that the model is now doing well and that no adjustment as is suggested on behalf of Strutt & Parker is required.
60. There is a disagreement over capital expenditure, which the accountants do not consider material, and I was not asked to decide it. It is now agreed that the figures can be split.
61. There is a dispute as to inflation of the season ticket rents which apply under the actual 2002 and 2003 leases. I am uncertain how far this is considered material. It did not feature in Mr Lamb's closing submissions. The Estate has shown that to increase the season ticket price costs BIA money because the resulting increase in the rent payable exceeds the gain from the sale of season tickets. That did not stop BIA effecting a substantial increase in 2005, although the consequences may not then have been appreciated. There was also an increase in 2006. If BIA simply froze the price of season tickets – which it is arguable that they would be legally entitled to do, they could be accused of bad faith, and certainly of acting contrary to the spirit of the leases. For reasons given in my previous judgment it is in the interest of BIA to retain good relations with the Estate. I conclude that it is appropriate in these circumstances to assume that BIA will in future increase the season ticket price by a percentage which is in line with the rate of inflation in the Retail Price Index over the last 5 years. I trust that a figure can be agreed between the accountants. The actual figures will be used for the past.
62. In my earlier judgment I made findings as to the chances of planning consent being granted for Field C to be used as a car park. As I have stated, it has now been granted: the probability has become a certainty. On this basis of assessment the loss is being assessed as of today. There should be no deduction to reflect the past uncertainty in respect of Field C.
63. It is submitted on behalf of Strutt & Parker that a discount should be made from the damages assessed on this basis to reflect the uncertainty of the car park revenue. In my view that misunderstands the basis of assessment. As I have earlier said, a company will not pay the full amount of a probable but uncertain income stream, but will require a discount to reflect the uncertainty as well as a discount to reflect the fact that the income will only become available in the future. Both are relevant to the valuation of the income stream. But here the court is not concerned with what a company would pay: it is concerned only to assess the probable income and then to discount it for early receipt. Once the probable income has been assessed there is no reason to discount it because it is only 'the most probable'.
64. There is agreement that the discount rate to be adopted for early receipt is 4.8375 per cent. It is submitted that a further 1 per cent is to be added to take account of the risk that BIA might become insolvent. This stems from paragraph 4.4 of Mr Taub's report of 19 January 2007 served on behalf of the Estate. It is, however, something that has not been accepted on behalf of the Estate as appropriate: I refer to paragraph 154 of Mr Speaight's written opening submissions for the first trial, and to paragraph 216 of his written opening submissions for this trial. Mr Lamb submits that the Estate is bound by its expert's view. I do not think that in the circumstances that is right. In my view a deduction to take account of the risk that the creditor in respect of a future debt will not pay is only appropriate if there is some evidence to show that there is a real risk of that occurring. I have the accounts of BIA. It is a soundly established company of some substantial size, and is a subsidiary of the Manchester Airport Group of which the same can be said but more so. I do not think that the evidence establishes that there is any real risk that the hypothetical turnover rents under consideration here would not be paid by BIA. It is not appropriate to make a deduction.
65. There is a difference between the accountants as to capital expenditure, but they agreed that it makes only a marginal difference. It is suggested on behalf of the Estate and agreed on behalf of Strutt & Parker that the differences should be split giving for Field A £497,861 and Field C £416,939 and for retarmacking in 2018 £150,000.

Interest

66. At the conclusion of the hearing I was unclear if there was still an issue as to the rate at which interest should be paid. I was not addressed on this by Mr Lamb. The Estate claim interest at the rates charged on Lord Malmesbury's borrowing set out in his bank's letter of 18 October 2007. It is now clear that there is an issue. I will leave it for further argument following the delivery of the judgment. An interim payment on account of interest can be applied for when the judgment is delivered.

Outcome

67. In order to convert my findings into figures for the Estate's losses on the two bases of assessment it will be necessary for further work to be done by the experts. I should record that when providing the judgment to the parties in draft I asked that it should be checked that I had in fact covered all matters on which a decision is needed. I trust that this is now so. I should also record that unfortunately my request led to attempts to argue matters on which I had reached a decision and to introduce new matters.