HT-2022-000417 - [2025] EWHC 1691 (TCC)

Fecha: 04-Jul-2025

THE EXPERT EVIDENCE

THE EXPERT EVIDENCE

33.

The Claimants’ independent experts were

Ian Lock – Valuation Expert

Daniel Langley – Accountancy Expert

Simply’s independent experts were

Rick Savage – Valuation Expert

Andrew Conti – Accountancy Expert

34.

The Claimants’ and Simply’s independent experts all gave helpful guidance to the court.

35.

With regard to the valuation evidence I generally preferred the evidence of Ian Lock. Mr Lock is highly experienced with 43 years of valuation experience of which the last 35 years have been dedicated to his specialist field in healthcare. Mr Lock also made realistic and appropriate concessions such as the probability that in 2018 the retention as part of the BlackRock deal would not have been earned whereas in a 2022 valuation it would have been earned. This resulted as Mr Lock explained in the quantum of loss as at 2022 being some £700,000.

36.

Mr Savage was in greater difficulties because of the complete absence of any factual evidence advanced by Simply. Many parts of his report were based upon assumptions which were speculative and not supported by any factual evidence.

37.

Mr Savage set out at page 56 of his report what he considered were the “Principal Valuation Considerations” which included “Operational Considerations”. He refers to disruptions in trade including “Covid” and “CQC Require Improvement Ratings” but no mention of the defects. When cross examined, he agreed he should have considered the defects but could not explain whether it was a deliberate omission or “… whether I just missed this. I don’t know.” This was more than somewhat surprising given the case was principally about the impact the defects had on the value and profitability of care home.

38.

However when asked to reflect on what was well known in the industry and must have been known at the time of contracting he gave helpful and illuminating answers as set out below at pages 126 and 127 of the Transcript of day 3 of the Trial after some gentle probing from Counsel for the Claimants’.

“Q. Could we move on, please, to the defendant. The defendant's directors are Mr Christopher O'Brien and Mr Gary Sharp. Are you aware of them as directors of the defendant company?
A. I know that they are the directors as I undertook a conflict check when we commenced the instruction.
Q. Have you ever met with them? Don't tell me the contents of this conversation.
A. I've not, no.
Q. You've not. And in addition to the defendant company, are you aware that they are directors of many other companies in the Simply Group as well as the Morar Living group?
A. Yes.
Q. And the Simply Group, if you could explain to the court, they invest in care homes; correct?
A. As far as I understand they develop and operate care homes.
Q. And invest and sell for profit?
A. Correct.
Q. And it's not unusual in the care sector for homes to be constructed and developed with a view ultimately for their disposal for profit to a third party, that's not unusual, is it?
A. That's not unusual, no.
Q. And particularly with development finance and, in this case, with Puma, that finance ultimately needs to be discharged after the construction works are completed; correct?
A. Correct.
Q. And it's typical in this industry for at least to be a real prospect that disposal of the asset would be a means of doing that; correct?
A. Correct.
Q. It's also a common method for raising capital to acquire and development yet further care homes in this industry, isn't it?
A. Correct.
Q. Just finally on this topic, are you aware that that is what the Abbey Group and its companies have done before on many projects?
A. I understand that, yes, they've developed and sold on.”

Mr Savage was not re-examined in respect of any of these answers.

39.

The accountancy experts, following the expert process, have achieved an impressive degree of common ground culminating in the production of an updated joint model attached to the second joint statement. The exercise carried out by the accountancy experts was concisely explained in Simply’s Written Opening parts of which I set out below: -

Loss of trading profits

“Abbey claims that the fact and remediation of the defects inhibited occupancy and profitability of the Care Home. Abbey claims its loss of trading profits from discovery of the defects to September 2021. It says that the difference between the profits it would have received but for the breaches of duty and the profits in fact received is £4,737,424 (Particulars of Claim, paragraph 54(1)) {A/2/19}.”

“Abbey's loss of profits claim has been considered by the parties' accountancy experts and, following the expert process, there is a degree of common ground. It is agreed that the measure of loss, if any, is the difference between the profits Abbey would have received but for the defects / breaches and the profits in fact received over the relevant period. The accountancy experts have agreed the figures in respect of Abbey's actual profits, as set out in paragraph 5 of the accountants' second joint statement dated 25 March 2025 {Dl.4/1/17}. The experts have also agreed the detail behind the actual profit figures, including the fixed and variable costs, which were amended following Mr Conti's report. The latest figures are contained in the updated joint model appended to the second joint statement (the "Joint Model") {D1.4/2}.

The issues between the parties concern the level of profits in the hypothetical "but for" scenario and the period of time over which these should be assessed.”

“It will be noted that there are a number of variables in the hypothetical "but for" scenarios, including the start and end dates, the starting occupancy, the rate of increase of occupancy and the average weekly fee. Subject to the Court's findings on these matters and any other assumptions, the experts have indicated that they are able to prepare any updated calculations or, if required, update the Joint Model to reflect such findings.”

40.

The work done by the independent accountancy experts in producing the Joint Model has saved a lot of court time and has simplified the quantification of any trading loss to which the Claimants might be entitled.