[2025] UKUT 274 (LC)

Evidence about the value of the stock owned by the business was given by Mr Parker and Mr Storry.

The experts were able to agree the value of the store of disaggregated parts at £168,000. They were unable to agree the number or value of the ELVs.

Mr Storry was first instructed on behalf of the claimants in March 2019, a year after the valuation date. He began to prepare his valuation in October 2019, after the vehicles which remained at the Site had been destroyed by fire. He was able to undertake a visual inspection of the stock at the North Street premises. In a report prepared in February 2020 he said “we recorded 233 vehicles” in the yard at North Street but in his itemised ‘Valuation Summary’ he noted 223. He counted 70 in the warehouse. For information about the vehicles at the Site he was reliant on photographs taken by Mr Quyoom. He valued 494 vehicles which he was instructed had been at the Site. Thus, in total, Mr Storry valued 787 vehicles. The vehicles in the warehouse and yard at North Street he valued at a little over £1.79m. The vehicles which had been destroyed in the fire at the Site he valued at more than £2.58m. Adding the disaggregated parts he valued the stock in total at £4,543,140.

Mr Parker’s valuation was based on the work he had done in 2017 along with his colleagues from Cerberus. He proceeded on the understanding that the claimants’ stock of ELVs comprised 698 vehicles, of which 94 which had been inspected in detail in 2017 and were of significant value (an average of £8,768) while the remaining 604 which had not been inspected in detail were worth on average only about £393. Adding the agreed value of the disaggregated parts produced a total value of the claimants’ stock of £1.23m.

The experts did not disagree on the value of the 94 best vehicles. Mr Parker valued these at £824,230 (an average of £8,768) whereas Mr Storry attributed a value of £26,533 to 16 vehicles which he referred to as “super special”, £8,152 to another high-quality group of 59 vehicles (“top grade”), and £5243 to a much larger group of “grade 1” vehicles. The valuers both agreed that there was little between them on the better vehicles. The differences concerned the total number of vehicles to be valued and the quality of those which were not adjudged by Cerberus to be in the best category.

We should explain that the vehicles Mr Storry described as “super special” were vehicles he deemed to be of particularly high value. These were cars which were too good to be classified simply as “grade 1”, a classification of vehicles which were almost completely intact and had a large quantity of parts. The super special cars had parts which, in his words, “might be collectable, young and more modern”.

As to the total number of vehicles present, the relevant date is 29 March 2018, not 12 months or more earlier, when Cerberus counted the vehicles for their report, nor 18 months later when Mr Storry counted those which remained at North Street. We think it unlikely that Cerberus miscounted, but by the time Mr Storry became involved there were more vehicles in all three locations (the yard and warehouse at North Street and the Site) than there had been when Cerberus were on site. We therefore think it likely that Mr Quyoom continued to buy vehicles in the year before the Site was taken, as the General Vesting Declaration was not executed by the Council until December 2017 and it was only after that that he was informed possession would be required the following March. We think it unlikely that he bought additional vehicles after 29 March 2018, because he no longer had access to the facilities required to depollute them before they were stripped for parts. Mr Quyoom said that he did not acquire much stock in the period before the vesting date, but his recollection of numbers was generally quite inconsistent, and we did not understand him to mean that no additional vehicles had been acquired. Nevertheless, we are satisfied that such vehicles as were added must have been of very low quality given that only £8,000 is shown in the final year accounts as having been spent on acquisitions. While the evidence was not probed in much detail we are therefore satisfied that 80 or more vehicles must have been added in the 12 months before the valuation date, which would explain the difference in numbers.

We reject the suggestion by Mr Fraser KC that any additional vehicles acquired by Mr Quyoom after Cerberus had stopped counting in about March 2017 should not be compensated because they were acquired contrary to his duty to mitigate his loss. The business had been operating under the threat of acquisition for several years and Mr Quyoom was actively searching for alternative premises. The appointment of Cerberus did not bring any certainty about when vesting would occur and, in the event, a date was not confirmed until nine months after they stopped work. We will therefore proceed on the basis that the stock in respect of which compensation is payable comprised 787 vehicles in all.

Mr Storry confirmed that the best vehicles were generally in the warehouse at North Street while those in the yard were also of reasonable quality. He accepted that the stock destroyed in the fire and which he had valued only from photographs comprised 57% of the total value and 62% of the total number. He had assumed that the fire damaged stock was of comparable value to the stock in the yard at North Street. That is reflected in his allocation of the 496 vehicles present on Site to the different grades he used in his valuation; only 4 of the 496 were placed in his lowest category 4 with only scrap value. That assumption is very difficult to square with Mr Quyoom’s evidence that very few vehicles were disposed of for scrap. It is also difficult to reconcile with what can be deduced about the age of the vehicles from the list of registration numbers, namely that 70% were more than 10 years old. Although we have our doubts about the accuracy of some of Mr Quyoom’s evidence, Mr Storry’s assessment does not fit easily with Mr Quyoom’s suggestion that he would buy relatively new ELVs and expect to dispose of most of the parts over a period of 6 or 7 years in the case of higher value vehicles and over 3 or 4 years in the case of ordinary vehicles.

We do not accept that Cerberus made an inadequate inspection and we accept the evidence of Mr Bateman and Mr Seddon concerning the condition of the vehicles they saw at the Site in 2017. Mr Parker was a very experienced valuer who gave his evidence dispassionately and persuasively. We are not persuaded that Mr Storry’s evidence is reliable on valuation, and we prefer Mr Parker’s assessment. It is consistent with the evidence that the stock at Commercial Street was of poorer quality than at North Street. The photographs and Mr Quyoom’s list of what was present confirm that much of it comprised very old examples of perfectly ordinary vehicles for which there is unlikely to have been much demand for disaggregated parts.

Mr Stinchcombe suggested that Mr Parker had undervalued the 600 shells which had not been closely inspected and had attributed no more than scrap value to them. We do not think that is correct or a fair criticism. Mr Parker explained that 600 vehicles were of lesser value than the least valuable of the 94 (which were worth about £3,000 each). He assumed that the largest and newest of the 600 were worth £2,000 each and worked back from that level to attribute a spot value to the remainder by reference to age and size based on the list of vehicles. The 600 were not valued on the assumption they were scrap and on average they were valued at a little under £400. In contrast, Mr Storry’s category 4 (scrap) value was only £60.

Nor did Mr Parker assume that none of the parts on the 600 vehicles would be sold, but unlike Mr Storry (who valued all of the parts on all of the vehicles) Mr Parker made a more realistic assumption that on most of the older vehicles only a small number of parts would be of any value. Given that most of the stock comprised perfectly ordinary vehicles we think that is a more realistic assumption.

To take account of the greater number of vehicles which we have found to have been present at the valuation date than were taken into account by Mr Parker, we add 12.75% to his valuation to arrive at a figure for the value of the stock (assuming retail sale on the valuation date) of £1,364,875.