[2025] UKUT 274 (LC)

After the CPO was confirmed and it became clear that there was no suitable site to which the business could be relocated, the parties tried to reach agreement on compensation for the cessation of the business. Mr Quyoom did not have a computerised inventory of the vehicles and saleable parts held by the business and it was agreed that the parties would appoint a specialist valuer to report on the value of the stock. Cerberus Asset Management (“Cerberus”), a firm with experience of valuing automotive stock, was instructed jointly by the parties on 13 October 2016.

An approach to valuation was agreed by the parties on 17 November 2016. Mr Quyoom would first prepare a list of the vehicles on the Site and their location. This would be checked by Cerberus, who would photograph the vehicles and compile an inventory of the saleable parts which had not yet been removed, and a separate list of disaggregated stock (i.e. components which had been removed from vehicles or acquired separately). The inventory would be checked by Mr Quyoom who would provide his estimate of the value of the components. Cerberus would then undertake a sampling exercise based on 10% of the stock which they would value by research of their own.

A senior director from Cerberus, Mr Bateman, visited the site twice. The first occasion was before the instruction was confirmed when he went to assess the job. Mr Bateman gave evidence and was cross examined. He told us that his first visit to the Site was in August 2016 and that he had asked Mr Quyoom for an inventory of his stock but was informed that none existed. He observed racking that ran the length of the site and on which vehicles were stacked. He also observed that there were no accessible aisles between the racks, and that vehicles were piled on top of one another in those spaces. These would have had to be removed to gain access to the vehicles on the racks.

Mr Bateman was not involved in the audit of stock, but he visited the Site on a second occasion in 2017 during a period of poor weather. On that visit he decided that the Site was unsafe because high winds created a risk that vehicles which were piled on top of one another might topple over. His recollection was that the general condition of the site remained as it had been at his initial visit.

The Cerberus employees who carried out the audit were Mr Mark Turner, whom Mr Bateman told us was very experienced, and Mr Seddon, who was a junior trainee at the time with no previous experience of visiting or valuing stock at a comparable site. Mr Seddon gave evidence at the request of the respondent (as did Mr Bateman) but Mr Turner was not called to give evidence by either party. The valuation itself was the work of Mr Parker, a Chartered Surveyor, who was also called by the respondent to give expert evidence (without objection by Mr Quyoom).

Mr Seddon told us that he and Mr Turner had worked on the audit for five months, usually attending the Site or the North Street warehouse five days a week. He explained that the most time-consuming element of the project had been listing the disaggregated vehicle parts, some of which were stored in a building which lacked electric lighting. He described the Site as overstocked with vehicles, the majority of which were not on racks but were piled on top of each other between the racks, separated only by a tyre or a timber pallet. He recalled that there were fewer vehicles at the North Street yard and that these had been much easier to inspect; some of those at the warehouse appeared relatively new and undamaged.

Mr Seddon was not aware of the methodology agreed between the parties, but he said that their original intention had been to inspect and photograph every vehicle. This had not been possible due to the way the vehicles were stored and Mr Quyoom’s unwillingness to allow his staff to assist by moving them. He and Mr Turner had counted the vehicles and identified 94 which they were able to photograph and inspect. They had counted another 604 which they had not been able to inspect in any detail before they were instructed to leave the Site which Mr Seddon understood to have been because of the risk of collapse during the poor weather. From the general appearance of these vehicles and the manner in which they were stored these had been assessed as being of scrap value only.

There were a number of differences of recollection between the Cerberus witnesses and Mr Quyoom concerning the inspection. We think it likely that Mr Quyoom did provide a handwritten list of vehicles arranged in the order in which they were stored in the yard, as we were shown such a list. We assume the list was prepared only after the joint instructions were agreed and that it was not available in August when Mr Bateman asked for it. The person to whom it is most likely to have been given was Mr Turner, who was not available to give evidence. We think it likely that Mr Seddon also saw the list and that it formed the basis of a typed inventory by Cerberus which records the stock in the same order as the handwritten list.

We accept the evidence of Mr Bateman and Mr Seddon that the Site was very full and that vehicles were piled between the racks, making access impossible without assistance from a forklift and driver. Both the handwritten list prepared by Mr Quyoom and the Cerberus inventory record the position of vehicles on the Site, and both show, for example, that there were 32 vehicles positioned between rack 1 and rack 2 (the inventory records 46 vehicles on rack 1 itself, suggesting that the vehicles between racks may have been stacked two deep, while those on the racks were three deep). Photographs taken in March 2018 support the recollection of Mr Bateman and Mr Seddon (although these show the condition of the Site when the respondent took possession, there is no evidence from Mr Quyoom to suggest that the general arrangement had changed in the 12 months after Cerberus were last in attendance). Aerial photographs taken in June 2017 and July 2018, although of limited quality, also appear to confirm that the Site was densely packed and did not change significantly between those dates.

We also accept the evidence of Mr Bateman and Mr Seddon that Mr Quyoom was uncooperative in relation to their audit and that in particular he was unwilling to have his own staff move vehicles around to facilitate a more thorough inspection. We can see no reason why Mr Bateman and Mr Seddon would both recall that being an issue if it was not true. It is also consistent with the report produced by Cerberus on 16 October 2017 which refers to the need for such assistance if a more detailed sampling exercise was required. The report also stated that Cerberus had been advised by “the Company” that it held no purchase records and did not keep a sales ledger or receipts which might have assisted in valuing the stock. That proposition was refuted by Mr Quyoom’s solicitor who said that records were available. Again, we can see no reason why the Cerberus team should have fabricated what they said at the time they had been told. We find it much easier to accept that Mr Quyoom may have been disinclined to cooperate with a valuation exercise undertaken before confirmation of when he was expected to leave and which we have no doubt would have been disruptive.

The Cerberus team provided their list of 96 vehicles on the Site to Mr Quyoom, who gave them his assessment of the value of the salvageable parts in each of them. These were compared by Mr Turner with the price of the same parts available from online sites, as researched by Mr Seddon, and this information was provided to Mr Parker, who then wrote the Cerberus report. That report concluded that stock of equivalent value could have been acquired in October 2017 at an aggregate cost of a little under £140,000, while the value of the stock to Mr Quyoom for retail sale at the same date was just over £1.2m. Both figures assumed individual transactions in the ordinary course of business, without any element of forced sale or any delay in realising the full value of all of the stock.

Mr Quyoom’s assessment of value was much higher than the research undertaken by Cerberus suggested was justified. Cerberus had also assumed that only 96 vehicles were of significant value and that the remaining 604 were worth on average only £393. This was not a scrap valuation but was Mr Parker’s assessment of the value of parts in the three least valuable of the 96 vehicles which had been properly inspected and it assumed that the 700 vehicles which had not been considered in detail were no more valuable, on average, than those three.

Mr Quyoom was not satisfied with the Cerberus report and refused to accept it as a basis of compensation. It has been relied on by the respondent and its author, Mr Parker, gave expert evidence.

One complication arising from the Council’s reliance on the Cerberus report is that it was compiled six months before the valuation date based on research undertaken 12 months or more before the valuation date. The claimant’s case is that on 29 March 2018 the business had 782 vehicles in stock. Mr Quyoom photographed every vehicle before the date of acquisition. Cerberus counted 700 vehicles belonging to the business. Possible explanations for this divergence are that the Cerberus count was inaccurate and incomplete, or that more vehicles were brought to the Site or stored at the North Street warehouse by March 2018 than were there a year earlier.