The seven–day hearing to determine the amount that Strutt & Parker must pay to the Earl of Malmesbury for providing negligent advice has ended.
After hearing closing submissions from Strutt & Parker’s counsel, Tim Lamb QC, and Malmesbury’s counsel, Anthony Speaight QC, Jack J has reserved judgment until a later date.
In May, Jack J found that former Strutt & Parker partner Ian Ashworth had acted negligently in failing to secure a 10% turnover rent for Malmesbury on 12 acres of parking land that the Earl owned adjacent to Bournemouth International Airport.
The land now provides Malmesbury with a rental income of £30,000 pa, but earned the airport almost £1.8m in 2006.
Jack J also directed that the correct method for assessing damages should be based on the diminution in value of the lease in 2002 resulting from the negligence. In other words, how much would a bidder in a notional market have been prepared to pay for the lease and how much it would have paid had there been no negligence.
However, in a supplemental judgment, Jack J held that in order to save time and costs should there be a successful appeal against his findings, damages would also be assessed on the basis of the likely lost income over the remaining 24 years of the lease.
At the damages hearing, Gerald Eve partner Robert Fourt, for Malmesbury, suggested a value of £150,000 for the lease that was actually granted in 2002, but £3.5m in the absence of negligence. Surveyor Simon West, for Strutt & Parker, suggested a value of £135,000 for the 2002 lease, but £450,000 had there been no negligence.
Malmesbury claimed that on the lost-income basis of assessment, he should receive around £7m.
Closing the case for Strutt & Parker, Tim Lamb QC said that the court could not be satisfied that a bidder would have emerged who was “whipped up to the level of excitement” that was required Malmesbury’s experts.
He added that no bidder would pay what Malmesbury’s experts alleged unless it “had a liberal investment policy; had sufficient internal resources or liberal financial backers; was prepared to hazard £3.5m plus professional fees on BIA’s future; and wished to pursue a rare unicorn amongst non-traditional investments”.
In response, Anthony Speaight QC said that Strutt & Parker’s case was “ultimately unreal” since at the time of the 2002 lease it was a “particularly attractive” time to invest in the land.
Strutt & Parker has already paid Malmesbury £450,000 as an interim payment after a judge ruled in July that the Earl would receive substantial damages once the full extent of negligence had been assessed.