We have acted recently as expert witness in respect of IPR, valuation, licensing and corporate value for the South African Government in Australia (Cape Wools SA v KPMG Corporate Finance (VIC) Pty Ltd); concerning the Eden Project’s IPR, and licensing, Jonathan Ball v Druces & Attlee; David Goldstein v Levy Gee (a professional firm); DeVere Hotels v VAT Commissioners (IPR associated with a top tier occupational premises group with leading golf courses), David de Jongh Weill v Mean Fiddler Holdings Limited and for the Barlo Group in Ireland (process patents).

In the High Court of Malaysia, Kuala Lumpur Telekom Malaysia are a current client: Telekom Malaysia Berhard and Buying Guide (Malaysia) SND BHD.

Cape Wools required testimony concerning the valuation of its brand worldwide to support a claim to its share of intangible value.

The outcome in the matters of Cape Wools, Jonathan Ball and David de Jongh Weill were marked successes.

In the High Court of Justice Northern Ireland, MS(NI) Limited and In the matter of the Companies (NI) Order 1956.

"The court was plainly impressed by Mr. Hindley who gave his evidence with great authority and integrity.  Indeed, the Judge commented upon the objective manner in which he had testified.  Thanks to the good work by Mr. Hindley, the Judge favored our stance and settled a scheme and timetable for the progression of the matter".

"Mr. Brewer is obviously an expert in company valuation and his evidence should be treated as such" Marffy v Marffy.

Jonathan Ball v Druces & Attlee (a firm) Citation Number 2004 EWHC 1402 (QB) Case Number 03/TLQ/0035 dated 17 June

As significant as it is in support of the valuation of a loss of business opportunity and a fair return on IPR, versus the forensic accountancy approach, this judgment is a huge acknowledgement of Valuation Consulting’s expertise and skills as expert witness. A few ‘sound bites’ follow and read the full judgment, particularly for us paragraph 274 et seq, at the link below.

“There was therefore a rejection of normal accounting standards of profit and loss by Mr. King who ignored the need to take a true and fair view of profit and loss”.

“It must be remembered that the putative negotiations in Autumn 1997 would not have been dealt with in the combative adversarial manner in which these issues were put before me”.

“The Trustees would have taken into account Mr. Mainz’s point on capex, but not in the manner he puts forward”.

“Mr. King’s discount factor of 9% or one very close to it would have in my judgment be borne in mind by them”.

“I consider that the Trustees would have found, as I did, that Mr. King’s views on royalty rates were persuasive...I see no basis for Mr. Mainz’s figure of 0.5%”.

“I have noted the challenge to the figure of 6.75% for accelerated receipt but accept that Mr. King’s research of the matter is correct”.

Link to the Judgment

As registered Expert Witnesses, we are frequently involved in arbitration, neutral mediation, Alternative Dispute Resolution and legal proceedings. Damages enquiries, market and comparability appraisals require our reasonable royalty rate proprietary database searches. Valuation of the loss of business opportunity (not lost profit) is now significant. 

In Children’s Broadcasting Corporation v The Walt Disney Company, et. al., No. 02316 (8th Cir. January 26, 2004), the U.S. Court of Appeals for the Eighth Circuit determined that a jury correctly determined the amount of Children’s Broadcasting’s damages in this breach of contract/misappropriation of a trade secret case. The damages for misappropriation were estimated based on Disney’s accelerated entry into the children’s radio market. The loss was measured by subtracting the value of Radio Disney without the misappropriated information from the value of Radio Disney with the misappropriated information at different time intervals.  Radio Disney was valued in both cases using the discounted cash flow method. The appellate court affirmed the admission of the damages expert, who survived a Daubert challenge before the district court. It further rejected Disney’s argument that the discounted cash flow method resulted in a measure of future damages. It found that the discounted cash flow method measures future values discounted to present value, and, therefore, calculates present loss.

VC comment. Another judgment that underlines our view that DCF used fairly and properly represents the value of the loss of business opportunity at any valuation date. Generally a Daubert challenge has to do with the admissibility of expert opinion testimony. Our understanding is that a judge uses a set of non-exclusive criteria in determining whether expert testimony is reliable. If not then the judge acting as a gatekeeper may prevent it from being admitted as evidence. Thus trying to limit the use of witchcraft and junk science disguised as expert opinion. Much the same judgment should be applied to spurious accuracy.

Where advisors have connections with a company or client an independent approach is helpful. Typically, we can be involved as experts in dissident shareholder actions, multi-party disputes, professional negligence claims, matrimonial and divorce proceedings, disputes concerning minority shareholder rights, claims for compensation, assessment of damages and insurance litigation. We offer a powerful ADR role in finding the best commercial solution and remedy for many of these problems. Our valuations were instrumental in settling a substantial litigation involving major airlines and also other global brands.

Auditors and valuers generally have to be beyond reproach when accepting engagements under Articles or agreements as Killick v PriceWaterhouseCoopers (2001) and re Robor Cartons Ltd (Unrep 31/03/00) an interlocutory decision illustrate. Much can be painful and defendants cannot rely upon words excluding liability for investment advice where a party is bound to sell. The moral from many such actions where we have been instructed is that if internecine war has been declared in a company, steer clear and seek independent expertise.  Even if you are expert and have got it right, unfairly it is often perception that counts.

The fair value provisions in many Articles of Association direct auditors to undertake this role. Many will be familiar with difficulties in fulfilling this task when inevitably there will be conflict of interest problems and where the relationship with some parties and not others will have been, and will be, different. The solution is for parties to instruct Valuation Consulting as a third party independent share valuation expert to write the valuation report or use us for overview and a second opinion. These alternatives provide a safety net in this troublesome area. The Courts clearly view independence as a desirable quality and they have always said that partiality is a valid reason for refusing to uphold an Expert’s decision. Kelvin King was a contributor to Dame Mary Arden’s Law Commission Reports; Shareholder Remedies.

Shares held by either party in substantial matrimonial proceedings will probably be one of the most valuable assets in the combined estate. The Courts can look unfavorably on detailed and costly valuations of capital assets such as the business or shares which are not to be sold since they provide a family’s main source of income. However, there is now general acceptance that expertise in valuation is essential to the process of financial determination to ensure fairness. References from a leading legal practice can be provided in respect of an out of court multi-million pound settlement which involved technically complex and unusual valuations.