CL-2022-000069 - [2025] EWHC 1512 (Comm)

In my judgment, the evidence plainly establishes that the Defendants breached the APA, in particular clauses 2.1, 2.2, 9.2 and 10.2, by failing to deliver the Withheld Assets on the Second Closing Date (albeit the Critical Withheld Assets were subsequently transferred in February 2022) and that the Defendants breached the non-competition provisions of the APA, in particular clause 23, by their active involvement in the establishment and development of a competing operation by Fantuan in Australia, and their engagement with businesses that competed with the EASI Business and failure to procure that no other member of the “Sellers’ Group” would carry on or be engaged with or otherwise interested in businesses competing with the EASI Business.

In their Particulars of Claim, the Claimants sought a number of remedies, including specific performance of the Defendants’ obligation to deliver certain assets under the APA, injunctive relief, damages for breach of the APA, and damages for unlawful means conspiracy.

However, in accordance with the confirmation made by the Claimants recorded in the Court’s order dated 22nd October 2024 that they would limit their claim to the claim for damages for breach of contract set out in paragraph 160 of the Particulars of Claim, the Claimants have now confined their claim for damages based on the loss of profits for the period from the date of the breach of the APA until 31st December 2022.

The claim for loss of profits is based on the difference between (a) the profit the Claimants in fact made over that period and (b) the profit which would have been made by the Claimants over that year had the Defendants not committed the breaches of the APA which they did commit. The latter element is necessarily hypothetical (Kramer, The Law of Contract Damages (2nd ed., 2017), at para 1-43).

The Claimants submit that in approaching the hypothetical question, the “fair wind” principle applies and rely on Kramer, The Law of Contract Damages (2nd ed., 2017), at para 13-03:

“… it falls on the defendant to prove that the loss would not have occurred but for the breach. This is something described by the maxim ‘omnia praesumuntus contra spoliatorem’ - everything is presumed against the wrongdoer – but that probably goes too far. In practice, the principle gives a fair wind not a free ride, and only has real traction where the question is as to what third parties would have done or what profits would have been made, not what the claimant or the defendant would have done.”

Further, the Court is to be assumed that the defaulting party would have performed its contractual obligations in good faith. As explained by the Court of Appeal in Durham Tees Valley Airport Ltd v Bmibaby Ltd [2010] EWCA Civ 485, [2011] 1 Lloyd’s Rep 68, para. 79:

“The court … has to conduct a factual inquiry as to how the contract would have been performed had it not been repudiated. Its performance is the only counter-factual assumption in the exercise. On the basis of that premise, the court has to look at the relevant economic and other surrounding circumstances to decide on the level of performance which the defendant would have adopted. The judge conducting the assessment must assume that the defendant would not have acted outside the terms of the contract and would have performed it in his own interests having regard to the relevant factors prevailing at the time. But the court is not required to make assumptions that the defaulting party would have acted uncommercially merely in order to spite the claimant. To that extent, the parties are to be assumed to have acted in good faith although with their own commercial interests very much in mind.”

The calculation of damages is based on comparing what profits were in fact earned by the Claimants from 14th December 2021 (the Second Closing Date) to 31st December 2022 and what profits would have been earned by the Claimants for the same period:

The Claimants submit that the best evidence for the counter-factual is derived from the budget prepared by the Claimants for the combined HungryPanda/EASI Business for the 2022 year on the assumption that the APA would be complied with. According to Mr McGlade, the Claimants’ budget for 2022 was prepared in December 2021 and prior to the Defendants’ failures to deliver the various assets and was prepared on the basis that the Defendants would comply with the obligations set out within the APA and that the Claimants would subsequently generate growth on the combined EASI and HungryPanda performance in 2021 (Mr McGlade’s first witness statement, para. 38).

The Claimants have relied on the expert evidence of Ms Katherine Hart. In her report dated 8th April 2024, Ms Hart considered the Claimants’ 2022 budget but observed that there were differences between the nature of costs reported within the Claimants’ financial results and those reported within budgets prepared by management, in particular the following categories of costs were not factored into the budget (a) interest paid or received, (b) depreciation, (c) gain/loss on sale of assets, and (d) foreign currency exchange.

Having made the requisite adjustments, Ms Hart collated and summarised the Claimants’ 2021 Profit and Loss statement and 2021 EASI Profit and Loss statement and a summary of 2021 sales (before discounts) in comparison to the 2022 Budget and information reported in the 2022 Trial Balances, showing that the Claimants’ actual performance was significantly below budgeted levels in 2022. Ms Hart also carried out a comparison of the 2022 budget and the 2023 budget. Ms Hart concluded that:

“In light of (1) my understanding as to the reasons behind the budgeted growth and subsequent departure from budget along with (2) my review of the 2023 HP Budget compared with actual results, and in the absence of any other information, I have relied on the 2022 HP Budget as being a reasonable indicator of HP’s performance had EASI complied with the terms of the APA.”

Ms Hart then set out her calculation of the Claimants’ loss of profit during the year ended 31st December 2022 in the sum of A$24.6 million, or more precisely A$24,554,204,being the budgeted pre-tax profit of A$25.9 million (more precisely, A$25,878,534), less adjusted actual pre-tax profits of A$1.3 million (more precisely, A$1,324,330). Although the breaches of contract occurred during late 2021, the calculation of damages for the purposes of these proceedings is taken from 1st January 2022.

I am satisfied therefore that the damages sustained by the Claimants by reason of the Defendants’ breaches of the APA are to be assessed in the amount of A$24,554,204.

I would observe however that in awarding these damages, there has been no quantification, separately, of each of the two broad categories of breach of contract relied on by the Claimants. However, as each of the Defendants’ liability has been established in respect of both categories of breach, there are no difficult questions which would require having to apportion loss between the two categories of breach. Instead, damages have been calculated on an aggregate basis for both breaches of contract.