Case No. HT-11-503

229.Accordingly, having analysed the four reasons put forward by Mr Barber as to why the actual turnover figures in October 2007 were not a guide to the profits that would have been generated in March, I reject that submission. On the contrary, it seems to me that none of the four reasons put forward by Mr Barber could possibly justify the decision to leave the actual figures to one side and pay no attention to them at all in the calculation of the loss of profit claim. 6.3 Is There Any Other Reason To Ignore The Actual Profit/Loss Figures? 230.During the course of the evidence, two further reasons, not espoused by Mr Barber, were put forward as justifying why the court should ignore the actual profit/loss figures generated by Brit Inns from October 2007. The first concerned the recession; the second concerned the length of time over which the actual figures were generated.231.As to the recession, Mr Barber was clear in his oral evidence that the recession was not a problem in October 2007, and therefore not a reason for ignoring the actual figures generated during that period. That therefore deals with that point as a matter of fact. It is true that Mr Watson, the expert who would have given evidence on behalf of Mr Barber and Mrs Lawless for their uninsured claim for loss of profit had it not been abandoned, does refer in his report to the possible effect of the recession later in 2007. But he was not called to speak as to his report. Moreover, he did so not by utilising actual statistics (whether relating to the catering trade or more generally), but by reference to the responses to business confidence surveys in the latter part of 2007. Those are, in my view, a notoriously unreliable guide to underlying economic trends. The other evidence suggests that the recession did not begin to have a significant effect on the catering trade until later in 2008. Accordingly, I find that the coming recession was not a reason to ignore the actual turnover figures from October 2007 to May 2008. 232.The other reason put forward to ignore the actual figures came from Mrs Rawlin’s oral evidence. She said that Mr Isaac was only having regard to the actual profit figures generated from October to the end of December 2007 and that this was too short a period on which to base any conclusion as to the underlying profitability of the business. Of course, there was a slight air of unreality about this argument, given that Mrs Rawlin had ignored the actual figures, not for this reason, but because she was told to by Mr Barber. Notwithstanding that, I can see that, without other information, the use of the short 10 week period might raise a number of question marks over the truly representative nature of the figures. But on the particular facts of this case, that argument is self-defeating. 233.On analysis, Mr Isaac concentrated on the 10 weeks or so at the end of 2007 because it was during that period that the average monthly turnover was at its highest. From January 2008 onwards, until the closure of the restaurant in June 2008 and beyond, the average turnover figures demonstrate that, with some peaks in the first few months of the year, the overall trend was down. In those circumstances, Mr Isaac has taken the best possible figures from Brit Inns’ point of view and, notwithstanding that, has still concluded that the business was not going to be profitable. Had he taken the profit figures over a more representative period, say the 12 months from October 2007 to October 2008, there could have been no argument about the length of time over which the figures had been generated, and the results would have been much worse and showed an even gloomier position. 234.Accordingly, it seems to me that Mr Isaac was right to have regard to the actual profit and loss figures, and to do his calculations on the first 10 weeks, because those produced the figures that were the most favourable to Brit Inns. The use of the 10 week period did not mean that the actual figures should be ignored. 6.4 The Relevant Period 235.There was a debate about the relevant period for the loss of profit claim. In my judgment, the relevant period over which the loss of profit should be calculated was the period during which, as a result of the second inundation, The Oak was closed when it should have been open. That was from March to October 2007, a delay period of 7 months. Thus, an analysis of the first 7 months trading of Brit Inns as The Oak, down to, say, mid-May 2008 ought to identify the financial effect of the delay caused by the defendants: put simply, the profit generated over that 7 month period is the lost profit for which the defendants are liable. What is more, that fits exactly with Mr Isaac’s period (which runs to mid-May) and is at least broadly consistent with Mrs Rawlin’s decision to run down the loss of profit claim from June 2008 because of what she said was the effect of the third incident. 236.I should, however, add that Mrs Rawlin’s use of a period extending beyond June was flawed, not only for the reasons given above, but because, although she considered that the third incident had an effect on the profit in June, she said that it only brought the loss of profit claim to a complete end in November 2008. That was completely unrealistic; it meant that Mrs Rawlin was calculating £12,000 a week loss of profit due to the second inundation in June 2008 and thereafter, despite the fact that a unilateral decision had been taken to close the restaurant in June, which meant that the actual profit figures would no longer be comparable with any projected figures anyway. That amply demonstrated the artificial nature of Mrs Rawlin’s calculations.237.In my view, the period for any calculation for loss of profit could only be longer than 7 months if it could have been shown that the delayed opening had an ongoing and irredeemable effect on the profitability of The Oak (at least until another overwhelming cause of the loss of profit eventuated), as opposed to a simple delaying effect. For the reasons that I have given, there is no evidence to support the suggestion that the delayed opening had such an effect. All the evidence suggests that this was a delay in generating profit or loss, rather than anything more permanent. On that basis, therefore, I consider that only the 7+ month period is relevant for the calculation of loss of profit.238.In reaching that view I take comfort from the fact that Mr Isaac has calculated, albeit for different reasons, that the relevant period started on 15 October and ceased on 11 May 2008, a period of 7 months. If my reasons for taking that period are wrong, then I make clear that I accept his3; on any view, therefore, I find that the relevant period for the purposes of calculating the loss of profit claim runs from 15 October to 11 May 2008. 6.5 The Claim Measured By Reference To The Actual Figures a) Overview 239.According to Mrs Rawlin’s calculations in her report, the average actual sales figure from October to December 2007 was £7,059 per week. Thereafter, despite some weeks where the figure was higher than that, the average between January and June 2008 was £5,128 per week. Following the closure of the restaurant, sales from July 2008 onwards was averaging £3,128 per week. It should be noted that although most of these figures are based on actual records, the actual sales figures from April to October 2008 appear to be estimated. Brit Inns have not provided the actual figures. This is particularly unfortunate given that it was in this period that the decision was taken to close the restaurant. As already noted, it was wholly unclear on what financial information (if any) that decision was taken. 240.It was generally agreed by the experts that, in the light of the costs being incurred by Brit Inns during this period, the actual figures showed that they were not making a significant profit. That said, both Mr Barber and Mrs Lawless accepted that, when it first opened, the business was doing quite well. In my view, that was a further indication that their projected/‘forecast’ loss of profit figures were far too high and that, in truth, actual sales of around £7,000 per week were properly viewed as being quite positive.241.The real test of course was whether the customers who were coming and generating that initial turnover (which Mrs Lawless and Mrs Barber thought were ‘quite good’) would come back. But, within a few months, they did not. It was put to Mr Barber in his cross-examination that people went once but then voted with their feet. Sadly, it is impossible not to conclude, on the basis of the actual figures, that this is exactly what happened. 242.During his evidence, I think that Mr Barber began to realise how thin his assertion sounded that this falling-off of business during 2008 was in some way due to the delayed opening the previous year. Accordingly, during his cross-examination, he rather changed tack and tried to find a reason, current in 2008, to explain the falling away. He alighted on the question of the odours. But, for the reasons which I have given in paragraphs 33-40 and 228 above, to the extent that the odours were the responsibility of the defendants, they were promptly and satisfactorily dealt with. The figures demonstrate that they did not have an effect on the sales in January and February 2008. Later odour problems may have done, but those were linked to the third incident, and emphatically not the responsibility of the defendants.243.Accordingly, I conclude that there is no reason why the claim for loss of profits should not be measured in the usual way, by reference to the actual figures generated by the business in question. When that exercise is undertaken, it demonstrates that the new business at The Oak started quite well and that, although it was not making a significant profit, there were grounds for some optimism. But as 2008 progressed, people did not go back and the figures fell away. That was nothing to do with the delayed opening. Ultimately, that was because people did not want to eat at The Oak, which was not the defendants’ responsibility.