Case No. HT-11-503

below. 5.2 The Appropriate Starting Point 194.I noted in paragraph 6 above that The Oak was an entirely new business venture and was very different to the pub business that operated as The Royal Oak in the old building before it was demolished. That was Mr Barber’s own evidence. Accordingly, it seems to me that any analysis of the potential loss of profits caused by the second inundation must take as its starting-point the proposition that The Oak was a new business venture. Thus, when assessing the claim for loss of profit, it is important not to start from the assumption that The Oak was going to be profitable from the outset. Since it was a new business, no such assumption was appropriate. 195.Mrs Rawlin admitted that both the report that she had provided to the insurers, and her report to the court in these proceedings, were based on the assumption that the business of The Oak was going to be profitable. For the reasons that I have given, I consider that to have been an erroneous assumption. Moreover, that was compounded by the fact that Mrs Rawlin’s calculations operated on the basis that a weekly sales figure of £12,000 odd would have been generated from the very first week of trading, and then maintained throughout the relevant period. It was wholly unrealistic to maintain that such a turnover would have been generated immediately, as Mrs Rawlin appeared to concede.196.I find that, like Mr Greig, she was faced with a potentially enormous claim by Brit Inns for loss of profit and, as a result, failed to ask herself the right questions at the outset. I should say a word about that claim. The original ‘forecast’ which Brit Inns provided indicated a loss of £2.2 million, apparently based on a turnover figure of £30,483 per week. When Mr Barber gave evidence, it became apparent that this figure was based on an existing insurance policy and the figure which he had estimated for the business interruption element of that policy. It never had any basis in any actual turnover/profit figures, and had not been assessed in any sort of meaningful way. As Mr Barber accepted, the figure resulted in a six fold increase in turnover from that generated by The Oak. There was simply nothing to justify that. 197.Despite this, I am in no doubt that, as Mr Greig accepted in cross-examination, the loss of profit claim was the principal focus during the lengthy period of adjustment of the claim. It appears that Mrs Rawlin concentrated her efforts on reducing the projected figures to what she considered to be more reasonable levels. She did not stand back and ask herself the more fundamental question as to whether this business would ever had made a profit at all. 5.3 Delay, Not Complete Negation Of Profit 198.In my view, the next important point to make is that, on the face of it, this is a claim for the delay in being able to generate a profit, rather than a claim for the inability to generate a profit at all. As a result of the second inundation, extensive remedial works had to be carried out and then the fit-out works had to be reinstated. Instead of being able to open The Oak in early March 2007, Brit Inns were not able to open The Oak until mid-October 2007. There was, as a result, a 7 month delay before The Oak was able to open for business, for which the defendants were responsible.199.This is not a case where the delay caused the claimant company to go into liquidation, thus depriving it of the opportunity of ever endeavouring to generate a profit. Brit Inns remained in existence and started to trade when The Oak was opened in October 2007. Accordingly, in my judgment, the claim for loss of profit is best regarded primarily as a claim for the profit lost over the 7 month period when The Oak should have been trading but when, because of the breach of contract and/or negligence of the defendants, it was not. 200.Furthermore, the loss of profit claim must be referable solely to the consequences of the second inundation. The consequences of the first inundation were nothing to do with the defendants, and were therefore irrelevant to the assessment of any claim against them. 201.On this basis, therefore, there are two further criticisms to be made of Mrs Rawlin’s calculations. First, she has not approached this as a claim for the delay in generating profits. She has instead assumed that any profit allegedly lost when The Oak reopened was due to the second inundation, and has then assumed that this loss of profit continued at a steady rate until the consequences of the third incident became overwhelming. In other words, there is an assumption that, if there was a loss of profit, it must be the result of the delay caused by the second inundation (at least until there was an intervening and overwhelming alternative cause for the lost profit). In my view, there was no basis in principle for such an approach.202.In addition, Mrs Rawlin’s calculations appeared to calculate a loss of profit caused by both the first and the second inundations, and then endeavoured to make some form of arbitrary allowance or reduction for the first inundation. In my view, that is an illegitimate approach, because it gives rise to the risk that the defendants were being made liable for matters which were simply not their responsibility. 5.4 The Importance Of Actual Figures 203.The experts were agreed that, in any case where there are actual figures for profit and loss, such figures ought to form the starting point for any calculation for loss of profit, unless there are good reasons why those actual figures should be disregarded. Mr Isaac has used the actual figures generated by Brit Inns from October 2007 onwards. Mrs Rawlin has not only failed to use the actual figures, but she has not even had regard to them for comparison purposes. I regard such an approach as surprising, and erroneous.204.There is a major argument between the parties, dealt with at