HT-2023-000006 - [2024] EWHC 1510 (TCC)

Fecha: 18-Jun-2024

Loss of business opportunity

Loss of business opportunity

483.

Claim 9 is a claim for £177,865.23 for loss of business opportunity.

484.

The claim is calculated on the basis that A & V lost the opportunity to attract contracts to a value of £889,326.16 upon which it would have earned 20% profit.

485.

The basis of this head of claim is set out helpfully in paragraph 6.9 of A & V’s written Closing Submissions:

JBH were aware and accept that A&V were solely working for JBH, and all of their resources were with JBH.

Adam Hill email 1^st March 2021 12:42 (Trial bundle 4, page 1672) Mr Hill and Seth Brown specifically were aware of A&V financial position as it noted: -

“as we are concernedthiswould add additional stress to your finances”

JBH being aware of A&V financial difficulties and without discussing the issues raised nor reasonably considering the merits of A&V position within A&V letter 15^th March 2021 chose deliberately to take an alternative course of action by employing other to undertake A&V works, remove them from the IAuditor system and generally unreasonably, erroneously, vexatiously and in breach of the contract make it difficult for A&V.

The consequences of JBH deliberate actions were that as A&V had all of its resources with JBH were unable to seek employment with other companies that they had any established relationship with. Those relationships were long over so A&V would have to start again. As has been heard within the trial A&V have tried to gain work for A&V but this has been difficult due to lack of working capital in March 2021as a result of inadequate payments for works genuinely undertaken (Blizzards £138K) that JBH had not paid for.

The QS responsible for valuing the works was Seth Brown and he and Adam Hill worked closely together. As a result of Seth Brown incorrectly and deliberately undervaluing A&V works as a result of:-

•

The commentaries within Blizzard decision particularly in relation to the JBH acts of prevention.

•

The inaccurate measuring and valuing of works completed (valuation 14). Mr Brown was fully aware of the outstanding works detailed by JBH in their outstanding works schedule and photographs (Trial bundle 5, pages 2208-2210). In Mr Niziolek witness statement, he referred in paragraph 15 to Seth having carried out a comprehensive review [Trial Bundle 1, page 195]. Mr Davidsons cross examination confirmed works were complete to all 3 towers and a significant part of the podiums. Mr Browns actions appear deliberate.

Judd letter 3^rd Feb 2022 refers to the impact that JBH actions were having on A&V cash flow (trial bundle 3, pages 1453 and 1454)

Judd letter 26/05/22 (trial bundle 3, page 1455) noted that JBH due to the breaches had a duty of care and were causing harm and damage to A&V.

A&V schedule for the losses is contained in trial bundle 4, page 1660.

The actions of JBH in March 2021, in the knowledge that they knew of A&V financial stress and that BYUK / JBH were behind programme, and were in the process of issuing significant variations, deliberately denied A&V the opportunity to undertake those works and thus would have removed the “financial stresses” upon A&V. The additional works A&V could have undertaken in the following 6 months to completion have been discussed during trial in the confirmed variations by Adam Hill of £228k and/or further works up to £405k (trial bundle 4, page 1709).

At the trial I have demonstrated attempts to gain work for A&V but to no avail. This is a direct consequence of JBH actions and breaches. Any monies I did have were subsequently used for legal actions against JBH, so I had no real working capital, this being directly caused by JBH wrong actions and the consequences thereto.

These actions were not remote from the contract but a direct result of the actions from the breaches of contract.

Paragraph 16 of the 17^thof October judgement:

“A recurrent theme in the application for permission is a challenge to my finding that A&V’s financial position was aggravated by J&BH’s conduct: that was, in my view, a statement of the obvious. J&BH’s conduct caused A&V real time financial problems as it had to deal with J&BH’s conduct which caused it cash flow problems as it dealt with the obstructions placed in the way of the Blizzard adjudication and the wrongfully issued Part 8 proceedings. Whilst the Court of Appeal questioned the continuance of the appeal to that Court following the Smith adjudication, in the real world much damage had already been done.”

As part of Mr Judd cross examination of Mr Geale, Mr Geale accepted that if the courts accepted the breach and loss his calculation for that loss would be £97,825.88 (Mr Geale report paragraph 9.7) Mr Judd noted that but advised that they would rely on A&V higher figures and commentary.

This is a matter for the courts review.

The court also has remedies as described within the claim as follows: -

•

Further or alternatively, damages

•

Any other relief the Court deems fit

Resulting from the Defendant’s (“JBH") Breach of Contract.

486.

It is correct that in my judgment handed down on 17 October 2023 I said (Footnote: ⁷⁷):

A recurrent theme in the application for permission is a challenge to my finding that A&V’s financial position was aggravated by J&BH’s conduct: that was, in my view, a statement of the obvious. J&BH’s conduct caused A&V real time financial problems as it had to deal with J&BH’s conduct which caused it cash flow problems as it dealt with the obstructions placed in the way of the Blizzard adjudication and the wrongfully issued Part 8 proceedings. Whilst the Court Appeal questioned the continuance of the appeal to that Court following the Smith adjudication, in the real world much damage had already been done.

487.

That was said in the context of an application for permission to appeal against my judgment handed down on 6 October 2023 (Footnote: ⁷⁸). In order to set what I said in context, it is necessary to see what I said in the judgment in respect of which such permission was sought. At paragraph 117 I had said this:

In my judgment this is one of those cases where the Court should, exceptionally, grant a stay of execution of the judgment against A&V for the following reasons:

(1)

The Court of Appeal has ruled in paragraph [43] of its judgment (A&V Building Solution Ltd v J&B Hopkins Ltd [2023] EWCA Civ 54; 206 ConLR 184) that as at April 2022 J&BH was in breach of contract because ithad not paid the first adjudicator’s decision “that should have been the firstorder of business”;

(2)

The Court of Appeal held (at paragraph [17]) that “the first adjudication was made more complicated than it needed to be, in particular because JBH’ssolicitors raised a number of unmeritorious jurisdictional challenges andgenerally failed to provide the sort of assistance to a lay adjudicator that Iwould expect”;

(3)

J&BH launched Part 8 proceedings raising arguments which the Court of Appeal held to be wrong (overruling the decision of Eyre J.);

(4)

Whilst these actions were not the sole cause of A&V’s financial difficulties, I am satisfied on the evidence before me that the costs arising from these actions exacerbated A&V’s financial difficulties …

488.

The terms of sub-paragraph 117(4) are important in understanding the context of what I said in the later judgment.

489.

In considering the claim for loss of business opportunity, it is necessary first to consider the legal bases upon which the claim is put forward.

490.

In the Scott Schedule reliance is placed upon Clauses 7.4, 8.5, 8.6, 9.8, 9.10, 13.2, 13.3 and 15.1.

491.

These have been considered largely above.

492.

Clause 7.4 relates to the bringing to site of additional labour. The breach which I have held existed could not justify a claim for loss of business opportunity.

493.

Clauses 8.5 and 8.6 relate to variations. I have held that A & V’s case as to the variation account has succeeded in part, but not to an extent that could be said to have caused significant loss of business opportunity.

494.

Clauses 9.8 relates to retentions and 9.10 to the usual final account exercise. There is no breach of contract proved in respect of these clauses.

495.

Clause 13.2 and 13.3 relate to extensions of time: I have held that an extension of time should have been granted, but if it had been granted, it would probably only have been in respect of the period of suspension. A grant of an extension of time for 10 weeks or so would have made no appreciable difference to A & V’s business prospects.

496.

There was no breach of Clause 15.1.

497.

Accordingly, none of the breaches pleaded in the justification for Claim 9 can support a claim for loss of business opportunity.

498.

However, I have held, firstly, that the measured works were worth significantly more than J&BH’s assessment, and, secondly, I have held that J&BH was in repudiatory breach of the sub-contract.

499.

As to the first, whilst it would undoubtedly have eased A & V’s cashflow position had more monies been certified, that certification in itself would not have transformed A & V’s position and made the difference between continuing in business profitably or not.

500.

As to the second, the practical effect of J&BH’s breach was to prevent A & V continuing to complete its works, thereby earning further profit of £6,396.56: this cannot sensibly be said to have led to the loss of business opportunity claimed.

501.

I return to the passages from my judgments set out above. It is important to note that what I said in paragraph 117(4) of the 6 October 2023 judgment was “whilst these actions were not the sole cause of A&V’s financial difficulties, I am satisfied on the evidence before me that the costs arising from these actions exacerbated A&V’s financial difficulties”.

502.

I have no doubt that the time and money expended by A & V in the two adjudications, and the various twists and turns in the court cases, has been considerable, but that cannot be attributed to any aspects of the dispute resolution process before Mr Blizzard delivered his decision in January 2022. This is significant since for most practical purposes A & V had stopped gaining any significant new work after March 2021: that cannot be attributed to the dispute resolution process.

503.

The conclusion I come to on the evidence is that A & V did make efforts to win fresh work but was generally unsuccessful. It is probably the case that A & V suffered significant problems because it had put all its eggs in the J&BH basket which perhaps inevitably would cause problems if that relationship got into difficulties, as it did.

504.

In my view A & V has failed to establish a significant loss of business opportunity as a result of any breach on J&BH’s part.

505.

Apart from that factual conclusion, I accept J&BH’s contention that the losses claimed are too remote in law to be recoverable. This was put by Mr Frampton in his written Opening Submissions as follows:

302.

As a matter of law, these losses are also too remote to be recoverable:

302.1

The legal test for remoteness is well known. In Hadley v Baxendale (1854) 9 Ex. 341, at [151], it was said that to be foreseeable, losses needed to be:

“such as may fairly and reasonably be considered either arising naturally, ie according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”

302.2

The House of Lords in The Achilleas [2009] AC 61 and the Court of Appeal in Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146, [2016] CH 529, clarified that the reasonable contemplation test was not sufficient in all cases to meet the rule of remoteness, which is intended to control recoverable damages Instead the ultimate test is whether a party is to be regarded as having assumed responsibility for the damage in question. In particular, the Court of Appeal explained at [550] that:

“The principle is founded on the notion that the parties, in the absence of special provision in the contract, would normally expect a contract-breaker to be assuming responsibility for damage which would reasonably be contemplated to result from a breach. The Achilleas shows that there may be cases where, based on the individual circumstances surrounding the making of the contract, this assumed expectation is not well-founded.”

302.3

Neither test is satisfied here. It was not in the reasonable contemplation of the parties that A&V would cease to trade at all if there was a breach by JBH. More importantly, JBH cannot in the circumstances of the Sub-Contract be regarded as having assumed responsibility for such damages.

506.

In his oral submissions, Mr Frampton emphasised, correctly as a matter of law, that the issue of foreseeability is to be determined at the time that the contract was entered into (see the passage from Hadley v Baxendale cited above). In this case, the due diligence carried out by J&BH was intended to, and did, satisfy J&BH as to A & V’s financial stability. I agree with J&BH that it was not within the reasonable contemplation of J&BH at that time that the sort of disputes as to performance and contract value which emerged (and which are common in the construction industry) would be such as to threaten A & V’s commercial viability.

507.

For these reasons I reject A & V’s claim for damages for loss of business opportunity.