EWJ 60 April 2025 web - Journal - Page 10
60% loss of chance discount (the risk of Scenario 1 not
eventuating) leaving a final total of £1,388,768.05
[679].
The Claims and the Judgments
Barrowfen brought claims in the High Court against
Girish and Barrowfen II. Barrowfen also claimed
against S&B, which acted for both Barrowfen and
Girish in relation to various matters pertaining to the
internal disputes from February 2014 onwards, and
which advised Girish and Barrowfen II on Girish’s
plans to force Barrowfen into administration.
2. Under Scenario 2, the total figure for loss of net
rents for 39 months, and associated costs, came to
£3,498,157.09. Following the deduction for increased
capital value (£2,508,182) and the application of an
80% multiplier, this resulted in a final figure of
£791,980.07 [681].
The Main Judgment
Mr Justice Leech handed down judgment in the case
on 21 July 2021 (‘The Main Judgment‘). The judge
divided Barrowfen’s claims into two categories, and
made the following findings:
In the Main Judgment, the judge awarded damages
of £1,388,768.05 (the final Scenario 1 figure) on the
basis that the two claims were “true alternatives and
that they do not overlap” [681]. But permission was
given for further submissions to be made on this, and
on the correct approach to deducting the credit of
c.£2.5m.
1. The Company Claims. These claims were brought
against Girish and S&B, and concerned numerous alleged failures of corporate governance in the period
November 2013 to July 2015. As against Girish, the
judge found that he had acted in breach of his duties
as a director in respect of the steps he took to prevent
Prashant being appointed as director, and to maintain
personal control over Barrowfen. S&B was in turn
found to have been negligent in failing to address the
conflicts of interest which existed between Barrowfen
and Girish.
The Reserved Matters Judgment
A further judgment was handed down which revisited
some of these (and other) matters on 22 June 2022
(‘The Reserved Matters Judgment‘). The following
points are relevant to the appeal:
Accounting for additional profits – the judge
affirmed his initial approach of deducting the increase
in capital value (£2.5m) from the total loss figure on
both Scenarios 1 and 2. This benefit was not a res inter
alios, or collateral [64]-[68]; it formed part of the same
continuous transaction begun by the Defendants’
breaches of duty [68]. It therefore needed to be
brought into account in calculating Barrowfen’s overall loss.
2. The Administration Claim. This claim related to
events between October 2015 and February 2016, and
the steps taken by Girish and Barrowfen II to put Barrowfen into administration. The judge again found
that Girish breached his duties as director of Barrowfen by pursuing this scheme. S&B were again held
liable in negligence for failing to address the conflicted
position of both Girish and S&B.
Future Finance Costs – the judge refused to bring
future finance costs within the scope of the overall loss
calculation. These were the costs which Barrowfen
would incur if it held the development, rather than
selling it and realising its capital value. If brought into
account, these sums were sufficiently large to negate
any credits accruing to Barrowfen for increased
capital value.
The judge went on to consider causation, loss, and
‘loss of chance’.
The judge found that but for the Company Claim
breaches, there was a good chance that Prashant and
Suresh would have taken control of Barrowfen sooner.
They could have pressed ahead with the Amended
Original Development Scheme, with a view to completing construction in September 2016 (‘Scenario 1’).
He assessed the probability of achieving Scenario 1 at
60% [622].
The judge held that even if Barrowfen could prove
an intention to hold the Property in the long term, it
was right (as a matter of law) to adopt an “investor
agnostic valuation” rather than a “Barrowfen specific
valuation” [72]-[73]. This meant valuing the Property
based on the amount for which it could be sold on the
open market at completion. The Defendants could
not be held liable for the costs to Barrowfen of its
decision to keep possession of the Property.
Alternatively, had it not been for the Administration
Claim breaches, there was a very good chance that
Barrowfen could have avoided administration, and
completed construction under the Amended Original
Development Scheme by January 2018 (‘Scenario 2’).
The chances of this were assessed at 80% [630].
The Loss of Chance calculation – the judge
approved of his earlier decision to apply the percentage loss of chance multiplier to the net figure, after the
deduction of the increased capital value sum (£2.5m)
[97]. He rejected S&B’s proposal of applying the loss
of chance multiplier before the deduction, which
would have significantly reduced overall recoveries.
As a result:
1. Under Scenario 1, Barrowfen lost the chance of
receiving net rents for 55 months, and of saving various other costs. These sums totalled £4,822,797.09.
The judge set off against this the figure of £2,508,182,
to reflect the increased capital value of the scheme
Barrowfen actually built, which was worth substantially more than the hypothetical Amended Original
Development Scheme which could have been completed in September 2016. The net total loss was
therefore £2,314,615.09. To this figure was applied a
EXPERT WITNESS JOURNAL
The Cumulation Issue – the judge revised his approach to quantum overall. In the Main Judgment,
he awarded £1,388,768.05, to reflect the loss of chance
in Scenario 1 alone. This followed from the judge’s
provisional finding that the claims under Scenario 1
8
APRIL 2025
