EWJ 60 April 2025 web - Journal - Page 9
Barrowfen Properties
Limited v Patel
In this article, Shail Patel KC and John Williams analyse the recent Court of Appeal
decision in Barrowfen Properties, with a focus on the court’s findings on loss of a chance. It’s
a must-read for any practitioners dealing with loss of a chance claims; and the case gives
important guidance on how loss of a chance principles interact with the rules on mitigation,
causation, and the quantification of damages.
Roger Stewart KC of 4 New Square Chambers acted for the Second Defendant solicitors’ firm.
Shail Patel KC acted for Suresh Patel in the earlier Company’s Court proceedings.
Barrowfen also claimed for various other costs and
expenses.
Background – Barrowfen’s Development Plans
The Claimant (‘Barrowfen’) held the freehold of large
commercial premises in Tooting, South London (‘the
Property’). This was the company’s principal asset.
The Property had been purchased by Barrowfen
shortly after its incorporation in 1984, and Barrowfen
charged the Property in March 1990 to secure a long
running commercial loan facility (‘the Zurich loan’).
The delays and changes to Barrowfen’s development
plans were caused by a tussle for control of the company, which was ongoing between July 2013, and
September 2016. The protagonists were two brothers
Girish (the First Defendant), Suresh, and Prashant (a
nephew). Girish was a director of Barrowfen, and
acted as the company’s sole managing director between 1994 and August 2013. Suresh was also a director of Barrowfen from 2002. In summer 2013,
Suresh and Prashant raised concerns about Girish’s
management of Barrowfen, and in August 2013
Prashant asked to be appointed as a third director.
Thereafter, Girish set out to prevent Prashant’s
appointment, and to retain personal control over the
company.
Barrowfen intended to develop the Property, and on
16 October 2014, it obtained permission for a development scheme including 78 hotel bedrooms, 99 student rooms, and retail premises (‘the Amended
Original Development Scheme’). Despite this permission being obtained, the scheme was never built.
Instead, in June 2018, a further permission was
granted (‘the Revised Development Scheme’). A
s.106 agreement was in place by August 2018, and
work began on the development of this scheme
shortly thereafter. The work was completed in April
2021.
Girish’s strategy included a plan to take control of the
Property, through an elaborate scheme to force Barrowfen into administration. Girish set up a new company (the Third Defendant, ‘Barrowfen II’) which
took an assignment of the benefit of the Zurich loan
from Zurich. As creditor, Barrowfen II (under the
control of Girish) called in the loan, forcing Barrowfen
into administration. Girish then attempted to
persuade Barrowfen’s administrators to market the
Property for sale.
Barrowfen’s claim was brought against one of its
directors at this time, ‘Girish’ (the First Defendant);
its former solicitors ‘S&B’ (the Second Defendant),
and a new company called ‘Barrowfen II’ which was
controlled by Girish (the Third Defendant).
The Dispute
Barrowfen’s main head of claim was for losses arising
out of its failure to pursue the Amended Original Development Scheme. Had it not been for the Defendants’ breaches of duty, Barrowfen said, it would have:
These strategies ultimately failed. Prashant was
appointed as a director of Barrowfen in December
2015; and although Girish succeeded in forcing Barrowfen into administration, control of the company
was returned to its directors (Suresh and Prashant) in
September 2016.
1. Completed work on the Amended Original
Development Scheme by August 2016. On this scenario, Barrowfen lost the benefit of 55 months of
rental income – that being the period between August
2016, and April 2021, when rents were received after
completion of works on the Revised Development
Scheme.
Barrowfen was then in a position to restart work on
developing the Property. But during the events outlined above, Waitrose – the anchor tenant of the
Amended Original Development Scheme – had
pulled out of the project. Barrowfen therefore took
the decision to draw up and implement a new revised
scheme – the Revised Development Scheme. Permission for this development was obtained by June 2018,
and work was completed in April 2021.
2. Alternatively, it would have completed work on the
Amended Original Development Scheme by December 2017 – with the loss of rental income on this scenario running to 39 months.
EXPERT WITNESS JOURNAL
7
APRIL 2025
