Breach of exclusivity agreement results in loss of chance amounting to £15m

A claim for substantial damages for breach of a confidentiality and exclusivity agreement concerning the sale of the Olympia Exhibition Centre, London and its exhibition, event and conference business has succeeded in Bugsby Property LLC v LGIM Commercial Lending Limited and Legal & General Assurance Society Limited [2022] EWCH 2001 (Comm). The decision will be of interest to all involved in property sales and acquisitions. In late 2015 the then-owners of the Centre put the site and business up for sale. The likelihood was that a purchaser would redevelop the Centre. The claimant, a Delaware property investment and management company, approached the defendants, part of the Legal and General Group, for finance to acquire the Centre. The parties signed a confidentiality and exclusivity agreement in January 2016 by which the defendants agreed to afford the claimant exclusivity for a period of 18 months in relation to the possible acquisition. In admitted breach of the agreement the defendants subsequently arranged finance for another bidder, Yoo, whose bid was accepted by the owner over that of the claimant. Yoo is now developing the Centre. The claimant sought damages for breach of the exclusivity agreement and breach of confidence. The case concerned what loss of chance the claimant had sustained. The defendants argued that arranging finance for Yoo made no difference to the claimant, Yoo would still have succeeded, and that even if the claimant had acquired the Centre it would have failed. The judge did not accept that confidential information provided by the claimant to the defendants has been misused by them. The defendants’ breach of contract comprised positive acts to assist Yoo. This did not cause the claimant to be unable to bid, but may have reduced its chance to succeed with its bid recognising that a bid itself is only a chance to succeed. The judge decided, rejecting the defendants’ arguments, that on the balance of probabilities there was a real and substantial chance that the owner of the Centre would have been prepared to sell to the claimant and that the claimant would have done all that was required of it. There was a near certainty that the claimant would have been able to finance its bid, but there was also a near certainty that Yoo would have been able to finance its bid without finance from the defendants although such financing would take longer – another two weeks – to secure. The court put at 40% the chance that the owners would have gone with the claimant’s bid rather than waiting for Yoo to secure alternative finance. The court rejected arguments that the claimant would not have secured planning permission or development finance: it would have executed the same scheme as Yoo was undertaking, since it was the most compelling, commercially. The court attributed a single percentage – 90% – to the near certainties multiplied by the 40% chance on timing resulting in an overall loss of chance, rounded to 35%. Applying that percentage to the claimant’s likely returns on the project equated to an award of £14,980,000. Louise Clark is a property law consultant and mediator