Sale of land – Exclusivity agreement – Loss of chance – Damages – Claimant seeking finance from defendants for acquisition of development site – Parties signing confidentiality and exclusivity agreement – Defendants arranging finance for third party – Claimant seeking damages for breach of exclusivity agreement – Whether defendants misusing confidential information – Whether claimant entitled to damages for loss of chance – Claim allowed
The Olympia Exhibition Centre in London was a property from which an established exhibition, event and conference business was run. In late 2015, the then owners (C) put the site and the business up for sale. The likelihood was that a purchaser would develop the site.
In 2016, the claimant, a Delaware company in the business of property investment sponsorship and investment management, approached the defendants for finance towards acquisition of the site. The parties signed a confidentiality and exclusivity agreement by which the defendants agreed to afford exclusivity to the claimant in relation to the possible acquisition.
In admitted breach of the agreed exclusivity, the defendant later became involved in arranging finance for another bidder for the site (Y). Y’s bid, with finance from the defendants, was chosen by C over a bid involving the claimant.
The claimant brought proceedings seeking damages for breach of the exclusivity agreement. It also alleged breach of the confidentiality provisions of that agreement and misuse of the claimant’s confidential information; and sought remedies for alleged breach of confidence. The claimant also claimed damages for the loss of chance.
The defendants denied that they had misused the confidential information but accepted that they had inadvertently breached the exclusivity provisions of the agreement. They argued that the claimant had not suffered any loss as a result of their breach because the claimant’s bid would have failed in any event. Further, even if the claimant had acquired Olympia, it would have failed.
Held: The claim was allowed.
(1) The defendants accepted that their negotiation, arrangement and provision of loan finance to Y for the acquisition of Olympia involved repeated and continuous breaches of the exclusivity agreement from which legal consequences flowed. However, on the evidence, the court accepted that the breaches were inadvertent, rather than knowing and deliberate. Further, the defendant’s evidence at trial that they did not in fact use the claimant’s confidential information was accepted. No document showed misuse of that confidential information by the defendants. Against those findings, the inferences of misuse were not made out.
(2) As regards the claim for damages for breach of the exclusivity agreement, a question arose whether the claimant was entitled to damages on the loss of a chance basis. The court rejected the defendants’ argument that it was not so entitled, because the object of the duty breached by the defendants was not to provide the claimant with the chance to acquire Olympia but to protect the claimant’s confidential information. Part of the object of the agreement was to prevent the defendants from providing finance to other parties. Accordingly, damages would be assessed on the loss of a chance basis.
In assessing damages which depended upon its view as to what would happen in the future, or would have happened in the future if something had not happened in the past, the court had to make an estimate as to what were the chances that a particular thing would or would have happened and reflect those chances, whether they were more or less than even, in the amount of damages which it awarded.
(3) The court’s task was to reach an overall judgment that did justice to the case, having understood the detail but also standing back to see the wood from the trees. Decisions of the highest authority signal the importance of clarity, common-sense, practicality and realism: Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602, Mallett v McMonagle [1970] AC 166, Davies v Taylor [1974] AC 207, Morris-Garner v One Step (Support) Ltd [2018] EGLR 26 and Perry v Raleys Solicitors [2020] AC 352 considered.
Where, as here, there had been a trial addressing both causation and quantification of loss, and the evidence advanced by the parties on both was complete, it was right to take causation and quantification together; ie, to deal at the same time both with the question of whether chances were real and substantial and evaluation of the chances. The court would treat all key stages as involving questions both of causation and quantification.
(4) Where the case reached quantification, there was not a single “correct” figure. The parties were instead entitled to a judicially determined figure, reached in accordance with principle and after consideration of the circumstances of the case. Although judges would strive for consistency and predictability, that could only realistically produce a figure within a range.
In a complex case like the present, although the key elements or stages would be broken down, it was appropriate to resist laying out an intricate single sequence of possible steps, with a percentage or combination of percentages at every step, and multiplying percentages throughout. The appearance of precision would be artificial. The many percentages in a case like this would often overlap, be affected by similar considerations, or be interdependent rather than independent: Hanif v Middleweekes [2000] Lloyd’s Rep PN 920, and Assetco plc v Grant Thornton LLP [2019] EWHC 150 (Comm); [2019] Bus LR 2291 considered.
(5) C was a willing seller. Within limits, which included the need for a proposition to be credible, its interest was in the level and achievement of the price rather than the identity of the purchaser. On the balance of probabilities, the claimant would have done all that was required of it to the end of C being prepared to sell to the claimant. There was a real and substantial chance that C would have been prepared to sell to the claimant. When it came to quantification, the court would evaluate the chance of C being prepared to sell to the claimant as a near certainty.
The court had to consider a complex series of interdependent contingencies as to what would have happened if the defendants had not financed the successful Olympia bid. Having evaluated the probability of each such contingency, there was a 35% chance overall that the claimant would have acquired Olympia if the defendants had not offered acquisition finance for the competing bid. The court’s evaluation totalled £14,980,000, acknowledging, despite the specificity of the figure, that that could not be a precise exercise.
Andrew Twigger QC, Thomas Munby QC and Duncan McCombe (instructed by Signature Litigation LLP) appeared for the claimant; Orlando Gledhill QC, Mehdi Baiou and KV Krishnaprasad (instructed by Clyde & Co LLP) appeared for the defendants.
Eileen O’Grady, barrister
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