DAMAGES: ASSESSMENT.

Appellant claiming damages for failure of respondent to supply premises in accordance with obligations under lease - appellant unable to open business and suffering loss of profits - judge awarding damages - appellant challenging quantum - whether judge properly assessing damages - appeal dismissedUYB Ltd v British Railways Board: Court of Appeal: Kennedy LJ, Waller LJ, Jonathan Parker LJ: 20 October 2000

The appellant, UYB, was a company which had been formed for the purpose of opening and running a leisure business in two railway arches at Bristol Temple Meads station.

The planning permission was granted and negotiations for a tenancy agreement between UYB and British Railways Board (BRB) took place.

A three-year tenancy was subsequently granted in July 1992.

While UYB was fitting out the arches, BRB carried out works to the roadway above, which caused large quantities of water to penetrate the arches.

As a result of this, the arches became unusable and the fitting-out had to be halted.

UYB claimed damages in both contract and tort for the failure of BRB to supply the premises in accordance with its obligation under the lease.

It was submitted that BRB's failure had prevented UYB from opening the property as planned, causing a loss of profits, from August 1992 to date, of not less than 62,500 pa.

BRB submitted to judgment on liability with damages to be assessed.

Then, by an amendment to its statement of claim, UYB asserted that it had had an expectation of a 25-year tenancy, and that, by reason of BRB's breach, it had lost the expectation of being able to trade in the property.

Its claim was for 12,178,429.

BRB asserted, among other things, that UYB unreasonably failed to seek other premises from which to operate the proposed business.

The judge accepted BRB's submissions, based upon Liesbosch Dredger v SS Edison [1933] AC 449, as to the appropriate basis for quantifying UYB's loss.

He therefore began by assessing the profits lost between 1992, when the premises would have opened but for the water problem, and November 1993, a date when it became clear that the venture would never proceed.

He then went on to assess the value of the hypothetical business in November 1993, and deducted such loss as should have been avoided by steps taken in mitigation.

In the result, he awarded 365,789 damages.

UYB appealed.

The primary issue to resolve was whether the judge had correctly applied the principles upon which he made his award.

Held: The appeal was dismissed.

The judge was entitled to choose the method of assessment that he did.

In November 1993 the expectations for starting the venture were destroyed, and, instead of attempting to fulfil the same expectations at different premises, UYB decided to pursue other plans more vigorously than they otherwise could have done.

To give UYB the value of those expectations, as at that date, together with the profits it would have achieved by that date, was adequate and proper compensation.

Kim Lewison QC and Gary Cowen (instructed by Eversheds, of Bristol) appeared for the applicant; Jonathan Gaunt QC and Jonathan Small (instructed by Kennedys) appeared for respondent.