Damages for Loss of Profits in UK Law

In my judgment, there is no such restrictive principle as that for which Mr Brindle contends. Obviously there will be cases where, on the evidence, it is not possible for the claimant to show on a balance of probabilities that any alternative transaction or business would have been profitable. There is simply no added requirement before such damages are recoverable that the alternative transactions(s) be shown to be “necessarily profitable”.

Mr Brindle placed particular emphasis on the passage in Kerr J's judgment where he refers to the claimant being exposed to the risk of being worse off. It was contended that this case was analogous to Bailey, since it too involved speculative trading. Accordingly, the defendants submitted that as in that case, the court should conclude that the alleged possibility of profit was too speculative to be recoverable.

I conclude that in principle it is entirely reasonable for Regus to restrict damages for loss of profits and consequential losses from the categories of loss for which it will become liable when in breach of contract. As it is not open to the court to sever a clause which fails to meet the requirements of the Act clause 23 is of no effect.

The claimant has first to establish an actionable head of loss. Where that involves a hypothetical exercise, the court does not apply the same balance of probability approach as it would to the proof of past facts. Rather, it estimates the loss by making the best attempt it can to evaluate the chances, great or small (unless those chances amount to no more than remote speculation), taking all significant factors into account.

The authorities therefore state a rational and sensible explanation for the view that the expectation loss principle underpins the award of damages in wasted expenditure cases. The authorities to which I have referred, in particular L. Albert & Son v Armstrong Rubber and CCC Films (London) Ltd. v Impact Quadrant Films Ltd. provide a rational and sensible explanation for the view that that burden should be on the defendant.

The measure of damages in a case of breach of contract is the amount required to place the claimant in the position that it would have been in if the contract had not been broken. In the present case, the breach of contract which I have found was committed by Antal London had the effect of depriving MMP of the franchise, but did not have the effect of closing its business down or of causing Mr Bosshard to sell the business.

He also amended the non-compete agreement on 6 May after speaking to Mr Channing to provide expressly that WPHK should not use the name Wellesley Partners in Europe or the US (paragraph 160(4) above), and I infer from this that Mr Channing had told him that WP was thinking of expanding into the US among other places. I also find that it was reasonably foreseeable that if Addax were able to withdraw its capital at short notice, it might prevent WP from earning profits in the US.