Car-Wizard Limited v Vixen Surface Treatments Limited [2026] EWHC 1682 (Ch)

[2026] EWHC 1682 (Ch)Case No BL-2023-BRS-000060IN THE HIGH COURT OF JUSTICEVenue BUSINESS AND PROPERTY COURTS IN BRISTOLCIRCUIT COMMERCIAL COURT (KBD)Venue Bristol Civil Justice Centre, 2 Redcliff Street, Bristol, BS1 6GRDate 3 July 2026
Before
HHJ PAUL MATTHEWS(sitting as a Judge of the High Court)
Between
CAR-WIZARD LIMITEDClaimantVIXEN SURFACE TREATMENTS LIMITEDDefendant
Jay Jagasia (instructed by Wards Solicitors LLP) for ClaimantSimon Goldberg KC (instructed by Knights) for DefendantAssessment of damages, carried out on paper
This judgment was handed down remotely at 2.30 pm on 3 July 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archive.HHJ Paul Matthews :

Introduction

[1]On 26 March 2026 I handed down my written reserved judgment ([2026] EWHC 685 (Ch)) on the trial of a claim for remedies in respect of what the claimant claimed to be the defective supply of a vertical diamond cuttinglathe by the defendant for the purposes of the claimant’s car wheel repair business. I held that the claim succeeded. However, because of points which had been raised only on the circulation of my draft judgment, I said that I would award the claimant damages to be calculated following further consideration, and upon further written submissions from the parties. I duly received the written submissions of the parties, and have taken them into account in making the present assessment.[2]The context of this assessment is set out in the claimant’s written submissions as follows:
“1. … As the court will recall, a draft judgment was circulated indicating that the court had awarded C damages of £80k but D raised an issue with the court’s calculation of damages very shortly prior to handing down suggesting that the court had overstated the award and that it should be reduced to between c. 68-73k. That suggestion was directed only at a consideration of lost trade revenue and the consequential impact that a reduction in that figure would have on the overall calculation of damages, with D having indicated the issue it had raised would not affect the other aspects of the calculation.”
[3]The relevant part of my judgment, as handed down in final form, is as follows:
“188. … I have held that failure to mitigate by acquiring another machine should cap the loss at nine months. What I have is the figure agreed by the experts for lost trade revenue for the first year of assumed operation of the lathe, that is, £158,000. The problem is that some of the letters relied on by the claimant say that wheel repair work would have been offered to the claimant only from a date after September 2020. So simply taking ¾ of £158,000 (which is £118,500) would probably overstate the lost revenue for the first nine months from September 2020. 189. There may be similar problems with the calculation of deductible costs, and perhaps even with lost retail revenue. On the other hand I do not wish to hold up the handing-down of this judgment just because a (proper) query has been raised at the last minute about the calculation of the damages due to the claimant. I am conscious in particular that it will be hard to preserve the confidentiality of the draft judgment for a significant period. 190. What I will therefore do is to adjourn the hearing of submissions on the calculation of the damages for breach of contract (lost profits for both trade and retail business) to a further occasion for consideration by me, assuming that the question of calculation is not agreed by the parties. It can be by written submissions or by (remote) hearing. This will not be a split trial, because findings of fact in this judgment will carry over to the assessment, and (importantly) there will be no new evidence. The matter will be dealt with solely on the material already before the court.”

Facts found

[4]Accordingly, in this assessment I am recalculating the loss of profit, not merely reviewing my first attempt. But I am doing so on the basis of materials already before me and facts already found. In my judgment, I found as follows:
“116, I referred above to the measure of the compensation that would be payable for breach of contract, in order to put the claimant in the position that it would have been in had the contract been performed As to this, I am also satisfied on the evidence before me that the claimant has suffered a loss of business that he had hoped to gain by acquiring the machine. This evidence was given by Mr Sacco orally and by Mr Swan in his witness statement, and was confirmed by a number of letters in the bundle from trade customers who said that they intended to use the claimant’s services but could not do so because of the problems with the lathe. In addition to the loss of business from trade customers, Mr Birrell says (and I accept) that he has lost business from private (ie non-trade) customers, although he accepts that (i) this was less significant than the loss from trade customers, and (ii) it is more difficult to quantify. 117. I agree that the quantification of such loss of business (whether trade or private) is self-evidently problematic. It involves a counterfactual state of affairs which never happened, and which cannot be hypothesised with any certainty. Nevertheless, there are a few matters on which I can make findings without much difficulty. The first is that the period of loss should begin at the beginning of September 2020. As at that time, I find, a price of £90 per wheel would have been a reasonable one. The end point for the period of loss is when the machine comes to the end of its useful life. There was no evidence before me about this, but I note from its accounts (as indeed did Mr Hatcher in his report) that the claimant company charges depreciation at 20% per annum on plant and machinery, so that a maximum of five years is being allowed for useful life. However, the reports of Mr Hatcher and Mr Pocock concentrate on the four years from September 2020. Mr Birrell himself accepts that, although there were few options available to customers for diamond-cut repairs in the Bristol area in 2020, there were more by 2025. That increase in availability would point to price competition (meaning lower profits) unless there were a corresponding increase in wheel repairs. As to this, there was no evidence either way. 118. Some eight trade customers supplied information about the work they would have given to the claimant, and I see no reason to disbelieve them. The claimant enjoyed a good reputation and had an established customer base. (I note that only five of these eight customers were actually pleaded in the amended particulars of claim. I consider the significance of this later.) On the basis of the data supplied by the claimant to the accountants who were engaged to consider the quantification of the losses, the estimated loss of gross trade revenue from September 2020 to August 2024 was £158,000 in year one, £340,000 in year two, £346,000 in year three, and £234,000 in year four. Given that the accountants from each side were agreed on these figures, that amounts to £1,078,000 over four years. The accountants also agreed on a monthly loss of £19,000 going forward from September 2024. I see no reason for me to try to repeat the same exercise. But those figures are for loss of gross trade revenue, not profits. 119. As to ascertaining what the lost trade profits were, it is necessary to calculate what would have been the costs incurred by the claimant in earning that revenue. This will cover any consumables needed (chemicals, paint and powder), running costs (power, oil etc), and operator costs. It will also include a sum for annual maintenance and repair costs associated with the lathe to keep it in good enough condition to earn the predicted revenue. 120. As to the first of these, Mr Birrell’s written evidence was that “Achieving an ‘as new’ finish will require chemically stripping the damaged wheel and then powder coating it before machining it on a lathe with a diamond tip to achieve a ‘factory finish’.”
However, it appears from Mr Hatcher’s report (at 3.20) that he was advised by Mr Birrell that ‘the alternative process offered to potential customers requires additional labour time in comparison with a diamond cut process which is machine based, however the latter incurs machine operating costs. Mr Birrell also advised that wheel repairs do not incur significant cost of sales in terms of materials, consumables etc., such that the majority of cost of sales purchases incurred by Car-Wizard relate to parts for body repairs.’ [ … ] 122. … Mr Pocock … says (report, 3.3.6) ‘that Car-Wizard’s website contains a general description of the ‘Diamond-Cut Wheel Repair Process’ which refers to chemical stripping, priming and lacquering the wheel’. He gives information (at 5.2.10-5.2.11), obtained from a company called Spraybooth Technology Ltd, that consumables costing about £12.80 would be required per wheel, though this appears to be an average of costs for both diamond cut and powder-coated repairs (the former, according to Mr Birrell, requiring fewer consumables, if any). Multiplying that by the number of wheels implied by Mr Hatcher’s calculation of loss of trade and retail business, Mr Pocock put forward a figure of £157,451 for consumables over the same period. Mr Hatcher agreed that arithmetical calculation, though not the base cost of £12.80. 123. As to the second (power), Mr Hatcher refers to this briefly in his report (at 4.6) but gives no figures, saying that it was “impossible for me to put a value on any other costs which have not been incurred as a result of the lathe lying idle”, so that the deduction from turnover to reach an estimated profit figure “could be understated to a small extent”. Mr Pocock notes the absence of any figures for consumables and energy in his report (at 2.4.4) and agrees that the cost savings calculated by Mr Hatcher are potentially understated. 124. As to the third (operator costs), the cost of an employee was agreed at £31,500 per annum. I do not think it is realistic to think that one employee could repair 15 wheels a day, even if, in the case of trade work, the tyres had already been removed and did not need to be replaced. In my view at least 1.5 employees would be required to achieve that output. That would cost £47,250 per annum, and £189,000 over four years. 125. As to the last matter (maintenance and repair), Mr Hatcher estimated the annual cost at £4,200 (15% of the cost of the machine), while Mr Pocock noted that one particular company would charge £3,170 for such annual maintenance. The sums are modest, and the difference between them even more so. I will split the difference at £3,685. 126. In relation to lost revenue from retail customers, there is evidence from the claimant (which I accept) of significant enquiries from such customers which had to be turned away. This is not the same as actual work, because retail customers were not providing firm statements of intention to supply work. Not every enquiry would necessarily have been converted to an order. Nevertheless, using the same price of £90 per wheel, the accountants are agreed that the undiscounted value of those enquiries amounted to about £36,000 from September 2020 to 30 April 2024. This was based on two separate calculations by Mr Birrell of the enquiries he had received. One, for the period September 2020 to January 2023, showed a loss of revenue of £19,660. The other, for the period February 2023 to April 2024, showed a loss of revenue of £16,427. 127. Mr Hatcher discounted the figure £36,000 by 20% to take account of the possibility that enquiries would not translate into orders. So in Mr Hatcher’s view the £36,000 lost revenue becomes about £29,000. From 1 May 2024, the claimant outsourced repairs, and the loss to the claimant was simply the difference between the price charged to the claimant’s customers and the price paid to the actual repairer. Up to the end of August 2024, the net loss was calculated by Mr Hatcher at about £2,000. The total lost retail revenue according to Mr Hatcher is therefore about £31,000. 128. In addition to that, the claimant had been offering a hand-sanding service at a lower price, but, once it decided to outsource repairs, that stopped. The calculation of the lost revenue thereby suffered, that is, the difference between the price that could have been charged for diamond cutting and the lower price charged for hand-sanding is about £11,000. Again, this is based on two separate calculations by Mr Birrell. He had hand-sanded 262 wheels in the period September 2020 to January 2023, with revenue totalling £14,973. And he had hand-sanded 143 wheels in the period January 2023 to December 2024, with revenue totalling £10,790. Mr Hatcher rebased the second period to end in April 2024 and pro-rated the number of wheels to 94, with pro-rated revenue of £6,110. So the potential income for diamond cut service would have been £32,040, whereas the actual income was only £21,083, a difference of £10,957.” ‘the alternative process offered to potential customers requires additional labour time in comparison with a diamond cut process which is machine based, however the latter incurs machine operating costs. Mr Birrell also advised that wheel repairs do not incur significant cost of sales in terms of materials, consumables etc., such that the majority of cost of sales purchases incurred by Car-Wizard relate to parts for body repairs.’

The defendant’s challenge to facts found

[5]In its submission, the claimant sets out the facts from my judgment relevant for its purpose as follows:
“The period of loss begins in September 2020 [J/117] and ends at the end of May 2021 [J/180] (i.e. 9 months from the beginning of September 2020). A price of £90 per wheel should be used for trade [J/117] and retail [J/126] customers. The four heads of costs are consumables, running costs, operator costs and annual maintenance and repair costs [J/119]; in its draft judgment, the court considered these under two heads, deductible costs (operator and maintenance and repair) and consumables and power. The cost of an operator is £31.5k p/a and it would require at least 1.5 operators to repair 15 wheels per day (at a cost of £47.25k p/a) [J/124] and, by parity of reasoning, it would not require more than one operator to repair 10 wheels or less per day (at a cost of £31.5k p/a). Annual maintenance and repair costs are £3,685 [J/125]. A discount factor of 20% should be used in relation to lost revenue from retail customers [J/127].”
[6]The defendant accepts some of these findings, but challenges the findings by me that(i) the cost of an operator was £31,500 per annum, and(ii) it would require at least 1.5 operators to repair 15 wheels per day. It says that the former was not agreed (contrary to what I said at [124] of my judgment) and the latter was not based on any evidence. It submits that the better course is to express employee costs as a fraction of turnover. For the relevant financial years, these are shown in the accounts as 30.8% and 35.7%. It further says that there is “no obvious reason why this percentage would not be applicable to alloy wheel repairs”. I do not think that it is open to the defendant to challenge my findings of fact on this loss assessment exercise, but I will say this.[7]The claimant’s expert Mr Hatcher was advised by Mr Birrell of the claimant that a lathe operator would cost £25,000-£30,000 per annum plus “on-costs” (eg National Insurance, pension, training, etc). Mr Hatcher took the mid-point and added £4,000 for “on-costs”, to reach £31,500. The defendant’s expert Mr Pocock did not challenge those figures, but instead worked with them. Whether strictly speaking there was an agreement on £31,500, the facts are that(i) the defendant knew of and had the opportunity to challenge that figure, but(ii) did not do so, and(iii) the only evidence available to the court (which I accepted) led to that figure. So that is what I found.[8]As to the number of operators needed, Mr Hatcher worked on the basis (as advised by the claimant) that one operator would be needed, whilst Mr Pocock worked on the basis (as advised by the defendant) that two operators would be needed. The evidence came from the clients, through their experts. On the material before me, therefore, the correct number was between one and two. Taking account of that material (including the video recordings), and doing the best I could, I found that one operator would be able to do 10 wheels a day (see my judgment at [124]), and therefore it would take 1.5 operators to do 15.[9]Finally, I turn to the defendant’s alternative basis for ascertaining employee costs. Contrary to the view of the defendant, I see no a priori reason for supposing the costs of a new business, namely, carrying out alloy wheel repairs on a new machine, should amount to the same percentage of turnover as the costs of all the other (different) work previously carried out by the claimant. I accordingly adhere to the view set out in my judgment.

The defendant’s threshold point

[10]At the outset the defendant takes a point of law. It says that authority binds me to hold that the correct approach to damages here is not to look at the hypothetical profits of a hypothetical business, but instead to attribute a capitalised value to the business that should have started trading in September 2021. This is said to be derived from the decision of the Court of Appeal in Crehan v Inntrepreneur Pub Company CPC [2004] EWCA Civ 637. The defendant then says that the claimant has advanced no evidence of what that business would have been worth, and accordingly the loss should be assessed at nil.[11]Crehan v Inntrepreneur Pub Company was a case where a publican (Mr Crehan) took leases from Inntrepreneur of two “tied” public houses, but found that because of the tie he could not compete with local “free” houses, and his businesses failed. In proceedings originally started in the Queen’s Bench Division against him for goods supplied, he counterclaimed that the ties were unlawful under EU law. The proceedings were transferred to the Chancery Division. A decision (by Carnwath J) adverse to Mr Crehan led to an appeal to the Court of Appeal, and thence to a reference to the European Court of Justice. The decision of the ECJ resulted in the decision of Carnwath J being overturned by the Court of Appeal and the matter remitted to be tried again by another judge. On the second trial, Park J held that the ties were not unlawful, although, in case he were held to be wrong about that, he went on to state his view that the ties had caused Mr Crehan’s businesses to fail, and then he assessed what would have been the award of damages. On appeal, the Court of Appeal reversed his decision on EU law, holding that the ties were unlawful. So the court had to consider Mr Crehan’s counterclaim for damages for breach of EU competition law, and the judge’s assessment of damages..[12]Peter Gibson LJ (giving the judgment of the court (himself, Tuckey LJ and Sir Martin Nourse) said this: “174. Mr. Milligan [counsel for Inntrepreneur] relied primarily on the decision of His Honour Judge Raymond Jack QC (as he then was) in UYB Ltd. v British Railways Board (16 April 1999, unreported), the facts of which must be carefully considered. There two partners in a successful business decided to start up a separate business of a night-club in two arches under the approach road to Bristol Temple Meads railway station. In October 1991 they incorporated UYB as a vehicle for the new business. The arches were then the property of the British Railways Board. A conditional liquor licence having been obtained, on 24 July 1992 a tenancy agreement was entered into between the Board and UYB for a yearly tenancy at £16,310 per annum terminable on 6 months' notice expiring at any time. At that stage conversion work to the arches was in progress and the reconstruction of the roadway running above the arches was nearing its conclusion. Before that, in early June 1992, the ingress of water to the arches from the road above had first been observed. The water increased and at the beginning of 1993 it was said, in a report made by the Board, that the quantity of it then entering the arches was "quite unbelievable". Meanwhile, the conversion work had had to stop. It was never resumed and the night-club never opened. Judge Jack found that a meeting held between UYB and the Board on 11 November 1993 was in reality the end of the road, and that thereafter there was no prospect of the night-club project going ahead in the arches. 175. The Board accepted that it was liable to UYB for breach of contract and in tort, and in May 1998 judgment was entered for UYB with an order for damages to be assessed. UYB claimed £12.7m representing loss of profits and interest on lost profits. As Judge Jack, who conducted the assessment, said, that was a large sum in respect of a night-club in an untried venue which never opened. Because before the tenancy agreement was signed the Board had offered UYB a 25-year lease on the same terms, its claim for loss of profits was for those it alleged it would have made over a 25-year period, had the commencement of the business not been prevented by the Board's tort and breach of contract. In dealing with the method of assessment of damages Judge Jack referred to the general principle stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at p. 39 (see below). He also considered at some length the speech of Lord Wright in The Liesbosch [1933] AC 449. Having cited other authorities, including the decision of this court in Allied Maples Group Ltd. v Simmons & Simmons [1995] 1 WLR 1602, he stated that, so far as he was aware, there was no authority which considered the problem. He continued: ‘The resolution is in my view to take a capital value for the hypothetical business at the time at which it became clear that it could not proceed, that is, when it was lost. That is the best reflection of what UYB … [has] been deprived of. That value should be based on the value which the business would have fetched in the open market at that date. That figure will reflect the fact that the new purchaser would be running the business and taking the risks in place of UYB. It would reflect the market view of the value. It will carry appropriate interest commencing at the date of the valuation.’177. Accordingly, the judge held that the loss was to be measured, first, by an assessment of the profits lost between the date the premises would have opened in October 1992 had there been no water problem and 11 November 1993, secondly, by an assessment of the value of the hypothetical business in November 1993 and, thirdly, by the deduction from that value of such loss as should have been avoided by steps taken in mitigation. An appeal by UYB to this court was dismissed (in an unreported decision on 20 October 2000), For summaries, see (2000) 97(43) LSG 37; (2000) 97(42) LSG 45; (2001) 81 P & CR DG19; The.Times, November 15, 2000. Waller LJ, with whom Kennedy and Jonathan Parker LJJ agreed, saying that there was no legitimate basis on which UYB could complain as to the quantum of damages awarded. Mr. Milligan submitted that in regard to the first and second stages the assessment made in that case was on all fours with that which ought to be made in the present case. He accepted that, on the judge's findings, no deduction was to be made in respect of steps which could have been taken in mitigation.178. Mr Brealey submitted that there were important factual differences between UYB Ltd v British Railways Board and the present case, in particular that UYB's night-club business never got off the ground and would in any event have been of a speculative nature. While we fully accept that each case must be judged on its own facts, we do not think that these and other points made by Mr Brealey are sufficient to justify a different approach from that adopted by Judge Jack. The approach adopted by Park J, on the other hand, is immediately suspect on one simple ground. He recognised (para 281) that there must be some scaling down of Mr Main's figure of £1,045,944 in order to take account of unidentified contingencies. However, we agree with Mr Milligan that a reduction of only 15% was palpably insufficient to take account of all the uncertainties over a ten-year period. This confirmed, submitted Mr Milligan, that the judge had approached the assessment of damages from the wrong end. We return to this point below.179. We start with the general principle stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas at p 39, who said that the correct measure of damages is: ‘that sum of money which will put the party who has been injured, or has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.’ The wrong sustained by Mr. Crehan was the loss of his businesses at The Cock Inn and The Phoenix. But, for the purpose of the measuring the damages recoverable, they were not actual businesses. They were hypothetical, in the sense that they had to be treated, contrary to the actuality, as having been free of tie. So they had to be treated, though for a different reason, in the same way as UYB's business. On Park J.'s approach that faces the court with the immediate difficulty that the measure of damages involves a hypothesis upon a hypothesis: the hypothetical profits of a hypothetical business.180. In para 281, having said that he would deduct a percentage for contingencies, the judge continued: ‘I accept that Mr Main has conscientiously taken account of developments between 1993 and 2003 in so far as he knows of them, and judges that they could have impacted on the businesses of The Cock and Inn and The Phoenix. For example, he has noted that part way through the period a new and large Wetherspoons pub opened quite close to The Cock Inn and The Phoenix (about the same distance away as The Angel), and he has considered what impact that might have had: by itself it might have had a downward effect on trade at The Cock Inn and The Phoenix. To the opposite effect he has observed that in 1997 a new shopping centre was opened near to The Cock Inn and The Phoenix: passing trade from that development could be expected to have a good effect on turnover. However, 10 years of trading is a long time, and there must be a real possibility that if Mr. Crehan had remained in the pubs for that period, something unforeseen could have gone wrong. I realise that a contingency provision is normally made in a forecast for the future, and that I am now looking back over ten years which have already elapsed. I nevertheless believe that it is appropriate to scale down Mr. Main's figure by 15 per cent for unidentified contingencies.’ We have already expressed the view that a reduction of 15% was palpably insufficient to take account of all the uncertainties over the ten-year period. We would observe that although the judge took some account of local competition, The Cock Inn and The Phoenix were in an area containing numerous competitors. We respectfully suggest that, while the judge took account of actual developments during the period and made some allowance for something unforeseen going wrong, he did not attach anything like the necessary significance to the various possibilities which might falsify the assumption that Mr. and Mrs. Crehan would carry on business at The Cock Inn and The Phoenix for the full ten-year period, for example, ill health caused to Mr. and Mrs Crehan by the stress of carrying on the businesses for another 10 years or a simple decision by them to sell up and move elsewhere. The imponderables are so great that to adopt Park J's approach would be unduly speculative and thus unfair to Inntrepreneur. We propose to adopt Judge Jack's approach. It follows that we accept Mr. Milligan's submission that the damages should be assessed at the dates in 1993 when Mr. Crehan gave up possession of The Cock Inn and The Phoenix respectively.” ‘The resolution is in my view to take a capital value for the hypothetical business at the time at which it became clear that it could not proceed, that is, when it was lost. That is the best reflection of what UYB … [has] been deprived of. That value should be based on the value which the business would have fetched in the open market at that date. That figure will reflect the fact that the new purchaser would be running the business and taking the risks in place of UYB. It would reflect the market view of the value. It will carry appropriate interest commencing at the date of the valuation.’ ‘that sum of money which will put the party who has been injured, or has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.’ ‘I accept that Mr Main has conscientiously taken account of developments between 1993 and 2003 in so far as he knows of them, and judges that they could have impacted on the businesses of The Cock and Inn and The Phoenix. For example, he has noted that part way through the period a new and large Wetherspoons pub opened quite close to The Cock Inn and The Phoenix (about the same distance away as The Angel), and he has considered what impact that might have had: by itself it might have had a downward effect on trade at The Cock Inn and The Phoenix. To the opposite effect he has observed that in 1997 a new shopping centre was opened near to The Cock Inn and The Phoenix: passing trade from that development could be expected to have a good effect on turnover. However, 10 years of trading is a long time, and there must be a real possibility that if Mr. Crehan had remained in the pubs for that period, something unforeseen could have gone wrong. I realise that a contingency provision is normally made in a forecast for the future, and that I am now looking back over ten years which have already elapsed. I nevertheless believe that it is appropriate to scale down Mr. Main's figure by 15 per cent for unidentified contingencies.’[13]I note in passing that an appeal from the decision of the Court of Appeal to the House of Lords was successful on the question of EU law, with the result that Inntrepreneur won the final round of the litigation, and the award of damages to Mr Crehan was set aside. But, in dealing with the question of EU law, the House of Lords said nothing about the assessment of damages, having no need to do so. Accordingly, the views of the Court of Appeal on that question were left undisturbed. It is therefore important to understand the context in which the court in Inntrepreneur (and for that matter in UYB) reached its decision.[14]I observe first of all, that UYB and Inntrepreneur were very different cases from the present. In each of the first two cases, the court was asked to assess lost profits from a hypothetical business over a lengthy period, 25 years and 10 years respectively. As the Court of Appeal observed, assessing lost profits over a long period is increasingly speculative. By contrast, in the present case I am looking at a period of just 9 months, being the period during which it was reasonable for the claimant to consider and if thought fit acquire a different lathe to enable it to offer the additional service to customers. I accept that it is a hypothetical exercise (because the original lathe was not producing profits during that period), and there must be an element of speculation, but it is grounded in evidence of lost business, and only over a short period. It is much less speculative than in either of those cases. Secondly, UYB involved a completely new business at the site proposed, and Inntrepreneur involved a new business being carried on by a new businessman at old sites. By contrast, in the present case there was an existing business, with existing premises and an existing client base (and goodwill). What was being added here was an additional service.[15]Thirdly, the capital value of a commercial business will have a direct relationship with the profit that may be earned by that business. A sensible business operator pays a price for a business which is justified by the return on that investment. The more speculative the return is, the more cautious the business operator will be in the price that he or she is willing to pay. This brings an element of objectivity to the valuation process. So, valuing the loss of a business which would have involved considerable speculation will be more accurately assessed by asking what a third party would have paid at the outset for the hypothetical business that, in fact, never got off the ground.[16]Both UYB and Inntrepreneur involved such highly speculative calculations. As the Court of Appeal said in Inntrepreneur, “The imponderables are so great that to adopt Park J's approach would be unduly speculative and thus unfair to Inntrepreneur.” But, where the lost business involves only modest speculation, or none at all, and the lost profit can be more accurately assessed on the evidence, there is no need to resort to capital value, in the sense of what a third party would have paid for the business. In my judgment, the present is just such a case. There is no need for me to resort to capital value to do justice here.[17]Moreover, unlike the first two cases, what is being valued in the present case is not the value of the long-term business which was never carried on. Here, that would be covered by the cost of buying a new lathe to replace the one that did not work. Instead, I am valuing the loss suffered whilst the claimant decided whether or not to buy a new lathe. In UYB, Waller LJ (with whom Kennedy and Jonathan Parker LJJ agreed) made this point when he said:
“23. It was recognised that in order to comply with the general overriding principle there might have to be some compensation assessed by reference to loss of profits for the period it would take to replace the profit−earning chattel … ”
[18]Overall, in UYB, Waller LJ said:
“29. What in my view this case demonstrates is that in relation to the assessment of damages each case depends on its own circumstances, and it is the overriding principle quoted above which is important … ”
I am accordingly satisfied that the UYB and Inntrepreneur approach is inappropriate in the present case.

The defendant’s alternative submission

[19]As an alternative to that approach, the defendant argues that “a discount should be applied to the assumptions as to trade income contained in Mr Hatcher’s report to reflect the uncertainties inherent in the assumptions used, which are highlighted by the limitations detailed in paragraphs 286 to 289 of D’s written closing submissions”. These submissions were before me after the trial when I was preparing my judgment. At paragraph [116] of my judgment, I accepted the evidence contained in those letters, but did not deal specifically with the points made in those paragraphs. The main points were:(1) the letters all spoke to the past and not to the future;(2) some of the letters did not appear to be the product of independent thought on the part of the authors;(3) Mr Swan’s evidence was given only by a statement unsupported by a hearsay notice and should be given “very little weight”;(4) Mr Sacco of Lansdowne accepted some matters in cross-examination which lessened the value of his evidence.[20]In its closing submissions, the defendant summarised the effect of the criticisms made of the evidence of loss of trade revenue in these words:
“242. In relation to Trade Revenue, the court is entitled to say – and should in this case say – that the evidence relied upon by CW is simply insufficient to discharge its burden of proving that it would have generated any profit from an alternative lathe.”
[21]As I have said, I did not accept this submission. In its submissions on assessment of damages, the defendant now proposes, on the basis of the same criticisms, a discount of 50% to the figures for trade and retail revenue. But my response remains the same. I was satisfied on the material before me, to the civil standard of proof, that the claimant would have lost the revenue claimed. There is no more justification for halving the loss of revenue then there was removing it altogether. I add that I dealt specifically with the position of Mr Sasso at [28], and with the position of Mr Swan at [31].

Assessment of losses

[22]There are a number of elements which must be dealt with in order to calculate the losses suffered by the claimant. First there is the question of lost revenue over several heads of business. These are:(1) lost trade revenue;(2) lost retail revenue; and(3) lost alternative repair revenue. Second, there is the question of costs attributable to each source of lost revenue. These are(4) deductible (ie fixed) costs; and(5) consumable costs. The relevant costs must be deducted from the revenue concerned to find the lost profit.

Lost trade revenue

[23]Only six of the eight trade customers who provided evidence of the work that they would have given the claimant would have done so within the nine-month period of loss. Four (Innovative, Lansdown, Swan and SJ Curtis) would have done so for the whole period, and two (Imola and Tradex) for at least some of the last two months. Innovative said it would have sent about 20 wheels per month, or 180 wheels for the nine-month period. Lansdowne said it would have sent between 10 and 12 wheels per week, so taking a mean figure of 11 over the 39 weeks of nine months gives a figure of 429 wheels. Swan said it would have sent between 16 and 20 wheels per month, so taking a mean figure of 18 over the nine months gives a figure of 162 wheels. SJ Curtis said it would have sent between 8 and 10 wheels per week, so taking a mean figure of 9 over the 39 weeks of nine months gives a figure of 351 wheels.[24]I turn now to the two trade customers who would have started to send work only in April 2021. The defendant says that the claimant has not proved when in April the work would have started coming, and I should therefore assume it is 30 April 2021. I declined to do so. The claimant has adduced evidence of work coming in April, and I cannot assume that it was any particular day. On this evidence I am entitled to find that the work would have started at the midpoint of the month. Imola said it would have sent between 30-40 wheels per month, so taking a mean figure of 35 gives a figure of between 35 and 70 wheels to the end of May 2021 (depending on when the supply began). The midpoint of the numbers is 52.5. Tradex said it would have sent 25 wheels per month, which gives a figure of between 25 and 50 wheels to the end of May 2021 (depending on when the supply began). The midpoint is 37.5. The total number of wheels over the nine-month period is thus between 1182 and 1242. The midpoint is 1212. At £90 per wheel, that amounts to lost gross revenue of between £106,380 and £111,780. The mid-point between the two values is £109,080. I will take that mid-point to represent the lost trade revenue.

Lost retail revenue

[25]The evidence of enquiries by retail customers shows that in the nine-month period there were 21 such enquiries, plus three earlier ones in July and August 2020, where the customer indicated that he or she would wait for the diamond-cut lathe. The defendant’s expert said it was not unreasonable to include these in the evidence of lost retail revenue. I agree. Judging by the prices quoted, those 24 enquiries appear to have been in respect of about 45 wheels in total. The claimant’s expert applied a discount of 20% to the figure for enquiries in order to reach figure for actual sales. In my judgment, I proceeded on that basis. Such a discount would mean there would have been 36 wheels to repair, which at £90 per wheel would have produced gross lost retail revenue of £3240.

Alternative repair process

[26]As found at [128] of my judgment, the claimant had “had hand-sanded 262 wheels in the period September 2020 to January 2023”. To pro-rate the number of wheels for nine of the 29 months between September 2020 and January 2023 would result in just over 81 wheels for that period. In fact, the claimant’s written submissions say that during the period of nine months, only 57 wheels were repaired using the alternative process, producing gross revenue of £3225. I have not seen the recalculation that leads to that figure, but as it is appreciably lower than the pro-rated figure I will proceed on that basis. At £90 a wheel for diamond cutting, those 57 wheels would produce £5130. The lost revenue is therefore £1905. This would not have required any additional labour, because the labour was already being used for the alternative process. The defendant complains that there is no proper evidence of this. But Mr Hatcher had no reason to lie about what Mr Birrell had told him, and I found Mr Birrell to be an honest and truthful witness, and concluded that I could rely on his evidence. Although it is strictly hearsay, I consider that I can so find.

Total lost revenue

[27]Adding together lost trade revenue of £109,080, lost retail revenue of £3240, and lost revenue from the alternative repair process of £1905, the total lost revenue comes to £114,225.

Deductible (fixed) costs

[28]These costs are(i) operator costs, and(ii) maintenance and repair costs. As to (ii), these amount to £2763.75, which is three quarters (nine months out of 12) of £3685, which is what I found the annual cost of maintenance repair to be. As to (i), this is not quite so straightforward. I have calculated that, during the nine-month period, there would have been an extra number of wheels to repair (not including the 57 alternative process wheels which were in fact carried out). Taking the midpoint between 1182 and 1242, that is 1212, and adding 36, gives a total of 1248 extra wheels. Over the 39 weeks of that nine-month period, that is an average of 32 wheels per week, or 6.4 wheels per day. In other words, during the nine-month period, there never would have been a need for more than one operator. Accordingly, over that period the operating cost would not have exceeded three quarters of the annual cost of one operator of £31,500, that is, £23,625.[29]The claimant makes the further submission that in fact the one employee needed would have been engaged in other fee earning work, or alternatively it would have been a part-time job at a lower salary. Therefore, it says, there should be a discount to the cost of the operator. I have found that the number of wheels works out at about 6.4 wheels per day. This would justify a discount of one third on the cost of the operator. The cost over nine months is therefore reduced from £23,625 to £15,750. Adding operator costs and maintenance and repair costs together, the total for deductible costs comes to £18,513.75.

Consumable (running) costs

[30]These depend on the amount of work actually done. They include the cost of power and of other consumable products used in the lathe. I dealt with these at paragraphs [122] and [123] of my judgment. As to consumable products, the defendant’s expert suggested a figure of £12.80 per wheel, although that appeared to be applicable to both diamond cut and hand sanding repair work. The claimant’s expert on the other hand said that Mr Birrell had advised him that wheel repairs did not incur “significant” costs of consumables. I do not think I can place much reliance on either of these approaches. But I cannot ignore the need to take running costs into account, otherwise the lost profit is overstated. What I will therefore do is to apply a discount of 10% to the estimated lost profit in order to cover these costs.

Calculation

[31]The total lost revenue comes to £114,225. The total deductible costs are £18,513.75. Deducting those costs from the revenue leaves an (overstated) lost profit of £95,711.25. To take account of consumables, and thus mitigate or avoid the overstatement of profit, I will reduce it by approximately 10%, to £86,140.

Correction of mistake

[32]At [192]-[195] of my judgment, I commented on a possible reduction in damages because of a potential charge to them by way of tax. This comment was prompted by a section in the report of Mr Hatcher for the claimant dated 15 August 2025. Unfortunately, in my judgment, I attributed that section to the report of Mr Pocock, the defendant’s expert. That was an error on my part, for which I apologise. Any criticism of the defendant or its advisers that may be thought to appear from the paragraphs of my judgment would obviously have been without foundation, and I am sorry that the error was not picked up by me at an earlier stage.

Conclusion

[33]for the reasons given above, I assess the damages to be awarded to the claimant in the sum of £86,140. I should be grateful for a minute of order, preferably agreed, to give effect to this judgment.

Cited in 1 later judgment