“This scheme is a unique opportunity to be involved in one of the most exciting place creations in the leisure sector in living memory. It is an iconic property. The development in prospect has the opportunity to be phenomenal.”
“… wast[ing] several months of CapCo’s time with a previous failed bid, causing CapCo to lose faith in Bugsby”
“… nothing in [Mr Marcus’] background or subsequent career suggest that that any success at all was remotely likely”, and that Mr Marcus: “significantly and systematically exaggerated, to UBS, CapCo, HNA, Goldman Sachs and others, his and Bugsby’s relevant experience and background.”
“… any and all (technical and non-technical) information disclosed or otherwise made available by or on behalf of Bugsby or its affiliates (or by or on behalf of any agent of, or adviser to, Bugsby or any such affiliate), however recorded preserved or disclosed, to [L&G] (or to any party acting for [L&G]) in relation to Olympia or Project Victory (whether or not marked or labelled as ‘confidential’ or ‘proprietary’) … And so that, for the avoidance of doubt: • Confidential Information shall include any notes, reports, analyses or other documents prepared by (or on behalf of) [L&G] reflecting or generated from any of the foregoing information; …” • Confidential Information shall include any notes, reports, analyses or other documents prepared by (or on behalf of) [L&G] reflecting or generated from any of the foregoing information; …”
“Exclusivity: In consideration of the Confidential Information being furnished to [L&G] (and in acknowledgment of the nature of Project Victory and the acquisition of Olympia, the significant investment made to date in Project Victory by Bugsby and the substantial and differentiated value and intellectual property created by Bugsby pursuant to Project Victory and the acquisition of Olympia), [L&G] hereby agrees that, for a period of eighteen (18) months from the date hereof, it will not, directly or indirectly through any of its Representatives or otherwise, without the prior written consent of Bugsby, (a) contact, entertain or continue any discussions or negotiations with other prospective parties, land owners, or developers (or any respective affiliates, directors, officers, agents, employees or representatives thereof) or other third party other than Bugsby concerning Project Victory and the Acquisition of Olympia.”
“Non-Circumvention: [L&G] acknowledges it has not entertained previous discussions with any third party, including the listing agents and bankers Rothschild and CBRE, as well as the vendor CapCo … regarding Project Victory and the Acquisition of Olympia. [L&G] hereby agrees that its involvement with and all conversations (including but not limited to the above parties) regarding Project Victory and the Acquisition of Olympia will be exclusively through and with the involvement of Bugsby at all times, except as permitted by Bugsby’s prior written consent.”
“… realistically comes two years too soon for a cautious institutional lender”
“• Bugsby shall earn a Promoted (or Carried) Interest over the Investor return. Cash flows shall be distributed in accordance with the following schedule: o First, to reasonable reserves and debt service. o Second, 100% to all Shareholders pari passu until they have received a return of equity capital invested and an 8% IRR, compounded annually. o Third, 80% to Bugsby / 20% to Shareholders until Bugsby has realized a 20% share of total distributed profits. o Thereafter, 80% to Shareholders / 20% to Bugsby.” o First, to reasonable reserves and debt service. o Second, 100% to all Shareholders pari passu until they have received a return of equity capital invested and an 8% IRR, compounded annually. o Third, 80% to Bugsby / 20% to Shareholders until Bugsby has realized a 20% share of total distributed profits. o Thereafter, 80% to Shareholders / 20% to Bugsby.”
“Debt – we need to drive these guys night and day to get us terms this week.”
“The main thing the borrower is concerned with is deliverability. The last basis point on price is not important.”
“Will need to recommend and agree strategy in next few weeks if we want to close with DEBT. Originally non-conditional financing, now understand it is.”
“… that we are not aware of any material issues identified to date which in our reasonable opinion are likely to materially delay or prevent completion of the transaction.”
“This Letter is issued subject to the assumption that exclusivity will be extended to March 31, 2017 as previously discussed and agreed with you on December 9, 2016. If we could receive an updated exclusivity letter reflecting the extended dates by January 30th [sic], this would be appreciated, so as to allow our teams to continue to progress the Acquisition work-streams.”
“He is concerned that your reply suggests that we aren't confirming that they still have the existing exclusivity to end Feb - he acknowledged that now is not the time to be discussing March which is helpful - but is worried that he is about to lose what he has to the end of Feb whilst he has '60' people working on this racking up a significant cost. This is the ambiguity that you and I discussed before you sent the email.”
“I have spoken to David and we are of the opinion that the letter they have provided in reality passes the test that is in the Exclusivity Agreement regarding their 31 January reconfirmation therefore we would be hard-pressed to argue that the exclusivity should be terminated at this time. On this basis we probably wouldn't be giving up very much (if anything) by saying to Lloyd that we understand he has spoken to Peter and confirm that as things stand they still have the exclusivity to end Feb.”
“Why don’t we just say nothing or be non-committal until we receive there [sic] report.”
“Q. So that is eight working days from your first proper meeting to a term sheet that was pretty much agreed, yes? A. Yes. Q. Isn’t that almost unheard of, that speed? A. It may be, but we did it.”
“We had a meeting yesterday afternoon with Deutsche and Yoo to get an update on funding and pensions - Gary your conversation with them on Thursday had the desired effect. On the funding point, they claim to have agreed terms on a£150m debt facility from L&G (credit approved) to fund the acquisition. I have asked Toby [Cohen] from Rothschild to contact Ashley at L&G on Monday to confirm exactly where they are… Despite their continued reassurance this debt is not required to complete I am not convinced but L&G’s comments on this should provide us with clarity on whether 31 March completion is realistic… They went to mention exclusivity but I buried this pretty quickly.”
“… may be more problematic for the pension with a leveraged structure and under no circumstances should we entertain a deal with any financing conditionality. Also suggests that March is unrealistic unless they are going to bridge it with their own equity.”
“I agree with your points - this is far from a done deal. They have 10 days to close these 2 key points out as come 28 Feb (we do have the grounds to end now) they are£2m + down in costs and out of exclusivity. Whilst it has been agreed that no formal paper was required for this week[’]s board meeting, I assume an update will be provided to the board on where things currently are re ongoing discussions, in particular the pension discussions - this and the funding at present are the 2 biggest blockers to a deal.”
“… [a]s agreed, these can be discussed on a call with [Mr. Horrobin of UBS] with a follow up e-mail to ensure they are picked up…”
“Our position remains that we are not prepared to enter into exclusivity with you [at this stage] and, therefore, we would not proposed having a principal-to-principal meeting to discuss this issue any further…”
“We do recognise the attraction to a buyer of being granted exclusivity but please understand that granting exclusivity at a late stage which would close out a highly advanced and certain offer, is not something that we could do. As you are aware, when the other party's exclusivity expired at the end of February we did not grant an extension, which we were under pressure to do, in order to accommodate the potential HNA interest. However, in such circumstances granting an alternative exclusivity to you, was equally not possible.”
“Thank you for the welcome letter, marked up SPA, data room access and draft lockout agreement We are meeting counsel this morning to review and will turn the lockout as soon as possible – commercial points of note to keep up momentum: 1) date – we need 15 working days which would be April 5/6 and could confirm funds before 31st march 2) cost cover – we need this to be unconditional for engagements to be arranged. Commercially this is the trade for the other party to keep running and an option on our higher deal 3) other party – we need this to be limited to the one party not open ended and HNA has requested the name of the other party to ensure that time and resource risk can be properly calibrated Also it would be helpful to get dates in calendar for PWC to sit with BDO, yourself, Yvonne at Olympia and for a sit down w the pension trustees – in light of the timings we’d look to get these done thurs / fri / Monday / Tuesday (starting tomorrow)”
“In this instance the borrower has an option to buy an asset which expires at the end of this month, so everyone is working hard to meet this deadline and I suspect it will go to the wire. We’re financing the borrower and we’re entirely dependent on their due diligence and management to close the deal, however I do know that they want this to happen as soon as possible, to avoid unnecessary month end stress.”
“… the volume of work required of all parties has resulted in some slippage and we are now looking for the transactions to be finalised by mid-April.”
“Completion date now aimed to be 7 April as even vendor can’t achieve 31 March. None the less even that is still tight allowing for what is involved for the vendor, you and us. All commercial points for SPA likely to be resolved in the next 24 hours. There will be some practical points that simply cannot be achieved by the end of the reorganization that can be conditions subsequent. You will highlight these to NRF ideally today to feed into the facility agreement…”
“We are enthusiastic about your proposed Acquisition and excited about the opportunity to work with you on the Debt Financing subject to the terms of this letter. Our enthusiasm for the Debt Financing is based on the due diligence which we have undertaken to date, including a review of business plan, cashflows and a tour of the property.”
“In addition we have had conversations with you regarding your views and the initial structure and terms for the Debt Financing. We have discussed the Debt Financing internally with senior members in the European Finance Group at Goldman Sachs as well as the Global Head of Real Estate Financing. Goldman Sachs is therefore highly interested in arranging and underwriting the Debt Financing subject to the terms of this letter and we believe that we should be able to work expeditiously with you towards completing the Debt Financing within a swift timeframe.”
“Goldman Sachs respects HNA as a partner and feels they are very credible”
“We understand that, for German regulatory reasons, BVK and VKB cannot have equity exposure to the operating aspects of the Target Group's business, in particular non-real estate income and employees. As such, the proposal is that a separate legal entity owned by Deutsche Finance International LLP and Yoo Capital will be established to own the operating business (‘Opco Bidco’)” “Following the Transaction, the returns received by the Investors will be real estate related (i.e. rent or capital profits) which we understand is critical for German regulatory reasons”
“… clearly there was pressure from Yoo to close by 31 March. But I do seem to recall that they passed on that CapCo in turn was keen for closure as soon as possible… my understanding was that CapCo was putting pressure on and Yoo was also in turn keen to close, as of course were we.”
“… had a meeting with the borrower on Friday … and was told that the vendor had significant concerns about the proposed transaction becoming public now (which seems quite possible), leading to a party that expressed an interest a couple of years ago potentially refreshing its interest, which would be difficult to rebuff. As a consequence completion of the acquisition and therefore our loan must occur by 12 April.”
“Our firm has been given the authority from HNA Group Top Management - Mr. Adam Tan, CEO of HNA Group to reach you and your Organization. … At this time, HNA & Bugsby again express their highest offer (i.e.£303,000,000 All Cash Purchase Price,£13,000,000 [sic, though this is uncertain] for target working capital and£2,300,000 payment to settle existing pension deficit) to you. Most importantly, HNA is planning to bring its best global resources into this great Olympia Exhibition Center to make it the greatest again. In return HNA just ask for a few more days under the protection of Exclusivity to complete its internal final approval process. HNA Global Acquisitions records speak for itself…”
“● consider, and if thought fit, approve the disposal of the Olympia Group to either the [Yoo] Consortium on the basis of the terms outlined above or, in the event that a transaction can be agreed at a higher price and on similar or better terms than the Consortium offer, to Bugsby /HNA (the “Disposal”); and ● delegate authority to a Committee comprising any two Executive Directors one of whom must be the Chief Executive to finalise and approve the Sale and Purchase Agreement and any other transaction documents (together the “Transaction Documents”) and to authorise the execution of the Transaction Documents by the relevant members of the Capital & Counties Properties PLC group, in order to effect the Disposal.”
“We need to close the deal tomorrow most likely to block the new bid [the Bugsby/HNA bid]”
“Yes, with completion tomorrow. We may even pull it off!”
“Another late night but generally a successful day.”
“Can’t believe you have got so far – fantastic effort.”
“I wanted to personally extend my sincerest gratitude and thanks to you and your team for your support, professionalism and commercial acumen helping us close Olympia. It is very much appreciated. It was a herculean effort by all, but particularly your side, to pull together and close as we did to fend off a hostile rival bid. We look forward to a long term partnership on both this and many other transactions.”
“We are extremely pleased to be working with L&G and, under [Mr Goldblatt’s] leadership, L&G delivered with impressive speed, decisiveness and commercial mindset.”
“… the courts have developed a clear and common-sense dividing line between those matters which the client must prove, and those which may better be assessed upon the basis of the evaluation of a lost chance. To the extent (if at all) that the question whether the client would have been better off depends upon what the client would have done upon receipt of competent advice, this must be proved by the claimant upon the balance of probabilities. To the extent that the supposed beneficial outcome depends on what others would have done, that depends upon a loss of chance evaluation.”
“21. … Allied Maples had made a corporate takeover of assets and businesses within the Gillow group of companies, during which it was negligently advised by the defendant solicitors in relation to seeking protection against contingent liabilities of subsidiaries within the vendor’s group. Allied Maples would have been better off, competently advised, if, but only if: (a) it had raised the matter with Gillow and sought improved warranties and (b) Gillow had responded by providing them. The Court of Appeal held that Allied Maples had to prove point (a) on a balance of probabilities, but that point (b) should be assessed upon the basis of loss of the chance that Gillow would have responded favourably. The Court of Appeal (Stuart-Smith, Hobhouse and Millett LJJ) were unanimous in that statement of legal principle, although they differed as to the outcome of its application to the facts. It was later approved by the House of Lords in Gregg v Scott[2005] 2 AC 176 , at para 11 by Lord Nicholls and para 83 by Lord Hoffmann. 22. The Allied Maples case was about the loss, due to negligence, of the opportunity to achieve a more favourable outcome in a negotiated transaction, rather than about the loss of an opportunity to institute a legal claim. But there is no sensible basis in principle for distinguishing between the two, and none was suggested in argument. In both cases the taking of some positive step by the client, once in receipt of competent advice, is an essential (although not necessarily sufficient) element in the chain of causation. In both cases the client will be best placed to assist the court with the question whether he would have taken the requisite initiating steps. He will not by the defendant’s breach of duty be unfairly inhibited in proving at a trial against his advisor that he would have done so, save perhaps where there is an unusual combination of passage of time and scarcity of other probative material, beyond his own unaided recollection.”
“The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.”
“37. The quantification of economic loss is often relatively straightforward. There are, however, cases in which its precise measurement is inherently impossible. As Toulson LJ observed in Parabola Investments Ltd v Browallia Cal Ltd (formerly Union Cal Ltd)[2010] EWCA Civ 486 ;[2011] QB 477 , para 22: “Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant’s wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss.” 38. An example relevant to the present case is the situation where a breach of contract affects the operation of a business. The court will have to select the method of measuring the loss which is the most apt in the circumstances to secure that the claimant is compensated for the loss which it has sustained. It may, for example, estimate the effect of the breach on the value of the business, or the effect on its profits, or the resultant management costs, or the loss of goodwill: see Chitty on Contracts, 32nd ed (2015), paras 26-172 - 26-174. The assessment of damages in such circumstances often involves what Lord Shaw described in Watson, Laidlaw at pp 29-30 as “the exercise of a sound imagination and the practice of the broad axe”. “Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant’s wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss.”
"20. The general rule is that the claimant must prove that the defendant's breach caused the loss which he seeks to recover by way of damages. That must be proved on the balance of probabilities. When that is done the loss is recoverable in full subject only to questions of mitigation or remoteness. In some cases, however, where the claimant's ability to have made the profit which it claims depends on the actions of unrelated third parties, there may be room for arguing that the court should approach the issue of causation by taking into account the chances of those events having occurred. 21. In the classic loss of a chance case the most that the claimant can ever say is that what he (or she) has lost is the opportunity to achieve success (e.g.) in a competition (Chaplin v Hicks … or in litigation ( Kitchen v Royal Air Forces Association[1958] 1 WLR 563 ). The loss is by definition no more than the loss of a chance and, once it is established that the breach has deprived the claimant of that chance, the damage has to be assessed in percentage terms by reference to the chances of success. But there will be other loss of chance cases where the recoverability of the alleged loss depends upon the actions of a third party whose conduct is a critical link in the chain of causation. The decision of this court in Allied Maples … has established that causal issues of that kind can be determined on the basis that there was a real and substantial chance that the relevant event would have come about. 22. To that extent the Allied Maples approach may assist a claimant by providing an alternative way of putting his case on damage which avoids the possibility of total failure inherent in the judge being asked to decide whether, on the balance of probabilities, the causal event would have occurred. But caution needs to be exercised in identifying the contingency which is said to represent the lost chance. The loss of a chance doctrine is primarily directed to issues of causation and needs to be distinguished from the evaluation of factors which go only to quantum. 23. So in the first claim the respondent's case on causation was straightforward. The appellant's breach of covenant had made the operation of the restaurant a legal impossibility. As a result, it did not trade. There was therefore no doubt at all that the breach had caused the loss subject only to the quantification of that loss. The issues raised about the respondent's competence and the restaurant's prospects of success were not matters that went to causation at all. They were relevant at most to the assessment of how profitable (or not) the restaurant would have been had it been able to operate. If it would have been a commercial failure Mr Vasiliou could have received no more than nominal damages for the breach. 24. Judge Levy, in the passages I have quoted from his judgment, found as a fact that Zorbas would have been a successful restaurant and therefore assessed its lost profits on that basis. His analysis of the variable factors I have outlined which formed the agreed components of that calculation involved taking into account the time needed to establish a reputation and other everyday contingencies but did not involve a more general discount of the kind described in Allied Maples to take account of the statistical possibility of failure. That was excluded by his finding that the restaurant would have been a success. 25. Where the quantification of loss depends upon an assessment of events which did not happen the judge is left to assess the chances of the alternative scenario he is presented with. This has nothing to do with loss of chance as such. It is simply the judge making a realistic and reasoned assessment of a variety of circumstances in order to determine what the level of loss has been. This process was described by Toulson LJ in Parabola Investments Ltd v Browallia Cal Ltd & Others[2010] EWCA Civ 486 … "[22] There is a central flaw in the Appellants' submissions. Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the Defendant's wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a Claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss. [23] The Claimant has first to establish an actionable head of loss. This may in some circumstances consist of the loss of a chance, for example, Chaplin v Hicks[1911] 2 KB 786 ; 80 LJKB 1292, [1911-13] All ER Rep 224 and Allied Maples … , but we are not concerned with that situation in the present case, because the judge found that, but for Mr Bomford's fraud, on a balance of probability Tangent would have traded profitably at stage 1, and would have traded more profitably with a larger fund at stage 2. The next task is to quantify the 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. (See Davis v Taylor[1974] AC 207 , 212,[1972] 3 All ER 836 ,[1972] 3 WLR 801 (Lord Reid) and Gregg v Scott,[2005] 2 AC 176 para 17,[2005] 4 All ER 812 (Lord Nicholls) and paras 67-69 (Lord Hoffmann)). [24] The Appellants' submission, for example, that "the case that a specific amount of profits would have been earned in stage 1 was unproven" is therefore misdirected. It is true that by the nature of things the judge could not find as a fact that the amount of lost profits at stage 1 was more likely than not to have been the specific figure which he awarded, but that is not to the point. The judge had to make a reasonable assessment and different judges might come to different assessments without being unreasonable. An appellate court will therefore be slow to interfere with the judge's assessment. As Lord Wright said in Davis v Powell Duffryn Associated Collieries Ltd[1942] AC 601 , 616-617,[1942] 1 All ER 657 , 111 LJKB 418: "
“… The profitability of the restaurant in Vasiliou presumably depended on whether it would have attracted sufficient custom, or in other words whether a number of third parties would have chosen to come to Mr Vasiliou's restaurant; and this does not seem very different in kind, only in degree, from the question in Allied Maples which was whether the third party in question would have chosen to accede to Allied Maples' request for a particular contractual term. It may be that the difference is between one particular third party and a pool of potential customers; in the case of an individual third party, the Court must assess the chance of his acting in a particular way, but in the case of a pool of potential customers, the Court is not concerned with how any individual would have behaved but with whether there would have been sufficient custom generally to make the business a success. … Be that as it may, it is clear from Parabola and Vasiliou that if the Court finds that trading would have been profitable, it then makes the best attempt it can to quantify the loss of profits taking into account all the various contingencies which affect this: see Parabola at [23]. This neither requires any particular matter to be proved on the balance of probabilities (see Parabola at [24]) nor has anything to do with the loss of a chance as such (see Vasiliou at [25]). The assessment of the loss will itself include an evaluation of all the chances, great or small, involved in the trading (see Parabola at [23]). Once the judge has assessed the profits in this way, any further discount is therefore inappropriate (see Vasiliou at [28]).".”
“The active issues on the amount of damages properly to be awarded to SBJ in the light of the findings which I have already made were, firstly, the amount to be deducted from SBJ's gross loss of 1999 commission and brokerage fees in respect of the eight clients in order to reach its net, claimable loss; secondly, the amount, if any, to be awarded for future loss of commission and fees in respect of renewal business in respect of the eight clients which is likely to be or may be lost by reason of the breaches of contract committed by Mr Mandy; thirdly, the amount of damages, if any, to be awarded for the possible loss of other clients of SBJ through Mr Mandy's breach of contract; and finally, the amount of any damages for lost management time, and loss of good-will or reputation, and lost business due to reallocation of staff. … The assessment of future losses after 1999 in respect of the eight lost clients is more difficult. They have been lost as a result of Mr Mandy's breaches of contract. It seems to me unlikely that SBJ will win them back, unless the result of this case drives Mr Mandy out of Amilcroft and broking in the area, which it would be speculative to propose. All the eight had been clients of SBJ for some years; many years - up to seventeen - in some cases. So they no doubt had a loyalty to SBJ. On the other hand their departure to Amilcroft demonstrated a stronger tie to Mr Mandy personally. That would have been weakened by his year on the touchline had he not broken his covenants. But it is unlikely that it would have disappeared by4 January 2000 when he would be free to solicit custom for the second year's renewals and it would be more difficult to prove that he was using protected information when so doing. Mr Mandy's neighbour, Mr White of Lifting Equipment, would probably have followed Mr Mandy as soon as he could. But even that is impossible to judge with certainty, and it is impossible to judge with any confidence whether the others would have stayed with SBJ or moved to Amilcroft, or wherever else Mr Mandy was by the year 2000. The clients might have left SBJ for some other reason altogether, although that is unlikely. A detailed examination of each case would be unrewarding of the effort involved, in my view. In these circumstances it was agreed that I could only judge the question of damages for loss of income from the eight clients, after 1999, as a loss of chance case, applying the guidance given in Allied Maples …. Performing that exercise, I take the view that Mr Mandy's overtures in 2000 would probably have drawn most of the eight clients away from SBJ, but that there was a real or substantial, rather than a speculative, chance that a significant minority would have stayed with SBJ, and then stayed for many more years, had Mr Mandy not drawn them away at the first opportunity in breach of his contract. Painting with a very broad brush, I value the loss of that chance, caused by Mr Mandy's breach of contract, at£45,000 , which is an approximation to one third of the lost net commission and fees for a multiplier of three years, and only coincidentally to one year's loss of the whole commission and fees from all the lost clients. That figure is calculated to take account of any acceleration in receipt of the award compared with loss of commission and fees. I am not persuaded that SBJ's prospects of retaining other clients than the eight who have already been lost, have been significantly damaged by Mr Mandy's breaches of contract. I am not persuaded that those breaches have caused lost management time, loss of goodwill or reputation or lost business due to reallocation of staff, in a way which is quantifiable as damages suffered by a large, busy concern like SBJ. I make no award of damages under those heads”
“This is a defendant’s appeal on quantum of damages from a decision dated30 October 2007 of His Honour Judge Toulmin CMG, QC, sitting as a Judge of the High Court. By that decision the claimant obtained judgment for£144,871.54 inclusive of interest. The judge had on12 April 2006 found the defendant liable in damages for breach of fiduciary duty to the claimant and for breach of its duty not to misuse confidential information obtained during the period for which it acted as an agent for the claimant. The claimant is a company which specialises in the importation, wholesaling and design of high and medium quality furniture, especially (though not exclusively) beds. It imports furniture from China and south east Asia and then supplies it to various retailers in this country. The judge had found that, as a result of the defendant’s breaches of duty, an existing customer of the claimant, Dreams, placed no order with the claimant from30 June 2005 . There was also a finding of liability in respect of a prospective customer, Argos, and part of the award of damages related to that. … The legal basis on which the assessment of damages should be made was not in issue below, namely as the loss of a chance of further orders. That required not merely an assessment of the chance but also an assessment of the profit which the claimant would have made, had the chance materialised. In the case of the prospective orders from Dreams, this exercise was made up of two elements: first, loss of profits in respect of the existing range of products, and secondly, loss of profits in respect of a range of new products. It is necessary to deal with the issue under each of those two headings. For the claimant, Mr Sinai emphasises that the judge had already found earlier in his judgment that there had been a strong trading relationship between the claimant and Dreams, that there was a substantial chance that the claimant would have received orders for new products and that these would not have been only in replacement of orders for older products. No material was put forward by the defendant to support any lower figure than that supplied to the accountant as an estimate. With some hesitation, I have concluded that the judge was entitled to accept this estimate, supported as it was by the claimant’s managing director, Mr Sadaghiani. It is an estimate which has to be seen in the context of the judge’s assessment of the chance of the claimant having sold these new products to Dreams, had it not been for the defendant’s breaches of duty. The judge expressly took a cautious figure for the chance of new orders, putting it at only 25%, as compared to 80% in respect of orders for existing products. One suspects that that figure of 25% was relatively low because the judge was prepared to take the claimant’s relatively high figure for the volume of such sales. In any event, he had no other estimate put before him. I therefore would reject this ground of appeal.”
“But for the breach it seems to me plain on a balance of probabilities that Nicholas Prestige Homes would have had a chance of selling the property themselves … the eventual purchaser did go through with the purchase, and therefore it seems to me on a balance of probabilities that the breach caused the loss of the chance for Nicholas Prestige Homes to sell the home. The next question therefore is: what damages flow from the loss of that chance? We have to evaluate whether that chance is purely speculative or whether it is real and substantial. In the events as they happened, given the purchasers' attraction to the property, which was unwavering from the point of their being introduced to it to their concluding the sale, it must be that this was a real chance, a substantial chance, which was lost by reason of the breach. …. In the result, it seems to me that this was a certain chance and that no discount should be afforded for the imponderables involved in any case involving the assessment of chances. In those circumstances, it seems to me to follow that the claimants lost the chance of earning the whole of their commission, they are entitled to damages accordingly, and I therefore would allow the appeal and enter judgment for the claimants in the sum of [the whole amount of the agreed commission].” “The Object of the Duty”
“… may, in itself, constitute a recoverable head of loss only if the object of the duty that was breached is the provision of the chance”
“… the object of the duties that L&G has breached, the object was not to provide Bugsby with the chance to acquire Olympia or to earn fees from acquiring Olympia. The object of the duty was to protect Bugsby’s confidential information.”
“Loss of a chance Mr Howard submitted that by agreeing to Mr Templeman's request for secret commission Seatrade deprived Fyffes of the opportunity of negotiating through an honest and prudent negotiator; and that if, in relation to any particular aspect of the service agreement and its addenda about which they complained, Fyffes failed to establish that an honest and prudent negotiator would probably have negotiated a more favourable agreement, they are entitled to damages reflecting the value of their lost chance that he would have done so. Mr Jones submitted that if Seatrade failed to establish as a matter of probability that any particular clause was objectionable by the standard to be expected of an honest and prudent negotiator, Fyffes would have failed to establish any loss under that head and that it would be wrong in those circumstances to award them damages under the head of loss of a chance. The subject of damages for loss of a chance can give rise to vexed questions, and so it is important to start from first principles. On any question of damages the fundamental principle is that the object of the law is to put the injured party in the same position as he would have been in but for the wrong. As Denning J put it in Duke of Westminster v Swinton[1948] 1 KB 524 , 534: “The real question in each case is: What damage has the plaintiff really suffered from the breach?”
“must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If [Bugsby] succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other”
“It was now envisaged that Olympia would be retained in the short term, but the longer term aim was to secure a sale.”
“Olympia[:] The recent offers to acquire the Venues business were noted at approximately£300m . As at the valuation date there were no factors which would warrant a change to this value. It was anticipated that there would be downward pressure on this valuation at the year-end if the business has not been sold.”
“… there is insufficient capital to undertake significant new activities and consideration should be given to sourcing partner capital or asset disposal. Opportunities to release value will be considered including a [redacted] disposal of Olympia”
“… price and net proceeds, together with speed and certainty of execution will be the key drivers of any favourable decision by the [CapCo] Board.”
“I heard the Bugsby meeting was not as positive as we would have liked.”
“… in order to accommodate the potential HNA interest [ie Bugsby]”, whilst making clear that “… granting an alternative exclusivity to [Bugsby], was equally not possible.”
“… absolutely no concerns over their [HNA’s] financial muscle”
“HNA as a party provides credibility. Rothschild has had positive dealings with them in the past”
“From the moment exclusivity was granted, I believe it would have taken HNA around 10 days to finish this process and exchange contracts and then a maximum further 30 days to complete the deal.”
“I understand the Defendants say that a Bugsby/HNA acquisition would not have taken place by1 April 2017 and they suggest it would not have taken place before1 August 2017 … . This is not correct in my view. HNA Property was very quick at closing real estate deals once agreements in principle were reached by the parties. My team closed 7 deals worth USD3.6 billion from November 2015 to May 2017 including the acquisition of 245 Park Avenue in Manhattan in May 2017 for£2.21bn , which was closed in 36 days. … If Capco had accepted our initial offers, there is no doubt that HNA would have moved very quickly. I believe the purchase could have been completed by early March 2017 and possibly earlier. HNA’s letter of intent of11 January 2017 … set exchange after 10 days of exclusivity and completion at 30 days from exchange with an option to extend by 15 days. For this kind of high prestige property acquisition, the 30-day completion timeframe was typical for HNA and in my experience was almost always achieved. Therefore, if Capco had been willing to accept our offer on11 January 2017 , this would have fixed completion sometime between 20 February and7 March 2017 .”
“I have to get the deal, otherwise, at that time, I feel I have a very bad face to the board.”
“… we were 99% certain of their lending on the deal.”
“As for the Bugsby portion, we have received indications that this would be sufficiently covered / over subscribed by the following sources: -personal wealth -fees from HNA on the deal due Bugsby -family wealth / my father -Marsiaj family -Borletti group -Saranac partners” -personal wealth -fees from HNA on the deal due Bugsby -family wealth / my father -Marsiaj family -Borletti group -Saranac partners”
“… appeal to only a relatively small sub-set of the real estate lending community”
“… the total universe of potential lenders to Olympia comprised 14 to 21 lenders at most.”
“There are clearly a number of challenges in a ground rent financing, more challenges.”
“… maintained excellent relationships with former JP Morgan colleagues including senior executives in their real estate lending group, and he did not think JP Morgan would have the relevant appetite in any way for the Olympia acquisition loan.”
“… when we bought Olympia, we struggled with debt financing because few lenders really understood that business.”
“… ifwe throw everything at it, if we burn the midnight oil,if we work weekends, if we get more people in”
“…they have a timeline I think they condensed down to about five weeks in the end …”
“And I think thereason why we've not been so specific, you can't, forexample -- neither of us knows how complex [were] the titleissues, how complex were various bits that needed to beexplored which fit in that timeline.So, you know, five weeks feels very tight to eight weeks to me felt comfortable, and somewhere in between the two is where it would depend on, you know,does your valuation arrive on time, does the bits of thejigsaw that you need to get your whole together cometogether. So that's timelines vary and timelines can be condensed and things can run in parallel when they needto. But I would suggest that, sort of, you know, thatGoldman Sachs inner boundary is probably is a tight asthings could get.”
“I think here as -- it's always the case that the lender doesn't control the wholetimetable. So it doesn't matter how much a lender throws at -- what resource the lender throws ata situation, the lender is still dependent on lots of other parties doing their bit. And here – andI alluded to it as the spinning plate syndrome – here you have a situation where the equity is not settled,you're running things in parallel, but you're runningthe debt and the equity in parallel. … You've got Capco … You've got the pension trustees. So you've got a whole -- and then you've got all the duediligence experts who are busily preparing reports. … So in somesenses we can look at what a lender might be able to do,but I think you have to look at the total -- the totalpicture. And in this case the total picture is complicated. … So in some senses it is obviously right to ask the question whata lender can [on] their own [] do, but actually in the roundhere that's a necessary but insufficient requirement. But if we come back to the Goldman Sachs five weeks, I think, my Lord, that's slightly misleading, becauseGoldman had been working on the transaction for a long time. This wasn't comparable to a situation where yousay you sign one of the alternative lender term sheetsand you've got five -- you can do it in five weeks fromthere. I simply don't believe that was the case. Itwas because Goldman had done quite a lot of work before that five-week period started. So I think it is a useful touch point, but it is nota -- you can't, in my view, read directly across fromthe alternative lenders to Goldman Sachs. … And I think where you have a niche asset, a complex structure, … You've got a complex set ofdramatis personae, all of whom are kind ofinterdependent.So that's why I really think -- as I've said11 weeks is a -- I would say that this would be a – an11-week period almost whatever.”
“So my point was eight weeks from issue ofterm sheet and the important factor for me is not thecredit approval point, it's the issue of term sheetbecause of the ability to run things in parallel andtandem if your borrower wants to. If you've got yourcosts underwritten by the borrower, which we've seenmany of these lenders are asking for, which implies to me they are wanting to run things in parallel, you canget those -- that work started and ongoing. I agree with Mr Priest that Goldman Sachs had donea lot of work, but they hadn't done any external duediligence, because Bugsby HNA had not signed off on thethird party costs. So all of that same external workthat needed to happen for the DFI-Yoo Consortium still had to happen for Goldman Sachs, and yet they weresaying five weeks. I think five weeks is very short andit's, you know, something Goldmans could throw resourcesat and maybe hit, which is why I was back to thiseight-week point, and somewhere between five andeight weeks we, you know, I agree, with, you know,things working out as they should do, the valuationarriving, no issues on legal title coming up, whichyou'd have to assume that they didn't, because L&G wereable to achieve the date that they did.”
“In my experience lenders differ in their approach and a term sheet from one lender is not necessarily equivalent in strength of interest to that from another. For one it could be a preliminary and contingent indication and for another it could represent a more informed and genuine interest in progressing the transaction. It also depends how much work has been done to obtain internal credit committee buy-in to the opportunity. Execution risk is therefore difficult for a borrower to assess: it would require knowledge of the individual lender and their approval and transaction process.”
“the best proxy for what it would have done is what [Yoo] has done in the real world”
“Mr Mackie: … One thing I am saying is that I do not believe that the Bugsby scheme as drawn up pre-acquisition, high level, I do not believe that that scheme in isolation would have been the scheme that would be developed, as I state in my report, because I find it – I do not believe, based upon my experience, that a scheme would stop still from pre-acquisition without design development going through a two year planning process that would inevitably develop it. So I do not believe that that Bugsby scheme as drawn up by TP Bennett pre-acquisition would have been the scheme that would have been developed, because I don’t think it would have existed. Mr Gledhill QC: I am not saying that the Bugsby scheme wouldn’t have been refined and changed, because I also think it would have been, but there is no reason to think it would have developed in the same way as the Yoo scheme, is there? Mr Mackie: I disagree with that. I think there was every reason to believe that that would have happened, that that would indeed have been the case. The key issue here in many ways is planning. No planning no development. And planning is not just about what the developer wants. Planning is a process that very much revolves around all the stakeholders in it, and in this case a large stakeholder is the London Borough of Hammersmith and Fulham. And it was very clear with the planning consent that had been granted that that would only have been granted with a desire from the planning authority for a scheme of that size, scope, prestige, that is what they want, that is what they were prepared to consent. Mr Gledhill QC: The planning consent that’s granted, that’s a response to what scheme is put in, isn’t it? Mr Mackie: No, it is, for a scheme of this size, it is very much a negotiation in many ways between the developer, the advisers, the specialist planning advisers, the architect, but particularly the planning authority. Bluntly they want the best scheme. … … Mr Gledhill QC: … But the point I’m putting to you is that there’s no reason to think it would have developed in the same way as the Yoo scheme. … Mr Mackie: … I take the point that different individuals are involved, the design – it would look different, and the make-up of it may be different. But that – but nevertheless I do feel that the movement through the planning, the progression through the planning process, would have been the same – along the same lines and, therefore, as I say, the best proxy scheme that I have to value with planning is, in my opinion, the DFI-Yoo scheme. …”
“… there’s no reason, if that equity investor came in and joined with Bugsby, that it wouldn’t have been possible to get redevelopment finance for Bugsby and the new investor”
“[In early 2021] the members of [the consortium, Yoo] have committed to deploy hundreds of millions of pounds of further equity and debt; and [Goldman Sachs] have committed to provide that debt. As a result, main works are underway. This would not be happening if the [consortium] members and [Goldman Sachs] (and their respective armies of professionals) did not have a good basis to anticipate substantial profit.”
“… other things being equal, it’s very unlikely that the Yoo Consortium are investing this money and committing this debt if in fact they are likely to make a large loss at the end of the day.”
“… generally, a developer only develops a property if it can make a suitable level of profit. What is suitable may be different for different developers, but is generally understood to be between 15% and 25%”
“Olympia was a trophy transaction which would have dramatically elevated the stature of anyone associated with it.”
“So I'm not surprised that Bugsby were trying to do a series of transactions of funders but ultimately with an aspiration of trying to put it altogether in a fund, that would seem to me a natural thing to do.”
“Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered [1] either as arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or [2] such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.”
“28. In the common law tradition the phrases and expressions used by judges do not have and should not be accorded the status of the words of a statute. In the Board’s view it is more important to identify what it is that judges have been trying to encapsulate in their choice of language. And that is whether as a question of fact the parties to a contract, or at least the defendant, reasonably contemplated, if they applied their minds to the possibility of breach when formulating the terms of the contract, that breach might cause a particular type of loss. In the context of contractual liability, the court is not concerned solely with the percentage chance of such an event occurring, although that is not irrelevant… 30. From this brief review of the main authorities, the position may be summarised as follows. 31. First, in principle the purpose of damages for breach of contract is to put the party whose rights have been breached in the same position, so far as money can do so, as if his or her rights had been observed. 32. But secondly, the party in a breach of contract is entitled to recover only such part of the loss actually resulting as was, at the time the contract was made, reasonably contemplated as liable to result from the breach. To be recoverable, the type of loss must have been reasonably contemplated as a serious possibility, in the sense discussed in paras 27 and 28 and above. 33. Thirdly, what was reasonably contemplated depends upon the knowledge which the parties possessed at that time or, in any event, which the party, who later commits the breach, then possessed. 34. Fourthly, the test to be applied is an objective one. One asks what the defendant must be taken to have had in his or her contemplation rather than only what he or she actually contemplated. In other words, one assumes that the defendant at the time the contract was made had thought about the consequences of its breach. 35. Fifthly, the criterion for deciding what the defendant must be taken to have had in his or her contemplation as the result of a breach of their contract is a factual one.”
“The Board is not concerned in this appeal with the recoverability of damages caused by unusual volatility in the market or questions of market understanding, which the House of Lords addressed in [The Achilleas], and in which Lord Hoffmann and Lord Hope of Craighead sought to bring into play the concept of assumption of responsibility as a further limitation on contractual damages. It suffices in this appeal to consider what the House of Lords in The Heron II[1969] AC 350 stated more generally about the principles governing remoteness of damage.”