Browning & Anor v Messrs Brachers (a firm) [2004] EWHC 16 (QB)

Case No HQ 01X03969IN THE HIGH COURT OF JUSTICEQUEENS BENCH DIVISION[2004] EWHC 16 (QB)Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13 February 2004
Before
THE HONOURABLE MR JUSTICE JACK
Between
(1) William BrowningClaimants(2) Maureen BrowningClaimantMessrs Brachers (A Firm)Defendant
David Blunt QC and Kate Livesey (instructed by Gregory Rowcliffe Milners) for ClaimantIan Croxford QC and Stephen Worthington (instructed by Barlow, Lyde & Gilbert) for DefendantHearing Hearing dates : 26 November – 15 December 2003
Judgment

Introduction

[1]This is an action against solicitors for negligence in the conduct of litigation. The claimants, Mr and Mrs Browning, have been goat farmers since 1986 at Lower Basing Farm in Kent. In the spring of 1991 they purchased the business and most of the assets of a goat farming business carried on by Mr Kenneth Gilham at Bowyers Court Farm in West Sussex. In September 1991 Mr Gilham commenced proceedings against them in the Staines County Court because he considered that they had failed to pay him part of what was due, namely the value of stores taken over by them. They defended that claim on the basis that the stores were included in the agreed price of £27,000. They also alleged that they had not received all the items included in the sale, and that Mr Gilham had for a period prevented them having other items. They further claimed that they were 39 goats short. Last and most important, they claimed that the goats they had purchased were infected with Johne’s disease and had infected their own herd. A report served with their re-amended defence and counterclaim suggested that the damages on account of that might be of the order of £120,000. Mr and Mrs Browning were required to pay £5,000 into court to obtain leave to defend the action. They were first represented by Mr J.B.O. Hinchliffe, a solicitor in sole practice. From August of 1992 they were represented by the defendant firm, Brachers.[2]Because of its size the counterclaim became the most important aspect of the litigation. Progress was slow. Matters came to a head in 1996. Mr Gilham was represented throughout by the firm of Barlows. They have a number of offices in Surrey. They are a different firm to that of Barlow, Lyde & Gilbert who represent Brachers in this action. At the beginning of 1996 neither side had served any expert evidence. On 31 January 1996 Barlows obtained an order that Mr and Mrs Browning serve expert veterinary evidence within 46 days or be barred from calling such evidence. A report prepared by Mr Baird, who was the vet who had attended the Browning goats, was served on 22 March 1996. In April 1996 the action was transferred to the Kingston County Court, and at the instigation of Barlows it was set down for trial. On 20 May the court informed the parties that the trial would commence on 13 December 1996 with an estimate of 6 days. On 9 September Mr Gilham died from the cancer from which he had been suffering for some time. On 24 September Brachers sent to Barlows a copy of a report prepared by Mr Measures, an agricultural consultant. He had prepared the report which was served with the particulars of claim and which had suggested that the damages on the counterclaim might be of the order of £120,000. The new report gave a figure of £1.5 million. On 16 October Brachers served on Barlows a supplementary report from Mr Baird. On 18 October Brachers served on Barlows witness statements of Mr Squire dated 20 April 1993, Mr Martin dated 13 July 1994, Mrs Byfleet dated 16 February 1996 and Mr Mowlem dated 20 February 1996. On 21 October Brachers wrote to Barlows to say they would be serving witness statements of Mr and Mrs Browning in due course. No statements by them had been served previously. All that there was were their affidavits in the summary judgment proceedings in 1992. On 25 October an order was made by HHJ Bishop barring Mr and Mrs Browning from relying on the recently served materials, that is Mr Measures’ report, Mr Baird’s supplementary report and the statements.[3]On 12 November Mr and Mrs Browning instructed Reid Minty to act for them in place of Brachers. They served a notice of discontinuance, proceeding on the basis, I presume, that the existing counterclaim had become hopeless for lack of evidence, but the claim itself was not yet barred by limitation. On 9 December HHJ Hull Q.C. struck out the notice of discontinuance as an abuse of the process of court and he refused to permit them to be non-suited. On 11 December Mr Gilham's claim was settled for the £5,000 already in court and costs. On 13 December, the trial date, the counterclaim was dismissed, Mr and Mrs Browning offering no evidence. The costs which Mr and Mrs Browning have been ordered to pay in the action are £30,155.57.[4]On 6 February 1997 Mr and Mrs Browning commenced proceedings against Mrs Gilham in her capacity of executrix of her husband.[5]On 11 January 1998 the Court of Appeal dismissed the appeal of Mr and Mrs Browning against the order of HHJ Hull Q.C. of 9 December 1996.[6]The proceedings against Mrs Gilham were discontinued on 18 March 1998 on the basis, I presume, that an application to stay them as an abuse of the process was bound to succeed, especially following the judgment of the Court of Appeal. Mr and Mrs Browning were ordered to pay Mrs Gilham’s costs, which have been assessed at £13,669.82.[7]It appears that, as Mr and Mrs Browning were legally aided in both actions, Mrs Gilham is unable to enforce either order for costs without a further order of the court.[8]The present proceedings against Brachers were commenced on 5 November 1998. They have taken 5 years to come to trial, which is too long. The causes of this delay were not investigated before me. Prima facie they must lie with Mr and Mrs Browning or, more likely, their advisers. Thus it was necessary for an application to be made on behalf of Mr and Mrs Browning to lift the automatic stay imposed by 51 PD 19 because the action had not been before a judge between 26 April 1999 and 25 April 2000. That was done on 6 July 2001 when directions were also given as to witness statements and oral evidence. Mr and Mrs Browning are now on their third firm of solicitors to represent them in the action.[9]At no time prior to the difficulties that arose in the latter part of 1996 did Brachers advise Mr and Mr Browning that their counterclaim against Mr Gilham was likely to fail, or even that it was weak. It does not appear that any advice on the merits of their claim was given. Mr and Mrs Browning had legal aid throughout, and I assume that Brachers would have complied with their duty to the legal aid board in connection with unmeritorious cases, had the claim been considered to be one. Nonetheless, now the claim has been lost, it is said that the chances of its success were slight.

Johne’s Disease

[10]Johne’s disease – the ‘j’ is pronounced as an English ‘y’, the ‘o’ is long, and the ‘e’ is sounded, is a chronic inflammatory bowel disease affecting ruminants, namely, in the United Kingdom, cattle, sheep and goats. It is associated with infection with the bacterium Mycobacterium avium subspecies paratuberculosis. The major clinical sign is chronic weight loss leading to death. It is infectious but the transmission of infection and the period of incubation of the disease are unusual. It is not thought that infection is normally passed between adult animals. The route of transmission is to young animals, that is those under 6 months, commonly within the first 30 days of life, either from an infected dam, another infected young animal or from the environment – the bacterium may survive in the environment for a substantial time. It may pass in utero, via colostrum - first milk, or by a faecal-oral route. It has a very long incubation period, namely from 18 months to 5 years or 7 years, though it has been seen in kids as young as 1 year where the dam was in the late stages of infection. The onset of the disease may be precipitated by stress, such as kidding. Tests on faecal samples from living goats may or may not indicate the disease when it is present. The only sure tests are those which can be done on stomach samples obtained by post mortem. It is uncertain how long the bacterium may survive in grassland and so infect grazing animals. It may do so for 2 years, and perhaps rather longer.

Negligence in the conduct of the action brought by Mr Gilham

[11]It was initially denied that Brachers had been negligent. By an amendment to their defence for which leave was given on 28 August 2003 it is admitted that Brachers were negligent in failing to serve witness statements, the evidence of Mr Measures and the supplemental report of Mr Baird before September 1996. It is also admitted that the negligence resulted in the order of 25 October 1996 with the consequence that Mr and Mrs Browning could not pursue their counterclaim against Mr Gilham.[12]Some of the particulars of negligence contained in the present particulars of claim are wide-ranging and others are specific. Thus the first allegation is that Brachers failed to act diligently in the prosecution of the counterclaim. The second is that they failed to act timeously in compliance with orders of the court. One specific allegation is that Brachers failed to instruct Professor Steele-Bodger CBE as the veterinary expert witness.[13]I am satisfied that the negligence of Brachers went far beyond the limited admissions recently made. To put it in my own words and avoiding legal language, they failed to progress the action, and they failed in particular to grapple with the problem of how it was to be proved that the Bowyers Court goats had Johne’s disease and had infected the Lower Basing goats, and what effect this had had. They appear never to have considered what evidence should be called to that end, at least until 1996 when forced to by Barlows. Counsel was never asked to advise on evidence. They took only limited steps to obtain evidence. They never took statements from Mr and Mrs Browning dealing with the deaths of their goats and their losses. They did not ensure that Mr and Mrs Browning kept proper records in relation to their goats and the deaths. They did not arrange for post mortem investigations of dead goats. They did not obtain statements from two persons who had also bought goats from Mr Gilham and who believed the goats purchased by them had had Johne’s disease. I refer to Mr Nash who was written to by Brachers on 26 March 1993 and who then had a telephone conversation with them. He said that he had bought 72 goats and lost over half with Johne’s disease. Nothing further was done as regards him. The second was Mr Beeney. Brachers spoke to him by telephone on 26 January 1995. It appears he had bought goats from Mr Gilham on a number of occasions. They died. The note of the conversation is unclear whether he said he put it down to Johne’s disease, but earlier his daughter had said that was so. Mr Beeney was also able to give useful information about deaths of goats at Bowyers Court. This was not followed up. All this was negligent.[14]On 19 November 1992 there was a conference with counsel attended by Brachers, Mr and Mrs Browning and Professor Steele-Bodger. Professor Steele-Bodger had been Professor of Veterinary Clinical Studies at Cambridge University. He had 40 years experience of Johne’s disease and also had experience of acting as an expert witness. In a letter prior to the conference he referred to the need for continuing detailed post-mortem examinations. Manuscript notes taken at the conference are available, but they were not written up. Professor Steele-Bodger was informed by Mr and Mrs Browning that Lower Basing goats had been going down with the disease over the previous 6 months. I point out that this was surprising if they had got the disease from the Bowyers Court goats as the two herds had only been in contact for a year at the start of the 6 months: I refer to the characteristics of transmission and incubation which I have described. Professor Steele-Bodger is noted as saying that the deaths of Lower Basing goats were a ‘pretty sure indication that the contamination must have been enormous.’ It is clear from the notes that Professor Steele-Bodger considered that further tests were required. (I mention that I heard no evidence from him: since 1999 he has regrettably had severe problems with his sight.)[15]Brachers here had to deal with a very serious situation facing Mr and Mrs Browning and a comparatively rare and difficult disease. They needed to make a plan with the help of the Professor to establish what was happening to the Browning goats and so, hopefully, to obtain the proof that the case required. The post mortem tests were not expensive. It seems likely that the Legal Aid Fund would have borne the expense, but that was not investigated. Although Professor Steele-Bodger wrote to Brachers on 19 May 1993 and on 22 April 1995 asking what was happening, Brachers made no further use of his services after the conference. In my view this was negligent. It was also a major cause of the lack of preparation of the case.[16]It is not an answer that Mr Baird could have done the same job. I should say immediately that I think that he served Mr and Mrs Browning well as their vet, and he impressed me as a witness. But he did not have the same qualifications as Professor Steele-Bodger, being a general veterinarian, and these being the first potential cases of Johne’s disease he had investigated. Second, he had no experience as an expert witness. Nor was he in fact used as one until, late in the day and apparently out of necessity, on 9 February 1996 he was pressed into service to fill that function. He had not previously provided a witness statement. He was not used as the Professor might have been to advise on the case and its preparation, as it progressed. Further, Mr Baird was primarily a witness of fact and did not have the independence to be expected of an expert.[17]This is therefore a case where negligence in the preparation of Mr and Mrs Browning’s counterclaim is established over a wide front.[18]I should mention that no one was called from Brachers to give evidence before me. I have come to the conclusions which I have largely on the basis of the documents.

The approach to the assessment of loss

[19]It is now well-established, as is here agreed, that in an action such as this the task of the court is to assess the prospects of the claimant’s success at a notional trial if his solicitor had fulfilled his duty. For the claimant to succeed he has to establish that he had a real and substantial rather than a negligible chance of success. The court should assess the chance in terms of a percentage. That will be applied to reduce the damages which might have been awarded at the notional trial, to reflect the risk that the claimant might have failed.[20]Where the claimant’s chances of success on liability at the notional trial are in dispute and what he might then have recovered by way of damages at the notional trial is also in dispute, in my judgment the first dispute is to be resolved by determining the chances of success as a percentage. The second dispute is to be resolved by determining the figure representing damages, which it is most probable that the claimant would have recovered if he had succeeded on liability. By ‘most probable’ I mean the figure more probable than any other figure. That figure is then reduced by the percentage to reflect the risk of failure on liability. That provides the best estimate, which the court can make, of what the claimant has lost through his solicitor’s negligence. Where there are separate claims or cross-claims, it may be appropriate to carry out the exercise separately in respect of each.[21]It cannot be right to approach the assessment of the chances of success on damages as opposed to liability in the same manner the assessment of the chances of success on liability. Take as an example a claim for £1 million damages by way of loss of profits. It may become clear that the figure of £1 million is inflated and that the claimant had no chance of recovering that amount. On a percentage basis he would then recover nothing. He might have some chance of getting as much as £800,000, a good chance of getting £600,000 and some chance of getting as little as £400,000, all depending on what view the judge at the notional trial took of the facts and the application of the law to those facts. If it appears that the figure that is most probable is £600,000, then that is to be taken as the figure for damages. A judge might reach that result by saying that the figure of £1 million was to be discounted by 40 per cent to arrive at the most probable figure, and so take 60 per cent of £1 million: but he is not then saying that there was a 60 per cent chance of recovering £1 million.[22]In assessing the amount which it is most probable that a claimant would have recovered by way of damages in his original action, the court should take the same broad brush approach as it should take to the assessment of the chances of his success on liability. It should not attempt to conduct a trial of the damages claim.[23]The recent growth in actions for negligence against solicitors has resulted in a number of decisions developing the principles to be applied. I may begin with the statement of the principles set out by Simon Brown LJ. in Mount v Barker Austin [1998] PNLR 493 at 510: ‘1. The legal burden lies on the plaintiff to prove that in losing the opportunity to pursue his claim (or defence to counter-claim) he has lost something of value i.e. that his claim (or defence) had a real and substantial rather than merely a negligible prospect of success. ….. 2. The evidential burden lies on the defendants to show that despite their having acted for the plaintiff in the litigation and charged for their services, that litigation was of no value to their client, so that he lost nothing by their negligence in causing it to be struck out. Plainly the burden is heavier in a case where the solicitors have failed to advise their client of the hopelessness of his position and heavier still where, as here, two firms of solicitors successively have failed to do so. If, of course, the solicitors have advised their client with regard to the merits of his claim (or defence) such advice is likely to be highly relevant. 3. If and insofar as the court may now have greater difficulty in discerning the strength of the plaintiff’s original claim (or defence) than it would have had at the time of the original action, such difficulty should not count against him, but rather against his negligent solicitors. It is quite likely that the delay will have caused such difficulty and quite possible, indeed, that that is why the original action was struck out in the first place. That, however, is not inevitable: it will not be the case in particular(a) where the original claim (or defence) turned on questions of law or the interpretation of documents, or(b) where the only possible prejudice from the delay can have been to the other side’s case. 4. If and when the court decides that the plaintiff’s chances in the original action were more than merely negligible it will then have to evaluate them. That requires the court to make a realistic assessment of what would have been the plaintiff’s prospects of success had the original litigation been fought out. Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendant’s negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure.[24]In Harrison v Bloom Camillin [2000] Lloyds Rep PN 89 Neuberger J. had to consider a claim against solicitors for negligently failing to serve a writ in a complex action against accountants. He began by assessing when the notional trial might have taken place. I will quote a short passage as to the assessment of the damages to be recovered at the notional trial. Neuberger J. stated at page 96.1:
“….the court should, as I see it, assess the likely level of damages which the claimant would have recovered had the action proceeded to judgment, and then apply an appropriate fraction to that sum to reflect the uncertainties.”
[25]He held that it might be appropriate to apply different discounts to different heads of claim. He said in respect of an issue of law (at page 98.2):
“In my judgment, the proper approach to the court to an issue of law which would have arisen in the action, which the claimant has been deprived of the opportunity to bring, is the same as in relation to an issue of fact or opinion which the claimant would have established in the action. However, at least in general, the court should in my judgment be far more ready to determine that the claimant would have failed or succeeded on a point of law than to determine that the claimant would have failed or succeeded on a point of fact or, even, opinion. That conclusion appears to me fair and practical, as well as consistent with the approach of the Court of Appeal in the three cases to which I have referred (albeit that they are not, as I have mentioned, determinative of this issue). ……. However, it is, I think, arguably implicit in the third and fourth numbered principles in the judgment of Simon Brown LJ in Mount that, at least in an appropriate case, it is right to assess damages on the “loss of a chance” basis even where the issue in the action would be one of law. At the end of his third numbered paragraph, Simon Brown LJ said that the assessment of the claimant’s claim may not be more difficult than in the action itself “where the original claim … turned on questions of law or the interpretation of documents”; his fourth numbered paragraph (quoted above) seems to apply to all types of cases encompassed within the previous paragraph. However, it would be wrong for me to place much weight on that, because, as I have mentioned, it does not seem to me that the Court of Appeal in Mount had to consider the aspect which I am now discussing.”
He went on to hold that, although in some loss of chance cases the court would adopt a “broad brush” approach to the chances of success, in others it might be appropriate to look at the issues more closely. That would be the case where the time gone by between the date of the notional trial and the actual trial was comparatively short. It will, in my view, also be highly relevant how far the evidence which is available at the trial of the action against the solicitors is the same as that which might have been heard at the notional trial.[26]In Sharif v Garrett & Co [2002] 3 All E.R.195 the Court of Appeal gave guidance as to how the court should approach its task where the original action was struck out because a fair trial was no longer possible. Tuckey L.J. stated at page 203:
“Although on a strike out the judge may not have to investigate whether or not an issue or issues can still be fairly tried in great detail I think his conclusion that no such trial is possible must be the starting point for the judge who later has to make an assessment of the claimant’s prospects of success. He cannot and therefore should not attempt to try the issue or issues himself, particularly on the evidence of the negligent solicitor’s former clients’ opponent in the original proceedings. In a case like the present where the legal burden is on the claimant to show that he would have succeeded on the issue or issues in question, I do not go so far as to say that they must be assumed against the solicitor, but the application of the second and third principles in Mount’s case may in practice produce this result. So, in such a case one would normally expect the claimant to be able to show that he had real and substantial prospects of success. This will not produce unjust results; what would be unjust is for the judge to try an issue which has already been held to be untriable because of the solicitor’s negligent delay. The judge then has to evaluate those prospects applying the fourth principle in Mount’s case. This is a difficult task but no more difficult than many others involved in the assessment of damages where the court has to predict the unknown. Here, the judge is having to put a value on the claim. This is not a science, but is a task which lawyers are used to performing. The judge will obviously need to consider all the relevant material which was available up to the time when the original claim was struck out, including documents disclosed and witness statements exchanged by the other side. If he is asked to hear the evidence which the other side would have called, or expert evidence of the kind called in this case, he may agree to do so but I do not think he should feel bound to do so if he thinks he can otherwise make a fair evaluation. If he does hear such evidence, it would simply be for the purpose of enabling him to form a better broad view of the merits of the claim.”
Those last two sentences are important here.[27]Simon Brown L.J. built on what he had said in Mount v Austen. At page 206 he stated:
‘39. With regard to the first stage the evidential burden rests on the negligent solicitors: they, after all, in the great majority of these cases will have been charging the claimant for their services and failing to advise him that in reality his claim is worthless so that he would be better off simply discontinuing it. The claimant, therefore, should be given the benefit of any doubts as to whether or not his original claim was doomed to inevitable failure. With regard to the second stage, the Armory v Delamirie (1722) 1 Stra 505, [1558-1774] All E.R. 121 principle comes into play in the sense that the court will tend to assess the claimant’s prospects generously given that it was the defendant’s negligence which has lost him the chance of succeeding in full or fuller measure.’ 40. The particular question raised by this appeal concerns the extent to which it is appropriate for the court hearing the loss of opportunity claim (a) to entertain primary factual evidence and (b) to reach clear conclusions whether of fact or of law. The question arises here in the context of the original claim having been struck out in April 1992 for want of prosecution on the ground that the witnesses’ memories had faded and ‘it would be impossible to investigate such matters [as the availability of alternative insurance cover] now. 41. The judge below seems to have tried this claim for all the world as if he were seised of the original action against the insurance brokers. Not only did he hear live evidence from the brokers - called, somewhat unattractively, by the defendant solicitors – but he treated the lack of oral evidence from the claimants in precisely the same way as if he had been deciding the original action.’

The Notional trial

[28]I have to look at what might have happened at a notional trial taking place in the context that Brachers had performed their duty to Mr and Mrs Browning as their solicitors in the action. I should bear in mind that a basic principle underlying the assessment of damages is the comparison between a claimant’s position as it actually is with the duty having been broken and that position as it would or might have been if the duty had been performed.[29]The case was presented on both sides on the basis that I should look at a notional trial taking place on the date actually fixed for trial, namely in December 1996. It could well be said that, if Brachers had performed their duty to Mr and Mrs Browning, a trial would have taken place before then. For the re-amended defence and counterclaim which set out the claim relating to Johne’s disease was served on 22 June 1992 and Brachers took over the conduct of the action in the following August. But it was agreed that the date of the notional trial should be taken to be December 1996: I should accept that.[30]It was submitted by Mr Ian Croxford Q.C. on behalf of Brachers that the evidence and arguments at a trial in December 1996 would have been substantially similar to those at this trial. This was contested by Mr David Blunt Q.C. representing Mr and Mrs Browning. I do not accept Mr Croxford’s submission. In particular, the evidence which might have been called at a trial in December 1996 which had been properly prepared for by Brachers (that is, on the basis that Brachers had performed their duty) would have been substantially different. There are a number of aspects.[31]First, Mr and Mrs Browning would have been giving evidence on the basis of statements taken from them at an appropriate early stage and on the basis of statements needed subsequently to up-date those statements. The records to support those statements would have been different in two respects: first they would have been more complete and comprehensible than the records which the Brownings in fact kept in the absence of instruction and advice from Brachers assisted by Professor Steele-Bodger. Second, those records would have been preserved, whereas they have only been partly preserved. Third, the recollection of Mr and Mrs Browning would have been very much better. The main events, namely those in 1991 and 1992 would have been within 5 years whereas before me they were being questioned about what had happened up to 12 years earlier and sometimes more. Even accepting that Brachers should not be disadvantaged by the time it has taken for the action against them to come to trial, there is still a very substantial difference.[32]Another important difference would have been the in-put of Professor Steele-Bodger, both in terms of his own evidence and the evidence which should have been obtained on the basis of his instructions as to what was needed in the circumstances. I do not know what that evidence would have been. The difficulties caused by this should count against the negligent solicitors rather than against the claimants – the third principle set out in Mount by Simon Brown L.J.[33]In the present case I have been faced with 5 files of expert evidence, 4 containing the reports of experts who were actually called before me. Professor Morgan and Mr Matthews were called, one on each side, as veterinary experts. Mr Brookes and Mr Marshall were called as agricultural consultants. Mr Handley and Mr Hampton were called as valuation experts. Mr Shelton and Mr Aspell were called as accountancy experts. The order made in the Staines County Court on 12 October 1993 allowed for 5 experts for each party: it did not specify their disciplines. Nonetheless the particulars of negligence do not allege that, Professor Steele-Bodger apart, Brachers should have instructed other experts. Complaint is made in the particulars as to the late instruction of Mr Measures.[34]Mr Measures practised as an agricultural consultant. He was a director of Laurence Gould Partnership Limited, a consultancy specialising in agricultural and farm business management. He has now retired. Most of his working papers have been lost. He did not give evidence before me. Mr Brookes (who may be said to have taken over from him) is a partner in the same consultancy. It appeared that he had not spoken to Mr Measures about the case. In his report Mr Measures made a comparison between the profits of Mr and Mrs Browning’s business with Johne’s disease and without the disease between 1991 and 2009 . He added to that a sum for the reduction in value of their land because it was infected with the disease (£28,000), a sum for the reduction in value of the goats (£8,750) and a sum for the reduction in the goodwill attributable to the business (£224,430). The total was £1,569,395. He included the bank interest paid or payable by the business in his calculations of profit. He did not make a separate calculation of the interest payable on the lost profits which he calculated. Mr Measures was thus doing the job undertaken by three experts before me – agricultural consultancy, valuation and accountancy.[35]The order of 12 October 1993 provided for experts reports to be exchanged within 12 weeks after discovery and inspection had taken place. Discovery drifted on and so the order, of a type which would not be made today, did not provide a clear date for the exchange of reports. Lists of documents were exchanged in June 1994. If Brachers had been diligent in their progress of the action it is fair to assume that Mr Measure’s report, or a report broadly similar but reflecting when it was produced, would have been served in late 1994. No report of any kind was ever served by Mr Gilham. Nor was any statement by him served dealing with the counterclaim. Letters written by Barlows over the years show that they were suspicious as to what Mr and Mrs Browning could actually prove and were suspicious of their will to progress the action. They also show that Barlows were anxious to keep costs to a minimum. Thus Barlows suggested that the summary judgment affidavits might stand as witness statements, and an order was made to that effect. They suggested a joint expert. Some insight as to what was happening on Mr Gilham’s side in the absence of Barlows’ file is gained from his bill of costs. They had discussions with Mr Gilham’s vet, Mr Cattell, in 1994/5 and in 1996. It does not appear that they ever took a statement from him. They had discussions in 1994/5 and in 1996 with Dr M Johnston of the Royal Veterinary College and in late 1996 they received a report from him. They had communications in 1996 with Coopers & Lybrand. Mr Gilham died in August or September 1996. He had, it seems, been ill for some time.[36]If Mr Measure’s report had been served when it should have been and if witness statements had also been served as they should have been, inevitably Barlows would have conducted their client’s case in a manner quite different to that in fact adopted by them. The action would have taken a wholly different course. There would have been a strong likelihood of transfer to the High Court. I can get some help as to the points which might have arisen on the expert evidence from the further reports which have been prepared for this action. It would be wholly wrong for me to take any course approaching a trial of the original issues utilising the expert evidence now available. The chances of success on liability[37]The original action involved Mr Gilham’s claim as well as the counterclaim based on Johne’s disease. That claim was for £8,778.80 on account of stores. The defence was that the stores were included in the original price of £27,000 agreed on a ‘lock, stock and barrel’ basis. Mr and Mrs Browning also asserted set offs on three grounds: one, £1,820 for 39 goats which were not delivered; two, £1,386 which they alleged was the value of items alleged to be included in the sale, which they had not received; (3) £5,995 damages for delay in delivery of certain items.[38]Mr Croxford submitted that Mr Gilham was bound to succeed on all these matters and that this would have done considerable damage to the credibility of Mr and Mrs Browning. I agree that the documents strongly support Mr Gilham on his claim for the stores. I think that the claim against Mr Gilham for the missing goats is much more difficult to be sure about. It overlaps with the counterclaim, because one possibility is that they had died, or been culled, as a result of Johne’s disease. It is difficult to unravel the several figures given for the Bowyers Court goats. Each one shows a reduction. I heard little in evidence about the claim for £1,386. I heard equally little about the claim for £5,995. Even if it was well-founded the damages claimed seem exaggerated.[39]I find that the probability is that Mr Gilham would have had the better of these claims if they had been fought and I would assess his chances on them overall at 75% of the sum claimed by him, £8,778, that is £6,682. I think that there would have been a very real possibility of these matters being settled prior to any trial thus leaving the parties free to concentrate on the counterclaim. If they had been fought, some aspects of Mr and Mrs Brownings’ evidence on them might not have impressed the judge. But evidence from Mr Gilham and from his manageress, Melanie Husband, as to what was happening to his goats, if they had denied that there was anything wrong, might have impressed him less. This is the claim which was in fact settled for the £5,000 in court.[40]In order to succeed on liability in relation to their claim based on Johne’s disease Mr and Mrs Browning had to establish first that the goats which they purchased from Mr Gilham were infected with Johne’s disease, and second that this gave them a cause of action. As to cause of action, their case was put in three ways: first, that the goats should have been but were not reasonably fit for their purpose – section 14(3) of the Sale of Goods Act 1979 – the Act then applicable; second, that the goats should have been but were not of merchantable quality – section 14(2) of the Act; third, that Melanie Husband ‘concealed and/or falsely represented that the Bowyers Court Farm herd was free of Johne’s disease’, which amounted to a warranty, or was in breach of a duty of care.[41]Mr Croxford accepted that there was a good chance that at the notional trial Mr and Mrs Browning would have established that the Bowyers Court herd was infected with Johne’s disease. He put it at 70% or perhaps better. In view of that acceptance I can take this aspect more shortly than I might otherwise.[42]Mr and Mrs Browning had to establish in the original action that on the balance of probabilities the Bowyers Court herd had Johne’s disease – that is, that it was more probable than not. Having considered the evidence now available Professor Morgan and Mr Matthews were agreed that the probability was that the herd had the disease. A previous manager of the herd, who left in October 1990, Nicholas Squire, was a witness to be called on behalf of Mr and Mrs Browning, and gave evidence before me. Although the mortality in the herd was low in his time, he suspected that deaths were occurring from Johne’s disease; he discussed the matter with one of the vets used by Bowyers Court and got the impression that the herd had had a previous problem with the disease; he collected some articles on the disease which he left behind him. Samantha May was a witness to be called on behalf of Mr and Mrs Browning. She worked at Bowyers Court from August 1989 to 30 April 1991, that is until the herd went to Lower Basing Farm. Throughout her time she suspected that the herd was infected with the disease. She looked at various text books for the symptoms. In her last two months the number of goats dying or having to be killed because of the effects of the wasting symptoms increased. It was agreed with Melanie Husband they should keep a list of the goats that died in a book, and against many they wrote that the suspected cause was Johne’s disease. Before that the deaths were noted in a diary. (The diary and list were not among the paperwork relating to the herd which Mr and Mrs Browning received on take-over.) She did not give evidence before me because she cannot now be found. I have mentioned the evidence which might have been given by Mr Nash and Mr Beeney. There was the evidence of the local kennel huntsman, Mr Paul Martin, as to the animals he collected from Bowyers Court. In contrast with this there was the evidence of Mr Alan Mowlem who went to Bowyers Court in early 1991 to make a valuation of the equipment and goats, which Mr and Mrs Browning were to purchase. He was called by Mr Croxford on behalf of Brachers but was to have been a witness for Mr and Mrs Browning at the original trial. He is very experienced with goats and is now a goat farmer and also gives consultant advice on goat farming. As part of his valuation he had inspected the Bowyers Court herd. My impression was that he looked them over rather than making a detailed inspection, but he told me that, if there had been two or three sickly animals, he would have remarked on it. This is puzzling because, if the impression given by the other evidence is right, he should have seen some sickly animals. It is possible that there was a clear-out before his inspection. Twelve years later it is impossible to form any view on how it came about and on its significance, particularly in the absence of evidence from Samantha May, Melanie Husband and Mr Gilham.[43]The evidence of tests carried out by the Veterinary Investigation Service at Winchester is not conclusive as to the presence or absence of Johne’s disease in goats coming from the Bowyers Court herd, save perhaps in respect of one goat, number 172. There is doubt, however, whether it can have been goat 172 which was the subject of a post mortem by Mr Baird leading to an examination of intestine at Winchester, which found Johne’s disease. For the dates give rise to a problem. Mrs Browning was sure that it was goat 172, a Bowyers Court goat, which was the subject of the post mortem. Mr Baird had no record of the identity of the goat, though he did say in his evidence to me that he thought that it was a Bowyers Court goat. This cannot be resolved. It should have been capable of resolution in 1996 with the help of proper records.[44]I conclude that the chance of it being found at the notional trial that on the balance of probability the Bowyers Court herd had Johne’s disease and was heavily infected with it was high. I would put it at 80%.[45]I turn now to examine the chances that a finding that the Bowyers Court herd was infected with Johne’s disease would have led to a finding of liability on the part of Mr Gilham.[46]Section 14(2) of the Sale of Goods 1979 – merchantability A number of points were raised by Mr Croxford as to why there was no breach of the implied term, all of which were contested by Mr Blunt on behalf of Mr and Mrs Browning.[47]For there to be an implied term that goods are of merchantable quality the sale must be ‘in the course of a business’. It is clear that Mr Gilham was in the business of selling goats. Mr Croxford took the point that this was the sale of Mr Gilham’s goat business and so was not in the course of that business. The only case which counsel could find in which the point has been considered is the Scottish case of Buchanan-Jardine v Hamilink [1983] SLT 149. It was held that a ‘displenishing sale and the sale of stock live or dead in the course of such a sale, while it may be the last or one of the last acts in the business or its liquidation, is still a sale in the course of the business’. In that case the cattle in question had been sold separately from other items comprising the farming business in question. The sale was not of the business as a whole. The sale here was of the goat business carried on by Mr Gilham but it appears that it did not include all the assets of that business: the items sold were specified. It seems to me arguable that a sale of items as part of the sale of the majority of a business is to be described as a sale in the course of a business where such items have been previously sold by the business. But I recognise that the argument is not free from difficulty: it might be decided either way, and depends in part upon how the facts are found as to this particular sale.[48]Section 14(2) (b) excludes defects which an examination actually made should reveal. Contrary to Mr Croxford’s submission I think it is difficult to say that Mr Mowlem’s inspection should have revealed the disease.[49]Mr Croxford submitted that, if the goats had Johne’s disease, they would nonetheless have been of merchantable quality. I think that it would have been very difficult to argue that a herd which was heavily infected with the disease was nonetheless of merchantable quality.[50]Section 14(3) of the Sale of Goods Act 1979 - fitness for purpose The first point that arises is as to sale ‘in the course of a business’, which I have already considered in the context of section 14(2).[51]Section 14(3) requires that the buyer rely on the skill or judgment of the seller. Mr Croxford submitted that Mr and Mrs Browning did not rely on the skill or judgment of Mr Gilham because they relied on themselves and on Mr Mowlem. It could be found that they relied also on Mr Gilham. It is a fact that Mrs Browning did specifically enquire of his manageress, Melanie Husband, as to Johne’s disease.[52]Mr Croxford submitted that the section was not satisfied because the circumstances showed that it was unreasonable for Mr and Mrs Browning to rely on Mr Gilham’s skill and judgment because the health of the goats was a matter of conjecture. This seems to me a weak point.[53]A heavily infected herd would not be fit for its purpose, namely the production of milk and breeding.

Misrepresentation, collateral warranty and negligence

[54]These claims are all based on the following evidence of Mrs Browning. Mrs Browning knew Mr Squire, the former manager of the Bowyers Court herd. She telephoned him to ask if there was anything she should know about the herd. He replied that she should ask about Johne’s disease. She therefore spoke by telephone to Melanie Husband as the current manager. Mrs Browning said to her that she had heard on the grapevine that they had Johne’s disease. Melanie Husband told her that the Golden Guernseys (some goats recently purchased by Mr Gilham from a Mrs Riley-Smith) had been suspect but had been tested and found negative. Melanie Husband later also told Mrs Browning that the Golden Guernseys had not been mixed with the main Bowyers Court heard. It was accepted in Mr Gilham’s reply and defence to counterclaim that Melanie Husband had stated as I have set out. What she said can only have meant that she was unaware of any other potential problem with Johne’s disease and so far as she knew the herd was free of it. There is a very strong case in the light of the evidence of Mr Squire and Samantha May that such a representation was incorrect and must have been known to her as incorrect. For the fact was that those concerned with the herd’s management were very concerned that the goats had the disease. That is how the case appears on the material which I have.[55]In paragraph 24 of the re-re-amended defence and counterclaim the case was pleaded against Mr Gilham as ‘thereby the said Melanie Husband concealed and/or falsely represented that the Bowyers Court Farm herd was free of Johne’s disease.’ I consider that the combination of concealment and false representation is to be taken as an allegation of fraud. It was alleged that the representation amounted to a collateral warranty. It was alleged in the circumstances a duty of care was owed to Mr and Mrs Browning in respect of the representation. In paragraph 27 it was pleaded that in breach of warranty, in breach of the conditions as to merchantability and fitness for purpose, and in breach of the duty of care, the Bowyers Court herd was infected with the disease. No claim for fraud was made. It is expressly alleged in the action against Brachers that the representation was fraudulent. It is very likely that its omission from paragraph 27 in the Gilham action would have been corrected by amendment. Likewise it seems to me that a claim under section 2(1) of the Misrepresentation Act 1967 might have been added.[56]Where a buyer makes an enquiry about a specific and important aspect of the goods and receives a favourable answer, that is typical of the situation in which the answer may be held to amount to a collateral warranty.[57]The relevance of the allegation of the duty of care is that it covers the possibility that Mrs Browning’s conversation with Melanie Husband may have taken place after the contract was made. This was a case run on behalf of Brachers on the basis of a document which was privileged in the Gilham action, but which was disclosed in this. If a purchaser asks after the purchase whether the animals he has purchased have an infectious disease and he receives a reply from the vendor, there must be a strong case for imposing a duty of care in respect of the reply. Mr Blunt cited Esso Petroleum v Marden [1975] 819. Mr Blunt submitted that the damages here would be broadly similar to those for breach of contract because, if a careful answer had been given, the Bowyers Court goats would not have come to Lower Basing Farm and caused the damage they did.[58]In his defence to counterclaim Mr Gilham relied on a term strangely included by Mr Hinchliffe in the written contract which he drafted for Mr and Mrs Browning to get Mr Gilham to sign. This was done at a very late stage, long after a binding oral agreement had been made. The term read: REPRESENTATIONS 59. The purchaser acknowledges that he has not entered into this Agreement relying upon any representations made by or on behalf of the Vendor except those made in writing by the Vendor or notified to him in writing as being representations upon which reliance is placed.

REPRESENTATIONS

[59]As Mr Croxford accepted, the term would have no application if what Melanie Husband had said was fraudulent: Pearson & Son Limited v Dublin Corporation [1907] A.C.351. Mr Blunt submitted that in any event the term could only operate as an estoppel and that Mr Gilham could not have shown that he relied on it. I agree that in the circumstances he would have had difficulty in showing reliance. Mr Croxford submitted that this was an estoppel by convention and reliance was therefore unnecessary. He referred to Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank [1982] Q.B. 84 at 122,126 and 130,131. Mr Blunt submitted that other passages enable a contrary argument. If what Melanie Husband had said, would otherwise have stood as a collateral warranty, can the warranty be negatived by a subsequent clause in this form : prima facie it would not, it relates to representations and not to warranties. Can the clause be an answer to a case in negligence when it does not refer to negligence? These submissions were not developed at any length. They depend in some degree on the underlying facts, as they might be found at the notional trial. I must take account of the arguments but should not attempt to determine them.[60]I have to look at these several ways in which the case of Mr and Mrs Browning might have been put and assess their overall chances of success. Success on any one would do. I am impressed in particular with their chances of success on their claims arising from what Melanie Husband told Mrs Browning. I conclude that, if they established that the Bowyers Court herd was infected with Brownings disease, they would have a strong case on liability, that is, their chances of success would be high. I have assessed their chances of success in establishing that the herd had the disease at 80%. I would reduce that to 70% to reflect the risk that they might not go on to establish liability against Mr Gilham as the consequence.

What damages might Mr and Mrs Browning have recovered against Mr Gilham?

[61]It is here necessary to include some further facts as to the business run by Mr and Mrs Browning.[62]Mr Browning was born on 12 December 1942. Mrs Browning was born on 2 March 1945. They purchased Lower Basing Farm in the summer of 1986 having sold their substantial house in Twickenham. They had had a business in Twickenham servicing and repairing Reliant Scimitars and other high performance vehicles. After giving up that business they attended a number of courses lasting from one to three days. They learnt the theory and practice of goat management, yogurt making and so on. They did market research into the products they might sell. Lower Basing Farm consists of 38 acres of pasture, a three-bedroomed farm house with an agricultural occupancy condition, and farm buildings. Having bought it, they had £10,000 in hand. They later arranged an overdraft facility with Lloyds Bank who have a first charge on the property. They purchased a herd of 86 goats from Hever in Kent for £4,028. They began to produce milk and yogurt for sale at the beginning of 1987. They had at first about 12 outlets. They expanded their range to include semi-hard cheese and ice cream – they are the only suppliers of goats milk ice cream in England. They opened a farm shop. There were thus two aspects to the business. One was milk production. The other was processing and marketing. Between 1987 and 1991 they built up their production and their herd.[63]Goats are prone to intestinal parasites which are picked up from pasture where the larvae can survive having been dropped by other infested goats. For this reason most commercial goat herds are kept confined under cover and are described as ‘zero-grazed’. Unfortunately the straw on which they are kept provides a favourable environment for the Johne’s bacteria. The Lower Basing herd is at pasture during the day when the weather is good. There was a dispute as to how much it grazed during the winter. Mrs Browning said in her evidence that it was kept in during the worse months save on the odd fine day. Her witness statement does not say that, but suggests that, subject to the weather, the herd was out throughout the year. In order to control parasites, the goats would be drenched with anthelmintics.[64]The milk production of the Lower Basing goats was low in quantity but the milk itself was high in solids. Mr and Mrs Browning were more concerned with the latter because of the uses to which they put their production. Nonetheless in 1990/1 the milk yield was only 389 litres per head. A standard publication produced in 1993 gave the following for yields: low – 500 litres; average - 750 litres; high – 900 litres per head per annum. Mr Measure’s 1996 report referred to a report by Alan Mowlem (one produced for general publication) stating that 800 litres per goat was a minimum commercially viable yield.[65]It is relevant to the prospects of the business that in its early years it sustained substantial losses which were supported by increased bank borrowing with, therefore, an increasing interest burden. The years are years ending on 31 August. Gross income £8,224 14,057 36,391 74,688 (Loss) (18,898) (23,366) (13,898) (18,188) Bank borrowing 57,833 89,413 125,119 188,833 Interest 6,211 11,852 18,933 27,198 Drawings/ (capital put in) 6,360 (1,421) 9,378 5,697[66]It is apparent from these facts, and was apparent to Mr and Mrs Browning that they needed to expand their production substantially. Thus their major purpose in taking over the Bowyers Court herd was to obtain the contracts which Mr Gilham had with Waitrose and with Holland and Barrett. In order to carry through the purchase they had to borrow further. Lloyds was not prepared to lend more. They obtained a loan of £35,000 from the Allied Irish Bank with a further £10,000 loan facility. Their ability to raise further money for capital expenditure was from this point severely limited. Their bank borrowings nonetheless continued to rise as the business continued to make losses.[67]The 101 goats which were transferred from Bowyers Court Farm to Lower Basing Farm arrived at the latter on 27 April 1991. On 22 July 1991 a further 32 goats (26 milking goats and 6 others) arrived from Reading University, which have been called the Shinfield goats. These were purchased because of their high quality in the hope that they would improve the quality and production of the Lower Basing herd. Unknown to Mr and Mrs Browning the Shinfield goats had some years back been afflicted with Johne’s disease. Permission for an amendment of the defendants’ defence to raise this point, was refused at the end of August 2003 by Davis J., and I need say no more about it.[68]Because of the passage of time and the facts that Mr and Mrs Browning kept no proper records and that those they did keep appear unreliable, it is very difficult to ascertain the numbers of milking goats which they had at any one time. It is further complicated by the fact that goats will be dry for a period prior to kidding and so the number of goats in milk will be less than the number of adult females. I will refer to goats in milk and to milking goats to reflect the distinction. The actual goats numbers are essential to any accurate calculation of loss. In a letter to Mr Hinchliffe dated 30 April 1992 (which constituted the report which I have referred to as being served with the re-amended defence and counterclaim in the Gilham action) Mr Measures gave the figures for milking goats as 120 in the quarters ending November 1990 and February 1991, and 200 thereafter up to May 1992. Mr and Mrs Browning’s accountant made a note in December 1991 that the number of ‘milkers’ – which clearly in its context referred to milking goats - as at 31 August 1990 was 120, and at 31 August 1991 was 200. These figures agree. They broadly fit with an increase in the herd following the arrival of the Bowyers Court goats and Shinfield goats if some culling occurred. In his 1996 report Mr Measures says that there was such culling. But in table 4 of that report the figures for milking goats as at 30 June 1990, 1991 and 1992 respectively were stated as180, 356 and 160. It is apparent that he included the Shinfield goats with the Bowyers Court goats in the year to 30 June 1991 as he had no purchases included in the following year. There are other figures in the table which are plainly wrong.[69]Another essential matter is the number of goats that died, and when, and with what symptoms, and whether from the original Lower Basing herd or from the Bowyers Court herd. Much time was spent on this at the trial. No reliable records were kept. The information which is now available is incomplete and difficult to interpret. I have concluded that there must have been more deaths than they show because I accept as the probability that the majority of the Bowyers Court goats died within 2 years or so of coming to Lower Basing Farm.[70]The exercise that Mr Measures carried out in his 1996 report was as follows. He tabulated the losses and profits of the business from the accounting years ending 31 August 1990/1 to 2008/9 on a with disease basis and a without disease basis. He went to 31 August 2009 because he took that as the date of retirement of Mr Browning (Mr Browning would in fact be 65 on 12 December 2007). He assumed that size of the herd would have been built up from 250 milking goats to 400. He assumed that in 1994 further land and buildings, which were offered to Mr and Mrs Browning, would have been acquired had it not been for the effects of the disease. He noted that the build up in numbers had been set back by 5 years. He recorded that young goats in the herd had been vaccinated since about March 1995 (not before). The difference in profits between the business with the disease and without, i.e. the claimed loss, totalled £103,843 up to 31 August 1996. That is the nearest year end to the notional trial date which I have to consider. The losses claimed for the next 5 years ending with that to 31 August 2001 were £33,019, £45,366, £57,458, £75,188, and £95,620. Losses were claimed for the 8 years to 2009 at £112,215 p.a. The total thus far was £1,308,214. To this was added £28,000 for reduction in land value in 2007 due to the disease, £8,750 for reduction in value of the herd in 2007, and £224,430 for the reduction in the goodwill of the business in 2007.[71]This approach appears to have been adopted Mr Measures without advice from Brachers. It is broadly the approach which is followed in the reports prepared on behalf of Mr and Mrs Browning in this action. The report prepared by Mr Shelton, an accountant, calculates the loss on a ‘with disease’ and ‘without disease’ basis as £72,828 up to 31 December 1996, and as £663,225 between 1 January 1997 and 31 August 2009. One important difference between them is that Mr Measures included bank interest in his calculations of lost profit and Mr Shelton excluded it from the figures quoted. Mr. Shelton made a separate calculation of interest.[72]When it is remembered that the values for stock (goats) given in the accounts for the business for the years to 31 August 1991 and 1992 were respectively £13,500 and £17,550, the magnitude of these figures is put in context.[73]I am satisfied that at the notional trial it would have been forcibly argued, as it was before me, that Mr and Mrs Browning should have taken steps to mitigate their loss and had failed to do so. Before me this was put on two bases. The first was that Mr and Mrs Browning did not follow established management practices to reduce the effect of the disease. These are set out in paragraph 162 of Mr Matthews’ report and are taken from a publication prepared by Professor Morgan. My impression is that little of this was followed by Mr and Mrs Browning. Most importantly, they did not begin vaccinating until about March 1995 (Measures report, paragraph 4.9). Then they used vaccine bought in batches, which they continued to use after the ‘use by’ date had passed. Nor did they buy in over a period mature breeding females, which would be free of the disease and past the age at which they might be infected with it. While I have sympathy with the situation in which Mr and Mrs Browning found themselves, they were claiming large sums from Mr Gilham: the law required that they take reasonable steps to curtail those losses.[74]The second way in which it was suggested that the losses should have been mitigated was more radical, such as by culling the herd and starting again either at Lower Basing after an interval or elsewhere. In comparison with the sums claimed it would have been much cheaper in the long run. The problem was that because of their borrowings Mr and Mrs Browning would have faced great difficulty in taking these steps, other than that of selling up. The costs of these alternatives as calculated by Mr Aspell (the accountant instructed on behalf of Brachers) were: closing the business £112,693, suspending the business for 2 years – the minimum to eradicate the disease from the land - £79,111, moving the business £72,692, cessation of farming £57,594. Those figures do not include losses prior to the event under consideration.[75]I have to consider what is the approach which it is most probable that a judge hearing the notional trial in 1996 would have adopted. The conclusion I have come to is that he would have accepted that Mr and Mrs Browning could and reasonably should have mitigated their loss over a period of time by adopting the measures set out in Mr Matthews’ report. They could and reasonably should have brought the disease under control by those measures so that it no longer had any substantial effect. The disease would not have been wholly eliminated, but its effects on the business would have been. He would have considered that the more radical Aspell measures were unnecessary in that context. He might also have had in mind that the award he was making should put a substantial sum into the hands of Mr and Mrs Browning, but that would be a secondary consideration.[76]My conclusion as to the probable approach is as I have set out. But I think that, in the context of the way the claims in this trial have been advanced it is as well to point out the following. If in 1996 the trial judge had awarded in respect of the losses caused by the Bowyers Court goats damages running on for years into the future, the judgment would have provided a substantial sum which would have enabled those very future losses to be avoided. Thus their damages would have provided Mr and Mrs Browning with a substantial sum with which to mitigate their on-going loss (in so far as attributable to the Bowyers Court goats), and so to earn the profits they would be being awarded in damages. In my view there is no real possibility that the judge would have awarded damages running far beyond the trial date, whatever analysis of the situation he adopted. The claim is advanced in the same way as a claim for loss of earnings in a personal injury action might be advanced. A personal injury claimant who has suffered a permanent injury, which reduces or limits his earning capacity, often has a claim which runs to his retirement. In such cases there is nothing to be done about his situation. That is not the case here.[77]Mitigation over a period would have been a gradual and drawn out process. I heard no evidence calculating when the effects of the disease should have been eradicated or largely eradicated. I have to take the period which seems most reasonable to me against the background of all the evidence that I have heard. I put it at 6 years from the start of 1992, that is 2 years after the conclusion of the notional trial. Thus I conclude that the judge at the notional trial would most probably have awarded Mr and Mrs Browning damages over the six year period ending two years after the trial. On the basis of Mr Measure’s figures the claim up to the end of 1998 is £182,228.[78]If Mr Measure’s report had been instructed and served in good time, common sense and what appears in Barlows’ bill of costs strongly suggest that there would have been a critical analysis of it on behalf of Mr Gilham, and a report or reports prepared in opposition. It is also true that, had all gone as it should have done, the report would have been checked and perhaps improved before it was served. That process would in my view have resulted in a lowering of the figures, certainly not in their increase. It is enough to say that I regard it as vulnerable to attack. I here have in mind the various points that were made in cross-examination of the expert witnesses in the trial before me. I should here, and do, take a broad brush rather than making a detailed analysis of the further reports. Weighing it as best I may, I think that the probability is that the judge would have reduced the Measures’ figures by some 40 per cent. This gives £109,336. (I note that the figure reached by Mr Shelton for the equivalent period was £155,490.)[79]The figure of £109,336 must be adjusted to take account of two matters. One is the failure to mitigate by adopting measures as listed by Mr Matthews. The second is that it is very likely that it would have been alleged on behalf of Mr Gilham that the Lower Basing herd was infected with Johne’s disease independently of the Bowyers Court goats. That is because, as I have noted with reference to the conference with counsel attended by Professor Steele-Bodger, Mr and Mrs Browning thought that they were losing Lower Basing goats from Johne’s disease in 1992, that is before the incubation period taken from the arrival of the Bowyers Court goats had expired. Professor Steele-Bodger’s off-the-cuff response was, according to the note, that this showed that the contamination from the latter must have been enormous. But the evidence of Professor Morgan and Mr Matthews before me was that, if the Lower Basing goats were dying of Johne’s disease within the incubation period following the mixing of the herds, the disease must have been present in the Lower Basing herd before that. I accept that as the orthodox view. There was also evidence that the goats as a whole at Lower Basing Farm had problems with intestinal parasites, and that some goats died from this. So at the notional trial it is very likely that Mr and Mrs Browning would have faced a case that they had deaths, and their herd under-performed, first because of a wasting disease, probably Johne’s disease, which did not come from the Bowyers Court goats, and second because of parasites affecting the combined herd. I think that there is a strong likelihood that at the notional trial the judge would have found that these additional causes of death and under-performance were made out, and that he would have made a reduction in his award to reflect that. I think that it is appropriate to make a reduction of 25 per cent in the notional award of damages to reflect this. That gives a figure of £82,002.[80]That still requires account to be taken of the mitigation point. I will do this in the following way. I start with 1994/5 because I think that this is when it is most probable that it would have been held that the measures should have begun to have effect. In the table ‘avoidable loss’ is the proportion of the loss claimed in the year in question which should have been avoided by mitigating steps as listed by Mr Matthews. Year Measures figure 60%Avoidable loss %Avoidable loss 1994/5 £21,325 £12,795 10% £1,279 1995/6 27,300 16,380 25% 4,095 1996/7 33,019 19,811 33.3% 6,603 1997/8 45,366 27,219 60% 16,331 I take 75 per cent of that to get the figure to be deducted from £82,002 (the loss caused by the Bowyers Court goats), namely £21,231, giving £60,771.[81]I have considered whether it would have been appropriate to add interest to the annual losses of profit which are included in that figure. I have come to the conclusion that it would not. As stated, Mr Measures included bank interest in his calculations. The losses increased that interest and so interest at the rates actually paid by Mr and Mrs Browning, is, or should be, included in the calculation. I refer to paragraphs 6.37 to 6.39 of his report and to tables 12 and 13.[82]Following provision of the judgment in draft Mr Blunt submitted that this approach was wrong and that the Measures figures should be recalculated to arrive at profits lost before interest. I think that there are two objections to that. First, the Measures figures do purport to take account of bank borrowing and the incidence of interest. At the notional trial the judge would have been entitled to assume they had done so correctly and that increased interest caused by lower revenues was included. That would be broadly equivalent to an award of interest on the profit lost in any year. Secondly these matters were not addressed at the trial before me save that the difference of approach regarding interest between Mr Measures and Mr Shelton, was observed. Mr Blunt’s submission would require further argument and fresh calculations. That seems to me to go outside the ambit of permissible change to a draft judgment as considered in Robinson v Bird, Court of Appeal, 19 December 2003, the Times 20 January 2004.[83]On the basis of the evidence of Mr Marshall a case was advanced on behalf of Brachers that Mr and Mrs Browning’s husbandry was at fault. This was founded on two visits by Mr Marshall to Lower Basing Farm: but he never discussed his concerns with Mr and Mrs Browning or asked questions about them. There is nothing to suggest that such a case would have been run on behalf of Mr Gilham. No visits of inspection were made to Lower Basing Farm on his behalf.[84]The judge would then have had to consider whether he should make a further award because the land, the herd and the goodwill of the business were reduced in value by reason of infection with Johne’s disease. Citing Cullinane v British Rema Manufacturing Co Ltd [1954] 1 Q.B. 292 Mr Croxford submitted that Mr and Mrs Browning could not claim for loss in value and loss of profits. I accept that a claimant who buys a defective machine usually cannot claim both the drop in value of the machine by reason of the defect and the loss of the profits which he would have made if the machine had not been defective: for he would have had to purchase the machine to make the profits. I think that there is here an argument, with a fair chance of success, that the claim here is different. It is that the goats were infected, and this had two consequences: it lowered the earnings from the combined herd; it also reduced the value of the combined herd, the land and the goodwill of the business. In short, if a defendant gives the claimant’s farm a disease which lowers his profits and reduces the value of his land etc, he has suffered loss under both heads and to include both is not double counting. These claims survive the points as to mitigation because at the date of the notional trial the herd and the land would still be infected. If the judge concluded that the original Lower Basing herd already had the disease, this head of claim would fail. I consider that these additional claims faced difficulties in law and fact including valuation, which mean that I should put a modest value on them. In particular I should state that I do not think that a business such as this would have a substantial goodwill value in addition to the value of the assets, and further the goodwill should have recovered: Mr and Mrs Browning intended to stay on, not sell up. I note that Mr Gilham received nothing for the goodwill although his business had contracts which were the main reason for Mr and Mrs Browning buying his goats. In my view £15,000 is an appropriate figure. That gives a total of £75,771.[85]In making this assessment I have endeavoured to follow the principles set out in the authorities which I have quoted, in particular from Mount and from Sharif.

The value of the lost chance

[86]I thus assess the probable award of damages at a trial at the end of 1996 at £75,771. That has to be reduced by 30 per cent to reflect the chances that Mr and Mrs Browning might have failed on liability on their claim based on the Bowyers Court herd having John’s disease. The figure reflecting the value of their lost chance on their counterclaim is thus £53,039. From that must be deducted the value I have ascribed to Mr Gilham’s claim against them, namely £6,682. That gives £46,357 as the value of the lost chance in the Gilham litigation as a whole. It was not suggested that if a judgment had been awarded against Mr Gilham, or his estate, it would have gone unsatisfied.[87]Following delivery of this judgment to the parties’ advisers in draft, it was pointed out that credit had not been given to Mr and Mrs Browning for the sum paid in settlement of Mr Gilham’s claim, which was then identified as £5,000. It was accepted on behalf of Brachers that credit should be given. Following that it was then submitted on behalf of Mr and Mrs Browning that credit should be given for the £5,000 plus interest because ‘The £5,000 in Court is believed to have been paid out to the Gilham estate with interest.’ That was contested on behalf of Brachers. There was no evidence at the trial as to the payment. The claimants’ written opening had stated in paragraph 22:
‘Mrs [Mr] Gilham’s claim was then compromised, with the £5,000 which had been paid into court being paid out, together with interest, to Mrs Gilham (as Executrix)…. .’
In my assessment I have not taken account of the interest which Mr Gilham’s claim might have attracted at the notional trial, but have simply deducted the value which I have ascribed to it, namely £6,682. In the circumstances it will do justice between the parties if I ignore any interest paid to Mrs Gilham as executrix and ignore such interest as might have been awarded on Mr Gilham’s claim at the notional trial.[88]I will return to the question of the orders for costs made against Mr and Mrs Browning in favour of Mrs Gilham as her husband’s executrix in the action brought by him, and in favour of her in the action brought against her.

The further consequences of Brachers’ negligence

[89]There was no effective trial in 1996 and Mr and Mrs Browning did not obtain a judgment or any money. I have held that, had there been a trial and had they succeeded on liability, the probability is that they would have recovered £75,771, subject to Mr Gilham’s original claim (£8,778.80). The result of Brachers’ negligence is that Mr and Mrs Browning have not had the money, which they might otherwise have received.[90]On the basis on which I have assessed the value of the lost chance there cannot be any further claim. I find that Mr and Mrs Browning should have been able to mitigate their losses by the end of 1998, and that they have no claim for on-going losses after that.[91]I did at one time consider what might be the position if the reason for the damages being capped at the notional trial at the end of 1998 would have been that Mr and Mrs Browning should early in 1997 have received a substantial sum which would have enabled them to take further steps in mitigation, which steps they were in fact unable to take because they had not received the money, and so their losses went on. Mr Blunt submitted, that in those circumstances, Mr and Mrs Browning would have a claim for on-going losses caused by Brachers’ negligence because the negligence caused them not to receive the judgment sum. Mr Croxford submitted, inter alia, that the claimants’ case had not been run in that way and it was not open to the claimants. He submitted that, if it had been run on that basis, an examination of the finances of Mr and Mrs Browning after 1996 would have been called for, which was not carried out. I think that Mr Croxford’s submissions would have some force. But, as I say, the point does not arise.

Interest on the damages

[92]The damages of £51,357 should carry interest commencing on 1 January 1997. Mr Croxford submitted that in my discretion I should not award interest over the full period because of the time it has taken for the present case to come to trial. As I have stated, the causes of the delay were not investigated. Mr and Mrs Browning have been out of their money and they should have interest for the full period. It is within my discretion to award them interest at the rates at which they have in fact been paying interest, provided that they are rates which are in line with what a small business such as theirs should pay. That may be more favourable to them. I refer to Jaura v Ahmed [2002] EWCA 210, paragraph 26. Mr Blunt submitted that it was appropriate for me to do so, and I accept that submission. I note that the latest accounts for the business show borrowings in the year to 31 August 2002 of £237,000 and interest of only £770.[93]In further submissions received since the draft judgment was circulated Mr Blunt submitted that the rate should not be in fact paid by Mr and Mrs Browning but that that paid by small tradesmen generally. The submission may suggest that they were not in fact paying a typical small business rate, but something lower. The basis for awarding a higher rate than a large business might obtain is that a rate of one or two per cent above base would not then be adequate compensation. In Juara v Ahmed the claimant asked for 4.5% above base but was awarded 3% as a reflection of the rates typical of small businesses in the claimant’s position. In paragraphs 9.4 to 9.10 of his first report Mr Shelton calculated that the average borrowing rate for the business between 1991 and 1998 was 3.25% above base. He does not comment on the very low amounts of interest paid latterly. In my view it is for Mr and Mrs Browning to establish that they had to pay rates of interest which would justify a higher than usual rate, and they will then be entitled to interest at approximately the rate they paid provided that it was no higher than typical for a business of their type. If they have somehow avoided paying interest on part of their borrowing, that would be relevant to whether they should be awarded interest at higher than the usual rate, but it should not disentitle them to interest at the usual lower rate. Until it is known what their borrowing arrangements were, it is not possible to be more specific. If following disclosure of their arrangements a rate or rates cannot be agreed, it may be necessary to have an enquiry as to the rate.

The Gilham costs

[94]The action brought by Mr Gilham Mrs Gilham has an order in her favour for £30,155.57. The order is not enforceable without a further order of the court. It was made because of the failure of Mr and Mrs Browning’s claim due to the negligence of Brachers.[95]Mr Croxford submitted that (1) the figure needed to be adjusted to take account of the costs of Mr Gilham’s claim, which would have been likely to be his; (2); some part of the costs of their counterclaim would have been disallowed; (3) as Mr and Mrs Browning are registered for VAT, it should be deducted as they can recover it; (4) 4 years having passed since the costs were assessed there is a strong chance that they will never be pursued. I will take these points in turn.[96]As to the first and second, I accept that it is unlikely that Mr and Mrs Browning would have wholly succeeded on costs at a trial, and that this should be reflected in what Brachers should be liable for. The likely outcome at the trial would have been an order which was overall in Mr and Mrs Browning’s favour. The Legal Aid Board would have effected a partial recovery of costs from Mr Gilham and would have had a charge on the damages recovered by Mr and Mrs Browning for the balance. So they were at risk. I consider that it is appropriate in the circumstances that Brachers should be liable for three quarters of the costs.[97]It is accepted that the VAT should be deducted.[98]Mr Croxford submitted that I should make an award that reflected the chances of Mr and Mrs Browning having to pay. That seems to me unsatisfactory in that it gives them too little if they have to pay, and too much if they do not. Mr Blunt suggested that I should award the full amount against an undertaking from Mr and Mrs Browning to pay it to Mrs Gilham. I consider that in the circumstances the most appropriate course is that Brachers should be ordered to indemnify Mr and Mrs Browning. The order will be in terms that Brachers indemnify them against any costs they have to pay Mrs Gilham up to the figure which is three quarters of the £30,155.57 less VAT.[99]The action brought against Mrs Gilham. Mr Croxford submitted that Brachers were under no liability here because the decision to start this action was made by Mr and Mrs Browning’s new solicitors. In my view it was a reasonable step to take in attempted mitigation of the loss which Mr and Mrs Browning had suffered. If they had not taken this step, it might have been alleged that, as their cause of action had not been statute-barred, they were the authors of their own loss by not pursuing Mrs Gilham. Although it can now be seen that the action against her was doomed, that was not so apparent at the time. There will be an order that Brachers indemnify Mr and Mrs Browning against the costs of this action less VAT.

Cited in 2 later judgments