Toppan Holdings Limited & Anor v Augusta 2008 LLP [2025] EWHC 1691 (TCC)

[2025] EWHC 1691 (TCC)Case No HT-2022-000417IN THE HIGH COURT OF JUSTICEBUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESKING'S BENCH DIVISIONTECHNOLOGY AND CONSTRUCTION COURTVenue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 4 July 2025
Before
MARTIN BOWDERY KCSITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Between
(1) TOPPAN HOLDINGS LIMITEDClaimant(2) ABBEY HEALTHCARE (MILL HILL) LIMITEDClaimantAUGUSTA 2008 LLPDefendant(formerly) SIMPLY CONSTRUCT (UK) LLPDefendant
Tom Owen KC (instructed by Watson Farley & Williams LLP) for ClaimantMichele de Gregorio (instructed by DAC Beachcroft LLP) for DefendantHearing Hearing dates: 30 th April 2025, 1 st, 6 th, 7 th, 8 th and 15 th May 2025
APPROVED JUDGMENT
[1]These are claims arising out of the performance of professional services and construction operations in respect of the design and construction of Aarandale Manor Care Home in Mill Hill, London NW7 1ND ("Care Home"). The First Claimant ("Toppan") is the freeholder. The Second Claimant ("Abbey") is the leaseholder which operates the Care Home.[2]The Defendant (“Simply”) designed and constructed the Care Home.[3]Toppan is, by novation, a party to the building contract with Simply. Abbey and Toppan are the beneficiaries of collateral warranties from Simply.[4]There are defects in the design and construction of the Care Home, in particular as to fire resistance, fire protection, fire stopping, and fire doors. Simply failed to carry out the works in compliance with the contract documents and statutory requirements. Further and in any event, Simply was contractually negligent. Simply is in breach of the building contract and the Toppan collateral warranty.[5]By reasons of Simply’s breaches of duty it is alleged that:(1) The Care Home did not meet the functional requirements of the Building Regulations 2010 and Building Act 1984.(2) There was a material, present, and imminent risk to the health and safety of residents.(3) As the Defendant suggests: “Abbey and Toppan needed to remedy the defects.” (As at para 5 of the Amended Particulars of Claim.)(4) Toppan incurred remedial costs and associated professional fees. Toppan also maintains that it lost the sale of the Care Home after a valuable offer and has not since received any offer at, or close to, the prior offer. Toppan also incurred abortive legal costs, associated losses, and/or finance charges.(5) Abbey maintains that it sustained loss of trading profits, abortive legal costs, and finance charges. B. LEGAL PROCEEDINGS[6]On 8 June 2020 Toppan wrote to Simply enclosing engrossments of collateral warranties for execution by Simply to the benefit of Abbey.[7]On 5 August 2020, in the absence of Simply executing the requested warranty notwithstanding requests to do so, Toppan was left with no alternative but to commence Part 8 proceedings to compel specific performance. Simply ultimately conceded and provided the warranty.[8]Toppan brought an adjudication under the building contract as the novated party in place of the employer. Abbey brought an adjudication under the recently-procured collateral warranty.[9]Toppan succeeded in establishing defects and recoverable loss for the remedial works (£792,172.00 plus VAT) and associated professional fees (£59,921.35 plus VAT). Abbey succeeded in establishing the same defects and recoverable loss for loss of trading profits (£869,500.00), but that decision has since been declared by the Supreme Court to be without jurisdiction.[10]In this litigation, Toppan seeks its unrecovered losses in connection with the aborted sale, its abortive legal costs, and further associated loses. Abbey seeks its lost trading profits, abortive legal costs, and overdraft charges. C. THE REMAINING ISSUES[11]The issues which remain are as follows: - Quantum Issues[12]To which sums, if any, are the Claimants entitled to: .1 Claim A1: Abbey's loss of trading profits. .2 Claims A2 and T4: the Claimants' claims for aborted legal costs and disbursements for the abortive sale. .3 Claim A3: Abbey's overdraft charges. .4 Claim T3: Toppan's claim for loss of sale of the Care Home. .5 Claim T5: Toppan's claim for increased interest and investment losses on what would have been the proceeds of the abortive sale. .6 Claim T6: Toppan's claim for interest charges related to suppressed occupancy. .7 Interest. Liability Issue 23. .8 Should a finding be made that Simply failed to comply with clause 6.13A of the Building Contract as to notification to its insurer immediately upon receipt of the claim on 15 January 2019 or thereafter? D. WITNESSES[13]The Claimants called both their factual witnesses: .1 Andy Taylor the Claimant’s group finance director. Mr Taylor is a chartered accountant formerly of Ernst & Young. For the past 7 years he has looked after the group finances and has managed the head office team. He explained that he has direct oversight, involvement and experience in 16 care homes group wide. .2 Nick Martin of Aedifice was the Employer’s Agent under the building contract and the Contract Administrator under the remediation contract. He is a Chartered Building Surveyor with 20 years’ experience of working with Abbey Healthcare Group on its various projects. Both witnesses were credible witnesses who were intent on assisting the court.[14]Simply led no factual evidence whatsoever. The factual issues fall to be determined solely on the strength of the Claimants’ factual evidence tested under cross examination and on the basis of the contemporaneous documentation.[15]In their written and oral closing Simply relied upon the decision of Mr Justice Leggatt (as he then was) in Gestmin SGPS SA v Credit Suisse [2013] EWHC 3560 (Comm): “In Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), Leggatt J (as he then was) explained the difficulty in relying on oral evidence based on recollection of events which occurred several years ago, at [15]-[21]. He summarised the approach in such cases, where there is a conflict between witness evidence and documents, at [22]: " ...the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose - though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross­ examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth."[16]Simply also contend that Gestmin had been approved in the Supreme Court in Regina (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No. 3) [2018] 1WLR 973 at 103. The only reference to Gestmin in this case was in the dissenting speech of Lord Kerr.[17]Simply also contended that: “the importance of contemporary documents was emphasised by the Court of Appeal in Simetra Global Assets Ltd v Ikon Finance Ltd [2019] 4 WLR 112 (CA), by Males LJ (with whom Peter Jackson LJ and McCombe LJ agreed), at [48]-[49]: "The importance of contemporary documents "The importance of contemporary documents48. In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party's internal documents including e-mails and instant messaging. Those tend to be the documents where a witness's guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence. The classic statement of Robert Goff LJ in Armadas Ltd v Mundogas SA (The Ocean Frost) [1985] I Lloyd's Rep 1, 57 is frequently, indeed routinely, cited: "Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance toa judge in ascertaining the truth. I have been driven to the conclusion that the judge did not pay sufficient regard to these matters in making his findings of fact in the present case. "49. It is therefore particularly important that, in a case where there are contemporary documents which appear on their face to provide cogent evidence contrary to the conclusion which the judge proposes to reach, he should explain why they are not to be taken at face value or are outweighed by other compelling considerations …"[18]I was also reminded by Simply that the danger of treating a witness' recollection of events that happened a long time ago as firm evidence was considered by HHJ Bird (sitting as a Judge of the High Court) in Norma Jackman v Harold Firth & Son Ltd [2021] EWHC 1461 (QB), at [13], where he derived the following principles from the authorities:
"i) A strong recollection of events expressed in evidence with confidence is not a reliable guide to the accuracy of the recollection ... ii) The fact that a witness has a considerable amount to gain if his or her recollection of events is accepted by the court as fact, means that the witness' recollection is very likely to be biased towards that which supports the outcome he or she seeks ... iii) When a witness recalls events from the past, he or she is in fact unconsciously reconstructing those events. The description the witness provides of the relevant event or events is in fact a description of the reconstruction undertaken at that point ... iv) Testing recollection against contemporaneous documentation is a very useful and important exercise... Testing in this way at least gives the court an opportunity to compare a near contemporaneous version of events (subject to no or little reconstruction) with a re-constructed version of events."
[19]Simply contends that the approach outlined in the above cases ought to apply with even greater force where a witness' evidence consists of their personal views or belief as to the impact or relevance of factual matters. A witness' expression of belief, particularly that of a non-independent witness, may be influenced by unconscious reconstruction or unconscious bias and therefore inherently unreliable.[20]Reliance upon contemporaneous documentation is not without its own difficulties. Historians must always challenge their sources. Contemporaneous documentation can be: - self serving; - based upon an incomplete understanding of what was occurring; - drafted without the benefit of hindsight.[21]A dogmatic preference for documentary evidence over witnesses’ recollections of what was said and was done is unhelpful. The main tests which I have applied to assess the credibility of the witness evidence are: - The consistency of the witness’s evidence with what is agreed or clearly shown by other evidence to have occurred; - The internal consistency of the witness’s evidence; - The demeanour of the witness. Apply these tests to the witnesses’ evidence from Andy Taylor and Nick Martin, I do not think that the evidence of Andy Taylor or Nick Martin was inherently unreliable and I consider that save in one respect explained later it is safe to place reliance upon the witnesses’ recollections. Unlike Manuel Champalimaud in GestminEnglish was not their second language. They were both professionally trained and again unlike Mr Champalimaud had no direct financial interest in the outcome of the litigation.[22]Both witnesses gave clear, concise and credible answers to the questions asked. They were not partisan or argumentative. They gave no indication of giving carefully scripted pre-prepared answers. Where their evidence differed or was not fully supported by contemporaneous documentation, Andy Taylor explained that they did not want to disturb their staff, their residents or their banks by emphasising the seriousness of the defects in the contemporaneous documentation. Such an approach I find was reasonable and credible.

Liability Issue

[23]Before reviewing each factual witness evidence in detail I should stress that throughout the evidence Simply seemed to underestimate the serious impact these appalling defects had on the care home.[24]The Consent Order dated the 18th December 2024 contained amongst other matters the following admission:
“e. The defects presented a material risk to the health and safety of the residents of the Care Home in the event of a fire. The fact, scope and duration of the remedial works, and phased floor-by-floor basis and approach, were reasonable. The defects deprived the Second Claimant of the potential use and occupancy of 21 bedrooms on the ground floor or 21 bedrooms on the second floor or 23 bedrooms on the first floor, at any one time during the remedial works.”
These defects presented a real risk to the health and safety of the elderly residents in the event of fire.[25]As Mr Taylor explained in his witness statement :
“53 After that, the next stage was to remedy the defects. Abbey obtained three quotes for the remedial works and ultimately selected Luciano Venetian Builders ("LVB") to conduct the works, as they had the lowest quote of the three received and were able to complete the works fairly promptly. The drawings from the BRE Report and LWF Report served as the basis of their instructions. 54 At the point of LVB's appointment, the Care Home was approximately half full. It was understood that the Care Home was going to be a building site for a period of time, and that the repair work would be very messy. We also knew we would need to keep one floor of the Care Home empty at all times so the work could be completed on that floor uninterrupted and efficiently and so we didn't have to worry about residents and staff breathing in dust or dust getting in rooms and so on. This is how the work was carried out, with floors being cleaned after they were done and residents moved into that floor so work could be done on the floors they had moved from. Despite this, during the remediation period, the Care Home looked like a building site from the outside as well as the inside, with access for builders and so on being· present on all floors. 55 As it was clear from the front of the Care Home that it was a building site and given all the disruption, marketing the Care Home was not at all possible. We did however get the odd new resident during this period but they really just would have replaced residents who had departed. Because of what was going on and the focus on managing the Care Home during this period, we thought that spending money on marketing would not have been the right thing to do and would have been a waste of money.”
[26]The existence of these serious damaging defects and potentially life-threatening defects must have been a cause of great concern to the staff and residents of the home. The nature and extent of the remedial works must have been a cause of great concern to the staff and residents, particularly given a third of the residents kept on the 3rd floor of the care home suffered from dementia and when work to the third floor was carried out had to share space with the other residents of the care home. E. FACTUAL HISTORY[27]Before addressing the issues raised in the Claimants’ claims I will recount the history of the relationship between the parties by setting out a chronology of events and then record some of my findings based on the factual evidence. Chronology of events Date Event Ref. 30 Mar 2010 Planning permission granted for a 60-bed care home Barnet Council 15 Dec 2014 The Defendant and its directors Gary Sharp and Christopher O'Brien introduced Toppan Holdings Limited (the "First Claimant") to Puma Investment Management Limited for development finance. E/1.1 11 May 2015 The Defendant commenced the works under the Building Contract. G1.8/1/3 at [2.2] 29 Jun 2015 Sapphire Building Services Limited ("Sapphire") engaged Augusta 2008 LLP (previously, Simply Construct (UK) LLP) (the "Defendant") by a JCT Design and Build Contract 2011 with amendments dated for the design and construction of the Care Home (the "Building Contract"). Aedifice Partnership LLP ("Aedifice") was appointed as the Employer's Agent under the Building Contract. F2/1 6 Aug 2015 Sapphire engaged RDT Architects Limited (the "Third Party") by an appointment to perform architectural and engineering services. [• ] 30 Oct 2015 Sapphire, the First Claimant, and the Defendant entered into a collateral warranty ("Toppan Collateral Warranty") in respect of the building contract and works thereunder. F9/2 10 Oct2016 Practical Completion of the Works under the Building Contract. F2/2/2 13 Jun2017 Settlement agreement between Sapphire and the Defendant of the final account and all claims under the Building Contract, save for latent defects. F2/4 14 Jun2017 The Building Contract was novated to First Defendant. F2/5 Jul 2017 The Care Home opened for business. F3.1/2/l 12 Aug 2017 The First Claimant granted a lease to the Second Claimant. Fl/2 Jan 2018 The Care Home had 17 residents. Dl.1/14 12 Jun 2018 First Claimant and BlackRock agreed heads of terms subject to contract for the sale of the freehold of the Care Home. E/49 20 Jun 2018 Mr Fazal of Workman LLP ("Workman"), on behalf of BlackRock, inspected the Care Home and discovered fire safety defects. E/50/1 21 Jun2018 Workman produced its initial comments to BlackRock recording defects. E/50 Jun 2018 The Care Home had 31 residents. Dl.1/14 4 Jul 2018 Workman technical note with Enquiry No. 1 for the First Claimant as to fire safety defects. E/53/2 19 Jul 2018 Workman notified BlackRock and Lambert Smith Hampton ("LSH") that the First Claimant must prove the entirety of the structural frame has 60 minutes' fire protection. G1.1D/4/144 24 Jul 2018 Workman notified BlackRock and LSH that it considered "all of the further information" but that the "position had not changed'. Workman reiterated that the First Claimant must prove that the entire structural frame has 60 minutes' fire protection. G1. 1D/4/148 26 Jul 2018 Workman emailed its client, BlackRock:
"this is not Workman being particularly awkward... this is a very important issue, and our opinion will not change on this point until factual information is provided demonstrating compliance"
. G1.1D/4/150 30Jul2018 Claimants updated Lloyds on the BlackRock deal. E/63 31 Jul 2018 First Claimant and BlackRock agreed subject to contract a 999-year leasehold with option to purchase the freehold. E/67 1 Aug 2018 WFW provided to BCLP the agreements for exchange and completion. E/67 2 Aug 2018 Quadrant A1 (Approved Inspector) and RDT (Architect) insisted that 60 minutes of fire resistance as built had been met. E/69 3 Aug 2018 Workman concluded the structural frame had insufficient fire resistance. E/70 6 Aug 2018 BlackRock communicated to LSH their intention for BCLP to down tools "until there is certainty on the fire resistance issue". E/71 8 Aug 2018 LSH sent further submissions to BlackRock and Workman. E/72/2 10 Aug 2018 Workman reiterated position and inadequacy of the fire resistance. E/72/1 13 Aug 2018 WFW requested an update from BCLP. BCLP responded:
"Our instructions are not to do any further work until the fire issue is dealt with satisfactorily."
E/73/2 E/73/1 30 Aug 2018 BRE inspected the care home. Mr Lennon of BRE informed the Claimants of the significance and likely scale of the defects, and of the likely remediation Cap on residents at 44 (the maximum number over two of the three floors). Occupancy suppressed. Not viable for the Second Claimant to take on significant new additions which risk breaching the cap. C3/1/5 at [16] E/75.2/3 C3/1/5 at [15]-[16] Aug 2018 The Care Home had 34 residents. D1.1/14 7 Sep 2018 Employer's Agent reiterated need to act fast with regards to the defects. E/75.1/3 Claimants reiterated the need for fire defects to be resolved urgently due to operational impact on the care home. E/75.2/2 LSH confirmed the significance of the defects on the BlackRock deal and losses to the Claimants. E/75.1/1 10 Sep 2018 BRE provided its report to the Second Claimant. E/76 14 Sep 2018 Aedifice approached Lawrence Webster Forrest ("LWF") as fire engineers to inspect the care home and advise on remediation. E/79/4 19 Sep 2018 Email from LSH confirming BlackRock deal is off unless solution can be agreed on the fire defects. E/76.1/4 20 Sep 2018 LSH reiterated BlackRock's and Workman's insistence that the care home must be fully compliant. E/76.1/2 26 Sep 2018 Registration of variation of permission for 5 additional rooms, i.e. 65 total, for the Care Home is made. E/223 27 Sep 2018 LWF formally engaged by the Second Defendant to advise on the defects and remediation works at the Care Home. E/79/3 Sep 2018 The Care Home had 33 residents. Dl.1/14 8 Oct 2018 LWF confirmed it had carried out an extensive review. Fire suppression was not sufficient to downgrade any fire rating of the structural walls or compartmentation. E/79/1 Oct2018 The Care Home had 33 residents. D1.1/14 15 Nov 2018 Sapphire entered a members' voluntary liquidation. Companies House 16 Nov 2018 Further communications between Aedifice and LWF as to the appropriate remediation to the defects (up to 17 Dec 2018). E/85 17 Dec 2018 LWF produced the design for the remedial works. E/85 Dec 2018 The Care Home had 37 residents. D1.1/14 15Jan2019 First Claimant formally notified the Defendant of the defects, requested the Defendant's remedial proposals, and invited inspection. E/96 Jan 2019 Second Claimant placed a temporary stop on admissions due to defects and anticipated works. Recorded in the management account commentaries of January 2019 confirming temporary stop to admissions. E/92.1 The Care Home had 32 residents. D1.1/14 14 Feb 2019 Andy Taylor advised AIB of continued suppression on occupancy and that as a result of reduced admissions the First Claimant had breached the annual leverage covenant under the AIB facility. E/109.1/5 19 Feb 2019 Andy Taylor advised AIB of continued suppression on occupancy E/109.1/2 Feb 2019 Management account commentaries of February 2019 confirming temporary stop on admissions. E/100.1 19 Mar 2019 Strategic Contracts Limited bid £1,293,686.19 plus VAT for the remedial works tender. G1.3B/2/17 3 Apr 2019 AIB become increasingly involved and interested in Mill Hill, updates on the scope of work and on occupancy. E/109.1/1 11 Apr 2019 Luciano Venetian Builders Ltd ("LVB") bid £640,000.00 plus VAT for the remedial works tender. Later increased to £680,000.00 upon confirmation of the scope and finishes and then increased again by reason of the discovery of yet further fire-safety defects which were the responsibility of the Defendant. E/110/2 Bl/4 18 Apr 2019 Novus Property Solutions bid £697,187.40 plus VAT for the remedial works tender. E/101/3 May 2019 The Care Home had 31 residents. D1.1/14 21 Jun 2019 WFW wrote to the Defendant explaining that the First Claimant had been left with no alternative but to progress remediation by engaging an alternative contractor. WFW repeated the invitation to inspect. WFW repeated the request to provide evidence of notifying insurers. E/122.2 24 Jun 2019 The Defendant wrote to WFW: (i) denying any liability, (ii) asserting that it did not have to propose any remediation, (iii) alleging that it had not been invited to inspect, (iv) conceded that it had not notified its insurer "as we feel there is no need'. G1.1A/6/1 1Jul 2019 The First Claimant notified its intention subject to contract to enter into the remediation contract with LVB. C2/21 16 Jul 2019 Nick Martin of Aedifice contacted Mark Fazal of Workman to ask whether Workman would review the remediation. E/126.12 17 Jul 2019 Mr Fazal of Workman indicated he would need to check for a conflict of interest in order to be engaged. E/126.14 Jul 2019 The remediation works commenced. E/126.12/2 5 Aug 2019 The Defendant attended site and produced a short report denying any responsibility or liability for the defects. E/130 17 Oct 2019 Elevation Advisers LLP ("Elevation") offered £16m for the freehold. C1/40/1 28 Oct 2019 The Second Claimant recorded that the defects were "currently being addressed which is limiting occupancy. " E/143.1/2 Dec 2019 The Care Home had 31 residents. D1.1/14 Jan 2020 The Care Home had 30 residents. D1.1/14 May 2020 Local Authority (Barnet Council) COVID-19 contract for up to 10 local authority residents. E/157.1 8 Jun 2020 First Claimant wrote to the Defendant enclosing engrossments of collateral warranties for execution by the Defendant to the benefit of the Second Claimant. G2.9/4/141 5 Aug 2020 First Claimant commenced Part 8 proceedings to compel specific performance of execution by the Defendant to the benefit of the Second Claimant of the Abbey Collateral Warranty. G2.9/1 23 Sep 2020 The Defendant executed a collateral warranty ("Abbey Collateral Warranty") in respect of the building contract and works thereunder. G2.1A/O. l/1 3 Nov 2020 Aprirose Real Estate Investment ("Aprirose") offered £18.5m freehold. E/181.1 13 Nov 2020 Aprirose revised offer. D2.3/17/4 11 Dec 2020 First Claimant adjudication under the building contract as the novated party in place of the employer (the "Toppan Adjudication"). G1.1 Second Claimant adjudication under the Abbey Collateral Warranty (the "Abbey Adjudication"). G2.1 Dec 2020 The Care Home had 33 residents. D1.1/14 Jan 2021 The Care Home had 35 residents. D1.1/14 30 Apr 2021 Toppan Adjudication decision. G1.8/1 Abbey Adjudication decision. G2.8/1 May 2021 The Care Home had 35 residents. D1.1/14 3 Aug 2021 Aprirose further revised offer: £16.4m on completion, with up to £3.2m on an earnout. C1/42/4 Sep 2021 The Care Home had 46 residents. D1.1/14 8 Feb 2022 Approval granted for variation of permission for 5 additional rooms, i.e. 65 total, for the Care Home. E/223 4 Nov 2022 Sapphire dissolved. Companies House 9 Mar 2023 Orea LGS Solutions Limited ("Orea") creditors' voluntary liquidation. Companies House 4 Oct 2023 Defendant changed its name to Augusta 2008 LLP Companies House 13 Oct 2023 CCMC B1/1 28 Jun 2024 Deadline for exchange of Extended Disclosure in these proceedings as extended by consent between the parties B1/3.1 9 July 2024 Supreme Court declared the Abbey Adjudication was without jurisdiction. [ • ] 27 Sep 2024 Deadline for filing and mutual exchange of witness statements of fact in these proceedings as extended by consent between the parties B1/3.2 18 Dec 2024 Consent order- Defendant's concessions. B1/4

Findings of Fact

[28]Taking each factual witness: - I accept Mr Taylor’s evidence in respect of the following factual issues identified by the Claimants in their written closings save in one respect explained below.(a) Mr Taylor's role in the business. It was not the case, as was suggested to him, that he is "not involved in a day-to-day basis". Mr Taylor explained how and why he was and is involved "across the whole business because finance and operations are very closely linked”. Mr Taylor spoke with direct knowledge and experience on the significant impact that the defects had on occupancy and the consequential suppression of occupancy.(b) Marketing and occupancy. It was not the case, as was suggested to Mr Taylor, that the care home manager is responsible for marketing and occupancy. The care home manager has responsibility at a local level, but there is "significant activity and support at a group level".(c) The 'but for' basis of the loss of profit claim A1. It was suggested to Mr Taylor that Claim A1 is based simply on Abbey's budget forecast of 2018, before the defects were discovered. (i) That is accurate to the extent it was based on that forecast. (ii) However, it was then suggested Mr Taylor's "instructions as to the but-for scenario were essentially that trading would have grown in line with your 2018 forecasts had it not been for the defects". Mr Taylor was initially hesitant and unsure of the detail:
"Yes, I believe so, yes". (iii) Later in his cross-examination, Mr Taylor set out (correctly) that factors such as management, fees, CQC rating, local authority embargo were factored into the but for case when considering the steady state occupancy: "
Those factors are already factored into the but-for case. The original budget was higher than the 59 residents, and we've factored those in."; and "So our original forecast was then reduced to take into account those other factors and then that's the basis of the claim." (iv) It was not the case, as had been suggested by Simply under cross­examination, that Claim A1 is simply a comparison between the 2018 forecast and the actual (agreed) profits. There was "a substantial amount of mechanics involved in working forward from the original forecasts prepared by Abbey to something which is appropriate to use within the hypothetical but-for scenario within the joint loss model". (e) Marketing from September 2018. Mr Taylor was clear. Additional marketing ceased, i.e. "new newspaper adverts, radio adverts and so on, none of that happened going forward'. (i) But, as Mr Taylor explained, but which appeared not to have been appreciated by Simply, there were newspaper adverts and advertising which had already been paid or committed to, and events which had already been organised or had been long in the organising "like the Diwali events" and those which "take months to organise". Those continued. (ii) It was sought to be suggested that there was an inconsistency between contemporaneous references to "marketing" and to new marketing having ceased. I disagree. By the end of August 2018 and start of September 2018 Abbey had made the decision that spending additional money on new advertising was not worthwhile. This was consistent with the desire "to try and maintain occupancy" despite the scale and gravity of the revelation of the defects and their impact. (iii) Mr Taylor explained that if Abbey "had stopped marketing, actually occupancy would have continually fallen throughout the period, and actually, during that period and throughout the whole period it was very hard work to even maintain occupancy". This was logical and credible. (f) The real, immediate and practical impact of the defects on the home and occupancy. This has always been under appreciated by Simply.

(i) It was put to Mr Taylor:

"I suggest to you that up until that date December 2018, or initial remediation quotes beginning in February 2019] there was no reason for care home managers to be highlighting to potential residents, you know, we're doing X, Y and Z in terms of building works, would they?" (A) This was a surprising suggestion, given the significance of the defects and the recent admission, for all purposes, that the defects presented a material risk to the health and safety of the elderly residents of the home in the event of a fire. (B) Mr Taylor rejected the proposition. He explained that potential residents were being advised of the same from the outset. “I think from the very start we were advising - - it was an endemic problem throughout the whole care home and that - - it was very likely that the plaster board would have to be either replaced or supplemented”. (v) Further consistent with the above, Mr Taylor was convincing in his evidence as to why there remained a focus in 2019 on occupancy, and the risk of even greater losses but for Abbey's mitigation: "that's right, which obviously would have been incredibly difficult with, you know, planning for remedial works, planning on moving the elderly residents round the home and then obviously then actually having the remedial works going on as well." (viii) Mr Taylor explained the difficulties presented by the defects, particularly with dementia patients. Abbey suppressed occupancy so that there were spare rooms to allow movement, and to preserve the same room layout (on a different floor). Further he explained the real and practical difficulties in marketing the home in mixing dementia patients with those who did not have dementia. I accept this evidence and I find that Abbey suppressed occupancy from the moment the defects were reported to them on 30 August 2018. (g) The suggested absence from the management account commentaries of references to the defects and the defects' impact on occupancy. Mr Taylor had an answer to this.

(i) "

Those commentaries go to our lenders in various forms, so AIB, as an example, get the section relating to their homes, and until we knew exactly what we were facing in terms of the timing, the duration, the extent of the works, we didn't share that information with them because we - - it's important with lenders to, I guess, present them with a problem and a solution in one go rather than just a problem". (ii) Mr Taylor was not taken to the internal (as opposed to external­ facing) documents and the events in the immediate aftermath on 30-31 August 2018. The defects and their impact on the home were of immediate and sustained priority. E.g. On 31 August 2018 following the BRE inspection the day before, Mr Martin responded to Mr Lennon of BRE recognising the seriousness of the defects and their likely impact on the home:
"Thanks for this draft report although disturbing findings"
. On 7 September 2018 Mr Taylor chased Mr Lennon of BRE:
"As you will appreciate, we are running a care home and need this resolved urgently"
. On 7 September 2018 Mr Taylor chased an urgent update from Mr Martin:
"Please can you get an update as requested. We can't afford to sit on this". (iii) It was sought to be suggested that the hold on occupancy only came in December 2018, after receipt of the LWF report. Mr Taylor rejected that. He explained the Claimants had known ''from the start the likelihood of what would happen"
. This was consistent with his witness statement, that the Claimants knew from Mr Lennon of BRE immediately as of 30 August 2018 the likely significance and scale of the defects, and remediation. That was also supported by the contemporaneous exchanges at that time with BRE. (iv) Mr Taylor's evidence in his witness statement is accurate:
"From the end of August 2018, it was not viable to take on significant new additions which risked breaching the cap. Occupancy was suppressed from that point because of the defects and prospect of the required works. We had been informed of the likelihood of extensive and intrusive works which needed to be carried out. Our priority was the residents and their safety, care and comfort."
I accept this evidence as being credible and true. (i) CQC "Requires Improvement" rating. Mr Taylor's evidence was that this rating for this home was not a material factor in determining occupancy. (i) Mr Taylor gave details of his experience with the ratings by reference to his adjudication evidence (unchallenged by Simply) of other Abbey group homes: Farnworth and Hamilton. (ii) He also explained by references to the actual occupancy figures:
"CQC ratings are often out of date, and so on, so they are of limited use for, I guess, buyers of care services, and in Aarandale, you know, the two months following the CQC rating showed no change in the rate of increase in occupancy, was actually that's when you would have thought the impact would have been greatest." (iii) Mr Taylor explained that "the CQC rating is a secondary concern for potential residents, if it's a concern at all. Often the route into finding a care home is through a website such as Carehome.co.uk. They would then contact the care home to come and have a show-around, and then they would be shown around the home to see the quality of the facilities, the quality of the food, etc, and the general atmosphere of the home, and those items are far more important than the CQC rating." (iv) Mr Taylor explained the significance of carehome.co.uk. Mr Taylor was taken by Simply to the Jones Lang LaSalle ("
JLL") report, but not to the section which recorded for this care home "a carehomes.co.uk rating of 9.3 which is very good." (v) Mr Taylor explained the significance of the website as the pre­ eminent authority in care home marketing:
"a Tripadvisor for care homes but with far more rigour.” (vi) There was no evidence at all, let alone any empirical evidence, that anyone left the home due to the CQC rating. (vii) Mr Taylor's direct experience is valuable and reliable. There is no witness evidence before the Court to the contrary. Simply's directors (Messrs O'Brien and Sharp) are highly experienced in the care sector. They develop, invest in, dispose of, and operate care homes on a substantial scale. Simply could have led such evidence but chose not to do so. (viii) Mr Taylor's evidence was consistent with Savills' literature, which recorded no difference in average occupancy depending on whether "
Good or "Requires Improvement". Both were at 74%. (j) Average weekly fees ("AWF"). Simply suggested to Mr Taylor, in general terms: higher AWF was "going to impact on rate of fill". This is the "logic of the market", it was said. Mr Taylor explained that Abbey's approach on AWF was reasonable.

(i) Mr Taylor explained that on the occupancy data:

"It evidently didn't [impact] particularly, because we continued to fill at that rate for a further six months or so.” (ii) Mr Taylor explained that Abbey "had benchmarked these fees, they looked in line with the market for similar standard care homes."
He explained that the care home manager had the flexibility "to negotiate in individual cases". (iii) Mr Taylor also explained the consequences of reducing AWF on overall profitability, and therefore the overall losses on claim A1: (A) "But that in itself would depress profitability because you'd have lower fees for the same number of residents.” (B) "reducing the fees would mean that the home is less profitable and there would be less ... funding available to employ staff, to pay for food and all the other costs." (iv) Finally, Mr Taylor explained "you can fill a care home by cutting fees significantly. What you can't necessarily do is then increase their rates extortionately to try and catch that up." (k) No credit required to be given by Toppan to Abbey for the increased rent following the BlackRock deal. This was a new and unpleaded point. Mr Taylor somewhat surprisingly did not accept that the Toppan had to give credit to Abbey for increased rent. Contrary to Mr Taylor’s evidence I find that Toppan would have had to give credit to the Abbey for any increased rent. Any alternative arrangement through other operating companies seems artificial and extremely improbable. The abortive costs paid to their solicitors Watson Farley & Williams LLP (“WFW”) for the abortive BlackRock deal were shared 50/50 by Toppan and Abbey because both Claimants required advice as to the consequences of the deal. (l) Planning permission in the context of the BlackRock deal. Mr Taylor denied that it was a dealbreaker:
"In terms of it being the issue or one of the issues that stopped the deal happening, then I don't believe it was one of the things that stopped the deal happening."
This was supported by the contemporaneous exchanges. The sole stated reason from Berwin, Cave, Leighton, Paisner LLP (“BCLP”) for BlackRock withdrawing was the defects. (m) Treatment of VAT in the context of the BlackRock deal. Mr Taylor explained why there was only a "very remote possibility" of treatment of VAT being a "stumbling block”. Mr Taylor rejected any significance in the point. This was consistent with, and is borne out by, the contemporaneous documents. By 31 July 2018 the parties had reached an agreed position on the lease structure, from which the concern as to VAT clawback arose. That was in the context of the structure, i.e. a shorter lease of 125 years, as opposed to 999 years). 999 years was acceptable to both parties, and had been agreed as at 31 July 2018. BCLP confirmed:
"I have spoken to my client and understand that a 999-year lease has been agreed." (n) Public marketing of the care home for sale. Simply sought to suggest that the home was not "openly marketed for sale". (i) This line of questioning focused on open, i.e. public, marketing. This focus was misplaced and misconceived. (ii) Mr Taylor pointed out that that it had not been publicly marketed, but had been marketed significantly via their agent Gary Phillips of Lambert Smith Hampton (“LSH”). Indeed "you can see from the list of people that he did approach, [he] did approach people widely across the market"
. Later in his evidence, Mr Taylor reaffirmed that "Gary Phillips was doing that as he went along". (iii) Mr Taylor highlighted the uncertainty created by openly and publicly marketing a care home. Simply highlighted no unreasonable failure to mitigate at any time. The Claimants’ conduct and approach was reasonable in the circumstances.[29]Nick Martin’s evidence when cross examined was clear and concise. I accept his evidence in full. - Mr Martin gave evidence in respect of the correspondence from 31 August to 11September 2018 which covers the immediate aftermath of the discovery of the defects and the exchanges with Tom Lennon of BRE but was not challenged when cross-examined on these immediate events and these discussions as to the impact of the defects on the home. - The discovery of the defects meant that “… the majority of the walls in the Care Home were indeed loadbearing and therefore structural” and that “it was therefore right to assume that the defects may have been widespread and that every wall could have had defects”. - Mr Martin’s evidence on the tender process for remediation, its direction and reasonableness were not challenged. - Mr Martin explained that there was nothing in the planning permission point as a potential problem for the BlackRock deal.[30]With regard to the factual evidence Simply in its Written Closing stated “It is submitted that the weight on contemporary documents does not support Abbey’s case that occupancy was impacted by the defects from the time they were discovered in September 2018. No mention is made of the defects in the contemporary documentation until February 2019.”[31]In fact Nick Martin’s unchallenged evidence showed that the defects were discovered and reported upon on 21 June 2018 not September 2018. See also the chronology of events set out above.[32]Whilst it is unclear how in this instance “weighing” of the evidence is of any assistance, it is clear from the Claimant’s factual evidence that the occupancy of the home was impacted from the date the defects were reported to Abbey on 30 August 2018. The nature and the extent of the defects combined with the frailty of the elderly residents suggests that it was almost inevitable that occupancy would be impacted by the discovery of the defects and I find that in fact was what happened. F. THE EXPERT EVIDENCE[33]The Claimants’ independent experts were Ian Lock – Valuation Expert Daniel Langley – Accountancy Expert Simply’s independent experts were Rick Savage – Valuation Expert Andrew Conti – Accountancy Expert[34]The Claimants’ and Simply’s independent experts all gave helpful guidance to the court.[35]With regard to the valuation evidence I generally preferred the evidence of Ian Lock. Mr Lock is highly experienced with 43 years of valuation experience of which the last 35 years have been dedicated to his specialist field in healthcare. Mr Lock also made realistic and appropriate concessions such as the probability that in 2018 the retention as part of the BlackRock deal would not have been earned whereas in a 2022 valuation it would have been earned. This resulted as Mr Lock explained in the quantum of loss as at 2022 being some £700,000.[36]Mr Savage was in greater difficulties because of the complete absence of any factual evidence advanced by Simply. Many parts of his report were based upon assumptions which were speculative and not supported by any factual evidence.[37]Mr Savage set out at page 56 of his report what he considered were the “Principal Valuation Considerations” which included “Operational Considerations”. He refers to disruptions in trade including “Covid” and “CQC Require Improvement Ratings” but no mention of the defects. When cross examined, he agreed he should have considered the defects but could not explain whether it was a deliberate omission or “… whether I just missed this. I don’t know.” This was more than somewhat surprising given the case was principally about the impact the defects had on the value and profitability of care home.[38]However when asked to reflect on what was well known in the industry and must have been known at the time of contracting he gave helpful and illuminating answers as set out below at pages 126 and 127 of the Transcript of day 3 of the Trial after some gentle probing from Counsel for the Claimants’. “Q. Could we move on, please, to the defendant. The defendant's directors are Mr Christopher O'Brien and Mr Gary Sharp. Are you aware of them as directors of the defendant company? A. I know that they are the directors as I undertook a conflict check when we commenced the instruction. Q. Have you ever met with them? Don't tell me the contents of this conversation. A. I've not, no. Q. You've not. And in addition to the defendant company, are you aware that they are directors of many other companies in the Simply Group as well as the Morar Living group? A. Yes. Q. And the Simply Group, if you could explain to the court, they invest in care homes; correct? A. As far as I understand they develop and operate care homes. Q. And invest and sell for profit? A. Correct. Q. And it's not unusual in the care sector for homes to be constructed and developed with a view ultimately for their disposal for profit to a third party, that's not unusual, is it? A. That's not unusual, no. Q. And particularly with development finance and, in this case, with Puma, that finance ultimately needs to be discharged after the construction works are completed; correct? A. Correct. Q. And it's typical in this industry for at least to be a real prospect that disposal of the asset would be a means of doing that; correct? A. Correct. Q. It's also a common method for raising capital to acquire and development yet further care homes in this industry, isn't it? A. Correct. Q. Just finally on this topic, are you aware that that is what the Abbey Group and its companies have done before on many projects? A. I understand that, yes, they've developed and sold on.” Mr Savage was not re-examined in respect of any of these answers. Q. And invest and sell for profit? A. I understand that, yes, they've developed and sold on.”

Q. And invest and sell for profit?

[39]The accountancy experts, following the expert process, have achieved an impressive degree of common ground culminating in the production of an updated joint model attached to the second joint statement. The exercise carried out by the accountancy experts was concisely explained in Simply’s Written Opening parts of which I set out below: - Loss of trading profits “Abbey claims that the fact and remediation of the defects inhibited occupancy and profitability of the Care Home. Abbey claims its loss of trading profits from discovery of the defects to September 2021. It says that the difference between the profits it would have received but for the breaches of duty and the profits in fact received is £4,737,424 (Particulars of Claim, paragraph 54(1)) {A/2/19}.” “Abbey's loss of profits claim has been considered by the parties' accountancy experts and, following the expert process, there is a degree of common ground. It is agreed that the measure of loss, if any, is the difference between the profits Abbey would have received but for the defects / breaches and the profits in fact received over the relevant period. The accountancy experts have agreed the figures in respect of Abbey's actual profits, as set out in paragraph 5 of the accountants' second joint statement dated 25 March 2025 {Dl.4/1/17}. The experts have also agreed the detail behind the actual profit figures, including the fixed and variable costs, which were amended following Mr Conti's report. The latest figures are contained in the updated joint model appended to the second joint statement (the "Joint Model") {D1.4/2}. The issues between the parties concern the level of profits in the hypothetical "but for" scenario and the period of time over which these should be assessed.” “It will be noted that there are a number of variables in the hypothetical "but for" scenarios, including the start and end dates, the starting occupancy, the rate of increase of occupancy and the average weekly fee. Subject to the Court's findings on these matters and any other assumptions, the experts have indicated that they are able to prepare any updated calculations or, if required, update the Joint Model to reflect such findings.”[40]The work done by the independent accountancy experts in producing the Joint Model has saved a lot of court time and has simplified the quantification of any trading loss to which the Claimants might be entitled. G. THE CLAIMS[41]I will now consider the remaining claims. Claim A1 Abbey’s loss of trading profits[42]Abbey claims that the fact of and the remediation of the defects inhibited occupancy and the profitability of the care home. Abbey claims its loss of trading profits from the reporting of the defects to September 2021.[43]Abbey seeks, rightly I consider and so find, that it should be put in the position it would have been but for Simply’s admitted breaches of duty. This exercise requires a comparison of the profit earned in fact in the relevant period (the “actual position”) with the profit which could have been earned but for Simply’s breaches of duty (the “but for position”).[44]The “actual position” is both known and agreed by the independent expert accountants. During the period of Abbey’s claim being September 2018 to September 2021 Abbey created a profit of £3,774,000 plus adjustments of £12,000 under the statutory audited financial statements. The total actual net profit in the relevant period for Abbey’s claim is £3,786,000. This is an agreed figure.[45]For ease of reference the occupancy data in the agreed joint model for the actual position and the but for position is as follows: January 2018 to May 2019 (when Abbey claims it would have achieved stable occupancy) Aarandale Manor Resident numbers Actual Claimed 'but for' Shortfall Inc/ (dec) Month end Occupancy Inc/ (dec) Month end Occupancy January 2018 17 26.2% 17 26.2% - February 2018 4 21 32.3% 4 21 32.3% - March 2018 5 26 40.0% 5 26 40.0% - April 2018 5 31 47.7% 5 31 47.7% - May 2018 1 32 49.2% 1 32 49.2% - June 2018(1) 31 47.7% (1) 31 47.7% - July 2018 - 31 47.7% - 31 47.7% - August2018 3 34 52.3% 3 34 52.3% - September 2018 (1) 33 50.8% 3 37 56.9% 4 October 2018 - 33 50.8% 3 40 61.5% 7 November 2018 2 35 53.8% 3 43 66.2% 8 December 2018 2 37 56.9% 3 46 70.8% 9 January 2019 (5) 32 49.2% 3 49 75.4% 17 February 2019 (1) 31 47.7% 3 52 80.0% 21 March 2019 (1) 30 46.2% 3 55 84.6% 25 April 2019 1 31 47.7% 3 58 89.2% 27 May 2019 - 31 47.7% 1 59 90.8% 28 June 2019 to September 2021 (when the claim period ends) Aarandale Manor Resident numbers Actual Claimed 'but for' Shortfall Inc/ (dec) Month end Occupancy Inc/ (dec) Month end Occupancy June 2019 2 33 50.8% - 59 90.8% 26 July 2019 1 34 52.3% - 59 90.8% 25 August2019(2) 32 49.2% - 59 90.8% 27 September 2019 (2) 30 46.2% - 59 90.8% 29 October 2019 1 31 47.7% - 59 90.8% 28 November 2019 - 31 47.7% - 59 90.8% 28 December 2019 - 31 47.7% - 59 90.8% 28 January 2020 (1) 30 46.2% - 59 90.8% 29 February 2020 (2) 28 43.1% - 59 90.8% 31 March 2020 - 28 43.1% - 59 90.8% 31 April 2020 (1) 27 41.5% - 59 90.8% 32 May 2020 10 37 56.9% - 59 90.8% 22 June 2020(3) 34 52.3% - 59 90.8% 25 July 2020 (1) 33 50.8% - 59 90.8% 26 August2020 - 33 50.8% - 59 90.8% 26 September 2020 (1) 32 49.2% - 59 90.8% 27 October 2020 - 32 49.2% - 59 90.8% 27 November 2020 - 32 49.2% - 59 90.8% 27 December 2020 1 33 50.8% - 59 90.8% 26 January 2021 2 35 53.8% - 59 90.8% 24 February 2021 (2) 33 50.8% - 59 90.8% 26 March 2021 - 33 50.8% - 59 90.8% 26 April 2021 (1) 32 49.2% - 59 90.8% 27 May 2021 3 35 53.8% - 59 90.8% 24 June 2021 2 37 56.9% - 59 90.8% 22 July 2021 1 38 58.5% - 59 90.8% 21 August2021 3 41 63.1% - 59 90.8% 18 September 2021 5 46 70.8% - 59 90.8% 13[46]The respective positions of the independent accountancy experts regarding the loss of trading profits are as follows as appears from their Supplemental Joint Statement. “Loss of trading profits suffered by Second Claimant - summary of Experts' calculations Mr Langley for the Second Claimant After taking into account the update applied to costs in the category labelled 'Recruitment' as discussed in item C1 above, Mr Langley considers that the calculated lost trading profits may be summarised as shown in the following three summary tables: Table 1 Lost trading profits of the Second Claimant - Langley loss calculations, occupancy growth of 3 residents per month (all values recorded in £000) Description Sept-Dec 2018 2019 2020 Jan-Sept 2021 Total Trading profit in the hypothetical 'but for' scenario 413 2,687 3,007 2,122 8,229(a) (A) Trading profit in the actual scenario(b) (B) 366 1,230 1,079 1,112 3,786 Lost trading profits (A - B) 47 1,457 1,928 1,010 4,442 Source: Updated Joint Model {D1.4/2} Mr Langley for the Second Claimant Table 2 Lost trading profits of the Second Claimant - Langley loss calculations, occupancy growth of 2 residents per month (all values recorded in £000) Description Sept-Dec 2018 2019 2020 Jan-Sept 2021 Total Trading profit in the 386 2,531 3,007 2,122 8,046 hypothetical 'but for' scenario (A) Trading profit in the actual 366 1,230 1,079 1,112 3,786 scenario (B) Lost trading profits (A - B) 20 1,301 1,928 1,010 4,260 Source: Updated Joint Model Table 3 Lost trading profits of the Second Claimant - Langley loss calculations, occupancy growth of 2 residents per month to the end of 2018 and then 1.5 residents per month (all values recorded in £000) Description Sept-Dec 2018 2019 2020 Jan-Sept 2021 Total Trading profit in the hypothetical 'but for' scenario 386 2,435 3,007 2,122 7,949 (A) Trading profit in the actual scenario (B) 366 1,230 1,079 1,112 3,786 Lost trading profits (A - B) 20 1,205 1,928 1,010 4,163 Source: Updated Joint Model Mr Conti for the Defendant 7.2 Taking into account the changes to the 'Recruitment' cost category, as discussed at item C1 above, Mr Conti has revised his Alternative 1 and Alternative 2 loss of profit calculations and summarised the results in the tables below: Alternative 1 ________________________________________________________ Description October 2019 to May 2020 £000 ________________________________________________________ Trading profit in the hypothetical 'but for' scenario 1,095 (A) Trading profit in the actual scenario (B) 704 Lost trading profits (A - B) 391 Source: Updated Joint Model {D1.4/2} (i). Alternative 2 Description Sept 2018 to Oct 2019 to Total Sept 2019 £000 May 2020 £000 £000 Trading profit in the hypothetical 'but 1,428 1,095 2,523 for' scenario (A) Trading profit in the actual scenario (B) 1,293 704 1,997 Lost trading profits (A - B) 135 391 526 Source: Updated Joint Model {D1.4/2}[47]After the end of the closing oral submissions and after it had been realised that Mr Conti’s start date – the date of the commencement of the remedial works – was wrong given that the remedial works started in July 2019 and not as previously thought by Mr Conti in October 2019 these figures were updated by an email from the Defendant’s counsel which stated:
“As requested at the hearing today, the updated figure provided by Mr Conti for Abbey's loss of profits claim is £644,291. This has been calculated using the "CONTI - Loss calculations" tab in the Updated Joint Model {D1.4/2}, with the following assumptions and changes from Mr Conti's calculation of the rounded figure of £391,000 given in the accountants' second joint statement{D1.4/1/23}: • Start date: July 2019 (previously October 2019) • End date: May 2020 (no change) • Period of loss: 11 months (previously 8 months) • Additional residents over period: 7 residents (previously 5) • Average growth rate over period: 0.636 residents per month (previously 0.625)”
[48]The “but for position” is not agreed but the matters still in dispute are limited. The remaining issues are -1 the but for start date -2 the but for end date -3 the but for occupancy growth rate -4 the but for occupancy steady state rate[49]-1 The but for start date I am satisfied that on the evidence it is clear that the start date for the claim is September 2018. I do not accept Simply’s invitation “… to find that the defects had no significant impact on trading profits until the start of the of the remedial works in September (or July) 2019. In the alternative the earliest affected month was February 2019 when the documents refer to a temporary stop on admissions“ Mr Taylor accepted when cross examined that marketing never stopped but I agree that that was to maintain occupancy not to grow occupancy. With the threat of major remedial work on the horizon this was not the time to ramp up occupancy particularly when it became clear that the maximum occupancy once remedial work commenced could only be two thirds of the total planned occupancy. The factual evidence is overwhelming that occupancy from September 2018 had to be suppressed and was suppressed. -2 The but for end date Mr Conti when cross examined accepted that his calculation leading to a but for end date position as at May 2020 was “numerically incorrect”. The Claimant’s in their written opening stated that “(2) The occupancy data is instructive. It demonstrates very clearly the recovery and the end of the period of loss: September 2021. Occupancy remains suppressed until May 2021, at which point it starts to grow to recovery in September 2021.” That is incorrect. The but for end date was a deliberate chosen date at which point occupancy had not fully recovered. As Mr Taylor explains in his written statement. “70 Our claim for the loss of profits is up to September 2021. While at this point occupancy had only reached 46 residents, it was considered (in discussion with our advisors) that a claim beyond this time would be too remote and other unrelated factors might play a part. In fact, occupancy of 59 residents was achieved in March 2023, due to the ongoing effects of Covid (largely due to admissions being halted in the event of positive covid cases in the home, or potential residents testing positive prior to admission).” Given this limits the claim to a point before full recovery it appears not unreasonable to accept September 2021, which I do, as the but for end date. -3 The rate of occupancy growth On this issue I prefer the approach of Mr Langley to the approach of Mr Conti. The figure of 0.625 per month suggested by Mr Conti is difficult to defend. The basis for that figure is that it equates to the rate achieved in the period January 2018 to September 2019. However these calculations do not make sense. Everyone accepts, as I do, that there was an impact on occupancy before September 2019 due to the Defendant’s breaches of duty. Mr Conti accepted when the 2017 occupancy data which he had excluded from his analysis was put to him from July 2017 to August 2018 the monthly net occupancy growth rate was 2.62 per month. From July 2017 to December 2018 it was 2.18 per month. I consider a prudent, conservative monthly net occupancy increase is 2. per month. This monthly increase was modelled by Mr Langley and somewhat to the surprise of Mr Conti when cross examined was also modelled by Mr Conti in the Updated Joint Model but had not made its way into his report. I consider that a monthly net occupancy increase of 2. per month is a reasonable figure and should be used in calculation the trading loss of profits. -4 The but for occupancy steady state rate Mr Savage the Defendants independent valuation expert had assumed 60 for steady state occupancy. Mr Conti arrived at 57 but agreed that Mr Savage was in a better position to opine on this matter. I consider Mr Langley and the Claimants’ figure of 59 should be accepted as the correct and appropriate figure for steady state occupancy and in fact this was achieved for a sustained period from March to September 2023. Accordingly the loss of trading profits is £4,260,000 premised on an occupancy growth of 2. per month up to September 2021 i.e. the but for profit in the period 2018 to September 2021 of £8,046,000 less actual agreed profit of £3,786,000 in the same period. Claim A2 and T4 The Claimants claims for aborted legal costs and disbursements for the aborted sale[50]This claim is £20,000 plus VAT namely £24,000 in abortive costs paid by the Claimants to WFW in respect of the BlackRock deal. The Claimants seek damages because but for Simply’s breaches of duty those costs and disbursements would not have been aborted and wasted as aborted sums.[51]Simply had asserted in opening that Claim T4 could not be claimed in addition to Claim T3.[52]Given Simply’s alleged insolvency and alleged intransigence to date, the Claimants stated in its written closing that it does not wish to generate any delay in enforcement of any judgment, nor any appealable point of law on a lower value head of claim.[53]On that basis and without concession, the Claimants now seek damages on Claim T4 only in the event that Claim T3 were to be rejected, and thus in the alternative to Claim T3. The Claimants still contend that the costs are plainly abortive and wasted. Any future sale will now require the renewal, instead of the re-use, of such costs and disbursements and the underlying work.[54]During the course of the trial I indicated that the pursuit of this size of claim could be said to be disproportionate. Despite all this I propose to make an order in respect of this claim.[55]Claim T4 states that these abortive costs were paid by Toppan. Claim A2 states that these abortive costs were paid by Abbey. Interim and final invoices claiming £6,000 were sent to both Toppan and Abbey. The invoices and their payment in the sums claimed are clearly documented. These losses were caused by Simply’s breaches of duty and these costs were plainly aborted and wasted. Any future sale will require new work. The abortive work cannot be reused. F3. Claim A3 - overdraft charges[56]The claim is for £7,400.39. It is the overdraft charges allegedly incurred by Abbey by reason of Simply’s breaches of duty.[57]Abbey has alleged it was required to make additional use of its overdraft facility during the remedial works due to static occupancy and loss of increased expected income. Abbey alleged it had to make higher interest payments totalling £7,400.39 than would have been incurred but for the defects and thus Simply’s breaches of duty.[58]Again I expressed concern that such a claim should be pursued when the sum in dispute is so small and the cost of resolving this claim is disproportionate to the sum in dispute. However, despite all that, I reject this claim because such a loss is far too remote. Simply had no knowledge of how these remedial works were to be funded. Simply notes that the interest is claimed from 15 December 2018 to 13 September 2019 which does not correspond to the timing of the remedial work. I do not consider that Abbey has established on the balance of probabilities that these overdraft charges are the responsibility of Simply. These losses are also too remote to be recoverable. Claim T3. The loss of the BlackRock deal[59]Simply contends that -1 the alleged loss is too remote. -2 the discovery of the defects did not in itself prevent the sale going ahead. Remaining issues such as: - VAT - Planning - updated financial records would have prevented a deal going ahead -3 In any event Toppan suffered no losses as a result of the deal with BlackRock not going ahead. Taking each in turn. -1 Remoteness[60]Where, as here, there are concurrent duties of care in contract and tort, the contractual remoteness test applies, and this is more restrictive than the reasonable foreseeability test in tort. The familiar remoteness test in Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145,Alderson B, at 354, is:
"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 either [JJ arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or [2} such as ay 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."
[61]This test was applied by the House of Lords in Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 (HL) with the result that damages for the late redelivery of a chartered vessel were limited to the difference between the market rate and the charter rate for the overrun period. The loss associated with a lucrative follow-on charter was not recoverable.[62]As Lord Hoffmann explained the remoteness test can have an exclusionary effect, such that a party may not be liable for foreseeable losses because they are not of the type or kind for which he can be treated as having assumed responsibility. Lord Hope also asked whether the loss was a type for which the party can reasonably be assumed to have assumed responsibility.[63]Lord Roger adopted a more traditional articulation of the test, whereby the damages recoverable for breach of contract are such as flow naturally in most cases from the breach, whether under ordinary circumstances or from special circumstances due to the knowledge either in the possession of or communicated to the defendants.[64]Lord Walker expressed agreement with all three opinions. He noted that there may be cases where the loss of unusually profitable contracts or exceptionally large losses could be said to be a "serious possibility", "real danger" or "not unlikely" yet it did not follow that they were within the reasonable contemplation of the parties, such as on the facts of The Achilleas, where the scale of the loss was due to extremely volatile market conditions.[65]Whether losses due to a fall in the market are recoverable in construction cases are fact-specific. “73.1.In Earl's Terrace Properties Limited v Nilsson Design Limited [2004] BLR 273 (TCC) a claim was brought against an architect for waterproofing defects identified during construction, which resulted in a delay to completion. Judge Thornton QC rejected the architect's argument that the claimant had to give credit for an increase in the sale price over the period of delay. Any loss due to a fall in the market would have been too remote and outside the scope of the architect's duty; it followed that any increase in the market should not be taken into account, at [99]-[108]. 73.2. In John Grimes Partnership Ltd v Gubbins [2013] BLR 126 (CA) an engineer's delay in the completion of designs resulted in a delay to the project and a claim was brought for the decline in value of the development due to the fall in the market over the period of delay. The Court of Appeal held that the loss due to the fall in the market was not too remote and was recoverable as a result of the engineer's delay.”[66]The Trial Judge in John Grimes, made detailed findings as to the engineer's knowledge, which was referred to in the Court of Appeal's reasoning. The engineer knew that any delay (on his part) presented a risk that the property market might move considerably, including to the disadvantage of the claimant. Further, he knew exactly what the claimant intended to do and when he intended to start.[67]This case is noted in Hudson's Building and Engineering Contracts (14th edition, Sweet & Maxwell, 2022), at 7-039, in the context of claims for delay and consequential loss, where it is cited as authority for the proposition that unless the market fluctuation is so severe as to be itself unforeseeable, such losses (resulting from delay) will be recoverable, "so long as the property was constructed for sale". The editors add the following comment:
"Where at the time of contracting it is not envisaged that the property would be sold, then any subsequent loss of sale value may be too remote."
[68]The illustrations in Hudson's, at 7-039, include an Australian case, at (5), Triden Properties Ltd v Capita Financial Group Ltd (1996) 15 ACLR 12. A claim was brought under a development agreement for losses caused by defective curtain walling. The Judge at first instance, Cole J, found that the discovery of the defects after completion resulted in a buyer pulling out of a sale for $65m. The claimant sought to recover the difference between the proposed sale price and the value of the building at trial, some $14m less. Cole J rejected the claim, and that decision was upheld by the New South Wales Court of Appeal on the grounds that the loss was too remote. It was not in the contemplation of the parties that the building would be sold upon completion; indeed, it was the intention that the claimant would become a long-term tenant of the property.[69]Simply’s analysis of the present state of the law regarding remoteness is not challenged. What is challenged is their understanding of the factual background to this transaction particularly after the cross examination of their own independent valuation expert Mr Savage.[70]In the light of that cross examination I find and so hold that. .1 Mr Savage knew and accepted that Messrs Sharp and O'Brien are directors of many other companies in the Simply group, as well as Simply and the Morar Living group. .2 Mr Savage knew and accepted that Simply's directors invest in, develop, and operate care homes, and sell them for profit. .3 Mr Savage knew and accepted that it is not unusual in the care sector for homes to be constructed and developed with a view ultimately for their disposal for profit to a third party. .4 Mr Savage knew and accepted that with development finance and, in this case, with Puma, the finance needs to be discharged after the construction works are completed. .5 Mr Savage knew and accepted it is typical in this sector for there to be, at the very least, a real prospect that disposal of the asset would be a means of discharging the development finance. .6 Mr Savage knew and accepted it is also a common method in this sector for raising capital to acquire and develop yet further care homes. .7 Mr Savage knew and accepted this is what the Abbey group and its related companies had done before on many projects: "I understand that, yes, they've developed and sold on.”[71]Contrary to Simply’s submissions the alleged losses associated with the proposed sale to BlackRock did arise naturally according to the usual course of things as a result of Simply’s breaches and the defects. The alleged losses were in the reasonable contemplation of the parties at the time of contract and as stated by Mr Savage Simply and the Claimants had special knowledge regarding the very real likelihood of the sale of newly constructed care homes.[72]In the light of the evidence I find and so hold that the actual or potential onward commercial disposal of the care home for profit was known to Simply through its directors, Christopher O'Brien and Gary Sharp, and/or was in their reasonable contemplation. Simply had introduced Puma to Toppan, and indeed the package deal. Simply and its directors operated in the same specialist field as Toppan with the knowledge and understanding that: .1 It is not unusual in the care sector for homes to be constructed and developed with a view ultimately for their disposal for profit to a third party. See the evidence of Mr Savage, an expert valuer in the sector. .2 With development finance and, in this case, with Puma, that finance ultimately needed to be discharged after the construction works are completed. See the evidence of Mr Savage. .3 It is typical in this sector for there to be, at least, a real prospect that disposal of the asset would be a means of discharging the development finance. See the evidence of Mr Savage.[73]I find and so hold that the alleged loss is not too remote. The discovery of the defects did not in itself prevent the sale going ahead. Remaining issues or difficulties it is alleged such as - with the planning permission - the VAT clawback - updated trading information would have prevented a deal going ahead.[74]Simply contends that either individually or in combination these matters meant that there was a real risk that BlackRock would not have proceeded with the transactions. I disagree.[75]With regard to the planning permission issue, the Care Home only had planning permission for 60 bedrooms, rather than the 65 which had been constructed and were being operated. This issue was raised by Gary Phillips, Toppan’s property agent in his email dated the 20th July 2018 to the seller team when he stated:
“The Home does NOT have a clear planning permission for 65 beds and they will want this regularised and will not complete on the transaction UNLESS there is a further retention of monies as the planning is not 100% guaranteed and they will therefore not pay for a 65 bed Home until it’s approved by the planners.”
[76]Mr Taylor, when cross-examined stated and I accept his evidence on this point. “I don’t believe it was one of the things that stopped the deal happening.”[77]In any event Simply in its written closing submissions suggest:
“at the very least BlackRock would have wanted a retention.”
[78]That in itself would have prevented the planning permission issue from blocking the deal.[79]The VAT clawback issue relates to the risk that Toppan would be liable to pay VAT on the construction cost of the Care Home upon the sale. Toppan sought, and received, specialist VAT advice from McIntyre Hudson following which a 999 year lease, rather than a 125 year lease, was agreed and treatment of VAT was no longer a material concern.[80]As McIntyre Hudson advised. “HMRC now accepts that a 999 year lease is tantamount for 70 GC purposes to the transfer of the asset. This follows the outcome of a tribunal case (Robinson Family (TC 02048).”[81]By the 7th August 2018, Gary Phillips informed Mr Taylor and Mr Sodhi that BlackRock had downed tools with their lawyers due to the fire resistance issue. However, he went on to urge Toppan to deal with the planning permission issue (emphasis added):
“While you take stock of the above, I would urge you to get the planning sorted out! Has planning been submitted for the additional five beds? This is the only point that BR are concerned with following my call with their Board yesterday.”
Planning, not VAT was the only point that BlackRock was concerned about and the alleged obstacle could be readily removed by adopting a retention in the sale agreement. - Updated financial records[82]On the 30th July 2018 Toppan updated one of its Lenders that terms were agreed with BlackRock, due diligence largely complete, surveys completed, legals very advanced and exchange should occur with early completion in September 2018. There appears to be no evidence BlackRock required or asked for updated financial records.[83]On the balance of probabilities, but for the defects caused by Simply’s now admitted breaches of duty, Toppan and BlackRock could have proceeded with the deal and the deal would have been completed in or about September 2018.[84]What was in fact the deal breaker was the defects. -3 In any event, Toppan suffered no loss as a result of the deal with BlackRock not going ahead.[85]The Claimants allege that but for Simply’s breaches of duty and the defects, Toppan would have completed a sale of the Care Home to BlackRock in or around September 2018 on a sale and leaseback basis of £22.5m. Of that sum, £20.5m would have been paid on completion. The experts almost agree that the retention of £2,000,000 would not have been paid. However, the Claimant accepts in Annex 4 of the Particulars of Claim that:
“The retention of £2,000,000 would not have been achieved.”
[86]The valuation experts agreed that there was no fall in the market until the Liz Truss mini-budget also known as the fiscal event of 23 September 2022, and the impact of that mini-budget was, as Mr Savage notes, unprecedented and any resultant loss would be too remote.[87]The valuation experts also agree that during the period from June 2018 to September 2022, the investment market for Care Homes was broadly stable, and the net yields adopted by BlackRock were within the range of evidence throughout that period.[88]As against the Claimant’s pleaded valuation date of 15 September 2022, Mr Lock’s valuation is £19,800,000 (based upon a lower initial rent of £1.05m and the retention of £1.8m would most likely have been met equating to an alleged £0.7m loss).[89]The valuation experts have considered the market value of the Care Home on a sale and leaseback basis at various points in time. These conclusions can be summarised as follows: Date Cs: Mr Lock D: Mr Savage Market Value Rent Market Value Rent June/September 2018 £20,500,000 + £2,000,000 retention £1,200,000 £20,500,000 £1,095,000 14 February 2020 £19,475,000 + £1,900,000 retention £1,200,000 £20,975,000 £1,120,000 15 September 2022 £18,000,000 + £1,800,000 retention £1,050,000 £21,350,000 £1,140,000 February 2025 £18,800,000 £1,200,000 £18,725,000 £1,120,000[90]This claim has to some extent been over-analysed. There is a short answer to the question of whether the Claimants have made a loss because of the failure of the BlackRock deal.[91]As Mr Lock agreed, in a sale and leaseback transaction, the seller and the tenant/operator need to find a balance between the maximum headline price and the affordability of rent.[92]The rent that Abbey was paying to Toppan under its existing lease was: .1. £770,000 from the end of August 2018 .2. £850,000 from the end of August 2019 .3. £900,000 from the end of August 2020 for the residue of the 21 year term.[93]The BlackRock Offer was based on initial rental payments of £1.2m per annum, increasing annually in line with the Retail Price Index, so: £1.200,000 from September 2018 £1.229.145 from September 2019.[94]On the basis of completion in September 2018 and Toppan paying the difference in rent for the first two years, this would have resulted in payments of: .1. £430,000 in the first year (difference between £1.2m and £770,000) .2. £379,145 in the second year (difference between £1,229,145 and £850,000) .3. A total of £809,145.[95]If as I find and so held, Toppan would have had to pay to Abbey the difference in rent for the first two years of the BlackRock deal Toppan has not suffered any loss through the collapse of the BlackRock deal because of the defects.[96]On the Claimants’ pleaded valuation date of September 2022 and on Mr Lock’s valuation, the loss resulting from the failure of the BlackRock deal is £0.7m (£20.5m less £19.8m). That loss is extinguished by the compensation Toppan would have had to pay to Abbey, calculated at £809,145.[97]When Mr Taylor was cross-examined, he accepted that with the BlackRock deal: “the operator though was paying more rent than it was with its existing lease to Toppan.” (see Day 2, page 119, line 19).[98]He also accepted that the £1.2m rent was high and it was going to be difficult for Abbey to afford when the care home was half full. He then gave evidence as to a presentation he gave at a meeting in May 2018:
“... 10 Q That’s what the email says, so I assume that’s right. 11 So there’s a presentation on this day. This sets 12 out a framework of the BlackRock deal. As we know, 13 BlackRock was interested in Mill Hill which was owned by 14 Toppan, leased to Abbey. 15 Heads of terms are: Purchase price: 22.5 million. 16 Rent: 1.2 million. 40—year lease. There’s no 17 suggestion there of a retention, so that presumably 18 comes later, but we have there the ultimate purchase 19 price as far as negotiation went, and a 1.2 million rent 20 and at the bottom we have: 21 “OpCo view.” 22 Now, would this have been Mr Sodhi who put together 23 this document or did you do it? 24 A. I believe this would have been me. 25 Q. It would have been you. Okay, so: — 1 “OpCo view”. 2 “... we have analysed our forecasts and consider 3 that at mature trading this rent is affordable ...” 4 You forecast EBITDA to be over two times rent, so 5 that’s your rent cover — — 6 A. Yes. 7 Q. — — profits, twice as much as your rent is a good 8 indicator rent is affordable. 9 A. Yes. Correct, yes. And it was the threshold in the 10 BlackRock deal as well ultimately. 11 Q. Yes: 12 “However, this is a significant increase in rent 13 over the current arrangement, and we would seek 14 compensation for this to cover the 1st two years rent.” 15 So as in the meeting note that we’ve just been 16 looking at, there’s a discussion being had about Toppan 17 compensating Abbey for two years’ rent, isn’t there? 18 That’s what it says. 19 A. Yes. I believe that would be probably the difference 20 between the rents. 21 Q. Well, the rent we’ve just seen at this point in time 22 anyway was about a quarter of the starting BlackRock 23 rent. 24 A. Yes. 25 Q. And then the BlackRock rent that starts at 1.2 million — 1 on day one goes up in year two by RPI, doesn’t it? So 2 it goes up a bit. 3 A. Between 0% to 4%, yes. 4 Q. Yes. Whereas the rent paid to Toppan, as we’ve just 5 seen, in year 2 goes up only to 770,000, so it’s still 6 not close to 1.2 million. 7 A. Yes. 8 Q. So I suggest to you that the arrangement between Toppan 9 Abbey was as follows: the objective of this deal is 10 to maximise the price for Toppan. That is going to mean 11 a very high rent, certainly far higher than Abbey is 12 paying at the moment. Toppan accepts that, and will 13 have to compensate Abbey for that difference, at least 14 for the first two years, maybe just when you’re ramping 15 up trading. Is that how you recall matters? 16 A. Yes, that was the discussion.”
[99]Later, Mr Taylor was asked who would support Abbey for the first two years of the BlackRock Deal if it had gone ahead:
“1 Q. Not that you’re aware, no. 2 So does it not follow, then, Mr Taylor that 3 Toppan’s claim for what it says it’s lost as a result of 4 the deal with BlackRock not going through should in 5 principle at least give credit for the compensation that 6 it would have had to have paid to Abbey in rent, for the 7 difference in rent? 8 A. I’m not sure. 9 Q. No, well, I understand the point in principle. Toppan 10 is claiming we would have sold the property to 11 BlackRock, we would have had 20.5 million, we can’t sell 12 it to BlackRock now because they don’t want it anymore, 13 we can only get less now, and Toppan is claiming 14 2.5 million as the difference, but, if the BlackRock 15 deal had gone through, Toppan, it seems, would have 16 inevitably had to have paid some compensation to Abbey, 17 the difference in rent, for the fact that Abbey, was 18 getting a worse side of the deal for the first, few 19 years? 20 A. That had been very preliminarily discussed. 21 Q. Okay, but it hadn’t changed, and I mean what do you 22 say — — I mean, what do you say would have happened then 23 if the deal had gone through and Abbey is in tremendous 24 financial difficulties paying the rent because trading 25 hasn’t picked up, as we know it didn’t in the first — — __ 1 in 2018? You’re not suggesting that Toppan would have 2 just sat back and taken the BlackRock money and let 3 Abbey suffer financially ? You’re not suggesting that, 4 are you? 5 A. I can’t speculate as to what would have happened in that 6 event. 7 Q. Why not? It’s sort of rational — — is it difficult to 8 predict what ultimately Mr Sodhi would do or the 9 trustees would do? 10 A. Well, I mean, the money may have been used elsewhere for 11 developments. 12 Q. Right. 13 A. And again, it’s speculation years down the line. 14 Q. It’s possible, if the deal had gone through, Toppan 15 would have gone off, spent the money on a new 16 development in Scotland and Spalding and just left Abbey 17 high and dry paying 1.2 million rent that they couldn’t 18 afford. Are you saying that’s plausible? 19 A. No, the other — — more likely is the other operating 20 companies as part of that same group would have 21 supported — —”
[100]It was this last answer I am unable to accept as being correct: - it is obvious that Toppan would have supported Abbey - that is what had been discussed at the meeting in May 2018 - there seems no commercial sense for other operating companies as part of its same group to have supported Abbey by paying the increased rent for the first two years of the lease with BlackRock. I also consider that even if the subsidy had been provided by another operating company in the same group, the Claimants would still have had difficulty in proving they suffered any loss through the collapse of the BlackRock deal. Claim T5 Increased interest charged by Toppan’s lenders and investment losses on what would have been the proceeds of the aborted sale to BlackRock[101]This head of claim is pleaded on two bases. First, Toppan claims for the continued interest payments made under its loan from Allied Irish Bank ("AIB"), which it says would have been discharged in September 2018 when the proposed sale to BlackRock completed. The sum claimed on this basis is £902,745. Second, Toppan claims for the profits it says it would have made by investing the proceeds of the lost sale with BlackRock. Toppan says it would have discharged the AlB loan, obtained equivalent funding elsewhere and invested £20.49m in the purchase and development of care homes, receiving high rates of return, of at least 6.25%, from September 2018. The amount claimed, after giving credit for continued receipt of rent from Abbey, is £1,765,937.50 to 31 October 2022, continuing at £31,718.75 per month.[102]The Claimants have advanced no expert evidence in support of this aspect of the claim.[103]This alleged loss is premised on Simply being liable for the loss of the sale to BlackRock which I accept is correct albeit no loss flowed from that loss of sale. The continued interest and investment losses are far too remote and are far removed from Simply's scope of duty.[104]In his second witness statement, Mr Taylor says that the Claimants would have developed sites in Spalding and Scotland (Airdrie), which had planning permission (paragraph 62) {C3/l/11}. In his first statement, Mr Taylor said there were "a variety of options available". He mentioned the two sites and said that in all likelihood the Group would have "either" developed "one" of these sites or sought a new site. The inconsistency in Mr Taylor's evidence suggests that there was no firm intention in this regard and certainly no firm intention to develop both sites, as is now said to be the case.[105]The only contemporaneous evidence as to Toppan's intended use of the proceeds of sale refers to an entirely different objective, namely to reduce the Lloyd's debt (on other care homes in the Group) by £2m. On the basis of this evidence, the amount of money available to invest must, at the very least, be reduced by £2m.[106]Even if Toppan can prove that it would have developed those sites (which I do not accept), the resultant loss of profit is speculative and far removed from Simply's breaches of duty.[107]There is simply too much speculation and too little credible evidence to support this fanciful claim. There is no business plan, no estimate of development costs, no analysis of likely rents or how long it could take to reach full occupancy. The proposed rate of return is far fetched and is meaningless without any analysis of - The value of the assets Toppan say it would develop - The operating profits - The weekly fees that could be charged - The rental income Toppan could expect to receive.[108]These claims as Simply contends are fundamentally flawed and are extremely speculative. I also find that these alleged losses are far too remote to be recoverable. These losses are not of the type or kind for which a party can be treated as having assumed responsibility see discussion on The Achilleas above. Claim T6 interest charges related to suppressed occupancy[109]Toppan contends that(1) Toppan’s secured loan facility with its lender, AIB, had an interest rate of 3-month LIBOR plus 3.5%.(2) The facility contained a condition that if the ratio of EBITDAR to total debt service costs is greater than 1.5 : 1 measured against the signed audited accounts of Abbey the interest rate for the AIB Facility reduces to 3-month LIBOR plus 3%, instead of plus 3.5%.(3) But for Simply’s defects and breaches of duty, Toppan would have achieved that Reduced Interest Condition in the year ended December 2019. It would not have incurred the higher rate of finance charges that it did by reason of the breaches.[110]Abbey's audited accounts for the year ending December 2019 were issued in September 2020. Toppan would have benefited from the Reduced Interest Rate from 2021 but for Simply's breaches of duty.[111]Instead, Toppan did not achieve the Reduced Interest Condition during the term of the loan.[112]The delay in Toppan achieving the Reduced Interest Condition as the result of Abbey not being able to achieve the target trading covenant caused Toppan to pay higher interest charges on the AIB Facility than would have been the case but for the Defects, in the sum of £38,878.25.[113]The loss is particularised in the table below. It comprises 0.5% of the average outstanding debt over the relevant period. 0.5% is the reduction in the interest rate to the Reduced Interest Condition. The relevant period is 1 January 2021 to 9 May 2022. There were 365 days in 2021. There were then 129 days to 9 May 2022. Year Reduction in margin Number of days Average debt balance TOTAL 2021 0.5% pa 365 £5,815,260 £29,076.30 2022 0.5%pa 129 £5,546,838 £9,801.95 Total £38,878.25 These figures were confirmed by Mr Taylor in his evidence.[114]This is not a global claim. Nor has it been alleged by Simply that this loss is too remote. Simply has again underestimated the impact of the defects on the care home’s occupancy. I am satisfied that Simply’s breaches of duty and the widespread defects in the care home were the dominant cause of Toppan failing to achieve the Reduced Interest Condition in the year ended 2019.[115]I consider that Toppan is entitled to recover £38,878.25 in respect of this claim which are the interest charges Toppan paid but would not have had to pay but for Simply’s breaches of duty. H. WAS THE DEFENDANT IN BREACH OF DUTY IN FAILING TO COMPLY WITH CLAUSE 6.13A OF THE BUILDING CONTRACT AS TO NOTIFICATION TO ITS INSURER(S) IMMEDIATELY UPON RECEIPT OF THE CLAIMS ON 15 JANUARY 2019 OR THEREAFTER”[116]On the 24 June 2019 Simply made what I regard as an admission that it had not notified its insurer(s) when they informed the Claimants “as we feel no need.” What loss flows from this breach is not a question I have been asked to answer. I. INTEREST[117]The pleaded rate is 4% per annum simple interest from the dates and periods set out in Annex 5 of the APOC. I consider that a rate of 4% is reasonable given that the average base rate from September 2018 was approximately 2.1%. If anything I consider a rate of 4% is low compared to rates which have been awarded in the Rolls Building in recent years. I invite the parties’ independent accountancy experts to agree the appropriate interest calculation from the dates these losses were incurred. J. CONCLUSIONS[118]In the light of my findings I answer the issues as follows:(1) To what damages are Abbey entitled to for? (a) Claim A1 loss of trading profits. - £4,260,000. (b) Claim A2 abortive legal costs and disbursements for the aborted sale to BlackRock. - £12,000. (c) Claim A3 overdraft charges. - none.(2) What damages are Toppan entitled to for? (a) Claim T3 loss of sale of the care home. - none. (b) Claim T4 abortive legal costs and disbursements for the aborted sale to BlackRock. - £12,000. (c) Claim T5 increased interest changes charged by Toppan’s lenders and investment losses on what would have been the proceeds of the abortive sale. - none (d) Claim T6 interest charges. - £38,878.25.(3) Was Simply in breach of duty in failing to comply with clause 6.13A of the Building Contract? - Yes.(4) To what interest is Abbey and Toppan entitled to – 4% per annum simple interest from the dates these losses were incurred to be agreed by the parties’ independent accountancy experts MARTIN BOWDERY KC (sitting as a Deputy High Court Judge)