Brit Inns Ltd & Ors v BDW Trading Ltd

INTRODUCTION

These two actions arise out of the flooding of the basement restaurant of The Oak in Teddington on 15 January 2007. The Oak was operated by a company called Brit Inns Limited, which is now in liquidation. The two directors of Brit Inns were Mr Vincent Barber and Mrs Linda Lawless, who continue to run a restaurant business at the premises through a different company. The flooding arose out of admittedly defective work carried out by BDW Trading Limited (better known as Barratts) and/or their sub-contractors, J Reddington Limited (to whom I shall refer collectively as “the defendants”). Action number HT-11-503 is the subrogated claim, pursuant to which Brit Inns’ insurers seek to recover the sums that they paid out to Brit Inns consequential upon the flooding. Although, unusually, Mr Barber and Mrs Lawless were also claimants in those proceedings, their claims were stayed. Action number HT-11-423 concerns their uninsured claims, many of which they pursue as assignees of Brit Inns. The liquidator of Brit Inns was joined as a party to that action because of a concern about whether proper notice of that assignment had been given.

The liability of the defendants for the flooding in January 2007 has never been in dispute. Thus the disputes at trial were limited to questions of causation and quantification. It is relatively unusual for such quantum-only claims, particularly when they have already been through the filter of an adjusted insurance claim, to be fought out in the traditional way in court. However, as I hope will be made clear below, there were particular features of these claims, and the documents surrounding them, which were very unusual; what ought to have been a straightforward assessment of loss became an attritional battle involving inadequate documentation, late evidence, and wrangles about the burden of proof. In those circumstances, I am grateful to all counsel for their good temper and considerable assistance.

I set out in Section 2 below a Chronology. Thereafter I deal with the claims under three broad heads. First, in Sections 3 and 4, I address the subrogated claims for material damage. Secondly, in Sections 5 and 6, I deal with the subrogated claim for loss of profit. Thirdly, I deal with the remaining miscellaneous claims in Section 7 below. There is a short summary of my Conclusions at Section 8 below.

CHRONOLOGY

The Royal Oak

For the best part of 20 years, until 2005, Mr Barber and Mrs Lawless ran a pub, known as The Royal Oak, at 170-172 High Street, Teddington. It was a traditional public house which did not serve much food. It is referred to at one place in the documentation as a ‘biker’s pub’. This reflected the previous experience of Mr Barber and Mrs Lawless, which was on the pub side of the business, rather than as restaurateurs.

Not all of the accounts prior to 2005 for the Royal Oak have been made available. By reference to those which have been disclosed, it appears that the annual turnover in 2001 was £313,529, with slightly lower figures for 2002 and 2003. Mr Barber confirmed that the figures in the withheld accounts for 2004 and 2005 would have been lower because the building and the business were run down for planning purposes. He also confirmed that the net profit for 2002 was £48,778 and, for 2003, £38,203. That was based on an average turnover of £5,300 per week.

The Development

Pursuant to a development agreement between Mr Barber and Mrs Lawless, BDW demolished the existing pub and constructed a new building on the site with flats above, and with a bar on the ground floor and a restaurant in the basement. Mr Barber and Mrs Lawless retained the ground floor and the basement, whilst the flats were sold off. The bar and restaurant were to be called The Oak. The restaurant was going to be very different from The Royal Oak, the aim being to create an up-market and expensive restaurant business on the site.

The development works involved, amongst other things, the tanking of the basement and the construction of a concrete slab. The shell of the basement and ground floor was completed by May 2006. They were then handed over to Mr Barber and Mrs Lawless, in order that they could then carry out the fit-out works. It appears that these fit-out works commenced in about July 2006.

The Original Fit-Out Works

The original fit-out works were relevant to the issues in these proceedings because it was said that their cost demonstrated the unreasonable nature of the costs subsequently claimed for the reinstatement fit-out works, following the flooding. The original fit-out was not the subject of a fixed price contract. There was no specification and no bill of quantities. It was therefore not always easy to discern precisely what was carried out first time around. There was, however, a large lever arch file full of invoices rendered by a wide variety of sub-contractors and consultants.

Although he had no construction experience, Mr Barber was the project manager. However, day-to-day control of the work seems to have been in the hands of Mr Stuart Penny, trading as SP Contracts, who acted as a Clerk of Works and was apparently on site most days. He was, he said, responsible for scheduling the works, carrying out the quantity surveying work, the purchasing of materials, the engaging of labour, the co-ordination of the trades, as well as contractors and sub-contractors, overseeing the works, and checking on the quality of the works. In carrying out this wide-ranging role, Mr Penny kept no records, other than a diary, which he said he routinely destroyed after the job. The evidence demonstrates that, for carrying out this work, Mr Penny rendered two invoices that totalled around £12,242.

The total cost of the original fit-out works was the subject of some debate. The only detailed analysis was that rather belatedly carried out by the defendant’s expert, Mr Thomas. His updated schedule arrived at a figure of £279,229 for the original fit-out works in the ground floor of the basement. He arrived at this figure by totalling the invoices with which he had been provided by the claimants and deducting those which were palpably not connected with the original fit-out works.

The £279,229 figure referable to work over two floors, was significantly less than the £390,000 odd claimed by Brit Inns for the subsequent reinstatement fit-out works to the basement only. Thus Mr Thomas relied on his analysis of the original costs as one way of demonstrating that the claimed costs in these proceedings were simply too high. It therefore became necessary for Mr Plewman to cross-examine Mr Thomas on his exercise. Although he did so with considerable forensic skill, he was unable to mask the fact that such criticisms as could be made of Mr Thomas’ exercise all stemmed from a single source, namely that the bundle of invoices (which the claimants themselves had provided) in respect of the original fit-out works might not have been complete or comprehensive. That, of course, was hardly Mr Thomas’ fault.

During the cross-examination of Mr Thomas during the morning of Day 5 (20 June 2012) it was suggested that the claimants may not have provided all of the invoices relating to the costs of the original fit-out. However, it was difficult to form a concluded view about the degree of incompleteness. By way of example, Mr Thomas properly acknowledged that there were no invoices in the bundle from someone calling themselves a painter, but, as he correctly pointed out, painting could have been carried out by one of the other trades. The same was true for the tiling work. And, although he said that some of the invoices from particular contractors seemed to be stated on a percentage basis, and the invoices for part-payment did not always come to 100%, he thought that that could be explained by the fact that at least some of the works were never completed (a fact borne out by the evidence of Mr Barber, amongst others).

Accordingly, although Mr Thomas properly accepted that he could not say that his analysis was exhaustive, I find that it was as complete as it could be, based on the information with which he had been provided by the claimants. In those circumstances, I find that, on the balance of probabilities, the cost of the original fit-out works was not materially in excess of his figure of £279,229. Even giving the claimants the benefit of the doubt, arising from the points put by Mr Plewman, there is no evidence to suggest that these matters would have increased the original fit-out costs to anything over £300,000.

The First Inundation

By 10 December 2006, the fit-out works were largely completed, although there is no reliable evidence as to precisely what remained outstanding. Some important elements of the works had yet to be completed; according to Mr Barber, this included the extensive panelling in the bar and the oak flooring in the basement restaurant area. Although it was Mr Barber’s evidence that they intended to open just three days later, on 13 December 2006, it seems clear that, even then, this was not a definite date: it was, to use his word, an “assumption”. It does not appear that there was going to be any particular launch event to mark the planned opening on 13 December.

The reason why the precise state of the fit-out works at this time is important is because, on 10/11 December, the basement was flooded due to the negligence of Thames Water, who failed properly to cap off the mains water supply whilst making the connection to the property. This failure was not, and was not alleged to be, the responsibility of the defendants. But it had an effect on the subsequent claim made against them arising out of the second inundation, in January 2007, which was their responsibility. That is because, following the flood on 10/11 December, there was some considerable stripping out works. These works, and their attendant costs, cannot in fact or law form part of the claim against the defendants.

The record of precisely what happened between 10/11 December and 15 January 2007 (when the second inundation occurred) is very sketchy. There are some general assertions in the witness statements, and some contemporaneous records, including photographs of the basement floor. Taken together, I find that these show extensive stripping out, with a good deal of remedial work still to be carried out by 15 January. That latter finding is borne out by the fact that, according to Mr Barber, it was thought in early January 2007 that the restaurant and bar could not open until a date in March. In other words, the first inundation created stripping out and reinstatement works that were going to take almost three months (10 December – 6 March) to complete.

Mr Penny was engaged to carry out similar services in relation to the works necessitated by the first inundation in December 2006. Indeed, this was simply a continuation of that which he had been doing, because of course the original fit-out works had not been completed by 10/11 December. According to his invoices, Mr Penny charged £26,532.25 for his work in connection with the first inundation. This was twice what he had charged for the whole of his involvement with the original fit-out works, which had lasted 5 or 6 months, and taken place over two floors. It was impossible to see how the sum of £26,532.25 could be justified, in circumstances where the work necessitated by the first inundation came to an end on 15 January 2007, when the second inundation occurred. Although the relevant period was therefore just over one month, Mr Penny’s invoices worked out at a total of 132 man days. Mr Penny agreed that “there must be something adrift somewhere” but, beyond that, he was not able to explain what appeared to be a very large discrepancy. This was relevant to the issues which I have to decide because of the subsequent allegations of overcharging by Mr Penny in connection with the second inundation.

Notwithstanding this apparent discrepancy, however, Mr Penny was paid the £26,532.25 in full by Brit Inns’ insurers, on the recommendation of their loss adjuster, Mr Jamie Greig. In fact, the insurers paid out a total of £205,546.93 to Brit Inns for the consequences of the first flood, on top of a sum of £50,000 paid directly by Thames Water.

The Second Inundation

The second inundation (as it was rather whimsically called in the documents) occurred, or was at the very least discovered, on 15 January 2007. It is common ground that this flooding was caused by the defendants’ defective workmanship in installing the damp-proof membrane during the original development works in 2006. Barnard Associates, the consulting engineers appointed by the defendants, accepted the defective workmanship and, in turn, the defendants accepted that it was liable to Brit Inns for loss and damage resulting from that defective work.

In general terms, what happened following the second inundation was this. Whilst the defendants and Barnard gave consideration as to the most effective form of remedial work, Brit Inns embarked on a second stripping-out exercise. Mr Penny talked about the stripping-out works being carried out over a fortnight, although it was unclear when precisely that was. There was also a suggestion that the stripping-out works were carried out in something of a rush. That was curious; no urgency was in fact required, because it was not until 12 April 2007 that final approval was given to Barnard’s recommended remedial solution.

That solution, which had first been proposed at the end of February 2007, involved the use of a Delta Drain. This consisted of both vertical and horizontal drains, in the form of an egg-box construction, which allowed the water to run down inside the floor and walls and then be pumped away. This obviated the need to dig out the entirety of the basement and to lay a second membrane, but it plainly gave rise to additional considerations once the drains had been installed. For example, false timber walls were necessitated, and the floor level was raised by 2 inches.

The installation of the Delta Drain, and the associated structural works to the basement, were carried out by the defendants at no cost to Brit Inns. On about 12 June 2007, the basement was then handed back to Brit Inns in order that the reinstatement of the fit-out works could commence. In many ways, what was handed back to Brit Inns in June 2007 – the concrete shell – was very similar to what they had been provided with in June 2006, save that, for the reasons noted above, the Delta Drain was going to require particular works around the walls, and a raised first floor level.

The Reinstatement Fit-Out Works

It is not clear what (if any) preparatory works were undertaken by Brit Inns prior to June 2007 in relation to the reinstatement fit-out works. Certainly, no schedule of the proposed fit-out works was prepared, either then or subsequently. It may be that this was because, to a very large extent, the reinstatement fit-out works were going to be a re-run of the original fit-out works, and were to be carried out by the same direct contractors. Whilst it is agreed in these proceedings that it was not unreasonable for Brit Inns to approach the reinstatement fit-out works on the same basis as the original, using what were called “direct appointments”, without a specification or detailed schedule of works, this was said to be because that was how the original fit-out works had been performed. What nobody seems to have thought about was the need to keep a record of the reinstatement fit-out works actually carried out. I consider this to be a surprising omission given that, because of the early insurance claim made by Brit Inns, the reinstatement fit-out works were very different from the original in one important respect: they were going to be ultimately paid for, not by Brit Inns, but by a third party.

The absence of any proper record of the reinstatement fit-out works being carried out by the sub-contractors was exacerbated by the vague nature of the responsibilities of the relevant individuals, and the haphazard way in which they were carried out. Mr Barber was again the Project Manager but, as Mr Penny noted in his witness statement, Mr Barber “wasn’t really involved with the construction side of the fit-out…and didn’t come to the site regularly”. Mr Barber accepted that he did not go to the site regularly; that he was not involved in the detailed construction works; that he did not choose the sub-contractors; that he did not identify the scope of work or produce a specification; that he did not agree the rates payable to the sub-contractors and that he did not order the bulk of the materials. To the extent that these things were done at all, they were done by Mr Penny, although a number of these services (such as the production of any sort of record of the works being performed, or the provision of any real quantity surveying services) were notable by their absence.

One important matter flowing from the rather ad hoc way in which the reinstatement fit-out works were carried out relates to programming. The evidence was that, following the reinstatement fit-out works, Brit Inns hoped to reopen The Oak on about 15 October 2007. There was no evidence as to when that proposed date was first identified or how that date was arrived at. Mr Barber said that it was just an assumption. Given the absence of any schedule of work, this was unsurprising: how can you know when the work might finish when you don’t really know what work you are going to do?

Mr Barber said that “one of the problems was because we didn’t know exactly what the opening date was, that is why we couldn’t do the marketing, and so on and so forth…at the end of the day, you have to have some sort of idea or guesstimate of when you are going to open”. For the reasons I have given, I find that that was, in reality, a criticism of Brit Inns’ own arrangements for the reinstatement fit-out works. Because they were never clear as to precisely what they were doing, they could not be clear as to when the works would be finished and when they might reopen. As Mr Barber confirmed, there was not a single piece of paper setting out a proposed or actual sequence of works. On the face of it, therefore, the uncertainties over the revised opening date were Brit Inns’ responsibility.

Payment for the Reinstatement Fit-Out Works

The evidence as to how payments for the reinstatement fit-out works were assessed and paid was also vague and, in some instances, contradictory. This also mattered for the issues that I have to decide, because the defendants complained repeatedly that there was almost nothing to say whether the invoices on which the claims were based had ever actually been paid at all.

Materials

Mr Barber said in cross-examination that most of the materials were ordered and paid for by Mr Penny and that he gave Mr Penny a credit card for that purpose. There was no mention of this credit card in any of his three witness statements. There were no credit card bills or statements. Mr Barber said that he had not checked the credit card payments. Mr Penny, on the other hand, said that, although he used the credit card for buying some of the materials, “the bigger stuff Vince [Barber] would deal directly, mainly.” Mr Penny agreed that his witness statement, which claimed that Mr Barber paid directly for all materials, was wrong.

It was therefore not entirely clear how the materials were purchased. It certainly appears to have been an ad hoc arrangement, without any proper system of checks or controls.

Contractors/Labour

It was Brit Inns’ case that the contractors, including SP Contracts, rendered invoices which Mr Barber then paid with a cheque. There were two difficulties with this. First, Mr Barber was plain that he did not go through each of the invoices and relied, he said, on what he was told by Mr Penny. Mr Penny’s evidence in relation to the invoices was very vague but he assured me on at least two occasions that he did not see all the invoices, let alone go through and check them. Accordingly, I find that invoices were considered for payment and/or paid without any check having been done on whether the work to which the invoice related had actually been performed.

Secondly, although the evidence was that Mr Barber paid all the contractors by cheque, copies of just two cheque stubs were provided to the defendants on disclosure. No bank statements of any sort were provided and there were no proper records of the many payments which, according to Mr Barber, he made in cash. It did not therefore follow that the fact that there was an invoice in the bundle meant that that invoice had actually been paid by Brit Inns.

Total Figure

The total which Brit Inns said they paid on the invoices rendered in respect of the reinstatement fit-out works was £396,502.38. That sum formed the basis of their insurance claim. As we shall see, the experts have recently agreed that this figure was at least £100,000 too much. But in my view, alarm bells should have been ringing much earlier. As noted in paragraph 13 above, the original cost of the fit-out works on both floors was not more than £300,000. On that basis alone, a figure of £400,000 odd for just one floor must have looked much too high. When the point was put to Mr Penny in cross-examination, and he was asked how the figures could possibly be reconciled, he confessed the he did not know. He gave the same answers in relation to the contractors: on the face of the figures, far more was paid to the individual trades in relation to the second lot of fit-out works than the first. Again, in my view, there was no evidence to justify the sizable nature of the discrepancies.

The Third Incident and Thereafter

The Oak finally opened on about 17 October 2007. Between the middle of October to the end of December 2007, the actual sales generated by The Oak averaged £7,059 per week. This compared favourably with the earnings of the previous business, which may explain why Mrs Lawless described the new business as being quite successful when it first started. Indeed, in to the early months of 2008 there were also some reasonably profitable weeks, even though this is a notoriously slow time in the catering trade. In the week commencing 16 March 2008, the actual sales were £8,107, the highest-ever weekly figure. Notwithstanding that, during the first half of 2008, the average sales figure began to decline so that, from January to June 2008, the average weekly figure fell to £5,128 per week.

At some point during the first half of 2008 there were problems with foul smells in the basement which were eventually traced to the work of an electrician engaged by Brit Inns themselves, who had inadvertently drilled a hole in a soil vent pipe in the rear lobby area. This event, referred to in the documents as the third incident, was not the responsibility of the defendants. However, like so many other elements of this case that initially seemed unremarkable, the third incident became a hotly contested issue. The dispute arose in this way. Mrs Rawlin, Brit Inns’ expert accountant, said that the third incident, and the smells caused thereby, triggered the end of the period for which Brit Inns could claim loss of profit arising out of the second inundation. She plumped for June 2008 as the relevant date when the third incident began to have an effect. The defendants agreed that the third incident could, on one view, be the end of the relevant period for loss of profit, but said that the evidence about bad smells existed considerably earlier than June 2008.

If the defendants were right about this, it would have had the effect of reducing the loss of profit claim (because it would move back in time the date when the third incident became the cause of any loss). So Brit Inns then argued that the earlier odour problems were nothing to do with the third incident, and were linked back to the problems with flooding that had caused the second inundation. On that (unpleaded) basis, they argued that these odour problems were the responsibility of the defendants. I am therefore required to make a number of findings of fact on this topic.

On 15 January 2008, there was a problem with a leaking joint in the foul drain which was the subject of a temporary repair carried out on the same day. Some odours may have remained. Permanent repair works were the subject of a method statement provided by Barnard Associates on 22 February 2008 and carried out on 26/27 February 2008. On the basis of the report on 27 February 2008, it appears no leaks or foul odours were recorded thereafter.

It would seem that, after a gap, a further odour problem became apparent at the end of April 2008 (when Mr Barber complained to his insurers). It appears that these odours were regarded by the insurers as being due to the third incident, when the soil pipe was pierced by Brit Inns’ own electrician. Although Mr Barber agreed that that was what his insurers said, he said that he disagreed with it (despite the fact that it was in his own witness statement).

On the basis of this rather inadequate evidence, I make the following findings of fact. There was an odour problem in January and February 2008. That problem was the responsibility of the defendants, and was dealt with by Barnard Associates on that basis. Temporary and then permanent remedial works were carried out promptly. Those odour problems did not have a material effect on turnover or sales; as noted above, Brit Inns achieved some of their best weekly figures during this very period. Thereafter, in the spring and early summer of 2008, a further odour problem materialised. That was not said at the time to be the responsibility of the defendants, and unlike the odour problem at the start of the year, was not referred to Barnard Associates. That was the third incident; the problem was due to the piercing of the soil pipe by Brit Inns’ electrician and was therefore Brit Inns’ responsibility.

In about June 2008, Mr Barber and Mrs Lawless closed the basement restaurant. There are no records relating to that decision, and nothing to say how it was reached. There was apparently no contemporaneous exercise carried out by reference to the actual costs and the actual sales, nor any comparison done with any projected figures. There was no record of any attempt to re-launch the restaurant rather than close it.

These omissions are surprising given that, as Mr Barber accepted, the closure of the restaurant in the basement of The Oak meant that Brit Inns’ profit projections were never going to be attainable. He accepted that without the restaurant, from June 2008, Brit Inns could not expect takings anywhere near those which they now say they had anticipated. In those circumstances, some evidence linking the decision to close with the ongoing effects of the second inundation would have been expected if, as it does, the loss of profit claim was going to extend beyond June 2008. There was none.

In fact, the restaurant never opened again in that guise. In 2009 or 2010, (no-one was sure which) The Oak was rebranded as Sammy’s Bar, an American diner and a completely different concept. The basement was used as a function room. Brit Inns were put into liquidation in December 2010. Mr Barber and Mrs Lawless however, continue to trade from the same premises as Sammy’s Bar, albeit using a different company vehicle.

Mr Barber was asked whether he had considered at the time what the likely turnover might be once the restaurant was closed and once the operation was rebranded as Sammy’s Bar. He said he had not. Yet despite these lacuna in the evidence, it was clear that Brit Inns continued to suggest that, at least in part, the failure of Sammy’s Bar in 2010 (when compared with what is now said to be the projected profits of The Oak) was the result of the delayed opening of The Oak in 2007. In Mr Barber’s words, “it [the second inundation] certainly still had a knock-on effect”, although he was unable to substantiate that assertion.

The Insurance Claims and Insurance Payouts

Brit Inns made two separate claims on their insurance in respect of the first and the second inundations. These claims were adjusted by Mr Jamie Greig of Special Risks. As already noted, Brit Inns recovered around £250,000 in relation to the first inundation (including a payment direct from Thames Water). They recovered the sum of £665,000 odd for the second inundation. That payment included £355,070 for the claim for material damage and £240,905 for the claim for loss of profit. These figures were then claimed in full in the subrogated claim. However, the evidence in this case demonstrates that these were very significant over-payments.

Although much was made of the need for speed and urgency in dealing with the insurance claim relating to the second inundation, so that the making of the claim itself did not affect the progress of the reinstatement fit-out works, it must be noted that Brit Inns did not make their detailed insurance claim until 2008, when the works themselves were completed and The Oak was up and running. Although Mr Greig had been involved in 2007, it was unclear precisely what his role was at that time. It was not established that he had in some way committed himself (or the insurers) to the payment of particular sums or the acceptance of particular claimed heads of loss. Accordingly, when in 2008 Mr Greig came to consider the insurance claim that had been made for material damage and loss of profit arising out of the second inundation, he had plenty of time in which to carry out a proper adjustment.

Unhappily, it would appear that both the claim itself, and the adjustment of it, were fundamentally flawed. As to the claim, Mr Barber indicated that he simply provided Mr Greig with the invoices in carrier bags. Although he claimed to have looked at them before he submitted them, Mr Barber’s evidence on this was extremely unconvincing. He did not say that he had sat down with Mr Penny to check whether each invoice was in respect of work that had been done at The Oak, and, for the reasons I have already explained, Mr Penny was adamant that he had not seen all the invoices. In any event, it is doubtful that Mr Penny could have provided a detailed input a year or so after the work, given the absence of any records against which he could perform any checks. Mr Barber did not carry out any independent checks himself. And although at one point he claimed to have ‘adjusted’ the claim before it was made to the insurers, he was quick to backtrack from that suggestion and accepted that he had done no such thing.

As to the actual adjustment, Mr Greig candidly admitted that there were items which he had accepted but which he now knew should not have been paid; that the insurers had paid out more than they should have done based entirely on his recommendation; that he should not have accepted the invoices at face value, as he did; that he should not have accepted that these costs had been incurred simply because that was what he was told; that he had failed to check the work done in respect of each invoice; that he had not asked for particulars of the labour invoices; that he had not asked for the original fit-out invoices or carried out any comparison with the cost of the original works; and that it was an oversight not to have asked for any proof of payment. Given these admissions, it was unsurprising that, as Mr Greig said, there were “elements of this claim where I am not happy with the adjustment I performed.” At another point, he said “I should have carried out a better adjustment of the material damage claimed”.

One of the particular problems which Mr Greig faced (and which I in turn have faced) was the complete absence of any proper record of the work actually carried out by each contractor. Mr Greig originally said that this absence was because he carried out his adjustment without Mr Penny’s help, because of a dispute between Mr Penny and Mr Barber. That seemed to me to be a somewhat flimsy reason for the inadequate adjustment, particularly as (for the reasons I have given) Mr Penny could not have provided detailed help even had he been available. The real reason for the problems was the inadequacy of the invoices themselves.

Moreover, Mr Greig accepted that he should have had the input of a quantity surveyor when adjusting the claim, because there was no written detail in the invoices of the works performed, and no sort of inventory of the works. Although Mr Greig claimed that the preparation of such an inventory would have caused delay to the works themselves, I reject that for the reasons already given. The preparation of such an inventory or schedule of the reinstatement fit-out work was the minimum that was required if a sensible third party claim was going to be mounted. It could have been prepared between March and June, while the Delta Drain was being installed.

To be fair to Mr Greig, it seems to me that he was distracted by two matters which, although both ultimately irrelevant to the task in hand, clearly played their part in his failure to undertake a proper adjustment of the material damage claim. First, there was the split under the policy between material damage and the increased costs of working. It appears that Mr Greig spent some time parcelling up the claims under these two different headings, in order to ensure that claims (which would otherwise have been caught by the limits in the insurance contract for the material damage claim) could be paid to Brit Inns under the increased costs of working provision instead. This was perhaps a laudable attitude on the part of a loss adjuster but, as Mr Greig accepted, it was of no relevance to the claim now made against the defendants. In fact, as we shall see, this ‘split’ gave rise to a number of complications.

Secondly, there was the business interruption (loss of profit) claim. Mr Greig accepted, both in his statement and in his oral evidence, that a forensic investigation into the entire insurance claim could have been undertaken and that such investigations are not uncommon. It did not happen here because – as he accepted in cross-examination - Mr Greig became preoccupied by the sheer size of the business interruption claim. The original forecast provided by Brit Inns for their business interruption was £2.2 million (Footnote: ¹). This dwarfed the material damage claim. I find as a fact that Mr Greig was so concerned with the size of the business interruption claim that he wholly failed to give the material damage claim the scrutiny it deserved.

Finally, on the issue of the adjustment and Mr Greig’s evidence, I should add this. In these proceedings, once the detailed problems with Mr Greig’s adjustment became apparent, Brit Inns were aware that they could no longer argue that, merely because the claim had been adjusted, they were entitled to be paid the sum produced by the adjustment. But instead of putting the adjustment to one side, and endeavouring to do the kind of objective valuation exercise which the defendants have done, they sought to hang on to the adjustment exercise, even in a reduced sum. Accordingly, Mr Greig produced a second witness statement, which purported to contain a second, reduced adjustment.

The problems with this evidence were legion. First it was after the event, when the sums based on the first adjustment had long since been paid out to Brit Inns. It was not therefore a meaningful exercise. Second, to the extent that Brit Inns wanted to rely on the reasonableness of Mr Greig’s revised figures at trial, the material was opinion evidence, not fact, and Mr Greig was not an expert witness. Thirdly, on the basis of the agreement reached by the expert Quantity Surveyors, Mr Greig’s reductions did not in any event go nearly far enough.

An overall impression was created of an insurance claim that was exaggerated at the outset, and which was then not properly adjusted, but which was still pursued because the alternative – an attempt at a reasonable valuation from scratch – was not even being considered. It inevitably made me ask myself why the Brit Inns claim was being pursued on such an apparently unsatisfactory basis.

The Proper Approach

Where a claimant’s property has suffered physical damage as a result of the breach of contract or negligence of a defendant, the claimant is entitled to recover against the defendant the reasonable cost of reinstatement: see East Ham Corporation v Bernard Sunley & Sons Ltd [1996] AC 406. In the ordinary case, the assessment of the reasonable cost does not require the remedial works to have actually been carried out by the time of the trial: see The Maersk Colombo [2001] 2 Lloyd’s Rep 275. By extension, therefore, if the works have in fact been carried out, that will not in principle affect the assessment although, where the works are completed by the time of the trial, the actual costs will almost always be the starting point of any assessment of the reasonable costs of reinstatement.

The actual costs may assume a greater significance where the remedial work has been carried out and paid for by a claimant on the advice of a professional, such as an architect or engineer. In those circumstances, it is sometimes argued that, unless it can be demonstrated that the architect or engineer was negligent in advising on the scope of the reinstatement, the claiming party is entitled to the cost of the remedial scheme so advised: see Trustees of the Hospital for Sick Children v McLaughlin & Harvey PLC 19 Con LR 25. However, that decision should be read in the light of the qualifying comments in The Maersk Colombo and McGlinn v Waltham Contractors and Others [2008] Bus LR 233. Of course, in the present case, that specific principle does not in any event arise, since the reinstatement fit-out works were not carried out on the advice of an architect or engineer.

Although not strictly a principle of recovery of damages, it is right to note that where (as here) the scope of the works and their cost were the subject of scrutiny by a third party (the insurers and the loss adjusters acting on their behalf) with a clear incentive to ensure that the sums paid out were kept to a minimum, the court is likely to attach significant weight to the reasonableness of the sums paid out. That is common sense: if a sum has been assessed as reasonable by an experienced loss adjuster, it will ordinarily take good evidence to demonstrate that the sum was not in fact reasonable (see by analogy Skandia Property (UK) Ltd v Thames Water Utilities Ltd [1999] BLR 338).

There are also more general rules relating to the recoverability of damage which also provide broad assistance to Brit Inns in this case. They relate to the proper approach of the court where there is uncertainty as to the precise nature and extent of the loss suffered. In those circumstances, the court has to do the best it can and not expect precise proof of each element of the calculation. In Chaplin v Hicks [1911] 2 KB 786 (CA) it was made plain that “The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages”. More recently, in Ashcroft v Curtin [1971] 1 WLR 1731, the Court of Appeal stressed that, whatever the concerns about imprecision, common sense demands an assessment of damage, even if such an assessment cannot be arrived at with mathematical precision.

But everything ultimately turns on the facts of the particular case. There may come a point at which the court may conclude that the evidence as to what was done and what was paid for was so vague and unsatisfactory; that so many of the individual claims made for work done have been shown, on investigation, to have nothing whatsoever to do with the breaches by the defendants; and that the claim was so unreliable from top to bottom, such that a reasonable retrospective valuation of the reinstatement work was the only appropriate basis on which to assess the damages claim. In such a case, the defendant will have demonstrated that, despite the earlier scrutiny, the claimed/actual costs were in fact unreasonable.

The Problems With Brit Inns’ Claim

Introduction

The insurers in the main action are seeking to recover, by way of a subrogated claim, the monies which they paid out to Brit Inns. The pleaded claim for material damage in these proceedings is £355,070, with a further £18,745 in relation to the uninsured losses, which has now been abandoned. In my view, there are numerous difficulties with this claim. The QS experts are agreed that, as a minimum, around £100,000 of that sum should simply not have been paid. In the context of an insurance claim that is a massive reduction: something like 25% of the amount actually paid by the insurers is now agreed (as a minimum) to have been wrongfully paid over. That immediately raises serious doubts as to the reliability and recoverability of the claim as a whole.

The main reasons why the original claim was grossly exaggerated, and then not properly investigated by the insurers and/or their loss adjusters are set out below.

No Fixed Scope

For the reasons noted in paragraphs 23-26 above, one of the fundamental difficulties with the insurance claim was the absence of any record of the works actually carried out. There was no specification or schedule of works, or even a basic inventory. It is therefore impossible to say with certainty, even now, precisely what was done and, perhaps more importantly, what was not done. The absence of any clear fixed scope of work has now rebounded on the insurers as they struggle to prove the subrogated claim against the defendants.

Inadequate Invoices

The inadequacies in the invoices in this case are too numerous to identify comprehensively. The most important were these. First, the invoices failed to identify with any sort of precision what work was the subject of the claim in the invoice. Secondly, if the work was carried out pursuant to particular instructions, those instructions were not identified or listed. Thirdly, no details were given as to rates or any other way in which the sum claimed in the invoice might be broken down and valued. Most of the invoices are one or two line claims for relatively large sums of money with a generic description of what was carried out. They are almost impossible to analyse retrospectively.

I will take one invoice as typical of so many inadequate invoices on which the material damage claim relied. The invoice of 23 October 2007 from G.B.M Limited, heating, plumbing and gas engineers, was addressed to Mr Barber at The Oak. It was Invoice 40. The invoice then went on:

“REF.THE OAK, TEDDINGTON

TOTAL: £11000.00

PLUS VAT AT 17.5%: £1925.00

TOTAL COST: £12925.00”

It was quite impossible to work out from this invoice what work was done, when it was done, and how or why the sum claimed was £11,000 before VAT. The large blank space in the middle of the invoice suggests the possibility that some such information was provided and then blanked out: certain other documents provided by Brit Inns have been redacted. But whether the invoice was blanked out prior to disclosure, or always contained this complete lack of detail may not matter; the key point is that the invoice – like so many in this case – is inadequate and incapable of sensible evaluation by the defendants who are now being asked to pay for it.

Wrongly Claimed Invoices

As Mr Thomas, the defendant’s expert quantity surveyor, properly accepted in cross-examination, the mere fact that the invoices were inadequate does not automatically mean that the sums claimed in them are exaggerated or overstated. But the inadequacies of so many of the invoices must now be seen against the experts’ agreement that numerous of them were irrecoverable because they did not relate to remedial works properly undertaken as a result of the second inundation. Time and again, following the investigative work carried out by Mr Thomas, invoices which were accepted by Mr Greig in the insurance claim, and originally accepted by Mr Woodall, Brit Inns’ expert quantity surveyor, were shown to relate to completely separate matters and were thus irrecoverable.

In section 2 of his report, Mr Thomas identifies invoices which, in his words, show “items that have succeeded in getting past the above level of scrutiny [the insurers and Mr Woodall] to find their way into the claim.” These include invoices for works which were not undertaken at The Oak at all; works which formed no part of the basement; works which were carried out before the first, let alone the second, inundation; works which were carried out after The Oak was up and running again as a business; items of claim for which no documentation was provided; items which were plainly betterment; invoices for works which were not complete at the time of the second inundation; invoices for work that was caused by the first and not the second inundation; items that were not building related; items included in the claim which Mr Greig said he had adjusted; duplications; and invoices which lacked sufficient detail. It is these legitimate complaints, raised by Mr Thomas and now accepted by Mr Woodall, which have led to a reduction of at least £100,000 from the amount originally paid out to Brit Inns.

It is worth taking two examples of invoices which remain the subject of Brit Inns’ pleaded claim in these actions but which were plainly irrecoverable. It is, in part, necessary to do this in order to demonstrate the sheer amount of investigative work that Mr Thomas has had to do in order to demonstrate the irrecoverability of so much of this claim.

The first is an invoice dated 23 March 2007 from Aston Cord Limited, who appear to be plumbers. The invoice is made out to Brit Inns Limited at the address at 172 High Street, Teddington. The work done was the supply and installation of a new fan and air vents. The cost was £575.75. Mr Thomas queried this invoice because there was no gas boiler in the basement. Mr Penny’s witness statement supported the claim by saying that this was provided to aid the drying out of the basement following the second flood. Mr Thomas therefore telephoned Aston Cord, as set out in his expert’s report, and was told that their records made plain that this work was undertaken on a gas boiler at Mr Barber’s houseboat at Taggs Island, Hampton. Despite this, in Mr Barber’s third witness statement, this invoice was expressly supported as part of the claim against the defendants. Mr Barber said that this work related to a temporary extractor ventilator system for the basement. It was only when Mr Barber came to give oral evidence that he finally accepted that this item should never have been claimed, let alone paid out by the insurers.

Two important matters therefore flow from this evidence. First, this item of claim was not made inadvertently: it was not only included in the original claim itself, but it was expressly the subject of written evidence (which turned out to be wholly untrue) within the signed statements of both Mr Barber and Mr Penny. That obviously raises questions as to the seriousness with which either man took the declaration of truth at the end of their statement, and the credibility of their evidence generally. Secondly, it must be noted that the truth had to be discovered by Mr Thomas, and only then by actually telephoning Aston Cord to find out what it was that they had done. On the face of the invoice, there was nothing to indicate that this work had been carried out anywhere other than The Oak. There was no mention of the houseboat at all. The explanation for this appeared to be, from Mr Barber’s cross-examination, that he had deliberately put this down as a business expense in order to claim the VAT on it.

The second example is similar. Reflex-Rol provided an invoice to Mr Barber at The Oak for the manufacture and supply of insulating materials in the sum of £2,514.50. It appears that, at Mr Barber’s instruction, the invoice was headed “Ref: The Oak”. Again it appears that this was for material for window coverings for Mr Barber’s houseboat and was, as he accepted, nothing to do with the business of The Oak. Again, Mr Barber accepted that he wanted to put these through as a business expense so that he could claim the VAT.

Accordingly, for the reasons which I have given, these invoices, and the numerous other invoices like them, make only too clear the wholly unreliable nature of the original claim by Brit Inns to their insurers and the equally unreliable nature of Mr Greig’s adjustment, because it included so many items which, on analysis, the experts have agreed were irrecoverable. More worryingly, the attempt to support these claims in the witness statements of Mr Barber and Mr Penny, by way of material that was simply untrue, casts a major doubt on the general credibility of both men.

The Absence Of Evidence Of Payment

The problems with the invoices are compounded by the absence of any proper evidence as to whether or not they were paid. Of course, in a normal case, the court will usually be only too willing to give a claimant the benefit of the doubt on a topic like this, so that where, say, a contractor rendered 5 invoices and payment can be evidenced for 4 of them, a complaint that the fifth payment has not been evidenced is unlikely to find favour with the court. But this case is not normal in this respect either. I have set out, at paragraphs 27-31 above, the almost complete absence of any evidence of payment by Brit Inns in connection with the invoices.

This is not just a technical gap in the evidence. Because the invoices are inadequate, it is perfectly possible that some were subsumed by others, or became part of a separate and later invoice. Duplication of invoices, but not payment, in such circumstances is quite likely. The problems with adequacy and credibility mean that the court cannot, without more, assume that each and every claimed invoice was paid.

Absence Of Evidence From The Contractors

A number of these unanswered questions (What work was actually done? What was actually paid?) could have been answered by the contractors themselves. However, Brit Inns chose not to adduce any evidence from any of the contractors. Instead, it was Mr Thomas who spoke to a number of them on the telephone, and extrapolated answers to at least some of these questions from what he was told.

Although he used some of Mr Thomas’ figures in his own calculations (see below), Mr Plewman criticised Mr Thomas because he was relying on what he was told by the contractors over the telephone about what they had done, sometimes years after the event. That criticism ignores the fact that Brit Inns could have obtained much better evidence from these contractors but chose not to. Thus, however unsatisfactory it may be, these conversations represent the best evidence about what happened, because they contain more details than the invoices. And that also provides an answer to the criticism that sometimes Mr Thomas’ figures were calculated without any reference to the relevant contractors, because they were not obtainable. Mr Thomas can hardly be criticised because he was not able to fill all the gaps in the material provided by Brit Inns.

Comparison With Original Fit-Out Costs

I have already made the point that the claimed reinstatement fit-out costs of almost £400,000 on one floor only should have rung alarm bells at the time, because that was considerably more than the round figure of £300,000 relating to the original fit-out works across two floors. Mr Woodall agreed that, if he had been the loss adjuster, he would have looked at the original fit-out costs for comparison purposes. Indeed, he laid some stress on that as a prudent and proper thing to do. For reasons which were unclear, he did not do the same exercise as the expert instructed by Brit Inns, despite his duty to the court. Mr Greig also failed to do this comparison, although this was again something which, certainly at one stage during the adjustment, he seemed to have in mind. Again, the broad comparison between the two figures demonstrates that, in Mr Penny’s words, “something has gone wrong somewhere”.

Summary

I find that what ‘went wrong’ was this: the claim for the cost of the reinstatement fit-out works was wholly exaggerated because, not only was the workscope not plain and the sums to be paid (and actually paid) to the contractors unclear, but also numerous claims were made for works which were nothing to do with The Oak, or the remedial works in the basement which were the defendants’ responsibility. Against the background of those difficulties with the claim as presented, I turn to the dispute between the QS experts.

The Dispute Between The Experts

The essence of the dispute between Mr Thomas, the expert quantity surveyor for the defendants and Mr Woodall, the expert quantify surveyor for Brit Inns, was simple. Wherever he had a concern about the sum claimed for a particular element of the work, Mr Thomas sought to obtain further information as to what work was actually done, and then attempted a re-measurement of that element of the work in order to arrive at a reasonable figure. It was a bottom-up approach necessitated, he said, by the inadequacy of the underlying material.

Mr Woodall, on the other hand, adopted a completely different approach. He did not undertake any valuation exercise himself. Instead, as he explained to me during his cross-examination, he accepted all the invoices at face value, save for those which, in his discussions with Mr Thomas, he had discounted. He said that his approach to the invoices was “If I couldn’t see a good reason to not accept them then I accepted them.”

For the reasons set out below, I am in no doubt that, on the evidence, Mr Thomas’ approach is to be preferred.

First, Mr Thomas’ approach involved a degree of quantity surveying expertise. It involved an independent valuation of the work done. Mr Woodall’s approach, which accepted at face value the evidence put forward by Brit Inns, and thus the reliability of the invoices, involved no quantity surveying at all. In one sense, because it relied on a judgment about the integrity or reliability of each invoice, it might be said to be an (entirely innocent) attempt to usurp the court’s own function. Moreover, Mr Woodall’s acceptance was itself based on a flawed assumption; he said that he understood that the invoices had been scrutinised/verified before they were paid. As I have found above, there was no such system of scrutiny or verification of the invoices.

Secondly, in Mr Woodall’s own words, “Mr Thomas’ method of doing it is a recognised method of valuing a building job.” There can be no doubt, therefore, that Mr Thomas has used a proper methodology. Mr Woodall has not used any methodology as such.

Thirdly, not only did Mr Woodall accept Mr Thomas’ methodology, but he also confirmed that he did not have a criticism of the actual manner in which Mr Thomas had undertaken each of his calculations. He said in terms: “I don’t have a criticism of the execution of that method.”

Fourthly, Mr Woodall accepted that it was necessary to undertake an assessment of the value of the works and that finding out what the works should have cost was one way of doing that. That is what Mr Thomas has done but which he has not. Mr Woodall accepted that measurement of the work, at least in some instances, could have been undertaken very easily. He said that he had not undertaken that exercise because he concluded that it was not needed. This chimed with his later evidence that, although he contemplated undertaking the measurement exercise he did not do so because, as he put it, ‘the invoices carried equal weight to a measurement and rates’.

That approach, of course, completely misses the point that, in the present case, the invoices, because of their many inadequacies, were not of equal weight to the recognised quantity surveying methodology using measurement and rates. For the reasons which I have given above, the invoices were wholly unreliable. Indeed, Mr Woodall accepted that the invoices were unreliable and said that the absence of proper detail concerned him. He seemed to contradict himself when, later in his evidence, he agreed that, in order to ascertain reasonableness, he could have undertaken an exercise it in a way similar to that done by Mr Thomas. As he put it, “If the tools to enable me to do that had been provided then I would have been able to do it much better, much easier for certain.” “The tools” to which he referred were proper records of the work done and sums paid. On his own case, he did not have those proper records and yet he was still willing to rely on the inadequate records (the invoices) so as to avoid doing a re-measurement. I do not accept that as a reasonable approach.

Fifthly, Mr Woodall accepted that circumstances would arise when he would have undertaken a measurement. He accepted that there would ‘come a time’ when he would have to do something more than merely accept the invoices at face value. He seemed to suggest that this might depend on the amount of the claim. He agreed that if the claim had been for £1 million, he would have looked at it “in closer detail”. It seems to me wrong in principle to say that, whether or not it was reasonable to re-measure, in a case where the records were so poor, should depend on the degree of exaggeration of the amount of the claim.

Sixthly, there was Mr Woodall’s complete failure to have regard to the cost of the original fit-out works. As noted above, Mr Thomas identified the cost of the original fit-out works in order to confirm his view that the sums now claimed were exaggerated. Mr Woodall agreed that, as a loss adjuster, he would have looked at the original costs and made a comparison and he did not clearly explain why he had not done so as the expert. Indeed he did not even ask for the original fit-out documents and did not know what the figures were. This was despite the fact that, as he himself conceded, he could have done a similar exercise to Mr Thomas which could at least have formed a starting point for comparison purposes.

On that point I should add that, although there were a number of suggestions from Brit Inns that the fit-out works were generally more difficult second time around, there was no credible evidence to support that assertion. None of the contractors who were there in 2006 and again in 2007, and who were therefore perfectly placed to have a view on that, gave any evidence at all. From the documentary evidence and the photographs, save for the need to accommodate the Delta Drain, which was not a particularly unusual construction feature, I can see no reason why the reinstatement fit-out works were more difficult following the structural works in 2007. I note the agreed evidence of Mr Garry as to the work done prior to the reinstatement fit-out works, but I reject the notion that, in some way, those works were particularly difficult or onerous, whether compared to the original fit-out works or at all.

Finally on the dispute between the experts, I have concluded that Mr Thomas’ approach is to be preferred because, in his closing submissions, Mr Plewman properly accepted Mr Thomas’ valuation for many of the disputed items in the material damage claim. It was a hallmark of the realism with which Mr Plewman presented his final submissions that, in relation to many of the disputed items, he accepted that, on the evidence, Mr Thomas had arrived at a figure in a way which was likely to be more accurate and more reliable than the figure produced by the relevant invoices.

For all these reasons, therefore, it seems to me that Mr Thomas’ approach is to be preferred to that of Mr Woodall. Mr Thomas had undertaken a proper independent valuation of the works because of the problems with the information which had been provided. Mr Woodall, although keenly aware of those problems, had accepted the invoices at face value, provided only that no good reason had been identified to reject the particular invoice. That approach reversed the burden of proof to an unacceptable degree, and made it incumbent upon the defendants (and therefore Mr Thomas) to rootle back through the invoices to find all the ones that were exaggerated or irrelevant. The fact that Mr Thomas has performed this task with great energy and perseverance should not disguise the fact that he should not have been obliged to undertake it in the first place.

Notwithstanding these conclusions, I do accept Mr Plewman’s secondary submission that, whatever view I came to on the proper general approach, each item in the material damage claim has to be looked at individually. Thus, if there are heads of claim where, despite the court’s reservations, the particular invoices produce a figure which, on their face, appears closer to a reasonable valuation than that produced by Mr Thomas, then that ought to form the basis of the assessment.

Conclusions As To Principle In This Case

The fact that the works have been carried out and sums paid out by the insurer to Brit Inns in consequence is not decisive of the issue of reasonable cost, but it is of some evidential weight. However, the sheer scale and range of the problems with the claim as submitted to the insurer mean that it is generally quite impossible to accept the invoices, without more, to support the claim. That view is compounded by the concerns I have as to the credibility of at least some of the evidence supporting Brit Inns’ claim in these proceedings.

In general terms, the retrospective valuations of Mr Thomas are to be preferred. On the facts of this case, a retrospective valuation of what was done, and the application of standard rates and prices to that work, will form the best way of arriving at a reasonable figure for the disputed element of work. But, depending on the facts, the invoiced sum may, on analysis, constitute the appropriate figure for assessment purposes. With that approach in mind, I then turn to the individual elements of the material damage claim.

THE SUBROGATED CLAIMS FOR MATERIAL DAMAGE/ASSESSMENT

Overview

The claim can be broken down as follows:

The item marked with the * reflects the experts’ joint statement. However there was a live issue between the parties throughout the trial as to whether some £28,000 odd of that amount should be allowed back in to the Brit Inns’ claim. That is dealt with in Section 4.4 below.

Items Agreed to be Included in the Claim: £47,654.89

This figure, which relates to materials invoices, is agreed in the sum of £47,654.89.

Items Not Agreed: £197,186.25

Introduction

The claimant originally claimed just £197,186.25 in relation to this element (excluding the materials, dealt with above). The differences between the parties can be summarised in the following table:

Accordingly, in relation to each disputed element of this claim, I set out below the relevant evidence and the conclusions that I have reached. All of these disputes relate to labour costs, because the material costs are agreed.

Carpentry

The Claim

The claim was for £77,916.97 for carpentry labour. A large number of different carpenters appear to have provided invoices. Many of them come from SPL Marine and Smith & Co. Mr Woodall agreed to delete some invoices on the basis that they appeared to relate to work carried out after The Oak opened in October 2007. That reduced the claim to £72,911.37. It is the single largest displayed item in the material damage of claim.

The Problems With The Claim As Presented

The general problems with the claim, of which the carpentry item was a good example, are discussed in paragraphs 59-71 above. The specific problems with the carpentry claim as presented are discussed in detail by Mr Thomas in his report at paragraphs 2.10.3-2.10.8. First, there is no detail provided of the work done. Mr Barber could not give such particulars, and Mr Penny said he could not remember the details of the work done and had nothing against which he could now check it. Given that there are already invoices from other contractors which were wrongly claimed (because the work was done on Mr Barber’s house boat), it is plainly a concern that SPL Marine are boat builders. With the telephone number and address deleted from their invoice, Mr Thomas was unable to contact them to find out in detail what they did. Mr Barber denied that the carpenters’ invoices concerned work carried out for his boat.

Secondly, the large claim for carpenters in the reinstatement fit-out work needs to be contrasted with the costs of the original carpentry (on two floors) which were about £25,000. Mr Barber was able to offer no explanation as to how the costs had increased threefold for what was essentially the same work. Furthermore, such explanation as he did provide, such as his admission that the extensive panelling in the bar had not been installed at the time of the second inundation, meant that the labour cost for installing that panelling as part of the reinstatement fit-out (which is part of the claim) could not be properly recoverable against the defendants.

Thirdly, as Mr Thomas made plain, it was impossible to work out what the carpenters were charging and/or were paid during the reinstatement fit-out works. For this reason alone, Mr Thomas said it was impossible to analyse the claim properly.

Fourthly, Mr Woodall agreed in his evidence that the carpentry claim as presented was too high, but – because of the way that he had approached the valuation – he was not able to come up with an alternative figure.

Accordingly I find that, for the general reasons noted in paragraphs 78-91 above, and because of the specific deficiencies in the presentation of this carpentry claim, and the inadequacy of its supporting material (paragraphs 100-103 above), much of which was accepted by Mr Woodall, it is appropriate for the reasonable cost of this element of the work to be measured and valued pursuant to Mr Thomas’ methodology. By way of their closing submissions, it did not appear that Brit Inns ultimately disputed this conclusion.

Mr Thomas’ Valuation

Mr Thomas’ valuation is at Appendix D10 of his report. He arrived at a total of £15,000 in relation to this item, by calculating an estimated figure of 100 days in total for the carpenters and multiplying that by a rate of £150.

Modifications To Mr Thomas’ Figures

In cross-examination, it was pointed out to Mr Thomas that, as part of the original fit-out works, the carpenters were charging £175 per day and that, if it were reasonable to use the same carpenters (and nobody suggested otherwise) it could not be said that the £175 rate was unreasonable. Mr Thomas said that he could have got it done for £150 as the standard was not particularly high, but he fairly accepted that the rate of £175, although high, was not unreasonably high. He did not make the same concession in relation to a rate of £200 per day. In any event, it was not clear that such a rate was charged, let alone paid, for all of the carpentry work for the reinstatement fit-out.

It seems to me that, on that basis of Mr Thomas’ concession, and giving Brit Inns the benefit of the doubt, it is appropriate to take a rate of £175 per day. That would increase Mr Thomas’ valuation to £17,500.

Although, as I have noted, Mr Woodall did not have any criticism to make of Mr Thomas’ calculations, and did not suggest that the 100 days was unreasonable, Mr Thomas was cross-examined about some of the matters which he had been obliged to assume for the purposes of his valuation. This is despite the fact that, in his closing submissions, Mr Plewman largely accepts Mr Thomas’ approach to this large head of claim, in preference to the pleaded claim based on the invoices.

I deal briefly with the remaining carpentry items where a dispute remained. Mr Thomas excluded the re-hanging of the doors and door linings. This was because the evidence established that the doors and door linings had been removed following the first inundation. The evidence that any of the doors and door linings were re-hung after the first inundation and before the second was impossibly vague and unspecific. Moreover, such re-hanging would have made no sense given that, by the time of the second inundation, Brit Inns was still 6 or 7 weeks away from reopening. Accordingly, I find that Mr Thomas was right to exclude those matters from his valuation.

There was a suggestion that Mr Thomas should have allowed for work done upstairs as a result of damage to the oak doors on the ground floor which were used for access. There was, of course, no invoice or specific item of claim which related to such work. In my judgment, if the oak doors were damaged, it was because they were not properly protected during the reinstatement fit-out works carried out by or on behalf of Brit Inns. Therefore, without any specific evidence to the contrary, this was not an item which could be at the defendants’ account.

Finally, it is important to note that Mr Thomas’ valuation included for the work involved in screening the vertical Delta Drain. It excluded the partitions because a separate contractor, Tim Sweetman, carried out the ceiling work, and not the carpenters. His work has been allowed elsewhere. Mr Thomas did not regard Mr Sweetman’s figure as unreasonable for reinstalling the ceilings in the basement.

Accordingly, subject to the increase in the rate to £175 per day, I find (as Mr Plewman ultimately accepted) that Mr Thomas’ valuation is the most accurate way of arriving at the reasonable cost of the carpentry in the reinstatement fit-out. It gives an adjusted figure of £17,500. In my judgment, that compares reasonably to the figure of £25,000 for both basement and ground floor in the original fit-out works. I therefore allow £17,500 against the carpentry claim.

For completeness, I should say that, in my view, the claimed figure of £72,911.37 was always wholly unreasonable and irrecoverable. The invoices were wholly unreliable. The work allegedly done was unclear. It had not been shown that £72,911.37 had actually been paid. There was no explanation for how and why the sum claimed was three times the cost of the original works. The item should never have been advanced in this form and in this amount.

Electricians

The Claim

The pleaded claim in relation to the electricians is £42,594.73.

The experts have agreed to reject some of the invoices because they relate to work carried out after The Oak was up and running. That reduced the claim to £36,048.43. A lesser figure of £33,812.25 was maintained in the closing submissions.

The Problems With The Claim As Presented

The claim for electricians suffers from the general problems noted at paragraphs 59-77 above. The specific problems with the claims as presented are set out in section 2.7 of Mr Thomas’ report. Again, the invoices give only a very general description of the work for which a charge was being rendered. There is also little to identify the appropriate rates. In addition, Mr Thomas identified at paragraph 2.7.4 of his report detailed queries about the invoices on which the claim is based, including the risk that they related to works which were nothing whatsoever to do with the second inundation. Mr Thomas also said that he failed to understand why three completely different electrical contractors were working on the project at identical times, and that no proper explanation for this had been given. In view of the paucity of information in the invoices, Mr Thomas considered that he had no option but to undertake his own valuation from scratch.

In my judgment, these problems with the invoices were not made good by the factual evidence. Mr Barber made plain that he could not help with the detail and had no idea as to what hours or days were being claimed, and what the detail of the work was. He said that he was not involved in the decision-making process that had led to the engagement of two different firms. Mr Penny, who was, was also unable to provide any information as to the detail that was not apparent from the face of the invoice. His explanation for the three contractors – that there was a lot of work – ignored the fact that the scope was no greater than the original fit-out works.

In those circumstances, it again seemed to me that the only reliable valuation of this work was that carried out by Mr Thomas. The reasons why I favour Mr Thomas’ approach, set out at paragraphs 78-91, apply again. The lack of information in the documentation meant that the electrical invoices were, in my view, an unreliable way to assess the reasonable value of the work carried out.

Mr Thomas’ Valuation

Mr Thomas spoke to Mr Collins of JP Electrical and Mr Hawkey of Quest Electrical about the work that they performed. I have addressed the reasons why such discussions were, in this case, appropriate in paragraphs 74-75 above. He then produced a measurement and valuation of the work that they said they carried out in the sum of £13,250. The biggest item of that was £12,500 for the basic work. In cross-examination he gave further details of these conversations. He said that those conversations only served to confirm his view that the work in the invoices had not been carried out.

Accordingly, subject to the paragraphs below, I find that the figure of £13,250 represented a proper and reasonable valuation of the electricians’ labour costs.

Modifications to Mr Thomas’ Figures

Again, although they were not suggested by Mr Woodall, various possible increases in the £13,250 figure were put to Mr Thomas in cross-examination. As I have already noted, Mr Thomas was adamant that the sums claimed in the invoices were unreasonable and was doubtful as to whether the work had actually been carried out. He denied that his valuation was based on “a feeling”; instead, he explained how, having reached the conclusion that the invoices were unreasonable and unreliable, he had valued the work in a different way. He also explained how and why his figure was akin to the cost of the electrical element of the original fit-out works.

Notwithstanding this, and contrary to Mr Miller’s firm submission that the valuation should not be increased, there was one area where I concluded that Mr Thomas’ valuation was, in his own word, “light”. He had not thought that it was reasonable for there to be a full strip-out of all the electrics. Whilst I consider that he may well be right about that, it appears from the evidence, including the undisputed evidence of Mr Garry, that there was a full strip-out to which nobody raised any objection at the time. In such circumstances, I consider that this is the sort of matter on which the party on whose behalf the work was carried out, and who is claiming the cost thereof, is entitled to the benefit of the doubt.

The problem was the calculation of the additional amount for the full stripping out. Mr Thomas was asked to deal with that, on the hoof, in cross-examination and in re-examination. It was not a process that was very fair to the witness, and it is unsurprising that his answers were rather muddled. However, I concluded that what he was saying was that the £12,500 for the basic work would become £25,000, whilst everything else stayed the same. That would increase the reasonable valuation to £25,750.

Although, in paragraph 88 of his closing submissions, Mr Plewman argued that there were other sums to be added, I reject that, because Mr Thomas’ figures were global, and they therefore discounted the different claims (for apparently similar work) by different contractors. I also reject the criticism that this adjustment then produces a figure close to the claimed amount; the pleaded amount was for nearly twice the sum assessed by Mr Thomas, even allowing for this modification.

Accordingly, I value the electrician claim in the sum of £25,750 which is based on Mr Thomas’ valuation but with the extra amount to reflect the total stripping out.

Painters

The Claim

The original claim for this item was £4,210. With the agreed reductions this figure became £3,748.

The Problems With The Claim As Presented

The problems with this element of the work claim are dealt with in Section 2.4 of Mr Thomas’ report. They are essentially the same as those general matters set out in paragraphs 59-77 above, namely the absence of any proper guide to what work was carried out, when and at what rate.

In particular, Mr Thomas demonstrated that, on the basis of the unparticularised invoices, either the painting work undertaken for Brit Inns was done 2.6 times more slowly than industry norms, or the painters had charged for working in areas other than the basement. Because I find that there were no factors peculiar to the basement which would have resulted in the works being undertaken in an inefficient manner, Mr Thomas was rightly unable to accept the reasonableness of the sums claimed.

As with other items, Mr Barber was unable to help with the detail of the works carried out. Neither was there any specific information from Mr Penny to make good the gaps. In those circumstances, I again accept Mr Thomas’ assessment and I accept his valuation as being the appropriate method to adopt to arrive at a reasonable figure. Again I note that, in his closing submissions, Mr Plewman adopted, with modifications, Mr Thomas’ figures.

Mr Thomas’ Valuation

Mr Thomas valued the painting work at £1,920. This was based on 16 man days.

Modifications to Mr Thomas’ Figures

In cross-examination, it was suggested that there were other matters which made the painting element of the reinstatement fit-out works inefficient or difficult. As noted above, I reject that notion. These were straightforward painting works and were entirely normal.

Another point put to Mr Thomas was that he was wrong to conclude that the defendants had no liability for the painting of doors and door linings, architraves and the like. Mr Thomas’ view was based on the assumption that these items, if they were damaged at all, were damaged by the first inundation and had been removed (and not replaced) by the time of the second inundation (see paragraph 109 above). For the reasons set out above, I accept that assumption as being factually accurate. Mr Thomas was therefore right to exclude such works. I therefore reject the £600 addition sought in Brit Inns’ closing submissions.

Accordingly, for those reasons, I accept the reasonable valuation of this element of the labour work in the sum of £1, 920.

Plasterers

The Claim

The claim for plasterers was originally put at £12,847.

The Problems With The Claim As Presented

This is dealt with in Mr Thomas’ report at Section 2.9. It is another good example of the problems identified in paragraphs 59-77 above. The majority of the plastering work was undertaken by Lee Henshaw, whose invoices lack any detail at all to identify what days he worked and what work he undertook. There is also no detail as to the rates charged. It proved impossible for Mr Thomas to contact Mr Henshaw by telephone. Mr Barber was unable to help with the detail. Mr Penny was asked to justify the £12,000 odd figure by comparison with the plastering work on the original fit-out works, which cost just £4,150. He was unable to help.

Mr Thomas’ Valuation

Accordingly, for these reasons, it again seems to me appropriate that Mr Thomas’ methodology ought to be adopted. Mr Thomas’ valuation, set out in his report and appendix D7, arrived at a figure of £1,500.

Modifications To Mr Thomas’ Figures

Mr Thomas was cross-examined about his figure. At the core of his explanation for the significant reduction that he made from the sum claimed was the fact that there was very little plastering in the basement. He said the basement divided into three parts. One third was the kitchen where there was no plastering; the second third were the bathrooms and the lobby which were entirely tiled; and that it was only the last third, the function room, that had finished plaster work applied to it. This was not challenged.

Mr Thomas did accept that, because of a betterment argument in relation to the tiling, he had omitted costing 20 square metres of plaster. In re-examination, he said that that would increase the valuation by £150. I accept that evidence.

Accordingly, I assess the value of the plasters in the sum of £1,650, being the original £1,500 produced by Mr Thomas, and its additional £150. Again I note that, in his closing submissions, Mr Plewman expressly accepted this figure. That was a realistic concession that this head of loss was claimed in a sum that was almost eight times higher than it is now agreed it should have been, and that the only reason this exaggeration came to light was not through the invoices or Mr Woodall’s efforts, but the detailed investigation and methodology of Mr Thomas.

Plumbing

The Claim

The original claim was £17,350. That was reduced as a result of the experts’ agreement to £13,900. That sum is still claimed in full by Brit Inns.

The Problems With The Claim As Presented

The general problems with this head of claim are set out at paragraphs 59-77 above; the specific problems were dealt with in section 2.8 of Mr Thomas’ report. The principal difficulty was the complete absence of any detail at all in the GBM invoices. Indeed, I have taken one of those invoices as an example of an invoice in this case which contains absolutely no helpful information whatsoever: see paragraphs 63-64 above. Again, Mr Barber was unable to help. Mr Penny at one point suggested that the sum of £11,000 was a fixed price, but when it was pointed out to him that there was another invoice from GBM, he was reduced to saying that possibly the sub-contractor had got “confused”. To be fair to Mr Penny, he said that he could not really remember the detail of what work was carried out or in what circumstances. Mr Penny was also unable to say why the plumbing work was so much more than the £10,000 odd for the original fit-out on two floors.

In those circumstances, bearing in mind my views at paragraphs 78-91 above, I again find that Mr Thomas’ methodology is the one to be preferred.

Mr Thomas’ Valuation

Mr Thomas valued the claim in detail and arrived at the sum of £6,468. He made plain that this was based on his discussions with Mr Jeff Malloy, the owner of GBM. Importantly, Mr Malloy told him that his work only related to hot and cold water supplies and wastes from the sinks and sanitary ware.

On the face of it, it seems to me that Mr Thomas’ valuation was reasonable and reliable, save for any particular modifications which he accepted in cross-examination.

Possible Modifications To Mr Thomas’ Figures

In cross-examination, Mr Thomas made plain that not all of the plumbing was in the basement although, of course, the claims in these proceedings should have been limited to plumbing in the basement. He accepted that his measurement relied in large part on what he was told by Mr Malloy in his conversations with him on the telephone but, for the reasons previously noted, this was only necessitated by the total inadequacy of the paperwork. To put the point another way, the detail given by Mr Malloy orally was greater than in the invoices.

There was some evidence that the gas distribution system had to be refitted as part of the reinstatement fit-out works. The evidence was unsatisfactory because of the absence of information in the invoices, but endeavouring to give Brit Inns the benefit of the doubt, and accepting the evidence of Mr Barber that there was some gas supply work done that was consequential on the second inundation, it appears that a further sum should be allowed for this work. Mr Thomas valued it at £650. No other item of work could be shown to have been omitted. The resulting figure (£7,118) compares with the original fit-out costs of £9,900 odd, for work on two floors.

Accordingly, a reasonable valuation of the plumbing work, to include the gas distribution work, was £7,118 (being £6,468 plus £650).

SP Contracts

The Claim

The claim in respect of SP Contracts is in the sum of £55,854.64. The experts agreed a reduction of £5,168.75, making a total claim of £50,685.89.

The Problems With The Claim As Presented

The problems with Mr Penny’s invoices were the same as those relating to other contractors. There was no detail of what was done. Mr Barber agreed that he had not made any enquires as to the work done by Mr Penny. Mr Penny himself agreed that no one else could check the invoices other than him and there was no detail to support them. There had been a diary but that had been destroyed although, as Mr Penny fairly accepted, that would not have recorded his hours in any event.

This was unfortunate because there was a significant problem with Mr Penny’s hours as claimed. He accepted that when he was cross-examined. When the figures for his various claims arising out of the second inundation were added up and put to him, they came to 223 days. He agreed that “There is something not right here”. In my view, the total of 223 days was incapable of being justified.

Mr Thomas’ Valuation

Mr Thomas valued the works by allowing £25,000 on the basis of allowing one week’s work in the period January/February 2007 and 19 weeks from June to October 2007.

The Proper Analysis

The claim for Mr Penny’s fees divided into three parts. The first related to the period prior to the reinstatement fitting-out works in June 2007 and was in the sum of £22,504. That included the sum of in excess of £13,000 odd, which was not the subject of an invoice but which apparently related to his attendance at meetings in relation to the insurance claim and the like. The claim for the period between June and October was in the sum of £26,181. The last period, which occurred after The Oak was up and running, was in the sum of £6,418. When Mr Thomas was cross-examined about Mr Penny’s fee claim, he was properly cross-examined by Mr Plewman on the basis of these three separate periods.

I consider that the claim for the middle period from June to October, in the sum of £26,181, should be allowed in full. That is because the figure is very close to Mr Thomas valuation for the same period, in the sum of £23,750. This is a good example of a situation where the ‘bottom-up’ valuation approach adopted by Mr Thomas produces a figure very close to the actual figure incurred. In those circumstances, it seems to me that Brit Inns should have the benefit of any doubt. Accordingly, I allow £26,181 in relation to Mr Penny’s claim for the fit-out works. By the same token, of course, it must follow that the claim for the subsequent period, namely £6,418, must be excluded in full, just as Mr Thomas has done. It appears that such work had nothing whatsoever to do with the second inundation.

That then leaves the question of the first period, prior to the commencement of the fit-out works. The experts are agreed that this should not be allowed as it stands; they have both made reductions to the sum claimed, and the issue for me is the appropriate amount of the reduction to be made.

The claim is for £22,504. For the reasons which I have given, that claim is both unsupported by the documents and, in my judgment, is wholly unjustified. There was no need for Mr Penny to be on site for very much of this period, because it was during the period prior to June that the structural remedial works, including the installation of the Delta Drain, were being carried out. In addition, there was no need for Mr Penny to attend meetings with Mr Greig (if he did so): I have already made the point that the one time Mr Greig needed Mr Penny, which was the following year, and after the claim had been formally made, Mr Penny was not available to him.

Mr Thomas made an allowance of 1 week to cover Mr Penny’s involvement during the period when the fit-out works were not yet started. That is in the sum of £1,250. I consider that the right allowance is for 2 weeks, because that was the (albeit vague) evidence about the length of time that the stripping-out took (paragraph 20 above). It was reasonable for Mr Penny to be on site for that period. That makes a total of £2,500.

Accordingly, I allow Mr Penny’s claims in relation to this claim in the sum of £28,681, being the £26,181 actually incurred during the period of the fit-out works and the 2 weeks I have allowed for prior to that period, in the sum of £2,500.

Tiling

The Claim

The pleaded claim for tiling was in the sum of £8,393 following the agreement before the experts.

The Problems

The problems with this head of claim were the same as those in relation to other elements of the labour, dealt with in detail by Mr Thomas in Section 2.5 of his report. The invoices are unclear and appear to be excessive. Again, therefore, Mr Thomas’ separate valuation is the proper approach.

Mr Thomas’ Valuation

Mr Thomas’ valuation is at appendix D3 of his report in the sum of £4,842.50.

Possible Modifications To Mr Thomas’ Figures

Mr Thomas accepted in cross-examination that he had not investigated with the tiler why the rates charged were so much higher than the rates taken from the price books. That was a good example of where the burden of proof was being subtly but completely reversed: it was not for Mr Thomas to try and make good the deficiencies in the invoices that underpin Brit Inns’ claim. As to the detail, Mr Thomas explained why he had used the rate of £32.50 and explained how and why he had undertaken the measurement and valuation at appendix D4 of his report.

In all those circumstances, I consider that the reasonableness of Mr Thomas’ valuation has been made out and I allow this item in his sum of £4,842.50. Again I note that in their closing submissions, Brit Inns expressly accept the reasonableness of this figure.

Manhole and Related Works

This item was agreed in the sum of £1,572.50.

Conclusions

Accordingly, for the reasons set out above, my assessment of the labour items in dispute can be summarised as follows:

Items Agreed To Be Rejected From The Claim

Overview

The experts agreed that £127,005.87 ought to be rejected from this claim as being irrecoverable. However, subsequent to the joint statement, and in somewhat unsatisfactory circumstances, Mr Woodall then sought to argue that £28,336.72 of this ought to be reinstated. Unlike the previous section of this Judgment, these claims were concerned with materials. For the reasons set out in detail below, I considered that, from the outset, these items were rightly rejected by the experts and should not have been the subject of this attempt at a claw-back.

When Mr Plewman provided his written closing submissions, he briefly noted that the evidential basis for these further amounts was insufficient, and predicted that “they will not be allowed”. Accordingly, he concluded that they should be abandoned. However, I deal briefly with these items in any event to demonstrate not only how and why Mr Plewman was right to abandon them, but to show the manifestly unreasonable nature of these claims and their pursuit up until the end of the trial.

The Experts’ Joint Statement

In their Joint Statement, the QS experts agreed as follows:

“2.11

The experts have noted from the witness statements that the fixtures and fittings in the basement were replaced in their entirety with new. In some cases, such as oak doors and linings, the statements claim that these were stored but were damaged and had to be replaced. The experts have studied the contemporaneous photographs and have spotted the oak door linings and a WC pan remaining unprotected on the site during the demolition stage of the work. The experts are agreed that it is not reasonable to claim for new goods where existing fixtures and fittings could have been stored off site and re-used.

2.12

The experts have noted from the witness statements that it is claimed that goods such as the sanitary ware and granite worktops in the bathrooms could not be removed and retained but had to be demolished. The experts both had considerable experience of repair contracts and, given the value of the goods which were brand new and had only just been installed, are agreed that it was not reasonable to discard and replace them.”

The 28 items which, in his report served the week before the trial, Mr Woodall sought to claw-back, were all covered by this agreement. Furthermore, Mr Woodall confirmed in cross-examination that he was not seeking to go back on this agreement and that indeed he stood by it. At one stage, he even suggested that it was wrong to try and claim back the items.

Mr Woodall’s confusion on this point could also been seen in his attempt to explain how it was that these items were the subject of the claw-back. He could not justify his change of opinion (if that is what it was) by reference to the supplemental statements (which was the only basis on which he was entitled to put in a supplemental report at all). Further and in any event, he accepted that there was nothing in those statements which was new or which led to this change of view. Instead, he repeatedly said that this change of mind (if that is what it was) stemmed from his confusion about the allocation of the insurance claims between material damage and business interruption. However, that difference was connected with the original insurance claim and had nothing whatsoever to do with the subrogated claim with which I am concerned. Moreover, despite a number of attempts, Mr Woodall failed to explain how and why a point about the proper characterisation of a particular item of claim for insurance purposes could be said to have anything to do with the experts’ sensible agreement to exclude from the claim items damaged on site and unnecessarily destroyed.

Accordingly, I find as a fact that the experts were right to exclude these items and that Mr Woodall was wrong to attempt to open them up again. It was not a proper performance of his duties as expert. They were not properly recoverable because of the agreement at paragraphs 2.11 and 2.12 of the signed joint statement. That is therefore the end of the matter.

The Individual Items

Although the view expressed in the preceding paragraph is enough to deal with this attempted claim, the parties spent an awfully long time during the trial debating the merits or otherwise of the 32 items worth £28,336.72 which are the subject of the (now abandoned) claw-back. This reflects badly on the credibility of Brit Inns’ claim generally: how intrinsically weak must that claim have been if the claimant was reduced to bolstering it with items which were plainly unarguable? In those circumstances I ought to deal, albeit briefly, with each item. In my view, even if it had been appropriate to consider these individual items of claim, it seems to me that, on the facts, they are not made out in any event.

Invoice 1: Temporary Signs £13.08

This is a claim for signs (disabled sign, male and female toilet signs and the like). Accordingly, on the assumption that such signs were required, they could only be recoverable against the defendants if the signs were either damaged by the second inundation or, possibly, if they were removed as a result of the second inundation and subsequently lost. There was no evidence of either. Mr Barber did not know whether they had been ordered or not. Accordingly, liability for this item has not been made out.

Invoices 3, 95, 100, 120, 122, 138, 172, 205, 219, 236, 237 and 259

All of these items related to the doors. I have already found on the facts that the doors were removed following the first inundation and there was no proper evidence that they were re-hung before the second inundation. They were therefore not the responsibility of the defendants because their removal (and any subsequent damage) was not their responsibility.

Secondly, these items were agreed to be excluded by the experts because they were items which could and should have been reused anyway. Mr Thomas confirmed that in his cross-examination. They are not therefore recoverable as part of the damages claim in any event.

Invoices 32 and 36: Storage of Cubicles (£300) and New Cubicles (£5,495.62)

For the same reason as the doors are not recoverable against the defendants, neither are these cubicles. The cubicles were removed following the first inundation and were not therefore damaged by the second inundation. Secondly, the cost of the new cubicles was apparently claimed because, although the cubicles were stored, they were somehow damaged or warped and became unusable. That claim is too remote and/or irrecoverable in law. If cubicles were stored awaiting their reinstallation, then it was not reasonably foreseeable that such cubicles would not be stored properly and/or would be stored in such a way as to allow them to become warped and therefore useless. Put another way, Brit Inns’ failure to store the cubicles properly broke any relevant chain of causation.

I also note in connection with these two items that Mr Woodall appeared to accept in cross-examination both that these items related to the first inundation and that they were easy to remove. I considered that his evidence amounted to a concession that these two items were bound to fail.

Invoices 56, 59 and 61

These items were agreed by the experts to constitute betterment. Subsequently, Mr Woodall sought to add back in a random one third of the amounts deleted for betterment.

Mr Woodall was wholly unable to explain in his cross-examination why he was allowing these items back in, even in part. It appears that Brit Inns used entirely new and much better taps as part of the reinstatement fit-out works. He appeared to accept however that the items constituted 100% betterment and was therefore unable to explain why he had allowed back in part of the costs. His explanation at the start of Day 5 of the trial appeared to be based on the fact that those in charge of the reinstatement fit-out works were ill-advised, and a little confused, but did not act unreasonably. But it did not seem to me that this had anything to do with whether an item already deleted for betterment should somehow be allowed back in. For the reasons that I have given, I do not allow these items.

Invoices 101, 101a and 102

These sanitaryware items had originally been deleted. Mr Woodall agreed in cross-examination that they could have been carefully removed and put into storage. In those circumstances, there could be no basis for this claim for new sanitary ware. The items were rightly disallowed by the experts originally.

Invoice 149

This was an item in the sum of £71.37 for joinery. Mr Woodall was asked how and why this item had been allowed back in, given that it related to softwood archways which meant that it was probably related to the outside beer store. Although Mr Woodall said that he thought that this softwood may have been painted in the main restaurant, he was unable to relate this to the invoice. Having agreed that the item was to be deleted, it was not clear to me why he was seeking to add it back. I therefore refuse this item on the evidence.

Invoice 177: Urinal and Furniture

Again, Mr Woodall had originally agreed that these items should be taken out because they related to portable items such as spin tables, ice bins and so on. Mr Woodall was seeking to add back 50% of the total of these items, but again the basis of that was not made plain. Furthermore, it did not appear that the bar work was not sufficiently advanced at the time of the second inundation for any loss to flow from these items in any event. For all these reasons, I again refuse to allow back in this arbitrary 50%.

Invoices 221 and 222

These invoices relate to the reinstallation of a coffee machine and granite work tops. There was no reason why the granite worktops could not be reused: there was no evidence that they were damaged or had been damaged during storage. In relation to the coffee machine, there was no evidence that it had been installed before the second inundation; indeed, on the balance of probabilities, the coffee machine was either not installed at the time of the first inundation or, at the latest, removed in consequence of the first inundation. Either way, it is not recoverable from the defendants.

Invoice 232: Reprogramming and Training

It seemed that this related to the reprogramming of tills and training of staff. Again, these items could only be recoverable if the tills had been originally programmed so that this was extra work. There was no evidence of that. Similarly, there was no evidence that any staff training had been carried out prior to the first and indeed the second inundations. Again, therefore, these were business expenses which would have been incurred in any event: there was nothing to say that they were a duplicated cost.

Invoice 248

This was in relation to a claim for mirrors. The evidence was that this claim could only be made if it could be shown that mirrors had been installed and then taken down so that they could not subsequently be reused. There was no credible evidence of such a condition. There was no evidence of mirrors damaged either as a consequence of the second inundation or as a result of the strip out works. Accordingly this item is disallowed.

Invoice 69: TV Cable and Invoice 310: Soap Dispensers

Again, these items could only be recoverable if it could be demonstrated that they were a duplicated expense; in other words that they had been incurred once before the second inundation and had to be incurred again. There was no evidence to support such a claim in either case. Again, therefore, I concluded the experts were originally right to disallow these two items.

Invoices 313 and 332 (Various Glazing)

It was very unclear why these invoices were the subject of the claw-back. The evidence of Mr Woodall established that, if the bar had not been completed at the time of the second inundation, this claim could not succeed. I have already pointed out the evidence from Mr Barber to that effect. Accordingly, this item must fail.

Conclusions

For the reasons set out above, I conclude that the experts were right to delete these items worth £28,336.72. These items were never properly recoverable against the defendants, a point ultimately accepted by Mr Plewman in his closing submissions. I regret the time and cost taken up by the pursuit of these items during the 6 days of the trial.

Material Damage Claim: Summary

In respect of the material damage claim, I allow the following items: as per Section 4.2 above, the sum of £47,654.89 in relation to agreed items; as set out in Section 4.3 above, the sum of £89,034 in relation to disputed items; in relation to Section 4.4 above, nil. The sum of £127,005.87 was properly rejected from the original claim. There are two further agreed rejections in relation to invoices which cannot be read (£598.20) and items which are not related to the building (£1,369.99).

Accordingly, as against the total pleaded claim of £373,815.20 I allow the sum of £136,688.89 (the total of Sections 4.2 and 4.3 above). No other claims are allowed. These conclusions demonstrate the exaggerated nature of both the original claim and the sum paid to Brit Inns as a result of Mr Greig’s unhappy adjustment.

THE SUBROGATED CLAIM FOR LOSS OF PROFIT

The Parties’ Competing Cases

The parties’ cases in relation to loss of profit could not be more different. Brit Inns seek the sum of £240,905 by way of lost profit between 7 March 2007 (the date that it is said The Oak would have reopened following the first inundation) to 16 November 2008 (the date when the effect on the turnover of the third incident was, on Mrs Rawlin’s analysis, complete). That was the sum paid out by the insurers to Brit Inns. Until Day 4 of the trial, when the claim was abandoned, Mr Barber and Mrs Lawless were also making a separate uninsured claim for loss of profits, covering the period from January 2009 to December 2010, in the sum of £194,000.

As presented by Brit Inns, the claim for loss of profit had three essential features. First it assumed that the business of The Oak, immediately it started trading, would have been profitable. Secondly, it assumed that all of the alleged loss of profit was referable back to the second inundation. And thirdly, the figures underpinning the claim came, not from the actual figures generated by the business of The Oak when it started trading in October 2007, but from extrapolated figures based on a completely different business, The King’s Head, situated in another location on Teddington High Street.

On behalf of the defendants, it was said that the only relevant figures were those actually generated by the business of The Oak once it started trading in October 2007. Mr Isaac, their expert accountant, argued that, whichever figures were taken, it could be shown that The Oak was never going to be a profitable business. In addition, the defendants say that The King’s Head was a very different business and a wholly unreliable comparator.

I identify and decide such points of principle as arise in relation to this claim for loss of profit in Sections 5.2 to 5.5 below. I then analyse the claim in Section 6 below.

The Appropriate Starting Point

I noted in paragraph 6 above that The Oak was an entirely new business venture and was very different to the pub business that operated as The Royal Oak in the old building before it was demolished. That was Mr Barber’s own evidence. Accordingly, it seems to me that any analysis of the potential loss of profits caused by the second inundation must take as its starting-point the proposition that The Oak was a new business venture. Thus, when assessing the claim for loss of profit, it is important not to start from the assumption that The Oak was going to be profitable from the outset. Since it was a new business, no such assumption was appropriate.

Mrs Rawlin admitted that both the report that she had provided to the insurers, and her report to the court in these proceedings, were based on the assumption that the business of The Oak was going to be profitable. For the reasons that I have given, I consider that to have been an erroneous assumption. Moreover, that was compounded by the fact that Mrs Rawlin’s calculations operated on the basis that a weekly sales figure of £12,000 odd would have been generated from the very first week of trading, and then maintained throughout the relevant period. It was wholly unrealistic to maintain that such a turnover would have been generated immediately, as Mrs Rawlin appeared to concede.

I find that, like Mr Greig, she was faced with a potentially enormous claim by Brit Inns for loss of profit and, as a result, failed to ask herself the right questions at the outset. I should say a word about that claim. The original ‘forecast’ which Brit Inns provided indicated a loss of £2.2 million, apparently based on a turnover figure of £30,483 per week. When Mr Barber gave evidence, it became apparent that this figure was based on an existing insurance policy and the figure which he had estimated for the business interruption element of that policy. It never had any basis in any actual turnover/profit figures, and had not been assessed in any sort of meaningful way. As Mr Barber accepted, the figure resulted in a six fold increase in turnover from that generated by The Oak. There was simply nothing to justify that.

Despite this, I am in no doubt that, as Mr Greig accepted in cross-examination, the loss of profit claim was the principal focus during the lengthy period of adjustment of the claim. It appears that Mrs Rawlin concentrated her efforts on reducing the projected figures to what she considered to be more reasonable levels. She did not stand back and ask herself the more fundamental question as to whether this business would ever had made a profit at all.

Delay, Not Complete Negation Of Profit

In my view, the next important point to make is that, on the face of it, this is a claim for the delay in being able to generate a profit, rather than a claim for the inability to generate a profit at all. As a result of the second inundation, extensive remedial works had to be carried out and then the fit-out works had to be reinstated. Instead of being able to open The Oak in early March 2007, Brit Inns were not able to open The Oak until mid-October 2007. There was, as a result, a 7 month delay before The Oak was able to open for business, for which the defendants were responsible.

This is not a case where the delay caused the claimant company to go into liquidation, thus depriving it of the opportunity of ever endeavouring to generate a profit. Brit Inns remained in existence and started to trade when The Oak was opened in October 2007. Accordingly, in my judgment, the claim for loss of profit is best regarded primarily as a claim for the profit lost over the 7 month period when The Oak should have been trading but when, because of the breach of contract and/or negligence of the defendants, it was not.

Furthermore, the loss of profit claim must be referable solely to the consequences of the second inundation. The consequences of the first inundation were nothing to do with the defendants, and were therefore irrelevant to the assessment of any claim against them.

On this basis, therefore, there are two further criticisms to be made of Mrs Rawlin’s calculations. First, she has not approached this as a claim for the delay in generating profits. She has instead assumed that any profit allegedly lost when The Oak reopened was due to the second inundation, and has then assumed that this loss of profit continued at a steady rate until the consequences of the third incident became overwhelming. In other words, there is an assumption that, if there was a loss of profit, it must be the result of the delay caused by the second inundation (at least until there was an intervening and overwhelming alternative cause for the lost profit). In my view, there was no basis in principle for such an approach.

In addition, Mrs Rawlin’s calculations appeared to calculate a loss of profit caused by both the first and the second inundations, and then endeavoured to make some form of arbitrary allowance or reduction for the first inundation. In my view, that is an illegitimate approach, because it gives rise to the risk that the defendants were being made liable for matters which were simply not their responsibility.

The Importance Of Actual Figures

The experts were agreed that, in any case where there are actual figures for profit and loss, such figures ought to form the starting point for any calculation for loss of profit, unless there are good reasons why those actual figures should be disregarded. Mr Isaac has used the actual figures generated by Brit Inns from October 2007 onwards. Mrs Rawlin has not only failed to use the actual figures, but she has not even had regard to them for comparison purposes. I regard such an approach as surprising, and erroneous.

There is a major argument between the parties, dealt with at Section 6.2 below, as to whether it is appropriate to have regard to the actual figures on the facts of this case. But Mrs Rawlin was very clear that this was not something which she had independently considered: she was simply instructed that the actual figures were irrelevant and left them out of account altogether (Footnote: ²). She had done, therefore, no calculations by reference to those actual figures and was not in a position to dispute Mr Isaac’s principal conclusion, to the effect that the actual figures demonstrated that The Oak was never going to be a profitable business. In this way, rather like the limited and flawed approach of Mr Woodall, the expert accountancy evidence called on behalf of Brit Inns was based on a very narrow argument, with no fall-back or alternative position if it was wrong.

The Relevance of Comparators

As a matter of principle, when assessing a loss of profit claim like this, it can be helpful to compare the performance of the business in question with the performance of a comparator business. Plainly, the degree of assistance to be derived from such a comparison will turn on whether the other business can properly be regarded as a comparator or not. In the present case, neither expert has searched out comparator businesses. The difference between them is that Mrs Rawlin was instructed that The King’s Head was an appropriate comparator and, assuming that this instruction was correct, she then did a series of calculations based on its rateable value. She did not herself do any assessment of whether or not The King’s Head was an appropriate comparator. Mr Isaac did undertake that exercise and he disputes, for a variety of reasons, that The King’s Head was an appropriate comparator.

Summary

For the reasons set out above, I do not accept the approach adopted by Mrs Rawlin. She assumed that The Oak was going to be profitable without questioning whether, as a new business, such an assumption was warranted. She did not consider this primarily as a claim for delay in generating profit, and instead assumed that any lost profit which she calculated once the business was up and running was in some way due to the inundations until a later event intervened, then made an arbitrary allowance for the effect of the first inundation. Unlike Mr Isaac, she failed to have regard to the actual figures once The Oak reopened in October 2007, and she based the entirety of her calculations for loss of profit on The King’s Head, a comparator that she did not herself find but which she was instructed to use.

As a matter of principle, therefore, I prefer Mr Isaac’s approach, because it made no assumption of profitability and was based on actual figures. The critical remaining question is whether Mr Isaac was entitled, in the particular circumstances of this case, to rely on the actual figures.

THE SUBROGATED CLAIM FOR LOSS OF PROFIT/ASSESSMENT

The Issues

As noted above, the principal issue is whether or not the actual figures for profit and loss generated by The Oak, once it started trading in October 2007, should be disregarded in their entirety for the purposes of calculating the loss of profit claim. I deal with that issue in Sections 6.2 and 6.3 below. The next issue is the appropriate period in respect of which the loss of profit claim should be measured. I deal with that at Section 6.4 below. I assess the claim based on the actual figures at Section 6.5 below. Finally, there is the separate issue as to whether The King’s Head was an appropriate comparator in any event (Section 6.6 below). There is a short summary of my conclusions at Section 6.7 below.

Are There Good Reasons To Conclude That The Profits Generated From October-December 2007 Were Materially Different To Those Which Would Have Been Generated From March 2007 Onwards?

The Issue

As I have already noted, it was not Mrs Rawlin who put forward the reasons why the actual profit figures from October 2007 onwards were an unreliable guide to the profits which would have been generated from March onwards. Instead, it was said that this was a matter of fact and the relevant evidence was that given by Mr Barber in paragraph 6.1 of his first witness statement. I set out that material in full before going on to analyse each of the four reasons that he put forward as to why the actual figures should be disregarded as an unrealistic guide to the profit that would have been generated from March 2007.

Paragraph 6.1 of Mr Barber’s statement reads as follows:

“6.1

It is true that after opening in October 2007, the business struggled to achieve the forecast levels of revenue. This was down to several factors:

a)

For almost a year we had been unable to give any certain date for opening, despite it being apparent in December 2006 that we were very nearly ready. The fact that we had had to start all over again was not lost on the local community and these issues caused a lack of confidence locally. Rumours began to spread about the viability of our business and why we were unable to open. This significantly damaged our reputation. There was gossip about planning, licensing, sewage and solvency issues. Given the delays, it was natural that there should be such speculation about these issues.

b)

Had we opened as scheduled in 2006 or even in early 2007, after the first inundation, then the staff that had been recruited specifically by Max Renzland (our specialist consultant) would have remained in place. They had proven to be extremely competent in their subsequent positions. The head chef recruited by Maz Renzland at that time, Stewart Tattersall, is now head chef at Mark Hix’s Oyster and Chop House. Simone Baker, recruited as general manager, is employed by Chez Gerard in a management position at a very busy site in London.

c)

The delay meant that we experienced several equipment issues. This ranged from equipment being out of warranty by the time of the actual opening (having been in storage for over 10 months) to the fact that the equipment had naturally deteriorated having been left unused in storage, gathering rust and blockages in the jets etc. Also some of the equipment was delicate and did not suit being disconnected, moved in and out of storage, and being reinstalled.

d)

We experienced ongoing problems with smells at the venue. These smells were initially noted approximately one month after opening and were associated with the problems encounter with the drainage system when the works were undertaken to install the Delta Drain system to remedy the cause of the second inundation. This obviously dented consumer confidence.”

Uncertainty of Opening Dates

I do not accept the substance of paragraph 6.1(a) of Mr Barber’s witness statement for two separate reasons.

First, as indicated in paragraphs 25-26 above, it seems to me that any confusion over opening dates, following the second inundation, was the responsibility of Brit Inns’ themselves. In what I consider to be a passage of oral evidence that grossly over-stated this part of the case, Mr Barber said:

“…the locals lost confidence in us because we kept suffering inundation after inundation, and then we were given dates which we couldn’t make. So by the time we finally opened – and we weren’t even sure until the day we opened what day we would open – we couldn’t do any more marketing, and people got fed up with it.”

I simply fail to see how, other than the initial delay caused by the second inundation, any of the matters suggested by Mr Barber (even if true) could be the responsibility of the defendants. Following the second inundation, once the remedial work scheme had been indentified and agreed, Brit Inns could have worked out how long that work would have taken, and how long the subsequent reinstatement fit-out works would take, and then calculated when the new opening would be. Thus, there would simply have been one planned reopening date, with none of the confusion and muddle to which Mr Barber refers.

I have already referred above to the absence of any schedule of work and the absence of any programme, and the fact that everything was done on a very ad hoc basis. This happened both for the original fit-out and the reinstatement fit-out works. On neither occasion did Brit Inns work towards a clear and publicised opening date. There is no evidence of opening dates being identified and then subsequently being scrapped. I therefore find as a fact that there was no confusion as to the proposed opening date in October 2007 and that, if there was, that was entirely of Brit Inns’ making.

Secondly, I do not accept as a matter of fact that there were rumours going round Teddington about the new business. Of course, evidence of rumours is difficult to identify at the best of times, but in the present case, other than Mr Barber’s bald assertion, there was no evidence of any kind to support the suggestion. Because of my general concerns regarding the credibility of Mr Barber’s evidence (see above, and in particular his untrue evidence about the claims for work done on his houseboat), I do not accept his unsubstantiated statement about the alleged rumours.

Thirdly, Brit Inns were always running a risk that the new business would fail, because The Royal Oak was first deliberately run down, and then demolished and rebuilt, meaning that, even if they had re-opened in December 2006, they would not have been trading for well over a year. There was always the risk that, because of this delay, their old customers would have found somewhere new in the interim.

Fourthly, and perhaps most importantly of all, it was quite impossible to see how the alleged rumours prior to October 2007 meant that, when The Oak opened, people did not go to the restaurant in the numbers anticipated. As was apparent from the cross-examination of Mr Barber on this point, the alleged rumours before the opening could not logically explain why people did not go to The Oak after it had opened. In fact, people did go but, having been once or twice, then stopped going (see below at paragraphs 241 and 242). That was nothing to do with the defendants.

In essence, there was no explanation of how and why the delay, the uncertainty, or the gossip (even if true, which I do not accept), meant that people decided that they would ignore the restaurant at The Oak from October 2007. There was nothing in this evidence of rumour and gossip which could justify the assertion that the actual profit figures when The Oak did open were in some way irrelevant to the calculation of the loss of profit claim.

Staff Issues

The catering trade is notorious for its high turnover of staff. Of course, the delay in opening may have meant that there was a greater turnover than would otherwise have been expected, because some members of staff were apparently let go until the works were reopened. But the changes in personnel could only justify the assertion that the profit figures in October were not those that would have been generated in March if there was some evidence that the staff engaged at the time of the second inundation were of a palpably higher quality than the staff who were available in October 2007, and that this drop in staff quality affected the profits. There was no credible evidence to that effect.

Such an exercise would have involved a comparison between the two sets of staff. There was no evidence that could have allowed such a comparison; indeed there was no evidence at all about the post-October staff.

As to the first set of staff, there was one person (Mr Stuart Tattersall) to whom Mr Barber made particular reference in his witness statement. He said that Mr Tattersall had to be let go early in 2007 and was not available in October because he had moved on to better things. The suggestion was that The Oak was a poorer place without him. But in keeping with the rest of the Brit Inns claim, there were grave doubts as to whether the factual basis for such a claim could be supported.

The payroll information provided by Brit Inns on disclosure did not include any mention of Mr Tattersall’s name between September 2006 and February 2007. Only a subsequent payroll document, which was not provided until Mr Barber’s third witness statement shortly before the trial, contained any reference to him. This blatant discrepancy has never been explained. I have no reason to disbelieve the accuracy of the document originally provided on disclosure. In addition, no contract between Brit Inns and Mr Tattersall – indeed no documents evidencing his employment by Brit Inns at all – has ever been disclosed. There is no Income Tax and no National Insurance documentation in connection with him. Furthermore, given that it was only Mr Barber who was saying that he had employed Mr Tattersall, my concerns about his credibility are again relevant.

Thus I conclude that it has not been established on the balance of probabilities that Mr Tattersall was on the payroll at the time of the second inundation. Further and in any event, it appears that Mr Tattersall has gone on to be a chef at a well-known restaurant in central London. There is nothing to say that, even if he had been employed by Brit Inns in late 2006 or early 2007, this change would not have happened in any event by October 2007. There was therefore nothing to say that this alleged change was the result of the second inundation, or that it had any effect on profitability.

Although in his oral evidence, Mr Barber made much of the assistance in staff matters provided by Mr Renzland, it was difficult to see where that took him. Mr Renzland did not give evidence, and there was no claim relating to his involvement. It appears that Mr Renzland had his own restaurant elsewhere and the precise nature of his involvement in The Oak was unclear.

In essence, as was put to Mr Barber during his cross-examination, there is no guarantee in staff loyalty in the catering trade, a point he fairly accepted. Although he said that it was a generalisation to say that the staff he employed in March 2007 were just as likely to leave then as in October, it seems to me that that was the only logical conclusion to draw.

It must be remembered that, for this purpose, the defendants were not suggesting that staff turnover did not occur; their point was simply that staff turnover was not a reason to ignore the actual profit figures generated from October 2007 onwards. For the reasons that I have given, I accept that submission.

Equipment Failures

This can be dealt with shortly. Mr Barber was cross-examined about this alleged reason why the actual figures were not a proper indicator of lost profit. There were no particulars, no invoices, and no details as to what the equipment difficulties might have been. More importantly, Mr Barber was unable to explain how the alleged equipment difficulties in October 2007 (to the extent that there were any) were due to the second inundation (as opposed to inadequate storage etc) and he was therefore unable to explain how the equipment failures meant that the actual turnover/profit figures should be ignored in calculating the loss of profit.

Smell

I have dealt with the question of the smell early in 2008 and the third incident in paragraphs 33-40 above. The odour problems earlier in 2008 were attended to and, as the figures show, made no difference to the profits being generated by Brit Inns. The issue of smell is therefore irrelevant to the figures generated for October 2007 until May 2008, when the third incident may then have had an effect on profit.

Summary

Accordingly, having analysed the four reasons put forward by Mr Barber as to why the actual turnover figures in October 2007 were not a guide to the profits that would have been generated in March, I reject that submission. On the contrary, it seems to me that none of the four reasons put forward by Mr Barber could possibly justify the decision to leave the actual figures to one side and pay no attention to them at all in the calculation of the loss of profit claim.

Is There Any Other Reason To Ignore The Actual Profit/Loss Figures?

During the course of the evidence, two further reasons, not espoused by Mr Barber, were put forward as justifying why the court should ignore the actual profit/loss figures generated by Brit Inns from October 2007. The first concerned the recession; the second concerned the length of time over which the actual figures were generated.

As to the recession, Mr Barber was clear in his oral evidence that the recession was not a problem in October 2007, and therefore not a reason for ignoring the actual figures generated during that period. That therefore deals with that point as a matter of fact. It is true that Mr Watson, the expert who would have given evidence on behalf of Mr Barber and Mrs Lawless for their uninsured claim for loss of profit had it not been abandoned, does refer in his report to the possible effect of the recession later in 2007. But he was not called to speak as to his report. Moreover, he did so not by utilising actual statistics (whether relating to the catering trade or more generally), but by reference to the responses to business confidence surveys in the latter part of 2007. Those are, in my view, a notoriously unreliable guide to underlying economic trends. The other evidence suggests that the recession did not begin to have a significant effect on the catering trade until later in 2008. Accordingly, I find that the coming recession was not a reason to ignore the actual turnover figures from October 2007 to May 2008.

The other reason put forward to ignore the actual figures came from Mrs Rawlin’s oral evidence. She said that Mr Isaac was only having regard to the actual profit figures generated from October to the end of December 2007 and that this was too short a period on which to base any conclusion as to the underlying profitability of the business. Of course, there was a slight air of unreality about this argument, given that Mrs Rawlin had ignored the actual figures, not for this reason, but because she was told to by Mr Barber. Notwithstanding that, I can see that, without other information, the use of the short 10 week period might raise a number of question marks over the truly representative nature of the figures. But on the particular facts of this case, that argument is self-defeating.

On analysis, Mr Isaac concentrated on the 10 weeks or so at the end of 2007 because it was during that period that the average monthly turnover was at its highest. From January 2008 onwards, until the closure of the restaurant in June 2008 and beyond, the average turnover figures demonstrate that, with some peaks in the first few months of the year, the overall trend was down. In those circumstances, Mr Isaac has taken the best possible figures from Brit Inns’ point of view and, notwithstanding that, has still concluded that the business was not going to be profitable. Had he taken the profit figures over a more representative period, say the 12 months from October 2007 to October 2008, there could have been no argument about the length of time over which the figures had been generated, and the results would have been much worse and showed an even gloomier position.

Accordingly, it seems to me that Mr Isaac was right to have regard to the actual profit and loss figures, and to do his calculations on the first 10 weeks, because those produced the figures that were the most favourable to Brit Inns. The use of the 10 week period did not mean that the actual figures should be ignored.

The Relevant Period

There was a debate about the relevant period for the loss of profit claim. In my judgment, the relevant period over which the loss of profit should be calculated was the period during which, as a result of the second inundation, The Oak was closed when it should have been open. That was from March to October 2007, a delay period of 7 months. Thus, an analysis of the first 7 months trading of Brit Inns as The Oak, down to, say, mid-May 2008 ought to identify the financial effect of the delay caused by the defendants: put simply, the profit generated over that 7 month period is the lost profit for which the defendants are liable. What is more, that fits exactly with Mr Isaac’s period (which runs to mid-May) and is at least broadly consistent with Mrs Rawlin’s decision to run down the loss of profit claim from June 2008 because of what she said was the effect of the third incident.

I should, however, add that Mrs Rawlin’s use of a period extending beyond June was flawed, not only for the reasons given above, but because, although she considered that the third incident had an effect on the profit in June, she said that it only brought the loss of profit claim to a complete end in November 2008. That was completely unrealistic; it meant that Mrs Rawlin was calculating £12,000 a week loss of profit due to the second inundation in June 2008 and thereafter, despite the fact that a unilateral decision had been taken to close the restaurant in June, which meant that the actual profit figures would no longer be comparable with any projected figures anyway. That amply demonstrated the artificial nature of Mrs Rawlin’s calculations.

In my view, the period for any calculation for loss of profit could only be longer than 7 months if it could have been shown that the delayed opening had an ongoing and irredeemable effect on the profitability of The Oak (at least until another overwhelming cause of the loss of profit eventuated), as opposed to a simple delaying effect. For the reasons that I have given, there is no evidence to support the suggestion that the delayed opening had such an effect. All the evidence suggests that this was a delay in generating profit or loss, rather than anything more permanent. On that basis, therefore, I consider that only the 7+ month period is relevant for the calculation of loss of profit.

In reaching that view I take comfort from the fact that Mr Isaac has calculated, albeit for different reasons, that the relevant period started on 15 October and ceased on 11 May 2008, a period of 7 months. If my reasons for taking that period are wrong, then I make clear that I accept his (Footnote: ³); on any view, therefore, I find that the relevant period for the purposes of calculating the loss of profit claim runs from 15 October to 11 May 2008.

The Claim Measured By Reference To The Actual Figures

Overview

According to Mrs Rawlin’s calculations in her report, the average actual sales figure from October to December 2007 was £7,059 per week. Thereafter, despite some weeks where the figure was higher than that, the average between January and June 2008 was £5,128 per week. Following the closure of the restaurant, sales from July 2008 onwards was averaging £3,128 per week. It should be noted that although most of these figures are based on actual records, the actual sales figures from April to October 2008 appear to be estimated. Brit Inns have not provided the actual figures. This is particularly unfortunate given that it was in this period that the decision was taken to close the restaurant. As already noted, it was wholly unclear on what financial information (if any) that decision was taken.

It was generally agreed by the experts that, in the light of the costs being incurred by Brit Inns during this period, the actual figures showed that they were not making a significant profit. That said, both Mr Barber and Mrs Lawless accepted that, when it first opened, the business was doing quite well. In my view, that was a further indication that their projected/‘forecast’ loss of profit figures were far too high and that, in truth, actual sales of around £7,000 per week were properly viewed as being quite positive.

The real test of course was whether the customers who were coming and generating that initial turnover (which Mrs Lawless and Mrs Barber thought were ‘quite good’) would come back. But, within a few months, they did not. It was put to Mr Barber in his cross-examination that people went once but then voted with their feet. Sadly, it is impossible not to conclude, on the basis of the actual figures, that this is exactly what happened.

During his evidence, I think that Mr Barber began to realise how thin his assertion sounded that this falling-off of business during 2008 was in some way due to the delayed opening the previous year. Accordingly, during his cross-examination, he rather changed tack and tried to find a reason, current in 2008, to explain the falling away. He alighted on the question of the odours. But, for the reasons which I have given in paragraphs 33-40 and 228 above, to the extent that the odours were the responsibility of the defendants, they were promptly and satisfactorily dealt with. The figures demonstrate that they did not have an effect on the sales in January and February 2008. Later odour problems may have done, but those were linked to the third incident, and emphatically not the responsibility of the defendants.

Accordingly, I conclude that there is no reason why the claim for loss of profits should not be measured in the usual way, by reference to the actual figures generated by the business in question. When that exercise is undertaken, it demonstrates that the new business at The Oak started quite well and that, although it was not making a significant profit, there were grounds for some optimism. But as 2008 progressed, people did not go back and the figures fell away. That was nothing to do with the delayed opening. Ultimately, that was because people did not want to eat at The Oak, which was not the defendants’ responsibility.

Mr Isaac’s Analysis

The various figures by both experts have gone through a number of different iterations. That is not uncommon. However, in the light of my conclusions as to the relevance of the actual figures, I take as my starting point Mr Isaac’s analysis. However, I do so by adjusting the figures to reflect some of the points made during Mrs Rawlin’s oral evidence.

Mr Isaacs demonstrated that, on the actual figures, the loss of gross profit during the relevant 7 month period, prior to any consideration of savings, was in the sum of £167,688. Since I have agreed with Mr Isaac’s calculation of the relevant period (albeit for slightly different reasons), that is therefore my starting point.

From that figure, as both experts agree, fall to be deducted the various savings. The savings agreed by the experts, subject to Mrs Rawlin’s late adjustments (which I accept), produce a total of £146,910. On that basis, Mr Isaac has calculated a net loss of profit of £20,779 for the relevant period (being the £167,688 less the savings of £146,910). Thus, if there were no other savings, Mr Isaac’s calculation shows a net loss of profit of £20,779. It seems to me that this was referable to the second inundation (and therefore the responsibility of the defendants).

Mr Isaac then identified two further potential savings. One, in relation to various miscellaneous items, was in the sum of £16,667, which would reduce the net loss of profit to about £4000 odd. The other is the saving in relation to the alleged £8,000 per month rent which amounted to £59,077 over the relevant period (7 ½ months x £8,000). These two figures, when added to the agreed savings, mean that the savings outweighed the loss of profit, so that the business would never have made a profit at all.

I was not persuaded by Mr Isaac’s analysis that a further miscellaneous category of savings could be introduced in the sum of £16,667. Whilst I accept that there was a possibility that some of these items, in relation to maintenance, motors, entertaining and recruitment, might have generated possible savings, the evidence was too flimsy to suggest that they should be brought into account for the purpose of assessing the net loss of profit over this period. I am inclined to agree with Mrs Rawlin that they were better treated as one-off savings which were not relevant to the calculation of loss of profit. For the purposes of the calculation of loss of profit, therefore, I put them to one side.

That leaves the question of rent. The evidential position relating to this element of the story was entirely unsatisfactory.

Any consideration of rent starts from the premise that, according to Mr Barber, the intention was that Brit Inns would pay Mrs Lawless and himself the sum of £8,000 per month by way of rent. It is certainly right, as Mr Miller pointed out, that the various forecasts produced by Brit Inns indicate this intention. But no agreement to this effect was ever drawn up and there is no other documentary record of any such intention. Furthermore, although Mrs Lawless and Mr Barber did advance a claim for loss of rent, in the second action, as an alternative to the loss of profit claim, that claim was abandoned during the trial.

Mr Plewman maintained that, if the rent figure was a saving to be taken into account in the calculation of the loss of profit on the part of Brit Inns, then it was properly the subject of the claim (currently stayed) by Mr Barber and Mrs Lawless for loss of rent in the Brit Inns action. He maintained that although their claims in that action had been stayed, the stay could be lifted to allow them to make this claim. He argued that this would follow, notwithstanding the abandonment of the loss of rent claim in the other action, because it was clarified at the start of the trial that the abandoned rent claim related to a different, later period, and not the 7 months between October 2007 and May 2008. Mr Plewman argued that, if the rent was classified as a saving to Brit Inns then – in fairness – it was a liability which Mr Barber and Mrs Lawless were entitled to claim. He went on to say that the only way in which the rent could be taken into account as part of the savings, but not made the subject of a separate claim by Mr Barber and Mrs Lawless, would be if the liability to pay rent on the part of Brit Inns was waived by Mr Barber and Mrs Lawless, and there was no evidence of that.

In my view, in order to achieve fairness, the possible loss of rent should be discounted on both sides of the balance sheet. I say that partly because I am not persuaded that there was ever any such agreement between Mr Barber and Mrs Lawless on the one hand, and Brit Inns on the other. And if I was wrong about that, and there was such an agreement, so that the rental was legitimately a saving on the part of Brit Inns then, on the face of it, it would give rise to a liability on the part of Brit Inns to Mr Barber and Mrs Lawless which could not fairly be ignored. For these reasons, therefore, I consider it much better for the loss of rental to be discounted entirely, both as a liability and as a saving.

Whilst dealing with the question of rent, I should add this. At one point in his closing submissions, Mr Plewman sought to argue that the loss of profit claim in the form advanced by Mrs Rawlin was real and significant because it could be compared with what might have happened if Mr Barber and Mrs Lawless had decided to rent out the property instead. I consider that this suggestion was much too speculative. They were never advised to rent out the premises; they never considered renting out the premises; they never did rent out the premises; and they continue to operate a (presumably successful) business from the premises. Thus there was nothing in this point, and it only confirmed my view that all questions of rent were properly left to one side in the assessment of the loss of profit claim.

Summary

On that basis, therefore, I do not allow either the miscellaneous savings, or the rental savings, put forward by Mr Isaac. As I have noted at paragraph 246 above, that means that there is a potential claim for loss of profit in this case, but in the modest amount of £20,779. In my view, that is a much more realistic figure. It acknowledges that a 7 month closure probably led to a loss of profit, but it also reflects the difficulties of starting up a new restaurant business in a competitive market. Furthermore, I accept that there is nothing put forward by the defendants to explain this loss of profit in any other way or by reference to any event other than the second inundation. On that basis it is a sum for which they are liable.

Was The King’s Head An Appropriate Comparator?

Although I have concluded that the loss of profit claim should be addressed by reference to the actual figures, I ought, for completeness, to set out my views on the separate issue as to whether The King’s Head was an appropriate comparator in any event.

The King’s Head was not identified as an appropriate comparator by Mrs Rawlin, or any independent expert. It was apparently suggested by Mr Barber, although there was very little evidence from Mr Barber, or anyone else, about how or why it was a good comparator. The only independent expert who had considered the question fully and gave evidence about it was Mr Isaac, and he was firmly of the view that it was not a good comparator. I agree with him for the reasons noted below.

First, The King’s Head was in a much better location than The Oak. It was in the main part of Teddington High Street, and next door to major shopping outlets like Marks and Spencer. The Oak was further away from the heart of the High Street and was not in a purely retail area: as Mr Barber noted by reference to one of the photographs, it was “all residential opposite us”.

Secondly, the facilities at The King’s Head were different to, and better than, those available at The Oak. In particular, The King’s Head had both a beer garden and a car park, neither of which were available at The Oak.

Thirdly, and perhaps most important of all, The King’s Head is an established business. It appears to have been established at least 12 years ago. It is so successful that it is now part of a chain. It serves upmarket French food. In these respects, it was completely different to the new business venture at The Oak. Although Mrs Rawlin said that she had used profit figures calculated by reference to earlier years of The King’s Head trading life, it must be remembered that, even by those early years (2002, 2003), The King’s Head was an established business. And it was a time when the general economic picture was better than five years later.

Finally, there is the point that the business on the site owned by Mr Barber and Mrs Lawless would have been closed for a year or more, even if The Oak had opened as originally planned in December 2006, whilst The King’s Head had had no such interruption to its business.

For all of those reasons, therefore, I find on the facts that The King’s Head was not an appropriate comparator for The Oak. In my judgment, it was inappropriate to assess the potential profitability of a new business by reference to an established business, particularly one with so many obvious advantages over the business advancing the claim. I therefore reject any claim based on figures referable to The King’s Head.

Conclusion On The Loss Of Profit Claim

For the reasons set out above, I find that there was no good reason not to calculate the loss of profit claim by reference to the actual figures generated by Brit Inns when The Oak went into business in October 2007. On that basis, the experts are agreed that the figures demonstrate that The Oak would not have made a significant profit.

Mr Isaac’s conclusion that The Oak would have made no profit at all assumes various savings figures which would outweigh the profit that would have been made. Whilst most of these savings figures are agreed, I accept Mrs Rawlin’s evidence as to the miscellaneous items, and, for the reasons given above, I do not make an allowance or saving in relation to the rent. On this basis, a modest sum of £20,779 is identified as the net loss of profit over the 7 month period. In the absence of any evidence to suggest that this loss of profit during the relevant period was caused by anything other than the second inundation, I find that the defendants are liable for this amount.

THE OTHER CLAIMS

Remarketing Of The Oak

At the outset and during the trial, the claimants maintained a claim for £136,000 in relation to the alleged remarketing of The Oak following the works caused by the second inundation. Mr Barber gave evidence in support of this claim. So too did Mr Greig, who authorised the payment to Brit Inns of £45,333 under this head of claim. That payment therefore comprised part of the subrogated claim. Mr Barber and Mrs Lawless maintained their claim for the difference (in other words, the money Mr Greig did not pay out) in the sum of £90,677.

The evidence in relation to these costs was extremely sketchy. The £136,000 figure came from an estimate/forecast prepared on one sheet of paper by Mr Barber. He himself said that “I just cobbled this together”. He accepted that no part of these figures related to actual expenditure. In addition, Mr Greig said that the £45,333 which he had authorised was by way of a gratuitous payment to Brit Inns. It was not at all clear that these sums could be justified.

In his closing submissions, Mr Plewman wisely concluded that the subrogated claim could not be sustained and it was abandoned; in addition, the separate claim for the sum not authorised by Mr Greig had itself been abandoned at the start of the trial. In those circumstances, no element of the alleged remarketing claim now gives rise to any liability on the part of the defendants.

Increased Accountancy Costs

At the commencement of the trial, the insurers claimed £2,159 that they had paid out by way of increased accountancy costs, whilst Mr Barber and Mrs Lawless pursued an uninsured claim for £116. The latter claim was subsequently abandoned by Mr Evans, leaving the subrogated claim for £2,159.

The evidence did not establish how the claimed sum of £2,159 was broken down: Mr Barber accepted that he could not provide such a breakdown. Mr Greig appeared to suggest that Mrs Rawlin was the person to deal with that but she gave no evidence on the point.

More importantly, it was wholly unclear how the second inundation had led to these or any increased accountancy costs. Although the suggestion was that, in some way, these costs had been incurred in providing assistance to Brit Inns for the purposes of their insurance claim, it was not easy to see what that assistance might have consisted of. It appears that the accountants provided some basic payroll information but, for the reasons set out in paragraph 222 above, that documentation was fundamentally flawed. Furthermore, the accountants cannot have provided information relating to Brit Inns’ trading for the purposes of the claim for loss of profit, given that the insurance claim was based on Mr Barber’s own forecast, and paid out on the basis of Mrs Rawlin’s use of the data in respect of The King’s Head. Accordingly, no causal link between any work by the accountants and the second inundation was made out.

Finally, although this might not have been decisive on its own, I am bound to note that the absence of evidence of payment of this sum is of some significance, in circumstances where it appears that the accountants were creditors in the liquidation of Brit Inns. It is not clear whether this sum was paid to the accountants or whether it formed part of their unpaid claim in the liquidation.

In the round, therefore, I consider that for the reasons set out above, this claim for additional accountancy costs has not been made out. On the face of it, it was a head of claim that should not have been paid out by Mr Greig, although it was not unique in that.

Increased Costs of Working

The original claim was in the sum of £31,406. Of that, the insurers paid Brit Inns £21,486, leaving an uninsured claim of £9,920. Both sums are still pursued.

The sums claimed were set out in a two page schedule prepared by Mr Barber and in the trial bundles at I3/841. They related to marketing, recruitment and training costs. On the face of it, these were business expenses of the sort which one would have expected a business like The Oak to be incurring on a regular basis. In other words, there was nothing on the face of these individual items to indicate that they were somehow an additional expense referable to the second inundation.

It appears that Mr Barber was aware of that potential flaw in this head of claim. Thus, in his witness statement, he made plain that these expenses were, as he put it, the result of “repeat exercises”. That is also reflected in the pleadings. Of course, to the extent that an exercise had to be repeated because of the second inundation, in circumstances where, had it not been for that second inundation, the expense would only have been incurred once, the cost of such an exercise would be recoverable in principle. For the same reason, in the absence of such evidence as to the repeated nature of the expenses, the claims would be likely to fail, as ordinary business expenses in connection to the defendants.

Since this head of claim depended on the credibility of Mr Barber, the absence of any other corroborative evidence means that, because of my concerns about the truthfulness of his evidence, noted above, I find that it has not been made out. But in addition, I am in no doubt that these expenses were not the result of repeat exercises. They were not duplicated costs. I consider that Mr Barber admitted as much in his cross-examination. One further reason for reaching that same conclusion is that many of these invoices relate to expenses incurred in 2008, long after The Oak had reopened following the reinstatement fit-out works.

Furthermore, in relation to the items of claim which were not paid out by the insurers, I consider that these were not recoverable for a number of additional reasons. First, 5 out of 8 of them were incurred some time after the opening of The Oak in October 2007 and were therefore nothing whatsoever to do with the re-launch. Again they were on their face straightforward business expenses. Secondly, it is worth noting that the insurers refused to pay these items principally because they were, in the insurers’ words “too remote from the opening [of The Oak]”. Given the over-generous approach of the insurers to the claim generally, it seems to me that the court is entitled to give considerable weight to their stated reasons for refusing these particular items of claim. Thirdly, I accept the specific points made in paragraph 223 of Mr Miller’s closing submissions.

The two biggest items within the list of uninsured claims perhaps illustrate these difficulties most clearly. The first was a claim in relation to a holiday with Enduro India which Mr Barber booked and then cancelled. The claim is for £2,866. On analysis, it became apparent that Mr Barber only committed himself to this holiday, and paid the bulk of the £2,866, in December 2007, before cancelling it in January 2008. It is impossible to see how the second inundation in January 2007 could be said to have caused Mr Barber to go back on his commitment a year later. By December 2007, the reinstatement fit-out works were completed and the business was up and running again. Obviously, in December 2007 Mr Barber felt able to commit to this endurance holiday. He changed his mind in January 2008, but there is nothing in the evidence or the documentation to indicate that this was in any way related to the second inundation in January 2007. This claim therefore also fails as a matter of causation.

The other large claim is in respect of 130 Litho Printing. Although £1,468 was paid by the insurers, £3,212 was not. The insurers made plain that this was because the unpaid element related to the cost of printing business cards, which they considered to be a normal cost. There was no evidence before me which could contradict that suggestion. The claim again therefore fails as a matter of causation.

Increased Costs of Insurance

This is a claim made solely by Mr Barber and Mrs Lawless in the sum of £15,300. The claim in that sum was unsustainable. However, Mr Evans seeks the smaller sum of £4,138.78. He justifies this lesser claim by taking the insurance premiums for 2010, 2011 and 2012 and claiming, in each case, the amount by which the insurance premium was in excess of the sum of £4,328.63, which was the insurance premium in 2007.

In my view, notwithstanding Mr Evans’ ingenuity, this claim was fundamentally flawed. First, there is nothing to indicate that in 2010, 2011 or 2012, Mr Barber and Mrs Lawless had to pay higher insurance premiums than they would otherwise have done because of the second inundation in January 2007. The amount of the insurance premiums 3, 4 and 5 years later was simply too remote from the consequences of the second inundation and there was no credible evidence to suggest to the contrary. There was a vague assertion as to this connection by Mr Barber, but for the reasons that I have given, that is just not enough.

Secondly, the eventual claim, albeit carefully reduced by Mr Evans to get it to a more acceptable level, suffers from a second flaw. It presupposes that 3, 4 and 5 years after the base date of 2007, the insurance premiums would not otherwise have gone up at all. Such an assumption is unwarranted. Insurance premiums across the board have gone up over those periods, so that the mere fact that there was an increase in 2010, 2011 and 2012 could not be ascribed to the second inundation in any event.

Thirdly, I agree with Mr Miller that the insurance being taken out is not like for like across the relevant years. And fourthly, the claim is artificial because it ignores the rebate for 2007-2008 which, on its own, was more than the (reduced) amount of the claim.

For those reasons, the claim for the increased costs of insurance must fail.

Wasted Costs of Employing Staff

This is the claim for the wasted costs of employing staff for the opening in December 2006, who had to be let go because that was cheaper than retaining them until October 2007, when The Oak finally opened. It is not part of the subrogated claim, although it was not clear why this head of claim was not made to the insurers; on its face, it carried with it an impression of reality that so many of the claims actually made (and paid) appeared to lack. At all events, it was a direct claim by Mr Barber and Mrs Lawless in the sum of £39,637.73.

As with so many of these ‘other’ claims, there is no breakdown for the pleaded figure. However, in his closing submissions, Mr Evans produced a calculation, by reference to the staff employed between September 2006 and February 2007, which totalled £39,490.81. This claim was put forward on the basis that these staff had to be let go no later than February 2007 as a result of the second inundation and that therefore the costs of employing these people was wasted as a result of the second inundation.

Mr Miller had two generic complaints about this claim. The first was that the way in which this claim was put in Mr Evans’ submissions, and the method of calculation, was not foreshadowed in the pleadings or the evidence. He complained that the subsequent claim was therefore an ambush. Secondly, he pointed out that the discrepancies between the payroll documents (already noted in paragraph 222 above) made the entire documentary basis of this claim suspect.

I have sympathy with Mr Miller on both these counts. However, as to the first complaint, it seems to me that, whatever the confusion and muddle in relation to this head of claim prior to Mr Evans’ closing submissions, those submissions do pull together sufficient documentation and references in the evidence to justify the presentation of the claim in this way. It may be new, but it is not based on material which could be said to have come as any surprise to the defendants.

As to the second point, I agree that the payroll documentation is suspect, because different documents, containing different figures, have been produced in relation to the same months. I have refused to accept the alleged employment of Mr Tattersall on that basis. The discrepancies obviously create a general doubt as to the reliability of the figures. But that needs to be offset by a certain amount of common sense: plainly, staff were engaged at The Oak in December 2006 who were readying themselves for the opening of the business but who, because of the first and second inundation, had to be dispensed with. As a head of claim, it seems to me to be legitimate, notwithstanding the problems with the documents showing the figures.

As I have indicated, Mr Evans’ calculations claims all of the staff employed in September, October, November and December 2006 and January and February 2007. I consider that to be excessive. I do not know why staff were engaged in September and October 2006. Given that, on Mr Barber’s own evidence, The Oak could not open until mid-December 2006 at the earliest, I consider that it was unreasonable to engage staff so early on. Indeed, in my view, if staff were engaged so early on, that is another reflection of the point that I have made in paragraphs 25-26 above, namely that even in relation to the original fit-out works, Brit Inns, who had prepared no schedule of work and had done no programming, had no real idea of when they were going to open. It is not for the defendants to reimburse Brit Inns for their failure to programme the original fit-out works properly.

In those circumstances, I reject the claim for staff in relation to September and October 2006. However, it seems to me that – subject to one further point – the staff engaged for November, December, January and February 2007 were engaged because, but for the second inundation, Brit Inns were preparing to open in mid-December. The first inundation does not seem to me to be a separate cause of this loss because, given that the damage that it caused was much less and the remedial period much shorter, it was not likely that staff would have to be let go prior to the anticipated reopening in March.

This conclusion is subject to one qualification. At paragraph 222 above, I have rejected the alleged employment of Mr Tattersall during the relevant period. Accordingly, no claim can be made in relation to his wages. I note that all other members of staff for whom a claim is now made can be found on both versions of the payroll document, so the discrepancy difficulty that affects the claim for Mr Tattersall does not apply to them.

Accordingly, on Mr Evans’ figures, and deducting the sum claimed in respect of Mr Tattersall, I allow the claim for wasted staff costs for November and December 2006 (£1443.66 and £6,653.76) and January and February 2007 (£6750.26 and £1,555.56). That produces a total figure of £16,403.24.

Costs of Installing, Servicing and Maintaining Delta Drain

The claim was an uninsured claim in the sum of £10,000. In opening, Mr Evans said that this was reduced to £500. There was no basis even for the reduced sum claimed. Furthermore, the claim was not made out on the facts. Barnard Associates recommended a maintenance contract with Direct Pumps Limited, but no such maintenance contract was entered into and there was no evidence of any maintenance cost ever having been incurred. This head of claim therefore fails.

Other Abandoned Claims

The remaining uninsured claims, such as the claim for the costs of renting a staff flat and the alleged loss of rental payments from January 2009 to December 2010 have all been abandoned. The latter claim was abandoned during the trial, although it was pleaded as being worth £368,000 and had been opened as a claim worth £184,000 (albeit on the basis that it could not be maintained as well as the loss of profit claim). In this way, a series of pleaded claims worth well over £1 million was reduced to just over half that by the start of the trial, and even less by the end of the closing submissions.

Summary

For these reasons, the only additional head of claim I allow is that relating to wasted staff costs, in the (reduced) sum of £16,403.24 (as per paragraphs 284-292 above).

CONCLUSIONS

For the reasons set out in Sections 3 and 4 above, I assess the quantum of the material damage claim in the total sum of £136,688.89.

For the reasons set out in Sections 5 and 6 above, I assess the loss of profit claim in the sum of £20,779.

For the reasons set out in Section 7 above, I assess the other/uninsured claims in the total sum of £16,403.24. Unlike the other two sums, that is due to Mr Barber and Mrs Lawless as assignees of Brit Inns.

Thus, the total due by way of damages is £173,871.13. This Judgment does not address any issues concerning interest or costs.