Jackson & Anor v Royal Bank Of Scotland

Loss of the chance of repeat business may be recoverable for breach of contract where that loss was reasonably foreseeable as liable to result from the breach. The loss-of-chance approach concerns quantification; it does not displace the contractual rules on remoteness. The recoverable period is limited to the time for which the loss was within the parties’ reasonable contemplation when the contract was made, assessed by the defendant’s knowledge then available rather than by later events. Interest is ordinarily awarded at a conventional rate. An exceptional uplift requires general evidence of borrowing rates available to the relevant class of claimant, not merely evidence of the claimant’s own borrowing arrangements.

The claimants, partners trading as Samson Lancastrian, imported and resold goods to Economy Bag. The Bank, which acted for both businesses, mistakenly sent Economy Bag a document revealing Samson’s supplier and substantial mark-up. Economy Bag then ended the relationship and traded directly with the supplier.

The High Court found breach of contractual confidence, treated Samson as seller rather than agent, and awarded damages for four years’ lost profits with interest at 6% over base rate. The Bank challenged liability for the lost repeat business, causation, remoteness, quantum and interest. Samson cross-appealed against the amount of damages. The central issues were the proper period and method for assessing loss of future repeat orders and the appropriate interest rate.

1. Appeal and cross-appeal. The appeal was dismissed. The cross-appeal was allowed to the extent that damages were reduced to US$45,000 and interest was fixed at 3% over base rate. Fresh evidence was admitted.
2. Characterisation. The trial judge was entitled to find that Samson and Economy Bag were in a seller-and-buyer relationship, not a principal-and-agent relationship. The original transaction was plainly one of purchase and resale, while the later 5% handling charge related to import formalities and carriage. The use of transferable letters of credit did not itself establish agency.
3. Remoteness and causation. Loss of the chance or opportunity of repeat business is recoverable in principle where the contractual test in Hadley v Baxendale is satisfied. The Bank knew of a continuing and expanding two-year trading relationship and could reasonably contemplate that disclosure of the mark-up might cause Economy Bag to place future orders directly with the supplier. Mr Taylor’s anger was precipitated by the breach and was not an intervening cause.
4. Quantification. The principle in Allied Maples Group Ltd v Simmons & Simmons concerns quantification, not remoteness. The chance of future transactions must therefore be assessed subject to the remoteness limit. The relevant period is what the Bank could reasonably have contemplated at the date of breach, not the period later shown by evidence at trial. On the available knowledge, one year was the proper cut-off. Samson was virtually certain to retain the business during that year, subject only to a modest discount, producing US$45,000.
5. Interest. Interest should generally be awarded conventionally. A higher rate may be justified by general evidence of borrowing rates available to claimants of the relevant class, but the claimant’s individual overdraft rate was insufficient. The award of 6% over base rate was unjustified; 3% over base rate was appropriate.

• High Court of Justice, Queen’s Bench Division, Mercantile List (Liverpool): The Bank was held liable for breach of confidence and damages were awarded for four years’ lost profits, with interest at 6% over base rate.
• Court of Appeal (Civil Division): The appeal was dismissed. The cross-appeal was allowed in part, damages were reassessed at US$45,000, interest was reduced to 3% over base rate, and leave to appeal to the House of Lords was refused.