PFE International Ltd v Material Auxiliare l'Informatique

On an application for permission to appeal an assessment of contractual damages, the appellate court will not interfere with a first-instance judge’s evaluation of evidence where the judge addressed the arguments and there is no reasonable prospect of dislodging the finding. In calculating loss of profit, the judge may use figures directed to the relevant historical period and reject later current costs if they cast no light on that period. A separate allowance for overtime is unnecessary where the adopted figures already include some overtime. The absence of competing calculations or accounting evidence may support reliance on the claimant’s figures.

PFE International Ltd v Material Auxiliare l'Informatique concerned damages assessed by the Central London County Court for breach of various contracts. His Honour Judge Hallgarten QC found that there was no available market and that the claimants could have fulfilled the contracts, thereby suffering a loss. Permission to challenge those findings had already been refused and the ground was not pursued.

The remaining application challenged the calculation of loss of profit. It concerned the use of projected 1997 standard costs rather than actual 1998 current costs, and the absence of a further allowance for overtime. The central issue was whether those criticisms gave a reasonable prospect of overturning the assessment.

Lord Justice Waller refused permission to appeal. The challenge to the available-market finding was not pursued, and the refusal of permission on that ground stood. The application therefore concerned only the assessment of damages.

1. Historical production costs. The judge had to assess the cost of production during 1997. The claimants’ figures for that year were contained in exhibit CFH 15. Although the current costs shown in the comparison were higher, the judge considered the argument that manufacturing experience might have reduced costs between 1997 and 1998. He was entitled to regard the increase in at least one item as alarming and to conclude that it cast no light on the costs existing in 1997. There was no reasonable prospect of dislodging that finding on appeal.
2. Overtime. The judge understood that some overtime was already included in the figures and declined to make a further increase. That was a conclusion he was entitled to reach on the evidence, and there was no reasonable prospect of successfully challenging it.
3. Competing evidence. The defendants had not produced calculations of their own or called an accountant. In that context, the judge was entitled to assess the claim using the claimants’ figures, while taking account of the arguments advanced on behalf of the defendants.

The operative order was: permission to appeal refused.

• Court of Appeal (Civil Division): Lord Justice Waller refused permission to appeal against the damages assessment. The challenge to the available-market finding had previously been refused permission and was not pursued.
• Central London County Court: His Honour Judge Hallgarten QC assessed damages for breach of contract and awarded £100,507.76, including interest.