Whiteleys (A Firm) v Trafalgar Consultancy Ltd

Where professional negligence consists of failing to carry out an express instruction, damages are assessed by comparing the claimant’s actual position with the position it would have occupied had the instruction been performed. The court must identify the duty and counterfactual from the pleaded case and findings. A party cannot on appeal recast the instruction as a broader obligation to achieve a different result. If the evidence shows that the customer would have accepted the increased tender, the lost additional revenue is recoverable. It is not reduced merely because the resulting payment might have exceeded the amount strictly required by the contract.

A security-services supplier engaged an accountancy firm to help price its tender for Siemens sites. The supplier alleged that the accountant failed to include double-time bank-holiday payments. The county court found breach, but assessed loss at £80,943 plus interest. On appeal, the supplier sought £109,420 using a calculation based on the actual number of bank holidays over five years, rather than the pleaded notional 53-week method. The appeal concerned the scope of the instruction and the correct counterfactual measure of damages, including whether a fortuitous pricing surplus could reduce recovery.

Disposition

The appeal was allowed in part. The judgment on the counterclaim was increased from £80,943 to £90,933, plus interest. The claim for the higher sums calculated under the alternative methods failed.

1. The pleaded instruction was to prepare the tender calculations on a notional 53-week basis, reflecting double-time payments for bank holidays. The evidence and findings did not establish a broader instruction requiring the accountant to calculate the precise number of bank holidays during each year of the contract. The appellant could not advance that unpleaded case on appeal. In particular, evidence cannot alter the pleaded allegation without an amendment.
2. The correct measure of damages was the sum required to place the appellant in the position it would have occupied if the respondent had carried out the pleaded instruction. The weekly tender total had been multiplied by 52. The instructed calculation required multiplication by 53. That produced a loss of £90,933, corresponding to the difference between what the respondent was instructed to do and what it actually did.
3. The Recorder was wrong to reduce the award by relying on the respondent’s analysis that the appellant had fortuitously priced more chargeable hours than the contract required. The finding that Siemens would have accepted a tender £100,000 higher meant that the additional £90,933 could have been earned. The possibility of an undeserved contractual windfall did not alter the loss caused by the negligent calculation.
4. Lord Justice Lloyd agreed, emphasising that the pleaded instructions defined the issue on liability and damages. Lord Justice Wilson agreed with both judgments. Counsel were directed to agree the interest figure so that an agreed order could be placed before the court.

• Court of Appeal (Civil Division): [2006] EWCA Civ 503. Appeal from the county court allowed in part; the counterclaim award was varied to £90,933 plus interest.
• Aldershot and Farnham County Court: On 12 May 2005, Mr Recorder Mawhinney found breach of duty and awarded £80,943 plus interest on the counterclaim.