Take Ltd v BSM Marketing Ltd. & Anor

Permission to appeal should be granted where a proposed challenge raises an arguable question about the analytical basis of a damages assessment. That includes a case where the judge selected an intermediate profit margin without clearly addressing the competing calculations, their evidential basis, or any further adjustment required. It also includes a challenge where the judge failed to explain the basis for projected supplier prices. By contrast, permission should be refused where a loss-of-chance conclusion rests on more than one evidential basis and the proposed challenge has no realistic prospect of displacing it. A challenge to selecting the top of an evidential range likewise lacks sufficient prospects where the relevant evidence was not tested because the opposing party did not call the witness.

Following findings that BSM Marketing Ltd had breached fiduciary duties of loyalty and not to misuse information, the High Court assessed damages at £144,871.54. The assessment concerned lost or prospective furniture sales to Dreams and prospective sales to Argos.

Five grounds of appeal were advanced. Toulson LJ had already granted permission on ground (iii). On the renewed application, the Court of Appeal considered whether grounds (i), (ii), (iv) and (v) were arguable and had a realistic prospect of success.

The Court of Appeal granted permission on grounds (i) and (ii), in addition to ground (iii), for which Toulson LJ had already granted permission. Permission was refused on grounds (iv) and (v). Dyson LJ agreed with Waller LJ.

1. Existing range sales to Dreams. The damages judge had selected a 20.68 per cent profit margin between the figures advanced by the parties. There was an arguable question whether he should instead have examined how the competing figures of 30.17 per cent and 20.68 per cent were calculated and then considered whether a further reduction was required to reflect reduced prices. Ground (i) was therefore permitted to proceed.
2. New range sales to Dreams. There was an arguable evidential issue because no supplier price list had been produced. The supplier’s evidence was that the prices were kept in his head, and the judge had not explained how he reached the projected supplier prices. Permission was granted on that aspect of ground (ii).
3. Prospective Argos sales. Permission was refused on the qualitative challenge. The judge had identified two bases for concluding that the quality issue might be overcome: his acceptance of the explanation concerning the quality-control test and the enthusiasm shown by Mr Hughes after visiting the Chinese factory. The judge assessed the chance at only 40 per cent, and there was no basis for the Court of Appeal to interfere with that assessment on appeal.
4. Level of Argos sales. The judge had selected the top of Mr Bates’s range, namely 8,000 beds, although BSM had not required Mr Bates to attend for cross-examination. The suggested alternative figure of about 4,500 beds did not present a ground with any prospect of success.

Waller LJ added that granting permission on the additional grounds did not detract from the recommendation that the dispute should be resolved through mediation.

• Court of Appeal (Civil Division): On 11 March 2008, granted permission on grounds (i) and (ii), in addition to ground (iii) previously permitted by Toulson LJ, and refused permission on grounds (iv) and (v).
• High Court of Justice, Queen’s Bench Division: HHJ Toulmin QC found breaches of fiduciary duty and assessed damages at £144,871.54.