Brit Inns Ltd & Ors v BDW Trading Ltd

Damages for physical damage are assessed by reference to the reasonable cost of reinstatement. Actual expenditure and payments by insurers are evidentially relevant, but they are not conclusive. Where invoices and records are unreliable, the court may prefer a retrospective valuation based on the work reasonably done and standard rates. The burden remains on the claimant to prove the loss; it is not reversed merely because the defendant must investigate defective evidence.

A loss-of-profit claim following delayed opening should ordinarily be treated as a claim for profits lost during the period of delay. For a new business, profitability must not be assumed. Actual trading figures ordinarily provide the starting point unless good evidence shows that they are unreliable. Comparators must be genuinely comparable in location, facilities, trading history and business character.

Two related actions arose from flooding at the basement restaurant known as The Oak, operated by Brit Inns Limited. Liability for the second inundation, caused by defective workmanship by BDW Trading Limited and/or J Reddington Limited, was admitted. The trial therefore concerned causation and quantification.

The claimants sought subrogated recovery of sums paid by insurers for material damage and loss of profit, together with uninsured claims. They also pursued assigned claims arising from delayed opening, staff costs and other alleged losses. The central issues were the reasonable valuation of reinstatement works, the proper calculation period and evidential basis for loss of profit, and whether the various additional losses were caused by the second inundation.

1. Material damage. The reasonable cost of reinstatement was the governing measure. The fact that works had been completed and paid for was relevant evidence, but did not determine reasonableness. In an ordinary case actual costs would usually be the starting point. Here, the absence of a fixed scope, inadequate invoices, lack of proof of payment, unreliable supporting evidence and numerous wrongly claimed items made the invoices generally unsuitable without further analysis.
2. The defendants’ quantity surveyor had used a recognised measurement and valuation methodology. The claimants’ expert had largely accepted invoices at face value. That approach impermissibly reversed the burden of proof. Retrospective valuation by reference to the work shown to have been done and standard rates was therefore generally preferred, while individual invoiced sums could still be allowed where supported by the evidence.
3. The material damage claim was assessed at £136,688.89. The court rejected the attempted reinstatement of items which the experts had properly excluded, including betterment, replacement of reusable fixtures and items attributable to the first inundation.
4. Loss of profit. The Oak was a new business, so profitability could not be assumed. The claim was primarily for the seven-month delay between the date on which the restaurant should have reopened and its actual reopening. The consequences of the first inundation could not be attributed to the defendants.
5. Actual trading figures after October 2007 were the proper starting point. The evidence did not establish that alleged uncertainty, staff changes, equipment problems or odours made those figures unreliable. The King’s Head was not a suitable comparator because it differed in location, facilities, trading history and business character. Loss of profit was assessed at £20,779.
6. The remaining claims were largely unproved or causally remote. The only additional sum allowed was £16,403.24 for wasted staff costs incurred in November 2006 to February 2007, subject to the exclusion of the unsupported claim concerning Mr Tattersall. Total damages were £173,871.13. Interest and costs were not addressed.