Altus Group (UK) Ltd v Baker Tilly Tax and Advisory Services LLP & Anor

Permission to appeal requires a real prospect of success. A claimant seeking damages based on hypothetical decisions must prove, on the balance of probabilities, what it would have done. The loss-of-a-chance approach applies only after the claimant has established that it would have taken the relevant course; it cannot replace proof of that antecedent decision merely because independent professional advice would have been obtained.

In assessing costs, the court should apply the procedural rules and take a broad view of the parties’ success and failure. It should avoid an artificial allocation of costs issue by issue. A valid Part 36 offer may justify enhanced costs consequences after the relevant acceptance period.

The claimant’s substantive claim against the defendants had been dismissed in an earlier judgment, [2015] EWHC 12 (Ch). The claimant then sought permission to appeal on four grounds, including challenges to factual findings, the treatment of hypothetical professional advice, the use of loss-of-a-chance principles, and the prospects of a challenge under section 54.

The defendants sought their costs, subject to specified deductions for expert evidence. The court also had to determine the effect of a Part 36 offer, interest on costs, and payment on account.

1. Permission to appeal. Permission was refused on all four grounds. The claimant had not adduced evidence from the relevant decision-maker capable of proving, on the balance of probabilities, what it would have done in 2009. Evidence concerning a later decision-maker acting in different circumstances could not establish the necessary inference.
2. The loss-of-a-chance approach could not be used to avoid proving the claimant’s own hypothetical decisions. The claimant first had to prove that it would have consulted the relevant professional, that it would have acted on the advice, and that it would have implemented the proposal. Only then could the prospects of the proposal being effective, including the conduct of an independent third party such as HMRC, be assessed on a loss-of-a-chance basis. The fact that the decision-maker would have relied substantially on professional advice did not alter that requirement.
3. The proposed ground concerning a section 54 Ramsay challenge was parasitic on the other grounds and did not arise. The court nevertheless observed that a loss-of-a-chance assessment generally does not require the court to determine every legal issue that might require determination in a different case.
4. Costs. The defendants were the successful party, but their costs did not reflect success on all the issues for which they had been incurred. After excluding the costs of expert evidence on breach of duty, the court adopted a broad assessment and awarded 50% of the defendants’ costs up to and including 4 November 2014.
5. The claimant had failed to obtain a judgment more advantageous than the defendants’ Part 36 offer. It was not unjust to apply the consequences of CPR 1998, r. 36.14. The defendants were therefore awarded 100% of their costs after 4 November 2014. Certain specified expert-report costs were excluded. Interest was payable at 1% above the Bank of England base rate from the dates on which the relevant costs were paid, and the claimant was ordered to pay £225,000 on account of costs.

High Court (Chancery Division): The substantive claim was dismissed on 7 January 2015 for reasons given in [2015] EWHC 12 (Ch). In this supplemental judgment, permission to appeal was refused and consequential costs orders were made.