Lum v Chan

In assessing damages for property or business wrongfully lost, a claimant bears the legal burden of proving loss on the balance of probabilities. The court may give the claimant the benefit of relevant doubt where the defendant’s wrongdoing has made valuation difficult, but that evidential advantage does not reverse or remove the burden of proof. A claimant cannot obtain an enhanced valuation based only on impressionistic or vague evidence. The court may nevertheless make a fair and evidence-based assessment, including a moderate uplift where the available evidence supports it.

This was the quantum determination following the liability judgment in January 2020. The defendant had been found liable for diverting payments and business opportunities from NewCo, a company operated by the claimant, and the defendant’s counterclaim had been dismissed.

The court assessed three principal heads of loss: the lost value of NewCo, monies diverted from NewCo accounts, and profits from cash jobs diverted to the defendant. It also considered the cost of liquidation, continuation of a freezing injunction, and outstanding issues concerning interest and wasted costs.

1. Lost value of NewCo. The starting point was the arm’s-length purchase price of £100,000. Brownings v Brachers [2005] EWCA Civ 573, following Armory v Delamirie (1722) 1 Stra 505, established that a claimant may receive the benefit of relevant doubt or a fair wind where the defendant has wrongfully deprived the claimant of property. That principle creates an evidential presumption; it does not reverse the legal burden of proving loss.
2. The claimant’s impressionistic evidence of turnover and profit could not justify the substantial valuation sought. The evidence that the defendant was to receive £100 per cooker, together with the fair wind available to the claimant, justified an uplift to £150,000, but not more.
3. Profit and diverted monies. The court found the gross profit element to be 55%, having regard to the true turnover and the evidence concerning individual jobs. It awarded £49,114 for admitted diverted monies, a further £12,396.34 after allowing for the accepted £40,000 payment and applying the 55% profit figure, and £22,125 for pre-suspension cash jobs. For post-suspension work, the recoverable loss was 55% of £124,024.93, namely £68,213.20.
4. The claimant was also entitled to £5,000 for the liquidation of NewCo. The total freezing injunction, varied by consent on 29 June 2020 to £675,000, was extended until the judgment sums and interest were paid because there remained a real risk of dissipation.
5. Issues concerning compound interest and a possible wasted-costs order were deferred for further written submissions and, if required, a further hearing.

First-instance quantum determination following the liability judgment entered on 31 January 2020. The judgment does not provide a citation for that earlier decision.