Raymani Zaloumis v Paul Martin Steele

Damages for late payment under a contract are subject to the ordinary rules of contractual remoteness. Loss of profits is recoverable only where the relevant loss was reasonably foreseeable when the contract was made, having regard to the defendant’s actual or imputed knowledge.

Delay in paying money does not itself establish recoverable damage. The claimant must prove both causation and loss. Where the alleged profits arise from a new business venture, the claim may require assessment as a loss of chance rather than as a certainty, supported by adequate evidence. A claim based on speculative calculations, unsupported expert evidence and unproved assumptions will fail.

The claimant sued his father for damages following late payment of £200,000 due under a settlement agreement dated 26 January 2022. The defendant accepted that the payments were made late, but disputed liability for the claimant’s alleged losses.

The claimant claimed substantial losses said to arise from missed manufacturing and licensing deadlines, the loss of a haircare business opportunity and lost profits connected with an agreement involving Nankoung Inc, referred to as the Buluwa Agreement. The defendant denied having the necessary knowledge of those matters and challenged the proof, causation and remoteness of the losses.

The issues were whether the defendant had assumed responsibility for the alleged losses and whether the claimant had proved recoverable damage.

1. The claim was dismissed. The defendant had breached the settlement agreement by paying the settlement sum late, but the claimant had proved no recoverable damage arising from that breach.
2. The governing principles were those stated in Hadley v Baxendale and explained in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd. Recoverable loss must have been reasonably foreseeable when the contract was made as liable to result from the breach. This depends on the knowledge then possessed by the parties, including imputed knowledge of the ordinary course of events and actual knowledge of special circumstances.
3. The claimant failed to prove that the defendant knew, or could reasonably be taken to have known, that late payment would cause the loss of the Buluwa Agreement, manufacturing opportunities, licensing arrangements or associated profits. The evidence did not establish that the mediator had conveyed the necessary details. The claimant had also had the opportunity to define expressly in the settlement agreement the consequences of late payment and the scope of the defendant’s responsibility.
4. The principles in Koufos v C Czarnikow Ltd (The Heron II), Sempra Metals Ltd v Inland Revenue Commissioners and Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) confirmed that ordinary remoteness principles applied to a claim based on non-payment of money. Delay in payment did not itself establish damage, and the claimant had to prove the loss claimed.
5. In any event, the claimed profits were not proved. The claimant relied principally on his own assertions, without admissible expert accountancy evidence. The evidence did not establish the profits Raymani Ltd would have generated, the dividends that would have been received, or how net profit and loss under the Buluwa Agreement were to be calculated.
6. Applying Wellesley Partners LLP v Withers LLP, any recoverable claim for profits from the new venture would, at most, have required assessment of a lost chance. The evidence was insufficient to evaluate that chance. The claimant had also failed to give credit for mitigation.
7. The only potentially viable loss identified was the cost of borrowing money elsewhere, but no such claim had been made. The defendant’s counterclaim was not actively pursued.