The Claimant was represented by Mr Chandler of counsel, instructed by Edesia Law
The Defendant was represented by Mr Shepherd of counsel, instructed by Mills and Reeves LLP
This judgment was handed down at a hearing without attendance of parties at 10 am on 14 July 2026 and by circulation to the parties' representatives by email.
His Honour Judge Pema:
Introduction
- The Claimant is a three-partner firm based in Huddersfield, West Yorkshire. It provides financial advice and investment services to individual clients. In broad terms, it advises on a range of investment products and, on instruction, arranges the chosen investment. Once the product has been purchased, it manages the client's portfolio through reviews and any necessary changes. It also manages the way income is drawn from those investments so that it is received tax-efficiently.
- The Defendant is a well-known multinational provider of financial and insurance services, with a multi-billion-pound turnover. As part of its business, it operated an online platform ("the Platform"). Through it, independent financial advisers ("IFAs") could purchase and manage a wide range of financial products, including ISAs, pensions and general investment accounts. The Platform was available only to professional financial advisers and had been in use since at least 2011. In broad terms, advisers who purchased the Defendant's investments through the Platform received remuneration by way of adviser charges and commission, facilitated through the Platform. All instructions, communications and transactions were generally carried out through it.
- The Claimant had used the Defendant's Platform in its business since early 2011. It also used a number of other platforms. Of its 700 active clients, approximately 109 were on the Platform (re-amended particulars, paragraph 7), representing about
15.5 per cent. The Claimant also avers that it estimated that almost 30 per cent of new clients since 2015 had been placed with the Defendant through the Platform.
- In 2017, the Defendant decided to upgrade the Platform, using a third-party company, FNZ, to operate it on the Defendant's behalf. The Defendant circulated information to IFAs about the upgrade and its anticipated benefits. That material, together with a proposed implementation date in December 2017, appears at [A56– 61]. The leaflet stated that the improvements were "designed to make the Platform, more flexible, faster to use and even better value for money" and went on as follows:
- For reasons which are not clear, the Defendant postponed the upgrade. On 17 January 2018, however, the planned revision took place, and the Platform was offline for a planned six days. The Claimant says that, once it restarted, the Platform was beset by problems and addressing them required significant time and effort on the part of its staff. The problems were also widely reported in the financial services press. I have been provided with extracts in Bundle G which, although strictly hearsay, make clear that there were widespread reports of problems with the Platform after January 2018 and for many months thereafter.
- The Defendant accepted that the upgraded Platform had caused problems. It is important to note, however, that any losses suffered by the underlying investors do not fall within these proceedings. Although I have been provided with Financial Ombudsman decisions concerning some of those individual investors, I do not consider those decisions to be relevant, save insofar as they support the Claimant's assertions about the problems caused by the Platform.
- Because of the number of compensation claims, the Defendant voluntarily set up a compensation scheme to provide redress to financial advisers affected by the problems with the Platform. The Claimant was invited to claim under that scheme and did so, providing details of the time spent on individual clients. The Defendant offered the Claimant c.£19,000, which it considered reasonable compensation. That figure included clients said to have been significantly affected and those less so. It fell far short of the Claimant's own figure of more than £96,000. The parties could not reach agreement under the scheme, and proceedings were then intimated and commenced.
The Claim
- The Claimant alleges that it suffered significant loss and/or wasted expenditure as a result of problems with the Platform. It says that the contract contained an implied term that the Platform would be fit for purpose, that the Defendant breached that term in multiple ways, and that those breaches caused loss. When proceedings were issued, the claim was valued at just over £200,000 and was therefore properly brought in the County Court. By the re-amended Particulars of Claim and expert evidence, however, one method of calculation put the loss close to £2 million. By the start of trial, the figure had reduced, but on one method of assessment remained about £1.2 million.
- The Defendant says that the express terms of the contract included exclusion clauses in the Electronic Services Schedule ("ESS"), which exclude liability for all pleaded claims for breach and loss. Alternatively, it says that no term as to fitness for purpose can be implied. In the further alternative, it denies the breaches, causation and loss.
- The documentary material was substantial. I had a core bundle marked A and additional bundles B to H, together exceeding 13,000 pages. Counsel filed skeleton arguments, written closing submissions, a joint bundle of authorities, and a supplemental authorities bundle for the Claimant. I am grateful to counsel, solicitors and the courtroom assistants for the preparation and operation of the electronic bundles, without which the trial would have taken significantly longer.
- The court heard evidence from five factual witnesses for the Claimant and one for the Defendant. Both parties also relied on forensic accountancy experts, each of whom produced reports and gave oral evidence.
Assessment of Witnesses
- I will return to the factual evidence when dealing with the issues. I set out here my overall assessment of the factual witnesses.
Mr Michael 
Lumley
- Mr Michael Lumley is the senior partner of the Claimant and was plainly its leading voice. He is the son of its founder and previous senior partner. He was the Claimant's principal factual witness on the problems after January 2018 and later events. Although he signed statements of truth on the pleadings, including the Excel spreadsheet forming the Schedule of Loss, he was not its author and had, at most, a supervisory role in its preparation.
- Mr Chandler's description of Mr Lumley's evidence as "clear eyed and reasonable" is not a submission I am able to agree with, rather the contrary. He was clearly angry about the Platform's failings and expressed that anger in intemperate
language. Some of Aviva's emails in reply were perhaps ill-judged, but they were responding to emails from Mr Lumley which bordered on the unprofessional. The language he used is all the more striking because his emails were drafted by hand for his secretary to type and send. In my judgment, his frustration with Aviva and strongly held belief that it had acted unreasonably coloured both the schedules he produced and aspects of how he gave evidence. It was clear that from quite an early stage he had formed a view that the Defendant's actions were unacceptable and that he and his clients were badly treated. That view had clearly become entrenched and unfortunately has affected the quality of his evidence.
- I found his evidence unreliable on important issues, including lost opportunities, Oliver Lumley's employment and the lost-time schedule. His explanation for not pursuing Mr Marshall's business was simply not credible nor why he had not obtained a statement from him in support of a fundamental part of his case. His answers in cross-examination were often evasive even when faced with clear documents, and his explanations were frequently short on detail or bordering on the illogical. This included his inability to explain how or why the substantial claims for Oliver Lumley's employment and lost opportunities were added so late, and his professed inability to remember whether his son had been successful in any investment job applications before joining the firm.
- He was also reluctant to make concessions, even when documents made the position plain, including in relation to duplicated or non-Platform entries in the spreadsheet. He usually conceded only when pressed, sometimes by the court. I do not find that he was inherently untruthful, but I do not regard his evidence as reliable on the key disputed issues.
Oliver Lumley
- Oliver Lumley is the son of Michael Lumley. He joined the Claimant in May 2018 as an investment analyst. The Claimant claims for the cost of employing him. While at the firm, he obtained numerous further investment qualifications and then qualified as a financial planner, becoming a partner in 2023. He prepared the Excel schedule of loss served with the Particulars of Claim in 2022 and the final version in March 2026.
- I found him to be clearly intelligent, but his answers were often stilted and appeared designed to protect the Claimant's case from what he thought may be damaging answers rather than to give a full and true account. His evidence about the reasons for, and sequence of, his employment appeared contrived after the event. I also did not find credible his attempt to explain why, if he had been engaged only as emergency cover for his father, he was then acquiring a range of additional qualifications at the company's expense. I return later to his role in
preparing the schedule. For present purposes, I do not accept that the spreadsheet was carefully checked and vetted. The contemporaneous material shows otherwise, particularly where descriptions in the "issues" column lacked proper documentary foundation.
Adele Bestwick
- Adele Bestwick is employed by the Claimant as a financial adviser and had previously worked for Aviva. Her evidence about the Platform problems was generally straightforward. She was knowledgeable about the Platform and more balanced than some other witnesses, although she was a junior employee and accepted that she felt some personal responsibility because of her Aviva background. Her evidence about lost opportunities for new clients was vague and weak. It did not provide a cogent basis for finding that the Claimant had lost actual opportunities for additional work. Since that claim is no longer actively pursued, I need say little more than I was not persuaded that her evidence provided any cogent basis for finding that the Claimant had lost actual opportunities for additional work.
Mr Baxter
- Mr Baxter is partner in the Claimant. He was a reserved witness and gave the impression of being more peripheral to the issues. On his own evidence, he felt less strongly about them than Mr Lumley did. The clear impression was that he was being carried along in Mr Lumley's wake. He was also vague about the preparation of the schedule of work and, in particular, about his own role in creating or checking it.
Mr Waters
- Mr Waters, an adviser at the firm since 2012, had limited recall beyond the general outline of events. He too was vague about his involvement in preparing or checking the schedules.
Mr Worton
- Mr Worton was the Defendant's only factual witness. He was called to give limited evidence and as became clear had no direct knowledge of many important events. His evidence was further constrained by the fact that his statement had been prepared without sight of the relevant documents for many years. As a result, his
evidence on breach was general and often wrong. Where there was a conflict about events, I found his evidence of very limited value, and often of no value.
The issues for trial
23. Although counsel differed to some extent about the issues for determination, it seems to me that they fall into two categories: first, contractual questions; and secondly, questions of breach, causation and loss.
Contractual Issues
24. The contractual issues are as follows:
a. What were the express terms of the contract? Whether the terms of the ESS governed the Claimant's use of the Defendant's Platform.
b. If they do, whether the exclusion clauses in the ESS are effective against the Claimant in respect of the alleged breaches.
c. If they are not, whether a term as to fitness for purpose should be implied into the contract between the parties and, if so, on what terms.
Issues on breach, causation and loss
- The issues relating to breach, causation and loss are these:
i) If such an implied term is to be implied, whether the Defendant was in breach of the contractual terms between the parties and, if so, to what extent.
ii) Whether any breach caused loss to the Claimant.
iii) If so, how those losses should be quantified.
What were the express terms of the Contract?
- Although the bundle contains contracts dated both before and after January 2018, it is common ground that the material terms did not change.
- The Claimant says that the express terms of the contract are contained only in the main Terms of Business ("the Terms"), for example at B7, and that the schedule headed "Electronic Services", for example at B32, did not form part of the contract governing use of the Platform. The Defendant says that the contract included the ESS, including the exclusion clauses on which it relies.
The Law
- The interpretation of a written contract is a multifactorial exercise. The court must apply the recognised principles of construction, none of which is decisive on their own. As noted in AIG Europe SA (formerly AIG Europe Ltd) v John Wood Group Plc [2021] EWHC 2567 (Comm) [2022] Lloyd's Rep IR 485, those principles are not to be applied mechanically. The court must apply those which are relevant and adopt the interpretation which produces a coherent and just result.
- The correct interpretation of a contractual provision cannot be reached by considering the clause in isolation. It must be construed in the context of the document as a whole. This is sometimes described as a holistic approach to construction. See C v D [2011] EWCA Civ 646; [2012] 1 All ER 302 per Rix LJ:
"There is a general principle of construction that a document which falls to be construed should be read as a whole and its separate parts should be so construed, if that is possible, as to bring rational sense and consistency to that whole."
Whilst the actual wording must be the starting point for interpretation, the court should be wary of becoming too fixated on individual words or phrases instead of the context. See Re Sigma Finance Corp [2010] 1 All ER 571, per Lord Collins:
"In complex documents of the kind in issue there are bound to be ambiguities, infelicities and inconsistencies. An over-literal interpretation of one provision without regard to the whole may distort or frustrate the commercial purpose." .
- As an overview, per Lord Hodge JSC in Wood v Capita Insurance Services Ltd [2017] UKSC 24, at [10]:
"The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning".
The relevant Contractual Terms
- The contract between the parties whilst having several iterations starts in almost the same way, for example:
"These Terms of Business replace the existing Aviva Terms of Business for Firms dated 31st March 2014 and the existing Friends Life Terms of Business for Intermediaries (UK) dated 31st December 2012.
Please read these Terms of Business (the "Terms") carefully. They set out the agreement between you and Aviva for Business conducted with us on or after 14 November 2016. By submitting Business to us after this date, you agree to these Terms.
1.1 These Terms explain how Business can be placed with us on or after 14 November 2016"
- Definitions are set out in clause 2, [B(i)/A-10], and as material include:
"Aviva Platform means the adviser facilitated online portfolio management service provided by Aviva;
...
Business means the referral of Customers by you to Aviva (by way of lead generation, introductions, execution only, direct offer, advised or non-advised sales) in respect of any of the private medical insurance, Pure Protection Contracts, Designated Investments and Equity Release Transactions offered from time to time by Aviva and shall include the transaction of business using the Aviva Platform;
...
Electronic Services has the meaning set out in Paragraph 1.2 of the Schedule to these Terms.
...
User means any Person nominated by you to have access rights on your behalf to the Aviva Platform and any Electronic Services specified in the Schedule to these Terms offered by us from time to time;".
- In each version of the ESS at paragraph 1.2:
"We may make information and services available to you by electronic means either directly or through a third party ("Electronic Services"). This Schedule will apply specifically to all such Electronic Services save for the secure electronic messaging services which are, unless otherwise agreed in writing with you, set out in the following Origo Legal Framework ("CELF"). LINK TO CELF v 3. You will comply with and be bound by the respective terms and conditions in the CELF with effect from the first use of the secure electronic messaging service by you or any of your employees, agents or subcontractors."
- The status of the ESS is addressed as follows:
"2.4 The Schedule is incorporated as part of these Terms and references to "the Terms" includes the Schedule.
2.5 If there is any conflict between the terms of the main body of these Terms and those contained in the Schedule, the terms of the main body of these Terms shall prevail to the extent of that conflict except in the case of Electronic Services Schedule, in which case the provisions of that Schedule shall prevail."
19.1 The terms which will apply between us in relation to Electronic Services are set out in the Schedule to these Terms".
- Specific paragraphs relating to the platform are:
"14 USE OF THE AVIVA PLATFORM
14.1 If you have access to the Aviva Platform, you agree to comply at all times with these Terms and any terms we may issue to Users from time to time ("User Guidance).
14.2 You will give us written notice of the Persons whom you wish to be Users. We reserve the right, at any time and without providing reasons, to change a User's access rights. We will notify you as soon as reasonably practicable of such action.
14.3 You will be responsible for the activities of the Persons that you have nominated as your Users and you will use all reasonable endeavours to ensure your Users comply with these Terms and any User Guidance.
14.4 If, at any time you cease to act for a Customer, we may continue to provide such Customer with access to the Aviva Platform.
14.5 You will retain sole responsibility to a Customer for investment advice and for advising a Customer as to the suitability of the Aviva Platform. We cannot be construed in any way as providing investment advice and/or advising on the suitability of the Aviva Platform to a Customer or of any investment made through the Aviva Platform.
14.6 Where you advise us that a particular Customer does not require direct access to the Aviva Platform, you will provide such Customer with all information that would otherwise have been available to such Customer through the Aviva Platform.
15. DEALING TERMS - AVIVA PLATFORM
15.1 All contributions for investment through the Aviva Platform will be payable to us and you will forward all such contributions, or the authority for the collection of contributions to us as soon as reasonably practicable and without deduction (unless required by Regulations). You have no authority to accept contributions on our behalf.
15.2 Where we receive instruction directly from a Customer, we will act on such instructions.
15.3 When buying or selling investments for a Customer, we will deal as agent for the Customer.
All investments purchased will be registered in our name or the name of our nominee or Affiliates
...
22.3 We will hold personal data about you and your dealings with us including personal data supplied by you to us when applying to open an Adviser Account with us. If you or your Users access the Aviva Platform or Electronic Services we may gather personal data relating to the identity of the User, time and type of use."
Parties' submissions
- Mr Chandler submits that the Terms expressly define the Aviva Platform and that clauses 14 and 15 contain specific provisions governing its use and the relevant dealing terms. If the Defendant had intended the Platform to fall within "Electronic Services", he says, it would have said so expressly. On that basis, the specific provisions relating to the Platform should prevail over more general terms. He also relies on the principle that a general clause should not lightly be construed so as substantially to cut down a benefit conferred by a specific provision: see Apache North Sea Ltd v INEOS FPS Ltd [2020] EWHC 2081 (Comm), [21]–[22]. Since the ESS contains exclusion clauses and does not refer expressly to the Platform, he submits that clear words are required before the court should conclude that the contract excludes rights or remedies which would otherwise arise at common law.
- The Claimant also relies on two parts of the Terms in which the Platform and ESS are said to be treated separately, namely the definition of user, "...to the Aviva Platform and any Electronic Services", and clause 22.3, "...the Aviva Platform or Electronic services".
- The Defendant submits that the ESS accompanied every version of the Terms and that each version provided that, in the event of conflict, the ESS prevailed. It says the Terms expressly refer to and define the ESS as governing part of the parties' relationship. On any view, it submits, the Platform was a service made available to the Claimant by electronic means. The ESS therefore formed part of the express contractual terms.
Discussion
- This was not a negotiated agreement. It consisted of the Defendant's standard terms and conditions, which the Claimant had to accept if it wished to do business with the Defendant.
- Although the drafting of the Terms, and their interaction with the ESS, is very poor particularly given the size and status of the Defendant, the objective meaning of the contract, read as a whole, is clear. The Terms govern all business placed by a professional financial adviser with the Defendant, whether by electronic means or otherwise. Where such business is placed through an electronic service, additional terms apply. That construction is supported by clause 14.1, which begins: "If you
have access to the Aviva Platform...". If all business had to be placed through the Platform, those words would be unnecessary. It is also supported by the unchallenged evidence of Mr Worton that, although most business was placed through the Platform or a similar system, some products could still be applied for on paper or, more likely, by email.
- Read in context clauses 14 and 15 do not exclude the Platform from the definition of Electronic Services. It is not persuasive to point to the absence of an express statement to that effect in those clauses when the Terms elsewhere make clear that use of the Platform is subject to the ESS and cross-refer to the relevant definition. The ESS was a schedule to the Terms and was not concealed.
- Although inelegant, the reference in the definition of "User" to "...Aviva Platform and any Electronic Services specified in the schedule to these Terms offered by us from time to time" is intended to extend the definition beyond the Platform itself. In context, it covers additional electronic services which may from time to time be identified in the ESS, even if they are not otherwise set out in the Terms.
- The other potentially inconsistent reference appears in clause 22.3, which concerns data protection. Although the drafting is again inelegant, I do not read it as distinguishing the Platform from Electronic Services. Rather, the clause is framed to apply to electronic services generally, and not only to the Platform.
- If that analysis is wrong, Lord Collins's observations in Re Sigma Finance Corp about inconsistencies in complex documents are apposite. These isolated words would not alter the proper construction of the contract so as to exclude the ESS from the express terms.
- I therefore conclude that the express terms of the contract between the parties included the ESS.
Are the exclusion clauses valid as against the Claimant's claims?
- The Defendant relies on various terms within the ESS which it submits exclude liability on each pleaded head of loss.
- The Claimant argues that the clauses are unclear in construction but in any event fall foul of the Unfair Contract Terms Act 1977 ("UCTA 1977").
The relevant "exclusion" terms
48. The relevant terms all appear within the ESS and so far as material (with headings) state:
"DOWNLOADS
Any software is downloaded at your own risk. We do not warrant the suitability of any such software that is downloaded and accept no liability for any problems with your computer that may arise as a result. In no event shall we be liable for any special, indirect, consequential damages including without limitation loss of business, loss of profit, loss of goodwill or reputation, loss of corruption of data or wasted management time which may be incurred or experienced as a result of the use, inability to use, or reliance on the Electronic Services.
ERRORS AND OMISSIONS
We endeavour to keep records accessed through the Electronic Services up to date and accurate at all times. We will not accept liability for claims by you, your Users or your customers for damages or loss arising from inaccurate or incomplete records.
We do not accept responsibility and will not be liable for the inaccuracy or incompleteness of information or responses you or your Users receive through the Electronic Services where the inaccuracy or incompleteness arises out of or in connection with data transmission, machine or software malfunction, services provided by a third party or from you or your Users operator error. You accept responsibility for ensuring that any data transmitted to us is accurate and complete."
(emphasis added)
It should also be noted that the Defendant refers to 2.2 of the Terms which provides:
"The headings in these Terms are for convenience only and do not affect interpretation"
Further whilst there is an exclusion clause relating to liability for the nonavailability of the Platform, as the Claimant does not seek to pursue a breach based on such issue, I have omitted it from consideration in this judgment.
The Law
49. As material, UCTA 1977 provides:
"3. This section applies as between contracting parties where one of them deals ...
on the other's written standard terms of business.
(2) As against that party, the other cannot by reference to any contract term—
(a) when himself in breach of contract, exclude or restrict any liability of
his in respect of the breach; or
(b)claim to be entitled—
(i) to render a contractual performance substantially different from that which was reasonably expected of him, or
(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,
except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.
...
11. The "reasonableness" test
...
(5) It is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does
...
Schedule 2
"The matters to which regard is to be had in particular for the purposes of sections 6, 7, 20 and 21 are any of the following which appear to be relevant—
(a)the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer's requirements could have been met;
(b)whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having a similar term;
(c)whether the customer knew or ought reasonably to have known of the existence and the extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);
(d)where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
(e)whether the goods were manufactured, processed or adapted to the special order of the customer."
50. As to exclusion clauses generally, Lord Leggatt said in Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29:
"[108] The modern view is...that commercial parties are free to make their own bargains and allocate risks as they think fit, and that the task of the court is to interpret the words used fairly applying the ordinary methods of contractual interpretation. [But one must consider that]...a vital part of the setting in which parties contract is a framework...[comprising] duties imposed by the law of tort and also norms of commerce which have come to be recognised as ordinary incidents of particular types of contract or relationship and which often take the form of terms implied in the contract by law. [Nowadays]...the case, the court in construing the contract starts from the assumption that in the absence of clear words the parties did not intend the contract to derogate from these normal rights and obligations."
Lord Leggatt further explained that the "assumption" was to be explained as
"[111] ...old and outmoded formulas such as the three-limb test in Canada Steamship Lines Ltd v The King [1952] AC 192, 208, and the 'contra proferentem' rule are steadily losing their last vestiges of independent authority...As [Judge] Andrew Burrows QC...said in Federal Republic of Nigeria v JP Morgan Chase Bank NA [2019] EWHC 347 (Comm); [2019] 1 CLC 207, [2019] 1 CLC 207,
[34](iii):
"Applying the modern approach, the force of what was the contra proferentem rule is embraced by recognising that a party is unlikely to have agreed to give up a valuable right that it would otherwise have had without clear words. And as MooreBick L.J. put it in the Stocznia case, at paragraph 23, "The more valuable the right, the clearer the language will need to be". So, for example, clear words will generally be needed before a court will conclude that the agreement excludes a party's liability for its own negligence.".
- Although Schedule 2 to UCTA 1977 does not strictly apply, it may properly be taken into account when considering reasonableness under section 3: see St Albans City and DC v International Computers Ltd [1996] 4 ALL ER 481 and FG Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2012] EWHC 2477 (Comm). As Popplewell J observed:
"Schedule 2 to UCTA contains guidelines for the application of the reasonableness test. They are not made applicable to the present contracts by the statute because they are directed to sections other than s. 3, but they identify matters that are likely to be of relevance when determining whether the term is reasonable for the purposes of s.3 and should be taken into account for that purpose."
- The burden is on the Defendant to prove reasonableness. In AEG (UK) v Logic Resource Ltd [1996] CLC 265 at 278, Hobhouse LJ held:
"If a party wishes to rely upon clauses, which are caught by the Act and in respect of which he has to discharge a burden of proof of reasonableness, he has to make a positive case and prove whatever is necessary by way of factual background and other commercial considerations that he says suffice to establish the reasonableness of the clause".
- The court considers the clause as a whole and asks whether it was fair and reasonable to include it at the time the contract was made, not by reference to the particular use later made of it: see Stewart Gill Ltd v Horatio Myer & Co Ltd [1992] QB 600 (CA).
Parties' Submissions
- The Defendant submits that the exclusion clauses are clear and unambiguous and should therefore be given effect. It says that the parties are "sophisticated commercial entities operating in the regulated financial sector", so there is no inequality of bargaining power. It also says that the terms were known to the Claimant when the agreement was made and that the Claimant could have insured against the relevant risks. On that basis, and by reference to the factors in Schedule 2, it submits that the terms are reasonable.
- The Claimant submits that the Defendant has neither pleaded nor proved a positive case on reasonableness. It says the clauses are very broad, extending even to deliberate or malicious acts, and that the Schedule 2 factors point against reasonableness. It also relies on the compensation scheme, which it says was established on the footing that the Defendant had legal liability to compensate.
Bulk Compensation Scheme and "admission" of legal liability
- The Claimant places reliance on the compensation scheme. There was evidence that a financial adviser compensation scheme existed before the January 2018 upgrade. Mr Worton referred to a "Financial Adviser Compensation Manual", said to be available to complaints handlers and still updated twice yearly, but it has not been disclosed. He also confirmed that compensation arrangements had been considered at a high level because FCA rules and codes prohibited inducements to financial advisers. No details have been considered by the court of these rules or codes.
- It is common ground that the compensation scheme was instituted in early 2019 and that Mr Worton was later given responsibility for administering it. It is also clear from the Defendant's correspondence that the writers considered themselves to be liable to compensate and relied on the need to comply with the relevant codes as a reason for not disclosing details of the scheme. For example, on 20 May 2020 [H13], it wrote to the Claimant as follows:
- The Defendant has chosen not to adduce evidence explaining why it abandoned its apparent position prior to notification of a formal legal claim, that there was a legal liability to compensate the Claimant if the scheme were to be established without contravening the COBS rules or the requirements of the FCA Handbook. The Claimant submits that I should draw an adverse inference from that omission or at least treat it as supporting its case that the exclusion clauses were not reasonable.
- The Defence, signed on behalf of the Defendant by a senior company officer, denies any legal liability on the basis that no term as to fitness for purpose is to be implied and/or that the exclusion clauses are effective. That could be said to sit uneasily with the Defendant's earlier internal conclusion that there was a legal liability to compensate financial advisers, and with the fact that substantial payments were apparently made under the scheme and continue to be made. No explanation or supporting evidence has been provided for that changed view.
- I do not consider that the compensation scheme determines the issue. The construction of the contract is for the court, and the reasonableness of the exclusion clauses must be judged at the time the contract was made. The writers of the correspondence were not lawyers, the scheme itself is not before the court in any complete form, and there has been no admission in the proceedings. I therefore draw no adverse inference on construction or legal liability. The absence of a developed evidential case from the Defendant remains relevant, however, when considering whether it has discharged the burden of proving reasonableness.
Analysis of validity of Exclusion Clauses
- I have considered all the parties' arguments and weighed the relevant factors in Schedule 2, together with the general principles set out in the authorities. I find that, properly construed, the general exclusion clause under the heading
"Downloads" does not exclude liability for any of the operative losses in this claim.
- Whilst the headings are "for convenience only" and do not affect interpretation, as Briggs LJ put it in Nobahar-Cookson v Hut Group Ltd [2016] EWCA Civ 128:
"The court must still use all its tools of linguistic, contextual, purposive and commonsense analysis to discern what the clause really means" [19]
- In Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd, [2008] EWHC 2379 (TCC) Coulson J referred to the principle as:
"Where a particular construction may produce an unfair result, the court will often require clear words to support the construction in question."
- The exclusion clause relied on is the final sentence of a longer paragraph in the ESS. As the heading shows, that paragraph is concerned with the downloading of software and the risks associated with it. Read as a whole, the clause applies only to consequences flowing from the downloading of the Defendant's software onto the other party's systems. Nothing of that kind occurred here. The evidence was clear that the Aviva Platform was a purely online service and involved no download. Other Electronic Services may have involved downloaded software, and the clause may be apt to address those cases, but not the Aviva Platform. I therefore conclude that, construed in context and purposively, the clause does not operate as an exclusion clause on the facts of this case.
- The other exclusion clauses do not raise the same construction issue. Even so, and in any event, I find that the Defendant has fallen well short of proving that any of the clauses relied on satisfies the requirement of reasonableness.
- There was a marked inequality of bargaining power between the parties. It was very surprising that the Defendant suggested otherwise. The disparity in size and status was substantial. The Defendant occupied a dominant position in the financial sector and, as the documents show, the Claimant was to do business on the Defendant's standard terms. At the time, the Claimant had only three active partners. There was no real equivalence in bargaining power. Nor is there any evidence of negotiation, or that different terms were offered to other firms. This was obviously a "take it or leave it" agreement.
- Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317, on which Mr Shepherd relies, is materially different. There the court had evidence of actual negotiations on price and terms between two substantial companies of equal bargaining power for a bespoke software system. Here, the Claimant was not purchasing bespoke software. The Defendant provided and controlled the Platform
as the means by which business was to be placed with it. It chose when to introduce the upgraded Platform, delayed the launch, and controlled the testing and migration of existing client accounts.
- It is true that other platforms existed. But there is no evidence that they contained comparable exclusion clauses. In any event, that point does not answer the position of existing clients whose accounts were already on the Defendant's Platform and had operated without difficulty until the Defendant chose to upgrade it.
- Although it may be inferred that the Claimant knew of the exclusion clauses from its long use of earlier versions of the Platform, that is a limited point. Inferred knowledge is not the same as actual knowledge. Nor were the clauses clearly presented as exclusions. The wider clause relied on was, in substance, tucked away in the second sentence of a long clause under the heading "Downloads".
- The ambit of the exclusion clauses, as relied on, is extremely wide. On their face, they would appear to exclude liability even for deliberate or malicious conduct, or for a decision to switch the Platform off without warning and delete client data.
- There is no evidence that insurance was available for the risks which arose here, particularly the unrestricted risks covered by the exclusion clauses in the form contained in the ESS. It is inherently improbable that insurance could be obtained against deliberate wrongdoing by the party controlling the very system provided for use. If anything, the Defendant was better placed to insure against the risk that the Platform, which it designed and controlled, would not function as intended.
- I therefore conclude that the exclusion clause under the heading "Downloads" does not exclude liability for any of the breaches alleged in the Particulars of Claim.
- As to all the exclusion clauses relied on, I find that the Defendant has failed to discharge the burden of showing that they satisfy the requirement of reasonableness.
Implied Term
- The Claimant contends that a term should be implied into the contract that the Platform would be "fit for purpose including a) that it would have adequate error, defect and software bug repellence and b) that it would properly and accurately effect, record, maintain and keep records of all transactions" [paragraph 6 of the re-amended particulars of claim at A18].
- The Defendant denies that any term can or should be implied. It submits that such a term is not necessary to give the contract business efficacy and that, in any event,
the term advanced by the Claimant is imprecise and vague. It also submitted that no such term could be implied where the contract already contained an express term on the same subject.
The Law
- Whether a term should be implied into a contract is a matter of law. Chitty on Contracts states:
"At a high level of principle it may be said that the implication of a term as a matter of fact depends upon the intention of the parties as collected from the words of the agreement and the surrounding circumstances. The court will not make a contract for the parties but will be prepared to imply a term if there arises from the language of the contract itself, and the circumstances under which it was entered into, an inference that the parties must have intended the stipulation in question. Traditionally, an implication of this nature may be made in two situations: first, where it is necessary to give business efficacy to the contract, and, secondly, where the term implied represents the obvious, but unexpressed, intention of the parties. Both are predicated to depend on the presumed common intention of the parties. Such intention is, in general, to be ascertained objectively and is not dependent on proof of the actual intention of the parties at the time of contracting."
- The implication of a term is an intrusive exercise, and the court must approach it with significant caution. The law has developed considerably since The Moorcock [1889] 14 PD 64 and was restated by the Supreme Court in Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72.
- Marks & Spencer plc concerned a dispute about four commercial leases between the parties. The leases had been negotiated and drafted by specialist solicitors on both sides. The claimant sought to imply a term requiring repayment of rent paid in advance for a period after the leases had been determined by the exercise of a break clause. The Supreme Court dismissed the appeal, holding that no such term was to be implied. In doing so, it reviewed the law on implied terms.
- In his leading judgment, Lord Neuberger approved the approach taken in a number of earlier cases, in particular that of Lord Simon in the Privy Council decision in BP Refinery (Westernport) Pty Ltd v The President, Councillors and Ratepayers of the Shire of Hastings ("BP Refinery") (1977) 180 CLR 266 at 283:
"...for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract".
- In the Privy Council in Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2, [2017] ICR 531 at [5], Lord Hughes held:
"It is enough to reiterate that the process of implying a term into the contract must not become the re-writing of the contract in a way which the court believes to be reasonable, or which the court prefers to the agreement which the parties have negotiated. A term is to be implied only if it is necessary to make the contract work, and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesi, apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, 'Oh, of course') and/or (ii) it is necessary to give the contract business efficacy. Usually the outcome of either approach will be the same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by the addition. The fairness or equity of a suggested implied term is an essential but not a sufficient pre-condition for inclusion. And if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement."
- The Court of Appeal in Yoo Design Services Ltd v Iliv Realty Pte Ltd [2021] EWCA Civ 560 has since emphasised the same approach. Lady Justice Carr, as she then was, held
"51. In summary, the relevant principles can be drawn together as follows:
i) A term will not be implied unless, on an objective assessment of the terms of the contract, it is necessary to give business efficacy to the contract and/or on the basis of the obviousness test;
ii) The business efficacy and the obviousness tests are alternative tests. However, it will be a rare (or unusual) case where one, but not the other, is satisfied;
iii) The business efficacy test will only be satisfied if, without the term, the contract would lack commercial or practical coherence. Its application involves a value judgment;
iv) The obviousness test will only be met when the implied term is so obvious that it goes without saying. It needs to be obvious not only that a term is to be implied, but precisely what that term (which must be capable of clear expression) is. It is vital to formulate the question to be posed by the officious bystander with the utmost care;
v) A term will not be implied if it is inconsistent with an express term of the contract;
vi) The implication of a term is not critically dependent on proof of an actual intention of the parties. If one is approaching the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time;
vii) The question is to be assessed at the time that the contract was made: it is wrong to approach the question with the benefit of hindsight in the light of the particular issue that has in fact arisen. Nor is it enough to show that, had the parties foreseen the eventuality which in fact occurred, they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred;
viii) The equity of a suggested implied term is an essential but not sufficient precondition for inclusion. A term should not be implied into a detailed commercial contract merely because it appears fair or merely because the court considers the parties would have agreed it if it had been suggested to them. The test is one of necessity, not reasonableness. That is a stringent test".
Discussion
- I apply the tests set out above. The court should be slow to imply a term into a written contract. The question is assessed at the time the contract was made, not with hindsight or to correct what later appears unfair or unwise.
- Clause 28.6, the "whole agreement" clause, does not preclude the implication of a term where implication is required for business efficacy or satisfies the officious bystander test. Nor does any express term, as properly construed, cover the same ground. Whilst a term cannot be implied where an express term already covers the same ground, that question arises only once the express terms have been construed: see JN Hipwell & Son v Szurek [2018] L.T.R. 15. Given my conclusions on construction, the exclusion clauses relied on by the Defendant do not prevent the implication of a fitness-for-purpose term. If anything, the presence of clauses purporting to exclude liability for lack of fitness tends to show that such liability was otherwise contemplated.
- An implied term that the Platform would be fit for purpose would not amount to an absolute warranty. A platform may be fit for purpose notwithstanding maintenance outages, internet interruptions, temporary malfunctions, or minor programming issues which do not, for prolonged periods, affect its basic functions.
- The officious bystander must be taken to know the nature of the contract. The Defendant created and controlled the Platform. It required the Claimant to use it to place business for clients, and the resulting investments were then managed through it. Against that background, it is obvious that the parties would have understood that the Platform had to be reasonably fit for those purposes. That is reinforced by the Defendant's own description of the upgraded Platform as a significant improvement on what had gone before.
- That conclusion is consistent with the approach taken in software cases. In St Albans City and District Council v International Computers Ltd [1996] 4 All ER
481, a term as to fitness for purpose was implied into a contract for software
intended to achieve specified functions. Although St Albans concerned purchased software, the Court held as follows:
"In my judgment, a contract for the transfer into a computer of a program intended by both parties to instruct or enable the computer to achieve specified functions is one to which Lord Pearson's words apply. In the absence of any express term as to quality or fitness for purpose, or of any term to the contrary, such a contract is subject to an implied term that the program will be reasonably fit for, i.e. reasonably capable of achieving the intended purpose." per Sir Iain Glidewell at 494d
- The term sought in this case was no doubt inspired by that implied by the court in Bates v The Post Office [2019] EWHC 606 (QB):
"750. I find that these two terms are to be implied, not as consequential upon the finding that the contracts are relational ones, but as part of the exercise necessary to consider whether they are necessary for business efficacy... It is also necessary for business efficacy that the Horizon system, which was provided by the Post Office, be reasonably fit for purpose, including any or adequate error repellency (which is a technical computer term meaning the way the system deals with errors)."
- The Defendant's attempt to distinguish Bates on the basis that the sub-postmasters were compelled to contract on standard terms is unpersuasive. The facts were different, but the relevant point is that the system was provided and controlled by one party and was necessary for the other to conduct the relevant business through that party. That is materially similar here. Although the Claimant could place business on other platforms, it could not use them for the Defendant's own products.
- Overall, the relationship here is closer to Bates than to a conventional arm's-length purchaser-seller relationship such as that in St Albans.
- Moreover, as paragraph 750 of Fraser J's judgment makes clear, the implied term he found as to fitness for purpose was not linked to the relationship between the parties. It formed part of the exercise of deciding whether such a term was necessary for business efficacy. Indeed, it might be said that the court could do little better than repeat the final sentence of that paragraph and substitute "Aviva Platform" for "Horizon".
- I therefore find that an implied term requiring the Platform to be reasonably fit for purpose was necessary for business efficacy. Without it, the contract would lack commercial and practical coherence. The same conclusion follows from the officious bystander test. Without the implied term, the contract would impose obligations on the Claimant but none of substance on the Defendant.
- I do not consider the additional pleaded elaborations to be necessary implications.
Matters such as accurate recording and retention of client financial records are, in
context, encompassed within the implied term itself. Further detail would add little. The concept of reasonable fitness for purpose is sufficiently clear, and in light of the admitted breaches the point makes no material difference.
Breach of Contract
- What began as a confusing Defence, with partial admissions of limited scope, was clarified to some extent by the Defendant's open letter of 30 April 2026, sent after the close of its evidence. Even so, in light of the Defendant's closing submissions, some issues on breach remain.
Law
- Mr Shepherd relies on observations of Staughton LJ in Saphena Computing Ltd v Allied Collection Agencies Ltd [1995] FSR 616 (CA) that bespoke software is not to be judged by the same standards as goods, namely at page 652:
"... But it is important to remember that software is not necessarily a commodity which is handed over or delivered once and for all at one time. It may well have to be tested and modified as necessary. It would not be a breach of contract at all to deliver software in the first instance with a defect in it.
And further:
"So I conclude that it was part of the contract that the suppliers in this case should have the right and the duty to test and modify as necessary the software they supplied. No doubt there was a time limit for that purpose a reasonable time is that which the law would ordinarily supply."
- I accept that principle applies here but to a limited extent. But the context here is materially different. The Defendant planned and controlled the upgrade. FNZ built the new system, and the data from the existing functioning Platform was migrated only six days before the new system went live. The timing of migration and release was entirely the Defendant's choice, and the launch had already been postponed. The reasonable time for identifying and remedying defects must be assessed in that context. The defects relied on here were not merely initial teething problems but included material faults which persisted for months.
Evidence on the remaining issues to be determined on breach of contract
- The issues on breach developed between the pleadings and trial. The re-amended
Defence admitted breaches at paragraphs 10(4), (5) and (6) of the Particulars of Claim, but only in narrow and time-limited terms, and denied the remaining alleged breaches. The Claimant adduced direct witness evidence and relied on extensive documents, including documents generated by the Defendant. The Defendant called only Mr Worton.
- The Claimant's witnesses were not meaningfully challenged on the scale of the Platform's problems. Mrs Bestwick, an experienced user, gave particularly clear evidence, which I accept. Where Michael Lumley's account went beyond the documents, I place less weight on it than on Mrs Bestwick's evidence.
- Mr Worton's evidence on breach was of limited value. He had not dealt with, used or interacted with the Platform before March 2018, when he was brought in to support the relevant teams.
- It is no exaggeration to say that Mr Worton was a sacrificial witness. He accepted that he had been told not to look at any documents or notes before preparing his witness statement in January 2026. He was therefore trying to recall matters at least four years old, and in some cases much older. It was put to him in crossexamination that this deliberate decision by the Defendant, namely that he should prepare his statement without referring to documents or records, was not disclosed in the statement itself. That admission casts his evidence on "Issues following Migration", beginning at paragraph 26, in a clear light. It includes phrases such as "I cannot recall issues...", "I don't recall the Platform ever sending an unexpected withdrawal...", and "I have a vague recollection of a temporary workaround...". He said that he remembered the Claimant firm, but none of the actual complaints, despite having been involved in the compensation claim which identified both the affected clients and the nature of their complaints.
- His evidence was significantly undermined in cross-examination. His initial view that the Platform problems were not significant did not survive being taken to contemporaneous documents. For example, an email from Duncan Singer to Mrs Bestwick on 20 November 2018 recorded that switches had not been successful, remained with FNZ for review, and were the subject of a special project because of how far back some went.
- Similarly, his denial that the system had made payments without instruction was undermined by documents in which the Defendant accepted that Mr Jupp had been paid without instruction, and that other similar cases existed. The Defendant's letter of 12 June 2018 also recorded incorrect payments of pension commencement lump sums, a backlog of cases requiring remedial work, and no timescale for resolution.
- Mr Worton accepted that, where he said he did not recall matters being an issue, that reflected lack of recollection rather than non-occurrence. He accepted that there was a backlog for FNZ, that the problems were caused by the Platform rather than user error, and that there were systemic problems with payments, drawdown quotes, switching and rebalancing. He also accepted that rebalancing could for a prolonged period be done only manually, and that he had neither advised anyone to use the workaround in his statement nor seen it operate successfully. His evidence on Bed and ISA likewise confirmed that the intended single-transaction process did not work on the new Platform.
- Insofar as any factual dispute remains on breach, I prefer the Claimant's evidence. Although the Claimant's witnesses were not ideal on every issue, their evidence was materially more reliable than Mr Worton's and was supported by contemporaneous documents.
Analysis
- As noted above, the re-amended Defence contained certain admissions of breach, but they were incomplete. After Mr Worton's evidence, the Defendant's solicitors sent an open letter dated 30 April 2026 making further admissions and accepting that the admitted breaches affected the Claimant's clients. Those admissions still did not cover all alleged breaches, and Mr Shepherd's closing submissions did not concede breach to the full extent I had initially understood from the letter. I therefore deal briefly with each allegation in paragraph 10 of the re-amended Particulars of Claim [A20–21].
i) 10(1) - The open letter admits this breach in full as pleaded, namely that the Platform made incorrect and unrequested pension, tax-free cash and ISA withdrawals.
ii) 10(2) - concerns whether the Platform displayed incorrect drawdown quotes, or in some instances none at all. The re-amended Defence admitted only an issue "immediately following migration" and denied that the system was intended to generate drawdown quotes only on request. I prefer the Claimant's evidence. Several witnesses gave clear evidence on the point. Mrs Bestwick described the problem and was taken to her email about it. Mr Worton accepted that, before migration, the system had provided drawdown quotes in this way but no longer did so afterwards. The only alternative was to telephone, although callers could wait more than an hour and might then be cut off. I find that the absence, after January 2018, of a basic facility enabling users to generate drawdown quotes automatically was a breach of the implied term.
iii) 10(3) - This breach, concerning issues in drawing income, is admitted in full in the open letter. To the extent Mr Shepherd submitted that it
was a breach only if not transitory, the open letter contains no such reservation.
iv) 10(4) - The re-amended Defence admits that the automatic rebalancing feature did not work correctly. The open letter also accepts that rebalancing for 79 of the Claimant's clients was not completed until 2020. In any event, I find that the absence of a functioning rebalancing feature was a clear breach of the implied term.
v) 10(5) - The re-amended Defence admits that unit prices did not display correctly for some clients, though not that this affected the Claimant's clients. The open letter now accepts that it did. In any event, it is untenable to suggest that funds available and invested on the previous Platform would not be carried across to the new Platform without clear notice. The documents also show unit prices grouped together rather than displayed fund by fund, making rebalancing impossible. I therefore find a breach of the implied term as alleged.
vi) 10(6) - The re-amended Defence admits in full that valuations and information were often incorrect or delayed, and that this was acknowledged in the Defendant's email of 24 June 2019.
vii) 10(7) - Bed and ISA. The re-amended Defence oddly denies this breach, notwithstanding the Defendant's own email of 21 March 2018, which accepted that "there is a current issue where some Bed and ISA instructions have been failing". The Defendant relies on a suggested workaround, namely that the investments could be sold manually and an ISA then purchased with the proceeds. The open letter now accepts that the admitted breaches affected the Claimant's clients.
Mr Michael Lumley and Mr Worton's evidence was that the workaround was slow and materially disadvantageous, because clients would be out of the market for up to ten days while investments were sold and repurchased within the ISA wrapper. Any market increase during that period would be lost. I therefore find that the Platform was not fit for purpose in this respect and that paragraph 10(7) is made out.
viii) 10(8) - The re-amended Defence did not admit this breach, concerning the payment of adviser fees. The open letter now admits it in full. ix) 10(9) - The Particulars allege that matters were aggravated by the way issues were addressed, including calls going unanswered for up to 50 minutes and unsatisfactory email responses. In my view, that does not amount to a breach of the pleaded fitness-for-purpose term. Had a term
been pleaded requiring an adequate customer service function, the position might conceivably have been different. It was admitted that calls could take more than an hour to be answered and were sometimes cut off, and there are numerous emails apologising for service levels and promising additional staff. But time spent waiting to complain about existing breaches is not itself a further breach. It may, however, be relevant to loss and damage.
Causation, Loss and Damage
105. The Claimant contends that the Defendant's breaches of the implied term caused it loss and invites the court to quantify that loss in one of several alternative ways.
The Claimant's case
106. The Claimant's case is now put by reference to paragraph 5 of its written closing submission expanded from paragraph 75 onwards. In summary, it says that the Claimant's claim "is for a loss of revenue caused by the disruption to its business". It says this can be determined as follows:
a) The Claimant's business was significantly disrupted by the breaches in the hours set out in their Schedule of Loss and that even the Defendant's counter schedule acknowledges weeks of work.
b) If the court finds a loss of revenue, it should quantify that loss by one of three alternative methods:
i. The court should find that the decline in fees between FY18 and FY20 was caused by the Platform disruption and award damages by reference to a three- or five-year average, producing figures of
£334,960 or £325,939, alternatively;
ii. Lost opportunities of Mr Garside and Mr Marshall's investments at
75% chance on initial and 25% for ongoing annual fees, a total of
£224,977 together with the £72,641 cost of employing Oliver Lumley; alternatively;
iii. The hours claimed in the Schedules of Loss should be valued on a time-cost basis at £250 per hour. On the Claimant's case, this produces £225,000 on 900 hours, or at least £180,000 on 720 hours.
Defendant's argument
- The Defendant submits that the Claimant fails on causation. It says the claim is a classic "global claim" because the Claimant has not identified a causal link between any particular breach and any particular loss. On the Defendant's case, the Claimant must show, for each client and defect, the time spent, what would otherwise have been done, and what revenue would have been generated. In any event, it says the Claimant has not proved any loss resulted, time spent does not mean a loss to the Claimant company.
- As to loss, the Defendant relies on the shifting value and formulation of the claim: first increasing 5-fold, then falling sharply, and moving from cumulative heads to alternatives, with many heads now abandoned altogether. It says this exposes the weakness of the Claimant's case. On the Defendant's analysis, the remaining heads are merely different ways of quantifying the same alleged loss: staff time spent dealing with Platform issues.
- For each remaining head of loss, the Defendant submits that the Claimant has failed to prove any recoverable loss.
i. The Claimant has abandoned the case advanced by its expert and now accepts the Defendant's expert evidence. On the Claimant's own accounts, initial fees and turnover remained broadly in line with expectations, and the expert evidence shows no loss referable to the breaches;
ii. There is no basis for finding any real chance that the Claimant lost either Mr Garside's or Mr Marshall's business because of a breach. Nor was the cost of employing Oliver Lumley caused by any breach;
iii. There is no proper basis for recovery by reference to "time costs" under Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] Bus LR 726, because the Claimant's business does not operate in a comparable way. The alleged "lost hours" would generate revenue only if they produced new work, which is the premise of heads (i) and (ii), and that has not been proved. In any event, the claimed "proxy rate" is without foundation in law.
Causation generally
- Both parties have referred me to the judgment of Mr Justice Akenhead in Walter Lilly & Company Ltd v Mackay [2012] EWHC 1773 (TCC), regarding "global claims". The Defendant relies on it to show the dangers of the same and the
Claimant in paragraph 79 onwards of the written closing that it is permissible in appropriate cases, of which this is said to be one.
- The passage relied upon by the Claimant is:
"486. Drawing together all the relevant threads together, it can properly be concluded as follows in relation to "global" or "total" cost claims:
(a) Ultimately, claims by contractors for delay or disruption related loss and expense must be proved as a matter of fact. Thus, the Contractor has to demonstrate on a balance of probabilities that, first, events occurred which entitle it to loss and expense, secondly, that those events caused delay and/or disruption and thirdly that such delay or disruption caused it to incur loss and/or expense (or loss and damage as the case may be). I do not accept that, as a matter of principle, it has to be shown by a claimant contractor that it is impossible to plead and prove cause and effect in the normal way or that such impossibility is not the fault of the party seeking to advance the global claim. One needs to see of course what the contractual clause relied upon says to see if there are contractual restrictions on global cost or loss claims. Absent and subject to such restrictions, the claimant contractor simply has to prove its case on a balance of probabilities. (emphasis added)
...
c) It is open to contractors to prove these three elements with whatever evidence will satisfy the tribunal and the requisite standard of proof. There is no set way for contractors to prove these three elements. For instance, such a claim may be supported or even established by admission evidence or by detailed factual evidence which precisely links reimbursable events with individual days or weeks of delay or with individual instances of disruption and which then demonstrates with precision to the nearest penny what that delay or disruption actually cost.
d) There is nothing in principle "wrong" with a "total" or "global" cost claim. However, there are added evidential difficulties (in many but not necessarily all cases) which a claimant contractor has to overcome. It will generally have to establish (on a balance of probabilities) that the loss which it has incurred (namely the difference between what it has cost the contractor and what it has been paid) would not have been incurred in any event. Thus, it will need to demonstrate that its accepted tender was sufficiently well priced that it would have made some net return. It will need to demonstrate in effect that there are no other matters which actually occurred (other than those relied upon in its pleaded case and which it has proved are likely to have caused the loss). It is wrong, as Counsel suggested, that the burden of proof in some way transfers to the defending party...
e) The fact that one or a series of events or factors (unpleaded or which are the risk or fault of the claimant contractor) caused or contributed (or cannot be proved not to have caused or contributed) to the total or global loss does not necessarily mean that the claimant contractor can recover nothing. It depends on what the impact of those events or factors is. ... ...
f) Obviously, there is no need for the Court to go down the global or total cost route if the actual cost attributable to individual loss causing events can be readily or practicably determined. I do not consider that Vinelott J was saying in the Merton case (at page 102 last paragraph) that a contractor should be debarred from pursuing what he called a "rolled up award" if it could otherwise seek to prove its loss in another way. It may be that the tribunal will be more sceptical about the global cost claim if the direct linkage approach is readily available but is not deployed. That does not mean that the global cost claim should be rejected out of hand."
- In my view, the Claimant has shown that the Defendant's breaches caused its staff to spend time dealing with their effects. This is not a case of discrete losses, each requiring a separate breach to be matched to it. If, for example, the Claimant alleged that it had missed a corporate awayday on 4 February and lost a £10,000 deposit, it would have to prove that breaches at that time reasonably prevented attendance.
- The Claimant's causation case is broader. It says that multiple breaches affected many clients and required staff time to deal with the resulting problems.
- The Defendant's letter of 30 April 2026 concedes multiple breaches, in addition to those admitted in the Defence, and accepts that those breaches affected the Claimant's clients. The first tab of the "Summary of Clients" schedule identifies the alleged breach in each case. I do not in this case accept Mr Shepherd's submission that each breach must be linked to a client and then to a precise amount of time spent and then to a particular loss.
- This was a case involving a number of related defects affecting a number of clients over a period of time. In that context, there is nothing wrong in principle with a broader causal case. The Claimant was entitled to say that the cumulative effect of the breaches disrupted its business and diverted staff time. The principles discussed in Walter Lilly support that general proposition: a claimant may advance an overall case where multiple breaches or events are said to have caused disruption, provided the necessary elements are still proved.
- That does not, however, relieve the Claimant of proving loss. The fact that breaches caused disruption is not the same as proving that the disruption caused recoverable financial loss. The Claimant must still prove, on the balance of probabilities, that the time diverted from ordinary business activity resulted in a loss of revenue, additional cost, or some other recoverable loss. That is the central difficulty in this case.
- I therefore reject the Defendant's submission that the claim fails merely because it is advanced in a global or rolled-up way. But I also reject the Claimant's submission that proof of disruption and staff time is sufficient, without more, to prove loss. The proper question is whether it has been established that the diverted time caused the Claimant to suffer recoverable financial or other identified loss.
For the reasons which follow, I find that it did not.
Relationship between loss and quantification of damages
The Law
- The parties agree that the Claimant bears the burden of proving, on a balance of probabilities, that it suffered loss caused by the breaches. They also agree that, if that burden is discharged, the court need not quantify loss with mathematical precision. There is an important distinction between proving the existence of loss and quantifying it.
- The Claimant relies on Morris-Garner and another v One Step (Support) Ltd [2019] AC 649 and Merricks v Mastercard Inc [2020] UKSC 51.
- In Morris-Garner the Supreme Court was dealing with a very different situation to that in this case namely:
"1. This appeal raises an important question in relation to the law of damages: in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to perform? Damages assessed on this basis, sometimes described as "Wrotham Park" damages, after Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, have attracted considerable debate, both judicial and academic. That debate, and the confused state of the authorities, have reflected a lack of clarity as to the theoretical underpinning of such awards, and consequent uncertainty as to when they are available."
- The court did however discuss some general principles governing common law damages for breach of contract before turning to the above issues:
"36. It follows from the principle in Robinson v Harman 1 Exch 850 that the language of election is not appropriate in a discussion of the quantification of damages for breach of contract. The objective of compensating the claimant for the loss sustained as a result of non-performance (an expression used here in a broad sense, so as to encompass delayed performance and defective performance) makes it necessary to quantify the loss which he sustained as accurately as the circumstances permit. What is crucial is first to identify the loss: the difference between the claimant's actual situation and the situation in which he would have been if the primary contractual obligation had been performed. Once the loss has been identified, the court then has to quantify it in monetary terms."
and at paragraph 37:
"The quantification of economic Ioss is often relatively straightforward. There are, however, cases in which its precise measurement is inherently impossible. As Toulson LJ observed in Parabola Investments Ltd v Browallia Cal Ltd (formerly
Union Cal Ltd) [2011] QB 477, para 22: "Some claims for consequential loss
are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant's wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss." An example relevant to the present case is the situation where a breach of contract aspects the operation of a business. The court will have to select the method of measuring the loss which is the most apt in the circumstances to secure that the claimant is compensated for the loss which it has sustained. It may, for example, estimate the effect of the breach on the value of the business, or the effect on its profits, or the resultant management costs, or the loss of goodwill: see Chitty on Contracts, 32nd ed (2015), vol I, paras 26-172 to 26-174. The assessment of damages in such circumstances often involves what Lord Shaw described in the Watson, Laidlaw case 1914 SC (HL) 18, 29—30 as
"the exercise of a sound imagination and the practice of the broad axe". [37] at page 673
- The Claimant also puts particular emphasis on the following passages from Mastercard:
"47 Where in ordinary civil proceedings a claimant establishes an entitlement to trial in that sense, the court does not then deprive the claimant of a trial merely because of forensic difficulties in quantifying damages, once there is a sufficient basis to demonstrate a triable issue whether some more than nominal loss has been suffered. Once that hurdle is passed, the claimant is entitled to have the court quantify their loss, almost ex debito justitiae. There are cases where the court has to do the best it can upon the basis of exiguous evidence. There are cases, such as general damages for pain and suffering in personal injury claims, where quantification defies scientific analysis, where the court has to apply general tariffs developed over many years by the common law, and now enshrined in the Judicial College Guidelines for the Assessment of General Damages in Personal Injury. In many cases the court unashamedly resorts to an element of guesswork: see generally McGregor on Damages, 20th ed (2017), paras 10-001 to 10-007.
48 A resort to informed guesswork rather than (or in aid of) scientific calculation is of particular importance when (as here) the court has to proceed by reference to a hypothetical or counterfactual state of affairs. The loss may have to be measured by reference to what the court thinks a claimant would have done if the defendant had not committed the wrong" complained of. Sometimes the quantification depends upon what a third party would have done, and the court has to evaluate the claimant's loss of a chance.
49 This principle of entitlement to quantification notwithstanding forensic difficulty has stood the test of time and outlasted the involvement of civil juries in the assessment of damages. In Davies v Taylor [1974] AC 207, 212, Lord Reid said: "There can be no question of proving as a fact that she would have received a certain amount of benefit. No one can know what might have happened had he not been killed. But the value of the prospect, chance or probability of support can be estimated by taking all significant factors into account. But, perhaps on an application of the de minimis principle, speculative possibilities would be ignored. I think that must apply equally whether the contention is that for some reason or reasons the support might have increased, decreased or ceased altogether. The court or jury must do its best to evaluate all the chances large or small, favourable or unfavourable." For a practical example of the application of this principle in the context of infringement of intellectual property rights see Experience Hendrix LLC v Times Newspapers Ltd [2010] EWHC 1986 (Ch) at [204]–[205], per Blackburne J.
51 In relation to damages, this fundamental requirement of justice that the court must do its best on the evidence available is often labelled the "broad axe" or "broad brush" principle: see Watson Laidlaw & Co Ltd v Pott Cassels & Williamson 1914 SC (HL) 18, 29–30, per Lord Shaw. It is fully applicable in competition cases. ASDA Stores Ltd v Mastercard Inc [2017] 4 CMLR 32 was a claim by an individual merchant arising out of (inter alia) the same breach as in these proceedings. After citing the Watson Laidlaw case Popplewell J said, at para 306:"The 'broad axe' metaphor appears to originate in Scotland in the 19th century. The more creative painting metaphor of a 'broad brush' is sometimes used. In either event the sense is clear. The court will not allow an unreasonable insistence on precision to defeat the justice of compensating a claimant for infringement of his rights."
- Where an imprecise calculation is required, the court may make reasonable assumptions. It may fairly resolve uncertainty about what would have happened but for the Defendant's wrongdoing in a way which, if anything, errs on the side of generosity to the Claimant: see Yam Seng Pte Ltd v International Trade Corp [2013] EWHC 111 (QB) at [188]. But that does not reverse or dilute the burden of proof, nor cure gaps in the Claimant's evidence.
- From the authorities I draw the following principles:
i) The Claimant must prove on a balance of probabilities that it sustained actual loss.
ii) If the Claimant proves loss, the court must then quantify it, with the Claimant continuing to bear the burden of proof.
iii) Difficulty in assessment will not prevent the court from properly compensating a Claimant.
iv) Where loss cannot be easily or precisely quantified, the court may adopt a "broad axe" or "broad brush" approach to quantification.
v) The broad axe assists the court in quantifying a proved loss; it does not relieve the Claimant of proving that a legally recoverable loss was suffered.
vi) The court may make reasonable assumptions which, in cases of uncertainty, err on the side of the Claimant.
vii) None of the above without more alters the burden of proof or absolves the Claimant from proving its case with proper evidence.
Has the Claimant proved it has suffered a loss?
- The Claimant's case is put at paragraphs 5(b), 75 and 76 of its closing submissions. It says that the disruption to its business caused a loss of revenue. It also says that its staff were put to "weeks of work" and relies on the fact that the Defendant had publicly offered compensation. It further relies on the internal communication at C139Z from Brian Gabriel, written in the context of the intemperate exchanges between Mr Singer and Mr Michael Lumley, that "...Reality is we can't pretend we haven't caused businesses like them significant issues and they have been financially impacted through no fault of their own..."
- Mr Chandler submits that the Claimant is plainly "out of pocket" and that only quantification is difficult. Beyond the above and the three alternative methods of quantification, however, he identifies no separate basis on which the court should find that loss has been proved.
- Mr Shepherd submits that loss is not self-proving merely because staff time was spent dealing with breaches. The Claimant must still prove, on a balance of probabilities, that it suffered loss. He says that must be examined considering the Claimant's business model. On that basis, the various ways in which the Claimant puts its case do not withstand scrutiny and fall well short of proof.
Discussion
- The burden remains on the Claimant to prove that the company suffered loss. Establishing a breach of contract which is not causatively linked to any loss or failing to show an actual amount of loss would not result in more than an award of nominal damages. The principal basis upon which the Claimant seeks to establish that it has suffered a loss is by reference to the additional hours its staff were required to work. But staff time spent dealing with breaches does not, without more, establish this. Reliance on mere temporal succession can be a fallacy, just because an event follows another event, does not of itself establish causal connection. That is particularly so here, given the way this business generates revenue.
- It is agreed that the Claimant generates revenue in two ways. First, when a client invests new funds or a pension, the Claimant charges a fee, generally 4% of the amount invested. These are described as "initial fees".
- Secondly, each client pays an annual management fee of 1% of the fund value. That fee is charged regardless of how much or how little work is done for the client; it is not based on an hourly rate. A client with a £1,000,000 portfolio is charged £10,000 whether the Claimant's staff spend 10 hours or 1,000 hours on the file in a year. That matters here because work on existing investments attracts no further charge beyond the 1% fee, regardless of what is done and because this makes up almost 70% of the Claimant's revenue.
- To prove lost revenue, the Claimant must show either actual loss of initial income or a real, not speculative, opportunity to earn it.
- Being put to additional work is not necessarily the same as proving recoverable financial loss. The Claimant does not allege paid overtime or additional expenditure (save Mr Oliver Lumley's employment). Its case is that staff spent time on Platform issues which would otherwise have generated revenue. But this Claimant did not generate revenue by time spent. It no longer argues its pleaded case that it would have generated revenue by billing clients for hourly rated work. The only possible basis for loss is therefore that the "lost" time would otherwise have generated new revenue, i.e. the 4% of a new investment.
- There is another difficulty to the inference sought that the hours spent must establish a loss to the company. The hours said to have been "lost" were spread over a long period and were not concentrated in a block which necessarily prevented revenue-generating work.
- The shortest period over which the total hours can sensibly be spread is two years. In fact, the final rebalancing checks were not completed until 2020, and a substantial amount of the time claimed for Mrs Laycock, nearly £9,000, also falls in 2020. For reasons I will give later, I consider the claimed hours to be significantly overstated. But even on the Claimant's full 720 hours, the average over 2 years is about seven hours per week across four people. Viewed in that way, the inference that the Claimant says the court must draw is not a valid one.
- As the Defendant submits in the absence of reliable evidence of missed leads, missed appointments, reduced conversion rates, overtime, or additional expenditure, that level of time spread across the firm does not itself prove loss.
- Indeed, the figures support the Defendant's wider case that there is no proof of lost initial income. The evidence does not show that the hours claimed, spread across four people, prevented the Claimant from following up leads or undertaking marketing.
- I therefore reject any inference in this case that staff time spent dealing with breaches, without more, establishes recoverable loss to the company. Loss must still be proved on the balance of probabilities. The above do not cross that threshold.
- The Claimant has advanced additional grounds for contending that loss has been suffered. It says that it lost specific investment opportunities in respect of two clients, and that it incurred additional expenditure by employing Oliver Lumley. Those are necessarily alternatives to its primary claim to a global loss of revenue. I will turn to those later.
Does the offer under the compensation scheme mean that the Claimant must have suffered loss?
- Before considering the evidence of loss, I should address the Claimant's argument that the Defendant has admitted loss by making offers under the compensation scheme and by what was said in internal emails.
- Offers under the voluntary compensation scheme are not an admission that loss is proved in this claim. The detailed methodology of the scheme is not before the court. The evidence suggests that it involved a broad and practical approach, including notional rates and allowances, rather than a legal assessment of causation and recoverable loss. Such a scheme may sensibly reflect inconvenience, goodwill, customer relations, or commercial judgment. It is not an admission that the Claimant has proved loss for the purposes of these proceedings.
- Nor do the internal communications amount to admissions of legal loss. It was an intervention email sent to another member of staff in the context of the compensation scheme and intemperate correspondence from Mr Lumley to that member of staff. They show that the Defendant appreciated that advisers had been affected by the Platform problems. They do not establish that this Claimant lost revenue, incurred additional cost, or suffered another recoverable financial loss as a matter of law.
- The Defendant was entitled to make without-prejudice offers of compensation, and the Claimant was entitled to reject them and bring proceedings. Having done so, it must prove its case in the ordinary way. Whether the Defendant administered the scheme unfairly, delayed accepting breaches, or misdescribed its internal checking process does not assist in finding whether the Claimant suffered recoverable loss.
- Therefore, I find that the whilst the Defendant's breaches caused staff time to be diverted and caused some disruption. I do not accept that the Claimant has proved that this diversion caused recoverable loss of revenue or other recoverable loss. I do not reject the Claimant's assertion of loss because it is global. I reject it because, even on a global approach, the Claimant has not proved that the disruption caused recoverable loss. The broad axe assists with quantification of a proved loss; it does not prove the existence of loss.
- The Claimant's case, however, does not rest there. It seeks to establish that there has been a loss of revenue, and from that, by way of almost reverse reasoning, or perhaps rather support for the above inference sought contend that the loss of revenue must be attributable to the lost "hours" caused by the Defendant's breaches of contract. Accordingly, the evidence on loss of revenue, it is said, proves not only quantum, but the loss itself. To some extent this conflation is understandable because as noted above, the company only really would lose out on revenue if the hours would have generated the same.
- I therefore turn to consider in some detail the three alternative heads of loss on which the Claimant relies.
Shortfall in initial fees
The Claimant's case
- As noted earlier, the Claimant's case changed significantly during both the proceedings and the trial. Neither the original Particulars of Claim in 2024 nor the amended Particulars served in March 2025 included a claim for reduced company revenue. That head of loss was first pleaded in the re-amended Particulars after service of the expert evidence in February 2026.
- The Claimant's case in opening was that the expert evidence showed a predisruption growth trend, and that the later fall in initial fees and revenue demonstrated a loss of initial fees over the following three years before a return to pre-disruption levels. On that basis, the loss was calculated at £705,206 using a 3 per cent growth-rate sensitivity, or £490,003 on a no-growth basis.
- In an open letter after the close of evidence the Claimant conceded that it no longer advanced a case based on growth rate trend nor any disruption to the business for the financial year ending 2021.
- The written submissions explain the Claimant's concession and closing position further at paragraphs 17-20. It concedes that its expert, Mr Segal's conclusions "unravelled under cross examination" so that the court could not "solely by reference to the accounts" find that the disruption in the accounts was caused by the Platform issues. In contrast it accepts that the Defendant's expert was a fair expert.
- The Claimant nevertheless submits that the Defendant's expert accepted the Platform disruption as a possible explanation for the fall in initial fees, and that the court can use the figures themselves, together with the wider factual evidence, to find that the fall was caused by disruption to the business.
- The loss is calculated therefore at £334,960 by reference to a five-year sensitivity analysis, or alternatively at £325,939 by reference to a three-year flat average.
Defendant's position
- The Defendant maintains that there is no evidence from which the court can find that the Claimant suffered any loss of initial fees caused by the Defendant's breaches. It criticises Mr Segal's approach, and has been vindicated, and relies on Ms Hotston-Moore's conclusion that there is no evidence of loss caused by the Platform issues. Although Mr Shepherd made broader criticisms of Mr Segal's evidence which no longer need to be addressed in full, he submits that the Claimant's revised approach suffers from the same inherent flaws which undermined Mr Segal's conclusion that a growth trend could be identified. On the evidence there is no basis at all for concluding there is a loss of initial income and thus using 2017 or any average is an inherently flawed approach.
Expert Evidence
- The Claimant relied on Mr Segal, a forensic chartered accountant. The Defendant relied on Ms Hotston-Moore, also a forensic chartered accountant and an expert business adviser specialising in valuation, liquidity and income-producing capacity of limited companies. She prepared a report, part 35 replies, an addendum report and a joint statement with Mr Segal.
- Both experts confirmed their reports on oath and were cross-examined. The Claimant properly conceded that Mr Segal's evidence unravelled in crossexamination. His evidence stood in marked contrast to that of Ms Hotston-Moore. She was precise, balanced and clearly knowledgeable about the financial sector. She made proper concessions on minor points but maintained her core opinions and explained them when challenged with great simplicity and clarity. I found her evidence measured, careful and persuasive. In short, she was an impressive witness.
- Mr Chandler relies on Ms Hotston-Moore's acceptance, in answer to a closed question, that it was a "possibility" that the fall in initial fee income between FY2018 and FY2020 was caused by disruption to the business. I do not regard that isolated answer fairly reflects her evidence as a whole.
- Her opinion in her second report at 2.1.6 [A673] was:
"Per my analysis of the initial and renewal fee income received by the claimant in each financial. In section 3.6, I have concluded that initial fee income appears to be variable year on year and does not follow a specific trend and movements in renewal fee income is largely consistent year on year."
And further in paragraph 3.6.8:
"It is my understanding that initial fee income is generated from new business however this is dependent on market conditions and the level of demand from potential and existing clients and therefore, in my opinion, initial fee income is not likely to be consistent year on year. On this basis, I am not able to determine the "normal" level of initial fee income in each financial year. The claimant has not disclosed sufficient evidence to allow me to reliably determine the reasons for the fluctuations in initial fee income in each financial. And therefore it is not reasonable, in my opinion, to assume that the level of initial fee income in FY18, FY19 and FY20 would have been consistent with previous periods if not for the alleged disruption"
- Ms Hotston-Moore's evidence at trial remained as above that it was not reasonable, on the evidence, to conclude that initial fee income would have remained at the FY17 level. Her reasoning was clear and not effectively challenged. She had all the same documents as the court, including the witness statements. Her opinion was based on the accounts, the FCA data, the unexplained fluctuations before and after the Platform issues, including the significant and unexplained drop in those same initial fees in FY2023/24[1]. She also noted that no account appeared to have been taken of the effects of Covid on FY20. This no doubt resulted in the concession by the Claimant that it did not seek any longer to claim loss for the financial year ending 2021.
- Ms Hotston-Moore also identified another anomaly at paragraph 7.2.17 [A484]. The Platform issues began only on 23 January 2018, so only the last six months of the accounting year ending July 2018 should have been affected. Since the disruption continued throughout the year ending July 2019, the impact would, if anything, have been expected to be greater then. Yet turnover in that year remained consistent.
- As to revenue more generally, Ms Hotston-Moore noted at paragraph 7.2.19 of her first report, having considered the accounts and FCA data:
"As concluded in paragraph 7.2.12 above, based on market trends (exhibits 8 and
9) it is my expectation that the claimant's revenue would have remained stable in
FY19 and FY20 if not for the disruption. This is consistent with actual results for the
business and therefore revenue does not appear to have been significantly impacted by the issues identified with the platform'
- In her evidence, she also pointed out that the Claimant's profit remained broadly steady, with only a slight drop in FY2019 once the unusually high legal costs and the increase in wages and pension contributions were stripped out: see [A494]. The same table also shows that turnover remained stable, and indeed rose slightly in FY2018, FY2019 and FY2020. There was then a larger increase in FY2021 and FY2022 before a significant, unexplained, fall in FY2023 and FY2024.
- Without descending to unnecessary detail here, Ms Hotston-Moore noted what she considered important gaps in the evidence from the company which would have allowed further consideration of the anomalous aspects of the Claimant's accounts and the possibility of causation relationship to the Platform issues. Her evidence remained firm and reasoned under robust cross-examination about could and should have been available from the Claimant company, even allowing for their small size.
- I accept Ms Hotston-Moore's evidence as she gave it both written and orally. The Claimant's attempt to turn her acceptance of a "possibility" into proof on the balance of probabilities cannot be sustained. It runs counter to her clear and direct evidence on the accounts and rests largely on the same flawed premise that Mr Segal advanced. Her evidence was that a drop in initial fees in FY 2018 and 2019 compared to FY 2017 was unreliable as a basis for concluding that there had been an effect due to the Platform problems for the cogent reasons she gave.
- Nor does the evidence fill that gap. The evidence that initial fees were lost because of the disruption can at its highest be described as thin and inadequate. There are no proper records of enquiries before compared to after the disruption, no conversion data, no monthly record of new instructions, and no evidence of promotional activity before and after the relevant period.
- Mrs Bestwick's evidence on loss of revenue was vague at best. At most, she said she had not gone out to meetings or talks with solicitors, but she gave no detail at all of numbers, comparison with before and whether in fact they generated any clients before the problems. When asked an open question she could not identify any opportunity or anyone she had failed to pursue. In short, the evidence of any actual lost opportunity was paper-thin.
- Mr Baxter's evidence was that most of his work came from referrals from existing clients. He was very general about what he did not do to acquire new work because of the Platform's problems without any detail at all. It in fact came as a surprise to him that his initial fees were down as much. However, his 2018 new initial fees were actually not much reduced from the 2017 high mark which the expert has
already addressed as being unreliable as a reference point as a comparison. Further 2018 was of course the height of the problems with the Platform. Whilst he discounts 2020 due to covid and 2021 is higher than ever before, it is noticeable that he does not provide his 2023 and 2024 figures which on the expert evidence we know show a very significant drop in initial fees. His evidence is therefore of very little value in my judgment.
- There is no evidence showing, before and after January 2018, the number of new instructions, enquiries, meetings, or the firm's approximate conversion rate. There is not even a record of how many new instructions were received each month before and after the disruption. The Claimant is not a large business: it has only about 700 clients, many of them long-standing. It would not have been difficult to compile that information, particularly as each new investment attracting a 4 per cent fee would have generated paperwork recording the advice given, and meetings appear to have been recorded by hand.
- Having considered all the evidence, including the expert evidence, I find no proper basis for concluding either that there was a reduction in initial fees, revenue or profit caused by the Defendant's breaches.
- Although it is not part of my reasoning as no express argument was heard on the matter, the conclusion is consistent with exhibit 4 to Ms Hotston-Moore's first report at [A702], which is the Claimant's document recording final salary pension transfer enquiries that did not proceed to advice. Allowing for duplication, the number of unsuccessful enquiries was broadly the same in before (2017) and after (2018) the Platform issues. Further the potential funds "lost" in 2017 were markedly greater than 2018. It can also be noted that the company was seemingly keeping such records for years before the platform issues highlighting the paucity of evidence which was produced before the court in support of a very substantial claim for damages.
Specific Lost Opportunities
- The Claimant's first alternative case was a claim for specific lost opportunities in respect of initial and renewal fees. As opened by reference to the schedule of loss at [A101] and Appendix 6 to Mr Segal's report at [A453], the claim was for £496,926 in lost initial fees and £695,905 in future renewal income, a total of £1,192,831.
- The Appendix 6, titled "Claimed Lost Fees", listed 23 names, investment values and links to supporting documents. Mr Michael Lumley said it was drawn from "a
list of names we were keeping" and put together when the Claimant was challenged on the hourly-rate claim in autumn 2019. Yet it was not pleaded until the re-amended Particulars of Claim in early 2026. Mr Lumley gave no satisfactory explanation for why a claim of that scale had not been advanced earlier.
- After the evidence closed, the Claimant filed an open letter identifying parts of the claim which it no longer pursued. Mr Chandler confirmed that the court was not being asked to treat the whole of Appendix 6 as the basis of loss.
- In submissions Mr Chandler says that this was a matter of pragmatism and that it now advances only "the core elements of the loss which the court can be confident in...". It therefore limits this part of the claim to two of the 23 alleged lost opportunities, Mr Marshall and Mr Garside.
- The Claimant submits that this is a loss of a chance claim. It says there was a substantial chance that those prospects would have produced significant income, lost because of the Defendant's breaches. It values the claim at 75 per cent of the initial fees, calculated at 4 per cent of the total value, and 25 per cent of the ongoing renewal fees, calculated at 1 per cent per annum. On that basis, the claim is reduced from £1,192,381 to £224,977.
- The Defendant submits that the Claimant comes nowhere near proving this head of loss. It says the claim was raised late, without satisfactory explanation, was "reverse-engineered", and rested on weak evidence which collapsed in crossexamination. It also says that the abandonment of the other 21 names was not pragmatic, but inevitable, because those claims were hopeless.
The Law
- There is a distinction between, on the one hand, proof of a past event which depends on whether the Claimant would have acted in a particular way, which must be proved on a balance of probabilities, and, on the other, a specific opportunity which depends on the actions of a third party. In the latter case, such proof is not required; the claim is one for loss of a chance: see Chitty on Contracts 30-088:
"This situation arises where a particular contingency depends on whether a third party would have acted in a certain way. Where the claimant claims that, in the absence of the breach of contract by the defendant, a third party would have acted in a particular way, so as to benefit the claimant, they need not prove that hypothetical action on the balance of probabilities. Provided that the claimant can prove that in the absence of the breach there was a "real" or "substantial" (not a speculative) chance of the third party's action, and the loss of chance is not too remote, the court must assess the chance of that action resulting (usually as a percentage) and then discount the claimant's damages for their loss by reference to that percentage.
- See also Gregg v Scott [2005] 2 AC 176, where Lord Nicholls said in the context of tortious damages:
"17. In order to achieve a just result in such cases the law defines the claimant's actionable damage more narrowly by reference to the opportunity the claimant lost, rather than by reference to the loss of the desired outcome which was never within his control. In adopting this approach the law does not depart from the principle that the claimant must prove actionable damage on the balance of probability. The law adheres to this principle but defines actionable damage in different, more appropriate terms. The law treats the claimant's loss of his opportunity or chance as itself actionable damage. The claimant must prove this loss on balance of probability. The court will then measure this loss as best it may. The chance is to be ignored if it was merely speculative but evaluated if it was substantial: see Davies v Taylor [1974] AC 207, 212, per Lord Reid.
- Any assessment of past loss is made on a balance of probabilities. But once the Claimant has established an actionable head of loss, the subsequent quantification of that loss is not approached in that way. Rather:
"22 ... Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant's wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss.
23 The claimant has first to establish an actionable head of loss. This may in some circumstances consist of the loss of a chance, for example, Chaplin v Hicks [1911] 2 KB 786 and Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602, but we are not concerned with that situation in the present case, because the judge found that, but for Mr Bomford's fraud, on a balance of probability Tangent would have traded profitably at stage 1, and would have traded more profitably with a larger fund at stage 2. The next task is to quantify the loss. Where that involves a hypothetical exercise, the court does not apply the same balance of probability approach as it would to the proof of past facts. Rather, it estimates the loss by making the best attempt it can to evaluate the chances, great or small (unless those chances amount to no more than remote speculation), taking all significant factors into account: see Davies v Taylor [1974] AC 207, 212, per Lord Reid, and Gregg v
Scott [2005] 2 AC 176, para 17, per Lord Nicholls of Birkenhead, and paras 67— 69, per Lord Hoffmann." Parabola Investments Ltd v Browallia Cal Ltd
(formerly Union Cal Ltd) [2011] QB 477
- Although "real or substantial" is not defined, "substantial" in this context does not mean "significant" but is simply synonymous with "real". The chance need only be one which is not speculative or, to adopt the summary judgment analogy, not fanciful.
- The court will also give the Claimant the benefit of any doubt regarding any precise percentage assessment, see Moda International Brands Ltd v Gately LLP [2019] P.N.L.R. 27.
- Hence, the Claimant must establish three matters: first, that there was a real (that is, non-speculative) chance of securing the relevant business; secondly, that the loss of that chance was caused by the Defendant's breaches; and thirdly, the value of that chance. Failure at either of the first two stages is fatal.
Lost Opportunity of Mr Marshall
- Mr Lumley said that he had known Mr Marshall for about 40 years, having played rugby with him and continued to see him socially. Mr Marshall had a possible final salary transfer of about £3 million. Mr Lumley said that Mr Marshall told him he was being pursued by another investment adviser, also a rugby colleague, from St James's Place.
- Mr Lumley said that this was complicated work requiring multiple calculations, documents and meetings. Had he thought he had time, he would first have met Mr Marshall socially, perhaps for golf or rugby, before explaining how LBAM could assist. He said he could not devote the necessary time, still less the time required to do the work itself. He could not say that Mr Marshall would have instructed him, but said that, because Mr Marshall had made the approach, "I would like to think I would have been able to persuade him to instruct us had time permitted"
- He was taken to the handwritten note at [E5143]. It records a meeting on 21 March 2019. The note also records that Mr Marshall had assets of over £9 million, had sold his business for £4 million, was still working on a large salary, and had a pension scheme with guaranteed increases of 8.5 per cent.
- In cross-examination, Mr Lumley said that he saw Mr Marshall socially, often for golf, both before and after the meeting. Asked what was to happen next, he could not recall and accepted that no next step was recorded on the note or elsewhere. He said that he simply had no time to contact Mr Marshall again. He did not know whether Mr Marshall had gone ahead with a pension transfer, although he believed St James's Place had not obtained the business.
- Although Mr Chandler submitted that Mr Lumley's evidence was consistent and compelling, and showed a strong chance that this business would have been secured but for the Defendant's breaches, I found it vague, inconsistent and lacking in credibility when tested against the objective facts and the contemporaneous note.
- The timing is relevant. The meeting took place 14 months after the Platform restarted. By then, on the evidence, the number and type of breaches had reduced. The Claimant's own witnesses put the period of disruption at no more than 12 to 24 months, and the immediate multiplicity of problems had eased, even if some particular clients remained affected. The evidence does not in my view support Mr Lumley's assertion that the problems remained "severe and ongoing". By then, Oliver Lumley had also been with the Claimant for 10 months and had taken over the investment analyst role, leaving Mr Lumley considerably freer. Taken together, those matters undermine the bald assertion that he lacked time to arrange further meetings, follow up, or carry out the work if secured.
- The opportunity was also very valuable. The initial fees alone were said to be £158,000, with a further £39,500 per annum thereafter. That was about 50 per cent more than the maximum amount Mr Lumley claimed under the compensation scheme. As was put to him in cross-examination, if this had truly been a genuine opportunity, he would have moved "heaven and hell" to secure what he was now describing as an almost certain instruction generating multiple hundreds of thousands of pounds in revenue.
- The contemporaneous note is also inconsistent with his evidence, recording
"Phil [Marshall] has received 'overtures' from St. James Place who are trying to persuade him to transfer him to transfer - he wishes to "sit on my hands" as he is 60 (and can take full benefits) in August 2020. Phil will decide what to do in the next 17 months."
- Far from being pressing or time-sensitive, the note shows that Mr Marshall did not wish to do anything until August 2020, nearly 18 months later. If this had been an opportunity worth hundreds of thousands of pounds, and not merely a friend using Mr Lumley as a sounding board, it is highly improbable to say the least that Mr Lumley would not later have followed it up, if only to see whether it remained. Yet when pressed he did not even know whether Mr Marshall had gone ahead with any transfer only that he had not instructed the immediate pursuer from St James's Place.
- There is no witness statement from Mr Marshall. I reject Mr Chandler's submission that it was unrealistic to obtain evidence from "retail investors" who were not clients. Mr Marshall and Mr Garside were long-standing personal friends of Mr Lumley, and those relationships continued after the meetings. There was no evidence of any obstacle to asking either for a statement. In those circumstances, it is a reasonable inference that had Mr Marshall's account assisted the Claimant, he would have given a statement and evidence.
- It is also noteworthy that the meeting note also records that Mr Marshall had substantial other investments, including a share portfolio of more than £510,000 managed for his own interest since 2010. Yet he had never placed investment business with Mr Lumley, his friend of 40 years.
- I accept the Defendant's submission that this was no more than a speculative, remote or fanciful chance. The evidence falls well short of showing a real or substantial chance. It is therefore unnecessary to assess the percentage chance. Had it been necessary, I would have assessed it at less than 10 per cent, even if Mr Lumley had pursued the matter.
- Even if there had been a real or substantial chance, I would not accept that its loss was caused by the Defendant's breaches. The absence of any follow-up over an extended period, and the lack of any indication nor evidence that the Claimant intended to pursue the matter further, point to the opportunity not being pursued for reasons unrelated to the breaches.
Mr Garside
- Mr Garside, an old friend of Mr Lumley from sixth form college, is the second of the 2 lost opportunities claimed. Mr Lumley addressed this in 9 lines of text in his statement to the effect that Mr Garside had called about investing via the Claimant, but he had not been able to pursue the work as he was too busy with the problems from the Platform. He was firefighting and did not have the time to devote.
- The contemporaneous document is a note of a 17-minute telephone call on 20 February 2018. It does not support the suggestion that this was an opportunity ready to be secured or even an opportunity at that time. It records that Mr Garside needed "varied and detailed professional advice", did not even know what type of pension he had, said he would "get my shit together", and needed "some legal advice". The note ends "...will ring for appointment shortly". As it appears in the bundle, however, the note is cut off due to photocopying error.
- The parties dispute whether that meant Mr Lumley would call Mr Garside, or vice versa. In cross-examination, Mr Lumley initially did not challenge the latter reading, but later said he did not accept that it must be so. The Claimant has not produced the full note, despite the point being raised by Mr Shepherd on the second day of cross-examination. On the wording of the note and the matters Mr Garside first had to address, I find it more likely than not that Mr Garside was to call for an appointment.
- In any event, that takes the Claimant little further. Mr Lumley had no actual recollection of the events. If this had truly been a real or substantial enquiry from a
friend of 40 years seeking professional services, rather than informal advice, he would no doubt have followed it up at some point over the next five years. There is no suggestion that Mr Garside was told Mr Lumley was too busy to assist. Nor did Mr Lumley say, as he had in relation to Mr Marshall, that he was confident he would have secured the business. The same point arises as to value and the implausibility of no follow-up: the initial fee was said to be £80,000, with renewal fees of up to £120,000.
- Again, the Claimant has also chosen not to adduce evidence from Mr Garside, in particular as to whether he would have pursued the enquiry or why he did not. For the same reasons as in Mr Marshall's case, there is no valid reason why the Claimant could not readily have obtained a witness statement, especially when the claim for Mr Garside alone was said to be worth up to £200,000. It is reasonable to draw an adverse inference from the absence of that evidence.
- The contemporaneous note evidences no more than a preliminary enquiry. It shows that the individual had yet to assemble relevant information or determine even the basic nature of any transaction. That falls well short of a real or actionable opportunity.
- The absence of any follow-up over several years is inconsistent with the existence of a genuine opportunity of the magnitude now alleged.
- I therefore find that the Claimant has failed to discharge the burden of proving that this was a real or substantial chance of additional income lost because of the Defendant's breaches.
The abandoned "21"
- The schedule runs from 4 September 2017 to 20 November 2019 and contains 23 names. Save for Mr Marshall and Mr Garside, there is no witness evidence in support of any of the alleged lost opportunities. The absence of even basic information about the number of meetings held each year, how many became instructions, or the distinction between new and existing client work is striking. The ability to revive or pursue opportunities later, once the Platform problems had eased, would also bear on whether any loss was caused by the breaches.
- The first entry illustrates the difficulty. It predates the Platform issues by four months. The only document is a pension provider letter dated 21 June 2017 setting out fund values, with a handwritten note of a meeting on 4 September 2017. There is no record of the meeting, whether it took place, what happened, why there was no follow-up in the next four months, or whether the individual was ever contacted
later. That is insufficient evidence for an alleged lost opportunity worth £18,489 in initial fees and £27,733 in renewal fees.
- The entry for Mr McCartney is no better. The schedule claimed £22,934 in initial fees and £5,744 in renewal fees, but the documents show only emails arranging a meeting and a handwritten note at [D427]. That note records switches of existing funds, completed at the meeting, and the client thanking the Claimant for "looking after his pension". There is no support for further work or for the large figure advanced in relation to what was plainly an existing and contented client.
- The claim for Mrs Joanne Ryan is similarly unsupported. She was a long-standing and continuing client. The note at [D425] records a meeting on 28 August 2019 but does not support the Appendix 6 claim. The Bed and ISA was ordered and is not said to have failed. There was no initial charge, contrary to the standard charging model, and the small pension payment recorded related to Liam rather than Mrs Ryan. Yet the schedule claims a lost fund value of £153,122 and the full 4 per cent initial fee. There is no documentary or witness evidence to support a missed opportunity, and a later meeting note in September 2021 records no outstanding or missed opportunity from 2019. The notes at [D424] in fact state "John client since 1974!" and "John and Jo knowledgeable and experienced, sophisticated investors".
- Mr Wainright is yet another example. The alleged opportunity arose in December 2019, almost two years after the Platform went live. Mr Lumley accepted that the emails concerned whether Mr Wainright, who lived in Thailand, should pursue an investment opportunity in the Cayman Islands, and that this was very unlikely to result in work given the compliance difficulties. This was a conscious decision not to pursue the matter, for reasons unrelated to the Defendant's breaches.
- Other substantial alleged claims, including Adam Swallow and Catherine Hiley, are supported by little more than pension scheme documents, despite specific dates being allocated to them. There is no evidence of when any meeting took place, what happened, whether there was any follow-up, or whether the individuals were later contacted to see if any real opportunity existed.
- The abandonment of the remaining 21 alleged opportunities was not merely pragmatic, it was inevitable. It reflects the absence of a proper evidential foundation for those claims and reinforces the conclusion that the Claimant has been unable to identify at trial any reliable evidence of lost business attributable to the Defendant's breaches.
- There is also some force in Mr Shepherd's broader point: if this was the strongest list of alleged lost opportunities the Claimant could produce by the end of 2019, it
tends to support that there was a lack of evidence that any actual financial loss was suffered by the Claimant company.
- Consequently, I am not satisfied that the Claimant has established any recoverable loss under this head. It has not proved a real or substantial chance of securing the relevant business in either case advanced. Nor has it proved that any such chance was lost as a result of the Defendant's breaches. The evidence relied upon is speculative, unsupported by contemporaneous material, or inconsistent with the Claimant's own conduct. A claim for loss of specific opportunity therefore fails.
Costs of employing Oliver Lumley style='text-decoration:none'>
- If the Claimant had had to employ additional staff or pay overtime as a consequence of the Defendant's breaches, such cost would in principle be recoverable. No claim for the cost of employing Oliver Lumley was made, however, until the re-amended Particulars were served in February 2026. As then formulated, the claim covered costs from May 2018 to July 2021, a period of three and a half years, totalling £229,164.75 including expenses and examination costs.
- When asked why that period had been chosen, Michael Lumley said it represented a reasonable time for Oliver Lumley to reach a level comparable to his own, developed over 30 years. After the evidence closed, the Claimant reduced the claim by open letter, contending that the relevant period ended in September 2019. The claim was thereby reduced to £72,641, still including development costs, or roughly 30 per cent of the original figure.
Agreed Facts
- Oliver Lumley is Michael Lumley's eldest son. He graduated from Newcastle University in 2014 and, after a temporary administrative role with the Claimant, joined Punter Southall in London. He worked in its bonds department, a role he did not enjoy, and by late 2017 was applying for other roles in London, including with Vanguard [C974] and others [C972], [C973], [C975]. He was discussing those applications with his father, who had both personal and professional insight to offer.
- By that stage he had come to dislike his role at Punter Southall and very much wanted to remain in London and had a desire to build a career on the investment side of the financial industry working with a trust fund manager.
- He began work with the Claimant on 1 May 2018. The job was not advertised.
There was no written contract of employment and no job description. He was paid
£40,000 in his first year, with an increase to £50,000 already planned from 1 March 2019: see [D214].
- He immediately took over the investment analyst role, met fund managers in London, researched funds, and took charge of the Claimant's monthly investment meetings. He had begun his CFA exams by 20 August 2018 and passed in December: see [D240]. He then undertook further investment and financial planning qualifications, moved to Huddersfield in January 2021, and became a partner in the firm on 1 October 2023 after achieving full certification.
The Claimant's case
- The Claimant's pleaded case at paragraph 15A of the re-amended Particulars [A24] is that, because Michael Lumley was occupied with Platform issues, he could not carry out the "necessary work on the investment side of the business". The Claimant therefore seeks the cost of employing Oliver Lumley, albeit now in a much reduced amount.
- The Defendant says the Claimant's evidence falls far short of proving that case. It submits that the employment was in reality succession planning within the firm, not expenditure caused by the breaches. It also challenges the amount claimed, including the substantial sum sought for "expenses" in addition to wages.
The Law
- The question is whether, on the balance of probabilities, the Claimant would have incurred the cost of employing Oliver Lumley but for the Defendant's breaches. The burden of proof lies on the Claimant. It is not sufficient that the employment coincided with the period of disruption or was said to be helpful in addressing it; it must be shown to have been caused by the breaches.
Discussion
- The Claimant's explanation is not supported by the contemporaneous material and is inconsistent with the surrounding facts. The absence of any recorded discussion linking the recruitment to the Platform problems, the presence of a contemporaneous alternative rationale, and the structure of the employment itself all point away from the Claimant's case.
- Oliver Lumley was unhappy at Punter Southall and wanted to leave. He had made multiple applications for other roles in 2017 and 2018, but there is no evidence that he was offered or even interviewed for any of them. If he had been, it is implausible that he would not have corrected the contrary suggestion put to his
father, having watched Mr Michael Lumley's rather uncomfortable and evasive performance on the issue under cross-examination.
- Oliver Lumley's own evidence was that he left Punter Southall because he disliked the job, not because of the Platform issues. He also said that he had no intention of joining the Claimant and wanted to work in specialist investment research for a fund manager. The Claimant relies on that as supporting causation, but the evidence as to how the move to the Claimant came about was weak.
- Although Michael and Oliver Lumley were broadly consistent in saying that Oliver would not have joined the Claimant in May 2018 but for the Defendant's breaches, their evidence as to how that came about was not compelling. Michael Lumley was not merely unclear but evasive. His witness statement went no further than the vague, "I will no doubt have discussed this with Oliver", and surprisingly when pressed he could add little. Although he said they spoke every Sunday, he could not say when the decision was made or how it came about. Yet, on the Claimant's case, this was a major step: he was inviting his son to leave a job with a large international firm, abandon other applications, and join a two-partner firm on what could only then have been a temporary basis, perhaps only weeks or months. It was not convincing evidence.
- Oliver Lumley's evidence was little better, although he had possibly even greater reason to remember the events if, as he said, he was giving up his dream to work for a fund manager. There is no text, email or other written communication between father and son about this significant career move. Nor, since joining the Claimant, has Oliver Lumley applied for work in the specialist field in which he said he had been keen to work.
- Even on the Claimant's own case, Oliver Lumley was said to have been engaged temporarily. That sits uneasily with the reality of the arrangement: a full-time position, no suggestion of a defined end point, and a pre-arranged pay increase within ten months. Those features are inconsistent with a short-term response to operational disruption and strongly suggest a longer-term business decision.
- The actual contemporaneous documents are in fact contrary to the Claimant's case.
The minutes of the investment committee on 28 February 2018 are silent, and the March minutes were not provided. The note of the meeting on 23 April 2018 [D226], however, records:
- The note records that someone was to be employed to provide "additional investment expertise". It does not say that the purpose was to relieve an overworked Michael Lumley, or to allow him to deal with Aviva issues. This was only 8 days before Oliver started work.
- I am unable to accept Mr Chandler's imaginative submission that the note is consistent with the Claimant's case. It is clearly not. Further none of the other attendees, at least four of whom gave evidence, suggested that there were unrecorded discussions, and Michael Lumley accepted that the minutes would be carefully kept and accurate. There is no contemporaneous documentary evidence linking the decision to recruit Oliver Lumley to the Platform problems. In fact, the reasoning recorded is contrary.
- In assessing contemporaneous documentary evidence against the oral evidence, I bear in mind the observations of Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm):
"18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time.
19. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.
...
22. In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose - though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth."
See also Arden LJ in Re Mumtaz Properties Ltd. [2011] EWCA Civ 610 at [14].
- These higher court observations are particularly apt here, given the wording of the note, the passage of eight years, the late introduction of this claim, and Michael Lumley's evident anger about the way the compensation claim had been handled.
- I prefer the contemporaneous note to the explanations now given by Michael and Oliver Lumley. I also bear in mind that this aspect of the claim was introduced only shortly before trial, and the explanation for that delay was vague and unconvincing. Michael Lumley said it must have "come up with the expert" but could not say when or why. Yet the Claimant's solicitors said in their letter of 9 January 2026 that the claim had been formulated by reference to the witness evidence. If Oliver Lumley's employment had truly been a direct result of the Defendant's breaches, it is difficult to see why it was omitted from the original and amended pleadings.
- It may be that Oliver Lumley did not intend to become a partner when he joined the Claimant. But that is not the issue. The question is whether the Claimant has proved that his employment was caused by the Defendant's breaches. I find that it has not. Although the burden is not on the Defendant, there is real force in its submission that Michael Lumley saw an unhappy son and offered him a route out of his job while allowing him to remain in London, acquire further investment qualifications and do work he found more attractive. On all the evidence, I consider that explanation far more likely than the Claimant's case.
- For those reasons, I find that the Claimant has failed to prove that the costs of employing Oliver Lumley were caused by the Defendant's breaches. The claim under this head therefore fails.
- It is unnecessary to decide the period or amount. I add only that the original attempt to claim three and a half years of Oliver Lumley's costs was symptomatic of the Claimant's approach to causation and damages. Further if he was hired from the outset simply to relieve his father of investment duties caused by the
Defendant's breaches, it is difficult to see why later qualifications, especially those connected with advising, would be recoverable.
Loss based on a "cost time basis"
- The Claimant's third alternative basis for damages is that the sums claimed in the schedule of loss, subject to modest concessions, should be awarded on a time-cost basis. It says it is entitled in law to recover "an hourly proxy for the hours it has been put to work". It claims 900 hours at £250 per hour, or at least 720 hours after a broad reduction, producing a claim of about £180,000.
- The Claimant argues that the revenue lost through diverted staff time can reasonably be measured by what those staff would otherwise have generated, using an "hourly-rate proxy". Mr Chandler submits that, because the Claimant is a partnership and its advisers were paid at least partly by reference to generated fees, the proxy reflects actual lost revenue. The Claimant also says that, because the idea of an hourly-rate proxy originated with the Defendant, it is appropriate to use £250 per hour as a safe measure for the revenue that would hypothetically have been generated.
- The Defendant submits that the Claimant's reliance on Aerospace is misplaced. It says the Claimant cannot recover damages by multiplying hypothetical work by notional hours; that a proxy hourly rate is wrong in principle; and that, in any event, £250 per hour is unjustified. Alternatively, it says the schedule is exaggerated, duplicative and, in many places, untethered to any proven breach. The Law
- Where defective performance of a contract causes staff to spend time dealing with the resulting problems, a Claimant may recover damages for the diverted staff's cost. Wilson LJ reviewed the authorities and explained the principle in Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] Bus LR 726:
"86 I consider that the authorities establish the following propositions.
(a) The fact and, if so, the extent of the diversion of staff time have to be properly established and, if in that regard evidence which it would have been reasonable for the claimant to adduce is not adduced, he is at risk of a finding that they have not been established.
(b) The claimant also has to establish that the diversion caused significant disruption to its business.
(c) Even though it may well be that strictly the claim should be cast in terms of a loss of revenue attributable to the diversion of staff time, nevertheless in the ordinary case, and unless the defendant can establish the contrary, it is reasonable for the court to infer from the disruption that, had their time not been thus diverted, staff would have applied it to activities which would, directly or indirectly, have generated revenue for the claimant in an amount at least equal to the costs of employing them during that time."
Parties' Positions
- The Claimant submits that limbs (a) and (b) of Aerospace are satisfied by the Defendant's admissions and by the time schedule served with the schedule of loss.
- Mr Shepherd does not dispute the principle but submits that the Claimant still bears the burden of proving that staff time was in fact diverted by matters amounting to breaches of contract, and to what extent. He submits that the Claimant fails to discharge the burden.
- For that purpose, I have been invited to consider the spreadsheet by samples and generally, but not line by line.
The Spreadsheet and counter-spreadsheet
- The spreadsheet lists 88 clients, each with separate dated entries and supporting documents. Its precise method of creation was not entirely clear, but the evidence showed the following:
i) The schedule for this claim was prepared by Oliver Lumley, with assistance from his sister, who has not given evidence;
ii) It was based on the document submitted under the compensation scheme, which claimed just over £96,900 and 646 hours, all said to have been undertaken by fully qualified financial planners;
iii) Full schedules for McNally and Jupp, claiming 78 and 74.5 hours respectively, were sent on 22 August 2019, with schedules for seven others following later;
iv) A version claiming 713.92 hours, across 77 clients, was served with the original Particulars of Claim and sent to Ms Hotston-Moore, the
Defendant's expert: see [A506];
v) The trial schedule, served on 27 March 2026, claimed 915.5 hours across 88 clients, said to reflect further document searches.
- Given the number of entries, the five-day time estimate and the need for proportionality, it was agreed that cross-examination would proceed by sample. The court was therefore not asked to determine the hours claimed by a line-by-line analysis of every client and entry.
- I accept that the spreadsheet cannot be expected to be wholly precise. It was retrospective, not based on contemporaneous time records, and prepared by a small firm which did not keep records in that way.
- As Ramsey J held in Bridge UK.com v Abbey Pynford plc [2007] EWHC 728 (TCC):
"...As he explained in evidence the hours were based on his assessment of the time he spent on various matters. That assessment was made retrospectively. He prepared it by looking through the various documents which record what happened.
123. Such a method of retrospective assessment is, I consider, a valid method of calculation. I have been referred to the judgment of His Honour Judge Peter Bowsher QC in Holman Group v. Sherwood (Unreported, 7 November 2001) where he indicated that in the absence of records, evidence in the form of a reconstruction from memory was acceptable. I respectfully agree. However, it must be borne in mind that such an assessment is an approximation of the hours spent and may over-estimate or under-estimate the actual time which would have been recorded at the time."
- The spreadsheet however suffers from more fundamental reliability problems. The spreadsheet served with the Particulars of Claim and for trial were not prepared by the people whose supposed "reconstruction from memory" they purported to record, nor were they properly checked by them. They were ultimately prepared by Oliver Lumley, who was not involved in giving advice and was based in London until 2021.
- The original compensation document was prepared largely, if not entirely, by Michael Lumley, who could not use email or seemingly computers generally. Mrs Bestwick said that "Mike would oversee the calculations for each of the files - with input from each of the advisers as to the number of emails sent/calls" (my emphasis). That does not suggest a genuine reconstruction of time spent. The evidence as to what checking the other advisers carried out, whether of that document or the trial spreadsheet, was vague and hesitant. Mr Lumley's anger and frustration with the Defendant also provide an obvious reason for caution.
- The original document sent to Aviva was not even accurate on its face. It stated that 169 clients were affected, that all 169 required crisis meetings, and that 104 required internal meetings. That is about 60 more than the total number of affected clients pleaded in paragraph 7 of the Particulars of Claim.
- Oliver Lumley then used that document, together with the nine client schedules submitted to Aviva, as a template. He searched the hard-copy files and emails for those clients and the other 79 clients, and allocated time to each event. It follows
that all documents relating to the events recorded in the schedule should now have been disclosed.
- As to how the time allocations were derived, Oliver Lumley said only in his witness statement: "I did check the contents of the schedule with each of the CFAs just to ensure I had not missed any significant items of time". He did not say that he checked with them how long each event had actually taken, only that he showed them the schedule to see whether anything significant had been omitted.
- The oral evidence reflected that the various witnesses whose time was being estimated had not reviewed the spreadsheet's entries beyond checking if it "seemed about right", "broadly reflects" (Ms Bestwick) and from Mr Lumley that he had "reviewed some of it".
- The weakness is compounded by the fact that the trial spreadsheet materially increased both the hours claimed and the number of clients included, with little clear evidence of what fresh material justified those increases.
- The spreadsheet must therefore be approached with real caution. It may provide a broad indication of the kind of work undertaken, but it cannot be accepted at face value as a reliable measure of the hours spent or of loss. I accept that some staff time was spent dealing with the consequences of the Platform issues, but I do not accept that the spreadsheet properly reflects the true extent of the time spent or alternatively what would have been reasonably spent.
- In summary, I find that the spreadsheet suffers from defects such as:
i) The use of 15 minutes as a unit is significant overstatement of the time for basic items in the schedule.
ii) Multiple entries cannot be related to any breach of the implied term, or only a small part of the time can be causally linked.
iii) There are duplicated entries. iv) There are multiple entries which include significant time well beyond that could be justified for the task claimed.
v) There are some entries which preceded the inception of the Platform and therefore could not be causally linked.
vi) The schedule includes time generated by outdated office practices, thereby inflating the claim.
Use of 15 minutes as unit block
- The use of 15-minute units appears to have been adopted by Michael Lumley in 2019 and then used by Oliver Lumley. The Claimant says that this was no less valid than any other method because it reflected work not separately recorded, such as reading incoming emails. I accept that any unit-based system used in place of exact time recording involves artificiality and some element of give and take. But the balance which might justify a 15-minute unit is not made out here.
- There are numerous examples of very short emails being read, with no further action, or brief emails being sent in matters already well known to the fee-earner, yet each is recorded as 15 minutes. Mr Bryant is one example: 15 minutes is claimed for reading an email on 5 May and a further 15 minutes for sending an email on 7 May, although the emails at E368 and E367 could not realistically justify that time. This is one of many such examples.
- Nor am I persuaded by the argument that a 15-minute unit was needed to allow for reading, checking and recording. Many entries concern closely connected matters, often in the same email chain or only days apart. The Claimant's own witnesses said they were "living and breathing" these clients' problems, which makes a 15minute minimum still less justifiable.
- I also reject the suggestion that each task required time for retrieving a paper file from the basement. Many entries concern email chains requiring little or no checking beyond brief reading. On the Claimant's own evidence, the clients and problems were extremely familiar. If the Claimant chose to maintain a paper filing system for emails and to store files on another floor while the matters were being worked on, that is not a cost the Defendant can reasonably be required to bear.
- There is no perfect unit for a schedule of this kind. On these facts, however, a five- or six-minute unit would have been more reasonable. That does not justify a simple 40 per cent reduction, since larger items would be unaffected. Taking the schedule broadly, I consider that a reduction of at least 20 per cent is justified on this ground alone.
Office set up and secretarial time
260. Mr Lumley's working practices in 2018 and 2019 were unusual and could not reasonably have been foreseen by the Defendant when providing an online-only investment platform. He did not use computers. Emails were printed for him, he obtained the paper file from the basement, drafted handwritten responses, and the secretary then typed and sent them. The file was then returned downstairs, even if the matter was ongoing. If a reply arrived, the process was repeated. This
inevitably increased both Mr Lumley's time and secretarial time, but that was substantially a product of the Claimant's own office system.
Accuracy of schedule and entries
- The schedule and the evidence show that there were multiple problems with the Platform affecting a number of the Claimant's clients. To that extent, the Claimant has proved that staff spent time dealing with Platform-related issues. The question is whether the schedule is a reliable record of the time spent on breach-related work, and therefore a reasonable basis for assessing hours.
- Mr Chandler submits that the schedule is amply supported by the documents and that any errors are no more than "odd aberrations". On the evidence this submission is not a valid one. The sample entries and others show much more than isolated mistakes. When challenged, the witnesses often gave unconvincing explanations, resisted obvious concessions until pressed, and appeared to be unsuccessfully retrospectively justifying a spreadsheet said to be carefully prepared and accurate.
- The following examples are sufficient to show the nature of the problem.
a) A number of entries bear no real connection to any breach. Laycock on 22
February 2018 is one example. One hour of partner time is claimed for a "client request to discuss Platform problems", yet the secretary's note simply says "Please ring Joan Laycock", and the attendance note records a broad portfolio discussion with no Platform issue. Mr Lumley ultimately accepted that the meeting was arranged to review Mrs Laycock's portfolio and invest £75,000 from transferred ISAs following her husband's death. The later attempted rebalance does not make the meeting itself caused by the breach.
b) Similar points arise from the Laycock entries of 18 April and 20 June 2018, where the supporting notes do not justify the "Aviva problems" descriptions. [E2142] is said to support "Aviva problems continue", but the shows only a brief reference to Aviva at the end of a detailed discussion of her finances, probate and correspondence. Any connection with breach was incidental at most. Michael Lumley accepted as much in cross-examination. Oliver Lumley's issue description is thus unsupported by the documents.
c) The 20 June meeting is claimed at 1 hour 15 minutes. [E2178] contains no reference to Aviva. It was a general review. I reject Mr Lumley's suggestion that everything was about Aviva and prefer the contemporaneous note as per Gestmin. I also note that he recorded a new investment and his 4 per cent initial fee and 1 per cent annual charge.
d) Mr Naylor for 18 April 2018 claims 1 hour 30 minutes. [E3636] note is an ordinary review of funds, objectives, risk and tax, not Aviva. Mr Lumley initially said otherwise, but the note does not support him. He later accepted that it was a record of advice. The further 30-minute claim for an unsuccessful change after the meeting is also irrecoverable on the Claimant's own case, because it relates only to temporary site unavailability and not to any pleaded breach.
e) Naylor - 18 July 2018, a 45-minute call with "a distressed client". The note [E3639] records only that Mr Naylor wished to pay premiums "no product advice required" and would call in with a cheque.
f) Naylor 19 July 2018 claims one hour for a client meeting and notes. The document [E3640] records only that Mr Naylor had called in and had not received his usual Aviva tax statement. It records no meeting and no duration. The further "top up notes" concern only a cheque payment into the grandchildren's pension. There is no causal connection to breach.
g) The tax certificate entries show both over-recording and duplication: a oneline email requesting certificates for Mr Naylor and Mr Oldroyd was charged on both ledgers, and the following Aviva email was also charged twice. The 22 October and 6 November entries likewise claim excessive senior partner and secretarial time for short emails and standard tax-voucher correspondence. The email at [E3650] is only three lines long.
h) 2 Oct 2018 Naylor - 1 hour partner, "analysing investments and dividends" There is nothing on those documents at [E3656] which would suggest that this was due to a breach. The underlying documents contain only handwritten fund notes and no link to Aviva.
i) There are entries which amount to basic product help or ordinary client work, not breach. Mr Childs on 18 May 2018 is a clear example. The entry claims 1 hour 15 minutes, but the documents show a short email query about where to find information on the Platform and a prompt response explaining where it was located, with a screenshot. That was not a breach - it was seemingly an inability to use the functions, particularly given that the information was in what was seemingly the most obvious place. Either way it could never be described as a breach.
j) 18 June 2018 Mrs Childs - the meeting was requested by Mr Baxter and has nothing to do with Aviva and yet is claimed in full. 17 Dec 2018 was also a meeting requested by Mr Baxter. The meeting note is not about problems with Aviva.
k) Other examples include Mr Patient's meeting on 13 September 2018. The note shows ordinary financial planning or clarification of charges, not breachrelated work. The note makes clear that the adviser was simply explaining the existing charging structure. The later failed rebalance is a different matter, but this meeting cannot be attributed to it.
l) The same is true of Mr Patient's entries in April and May 2019. On 23 April 2019 [E3882], a received email asking for a meeting about withdrawing more money for a holiday. A meeting on 1 May, 45 minutes is claimed. But [E3885] shows that the only possible connection is that, after discussing his need for money in mid-June, he was warned of "Aviva problems". That could not justify treating the meeting itself as caused by breach.
These examples are modest in value, but that is not the point. They are only examples, but the schedule was said to have been checked by several people. Both Oliver and Michael Lumley were adamant in their evidence that they stood by the accuracy of the spreadsheet and yet obvious other examples are unrecoverable or inflated. They undermine confidence in the accuracy of the schedule.
m) There are duplicated entries, including for Jupp and Laycock on 6 and 10 September 2018. Mr Chandler says his solicitors have rechecked the schedule and found only eight hours. That is not evidence. Given that the schedule was said to have been checked in detail before service, I place no weight on second-hand reassurance that it has now been rechecked.
n) The schedule also claims substantial time for long and personal emails sent on 8 and 9 August 2018. That time is inflated.
o) Even entries for the most affected clients, such as Mr Jupp, are materially overstated. On 9 April 2018, three short emails about the erroneous £12,000 payment and its return generated a claim for two hours. Mr Lumley's explanation that the correspondence failed to capture extensive background work is not credible. By his own account, he was "living and breathing" these clients' problems.
p) The same is true of the email chain from 26 to 29 March 2018. It involved no more than eight short emails about the inability to use bank transfer details and
the need to send a cheque instead. The schedule claims 2 hours 45 minutes. That is clearly excessive. Similar overstatement appears elsewhere in Mr Jupp's ledger. For example, on 16 April 2018, perhaps ten lines across four emails generated a claim for two hours, and on 23 April 2018 an acknowledgement of complaint is claimed at 30 minutes of senior partner time.
- By the time the original schedule was submitted under the compensation scheme, there was considerable, and perhaps understandable anger about the Platform and the Defendant's failure to resolve matters promptly. Michael Lumley was central to the time estimates. In my view, those estimates were coloured by that anger rather than by a dispassionate objective assessment of the actual or reasonable time spent. The mere mention of Aviva appears to have led to entries being included which, on any careful review, should either have been excluded or materially reduced.
- By the time the spreadsheet was prepared for issue and trial, it appears to have been reproduced and enlarged without proper consideration of whether each entry was caused by breach. Contrary to Oliver Lumley's evidence, and Mrs Bestwick's assertion about the solicitors' review, matters unrelated to Aviva had not been stripped out. Any supervision or checking by Michael Lumley or the other financial advisers was either not done or done with so little care as to be valueless.
- I do not, however, accept the Defendant's submission that the spreadsheet should be disregarded altogether. There is no doubt that staff spent time addressing genuine Platform problems, especially in the early weeks and months. Numerous emails show staff trying to resolve issues for clients, often repeatedly. The schedule is unreliable as a precise measure, but not wholly devoid of value.
- Nor does the Defendant's counter-spreadsheet provide a reliable alternative. Its apparent author and the signatory to the statement of truth did not give evidence. I found that to be quite deliberate and unacceptable. It also fails, as Mr Chandler showed, to allow proper time, or sometimes any time, for accepted breach events. It ignores the underlying documents and does not address whether the event was in fact caused by breach, but simply attributes what the Defendant says is a fair estimate of time. I therefore attach no weight to it as a measure of the recoverable time.
- I therefore do not regard the Claimant's schedule as so fundamentally flawed that no weight can be placed on it. But the number and nature of the defects mean that a simple 20 per cent reduction, as suggested by Mr Chandler and perhaps inspired by Bridge UK.com, would not adequately reflect the overstatement.
- Doing the best I can on the spreadsheet and the evidence, I would first remove 60 hours for secretarial time. I would then reduce the remaining hours by one third to reflect exaggerated entries, duplication, entries predating the Platform, and entries unrelated to breach, leaving 570 hours. That figure must then be reduced to reflect the 15-minute unit used for every interaction. For the reasons already given, I would apply a further 20 per cent reduction, rather than 40 per cent, producing 456 hours.
Conclusion on Aerospace Publishing limb a) and b)
- The Claimant has therefore established, for the purposes of limb (a), that staff time was spent dealing with issues caused by the Defendant's breaches.
- The next question is whether that time caused significant disruption to the Claimant's business. Plainly, the ordinary running of the business was affected, and time was spent on issues which would not otherwise have arisen. That was most pronounced in the early months, although some clients, including McNally, Laycock and Jupp, continued to generate issues in 2019 and slightly beyond. But the scale and duration of the disruption must be kept in perspective as from the evidence the problems were reducing in severity as time went on.
- The shortest sensible period over which to spread the relevant time is two years. In fact, the final rebalancing checks were not completed until 2020, and a substantial amount of the time claimed for Mrs Laycock, nearly £9,000, also falls in that year. I have attributed 456 hours to breach-related work over two years. That equates to less than five hours per week, spread across four or more people, albeit not equally. Even on the Claimant's full post-trial figure of 720 hours, the figure would remain modest when spread in that way.
- This level of time does not, in my view, amount to significant disruption over the whole period. I nevertheless accept that the witness statements, emails, correspondence and press material show real Platform problems in the early months after release, with continuing but lesser problems thereafter. What they do not show is the two years of business chaos described by the Claimant's witnesses. That account is not borne out by the schedule or by the time I have found proved.
- Whether a business can absorb a limited number of additional hours each week without loss or additional cost depends on how many hours, when required and over what period and the particular business. The question is whether that diversion amounted to "significant disruption" within the meaning of Aerospace. In my judgment it did not. The hours attributable to breach, when spread across the relevant period and across several members of staff, are modest. They do not demonstrate that the Claimant's business was materially impeded or that its core revenue-generating activities were significantly disrupted. The wider evidence including the expert evidence also does not for the reasons given earlier provide any additional support for that conclusion.
Limb c) of Aerospace Publishing
- A central issue between the parties is the application of the third limb of Aerospace. The Claimant submits that revenue lost through diverted staff time can be measured by the revenue which the partners and chartered financial advisers would otherwise have generated at their hourly charge-out rate. Although such a rate was not ordinarily charged, the Claimant says that £250 per hour should be adopted as a "proxy rate".
- The Defendant submits that stage (c) remains concerned with loss of revenue. It accepts that, in an ordinary case, the court may infer that diverted staff would have undertaken revenue-generating activity worth at least the cost of employing them. But it says this is not an ordinary case, any such presumption is rebutted, and the Claimant has in any event adduced no evidence of the actual cost of employing the relevant staff. It is therefore impermissible to use a notional billing rate as that cost.
Discussion
- In Aerospace, the trial judge found that staff who would ordinarily have undertaken conventional revenue-generating work, such as editorial work in creating publications, had been diverted by the defendant's negligence. The Court of Appeal upheld that approach. As Wilson LJ said at [87]:
"...the judge was entitled to draw the inference that the employees had been diverted from revenue-generating activities; and accordingly I see no error in his allowance within the damages for the costs of the employees referable to the diversion." Para 87 per Wilson LJ
- Aerospace therefore permits a rebuttable inference in an ordinary case that the cost of employing diverted staff represents at least the revenue they would otherwise have generated. The assumption is that a business does not employ staff for more than they earn for it.
- Where a business is based on sales or billable hours, that may be a fair baseline where the precise revenue lost cannot be proved. A claimant may, of course, prove that particular billable work would have been done. The Claimant originally pleaded such a case in the original Particulars of Claim but adduced no evidence of any lost billable hourly work. It therefore relies on the Aerospace presumption.
- This is not an ordinary case of the kind considered in Aerospace. The staff were not wholly diverted for a defined period to deal with the effects of breach and unable to generate revenue at all. Although Platform problems were a major focus shortly after launch, about 70% of the Claimant's clients were not on the Platform, and it is not suggested that work for them could not or was not done. The hours claimed were spread over more than two years. The link between breach-related time and loss of revenue is therefore far from straightforward.
- Nor does the Claimant generate revenue in a way comparable to the company in Aerospace. Its revenue came in two ways. First, it earned an initial fee, usually 4% of the value of any new investment. Secondly, it earned an annual management fee of 1% of the fund value, regardless of whether staff spent 1 hour or a 1000 on the client's affairs. The staff must have had to work on client's files on an ongoing basis to justify that 1% charged, though when it was done was somewhat flexible. The 1% revenue generation is especially significant because it made up almost 70% of the Claimant's annual revenue.
- The only activity which could have generated additional revenue during the "lost" time was therefore the acquisition of new business producing the 4 per cent initial fee. That is, in substance, the case already advanced under heads A and B.
- This is therefore far from an ordinary case in which the Aerospace inference can be applied. Even if the inference were in principle engaged, I am satisfied that it is rebutted on the evidence including that of the business model. The Claimant has not shown that the time said to have been diverted would probably have been applied to activities generating additional revenue, as opposed to servicing existing clients or undertaking routine work.
- The Claimant is therefore unable to establish limb c) of the approach in Aerospace as an alternative to establishing loss to the company by showing loss in the usual ways of loss e.g. profit/revenue, loss of opportunities or additional costs.
- Taking this head overall, I find that the Claimant has established that some staff time was diverted as a result of the Defendant's breaches. But it has not established that such diversion caused significant disruption to its business or that the time would otherwise have generated revenue. Nor has it been able to show that this is a case where the cost of employing staff could be a valid baseline for lost revenue. The alternative basis of claim under this head therefore fails.
Hourly or "proxy" rate
- Although unnecessary in light of my conclusion, I deal with one further point because it was fully argued. Even if time-based recovery were permissible, the Claimant would be entitled only to recover the cost of employing the relevant staff, not a notional charge-out rate. A billing rate includes an element of profit and assumes that the time would in fact have been billable. The Claimant has proved neither.
- There is no claim for overtime and no proof that staff worked more hours overall after the Platform changed. The claim remains one for loss of revenue suffered by the company. In the absence of evidence that the time would otherwise have generated revenue, the use of a proxy rate is unsustainable.
- Mr Chandler recognised the difficulty submitting:
"the ordinary presumption is not straightforward to imply because Lumley Baxter is a partnership, and its CFAs are paid at least in part by reference to fees brought in. Accordingly the salary proxy does not go any further than the claim for actual lost revenue"[2]
- The Claimant nevertheless says that the Defendant accepted disruption caused loss and that the Defendant itself used an hourly proxy, £150, in the compensation scheme. I have already explained why the compensation scheme provides no proper basis for an admission of liability, causation or loss. The same reasoning applies to the suggestion that it created any agreement that legal compensation in the court can or should be calculated by multiplying hours by an hourly rate. No such case is pleaded.
- A charge-out rate is not equivalent to, or a proper proxy for, the cost to the company of employing staff. It is not. Calling it a "proxy rate" merely blurs cost and charge out rate. Despite being criticised by the Claimant, Mr Singer's email at [C382] correctly recognised that, if an hourly rate were to be used, the relevant measure would be loss of profit, not the amount which might have been billed. A billing rate includes profit, and not all working hours are billable.
- A simple example illustrates the point. If a solicitor employed by the Claimant were unable to work for four weeks, the company's loss under Aerospace would not be his hourly rate multiplied by 50 potential billable hours. The cost to the company would be his salary. If the Claimant wished to prove actual lost revenue, it would also have to show that those hours would in fact have been billable.
- The Claimant has adduced no evidence of the actual cost of employing the relevant staff, save for the separate claim concerning Oliver Lumley. Counsel agreed that
his £40,000 salary equated to about £25.40 per hour. By contrast, the Claimant advances £250 for senior partners and chartered financial planners, £100 for paraplanners, and £60 for a personal assistant or secretary. There is no evidence as to how the latter two rates were calculated. On the Claimant's figures, the secretary would cost more than twice as much as a specialist investment analyst, and a financial adviser about ten times as much. That is not credible.
- For all these reasons, the Claimant's case on this alternate head of loss also fails.
Conclusions
- Drawing matters together, I find that the contract whilst including the ESS had no valid exclusion clauses and an implied term as to fitness for purpose. Further the Defendant's breaches of contract caused disruption and staff time was spent on issues resulting from them. But the Claimant has not proved that the diversion caused recoverable financial loss. The claim is not dismissed because it was advanced globally, nor because precise quantification was impossible. It is rejected because the evidence does not establish the necessary link between the disruption and any loss of revenue, lost opportunity, additional employment cost, or other recoverable financial consequence.
- My conclusions therefore on the issues are:
i) The terms of the ESS were incorporated into the contract.
ii) The exclusion clauses relied upon by the Defendant to refute the Claimant's heads of loss are unreasonable.
iii) The contract between the parties was subject to an implied term that the Platform would be reasonably fit for purpose.
iv) The Defendant was in breach of that implied term as pleaded, save for paragraph 10(9) of the Particulars of Claim.
v) The Claimant has failed to prove on a balance of probabilities that it suffered loss. vi) Further, and in the alternative, it has failed to establish it sustained loss as alleged in alternative heads of loss and/or the amount of any loss if so incurred.
- Having established breach of contract without proof of loss the Claimant is therefore entitled only to nominal damages which I award at £1.
- Finally, I would record my thanks to both counsel for their assistance in an extremely paper heavy trial and managing to keep the matter to the trial estimate
which was no little part due to the excellence of the electronic bundles, links and the digital assistants.
- As the parties have not been able to agree a form of order, a further hearing to address that and any consequential matters shall be listed. The parties shall provide dates of availability to the court within 7 days of this judgment being handed down.
