Court of Appeal judgment on damages law handed down in Barrowfen Properties Limited v Patel

On 23 January 2025, judgment was handed down by the Court of Appeal on issues of damages law in Barrowfen Properties Limited v Patel and others [2025] EWCA Civ 39.

At trial, the Court made various findings of dishonest breaches of directors’ duties against the First Defendant and of negligence against the Second Defendant firm of solicitors.

The trial judge awarded damages based on the lost rental income suffered because of the delay in the development of Barrowfen’s commercial property in Tooting. The principal award of £4 million was reduced down to £1.7 million because Barrowfen was required to give credit for the increased capital value of the revised development scheme implemented compared to the original development scheme that would have been implemented at an earlier date.

Both Barrowfen and the Second Defendant appealed to the Court of Appeal on issues of damages law about the application of the credit, but the decision of the trial judge was upheld (other than on a point about the amount of interest as damages):

1. Barrowfen appealed on the basis that it intended to hold the property as an income-producing asset and that once the increased finance costs of the more expensive revised development scheme were taken into account there was no credit to be given. The Court of Appeal analysed the leading cases on mitigation, causation and betterment and dismissed Barrowfen’s appeal on the basis that the decision to retain the Tooting property (and incur future financing costs) rather than sell it was an independent decision that broke the chain of causation.
2. The Second Defendant cross-appealed, contending that the credit should be deducted (in full) after the application of the loss of a chance percentages, rather than before the application of the loss of a chance percentages. The Court of Appeal explained the decision in Hartle v Laceys and dismissed this main cross-appeal.

Tim Matthewson was instructed with Adam Kramer KC of 3VB by Withers to act for Barrowfen.

Read the full judgment