Damages awarded for a loss of opportunity
A recent case in the Technology and Construction Court* has confirmed that a claim for loss of profit can include loss of opportunity as well as loss actually incurred.
A developer sued for loss of profit arising from a fire caused by a negligent plumbing contractor. The developer argued that had it not been for the fire it would have had the funds to construct dual developments (in accordance with its previous business model) instead of the single developments which it undertook in the period following the fire. The developer claimed for the loss of profits from three sets of dual properties, giving credit for the single developments it constructed instead. The claim was therefore not a claim for a loss actually incurred as a matter of fact but a loss of opportunity.
The judge analysed the facts presented by the developer and considered whether, on a balance of probabilities, the losses suffered by the claimant were caused by the initial breach. In determining if, and to what extent, the claimant could recover its losses, the judge considered the following three questions:
(1) Was loss claimed of a type or kind that would either:
• naturally arise from the breach; or
• have been in the contemplation of the parties at the time they made the contract as the probable result of the breach?
(2) If the loss falls within one of the above categories, on the balance of probabilities, what element of that loss was actually caused by the breach?
(3) Was any part of the loss caused by another event which was not reasonably foreseeable by the defendant at the date of the contract?
The judge was satisfied that the defendant’s breach had resulted in a loss of opportunity to engage in other developments and awarded damages in the sum of £401,253 comprising the loss of profit on three properties and 50% of the marginal loss of opportunity to carry out a dual development, because he concluded on the facts that that there was no more than a 50% chance that the claimant would have procured an adjacent plot if it had had the funds.
*Aldgate Construction Company Ltd v Unibar Plumbing & Heating Ltd  EWHC 1063
Reviewed in 2015