PROVING THINGS 58 : FAILURE TO PROVE CAUSATION LEADS TO AWARD OF NOMINAL DAMAGES
For the third time in recent weeks I write about a case where a claimant has spent much time, energy (and no doubt money) in bringing an action but only recovered nominal damages. In Plantation Holdings (FZ) LLC -v- Dubai Islamic Bank PSJC  EWHC 520 (Comm) the trial took 31 days of court time. In the end, however, Mr Justice Picken held that only nominal damages were to be awarded.
“The simple fact is that, in assessing the level of damages which are payable to any claimant, it is necessary to consider what level of damages will fairly compensate the claimant. The claimant should not be short-changed. Equally, however, the claimant ought not to be allowed to recover a windfall.”
“… it would have been open to me to take the view that no damages should be awarded at all. I am, however, persuaded that it would be appropriate, in the circumstances, to make an award of damages, albeit only in a nominal amount.”
The claimant claimed damages of £2 billion following the defendant’s taking possession of land which had been intended for development in Dubai. The claimant contended that the defendant had no right to take possession at that time and had suffered £2 billion for the losses it sustained.
THE DEFENDANT’S ARGUMENT
The defendant denied breach. Further it denied causation, arguing that the claimant’s financial position was so precarious the development would have failed.
“DIB denies liability to Plantation. DIB’s case is that it was entitled to act as it did and when it did, and that accordingly it was not in breach of the RSA in doing what it did. Even if that is not the case, however, it is DIB’s position that there is, in any event, no basis upon which Plantation can claim to be entitled to substantial damages since Plantation’s case entirely ignores both the highly precarious nature of Plantation’s financial position, specifically a funding model which required it to achieve sales at an unachievable (and unachieved) rate (all the more so having regard to the wider economic realities in the second half of 2008). DIB contends that, in the circumstances, even had DIB not taken the action which it did, Plantation would, in any event, have failed and DIB would, as a result, have been entitled to take possession following an Event of Default”
THE JUDGMENT ON CAUSATION
The judge stated that the question of causation was the most significant issue.
At the start of the trial there appeared to be a fundamental dispute between Mr Anderson QC and Mr Cakebread concerning the proper causation approach to be adopted in relation to contractual claims. Mr Anderson QC pointed out in his written opening submissions that Plantation’s case appeared to boil down to an assertion that, if DIB was not entitled to act as it did, then, Plantation must receive damages assessed by reference to the market value of Plantation, with damages being assessed as at the date of breach with no reference to subsequent events or what would have occurred absent the breach. Mr Anderson QC’s submission was that this was an entirely wrong approach since ‘stopping the clock’ in this way would involve affording Plantation compensation on a basis which ignored reality, specifically the fact that as at 1 October 2008, when the next instalment of the Rescheduling Amount became due, a Plantation Enforcement Event would have occurred in any event. As a result, Mr Anderson QC submitted, Plantation cannot show that it has suffered any recoverable loss.”
The judge considered the case law and the claimant’s assertion that the damages should be based on conversion. He rejected that argument.
These are all reasons why Mr Cakebread’s reliance on conversion-based authorities does not assist him. It follows that I agree with Mr Anderson QC that the correct approach is to apply contractual principles to the assessment of Plantation’s damages and, in particular, that The ‘Golden Victory’ is applicable in this case. The simple fact is that, in assessing the level of damages which are payable to any claimant, it is necessary to consider what level of damages will fairly compensate the claimant. The claimant should not be short-changed. Equally, however, the claimant ought not to be allowed to recover a windfall.
The consequence in the present case is clear: Plantation cannot make anything like the level of recovery which has been suggested on its behalf since it is perfectly plain and obvious (Mr Anderson QC described it during the course of his oral closing submissions as an “inconvenient truth”) that, even if DIB had not done what it did in mid-July 2008 when it sought to perfect the assignment of the Lease notwithstanding that, as I have decided, there had not been a Plantation Enforcement Event, there would, in any event, have been the occurrence of a Plantation Enforcement Event on 1 October 2008, when just under US$60 million fell to be repaid in accordance with Schedule 2 to the RSA to bring the cumulative amount of the Rescheduling Amount up to the US$120 million which it was agreed would be repaid within 365 days of the RSA’s Effective Date.
I agree with Mr Anderson QC that it is, indeed, as he submitted, plain beyond doubt that Plantation would not have been in any position to meet its obligations under clause 6 of the RSA, and that there would, therefore, have been a very large default on 1 October 2008 since, again as he submitted in his written closing submissions: “no more was going to come in, and no more came in, from the various receivables; no more came in from any other source; and there was no prospect of Plantation/Mr Fitzwilliam raising further monies”. I have previously analysed Plantation’s financial position as at June/July 2008 in considerable detail, concluding that it was precarious to say the least since its sources of income were insufficient to meet its expenditure commitments. I have rejected the evidence given by Mr Bacon and Mr Fitzwilliam concerning the alleged Chescor deal. I have decided that there was no Chescor deal, and that the evidence given by Mr Bacon and Mr Fitzwilliam was essentially made up in order to support a case that, notwithstanding the apparent precariousness of Plantation’s financial position, Plantation would have had access to a substantial source of funding were it not for Mr Fitzwilliam’s arrest. I have also considered the evidence given by Mr Bacon concerning other third party interest in Plantation, specifically his evidence concerning Arbah Capital and Noor Capital. I have concluded that there is nothing in the suggestion that during the course of 2008 there was substantial interest by potential investors in Plantation, still less that there would have been any deal in place in time to enable Plantation to meet the obligation which arose on 1 October 2008. It is fanciful to suppose, in the circumstances, that proviso (i) to sub-paragraph would have come to Plantation’s rescue since application of that proviso would still have required 90%, and so a very substantial sum of money, to have been repaid. Plantation was, quite simply, in no position to pay anything like the amount of money which it would have had to pay on 1 October 2008.
It follows that the occurrence of a Plantation Enforcement Event was inevitable. That DIB would, accordingly, have been entitled to perfect the assignment of the Lease in October 2008 is obvious. In these circumstances, Mr Anderson QC must be right when he submitted that Plantation has no entitlement to damages which take no account of what would, in any event, have happened even if DIB had not taken the action which it did in July 2008. The most that it is open to Plantation to seek by way of damages is a sum representing the loss suffered by reason of DIB having given itself what Mr Anderson QC described as a ‘paper title’ between mid-July and 1 October 2008, yet Plantation has put forward no such case as I shall explain when dealing with the damages issue.
THE JUDGE’S CONCLUSION ON DAMAGES
As I have already explained, since DIB would, in any event, have been entitled to perfect the assignment of the Lease, and so enforce the Plantation Security, after 1 October 2008, any damages ought only to be to compensate Plantation for loss suffered between mid-July 2008 and 1 October 2008. Since, as I have explained, the Project was loss-making in this period, it is very difficult indeed (if not impossible) to see how Plantation can really have suffered any loss which would merit an award of anything more than nominal damages. Plantation has, however, made no attempt at quantifying its loss by reference to that period, even in the alternative. Given this, it would have been open to me to take the view that no damages should be awarded at all. I am, however, persuaded that it would be appropriate, in the circumstances, to make an award of damages, albeit only in a nominal amount.”
RELATED POSTS: THE PROVING THINGS SERIES
- Proving things 1: Civil Evidence Act notices will not cut it
- Proving things 2: evidence to support a claim for damages must be pitch perfect.
- Proving things 3: the complete absence of evidence means the court will not speculate
- Proving things 4: Witnesses who just aren’t there.
- Proving things 5: witness statements and failing on causation.
- Proving things 6: “That’s what I always do” & proving causation.
- Proving things 7: If you don’t prove a loss you don’t get an order.
- Proving things 8: a defendant must prove that a failure to wear a seatbelt made a difference.
- Proving things 9: the role of experts
- Proving things 10: “He said, she said”: the difficulties of recollection.
- Proving things 11: Lies, damn lies and…
- Proving things 12: That oral contract is not worth the paper its written on.
- Proving things 13: Loss, there was no loss.
- Proving things 14: proving mitigation of loss
- Proving things 15: damages and evidence: going back to College
- Proving things 16: if you don’t prove it you don’t get it.
- Proving things 17: Heads of damage that were “entirely bogus”
- Proving things 18: Damages; Car hire; Proof & Summary Judgment
- Proving things 19: prove service or you could be caught out.
- Proving things 20: allegations of improper conduct have to be prove
- Proving things 21: when the whole process of investigation is flawed
- Proving things 22: damages, mitigation part 36 (and bundles).
- Proving things 23: serving important evidence late
- Proving things 24: Damages & the “But for test”: when it gets really complexProving things 24: Damages & the “But for test”: when it gets really complex
- Proving things 25: Attempts to smuggle in witness statements do not help (and carry no weight).
- Proving things 26: distinguishing between what you can remember and what you now think you did.
- Proving things 27: Burdens of proof, hearsay evidence and… attempted murder.
- Proving things 28: make unwarranted personal attacks and use a “mud-slinging” expert: that always ends well.
- Proving things 29: Make sure the witness evidence deals with the relevant issues
- Proving things 30: Office Gossip Proves Nothing: The importance of the source of information and belief.
- Proving things 31: witnesses tend to remember what they want to remember.
- Proving things 32: Damages claim struck out as unsustainable: application to amend refused.
- Proving things 33: causation and the burden of proof in claims against solicitors.
- Proving things 34: There is no primer for scuttlers: when your ship doesn’t come in.
- Proving things 35: Reconstruction, documents & memory.
- Proving things 36: credibility and contemporaneous documents.
- Proving things 37: An approach to damages that was “fundamentally deficient throughout”.
- Proving things 38: Proving inability to pay on a security for costs application.
- Proving things 39: You can spend £10 million in costs and still not prove your case.
- Proving things 40: No evidence – no loss.
- Proving things 41: Proving damages – you are not going to get a second bite of the cherry.
- Proving things 42: silence does not prove inducement.
- Proving things 43: How the Court decides: a Primer.
- Proving things 44: Findings of Fact, Walter Mitty and Witness Training.
- Proving things 45: If you can’t prove loss the defendant is going to get summary judgment.
- Proving things 46: Late theories advanced by experts rarely help.
- Proving things 47: Fire in the loft: it wasn’t the mouse man at all.
- Proving things 48: valves, floods, models and causation.
- Proving things 49: it is difficult to prove damages when the opinion evidence in your witness statement has been struck out.
- Proving things 50: to prove breach of contract you first have to prove that there was a contract.
- Proving things 51: No evidence of loss – no damages
- Proving things 52: Solicitor’s negligence action fails on all counts: no negligence and no loss.
- Proving things 53: dishonesty some of the times doesn’t mean dishonesty all of the time.
- Proving things 54: getting £2 in damages after claiming £15 million.
- Proving things 55: I’ll say it again: No evidence – no damages.
- Proving things 56: A judge will not speculate when things could have been proven.
- Proving things 57: Lease said soonest mended: claim for substantial damages fails (and guess the reason)