The judgment of Simon Tinkler, sitting as a Deputy High Court Judge, in Ickenham Travel Group Ltd v Tiffin Green Ltd [2024] EWHC 27 (Comm) is another classic example of a failure to prove damages.  The defendant had been in breach of duty but the claimant failed to prove that the breaches led to any losses or any additional expenditure.


“In my judgment, Ickenham has not proved that it suffered any loss when it sold BTD in July 2019. It has also not proved that the consequences would have been different if the Irregularities and Understatement had been discovered in 2014 or at any subsequent audit. Tiffin Green has therefore succeeded on both the Loss Argument and the Factual Causation Argument. Accordingly, I give judgment for the Defendant…”


The claimant is a travel agent. The defendant had been the claimant’s auditors, first appointed in 2014 and working until 2017.  An understatement in the claimant’s accounts had built up over many years. It stood at £2,500.000 when the defendant was first appointed. The understatement was discovered in 2018 and the defendant replaced as auditor.


The claimant’s claim arose because it was required to raise significant cash to carry on trading. It sold a business (“BTD”) to raise that money. The claim for damages was based on:

  • The argument that the business it sold was sold at an undervalue of £6 million and, if the discrepancy had been discovered earlier it would have been sold for significantly more.
  • Professional fees of £300,000.


    1. Tiffin Green raised four core reasons why it says it has no liability to Ickenham. The four reasons are that:


i) BTD had been on for sale for some 18 months before its eventual sale in 2019, and that in July 2019 BTD was sold for its true value; Ickenham has not therefore suffered any loss on that sale (the “Loss Argument“);

ii) if the Understatement had been discovered during the audit of the financial year ended 30 September 2014, then Ickenham would have taken the same steps in 2014 as it eventually took in 2019, with the same consequences; that therefore any loss on the sale of BTD and any fees incurred by Ickenham would have occurred in any event, such that there is no factual causation by Tiffin Green of any loss to Ickenham (the “Factual Causation Argument“);

iii) if Tiffin Green had carried out its duties in the manner set out in the pleadings then Tiffin Green would not in any event have discovered the Understatement or Irregularities (the “Pleadings Argument“); and

iv) the loss suffered by Ickenham on the sale of BTD is not a type of loss for which Tiffin Green is liable at law (the “Legal Causation / Scope of Duty Argument“).”


“In my judgment, Ickenham has not proved that it suffered any loss when it sold BTD in July 2019. It has also not proved that the consequences would have been different if the Irregularities and Understatement had been discovered in 2014 or at any subsequent audit. Tiffin Green has therefore succeeded on both the Loss Argument and the Factual Causation Argument. Accordingly, I give judgment for the Defendant…”



    1. Ickenham made assertions in the pleadings and at trial that if they had more time then they would have potentially been able to sell BTD for a higher price than that paid by Reed & Mackay. That is of course a possibility. There was, however, no evidence that it was a realistic possibility rather than a theoretical one. The only other buyers that Ickenham suggest would have paid a higher price were Portman, who never came close to making an offer, and Endless, who were not prepared to buy the business at all.


    1. Ickenham had been considering a sale of BTD since at least January 2018. They had been advised during this time by experienced corporate finance specialists whose role was to identify possible purchasers. They had considered the universe of possible buyers again in April/May 2019 when it became apparent that Endless were not going to go ahead with a purchase. During that entire time neither Ickenham nor their advisers identified a specific purchaser who they thought would pay more than Reed & Mackay. In his witness evidence Mr Pay did not identify any such possible purchaser. There was no evidence of other potential buyers who Ickenham could have approached if they had more time.


    1. Mr Pay said that he had a target price for BTD of £14,000,000 and he expressed confidence that he could achieve that. There is however no evidence whatsoever of any purchaser who was prepared to pay that, whether Portman, Endless, Reed & Mackay or anyone else. I am sure Mr Pay would have liked to be able to tell Mr Reglar that he had found a buyer for BTD at £14,000,000. There is, however, simply no evidence that such a buyer existed or ever would exist.


    1. Furthermore, there was evidence from the expert witnesses on the true value of BTD. Mr Beressi accepted that it was no more than speculative that any transaction with Endless would have completed. Mr Beressi then confirmed that in his view on the assumption that the Endless deal did not proceed then :


Question: [Does] the Reed & Mackay deal, as concluded, represent[s] a realistic and reasonable valuation of BTD?

Mr Beressi : Yes

    1. In my judgment, Ickenham have not shown that a transaction with Endless at all, let alone on terms in which they would have paid £11,000,000 is anything more than speculative. There is, in conclusion, no other evidence that any person would have paid a higher price than Reed & Mackay either in July 2019 or at any later date. Ickenham has not proved that the terms of the transaction with Reed & Mackay were anything other than the best terms on the open market that Ickenham could obtain for BTD; in other words, the fair market value.


    1. During the trial there was discussion about the impact of the value of LG2 on the terms of the sale of BTD. There was much discussion about whether LG2 was loss -making, and when it became profitable, if at all. By the end of the trial both parties accepted that LG2 had been loss making until some point in early 2019. After that point Ickenham implemented profit improvement measures. Those may or may not have moved LG2 into profitability and it may or may not have had a value if sold at that point. In mid 2019 Ickenham were asserting that LG2 was profitable and was expected to have an EBITDA in 2019 of some £342,000. Mr Pay, who prepared the document that included this assertion, however, described the document as a “sales document“. He said the intention was merely to illustrate that LG2 had a “value…rather than it being a basket case“. Ultimately both parties, however, accepted that the value of LG2 had no bearing on the value of BTD as the two business were separate. Accordingly, I do not need to make any findings about the value or profitability of LG2.


    1. The question then becomes whether Reed & Mackay reduced their price once they were told of the Irregularities. If they did reduce the price then that would be evidence that the sale price for BTD was below its “true value” because of the existence of the Irregularities.


    1. Almost all conversations and negotiations with Reed & Mackay took place before Reed & Mackay knew about the Irregularities. There is clear documentary evidence as to what the terms of the transaction were. There was, by the end of the trial, no meaningful dispute between the parties as to the terms of sale before and after the discovery of the Irregularities.


    1. Immediately prior to Reed & Mackay being informed of the Irregularities the financial terms of the transaction were as follows:


i) A payment on completion of £5,000,000;

ii) A further payment of £1,000,000 subject to deductions if the working capital of BTD was not as promised; and

iii) An earn out based on future profits of up to £4,000,000.

    1. Reed & Mackay were told of the Irregularities and Understatement in LG2 on 12 July 2019. At that time they were not told about the need for a cash injection of £1,000,000 into BTD.


    1. Mr Hanly of Reed & Mackay responded to being told about the Irregularities and Understatement in LG2 by emailing “As long as the prior year adjustment relates exclusively to LG2 then hopefully we can get comfortable with it“. This was part of a much longer email dealing with various other matters including the legal documents, the IATA registration transfer that was needed and the like. There is no indication whatsoever that the Irregularities or Understatement were the source of serious concern to Mr Hanly. Mr Pay responded by assuring him that the issue only related to LG2.


    1. After receiving the response from Mr Hanly, Mr Pay emailed the directors of Ickenham at 3.28pm on Friday 12 July to say that all was “hopefully positive!“.


    1. Mr Pay said in his witness statement that in the evening of Friday 12 July he had a call with Mr Hanly who was “fuming about the hole” in the LG2 accounts. In his evidence at trial Mr Pay said that on reflection he thought Mr Hanly had been angry about the disclosure of the need for Ickenham to sell BTD. There is no evidence from Mr Hanly or from phone records to confirm that the call took place on 12 July. Tiffin Green suggested that neither version of Mr Pay’s recollection was correct. It said the call took place a few days later and related to the matters I am about to describe.


    1. There is no indication in emails or documents that Reed & Mackay were “fuming” or that they were asking for changes to the transaction terms after being told of the Irregularities and Understatement. Their stated concern was to ensure the issue was ringfenced within LG2 and did not impact BTD. Indeed, Mr Hanly said they were “getting close to concluding this acquisition“.


    1. On Tuesday 16 July Mr Hanly emailed Mr Pay repeating a previous request for the cash flow forecasts for BTD. He wanted clarity on the Balance Sheet and details of working capital so he could “manage the cash flows…post completion”.


    1. Ickenham emailed the daily cash flows to Mr Hanly at 11.35 on Wednesday 17 July. Those cashflows include the assumption that a working capital injection of £1,000,000 would be needed into BTD in July 2019. Within 25 minutes Mr Hanly emailed back to say “This cash flow raises some very serious concerns. We will need to consult internally“.


    1. Mr Hanly responded on Friday 19 July. His email, in essence, said that Reed & Mackay were, after some deliberation, prepared to go ahead with the purchase of BTD. He set out his three top concerns. They were (1) the cash flow shortage of £1,000,000 (2) the risk of cash being trapped in Ickenham that related to BTD and (3) reputation. Reed & Mackay required changes to the transaction terms to address these issues. The key financial changes were


i) A reduction in the initial purchase price of £1,000,000 to reflect the working capital needed in BTD; and

ii) A change to payment dates of the £5,000,000 cash consideration such that £3m was to be paid on completion, £1,000,000 on 25 October 2019 and £1,000,000 in January 2020.

    1. There were subsequent negotiations which resulted in Reed & Mackay agreeing to increase the amount that could be paid under the earn out provisions by £1,000,000. The financial terms otherwise remained as proposed by Reed & Mackay.


    1. The agreement to sell BTD on those terms was signed on 30 July 2019 and included those financial terms. I note, finally, that Reed & Mackay were assuming an EBITDA of only £1,200,000 for BTD. They were not prepared to accept an EBITDA assumption of £1,300,000 let alone £1,700,000 as originally put forward to Endless.


    1. The changes that were made to the financial terms following the revelation of the Irregularities are therefore clear. Those changes, however, also followed the revelation of the working capital position of BTD. That working capital position had been of concern to Reed & Mackay throughout the negotiations. They had from the start required an amount of £1,000,000 to be available to cover possible working capital shortfalls in BTD.


    1. In my judgment, the evidence from the emails to and from Reed & Mackay, together with inferences that can readily be drawn from the sequence of events, show the following:


i) The reduction in the up front payment of £1,000,000 was entirely to do with the working capital position of BTD; it was not related to LG2 and the Irregularities;

ii) The deferral of the two payments of £1,000,000 each can reasonably be inferred to relate to concerns about the ongoing financial position of LG2, as that was the only business left in Ickenham after the sale of BTD and would be responsible for meeting any obligations of Ickenham to Reed & Mackay after the sale completed;

iii) The increase in the earn out was to Ickenham’s benefit, although of possibly limited value as it was viewed as being aspirational at best.

    1. The two payments that were deferred under (ii) above were subsequently paid on or around their due dates by Reed & Mackay. Deductions were made from those payments but those deductions related to liabilities of BTD that Reed & Mackay had agreed not to take, or to liabilities of the LG2 division which had wrongly been transferred. There was no evidence that Reed & Mackay first raised these deductions in connection with Ickenham revealing the Irregularities and Understatement to Reed & Mackay. In other words, the deductions were completely unrelated to the Irregularities and would, on the evidence before me, have been made in any event. In particular, the price of £5,000,000 for BTD was always said to be on a debt-free and cash-free basis based on a normal level of working capital. The only difference was that on the original terms Ickenham would have had to pay the amount of those working capital deductions to Reed & Mackay, whereas under the deferred consideration structure Reed & Mackay made the deductions itself from the two payments of £1,000,000 it was due to make to Ickenham. The ultimate net payment from Reed & Mackay for BTD was the same. Ickenham suffered no loss because the payment terms were changed from £5,000,000 on completion to the payment of £3,000,000 on completion and two payments of £1,000,000 subsequently.


    1. In my judgment, Mr Pay’s recollection that he had a conversation with Mr Hanly in which Mr Hanly was “fuming” is likely to be accurate. Mr Pay described where he was, and the tone of the conversation in a credible way. In my judgment, however he is mistaken about the timing of the call. The evidence indicates that Mr Hanly reacted very badly to the discovery of the cash flow position of BTD. He did not react badly to the revelation of the Irregularities; indeed, Mr Pay described Mr Hanly’s reaction as “hopefully positive!”. Mr Pay changed his witness evidence at trial to say that Mr Hanly was most angry about the accounts saying the BTD sale was needed. This does not seem supported by any contemporary evidence. It seems to me more likely that Mr Pay’s prior evidence is correct in which he said that Mr Hanly was “fuming about the hole”. The most likely hole about which he was fuming was, however, the hole in BTD’s cashflow about which he was told on Wednesday 17 July and which prompted the almost instant reaction that this was “very serious“, followed by the email requiring changes in the transaction terms.


    1. I will deal briefly with one final point made by Tiffin Green. They asserted that the Reed & Mackay offer was in reality for £10,000,000. This was because it included an earn out of up to £5,000,000. The Reed & Mackay offer was therefore almost the same as the Endless offer of £11,000,000. Ms Hindson gave evidence that she agreed with this assessment. As I have determined that the Reed & Mackay offer represented the market value of BTD I do not need to address this point. Suffice it to say that it seems to me to be quite challenging to accept that a payment of £11,000,000 is the same as a payment of £5,000,000 with a possibility of further payments of up to £5,000,000 if certain very stringent targets are met.


  1. It follows from the conclusions above that, in my judgment, the price paid by Reed & Mackay was the market value of BTD and there was no reduction in the price paid by Reed & Mackay caused by the Irregularities or Understatement. In other words, there was no loss caused to Ickenham on the sale of BTD to Reed & Mackay caused by Tiffin Green.



    1. Ickenham claimed for just over £300,000 of professional fees. These were incurred for advice received in 2019 following the discovery of the Irregularities. The fees were incurred in relation to the following advisers:


i) Blake Morgan;

ii) Cherry B Consulting;

iii) FRP Advisory;

iv) Interim Financial Solutions Ltd;

v) White Hart Associates;

vi) Grant Thornton UK Limited;

vii) and PTT Trustees.

    1. At the trial Ickenham accepted that the fees incurred by Blake Morgan were in fact incurred in connection with this litigation. They were therefore removed from their damages claim.


    1. The parties agreed that if Ickenham would have taken the same steps in 2014 when informed by Tiffin Green of the existence of the Irregularities and Understatement as it did in 2019 then as a matter of law Tiffin Green would not have caused loss to Ickenham. Ickenham would have failed to prove its case on what is usually referred to as the “but for” test; it would not have shown that the loss would not have arisen “but for” Tiffin Green actions.


    1. The evidence set above under “Factual Causation” applies equally to the court’s analysis on the professional fees claimed. The evidence clearly shows that Ickenham would have needed to engage in 2014 with the CAA in relation to its ATOL licence. This is because there was an Understatement of at least £2,500,000 that existed when the 2014 audit opinion was issued by Tiffin Green. The evidence also shows that Ickenham would have had to seek funding in 2014 to address that Understatement. The Understatement increased from 2014 until its discovery in 2019. The rate of increase is not known. There is no evidence to suggest that Ickenham would have been in a better position with the CAA or had a lesser need to seek additional funding at the time of issue of the audit opinions in 2015, 2016 or 2017.


    1. Ickenham did not produce any evidence that it appointed any advisers in 2019 that would not have been appointed in 2014 or subsequently. It did not produce any evidence that the fees incurred in 2019 were in excess of the fees it would have incurred in 2014 or subsequently. It is, of course, for the claimant to prove its case and not for the defendant to disprove it. Indeed, when Mr Reglar gave evidence he even accepted some of the fees were unrelated to the Understatement and Irregularities. He said, for example, that invoices from Cherry B Consulting were at least “partially” to cover a gap caused by the departure of the previous finance director.


  1. In my judgment, Ickenham has not shown that the professional fees it incurred in 2019 were caused in whole or in any part by Tiffin Green’s breach of duty in 2014 or at any subsequent point. They were caused by an Understatement of which at least £2.5 million existed in 2014 when Tiffin Green first conducted an audit and which existed throughout the period in question. Ickenham’s claim in relation to professional fees therefore fails.