The Commercial Court handed down its judgment on 27 July 2022 on a £366 million claim for damages arising from a failed bid to acquire the iconic exhibition centre, Olympia London. The Court awarded the Claimant “loss of a chance” damages of £14.98 million.
The judgment of Knowles J follows a four-week trial in October–November 2021. The trial featured extensive expert evidence regarding the availability of finance for the acquisition of Olympia, the redevelopment prospects of Olympia and the impact of Covid-19 on such redevelopment.
The claim was brought by Bugsby Property LLC (“Bugsby”), a Delaware company, against two entities in the Legal & General Group (“L&G”). Bugsby had approached L&G in 2016 to seek finance for acquiring Olympia. In that context, Bugsby and L&G entered into a confidentiality and exclusivity agreement (the “Agreement”). L&G declined to lend to Bugsby, but over a year later financed the acquisition of Olympia by a consortium backed by German institutional investors. Bugsby alleged that, in doing so, L&G had misused Bugsby’s confidential information and breached the exclusivity provisions of the Agreement.
L&G denied misuse of confidential information but admitted that they had inadvertently breached the exclusivity provisions of the Agreement. L&G’s case was that Bugsby had not suffered any loss as a result of their breach because Bugsby’s Olympia bid would have failed in any event and, even if Bugsby had succeeded in acquiring Olympia, it would not have made any profits as a result.
The Court rejected Bugsby’s claim for misuse of confidential information. Knowles J said, “[L&G] did not in fact use Bugsby’s confidential information. No document showed misuse of Bugsby’s confidential information by L&G. Against these findings, the inferences [of misuse] are not made out” (at [190]). He also found that L&G’s (admitted) breaches of the Agreement were inadvertent (at [187]).
In relation to Bugsy’s claim for damages for L&G’s breach of the Agreement, a preliminary question was whether Bugsby was entitled to claim damages on the loss of a chance basis. L&G argued that it was not, because the object of the duty that L&G breached was not to provide Bugsby with the chance to acquire Olympia. Rather, the object of the relevant duty was to protect Bugsby’s confidential information. The Court rejected this submission. Knowles J held that preventing L&G from providing finance to other parties was part of the object of the Agreement ([212]–[214]). Accordingly, the Court assessed Bugsby’s damages on the loss of a chance basis.
This exercise required the Court to consider a complex series of interdependent contingencies as to what would have happened if L&G had not financed the successful Olympia bid. Having evaluated the probability of each such contingency, Knowles J concluded that there was a 35% chance overall that Bugsby would have acquired Olympia if L&G had not offered acquisition finance for the competing bid (at [345]).
The Court quantified Bugsby’s damages at £14.98 million (at [411]). This sum consisted of a percentage of the fees that Bugsby would have earned from the Olympia acquisition and the return that Bugsby would have obtained on its investment in Olympia.
A discrete aspect of Bugsby’s claim was that it would have launched a property investment fund if it had been successful in acquiring Olympia. Bugsby claimed the profits that would have been made from such a fund. Knowles J rejected this aspect of Bugsby’s claim. He found that there was no real or substantial chance that Bugsby would have launched a successful property investment fund, even if it had successfully acquired Olympia (at [409]).
Orlando Gledhill QC, Mehdi Baiou and KV Krishnaprasad, instructed by Clyde & Co LLP, acted for L&G.
The judgment can be found here.