28/01/2025

Court of Appeal clarifies approach to credits which reduce damages

On 23 January 2025, the Court of Appeal handed down judgment in Barrowfen v Patel [2025] EWCA Civ 39, which clarified three important points on damages where a claimant is required to give credit for benefit(s) received. The appeal arose from a three-week civil fraud and professional negligence trial, but the damages principles are broadly applicable in contract, tort and equity.

1. The claimant argued that the additional equity and finance costs it spent in obtaining the benefit for which it had to give credit should be brought into account. This was rejected by the court, which held this was not required by either the British Westinghouse/Fulton Shipping principle nor the law on ‘betterment’: [97]–[114].
2. The court clarified how to determine whether benefit(s) received by a claimant in responding to breach(es) amount to betterment. Leggatt J in Thai Airways International v KI Holdings [2016] 1 All ER (Comm) 675 had suggested that the test in relation to non-monetary benefits was whether a claimant could “reasonably be expected to raise [the benefit] in terms of money” (i.e. to sell it). The court rejected a distinction between “monetary” and “non-monetary benefits”, asking instead whether the claimant had obtained a “measurable benefit”: [115]–[119].
3. Where the claimant’s claim is for loss of a chance, the court confirmed the approach in Hartle v Laceys [1999] Lloyd’s Rep PN 315 that the credit should be deducted before the loss of chance percentage is applied. This approach generally results in higher damages because any credit a claimant has to give for benefit(s) received is also discounted: [126]–[137].

Joshua Folkard acted for the successful second defendant/respondent (and cross-appellant), Stevens & Bolton LLP, at trial and on appeal, led by Roger Stewart KC of 4 New Square Chambers and instructed by Nick Bird, Tina Campbell and Sharon Law of RPC. Josh conducted the oral advocacy in the Court of Appeal on Stevens & Bolton LLP’s successful interest appeal.