Partner London
"WFW has secured £6.4m inclusive of damages, interest and costs to compensate the claimants for their business losses."
Watson Farley & Williams (“WFW”) has secured another legal victory for claimants Toppan Holdings Limited (“Toppan”) and Abbey Healthcare (Mill Hill) Limited (“Abbey”) in a long-running dispute concerning defects at a care home. Having previously won damages against the contractor for the defects repair costs, now in the case of (1) Toppan Holdings Limited, (2) Abbey Healthcare (Mill Hill) Ltd. v Augusta 2008 LLP (formerly Simply Construct (UK) LLP),¹ WFW has secured £6.4m inclusive of damages, interest and costs to compensate the claimants for their business losses.
The factual background
Augusta 2008 LLP (formerly Simply Construct (UK) LLP (“Simply”)) designed and built a luxury care home in Mill Hill, London. Toppan is the landlord and Abbey the tenant and operator.
After the care home opened, defects in its design and construction were identified. These required remedial works which Simply did not perform. Toppan subsequently incurred remedial works costs and associated professional fees and lost the sale of the care home after a value offer resulting in legal costs, associated losses and finance charges. Abbey sustained loss of trading profits, abortive legal costs and finance charges.
Toppan and Abbey successfully recovered some of their losses against Simply through adjudication proceedings, including business losses. Although the Toppan decision was enforced by the court, the Abbey adjudicator’s decision was not enforced by HH Judge Martin Bowdery, KC on grounds of jurisdiction.² That decision was overturned by the Court of Appeal,³ which was itself overturned on appeal by the UK Supreme Court.⁴
In this case, back again before HH Judge Martin Bowdery, KC, Toppan claimed its unrecovered losses in connection with the aborted sale, abortive legal costs and associated losses. Abbey claimed its lost trading profits, abortive legal costs and overdraft charges.
The Decision
By judgment dated 4 July 2025, the claimants were awarded £6.4m inclusive of damages, interest and costs. The relevant legal issues arising from the judgment include:
"The judgment provides helpful guidance, especially on the issues of lost trading profits claims and lost transaction claims."
- Abbey’s loss of trading profits: The assessment of loss is to put a claimant into the position it would have been but for the defendant’s breaches of duty. That requires a comparison of the profit earned in fact in the relevant period with the profit which could have been earned but for the defendant’s breaches of duty. Based on the facts, the Judge found that Abbey had been forced to suppress occupancy from the moment the defects were reported to them in September 2018. The repairs had to be carried out in a manner that prioritised the wellbeing of residents; including carefully completing works in a way that prevented mixing patients with dementia with those who did not. Damages were awarded to September 2021, as beyond that date the claim would be too remote and other unrelated factors might play a part. The trading profits calculation was assessed based on a prudent, conservative monthly net occupancy increase of two residents per month, with a but for occupancy steady stage of 59 residents.
- Abortive legal costs: The legal costs incurred by Abbey on the abortive transaction for the sale of the care home were held to be losses caused by Simply’s breaches of duty. These costs were aborted and wasted. Any future sale of the care home will require new work and the abortive work cannot be reused.
- Overdraft charges: Abbey claimed it was required to make additional use of its overdraft facility during the remedial works due to the static occupancy and loss of increased expected income. The Judge held that such losses were too remote to be recoverable as Simply had no knowledge at the relevant time as to how the remedial works were to be funded.
- Lost sale transaction: Where at the time of contracting it is envisaged that a property would be sold, any subsequent loss of sale value could be recoverable. However, losses could not be recovered where such a sale is not envisaged when the contract was concluded. The Judge found that the directors of Simply are directors of other companies that invest in, develop and operate care homes and sell them for profit. Simply’s expert accepted that it is not unusual in the care sector for homes to be built and developed, ultimately for their disposal for profit to a third party. While the lost sale of the care home occurred because of the defects and Simply’s breaches, no losses would be awarded for this head of claim. This is because any losses that Toppan would have been due would have been offset by the support that Toppan would have given to Abbey as its tenant to compensate Abbey for the higher rent it would have paid under its new lease had the sale completed.
Commentary
The judgment follows longstanding litigation between the parties over how the claimants’ business losses should be recovered. This judgment finally compensates the claimants for their business losses. The judgment also provides helpful guidance, especially on the issues of lost trading profits claims and lost transaction claims.
Barry Hembling, Construction Partner at Watson Farley & Williams LLP, acted for the successful claimants in the proceedings.
[1] [2025] EWHC 1691 (TCC).
[2] Toppan Holdings Ltd & Anor v Simply Construct (UK) LLP [2021] EWHC 2110 (TCC).
[3] Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP [2022] EWCA Civ 823.
[4] Abbey Healthcare (Mill Hill) Ltd v Augusta 2008 LLP (formerly Simply Construct (UK) LLP) [2024] UKSC 23.
