Background

A property developer arranged for a prospective lender (the Lender) to sign a confidentiality and exclusivity agreement before submitting a request for funding to acquire the Olympia Exhibition Centre in London.

The Lender declined the request, and some twelve months later became involved in arranging finance for another bidder who became the successful purchaser (the Purchaser).

The unsuccessful developer commenced legal action against the Lender, claiming damages said to arise due to breaches of the confidentiality agreement.

The Lender admitted that there had been “repeated and continuous breaches” of its obligations under the agreement – but denied that there was any damage caused by those breaches, for two reasons.  First, it claimed that the purchaser’s bid would have been successful if the funding had been provided by another lender.  Secondly, it claimed that the unsuccessful developer would have been unable to complete the project successfully.

The Banking Expert Evidence

The parties provided banking expert evidence including expert reports, memoranda from joint meetings, oral evidence under cross examination and concurrent oral evidence.  The Court noted that “each made a considerable contribution even if some of their reports cover areas of fact that did not need an expert.”

Outcome

In Bugsby Property LLC v LGIM Commercial Lending Ltd & Anor [2022] EWHC 2001 the Court held that:

• The lender’s breaches were inadvertent, and there was no misuse of confidential information.
• The Lender have provided a full credit approval, which saved the Purchaser’s bid at a crucial juncture – and had therefore reduced the unsuccessful bidder’s chances of success.
• The unsuccessful bidder was no more or less reputable or reliable than the Purchaser, and it was “a near certainty” that the vendor would have sold to the unsuccessful bidder if required, and equally “a near certainty” that the unsuccessful bidder would have been able to secure finance and complete the development.
• It was also “a near certainty” that the Purchaser would have been able to finance its bid without the Lender, given enough time – but the central question was whether any other lender would have been able to provide funding in the time required to meet the vendor’s timetable – and it was likely that they would have missed the deadline by at least two weeks.
• The most likely outcome of the missed deadline was that the vendor would have extended the timetable rather than switch to the unsuccessful developer, but the possibility that it might have refused – assessed by the Court as a 40% probability – entitled the unsuccessful purchaser to damages for “loss of chance” which the Court quantified as £14,980,000.