England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
JACK J
HQ 01X03969

		Royal Courts of Justice Strand, London, WC2A 2LL
		Monday, 20 June 2005

Lord Justice Jonathan Parker :

INTRODUCTION

1. This is an appeal by Mr and Mrs Browning, the claimants in a negligence action against their former solicitors Messrs Brachers ("Brachers"), from an order made by Jack J in the Queens Bench Division on 5 April 2004.
2. In the action, Mr and Mrs Browning allege that Brachers were negligent in acting as their solicitors in an earlier action ("the original action") brought against them by a Mr Gilham; and that as a result they lost the chance of pursuing a substantial counterclaim in that action. They claim damages representing that the value of that lost chance.
3. Brachers admit that Mr and Mrs Browning's inability to pursue their counterclaim in the original action was caused by their negligence, but they contend that the counterclaim had no real prospect of success and that the value of Mr and Mrs Browning's lost chance is accordingly nil or negligible – a contention which lies uneasily with the fact that at no stage while they were acting for Mr and Mrs Browning did Brachers advise them to that effect. As the judge pertinently observed (in paragraph 9 of his judgment):

"At no time prior to the difficulties that arose in the latter part of 1996 did Brachers advise Mr and Mr Browning that their counterclaim against Mr Gilham was likely to fail, or even that it was weak. It does not appear that any advice on the merits of their claim was given. Mr and Mrs Browning had legal aid throughout, and I assume that Brachers would have complied with their duty to the legal aid board in connection with unmeritorious cases, had the claim been considered to be one. Nonetheless, now the claim has been lost, it is said that the chances of its success were slight."

4. In saying that, the judge may well have had in mind a passage in the cross-examination of Mrs Browning by Mr Ian Croxford QC (for Brachers), when Mr Croxford put to her that at all times Mr Wilson of Brachers (who had the conduct of the matter within Brachers) was being very cautious about Mr and Mrs Browning's chances of success in the original action. Mrs Browning's response was as follows:

"Well, I do not think I have ever heard of a solicitor saying: 'Yes, you have got a 100 per cent chance', but, as I say, he was still [in 1994] encouraging us to go on with it. So that was down to him. If he thought there was no chance of success, I am sure he would have said so; and surely that was his duty not only to us but also to the Legal Aid Board …"

5. In the result, by paragraph 1 of his order dated 5 April 2004 the judge entered judgment for Mr and Mrs Browning against Brachers in the sum of £76,873.03 (inclusive of interest). By paragraph 2 of his order he ordered Brachers to indemnify Mr and Mrs Browning against three quarters of their liability under an order for costs made against them in the original action and against the whole of their liability under a further order for costs made against them in a later action which they brought against Mrs Gilham in her capacity as Mr Gilham's sole personal representative (Mr Gilham having died) but which they subsequently discontinued. By paragraph 10 of his order the judge granted Mr and Mrs Browning limited permission to appeal.
6. The original action arose out of the purchase by Mr and Mrs Browning from Mr Gilham, in March 1991, of a herd of goats ("the Gilham goats") together with the goodwill and machinery of the business of goat farming carried on by Mr Gilham at Bowyers Court Farm, West Sussex.
7. Mr and Mrs Browning had, since 1986, been carrying on a goat farming business on their farm at Lower Basing Farm, Cowden, in Kent, supplying home-made goats' milk products to local retail outlets. In purchasing the Gilham goats they were pursuing a strategy of expanding their business. Following the purchase, the Gilham goats remained at Bowyers Court Farm until they were removed to Lower Basing Farm on 27 April 1991. Later in 1991 Mr and Mrs Browning purchased additional goats from Reading University (in evidence, these additional goats were referred to as 'the Shinfield goats').
8. It was subsequently established that Mr and Mrs Browning's (expanded) herd had become infected with a disease called Johne's disease.
9. Paragraph 10 of the judge's judgment contains the following description of Johne's disease:

"Johne's disease – the 'j' is pronounced as an English 'y', the 'o' is long, and the 'e' is sounded, is a chronic inflammatory bowel disease affecting ruminants, namely, in the United Kingdom, cattle, sheep and goats. It is associated with infection with the bacterium Mycobacterium avium subspecies paratuberculosis. The major clinical sign is chronic weight loss leading to death. It is infectious but the transmission of infection and the period of incubation of the disease are unusual. It is not thought that infection is normally passed between adult animals. The route of transmission is to young animals, that is those under 6 months, commonly within the first 30 days of life, either from an infected dam, another infected young animal or from the environment – the bacterium may survive in the environment for a substantial time. It may pass in utero, via colostrum - first milk, or by a faecal-oral route. It has a very long incubation period, namely from 18 months to 5 years or 7 years, though it has been seen in kids as young as 1 year where the dam was in the late stages of infection. The onset of the disease may be precipitated by stress, such as kidding. Tests on faecal samples from living goats may or may not indicate the disease when it is present. The only sure tests are those which can be done on stomach samples obtained by post mortem. It is uncertain how long the bacterium may survive in grassland and so infect grazing animals. It may do so for 2 years, and perhaps rather longer."

10. On 24 September 1991 Mr Gilham commenced the original action in the Staines County Court, claiming £8,778.80 as representing the unpaid purchase price of certain stores which (he alleged) were included in the sale at cost, together with water, telephone and electricity charges incurred between the sale and 27 April 1991. Mr and Mrs Browning obtained legal aid to defend the action, and they instructed a Mr J. Hinchliffe, a sole practitioner, to act for them. In or about October 1991 Mr Hinchliffe served a Defence on behalf of Mr and Mrs Browning, alleging that the stores were included in the overall sale price of £27,000 (which Mr and Mrs Browning had paid), and that they had tendered payment for the full cost of services but that their tender had been refused. By a Re-amended Defence and Counterclaim served in June 1992, while Mr Hinchliffe was still acting for them, Mr and Mrs Browning added a counterclaim for damages for alleged non-delivery of 39 goats and (more significantly for present purposes) for breach of contract, alternatively for misrepresentation, on the ground that a number of the Gilham goats were infected with Johne's disease. The pleading stated that the damages counterclaimed were estimated to exceed £120,000.
11. In July 1992 Mr and Mrs Browning instructed Brachers in place of Mr Hinchliffe. In September 1992 Mr and Mrs Browning paid £5,000 into court to the credit of the original action.
12. The subsequent procedural history of the original action, and of the action subsequently commenced by Mr and Mrs Browning against Mrs Gilham as sole personal representative of Mr Gilham, is set out by the judge in paragraphs 2 to 6 of his judgment, as follows:

"2. Because of its size the counterclaim became the most important aspect of the litigation. Progress was slow. Matters came to a head in 1996. Mr Gilham was represented throughout by the firm of Barlows. They have a number of offices in Surrey. They are a different firm to that of Barlow, Lyde & Gilbert who represent Brachers in this action. At the beginning of 1996 neither side had served any expert evidence. On 31 January 1996 Barlows obtained an order that Mr and Mrs Browning serve expert veterinary evidence within 46 days or be barred from calling such evidence. A report prepared by Mr Baird, who was the vet who had attended the Browning goats, was served on 22 March 1996. In April 1996 the action was transferred to the Kingston County Court, and at the instigation of Barlows it was set down for trial. On 20 May the court informed the parties that the trial would commence on 13 December 1996 with an estimate of 6 days. On 9 September Mr Gilham died from the cancer from which he had been suffering for some time. On 24 September Brachers sent to Barlows a copy of a report prepared by Mr Measures, an agricultural consultant. He had prepared the report which was served with the particulars of claim and which had suggested that the damages on the counterclaim might be of the order of £120,000. The new report gave a figure of £1.5 million. On 16 October Brachers served on Barlows a supplementary report from Mr Baird. On 18 October Brachers served on Barlows witness statements of Mr Squire dated 20 April 1993, Mr Martin dated 13 July 1994, Mrs Byfleet dated 16 February 1996 and Mr Mowlem dated 20 February 1996. On 21 October Brachers wrote to Barlows to say they would be serving witness statements of Mr and Mrs Browning in due course. No statements by them had been served previously. All that there was were their affidavits in the summary judgment proceedings in 1992. On 25 October an order was made by HHJ Bishop barring Mr and Mrs Browning from relying on the recently served materials, that is Mr Measures' report, Mr Baird's supplementary report and the statements.

3. On 12 November Mr and Mrs Browning instructed Reid Minty to act for them in place of Brachers. They served a notice of discontinuance, proceeding on the basis, I presume, that the existing counterclaim had become hopeless for lack of evidence, but the claim itself was not yet barred by limitation. On 9 December HHJ Hull Q.C. struck out the notice of discontinuance as an abuse of the process of court and he refused to permit them to be non-suited. On 11 December Mr Gilham's claim was settled for the £5,000 already in court and costs. On 13 December, the trial date, the counterclaim was dismissed, Mr and Mrs Browning offering no evidence. The costs which Mr and Mrs Browning have been ordered to pay in the action are £30,155.57.

4. On 6 February 1997 Mr and Mrs Browning commenced proceedings against Mrs Gilham in her capacity of executrix of her husband.

5. On 11 January 1998 the Court of Appeal dismissed the appeal of Mr and Mrs Browning against the order of HHJ Hull Q.C. of 9 December 1996.

6. The proceedings against Mrs Gilham were discontinued on 18 March 1998 on the basis, I presume, that an application to stay them as an abuse of the process was bound to succeed, especially following the judgment of the Court of Appeal. Mr and Mrs Browning were ordered to pay Mrs Gilham's costs, which have been assessed at £13,669.82."

13. The trial of the present action occupied some 12 court days between 26 November and 15 December 2003. In the course of the trial, the judge heard evidence from five witnesses of fact and no less than eight expert witnesses (four on each side).
14. It was common ground before the judge (and it remains common ground) (a) that but for Brachers' negligence the trial of the original action ("the notional trial") would have taken place in December 1996; and (b) that in considering what the outcome of the notional trial would or might have been the court should proceed on the assumption that Brachers had properly discharged their duties to Mr and Mrs Browning; in particular, that they had taken all proper steps to prepare for the notional trial, including serving witness statements and expert reports (a direction for 5 experts on each side having been given in October 1993). The corollary of the latter assumption, one would think, is that Barlows (Mr Gilham's solicitors) would likewise have prepared fully for trial, and would have served the witness statements and expert reports on which Mr Gilham wished to rely. (In the course of the appeal, an argument to the contrary was abandoned by Mr David Blunt QC, appearing for Mr and Mrs Browning.)
15. In the event, as we know, the only expert evidence which had been prepared on either side were the two reports by Mr Measures on behalf of Mr and Mrs Browning (the later report superseding the earlier). So not only was the judge concerned with a notional trial taking place some 7 years earlier and relating to events which had taken place some 12 years earlier; he also had to reach conclusions as to the evidence (both oral and documentary) which would or might have been adduced at the notional trial, including the expert evidence.
16. As to damages, the judge was faced with a task of considerable difficulty in assessing the value of Mr and Mrs Browning's lost chance to prosecute their counterclaim. His lengthy and detailed judgment is a testament to the care with which he approached that task.
17. In the event, Mr Measures did not give evidence before the judge. By the time the trial of the present action took place he had retired, and (as the judge noted in the course of his judgment) most of his working papers had been lost.
18. The judge handed down judgment on 13 February 2004. I shall turn to the detail of the judgment below; at this stage, I merely summarise the judge's findings and conclusions.
19. So far as the factual evidence was concerned, the judge concluded that the recollections of Mr and Mrs Browning (who gave evidence before him) would have been fresher at the notional trial, and that their oral evidence would have been given by reference to witness statements taken from them at an early stage in the original action and subsequently updated. As to the documentary evidence, the judge concluded that Mr and Mrs Browning's evidence would have been supported by more complete and comprehensible records than were, in the event, available. These conclusions are not challenged on this appeal.
20. As to the expert evidence which would or might have been available at the notional trial, the judge considered that he could get some help as to the points which might have arisen from the further reports which were before him, but he concluded that it would be wholly wrong to take any course approaching a trial of the issues in the original action on such further evidence.
21. As to the expert evidence which would or might have been adduced at the notional trial by Mr and Mrs Browning, the judge's starting-point was Mr Measures' later report (I will refer to it as his 1996 report). As it stands, Mr Measures' 1996 report assesses Mr and Mrs Browning's claim for loss of profits by reference to a period from and including 1991/2 up to and including 2008/9 (a period of some 18 years). It computes the claim for loss of profits over that period at £1,308,215, to which is added a capital loss of £261,180 representing the reduction in the value of Mr and Mrs Browning's herd, business and farmland caused by the presence of Johne's disease. The total claim as computed in Mr Measures' 1996 report is therefore £1,569,395. However, the judge concluded that the 1996 report would in all probability have been checked and possibly improved before it was served, and that such a process would probably have led to a reduction in the amount of Mr and Mrs Browning's claim.
22. The judge also concluded that expert evidence would have been available to Mr and Mrs Browning from Professor Steele-Bodger, but he had no means of knowing what that evidence would have been.
23. The expert evidence adduced before the judge on behalf of Mr Gilham raised a number of issues as to the quantification of Mr and Mrs Browning's loss (both in relation to loss of profits and in relation to the claimed capital loss). It also raised an issue as to whether some part of the claimed loss was avoidable – in other words, as to whether Mr and Mrs Browning had failed to some extent to mitigate their loss.
24. As to liability, the judge found that negligence on the part of Brachers in the preparation of Mr and Mrs Browning's counterclaim was established "over a wide front"; and that had the counterclaim been properly prepared and presented at a trial of the notional trial it would have had a 70 per cent chance of success in establishing Mr and Mrs Browning's entitlement to an award of damages. There is no appeal against those findings.
25. Turning to damages (on the assumption that the counterclaim had succeeded on liability) the judge took the figures for loss of profits in Mr Measures' 1996 report as the basis for Mr and Mrs Browning's claim in that respect, albeit he awarded damages in respect of a substantially shorter period than that proposed by Mr Measures, and in respect of the shorter period he applied a discount of 40 per cent to Mr Measures' figures. As to the claimed capital loss (reduction in value of capital assets) the judge awarded £15,000.
26. In the result, he valued Mr and Mrs Browning's counterclaim, after bringing into account the value of Mr Gilham's claims, at £46,357. To that sum he added interest from 1 January 1997 to judgment in the sum of £30,516.03, making a total award of £76,873.03 (as referred to earlier).
27. In arriving at the judgment sum of £76,873.03 as representing the value (as at the date of judgment in the present action) of Mr and Mrs Browning's lost chance of pursuing their counterclaim in the original action, the judge reasoned as follows (references to paragraphs are to paragraphs in his judgment):

• Stage 1: The general approach. In paragraph 20 of his judgment the judge directed himself that in addressing the issue as to the amount of damages which Mr and Mrs Browning would or might have recovered at the notional trial the correct general approach was to determine the sum which it was "most probable" that they would have been awarded had their counterclaim succeeded on liability.

• Stage 2: Damages for loss of profits. Stage 2.1: As to the period in respect of which damages for loss of profits would most probably have been awarded, the judge concluded that the judge at the notional trial would have taken the period from the start of 1992 to the end of 1998. i.e. a period ending some two years after the notional trial (paragraphs 75 to 77). In reaching that conclusion the judge rejected Mr Measures' opinion (as set out in his 1996 report) that damages for loss of profits should be awarded in respect of each year from 1991/2 up to and including 2008/9. Stage 2.2: As to the amount of profits lost in each year during the relevant period, the judge took Mr Measures' figures for each year in the period 1992-1998, as set out in his 1996 report, but discounted those figures by 40 per cent (paragraph 78). Mr Measures' figure for the total lost profits during that period was £182,228; sixty per cent of that sum is £109,337.

• Stage 3: Further adjustments. The judge then made two further adjustments. Stage 3.1: The chance of infection from another source. The judge applied a 25 per cent discount to reflect the possibility that Mr Gilham might have succeeded in establishing that Mr and Mrs Browning's herd was infected with Johne's disease from another source. That gave a figure of £82,002 (paragraph 79). Stage 3.2: The chance of a finding of failure to mitigate. The judge went on to make a deduction of £21,231 to reflect the possibility of Mr Gilham succeeding in establishing that Mr and Mrs Browning had failed to mitigate their loss, thus reducing the £82,002 to £60,771 (paragraph 80).

• Stage 4: Diminution in capital values. To the figure of £60,771 the judge added a sum of £15,000 representing the sum which would most probably have been awarded to reflect the diminution in value of the goodwill of Mr and Mrs Browning's business and in the value of the farm, due to the presence of Johne's disease in their herd and on their land, giving a figure of £75,771 (paragraph 84).

• Stage 5: Adjustment to reflect the percentage chance of success on liability. The judge then took 70 per cent of that figure to reflect the chances of Mr and Mrs Browning succeeding on liability, giving a figure of £53,039 (paragraph 86). (As noted earlier, there is no appeal against this element in the judge's calculation.)

• Stage 6: Adjustment to reflect the value of Mr Gilham's claims. From the figure of £53,039 the judge deducted a sum of £6,682 representing the value of Mr Gilham's pleaded claims, giving the final figure of £46,357 (paragraphs 39 and 86).

• Stage 7: Interest. As already noted, the judge then added interest in the sum of £30,516.03, thus arriving at the judgment sum of £76,873.03 (paragraph 92).

28. Following the handing down of the judgment it was pointed out to the judge that in making a deduction to reflect the value of Mr Gilham's claims (Stage 6 above) credit should be given to Mr and Mrs Browning for the £5,000 which they had paid to compromise those claims (paragraphs 3 and 87). On the judge's figures, that left £1,682 outstanding as the unsatisfied balance of the value of Mr Gilham's claims.
29. The judge granted Mr and Mrs Browning permission to appeal on three grounds, but refused permission on a number of additional grounds. Permission to appeal on the additional grounds was granted by Latham LJ on 9 July 2004.
30. Brachers have served a Respondent's Notice in relation to the judge's award of £15,000 in respect of capital losses (Stage 4 above), contending that the award is over-generous to Mr and Mrs Browning. There is, however, no cross-appeal against that award.

THE DAMAGES CLAIMED BY MR AND MRS BROWNING IN THE ORIGINAL ACTION

The pleaded losses

31. At this stage it is convenient to see how Mr and Mrs Browning pleaded their loss and damage in their counterclaim in the original action.
32. The pleaded particulars of loss allege (among other things) that 58 goats were suffering from Johne's disease "to date" (i.e. as at March 1992), and that Mr and Mrs Browning were suffering loss of milk production at a current rate of £5,850 per month and increasing. The particulars also include the cost of a report by Mr Measures dated 30 April 1992 (his first report), together with the estimated cost of a further report, veterinary costs and interest. The particulars continue as follows:

"The Defendants losses to date are estimated to be in excess of £120,000. The Defendants will have to carry out further culling of the flock of goats which will increase their dependency on bought in goat milk. The disease in the herd cannot be eradicated. The Defendants will have to cull the entire flock and will have to shut down Lower Basing Farm for two years in order to eliminate the disease from the land and will thereby suffer yet further loss and damage."

33. The final item in the particulars of loss is loss of goodwill, against which no figure is placed.
34. Barlows sought further information as to the alleged loss of milk production, to which Brachers' reply (dated 19 July 1995) was: "An expert's report is awaited". In the event, as we now know, the report which was awaited was Mr Measures' 1996 report.
35. Asked for further information as to the date or dates on which the herd was culled, and as to the period during which the farm was shut down, Brachers responded as follows:

"(a) The herd has not been culled in its entirety. However, in addition to some goats being culled, others have died and others have been sold for meat before they finally succumbed to the disease.

(b) Lower Basing Farm has not in the event been shut down but has had to function well below capacity. Milk is still bought in throughout the year."

36. Asked for particulars of the claim for loss of goodwill, Brachers responded:

"Because of the losses caused to the Defendants they have suffered serious cash flow problems with the direct result that they have been unable to obtain credit. Purchase of equipment and pots has been restricted and the Defendants have been unable to promote their business or otherwise protect it from adverse reaction resulting from their cash flow problems,"

Mr Measures' 1996 report

37. For reasons which will now be apparent, it is necessary to read the pleaded claim for damages in conjunction with Mr Measures' 1996 report.
38. As already noted, Mr Measures' total figure of £1,569,395 is made up of revenue losses (i.e. loss of profits over a period from and including 1992/3 up to and including 2008/9) in the sum of £1,308,215, together with capital losses (i.e. the diminution in value of Mr and Mrs Browning's capital assets, viz, the land, the herd and the goodwill of their business) in the sum of £261,180.
39. In the introduction to his 1996 report, Mr Measures describes himself as an agricultural consultant. In section 3 of his report he describes the rapid expansion of commercial goat farming since the 1980s. In paragraph 3.06 of his report he says this:

"Since about the mid 1980s a more commercial approach has developed with the growth of larger units adopting rigorous selection policies to improve performance. On these units the larger number of goats from which to select is enabling rapid improvement in performance, yields rising by some 10 per cent or more per year."

40. In section 4 of his report he considers the effect of Johne's disease on Mr and Mrs Browning's herd. In paragraph 4.05 he concludes that its effect had been to cause an abnormally high incidence of mortality, an abnormally high rate of culling of young milking goats reduced to a poor condition, and severely reduced milk yields. In paragraphs 4.08 to 4.10 he says this:

"Vaccination

4.08 There appears to be no cure for the disease although some in a group seem more resistant to the infection, taking longer to succumb and apparently acquiring a degree of immunity.

4.09 Because Johne's disease is encountered infrequently there appears to have been comparatively little research to develop vaccines and treatments. No proven vaccine was available in 1992 although one had been developed, it is understood, for use on other species and not trialled on goats. The use of vaccine has been developed since then and young goats in Mr and Mrs Browning's herd have been vaccinated since about March 1995, before being transferred to join the infected main herd.

Eradication

4.10 Eradication of the disease from the holding appears to be impossible without removing all carriers, e.g. goats, cattle, sheep from the land for 5 years or more."

41. In section 5 of his report, Mr Measures reviews the events of 1990 to 1994. In Table 4, annexed to his report, he sets out in tabular form the number of adult milking goats in the herd over the period from accounting year 1988/89 (the accounting year ended on 30 June) up to and including 1994/5, and the numbers which had been sold or culled, or which had died, in each of those years. According to Table 4, the number of female milking goats increased from 180 in 1990/1991 to 356 in 1991/1992. Table 4 also shows that whereas in 1990/1991 no female milking goats were sold or culled and only 13 died, in 1991/1992 93 were sold or culled and 112 died. In 1992/1993, according to the Table 4, none were sold or culled but 34 died, out of herd which had been reduced to 160 female milking goats by the beginning of 1992/1993.
42. Table 5 in the report sets out the figures for milk sales, purchase and production for the period 1990/1991 to 1993/1994 inclusive. The table shows a steady decline in total milk production from Mr and Mrs Browning's herd from 81,706 litres in 1990/1991 (from 210 milking goats) to 48,511 litres in 1993/1994 (from 137 milking goats). Table 5 also shows that in each of the years 1990/1991 to 1993/1994 Mr and Mrs Browning bought in goats' milk from other sources in order to meet demand from their customers.
43. Table 6 in the report contains an analysis of the trading accounts of Mr and Mrs Browning's business for the accounting years 1989/1990 to 1993/1994. The analysis shows that the business made net losses in each of those years after bringing bank and interest charges into account, and without bringing into account any drawings by Mr or Mrs Browning. Commenting on the 'bottom line' (net profit/loss), Mr Measures said this:

"Profit before interest charges is, in farming, commonly used as an indicator of the financial performance of a business. Profit before interest rose in 1990/91 by some £10,649 compared to the previous year (adjusting for depreciation). This is in fact an understatement of the improvement, given that £3,528 was written off in bad debts in 1990/91.

In the following year, with emergence of the disease, profit before interest fell by £13,404 to a loss of £4,394 in 1991/92. Once Mr and Mrs Browning were able to effect steps to mitigate their losses caused by Johne's disease profitability improved and continues to do so."

44. In section 6 of his report, headed 'Losses as a consequence of the disease', Mr Measures identifies the direct effects of Johne's disease on Mr and Mrs Browning's herd as being increased goat mortality, leading to loss of milk production and loss of kid sales. He identifies indirect effects as follows:

"the severe immediate losses caused Mr and Mrs Browning financial embarrassment. Bank funding became limiting [sic].

only limited supplies of milk were available to purchase and consequently where Mr and Mrs Browning had expected to be expanding sales they found themselves rationing supplies to buyers, despite buying as much as they could. The effect was to halt until about 1994/95 any serious attempt to boost sales and even then the sales effort was relatively low key. They also re-directed milk from local deliveries to small outlets to the multiples to protect the market outlets of most value in the long term."

45. In Table 18 he summarises Mr and Mrs Browning's losses as follows:

(Note: The figures in the 'Difference' column in Table 18 for the years 1991/2 to 1997/8 inclusive add up to £182,228, which (as will appear when I come to the detail of the judge's judgment) is the figure which the judge took as the base figure for lost profits for those years, and which he then discounted by 40 per cent.)

THE EVIDENCE BEFORE THE JUDGE AT THE TRIAL OF THE PRESENT ACTION

Evidence of fact

46. The judge heard oral evidence from five witnesses of fact. For Mr and Mrs Browning, the judge heard evidence of fact from Mr and Mrs Browning themselves, from Mr Baird (their local veterinary surgeon), and from Mr William Squire (who was employed by Mr Gilham as manager of his goat herd prior to 1991, and who visited Lower Basing Farm from time to time to purchase or deliver goats' milk).
47. Mr Baird's evidence included expressions of professional opinion, but the judge treated him primarily as a witness of fact (see paragraph 16 of the judgment). Mr Baird nevertheless impressed the judge as a witness (ibid.).
48. For Brachers, the judge heard evidence of fact from Mr Alan Mowlem. In 1991 Mr Mowlem was carrying on a goat consultancy practice known as The Goat Advisory Bureau. He came to know Mr and Mrs Browning through a trade association called The Goat Producers' Association. He was retained by Mr and Mrs Browning to value the Gilham goats prior to their purchase.
49. No one from Brachers was called as a witness.
50. I turn first to the evidence of Mrs Browning. In paragraph 16 of her first witness statement she says this:

"16. The simple fact is that we are not some large corporation which can afford to spend limitless sums conducting this litigation. We are a small business which has been blighted by a disastrous event (infection of our herd) and the effects which have resulted from that event (lost profits meaning increased debts and lower investment etc.)."

51. In paragraphs 86 and 87 of her second witness statement Mrs Browning describes Mr Baird's visits to Lower Basing Farm, as follows:

"86. Within six weeks, our Vet, Jim Baird, visited the herd after we had telephoned him and asked him to visit because we were worried about the BCF goats [i.e. the Gilham goats] being thin, lacking in energy and the low milk yields they were producing. His immediate reaction was "I can see which are your goats and which are from the other herd".

87. On the 1^st July 1991 Mr. Baird visited again. He gave the goats Lectade etc. to see if this helped the poorly goats. He again visited on the 2^nd July 1991. On the 7^th July 1991 Mr. Baird visited again and this time gave them Pannelog and Lectade and Lectade Plus. Lectade is a glucose drink which also helps to stop the runs, it is for smaller animals whereas Lectade Plus is for larger animals."

52. Turning to the possible methods of minimising the effect of the disease, she says this:

"100. When the disease was first diagnosed the policy was to cull any goats that were showing symptoms of the disease. We did our own research and our Vet, Jim Baird gave guidance. There was not much information available on Johne's disease at the time. The alternative was to cull the whole herd and start again on a clean farm and clean pastures or rear all the kids on another farm. This latter (halfway house) option became available to us for a short time when our neighbours let us put the young stock into buildings on their farm which had not been used for a number of years. We did this up until just before they were due to kid for the first time – they then had to be brought back to our farm and as we had no other choice due to space and the logistics of the milking parlour they had to go into the main herd thereby exposing them to the disease. In any event, when our neighbours decided to develop their redundant farm buildings into holiday lets and a livery yard in 1998, we had to vacate after about 2 or 3 years. We would, and still do, cull any goats that we suspect may have the disease – of course this can mean that goats that do not have Johne's may be culled by mistake.

101. If I recall correctly we were expressly advised by Mr Hinchcliffe not to cull the sick goats at that stage in the litigation. I am not sure why he gave us this advice [except] he thought the other side would wish to view the sickly goats. Although shortly afterwards he confirmed the culling programme could start.

102. Of course, we considered vaccination, but we were being told that the vaccine was only registered for cattle and the results in goats was unknown. The amount to give then was also unknown. The cost was expensive: approximately £6 per goat, which is a lot of money to pay for something which may not work.

….

104. Other measures taken included taking the kids away as soon as they were born and feeding them artificially, but of course eventually these kids, when they were ready to kid and be milked, would have to join the main herd. This had been our practice even before the disease – as a commercial farm we breed for milk, so since 1987 we have always reared our kids artificially in a different building to the main herd.

….

109. Vaccination against Johne's disease is licensed to be administered to cattle and sheep but it was not and is not licensed by the Ministry of Agriculture to be given to goats. The Ministry of Agriculture only permits the vaccine to be purchased by goat farmers via Vets, and it is administered at the personal risk of the farmer. The vaccination is given in half doses to kids of approximately two weeks old. We first vaccinated the kids on the 18^th April 1995, but we did not know for two years, when the goats eventually kidded whether the vaccination had worked or not, and even then they may not succumb to the disease straight away. Of the 45 goats that we vaccinated in April 1995, we only lost three goats when they first kidded. We were unable to afford to purchase the vaccine in 1998, which would have cost over £300 due to our continuing financial constraints. We have purchased the vaccine every year, normally in March except for 1998 and 2001. The Ministry were not supplying the vaccine in 2001 due to the foot and mouth disease."

….

Eliminating the disease

113. There are three ways in which we might have tried to eliminate the disease from our herd. None were practical.

Firstly, cull the herd and start again after the ground had been left fallow for the appropriate number of years. That would only have been practical if we had alternative sources of income which could have met the interest payments demanded by the Bank during the period in which the farm was not being used. Otherwise foreclosure would be inevitable. We did not have any such alternative sources of income. We had put our hearts and souls in LBF [i.e. Lower Basing Farm].

Secondly, is to sell LBF but it has an agricultural restriction. Beef/cow intensive farming would be inappropriate and together with sheep and deer are all liable to succumb to Johne's disease. Horses are not agricultural otherwise they would be ideal. We did place the farm on the market for several months although obviously we had to declare the disease. A few people came round but there were no offers. King & Chasemore were the Estate Agents.

Thirdly, would be to move to a section of LBF and have new buildings erected and zero graze our animals (we could never then be organic), or move to alternative accommodation but this again would be totally impractical. The memo from Alan Measures to the Burgess office of Laurence Gould Partnership in May 1992 enquired about the possibility of de-stocking the farm by finding someone with suitable buildings for us to de-stock our unit for two years. No alternative accommodation was found at that time. Further, on the 19^th November 1992, Professor Steele-Bodger actually advised us in the presence of Mr Wilson of Brachers that we would have to de-stock for a minimum of five years rather than two years he also said "even then there would be no guarantee that the disease had gone", this has also been confirmed by other sources. The possibility of replacing the herd in May 1992, when goat produce was rising in popularity, was only feasible if we raised young stock. It takes 18 months to 2 years until young goats are mature enough to produce milk and we were not financially able to survive for two years with neither animals nor milk and it was not feasible to buy milk, particularly since there is naturally a shortage of winter milk."

53. Referring to the situation as it existed in early 1993, Mrs Browning says this (paragraph 238):

"238. Our financial position was becoming so acute that both Alan Measures and Brachers became involved …. Mr Wilson also reminded me of our duty to mitigate our losses but he stated that he did not think that the Court would criticise us if we stopped now. For reasons I have explained, however, to stop was to lose everything."

54. It is noteworthy that despite the fact that, as this last paragraph shows, Mr Wilson was aware at the time of the requirement that Mr and Mrs Browning take reasonable steps to mitigate their losses, there is no evidence that Brachers at any stage advised Mr and Mrs Browning that they were failing to meet that requirement.
55. Mr Browning's evidence did not add materially to the evidence given by Mrs Browning.
56. I turn next, therefore, to Mr Baird's evidence. In the first of the two reports annexed to his witness statement he says this:

"9. The Vaccination Programme

9.1 In April 1995 the Brownings commenced a vaccination programme which is Johne's specific. If the vaccine works then we will see it suppressing the clinical signs of Johne's disease. The vaccine comes from Central Veterinary Laboratories of MAFF at Addlestone, Surrey. It is licensed for cattle and the dose for sheep and goats is simply one half of the cattle dose. I supplied the vaccine and the Brownings carried out the vaccinations. I believe that they vaccinated a mixture of young and old.

9.2 The vaccination probably works by helping to resist cellular inflammation in the bowel.

9.3 If the vaccination does not help this is certainly not evidence that we are not dealing with Johne's disease.

9.4 Even if the vaccination appears to have successful results (after appraisal of this year's kidding) there is no guarantee that it will be successful again in the future years. In any event goats will have to be re-vaccinated every year."

57. In his second, supplemental, report, Mr Baird says this:

"2.1 In my first Report paragraph 9, I discussed the Vaccination Programme undertaken by the Brownings. The Brownings have continued with their Vaccination Programme and on 17^th May 1996 purchased from me, at a cost of £703.30, 72 doses of Johne's vaccine. This is the same vaccine which I referred to in paragraph 9.1 of my first Report.

2.2 The 72 doses are sufficient for approximately 144 goat vaccinations. The Brownings carry out their own vaccinations.

2.3 The goats vaccinated to date have only been pre-milking goats. As to kids, the practice they are adopting is to vaccinate them within the first 7 days of birth. I understand from the Brownings that they vaccinated 43 young goats on 18^th May 1995. These kidded earlier this year. Three weakened after kidding in a classic Johne's fashion and went for meat before they got too ill, I am told. One proved to be barren (655) after being put to the Billy several times so has not been retained. Another (542) broke her shoulder and went for meat.

2.4 Not all the doses collected in May 1996 have been used. Some were used for the last of the kids born at the end of May and early June 1996. The rest of the doses will be used from December 1996 onwards on new kids."

58. In cross-examination, Mr Baird was asked by Mr Croxford about his experience of Johne's disease, as follows:

"Q. You are now many years more experienced as a vet than you were, obviously, back in 1991 and 1996. But even back then you were a very experienced vet?

A. I was veterinary surgeon to Hillsborough Research Institute in the north of Ireland. For many years I looked after their cattle herd, pig herd and sheep flocks and was there on many occasions.

Q. And whilst back in the 1990s your experience of commercial goat herds was confined to the Lower Basing Farm, that is right, is it not?

A. No, it is not correct. I had experience of one herd in the north of Ireland, which had only about 20, 22 goats. It was run on a commercial basis and it was milked by machine. And I can remember the problems that goat herd had that I had never seen in the Brownings goats. And I did see many goats for small holding -- people with three or four goats who were selling milk to health shops.

Q. That was fairly common, was it not?

A. That was quite common. Large numbers of goats – and certainly at that time in the north of Ireland were not common.

Q. Perhaps I ought not to use the expression "herds". Larger herds of 20 or more. But your experience once you came from Ireland and were practising in England was that you still would from time to time come across small herds of goats?

A. Yes.

Q. And that people would keep a small number, half a dozen or three?

A. Or three; twos and threes in gardens, yes.

Q. So if one looks at the position, your position in the first half of the 1990s, whilst you were not dealing with large herds, apart from the Lower Basing Farm, you were dealing fairly regularly with goats.

A. I was dealing occasionally with goats. Outside the Browning herd, yes.

Q. Clearly you felt that you were able to and did keep up with veterinary literature on goats, no doubt along with other animals as well.

A. I was keeping up with the information on other animals more so than goats. At that time in early 1990s there was not much provision in goats, there was no information on Johne's and there was not much information on vaccination for Johne's. Nobody at that time could tell me whether it worked, or whether it did not work. It was not licensed for goats and still is not licensed for goats …. At that time, I did not know what the incubation period for Johne's was. We were led to believe it could be anything from one to four or five years, depending on the infection in the herd, and I still do not know.

Q. The fact that you did not know and do not know by the time you came in about 1991 to suspect Johne's was not because you were lazy about finding out?

A. There was not much information to find out from.

Q. You conscientiously went about trying to make sure that you were fully informed

A. If I did not know something I would go and consult textbooks and see what was written. Most of the work on Johne's at that time appeared in American textbooks.

Q. And you had obviously had dealings with Mr and Mrs Browning, but you also had dealings with Alexander Wilson at Brachers, did you not?

A. Yes.

Q. And you felt that you were confident in being able to advise your clients, the Brownings, about what you thought was going on in their herd.

A. That is what any farmer asks his veterinary surgeon, to come and give advice to the best of his knowledge.

Q. And that is what you did?

A. And that is what I did.

Q. And you felt confident that you were able to give competent professional advice?

A. I gave professional advice to what I knew and what was known about goat diseases in those days.

Q. And given what you knew and given your background with the Hillsborough herd and so forth –

A. Which did not include goats.

Q. Did not include goats?

A. No, right.

Q. Given your background in veterinary practice and study, you felt competent also too tell Mr Wilson about what you believed was going on in the herd?

A. I told Mr Wilson what we were doing at the Browning herd."

59. Later in his cross-examination, Mr Baird was asked about his dealings with Mr and Mrs Browning, as follows:

"Q. And your opinion, also, was it was not necessary to obtain further post-mortem results.

A. The Brownings had to pay me every time I came to do these and they could not afford to pay, and we were in a situation where with a disease like Johne's where we could not do anything to stop it, the animals that were infected were going to die. And in the long-term, it might – looking back on it you would like to have said there is several post-mortems should have been done, the disease was diagnosed mainly on how it fitted in on the clinical picture.

Q. The point I really want to ask you though, Mr Baird, is that your opinion, which you expressed no doubt to Mr and Mrs Browning but you also expressed it to Mr Wilson, did you not, was that the diagnosis of Johne's disease was firm and clear?

A. In our mind at that time, yes."

….

Q. If you were passing, you might on occasion drop into the Brownings as you would to any client, is that right?

A. Yes.

Q. Just to see?

A. If I was passing and knew there was something going on,

Yes, I would."

….

Q. In the middle part of 1992, did you ever come to understand that Mr and Mrs Browning were at least conscious of an option for their farming business being to close down at Lower Basing farm?

A. I was not aware of what financial things were going on apart from the fact I knew later on that money was scarce.

Q. Did you know that in July 1992 it was foreseen or intended that a vaccination programme would then start in the next few weeks?

A. Yes.

Q. And leaving aside that vaccine was not available specifically for goats, we have heard some evidence yesterday about the Shinfield goats being vaccinated in the 1980s I think but leave aside the question of licensing vaccination of the herd was something –

A. You can leave aside the fact about vaccination. When I tried to get information as to whether the vaccine worked, nobody would give me any information. They presumed it was in sheep and they would tell me at the labs where they made it that they had no evidence that it worked in goats.

Q. So your –

A. I was not – and the situation where they did not have much money, it was an extra cost, it was not going to save those goats that were all dying, and it is on a long-term basis, yes.

Q. So you did not press it terribly hard, is what you are saying.

A. I did not press it very hard. Again, the vaccine came through me, and I paid for it. And the Brownings on those occasions when they did get vaccine they paid for the thing with a cheque at the time.

Q. Of course. A vaccination programme whether in 1992 or subsequently would have been vaccinating the young animals.

A. That is the way. Now they do it within three or four days.

Q. Of birth?

A. At birth.

Q. And that is presumably what you had in mind –

A. And at that time it was not even certain that that was – some people were doing older goats, and it was just what the Brownings' heard from other goat owners who were using it, they thought it was working. I did not push vaccine at that time.

Q. Very well. Were you involved in talking to any of these other goat owners?

A. The other goat owners, no, I was not.

Q. And you had noted, of course, had you not, that it was believed that Johne's disease was transmitted to young animals?

A. Yes

Q. Indeed your report, page 86 mentioned infection of young animals by faeces from infected animals.

A. Yes.

Q. That was the conventional understanding.

A. Yes, or colostrum from the dames.

Q. Presumably you suggested to the Brownings that kids should be snatched at birth.

A. They did that.

Q. Right. Vaccination was carried out in April of 1995, was it not?

A. That is when I probably sold the vaccine."

60. Mr Squire was asked in cross-examination about the possible presence of Johne's disease in Mr Gilham's herd in 1990. He said that little was known about Johne's disease at that time; that a few goats became ill; and that Johne's disease was one of the possibilities that were mentioned but that the presence of Johne's disease in Mr Gilham's herd was not confirmed.
61. I turn next to the evidence of Mr Mowlem (called by Brachers). In paragraph 7 of his witness statement Mr Mowlem says this:

"7. If it had been put to me that the [Gilham] goats had been the subject of a Johne's disease investigation or that otherwise others had been wasting away and dying or were being destroyed then I would have suggested a full investigation. As mentioned in my document dated 13^th February 1991 there were at that time a lot of good goats available so there was no reason for a purchaser such as the Brownings to take any risk at all with any hint of a problem of Johne's disease or some other wasting condition in the herd."

62. In the course of Mr Mowlem's evidence in chief, the following sequence of questions and answers occurred:

"Q. …. By the end of the 1980's, how common, in your experience, was Johne's disease in the United Kingdom?

A. In terms of being recognised as a problem, not very common. One or two goat herds possibly had animals dying from this disease or reported animals dying from this disease.

Q. Since the end of the 1980s?

A. It has become more common or it has been more recognised. I think there are two factors here: (1) we know a lot more about the disease and have come to recognise it, and (2) I think the commercial goat herd of the country has grown, and I think the pressures of commercial farming, we have seen more instances of the disease on farm, it is less common with people with two or three goats in their back garden, in pet goats it is not seen so much."

63. In re-examination, Mr Mowlem was asked by Mr Croxford about the state of the Gilham goats when he carried out his valuation. He replied:

"The goats that I saw on the day of inspection looked healthy to me, or certainly did not look unhealthy. I did not see anything that made me think twice. Through the Goat Producers' Association I was on quite friendly terms with Mr and Mrs Browning, and I would have been in a position to have said: 'I am really not too sure. I am not too happy about that animal, this animal, that group of animals', had I seen anything of that nature, but I did not at that time."

Expert evidence

64. I can now turn to the expert evidence. Notwithstanding the fact that Mr Measures was not called as an expert witness, there was (as already noted) no shortage of expert evidence before the judge. He had before him written reports from no less than eight experts, each of whom gave oral evidence and was extensively cross-examined.
65. The eight experts were as follows:

Veterinary experts

Professor Morgan (called by Mr and Mrs Browning)

Mr Matthews (called by Brachers)

Agricultural consultants

Mr Brookes (called by Mr and Mrs Browning)

Mr Marshall (called by Brachers)

Valuation experts

Mr Handley (called by Mr and Mrs Browning)

Mr Hampton (called by Brachers)

Accountancy experts

Mr Shelton (called by Mr and Mrs Browning)

Mr Aspell (called by Brachers)

66. In addition to the reports of the two valuation experts, the judge also had before him, as part of the documentary evidence in the case, two historical valuations of Lower Basing Farm, each of which valued the farm on the alternative bases that Johne's disease was, or was not, present on the farm. In other words they attempted to assess the diminution in value of the farm by reason of the presence of Johne's disease. The earlier in time of these two valuations is an undated valuation by Mr Michael Bax, of Messrs. Bax Standen, chartered surveyors and agricultural valuers, prepared on the instructions of Brachers as solicitors for Mr and Mrs Browning. That means that it must have been prepared at some time before 12 November 1996 (when Brachers ceased to act for Mr and Mrs Browning). The later valuation, which is dated 25 February 1999 (that is to say it postdates the notional trial), is by FPDSavills on the instructions of Lloyds Bank, Mr and Mrs Browning's bankers.
67. Since both the Bax Standen valuation and the FPDSavills valuation formed part of the evidence before the judge, notwithstanding that the authors of them were not called as witnesses, I will return to them below, under the heading 'Valuation evidence'.
68. It would be neither practicable nor appropriate to attempt to summarise the entire contents of each of the experts' reports, but the following (inevitably selective) references will serve to give at least a flavour of the expert evidence and of the various issues raised.

The veterinary evidence

69. The first report of Professor Morgan (Mr and Mrs Browning's veterinary expert) is directed to the physical manifestations of Johne's disease in Mr and Mrs Browning's herd. In that report, he reaches the following principal conclusions:

1. that the first diagnosed case of Johne's disease was one of the Gilham goats, and that its infection with Johne's disease could not be attributed to transmission of infection after arrival at Lower Basing Farm;

2. that there was no evidence the goats at Lower Basing Farm were showing symptoms of Johne's disease prior to the arrival of the Gilham goats;

3. that the evidence showed that Mr Gilham's herd had shown clinical signs consistent with Johne's disease, that the disease was suspected by the attending veterinary surgeon and that it had reached epidemic proportions within the herd; and

4. that the Shinfield goats came from a herd in which Johne's disease was a recognised problem.

70. In the course of his first report, Professor Morgan expresses the view (in paragraph 2.14) that once Johne's disease is present in a herd it is difficult to control it. He continues (in paragraph 2.15):

"Selective breeding, with the removal of all offspring of nannies or does with confirmed Johne's disease, supplemented with management techniques which reduce the probability of transmission of infection may be used. Current evidence suggests that this is a long-term strategy, taking 5-10 years to have any impact. There have been some theoretical studies of these control methods but for practical purposes a herd in which a diagnosis of Johne's disease has been made should be considered permanently infected."(emphasis supplied)

71. As to vaccination, Professor Morgan says this (in paragraph 2.18):

"Vaccination: a vaccine is available. This controls the disease but not infection. A licence is required for its use as it sensitises animals to the test commonly used in the diagnosis of tuberculosis."

72. Later in his first report, Professor Morgan expresses the opinion that there was "a high probability" that the ill health in Mr and Mrs Browning's goats was associated with Johne's disease.
73. As to the Shinfield goats, Professor Morgan accepts (in section 6 of his first report) that they came from a herd in which Johne's disease was a recognised problem. He continued:

"Infection could have been introduced into the Lower Basing Herd by goats from Shinfield but this occurred after the first reported cases of Johne's disease in the Basing herd."

74. In paragraphs 8.1e and 8.1f of his first report, Professor Morgan says this:

"8.1e Cost of vaccination may be calculated from herd numbers and the unit vaccine cost, assuming half a dose per goat. It is expensive, circa £7 per goat, and is recurrent. It does not prevent infection, only disease and this herd will have to be vaccinated ad infinitum. Veterinary costs may be estimated from Mr Baird's invoices. Vaccination is the only realistic method of controlling the disease in milking goat herds and in this case vaccination was instituted.

8.1f There is no method of eradicating Johne's disease from a herd. The organism survives in the soil for at least one year and it would be sensible to allow the land to be fallow for a period of at least 2 years prior to restocking,. This approach is currently being taken in Australia to control the disease. In Australia farmers are compensated for their total loss of earnings during this two year period."

75. Mr Matthews (the veterinary expert called on behalf of Brachers) reaches the following principal conclusions in his first report:

1. that the high incidence of disease and death of adult goats at Lower Basing Farm during 1991 and 1992 was never properly investigated;

2. that there is no post mortem or laboratory evidence to support Mr and Mrs Browning's claim that their herd is infected with Johne's disease;

3. that the presence of Johne's disease has never been demonstrated in any goat in Mr and Mrs Browning's herd by means of a comprehensive post mortem examination carried out by a specialist veterinary pathologist;

4. that the high mortality rate of goats in Mr and Mrs Browning's herd in 1991-1993 was unlikely to be due to Johne's disease; and

5. that Mr and Mrs Browning appeared to have taken no consistent action to control either Johne's disease or gastro-intestinal parasites in their herd.

76. In the course of his first report, Mr Matthews, whilst accepting that there is no treatment for Johne's disease, identifies a number of what he describes as 'control measures' designed to control the spread of Johne's disease in a herd, including vaccination. In paragraphs 55.6 and 55.7 of his first report he says this:

"55.6 Vaccinate the kids between 2 and 4 weeks of age, using half the cattle dose. When all the goats on the unit have been vaccinated, continue for a further 2 years. Injections are given subcutaneously on the brisket. A granulomatous nodule may develop at the injection site. Vaccination will reduce the incidence of clinical disease, but animals may still become infected and shed bacteria without ever developing the disease.

55.7 The effect of the vaccination alone is often difficult to assess as it is usually combined with improved husbandry. However there is a consensus that vaccination will reduce the number of animals with clinical disease, decrease the number of excretors and the level of excretion and therefore the number of animals with detectable intestinal infection [European Commission report, 2000, 6.5, p35]. In experimental studies, it has been observed that vaccination does not prevent infection but modifies the course of the disease and the pathology towards tuberculoid and regressive forms containing few (or undetectable) bacteria. Clinical disease can still occur for several years after the start of vaccination on a farm."

77. Later in his first report, in a section headed 'If the Brownings' herd was infected with Johne's disease after April 1991, could that infection have been successfully managed? And if so, how?', Mr Matthews says this:

"158. Johne's disease can be controlled and even eliminated from infected herds. However, it takes a thorough understanding of the disease by the farmer and the active involvement of the herd veterinary surgeon. Half hearted attempts to control Johne's disease generally fail. Control of Johne's disease also takes time, typically 5 years or longer.

159. The basics of control are to prevent new infections by manure management, milk management and by culling the offspring of infected mothers and to identify and then remove animals with the infection from the herd.

160. These basics of control have been known for many years and were successfully used in the early 1990s to control Johne's disease in UK herds [Alan Mowlem, paragraph 6, witness statement, May 02].

161. Because infection would have been spread between goats when grazing at pasture, the kids being reared under the control programme could not be grazed until they were no longer susceptible to infection [6+ months]. This would probably mean goats not grazing at all during their first year of life.

162. Management practices to control Johne's disease in infected herds have been summarised by Professor Morgan on behalf of commercial goat keepers in the UK:

1. Isolate goats that are losing weight and establish a diagnosis

2. Cull goats with progressive weight loss before they kid

3. Remove clinical cases from the herd as soon as possible

4. Remove the offspring of infected goats from the herd

5. Use generous amounts of clean straw bedding

6. Burn the straw litter from infected herds or allow long term manuring [greater than 1 year] to occur before spreading it onto land used to produce food for animal consumption.

7. Isolate goats at kidding into clean kidding pens in an area separate from the main herd

8. Clean and disinfect kidding pens between goats and use generous amounts of straw bedding

9. Remove kids from their dams soon after birth

10. Pasteurise the colostrum and milk fed to young kids

11. Do NOT feed pooled colostrum or milk

12. Provide young kids with access to hay and clean straw to discourage them from eating the straw bedding

13. Rear kids in small groups for the first 4-6 months in an area isolated from the adults

14. Record the identity of the kids in each rearing group

15. Vaccinate kids as soon after birth as possible

16. Breed replacements from older animals in the herd

17. Test the herd routinely for Johne's disease

163. Although these procedures require time and effort and attention to detail, a basic control programme could have been introduced by the Brownings as soon as they thought that Johne's disease was present on the farm."

78. In paragraph 202 of his first report, Mr Matthews reverts to the topic of vaccination, saying this:

"Vaccination of young kids, together with sensible management practices, has been extremely successful in controlling Johne's disease in many commercial goat herds. It is not correct to state that vaccination is not effective in goats [paragraph 6.5, Small report]. It is interesting to note that Alan Mowlem, who had been used by the Brownings in an advisory capacity, started using the vaccine on his own farm in 1992 [paragraph 6, witness statement, May 02]. The vaccine is easily obtained through a veterinary surgeon and, despite Professor Morgan's assertion to the contrary [paragraph 2.18, veterinary report, February 03], no licence is required for its use in goats. Vaccination does not eliminate infection, but it can decrease herd prevalence, delay the onset of clinical signs and decrease cross-transmission by reducing the amount of bacteria shed in faeces [Pugh, 2002]. The emphasis of a vaccination programme is on vaccinating kids before they are four weeks of age, because young kids are most susceptible to infection. The value of vaccinating older goats is not known, although not contraindicated and several studies have noted the disappearance of clinical cases several months following the vaccination of adult animals. The vaccine has a very short shelf life of fourteen days, so vaccine needs to be ordered shortly before it is used, i.e. shortly after the kids are born. It can be ordered by telephone and is sent by post from the Central Veterinary Laboratory. Small amounts of vaccine can be purchased at any one time. The vaccine was not being used correctly by the Brownings. Indeed it appears that the first batch of vaccine purchased in April 1995 was still being used in February and May 1996 [paragraph 2.4, Baird report 16 10 96]."

79. Following exchange of their first reports, both Professor Morgan and Mr Matthews provided further reports. Thereafter they met, with a view to identifying areas of disagreement. That led to the provision of a joint statement dated 4 December 2003, which I should quote in full. It reads as follows:

"Introduction

The aim of this meeting was to identify areas of agreement between the expert witnesses and to highlight outstanding differences. The following points were discussed:-

1. Epidemiology of Johne's disease

2. The disease status of both herds prior to amalgamation

3. Timing of the reported goat deaths

4. Post-mortem report of Johne's disease

5. Parasitic gastro-enteritis

1. Epidemiology of Johne's disease

The description of the epidemiology of Johne's disease presented by both expert witnesses is similar and there are no areas of disagreement about this. Two key features of the natural history of the disease are that infection takes place during the first few months of life but disease only develops in young adults after an incubation period of 18 months to 2 years or longer. We agree that an increase in dose of the infectious agent, such as that associated with heavy environmental contamination, can result in a reduction of the incubation period, although the incubation period is unlikely to be less than 1 year.

2. The disease status of both herds prior to amalgamation

We agree that the culling rate in Bowyers Court Farm was high prior to the amalgamation of the two herds. We also agree that weight loss was a component of this. Neither of us consider that this could be associated with parasitic gastro-enteritis, if, as has been stated, the herd was permanently housed. We attach different probabilities to Johne's disease being the major cause of this weight loss and culling. Professor Morgan considers Johne's disease to be high on the list of differential diagnoses. Mr Matthews disagrees but concedes that Johne's disease could have been a component of problems on Bowyers Court Farm. We both recognise that, in the absence of a thorough investigation of this problem at the time of occurrence, we are dealing with probabilities. We agree that there is no evidence of widespread loss of condition in the Lower Basing herd prior to amalgamation.

3. Timing of the reported goat deaths

We agree that the minimum time between exposure of kids to infection and Johne's disease in adult goats is between 12 and 24 months. Therefore, no Lower Basing goat older than 2 years could have died from Johne's disease within the first 2 years of amalgamation if infection was contracted from Bowyers Court goats. It is possible that adult goats from Bowyers Court died of Johne's disease during this time.

The converse of this is that if the deaths on Lower Basing area attributable to Johne's disease then only animals, which were less than 6 months of age, at the time of amalgamation, in April 1991 and those born in subsequent years, could have developed disease from exposure to infection introduced with the goats from Bowyers Court. We discussed possible routes of exposure and whether kids in Lower Basing Farm could have been exposed to infection during the spring of 1991.

We agree that if Johne's disease were a problem in the Bowyers Court herd then only goats over 18 months to 2 yrs of age might show clinical signs of Johne's disease in the first few months after amalgamation. Lower Basing goats would not show clinical signs of disease before early 1993.

We agree that not all deaths can be attributed to Johne's disease and find data about the number of goats at risk and number of losses unsatisfactory.

4. Post-mortem report of Johne's disease

We agree that if post-mortem report 64/M567-3 was from a Bowyers Court goat it most probably represents Johne's disease.

We disagree about this report if it was a Lower Basing animal. Professor Morgan considers that Johne's disease is still the most probably diagnosis. Mr Matthews considers that because DNA from Mycobacterium sylvaticum has been identified in one goat on Lower basing farm (Albert) it cannot be excluded as a possible cause.

5. Parasitic gastro-enteritis

We agree that parasitic gastro-enteritis was diagnosed in animals on Lower Basing farm post amalgamation but we differ in our view of the contribution of this to the clinical problem."

80. In the course of his re-examination by Mr Blunt, Professor Morgan was asked about the prevalence of Johne's disease in 1991/2, as follows:

"Q. …. [I]n 1991/1992, was it thought that Johne's disease was widespread throughout the vast majority of herds in this country?

A. No, I think at that period of time we were just becoming aware that some herds were on the verge of an epidemic of Johne's disease, the like of which we had not seen before.

Q. Do we know now whether in fact in 1991, 1992, that sort of period, Johne's disease was widespread in the vast majority of herds, or not?

A. No, I do not know the answer to that.

Q. You simply do not know?

A. No. It was certainly increasing in number, but if you took the national population of herds it would be difficult to say. My experience in the South West was that a number of herds were beginning to experience problems."

The evidence of the agricultural consultants

81. Mr Brookes' first report is dated February 2003. As the starting point for his analysis of the effects of Johne's disease on Mr and Mrs Browning's herd, Mr Brookes takes the goat numbers as set out in Table 4 of Mr Measures' August 1996 report.
82. In section 3.3 of his report, under the heading 'Trading with the Disease', Mr Brookes forecasts that, allowing for the presence of Johne's disease in the herd, by 2008/9 the herd will number 225 goats and milk yield will be 495 litres per head (giving a total yield of 111,323 litres) for that year. By contrast, in section 3.5 of his report, under the heading 'Trading without the Disease', he forecasts that without the presence of Johne's disease by 2008/9 the herd would number 400 goats and the milk yield would be 665 litres per head (giving a total yield of 266,052 litres for that year).
83. In section 4 of his report he summarises his conclusions as follows:

"4.1 The results of the analysis carried out in this Report indicate that had the Brownings' herd not suffered Johne's Disease milk production in 2008/2009 would he been 266,052 litres.

4.2 The predicted production for that year with the disease is only 111,323 litres.

4.3 The Brownings had intended to increase their herd to 400 goats and in the absence of Johnes Disease the markets would have been available to them and they would have had the resources to do this.

4.4 A comparison of the actual milk production at Basings Farm for the period 1990/1991 to date shows close correlation with the projections for with disease (…). Although actual production was above the projection for 1995/1996 to 1997/1998 it fell behind sharply in 1999/2000 to 2000/2001."

84. Mr Marshall, in his report (dated 30 April 2003), concludes (in paragraph 64) that there were no clear and identifiable control systems in place to deal with disease on Lower Basing Farm. He reaches the following conclusions:

"1. The Claimants have developed and established a market for dairy goat products that they should be proud of, especially so in such difficult circumstances.

2. Their production system is atypical with access permitted to grass fields all year round.

3. Their buildings are not ideal for the goats with ventilation likely to be a problem at certain times of the year.

4. There are no basic management records on the farm. Management operates by coping with each crisis as it comes along. This is not what would usually be found on a commercial dairy goat farm.

5. Benchmark figures indicate milk yields well below average and low veterinary input compared to what would usually be required to ensure proper health for reasonable milk yields (above 500 litres).

6. Goats were purchased from 6 sources prior to the Bowyers Court purchase.

7. Despite the health problems experienced the system in operation appears to be exactly the same now, and the Claimants' practices appear to be large unchanged before, during and after the problem period.

8. The system has major areas of concern for me in terms of hygiene and cross infection. In particular no proper worm control programme is in operation and there is a total lack of grazing management to control worms.

9. All adult females are kept together with no grouping for stage of lactation. All milking females are fed the same ration and no allowances is made for stage of lactation. Kidding females and milking goats are kept in the same pen, with a damp environment for young kids.

10. Both Mr Measures and Mr Brookes, despite being asked to consider the technical aspects of this case, appear to have chosen not to look at the system in operation on the farm as a whole. They have not made any attempt to review and assess all the potential reasons why the sudden dramatic number of deaths during 1991/1992 could have occurred. They have simply concluded that the problem was Johne's disease without have this substantiated by proper veterinary investigation. They make reference to a 5-year quarantine period for the land when the literature suggests 12 months for cattle or up to 2 years for goats. The figure for 5 years is unsubstantiated.

11. The predictions and calculations on milk yields and goat numbers ignore the additional goat purchases made by the Brownings from other sources and do not consider the environmental impact on generic potential, the dilution factor on the milk quality by increasing the milk yield or the effect nutrition has on milk quality and milk yields. On this basis without I am unable to agree with the assumptions made in the Laurence Gould reports."

85. Mr Brookes replied to Mr Marshall's report in a short second report, and thereafter they provided a joint statement. The joint statement records that Mr Marshall remained of opinion that the poor performance and problems encountered at Lower Basing Farm resulted from "poor management practice".

The valuation evidence

86. In his report dated May 2003, Mr Handley values Lower Basing Farm as at December 1996 at £120,000 with the disease, as compared with £240,000 without the disease: a difference of £120,000. He considers the land (extending to some 38.5 acres) to be of relatively poor quality and liable to flooding. He also takes account of the fact that the property is (and was at the material time) subject to an Agricultural Occupancy Condition, the effect of which was to restrict its use to agriculture.
87. In section 16 of his report he concludes that if the property were offered for sale and the presence of Johne's disease was disclosed, it is unlikely that the purchaser would be a person who had arrived at a figure by means of a detailed study and analysis of all the facts. He continues:

"The likely purchaser would therefore be a "chancer"; a person who had some knowledge of the countryside, possibly living in an urban area but would only look at the risk involved in having enforcement notices served by the local Council. Additionally, that "chancer" would consider the value of the property, compared to say, a semi-detached house in London, Croydon or other urban communities. That person would weigh up the likelihood of being able to argue against the interpretation of the AOC and or that a planning inspector would give time to comply given the disease problem. Such people simply adopt a philosophy of "if it looks cheap enough so I will have a go". I believe that a reduction in value of approximately 50% from the market value would tempt such a person. However, I also believe the figure that the "chancer" would pay has a ceiling at around the figure of £220,000 (two hundred and twenty thousand pounds) so that if the unaffected valuation figure (which it is not) was say, £6000,000 (six hundred thousand pounds) then the property would have a maximum value of £220,000.

There may be other potential purchasers and they may be people who would have equestrian interests, although, I believe that this potential purchaser would be at the lower end of the equestrian market. Most horse owners think more about their animals then they do about their own welfare or habitat and the sheer fact that there is disease on the farm would deter most of those people whether their prejudices or beliefs are correct or not. Equestrian uses do not comply with the Agricultural Occupancy Condition.

Similarity, there may be prospective purchasers interested in poultry production and whist this use would comply with the Agricultural Occupancy Condition, substantial monies would have to be extended in order to produce either barn eggs or free range eggs. Recent experience (over a period of two to three years) has shown that most people wishing to start poultry enterprise are looking for a green field site.

Properties with Agricultural Occupancy Conditions have always present difficulties when selling. In the last ten years a greater number have come to the market as the viability of the agricultural industry has declined. Often they present difficulties in obtaining mortgages particularly from High Street financial institutions. As a result small farms or houses which are subject to an AOC look cheaper in the market than similar but unencumbered properties.

However, it is a fact that there exists a number of people, albeit a small number, who will buy such properties despite the fact that they do not comply with the AOC and in some cases have no intention of complying. Since 1990 and the Town & Country Planning Act of that year there have been purchasers who would look to remove the AOC after 10 years of breach of the condition.

Occasionally, properties subject to AOC have sold at prices which take no account of the AOC. When these circumstances occur the purchaser is usually one who has cash available for the purchase.

To summarize this point regarding properties subject to Agricultural Occupancy Conditions is that, at best, the market place is variable and inconsistent. It is not unusual for AOC properties to be on the market for considerable periods.

The additional negative aspect of Johne's disease would, for most people drive values down further. Johne's disease presents a double jeopardy."

88. Mr Hampton, in his report dated 30 July 2003, concludes that the value of the property as at October 1996, on the assumption that the land was infected with Johne's disease and that in order to eliminate the infection it would be necessary to keep ruminant livestock off the land for two years, was £257,000. He values the property as at December 1996 on the assumption that the land was not infected with Johne's disease at £263,000 (a difference of only £6,000).
89. In paragraphs 87 and 88 of his report he says this:

"87. …. I recognise that this calculation is theoretical but I consider that it is the best that can be made in the absence of market evidence on a before and after basis. The reason the reduction is comparatively modest at £6,000 is that it is only the value of the land and buildings that is reduced, not the value of the house.

88. The underlying logic behind my valuation approach is that the primary interest in the property would be from a residential occupier, who would only commit himself to the minimum amount of farming to satisfy the Agricultural Occupancy Conditions [sic]."

90. In paragraph 90 of his report he says this:

"90. The important thing to realise is that the diminution only applies to the land. In my opinion it is possible to farm the land and satisfy the Agricultural Occupancy Condition while the land is infected with Johne's disease in the way I have described above. If the land could not be farmed at all, I have no doubt that the local planning authority would give a temporary dispensation on the Agricultural Occupancy Condition. Indeed, if the land could not be farmed it appears to me that there would be good grounds for the removal of the Agricultural Occupancy Condition altogether with perhaps some consequential increase in the value of the house. …."

91. Following a meeting on 2 September 2003, Mr Handley and Mr Hampton produced a joint statement. In a section of the joint statement headed 'Key Issues', they identify the areas of agreement and disagreement between them as follows:

"2. The valuers agreed that there are minor differences in the methodology they have each adopted, but that their respective valuations for the property in its uncontaminated stated are all within an acceptable range. For the purposes of this action the valuers are agreed that the following valuations should be adopted for the property in its uncontaminated state:-

Date Value

April 1991 £192,000 December 1996 £251,000

June 2003 £424,000

December 2003 £424,000

3. The valuers recognise that the key valuation date is likely to be December 1996, and are in complete agreement that the value they propose at that date is reasonable.

4. The valuers had some difficulty in reconciling their figures in respect of the 1991 valuation. EH [Mr Handley] had proposed £170,000 and DH [Mr Hampton] £214,000. The difference between them lies entirely in the value of the house, where EH was at £88,000 and DH at £150,000. The valuers were hindered by the fact that they had no evidence of open market transactions in that period, as they had not retained their records for over 12 years. On the basis of indexation back from the present day the house should be worth about £150,000. The market was very depressed in 1991 following the property crash of 1990, and EH feels that at that time the price of properties with Agricultural Occupancy Conditions would have been more depressed that the general residential market, hence the lower figure he adopted. In the circumstances the valuers believe that a 'mid-point' figure is reasonably realistic and the best figure they can provide without better market evidence.

5. The valuers are not agreed on the diminuation of value that would apply to the uncontaminated value referred to above. EH considers that the diminuation would be the order of 50% on the basis of his 'damaged goods' argument as set out in paragraphs 38 to 44 of his supplemental report and Section 16 of his original valuation. DH considers that the hypothetical purchaser would approach the property on a reasonably logical basis and would take account of the loss of flexibility to use the property for animals susceptible to Johne's disease for a limited period. EH understands the valuation principles that DH has adopted but does not think the hypothetical purchaser would adopt that approach. Neither valuer has any market evidence of sales of land with Johne's disease.

6. If the relevant methodology is applied to the agreed figures set out above, the table set out in paragraph 103 of DH's original report would be amended as follows:-

Status of Property April 1991 December June 2003 December

1996 2003

Agreed values- no £192,000 £251,000 £424,000 £424,000

Johne's disease

DH with Johne's disease £189,000 £245,000 £418,000 £418,000

EH with Johne's disease £96,000 £125,000 £212,000 £212,000

DH [diminution] £3,000 £6,000 £6,000 £6,000

EH [diminution] 96,000 £126,000 £212,000 £212,000

DH % [diminution] 1.6% 2.4% 1.4% 1.4%

EH % [diminution] 50% 50% 50% 50%"

92. I now return to the Bax Standen valuation and the FPDSavills valuation.
93. Mr Bax valued Lower Basing Farm, absent Johne's disease, at £210,000, as compared with a value of £100,000 taking account of the presence of Johne's disease: a difference of £110,000. He described the farm buildings as "well adapted and suited to the dairy goat enterprise" and as providing ideal facilities for that enterprise. He continued:

"The buildings house a substantial amount of purpose built and purpose installed fixed equipment, but this could be removed at a cost, to suit the new owner's requirements."

94. He described the land as being "all productive pasture, and well suited for most livestock enterprises". Addressing questions of valuation, his report reads as follows:

"Valuation in the open market, ignoring disease problems

Taking the above factors into account, I would assess the open market value of this property, freehold and with vacant possession, and subject to the planning constraints outlined above, in the sum of TWO HUNDRED AND TEN THOUSAND POUNDS (£210,000). This figure reflects a discount of approx. 15% from my view of the value of the property if no agricultural occupancy condition existed.

The problems arising from Johne's disease

Mr. and Mrs. Browning purchased this property in 1986 and a dairy goat enterprise has been in operation since that time. The original enterprise made steady progress and Mr. And Mrs. Browning needed to expand to take advantage of opportunities. Just over 12 months ago the opportunity arose to take over a dairy goat enterprise from Bowyers Court Farm, Wisbororugh Green, on a lock, stock and barrel basis and the purchased herd was brought to Lower Basing Farm in the early spring of 1992.

Problems soon became apparent with animals losing condition and mortalities increasing to an alarming extent. The symptoms have now been recognised as Johne's disease, a form of para tuberculosis, which affects all ruminant animals through their immune system. It is highly contagious and will remain dormant in ground over which infected animals have been grazing, for periods up to five years. The implications of this are of course far reaching in that not only have Mr. and Mrs. Brownings plans for this enterprise been destroyed, but also the option to move to another holding does not exist, due to the fact that the infection of the herd would have to be disclosed to any potential purchaser and it is most unlikely that anyone would be willing to consider purchasing the property except at a heavily discounted figure, which clearly the Brownings cannot sustain.

Valuation with Johne's disease disclosure

Under the circumstances which actually prevail, the conditions which would affect the property on the open Market are more serious than would prevail in a forced sale situation due to the inevitable concerns which would arise in any purchaser's mind in terms of possible infection of stock and indeed possible implications of transfer of the disease from the farm as a result of livestock movements, which could lead to third party claims, as well as direct losses to a new owner.

It is understood that horses are not vulnerable to this disease, and it is possible therefore that a limited market would exist at heavily discounted values. The question of agricultural occupancy condition must be considered in this respect in that it may be more difficult for a new owner to comply with the occupancy condition if the predominant use is equestrian.

Under these circumstances I consider that the value of the property freehold, subject to all these constraints and the planning conditions which exist in any event, is in the sum of ONE HUNDRED THOUSAND POUNDS (£100,000)."

95. FPDSavills valued the farm on the basis that Johne's disease could not realistically be eradicated from the farm in less than 5 years. They also noted that the local planning authority had a reputation for taking a "robust" view of applications to remove an Agricultural Occupancy Condition. Section 5 of their report reads as follows:

"5. VALUATION

5.1 Valuation Approach

This is a most unusual situation and one for which is there is no comparable evidence to draw upon in valuation terms.

The Agricultural Occupancy Condition on the farmhouse would not ordinarily be a major problem because the buildings and land would quite clearly support an enterprise that would qualify under the restriction. Unfortunately, the Johne's disease affects virtually all ruminants and therefore stock rearing is excluded from the available enterprises.

The farm buildings are not suited to more intensive forms of farming, although a very small scale barn egg production enterprise may conceivably work without risk of Johne's disease. This would not be economically sustaining but purely a means of complying with the restriction.

It is our view, however, that prospective purchasers and their legal advisers are likely to take an extremely cautions view of the implications of the Johne's disease and its interaction with the Agricultural Occupancy Condition. We would anticipate a substantial discount from an unencumbered open market value well beyond that which would normally apply to restricted property.

Smallholdings of this type in the open market are usually extremely well sought after, particularly in attractive settings such as this. If the property was unrestricted we would anticipate a sale value in the order of £350,000. With the Agricultural Occupancy Condition but ignoring the effect of Johne's disease, we would expect a discount of just over 20% given the present market conditions which would produce a value in the order of £275,000.

The question then is to decide what a purchaser would need as a further discount to reflect the possibility that the farm could not initially satisfy the Agricultural Occupancy Condition and would take somewhere upwards of five years to be capable of sustaining a stock rearing enterprise for which the property is best suited. We take the view that this is likely to be in excess of 50% of the open market value, although there is no solid evidence to support this contention.

The added complication of the potential occupancy rights of the mobile home would further dissuade all but the most persistent of prospective purchasers.

5.2 Open Market Value

In the light of the above, we are of the opinion that the open market value of Lower Basing Farm, on the basis that the Johne's disease infection will take five years or more to eradicate as at the date of valuation, is in the sum of £125,000 (One Hundred and Twenty Five Thousand Pounds).

5.3 Estimated Realisation Vale

We are of the opinion that the ERV of the property on the same basis as above but assuming a period of six months from commencement of marketing to legal completion, is in the sum of £125,000 (One Hundred and Twenty Five Thousand Pounds).

5.4 Suitability for Security

Under present circumstances, it is difficult for us to advise that the property is suitable for security lending purposes. Our estimation of open market value as above makes a realistic assumption of likely purchaser discount. However, it is not inconceivable that under present circumstances the property would be more or less unsaleable."

The accountancy evidence

96. Mr Shelton's first report (dated 13 June 2003) is directed primarily to the loss of profits claim. On that element of the claim, his instructions were "to calculate the quantum of losses based on the impact of the disease on milk yields, mortality and other physical factors as assessed by [Mr Brookes] in his report dated February 2003".
97. In section 2 of the report Mr Shelton summarises his conclusions as follows:

"2.1 My analysis of the accounts for W A Browning, Lower basing Farm indicates:

The business was financially sound prior to the purchase of the BCF goats in 1991;

The observed trends in turnover since 1991 are consistent with factors that have been attributed to the purchase of the BCF goats;

The losses suffered since the purchase of the BCF goats have resulted in the financial position of the business deteriorating from being sound to one where, without a significant and rapid turnaround in trading performance, or the receipt of a significant capital sum, the Claimants would be unable to meet approximately 35% of the business debts.

2.2 I consider that it is appropriate to calculate interest on past losses, discount in respect of future losses and interest on delayed receipt of damages at the business' cost of capital which is deemed to be the average rate of interest on the business' borrowing (3.25% over bank base rate). I also consider that, if it were appropriate to apply a discount in respect of the possible mortality of the Claimants, the amount of any discount is unlikely to be material.

2.3 Had this matter gone to trial in December 1996 I calculate that the losses that the Court might have awarded at that date were as follows:

£ £

Past loss of profits 72,828

Interest on past losses 11,5921 -------

84,419

Future loss of profits 663,225

Less discount for early receipt (268,978)

---------

394,247

Loss of capital value of farm

and business 449,000

Less discount for early receipt (297,821)

------------

151,179

---------

629,845

---------

2.4 I calculate the total loss of profits as at the Current Trial Date (December 2003) as follows:

£

Loss of profits as at Notional Trial Date 629,845

Interest from Notional Trial Date to Current Trial Date 324,560

---------

954,405

---------

2.5 My calculations are based on certain assumptions regarding the numbers and milk yields of goats both with and without Johne's disease. Such matters are outside my area of expertise. If the Court considers that these assumptions are not appropriate then the losses could be significantly different from those calculated above."

98. In section 5 of the report Mr Shelton considers the pattern of sales achieved by the business. He notes that sales were increasing rapidly over the year to August 1991. He regards this as consistent with the increase in herd numbers to the point where "there were 300 healthy goats prior to [the Gilham goats] arriving". He goes on to note that the increase in sales slowed in the following year and that in the year after that (1993) sales declined. He concludes that that is consistent with the Gilham goats lacking in energy and producing low milk yields and with infection with Johne's disease spreading to the whole herd. He notes that during the period 1993 to 1998 sales showed a gradually increasing trend, but that in 1999 sales dropped away almost completely, partly as a result of the loss of a contract to supply Waitrose (a contract which had accounted for £75,000 to £125,000 per annum in turnover). Finally he notes that thereafter sales recovered significantly, and that in the autumn of 1999 Mr and Mrs Browning started supplying Unigate.
99. In paragraph 5.4 of the report Mr Shelton says this:

"5.4 Total costs broadly followed the trend in sales but exceeded sales in all years resulting in a loss in each of the years considered."

100. In section 6 of his report Mr Shelton explains his general approach, as follows:

"6.1 The quantum of the claim has been considered in two stages:

1) the losses that would have been claimed had the case gone to trial in December 1996 ("the Notional Trial Date"); and

2) the additional losses suffered as a result of the delay in receiving the compensation that would have been claimed in December 1996.

6.2 I have assumed for the purposes of this report that the trial date for this case will be 1 December 2003 ("the Current Trial Date")."

101. As to the loss of profits claim (as December 1996, the date of the notional trial), Mr Shelton's approach is to take the actual past profits and to estimate expected future profits, on a 'with disease' basis, to arrive at a total profit figure for the period 1991-2009 (the period taken by Mr Measures in his 1996 report), and then to compare that figure with the estimated profits for that period on a 'without disease' basis. He explains that in respect of the period from December 1996 to the date of his report he has had regard to the accounting information currently available. In relation to the period up to December 1996 he has applied interest in order to arrive at a figure for loss of profits as at December 1996; and in relation to subsequent years, he has discounted the estimated figures back to December 1996. He also takes into account that had the counterclaim succeeded Mr and Mrs Browning would have received an award of damages some seven years earlier than would be the case if an award were made in the present action. He concludes that that factor caused additional losses consisting not merely of interest charges which would not otherwise have been incurred, but also of "losses suffered as a result of the inability of [Mr and Mrs Browning] to invest in, and to develop the business as they would have done had the compensation been received immediately following the Notional Trial Date".
102. As to the claim for capital losses, Mr Shelton says this:

"6.13 The Claimants intend to sell the farm and the business when they retire in 2009. In addition to the loss of trading profits that they will suffer up to their anticipated retirement date, the proceeds from the sale of the farm and the business will be reduced due to the disease.

6.14 The loss in value of the Farm should be indexed in line with the expected increase in property prices up to the anticipated retirement date and this sum should then be discounted back to the Notional Trial Date to allow for early receipt.

6.15 The value of the business is directly related to the profit that it generates. I have used an earnings basis to calculate the loss in value as at the retirement date. I have discounted this sum to allow for early receipt.

6.16 I have assumed that the property is excluded from the sale of the business and will be sold separately. The loss in value of the freehold property is therefore additional to any loss in value of the business. If the business were sold without the land the business would have to pay a similar rent for the premises either with or without the disease. It is therefore appropriate to consider the loss value of the land separately from that of the business."

103. In section 7 of his report Mr Shelton turns to 'with disease' profits, explaining that he has taken actual figures for profits/losses for the period to August 2002 (by reference to the latest accounts) and estimated the figures for profits/losses from August 2002 to 2009 (the end of the period taken by Mr Measures in his 1996 report); and that his calculations are based on the figures for goat numbers, milk yields and sales in Mr Brookes' report. In paragraph 7.8 he explains that he has excluded interest costs from his analysis since that aspect is considered separately in section 90 of his report. He calculates the profits for the period 1991 to 2009 'with disease' as amounting £75,199.
104. In section 8 of his report he turns to profits/losses over the relevant period 'without the disease', once again basing himself on Mr Brookes' projections of goat numbers and milk yields. He estimates such profits as amounting to £811,252: a difference (representing loss of profits resulting from the disease) of £736,053.
105. He then adds interest on past lost profits (as at December 1996) at actual overdraft rates, amounting to £11,591; and applies a discount to future lost profits (as at December 1996) amounting to £268,978. The result, as set out in paragraph 10.8 of his report, is a final figure for loss of profits as at December 1996 of £478,666.
106. In section 11 of his report he turns to the claimed capital losses. As to the claimed capital loss in respect of the farm, basing himself on Mr Handley's valuation he estimates the reduction in value of the farm in 2009 due to the disease as amounting to £225,000. As to the claimed capital loss in respect of the business, he values the business as at the date of judgment in the present action at £84,000 'with the disease' as compared with £308,000 'without the disease' (a difference of £224,000). His method of valuation of the business on a 'without the disease' basis is to average the price/earnings ratios for four quoted dairy companies and then to apply a discount of 60 per cent to take account of the fact that Mr and Mrs Browning's business is in private ownership. The resulting difference of £224,000 gives a total capital loss of £449,000. He then discounts that loss back to December 1996, and reaches a final figure of £151,179.
107. Adding the loss of profits figure (£478,666) to the capital loss figure (£151,179) gives a total figure for the entire claim (as at December 1996) of £629,845. To that figure Mr Shelton adds interest over the period from December 1996 until the trial of the present action in the sum of £324,560, giving a total figure for the entire claim (as at the date of trial) of £954,405.
108. Mr Aspell's report is dated 26 August 2003. In that report he concludes, in summary:

that Mr and Mrs Browning's business was not soundly based in 1991;

that, given the fact that the lack of profitability of the business up to 1991 had contributed to "unsustainable" borrowing levels, it was doubtful whether the business would have been able to finance the expansion required to make it profitable;

that both Mr Measures' calculation of the loss at £1,569,394 and Mr Shelton's calculation of the loss at £629,845 significantly overstate the loss suffered by Mr and Mrs Browning in that Mr Measures and Mr Shelton have (a) failed to take account of obstacles to business expansion (i.e. lack of available finance), (b) used assumptions which have neither been explained nor justified, (c) included a significant element representing loss of goodwill which cannot be justified, and (d) have ignored mitigation; and

that, assuming that Mr and Mrs Browning had taken action to mitigate their losses, such losses would have fallen within the range £72,692 to £112,693, excluding interest.

109. As to the claimed loss in respect of goodwill, Mr Aspell challenges Mr Shelton's methodology by reference to price/earnings ratios, on the ground that it is inappropriate to the valuation of a farming business. He also criticises Mr Measures' 18-year period as the basis for computing loss of profits. His own calculations of the loss are set out in section 5 of his report. He records (in paragraph 5.2 of the report) that in making his calculations he is proceeding on the assumption, which he was instructed to make, that Mr and Mrs Browning "should have taken action to mitigate their loss at the earliest practical opportunity and in accordance with advice given to them by Mr Measures". He goes on to refer to a letter from Mr Measures to Mr and Mrs Browning dated 30 June 1992 in which Mr Measures "advised them to consider culling the herd immediately or in Spring 1993 and to start with a new herd on a new site".
110. In paragraph 5.3 of his first report he says that he has prepared his calculations on four different bases, as follows:

The Claimants closed the business on 31 August 1992 and ceased trading.

The Claimants suspended trading for two years, on 31 August 1992, until it was considered free of Johne's disease.

The Claimants ceased trading from Lower Basing farm on 31 August 1992 and relocated to other premises.

The Claimants ceased trading from Lower Basing Farm on 31 August 1992 for two years, until it was considered free of Johne's disease but purchased milk from other farms in order to continue processing and selling milk and related products.

111. On the first basis of calculation (cessation of trading) Mr Aspell calculates the loss (as at December 1996) at £155,404.
112. As to the second basis (suspension of trading for two years), he assumes (see paragraphs 5.38 to 5.41) (a) that "by slaughtering the herd and suspending farming and processing activities for two years, the disease would have been eradicated; and that after two years (i.e. in August 1994) Mr and Mrs Browning could have recommenced business, disease-free; (b) that "at the end of the two year suspension period sales would have returned to historical levels, or higher, due to high customer demand"; and (d) that Mr and Mrs Browning could have supported themselves financially during the two-year period, for example by alternative employment. On the second basis of calculation, he calculates the loss (as at December 1996) at £103,540
113. On the third basis of calculation (relocation of the business on an alternative site), Mr Aspell calculates the loss (as at December 1996) at £100,242.
114. On the fourth basis of calculation, Mr Aspell calculates the loss (as at December 1996) at £102,001.
115. In his second report (dated 22 September 2003) Mr Shelton responds to Mr Aspell's first report. He rejects each of Mr Aspell's four alternative bases of calculation as not being feasible in the circumstances of the case. I note in particular his rejection of the second of the four alternative bases (in paragraph 4.23):

"I believe that this option was not feasible as the Claimants would not have been able to obtain finance to enable a period without trading and to restock the farm with a new herd of goats at the end of this period. In my view Mr Aspell understates the additional losses that the Claimants would have assumed would need to be financed as:

It appears likely that the Claimants would have been advised that they should destock the farm for five years rather than for two years;

Sales were unlikely to have returned to the levels prior to the suspension of trading immediately on recommencement;

The Claimants may not have been able to get alternative employment to support them during the period of suspension of trading."

116. On 3 October 2003 Mr Shelton and Mr Aspell had a meeting. An agreed note of what transpired at that meeting was in evidence before the judge. For present purposes I need refer only two paragraphs under the heading 'Mitigation', which read as follows:

"Aspell's calculations of loss all assume that the claimants took steps to mitigate their losses at the earliest opportunity. Shelton's supplementary report details his reasons for disagreement. He considers that the Brownings were prevented from taking action to mitigate for a number of reasons but primarily because of the lack of resources. Aspell considers that mitigation was and is a more justifiable option than continuing to trade at a loss.

Aspell's calculations are based on leaving the land for a two-year cleansing period. Shelton considered that advice available in 1991/92 would have indicated the necessity for a five-year cleansing period. Whilst there is conflicting evidence on the necessary cleansing period, there was no agreement as to what veterinary advice would have been available to the claimants in 1991/92. In any event, this is a matter for technical veterinary advice."

THE CLAIM FOR DAMAGES AS ADVANCED AT THE END OF THE TRIAL

117. The damages claim as advanced on behalf of Mr and Mrs Browning at the end of the trial – following certain adjustments which Mr Shelton made to his calculations in the course of his oral evidence – amounted to £985,495 (as compared with the total claim put forward by Mr Measures in his 1996 report of £1,569,395).
118. The claim of £985,495 was made up of the following elements [the corresponding figures in Mr Shelton's first report are shown in square brackets] :

1. Past loss of profits as at December 1996: £72,828, plus interest in the sum of £11,591, giving a total of £84,419 [unchanged].

2. Future loss of profits as at December 1996: £663,225, less discount of £268,978, giving a total of £394,247 [unchanged].

3. Loss of capital value of the farm and the business: £405,657 [£449,000], less discount for early receipt of £269,072 [£297,821], giving a total of £136,585 [£151,179]. And

4. Interest on the total of 1, 2 and 3 from December 1996 to the date of the trial before the judge: £370,244 [£324,560].

THE JUDGE'S JUDGMENT

119. I can now return to the judge's judgment.

Brachers' negligence in the conduct of the original action (paragraphs 11 to 18 of the judgment)

120. In paragraphs 11 to 18 of his judgment, the judge says this:

"11. It was initially denied that Brachers had been negligent. By an amendment to their defence for which leave was given on 28 August 2003 it is admitted that Brachers were negligent in failing to serve witness statements, the evidence of Mr Measures and the supplemental report of Mr Baird before September 1996. It is also admitted that the negligence resulted in the order of 25 October 1996 with the consequence that Mr and Mrs Browning could not pursue their counterclaim against Mr Gilham.

12. Some of the particulars of negligence contained in the present particulars of claim are wide-ranging and others are specific. Thus the first allegation is that Brachers failed to act diligently in the prosecution of the counterclaim. The second is that they failed to act timeously in compliance with orders of the court. One specific allegation is that Brachers failed to instruct Professor Steele-Bodger CBE as the veterinary expert witness.

13. I am satisfied that the negligence of Brachers went far beyond the limited admissions recently made. To put it in my own words and avoiding legal language, they failed to progress the action, and they failed in particular to grapple with the problem of how it was to be proved that the Bowyers Court goats had Johne's disease and had infected the Lower Basing goats, and what effect this had had. They appear never to have considered what evidence should be called to that end, at least until 1996 when forced to by Barlows. Counsel was never asked to advise on evidence. They took only limited steps to obtain evidence. They never took statements from Mr and Mrs Browning dealing with the deaths of their goats and their losses. They did not ensure that Mr and Mrs Browning kept proper records in relation to their goats and the deaths. They did not arrange for post mortem investigations of dead goats. They did not obtain statements from two persons who had also bought goats from Mr Gilham and who believed the goats purchased by them had had Johne's disease. I refer to Mr Nash who was written to by Brachers on 26 March 1993 and who then had a telephone conversation with them. He said that he had bought 72 goats and lost over half with Johne's disease. Nothing further was done as regards him. The second was Mr Beeney. Brachers spoke to him by telephone on 26 January 1995. It appears he had bought goats from Mr Gilham on a number of occasions. They died. The note of the conversation is unclear whether he said he put it down to Johne's disease, but earlier his daughter had said that was so. Mr Beeney was also able to give useful information about deaths of goats at Bowyers Court. This was not followed up. All this was negligent.

14. On 19 November 1992 there was a conference with counsel attended by Brachers, Mr and Mrs Browning and Professor Steele-Bodger. Professor Steele-Bodger had been Professor of Veterinary Clinical Studies at Cambridge University. He had 40 years experience of Johne's disease and also had experience of acting as an expert witness. In a letter prior to the conference he referred to the need for continuing detailed post-mortem examinations. Manuscript notes taken at the conference are available, but they were not written up. Professor Steele-Bodger was informed by Mr and Mrs Browning that Lower Basing goats had been going down with the disease over the previous 6 months. I point out that this was surprising if they had got the disease from the Bowyers Court goats as the two herds had only been in contact for a year at the start of the 6 months: I refer to the characteristics of transmission and incubation which I have described. Professor Steele-Bodger is noted as saying that the deaths of Lower Basing goats were a 'pretty sure indication that the contamination must have been enormous.' It is clear from the notes that Professor Steele-Bodger considered that further tests were required. (I mention that I heard no evidence from him: since 1999 he has regrettably had severe problems with his sight.)

15. Brachers here had to deal with a very serious situation facing Mr and Mrs Browning and a comparatively rare and difficult disease. They needed to make a plan with the help of the Professor to establish what was happening to the Browning goats and so, hopefully, to obtain the proof that the case required. The post mortem tests were not expensive. It seems likely that the Legal Aid Fund would have borne the expense, but that was not investigated. Although Professor Steele-Bodger wrote to Brachers on 19 May 1993 and on 22 April 1995 asking what was happening, Brachers made no further use of his services after the conference. In my view this was negligent. It was also a major cause of the lack of preparation of the case.

16. It is not an answer that Mr Baird could have done the same job. I should say immediately that I think that he served Mr and Mrs Browning well as their vet, and he impressed me as a witness. But he did not have the same qualifications as Professor Steele-Bodger, being a general veterinarian, and these being the first potential cases of Johne's disease he had investigated. Second, he had no experience as an expert witness. Nor was he in fact used as one until, late in the day and apparently out of necessity, on 9 February 1996 he was pressed into service to fill that function. He had not previously provided a witness statement. He was not used as the Professor might have been to advise on the case and its preparation, as it progressed. Further, Mr Baird was primarily a witness of fact and did not have the independence to be expected of an expert.

17. This is therefore a case where negligence in the preparation of Mr and Mrs Browning's counterclaim is established over a wide front.

18. I should mention that no one was called from Brachers to give evidence before me. I have come to the conclusions which I have largely on the basis of the documents."

121. There is no challenge to the judge's findings as to the extent of Brachers' negligence.

The judge's approach to the assessment of loss (paragraphs 19 to 27 of the judgment)

122. In this part of his judgment the judge directs himself as to the general approach to be adopted in assessing the value of Mr and Mrs Browning's lost chance (Stage 1 above), saying this (in paragraphs 19 to 22):

"19. It is now well-established, as is here agreed, that in an action such as this the task of the court is to assess the prospects of the claimant's success at a notional trial if his solicitor had fulfilled his duty. For the claimant to succeed he has to establish that he had a real and substantial rather than a negligible chance of success. The court should assess the chance in terms of a percentage. That will be applied to reduce the damages which might have been awarded at the notional trial, to reflect the risk that the claimant might have failed.

20. Where the claimant's chances of success on liability at the notional trial are in dispute and what he might then have recovered by way of damages at the notional trial is also in dispute, in my judgment the first dispute is to be resolved by determining the chances of success as a percentage. The second dispute is to be resolved by determining the figure representing damages, which it is most probable that the claimant would have recovered if he had succeeded on liability. By 'most probable' I mean the figure more probable than any other figure. That figure is then reduced by the percentage to reflect the risk of failure on liability. That provides the best estimate, which the court can make, of what the claimant has lost through his solicitor's negligence. Where there are separate claims or cross-claims, it may be appropriate to carry out the exercise separately in respect of each.

21. It cannot be right to approach the assessment of the chances of success on damages as opposed to liability in the same manner as the assessment of the chances of success on liability. Take as an example a claim for £1 million damages by way of loss of profits. It may become clear that the figure of £1 million is inflated and that the claimant had no chance of recovering that amount. On a percentage basis he would then recover nothing. He might have some chance of getting as much as £800,000, a good chance of getting £600,000 and some chance of getting as little as £400,000, all depending on what view the judge at the notional trial took of the facts and the application of the law to those facts. If it appears that the figure that is most probable is £600,000, then that is to be taken as the figure for damages. A judge might reach that result by saying that the figure of £1 million was to be discounted by 40 per cent to arrive at the most probable figure, and so take 60 per cent of £1 million: but he is not then saying that there was a 60 per cent chance of recovering £1 million.

22. In assessing the amount which it is most probable that a claimant would have recovered by way of damages in his original action, the court should take the same broad brush approach as it should take to the assessment of the chances of his success on liability. It should not attempt to conduct a trial of the damages claim."

123. The judge goes on cite passages from the judgment of Simon Brown LJ in Mount v. Barker Austin [1998] PNLR 493 ("Mount") (in which he formulated the relevant principles), and to the judgments of Tuckey and Simon Brown LJ in Sharif v. Garrett & Co [2002] 3 All ER 195 CA ("Sharif"). The judge also refers to Harrison v. Bloom Camillin [2000] Lloyds Rep PN 89 (a decision of Neuberger J) ("Harrison").
124. In Mount, Simon Brown LJ said this (at p.510):

"1. The legal burden lies on the plaintiff to prove that in losing the opportunity to pursue his claim (or defence to counter-claim) he has lost something of value i.e. that his claim (or defence) had a real and substantial rather than merely a negligible prospect of success. …..

2. The evidential burden lies on the defendants to show that despite their having acted for the plaintiff in the litigation and charged for their services, that litigation was of no value to their client, so that he lost nothing by their negligence in causing it to be struck out. Plainly the burden is heavier in a case where the solicitors have failed to advise their client of the hopelessness of his position and heavier still where, as here, two firms of solicitors successively have failed to do so. If, of course, the solicitors have advised their client with regard to the merits of his claim (or defence) such advice is likely to be highly relevant.

3. If and insofar as the court may now have greater difficulty in discerning the strength of the plaintiff's original claim (or defence) than it would have had at the time of the original action, such difficulty should not count against him, but rather against his negligent solicitors. It is quite likely that the delay will have caused such difficulty and quite possible, indeed, that that is why the original action was struck out in the first place. That, however, is not inevitable: it will not be the case in particular (a) where the original claim (or defence) turned on questions of law or the interpretation of documents, or (b) where the only possible prejudice from the delay can have been to the other side's case.

4. If and when the court decides that the plaintiff's chances in the original action were more than merely negligible it will then have to evaluate them. That requires the court to make a realistic assessment of what would have been the plaintiff's prospects of success had the original litigation been fought out. Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendant's negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure."

125. In Harrison, Neuberger J said this (at pp.96.1 and 98.2):

"….the court should, as I see it, assess the likely level of damages which the claimant would have recovered had the action proceeded to judgment, and then apply an appropriate fraction to that sum to reflect the uncertainties.

……

In my judgment, the proper approach to the court to an issue of law which would have arisen in the action, which the claimant has been deprived of the opportunity to bring, is the same as in relation to an issue of fact or opinion which the claimant would have established in the action. However, at least in general, the court should in my judgment be far more ready to determine that the claimant would have failed or succeeded on a point of law than to determine that the claimant would have failed or succeeded on a point of fact or, even, opinion. That conclusion appears to me fair and practical, as well as consistent with the approach of the Court of Appeal in the three cases to which I have referred (albeit that they are not, as I have mentioned, determinative of this issue).

…….

However, it is, I think, arguably implicit in the third and fourth numbered principles in the judgment of Simon Brown LJ in Mount that, at least in an appropriate case, it is right to assess damages on the "loss of a chance" basis even where the issue in the action would be one of law. At the end of his third numbered paragraph, Simon Brown LJ said that the assessment of the claimant's claim may not be more difficult than in the action itself "where the original claim … turned on questions of law or the interpretation of documents"; his fourth numbered paragraph (quoted above) seems to apply to all types of cases encompassed within the previous paragraph. However, it would be wrong for me to place much weight on that, because, as I have mentioned, it does not seem to me that the Court of Appeal in Mount had to consider the aspect which I am now discussing."

126. In Sharif, Tuckey LJ said this (at p.203):

"Although on a strike out the judge may not have to investigate whether or not an issue or issues can still be fairly tried in great detail I think his conclusion that no such trial is possible must be the starting point for the judge who later has to make an assessment of the claimant's prospects of success. He cannot and therefore should not attempt to try the issue or issues himself, particularly on the evidence of the negligent solicitor's former clients' opponent in the original proceedings. In a case like the present where the legal burden is on the claimant to show that he would have succeeded on the issue or issues in question, I do not go so far as to say that they must be assumed against the solicitor, but the application of the second and third principles in Mount's case may in practice produce this result. So, in such a case one would normally expect the claimant to be able to show that he had real and substantial prospects of success. This will not produce unjust results; what would be unjust is for the judge to try an issue which has already been held to be untriable because of the solicitor's negligent delay.

The judge then has to evaluate those prospects applying the fourth principle in Mount's case. This is a difficult task but no more difficult than many others involved in the assessment of damages where the court has to predict the unknown. Here, the judge is having to put a value on the claim. This is not a science, but is a task which lawyers are used to performing. The judge will obviously need to consider all the relevant material which was available up to the time when the original claim was struck out, including documents disclosed and witness statements exchanged by the other side. If he is asked to hear the evidence which the other side would have called, or expert evidence of the kind called in this case, he may agree to do so but I do not think he should feel bound to do so if he thinks he can otherwise make a fair evaluation. If he does hear such evidence, it would simply be for the purpose of enabling him to form a better broad view of the merits of the claim."

127. In paragraph 26 of his judgment, the judge notes the last two sentences of the above passage as being of importance in the instant case.
128. The judge then goes on to cite the following passage from the judgment of Simon Brown LJ in Sharif (at p.206):

"39. With regard to the first stage the evidential burden rests on the negligent solicitors: they, after all, in the great majority of these cases will have been charging the claimant for their services and failing to advise him that in reality his claim is worthless so that he would be better off simply discontinuing it. The claimant, therefore, should be given the benefit of any doubts as to whether or not his original claim was doomed to inevitable failure. With regard to the second stage, the Armory v Delamirie (1722) 1 Stra 505, [1558-1774] All E.R. 121 principle comes into play in the sense that the court will tend to assess the claimant's prospects generously given that it was the defendant's negligence which has lost him the chance of succeeding in full or fuller measure.'

40. The particular question raised by this appeal concerns the extent to which it is appropriate for the court hearing the loss of opportunity claim (a) to entertain primary factual evidence and (b) to reach clear conclusions whether of fact or of law. The question arises here in the context of the original claim having been struck out in April 1992 for want of prosecution on the ground that the witnesses' memories had faded and 'it would be impossible to investigate such matters [as the availability of alternative insurance cover] now.

41. The judge below seems to have tried this claim for all the world as if he were seised of the original action against the insurance brokers. Not only did he hear live evidence from the brokers - called, somewhat unattractively, by the defendant solicitors – but he treated the lack of oral evidence from the claimants in precisely the same way as if he had been deciding the original action."

The notional trial (paragraphs 28 to 36 of the judgment)

129. In paragraphs 28 to 36 of his judgment the judge says this:

"28. I have to look at what might have happened at a notional trial taking place in the context that Brachers had performed their duty to Mr and Mrs Browning as their solicitors in the action. I should bear in mind that a basic principle underlying the assessment of damages is the comparison between a claimant's position as it actually is with the duty having been broken and that position as it would or might have been if the duty had been performed.

29. The case was presented on both sides on the basis that I should look at a notional trial taking place on the date actually fixed for trial, namely in December 1996. It could well be said that, if Brachers had performed their duty to Mr and Mrs Browning, a trial would have taken place before then. For the re-amended defence and counterclaim which set out the claim relating to Johne's disease was served on 22 June 1992 and Brachers took over the conduct of the action in the following August. But it was agreed that the date of the notional trial should be taken to be December 1996: I should accept that.

30. It was submitted by Mr Ian Croxford Q.C. on behalf of Brachers that the evidence and arguments at a trial in December 1996 would have been substantially similar to those at this trial. This was contested by Mr David Blunt Q.C. representing Mr and Mrs Browning. I do not accept Mr Croxford's submission. In particular, the evidence which might have been called at a trial in December 1996 which had been properly prepared for by Brachers (that is, on the basis that Brachers had performed their duty) would have been substantially different. There are a number of aspects.

31. First, Mr and Mrs Browning would have been giving evidence on the basis of statements taken from them at an appropriate early stage and on the basis of statements needed subsequently to up-date those statements. The records to support those statements would have been different in two respects: first they would have been more complete and comprehensible than the records which the Brownings in fact kept in the absence of instruction and advice from Brachers assisted by Professor Steele-Bodger. Second, those records would have been preserved, whereas they have only been partly preserved. Third, the recollection of Mr and Mrs Browning would have been very much better. The main events, namely those in 1991 and 1992 would have been within 5 years whereas before me they were being questioned about what had happened up to 12 years earlier and sometimes more. Even accepting that Brachers should not be disadvantaged by the time it has taken for the action against them to come to trial, there is still a very substantial difference.

32. Another important difference would have been the in-put of Professor Steele-Bodger, both in terms of his own evidence and the evidence which should have been obtained on the basis of his instructions as to what was needed in the circumstances. I do not know what that evidence would have been. The difficulties caused by this should count against the negligent solicitors rather than against the claimants – the third principle set out in Mount by Simon Brown L.J.

33. In the present case I have been faced with 5 files of expert evidence, 4 containing the reports of experts who were actually called before me. Professor Morgan and Mr Matthews were called, one on each side, as veterinary experts. Mr Brookes and Mr Marshall were called as agricultural consultants. Mr Handley and Mr Hampton were called as valuation experts. Mr Shelton and Mr Aspell were called as accountancy experts. The order made in the Staines County Court on 12 October 1993 allowed for 5 experts for each party: it did not specify their disciplines. Nonetheless the particulars of negligence do not allege that, Professor Steele-Bodger apart, Brachers should have instructed other experts. Complaint is made in the particulars as to the late instruction of Mr Measures.

34. Mr Measures practised as an agricultural consultant. He was a director of Laurence Gould Partnership Limited, a consultancy specialising in agricultural and farm business management. He has now retired. Most of his working papers have been lost. He did not give evidence before me. Mr Brookes (who may be said to have taken over from him) is a partner in the same consultancy. It appeared that he had not spoken to Mr Measures about the case. In his report Mr Measures made a comparison between the profits of Mr and Mrs Browning's business with Johne's disease and without the disease between 1991 and 2009 . He added to that a sum for the reduction in value of their land because it was infected with the disease (£28,000), a sum for the reduction in value of the goats (£8,750) and a sum for the reduction in the goodwill attributable to the business (£224,430). The total was £1,569,395. He included the bank interest paid or payable by the business in his calculations of profit. He did not make a separate calculation of the interest payable on the lost profits which he calculated. Mr Measures was thus doing the job undertaken by three experts before me – agricultural consultancy, valuation and accountancy.

35. The order of 12 October 1993 provided for experts reports to be exchanged within 12 weeks after discovery and inspection had taken place. Discovery drifted on and so the order, of a type which would not be made today, did not provide a clear date for the exchange of reports. Lists of documents were exchanged in June 1994. If Brachers had been diligent in their progress of the action it is fair to assume that Mr Measure's report, or a report broadly similar but reflecting when it was produced, would have been served in late 1994. No report of any kind was ever served by Mr Gilham. Nor was any statement by him served dealing with the counterclaim. Letters written by Barlows over the years show that they were suspicious as to what Mr and Mrs Browning could actually prove and were suspicious of their will to progress the action. They also show that Barlows were anxious to keep costs to a minimum. Thus Barlows suggested that the summary judgment affidavits might stand as witness statements, and an order was made to that effect. They suggested a joint expert. Some insight as to what was happening on Mr Gilham's side in the absence of Barlows' file is gained from his bill of costs. They had discussions with Mr Gilham's vet, Mr Cattell, in 1994/5 and in 1996. It does not appear that they ever took a statement from him. They had discussions in 1994/5 and in 1996 with Dr M Johnston of the Royal Veterinary College and in late 1996 they received a report from him. They had communications in 1996 with Coopers & Lybrand. Mr Gilham died in August or September 1996. He had, it seems, been ill for some time.

36. If Mr Measure's report had been served when it should have been and if witness statements had also been served as they should have been, inevitably Barlows would have conducted their client's case in a manner quite different to that in fact adopted by them. The action would have taken a wholly different course. There would have been a strong likelihood of transfer to the High Court. I can get some help as to the points which might have arisen on the expert evidence from the further reports which have been prepared for this action. It would be wholly wrong for me to take any course approaching a trial of the original issues utilising the expert evidence now available."

The chances of success on liability (paragraphs 37 to 60 of the judgment)

130. Since, as already noted, there is no appeal against the judge's finding (in paragraph 60 of the judgment) that Mr and Mrs Browning's counterclaim carried a 70 per cent chance of success on liability, it is unnecessary to consider this part of the judgment in any detail.

What damages might Mr and Mrs Browning have recovered against Mr Gilham? (paragraphs 61 to 85 of the judgment)

131. This is the crucial part of the judgment for present purposes. The judge introduces it by setting out, in paragraphs 62 to 65, some further facts about the business carried on by Mr and Mrs Browning, as follows:

"62. Mr Browning was born on 12 December 1942. Mrs Browning was born on 2 March 1945. They purchased Lower Basing Farm in the summer of 1986 having sold their substantial house in Twickenham. They had had a business in Twickenham servicing and repairing Reliant Scimitars and other high performance vehicles. After giving up that business they attended a number of courses lasting from one to three days. They learnt the theory and practice of goat management, yogurt making and so on. They did market research into the products they might sell. Lower Basing Farm consists of 38 acres of pasture, a three-bedroomed farm house with an agricultural occupancy condition, and farm buildings. Having bought it, they had £10,000 in hand. They later arranged an overdraft facility with Lloyds Bank who have a first charge on the property. They purchased a herd of 86 goats from Hever in Kent for £4,028. They began to produce milk and yogurt for sale at the beginning of 1987. They had at first about 12 outlets. They expanded their range to include semi-hard cheese and ice cream – they are the only suppliers of goats milk ice cream in England. They opened a farm shop. There were thus two aspects to the business. One was milk production. The other was processing and marketing. Between 1987 and 1991 they built up their production and their herd.

63. Goats are prone to intestinal parasites which are picked up from pasture where the larvae can survive having been dropped by other infested goats. For this reason most commercial goat herds are kept confined under cover and are described as 'zero-grazed'. Unfortunately the straw on which they are kept provides a favourable environment for the Johne's bacteria. The Lower Basing herd is at pasture during the day when the weather is good. There was a dispute as to how much it grazed during the winter. Mrs Browning said in her evidence that it was kept in during the worse months save on the odd fine day. Her witness statement does not say that, but suggests that, subject to the weather, the herd was out throughout the year. In order to control parasites, the goats would be drenched with anthelmintics.

64. The milk production of the Lower Basing goats was low in quantity but the milk itself was high in solids. Mr and Mrs Browning were more concerned with the latter because of the uses to which they put their production. Nonetheless in 1990/1 the milk yield was only 389 litres per head. A standard publication produced in 1993 gave the following for yields: low – 500 litres; average - 750 litres; high – 900 litres per head per annum. Mr Measure's 1996 report referred to a report by Alan Mowlem (one produced for general publication) stating that 800 litres per goat was a minimum commercially viable yield.

65. It is relevant to the prospects of the business that in its early years it sustained substantial losses which were supported by increased bank borrowing with, therefore, an increasing interest burden. The years are years ending on 31 August.

1988 1989 1990 1991

Gross income £8,224 14,057 36,391 74,688

(Loss) (18,898) (23,366) (13,898) (18,188)

Bank borrowing 57,833 89,413 125,119 188,833

Interest 6,211 11,852 18,933 27,198

Drawings/ (capital put in) 6,360 (1,421) 9,378 5,697"

132. In paragraph 66 the judge turns to Mr and Mrs Browning's perceived need to expand their business, saying this:

"It is apparent from these facts, and was apparent to Mr and Mrs Browning that they needed to expand their production substantially. Thus their major purpose in taking over the Bowyers Court herd was to obtain the contracts which Mr Gilham had with Waitrose and with Holland and Barrett. In order to carry through the purchase they had to borrow further. Lloyds was not prepared to lend more. They obtained a loan of £35,000 from the Allied Irish Bank with a further £10,000 loan facility. Their ability to raise further money for capital expenditure was from this point severely limited. Their bank borrowings nonetheless continued to rise as the business continued to make losses."

133. In paragraph 67 the judge refers to the purchase, later in 1991, of the Shinfield goats, saying this:

"The 101 goats which were transferred from Bowyers Court Farm to Lower Basing Farm arrived at the latter on 27 April 1991. On 22 July 1991 a further 32 goats (26 milking goats and 6 others) arrived from Reading University, which have been called the Shinfield goats. These were purchased because of their high quality in the hope that they would improve the quality and production of the Lower Basing herd. Unknown to Mr and Mrs Browning the Shinfield goats had some years back been afflicted with Johne's disease. Permission for an amendment of the defendants' defence to raise this point, was refused at the end of August 2003 by Davis J., and I need say no more about it."

134. In paragraphs 68 and 69 the judge refers once again to the lack of records, and to the unreliable nature of such records as exist, saying this:

"68. Because of the passage of time and the facts that Mr and Mrs Browning kept no proper records and that those they did keep appear unreliable, it is very difficult to ascertain the numbers of milking goats which they had at any one time. It is further complicated by the fact that goats will be dry for a period prior to kidding and so the number of goats in milk will be less than the number of adult females. I will refer to goats in milk and to milking goats to reflect the distinction. The actual goats numbers are essential to any accurate calculation of loss. In a letter to Mr Hinchliffe dated 30 April 1992 (which constituted the report which I have referred to as being served with the re-amended defence and counterclaim in the Gilham action) Mr Measures gave the figures for milking goats as 120 in the quarters ending November 1990 and February 1991, and 200 thereafter up to May 1992. Mr and Mrs Browning's accountant made a note in December 1991 that the number of 'milkers' – which clearly in its context referred to milking goats - as at 31 August 1990 was 120, and at 31 August 1991 was 200. These figures agree. They broadly fit with an increase in the herd following the arrival of the Bowyers Court goats and Shinfield goats if some culling occurred. In his 1996 report Mr Measures says that there was such culling. But in table 4 of that report the figures for milking goats as at 30 June 1990, 1991 and 1992 respectively were stated as180, 356 and 160. It is apparent that he included the Shinfield goats with the Bowyers Court goats in the year to 30 June 1991 as he had no purchases included in the following year. There are other figures in the table which are plainly wrong.

69. Another essential matter is the number of goats that died, and when, and with what symptoms, and whether from the original Lower Basing herd or from the Bowyers Court herd. Much time was spent on this at the trial. No reliable records were kept. The information which is now available is incomplete and difficult to interpret. I have concluded that there must have been more deaths than they show because I accept as the probability that the majority of the Bowyers Court goats died within 2 years or so of coming to Lower Basing Farm."

135. The judge then turns (at paragraph 70 of the judgment) to Mr Measures' 1996 report, summarising its approach and its conclusions as follows:

"The exercise that Mr Measures carried out in his 1996 report was as follows. He tabulated the losses and profits of the business from the accounting years ending 31 August 1990/1 to 2008/9 on a with disease basis and a without disease basis. He went to 31 August 2009 because he took that as the date of retirement of Mr Browning (Mr Browning would in fact be 65 on 12 December 2007). He assumed that size of the herd would have been built up from 250 milking goats to 400. He assumed that in 1994 further land and buildings, which were offered to Mr and Mrs Browning, would have been acquired had it not been for the effects of the disease. He noted that the build up in numbers had been set back by 5 years. He recorded that young goats in the herd had been vaccinated since about March 1995 (not before). The difference in profits between the business with the disease and without, i.e. the claimed loss, totalled £103,843 up to 31 August 1996. That is the nearest year end to the notional trial date which I have to consider. The losses claimed for the next 5 years ending with that to 31 August 2001 were £33,019, £45,366, £57,458, £75,188, and £95,620. Losses were claimed for the 8 years to 2009 at £112,215 p.a. The total thus far was £1,308,214. To this was added £28,000 for reduction in land value in 2007 due to the disease, £8,750 for reduction in value of the herd in 2007, and £224,430 for the reduction in the goodwill of the business in 2007."

136. In paragraph 71 the judge compares Mr Measures' approach with that of Mr Shelton, as follows:

"This approach appears to have been adopted by Mr Measures without advice from Brachers. It is broadly the approach which is followed in the reports prepared on behalf of Mr and Mrs Browning in this action. The report prepared by Mr Shelton, an accountant, calculates the loss on a 'with disease' and 'without disease' basis as £72,828 up to 31 December 1996, and as £663,225 between 1 January 1997 and 31 August 2009. One important difference between them is that Mr Measures included bank interest in his calculations of lost profit and Mr Shelton excluded it from the figures quoted. Mr. Shelton made a separate calculation of interest."

137. In paragraph 72 the judge observes that when it is remembered that in the accounts of the business for the years 1990/1991 and 1991/2 the stock of the business (i.e. the herd) was valued at £13,500 and £17,550 respectively, the magnitude of the figures quoted in the previous paragraph is put in context.
138. Paragraphs 73 to 80 of the judgment lie at the heart of the argument on this appeal, and I must accordingly set them out in full:

"73. I am satisfied that at the notional trial it would have been forcibly argued, as it was before me, that Mr and Mrs Browning should have taken steps to mitigate their loss and had failed to do so. Before me this was put on two bases. The first was that Mr and Mrs Browning did not follow established management practices to reduce the effect of the disease. These are set out in paragraph 162 of Mr Matthews' report and are taken from a publication prepared by Professor Morgan. My impression is that little of this was followed by Mr and Mrs Browning. Most importantly, they did not begin vaccinating until about March 1995 (Measures report, paragraph 4.9). Then they used vaccine bought in batches, which they continued to use after the 'use by' date had passed. Nor did they buy in over a period mature breeding females, which would be free of the disease and past the age at which they might be infected with it. While I have sympathy with the situation in which Mr and Mrs Browning found themselves, they were claiming large sums from Mr Gilham: the law required that they take reasonable steps to curtail those losses.

74. The second way in which it was suggested that the losses should have been mitigated was more radical, such as by culling the herd and starting again either at Lower Basing after an interval or elsewhere. In comparison with the sums claimed it would have been much cheaper in the long run. The problem was that because of their borrowings Mr and Mrs Browning would have faced great difficulty in taking these steps, other than that of selling up. The costs of these alternatives as calculated by Mr Aspell (the accountant instructed on behalf of Brachers) were: closing the business £112,693, suspending the business for 2 years – the minimum to eradicate the disease from the land - £79,111, moving the business £72,692, cessation of farming £57,594. Those figures do not include losses prior to the event under consideration.

75. I have to consider what is the approach which it is most probable that a judge hearing the notional trial in 1996 would have adopted. The conclusion I have come to is that he would have accepted that Mr and Mrs Browning could and reasonably should have mitigated their loss over a period of time by adopting the measures set out in Mr Matthews' report. They could and reasonably should have brought the disease under control by those measures so that it no longer had any substantial effect. The disease would not have been wholly eliminated, but its effects on the business would have been. He would have considered that the more radical Aspell measures were unnecessary in that context. He might also have had in mind that the award he was making should put a substantial sum into the hands of Mr and Mrs Browning, but that would be a secondary consideration.

76. My conclusion as to the probable approach is as I have set out. But I think that, in the context of the way the claims in this trial have been advanced it is as well to point out the following. If in 1996 the trial judge had awarded in respect of the losses caused by the Bowyers Court goats damages running on for years into the future, the judgment would have provided a substantial sum which would have enabled those very future losses to be avoided. Thus their damages would have provided Mr and Mrs Browning with a substantial sum with which to mitigate their on-going loss (in so far as attributable to the Bowyers Court goats), and so to earn the profits they would be being awarded in damages. In my view there is no real possibility that the judge would have awarded damages running far beyond the trial date, whatever analysis of the situation he adopted. The claim is advanced in the same way as a claim for loss of earnings in a personal injury action might be advanced. A personal injury claimant who has suffered a permanent injury, which reduces or limits his earning capacity, often has a claim which runs to his retirement. In such cases there is nothing to be done about his situation. That is not the case here.

77. Mitigation over a period would have been a gradual and drawn out process. I heard no evidence calculating when the effects of the disease should have been eradicated or largely eradicated. I have to take the period which seems most reasonable to me against the background of all the evidence that I have heard. I put it at 6 years from the start of 1992, that is 2 years after the conclusion of the notional trial. Thus I conclude that the judge at the notional trial would most probably have awarded Mr and Mrs Browning damages over the six year period ending two years after the trial. On the basis of Mr Measure's figures the claim up to the end of 1998 is £182,228.

78. If Mr Measure's report had been instructed and served in good time, common sense and what appears in Barlows' bill of costs strongly suggest that there would have been a critical analysis of it on behalf of Mr Gilham, and a report or reports prepared in opposition. It is also true that, had all gone as it should have done, the report would have been checked and perhaps improved before it was served. That process would in my view have resulted in a lowering of the figures, certainly not in their increase. It is enough to say that I regard it as vulnerable to attack. I here have in mind the various points that were made in cross-examination of the expert witnesses in the trial before me. I should here, and do, take a broad brush rather than making a detailed analysis of the further reports. Weighing it as best I may, I think that the probability is that the judge would have reduced the Measures' figures by some 40 per cent. This gives £109,336. (I note that the figure reached by Mr Shelton for the equivalent period was £155,490.)

79. The figure of £109,336 must be adjusted to take account of two matters. One is the failure to mitigate by adopting measures as listed by Mr Matthews. The second is that it is very likely that it would have been alleged on behalf of Mr Gilham that the Lower Basing herd was infected with Johne's disease independently of the Bowyers Court goats. That is because, as I have noted with reference to the conference with counsel attended by Professor Steele-Bodger, Mr and Mrs Browning thought that they were losing Lower Basing goats from Johne's disease in 1992, that is before the incubation period taken from the arrival of the Bowyers Court goats had expired. Professor Steele-Bodger's off-the-cuff response was, according to the note, that this showed that the contamination from the latter must have been enormous. But the evidence of Professor Morgan and Mr Matthews before me was that, if the Lower Basing goats were dying of Johne's disease within the incubation period following the mixing of the herds, the disease must have been present in the Lower Basing herd before that. I accept that as the orthodox view. There was also evidence that the goats as a whole at Lower Basing Farm had problems with intestinal parasites, and that some goats died from this. So at the notional trial it is very likely that Mr and Mrs Browning would have faced a case that they had deaths, and their herd under-performed, first because of a wasting disease, probably Johne's disease, which did not come from the Bowyers Court goats, and second because of parasites affecting the combined herd. I think that there is a strong likelihood that at the notional trial the judge would have found that these additional causes of death and under-performance were made out, and that he would have made a reduction in his award to reflect that. I think that it is appropriate to make a reduction of 25 per cent in the notional award of damages to reflect this. That gives a figure of £82,002.

80. That still requires account to be taken of the mitigation point. I will do this in the following way. I start with 1994/5 because I think that this is when it is most probable that it would have been held that the measures should have begun to have effect. In the table 'avoidable loss' is the proportion of the loss claimed in the year in question which should have been avoided by mitigating steps as listed by Mr Matthews.

Year Measures figure 60% Avoidable loss % Avoidable loss

1994/5 £21,325 £12,795 10% £1,279

1995/6 27,300 16,380 25% 4,095

1996/7 33,019 19,811 33.3% 6,603

1997/8 45,366 27,219 60% 16,331

£28,308

I take 75 per cent of that to get the figure to be deducted from £82,002 (the loss caused by the Bowyers Court goats), namely £21,231, giving £60,771."

139. In paragraph 81 of his judgment the judge turned to the question whether (as contended on behalf of Mr and Mrs Browning) it would have been appropriate for the judge at the notional trial to add interest to the annual losses of profit represented by the figure of £60,771. He concluded that it would not be appropriate to do so, since Mr Measures had already included bank interest when calculating the loss of profits.
140. In paragraph 84 of his judgment the judge turned to Mr and Mrs Browning's claim for capital losses representing the diminution in value of their herd, of the goodwill of their business and of their land resulting from the alleged fact that Johne's disease had been introduced into their herd via the Gilham goats, saying this:

"The judge would then have had to consider whether he should make a further award because the land, the herd and the goodwill of the business were reduced in value by reason of infection with Johne's disease. Citing Cullinane v British Rema Manufacturing Co Ltd [1954] 1 Q.B. 292 Mr Croxford submitted that Mr and Mrs Browning could not claim for loss in value and loss of profits. I accept that a claimant who buys a defective machine usually cannot claim both the drop in value of the machine by reason of the defect and the loss of the profits which he would have made if the machine had not been defective: for he would have had to purchase the machine to make the profits. I think that there is here an argument, with a fair chance of success, that the claim here is different. It is that the goats were infected, and this had two consequences: it lowered the earnings from the combined herd; it also reduced the value of the combined herd, the land and the goodwill of the business. In short, if a defendant gives the claimant's farm a disease which lowers his profits and reduces the value of his land etc, he has suffered loss under both heads and to include both is not double counting. These claims survive the points as to mitigation because at the date of the notional trial the herd and the land would still be infected. If the judge concluded that the original Lower Basing herd already had the disease, this head of claim would fail. I consider that these additional claims faced difficulties in law and fact including valuation, which mean that I should put a modest value on them. In particular I should state that I do not think that a business such as this would have a substantial goodwill value in addition to the value of the assets, and further the goodwill should have recovered: Mr and Mrs Browning intended to stay on, not sell up. I note that Mr Gilham received nothing for the goodwill although his business had contracts which were the main reason for Mr and Mrs Browning buying his goats. In my view £15,000 is an appropriate figure. That gives a total of £75,771."

141. The addition of £15,000 for capital losses gave the figure of £75,771 as the judge's figure for the probable award of damages following the notional trial (Stage 4 above).
142. In paragraph 85 of his judgment the judge reiterated that in making his assessment of the value of the lost chance he had endeavoured to follow the principles set out in the authorities to which he had referred, in particular Mount and Sharif.

The value of the lost chance (paragraphs 86 to 88 of the judgment)

143. In paragraph 86 of his judgment, the judge takes 70 per cent of £75,771 (reflecting his finding as to the chances of the counterclaim succeeding on liability), to arrive at a figure of £53,039 as the value of the counterclaim (Stage 5 above). From that he deducts £6,682 representing the value of Mr Gilham's claims, to arrive at his final figure of £46,357 (Stage 6 above).
144. As noted earlier, it was pointed out to the judge following the handing down of the judgment that Mr and Mrs Browning were entitled to a credit of £5,000 against the value of Mr Gilham's claims, being the sum which they had paid to compromise those claims. The judge records this in paragraph 87 of the judgment as finally revised.

The further consequences of Brachers' negligence (paragraphs 89 to 91 of the judgment)

145. In paragraph 89 of his judgment, the judge notes that in the event there was no award of damages in December 1996 and no payment was made to Mr and Mrs Browning. He goes on:

"The result of Brachers' negligence is that Mr and Mrs Browning have not had the money, which they might otherwise have received."

146. In paragraph 90 the judge says this:

"On the basis on which I have assessed the value of the lost chance there cannot be any further claim. I find that Mr and Mrs Browning should have been able to mitigate their losses by the end of 1998, and that they have no claim for on-going losses after that."

147. In paragraph 91 the judge reverts to the facts that no award of damages was made, and that no money has been received by Mr and Mrs Browning on account of their counterclaim, saying this:

"I did at one time consider what might be the position if the reason for the damages being capped at the notional trial at the end of 1998 would have been that Mr and Mrs Browning should early in 1997 have received a substantial sum which would have enabled them to take further steps in mitigation, which steps they were in fact unable to take because they had not received the money, and so their losses went on. Mr Blunt submitted, that in those circumstances, Mr and Mrs Browning would have a claim for on-going losses caused by Brachers' negligence because the negligence caused them not to receive the judgment sum. Mr Croxford submitted, inter alia, that the claimants' case had not been run in that way and it was not open to the claimants. He submitted that, if it had been run on that basis, an examination of the finances of Mr and Mrs Browning after 1996 would have been called for, which was not carried out. I think that Mr Croxford's submissions would have some force. But, as I say, the point does not arise."

Interest on the damages (paragraphs 92 and 93 of the judgment)

148. In paragraph 92 of the judgment the judge concludes that the notional damages of £46,357 should carry interest from 1 January 1997 (Stage 7 above). As to the appropriate rate of interest, the judge says this in paragraph 93 of the judgment:

"In further submissions received since the draft judgment was circulated Mr Blunt submitted that the rate should not be in fact paid by Mr and Mrs Browning but that that paid by small tradesmen generally. The submission may suggest that they were not in fact paying a typical small business rate, but something lower. The basis for awarding a higher rate than a large business might obtain is that a rate of one or two per cent above base would not then be adequate compensation. In Juara v Ahmed the claimant asked for 4.5% above base but was awarded 3% as a reflection of the rates typical of small businesses in the claimant's position. In paragraphs 9.4 to 9.10 of his first report Mr Shelton calculated that the average borrowing rate for the business between 1991 and 1998 was 3.25% above base. He does not comment on the very low amounts of interest paid latterly. In my view it is for Mr and Mrs Browning to establish that they had to pay rates of interest which would justify a higher than usual rate, and they will then be entitled to interest at approximately the rate they paid provided that it was no higher than typical for a business of their type. If they have somehow avoided paying interest on part of their borrowing, that would be relevant to whether they should be awarded interest at higher than the usual rate, but it should not disentitle them to interest at the usual lower rate. Until it is known what their borrowing arrangements were, it is not possible to be more specific. If following disclosure of their arrangements a rate or rates cannot be agreed, it may be necessary to have an enquiry as to the rate."

The Gilham costs (paragraphs 94 to 99 of the judgment)

149. In the final part of his judgment the judge considers the possible incidence of costs at the notional trial. His conclusions are reflected in paragraph 3 of his order, quoted earlier. Since there is no appeal or cross-appeal against those conclusions, I need not consider this part of the judgment further.

THE GROUNDS OF APPEAL

150. By their grounds of appeal, Mr and Mrs Browning contend firstly that the judge erred in law in proceeding on the basis that the dispute as to the damages which might have been recovered at the notional trial is to be resolved by determining the figure which it is "most probable" that the judge at the notional trial would have awarded, on the assumption that liability had been established. They go on to challenge the judge's findings in relation to mitigation of damage, and his award of only £15,000 in respect of the capital losses claimed. Permission to appeal on these three grounds was granted by the judge.
151. In addition, pursuant to the permission to appeal granted by Latham LJ, Mr and Mrs Browning advance the following further grounds of appeal (some of which overlap with the grounds referred to above):

that the judge ought not to have valued Mr Gilham's claims at a sum in excess of the compromise figure of £5,000;

that the judge was wrong to conclude (in paragraph 36 of his judgment) that had Mr Measures' 1996 report been served timeously the case on behalf of Mr Gilham would have been conducted differently and that it would have been forcibly argued that Mr and Mrs Browning should have taken the steps to mitigate contended for by Brachers;

that the judge was wrong to assess the damages likely to be awarded at the notional trial by reference to Mr Measures' 1996 report (little attention having been paid to that report in the course of the trial, save in so far as the figures contained in it formed the basis for the reports of Mr Brookes and Mr Shelton);

that the judge's methodology in deducting £21,231 for failure to mitigate (Stage 3.2 above) was flawed in that he failed to take into account the possibility that the judge at the notional trial might not have found that Mr and Mrs Browning had failed to mitigate or that the mitigation points raised by Brachers might never have been developed at the notional trial;

that the judge was wrong to conclude (in paragraph 75 of his judgment) that the judge at the notional trial would have allowed Mr and Mrs Browning a claim for annual lost profits only up to the end of 1998;

that the judge was wrong (in paragraphs 92 and 93 of the judgment) not to make any separate award of interest in respect of Mr and Mrs Browning's losses up to December 1996 on the basis that Mr Measures' calculations of loss of profits in his 1996 report included interest paid by Mr and Mrs Browning on their bank borrowings.

THE RESPONDENT'S NOTICE

152. By a Respondent's Notice, Brachers contend that the judge's award of £15,000 in respect of capital losses (Stage 4 above) should be upheld on the additional ground that the contention advanced on behalf of Mr and Mrs Browning that they were entitled to damages for diminution in capital value as well as loss of profits was wrong or, at best, extremely weak, such that the award of £15,000 was generous.
153. As noted earlier, there is no cross-appeal.

THE ISSUES ON THIS APPEAL

154. Thus the principal issues which fall for decision on this appeal are these:

1. Whether the judge's general approach to the assessment of the damages which would or might have been awarded at the notional trial – i.e. his inquiry as to the "most probable" figure (Stage 1 above) – was wrong, either in principle or having regard to the particular circumstances of the instant case (e.g. lapse of time, unavailability of evidence etc).

2. Whether the judge was justified in concluding (in paragraph 36 of his judgment) that had Mr Measures' 1996 report been served timeously the case on behalf of Mr Gilham would have been conducted differently, and in proceeding on the basis that the points now taken by Brachers would have been taken on behalf of Mr Gilham.

3. As to the deduction of £21,231 (Stage 3.2 above): (a) whether the judge was justified in finding (in paragraph 75 of his judgment) that it was probable that the judge at the notional trial would have decided that Mr and Mrs Browning had failed to mitigate in line with the steps suggested by Mr Matthews; and (b) whether the judge was justified in finding (in paragraph 80 of his judgment) that the judge at the notional trial would have reduced the loss claimed in each year to reflect their failure to mitigate.

4. Whether the judge was justified in finding (in paragraphs 76 and 77 of his judgment) that the judge at the notional trial would have allowed the claim for loss of profits only in respect of the period up to the end of 1998.

5. Whether the judge was justified in awarding only £15,000 for capital loss (diminution in value of capital assets) (Stage 4 above).

6. Whether the judge was wrong to value Mr Gilham's claims in the original action at more than £5,000.

7. Whether the judge ought to have concluded that the judge at the notional trial would have made a separate award of interest on past losses of profit.

THE ARGUMENTS ON THIS APPEAL

Issue 1

155. For Mr and Mrs Browning, Mr Blunt (leading Miss Kate Livesey) submits that having regard to the lapse of time since December 1996, the unavailability of evidence and the numerous uncertainties in the instant case it was appropriate for the judge to apply a "broad brush" approach to the various issues, coupled with the application of a discount to reflect the uncertainties; and that he had failed to do so. He submits that the judge ought not to have attempted to make firm findings as to what would have transpired at the notional trial in circumstances where firm findings were impossible; and that, despite his self-direction to the contrary (see paragraph 36 of the judgment) he had fallen into the trap of attempting to retry the original action.
156. Further or alternatively, relying on a passage from the judgment of Potter LJ in Channon v. Lindley [2002] Ll Rep PN342 at 353 para 42 (an authority which was not cited to the judge), he submits that the judge ought to have inquired as to "the best order reasonably likely to have been achieved" by Mr and Mrs Browning rather than "the figure representing damages which it is most probable that [Mr and Mrs Browning] would have recovered if they had succeeded on liability" (see paragraph 20 of the judgment).
157. Turning from the general to the particular, Mr Blunt submits that in addressing the expert evidence before him the judge ought to have taken Mr Shelton's report as his starting-point, rather than Mr Measures' 1996 report. As it was, the judge made little reference to Mr Shelton's report, whilst subjecting Mr Measures' 1996 report to the criticisms made by Brachers' experts. Mr Blunt submits that that was contrary to the approach laid down in the authorities and unfair to Mr and Mrs Browning.
158. For Brachers, Mr Croxford (leading Mr Stephen Worthington) submits that the judge's general approach was entirely in line with the principles established by the various authorities to which the judge himself referred. In particular, he submits, the judge appreciated that he was not trying the original action, neither was he seeking to make definite findings of fact as if he had been the judge at the notional trial. In so far as he came to clear conclusions and made firm findings, he was fully entitled to do so (see Sharif at p.207 per Simon Brown LJ). Channon, Mr Croxford submits, lays down no new principle. On the contrary, it is entirely consistent with the other authorities.
159. Mr Croxford submits that the judge was fully entitled to take Mr Measures' 1996 report as his starting-point, given that it was overwhelmingly probable that that report would have formed the basis of Mr and Mrs Browning's case at the notional trial.

Issue 2

160. Mr Blunt submits that in the absence of any evidence as to the way in which Mr Gilham might have run his defence to Mr and Mrs Browning's counterclaim had he found it necessary to address the increased claim based on Mr Measures' 1996 report, the judge was wrong to regard it as inevitable, or certain, that he would have responded by raising the arguments as to mitigation advanced by Mr Matthews in the present action. He points out that the list of mitigation measures in Mr Matthews' report on which the judge relied is derived from the list contained in Professor Morgan's report on behalf of Mr and Mrs Browning. In any event there was, he submits, no clear evidence that such comprehensive techniques would have been known to whoever might have been instructed to advise Mr Gilham in the original action. Further, he submits that there was no evidence before the judge that Mr or Mrs Gilham had instituted any of the suggested mitigation measures themselves when confronted by Johne's disease on their own farm; and that it would have been more difficult for the Gilhams than it was for Brachers to argue that there were measures to control the disease which Mr and Mrs Browning could reasonably have taken but had failed to take.
161. Mr Croxford submits that it was "inevitable" (to use the judge's word when refusing permission to appeal on this issue) that Mr Gilham, properly advised by Barlows, would have raised mitigation arguments at the notional trial; and that the judge was fully entitled to recognise that fact. There was, he submits, no scope for a "broad brush" approach on that issue: the judge's conclusion was no more than common sense required.

Issues 3 and 4

162. Mr Blunt submits that on the evidence there were too many imponderables to enable the judge to make a firm finding as to whether Mr and Mrs Browning had failed to mitigate their loss and, if so, as to what might have happened had they taken additional steps to control the disease. In particular, he submits, the judge ought not, consistently with the approach established on the authorities, to have found that the mitigating steps would have gradually eliminated the annual losses of profit over a 6-year period: a finding which led directly to his conclusion that the judge at the notional trial would have awarded damages for loss of profits only in respect of the 6-year period to the end of 1998.
163. Mr Blunt relies on the evidence of Mrs Browning and Mr Baird that Mr and Mrs Browning at all times acted on Mr Baird's advice, and that much less was known to goat farmers (and, for that matter, to local vets) about Johne's disease in the 1990s than was known in 2003. He points out that it was not put to either Mr Browning or Mrs Browning in cross-examination that they had unreasonably failed to adopt the various control techniques suggested by Mr Matthews. He further points out that it is common ground that there is no known cure for Johne's disease. He submits that it is not clear when the full range of techniques suggested by Mr Matthews became generally known; nor is it at all certain how effective they would or might have been. Nor, he submits, was there any serious analysis at the trial as to how much the implementation of such control techniques might have cost; still less as to the financial feasibility of Mr and Mrs Browning incurring that cost. Mr Blunt points out that Mr Matthews made it plain in his report that testing for Johne's disease is expensive, and that the effectiveness of vaccination is, even now, difficult to assess. He relies in particular on paragraph 158 of Mr Matthews' report (quoted in paragraph 77 above). By contrast (submits Mr Blunt) it is clear from paragraph 8.1e of Professor Morgan's report (quoted in paragraph 74 above) that the cost of recurrent vaccination of an infected herd will continue to be incurred even if or when disease in the herd is considered to be under control. He submits that the judge's award of damages fails to take account of this ongoing cost, which (he submits) Mr and Mrs Browning would be entitled to recover by way of damages.
164. Mr Blunt also relies on the evidence of Mr Baird (whom the judge described as an impressive witness) to the effect that Mr and Mrs Browning's herd was well-managed; and that although he was himself no expert on Johne's disease he did what he could to inform himself about the disease with the assistance of such text books as were available. Further, in cross-examination Mr Baird said that he did not press Mr and Mrs Browning to adopt a vaccination programme because it was an extra cost, and there was no evidence that it would be effective on goats.
165. Mr Blunt points out that the fact that Mr and Mrs Browning had limited financial means was not in dispute (indeed, it was positively relied on by Brachers in support of their case that the Mr and Mrs Browning's business was financially unsound). He submits that the judge ought to have taken that fact into account in addressing the question whether Mr and Mrs Browning had failed to mitigate their losses. He also points out that there was no evidence before the judge that the control techniques suggested by Mr Matthews had been taken by Mr Gilham.
166. As to the more radical mitigation proposals of Mr Aspell, Mr Blunt first points out that the failure to mitigate was not pleaded by Mr Gilham. He further submits that it is established by the authorities that a Court should take into account the claimant's means and available cash flow when deciding whether he has acted reasonably in mitigation. Mr Blunt submits that the financial circumstances of the Brownings as well as the information and guidance available to them at the time leads to the conclusion that the Gilhams would have had an uphill struggle had they sought to establish in 1996 that the Brownings had unreasonably failed to adopt any of the alternative courses put forward by Mr Aspell.
167. Mr Croxford submits that, whilst it is not in dispute that Mr and Mrs Browning followed Mr Baird's advice, the effect of his evidence was that he knew very little about Johne's disease. Further, he submits that had Professor Steele-Bodger been retained by Mr and Mrs Browning as an expert witness (as, admittedly, he should have been) it is overwhelmingly probable (a) that he would have known about techniques of controlling Johne's disease and that appropriate measures would have been taken prior to the notional trial. As to alleged lack of general knowledge about Johne's disease at the material time, Mr Croxford points out that Mr and Mrs Browning knew or suspected by no later than 21 October 1991 (when the Counterclaim was served) that the disease was present in their herd, suggesting that there is every reason to suppose that over the ensuing period prior to the notional trial they would have made it their business to become more knowledgeable. He further suggests that even if Mr and Mrs Browning's knowledge about the disease remained limited, their employees (in particular Mr Squire and Ms May) may well have had greater knowledge about it.
168. In any event, Mr Croxford submits, there is no basis in the evidence for the suggestion that there was any lack of relevant knowledge in the 1990's. He relies in support of this submission on the fact that Mr and Mrs Browning said that they implemented a system of snatching young goats from their mothers shortly after birth.
169. As to the financial constraints under which Mr and Mrs Browning were operating, Mr Croxford submits that their lack of money was no excuse for their failure to get to grips with the disease. He acknowledges that vaccination is costly, but he points out that there is no evidence that any cost/benefit analysis was carried out. He submits that Mr and Mrs Browning never made any comprehensive or sustained effort to manage the disease (or for that matter any other parasitic problems from which their herd may have been suffering) and that, in consequence, the instant case cannot be regarded as a case in which attempts at mitigation can be shown to have been ineffective.
170. Mr Croxford accordingly submits that on the evidence the judge was fully entitled to conclude that Mr and Mrs Browning had failed to mitigate their loss; and that had they taken reasonable steps to do so, the disease would have been brought under control gradually over a period of six years.

Issue 5

171. Miss Livesey, who addressed us on this issue, submits that the judge's reasoning in paragraph 84 of his judgment is highly unsatisfactory, in that it focuses primarily on the claim in respect of the reduction in the goodwill of the business (which the judge regarded as a doubtful claim) and does not contain any review of, or indeed reference to, the valuation evidence which was before the judge as to the diminution in the value of the farm in consequence of the presence of the disease.
172. She submits that there is no inconsistency or error of principle in awarding damages under this head in addition to an award of damages representing loss of profits, given that as a direct result of the presence of Johne's disease in Mr and Mrs Browning's herd not only has the profitability of their business suffered but the capital values both of the business and of the farm itself have been substantially reduced.
173. Miss Livesey took us in some detail through the valuation evidence (as summarised earlier in this judgment: see paragraphs 86 to 95 above), including the Bax Standen valuation and the FPDSavills valuation, in support of her submission that an appropriate base figure for the diminution in the value of the property as at December 1996 would be Mr Handley's figure of £126,000 (i.e. the figure contained in the joint statement referred to in paragraph 91 above), subject to some relatively small discount to allow for the possibility of the judge at the notional trial being impressed by Mr Hampton's evidence.
174. Nor, she submits, does the judge provide any reasons for his decision to award only £15,000 under this head.
175. Mr Croxford submits that it would be contrary to principle to make any award of damages representing reduction in the value of the goodwill of Mr and Mrs Browning in addition to an award representing loss of profits, since the goodwill of the business is in substance no more than the capitalisation of future profits. He accordingly submits that the judge fell into error in this respect.
176. In any event, he submits, even if a claim for damage to goodwill is sustainable in principle, it cannot amount to much on the facts of the instant case, given that the business had consistently run at a loss prior to the purchase of the Gilham goats. He also submits that allowance must be made for the possibility that the herd might have been infected from some third party source, since if that were the case the claim for damages under this head would fail altogether.
177. As to the claim in respect of the value of the farm, Mr Croxford points out that neither Mr Handley nor Mr Hampton had any direct market experience of the effect of Johne's disease on property values. He submits that the evidence of Mr Hampton is to be preferred, on the footing that Mr Handley's valuation was obviously speculative on the facts. He accordingly submits that the judge was entitled to conclude (in paragraph 84) that the claims for damages under this head "faced difficulties in law and fact (including valuation), which mean that I should put a modest value on them"; and that his award of £15,000 was, in all the circumstances, generous.

Issue 6

178. Relatively little turns on this issue in terms of money, but Mr Blunt submits that it is a good example of an aspect of the case where the judge plainly failed to follow the correct approach.
179. Mr Blunt submits that the judge was in error in proceeding on the footing that if Brachers had not been negligent Mr Gilham's claims would not have settled; and in failing to discount Mr Gilham's chances of success so as to allow for the possibility of settlement. He submits that the fact that Mrs Gilham chose to settle the claims for £5,000 (Mr Gilham died prior to the settlement) at a time when Mr and Mrs Browning were in procedurally weak position with regard to their counterclaim suggests that the settlement of the claim reflected Mr and Mrs Gilham's estimate of their value. He notes that (in paragraph 39 of the judgment) the judge recognised the "very real possibility" that Mr Gilham's claims might in any event have settled prior to trial, but he submits that, having recognised that possibility, the judge failed to take proper account of it in valuing the claims at £6,682.
180. Mr Blunt further submits that in any event the judge's assessment of the chances of Mr Gilham's claims succeeding at 75 per cent is ungenerous to Mr and Mrs Browning, particularly since at any trial of the Gilham claims Mr and Mrs Browning would (as Mrs Browning confirmed in evidence) have been in a position to adduce evidence from a Ms Samantha May (the joint manager of the Gilham goats at the time of the sale) to the effect that the sale price of £27,000 included the additional items which were the subject of Mr Gilham's claims.
181. Mr Croxford reminds us that the settlement figure was equal to the sum in court, and that the settlement occurred soon after Mr Gilham's death. He submits that it is doubtful whether the original action was cost effective from the Gilham's point of view. He submits that the reasoning and conclusions of the judge on this issue were amply justified on the evidence. He submits that Mr Blunt's submission as to evidence which might have been given by Ms May is based on pure speculation.

Issue 7

182. Mr Blunt asserts that the judge's approach to the question of interest was not foreshadowed at the trial, and no submissions were made in relation to it, since it was not suggested at trial that the figures in Mr Measures' 1996 report should form the basis of the award of damages in preference to those of Mr Shelton. In consequence, no issue arose as to whether Mr Measures' incorporation of interest into his loss of profit figures arose. He submits that the judge (in paragraph 82 of his judgment) misunderstood his post-trial objection on this point. He submits that the judge at the notional trial would in all likelihood have awarded Mr and Mrs Gilham interest to the date of the notional trial on their loss of operating profits in consequence of the presence of Johne's disease; and that there was no evidence that Mr and Mrs Browning's overdraft increased by an amount equal to the loss of operating profits and no evidence that the cost of their bank borrowings mirrored the interest which would have been payable on the lost profits.
183. Mr Croxford submits that the concept of recovering interest as damages is well-recognised, and that the judge's approach was permissible in principle. He submits that the likelihood is that the judge at the notional trial would have been presented with expert evidence (i.e. Mr Measures' 1996 report) which included interest in the calculation of lost profits. He submits that Mr Measures' 1996 report formed the foundation of Mr and Mrs Browning's case on their counterclaim in the original action, and that they are not entitled to "cherry pick" Mr Measures' evidence depending on whether or not it suits their case. If Mr and Mrs Browning had wished to disassociate themselves from Mr Measures' calculations they should have made that clear in the course of the trial, and they failed to do so.
184. Mr and Mrs Browning's Appellant's Notice does not state what order they are inviting this court to make; nor did Mr Blunt enlighten us to that in the course of his opening submissions on the appeal. Accordingly, in the course of his submissions in reply we invited him to commit to paper the terms of the order which he was inviting this court to make. Over the short adjournment on the third and final day of the hearing of the appeal, Mr Blunt prepared a draft document to that effect, which he duly placed before us. However, he stressed that in a number of respects the calculations which it contained required to be "audited". We accordingly granted him permission to submit a final version of the document after the close of the hearing; and we granted Mr Croxford liberty to lodge submissions in writing in relation to it if so advised.
185. The final version of the document (which I will call "the calculation document") reflects Mr. Blunt's submissions made during the hearing that Mr. Shelton's report should be used as a starting-point for the measure of damages. The calculation document accordingly adopts Mr. Shelton's figures for the loss of profit (and interest thereon) up to 31^st December 1996 and for the future loss of profit (discounted for accelerated payments). Future losses of profit are claimed for a period of 7 years and 8 months after this notional trial date. Both these sums are discounted by 25 per cent to reflect uncertainties in the Shelton and Brookes figures and discounted by a further 25 per cent to reflect the finding that the Brownings were likely to have faced a case that their herd had deaths and underperformed as a result of Johne's disease and parasites affecting the combined herd in any event.
186. Consistent with Miss Livesey's submissions on the matter of capital losses, the calculation document is based on Mr. Handley's valuation of the diminution in the value of the land (contained in the joint statement with Mr. Hampton). This amount is discounted by 15 per cent to reflect the chance that the judge at a notional trial would have been impressed by Mr. Hampton's lower figure. The amount is further reduced by 25 per cent to reflect the effect of the argument that the herd would have been affected by Johne's disease and parasites in any event. Additionally, a claim of £5,000 is made for the loss of goodwill.
187. Pursuant to the liberty which we granted to him, Mr Croxford lodged written submissions in relation to the calculation document.
188. Mr Croxford takes the preliminary objection that Mr and Mrs Browning ought not to be permitted to advance the case set out in the calculation document. He submits that by the calculation document Mr and Mrs Browning are in effect inviting this court to ignore paragraphs 73 to 84 of the judgment and to replace them with new findings as to the correct factual approach, the appropriate evidence to adopt and the necessary discounts to apply. He submits that that is neither a fair nor an appropriate way of dealing with the appeal, particularly when the new calculation was produced after the conclusion of the hearing.
189. He further submits that this court is being invited to go far beyond the grounds of appeal. In particular, he submits that there is no ground of appeal which explicitly challenges either the judge's decision to limit the loss of profits claim to the six-year period ending at the end of 1998, or the deduction of 25 per cent to reflect the possibility of Mr and Mrs Browning's herd being infected from some source other than the Gilham goats. He submits that had any such grounds of appeal been advanced (a) it would have been necessary for this court to consider the evidence in far greater detail, and (b) there would in any event have been a cross-appeal on the basis that the 25 per cent deduction was too small.
190. Mr Croxford submits that the case sought to be advanced in the calculation document is completely different to the case contended for in the grounds of appeal, and that the case that there should be no deduction for failure to mitigate represents a volte face by Mr and Mrs Browning.
191. Mr Croxford takes strong objection to the fact that Mr and Mrs Browning's "new case" is advanced after the hearing of the appeal. The calculations in the calculation document ought, he submits, to have been put before the court either in Mr Blunt's written skeleton argument or in the course of his opening submissions. He submits that the procedure adopted is "grossly unfair" to Brachers, not least because Mr and Mrs Browning's case only crystallised after the conclusion of the hearing, with the result that Brachers have not had a proper opportunity of dealing properly with it. In the circumstances, he submits, Brachers are at a significance disadvantage and cannot deal effectively with the new case by way of written submissions.
192. Without prejudice to his preliminary objection, Mr Croxford then turns to the calculations in the calculation document. As to the calculation of loss of profits to the end of 1996, he submits that Mr Brookes' figures (on which Mr. Shelton's calculations of loss of profit were based) were in a number of respects "demonstrably and obviously flawed". He further submits that Mr Brookes makes no allowance for the probable existing infection of the Shinfield goats, or for the possibility of Mr and Mrs Browning's existing herd being infected. Nor does Mr Brookes take proper account of the parasitic infection.
193. As to the suggested discount of 25 per cent to reflect uncertainties in the figures of Mr Brookes and Mr Shelton, Mr Croxford submits that the judge's discount of 40 per cent in relation to the figure in Mr Measures' 1996 report was generous to Mr and Mrs Browning, and that the suggested 25 per cent discount accordingly cannot be justified.
194. Mr Croxford makes essentially the same submission in relation to the further 25 per cent discount.
195. As to future loss of profits, Mr Croxford submits that the proposed 7-year period is far too long. He submits that, on the evidence, the disease can be kept under control (albeit not completely eradicated) by means of the various methods suggested by Mr Matthews. He submits that if any award is to be made in respect of future loss (as at December 1996) it should be for no longer than the period of 4 years from 1 July 1995. (For the assistance of the court, Mr. Croxford set out calculations showing various alternative starting dates in an appendix to his written submissions.)
196. Mr Croxford submits that in any event particular care must be taken in considering the estimates of future losses, since (in particular) instead of basing themselves on reasonable forecasts, such as would have been before the judge at the notional trial, Mr Brookes and Mr Shelton have had recourse to hindsight and in so doing have taken into account at least one major event (the loss of the contract with Waitrose in August 1998) which was unforeseeable in 1996 and the effect of which was to damage the profitability of Mr and Mrs Browning's business. He submits that the available evidence indicates that but for the loss of that contract Mr and Mrs Browning would have been making quite substantial profits. In any event, he submits, the loss of the Waitrose contract could not and should not be regarded as attributable to any Johne's disease carried by the Gilham goats. He submits that there was extensive and compelling evidence before the judge that Mr and Mrs Browning's existing herd was infected with Johne's disease. He also relies on the passage in the cross-examination of Professor Morgan quoted in paragraph 80 above.
197. Contrary to the assumption made in the calculation document, Mr Croxford stresses that no concession is made by Brachers that a judge would have concluded at the notional trial in 1996 that on the facts there had been no failure by the Brownings to mitigate. He submits that it is not necessary in this action to consider whether Mr and Mrs Browning were or were not in breach of a duty owed to Mr Gilham to mitigate their loss; nor is it necessary, he submits, to conclude that they had or had not failed in that duty. He submits that the judge did not go down that route. He submits that the material considerations are (a) that the judge at the notional trial would have concluded that Mr and Mrs Browning were under a duty to mitigate by managing their herd; that the figures for damages advanced by Mr and Mrs Browning in the present action are founded on actual and assumed management which had not taken any effective steps to mitigate; and accordingly that such figures must be reduced by the extent to which loss would have been avoided had effective steps to mitigate been taken. Accordingly, he submits that the judge adopted the correct approach to the issue of mitigation, and that his conclusions on that issue are unchallengeable in this court.
198. As to the claimed capital losses, Mr Croxford stresses that Brachers' case is that Mr and Mrs Browning's goats were already infected with Johne's disease prior to the arrival at Lower Basing Farm of the Gilham goats. He submits that the evidence before the judge to that effect was compelling. He submits that the judge's discount of 25 per cent to reflect this possibility in the context of the loss of profits claim has no relevance in the context of the claim for capital losses, since if Mr and Mrs Browning's herd was already infected with Johne's disease prior to the arrival of the Gilham goats no part of any capital loss could have been be laid at the door of Mr Gilham, and hence at the door of Brachers. He submits that, the judge having expressed the view (in paragraph 79 of his judgment) that there was "a strong likelihood" that Mr and Mrs Browning's herd was infected from some other source than the Gilham goats, it was inevitable that a large discount should be applied. In addition, he submits, account must be taken of the weaknesses in Mr and Mrs Browning's valuation evidence which, he submits, grossly overstates the diminution in the value of the land by reason of the presence of Johne's disease.
199. In any event, he submits, the evidence of Mr Hampton was logical and persuasive, and is to be preferred to that of Mr Handley.
200. He submits, therefore, that the judge's award of £15,000 was excessive (albeit it is not the subject of a cross-appeal).
201. As to the claim in relation to loss of goodwill, Mr Croxford submits that the claim put forward in the calculation document is different in nature from the claim put forward under this head at the trial. He repeats his submission that it is inappropriate to award both damages for loss of profits and damages for loss of goodwill. In so far as the figure of £5,000 in the calculation document includes vaccination costs, Mr Croxford submits that such cost is not in the nature of damage to goodwill. He submits that vaccination costs may not be a cost in perpetuity, and that in any event the cost falls to be discounted to reflect the possibility that Mr and Mrs Browning's herd was infected from a source other than the Gilham goats.
202. As to interest, he queries whether the figure of 58.69 per cent put forward in the calculation document as the agreed rate has been agreed, saying that further inquiries are being made.
203. In an appendix to his written submissions, Mr Croxford sets out a "corrected analysis of the position upon the basis of [Mr and Mrs Browning's] new case". This appendix contains a series of calculations illustrating Brachers' interpretation of the Brownings' analysis of the measure of damages, based on either two or four year periods of future losses and the application (or otherwise) of a deduction for failure to mitigate. The calculations assume a discount of 35 per cent (rather than the 25 per cent discount used in the calculation document) to reflect uncertainties in Mr. Shelton's figures.

CONCLUSIONS

The judge's general approach to the evaluation of the lost chance

204. In the well-known case of Armory v. Delamirie (1722) 1 Stra 505 the claimant, a chimney-sweeper's boy, found a jewel, and took it to the shop of the defendant (a goldsmith) to find out what it was worth. The defendant handed it to an apprentice, who, under the pretence of weighing it, told the defendant that it was worth three halfpence. The defendant offered the claimant that sum, but the claimant refused to take it and demanded the return of the jewel; whereupon the apprentice returned only the empty socket. The claimant sued the defendant in trover. The trial of the action took place before Pratt CJ and a jury. The Chief Justice ruled that the claimant was entitled to maintain an action against the defendant in trover. The significance of the case, however, lies in the direction which the Chief Justice gave to the jury as to the measure of damages. In the course of the trial, the jury had heard evidence from witnesses in the trade as to the value of a jewel of the finest quality of the right size to fit the socket. The brief report of the case concludes as follows:

"…. the Chief Justice directed the jury that unless the defendant produce the jewel, and show it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did."

205. It has been recognised in subsequent authorities that in so directing the jury the Chief Justice was applying a general principle to the effect that, in a case where the defendant has wrongfully deprived the claimant of property of value (be it an item of physical property or a chose in action), the court will, save to the extent that it is persuaded otherwise by the defendant, assess the value of the missing property on a basis which is generous to the claimant.
206. Thus, in Allen v. Sir Alfred MacAlpine & Sons Ltd [1968] 2 QB 229 (a case where, by reason of the negligence of the defendant solicitors, the claimant's claim had been struck out on grounds of inordinate delay) Diplock LJ said (at pp.265F-257B):

"It is true that if the action for professional negligence were fought, the court which tried it would have to assess what those chances were. But on this issue the plaintiff would be in a much more advantageous position than if he had sought, despite the inordinate delay, to establish liability against the defendant in the action which had been dismissed. Not only would there be available to him any advice or material which he had been given or obtained by his solicitor in support of his case in the dismissed action, but the principle of Armory v. Delamirie …. would apply and would impose on the solicitor the onus of satisfying the court that the plaintiff's claim in the dismissed action would not have succeeded had it been prosecuted with diligence. This would be a heavy onus to sustain after so great a lapse of time."

207. Similarly, in Mount and Sharif Simon Brown LJ refers to Armory v. Delamirie as establishing a principle to the above effect (see the passages cited by the judge in the course of his judgment).
208. In Mount, Moore-Bick J (giving the first judgment in the Court of Appeal) rejected a submission by Mr Mount (who appeared in person) that, in the passage in his judgment in Allen v. MacAlpine quoted above, Diplock LJ was referring to the legal, as opposed to the evidential, burden of proof. Simon Brown LJ took the same view. Having stated (proposition 1 at p.510D) that the legal onus is on the claimant to establish that he has lost something of value, Simon Brown LJ went on to say this (proposition 4 at 511B-C, dealing with the evaluation of what the claimant has lost):

"Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendants' negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure. To my mind it is rather at this stage that the principle established in Armory v. Delamirie …. comes into play." (Emphasis supplied)

209. To the same effect is paragraph 39 of Simon Brown LJ's judgment in Sharif (quoted earlier).
210. I respectfully agree that the principle in Armory v. Delamirie is not directed at the legal burden of proof; rather it raises an evidential (i.e. rebuttable) presumption in favour of the claimant which gives him the benefit of any relevant doubt. The practical effect of that is to give the claimant a fair wind in establishing the value of what he has lost.
211. Channon is, in my judgment, simply another example of the application of the Armory v. Delamirie principle in the context of loss of a chance. As I read Potter LJ's judgment in Channon, his approach in applying that principle is entirely consistent with Mount and Sharif. Thus, Potter LJ considered first what would have been "the best order which could reasonably have been hoped for" (paragraph 45), before going on to discount it "on the basis of uncertainty" (paragraph 47).
212. In the instant case, in my judgment, the judge correctly directed himself by reference to the relevant authorities as to the general approach which he should adopt in valuing Mr and Mrs Browning's lost chance. His two-stage approach of inquiring as to the amount of damages which would "most probably" have been awarded at the notional trial, and then discounting the resulting sum to take account of the uncertainties on the issue of liability, is in my judgment an entirely legitimate approach, provided of course that in addressing each of the two stages due regard is had to the Armory v. Delamirie presumption.
213. So I reject Mr Blunt's submission that the judge misdirected himself in law as to the approach to be adopted in valuing Mr and Mrs Browning's lost chance.
214. However, the question remains whether, having correctly identified the approach to be adopted, the judge adhered to that approach when considering the various areas of uncertainty in relation to the assessment of the amount of damages which would "most probably" have been awarded at the notional trial.
215. In addressing this question I bear the following considerations firmly in mind:

• that an appellate court will be slow to interfere with a decision at first instance which derives from a process of judicial evaluation (cf. Welsh Development Agency v. Redpath Dorman Long [1994] 1 WLR 1409 at 1418D-E per Millett LJ and Assicurazioni Generali Spa v. Arab Insurance Group [2003] 1 WLR 577 at 580, para 14, per Clarke LJ), and that the judge's decision in the instant case is, par excellence, such a decision;

• the difficulty of the task with which the judge was faced in assessing damages for Brachers' admitted negligence; and

• the enormous care which the judge has evidently taken in addressing the numerous and complex issues which arise in that context.

216. Nevertheless, despite making every allowance for those factors, I have come to the conclusion that in three particular respects (two of them major, the third relatively minor) the judge has signally failed to follow the course which he correctly charted for himself by reference to the authorities; and that in consequence his ultimate award of £76,873.03 represents a significant undervaluation of Mr and Mrs Browning's lost chance to prosecute their counterclaim in the original action.
217. The two major respects are these:

1. the judge's treatment of the expert evidence adduced before him, in relation both to the loss of profits claim and to the capital loss claim; and

2. his findings (based both on the expert evidence and the factual evidence) as to Mr and Mrs Browning's failure to mitigate their loss, and his consequential finding that the judge at the notional trial would not have awarded damages for loss of profits in respect of any period after the end of 1998.

218. The third, and relatively minor, respect is the judge's evaluation of Mr Gilham's claims.
219. I will consider each of these in turn.

The judge's treatment of the expert evidence

220. Referring to the mass of expert evidence before him, the judge concludes (in paragraph 78) that he should:

"…. take a broad brush rather than making a detailed analysis of the further reports."

221. Such an approach to the expert evidence is, in my judgment, wholly unobjectionable in principle; but the canvas to which the broad brush is to be applied must in my judgment extend to the entirety of the expert evidence, including the evidence of the experts called on behalf of Mr and Mrs Browning (and in particular the evidence of Mr Brookes and Mr Shelton in relation to the loss of profits claim and the evidence of Mr Handley – largely supported by the Bax Standen and FPDSavills reports – in relation to the capital loss claim).
222. So far as the loss of profits claim is concerned, the judge, as we know, based his assessment of damages on Mr Measures' 1996 report, noting (in paragraph 33) that "the particulars of negligence do not allege that, Professor Steele-Bodger apart, Brachers should have instructed other experts". At the same time, he concludes (in paragraph 78) that:

"…. had all gone as it should have done, the [1996] report would have been checked and perhaps improved before it was served",

and that had that process been carried out it would have led to some reduction in the amount of the claim.

223. In the event, the expert reports provided by Mr Brookes and Mr Shelton, which were based on Mr Measures' 1996 report, represent (as I read them) just the kind of reworking of the 1996 report that the judge had in mind. Yet Mr Brookes' evidence is not specifically referred to at any point in the judgment, and Mr Shelton's evidence merits only passing references; and this despite the fact that the judge considered that Mr Measures' 1996 report (in its unchecked and unimproved form) should be heavily discounted (as noted earlier, he reduced Mr Measures' 18-year period to 6 years (in paragraph 77), and went on to discount Mr Measures' loss of profit figures for those 6 years by 40 per cent (in paragraph 78)). Whilst the judge's selection of the 6-year period is based on his finding as to mitigation (see paragraph 90), he gives no specific reasons for applying a 40 per cent discount to Mr Measures' profit figures for the 6 years in question beyond saying that it results from his weighing of the expert evidence (which did not, in the event, include any oral evidence from Mr Measures).
224. At this point in his judgment, the judge, in a passing reference to Mr Shelton's evidence (see the sentence in parenthesis at the end of paragraph 78), compares the discounted figure of £109,336 with Mr Shelton's equivalent figure of £155,490 (a difference of £46,154: almost 30 per cent of Mr Shelton's figure). However, he does not go on to explain what significance he attaches to that comparison, or why he considers it appropriate to arrive at a figure which is so much lower than Mr Shelton's equivalent figure.
225. As to the capital loss claim, in arriving at his award of £15,000 (in paragraph 84) the judge makes no reference at all to the valuation evidence on either side beyond observing that the capital loss claim "faced difficulties in law and fact including valuation". Even allowing for the fact that the judge regarded the claim for loss of goodwill as a doubtful claim, the fact remains that the award of £15,000 represents only 11 per cent of the £136,585 claimed under this head as at the end of the trial (see paragraph 118 above).
226. In the circumstances it was in my judgment incumbent on the judge to explain, if only in the broadest terms, what valuation difficulties he had in mind so far as the capital loss in relation to the land was concerned, and why he considered that the judge at the notional trial would have effectively rejected Mr Handley's evidence in support of that aspect of the claim (and for that matter the evidence of the Bax Standen and FPDSavills reports). Absent any such explanation, the clear impression which I am left with is that on the capital loss claim, as on the loss of profits claim, the judge, far from tending towards an approach which was generous to Mr and Mrs Browning, was tending in the opposite direction.
227. All in all, I conclude that the judge's treatment of the expert evidence in his judgment fails to do justice to Mr and Mrs Browning's case, and represents an error of approach which feeds into, and infects, his findings and conclusions in so far as they are based on that evidence.

The judge's findings as to mitigation of loss

228. In paragraph 75 the judge finds:

"…. that Mr and Mrs Browning could and reasonably should have mitigated their loss over a period of time by adopting the measures set out in Mr Matthews' report" (Emphasis supplied)

229. In paragraph 77 he finds that:

"[m]itigation over a period would have been a gradual and drawn out process";

and he goes on to find that had that process begun in 1992 (as impliedly, it should) it would have been complete by the end of 1998. On that basis, he finds that the judge at the notional trial would most probably have awarded Mr and Mrs Browning damages for loss of profits only in respect of that six-year period. The dependence of his finding as to the six-year period on his finding that Mr and Mrs Browning had failed to mitigate their damage is confirmed in paragraph 90, where he says:

"I find that Mr and Mrs Browning should have been able to mitigate their losses by the end of 1998, and that they have no claim for ongoing losses after that."

230. In my judgment, however broad the brush which is applied to the evidence before the judge (and in particular the expert evidence), the effect of his findings as to mitigation of loss – that is to say his finding that Mr and Mrs Browning ought to have taken further steps to mitigate their loss prior to the notional trial and his finding that, had they done so, they would have suffered no ongoing losses after the end of 1998 – is to produce what seems to me to be a harsh result so far as Mr and Mrs Browning are concerned.
231. Mr and Mrs Browning are not commercial goat farmers on a large scale. Their business was making losses, and at all material times they were operating under severe financial constraints (see paragraph 65 of the judge's judgment). They needed to expand their production substantially, and in purchasing the Gilham goats their major purpose was to obtain the valuable contracts which Mr Gilham had with Waitrose and with Holland and Barrett (see paragraph 66 of the judge's judgment). On the evidence, they did their best in difficult circumstances to keep the disease under control, acting at all times on the advice of their local vet, Mr Baird. Mr Baird's evidence (accepted by the judge) was to the effect that he was no expert in Johne's disease, but that he did his best to find out what were the most effective measures to take, taking into account Mr and Mrs Browning's difficult financial position. Whatever the precise state of expert knowledge about Johne's disease in the early 1990s, I would regard it as extremely unlikely that the judge at the notional trial would have concluded that Mr and Mrs Browning ought to have sought advice from an eminent expert such as Professor Morgan as to the measures which they might take with a view to bringing the disease under control, even assuming that they could afford to take such measures.
232. Nor does the judge appear to have taken account of the fact that Mr and Mrs Browning's reasonable costs of mitigating their damage would in any event be recoverable as damages. Indeed, there does not appear to have been any detailed investigation at trial as to what the costs of the measures advocated by Mr Matthews might have been. Moreover, the question whether Mr and Mrs Browning could reasonably have afforded to take all or some (and if so, which) of the mitigating measures recommended by Mr Matthews was, as it seems to me, of direct relevance to the question whether they had failed to mitigate their losses.
233. Further, although the judge refers (in paragraph 76 of his judgment) to the fact that, due to Brachers' negligence, no award of damages was made in December 1996, he seems (if I understand the judgment correctly) to have placed this factor on Brachers' side of the scales, on the footing that payment of the damages would have enabled Mr and Mrs Browning "to mitigate their on-going loss …. and so to earn the profits they would be awarded in damages". At all events, this is a factor which should in my judgment be placed firmly on Mr and Mrs Browning's side of the scales, given that Brachers' negligence deprived them of the benefit of an injection of cash following the notional trial. Such an injection of cash would inevitably have had the effect of easing pro tanto Mr and Mrs Browning's pressing financial constraints and thus of putting them in a stronger financial position in relation to the taking of palliative measures than was in fact the case.
234. Next, although the judge correctly observed (in paragraph 32 of his judgment) that the difficulties caused by the fact that Brachers' negligently failed to retain Professor Steele-Bodger should count against Brachers rather than against Mr and Mrs Browning, he does not appear to have followed that through into his findings as to mitigation. In the context of mitigation, it seems to me not merely legitimate but appropriate to assume that had Professor Steele-Bodger been retained he would have advised Mr and Mrs Browning as to the steps which they ought reasonably to take with a view to mitigating their losses, taking into account their financial circumstances; whereas in the event they received no expert advice apart from that of Mr Baird (in so far as he was able to give such advice). The absence of Professor Steele-Bodger's advice as to mitigation ought, in accordance with the judge's observation, to weigh in the scales in favour of Mr and Mrs Browning. The effect of so doing is to render it less likely that the judge at the notional trial would have found that Mr and Mrs Browning had failed to mitigate their loss.
235. Finally, so far as mitigation is concerned, there was in my judgment no evidential basis for an unqualified finding by the judge that Mr and Mrs Browning had failed to mitigate prior to the notional trial. At best, he should have expressed his finding in terms of likelihood. To my mind, however, the evidence points strongly towards the opposite conclusion.
236. For all those reasons, I conclude that the judge's findings as to mitigation of loss are inconsistent with the approach to the assessment of damages established by the authorities, and that such findings accordingly cannot stand. Further, since (for reasons already given) such findings lie at the heart of the judge's assessment of the overall value of the loss of profits claim, that assessment is itself undermined.

Mr Gilham's claims

237. I agree with Mr Blunt that the judge's approach to the valuation of Mr Gilham's claims is also inconsistent with the correct approach as established by the authorities. The issue as to whether or not the claims would have been settled for £5,000 had Brachers not been negligent inevitably involves a high degree of speculation, and in addressing that issue the judge ought in my judgment to have given Mr and Mrs Browning if not the entire benefit of the doubt, then at least the lion's share of it.
238. Having addressed the three areas where, in my judgment, the judge departed from the correct approach as established by the authorities, I can now turn to the various specific issues.

Procedural unfairness?

239. Before doing so, however, I must first address Mr Croxford's preliminary objection, forcefully argued in his written response to the calculation document, that the submission of the calculation document (at least in its final form) after the conclusion of the hearing put Brachers' at a substantial disadvantage and was procedurally unfair.
240. I reject that objection. The contents of the calculation document in relation to each of the various stages in the suggested calculation of damage were clearly foreshadowed in the detailed arguments which were addressed to us by Mr Blunt and Miss Livesey in the course of the three-day hearing of this appeal. What Mr Blunt had not done, until we invited him to do so in the course of his submissions in reply, was to enlighten us as to the precise form of the order which he was inviting us to make, based upon those arguments. Since, in the event, the document which Mr Blunt handed in was only a draft document, and since there was no time available for any further oral submissions following Mr Blunt's reply (the appeal having been listed for a three-day hearing), we granted Mr Croxford permission to lodge written submissions in relation to the final version of the calculation document when served, which he duly did.
241. In my judgment there was no unfairness in that procedure. If, in making his oral submissions, Mr Croxford had regarded himself as being in any way disadvantaged by reason of the fact that in opening the appeal Mr Blunt had omitted to specify the terms of the order sought, I have no doubt that he would have said so in the course of his submissions. As it was, he was given the opportunity to comment on the calculation document, albeit in writing rather than orally.
242. I turn, then, to the various issues, using the numbering in paragraph 154 above.

The general approach (Issue 1)

243. For the reasons given in paragraphs 204 to 216 above, I conclude that although the judge correctly directed himself as to the correct approach to the assessment of damages in a case such as the instant case, he nevertheless failed to adhere to that approach in the three respects identified in paragraphs 217 and 218 above.

Preparation for the notional trial (Issue 2)

244. I agree with the judge that had Brachers prepared properly for trial, Barlows would have ensured that they in turn were properly prepared; and that it was inevitable in that event that at the notional trial issues as to mitigation of damage would have been raised on behalf of Mr Gilham. Any other conclusion would fly in the face of common sense, in my judgment.
245. After the conclusion of the hearing of the appeal, Mr Blunt and Miss Livesey drew our attention to the decision of this court in Charles v. Hugh James Jones & Jenkins [2000] 1 WLR 1278. In that case the claimant's personal injury claim had been automatically struck out due to the negligence of the defendant solicitors. Liability was admitted but there was a dispute as to damages. At the trial in 1998 the judge awarded the claimant substantial damages. He found that the personal injuries action would have come to trial in January 1996, but he nevertheless took into account evidence of a medical practitioner (Dr Barrow) which had been obtained subsequently. He did so on the basis that, but for their negligence, the solicitors would have obtained such evidence by January 1996. The solicitors appealed on the ground (among others) that the judge ought not to have admitted Dr Barrow's evidence, since no medical report by Dr Barrow had in fact been served in the personal injuries action. The Court of Appeal dismissed the solicitors' appeal. The leading judgment (with which Sir Richard Scott V-C and Robert Walker LJ agreed) was given by Swinton Thomas LJ. In the course of his judgment, Swinton Thomas LJ said this with reference to Dr Barrow's evidence (at pp.1286H-1287B):

"I accept …. that the judge had to consider the position as it would have been in January 1996. However, for reasons which I will come to shortly, the judge was entitled in coming to his conclusions in relation to that matter to take into account what has happened since. As to the specific complaints made in relation to Dr Barrow, no submission was made at the trial as to the admission of his evidence prior to final submissions, in other words no complaint was made as to the initial reception of his evidence. The fact that no complaint of negligence was made against [the solicitors] in relation to Dr Barrow's evidence is, to my mind, quite irrelevant. The question is whether competent solicitors would, in the circumstances of this case, have made Dr Barrow's evidence available at a trial in January 1996. …. I have no doubt at all that, having considered the evidence of the claimant herself, any competent solicitor would have obtained the general practitioner's evidence and have made it available at a trial in January 1996."

246. The above passage from the judgment of Swinton Thomas LJ, as I read it, confirms the conclusion which I have reached on this issue. In the instant case competent solicitors acting for Mr and Mrs Browning would have been fully prepared for the notional trial; and their state of preparedness would have been matched by that of Barlows, on behalf of Mr Gilham.

The loss of profits claim (Issues 3, 4 and 7)

247. In my judgment, taking proper account (in accordance with the authorities) of the fact that it was Brachers' negligence which deprived Mr and Mrs Browning of the chance to earn the profits for which they now seek compensation, the following propositions, taken together, provide a fair basis for the assessment of the overall value of their loss of profits claim:

1. that the chance of the judge at the notional trial finding that Mr and Mrs Browning had failed to mitigate their loss was negligible;

2. that, accordingly, the period which the judge at the notional trial would have adopted as being the period to which the claim for future loss of profits should be limited would not have been reduced on account of such a failure;

3. that, subject to proposition 4 below, it would have been appropriate for the judge at the notional trial to have awarded damages for loss of future profits over a period of four years from the date of the notional trial (that is to say a period expiring at the end of 2000, some six years after Mr and Mrs Browning began taking steps to reduce the effect of the disease);

4. that, given that at all material times prior to December 1996 Mr and Mrs Browning were in difficult financial circumstances, and that that situation was on any view likely to continue for some time after December 1996, it would have been appropriate for the judge at the notional trial to have extended the four-year period referred to in proposition 3 above by a further year, i.e. until the end of 2001;

5. that, so far as quantum is concerned, the loss of profits claim should be based on Mr Shelton's figures (including his separate award of interest), but subject to an appropriate discount (as to which, see proposition 7 below);

6. that Mr Aspell's criticism of Mr Shelton's methodology in basing his figures on the average of the price/earnings ratios of four quoted dairy companies (see paragraph 11.10 of his first report, referred to in paragraph 106 above) would appear to have considerable force; and

7. that in all the circumstances Mr Shelton's figures should be discounted by 30 per cent to reflect (a) the uncertainty which is inherent in the nature of the calculation, and (b) Mr Aspell's particular criticism of Mr Shelton's methodology.

248. Propositions 1 and 2 above are consistent with the submissions made on behalf of Mr and Mrs Browning.
249. Propositions 3 and 4 above produce a shorter period than the period for which Mr and Mrs Browning have contended. As to proposition 4, I have well in mind what the judge said in paragraph 91 of his judgment (quoted in paragraph 147 above). However, it remains the case that Mr and Mrs Browning's ability to take effective mitigating steps before December 1996 was materially restricted by lack of available resources, and that this was likely to continue for some time after that date, even in the event of a successful judgment. I would add that it seems to me that it would have been for Brachers to show both when a judgment sum would have been received, and its mitigating effect on the course of the disease.
250. So far as proposition 5 above is concerned, I do not accept Mr Croxford's submission that the figures need to be specifically discounted to take account of Mr and Mrs Browning's loss of the Waitrose contract in 1998. The presence of Johne's disease seems to have played no part in this loss: indeed, the immediate cause of the loss seems to have been Mr and Mrs Browning's failure or inability to buy a more effective processor. Moreover, Mr Shelton's figures for the profit which would have been earned but for the presence of the disease are based on the reduced volume of milk actually processed in and after 1998, so that the loss of the Waitrose contract appears to that extent to have already been excluded. In any event, absolute precision is never obtainable in a calculation such as this, and the general discount applied in proposition 7 above seems to me sufficient in the circumstances to cover any residual questions arising from the loss of the Waitrose contract.

The capital loss claim (Issue 5)

A. The claim in respect of loss of goodwill

251. In my judgment the point raised by the Respondent's Notice is well taken. On the evidence, the value of Mr and Mrs Browning's business lay essentially in its potential to earn profits. As Mr Shelton himself says in paragraph 6.15 of his report (quoted in paragraph 102 above):

"The value of the business is directly related to the profit that it generates."

252. On that basis, to award damages under this head in addition to damages for loss of profits would, in my judgment, involve double-counting. I accordingly conclude that the judge at the notional trial would not have made any award under this head of claim.

B. The claim in respect of the diminution in the value of the farm

253. In my judgment no double counting is involved in awarding damages under this head. Mr and Mrs Browning had two distinct assets, their business and their farm. Each suffered loss of value by reason of the presence of the disease. A combination of compensation for loss of profits (revenue loss) and compensation for loss of value of the farm (capital loss) is in my judgment appropriate in the circumstances of this case.
254. As to the date of valuation, it seems to me that as at the date of the notional trial the only feasible date was the current date (December 1996); and that that is the date which the judge at the notional trial would inevitably have selected. For the judge at the notional trial to have awarded damages on the basis of expert evidence as to the likely value of the farm with and without the disease at some date in the future would have involved such a high degree of speculation that I cannot think that he would have taken that course.
255. As to the amount of the award under this head, I accept Mr Croxford's submission that it is inappropriate to apply the judge's 25 per cent discount in the context of the loss of profits claim (in paragraph 79 of the judgment) – a discount which reflected the chance of Mr Gilham establishing that Mr and Mrs Browning's herd had been infected in whole or in part from some extraneous source – to the claim in respect of the diminution in value of the farm. In the context of the latter claim, it seems to me that different considerations may arise. For example, if Mr Gilham had succeeded in establishing that the disease was already present on the farm by 27 April 1991 (when the Gilham goats arrived), that would in all probability have proved altogether fatal to the claim for diminution in value of the farm, no matter how minimal the effect of the disease on Mr and Mrs Browning's herd prior to that date.
256. In my judgment, in the light of the evidence on this aspect of the case to which we were referred by Mr Croxford (both orally and in his written submissions), there must have been a real possibility of the judge at the notional trial concluding that this head of claim was defeated on the facts. In my judgment a discount of 40 per cent is appropriate to reflect that possibility.
257. As to the base figure to which that discount is to be applied, I would accept Miss Livesey's submission that Mr Handley's figures represent the most realistic valuation of the diminution in the value of the land. Mr Hampton's evidence is substantially out of line with all the other valuation evidence (i.e. Mr Handley's evidence, and the Bax Standen and FPDSavills valuations), not least in that he assumes that the disease can be eradicated from the farm in a period of only two years. Nevertheless, Mr. Handley's valuation of £126,000 should not be accepted without some reduction to reflect the effect in a notional trial of evidence providing lower valuations. A discount of 15 per cent from Mr Handley's figure seems to me fairly to reflect that position, giving a figure of £107,100.
258. I would accordingly discount the figure of £107,100 by a further 40 per cent, and not the 25 per cent discount proposed on behalf of Mr and Mrs Browning. This gives a figure of £64,260.

Mr Gilham's claims (Issue 6)

259. For reasons given earlier (see paragraph 236 above), the judge ought in my judgment to have brought these claims into account in the sum for which they were compromised: i.e. £5,000.

RESULT

260. I would allow the appeal to the extent indicated in this judgment. If (as Mr Croxford asserts) the calculation of interest in respect of the period since December 1996 has not been agreed, an inquiry may be necessary. However, I would expect the parties to reach agreement as to interest, if they have not already done so. I would also express the hope that the monetary consequences of this judgment can be agreed between the parties.

Lord Justice Mance:

261. I agree.

The Vice Chancellor:

262. I also agree.