DAMAGES, MARKET VALUE AND EXPERT EVIDENCE
In Regal BA Limited v Jun Zhang [2026] EWHC 1446 (Ch), the England and Wales High Court considered how damages should be assessed where a buyer failed to complete the purchase of high-end residential property, and where the seller later resold at a much lower price than the contractual price.
Background. The claimant (“Regal”) agreed to sell “High Trees”, a luxury residential property at 16 White Lodge Close, to the defendant (“Ms Zhang”) for £16.9 million including contents, with completion ultimately due on 22 April 2024 (Judgment [2], [5]).
Ms Zhang failed to complete by the deadline, a notice to complete expired on 8 May 2024, the Sale Agreement was terminated, and Ms Zhang forfeited a deposit of £2,527,500 (Judgment [6]).
Regal later sold the property to 16 Bishop Limited for £10,157,168.94 on 12 September 2024 (Judgment [7]).
The principal dispute was not liability in principle, which Ms Zhang admitted, but quantum: Regal claimed the difference between the £16.9 million contract price and the resale price, less the forfeited deposit, while Ms Zhang argued that the resale price was below true market value (Judgment [8]–[9]).
The damages issue: resale price or valuation evidence? The Court began from the compensatory principle in Johnson v Agnew [1980] AC 367: the innocent party is to be put, so far as money can do so, in the position it would have occupied had the contract been performed (Judgment [11]).
In the failed land-purchase context, the Court noted that York Glass Co Ltd v Jubb [1925] All ER Rep 285 established the usual measure as the difference between the agreed price and the value of the land remaining with the vendor at the date of breach, with further incidental expenses also recoverable (Judgment [12]–[13]). And relying on Hooper v Oates [2013] EWCA Civ 91, the Court accepted that the eventual resale price would often be the appropriate figure to set against the contract price, unless the defendant could show that the claimant failed to mitigate (Judgment [14]–[16]).
The Court thus held that the price obtained by Regal on resale was of primary importance, subject only to Ms Zhang proving that the property had not been freely and competently sold at arm’s length on the open market, with the consequence that the best available price was not obtained (Judgment [17]).
The Court further relied on Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] 2 All ER 769 for the proposition that where a property has been properly marketed, the sale price is potentially the best evidence of open market value, with comparables serving essentially as a cross-check (Judgment [18]), making clear that if prices achieved by comparables were at variance with the sale price in issue, it does not necessarily follow that the property was not freely and competently sold on open market (Judgment [19]).
Mitigation and “bad luck”. Ms Zhang’s case focused on the adequacy of the marketing and on alleged reasons why the sale to 16 BL did not reflect proper market value. The Court rejected those points and found that the property had been marketed for an appropriate period by two successive agents with expertise in the relevant sector (Judgment [80]).
It also found that the sale to 16 BL was an arm’s-length open-market sale and that any element of bad luck in failing to find a buyer willing to pay more than £10.1 million was irrelevant (Judgment [80]).
This is an important practical point. The Court expressly recognised that, at the upper end of the property market, luck may play a greater role because the pool of potential purchasers is smaller (Judgment [21]). A defaulting buyer cannot simply substitute a theoretical valuation for the actual resale price where the seller has properly exposed the property to the market.
The expert evidence: useful, but only as a cross-check. Both parties relied on valuation experts. Regal’s expert, Mr Nimba, valued the property at £10.25 million, while Ms Zhang’s expert, Mr Kay, valued it at £14.75 million (Judgment [82]–[83], [89]).
The Court nevertheless held that the expert valuation evidence was of little help in determining damages because the property had been adequately marketed and sold on the open market, though they may be used as a cross-check (Judgment [81]).
Criticism on expert evidence. The Court criticised the way the expert evidence had been prepared. Both experts had been given the pleadings and knew, before finalising their reports, the values each side wished to establish at trial (Judgment [86]).
The Court considered that the experts’ credibility would have been improved if they had first valued the property without knowing the parties’ target figures, and only later been asked to comment on the actual resale price in a supplementary report (Judgment [87]).
A significant concession was that counsel for both parties agreed that this sequential approach would have been of greater assistance to the Court (Judgment [88]).
The Court did not suggest that either expert had set out to mislead it, but it recognised the practical risk that experts in contentious proceedings may be influenced by loyalty to the instructing party and by the litigation process itself (Judgment [90]).
As a result, the Court noted that the value of the expert evidence was compromised even as a cross-check (Judgment [91]).
Concluding observations. The decision is a useful reminder that, in failed property transactions, the actual resale price may be more important than retrospective expert valuation evidence where the resale follows proper marketing.
It is also a warning on expert valuation evidence: where experts know the parties’ pleaded figures before valuing the asset, their evidence may be seen as less independent and less useful. Thus, a staged approach — valuation first, response to pleaded case and actual sale price later — may better preserve the expert’s role as an independent assistant to the court in appropriate cases.
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