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Damages awarded for Minister’s failure to process grant application

AUTHOR(S): Nicola Dunleavy
PRACTICE AREA GROUP: Commercial Litigation and Dispute Resolution, Environmental, Planning and Safety
DATE: 26.10.2015

In the Minister for Communications, Marine and Natural Resources v Figary Water Sports Development Company Limited (unreported, Supreme Court, 30 July 2015) the Supreme Court awarded damages for “loss of chance” against the State on the basis that the Minister for Communications, Marine and Natural Resources was in breach of a duty under European Union Law to properly administer a grant scheme.  The Supreme Court found that the Minister had prevented the processing of a grant application by Figary Water Sports Development Company Limited (“Figary”) for EU funding for a project to develop a marina.  As a consequence Figary had lost the chance to obtain part of the funding to which, on balance, it would otherwise have been entitled.  The Supreme Court’s approach could potentially be significant in the context of any “lost chance” in breach of European law.

In the grant application, Figary had applied for €2.46 million for the Marina project.  The Supreme Court found that it was probable that the funding actually granted would have been in the range of €800,000 to €1 million.  This finding was based on a number of factors, particularly Figary’s obligation to ‘match’ the grant funding sought. The Supreme Court considered Figary’s accounts to assess what funding Figary could have matched.  On the basis of Figary’s 50/50 chance of obtaining funding, the Supreme Court awarded “Francovich” damages to Figary of €450,000 - a reduction on the High Court’s finding which awarded 50% of the total grant sought by Figary.

The Court found that the Minister had “manifestly and gravely disregarded the limits” of his discretion as implementing agent in processing grant applications.  The Supreme Court confirmed that Figary’s claim for damages for “loss of chance”, must demonstrate that (a) Figary had, on the balance of probabilities, a real and substantial chance of success, not merely a speculative one; and (b) there were no actions which, on the balance of probabilities, would have prevented that chance from being real and substantial. The court confirmed that once those criteria are satisfied it will then assess the quantum of damages based on the likelihood of that chance.

The Supreme Court was satisfied that there was ample evidence to uphold the High Court’s conclusion that the EU Steering Committee would, in principal, have approved Figary’s grant application.  The next stage in the grant application process would have been an independent economic appraisal.  However, the Supreme Court found that Figary’s chance of obtaining the full grant would have been “extremely slight” but that Figary would have had a 50/50 chance of obtaining some grant funding.

This decision provides interesting guidance on how to quantify damages for “loss of chance”.

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