Sorgem Evaluation was commissioned to assist JCDecaux France, which was claiming loss of earnings following the termination of its contract by the Municipality of Aix-en-Provence on grounds of public interest.
In its judgment of 26 September 2022 (Marseille Administrative Court of Appeal, 6th Chamber – three-judge panel, 26 Sept. 2022, No. 17MA00120), the Marseille Administrative Court of Appeal ordered the Municipality of Aix-en-Provence to pay not only the loss of earnings resulting from the termination but also the costs of the private expert report incurred by JCDecaux France, on the grounds that “The costs of an expert assessment may be included in the compensation payable by the party responsible for the damage if that assessment was useful to the administrative court in determining the compensable loss.” The Administrative Court of Appeal considers that “In the present case, the expert assessment commissioned privately by JCDecaux France from Sorgem Evaluation was useful in determining its loss. The costs of this expert assessment, amounting to €40,042.08 including VAT, should therefore be regarded as a component of its loss.”
The judgment also makes two important points:
1/ the calculation of damages intended to compensate for a loss of revenue must be carried out before taking corporation tax into account:
“Compensation intended to make good a company’s loss of earnings must, in so far as it compensates for a loss of commercial revenue, be regarded as a profit for the financial year in which it was awarded and is, as such, subject to corporation tax. This circumstance precludes the compensation intended to make good the loss of revenue from being assessed on the basis of the operating profit after deduction of corporation tax.”
2/ The calculation of damages intended to compensate for a loss of revenue must be limited to the additional indirect costs that would have been incurred had the contract continued:
"(…) the loss of earnings corresponds to the amount of remuneration foregone, less only those additional expenses that would have been incurred had the contract continued to be performed until its completion. It is therefore necessary to determine to what extent the expenses recorded as ‘indirect operating costs’ actually correspond to additional expenses that would have been incurred by the company had the contract continued to be performed.”
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