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Failure to complete

Damages for failure to complete

Date of assessment

Hooper v Oates
[2013] EWCA Civ 91

Summary

Damages for failure to complete should be assessed so as to take all relevant factors into account in order to put the innocent party into the same position as if the contract had been performed.

Facts

C contracted to sell their property to D for £650,000 with completion set for 30 June 2008. D failed to complete and C accepted the repudiation. After 14 months on the market, but no sales, C let the property for six months and by the summer of 2011 moved back in. Due to the general fall in market conditions in later 2008, the value of the property had fallen since D failed to complete.

C sued for the balance of the deposit due and for damages. At the hearing the following expert evidence was adduced in relation to the value of the property at various dates:
  • Completion - £600,000.
  • October 2008 - £545,000.
  • 13 September 2010 - £495,000.
Appeal

C was awarded damages based on the 13 September 2010 figure and awarded £110,000. D appealed that decision, maintaining that damages should be assessed at the date of breach and not at a later date.

Decision

The appeal was dismissed.

Lloyd LJ referred to Johnson v Agnew [1980] AC 367 for the proposition that:
    “The general principle for the assessment of damages is compensatory, i.e. that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach …”


However, the date of breach was not always the correct date. Since Techno Land Improvements v British Leyland (UK) Ltd [1979] 2 EGLR 27, there has been greater flexibility so that:
    “The general rule does not require the court to close its eyes to matters occurring after the breach of contract or after the commencement of the action or even after a judgment has declared the defendant’s liability without quantifying it.”
In dismissing the appeal on the basis that it was correct to take a later date in this case, at paragraph 34 he stated:
    “I agree that the availability of a market is a most relevant factor in relation to the date for assessment of damages for breach of a contract for the sale of land where the buyer fails or refuses to complete the purchase. It is hardly ever the case that there is a readily and immediately available market for the sale or purchase of land, in the sense that the seller can go out into the market on the date of breach, or the next day, and find a purchaser who can and will proceed to contract at once. That may be possible with commodities, with listed shares, with freight forward agreements, or with charterparties, for example. But the sale of land invariably requires time, under the procedures and legislation prevailing in England, and how long it requires will depend in part on economic circumstances at the time. The definition of market value itself, to which I have referred above, involves an assumption that the property has been exposed to the market for a reasonable time, which is likely to be for more than a month and may well be several months or longer. If the comparison sought to be made is between the contract price and the market value as at the breach date, then the assessment of that market value, by an expert valuer on established principles, would have to assume a prior period of marketing, which, by definition, will not and could not have happened.”
And at paragraphs 38 and 39:
    “It seems to me that the breach date is the right date for assessment of damages only where there is an immediately available market for the sale of the relevant asset or, in the converse case, for the purchase of an equivalent asset. This is most unlikely to be the case where the asset in question is land. If the defaulting party is the buyer, much will depend on what the seller does in response to the breach…

    If the vendor does not resell, and takes no steps to do so, then it may be that the date of the breach is to be taken as relevant, or a date soon after that, when he is shown, or taken, to have decided to retain the property. In the present case, by contrast, the seller only decided not to resell after taking reasonable steps to find a buyer. I can see no basis of policy or principle, in such a case, for imposing on the vendor the value as at the breach date rather than the later date when, after taking steps with a view to mitigating his loss, he finally decided to retain the property upon the failure of his attempt to mitigate.”



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