Skip to main content
×
Home

COST OF CURE DAMAGES AND THE RELEVANCE OF THE INJURED PROMISEE'S INTENTION TO CURE

Abstract
Abstract

The article focuses on whether, when considering whether to award cost of cure damages, the courts take account of what the injured promisee to a breach of contract does, or intends to do, with his damages award, and whether or not they should take account of it. This issue has given rise to divergent approaches and some confusion in the cases. The article seeks to shed new light on the issue and considers possible ways of resolving the confusion.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      COST OF CURE DAMAGES AND THE RELEVANCE OF THE INJURED PROMISEE'S INTENTION TO CURE
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your Dropbox account. Find out more about sending content to Dropbox.

      COST OF CURE DAMAGES AND THE RELEVANCE OF THE INJURED PROMISEE'S INTENTION TO CURE
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your Google Drive account. Find out more about sending content to Google Drive.

      COST OF CURE DAMAGES AND THE RELEVANCE OF THE INJURED PROMISEE'S INTENTION TO CURE
      Available formats
      ×
Copyright
Corresponding author
Address for Correspondence: School of Law, London School of Economics, Houghton Street, London, WC2A 2AE, UK. Email: S.Rowan@lse.ac.uk.
Footnotes
Hide All
*

Associate Professor in Law, London School of Economics.

I would like to thank Gregg Rowan, the Editor of the Cambridge Law Journal and the anonymous reviewers for their comments and suggestions on an earlier draft.

Footnotes
References
Hide All

1 Robinson v Harmann (1848) 1 Ex 850; 154 E.R. 363 .

2 The promisee's intention is irrelevant to the other main measure of compensatory damages, the “difference in value measure”, which compensates the difference between the value of the promised performance and the performance actually rendered.

3 Ruxley Electronics & Construction Ltd. v Forsyth [1996] A.C. 344, 359, per Lord Jauncey; Darlington Borough Council v Wiltshier Northern Ltd. [1995] 1 W.L.R. 68 (CA), 80, per Steyn L.J.

4 Damages awards must be unconditional: Banbury v Bank of Montreal [1918] A.C. 626; Patel v Hooper & Jackson [1999] 1 W.L.R. 1792, 1800, per Nourse L.J.; Scullion v Bank of Scotland plc [2010] EWHC 2253, at [68]–[80]; Andrews N., Clarke M., Tettenborn A. and Virgo G., Contractual Duties: Performance, Breach, Termination and Remedies (London 2012), [21-103]–[21-105]. For inroads into this principle, mainly in personal injury and wrongful death cases, see McGregor H., McGregor on Damages, 19th ed. (London 2014), [38-004]–[38-012], [50-046].

5 Burrows A., Remedies for Torts and Breach of Contract, 2nd ed. (Oxford 2004), 222 .

6 Ibid., at p.183.

7 Patel [1999] 1 W.L.R. 1792, 1800, per Nourse L.J.

8 It is the subjective intention of the promisee that is relevant: Beale H. (ed.), Chitty on Contracts, 32nd edn. (London 2015), [26–036]; Latimer v Carney [2006] EWCA Civ 1417, at [24], per Arden L.J.

9 Dean v Ainley [1987] 1 W.L.R. 1729, 1735, per Glidewell L.J.; Dodd Properties (Kent) v Canterbury City Council [1980] 1 W.L.R. 433, 457, per Donaldson L.J.

10 For a more detailed review of these three cases and the issues that they raise in this context, see Burrows, Remedies, p. 222.

11 Tito v Waddell (No. 2) [1977] Ch. 106.

12 Ibid., at p. 327.

13 Ibid., at pp. 332–33.

14 Radford v De Froberville [1977] 1 W.L.R. 1262.

15 Ibid., at p. 1283. See also East Ham Corporation v Bernard Sunely & Sons [1966] A.C. 406, 434.

16 Ibid., at pp. 1268, 1284.

17 Ibid., at p. 1270.

18 Ruxley Electronics & Construction Ltd. [1996] A.C. 344 (HL).

19 Ibid., at p. 373, per Lord Lloyd.

20 Staughton L.J. in Ruxley Electronics [1994] 1 W.L.R. (CA) 650, 656, also considered intention as separate from the requirement of reasonableness.

21 O'Sullivan J., “Loss and Gain at Greater Depth: The Implications of the Ruxley Decision” in Rose F. (ed.), Failure of Contracts, Contractual Restitutionary and Proprietary Consequences (Oxford 1997), 1, 9.

22 See the judgments of Lord Bridge, Lord Keith and Lord Mustill which focus only on reasonableness without any mention of the promisee's intention.

23 At p. 359.

24 E.g. Bovis Lend Lease Ltd. (formerly Bovis Construction Limited) v RD Fire Protection Limited 2003 WL 21917429; Birse Construction Ltd. v Eastern Telegraph Company Ltd. [2004] EWCA 2512; London Fire and Emergency Planning Authority v Halcrow Gilbert Associates Ltd. [2007] EWHC 2546.

25 Unless the doctrine of mitigation requires the injured promisee to cure the breach.

26 Tito v Waddell (No 2) [1977] Ch. 106, pp. 332–33.

27 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 373.

28 Ibid., at pp. 332–33.

29 Radford [1977] 1 W.L.R. 1262, 1270, per Oliver J.; Harris D., Phillips J. and Ogus A., “Contract Remedies and the Consumer Surplus” (1979) 95 L.Q.R. 581, at 586. For criticism of this argument, see B. Coote, “Contract Damages, Ruxley, and the Performance Interest” [1997] C.L.J. 537, at 548–49, 561.

30 E.g. see the judgment of Lord Jauncey.

31 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 353, per Lord Bridge and 373, per Lord Lloyd; McKendrick E., “The Common Law at Work: The Saga of Alfred McAlpine Construction Ltd. v Panatown Ltd. ” (2003) 3 O.U.C.L.J. 145, at 174.

32 Ruxley Electronics [1994] 1 W.L.R. 650 (CA), 656–57.

33 Darlington Borough Council [1995] 1 W.L.R. 68 (CA), 75–76, per Dillon L.J. and 80, per Steyn L.J.; Dean [1987] 1 W.L.R. 1729, 1737–38, per Kerr L.J. See however Glidewell L.J. at 1735, who thought that intention was necessary; Sir George Waller at 1738 was undecided on this issue.

34 For other areas in which intention is not taken into account, see Coote, “Contract Damages”, pp. 560–63.

35 Darlington Borough Council [1995] 1 W.L.R. 68 (CA).

36 At p. 97.

37 The courts have sometimes felt uneasy with the “abstract” measure of damages that is the market rule and have declined to apply it: see Sealace Shipping Co. Ltd. v Oceanvoice Ltd. (The Alecos M) [1991] 1 Lloyd's Rep. 120. See also the different approaches in Bence Graphics International Ltd. v Fason UK Ltd. [1998] Q.B. 87 and Slater v Hoyle & Smith Ltd. [1920] 2 K.B. 11.

38 See the Sale of Goods Act 1979, ss. 50(3), 51(3), 53(3).

39 Bridge M., The Sale of Goods (Oxford 2014), [12.57].

40 Bridge M., “The Market Rule of Damages Assessment” in Saidov D. and Cunnington R. (eds.), Contract Damages: Domestic and International Perspectives (Oxford 2008), 431, 433–34. Agreeing with this approach: Winterton D., Money Awards in Contract Law (Oxford 2015), 196–97. See also Bridge M., “Market and Damages in Sale of Goods Cases” (2016) 132 L.Q.R. 405 and his reply to the analysis in Dyson A. and Kramer A., “There Is No ‘Breach Date’ Rule: Mitigation, Difference in Value and Date of Assessment” (2014) 130 L.Q.R. 259 .

41 Bridge (note 40 above).

42 Ibid., at pp. 436–39.

43 Ibid., at pp. 454–55.

44 Ibid., at pp. 448–55; Coote, “Contract Damages”, p. 562, shows that this rule enforces the performance interest.

45 Linden Gardens [1994] 1 A.C. 85.

46 Nor could any tortious liability be established by reason of the rule that pure economic loss is generally irrecoverable in tort: Murphy v Brentwood District Council [1991] 1 A.C. 398.

47 GUS Property Management Ltd. v Littlewoods Mail Order Stores Ltd. 1982 S.L.T. 533, 538, per Lord Keith.

48 Dunlop v Lambert (1839) 6 Cl. & F. 600; The Albazero [1977] A.C. 774.

49 Linden Gardens [1994] 1 A.C. 85, 97.

50 Ibid., at p. 98.

51 This analysis seems to have been shared by Lord Keith in Linden Gardens. He said at p. 95: “There is much force in the analysis that the party who contracted for the works to be done has suffered loss because he did not receive the performance he had bargained for and in order to remedy that has been required to pay for the defects to be put right by another builder.”

52 This is what Lord Clyde called the “first formulation” of Lord Griffiths's approach: Alfred McAlpine [2001] 1 A.C. 518, 533.

53 See the speeches of Lord Clyde and Lord Jauncey in Alfred McAlpine [2001] 1 A.C. 518; Beale, Chitty on Contracts, paras. [18-063], [18-066]–[18-067].

54 Alfred McAlpine [2001] 1 A.C. 518.

55 Ibid., at pp. 533ff., per Lord Clyde and 571–74, per Lord Jauncey.

56 Beale, Chitty on Contracts, at para. [18-063].

57 Darlington Borough Council [1995] 1 W.L.R. 68 (CA).

58 Ibid., at p. 97, per Steyn L.J.

59 Alfred McAlpine [2001] 1 A.C. 518.

60 Ibid., at pp. 547–48, per Lord Goff and 587–90, per Lord Millett.

61 Ibid.

62 Ibid., at pp. 546–47, 556, per Lord Goff and 592, per Lord Millett. For a criticism of this approach, see Beale, Chitty on Contracts, at para. [18-066].

63 For a discussion of the protection the performance interest, see e.g. Coote, “Contract Damages”; Webb C., “Performance and Compensation: An Analysis of Contract Damages and Contractual Obligation” (2006) 26 O.J.L.S. 41 . For a comparative perspective on this issue, see Rowan S., Remedies for Breach of Contract: A Comparative Analysis of the Protection of Performance (Oxford 2012).

64 See the judgments of Lord Clyde and Lord Jauncey in Alfred McAlpine [2001] 1 A.C. 518.

65 See the judgments of Lord Goff and Lord Millett in ibid.

66 Giedo van der Garde BV v Force India Formula One Team Ltd. (formerly Spyker F1 Team Ltd. (England)) [2010] EWHC 2373.

67 The claimants also sought the return of $2 million on the basis of total failure of consideration and, in the alternative, “Wrotham Park damages”.

68 At paras. [457]ff.

69 At para. [478].

70 De Beers UK Ltd. (formerly Diamond Trading Co Ltd.) v Atos Origin IT Services UK Ltd. [2010] EWHC 3276 (TCC); [2011] B.L.R. 274; 134 Con. L.R. 151; [2010] Info. T.L.R. 448.

71 Ibid., at para. [345].

72 Giedo van der Garde BV [2010] EWHC 2373, paras. [474]–[485].

73 At [18-066]–[18-068].

74 Kramer A., The Law of Contract Damages (Oxford 2014), 133 , criticises the decision for this very reason.

75 See earlier the paragraph entitled “Justifications for taking account of the promisee's intention to cure”.

76 Some commentators have argued that cost of cure damages should not be seen as compensatory but rather substitutionary: e.g. Smith S., “Substitutionary Damages” in Rickett C. (ed.), Justifying Private Law Remedies (Oxford 2009), 93 ; Winterton, Money Awards in Contract Law. The currently prevailing position in English law is that financial loss is the touchstone of damages liability, and it is on that basis that the paper proceeds.

77 London Fire and Emergency Planning Authority [2007] EWHC 2546.

78 See also Nordic Holdings Ltd. v Mott MacDonald Ltd. (2001) 77 Con. L.R. 88 ; GW Atkins Ltd. v Scott (1991) 7 Const. L.J. 215 ; Minscombe Properties Ltd. v Sir Alfred McAlpine (1986) [1986] 2 EGLR 15 ; Wigsell v School for the Indigent Blind Corp. (1881–82) L.R. 8 Q.B.D. 357; Imodco Ltd. v Wimpey Major Projects Ltd. Taylor Woodrow International Ltd. (1987) 40 B.L.R. 1 .

79 Burrows, Remedies, p. 223; Harris et al., “Contract Remedies”, p. 582.

80 E.g. Dean [1987] 1 W.L.R. 1729, 1737–38, per Kerr L.J.; Coote, “Contract Damages”, p. 562. Not everyone accepts that this tension exists. For instance, Burrows, Remedies, p. 222, sees this as a misleading objection because the courts commonly have to assess the likely future costs of the claimant on the basis that damages will cover these costs.

81 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 359.

82 Coote, “Contract Damages”, p. 563.

83 Bellgrove v Eldridge (1954) 90 C.L.R. 613 .

84 Ibid., at p. 616.

85 De Cesare v Deluxe Motors Pty Ltd . (1996) 67 S.A.S.R. 28 .

86 Ibid., at p. 30.

87 Unique Building Property Ltd. v Brown [2010] S.A.S.C. 106.

88 Ibid., at para. [94]; However, it has been argued that, in very exceptional circumstances, Bellgrove will be displaced “if there are supervening circumstances that show with substantial certainty” that the rectification will not happen: see Scott Carver Pty Ltd. v SAS Trustee Corp. [2005] NSWCA 462, at [44], per Hodgson J.A.; Central Coast Leagues Ltd. v Gosford City Council (unreported, Supreme Court, NSW, Giles C.J. at CL, 9 June 1998); Westpoint Management Ltd. v Chocolate Factory Apartments Ltd. [2007] NSWCA 253.

89 De Cesare (1996) 67 S.A.S.R. 28.

90 Director of War Service Homes v Harris (1968) Q.R. 275.

91 Whether the test of reasonableness is the same as the test applied in the context of mitigation is a point of disagreement. Oliver J. in Radford [1977] 1 W.L.R. 1262, 1284, thought that whether it is reasonable for the promisee to incur the cost of reinstatement was “[a question] of mitigation”. This view is shared by a number of commentators: Kramer, The Law of Contract Damages, pp. 119ff.; Burrows, Remedies, pp. 219ff. Contra Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 369–70, per Lord Lloyd. Regardless of whether the tests are identical, they share the same objective, which is not to overburden the defaulting promisor with losses that he has not caused.

92 G. McMeel, “Common Sense on Cost of Cure” [1995] L.M.C.L.Q. 456, at 458–59; Loke A., “Cost of Cure or Difference in Value: Towards a Sound Choice in the Basis for Quantifying Expectation Damages” (1996) 10 J.C.L. 189 .

93 Radford [1977] 1 W.L.R. 1262, 1270, per Oliver J.

94 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 353, per Lord Keith and 367, 369, per Lord Lloyd.

95 Ibid., at pp. 357–58, per Lord Jauncey; Imodco Ltd. (1987) 40 B.L.R. 1 .

96 Dean [1987] 1 W.L.R. 1729, 1735, per Glidewell L.J.

97 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 358, per Lord Jauncey.

98 Ibid, at pp. 361–60.

99 Ibid, at p. 358, per Lord Jauncey; Radford [1977] 1 W.L.R. 1262, 1270, per Oliver J.

100 Ibid.; see also Channel Island Ferries Ltd. v Cenargo Navigation Ltd. [1994] 2 Lloyd's Rep 161, 166–67, per Philips J.; GW Atkins Ltd. (1991) 7 Const. L.J. 215, 221–22, per Ackner L.J.

101 Coote, “Contract Damages”, p. 559.

102 Ruxley Electronics [1994] 1 W.L.R. (CA) 650, 652, per Staughton L.J.

103 Radford [1977] 1 W.L.R. 1262, 1269.

104 Tito [1977] Ch. 106, 333.

105 Nordic Holdings Ltd. (2001) 77 Con. L.R. 88, at [106]; London Fire and Emergency Planning Authority [2007] EWHC 2546, at [633]ff.

106 Ibid; Birse Construction Ltd. [2007] EWHC 2546, at [52].

107 London Fire and Emergency Planning Authority [2007] EWHC 2546, at [633]ff.; Nordic Holdings Ltd. (2001) 77 Con. L.R. 88 , at [107].

108 Ward v Cannock Chase District Council [1986] Ch. 546, 577 (tort).

109 Nordic Holdings Ltd. (2001) 77 Con. L.R. 88, at [106].

110 London Fire and Emergency Planning Authority [2007] EWHC 2546, at [633]ff.

111 Dublin Corp. v Building and Allied Trade Union [1996] 2 I.L.R.M. 547 ; O'Dell E., “Restitution and Res Judicata in the Irish Supreme Court” (1997) 113 L.Q.R. 245 .

112 Dublin Corp. [1996] 2 I.L.R.M. 547, 556.

113 Possibly on the basis of unjust enrichment: ibid.

114 Unless the money is held on trust (eg a Quistclose type of trust, see Barclays Bank v Quistclose Investments Ltd. [1970] A.C. 567)) or put into an escrow account pending the promisee curing the breach.

115 Proposed by Webb, “Performance and Compensation”.

116 Zuckerman A., Civil Procedure (London 2003), [22.74]–[22.91].

117 Tito [1977] Ch. 106, 333.

118 Radford [1977] 1 W.L.R. 1262, 1284, per Oliver J.; see also Dean [1987] 1 W.L.R. 1729, 1735, per Glidewell L.J.

119 Ruxley Electronics & Construction Ltd. [1996] A.C. 344, 373, per Lord Lloyd. See also Scullion [2010] EWHC 2253, at [68]–[80]: the courts have no jurisdiction to extract an undertaking from the promisee to compel him to spend his damages award in a particular way.

120 Burrows, Remedies, p. 220; McKendrick, “Breach of Contract and the Meaning of Loss”, p. 50. For arguments in favour of enforcing such undertakings, see A. Phang, “Subjectivity, Objectivity and Policy: Contractual Damages in the House of Lords” [1996] J.B.L. 362.

121 Zuckerman, Civil Procedure, para. [22.89].

* Associate Professor in Law, London School of Economics.

I would like to thank Gregg Rowan, the Editor of the Cambridge Law Journal and the anonymous reviewers for their comments and suggestions on an earlier draft.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

The Cambridge Law Journal
  • ISSN: 0008-1973
  • EISSN: 1469-2139
  • URL: /core/journals/cambridge-law-journal
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords:

Metrics

Full text views

Total number of HTML views: 5
Total number of PDF views: 72 *
Loading metrics...

Abstract views

Total abstract views: 82 *
Loading metrics...

* Views captured on Cambridge Core between 17th November 2017 - 14th December 2017. This data will be updated every 24 hours.