C & P Haulage v Middleton

Damages for breach of contract place the claimant, so far as money can, in the position which proper performance would have produced. Wasted expenditure may be recovered where the breach caused the waste, particularly when the expected profit cannot be proved. It cannot be recovered where performance would have left the claimant bearing the same expenditure or loss.

The reliance measure cannot place a claimant in a better financial position than performance. Contract damages compensate for the consequences of breach, rather than the consequences of entering into an improvident bargain. Where breach is established but causes no substantial loss, the claimant remains entitled to nominal damages.

The defendant occupied the plaintiffs’ workshop under a renewable six-month licence. He spent £1,767.51 on a wall, locks, electricity and a telephone, knowing that fixtures had to remain when the licence ended. The plaintiffs wrongfully excluded him about ten weeks before they could lawfully have terminated the licence.

The defendant immediately resumed trading from his own property. He incurred no additional expense or loss of profit and avoided the payment which would otherwise have been due for the workshop. The Watford County Court dismissed his counterclaim for damages because the breach had caused no loss.

The defendant appealed, seeking his expenditure as reliance damages. The central issue was whether wasted expenditure could be recovered when its award would place him in a better position than proper performance of the contract.

1. Appeal dismissed save as to nominal damages. Ackner LJ held that the plaintiffs had committed a breach by excluding the defendant before the licence could lawfully end. A proved breach entitled the defendant to judgment even though he could establish no substantial loss. Judgment was therefore entered for nominal damages of £10.

2. The ordinary compensatory principle places the claimant, so far as money can, in the position which performance of the contract would have produced. The defendant instead sought the position he would have occupied if the agreement had never been made. That approach was unavailable because the result of performance could readily be assessed.

3. (1972) 1 Queen's Bench 60 did not establish that reliance expenditure is recoverable irrespective of the bargain’s value. That decision concerned expenditure thrown away by breach where the profit from an abandoned production could not be assessed. It did not concern a loss-making or otherwise disadvantageous bargain.

4. A claimant cannot recover reliance expenditure when the court can see that the expenditure or loss would have remained if the contract had been fully performed. Contract damages compensate for loss caused by breach. They do not transfer to the defendant the risk inherent in the claimant’s bargain or make the defendant an insurer of the claimant’s enterprise.

5. Proper performance would have given the defendant only another ten weeks’ occupation. He suffered no lost profit or increased expense during that period. He instead saved the payment which would have been due for the premises. Recovery of the improvement costs would therefore have placed him in a better position than lawful performance.

6. Fox LJ agreed. The expenditure was equally liable to be wasted without any breach because the licence could be terminated at short notice and the fixtures had to remain. The waste resulted from the inherently risky bargain rather than from the premature exclusion.

1. Court of Appeal: Dismissed the appeal save that judgment was entered for the appellant on the counterclaim for nominal damages of £10.

2. Watford County Court: His Honour Judge Eric Stockdale held that the plaintiffs had breached the licence agreement but dismissed the counterclaim because the defendant had suffered no loss.