Hooper & Anor v Oates

Damages for a buyer’s failure to complete a sale of land are governed by the compensatory principle, not an inflexible breach-date rule. The breach date is ordinarily appropriate where an immediately available market permits prompt substitute performance. Land rarely has such a market. Where the seller takes reasonable steps to mitigate by marketing the property, loss should be assessed when those efforts end and the loss crystallises. A later resale price will ordinarily provide the measure. If the seller retains the property after reasonable but unsuccessful efforts to sell, the value at that later date may be used, up to the hearing. A subsequent market fall remains recoverable where the seller has not failed to mitigate.

The respondents agreed to sell freehold property to the appellant, who failed to complete. Liability, forfeiture of the deposit and liability for damages had been determined earlier; the appellant’s liability appeal was dismissed in [2010] EWCA Civ 1346. On the remitted assessment of damages, Mr Recorder Khan valued the property at a later date, after the respondents had marketed it, let it temporarily and eventually resumed occupation. The appellant argued that damages had to be measured at the breach date. The respondents relied on their reasonable attempts to sell and the subsequent fall in value. The central issue was the proper date for assessing loss.

1. Appeal dismissed. The Court of Appeal unanimously upheld the recorder’s assessment by reference to the later value of the property.
2. The governing principle is compensation. Damages should place the innocent party, so far as money can, in the position performance would have produced. The usual breach-date measure is only a specific application of that principle. Johnson v Agnew [1980] AC 367 establishes that another date may be selected where the breach-date measure would cause injustice. That principle is not confined to cases in which specific performance has been pursued and abandoned.
3. The existence of an available market is highly relevant. Section 50(3) of the Sale of Goods Act 1979 illustrates the ordinary market-difference approach, and Dampskibsselskabet “Norden” A/S v Andre & Cie S.A. [2003] 1 Lloyd’s Rep 287 explains its rationale. Land ordinarily lacks an immediately available market because marketing and conveyancing take time. In such cases, the seller’s reasonable response to the breach and mitigation efforts determine the appropriate date.
4. Where the seller reasonably resells, the eventual resale price will ordinarily be set against the contract price because it demonstrates the actual loss. Where the seller does not resell, the loss should be assessed when reasonable attempts to sell end and the decision to retain the property crystallises, subject to the hearing date. A later fall in value is not excluded merely because it occurred after breach, provided the seller acted reasonably. Any allegation of failure to mitigate must be pleaded and supported by evidence.
5. The respondents had taken reasonable steps to sell and there was no pleaded or proved failure to mitigate. Their later value of £495,000 was therefore an appropriate basis for assessment. It was unnecessary to decide the precise crystallisation date because the evidence produced the same result.

1. Court of Appeal (Civil Division): The appeal against the damages assessment was dismissed, and the order of Mr Recorder Khan was upheld: [2013] EWCA Civ 91.
2. Court of Appeal (Civil Division): The appellant’s earlier appeal on liability was unsuccessful: [2010] EWCA Civ 1346.
3. Manchester County Court: Mr Recorder Khan determined liability on 3 March 2010 and assessed damages on 22 March 2012 by reference to the later property value.