Anselm v Buckle & Anor

A contractual obligation to carry out works identified by a later expert report is not capped by an earlier estimate used only to calculate a retention, unless the contract provides for that limitation. A defendant relying on failure to mitigate must plead and prove the particular case advanced. A court should not limit damages on an unpleaded and unproved basis. Mitigation requires a proper assessment of the claimant’s resources and the reasonableness of funding works which the defendant undertook to perform. A loss-of-chance claim requires proof, on the balance of probabilities, that the claimant would have pursued the relevant venture absent the breach. An alternative loss theory cannot be introduced for the first time on appeal.

The respondents, who had sold business premises and granted a lease to the appellant, claimed the cost of works required by the Fire Authority under a lease indemnity. The appellant counterclaimed damages for breach of an agreement under which the respondents had undertaken to complete specified works within six months of contractual completion.

After a five-day trial, the County Court rejected the respondents’ construction of the agreement and found substantial breaches. It limited the appellant’s consequential losses from 1 March 2007, awarded no damages for electrical works beyond £500, and rejected the claim concerning a higher-end kitchen business. The appeal concerned the proper scope of the electrical obligation, mitigation, and remoteness and causation.

1. Appeal allowed in part. The appellant succeeded on the electrical works and mitigation grounds. The appeal concerning the alleged loss from a higher-end kitchen business was dismissed.
2. Electrical works. On the true construction of clause 15, read with the letter of 18 September 2003, the respondents were required to carry out whatever upgrading an electrician’s report obtained by them showed was necessary. The £500 estimate was supplied before completion by the appellant’s surveyor, was not referred to in clause 15, and was used only in proposing the retention. It did not limit the contractual obligation. The respondents were liable for the cost of the complete rewiring required by the report which should have been obtained.
3. Mitigation. Where failure to mitigate is relied upon in answer to contractual damages, the defendant must plead and prove that case. The case pleaded and pursued at trial was that the appellant should use the retention money to fund the repairs. The judge instead relied on a different case, namely that the appellant should use his own resources to carry out the works. That case had not been pleaded, put to the appellant in cross-examination, or proved, and it was unfair to decide the issue on that basis.
4. The fact that the lease permitted the appellant to undertake repair works without the respondents’ consent did not establish failure to mitigate. The court also had to consider whether it was reasonable and prudent for him to fund works which the respondents had undertaken to perform, having regard to the resources actually available at the relevant time. The limitation on consequential losses from 1 March 2007 was therefore removed. No alternative limiting date had been pleaded or established.
5. Causation and remoteness. The appellant’s claim was for the lost chance of establishing a more profitable, higher-end kitchen business. He had to prove on the balance of probabilities that, absent the disrepair caused by the respondents’ breach, he would have pursued that business. The judge’s finding that he had no settled intention to do so was a finding on causation and was not challenged. The judge’s discussion of remoteness proceeded only on an alternative assumption and was unnecessary. The appellant could not recast the claim on appeal as loss of profitability from the budget business actually established, because that alternative case had not been pleaded or advanced in evidence at trial.

• Court of Appeal (Civil Division): On appeal, the court allowed the electrical works and mitigation grounds, removed the limitation on consequential losses, and dismissed the remoteness ground: [2014] EWCA Civ 311.
• Bradford County Court: After a five-day trial, the court entered judgment on the respondents’ claim and on the appellant’s counterclaim, awarded damages to be assessed, limited consequential losses from 1 March 2007, and rejected the electrical works claim beyond £500 and the higher-end kitchen business claim.