Summary
Contract damages are assessed by reference to causation and on the assumption that the claimant responded reasonably to the breach. Where the claimant takes a reasonable mitigating step, the calculation includes both its costs and the resulting benefits, subject to any benefit being causally attributable to the breach rather than an independent commercial decision.
Credit must be given for any monetary benefit received or reasonably capable of realisation as a result of reasonable mitigation, even if the benefit was unavoidable. The defendant bears the burden of proving both the existence and value of the benefit relied upon.
Factual background
An airline claimed damages after an aircraft-seat manufacturer delivered some seats late and failed to deliver others under three English-law contracts. Regulatory intervention following falsification of safety data also required testing and replacement of certain seats. Liability was admitted shortly before trial.
The principal claim concerned the cost of leasing three substitute aircraft. Other claims included the additional cost of replacement seats, storage and preservation expenses, technician expenses and regulatory-compliance costs. The manufacturer contended that profits, fuel savings and credits obtained from an aircraft supplier had to be brought into account. The central issues were which costs and benefits were legally attributable to reasonable mitigation and who bore the burden of proving betterment.
Held
Judgment for the claimant on its principal damages claim. The claimant was entitled to recover approximately US$107 million representing the first two years of the substitute-aircraft leases. The third year was attributable to the claimant’s independent commercial objectives rather than reasonable mitigation of the breaches: paras [51]–[62], [138]–[139].
The mitigation rules are aspects of causation. Damages are assessed by reference to the position resulting from a reasonable response to the wrong. Where the claimant acts reasonably, both costs and benefits caused by that response enter the damages calculation. Where it acts unreasonably, damages are assessed as if it had acted reasonably: paras [31]–[38].
A benefit from reasonable mitigation must still be causally connected with the breach. A consequence of an independent commercial decision remains for the claimant’s own account. Applying that distinction, the first two years of the leases were attributable to the breach, but the third was not: paras [46]–[62].
Credit must be given for a monetary benefit received, or reasonably capable of being realised in money, as a result of reasonable mitigation. This applies whether or not the benefit was chosen or avoidable. Non-pecuniary improvements may stand differently where they confer no proven realisable financial advantage: paras [66]–[82].
The defendant bears the burden of proving both the fact and amount of any benefit said to reduce recoverable mitigation expenditure. The manufacturer failed to prove that profits from the leased aircraft offset the claimant’s loss or lease costs: paras [83]–[92], [127]–[139].
The claimant had to credit US$1,893,418 in proven fuel savings from lighter replacement seats, but no deduction was made for alleged savings from other seats because their value was too speculative. The recoverable storage costs were US$2,465,980. Technician expenses were reduced by 80%. The legal-cost claim and future seat-replacement claim failed: paras [141]–[170].
The claimant had to credit a US$9.44 million price reduction causally connected with delayed aircraft delivery. Later credits conditional on purchasing other aircraft resulted from an independent transaction and were not attributable to the breaches. A separate disruption-cost sum was irrecoverable because liability for it was unproved. The parties were invited to agree the resulting net awards in each currency: paras [171]–[192].
The court’s approach to earlier authorities
Available to signed-in members.
Appellate history
not stated in the judgment.
Key cases cited
25 authorities cited.
- Golden Strait Corporation (Appellants)v.Nippon Yusen Kubishka Kaisha (Respondents) [2007] UKHL 12
- Lagden (Respondent) v. O'Conner (Appellant) [2003] UKHL 64
- Dimond v Lovell [2002] 1 AC 384
- Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452
- British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673
- Pattni v First Leicester Buses Ltd [2011] EWCA Civ 1384
- Wilding v British Telecommunications plc [2002] EWCA Civ 349
- Voaden v Champion [2002] EWCA Civ 89
- Darbishire v Warran [1963] 1 WLR 1067
- FULTON SHIPPING INC OF PANAMA v GLOBALIA BUSINESS TRAVEL SAU (FORMERLY TRAVELPLAN SAU) OF SPAIN (THE "NEW FLAMENCO") [2014] 2 Lloyd's Rep 230
- Yam Seng PTE Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB)
- Borealis AB v Geogas Trading SA [2010] EWHC 2789 (Comm)
- Omak Maritime Ltd v Mamola Challenger Shipping Co & Ors [2010] EWHC 2026 (Comm)
- BRITVIC SOFT DRINKS LTD AND OTHERS v. MESSER U.K. LTD. AND ANOTHER [2002] 1 Lloyd's Rep 20
- Standard Chartered Bank v Pakistan National Shipping Corp [2001] 1 All ER (Comm) 822
- FAMOSA SHIPPING CO. LTD. v. ARMADA BULK CARRIERS LTD. (THE “FANIS”) [1994] 1 Lloyd's Rep 633
- SOTIROS SHIPPING INC. AND AECO MARITIME S.A. v. SAMEIET SOLHOLT (THE "SOLHOLT") [1983] 1 Lloyd's Rep 605
- KOCH MARINE INC. v. D'AMICA SOCIETA DI NAVIGAZIONE A.R.L. (THE "ELENA D'AMICO") [1980] 1 Lloyd's Rep 75
- R v National Insurance Comr, Ex parte Hudson (Hudson, Ex parte, Hudson v Secretary of State for Social Services, Jones v Secretary of State for Social Services) [1970] 1 QB 477
- The World Beauty [1970] P 144
- Heskell v Continental Express Ltd [1950] 1 All ER 1033
- L Albert & Son v Armstrong Rubber Co 178 F 2d 182 (1949)
- Payzu Ltd v Saunders [1919] 2 KB 581
- British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] 3 KB 128
- Roper v Johnson (1873) LR 8 CP 167
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Cases citing this case
18 later cases · 17 positive · 1 negative
Most senior citing decisions:
- Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC and others [2020] UKSC 24 applied
- Barrowfen Properties Limited v Girish Dahyabhai Patel & Ors [2025] EWCA Civ 39 doubted
- Endurance Corporate Capital Ltd v Sartex Quilts & Textiles Ltd [2020] EWCA Civ 308 applied
- Fulton Shipping Inc of Panama v Globalia Business Travel S.A.U. (Formerly Travelplan S.A.U.) [2015] EWCA Civ 1299
- Regal BA Limited v Jun Zhang [2026] EWHC 1446 (Ch)
- McLaren Indy LLC & Anor v Alpa Racing USA LLC & Ors [2026] EWHC 110 (Comm)
- Andrew Avison & Anor v Harold Bell Infields & Co (A Firm) [2025] EWHC 1787 (Ch)
- Vitsoe Limited v Waugh Thistleton Architects Limited [2025] EWHC 850 (TCC)
- 4VVV Ltd & Ors v Nicholas Spence & Ors [2024] EWHC 2434 (Comm)
- Tata Consultancy Services Limited v Disclosure and Barring Service [2024] EWHC 1185 (TCC)
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