Sprint Electric Ltd v Buyer's Dream Ltd & Anorr

Damages for breach of contract seek to place the claimant in the financial position it would have occupied had the contract been performed. Causation requires a sufficiently close connection between breach and loss. Mitigation is part of causation, and the defendant must show that the claimant acted unreasonably by failing to take an available response. Reasonable remedial costs may be recovered, but losses caused by conduct collateral to mitigation are excluded. Where loss depends on hypothetical third-party conduct, the loss-of-a-chance approach is mandatory. The claimant must prove a substantial chance of the beneficial outcome, which is then valued and discounted. Where a 100% likelihood is established, ordinary quantification applies.

The claimant had previously succeeded in related proceedings concerning contracts for computer software and source code. An inquiry as to damages was ordered for the defendants’ failure to provide specified PL/X source code and for failure to perform a contractual schedule requiring adaptation of JL/X software for different computer hardware.

The claimant sought lost profits, future losses, remedial expenditure, management time and repayment of sums paid for the unperformed work. The defendants disputed causation, mitigation, remoteness and quantification.

1. Outcome. The claimant recovered limited damages: the cost of two weeks of an engineer’s time for completing work under Schedule 200815, five months of another engineer’s charging rate for creating a functional equivalent of the missing source code, £2,000 for assistants’ time and £3,250 for specified management time. The remaining heads of claim failed.
2. Compensatory principle. Damages place the claimant, so far as money can, in the position it would have occupied on performance. Causation requires a sufficiently close connection between breach and loss, assessed by considering the circumstances as a whole.
3. Mitigation. Mitigation is an aspect of causation, not a duty owed by the claimant to the contract-breaker. The defendant must show that a reasonable course was available and that it was unreasonable for the claimant not to take it. A claimant may choose between several reasonable responses. Conduct collateral to mitigation cannot generate recoverable loss. The court therefore compared a no-breach counterfactual with a mitigation counterfactual and excluded collateral conduct and wasted time.
4. Loss of a chance. Where causation depends on hypothetical conduct by one or more third parties, the claimant must prove the loss of a substantial, rather than speculative, chance of a beneficial outcome. The chance is then valued and discounted according to the likelihood of success. The approach is mandatory. Events in a chain of hypothetical events must be separately assessed. Where the evidence establishes a 100% likelihood of deprivation of the beneficial outcome, ordinary quantification applies.
5. Other principles. Reasonable remedial costs may be recovered, including properly established staff costs. Where alternative contractual performances were available, the no-breach counterfactual assumes the least onerous lawful performance carried out in good faith. Subsequent events known by trial may be taken into account. The claimant bears the burden of proving causation and quantum; evidential difficulty does not permit the court to invent facts or award damages where the loss is too speculative or remote.

This was a first-instance inquiry as to damages following an earlier judgment in related proceedings. No appellate history is stated in the judgment.