Dodd Properties (Kent) Ltd v Canterbury City Council [1979] EWCA Civ 4 (21 December 1979)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (Civil Division)
(On appeal from Mr. Justice Cantley)

Royal Courts of Justice
21st December 1979

B e f o r e :

LORD JUSTICE MEGAW
LORD JUSTICE BROWNE
and
LORD JUSTICE DONALDSON

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DODD PROPERTIES (KENT) LIMITED
First Plaintiffs
and
 
MARLOWE GARAGE (CANTERBURY) LIMITED
Second Plaintiff
-v-
 
THE MAYOR, ALDERMEN AND CITIZENS OF THE CITY OF CANTERBURY
First Defendants
and
 
TRUSCON LIMITED
Second Defendants
and
 
FRANKIPILE LIMITED
Third Defendants

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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters Ltd., Room 392, Royal Courts of Justice, and 2, New Square, Lincoln’s Inn, London, WC2)

____________________MR. ROGER TITHERIDGE, Q.C., and Mr. MICHAEL McMULLAN (instructed by Messrs. Lewis & Dick) appeared on behalf of the Appellants (Plaintiffs).
MR. OLIVER POPFLEWELL, Q.C., MR. STEPHEN DESCH and MR. ANTONY EDWARDS-STUART (instructed by Messrs. Ponsford & Devenish, Tivendale & Munday) appeared on behalf of the Respondents (Third Defendants).

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LORD JUSTICE MEGAW: This is an appeal from a judgment of Mr. Justice Cantley.

The first plaintiffs, Dodd Properties (Kent) Ltd., are the owners of a building in Rose Lane, Canterbury, known as Marlowe Garage. The second plaintiffs, Marlowe Garage (Canterbury) Ltd., have been the occupiers of Marlowe Garage as lessees of the first plaintiffs. They carry on their business there as motor-car dealers and they sell petrol, oil and car accessories.

In 1968 the first defendants, the Mayor, Aldermen and Citizens of the City of Canterbury, erected a large multi-storey car park close to Marlowe Garage. The second defendants, Truscon Ltd., were the main contractors; the third defendants, Frankipile Ltd., were their sub-contractors for the foundations of the car park. As a result of their operations, damage was caused to the plaintiffs’ building. Liability was for long denied, but shortly before the action came on for hearing before Mr. Justice Cantley in 1978 liability was admitted in nuisance by the second and third defendants, though the extent of the damage was in issue, and also the basis of assessment of the amount of the damages to which the plaintiffs were entitled. The first defendants did not formally admit liability. But they took no part in the proceedings, having received an undertaking of indemnity from the other defendants.

The judge held that the first defendants also were liable. They are not parties to the appeal. There is no dispute as to liability. The issues are as to damages.

No question of fact is now in dispute, the judge’s findings of fact are accepted as to the extent of the physical damage and as to other matters.

On the question of the extent of the damage, the judge to a large degree accepted the evidence of the defendants’ experts. On their evidence, the necessary repairs would, at the prices prevailing at the time of the hearing in 1978, cost about £30,000. On the evidence of the plaintiffs’ expert, the repairs required were much greater and the cost much higher.

The question which remained, and which is the primary issue before us, is this: by reference to which of two dates is the cost of the repairs to be ascertained, for purposes of arriving at the amount of the defendants’ liability for their tort? The plaintiffs say that the relevant date for this purpose is the date of the hearing, or of the judgment: that is, that the 1978 prices are relevant and decisive. The defendants say that the relevant date is 1970 and the relevant prices are the 1970 prices. As a result of inflation, the difference between the computations at those respective dates is very large. The 1978 figure, for the repairs which the judge held to be required, is £30,327. The 1970 figure, for the same work, is approximately £11,375.

The second plaintiffs also have a claim. It gives rise to the same issue as to the proper date of assessment. The second plaintiffs’ claim arises out of prospective interruption of their business during the time that would be required for the carrying out of the appropriate repairs, if and when that work is done. The figure, if the repairs were to be carried out in 1978 would be £11,951. In 1970 the corresponding amount would have been £4,108.

Taking the first and second plaintiffs’ potential entitlements together, the sums payable by the defendants as damages (apart from any question of interest) would be: on the 1970 assessment, £15,483; on the 1978 assessment, £42,278.

Mr. Justice Cantley held that in law, in the circumstances, judgment had to be given on the 1970 basis. He also awarded interest, making the total payable by the defendants to the first and second plaintiffs £22,974.20.

Against that judgment, the plaintiffs appeal and the defendants cross-appeal. The plaintiffs say that the judge was wrong in lav; to make his assessment of damages on the basis of the cost of the repairs in 1970. They say that he should have taken the 1978 computation. They say, in the alternative, that, if they should be wrong on this, which is their first and main contention, then the judge ought to have awarded interest from an earlier date and at a higher rate. They accept that, if they are right on their first contention – that is, the acceptance of 1978 as the date by reference to which the cost of the repairs is to be assessed – then they could not claim interest.

The defendants’ cross-appeal raises an issue affecting the damages of the second plaintiffs only. The defendants say that, since the judge held that it was only “just about established” that it was probable that the repairs would in fact be carried out after his judgment, he ought not to have awarded to the second plaintiffs the full amount of the prospective loss to them arising from the interruption of their business which would be caused by those potential repairs. The judge, say the defendants, should have awarded the second plaintiffs only, say, 60 per cent of the total prospective loss by interruption, because the chance that the loss would in fact occur was no greater than a chance of that order.

On the first, and main, issue raised by the plaintiffs, it is necessary to see what the learned judge found were the reasons why the repairs for this damage to the Marlowe Garage, caused in 1968, had still not been carried out when the action was heard in 1978. Because I think it is important to see precisely what the judge held in this respect, I shall quote the judge’s own words from the transcript of his judgment, page 9-G to page 10-A: “I find that the first plaintiffs could probably have raised the money for repairs but this would have increased their annual losses and their financial stringency. As a commercial decision, judged exclusively from the point of view of the immediate and short-term welfare of the companies, it was reasonable to postpone incurring the very considerable expense of these repairs while no harm was being done to the building by the delay in repairing it and while these three rich defendants with apparent if not genuine belief in the validity of their defences were firmly denying liability to make even a contribution.”

The learned judge then referred to the well-known, much-discussed, case, Owners of Dredger Liesbosch v. Owners of SS Edison (1933) AC 449. He said, at page 11-B: “In the case of destruction of a chattel, the normal measure of the damage is the market value at the time of the loss. That was the measure of damage applied in Liesbosch“. The learned judge then cited from the judgment of Lord Justice Denning in Philips v. Ward (1956) 1 WLR 471 at page 474: “The general principle of English law is that damages must be assessed as at the date when the damage occurs, which is usually the same day as the cause of action arises. … A fall thereafter in the value of money does not in law affect the figure, for the simple reason that sterling is taken to be constant in value”. Although this may not affect the statement of “the general principle”, I think that the reasoning as to sterling having to be taken to be constant in value is unfortunately no longer good law, having regard to the facts of life and the recent authoritative decisions, including Miliangos v. George Frank (Textiles) Ltd. (1976) AC 443.

Mr. Justice Cantley then said (page 13 A-H): “No authority has been cited to me and in my very limited opportunity lately I have discovered none for myself where a court has considered the time at which damages are to be assessed in the cases of buildings damaged and put in need of repair by a tortious act. If there is no authority on that precise point, it may be because no-one has ever before thought to contend that the general principle did not apply to it. The general principle is that damages must be assessed as at the date when the damage occurs. In my view, that general principle applies here. It is not, of course, to be rigidly applied as a rule of thumb, fixing the time rigidly by the calendar and the clock. The damage may be concealed by some fault of the wrongdoer or not reasonably discoverable by the victim until some time after it has first appeared, see e.g. East Ham Corporation v. Bernard Sunley & Sons Ltd. (1966) AC 406 and Applegate v. MossArcher v. Moss (1971) 1 QB 406.

“Moreover, repairs cannot usually be put in hand at once and at prices ruling at the very date of damage. There may have to be inspections and specifications and tenders and an available contractor may have to be found before the work can be started.

“Furthermore, the nature and circumstances of the damage may be such that it would be imprudent and possibly wasteful to begin the work before waiting longer to ensure that no further damage is going to develop from the same cause. This is particularly true when the foundations of a building have been disturbed by vibrations.

“I would put it in this way. The appropriate damages are the cost of repairs at the time when it was reasonable to begin repairs. Whether the time is reasonable must be judged objectively and not taking into account such matters as impecuniosity or financial stringency which, in the words of Lord Wright in the Liesbosch case, are extrinsic”.

The learned judge then held that it was reasonable for the plaintiffs not to begin repairs until 1970 even though the damage had all occurred, and was known, in 1968. On that basis he adopted “as the measure of damage … the cost of repairs on the prices ruling in 1970”; that is, £11,375.

There is no dispute in this case but that the appropriate measure of damages on this claim of the first plaintiffs is by reference to the cost of the repairs required.

The defendants do not challenge the judge’s acceptance of the 1970 figures. That means that they do not now contend that the judge should have taken the lower prices for the repair work prevailing in 1968 when the tort was committed.

It is important to bear in mind that we are not concerned with any suggestion that the plaintiffs were under a duty towards the defendants to repair the premises damaged by the defendants’ wrongdoing. The plaintiffs did not lose their right to recover damages from the defendants because they did not effect the repairs. True, in certain circumstances with which we are not concerned here, such as the building being destroyed by fire before the repairs were carried out, the amount of the plaintiffs’ entitlement to damage might have become nil. But what we are concerned with here is: by reference to what date is the amount of the recoverable loss to be calculated, during a period when the cost of the necessary work is rising as time goes on? Since the defendants do not suggest that the judge was wrong in taking the 1970 prices instead of the 1968 prices, it is accepted, and I think necessarily and rightly accepted, by the defendants that there are circumstances in which the proper amount of damages, where, as here, the damages are to be computed by reference to the cost of repairs, have to be computed by reference to that cost at a date later than the date of the wrongdoing which caused the damage.

The general principle, referred to in many authorities, has recently been recognised by Lord Wilberforce in Miliangos v. George Frank (Textiles) Ltd. (1976) AC 443at page 468E: namely, that “as a general rule in English law damages for tort or for breach of contract are assessed as at the date of the breach”. But in the very passage in which this “general rule” is there stated, it is stressed that it is not a universal rule. That it is subject to many exceptions and qualifications is clear. Mr. Justice Cantley in the present case rightly recognised that that was so, in the passage from his judgment which I have recently read.

Indeed, where, as in the present case, there is serious structural damage to a building, it would be patently absurd, and contrary to the general principle on which damages fall to be assessed, that a plaintiff, in a time of rising prices, should be limited to recovery on the basis of the prices of repair at the time of the wrongdoing, on the facts here, being two years, at least, before the time when, acting with all reasonable speed, he could first have been able to put the repairs in hand. Once that is accepted, as it must be, little of practical reality remains in postulating that, in a tort such as this, the “general rule” is applicable. The damages are not required by English law to be assessed as at the date of breach.

The true rule is that, where there is a material difference between the cost of repair at the date of the wrongful act and the cost of repair when the repairs can, having regard to all the relevant circumstances, first reasonably be undertaken, it is the latter time by reference to which the cost of repairs is to be taken in assessing the damages. That rule conforms with the broad and fundamental principle as to damages, as stated in Lord Blackburn’s speech in Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25, at page 39, where he said that the measure of damages is “that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”.

In any case of doubt, it is desirable that the judge, having decided provisionally as to the amount of damages, should, before finally deciding, consider whether the amount conforms with the requirement of Lord Blackburn’s fundamental principle. If it appears not to conform, the judge should examine the question again to see whether the particular case falls within one of the exceptions of which Lord Blackburn gave examples, or whether he is obliged by some binding authority to arrive at a result which is inconsistent with the fundamental principle. I propose to carry out that exercise later in this judgment.

The judge has held, in a passage which I have already read, that as a commercial decision, judged exclusively from the plaintiffs’ point of view, it was reasonable to postpone incurring expense of the repairs up to – for so I understand what the judge says – the time when the action had been heard and liability decided, resulting in a judgment which, when complied with, would have put the plaintiffs in funds. The reasons why that deferment of repairs was reasonable from the plaintiffs’ point of view included the fact, not that they were “impecunious”, meaning poverty-stricken or unable to raise the necessary money, but that the provision of the money for repairs would have involved for them a measure of “financial stringency”. Other reasons, consistent with commercial good sense, why the repairs should be deferred include those mentioned in evidence by a director of the plaintiff companies, whose evidence was accepted by the judge as truthful and reliable. If there had been no money problem, he said, he would still not have spent money on the building before he was sure of recovering the cost from the defendants. It would not have made commercial sense to spend this money on a property which would not produce corresponding additional income. So long as there was a dispute, either as to liability or amount of compensation, he would have done no more than to keep the building weatherproof and “in working order”.

If that was, as the judge held, reasonable from the point of view of the plaintiffs as being grounds for deferring the carrying out of repairs, and if the time at which the cost of the repairs falls to be completed in order to ascertain the amount of damages is the time when it has become reasonable to do the repairs, why did the judge reject 1978, for which the plaintiffs contended, and accept 1970 for which the defendants contended?

There are, as I see it, two possible answers to that question. The first answer is that what is reasonable has to be looked at from the point of view of both parties and a balance struck. The judge’s findings of reasonableness of the deferment from the point of view of the plaintiffs does not, therefore, conclude the matter. But I do not think that that was the answer intended to be given by Mr. Justice Cantley. He nowhere refers to the question in any such form and there is no indication of any attempt by him to strike a balance. If a balance had to be struck, surely it would be right, even in a climate of indulgence to contract-breakers or tortfeasors, that the scales should move heavily in the favour of the innocent party as against the wrongdoer, in any comparison of respective disadvantages or unfairnesses? It has to be borne in mind that these were defendants who were wrongly maintaining a denial of any liability and thereby leaving the plaintiffs faced with all the potentially heavy expenditure of money required for the mere purpose of establishing by litigation what we now know to have been their rights. Moreover, as the plaintiffs concede, they could not claim interest on the amount of their compensation starting to run before the date when the money was expended on repairs. So the defendants, being liable, as we now know, to recompense the plaintiffs for the tort which the defendants committed in 1968, will have enjoyed the free use for their own account of the money which would have been the appropriate compensation at that date, with the opportunity of earning compound interest thereon, from 1968 until the date of judgment. If that were the ground on which the judge held in favour of the defendants on this issue, I would respectfully hold that it was a wrong ground. But I do not think that the judge did so hold.

The second possible answer is that which I believe to have influenced the learned judge. He thought that the decision in The Liesbosch (1933) AC ¥±9 precluded him from taking into account, in considering the reasonableness of the deferment of repairs, any part of the deferment which was caused by “financial stringency”.

The Liesbosch has been the subject of much debate and much speculation, and a considerable measure of disagreement, as to its ratio decidendi and the scope of its application, particularly in the light of later House of Lords decisions. See, for example, the discussion of the case by the learned author of the article on Damages in Halsbury’s Laws of England (4th Edition) Vol. 12, para. 1144, footnote 4. (I agree with the analysis of The Liesbosch and the comments thereon in the judgment which Lord Justice Donaldson will deliver hereafter). I do not think that, on any fair view of the ratio decidendi of The Liesbosch, it applies to the issue with which we are concerned. Amongst other reasons, there are these two. First, it was not “financial stringency”, let alone “impecuniousness” as in The Liesbosch, which on any fair view, on the judge’s findings, was the cause, or even, I think, an effective cause, of the decision to postpone repairs. The “financial stringency” which would have been created by carrying out the repairs was merely one factor among a number of factors which together produced the result that commercial good sense pointed towards deferment of the repairs. The second reason which I would mention is that, once it is accepted that the plaintiff was not in any breach of any duty owed by him to the defendants in failing to carry out repairs earlier than the time when it was reasonable for the repairs to be put in hand, this becomes, for all practical purposes, if not in theory, equated with a plaintiff’s ordinary duty to mitigate his damages. Lord Wright in his speech in The Liesbosch (1933) AC at page 46l accepted Lord Collins’s dictum in Clippens Oil Co. v. Edinburgh & District Water Trustees (1907) AC 291, at page 303: “… in my opinion the wrongdoer must take his victim talem qualem, and if the position of the latter is aggravated because he is without the means of mitigating it, so much the worse for the wrongdoer …” I agree with the observations of Mr. Justice Oliver in Radford v. de Froberville (1977) 1 WLR 1262, at page 1268, as to the relationship between the duty to mitigate and the measure, or amount, of damages in relation to a question such as the question with which we are here concerned. A plaintiff who is under a duty to mitigate is not obliged, in order to reduce the damages, to do that which he cannot afford to do: particularly where, as here, the plaintiffs’ “financial stringency”, so far as it was relevant at all, arose, as a matter of common sense, if not as a matter of law, solely as a consequence of the defendants’ wrongdoing.

My provisional answer to the question raised in the first issue would, thus, be that the damages in this case are to be assessed by reference to the 1978 cost of repairs. I now carry out that exercise which I mentioned earlier. Once it is accepted, as it is accepted by the parties, that the damages fall to be computed by the cost of repairs to the building, and once The Liesbosch and Philips v. Ward are out of the reckoning, there is no exception of which I am aware which is relevant here to exclude the application of Lord Blackburn’s fundamental principle. On the relevant facts as found by the judge, the 1978 cost of the repairs gives the answer which accords with that principle. The calculation of damages by reference to the 1970 cost of repairs would not so accord.

On that issue, I would allow the appeal.

The result is that the plaintiffs’ alternative ground of appeal, as to the appropriate calculation of interest, does not arise. For it is a necessary part of their submission on the first issue that, damages being referable to the deferment of repairs, interest is not payable up to the date of the hearing. In the circumstances, I think it better to say nothing, on that point, on which the argument on either side was commendably brief.

If I am right on my conclusion on the main issue in the appeal, I think that the cross-appeal, whatever its merits in law might otherwise have been, ceases to have validity. Early in this judgment, I summarised the issue raised by the cross-appeal. I need not repeat it. I find difficulty in reconciling two passages in the judgment as to the probability of repairs being carried out. at page 15-D, the learned judge, referring to the evidence of Mr. Smith, a director of the plaintiff companies, said: “However, Mr. Smith who I think was being careful to say no more than the truth and no more than he knew, said that in all probability the repairs will be done”. The acceptance of the truthfulness and the reliability of that evidence by the man who was in the best position to give the best evidence on that question would appear to be conclusive. How then can the judge’s acceptance of it be reconciled with what he says a few lines later: “Having re-ard to what Mr. Smith said, I think the probability … is just about established”? If Mr. Smith was truthful and reliable in saying “in all probability”, that results in much more than probability being “just about established”.

However, fortunately, it is not necessary to resolve that difficulty, since the learned judge went on to say “although I would be more confident of the extent of the second plaintiffs’ loss if the first plaintiffs were recovering the present-day costs of the repairs, so that they could, with a light heart, carry out the full repairs”. As in my judgment the plaintiffs are entitled to recover the 1978 cost of the repairs, this court should not remit this Methuselah of an action for a further hearing by the judge on that issue. We should make our own assessment what the discount, if any, should be. In my opinion, the discount, if the law requires any discount -I do not find it necessary to decide this – would be _de minimis. As the law requires us to disregard the trivial, I propose to disregard it, as I think Mr. Justice Cantley would have disregarded it, if he had reached the same conclusion as I have reached on the main issue.

So I would allow the appeal, and direct that judgment be entered for the first plaintiffs for £30,327, without interest up to the date of Mr. Justice Cantley’s judgment, and for the second plaintiffs for £11,951» also without interest up to that date. I would dismiss the cross-appeal.

LORD JUSTICE BROWNE: I agree that this appeal should be allowed and the cross-appeal dismissed, for the reasons diven by Lord Justice Megaw and the reasons which will be given by Lord Justice Donaldson in the judgment he will deliver very soon. I can summarise my own reasons fairly shortly, because they are in substance the same as theirs.

The first principle for the assessment of damages is that the injured person should, so far as money can do it, be put in the same position as if the wrong – in this case the tort – had not been committed against him: (see Halsbury’s Laws (4th Ed.) Vol. 12, title “Damages”, para. 1129, and. – for example – the authority cited by Lord Justice Megaw, Livingstone v. The Rawyards Coal Co. (l880) 5 App. Cas. 25, Lord Blackburn at page 39)• This the damages of £11,375 awarded to the first plaintiffs, for the cost of repairs in 1970, glaringly fail to do. By the time of the hearing in 1978 the cost had risen to £30,327* In fact, the repairs had not been done by that time, and the cost will probably have risen still further by the time they are done, but the plaintiffs do not make any further claim beyond the cost at the date of the hearing.

It is not disputed that in this case the measure of the first plaintiffs* damages is the cost of repair, as opposed to the other possible measure in a case of this sort, i.e. the diminution in the value of the building. The only question is the time as at which that cost shall be taken.

The general rule, both in contract and tort, is that damages should be assessed as at the date when the cause of action arises, but they may be assessed as at some later date. In my view, Mr. Justice Cantley was plainly right in saying “The appropriate damages are the cost of repairs at the time when it was reasonable to begin repairs”: (page 13-G). In Johnson v. Agnew (1979) 2 WLR 486 Lord Wilberforce said (at page 499 E-H): “The general principle for the assessment of damages is compensatory, i.e. that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach – a principle recognised and embodied in section 51 of the Sale of Goods Act 1893. But this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances. In cases where a breach of a contract for sale has occurred, and the innocent party reasonably continues to try to have the contract completed, it would to me appear more logical and just rather than tie him to the date of the original breach, to assess damages as at the date when (otherwise than by his default) the contract is lost. Support for this approach is to be found in the cases. In Ogle v. Earl Vane the date was fixed by reference to the time when the innocent party, acting reasonably, went into the market; in Hickman v. Haynes at a reasonable time after the last request of the defendants (buyers) to withhold delivery. In Radford v. de Froberville, where the defendant had covenanted to build a wall, damages were held measurable as at the date of the hearing rather than at the date of the defendant’s breach, unless the plaintiff ought reasonably to have mitigated the breach at an earlier date”.

Lord Wilberforce, of course, was there speaking of damages for breach of contract, but I have no doubt that the same principle applies to this case, where it is common ground that the measure of damages is the cost of repairs. I think this view is supported by analogy by the decision of the House of Lords in Birmingham Corporation v. West Midland Baptist (Trust) Association (1970) AC 874.

In this case, it was common ground, and the judge accepted, that it was reasonable to postpone the doing of the repairs from 1968, when damage was first discovered, until 1970, and that 1970 was the earliest date as at which the cost of repairs should be assessed. The defendants/respondents contended that the assessment should not be any further postponed; Mr. Justice Cantley accepted this contention, and assessed the damages on the cost of repairs in 1970.

In the course of the passage at page 9-G to 10-A of the judgment which Lord Justice Megaw has already read, and I will not read in full again, the judge held that “As a commercial decision, judged exclusively from the point of view of the immediate and short-term welfare of the companies, it was reasonable to postpone incurring the very considerable expense of these repairs …” Like Lord Justice Megaw, I understand this to mean that it was in this sense reasonable to postpone doing the repairs until after the hearing. This finding was based on the evidence of Mr. Smith, a director of both the plaintiff companies and a Chartered Accountant, which is set out on page 9 of the judgment and has been summarised already by Lord Justice Megaw. He gave a number of reasons for the decision. Only one of what he said were the relevant factors was financial, and I think that the judge’s finding on this point falls far short of “impecuniosity” or “financial embarrassment” in the Liesbosch sense.

The judge said at page 13-G: “Whether the time is reasonable must be judged objectively and not taking into account such matters as impecuniosity or financial stringency which, in the words of Lord Wright in the Liesbosch case, are extrinsic”. I am afraid I do not clearly understand what the judge meant by “objectively” in that sentence. If he meant that the decision to postpone, although reasonable from the point of view of the plaintiff companies, was not reasonable from the point of view of a hypothetical reasonable commercial man, I cannot agree; it seems to me that any commercial man in the circumstances with which Mr. Smith was faced could reasonably, and probably would, have come to the same decision.

The judge relied on Philips v. Ward (1956) 1 WLR 471 and Clark v. Moor (1965) 2 AER 353, in which Mr. Justice Lawton (as he then was) simply followed and applied Philips v. Ward. I agree with Lord Justice Megaw that the reasoning of Denning L.J. in Philips at page 474 can no longer be regarded as good law.

That leaves only The Liesbosch (1933) AC 449. I do not propose to analyse that difficult case, because I entirely agree with Lord Justice Megaw and Lord Justice Donaldson that, for the reasons they give, it did not compel Mr. Justice Cantley to take the 1970 cost of repairs. I will only say that, like Lord Justice Megaw, I agree with the observations of Mr. Justice Oliver in Radford v. de Proberville (1977) 1 WLR 1262 at page 1272 as to the relationship between the duty to mitigate and the measure of damages in a case such as this.

I would, therefore, allow the first plaintiffs’ appeal and vary the judgment by substituting £30,327 for £11,375. I think it necessarily follows that the appeal of the second plaintiffs should also be allowed, and their damages increased from £4,108 to £11,951.

The plaintiffs’ alternative ground of appeal as to interest therefore does not arise, and, like Lord Justice Megaw, I think it better to say nothing on that point.

I agree that the cross-appeal should be dismissed, for the reasons given by Lord Justice Megaw.

LORD JUSTICE DONALDSON: The general object underlying the rules for the assessment of damages is, so far as is possible by means of a monetary award, to place the plaintiff in the position which he would have occupied if he had not suffered the wrong complained of, be that wrong a tort or a breach of contract. In the case od a tort causing damage to real property, this object is achieved by the application of one or other of two quite different measures of damage, or, occasionally, a combination of the two. The first is to take the capital value of the property in an undamaged state and to compare it with its value in a damaged state. The second is to take the cost of repair or reinstatement. Which is appropriate will depend upon a number of factors, such as the plaintiffs1 future intentions as to the use of the property and the reasonableness of those intentions. If he reasonably intends to sell the property in its damaged state, ;clearly the diminution in capital value is the true measure of damage. If he reasonably intends to continue to occupy it and to repair the damage, clearly the cost of repairs is the true measure. And there may be in-between situations.

Happily there is no issue in the present case as to which measure of damage falls to be applied. It is the cost of reinstatement. The primary issue is as to how and, more particularly, on what date those costs are to be assessed. This is a very significant issue in the light of the increase in costs over the period between the occurrence of the damage in 1968 and the trial in 1978.

Mr. Popplewell, for the respondents, submits, and I for my part would readily accept, that the general rule is that damages fall to be assessed as at the date when the cause of action arose. The rule is so stated by Lord Wilberforce in Miliangos v. George Frank (Textiles) Ltd. (1976) AC 443 at p.468. And I am inclined to think that in normal circumstances this would be applicable where the relevant measure of damage was diminution in the capital value of the property. But it is only a general or basic rule and is subject to many exceptions. Thus damages for personal injury, excluding consequential loss to which other principles apply, are assessed in the light of the value of money at the date of the hearing. The issue here is whether the assessment of damages based upon the cost of repair or reinstatement is another exception as Mr. Titheridge for the appellants contends. I think that it is.

In Birmingham Corporation v. West Midland Baptist (Trust) Association (Inc.) (1970) AC 874, the House of Lords was faced with the problem of whether the reasonable cost of equivalent reinstatement, which was the basis of compensation under the Land Compensation Act 196l, involved taking costs which prevailed at the date of the notice to treat or those which prevailed at the earliest date when the claimants might reasonably have begun rebuilding. The decision was in favour of the latter. Lord Reid, at page 89A, cites with approval various statements on the measure of compensation which assume that the assessed cost of reinstatement would be sufficient to enable the owner to undertake the work if he acted reasonably. In an era of rising costs, this could only happen if compensation was assessed on the basis of costs applicable at the time at which reinstatement would in fact occur, on the assumption that the owner acted reasonably. Again Lord Morris of Borth-y-Gest at page 903 said that “The reasonable cost, depending upon the facts of particular cases, will be the actual reasonable cost which a claimant has incurred or can be expected to incur; it will be such cost at the time when equivalent reinstatement reasonably does or should take place”.

Whilst this is not a decision on the measure of damages in tort, I think that the reasoning is directly applicable to the present problem. It is also only common sense, for, as Mr. Titheridge pointed out, it would be wholly unfair to the defendant to charge him with the costs applicable to reinstatement in 1968 when the damage occurred, if the actual reinstatement took place at a later date when improved technology had reduced the cost. That this happy situation has not in fact arisen does not affect the point of principle.

In the absence of special and extraneous factors, there is no divergence between the interest of a plaintiff and a defendant on the choice of the most propitious moment at which to effect reinstatement. Both wish to achieve the maximum economy, at least so long as the plaintiff is in doubt whether he will be entitled to a full indemnity from the defendant. It follows that in a case in which a plaintiff has reinstated his property before the hearing, the costs prevailing at the date of that operation which were reasonably incurred by him are prima facie those which are relevant. Equally in a case in which a plaintiff has not effected reinstatement by the time of the hearing, there is a prima facie presumption that the costs then prevailing are those which should be adopted in ascertaining the cost of reinstatement. There may indeed be cases in which the court has to estimate costs at some future time as being the reasonable time at which to reinstate, but that is not this case.

This is, however, only a prima facie approach. It may appear on the evidence that the plaintiff, acting reasonably, should have undertaken the reinstatement at some date earlier than that in fact adopted or, as the case may be, earlier than the hearing. If so, the relevant costs are those ruling at that earlier date. Whether this is regarded as arising out of the primary measure of damage, i.e., that the relevant time is when the property should have been reinstated or whether it is regarded as being a reflection of a plaintiff’s duty to mitigate his loss, may not matter.

In the present case Mr. Justice Cantley accepted that the relevant date was when it was reasonable to begin repairs. However, in deciding what was reasonable, he considered himself bound by the decision of the House of Lords in the Liesbosch case to disregard such factors as impecuniosity or financial stringency experienced by the plaintiffs. Accordingly, although he considered that the plaintiffs had acted reasonably in deferring reinstatement until after the hearing, he felt constrained to adopt September 1970 costs, the delay until then being justified exclusively on other grounds, namely, the need to make sure that no further damage would occur before repairs were started.

Dealing with the latter delay he said, “I find that the first plaintiffs could probably have raised the money for repairs but this would have increased their annual losses and their financial stringency. As a commercial decision, judged exclusively from the point of view of the immediate and short-term welfare of the companies, it was reasonable to postpone incurring the very considerable expense of these repairs while no harm was being done to the building by the delay in repairing it and while these three rich defendants with apparent if not genuine belief in the validity of their defences were firmly denying liability to make even a contribution”.

Whatever the difficulties inherent in the Liesbosch decision – and it is not at once apparent why a tortfeasor must take his victim as he finds him in terms of exceptionally high or low profit earning capacity, but not in terms of pecuniosity or impecuniosity which may be their manifestations – it binds this court as much as it bound Mr. Justice Cantley unless and until it is reviewed by the House of Lords. However, it is important to see precisely what it did decide.

The Edison fouled the Liesbosch’s moorings, carried her out to sea and sank her. The ordinary measure of damage was the cost of buying another similar vessel, the cost of getting her to the Liesbosch’s old moorings and any loss of profit consequent upon the disruption of commercial operations whilst the substitute vessel was being obtained and delivered. However, the plaintiffs contended for a different and special measure of damage. Substitute dredgers were available for purchase but the plaintiffs could not afford to buy them. Instead they hired another dredger, the Adria, which was larger than the Liesbosch, more expensive to operate and for which they had to pay a very high rate of hire. Eventually the port authority, for whom the plaintiffs were working, bought the Adria and resold her to the plaintiffs under a credit sale contract. The plaintiffs claimed the cost of hiring the Adria until the port authority bought and resold her to them, the cost of purchasing the Adria and the excess cost of working her as compared with the Liesbosch together with unrecovered overhead charges and lost profit whilst they were without any dredger. The ordinary measure of damage is based upon market rates. The measure of damage claimed by the plaintiffs was quite different, namely, one based upon their actual loss and expenditure.

As I understand Lord Wright’s speech, he took the view that in so far as the plaintiffs in fact suffered more than the loss assessed on a market basis, the excess loss flowed directly from their lack of means and not from the tortious act, or alternatively it was too remote in law. In modern terms, I think that he would have said that it was not foreseeable.

The position of the plaintiffs in the present case seems to me to be quite different. They were not impecunious in the Liesbosch sense of one who could not go out into the market. On the contrary, they were financially able to carry out the work of reinstatement in 1970. However, on the learned judge’s findings, they were commercially prudent in not incurring the cash flow deficiency which would have resulted from their undertaking the work in the autumn of 1970 and waiting for reimbursement until after the hearing, particularly when the defendants were denying liability and there was a dispute as to what works could and should be done by way of reinstatement. In my judgment, the decision in the Liesbosch has no application to such a situation which is distinguishable.

If the decision whether to adopt 1970 or 1978 costs turns upon whether, bearing in mind the likelihood that prices would rise, the plaintiffs should have undertaken the work in 1970 in pursuance of their duty to mitigate their damage, there is another ground for distinguishing the Liesbosch and for taking full account of the plaintiffs’ financial position. This is that Lord Wright’s explanation of the decision in Clippens Oil Company v. Edinburgh and District Water Trustees (1907) AC 291, where Lord Collins at page 303 said that the tortfeasor must take his victim as he found him, including any lack of means, was that that decision represented the rule in relation to the duty to minimise damage.

I would therefore allow the appeal by the plaintiffs and, for the reasons stated by my Lord, Lord Justice Megaw, would dismiss the defendants’ cross-appeal.

(Appeal allowed. Judgment below varied by substituting as the amount of damages, for the first plaintiffs, £30,327, and, for the second plaintiffs, £11,951. Cross-appeal dismissed. Plaintiffs to have their full costs below and the costs of the appeal and the cross-appeal. Leave to appeal to the House of Lords refused)

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