The claimant’s building was destroyed by fire as a result of the defendant’s negligence. It was impracticable to rebuild and so, to keep its business going the claimant bought a 36 year lease of another building with 20% more floor space. In the fire the claimant had lost some carpet-holding machines which it had bought, almost new, for a bargain pounds 13,500, but which would cost pounds 65,000 to replace. It did not replace the machines, but claimed pounds 65,000.
Held: It was entitled to succeed on both claims. Should the replacement cost be more than the market value, that cost is still recoverable if it is reasonable to replace. It is not relevant that the replacement cost should exceed the amount for which the purchaser acquired the goods.
Taylor LJ: As to the cost of the lease: ‘Although the ground area was somewhat greater at Waterden Road than their original premises, I consider that it falls within the sort of betterment for which no reduction should be made. It is not as case, as this court instanced in the Harbutt’s Plasticine case, of a rebuilding deliberately incorporating enlargement, improvement or added facilities.’
As to the machines, the CA increased the damages from pounds 13,500 to pounds 65,000: ‘Counsel’s arguments both before the judge and before us were based solely on the alternative awards of pounds 13,500 or pounds 65,000. No intermediate was canvassed. It was not suggested by the appellants, either in evidence or by submission, that there was any second-hand source of paternoster machines. The respondent’s evidence was that no such source existed to his knowledge. Where this is the case and the only way the owner of destroyed chattels can replace them is by buying new ones, the measure of damages is the cost of doing that, unless the result would be absurd . . Had it been argued that in fairness to the appellants some discount from the pounds 65,000 should have been allowed to reflect the depreciation of the machines in their few months of service, the point would have merited consideration. But no such submission was made nor was there any evidence on which to base an assessment of an appropriate discount. In these circumstances I consider that, of the two alternatives contended for, pounds 65,000 was the proper sum.’
Stocker LJ: ‘The cases cited seem to me clearly to point the distinction between a situation in which the proper and reasonable compensation for the plaintiff is diminution of the value of the building destroyed as damages on the one hand or reinstatement on the other, a distinction which, in most cases, will depend on whether or not the building destroyed is a profit-making asset. Since in almost any other case if the plaintiff recovers as damages the diminution in value he will have been restored to his original position, reinstatement, or its equivalent, is only appropriate where such is the only reasonable method of compensating a plaintiff for future loss of profits derived from the asset destroyed.’
Judges:
Taylor LJ, Stocker LJ
Citations:
[1990] 2 All ER 246
Jurisdiction:
England and Wales
Cited by:
Cited – Pegler Ltd v Wang (UK) Ltd TCC 25-Feb-2000
Standard Conract – Wide Exclusions, Apply 1977 Act
The claimant had acquired a computer system from the defendant, which had failed. It was admitted that the contract had been broken, and the court set out to decide the issue of damages.
Held: Even though Wang had been ready to amend one or . .
Cited – Robot Arenas Ltd and Another v Waterfield and Another QBD 8-Feb-2010
The tenant company had defaulted under the lease, and the landlord had retaken possession. The landlord discarded the tenant’s possessions, and the tenant now sued, saying that the landlords as involuntary bailees owed duties to the proper owner. . .
Lists of cited by and citing cases may be incomplete.
Damages, Negligence
Updated: 21 July 2022; Ref: scu.238591