The plaintiff bank had agreed to underwrite a share placement. The defendant brokers made representations to potential investors outside and in breach of the terms of the engagement letter. The bank failed to check on the status of indicative commitments obtained by the chairman of the company. A significant number of shares were not taken up, and the bank held a loss. At trial Judge had held that ‘the brokers’ representations were not of equal efficacy with the bank’s decision to accept the quality of the indicative commitments . . without making proper inquiries’
Held: The bank’s appeal succeeded. It was entitled to recover its loss from the brokers.
Hobhouse LJ said: ‘Where a plaintiff does not know of a defendant’s breach of contract and where he is entitled to rely upon the defendant having performed his contract, it will only be in the most exceptional circumstances that conduct of the plaintiff suffices to break the causal relationship between the defendant’s breach and the plaintiff’s loss.
The plaintiffs’ conduct was not voluntary in the sense of being undertaken with a knowledge of its significance. Conduct which is undertaken without an appreciation of the existence of the earlier causal factor will normally only suffice to break the causal relationship if the conduct was reckless. It is the character of reckless conduct that it makes the actual state of knowledge of that party immaterial.’
There is a close relationship between the application of such concepts as remoteness, contributory negligence and causation. Where a defendant’s breach of contract remains an effective cause of the loss, at least ordinarily, the chain of causation will not be broken.
Beldam, Hobhouse LJJ
[1996] 3 All ER 834
England and Wales
Citing:
Cited – Monarch Steamship Co Ltd v Karlshamns Oljefabriker A/B HL 1949
Damages were sought for breach of contract.
Held: After reviewing the authorities on remoteness of damage, the court reaffirmed the broad general rule that a party injured by the other’s breach of contract is entitled to such money . .
Cited by:
Cited – Platform Home Loans Ltd v Oyston Shipways Ltd and others HL 18-Feb-1999
The plaintiffs had lent about 1 million pounds on the security of property negligently valued at 1.5 million pounds. The property was sold for much less than that and the plaintiffs suffered a loss of 680,000 pounds. The judge found that the . .
Cited – Borealis Ab v Geogas Trading Sa ComC 9-Nov-2010
The parties had contracted for sale and purchase of butane for processing. It was said to have been contaminated. The parties now disputed the effect on damages for breach including on causation, remoteness, mitigation and quantum.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Negligence, Damages
Leading Case
Updated: 11 November 2021; Ref: scu.190065
