Profits made on development were not deductible
The purchasers of a property for a price of 53,250 pounds had relied on a negligent misrepresentation that the property had not been the subject of subsidence. In fact it had. The cost of the required works was 17,000 pounds, which they could not afford. Two and a half years later, they obtained planning permission to knock the property down and build two new properties: they then sold all the land, with the benefit of the planning permission, to developers for 78,500 pounds and moved out.
Held: They had been under no duty to mitigate by obtaining planning permission, selling and moving. Accordingly the ‘profits’ made on the resale accrued to their own benefit and were not, as a matter of reality, caused by the original negligence. It was not ‘part of a continuous transaction of which the purchase of land and bungalow was the inception’. The Court of Appeal reversed the first instance decision that the profit fell to be deducted from the damages. Although there was a logical distinction between treating benefits as the product of mitigation and treating them as part of the measure of loss, each approach raises the same issues of fact and leads to the same conclusion.
While there was in one sense a causal link between the inducement of the purchase by misrepresentation and the sale of the property two and a half years later, the reality of the situation was that the plaintiffs bought the house to live in, and in fact did live in it for a substantial period. It was only years later that the possibility of selling the land and moving elsewhere was explored and came to fruition, which meant that the transaction was not part of a continuous transaction of which the purchase was the inception.
Mustill LJ
[1990] 2 QB 227, [1990] 1 All ER 449, [1990] 2 WLR 234
England and Wales
Cited by:
Cited – Bacciottini and Another v Gotelee and Goldsmith (A Firm) CA 18-Mar-2016
A property subject to a planning condition was purchased by the appellant under the advice of the respondent, who failed to notify him of the existence of a planning condition. The judge had awarded the claimant pounds 250 being the cost of the . .
Cited – Gard Marine and Energy Ltd and Another v China National Chartering Company Ltd and Another SC 10-May-2017
The dispute followed the grounding of a tanker the Ocean Victory. The ship was working outside of a safe port requirement in the charterparty agreement. The contract required the purchase of insurance against maritime war and protection and . .
Lists of cited by and citing cases may be incomplete.
Damages
Leading Case
Updated: 31 October 2021; Ref: scu.561223