Omak Maritime Ltd v Mamola Challenger Shipping Co Ltd: ComC 4 Aug 2010

Lost Expenses as Damages for Contract Breach

The court was asked as to the basis in law of the principle allowing a contracting party to claim, as damages for breach, expenditure which has been wasted as a result of a breach. The charterer had been in breach of the contract but the owner had been able to re-hire the vehicle at a higher rate. The owner sought payment of his costs.
Held: The appeal succeeded. Reliance losses are a species of expectation losses and that they are neither ‘fundamentally different’ nor awarded on a different ‘juridical basis of claim’, and ‘the expectation loss analysis does provide a rational and sensible explanation for the award of damages in wasted expenditure cases. The expenditure which is sought to be recovered is incurred in expectation that that the contract will be performed. It therefore appears to me to be rational to have regard to the position that the claimant would have been in had the contract been performed.’ The tribunal erred in regarding a claim for wasted expenses and a claim for loss of profits as independent claims not to be ‘mixed’. However, both claims are governed by the fundamental principle in Robinson v Harman, requiring the court to compare the claimant’s position and what it would have been had the contract been performed: ‘Where steps have been taken to mitigate the loss which would otherwise have been caused by a breach of contract that principle requires the benefits obtained by mitigation to be set against the loss which would otherwise have been sustained. To fail to do so would put the claimant in a better position than he would have been in had the contract been performed.’

Teare J
[2010] WLR (D) 230, [2010] EWHC 2026 (Comm)
Bailii, WLRD
England and Wales
CitedWertheim v The Chicoutimi Pulp Company PC 18-Mar-1910
(Quebec) The buyer sought damages for late delivery of goods calculated on the difference between the market price at the place of delivery when the goods should have been delivered and the market price there when the goods were in fact delivered. . .
CitedBritish Westinghouse Electric and Manufacturing Co v Underground Electric Railways Co (London) Limited HL 1912
The plaintiffs purchased eight steam turbines from the defendants. They later proved defective, and the plaintiffs sought damages. In the meantime they purchased replacements, more effective than the original specifications. In the result the . .
CitedL Albert and Son v Armstrong Rubber Co 1949
(United States Court of Appeals, Second Circuit) A purchaser of machines designed to recondition rubber sought damages for breach of contract, namely, the cost of the foundation on which the machines were placed. However, the purchaser did not prove . .
CitedAnglia Television v Oliver Reed CA 1971
The television company had agreed with the actor defendant for him to appear in a production. He breached the contract. The company sought both loss of profits and for the expense incurred. The issue before the Court of Appeal was whether such . .
CitedCullinane v British ‘Rema’ Manufacturing Co Ltd CA 1954
The court considered the possibility of a claim in breach of contract for damages for both capital loss and loss of profit.
Lord Evershed MR said: ‘It seems to me, as a matter of principle, that the full claim of damages in the form in which . .
CitedGolden Strait Corporation v Nippon Yusen Kubishka Kaisha (‘The Golden Victory’) HL 28-Mar-2007
The claimant sought damages for repudiation of a charterparty. The charterpary had been intended to continue until 2005. The charterer repudiated the contract and that repudiation was accepted, but before the arbitrator could set his award, the Iraq . .
CitedC and P Haulage v Middleton CA 27-Jun-1983
The parties entered into an agreement allowing the defendant to occupy the plaintiff’s land. They had disputed whether it was a licence or a lease. The occupier had expended sums on improving the premises, but had then been summarily ejected. He now . .
CitedBowlay Logging Limited v Domtar Limited 1978
(Canada) The parties contracted for the claimant to cut timber and the defendant to haul it. The plaintiff said that the defendant breached the contract by supplying insufficient trucks to haul the timber away, and claimed as damages his wasted . .
CitedLloyd v Stanbury 1971
A purchaser who had been let into possession before completion and had spent money on improvements to the property was not entitled to claim for such expenses because they would not usually have been within the contemplation of the parties. As to . .
CitedCommonwealth of Australia v Amann Aviation Pty Ltd 12-Dec-1991
(High Court of Australia) In a claim for damages for breach of contract, wasted expenditure was claimed and there was a complex dispute as to what the consequences of performing the contract would have been.
Held: The law should not, when . .
CitedCCC Films (London) Ltd v Impact Quadrant Films Ltd 1984
The claimants purchased a licence to promote three films, but the defendant lost the film prints and CCC could not therefore promote them. After their claim for loss of profit failed in the absence of evidence, they claimed for the expenditure they . .
CitedWallington v Townsend ChD 1939
The parties exchanged contracts for the sale and purchase of land, but the contract had attached an incorrect plan, including a strip of land now disputed. Neither party had properly attended to what they were signing. The plaintiff buyer maintained . .
CitedSurrey County Council v Bredero Homes Ltd CA 7-Apr-1993
A local authority had sold surplus land to a developer and obtained a covenant that the developer would develop the land in accordance with an existing planning permission. The sole purpose of the local authority in imposing the covenant was to . .
CitedFilobake Ltd v Rondo Ltd and Another CA 11-May-2005
Unsuitability of baking equipment installation. A claimant in a breach of contract claim has a choice whether to claim loss of profits or wasted expenditure. . .

Lists of cited by and citing cases may be incomplete.

Contract, Damages

Updated: 11 November 2021; Ref: scu.421533