Ruxley Electronics and Construction Ltd v Forsyth: HL 29 Jun 1995

Damages on Construction not as Agreed

The appellant had contracted to build a swimming pool for the respondent, but, after agreeing to alter the specification to construct it to a certain depth, in fact built it to the original lesser depth, Damages had been awarded to the house owner against a builder at the cost of recreating a swimming pool which would fit the initial description.
Held: The appeal succeeded. The damages award was disproportionate, and should have been limited to the loss of amenity only. The cost of reinstatement or reconstruction may be an inappropriate standard if it was disproportionate to the loss. ‘There are not two alternative measures of damages, as opposite poles, but only one; namely, the loss truly suffered by the promisee.’ Where the defect is minor it may be appropriate for an award for disappointed expectation rather than any difference in value. The fact that such damages could not be calculated mathematically did not mean they could not be calculated.
HL Lord Jauncey of Tullichettle said: ‘Damages are designed to compensate for an established loss and not provide a gratuitous benefit for an aggrieved party from which it follows that the reasonableness of an award of damages is to be linked directly to the loss sustained does not extend to the need to reinstate.’ and
‘What constitutes the aggrieved party’s loss is in every case a question of fact and degree. Where the contract breaker has entirely failed to achieve the contractual objective it may not be difficult to conclude that the loss is the necessary cost of achieving that objective. Thus if a building is constructed so defectively that it is of no use for its designed purpose the owner may have little difficulty in establishing that his loss is the necessary cost of reconstructing. Furthermore in taking reasonableness into account in determining the extent of loss it is reasonableness in relation to the particular contract and not at large.’
Lord Mustill stated: ‘the law must cater for those occasions where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure. This excess . . is usually incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non-monetary gain. Nevertheless where it exists the law should recognise it and compensate the promisee if the misperformance takes it away . . [I]n several fields the judges are well accustomed to putting figures to intangibles, and I see no reason why the imprecision of the exercise should be a barrier, if that is what fairness demands.’

Lord Mustill, Lord Lloyd of Berwick, Lord Jauncey of Tullichettle
Independent 12-Jul-1995, Gazette 06-Sep-1995, Times 03-Jul-1995, [1996] 1 AC 344, [1995] 3 WLR 118, [1995] UKHL 8, [1995] CLC 905, [1995] 3 All ER 268
England and Wales
Appeal fromRuxley Electronics and Construction Ltd v Forsyth CA 7-Jan-1994
In 1986, the defendant, wanted a swimming pool adjoining his house. He contracted with the plaintiffs. The contract price for the pool, with certain extras, was 17,797.40 pounds including VAT. The depth of the pool was to be 6 ft 6 in at the deep . .
ConsideredAddis v Gramophone Company Limited HL 26-Jul-1909
Mr Addis was wrongfully and contumeliously dismissed from his post as the defendant’s manager in Calcutta. He sought additional damages for the manner of his dismissal.
Held: It did not matter whether the claim was under wrongful dismissal. . .
ConsideredJacob and Youngs v Kent 1921
. .
ConsideredEast Ham Corporation v Bernard Sunley and Sons Ltd HL 1965
In cases in which the plaintiff is seeking damages for the defective performance of a building contract, which is a contract for labour and materials, the normal measure of his damages is the cost of carrying out remedial work, or re-instatement. . .
CitedDarlington Borough Council v Wiltshier Northern Ltd and Others CA 29-Jun-1994
The council owned land on which it wanted to build a recreational centre. Construction contracts were entered into not by the council but by a finance company, the building contractors being the respondents Wiltshier Northern Ltd. The finance . .
CitedRobinson v Harman 18-Jan-1848
Damages for breach of contract should compensate the victim of the breach for the loss of his contractual bargain. Baron Parke said: ‘The next question is: What damages is the plaintiff entitled to recover? The rule of the common law is, that where . .
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 . .
CitedJacob and Youngs Inc v Kent 1921
Court of Appeals of New York. A building contract specified that the plumbing should use a particular type of piping. In fact the builder used a different type of piping. Cardozo J. stated: ‘In the circumstances of this case, we think the measure of . .
CitedBellgrove v Eldridge 1954
High Court of Australia. The builder built a house with defective foundations, as a result of which the house was unstable. The building owner brought an action against the builder claiming the cost of reinstatement.
Held: His claim succeeded . .
CitedTito v Waddell (No 2); Tito v Attorney General ChD 1977
Equity applies its doctrines to the substance, not the form, of transactions. In respect of the rule against self dealing for trustees ‘But of course equity looks beneath the surface, and applies its doctrines to cases where, although in form a . .
CitedRadford v De Froberville 2-Jan-1977
A contract was made for the sale of a plot of land adjoining a house belonging to the plaintiff (the vendor) but occupied by his tenants, under which the defendant (the purchaser) undertook to build a house on the plot and also to erect a wall to a . .
CitedMinscombe Properties Ltd v Sir Alfred McAlpine and Sons Ltd CA 1986
O’Connor LJ applied the test of reasonableness in determining whether the cost of reinstatement of land to its contracted for condition should be recoverable as damages. . .
CitedImodco Ltd v Wimpey Major Projects Ltd CA 1987
Glidewell LJ stated that the cost of work to put pipes in the position contracted for would be recoverable if there was an intention to carry out the work and if it was reasonable so to do. . .
CitedMottram Consultants Ltd v Bernard Sunley and Sons Ltd HL 1975
Stone panels which had been fixed to the external walls of a school fell off, owing to defective fixing by the contractor.
Held: The contractor was liable for the cost of reinstating the stone panels, calculated at the date when the defect was . .
CitedG W Atkins Ltd v Scott CA 1980
A building owner complained of defective tiling installed by the appellant. He claimed the cost of retiling the whole roof. The county court judge found that the tiling was defective, but that the defects were mostly cosmetic and of a minor . .
CitedC R Taylor (Wholesale) Ltd v Hepworths Ltd 1977
May J referred with approval to a statement in McGregor On Damages (13th edn, 1972) paras 1059-1061 that in deciding between diminution in value and cost of reinstatement the appropriate test was the reasonableness of the plaintiffs desire to . .
CitedChannel Island Ferries Ltd v Cenargo Navigation Ltd (The Rozel) QBD 5-Apr-1994
Arbitrator to award all costs even if award much less than original claim.
Phillips J said: ‘It is always necessary to exercise the greatest care before applying the reasoning in one case to a different factual situation, and this is . .
CitedDarlington Borough Council v Wiltshier Northern Ltd CA 28-Jun-1994
The plaintiff council complained of the work done for it by the defendant builder.
Held: Steyn LJ said: ‘in the case of a building contract, the prima facie rule is cost of cure, i.e., the cost of remedying the defect: East Ham Corporation v. . .
CitedJarvis v Swans Tours Ltd CA 16-Oct-1972
The plaintiff had booked a holiday through the defendant travel tour company. He claimed damages after the holiday failed to live up to expectations.
Held: In appropriate cases where one party contracts to provide entertainment and enjoyment, . .
CitedJackson v Horizon Holidays Ltd CA 5-Feb-1974
A family claimed damages for a disappointing holiday. The generous measure of damages given to the father was that the father was being fully compensated for his own mental distress, but the rule of privity of contract operated to bar the claim for . .
CitedSealace Shipping Co Ltd v Oceanvoice Ltd, The Alecos M CA 1991
The parties contracted for the sale of a ship, including a spare propeller. When the ship was delivered there was no spare propeller. It was common ground that there was no market for secondhand propellers. So the only way of providing a spare . .

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The claimant sought damages from the defendant surveyor. He had asked the defendant whether the house he was to buy was subject to aircraft noise. After re-assurance, he bought the house. The surveyor was wrong and negligent. A survey would not . .
CitedSmith New Court Securities Ltd v Scrimgeour Vickers HL 21-Nov-1996
The defendant had made misrepresentations, inducing the claimant to enter into share transactions which he would not otherwise have entered into, and which lost money.
Held: A deceitful wrongdoer is properly liable for all actual damage . .
CitedHunter and Others v Canary Wharf Ltd HL 25-Apr-1997
The claimant, in a representative action complained that the works involved in the erection of the Canary Wharf tower constituted a nuisance in that the works created substantial clouds of dust and the building blocked her TV signals, so as to limit . .
CitedAlfred Mcalpine Construction Limited v Panatown Limited HL 17-Feb-2000
A main contractor who was building not on his own land, would only be free to claim damages from a sub-contractor for defects in the building where the actual owner of the land would not also have had a remedy. Here, the land owner was able to sue . .
CitedPegler 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 . .
CitedCatlin Estates Ltd and Another v Carter Jonas (A Firm) TCC 31-Oct-2005
The defendants had been employed to manage a building project which it was said went wrong. The court had to consider several different factual claims. . .
CitedLatimer and Another v Carney and others CA 27-Oct-2006
The landlords appealed disissal of their request for relief against their tenants for non-repair of the premises. The judge had held that the landlord had not provided appropriate evidence of the damage and costs of repair which it claimed.
CitedJohnson v Gore Wood and Co HL 14-Dec-2000
Shareholder May Sue for Additional Personal Losses
A company brought a claim of negligence against its solicitors, and, after that claim was settled, the company’s owner brought a separate claim in respect of the same subject-matter.
Held: It need not be an abuse of the court for a shareholder . .
CitedRegus (Uk) Ltd v Epcot Solutions Ltd ComC 4-May-2007
Claim for unpaid fees for the use of serviced office accommodation and a very large counter-claim for mis-representation and breach of contract over allegedly defective air conditioning. . .
CitedDobson and others v Thames Water Utilities Ltd and Another CA 29-Jan-2009
The claimants complained of odours and mosquitoes affecting their properties from the activities of the defendants in the conduct of their adjoining Sewage Treatment plant. The issue was as to the rights of non title holders to damages in nuisance . .
CitedMorris-Garner and Another v One Step (Support) Ltd SC 18-Apr-2018
The Court was asked in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to . .

Lists of cited by and citing cases may be incomplete.

Construction, Damages, Contract

Leading Case

Updated: 09 November 2021; Ref: scu.88938