Vendor fails to give vacant possession of house with sitting tenant–Purchaser need not mitigate damage by accepting offer to repurchase made by vendor–Entitled to keep house and sue for difference in value attributable to tenant’s presence
This was an
appeal by Mr Norman Whitnell and his wife, Mrs Christine Marjorie Whitnell, of
Cottage Grove, Clacton-on-Sea, Essex, from a decision of the district registrar
at Colchester on April 3 1974 assessing at £1,900 the damages due to the
respondent, Mr John Alan Strutt, of Vicarage Gardens, Clacton-on-Sea, upon his
claim for breach of a contract of sale of 22b Bockings Grove, Clacton.
Mr A Scrivener
(instructed by Gotelee & Goldsmith, of Ipswich) appeared for the
appellants, and Mr M J Hyam (instructed by Elwes, Wittey & Co of
Colchester) represented the respondent.
Giving
judgment, CAIRNS LJ said that the contention raised on behalf of the defendants
before the registrar was that certain events had occurred as a result of which
the plaintiff could have mitigated his damage, and that if he had done so he
would have suffered no damage at all. Consequently he was entitled to no more
than nominal damages in the action. The plaintiff was a property developer, and
the defendants were friends of his. On April 26 1969 they purchased from him
22b Bockings Grove for £4,650. They let the house to a tenant who became a
protected tenant under the Rent Act. In 1970 structural defects became apparent
in the house. The defendants were in the position that they could not sue the
builder in respect of these defects because they had no privity of contract
with him. It was therefore arranged in a friendly manner between them and the
plaintiff that he would buy back the house so that he could make a claim on the
builder. Accordingly the plaintiff did buy back the house, the conveyance
taking place on March 3 1971. The sale was a sale with vacant possession,
according to the terms of the contract. It was thought at that time that the
tenant would be willing to leave. But unfortunately he did not do so, and there
was no ground under the Rent Act on which an order for possession could be
obtained against him. There was a meeting in the late spring of 1971 when the
matter was discussed between the plaintiff and the two defendants, and the
plaintiff said he might have to sue them for damages for breach of the term as
to vacant possession. The first defendant, Mr Whitnell, said, ‘Don’t do that,
we will buy it back.’ The plaintiff said
he could not do that because he had already sold the house in a portfolio with
11 other properties. That was a totally untrue statement which at the hearing
he denied making. The registrar disbelieved him, accepting the defendants’
account of the conversation. Mr Whitnell, not deterred by that attitude of the
plaintiff at that interview, made at least one further offer in similar terms,
that offer being made, according to Mr Whitnell’s own evidence, when he got the
letter before action claiming damages.
The plaintiff
duly sued for breach of contract, the damages being quantified as the
difference in the value of the house with vacant possession and the value
without it. The defendants recognised that to that claim they had no defence.
They therefore simply appeared in the action but served no defence, and
judgment was accordingly entered for the plaintiff for damages to be assessed.
The issue of damages was referred to the registrar. There was evidence from
surveyors on each side as to the value of the house both with and without
vacant possession. The conclusion at which the registrar
damages. The contention of the defendants before the registrar and in the Court
of Appeal had been that the plaintiff could have mitigated his damage so as to
reduce the defendants’ liability from £1,900 to nothing, simply by accepting
the offer which the defendants had made to him, there being no good reason for
refusal. What was said by Mr Scrivener, on behalf of the defendants, was that
this was a simple case of mitigation of damage on principles which had been
laid down in a number of cases, and in particular in the decision of the Court
of Appeal in Payzu Ltd v Saunders [1919] 2 KB 581. Certainly if
one took passages from the judgments in that case, particularly the judgment of
Scrutton LJ, there were statements of general principles in relation to
mitigation of damage which, if they were treated as of universal application,
might be said to apply to the facts of this case. Nevertheless the court had
been referred to no case which was really parallel in its facts and in which
the rule as to mitigation of damage had been applied.
He (his
Lordship) had reached the conclusion that the rule could not be applied to a
case where the buyer of either goods or real property had a cause of action in
damages for defects in the goods or the property or for breach of covenant in
the contract, and where some offer had been made to the buyer by the sellers
which might be said to amount to providing him with an alternative remedy. One
of the cases to which the court had been referred was a decision of Devlin J in
Heaven & Kesterton Ltd v Etablissements Francois Albiac & Cie
[1956] 2 LLR 316. At page 321 the judge said: ‘That is tantamount to depriving
a buyer of his right to reject altogether and saying that, notwithstanding that
he is properly rejecting, he is to be put in precisely the same position as if
he had taken up the goods and as if his only remedy was to be compensated for
the damage on the basis of defective quality.’
The circumstances here were that the only remedy in law which the
plaintiff initially had in respect of this breach of contract was a right of
action in damages. If it were to be said that an alternative remedy was offered
to him by the defendants by way of selling the house back to them, then he (his
Lordship) would say that, just as in the case before Devlin J, the plaintiff
was not bound to choose between the two remedies. He would add that it did not
appear to him that there was any such offer made by the defendants as could put
the plaintiff in the position that he was bound to accept it in mitigation of
damage. Nothing appeared to have been said as to the price at which the
defendants would repurchase. Even if the offer had been in definite terms, the
defendants had failed to establish that it was unreasonable for the plaintiff
to have refused it or that he had no good reason for refusal. The registrar
came to the right conclusion, and he (Cairns LJ) would dismiss the appeal.
Agreeing,
LAWTON LJ said that the question was whether, if the law gave a man a remedy,
he could be said to act unreasonably if he elected to keep that remedy and not
accept some other remedy which might be available to him in law, or
alternatively might arise, as in this case, out of an offer made by those who
were in default. The registrar had approached the problem on the basis that the
law gave the plaintiff a remedy, that he had elected to keep his remedy and
that in those circumstances it could not be said that he had acted unreasonably.
The registrar was saying that the plaintiff had a right to keep the house and
sue for damages. That was what he did. Like the registrar, he (his Lordship)
could not say he was wrong.
Also agreeing,
MACKENNA J said that there was no evidence of any definite offer by the
defendants to buy back the property at the contract price. The evidence did not
establish that the plaintiff had unreasonably refused such an offer. At the
worst he had refused to enter into negotiations with the defendants, giving, as
the registrar had found, an untrue reason for his refusal. That was not enough,
on his (MacKenna J’s) view of the law, to disqualify him from recovering
substantial damages. It looked as if the plaintiff had behaved badly towards
the defendants, who were his friends, and had earned the description of
‘Shylock’ which the registrar had given him, together perhaps with an
additional epithet which would be appropriate to an untrue witness. If that
were so, it was a pity that he must recover substantial damages. But it was no
ground for deciding his case otherwise than in accordance with the principles
of the law of damages, which were well settled in his favour. With that much
reluctance, he (his Lordship) agreed that the appeal failed.
The appeal
was dismissed. Leave to appeal to the House of Lords was refused.
