Breach of contract — Delay — Vendor not having title — Purchaser losing profit — Damages — Rule in Bain v Fotbergill applies — Whether leave to appeal direct to House of Lords — Certificate granted
By a contract in writing made on June 26 1987 the plaintiff agreed to purchase, and the defendant agreed to sell, a leasehold interest in 27-29 Sloane Gardens, London SW1, for £1.635m. By a contract of the same date the defendant had agreed to purchase the same interest in the premises from the then owners (the “owners”) for £1.5m. Completion of the sale from the owners to the defendants did not take place until April 1988, after an order for specific performance had been made. The plaintiff, having meanwhile exercised its right to rescind the contract, then agreed in early 1988 to purchase the premises for £1.375m if the defendant succeeded in acquiring them. The sale of the premises by the defendant to the plaintiff was completed in April 1988.
The plaintiff claimed damages for (1) loss of profit on a prompt resale or (2) loss of profit from renovating the premises and selling individual flats. The defendant averred that the failure on its part to complete was caused by a defect in title and the plaintiff was precluded by the rule in Bain v Fotbergill (1874) LR 7 HL 158 from recovering for loss of profit or failure of the bargain. The plaintiff conceded this and applied for a certificate to appeal to the House of Lords.
Held The certificate was granted.
A point of law of general public importance was involved. The rule in Bain v Fothergill applied and bound the court in the present case. It has been criticised and was abolished by section 3 of the Law of Property (Miscellaneous Provisions) Act 1989, although that had no effect in this case. It was for the Appellate Committee of the House of Lords to consider whether a rule that had been abolished should be considered by them.
Richard Fawls (instructed by Reid Minty & Co) appeared for the plaintiff; and Geoffrey Zelin (instructed by Allan Jay & Co) appeared for the defendant.
