Negligence — Solicitors — Damages — Chance — Agricultural land — Negligent conveyancing advice — Late completion — Failure to advise on service of completion notice — Measure of damages — Whether loss of profits on lamb crop — Chance of making profit if completion notice served — Whether loss of chance of profits
On 30 September 1993, the first appellant acquired at auction an 82ha farm for £235,000. Shortly before completion, it became apparent that the vendor would be unable to give vacant possession of the farmhouse on the completion date. On 9 November, the first appellant and O, a solicitor with the respondent firm, met to consider how to proceed. The first appellant alleged that O had failed to advise him at that meeting to serve a completion notice on the vendor under condition 23 of the Law Society’s conditions of sale (1984 revision). This was accepted by the trial judge. Non-compliance with such a notice would have allowed the first appellant to treat the contract as discharged and enabled him to recover his deposit. The vendor was unable to give vacant possession until 21 January 1994.
On completion, the vendor claimed interest on the balance of the purchase price. The first appellant brought proceedings (to which other members of his family were later joined as additional claimants) against the respondent to recover, inter alia, damages, because of the delay in obtaining possession. A single joint accounting expert concluded that the first appellant’s measure of loss was the profit that he would have made from the lamb crop during the 1993/1994 season, on the basis that, after the end of November 1993, it was too late to buy breeding ewes; this amounted to £10,594. The trial judge concluded that the respondent had been negligent. He awarded damages of £591.75, representing interest from the contractual completion date until actual completion, on the basis that the first appellant ought to have mitigated his losses by taking proceedings against the vendor. The appellants appealed against the award of damages and the order for costs.
Held: The appeal was allowed. The damages should have been £4,238. The only claim to damages that the appellants could maintain was for delayed completion. Had the first appellant served a completion notice at the earliest opportunity, it would not have expired until 3 December 1993. On the expert evidence, that would have been too late for the first appellant to buy in breeding ewes, and he would not have been able to earn his lost profit elsewhere; the loss of profit in respect of the 1994 lambing season was not within the respondent’s liability. The true measure of the first appellant’s loss was the chance that, had he served a completion notice at the earliest opportunity, he would have been in a position to buy breeding ewes before the end of November. The value of that chance represented the true measure of his loss. He would have been in a position to buy breeding ewes before the end of November only if the vendor, under the pressure of a completion notice, had secured an agreement with the occupier of the farmhouse to obtain vacant possession, and the first appellant had been informed of that agreement and been sufficiently confident of completion taking place on the expiry of the notice to justify buying ewes. The first appellant had a 40% chance of earning a profit of £10,594 from the 1994 lambing season. His duty to mitigate did not require him to take proceedings for damages against the vendor.
The following cases are referred to in this report.
Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452
Walker v Geo H Medlicott & Son (a firm) [1999] 1 WLR 727; [1999] 1 All ER 685, CA
This was an appeal by the appellants, Douglas Williams and others, from a decision of Mr Recorder Howells, sitting in Llangefni County Court, in proceedings by the appellants against the respondent firm, Glyn Owen & Co, for damages for negligence.
Graham Walters (instructed by the Bar Pro Bono Unit) appeared for the appellants; Katherine McQuail (instructed by Pinsents) represented the respondent.
Giving the first judgment, Jonathan Parker LJ said:
Introduction
[1] This is an appeal by Mr Douglas Williams and three other members of his family, who are partners in a farming partnership, against an order made on 20 August 2001 by Mr Recorder Howells, sitting in Llangefni County Court, in a solicitor’s negligence action. By his order, the judge awarded the appellants damages against their former solicitor, Mr Glyn Owen, practising as Glyn Owen & Co, in the sum of £591.75, plus interest. The damages were for the negligence of Mr Owen in acting for the appellants in the matter of their purchase of a farm known as Pen y Coed Farm, Llansannan, Clwyd. I shall refer to it hereafter as “the farm”. The appeal is against the amount of the damages, and against the judge’s consequential orders for costs. The judge refused permission to appeal, but permission was granted by Ward LJ on 11 July 2002 at an oral hearing.
[2] There is no cross-appeal by Mr Owen on the issue of liability.
[3] The interests of Mr Williams and his co-appellants are identical, and Mr Williams has acted on their behalf throughout, both in the purchase of the farm and in the action. In the circumstances, I will, for convenience, proceed as if Mr Williams were the sole appellant.
[4] Until the hearing of this appeal, Mr Williams has appeared in person. On this appeal, however, he appears by Mr Graham Walters, of counsel, acting pro bono. Mr Walters has had only a very short time in which to familiarise himself with the case, and we are extremely grateful to him for the assistance he has given us.
[5] Mr Owen, the effective respondent to the appeal, appears by Ms Katherine McQuail, of counsel. She also appeared for Mr Owen before the judge.
[6] Also before the court was an application by Mr Williams for permission to appeal against an interlocutory costs order made in the |page:68| action on 14 March 2001 by Judge Elystan Morgan. By his order dated 11 July 2002, Ward LJ adjourned this application to be heard on notice, with the substantive appeal to follow should permission be granted. The application was, however, withdrawn by Mr Walters on instructions.
Factual and procedural background
[7] The factual and procedural background to the appeal is briefly as follows.
[8] The farm is a stock and arable farm comprising some 82ha (around 203 acres), together with a farmhouse and buildings. It was put up for sale, at auction, on 30 September 1993, and, in the event, was knocked down to Mr Williams for £235,000. The underbidder had bid £230,000.
[9] The evidence at the trial was that the vendor, a Mr Bibby (who has since died), was disposing of all his agricultural interests, laying off his employees and retiring from farming.
[10] The particulars of sale provided that any hill cow quota that became vested in the vendor would be transferred to the purchaser without further payment. At the trial, the judge found that the expression “hill cow quota” was understood by all parties to refer to a suckler cow premium. He also accepted Mr Williams’ evidence that the vendor had orally assured Mr Williams that: (i) he was entitled to such a premium; (ii) such an entitlement was a valuable asset; and (iii) Mr Williams had relied upon the vendor’s assurance in bidding £235,000 for the farm.
[11] The contract of sale provided, so far as material, that:
(i) the Law Society’s conditions of sale (1984 revision) — I will refer to them hereafter as “the general conditions” — should be incorporated into the contract, so far as they were not varied by or inconsistent with it (clause 17);
(ii) the completion date should be 11 November 1993 (clause 1.5);
(iii) a deposit of 10% of the purchase price should be paid on or before the date of the contract to the vendor’s solicitor, as stakeholder (clause 4);
(iv) the interest rate applicable under the contract was 4% above Barclays Bank base rate from time to time (clause 1.6);
(v) as provided in the particulars, on completion the vendor would, so far as he was able to do so, transfer to the purchaser such hill cow quota (ie suckler cow premium quota) as might be vested in him, without further payment (clause 5.2);
(vi) on completion, the vendor would sell and the purchaser would purchase the breeding flock of 250 ewes and shearlings that grazed the high ground forming part of the farm at a valuation, plus an additional £8 per head as “an acclimatisation or hefting payment” (clause 5.3); and
(vii) the farm would be sold with vacant possession on completion (clause 8).
[12] Condition 18(4)(a) of the general conditions provided that should the purchaser, with the authority of the vendor, enter into possession of the whole or any part of the farm before actual completion, the purchaser should pay to the vendor, in respect of such occupation, a sum calculated at the contract rate (that is to say, the rate specified in clause 1.6 of the contract) on the balance of the purchase money.
[13] Condition 23 of the general conditions (which is headed “Completion Notice”, and which was not varied by, or inconsistent with, the contract) provided as follows (so far as material):
(1) …
(2) If the sale shall not be completed on the contractual completion date, either party, being himself then ready, able and willing to complete, may after that date serve on the other party notice to complete the transaction in accordance with this condition…
(3) Upon service of a completion notice it shall become a term of the contract that the contract shall be completed within fifteen working days of service and in respect of such period time shall be of the essence.
…
(6) If the vendor does not comply with a completion notice, the purchaser, without prejudice to any other rights or remedies available to him, may give notice to the vendor forthwith to pay to the purchaser any sums paid by way of deposit or otherwise under the contract and interest on such sums at the contract rate from four working days after service of the notice until payment. On compliance with such notice the purchaser shall not be entitled to specific performance of the contract, but shall forthwith return all documents delivered to him by the vendor and at the expense of the vendor procure the cancellation of any entry relating to the contract in any register.
(7) …
[14] The 10% deposit (£23,500) was duly paid. On or about 8 October 1993, a valuation of the sheep was agreed, and payment (including the additional hefting payment of £8 per head) was made to the vendor by Mr Williams.
[15] On or about 12 October 1993, Mr Williams instructed Mr Owen to act for him in the purchase of the farm. This was the first time that he had instructed Mr Owen to act for him.
[16] Mr Williams had arranged a mortgage with the TSB (as it then was), and, by letter dated 26 October 1993, the TSB instructed Mr Owen to act for it in the purchase.
[17] By 9 November 1993 (two days before the contractual completion date, 11 November 1993), it had become apparent that the vendor would not be in a position to give vacant possession of the farmhouse on the completion date, by reason of a dispute with the occupier (a service occupier) over the amount of a redundancy payment.
[18] On that date (as the judge found), a meeting took place between Mr Williams and Mr Owen, at which Mr Owen advised Mr Williams as to how he should proceed. At that stage, Mr Williams wished to proceed to completion with a retention of £70,000 in respect of the farmhouse and a further retention of £7,000 in respect of the cow premium. Mr Owen accordingly wrote to the vendor’s solicitor proposing this. The vendor was willing to agree to a retention of £70,000 in respect of the farmhouse (although not in respect of the cow premium). But, in the event, the proposal came to nought because the TSB was not willing to make an advance otherwise than on the basis that vacant possession would be given of the whole of the farm, including the farmhouse.
[19] The meeting between Mr Williams and Mr Owen on 9 November 1993 is central to the action, since it is Mr Williams’ case (which the judge accepted) that, at that meeting, Mr Owen had negligently failed to advise Mr Williams to serve a completion notice under condition 23 of the general conditions, quoted in [13] above.
[20] It is common ground that service of a completion notice by Mr Williams on the vendor at any time after 11 November 1993 would have given rise to a situation in which, should the vendor not have completed within the prescribed period of 15 working days (ie should he not have been able to give vacant possession of the whole of the farm, including the farmhouse, within that period), Mr Williams would, on the expiry of the notice, have had the opportunity to treat the contract as discharged (in effect, to terminate it), and recover his deposit with interest at the rate prescribed by the contract (4% over Barclays base rate from time to time). It is also common ground that had a completion notice been served at the earliest available opportunity (ie on 12 November 1993), the prescribed period would have expired on 3 December 1993.
[21] The judge found that had Mr Williams been advised by Mr Owen as to the effect of general condition 23, he would have instructed Mr Owen to serve a completion notice forthwith, and that had the vendor failed to comply with it, Mr Williams would have terminated the contract and bought land elsewhere.
[22] In the event, the vendor was not in a position to give vacant possession of the farmhouse until 21 January 1994. At that point, the vendor claimed interest on the balance of the purchase price under condition 18(4)(a) of the general conditions, asserting that Mr Williams had been in occupation of the grazing land on the farm through subtenants. Mr Williams denied this, and Mr Owen negotiated a reduction in the amount of interest claimed from some £2,000 to £1,351. That sum was paid to the vendor by a Mr Parry, who had agreed to buy the farmhouse from Mr Williams, but Mr Parry was subsequently reimbursed by Mr Williams. Mr Williams sought to recover this sum from Mr Owen by way of damages in the action, but, on 11 January 2000, Deputy District Judge Culleton struck out that claim. |page:69|
[23] On 27 January 1994, the vendor served a completion notice on Mr Williams, and, on 21 February 1994, completion took place.
[24] The action was commenced on 29 September 1999 (one day short of six years after the date of the contract). Initially, Mr Williams was the only claimant. In the course of lengthy particulars of claim annexed to the claim form, Mr Williams said:
in the particulars of sale it stated that the Vendor had applied for Suckler Cow Quota and that the Quota would be passed on to the purchaser, free of charge. As it turned out, there was no Quota…
[25] In fact, as I recorded earlier, the particulars of sale contained no such statement. It is also to be noted that the particulars of claim contained no allegation of an oral misrepresentation by the vendor, such as the judge found to have been made.
[26] Later in the course of his particulars of claim, Mr Williams said:
Because the vendor could not complete on the completion date 11/11/93… I had to cancel the purchase of the sheep to stock the farm, and I lost the sheep Premium for that winter because of the delay. I have had a report from ADAS, agricultural consultants, to calculate my losses which comes to over £19,000. My accountants confirm this to be correct.
[27] At the conclusion of the particulars of claim, Mr Williams said:
My claim against the defendant is negligence because he did not serve notice to complete or even advise me of such a procedure, to protect my interests, when it became clear that the Vendors were unable to complete, also agreeing to pay interest to the Vendors without discussing it with me.
[28] As already noted, the claim in relation to interest has since been struck out.
[29] On 8 November 1999, a defence was served (which was subsequently amended). The defence denied liability, alleging, in para 24, that, at the meeting on 9 November 1993, Mr Owen had explained “the difficulties with service of a notice to complete to the claimant in November 1993”.
[30] As to damages, para 20 of the defence denied that the ADAS report set out any loss for which Mr Owen was liable to Mr Williams, asserting that, in any event, the report had been prepared on the basis of projections, rather than actual figures. Paragraph 28 contained a general denial of liability for any loss, should negligence be found. Paragraph 31 of the defence was in the following terms:
Insofar as the claimant suffered loss, whether as particularised or at all, by reason of the delay in completing the transaction, the defendant firm avers that such loss could have been recovered from the vendor and that the failure to do so amounts to a failure to mitigate loss.
[31] Mr Owen applied for summary judgment on the footing that the ADAS report disclosed no recoverable loss. That was the application that resulted in District Judge Culleton’s order striking out the claim in relation to interest paid to the vendor. The district judge declined to strike out the entire claim, or to enter summary judgment on it in favour of Mr Owen, but, in the course of his judgment, he expressed doubts as to whether the ADAS report disclosed any recoverable loss. In the event, however, the district judge concluded that he could not rule out the possibility that a claim based upon the ADAS report might succeed.
[32] By a request for further information made on 26 April 2000, Mr Owen sought clarification as to the precise basis upon which Mr Williams claimed damages.
[33] In his first answer to the request, the answer being dated 8 May 2000, Mr Williams said:
Had I been advised about the procedure to serve notice to complete by Mr Glyn Owen, I would have done so on 12 November 1993. This would have almost certainly caused the vendor to settle his dispute with [the occupier of the farmhouse] and possession would then be available by 26 November 1993, but because no notice was served on the vendor, he carried on with his dispute with the [occupier] knowing that no notice to complete had been served.
On the other hand, had the vendor not been able to complete by 26 November 1993 I would be in a position to renegotiate the price of [the Farm], this time without the pretence that there was a suckler cow quota and without having to pay hefting money on ewes which had no value whatsoever, also knowing that the season for stocking the farm and entering the number of stock for grants with the Ministry of Agriculture would run out very soon, I would certainly have bought [the Farm] for at least £20,000 cheaper.
[34] In a second answer, dated 18 May 2000, Mr Williams in effect repeated the contents of his earlier letter.
[35] By an order dated 16 June 2000, District Judge Hughes granted to Mr Williams permission to add the other three members of his family as claimants, and to amend his particulars of claim. The order also appointed an accountant, Mr Aubrey Davies, of Aston Hughes & Co, a specialist in agricultural accountancy, as the single joint accounting expert on the issue of the loss of profits claim; that is to say, the claim for loss of profits by reason of delayed completion.
[36] On 3 July 2000, Mr Williams filed amended particulars of claim in which he alleged that, in a letter dated 16 May 1994, Mr Owen had negligently advised him that he had no claim for compensation against the vendor. In that letter, Mr Owen acknowledged that Mr Williams had, throughout the transaction, emphasised the need to complete at the earliest possible time. He went on to say that the file clearly showed a number of points, including the following:
As you had enjoyed full possession of the land at Pen y Coed since October, 1993, the purported claim for loss of profit in not being able to purchase sheep at the market during this period would have failed…
[37] On 17 July 2000, Mr Owen served an amended defence objecting to the inclusion of the additional claim of negligence on the footing that the claim was not within the terms of the permission to amend and that it was, in any event, statute-barred.
[38] On 22 September 2000, a case-management conference took place before District Judge Hughes. By his order, the district judge struck out the additional claim based upon Mr Owen’s letter dated 16 May 1994. Among other procedural directions, he directed that each party be permitted to put written questions to Mr Davies, and that Mr Davies give oral evidence at the trial unless the parties agreed otherwise. Mr Williams sought permission to appeal against the district judge’s order (principally, it would appear, against the striking out of the claim based upon the letter dated 16 May 1994), but, on 18 October 2000, Judge Edwards QC refused permission.
[39] By an order dated 23 October 2000, District Judge Williams refused Mr Williams’ application to call a second expert witness at the trial, and gave directions about bundles.
[40] In September 2000, Mr Davies submitted his first report, dated 5 September 2000, in which he calculated the loss suffered by Mr Williams by reason of delayed completion. He concluded that the true measure of Mr Williams’ loss was the profit that he would have made from a lamb crop during the 1993/1994 season, on the basis that, by January 1994, it was too late to buy breeding ewes. In paras 1.19 to 1.21 of his first report, Mr Davies said:
1.19 The claimant has produced evidence to show that the cost of breeding ewes increased between November 1993 and January 1994 but it must be borne in mind that the ewes in November would have been valued prior to service and in January the ewes would have been in lamb or with lamb at foot.
1.20 By the end of November the main breeding season has passed and then the market is for old breeding ewes and in lamb or with lamb ewes which, again, are generally older ewes that are not suitable as future breeding ewes for an upland farm.
1.21 Once the opportunity to buy good breeding ewes had passed it was good farming practice to delay buying ewes until 1994.
[41] In para 2.5 of his first report, Mr Davies concluded that the net loss suffered by Mr Williams as a result of his being unable to stock the farm in good time (ie to buy in breeding ewes before the market was lost) was £7,748. In para 3(2)(a) of his first report, Mr Davies concluded that it would have been possible for Mr Williams to carry into effect his original plan; that is to say, to buy in breeding ewes for the 1994 lambing season had completion taken place on 26 November 1993. |page:70| (The date 26 November 1993 is relevant only in so far as it was a date that had featured in the questions that both parties had asked Mr Davies. At that stage, the parties appear to have thought that 26 November 1993 was the earliest available date for the expiry of a completion notice, but, if so, they were in error in failing to take into account that the period prescribed by general condition 23 is 15 working days.)
[42] In para 3.2(b) of his first report, Mr Davies concluded that, by 7 December 1993 (again, a date that, so far as I can see, has no significance beyond the fact that it was expressly mentioned in the questions that the parties asked Mr Davies), “it was too late to buy good breeding ewes for the 1994 lambing season”.
[43] By letter dated 2 October 2000, Mr Williams queried certain aspects of Mr Davies’ report. Mr Davies responded to those queries by letter dated 2 November 2000.
[44] On 29 March 2001, Mr Davies produced a revised report, taking account of the representations made by Mr Williams in his letter dated 2 October 2000. In the light of those representations, Mr Davies increased his figure for the profit that Mr Williams would have made from a lamb crop in 1994, but which he was unable to make due to delayed completion, from £7,748 to £10,594.
[45] The trial of the action took place before Mr Recorder Howells on 14 to 18 May 2001. At the trial, Mr Davies gave oral evidence. In the course of his evidence, in response to a question from Ms McQuail, Mr Davies expressly confirmed the statement in para 1.20 of his first report that “[b]y the end of November the main breeding season [had] passed”.
[46] On 20 August 2001, the judge delivered a reserved judgment on liability. After hearing further argument, he went on to deliver an extempore judgment on damages.
Judge’s judgments
[47] I have already sufficiently summarised the judge’s judgment on liability, against which there is, as I noted earlier, no cross-appeal.
[48] On the issue of damages, the judge began by saying that he had listened carefully to Mr Davies’ evidence, and that “there were plainly losses suffered by the claimants”. However, in the course of his judgment, the judge made no further express reference to Mr Davies’ evidence, either by way of acceptance or by way of rejection of it.
[49] The judge then posed the question to be decided in the following terms:
The real question is as to how I ought to reflect in damages the finding made to the effect that, if properly advised, the claimants would have elected to terminate the contract and look elsewhere for another purchase.
[50] The judge went on to hold that the correct measure of damages was the difference, in financial terms, between what would have happened had a completion notice been served by Mr Williams and what actually happened. As to that, he accepted Ms McQuail’s submission that the losses identified by Mr Davies would only have been suffered had Mr Williams elected to proceed with the contract, rather than to terminate it. He further accepted her submission that, in any event, Mr Williams ought to have mitigated his damage by suing the vendor for damages, including damages for misrepresentation in relation to the cow premium. As to mitigation, the judge said:
the claimants had a relatively simple cause of action against the Vendor (a) for all the damages which have been claimed in this present case or (b) for the Cow Quota price (if calculable) and the sheep price and hefting charge.
[51] The judge went on to accept Ms McQuail’s further submission that the only damage that Mr Williams could recover was a sum representing interest at the contract rate on the deposit from the contractual completion date until actual completion, together with interest on that sum. That worked out at £591.75, plus £354.72 interest, making a total of £946.47. The judge accordingly awarded that sum as damages.
[52] As to costs, since there had been a payment into court that exceeded the amount of the judgment (the last date for acceptance of which had been 27 April 2000), the judge awarded Mr Owen his costs since that date, and ordered that, in respect of the period prior to that date, there should be no order for costs, save that Mr Williams should be entitled to be paid £300 by Mr Owen, representing the fee for the issue of the claim form. He also ordered payment out to Mr Owen of the sum in court (without, apparently, any deduction in respect of the damages awarded), and he directed that the £300 to be paid by Mr Owen be offset against an earlier order for costs in Mr Owen’s favour.
Mr Williams’ grounds of appeal
[53] Mr Williams’ ground of appeal against the amount of damages awarded is, in effect, that, as a result of Mr Owen’s failure to advise that a completion notice be served, he was forced to pay over the odds for the farm, particularly in respect of a non-existent cow premium, and that he had done all he reasonably could to mitigate his loss. Mr Williams also appeals against the judge’s costs orders on the ground, as I understand it, that, following the dismissal of Mr Owen’s application for summary judgment, the only live issue remaining was as to the amount of the damages, and that, consequently, the costs incurred by Mr Owen after 27 April 2000 were unreasonably incurred. Mr Williams also asserts that since Mr Owen’s application for summary judgment was unsuccessful, Mr Owen should have been ordered to pay the costs prior to 27 April 2000. He also complains that a fourth bundle of documents, which had been prepared for the trial by Pinsent Curtis Biddle [as it then was], was unnecessary because Mr Williams had prepared the bundle himself. Mr Williams also seeks to adduce new evidence as to advice he received from other solicitors and from counsel in relation to a possible claim for damages against the vendor. This evidence, he asserts, is relevant to the question of mitigation.
[54] Granting permission to appeal, Ward LJ considered that it was arguable that Mr Williams could not reasonably be expected to engage in litigation against the vendor, and, accordingly, that he had not failed to mitigate the damage that he had suffered.
Arguments
[55] Before us, Mr Walters (for Mr Williams) effectively conceded that, on the available evidence, he was not in a position to contend for awards of damages on the footing that Mr Williams had paid too much for the farm, or that the hefting payment was, in the event, wasted expenditure. At all events, whether Mr Walters had formally made that concession or not, it is plain, in my judgment, that, on the available evidence, the only claim to damages that Mr Williams can maintain is a claim to damages for delayed completion.
[56] Mr Walters submits that the judge ought to have assessed the damages for delayed completion at £10,594, in accordance with Mr Davies’ revised report, on the footing that Mr Owen’s negligent failure to advise as to the availability of the completion notice procedure resulted in completion being delayed beyond 3 December 1993, which, in turn, meant that it was too late for Mr Williams to buy in breeding ewes for the 1994 lambing season. Hence, he submits, Mr Owen’s negligence led directly to the loss of the 1994 lamb crop. As to mitigation, he submits that it was not unreasonable for Mr Williams to claim damages against Mr Owen without first having claimed them against the vendor. He relies upon Mr Owen’s letter dated 16 May 1994 as, if not direct advice to Mr Williams that he had no claim against the vendor, at least discouraging such a claim.
[57] Ms McQuail submits that, on the face of Mr Davies’ first report, by 3 December 1993, it was already too late for Mr Williams to go into the market to buy breeding ewes. She points out that in questioning Mr Davies in the course of his oral evidence at trial, she specifically asked him to confirm the contents of para 1.20 of his first report, which he duly did. It follows, she submits, that, on the basis of Mr Davies’ own evidence, the loss of the 1994 lamb crop cannot be laid at the door of Mr Owen, since service of a completion notice at the earliest available opportunity — 12 November 1993 — would not have prevented that loss occurring.
[58] As to mitigation, Ms McQuail points out that, quite apart from Mr Owen’s negligence, Mr Williams had a claim for damages for breach of contract against the vendor (or his estate) in respect of losses resulting from the delay that occurred after the contractual date for completion (11 November 1993). She submits that that claim (albeit |page:71| now long since statute-barred) was in all respects a more straightforward claim than the claim in negligence against Mr Owen, and that, in the circumstances, it would have been reasonable for Mr Williams to pursue his remedies against the vendor (or his estate) before seeking recovery from Mr Owen. In support of that submission, Ms McQuail relies upon the decision of this court in Walker v Geo H Medlicott & Son (a firm) [1999] 1 WLR 727, a case of negligent drafting of a will. In that case, the claimant had failed to recover damages against the negligent draftsman, it being held that he ought to have taken proceedings for the rectification of the will.
[59] When faced with the possibility that we might conclude that the issue of damages might have to be remitted for a further hearing, both Mr Walters and Ms McQuail, having taken instructions, very sensibly took the view that such a course would be disproportionate in terms of time and costs, and they accordingly invited us to deal with the issue of damages finally on this appeal.
Conclusions
[60] While I have considerable sympathy with the judge, confronted as he was with difficult questions in relation to the assessment of damages, I nevertheless take the view that his treatment of Mr Davies’ evidence, or, perhaps more accurately, his non-treatment of it, was so unsatisfactory that, in normal circumstances, a remission of the issue for a further hearing might well have been unavoidable. However, I recognise the good sense of the parties in inviting us to deal with the matter finally on this appeal, and, accordingly, I shall do the best I can on the available evidence, such as it is.
[61] In the first place, I accept Ms McQuail’s submission that, on the face of Mr Davies’ first report, and in particular para 1.20, which he confirmed in the course of his oral evidence, the market for breeding ewes for the 1994 lambing season had been lost by the end of November 1993, and that, in consequence, by 3 December 1993 (the earliest available date for the expiry of a completion notice served by Mr Williams), it was already too late for Mr Williams to buy in breeding ewes. That in turn means that had Mr Williams terminated the contract on the expiry of a completion notice, he would not have been able to earn his lost profit elsewhere because it would have been too late for him to buy in breeding ewes, and, hence, the loss of profit in respect of the 1994 lambing season could not, in that event, be laid at Mr Owen’s door.
[62] However, that is not the end of the matter, as it seems to me, since it is still necessary to consider what chance there would have been, had Mr Williams served a completion notice on 12 November 1993, of his being thereby placed in a position to buy in breeding ewes before the end of November 1993. In my judgment, the value of that chance represents the true measure of Mr Williams’ loss resulting from Mr Owen’s negligence.
[63] Given that there can, so far as I can see, have been no significant possibility of actual completion taking place on a date prior to the expiry of the notice (3 December 1993), Mr Williams would have been in a position to buy in breeding ewes before the end of November 1993 only if: (a) under pressure of a completion notice, the vendor had reached a binding agreement with the occupier of the farmhouse whereby vacant possession of it would be given upon the expiry of the notice; and (b) Mr Williams had been informed of that agreement, so that he could be sufficiently confident of completion upon the expiry of the notice to justify his going into the market to buy breeding ewes. What, then, were the chances of Mr Williams being placed in that position?
[64] This question was not addressed by the judge, and there is no direct evidence about it. However, doing the best I can, and taking a conservative approach, I conclude that had a completion notice been served on 12 November 1993, the chance of Mr Williams thereby being placed in a position to buy in breeding ewes before the end of November 1993, and, hence, of being able to earn a profit from the 1994 lambing season, would have been in the region of 40%. In reaching this conclusion, I bear in mind that the vendor was selling up and retiring, and, hence, would be unlikely to risk losing the sale of the farm for the sake of a dispute about a redundancy payment (the amount of which was not in evidence, but that must, in all likelihood, have been relatively insignificant by comparison with the purchase price of the farm). It also seems to me to be more likely than not that if the vendor had reached agreement with the occupier of the farmhouse for completion to be given on 3 December 1993, he would have done so some days before that date, in sufficient time to enable Mr Williams, upon being informed of the agreement, to go into the market to buy breeding ewes. It is also reasonable to assume that the vendor would have been aware of Mr Williams’ intention to terminate the contract if completion did not take place in accordance with the completion notice: at the very least, he would have appreciated there was a serious risk that he might do so.
[65] I readily accept that these conclusions involve a significant degree of speculation, but, for reasons already explained, to remit the assessment of damages for a further hearing would, in the circumstances, be wholly disproportionate.
[66] In my judgment, therefore, but for Mr Owen’s negligence Mr Williams would have had a 40% chance of earning a profit from the 1994 lambing season. As to the amount of that profit, the only available figure is Mr Davies’ revised figure of £10,594: 40% of £10,594 is £4,238. That, in my judgment, is the amount of the damage suffered by Mr Williams as a result of Mr Owen’s negligence, and, subject to the question of mitigation, that is the amount he is entitled to recover against Mr Owen. (I should make it clear at this point that both sides agree that if damages are awarded on this basis, the award must be substituted for the judge’s award of damages representing interest on the deposit, in order to avoid double counting.)
[67] I turn, therefore, to the question of mitigation.
[68] In my judgment, Mr Williams’ duty to mitigate his damage did not require him to take proceedings for damages against the vendor. As Lord Macmillan said in a much-cited passage in his speech in Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452, at p506:
Where the sufferer from a breach of contract finds himself in consequence of that breach placed in position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult position by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken.
[69] In the instant case, it cannot, in my judgment, be assumed that a claim for damages against the vendor would have been a straightforward affair. Moreover, in his letter dated 16 May 1994, Mr Owen himself, to put it at its lowest, fell a long way short of recommending that Mr Williams commence such proceedings. I conclude, therefore, that Mr Williams acted reasonably in the course that he eventually took in suing Mr Owen.
[70] Nor, in my judgment, is the decision in Walker of assistance in the instant case. In Walker, as Slade LJ (who gave the leading judgment) pointed out, at p739, the recovery of damages against the negligent solicitor had the effect of enabling the beneficiaries under the will to retain “adventitious benefits”, and, accordingly, fairness required that the beneficiaries share the cost of putting things right by means of rectification proceedings. That feature is not present in the instant case.
[71] I would accordingly allow the appeal, set aside the judge’s order, and award Mr Williams damages in the sum of £4,238.
[72] It follows that the costs orders made by the judge may have to be revisited. In that event, unless the parties can reach agreement there will have to be further argument as to costs, and as to any other consequential matters. |page:72|
Agreeing, Clarke LJ said :
[73] I agree with Jonathan Parker LJ that this appeal should be allowed to the extent that he proposes. I add a few words of my own on only one point that arose in the course of the argument in what seems to me to be a difficult case in which to assess damages.
[74] Jonathan Parker LJ has concluded that if Mr Owen had not negligently failed to advise Mr Williams to serve a completion notice, there was about a 40% chance that the vendor would have completed the sale in time to enable him to buy in ewes so as not to miss the 1994 lambing season. It follows that there was also a chance that he would not have done so. The recorder held that if the vendor did not complete within the notice period, Mr Williams would have terminated the contract.
[75] In the course of argument, there was some discussion as to what, if any, loss Mr Williams sustained as a result of being deprived of the opportunity of terminating the contract. No attempt was made to show that the whole bargain was disadvantageous to Mr Williams and that he suffered a loss as a result of being committed to it that he would have avoided but for Mr Owen’s negligence. Such an exercise would have involved a complicated analysis of the comparison between the position as it was and the position as it would have been had the contract been terminated.
[76] It occurred to me during the course of the argument that Mr Williams might have been able to recover damages for loss of an opportunity to terminate the contract, but only if he could establish these two steps. The first is that if he had terminated the contract, he would have sued the vendor for damages for failure to complete on 11 November 1993 (his rights of suit being preserved by clause 23(6) of the general conditions quoted by Jonathan Parker LJ), and the second is that if he had done so, he would have recovered the whole amount of the loss of profit attributable to the loss of the 1994 lambing season, namely £10,594, from the vendor.
[77] In that event, it could be said that Mr Williams was entitled to 40% of the £10,594, to reflect the loss of the chance of the vendor completing in time, and a further figure to reflect the value of the loss of opportunity to terminate the contract. He would not, however, be entitled to the whole of the remaining 60% because some allowance would have to be made for the chance of the vendor completing within the period of the notice, or perhaps before Mr Williams exercised his right to terminate but too late for Mr Williams to buy in suitable ewes.
[78] I have, however, reached the conclusion that Mr Williams has not established the necessary steps identified above. As Jonathan Parker LJ has explained, he did not in fact sue the vendor, although he could have done. I agree with Jonathan Parker LJ that, in the events that have happened, it was not unreasonable for him not to do so, but I can see no sensible basis on the evidence for holding that he would have done so if had he terminated the contract. Indeed, so far as I can see, it was not his case at the trial that he would have done. I also note in passing that it was not Mr Williams’ case that Mr Owen should have advised him to sue the vendor, or, indeed, that he would have done so had Mr Williams terminated the contract.
[79] In these circumstances, I have reached the conclusion that Mr Williams has not established any loss as a result of a loss of opportunity to terminate the contract. His loss depends upon the quantification of the chance of the vendor completing in time to enable him to buy in suitable ewes. I agree that, for the reasons given by Jonathan Parker LJ, a fair assessment of that chance leads to the conclusion that Mr Williams is entitled to damages of £4,238.
Agreeing, Auld LJ said:
[80] For the reasons given by my lords, I agree that the appeal should be allowed and that the court should substitute for the judge’s award of damages the award of £4,238 indicated in [71] of Parker LJ’s judgment.
Appeal allowed.
