I'm not sure that your starting proposition is right, Adam - see the judgment of Sir John Donaldson MR in The Solholt [1983] 1 Lloyd's Rep 605 (with which I am inclined to agree).

 

The whole is worth a read (the facts are quite stimulating, due to the improbable actions of the buyer - described as "something of a mystery" early in the judgment), but for a quick extract:

 

"A plaintiff is under no duty to mitigate his loss, despite the habitual use by lawyers of the phrase "duty to mitigate".  He is completely free to act as he judges to be in his best interests.  On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting.  A defendant is only liable for such part of the plaintiff's loss as is properly to be regarded as caused by the defendant's breach of duty ... the buyers had an unfettered right in the circumstances of this case to affirm the original contract of sale or to cancel it.  No question of mitigation arose at that stage ..."

 

John

 

JOHN RANDALL QC

 

St Philips Chambers

55 Temple Row

Birmingham B2 5LS

www.st-philips.com

 

Tel  +44 (0)121 246 7000 (DDI 246 2126)

Fax  +44 (0)121 246 7001

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-----Original Message-----
From: Adam Kramer [mailto:adam@kramer.me.uk]
Sent: 19 October 2012 08:54
To: 'Robert Stevens'; obligations@uwo.ca
Cc: 'Stephen Smith, Prof.'
Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

 

I think Rob agrees with me (contra Steve, I think) that the duty to mitigate

applies to the decision whether to terminate providing there has been an

actual breach (albeit repudiation has not yet been accepted so as to

terminate).

 

The question is then one of the facts: has the defendant breached. Whenever

a completion date has been fixed in a sale there will be a breach by

non-delivery of possession or keys or whatever on that date. In Southcott

the closing date was fixed and then extended to 31.1.05 but the claimant

refused to extend further. So clearly there was a breach on 31.1.05, and

this was also a repudiation. Damages started to flow from the breach (the

failure to pursue the development) and the claimant could have mitigated by

terminating and going elsewhere (although clearly it would be too risky to

go elsewhere without terminating as it might end up with two properties),

and it was found unreasonable not to (given that the spec perf claim was

weak and there were other properties just as good). I'm not sure when trial

was but the first appeal was 2010 and the SC case 2012. So the claimant

should have mitigated during that period but did not, and that has

implications for the measure of damages (but not, as we all agree, the

action for a price which is entirely different and to which this argument

does not apply). The SC was right.

 

As for Rob's answer to Steve, the question the courts and Sale of Goods Act

asks is whether and when the claimant should have gone to the market for a

replacement. This date can vary according to the market, whether the

claimant reasonably pressed the defendant for performance for a while, etc.

Rob's answer simply does not allow for these features. (E.g. if the claimant

reasonably waits two weeks or two years following breach and then goes to

the market or should have done, the replacement cost is assessed at that

date, even if the loss is then lower than the value at the date of breach;

indeed the court does not care about the value or cost at the date of breach

and it is not discussed; and this is not some hidden replacement of

substitutionary damages by lower consequential losses which in any case Rob

says cannot happen.)

 

 

 

 

Adam Kramer

3 Verulam Buildings

Gray’s Inn, London, WC1R 5NT

 

 

 

Direct dial:

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-----Original Message-----

From: Robert Stevens [mailto:robert.stevens@law.ox.ac.uk]

Sent: 18 October 2012 17:38

To: Adam Kramer; obligations@uwo.ca

Cc: 'David Campbell'; 'Stephen Smith, Prof.'

Subject: RE: Supreme Court of Canada on Specific Performance and Mitigation

 

It all depends when the breach occurs. 

 

So, Adam states

 

"The choice whether to affirm or

terminate occurs after (upon) the breach and the duty to mitigate has

arisen."

 

I don't think it does because without the acceptance of the repudiation

there is no breach at all. It is writ in water. That is why a repudiation

can be withdrawn. If it were itself a breach without more it could not be. 

 

As to the cases

 

Asamera v Sea Oil did not concern a repudiation, but an actual breach

 

Habton v Nimmo concerned a breach of warranty of authority, not repudiation.

And so there was a duty to mitigate from the moment of the wrong.

 

Dunno about the Saskatchewan one

 

Steve asks

 

 "If you fail to deliver goods to me and, without having in any way

indicated that I am no longer expecting you to perform, I later sue you, I

will not be given specific performance (unless the goods are unique) and my

damages will be calculated assessed on the basis of the market price as of

the contractual date of delivery. Yet if I did not terminate, then according

to the orthodox understanding of the relationship between termination and

mitigation (as set out by Rob and Andrew), should not damages be calculated

as of the date of judgment?"

 

 

The plaintiff is entitled to damages reflecting his right to performance,

assessed at the time of breach (here time of non-delivery). Consequential

loss is irrelevant to this head of damages. If he wishes to argue that he

has loss consequent upon the breach of the duty to deliver on a particular

day over and above the difference in value this is recoverable (although

usually difficult to show where there is a ready market for the goods that

he can avail himself of, ie he either can or should mitigate). Consequential

losses are assessed at time of trial. Termination does not come into it. 

 

I tried to explain the law on timing of damages in sale cases (amongst other

things) in a book chapter edited by one J Neyers. Available to be read here

I see

 

 

 

 

http://denning.law.ox.ac.uk/news/events_files/A_Golden_Victory_or_Not.pdf=

 

 

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