The Gazette 1980

APRIL 1980

GAZETTE

that the difference between the "Edison" and Ali case "did not depend on the difference (if any) between contract and tort in question". Regarding the principles as to remoteness in tort and contract but without wishing to "swim in this sea of semantic exercises" it appears that the rules are coming together, 13 and that impecuniosity is one of the matters to be considered in the question of reasonable foresight or degree of likelihood. Recently, however, the "Edison" has come before the High Court for consideration. In Riordan's Travel Ltd. v. Acres and Co. Ltd. 16 the plaintiffs took over a lease of a shop. Acres and Co. Ltd. were the lessors and they also owned the adjoining premises. They employed the second defendants, G. & T. Crampton Ltd., to demolish the adjoining premises, and the second defendants sub- contracted the actual demolition to the third defendants Mathew O'Dowd Ltd. When the demolition and excava- tion work had reached an advanced stage the side of the plaintiff's premises, where they* were carrying on the business of travel agents, collapsed so that the plaintiffs were entirely deprived of the use of the premises and had some of their property damaged, and it was eighteen months before they were reinstated in new apartments in a new building on the site of their old premises. Their claim for damages fell under various headings:- the value of the equipment damaged and destroyed; the rent of alternative accommodation from the time of collapse until their return to the new offices; loss of profits from being deprived of the use of their premises; and interest on money which they had to borrow in order to pay for the rent of the alternative premises. The first two caused very little problem, but there were difficulties in calculating the loss of profits. Various projections and estimates were made and McWilliam J. was satisfied that there was a reduction in business due to the conditions under which the plaintiffs had to work "but there are too many imponderables, such as the increase in oil prices and the resulting increases in fares for one to accept as accurate the figures presented on these projections". In the absence of any reasonably accurate method of assessing the losses, but looking at the increases in business actually achieved he awarded a smaller sum than that claimed by the plaintiffs. The fourth head - the interest they had to pay on the borrowed money - was the most contentious since the decision of the House of Lords on the "Edison" appeared to be the authority in point. The plaintiffs had to borrow the money because they did not have sufficient funds of their own. McWilliam J. pointed out that as their original premises were totally destroyed, they would have been put out of business completely had they not taken steps to acquire new premises as speedily as possible. The money borrowed was thus borrowed for the purpose of mitigating their loss and he found that they had acted reasonably in doing this. He accepted as a correct statement of Irish law the passage from Mayne on Damages approved by Davies L.J. in Moore v. Der Ltd. 11 that "although the plaintiff must act with the defendant's as well as with his own interests in mind, he is only required to act reasonably and the standard of reasonableness is not high in view of the fact that the defendant is an admitted wrongdoer," and McWilliam J. went on to say "acting reasonably to me means doing the best a plaintiff can in the circum- stances in which he finds himself'.

Not unexpectedly, the defendants relied on the House of Lords decision in the Edison. It should be pointed out that the Registrar of the Admiralty Division in that case considered the additional expenditure to be reasonable, however the House of Lords did not consider this to be relevant and McWilliam J. confessed to having difficulty in following Lord Wright's reasoning on this. He said that Lord Wright was considering two poss- ible points. Firstly, whether the plaintiff's financial embarrassment was a consequence of the loss of the dredger and, secondly, whether the financial embarrass- ment was a cause of loss quite independent of the sinking of the dredger. He did not consider it relevant to deal with the question of mitigation and what that duty entailed. This was made clear by his statement that "if the appell- ant's financial embarrassment is to be regarded as a consequence of the respondent's tort, I think it is too remote, but I prefer to regard it as an independent cause, though its operative effect was conditioned by the loss of the dredger," 18 and his later comment that the Lords were dealing with the measure of damage and not the victims duty to minimise "which is quite a different matter". 19 McWilliam J. was convinced that the issue before the House of Lords should have been whether the plaintiffs acted reasonably to mitigate their loss. The suggestion that their financial situation could have been a consequence of the tort was inappropriate, and it was not satisfactory to describe their financial embarrassment as an independent cause of damage. "There would have been neither damage nor embarrassment if the defendants had not negligently sunk the dredger. There was no financial embarrassment at the time the dredger was sunk which affected the appellant's capacity to operate the dredger if it had not been sunk. The dredger was totally destroyed and the financial embarrassment which does not appear to have been significant before the sinking, only affected their capacity to mitigate the loss." The only consequence of their financial situation at the time their dredger was sunk was that they could not buy a new dredger and so mitigate the loss to the fullest. It might have been argued that it was not reasonably fore- seeable that the owners of the dredger would have all their liquid resources tied up in the contract with the Harbour Board for whom they were using the dredger but these were the days when Polemis 20 reigned and the Lords were concerned with the question of direct cause, and Lord Wright felt that the plaintiffs actual loss in so far as it was due to their impecuniosity arose from that impecuni- osity as a separate and concurrent cause, extraneous and distinct in character from the defendant's negligence. McWilliam J. therefore, "with hesitation in view of the eminence of the Court," declined to apply the "Edison". It did not provide "assistance on questions arising from the incapacity of a plaintiff to mitigate damage to the greatest advantage of a defendant," and anyway it appeared that the duty to mitigate and the Wagon Mound principle "precluded the enunciation of any hard and fast rule that impecuniosity can never be taken into account in the assessment of damages". Liability for damage depends on whether that damage is of such a kind as a reasonable person would have foreseen. In the present case any reasonable person must have foreseen that the plaintiffs business must cease and the plaintiffs thereby

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