The Gazette 1983

GAZETTE

JULY/AUGUST

1983

they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the Plaintiffs to the Defendants and thus known to both parties, the damages resulting from the breach of such contract, which they would reason- ably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circum- stances so known and communi- cated." The claim for additional bank interest could not be regarded as a loss which arose naturally from the Defendant's breach of contract. The Defendant could not know, and was not told, the amount the Plaintiff was required to borrow and there was no evidence to show that she could have been aware that the Plaintiff was not in a position to pay interest if she failed to complete the sale. The Plaintiffs special circumstances were not known by or communicated to the Defendant; thus the damages claimed were not reasonably in the contemplation of the parties when the breach occurred, (iii) Miscellaneous Items of Damage— (a) As the contract made no reference to the guesthouse contents the claim for £1500 failed. (b) The Defendant, as Vendor, had a duty to take reasonable care of the property pending completion of the sale; she was in breach of that duty and should pay damages which arose out of it. The claim for £662.29 was allowed. (c) The claim for £1280 was not sustain- able as (1) the Plaintiff was not under a contractual obligation, either expressed or implied, to pay storage charges. On the evidence the vendor did not require the Plaintiff to agree to pay him for the storage, and (2) the claim did not fall within either of the limbs of the rule in Hadley -v- Baxendale. The loss did not arise naturally from the Defendant's breach of contract and the Defen- dant did not know of the special circumstances which gave rise to it. Seamus Malone -v- Mary Malone. High Court (per Costello J.). Unreported. 9 June. 1982. WilHam Johnston PLANNING Declaration sought that Permission be deemed to have been obtained by default — exercise of Court's discretion to refuse. Section 4 (5) of the Housing Act, 1969 ("the 1969 Act") provides that a decision by a Housing Authority to grant Permis- sion under the Act is to be regarded as having been given in circumstances where it has not issued notice to the applicant of

addition, a bridging term loan was opened and interst on this sum was also due, and (iii) miscellaneous items of damage — the Defendant auctioned the guest- house contents for £1500. The Plaintiff claimed the sale was of the guesthouse as a going concern and its contents were his. £662.29 was claimed arising from damage to the central heating plant. £1280 was claimed for the storage of furniture which the Plaintiff had purchased for the guesthouse and which he was required to leave with the vendor of the furniture. . The Court held: (i) Loss of Trading Profits — On the evidence only a rough calculation could be made of the trading profits which the Plaintiff would have made had the sale gone through. This task could be approached best by (1) taking into account the market value of the guest- house at the date of sale, that is £35,000 and (2) taking into account the fact that an experienced bank manager had concluded that the guesthouse was capable of generating an income of at least £393 per month. It would have been reasonable to assume that the Plaintiff would have obtained an after tax trading profit of about £800 per month. However, the Plaintiff would have had to repay the bank approximately £400 per month and so his actual net loss would have been in the region of £400 per month — £11,600 over the 29 month period. But there must be deducted from the lost profits the Plaintiffs after tax earnings during that period, namely £11,979.25, which meant he suffered no loss of profits. (ii) Interest — The claim for interest on the bridging loan could not be sustained as it arose primarily because of extra borrowing for the renovation of the guesthouse. The claim if sustainable would have been limited to the difference between the interest payable had all repayments been made and the interest which actually accrued because no repay- ments were made. There were two objections to the claim The first of these was that when the Vendor's solicitors returned the purchase price in November, 1979 the Plaintiff could have repaid the loan in full and thus could have stopped interest running on it — the loss could therefore have been mitigated by the Plaintiff. The second arose from the rule relating to remoteness of damage as stated in Hadley -v- Baxendale (1854) 9 EX. 341 which states that a plaintiff is entitled to such damages for breach of contract— "as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contem- plation of both parties, at the time

Recent Irish Cases

CONTRACT Breach of Contract — Damages — Loss of Profits — Mitigation of Loss — Remote- ness of Damage. The Plaintiff lived with his wife in a large guesthouse which was owned and run by his father assisted by his step- mother (the Defendant). The Plaintiff helped to run the guesthouse until his father's death in 1976. Relations between himself and the Defendant became very strained and in October 1976 he left to reside elsewhere with his wife and found work as a painter. In July, 1978 the Defendant agreed, as executrix of her husband's estate, to sell the guesthouse to the Plaintiff for £35,000. Shortly after the contract was signed and after the purchase price had been paid over she repudiated her agreement. The sale was closed, following an order for specific performance, in January, 1981. The Plaintiff claimed compensation of £73,830.46 for the loss sustained as a result of the Defendant's breach of contract, made up of:— (i) lossrof trading profits between the contractual completion date (August, 1978) and the date of actual completion, (ii) additional interest payable to the Plaintiffs Bank arising from the Defendant's breach of contract. The Plaintiff drew down a loan shortly before August, 1978 and his solicitor thereupon sent a cheque to the Defendant's solicitor. Notwith- standing the Defendant's repudia- tion of the contract, the purchase price was not returned to the Plaintiffs solicitors until November, 1979. The Plaintiffs solicitor refused to accept its return and it was agreed, on a without-prejudice basis, that the monies would be placed on deposit receipt in the joint names of the parties' solicitors. As a result of being deprived of the profits which would have been made from the guesthouse business no repayments were made to the bank and much greater interest became payable. In

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