I'm glad that Force India has now been mentioned, since (a) it wrestles with these issues at considerable length and (b) I was in it.

If anyone is interested in the case, see http://www.bailii.org/ew/cases/EWHC/QB/2010/2373.html.


Tony de Garr Robinson QC



-----Original Message-----
From: Adam Kramer [mailto:adam@kramer.me.uk]
Sent: 09 March 2011 08:38
To: obligations@uwo.ca
Subject: RE: ODG: Measure of Damages - Tort and Contract- Smith v Landstar

Great case.

Supplier skimped but got away with it (i.e. the security wasn't needed and the customer never noticed/sought the security during the life). Tort measure doesn't help the customer because customer lost opportunity to do the same deal (she wouldn't have taken out the unsecured deal at a better price, unlike in Clef Aquitaine, but rather would have done the same or similar secured deal elsewhere).

Rob's recent treatise has brought this back to the centre of our wrestle with contract damages. Especially tricky in supply of services cases.

Currently we have various options:
- No damages because no loss- risk was run but all worked out fine- City of New Orleans
- Rob's thesis of objective value rather than loss- White Arrow Express, Giedo v Force India, Miles v Wakefield
- 'Subjective' loss of amenity/peace of mind- holiday cases, Ruxley, Wallace v Manchester CC, Hamilton Jones v David & Snape, Channon v Lindley Johnstone etc

I like Rob's thesis but, as it's Wednesday and the wind is blowing east, do not agree, at least with the focus.

All contracts permit recovery of value that is within the contemplation of the parties/assumption of responsibility (don't groan at me). Businessmen are usually result-oriented and the scope there principally is bottom-line
focused: you guarantee a certain profit-level and if you get away with skimping then so be it (else you pay the financial loss/lost chance).
Consumers (including of professional services) are usually enjoyment etc focused (as suppliers contemplate) and so the enjoyment value is recoverable for them. Domestic building works are both (swimming pool/survey of air flight noise is for enjoyment but also for house value). (The Farley v Skinner 'major and important object' test of mental distress etc is really working out which category we are in.)

In difficult cases it is okay to rely on a presumption of breaking even (Omak v Mamola etc). That should apply to non-financial cases as well as
financial: if you pay extra (market value) for a special service it must be rebuttably presumed that you derive contractually recoverable benefit/value from the extra service. People don't pay for nothing, and suppliers must know this. The claimant may be able to show greater loss of amenity (most holidays are worth more than they cost), or the defendant may be able to show the loss was less.

So I would start in White Arrow and Smith v Landstar and Force India with the question of how much more the gold star delivery service/secured lending cost the customer (in the Landstar case, it was a reduction in her interest rate). Presume that is recoverable value because presume break even (not because recover an objective measure). Then look to evidence. Usually no evidence. This seems to me, at least, to be a good start. There are trickinesses with it, however...

Adam Kramer


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