In January 2016, we reported on the Court of Appeal judgment in
Fulton Shipping Inc of Panama v Globalia Business Travel SAU of
Spain  EWCA Civ 1299 which offered some useful guidance
on the principles the Courts are likely to apply when considering
whether a claimant needs to give credit for benefits which have
resulted from the breach of contract which is the subject of the
claim (to read that commentary please click
This January, we find ourselves reporting on another decision of
the Court of Appeal which addresses accounting for benefits –
Alison Quilter v Hodson Developments Ltd  EWCA Civ
Ms Quilter purchased an apartment from Hodson in January 2012
for the sum of £240,000, which she sold for £275,000
two years later. Subsequently, Ms Quilter brought a claim against
Hodson seeking damages flowing from alleged misrepresentations made
prior to contract. The alleged misrepresentations concerned,
amongst other things, a failure by Hodson to disclose the existence
of disputes relating to the communal heating system used by the
Ms Quilter succeeded with her claim at first instance. The High
Court found that some of the alleged misrepresentations were made
out, and awarded damages in the sum of £15,000. In arriving
at this figure, the judge applied the "normal measure" of
damages; that is, the difference between the actual value of what
was acquired and the price which was paid. He held that Ms Quilter
was entitled to take advantage of the market increase in the
property (from £240,000 to £275,000) and noted that the
profit would have been £15,000 greater if she had paid the
appropriate price initially.
Hodson appealed the High Court decision on several grounds,
including, that the judge had erred in deciding that Ms Quilter had
suffered a capital loss on the purchase of the property by wrongly
assessing the loss at the date of the transaction when he ought to
have taken the subsequent sale into account.
The Court of Appeal rejected all of Hodson's grounds of
appeal, including the ground concerning the measure of damages.
Central to the Court's decision on this issue was the fact that
benefit which had accrued had not arisen directly as a consequence
of Hodson's breach of duty. The Court found that Ms
Quilter's decision to sell the property was not due to the
defects in the heating system (which was in the process of being
repaired under the NHBC guarantee scheme) but a decision in the
ordinary course of her domestic life as she was buying another
property. This can be contrasted with a case such as Fulton
Shipping Inc (although the facts in that case were very
different) where the decision to sell is a direct result of the
breach of contract.
The decision serves as a reminder that there are circumstances
in which a claimant may be allowed to benefit from a rise in market
value, and makes clear that the Courts will focus on the causative
connection between the breach and benefit when assessing loss in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The English Commercial Court has published two recent judgments of Mr Justice Popplewell in a single anonymised case concerning the removal of two arbitrators under section 24(1)(d)(i) of the Arbitration Act 1996.
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