Mr and Mrs Hooper, the respondents, owned a freehold property at Northwich in Cheshire. On 8 February 2008 they agreed to sell it to Mr Oates, the appellant, for £605,000, for completion by 30 June 2008. When the time came Mr Oates could not, or would not, complete. After service of a notice to complete, with which Mr Oates did not comply, Mr and Mrs Hooper accepted his repudiation by notice dated 14 July 2008. They remained anxious to sell the property because it was subject to a mortgage to secure a debt of £500,000 and they had already moved to another property which they had bought in Dorset. They tried to sell it, with the benefit of estate agents’ advice, but they failed despite 14 months’ marketing. In October 2009 they let it to tenants for 6 months. When the tenants left, late in 2010, they marketed it again, but still unsuccessfully. By the summer of 2011 they gave up, at least for the time being, and moved back into the property themselves. In the meantime the value of the property had fallen substantially, because of the events of autumn 2008 and their impact on the property market.

The issue on the appeal is whether the claim for damages against Mr Oates for his breach of contract is to be measured by reference to the value of the property at the date of the breach of contract, or rather by reference to its value at a later date, after Mr and Mrs Hooper had given up trying to sell the property. The judge below held that the right date was the later one. For reasons which I will explain, I consider that he was right to reject the contention that the breach date was decisive for this purpose.

In May 2009 Mr and Mrs Hooper sued Mr Oates for damages and for forfeiture of the deposit of £30,250. Mr Oates defended the case, but on the trial of liability Mr Recorder Khan held, on 3 March 2010, that he had been in breach of contract, the deposit was forfeit, he was bound to pay the other half of the deposit, namely a further £30,250, and he was liable to pay damages, to be determined by the court. He appealed, but unsuccessfully, against that order. The Court of Appeal’s judgment, given on 26 November 2010, is at [2010] EWCA Civ 1346.

The case returned to Mr Recorder Khan on 22 March 2012 for the determination of damages. The evidence of the joint single expert valuer was that the open market value of the property at the date for completion had been £600,000, by 21 October 2008 it was £545,000 and by 13 September 2010 (the date of the valuation) it was £495,000. The recorder held that Mr and Mrs Hooper’s damages should be assessed by reference to the last figure, so that, before allowing for the deposit, the damages would be £110,000; the net amount was £49,500.

Mr Oates appeals, with permission to appeal given by Sir Richard Buxton on a consideration of the papers, asserting that the value of the property at the date of the breach should be taken, in which case Mr and Mrs Hooper have suffered no loss that is not covered by the deposit.

As before the recorder, Mr and Mrs Hooper were represented before us by Mr Philip Flower of Counsel, and Mr Oates by Mr Nicolas Davis, solicitor advocate. I am grateful to both of them for their written and oral submissions which enabled the hearing of the appeal to be completed within a morning.

I need say little more about the detail of the facts. The agreement provided for completion by 30 June 2008 or earlier by mutual agreement, and it also provided that if completion had not taken place by 30 April 2008 Mr Oates would pay a further £20,000 by way of deposit. He did not do so, asserting without justification that the vendors were not then in a position to complete.

Mr and Mrs Hooper had put the property on the market in June 2007 at an asking price of £625,000. Soon after that Mr Oates made an offer of that amount, which they accepted. The property was already empty, since they had already bought and moved into another property. Later, before exchange, the price was reduced to £605,000. After Mr Oates had failed to complete on the due date, or in response to a notice to complete, Mr and Mrs Hooper put the property back on the market at an asking price of £585,000. This attracted no offers. The price was then reduced to £550,000, but again unsuccessfully. One offer was received, at £460,000, which their agent managed to get increased to £485,000. They accepted this offer despite the fact that it would not have covered the whole of the sum secured by the mortgage, but nothing came of the offer.

As an alternative, in order get some return from the property, they marketed it for letting. As of 1 October 2009 they let it on an assured shorthold tenancy for 6 months which, it seems, was then renewed for a further 6 months. Once that tenancy had come to an end and the property was again empty, they put the property back on the market for sale in March 2011. They got one offer of £482,500 and then an alternative offer at £485,000, neither of which showed any real sign of proceeding to exchange. One offer was received at £499,000, but on terms that were not acceptable to Mr and Mrs Hooper. No other offer was forthcoming. Thereafter Mr and Mrs Hooper decided to move back into the property. They were living there at the time of the trial of quantum.

Mr Hooper gave the only evidence of fact, in two witness statements, on which he was only cross-examined on a minor point as to dates. A valuation report of Robert S Newton was before the court, made on joint instructions from both parties’ solicitors given in July 2010, followed by an inspection of the property on 13 September 2010. Mr Newton observed that the residential property market had peaked in mid 2007, that due to the economic downturn there was uncertainty in the market during the latter half of 2007 and that in 2008 property values were beginning to decline. At the breach date there was significant economic uncertainty. At the date of the valuation, confidence in the property market remained weak and there was a high level of uncertainty in the performance of property values generally, reflected in the abnormally low volume of recent sales comparable transactions.

He had been asked to give a figure for the market value of the property as at three dates: 30 June 2008, 21 October 2008 (a date not pursued as relevant after the judgment of the Court of Appeal in November 2010) and at the date of inspection or valuation. For this purpose, he took the market value to be as follows:

His figures were: 30 June 2008 - £600,000; 21 October 2008 - £545,000; 13 September 2010 - £495,000. No questions were addressed to him on any aspect of his report by either party. His report was before the recorder, without him being required to attend the hearing.

By the Particulars of Claim, Mr and Mrs Hooper asserted that they had suffered loss as a result of Mr Oates’ breach of contract. Relevantly, they said that they had been unable to sell the property which was then still being marketed, that they had suffered further loss by the diminution of the value of the property after 14 July 2008 and that this loss would be quantified in due course by way of valuation if the property was not sold before trial. In paragraph 8 of the Defence Mr Oates responded to this by saying that, if damages for loss of bargain were sought, the appropriate date for assessment would be the date of breach, and he denied any liability for the diminution of the value of the property after the breach date. No issue was raised as regards failure to mitigate the Claimants’ loss.

The recorder noted the absence of any arguments about mitigation, remoteness or foreseeability, and identified the sole issue as being whether the damages should be assessed by reference to the value of the property at the breach date or at a later date, for which he had the valuation date figure, as at September 2010, and the acceptance by the parties that the value at the date of the hearing had not changed since the valuation date. He noted that the normal rule was to take the value at the breach date, but that there were exceptions to that rule, which should not be slavishly followed. He posed the question as being whether he should assess damages at the breach date or at another date because the latter more accurately reflects the overriding rule as to compensating the wronged party, on the basis that departure from the general rule was demanded by fairness, and because he was dealing with an assessment “with an eye to reality on the facts as presented to me, not as they might have been in the past or they might possibly be in the future”.

He held that the right course was to adopt the later date, for reasons which he expressed as follows:

On that basis he chose a later date, and it made little practical difference whether it was the valuation date or the hearing date. Since his order did not include any interest on the damages for the period before the judgment, it may be that, on analysis, his order assumes the hearing date rather than the earlier valuation date.

Mr Davis took as his starting point this proposition in paragraph 22-034 of McGregor on Damages, 18^th edition, dealing with the sale of land:

Chitty on Contracts, 31^st edition, deals with the date of assessment first at paragraph 26-014:

Under the overall heading of mitigation, the authors put it in this way at paragraph 26-086:

The last quotation is taken from the speech of Lord Wilberforce in Johnson v Agnew, to which I will turn shortly. The authors of Chitty also make the comparison with sale of goods cases, in relation to which section 50 of the Sale of Goods Act 1979 makes the point in terms at subsection (3):

Later, at paragraph 26-159 Chitty again says that if the purchaser fails to complete the normal measure of damages is the contract price less the market price at the date of breach. As in McGregor, Laird v Pim (1846) 7 M&W 474 and some other cases are cited in support of this proposition.

In Laird v Pim the buyer of the land had gone into possession before completion but had refused to complete, in breach of contract. The seller claimed under the contract and sought payment of the full price as well as damages. He was awarded some consequential loss as damages but asserted that he should be awarded the whole price as well. The court (Baron Parke, the other members of the court agreeing) held that he was not so entitled, and set out what he was entitled to, but only in general terms. There was no discussion of the date for assessment, nor any reason to enter into such a discussion.

Noble v Edwards (1877) 5 Ch D 379 is another case cited in the books on this point. (It was reversed on appeal at 5 Ch D 392 but on a different point.) The contract, made on 3 September 1873, was for the sale of land at £33,000, with completion due on 29 September. The vendor did not then have title to the land, but only the benefit of a contract to buy it (for £21,000). By late September 1873 the buyer refused to complete, on the basis of an unjustified assertion of a defect in title. The vendor then offered the property for sale on the market and found a buyer in May 1874 at £25,000. He sold to that buyer at that price and claimed damages of £8,000 plus consequential loss. At first instance he was held entitled to the sum of £8,000 and an enquiry as to any consequential loss. There was no discussion as to what the correct date for assessment was, nor as to whether the value of the land had changed between the end of September 1873 and the time of the sale in May 1874.

In Keck v Faber (1915) 60 SJ 253, the contract was for the sale of 7,297 acres of land for a price of over £250,000. Completion was due on 9 January 1914. The buyer could not complete. The seller sued for specific performance or damages, and elected for damages at the trial on 9 July 1914. The seller was held to be entitled to the difference between the contract price and the price that would be realised by sales within a reasonable time of the breach rather than (as the buyer argued) the possibly higher price that might be realised if the property were nursed over a longer period in order to obtain better prices for individual parcels of the land.

The last of the older cases that is sometimes cited in this respect is the remarkable case of York Glass Co Ltd v Jubb (1926) 134 LT 36. The contract was for the sale of land, together with the buildings and machinery of the glass-making business which was being carried on by York Glass on the land. The contract was made in October 1922 and repudiated in February 1923. In the meantime it had become clear that the buyer was not of full mental capacity, and much of the judgment of the Court of Appeal is concerned with the implications of that. By the time of the repudiation the market for glass had collapsed and the business was no longer capable of being carried on as a going concern. This reduced massively the value of what was being sold. The buyer’s representative argued that the vendor should have sold the property on much sooner, before the market had collapsed as far as it eventually did. The Court of Appeal held that the seller had acted correctly, or at least reasonably, in not acting until the seller repudiated, and that it was entitled to damages by reference to the difference in value as at the date of repudiation. Neither side argued for a later date of assessment.

None of these cases is decisive as to the correct date of assessment, but neither Noble v Edwards nor Keck v Faber is consistent with a strict breach date rule. McGregor at paragraph 22-035 makes the observation that “the price at which the seller has resold is strictly not to be taken in preference to the market price, but it has been taken in most cases”, citing the latter three cases. The further comment follows:

It is a fair comment that there was no discussion as to whether the resale price differed from the market price at the date of breach, but I cannot agree that the later resale price was taken in these cases because it was regarded as an equivalent of the breach date market price. The point was not addressed.

The latest and most authoritative treatment of the point is in Johnson v Agnew [1980] AC 367. The major importance of that case was in eliminating an old rule to the effect that, if a vendor had obtained an order for specific performance with which the purchaser would not comply, and then sought damages instead, the vendor was not entitled to damages at all, and had to be content with retention of any deposit. It is unnecessary to go into that aspect of the case. Having held that the vendor was entitled to damages, the House of Lords then had to say on what basis the damages should be assessed. I can also ignore the discussion as to the position in respect of damages in lieu of specific performance, under Lord Cairns’ Act. At pages 399-400 Lord Wilberforce turned to the position as regards damages at common law:

Shortly after the judgment in Johnson v Agnew, Goulding J had to consider a similar issue on a claim for damages for breach of a contract to take a lease of land in an industrial estate: Techno Land Improvements Ltd v British Leyland (UK) Ltd [1979] 2 EGLR 27. He referred to the general principle of assessment of damages for breach of contract, that a party who suffers loss by reason of a breach of contract is to be placed, so far as money can do so, in the same situation with respect of damages as if the contract had been performed: Robinson v Harman (1841) 1 Exch 850, per Baron Parke at 855. He then made this comment:

Having referred to Johnson v Agnew, he went on as follows:

As it happens, in that case to take a later date was to the advantage of the defaulting buyer, since the seller had eventually found a new tenant for a similar lease at a price closer to that under the contract. The principle should be the same, whichever way it may operate in the particular case.

As it seems to me, Goulding J’s reference to the general principle as to compensation for breach of contract is very much in point in the present case, as it was in the case he had to consider. Lord Blackburn’s words in Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 are also often cited for this, as an alternative to those of Baron Parke, but the point is the same. Specific rules, such as the breach date rule now under examination, are individual examples of how the general principle is to be carried into effect, of putting the innocent party in the same position as he would have been in if the party in breach had performed his contractual obligations, instead of breaking them.

Lord Justice Toulson has drawn to my attention a judgment of his own in the Commercial Court: Dampskibsselskabet “Norden” A/S v Andre & Cie S.A. [2003] 1 Lloyd’s Rep 287. In that case, by reference to a judgment of Goff J in The Elena d’Amico [1980] 1 Lloyd’s Rep 75, he discussed the effect of there being an available market - in the Norden case it was for a forward freight agreement repudiated by one party some three months into its twelve month duration. Toulson J said this:

I agree that the availability of a market is a most relevant factor in relation to the date for assessment of damages for breach of a contract for the sale of land where the buyer fails or refuses to complete the purchase. It is hardly ever the case that there is a readily and immediately available market for the sale or purchase of land, in the sense that the seller can go out into the market on the date of breach, or the next day, and find a purchaser who can and will proceed to contract at once. That may be possible with commodities, with listed shares, with freight forward agreements, or with charterparties, for example. But the sale of land invariably requires time, under the procedures and legislation prevailing in England, and how long it requires will depend in part on economic circumstances at the time. The definition of market value itself, to which I have referred above, involves an assumption that the property has been exposed to the market for a reasonable time, which is likely to be for more than a month and may well be several months or longer. If the comparison sought to be made is between the contract price and the market value as at the breach date, then the assessment of that market value, by an expert valuer on established principles, would have to assume a prior period of marketing, which, by definition, will not and could not have happened.

Mr Davis argued, on the basis of Johnson v Agnew, that the breach date rule should apply unless the vendor has sought specific performance and has had to abandon that, for whatever reason, and has opted for damages instead. Johnson v Agnew was such a case. But it does not seem to me that either the terms or the logic of Lord Wilberforce’s speech leads to the conclusion that that is the only type of case in which a later date may be relevant.

He also argued that what is different and distinctive about the present case is that the vendor has not in fact resold the property. He might accept that, where the disappointed vendor has resold, and has not taken unreasonably long about it, it would be difficult to argue that the resale price should not be measured against the contract price to calculate the damages. But in the present case, he contended, there is no good reason for departing from the normal rule by reference to the value at the breach date.

Mr Recorder Khan rejected that argument and so would I. There being no suggestion that the vendors failed in any way in their duty to mitigate, or that the steps they took in the hope of selling were in any way unreasonable, it seems to me that the fact that, in the end, they decided to retain the property rather than to sell it makes no difference to the principle for assessing the loss which they have suffered. Of course, it is necessary to take a date on which the loss is crystallised, which cannot be later than that of the hearing of the assessment of damages. If something has happened before that which establishes the position, such as a resale, then that earlier date will be taken. In the present case, as it seems to me, there could be a debate as to whether the right moment is when the respondents withdrew the property from the market for sale and let it instead, or rather the later date when, after the tenancy had run its course and after further efforts to sell, they decided to cut their losses and move back into the property. As I have said, the recorder did not order the appellant to pay interest on the damages from a date before that of judgment, so he was probably proceeding on the basis that the later date was correct. It seems to me that he may well have been correct about that, but in any event nothing turns on the difference in date as regards the evidence of value, so it is not necessary to go further into that question.

It seems to me that the breach date is the right date for assessment of damages only where there is an immediately available market for the sale of the relevant asset or, in the converse case, for the purchase of an equivalent asset. This is most unlikely to be the case where the asset in question is land. If the defaulting party is the buyer, much will depend on what the seller does in response to the breach, as is suggested in Chitty at paragraph 26-014, cited above. If he resells, the buyer may be able to show that, in so doing, the seller failed to take reasonable steps to mitigate his loss, for example by taking too long, or failing to follow proper professional advice, or in some other way. Absent any feature of that kind, the eventual resale price is likely to be the figure to be set against the contract price for assessment of the damages, not because it represents the market value at the date of the breach, but because it shows what loss the seller has suffered, uncomplicated by issues of remoteness or failure to mitigate. If the property market has declined during that time, it is of no avail for the defaulting buyer to say that this should not be laid at his door. If he had completed the contract, he would have suffered that decline in value, so this is part of the loss for which the seller needs to be compensated.

If the vendor does not resell, and takes no steps to do so, then it may be that the date of the breach is to be taken as relevant, or a date soon after that, when he is shown, or taken, to have decided to retain the property. In the present case, by contrast, the seller only decided not to resell after taking reasonable steps to find a buyer. I can see no basis of policy or principle, in such a case, for imposing on the vendor the value as at the breach date rather than the later date when, after taking steps with a view to mitigating his loss, he finally decided to retain the property upon the failure of his attempt to mitigate.

In the present case, there has been no suggestion that Mr and Mrs Hooper failed to take reasonable steps to mitigate their loss. Any such contention would have to have been pleaded and explored in evidence. Accordingly, it seems to me that the appropriate date, as I have said, is the date when they brought to an end their reasonable attempts to resell and took the property back for their own use. The value as at that date, according to the expert evidence, is the figure of £495,000 which the recorder took. Accordingly it seems to me that he was right on this point, and the appeal should be dismissed.

I agree. It is only necessary to ask the question what more the vendors could have done to dispose of a property which they no longer wished to occupy. In truth, they did everything that they could to market and sell the property, returning not because they wished to but because there was no other alternative. Although the valuer provided a valuation between willing buyer and willing seller, at no time prior to the assessment of damages was there a willing buyer ready and able to complete. In the circumstances, the recorder assessed the loss suffered by the vendors in an appropriate manner and, as Lloyd LJ has demonstrated, entirely in keeping with the law.

I also agree.