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Velmore Estates Ltd & Ors v Roseberry Homes Ltd (2005)

Summary

Where the appellant had a remedy in damages, he could not be required to mitigate his loss by accepting an offer that would deprive him of his remedy.

Facts

The appellant vendor (V) appealed against the refusal of an award of damages against the respondent purchaser (R). R had contracted with V to purchase land and buildings. R failed to complete the purchase due to problems with financing, resulting in a breach of contract. Subsequent to the breach R made several offers to V in an attempt to salvage the purchase. V refused the offers as insufficient, rescinded the contract and forfeited the deposit. The property was eventually sold on the open market for less than the amount previously agreed between the parties. An account of interest due and a determination of V's entitlement to damages was heard before a master. The master held that the date of assessment of damages was the date of the breach of contract by R but V was not entitled to damages because, on the balance of probabilities, V had failed to mitigate their loss by refusing to accept reasonable offers made by R to V after the breach but prior to rescission. V submitted that the master had erred in his assessment of the true meaning of R's offers and that the recoverable loss was to be calculated on the difference between the open market value of the property and the price agreed between the parties. V argued that the master had erred in law by taking into account any offers made after termination of the contract.

Held

The reasonableness of R's offers to V was a question of fact to be assessed by the court below. It could not be said that the master had fallen into error in his assessment of the offers made. On the evidence and findings no other conclusions could be substituted, Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd (1996) CLC 1958 cited. However the master had fallen into error in considering any offers made after the termination of the contract. V's chosen remedy in law was rescission of the contract, forfeiture of the deposit and a remedy in damages, Strutt v Whitnell (1975) 1 WLR 870 applied. It could not be said that V had acted unreasonably in using that remedy. V was not obliged to mitigate his loss by accepting any offers made by R following breach of the contract thereby depriving himself of his legal right to sue for damages.

Appeal allowed.

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Judgment
31 Oct 2005

Chancery Division
Judge Rich QC

References
‚ÄčLTL 31/10/2005 

Members
Nicholas Peacock QC

Practice areas
Commercial Disputes