Succesfully Claim Damages for the Distress

In 20th July 2009, Lucy Smith contracted with Horizon Builders Ltd development of project at Moor View House. Following a telephone conversation Lucy Smith accepted the quotation. Horizon started work on 10th October 2009. On completion of the work Lucy Smith noticed that the work has not done properly and there was serious problem in the refurbished work. She noticed a very small crack in the kitchen tiles. Most disappointing to her is that the French door in the master room has not been installed properly. There was a gap at the bottom of the doors, which allow freezing cold air and thus made it impossible to live in that room. Furthermore, the French door in the lounge also was defective, leaving a gap at the top of the doorway. Lucy Contacted Horizon but they refused to accept the liability and repair them. She contacted another builders to rectify the remedy which will cost her ₤15,000 for the kitchen tiles and ₤2,000.

Now the legal issues arise as to :

Whether Lucy Smith has possible cause of action?

What are the statutory implied terms?

Which remedies are available to Lucy Smith?

Can Lucy Smith successfully claim damages for the distress caused by the defective work?

Can she be entitled to the cost of remedial works for defective works?

Whether she is likely to be liable to Horizon?

Can she be liable for the payment for works done?

Which remedies are available to Horizon?

Is Horizon entitled to the payment for the works done?

Is there any deduction from their claim?

Lucy Smith has a good chance of successfully claiming that Horizon has breached implied terms of the contract. Where the contractor is responsible for the supply of materials for the building works, there will be an implied warranty that the materials (i) will be reasonably fit for their purpose; and (ii) will be of good quality. As Horizon did not properly fit the French doors and provided defective tiles, Horizon did not complete the work with reasonable skill and care (s. 13 of Sale of Goods and Services Act 1982, SOGSA.). Furthermore, the kitchen, master bedroom and the lounge can not be used. Thus these are not fit for purpose. (Section 4 of SOGSA)

After completion, if there are defects in the works, the employer will normally be entitled to damages equal to the costs of making good the defects ( East Ham Corp v Bernard Ltd [1966] A.C. 406 HL) provided that that reinstatement is a reasonable remedy and the employer intends to execute it, (Ruxley Electronics & Constructions Ltd v Forsyth [1996] AC 344 at 366). Consequential losses would be recoverable provided that it is reasonably contemplated by both parties while making the contract (Hadley v Baxendale(1854) 9 Ex. 341) .Consequential loss should include such items as loss of use the building during the repairs and also loss of profit in appropriate circumstances (Bevan Investments Ltd v Blackhall & Struthers (No.2) 11 B.L.R 78) According to the valuer report, it can be inferred that though the kitchen tiles was defective, they are practically invisible and do not affect the lifespan of the tiles. Therefore, it would not affect the price of the house. Now the question arises as to what loss and damages available to Lucy Smith suffered as a result of the installment of defective tiles? Considering the valuer report it can be said that it would be very nominal. So, she can claim for the rectification of the defective works. But it appears that as the defect is so slight, repair of the works might not be reasonable and it will put Horizon in a hardship. However, she might be awarded very nominal damages for the distress and disappointment caused by the defective work as the court awarded in Ruxley v Forsyth case. If Lucy Smith will not have the work done or it would be unreasonable to do so, the damages will be measured by the difference in value, which may be less than the cost of having the work done.

In respect of the defective French doors, it is submitted that the defect is serious in nature as the doors allow cold air, which made the rooms unsuitable to live in. Therefore, she is entitled to rectify the defect by Horizon .However, Horizon refused to rectify the defect in doors, she can claim damages from Horizon. If, following defective work by Horizon in breach of contract, she takes the step of rebuilding to a higher standard than necessary, or to a standard higher than the building contract, properly performed, would have produced, then she must give credit for the element of betterment (British Westinghouse Electric and Manufacturing v Underground Electric Railways [1912] A.C. 673, 691) However, betterment will not apply where she obtains a building which, whilst necessarily newer and better than the defective building, is a reasonable choice of replacement in all the circumstances.

I have no specific information as to whether she paid Horizon the whole contract money. If she paid the whole amount, no problem will arise. However, if she did not pay the whole amount, she may be liable for a breach of contract if she withholds payment. Horizon can claim the contract price if they can show that they have substantially completed the contract subject to the deduction of the reasonable cost of completing the defective work (H Dakin v Lee [1916] 1 KB 566) Providing that Horizon would agree to rectify the defect, she is entitled to abatement (Gilbert-Ash Ltd v Modern Engineering Ltd [1974] A.C. 689 HL) The measure of abatement may be determined by reference to the cost of remedial works (Multiplex Constructions Limited v Cleveland Bridge Limited.[2006] EWHC 1341 (TCC)) On the other hand, if Horizon did not intend to rectify the defect, Horizon is entitled to a right of set-off in the event of a successful claim by Lucy Smith.

CONSULTED BOOKS FOR PART A

Chitty on Contracts 30th Ed. (Volume 2)

Mcgregor on Damages, 18th edition

PART_B

Introduction:

The purposes for which damages are made in a civil suit, focusing on: (1) compensatory damages; (2) exemplary and punitive damages; and (3) Restitutionary damages. In this course work we will examine the role of compensation and vindication in contract and tort damages. Compensatory damages are awarded to compensate the claimant for the loss of right. However, there are certain situations where compensatory damages have little significance. Vindication describes the making good of a right by the award of an adequate remedy. We will argue that, while the primary purpose of compensation is to provide an indemnity for loss, an award of compensatory damages will nevertheless generally vindicate the right to performance of the contract. Furthermore we will suggest that the courts should confine themselves to awarding compensation for loss or damage due to wrongful conduct and the vindication of rights, and punitive awards should be avoided.

Compensatory and Vindication:

Civil law protects a variety of interests. These include interests in one’s physical and psychological integrity, reputation, and entitlements to property and the value inherent in it. The protection by civil law is provided by the imposition of legal duties which entails individuals to respect such interests. These duties may impose obligation on the individual to refrain from acting in ways which may impair these interests. Alternatively, the protection may be achieved by compelling the individual to act in such a way as gives (positive) effect to the protected interest. These rights can be achieved directly. This may happen whenever a claimant seeks an injunction to prevent the wrongdoing of a tortfeasor or whenever a claim is made in unjust enrichment [1] .

However, such direct enforcement will not always be possible. If the defendant has breached a legal right by acting in such a way as to harm or infringe that right of the claimant, it will often be too late for the claimant to rely on his right that the defendant did not act in that manner. The claimant may well be able to rely on this right to prevent further infringements in future. But, regarding those infringements which have already been committed, this right will in general offer no protection. It is the breach of such a primary duty that constitutes a civil wrong. In such circumstances the law usually would protect interest of the claimant. An injured/aggrieved party has an interest in not being left worse off as a result of the defendant’s failure to perform. The law gives effect to this interest by way of a right that the defendant should compensate the claimant for losses that should be caused to him as a result of a breach of contract by the defendant or breach of duty of care. This interest may be referred to as the compensation interest. [2]

Measures of compensatory damages in tort and contract are based on the two different principles on which they are calculated. In tort the principle is to re-position the plaintiff as if the defendant had not conducted himself tortiously (the “ tort principle” ). In contract the principle is to re-position the plaintiff as if the defendant had performed the promise (the “ contract principle” ) yielding the expectation measure, which is said to protect the expectation interest. [3]

Apart from the compensatory purpose of the civil law in awarding damages, he function of the civil law is to enable rights to be vindicated and to provide remedies when duties have been breached [4] .Vindication describes the making good of the claimant’s legal right by granting an adequate remedy. Unless an infringed right is cured with an adequate remedy, the right is ‘ a hollow one, stripped of all practical force and devoid of all content’ [5] .As society becomes more rights-focused and English law more rights-based, the vindicatory function of the civil law is becoming increasingly important [6] . In compensating the claimant the Court often award very nominal but such nominal damages are an ineffective means of vindicating the performance right. It is submitted that while an award of substantial damages for breach of contract represents the enforcement of the defendant’s duty to compensate, the remedy nevertheless provides an effective means of making good the claimant’s performance right. This is because of the way in which the courts measure loss. Furthermore, in certain situations, the vindicatory impulse exerts a more radical influence on the availability of contractual remedies. In these cases, the courts conclude that the application of orthodox compensatory principles would be an inadequate response to the defendant’s breach of contract. In order to ensure that the claimant’s right to performance is made good, the court awards substantial damages notwithstanding the claimant can only claim nominal damages on the basis of conventional theory of damages [7] . An important feature of these awards is that, while exceptional, they are nevertheless intended to be compensatory. Our third argument is that in some situations, a remedial response to a breach of contract may take the form of an award of vindicatory, as distinct from compensatory, damages as we will see that some argues that restitution, aggravated and exemplary damages are vindicatory in nature. [8]

Vindicatory damages are neither loss-based nor gain-based( as we have seen that compensatory damages is loss-based). They are a rights-based remedy. As such, vindicatory damages are not measured by the claimant’s loss or the defendant’s gain. Instead they comprise a fair and reasonable or, in some cases, conventional sum which is intended to provide a ‘ measure of recognition’ [9] of the violation of the claimant’s performance right. Vindicatory damages are used to fill the gap in remedy. In most cases, the claimant’s performance right will be sufficiently protected by an award of compensatory damages or by specific relief. It is only where these orthodox remedies would constitute an inadequate answer to a breach of contract that vindicatory damages will be relevant. [10]

When damages will be awarded for the vindication of claimant’s right?

As we have seen that the main purpose of an award of compensatory damages is to compensate the claimant for loss suffered. But the objective has never been to provide a precise indemnity. This suggests that compensation is not the sole function of damages in contract. So, for instance, the rules on remoteness and mitigation may result in a claimant recovering less in damages than the amount of ‘ loss’ actually suffered. Conversely, an award of damages may exceed this amount. Thus the owner of a factory in Harbutt’s ‘ Plasticine’ Ltd v Wayne Tank and Pump Co Ltd was awarded damages sufficient to enable him to build a new factory [11] , which is excessive than that of destroyed by the defendant’s breach. In another cases the damages awarded did not correspond to the loss what the claimant actually suffered. [12] There are also instances [13] where the court’s desire to vindicate the performance right means that general damages are awarded for pecuniary loss. [14]

Restitution:

“Unjust enrichment justifies imposing an obligation on a defendant to restore to a claimant the latter’s economic wealth, when an otherwise legally effective transfer to the defendant of the asset representing that wealth ought not to be recognised as legitimating the defendant’s receipt of that wealth.” [15]

This proposition suggests once again that the claim in unjust enrichment is not about restoring the plaintiff’s wealth position to the status quo ante, but is concerned simply to strip away the gain made by the defendant. [16]

In Foskett v. McKeown [17] , the court concluded that a claimant’s proprietary rights in the traceable product of an original asset arise in response to, and as a means to vindicate, the claimant’s proprietary rights in the original asset. The claimants in Foskett claimed a proportionate share of the proceeds of a life insurance policy. This claim arose out of the use by a trustee of money held in trust for the claimants. This money had been settled upon trust to finance a real estate development. In fact, the trustee misappropriated the trust money to pay the premiums paid under a life insurance policy. This policy was held for the benefit of the trustee’s children. Their Lordships were agreed that the claimants’ claim was not one in unjust enrichment, but was to vindicate their undoubted equitable property rights in the original trust money [18]

Speaking extra-judicially, Lord Scott recently lamented the irrationality of the current law of damages. In the contractual damages, irrationality may arise from those cases where substantial damages are awarded but where the claimant has not suffered any loss within the conventional meaning of the term. While some argues that such award is restitutionary damages, it has been argued that such an explanation is unacceptable. Restitution should be confined to a remedy whereby the defendant is obliged to restore to the claimant property or value belonging to the claimant; for instance, where the defendant’s gain corresponds to the claimant’s loss. While Reading v Attorney-General provides an example of a restitutionary remedy, awards of mesne profits and user damages does not fall within the ambit of restitution. Even if restitution is explained in a looser sense, to refer to a gain-based remedy, restitutionary awards ought to equate to the gain actually realized by the defendant. Alternatively, it is argued that these case may be justified on the basis that the remedy is compensatory, involves straining the conventional meaning of loss. However, the better approach is to extend the availability of vindicatory damages to these cases. Awards of vindicatory damages seek to make good the claimant’s performance right, and give substance to the principle that a claimant has a legally enforceable right to the performance of the contract. Vindicatory damages permit the courts to award an adequate remedy. [19]

Edleman also explained the restitutionary damages as a award for the vindication of the claimant’s right. Edelman argued that cases in which the defendant infringes the claimant’s rights can not be explained in terms of making the wrongdoer account for any resulting benefit. According to Edelman, these cases can be analysed as paradigmatic examples of restitution, whereby the relief issued functions to reverse a benefit obtained from the claimant. This suggests that, rather than being viewed as an exceptional remedy, a claim for a reasonable fee for the relaxation of the right infringed will always be available where the defendant has gained a benefit as a result of interfering with the claimant’s rights. [20]

However, this reinterpretation of the law of unjust enrichment by wrongs has been subject to sever criticism. The critiques argue that the conceptual analysis at the heart of this new cocept is fundamentally misconceived. The new interpretation omits an important analytical distinction between subtractive transfers or “ takings” and non-appropriative interferences with rights. Moreover, it is not desirable for our law to adopt the principle that all interferences with a claimant’s rights should give rise to an action for restitution. The proposition that restitution should be available on this basis overlooks the reality that legal rights protect very different resources and relationships and that these rights do not necessarily merit the same level of protection. [21]

Aggravated and Exemplary damages:

In Rookes v Barnard [22] Lord Devlin defined aggravated damages as a special category of compensatory damages used to redress special injury to the plaintiff’s dignity or pride. However, Lord Devline argues that awards of aggravated damages made in conjunction with compensation for mental distress can be compensatory [23] , this is unfounded. Aggravated damages do not compensate for injured feelings. If It is allowed to compensate for the injured feelings, the quantum of aggravated damages does would change according to how injured the claimant feels. But in reality this does not happen [24] In its report on private law damages, the Law Commission also expresses the view that, were aggravated damages purely compensatory they should be available in cases of breach of contract and negligence. As they are not so available, they cannot be compensatory [25]

Instead, some claims that an award of exemplary damages vindicates the claimant’s rights, because, in awarding those damages, the court demonstrates to the claimant that it views the defendant’s actions as an unjustifiable breach of the claimant’s personal dignity. While it may be true that many claimants feel vindicated when awarded exemplary damages, as a matter of principle, exemplary damages are not vindicatory. Exemplary damages are oriented towards the defendant’s wrongdoing. Consequently, they are quite consistent with a complete disregard for the claimant. One may feel that a person deserves punishment though one cares nothing for that person’s victims. One may even feel that the victims deserved to be harmed. Moreover, it is widely held that punishment can be awarded even though no one has been harmed–possession of drugs being an obvious example. Hence, in awarding exemplary damages, a court is not concerned with the rights of the claimant. The court is expressing condemnation of the defendant, but condemnation of the defendant does not imply vindication of the claimant [26]

The Law commission report indicated the abolishment of exemplary damages. However, finally it recommended that exemplary damages should be retained, but put on a principled basis an in exceptional circumstances. It is noted that the nature of such rationalisation and the extent to which such damages should be available depend on whether the principle seen to justify exemplary damages is that punishment and deterrence are legitimate functions of the law of civil wrongs, or that there is a need to provide redress for breach of intangible personality interests. [27]

Conclusion:

To conclude it is submitted that a broader recognition of vindicatory damages may ensure fairer outcomes for both claimants and defendants. Extending the availability of vindicatory damages to contractual actions would serve a more accurate explanation of the remedy awarded in certain cases and would help to preserve the coherence of the conventional remedies of compensation and restitution. [28]

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