C&P Haulage Co Ltd v Middleton [1983]

C&P Haulage Co Ltd v Middleton [1983] EWCA Civ 5 addressed the principle that damages for breach of contract should not place the claimant in a better financial position than if the contract had been properly performed.

George Middleton held a licence to occupy premises for six months at a time for his car repair business. Despite the licence contract stipulating that fixtures were not to be removed at the end of the licence, C&P Haulage Co Ltd ejected Middleton for breaching the contract. George Middleton argued that he should be entitled to damages for the cost of improvements he had made to the property.

When C&P Haulage Co Ltd claimed for unpaid rent, George Middleton counterclaimed for wasted expenditure from refurbishing the premises. The court held, particularly in the context of the counterclaim, that George Middleton was only entitled to nominal damages. Ackner LJ, delivering the judgment, addressed the principle established in Anglia TV v Reed [1972] and clarified that Lord Denning MR in Anglia TV v Reed was contemplating a case where any loss of profits was impossible to assess, not a situation where the claimant entered into a loss-making contract.

In the present case, George Middleton had suffered no loss of profit since he saved payment for the remaining lease by operating from his garage after being ejected. Ackner LJ emphasised that it is not the function of the courts, especially in cases of a known breach of contract, to put the plaintiff in a better financial position than if the contract had been properly performed. In this specific case, compensating Middleton for wasted expenditure would have placed him in a better position than if the contract had been performed, as he would not have been able to recover his expenses had the contract been lawfully terminated after the 6-month period.

This case underscores the principle that damages claimed for wasted expenditure, constituting reliance loss, cannot exceed the loss of profit or the bargain, which relates to expectation loss. The judgment aligns with the overarching principle that damages aim at restitutio in integrum and should not overcompensate the claimant beyond what would have been gained if the contract had been fully performed. This principle was later affirmed and clarified in cases such as Omak Maritime Ltd v Mamola Challenger Shipping Co [2010].

In conclusion, the case of C&P Haulage Co Ltd v Middleton establishes the principle that reliance loss, as a form of damages in contract law, is not an independent category but is intertwined with expectation loss. Damages for reliance loss can only be claimed when certain conditions are met, and the court should not put the claimant in a better financial position than if the contract had been fully performed.
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