John Grimes Partnership Limited v Gubbins [2013]
Share
John Grimes Partnership Limited v Gubbins [2013] EWCA Civ 37 provided a significant analysis of the rules of remoteness in the context of breach of contract, seeking to rationalise the relationship between the principles established in Hadley v Baxendale [1854] and The Achilleas [2008].
The dispute arose from a property development project, where Gubbins engaged John Grimes Partnership to design a road. However, John Grimes Partnership failed to deliver the design on time, causing delays in securing local authority permissions and resulting in financial losses for Gubbins.
The primary issue before the Court was whether John Grimes Partnership could be held liable for the losses incurred by Gubbins due to the subsequent fall in market prices. The Court of Appeal, led by Sir David Keene, held that John Grimes Partnership was indeed liable for the loss arising from the decline in property values. The Court determined that the loss was reasonably foreseeable, and there was no evidence to suggest that John Grimes Partnership had not assumed responsibility for such consequences.
Sir David Keene's judgment provided a systematic approach to rationalising the rules of remoteness. He emphasised that in the absence of an express term addressing liability for specific losses resulting from a breach, the law implies a term to determine the answer. Typically, there is an implied term accepting responsibility for losses that can reasonably be foreseen at the time of the contract as not unlikely to result from a breach. However, Sir Keene noted that if the nature of the contract, commercial background, or other relevant special circumstances render the implied assumption of responsibility inappropriate for a type of loss, the party in breach may escape liability.
Applying these principles to the case at hand, Sir David Keene found that the judge's reasoning was sound. The loss from the fall in property prices was considered reasonably foreseeable, and the circumstances did not fall outside the scope of Hadley v Baxendale based on the commercial background. Importantly, the Court clarified that the fact that damages were disproportionate to the contract price did not render the case extraordinary.
It is noteworthy that under Sir David Keene's approach, the reasonable foreseeability test is not treated as a self-standing test but rather as a presumption of an intention to assume responsibility for reasonably foreseeable loss. Additionally, the rules of remoteness are framed based on the implication of terms.
The case distinguished itself from SAAMCO on the grounds that SAAMCO involved a negligent valuation, whereas the present case concerned a delay in the project. The application of the SAAMCO principle would likely have absolved John Grimes Partnership of liability in this case, as it was not an adviser of action.
The dispute arose from a property development project, where Gubbins engaged John Grimes Partnership to design a road. However, John Grimes Partnership failed to deliver the design on time, causing delays in securing local authority permissions and resulting in financial losses for Gubbins.
The primary issue before the Court was whether John Grimes Partnership could be held liable for the losses incurred by Gubbins due to the subsequent fall in market prices. The Court of Appeal, led by Sir David Keene, held that John Grimes Partnership was indeed liable for the loss arising from the decline in property values. The Court determined that the loss was reasonably foreseeable, and there was no evidence to suggest that John Grimes Partnership had not assumed responsibility for such consequences.
Sir David Keene's judgment provided a systematic approach to rationalising the rules of remoteness. He emphasised that in the absence of an express term addressing liability for specific losses resulting from a breach, the law implies a term to determine the answer. Typically, there is an implied term accepting responsibility for losses that can reasonably be foreseen at the time of the contract as not unlikely to result from a breach. However, Sir Keene noted that if the nature of the contract, commercial background, or other relevant special circumstances render the implied assumption of responsibility inappropriate for a type of loss, the party in breach may escape liability.
Applying these principles to the case at hand, Sir David Keene found that the judge's reasoning was sound. The loss from the fall in property prices was considered reasonably foreseeable, and the circumstances did not fall outside the scope of Hadley v Baxendale based on the commercial background. Importantly, the Court clarified that the fact that damages were disproportionate to the contract price did not render the case extraordinary.
It is noteworthy that under Sir David Keene's approach, the reasonable foreseeability test is not treated as a self-standing test but rather as a presumption of an intention to assume responsibility for reasonably foreseeable loss. Additionally, the rules of remoteness are framed based on the implication of terms.
The case distinguished itself from SAAMCO on the grounds that SAAMCO involved a negligent valuation, whereas the present case concerned a delay in the project. The application of the SAAMCO principle would likely have absolved John Grimes Partnership of liability in this case, as it was not an adviser of action.
