Ruxley Electronics & Construction Ltd v Forsyth
[1996] AC 344
House of Lords
Facts:
R contracted to build swimming pool in F’s Garden.
Final depth of pool less than what F had wanted, but it would not affect property value and was still safe to use / dive into. To fix it, the pool would have to be demolished and rebuilt.
R claimed for payment of the outstanding balance and F counterclaimed for the cost of rebuilding the pool to the correct specification (£21,560). R awarded debt owed and F awarded £2500 for loss of amenity.
Legal Facts / Procedural History:
Trial
Court of Appeal
Legal Issues:
Whether F should be entitled to damages amounting to the cost of rebuilding the pool to the correct depth.
How should damages be assessed.
Appellant (R) Arguments:
For F to claim the amount of money to rebuild the pool to the correct depth, he must show that he has an intention to rebuild and that the cost would be reasonable. Where it would be unreasonable, the court should offer a different monetary remedy.
Damages are not recoverable for a loss that could reasonably have been avoided.
Question is of whether F has actually lost anything. Giving F the amount they claim would overcompensate them for their actual loss.
Courts of other jurisdictions (USA, Australia and Canada) support R.
F cannot receive damages for injured feelings. [1]
Respondent (F) Arguments:
While there was no financial loss, F had suffered a real loss by having a shallower pool. The objective of the contract was to satisfy a personal preference. When this was not satisfied, the contract was broken, and F should be entitled to the cost of rebuilding it to his satisfaction.
It should not matter whether F actually intends to get the pool rebuilt as there is no rule which states a party has to prove how they will / have spent their awarded damages.
Judgement (Keith LJ, Bridge LJ, Jauncey LJ, Mustill LJ and Lloyd LJ):
Appeal allowed. The expenditure to R was out of proportion for the loss that F suffered.
Uncertainty as to how damages for non-financial losses are assessed.
Bridge LJ:
Damages must reflect the loss that F has suffered for not receiving what he had bargained for. No question that R owes F, but the expenditure to rebuild would be out of proportion with any benefit F would gain. However, if a court were to award a different amount, they would be plucking numbers out of thin air.
Jauncey LJ:
Damages meant to compensate a loss, not provide a gracious benefit. Loss is not of the purpose of the pool or its usability, but dependant on the facts. Personal preference may be a factor in determining reasonableness, but it should not be determinative of what has been lost. F’s loss is not to the extent of rebuilding the pool – unreasonable to rebuild the pool. If a loss is incapable of economic measurement, then an argument cannot be made by a claimant for economic damages. Reinstatement normal measure of damages in building work.
Mustill LJ:
Many homeowners undergo works to their house to improve it as to their own tastes, irrespective of market value. While it would be unreasonable to make R pay the entire cost of rebuilding, it would also be unreasonable to prevent F recovering anything. Courts often put figures to intangible things, so it can do in this case. Courts have leniency to choose.
Lloyd LJ:
Counterclaim amended years after F knew about depth to claim more. Pool is safe for diving, so the value of it is unaffected. Questionable whether F even wanted to build the pool deeper, or just save money. Disproportionate cost to benefit ratio. Objective of damages to compensate claimant, not punish defendant. £2500 award justified.
[1] Addis v Gramophone Co Ltd [1909] AC 488
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