Wenham v Ella

(ii) By a cash payment of Fifty Thousand Dollars ($50,000.00).

A number of provisions of the agreement were related to the completion or date of completion of the agreement: but no date for completion was expressly stated by the agreement. Apparently the sum of $50,000 was paid by the appellants to the respondent at the time of the execution of the agreement. Also, it would appear that the respondent's shares in the company and the respondent's debt due by the company were transferred to the appellants soon after the execution of the agreement.

A "Broadmeadow Syndicate", in the organizing of which one of the appellants had taken part, had been formed to enable the purchase of "large profit making properties", that is to say, real estate, to be held by the syndicators as tenants in common. There were to be a total of twenty "shares" in the syndicate for which the purchase price was $4,400 each. The holder of each "share" was to be the registered proprietor of an interest in the land in common with the other persons entitled to a "share" in the syndicate. The property thus held at the time of the agreement between the parties was a building known as no. 35 Brunker Road, Broadmeadow in the State of New South Wales. It was let to various tenants and produced a net total rental of $8,384.80 per annum. Thus, the holder of one "share" in the syndicate was entitled to one-twentieth of this net income, namely $419.24 per owner, or approximately eight per cent per annum on the cost price of the "share".

As appears from the portion of the agreement which I have quoted, the balance of the purchase price of $76,400, namely $26,400 was to be satisfied by the delivery to the respondent or his nominee by R. A. Wenham Pty. Ltd. of six such "shares" in the Broadmeadow Syndicate, that is to say by the transfer of the title to a six-twentieth interest in the said land as tenant in common with those holding the remaining fourteen-twentieths.

The appellants paid to the respondent from November 1967 to July 1968 inclusive the monthly sum of $192 representing the produce of the six-twentieth interest in the said land. However when these payments ceased and the appellants had failed to deliver to the respondent the title to the said six-twentieth interest in the said land, the respondent on 16th July 1969 commenced an action in the Supreme Court of Queensland claiming specific performance of the said agreement in writing and an account of the "profits realised by the said six-twentieth undivided shares" of the land or alternatively damages for breach of the said agreement.

In fact, by the date of the commencement of the action, R. A. Wenham Pty. Ltd. had disposed of all its "shares" in the syndicate, so that it had become impossible for the appellants to procure the delivery to the respondent by R. A. Wenham Pty. Ltd. of the six-twentieth undivided interest in the said land as required by the agreement. But of this fact the respondent was then unaware.

It appeared in evidence at the hearing of the suit that the "shares" in the syndicate had remained of the value of $4,400 each and that the holder of each "share" if held up to the date of judgment in the action would have received eight per cent per annum on that value; that is to say, that from July 1968 until judgment, the six-twentieth undivided interest in the land if held by the respondent would have produced for him $192 per month.

It appears that in August 1968 the respondent had borrowed from the appellants $5,000 which had not been repaid at the date of judgment in this action. The appellants counterclaimed specific performance of an agreement alleged by the appellants to have been made between them and the respondent with respect to the re-transfer of the shares in the company and other ancillary matters. However, the trial judge did not find that any such agreement had been made. I need not trouble further with it. But the trial judge having found that the "shares" in the Broadmeadow Syndicate were worth the sum of $26,400, allowed the said sum of $5,000 to be set off against the sum of $26,400 which he found as damages for the non-delivery of the transfer of the six one-twentieth shares in the syndicate.

Having further found that the respondent would have received eight per cent on his investment in the syndicate had the said transfers been delivered as agreed the trial judge allowed the sum of $5,394.78 as damages for the loss of the respondent's return on his investment between July 1968 and the date of judgment. He calculated this amount as eight per cent on $21,400, i.e., $158.67 per month. This calculation has not been challenged on this appeal though its effect was to give the appellants eight per cent on the sum of $5,000 from July 1968 to judgment, a rate of interest neither agreed nor claimed. It denied the respondent the full return on the six-twentieth interest in the land for the period in question. The total judgment found for the respondent was $26,794.78.

The appellants appealed to the Full Court of the Supreme Court of Queensland on the ground, in substance, that the trial judge had no material on which he could find that the six one-twentieth shares were worth the sum of $26,400, and that the award of $5,394.78 constituted an award of interest which could not lawfully be made. The Full Court dismissed the appeal. [1]

The appellants appealed to this Court upon the following grounds:

That there was no evidence upon which the Court could assess the damages suffered by the respondent consequent upon the appellant's breach of contract.

That there was no evidence as to the value of the six-twentieths undivided shares in the land the subject of the contract between the appellants and the respondent.

That the Court was in error in assessing and awarding damages in the action in the absence of:

(i) a particularised claim for damages in the statement of claim; and

(ii) proper evidence of damage and value at the hearing.

No argument was offered in support of any of these grounds. The appellants, however, were given leave to add two grounds of appeal as follows:

That the Court was in error in awarding to the respondent the sum of $5,394.78 or any sum as damages for the loss of return on the respondent's investment.

That there was no evidence that the value of the six-twentieths undivided shares in the land the subject of the contract between the appellants and the respondent exceeded $26,400.00.

Neither of these grounds were covered by the appellants' grounds of appeal to the Full Court but no point was made of this in the hearing of the appeal.

The additional grounds were sought to be supported by the submission that as damages for breach of contract must be assessed as at the date of the breach, the sum of $26,400, being the full value of the interest in the said land at that date, represented the whole of the respondent's damages. It was said that the capital sum arrived at as the value of the six-twentieth interest in the said land was reached only on the footing that such interest would produce $192 per month, or eight per cent on that capital value. Therefore, to give the respondent the sum of $192 per month additional to the capital value of the interest was to give him, to that extent, his damages twice over.

This argument, although clearly and forcibly presented by counsel, is, in my opinion, fallacious. On the one hand, in my opinion, it confuses the capacity to earn interest or profits with the actual earning of interest or profits. It overlooks the fact that the promise of the appellants was not to transfer the said shares at some time but to do so by a day certain. The date of completion, though not named in the agreement, was a day certain because in the terms of the agreement it could be rendered certain. Further, to assess damages in contract as at the date of the breach does not mean that damages accruing thereafter by reason of the breach are not recoverable.

Before discussing the matter further, I should observe that the claim in this case was a claim for specific performance of a contract for the transfer of an interest in land. That is to say, it was a claim which the Court of Chancery would clearly have had jurisdiction to entertain. It was not a contract for the sale of goods, or of shares in an incorporated company available in the market. The land was income-producing and the interest in it the subject of this agreement was in the nature of an income-producing investment.

However, by the date of hearing of the action, specific performance could not have been ordered. The remedy of the respondent then was damages for breach of the promise to cause delivery of the transfer of the described interest in land at the agreed time. There is no need to discuss whether the inability in the circumstances to order specific performance deprived the court of equitable jurisdiction to order damages in lieu of specific performance because the measure of damages which could be awarded at common law for breach of the contract between these parties is, in my opinion, the same as a court of equity would employ in this case in ordering damages in lieu of specific performance. In some circumstances, damages in the latter case may exceed those which would be awarded at law: but circumstances which might justify a larger amount of damages in lieu of specific performance than would be given at law are not present in this case.

Accordingly, I shall treat the present case, so far as concerns the points raised by the amended grounds of appeal, as involving no more than a claim for damages for breach of a contract to procure the transfer of an income-producing interest in land. The general rule in such a case is that the party not in default is to be placed in the same position as that in which he would have been had the contract been performed. For a clear statement of the general principle in respect of the award of damages for breach of contract see Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1] . There are exceptions to this rule such as are constituted by the decisions in Flureau v. Thornhill [2] and Bain v. Fothergill [1] . But these are not applicable, and were not relied upon, in the present case.

1. [1949] 2 K.B. 528, at pp. 539-540. 2. (1776) 2 W. Bl. 1078 [ 96 E.R. 635]. 3. (1874) L.R. 7 H.L. 158.

Here the promise broken was to procure the transfer by a certain day of an interest in land, such interest in land being productive of income. The parties contemplated that by the delivery of such transfer the respondent should as from the date thereof be in receipt of the product of such interest in land. There can be no doubt that the loss to the respondent of the product of the interest in the land if the transfer were not delivered as promised was, not only foreseeable, but in fact contemplated. The payment of the sum of $192 per month for a period after the date when the transfer ought to have been delivered is eloquent in this connexion.

These considerations are sufficient to dispose of the matter. But it might be observed that we are not here dealing with a contractual subject-matter which on failure of delivery, could be replaced by purchase in the market. Nor are we dealing with a purchaser who has not parted with the consideration for the purchase and so has his money in hand. We are dealing with a purchaser who has given to his vendor the full consideration for the purchase of an interest in land, not procurable in the market. Indeed, the reason for the appellants' failure to perform would appear to have been his inability to procure the delivery to the respondent of the agreed interest in land.

In my opinion, the respondent was entitled at common law, in the circumstances of this case, to recover, in addition to the value of the interest in land of which transfers were promised to be delivered and for which he had paid, damages for the loss of the income which such interest in land would have produced from the date when the transfers ought to have been delivered to the date of judgment, at which time his further rights are to be found in that judgment. However, as some payments had been made by the appellant in respect of that income, and as apparently, the amount so paid up to the date on which a payment was last made is accepted as being the full amount of such income from the date for completion until the date of such last payment, the amount recoverable, in the circumstances, would be the amount which the agreed interest in land would have produced from the date of such last payment until the date of judgment in the action. This sum, in fact, was greater than the amount awarded by the Supreme Court.

In my opinion, the respondent was entitled at least to the amount awarded. Consequently, this appeal, in my opinion, should be dismissed.

The respondent was, upon trial of an action in the Supreme Court of Queensland, awarded $26,794.78 damages for breach by the appellants of a contract which required them to obtain the transfer to the respondent of six twentieth undivided shares as tenants in common in land belonging to a syndicate known as the "Broadmeadow Syndicate". The syndicate owned land and buildings situate at 35 Brunker Road, Broadmeadow in the State of New South Wales. The Full Court dismissed an appeal, and the appeal to this Court is concerned only with the amount of damages awarded.

The damages in question were assessed by adding to the value of the shares which should have been transferred - less a set-off of $5,000 - a sum of $5,394.78 in respect of the loss of return which would have come to the respondent between July 1968 and the date of judgment had the contract been carried out and the shares transferred. The commencing date of July rather than the actual date of the breach - which was not, I think, clearly identified - is to be explained by the fact that whatever the date of the breach, the lost return, i.e., $192 per month, was paid by the appellants to the respondent until July when these monthly payments were discontinued.

The legal problem is simply whether damages for breach of contract to transfer or to obtain the transfer of land is to be measured by the value of the land not transferred, when, in accordance with the contract, it should have been transferred, or whether, in the circumstances here, it was proper to add to that value the return, which, the respondent would have received from the land for the period between the dates of breach and judgment, had it been transferred in accordance with the contract.

Here, as will be seen from the judgments of other members of the Court, the circumstances are more complicated than the simple case of a vendor failing to transfer land in accordance with contract to a purchaser who has paid the purchase price but, as I am satisfied that the principle to be applied is the same as that simple case, I propose to examine the simple case.

When a purchaser of land has paid for what has not been transferred to him so that the other party, who is in breach, has the advantage of the purchase price which has been paid, fair dealing would seem to require that the damages for the breach should not be confined to judgment for the value of the land at the date of the breach. In the interval between the breach and judgment, the purchaser would be out of pocket, and the vendor in pocket, by the amount of the return from the land. Furthermore, in such a case the purchaser's intermediate loss would appear both to flow naturally enough from the breach and to be loss within the contemplation of the contractors. Why, then, is such lost return not recoverable as damages in accordance with well established principles?

It was argued for the appellant, with ingenuity and persistence, that common law damages are to be assessed as at the date of the breach of the contract, and, as payment, of that capital value of what has been purchased but not transferred, would provide restitutio in integrum, no addition should be made to such a sum in the assessment of damages. To support this argument reference was made to cases such as the failure to pay money as agreed, and the failure to transfer shares as agreed, when, it was said, all that is recoverable is the money not paid or the value of the shares at the date of the breach, as the case may be. Damages for consequential loss are not normally awarded in such cases.

It appears to me that to proceed by analogy from such restrictive instances would lead to error. First of all, the general rule, that no more can be recovered than a promised sum of money not paid as agreed, appears to be no more than a particular application of the principle that no more is recoverable than that which was, when this contract was made, within the contemplation of the parties in the event of breach. If, in a special case, further loss was within that contemplation, it is not established law that such loss could not be recovered - Trans Trust S.P.R.L. v. Danubian Trading Co. Ltd. [1] and [2] . Secondly, it being the obligation of a person to mitigate his loss, it does follow that, if what was not transferred could have been obtained elsewhere, damages for failure to transfer would ordinarily not exceed what it would have cost to have obtained what it was the contractor's duty to provide: certainly in a case where the purchase price had not been paid. We were referred to Cullinane v. British "Rema" Manufacturing Co. Ltd. [3] and in particular to the observations of Evershed M.R. The reference to this case in T.C. Industrial Plant Pty. Ltd. v. Robert's Queensland Pty. Ltd. [4] discloses that what was said there by Evershed M.R. requires some explanation. Indeed it seems to me open to question whether - to take the instance given in his Lordship's judgment [1] - a purchaser who has taken possession of and paid for a heifer which does not meet a production warranty could, having regard to his obligation to mitigate his damages, recover as damages the lost profit occasioned by keeping and milking the unproductive beast indefinitely. When the breach became evident, the proper course would have been to have sold the beast and to have bought another with the required production. The difference in value would have been recoverable as damages, with, I should think, some addition for intermediate loss. This problem is mentioned in Street, Principles of the Law of Damages (1962), at pp. 243-245.

1. [1952] 2 Q.B. 297, at p. 306 per Denning L.J. 2. [1952] 2 Q.B., at p. 307 per Romer L.J. 3. [1954] 1 Q.B. 292. 4. (1963) 37 A.L.J.R. 289. 5. [1954] 1 Q.B., at p. 303.

The circumstances here are quite different from a case of uncontemplated loss or of a failure to mitigate a loss by the making of another purchase. Here it was obvious at the time of the making of the contract that the appellants' failure to secure a transfer to the respondent after payment would involve the respondent in loss and there was no evidence upon which it could have been found that the respondent could have mitigated his loss by buying other shares. Indeed, had other shares been available and had the respondent purchased them, he would have continued to have been out of pocket by reason of his having paid money to the appellants upon which the appellants were getting the return until repayment or judgment. Rules which operate satisfactorily in cases where purchasers have not paid money, cannot be applied automatically to cases where purchasers have paid money for what has not been delivered to them.

Accordingly, in the circumstances here, I do not consider that damages for breach, in not obtaining the transfer of the shares, were restricted to the value of the land at the date when it should have been transferred. I consider that the damages did include the loss of the purchaser's return resulting from the breach and that in assessing that loss, it was proper to look at what actually happened up to judgment.

The facts and the grounds upon which the award of damages made in this case have been challenged are set out in the judgments of the Chief Justice and of Gibbs J. which I have had the advantage of reading.

I agree with the conclusion reached by their Honours that the learned trial judge who heard the action did not make any error of principle in awarding to the respondent (after making an adjustment in relation to a sum which the respondent owed the appellants for money lent) damages for the loss of income that he would have received up to the date of trial and judgment if his agreement with the appellants had been duly performed by them, as well as allowing a sum representing the value that had been assigned by the parties to the undivided shares in certain land, which should have been transferred to him.

In assessing the amount which the respondent would have received if he had continued to be paid income attributable to the interest in land which he was entitled to receive, the learned trial judge may have made an erroneous calculation, but if he did so, the award has not been challenged on that ground. The submissions for the appellants have been confined to an endeavour to show that the assessment of damages was based upon wrong principles.

I am in general agreement with the reasons given by the Chief Justice and by Gibbs J. for rejecting the appellants' submissions. I propose to add some comments upon them.

The basic proposition upon which rests the argument for the appellants that the decision of the learned trial judge and that of the Full Court of the Supreme Court of Queensland on appeal were wrong in principle is that the loss which resulted to the respondent from the breach of contract consisted of, and was confined to, the loss of the value of the shares in the land, measured at the date of the breach of contract. According to the argument it is wrong to treat the respondent as having suffered, in addition to that capital loss, a further loss of income which the shares would produce. I do not doubt that in many cases in which a person has agreed to transfer or to deliver property or to cause this to be done, and has failed not merely to carry out that obligation by the due date but has failed to carry it out at all, the damages to which the other party is entitled should be ascertained in the manner indicated by the foregoing submissions. In many cases, there could be no justification for adding to the sum which would give to the purchaser the monetary equivalent of the asset which he should have received a further sum representing the return which he might have obtained from the ownership of that asset, either throughout the "life" of the asset or for a more limited period. In many situations there could be no warrant for allowing what would amount in effect to damages for delay in performing the contract, as well as damages for the failure to perform it at all. If the agreement for the sale of a cow to which Lord Evershed referred by way of example in Cullinane v. British "Rema" Manufacturing Co. Ltd. [1] were broken not by the delivery of a cow yielding milk at a rate lower than at which she was warranted to yield it, but by a failure to deliver any cow, the disappointed purchaser could not recover, in the absence of relevant special circumstances, both a capital loss suffered by not getting the cow and also the profit which he would have made by selling her milk. But, in my opinion, there could be circumstances which would require that the purchaser be held entitled to some loss of profits in addition to an amount measured by the difference between the contract price and the value of the cow at the date of breach, if those circumstances were capable of being regarded as within the contemplation of the parties.

In my opinion the error that is contained in the argument for the appellants consists in treating rules which constitute useful guidance in the ascertainment of damages as rigid rules of universal application, instead of treating them as prima facie rules which may be displaced or modified whenever it is necessary to do so in order to achieve a result which provides reasonable compensation for a breach of contract without imposing a liability upon the other party exceeding that which he could fairly be regarded as having contemplated and been willing to accept. The achievement of such a result is the purpose of the principles laid down in Hadley v. Baxendale [2] as explained in subsequent cases, including those to which Gibbs J. has referred in his judgment in the present case. I add a reference to some observations made in the case of Monarch Steamship Co. Ltd. v. Karlshamns Oljefabriker (A/B) [3] . Lord Wright referred to "the broad general rule of the law of damages that a party injured by the other party's breach of contract is entitled to such money compensation as will put him in the position in which he would have been but for the breach". [4] The entitlement of the injured party is limited of course by the requirement that the damages must not be too remote. Lord Wright went on to say that remoteness "is in truth a question of fact" [5] and he cited a passage from the speech of Lord Haldane in an earlier case, to the effect that the apparent discrepancies found in the statements of general principles governing damages are due mainly to the varying nature of the particular questions which have arisen in different cases and to the need to mould the expression of the general principles, in applying them to the circumstances of particular cases. Lord du Parcq expressed agreement with what Lord Wright had said and added [6] :

Circumstances are so infinitely various that, however carefully general rules are framed, they must be construed with some liberality, and not too rigidly applied. It was necessary to lay down principles lest juries should be persuaded to do injustice by imposing an undue, or perhaps an inadequate, liability on a defendant. The court must be careful, however, to see that the principles laid down are never so narrowly interpreted as to prevent a jury, or judge of fact, from doing justice between the parties. So to use them would be to misuse them. 1. (1854) 9 Exch. 341 [156 E.R. 145]. 2. [1949] A.C. 196. 3. [1949] A.C., at p. 220. 4. [1949] A.C., at p. 223. 5. [1949] A.C., at p. 232.

I am of opinion that an acceptance in the circumstances of this case of the submissions for the appellants would impose an inadequate liability upon them and would fail to give to the respondent what ought to be regarded, in the light of what was contemplated by the parties when they made their agreement, as a just compensation for the breach by the appellants of their bargain that the shares in the land would be transferred to the respondent. As the Chief Justice has pointed out, the contract was fully performed by the respondent on his part, as he had parted with the full consideration to be provided by him and so far as appeared from the evidence it was not open to him to obtain by purchase in the market from some other person the property to which under the contract he was entitled. Furthermore, although it may be taken that it was contemplated that the contract would be completed within a very short time and at the latest it appears that the time for completion had arrived before August 1968, the respondent did not know at that time that it was or would soon become impossible for him to obtain specific performance of the contract. In the following year he instituted his action for specific performance, affirming that he was ready and willing to complete the agreement by accepting delivery of transfers of the shares in the land. In the meantime he had been treated as entitled to receive and had received in fact the income attributable to those shares. These circumstances appear to me to render inappropriate the application of a rule which would confine the damages resulting from the failure to procure for the respondent the shares in their land to their value at the earlier date when they ought to have been transferred to him. In my opinion, the respondent's loss should not be measured in accordance with a rule that would be appropriate in a case in which a purchaser of goods or of shares in a company is able on and from the date of the breach of the contract to act upon the knowledge that he will not receive the property which he had expected to get and so may proceed immediately, if he wishes to do so, to obtain similar property elsewhere.

This appeal is brought from the Full Court of the Supreme Court of Queensland which dismissed an appeal from a judgment given by the learned trial judge in favour of the present respondent, the plaintiff in the action, against the appellants. In the action the respondent claimed specific performance of an agreement in writing made between the parties and dated 7th December 1967 together with certain ancillary relief and, alternatively, damages for breach of the agreement. By the agreement it was recited (inter alia) that the respondent (described therein as "the vendor") had agreed to sell and transfer or cause to be transferred and the appellants ("the purchasers") had agreed to purchase the shares of the respondent in the capital of Mantella Investments Pty. Ltd. (to which I shall refer as "Mantella"), a company incorporated in New Guinea, and that the appellants had agreed to take over the loan account of the respondent in the books of Mantella, which was in credit to the extent of $11,043.73. Clause 1 of the agreement provided as follows:

1 (a) The purchase price for the said shares shall be Sixty-Five Thousand Three Hundred and Fifty-Six Dollars Twenty-Seven Cents ($65,356.27) and the Purchasers will pay the sum of Eleven Thousand and Forty-Three Dollars Seventy-Three Cents ($11,043.73) for the Loan Account of the said Frank Herbert Ella in the books of Mantella.

(b) The total purchase price of Seventy-Six Thousand Four Hundred Dollars ($76,400.00) shall be satisfied at the date of completion: -

(i) by the delivery of transfers to the Vendor or his nominee by R. A. Wenham Pty. Ltd. of six (6) twentieth undivided shares as tenants in common free from encumbrance of the whole of the land comprised in Volume 4039 Folio 132 and being premises situated at 35 Brunker Road, Broadmeadow in the State of New South Wales and the Vendor [sic] warrants to procure the said R. A. Wenham Pty. Ltd. to execute and deliver to the Vendor the transfers as aforesaid.

(ii) by a cash payment of Fifty Thousand Dollars ($50,000.00).

The agreement did not specifically fix a date for completion.

It is common ground that the appellants made the cash payment of $50,000 referred to in the agreement and that the respondent transferred to the appellants the shares in Mantella and the debt recorded in the loan account. The evidence does not reveal when the transfers were effected but it appears that the payment was made at about the same time as the contract was signed and it is reasonable to infer that the transfers were also effected at about that time. However, the appellants did not cause a six-twentieth interest in the land to be transferred to the respondent. Although the agreement does not refer to the fact, the parties contemplated that the respondent would arrange for an Australian company, Mr. Whippy Pty. Ltd., to grant to Mantella a franchise giving it the sole right to sell certain products in New Guinea, and the appellants told the respondent (who apparently did not object) that the title to the undivided interest in the land would not be delivered until the franchise agreement was obtained. In August 1968, Mr. Whippy Pty. Ltd. forwarded a franchise agreement to Mantella for signature, but by that time the parties had commenced negotiations with a view to the re-purchase by the respondent of the shares in Mantella and the purchase by the appellants of the undivided interest in the Broadmeadow land. At the trial, the case for the appellants was that as a result of these negotiations it was orally agreed to rescind the agreement of 7th December 1967, but the learned trial judge found that no fresh contract was concluded between the parties and this finding was not challenged before us.

The land at Broadmeadow, which was owned by a syndicate each of whose members had one or more one-twentieth undivided shares in the land, was income-producing, and it appears that during the negotiations before 7th December 1967 the appellants told the respondent that each one-twentieth share in the land was worth $4,400 and that at that price a share would return approximately eight per cent per annum. Although the respondent did not obtain a transfer of six one-twentieth undivided shares in the land he did receive payments of the income attributable to the interest which such a transfer would have given him. The parties apparently anticipated completion of the agreement and the first dividend, as it was called, was paid to the respondent in November 1967; it amounted to $192 and similar payments were made monthly until August 1968 when a final payment in respect of the month of July 1968 was made.

On 16th July 1969 the respondent commenced the present action. By that time however, unknown to him, R. A. Wenham Pty. Ltd. had disposed of its interest in the land; that had occurred in October 1968. The learned trial judge held that the disposal of the interest made it impossible to grant specific performance, but he awarded the respondent damages amounting to $26,794.78. This total included two items. First, the learned trial judge allowed the respondent $26,400, representing the value of the six one-twentieth undivided shares which the respondent was entitled to have transferred to him under the agreement, but against that amount gave credit to the appellants for $5,000 lent by them to the respondent in August 1968. Secondly, he allowed the respondent damages for loss of the return which he would have received on his investment had the interest in the land been transferred to him. He found that if the interest in the land had been transferred in accordance with the agreement the respondent would have continued to receive "dividends" of $192 per month, and held that the respondent's damages should include the sum of $192 a month for thirty-four months (which was the period commencing in August 1968 and ending in May 1971, the month before trial and judgment) subject to an adjustment in respect of the $5,000 owed by the respondent to the appellants. He went on to say that it was conceded by the respondent that the $5,000 should be allowed as a credit against the sum of $26,400 and that dividends amounting to eight per cent per annum should be calculated as for an amount of $21,400 during the said period of thirty-four months. He concluded, "I therefore calculate that the loss of the plaintiff of return on his investment is a sum of $158.67 for each of thirty-four months, a sum of $5,394.78."

In argument before us the appellants neither disputed that the respondent was entitled to damages for breach of the agreement nor challenged the finding that the damages included an amount of $26,400 against which $5,000 was to be credited. Their only submission was that the learned trial judge was in error in awarding in addition a sum representing a loss of return on the respondent's investment. In support of this submission it was said that the value of the interest in the land was fixed at $26,400 because it was capable of returning a "dividend" of eight per cent and that if the respondent were allowed not only the value of the interest, but also the return at the rate of eight per cent which he would have made if the interest had been transferred to him, he would recover damages twice over for the one breach. Moreover, it was submitted that the damages had to be assessed as at the time of the breach and that it was not permissible to include income lost thereafter and thus to make the amount of damages depend on how long it had taken the respondent to recover judgment; what the learned trial judge had done in effect, it was said, was to give the respondent interest on the amount of his damages, a course unauthorized in Queensland which has no legislation corresponding to s. 3 of the Law Reform (Miscellaneous Provisions) Act 1934 U.K..

If the present case is approached on principle it seems to me clear that the respondent was entitled to recover damages under both heads awarded by the learned trial judge. The general rule of the common law, which forms the starting point of a consideration of the assessment of damages, is that "where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed" (per Parke B. in Robinson v. Harman [1] , cited in C. Czarnikow Ltd. v. Koufos [2] ; see also [3] ). If the agreement of 7th December 1967 had been performed the respondent would have become one of the co-owners of the land at Broadmeadow and would have received his share of the net income that the land produced. However, the general principle is limited by the rule in Hadley v. Baxendale [4] that "Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it". The meaning of this rule was recently expounded in C. Czarnikow Ltd. v. Koufos where Lord Reid said [5] :

The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation. Various expressions have been used in an attempt to describe the damage that, in accordance with this rule, is not too remote, and in C. Czarnikow Ltd. v. Koufos [6] there was some difference of opinion as to whether it is right to say that the loss is recoverable if its occurrence was "a serious possibility" or "a real danger" or if it was "liable" to occur, or whether it is more correct to refer to loss "not unlikely" to occur, although there was general agreement that the colloquialism suggested by Asquith L.J. in Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [7] , "on the cards", could not usefully be adopted. I need not consider which of the phrases suggested conveys most precisely the desired shade of meaning, because it is clear that a person injured by breach of contract need not go so far as to establish that the loss was "a near certainty or an odds-on probability", and in the present case it seems to me that it was a near certainty that if the agreement were not performed the respondent would lose the return on his investment. The damage in the present case in my opinion falls within the rule in Hadley v. Baxendale [1] and it is immaterial whether it comes within the first part of the rule or the second, or indeed whether both are applicable. I have already said that if the contract had been performed the respondent would not only have obtained his undivided share in the land but would also have received the income which that share produced after the date of completion of the contract. The loss of that income was directly caused by the breach and it must reasonably be supposed that the appellants, if they had applied their minds to the question at the time when they entered into the agreement, would have contemplated that such a loss would flow from a breach. On principle, therefore, the damages would appear to be recoverable. 1. (1848) 1 Exch. 850, at p. 855 [154 E.R., 363, at p. 365]. 2. [1969] 1 A.C. 350, at pp. 414, 420. 3. [1969] 1 A.C., at p. 400. 4. (1854) 9 Exch., at p. 354 [156 E.R., at p. 151]. 5. [1969] 1 A.C., at p. 385. 6. [1969] 1 A.C. 350. 7. [1949] 2 K.B. 528, at p. 540. 8. (1854) 9 Exch. 341 [156 E.R. 145].

No doubt if the respondent had not already transferred to the appellants his share in Mantella and his credit in the loan account, so that the consideration which he was required to provide had fully passed to the appellants, the situation would have been different. The respondent would then have had the benefit of whatever income those assets yielded and might, if necessary, on the appellants' breach of the agreement have mitigated his loss by securing another investment that would have yielded him about eight per cent. I need hardly say that I do not mean to explore the possibilities that might have arisen if the consideration had not passed, but merely wish to emphasize that a crucial circumstance of the present case is that the respondent had before the breach entirely performed his part of the agreement.

The award does not in my opinion involve any duplication of damages. By reason of the breach the respondent lost the income as well as the interest in the land and was entitled to an award of damages to compensate him for both heads of loss. It is of course clear that in appropriate cases damages may be awarded for profits lost because of the failure to deliver or the late delivery of a chattel which would have been used for profit-making; some examples are referred to in Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [2] . It has also been decided that where there has been a delay in giving possession under a contract of sale of land, which was due not to an inability to give a good title but to some fault of the vendor, the purchaser may recover substantial damages for the breach of contract: see Hensley v. Reschke [1] ; King v. Poggioli [2] and Phillips v. Lamdin [3] . Therefore a plaintiff who has received the goods or obtained title to the land which he has agreed to buy may in a proper case receive damages in addition for the delayed delivery. It is difficult to see any reason why in a case such as the present the respondent should not receive damages which will compensate him for the income he has lost as well as give him the value of the interest in the land which he was entitled to receive since by reason of the breach he has lost both the income and the interest in the land and he was unable to mitigate the loss. The appellants in argument relied on the decision in Cullinane v. British "Rema" Manufacturing Co. Ltd. [4] . I need not repeat the explanation of that decision which was given in T.C. Industrial Plant Pty. Ltd. v. Robert's Queensland Pty. Ltd. [5] ; it is enough to say that the majority of the Court of Appeal treated the case as one in which the plaintiff sought to recover the whole of the profit which he would have made if the defective goods supplied had answered to the warranty and also the whole of the expenditure he had incurred although the profits could not have been earned without incurring the expenditure. If the plaintiff's claim had been allowed, he would have been better off than if there had been no breach. However, to say that damages will be awarded twice over if a plaintiff is allowed to recover the whole of the profit he would have gained but for the breach as well as the amount of the expenditure he would have had to incur in order to obtain the profit does not mean that there is a similar duplication if allowing a plaintiff to recover the value of a lasting asset to which he was entitled under a contract and for which he had paid in full and in addition the loss of profits sustained during the period from the date of the breach until judgment.

1. [1949] 2 K.B. 528, at pp. 536-538. 2. (1914) 18 C.L.R. 452, at p. 464. 3. (1923) 32 C.L.R. 222, at pp. 245-247. 4. [1949] 2 K.B. 33, at pp. 42-44. 5. [1954] 1 Q.B. 292. 6. (1963) 37 A.L.J.R., at pp. 292-294.

The general principle that damages are normally measured by reference to the circumstances at the date of the breach of contract does not mean that events that have occurred after that date may never be considered. The appellants' contention on this point, if correct, would mean that evidence could never be given of the amount of profits lost as the result of a breach and that the every-day practice of receiving evidence as to the damage that had in fact flowed from a breach and as to steps that were or could have been taken to mitigate a loss is erroneous. However, the evidence as to the income in fact lost by the breach was in my opinion plainly admissible. As to the contention that it was wrong that the amount of damages should have depended on the time that elapsed until judgment, the answer simply is that until that time the respondent was kept out of his profits as well as deprived of his asset and its value. The learned trial judge did not purport to allow interest on the amount of his award of damages and did not do so - he assessed damages for loss of the return of which the respondent had been deprived by the breach.

The correctness of the quantum of the award in respect of loss of return was not challenged. The award proceeded on the assumption (which it appears was correct) that the date of completion, although not fixed by the contract, had arrived before August 1968. It is not perfectly clear how the learned trial judge reached the monthly sum of $158.67. That sum represents a return of more than eight per cent on $21,400 but it may be observed that at eight per cent $26,400 would have yielded less than the amount of $192 per month that was actually received. These matters of detail were not canvassed before us or, so far as it appears, in the Full Court and it is unnecessary to consider them further.

The facts relevant to this appeal and the arguments advanced on behalf of the appellants appear in the reasons for judgment of the Chief Justice which I have had the opportunity of reading.

This case appears to me to be one to which well-established principles relating to damages for breach of contract are readily applicable. These principles are discussed in some detail in the reasons for judgment of my brothers where their application to the present case is explained, and I do not propose to add to what has already been said on that topic.

I do, however, wish to add something concerning the appellants' submission that the award of damages is erroneous because the respondent has enjoyed double compensation. It is said that he has received, as one element of his damages, the price he paid for the interest in real estate, which price may be taken to have been its value; because that value included as a constituent element, the value of the right, conferred by ownership of the interest, to receive future income, it follows, say the appellants, that also to award damages representing income lost up to date of judgment is to compensate twice over for loss of that income. This submission is, I think, concerned not so much with the application of the law relating to damages to the facts of this case as with those facts themselves.

The appellants' submission appears to me to involve treating the interest in real estate as if it were no more than a right to an annuity for a term of years, the value of which is only the sum of future annuity payments, less a discount to take account of their deferred receipt. The interest in land here in question is of a quite different character. It confers no mere right to a finite number of future income payments; its value does not necessarily decline with the passing of time as does that of an annuity for a term of years. Indeed, due to inflation or to supply and demand factors or both, it may greatly appreciate as time passes. The nature of the interest, a six-twentieths interest in land on which was erected a substantial building occupied as office premises by two tenants and as residential flats by three others, certainly ensured receipt of income but also involved the existence of capital assets, to a share of which the respondent would become entitled upon transfer to him of the interest for which he had bargained.

Basic to the appellants' argument must be the proposition that the value of the interest in land, which value forms the first element of the damages awarded, included within it the full amount of the lost income which forms the second element of damages. Only if this be so will that second element wholly duplicate some part of the first element of damages awarded. The proposition so expressed appears to me to be untenable; not only is the income entitlement one of indeterminate duration but, more significantly, only a discounted fraction of any entitlement to income in the future, discounted for futurity of receipt, will be reflected in the first element, market value.

No doubt in theory one constituent of the market value of the interest reflects the discounted value of future income which it will bring in. Were it ever possible to separate that element from others, such as the value of the site itself which is no doubt not depreciating but may, in fact, be of a substantially appreciating nature, and the value of the structure erected on it, it might properly be taken into account in reduction of the second element of damages here awarded. However, in the present case, the only evidence as to damages available to the learned primary judge was that of the market value of the interest and of the loss of subsequent entitlement to income. In those circumstances, the evidence provided no basis for attributing to any specific portion of that market value a discounted value of that income entitlement. I consider that the learned judge was correct in acting as he did; it was open to him to arrive at the amount of damages which he awarded.