Damages: An Explanatory Note – Part 1

Damages are at the forefront of people’s minds when considering how they are to be compensated for a wrong or how they will be rewarded for damage suffered.

This note considers a mere snippet of what is available, how it is measured, and the legal aspect of the damage being claimed. The reality is that it is sometimes difficult to show that there is damage to be able to be awarded damages.

Damages are the principal judicial remedy in the UK for both tortious claims and breach of contract claims. Its function is compensation which are assessed with some form of loss. There are many different considerations that a court will have to consider such as the concepts of remoteness or causation, mitigation and even contributory negligence.

Case law sets out the primary rule for compensation which is to be restored to the position that it would have been in had the tort not been committed and that a claimant’s losses or damage may be monetary/financial or even could be non-monetary/non-financial.

Financial loss is considered easier to calculate due to the nature and usual visual aspect of it. The usual way in evaluating monetary or financial loss is considering things such as damage to property or land and even vehicles. Essentially it is loss that can be of value such as to damage to goods or negligence that results in loss. If repairs are necessary, then this would be included in the loss.

A summary for calculating loss such as to repair was neatly outlined through case law as:

  1. Where a chattel is damaged by the negligence of another, direct loss is suffered as soon as the chattel is damaged.
  2. The proper measure of that loss is the diminution in value that the chattel has suffered as a result of the negligence of the defendant.
  3. If the chattel can be repaired, the claimant is entitled to have it repaired at the cost of the tortfeasor, although there is no obligation to repair the chattel to recover the direct loss suffered.
  4. Events occurring after the infliction of damage are irrelevant to calculating the diminution of value measure of damages. That is, it is irrelevant if the chattel is subsequently destroyed, repairs are delayed or repairs are carried out at no cost to the claimant.
  5. Generally, the diminution in value is calculated by reference to the reasonable cost of repair so as to put the chattel back in the state it was in before it was damaged. Strictly speaking, the cost of the repairs is not the loss suffered. Only if the sum appears to be clearly excessive will the court be justified in investigating whether that sum exceeds the cost that the claimant would have incurred in having the repairs carried out by a reputable repairer.
  6. A claim for diminution in value is a claim for direct loss and, therefore, a claim for general damages and should be pleaded as such. Documents such as an invoice for the cost of the repairs are simply evidence of the diminution in value suffered by the chattel as a result of the tortfeasor’s actions, which can be used to make good the claim. There may be consequential losses, such as loss of use, which would also require a claim for general damages. However, a claim for loss of profits would constitute a claim for special damages, which would need to be specifically pleaded and proved.
  7. As a claim for diminution in value is a claim for direct loss, mitigation is not relevant. Accordingly, there is no obligation on the claimant to have the repairs done at a lower cost. If a claimant chooses to repair a chattel at an unreasonable cost, the reason why such costs cannot be recovered is because the cost does not represent the diminution in value of the chattel.
  8. If the chattel is insured the fact that the claimant has been indemnified by the insurer will not reduce the liability of the tortfeasor. Accordingly, if for example, the insurer arranges the repairs, the reasonableness of the repair costs will not be assessed by reference to what the insurer can obtain in the open market, but by what represents a reasonable cost of repairs to the claimant, without reference to its insurer.
  9. In determining whether the cost of repairs (arranged and paid by insurers) is reasonable, the court will examine the components of the notional figure representing what the claimant (not the insurer) would have had to pay if he had organised the repairs. It will then compare that figure (stripped of any unreasonable elements) with the total sum representing the actual cost to the insurer. The question is not whether the individual items charged are reasonable, but whether the overall cost is reasonable.

Loss of profits are also capable of being considered on top of the usual standard damages awarded. The court will take into account who the claimant is, what their job is and how the calculation has been worked out before considering loss of profits. The calculation must be understood by the claimant because this is very limited to merely the profit which is lost rather than the turnover which has been lost due to the damage. There are some further special damages which will be considered by the court such as loss of use of a property such as a car, but these are beyond the scope of this publication. Lastly, there is the cost of replacement which a court will consider and involves good which have been completely destroyed by the defendant’s actions rather than damaged. The damaged goods may be irrecoverable though so would be deemed as destroyed if they cannot be reasonably fixed.

If the person who has done a wrong is a professional and they have been negligent then there could be damages payable to put the claimant back into the position they were in had the professional person not been negligent so would be pure economic loss. This means that any monies paid to the professional would be payable to the claimant and then the court would consider other non-monetary claims.

Non-monetary claims are especially relevant in tortious matters rather than contractual matters and can be very involved and difficult to show. However, there are different considerations that a court will consider and different types of damages such as aggravated damages can be awarded by the court. The types of non-monetary claims may be:

  1. Pain and suffering and loss of amenities.
  2. Physical inconvenience and discomfort.
  3. Social discredit.
  4. Mental distress.
  5. Loss of society of relatives

All of the above points are very basic and can be explored further with wider reading or through the below cases. Please not that this is a non-exhaustive list. There is a whole plethora of case law which address a wide range of damages such as restitutionary damages; damages in lump sum and future loss, non-compensatory damages and punitive damages.

Livingstone v Rawyards Coal Co *1880) 5 App Cas 25

Forster v Outred & Co [1982] 1 W.L.R. 86

Coles and others v Hetherton and others [2013] EWCA Civ 1704

Moore and another v National Westminster Bank [2018] EWHC 1805 (TCC)

Simmons v Castle [2012] EWCA Civ 1288)

Henderson v Henderson (1843) 3 Hare 100)

Rookes v Barnard [1964] AC 1129.

Lawdit has a very experienced team who work on tortious claims and contractual disputes on a daily basis. If you consider yourself to have suffered loss or damage, then do not hesitate to contact us. It may be that there are only non-compensatory damages that are available which simply means that the cost of bringing the claim is awarded rather than any compensation. however we will do our best to get you the result you deserve. Remember that litigation is a last resort and any claim that can be settled amicably outside Court is always worth considering first.

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