The Gazette 1980

GAZETTE

APRIL 1980

that the difference between the "Edison" and Ali case

"did not depend on the difference (if any) between

contract and tort in question". Regarding the principles

as to remoteness in tort and contract but without wishing

to "swim in this sea of semantic exercises" it appears that

the rules are coming together,

and that impecuniosity is

one of the matters to be considered in the question of

reasonable foresight or degree of likelihood.

Recently, however, the "Edison" has come before the

High Court for consideration. In

Riordan's Travel Ltd. v.

Acres and Co. Ltd.

the plaintiffs took over a lease of a

shop. Acres and Co. Ltd. were the lessors and they also

owned the adjoining premises. They employed the second

defendants, G. & T. Crampton Ltd., to demolish the

adjoining premises, and the second defendants sub-

contracted the actual demolition to the third defendants

Mathew O'Dowd Ltd. When the demolition and excava-

tion work had reached an advanced stage the side of the

plaintiff's premises, where they* were carrying on the

business of travel agents, collapsed so that the plaintiffs

were entirely deprived of the use of the premises and had

some of their property damaged, and it was eighteen

months before they were reinstated in new apartments in

a new building on the site of their old premises.

Their claim for damages fell under various headings:-

the value of the equipment damaged and destroyed;

the rent of alternative accommodation from the time of

collapse until their return to the new offices; loss of profits

from being deprived of the use of their premises; and

interest on money which they had to borrow in order to

pay for the rent of the alternative premises. The first two

caused very little problem, but there were difficulties in

calculating the loss of profits. Various projections and

estimates were made and McWilliam J. was satisfied that

there was a reduction in business due to the conditions

under which the plaintiffs had to work "but there are too

many imponderables, such as the increase in oil prices

and the resulting increases in fares for one to accept as

accurate the figures presented on these projections". In

the absence of any reasonably accurate method of

assessing the losses, but looking at the increases in

business actually achieved he awarded a smaller sum than

that claimed by the plaintiffs. The fourth head - the

interest they had to pay on the borrowed money - was

the most contentious since the decision of the House of

Lords on the "Edison" appeared to be the authority in

point.

The plaintiffs had to borrow the money because they

did not have sufficient funds of their own. McWilliam J.

pointed out that as their original premises were totally

destroyed, they would have been put out of business

completely had they not taken steps to acquire new

premises as speedily as possible. The money borrowed

was thus borrowed for the purpose of mitigating their loss

and he found that they had acted reasonably in doing this.

He accepted as a correct statement of Irish law the

passage from

Mayne on Damages

approved by Davies

L.J. in

Moore v. Der Ltd.

that "although the plaintiff

must act with the defendant's as well as with his own

interests in mind, he is only required to act reasonably

and the standard of reasonableness is not high in view of

the fact that the defendant is an admitted wrongdoer,"

and McWilliam J. went on to say "acting reasonably to

me means doing the best a plaintiff can in the circum-

stances in which he finds himself'.

Not unexpectedly, the defendants relied on the House of

Lords decision in the

Edison.

It should be pointed out that

the Registrar of the Admiralty Division in that case

considered the additional expenditure to be reasonable,

however the House of Lords did not consider this to be

relevant and McWilliam J. confessed to having difficulty in

following Lord Wright's reasoning on this.

He said that Lord Wright was considering two poss-

ible points. Firstly, whether the plaintiff's financial

embarrassment was a consequence of the loss of the

dredger and, secondly, whether the financial embarrass-

ment was a cause of loss quite independent of the sinking

of the dredger. He did not consider it relevant to deal with

the question of mitigation and what that duty entailed.

This was made clear by his statement that "if the appell-

ant's financial embarrassment is to be regarded as a

consequence of the respondent's tort, I think it is too

remote, but I prefer to regard it as an independent cause,

though its operative effect was conditioned by the loss of

the dredger,"

and his later comment that the Lords were

dealing with the measure of damage and not the victims

duty to minimise "which is quite a different matter".

McWilliam J. was convinced that the issue before the

House of Lords should have been whether the plaintiffs

acted reasonably to mitigate their loss. The suggestion that

their financial situation could have been a consequence of

the tort was inappropriate, and it was not satisfactory to

describe their financial embarrassment as an independent

cause of damage.

"There would have been neither damage nor

embarrassment if the defendants had not negligently sunk

the dredger. There was no financial embarrassment at the

time the dredger was sunk which affected the appellant's

capacity to operate the dredger if it had not been sunk.

The dredger was totally destroyed and the financial

embarrassment which does not appear to have been

significant before the sinking, only affected their capacity

to mitigate the loss."

The only consequence of their financial situation at the

time their dredger was sunk was that they could not buy a

new dredger and so mitigate the loss to the fullest. It

might have been argued that it was not reasonably fore-

seeable that the owners of the dredger would have all their

liquid resources tied up in the contract with the Harbour

Board for whom they were using the dredger but these

were the days when Polemis

reigned and the Lords were

concerned with the question of direct cause, and Lord

Wright felt that the plaintiffs actual loss in so far as it

was due to their impecuniosity arose from that impecuni-

osity as a separate and concurrent cause, extraneous and

distinct in character from the defendant's negligence.

McWilliam J. therefore, "with hesitation in view of the

eminence of the Court," declined to apply the "Edison".

It did not provide "assistance on questions arising from

the incapacity of a plaintiff to mitigate damage to the

greatest advantage of a defendant," and anyway it

appeared that the duty to mitigate and the Wagon Mound

principle "precluded the enunciation of any hard and fast

rule that impecuniosity can never be taken into account in

the assessment of damages". Liability for damage

depends on whether that damage is of such a kind as a

reasonable person would have foreseen. In the present

case any reasonable person must have foreseen that the

plaintiffs business must cease and the plaintiffs thereby

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