The Court of Appeal dismissed an appeal by the defendant, the Vehicle Builders and Repairers Association, against the assessment of damages of pounds 24,439.48 plus interest, awarded by Judge Morrell to the plaintiff, Dataliner Ltd, in respect of the defendant's breach of contract in failing properly to promote a trade show at which the plaintiff was an exhibitor.
Peter Susman (Booth & Co, Leeds) for the defendant; Heathern Swindells (Greenwoods, Peterborough) for the plaintiff.
Lord Justice Henry, giving the judgment of the court, said the plaintiffs sold vehicle body-straightening equipment, called "jigs", to vehicle repair businesses, called bodyshops. Between a quarter and a third of their sales came from trade exhibitions or shows. The defendant organised one such show, called "Bodyshop South", held at Wembley Conference Centre from 24 to 26 April 1990. The plaintiff incurred considerable expense in a substantial appearance at that show, but in the event got no new business therefrom. The judge found that the show was a failure, in that insufficient potential customers for vehicle repairing equipment attended, because the defendants failed to promote the show properly and in so failing were in breach of their contract with the plaintiff.
The defendant's appeal was not against the finding of liability for breach of contract, but solely over the quantum of damage. The plaintiff's claim was for wasted expenditure only: it sought to recover what it had spent in participating as an exhibitor at the show, as expenses rendered futile by the defendant's breach of contract. The judge held that where such a contract was discharged by a defendant's breach, a plaintiff might elect to claim either "expectation damages", being the profit he would have earned but for the defendant's breach, or "reliance damages", being the money expended by him in reliance upon the defendant's promise to perform the contract.
A claim for reliance damages would only succeed to the extent that on exploitation, that expenditure would have been recouped: see CCC Films (London) Ltd v Impact Quadrant Films Ltd  1 QB 16. The plaintiff must establish, on a balance of probabilities, that but for the defendant's breach, he would have recouped his expenditure. Reliance damages might not be used to compensate the plaintiff for having entered into an intrinsically unprofitable contract: see C & P Haulage v Middleton  1 WLR 1461 at 1467.
The judge was satisfied not only that the plaintiff expected to transact sufficient business as a result of attending and exhibiting at Bodyshop South to recover its expenditure, but also that this expectation was reasonable and justified in the light of the circumstances, including the defendant's assurance that the show was to be adequately advertised and promoted. He concluded: "Where the plaintiff's expectation of profit is well-founded as opposed to aleatory, the court will assume or infer that, but for the defendant's breach, and in the absence of evidence to the contrary, the plaintiff would have recouped all his expenditure." He found all those criteria satisfied.
The defendant wrongly assumed in argument that, in claiming reliance damages, the plaintiff automatically created a presumption that the contract would have been profitable or shifted the burden of proof on to the defendant to disprove it. But the judge made no presumption that the plaintiff's appearance at the show would have been profitable and required it to prove that. The defendant contended that reli- ance damages were not recoverable unless the contract had been discharged by breach, in that the plaintiff had accepted the defendant's repudiatory breach of contract; yet here the contract was fully performed, if badly. Had the plaintiff wished to recover for wasted expenditure, it should have abandoned the show before it ended.
In their Lordships' judgment there was no authority, and no ground of principal, supporting the defendant's proposition. The suggestion was commercial nonsense. In arriving at the ratio for his judgment, the judge directed himself correctly in law. The appeal must be dismissed.
Paul Magrath, BarristerReuse content