Contract law update 2019

Damages

There is a general rule that damages for breach of contract are assessed at the date of breach.¹ This rule does not apply, however, if assessing damages at a different date would more appropriately compensate the plaintiff. Given the flexibility of this exception, it is arguably not a rule at all, although the High Court has emphasised its importance.²

The New South Wales Court of Appeal recently confirmed one well-established exception to this principle. In El Ali v Tritton³, the defendant had breached a contract for the sale of land. The plaintiff had initially sought specific performance of the contract. However, specific performance subsequently became impossible when the mortgagee in possession sold the land. The court held that the proper date for assessing damages was the date when specific performance was no longer possible. In reaching this conclusion, Justice Payne (with whom Justices Macfarlan and Leeming agreed) approved the following passage from a judgment of Lord Wilberforce:⁴

In cases where a breach of a contract for sale has occurred, and the innocent party reasonably continues to try to have the contract completed, it would to me appear more logical and just rather than tie him to the date of the original breach, to assess damages as at the date when (otherwise than by his default) the contract is lost.