Another example of the need to prove damages can be seen in the Court of Appeal decision in Gartell & Son (a firm) -v- Yeovil Town Football & Athletic Club Limited  EWCA Civ 62. It is another case that reflects a failure to prove damages on a counterclaim. Indeed it was conceded that there was no evidence to prove some of the damages that the judge had awarded.
- A person who had carried out work which was totally ineffective was not entitled to be paid for those works.
- The judge had erred in awarding the defendant damages on the counterclaim. The defendant was only entitled to the losses that arose as a result of the breach of contract.
- There was no evidence that the breach had led to any additional losses.
The claimant did work improving the pitch for the defendant. The defendant said the work was useless and counter-claimed for the costs of someone else doing the work.
The judge held that there was a total failure of consideration by the claimant, he dismissed the claim and awarded £21,494 (including vat) on the counterclaim with an additional £5,000 for overtime.
The Court of Appeal upheld the finding of a total failure of consideration. However the counterclaim was dismissed.
NO EVIDENCE AT ALL TO SUPPORT SOME OF THE DAMAGES AWARDED
The defendant conceded that there was no evidence to support part of the damages claim for which the judge had awarded damages on the counterclaim.
“The grounds of appeal
1. the judge was wrong to dismiss the claim on the basis of a total failure of consideration;
2. in the alternative, in dismissing the claim, the judge was wrong to allow the counterclaim for a sum in excess of that required to restore Yeovil to the position it would have been in absent performance of the contract;
3. the judge was wrong to allow Yeovil, which is registered for VAT, to recover compensation for the VAT element of the cost of remedial works;
4. the judge was wrong to treat works carried out for Yeovil by Ecosolve as remedial works. He should have disallowed the claim for the cost of remedial works to the extent that they were not shown to be reasonably necessary in consequence of Gartell’s breach;
5. the judge erred in failing to acknowledge that the so-called remedial works, or works similar thereto, would have been carried out in any event such that Yeovil was not put to any, or any equivalent, additional expense;
6. the judge’s finding that £5000 had been incurred in overtime payments to Yeovil employees was unsupported by the evidence;
7. in awarding the costs of the proceedings to Yeovil, the judge was wrong to decline to make any adjustment to reflect the fact that the counterclaim was amended one month before trial.
Yeovil now accepts that the judge was wrong in the respects identified in grounds 3 and 6. In my judgment it was entirely right to do so. The point raised by ground 3 is simply a recognition of the fact that a party who claims lost expenditure with a VAT element does not suffer a loss of the VAT when he is able to reclaim that VAT from the Revenue. The claim for overtime which is the subject of ground 6 suffered from the disadvantage, which the judge recognised, that there was simply no evidence on which it could be quantified. The fact that employees of Yeovil had done work rectifying the state of the pitch did not mean that they had earned overtime in doing so. If it was overtime, it was necessary for Yeovil to produce some evidence from which it could be quantified. There was none.”
NO EVIDENCE AT ALL TO SUPPORT THE CLAIM THAT THE BREACH HAD LED TO ADDITIONAL EXPENDITURE
“Damages on the counterclaim
The significance of the finding of total failure of consideration was that Yeovil was discharged from its obligation to pay the price. On a different analysis one might say that there had been a breach of a condition, or of an intermediate term where the breach was so serious as to deprive Yeovil of substantially the whole benefit of the contract. Either way, Yeovil was not, in addition, then entitled to insist that Gartell pay for the full cost of renovation works. Gartell’s primary obligations under the contract were replaced by an obligation to compensate Yeovil for the loss sustained as a result of their non-performance of the contract. Those damages could be assessed by reference to the additional cost to Yeovil of arranging for the work contracted for to be done by someone else, but Gartell cannot be denied payment and then rendered liable for the entire cost of obtaining a substitute performance. The situation is analogous to the case of non-delivery of goods. The purchaser is not liable for the price, and has suffered damage in the additional amount he reasonably has to pay for the goods from another supplier. The purchaser does not get the substitute goods for nothing.
The judge did not subject the Ecosolve invoice to this type of scrutiny, because he concluded that he was entitled to award the amounts claimed for the main and training pitch in full, in addition to holding that Yeovil did not have to pay Gartell the price. For the reasons I have given that conclusion was wrong.
Mr Sampson submitted that the Ecosolve works were merely those made necessary by Gartell’s failure to perform, i.e. there was no element of renovation, and the works merely restored the pitches to the condition they would be in had there been no intervention. He relied on the fact that Mr Hillier, the stadium manager of Yeovil, had produced the quotations and invoices and described them as “relevant to the remedial work in relation to the work previously completed by Gartells”. If he was right about the nature of the work, the judge’s award was not inconsistent with the finding of a total failure of consideration.
I cannot accept these submissions. The Ecosolve works plainly went further than restoring the pitches to the condition they would have been in had Gartell done nothing. One need look no further than the fact that the works included Koro treatment and scarifying. Koro treatment was described by Yeovil’s expert Mr Jaaback as “the ideal treatment”, although expensive. Scarifying was less costly, and would not remove 100% of the meadow grass. The combined costs of Koro treatment on the main pitch and scarifying the training pitch was £4950 (£3250 on the main pitch and £1700 on the training pitch). This was a significant part of the sums claimed in the counterclaim. In addition, Yeovil would have had to carry out annual maintenance even if Gartell had carried out the works correctly. No credit has been given for the cost of maintenance, which it should have been.
Mr Sampson frankly acknowledged that Yeovil was in considerable difficulty in adducing evidence of the necessary work given the restrictions which had been placed on the scope of its expert evidence by the order of DJ White. In my judgment, there was as a result no basis for holding that the Ecosolve works were those necessary to leave the ground in the unsatisfactory condition it was in before the Gartell work started.
It is clear that the Ecosolve works were in reality an alternative treatment of the pitches, aimed at achieving an improvement in the pitches. Approaching the matter in this way, the most that Yeovil could recover on the counterclaim was the amount by which the cost of Ecosolve works reasonably exceeded the contract price. That would be the proper measure of the damage which Yeovil had suffered by reason of Gartell’s failure to perform the contract. The judge’s award of damages on the counterclaim in the full amount of the Ecosolve invoice cannot stand. It over-compensated Yeovil by awarding them the costs of a substitute performance of the contract when they were relieved altogether of their obligation to pay.
Although a respondent’s notice was served, it does not ask, in the event that the appeal succeeded on this ground, that we substitute a judgment for the amount by which the cost of the Ecosolve works reasonably exceeded the contract price. There would be obvious difficulties in the way of this court undertaking such an exercise, not least that the “face value” of the Ecosolve works was only some £335 more than Gartell’s price (on a VAT inclusive basis). This relatively modest sum must therefore represent the maximum recoverable on this basis, before any analysis of whether the works were equivalent to those which Gartell should have supplied. However, as the matter is not before us, Yeovil having only sought to uphold the judge’s award of the whole invoiced sum, I need not consider it further. It follows that the counterclaim will be dismissed.
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- Evidence: proving damages and interest on damages: you can’t sugar the pill and have to prove the loss.
- Witness statements and proving loss of earnings.
- Proof of facts: the basic principles summarised.
- Causation and evidence – a burning problem.
- Making a finding of fraud without evidence 3.
- If findings of dishonesty are to be made then witnesses have to be heard.
- Making findings of fraud without a party being represented 2: a hearing in the administrative court
- Pleading and proving allegations of fraud or dishonesty: useful guidance