Hadley v Baxendale in the Irish High Court

Hanrahan v Minister For Agriclture, Fisheries And Food [2010] IEHC 442 (26 November 2010)

McMahon J:

11. It is well established that a plaintiff may recover such damages for a breach of contract ‘as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things’ or ‘such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it’. This test was set out in Hadley v Baxendale (1854) 9 Ex 341 at 354-355, and has been approved in numerous Irish decisions such as Lennon v. Talbot Ireland Ltd (Unreported, High Court, 20th December 1985), and Lee v. Rowan (Unreported, High Court, 17th November, 1981,).

12. The plaintiff is entitled to such damages as would put him as nearly as possible into the position in which he would have been had the animals been returned as agreed. In the absence of the cattle themselves, a sum of money to represent their value should be awarded. Additionally, the plaintiff claims he is entitled to profits lost and expenditure incurred because of the breach of the agreement. In the present case, these primarily relate to his loss of milk from the milking cows not returned. These may also include losses resulting from his particular circumstances so far as they are foreseeable by the defendant. Such losses are sometimes described as “consequential loss” in Anglo American usage. The third claim for damages by the plaintiff occurs under the heading of inconvenience and distress caused to him as a result of the failure to return the animals on 5th May, 2006.

13. In assessing his losses under the above headings, however, the plaintiff must bring into account any compensating gains which will be offset against his losses: he is only entitled to his net losses. Moreover, in calculating what gains he would have made if there had been no breach, the cost of realising such gains are compensatory savings which must be deducted, to quantify the net gain only at the end of the day. In the present case, the defendant argues that there were cost savings for the plaintiff in calculating his losses from a lower mild yield, insofar as, since it is a theoretical exercise, he would not have (or should not have) incurred labour or land costs in the event, as, in fact, the cattle were not returned. I will deal with this argument in more detail below.

14. Where a breach of contract occurs, the aggrieved party is obliged to take reasonable steps to reduce his losses. He is obliged to mitigate his losses. Costs reasonably incurred by the plaintiff in such an exercise are recoverable.

15. These are the principles applicable to the present case and are not difficult to state in the abstract. The difficulties here arise in applying them to the facts of the case and in quantifying the losses in monetary terms. Some of these difficulties must be attributed to the plaintiff’s failure to keep proper farm accounts, not only prior to the seizure in 2006, but also subsequently, when it became obvious that an action against the State was contemplated. Perhaps it is too much to expect the plaintiff to change his life long practices in this regard, at this late stage of his life, but it must be noted that it presents difficulties for the court.

16. Nevertheless, the court must do its best. The fact that damages are difficult to assess does not disentitle the plaintiff to compensation for losses resulting from the defendant’s breach of contract. As Finlay P. stated in Grafton Ct. Limited v. Wadson Sales: the court “should be alert, energetic and if necessary ingenious to assess damages where it is satisfied that a significant injury has flowed from breach”. (Unreported, High Court, 17th February, 1975 at p. 21).

[McMahon J considered that the available damages comprised the value of the animals not returned, the loss of associated profit, and the loss of a winter milk bonus; and he continued]

40. Because I have awarded the plaintiff a sum in respect of loss of profits during the years 2006-2010, as a result of the failure to return the animals as agreed, I do not believe that any sum for interest is due to the plaintiff for the delay in the payment of the capital sum, that is the sum I have valued the unreturned herd as of 5th May, 2006. There is no evidence before the court that the loans which the plaintiff got from others, and particularly from his brother in-in-law, were anything other than non-interest bearing loans from close friends and relatives.

41. Due to the stress, upset and inconvenience caused to the plaintiff, as a result of the breach of the agreement by the defendant, I award the plaintiff an additional sum of €25,000.

42. This brings the total award of damages to the plaintiff to €304,320.


Other recent Irish cases on Hadley v Baxendale include:  
  • Carey v Independent Newspapers (Ireland) Ltd [2003] IEHC 67 (7 August 2003)
  • Mallett & Son (Antiques) Ltd v Rogers [2005] 2 ILRM 471, [2005] IEHC 131 (12 May 2005)
  • ESL Consulting Ltd trading as VoIP Ireland v Verizon (Ireland) Ltd [2008] IEHC 369 (27 November 2008)  
  • Moloney v Fox [2010] IEHC 72 (22 February 2010).