Dany Lions Ltd v Bristol Cars Ltd [2014] EWHC 817 (QB)

Case No HQ13X00837[2014] EWHC 817 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 21/03/2014
Before
MRS JUSTICE ANDREWS DBE
Between
DANY LIONS LTDClaimantBRISTOL CARS LTDDefendant
JONATHAN CHEW (instructed by IBB Solicitors, Capital Court, 30 Windsor Street, Uxbridge, Middlesex, UB8 1AB) appeared for ClaimantOWAIN DRAPER (instructed by Pitmans LLP, 47 Castle Street, Reading, Berkshire, RG1 7SR) appeared for DefendantHearing Hearing dates: 6 and 7 March 2014
Judgment
[1]Ever since he first saw one at the age of eighteen, it has been Mr Andrew Olins’ dream to own a Bristol 405D drophead coupé. However, only around 43 of these classic cars were ever made, and few of those have survived. Thus when, in February 2011, Mr Olins discovered that the manufacturer, the original Bristol Cars Ltd, (“Bristol Cars”) was offering for sale, as a restoration project, a 1955 Bristol 405 four-door saloon which could be converted into a 405D, he felt he had to have it. By then, Mr Olins was an experienced commercial litigation partner in IBB Solicitors, the firm which represents the Claimant in this action.[2]In 2008 Mr Olins had established a family settlement whose assets are held by the Claimant (“DLL”). Mr Olins and his wife are the trustees of the settlement and, in that capacity, the shareholders and directors of DLL. DLL’s assets include four unencumbered flats, whose rental income of around £4,000 per month is used to pay the interest on loans made by the trust to DLL. Whilst Mr Olins was negotiating with Bristol Cars, that company went into administration. With the sanction of the administrators, Mr Olins procured DLL to purchase the car for £20,000 from Bristol Cars, on the express understanding that it would then be restored and converted into a 405D.[3]Mr Olins subsequently negotiated the scope of the works and the terms on which they would be carried out with personnel from Bristol Cars, chiefly a Mr Antony Steevenson, though he also had some discussions with the former CEO, Mr Toby Silverton. He intended at that time that the manual transmission would be converted to automatic, and was led to believe that this would be no problem. As might be expected, Mr Olins was careful to document the substance of these discussions, either by taking contemporaneous notes or by confirming their contents in an email sent shortly afterwards.[4]It was anticipated by both parties that when the administrators put the business up for sale, the old management would make a successful bid for it. However, when the time came, the Frazer-Nash group outbid them, and gained control of the “phoenix” company taking over the business, the present Defendant (“BCL”). Mr Steevenson reassured Mr Olins that despite this, it was “business as usual,” and that he and Mr Silverton were being kept on. He continued to negotiate with Mr Olins, now on behalf of BCL. Mr Olins insisted that there be a fixed price for the works, and that was what the parties ultimately agreed.[5]The contract was contained in an exchange of emails between BCL and Mr Olins (on behalf of DLL). The offer was made in an email from BCL dated 30 June 2011, which was accepted in an email sent on 5 July 2011. The price for the works was agreed at £153,000 inclusive of VAT (£127,500 net). This was £15,000 lower than BCL’s original asking price, because DLL had already bought the car. The discount reflected part of the cost of purchase, but not the whole of it because BCL estimated that the change to automatic transmission would cost £5,000. DLL already had the funds to pay the first £50,000, and made a downpayment of that sum on 5 July. A few weeks later, Mr Olins obtained a loan facility of up to £100,000 for DLL with his bankers, Coutts, to assist with payment of the balance. Coutts had originally sought a personal guarantee from Mr Olins as security for the loan, but in the event they dropped that requirement.[6]Unfortunately BCL never even made a start on the works. Mr Olins was concerned about the lack of progress and kept chasing BCL, but it was not until early February 2012 that Mr Steevenson disclosed to him that a number of staff with specialist skills had been let go by the administrators, and that BCL was having difficulty in replacing them. It was then that Mr Steevenson first raised the possibility that BCL might sub-contract part of the works to a specialist restorer of classic cars. He recommended Jim Stokes Workshops Limited (“JSW”) which he described as probably the best restorer of classic cars in the country, with an excellent reputation. Mr Olins was concerned about whether subcontracting the works would adversely affect the provenance of the finished car, and thus its value (which he had assumed roughly equated with the cost of its purchase and restoration). Mr Steevenson assured him that BCL would oversee and sign off the works and that the provenance would be unaffected. On that assurance, Mr Olins left BCL to explore the possibility of a sub-contract with JSW.[7]By the end of March 2012, which was when Mr Olins had initially hoped and been led to believe by BCL it was likely he would take delivery of the finished car, there had still been no progress. Mr Olins began to lose patience. His concerns were exacerbated by the departure from BCL of Mr Steevenson and Mr Silverton, apparently in somewhat acrimonious circumstances. He therefore raised a formal complaint with BCL’s new management. When discussions proved unproductive, Mr Olins instructed his firm to act on behalf of DLL in the dispute.[8]That was the background to a Settlement Agreement which was entered into between BCL and DLL on 4 May 2012, and which is at the heart of the matters that I now have to resolve. The Settlement Agreement provided, so far as material, as follows:
“1. In this agreement: 1.2 “Car” means DLL’s 405 motorcar registration number NOR 11. 1.5 “Condition Precedent” means DLL entering into an agreement with JSW on or before 30 May 2012 to carry out the Works. 1.7 “Existing Agreement” means any agreements between BCL and DLL made on or about 5 July 2011 pursuant to which BCL agreed to carry out the Works. 1.8 “Information” means any design drawings (including the design drawings relating to the manufacturer of the Car’s 405 hood) or other information which it reasonably needs to facilitate the carrying out of the Works. 1.11 “Works” means all or any part of the restoration works to the Car set out in BCL’s email of 30 June 2011 a copy of which is attached as Annex 1. 2. DLL will use its reasonable endeavours to fulfil the Condition Precedent. 3. BCL will return the £50,000 (inclusive of all taxes) paid to it by DLL on or about 5 July 2011 pursuant to the Existing Agreement within 5 working days of the date hereof…. 4. If the Condition Precedent is fulfilled the Existing Agreement will come to an end and the parties will be released and fully discharged from their respective obligations under it and the clauses below shall have effect. If the Condition Precedent is not fulfilled, the clauses below shall have no effect and the parties shall have the same rights and obligations relating to or otherwise in connection with the Existing Agreement which they had immediately before the making of this agreement. 5. BCL will provide JSW with the information. 10. BCL will pay DLL £8,000 representing: 10.1 compensation for “thrown away” loan arrangement fees of £1,000 incurred by DLL with Coutts & Co; 10.2 compensation for the disappointment, inconvenience and lack of service suffered by DLL arising from BCL’s failure to perform the existing contract; and 10.3 a contribution towards DLL’s legal costs.”
The Settlement Agreement also contains a “full and final settlement” clause and an “entire agreement” clause which, like all the other Clauses from Clause 5 onwards, would only come into effect on fulfilment of the Condition Precedent.[9]The original deadline was extended several times, ultimately to 19 January 2013, but the Condition Precedent was not fulfilled by that date. Mr Olins engaged Mr Steevenson to represent DLL in negotiations with JSW. He tried to get JSW to quote for a fixed price, but they were reluctant to do so because there were too many imponderables. Even after the body had been stripped down, there was a potential for problems to surface in the engine, which might be extremely expensive to sort out. Until the engine itself was stripped down JSW would have no real idea of the true cost of the restoration. On 16 November 2012, Mr Olins received an email from JSW that indicated that a “firm fixed price” to take account of all contingencies would be £195,000 plus VAT (i.e. £243,000). However the email went on to say that they expected the final bill to be less and that he would only be billed for the costs that they incurred. By then, the plan to convert the transmission to automatic had been jettisoned because Mr Olins had been advised that it would make the engine sluggish.[10]Mr Olins was shocked when he received that email. Despite the saving on the changes to the gearbox, there was an increase of £67,500 over the net price DLL had agreed with BCL. When VAT was taken into account, the difference between the two prices was £90,000. He considered that an increase of that magnitude was unaffordable for DLL unless BCL contributed something. Mr Olins sent an email to JSW on 16 November saying that unless BCL was willing to make a financial contribution, he could not proceed. JSW’s response, sent later that day, was that it was essential to convene a meeting with Mr Stokes, the owner of JSW, with a view to seeing where any costs savings might be made and whether any contingencies could be eliminated. They said it would be a shame if DLL had to withdraw.[11]That meeting took place on 17 December 2012 between Mr Olins, Mr Stokes and representatives of BCL. Far from bringing the parties closer together on price, it had the opposite effect. Mr Stokes said that the 16 November email was not intended to be a formal offer to enter into a fixed-price contract, that JSW was not willing to enter into a fixed-price contract, and that although the quoted figure of £195,000 was JSW’s considered view of the likely price for the modified works, (i.e. an estimate) he could not rule out the actual price being significantly higher. Instead of exploring areas of cost saving, Mr Stokes sought to justify JSW’s indicative costs.[12]At the time of the tripartite meeting, the deadline for fulfilling the Condition Precedent was only two days away, and there was plainly no prospect of reaching agreement with JSW before then. What turned out to be the final extension of one month to 19 January 2013 was agreed against a background of BCL and DLL engaging in “without prejudice” negotiations, but these were unproductive. After reflecting on JSW’s position over the holiday period, Mr Olins came to the view that matters had reached an impasse; that he had used reasonable endeavours to fulfil the Condition Precedent, and that he should stop trying to reach an agreement with JSW before the deadline expired. Therefore when JSW told him on 7 January 2013 that they had a window of opportunity to make a start on the work, Mr Olins responded in these terms in an email sent on 9 January: “The contractual relationship with Bristol Cars and my company, Dany Lions Limited, does not come to an end until 19 January. Until then DLL cannot enter into a formal agreement for the restoration works with JSW. To do so would prejudice DLL’s position against BCL. However, if the particular works that you have in mind can properly be categorised as works designed to get a better estimate about the overall cost of the restoration works I suspect that they should not present a problem”.[13]JSW gave their confirmation that the works would be limited to stripping the engine down to ascertain what restoration works to the engine would be needed, and on that basis Mr Olins gave his consent. Negotiations between DLL and JSW for the full works resumed on 21 January and proceeded at a somewhat more leisurely pace than they had prior to the tripartite meeting. They eventually entered into a contract on 5 February 2013 on the basis that JSW would charge £45 per hour for their labour, and cost plus 20% for materials. There is no ceiling on the price, but Clause 24 entitles DLL to terminate the contract with immediate effect before the restoration work is completed, and pay only for the work done to the date of termination. At the time of trial, JSW had done £121,000 worth of work, but the latest estimate of costs to completion is just over £249,000. It is anticipated that the project will be completed by the end of May or, at the latest, by the middle of June 2014.[14]DLL contends that, in accordance with Clause 4 of the Settlement Agreement, it is entitled to revert to the position before it was made, and to sue BCL for damages for non-performance of its contractual obligations under the agreement of 5 July 2011. DLL claims the difference between the fixed price under the original agreement with BCL and the actual cost to it of having the works carried out, (subject to appropriate adjustments for “extras” such as power steering, which were not part of the original bargain). DLL also claims for the loss of rental and other commercial income from the car, such as fees for TV and film appearances, for the period between the date on which the vehicle would have been delivered under the contract with BCL and the date of its delivery (or anticipated delivery) under the substitute contract with JSW.[15]By way of defence on liability, BCL raised three main arguments, two of which were disposed of in DLL’s favour on 25 July 2013 by HH Judge Seymour QC, on applications by DLL for summary judgment or to strike out passages from the Defence as disclosing no reasonable grounds for defending the claim. In consequence of that judgment, it is no longer open to BCL to contend that there was no binding agreement for the works between itself and DLL. BCL’s remaining defence is that DLL was in breach of Clause 2 of the Settlement Agreement and that if DLL had used its reasonable endeavours, it could and would have contracted with JSW on or before 19 January 2013 to carry out the works. Therefore, it is argued, DLL is no longer entitled to pursue it for damages. An argument of failure to mitigate is advanced on similar grounds.[16]There are three main issues for me to decide, namely: i) Is Clause 2 enforceable? ii) If so, did DLL use reasonable endeavours to enter into an agreement with JSW on or before 19 January 2013 to carry out the works? iii) If DLL failed to use reasonable endeavours, did that cause DLL’s loss? The burden of proof lies on BCL to establish that Clause 2 is enforceable, that there was a failure to use reasonable endeavours, and causation. If BCL fails on any of these issues, I then have to consider the quantum of DLL’s recoverable losses.

Is Clause 2 enforceable?

[17]In general, an obligation to use reasonable endeavours (or best endeavours) to achieve a particular object is not in itself regarded as too uncertain to be enforceable, provided that the object of the endeavours can be ascertained with sufficient certainty, and there are sufficient objective criteria by which the performance of the “endeavours” obligation can be evaluated. Helpful guidance is to be found in Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417, in which the Court of Appeal considered the earlier authorities on the subject, and the majority (Moore-Bick and Longmore LJJ) concluded that an agreement to use best endeavours to promote the claimant’s low-cost airline services from Blackpool was enforceable.[18]At [29], Moore-Bick LJ drew a distinction between a clause whose content was so uncertain that it was incapable of giving rise to a binding obligation, and a clause which gave rise to a binding obligation, the precise limits of which were difficult to define in advance, but which could nonetheless be given practical content. He went on to say that if the clause is enforceable, then whether (and if so to what extent) a person who has undertaken to use reasonable or best endeavours can have regard to his own financial interests will depend on the nature and terms of the contract in question.[19]Longmore LJ, in his concurring judgment at [69], said that the authorities justified the conclusion that an obligation to use best endeavours should usually be held to be an enforceable obligation unless: i) the object intended to be procured by the endeavours is too vague or elusive to be itself a matter of legal obligation; or ii) the parties have provided no criteria on the basis of which it is possible to assess whether best endeavours have been, or can be, used.[20]It is well established that an agreement between A and B that they will negotiate or enter into a future contract is unenforceable as an “agreement to agree” Walford v Miles [1992] 2 AC 128. The reason usually given for this is that the agreement which is the object of the obligation lacks the necessary certainty. An agreement between A and B that A will use his reasonable (or best) endeavours to enter into an agreement with B is also unenforceable; see e.g. Multiplex Constructions UK Ltd v Cleveland Bridge UK Ltd [2006] EWHC 1341 (TCC) at [633] to [639]; Barbudev v Eurocom Cable Management Bulgaria EOOD [2012] EWCA Civ 548 at [43] to [46]; and the decision of Teare J in Shaker v VistaJet Group Holding SA [2012] EWHC 1329 (Comm) [2012] 2 Lloyd’s Rep 93, on which Mr Chew placed considerable reliance.[21]In Phillips Petroleum Co UK v Enron Europe Ltd. [1997] CLC 329 at 343 Potter LJ observed that:
“The unwillingness of the courts to give binding force to an obligation to use “reasonable endeavours” to agree seems to me to be sensibly based on the difficulty of policing such an obligation, in the sense of drawing the line between what is to be regarded as reasonable or unreasonable in an area where the parties may legitimately have differing views or interests, but have not provided for any criteria on the basis of which a third party can assess or adjudicate the matter in the event of dispute. In the face of such difficulty, the Court does not give a remedy to a party who may with justification assert “well, whatever the criteria are, there must have been a breach in this case”
. It denies the remedy altogether on the basis of the unenforceability in principle of an obligation which may fall to be applied across a wide spectrum of arguable circumstances.”[22]That passage was cited with approval by Lewison LJ in his dissenting judgment in Jet2.com v Blackpool Airport at [50] and [51]. In the same case Moore-Bick LJ, at [24], said he regarded Phillips Petroleum as a case reinforcing what he described as the “well established principles” that the terms of the relevant clause must be construed in their contractual and factual context and that an agreement to use reasonable endeavours to agree is unenforceable, although he did not find it of assistance in determining the issues then before the Court. It seems clear from [69] that Longmore LJ also agreed with Potter LJ’s reasoning in Phillips Petroleum.[23]In Little v Courage Ltd [1995] CLC 164, it was a condition of the renewal of a lease that the tenant should enter into a business agreement with the landlord. The Court of Appeal refused to imply a term that the landlord would use its best endeavours to reach agreement with the tenant on a new business agreement. Millett LJ, with whose judgment the other members of the court agreed, confirmed that an agreement to use best endeavours does not suffer from the defect of uncertainty unless the object which the best endeavours were to be used to achieve was left wholly indefinite. He said, at 169H:
“An undertaking to use one’s best endeavours to obtain planning permission or an export licence is sufficiently certain and is capable of being enforced; an undertaking to use one’s best endeavours to agree, however, is no different from an undertaking to agree, or to try to agree, or to negotiate with a view to reaching agreement; all are equally uncertain and incapable of giving rise to an enforceable legal obligation.”
[24]Although all the observations to which I have referred were made in the context of the parties to an existing contract seeking to reach agreement with each other on a future contract, in principle the same reasoning would appear to apply with equal force to an agreement between A and B that B will enter into an agreement with C, or that B will use his reasonable endeavours to enter into an agreement with C. The object is still a future agreement whose terms are wholly uncertain, and a “reasonable endeavours” clause is likely to suffer from the further deficiency identified by Potter LJ in Phillips Petroleum. However, there are remarkably few authorities in which that issue has been considered directly, and of those which do exist, it is far from clear that the issue has been argued fully, if at all.[25]The earlier authorities on “reasonable endeavours” and “best endeavours” clauses referred to in Moore-Bick LJ’s judgment in Jet2.com v Blackpool Airport provide little assistance beyond the articulation of the general principles to which I have already referred. It is worth noting, however, that in his observations at [28] about the Scottish case of R&D Construction Group Ltd v Hallam Land Management Ltd [2010] CS1H 96, 2011 SC 286, Moore-Bick LJ had reservations about the correctness of a decision that a clause obliging the defendant to use all reasonable endeavours to agree a price with a third party seller of land that was “wholly acceptable” to him as buyer of the land was enforceable. He said that in the absence of any objective criterion by which the defendant’s satisfaction was to be judged, the clause allowed him to decide for himself whether any particular terms were or were not acceptable. The contract therefore imposed on him no more than an obligation to agree terms if he wished. Those observations seem to me to indicate that Moore-Bick LJ regarded an obligation to agree (or use best endeavours to agree) a key term or terms of a contract with a third party as being just as unenforceable for uncertainty as an obligation to agree or use best endeavours to agree such terms with the other contracting party.[26]What does emerge from the authorities is that there is a distinction between cases in which the object of the reasonable endeavours is a clearly defined object (e.g. permission to import certain goods, or the acquisition of a grant, or of another form of finance) which can only be achieved by obtaining the consent of, or even entering into a contract with, a third party, and cases in which the object of the endeavours is the future agreement itself. Cases falling within the first category do not suffer from the problems besetting agreements to agree, because there is sufficient certainty about the object of the endeavours, and the putative future agreement is merely a means of achieving it. Jet.2com v Blackpool Airport is an example of a case falling within that category, because the object was clearly defined, although achieving it would no doubt have involved some contractual arrangements being entered into between the airport and third parties.[27]There are few examples of authorities dealing with cases falling within the second category. In Yewbelle Ltd v London Green Developments Ltd [2007] EWCA Civ 475, the relevant obligation was to use all reasonable endeavours to secure a completed agreement under s.106 of the Town and Country Planning Act 1990. The enforceability of that obligation was never in issue in the case, which was largely concerned with how the reasonable endeavours were to be evaluated. However, even if it were to be treated as an example of a clause requiring the use of reasonable endeavours to enter into an agreement with a third party being regarded as valid and enforceable, that case had special features, because the s.106 agreement was the only means by which planning permission for the development of the land in question could be obtained. Thus there is no difference in kind between the obligation in that case and an obligation to use reasonable endeavours to obtain planning permission, which would plainly be enforceable. There are objective criteria governing the circumstances in which planning permission may be granted, and the decision of the planning authority is made by reference to those criteria. It is not the same type of situation as the one in which two putative contracting parties are negotiating at arms’ length and are each expected to have regard to their own commercial interests.[28]Moreover, it is apparent from paragraph 1 of Lloyd LJ’s judgment that the obligation in that case was to use reasonable endeavours to secure a completed s.106 agreement that was substantially in the form of a draft which was already in existence. Thus the terms of the proposed agreement were clearly defined. A fortiori, an obligation to use reasonable endeavours to become a party to a pre-existing agreement is likely to be enforceable. The terms are known in advance, and as the party undertaking to use reasonable endeavours is aware what he is supposed to be signing up to, the court need only consider whether he has made a sufficient effort to persuade the existing contracting parties to agree to include him among their number. Such a case does not suffer from the problem identified by Potter LJ in Phillips Petroleum, because the party using the endeavours has already sacrificed his future negotiating position by agreeing in advance that he will contract on identified terms.[29]Cases in which obligations to use best or reasonable endeavours to contract with third parties have been held to fall on the other side of the line are Shaker v VistaJet Group Holding (supra) and, in Scotland, Scottish Coal Co Ltd v Danish Forestry Co Ltd [2009] CSOH 171, on which Teare J placed reliance in Shaker v VistaJet. However, I gain very limited assistance from them.[30]In the Scottish Coal case, party A was under an obligation to enter into an agreement with party B and/or party B’s bankers “reasonably to regulate the relationship between the sums which will be recoverable under the Standard Security and the terms under which these sums will rank ahead of any other sums due by [party B] to their bankers from time to time (“the Ranking Agreement”). That provision was held by the Lord Ordinary, Lord Glennie, to be an agreement to agree, which lacked the requisite criteria to enable the terms of any ranking agreement to be ascertained, and the decision was upheld on appeal.[31]Lord Glennie, having reviewed the earlier authorities, said at [61] that he had some doubt whether there can be any valid distinction between(a) the case where parties are to use best endeavours to agree a contract between themselves and(b) a contract in terms of which one party is under an obligation to use reasonable endeavours to conclude a contract with a third party. “In both cases it seems to me that the question of enforceability must depend on the existence or otherwise of objective criteria by reference to which the efforts to secure the contract must be judged”. That is consistent with the approach of Potter LJ in Phillips Petroleum, to which the judge subsequently referred. However, he then went on to say that he was not sure that an obligation to enter into a Ranking Agreement with the other contracting party and/or its bankers could properly be regarded as an obligation to contract with a third party. In any event, the judge’s observations on reasonable endeavours clauses were all obiter because as the next passage makes clear, counsel was arguing that the obligation was not a “reasonable endeavours” obligation but an absolute one, and indeed that was the view taken of it by the appellate court. Therefore this is not a true example of a case in which an obligation to use reasonable endeavours to contract with a third party was held to be unenforceable.[32]In Shaker v Vistajet, the issue did arise squarely for consideration, but it was dealt with by the judge in a single sentence, no doubt for the very good reason that the clause containing the obligation to “proceed in good faith and use reasonable endeavours to agree, execute and deliver [Transaction] documents by no later than the Cut-Off Date” appeared in a Letter of Intent which also contained an express provision that it did not constitute a binding agreement to enter into the Transaction Documents. That point alone was fatal to enforceability.[33]The Transaction Documents were a mixture of agreements with the other contracting party and agreements with third parties, including a financing party. At [7] Teare J found that the obligation to use reasonable endeavours to agree with the other contracting party was unenforceable, citing the line of authorities on agreements to agree and reasonable endeavours to agree to which I have already referred at paragraph 20 above. He said that the reason for such unenforceability is that there are no objective criteria by which the court can decide whether a party has acted unreasonably. He then added:
“Agreements to reach agreement with a third party (such as the financing party in the present case) are also unenforceable for the same reason: see Scottish Coal Co Ltd v Danish Forestry Co Ltd.”
It is not known whether Teare J heard any argument that sought to distinguish agreements to agree with third parties from agreements to agree with the other contracting party, but it seems unlikely that he did, because in the context of the case there was no particular reason for either party to have drawn that distinction. He certainly did not have the advantage of seeing the full range of cases that were cited to me.[34]In the present case, neither party contended that there is a general principle that an agreement to use reasonable endeavours to enter into an agreement with a third party will always be too uncertain to be enforceable. Indeed they both accepted that if there is a sufficiently clear framework in relation to the third party agreement that is the object of the endeavours, an agreement to agree something with a third party may be binding. The difference between them lay in where the line was to be drawn. Mr Chew submitted that the distinction is between cases (such as Yewbelle) in which there is an existing agreement or framework at the time of the entry into the contract containing the “reasonable endeavours” obligation, on the one hand, and cases in which there is no more than an obligation to contract with the third party, on the other, which is how he contended Clause 2 should be characterised.[35]Mr Draper argued that agreements to agree with third parties do not suffer from the same defects as agreements to agree with the other contracting party, when both parties are entitled to look after their own selfish interests in the pre-contractual negotiations and the court has no means of adjudicating upon the reasonableness of any unresolved terms. He submitted that in “third party” cases, what matters is whether the object of the endeavours (in this case, an agreement with a third party) is sufficiently certain. If it is wholly unclear what party A was promising party B he would use his reasonable endeavours to agree with party C, the obligation would be void for uncertainty; but if there is sufficient certainty as to the putative third party agreement, the obligation will be enforceable. He submitted that this case fell into the latter category.[36]I agree with Mr Draper’s submission that in determining whether a contractual obligation to use best or reasonable endeavours is or is not enforceable the initial focus should be on the object of the endeavours and whether it is sufficiently certain. If it is sufficiently certain, then the court will know precisely what it is that the party concerned must use his reasonable endeavours to achieve. However even in a case where there is certainty as to the object, there is still potentially the problem of whether there are sufficient objective criteria by which to evaluate the reasonableness of the endeavours. That is a separate requirement, endorsed by the Court of Appeal in Jet2.com v Blackpool Airport.[37]Those two essential requirements of certainty of object and a yardstick by which to measure the endeavours are applicable across the board, whatever the object may be. They will not be satisfied in a case in which the object is a future agreement with the other contracting party, because even if the first requirement is satisfied (e.g. there is a draft contract on the table) the second will not be, for the reasons given by Potter LJ in Phillips Petroleum. They may be satisfied if the object is a future agreement with a third party, but such cases are likely to be exceptional because of the difficulty of satisfying both requirements. If the essential terms of the prospective agreement with the third party are identified in advance, there may be both the requisite certainty of object and sufficient criteria by which to judge the endeavours. If those terms are left open for negotiation, satisfying the second requirement is just as problematic as it would be in a case where the prospective agreement is with the other contracting party, and for precisely the same reasons.[38]Applying that principled approach to the clause in the present case it is obvious that it is insufficiently certain to give rise to enforceable obligations. The subject-matter and scope of the putative contract with JSW are clearly defined – the “Works” as identified in the BCL email of 30 June 2011 which is annexed to the Settlement Agreement – but nothing is said about the terms of that contract, including for example the price for JSW’s services, and how and when payment for those services is to be made. These and other terms were all matters which the clause envisages being open to future negotiation between DLL and JSW, and there are no objective criteria by which the court could evaluate whether it was reasonable or unreasonable of DLL to refuse to agree to any particular terms on offer.[39]Mr Draper submitted that the absence of express reference to the price did not matter, because by necessary implication the anticipated “agreement” is to be construed as an agreement to contract for the Works, as defined, at an objectively reasonable market price (which he submitted amounted to the same thing as JSW’s actual price, because it was the opinion of DLL’s expert that JSW’s charging rates were reasonable). The Settlement Agreement placed a risk on both parties that this sum would be higher or lower than the fixed cap price that they had agreed. If the “market price” or “reasonable market price” turned out (as it did) to be vastly in excess of £153,000 including VAT, then the question of whether it should have been accepted by DLL fell to be determined in the context of deciding whether “reasonable endeavours” had been used to reach agreement.[40]I am unable to accede to those submissions. Whilst the court should try so far as possible to construe a contract in such a way as to make commercial sense of it and to give effect to the obligations that are contained within it, it cannot re-write it or substitute terms that the parties themselves have failed to include or to agree upon.[41]At the time when the Settlement Agreement was entered into, BCL had not yet suggested that there was no binding contract between itself and DLL. Objectively, BCL was exposed to a claim for the difference, if any, between the fixed price it had agreed to carry out the works, and the actual price of having them carried out by another specialist restorer, to which as yet it had raised no defence. It seems plain that the object of the Settlement Agreement was to compromise the dispute on the basis that instead of the originally mooted sub-contract between BCL and JSW, DLL would contract with JSW directly. BCL would drop out of the picture (save for providing the same drawings and other assistance to JSW as they would have done if there had been a sub-contract). BCL would compensate DLL for the disappointment and delay and its expenses thrown away, including legal costs, by paying it £8,000.[42]The value of the settlement to BCL was the ability to walk away for £8,000 and its agreement to provide assistance to JSW, without which there was a real prospect that JSW would have been reluctant to take on the project. It was not running any “risk” that JSW’s price might be lower than an all-inclusive £153,000. If it were lower, all that would mean is that the risk to which DLL was exposed, namely the risk of having to pay damages to BCL measured by the difference in price, would never have materialised. That does not mean that DLL would be “over-compensated”, if the price was £153,000 or less, just that it would have suffered no loss apart from the matters which the £8,000 was expressly designed to compensate. Indeed, a lower price would enhance the prospect of a deal being struck with JSW, which could only benefit BCL.[43]If JSW sought to charge more than BCL had, and DLL reached agreement with them on that basis, DLL would have to absorb the difference, whereas if there were no settlement, subject to any viable defences to the breach of contract claim, the obligation to pay that difference would lie with BCL. Thus looking at the matter objectively, the terms of the envisaged settlement would be of little or no value to DLL if it transpired that JSW’s price was well in excess of £153,000 – even if that figure was a reasonable price to charge for the work and DLL could afford to pay it. There would be no good reason for DLL to have agreed that it would release BCL from any liability to pay the difference if those circumstances arose, especially since at that time it was unaware that liability was in dispute. The value of what it stood to receive under the settlement would go nowhere near compensating it for having to bear such a significant financial loss.[44]The parties could have provided that the envisaged contract would be for the same price as the contract between BCL and DLL, or for the same price plus or minus a percentage, or for a capped price, but they did not. They left the price open. However it does not follow from the absence of a cap or a formula for fixing the price that DLL was agreeing to take an unqualified risk that it would end up paying a significant sum out of its own pocket that, so far as it appeared at the time, it could otherwise have recovered from BCL as damages. Nor does it follow that DLL was promising that it would use its best endeavours to negotiate a deal at the lowest price that the other contracting party, JSW, was prepared to charge, or at an objectively “fair and reasonable” price. By leaving the matter open, the parties left it to DLL to decide whether it was prepared to contract with JSW at a higher price and if so, how much of the resulting loss it was prepared to bear.[45]Whilst it is true that at the time, neither party envisaged that JSW’s price would be significantly different from the all-in price of £153,000 in the contract between BCL and DLL, JSW held all the bargaining power in future negotiations with DLL, and, significantly, there was no other specialist restorer in the frame. The only person with whom DLL could contract was JSW. Thus the “market price” for the restoration work (insofar as there was one) was whatever price JSW decided to charge. I cannot construe Clause 2 as obliging DLL to use its reasonable endeavours to agree to whatever price JSW wanted, even if it was significantly more than £153,000. For the reasons I have given, that would make no commercial sense. Adding in the qualification that JSW’s asking price be “objectively reasonable” creates even more uncertainty. Would DLL therefore be obliged to go and get quotations from other restorers to evaluate whether JSW’s quotes were within the range of what they would charge for the same work? Plainly not; but if it did not do so, how would it be able to evaluate what a “reasonable market price” was? The use of reasonable endeavours would not extend to instructing an expert at DLL’s own expense to investigate the reasonableness of JSW’s pricing. DLL would have to take JSW’s figures at face value. Therefore BCL’s “objectively reasonable” qualification to the market price really adds nothing to the contention that DLL was obliged to use its reasonable endeavours to contract with JSW at JSW’s asking price. However, if the obligation were to be viewed as an obligation to use reasonable endeavours to agree a contract at a price acceptable to DLL, or a price that was mutually acceptable to DLL and JSW, it would suffer from precisely the same deficiencies and uncertainties as were identified by Moore-Bick LJ in paragraph [28] of Jet2.com v Blackpool Airport and Potter LJ in Phillips Petroleum.[46]In my judgment, Clause 2 is no better than a bare agreement to agree, and the fact that the subject-matter of the putative agreement is defined with some precision is not enough to make the clause sufficiently certain to be enforceable. The parties left open the question of the price and other terms, and therefore these were matters for future negotiation between DLL and JSW. Both DLL and JSW were entitled to have regard to their own commercial interests in those negotiations and make the bargain that best suited those interests. There is no difference in nature between this situation and the situation where the two contracting parties agree to use reasonable endeavours to agree the terms of a new contract.[47]I reach this conclusion with regret, since (in marked contrast to the situation in Shaker v Vistajet) it seems obvious that this was objectively intended by the parties to be a binding and enforceable obligation. Without Clause 2, there could have been no complaint by BCL if DLL did nothing to seek to fulfil the Condition Precedent. The whole purpose of Clause 2 was to ensure that there was something more than a moral obligation on DLL to negotiate an agreement with JSW, and annexing the email setting out the scope of the Works was plainly directed towards achieving the necessary certainty. It is unfortunate that it failed to achieve the purpose for which it was intended; but for the reasons I have stated, I have no doubt that this clause falls on the wrong side of the line.

Did DLL use reasonable endeavours to agree with JSW?

[48]In the light of my conclusion on the first issue, it is unnecessary to consider the second and third issues, but I shall do so out of deference to the arguments advanced by both parties. In my judgment DLL did use its reasonable endeavours to reach agreement with JSW for as long as it was obliged to do so. In the period up to 16 November 2012 Mr Olins did his level best to reach an agreement with JSW. Realistically, Mr Draper did not seriously seek to contend the contrary. It was reasonable for Mr Olins to seek to ascertain the extent of the financial liability to which DLL would be exposed under the agreement with JSW, and to try to put a cap on it, as he had done with BCL.[49]Even after the significant shock of JSW’s “fixed-price” estimate on 16 November, Mr Olins entered into further discussions with a view to reaching agreement with JSW, (albeit that by then, he was hoping to persuade BCL to make a financial contribution). The hiatus between 16 November and the tripartite meeting on 17 December 2012 is readily explicable, and excusable, because 17 December was the earliest date on which all the parties could convene, and there was no possibility of moving forward in the negotiations without having a discussion with Mr Stokes along the lines proposed by JSW.[50]Mr Draper submitted that the inference was to be drawn from Mr Olins’ email to JSW of 9 January 2013 (quoted in paragraph 12 above) that DLL would have contracted with JSW before 19 January 2013 on the basis on which they did eventually contract with JSW, if Mr Olins had not taken the decision that it was against DLL’s interests to do so; and that Mr Olins was wrong to take that decision because he remained under an obligation to continue negotiating right up to the deadline. However, in my judgment, once Mr Stokes had made it clear that £195,000 was not a ceiling, that JSW was not prepared to take the financial risk, and that the cost could be significantly higher, Mr Olins was entitled to take the view (as he did) that there was no longer any point in trying to satisfy the Condition Precedent and that he was entitled to wait for the deadline to pass before DLL contracted with JSW. Even if Clause 2 had been enforceable, DLL was not obliged to enter or try to enter into an agreement with JSW at an open-ended price, and that was the only deal that was on the table up to (and after) 19 January 2013. Once the party under a reasonable endeavours obligation correctly takes the view that it can do nothing further in terms of reasonable steps to achieve the object, it is no longer obliged to try: see Rhodia International Holdings Ltd & Another v Huntsman International LLC[2007] EWHC 292 (Comm) [2007] 1 CLC 59, at [35], approving and following the approach of Lewison J. at first instance in Yewbelle v London Green Developments [2006] EWHC 3166 (Ch) at [122] to [123].[51]Thus the reasonable endeavours obligation ceased on or around 17 December 2012, because objectively that was the point at which all reasonable endeavours were exhausted. Even if I am wrong about that, it was unrealistic to expect any decision on the response to Mr Stokes to be taken before Christmas in circumstances where an extension of a month had just been granted. By the time that Mr Olins reverted to JSW on 9 January, it was clear that he was going to get no further financial contribution from BCL. That is the latest point at which it can be said that there was an insurmountable impasse and the reasonable endeavours obligation ceased.[52]This was plainly a case in which DLL was entitled to have regard to its own commercial interests in determining what terms it was prepared to accept. The context is very different from that in Jet2.com v Blackpool Airport where promotion of the claimant’s business necessarily involved a considerable sacrifice of the defendant’s own commercial interests. Even if JSW had adhered to the ceiling of £195,000 plus VAT, and even if it had made an unequivocal offer to contract at that price which was capable of acceptance (which in fact it did not), DLL was not required to act against its own commercial interests to the extent of agreeing to absorb the financial impact of an increase of more than half as much again over the price it had agreed with BCL. There was no obligation on it to agree to that price, even if it had been on offer and even if it could have afforded to pay it.[53]BCL’s position was that DLL would only have been justified in refusing to contract with JSW before 19 January 2013 on the terms on which it eventually did contract with them on 5 February, if it could not have afforded to pay what JSW was asking. I do not accept that argument. Reasonableness is not to be equated with affordability, though affordability is one factor to be taken into account when evaluating reasonableness. In the course of argument I put to Mr Draper the hypothetical example of the party in DLL’s position being a very rich person with limitless resources, who could easily afford whatever price JSW charged, and asked whether, on BCL’s case, Clause 2 would oblige that person to contract with JSW at that price, even if it was double or treble what BCL had agreed to charge. Logically, his argument constrained Mr Draper to submit that it would, as, indeed, he did; but patently, reasonable endeavours in this context would not require even a billionaire to act against his own commercial interests to that extent.[54]In any event, Mr Olins reasonably took the view that DLL could not have afforded to bear the financial risk of paying JSW the kind of sums it was asking for, unless it had some recourse to BCL. DLL was unable to pay even the £153,000 to BCL without borrowing a significant sum from the bank. A contract with JSW capped at £195,000 plus VAT would have required it to have borrowed almost twice that amount. Mr Olins was not comfortable with the idea of DLL borrowing that sort of money, as he did not want its liabilities to exceed its assets, at least to any significant extent. At the time of the contract with BCL he anticipated that the value of the finished car would be broadly the same as the cost of its acquisition and restoration, so that the impact on DLL’s balance sheet would be neutral. That would not be the case if the cost of the restoration was bound to exceed the value of the finished item by a very considerable margin, as now appeared likely.[55]In any event, if DLL were to borrow up to £200,000, how was it going to pay back that sum, including interest and bank charges? It is unlikely that hiring out the car for weddings and other commercial events would have generated sufficient income, at least not in the short term. Since DLL could not have afforded to pay even £195,000 plus VAT, it follows that there was no obligation on DLL to agree (or use its reasonable endeavours to agree) an open-ended contract with the price based on labour and materials plus a reasonable uplift, which could have cost (and in the event, will cost) significantly more than that amount.[56]Mr Draper submitted that the burden lay on DLL to prove that it could not afford to pay the additional cost, and that it had failed to discharge that burden. He further submitted that there was no reason to suppose that DLL could not have afforded to pay, at least by instalments, because the evidence was that Mr Olins’ relationship with Coutts was so good that he could have negotiated the necessary increase to the loan facility. If that had meant Mr Olins giving a personal guarantee, or making up any difference between the price and what the bank was willing to lend out of his own pocket, or causing further funds to be injected into DLL from the family settlement, or paying the trust for the use of the car, Mr Draper contended that those steps would have been entirely reasonable, since the car was “his baby,” and it was always Mr Olins’ intention to have the personal use of the car after a period in which it was to be exploited commercially to help to recoup some of the expenditure incurred in its restoration. Mr Olins’ riposte was that making a personal financial contribution never crossed his mind, and there was no reason why he should have done so.[57]Although there are no objective criteria by which to judge the reasonable endeavours in this case, I have no doubt that they would not extend to requiring DLL to commit itself to borrowing around another £100,000 from a bank, or asking the family trust for a further substantial loan, let alone extend to Mr Olins providing personal security for such borrowing or contributing his own money to the price. The obligation in Clause 2 was on DLL, not on Mr Olins, and DLL was not his alter ego.[58]In all the circumstances, I find that DLL was entitled to cease using its reasonable endeavours to contract with JSW before the deadline once it became aware that the minimum financial loss it would suffer by doing so was £67,500 net. Accordingly there was no breach of the obligation to use reasonable endeavours even if Clause 2 were enforceable.

Did the absence of reasonable endeavours cause a loss?

[59]If one assumes, contrary to the findings I have made, that DLL was obliged to continue to use reasonable endeavours to negotiate an agreement with JSW in the period up to 19 January 2013, the question which then arises is what would have happened if Mr Olins had not ceased his attempts to fulfil the Condition Precedent on or around 9 January. Would he have reached agreement with JSW on the terms that he actually agreed with them, on or before 19 January? This is the hardest of the three questions to answer.[60]I have already found that reasonable endeavours to contract were used up to the tripartite meeting. On the evidence, it appears that the first opportunity for JSW’s workshop to strip down the engine after that meeting arose on or around 7 January 2013. It was plainly necessary to investigate what work was required to the engine in order to have any real idea of the likely cost of the restoration. It would have been reasonable for DLL to await the results of that investigation before committing to a contract with JSW. Those results were not made known to Mr Olins until an email was sent to him by JSW in the late afternoon of 25 January – after the deadline had passed. Even then he needed to ask questions to make sense of the findings and it was only on 28 January that he was told that the work to the engine was in line with the figure budgeted for in JSW’s quotation (presumably referring to the email of 16 November).[61]However it cannot be assumed that the timetable of events that actually occurred would have been the same if Mr Olins had not taken the view he had on 9 January that he was no longer obliged to aim to contract with JSW before the 19 January. Mr Draper made the valid point that there was a marked contrast between Mr Olins’ behaviour when he believed there was a deadline to be met, when he was constantly communicating with JSW and pressing them for information, and his behaviour after he took the view that he was no longer obliged to use his reasonable endeavours to obtain an agreement by 19 January, when he took a more relaxed approach. He submitted that one could not assume that it would have taken the 15 days to negotiate terms that it in fact took, had reasonable endeavours been used to achieve an agreement before 19 January.[62]I agree. The issue, however, is whether BCL can establish on the balance of probabilities that the use of reasonable endeavours would (not could) have resulted in an agreement being reached with JSW by 19 January. The period between Mr Olins sanctioning the strip down of the engine on 9 January and the deadline for reaching agreement was only 10 days, including a weekend. It is true that Mr Olins could have provided JSW with a draft contract sooner than 21 January. That was also the date on which he first asked them “have the works to the engine thrown up anything particularly untoward?” By then, of course, Mr Olins might have expected the investigations into the engine to have been completed. Mr Draper submitted he would have asked that question much earlier had he still been using reasonable endeavours. It was incumbent on DLL to chase JSW for the results of the strip down of the engine and to do so well in advance of the deadline[63]I agree that it would probably have been possible to negotiate the agreement in a faster period than it actually took, but the obligation under Clause 2 was only to use reasonable endeavours to reach agreement, and the length of time taken by JSW to consider the draft contract and satisfy itself as to the terms was outside DLL’s control. Moreover, as I have said, that obligation would not have required DLL to contract before the results of the strip down to the engine were made known to them. So even if a draft contract had been provided to JSW on or around 11 January, there would still have been the need to await the outcome of those investigations before the agreement could be finalised. In those circumstances it would have made sense to have waited until after those results were known before starting to negotiate the terms. Otherwise, if JSW found something seriously wrong with the engine, the terms would have to be revisited.[64]Having left matters in JSW’s hands on 9 January, in my judgment Mr Olins would have been entitled to wait for them to get back to him with the results of their investigations, because it would have been reasonable for him to expect them to revert as soon as they knew those results and had drawn their conclusions from them as to the scope of work and the impact, if any, on costs. This was not a “best endeavours” clause. If the use of reasonable endeavours did require any chasing of JSW, which I very much doubt, Mr Olins was entitled to wait for a reasonable time before doing so. Mr Olins is not an engineer. He did not know how long the strip down, let alone the investigations would take. He was entitled to wait at least a week before making any inquiries. Even if there had been an immediate response to his inquiry, instead of the delay that actually occurred, that would have left three days at most to finalise terms.[65]Mr Draper invited the court to draw the inference from an invoice that JSW had completed all the necessary works to the engine and reached their conclusions by 11 January, but that is far from obvious. Even if they had physically completed the stripping down and cleaning by then, it is a matter of speculation how much time was taken internally to consider what they had found and whether it was likely to have any significant impact on the costs estimate. They may well have been waiting on the results of inquiries from the suppliers about the cost of parts. JSW had no particular reason to drag their heels in getting back to Mr Olins, and no evidence was adduced from them as to why it took them until 25 January to tell him the results of their investigations (especially when he was asking for that information on 21 January). Even if they had no excuse for taking that amount of time, Mr Olins would not have known that.[66]I am not satisfied that any amount of chasing by Mr Olins from 11 January onwards would have produced the results before the deadline expired, regardless of how long or short a time the engine investigations actually took. I am therefore not persuaded that the results of the investigations into the engine would have been made available swiftly enough to enable the contractual negotiations to be concluded in the requisite timescale. Even if I were to assume that reasonable endeavours would have(a) produced the results of the engine investigations before 19 January and(b) significantly truncated the period of the negotiations to, say, four or five days, with the pressure on DLL to conclude the deal accelerating as the deadline loomed, I am not satisfied on the balance of probabilities that contractual consensus would have been reached prior to 19 January. It might have been possible for the parties to have reached agreement by that date, but it would have been a close-run thing.[67]Thus, even if contrary to my earlier findings Clause 2 were enforceable, and even if there had been a breach of it, the breach made no difference to BCL’s position and caused it no loss because even if reasonable endeavours had been used, the Condition Precedent would still not have been fulfilled. Thus the alleged breach of Clause 2, even if it had been proved, would have afforded BCL no defence.[68]For those reasons, DLL is entitled to pursue its claim for damages against BCL and BCL has no defence to liability. The failure to mitigate argument also fails. It was never open to DLL to enter into an agreement with JSW that would have reduced the amount of or eliminated its claim for damages, and in any event DLL acted reasonably in trying, but failing, to reach an agreement with JSW on more favourable terms than the agreement it ultimately reached with them on 5 February 2013. Its failure to agree to those terms prior to 19 January was not a failure to mitigate its loss.

QUANTUM

[69]There are relatively few matters in dispute on quantum. As regards the difference between the contract price and JSW’s price, I accept Mr Draper’s submission that it is wrong in principle to take into account in the computations any sum to account for the fact that the manual gearbox is to remain. Damages are intended to be compensatory, and the general approach in a contract case is to seek to put the injured party, so far as possible, in the position in which he would have been had the contract been performed.[70]DLL’s loss has not been increased by the fact that a decision was made not to proceed with the change from manual to automatic transmission, apparently for very sound reasons. If Mr Olins had gone ahead with that change as part of the JSW specification, then the cost of the work done under the JSW contract would have been higher; but the performance of the car would have been adversely affected and thus DLL would have been far worse off, so it would not have been reasonable to have proceeded with the change. In any event it is plain that Mr Olins would not have pursued the change to automatic transmission even if BCL had carried out the works. There has been no diminution in value, and no loss of amenity in consequence of the decision.[71]It does not follow, either, that the “saved” cost of that work to the gearbox should be deducted from the fixed price in the contract with BCL in order to “compare like with like,” as Mr Chew submitted. There is no reason to suppose that BCL would have agreed to reduce its fixed price under the contract once Mr Olins had decided not to pursue the change to automatic transmission.[72]Thus for the purpose of measuring the loss on the works, the correct comparison is between the original contract price and what it will actually cost DLL to carry out the envisaged restoration under the contract with JSW. Since the £153,000 included VAT, but DLL is now registered for VAT, the comparison should be made between the two net figures, £127,500 and £245,655.50 respectively, producing a loss of £118,155.50.[73]Mr Draper also made the point that insofar as the actual cost of JSW’s restoration work has exceeded £220,000 or is estimated to do so, there is no evidence from DLL’s expert, Mr Page, that the excess is fair and reasonable. That is true, but on the face of it, the measure of damages is the difference between the contract price and the actual cost. Reasonableness only comes into the picture if there is reason to suppose that the Claimant is using the fact that someone else is paying as an excuse to have the work done to an enhanced standard, or that the restorer is overcharging. The expert evidence indicates that JSW’s hourly rates for labour and charges for materials at cost plus 20% are reasonable and within the industry norm. That remains the case on his evidence even though I note that JSW changed its labour charges in May 2013 to £47 per hour for a skilled mechanic and £32 per hour for a junior technician and has charged DLL at those rates ever since. There is no reason to suppose that the work that JSW is doing to finish the restoration is unnecessary or that JSW is doing anything over and above the original specification – save for the power steering, alarm, tracking and other add-ons for which DLL is giving an appropriate allowance.[74]Mr Page said in his report that an overall cost “in the region of” £220,000 plus VAT would be reflective of the type of work involved, including the additional work to convert to power steering that was not part of the original specification. It does not follow from this that the additional sum of around £26,000 relates to unnecessary work or that the overall figure is unreasonable. In any event, the claim is based on what I have no reason to doubt is a bona fide and reasonably up to date estimate of the likely cost given by JSW. I cannot draw any adverse inferences merely from the absence of further expert evidence, even though BCL says it was led to expect that such evidence would be forthcoming. Therefore I am not prepared to “cap” the figure to be compared with the contract price at £220,000, as BCL submitted I should.[75]Finally, there is a claim for around £46,000 in lost rentals or other income from the commercial exploitation of the finished car between the date when it would have been delivered under the original contract and its anticipated date of delivery (which DLL is content to assume is mid-May 2014), less the £8,000 that would have been paid under the Settlement Agreement in compensation, inter alia, for such lost income. These are claimed as losses falling within the second limb of Hadley v Baxendale on the basis that Mr Olins told Mr Steevenson before the contract with BCL was entered into that it was his intention to hire out the car commercially in order to recoup some of the outlay. Therefore DLL’s case is that it would have been in the reasonable contemplation of the parties that if BCL failed to do the work, and in consequence there was delay in restoring and delivering the car to DLL, there would be a loss of earnings from its commercial hire or use in films and TV.[76]DLL has taken a starting point of March 2012 because that is when Mr Olins was led to believe the restored car would be completed and delivered to him. However it is clear from the correspondence that BCL were only saying that they would do their best to have it ready for his birthday, which is towards the end of March, and there was no express obligation under the contract to deliver it by that or any other specified deadline.[77]Although I accept that Mr Olins honestly believes that his plans to hire out the car were something he discussed with Mr Steevenson prior to the contract with BCL, I am not satisfied on the balance of probabilities that he did. The subject undoubtedly did come up afterwards, but there is no mention of it in any of the contemporaneous notes and correspondence passing between the parties prior to the date of the contract. As I have already mentioned, Mr Olins was someone who was assiduous to keep a record of his discussions, and if he had told Mr Steevenson that he intended to hire out the car or exploit it commercially, I would have expected him to have recorded it somewhere, or that there would have been some reference to it, even if only inferentially, but there is nothing. He did keep a note of far less significant matters. It seems likely that Mr Olins’ memory has been clouded by the passage of time and that he now genuinely believes that he did mention the matter to Mr Steevenson, but he is mistaken about it. Therefore this head of damages is irrecoverable.[78]There will be judgment for DLL in the sum of £118,155.50 plus interest from the date of acceptance of BCL’s repudiatory breach, namely 30 January 2013, to the date of judgment, at the rate of 4.5% per annum (that being the rate charged to DLL under the loan facility with Coutts). The amount of interest has been calculated as £6,057.87. The total judgment sum is therefore £124,173.37.

Cited in 2 later judgments