Common law damages

Common Law Damages for Delayed Completion

In property transactions, delayed completion can lead to significant inconvenience and financial loss for the parties involved. When completion is delayed due to a breach of contract, common law damages may be awarded to compensate the injured party. These damages aim to cover financial losses, additional expenses, and any other quantifiable harm resulting from the delay. Understanding the basis for claiming such damages and how they are calculated is crucial for parties affected by a delayed completion.

Basis for Claiming Damages

Damages for delayed completion arise when one party fails to fulfill their contractual obligations within the agreed timeframe:

• ★ Breach of Contract: Delayed completion typically constitutes a breach of contract, entitling the non-breaching party to seek damages. The breach occurs when the completion date specified in the contract is not met due to the default of one of the parties.
• ★ Foreseeability of Loss: The damages must be foreseeable, meaning the losses arising from the delay should have been within the contemplation of the parties at the time the contract was formed.
• ★ Mitigation of Loss: The injured party must take reasonable steps to mitigate their losses. Failure to do so may limit the amount of damages recoverable.

Types of Recoverable Damages

The damages awarded for delayed completion can cover a range of financial losses and additional expenses:

• ★ Additional Accommodation Costs: If the buyer or seller incurs extra costs for temporary accommodation due to the delay, these costs can be claimed as damages. For example, if a buyer has to stay in a rental property because they cannot move into their new home, the rent paid can be recovered.
• ★ Storage Costs: Costs associated with storing belongings, if possession of the new property is delayed, can also be claimed. This includes fees for storage units or moving services.
• ★ Interest on Mortgage Payments: The buyer may claim for additional interest payments if they had arranged a mortgage based on the original completion date and had to pay extra interest due to the delay.
• ★ Loss of Rental Income: If the property was intended to be rented out, the loss of rental income during the period of delay can be claimed. This is particularly relevant for investment properties where the buyer expected immediate rental returns.
• ★ Increased Financial Costs: Any increase in financial costs, such as higher mortgage rates or penalties, incurred due to the delay can be included in the claim. For instance, if a mortgage offer expires and the buyer has to secure a new, more expensive loan, the additional cost can be recovered.
• ★ General Inconvenience: While more difficult to quantify, compensation may also be sought for general inconvenience and stress caused by the delay, though these are typically more challenging to prove and quantify.

Calculation of Damages

The calculation of damages depends on the specific losses incurred and requires clear evidence and documentation:

• ★ Proof of Loss: The claimant must provide detailed evidence of the losses suffered, such as receipts for accommodation or storage, bank statements showing additional interest payments, or rental agreements.
• ★ Reasonableness of Costs: The costs claimed must be reasonable and directly attributable to the delay. For example, opting for luxury accommodation when more modest alternatives were available may not be fully recoverable.
• ★ Duty to Mitigate: The claimant must demonstrate that they took reasonable steps to mitigate their losses. For instance, if alternative accommodation was required, the choice should be cost-effective and appropriate for the situation.

Examples

Conclusion

Common law damages for delayed completion provide a remedy for parties who suffer financial loss due to another party's failure to complete a property transaction on time. By understanding the types of recoverable damages and the principles guiding their calculation, affected parties can effectively seek compensation for their losses. Clear documentation and evidence of the incurred costs are essential for substantiating claims and ensuring fair compensation.