Hooper v Oates – an Article by James Newman
In Hooper v Oates  EWCA Civ 91 the Court of Appeal considered the correct valuation date when a purchaser failed to complete on a property transaction.
In a recent Court of Appeal decision dated 20 February 2013, the Court of Appeal comprised of Lloyd LJ, Leveson LJ and Toulson considered whether a claim for damages for a purchaser’s breach of contract is to be measured by reference to the value of the property at the date of the breach of contract, or by reference to its value at a later date.
Mr and Mrs Hooper, owned a freehold property at Northwich in Cheshire. On 8 February 2008, they agreed to sell it to Mr Oates for £605,000, for completion by 30 June 2008. When the time case Mr Oates could not, or would not complete. After service of a notice to complete, with which Mr Oates did not comply, Mr and Mrs Hooper accepted his repudiation by notice dated 14 July 2008. As the property was subject to a mortgage of £500,000 and they had moved to another property they were anxious to sell it. Mr and Mrs Hooper marketed the property through estate agents for 14 months without success.
In October 2009 they let it to tenants for 6 months. When the tenants left, late in 2012 they marketed again, without success. By the summer of 2011 they gave up and moved back into the property themselves and were still living there at the date of the quantum hearing. Due to economic crisis in October 2008 the value of the property had fallen dramatically.
The evidence of the single joint expert was that the market value of the property at the date of completion was £600,000, by 21 October 2001 it was £545,000 and by 13 September 2010 it was £495,000. It was agreed that at the quantum hearing of that the price had not changed from the September 2010 valuation.
The Court decided this was a case where the seller had taken all reasonable steps to find another purchaser and in those circumstances the correct date was the date when Mr and Mrs Hooper brought to an end their reasonable attempts to resell the property and took the property back for their own use. Lloyde LJ stated:
“It seems to me that the breach date is the right date for assessment of damages only where there is an immediately available market for the sale of the relevant asset or, in the converse case, for the purchase of an equivalent asset. This is most unlikely to be the case where the asset in question is land. If the defaulting party is the buyer, much will depend on what the seller does in response to the breach. . .If he resells, the buyer may be able to show that, in so doing, the seller failed to take reasonable steps to mitigate his loss, for example by taking too long, or failing to follow proper professional advice, or in some other way. Absent any feature of that kind, the eventual resale price is likely to be the figure to be set against the contract price for assessment of the damages, not because it represents the market value at the date of the breach, but because it shows what loss the seller has suffered, uncomplicated by issues of remoteness or failure to mitigate.
If the vendor does not resell, and takes no steps to do so, then it may be that the date of the breach is to be taken as relevant, or a date soon after that, when he is shown, or taken to have decided to retain the property”
This case emphasises the importance of a disappointed seller properly mitigating his loss in order to maximise his compensation in a falling property market.
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