University of Colombo, Sri Lanka Faculty of Law Inaugural Professor T. Nadaraja Memorial Oration 2012 “Some Reflections on Damages for Breach of Contract” delivered by Professor Michael Furmston Dean, School of Law Singapore Management University at Library Auditorium University of Colombo 27th January 2012 1 Some Reflections on Damages for Breach of Contract Discussions of damages for Breach of Contract traditionally begin with Hadley v Baxendale1. We all know that the plaintiff failed in this case. It is usually assumed that the plaintiff would have done better if he had told the defendant at the time the contract was made that he had no spare shaft and that his mill would be out of operation until the new shaft arrived. This assumption really raises two separate questions. One is it sufficient to show that the defendant knew of the plaintiff’s potential loss and secondly, is it necessary to show knowledge or will a higher degree of probability do. We can readily answer the second question. It is clear from the decision of the House of Lords in Koufos v Czarnikow Ltd, The Heron II2 that knowledge is not essential. In that case the plaintiff recovered damages, which reflected the less good price obtained from selling 9 days late in the Basra sugar market as the result of the defendant’s deviation. The defendant did not know that the plaintiff intended to sell on arrival. The five judgments in the House of Lords all agree on this though they put the critical question in a number of different ways. Lord Reid said – “The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in 1 2 (1854) 9 Exch 341 [1969] 1 AC 350 2 his position would, have realized that such loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.” The Heron II is unusual among the leading cases discussed here in that the plaintiff won. It is clear that the defendants did not know that the plaintiffs did intend to sell the sugar on arrival but they did know that there was a sugar market in Basra and that sugar was often sold in that market on arrival. So this was adequately likely. Their Lordships spent a lot of time trying to capture the changes in words but did not attempt to put it in numerical terms. The first question is more difficult to answer. It is the subject of a well known hypothetical. Furmston rings up his local taxi driver and books a taxi to drive him to the airport at 7am the next day. He tells the driver that it is most important, because he is flying to New York to sign a multimillion dollar contract. The taxi driver oversleeps; Furmston misses his flight and loses his deal. Is the driver liable? Would it, make any difference if the fare is fixed by law? One’s intuitive feeling is that the taxi driver will not be held liable but it is more difficult to explain why. I shall return to this question later. The claimant will normally suffer his or her loss at the moment of breach, and the situation at the date of breach will usually be very relevant to the 3 assessment of the damage. How far this goes was a central question in the recent decision of the House of Lords in The Golden Victory.3 In this case, the owners (O) of a ship chartered it for seven years to the charterers (C). In December 2001, C wrongfully repudiated and a few days later O accepted the repudiation as terminating the contract, and in due course started an arbitration claiming damages. At this point the charterparty had 48 months to run. O did not re-let the ship on a long charterparty but it was held that there was an available market, even though it would take some three months to re-let the ship. Everyone involved in the case (the parties, their lawyers, counsel, the arbitrator and all the judges) proceeded on the basis that damages should be assessed on the basis of the notional monthly hire obtainable in the available market. Nobody appears to have thought it necessary or appropriate to calculate on the basis of what the owners had actually done. There was, however, a major practical problem. In charterparty cases, the ship is not chartered for a price but, in the case of a time charter, as in Golden Victory, for a monthly payment of hire. The monthly figure has to be capitalised. As discussed in the reported judgments, it looks as if the owners were claiming 48 times the monthly notional hire on the grounds that the charter had 48 months to run. It is perhaps worth pointing out that cannot actually be right. If, as would be the case if the arbitration proceeded in a normal way with reasonable dispatch, the owners received the money before the end of the term, they would have, as it were, to give a 3 [2007] UKHL 12 4 discount for getting the money in advance. Further, it is hardly conceivable that the ship would have been working continuously for the 48 months to the end of the charter. Almost certainly, there would have been periods when it was off hire and the charterers were not obliged to pay. Some effort would have had to be made to estimate the value of this possibility. These questions were not before the court in the present case. What was before the court was a provision in the charterparty under which, if war broke out between a number of countries, including USA, UK and Iraq, either party should be entitled to cancel. Such a war did in fact break out in March 2003 and C accordingly argued that the appropriate multiplier to apply for the notional monthly hire was therefore 15 and not 48. The arbitrator, Langley J, the Court of Appeal and the majority of the House of Lords (Lords Bingham and Walker dissenting) agreed. All five speeches in the House of Lords agreed on one proposition. Damages are often correctly assessed at the date of breach, but this is not a universal rule. The difficult question, on which there is certainly not agreement, is when one should apply the breach date rule and when one should depart from it. It may, with the greatest respect, be doubted whether the answer to the question is any clearer now than it was before the decision of the House of Lords. One argument is that if the charterparty had still been subsisting the charterer would certainly have terminated in March 2003 on the outbreak of the war. The arbitrator held as a fact that the charterer would have done so if it had had the option of doing so. It is, 5 however, hard to see how the charterer's actual position can be relevant. By repudiating the charter and by the repudiation being accepted by the owner, the charterer's right to cancel had come to an end. If the owners had rechartered the ship, then it would have been possible to enquire what the new charterer would have done or indeed did in March 2003. Since the owners had not rechartered the ship it is necessary to keep reminding ourselves that no one involved in the case inquired what the owner had actually done. What was considered was the notional loss suffered in the light of the notional rechartering. So perhaps the question should be, would the notional charterer have terminated in March 2003? This question was not put, but it is perhaps worth answering. It is believed that the effect of the outbreak of war in March 2003 was to drive freight rates sharply upwards. In such a situation, it is actually rather unlikely that a charterer would terminate since this would usually involve going into the market and rechartering at a higher rate. The truth is that the cancellation clause gave both the owner and the charterer the possibility of cancelling if war broke out. It is almost inconceivable that the outbreak of war would have no effect on the charter market and very probable, therefore, that in any normal situation one of the parties would be glad of the opportunity to cancel, as provided by the cancellation clause. In the circumstances in 2003, this would seem to be much more likely to be an owner's option than a charterer's option. There is it certainly a conceivable argument that in March 2003 either the owner or 6 the notional new charterer would have thought it expedient to use the cancellation clause, but this is not the way the case was put. Counsel for the owners was certainly not asked during argument in the House of Lords whether the owners would have cancelled the notional recharter in March 2003. He might perhaps have plausibly replied that the owners had never directed their minds to this question. If we assume that the owners would behave in a rational but opportunistic war the answer must depend upon a sophisticated analysis viewed from March 2003 of likely moves in the market between March 2003 and, the normal end of the notional recharter in December 2005. Presumably a similar analysis in December 2001 had led the owners not actually to recharter but to let the ship on the spot market. The most powerful argument for the owner’s position is that it would have been perfectly possible for an arbitrator to reach a decision in December 2001 as to the value of what the owners had lost. The balance of the charter clearly had a commercial value. One could have gone to a bank, and borrowed against it or one could have sold it. It is perhaps worth stopping at this point and considering how the balance of the charter should have been valued in December 2001. Anyone buying or lending against it would surely have read the charter carefully or got a lawyer to do so for them. This would have involved a consideration of the cancellation clause. The arbitrator in fact considered the cancellation clause and, indeed, both sides called expert evidence on it. The arbitrator held that at 17 December 2001 [a reasonably well informed person] would have considered war or large scale hostilities between the United States or the 7 United Kingdom and Iraq to be not inevitable or even probable but merely a possibility. The speeches in the House of Lords revealed some puzzlement as to exactly what the arbitrator meant by his finding. It would obviously have been more precise, though also more likely wrong, if he had given it a numerical value and said that it was 10% chance or whatever. The arbitrator's finding is obviously not open to challenge in the courts. The opinions which are being tested were probably those of people likely to lend against or buy the balance of the charter rather than well-placed observers in Washington with friends in the West Wing. One can perhaps test matters by asking whether the situation would have been different if the charterers had repudiated in the summer of 2002 rather than in December 2001. The answer is surely that in the summer of 2002 war was much more likely and therefore the value of a long-term charterparty with a war cancellation clause would have been significantly reduced compared with its value in December 2001. As a historical fact, the value of the charter in December 2001 was not altered by the outbreak of war. One might measure this by asking what the position would have been if, after the repudiation, the owners had in fact rechartered the ship and six months later the ship had been the subject of a nautical accident and had sunk. It is hard to see how this could affect the liability of the charterers for wrongful repudiation. 8 There is clearly a more plausible case in relation to the cancellation because the cancellation clause was part of the charterparty. This would certainly justify taking the possibility of cancellation into account in valuing the charter in December 2001, but this does not necessarily mean that one should wait until March 2003 to do the sums or, indeed, that, because the process of litigation was taken to 2003 or later, the answer should be different. The argument put for the owners in the House of Lords seemed to come close to arguing that the cancellation clause could be disregarded. Such an argument cannot, it is thought, be right. It was appropriate to discount the possibility of the charter lasting for 48 months but not, in the light of the arbitrator's holding, by much. It is thought that the presence of the cancellation clause in the charterparty was an essential part of the reasoning of the majority. It cannot be the case that the measure of damages is at the mercy of events between the breach and the date of judgment. Let me turn now to The Achilleas, Transfield Shipping Inc V Mercator Shipping Inc4 The Achilleas is certainly the most important contract damages decision since the Heron II, if not since Hadley v Baxendale, Unfortunately it is not 4 [2008] UKHL 48 [2008] 2 Lloyd’s Rep 275 9 completely clear what it decides nor, for Jurisdictions not bound by House of Lords, whether it is rightly decided. An alternative analysis of the facts can be found in the Judgment of Clarke J 5 and the Court of Appeal 6 described by Baroness Hale in her speech as clearly first class. Time Charter Parties In order to understand the significance of the case for general contract Law it is necessary to say something briefly about the law of time charter parties. In a time charter party the owner transfers the use of the ship to the charterer for an agreed time. Normally the owner provides the crew and is in possession of the ship. The charterer pays at an agreed rate, typically monthly in advance. The ship will usually be used for a number of voyages (sometimes by way of subcharter). There is an obvious practical problem of getting the last voyage to end on the last day of the charter. It is obvious that the accidents of navigation are such that this will not always happen. The problem can be addressed by an express tolerance (for a charter six months, three weeks more or less at the charterers option). It may also be that where there is no express tolerance, an implied tolerance will be discovered. Tolerances reduce the number of difficult case but do not eliminate them. A key factor is that hire rates go up and down all the time, often quickly and by large amounts. Everyone agrees that at the least the charterer has to pay for extra days at the contract 5 [[2007] Lloyd’s Rep 19 6 [2007] 2 Lloyd’s Rep 555 10 rate. If the market rate has gone down the charterer has every incentive to finish on time and re charter at a lower rate but if the market has gone up the charterer has a powerful reason to seek to squeeze any extra days at the lower contract rate out of the system. An important concept here is the lawful last voyage. When the charterer orders the last voyage, it will often be possible to tell whether it is likely to be completed within the contract framework. If the better view is that it cannot then the owner is entitled to refuse the voyage. Ordering an illegitimate last voyage is itself a breach of contract; the order may be refused and damages be recovered unless the breach is waived. For a long time it was unclear whether late delivery after a legitimate last voyage could be a breach7. It was not finally decided that legitimate final voyage followed by delayed re-delivery was a breach until The Peonia8. By a charter party dated 22 January 2003 the Achilleas was chartered for a period of about five to seven months at a daily rate of US$13,500. By an addendum dated 12 September 2003 it was fixed in direct continuation for a further period of about five to seven months at a daily rate of US$16,750. The maximum period expired on 2 May 2004. By April 2004 Market rate had more than doubled. On 20 April 2004 charterer gave notice of re-delivery between 30 April and 2 May. On 21 7 (see the different views obiter in House of Lords in the London Explorer [1972] AC 1) 8 [1991] 1 Lloyd’s Rep 100 11 April owners fixed a charter of about four to six months with Cargill at rate of US$39,500 a day. The laycan date was 8 May 2004. The last voyage was a sub charter to load a cargo of coal at Qingdao for discharge at Tobdia and Otta in Japan. The owner did not object to this fixture. The ship was delayed at Otta and not redelivered until 11 May. By 5 May it had become clear that the vessel would not be available to Cargill before the cancelling date. By that time rates had fallen steeply. The owners negotiated for an extension of cancelling date to 11 May and in return agreed a revision of the hire to US$31,500. This charter ran for 191 days and 11 hours. The owners claimed that they had suffered the loss between $39,500 and $31,500 (That is $8,000) for 191 days and 11 hours amounting to $1,364,584.57. The charterer said owners were only entitled to difference between Market rate and contract rate for 9 days which was US$158,301.17. It was agreed that the charterers had broken the contract. The owners claim was referred to Arbitration. By a majority of 2-1 the arbitrators found for the owners. Christopher Clarke J and the Court of Appeal affirmed. 12 It was clear that each of the steps leading up to the loss was not merely foreseeable but readily within the contemplation of the parties or any well informed player in the market. It is well known that the market is volatile and that this exposed players in the market to significant risks. It is likely that an owner will seek to re-let the ship as soon as possible after the end of the previous charter and that this will involve entering into a contract before the end of the previous charter. It was not suggested that the owner’s renegotiation of the Cargill charter was other than a reasonable attempt to mitigate its loss. Of course the actual amount of the owner’s loss was surprising but this has traditionally been held not to matter. In fact after the collapse of Lehman Brothers much bigger changes occurred, from say $300,000 a month to $5,000 a month. The House of Lords reversed the Court of Appeal 5-0 though it is clear that some Lords had more doubts than others. This is particularly true of Lady Hale who comes close to dissenting (see below). It is clear therefore that something more is neaded than that the loss is within the contemplation of the parties. What is this? This question receives a number of different answers and the differences are, I think ones of substance and not merely of formulation. 13 Lord Hoffmann held that the charterers had not assumed liability for the loss of the next fixture. This is in a sense of extension of his reasoning in the SAAMCO Case. 9 It rests to some extent on a finding of the arbitrators. “The general understanding in the shipping market was that liability was restricted to the difference between the market rate and the charter rate for the overrun period and “any departure from this rule [is] likely to give rise to a real risk of serious commercial uncertainty which the industry as a whole would regard as undesirable”. “The majority arbitrators, in their turn, did not deny that the general understanding in the industry was that liability was so limited. They said (at para 17): “The charterers submitted that if they had asked their lawyers or their Club what damages they would be liable for if the vessel was redelivered late, the answer would have been that they would be liable for the difference between the market rate and the charter rate for the period of the late delivery. We agree that lawyers would have given such an answer. “If, therefore, one considers what these parties, contracting against the background of market expectations found by the arbitrators, would reasonably have considered the extent of the liability they were undertaking, I think it is clear that they would have considered losses arising from the loss 9 [1997] AC 191 14 of the following fixture a type or kind of loss for which the charterer was not assuming responsibility. Such a risk would be completely unquantifiable, because although the parties would regard it as likely that the owners would at some time during the currency of the charter enter into a forward fixture, they would have no idea when that would be done or what its length or other terms would be. If it was clear to the owners that the last voyage was bound to overrun and put the following fixture at risk, it was open to them to refuse to undertake it. What this shows is that the purpose of the provision for timely re-delivery in the charterparty is to enable the ship to be at the full disposal of the owner from the re-delivery date. If the charterer’s orders will defeat this right, the owner may reject them. If the orders are accepted and the last voyage overruns, the owner is entitled to be paid for the overrun at the market rate. All this will be known to both parties. It does not require any knowledge of the owner’s arrangements for the next charter. That is regarded by the market as being, as the saying goes, res inter alios acta”. It may be observed that the views of the owner and charterer objectively determined must be industry wide since there does not appear to be any relevant evident of the views of the particular owner and charterer. It is not clear what evidence (if any) was before the arbitrators as to market views and whether it would be open in another case to lead different evidence. It is clear that none of their Lordships had personal knowledge. The best informed Judges involved in the case were clearly Christopher Clarke J and Rix LJ. 15 In any case it is not clear exactly where the significance of the arbitrators’ statement is. If shipping lawyers had been asked for advice in 1990 many would have said that late re-delivery after a legitimate last voyage was not a breach but we now know that they would have been wrong. The House of Lords faced a similar problem in Raineri v Miles10. In this case a seller of a house failed to complete on the agreed completion date which was not time essential. The buyer sued for damages. The seller argued that failure to complete on time was not a breach. Many conveyancing solicitors thought this to be the case and that was the view taken by the leading text Williams on Vessor and Purchaster in every edition since the first in 1903. The House of Lords (Viscount Dilhorne dissenting) had little difficulty in deciding that this was wrong. Lord Hope also talks in terms of assumption of risk but for him the key factor is that at the time of the contract the charterer, although he would know that ship was likely to be re-let at the end of the charter would have no idea for how long or on what terms. This is because the second fixture is unlikely to be fixed until well into the first charter because of the changing nature of the markets. The key paragraph is paragraph 34, “In this case it was within the parties’ contemplation that an injury which would arise generally from late delivery would be loss of use at the market rate, as compared with the charter rate, during the relevant period. This is 10 [1981] AC 1050 16 something that everybody who deals in the market knows about and can be expected to take into account. But the charterers could not be expected to know how, if – as was not unlikely – there was a subsequent fixture, the owners would deal with any new charterers. This was something over which they had no control and, at the time of entering into the contract, was completely unpredictable. Nothing was known at that time about the terms on which any subsequent fixture might be entered into – how short or long the period would be, for example, or what was to happen should the previous charter overrun and the owner be unable to meet the new commencement date. It is true that neither party had any control over the state of the market. But in the ordinary course of things rates in the market will fluctuate. So it can be presumed that the party in breach has assumed responsibility for any loss caused by delay which can be measured by comparing the charter rate with the market rate during that period. There can be no such presumption where the loss claimed is not the product of the market itself, which can be contemplated, but results from arrangements entered into between the owners and the new charterers, which cannot”. The views of Lord Hoffmann and Lord Hope provide a possible answer to the taxi driver hypothetical. It is plausible to suggest that telling the taxi driver about the flight is not enough for him to assume responsibility for it being missed. 17 Lord Rodger takes what was seems to be a significantly narrower view based on the extreme volatility of the market on the relevant dates. “Returning to the present case, I am satisfied that, when they entered into the addendum in September 2003, neither party would reasonably have contemplated that an overrun of nine days would “in the ordinary course of things” cause the owners the kind of loss for which they claim damages. That loss was not the “ordinary consequence” of a breach of that kind. It occurred in this case only because of the extremely volatile market conditions which produced both the owners’ initial (particularly lucrative) transaction, with a third party, and the subsequent pressure on the owners to accept a lower rate for that fixture. Back in September 2003 this loss could not have been reasonably foreseen as being likely to arise out of the delay in question. It was, accordingly, too remote to give rise to a claim for damages for breach of contract”. With the greatest respect there is a major problem with this reasoning. It suggests that if market conditions had been less volatile and the plaintiff’s loss accordingly less it would have been awarded. But this means that if ordinary fluctuations would have caused a loss of £200,000 it would have been recovered but because the loss was over £1 million nothing should be recovered. But on this approach it is hard to see why the plaintiff should not recover at least the £200,000. 18 Lord Walker’s view are perhaps most clearly set out in paras 78 and 84 of his judgment. “To my mind, however, the diversity of opinion in the Heron II has another and more important significance. Other passages in the speeches show that their Lordships had well in mind (but did not, perhaps, spell out at length) that it is not simply a question of probability. It is also a question of what the contracting parties must be taken to have had in mind, having regard to the nature and object of their business transaction. If a manufacturer of lightning conductors sells a defective conductor and the customer’s house burns down as a result, the manufacturer will not escape liability by proving that only one in a hundred of his customers’ buildings had actually been struck by lightning. The need to take account of the contract is recognised, I think, in the passage (at page 385) from Lord Reid’s speech which I have already quoted; in Lord Morris’s speech at pages 398 and 399; in Lord Pearce’s speech at pages 416 and 417 (with the example of the court ceiling collapsing during a sitting); and in Lord Upjohn’s speech at pages 424 and 425. The need for the loss suffered to be within the horizon of the parties’ contemplation (Lord Pearce at page 416) makes it less important to define its degree of probability with any precision. Arguably a vague expression (such as “real possibility”) is actually preferable, because it is more flexible, once it is understood that what is most important is the common expectation, objectively assessed, on the basis of which the parties are entering into their contract”. 19 “The majority arbitrators referred to a number of authorities, cited by the charterers, to the effect that the normal measure of damages for late delivery is the market rate (if higher than the charter rate) for the period from the latest date for re-delivery under contract until the date of actual re-delivery. They made a passing reference to the discussion of this point by Lord Mustill in Torvald Klaveness A/S v Arni Maritime Corporation (The Gregos)11, on which Rix LJ commented in paras 58 and 59 of his judgment. The majority regarded these authorities as giving the charterers only very limited assistance. Ultimately they accepted and applied the owners’ submission that “what mattered was that the type of loss claimed was foreseeable” (para 18 of the majority reasons). That was in my opinion too crude a test, and it was an error of law to adopt it. What mattered was whether the common intention of reasonable parties to a charter party of this sort would have been that in the event of a relatively short delay in redelivery an extraordinary loss, measured over the whole term of renewed fixture, was, in Lord Reid’s words”: “Sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within [the defaulting party’s] contemplation. “ 11 [1995] 1 Lloyd’s Rep 1, page 10 20 Lord Mustill’s dictum in The Gregos indicates that that would not have been the common intention of reasonable contracting parties, and I respectfully agree. The speech of Baroness Hale is reminiscent of that of Lord Blackburn in Foakes v Beer12 in that 90% of it reads like preparation for a dissent. Nevertheless the decision not to dissert is of great importance since it goes to the root of what the case decides. The core of this reasoning is to be found in para 93 of the speech “My Lords, I hope that I have understood this correctly, for it seems to me that it adds an interesting but novel dimension to the way in which the question of remoteness of damage in contract is to be answered, a dimension which does not clearly emerge from the classic authorities. There is scarcely a hint of it in the Heron II, apart perhaps from Lord Reid’s reference, at page 385, to the loss being “sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation” (emphasis supplied). In general, The Heron II points the other way, as it emphasizes that there are no special rules applying to charter parties and that the law of remoteness in contract is not the same as the law of remoteness in tort. There is more than a hint of it in the judgment of Waller LJ in Mulvenna v Royal 12 (1884) 9 App Cas 605 21 Bank of Scotland plc13, but in the context of the “second limb” of Hadley v Baxendale where knowledge of an unusual risk is posited. To incorporate it generally would be to introduce into ordinary contractual liability the principle adopted in the context of liability for professional negligence in South Australia Asset Management Corpn v York Montague Ltd14 . In an examination, this might well make the difference between a congratulatory and an ordinary first class answer to the question. But despite the excellence of counsels’ arguments it was not explored before us, although it is explored in academic textbooks and other writings, including those cited by Lord Hoffmann in para 11 of his opinion. I note, however, that the most recent of these, Professor Robertson’s article on “The basis of the remoteness rule in contract”15 argues strongly to the contrary. I am not immediately attracted to the idea of introducing into the law of contract the concept of the scope of duty which has perforce had to be developed in the law of negligence. The rule in Hadley v Baxendale asks what the parties must be taken to have had in their contemplation, rather than what they actually had in their contemplation, but the criterion by which this is judged is a factual one. Questions of assumption of risk depend upon a wider range of factors and value judgments. This type of reasoning is, as Lord Steyn put it in Aneco Reinsurance Underwriting Ltd v Johnson & Higgins Ltd 16 a “deus ex machina”. Although its result in this case may be to bring about certainty and clarity in this particular market, such an imposed limit on liability could easily be at the expense of justice in some future case. It could also [2003] EWCA Civ 1112 [1997] AC 191, 211 15 (2008) 29 Legal Studies 172 16 [2002] 1 Lloyd’s Rep 157, 186 13 14 22 introduce much room for argument in other contractual contexts. Therefore, if this appeal is to be allowed, as to which I continue to have doubts, I would prefer it to be allowed on the narrower ground identified by Lord Rodger, leaving the wider ground to be fully explored in another case and another context”. This bring us back to the Victoria Laundies case17, a case which has always been regarded as correctly decided despite some doubts about the precise language. There some loss of profits as a result of late delivery was clearly within the contemplation of the parties as likely to result. This did not entitle the plaintiffs to recover for the extraordinary loss. In the same way here the possibility of losing a follow on fixture was clearly within contemplation but the extreme volatility of the market was not. It seems reasonably clear that their Lordships do not say exactly the same thing. In general, like the The Golden Victory the effect is to favour defendants and make it more difficult to recover. The speeches which go least far in this direction are those of Lord Rodger and Lady Hale. Though Lord Hoffmann and Lord Hope do not say exactly the same thing they clearly go a good deal further. The key speech is that of Lord Walker (the only Lord to sit on both appeals). He says 17 [1949] 2 KB 528 23 “For these reasons, and for the further reasons given by my noble and learned friends, Lord Hoffmann, Lord Hope of Craighead and Lord Rodger of Earlsferry, whose opinions I have had the advantage of reading in draft, I would allow this appeal”. I do not find it easy to interpret this passage. Lord Walker does not actually say that he agrees with Lords Hoffmann, Hope and Rodger and indeed I am not sure if that is possible if they are not themselves agreed. The application of The Achilleas in Singapore was considered in MFM Restaurants Pte Ltd v Fish & Co Restaurant Pte Ltd18. The court of Appeal made it clear that it did not think The Achilleas should be followed in Singapore for the following reasons: (a) It is not clear that Lord Hoffmann's view represents the ratio of the case. (b) It is not clear that what is said in The Achilleas can be reconciled with what was said in The Heron II. (c) The application of assumption of responsibility test will have serious practical difficulties. (d) Properly considered, it is not clear how far assumption of responsibility differs from the rules set out in Hardley. 18 [2010] SGCA 36 24 (e) In the court of Appeal's view, the Hadley test produced greater certainty than the The Achilleas test proposed by Lord Hoffmann. Conclusions: 1. The plaintiff will not normally recover unless his loss flows from the defendant’s breach of contract. There are problems where the plaintiff’s loss can be attributed to breaches of two separate contracts. This has caused endless debate in tort but its effect in contract must await another day. 2. Generally speaking it is not enough to show that the loss flows from the breach if it is rather unlikely. This however must turn on the facts. If I sell you a faulty lighting conductor and your house is burned down after being struck by lightning it does not matter that lightning is very unusual in the area. 3. Conversely it is not necessary to show that the loss is certain. The precise degree of probability is hard to capture in words. English lawyers tends to try to avoid the use of the word foreseeable in this context. 4. It may be that The Achilleas will lead to the adoption of an extra test based on acceptance. In England this depends on what the case is treated as deciding. Outside England it will also turn on whether the decision carries conviction. 5. Usually but not always damages should be assessed as at the date of breach. Undoubtedly there are exceptions to this rule but their extent is still to be fully worked out. 25