John Grimes Partnership Limited v Gubbins [2013] EWCA Civ 37

Gubbins planned a residential development and employed John Grimes Partnership to provide engineering work needed for an access road and associated approval. The work was delayed, affecting the progress of the development. During the resulting period, property values fell. The engineers claimed their unpaid fees; Gubbins counterclaimed for losses caused by their breach, including the effect of the market decline. The court below held the engineers liable. Their appeal challenged responsibility for that category of loss, raising the relationship between ordinary contractual remoteness and the commercial assumption-of-responsibility reasoning in The Achilleas.

Was the development's loss from a fall in property prices during the engineers' delay too remote, or outside the responsibility undertaken under their contract?

The Court of Appeal upheld liability for the market-related loss. The engineers knew the purpose of their work and that delay could postpone the development and its sale. A fall in property values during that delay was within the kind of loss reasonably contemplated. The court did not read The Achilleas as replacing the ordinary Hadley v Baxendale approach in every case. Special contractual or commercial circumstances might show that responsibility for a foreseeable type of loss was not undertaken, but none displaced the ordinary result here. The size of the loss relative to the engineering fee did not, by itself, establish that the risk had been excluded from the bargain.

Hadley v Baxendale remains the ordinary framework for contractual remoteness. Commercial context may show that responsibility for an otherwise foreseeable type of loss was not assumed, but a modest fee or inability to control the market does not automatically exclude liability for delay-related losses.

John Grimes is useful after The Achilleas because it explains how orthodox remoteness and contractual assumption of responsibility fit together. It rejects an automatic inference that professionals cannot bear market losses or that damages are capped by a multiple of their fee. The important questions concern knowledge at formation, the type of loss and the commercial setting. Keep those questions separate from factual causation and quantification, both of which still need evidence even when the relevant category of damage is not too remote.