Hanrahan v Minister for Agriculture: Plaintiff can recover for both capital loss and loss of profit for breach of contract

In this judgment (here), the Supreme Court upheld the High Court’s award to Hanrahan for capital loss as well as for loss of profit, for the Minister’s breach of contract.

 

Background

Hanrahan is a farmer and was the plaintiff in the case of Hanrahan v Merck, Sharp and Dohme (Ireland) Limited [1988] I.L.R.M. 629, where he successfully recovered for loss due to nuisance and and wrongful discharge of noxious fumes by the defendant firm. Due to the harm that those discharges caused to Hanrahan’s herd, the Minister suspended his milk quota for a time; illegally, Hanrahan claimed. Hanrahan issued proceedings against the Ministwr for loss resulting from the suspension (in a separate case from this). Hanrahan claims that the non-payment of compensation from that case caused him financial difficulty, resulting in an inability to purchase feed for his herd.

In late 2005 Hanrahan made representations seeking payments from the Minister to enable him to purchase livestock feed. The Minister arranged for Department of Agriculture vets to visit Hanrahan’s farm on a number of occasions. In early 2006 Department Officials seized most of Hanrahan’s herd on welfare grounds. After Hanrahan issued court proceedings, the Minister agreed to return the herd. But the Minister ordered the sale of the herd, instead. Hanrahan issued High Court proceedings seeking damages.

In the High Court, McMahon J (here) held that the Minister did cause damage to Hanrahan through breach of contract. The Minister’s expert witness calculated damages at €1,979. Hanrahan’s expert calculated damages at €834,000. McMahon J disregarded both and assessed damages at €141,000 for the replacement of the herd; €145,000 for loss of profit from the date of breach to the date of judgment; and awarded €25,000 for stress, upset and inconvenience.

 

Supreme Court

The Minister appealed on grounds that Hanrahan could not recover for both capital loss and loss of profit and on grounds that he could not recover for stress, upset and inconvenience resulting from breach of contract. Hanrahan cross appealed.

The Minister’s appeal relied on Cullinane v British Rema Manufacturing Co Ltd [1954] 1 Q B 292; and Addis v Gramophone Company Ltd [1909] A C 488, which established that, in general, damages for breach of contract do not include damages for distress, upset and inconvenience.

The judgment in Cullinane contained an analogy of a cow that was purchased for £100 and was to produce four gallons of milk a day. But the cow only produced one gallon a day and was consequently only worth £10. The judge stated that, in such a case, a plaintiff could only recover the difference in value or the loss of profit from the low yield. But not both.

Writing for the three judge panel in this case, O’Donnell J distinguished the facts of this case from that analogy. In this case, Hanrahan was not left with an inferior herd, but with no herd. And given the outlay of capital that would be required to replace the herd, no possibility of replacing it to mitigate his losses. And that was known by the Minister. Therefore Hanrahan was entitled to the replacement cost for his herd and the profit he would have earned from the herd until the date of judgment.

O’Donnell J allowed the Minister’s appeal on the issue of damages for stress, upset and inconvenience, which is not recoverable for breach of contract (Addis). He dismissed Hanrahan’s cross appeals under the rule that an appellate court will not overturn the decisions of a trial judge which are supported by evidence.

O’Donnell J discussed a number of circumstances where awards for capital loss will differ. Assets can depreciate or appreciate over time. For example, a fleet of vehicles can depreciate, whereas a rental property could appreciate. Awards that a court should make will vary accordingly.

O’Donnell J was critical of the seeming lack of impartiality by expert witnesses, stating:

4. … Experts are permitted to give evidence of their opinion, while lay people are not. This is because experts are understood to have professional expertise, and to owe an obligation to the Court to give their own expert opinion to the Court. I do not wish to criticize the individuals who gave evidence in this case, since this was a difficult case and in any event the “high ball – low ball” approach which occurred here is only an example of a more widespread phenomenon. … An expert who merely advances a party’s case rather than his or her own independent opinion may, and perhaps should, be criticised, sometimes severely.

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