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29 JULY 1971

3PLR/1971/19 (CA)













Contract – Breach – Damages – Measure – Expenditure incurred before contract made – Expenditure recoverable if within contemplation of parties as likely to be wasted if contract broken – Television company incurring expenditure in respect of proposed film – Expenditure on fees to director, designer and stage managers, before contract made with leading actor – Leading actor subsequently repudiating contract – Television company entitled to recover pre-contract expenditure – Necessity to elect between claiming for wasted expenditure and loss of profits.



29 July 1971. The following judgments were delivered.


LORD DENNINGMR. Anglia Television Ltd were minded in 1968 to make a film of a play for television entitled ‘The Man in the Wood’. It portrayed an American married to an English woman. The American has an adventure in an English wood. The film was to last for 90 minutes. Anglia Television made many arrangements in advance. They arranged for a place where the play was to be filmed. They employed a director, a designer and a stage manager, and so forth. They involved themselves in much expense. All this was done before they got the leading man. They required a strong actor capable of holding the play together. He was to be on the scene the whole time. Anglia Television eventually found the man. He was Mr Robert Reed, an American who has a very high reputation as an actor. He was very suitable for this part. By telephone conversation on 30 August 1968 it was agreed by Mr Reed through his agent that he would come to England and be available between 9 September and 11 October 1968 to rehearse and play in this film. He was to get a performance fee of £1,050, living expenses of £100 a week, his first class fares to and from the United States, and so forth. It was all subject to the permit of the Ministry of Labour for him to come here. That was duly given on 2 September 1968. So the contract was concluded. But unfortunately there was some muddle with the bookings. It appears that Mr Reed’s agent had already booked him in America for some other play. So on 3 September 1968 the agent said that Mr Reed would not come to England to perform in this play. He repudiated his contract. Anglia Television tried hard to find a substitute but could not do so. So on 11 September they accepted his repudiation. They abandoned the proposed film. They gave notice to the people whom they had engaged and so forth.


Anglia Television then sued Mr Reed for damages. He did not dispute his liability, but a question arose as to the damages. Anglia Television do not claim their profit. They cannot say what their profit would have been on this contract if Mr Reed had come here and performed it. So, instead of claim for loss of profits, they claim for the wasted expenditure. They had incurred the director’s fees, the designer’s fees, the stage manager’s and assistant manager’s fees, and so on. It comes in all to £2,750. Anglia Television say that all that money was wasted because Mr Reed did not perform his contract.


Mr Reed’s advisers take a point of law. They submit that Anglia Television cannot recover for expenditure incurred before the contract was concluded with Mr Reed. They can only recover the expenditure after the contract was concluded. They say that the expenditure after the contract was only £854·65, and that is all that Anglia Television can recover. The master rejected that contention; he held that Anglia Television could recover the whole £2,750; and now Mr Reed appeals to this court.


Counsel for Mr Reed has referred us to the the recent unreported case of Perestrello AND Compania Limitada v United Paint Co Ltd (No2), in which ThesigerJ quoted the words of Lord TindalCJ in 1835 in Hodges v Earl of Litchfield ((1835) 1 Bing NC 492 at 498, [1835–42] All ER Rep551 at 552, 553):


‘The expenses preliminary to the contract ought not to be allowed. The party enters into them for his own benefit at a time when it is uncertain whether there will be any contract or not.’


Thesiger J applied those words, saying: ‘In my judgment pre-contract expenditure, though thrown away, is not recoverable … ’


I cannot accept the proposition as stated. It seems to me that a plaintiff in such a case as this had an election: he can either claim for his loss of profit; or for his wasted expenditure. But he must elect between them. He cannot claim both. If he has not suffered any loss of profits—or if he cannot prove what his profits would have been—he can claim in the alternative the expenditure which has been thrown away, that is, wasted, by reason of the breach. That is shown by Cullinane v British ‘Rema’ Manufacturing Co Ltd ([1953] 2 All ER 1257 at 1261, 1264, 1265, [1954] 1 QB 292 at 303, 308).


If the plaintiff claims the wasted expenditure, he is not limited to the expenditure incurred after the contract was concluded. He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken. Applying that principle here, it is plain that, when Mr Reed entered into this contract, he must have known perfectly well that much expenditure had already been incurred on director’s fees and the like. He must have contemplated—or, at any rate, it is reasonably to be imputed to him—that if he broke his contract, all that expenditure would be wasted, whether or not it was incurred before or after the contract. He must pay damages for all the expenditure so wasted and thrown away. This view is supported by the recent decision of BrightmanJ in Lloyd v Stanbury. There was a contract for the sale of land. In anticipation of the contract—and before it was concluded—the purchaser went to much expense in moving a caravan to the site and in getting his furniture there. The seller afterwards entered into a contract to sell the land to the purchaser, but afterwards broke his contract. The land had not increased in value, so the purchaser could not claim for any loss of profit. But BrightmanJ held that he could recover the cost of moving the caravan and furniture, because it was ([1971] 2 All ER at 276, [1971] 1 WLR at 547) ‘within the contemplation of the parties when the contract was signed’. That decision is in accord with correct principle, namely, that wasted expenditure can be recovered when it is wasted by reason of the defendant’s breach of contract. It is true that, if the defendant had never entered into the contract, he would not be liable, and the expenditure would have been incurred by the plaintiff without redress; but, the defendant having made his contract and broken it, it does not lie in his mouth to say he is not liable, when it was because of his breach that the expenditure has been wasted.


I think the master was quite right and this appeal should be dismissed.




MEGAWLJ. I also agree.


Appeal dismissed.


Solicitors: Crawley AND De Reya (for the plaintiffs); Richards, Butler AND Co (for the defendant).


Wendy Shockett Barrister.

Cases referred to in judgments

Cullinane v British ‘Rema’ Manufacturing Co Ltd [1953] 2 All ER 1257, [1954] 1 QB 292, [1953] 3 WLR 923, 39 Digest (Repl) 592, 1122.

Hodges v Earl of Litchfield (1835) 1 Bing NC 492, [1835–42] All ER Rep551, 131 ER 1207, 17 Digest (Repl) 143, 444.

Lloyd v Stanbury [1971] 2 All ER 267, [1971] 1 WLR 535.

Perestrello AND Compania Limitada v United Paint Co Ltd (No2) (1969) 113 Sol Jo 324.

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377.

Wallington v Townsend [1939] 2 All ER 225, [1939] Ch588.

G N Butler for the defendant.

A J BatesonQC and D J M Browne for the plaintiffs.


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