Gubbins, a farmer, wanted to develop some land he owned in Cornwall. He engaged John Grimes Partnership (JGP) to design the road and drainage works that the local government required for the project. Gubbins and JGP agreed that the work would be completed by March 2007, but even by February 2008 some parts of the work had not been completed. Gubbins hired a new engineer in May 2008 who redesigned the road and drainage layout and got council approval a month later. JGP sued for outstanding fees; Gubbins counterclaimed for the reduction in the value of the rental units he had built on the land, as a result of a falling real estate market.

The trial judge found that JGP was responsible for the delay and had caused loss attributable to a decline in the market value property. The real issue was whether that loss was too remote for recovery. The trial judge concluded that it was not: ‘while property markets rise and fall, they tend not to do so overnight but over a prolonged period’ – and it was the ‘egregious delay’ of JGP (which would have known the potential effects of delay on property values) which caused this loss. On appeal, JGP argued that losses flowing from market fluctuations beyond its control were too remote for recovery and not reasonably foreseeable at the time of contracting. Sir David Keene, who gave the leading judgment in the Court of Appeal, held that it is necessary to decide whether a loss is of the kind or type for which the contract-breaker can fairly be said to have taken responsibility, in light of the particular market in which the parties are operating. While there are very few decided cases where a decline in the property market during a period of delay has given rise to an actionable loss, JGP would have known that market fluctuations were likely, known what Gubbins wanted to do with the land and appreciated the potential consequences of a long delay in performance. Appeal dismissed: John Grimes Partnership Ltd v Gubbins, [2013] EWCA Civ 37.

[Link available here and here].