Damages-Warranty-Measure of damages=-Loss of profits-Future losses

Respondents sold an irrigation engine and pump to appellant and war-
ranted that it would give a discharge of 7,000 gallons per minute, whereas
it's actual maximum discharge-given only if the engine was overdriven-
was 6,400 g.p.m. After two seasons appellant sued respondents and after
an appeal obtained judgement for breach of warranty. The High Court
assessed the damages at £ E.500, but the appellant appealed alleging that
the judge had applied wrong principles in arriving at this figure.

Held: (i) The measure of damages for breach of warranty is the
estimated loss directly and naturally resulting in the ordinary course of
events.

(ii) As to the two seasons before the action was brought, the appel-
lant is entitled to recover in lieu of damages a 10% loss in respect of
the actual profits made, and an allowance to cover the depreciation. plus
any extra expences incurred, due to overdriving the engine.

(iii) Future damages should be estimated by comparing profits which
could be expected to be derived from an output of 7,000 g.p.m. with those
which could be expected for the lower output which would probably result
if the engine were not over-worked over the remainder of the normal life of
the engine, and taking into account other intangible factors which might
affect the amount and value of future crops.

British Westinghouse Electric & Mfg. Co. Ltd. v. Underground Electric
Ry. Co. of London Ltd. [1912] A.C. 673 cited.

Appeal

1933. Owen C.J.: The appellant purchased in 1925 an R.2
Vickers Petter semi-diesel crude oil engine of 110/120 b.h.p. He
bought it to drive a Gwynne 20/22 centrifugal pump. The engine and
pump combined to form a plant for the irrigation of the appellant's

* Court: Owen C.J., Gorman 1. and Evans R.G.L.

land. This plant was purchased from the respondents, and the total
cost was £E.2,239, of which sum ££.1,500 represented the cost of
the engine. Shortly after the contract was signed, but before the
plant was delivered, the respondents expressly warranted that the
engine would drive the pump "at lowest Nile:' This warranty was a
collateral one, and was given for good consideration.

The plant was actually delivered in May and June of 1925, and
the work of irrigation was started in August of the same year. It
was used during the cultivation seasons of 1925/26 and 1926/27.
For a full account of events, reference must be made to the narrative
set out in the judgement of the judge of the High Court dated May 28,
1931. It is enough to say here that the appellant, dissatisfied with
the working of the plant, brought an action claiming, after considerable
amendment of his original pleas, damages for fraud, and for breach
of warranties in respect of both the pump and the engine, and on
appeal it was held by this court, reversing the decision of the court
below, that the respondents had been guilty of breach of contract
in respect of the pump, and breach of warranty in respect of the
engine, and the case was referred back to the High Court for assess-
ment of the damages accordingly. On March 22, 1933, the judge
of the High Court gave judgement. He found that the damages suf-
fered by the appellant amounted to £E.500. From this judgement
the appellant has appealed, saying that the judge has applied wrong
principles in arriving at the figure of £ E.500 and has misdirected
himself generally, and the whole point of this appeal is whether or
not this plea is correct.

As I have indicated, the learned judge was directed to assess
damages under two heads, viz., for breach of contract in respect of
the pump, and for breach of warranty in respect of the engine. He
actually included these two heads in the £E.500 which he held to
be the total sum to which the appellant was entitled. In my opinion
it was not incorrect to assess the damages in one lump sum, but my
difficulty is not as to whether £E.500 is or is not the proper sum to
which the appellant is entitled. I do not know. My difficulty is
that, from the way the judgement proceeds and is framed, it is reason-
able to infer that certain clements which go to make up the true
measure of damages in the case of the breach of warranty have not
been taken into consideration, and I have reluctantly come to the
conclusion that the matter must be referred back to the court for
reconsideration of the means by which the sum awarded by way of

damages has been arrived at and reassessment accordingly, if nee-
essary.

I do not propose to discuss the question of the breach of contract
in respect of the pump at the moment. ) propose to confine myself
to an expression of opinion as to the principles underlying the
assessment of damages for the breach of warranty of the engine, with
special reference to the evidence disclosed at the hearings in the court
below.

The measure of damages for breach of warranty is the estimated
loss directly and naturally resulting in the ordinary COUISe of events.
If this particular warranty had been fulfilled, the appellant would
have been able to obtain from the pump, which formed part (or
should have formed pan) of his plant, a discharge of 7,000 g.p.m.
As it was, he was only able to obtain ..;J discharge of 6,400 g.p.m.,
and the evidence goes to show that he was only able to obtain this
discharge by driving the engine in such a way that it caused extra
expense in running, and - an added measure of depreciation, and it
is upon this important fact that the proper approach to the problem
of assessment largely depends, for the normal life of this engine has
been shortened.

The plant, as I have said, was used for two seasons before the
appellant brought his action. During that period damage was suffered
by reason of the respondent's breaches, damages which can be as-
sessed by reference to what actually happened. But assessment over
this period does not exhaust his rights. Had there been no breach
by the respondents, the appellant would have been able to say in
1927/28 that he had an engine whose normal life of fifteen years-
or whatever it is-was unaffected, and that he could reasonably
contemplate it's use for the remainder to bring him the profit with
a view to which it was purchased. But the respondents have com-
mitted a breach, and, furthermore, by reason of events for which
defendants must bear responsibility, the engine has been damaged
and it's life shortened. It is necessary therefore to consider the
question of damages in the light of these circumstances by dividing
the total period over which damages may be claimed into two,
namely, that before 1928, and that after that year. For the sake
of brevity, I shall call the first period the "past," and the second
period the "future." Different considerations apply to these periods,
but there is one principal element which applies to both.

A manufacturer may properly estimate the superiority of one

plant over another by reference to discharge, but the cultivator can
only do so by reference to the quantity of land each plant can
rrrigate. For example, the difference between a discharge of 7,000
g.p.m. and a discharge of 6,400 g.p.m. shows a 10% deficiency in the
plant. The cultivator is entitled to turn this deficiency into terms
of land, and say prima facie that, if the respondents had not- com-
mitted a breach of their warranty, he would have been able to ir-
rigate 10% more land than the plant was actually capable of irrigating,
and to that extent he has suffered damages which can only be repre-
sented in terms of probable profits he would have made by the
extra irrigation. This element is one which applies to the whole
normal life of the engine, and must therefore be applied to both
past and future periods. But the methods of it's application differ,
for reasons which I shall explain, and therefore it will be necessary
to discuss each period separately, and indicate how and to what
extent this element should be applied to each, and \ .••. bat other elements
exist which are common or peculiar to the past and future periods
respective! y.

First of all the past. 7,000 g.p.m. was what the appellant should
have got. He could only get 6,400 g.p.m. This is a 10% deficiency
and the appellant is entitled to ask for damages in respect of that
deficiency for the two cultivation seasons, which I have called the
"past" period. But, in addition to this, we are faced with the fact,
supported abundantly by the evidence, that in order to obtain the
discharge of 6,400 gallons per minute, not only was this engine
subjected to alterations, but it was also pressed in such a way as to
diminish seriously it's efficiency and value. This alteration (reduction
of the pulley) and pressure was made with the knowledge and a~,i<;-
tance of the respondents themselves, and it is clear that damage has
accrued to the appellant by reason of it. It is in evidence, furthermore,
that during this period, the alterations and repairs to the engine
necessitated the employment of supplementary or auxiliary power
in order to maintain this discharge of 6,400 g.p.m. This may have
put the appellant to extra expense, and he is entitled to be recouped
in respect of such extra expense. Shortly, the plaintiff is entitled to
recover by way of damages in respect of the cultivation seasons
1926127 and 1927/28. the loss of profits which he can show he has
suffered by reason of the fact that. the discharge was not the 7,GeO
g.p.m. which he ought to have got but 6,400 g.p.rn. only. Then he
can recover damages for the depreciation (If his plant due to the undue
pressure put upon it ic order to enable it to obtain the discharge of

6,400 g.p.m. To this may be added the extra cost of any supplemental
or auxiliary power used by him, when obliged by break-down and
delay caused by overworking and altering the engine.

Turning now to the future period, namely that represented by
the remainder of the normal life of the engine, assuming that it had
not been subjected to the pressure which has caused it's depreciation,
the only matter for consideration is the application of the element
of loss of profits due to the deficiency of the plant, represented in
terms of the area which could have been irrigated had there been
no breach of warranty. We know that in the period before 1928 the
difference in terms of discharge was 10%. But, as we also know, this
difference of 10% was only arrived at after undue pressure, and
it is a proper inference that, if this engine had been allowed to run
normally, the difference must have been greater. Over this future
period, the damages must therefore be assessed, not on a 10% basis,
but on the basis of the difference between a discharge of 7,000 g.p.m.
and the discharge the plant delivered would be normally capable of
in normal circumstances, spread over what would have been the
remainder of the normal life of the engine. How far these damages
have actually been sutIered or can be said to be likely to be suffered
by the appellant is a matter to be decided on the evidence. As to
future damages, i .. e., those flowing from loss of profit from 1928
to the end of the normal life a§. the engine, factors arise which will
require most careful consideration, e.g., the normal rate of deprecia-
tion of the engine and its gradual and normal loss of power. the
probability of the appellants being able or willing- to irrigate up to
the full extent of the plant's capacity, the fall in the price of crops,
rises in the cost of labour and so on. I agree that the presence of
the contingencies upon which the profits might depend makes the
calculation of damages not only difficult, but incapable of being carried
out with certainty or precision. But this cannot absolve the court
of the duty of assessment: the court must do it's best; it is not necessary
that there should be an absolute measure of damages; a wrong has
been done and the court's duty is to give an adequate solatium
under all the circumstances of the case. It is impossible to give
more specific direction than this.

Turning now to the judgement of the learned judge, I am unable
to see how the above principles have been applied in arriving at the
sum of £E.500 awarded. It seems to me that it is possible to infer
that the learned judge excluded any allowance, past or future, for