Neutral Citation Number: [2011] EWCA Civ 1330
Case No: B2/2010/2481

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LINCOLN COUNTY COURT
Mr Recorder Maw
8LN02903
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 24/11/2011

Before:

LORD JUSTICE WARD
LORD JUSTICE LLOYD
and
LORD JUSTICE KITCHIN
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Between:

	Paul Martin Foster Howard-Jones 	Claimant Respondent	
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	Dennis Eaton Tate	Defendant
Appellant	

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Richard Hedley (instructed by Anthony Clark & Co) for the Claimant/Respondent
Jonathan Price (instructed by McKinnells Solicitors) for the Defendant/Appellant

Hearing date: 31 October 2011
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Judgment

Lord Justice Kitchin
Introduction
1.	This appeal, from an order of Mr Recorder Maw made on 12 July 2010, concerns the remedies available in consequence of a finding of breach of a post-completion condition in a contract for the sale of land.  Two issues arise: first, on the basis that the appellant vendor, Mr Tate, committed breaches of the contract which went to its root, whether the respondent purchaser, Mr Howard-Jones, was entitled to rescind the contract; second, if Mr Howard-Jones was not entitled to rescind the contract, whether it was nevertheless appropriate to award him damages which had the effect of restoring him to his original pre-contractual position.
Background and proceedings
2.	On 1 November 2007, Mr Howard-Jones agreed to buy a warehouse and outbuildings at Odder Farm, Saxilby in Lincolnshire (“the Property”) from Mr Tate for the sum of £140,000.  The Property lies to the north of Odder Farmhouse, which at that time was owned by Mr Tate’s son.  The remainder of Odder Farm, including a barn which lies to the west of the Property, remained in the ownership of Mr Tate.
3.	Prior to the agreement, the Property was supplied with water and electricity from Odder Farm.  The arrangements for the supply of these services were, by their nature, temporary and accordingly Mr Howard-Jones agreed to buy the Property on the basis that Mr Tate would arrange, at his own expense, for the Property to be provided with a new directly metered electricity supply and a separately metered mains water supply. The contract of sale provided, by special condition 12:
“The seller [Mr Tate] shall at his own expense and no later than six months from the Completion Date:
(a) provide a new directly metered single phase electricity supply to the building [the warehouse] forming part of the Property;
(b) provide a separately metered water supply (mains) to the building forming part of the Property.”
4.	Completion took place on the same day, that is to say 1 November 2007, but by 1 May 2008, Mr Howard-Jones was of the view Mr Tate had still not provided the services in accordance with his obligations under special condition 12 of the contract.  Mr Howard-Jones’ solicitors therefore wrote to Mr Tate by letter dated 22 May 2008 requesting that the necessary works be completed within seven days.  No reply to that letter was ever received and so, by letter dated 6 June 2008, Mr Howard-Jones’ solicitors wrote again, giving formal notice that if Mr Tate did not comply with his obligations by 30 June 2008, Mr Howard-Jones would rescind the contract and issue proceedings claiming return of the purchase price of £140,000 and costs and damages. No further work was carried out by 30 June 2008 and, by letter dated 2 July 2008, Mr Howard-Jones’ solicitors purported to give notice that the contract was rescinded.
5.	On 23 October 2008, Mr Howard-Jones issued these proceedings seeking an order for rescission of the contract and damages.  In his defence dated 21 November 2008, Mr Tate asserted that he had provided a new separately metered water supply in accordance with his obligations under the contract by 24 April 2008 but accepted that, despite his best efforts, he had not installed an appropriate single phase electricity supply by 2 July 2008.  He contended that he had, however, offered an electricity supply from his barn on his adjoining property.  He also asserted that damages were an adequate remedy and that rescission was not appropriate.  The case duly proceeded to trial before the Recorder on 17 and 18 May 2010.
The judgment
6.	The Recorder approached the matter in the following way.  First, he considered the water supply and found (at paragraphs [63] to [87]) that Mr Tate had installed a water supply of sorts in that he had run a flexible pipe from his barn to the warehouse.  He held this did not, however, constitute a separately metered water supply; nor was it a supply to the warehouse.
7.	The Recorder then turned to the electricity supply.  He found (at paragraphs [89] to [115]) that Mr Tate had failed to install an electricity supply, whether metered or otherwise, by 1 May 2008 or, indeed, by 2 July 2008, the date Mr Howard-Jones purported to rescind the contract.  Further, although Mr Tate had subsequently instructed Eon to install an electricity supply, it was not completed until April 2009; moreover, although this supply was provided to the Property, it terminated at a junction box some distance away from the warehouse.
8.	In all these circumstances, the Recorder found (at paragraphs [87], [115] and [163]) that Mr Tate was in clear breach of the contract in failing to provide an appropriate water supply and electricity supply to the Property.  Further, he held (at paragraphs [164] to [165]) that these breaches arose after completion. He also found (at paragraphs [169] to [171]) that these breaches went to the root of the contract and rendered the Property worthless to Mr Howard-Jones because, without water and electricity, he could not use the Property for the purpose of carrying on his business as a motor trader.  Nevertheless, he held (at paragraph [172]) that Mr Howard-Jones was not entitled to rescind the contract ab initio; rather, Mr Tate was liable to Mr Howard-Jones for damages.
9.	The Recorder then addressed the issue of quantum of damages.  He found (at paragraphs [176]-[177]) that Mr Howard-Jones was entitled to return of the purchase price of the Property although, as a corollary of that, he had to re-convey the Property to Mr Tate.  He also held (at paragraph [178]) that Mr Howard-Jones was entitled to consequential damages being his mortgage lender’s survey fee; his solicitors’ fees in respect of the purchase and mortgage of the Property; his mortgage arrangement fees; his accountant’s fees; the charges he had incurred for early redemption of the mortgages; his mortgage interest payments; the building insurance premium; and his Council tax.  In total, Mr Tate was ordered to pay to Mr Howard-Jones in excess of £190,000.

The appeal and cross-appeal
10.	Mr Price, who has appeared on behalf of Mr Tate, does not take issue with the Recorder’s findings that Mr Tate’s breaches went to the root of the contract.  Further, he embraces the Recorder’s finding that Mr Howard-Jones was not entitled to rescind the contract.  He contends that it was at the next stage that the Recorder fell into error because, notwithstanding his finding that Mr Howard-Jones was not entitled to rescind the contract, he proceeded to assess damages on the basis that he was.
11.	Mr Hedley, who has appeared on behalf of Mr Howard-Jones, contends that the Recorder ought to have found that Mr Howard-Jones was entitled to rescind the contract.  Further, he submits that even if he is wrong on that point, the Recorder’s decision on damages is entirely correct.
Rescission
12.	In considering these rival submissions, it is convenient to begin with the issue of rescission. The critical distinction between rescission and discharge by breach was explained by the House of Lords in Johnson v Agnew [1980] AC 367.  The case concerned a contract for the sale of land which was the subject of a number of mortgages.  The price which the purchaser agreed to pay was in excess of the sums required to discharge the mortgages and a loan raised by the vendors to enable them to buy another property.  The purchasers failed to complete and the vendors obtained an order for specific performance.  However, before the order for specific performance was carried out, the mortgagees of the property enforced their securities by selling the properties.  The vendors therefore went back to court and asked for the order of specific performance to be dissolved, for the contract to be terminated or rescinded, and for an order for damages.  
13.	The House of Lords held that although the vendors had secured an order for specific performance, if the order was not complied with, they were entitled to damages for breach.  In this connection, Lord Wilberforce stated the following propositions of law at pages 392-393:
“In this situation, it is possible to state at least some uncontroversial propositions of law.
First, in a contract for the sale of land, after time has been made, or has become, of the essence of the contract, if the purchaser fails to complete, the vendor can either treat the purchaser as having repudiated the contract, accept the repudiation, and proceed to claim damages for breach of the contract, both parties being discharged from further performance of the contract; or he may seek from the court an order for specific performance with damages for any loss arising from delay in performance.  (Similar remedies are of course available to purchasers against vendors.)  This is simply the ordinary law of contract applied to contracts capable of specific performance.
Secondly, the vendor may proceed by action for the above remedies (viz. specific performance or damages) in the alternative.  At the trial he will however have to elect which remedy to pursue.
Thirdly, if the vendor treats the purchaser as having repudiated the contract and accepts the repudiation, he cannot thereafter seek specific performance.  This follows from the fact that, the purchaser having repudiated the contract and his repudiation having been accepted, both parties are discharged from further performance.
At this point it is important to dissipate a fertile source of confusion and to make clear that although the vendor is sometimes referred to in the above situation as “rescinding” the contract, this so-called “rescission” is quite different from rescission ab initio, such as may arise for example in cases of mistake, fraud or lack of consent.  In those cases, the contract is treated in law as never having come into existence.  (Cases of a contractual right to rescind may fall under this principle but are not relevant to the present discussion.)  In the case of an accepted repudiatory breach the contract has come into existence but has been put an end to or discharged.  Whatever contrary indications may be disinterred from old authorities, it is now quite clear, under the general law of contract, that acceptance of a repudiatory breach does not bring about “rescission ab initio”.  I need only quote one passage to establish these propositions.
In Heyman v Darwins Ltd [1942] A.C. 356 Lord Porter said, at p. 399:
“To say that the contract is rescinded or has come to an end or has ceased to exist may in individual cases convey the truth with sufficient accuracy, but the fuller expression that the injured party is thereby absolved from future performance of his obligations under the contract is a more exact description of the position.  Strictly speaking, to say that on acceptance of the renunciation of a contract the contract is rescinded is incorrect.  In such a case the injured party may accept the renunciation as a breach going to the root of the whole of the consideration.  By that acceptance he is discharged from further performance and may bring an action for damages, but the contract itself is not rescinded.””
14.	A little later, Lord Wilberforce again emphasised the distinction between rescission and discharge by breach in approving, at page 396, the following passage in the judgment of Dixon J in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at pages 476 to 477:
“When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning.  Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired.  Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected.  When a contract is rescinded because of matters which affect its formation, as in the case of fraud, the parties are to be rehabilitated and restored, so far as may be, to the position they occupied before the contract was made.  But when a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach.”
15.	It is, therefore, clear that rescission ab initio is very different from a failure of performance which entitles the innocent party to treat the contract as discharged.  This latter situation, though still sometimes referred to as “rescission” does not have the consequence that the contract is treated as never having come into existence.  Rather, the parties are absolved from future performance and the innocent party may claim damages for breach.  In Photo Productions v Securicor Transport Ltd [1980] AC 827, Lord Diplock explained the position of the innocent party who elects to treat the contract as discharged in the following terms (at page 849):
“Where such an election is made (a) there is substituted by implication of law for the primary obligations of the party in default which remain unperformed a secondary obligation to pay monetary compensation to the other party for the loss sustained by him in consequence of their non-performance in the future and (b) the unperformed primary obligations of that other party are discharged.”
16.	Application of these principles in the context of the present case would seem to be relatively straightforward.  On 2 July 2008, Mr Howard-Jones was entitled to and did elect to treat the contract as at an end.  At that moment all the unperformed primary obligations of the parties were discharged  and there was substituted a secondary obligation on Mr Tate to pay monetary compensation to Mr Howard-Jones for the losses he had sustained by reason of Mr Tate’s breaches of the contract.
17.	Nevertheless, Mr Hedley says that none of these cases were concerned with a transaction involving the sale of land where, as here, a condition of sale remained outstanding after completion.  He submits that, in such a case, a right of rescission is available and he relies in support of this proposition upon the decision of the Court of Appeal in Gunatunga v DeAlwis (1996) 72 P&CR 161.
18.	In Gunatunga, the plaintiff entered into a contract with the defendants to purchase a newspaper business, including the leasehold property where it was carried on, for £15,000.  The property comprised a shop on the ground floor and a self-contained flat on the first floor.  The plaintiff made it quite clear to the defendants that she was only willing to effect the purchase if she obtained vacant possession of the whole property.  This was of great importance to her because the purchase of the property with a sitting tenant would have put her in immediate breach of the head lease and exposed her to a risk of forfeiture; further, she and her husband needed to move into the flat in order to run the business effectively.
19.	The sale contract apportioned the purchase price as to £5,000 for the lease, £5,000 for the goodwill of the business and £5,000 for fixtures and fittings.  A special condition provided: “The property is sold with vacant possession on completion”.  Upon confirmation by the defendants’ solicitors that the property was vacant, the parties exchanged contracts. 
20.	On the date agreed for completion, the lessor’s licence to assign the freehold interest had not yet been obtained and no-one had yet executed the assignment.  Further, the plaintiff discovered that tenants were still occupying the flat.  She made it clear that she was not happy with the situation but nevertheless went into possession of the business part of the premises upon the defendants’ assurances that vacant possession would be provided.
21.	Despite these assurances, the flat had not been vacated when, some two weeks later, completion took place.  On that same day, the plaintiff’s solicitors sent to the defendants’ solicitors a fax complaining about the presence of the tenants and stating that the plaintiff intended to issue proceedings claiming, inter alia, damages arising from the defendants’ misrepresentations and breaches of contract.  Proceedings were issued some three months later which progressed to trial.  
22.	The trial judge ordered the defendants to repay the purchase price of £15,000 primarily on the basis that the defendants’ failure to give vacant possession of the whole premises amounted to a repudiatory breach of the contract; that this repudiatory breach had been accepted by the plaintiff; and that this operated to rescind the agreement and entitled her to repayment of the purchase price.
23.	On appeal, Sir Christopher Slade, with whom Butler-Sloss and Swinton Thomas LJJ agreed, held that the plaintiff had affirmed the contract by returning the executed counterpart licence to assign to the lessor’s solicitors and by proceeding to completion knowing that the flat was still occupied.  She had therefore lost her right to rescind the contract by reason of the defendants’ misrepresentation. But that did not mean that she had thereby waived her rights to complain of and seek remedies for the defendants’ failure to give her vacant possession of the premises on completion, pursuant to the special condition in the contract.  The obligation undertaken by the defendants under that condition was one which, according to its terms, only became operative on completion and, indeed, before the date of completion, the condition did not render the defendants in breach of contract at all.  However, on completion, the defendants did become in breach of the condition.  Further, a term of a contract that vacant possession shall be given on completion does not merge in the conveyance.  Accordingly, as from the date of completion, the plaintiff had a clear right to seek damages for breach of this term.
24.	Sir Christopher Slade then turned to consider whether the defendants’ failure to give vacant possession on completion amounted to a repudiation of the contract which entitled the plaintiff to treat the contract as at an end.  He continued, at pages 170 to 171:
“The question whether the refusal or failure to perform part of the contract amounts to a repudiation of the whole depends on the construction of the contract and all the circumstances of the case.  As Mr Buckhaven [counsel for the defendants] submitted, there must be a refusal or failure to perform something which goes to the root of the contract, before the innocent party can regard himself as discharged from further performance of the contract and entitled to rescind.  Mr Buckhaven submitted that, on the facts of the present case, the failure to give vacant possession did not go to the root of the contract.  In his submission, the purchase by the plaintiff was simply a commercial venture.  It was essentially the purchase of a business with living accommodation above.  In his submission, the failure to give vacant possession of merely one of three residential rooms above the business could not be said to frustrate the commercial purpose of the venture.  Diplock LJ in Hong Kong Fir Shipping Company v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at page 66 stated the test thus:
Does the occurrence of the event deprive the party who has further undertakings to perform, of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?
Mr Buckhaven submitted that here the breach clearly did not deprive the plaintiff or substantially the whole benefit of her contract.
In my judgment however, in the particular circumstances of this case, the defendants’ failure to give vacant possession on August 30, clearly did go to the root of the contract.  This purchase was not, in my view, just a commercial venture.  By the time that contracts were exchanged, it had been made clear to the defendants that the plaintiff was embarking on the purchase with the intention of moving into the flat above the business, for the convenient running of the business, and that she and her husband were going to use it as their home.  Though Mr Ahmed’s tenancy extended to only one of the living rooms in the flat, it would have been quite unrealistic to expect the plaintiff and her husband to share the occupation of the amenities of the flat with the Ahmeds.  In my judgment, as at August 30, 1991, the plaintiff was plainly entitled to rescind the contract.”
25.	Having concluded that the plaintiff was entitled to rescind the contract, Sir Christopher Slade then turned to consider whether the plaintiff had exercised that right.  He considered the judge was wrong in holding that the plaintiff had rescinded the contract by her solicitor’s letter written on the date of completion. However, he held that she did exercise her right to rescind by issuing proceedings some three months later, and that nothing she had done in the meantime amounted to an affirmation.
26.	Accordingly, Sir Christopher Slade concluded, at page 173:
“In my judgment, Mr Buckhaven’s well-sustained submissions were unable to circumvent a fatal weakness in the defendants’ case, which was not canvassed before the learned judge, namely that the defendants’ failure to give vacant possession on August 30, 1991 gave rise to a new and separate right to rescind the contract which was in due course duly exercised by the plaintiff.
Though I reach this conclusion by rather a different route, I think that, for the reasons which I have given, the judge was right to make the order for repayment which he did make, on the basis that the contract had been rescinded.  I would accordingly dismiss this appeal.”
27.	Mr Hedley submits the present case is on all fours with Gunatunga and the Recorder erred in holding that, although the breaches went to the root of the contract, rescission was not available to Mr Howard-Jones. He says that the effect of what is contended for by Mr Tate is that where there is a breach of a contract for the sale of land which, as here, goes to its root then, simply because there has been completion, the purchaser is unable to set the transaction aside even though he is not getting what he bargained for. That, he says, is manifestly unjust. 
28.	It is, I think, important to note that the principal issues before the Court of Appeal in Gunatunga were first, whether the plaintiff had affirmed the contract by returning the executed counterpart licence and proceeding to completion; second, whether the defendants’ failure to give vacant possession on completion amounted to a repudiatory breach of the contract; and third, whether the plaintiff had lost her right to rescission by running the business and failing to commence proceedings for some three months after completion.  There appears to have been no dispute between the parties that, if the defendants were in repudiatory breach which entitled the plaintiff to treat the contract as discharged, then she was entitled to rescission and return of the purchase price.  Moreover, it appears that Johnson v Agnew was not cited to the Court of Appeal and the case may therefore have been decided per incuriam. Certainly there is no indication in the judgment of the important and clear distinction between rescission of a contract ab initio and termination of a contract for subsequent breach.  Nor is there any suggestion that the plaintiff elected, as an alternative to claiming damages, to sue for recovery of the money paid on the basis that the consideration for the payment had wholly failed.
29.	In my judgment, it is not, however, necessary to express a final conclusion as to whether the decision in Gunatunga is binding upon this court because I am entirely satisfied that the circumstances of the present case are quite different from those of Gunatunga.  In contrast to the position in Gunatunga, this is not a case where Mr Tate was in repudiatory breach of a condition which became operative on completion.  Mr Tate was not obliged to provide a separately metered water supply and a directly metered single phase electricity supply until six months after completion, that is to say by 1 May 2008.  It is therefore a case where Mr Tate failed to comply with a post-completion obligation.  In such a case, I believe there can be no justification for failing to apply the principles explained by the House of Lords in Johnson v Agnew and, more recently, in Photo Productions v Securicor Transport.  In my judgment, the Recorder was right to say that Mr Tate’s repudiatory breaches rendered him liable in damages but did not entitle Mr Howard-Jones to rescind the contract ab initio. 
30.	Nor do I accept Mr Hedley’s submission that this result is manifestly unjust. Upon completion, Mr Howard-Jones became the owner of precisely what he had bargained for, namely the Property without a directly metered electricity supply or a separately metered water supply.  Mr Tate was not in breach of his obligation to provide the appropriate water and electricity supplies until six months later. Upon breach of that obligation, which it is accepted for the purposes of this appeal went to the root of the contract, Mr Howard-Jones became entitled to treat himself as discharged. After discharge, he was no longer bound to accept the further performance by Mr Tate of his obligations. But he was not entitled to recover all the moneys he had paid under the contract unless he could say that the consideration for his payment had wholly failed. That he has not sought to do. Nor, in my judgment, could he properly have done so.  The Property has been used by Mr Howard-Jones to store some vehicles. Further, the Property plainly has some value and Mr Howard-Jones can arrange for the directly metered electricity and separately metered water supplies necessary for his business to be installed. In so far as it may be necessary to have a service pipe laid across Mr Tate’s land for the purposes of the water supply or access to Mr Tate’s land for the purposes of the electricity supply, these are not matters to which Mr Tate can properly object. In so far as he has objected and, indeed, continues to object, then that should be reflected in the assessment of the damage Mr Howard-Jones has suffered.   
The appropriate measure of damages
31.	The Recorder, having correctly directed himself that Mr Howard-Jones was not entitled to rescission ab initio, ought then to have considered what losses Mr Howard-Jones has suffered by reason of Mr Tate’s breaches.  Those losses would seem to me primarily to comprise the costs to Mr Howard-Jones of having the services installed for himself within a reasonable time after his acceptance of Mr Tate’s repudiation, together with any other losses he has suffered as a result of the services not being installed in due time.
32.	So far as the failure to provide a metered supply of water is concerned, Mr Howard-Jones’ solicitors received a letter from Anglian Water dated 14 May 2009 suggesting that a separately metered mains water supply could be laid to the edge of Mr Tate’s land at a cost of £729.00.  To this would have to be added the cost of having a service pipe laid across Mr Tate’s land.  The cost of installing a water supply which meets the contractual requirement should therefore be ascertainable without undue difficulty. Any assessment of further losses Mr Howard-Jones has suffered should take due account of the fact that, since April 2008, Mr Howard-Jones has had the benefit of the water supplied from the barn through the flexible pipe to which I have referred.
33.	So far as the failure to provide a directly metered single phase electricity supply is concerned, Mr Howard-Jones and Mr Tate received offers from Eon to provide such a supply to the warehouse.  Once again, this shows that the cost to Mr Howard-Jones of having such a supply installed can be ascertained. Furthermore, since April 2009, an electricity supply has been provided to a junction box on the Property. Although this junction box is some distance from the warehouse, there is no reason to suppose the supply cannot be extended to the warehouse. Certainly there is nothing in the judgment of the Recorder to suggest otherwise. As for further losses, any assessment should take due account of alternative sources of electricity available to Mr Howard-Jones, including any use that he has made of a generator. 
34.	Mr Price has also drawn our attention to Mr Howard-Jones’ particulars of claim which claim, as one of the heads of loss: “rent on alternative business premises of £3,000 and continuing at £500 per month”. It appears from this that Mr Howard-Jones is in a position to quantify the loss he says he has suffered as a result of not being able to use the Property for his motor trade business.
35.	In light of all these facts and matters, many of which are referred to in the judgment, I have reached the conclusion that the Recorder erred in his approach to the assessment of damages.  In paragraphs [176] to [179] of his judgment, the Recorder has not sought to identify the damage which Mr Howard-Jones has suffered as a result of Mr Tate’s breaches of the contract, but rather has sought to assess the cost of putting Mr Howard-Jones back into the position he would have been in had the contract never been entered into.  In the circumstances of this case, that was not a permissible approach.
36.	I would therefore allow the appeal and direct that the matter be referred to the Lincoln County Court for damages to be re-assessed before a different judge. 
Lord Justice Lloyd:
37.	I agree with Kitchin LJ that the cross-appeal should be dismissed and the appeal allowed, for the reasons and to the extent that he has stated.  I am not sure that I would have held, as the judge did, that the breaches of the contract went to the root of the contract, but nothing turns on that for the purposes of the appeal.  
38.	I add some observations of my own about the decision of this court in Gunatunga v DeAlwis (1996) 72 P&CR 161, of which I was unaware prior to this appeal.  So far as electronic searches reveal, the decision does not appear to have been cited in any subsequent judgment until now.  It is noted in Megarry & Wade, The Law of Real Property, 7th ed (2008) at paragraph 15-091 for the proposition that the purchaser can terminate the contract even after completion for breach of an obligation by the vendor.  It is cited in some other textbooks, including Emmet & Farrand on Title and Chitty on Contracts, but not for this proposition.
39.	On the face of it, the idea that a contract can be discharged retrospectively, after completion, on the ground of the vendor’s fundamental breach of contract seems to be inconsistent with the decision of the House of Lords in Johnson v Agnew, cited by Kitchin LJ.  It appears to hark back to the use of the word rescission which Lord Wilberforce deprecated in his speech in Johnson v Agnew because it confuses a remedy available only for such wrongs as misrepresentation, under which what had already been done might be undone, with the case of discharge for breach on the basis of accepting a repudiation of the contract, which can only operate prospectively.  Sir Christopher Slade spoke, correctly, of the plaintiff being entitled “to treat the contract as at an end” (at page 170, just before the passage quoted in paragraph 24 above), and of being “discharged from further performance of the contract” (page 171 of the report, in the quoted passage) but went on from the latter proposition to add “and entitled to rescind”.
40.	It would be natural, on the facts of Gunatunga, to feel sympathy for the plaintiff, in face of, first, a fraudulent statement by the vendor, without which the plaintiff would not have entered into the contract, and secondly what seems incomprehensible behaviour on the part of her solicitors, who had the opportunity (knowing of the continued presence of the tenants) to prevent completion from taking place, but did not do so.
41.	However, it seems to me that the decision must be of seriously questionable authority, given the absence of any reference to Johnson v Agnew, and therefore of any consideration of whether the breach entitled the plaintiff to have the whole transaction unscrambled retrospectively, or rather only to damages for the vendor’s breach of contract.
42.	It is not necessary for us to decide the point, as Kitchin LJ says, because in the present case the breach of contract did not arise until 6 months after completion.  Such a breach cannot possibly justify either setting aside what had been done or awarding damages to the Claimant on an equivalent basis.  The damages to which the Claimant is entitled are those which flow from his not having had (from the end of the six month period) the electricity and water supplies for which he had contracted.  In principle, the damages ought to be the same as if he had been let down in this respect by a contractor who had undertaken to provide the supplies, altogether independently of the sale of the property.  If, however, in some future case, Gunatunga is relied on in relation to facts to which it is closer, it will be necessary, in my judgment, to treat it with some care, because it seems to me well arguable that it was decided per incuriam, and is therefore not binding.
Lord Justice Ward:
43.	I too agree that the Respondent’s Notice should be dismissed and that the appeal should be allowed for the reasons given by Kitchin LJ.