BULKHAUL LTD V RHODIA ORGANIQUE FINE LTD

[2008] EWCA Civ 1452, Court of Appeal, Lord Justice Sedley, Lord Justice Keene and Lady Justice Smith, 18 December 2008

Lease of tanks – Lease terminated early by hirer – Measure of damages – Whether owner entitled to claim loss of hire for entire unexpired period of contracts – Mitigation of loss

BL owned a fleet of tanks used for transporting chemicals. In March 1999 BL agreed to lease 18 bespoke tanks to ROFL for a period of ten years for the carriage of corrosive chemicals. The rent was £18.50 per day. ROFL purported to terminate the contract in October 2004, and its repudiation was accepted in December 2004. BL sought damages for unpaid rentals for the period up to March 2009. ROFL contested the claim for damages on the ground that BL was under a duty to mitigate its loss, and should have sold the tanks rather than retaining them. The Court of Appeal upheld the trial judge’s ruling that there was sufficient evidence of a market for the tanks and that damages would be reduced accordingly.