Post‐Breach Events, Itemisation and the Avoided Loss Rule

In English law, the following equation is used to compute damages awards: (a) loss sustained in consequence of the breach of duty (‘prima facie loss’) minus (b) benefits obtained as a result of the breach of duty = (c) net loss. This paper explores the manner in which prima facie loss is defined. It argues that prima facie losses are itemised; the description of a particular loss includes within it a reference to the transaction from which that loss arose and to the character of the loss. Further, it demonstrates that whilst a causal connection test is used to determine which gains (on the ‘b’ side of the net loss equation) are to be offset against prima facie losses on the ‘a’ side, a post‐breach event which diminishes or eradicates a claimant's prima facie loss will be taken into account irrespective of any causal connection between that event and the defendant's breach of duty (or the claimant's mitigating steps). The import of this is that some of the avoided loss case law simply does not involve an application of the causal connection test and those cases are therefore irrelevant to an understanding of the normative principles underlying that test.