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Borealis V. Geogas Notes

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BOREALIS V. GEOGAS FACTS The Claimant ("Borealis") claims damages from the Defendant ("Geogas"), arising out of the supply by Geogas to Borealis of some 5,200 mt of butane as feedstock for Borealis' integrated olefin plant situated at Stenungsund, Sweden, in September 2003 ("the plant"). It is Borealis' case that, in breach of contract, Geogas supplied butane ("the goods") heavily contaminated with fluorides that cracked under normal processing conditions to produce, amongst other substances, hydrofluoric acid ("HF") which, in turn, caused serious and extensive physical damage to the plant and equipment, together with consequential interruption to Borealis' business. HOLDING Summary of general principles I. A convenient starting point is to be found in the judgment of Sir John Donaldson MR in The "Solholt" [1983] 1 Lloyd's Rep. 605, at p. 608: "A plaintiff is under no duty to mitigate his loss, despite the habitual use by the lawyers of the phrase 'duty to mitigate'. He is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting. A defendant is only liable for such part of the plaintiff's loss as is properly to be regarded as caused by the defendant's breach of duty" II. As Viscount Haldane, LC, put it in British Westinghouse Electric and Manufacturing Co. Ltd v Underground Electric Railways Co. of London Ltd., [1912] AC 673 at p.689: "The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps." III. First, the onus of proof on the issue of mitigation is on the defendant: McGregor on Damages (18th ed.), at para. 7-019. IV. Secondly, the conduct of the innocent party should not be "weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty": per Lord Macmillan in Banco de Portugal v Waterlow [1932] AC 452, at p. 506. Immediately thereafter (ibid), Lord Macmillan said this:

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