Settlement after cancellation of house purchase – the distinction between damages and default interest

The buyers of a house, who had been successful in the Court of Appeal in their request to cancel the purchase, which entailed repayment of the purchase price with interest, also claimed compensation for lost value increase during the period they had been owners. The Supreme Court stated that compensation for lost value increase and default interest is, at least to some extent, meant to compensate the same loss, and that this could give a basis for coordinating these items after an individual assessment. However, the coordination must not have the effect in the individual case that less than full compensation is awarded, but also not more. The amount to be coordinated was set at the balance between net default interest and the deduction for use determined by the Court of Appeal. Thus, the compensation, which the seller and his insurance company were ordered to pay, constituted the balance between the value increase, which the parties agreed on, and the coordinated amount.

Read the whole judgment (Norwegian only)

Areas of law: Section 7-1 of the Sale of Property Act. Damages. Default interest. 

Key paragraphs: 48-51, 55, 72

Justices: Bergsjø, Arntzen, Bergh, Steinsvik, Stenvik