#7184 - Damages Super Summaries

Concept	Key Cases	Issue	Principle	Page No./ [Para]	Ratio	Page No./ [Para]	Comments
Expectation Damages	Belgrove v Eldridge	To what extent could Eldridge claim damages in respect of substantial departures from specification	The proper principles (except in sale of goods) is rectifying the departure so far as possible It must be a “reasonable course to adopt” – what is “reasonable necessary” is a question of fact	647/0 [617] 647/2 [618-9]	Sometimes this will require removal/demolition as the only practicable method Replacing the foundations would be a doubtful remedy and thus would not be adequate compensation It doesn’t matter that the damages be used to replace the buildings – damages are assessed once and for all	647/1 [618] 648/0 [620] 648/0 [621]
Reliance Damages	McRae v Commonwealth Disposals	To what extent are damages recoverable	Difficulty in assessment does not prevent award but for lost profits only nominal damages would be awarded Breach of contract (rather than non-delivery) gives the plaintiffs a starting point to make a prima facie case, reversing the burden to the CTH to show that the expense incurred would have been wasted even if there was a tanker	765/2 [411] 766/2 [414]	The case was one off breach of contract – it was promised that there was a tanker in the place; in reliance of this the plaintiff expended considerable money; there was no tanker in the place The court proceeded to accept certain forms of damage such as travelling expenses, the value of coal and other stores consumed before the ship foundered, wages, office expenses and loss which might have been expected to earn if not devoted to the futile enterprise	765/4 [412] 767/3-4 [419]	It is important to note that what will be recovered is what was reasonable, necessary and wasted
Amann Aviation	To what extent are damages recoverable on reliance On loss of a chance	In cases where a plaintiff has incurred expenditure but it is impossible or difficult to establish the value of any benefits derived from performance the plaintiff can rely on a presumption that they would break even doing what was reasonably necessary for performance The presumption will be rebutted if it is established that the plaintiff would have derived no benefit or that it would have been insufficient to recoup expenditure If the latter is established, recovery will be limited to the extent not established that expenditure would not have recouped It will not be rebutted by the fact that the benefit may have included the chance of another remote benefit which is speculation OR if the perceived benefit is only something of value to the plaintiff		Amann would have had a very good chance of having the contract reviewed but it is impossible to speculate about the value of the contract if renewed or the value of the equipment if the commonwealth performed Hence Amann is entitled to the presumption that the value of the benefits would at least be equal to the expenditure incurred in obtaining the contract and performance on its part subject to one qualification The conclusion of the Full Court that there was a 20% chance of cancellation has to also be factored in – this flows not from performance but from their breach The court has to estimate based on what the chances are of a particular thing occurring – in this case it was estimated at 20% hence damages are reduced by 20%		It is important to note that what will be recovered is what was reasonable, necessary and wasted Only applicable where money is paid later for a venture

Expectation Damages

Belgrove v Eldridge

To what extent could Eldridge claim damages in respect of substantial departures from specification

The proper principles (except in sale of goods) is rectifying the departure so far as possible
It must be a “reasonable course to adopt” – what is “reasonable necessary” is a question of fact

647/0 [617]

647/2 [618-9]

Sometimes this will require removal/demolition as the only practicable method
Replacing the foundations would be a doubtful remedy and thus would not be adequate compensation
It doesn’t matter that the damages be used to replace the buildings – damages are assessed once and for all

647/1 [618]

648/0 [620]

648/0 [621]

Reliance Damages

McRae v Commonwealth Disposals

To what extent are damages recoverable

Difficulty in assessment does not prevent award but for lost profits only nominal damages would be awarded
Breach of contract (rather than non-delivery) gives the plaintiffs a starting point to make a prima facie case, reversing the burden to the CTH to show that the expense incurred would have been wasted even if there was a tanker

765/2 [411]

766/2 [414]

The case was one off breach of contract – it was promised that there was a tanker in the place; in reliance of this the plaintiff expended considerable money; there was no tanker in the place
The court proceeded to accept certain forms of damage such as travelling expenses, the value of coal and other stores consumed before the ship foundered, wages, office expenses and loss which might have been expected to earn if not devoted to the futile enterprise

765/4 [412]

767/3-4

[419]

It is important to note that what will be recovered is what was reasonable, necessary and wasted

Amann Aviation

To what extent are damages recoverable on reliance

On loss of a chance

In cases where a plaintiff has incurred expenditure but it is impossible or difficult to establish the value of any benefits derived from performance the plaintiff can rely on a presumption that they would break even doing what was reasonably necessary for performance
The presumption will be rebutted if it is established that the plaintiff would have derived no benefit or that it would have been insufficient to recoup expenditure
- If the latter is established, recovery will be limited to the extent not established that expenditure would not have recouped
It will not be rebutted by the fact that the benefit may have included the chance of another remote benefit which is speculation OR if the perceived benefit is only something of value to the plaintiff

Amann would have had a very good chance of having the contract reviewed but it is impossible to speculate about the value of the contract if renewed or the value of the equipment if the commonwealth performed
Hence Amann is entitled to the presumption that the value of the benefits would at least be equal to the expenditure incurred in obtaining the contract and performance on its part subject to one qualification
The conclusion of the Full Court that there was a 20% chance of cancellation has to also be factored in – this flows not from performance but from their breach
The court has to estimate based on what the chances are of a particular thing occurring – in this case it was estimated at 20% hence damages are reduced by 20%

It is important to note that what will be recovered is what was reasonable, necessary and wasted

Only applicable where money is paid later for a venture

“Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same position with respect to damages, as if the contract had been performed” – Parke B in Robinson v Harman (1848) 1 Ex 850

Concept	Key Cases	Issue	Principle	Page No./ [Para]	Ratio	Page No./ [Para]	Comments
Loss of a Chance	Chaplin v Hicks	The beauty Queen case and the starting point for all analysis of loss of a chance. Damages were calculated by a jury The question is one of contingency
	Howe v Teefy	How should damages be awarded?	All that must be answered is the plaintiff had something of monetary value of which he was deprived by the breach	650/1 [306]	Here the injury was deprivation of the right to train/race the horse and the profits acquired doing so This is not without value The calculation is not based on how much profit he would have made from the horse but how much his chance of making profit, by having the use of the horse, was worth in money	350/2 [307]	There are two steps: 1) Has the plaintiff lost something of value in losing the opportunity on the balance of probabilities? 2) What is the percentage chance that the plaintiff would have been successful?
	The Poseidon The false agreement case	How should damages be awarded?	If damages are recoverable for loss of a chance: Damages are to be ‘ascertained by reference to the court’s assessment of the prospects of success of that opportunity had it been pursued		No-one knows whether or not they would have had an agreement but it was likely The value of that chance is to be ascertained by reference to the degree of probabilities or possibilities
Restitution	Awarded where the defendant receives payment but doesn’t provide performance – these damages are referred to as restitutionary (awarded in cases of total failure of consideration) Where a benefit is conferred, damages can be recovered on the basis of unjust enrichment Defendants who breach can also benefit in other ways e.g. not performing to the same standard, getting profits when they shouldn’t (damages can be awarded on the basis of disgorgement or account of profits where profits are made through conduct not permitted by the contract. But it is generally denied as a head of recovery for breach). These type of benefits based on what the wrongdoer has gained (rather than what the victim has lost) are awarded in equity. A-G v Blake Can damages be awarded? “Practical justice” can be used to recover ‘ill-gotten gains’ in contract – considered and rejected by the Federal Court of Australia in Hospitality Group v Australian Rugby Union
Date of Assessment	Perez – Solicitor’s failure to prosecute case	What is the date of assessment for damages	In general, if the breach causes the loss, then the date of assessment is the data of breach But sometimes the party has to look at the party’s intention in buying the goods. It should consider The parties ability to mitigate damages The party’s intention in buying the good Whether circumstances indicate that the party intends, at some stage, to convert the property into monetary terms (if so the award should reflect the time of intend conversations)		There is no question of mitigation – it was impossible for the respondent to limit the damage caused by the appellant’s negligence It is appropriate for the injured party to be protected from the vicissitudes of depreciating currency and the tortfeasor bear the risk of appreciation Since the personal injury actions would have been converted at an earlier date; the dates that the personal injury actions WOULD have been converted is used as the date of assessment

Concept	Key Cases	Issue	Principle	Page No./ [Para]	Ratio	Page No./ [Para]	Comments
Causation and Remoteness	Alexander v Cambridge Credit	Was CC’s loss caused by A’s failure to disclose Was the loss too remote?	Causation between breach and damage suffered is established by showing that the breach was a cause of the loss A loss must be such as fairly and reasonably considered as arising naturally according to the usual course of things or such as may be reasonably supposed to have been in the contemplation of the parties (Hadley Bax) To be in the reasonable contemplation the result, if thought by the parties, would have had at least a ‘serious possibility’ It is not necessary or precise details of the event – only the type or kind of loss suffered The classification of level of damages must not be so high that the parties are required to contemplate the very loss in question loss or so low that any loss no matter how unusual would be included	667/5 [358] 669/6 [354] 670/3 [365] 670/4 [365-6]	The existence of a company cannot be a cause of trading; except to the extent that the certificates induced the trustees not to take action, the issue was not one jointly necessary to produce the $145m loss Even if causation was established, the economic conditions (budget, monetary expansion) constituted a novus actus interveniens that so superseded the breach in potency Though some tightening of economic conditions could have been contemplated, what would have been contemplated compared to what actually happened was so different as to be a different kind and it was thus not one on the cards	668/2 [359] 668-9/ [362-363]	Causation – Other cases: Dorset Yacht – ridiculousness of the ‘but for’ test (Lord Hoffman) Stansbie v Troman – Implied term of reasonable care, skill and diligence for an interior decorator will at least extend to a “casual duty” apt to include locking the door to prevent common thieves but not to make the house impregnable Remoteness - Other cases: Victoria Laundry – Boiler had one purpose, to do big laundry work and business was booming. Though ordinary profit claimable, extra profit from lucrative contracts not Heron II – Everyone knew that the goods were being delivered to a sugar port and that sugar was volatile hence in the...

Causation and Remoteness

Alexander v Cambridge Credit

Was CC’s loss caused by A’s failure to disclose

Was the loss too remote?

Causation between breach and damage suffered is established by showing that the breach was a cause of the loss
A loss must be such as fairly and reasonably considered as arising naturally according to the usual course of things or such as may be reasonably supposed to have been in the contemplation of the parties (Hadley Bax)
To be in the reasonable contemplation the result, if thought by the parties, would have had at least a ‘serious possibility’
It is not necessary or precise details of the event – only the type or kind of loss suffered
The classification of level of damages must not be so high that the parties are required to contemplate the very loss in question loss or so low that any loss no matter how unusual would be included

667/5 [358]

669/6 [354]

670/3 [365]

670/4 [365-6]

The existence of a company cannot be a cause of trading; except to the extent that the certificates induced the trustees not to take action, the issue was not one jointly necessary to produce the $145m loss
Even if causation was established, the economic conditions (budget, monetary expansion) constituted a novus actus interveniens that so superseded the breach in potency
Though some tightening of economic conditions could have been contemplated, what would have been contemplated compared to what actually happened was so different as to be a different kind and it was thus not one on the cards

668/2 [359]

668-9/ [362-363]

Causation – Other cases:

Dorset Yacht – ridiculousness of the ‘but for’ test (Lord Hoffman)

Stansbie v Troman – Implied term of reasonable care, skill and diligence for an interior decorator will at least extend to a “casual duty” apt to include locking the door to prevent common thieves but not to make the house impregnable

Remoteness - Other cases:

Victoria Laundry – Boiler had one purpose, to do big laundry work and business was booming. Though ordinary profit claimable, extra profit from lucrative contracts not

Heron II – Everyone knew that the goods were being delivered to a sugar port and that sugar was volatile hence in the...

#7184 - Damages Super Summaries - Contracts 2

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