Chiara Rawlins

Section 596A of the Corporations Act (Act) provides for the summoning of a person (officers and former officers) for examination about a company's affairs when the company is, in summary terms, under administration, being restructured or wound up.

Published by Chiara Rawlins

28 September, 2023

Where a breach of contract occurs, the party who has not breached the contract is entitled to recover damages to compensate for any loss suffered (1). A breach may occur by a failure to perform or by anticipatory breach by the breaching party. To recover damages, the plaintiff's loss or damage must be caused by the defendant's breach (causation requirement) and must not be too remote (remoteness requirement). The plaintiff has the onus of establishing the extent of the loss or damage suffered (2). The court will consider whether the plaintiff is entitled to an award in protection of an expectation, reliance or restitution interest in receiving the defendant's performance, which resulted in the identified loss (3).   The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 The Commonwealth v Amann Aviation is authority for the proposition that there is a rebuttable presumption that the Plaintiff is entitled to damages for any expenditure that they incurred in performing their duties under the contract (reliance loss) (4). To be recoverable, the expenses must be reasonable, contemplated by the other party and capable of being valued in monetary terms. In making a determination, the court will consider the commercial benefits which the plaintiff was to receive under the contract and which could be obtained in the event of full performance by the defendant. Damages are assessed as at the time of the breach of contract based on the loss suffered (5). Damages must be compensatory - they are aimed at placing the plaintiff in the same situation they would have been had the contract been performed (6). The plaintiff is not entitled to be placed in a better position than they would have been had the contract been performed by all parties (7).   Hadley v Baxendale (1854) 9 Ex 341 A plaintiff is only entitled to damages to the extent that their losses were caused by the defendant's conduct. In Hadley v Baxendale, the Court articulated the test of causation as being either the losses that arise naturally (or, in the usual course of things) from the breach of contract or those that were reasonably in the contemplation of both parties at the time they made the contract. In that case, the Court separated this principle into two limbs: General damages: a claim for general damages arises in the 'usual course of things' from the defendant's breach of contract (8). The loss must be 'not unlikely to result' from the breach (9). Special damages: a claim for special damages arises when the loss does not arise in the usual course of things, but the loss is reasonably supposed to have been in the contemplation of both parties at the time of the construction of the contract, as a probable result of a breach. The plaintiff must have suffered damage because of a reliance placed on the contract, and that reliance must be placed on knowledge actually possessed by the defendant (10).   123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 (20 February 2023) The Cessnock City Council (the Respondent) agreed to grant Cutty Sark (the Appellant) a lease of a part of the Cessnock Airport on which the appellant was constructing an aircraft hanger. The lease would be for a term of 30 years from the date of the proposed subdivision plan which the Respondent was to apply for and register by 30 September 2011. The Respondent repudiated that obligation, but in the meantime the Appellant had proceeded to construct the hangar at a cost in excess of $3 million (11). On appeal, the New South Wales Court of Appeal highlighted that the dominant rationale for the Amann Aviation presumption is that it may be presumed that a party would not enter into a contract unless it would at least have recovered its reliance expenditure through performance of the contract (12). The Court decided that the Amann Aviation presumption arose as the Appellant had incurred $3,697,234.41 in expenditure in reliance on the Respondent's obligation to take all reasonable steps to procure registration of the plan (13). It found that this expenditure had been reasonably incurred as it was the 'type of expenditure as might naturally be incurred in preparing for, performing or exploiting the benefit of the contract, or as ought to have been contemplated by the defendant' (14). The Court found that this presumption was not rebutted and that the primary judge had erred in finding the recovery was precluded by the rule in Hadley v Baxendale on the basis that it was highly likely that had the subdivision plan been registered, the Appellant would have recouped its expenditure over the term of the 30 year lease (15). The Court of Appeal held that it was clear to both parties that the Respondent's failure to register the subdivision plan would result in the Appellant wasting the expenditure it had incurred (and would continue to incur) in constructing the hangar. Furthermore, the loss was reasonably in the contemplation of both parties when the contract was made, and thus fell within the second limb of the Hadley v Baxendale principle (16).   McCabes’ Litigation and Dispute Resolution Group has significant knowledge and experience in relation to contractual disputes. Please do not hesitate to contact us if you require advice or assistance.     (1) Cell Tech Communications Pty Ltd v Nokia Mobile Phones (UK) Ltd (1995) 58 FCR 365 [750] (Lindgren J). (2) Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 80 (Mason CJ & Dawson J). (3) Ibid 134. (4) Ibid 86 (Mason CJ & Dawson J). (5) Ibid 161-162. (6) Ibid 98 (Brennan J). (7) Ibid 82 (Mason CJ & Dawson J). (8) Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, 91-2. (9) Ibid 99. (10) Carpenter v McGrath (1996) 40 NSWLR 39, 44. (11) 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 (20 February 2023) [30]-[31]. (12) Ibid [56]. (13) Ibid [159]. (14) Ibid [70]. (15) Ibid [140] & [167]. (16) Ibid [149].

Published by Chiara Rawlins

14 March, 2023