BGL Operations Pty Ltd v Allied Express Transport Pty Ltd

BGL Operations Pty Ltd v Allied Express Transport Pty Ltd - [2011] NSWCA 41 - NSWCA 2011 case summary — Zoe

[3]

Nature of Case and Conclusions 5In early September 2006 the appellant ("Bells") entered into a written Interim Agreement with the respondent ("Allied") for the provision by Allied to Bells in Sydney and Newcastle of ice delivery services. Bells was at that time the largest supplier of packaged ice in New South Wales, supplying ice through some 1,300 outlets. Allied was a freight transport operator utilising some 1,000 vehicles in Australia, by itself or through related entities. 6Clause 8.2 of the Interim Agreement provided as follows: "8.2 If said contract [a contemplated long term contract between the parties] cannot be agreed and executed for any reason by 30 th November 2006, or Bells Pure Ice decide not to proceed to execute said contract with Allied Express, then all retro fitted vehicles, and materials handling equipment configured [to] perform work for Bells Pure Ice will be purchased by Bells Pure Ice from Allied Express at the vehicle/equipment market price". 7The long term contract was not executed by 30 November 2006 and the primary judge found that Bells had in fact decided by at least early November 2006 not to execute it. 8The parties continued to perform the Interim Agreement after 30 November 2006. They did so until June 2007. At a meeting on 5 June 2007 a representative of Bells told representatives of Allied that Allied "can keep the equipment [referring to items that were the subject of Clause 8.2]", "that none of it works anyway" and that Allied "bought the wrong brands and old stuff that did not work". Allied's response was that it "would check and come back to" Bells. It did not do so. 9On 19 October 2007 Allied commenced the present proceedings making various claims against Bells that were subsequently withdrawn, settled or otherwise disposed of. None of these are in issue on the present appeal. On 30 October 2009 Allied amended its Statement of Claim to make for the first time a claim against Bells for damages for breach of Clause 8.2 of the Interim Agreement. This claim is the matter in issue on the present appeal by Bells. 10The primary judge, Rolfe DCJ, found in favour of Allied on this claim and awarded it damages of $148,650 (see [2010] NSWDC 47). 11In my view Bells' appeal should be allowed for the following reasons: (a) Allied did not, as Bells contended, waive its right to claim that Bells breached Clause 8.2 (see [33] - [36] below). However Bells did not in fact breach that Clause because the Clause gave rise to concurrent and mutually dependent obligations binding the parties and Allied did not at any relevant time communicate to Bells that it was ready, willing and able to perform its own obligations (see [37] - [44] below). (b) Even if Bells did breach Clause 8.2, Allied failed to prove that it suffered any loss as a consequence of such breach because first, the contract price (specified to be the "market price") and the market price were the same (see [46] - [54] below) and, secondly, because Allied otherwise failed to prove that it suffered any loss (see [55] - [64] below).

[4]

The vehicles and equipment adapted or purchased by Allied 12In accordance with discussions between the parties and as contemplated by the Interim Agreement, Allied proceeded after the Interim Agreement was entered into to have adapted or to acquire vehicles and equipment to enable it to provide the requisite delivery services to Bells. It was common ground between the parties there were five items of this description, all of which fell within the ambit of the purchase obligation contained in Clause 8.2. These items were described by the primary judge as follows (the references to the "the plaintiff" being to Allied): "(a) 10 Pallet jacks, ordered on 15 September 2006 and which were delivered on 30 October 2006. These cost the plaintiff $52,250. (b) One 1996 international ACCO 2350 tautliner truck registered as YEB 247, which was a retrofit of the plaintiff's own vehicle, and which arrived at the premises of the plaintiff on 23 November 2006, having been ordered on 15 September 2006 at a cost of $58,496. (c) One 1994 Barker Chiller tautliner trailer which arrived at the plaintiff's premises on 23 November 2006, having been ordered on 23 October 2006. It was purchased for $57,050. (d) One 1984 Maxicube insulated trailer which arrived at the plaintiff's premises on 15 December 2006, having been ordered on 21 November 2006. Its cost was $36,417. (e) One tautliner truck, registered at WIG 858, which was a retrofit of the plaintiff's own vehicle, and which arrived at the plaintiff's premises on 15 December 2006" (Judgment [11]). 13The evidence of what became of the items was as follows. 14The evidence given on 8 February 2010 at the hearing at first instance was that two or three of the pallet jacks were still then at Allied's warehouse. The evidence did not make clear where the remainder had gone but it was apparent that they had not been sold, at least not for any significant amount of money. Allied had been able to put some of the pallet jacks to use for a limited period. It made no attempt to sell them other than to make an enquiry of the company that had supplied them to Allied. That company offered what was described in the evidence as a "rock bottom price". The primary judge estimated this price to be $5,000 (Judgment [85]). 15The tautliner truck YEB 247 was sold by Allied at a profit. The primary judge credited this profit against losses that he found that Allied incurred in relation to other items. 16At the date of the hearing Allied still owned the third item, the tautliner trailer. The primary judge found that it had a value of $30,000 at that time. There was no evidence of Allied having attempted to sell the vehicle other than evidence of Mr Richardson of Allied who said that it had been "on the market for the last eight months" (affidavit [85]). As his affidavit was sworn on 29 August 2008, it appears that Allied's first attempts to sell occurred at about the end of December 2007. 17Mr Richardson's evidence was that the fourth item, the Maxicube insulated trailer, was still owned by Allied, although it was not being put to any use because Allied did not have "a spare prime mover to actually pull it" (transcript p 82). He said that Allied had not been able to sell the trailer (affidavit [86]) but gave no details of the timing or nature of any efforts to sell. 18The final item, the tautliner truck WIG 858, was sold by Allied on 3 October 2007 for less than the total of its original value and the cost of the "retrofit" that it had been given to adapt it for use in Allied performing services for Bells. There was no evidence of the timing or nature of any efforts to sell made prior to 3 October 2007.

[5]

The judgment at first instance 19After dealing with various matters that are not in issue on this appeal, the primary judge noted Bell's submission that Allied never requested it to purchase the vehicles and equipment. In response to this submission, the judge said that "the onus was on [Bells] to purchase the equipment as at 1 December 2006. It made no attempt to do so" (Judgment [65]). Implicitly treating this failure as a breach of Clause 8.2, his Honour turned to the assessment of Allied's damages and expressed the following conclusions (referring to Allied as the plaintiff and Bells as the defendant): "78 In my opinion, looking at the contract as a whole in this case, the Court has to bear in mind that the specific purpose of the equipment was its availability and suitability for carrying the defendant's ice. There can be no doubt that the plaintiff, in retrofitting some of the vehicles, did so in order to make them adaptable for this specific purpose. In effect, the result was a 'hybrid' in the case of the vehicles which were retrofitted. In this respect, in my opinion, the defendant cannot take advantage of its own breaches by asserting that, on the facts peculiar to the case, the Court should ignore the price paid by the plaintiff for the equipment and should determine the price with reference to what might be available in a general market place (where it would be difficult to achieve a sale). I accept the plaintiff's submission that if the Court were to do this it would allow the defendant to take advantage of its own wrong: Alghussein v Eton College (1998) 1 WLR 587; Ruthol Pty Limited v Mills & Ors (2003) NSWCA 56 (at 94). 79 The best evidence before the Court about the market price as at 1 December 2006 is the evidence of what the plaintiff paid for the equipment. Further, on the facts that existed at that date, it is abundantly clear from Mr Port's evidence, in terms of 'the market', that the market was either solely the defendant or it was largely dominated by the defendant. 80 [His Honour here referred to Bells' position in the market]. 81 [His Honour here referred to case authorities requiring consideration in construing a contract of surrounding circumstances, including the market in which the parties were operating.] 82 I therefore propose to assess the plaintiff's damages on the basis of the price paid by the plaintiff for the equipment. In doing so, it is necessary to determine what, if any, deductions should be made from the purchase price of the equipment to arrive at the final figure for damages. In doing so, I have kept in mind the remarks of Lord MacMillan in Banco de Portugal v Waterlow & Sons Limited (1932) AG 452 at 506 that it is sufficient if a plaintiff has acted reasonably. His Lordship's remarks have been accepted in Australian cases: Segenhoe Ltd v Atkins (1990) 29 NSWLR 569. In all the circumstances, I am satisfied that the plaintiff has acted reasonably. I now consider each piece of equipment in turn". 20The primary judge then calculated damages by reference to the cost to Allied of acquiring or adapting the vehicles and equipment, making allowance for the residual value of certain of the items as at the date of hearing, the sale price of the tautliner truck WIG 858 and the value that Allied had obtained from limited use of some of the items.

[6]

The issues on appeal 21Bells' first basis of challenge to the primary judgment was that Allied waived compliance with the purchase obligation that Clause 8.2 of the Interim Agreement imposed upon Bells and that Bells did not therefore breach that obligation. 22Secondly Bells contended that it did not in any event breach Clause 8.2 because, first, the obligations imposed by that Clause upon Allied to deliver the relevant items and upon Bells to accept delivery and pay the purchase price were concurrent and mutually dependent obligations and, secondly, at no time did Allied either offer to perform its own obligations or request or demand that Bells perform its obligations. 23Thirdly Bells contended that Allied had not established that it had suffered any, or alternatively more than nominal, loss as a result of Bells' alleged breach of Clause 8.2. 24Fourthly Bells contended that the primary judge had erred in failing to find that Allied had not taken reasonable steps to mitigate its loss in respect of some of the items. 25During the hearing of the appeal Bells withdrew a submission that it had earlier made that because Allied did not have title to all the items on 1 December 2006, it was not able, and therefore not ready, willing and able, to complete the sale at that time, with the result that Allied was precluded from claiming damages in respect of the breach of contract alleged to have been committed by Bells on that date. 26This submission had largely been founded upon the fact that Allied was on that date only the hirer, under hire purchase agreements, of a number of the items and not the owner of them. The submission was withdrawn when Bells accepted that the relevant time for assessment of Allied's ability to perform its obligations under the contract was not 1 December 2006 but the subsequent point of time at which a reasonable time for the performance by the parties of their obligations expired (see McNally v Waitzer [1981] 1 NSWLR 294 at 296-7, 303-4; N C Seddon & M P Ellinghaus , Cheshire and Fifoot's Law of Contract, 9 th Aust ed (2008) LexisNexis Butterworths at [21.26]). 27There was no issue on the appeal as to the ambit of Bells' contractual obligation but it is nevertheless appropriate that I make some comments below about that obligation.

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Bells' contractual obligation 28I should note first that notwithstanding that the Interim Agreement stated that it was a "non binding agreement" neither party contended in the proceedings that it was not in fact binding. 29Secondly the parties accepted on appeal that each of the five items referred to above (see [12]) constituted "retro fitted vehicles" or "materials handling equipment" covered by the purchase obligation imposed by Clause 8.2. 30Thirdly it was common ground that both of the alternative conditions precedent to the operation of Clause 8.2 (see the first two lines of that Clause) had been satisfied by 30 November 2006. 31Fourthly by Clause 8.2 Bells agreed to purchase what were in effect future goods, that is, goods to be identified at a later point in time (see Sale of Goods Act 1923, s 10). The Clause did not purport to effect an immediate sale and purchase. Whilst it was plain from the terms of the Clause that the purchase was not to occur before 30 November 2006 (or before such earlier time as Bells decided not to execute the long-term contract), the Clause did not specify a date for performance by Bells of the obligation to purchase. In these circumstances the Court would imply that the obligation was to be performed within a reasonable time ( Canning v Temby [1905] HCA 45; (1905) 3 CLR 419 at 424, 430 and 432). 32Fifthly as Bells submitted at the hearing of the appeal, Clause 8.2 imposed concurrent and mutually dependent obligations on Allied and Bells. Allied's obligation as seller of the items in question was to deliver the items and Bells' obligation as buyer was to accept and pay for them. Section 31 Sale of Goods Act confirms as follows the position that is in any event applicable under the general law. "31 Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods".

[8]

Whether waiver by Allied of Bells' obligation to purchase 33Bells' submission on waiver, as it finally came to be put at the hearing of the appeal, was confined to one that Allied waived its right to claim that Bells breached Clause 8.2 because Allied elected to adopt a course of action with which that claim was inconsistent, namely, continuing to perform the Interim Agreement after 30 November 2006. Bells submitted that Allied "was confronted with a choice between two mutual[ly] exclusive [courses] of action: on the one hand it could have requested or demanded that [Bells] purchase the [relevant items] and thereby brought the Interim Agreement to an end or, alternatively, on the other hand could have continued to affirm and perform the Interim Agreement (Written Submissions [42] relying upon the decision of the High Court in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) HCA 57; (2008) 238 CLR 570). 34In my view Bells' submission should be rejected because the two courses of action identified by Bells were not in fact inconsistent. It was arguably implicit in the Interim Agreement that the parties would cease to perform it once Bells had completed the purchase of the items falling within the ambit of Clause 8.2 that Allied had acquired or adapted for the purpose of providing services to Bells. However this never occurred and there was in my view no reason why Allied should not have continued to provide services under the Interim Agreement unless and until Bells performed its purchase obligation. Contrary to Bell's submission, there was no inconsistency between a request or demand by Allied for Bells to purchase the items and Allied continuing to provide services under the Interim Agreement until Bells complied with the request or demand. As in Immer (No 145) Pty Ltd v Uniting Church of Australia Property Trust (NSW) [1993] HCA 27; (1993) 182 CLR 26, "the stage had not been reached where [Allied] was required to make an election ..." (at 43). 35Indeed, in the absence of Allied taking steps to terminate the Interim Agreement by reason of Bells breaching its purchase obligation, Allied would itself have been in breach of the Interim Agreement if it had ceased to supply the services provided for by the Agreement. Thus, without any inconsistency of approach on its part, Allied could have requested or demanded that Bells purchase the items and, until Bells did so, have continued to supply delivery services under the Interim Agreement. Put simply, Allied's continued supply of services would not have indicated to a reasonable person in the position of Bells that Bells need not perform its purchase obligation. 36The outcome might have been different if Bells had contended that Allied's continued supply of services over a significant period of time gave rise to an estoppel in favour of Bells, or to an inference that Allied intended to abandon the Interim Agreement so far as it contained an obligation of purchase on the part of Bells (see Agricultural and Rural v Gardiner at [51]-[52]). However, this was not the basis upon which Bells put its waiver submission. The Court does not know whether there would have been a factual basis for such contentions. In any event they would have raised factual issues that were not explored at first instance and could not have been made for the first time on appeal.

[9]

Whether Bells breached its purchase obligation 37As the obligations of Allied and Bells were concurrent and mutually dependent, Bells would only have been in breach of its obligations if Allied had communicated to Bells its readiness and willingness to perform its own obligations. The requirement that a person in the position of Allied do this arises as a matter of general contract law applicable both to the sale of goods and the conveyance of real estate. The existence of this principle underlaid the judgments of each member of the Court in Foran v Wight [1989] HCA 51; (1989) 168 CLR 385. Mason CJ who dissented in the result but not on this point said in that case: "In the context of concurrent and mutually dependent obligations it was recognized as early as the eighteenth century that a party who was ready and offered to perform his part of the contract could maintain an action against the party who refused or neglected to perform his part" (at 396-7). 38To similar effect was the statement of Deane J as follows: "Neither vendor nor purchaser will be guilty of breach of contract if he fails to complete within the time or upon the day fixed by the contract unless the other party tenders performance of his concurrent obligations" (at 433; see also Brennan J at 420-1; Dawson J at 450-1). 39Gaudron J put it as follows, citing Dainford Ltd v Smith [1985] HCA 23; (1985) 155 CLR 342 at 365 and Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245 at 275-6: "there is no actual breach by one party of an obligation to settle [a contract for the sale of land] unless the other party tenders performance of his or her obligation to settle" (at 455; see also Cheshire & Fifoot's Law of Contract at [21.26]; K C T Sutton, Sales and Consumer Law 4 th ed (1995) at [21.52]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [161]). 40A consequence of this principle is that where a seller of goods neither offers to perform nor tenders performance of its own obligations, it may not maintain an action against the buyer for damages for non acceptance (see Sale of Goods Act, ss 52 and 40). 41In the present case it is unnecessary to decide whether it is sufficient for the party complaining of a breach by the other party to have offered to settle, or whether the first party must have gone further and tendered performance of its obligations, as Allied did not here do either. I note however that older case authority and commonsense strongly favour the view that an offer is sufficient ( Rawson v Johnson (1801) 1 East 203 [102 ER 79]; Jackson v Allaway (1844) 6 Man & G 942 [134 ER 1174]; Bankart v Bowers (1866) LR 1 CP 484; see also: Levey & Co v Goldberg [1922] 1 KB 688; and Benjamin's Sale of Goods , 7 th ed (2006) Sweet and Maxwell at [8-004]). 42In the present case Allied contended both at first instance and, at least initially, on appeal that Bells had breached its purchase obligation as soon as 30 November 2006 (being the date mentioned in one of the pre-conditions to Clause 8.2) passed without the purchase having occurred. However there was no breach at that time because Allied did not then offer to perform its own obligations, nor did it in fact do so at any time. If Allied had contended that Bells breached its purchase obligation on or after the meeting of 5 June 2007, Allied would have had the basis for an argument that it had been excused from its obligation to tender performance by an intimation by Bells, implicit in what was said on Bells' behalf at the meeting on that day, that Allied need not do so ( Foran v Wight ). However such an argument would have been likely to give rise to issues as to whether, six months having passed since 30 November 2006, Allied's conduct in continuing to perform the agreement had raised an estoppel in favour of Bells or had impliedly indicated an intention to abandon that part of the contract concerned with the purchase by Bells of the relevant items. As pointed out above (see [36]), these issues were not explored at the hearing. 43As Allied did not offer to perform its own obligations at any time at or before the date upon which it alleged that Bells breached Clause 8.2, Allied's claim for damages for breach must fail. 44As this point was not taken by Bells at first instance, it was not dealt with by the primary judge. Allied did not oppose it being raised for the first time on appeal as Allied was not prejudiced by that occurring because the facts relevant to it had been litigated at first instance.

[11]

The Contract Price and the Market Price were the same 46The first and most obvious reason for this conclusion arises out of the fact that Clause 8.2 specified that the purchase price payable by Bells was the "market price" of the items to be purchased. 47For there to have been a "market price", there would have to have been a market. However if there is a market at the relevant time the measure of damages for a buyer's breach of its obligation to purchase goods is the difference between the market price and the contract price ( Sale of Goods Act, s 52(3)). As the contract price was here the "market price", the two prices were the same. Accordingly, the difference, and therefore the quantum of damages, is zero. 48Section 52(3) is conditional upon the existence of "an available market" and not simply a "market". The subsection is in the following terms: "Where there is an available market for the goods in question, the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted, or if no time was fixed for acceptance, then the time of the refusal to accept". 49I do not consider that the adjective "available" indicates that the "market or current price" later referred to in that subsection is different from the "market price" to which Clause 8.2 of the Interim Agreement referred. Neither party submitted that it was. 50Whilst the words "prima facie" in s 52(3) indicate that the rule there stated is not an inflexible one, a reason for it to be departed from would need to be shown. None is apparent to me or was suggested by the parties. Furthermore, if the rule were departed from, damages would be assessed by estimating the seller's "loss directly and naturally resulting in the ordinary course of events from the buyer's breach of contract" (s 52(2)). For reasons that I give below (see [55] - [64]) assessing damages in this way would not assist Allied. 51Contrary to Allied's contention, the conclusion that the damages to which Allied is entitled are zero is not one that flouts common sense and fails to give operation to Clause 8.2. Why, Allied submitted, would Allied agree to Bells assuming an obligation in the terms of Clause 8.2 (indeed the evidence indicated that Allied suggested the terms of Clause 8.2 to Bells) if the price to be paid by Bells was simply that which Allied could obtain elsewhere? A possible answer to this question is that Allied may well have sought by the Clause to ensure that it had an assured buyer at an assured price for the items especially acquired or adapted by it for use in performing its contract with Bells. Having an assured buyer and price would have been an advantage to Allied even if Allied could, perhaps with some inconvenience and delay, have obtained the same price elsewhere in the market. Particularly might this have been so because, on the evidence, the relevant items were not ones that Allied ordinarily used. It would probably therefore have been unfamiliar with the market for disposal of such items. 52These considerations preclude any conclusion that the Court should depart from the ordinary meaning of the words used in Clause 8.2. Indeed Allied did not contend for any such conclusion. It did not for example submit that the words "market price" in Clause 8.2 should be construed as meaning the cost to Allied of the items in question. Rather, its submission, reflecting the approach of the primary judge, was that in the circumstances of this case Allied's acquisition cost was the best evidence of market value. 53This being the nature of Allied's submission, it is apparent that the submission does not provide an answer to the fundamental barrier to Allied recovering substantial damages that the contract price was expressed to be "market price". 54It would not have been possible for Allied to support the damages claim by asserting that there was no relevant market and therefore no relevant "market price" for the purposes of Clause 8.2. If this had been the case Clause 8.2 could not have operated to confer upon Allied an entitlement to substantial damages because there would not have been any contract price specified in Clause 8.2 that was referrable to the circumstances. Accordingly, a fundamental ingredient of the contractual obligation for breach of which damages were sought would have been absent The contractual promise would in these circumstances have been incomplete and unenforceable (see Cheshire & Fifoot at [6.8]-[6.11]).

[12]

Ascertainment of market price 55A further and alternative reason why Allied's claim for damages must fail is as follows. 56It was not in my view correct in the circumstances of the present case to treat Allied's acquisition costs (whether or not adjusted in the manner provided for by the primary judge) as indicative of the market price of the relevant items. 57The first point to make in this regard is that the primary judge effectively took the dates of the hearing before him, that is, 8 to 10 February 2010 as the dates for assessment of damages, rather than the date or dates of the alleged breach in late 2006. The date of breach is the usual date as at which damages are assessed ( Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351). On occasions a later point of time may be taken but there need to be reasons for doing so. For example in Rentokil Pty Ltd v Channon [1990] 19 NSWLR 417 damages were assessed as at the date of the hearing because of the plaintiff's impecuniosity at an earlier time (at 432). 58No comparable or other relevant circumstances were shown to exist in the present case. The evidence did not for example show that from the time of breach Allied took reasonable steps to sell the relevant items (see [14] - [18] above). In these circumstances there was in my view every reason in the present case to adhere to the general rule that damages should be assessed as at the date of breach. 59Assessment of damages as at the date of breach would have highlighted the fact that Allied neither proved that there was a market for the items and what the relevant market prices were, nor proved that there was no relevant market and that Allied took reasonable steps to attempt to sell the items. In the absence of proof of one or other of these, there was no warrant for adopting Allied's acquisition costs, albeit adjusted in a limited fashion, as representing the market prices. The fact was that Allied simply failed to prove its loss and should have failed on that basis, as well as on the basis to which I have referred in [46] - [54] above. 60The primary judge appears to have concluded that there was no significant market for the relevant items if the possibility of sale to Bells were excluded. I agree with his Honour that, as it is a party that at this point in the analysis is to be assumed to have refused to purchase the items, Bells should not be considered as a potential purchaser. 61However the evidence did not in my view justify the judge's conclusions that there was no other significant market and that Allied had proved that it suffered a substantial loss. Allied did not establish that the items were not fit for any purpose other than use in Bells' ice supply business. Indeed to some extent the evidence suggested otherwise. For example Mr Noel Ryles gave evidence on behalf of Allied that he was satisfied that the retrofitted vehicles "were able to do normal taxi-truck work when they weren't being used to deliver ice" (black appeal book p 51). Furthermore, Allied did not establish that it had made consistent and reasonable efforts to sell the items after the date of Bells' alleged breach (see [14] - [18] above). In those circumstances it was not appropriate for the primary judge to conclude that there was no relevant market, that Allied's acquisition prices constituted the best evidence of market price and that Allied had proved that it had suffered quantifiable loss. 62The primary judge justified his adoption of Allied's acquisition prices in preference to "what might be available in a general market place", upon the basis that the court would otherwise be allowing Bells to "take advantage of its own wrong" (see Judgment [78] quoted in [19] above). 63The precise ambit of this principle (if indeed it can properly be described as a principle at all: see Young JA in Nicholls v Michael Wilson & Partners Ltd [2010] NSWCA 222; 243 FLR 177 at [181]) is not clear. It can at least be used in some circumstances to prevent a person relying upon the occurrence of an event where the event has been brought about by the person's own conduct (see generally Ruthol Pty Ltd v Mills [2003] NSWCA 56; (2003) 11 BPR 20,793 at [88]-[100]) and to justify a construction of a contract that precludes a wrongdoer taking advantage of his or her own wrong (see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418 at 440-1; TCN Channel 9 v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 147). However Allied was not able to refer the Court to any case in which the approach has been applied in any situation arguably analogous to the present. 64Nor do I see any reason why as a matter of principle or commonsense it should be applied in the present case. The "wrong" referred to by the primary judge was Bells' breach of Clause 8.2. The "advantage" of it that the judge considered that Bells should not be entitled to take was the advantage of requiring Allied's damages to be assessed in accordance with the ordinary principles of the law, applied in the context of the contract entered into between the parties. These principles are designed to enable assessment of fair compensation to the plaintiff for its loss resulting from the wrong of the defendant. A defendant is not in ordinary circumstances taking advantage of his own wrong by requiring adherence to them. There were no special circumstances present that rendered this general principle inapplicable.

[13]

Mitigation of damages 65Bells submitted that Allied failed to prove that it mitigated its loss by taking reasonable steps to sell the relevant items after the alleged breach occurred. Allied responded by submitting, correctly, that the onus of establishing a failure by a plaintiff to mitigate its loss was on the defendant. 66However, this is not in my view a case where mitigation of loss properly arises as an issue. For reasons I have given above (see [46] - [64]) the plaintiff here, Allied, failed to prove that it suffered any loss as a result of the alleged breach of contract by Bells. Allied bore the onus of proving any such loss. Mitigation of loss would only have arisen as an issue if Allied had proved, at least on a prima facie basis, that it had suffered loss. The onus would then have shifted to Bells to prove that Allied did not take reasonable steps to mitigate its loss. 67As Powell JA pointed out in Wenkart v Pitman (1998) 46 NSWLR 502, the accepted view that the defendant bears the onus of proof on the issue of mitigation appears to stem from the decision of the Court of Common Pleas in Roper v Johnson (1873) LR 8 CP 167. That proof by the plaintiff of its loss, at least on a prima facie basis, is necessary before the issue of mitigation arises is apparent from the following passage from the judgment of Brett J (as Lord Esher MR then was) in that case, quoted with approval by Powell JA in Wenkart (at 523): "It seems to me to follow ... that the plaintiffs here did all they were bound to do when they proved what was the difference between the contract price and the market-price at the several days specified for the performance of the contract, and that prima facie that is the proper measure of damages; leaving it to the defendant to shew circumstances which would entitle him to a mitigation. No such circumstances appeared here: there was nothing to shew that the plaintiffs ought to have or could have gone into the market - a rising market - and obtained a similar contract" (at 181-2).

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Judgment (15 paragraphs)

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Cases Cited (26)

Cited By (3)