Hasell v Bagot, Shakes and Lewis, Ltd [1911] HCA 62

Hasell v Bagot, Shakes and Lewis, Ltd [1911] HCA 62 - HCA 1911 case summary — Zoe

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price which the respondents gave for the 3,000 tons bought from Doyle. 'The appellant contends that the price was excessive, and that the principle on which the measure of damages depends was not considered by the learned Judge who tried the case. It is not denied that the matter was fully argued below, or that the appellant impressed upon His Honor that the true course was to ascertain the value at the place of manufacture at the time of breach, and to add the cost of carriage and a reasonable profit for the importer. It is true that the learned Judge did not state this rule in his judgment, but certainly he does not seem to have said anything which would entitle us to say that he ignored it. The judgment which he delivered is consistent with his having borne it in mind, and we cannot come to the conclusion that he failed to do so in the absence of any expression tending to that conclusion. I think, therefore, we may fairly treat the question which His Honor decided as being whether the margin between the contract price and the price of the purchase from Doyle was unreasonably large. In considering whether he rightly decided that question in the negative, we must have regard to the principles laid down in the case of O'Hanlan v. Great Western Railway Co. (1), which are very succinctly stated in the judgment of Shee J. (2). The expression used in some other cases that a plaintiff buying against a defendant (and the respondents were in the position of plaintiffs guead the counterclaim) is bound to "minimize" his loss, is nothing more than to say that he must act as reasonably as a man would if buying for himself. The jury, or the Judge trying a case without a jury, would do rightly in arriving at the value of the goods at the place of manufacture, and adding to that the cost of their carriage to the place at which the original contract was to be performed by delivery, together with a reasonable profit to an importer. In the present case the price paid by the respondents gave the importer, Doyle, a profit of 64 per cent. Personally, I should hesitate to affirm that this was an unreason- ably large profit. The respondents were not themselves importers, nor do they appear to have had any business connections in Japan which would enable them to arrange there for the purchase and shipment of a large consignment of superphosphates. Their (1) 34L3.Q.B,, 154. (2) 34 L.J.Q.B., 154, at p. 159.

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occasioned by the extra price they had been obliged to pay Doyle for the 3,000 tons Japanese supplied by him. The appellant disputed the respondents' right to take that course and sued them for that balance. The respondents counterclaimed for their loss " under the Doyle contract. On the appellant's claim the learned Judge found for the appellant in the sum of £975 the full amount. No question is now raised as to the propriety of that finding. But the learned Judge at the same time found for the respondents on the counterclaim in the sum of £1052 10s. A deduction of one from the other leaves an amount of £77 10s., judgment for which now stands in the respondents' favour. Of the items which go to make up the £1052 10s. one is not now questioned, namely the item of £77 10s. for special damage. The sum remaining represents the difference between the price per ton paid by the respondents under Doyle's contract and that stipulated for in their original agreement with the appellant. That is the sum, and the only sum, now in controversy. The appellant challenges it in two ways. First, he says that the difference in price, supposing it to be recoverable, is to be cal- culated on 2,500 tons, not on 3,000 tons, reasoning as follows: The appellant's agreement was to supply 5,000 tons or, at his option, 10 per cent. more or less than 5,000 tons; he was not bound to supply more than, 4,500 tons in all. Of that quantity 2,000 tons was covered by the British superphosphates supplied under the agreement which I have described as being in accord and satisfaction as to part. That left a balance of 2,500 tons for the supply of which the appellant was responsible. The respondents were not entitled to buy against him more than was sufficient to cover that balance. The contention raises the ques- tion of how the words " 5,000 tons 10 per cent. more or less" in the original agreement are to be construed. Upon that I do not think it necessary to express an opinion because, in the events that have happened, the question has not really arisen and indeed cannot arise. Assuming that the appellant's construction of the agreement is right, that in carrying out his contract he was not bound to supply more than 4,500 tons, it is plain that at the time when the respondents bought against the appellant to the extent of 3,000 tons by their contract with Doyle no portion of the

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Applying these principles to the facts of the present case, it was for the learned Judge of first instance to determine, first, what was the actual loss which the respondents had suffered by reason of the appellant's breach of agreement. That is a mere matter of arithmetic. The further and important issue for his determination was whether any portion of that loss, and if so how much, was due to the respondents' failure to take such steps for mitigating the amount of loss as a prudent business man might be reasonably expected to take in the ordinary conduct of his own business. The learned Judge has not in form expressed his conclusion on the latter issue, but I am satistied that he had it under consideration and his judgment necessarily involves that he found it in the respondents' favour. This Court has now to decide whether any ground has been shown for disturbing that finding. In my opinion none has been shown. The chief objec- tion against the defendants' conduct was that they had contracted to pay Doyle a price that was unreasonably high, higher than a prudent business man would have contracted to pay in the ordin- ary course of his business. It was further objected that they were not justified in employing an intermediary to whom a profit would have to be paid, that they ought to have dealt directly with suppliers in Japan, and further that, assuming it was reason- able to make use of an intermediary, the profit which the price paid by the respondents enabled Doyle to make on the transaction was unreasonably large. In my opinion a consideration of the circumstances in which the respondents were placed by the appellant's breach of agreement furnishes a complete answer to these objections. It was of vital importance to the respondents' retail business to obtain the goods in time for the season and of the kind and quality they had been in the habit of supplying to their customers. There was no local market in South Australia in which superphosphates of that kind and quality could be bought, and the respondents had no business relations with the Japanese manufacturers. The usual, and speaking generally, the only way in which retailers in Adelaide such as the defendants

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Judgment (68 paragraphs)

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