Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QDC
  3. 2005
  4. Jackson Nominees Pty. Ltd. v Pioneer Building Products (Qld) Pty. Ltd. - [2005] QDC 175

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Jackson Nominees Pty. Ltd. v Pioneer Building Products (Qld) Pty. Ltd.[2005] QDC 175

Jackson Nominees Pty. Ltd. v Pioneer Building Products (Qld) Pty. Ltd.[2005] QDC 175

DISTRICT COURT OF QUEENSLAND

CITATION:

Jackson Nominees Pty Ltd v Pioneer Building Products (Qld) Pty Ltd [2005] QDC 175

PARTIES:

JACKSON NOMINEES PTY LTD (Plaintiff)

V

PIONEER BUILDING PRODUCTS (QLD) PTY LTD (t/a PIONEER HERVEY BAY PLASTAMASTA CENTRE) (Defendant)

FILE NO/S:

D96 of 2000

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court

DELIVERED ON:

30 June 2005

DELIVERED AT:

Brisbane

HEARING DATE:

2nd, 3rd and 13th August 2004

JUDGE:

Tutt DCJ

ORDER:

  1. Judgment for the plaintiff Jackson Nominees Pty Ltd against the defendant Pioneer Building Products (Qld) Pty Ltd in the sum of $131,171.00 together with costs to be assessed on the standard basis under the District Court scale; and
  2. The defendant’s counterclaim is dismissed.

CATCHWORDS:

Contract – carrier’s agreement for cartage of plasterboard for term of 4 years together with option to renew – business sold to third party approximately 2 years later – repudiation of agreement – whether obligation not to put beyond its power the ability to perform contract – damages claimed for breach of contract including option period – liability and quantum considered.

Borg v Northern Rivers Finance [2003] QSC 376.

The Commonwealth of Australia v Amann Aviation Pty Limited (1991) 174 CLR 64.

Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305.

Daulia Ltd v Four Millbank Nominees Ltd & Anor [1978] 1 Ch 23.

Foran v Wight (1989) 168 CLR 385.

Great Northern Railway Company v Witham (1873) 9 LRCP 16.

Ketteman v Hansel Properties [1987] 1 AC 189.

Loutfi v Czarnikow [1952] 2 All ER 823.

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638.

Percival v London County Council Asylums Committee (1918) 87 LJKB 677.

R v Demers [1900] AC 103.

Ralph v Strutton (1969) Qd R 348.

The State of Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146.

Ting v Blanch (1993) 118 ALR 543.

COUNSEL:

Ms C Heyworth-Smith for the plaintiff.

Mr S Keim SC for the defendant.

SOLICITORS:

Lewis & McNamara Solicitors for the plaintiff.

Stephen Comino & Cominos Solicitors for the defendant.

Introduction

  1. [1]
    The plaintiff in this proceeding operated a carrier business in the Hervey Bay district of Queensland which it purchased pursuant to a business contract of sale dated 13 August 1997[1]from Raymond Donald Daken and Cynthia Joan Daken. The directors of the plaintiff company Jackson Nominees Pty Ltd (“Jackson”) were Mr Phillip Donald Jackson and Mrs Kendall Judy Jackson.
  1. [2]
    The co-vendor Raymond Donald Daken occupied the position of branch manager for the defendant, which traded as Pioneer Hervey Bay Plastamasta Centre at Hervey Bay (“Pioneer”), from April 1992 to 18 May 1998, while the other co-vendor Cynthia Joan Daken operated a carrier business under the name Fraser Coast Plasterboard Transport (“Plasterboard Transport”). It was this business that was purchased by Jackson in August 1997.
  1. [3]
    The evidence is that Plasterboard Transport had an agreement[2]with Pioneer that Plasterboard Transport had the rights “to deliver” the plasterboard from Pioneer within the Hervey Bay district at cartage rates set by the state manager for Pioneer in Brisbane.
  1. [4]
    The contract of sale between Cynthia Joan Daken and Jackson provided among other things for a purchase price of $100,000.00 which was apportioned as $55,000.00 for plant and $45,000.00 for the goodwill of the business. A special condition of the contract was that it was subject to and conditional upon Jackson obtaining a “carrier’s agreement” with Pioneer. Attached also to the contract as an appendix is a “List of Inventory” document which details one 1994 Hino Raven diesel 8.5 tonne truck which was necessarily an integral part of the purchase of the business. Jackson entered into a lease agreement with CBFC Limited in respect of the acquisition of the truck.[3]

The “Carrier’s Agreement”

  1. [5]
    Following the purchase of the “transport” business from Dakens, Jackson signed a “Carriers Agreement” dated 16 September 1997 with Pioneer which is Exhibit “4” in these proceedings.[4]Annexed to the agreement is a list of the cartage rates applicable for the agreement. This carrier’s agreement is the focal point upon which these proceedings are based.
  1. [6]
    The preamble to the carrier’s agreement states that its purpose:

“…is to formalise an agreement between Pioneer Building Products t/a Plastamasta Hervey Bay and owner-driver Jackson Nominees (Qld) Pty Ltd t/a Frasercoast Plaster Transport for the purpose of delivering plasterboard and associated products to customers in the Hervey Bay and outer regions as prescribed on cartage rates list”.

The preamble further states that the document:

“…is intended to set out the broad areas of responsibility of the company and the carriers so that a mutual acceptable relationship can be developed to provide the following benefits:

  • A reliable, efficient delivery service for customers as (sic) competitive rates to assist the company to increase sales.”

The terms and conditions of the agreement are then set out in Clauses 1 to 17 inclusive.

  1. [7]
    Upon entering into the carrier’s agreement Jackson immediately undertook the delivery duties for Pioneer as provided for in the agreement. In June 1998 (9 months later) Pioneer advertised its intention to dispose of its plasterboard distribution division of its business and prepared what is described as a “franchise disclosure document” for prospective purchasers.[5]
  1. [8]
    Jackson reminded Pioneer of the “carrier’s agreement” between them by letters of 8 July 1998 being Exhibits 10, 11 and 12 to three managers of Pioneer in Brisbane.
  1. [9]
    Pioneer subsequently sold the plasterboard division of its business to Manmay Pty Ltd (“Manmay”) with effect from 30 June 1999 as evidenced by the sale agreement dated 9 June 1999[6]and its letter to Jackson dated 30 June 1999.[7]
  1. [10]
    After Manmay purchased the plasterboard division of the business from Pioneer, Jackson continued to transport the plasterboard product for approximately six (6) weeks.[8]During this period Jackson conducted negotiations with Manmay with respect to new cartage rates but agreement could not be reached and the evidence is that Manmay purchased its own vehicle for delivery purposes and Jackson was informed that its services were no longer required.[9]Ultimately Manmay went into receivership in May 2001 and then into liquidation in August 2001.

The Issue

  1. [11]
    Jackson’s basic submission is that by Pioneer disposing of its plasterboard division of its business in the Hervey Bay area, it put it beyond its power to comply with the carrier’s agreement it had with Jackson thereby breaching its contract with Jackson and as a result Jackson has suffered loss. Jackson therefore claims the sum of $132,471 as damages for breach of contract together with interest thereon and costs.

The Pleadings

  1. [12]
    At the time of trial the relevant pleadings in this proceeding were Jackson’s Amended Statement of Claim filed 19 December 2002 and Pioneer’s Amended Defence and Counterclaim filed 28 May 2003.
  1. [13]
    At the conclusion of the evidence both counsel tendered written submissions and spoke to them in their respective addresses.
  1. [14]
    Subsequent to the hearing (with the consent of Pioneer’s counsel) Jackson’s counsel provided annotated amended submissions including references to the evidence and updated the calculation of Jackson’s claim and interest. Pioneer’s counsel then provided “Supplementary Submissions”.
  1. [15]
    Several days later Jackson’s counsel provided further supplementary submissions seeking leave to amend Jackson’s statement of claim to insert the following sub-paragraph to paragraph 3 thereof:
  1. “3(e)
    that the Defendant would continue to supply plasterboard to be carted by the Plaintiff pursuant to the agreement for the term of the agreement.

Particulars

  1. (i)
    The said term is express and is to be found in the first paragraph of the agreement and clauses 1, 5 and 6 of the agreement.
  1. (ii)
    In the alternative, if not express, the term is implied on the bases that:

A. it is reasonable and equitable;

B. it is necessary to give business efficacy;

C. it is so obvious that it goes without saying;

D. it is capable of clear expression; and

E. it does not contradict any express term of the contract.”

  1. [16]
    The court was subsequently reconvened to hear the parties on this application at which time further submissions were made by both counsel and in addition Pioneer’s counsel provided further written submissions.
  1. [17]
    Rule 375 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) gives the court a wide discretion to allow a party to amend a pleading and there are many authorities on point to which both counsel have referred.[10]
  1. [18]
    The matter of The State of Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 provides a very useful and informative summary of what a court should consider when exercising its discretion to grant or refuse amendment to a party’s pleadings where application is made at a late stage in the proceeding.[11]
  1. [19]
    Jackson’s counsel has submitted that the amendment sought should be allowed primarily on the principles set out in Ralph v Strutton (supra) at page 361 which essentially reiterated what was stated in a matter of Loutfi v Czarnikow (supra) where the headnote to the report summarised the approach of Sellers J who stated:

“Unless there is very good ground and strong justification for so doing the court should be reluctant to grant amendments of the pleadings after the close of the case and before judgment”

The report then went on to say:

“Such an amendment may be allowed –

  1. (i)
    where the matter involved has been raised in the course of the trial and counsel has addressed the Court on it, since it will be merely incorporating in the pleadings that which has emerged in the course of the case as an issue between the parties; and
  1. (ii)
    where the fact the subject of the amendment has been referred to by counsel in opening and evidence about it has been given since there has been sufficient indication in the course of the trial and in the evidence that it is a matter in controversy and the amendment will enable the Court to arrive at the view, if it thinks fit, that what is pleaded is a correct interpretation of the facts.”[12]
  1. [20]
    Pioneer’s counsel opposed the application to amend and in his written submissions referred to a number of authorities on point.[13]Pioneer’s response in objecting to Jackson’s application is essentially summarised in its counsel’s submission when he said:

“…this is a case where the plaintiff expressly eschewed any reliance on implied terms and jealously prevented the adducing of evidence either in the defendant’s case or by way of cross-examination of the defendant’s witnesses.”

  1. [21]
    Taking all matters into account and on the basis of the authorities cited to me particularly the guidance contained in the matter of The State of Queensland v JL Holdings (supra) I am not prepared to grant Jackson leave to amend its statement of claim as sought.

Counsels’ Submissions on Claim

  1. [22]
    Jackson’s counsel submits that because of Pioneer’s decision to cease its plasterboard distribution division in the Hervey Bay area it “…repudiated its obligations pursuant to the carrier’s agreement in as much as it put it beyond its power to further perform them”.[14]
  1. [23]
    Jackson’s counsel further submits that the exclusivity of the carrier’s agreement in that Jackson was allowed to cart only for Pioneer except with permission to do otherwise distinguished the instant case from a number of cases cited by Pioneer’s counsel including Great Northern Railway Company v Witham (1873) 9 LRCP 16; R v Demers [1900] AC 103; Percival v London County Council Asylums Committee (1918) 87 LJKB 677[15]and thereby committed Pioneer to perform its obligation under the contract (to continue to distribute plasterboard) and to allow Jackson to deliver such plasterboard to Pioneer’s customers.
  1. [24]
    Jackson’s counsel submits that Jackson’s loss should be calculated over the remainder of the term of the agreement and an option period of a further four (4) years on the basis of the reports tendered as Exhibits 21 and 22 respectively.[16]
  1. [25]
    Pioneer’s counsel submits that the carrier’s agreement was not intended to create contractual relations; was terminable without cause on one month’s notice or is essentially “… just an agreement to agree” re-occurring each year. Pioneer further submits that the contract does not impose any obligation on it to use Jackson if it does not have goods to be carried.
  1. [26]
    Pioneer further submits that there is no obligation on it to trade for the length of the agreement (and any option) period and that Jackson can only succeed if the court holds that an implied term exists either to the effect that it was bound to keep trading at certain minimum levels for the term of the agreement (and any option) or that it could not sell its business without some iron-clad agreement that the purchaser thereof could comply with the agreement, but no implied term has been pleaded by Jackson.
  1. [27]
    Pioneer’s counsel further submits that any assessment of Jackson’s loss, if there is a finding that Pioneer breached the agreement, should take into account Jackson’s failure to mitigate their loss as contained in the evidence which is on “a three-fold basis”.[17]In its pleading Pioneer also seeks declaratory relief and that Jackson’s claim be dismissed with costs.[18]

Issues

  1. [28]
    The first question which the court must decide is whether by selling the plasterboard division of the business to Manmay, did Pioneer’s conduct repudiate the carrier’s agreement and therefore make it liable in damages to Jackson for the term of the carrier’s contract (and any option). Secondly if repudiation was effected was such repudiation accepted by Jackson?
  1. [29]
    Repudiation of an obligation does not of itself effect a termination of performance of a contract. If the promisee wishes performance to be terminated the promisee must accept the repudiation of the obligation.[19]Acceptance discharges each party’s obligation except for the purposes for the promisee’s right to sue.[20]A promisee may elect to go on with the contract notwithstanding the opportunity to terminate performance.[21]
  1. [30]
    The issue of election is that a person such as a promisee cannot take inconsistent positions.[22]
  1. [31]
    In the transfer of the business to Manmay by Pioneer there was no assignment of Pioneer’s obligation under the carrier’s agreement to Jackson.
  1. [32]
    With respect to the period of “approximately six weeks”[23]after the business was sold to Manmay, Jackson continued to deliver for Manmay but was then told that they “…were no longer needed”. During this period there were discussions between Manmay and Jackson in respect of proposed freight rates but no agreement was reached.

Novation

  1. [33]
    The only way in which a contractual obligation may be transferred from Pioneer to Manmay is by a novation that is a further agreement between the parties to the original contract (Pioneer and Jackson) and Manmay.[24]Novation is to be distinguished from arranging for one’s obligations to be vicariously performed. The question of vicarious performance by Manmay of Pioneer’s obligations under the agreement does not arise in this instance.
  1. [34]
    I am not satisfied that there was a novation created in this case either expressly or by implication as there was no agreement between Jackson and Manmay in respect of carting arrangements and indeed Manmay considered the cartage rates applicable to the agreement between Pioneer and Jackson to be “too high”.[25]While it appears that there were some negotiations between Jackson and Manmay to attempt to reach agreement with respect to cartage rates no agreement was achieved and hence in my opinion there was no novation of the cartage contract. In any event the issue of novation was not pleaded.

Findings

  1. [35]
    In the circumstances I make the following findings:
  1. That at the time the parties entered into the carrier’s agreement (Exhibit 4) it was their intention to create contractual relations that Jackson would deliver plasterboard and associated products to Pioneer’s customers in the Hervey Bay area of Queensland at cartage rates set out in the list attached to the agreement (Schedule A);
  1. That the agreement would endure for a period of four (4) years from 16 September 1997 with an option (no specified period) to continue the agreement at the expiration of the four (4) year term to be exercised by Jackson subject to certain terms and conditions being satisfied;
  1. That Jackson had the exclusive right to cart such products within its capacity to do so and to give priority to Pioneer for such cartage for the duration of the agreement unless otherwise permitted by Pioneer;
  1. That the cartage rates were to be reviewed annually in March with any increases to be not more than any increase in the consumer price index figure for the preceding year;
  1. That by Pioneer selling the plasterboard division of its business to Manmay with effect from 30 June 1999, Pioneer repudiated its obligations under the carrier’s agreement thereby making it liable for any loss flowing from such a decision: Foran v Wight (1989) 168 CLR 385 per Brennan J at 421; Daulia Ltd v Four Millbank Nominees Ltd & Anor [1978] 1 Ch 231 at 239 per Goff LJ;
  1. That Jackson negotiated with Manmay to continue to carry plasterboard for it and in fact did so for approximately six weeks but negotiations for a more permanent arrangement were not finalised;
  1. That Jackson accepted Pioneer’s repudiation of the carrier’s agreement in that Jackson looked for other work with its truck as evidenced by its correspondence to other businesses in the Hervey Bay area (Exhibits 15 and 17);
  1. That the only basis upon which the agreement may have been terminated would be in accordance with Clause 17 thereof[26]; and
  1. That Jackson is therefore entitled to an award of damages occasioned by Pioneer’s breach of the agreement.

Quantum of Damages

  1. [36]
    The principles to be applied to a case of this nature can be found in The Commonwealth of Australia v Amann Aviation Pty Limited (1991) 174 CLR 64 at 80 per Mason CJ and Dawson J:

“The general rule at common law, as stated by Parke B. in Robinson v. Harman (1848) 1 Ex 850, at p 855 (154 ER 363, at p 365), is: "that 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 situation, with respect to damages, as if the contract had been performed". This statement of principle has been accepted and applied in Australia:  see Wenham v. Ella (1972) 127 CLR 454, per Gibbs J. at p 471.

The award of damages for breach of contract protects a plaintiff's expectation of receiving the defendant's performance. That expectation arises out of or is created by the contract. Hence, damages for breach of contract are often described as "expectation damages". The onus of proving damages sustained lies on a plaintiff and the amount of damages awarded will be commensurate with the plaintiff's expectation, objectively determined, rather than subjectively ascertained. That is to say, a plaintiff must prove, on the balance of probabilities, that his or her expectation of a certain outcome, as a result of performance of the contract, had a likelihood of attainment rather than being mere expectation.”

  1. [37]
    The assessment of Jackson’s quantum of damages is not without difficulty and the starting point must be the known profitability of Jackson’s business in the financial years immediately preceding the repudiation of the agreement. The net profit of the business for the 1999 financial year was $21,579.00 where the gross cartage fees were $83,806.00. These fees were approximately $6000.00 less than the 1998 financial year.

Profitability of Jackson’s Business

  1. [38]
    The only expert evidence on this issue was that given by an experienced accountant Mr Keith Cooper who prepared two (2) reports dated 22 February 2002 and 21 May 2002 respectively (Exhibits 21 and 22) and also provided other relevant statistics upon which his calculations were based with a view to assisting the court in the assessment of the plaintiff’s quantum of damages.
  1. [39]
    Mr Cooper’s second report of 21 May 2002 (Exhibit 22) is probably the more relevant for the purposes of quantifying projected trading losses as the calculations contained therein are based upon an analysis of building trends within the Hervey Bay area which would seem to be a reasonable and consistent barometer for current purposes.
  1. [40]
    Exhibit 23 which contains an analysis of building trends in the Hervey Bay area and in particular the “Annual Residential Building Approvals” for the financial years ended 30 June 1999 to 30 June 2003 respectively shows the fluctuations of residential building approvals based upon the 1999 financial year. The document reveals a modest increase in the 2000 financial year (17.21%); a decrease of 23.74% in the 2001 financial year (immediately following the introduction of the Commonwealth Goods and Services Tax)(“GST”); a very substantial increase of 97.665% in the 2002 financial year and a huge increase of 166% in the 2003 financial year.
  1. [41]
    The report then calculates projected losses of trading profits for a period of eight (8) years to September 2005. It would seem to me that the calculation of losses to the end of the term of the agreement excluding any option period is capable of more precise calculation than including any option period in that in respect of the option period a number of imponderables would have to be taken into account using the principles enunciated in Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 to which later reference is made.
  1. [42]
    With respect to the period covering the term of the agreement Pioneer adduced evidence that there was a downturn in business turnover of the plasterboard business before Manmay purchased the business on 30 June 1999 in that the gross revenue for the 1998 year was $2.178 million while for the 1999 year it was $1.735 million.[27]
  1. [43]
    Notwithstanding this significant decrease (some $400,000.00) it resulted in Jackson’s gross cartage revenue being reduced by only approximately $6,000.00.
  1. [44]
    In the following 2000 financial year Manmay’s gross sales were $2.266 million which indicated a recovery in the business from the 1999 year to approximately the 1998 year level and although Manmay’s income tax return for the 2000 year[28]showed a nominal loss of $56,720.00 this was calculated after Manmay had made an investment of $99,000.00 out of the business to “Great Southern Blue Gums” which had nothing whatsoever to do with the operations of the plasterboard business. In fact the “real” profit of the business for that year was approximately $42,000.00.

Loss of Profits for Term of Agreement (Excluding Any Option Period)

  1. [45]
    Dealing firstly with the period to the end of June 2001 (and for assessment purposes I will treat the agreement as having two (2) years to run[29]when it was repudiated, as this would take into account in broad terms the additional period of approximately six (6) weeks beyond the 30 June 1999 when Jackson carried out some work for Manmay),  Appendix 15 of Exhibit 22 calculates a trading loss of $51,275.00 including the actual trading loss for the 2000 financial year of $9,792.00 (loss on truck).[30]
  1. [46]
    These figures were calculated by using Jackson’s profit and loss accounts for the period to 30 June 1999 adopting as a constant Jackson’s gross cartage fees of $83,806.00 but making appropriate projected adjustments in respect of expenditure by the consumer price index (CPI) increases over the relevant period.
  1. [47]
    The GST was introduced with effect from 1 July 2000 and it appears impacted upon the building industry in the short term but by reference to Exhibit 23 there was a significant upturn in building approvals in the March 2000 quarter no doubt in anticipation of the introduction of the GST 3 months later and this increase would logically have had a favourable impact upon the volume of cartage of the plasterboard products within the district which would have extended well into the 2001 financial year.
  1. [48]
    I accept the evidence and calculations of Mr Cooper as representing a reasonable assessment of the projected trading figures of Jackson’s business to the end of the term of the agreement.

Mitigation of Loss

  1. [49]
    It is then relevant to consider the question of whether Jackson satisfied its obligations incumbent upon all plaintiffs in these circumstances to mitigate its loss.
  1. [50]
    Pioneer’s counsel submitted that Jackson showed “a fairly carefree attitude to mitigation” in three areas namely:
  1. (a)
    Rejecting the opportunity to carry goods for Manmay “…at rates about 10% less than they had enjoyed under the contract…”[31];
  1. (b)
    “…the failure to accept Manmay’s offer for the truck (of $45,000)”[32]; and
  1. (c)
    “…the failure to convert it (the truck’s specifications) for between $500 and $1000”.[33]
  1. [51]
    Jackson answers these submissions in the following way:
  1. (a)
    It was reasonable to reject Manmay’s suggested new rates because they were less than the plasterboard carriers’ award recommended cartage rates for owner/drivers at that time[34]; in any event the evidence of Mr Robert L Mayfield (who was one of the principals of Manmay) was that even though the rates may have been reasonable Manmay could not have afforded them as the company was on a “tight budget”;[35]
  1. (b)
    Jackson needed the truck to attempt to continue to cart goods and therefore remain in business so that selling the truck at the date of the offer would have been impracticable;[36]and
  1. (c)
    Jackson could not afford to spend the conversion costs at that time[37]on the expectation only that it would be able to gain other carting business than plasterboard.[38]
  1. [52]
    Therefore, in all the circumstances which confronted Jackson at that time I find that its conduct in respect of all three (3) propositions referred to in paragraph [50] above was reasonable and that it did not fail to mitigate its loss as alleged by Pioneer.
  1. [53]
    Taking all matters into account I therefore find that Jackson’s loss to the end of the term of the agreement (being end of June 2001) is the sum of $51,275.00 as calculated by the evidence of Mr Cooper.

The Option Period

  1. [54]
    The principles relevant to the assessment of losses from the inability to exercise an option to renew a contract were also discussed in Amann’s Aviation (supra). At pages 91 and 92 of that judgment their Honours Mason CJ and Dawson J said in discussing generally what damages might flow from one party’s expectation that it would have secured a renewal of a particular contract on its expiration:

“However, the rule that the defendant is not liable in damages for not doing that which he or she has not promised to do is necessarily subject to the rule in Hadley v. Baxendale. According to Alderson B.'s renowned formulation, the plaintiff is entitled to recover such damages as arise naturally, that is, according to the usual course of things, from the breach, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach: at p 354 (p 151 of ER). It is now accepted that this is the statement of a single principle and that its application may depend on the degree of relevant knowledge possessed by the defendant in the particular case:  C. Czarnikow Ltd. v. Koufos (1969) 1 AC 350, per Lord Reid at p 385; Lord Upjohn at p 421; The "Pegase" (1981) 1 Lloyd's Rep 175, per Robert Goff J. at p 182.

However, in the present case, the application of the rule in Hadley v. Baxendale turns not on the degree of knowledge possessed by the defendant but on what may reasonably be supposed to have been in the contemplation of the parties as the probable result of the breach. If it be right to suppose that the loss of the prospect of securing a renewal of the contract was within the contemplation of the parties as a probable result of the breach, then, notwithstanding the principle established by Abrahams and Lavarack, Amann is entitled to compensation which takes into account the value of the loss of the prospect of securing a renewal of the contract.

What was in the contemplation of the parties depends upon a consideration of the terms of the contract in the light of the matrix of circumstances in which it was made. As we have seen, performance of the contract by Amann would have placed it in an advantageous position to secure a renewal of the contract with the benefits that would entail. The prospect of renewal was a distinct commercial benefit, inevitably contemplated by the parties as enuring to the advantage of Amann on, and by reason of, its performance of the contract. It was not an advantage which would accrue to Amann independently of performance of the contract or incidentally. The corollary is that the parties necessarily contemplated the loss of that prospect as the probable result of a repudiation or fundamental breach of the contract on the part of the Commonwealth.”

  1. [55]
    As previously foreshadowed the assessment of Jackson’s potential loss for any option period is subject to a number of imponderables including:
  1. Whether Jackson would have in fact exercised the option to continue with the agreement;[39]
  1. The term of the option period and in particular whether the term of the option period would have been for four (4) years;
  1. Whether agreement could have been reached on the future cartage rates applicable taking into account that there would have to be adjustments to such rates and the time such adjustments would be implemented;
  1. What impact the operational expenses of any cartage vehicle(s) might have on the agreement;
  1. Other relevant considerations including market fluctuations.
  1. [56]
    For these reasons the assessment of loss for any option period is speculative and incapable of calculation with any degree of precision or accuracy.
  1. [57]
    Doing the best I can on what has occurred in the plasterboard distribution industry in the Hervey Bay district since 1 July 2001 and having regard to the evidence adduced particularly Exhibits 23 and 28-32 inclusive together with the evidence of Mr Robert Mayfield, it would seem that the plasterboard distribution industry experienced a downturn in business in the 2001 financial year but a significant resurgence in the 2002 financial year and a dramatic escalation in the 2003 financial year.
  1. [58]
    In the circumstances and having regard to the relevant authorities on point[40]and the evidence adduced I make the following findings on the balance of probabilities:
  1. (a)
    That Jackson would have exercised its option to continue with a carrier’s agreement at the expiration of the term of the original agreement[41]but because of the market fluctuations in the plasterboard distribution industry at that time (which would have been at or about the time the option was to be exercised)  caused by the implementation of the GST I am not persuaded that any exercise of the option would have been for a term of four (4) years but rather something less than that period. Taking into account all relevant contingencies including whether Pioneer or any subsequent purchaser would have continued in the plasterboard distribution business or continued to use Jackson for cartage purposes; what the future cartage rates might have been or whether Jackson would want to continue carting plasterboard in any event, I will therefore allow a period of two (2) years as the most probable maximum duration of any further term as I am not persuaded that it would be reasonable to assess Jackson’s loss for any longer period than to the end of the 2003 financial year.
  1. (b)
    As it would appear that the demand for plasterboard distribution would have increased for the financial years 2002 and 2003, I find that Jackson would have continued to trade to at least the same level as estimated in Appendices 15 and 16 of Exhibit 22 wherein the loss of trading profits for those two financial years are estimated at $17,600.00 and $15,962.00 respectively.
  1. (c)
    I therefore find that Jackson’s losses for the option period to the end of the 2003 financial year amount to the sum of $33,562.00.

Order

  1. [59]
    It follows therefore that I give judgment for Jackson in the sum of $84,837.00 damages together with interest at the rate of 10% from 12 January 2000 being the date of commencement of the proceeding and costs to be assessed on the standard basis under the District Court scale.
  1. [60]
    This amounts to the sum of $131,171.00 calculated as follows:

Damages

$84,837.00

Interest

$46,334.00

TOTAL

$131,171.00

  1. [61]
    In light of the above I also formally dismiss Pioneer’s counterclaim as pleaded.

Footnotes

[1]  Exhibit 1.

[2]  Exhibit 24, “Carrier’s Agreement” dated 26 June 1997.

[3]  Exhibit 3.

[4]  This document was signed by Raymond Donald Daken on behalf of the plaintiff.

[5]  Exhibit 9.

[6]  Exhibit 35.

[7]  Exhibit 14.

[8]  T27.37-40.

[9]  T27.44-45.

[10]  See Ralph v Strutton (1969) Qd R 348; Loutfi v Czarnikow [1952] 2 All ER 823; Borg v Northern Rivers Finance [2003] QSC 376; Ting v Blanch (1993) 118 ALR 543; and Ketteman v Hansel Properties [1987] 1 AC 189.

[11]  At page 167 and following.

[12]  Ibid at 361.

[13]Ralph v Strutton (1969) Qd R 349; Borg v Northern Rivers Finance [2003] QSC 376;  Ting v Blanche (1993) 118 ALR 543;  and Ketteman v Hansel Properties [1987] 1 AC 189.

[14]  Paragraph 9 of the Amended Statement of Claim.

[15]  T110.

[16]  Those prepared by the expert accountant witness Mr Keith Cooper.

[17]  T105.30-43.

[18]  See Amended Defence and Counterclaim filed 28 May 2003.

[19]Breach of Contract by Carter 2nd Ed at paragraph [753].

[20]  At paragraph [754].

[21]  At paragraph [756].

[22]  See Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326.

[23]  T27. 43.

[24]Equity, Doctrine & Remedies, Meagher, Gummow and Lehane 2nd Ed, at paragraph 691.

[25]  T27. 56.

[26]  “Clause 17: The company reserves its right to terminate this agreement should the carrier be found to be negligent or if gross misconduct occurs during the term of this agreement. Furthermore the notice period by either party shall be one month.”

[27]  Exhibits 28 and 30.

[28]  Exhibit 31.

[29]  In strict terms the agreement did not expire until 14 September 2001 ie. 2.2 years from the date of repudiation.

[30]  Appendix 8 page 2 to Exhibit 21.

[31]  Paragraph [13] of the Defendant’s written submissions of 3 August 2004.

[32]  Paragraph [14] of the submissions.

[33]  Ibid.

[34]  T20.10-35.

[35]  T93.15-35.

[36]  T20.45; T29.5-10 & 28-52.

[37]  T34.1-15, Mr Jackson could not say precisely what the conversion costs might be.

[38]  T34.16-43.

[39]  T16.15 per K J Jackson.

[40]The Commonwealth of Australia v Amann’s Aviation Pty Limited (supra); Malec v Hutton (supra).

[41]  T16.14-15 (K J Jackson) and T30.48-49 (P D Jackson).

Close

Editorial Notes

  • Published Case Name:

    Jackson Nominees Pty. Ltd. v Pioneer Building Products (Qld) Pty. Ltd.

  • Shortened Case Name:

    Jackson Nominees Pty. Ltd. v Pioneer Building Products (Qld) Pty. Ltd.

  • MNC:

    [2005] QDC 175

  • Court:

    QDC

  • Judge(s):

    Tutt DCJ

  • Date:

    30 Jun 2005

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
ALR (1993) 118 ALR 543
3 citations
Jump To
Cite 1 - (1993) 118 ALR 543
Cite 2 - (1993) 118 ALR 543
Cite 3 - (1993) 118 ALR 543
Borg v Northern Rivers Finance Pty Ltd [2003] QSC 376
3 citations
Jump To
Cite 1 - [2003] QSC 376
Cite 2 - [2003] QSC 376
Cite 3 - [2003] QSC 376
C Czarnikow Ltd v Koufos (1969) 1 AC 350
1 citation
Jump To
Cite 1 - (1969) 1 AC 350
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64
3 citations
Jump To
Cite 1 - (1991) 174 CLR 64
Cite 2 - (1991) 174 CLR 64
Cite 3 - (1991) 174 CLR 64
Craine v The Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305
2 citations
Jump To
Cite 1 - (1920) 28 CLR 305
Cite 2 - (1920) 28 CLR 305
Daulia Ltd v Four Millbank Nominees Ltd & Anor (1978) 1 Ch 231
1 citation
Jump To
Cite 1 - (1978) 1 Ch 231
Foran v Wight (1989) 168 CLR 385
2 citations
Jump To
Cite 1 - (1989) 168 CLR 385
Cite 2 - (1989) 168 CLR 385
Great Northern Railway Company v Witham (1873) 9 LRCP 16
2 citations
Jump To
Cite 1 - (1873) 9 LRCP 16
Cite 2 - (1873) 9 LRCP 16
Hadley v Baxendale (1854) 156 ER 145
1 citation
Jump To
Cite 1 - (1854) 156 ER 145
Hadley v Baxendale (1854) 9 Ex 341
1 citation
Jump To
Cite 1 - (1854) 9 Ex 341
Ketteman v Hansel Properties Ltd (1987) 1 AC 189
3 citations
Jump To
Cite 1 - (1987) 1 AC 189
Cite 2 - (1987) 1 AC 189
Cite 3 - (1987) 1 AC 189
Loutfi v C. Czarnikow Ltd (1952) 2 All E.R. 823
2 citations
Jump To
Cite 1 - (1952) 2 All E.R. 823
Cite 2 - (1952) 2 All E.R. 823
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
2 citations
Jump To
Cite 1 - (1990) 169 CLR 638
Cite 2 - (1990) 169 CLR 638
Percival v London County Council Asylums Committee (1918) 87 LJKB 677
2 citations
Jump To
Cite 1 - (1918) 87 LJKB 677
Cite 2 - (1918) 87 LJKB 677
R. v Demers (1900) AC 103
2 citations
Jump To
Cite 1 - (1900) AC 103
Cite 2 - (1900) AC 103
Ralph v Strutton [1969] Qd R 348
4 citations
Jump To
Cite 1 - [1969] Qd R 348
Cite 2 - [1969] Qd R 348
Cite 3 - [1969] Qd R 348
Cite 4 - [1969] Qd R 348
Ralph v Strutton (1969) Qd R 349
1 citation
Jump To
Cite 1 - (1969) Qd R 349
Robinson v Harman (1848) 1 Ex 850
1 citation
Jump To
Cite 1 - (1848) 1 Ex 850
Robinson v Harman (1848) 154 ER 363
1 citation
Jump To
Cite 1 - (1848) 154 ER 363
Satef-Huttenes Albertus SpA v Paloma Tercera Shipping Co SA (1981) 1 Ll Rep 175
1 citation
Jump To
Cite 1 - (1981) 1 Ll Rep 175
State of Queensland v J L Holdings Pty Limited (1997) 189 CLR 146
3 citations
Jump To
Cite 1 - (1997) 189 CLR 146
Cite 2 - (1997) 189 CLR 146
Cite 3 - (1997) 189 CLR 146
Wenham v Ella (1972) 127 CLR 454
1 citation
Jump To
Cite 1 - (1972) 127 CLR 454

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.