Cessnock City Council v 123 259 932 Pty Ltd

The appeal concerned a dispute between Cessnock City Council, the owner of land on which an airport was located, and 123 259 932 Pty Ltd, a respondent who had entered into an agreement with the Council to lease a prospective lot at the airport. The Council had breached its contractual obligation to take all reasonable action to apply for and obtain registration of a plan of subdivision. The respondent had incurred considerable expenditure in anticipation of or reliance on the Council's performance, which was rendered wasted due to the Council's breach. The case was heard by the High Court of Australia.

The central legal issue before the court was the proper approach to assessing damages for wasted expenditure incurred by a plaintiff in reliance on a defendant's contractual performance, where the defendant's breach has caused that expenditure to be wasted. Specifically, the court considered how a plaintiff should establish the position they would have been in had the contract been performed, particularly when the breach creates uncertainty regarding the recoupment of such expenditure.

The High Court affirmed the application of the "facilitation principle" in assessing damages. This principle, consistent with previous High Court decisions, operates to ease the plaintiff's burden of proof by presuming that reasonably incurred, but wasted, expenditure would likely have been recouped had the contract been performed. The court emphasised that this principle is not rigid and its application depends on the specific circumstances, including the extent of uncertainty caused or increased by the defendant's breach. In this instance, the Council's breach had created considerable uncertainty, justifying the application of the principle.

The High Court dismissed the appeal with costs.