Cockburn Cement Ltd v BGC (Australia) Pty Ltd

Cockburn Cement Ltd (Cockburn) and BGC (Australia) Pty Ltd (BGC) were parties to a dispute concerning the interpretation and application of a contract for the supply of cement. The matter came before the Supreme Court of Western Australia.

The central legal issues before the Court were whether BGC had breached the contract by failing to take delivery of the minimum quantities of cement stipulated, and if so, what damages were recoverable by Cockburn. The Court was required to determine the proper construction of the contract's "take or pay" provisions and the extent to which Cockburn's actions, including its dealings with third-party purchasers of cement, affected its claim for damages.

The Court found that BGC had indeed breached the contract by failing to meet the minimum take-or-pay obligations. In assessing damages, the Court applied principles of contract law, considering the loss actually suffered by Cockburn. Crucially, the Court held that Cockburn was not required to mitigate its loss by selling surplus cement to third parties at a discount, as such sales were not a direct consequence of BGC's breach but rather a commercial decision made by Cockburn in response to BGC's non-performance. The Court determined that the damages should be calculated based on the profit Cockburn would have made had BGC taken the contracted quantities, without an offset for the proceeds of sales to third parties.

The Court ordered that BGC pay damages to Cockburn in accordance with this assessment.