Commonwealth of Australia v Amann Aviation Pty Limited

The Commonwealth of Australia appealed to the High Court of Australia against a decision of the Full Federal Court which had awarded damages to Amann Aviation Pty Limited for breach of contract. Amann Aviation had entered into a contract with the Commonwealth for the provision of aerial surveillance services. The Commonwealth terminated the contract, and Amann Aviation sued for damages, alleging wrongful termination.

The High Court was required to determine whether the Commonwealth's termination of the contract was lawful, and if not, the principles governing the assessment of damages for breach of contract, particularly in circumstances where the innocent party had a duty to mitigate its loss. A key issue was whether Amann Aviation had a duty to accept an offer of alternative employment from the Commonwealth after the termination, and if so, the extent to which this affected the damages recoverable.

The High Court held that the Commonwealth had breached the contract by terminating it. The Court affirmed the principle that an innocent party has a duty to mitigate its loss, but this duty does not extend to accepting an offer of employment that is not substantially different from the employment lost. In this instance, the alternative employment offered by the Commonwealth was found not to be substantially similar to the contract that had been terminated, and therefore, Amann Aviation was not obliged to accept it. The Court applied the principles of contract law regarding the assessment of damages for loss of profit and the duty to mitigate.

The High Court dismissed the appeal, upholding the Full Federal Court's decision that Amann Aviation was entitled to substantial damages for the breach of contract.