Commonwealth of Australia v Amann Aviation Pty Limited

[1990] HCATrans 156

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S38 of 1990

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Applicant

and

AMANN AVIATION PTY LIMITED

Respondent

Application for special
leave to appeal

MASON CJ TOOHEY J MCHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 6 AUGUST 1990, AT 10.59 AM

Copyright in the High Court of Australia

Amann 1 6/8/90

MR D. GRIEVE, QC:  May it please Your Honours, I appear with

MISS C. ADAMSON for the applicant. (instructed by

the Australian Government Solicitor).

MR R. BAINTON,QC: If the Court pleases, I appear with my

learned friend, MR M. GRACIE, for the respondent.

(instructed by Owen Hodge & Son).

MASON CJ: Yes, Mr Grieve.

MR GRIEVE:  Your Honours, the applicant seeks special leave

to appeal from a majority decision of a Full

Federal Court awarding some $6.6 million in damages

for breach of contract. The essential questions

concern the principles governing the assessment of

damages for breach of a contract for the supply of

services; that being the subject-matter of this

contract.

Now, Mr Justice Sheppard approached the

problem in the Full Court at page 354, in the

following terms, at line 19 - - -

MASON CJ:  Now, are you seeking to support

Mr Justice Sheppard's approach?

MR GRIEVE:  No, but we take this passage from His Honour's

judgment as illustrative of the difficulties with

which the Full Court considered that the matter

raised.

I confess -

said Mr Justice Sheppard at 354, line 19 -

that I have found the exercise of assessing

damages in this case one of substantial

difficulty. I have no doubt that it is a task

that may be approached quite properly, in a

number of different ways.

We submit that that, with respect, is incorrect.

My conclusion, however, is that a result which
does not allow for the various matters to
which I have referred will not do justice as
between the parties.

Well, Your Honours, the mathematics of the

situation demonstrate the substantial divergence of

view among the members of the Federal Court as to

what the just result in this case would be.

Mr Justice Sheppard considered that an

appropriate figures was in the order of

$2.7 million. The majority were almost double

Amann 2 6/8/90

that. The judge at first instance considered a sum

of $410,000 to be an appropriate compensation.

Your Honours, the contract in question was made in March of 1987. It provided for - - -

MASON CJ:  We are familiar with the contract and with the

background of the matter.

MR GRIEVE: Yes. The point that we would wish to make at the

outset is that although the hearing at first

instance took some time, the facts as found by the

primary judge are comparatively now encompassed for
present purposes and were not the subject of any dispute before the intermediate appellate court,

nor would they be in dispute before this Court.

McHUGH J: Well, one very important fact is a subject of

dispute and that is the question of the
availability of other grounds for terminating the

appeal. The learned trial judge held there was a

50 per cent chance; Mr Justice Davies, 20 per cent

and Mr Justice Burchett, no chance and

Mr Justice Sheppard did not deal with the question

except in a roll-up way.

MR GRIEVE: Yes, that is right. Well now, the facts that

were found by the primary judge as to what actually

happened were not in dispute.

McHUGH J: But what is your point? I mean, what is ground

for special leave? What is your ground?

MR GRIEVE: There are two. Put in short compass: first, and primarily, the Full Court took the approach

that the respondent to this application was

entitled to be compensated on the basis that it was

to be put into the position that it would have been

in had the contract not been entered into. In

other words, it was entitled to be awarded damages

for the full extent of its-expenditure regardless

of whether or not in fact it would have recovered

the whole of that expenditure by performance of the

contract.

McHUGH J:  But that was only because they took the view that

the onus was on you to show that they would not

have been able to recoup that expenditure and you

failed to do it.

MR GRIEVE:  Yes. Well, we challenged that latter finding,

both as to point of principle and as to point of

fact. What would have been received and incurred

by the respondent was found by the primary judge as

a matter of fact and it is set out in the affidavit

of Mr Orr and there is no material dispute about

that.

Amann	6/8/90
McHUGH J: There is on the basis there is a three-year

contract.

MR GRIEVE: That is true and there can be no - - -

McHUGH J: That left out of sight the question of renewal.

MR GRIEVE: Yes. Well, the contract made no provision for

renewal in terms or otherwise. The claim was for

damages to a breach of this contract not for

damages for breach of some contract that may be

awarded in the future and we submit that in

principle the Full Court fell into error by taking

into consideration so much as the prospect of the

economic consequences of a further contract as

relevant to any question of damages arising out of

this contract. The issue here was what sum should

the Commonwealth pay Amann for its breach of this

contract.

In substance, the Full Court said it should

pay Amann some $5 million-odd when, as a matter of
arithmetic, Amman could not have recovered the

whole of that sum - indeed, no more than

approximately $3 million - by performance of the

contract. The net result is that Amann has

recovered $2 million more in round terms as a

consequence of the breach of the contract than it could have conceivably recovered as a consequence

of its performance. Now, we submit that that

exposes a fundamental error of principle warranting

the grant of special leave in order that this Court

can restate the principles with clarity; that is

the first ground.

McHUGH J: But the premise of that argument is that you

leave out a consideration altogether: the renewal

of the contract.

MR GRIEVE:	Yes, indeed.
McHUGH J: Well, all the members of the Full Court took the

view that it was, in effect, commercially

unthinkable to approach the case in that way.

MR GRIEVE: Well, they did so by way of, we submit, surmise

or speculation and no more. The observation by

Mr Justice Sheppard that the onus as perceived by

the majority was one that was impossible for the

Commonwealth to discharge was with respect

correctly made in the sense that the question of

whether or not the contract would be renewed in

1990 is a question which, of itself, involves any

number of imponderables, governmental policy being

one of them, as to whether this form of

surveillance would be continued; budgetary matters

being another of them, as to whether or not

Amann 4 6/8/90

surveillance to that level of expenditure or a
significantly greater level of expenditure or a

significantly lesser level of expenditure being

another imponderable and so on it goes.

McHUGH-J: Well, the respondent would want to support the

reasoning of the Full Court and if you want to

challenge it, why is this a suitable vehicle for

special leave if we have got to get into that sort

of factual investigation?

MR GRIEVE: Well, we submit that those matters do not

involve any factual investigation on this part;

they simply are sufficient as I formulate them to

demonstrate that the majority's view that it was

virtually a matter of commercial inevitability that

this contractor would have obtained a renewal was a

finding which was unsupported by any evidence and

one that ought not to have been made. We do not

need to take up this Court's time any longer than

that to expose what we submit to be that error

inherent in their judgment and we then go on to

point to the second question which, in our

submission, is one of sufficient importance to

warrant the grant of special leave; namely, what is the current extent and application of what has been loosely described as the Mihalos Angelos doctrine.

Now, we submit that in days gone by that

doctrine so called was regarded by the courts as

giving rise to what amounts to a virtual

presumption. True it is that the judges over the

years have referred to it as an assumption but we

submit that there is no material difference between

the word "assumption" and "presumption"; namely,

that absent any evidence to the contrary, the

defaulting party would act in such a way under the

contract as would minimize its exposure to damages

in favour of the innocent party.

Now, in recent times, particularly in the

Court of Appeal's decision in the 2CN Name case,

the force of that assumption, or query presumption,

appears to have been rather doubted and, in that

sense, we submit that a second question of

importance arises for this Court's clarification;

namely, what is the status of the doctrine as at

this time? It arises out of this case

appropriately, given the facts as found by the
primary judge and, again, not the subject of
dispute on appeal before the Full Court; certainly
the subject of dispute as to the consequence of the
finding but the findings themselves are not the

subject of dispute - the primary judge's findings

were that the breaches on the part of the

respondent company were such as would have entitled

Amann 5 6/8/90

the Commonwealth to invoke the procedure laid down

by clause 2.24 of the contract.

Now, it was argued below, and it would be

argued here, that given that finding, which we

would seek to defend as a matter of fact and as a

. matter of construction of the clause, the Mihalos

Angelos principle comes into operation so as to

have given the Commonwealth the right, as it were,

to observe the contract or, to put it another way,
to perform it, by strict compliance with the formal

requirements of 2.24 and thereby to bring the

contract to an end. That is one way in which the

Mihalos Angelos question arises in this case.

The other way in which it arises is to what

extent if at all the measure of damages recoverable

by an innocent party in a circumstance such as this

should be discounted to accommodate the existence

of a provision such as 2.24 conferring on the

Commonwealth in this instance a right during the

currency of the three years to bring the contract

to an end by observance with the procedures laid

down in that clause so as to cut short the

contractor's opportunity to recoup his capital

outlay.

We would be contending that that, in itself,

exposes a question of importance and we would seek

the opportunity to argue that a substantial

discount factor should, in any event, be introduced

even if we are wrong on the first point. So,

Your Honours, there are three points.

McHUGH J: The first point being the renewal point?

MR GRIEVE:- No, the first point - I am sorry, the first

Mihalos Angelo point being the point that we were

entitled - or our client was entitled in September

1987 then and there to bring the contract to an end

by observing the clause so ~s to effectively reduce

its viability to nil; that is the first Mihalos

Angelos point.

In summary, therefore, there are three points

which we submit to be of sufficient important to

warrant the granting of leave: first, is a

contract of this nature, in the light of the facts

as found by the primary judge and not the subject
of any disturbance or contest on appeal, one that

is apposite for the application of a McRae-type

test. In other words, can it be said, as the

majority in the Full Court appeared to hold, that

a contracting party in the circumstances of the

respondent in this application has the right to

elect between what is called reliance lost damages

Amann 6 6/8/90

on the one hand and loss of profits damages on the

other.

The Full Court appeared to base the decision

on the principle that such right of election was

available in all cases, whether of not the damages

· were capable of quantification in any accurate way,

qome what may. The consequence, in our submission,

in this case, if that principle is right, is that a
party such as Amann can look to his loss of

profits, look to his reliance, choose the greater

of them and sue for that.

McHUGH J:  If the approach of the Full Court was correct in

taking into consideration the potentiality for

renewal of the contract, could you dispute the

general approach of the three members of the Full

Court? That is to say that it would then, by reason of your default, be virtually impossible to

assess the future income and expenditure from this

contract and its renewal?

MR GRIEVE:  We could not dispute that, when one adds the

words "from this contract and its renewal". But,

of course, the renewal - it is not as though it is

an option. The renewal would be the grant of an

entirely fresh contract. There is nothing

contained in this contract at all that contemplated

any renewal whatever. But if one were to say that,

notwithstanding that fact, notwithstanding that

there was not a word in the contract that said that

the parties were to have any relationship with one

another for one moment beyond 12 September 1990 or

whatever the relevant date was - we submit it was

12 September 1990 - if one can properly regard this

contract as legally open to a construction that

would expose either party to its breach to damages

in respect of performance beyond its time frame,

its express time frame, then I suppose what

Your Honour has put to me must be right.

We would submit, however, that it is wrong as

a matter of principle, and it is not confined to

this case to regard any contract in that light and

to impose an onus of disproof, as it were, on the

part of the defaulting party is an error of

principle warranting the grant of special leave.

So, in sum, there are three points: there is

the Robinson v Harman point; has the Full Court's

decision displaced that and effectively introduced

into the law of contract the notion that the
contract breaker is liable to put the innocent
party in the position in which he was before the

contract was entered into, which is the tortious

test; and secondly, there are the two aspects of

the Mihalos Angelos point.

Amann 7 6/8/90

McHUGH J:  Mr Grieve, the trial took 100 days here.

MR GRIEVE: That is right.

McHUGH J: Would it be necessary to put on the evidence for

the trial?

MR GRIEVE:. No, it would not. We would not expect that

there would be any significant need, if any need at

all, to go beyond the judgments that are in the

leave papers.

MASON CJ:  How long do you think the appeal would take, if

special leave were granted?

MR GRIEVE:	I would not expect it to take more than two to three days. It took about, I think, seven days, if
my memory serves me correctly, in the Full Court but that was an all issues appeal.
MASON CJ:	Or it may take a day and a half.

MR GRIEVE: Perhaps that is right. A day and a half would

see it out.

MASON CJ: Very well, we will see what Mr Bainton has to

say.

MR BAINTON:  Would it be of any assistance to Your Honour to

have a short written outline?

MASON CJ: Yes, Mr Bainton. Thank you.

MR BAINTON:  The first page has been substantially covered

on what His Honour Justice McHugh put to our

learned friend. What is of significance is what

begins at the bottom of page 1 because the three

judges took, all of them, a somewhat different view

of the construction of clause 2.4 which is

critical, the Mihalos Angelos argument, no matter

how it is postulated.

Mr Justice Burchett took the view that it

restrained rather than empowered. The other two

took a somewhat different view, the difference

between them being substantially that

Mr Justice Sheppard thought a decision of the

secretary was arbitrable under the arbitration

clause in the contract. Your Honours, it is quite

wrong to say that there was no dispute before the

Court of Appeal as to the operation of clause 2.4,

either as a question of law or on the facts of the

case. It occupied a couple of days of argument.

McHUGH J: But Mr Bainton, leaving aside the discount point,

is not the critical question as to whether the

Full Court was entitled to take into consideration

Amann 8 6/8/90

the renewal point. If they were, then your case

tends to fall into place pretty - - -

MR BAINTON:  That is the ultimate critical point and it was

decided, with respect, something of the order of

150 years ago. It is the decision - what I had in

mind is referred to in the decision of the Court of

Appeal in England in Chaplin v Hicks, if I can just

hand it up. The best account of it is at page 799

in Lord Justice Farwell's judgment. It is

Richardson v Mellish, 2 Bing 229. I should have

looked at the precise date of that but I think it

is about 150 years ago. That was a case of an

action for breach of contract to appoint a person

captain of an East India-man for a voyage, it

being established that the appointment was always

for one voyage but as a matter of practice it was
usual to give the man the renewal and damages were
assessed on the basis that having not had his first
contractual appointment fulfilled - in other words

it was cancelled - damages could be assessed on the

basis that he lost his opportunity of renewal.

That is this case exactly.

It is also, with respect, not quite right to

say that there was no argument about the likelihood

of renewal, or no evidence about it. There was a

great deal. Most of it can be found to arise out
of the circumstances in which the previous and
still holder of this contract brought pressure on

the government, once it found out that the renewal

contract had been let to my clients, in effect to

cancel that contract, an endeavour which of course

obviously succeeded.

Now, there is a lot of material about that

which, if there is to be an argument on that

question, would have to be looked at, and that, I

think, took about a day to go through before the

Full Court of the Federal Court. But I quite

accept what Your Honour Justice McHugh says to me,

that is the ultimate question and the only ultimate

question. As a matter of principle, we would rely

on the decision I have just referred to. As far as

evidence was concerned, there was ample, so much so

that none of the judges really thought it necessary

to go through it. They just made their statements

about it at the various passages we have noted on

the document.

We would also take issue with one of the

factual matters relied upon, and that is dealt with

close to the end, that Amann Aviation would not

have recouped its expenditure. That assertion is

simply made, with the aid of some figures, on the

back of the application for leave to appeal. We do not accept the correctness of all of those figures.

Amann 9 6/8/90

One of them in particular has got no explicable

origin and it is one of the biggest ones. The

other one is the assertion that part of the loss

was the difference between the cost price of the

aircraft and the value that they were established

to have on cancellation. Now, that figure did not

depend upon depreciation in the ordinary way by

usage for three years; that depended on the fact

that the contract had been cancelled and that they

were no use for anything else. And it was to that

extent, in so far as it exceeded what might be the

depreciation in the ordinary way through usage,

that the loss is directly attributable to the

cancellation of the contract and that is directly,

of course, a result of the repudiation by the

Commonwealth.

So we really have two answers to all of them -

three answers to all of the arguments: one, it is

factually not correct to say we would not have

recovered the entirety of the expenditure because

the figures relied upon to demonstrate that are

wrong, both in fact and in principle. Secondly,

the probability of renewal and profit out of the

renewed contract is to be taken into account in

accordance with the principle.established about 150

years ago, and the possibility or probability was

amply proved in this case. And thirdly, so far as

the Mihalos Angelos principle is concerned, that

depended, in the way it was put to the Federal

Court and in the way in which it has been put to

Your Honours now, entirely upon the proposition

that at any time the Commonwealth could have had

resort to the provisions of clause 2.24 and

cancelled the contract. That, with respect, is

wrong.

If Mr Justice Burchett's view of the

construction is correct, they could never have come

back under 2.24. If the view of the other two is

correct, they could have come back, but the

secretary would have had to observe the principles

of natural justice, as it were, and determine

whether it was proper to determine, for

any ••••. breach. If Mr Justice Sheppard was correct

he would have had to have done that and it could

have been dealt with again before an arbitrator.

But all that is really academic because the

evidence disclosed that all of the judges accepted

that given another two months at maximum Amann

Aviation would have been in the position to perform and comply with every single provision in the

contract. What scope, one has to ask, could be

left for the Mihalos Angelos doctrine? Even if my

learned friend's description of it was an accurate

one, which with respect it is not, the principle

Amann 10 6/8/90

depends really upon - and one goes to

Lord Justice Megaw's judgment for this - it being

able to be seen that cancellation in fact, for a

different reason - that is after the one relied

upon as breach of contract - is to use his phrase,

"predestined". It was, on the facts of that case,

certain beyond any doubt whatever that the contract

would have been terminated for a different reason
within a very short period of days or a week or so
after the cancellation relied upon to found the
claim for breach.

That cannot be said of this matter because of the 2.24 procedure, because of what would have been

involved in that if Mr Justice Davies' and

Mr Justice Sheppard's construction of it is

correct, and it does not sit well, the argument,

with the finding that within two months at the

outside Amann would have been in a position to

observe meticulously each and every term of the

contract.

In our submission, none of the points sought

to be argued are good in law and the factual basis

underlying most of them is not as has been

submitted to Your Honours. It is is different. It

is, in all of those questions, as all of the judges

found it to be, that is to say compliance strictly

within a couple of months, the high probability of renewal at the end of the contract. Those are the two significant points and the evidence on those

was all one way. We do not need to go to that

respect because we have unanimous findings and, in

our submission, it is not an appropriate case for

leave.

MASON CJ: Yes, thank you, Mr Bainton. Yes, Mr Grieve.

MR GRIEVE:  Your Honours, our friend has acknowledged that

it is crucial to the award in his client's favour

that the prospect of renewal was to be taken into

account. That is as I understand it. He does not

seem to accept that, but at all events if that is a

correct analysis of the Full Court and the

majority's view, as we submit that it is, then of

necessity that conclusion involves the Full Court

disregarding the Mihalos Angelos principle

entirely. Indeed, it tips the principle on the

head because it assumes that the contract breaker

in this instance will not only exercise whatever

rights it may have had to minimize its liability to

damages under this contract, but that it would go a

step further and of its own volition grant a fresh

contract.

Now, that puts the assumption around the other

way. That puts the assumption in terms that the

Amann 11 6/8/90

contract breaker will act in such a way as to

maximize its exposure to damages which, in our

submission, cannot be right. Your Honours, the

evidence to which our friend has referred in

relation to the rival contractor's pressure had,

with respect, nothing to do with any question of

. the renewal of this contract, the subject contract.

It had to do with Skywest's position under the

antecedent contract and we submit that it just was

of no assistance and the reason why Their Honours

made no reference to it was that it was entirely

irrelevant to this question of whether or not this contract was going to be renewed at the end of its

time or not.

Now, as to the other matters to which our

friend has referred, we would put again, with
respect, the submissions we put in chief. The

facts are there, it is what interpretation one

makes of the facts. It will not involve - and this

is a matter of assurance - a matter of combing

through evidence. The primary judge's findings

were not the subject of argument, other than as to their interpretation, on the appeal. It was not a matter of saying, "That finding was not supported

by evidence" or "That finding was against the

evidence", no point was taken by either party in

the intermediate court, nor would they, as we

apprehend it, take it in this Court along those

lines. But certainly questions of what one draws

from the primary facts as found were at large in

the intermediate court and they would be at large

in this Court.

MASON CJ: That is the problem with this case, is it not,

from the point of view of special leave, that you

are right in identifying certain issues as ones in

respect of which there is no clearly settled
principle that provides precise guidance but none

the less one has the feeling that if special leave

is granted, a good deal of the Court's time will be

taken up in considering arguments as to what

inferences ought to be drawn from facts as found.

MR GRIEVE:  That may be so, but we would not necessarily

concede that that will inevitably be so and the

amount of time that would be involved would not be

measurable in weeks, nor indeed in any number of

days. The corollary, however, to Your Honour the

Chief Justice's observation is that it cannot be so

that the mere fact that a case at first instance

runs for a matter of weeks or months or even a

number of months, as this one did, of itself is

sufficient to disqualify that case from being the

subject of a grant of special leave.

Amann 12 6/8/90

MASON CJ: I was not suggesting that. What I was really

suggesting was that the Court would be embarking

rather on an exploration of inferences than an

examination of principle, because it may well be

that in the upshot the drawing of inferences

provides almost an answer to the question of

principle.

MR GRIEVE: Perhaps. Although certainly as matters stand,

the Full Court's decision does appear to rest on

what we would submit to be a rather rickety

principle, the notion that, as we put in chief,

even where the numbers are there to be counted and

the end result of a particular contract can be
assessed with precise mathematical accuracy, none

the less one can elect between the better of two

alternatives if one is the innocent party. Now,

that principle, we submit, standing alone ought not

to, as it were, remain on the books, if it be a

principle at all, as we contend it is not, and that

this Court ought to regard this case, with all its

imperfections, as being an appropriate vehicle in
order to, as it were, repeal that principle to the

extent to which it has ever existed.

MASON CJ:  On the renewal issue, which does seem to be a

critical, or near critical issue, what guidance do

we have from the authorities, apart from Chaplin v

Hicks upon which Mr Bainton relies?

MR GRIEVE: Well, precious little, but we would submit this

is not a Chaplin v Hicks case.

McHUGH J:  No, it is not a Chaplin v Hicks case because the

Chaplin v Hicks case it was the loss of chance

derived directly from the breach of contract.

MR GRIEVE: That is right.

McHUGH J: But Richardson v Mellish, although referred to

and perhaps relied on in Chaplin v Hicks, •....

decided before Hadley v Baxendale and the modern

development of the law in damages and contract, has it been commented on apart from Chapman v Hicks, do you know?

MR GRIEVE:  I am afraid I cannot say, Your Honours. Would

Your Honours just pardon me a moment. I am afraid

I cannot give Your Honours a direct reliable answer

to that question. It certainly has not been the

subject of a great deal of discussion, put it that

way.

McHUGH J: But why would not the renewal, quite apart from

the authority of Richardson v Mellish, why would it

not be within the second limb of the Hadley v

Baxendale rule?

Amann	13	6/8/90
MR GRIEVE:	We would put it around another way.	We would

put it in these terms:  we would say that you have

a situation where a contractor goes along to a

party such as the Commonwealth and says, "Look, I

will enter into this contract at an undervalue in

the hope that you might award me a contract in due

course." Now, in that sense the contractor is himself expressly saying that I have spent, in

relation to this contract, an amount of money by

way of self-promotion, goodwill, advertising, call

it what you will, in the hope that that will put me
in a favoured position in relation to some further

contract in time to come.

McHUGH J: But these planes were of practically no use apart

from the work required by this contract.

MR GRIEVE: That is right.

McHUGH J:	And the contractor could only hope to recover the large capital cost in any realistic way if the
contract was renewed or - - -
MR GRIEVE:	No, not at all.
McHUGH J:	I know he was going to make a profit- - -

MR GRIEVE:  No, no, not at all, with respect. It is a

matter for the contractor to say, "I will pitch my

tender on a basis that I will recoup the whole of

my capital costs under this fixed term" or "I will

take the chance of pitching my tender at a lower figure, at a loss figure, in the hope that I can

recoup it under some other contract." That is a

matter for him. He can choose whatever way he

wants and it would appear from the figures exposed

here that he has chosen the second course in this

instance. And that is a matter for him, we would

submit, and does not entitle him, as a matter of

legal principle, to enlarge his damages under this

contract.	He has made a choice, which is his
choice to make-

MASON CJ: But is it not very likely from an economic point

of view that the Commonwealth would offer a renewal

to this contractor who, as it were, having all his

equipment in place, ought to be able to tender
competitively against anyone else?

MR GRIEVE:  The probabilities are at most even, and I say

that only on the footing that the previous

contractor, Skywest, was in that very position up to the grant of the contract to Amann. It was in

place with its infrastructure, it did tender; it

tendered competitively but lost the tender to

Amann.

Amann 14 6/8/90

McHUGH J: But Skywest had not been performing as the

Commonwealth wanted.

MR GRIEVE:  No, no; there was some measure of contest about

that but it does not follow, indeed may I say this:
there was no suggestion on the evidence that the

reason why the Commonwealth accepted Amann was

because of that factor. It was purely a matter of

money. Amann priced the contract at a lower figure

than Skywest. There was some evidence of

dissatisfaction on the Commonwealth's part with

Skywest, true it was, but there was no evidence,

nor a finding critically of a nexus between the two

things. Amann simply beat Skywest to the tender on

purely monetary grounds.

Now, if history is any instructor, that would

tend to say that the probabilities of the renewal

were at best even and, indeed, we would submit that

the legal principle, the Mihalos Angelos principle,

comes into play over the top to say that one would

presume - or assume - that the Commonwealth would

not renew the contract after its breach.

McHUGH J: But there are a lot of outstanding questions of

fact in this case. The commercial world is not

going to fall apart if we refuse special leave in

this case, is it?

MR GRIEVE: I am not sure, Your Honour. Nor, I suppose, is

the Commonwealth, but we do submit there are some questions to be clarified and basic ones at that.

MASON CJ: The Court is minded to grant special leave in

this case but the Court reserves the right to

reconsider the grant of special leave, with the

possibility of rescinding it, after the Court is better seized of the issues which will arise for

determination on the hearing.

MR GRIEVE: If Your Honours please. ·There is a

supplementary order that we are obliged to ask
Your Honours to make.	The Full Court granted a

stay - it is in the papers at page 414 - but

limited the stay as it were up to the point of this

leave application. May we, with respect, ask

Your Honours to extend that stay in the terms

granted until the hearing of the appeal.

MASON CJ: That is in paragraph 5 on page 414?

MR GRIEVE:	Yes, Your Honour.
McHUGH J:	Is there any suggestion that you could not

recover the money back? Is there any evidence?

Amann 15 6/8/90

MR GRIEVE:  Yes, there is, and that is why we had to apply

for the stay. There was some evidence at the trial of the financial position of the respondent company

that would suggest that there would be a real risk.

MASON CJ:	What do you say about that, Mr Bainton?
MR BAINTON:	The financial circumstances which were examined

at the trial were a balance sheet on the basis that the present respondent was not entitled to any part of this verdict. It is a very different position

from the one it is in now. It has been paid half

and it has got a presumptive entitle to the

balance. I am trying to remember whether any other

material was before him when the stay was granted

in the Federal Court but I do not think it was.

TOOHEY J: 

Why then was the stay granted, Mr Bainton?

MR BAINTON: 

Presumably on the basis that the Full Court of

the Federal Court thought there was an arguable
point as to the amount that is said to be in issue

and I can only assume they must have thought there
was some possibility that it would not have been

recovered. But they did not deliver reasons; they

simply made the order.

MASON CJ: There will be a stay in terms of paragraph 5 of

the order of the Full Court of the Federal Court of

4 April 1990.

MR GRIEVE: Until the hearing of the appeal.

MASON CJ: Until the hearing of the appeal or further order.

AT 11.42 AM THE MATTER WAS ADJOURNED SINE DIE

Amann 16 6/8/90