Commonwealth of Australia v Cockatoo Dockyard Pty Limited

The Commonwealth of Australia (the appellant) appealed to the High Court of Australia from a decision of the Full Federal Court concerning a dispute with Cockatoo Dockyard Pty Limited (the respondent). The dispute arose from a contract for the repair of a naval vessel, HMAS Success, and involved claims for damages for breach of contract and for the recovery of moneys paid under alleged duress.

The High Court was required to determine, among other things, whether the respondent had established a claim for moneys had and received by the Commonwealth under duress, and whether the Commonwealth had breached the contract by failing to provide certain information and by its conduct in relation to the repair work. A key issue was the proper characterisation of the payments made by the respondent to the Commonwealth, and whether these payments were made under such compulsion as to vitiate consent.

The Court analysed the principles of economic duress, noting that it requires proof of a demand for payment that is illegitimate and that the payment was made in response to that demand, leaving the payer with no practical choice but to pay. The Court found that the respondent had not established economic duress, as the payments were made in the context of a commercial dispute where the respondent had alternative avenues available to it, even if they were commercially disadvantageous. The Court also considered the contractual obligations regarding the provision of information and the conduct of the parties, ultimately finding that the Commonwealth had not breached the contract in the ways alleged by the respondent.

The High Court allowed the appeal, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for further consideration of the remaining issues.