Conagra Inc v McCain Foods (Aust) Pty Ltd

The Federal Court of Australia in the case of Conagra Inc v McCain Foods (Aust) Pty Ltd was tasked with determining the extent of damages McCain Foods was entitled to recover from Conagra Inc due to an interlocutory injunction that had been granted in April 1991 and subsequently dissolved in June 1991. The injunction had restrained McCain Foods from advertising, distributing, and selling their "McCain Healthy Choice" frozen dinner products. McCain claimed damages due to lost sales of Healthy Choice and Traditional dinners, as well as expenses incurred from ceasing production and advertising during the period of the injunction. The court was required to assess the lost sales attributable to the injunction, the expenses incurred, and the appropriate period for which interest should be calculated, as well as the effect of taxation on the damages. The key legal issues revolved around the principles governing the assessment of damages based on an undertaking as to damages, and whether the losses claimed by McCain were a natural consequence of the injunction.

The court held that damages should be confined to losses that were a natural consequence of the injunction. The court examined the evidence and expert opinions provided by both parties, focusing on the impact of the injunction on McCain's sales of Healthy Choice and Traditional dinners. The court found that McCain had sustained losses during the period of the injunction and that these losses extended beyond the period of the injunction due to the delay in relaunching the Healthy Choice product and the disruption to their marketing efforts. The court accepted the evidence of John Legge, one of McCain's experts, who used a sophisticated Bass-type model to estimate the lost sales. The court concluded that McCain was entitled to damages in the amount of $1,770,000 for lost sales of Healthy Choice and Traditional dinners from April 1991 to December 1992, and $55,000 for expenses incurred due to the injunction. The court also ruled that interest should not be payable for the period 1 November 1992 to 27 May 1993 due to the unreasonable delay in filing the affidavits. The matter of taxation was left to be determined by the parties.