Hungerfords (Registered Firm) & Ors v Walker

The parties to this proceeding before the High Court of Australia were Hungerfords (a registered firm) and associated firms, and Peter Victor Walker and other members of the Walker family. The dispute concerned the assessment of damages, specifically the calculation of lost profits and consequential financial loss arising from a breach of contract or duty.

The court was required to determine several legal issues. These included whether the evidence supported the inference that a limiting factor on the business's growth was customer demand rather than the ability to purchase goods, and consequently, whether any injected capital would necessarily have produced turnover at a specific gross profit rate. The court also considered the legal effect of an admission concerning an implied term in the defence, particularly in light of developments in contract law and the relationship between rules in tort and contract. Furthermore, the court had to assess whether the highest interest rate paid on borrowings could be assumed to be the earning rate on marginal sums of money.

The court's reasoning addressed the submissions made by counsel regarding the evidence of the business's growth and profitability. It was noted that the evidence did not clearly distinguish between customer demand and the ability to purchase goods as the primary constraint on growth, making it difficult to infer the precise return on additional capital. The court also considered the legal implications of admissions, noting that admissions of law do not alter the legal position and that recent developments in contract law, particularly concerning consequential financial loss, must be read subject to established principles. The court rejected the assumption that the highest borrowing rate necessarily reflected the earning rate on marginal funds, citing the existence of other borrowings at different rates.