Ruthol Pty Ltd v Tricon (Australia) Pty Ltd - [2005] NSWCA 443

No judgment structure available for this case.

Reported Decision:
(2006) NSW ConvR 56-145

Court of Appeal

CITATION:
Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443

HEARING DATE(S):
3 November 2005

JUDGMENT DATE:

21 December 2005

JUDGMENT OF:
Giles JA at 1; Santow JA at 70; Hunt AJA at 71

DECISION:
Appeal dismissed with costs.

CATCHWORDS:
Damages - breach of contract - delay in completion of sale of land - purchaser was lessee from vendor - vendor sued for rent for period of delay - whether claim failed because was taking advantage of own wrong - was entitled to rent - purchaser entitled to damages in the same amount - whether in assessing damages allowance for benefit to purchaser of not having to pay purchase price for period of delay - what was benefit - needed proof of actual benefit - and no allowance because in the circumstances any benefit not caused by breach of contract. D

CASES CITED:
Alghussein Establishment v Eton College (1988) 1 WLR 587;
Allen v Bega Valley Council (1994) 85 LGERA 364;
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2001) 215 ALR 385;
Bendall v Haines (1991) 172 CLR 60;
British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd (1912) AC 673;
Chappell v Hart (1998) 195 CLR 232;
Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 2 AC 180;
re C L Nye Ltd (1971) Ch 442;
Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005;
Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd (1999) 2 AC 22;
Erie County Natural Gas & Fuel Co Ltd v Caroll (1911) AC 105;
Gates v The City Mutual Life Assurance Society Pty Ltd (1986) 160 CLR 1;
Grozier v Tate (1946) 16 LGR 57;
Harbutt's "Plasticine" Ltd v Wayne Tank & Pump Co Ltd (1970) 1 QB 447;
Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263;
Hoad v Scone Motors Pty Ltd (1977) 1 NSWLR 88;
Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358;
Hooper v Lane (1859) 6 HL Cas 443; 10 ER 1368;
Hussain v New Taplow Paper Mills Ltd (1988) 1 AC 514;
Hungerfords v Walker (1988) 171 CLR 125;
Hyder Consulting (Australia) Pty Ltd v Whlh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313;
Koch Marine Inc v D'Amica Societa di Navigazione ARL ("The Elena d'Amico") (1980) 1 Ll LR 75;
Lavarack v Woods of Colchester Ltd (1967) 1 QB 278;
Levison v Farin (1978) 2 All ER 1149;
re London Celluloid Company (1988) 39 Ch D 190;
Mills v Ruthol Pty Ltd [2002] NSWSC 294;
Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212;
Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (1991) 35 FLR 1;
New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France (1919) AC 1 (HL); (1917) 2 KB 717 (CA);
Richco International Ltd v Alfred C Toepfer International GmbH (1991) 1 Ll R 136;
Ruthol Pty Ltd v Mills [2003] NSWCA 56;
Screenco Pty Ltd v R L Drew Pty Ltd (2003) 58 NSWLR 720;
Simonius Vischer & Co v Holt & Thompson (1979) 2 NSWLR 322;
Steedman v The Council of the Shire of Baulkham Hills (No 2) (1993) 80 LGERA 323;
Sutor v Gundowda Pty Ltd (1950) 81 CLR 418;
TCN Channel 9 Pty Ltd v Hayden Engerprises Pty Ltd (1989) 16 NSWLR 130;
The World Beauty (1970) P 144;
Travel Compensation Fund v Robert Tambree [2005] HCA 69;
Tyco Australia Pty Ltd v Optus Network Pty Ltd [2004] NSWCA 433;

PARTIES:
Ruthol Pty Ltd - Appellant
Tricon (Australia) Pty Ltd - Respondent

FILE NUMBER(S):
CA 41133/04

COUNSEL:
R Angyal SC & K Andronos - Appellant
M W Young - Respondent

SOLICITORS:
David Landa Stewart, Broadway - Appellant
Grahame Jackson & Associates - Respondent

LOWER COURT JURISDICTION:
Compensation Court

LOWER COURT FILE NUMBER(S):
SC 4858/01; SC 5102/04

LOWER COURT JUDICIAL OFFICER:
Palmer J

CA 41133/04
SC 4858/01
SC 5102/04

GILES JA
SANTOW JA
HUNT AJA
Wednesday 21 December 2001

RUTHOL PTY LTD v TRICON (AUST) PTY LTD

Judgment

1 GILES JA: The appellant vendor failed to complete a contract for the sale of land on the contractual completion date, and was liable in damages to the respondent purchaser for delay in completion. The respondent was the lessee of the land from the appellant. Could the appellant recover from the respondent the rent for the period of delay? If it could, were the respondent’s damages for breach of contract in an amount equivalent to the rent to be reduced, to reflect a benefit to the respondent through not having to pay the purchase money for the period of delay?

Facts

2 On 25 February 1997 the appellant granted to Mr and Mrs Mills an option to purchase the property 258-260 Condamine Street, Manly Vale, exercisable between 7 April 1997 and 30 June 1997. The option was not exercised prior to 30 June 1997.

3 On 6 May 1998 the appellant leased the property to the respondent for a term of five years commencing on 1 July 1998. Rent was payable monthly in advance without any set-off or deduction. The lease provided for holding over as a monthly tenant after the expiry of the term and for an option to purchase exercisable during the first three years of the term.

4 In circumstances which need not be recounted, but which are described in Mills v Ruthol Pty Ltd [2002] NSWSC 294 (Palmer J) and Ruthol Pty Ltd v Mills [2003] NSWCA 56 (Court of Appeal), in May 1999 the Mills brought proceedings alleging that the time for exercising their option to purchase had been extended and that they had validly exercised it.

5 On 30 May 2001 the respondent exercised its option to purchase. Contracts for the sale of the property were exchanged on 7 June 2001. The purchase price was $640,000. The contractual completion date was 19 July 2001.

6 The Mills’ claim was unresolved as at 19 July 2001. The appellant was unable to complete the contract for sale to the respondent. In October 2001 the respondent brought proceedings claiming specific performance of the contract for sale, alternatively damages for breach of contract.

7 Palmer J heard together the Mills’ proceedings and the respondent’s proceedings. His Honour held that the Mills had validly exercised their option to purchase and that their equity took priority over that of the respondent. The Court of Appeal affirmed the Mills’ exercise of their option to purchase, but held that they had a mere equity over which the respondent’s equitable interest took priority.

8 The decision of the Court of Appeal was delivered on 26 March 2003. For some reason orders were not made until 5 November 2003. It was ordered that the contract for sale to the respondent be specifically performed, that the appellant pay damages to the Mills for breach of their option to purchase, and that the assessment of any damages claims between the parties be referred back to Palmer J for hearing.

9 The contract for sale was completed on 11 March 2004.

10 The respondent had remained in possession of the property throughout. It had paid the rent until 19 July 2001, but had then ceased to pay rent. Accordingly, as at 5 November 2003 it could not claim damages represented by rent paid by it for the period 20 July 2001 to 11 March 2004. It is unclear whether it claimed damages of any other kind; strictly, its claim to damages was in the alternative to specific performance, and it had obtained specific performance.

11 On 24 June 2004 the appellant brought proceedings against the respondent in the District Court, claiming over $250,000 as rent and interest on rent for the period 1 August 2001 to 11 March 2004. On the respondent’s application, the District Court proceedings were removed into the Supreme Court to be heard concurrently with the assessment of damages claims to be undertaken by Palmer J.

12 The respondent filed a defence to the appellant’s claim in which it admitted that it had not paid the rent, but said that it was not obliged to pay it and -

“5. In relation to the entirety of the Statement of Claim, the Defendant says that the plaintiff is precluded from claiming any and all of the monies sought in the Statement of Claim by reason that the cause of the Defendant remaining a tenant of the Plaintiff since 19 July 2001 was the Plaintiff’s own wrong in failing to convey the Property to the Defendant on 19 July 2001 in breach of contract, and that the Plaintiff may not take advantage of its own wrong.

6. Further, or in the alternative, the Defendant relies on its claim for damages for breach of contract against the Defendant in Supreme Court Equity Division proceedings 4858 of 2001 (‘the Tricon Proceedings’) as a complete set off or counter-claim.

13 The hearing before Palmer J was concerned with the respondent’s damages and the appellant’s claim, not with the Mills’ damages. The respondent did not maintain a damages claim other than in response to the appellant’s claim. It said that it was “not claiming any damages over and above the level of [the appellant’s] claim”, and that all that it was seeking was that “no net damages [sic]” be paid to the appellant.

Palmer J’s decision

14 The appellant acknowledged the principle that it could not take advantage of its own wrong, but submitted that it would not be taking advantage of its own wrong if the respondent were put in the position it would have been in if the contract had been performed. It accepted that the respondent was entitled to damages in an amount equivalent to the rent recoverable by it, but submitted that to put the respondent in the position it would have been in if the contract had been performed the damages should include an allowance in its favour, of an amount representing the interest saved by the respondent because it was not paying interest on borrowed purchase money from 19 July 2001 to 11 March 2004 or alternatively of an amount representing the interest the respondent could have earned by investing the purchase money from 19 July 2001 to 11 March 2004. The appellant submitted that the judge should order the respondent to “pay damages” to it in one or other of these amounts.

15 If the appellant’s submissions had been accepted, the result would not have been an order that the respondent pay damages to the appellant. The appellant had a liquidated claim against the respondent, the respondent had a damages claim against the appellant, and there would have been a question of two judgments and possibly set-off or of one judgment for the net amount (see s 91 of the Supreme Court Act 1970). The substance was clear enough; the appellant claimed only the net amount of rent less damages.

16 After describing how the issues arose and summarising the respondent’s answers to the appellant’s claim, Palmer J said -

“11 I should observe at this point that there is no evidence at all that Tricon would have been compelled to borrow the whole of the purchase price of $640,000 in order to complete the contract or, indeed, that it would have had to borrow any part of the purchase price. There is simply no evidence at all as to how Tricon would have provided the purchase price of the property.”

17 The nub of Palmer J’s reasons was -

“14 In this case, I am not satisfied that there should be any deduction made from the damages that Tricon would be able to establish for breach of the contract for sale by Ruthol, whether in the form of an allowance of interest notionally saved or in the form of interest notionally earned.

15 As I have said, there is no evidence that Tricon would have had to borrow any amount in order to complete the purchase from Ruthol. The fact that Tricon has in a certain sense kept the purchase price in its own pocket is, in my view, neutral. If the contract had been performed, Tricon would have been the owner of the property since 19 July 2001. It would then have had an appreciating asset, as the valuation evidence shows. It may have been able to sell that asset at a profit a short time thereafter or it may have been able to use the asset for other profit-making endeavours. I do not think that it is permissible for a wrongdoer in the position of Ruthol to compel an innocent party in the position of Tricon, as it were, to notionally invest or notionally borrow in order to mitigate a loss occasioned by the wrongdoer's breach of contract.

18 His Honour ordered that there be judgment for the respondent on the appellant’s claim, and assessed the damages payable by the appellant to the respondent at nil “by reason of” that judgment.

Taking advantage of one’s own wrong

19 If the principle applied, it would preclude the appellant from recovering the rent claimed. Whether the appellant was taking advantage of its own wrong would arise in the appellant’s claim for the rent, and would not be answered by the fact that the respondent would have been entitled to damages, if it had paid the rent, in an equivalent amount, let alone in a lesser amount. In its application in the law of contracts, the principle is not concerned with arriving at compensatory damages for breach by the wrongdoer, but with whether the wrongdoer can enforce its contractual right.

20 A line of authority founds on the principle a rule of construction that, in the absence of clear words, a contractual entitlement upon a particular event will not be enlivened if the event came about through breach of the party seeking to rely on it (New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France (1919) AC 1 (HL); (1917) 2 KB 717 (CA); Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 2 AC 180; Alghussein Establishment v Eton College (1988) 1 WLR 587; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130; Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212). (This has also been seen as an implied term, for example Richco International Ltd v Alfred C Toepfer International GmbH (1991) 1 Ll R 136.) As an illustration, in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd the contract could be terminated if a related contract “comes to an end”; it was held that these words should be construed so as to exclude any termination in substance caused by the terminating party’s repudiation of the related contract. The principle founds a like rule of construction of statutes (Grozier v Tate (1946) 16 LGR 57; Steedman v The Council of the Shire of Baulkham Hills (No 2) (1993) 80 LGERA 323; Allen v Bega Valley Council (1994) 85 LGERA 346).

21 In Broom’s Legal Maxims, 10th ed (1969 reprint) it is said at 191 that the maxim that no man shall take advantage of his own wrong is “based on elementary principles” and “admits of illustration from every branch of legal procedure”. Many illustrations are given beyond the construction of contracts, to the extent of treating estoppel in pais as “referrable to the principle set forth in the maxim” (at 197). But the work recognises that the operation of the maxim is qualified, in particular citing at 199-200 Bramwell B in Hooper v Lane (1859) 6 HL Cas 443 at 460-1; 10 ER 1368 at 1375-6 -

it means that no one shall gain a right by his own wrong; and not that if he has a right, he shall lose it, or the power of exercising it, by a wrong done in connection with it

22 Thus a party in breach of contract may be precluded from relying on a contractual entitlement arising from the breach, but will not be precluded from relying on a contractual entitlement which does not arise from the breach.

23 In re London Celluloid Company (1988) 39 Ch D 190 shares were allotted under a contract which had to be registered to legalise their issue as fully paid up, and in the contract the company promised to register it. The shares were transferred to directors of the allottee. The contract was not registered. When the liquidator required the directors to pay calls, they argued that the company was taking advantage of its own wrong by requiring payment of calls which would not have been payable if the contract had been registered. That the directors were not parties to the contract formed no part of the rejection of the argument, which was expressed by Bowen LJ at 206 -

Hooper v Lane

To return to the maxim that a man cannot take advantage of his own wrong, we can see the point where it ceases to be applicable. Construing the maxim as I have said, the first question is, has the right to demand payment in cash been acquired through the breach of contract in question? Was it through non-registration of the contract that the liability to pay in cash arose? In my opinion it was not: the liability arose from taking the shares, although such liability might have been avoided in the one way pointed out by the section.”

24 Although with rights of third parties in mind, Hooper v Lane and re London Celluloid Company were considered with evident acceptance in Ruthol Pty Ltd v Mills at [90]-[97] when considering the effect of the appellant’s wrongdoing towards the Mills upon priority between the Mills and the respondent. The passage from the judgment of Bowen LJ in re London Celluloid Company was adopted in re C L Nye Ltd (1971) Ch 442. In Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005 Palmer J (as it happens) took from Hooper v Lane, citing also re London Celluloid Company, that the maxim only applies to the extent of undoing the advantage gained by the wrongdoer and not the extent of taking away a right previously possessed.

25 In my opinion, the principle did not apply to preclude the appellant from recovering the rent claimed. The respondent was obliged from the beginning to pay the rent to the appellant for the term of the lease and while holding over as a monthly tenant, and to pay it without any set-off or deduction. The respondent remained in possession of the property, and its right to possession was referable only to its position as lessee and then as tenant holding over; it did not have a right to possession under the uncompleted contract for sale. The appellant’s breach of contract by failing to complete the contract for sale on 19 July 2001, or its breach of a contract found in the lease with its option to purchase rather than the contract for sale (which I doubt is correct), meant that the respondent was obliged to pay the rent for longer than would otherwise have been the case; but the obligation to pay the rent did not arise from the breach of contract.

The respondent’s damages - introduction

26 It became common ground that, whether through circuity of action or set-off or counterclaim, if the respondent’s damages were the amount of the rent recoverable by the appellant the substantive outcome should be that the appellant recovered nothing. The appellant submitted that there was no circuity of action and less than complete set-off or counterclaim, and that it should recover the net amount of rent less damages, because the respondent’s damages were less than the amount of the rent. It said that the damages were less by “the amount of the benefit gained by not having to part with the purchase money for about 32 months”, being either the interest saved by the respondent or the interest it earned. The contest was over assessment of the respondent’s damages, not over substantive or procedural questions of circuity, set-off or counterclaim.

27 Before Palmer J the appellant had submitted that the parties should agree on the amount of the respondent’s damages, and that failing agreement there should be an inquiry. In context, this had meant agreement upon or an inquiry into the amount of the interest saved by the respondent or the interest it could have earned. The respondent had not opposed that course if the appellant’s submissions were otherwise accepted. On the respondent’s submissions, however, there was no question of agreement or an inquiry because the appellant was precluded from recovering the rent claimed, and because in any event no principle of law required that it account to the appellant for any “incidental” benefit through not having to pay the purchase money sooner. No attention appears to have been given to burdens of proof, or to whether it was necessary that the appellant show that there was a monetary benefit gained by the respondent into the amount of which an inquiry should be held.

28 Palmer J considered that the respondent’s damages were “precisely the amount which it would otherwise have to pay [the appellant] under the holding-over clause of the lease” (see his [16] above; strictly, under the respondent’s covenant to pay rent and then under the holding over clause). On one view, that was because there was no evidence showing that the respondent would have needed to borrow or how it would have provided this purchase price and, in the absence of proof of the actual monetary benefit to the respondent, notional interest saved or earned was not to be taken into account. On that view, questions of burden of proof and the suggested inquiry would have arisen. Hence another view, that his Honour’s conclusion was because, even if there were an actual monetary benefit by way of interest saved or interest earned, it was not to be brought to account at all in assessing the respondent’s damages. It is, with respect, not entirely clear.

29 The referral back to Palmer J was for the assessment of the respondent’s damages, and no reason appears for the appellant (or the respondent) to have assumed that there would be an inquiry and to have held back from presenting all necessary evidence. Indeed, the appellant’s supplementary written submissions stated that when arranging the hearing date his Honour “ordered the parties to notify his Associate if they intended to lead evidence.” On the other hand, before Palmer J the respondent did not oppose an inquiry and did not submit that the evidentiary vacuum was of itself fatal to the appellant.

30 In this Court the appellant submitted that the amount of the benefit was a matter for an inquiry before an Associate Judge, and asked for judgment in its favour on its claim for the rent and an inquiry into the respondent’s damages. The respondent at one point accepted that this was the appropriate outcome if the appeal were upheld, although with a stay of execution on the judgment while its damages were assessed, and the appellant did not oppose a stay. But, the Court having raised burdens of proof and requested supplementary written submissions, the respondent came to submit that -

“ ... if [the appellant] wished to obtain some greater benefit than that which was available by inference from the mere fact that [the respondent] did not have to pay the bulk of the purchase price until a later date, it was for [the appellant] to adduce that evidence at the hearing before Palmer J”.

The respondent’s damages - benefit

31 The starting point for appellant’s submissions was that damages for breach of contract were compensatory, intended to put the innocent party in the position it would have been in if the contract had been performed (see for example Gates v The City Mutual Life Assurance Society Pty Ltd (1986) 160 CLR 1 at 11-12). It submitted that there had to be an allowance in favour of the guilty party for any benefit obtained as a result of the breach of contract other than a purely collateral benefit, citing British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd (1912) AC 673; Levison v Farin (1978) 2 All ER 1149 and Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263. It said that as a result of its breach the respondent obtained a benefit from not having to outlay the purchase money on 19 July 2001 and until 11 March 2004, although the amount of the benefit was not presently known and should be the subject of an inquiry.

32 It is necessary to identify more closely the benefit in question. The evidence did not disclose what deposit was paid, but assuming that it was the conventional ten per cent the respondent had to pay the appellant $576,000 plus or minus adjustments on completion. The appellant submitted that not having to pay the money for nearly three years was itself a “tangible real benefit”, because either the respondent did not have to borrow the money or the respondent could invest the money or continue to invest it. It described this as an actual, not theoretical, benefit.

33 It appears to have been put to Palmer J that the proposed inquiry should be into the interest the respondent could have saved or earned, hence his Honour’s references to notional interest. This underlay the submission in this Court, notwithstanding the label of an actual benefit. The appellant’s notion of an actual benefit lay in an asserted benefit in itself of not having to pay money. There is a difference, however, between placing a value on a benefit of not having to pay money, according to what interest could have been saved or earned, and determining whether an actual benefit was gained and its amount in dollars and cents because the money did not have to be paid.

34 If the respondent had used borrowed money on 19 July 2001, it would have paid interest for the duration of the loan. If it in fact used borrowed money on 11 March 2004, it still had to pay interest for the duration of the loan. It is not correct to postulate a benefit because the respondent was not paying interest on borrowed money from 19 July 2001 to 11 March 2004. There may have been a benefit, although not a benefit valued by the amount of interest paid for the period of delay, or there may have been a detriment, depending on the durations and interest rates for the borrowings and even, if the borrowings were on identical terms, on whether the adjustments on settlement were more or less on 11 March 2004 than they would have been on 11 July 2001. That there was an actual benefit was no more than speculative, and if there was a benefit it was almost certainly not in an amount equal to the interest saved.

35 If the respondent would have used and did use its own money as the purchase money, it had the money for alternative use from 19 July 2001 to 11 March 2004. It may have left the money idle, it may have invested it, or it may have used it in its general business activities (including repayment of other borrowings). It may have used the money profitably or it may have lost it all. On an optimistic presumption, there may have been an actual benefit, but valuing the benefit by the interest the respondent could have earned by investing the money from 19 July 2001 to 11 March 2004 is unwarranted. That there was an actual benefit of some kind scarcely rose above speculation, but its amount was no more than speculative.

36 The complexity in the case of partly borrowed money and partly the respondent’s own money, or a change in the mix of money between July 2001 and March 2004, need not be spelled out. There may have been an actual benefit to the respondent, but a benefit was far from certain. Whether there was an actual benefit, and why and of what value, required factual investigation.

37 I do not think it is correct to assert a benefit from not having to pay the purchase money for the period of delay, describing it as an actual benefit. There was the potential of a benefit. For the respondent’s damages to be reduced, either the respondent had to be obliged vis a vis the appellant to take steps to realise the potential, under the avoidable loss principle of mitigation, or the appellant had to prove that the respondent gained an actual benefit, under the avoided loss principle of mitigation.

The respondent’s damages – principles of mitigation

38 The compensatory objective of damages, for breach of contract or for other wrongs, is not given full effect. Limitations on recovery of loss are imposed by concepts of remoteness and foreseeability and causation. While compensating advantages (I use the phrase used by, amongst others, Professor Burrows in Remedies for Torts and Breach of Contract, 3rd ed, Ch 7) generally reduce recovery of loss, not all compensating advantages which, as a matter of “but for” causation, are gained in consequence of a guilty party’s wrong, are taken into account. Obvious illustrations are insurance recovery, charitable assistance and (subject to statute) social security benefits. Of present relevance, a compensating advantage from the innocent party’s mitigatory action is not always brought to account.

39 The innocent party must take all reasonable action to mitigate the loss to it consequent on the guilty party’s wrong, and can not recover damages for any loss which it could have avoided but unreasonably failed to avoid (the avoidable loss principle). The loss claimed by the respondent was the rent payable to the appellant. The respondent could not have avoided that loss by anything it did or failed to do about payment of the purchase money. The respondent did not claim loss because it had to borrow the purchase money on more unfavourable terms in March 2004, or because it was adversely affected in its investment strategy. Although the asserted benefit could have been put as a contention that the respondent was obliged to take steps to realise a benefit from not having to outlay the purchase money on 19 July 2001 and until 11 March 2004, it was not so put. I do not suggest that the contention would have had merit. The appellant did not rely on the avoidable loss principle.

40 If the innocent party does take action to mitigate the loss to it consequent on the guilty party’s wrong, even if the action goes beyond reasonable action, in general the guilty party is entitled to an allowance for the benefit to the innocent party from that action (the avoided loss principle). This was the basis of the appellant’s submission.

41 That the benefit is not always taken into account was explained by Viscount Haldane LC in the leading case of British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd at 689-91; it is convenient to set out a lengthy passage from his Lordship’s speech -

“As James L.J. indicates, this second principle does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account even though there was no duty on him to act.

Staniforth v Lyall

I think that this decision illustrates a principle which has been recognized in other cases, that, provided the course taken to protect himself by the plaintiff in such an action was one which a reasonable and prudent person might in the ordinary conduct of business properly have taken, and in fact did take whether bound to or not, a jury or an arbitrator may properly look at the whole of the facts and ascertain the result in estimating the quantum of damage.

Erie County Natural Gas and Fuel Co. v Carroll

Wertheim v Chicoutimi Pulp Co.

The subsequent transaction, if to be taken into account, must be one arising out of the consequences of the breach and in the ordinary course of business

Bradburn v Great Western Ry. Co

Jebsen v East and West India Dock Co.

did not arise out of the transactions the subject-matter of the contract

Joyner v Weeks

res inter alios acta with which the original lessee had nothing to do and which he was not entitled to set up

42 In British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd the claimant was sold defective turbines. It replaced them with turbines which were more profitable to operate than the defective turbines would have been. It was held that the benefit from the replacement turbines should be taken into account as an allowance against the cost of the replacement turbines, on the basis that the replacement of the turbines -

“…was not res inter alios acta, but one in which the person whose contract was broken took a reasonable and a prudent course quite naturally arising out of the circumstances in which he was placed by the breach. Apart from the breach of contract, the lapse of time had rendered the appellants’ machines obsolete, and men of business would be doing the only thing they could properly do in replacing them with new and up-to-date machines.” (at 691)

43 The appellant cited also Levison v Farin and Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc. In Levison v Farin the claimants were entitled to damages for breach of a warranty as to a company’s financial position. They paid £8,500 more than the value of the company if the warranty had been true, but because of the losses which made the warranty untrue paid £2,940 less tax from its continued trading than would otherwise have been paid. It was held that the reduction in tax arose out of the transaction, and the damages were reduced accordingly. In Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc the claimant’s fertilizer was contaminated. It bought some replacement fertilizer at an advantageous price, it seems better than the market price. It was held that the price advantage should be taken into account.

44 The avoided loss principle only applies so far as the innocent party in fact gained a compensating advantage. The guilty party bears the burden of proving that loss had been avoided and the extent to which it had been avoided: The World Beauty (1970) P 144 at 154, 158; Simonius Vischer & Co v Holt & Thompson (1979) 2 NSWLR 322 at 361; Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (1991) 35 FLR 1 at 17. The appellant submitted to the contrary, relying on Erie County Natural Gas & Fuel Co Ltd v Carroll (1911) AC 105 at 118-9, but the decision turned on weak but sufficient evidence that the claimed expense of setting up new gas wells, had been recouped on sale of the gas wells which it was said the innocent party had the burden of rebutting; this was an evidentiary burden once there was evidence of compensating advantage. The appellant also submitted that no question of burden of proof arose in the present case because the respondent’s defence to the claim for rent was “in the nature of a demurrer”, but there is no substance in this submission. It was for the appellant to prove that the respondent had gained an actual benefit, and what benefit. The respondent may have been using borrowed money and not been advantaged by the delay, or been disadvantaged; if it was using its own money and left the purchase money idle, or used it unprofitably, the avoided loss principle did not require the allowance of a notional amount in favour of the appellant.

45 Viscount Haldane used different phrases, emphasised in the passage earlier set out, to identify when a compensating advantage was not to be taken into account. In many cases the dividing line has been expressed by excluding compensating advantages said to be collateral, a word taken up in the appellant’s submissions. An illustration, also of what might be thought a difficult dividing line, is Lavarack v Woods of Colchester Ltd (1967) 1 QB 278, in which the plaintiff was wrongly dismissed, became employed by Martindale at a lower salary, and bought shares in Martindale and Ventilation which increased in value. The new salary and the increase in the value of the Martindale shares were brought to account, but not the increase in the value of the Ventilation shares, on the ground (per Lord Denning MR at 290-1) that that benefit was not a direct result of the dismissal but was an “entirely collateral benefit”.

46 Professor Burrows says (Remedies for Torts and Breach of Contract, 3rd ed, p 157) that “indirect” compensating advantages are not deducted, and that -

“’Directness’ puts a limit on the extent to which compensating advantages are deducted on the policy ground that it is unfair that a claimant should have its damages reduced by a benefit that is far removed from the wrong and is essentially coincidental to it. Directness therefore plays an analogous but reverse role to remoteness and intervening cause; they counter a rigid adherence to the compensatory principle by limiting the claimant’s damages, whereas directness here counters compensation, as strictly applied, by increasing the claimant’s damages.”

47 The learned author says (at p 158) that, where the compensating advantages have been gained from action taken by the claimant subsequent to the tort or breach of contract, “the test for directness appears to turn on whether the compensating advantage derived from actions taken by the claimant to avoid the consequences of the wrong”. He adopts the first part of the statement in McGregor on Damages, 17th ed, 269 (7-101), the full statement being -

“In any event, it is suggested that the basic rule is that the benefit to the claimant, if it is to be taken into account in mitigation of damage, must arise out of the act of mitigation itself; this approach has been adopted by the courts in quite a number of cases. It may be regarded as simply another way of expressing Viscount Haldane’s requirement that the transaction giving rise to the benefit “must be one arising out of the consequences of the breach”.

48 References to indirect or collateral benefits are not helpful when faced with novel circumstances, and a test of “arising out of the act of mitigation” is itself not easy of application. In Hussain v New Taplow Paper Mills Ltd (1988) 1 AC 514, which was concerned with payments to an injured employee under a workplace health insurance scheme, Lord Bridge referred (at 528) to the difficulty of articulating a single guiding rule to distinguish receipts by a plaintiff which are to be taken into account in mitigation of damage from those which are not, and to the common law treating the matter “as one depending on justice, reasonableness and public policy.” I venture to repeat what I said in Tyco Australia Pty Ltd v Optus Network Pty Ltd [2004] NSWCA 433 at [253], that “collateral” -

Naumann v Ford

Johns v Prunell

49 In Koch Marine Inc v D’Amica Societa di Navigazione ARL (“The Elena d’Amico”) (1980) 1 Ll L R 75 Robert Goff J asked why, as a matter of principle, the buyer of undelivered goods who has to buy in from elsewhere cannot add any increased cost to its damages if the market rises, and need not bring any saving to account if the market falls. His Lordship said that it was necessary to look to the principles of mitigation, and that they were -

“ … all really aspects of a wider principle which is that, subject to the rules of remoteness, the plaintiff can recover, but can only recover, in respect of damage suffered by him which has been caused by the defendant’s legal wrong. In other words, they are aspects of the principle of causation.” (at 88)

50 His Lordship said, referring to and citing from the speech of Viscount Haldane in British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd, that “there must be a causative link between the breach of contract and the action or inaction in question to bring into play the principle of mitigation of damage”. He answered his question that generally the decision not to take advantage of the available market (and his Lordship’s reasoning would extend to a decision to take advantage of the available market) was -

“ … the independent decision of the innocent party, independent of the wrongdoing which has taken place. It takes place in the context of a pre-existing wrong but it does not, to use Viscount Haldane’s expression, ‘arise out of the transaction’.” (at 89)

51 I find this analysis valuable. In arriving at recoverable loss, remoteness and foreseeability and intervening cause are limitations on causation in fact. In arriving at reduction in recoverable losses by compensating advantages, being indirect or collateral or not arising out of the act of mitigation itself (whatever phrasing be used) is a limitation on causation in fact. Causation in law involves appreciation of the purpose of the causal inquiry (Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd (1999) 2 AC 22 at 31; Chappell v Hart (1998) 195 CLR 232 at [62]; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2001) 215 ALR 385 at [54]-[55]; Travel Compensation Fund v Robert Tambree [2005] HCA 69 at [45], [51]), and “determination of a causal question always involves a normative decision” (per McHugh J in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd at [55]; see also Travel Compensation Fund v Robert Tambree at [28], [46]). That does not mean that the decision turns on a value judgment whether the guilty party ought to be held liable to pay damages (Travel Compensation Fund v Robert Tambree at [28], [46]), but deciding whether the compensating advantage is indirect or collateral or does not arise out of the act of mitigation itself may require “the making of a value judgment and, often enough consideration of policy considerations” (Allianz Australia Insurance Ltd v GSF Australia Pty Ltd at [55] per McHugh J).

The respondent’s damages - decision

52 In my opinion, the respondent’s damages were the amount equivalent to the rent without any allowance in favour of the appellant.

53 There is a short path to that conclusion. It was necessary that the appellant do more than assert a benefit through the respondent not having to pay the purchase money for nearly three years. There may or may not have been an actual benefit, and it was for the appellant to prove that a compensating advantage had been gained which should be brought to account. It did not do so, even to the point of proving some actual benefit so that an inquiry was warranted into its amount.

54 It would not be satisfactory to leave the decision at this point, given the unfortunate lack of attention to burdens of proof at the trial and the respondent’s sometime acceptance of an inquiry. Hence I explain the long path to the same conclusion. For that purpose, I assume that, on factual investigation, it would be shown that the respondent benefited from more favourable loan terms, from profitable use of its own money, or from a mix of the two.

55 The appellant put forward a novel circumstance of compensating advantage. No case directly in point could be cited, but it submitted that Bendall v Haines (1991) 172 CLR 60 and Screenco Pty Ltd v R L Dew Pty Ltd (2003) 58 NSWLR 720 supported an allowance in favour of a guilty party of the value of the use of money which the innocent party had not had to pay.

56 In Bendall v Haines an injured worker received a workers compensation payment of about $50,000 under s 16 of the Workers Compensation Act 1926. He then recovered common law damages which included $75,000 for pre-judgment non-economic loss. Statutory interest was awarded on the $75,000. The worker had to repay the $50,000 upon the award of his common law damages. Should the interest have been on only $25,000, after deduction of the $50,000?

57 Mason CJ and Dawson, Toohey and Gaudron JJ held that it should have been, because the worker’s enjoyment of that payment could not be attributed to his economic loss and the compensation paid under s 16 “serves the same purpose as the award of damages at common law” (at 72). Brennan J agreed in the result, but thought it sufficient that the compensation paid under s 16 was for the injury, without attributing to it any more specific character (at 73-4). Deane and McHugh JJ dissented. Their Honours gave to the payment under s 16 a purpose or character different from that of an award of damages for pain and suffering and loss of amenities occurring up to the date of the trial, in particular because the payment was of the same amount whatever the pain and suffering and loss of amenities and was for all the consequences of the injury, financial and non-financial and for the rest of the worker’s life.

58 All the reasoning began with the compensatory objective of damages, generally (at 63) or in awarding statutory interest (at 66, 79). The appellant submitted that the majority recognized that the value of the $50,000 to the worker should be taken into account in arriving at his damages. That the worker received the $50,000 gave rise to the question, but it was not a case of a compensating advantage from not having to pay money. Rather, it was a case of no detriment from being kept out of money which should be remedied by an award of interest.

59 In Screenco Pty Ltd v R L Dew Pty Ltd damages had been awarded for the value of a chattel and consequential losses, but excluding statutory interest on the value of the chattel. The property in the chattel had passed to the innocent party, but it had not yet paid for it and was not obliged to pay interest to the vendor. It was held that the statutory interest was correctly excluded because the innocent party had not lost its money “in a real and practical sense” (per Handley JA at [14]; see also Sheller JA at [56] and Tobias JA at [90]). The innocent party had not lost the use of its money, and if interest were included in the damages it would be overcompensated. Again, it was not a case of compensating advantage, but rather a case of no detriment compensable by interest. It may be noted that the innocent party would appear to have had the benefit of the use of the money payable to the vendor until the time it recovered its damages; there is no suggestion that its damages were reduced to reflect the value to it of that use of money.

60 If the respondent gained a compensating advantage in the manner I have assumed, that would not be because it took action to mitigate loss caused by the appellant’s breach of contract in anything other than a “but for” sense. So far as the respondent was using borrowed money, it could not borrow in July 2001 and had to borrow in March 2004; so far as it was using its own money, it was left with the money available for its business purposes. As a matter of causation in law, the purpose of the inquiry into causation being arriving at the damages payable by the appellant for its breach of contract, the appellant has little claim to have the damages recoverable for its wrongdoing reduced, when its wrongdoing put the respondent into this position and the respondent happened to gain an actual benefit from business decisions not made to remedy the adverse consequences of the appellant’s breach of contract.

61 The common law “turned its face against awarding interest as compensation for the late payment of damages”: Hungerfords v Walker (1988) 171 CLR 125 at 136 per Mason CJ and Wilson J. It was held in that case, however, that loss due to the late payment of a debt or damages could be recovered if the requirement of remoteness or foreseeability was satisfied. In rejecting a policy that encouraged recovery of expenses actually incurred and discouraged or denied recovery of opportunity cost, Mason CJ and Wilson J, with whose reasons Brennan and Deane JJ agreed generally, said at 143-4 -

“Yet it is not easy to see any cogent reason for the adoption of such a policy; the award of compensation for opportunity cost would not expose the courts to insuperable problems in fact-finding.

Indeed, such a policy would be at odds with the fundamental principle that a plaintiff is entitled to restitutio in integrum. According to that principle, the plaintiff is entitled to full compensation for the loss which he sustains in consequence of the defendant’s wrong, subject to the rules as to remoteness of damage and to the plaintiff’s duty to mitigate his loss. In principle he should be awarded the compensation which would restore him to the position he would have been in but for the defendant’s beach of contract or negligence. Judged from a commercial viewpoint, the plaintiff sustains an economic loss if his damages are not paid promptly, just as he sustains such a loss when his debt is not paid on the due date. The loss may arise in the form of the investment cost of being deprived of money which could have been invested at interest or used to reduce an existing indebtedness. Or the loss may arise in the form of the borrowing cost, i.e., interest payable on borrowed money or interest foregone because an existing investment is realized or reduced.

The requirement of foreseeability is no obstacle to the award of damages, calculated by reference to the appropriate interest rates, for loss of the use of money. Opportunity cost, more so than incurred expense, is a plainly foreseeable loss because, according to common understanding, it represents the market price of obtaining money. But, even in the case of incurred expense, it is at least strongly arguable that a plaintiff’s loss or damage represented by this expense is not too remote on the score of foreseeability. In truth, it is an expense which represents loss or damage flowing naturally and directly from the defendant’s wrongful act or omission, particularly when that act or omission results in the withholding of money from a plaintiff or causes the plaintiff to pay away money.”

62 An actual loss due to late payment of the debt or damages must be proved, and while interest may be a measure of the proved loss the actual loss may be otherwise arrived at: Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 363-4. But if damages for loss of use of money are recoverable by the innocent party if it is proved that the debt or damages would, if received, have brought dollars and cents to it, it may be asked why the guilty party cannot have an allowance for a compensating advantage from use of money. The appellant did not refer to Hungerfords v Walker, but put a submission to the same effect. It said that, if the respondent had paid the rent, it could have claimed interest on the amount it paid to compensate it for not having the use of the money during the period of delay; it said that the loss of use of the rent money would not have been collateral, and that by parity of reasoning the benefit to the respondent in having the use of the purchase money was not collateral either.

63 I do not think the circumstances are comparable, or that there is parity of reasoning. Loss from the innocent party’s loss of use of money is caused in fact and in law by the guilty party’s wrong, without intervention of action by the innocent party. The innocent party’s gain from use of money brings in its action as part of the normative attribution of causation in law.

64 The respondent submitted that the present case was analogous to one of betterment which did not have to be brought to account, referring to Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co. Ltd (1970) 1 QB 447. The guilty party caused the innocent party’s factory to burn down. The innocent party rebuilt the factory, and claimed the cost of rebuilding. The new factory was modern in design and materials, and the guilty party contended that the damages should be the difference in value of the factory before and after the fire. This was rejected, on the ground that the innocent party acted reasonably in replacing the factory, indeed had no choice, and acted reasonably to mitigate its loss of profit. It was said also that there should be no allowance for betterment, because the factory was replaced “in the only possible way, without adding any extras” (per Lord Denning MR at 468), because to do so “would be the equivalent of forcing the plaintiffs to invest their money in the modernising of their plant which might be highly inconvenient for them” (per Widgery LJ at 473), and because “it is not in practice possible to rebuild and re-equip a factory with old and worn materials and plant corresponding with what was there before…[and] the planning authorities would not have allowed the factory to be rebuilt on the old lines” (per Cross LJ at 476). If, however, the innocent party had “added extra accommodation or made extra improvements,” had rebuilt the factory “to a substantially different design…[involving] expenditure beyond the cost of replacing the old”, or had rebuilt the factory “with a different and more convenient layout and spent more money than they would have spent had they rebuilt it according to the old plan”, the excess expenditure could not have been recovered (ibid at 468, 473, 476 respectively).

65 Betterment is a form of compensating advantage to the innocent party, from action taken by the innocent party in consequence of the wrong. If in Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd there had been evidence of cost savings in the operation or maintenance of the new factory compared to the old, it may be that an allowance would have been appropriate. In Hoad v Scone Motors Pty Ltd (1977) 1 NSWLR 88 the innocent party had acted reasonably in buying a new tractor and mower to replace its old equipment destroyed by the wrong, thereby avoiding farm losses. It was held that recovery of the cost of the new equipment would over-compensate him. Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co. Ltd was distinguished, because the innocent party had intended to sell the farm and the old equipment in eighteen months time (see per Moffitt P at 93-4; Hutley JA agreed in the result with reference to British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd at 97; Samuels JA dissented). The cases were considered by Sheller JA in Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313, in which there was no allowance for betterment in replacement of a failed pavement because the innocent party had no choice but to replace it and there was no more than a “speculative proposition that the new pavement might last longer than the old one would have” (at [55]).

66 However, the present case is not one of betterment by replacement of damaged or destroyed property. The respondent may or may not have gained a compensating advantage, for example through borrowing on more favourable terms in March 2004 or through using profitably its own money during the period of delay. If it did gain a compensating advantage, that was not betterment. The respondent particularly relied on Widgery LJ’s reference to forcing the plaintiffs to invest their money in modernising their plant, as I understand it suggesting that the appellant’s submissions were equivalent to forcing the respondent to gain any compensating advantage it might have gained. If the respondent did benefit, it was not because it acted reasonably to mitigate the loss caused by the appellant’s breach of contract, or in anything other than a bald “but for” sense in consequence of that breach. There was no equivalent to having to rebuild an improved factory.

67 Whether the respondent gained an actual benefit would not be known without a possibly complex factual investigation, with many outcomes from no benefit at all to a large benefit from unexpectedly fortunate investment. Ascertaining the benefit would not stop at the respondent’s receipts; what of the tax benefit of losses from unwise investment of the purchase money, or tax on the proceeds of its fortunate investment? If the appellant’s submissions were correct, on every occasion that a wrongdoer’s default meant that the innocent party did not have to pay money to it (or to a third party), at a particular time or at all, a factual investigation of this kind could be made. The builder who overran time or failed to complete, and the vendor of goods who was late in delivery or failed to deliver, are ready instances. These are policy reasons for declining to recognize a compensating advantage through not having to pay money in the circumstances in question. Wronged parties should not face undue burdens in recovering loss; curial resources are finite.

68 The policy reasons do not govern, but suggest caution in determining that an actual benefit from deferral of payment or non-payment of money in these circumstances is brought to account. The present case is different from British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd, where the decision to replace the turbines, while a natural replacement of obsolete machines, remedied the position in which the innocent party had been placed by the breach. I do not think that any actual benefit gained from the respondent’s business decisions not made to remedy the adverse consequences of the appellant’s breach of contract was caused in law by the breach. In the traditional phrasing, it did not arise out of an act of mitigation by the respondent or out of the consequences of the breach.

Orders

69 I propose that the appeal be dismissed with costs.

70 SANTOW JA: I agree with Giles JA.

71 HUNT AJA: I agree with Giles JA.

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Citations

Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443

Most Recent Citation

Lawson & Lawson v Pham No. DCCIV-94-1535 Judgment No. D3386 [1996] SADC 3386

Cases Citing This Decision

54

Fox v Wood [1981] HCA 41

Mills v Walsh [2022] NSWCA 255

Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158

Cases Cited

16

Statutory Material Cited

0

Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005

Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313

Mills v Ruthol Pty Ltd [2002] NSWSC 294

CITATION:	Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443
HEARING DATE(S):	3 November 2005
JUDGMENT DATE:	21 December 2005
JUDGMENT OF:	Giles JA at 1; Santow JA at 70; Hunt AJA at 71
DECISION:	Appeal dismissed with costs.

CATCHWORDS:	Damages - breach of contract - delay in completion of sale of land - purchaser was lessee from vendor - vendor sued for rent for period of delay - whether claim failed because was taking advantage of own wrong - was entitled to rent - purchaser entitled to damages in the same amount - whether in assessing damages allowance for benefit to purchaser of not having to pay purchase price for period of delay - what was benefit - needed proof of actual benefit - and no allowance because in the circumstances any benefit not caused by breach of contract. D
CASES CITED:	Alghussein Establishment v Eton College (1988) 1 WLR 587; Allen v Bega Valley Council (1994) 85 LGERA 364; Allianz Australia Insurance Ltd v GSF Australia Pty Ltd (2001) 215 ALR 385; Bendall v Haines (1991) 172 CLR 60; British Westinghouse Manufacturing Co Ltd v Underground Electrical Railways Co of London Ltd (1912) AC 673; Chappell v Hart (1998) 195 CLR 232; Cheall v Association of Professional Executive Clerical and Computer Staff (1983) 2 AC 180; re C L Nye Ltd (1971) Ch 442; Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd (1999) 2 AC 22; Erie County Natural Gas & Fuel Co Ltd v Caroll (1911) AC 105; Gates v The City Mutual Life Assurance Society Pty Ltd (1986) 160 CLR 1; Grozier v Tate (1946) 16 LGR 57; Harbutt's "Plasticine" Ltd v Wayne Tank & Pump Co Ltd (1970) 1 QB 447; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263; Hoad v Scone Motors Pty Ltd (1977) 1 NSWLR 88; Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358; Hooper v Lane (1859) 6 HL Cas 443; 10 ER 1368; Hussain v New Taplow Paper Mills Ltd (1988) 1 AC 514; Hungerfords v Walker (1988) 171 CLR 125; Hyder Consulting (Australia) Pty Ltd v Whlh Wilhelmsen Agency Pty Ltd [2001] NSWCA 313; Koch Marine Inc v D'Amica Societa di Navigazione ARL ("The Elena d'Amico") (1980) 1 Ll LR 75; Lavarack v Woods of Colchester Ltd (1967) 1 QB 278; Levison v Farin (1978) 2 All ER 1149; re London Celluloid Company (1988) 39 Ch D 190; Mills v Ruthol Pty Ltd [2002] NSWSC 294; Mitchell v Pattern Holdings Pty Ltd [2002] NSWCA 212; Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (1991) 35 FLR 1; New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France (1919) AC 1 (HL); (1917) 2 KB 717 (CA); Richco International Ltd v Alfred C Toepfer International GmbH (1991) 1 Ll R 136; Ruthol Pty Ltd v Mills [2003] NSWCA 56; Screenco Pty Ltd v R L Drew Pty Ltd (2003) 58 NSWLR 720; Simonius Vischer & Co v Holt & Thompson (1979) 2 NSWLR 322; Steedman v The Council of the Shire of Baulkham Hills (No 2) (1993) 80 LGERA 323; Sutor v Gundowda Pty Ltd (1950) 81 CLR 418; TCN Channel 9 Pty Ltd v Hayden Engerprises Pty Ltd (1989) 16 NSWLR 130; The World Beauty (1970) P 144; Travel Compensation Fund v Robert Tambree [2005] HCA 69; Tyco Australia Pty Ltd v Optus Network Pty Ltd [2004] NSWCA 433;
PARTIES:	Ruthol Pty Ltd - Appellant Tricon (Australia) Pty Ltd - Respondent
FILE NUMBER(S):	CA 41133/04
COUNSEL:	R Angyal SC & K Andronos - Appellant M W Young - Respondent
SOLICITORS:	David Landa Stewart, Broadway - Appellant Grahame Jackson & Associates - Respondent

LOWER COURT JURISDICTION:	Compensation Court
LOWER COURT FILE NUMBER(S):	SC 4858/01; SC 5102/04
LOWER COURT JUDICIAL OFFICER:	Palmer J