Stencraft Pty Ltd v Graham Evans Pty Ltd

Stencraft Pty Ltd (the appellant) appealed to the High Court of Australia against the decision of the Supreme Court of New South Wales, which had dismissed its appeal from a judgment of the District Court. The dispute concerned the appellant's claim for damages for breach of contract against Graham Evans Pty Ltd (the respondent), arising from the respondent's alleged failure to complete building works in a timely manner. The appellant sought to recover losses it incurred due to the delay, including increased costs and loss of profit.

The High Court was required to determine whether the District Court had erred in its assessment of damages, specifically in relation to the appellant's claim for loss of profit. The central legal issue was whether the appellant had established, on the balance of probabilities, that the delay caused by the respondent's breach of contract directly resulted in the loss of a specific contract with a third party, and consequently, the loss of profit that would have been derived from that contract.

The Court considered the principles of remoteness of damages in contract law, particularly the rule in *Hadley v Baxendale*. It examined whether the loss of the third-party contract was a foreseeable consequence of the respondent's breach, having regard to the knowledge of the parties at the time the contract was made. The High Court found that the evidence presented by the appellant was insufficient to establish a causal link between the respondent's delay and the loss of the third-party contract. The Court noted that the appellant had failed to demonstrate that the third-party contract would have been secured but for the delay, or that the respondent had been made aware of the specific importance of the timely completion of the works for the securing of such a contract.

The High Court dismissed the appeal, upholding the decision of the Supreme Court and the judgment of the District Court.