In Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17 the High Court unanimously upheld the decision of the New South Wales Court of Appeal, finding that damages for breach of contract includes wasted expenditure reasonably incurred in anticipation of, or reliance on, the performance of the contract.

As part of its airport development plan, the Cessnock City Council entered into a contract with the respondent requiring the Council to take all reasonable steps to register a plan of subdivision and then grant the respondent a 30-year lease over part of the land on which the airport is located. In the meantime, the respondent was given a licence to occupy the land and spent $3.7 million constructing a hanger. The Council repudiated the contract, leaving the respondent’s investment stranded.

Chief Justice Gageler and Justice Jagot considered that wasted expenditure is recoverable as a separate category of damages.  

Justices Edelman, Steward, Gleeson and Beech-Jones relied on the facilitation principle to reach their decision. Broadly stated, that principle provides that where a breach of contract results in uncertainty as to the position a plaintiff would have been in had there been no contractual breach, the plaintiff is entitled to a presumption (rebuttable by the defendant) that the plaintiff would have recovered its wasted expenditure.

Justice Gordon on the other hand stated that wasted expenditure is not a separate category of damages but a method of calculating damages consistent with the principle that a plaintiff is entitled to put into the same position it would have been in had there been no breach of contract. Her Honour also stated there is no relaxation of proof for wasted expenditure damages claims, thus indicating the facilitation principle does not apply to such claims.

Francis Tiernan KC and Nicholas Gallina

Liability limited by a scheme approved under professional standards legislation