North Sydney Leagues' Club Ltd v Synergy Protection Agency Pty Ltd (formerly Joseph Merhi Industries Pty Ltd) trading as Synergy Protection Agency [2010] NSWSC 52

North Sydney Leagues' Club Ltd v Synergy Protection Agency Pty Ltd (formerly Joseph Merhi Industries Pty Ltd) trading as Synergy Protection Agency [2010] NSWSC 52

In calculating expectation damages for lost profits from breach of contract, indirect or overhead costs incurred by the claimant during the period the contract should have been performed must be taken into account; the absorption method of cost accounting for allocating overheads may not be appropriate where such costs would have been incurred regardless of the breach, and damages are to reflect the net profit actually lost.

Jurisdiction
Australia
Judgment Date
12 February 2010
Procedural Posture
Commercial Contract Dispute / Damages Assessment Following Remittal From Court of Appeal; Determination of Separate Questions
Outcome
Separate question 3 answered in the affirmative; separate question 1 answered in the negative; separate question 2 does not fall for consideration.
Legal Topics
['expectation Damages' 'lost Profits' 'overhead Costs' 'absorption Method' 'evidence Admissibility']
['damages' 'contract Law' 'evidence'] ['expectation Damages' 'lost Profits' 'overhead Costs' 'absorption Method' 'evidence Admissibility']

Case Brief

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Procedural Posture

Commercial Contract Dispute / Damages Assessment Following Remittal From Court of Appeal; Determination of Separate Questions

Legal Issues

  1. 1 ['Whether evidence in Exhibits JM-1 and JM-3 can be presumptively relied upon under s.146(2) of the Evidence Act 1995' 'Whether the absorption method is appropriate for overhead cost allocation in lost profits damages' 'Whether indirect/overhead costs should be taken into account in calculating net profit expectation damages']

Ratio Decidendi

In calculating expectation damages for lost profits from breach of contract, indirect or overhead costs incurred by the claimant during the period the contract should have been performed must be taken into account; the absorption method of cost accounting for allocating overheads may not be appropriate where such costs would have been incurred regardless of the breach, and damages are to reflect the net profit actually lost.

Court Disposition

Separate question 3 answered in the affirmative; separate question 1 answered in the negative; separate question 2 does not fall for consideration.

Orders

  • ['Overhead costs should be taken into account in assessing expectation damages for lost profits.' 'Evidence in Exhibits JM-1 and JM-3 can be relied upon; no sufficient doubt raised about their reliability under s.146 of Evidence Act.' 'No determination required on separate question 2 in light of the answers to...