Moot Submission Essay Example

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No. CA 1 OF 2013







  1. The respondent, Goondiwindi Contractors Pty Ltd (GC), use the latest model (series 7) harvesters as a contract grain harvester manufactured by Golden Sheaf Harvesters Ltd.

  1. In November 2009, GC was carrying out a contract to Harvest wheat on a property near Croppa Creek, north of Moree. Under an oral contract, the grower was to pay GC $330 per hour (incl. GST) for each operating harvester.

  1. The grower was to be responsible for supplying the fuel. There were two operating harvesters. The estimate was that it would take 100 hours to strip the crop.

  1. The computers controlling the operations of each harvester “crashed”. The issue afflicted both harvesters. It required immediate replacement of each computer from Golden Sheaf Harvesters Ltd. Golden Sheaf had to fly the replacement computers under warranty from its factory near Perth, Western Australia.

  1. The manager of GC emailed the appellant advising the urgency of installing the replacement computers.

  1. The respondent had clearly stated in the email that “it is not only urgent for the current contract but there is a deadline on starting the next and bigger contract. The next contract is to immediately follow on at Moree”.

  1. Golden Sheaf sent two replacement computers, but they were for an earlier model (series 6) harvester. They were not compatible with the 7 series harvester models GC was using.

  1. Golden Sheaf then sent two correct replacement computers. As a result of this mix-up, harvesting at Croppa Creek ceased for nearly six days. This was twice as long as the original estimate.

  1. Consequently, GC suffered a loss on its harvesting contract at Croppa Creek because of a 20% penalty rate reduction in the hourly rate.

  1. It blamed its loss of $6,600 on the breach of the warranty agreement it had with Golden Sheaf to replace the computers promptly.

  1. GC also claimed damages brought about by its inability to carry out the Moreewheat harvesting contract. As indicated in the GC manager’s e-mail, the Moree contract was to have immediately followed on from the Croppa Creek contract.

  1. It involved 200 hours of harvester operating time at $550 per hour (incl. GST), with fuel to be supplied by the grower. It was worth $110,000 (incl. GST) to GC.

  1. The matter came on for hearing in the Commercial Division of the Supreme Court of New England.

  1. The Court held that GC was entitled to recover damages against Golden Sheaf on the grounds that they fell within the rule in Hadley v Baxendale(1854) 156 ER 145.

  1. The assessed damages of $116,600 were for the loss of the Moree contract of $110,000 and $6,600 on the Croppa Creek contract.

  1. Golden Sheaf has filed a Notice of Appeal relying upon the following grounds:

    1. That the learned trial judge erred in applying the rule in Hadley v Baxendalein assessing the damages of $110,000 on loss of the Moree contract.

    1. That the learned trial judge should have held that the damages in respect of the Moree contract were too remote.

    1. That the learned trial judge should have followed the reasoning in Transfield Shipping Inc v Mercator Shipping Inc[2009] 1 AC 61.

17. Appeal Ground 1: The learned trail judge did not err in applying the rule in Hadley v Baxendale in assessing the damages of $110,000 on loss of the Moree contract.

17.1 Damages due to termination are assessed based on contractual principles for damages, as stated out in Hadley v Baxendale. However,the alternative is available to the innocent of claiming in quantum meruit or the already accomplished work under the contract. In regard to this, the High Court has strictly held that it is not the accurate loss that needs to be foreseeable, but rather a loss should be considered of the sort that had been suffered.

17.2 Therefore, We are entitled to be put back into the position we would have been in had the breach not occurred. If the computer had never crashed, we would have finished our job and moved on to the other bigger contract and been 110,000 richer, since the computer crashed and the new computer had been delayed, we lost that 110,000 contract.

17.3 The innocent party is entitled for compensation by the defaulter in sufficient amount to restore their original position they would have currently been in, that is, if the contract had been fulfilled by the defaulter. However, the defaulter has the alternative of seeking compensation in quantum meruit for the reasonable benefits that have accrued to him or her. ((1854) 9 Exch 341).

17.4 The trial judge did not err when awarding damages in relation to the Moree contract as the manufacturer Golden Sheaf, should have known that when supplying companies with equipment, any delays in repairing/supplying replacement pieces would affect contract completion dates. Each day without running equipment is a day behind schedule. It is also within the ‘usual course of things’ that once GC complete one contract, they would move on to another especially as it was highlighted in the email. Based on this ground, the loss is not remote and damages should be awarded.

17.5 It can also be concluded that Golden Sheaf did have the presumed knowledge and that it was reasonably foresable that GC would claim damages for the Moree contract as GC emailed Golden Sheaf in relation to the urgency at repairing the computers and the fact that there was a subsequent contract that was immediately after the current one.

17.6 Should Golden Sheaf argue that this form of damages is an unusual loss, GC would claim that Golden Sheaf had the knowledge that there was a larger contract immediately after the current contract and as such should have reasonably foreseen that a delay in returning the correct computer would affect the next contract.

17.7 In the case of Commonwealth v Amann Aviation Pty Ltd, the High Court summarized the principle from Hadley v Baxendale that;

the plaintiff is entitled to recover such damages as arise naturally, that is, in accordance with the normal operational course of things, in regard to the breach or could reasonably be expected to in the inspection of the two parties during their time of contract agreement as the probable result of the breach (“(1991) 174 CLR at para 51).”

17.8 The breach occurred naturally, that it is only natural we would have contracts after this one finished and a delay would influence our other jobs. Even in the event that it wasn’t assumed, we communicated with them via email to notify about situation.

Hadley v Baxendale applied: it was held thatas a legal requirement, the type of damage sustained must be foreseeable. Therefore, if the type is foreseen, then the defendant is held liable for all damages of that particular type, albeit it may be greater in extent than was foreseen.”

17.9 It was a clause of the contract that all equipment would be fixed promptly. Due to the delay , the required equipment was not provided on time. GC suffered a loss as a result of the delay. Golden Sheaf was emailed and advised of the urgency of the computers being delivered promptly and as such a breach in contract for not promptly fixing equipment means that even though they did not expect to pay $110,000, they are liable for the damage and have to pay it, even it is greater than they thought it would be.

18. Appeal Ground 2: The learned judge should not have held that the damages in respect of the Moore contract were too remote based on the following grounds:

18.1 The two limbs discussed in Hadley v Baxendal state that claims for loss will be recoverable as damages for breach of contract if it:

it could justly and reasonable seen as either arising naturally, that is, in accordance with the normal operational course of things, in regard to the breach or could reasonably be expected to in the inspection of the two parties during their time of contract agreement as the probable result of the breach to show the probable consequence of the breaching it .

Based on this two limb approach, any loss that can be applied to either limb shall be granted compensatory damages. As Golden Sheaf manufactured the equipment used by GC, Not to mention the fact that GC emailed Golden Sheaf specifically discussing the urgency in having the computer repaired on time to complete the contract and begin the subsequent Moree contract.

18.3 Based on limb two, we can establish that the damages resulting from the Moree contract were not too remote as Golden Sheaf were reasonably notified of the urgency on going contracts and any failure of equipment would impact their current contract and delays in contract completion would have effects on those following it.

Victoria Laundry (Windsor) Ltd v Newman Industries LtdThe remoteness of the damages that GC were awarded, are deemed to be appropriate based on the issues argued in 18.3

18.4 The loss was naturally arising as delaying the running of equipment will only naturally push back the contracts completion date and affect the contracts which are meant to begin after it. This is based on the presumed knowledge of Golden Sheaf, they should have presumed that GC as a operational company would only naturally have contracts after the current one, and any delay in completing the contract would mean issues for those which are after it.

18.5 Even in the event that Golden Sheaf would argue that the loss was “extraordinary” and did not arise naturally, it can be proven that they have actual knowledge of the Moree contract (as seen in the email sent by GC) and as such the damages of the Moree contract are not too remote.

    1. In the case of Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd [2010] EWHC 542, the loss was recoverable and it was not too remote. This clearly discusses the judgment in Transfield and tries to reflect on the findings. It was held that :

That in a number of cases, it will not be such important to specifically address the issue of assumption based on the responsibility. Basically, the fact that the type of loss occurs ordinarily in the course of things or due to special known circumstances will be associated with the necessary assumption of responsibility.”

    1. The decision in Sylvia Shipping makes certain that the traditional method to remoteness, as per Hadley, shall be applicable in all but the utmost incomparable matters.

    2. The judge should not follow the reasoning in Transfield as, the judgement in that matter presented a obligation for the assumption of responsibility however, in doing so, it was not at all obvious what particulars would confirm (or disaffirm) such an assumption. After reading the judgement in this case, we ask ourselves, had the judgments altered the established assessment for remoteness and if it had, which of the five judges’s findings set out the reviewed assessment?

19. Appeal Ground 3: The judge should not have followed the reasoning in Tranfield Shipping due to the following reasons:

    1. It is hard to reconcile the findings in Transfield case with that of Koufos x Czarnikow (Heron II) – this case found that loss was not too remote. This is applicable to our case as even though Golden Sheaf may argue that they didn’t know we intended to begin another contract straight after the current one, we are a harvesting company and harvesting is what we do.

    1. Siemens Building Technologies FE Ltd v Supershield Ltd 2010 case was in favour of not supporting the reasoning in Transfield, rather considering Hadley v Baxendale and it was held that:

that a loss was recoverable if it arose naturally and if it was of a type in the reasonable contemplation of the parties. It did not matter whether the parties had contemplated the actual extent of the loss.”

    1. From the proceedings of the Transfield case, it was concluded that Hadley v Baxendale would continue to be in force as the regular law albeit, it had been ‘rationalised’ to reflect the ‘expectation to be imputed to the concerned parties in the ordinary case.

    2. The Transfield case should not be applied here as the case is an example of a matter in which the regular method would not be a reflection of the party’s expectations. The defendant will be accountable if a rational person in the respondent’s position at the time of creating the contract would have considered damage of that sort as not unlikely to result from a breach. Based on this rule, it is evident that when Golden Sheaf and GC created their contract, Golden Sheaf would have expected that in the event there was a delay in providing equipment, and the delay resulted in contracts being delayed, damages would be sought.

In Pindell Ltd v AirasiaBerhad (2011 All ER (Comm) 396), the Judge held that maintenance delays are usual, and thus it is foreseen that the lessor should have been cautious of that. In the same manner the mill owner could have anticipated that there was a spare crank shaft in the judgment of Hadley v Baxendale. Therefore, all particulars related to Transfield case was considered as being ‘far from the truth.”

    1. This is relevant to us as our harvester the owner Golden Sheaf was responsible for the operation and running of the equipment. It is only expected that they would have a spare computer ready to go. The judge recognised the Siemens case and did not ruminate that the Transfield case had prompted any main variation in the law.

    1. Considering the claim that the Transfield case would be investigated into, Lord Hope observed that a defendant was actually accountable for damage suffered. This is not only considered in cases where the damage is proved to be foreseeable but also in circumstances where that particular loss is one which the defendant can reasonably be expected to have presumed accountability. However, the defendant is not liable for the presumed accountability for something that he is not capable of controlling, and thus unable to enumerate.

    1. Therefore, it is relevant to argue that Golden Sheaf had full knowledge of the computers crashing, they were aware of what they had sent out, that being the wrong computer. As they had sent the wrong computer, there was a delay and they should be found responsible for it.