Like Katy, I think the plurality (and Gordon J who is very similar) have the better of it. The second case recently when Gageler CJ has adopted the position of the US Restatement, whilst the majority has (rightly) rejected it. I am not sure whether the different approaches would ever give a different result in practice (can someone more awake than I am think of an example?)

Gageler CJ states that wasted expenditure “is itself a category of damage” ([9]), because the defendant is “worse off” ([12]), see also Jagot J at [190]

I do not think that is correct. When we assess whether the plaintiff is “worse off” we need to compare the position today with another baseline. They may certainly be said to be “worse off” than they were before they started performing. So, comparing the world as it is now, with the world as it once was before they started work, they’re definitely worse off. And when we use loss as a verb in everyday English (“I have lost my reading glasses”) that is the comparator we employ.

But without further reasoning, there is no justification for placing the plaintiff in the financial position they were once in in the past. All damages seek to place the plaintiff in the position they would have been in if the wrong had not occurred. Where the wrong is a breach of contract, that is the position the plaintiff would have been in if the breach had not occurred, which is the position they would have been in if the defendant had performed. Normatively, that is because the reasons for the duty breached justify the defendant now being under a next-best duty of that form. Our comparators are the world as it is and the hypothetical world that would have existed if the wrong had not occurred.

Gageler CJ and Jagot J both state that their starting position that reliance expenditure is recoverable just because it is a relevant head of loss, is then limited by the Robinson v Harman rule that you cannot be placed in a better position than you would have been if the contract had been performed. But neither articulate any reason why that is so, they just assert it as a limiting principle.

For the majority (and I think we can lump Gordon J in with the plurality) the problem is why the plaintiff is able to opt to claim their wasted expenditure at all. They adopt Kramer’s helpful explanation that we give the plaintiff a fair wind assumption that he would have recovered that expenditure, the difficulty of proving that they would have done so having been created by the defendant’s breach. Where the defendant can show that the expenditure would not have been made good, it is not recoverable.

Three further thoughts.

First it is irritating that the judgments don’t engage with one another, so that we have to work out for ourselves what the points of disagreement are. The same problem has long been true of trying to make sense of Commonwealth v Amann and you’d hope they’d be a bit more generous to the future.

Second Australian contract lawyers no longer need to struggle through hundreds of pages of judges saying slightly different things in Amann in order to work out the law.

Third, and more substantively, under Planche v Colburn, a plaintiff should be able to recover the value of the work they’d done prior to the defendant’s repudiation of the contract (quantum meruit). Such a claim has the advantage that there is no reasonableness requirement but the disadvantage that all that is recoverable is the performance necessary under the contract, not any “incidental” expenditure. I expect Fuller & Perdue’s confusion comes from that separate rule.

R

Great summary Katy. I’ve only been able to skim so far (did they really need this many separate judgments?) but I agree with your summary. In short, all but Gageler CJ adopt the orthodox approach that reliance loss in Australia and England (but not the US) is not a separate head of damage but all about a presumption facilitating proof of expectation loss (e.g. lost revenue) where there is uncertainty as to what would have happened. The majority does not agree with Gageler that the Soteria case in the English C of A (which I lost and did not get permission from the Supreme Court on. Aargh!) says anything contrary to this, or that causing expenditure that would have been incurred anyway to be ‘thrown away’ (Gageler at 12) is a form of loss of its own separate from the lost recoupment in any way. So this is the new leading summary on the wasted expenditure summary. Time to edit all your contract reading lists! Adam