By Rob Lawson and Shenali Biyanwila -
Snapshot
- In a recent decision, the High Court clarified the entitlement of a plaintiff to recover expenditure incurred in reliance upon a defendant’s unperformed contractual obligation.
- The legal onus always remains on the plaintiff to prove they would have recouped the expenditure had the defendant complied with its obligations under the contract. However, if the defendant’s breach of contract resulted in uncertainty that hinders the plaintiff’s ability to prove it would have recovered the expenditure, the facilitation principle will be applied.
- This case illustrates the High Court’s approach to the facilitation principle which appears to advantage plaintiffs.
In Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17, Cessnock City Council (‘Council’) planned to subdivide and develop land at Cessnock Airport to promote the area as a gateway to the Hunter Valley region. Council proposed a 25-lot subdivision at Cessnock Airport to facilitate development of the land for aviation and non-aviation uses.
On 26 July 2007, 123 259 932 Pty Ltd (formerly ‘Cutty Sark’) entered into an agreement for lease (‘AFL’) with Council in respect of one of the proposed lots (‘Lot 104’) for the purpose of operating a business of joy flights and advanced flight aerobatic training out of a hangar that was to be built on that lot (‘Hangar’).
The AFL provided that:
- Cutty Sark would be granted a 30 year lease of Lot 104 upon registration of a proposed plan of subdivision (‘Plan’);
- Council would take all reasonable action to cause the proposed Plan to be registered by 30 September 2011 (‘Sunset Date’);
- Cutty Sark was entitled to a licence to use Lot 104 on the same terms as the proposed lease up until the time that the proposed Plan was registered; and
- the permitted use of Lot 104 under the licence was ‘as an aircraft hangar for joy flights and advance [sic] flight-aerobatic training’.
