Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10

HIGH COURT OF AUSTRALIA

GLEESON CJ,

McHUGH, KIRBY, HAYNE AND CALLINAN JJ

PLACER (GRANNY SMITH) PTY LTD APPELLANT

AND

THIESS CONTRACTORS PTY LTD RESPONDENT

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd

[2003] HCA 10

11 March 2003

P60/2001

ORDER

1. Appeal allowed with costs. 2. Set aside the whole of the order of the Full Court of the Supreme Court of Western Australia made on 14 April 2000 and, in lieu thereof, order that the respondent's appeal to that Court be dismissed with costs.

On appeal from the Supreme Court of Western Australia

Representation:

J Gilmour QC with C M Duncan for the appellant (instructed by Mallesons Stephen Jaques)

D F Jackson QC with P G Clifford for the respondent (instructed by Hollingdales)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd

Damages – Breach of contract – Proof of damage – Calculation of damages – Joint venture mining contract – Respondent carried out mining operations for appellant – Rates based on genuine estimates of cost of operations – Respondent inflated cost estimates – Whether breach of contractual obligation of good faith – Whether sufficient evidence from appellant to prove damage – Whether sufficient evidence for trial judge to make a calculation of damages on proper principles – Significance of respondent's admission that cost estimates exceeded actual bona fide estimates of costs – Continuing obligation during litigation to correct fraudulent conduct.

1. GLEESON CJ, McHUGH AND KIRBY JJ. This appeal arises out of complex and protracted litigation in the Supreme Court of Western Australia in relation to a contract pursuant to which the respondent agreed to carry out mining operations for the appellant at rates based on genuine estimates, reviewed from time to time, of the cost of such operations. After relations between the parties broke down, the appellant alleged that, in breach of a contractual obligation of good faith, the respondent had inflated its cost estimates and, in consequence, had been overpaid. By way of counterclaim in proceedings commenced by the respondent, the appellant sought to recover the overpayments. The trial judge awarded the appellant $4,853,000. 2. The contractual provisions, and the relevant facts, appear from the reasons for judgment of Hayne J and Callinan J. 3. The Full Court of the Supreme Court of Western Australia rejected an argument that the appellant had failed to make out a case of overpayment. Accepting that the best evidence of the respondent's true estimates of its costs was to be found in its internal plant department rates, the Full Court said: