WRITTEN BY Ian Meagher
In Chaplin, the plaintiff was promised the “chance” of being selected from a number of women to be given a theatre contract, however, was not provided with the letter intended to advise her of an audition and, as a result, lost her chance to be selected as the successful candidate. At trial, the trial judge instructed the jury that the loss of opportunity that the plaintiff had suffered was compensable and awarded the plaintiff substantial damages, which were upheld on appeal also. The principle in Chaplin has been followed and applied in several cases of the High Court of Australia, including, amongst others, Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 (Sellars) and Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 (Amann Aviation).
The important question is not whether the loss of a commercial opportunity is compensable, but how one goes about assessing the loss. In the 2020 decision of Berry, the High Court considered three issues concerning the assessment of damages surround loss of a commercial opportunity.
In Berry, the appellants entered into an agency agreement with the respondent, who produced polymer banknotes. The agency agreement provided that the appellants would act as the respondent’s agent in the sale of opacified polymer to the Nigerian government and, in return, the appellants would receive a 15% commission on what was sold to the Nigerian government. The agency agreement was to be renewed every two years unless it was terminated in accordance with the relevant termination clauses in the agreement. After deciding it no longer wanted the appellants to act as its agent in dealing with the Nigerian government, the respondent induced the appellants to sign a termination letter by representing that the signing of the termination letter was a necessary routine procedure in order to put in place the partnership agreement.
The appellants commenced proceedings in the Federal Court, seeking damages under section 82 of the Trade Practices Act 1974 (Cth) to recover the amount of commission that would have been paid to him had he not relied upon the respondent’s misleading or deceptive conduct and signed the letter.
There the court set out the relevant principles, namely, that the value of a lost opportunity was to be ‘ascertained by reference to hypotheses, possibilities, which though they were speculative and could not be proved on the balance of probabilities, could be evaluated as a matter of informed estimation’. The plurality applied this principle to the facts before them, and held that the plaintiffs were entitled to the loss of commission that would have been made had the valuable commercial opportunity, being the agency agreement, not been brought to an end. The remaining judges, Gageler and Edelman JJ, agreed with the judgment of the plurality.
In upholding the Federal Court’s approach, the High Court in Berry has affirmed that the loss of opportunity is a compensable loss, such that is not a full defence to argue a lost possibility may have not materialized. Instead, the formulation of damages is to be evaluated by informed estimation, taking into account the various possibilities of the lost chance having come to fruition.
The principle that someone can be compensated for a loss of a valuable opportunity is not one that people ordinarily bring to mind because it is often considered that the obstacles in the path of the opportunity means that there is no loss suffered. Berry reaffirms not only that the loss of a valuable commercial opportunity is compensable, but also the correct way to approach the valuation of such loss.
BAL’s Dispute Resolution team can assist companies who believe that they may have lost a valuable opportunity as a result of someone’s action to recover more than mere nominal damages.