Clark v Macourt PDF

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Clark v Macourt (2013) 253 CLR 1 Hayne J, Crennan J, Bell J, Gageler J, Keane J. I.

FACTS

Dr Anne Clark (appellant) and Dr David Macourt (respondent) were registered medical practitioners, both specialising in providing assisted reproductive technology services. Clark entered into a deed in 2002, with Macourt’s company, St George Fertility Centre Pty Ltd, agreeing to sell its assets to Clark. Macourt acted as a guarantor for the performance of St George’s obligations under the deed including warranties.1 Macourt’s company (“the vendor”) delivers 3513 straws of frozen sperm to Clark. Clark reasonably expected to be able to use 2500 from the delivery, however 1996 straws of sperm were not as warranted and were unusable.2 St George breaches the warranty in the deed by failing to provide useable sperm as per the contract. Clark is unable to use the remaining straws, and was unable to acquire replacement sperm in Australia, that complied with Australian guidelines. Subsequently Clark acquires replacement sperm to treat her patients from a United States supplier, Xytex at approximately $1 million.3 Clark incorporates the cost of the replacement sperm in her professional fees to patients.4 Clark pays $167,000 of the purchase price of $386,950.91. At which point Macourt commences legal action. Clark cross-claimed for damages for breach of warranty against the vendor and Macourt as guarantor. 5 II.

DECISION OF THE NSW SUPREME COURT

On 25 October 2011 Gzell J holds the measure of damages for breach of warranty is the amount of a hypothetical purchase of 1996 straws, at the time the warranty is breached. 6 If measured at time of breach damages would amount to $1,020,252.70. However, replacement sperm was acquired in 2005 allowing interest on the damages equates to an award of $1,246,025.01. Gzell J awards total damages award of $1,246,025.01($1,020,252.70 excl. interest) as the value of 1996 straws.7 III.

DECISION OF THE NSW COURT OF APPEAL

In 2012 the NSWCA overturned the decision made by Gzell J and no damages were awarded, as Macourt claimed Clark was able to mitigate the loss she suffered by recouping the costs from her 1 Clark v Macourt (2013) 253 CLR 1 [43]. 2 Ibid [45]. 3 Ibid [46]. 4 Clark v Macourt (2013) 253 CLR 1 [43]. 5 Ibid [48]. 6 Ibid [52]. 7 St George Fertility Centre Pty Ltd v Clark [2011] NSWSC 1276 [110-111].

patients. 8 The court held that Gzell J erred in characterising the deed as a contract for sale of goods, therefore it is unsuitable to assess damages at the date of the breach. Damages were assessed at the date of the hearing. 9 IV.

ISSUES BROUGHT TO THE HIGH COURT OF AUSTRALIA (HCA)

The HCA determined three key issues. Whether different principles apply in assessing damages for breach of contract, for sale of goods and for sale of business including assets, in regard to the ruling principle; whether damages are assessed at the date of breach or the date of the trial and whether the loss of the purchaser had been mitigated or aggravated. V.

DECISION OF THE HIGH COURT

Clark appeals to the HCA by special leave, to reinstate the award made by Gzell J. In a 4-1 majority decision, the court allowed the appeal with costs and reinstated the award of damages by the initial judge.10 The ruling principle is reiterated for assessing damages which states, damages must put Clark in the same situation, so far as money can do it, had the broken promise been performed.11 The HCA then reasons that assessing damages at the date of the breach is an integral aspect of the principle. 12 Clark’s loss is measured by the value Macourt’s company failed to deliver, and the damages work to protect a promisee’s expectation interest. The court held that Clark charging a fee to patients to cover her costs, thus suffering no loss, is irrelevant in determining the quantum of damages to be awarded for what was not provided by the vendor under the contract.13

8 Ibid [129]-[131]. 9 Macourt v Clark [2012] NSWCA 367 [49]. 10 Clark v Macourt (2013) 253 CLR 1 (Crennan and Bell JJ) [146]. 11 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 at 286 [13]. 12 Ibid [109]. 13 Ibid [22]....