Katy Barnett, ‘Protecting the Plaintiff’s Expectations: Clark v Macourt‘ (10 March 2014).

A majority of the High Court has allowed an appeal against the decision of the NSW Court of Appeal in Macourt v Clark.

The appellant (Dr Clark) was party to a deed under which Clark would purchase donor sperm samples from the St George Fertility Centre Pty Ltd to be used in Clark’s assisted reproductive technology practice. The respondent (Dr Macourt) was also party to this deed as the guarantor of St George’s obligations. Of the 3513 samples delivered, only approximately 15 per cent of the samples were useable. The trial judge, Justice Gzell, held that Clark should be compensated for 1996 samples, on the basis that industry regulations would have only allowed Clark to use 2500 of the samples, and she had successfully used 504 of them. Justice Gzell assessed damages due to Clark at over $1.2mil, based on the market cost of replacement samples (bought from Xytex Corp in the United States) assessed at the date of the breach (early 2002). On appeal, the NSWCA allowed Macourt’s appeal and reduced that amount to $215,000. Justice Tobias (Justices Beazley and Barrett agreeing), held that there was no evidence that Clark had yet paid anything for the St George samples, and that although she had suffered loss from not being able to use those samples, she mitigated that lost by using the Xytex replacements, and recouping the extra costs associated with those replacements by including them in patient billing.

Applying the ‘ruling principle’ — that damages for breach of contract should put the promisee in the same situation with respect to damages, so far as money can, as the promisee would have been in had the broken promise been performed — the majority held that Clark should receive the amount it would have cost to purchase the 1996 samples: the appellant’s loss was to be measured by the value of what St George had promised to deliver but failed to do, and not by reference to what she outlaid as compared with what she received from St George. The majority looked to what sum was required to rectify the breach as at the date it occurred, not the diminution in value which had occurred to Clark’s business or the amounts spent in reliance on the promise. The majority’s prioritisation of Clark’s interest in performance of the contract was in line with the court’s previous decision in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272.  Gageler J dissented.