Sydney, Australia—In a landmark breach of contract case, the full bench of the High Court of Australia has delivered judgment in Cessnock City Council v 123 259 932 Pty Ltd, dismissing Cessnock City Council’s appeal. The case is now the leading authority for reliance damages arising from a breach of contract.

Dentons, the world’s largest global firm, represented property developer 123 259 932 Pty Ltd (formerly Cutty Sark). The Dentons team was led by Construction Litigation Partner Ourania Konstantinidis, Special Counsel Aimee McIntyre and Solicitor Eric Grima.

"We are extremely delighted with the successful outcome of this case for our client, 123 259 932 Pty Ltd," said Partner Ourania Konstantinidis. "Not only has the verdict concluded a prolonged period of contention for our client, the High Court's unanimous decision has clarified the precedent regarding the presumption of recoupment in reliance damages for contracts in Australia.”

The dispute arose from a 2007 agreement for lease between Council and Cutty Sark, in which Cutty Sark would be granted a 30-year lease to develop and manage a section of a proposed airport in Cessnock. Council's failure to register the plan of subdivision by the specified sunset date led to a breach of their contractual obligations. Despite this, Council took no action to prevent Cutty Sark from continuing to invest substantial sums of money on the construction of a hangar and the purchase of aircraft.

Dentons, acting on behalf of Cutty Sark, commenced proceedings in the Supreme Court seeking damages for "wasted expenditure." While the Supreme Court awarded only nominal damages, Dentons appealed the decision to the NSW Court of Appeal. The Court of Appeal ruled in favour of Cutty Sark, stating that the burden of proof rested with Council and that Cutty Sark was entitled to recoup its wasted expenditure.

Council sought and was granted special leave to appeal to the High Court of Australia, but its appeal was ultimately dismissed unanimously by the full bench. The High Court upheld the Court of Appeal's decision, stating that Council's repudiation of the contract entitled Cutty Sark to recover damages for wasted expenditure. Council failed to prove that Cutty Sark's expenditure on the hangar would have been wasted if Council had fulfilled its contractual obligations.

Solicitor Eric Grima said "It is a proud moment for Dentons to represent 123 259 932 Pty Ltd in the highest legal platform in Australia in an overwhelming unanimous decision. It is rewarding to see the outcome that we were able to achieve for our client, along with providing clarification of an important legal precedent on contracts that has widespread implications on commercial law in Australia."

“With proceedings commencing over seven years ago, 123 259 932 Pty Ltd is understandably pleased with the outcome, and we congratulate them on the win,” said Special Counsel Aimee McIntyre.

This case highlights Dentons' commitment to providing exceptional litigation and dispute resolution legal services to clients in the construction and real estate sector.

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