Are performance penalties payable by a tram operator due to significant delays to the tram network a reasonably foreseeable loss arising from a motor vehicle collision with a tram?
Facts
This case will shape the future application of the test of reasonable foreseeability as it has redefined the range of losses recoverable from wrongdoers.
Metrolink owned trams on the Melbourne network. Inglis was the driver of a motor vehicle that collided with one of Metrolink's trams.
The collision resulted in damage to a tram and significant delays to the tram network. Prior to the commencement of proceedings, Inglis admitted negligence and paid for the costs of repairing the damaged tram. Inglis denied liability and refused to pay for the contractual losses sustained by Metrolink on the basis that they were not reasonably foreseeable and therefore too remote at law. Metrolink commenced proceedings to recover these losses.
Metrolink operated its services pursuant to a franchise agreement with the State Government. The agreement contained an incentive scheme whereby Metrolink was penalised for deviations from the master timetable. Inglis contended that the performance penalties were too remote – it was not reasonably foreseeable that a collision with the tram would trigger performance penalties under a contract that Metrolink had entered into with, in this case, the State.
Finding
In allowing Metrolink's claim, the Court of Appeal held that "there is nothing unusual about the expectation that M would receive remuneration for the operation of its part of the tram network or that it would lose revenue in the event that it could not operate a part of its service." Loss arising by operation of the franchise agreement was a particular form of loss of revenue, it was not too remote and consequently was recoverable by Metrolink as damages.
Application
Whilst the Metrolink case was an action in tort and it was not possible for Inglis to exclude liability, this case serves to highlight that plainly indirect or consequential loss of the kind suffered by Metrolink may be recoverable. Liability for indirect or consequential loss can be avoided by a contracting party by sufficiently clear language in the contract. In the absence of a provision in the contract excluding recovery for consequential loss, a party may find itself met by claims for indirect loss of the kind that Inglis was found liable for in the Metrolink case.
An application by Inglis to the High Court for special leave to appeal the decision of the Court of Appeal has been refused.
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