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
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
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
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.
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.
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
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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