Australia: Tram Delays, Negligent Driver Pays

Public law report
Last Updated: 6 April 2010
Article by Matthew Ellis

Metrolink Victoria Pty Ltd (Yarra Trams) was recently successful in the Victorian Court of Appeal in a matter that will shape the future application of the test of reasonable foreseeability and redefine the range of losses recoverable from tortfeasors. In the case of Metrolink Victoria Pty Ltd v Inglis [2009] VSCA 227, Yarra Trams successfully argued that losses sustained under a contractual incentive regime were recoverable from a third party who had negligently caused delays to the tram network.

Yarra Trams operates its services pursuant to a franchise agreement with the State Government. The agreement contains an incentive scheme by which Yarra Trams is financially rewarded for its close adherence to a master timetable and is penalised for deviations from it. Any delay occasioned to the tram network results in a loss to Yarra Trams under the incentive regime, either by way of a reduction in the payment it receives or an increase in the penalty it pays under the regime. Tram delays are measured by sophisticated equipment that monitors the location and movements of each tram in the network. That data is then used to assess compliance with the master timetable and, in turn, used to calculate losses incurred under the incentive regime.

Yarra Trams successfully argued that the losses it incurred under the incentive scheme were recoverable from the respondent. The respondent had, by his negligent driving, caused a motor vehicle accident resulting in damage to a tram and significant delays to the tram network.

Prior to the commencement of the proceedings in the Magistrates' Court, the respondent had admitted negligence and paid for the costs of repairing the damaged tram. However, the respondent denied liability for and refused to pay the contractual losses sustained by Yarra Trams under the incentive regime on the basis that they were not reasonably foreseeable and too remote at law.

The respondent was successful in the Magistrates' Court and in an appeal of that decision brought by Yarra Trams in the Supreme Court. However, on 2 October 2009, the decision was overturned by the Court of Appeal majority comprising Justices Redlich and Williams (with Neave JA dissenting).

In considering whether the loss suffered by Yarra Trams pursuant to the incentive scheme was recoverable from the respondent, the majority confirmed that the test for remoteness of damage at law is that established by The Wagon Mound case and more recently applied by the Victorian Court of Appeal in National Australia Bank Ltd v Nemur Varity Pty Ltd [2002] VSCA 18. The appropriate test to be applied was whether the damage claimed was "of such a kind or genus that a reasonable person should have foreseen".

The Court of Appeal observed that the application of the test required two processes. Firstly, a court must identify the particular kind or genus to which the loss belongs. Secondly, a court must determine whether a reasonable person in the position of the defendant ought to have foreseen loss of that particular kind or genus.

The Court of Appeal (including the dissenting Neave JA) accepted that the categorisation of the type of genus of loss was a question of law as the categorisation involves questions of policy, precedent and reasoning by analogy, all of which are not consistent with the role of a tribunal of fact.

The Magistrate had categorised the kind or genus of the loss claimed as "the reduction of a financial benefit payable by a third party to the plaintiff or the imposition of a financial penalty upon the plaintiff by a third party". The majority of the Court of Appeal determined that such a categorisation was too narrow as it required the foreseeability of the precise manner in which the loss came about, not just its kind or genus. The Court of Appeal noted that requiring such a detailed description of the loss was contrary to strong precedent which rejected the need for the reasonable person to foresee "the concatenation of the circumstances which caused the loss".

The majority instead stated that the courts should favour a broad categorisation of the type or genus of loss, save where the damages claimed were so uncommon that public policy demanded a more confined approach. In this regard, the majority held that, "...[i]n the modern world, however, complexity of contracts, and the provisions of items such as key performance indicators and other performance targets, could hardly be said to be unusual." Accordingly, there was no reason for policy considerations to interfere with the recovery of losses under the franchise agreement, losses which Redlich JA broadly defined as "revenue lost as a result of the inability to operate the tram service".

Turning to the second question, having categorised the loss as loss of revenue, the majority found that the loss was real and not far-fetched or fanciful and therefore not too remote. The majority stated that "it is in fact highly likely, or at least a real risk, that the disruption of the provision of any service might result in a loss of revenue to the person who is responsible for the provision of that service".

The decision is of financial benefit to Yarra Trams and other public transport operators conducting their services under contracts with the State Government, including those companies that have been granted the tram and rail franchises from 1 December 2009. The decision is also likely to have far broader implications for companies operating under incentive regimes or where measured performance indicators can result in quantifiable losses under a services contract.

The decision also reflects the ability of the law to adapt to the increasing complexity of business dealings – a complexity of which a reasonable person is now deemed to be aware.

The respondent made an application for special leave to appeal to the High Court of Australia. The respondent's main submission before Chief Justice French and Justice Kiefel was that a "salient features" test ought to be incorporated into the categorisation of loss, which would assist lower courts in correctly characterising the loss. Kiefel J questioned whether the "salient features" test would assist the lower courts, or whether it would simply cloak the exercise of characterisation of loss in other terms. The High Court did not consider that the matter was one which warranted a grant of special leave and the respondent's special leave application was refused with costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Matthew Ellis
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.