A brief account on Commonwealth V Amann Aviation

Question

Task: Provide a brief account of the case of Commonwealth V Amman Aviation Pty Ltd.

Answer

In this report, the jurisdiction done by the High Court in the case of Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 has been discussed to contemplate the idea of hypothetical legal conduct. The Australian Commonwealth and the Amman aviation signed a contract by which the petitioner ie, Amann was provided with the responsibility to handle the task of above ground or aerial observation in the northern shore of Australia for the uninterrupted period of 3 years which was supposed to begin after the six months of the contract date. To conduct the assured task of above ground surveillance in the northern shore of Australia, Amann had spent a substantial amount of money in planning and purchasing technically advanced aircraft for efficient and endured surveillance (Harder, 2010).

Amann Aviation had started the task of aerial observation on the assured date but the agreement was canceled by the Commonwealth. The company has acknowledged the cancellation order from Commonwealth and sued them for the compensation for the heavy expenses which went into vain because of the sudden cancelation of the contract (Swarb, 2015a). The fact that the Amann Aviation would not be able to recover the huge expenditure even in 3 years was raised by its management. The foundation of this argument by the Amann on this issue of excessive disbursement was centered on the postulation that the agreement should have been renewed after 3 years (Harder, 2010).

Legal issues discussed in this commonwealth v Amann aviation case is about the unliquidated damages caused by the unprecedented cancellation or breach of the contract by the respondent, where the petitioner was optimistically looking forward to the contract responsibilities. The ruling promulgated in this appeal had addressed whether the petitioner was worthy of a greater volume of compensation for its damage.

Relevant Laws and Principles
When a party engaged in the contract fails to meet the commitment of the agreement which was written in the contract, the action will be termed as breach of contract (Abbott, Pendlebury, & Wardman, 2007). At whatever time there is a breach of the contract said to be established, the affected participant can appeal to the court of law demanding the financial or such similar compensation for the damages incurred. (Latimer, 2012).

Section 349 of the Restatement of the Law: Contracts, 2nd ed. (1981) states the damaged or injured party, being an auxiliary for the extent of damage as keeping in mind the expected damages which are mentioned in section 347, can claim for the compensation on the foundation of reliance interest. The compensation amounts to the disbursement occurred while executing the task or while making an outlay for it. The compensation also covers the amount which provides the affected party with sensible stability which should be deducted from the party who conducts the breach. The affected or the injured party suffers damage because of commencing into the contract (Jade, 2017).

According to Park B’s observation in the case of Robinson v Harman (1848) 1 Ex-Rep 850, the compensation provided due to the breach of contract should reimburse the amount of harm because of the votive bargain to the causality (Swarb, 2015b). In this case, Baron Park has raised the issue about the volume of loss the petitioner was permitted to cover. He emphasized that according the rules dictated in the common law that whenever there is a loss occurred to a party because of the breach of contract, the petitioners were allowed with so much compensation for the damage that the defenders were pulled down to the same situation of the petitioners, since the amount of money provided was equal to the amount at which the contract was commenced (Civil Lawyer, 2011).

If considered the case of Hayes v Dodd (1990) 2 All ER 815, an engine repairing business was being operated by the defender and he had made a contract to buy a domestic workspace beside a yard that should be reached about a very slender and difficult underpass which is situated in the anterior side of the before said land and the avenue. The tunnel moreover provided entree to the posterior part of the property. As the petitioner required financial assistance to buy the land, he had taken two credits from the bank which amounted to £65,000 and £ 55,000 respectively. The defender had to close down his business after a while, which made him unable to buy the property in a single installment. Because of the confusion and the anguish caused by the defender, the petitioners filed a claim of £ 1,500 each. It was being held by the judiciary that in the case of breach of contract, confusion and vexation couldn’t be kept a basis for compensation up until the purpose of the agreement stipulate the peace of mind (Williams, 2013). It was being made clear in the case that the claimed amount by the petitioners was not retrievable since the contract was of commercial nature (Swarb, 2016).

As per the observations made by Learned Hand C.J. in the case of L. Albert and Son v. Armstrong Rubber Co. (1949) 178 F 2d 182, the situation when the engaged parties fail in performing the activity outlaid in the contract, the below-par outcome has the potential to inflict the risk of failure from behalf of promisor to the promise. Hence the judiciary had made it clear in this case that the failure in committing the task will be the breach of contract as the performer is the insurer of the venture (H2O, 2013).

As per the account made by Lord Denning in the case of Anglia Television Ltd. v. Reed (1972) 1 QB 60, the petitioner could make a plea for the expenditure committed, when the expected amount of profit is not recovered and has caused substantial damaged has caused to the victim party. The petitioner could either claim for damage in the case of futile expenditure or the loss of profits (E-Law Resources, 2017).

Arguments of the Parties and Analysis
As an argument put forward to claim the compensation for the damage caused, Amann stressed the situation or the turnover the company may have accrued if the agreement was valid and pursued until its finishing date. The petitioners had referred to the Robinson v Harman to ascertain that it was the responsibility of the Commonwealth to place the Amann company in the situation where it may have in the nonexistence of the breach of agreement (Australian Contract Law, 2013). The defendant has accused the petitioner of the liability of proof in this commonwealth v Amann aviation case. This accusation was laid on the basis that the Amann company had trusted the Commonwealth and mad huge expenditures as a precaution to fulfill the obligations mentioned in the contract. This case had made its focus n reliance loss rather than the estimated damage (Australasian Legal Information Institute, 2017).

The judiciary hadn’t identified the term to provide Amann Company mental satisfaction although they have raised the arguments and judicial ruling in Hayes v Dodd, the court had refused to address the issue of mental peace. The judicial had declined to address this issue because the contract was pure of a commercial nature (Australasian Legal Information Institute, 2017).

Amann company made it clear that a considerable amount of profit should have been made only if the contract was renewed for another term. Hence Amann company had made their statements on this foundation. Because of the violation of the agreement by the Commonwealth, it was evident that any sort of renewal will not be awarded to the Amann Company, hence there was no chance that the Commonwealth could raise any defending arguments against it (Jade, 2017). McHugh, one of the jury members, had levied the commonwealth with the burden of proof. Since the Arguments of Commonwealth were unsuccessful in claiming that the probability of recommencing the contract was above 50%, the majority of the members in the judicial bench permitted the compensation to Amann for the expenditure commenced. The argument by Amann which convinced the jury was the depiction of its position expected to be after 3 years, which must have been superior that of the present condition, by providing described service in the contract to the Commonwealth (Australasian Legal Information Institute, 2017).

As per the court’s ruling the amount of $410,000 was awarded as compensation for the expenditure, of the net profit of $819,099 which the company could have earned by performing the task mentioned in the contract. The court gave a decree according to clause 2.24 which was to be deemed under the contingency of cancellation that the amount of compensation should be reduced to its half. Against it, Amann had pleaded that it had the right over total compensation since it had shown full resilience to the contract and the financial benefit it would have gained after three years was substantial. The court had acknowledged this argument and changed the decision to incise the compensation (Australasian Legal Information Institute, 2017).

The court also considered the argument further regarding the Commonwealth had conducted a breach of contract. The judiciary has noticed that the probability of the contract being was limited to only 20% according to the data quoted in the contract. The judges in the judiciary panel dictated that even though the probability of the cancellation was provided in the contract, the factor could not be considered to determine the amount of compensation. Because of this reason the company was only awarded the 80% compensation from the amount of $4,808,563's which accounted for the total sum of $3,846,850. Apart from the compensation amount of $3,846,850 the sum of $143,049 was put aside as the termination payments for the employees of Amann. Thus total liability of compensation charged against Commonwealth summed up to $3,989,899. The company was also provided with an interest of 80% on the sum of $4,695,563 an on all pending sums, till the date of the verdict (Australasian Legal Information Institute, 2017).

Conclusion and Court Jurisdictions
It was observed in this case that the ascertaining the violation of the agreement is convenient if matched with calculating the extent of damages or compensation to be paid for the victim party. Thus the issue of a contract of breach is a very sensitive one and it should be dealt with utmost precaution and the breach should be avoided before the accusation is made. According to Dean J the broad principle followed in this commonwealth v Amann aviation case which was being used to contemplate and calculate the compensation, the petitioner should have been provided with the amount of money because of the wrongful act committed by the Commonwealth

References
Abbott, K., Pendlebury, N., & Wardman, K. (2007). Business law (8th ed.). London: Thompson Learning.

Australasian Legal Information Institute. (2017). Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64 (12 December 1991). Retrieved from: https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1991/54.html?stem=0&synonyms=0&query=Commonwealth%20v%20Amann%20Aviation%20Pty%20Ltd

Australian Contract Law. (2013). Commonwealth v Amann Pty Ltd: High Court of Australia (1991) 174 CLR 92. Retrieved from: https://www.australiancontractlaw.com/cases/amann.html

Civil Lawyer. (2011). Expectation damages - Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64. Retrieved from: https://www.the-civil-lawyer.net/2011/11/expectation-damages-commonwealth-v.html

E-Law Resources. (2017). Anglia Television v Reed [1971] 3 All ER 690. Retrieved from: https://www.e-lawresources.co.uk/cases/Anglia-Television-v-Reed.php

Harder, S. (2010). The Exculpation of Repudiating Parties by a Right to Terminate the Contract. Retrieved from: https://www.researchgate.net/profile/Sirko_Harder/publication/228169768_The_Exculpation_of_Repudiating_ Parties_by_a_Right_to_Terminate_the_Contract/links/543685400cf2bf1f1f2bd67a.pdf?origin=publication_detail

Jade. (2017). High Court of Australia. Retrieved from: https://jade.io/article/67658

Jervis, H. (2015). How do I calculate damages for breach of contract?. Retrieved from: https://legalvision.com.au/how-do-i-calculate-damages-for-breach-of-contract/

Latimer, P. (2012). Australian Business Law 2012 (31st ed.). Sydney, NSW: CCH Australia Limited.

Swarb. (2015a). Commonwealth of Australia v Amann Aviation Pty Ltd; HCA 12 Dec 1991. Retrieved from: https://swarb.co.uk/commonwealth-of-australia-v-amann-aviation-pty-ltd-hca-12-dec-1991/

Swarb. (2015b). Robinson v Harman; 18 Jan 1848. Retrieved from: https://swarb.co.uk/robinson-v-harman-18-jan-1848/

Williams, S. (2013). Transaction Or No Transaction?. Retrieved from: https://www.radcliffechambers.com/wp-content/uploads/2013/01/Simon_Williams_-_Prof_Neg_article.pd

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