Case Reports

Consequential loss - What's in and what's out?

In Allianz v Waterbrook [2009] NSWCA 224 (10 August 2009), the New South Wales Court of Appeal applied the decision in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSC 26, where the Victorian Court of Appeal found that contract clauses that exclude liability for consequential loss may exclude liability under the first limb in Hadley v Baxendale.

Until the High Court is given the opportunity to reconsider the definition of "consequential loss", these Court of Appeal cases suggest that an exclusion for "consequential loss" may exclude liability for all "loss of profits" and "expenses incurred through breach" even if they are not specifically referred to in the exclusion clause, or if they fall within the first limb of Hadley v Baxendale. 

Nick Galloway’s guidance on this summary gratefully acknowledged (any errors are ours) - Editor