Case: Johnson v Perez [1988] HCA 64 ; (1988) 166 CLR 351
Outcome: cited
A general, but not universal, rule as to damages must, in any event, give way in a particular case to solutions which fairly compensate a plaintiff: Johnson v Perez [1988] HCA 64 ; (1988) 166 CLR 351 at 355 -356. In The 'Golden Victory ' Langley J considered that the ' normal measure ' referred to in The Elena D'Amico , was merely a prima facie rule and the ' governing principle ' remains that the measure of damage is the loss directly and naturally resulting, from the breach of contract. The application of principles relating to mitigation must be understood in this light. 81 Hyundai MM owns ships and charters ships both on long and short term. Part of its business is the carriage of cargo by hiring vessels. In the present case it had contracted as an owner, but the vessel to be nominated was not limited to one of its own vessels. Clause 34(A) of the charterparty recognises that the vessel might be provided from any such source. Its terms reflect the concern that Hyundai MM have control of the vessel used. 82 The situation with respect to Hyundai is similar to that of Cobelfret . A factual difference however is that it was known that Cobelfret would have two ships on time charter for the purposes of the charterparty in question. They were at their disposal and able to be used. It was obliged to mitigate for this reason. This accords with the approach taken in the cases referred to above. The basis upon which the ' rule ' proceeds is that there is a vessel available for use. That circumstance, and the shipowner's failure to use it for substituted cargo, are the only grounds for a conclusion that the loss claimed against the charterer was not a consequence of the breach of contract, but flowed from the shipowner's unreasonable inaction. 83 If it could be concluded that Hyundai MM had available to it a ship to take substitute cargo a short time after 16 April 2004, the profits that ship could have earned must be taken into account against contract freight. This accords with what might be expected in practice, as Mrs Richards said. An owner would simply be pursuing revenue for ' his fleet '. It is simply a matter of comparing income streams. It will be recalled that Scrutton, 20 th Edn, Art 193, makes an observation to similar effect. At a practical level there would have been no reason why a shipowner with a vessel available could not have gone into the market for substitute cargo. At the relevant time there was more cargo than ships available. 84 Mrs Richard's view, that Hyundai MM would have had a vessel available, appeared to have two bases. She considered that in a fleet such as Hyundai MM's a vessel could be made available by it. The second was that Hyundai MM should have maintained the fixture on the Tian Bai Feng , not the least because it was at a good price. The latter does not provide a basis for an assumption that a vessel was available at the date of acceptance of repudiation, or shortly thereafter. It is not even relevant to mitigation, since Hyundai MM could not have known, when it agreed to alter the laycan dates and not take a fixture on the vessel, that Dartbrook would later repudiate the charterparty.