King & Wood Mallesons

Asia-Pacific 100 position: 2

Western Australian Court takes a new, more commercial, approach to consequential loss exclusions

The law surrounding consequential loss remains complex and unclear following a recent decision in the Western Australian Supreme Court, which emphasises the need for fulsome, clear drafting of consequential loss exclusion clauses.

In Regional Power Corporation v Pacific Hydro Group Two Pty Ltd [No 2] [2013] WASC 356, Justice Martin rejected both the English approach to the construction of the term ‘consequential loss’ as falling under the second limb of Hadley v Baxendale and the view adopted by the Victorian Court of Appeal in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd.

In 1994, Pacific Hydro entered into a power purchase agreement (PPA) with the Regional Power Corporation for the construction of, and then the supply of electricity from, the Ord Hydro Power Station to the corporation…

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