Consequential loss - another fork in the road?

A Western Australian Supreme Court decision has turned the meaning of consequential loss on its head...again.

The Judge decided that there is no universal definition of 'consequential loss', and that its meaning will depend on the circumstances of each case. Extraordinary care must now be taken when using the term.

REGIONAL POWER V PACIFIC HYDRO

The case in question concerned an agreement between Pacific Hydro Group Two Pty Ltd and a statutory corporation which later became Regional Power Corporation.

Pacific Hydro agreed to construct the Ord Hydro Power Station and then supply electricity from that power station to Regional Power.

The agreement contained a typical exclusion of liability for 'consequential loss' clause, which excluded both parties'' liability to each other for "indirect, consequential, incidental, punitive or exemplary damages or loss of profits." The term 'consequential loss' was not otherwise defined in the agreement.