In estimating damages, are overheads fixed and does it matter?

Issues with what costs should be deducted from revenue in assessing damages and account of profits

Introduction

Faced with the task of estimating damages to be awarded or profits to be disgorged courts and lawyers are often confronted with the question of which costs should be deducted from the revenue that was or would have been earned. In this edition of Damages Matters, Owain Stone, Partner and Justine Power, Senior Business Analyst in our Melbourne office look at a recent decision in the New South Wales Court of Appeal which dealt with the complex issue of the treatment of overheads when assessing damages, and considers the extent to which the treatment of overheads may be the same for damages or profits to be disgorged.