Wednesday, 20 June 2012 The case relates to a damages claim by a security company against an RSL club for breach of contract arising from early termination. The issue at stake was whether fixed and variable costs should be deducted from lost revenue, in addition to variable costs when deriving a claim for damages. The Court held that the requisite approach requires more than a “slavish” deference to accounting classification of fixed and variable costs. The Court held that the appropriate methodology is to examine the true nature of a cost to identify whether it is “saved” as a result of the breach of contract. In this instance, the Court agreed with the security company’s methodology described as follows: Synergy has looked at each expense individually, irrespective of whether it is a direct cost or overhead, and determined what cost was saved as a result of the loss of the contract. This case appears to take a different approach to the High Court decision in Dart Industries Inc v Dcor Corporation Pty Ltd (1993) 179 CLR 101. We will consider these cases in further detail in an upcoming Damages Matters publication. The appeal decision can be read through this link.