Do Plaintiffs Always Bear the Burden of Proof?

The recent High Court case of Cessnock City Council v 123 259 932 Pty Ltd has provided further clarity on what plaintiffs need to prove and what they don't.

The burden of proof (also known as onus of proof) is a legal term that means the requirement to prove something. It is enshrined in the well-known saying that an accused criminal is ‘innocent until proven guilty’, which simply means a person is presumed to be innocent unless the prosecutor proves otherwise. The prosecutor has the ‘burden of proof’.

In civil cases, such as commercial contract disputes, the plaintiff (the person suing) will generally have the burden of proof. To succeed in a breach of contract claim, the plaintiff will generally need to prove the following:

1. An agreement existed between the plaintiff and defendant (the person being sued);

2. The defendant breached the agreement; and

3. The defendant’s breach caused the plaintiff to suffer loss.

If the plaintiff proves these elements, the court will usually order the defendant to pay the plaintiff a sum of money. Generally, the amount of money which the defendant will have to pay will be the amount that would, as far as money can do it, put the plaintiff in the same position as if the defendant did not breach the contract.[1] This will usually include expected profits.

In some cases, however, the fact that the defendant breached the contract makes it difficult to prove that the plaintiff’s expected profits would have been generated. For example, if the defendant’s breach happened at a very early stage, the plaintiff’s expected profits might be regarded as purely speculative. This raises doubt that any profits would have been generated, which makes it harder for the plaintiff to discharge the burden of proof in relation to element three (above).

In this scenario, the plaintiff might claim its wasted expenditure, which is the expenditure incurred on the assumption that the contract will be performed. However, it cannot be truly ‘wasted’ if it would not have been recouped even if the contract were performed, as it would have been equally wasted. The court will not require the defendant to compensate the plaintiff for loss it would have suffered anyway.

But if the plaintiff is unable to prove it would have generated a profit, how will it prove that it would have recouped its expenditure?

In the recent case of Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17, the High Court affirmed the principle that, in such a case, the court may presume that the wasted expenditure would have been recouped. This is known as the ‘facilitation principle’. It puts the burden of proof on the defendant, requiring the defendant to prove that the wasted expenditure would not have been recouped.

The plaintiff must still prove its loss by providing receipts and other supporting documentation. It will also need to prove that the loss was reasonably incurred in reliance on the contract being performed. However, where the court applies the ‘’facilitation principle’, the plaintiff will not need to prove that the wasted expenditure would have been recouped had the contract been performed.  This will be presumed unless the defendant proves otherwise.

If you are involved in a commercial dispute, please contact Jackson O’Keeffe or   Ben Hemsworth on (02) 9923 2321 or email us at enquiries@somervillelegal.com.au.

[1] Robinson v. Harman (1848) 1 Exch 850.