How To Measure Damages Where Loss Is Difficult To Quantify: A Look At The Court Of Appeal’s Decision In Gao V Zespri Group Ltd

Abstract

This paper assesses the different approaches to calculating damages which could have been applied by the Court of Appeal in Gao v Zespri Group Ltd. This case created difficulties in awarding damages due there being significant impact on the plaintiffs but insufficient evidence to measure any of their loss or the defendant’s gain. Various potential approaches the Court might have taken are considered. Each approach is critiqued with reference to principles of compensation and damages at common law and the ability to adequately remedy the situation. Ultimately, this paper concludes that the Court’s use of a hypothetical bargain, even where the plaintiffs would not have made such bargain, was the best approach available. Other approaches fail to practically remedy the situation offering inappropriate sums and uncertain calculations. However, the failure of hypothetical bargains to follow ordinary principles of compensation cannot be ignored as it was by the Court of Appeal. There is room for the Courts to consider the approach an exception to ordinary principles of compensation. Doing so is necessary to ensure a fair and reasonable measure of damages can be achieved. Recognising this approach as an exception to ordinary compensatory principles will also ensure issues surrounding causation, remoteness and proportionality may be more readily considered, and that such principles are not slowly eroded away by legal fictions.