Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322
Contract; remedies for breach; damages; mitigation of loss.
Facts: Simonius Vischer were Swiss wool brokers. They established a local firm in Sydney to trade in the Sydney wool futures market. The Sydney firm was audited by Holt & Thompson. Undetected by Holt & Thompson, the Sydney firm exceeded the powers given to them by Simonius Vischer, entering into unauthorised contracts that caused a loss of $200,000. On discovering the situation, Simonius Vischer decided that the losses would be minimised by approving the unauthorised contracts. This proved a wrong decision and even greater losses were suffered. Simonius Vischer then sued Holt & Thompson for breach of the auditing contract, claiming damages to compensate for the full extent of their losses.
Issue: Were the additional losses, incurred by the decision to keep the contracts, recoverable?
Decision: The additional losses were recoverable.
Reason: The court rejected Holt & Thompson's argument that Simonius Vischer had failed to effectively mitigate their losses. It was held instead that Simonius Vischer had acted reasonably in deciding to keep the contracts in the hope of minimising the loss. Accordingly, when this hope did not materialise, Holt & Thompson were liable for the additional losses that resulted.