The New South Wales Court of Appeal has recently confirmed that parties claiming damages for misleading or deceptive conduct under the Australian Consumer Law (ACL) may be entitled to damages for “expectation loss” in certain circumstances.

Larsen as trustee for the Larsen Superannuation Fund v Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd) [2025] NSWCA 145 considered the damages available to the Larsens, who entered into a lump sum contract with Tastec Pty Ltd for the supply and assembly of a prefabricated house in Glen Alice, NSW. The contract specified the use of Maxline 340 cladding, which was of aesthetic importance to the Larsens. The Larsens alleged that their agreement to vary the contract (“Variation 6”) to instead require Bondor 580 cladding, was induced by Tastec’s misleading or deceptive conduct.

Justice of Appeal Adamson, with whom Stern JA and Price AJA agreed, accepted that but for Tastec’s misleading or deceptive conduct the Larsens would not have agreed to Variation 6 and would have had an enforceable contractual right to require the installation of Maxline 340.

The Larsens claimed damages calculated in a way to bring them into the position they would have been under the contract, if not for Variation 6. The primary judge rejected the claim on the basis that expectation loss could not be awarded for contravention of the ACL.

In circumstances where the plaintiff’s loss as a result of the misleading or deceptive conduct was the loss of a contractual benefit (in this case, performance of the original contract requiring Maxline 340 cladding), the Court of Appeal found that “the damages for the contravention in the law resembles damages for breach of contract (otherwise referred to as expectation loss)”.

The amount required to put the Larsens in the position they would have been in had they not been misled into accepting Variation 6, was therefore the same as the value of the contractual benefit of being entitled to performance of the contract on alternative (original) terms. In those circumstances, the primary measure of damages is the cost of reinstatement.

In the circumstances, it was not relevant to their recovery that the Larsens’ interest in Maxline 340 was largely aesthetic or that the Bondor 580 did not diminish the market value of the constructed home.

The decision can be found here.