In Millington v Waste Wise Environmental Pty Ltd [2015] VSC 167 the Supreme Court of Victoria found that an award for damages to compensate the respondent for damage to the respondent’s vehicle should be exclusive of GST where the respondent was entitled to claim input tax credits in respect of the repairs to the vehicle. The Court allowed the appeal against the decision of the Magistrates Court that the order should be for a GST-inclusive amount of damages with a further order that at a subsequent date the respondent repay an amount equal to the input tax credits which could be claimed.

The Court adopted the finding of the NSW Court of Appeal in Gagner Pty Ltd trading as Indochine Cafe v Canturi Corporation Pty Ltd [2009] NSWCA 413 that an an award of damages properly calculated should not include an amount for GST where the plaintiff is entitled to claim input tax credits for that amount. However, the Court noted that a key element in this proposition is the concept of certainty, as the loss suffered could be easily quantified and an order for a fixed sum can be readily made. Where the amount of loss is not easily quantified, the principle may not be available – the Court referred to the decision of the Victorian Supreme Court in Peet Limited v Richmond (No.2) [2009] VSC 585 as an example.

The Court also found that the orders of the Magistrate were structured in the manner in which they were was because of the erroneous view taken that there existed a positive duty upon the respondent to mitigate its loss by claiming the input tax credits to which it was entitled. The Court considered that no such positive duty exists and the correct view is that  a person who claims a loss must take all reasonable steps to mitigate the loss consequent upon the defendant’s wrong and will not be entitled to recover an amount for damages for any such loss which he, she or it could have avoided, but has failed to avoid through their own unreasonable action or inaction. The claiming of input tax credits could not be seen as an unreasonable imposition.