In Metro Environmental Logistics Pty Ltd v Newcastle Port Corporation trading as Port Authority of New South Wales [2026] NSWSC 791, the Supreme Court dismissed a claim for damages brought by the plaintiff (MEL) in relation to an allegation that the defendant (Port Authority) had engaged in unconscionable conduct in connection with the negotiation and terms of an agreement for lease.

MEL contended that Port Authority’s allegedly unconscionable conduct caused it to lose an opportunity to make a profit of around $300 million over a putative 20-year lease period. It claimed damages in that sum from Port Authority.

Brereton J found that Port Authority did not act unconscionably and, even if it had acted unconscionably, its conduct did not cause MEL to lose an opportunity of any value. His Honour also found that, in any event, no causal connection could be established between the impugned conduct and any alleged loss.

This article covers the causation findings in the judgment and its relevance to claims for unconscionability and loss of opportunity damages more generally. Our earlier article(opens in new tab) on this case focuses on the judgment insofar as it deals with unconscionable conduct in a commercial context.

The facts

Since the facts of the matter are set out in more detail in our earlier article, relevant events are only summarised below.

MEL was a single-purpose company established in 2010 with a view to importing sand to Sydney for use in the manufacture of concrete for construction projects around the city. Port Authority is a state-owned corporation which operates the port at Glebe Island.

The parties had a long history of dealings, with MEL initially proposing to build a sand importation and distribution facility at Glebe Island before the proposal shifted towards MEL being a possible tenant of a Multi-User Facility (MUF) used for the storage of bulk construction materials which would be built by Port Authority. That history of dealings included the parties entering two non-binding Heads of Agreement and was marked by delays caused by uncertainty in relation to the future use of Glebe Island.

From July 2017, Port Authority and MEL engaged in negotiations regarding the terms of an agreement for lease (AFL) in relation to part of the MUF.

Negotiations relating to the AFL continued until early December 2018. Both parties were legally represented, and MEL also had the benefit of expert and experienced commercial assistance from one of its directors. However, as negotiations continued, personnel within Port Authority became increasingly concerned about MEL’s ability to be able to fulfil its obligations under any prospective lease – particularly because it had no certain sand supply source.

This led to the AFL containing certain conditions precedent (CPs) that primarily required MEL to satisfy Port Authority that it would be able to fulfil its obligations under the lease – including a minimum throughput of sand. There was evidence of some objections by MEL to those proposed terms and there were subsequent changes in the drafting of the terms.

On 7 December 2018, MEL executed the AFL. On 15 February 2019, MEL sent a letter to Port Authority advising that it had satisfied the CPs in accordance with the AFL and provided what it said were supporting materials. MEL proposed, in part, to satisfy the CP relating to its proposal to import sand by providing an exploration licence access agreement with North Scottsdale Resources Pty Limited (NSR) for the supply of sand from Rushy Lagoon in Tasmania – although NSR only held a soon-to-expire exploration licence in relation to that resource.

On 15 March 2019, a Port Authority assessment panel determined that none of the CPs had in fact been satisfied. Later that same day, Port Authority issued a letter to MEL advising that it had not satisfied the CPs and, on 18 March 2019, Port Authority terminated the AFL.

MEL subsequently commenced proceedings in the NSW Supreme Court alleging that Port Authority engaged in unconscionable conduct within the meaning of s 21 of the Australian Consumer Law in its dealings with MEL (particularly with respect to some of the CPs). This section, in summary, prohibits unconscionable conduct in trade or commerce.

The proceedings were dismissed on 9 July 2026.

Loss of opportunity

Causation

Brereton J considered issues of causation and quantum in case his conclusion in relation to unconscionability was wrong. His Honour observed that the line between causation and quantum can be difficult to determine and ‘was not bright in this case‘. He noted that:

1. it was common ground that MEL was required to prove that it was more probable than not that the allegedly wrongful conduct caused it to lose an opportunity of some value. This was MEL’s burden on causation; and
2. if causation was established, it was agreed that the quantum was to be assessed by reference to the prospects of success of the opportunity, taking into account and weighing all relevant probabilities and possibilities.

His Honour held that MEL’s loss should be conceptualised as the ‘loss of the benefit of the lawful performance of the agreement for lease‘. To determine this loss, it would be necessary to consider the prospect of MEL making a profit as a tenant of the facility – albeit with a focus on the value of the AFL. However MEL had framed its loss of opportunity claim as the loss of the opportunity for MEL to have sold sand from Glebe Island for a profit. Having regard to the relevant principles, his Honour found that in order to prove that that the alleged wrongful conduct caused MEL to lose the opportunity to sell sand profitably from Glebe Island, MEL would need to establish that, on the balance of probabilities:

1. if the conduct in issue had not occurred, Port Authority would have constructed the MUF (a matter over which it had absolute discretion by reason of one of the CPs) and the parties would have entered into the lease; and
2. the opportunity to sell sand from the MUF had some non-negligible value. Here all MEL had to do was show there was a non-negligible chance that, as a tenant of the MUF, it would have made profits by selling sand. Thus, for example, if MEL proved that there was a 40% chance that, as a tenant of the MUF, it would have made profits, then it had proved it was denied an opportunity of value.

If it could establish these matters, the quantum of the claim was not then to be discounted based on the potential that the MUF was not built or that the parties would not have entered into the lease. On this analysis, Port Authority would cause the opportunity to be lost by failing to grant MEL the lease.

His Honour considered what he saw as MEL’s three differing cases on causation which, he observed, ‘continued to evolve‘ during the hearing. His Honour found that whilst the first causation case had been abandoned during the hearing, the further two causation cases failed.

By the time of the final hearing, MEL’s causation case was essentially that it would have sourced sand from a hypothetical sand mine operated by NSR at Rushy Lagoon, Tasmania; it would have transported the sand from Tasmania to Glebe Island; and there would be an escalation in the price of natural fine sand for use in concrete manufacture over time that would cause it to make substantial profits.

Dealing with these matters required his Honour to consider evidence from a number of expert witnesses. He observed that:

The number of expert witnesses and the complexity of the evidence was a reflection of the number of scientific and engineering matters that were relevant to the path to the viable extraction of sand from Rushy Lagoon.

As of March 2019, when the AFL was terminated, Rushy Lagoon was a prospective source of sand but there had not been enough investigation to determine that it was capable of producing sand to meet MEL’s requirements. In particular, while the evidence indicated that the resource comprises a significant amount of sand that could theoretically be mined and used for construction purposes, there was uncertainty as to the ability to do so in a cost-effective manner.

Relatedly, his Honour found that it was highly unlikely that NSR would have been able to secure the funding it needed for the construction and operation of the mine, noting the evidence of geological problems with the resource; the uncertainty regarding the capital and operating expenditure required; the risk profile of the investment; the absence of any offtake agreement in favour of MEL; and the nature of MEL as a start-up with no track record.

Further, his Honour found that MEL had not established that it was more probable than not that NSR would have secured a mining lease by relevant dates and MEL had not established that NSR would have had the financial ability to obtain the required approvals more quickly that it has done in the real world (noting that NSR still does not have approval to operate a sand mine).

Significantly, his Honour also found that the price MEL would be able to charge for sand would be impacted by the industry’s move towards the use of manufactured sand as a replacement for some amount of natural fine sand. Further, MEL’s expert evidence as to the price it would be able to charge for sand failed to account for the fact that MEL would, though its entry into the market, meet the shortfall in supply that it intended to capitalise on and this would have to have an effect on prices. The likely inability to raise prices as desired had direct ramifications for the question of the funding of MEL’s operations, as well as on the profits it would make.

Having regard to these matters, his Honour concluded that it is highly unlikely that Port Authority would have built the MUF at Glebe Island and that it would have granted a lease to MEL because:

1. it was unlikely that NSR would have obtained the required approvals and mining lease;
2. it was unlikely that NSR would have been able to demonstrate that funding was available to undertake the necessary capital and operational expenditure for the mine;
3. there was considerable doubt that MEL could have convinced Port Authority that Rushy Lagoon was a viable sand resource; and
4. it is unlikely that MEL would have been able to present a business case that was commercially viable so as to make clear that it could fulfil its obligations as a tenant.

Importantly for MEL’s case, CP6 (the CP allowing Port Authority absolute discretion as to whether to build the MUF) would not have been satisfied, in the counterfactual world, by the sunset date in the AFL of 14 December 2019. That meant that, by no later than that date, either party would have had the right to terminate the AFL. His Honour found that it was difficult to ‘conceive a world where Port Authority would have declined to exercise its right to terminate before condition precedent 6 was satisfied‘. He also found that it would have been a ‘commercial disaster for MEL if condition precedent 6 was satisfied and Port Authority insisted on its rights under the agreement for lease‘. Consequently, his Honour found that if Port Authority did not terminate the AFL once the sunset date for CP6 expired, it is highly likely that MEL would have exercised its right to do so in order to save itself from insolvency.

On that basis, his Honour held that MEL had failed to prove Port Authority’s allegedly unconscionable conduct caused MEL to lose an opportunity to make a profit selling sand from a facility at Glebe Island.

Was there an opportunity of value?

As MEL did not establish on the balance of probabilities that the wrongdoing caused MEL to lose the claimed opportunity, his Honour did not address in detail the related causation question of whether the opportunity had some non-negligible value.

His Honour observed that, as at March 2019, ‘MEL’s path to profits was sketchy’ because it depended on the construction of the MUF proceeding; the AFL not being lawfully terminated; and MEL being able to secure sand at a price which made its business model viable. Further, MEL would have been required to incur significant expenditure before realising any profit. The forensic accounting evidence advanced by MEL relied on assumptions that did not reflect the case ultimately advanced by MEL and its expert took a discounted cashflow approach that did not undertake comparison cashflows dependent on alternate scenarios. His Honour observed that this lessened the utility of the results of the discounted cash flow analysis.

His Honour held that even without the benefit of hindsight, ‘the value of MEL’s opportunity in March 2019 was so uncertain, speculative and risky that I cannot conclude that it had any value’ and that, with the benefit of hindsight, this position was confirmed such that ‘if a wise commercial person in MEL’s shoes knew in March 2019 what has been established by the evidence in this case, the commercially rational thing to do would have been to abandon the project.’

Takeaways from this case in relation to lost opportunity claims

• The utility of expert evidence in lost opportunity claims largely flows from the assumptions and scenarios upon which it is based. In this regard, establishing, with precision, the case being advanced and the counter-factual which flows from that case are essential to ensuring that the assumptions and scenarios upon which the expert evidence is premised assist the Court and are consistent with the case being brought. If a causation case changes during the course of proceedings, the assumptions on which expert evidence has been based need to be carefully reviewed and perhaps revisited.
• For expert evidence to be of use to the Court in lost opportunity cases, it should not just express the best possible outcome and should acknowledge, and model where appropriate, other less-favourable scenarios. It also needs to make allowance for realistic contingencies and likely impacts of forecast events on the relevant market.
• The characterisation of the lost opportunity plays a significant role in determining the matters that must be proven on the balance of probabilities and the matters that can be discounted having regard to the probabilities and possibilities. In this case, a significant hurdle faced by MEL was that it was required to prove on the balance of probabilities that Port Authority would have constructed the facility, when Port Authority had absolute discretion not to do so, and that the parties would have entered into the lease of the site.

HWLE Lawyers acted for Port Authority in the proceedings.

This article was written by Alistair Little, Partner, Nicole Tutton, Senior Associate, Phoebe Cook, Associate, and Grace Cataldo, Solicitor.