Barnes & Ors v Hay

[1988] HCATrans 171

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S45 of 1988

B e t w e e n -

McGUIRE, STEPHEN JOSEPH 0 1HALLORAN,	JOHN HOWARD BARNES, JOHN CECIL
and DAVID PAUL SUTHERLAND

Applicants

and

JOHN ALEXANDER HAY

Respondent

Application for special leave to

appeal

MASON CJ
BRENNAN J

Barnes

DEANE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 AUGUST 1988, AT 12.55 PM

Copyright in the High Court of Australia

SlTl0/1/JM 1 12/8/88

MR W.H. NICHOLAS, QC: If Your Honours please, in this matter

I appear with my learned friend, MR M. PEMBROKE

for the applicant. (instructed by Ebsworth & Ebsworth)

MR K. HANDLEY, QC:  I appear with my lean1ed friend,

MR D. H. :HURR, if Your Honours please, for the

respondent. (instructed by Law & Milne)

MASON CJ:	Yes, Mr Nicholas.
MR NICHOLAS:	Your Honours, if it is convenient, can we

hand up to you some notes that we have made of our

submissions, as well as a chronology, together with a

copy of the three authorities to which reference may

be made?

Your Honours, in due course we will hand

up, if we may, an amended page 95 of the appeal book.

It is the grounds of appeal, amended only to correct

an obvious typographical error or omission. We have

discussed it with my friends and I understand there

is no problem about that, Your Honour and perhaps

we can deal with that after lunch.

Your Honours, if I can go to the notes,

we have set out in a summary way the circumstances

which gave rise to this litigation. Mr Hay sued

the defendants, a firm of solicitors, for damages

for the negligence in their advice to him. The

defendant solicitors admitted to a limited extent

that they had been negligent, and I will indicate in

what respect particularly in a moment, Your Honours.

On the appeal there were three contentions raised:

that the plaintiff's loss, which was economic loss,

was not foreseeable and remote; secondly, that it

was not caused by the advice of the solicitors;
and thirdly, Your Honour, a question as to mitigation,

which we do not raise before Your Honours.

Your Honou~ on the second page of our notes

we have endeavoured to sununarize something of the
factual situation.	The respondent had a shop in

the Hyatt Kingsgate complex at the top of William Street

in Sydney. From that shop he sold to tourists, opals

and other goods, and he had been in occupation of those

premises carrying on that business since about

December 1971. Some years later he moved to another

shop and it is that premises in respect of which the

problem arose. He had no written lease of that shop

but during 1980 he negotiated with the owner of that
building, which was then the State Superannuation

Board of New South Wales, for the purpose of acquiring

a lease. It was in relation to that lease and the

negotiations for it that he sought the relevant advice

from the defendant solicitors.

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Now, the solicitors' failure, as alleged by

Mr Hay and admitted by them was in substance that

they had failed to - - -

MASON CJ:  Mr Nicholas, I think it might be convenient

to adjourn now and we will resume at 2.15.

AT 12.59 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.21 PM:

MASON CJ: Yes, Mr Nicholas?

MR NICHOLAS:  Your Honours, I think we had got to the

second page, at about paragraph numbered 4 of the

notes. We had indicated that the solicitors' failure

had been admitted. I should take Your Honours to

that passage in the book which records the nature

of the admission. It is at the foot of page 15,

Your Honours. The last line on 15 - I do not think

I need trouble Your Honours with the preceding matter -

at line 40 on page 15, (f):

'That the defendants committed a breach of the

agreement between the plaintiff and the defendants

and a breach of their duty of care to the plaintiff

in that they failed to warn the plaintiff, upon

receipt of a letter dated 20 October 1980 from

Messrs Dawson Waldron, of the legal consequences

of a failure both to reach an agreement in
relation to the amount payable by the plaintiff
in the event of a sale of the business and

to obtain a registered lease of the said

premises prior to the registration of a transfer

in favour of a purchaser of the said property'·

Now, Your Honours, that was part of, as it were,

terms of settlement on the question of liability

in the matter and at the trial. Your Honours, the

book goes on to set out details of the history of the plaintiff's occupation of the premises after that date. It may be followed from page 17 of the

book, Your Honours, but it may be, perhaps, shorter

to go to the chronology, if I may take you to that, where in a summary way we have set out the matters.

The chronology, you will see, Your Honours, begins

in December '71 when the respondent first occupied

the shop in the premises. If I can take you to

20 October 1980, Your Honours will see reference to

the breach by my clients in failing to warn the

respondent of the legal consequences of the new purchaser

becoming the registered proprietor. A form of

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agreement was reached on all of the terms of the lease

and the lease registered. In December '80 the sale

to the new purchaser and the transfer and then in

June '81 a notice to quit was served upon

Mr Handley's client, the tenant.	By 30 June a number
of tenants had been persuaded to leave.	As the

evidence showed,. steps were being taken by the owner

to refurbish and reorganize the complex. The only

tenants remaining by that time was one Dr Mitchelmore

and Mr Hay, and those with shops having a street

frontage.

A second notice to quit was served and in

October '81 proceedings for possession commenced

against Mr Hay. They were dealt with in December '81

b.y Master Allen, as he then was. He, coincindentally,was in

fact the trial judge. An application for summary

judgment was refused. Thereafter the evidence

showed that the respondent did not seek any injunction,

or take any steps to prevent the owners interfering

with quiet enjoyment and possession. Now, the

interference consisted of a number of acts which

was characterized by the trial judge as· harassment

and he used terms such as "outrageous, relatively gross"

and expressions such as that to demonstrate his view of

the conduct of the landlords.

The conduct included matters such as denying

access to the walkways around the complex; the closing
down of the escalators, the lifts; the boarding up

of doorways; the shutting off of water, electricity

from time to time, and matters of that sort.

DEANE CJ:	What was the nature of his tenancy?
MR NICHOLAS:	By virtue of the fact that he did not become

registered, Your Honour, I think the provisions of

section 127 of the New South Wales CONVEYANCING ACT

took over and he became a monthly tenant. That was

the situation.

DEANE CJ: Is that common ground?
MR NICHOLAS:	Yes.
DEANE J:	Which means it is common ground that his tenancy could have been terminated by a notice to quit?
MR NICHOLAS:	Yes, but what happened was a notice to quit

was served and the argument was, and it was never

resolved, that he .had an equitable right to

remain in on the terms of the negotiated arrangement

back in October 1980 and that was the reason by

Master Allen refused summary judgment. He took the

view that there were arguable defences for the tenant

and that situation was never brought on and determined.

DEANE J: But then on what basis does one deal with this

question: on the basis that he did have an equitable

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tenancy, or on the basis that he did not have an

equitable tenancy?

:t1R NICHOLAS: Well, Your Honour, the situation was never

resolved.

DEANE J:  But would it not be critical? I mean, if he

only had a monthly tenancy and he is given a notice to quit, what you are saying is that he should have

unlawfully stayed in possession to mitigate his damages

and his doing that was prevented by this unforeseeable
conduct of the landlord, if you assume that he did

have an equitable tenancy.

MR NICHOLAS:  No, Your Honour. What we say was this, with

respect, that the tenant had certainly got considerably

less than he should have got had my clients advised

him properly. Now, regardless of the status of

his occupancy, or of his tenancy, the owner went about

his activities in the way that he did and Mr Hay

was not singled out' for special creatment by reason

of his vulnerability as an occupant. The activity

which was described as outrageous and so on was

directed against anybody who was in occupati-cm.	The
situation that arose as a result of the matter
before Master Allen really was this, that Mr Hay

sought advice from another firm of solicitors about

what he could do and they advised him against taking

any step to restrain this sort of activity because

they feared that that might provoke the problem and

put him at risk that way and I think that is the

explanation why things just remained as they were.

DEANE J:  So far as you are concerned, it would have been

all right if, having been served with the notice to

quit,he had left?

:t1R NICHOLAS:  Yes, indeed. We have no problem with that

at all, Your Honour.

DEANE J: It is the additional damage through his staying

and being vexed that you are fighting about?

:t1R NICHOLAS:  Yes. I may have misunderstood, Your Honour,

with respect. We make no argument about, and indeed,

have admitted, as our notes show, that we should be

liable for the reasonable costs that he would have

incurred in the course of being evicted properly,

the relocation of his premises in some other place,

and matters related to that.	We have no problem
about that and we admitted it.

BRENNAN J: What about loss of profits?

:t1R NICHOLAS: In relation to that aspect, with respect,

Your Honour.

BRENNAN J: In relation to the period in which, if he had

had a secure tenancy, he would have earned those profits?

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MR NICHOLAS: Well, that is the problem, with respect,

Your Honour, in this case because the claim that he

succeeded upon was in relation to his loss of

profits over the following three-year period.

BRENNAN J: There were two aspects,were there not?

One was the loss of profits and the other were the

actual losses?

MR NICHOLAS:	Yes.
BRENNAN J:	Some distinction seems to have been drawn

between the two?

MR NICHOLAS:  Your Honour, can I come at it this way,

Your Honour? What happened was this: if the

lease had been registered, it would have expired

on 31 December 1983. In fact, he remained in

possession until 17 February 1984 and because of

certain events which took place for which he

was responsible, no one is concerned with what

happened after 17 February '84. Now, his claim was

in respect of a loss of profits up until, I think,

December 1983. · ·

Our contest was that the cause of the loss of

profits,of his trading loss,was not attributable

to our breach and, Your Honour, the question raised
in this application is essentially the question as

to the principles to be applied in determining

causation. That is thep::-oblem that was thrown up

by the Court of Appeal in this case and the approach

that they took. The question which we seek to raise

is fundamentally one of the principles to be

applied in determining or identifying cause. Now, we

say shortly, Your Honour, that the activities of the

owner over this period was of such a kind - firstly,
they were not activated by ~eason of the status of

the tenant, or the vulnerable position, or

impaired position that he was in as a consequence

of this advice, or the lack of it. More importantly,

caused, and as His Honour Mr Justice Mahoney was they were of a kind and of a character which directly satisfied, was the cause of this man's loss.

Yeur Ha:001.u- ._ it is that sitluatior,L i@ich

prev0kes the: q.ue-.stion whi_ch we seek tQ'._ ·raise before

this· Court-. It may be in a more orderly way if I

can take Your Honours to our notes and we will

follow it that way. Your Honours, on page 3 of the

notes, paragraph 7, I have indicated the elements of

the plaintiff's claim, the costs incurred by him in

resisting eviction by the owner of the complex. As

I have indicated, thatwa.s a matter admitted by my

clients. The remaining matters were the profit he

would have made during the period hade he remained

in occupation of the shop and not been harassed and
the actual losses which he incurred in running his

business during the period he remained in occupation.

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Thus the claim was for economic loss, allegedly the consequence of the solicitors' breach.

Now, the court below, both His Honour the

trial judge and the Court of Appeal, found that the

loss was caused by the solicitors' breach. Our

submission is that that conclusion is in effect

contrary to the evidence and derives from an error

in the principles to be applied, or the approach to

be adopted in determining this question. The

difference in the paths taken by the several members

in the Court of Appeal, we submit, demonstrates the

substantial division between and confusion among

the members of the court as to the correct approach.

Now, if Your Honours would turn to the joint

judgment of Their Honours Mr Justice Hope and

Mr Justice Priestley, and particular at page 8 of the

book. Your Honours, at page 8, line 4:

We have come to a contrary conclusion.

That was by way of rejecting my submission.

However, in doing so we have not found it necessary

to analyse the various legal (or for that matter
philosophical) concepts of causation. Cases where
courts have made such an analysis have been in

the grey area, where the resolution of the issue

is difficult and clouded. In those cases where

an analysis has been carried out and some

principle of causation applied, the resolution of

the issue is still required (and we think will

almost always require) the exercise of judgment,

with different judges arriving at different

results. As well as the application of any

particular test requiring the exercise of

judgment, the meaning of any formula may be

differently understood by different judges. Thus

in ALEXANDER V CAMBRIDGE CREDIT CORPORATION LIMITED

(1987) 9 ~SWLR 310, Glass and McHugh JJA each

expressed himself to be guided by what was referred

to as the "but for" test, and each came to a

different conclusion on the facts.

And, in due course, Your Honours, I will be taking you to

particular passages in it. And I think Your Honours are

probably ahead of me; if I follow through to the

top of page 9 Your Honours see, at line 2:

What happens in practice and what we think the

law requires is that the court decides whether the connection of the negligent act or omission of the defendant to the plaintiff's loss was such that

that the defendant should be made liable for it.

In the present case we would conclude that the

defendants' negligence was sufficiently

connected with the plaintiff's loss to be regarded

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as a cause of it. We also think this conclusion

would be reached upon the approach explained by

McHugh JA in the CAMBRIDGE CREDIT case or that

favoured by Mahoney JA in the present case.

Now, pausing there, with respect, and as will be

demonstrated when we come to the CAMBRIDGE CREDIT case,

in that case, Justices Glass and McHugh were in the

majority as far as the test, the principle for

causation, is concerned. They asserted that the

approach to be adopted in New South Wales was the

"but for" test.	Mr Justice Mahoney disagreed in
the CAMBRIDGE CREDIT case as to that.	I will indicate

to Your Honours the line that he takes in this judgment

where he plainly rejects the "but for" approach as

the proper one.

Well, now, Your Honours, the conclusion of

Justices Hope and Priestley is expressed particularly

at page 11, line 15, and there, T~eir Honours say:

Undoubtedly the actions of the ptrchaser were a

cause of his loss -

the new owner, that is -

but equally the negligence of the defendants was also one of the causes of that loss, and without it the probability is that the loss would not

have occurred.

The way they came to that, Your Honours, appears from

page 10, the preceding page, at about line 15. What

they say is this:

Had the plaintiff had such a lease, it may have

had some restraining influence on the purchaser,

but asssuming it did not, the plaintiff would have

been able quickly and simply to seek and obtain

an injunction to restrain most of the acts which

caused the loss to the plaintiff. This relief

would not simply be to prevent the purchaser from

ejecting the plaintiff. It would have prevented

the purchaser from carrying out the greater

and more damaging parts of its campaign to obtain

vacant possession.

Well, there was no evidence as to that, with respect.

There was a conclusion that that might have been the result if such proceedings had been taken.

Then Their Honours shift from indicating that restraining action may have brought about this result

to a firming-up, as it were, on the next page, where,

at line 8,they say:

but if it had done so, the principal and damaging

part of the actions could readily have been

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restrained. But for the negligence of the

defendants, the plaintiff would have had the

security which proper advice from the

defendants would have given him. It was that

security that the defendants were engaged to

give him; it was to get protection against

loss resulting from the lack of it that the

plaintiff sought advice and assistance from

the defendants.

And then Their Honours conclude that these considerations

were similar to those that Mr Justice Mahoney thought

would be the way to deal with the case but they, as

they indicate, com: at it by a different route.

Your Honours, it then becomes necessary to go

to Mr Justice Mahoney's judgment, which was the

principal judgment of the case.

DEANE J:  But if those factual conclusions on page 10 to 11

stand, what is wrong with the result?

MR NICHOLAS:  Your Honour, accepting for the momenF that

if those conclusions stand, well then what we say

about it, Your Honour, is that there is no indication from Their Honours in their judgment as to the method by which they determine that this economic loss in

the relevant sense was caused by the breach of the

solicitors back in October 1980. They do not,

with respect, deal with that at all.

DEANE J: It is fairly clear though, is it not, that they

are really saying if the locksmith puts on a faulty lock, the householder cannot say, "Oh, it's all the

burglar's fault"?

MR NICHOLAS:  Your Honour, the problem with that is, at

page 10, for example, they do not seek to put it

so high.	They leave that, we would suggest, fairly
loose.	They say, well, he would have been able to:

simply seek and obtain an injunction to restrain

most of the acts -

pause - what acts? That was not addressed or dealt with.

This relief would not simply be to prevent the

purchaser from ejecting the plaintiff. It would

have prevented the purchaser from carrying out

the greater and more damaging parts of its

campaign to obtain vacant possession.

Well, Your Honour, we would say that without more

it is impossible, with respect to them, to come to

a conclusion that the lack of capacity to move to

restrain the landlord in the way he went about

conduct which was described as outrageous and beyond

the pale it would have been causative of the loss.

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Now, His Honour Mr Justice Mahoney's judgment

begins at page 32.

MASON CJ: Before you leave this judgment, you are not

attacking these findings of fact, are you?

MR NICHOLAS:  Yes. We do not accept them at all, with

respect, Your Honour.

MASON CJ:	Does the draft notice of appeal attack these findings of fact?
MR NICHOLAS:	Your Honour, the draft notice of appeal

raises the question as to causation and it was not

open to the - we will hand it up to Your Honours.

Your Honours, we raise, we say, sufficiently

clearly the questions as to causation in grounds (a),

dealing.with the judgments of Justices Hope and Priestley.

BRENNAN J:  But the question is whether the connection,

the sufficiency of which is in dispute, is the

connection of which Their Honours speak at pages 10 and 11,

is it not?

MR NICHOLAS:	Yes, Your Honour.
BRENNAN J:	Do you say that with those findings on pages 10

and 11 there is an insufficient connection?

MR NICHOLAS:  Yes, we do indeed, Your Honour, because we

would say that a conclusion such as that is

contrary to the evidence, with respect.

BRENNAN J:  My question to you is posited on the acceptance

of what is on pages 10 and 11. Do you say that if one

looks at pages 10 and 11, one finds an insufficient

connection in point of law?

MR NICHOLAS:  Yes, we do, because they have not set out

to identify - well, firstly, they have not identified
that part of the purchaser's conduct which would·

bring·about this result. That is the first thing. The

second thing, no attempt has been made to identify

that part of the conduct which the tenant, had he chosen to do so, could have moved to restrain and

had he restrained it, would have achieved the

sought for protection. · That is the problem, with

respect, we say, about this judgment and one gets

no guidance from Their Honours' statement as to

principle as to how they looked at the matter.

BRENNAN J:  Your objection is really to the absence of

particularity in what Their Honours say there?

MR NICHOLAS: It is certainly that, Your Honour, but it leaves it open, we say, and when one comes to read

the judgment of Mr Justice Mahoney- and it was left

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to him to deal with the facts - it is quite plain,

on his finding of the facts and his analysis of them,

that we would have succeeded on the "but for" test

and he says so, but he rejects the "but for" test
and then moves to deal with it on another basis, and

that is what I want to take Your Honours to, if I may,

now.

MASON CJ: Before you do so, though, I just want to clarify

this other question. Although you do not mention

these particular matters in your grounds of appeal,

that is the matters of fact that the joint judgment

refers to on pages 10 and 11, I gather you want to
challenge them as well, and if that is so, what
matters of fact, and what evidence in this case, is

going to arise for consideration anddebate in any

proposed appeal?

MR NICHOLAS:  Your Honour, dealing with the first question,

certainly if it requires amendment we would seek

to amend to make quite clear that we were raising
that issue. Then, secondly, Your Honours, as far

as the evidentiary material would be concern~d, it would be no new matter that will not be -: fatl for consideration on a generzl consideration of the facts;

the conduct of the purchaser that will need t6 be looked

at. There will be no new factual matter which would

fall for consideration. What will fall for consideration

is the fact that there was no evidence to link a

particular aspect of conduct with the tenant's position.

There is certainly no evidence to support the

proposition that this tenant was singled out for

special treatment by reason of his status and,

Your Honours, we would be able to sa~ with the material

that would necessarily be considered in relation to

other aspects of the appeal, that the material was not

available to come to this conclusion.

MASON CJ :	Yes.
MR NICHOLAS:	Your Honours, if I can take you to the

judgment of Mr Justice Mahoney. His judgment begins

at page 11, but his judgment in relation to the

causation question as far as we are concerned,

Your Honour, begins at page 32. The particular

question with which our application is concerned,

Your Honour, is really spelt out at page 38. At page 38,

line 3, His Honour says:

Fourth, the real difficulty in the law of

causation lies in the formulation of the principle, ie, the verbal formula, by the application of which

the court is to decide whether a particular

precedent event is or is not causal in its nature

and then whether it is to be seen as the cause of

the loss in the particular case.

He then proceeds to record his difference with the majority in the CAMBRIDGE CREDIT case and it appears

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that he felt free to depart from that, Your Honours,

because of what he said at page 33 in the book.	If
I can just take you to that, page 33, line 8. He
says:

Two members of the Court, Glass and McHugh JJA,

based their reasoning upon the "but for" test.

Had the decision in that case been a final

determination of what was there involved, I would,
in accordance with my understanding of what

precedent requires, adopt the "but for" test

and endeavour to determine this appeal by the

application of it. It would be proper so to do

notwithstanding that the judgment of Glass JA
was, on this issue, a dissenting judgment. However,

the matter then before the court was not a final

determination of what was involved. And, in

addition, the final determination of, inter alia,

this issue in that proceeding is or may be the

subject of appeal to the High Court of Australia.

Now, that was the situation at the time this judgment

was written. In fact, the CAMBRIDGE CREDIT case was not the subject of - it was settled, I think, and it

never got any further. So, that explains, p~rhaps, how

Mr Justice Mahoney came to say what he said there, but

he came to reject the "but for" test at page 40 and

particularly at line 20.

(Continued on page 13)

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MR NICHOLAS (continuing):  Now, if I could take Your Honours

to that. At line 21:

But the determination of a causal question

involved, in my opinion, a normative decision

as to whether, for the purposes of the case,

the precedent act for which the defendant is

responsible should be seen as causal of the

plaintiff's loss. And, in my opinion, that

evaluation is made, not by a "test" or "guide"

such as the "but for" test, but by a

functional evaluation of the relationship and
the purposes and policy of the relevant part

of the law.

Now, Your Honours, the significance of his rejection

as far as we, in New South Wales, are concerned, we

submit, is heightened when one reads what was said

by Mr Justice McHugh in the CAMBRIDGE CREDIT case

and we would hand copies of that up to Your Honours.

MASON CJ: But, can you summarize what Mr Justice McHugh said

in the CAMBRIDGE CREDIT case that is m?terial for

present purposes?

MR NICHOLAS:  Yes. He says that, as far as the law of

New South Wales is concerned - at page 352C,

Your Honour, he says this:

So far as the law of tort is concerned,

the "but for" test must be taken in this

Court to be the leading and, in all but

exceptional cases, the exclusive test of

causation. And I can see no reason why

the same test should not be applied in

contract.

And he repeated that more particularly at page 358

in relation to his dealing with the contract

situation. Now, and as I have already indicated,

Your Honours will see that Mr Justice Mahoney dissented in the CAMBRIDGE CREDIT case from the
views of the majority on the proper approach to

the causation question.

DEANE J: Well, now, what do you want to support?

MR NICHOLAS:  Your Honour, we say that the "but for" test is the right one.

DEANE J: Well, then, you have won on that.

MR NICHOLAS: With Mr Justice Mahoney we have.

DEANE J:  Mr Justice Mahoney was in favour of the "but for"

test, was he not?

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MR NICHOLAS:  No, you - - -

DEANE J: That is what I am saying - - -

MR NICHOLAS:	I am sorry.
DEANE J:	You have won.
MR NICHOLAS:	No.
DEANE J:	Is that not what Mr Justice Hope and Mr Justice Priestley
held?
MR NICHOLAS:	Well, they seem to have it, with respect to them, both

ways, Your Honour. They rejected - if they applied

the "but for" test they said we lost on that but they
agreed with Mr Justice Mahoney's conclusion in any

event. They said, "We come to the same conclusion

by a different route."

DEANE J: Well, I am sorry, I had read them as supporting the

"but for" test.

MR NICHOLAS:	Well, it does not seem clear to us, with great respect. Our concern with their judgment is that
they really do not articulate. You remember they
said, "Well, judges had come to these things differently.
We do not want to get involved in any philosophical
consideration of how one goes about it."
IlEANE J:	But if they did accept the "but for" test, you would be happy with that?
MR NICHOLAS:	If they - yes, but we are not happy with the

conclusion.

DEANE J: Well, I follow you. So, they reached the wrong

result.

MR NICHOLAS:  But, Your Honour, if we could come back to their

judgment, with respect, because we do not see it

clear how they dealt with it but as far as

Mr Justice Mahoney is concerned, he quite plainly

rejects the "but for" test and, as we submit at the

foot of page 4, it is quite plain from his judgment

at page 43 and over on to page 44, with respect, that

he accepts our contention that on the "but for" test the tenant's loss cannot be explained by the default

of a solicitor and at 43 line 6, he commences

dealing with that. At line 5, on 43:

I agree with Mr Nicholas' submission that

such a conclusion cannot be explained on

"but for" test or guide. If that were the

concept the application of which established

that the defendant's faulty advice was the

cause of the plaintiff's loss, i.e., was a

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"necessary member of a group of conditions

jointly sufficient to produce" that loss,

then the application of the concept would

require some attenuation and manipulation.

Thus, the losses and loss of profits which

constitute the plaintiff's loss came from

the fact that customers could not have access,

and access with amenity, to the plaintiff's
shop. The faulty advice alone did not

produce that.

And then I could, perhaps, bring Your Honours down

to the foot of the page, line 25:

It is the owner's actions which are sufficient to bring that about and it is they which

brought it about. It is not necessary, in

order to find a group of conditions sufficient
to produce the loss, to go back to the faulty

advice.

The matter may be taken a further step.

If the faulty advice and the ownerJs actions are to be coupled so as to constitute the group of conditions jointly sufficient to produce the plaintiff's loss, then it is necessary to explain why and why it is the

bad advice rather than the owner's actions

which is to be selected as the cause of the

plaintiff's loss for the purpose of the

present proceedings. As Mr Nicholas'

argument, I think, suggested, the faulty

advice was given in October 1980. It was

not until many months later that the actions

of the owner commenced to interfere, in any

substantial way, with the customers' access

and amenity. It is difficult to see the faulty advice as a "necessary" member of

such a group of conditions when the owner's

actions alone would suffice to produce the

loss. If the selection of the faulty advice

"but for" test or guide authorises the is to be justified on the basis that the

selection, as a cause, of "every" member of

the relevant conditions, then the artificiality

of a concept which produces, as a cause, what
happened many months before what in fact

brought about the loss must raise doubts as

to its validity.

And, thus, we put, Your Honours, that the effect

of what His Honour was saying is that if he regarded	the "but for 1·1 test as appropriate, then we should
have succeeded and we go on to put,Your Honour, as we do at the top of page 5, it is recognized that
the loss was not caused in fact by the breach of
duty and we give the references at page 43 to that.

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Well, now, we have put to Your Honours that,

in effect, the evidence makes plain that the tenant's

loss was unrelated to his status as a tenant at will

and so too was any conduct of the owner.

Now, in dealing with the way His Honour - - -

BRENNAN J:  Could I take you back to that 7(b) at the top

of page 5?

MR NICHOLAS:	Yes, Your Honour.
BRENNAN J:	I am not sure that I follow the proposition that

it was recognized that the loss was not caused in

fact. Where does one find that?

MR NICHOLAS: Well, Your Honour, if I could take you to the

reference. It is page 43, line 21. If I could read

through over the page. He says this:

But if the purpose of the Court's examination of the facts is to find what are the necessary members of the group

of conditions jointly sufficient to produce	the customers' absence, there is not necessity
to refer to the faulty advice. It is the owner's actions which are sufficient to bring
that about and it is they which brought it
about. It is not necessary, in order to find a group of conditions sufficient to
produce the loss, to go back to the faulty
advice.

And what His Honour, we suggest, seems to be saying

there is that, if you apply the "but for" test which

seems to suggest that a relevant cause of loss is

one which is necessary, either directly or by way

of its contribution to produce that result, then

His Honour would seem to be suggesting that - - -

BRENNAN J:  Is His Honour saying any more than that when you

have a chain, series of links in a chain of causation,

it is the most immediate cause which is sufficient to

produce it?

MR NICHOLAS:  We would have th::>ught not, with respect,

Your Honour. We would have thought, given that

His Honour is dealing with our submissions on the

"but for" test, and the "but for" test seems to

raise the concept of necessity that, in order to identify a cause which brought about the loss in

a relevant legal sense, one needs to be able to
demonstrate that that event played a contributing

part or was necessary, in the production of that

loss and - - -

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BRENNAN J: That is not what the "but for" test is, is it? It is

that the loss would not have occurred but far

the event which is said to give rise to the liability.

MR NICHOLAS:  Yes, Your Honour, and then it has been, perhaps

a -

BRENNAN J: Well, in this case, if it was the harassment or the owner's conduct which was the immediate cause of the loss, the question is would that have occurred

but for the negligence.

MR NICHOLAS:  Yes, well - - -

BRENNAN J: And, pages 10 and 11, of course, bear very heavily

on that. What does His Honour here say about that

question?

MR NICHOLAS:  Well, so much as one can ascertain from what

His Honour is saying, he is satisfied that the advice was not an event necessary to bring about

this loss and, therefore, it would fall outside the "but for" test. He could not say,.in other

words, that "but for" this advice, this loss would

not have happened.

BRENNAN J: Really the problem is this, is it, that'out for"

the negligence, the loss would have been avoidable?

It may not be that the loss was caused by the

negligence but "but for" the negligence, the loss
would have been avoidable.

MR NICHOLAS:  No. Well, we see what Your Honour putting, with

respect, but we do not accept that and we do not - - -

BRENNAN J: No, I appreciate that.

MR NICHOLAS:  But, you see, because that presupposes that

he - well, our contention was he had the opportunity

to take proceedings and did not do so because he was

advised against it and he chose to take that course

but, going further than that, there is nothing to

suggest that the conduct which he may have been

entitled to restrain would have - I have put it

badly. That had he restrained parts of the owner's

conduct, that would have been sufficient to protect

him from the loss.

BRENNAN J: What, the owner might have disregarded the injunction?

MR NICHOLAS:  No, Your Honour, there are different things that

the owner could have or was perfectly entitled to do

and, you see, what one has got to remember, with

great respect, is that - - -

BRENNAN J:  But if the owner had done those other things, the

loss, that is, the lost profits, would still have

resulted, would they not?

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MR NICHOLAS: If the owner had - - -

BRENNAN J: Not by way of harassment. If the·owner, for

example, had brought ejectment successfully.

MR NICHOLAS:	Yes.
BRENNAN J:	The loss, that is, the loss sued for, would still

have occurred.

MR NICHOLAS:  Not over that period, with respect, Your Honour.

We are talking about a loss over, I think, a three-

year period. Now, we would certainly, as we have
recognized, be liable for losses which would have

been suffered by him as a consequence of reasonable

steps being taken to evict him and then he has to

relocate and set himself up and do all those things

and there wa.sno argument about that and, of course,

as we indicated before,Your Honour, in any event he would have only been able to stay, under his lease,

until December 1983, whatever it was.

But, Your Honour, that is why we do say, with

respect, that as far as Mr Justice Mahoney was

concerned, on his analysis of the material, the

cause of the loss - rather, the solicitor's advice

was not necessarily productive of or contributed to

this situation. The real cause in the sense in which

the "but for" test appears to be applied and, more

importantly, the sense in which Mr Justice McHugh

articulates it as it being applied in a conm1on

sense and practical way and you cannot to better

than that, he says, but that is what it all boils

down to.

DEANE J: Mr Nicholas, is not your real problem this: that

it would seem on a fair reading of the majority

judgment that what they have said is, "Even if

we apply the "but for" test, the result is liability

for these damages". Well, now, what you want to do

is attack the result of their application of the

"but for" test and the important point you have to

argue is whether the "but for" test is, in fact,

the appropriate test but you only get to that if

your attack on all the factual conclusions succeeds.

MR NICHOLAS:  Yes, I would have to accept that, Your Honour.

Well, then, Your Honour - - -

DEANE J: Well, that is your problem in getting leave to

appeal in this case, is it not, in that your

legal attack is to establish what the majority

judgment assumed for the purposes of reaching a

factual result.

MR NICHOLAS: Well, not entirely, with great respect,

Your Honour. Certainly, obviously that is involved

but we would wish to say that if the "but for" test

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is correct- we do say that- then Their Honours

have applied it wrongly. We have

Mr Justice Mahoney on our side in that one and we say his analysis of the matter was correct

as far as that goes but, Your Honour, where the

problem which,we would submit,would whet the

appetite of this Court comes up on the special

leave point, really, is that given the state of

affairs in·CAMBRIDGE CREDIT and the pronouncements

in that case, given the way in which the majority
in our case have expressed themselves and we say,

with respect to them, that it is by no means clear

what approach they take if any reasonably identifiable

approach but given beside that, the firm line that

Mr Justice Mahoney has taken, then a situation arises

in which, at least as far as the State of New South

Wales is concerned, Your Honour, it is unsatisfactory

to say the least and it may well be, with great
respect, that if leave were granted and we had the
opportunity of agitating the question of principle

to the factual situation, not only would we get a

different result but we would also get a clarification

of the proper principles to be followed in ascertaining

cause and that is, really, with respect; what we

are seeking to put forward as the substantial leave
point.

Now, Your Honours, our notes through to the of page 5 and 6 have probably been overtaken by the

discussion. We do, of course, attach great

significance to the fact that this conduct directed

not specifically at the tenant
was of a kind which was categorized, to put it

at its least, unreasonable.

Now, we submit in answer to the approach that

Mr Justice Mahoney took - he was saying, "Well, it was conduct - our breach was apt to lead", that is

the expression he uses. It was apt to lead to this

kind of loss. Now, we would submit, with respect,

that on any view, it could not be said that conduct

which was categorized as unreasonable, outrageous

and so on could be said to be an apt consequence

of the breach of duty and that brings us to our
submissions, with respect, at the foot of page 6 on

the foreseeability question and that can be put to

Your Honours quite briefly; namely, that the courts

took the view, without, we submit, any evidence to

support it, that it was a matter of notoriety that

landlords would overstep the mark, would indulge

in harassing activity, outrageous activity, in

order to evict a tenant if they saw fit to do so

and that if that was right then such conduct

would be reasonably foreseeable and ought to have

been foreseen by the solicitor when consulted.

Now, what we say about that, with respect,

Your Honour, is that this Court seems to have made

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it quite plain, at least since MAHONY V KRUSCHICH,

that foreseeable conduct for which a tortfeasor

will be liable will not include conduct of another

which is unreasonable or inexcusably bad or improper
and the references we have given Your Honours, on

page 7 and paragraph 5 and it is, perhaps, not

necessary to take you specifically to the passages.

But, Your Honours,we say that on any view all the

judges found that this activity was beyond reasonable

activity and, in our submission, that would necessarily

take it outside the limits of reasonably foreseeable.

But the causation question comes first and then one

moves to ascertain whether or not it would fall within

that category and we say, on the proper principles,

it must have been excluded. Those are our submissions,

with respect.

MASON CJ:  The Court need not trouble you, Mr Handley. The

applicant seeks special leave to appeal on the

ground that the Court of Appeal did not apply the

"but for" test in determining the issue of causation.

We do not so read the joint judgment of

Mr Justice Hope and Mr Justice Priestley. As we

understand Their Honours' judgment, they held that even if the "but for" test was applied, the result

would have been adverse to the applicant.

Accordingly, in order to succeed, the applicant

would need to challenge successfully findings of

fact made in the courts below. For this reason,

the case is not a case appropriate for the grant of

special leave. The application is refused.

MR NICHOLAS: If the Court pleases.

MR HANDLEY: With costs, Your Honour?

MASON CJ:  You do not resist that, Mr Nicholas?

MR NICHOLAS: No, I cannot, Your Honour.

MASON CJ: The application is refused with costs.

AT 3.10 PM THE MATTER WAS ADJOURNED SINE DIE

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