Blacker v National Australia Bank Ltd - [2000] FCA 681

FEDERAL COURT OF AUSTRALIA
Blacker v National Australia Bank Ltd [2000] FCA 681
FEDERAL JURISDICTION – accrued jurisdiction – whether State “double function” legislation can be source of accrued jurisdiction
CONSTITUTIONAL LAW – whether s 51AA(1) of Trade Practices Act invalid
TRANSFER OF PROCEEDINGS – whether in interests of justice to transfer part of proceeding after judgment reserved
TRADE PRACTICES – s 51A(2) of Trade Practices Act – nature of burden thereby imposed on corporation – how burden may be satisfied
TRADE PRACTICES – reliance on misleading or deceptive conduct – how established – significance of fact that conduct intended to induce reliance
LIMITATIONS – trade practices – when causes of action for breaches of ss 51AA and 52 of Trade Practices Act accrue
NEGLIGENT MISREPRESENTATION – duty of care – whether respondent had assumed position of business adviser to applicants
CONTRIBUTORY NEGLIGENCE – whether defence available when negligent misrepresentor intends to induce reliance on misrepresentation
DAMAGES – negligent misrepresentation inducing acquisition of property – availability of reasonably foreseeable consequential damages where applicant cannot prove that value of property acquired was less than what was paid for it
Trade Practices Act 1974 (Cth) ss 51A, 51AA(1), 52(1), 82, 87
Fair Trading Act 1987 (NSW) s 42
Contracts Review Act 1980 (NSW) s7(1)
Judiciary Act 1903 (Cth) s 78B
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 5(4)(b)(iii)
Federal Courts (State Jurisdiction) Act 1999 (NSW) s 11(2)
Rochester Communications Group Pty Ltd v Adler (1996) 65 FCR 572 followed
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 167 ALR 303 discussed
Re Wakim; Ex parte McNally (1999) 163 ALR 270 referred to
Byrnes v The Queen (1999) 164 ALR 520 referred to
Edensor Nominees Pty Ltd v Australian Securities & Investments Commission (1999) 168 ALR 676 referred to
Jeffcoat v Queensland Coal & Oil Shale Mining Industry (Superannuation) Ltd [2000] FCA 655 (Kiefel J, 19 May 2000, unreported) referred to
Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 discussed
Hooper v Kirella Pty Ltd (1999) 167 ALR 358 referred to
McIntosh v National Australia Bank (1988) 17 FCR 482 referred to
Ting v Blanche (1993) 118 ALR 543 referred to
Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) ¶ 46-179 referred to
ACCC v IMB Group Pty Ltd (1999) ATPR ¶ 41-704 referred to
Sykes v Reserve Bank of Australia (1998) 88 FCR 511 referred to
Gould v Vaggelas (1985) 157 CLR 215 discussed
Henderson v Amadio (No 1) (1995) 62 FCR 1 referred to
Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 referred to
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 discussed
Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 applied
Bate v International Computers (Aust) Pty Ltd (1984) 2 FCR 526 referred to
Dorfler v Australia and New Zealand Banking Group (1991) 103 ALR 699 referred to
Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 referred to
Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170 referred to
Smith v Commonwealth Bank (von Doussa J, 11 March 1991, unreported) discussed
Commonwealth Bank v Smith (1991) 42 FCR 390 and (1991) 102 ALR 453 applied
San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 referred to
Perre v Apand Pty Ltd (1999) 164 ALR 606 referred to
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, referred to
State of South Australia v Johnson (1982) 42 ALR 161 discussed
Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 discussed
Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 referred to
Kyogle Shire Council v Francis [1988] 13 NSWLR 396 referred to
L Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] (1981) 150 CLR 225 discussed
Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 followed
Luntz and Hambly Torts: Cases and Commentary 4^th ed. 1995 at p. 811
Phegan “The Tort of Negligence into the New Millenium” (1999) 73 ALJ 885
PETER RAYMOND BLACKER & CHRISTINE BLACKER
v NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
NG 997 of 1997
KATZ J
25 MAY 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 997 of 1997

BETWEEN:

PETER RAYMOND BLACKER &
CHRISTINE BLACKER
APPLICANTS/CROSS-RESPONDENTS

AND:

NATIONAL AUSTRALIA BANK LIMITED
(ACN 004 044 937)
RESPONDENT/CROSS-CLAIMANT

JUDGE:

KATZ J

DATE OF ORDER:

25 MAY 2000

WHERE MADE:

SYDNEY

MINUTES OF ORDER
THE COURT ORDERS THAT:
1.the applicants file and serve on respondent by 1 June 2000 proposed short minutes of order giving effect to the Court’s reasons on their claim;
2.the respondent, if it contends that the applicants’ proposed short minutes of order do not properly give effect to the Court’s reasons on their claim, file and serve on the applicants by 4 June 2000 alternative proposed short minutes of order;
3.the cross-claimant file and serve on the cross-respondents by 1 June 2000 proposed short minutes of order giving effect to its cross-claim;
4.the cross-respondents, if they contend that the cross-claimant’s proposed short minutes of order do not properly give effect to its cross-claim, file and serve on the cross-claimant by 4 June 2000 alternative proposed short minutes of order; and
5.the matter be listed for further hearing at 9.30 am on 8 June 2000.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 997 of 1997

BETWEEN:

PETER RAYMOND BLACKER &
CHRISTINE BLACKER
APPLICANTS/CROSS-RESPONDENTS

AND:

NATIONAL AUSTRALIA BANK LIMITED
(ACN 004 044 937)
RESPONDENT/CROSS-CLAIMANT

JUDGE:

KATZ J

DATE:

25 MAY 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The applicants (and cross-respondents) in the present proceeding, Mr Peter and Mrs Christine Blacker, are husband and wife. They own a farm called “Springbrook”, situated near Bega in southern New South Wales, on which farm they operate a dairying business. The former owners of the farm, Mr Richard Vincent Bateman and Mrs Mary Margaret Bateman, had also operated a dairying business on it. In September 1993, the Blackers paid about $1.53M to the Batemans and about $70,000 in legal fees and stamp duty in order to buy from the Batemans certain milk quotas which they then held, the farm, certain plant on it devoted to dairying and the herd of cattle then on it. For the purpose of the Blackers’ entering into the dairying business on Springbrook, the National Australia Bank (“the NAB”), the respondent (and cross-claimant) in the proceeding, agreed to make to them three loans totalling $1.05M. One of the three loans was for $900,000 and was to be expended as part of the $1.6M required to acquire from the Batemans the assets which I have mentioned above (with the remaining $700,000 or so to come from the Blackers’ own resources). Another of the three loans was for $100,000 and was to be expended on capital improvements to the farm once acquired. The third of the three loans was for $50,000 and was to be available to be expended on the day-to-day operation of the dairying business once begun.
The Blackers’ dairying business on Springbrook has not been a success and a consequence of that lack of success has been the present proceeding, started by the Blackers more than four years after they had begun to operate that business. In the proceeding, the Blackers have made a number of claims against the NAB and, in turn, the NAB has made, by way of cross-claim, a number of claims against the Blackers.
As for the NAB’s claims against the Blackers, it is sufficient for present purposes merely to say that they are claims for the enforcement, according to their tenor, of rights acquired by the NAB as against the Blackers as a result of various loans made by it to them in connection with the Blackers’ dairying business on Springbrook.
As for the Blackers’ claims against the NAB, however, it is not so easy to summarise them in a few words. There has been a plethora of claims made by the Blackers against the NAB during the course of the proceeding, with one being added to, and then two being subtracted from, their five original claims.
Before, however, cataloguing those claims made by the Blackers against the NAB, I mention that, at the forefront of the allegations which the Blackers have made from the outset of the proceeding in support of those claims against the NAB has been the allegation that they were induced to enter into the dairying business on Springbrook by misrepresentations made to them by the NAB relating to such proposed business.
Such misrepresentations are alleged to have been made on behalf of the NAB by Mr John Neagle, who was, throughout most of the process of the Blackers’ borrowing money from the NAB for the purpose of entering into the dairying business on Springbrook, the manager of the NAB’s Bega branch. (He had held that position since 1989.) Not surprisingly, the Blackers had much contact with Mr Neagle in the course of the process which I have just mentioned. However, Mr Neagle did not continue as Bega branch manager throughout the entirety of that process. Just days before it was completed, Mr Neagle was dismissed without notice by the NAB, for what was shortly thereafter described to Mrs Blacker by Mr Neagle’s temporary replacement as serious wrongdoing. The serious wrongdoing relied on by the NAB to dismiss Mr Neagle had had nothing to do with the Blackers themselves, although, subsequently, NAB officials did form the view that, as well as having engaged in the serious wrongdoing relied on to dismiss him, Mr Neagle had also engaged in serious wrongdoing regarding the Blackers’ borrowing of money from the NAB for the purpose of entering into the dairying business on Springbrook.
Given the allegation to which I have referred above, it is not surprising that much of the evidence in the present proceeding has related to Mr Neagle’s conduct as it was said to have induced the Blackers to enter into the dairying business on Springbrook and, in particular, to Mr Neagle’s preparation and supply to the Blackers of certain cash flow (and associated) forecasts regarding that business when, according to the Blackers, they had not yet made a decision to enter into it.
Nor is it surprising that two claims relying on that allegation have been made by the Blackers from the outset of the proceeding and were given the greatest prominence at the trial of the proceeding. They are that the making by Mr Neagle, in the forecasts to which I have referred above, of the alleged misrepresentations amounted both to a breach by the NAB of its duty under subs 52(1) of the Trade Practices Act 1974 (Cth) (“the TPA”) (with the Blackers placing reliance in that respect on s 51A of the TPA) and to a breach by the NAB of its duty of care to the Blackers under the general law, with resulting loss by the Blackers.
Three other claims made by the Blackers against the NAB from the outset of the proceeding, which claims did not assume the prominence at the trial of the proceeding of the two just mentioned, were: first, breach by the NAB of its duty under s 42 of the Fair Trading Act 1987 (NSW), with resulting loss by the Blackers; secondly, breach by the NAB of a contract to provide financial advice to the Blackers; and, thirdly, that the circumstances mentioned in s 7(1) of the Contracts Review Act 1980 (NSW) (“the CRA”) existed in respect of a number of contracts entered into between the Blackers and the NAB in relation to the Blackers’ dairying business on Springbrook.
As to the first of those three other claims, the Blackers acknowledged during (what were expected to be) final submissions before me that they gained no practical advantage by persisting with it and accordingly invited me to put it aside for present purposes. As to the second of those three other claims, the Blackers expressly abandoned it during the scheduled final submissions before me. As to the third of those three other claims, however, the Blackers have persisted with it and I will shortly discuss it further.
As well as the five claims which the Blackers had made from the outset of the proceeding, they had added, before the trial of the proceeding began before me, yet a sixth claim, namely, that the NAB had breached its duty under subs 51AA(1) of the TPA, with resulting loss by them. Again, that claim assumed little prominence at the trial of the proceeding compared to the first two which I have mentioned above, although the Blackers have also persisted with it. I will shortly discuss it further also.
It is convenient now to mention two decisions of this Court of which I became aware after the scheduled final submissions before me had been concluded and I had reserved my judgment in the proceeding: first, I discovered the existence of the decision of Beaumont J in Rochester Communications Group Pty Ltd v Adler (1996) 65 FCR 572, a decision to which neither the Blackers nor the NAB had drawn my attention during the hearing of the proceeding (although I consider that they should have); and, secondly, I became aware of the decision of French J in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 167 ALR 303, a decision made only after the conclusion of the scheduled final submissions. It is necessary that I should say something more about each of those two decisions.
Dealing first with Rochester Communications, I have already mentioned that the Blackers started the present proceeding more than four years after they had begun to operate their dairying business on Springbrook. (To be more precise, they started the proceeding on 27 November 1997, having begun to operate their dairying business on Springbrook immediately after having settled, on 23 September 1993, the purchase from the Batemans of the assets which I have mentioned above.) I have also already mentioned that, at the time when they started the proceeding, their claims included a claim that the circumstances mentioned in s 7(1) of the CRA existed in respect of a number of contracts entered into between the Blackers and the NAB in relation to the Blackers’ dairying business on Springbrook. At that time, it was unnecessary for the question of this Court’s jurisdiction to entertain such a claim to loom large in anyone’s thinking, given the fact that s 7(1) of the CRA conferred jurisdiction on (relevantly) the Supreme Court of New South Wales (as will be seen in the next paragraph of these reasons for judgment) and given also the existence of the general cross-vesting scheme, so far as that scheme purported to cross-vest this Court with the jurisdiction in State matters of (relevantly) the Supreme Court of New South Wales. However, after the High Court’s decision in Re Wakim; Ex parte McNally (1999) 163 ALR 270, it became obvious that, unless the Blackers’ CRA claim fell within this Court’s accrued jurisdiction, it did not fall within this Court’s jurisdiction at all. A question therefore necessarily arose as to whether the Blackers’ claim under s 7(1) of the CRA fell within this Court’s accrued jurisdiction.
Section 7(1) of the CRA provides,
“Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following:
           (a) it may decide to refuse to enforce any or all of the provisions of the contract;
           (b) it may make an order declaring the contract void, in whole or in part;
           (c) it may make an order varying, in whole or in part, any provision of the contract;
           (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that:
  (i) varies, or has the effect of varying, the provisions of the land instrument; or
  (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.”
The word “Court”, as appearing in s 7(1) of the CRA, is defined in s 4(1) thereof as follows:
“Court'' means:
           (a) the Supreme Court of New South Wales; or
(b) in accordance with section 134B of the District Court Act 1973, and without affecting the jurisdictional limitations referred to in that section, the District Court of New South Wales; or
(c) in accordance with section 12A of the Local Courts (Civil Claims) Act 1970, and without affecting the jurisdictional limitations referred to in that section, a Local Court; or
(d) in accordance with section 89D of the Home Building Act 1989, and without affecting the jurisdictional limitations referred to in that section, the Fair Trading Tribunal.”
It is apparent from the form of s 7(1) of the CRA that it is a “double function” provision: for a recent reference to such provisions, see Byrnes v The Queen (1999) 164 ALR 520 at 533, [37] (Gaudron, McHugh, Gummow and Callinan JJ). The provision both deals with substantive legal relations and gives a jurisdiction to specified New South Wales courts and a specified New South Wales tribunal with reference to those substantive legal relations.
When I discovered the existence of the decision of Beaumont J in Rochester Communications, it appeared to me that the jurisdictional issue dealt with in that case was materially identical to that raised by the form taken by s 7(1) of the CRA.
Rochester Communications was a case in which a question arose whether, in addition to having jurisdiction to entertain certain claims made under (relevantly) the TPA, this Court had jurisdiction to entertain a claim made under s 275(1) of the Industrial Relations Act 1991 (NSW). That subsection provided:
“The Industrial Court may make an order declaring wholly or partly void, or varying, either from its commencement or from some other time, any contract or arrangement or any related condition or collateral arrangement under which a person performs work in any industry if the Industrial Court finds that the contract or arrangement or any related condition or collateral arrangement:
           (a)       is unfair; or
           (b)       is harsh or unconscionable; or
           (c)       is against the public interest; or
           (d)       provides or has provided a total remuneration less than a person performing the work would have received as an employee performing the work; or
           (e)       was designed to, or does, avoid the provisions of an award or former industrial agreement; or
           (f)       was designed to, or does, avoid the provisions of an agreement registered, or contract determination made, under Chapter 6.”
The “Industrial Court” being referred to in the provision was (not surprisingly) the Industrial Court of New South Wales.
Beaumont J said (at 573-74),
“It is common ground that the allegations made in pars 64 and 79 of the amended statement of claim and the claims for relief made in pars h and 12-15 inclusive of the amended application depend for their ultimate source of jurisdiction upon the availability in these proceedings of the provisions of s 275 of the NSW Act. That jurisdiction is sought to be invoked in several ways by the applicants. They say that this Court is invested with the s 275 jurisdiction by virtue of the Court’s accrued or pendent jurisdiction or, if that is not available, by virtue of the Court’s associated jurisdiction granted by the terms of s 32 of the Federal Court of Australia Act 1976 (Cth).
It should be noted at the outset, even if the jurisdiction claimed to exist might otherwise have been available, the applicant is immediately confronted by one significant threshold in this context, that is, in its terms, s 275(1) of the NSW Act vests the jurisdiction in question in the Industrial Court, but not in any other court. Indeed, a similar and, in my view, properly analogous situation was considered by the High Court of Australia in Smith v Smith (1986) 161 CLR 217. There it was held that the Family Court had no accrued or other jurisdiction to exercise the power of approval conferred on the Supreme Court of New South Wales by s 31 of the Family Provision Act 1982 (NSW).
Referring to the accrued jurisdiction of federal courts, Gibbs CJ, Wilson and Dawson JJ said (at 237-238):
‘The word ‘controversy’ is hardly apt to describe the present situation between the parties, who are in agreement in seeking orders from the Family Court. If, however, one inquires what was the subject-matter for determination in the proceedings in the Family Court, the answer to that question must be that two separate matters fell for determination — first, whether the maintenance agreement should be approved and secondly, whether the Family Court, acting for the purposes of s 31 of the Family Provision Act, could and should approve of the release contained in cl 7(a) of the agreement. That the questions are clearly severable is shown by the fact that they are committed by federal and State laws respectively to the decision of two different tribunals, and by the fact that approval under the Commonwealth Act is fully effective for the purposes of that Act although it has no effect whatever on the rights given by the State Act. If, however, contrary to our opinion, it be assumed that the two issues form part of a single justiciable controversy, of which the approval of the agreement forms an integral part, it does not follow that the Parliament has given the Family Court jurisdiction to resolve the whole of that controversy. Although, on the authority of the cases mentioned, the Parliament would on that assumption have power to invest the Family Court with jurisdiction, the question whether it has done so depends on the effect of the Family Law Act 1975 (Cth). For reasons we shall give, the jurisdiction of the Family Court does not extend to a ‘matter’ of which the grant of approval under s 31 of the Family Provision Act is a part.’
On the question of accrued federal jurisdiction, Mason, Brennan and Deane JJ said (at 251):
‘The Solicitor-General for New South Wales submitted that, in order to validly invest a federal court with accrued jurisdiction to determine a non-federal claim, the accrued jurisdiction must involve the exercise of the judicial power of the Commonwealth or something incidental to that exercise. The next step in the argument was to say that the object of a proceeding for approval of a release under s 31 of the State Act [the Family Provision Act] is to ascertain and declare, but not to enforce, what, in the opinion of the Court, ought to be the rights of the parties under a State law ... This function, so the argument ran, stands outside the judicial power of the Commonwealth and outside the concept of ‘matter’ in s 76 of the Constitution.
It is unnecessary to decide whether this submission is well founded. It is sufficient for us to say that if the Family Court assumed an accrued jurisdiction to make an order under s 31 of the Family Provision Act approving a release in a maintenance agreement, the order would none the less not be an order of the Supreme Court. It therefore would not amount to an approval by the ‘Court’ which is referred to in s 31(3), with the consequence that the release would have no effect by virtue of s 31(2). It is quite impossible to read the reference to ‘Court’ in s 31, viewed in the light of the definition of ‘Court’ in s 6(1), otherwise than as a reference to the Supreme Court. It follows that the Family Court does not possess accrued jurisdiction to approve a release for the purposes of the State Act.’
In my opinion, that reasoning is squarely on point in the present case and, of course, I must follow it.”

(I make the incidental point about Rochester Communications that, even though the case was being dealt with before the High Court’s decision in Wakim, the applicants in it were unable to seek support for their position from the general cross-vesting scheme, in so far as that scheme purported to cross-vest in this Court (relevantly) New South Wales State jurisdiction. That was because the general cross-vesting scheme purported to cross-vest in this Court only the State jurisdiction of (relevantly) the Supreme Court of New South Wales, not the State jurisdiction of other New South Wales courts, such as the Industrial Court of New South Wales.)
Given that the jurisdictional issue dealt with in Rochester Communications appeared to me to be materially identical to that raised by the form taken by s 7(1) of the CRA and given also that I consider it appropriate, as a matter of comity, to follow decisions of other single Judges of this Court unless satisfied that those decisions are plainly wrong, I formed the provisional view that this Court had no jurisdiction to entertain the Blackers’ CRA claim. I therefore sought the written submissions of the parties on the question whether Rochester Communications was either distinguishable or plainly wrong.
Turning now to Berbatis, I have already mentioned that, before the trial of the proceeding began before me, the Blackers had added to those claims which they had made from the outset of the proceeding a claim of breach by the NAB of its duty under subs 51AA(1) of the TPA, with resulting loss by them.
In Berbatis, the applicant had also made a claim of breach of duty under subs 51AA(1) of the TPA, but, at the outset of the hearing of that claim, French J raised the question of subs 51AA(1)’s validity. Taking the view that the provision’s invalidity was “seriously arguable” (see at 306, [7]), French J also took the view that, despite the respondents’ having made a conscious decision before the hearing not to take any point at the hearing about subs 51AA(1)’s validity, s 78B of the Judiciary Act 1903 (Cth) prohibited the Court from proceeding to hear and determine that claim unless there had been compliance with its provisions. In French J’s view, once the Court had itself formed the view that a real question arose as to subs 51AA(1)’s validity, s 78B operated, irrespective of the attitude to that question of the parties to the proceeding. He therefore required the applicant to send out notices under the section and adjourned the proceeding for argument on the validity of subs 51AA(1).
Given my attitude to the decisions of other single Judges of this Court which I mentioned three paragraphs ago in these reasons for judgment, I formed the provisional view that I should take steps to ensure that notices were sent out under s 78B of the Judiciary Act, raising the question of the validity of subs 51AA(1) of the TPA, and should then hear argument on that question. I therefore sought the written submissions of the parties on the question whether Berbatis was plainly wrong.
On the Rochester Communications issue, I received substantive written submissions from the Blackers and contrary substantive written submissions from the NAB. On the Berbatis issue, I received substantive written submissions from the NAB only, which submissions the Blackers, in effect, adopted.
I will deal first with the Rochester Communications issue.
In spite of the fact that I am unable to see how I could have made any clearer than I did my desire to receive submissions from the parties on the question whether the decision of Beaumont J in Rochester Communications was either distinguishable or, if not, plainly wrong, the Blackers’ submissions on their CRA claim were notable for their not even condescending to make reference to the existence of that decision, let alone seeking either to distinguish it or to establish that it was plainly wrong. I mention also that, as the Blackers were aware at the time of making their submissions, a Full Court of this Court, in Edensor Nominees Pty Ltd v Australian Securities & Investments Commission (1999) 168 ALR 676 (Hill, Sundberg and Mansfield JJ), had recently referred to Rochester Communications: see at 684, [27]. Such reference appears to me plainly to have been an approving one. In the circumstances, I propose to act on the provisional view which I had earlier formed and hold that this Court has no jurisdiction to entertain the Blackers’ CRA claim. I may express my conclusion briefly by saying that, not only was the decision of Beaumont J in Rochester Communications not distinguishable or plainly wrong, but it was on point and right; a State statutory provision performing a double function (see par 15 above) cannot be a source of accrued jurisdiction in this Court. (See also, to similar effect, Jeffcoat v Queensland Coal & Oil Shale Mining Industry (Superannuation) Ltd 2000 [FCA] 655 (Kiefel J, 19 May 2000, unreported), [22].) I will, however, mention before leaving this issue that the submissions which the Blackers actually made on it were pervaded by a failure to distinguish between, on the one hand, statutory provisions which confer subject-matter jurisdiction on a court and, on the other hand, those which either confer on it powers capable of being exercised, or prescribe rules of decision to be applied, in the course of the exercise of such jurisdiction.
I will deal next with the Berbatis issue.
Perhaps surprisingly, the submissions which I received on that issue from the NAB were to the effect that French J had been plainly wrong in Berbatis and that I should therefore not take steps to ensure that notices were sent out under s 78B of the Judiciary Act, raising the question of the validity of subs 51AA(1) of the TPA, and then hear argument on that question. Furthermore, the submissions on the issue by the Blackers, in effect adopting those of the NAB, were not filed until the last day of the law term in 1999. That meant that, if I were to decide to require the sending out of notices under s 78B and then hear argument on the question of the validity of subs 51AA(1), such argument could not realistically occur until, at the very earliest, the start of the law term in 2000. In those circumstances, I decided to postpone considering whether French J had been plainly wrong in Berbatis, in order to see whether he might decide the substantive question in the intervening period. In the result, he did: see Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324. In spite of the view which his Honour had earlier taken that the invalidity of subs 51AA(1) of the TPA was seriously arguable, he held in the result that the subsection was not invalid. Given the attitude taken by the parties in their submissions on the s 78B question, I have not sought their further submissions on the question whether French J’s second Berbatis decision was plainly wrong; it is apparent to me that they would submit that it was not. Furthermore, I am not satisfied that it was plainly wrong. In the result, I propose to proceed on the basis that the Blackers’ claim of breach by the NAB of its duty under subs 51AA(1) of the TPA, with resulting loss by the Blackers, is properly before me for determination.
(Before leaving the question of the claims by the Blackers with which I am to deal in this proceeding, I should mention two further matters arising out of the Blackers’ written submissions on the Rochester Communications issue. First, the Blackers applied in a conditional way in those submissions for leave to amend further their statement of claim to introduce yet another claim, the condition being that I was of the view that their claims under the CRA and of breach of duty under subs 51AA(1) of the TPA with resulting loss were both incompetent. That application was, not surprisingly, opposed by the NAB. However, as I am proceeding herein on the basis that their claim of breach of duty under subs 51AA(1) of the TPA with resulting loss is competent, the condition on which their application for further amendment of their statement of claim was made has not been satisfied and I therefore need not deal with that application. Secondly, as I understood their submissions, the Blackers submitted that, if I were of the view that their CRA claim was incompetent, I should “transfer that aspect of the case to the Supreme Court [of New South Wales] for that court to exercise the relevant remedial jurisdiction pursuant to the Cross-Vesting legislation which still remains on foot”. As I understand the quoted words, what was being submitted was that, if I were of the view that the Blackers’ CRA claim was incompetent, I had power under subpar 5(4)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) to transfer that claim to the Supreme Court and should exercise that power. On the assumptions that: first, that was what was being submitted; secondly, subpar 5(4)(b)(iii) is valid, despite Wakim (compare Hooper v Kirella Pty Ltd (1999) 167 ALR 358 at 374-75, [71] (FCA: Wilcox, Sackville and Katz JJ)); thirdly, subpar 5(4)(b)(iii) was intended to have any potential operation in the present circumstances, given the presence in the TPA of s 86A; fourthly, subpar 5(4)(b)(iii) was intended to permit the transfer of part only of a proceeding; and, fifthly, subpar 5(4)(b)(iii) is capable of being construed as permitting the transfer of a part of a proceeding, over which part the Court has no jurisdiction (compare McIntosh v National Australia Bank (1988) 17 FCR 482 (Gummow J)), and is so construed; I nonetheless reject the application as not being in the interests of justice, given the stage which the present proceeding has reached. (Of course, my rejection of that application, will not prevent the Blackers, if so advised, from making application to the Supreme Court of New South Wales for an order pursuant to s 11(2) of the Federal Courts (State Jurisdiction) Act 1999 (NSW), on the basis that I have made a relevant order within the meaning of s 11(1) of that Act by deciding or determining that this Court has no jurisdiction to hear and determine their CRA claim.))
With the outlines of the Blackers’ and the NAB’s respective claims against each other now, I hope, relatively clear, it is convenient to turn to the facts of the matter, concentrating, in the first instance at least, on those relevant to the Blackers’ claims of breach by the NAB of its duty under subs 52(1) of the TPA and of breach by the NAB of its duty of care to the Blackers under the general law, with resulting loss by the Blackers. I begin with certain background information about the Blackers which takes one up to the end of 1992.
Mr Blacker was born in Bega in 1953. He lived with his family (apparently consisting of his parents, one brother and two sisters) in Bega until 1966, at which time he moved with them to a nearby beef farm which, I gather, they had owned and operated since the time of his birth. He worked on the beef farm from his early years. He also attended primary and secondary school in Bega (even after the family’s move to the beef farm) and completed the school certificate in 1969. In the following year, he completed a farm management course at an agricultural college in Yanco, New South Wales, which course included brief exposure to the theory and practice of dairy farming. Having completed the course, he returned to Bega, where he began to work full time on the family beef farm. In 1974, his father died, leaving to one of his sisters “East Quira”, one of the three separate properties which had together constituted the family beef farm, and to the other of his sisters “Willow Park”, another one of those three separate properties. The third of those three separate properties was “Kanoona”, a property of some 780 acres in area which his mother appears to have owned even before her husband’s death. In 1975, he and his brother together bought East Quira from the sister who owned it. I gather that he and his brother operated the property as a beef farm (as well as continuing to work on Kanoona). In 1977, he and Mrs Blacker were married. In 1982, he sold his interest in East Quira to his brother and acquired from his mother at a nominal price a part of Kanoona, known thereafter as “South Kanoona”. (I gather that, at the same time, his brother acquired the balance of Kanoona.) Mr Blacker operated South Kanoona as a beef farm. In 1985, he bought “Willow Park” from the sister who owned it. I gather he then operated a beef farm on Willow Park, as well as on South Kanoona. In 1989, he sold Willow Park. At that time, he began deer farming, as well as beef farming, on South Kanoona. However, deer farming was not successful and by about late 1992, the Blackers could not make a living from South Kanoona, even from the combination of beef and deer. Mr Blacker was then finding it necessary to spend up to five days a week off the farm, working for others, in order to supplement his income.
It is convenient to mention now that Mr Blacker appears to have made a practice, during his ownership of it, of carving out of South Kanoona by subdivision a number of relatively small blocks of land, which blocks he then sought to sell. The last such subdivision occurred around 1989, when three blocks were created for the purpose of sale. As of the end of 1992, one of those three blocks (usually called in the evidence the “bush block”) remained to be sold.
As to Mrs Blacker, I do not know the place or year of her birth, but do know that she left high school in Cowra, New South Wales, in 1973, having obtained the school certificate. In 1974, she attended the Cowra Technical College, taking a secretarial course. She then worked at a pharmacy in Cowra and, in 1975, became employed by the Bank of New South Wales in Bega as a junior ledger machinist and batch machinist. While employed at the bank, she undertook a teller course. As I have already mentioned, in 1977, she and Mr Blacker were married. She remained with the bank until 1980, but the first of her and Mr Blacker’s two children was born in that year and she has not worked off the family’s farm since then.
Given their difficulties by about late 1992 in surviving on South Kanoona, the Blackers were then considering finding some entirely different means of earning a living than beef or deer farming. Among the things which they considered was the purchase of an existing menswear business in Bega. Being then customers of the Bega branch of the NAB (Mr Blacker having been one, according to him, since 1971 and Mrs Blacker having been one, according to her, since about 1980), they were in contact with the bank about the menswear business. For instance, Mr Ewan Munro, who was the Blackers’ accountant, wrote to Mr Neagle on 29 January 1993, enclosing certain financial information about the business and promising more. The Blackers also met with Mr Neagle about the proposed purchase of the business. (I should perhaps add here that the menswear business discussions had not been the Blackers’ first contact, as customers, with Mr Neagle. They had had contact with him on numerous occasions throughout his tenure as the Bega branch manager, in particular, regarding an overdraft which they had from the bank and, in connection with that overdraft, the blocks subdivided around 1989.)
Some time later, when Mrs Blacker was at the bank for another purpose, Mr Neagle approached her and told her that a competitor of the business which they were contemplating buying was about to move into larger premises, which move would increase competition with the business which they were contemplating buying.
In the scheduled final submissions before me, it was submitted on behalf of the Blackers that I should conclude that, in reliance on Mr Neagle’s information about the competitor, the Blackers had ceased to pursue the menswear business proposal. However (in just one of many breaches of a solemn assurance given to me by both the Blackers and the NAB before the scheduled final submissions began that I would be asked to make no finding of fact without my being directed to the specific evidence relied on in support of that finding), no specific evidence to that effect was pointed to, nor am I aware of any myself among the thousands of pages of affidavits, transcript of oral evidence and documentary exhibits in the proceeding. Instead, I am aware only of Mrs Blacker saying in evidence that, “At about the same time [that is, the same time as her conversation with Mr Neagle] the menswear shop we were contemplating buying was taken off the market”. In those circumstances, no question appears to me to arise as to the effect of Mr Neagle’s information on the Blackers’ willingness to consider further the purchase of the menswear business. However, I should record now two matters about Mr Neagle’s warning to Mrs Blacker about the menswear business: first, Mrs Blacker asserted in evidence that it had caused her to form the view that she and her husband could trust Mr Neagle to provide them with advice which was in their best interests; and, secondly, it was conduct by Mr Neagle which certainly went beyond the mere role of deciding whether or not to grant (or to recommend to his superiors whether or not to grant) finance in connection with a proposed business venture by a customer. As to the second of those matters, Mr Neagle’s oral evidence was that: he had thought that, by giving them the warning which he did, he would be able to give the Blackers “a bit of a helping hand”; he had intended them to take the warning “seriously”; and he had wanted them to “trust and rely on” the warning.
After the false start with the menswear business, the Blackers turned their attention to the possibility of acquiring a local dairying business, a type of business of which, in substance, neither of them had had any prior experience. (It appears that they had given consideration to acquiring such a business even earlier, but that nothing had come of it at that time.) Their consideration of that possibility led them to become aware of the Batemans’ business, which was not then being offered for sale. However, after some preliminary discussions between the Blackers and Mr Bateman, Mr Bateman told them that the asking price for his and his wife’s milk quotas, farm, and the plant and cattle herd on it was $1.68M and invited the Blackers to obtain certain financial information from his and his wife’s accountant.
Shortly thereafter (at about the end of April 1993), the Blackers spoke to Mr Munro (their accountant) about the Batemans’ assets. They told him what Mr Bateman was asking for those assets and what he had said about obtaining financial information from his and his wife’s accountant. They told Mr Munro that they could pay for the Batemans’ assets by selling South Kanoona (excluding the bush block) and borrowing $1M.
After obtaining certain financial information from the Batemans’ accountant, Mr Munro prepared a two-page document making cash flow (and associated) forecasts regarding the operation by the Blackers on Springbrook of a dairying business. Mr Munro described those forecasts in evidence (having been called as a witness by the Blackers) as having been of a preliminary kind. (Those forecasts, and the broadly similar forecasts later done by Mr Neagle which are at the heart of the present proceeding, were usually referred to before me as “budgets”; I will adopt the same terminology hereafter.) Mr Munro’s assessment of his budget as having been of a preliminary kind was one with which Mr Neagle (having been called as a witness by the NAB) agreed in the course of his cross-examination, saying that Mr Munro’s budget had been “simply a very preliminary view of the matter”, as far as he was concerned. Further, Mr Richard Ivey, an expert witness called by the NAB, also agreed in substance with Mr Munro’s assessment of his own budget, acknowledging in his (Mr Ivey’s) evidence that Mr Munro’s budget was “very much an overview type of document”. It is appropriate, however, even though Messrs Munro, Neagle and Ivey all considered that it was preliminary in character, that I set out in some detail the substance of Mr Munro’s budget, because it assists in understanding both the budgets subsequently prepared by Mr Neagle and the criticisms which may be made of them.

The first thing which Mr Munro did in his budget was to predict the milk production from the operation of a dairying business on Springbrook over a thirty-six month period, beginning in July (1993, although the year was not actually mentioned).
Mr Munro began the thirty-six month period showing 175 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the twenty-second month of the thirty-six to 220 and he finally increased in the twenty-seventh month of the thirty-six to 250. The starting number was Mr Munro’s prediction of the number of cows being milked on Springbrook as of July 1993, based on some numbers as to cows then being milked on the property, which numbers Mr Munro appears to have had at the time. As to the source of the increase in numbers, it appears that Mr Munro expected that it would come both from natural increase of the herd and from purchase, such purchase to be financed by the sale of the bush block. As to Mr Munro’s choice for his timing of his three increases, the evidence was silent.
For each of the thirty-six months in the period, Mr Munro multiplied the number of cows being milked that month by an average number of litres of milk produced per cow per day. The latter number was a variable number, depending both on the particular month of the year and on the particular year in the three year period. According to Mr Munro, he had obtained those variable numbers from a generally-available document published by the Bega Co-operative, which document was applicable to the local district.
Having multiplied the number of cows being milked in a month by the average number of litres of milk produced per cow per day for that month, Mr Munro then multiplied the product of that multiplication by the number of days in that month (with some distortions in that respect) to arrive at a total number of litres of milk produced per month by the dairy herd. The monthly figures were then added to one another to produce yearly totals. Those yearly totals were 1,238,000 litres for the first year, 1,358,000 litres for the second year and 1,607,000 litres for the third year, a total of 4,203,000 litres over the three-year period.
(All of the information from Mr Munro’s budget to which I have been referring above appeared on the first page of Mr Munro’s two-page document, which page was headed “Milk Production Budget”. All of the remaining information from Mr Munro’s budget to which I am now about to refer appeared on the second page of Mr Munro’s two-page document, which page was headed “Cash Income Budget”.)
Having arrived at figures for total annual milk production over each of the three years, Mr Munro then calculated the proceeds of the sale of that milk, showing sales in each year which were equal to the exact number of litres of milk produced in that year. He treated a fixed quantity of that milk as New South Wales quota milk, which would be sold at a rate per litre which did not vary over the entire three years, therefore producing an identical dollar amount each year. The balance of each year’s production, he treated as either Australian Capital Territory quota milk or non-quota milk, treating all that milk as bringing a rate per litre (less than that for New South Wales quota milk) which also did not vary over the entire three years. (Although his budget did show that the rate per litre for Australian Capital Territory quota milk and non-quota milk was greater in the first year than in the second and third years, that was merely a typographical error.) He then multiplied the total of the non-NSW quota milk for each year by that fixed rate per litre, arriving at a dollar amount for the proceeds of that milk for each year. He then added together the NSW quota milk dollar amount and the non-NSW quota milk dollar amount in order to obtain a total dollar amount for proceeds of milk sales for each of the three years. (In calculating the price each litre of milk would bring, Mr Munro used a net price per litre, that is to say, excluding certain freight costs and levies which would necessarily be deducted from the gross price per litre.)
Mr Munro then added to those dollar amounts one more dollar amount, namely “Cattle Sales & Calves”, showing the same dollar amount for each of the three years.
Having arrived at a total income for each year, Mr Munro then deducted expenditure from that total income, under four headings: “Salaries”, “Fodder”, “Farm Costs” and “Interest”.
Salaries were subdivided into two in the first of the three years, representing drawings by the Blackers themselves and an employee’s wages. The total salaries figure increased slightly in the third year, having remained constant for the first two, but was not subdivided in the second and third years.
As to the amounts for fodder, they were $120,000, $125,000 and $140,000 for the three years respectively. Those amounts represented direct fodder costs only and not such indirect costs of fodder as seed and fertiliser, repairs and maintenance, fuel and oil and irrigation; in other words, they represented the cost of buying fodder, as opposed to the cost of growing it on Springbrook. (Indirect fodder costs (together with other, non-fodder related, farm costs) were subsumed under Mr Munro’s heading “farm costs”.)
Mr Munro calculated his direct fodder costs in the same way that he had calculated the average number of litres of milk produced per cow per day, that is to say, by using generally-available information from the Bega Co-operative. That information was that it cost between $300 and $350 per cow per year “to maintain purely in fodder, grain and hay as feed”.
Of course, in order to make use of that information, Mr Munro had to multiply it by the average number of cows which he was predicting would be on Springbrook each year. I have already set out above information as to the number of cows which Mr Munro was predicting would be milked on Springbrook during each month of the thirty-six month period. From those figures, one discovers that Mr Munro was predicting that there would an average of: 194 cows being milked on Springbrook during the first year; 205 cows being milked during the second year; and 245 cows being milked during the third year.
However, Mr Munro did not merely multiply an amount derived from the Bega Co-operative’s information by the average number of cows being milked on Springbrook in a particular year in order to arrive at his fodder cost for that year. It is recognised that in order to have a herd containing a certain number of cows being milked at any one time, the usual farm will have a herd of a greater number. That greater number is required in order to take account of the facts that a mature cow does not produce milk for about two months every year (the “drying-off” period) and that heifers are introduced into the herd to replace mature cows about to end their lives as milk producers, whether through old age, illness or some other cause. I am satisfied that, as a rule of thumb, if a herd contains one hundred cows being milked, it will also contain at the same time an additional twenty “dry” cows (a number equal to 20% of the milking cows) and an additional seventy-two heifers (a number equal to 60% of the mature cows, both milking and “dry”) or, in other words, that the total herd will be 192% of the number of cows being milked.
Instead, however, of multiplying an amount derived from the Bega Co-operative’s information by 192% of the average number of cows which he was predicting would be milked on Springbrook in a year, Mr Munro, according to his evidence, multiplied an amount derived from the Bega Co-operative’s information by 200% of the average number of cows which he was predicting would be milked on Springbrook in a year, in order to produce his yearly fodder costs. Dividing each of Mr Munro’s three yearly fodder allocations by double the average number of cows which he was predicting would be milked in that year yields the following figures for fodder costs for each cow in the herd: $310 for the first year, $305 for the second year and $286 for the third year. (Why Mr Munro’s figure for the third year fell below the Bega Co-operative’s minimum figure of $300 per cow per year was not explained in the evidence; however, if Mr Munro had actually used a multiple of 1.9, rather than a multiple of 2.0, as he said, that would have meant that his yearly figures for fodder costs per cow per year (ignoring cents) began at $325 in the first year (the midpoint between the two figures in the Bega Co-operative’s range) and then fell to $320 in the second year and to $300 in the third year (the lower of the two figures in the Bega Co-operative’s range). It may be that, in his evidence, Mr Munro wrongly recollected the multiple which he had used. The yearly figures derived from the use of a multiple of 1.9 are so striking by reference to the Bega Co-operative’s range of figures that a false recollection in that respect by Mr Munro does not seem unlikely.)
As to the amounts for farm costs, Mr Munro intended by them to comprehend “the normal overheads of insurance, fuel, electricity, things like that. Normal operating costs” (obviously including indirect fodder costs, as already discussed). His farm costs amounts increased in each of the second and third years.
The amounts for interest, which remained constant over the three-year period, were said to represent interest of 12% on a loan of $1M.
After deducting the nominated expenditure from the total income, Mr Munro concluded that there would be a positive net cash flow of $9,000, $29,500 and $65,750 respectively for each year of the three-year period. Part, at least, of those positive net cash flows would, no doubt, have been available to reduce the outstanding amount of the $1M borrowing then in contemplation.
Mr Munro discussed his budget with the Blackers. According to his evidence, he told them that the position disclosed by it was “tight”, but he recommended neither for nor against the proposal. Instead, “I asked them to see, to have a yarn to, John….”
That suggestion by Mr Munro was the subject of considerable debate before me. It was the Blackers’ evidence that Mr Munro had merely referred to “John”, without adding a surname, and that they had understood him to be recommending that they speak to John Neagle, their bank manager, in order to get a second opinion about the proposal’s viability. In the scheduled final submissions before me, the NAB submitted that it “defie[d] rationality” to say, as the Blackers had done, that Mr Munro had merely referred to “John” without adding a surname; for him to have done so could only be explained, it was said, on the basis that he had “suffered some temporary mental aberration involving a serious lapse in his professionalism and dealings with his clients, which was entirely out of character”. The NAB further submitted that Mr Munro’s evidence had been that what he had said to them was that they should see “John Hukins”, the latter being another accountant experienced in the dairy industry.
I reject those submissions by the NAB. Mr Munro neither said in terms in his evidence that, nor was he asked in terms in cross-examination by the NAB whether, he had said “John Hukins”, rather than just “John”, to the Blackers. Furthermore, Mr Munro’s whole sentence, part only of which I have quoted in the next preceding paragraph, read as follows, “I asked them to see, to have a yarn to, John, and meaning John Hukins, to another accountant to check their [sic] figures”. I take Mr Munro’s use of the word “meaning” to imply that he did use to the Blackers the word “John” only, although he intended to convey by the use of that word “John Hukins”. In the result, I accept the Blackers’ and Mr Munro’s evidence that Mr Munro did refer to “John” only and the Blackers’ evidence that they understood Mr Munro to be referring to Mr Neagle, although at the same time I accept Mr Munro’s evidence that his intention had been to refer to Mr Hukins.
As I have been dealing above with Mr Munro’s evidence, there is one more matter referred to in that evidence which I should now mention.
Mr Munro said that he knew, at the time of which I have been speaking, that the Blackers intended to make the contents of his budget known to the NAB. At the same time, however, based on his experience of the making of applications for finance such as that which the Blackers were contemplating making, Mr Munro did not expect that the NAB would be content to receive from him merely the budget which he had thus far produced when deciding whether to lend money to the Blackers; instead, it would require from him more detailed figures. However, that did not occur in the Blackers’ case.
The matter to which I have just referred was also the subject of some evidence by Mr Neagle and it is convenient to refer to that evidence now. It was suggested to Mr Neagle in cross-examination that Mr Munro’s budget was not something that Mr Neagle “could possibly go forward with by itself in relation to any proposed loan”, to which Mr Neagle replied, “No, I couldn’t submit it just like that”. Later in Mr Neagle’s cross-examination, reference was made to the various budgets prepared by Mr Neagle himself, which budgets are central to the Blackers’ misrepresentation case, and the following exchanges occurred:
“In terms of preparing cashflow budgets, you undertook that process we know, commencing on 12 May, correct? --- For Blackers, yes.
Setting Blackers to one side for a moment, in terms of other farm lending, the usual practice was it, was to insist upon the production of budgets of that type, that is to say the type that you have prepared up [sic] on and after the 12 May, but from the client or customer’s own accountants? --- Not necessarily, some of the clients prepared their own budgets.
In the case of the Blackers, they didn't personally prepare their own budgets, did they? --- No.
And we know that Mr Munro didn't prepare the sort of cash flow budget of the type that would ordinarily be expected from a client or from a client's accountant, don’t we? --- Yes.”
It thus appears that, in the preparation of budgets in the case of the Blackers, Mr Neagle, contrary to the NAB’s usual practice, performed, not only his own usual function, but also simultaneously a function which would usually have been performed by the accountant of a prospective borrower (assuming that that prospective borrower had an accountant). Furthermore, Mr Neagle did so, knowing full well when he did so that the Blackers did have an accountant. Why he did so is a matter about which he was not specifically asked, nor did he volunteer an explanation.
To return now to the chronology of events, shortly after being advised by Mr Munro to see “John”, the Blackers first (in about early May 1993) saw Mr Neagle about Springbrook. Naturally, the Blackers gave in evidence their accounts of what had been said at that meeting and Mr Neagle was cross-examined about (most of) the assertions contained in those accounts. By and large, Mr Neagle agreed in cross-examination with the Blackers’ accounts of what had been said at that meeting, although, as to one or two of the matters put to him as having been said, he either answered that he did not recall or that he denied it. Further, as to some of his answers, it is not easy to tell precisely what Mr Neagle was intending to convey. In what follows, I propose to deal only with Mr Neagle’s evidence as to what was said at the meeting, rather than dealing with the Blackers’ evidence as well. I do so because I find it unnecessary to resolve such conflicts as exist between their respective accounts as to what was said. As will be seen below, looked at from the Blackers’ point of view, it is sufficient for their purposes that I proceed on the basis of acceptance of Mr Neagle’s evidence about what was said between them, not only at this meeting, but on subsequent occasions as well.
I first set out a number of matters put to Mr Neagle about the Blackers’ accounts of things said by the Blackers at that meeting with which, as I understand his evidence, Mr Neagle agreed: the Blackers had said that they were looking at Dick Bateman’s dairy; the Blackers had told him something of the set up of the property, including that there was a “travelling” irrigation system; the Blackers had said that Mr Bateman’s price was $1.68M; Mr Blacker had said that his brother was going to buy South Kanoona for $700,000 and that that sum would be used as a deposit; the Blackers had told him what the milk quota attached to the property was; Mr Blacker had said that, if he purchased the property, he would convert the existing irrigation system from the “travelling” type to the “[motor]bike shift” type; the Blackers had said that the existing milk vat was too small and would need to be upgraded (although Mr Neagle qualified his acceptance that that had been said by adding, “Over a period of time”); the Blackers had said that they had never run a dairy farm themselves; the Blackers had asked him to do a budget, which should be “conservative”; and the Blackers had said that they were there [that is, seeing Mr Neagle] “to give them an opinion about it [that is, entering into the dairying business on Springbrook] by reason of what the cashflows would show”.
I next set out a number of matters put to Mr Neagle about the Blackers’ accounts of things said by him at that meeting with which, as I understand his evidence, Mr Neagle agreed: he had told the Blackers immediately that he could run a budget on the bank’s computer system; he had asked the Blackers about the number of cows being milked at Springbrook; he had told the Blackers that most of his dairy clients did monthly herd recording to show which cows were more profitable; he had told the Blackers that he had all the figures he needed; he had told the Blackers that, having produced a budget, he would “then let them know whether or not they could proceed”; he had asked the Blackers for some time to do the figures and had told them to come back; and he had told the Blackers that it would be necessary to get an answer from Canberra.
I next set out a number of matters put to Mr Neagle about the Blackers’ accounts of things said by the Blackers at that meeting as to which I am not certain what Mr Neagle’s response was intended to mean. He was asked whether the Blackers had told him that the costs of changing the type of irrigation and upgrading the milk vat should be included in the budget; he answered, “All the improvements [sic] costs that we discussed were put in the budget”. He was asked whether the Blackers had told him that they would need to buy replacement heifers, because Mr Bateman was not rearing any at that time; he answered, “I allowed for heifer purchase in the budget”. He was asked whether the Blackers had told him that they were intending to take their machinery with them; he answered, “Not all their machinery. They discussed the little four wheel bike or what--I can’t remember the sort of bike it was, to do the ---”. He was then asked whether the Blackers had said that they would take their motor bike for moving the irrigation system and their post driver, because extra fencing would be needed; he answered, “I can’t remember the post driver. I remember the bike.” I take Mr Neagle’s first two answers as probably intended to convey assent to the questions asked. I take his last two answers as probably intended to convey that the only machinery which he remembered the Blackers’ telling him about was their motor bike.
I next set out a number of matters put to Mr Neagle about the Blackers’ accounts of things said by him at that meeting as to which I am not certain what Mr Neagle’s response was intended to mean. He was asked whether he had told the Blackers that the budget he would do would be “based on the bank’s own computer records”. His answer was, “Banks - I could punch up a budget, yes, out of the computer”. He was asked whether he had told the Blackers that milk production would be significantly higher in the spring. He answered, “Normally it is, yes”. He was asked whether he had told the Blackers that they should be able to produce some specified number of litres of milk. His answer was, “I can’t remember saying that - I can’t remember what exactly what litres I said”. Whether the first of those answers was intended to convey assent to the question, I am unable to say. The second and third answers appear to have been intended to convey assent to the question.

Mr Neagle was asked whether he had said to the Blackers that the bank had all of the milk prices and freights and levies on the computer. His answer, which (like so many of his answers to questions put to him, some of which I have already set out above) was not directly responsive, was, “I had them available to me, yes”. He was next asked whether he had said to the Blackers that there were other input figures which he could use for the purpose of working out the cash flow for them, which question he answered in the affirmative.
Mr Neagle was asked some questions specifically relating to discussion at the meeting about Mr Munro, with which it appears to me to be appropriate to deal separately. He was asked whether the Blackers had told him that they had been advised by Mr Munro and that he had done a budget for them. Mr Neagle’s answer was, “Yes, they said they’d seen Ewan Munro, yes”. (He also acknowledged that, at the time of the first meeting with the Blackers, he had a copy of Mr Munro’s budget.) Mr Neagle was asked whether the Blackers had said to him that Mr Munro had advised them that the figures were “pretty tight”. He answered that he could not recall that. Mr Neagle was also asked whether he had told the Blackers that he would not use Mr Munro’s figures in preparing his own budget. Mr Neagle said he could not remember saying that.
Mr Neagle was also asked a number of questions, not about what had been said at the meeting, but about what he had known at the time. He agreed that he knew at that time that the Blackers were not dairy farmers, had never run a dairy farm themselves, had no capacity to do any budgets for themselves and had “no familiarity with prices of feed and freight and running costs”.
About two weeks later, the Blackers again saw Mr Neagle, by which time he had prepared a budget dated 12 May 1993. It covered the same three-year period as Mr Munro’s budget had. It will obviously be necessary for me to deal in some detail with the content of that budget (as well as dealing with certain aspects of two subsequent budgets relating to Springbrook prepared by Mr Neagle, so far as they differed from those of his first). Before I do so, however, I will mention certain evidence by Mr Neagle about what he said to the Blackers at the meeting at which he gave them the 12 May 1993 budget.
First, according to Mr Neagle, at that meeting, “I said they [that is, the figures in the budget] were good”. Secondly, Mr Neagle was asked some questions in cross-examination about whether (as they asserted) he had told the Blackers at that meeting that the budget showed that they would have “a $70,000 profit in the second year”. The relevant evidence was as follows:
“So is it possible that you said to them that at the end of the second year … [they] would have a [$]70,000 profit?---No.
…
You’ve got no recollection, one way or the other, as to what you said to them about the profit at the end of the second year?---I thought I told them there was going to be a profit of about [$]30,000. I can’t remember.
You’ve got a recollection that you told them that there was a profit of about [$]30,000 in the second year?---I can’t remember.
…
You now say, do you, that you think instead of saying that there would [be] a [$]70,000 profit in the second year … in fact you said to them there will be a [$]30,000 [profit] - - -?---No, I can’t remember what I said to them. I wouldn’t have said there would [be] a [$]70,000 [profit] because it [that is, the budget, did not] show a [$]70,000 profit.
But you’ve offered up today a reference to a [$]30,000 profit?---No, I didn’t offer that all, sorry, that’s what - - -
That’s what what?---That’s what the budget shows there but I’m not saying that’s what I told them then.
…
You gave them the document to take away, you didn’t say anything at all about profit even though you say today that you think that there was a $30,000 profit---No, I can’t remember saying there[ ] was a [$]30,000 profit then.”
About the evidence which I have just quoted, I make the following observations. It was obviously Mr Neagle’s belief, at the time when he gave his evidence before me, that his 12 May 1993 budget had shown that the Blackers would have about a $30,000 profit in the second year from the operation of a dairying business on Springbrook. If Mr Neagle had the belief at the time when he gave his evidence before me that his first budget had shown a profit of about $30,000 in the second year, I infer that he also had that belief at the time of his meeting with the Blackers at which he gave them that budget. In those circumstances, I am prepared to accept, in spite of his later refusals to be positive about it, that he “told them there was going to be a profit of about [$]30,000” in the second year, as he at first said in oral evidence he thought he had.
(I should, perhaps, add here that, according to other evidence which he gave, Mr Neagle reached his conclusion that his 12 May 1993 budget had shown that the Blackers would have about a $30,000 profit in the second year from the operation of a dairying business on Springbrook by subtracting the amount of the closing balance in the Blackers’ working account #1 at the end of July 1994 ($27,240) from the amount of the closing balance in their working account #1 at the end of June 1995 ($55,310), both of those figures being shown in his budget. Why that difference, which was actually $28,070, was thought by him to represent the profit predicted to be earned from the operation of a dairying business on Springbrook between the dates of those two closing balances, Mr Neagle did not explain in his evidence. Furthermore, I note that, on the assumption that the process of comparing two closing balances in the Blackers’ working account #1 would yield the profit to be earned by a dairying business between the dates of those two closing balances, then Mr Neagle’s calculation did not compare the correct closing balances in order to determine the profit for the second year. That is because he compared the closing balance at the end of June 1995 with the one at the end of July 1994, rather than with the one at the end of June 1994. If one compares the closing balance at the end of June 1995 ($55,310) with the closing balance at the end of June 1994 ($38,270), one discovers that the difference (and, therefore, according to Mr Neagle, the profit predicted for the second year) is not about $30,000, but only $17,040.)
Turning now to the content of Mr Neagle’s first budget, like Mr Munro had done with his budget, Mr Neagle began by predicting milk production in each month of a thirty-six month period beginning in July 1993.
I may say immediately that, when one adds together Mr Neagle’s thirty-six monthly milk production predictions, one gets a predicted total milk production over the thirty-six month period of 4,678,040 litres, as compared to Mr Munro’s 4,203,000 litres. There were three causes of that difference.
The first was that, as I have already mentioned, Mr Munro had not always multiplied the total number of litres of milk produced by the herd each day by the exact number of days in the relevant month. When Mr Munro’s figures are changed in that respect to accord with Mr Neagle’s (although Mr Neagle also made one error in that respect, ignoring the fact that 1996 was a leap year), Mr Munro’s number of litres over the thirty-six month period increases by 9,955 litres. Treating Mr Munro’s total predicted production, therefore, as 4,212,955 litres, rather than as 4,203,000 litres, Mr Neagle’s extra litres of predicted production over the thirty-six month period become 465,085, thereby exceeding Mr Munro’s predicted litres by over 11%.
Such a difference is obviously a significant one. To give a rough idea of its economic significance, I mention that the average sale price of non-quota milk which was shown in Mr Neagle’s budget was twenty-three cents per litre (“¢/l”). Applying that price to those extra 465,085 litres would mean that they had led to an addition to the gross income predicted to be received in Mr Neagle’s budget of almost $107,000 over the thirty-six month period. (That figure may itself be compared with the positive net cash flow predicted by Mr Neagle over the entire thirty-six month period of almost $119,000.)
To turn now to the second and third causes of difference between Mr Munro’s and Mr Neagle’s total litres of production, of Mr Neagle’s extra 465,085 litres (after adjustment), a mere 3,600 arose because of Mr Neagle’s using different figures than Mr Munro’s for the average number of litres of milk produced per cow per day–in the twelfth month of the thirty-six months, Mr Neagle used a figure of 16.5 litres of milk produced per cow per day instead of Mr Munro’s (effectively, the Bega Co-operative’s) 16 litres. The vast majority of Mr Neagle’s extra 465,085 litres arose, instead, from a difference between himself and Mr Munro in the predicted number of cows being milked on Springbrook during many months in the thirty-six month period.
It will be recalled that Mr Munro had begun the thirty-six month period showing 175 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the twenty-second month of the thirty-six to 220 and he finally increased in the twenty-seventh month of the thirty-six to 250. Mr Neagle instead began with 190 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the fifth month of the thirty-six to 210, he then increased in the seventh month of the thirty-six to 220, he then increased in the ninth month of the thirty-six to 230, he then increased in the eleventh month of the thirty-six to 240 and he finally increased in the thirteenth month of the thirty-six to 250, at which level it remained throughout the rest of the three-year period. Thus, whereas Mr Munro’s number of cows being milked began at 175, Mr Neagle’s began at 190; further, whereas it is true that both Mr Munro and Mr Neagle showed a maximum number of cows being milked of 250, Mr Munro’s number of cows being milked did not reach 250 until the twenty-seventh month of the thirty-six month period, whereas Mr Neagle’s number of cows being milked reached 250 in the thirteenth month of the thirty-six month period; finally, whereas Mr Munro’s number of cows being milked reached 250 in three steps, an increase of 25 in the fourth month of the thirty-six, a further increase of 20 in the twenty-second month of the thirty-six and a final increase of 20 in the twenty-seventh month of the thirty-six, Mr Neagle’s reaching 250 occurred in six steps, each increase being of 10 cows and those increases occurring in the fourth, fifth, seventh, ninth, eleventh and thirteenth months of the thirty-six. (Another way of comparing Mr Munro’s predicted numbers of cows being milked with Mr Neagle’s is to compare the average numbers of cows predicted to be milked per year over each of the three years: whereas, as I have already mentioned, Mr Munro three yearly figures were 194, 205 and 245 respectively, Mr Neagle’s were 214, 250 and (again) 250.)
A question immediately arises as to the grounds on which Mr Neagle made what amounted to thirty-six predictions in his budget as to the number of cows being milked, one prediction for each month of the thirty-six month period.
Before discussing that question, however, it is convenient that I make some comment about the context in which it (as well as other questions regarding Mr Neagle’s budgets which I will also discuss) is to be answered.
I have already mentioned that the Blackers have alleged against the NAB a breach by it of its duty under subs 52(1) of the TPA with resulting loss by them and that they have placed reliance regarding the breach issue on s 51A of the TPA. Subsection 51A(1) of the TPA provides that, for the purposes of (relevantly) subs 52(1) of the TPA, where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for doing so, the representation shall be taken to be misleading. Subsection 51A(2) of the TPA provides that, for the purposes of the application of subs 51A(1) in relation to a proceeding concerning a representation made by a corporation with respect to a future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making that representation.
It is accepted in the cases (see Ting v Blanche (1993) 118 ALR 543 at 552 (FCA: Hill J), followed in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) ¶ 46-179 at 54,432 (FCA: Goldberg J) and in ACCC v IMB Group Pty Ltd (1999) ATPR ¶ 41-704 at 43,021, [13] (FCA: Drummond J)) that, in spite of its reference merely to the adducing of certain evidence by the corporation concerned, the effect of subs 51A(2) of the TPA is to impose on that corporation the burden of persuading the trier of fact that it had reasonable grounds for making the representation concerned, in default of which persuasion it will be held to have breached (relevantly) subs 52(1) of the TPA. Certainly, the NAB did not argue in the present case for a different construction of subs 51A(2) of the TPA.
It may be noted that, given the construction of subs 51A(2) of the TPA to which I have just referred, that provision makes it easier for an applicant to establish a breach of subs 52(1) of the TPA in respect of a representation with respect to a future matter than it is to establish a breach of duty of care under the general law in respect of that same representation: see Luntz and Hambly Torts: Cases and Commentary 4^th ed. 1995 at p. 811, who say also that legislative developments such as s 51A of the TPA “have made the common law right of action in the area [that is, the area of negligence in relation to economic loss] largely … redundant”. It is because of the relative ease with which an applicant can, by reference to s 51A of the TPA, make out a case of breach of subs 52(1) of the TPA in respect of a representation with respect to a future matter, as compared to making out a case of breach of duty of care under the general law in connection with the same representation, that I will focus my attention in the first instance on the former case by the Blackers, rather than the latter. All other things being equal, if the Blackers cannot succeed with the former case, they cannot succeed with the latter.
As well as not disputing the construction of subs 51A(2) of the TPA to which I have referred above, the NAB did not submit that I should conclude that the predictions made by Mr Neagle in his various budgets were not representations by it as to future matters within the meaning of s 51A of the TPA. (I have referred only to Mr Neagle’s budgets in what I have just said, because, as the Blackers fought their case, those budgets were the real source of misleading conduct by the NAB ultimately relied on by them). Instead, the NAB submitted that I should conclude that Mr Neagle had had reasonable grounds for the making of those predictions.
In doing so, the NAB submitted that the question whether “the Bank had reasonable grounds for making the said representations … is to be determined at the time the budgets were prepared”. I accept that submission: see to that effect, for example, the reasons for judgment of Heerey J in Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513 (FCA: Heerey, Sundberg and Emmett JJ). It is also worth repeating what Heerey J said more generally in that case about the effect of subs 51A(2) of the TPA,
“If there was a representation as to a future matter, s 51A requires the representor to show:
·some facts or circumstances
·existing at the time of the representation
·on which the representor in fact relied
·which are objectively reasonable and
·which support the representation made.”
Applying subs 51A(2) of the TPA as Heerey J’s statement dictates to each of Mr Neagle’s thirty-six predictions in his 12 May 1993 budget as to the number of cows being milked on Springbrook, it was incumbent on the NAB to prove, in order to avoid a conclusion of breach by it of subs 52(1) of the TPA, that Mr Neagle, in making that prediction, had in fact relied on certain facts or circumstances existing at the time of his making it, which facts or circumstances were objectively reasonable and supported his prediction.
In considering whether the NAB has done so, it is important to keep steadily in mind the nature of the predictions presently under discussion. They were not qualitative predictions (for instance, “your profits will be good”) or “fuzzy” quantitative predictions (for instance, “your profits will be between ten and twenty percent”); they were precise quantitative predictions.
Given that the NAB had the benefit in the present proceeding of Mr Neagle’s being available to give and actually giving evidence on its behalf, one might have expected that the NAB’s first step in satisfying its burden of persuasion under subs 51A(2) of the TPA would be to establish by his evidence, whether given by reference to his unaided recollection or (more likely) given by reference to his recollection aided by contemporaneous documents, what were the facts or circumstances existing at the time of the preparation of his budget on which he had in fact relied in order to make each of his precise quantitative predictions as to the number of cows being milked. Then, that having been done, the NAB’s next step would be to seek to establish that those facts or circumstances on which he had in fact relied provided objectively reasonable support for the prediction concerned.
As to the actual grounds for Mr Neagle’s predictions, he might, for instance, have been asked first why he had chosen, as his starting number of cows being milked, 190. One might have expected him in response to demonstrate that he had had information at the time, on which he had relied, as to the number of cows actually being milked on Springbrook at a particular point in time and, if that number differed from 190, to explain the ground upon which he had decided to alter it. Then, the ground of his having predicted his starting number having been established, he might have been asked about the method(s) by which he had expected the milking herd to grow in the way which he had predicted. One might have expected him in response to refer either to natural increase or to subsequent purchase or both. If he referred to the former method, one might have expected him to demonstrate that he had had information at the time, on which he had relied, about an expected rate of natural increase, either past information specific to the Springbrook herd or information which was general in nature. If he referred to the latter method, one might have expected him to disclose such matters as the age of the cows he had expected would be purchased, their number, their cost and the date of their purchase and then to demonstrate that he had had information at the time, on which he had relied, establishing the likely availability of cows of such ages in such numbers at such cost at such date.
However, that is not the way in which the NAB proceeded. It made what could, at best, be described as a perfunctory attempt to obtain from Mr Neagle himself an account of the facts or circumstances existing at the time of the preparation of his budget on which he had in fact relied in order to make each of his predictions as to the number of cows being milked. Further, in its scheduled final submissions, it relied on very little indeed of such evidence as Mr Neagle had given which might be thought to bear on the topic, in seeking to satisfy its burden of persuasion on the question of the grounds on which he had in fact relied when making those predictions. (That question is, of course, logically anterior to any question of the reasonableness of those grounds).

(Although it does not matter for present purposes, I note that the High Court appears afterwards to have resiled from its treatment in the above passage of the measure of damages in deceit, acknowledging the appropriateness of imposing a foreseeability requirement in that case as well: see Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 12 (Mason, Wilson and Dawson JJ), relying on what Gibbs CJ had said in Gould v Vaggelas at 223-24; and see also Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 at 346, [41] (McHugh, Hayne and Callinan JJ). (The relevant passage from Gates is quoted below.))
Subsequently, in Wardley Australia Ltd v Western Australia, Mason CJ and Dawson, Gaudron and McHugh JJ said (at 530),
“In the case of a fraudulent or negligent misrepresentation which induces the plaintiff to enter into a contract to purchase property, the plaintiff’s loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the contract and the value of the property at the date of the contract.”
As I understand the effect of the two passages which I have quoted above, in a case such as the present, the prima facie measure of damages is the difference between the price paid by the representee to purchase the property concerned and the value of that property as at the date of entry into the contract to purchase it. However, in addition to seeking damages on the usual basis, the representee may seek reasonably foreseeable consequential damages. (Of course, in a case in which the representee seeks reasonably foreseeable consequential damages in addition to damages on the usual basis, care must be taken to avoid double counting.)
Further, as I understand the position, the representee may seek reasonably foreseeable consequential damages alone, even if the representee could not have established an entitlement to damages on the usual basis. That appears to be implicit in the passage from the reasons for judgment of Mason, Wilson and Dawson JJ in Gates to the existence of which I have already referred above. The passage deals with fraudulent misrepresentation inducing the purchase of goods, but there is no difference between fraud and negligence or between goods and other assets, at least for present purposes. The passage is as follows (case references omitted):
“In deceit the measure of damages is the difference at the time of purchase between the real value of the goods, and the price paid…. But this has been treated as a prima facie measure only, the true measure being reflected in the proposition stated by Dixon J … in these terms:
‘In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant.’
As his Honour then pointed out, it is a question of determining how much worse off the plaintiff is as a result of entering into the transaction which the representation induced him to enter than he would have been had the transaction not taken place. This entitles the plaintiff to all the consequential loss directly flowing from his reliance on the representation …, at least if the loss is foreseeable….”
(I also note now that it was implicit in the manner in which the NAB made its final oral submissions before me that it accepted that the Blackers might recover reasonably foreseeable consequential damages for negligent misrepresentation, even if unable to recover damages on the usual basis.)
As mentioned in South Australia v Johnson, reasonably foreseeable consequential damages of the type of which I have been speaking may include profits foregone by reason of the representee’s having purchased the property concerned (which are to be distinguished from those profits which would have been gained under the contract to purchase the property concerned if the inducing misrepresentation had been true or come to pass). An example of such consequential damage was given by Mason, Wilson and Dawson JJ in Gates (at 13):
“If that reliance [that is, the plaintiff’s reliance, in buying goods, on the defendant’s fraudulent misrepresentation] has deprived him of the opportunity of entering into a different contract for the purchase of goods on which he would have made a profit then he may recover that profit on the footing that it is part of the loss which he has suffered in consequence of altering his position under the inducement of the representation. This may well be so if the plaintiff can establish that he could and would have entered into the different contract and that it would have yielded the benefit claimed…. The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation…. [I]t is for the plaintiff to establish that he could and would have entered into the different contract.”
(For a case in which the distinction became crucial between, on the one hand, profits foregone because of a failure to enter into a different contract to purchase property and, on the other hand, profits which would have been gained under the very contract induced by the misrepresentation if that misrepresentation had been true or come to pass, see Kyogle Shire Council v Francis [1988] 13 NSWLR 396 (Mahoney and Clarke JJA; Kirby ACJ dissenting).)
Reasonably foreseeable consequential damages of the type of which I have been speaking may also include expenses incurred in connection with the property acquired, as appears from L Shaddock & Associates Pty Ltd v Parramatta City Council [No1] (1981) 150 CLR 225.
Shaddock was a case in which, induced by a negligent misstatement by the defendant that some land which the plaintiffs were considering purchasing from a third person for redevelopment was not affected by any road widening proposal by the defendant, the plaintiffs agreed in May 1973 to pay to that third person about $417,000 to purchase that land. At that time, the land had on it a disused service station and it was the plaintiffs’ intention to hold the land for three to five years and then to build on it an office building. The plaintiffs financed the purchase by borrowing the purchase price at interest. The road widening proposals which existed would, if implemented, have substantially reduced the size of the land concerned and made it unsuitable for the construction of the office building proposed by the plaintiffs.
The plaintiffs sought from the defendant damages for negligent misstatement, both on the usual basis and for consequential losses. At trial, the judge held that the defendant had owed no duty of care to the plaintiffs, but also discussed the question of the damages which he would have awarded to the plaintiffs if he had held that the defendant had owed a duty of care to the plaintiffs. On appeal from the decision of the New South Wales Court of Appeal affirming the decision of the trial judge, the High Court held that the defendant had owed the plaintiffs a duty of care which it had breached and so the question of the assessment of their damages arose. That question was dealt with by the High Court itself, the court doing so by reference to the trial judge’s approach.
The trial judge had first dealt with the plaintiffs’ claim for damages on the usual basis. He had found that the land purchased had been worth $284,000 in May 1973, or $133,000 less than the plaintiffs had paid for it, and would have awarded the plaintiffs the latter amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $133,000 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount.
As well as dealing with the plaintiffs’ claim for damages on the usual basis, the trial judge had also dealt with their claim for consequential damages and would have awarded the plaintiffs certain consequential damages if he had held for them on the duty of care issue. All of the damages concerned were expenses incurred by the plaintiffs, some of them of a recurring nature. It was the trial judge’s view, however, that any expenses should be allowed only until the end of 1994 “because until then they [that is, the plaintiffs] were exploring what could be done with the land and making efforts to salvage what they could from what was in fact a disastrous purchase” (see (1978) 38 LGRA 23 at 47).
One such expense was the interest paid on the money borrowed to purchase the land. The trial judge assessed that amount at $22,193 and would have awarded the plaintiffs that amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $22,193 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount.
Another such expense was fees paid to architects and surveyors and to the defendant for a development application. Those totalled $5,530 and the trial judge would have awarded the plaintiffs that amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $5,530 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount.
The remaining expenses for which consequential damages were claimed totalled $13,215 and were for rates and tax on the land, for insurance and for the additional stamp duty and solicitors’ costs paid because the price of the land had been about $417,000, instead of its actual value, $284,000. The trial judge would have awarded the plaintiffs $13,215 in damages for those items of expense if he had held for them on the duty of care issue, but the defendant disputed in the High Court that the plaintiffs were entitled to the $13,215, even assuming that the defendant had breached a duty of care which it owed to them.
It was held unanimously by the High Court (Gibbs CJ and Stephen, Mason, Murphy and Aickin JJ), however, that the plaintiffs were entitled to the disputed $13,215. Murphy J so held without giving any reasons therefor (see at 256), from which one may infer that he simply agreed with the reasoning of the trial judge on that issue. Stephen J (at 244) and Aickin J (at 256) expressly agreed with the reasons for judgment of Mason J on that issue. Gibbs CJ (at 236-37) and Mason J (at 254-55) each gave separate sets of reasons for holding that the plaintiffs were entitled to the disputed amount, although the substance of each of those separate sets of reasons for judgment appears to me to have been the same.
Gibbs CJ said (at 237; emphasis added),
“It was submitted on behalf of the Council that if the appellants, who had the land, were given $133,000 in addition, they would be in the same position as if the land had not been affected by the proposals and that the payment to them of the additional items would give them a windfall benefit. It was submitted that if they had received the land unaffected by the road widening proposals they would have been bound to meet the additional expenses in question, and that since they were to be given an amount which would mean that they would receive the full value of the land in the condition in which they intended to buy it they should not be paid in addition the amounts which they would have been required to spend if the Council’s representation that the land was unaffected by the proposals had been true. No question of directness, remoteness or foreseeability arises. The only question is whether in fact there has been a duplication in the assessment of damages. The appellants are entitled to be put, so far as money can do, in the same position as if they had not made the purchase. If the purchase had not been made the appellants would have kept the money paid to the vendor and would not have made the other payments in question. The award of $133,000, when added to the actual value of the land bought, recompensed the appellants for the payment out of the purchase money, but did not recompense them for the other expenses that they had to meet. It is true that the rates, tax, insurance, stamp duty and costs would have been payable if the land had not been affected by the road widening proposals, but it was so affected, and the payments would not have been made if the Council had not made the negligent mis-statement on which the action is founded. Of course the appellants were bound to mitigate their loss, but the learned trial judge was entitled to find that it was reasonable for the plaintiffs to continue to hold the land until the end of 1974, while they were exploring what could be done with the land and endeavouring to salvage what they could from the disastrous purchase. For these reasons the challenge made to the assessment of damages should not succeed.”
Mason J said (at 254-55; emphasis added),
“The respondent submits that the approach to damages taken by the judge was to place the appellants in the same position as if the land had not been affected by the road-widening proposal and that there was no justification for giving them any compensation beyond that. The respondent says that the items in question were all expenses to which the appellants would have been subject if they had bought the land free from the road-widening proposal.
The primary judge considered that the appellants would have been entitled to recover all items of consequential damage up to the end of 1974 because until that time ‘they were exploring what could be done with the land and making efforts to salvage what they could from what was in fact a disastrous purchase’. His Honour found that the period up to the end of 1974 was a reasonable period.
The respondent is right in saying that the items were expenses to which the appellants would have been subject had the land been free from the road-widening proposal. However, this does not prevent the expenses from constituting recoverable damage. The judge found that, but for the negligent mis-statement, the appellants would not have bought the land, the land being useless for the purpose for which it was acquired. Consequently, the appellants’ loss includes, not merely the diminution in value of the land, but also the expenses of acquisition and retention for a reasonable time, expenses which would not have been incurred had the respondent not been negligent. It was not suggested that the items in question fell outside the boundary of foreseeability. The measure of recoverable damages for negligent mis-statement is the amount of money necessary to restore the plaintiff to the position he was in before the statement, subject to the loss being foreseeable.”
If, in the present case, the Blackers were seeking damages on the usual basis, one would have expected them in their final submissions to submit that the Batemans’ assets had had a value on the date of the contract to purchase them, 31 August 1993, of less than $1.53M, to nominate what that value was and then, in accordance with the clear understanding on which the present case was conducted, accepted by both sides of the record from the outset, that I would be asked to make no finding of fact which they desired me to make without being directed to the evidence on which they were relying in support of that finding, to identify that evidence which supported their submission as to the Batemans’ assets’ actual value on 31 August 1993.
Next, if, in the present case, the Blackers were seeking consequential damages for lost profits, one would have expected them in their final submissions to submit that, as a result of purchasing the Batemans’ assets, they had lost profits from a certain alternative business in a certain amount and then, in accordance with the understanding to which I have just referred, to identify that evidence which supported their submission that they “could and would have entered into” a “different contract” to purchase a dairying (or other) business “and that it would have yielded the benefit claimed” (to adapt the statement from Gates quoted above).
Finally, if, in the present case, the Blackers were seeking consequential damages for expenses incurred, one would have expected them in their final submissions to submit, as in Shaddock, that they had incurred expenses of certain amounts in certain categories and then, again in accordance with the understanding to which I have referred, to identify that evidence which supported their submission as to those amounts and categories.
However, none of the things to which I have referred in the preceding three paragraphs occurred (nor, perhaps I should add at this point, had the Blackers put before me any expert financial evidence on their claimed damages which would have made the basis of that claim apparent.)
Instead, in their scheduled final written submissions, the Blackers merely made the following submissions (which I have re-ordered to some extent, as will be apparent from their paragraph numbers),
“34     The measure of damages is the direct and foreseeable consequence of the negligent advice being the amount necessary to restore the Applicants to the position they were in before the making of the representations and the giving of advice subject only to the losses being foreseeable.
35       The measure of recoverable damages for negligent misstatement is the amount of money necessary to restore the plaintiff [sic] to the position he [sic] was in before the statement, subject to the loss being foreseeable. The test is somewhat different from that applied in deceit and breach of warranty: L Shaddock & Associates Pty Ltd v Parramatta City Council (No1) (1981) 150 CLR 225.
5         When the Blackers entered into the agreement to purchase ‘Springbrook’ they had net assets of $857,000 consisting of real property ‘South Kanoona’ $700,000, a bush block worth approximately $70,000, plant and equipment worth $40,000 and stock worth $70,000. They had an overdraft debt of $23,000…. At the date of trial the Blackers’ equity has been entirely eroded, because the outstanding bank debt is significantly greater than the present value of ‘Springbrook’.
6         … [B]y way of damages for negligent advice …, the Applicants seek relief which places them as nearly as possible into the position they would have been in but for their entry into the agreement to purchase ‘Springbrook’. Shortly put, the available remedy should be fashioned to restore the Blackers to their pre-purchase equity position.
36       The Applicants claim interest under section 51A Federal Court of Australia Act 1976.”
As I understand those written submissions, what the Blackers were submitting in them was that their damages for negligent misstatement were to be quantified at $857,000. (I add also that I understood the NAB not to be disputing that the Blackers’ net worth before purchasing the Batemans’ assets had been $857,000, but was nil at the date of trial, although, not surprisingly, the NAB did not concede that if duty of care and breach of that duty had been made out against it, then the Blackers were entitled to the $857,000 claimed.)
To the extent to which the matter of the Blackers’ damages was the subject of attention during their final oral submissions, that attention was as brief as it had been during their scheduled final written submissions. However, such attention as there was disclosed that, in so far as the Blackers relied on previous authority for their claim that their damages should be quantified at $857,000, that authority consisted solely of the emphasised portions of those passages in the reasons for judgment of Gibbs CJ and Mason J in Shaddock which I have set out above.
It is apparent, however, that those emphasised portions do not support the submission made (which submission appears to have been made in an attempt to avoid confronting, rather than to overcome, any problems of causation, remoteness and mitigation). Neither those emphasised portions, nor the entirety of the passages which I have quoted from Shaddock, would justify an approach to damages which amounts in substance simply to saying that: before they bought the Batemans’ assets, the Blackers had a net worth of $857,000; at trial, after buying those assets, their current net worth was nil; they bought those assets as a result of negligent misrepresentations by the NAB; therefore the NAB was liable to them for $857,000. All that those passages would justify would be: first, awarding damages on the usual basis; and, secondly, awarding reasonably foreseeable consequential damages of the “expenses incurred” type. As the High Court said of Shaddock in South Australia v Johnson (at 170),
“In Shaddock, as no question of loss of profits arose, it was appropriate to award the plaintiff compensation by reference to the difference between the amount paid by the plaintiff for the property and its actual value plus other incidental expenses.”

The question obviously arises what I am now to do, faced with the inadequate manner in which the Blackers have presented their case on damages. In considering that question, there are a number of matters which I keep in mind.
First, if the Blackers had submitted that, at the date of the contract to purchase the Batemans’ assets for $1.53M, those assets had had a value of less than that sum, then it would have been, to say the least of it, difficult for me, on the evidence which I have before me, to accept such a submission. The evidence which is most relevant in that respect is a report prepared by Mr Colin Alfred Ferguson in October 1998. Mr Ferguson was a registered valuer who had been valuing rural properties in the Bega area for about twenty years. In his report, Mr Ferguson said that he had been asked (by the NAB) to assess Springbrook’s market value “in early 1994 (say March 1994)”. However, Mr Ferguson appears to have understood that task as being one to value only some of the assets which the Blackers had purchased from the Batemans. Excluded from that valuation, according to Mr Ferguson, were “the dairy stock, and movable farm plant and equipment”. According to Mr Ferguson, the market value in March 1994 of those assets whose value he did assess was $1.173M, which is $357,000 less than the price which the Blackers had agreed to pay for all of the Batemans’ assets in August 1993. However, there was no expert evidence before me as to the value in March 1994 of the dairy stock and movable farm plant and equipment which were excluded from Mr Ferguson’s valuation and so I am unable to say how their value at that time compared to $357,000. In any event, even if there had been expert evidence before me causing me to conclude that the value of the dairy stock and movable farm plant and equipment in March 1994 had been less than $357,000, a question would have arisen whether I should infer that the value of all of the assets which the Blackers had agreed to purchase had been no greater in August 1993 than their value in March 1994, some seven months later. Of course, I need not consider that question in the circumstances.
Secondly, if the Blackers had submitted that they had suffered reasonably foreseeable consequential damages of the “lost profits” type, then it would have been impossible for me to accept such a submission, given the state of the evidence before me. There was no evidence of the existence of any specific alternative dairying (or other) business which the Blackers were considering at the relevant time, let alone any evidence as to the subsequent profitability of such a business.
Thirdly, if the Blackers had submitted that they had suffered reasonably foreseeable consequential damages of the “expenses incurred” type, then there was evidence before me on which they could have constructed such a claim, although, by no stretch, am I able to imagine that a properly prepared and presented case along those lines would have yielded total damages of $857,000, even if one were to ignore all questions of causation, remoteness and mitigation.
Fourthly, in its final oral submissions, the NAB did submit that the Blackers had failed to establish a case for damages on the usual basis. At the same time, however, the NAB conceded, “No doubt, there were expenses associated with the acquisition which would represent some damage….” The NAB also submitted,
“[I]n the absence of any satisfactory demonstration of what their [that is, the Blackers’] damages are, any award in their favour should be discounted to the minimum extent that the court can have sufficient confidence is actual loss they suffered. The discountable bill will be larger for their failure to adduce evidence as to what it might be.”
Later, the NAB returned to that topic, submitting,
“[T]hey have failed to produce any satisfactory evidence of what their loss was and as I have pointed out the onus is on them[. I]n the absence of satisfactory evidence, your Honour should significantly limit the loss.”
Finally for present purposes, the NAB submitted, “[T]he only appropriate remedy available on the material adduced in this case would be an assessment of an amount representing loss[,] which we say should be established as of mid 1994”. (The mid-1994 date was selected by the NAB on the basis that that was the date by which, it was submitted, the Blackers should have should have mitigated their losses by reselling the assets which they had purchased from the Batemans.)
I consider that the submissions of the NAB to which I have referred in the preceding paragraph amounted to an invitation to me in the circumstances (and regardless of what I would have done in the absence of those submissions) to award to the Blackers a global sum representing consequential damage of the “expenses incurred” type for the period ending at the end of June 1994. I am prepared to accept that invitation, rather than simply to dismiss the Blackers’ claim for failure adequately to establish their damages (as I would otherwise have done, in light of their failure to adhere to what they had agreed at the outset of the case as to the way in which I was to engage in the fact-finding exercise on their claim).
The global sum which I consider appropriate in the circumstances is $92,500, representing about $10,000 a month between the time when the Blackers acquired the Batemans’ assets and the end of June 1994. There was evidence before me that, for about four years after acquiring the Batemans’ assets, the Blackers had paid to the NAB $10,000 a month in interest in connection with their loans from it, although they had ceased to pay any interest thereafter. If that figure were accurate, then the $92,500 to which I have referred would represent the Blackers’ interest payments to the NAB over the period to the end of June 1994. However, I have some doubt about the accuracy of that figure, since the Blackers’ revenue account for 1993-94, to which I have already referred above in another connection, showed total interest paid in 1993-94 (all of it to the NAB) of only $78,308, some of which appears inevitably to have been attributable to the business in which the Blackers were engaged before they began dairying, some months into 1993-94. To the extent that the $10,000 a month exceeds the actual interest payments to the NAB, it may, of course, be treated as representing other relevant expenses incurred by the Blackers’ during the period.
I add that I have not considered it appropriate to reduce the sum of $92,500 by reference to the existence of contributory negligence by the Blackers. That I should do so had been submitted by the NAB in its scheduled final written submissions, although the issue was not the subject of any submission by it in its final oral submissions. (I note, incidentally, that some of the matters relied on by the NAB in its scheduled final written submissions as establishing contributory negligence by the Blackers were in truth matters which would have established instead a failure by them to mitigate their losses.) In declining to give effect to the NAB’s contributory negligence submission, I am content to adopt the approach to the matter taken by Sir Donald Nicholls V-C in Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 at 574-75.
I consider that the Blackers should also be awarded interest on the sum of $92,500. I add that, although I understood the NAB to resist the payment of interest on any sum which represented the difference between the value of the Batemans’ assets at the time of purchase and the price paid for those assets by the Blackers, it made no submission that I should not award interest on any sum which represented expenses incurred and it is on the latter basis that I am awarding the $92,500. Such interest should run from 1 February 1994, which is about halfway through the relevant period.
I will order the Blackers to file and serve on the NAB, within seven days of the date of publication of these reasons, proposed short minutes of order giving effect to my reasons on their claim. I will also order the NAB, if it contends that the Blackers’ proposed short minutes of order do not properly give effect to my reasons on their claim, to file and serve on the Blackers, within ten days of the date of publication of these reasons, alternative proposed short minutes of order.
As to the NAB’s cross-claim, it was not the subject of any real attention during the hearing before me. The Blackers did not in truth dispute that cross-claim, except in so far as they relied on those matters which were the subject of their claim. In so far as their reliance on those matters was successful, that will be reflected in my judgment on their claim, so that the NAB’s cross-claim must succeed in its entirety. As I am doing with the Blackers in respect of their claim, I will order the NAB to file and serve on the Blackers, within seven days of the date of publication of these reasons, proposed short minutes of order giving effect to its cross-claim. I will also order the Blackers, if they contend that the NAB’s proposed short minutes of order do not properly give effect to its cross-claim, to file and serve on the NAB, within ten days of the date of publication of these reasons, alternative proposed short minutes of order.
Finally, I will order that the matter be listed for further hearing fourteen days after the date of publication of these reasons. On that further hearing, any dispute about the orders to be made on the claim and cross-claim will be dealt with. I will also deal then with the question of costs.

I certify that the preceding two hundred and sixty-five (265) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz.
Associate:
Dated: 25 May 2000

Counsel for the Applicants: Messrs D McGovern
& L Aitken

Solicitor for the Applicants: Commins Hendriks

Counsel for the Respondent: Messrs J E Thomson
& G Lucarelli

Solicitor for the Respondent: Dibbs Crowther & Osborne

Dates of Hearing: 25, 26, 27, 30 November 1998, 1, 2, 3, 4 December 1998, 5, 6, 7, 8, 9 July 1999, 12, 13, 14, 15, 16 July 1999, 16, 17 August 1999

Dates of Further Written Submissions:

Date of Judgment:

20 August 1999, 22 November 1999, 17 December 1999, 13 January 2000

25 May 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 997 of 1997

BETWEEN:	PETER RAYMOND BLACKER & CHRISTINE BLACKER APPLICANTS/CROSS-RESPONDENTS
AND:	NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) RESPONDENT/CROSS-CLAIMANT
JUDGE:	KATZ J
DATE OF ORDER:	25 MAY 2000
WHERE MADE:	SYDNEY

JUDGE:	KATZ J
DATE:	25 MAY 2000
PLACE:	SYDNEY

Counsel for the Applicants:	Messrs D McGovern & L Aitken
Solicitor for the Applicants:	Commins Hendriks
Counsel for the Respondent:	Messrs J E Thomson & G Lucarelli
Solicitor for the Respondent:	Dibbs Crowther & Osborne
Dates of Hearing:	25, 26, 27, 30 November 1998, 1, 2, 3, 4 December 1998, 5, 6, 7, 8, 9 July 1999, 12, 13, 14, 15, 16 July 1999, 16, 17 August 1999
Dates of Further Written Submissions: Date of Judgment:	20 August 1999, 22 November 1999, 17 December 1999, 13 January 2000 25 May 2000