Doolan v Renkon Pty Ltd - [2011] TASFC 4

[2011] TASFC 4

COURT: SUPREME COURT OF TASMANIA (FULL COURT)

CITATION: Doolan v Renkon Pty Ltd [2011] TASFC 4

PARTIES:  DOOLAN, Bruce Richard
  ELLIS, Timothy James
  WELCH, Phillip Andrew
  SMITH, David Anthony
  v
  RENKON PTY LTD

FILE NO/S: 733/2010
JUDGMENTS

APPEALED FROM: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd [2009] TASSC 86; Ross Ambrose Group Pty Ltd v Renkon Pty Ltd (No 3 – Quantum) [2010] TASSC 37

DELIVERED ON:  24 August 2011
DELIVERED AT:  Hobart
HEARING DATE:  28 February, 1 March 2011
JUDGMENT OF:  Crawford CJ, Blow and Porter JJ
CATCHWORDS:

Damages – Measure and remoteness of damages in actions for tort – Remoteness and causation – Proof of causation – Loss of opportunity – Opportunity to surrender lease and demand a payment – Whether a need for proof on the balance of probabilities that the plaintiff would have taken up the opportunity – Assessment of the value of the lost opportunity – Estimation of the value if the opportunity had been pursued to a successful outcome – Proof of a loss in accordance with the principles in Hungerfords v Walker (1989) 171 CLR 125.

Sellarsv Adelaide Petroleum NL (1994) 179 CLR 332; Tabet v Gett (2010) 240 CLR 537; Price Higgins & Fidge v Drysdale [1996] 1 VR 346; G W Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47; Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501, State of New South Wales v Burton [2008] NSWCA 319; Lahoud v Lahoud [2009] NSWSC 623; Olympic Holdings v Lochel [2004] WASC 61, followed.

Hungerfords v Walker (1989) 171 CLR 125, applied.

Duke Group Ltd v Pilmer (1999) 73 SASR 64; Pooraka Holdings Pty Ltd v Participation Nominees Pty Ltd (1991) 58 SASR 184; Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358; State Bank of New South Wales Ltd v Yee (1994) 33 NSWLR 618; Hutt v Cascade Brewery Coy Ltd [1991] TASSC 98 (judgment No 99/1991); Commonwealth v Chessell (1991) 101 ALR 182, referred to.
Aust Dig Damages [22]

Professions and Trades – Lawyers – Duties and liabilities – Solicitor and client – Negligence – In relation to property transactions – Advice as to status of lease – Incomplete advice – Inexperienced client.

Rogers v Whitaker (1992) 175 CLR 479; Carradine Properties Pty Ltd v D J Freeman & Co (1982) 126 SJ 157; National Home Loans Corporation v Giffen Couch & Archer [1998] 1 WLR 207; Austrust PtyLtd v Astley (1993) 60 SASR 354, referred to.
Aust Dig Professions and Trades [1175]

REPRESENTATION:

Counsel:
             Appellants:  K B Procter SC
             Respondent:  S P Estcourt QC, S Tatarka
Solicitors:
             Appellant:  Murdoch Clarke
             Respondent:  Page Seager

Judgment Number: [2011] TASFC 4
Number of paragraphs: 126

Serial No 4/2011
File No 733/2010

BRUCE RICHARD DOOLAN, TIMOTHY JAMES ELLIS,
PHILLIP ANDREW WELCH and DAVID ANTHONY SMITH
v RENKON PTY LTD

REASONS FOR JUDGMENT FULL COURT

CRAWFORD CJ
BLOW J
PORTER J
24 August 2011

Orders of the Court

Appeal dismissed.

Cross-appeal allowed.

The Court will hear further from counsel concerning the amount of the judgment sum to be substituted.

Serial No 4/2011
File No 733/2010

BRUCE RICHARD DOOLAN, TIMOTHY JAMES ELLIS,
PHILLIP ANDREW WELCH and DAVID ANTHONY SMITH
v RENKON PTY LTD

REASONS FOR JUDGMENT FULL COURT

CRAWFORD CJ
BLOW J
PORTER J
24 August 2011

The appellants were the partners in a Launceston legal firm, Clarke & Gee, as at May 1991. The respondent, Renkon Pty Ltd, was then a client of that firm. Renkon was the operator of a hotel/motel known as the Olde Tudor Motor Inn. It was leasing the premises of that business. During May 1991 a director of Renkon named Suzanne Rees phoned the firstnamed appellant, Bruce Doolan, and sought some advice on behalf of Renkon. Mr Doolan gave advice over the telephone. Subsequently, the landlord of the premises sued Renkon; Renkon took third party proceedings against Mr Doolan and his partners alleging that he was negligent in providing incomplete advice; there was a trial of the third party proceedings before Tennent J, and her Honour gave judgment for Renkon against the four appellants for $762,588 damages.

Mr Doolan and his partners have appealed, on grounds relating to both liability and quantum. Renkon has cross-appealed, contending that the award of damages should have been greater.

Background

At all material times the business premises were owned by Ross Ambrose Group Pty Ltd ("Ambrose"). Until 30 June 1989 the business was carried on by an associated company, Deming No 80 Pty Ltd ("Deming"). Renkon purchased the business from Deming for $1 million plus the value of the stock in trade. The purchase was completed on 30 June 1989. Renkon leased the premises from Ambrose for four years commencing on 1 July 1989. The lease provided for Renkon to have a number of options for renewal.

Renkon had four shareholders – Suzanne Rees, her partner Peter Shipton, and a couple named Plunkett. It was incorporated as a vehicle for the four of them to lease the premises and operate the business. Their shareholdings were equal. They each gave personal guarantees to Ambrose as to Renkon's performance of its obligations under the lease.

Before the completion of Renkon's purchase, it became apparent that part of the land that it proposed to lease was burdened by a restrictive covenant which provided that no intoxicating liquor could be sold to the public on the affected land. The covenant was contained in a schedule of easements forming part of a sealed plan. Arrangements were initiated for a petition to amend the sealed plan so as to exempt the leased land from the operation of the covenant. For practical purposes it was up to Ambrose, as the landowner, to take steps to get the sealed plan amended. There was no reason to think that the petition would be unsuccessful since Ambrose apparently owned all the land to which the benefit of the covenant attached. As the date for the completion of the purchase approached, it became clear that it would not be possible to get the sealed plan amended in time. Renkon therefore entered into a supplementary agreement ("the covenant agreement") with Ambrose and Deming. In consideration of Renkon completing the purchase of the business and entering into the lease of the premises, Ambrose and Deming agreed that, if the Recorder of Titles did not amend the sealed plan to exempt the leased land from the operation of the covenant within two years after the completion of Renkon's purchase, then Ambrose would accept a surrender of the lease, and the two companies would pay Renkon $1 million, less an adjustment sum relating to plant, equipment and stock. With the covenant agreement in place, completion of Renkon's purchase of the business occurred on 30 June 1989. Renkon entered into the lease and it commenced to operate the business.

The appellants acted for Renkon and its shareholders in relation to the purchase of the business, the incorporation of Renkon, the leasing of the premises, and the making of the covenant agreement. Mr Doolan had carriage of all those matters.

Things did not go according to plan in relation to the exemption of the land from the operation of the covenant. The two years went by without the Recorder of Titles having amended the sealed plan. It seems that nobody noticed that until late-1992, more than a year after the two years expired.

At a much earlier stage in this litigation, Wright J held that the covenant agreement contained an implied term "that Renkon would exercise its right to call upon Ambrose to accept the surrender within a reasonable time of the triggering event on 1 July 1991": Ross Ambrose Group Pty Ltd v Renkon Pty Ltd, unreported, 72/1998, at 6. His Honour went on to express the view that a period of "about three months" would have been a reasonable time for the purposes of the implied term. The context of his Honour's judgment will be explained later in these reasons.

In May 1991 Ms Rees was the licensee of the premises under the Liquor and Accommodation Act 1990. In that capacity she received two notices, apparently from a delegate of the Commissioner for Licensing, both dated 13 May 1991, requiring a great deal of work to be done in relation to the premises, particularly as to the repair and replacement of plant and equipment. She was concerned about the cost of the required work.

The receipt of the two notices prompted Ms Rees to phone Mr Doolan and request advice. In their evidence before the learned trial judge, Ms Rees and Mr Doolan gave different versions of what Ms Rees asked. She gave evidence that she asked Mr Doolan, amongst other things, to see if there was a way out of the lease. Mr Doolan gave evidence that she did not ask him to do that. The learned trial judge rejected the evidence of Ms Rees as to that point, and found that she "did not specifically seek advice about avoiding the lease altogether". Renkon is not challenging that finding in these proceedings.

Her Honour made further findings, also unchallenged in these proceedings, that Ms Rees told Mr Doolan about the licensing notices, and asked him if there was any way she could avoid having to comply with them; that Mr Doolan agreed to look into the matter and get back to her; that he did not go to his archived file in relation to the 1989 transactions; and that he told her there was nothing she could do to avoid complying with the "orders" unless Ambrose had breached the lease. It is common ground that Mr Doolan did not give Ms Rees any advice as to the possibility that the sealed plan might not have been amended to exempt the land from the covenant, and that Renkon might consequently acquire a right to surrender its lease on 1 July 1991.

In September 1992, Renkon was provided with some advice by a Hobart solicitor. He informed Renkon's directors that the land was still burdened by the covenant, and reminded them of the terms of the covenant agreement. As a result of that advice, Renkon instructed Mr Doolan to write to Ambrose on its behalf, calling upon Ambrose to accept a surrender of the lease pursuant to the terms of the covenant agreement. Mr Doolan wrote accordingly on 30 September 1992, but Ambrose refused to agree to the surrender of the lease.

The lease required Renkon to make monthly payments of rent to Ambrose. After Ambrose refused to accept the surrender, Renkon unilaterally reduced the amount of its monthly rent payments. Ambrose commenced this litigation by bringing an action for arrears of rent. Renkon counterclaimed against Ambrose and Deming, seeking specific performance of the covenant agreement. Proceedings were taken against third parties and a fourth party in respect of that counterclaim, but nothing now turns on that.

The lease expired on 30 June 1993. Renkon vacated the premises and ceased to trade. Receivers were appointed. Renkon lost its business. Renkon owed money to its bank. Each of its four shareholders had given personal guarantees and mortgaged properties in order to secure the debt to the bank. The bank served notices on the shareholders on 10 August 1994, demanding payment of the sum outstanding. Apparently the mortgaged properties were subsequently sold by the bank.

There was a trial of Renkon's counterclaim, against Ambrose and Deming, in June 1998. Wright J dismissed that counterclaim. It was then that his Honour held that the covenant agreement contained an implied term whereby Renkon was entitled to surrender the lease only within a reasonable time after the two-year period expired. His Honour found that a reasonable time had expired before the letter of 30 September 1992 was written: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd (supra), at 6. Subsequently, in 1999, Renkon was ordered to pay costs to Ambrose in respect of the unsuccessful counterclaim. On 18 February 2002, judgment was entered by consent for Ambrose against Renkon and its four guarantors (its four shareholders) for $304,485.16 (comprising $116,867.28 for rent and $187,617.88 interest thereon) plus costs to be taxed.

Thereafter, the only claim that had not been determined was Renkon's claim against the appellants. Seven more years passed. The learned trial judge tried the issue as to negligence in 2009, and found in favour of Renkon: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd [2009] TASSC 86. Her Honour then tried the issues relating to damages in 2010, and gave judgment for $762,588 in favour of Renkon: Ross Ambrose Group Pty Ltd v Renkon Pty Ltd (No 3 – Quantum) [2010] TASSC 37.

Her Honour's reasoning and the parties' contentions

At the trial of the issue as to negligence in 2009, it was common ground that the appellants owed Renkon duties of care, both in contract and in tort. The critical question was whether the appellants had a duty to advise in relation to the covenant agreement, and the possibility that it might provide Renkon with a right to surrender the lease exercisable on or after 1 July 1991.

Her Honour held that, on the facts as found, Mr Doolan's duty of care required him to mention the covenant agreement to Ms Rees and "raise with her its potential as a means of meeting her objective", ie avoiding the cost of complying with the licensing notices. She also held that the appellants' duty of care required Mr Doolan to alert Renkon "to the possibilities available under the Covenant Agreement". She concluded that Mr Doolan had breached the duty of care by failing to do those things. The appellants now contend that her Honour erred in reaching that conclusion, and that their duties of care did not require Mr Doolan to do those things.

At the trial of the issues relating to damages, it was common ground that, if Renkon had exercised its rights under the covenant agreement in a timely fashion, Ambrose and Deming would have been obliged to pay it $820,505. That represented $1 million less the adjustment required by the covenant agreement. Renkon claimed that sum of $820,505 as one head of damage. Her Honour found that it was not inevitable that Renkon would have exercised its right of surrender, either within a reasonable time or at all. She did not make a finding as to whether or not she was satisfied on the balance of probabilities that Renkon would have exercised that right. She said that the issue to be determined was "what is the degree of probability that Renkon would have sought a surrender of the lease in or about July to September 1991 had it been alerted to its right under the Covenant Agreement in or about May 1991 to do so?" Her Honour reviewed the evidence as to the likelihood or otherwise of Renkon exercising that right. She also addressed the possibility of Renkon using that right as a bargaining tool for the purpose of negotiating with Ambrose for a more favourable deal. She rejected a submission that it was a certainty that Renkon would have exercised its right to surrender within a reasonable time, and said this:

"The evidence suggests that the possibility was far less than that, although it is simply not possible to determine with precision an actual percentage figure. In the circumstances, taking into account the various possibilities, I find that Renkon is entitled to recover the sum of $410,000 under this head of damages."

The appellants contend that her Honour erred in law by reasoning in that way. They contend that she was obliged to consider whether she was satisfied on the balance of probabilities that Renkon would have exercised its right to surrender while that right existed, and that she was obliged to dismiss Renkon's claim unless she was satisfied of that. Further, they contend that the figure of $410,000, which is slightly less than half of $820,505, indicates an unstated finding that the chances of Renkon having exercised its right to surrender at an appropriate time were less than 50 per cent, and that her Honour should therefore have concluded that the claim was not established on the balance of probabilities.

Renkon contends that her Honour took the correct approach in assessing damages for the loss of a chance, but contends that her Honour erred by awarding too little under this head. That is to say, Renkon contends that her Honour erred by underestimating the chances that it would have surrendered the lease when it was entitled to do so, or used it as a bargaining tool in negotiating a better arrangement with Ambrose.

Renkon claimed interest on the sum of $820,505 by way of damages in accordance with Hungerfords v Walker (1989) 171 CLR 125. The learned trial judge rejected that claim. Renkon now contends that her Honour erred in doing so, and that some damages should have been awarded under that head.

As we have said, Renkon was ordered in 1999 to pay costs to Ambrose in relation to its unsuccessful counterclaim. When her Honour assessed damages in 2010, no such payment had been made. Interest had therefore accrued on the unpaid costs pursuant to the Supreme Court Civil Procedure Act 1932, s165. Renkon claimed as damages the amount that it owed Ambrose for costs under the 1999 order, plus the interest thereon. Her Honour awarded $46,674 under this head. The inclusion of that amount in the damages assessed by her Honour is not challenged in these proceedings by the appellants.

Renkon also claimed as damages the amounts that it was required to pay Ambrose pursuant to the judgment of 18 February 2002, which had not been satisfied. It claimed the judgment sum of $304,485.16, a sum by way of costs, and the interest that had accrued under s165. Her Honour awarded $275,181 in respect of the judgment sum and interest thereon, and a further $30,733 in respect of the costs. These figures represented half of the amounts actually owing by Renkon to Ambrose, less a few cents that were rounded off. The appellants contend that these sums should not have been included in the award of damages, and that her Honour erred in including them.

The appellants pleaded that there was contributory negligence on the part of Renkon, but her Honour concluded that no finding of contributory negligence could be made. That conclusion has not been challenged in these proceedings.

The scope of the duties of care

Renkon's case against the appellants was based solely on the contention that, as a result of the telephone call from Ms Rees, Mr Doolan had a duty to provide advice in relation to the covenant agreement. There is no suggestion that, as a result of having acted for Renkon in relation to the purchase of the business, the taking of the lease, and the making of the covenant agreement, the appellants owed Renkon any continuing duty to provide information or advice concerning the proposed amendment of the sealed plan.

When the learned trial judge reviewed the evidence as to the critical telephone conversations between Ms Rees and Mr Doolan, there were three significant pieces of evidence that she did not mention:

·     In his evidence in chief as to Ms Rees' telephone enquiry, Mr Doolan said, "… she told me that she had received a number of Licensing Board orders and she enquired as to whether the lease was in effect and whether she was obliged to carry them out."
·     Under cross-examination, Mr Doolan was asked to say in his own words what Ms Rees asked him. He replied, "She asked me whether the lease was in place and whether she was obliged to comply with the orders."
·     Later in his cross-examination, Mr Doolan confirmed that he had given the following answer to an interrogatory about the conversation:
"Mr Doolan believes that Ms Rees may have phoned him and informed him that a number of orders had been made against the premises by the Licensing Commission [sic] and enquired if she was obliged to comply with them. Mr Doolan believes he informed her that the lease was in force and that they were probably the tenant's obligations under the lease and that they could only be avoided if the landlord were in breach of the lease."

The learned trial judge made no finding, one way or the other, as to whether Ms Rees asked Mr Doolan whether the lease was "in effect" or "in place". It is open to this Court to make a finding of fact to the effect that Ms Rees made some such enquiry: Supreme Court Civil Procedure Act, s47(2). The learned trial judge had the advantage of seeing and hearing the witnesses. She did not wholly accept the evidence of either Ms Rees or Mr Doolan as to what was said on the telephone. She rejected Ms Rees' evidence that she asked about getting out of the lease. She rejected Mr Doolan's evidence that there was only one telephone conversation, not two. However, Mr Doolan's evidence that Ms Rees enquired as to whether the lease was "in effect" or "in place" does not appear to be particularly controversial. He said that she asked that much. She said that she made a more specific enquiry. On the version of each of those witnesses, Ms Rees did not just ask whether she could avoid complying with the licensing notices, but also asked another question about the lease. Although this Court does not have the advantage of having heard or seen the witnesses, we are satisfied that Ms Rees, when speaking to Mr Doolan about the licensing notices, made an enquiry as to whether the lease was in force. The scope of the appellants' duties of care should be considered in the light of that finding.

The appellants did not charge for the advice that Mr Doolan provided. However it is common ground that, as a result of Ms Rees seeking advice from him in the course of his practice, and of him taking on the task of providing that advice, a contractual relationship came into existence between Renkon and the appellants. In an action against a solicitor for professional negligence, prima facie, the plaintiff may sue in either contract or tort, or both: Astley v Austrust Ltd (1999) 197 CLR 1 at 20. The principal judgment in that case was delivered by Gleeson CJ, McHugh, Gummow and Hayne JJ. At 22, their Honours held that contracts for professional services contain an implied promise to exercise reasonable care and skill in the performance of the relevant services, save that the parties to a contract can bargain away or limit that implied term, and their rights of action in tort.

Much has been written as to whether a solicitor's duty of care in tort can ever extend further than his or her contractual duty of care. In Hawkins v Clayton (1988) 164 CLR 539 at 579, Deane J said that the relationship of solicitor and client "may well give rise to a duty of care on the part of the solicitor which requires the taking of positive steps, beyond the specifically agreed professional task or function, to avoid a real and foreseeable risk of economic loss being sustained by the client." That comment was obiter. None of the other judges in that case dealt with that point. The New South Wales Court of Appeal applied that dictum in Waimond Pty Ltd v Byrne (1989) 18 NSWLR 642, holding that a solicitor had been negligent in failing to take a step that was outside the scope of his retainer.

In Heydon v NRMA Ltd (2000) 51 NSWLR 1, three senior judges from other States, sitting as acting judges of the New South Wales Court of Appeal in proceedings concerning a barrister and a firm of solicitors, considered whether there could ever be a "penumbral" duty of care, requiring the taking of a step outside the scope of the relevant retainer. It was alleged that the barrister and his instructing solicitors were negligent in failing to predict how the law might change or develop. At par[364], McPherson A-JA concluded that, as a result of the High Court's decision in Astley v Austrust Ltd (above), "it is no longer possible to say that there is a 'penumbral' duty in tort requiring a solicitor to advise on matters going beyond the limits of his or her retainer". Ormiston A-JA agreed: footnote 478 and par[678]. Malcolm A-JA discussed the issue at pars[143] – [148], but expressed no conclusion as to the question. At par[237] he concluded that the barrister had not been negligent, on the basis that there was no evidence that he had assumed a responsibility for making a prediction as to how the law might change or develop, and no evidence that his instructing solicitors or the client relied upon his opinion as involving any such prediction. The views of McPherson and Ormiston A-JJA expressed in that case are in direct conflict with the majority judgments in Waimond.

A detailed analysis of the New South Wales authorities was undertaken by Campbell JA in Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 at pars[267] – [294]. The proposition that a solicitor may owe a penumbral duty that extends beyond the scope of his or her retainer is now regarded in New South Wales as "doubtful": David v David [2009] NSWCA 8, per Allsop P, with whom Hodgson JA and Handley A-JA agreed, at par[76]; Dominic v Riz [2009] NSWCA 216, per Allsop P, with whom Hodgson and McColl JJA agreed, at pars[90] – [91].

The Victorian Court of Appeal touched on the question of possible penumbral duties in AJH Lawyers Pty Ltd v Hamo [2010] VSCA 222. Nettle JA, with whom Maxwell P agreed, referred with approval to both the judgment of Deane J in Hawkins v Clayton (above) and Waimond Pty Ltd v Byrne (above). His Honour said this (omitting footnotes):

"As Deane J said in Hawkins v Clayton, depending upon the circumstances, a solicitor may come under a duty to do more than simply perform the task defined by his instructions. A duty to warn may arise where circumstances give rise to a real and foreseeable risk of economic loss by the client or, in particular circumstances, even a person who was not a client but who may be adversely affected."

Those comments were obiter. Quite apart from a non-contractual duty to offer advice, a solicitor may have contractual duty to answer an unasked question. In Credit Lyonnais SA v Russell Jones & Walker [2002] EWHC 1310 (Ch), Laddie J held that a solicitor acting for a bank in relation to the termination of a lease had had a duty to provide unsought advice about a point that was critical to the success of the proposed transaction.

Because of the state of the law concerning a solicitor's duty of care in tort, it is desirable to consider the scope of the contractual duty of care in isolation at this stage.

Unless it is otherwise expressly agreed, the contract between a solicitor and a client contains an implied promise by the solicitor to exercise reasonable care and skill in the performance of the relevant services: Astley v Austrust Ltd (above) at 22. For the purposes of the law of tort, the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill: Rogers v Whitaker (1992) 175 CLR 479, at 487. There is no reason why a different standard of care should apply for the purposes of the law of contract, subject to any relevant contractual terms. In this case there were no contractual terms of relevance, and Mr Doolan exercised and professed to have the special skills of a solicitor.

There are a number of reported cases that support the proposition that the scope of a solicitor's duty of care depends, to some extent, on the nature of the client. In Carradine Properties Ltd v D J Freeman & Co (1982) 126 SJ 157, Donaldson LJ said the following:

" … the precise scope of that duty will depend inter alia upon the extent to which the client appears to need advice. An inexperienced client will need and be entitled to expect a solicitor to take a much broader view of the scope of his retainer and his duties than will be the case with an experienced client."

Those words do not appear verbatim in the report of the case in the Solicitors' Journal, which gives only a summary of the judgment. However they were quoted with approval by Peter Gibson LJ, with whom Hobhouse and Leggatt LJJ agreed, in National Home Loans Corporation v Giffen Couch & Archer [1998] 1 WLR 207 at 213.

In the Supreme Court of British Columbia, in Ormindale Holdings Ltd v Ray, Wolfe, Connel, Lightbody & Reynolds (1980) 116 DLR (3d) 346 at 357, Taylor J, said:

"While a lawyer might have to warn on consequences unknown to his client which may flow from acceptance of his advice if it proves to be wrong, he is not, I think, normally required to warn experienced business clients of the possibility that the opinion, although firmly held, may not in fact prevail. That follows inevitably from the fact that it is, as these plaintiffs must have known, a matter of professional judgment."

Mullighan J referred to this line of authority when considering the scope of a legal firm's duty of care in Austrust Pty Ltd v Astley (1993) 60 SASR 354 at 372. In that case a trustee company was suing the members of a firm of solicitors. After referring to the parties' contentions as to the scope of the firm's retainer, and the extent to which it required the firm to provide the client with advice, his Honour said:

"In considering these matters, it is appropriate to have regard to the experience and expertise of the plaintiff and what action it took independently of the defendants. These matters are also of importance in determining the nature and extent of the duty of care and whether Mr Astley was in breach of it. … The plaintiff had considerable experience as a trustee and in administering trusts in accordance with the instruments creating them."

His Honour went on to make findings as to the competence and experience of the plaintiff's staff.

In this case, Ms Rees gave evidence that she had been working at the Olde Tudor Motor Inn for three years as the marketing manager before the business was purchased by Renkon; that she looked after the front office, the marketing, and functions for Renkon; and that she was employed as the business development manager of the Launceston Country Club at the time of the 2009 trial. She gave evidence that two of Renkon's other shareholders, Mr and Mrs Plunkett, had worked at the Olde Tudor Motor Inn with her for a considerable period before June 1989; that Mr Plunkett was the bar manager and live-in manager after Renkon took over; and that Mrs Plunkett was the head of the housemaids. She said that Ambrose's general manager, Mr Anyon, was running the operation before Renkon's purchase. There was no evidence as to the commercial experience, if any, of the fourth director of Renkon, Mr Shipton, who was Ms Rees' partner. However, it seems clear that Renkon was by no means an experienced commercial client. It was an entity created for the purpose of a staff takeover of a suburban hotel/motel. It is clear from her evidence that Ms Rees had minimal experience in relation to commercial leases and the like.

Ms Rees' request for advice was imprecise and vague. She made it clear that she wanted to know whether there was any way that she could avoid having to comply with the licensing notices. But she also made a vague enquiry as to whether the lease was "in effect" or "in place". When she made that enquiry, she did not make it clear whether she wanted to make sure that Renkon's tenancy was not at risk, or whether she was interested in arranging for the lease to be terminated, or whether she was hoping there might be some opportunity for Renkon to renegotiate the terms of the lease. Those were all possibilities. There was evidence that the terms of the lease, especially in relation to expenditure by the tenant on capital works, were unusually onerous for Renkon.

It is clear from Mr Doolan's evidence that he was conscious that the lease would bind Renkon to carry out the work required by the licensing notices unless some reason could be found for Renkon to avoid having to comply with the lease. In his evidence as to what he told Ms Rees, Mr Doolan said, "I told her that the lease was in effect and that it was her obligation to do all the repairs and all the orders and that the only way she could avoid them would be if the landlord was in breach of the lease." A little later he said, in relation to the same conversation, "I would have given the advice that the only relief [sic] would be available if the landlord was in breach of the lease there may be some negotiations that could take place." His answer to an interrogatory quoted in par[27] above gives a similar version of what was said.

It is clear from the evidence of Mr Doolan and Ms Rees that Mr Doolan made no attempt to clarify or limit the scope of the matters upon which he was being asked to advise. As nothing was done to clarify or limit the scope of the retainer, it was his duty to provide thorough advice in response to the questions asked by Ms Rees. In order to deal thoroughly with her request for advice, he could have, within the scope of his firm's retainer, advised as to the following points:

·     The possibility that the notices were signed by a person who was not in fact a delegate of the Commissioner for Licensing.
·     The right to appeal to the Licensing Board under the Liquor and Accommodation Act, s211(f), and the merits or otherwise of such an appeal.
·     Whether or not the lease had been registered.
·     The fact that both Ambrose and Renkon were bound by the lease, even if it was not registered.
·     The possibility that the leased property had not been exempted from the operation of the restrictive covenant, that that might still be the position on 1 July 1991, and that it might therefore be possible to avoid having to comply with the licensing notices if Renkon wished to surrender the lease on or after that date.

In our view, the scope of the appellants' retainer was such that Mr Doolan was obliged to give advice as to the last of these points. As no such advice was given, there was a breach of the appellants' contractual duty of care. It follows that there was also a breach of the appellants' duty of care in tort. It is therefore not necessary to consider any question as to the existence of a "penumbral" duty of care in tort, or as to a contractual duty to answer an unasked question.

Ground 4 – Separate obligations of Ms Rees and Renkon

One of the appellants' grounds of appeal, ground 4, raises a contention that the learned trial judge should have made a finding that Ms Rees' obligations as licensee under the Liquor and Accommodation Act were separate from Renkon's repair obligations under the lease. It is true that there were two sets of separate obligations — Ms Rees' obligations under the Act and Renkon's contractual obligations under the lease. Under cl 1(z) of the lease, Renkon was obliged to comply with certain requirements if they were made by the "Licensing Board the Commissioner for Licensing or any officer of the Licensing Board". The learned trial judge did not refer to the fact that there were two otherwise separate sets of obligations, but there was no need for her to do so. The nature of the different obligations under the notices and the lease had no relevance to any issue relevant to the liability of the appellants or the assessment of damages. Ground 4 must therefore fail.

Ground 9 — Mr Adams' affidavit

On 14 November 1996 the solicitor for Renkon, Mr Adams, swore an affidavit for the purpose of an application to have the appellants joined as third parties. That affidavit contained hearsay evidence as to what advice Ms Rees sought from Mr Doolan. Mr Adams was not called as a witness at the trial. One of the appellants' grounds of appeal, ground 9, asserts that the learned trial judge erred in failing to draw an inference in accordance with Jones v Dunkel (1959) 101 CLR 298 — an inference that evidence from Mr Adams could not have helped Renkon — and in failing to adequately consider the affidavit when assessing the credibility of Ms Rees.

Counsel for Renkon made no oral submissions in relation to this ground, but did not formally abandon it. It is therefore necessary to deal with it. It has no merit. Mr Adams could not have given evidence at the trial as to any conversation between Ms Rees and Mr Doolan because such evidence would have been inadmissible hearsay. It follows that no inference adverse to Renkon could be drawn from the fact that he was not called. The learned trial judge preferred Ms Rees' evidence to that of Mr Doolan only in relation to the proposition that they had two telephone conversations, not one. There was nothing in Mr Adams' affidavit as to that point. It has not been demonstrated that paying greater attention to Mr Adams' affidavit could have brought about a result more favourable to the appellants. The appellants have not demonstrated that her Honour made any error in relation to the affidavit. Ground 9 must therefore fail.

Availability for damages for the loss of a chance

The learned trial judge awarded $410,000 damages in compensation for Renkon's lost opportunity to take advantage of the failure by Ambrose to have the covenant removed by 30 June 1991.

Her Honour found it was possible that, with advice from Mr Doolan that the opportunity was likely to arise after 30 June 1991, Renkon would have taken one of three steps. First, it might have given notice unconditionally to Ambrose to accept a surrender of the lease and pay to Renkon $1 million, subject to certain adjustments which, it was agreed at the trial, would have required payment of $820,505. Second, Renkon might have used the capacity to demand a surrender as a bargaining tool. Third, recognising that the failure to remove the covenant was of limited use as a bargaining tool and accepting that the business was continuing to be a good one, Renkon might have done nothing.

Her Honour found that each of those alternatives was a real possibility and held that Renkon was entitled to be compensated for the loss of the opportunity to take one of the first two steps, although the compensation was to be discounted to reflect the lack of certainty that Renkon would have taken either of those two steps. The judge found that there was no dispute that Ambrose had the capacity to pay $820,505.

The judge did not accept that there was a certainty that Renkon would have exercised its right to a surrender within a reasonable time, which her Honour found extended from 1 July 1991 to 30 September 1991. The possibility was far less than that but her Honour found it impossible to determine the chance as a precise percentage figure. Taking into account the various possibilities, she awarded Renkon $410,000 for what it had lost, a figure that was fractionally below half of what Ambrose would have had to pay Renkon if there had been an effective surrender pursuant to the covenant agreement.

As we have previously outlined, the appellants challenge Renkon's entitlement to damages for loss of opportunity. They argue that Renkon needed to, but did not, establish that it was more likely than not that they would have sought to surrender the lease. The appellants' grounds as to this issue are:

"8A
(a)The learned trial judge erred by identifying the issue to be determined by her before assessing damages as the degree of probability that Renkon would have sought a surrender of the lease in about July to September 1991.
(b)The learned trial judge ought to have identified the issue at that point as whether Renkon had shown, on the balance of probabilities, that it would have sought a surrender of the lease in about July to September 1991.
8BThe learned trial judge erred in that, having determined that Renkon had not shown, on the balance of probabilities, that it would have sought a surrender of the lease in or about July to September 1991, she proceeded to assess damages, rather than to order that judgment be entered for the appellants."

In its cross-appeal, Renkon complains that the trial judge was wrong to find that the degree of probability that Renkon would have exercised the right to surrender the lease was a little less than 50 per cent. In the cross-appeal the relevant grounds are as follows:

"1The learned trial judge erred in finding that the probability that the cross appellant would have exercised the right to surrender the lease had it been advised of the said right by the cross respondents in May 1991 was less than 50 per cent and in discounting the award of damages to the cross appellant accordingly.
2The learned trial judge erred in finding the cross appellant may or may not have exercised the rights it had under the covenant agreement in June 1991 had it been given accurate and timely advice as to those rights by the cross respondents in May 1991."

In examining what the trial judge said on these issues, we should mention the trial process of splitting the issues of liability and quantum, and how that was reflected in the two sets of reasons. In the first reasons, her Honour noted the parties' agreement that only the issue of liability would initially be determined. Those first reasons end with findings that the appellants owed a duty of care to Renkon and that they were in breach of that duty. A finding in favour of Renkon was made "as to the issue of liability". There was no mention of the issue of whether the breach had caused any loss or damage on the part of Renkon.

Her Honour's second reasons were expressed to deal only with the issue of quantum. However, early in those reasons under the heading "The dispute in these proceedings", her Honour described Renkon's case as being, that had Mr Doolan told them in or about May 1991 that, come July 1991, absent the removal of the covenant, Renkon could give notice of surrender in respect of the lease, they would have done so. The appellants' case was summarised as being that the court could not be satisfied that even had Mr Doolan advised of a potential entitlement to seek a surrender of the lease, Renkon would have sought surrender in July 1991, or even within the timeframe Wright J considered reasonable. Her Honour said: "Had they not sought a surrender within the identified timeframe, events could have unfolded largely as they eventually did, and it is likely the damage complained of would, in large part, have been suffered anyway. Hence the damage complained of was not as a consequence of the defendant's failure to properly advise." Those comments seem to relate to the question of causation of compensable loss.

The passages of particular relevance in the trial judge's second reasons are as follows:

"The issue to be determined must be, what is the degree of probability that Renkon would have sought a surrender of the lease in or about July to September 1991 had it been alerted to its rights under the Covenant Agreement in or about May 1991 to do so? We know none of this happened. Therefore, the Court can only have regard to the events which did occur, and determine, if possible, the probability of events having occurred in a different way.
Counsel for the plaintiffs submitted that it was 100 percent certain that, had the plaintiffs been alerted to the existence of the right to seek a surrender, that right would have been exercised within the appropriate time. Counsel for the defendants submitted it was highly improbable that would have occurred.
…
The plaintiffs were, in the middle of 1991 and in September 1992, operating a business that was trading well and was profitable but which, because Renkon had entered into an onerous lease as far as repair obligations were concerned, had ongoing repair costs. I infer that, notwithstanding those repair costs, the business, because it was making a profit, was capable of meeting all its expenses including those costs. The obligation to make repairs was a matter which was the subject of discussion with Mr Ambrose over this period as was, I infer, the payment of the level of rent which Renkon was obligated to pay. There was no evidence about the precise nature of the negotiations and whether, for example, Ms Rees was suggesting that Renkon would pay for the repairs, but the rent should be reduced. The fact of the matter was that Mr Ambrose was in the driver's seat, so to speak, as at June 1991, because Renkon was bound to repair and pay the rent. I would accept that Mr Ambrose's bargaining position might have been weakened after 1 July 1991 with the covenant still in place. However, as I have noted, that situation could have quickly altered.
It may have been that Renkon, had it been alert to the terms of the Covenant Agreement, might have, in any event, because the business was and had been doing so well, decided to keep going with it regardless. It may simply have been the passage of time which brought the plaintiffs to the position they eventually adopted in September 1992. On the other hand, that position may have been reached far earlier with knowledge of the position relating to the covenant.
As Evans J said in Wilson v State of Tasmania [1999] TASSC 145 at par[69] … 'It is, of course, not certain that my prognostications are correct. They relate to hypothetical events which may or may not have occurred ….'. In this case, the sentence would end 'regardless of the advice given by Mr Doolan'. In this case, it is possible that, with that advice, Renkon might have given notice unconditionally, used the capacity to do so as a bargaining tool or, recognizing that the failure to remove the covenant was of limited use as a bargaining tool and accepting that the business was continuing to be a good one, done nothing different to what it did. Each of these alternatives was a real possibility. Renkon is, in my view, entitled to be compensated for the loss of the opportunity to take one of the first two steps, although that compensation must be discounted to reflect the lack of certainty that it would have done so.
Damages claimed in par 1 of the particulars
There is no dispute that, had the right to surrender been exercised within a reasonable time, Ambrose would have had the capacity to pay the sum of $820,505 which is the sum the parties are agreed it would have had to pay. Any claim by Renkon to that sum needs however to be discounted to reflect the possibilities that I have identified. I do not accept the submission of counsel for the plaintiffs that there was an 'inexorable' inference to be drawn that Renkon would have, with 100 percent certainty, exercised its right to surrender within a reasonable time. The evidence suggests that the possibility was far less than that, although it is simply not possible to determine with precision an actual percentage figure. In the circumstances, taking into account the various possibilities, I find that Renkon is entitled to recover the sum of $410,000 under this head of damages."

It is, of course, well established that damages for breach of contract may be awarded for the loss of a chance or opportunity of more than speculative or negligible value. The existence of that chance must be established on the balance of probabilities. A relevant chance or opportunity includes an opportunity to avoid a detriment: Unit 11 Pty Ltd v Sharpe Partners Pty Ltd (2006) 150 FCR 405, at [34]. In Sellarsv Adelaide Petroleum NL (1994) 179 CLR 332, the High Court was concerned with damages under s52 of the Trade Practices Act 1974 (Cth), but discussed damages for loss of commercial opportunity both in the context of breach of contract and tort. Having referred to Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, and Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, Mason CJ, Dawson, Toohey and Gaudron JJ said, at 351:

"Unlike contract, loss or damage is the gist of the action for contravention of s. 52. Is this a convincing point of distinction? That, it seems to us, is the critical question.
The adoption of the Malec principle in the assessment of damages for personal injury for negligence would seem to deny the validity of such a distinction. But, in cases of that kind, the fact that the plaintiff has suffered some damage and therefore has a complete cause of action is normally established by evidence which satisfies the civil standard of proof."

After considering several authorities including Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149 – a case relied on by counsel for the appellants – their Honours, at 355, concluded that:

"Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. …
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage would be sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities." [Our emphasis]

The need to prove the existence of a chance or opportunity of some value, and its loss, has been subsequently confirmed on many occasions: see for instance Glenmont Investments Pty Ltd v O'Loughlin (No 2) (2000) 79 SASR 185, at 279; Rufo v Hosking (2004) 61 NSWLR 678; Price Higgins & Fidge v Drysdale [1996] 1 VR 346; Darvall McHutcheon v H K Frost Holdings Pty Ltd (2002) 4 VR 570 at [29]; Radosavljevic v Radin [2003] NSWCA 217, per Mason P, at [50] – [52]. In Tabet v Gett (2010) 240 CLR 537, Kiefel J discussed the difference between proof of damage in the causative sense, and what arises in the assessment process. Her Honour said:

"136 Different standards apply to proof of damage from those that are involved in the assessment of damages. Sellars v Adelaide Petroleum NL confirms that the general standard of proof is to be maintained with respect to the issue of causation and whether the plaintiff has suffered loss or damage (1994) 179 CLR 332 at 355 per Mason CJ, Dawson, Toohey and Gaudron JJ; at 367 per Brennan J. In relation to the assessment of damages, as was said in Malec v J C Hutton Pty Ltd, 'the hypothetical may be conjectured' (1990) 169 CLR 638 at 643 per Deane, Gaudron and McHugh JJ. The court may adjust its award to reflect the degree of probability of a loss eventuating. This follows from the requirement that the courts must do the best they can in estimating damages; mere difficulty in that regard is not permitted to render an award uncertain or impossible The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, citing Fink v Fink (1946) 74 CLR 127 at 143.
137 Thus in the case of the loss of a commercial opportunity, the plaintiff must first establish the fact of the loss, for example by reference to the fact that it had a commercial interest of value which is no longer available to be pursued because of the defendant's negligence. The damages assessed of that loss, the estimation of its value, reflect the chance, often expressed in a percentage, that the opportunity would have been pursued to a successful outcome. The award is proportionate in that sense."

Further, of direct concern in this case, it is also well established that where the realisation of an opportunity depends on a plaintiff's own decision to take it up, it must be proved on the balance of probabilities that it would have been taken up. Unless it is proved that a plaintiff would have acted on an opportunity, it cannot be said that the breach has caused any loss: Sellars v Adelaide Petroleum (above), at 361; Price Higgins & Fidge v Drysdale (above) at 355; G W Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47, at [29]; Australian Medic-Care Co Ltd v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501; State of New South Wales v Burton [2008] NSWCA 319, at par[25]; Lahoud v Lahoud [2009] NSWSC 623, at [116].

In Olympic Holdings v Lochel [2004] WASC 61, McClure J, at [121] – [123], succinctly summarised the law as to the general approach as follows:

"121     A plaintiff is entitled to damages for loss of any foreseeable chance or opportunity of benefit that can be causally linked to the breach. Recovery extends to the loss of a chance which was not promised (as in this case) but which would nevertheless have been created by performance of the contract: Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 91 – 92, 102, 118 – 120; Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332 at 349.
122      Damages for loss of a chance are recoverable if the loss is foreseeable as a probable result of the breach and are assessed by reference to the prospects of success. In this case the plaintiffs claim for the loss of a chance of earning a profit. A loss of a chance is compensable even if its realisation is unlikely, on the balance of probabilities. As stated by the High Court, unless the chance is so low as to be regarded as speculative – say less than one per cent – or so high as to be practically certain – say over 99 per cent – the court will take that chance into account in assessing the damages: Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638.
123      However, before reaching that stage it is necessary for the plaintiff to establish, on the balance of probabilities, the existence of the chance. There is authority to the effect that where realisation of the chance depends on a plaintiff's own decision to take it up, the plaintiffs must also establish on the balance of probabilities that it would have been taken up: G W Sinclair & Co Pty Ltd v Cocks [2001] VSCA 47."

The appellants submit that the trial judge interpreted the issue to be determined as being the degree of probability that Renkon would have sought a surrender of the lease in about July to September 1991 had it been alerted to its rights, and went on then to identify three possible courses of action which Renkon could have taken. One of those was to do nothing, which was not of course relevant. Each of the other two were said to be "a real possibility". The submission is that her Honour needed to be satisfied on the balance of probabilities that Renkon would have adopted one of these courses. The appellants argue that the trial judge did not consider this issue.

Extrapolating from the trial judge's findings as to the quantification of $410,000, the appellants argue that her Honour must have been satisfied that there was slightly less than a 50 per cent chance of Renkon exercising its right to surrender, and accordingly she could not have been satisfied on the balance of probabilities that this course would have been adopted. Indeed, the appellants argue that it is a clear indication that her Honour was not so satisfied.

Renkon argues that the trial judge's finding that each of the two courses open being "a real possibility", was tantamount to a finding on the balance of probabilities that a chance of some value had been lost. It argues that this particularly emerges from the finding that Renkon was entitled to be compensated for the loss of the opportunity to take one of the two steps, but noting that the compensation must be discounted to reflect the lack of certainty that it would have done so. Renkon argues that this is the correct approach. It submits that the extent of the discount was not an indicator of a lack of satisfaction to the requisite degree that a chance or opportunity of some value had been lost, but rather her Honour's adjustment of the award of damages to accord with her assessment of the degree of probability that either of the two alternatives she identified might not have been availed of at all.

In this respect, Renkon highlights the distinction between the causation issue and the evaluation issue, as articulated by Kiefel J in Tabet v Gett (above). Renkon also relies on what Young CJ and Kaye J said in Waribay Pty Ltd v Minter Ellison [1991] 2 VR 391, at 397:

"Once it is accepted that what is to be valued is a lost opportunity and it is shown that the opportunity has but a slight chance of success, say a 25 per cent chance, what has to be valued is the 25 per cent chance."

In this case, the first question which needed an answer before proceeding to the evaluation issue, was whether Renkon had lost an opportunity of some value. Subsumed within that question is the issue of whether Renkon had established that it was more likely than not that it would have taken up or pursued the opportunity. It is quite clear that the trial judge found that the opportunity to surrender the lease or utilise the right to do so was an opportunity of some value but a key point in the appeal is whether, despite the absence of an explicit statement, her Honour impliedly found on the balance of probabilities that Renkon would have taken up that opportunity, and thus established its loss as a result of the breach. The alternative position is that her Honour conflated issues of causation and evaluation, and that by inference, having found that there was a less than 50 per cent chance that the lease would have been surrendered, was not so satisfied. The intermediate position is that no actual relevant finding was made, in which case, counsel for the appellants accepted that this Court could make its own findings to the extent it felt able.

In our view, although it was not directly expressed, and there is room for some ambiguity, it is implicit in the trial judge's approach that her Honour found that Renkon had established that it was more likely than not that it would have pursued the opportunity afforded by the right to surrender the lease. This is so because:

·     earlier in the reasons (as previously set out), her Honour correctly described the plaintiff's case as being that had Mr Doolan told them in or about May 1991 that, come July 1991, absent the removal of the covenant, Renkon could give notice of surrender in respect of the lease, they would have done so;
·     her Honour later posed the question of what was the degree of probability that Renkon would have sought a surrender, and
·     she made a finding that two alternatives were open – each being "a real possibility" – with the stated result being that Renkon was entitled to compensation for the loss of opportunity to avail itself of one of those two possibilities, but with the compensation to be "discounted to reflect the lack of certainty that it would have done so".

If we are wrong about that, then we take the view that on the whole of the evidence, a finding on the balance of probabilities that Renkon would have sought to surrender the lease within the relevant time, or used the right in negotiations with Ambrose, was open and one which ought to have been made. The difficulty is that, oddly enough, the direct question of what Renkon would have done had it been advised of the opportunity was not asked.

The evidence to be considered primarily comes from Ms Rees. The whole of the evidence makes it clear that whilst perhaps not the alter ego of Renkon, she played a dominant role in its affairs. There was no direct evidence that in dealing with Mr Doolan and the Hobart solicitor she was acting with the authority of the company, but the inference is a compelling one, and the contrary was not put to her in cross-examination. There was no suggestion that when Ms Rees spoke in evidence of what her attitude was, it was not the corporate state of mind.

Ms Rees' evidence was that in contacting Mr Doolan she "was looking for a way out because the place was falling down around my ears". Her intention was to ask him if he could "find any loophole that I could – well we could get out of the business". Ms Rees said that if they could have got out of the business "we would have paid the bank back and I'd have got on with my life". Ms Rees described a number of building issues which were a progression of things that virtually started in 1989, and just kept continuing. She contacted the Hobart solicitor in September 1992 to have him go through the lease, because she was still having problems with the hotel, even though it was trading very well. The issue of repairs was an ongoing one and here was an underlying structural problem which was not the subject of any directions in the licensing notices. In cross-examination Ms Rees confirmed that she had rung the Hobart solicitor "Because I was still looking for a way out…". She said that she wanted to see if someone else "could find a loophole in the lease". She was asked what was she going to do if a loophole had been found. Her reply was that hopefully Ambrose would pay them back.

The trial judge also had evidence from two employees of the business; Heather Dubbeld and Gayle Murray. This evidence is detailed in the first reasons and appears generally to have been accepted by her Honour. The notices from a delegate of the Commissioner of Licensing seem to have followed an inspection by a licensing inspector. Ms Dubbeld was with the inspector and Ms Rees at the time of the inspection. Ms Dubbeld's evidence was that Ms Rees was absolutely appalled at the amount of things that needed to be fixed or altered, and told her that she was going to contact her lawyer to find out if there was a way of getting out of the lease because of the number of things that had been happening. In particular, Ms Rees made reference to the bad structural state of the building. Ms Dubbeld said that later she went into Ms Rees' office to find her in tears. She (Ms Rees) said she had just spoken to the lawyer who had said there was nothing that could be done. In cross-examination Ms Dubbeld confirmed that Ms Rees had wanted to see if there was a way to get out of the lease.

Ms Murray said her recollection of events was very clear as they all treated the business as though it was their own and it was very important to them. She said that Ms Rees said to her that she was going to ring her solicitors as she was "sick and tired of the place falling down around her ears and she wanted to find if they could get her out of the lease". A few days later Ms Rees made a comment about being sick of waiting and was going to ring Mr Doolan again. Shortly after that, Ms Murray found Ms Rees in tears, with Ms Rees reporting that apparently nothing could be done.

It will be recalled that in September 1992, quickly following the advice from the Hobart solicitor, Mr Doolan was instructed to write to Ambrose, calling upon him to accept the surrender of the lease pursuant to the terms of the covenant agreement. It is significant that as soon as Renkon was advised of the possibility of surrender, it pursued the option of which it had not previously been advised.

For the sake of completeness, we would observe that the finding that the opportunity loss was one of some value, was one which was open and rightly made. For those reasons, the appeal grounds are not made out.

As to the cross-appeal, Renkon argues that the trial judge did not identify the evidence supporting, or the basis for, the finding that the degree of possibility of Renkon surrendering the lease was far less than 100 per cent. The submission is that the evidence justified a finding that the chance should have been assessed at a much higher percentage than the inferred figure of about 50 per cent. As to this, Renkon relies on the body of the evidence to which we have just referred. In the evaluation stage of course, it was an assessment of the prospects of success of the pursuit of the opportunity which had to be made.

Assuming that the trial judge's focus was on the evaluation of the lost opportunity, having regard to this evidence and in the absence of reasons of her Honour, it is difficult to see how the 50 per cent discount was arrived at. It is of course reasonably possible, as the trial judge found, that rather than attempt to surrender the lease, Renkon would have used its capacity to surrender the lease as a bargaining tool. This may have achieved a result not as favourable as a surrender and a refund. It is possible that Renkon might have incurred legal costs, not recoverable from anyone, in exercising and enforcing its right to surrender, or in trying to negotiate a more favourable deal. But the degree of probability of negotiations being pursued, as distinct from what was actually done in September 1992, is not very high. The only evidence on which the argument as to the likelihood of that alternative is based, is that Renkon was making a profit, notwithstanding the difficulties with the need for repairs and maintenance.

In our opinion, the uncontradicted evidence of the three witnesses compelled a finding of a higher level. There may be some other adverse contingencies which need to be reflected in the assessment, but it is difficult to identify any one in particular which would have a significant impact in the assessment process. In our opinion, the opportunity lost should be ascribed a value of 75 per cent. On that basis, the cross-appeal should succeed and the award of damages under this head ought to be $615,378.75.

Renkon's claim for damages in the nature of interest

After the finding that Renkon was entitled to recover the sum of $410,000, the trial judge turned her attention to Renkon's claim that it was entitled to be paid damages in the nature of interest on the awarded amount, pursuant to the principles established by Hungerfordsv Walker (above). Basing its claim to such damages on the $820,505 it claimed Ambrose would have had to pay it under the covenant agreement, but did not pay because of Renkon's failure to call for a surrender of the lease within a reasonable time, Renkon argued that it should be awarded damages, assessed by reference to appropriate interest rates, for the loss of use of that money as a direct consequence of the appellant's breach of duty. Renkon pleaded in its statement of claim that had it not been deprived of the receipt and use of that money, it would have applied it in reduction of its borrowings in respect of which it was obliged to pay interest.

However, Renkon's particulars of what it claimed by way of Hungerfords damages were not predicated on the basis that the company had to pay interest on borrowings through not having been paid the $820,505. Instead, the particulars were based on lower rates of interest, being the interest Renkon would have been able to earn if it had invested the $820,505 from 30 September 1992. It was an agreed fact that the interest rates contained in the particulars were the rates that would have applied to monies held on deposit for the period since that date.

Renkon's particulars claimed damages by way of interest totalling $1,219,457, calculated from 30 September 1992 with interest capitalised every 12 months until the date of the particulars on 26 April 2010, and thereafter at a daily rate of $354.61 calculated on the basis of 6.6 per cent per annum on a capitalised total, as at 29 September 2009, of $1,961,086.

There was no evidence that Renkon would have invested the money, and only a little evidence about what would have happened if Ambrose had paid the $820,505 to Renkon on 30 September 1992. We will relate that evidence in due course.

The trial judge refused to award any damages under the Hungerfords heading, concluding that the evidence did not support an award. Her reasons were as follows:

"The only evidence about these issues came from Ms Rees. She told the Court that, to fund the purchase of the business, Renkon borrowed from the Commonwealth Bank and 'our properties were put up as guarantee for the loan'. An equitable mortgage was given to the bank to support borrowings of $1,250,000. After the receivers had moved in, the bank made demand of the guarantors for $1,127,385.62, of which $124,589 was said to be interest accrued on the borrowings. As far as Ms Rees was aware, Renkon's indebtedness was fully met as a result of the bank taking possession of three Gold Coast properties and Rodney Plunkett's home in respect of which security had been given to the bank. There was no evidence about what those properties were sold for and whether the bank was fully paid out or perhaps compromised its debt. Ms Rees' evidence was to the effect that, had Mr Ambrose given them their money back, 'I'd have paid the bank back and I would have got on with my life.'
It must flow from that evidence that, had Renkon exercised its rights in a timely fashion and received the sum of $820,505 from Ambrose, it would have paid that amount to the Commonwealth Bank in reduction of its debt. The only inference to be drawn is that Renkon would still have owed some few hundred thousand dollars to the bank, and individual directors would still have owned their properties. It is clearly not the case, and there is certainly no evidence to that effect that, had Renkon received the sum of $820,505 from Ambrose, it would have invested the sum and been paid interest of which it has been deprived. The figures set out in par2 of the particulars cannot in those circumstances be an accurate representation of any loss.
The submission from counsel for the defendants was that, given the paucity of evidence, the plaintiffs had not made out a proper case for damages under this heading at all.
Counsel for the plaintiffs submitted that the measure of damages set out in par2 of the particulars was not put forward as 'the' measure of damages but as 'a' measure. In effect, what counsel submitted was, Renkon did not get this money, it could not therefore reduce its debt, it incurred interest until such time as the guarantors' properties were sold, and the individual guarantors lost the capacity to obtain income by way of rent on those properties. I should do the best I can in those circumstances.
There were, I would have to say, gaping holes in the evidence. There was no evidence as to what Renkon's interest payments were between September 1992 and when it ceased to operate the business. There was no evidence of what income the business was generating in the same period. The only evidence was that a profit was still being made in September 1992 and, therefore, I can infer that whatever interest was due was being paid. I have no idea when that stopped. There is evidence that the Commonwealth Bank made demands for repayment of debt by notices dated 10 August 1994. Evidence was led from Ms Rees that a portion of the money demanded was interest. However, that information is not reflected in the demands nor was there any evidence to explain what interest that was, more particularly to what period it related. There was also no evidence about when the properties, the subject of the guarantees, were sold, and what further interest accrued on debt until capital repayments were made from those sales. As conceded by counsel for the plaintiffs, there was also no evidence to support his submission that, once those properties had been sold, individual guarantors lost the capacity to earn rent from them. One property, in any event, that of the Plunketts, was their home and not a rental property as I understood the evidence.
Another issue addressed by counsel for the plaintiffs arose out of submissions by counsel for the defendants which appeared to suggest that since the indebtedness of Renkon to the bank had been discharged by the sale of the guarantors' property, Renkon had no debt thereafter, and it could not be said it had therefore suffered from the loss of use of the money. This clearly cannot be entirely correct. Renkon was a company established by the individual directors for the purpose of the purchase of the business. The company borrowed money to fund the purchase. The directors were required to guarantee those borrowings. The directors, as guarantors, were called upon to surrender their properties over which the bank had taken security to support the guarantee. Those properties were sold. I infer from the evidence that none of the guarantors saw any surplus returned to them after those sales. The guarantors would, in the circumstances, be entitled to an indemnity from Renkon in respect of whatever they had paid to clear its indebtedness to the bank. Renkon would therefore have had a continuing obligation to the guarantors. (See commentary in The Modern Contract of Guarantee, 3rd ed, by O'Donovan and Phillips at 586 and following). Renkon could have been or might be sued by the guarantors.
While it might flow that Renkon could have been or might be sued by the guarantors who had lost their own properties, there was no evidence Renkon had been sued or that it had any ongoing obligation to pay interest to anyone. There was also no evidence as to Renkon's financial status at any stage in these proceedings. It must be remembered that the party making the claim against the defendants, as opposed to the loosely described plaintiffs in these proceedings, is Renkon. Any judgment amount will be payable to Renkon and not its individual directors, although they may ultimately have claims on any such money. The individual directors might have been said to have suffered from the loss of use of the money Renkon might have obtained. However, that is not the claim with which I am dealing. I am dealing with a claim by Renkon for loss of use of a sum of money
I am not satisfied that Renkon is entitled to any amount under this heading of damages."

Three grounds of Renkon's cross-appeal attack the refusal to award Hungerfords damages:

"3The learned trial judge erred in failing to be satisfied that the cross appellant was entitled to 'any amount' by way of an award of damages in the nature of interest under the principles in Hungerfords v Walker (1989) 171 CLR 125.
4Albeit that it involved a necessary element of speculation, the learned trial judge erred in failing to be satisfied that there was evidence upon which, 'doing the best she could', she could conclude that an award of damages in the nature of interest under the principles in Hungerfords v Walker (1989) 171 CLR 125 should be made.
5The learned trial judge erred in failing to find for the purposes of an award of damages in the nature of interest under the principles in Hungerfords v Walker (1989) 171 CLR 125 that the interest rates set out in the second column of paragraph 2 of the particulars of loss and damage (updated to 26 April 2010) and admitted in evidence by consent of the parties were an appropriate indicator of and a basis for assessment of, the loss and damage suffered by the cross appellant from the loss of use of money as a direct consequence of the breach of contract and negligence of the cross respondents."

In order to resolve the grounds the relevant evidence must again be considered. It came only from Ms Rees.

Her evidence was that Renkon was formed for the purpose of leasing and operating the hotel. At that time, there were four equal shareholders and directors, Ms Rees, Mr Shipton and Mr and Mrs Plunkett. Ms Rees and Mr and Mrs Plunkett were active in the operation of the business when it commenced to operate. At that time there was no discussion about what would happen if the company ceased to run the hotel.

On 13 July 1989, Renkon provided the Commonwealth Bank with an equitable mortgage in the sum of $1,250,000 to support borrowings. Ms Rees and Mr Shipton guaranteed the payment of those borrowings. Their guarantees were secured by mortgages over three Queensland properties they owned. Renkon's borrowings were also guaranteed by Mr and Mrs Plunkett. Their guarantees were secured over their Westbury home. Guarantees were also provided by Mr Plunkett's parents although, as will be seen, they appear to have been more limited.

Late in 1989, Mr Plunkett ceased to be involved in the conduct of the business arising out of an allegation of dishonesty in his relationship with the company. As a consequence, Mrs Plunkett also ceased to be involved in the conduct of the business. At that time there was no discussion concerning how they might recover their investments in Renkon. Mr and Mrs Plunkett remained shareholders and possibly directors, although Ms Rees was uncertain about the continuance of Mr Plunkett's directorship. In any event, they ceased having a day-to-day involvement in the company. She said that it was not until the meeting of the company with its advisers in September 1992, at which Mr and Mrs Plunkett attended, and it was decided to call on Ambrose to accept a surrender of the lease, that they had anything more to do with the operation of the company.

Ms Rees was asked whether there was any discussion at that meeting in September 1992 about what the company would do if Ambrose paid [the $820,505] on demand. She vaguely referred to the Plunketts, mentioned that money would have had to be distributed, added that they would have had to pay back the bank and concluded "and I'd have got on with my life, they'd have got on with their lives". She confirmed there was no discussion about what would be done if Ambrose made the payment, and added: "But what I would have done, as I said, would have paid the banks back – the bank back and that was the end of story – that's what I would have done."

Following the expiration of the hotel lease on 30 June 1993, a receiver of Renkon's business was appointed. By 10 August 1994, the receiver had finished his or her duties, and there remained owing to the Commonwealth Bank $1,127,385.62. Of that sum, $124,589 was interest that had accrued on the borrowings.

On that day, 10 August 1994, the bank issued separate demands to Ms Rees, Mr Shipton and Mr and Mrs Plunkett, each demanding payment of $1,127,385.62 and advising that if payment was not received by 24 August 1994, the bank would exercise its powers under the mortgages and sell their secured properties. Notices of demand were also issued to Mr Plunkett's parents demanding payment of $225,000 under the guarantee they had provided. Subsequently, the bank exercised its powers of sale under the mortgages and sold the three Queensland properties of Ms Rees and Mr Shipton and the Westbury property of Mr and Mrs Plunkett.

Having given that evidence, Ms Rees was asked whether Renkon owed the bank any more money or had it been paid out. She answered: "As far as I know the bank has accepted what they took."

She accepted that in June 1991, the company was trading profitably.

There was no other evidence relevant to the issue of Hungerfords damages.

Hungerfords v Walker concerned negligent discharge of duties by accountants that caused clients to pay more income tax than they should have done. The trial judge held that while the clients had no entitlement under the common law to interest on the damages they suffered, nevertheless they were entitled to recover damages for loss of use of the amounts overpaid. It was found that the clients would have put most of the overpaid tax into their business by paying off such of their loans as bore the highest interest, one of 20 percent, but because some of the money might have been used in the business in other ways, the damages for loss of use of the money were discounted to a sum less than the equivalent of 20 per cent interest.

On appeal, the High Court held that expenses incurred and opportunity costs arising from money being paid away or withheld as a result of breach of contract or negligence, were pecuniary losses for which the plaintiffs were entitled to be compensated by an award of damages. In the circumstances of the case, the damage resulting from the loss of use of the money was a foreseeable loss, necessarily within the contemplation of the parties, directly related to the breach of contract and negligence and therefore, recoverable under common law rules as to damages.

Such a loss may be suffered in more than one way. For example, it may be in the form of an incurred expense, such as the cost of borrowing to replace money paid away or withheld or the cost of money already borrowed which would have been retired if the payment or withholding had not occurred. On the other hand, it may be in the form of opportunity loss, that is, the lost opportunity to invest or maintain an investment because the money was paid out or withheld. See Hungerfords at 145 – 146, 152.

A critical distinction must be understood. It concerns the difference between an order that interest be paid upon an award of damages and an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by investment of the money, or which was in fact paid upon borrowings which otherwise would have been unnecessary or retired: Hungerfords, at 152. In this State, there is no lawful authority for the award of interest on damages as there is in the other States and Territories.

The trial judge rejected the claim to Hungerfords damages because she found that the evidence did not establish that Renkon had suffered a material loss. It is Renkon's argument that the evidence did establish the suffering of such a loss. Although accepting that the evidence was not particularly clear and did not prove a definite loss in a precise amount, Renkon's counsel submitted that there was sufficient evidence to justify an award under this heading.

Reliance was placed on the statements of the Full Court of South Australia in Duke Group Ltd v Pilmer (1999) 73 SASR 64, at pars[498], [499], as authority for the proposition that a court may engage in an element of speculation and that allowance must be made for difficulties of proof. It was argued that on the evidence the judge should have done the best she could and awarded damages in the nature of interest at the rates claimed.

What the court said in the passage in Duke Group Ltd v Pilmer which preceded those to which reference was just made, was that an award of damages under this head requires proof of loss, as well as reliance upon the established rule that the loss is not too remote. The court then went on to accept that in a given case, there may be difficulties of proof and referred with apparent approval to a remark of King CJ in Walker v Hungerfords (1987) 49 SASR 93, at 101, that a court might make an assessment as a matter of judgment on sparse material.

Nevertheless, it is well established that the suffering of a loss of the Hungerfords kind must be proved. For example, in Pooraka Holdings Pty Ltd v Participation Nominees Pty Ltd (1991) 58 SASR 184, at 196, King CJ made it clear that the onus is on the claimant to prove that such a loss was sustained and the extent of any such loss. See too Zelling AJ, at 212, with whom Mohr J agreed, at 197. Other pronouncements to a similar effect include those of Giles J in Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358, at 364, and in State Bank of New South Wales Ltd v Yee (1994) 33 NSWLR 618, at 636. See too Hutt v Cascade Brewery Coy Ltd [1991] TASSC 98 (judgment No 99/1991), per Wright J, at par[26], and Commonwealth v Chessell (1991) 101 ALR 182, per Sheppard J, at 189 – 190, and Wilcox J, at 191 – 192. Before an assessment can be made, appropriate findings must be capable of being made on the balance of probabilities from the evidence.

Up until the trial, Renkon's particulars expressed this item of damages upon the basis that Ambrose would have paid the $820,505 on 30 September 1992 if it had not been for the defendants' failure to properly advise. The Hungerfords claim was based on interest on that sum commencing on that date and continuing to the date of judgment. Following the trial but before judgment, Renkon sought to re-open its case for the purpose of re-opening its claim to Hungerfords damages on the basis that Ambrose would have paid the $820,505 on or about 1 July 1991, instead of 30 September 1992. Leave to do so was refused. For that reason, the appeal must be determined upon the basis that Ambrose would have paid the amount on 30 September 1992.

The evidence of Ms Rees made it clear that by that date, Mr and Mrs Plunkett, who between them owned half the company, were no longer active in its day-to-day operations and they had fallen out with her and presumably, Mr Shipton. On the evidence, she appears to have been the only shareholder and director who was actively engaging in the company's operations. Her evidence also made it clear that if Ambrose had accepted the surrender of the lease and paid Renkon the $820,505, she would have applied it towards the loan from the Commonwealth Bank and, as she put it, the Plunketts would "have got on with their lives" and she would "have got on with my life". The only finding open from that evidence was that without a hotel to operate and having regard to the falling out with the Plunketts, the company would have been wound-up. There was no suggestion in the evidence of any reason to prolong its life.

It was established by the evidence that on 10 August 1994, the bank demanded from the shareholders and directors, as guarantors of the loan, repayment by 24 August 1994 of what was then owing, being $1,002,796.62 capital and $124,589 interest, a total of $1,127,385.62. The evidence also established that after selling four properties owned by guarantors, the loan had been repaid or at least, the bank made no further claim. There was no evidence concerning when that state of affairs was reached, but it was open to find by way of inference that the sale of the properties would have taken a number of months at the very least. During that time interest owing on the loan would have continued to accrue and Renkon would have remained unpaid as to the $820,505 it would have used in repayment of part of the loan. While the money was withheld, it was suffering a pecuniary loss.

The Court finds those matters and it also finds that if the money had been paid by Ambrose to Renkon so that it could have been applied by Renkon in part repayment of the loan on or about 30 September 1992, thereafter the bank would have recovered the unpaid balance of the loan from one or more of the guarantors and Renkon would have been wound-up or allowed to lapse.

Because of lack of evidence, a precise finding as to when the bank in fact achieved satisfaction of the loan cannot be made. To sell the properties of the guarantors would have taken some time. Doing the best it can, the Court finds that it would not have occurred before the end of March 1995, two years six months after the $820,505 should have been paid on 30 September 1992, the date selected by Renkon for this part of its claim to damages.

For these reasons, the Court is satisfied that the trial judge erred by not awarding damages in the nature of interest on the amount it is assumed would have been paid by Ambrose to Renkon on 30 September 1992, if it was not for the defendants' breach of duty, until 31 March 1995. The method of calculating that interest, and the rates to be applied, are to be found in Renkon's particulars. The figures were the subject of agreement between the parties.

However, the Court is not persuaded that any greater sum should have been awarded and particularly not with regard to the period since 31 March 1995. The reasons of the trial judge amply described the absence of evidence that might have justified an award in respect of that period.

The Court's conclusion is that Renkon should be awarded damages of the Hungerfords kind calculated in accordance with the interest rates in the particulars and based on $615,378.75 from 30 September 1992 to 31 March 1995.

Renkon's claim for damages arising out of Ambrose's judgment of 18 February 2002

When Renkon's shareholders and directors belatedly realised in September 1992 that on 1 July 1991 they could have called on Ambrose to accept a surrender of the lease and had Ambrose and Deming pay what turned out to be $820,505, an attempt was made to do so then. When Ambrose refused to accept the surrender of the lease and pay the money, Renkon unilaterally reduced its monthly rental payments under the lease.

The evidence established that it did so on the advice of the appellants, and that much of the reduction represented a set-off based on damages along Hungerfords principles. The Court infers from the evidence that a substantial proportion of the reduction was a sum commensurate with the appellants' calculation of the damage Renkon was suffering through being kept out of the money it had demanded Ambrose pay to it in return for a surrender of the lease under the covenant agreement. The evidence is insufficient to permit a finding of what the precise amount of that money was perceived to be at that time.

Subsequently, Ambrose sued Renkon for the unpaid rent, and on 18 February 2002, judgment for Ambrose against Renkon was entered for $304,485.16, being $116,867.28 outstanding rent and $187,617.88 interest thereon. The material before the Court does not disclose the breakdown of the judgment sum between rent and interest.

In that judgment, it was ordered that Renkon pay Ambrose's costs of the action. The judge found that the costs amounted to $34,000. That finding is not attacked.

The judge included in the damages sums arising out of Renkon's liability to Ambrose to pay the judgment sum and the costs. First, she calculated that owing by way of statutory interest on the judgment sum to the date of her judgment on 11 August 2010 was $245,877.02, and that the total amount payable to Ambrose under the judgment, not including the aspect of costs, was $550,362.17. Adopting the same approach to discounting the claim to that sum as she had in respect of the earlier part of the claim, she included in the award of damages $275,181, once again fractionally less than half of what was claimed.

Second, with regard to the costs, her Honour calculated that statutory interest due to Ambrose on the costs to the date of her judgment was $27,467.47, so that with the base amount of $34,000, a total of $61,467.47 was then outstanding from Renkon to Ambrose in respect of the costs and statutory interest. Once again the same approach to discounting was applied, and $30,733 was included in the award, fractionally less than half of what was claimed.

The appellants appealed against the inclusion of both those sums in the damages. Ground 10 is the relevant ground of the appeal. Under it they argue that the judge failed to recognise Renkon's obligation to pay rent, and interest on arrears of rent was imposed on it by the terms of the lease, and that Renkon's failure to make those payments was not caused or contributed to by the breach of duty found to have been committed by them.

Relied on by the appellants was her Honour's finding that Renkon was still making a profit from operating the business in September 1992. The lease continued to operate until 30 June 1993, when it expired. Rent under the lease was not accruing thereafter. There is no evidence one way or the other concerning whether the business was still profitable when the lease expired. In particular, there was no evidence that Renkon was unable to pay the rent due under the lease because of the appellants' breach of duty to properly advise it in 1991. For those reasons, it was argued for the appellants that there was no basis for making an award.

Counsel for Renkon described as his over-arching submission that the appellants conceded these items of damage at the trial through their counsel, subject only to the question concerning the probability that Renkon would have exercised its right to surrender the lease in a timely fashion but for the appellants' breach of duty and the question whether the award of damages should be discounted, because, at best, Renkon had only established the loss of an opportunity to surrender the lease (as we said, the judge reduced all of the allowed items by about a half on that basis). Counsel claimed from the bar table that if that concession had not been made, Renkon would have led evidence about the profitability of the company.

As evidence of the concession, Renkon's counsel referred to the closing addresses of both counsel at the trial. Counsel for Renkon informed the trial judge that the amounts of the judgment sum and statutory interest on it were agreed. However, as to the costs, which Renkon claimed in particulars to amount to $34,000, its counsel said that Ambrose had not yet had the costs taxed and the parties had failed to agree on an appropriate sum. He asked the judge to make an order that would have the effect that the appellants indemnify Renkon for the costs once taxed and interest thereon.[1]
[1] It is not clear to the Court why $34,000 was the amount found by the trial judge notwithstanding that statement.

In his closing address, counsel for the appellants did not advance either of the arguments made to this Court, which are the basis of ground 10 of their appeal. Instead, all he submitted in the course of what Renkon's counsel referred to in reply as a discussion with the judge, was that if it was not a 100 per cent certainty that Renkon would have effectively surrendered the lease, then the damages "should be reduced accordingly, and that would also apply to the claim for indemnity that was put this morning".

In reply, counsel for Renkon referred, without demur from the appellants' counsel, that the latter had accepted, "subject to the hurdle that you discussed with him in argument", that what was claimed "are proper measures of my client's loss and in respect of which he makes no submission".

The Court should accept Renkon's "over-arching submission" concerning this ground. Counsel for the appellants made no submissions that it should not do so. He did not challenge that on behalf of the appellants at the trial he conceded the items of damage, subject only to what we have mentioned. Importantly, he did not challenge the claim of Renkon's counsel that if the items of damage had not been conceded, Renkon would have led additional evidence at the trial.

If a point is not taken at a trial and as a result, evidence is not led that could have affected the outcome of the matter, as a general rule it cannot be taken on appeal: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, at 438; Coulton v Holcombe (1986) 162 CLR 1, at 7; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; 77 ALJR 1598, at pars[51] – [52]. It is also a general rule that if a party has conceded or abandoned an argument at trial, it will not be permitted to raise it on appeal: Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231, at 241. Cogent grounds for permitting such a course need to be shown: O'Sullivan v Watson (1986) 7 NSWLR 693, at 699. None has been demonstrated.

Accordingly, ground 10 of the appeal is rejected by the Court. It is unnecessary to resolve the other arguments of counsel concerning it.

Because of the Court's finding on the balance of probabilities that the appellants' breach of duty caused Renkon not to seek to surrender the lease, or to use the right to do so in negotiations with Ambrose, in about July 1991, it must follow that the Court should also find that Renkon would not have acted in the way it did after September 1992 by unilaterally reducing the amount of its rental payments. It must also follow that the damages arising out of Ambrose's judgment of 18 February 2002 should not have been discounted at all. The full amounts of the judgment sum and costs, and interest thereon, should have been awarded to Renkon.

Outcome

For the foregoing reasons, the appeal is dismissed and the cross-appeal is allowed. The Court will hear further from counsel concerning what amounts should go to make up the judgment sum to be substituted.