G & M Dawson Pty Limited v Cripps & Ors (RLD)

[2004] NSWADTAP 38

Appeal Panel - Internal

CITATION:	G & M Dawson Pty Limited v Cripps & Ors (RLD) [2004] NSWADTAP 38
PARTIES:	APPELLANT G & M Dawson Pty Limited FIRST RESPONDENT Michael Lance Cripps, Executor of the Will of the late Kerrie Frances Cripps SECOND RESPONDENT Madonna Kaye Jones THIRD RESPONDENT H G & R Securities Pty Limited
FILE NUMBER:	049003
HEARING DATES:	18/03/2004
SUBMISSIONS CLOSED:	09/01/2004
DATE OF DECISION:	09/08/2004
DECISION UNDER APPEAL:	G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274
BEFORE:	Chesterman M - ADCJ (Deputy President); Rickards K - Judicial Member; Weule B - Non Judicial Member
CATCHWORDS:	application of common law test - leave to extend to the merits
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	025079
DATE OF DECISION UNDER APPEAL:	12/23/2003
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Real Property Act 1900 Trade Practices Act 1974 (Cth)
CASES CITED:	Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 French v Sydney Turf Club Ltd (No 2) [2003] NSWADTAP 54 G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274 Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 Hoogerdyk v Condon (1990) 22 NSWLR 171 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 South Australia v Johnson (1982) 42 ALR 161 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
REPRESENTATION:	APPELLANT S Reuben, barrister FIRST AND SECOND RESPONDENT S Epstein SC, barrister THIRD RESPONDENT C Champion, barrister
ORDERS:	1. Leave is granted to the Appellant to substitute Michael Lance Cripps, as executor of the will of the late Kerrie Frances Cripps, in her place as the First Respondent to this appeal; 2. The appeal is allowed; 3. Order 1 made by the Tribunal on 23 December 2003 is set aside, and in its place it is ordered that the First and Second Respondents are jointly and severally liable to pay to the Appellant the amount of $105,115.00, less any amount that has already been paid in satisfaction of the Tribunal’s Order; 4. Unless within 28 days one of the parties files a written submission seeking costs, there will be no order for the costs of the appeal. If a submission is filed, the opposing party or parties must file any submission in reply within a further 14 days. The matter will be determined on the papers unless a party seeks to be heard; 5. The case is remitted to the Tribunal as constituted at first instance for determination of the following issues: (a) the costs of the hearing at first instance and (b) interest on the damages awarded

Introduction

1 In this appeal, the Appellant, G & M Dawson Pty Limited (hereafter ‘Dawson’), challenged one aspect only of the decision of the Tribunal, constituted by Mr S Montgomery, Judicial Member, in G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274.

2 Dawson contended that the Tribunal erred in law in holding that it was not entitled to recover damages from the First and Second Respondents to its application in the proceedings, Kerrie Frances Cripps and Madonna Kaye Jones, under one of several heads that it had included in its claim. It also sought leave from the Appeal Panel under s 113(2)(b) of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’) for the appeal to extend to the merits.

3 On behalf of the Second Respondent, it was argued that the grounds of appeal put forward were unsustainable and furthermore did not allege an error of law so as to justify the granting of leave under s 113(2)(b).

4 The Third Respondent, HG & R Securities Pty Ltd (hereafter ‘HGR’), entered an appearance but did not participate in the appeal.

5 Before the conclusion of the hearing at first instance, the Tribunal was notified that the First Respondent, Kerrie Frances Cripps, had died. Its judgment nonetheless included an award of damages against her.

6 At the time when this appeal was heard, probate of Ms Cripps’ will had not been granted. Mr Epstein, who appeared for the Second Respondent, indicated that he had also been retained by the executor named in the will. He gave undertakings that he would notify the Registry as to (a) the granting of probate of the will, (b) the name of the legal personal representative of Ms Cripps and (c) whether the legal personal representative wished to add any submissions to those advanced by him at the hearing on behalf of the Second Respondent.

7 On 25 June 2004, probate of the will of the late Kerrie Frances Cripps was granted to Michael Lance Cripps as executor. By a letter dated 3 August 2004 to the Registry, the solicitors for Dawson applied, as its counsel had foreshadowed at the hearing, for leave to substitute Mr Cripps, in his capacity as executor, as the First Respondent to the appeal in place of the late Ms Cripps.

8 There being no expressed opposition to this application and no apparent ground on which it might be resisted, we make an order to this effect.

9 By a letter dated 1 September 2004 faxed to the Registry, the solicitors for the First Respondent indicated that the First Respondent did not wish to make any submissions to us in addition to those already advanced on behalf of the Second Respondent.

10 The judgment at first instance dealt with numerous issues, most of which did not have to be considered in this appeal. For present purposes, it is sufficient to outline the Tribunal’s principal findings and the main features of its judgment, before then proceeding to examine the particular section of the judgment that was challenged before us.

11 In conformity with the terminology of the judgment at first instance, we will refer to the First and Second Respondents, as they were prior to the substitution of Mr Michael Cripps for the late Ms Kerrie Cripps, as ‘Cripps & Jones’.

Relevant findings of the Tribunal

12 Under a retail shop lease dated 20 November 1991, Dawson was the lessee of premises at Shop 1 Eton Arcade, 754-760 Princes Highway, Sutherland (‘the Premises’). This lease and its options for renewal terminated on 20 July 1998, but Dawson remained in possession. The freehold land on which the Premises are located (‘the Property’) was registered under the Real Property Act 1900. Dawson had lodged a caveat on the title in respect of its leasehold interest.

13 As the mortgagee in possession of the Property, HGR was the lessor. By a contract of sale dated 21 September 2000, HGR agreed to sell the Property to Cripps & Jones.

14 Dawson and HGR commenced negotiations with respect to a new lease. By an instrument dated 3 November 2000 (‘the Lease’), Dawson and HGR purported to enter into a lease of the Premises for a term of 3 years commencing on 16 June 2000 and terminating on 15 June 2003, with an option to renew for a period of 3 years.

15 Clause 11.4 of the Lease required the landlord to ensure that the Lease was registered. On or about 17 October 2000 Dawson forwarded the duly executed Lease together with a cheque in payment of stamp duty to HGR’s solicitors, Alan Brown & Co (‘Brown’), so that they might attend to its registration of the Lease.

16 At Brown’s request, Dawson furnished a Withdrawal of Caveat in respect of the Lease on 31 October 2000. The Withdrawal of Caveat was to be held by Brown in escrow pending confirmation that HGR had signed the Lease and that the Lease would be registered on settlement.

17 The transfer of the Property to Cripps & Jones and a mortgage of it to an incoming mortgagee, Westpac Bank Ltd, were registered. The Lease, however, was never registered.

18 On 31 May 2002, Dawson entered an agreement (‘the Kilbane Agreement’) to sell its business to John Anthony Kilbane and Tanya Gaye Kilbane (‘Kilbane’). The contract price was $130,000.00. Clause 29 of the Kilbane Agreement provided that the sale was to be subject to the existing lease. A copy of the Lease was attached to the contract. Clause 29.4 of the Agreement permitted Kilbane to rescind the agreement if the landlord did not consent to the assignment of the Lease.

19 On 3 June 2002, Dawson sought the consent of Cripps & Jones to this assignment. It also asked about their requirements regarding the assignment. Holt & Allen, who were solicitors for Cripps & Jones, subsequently advised that there was no lease in registrable form and that an assignment was not permissible.

20 By a letter dated 27 June 2002, Kilbane's solicitors advised Dawson that they would rescind the contract if the assignment of the Lease was not received by 28 June. The assignment was not received and Kilbane rescinded the contract.

21 Dawson subsequently entered an agreement to sell its business to Mr Qing Yao Song for a contract price of $28,000. That agreement was dated 7 April 2003.

22 The principal orders that Dawson sought in its application to the Tribunal were (a) a declaration that it had obtained a valid and subsisting lease of the Premises, embodying the terms set out above at [14], (b) a declaration that Cripps & Jones were in breach of the Lease in unreasonably withholding their consent to the assignment of the Lease to Kilbane, (c) awards of damages against Cripps & Jones and against HGR for their respective failures to register the Lease and (d) an award of damages against Cripps & Jones for their unreasonable withholding of consent to the assignment.

23 HGR filed a cross claim seeking orders against Cripps & Jones to the extent of any liability found against it.

24 The Tribunal held (G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274 at [39]) that under Clause 11.4 of the Lease HGR had an obligation to ensure that it was registered, but that under provisions of the contract of sale of the Property to Cripps & Jones, this obligation was shifted from HGR to Cripps & Jones (see the judgment at [46]).

25 The Tribunal went on to hold that, having regard to the fact that Dawson furnished its Withdrawal of Caveat to permit registration of Cripps & Jones as proprietors, the failure of Cripps & Jones to acknowledge that it had an assignable lease constituted ‘equitable fraud’, falling within an express exception to the principle of indefeasibility of the title of a registered proprietor contained in s 42 of the Real Property Act (see [50]). It followed that Dawson’s unregistered leasehold interest was valid and subsisting and could be asserted against the registered interest of Cripps & Jones (see [63 – 64]).

26 The Tribunal held further, at [73], that Cripps & Jones were not entitled to withhold consent to the assignment of the Lease and that both on this account and by virtue of their failure to register the Lease they were liable to pay damages to Dawson for the losses ‘directly attributable to these failures’ (see [75]).

27 At [79], the Tribunal held that the damages payable by Cripps & Jones to Dawson should include an amount of $3,115.00, being the legal costs and disbursements that Dawson incurred on the failed sale to Kilbane.

28 At [81 – 88], it rejected Dawson’s claim to recover in addition an amount of $102,000.00, being the difference between the price stipulated in the contract to sell Dawson’s business to Kilbane ($130,000.00) and the price stipulated in the contract to sell the business to Mr Qing Yao Song ($28,000.00).

29 At [89 – 101], the Tribunal rejected Dawson’s claim for damages representing the costs of running the business between 1 July 2002, a date shortly after the rescission of its contract with Kilbane, and 30 April 2003, which was about four weeks after the date of its contract with Mr Qing Yao Song.

30 In the result, Cripps & Jones were ordered, at [102 – 103], to pay to Dawson the amount of $3,115.00 on account of legal costs and disbursements incurred on the failed sale to Kilbane, together with any additional sum that might be awarded, following further submissions, by way of interest and costs.

31 The Tribunal’s rulings in relation to HGR (see [65]) were as follows: (a) that it had failed to satisfy its obligation under Clause 11.4 of the Lease to ensure that the Lease was registered; (b) that Cripps & Jones had however accepted responsibility for the registration, which was a matter clearly within the control of their solicitors; and (c) that accordingly HGR should succeed in its cross claim seeking orders against Cripps & Jones to the extent of any liability found against it. The Tribunal did not make any order requiring HGR to pay damages to Dawson by virtue of its failure to ensure registration of the Lease.

The issues in this appeal

32 In this appeal, the only ruling challenged by Dawson was the Tribunal’s decision not to include in the award of damages against Cripps & Jones an amount of $102,000.00, representing the difference between the price that Kilbane would have paid for the business if the sale to it had proceeded and the price stipulated in the contract for sale to Mr Qing Yao Song.

33 It is convenient here to reproduce in full the passage in the Tribunal’s judgment dealing with this issue:-

82 There is no doubt that Kilbane agreed to purchase the business inclusive of equipment for a figure of $130,000.00. It is equally clear that the price that Kilbane was prepared to pay was inclusive of stock and that no amount was included for goodwill. The clear evidence in this case was there was no goodwill attaching to the business. Between the time of the sale to Kilbane and the time of the sale to Mr Song the value of the stock had dropped significantly. Dawson submits that the valuation evidence was clear and consistent, and that it justifies the fall-off in value in respect of the photographic equipment. Further, Dawson’s ability to sell the business was affected by the uncertainty as to whether any assignment of the Lease was possible. Consequently a contract price of only $28,000 was possible at the date that the contract to Mr Song occurred.

83 Mr Robertson submits that the damages sought by Dawson are too remote. The damage that Dawson claims is the loss of the opportunity to realise the value of its equipment at a high price in June 2000. He argues that it is clear from both the Kilbane Agreement and the agreement for sale to Mr Song and from other evidence going to the value of the equipment that the business itself had no value at all at 31 May 2002 or at 8 April 2003. What was being sold to Mr Kilbane and to Mr Song was the equipment. Mr Robertson submits that that is damage that is too remote from a breach of a covenant in relation to an assignment of the Lease.

84 In support of that submission Mr Robertson referred to the principles set out in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145 and comments in relation to that decision by McHugh J in Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. He submitted that the proposition in Hadley v Baxendale is that there are two types of damages that are recoverable in a suit for breach of contract. One is damages as may fairly and reasonably be considered as arising naturally, i.e., according to the usual course of things from such breach of contract itself, or such as may reasonable be supposed to have been in the contemplation of both parties at the time they made the contract as a probable result of the breach of it.

85 Mr Robertson submits that the second limb, that is, what was in the contemplations of parties, really can’t assist Dawson. It would not be reasonably supposed that the parties entering into a lease in November 2000 would have anticipated that a breach of the terms of that lease might result in the lessee losing the opportunity to sell a piece of equipment that the lessee was in the course of acquiring on hire purchase two years later.

86 Further, in Mr Robertson’s submission, there is no basis upon which it could be said that such damage may fairly and reasonably be considered as arising naturally according to the usual course of things from a breach of contract. The breach of contract of a covenant to assign might be apprehended as likely to give rise to the loss of a contract of sale of the business but not a loss of the opportunity to sell equipment at a significant value. The loss of the opportunity to sell the business is not what caused the damage. It’s the loss of the opportunity to sell the equipment at a particularly good price in June 2002.

87 In Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 McHugh J said at pages 365 – 366:

“The actual decisions in Hadley v Baxendale and Victoria Laundry (Windsor) Ltd v Newman Industries Ltd bear out the proposition that the contemplation test limits the area of potential liability. For it was surely reasonably foreseeable as a serious possibility that the millshaft was required for the operation of the mill and that a launderer and dyer might have special contracts with a lucrative profit margin. Yet the losses of the plaintiffs arising from those circumstances were not recoverable.

An important matter in ascertaining whether the loss or damage is too remote is the extent to which the parties may be taken to have contemplated the events giving rise to that loss or damage. The parties need not contemplate the degree or extent of the loss or damage suffered: Wroth v Tyler [1974] Ch 30 at 61-62; H Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd at 813 and South Coast Basalt Pty Ltd v R W Miller and Co Pty Ltd [1981] 1 NSWLR 356 at 364. Nor need they contemplate the precise details of the events giving rise to the loss. It is sufficient that they contemplate the kind or type of loss or damage suffered.

The most difficult question in determining the relevant kind of damage concerns the level of classification of the damage which the parties must have contemplated. Clearly the level must not be so high that the parties are required to contemplate the very loss in question or the precise manner of its occurrence. Nor must it be so low that any loss or damage, no matter how unusual in nature or occurrence, would fall within the classification.”

88 I agree with Mr Robertson’s submissions. There was no goodwill attaching to this business. What Dawson did was to sell the stock including the equipment, which had lost a significant portion of its former value. In my view, the loss that Dawson sustained because of the difference in the Contract price to Kilbane and the contract price to Mr Qing Yao Song is attributable to the loss of the opportunity to sell equipment. I do not accept that the parties may be taken to have contemplated that kind or type of loss or damage. In my view it is too remote. Accordingly, this aspect of the claim must fail.

34 The written submission of Mr Reuben, counsel for Dawson, addressed issues of causation in the context of an action for damages for breach of contract. But we do not interpret the Tribunal as having held, either in these paragraphs or elsewhere in its judgment, that the failures of Cripps & Jones to register the Lease and to consent to the assignment to Kilbane did not cause or contribute to Dawson’s loss of the opportunity to complete this assignment and the accompanying sale.

35 The sole reason why the Tribunal held that Dawson could not recover damages in respect of this loss was instead that, in the Tribunal’s opinion, it was of a kind or type that was, according to the relevant test to be applied, too remote.

36 As summarised by the Tribunal at [84], this test, stemming from the leading case of Hadley v Baxendale (1854) 9 Exch 341, provides that the damages to be awarded for breach of a contract are to be confined to two types of loss. These are first, for losses of a type that ‘may fairly and reasonably be considered as arising naturally, i.e., according to the usual course of things from such breach of contract itself’ and secondly, for such losses ‘as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as a probable result of the breach of it’.

37 Neither Mr Reuben nor Mr Epstein, counsel for the First and Second Respondents, disputed this general statement of principle.

38 Mr Reuben submitted first, however, that the Tribunal failed to take due account of the observations on the Hadley v Baxendale test contained in the passage from Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 that it quoted in its judgment. In particular, in applying the second limb of this test, it failed to give due weight to the statement by McHugh JA that the parties need not ‘contemplate the precise details of the events giving rise to the loss’. McHugh JA said that it was instead ‘sufficient that they contemplate the kind or type of loss or damage suffered’.

39 Mr Reuben argued that the Tribunal’s error in this regard arose from its having drawn a distinction, at [86], between the loss of an opportunity to complete a contract of sale of the business and the loss of an opportunity to sell the equipment of the business, and having treated the latter ‘kind or type of loss’ as the material one in applying the criteria of remoteness of damage. The Tribunal held that a loss of the latter kind would not have been within the contemplation of the parties to the Lease as a consequence of a breach of the covenant to permit an assignment, though a loss of the former kind might well have been.

40 To draw and act upon this distinction was, in Mr Reuben’s submission, to commit the error of asking whether the parties could reasonably have been expected to have contemplated ‘the precise details of the events giving rise to the loss’.

41 The correct approach to be applied, he submitted, was instead to consider whether it could reasonably be supposed that the parties, at the time of entering the Lease, would have contemplated that a failure by Cripps & Jones, in breach of the Lease, to consent to an assignment of the Lease by Dawson might cause Dawson to suffer the loss of an opportunity to sell its business.

42 In so categorising Dawson’s loss as the deprivation of an opportunity to acquire a commercial benefit, Mr Reuben relied on statements of principle of the High Court in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 91-92 (Mason CJ and Dawson J) and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 349 (Mason CJ, Dawson, Toohey and Gaudron JJ), 361-364 (Brennan J). He drew attention specifically to the following statement of Brennan J in Sellars, at 362:-

…the loss of a mere opportunity to acquire a benefit is not in itself a loss, but the loss of the benefit will be such a loss if the plaintiff proves that he could and would have taken the opportunity and that the benefit would then have been yielded.

43 Although made with specific reference to the assessment of damages under s 82(1) of the Trade Practices Act 1974 (Cth), Brennan J indicated ((1994) 179 CLR 332 at 364) that it was equally applicable to the assessment of damages for breach of contract. He said also at 364 that an opportunity can be held ‘valuable’, and therefore provide the basis for an award of damages, so long as it ‘offers a substantial, and not merely speculative, prospect’ of acquiring a benefit or avoiding a detriment.

44 Mr Reuben submitted that whereas in these two High Court cases the Court was required to assess the probability or possibility of the relevant benefit materialising and to consider, in the light of that assessment, whether the damages awarded should be discounted, these things did not have to be done in the present case. What Dawson lost was, he said, the certain benefit of completing the sale of its business to Kilbane. But for the breach of contract by Cripps & Jones, it would have availed itself of this commercial opportunity.

45 Mr Reuben’s argument included some subsidiary propositions, two of which should be mentioned.

46 First, he maintained that since the Tribunal had characterised the conduct of Cripps & Jones as ‘equitable fraud’, this conduct fell within the principle that a fraudulent defendant was liable for all damage caused by his or her fraud and could not be permitted to complain that any such damage was not reasonably foreseeable. He relied in this connection on the decision of the High Court in South Australia v Johnson (1982) 42 ALR 161.

47 Secondly, he submitted that, having regard to the broad characterisation given to goodwill in the judgment of Young J in Hoogerdyk v Condon (1990) 22 NSWLR 171 at 175-177, the Tribunal had no evidence sufficient to warrant its conclusion that in the sale of Dawson’s business to Kilbane the goodwill was of no value. Although the contract contained a stipulation to this effect, it was nonetheless headed ‘contract for the sale of a business’ and any apportionment within it of the sale price between equipment and goodwill did not in any way bind the Tribunal. Furthermore, although at [82] the Tribunal stated that stock was included in the price, an examination of the contract showed that this was not the case. Accordingly, if in fact the goodwill had no value, it followed that a sale of the business (with stock excluded) would be substantially equivalent to a sale of the equipment. In this situation, the distinction between the two, on which the Tribunal relied significantly, was a meaningless one.

48 Finally, Mr Reuben submitted that the principal errors that he had identified in the Tribunal’s judgment were errors of law. Accordingly, if this were necessary to dispose of the case, the Tribunal could and should grant leave under s 113(2)(b) of the ADT Act for the appeal to extend to the merits.

The submissions by the First and Second Respondents

49 Mr Epstein placed significant reliance on the Court of Appeal case of Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. He acknowledged that the primary ground of the decision of McHugh and Mahoney JJA, who formed the majority, was that of causation. But he submitted that the ruling and observations on remoteness contained in McHugh JA’s judgment were of direct relevance in the present appeal and should be followed.

50 In that case, Cambridge Credit, through its receiver, sued its former auditors in negligence. It alleged that if the auditors, in auditing its accounts in 1971, had drawn attention, as they should have done, to its failure to make certain provisions in the accounts, it would most likely have gone into receivership at that time. By the time, however, that a receiver was appointed in 1974, the balance of its liabilities over its assets had increased by the massive amount of $145 million. The auditors argued that a number of factors had conspired to cause this: in particular, decisions by Cambridge Credit between 1971 and 1974 to expand its borrowings and its investment in real estate and a major collapse in the real estate market in 1973-74, brought about by government economic policies.

51 Mahoney and McHugh JJA treated these factors, not the negligence of the auditors, as the true causes of the losses claimed. McHugh JA held also that the collapse of the real estate market constituted a novus actus interveniens.

52 It was in the context of this factual situation that McHugh JA expressed the opinion, by way of obiter dicta, that the loss claimed was too remote. He said at 367 that this loss, seen as a whole, did not belong to ‘the kind of loss or damage which the parties would have contemplated as being a serious possibility of occurring’. He considered it of major importance that no loss or damage was suffered until 1973 or 1974. At 368, he referred to the deterioration in the economic situation as ‘spectacular’ to an extent experienced by few countries and added that there were in fact ‘a number of independent causal chains leading to’ the losses suffered.

53 Mahoney JA chose not to express an opinion on the issue of remoteness. Implicitly, Glass JA, who was in dissent, did not consider the loss for which Cambridge Credit claimed damages to have been too remote.

54 The gist of Mr Epstein’s argument was (a) that the Tribunal had appropriately characterised the loss suffered by Dawson through Kilbane’s rescission of the contract of sale as a loss arising from the rapid and dramatic depreciation of the value of the equipment and (b) that, adopting the approach taken by McHugh JA to broadly comparable facts, the Tribunal’s conclusion was correct. It would not have been contemplated by the parties at the time they made the contract that a loss of this type or kind would be a probable result of a breach of it.

55 Mr Epstein submitted also that there was ample authority – for example, in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 – for the proposition that the ‘reasonable contemplation’ test was distinctly narrower than the ‘reasonable foresight’ test in tort law. He referred also to a statement in Cheshire and Fifoot on Contract, 8th edn, 2002, 580 that in determining this issue of remoteness a ‘line must be drawn’ and for practical reasons certain types of loss must be held too remote.

56 Finally, Mr Epstein claimed that, even if Mr Reuben’s submissions on remoteness were correct, they did not identify, let alone establish, an error of law by the Tribunal. For this reason alone, the appeal failed, it being well established (see, for example, French v Sydney Turf Club Ltd (No 2) [2003] NSWADTAP 54 at [29]) that if no error of law is shown an Appeal Panel must dismiss an application under s 113(2)(b) of the ADT Act for the appeal to extend to the merits.

57 Section 113(2) is in the following terms:-

(2) An appeal under this Part:

(a) may be made on any question of law, and

(b) with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision.

58 In support of his submission that no error of law had been identified or established, Mr Epstein relied on passages in two leading authorities on the distinction between questions of law and questions of fact in the particular context of provisions limiting appeals or other forms of review to questions of law.

59 First, he cited a passage in the judgment of the Full Court of the Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1 at 8-11, where the Court emphasised that a court or tribunal possessing a review jurisdiction of this nature must exercise it with restraint and must not be too hasty to classify alleged errors as errors of law.

60 Secondly, he referred to the judgment of Gleeson CJ, Gummow and Callinan JJ in Vetter v Lake Macquarie City Council (2001) 75 ALJR 578 at 584. Here, at [27], their Honours stated the principle that, in determining whether a statutory provision applies to a particular factual situation, a question of law does not arise unless ‘on the facts found only one conclusion is open’. At 585, in paragraph [31], they held that no question of law arose in the case before them ‘because the trial judge’s description or characterisation was one reasonably available description’.

61 Mr Epstein submitted that we should adopt the approach described in Vetter. Because, he said, the characterisation of the loss claimed by Dawson was one ‘reasonably available’ to the Tribunal at first instance, any error committed by it was an error of fact only, not of law.

Our conclusions

62 In our judgment, the appeal should succeed, broadly for the reasons advanced by Mr Reuben.

63 We agree with his submission that the Tribunal erred in distinguishing between the loss of an opportunity to complete a contract of sale of a business and the loss of an opportunity to sell only the equipment of the business, and in treating the latter ‘kind or type of loss’ as the material one in applying the criteria of remoteness of damage.

64 The Tribunal stated that a loss of the latter kind would not have been within the contemplation of the parties to the Lease as a consequence of a breach of the covenant to permit an assignment, though a loss of the former kind might well have been. According to this approach, it would follow that, if Dawson had been able to show that, at the time of its contract with Kilbane the business possessed some goodwill, however limited in value, its loss would have been held within the contemplation of the parties at the time of the contract and therefore not too remote.

65 In our view, an approach which requires attention to such factual distinctions involves asking, in purported application of the second limb of Hadley v Baxendale test, whether the parties could reasonably have been expected to have contemplated what McHugh JA called ‘the precise details of the events giving rise to the loss’ (Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 at 365-366). It contravenes his warning, at 366, against adopting an unduly high ‘level of classification of the damage which the parties must have contemplated’.

66 In so holding, we take significant account of the principle, established and illustrated in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, that what may be claimed in a case such as this is the loss of the opportunity to acquire a commercial benefit. We do not see how the loss of an opportunity to sell a lessee’s business and the loss of an opportunity to sell the equipment within such a business (there being, at the time when the opportunity arises, no identifiable goodwill) can be characterised as different ‘types’ or ‘kinds’ of loss. Both would appear to us to be within the reasonable contemplation of the parties to a lease, when considering what are the probable consequences of a breach of a covenant to consent to an assignment by the lessee.

67 A further matter of concern in the Tribunal’s characterisation of the loss suffered by Dawson is its use, at [86], of the phrase ‘the loss of the opportunity to sell the equipment at a particularly good price’ (emphasis added). In so far as the Tribunal took account of the scale of Dawson’s loss (measured in terms of the difference between the price of the projected sale to Kilbane and the price in the later contract with Mr Qing Yao Song), it appears to us to pay insufficient heed to McHugh JA’s statement in Alexander v Cambridge Credit Corporation Ltd (at 365) that ‘the parties need not contemplate the degree or extent of the loss or damage suffered’. It opens up the possibility that if Dawson had sustained a loss of (say) $40,000 instead of $102,000, such a loss would not have been held too remote.

68 Having said this, we recognise that in Alexander v Cambridge Credit Corporation Ltd, McHugh JA himself, in his observations on remoteness of damage to which we have referred, treated the massive scale of Cambridge Credit’s losses as a highly relevant factor. If, contrary to Mr Epstein’s argument, this aspect of his treatment of remoteness of damage is not to be given significant emphasis in the present appeal, it would be for the reason that the circumstances with which he dealt were found by the Court to be highly exceptional, to an extent not matched in this appeal.

69 Having regard to these matters, however, we would not base our decision in the present appeal only on the Tribunal’s having made reference to ‘a particularly good price’.

70 Our decision is instead based on our ruling that, in drawing and relying on a distinction between the loss of an opportunity to sell a lessee’s business and the loss of the opportunity to sell the equipment within such a business, the Tribunal misapplied the second limb of Hadley v Baxendale test. It asked, in effect, whether the parties could reasonably be expected to have contemplated ‘the precise details of the events giving rise to the loss’.

71 An error of this nature, relating to the interpretation and mode of application of a broad common law principle, is in our view an error of law. It is not comparable to the type of error discussed in the passage cited to us from Vetter v Lake Macquarie City Council (2001) 75 ALJR 578. The issue facing the Tribunal in this case was quite distinct from that of determining whether a statutory provision applies to a particular factual situation. The test laid down by the High Court in Vetter for distinguishing a question of law from a question of fact – that is, whether or not on the facts found only one conclusion is open – is therefore not applicable here.

72 The Tribunal stated, in its judgment at [88], that ‘the loss that Dawson sustained because of the difference in the Contract price to Kilbane and the contract price to Mr Qing Yao Song is attributable to the loss of the opportunity to sell equipment’. Implicitly, this sentence appears to acknowledge that the quantum of damages under this part of Dawson’s claim should be assessed, as Dawson asserted, at $102,000, being the difference between the two contract prices. The Tribunal did not, however, make an express finding to this effect.

73 In these circumstances, having identified an error of law in the Tribunal’s judgment, we consider that the appropriate course for us is to grant leave under s 113(2)(b) of the ADT Act for the appeal to extend to the merits and to make our own assessment of the damages to be awarded under this head. The obligation of an Appeal Panel, having granted such leave, is indeed ‘to decide what the correct and preferable decision is having regard to the material then before it’: ADT Act, s 115(1).

74 Having reviewed the relevant evidence and findings by the Tribunal, we are satisfied that (a) the sale of Dawson’s business to Kilbane for $120,000 in June 2002 was, for all practical purposes, a ‘certainty’, but for the refusal by Cripps & Jones to consent to the assignment of the Lease; (b) the price of $28,000 stipulated in the contract with Mr Qing Yao Song provides an acceptable estimate of the value of the business as at April 2003; and (c) in the absence of contrary evidence, the difference between these two prices, namely $102,000, should therefore be taken to constitute the damage suffered by Dawson on account of the loss of its opportunity to sell the business to Kilbane.

75 In its judgment at [103], the Tribunal noted that two matters remained to be determined: the costs of the hearing at first instance and interest on the damages awarded. It invited written submissions on these matters from the parties. In our view, it is appropriate that they be determined by the Tribunal as constituted for the hearing at first instance.

76 Unless within 28 days one of the parties files a written submission seeking costs, we make no order for costs of this appeal. If a submission is filed, the opposing party or parties must file any submission in reply within a further 14 days. The matter will be determined on the papers unless a party seeks to be heard.

77 The orders that we make are accordingly as follows:-

1. Leave is granted to the Appellant to substitute Michael Lance Cripps, as executor of the will of the late Kerrie Frances Cripps, in her place as the First Respondent to this appeal.

2. The appeal is allowed.

3. Order 1 made by the Tribunal on 23 December 2003 is set aside, and in its place it is ordered that the First and Second Respondents are jointly and severally liable to pay to the Appellant the amount of $105,115.00, less any amount that has already been paid in satisfaction of the Tribunal’s Order.

4. Unless within 28 days one of the parties files a written submission seeking costs, there will be no order for the costs of the appeal. If a submission is filed, the opposing party or parties must file any submission in reply within a further 14 days. The matter will be determined on the papers unless a party seeks to be heard.

5. The case is remitted to the Tribunal as constituted at first instance for determination of the following issues: (a) the costs of the hearing at first instance and (b) interest on the damages awarded.