Henville & Anor v Walker

[2000] HCATrans 258

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P45 of 1999

B e t w e e n -

BRYAN SAMPSON HENVILLE and
BRYAN SAMPSON HENVILLE as Trustee for the HENVILLE PROPERTY TRUST

Applicants

and

GRAHAM GEOFFREY WALKER
WALKER PADDON REAL ESTATE PTY LTD

Respondents

Application for special leave to appeal

McHUGH J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 16 JUNE 2000, AT 12.55 PM

Copyright in the High Court of Australia

MR P. MENDELOW:   May it please your Honours, I appear for the applicant. (instructed by Bowen Buchbinder Vilensky)

MR P.G. McGOWAN:   If the Court pleases, I appear for the respondents. (instructed by Phillips Fox)

McHUGH J:   Yes, I think we might hear from Mr McGowan.

MR McGOWAN:   May it please your Honours, this issue articulated in the application book really goes to the question of whether, where there are two so-called factors, the question for the Full Court which it determined was what was the ultimate cause of the loss suffered by the plaintiff in the court below.  The force of the Full Court ‑ ‑ ‑

HAYNE J:   Certainly the Full Court looked for a single cause.  Was that the right question for the court to have been pursuing?

MR McGOWAN:   The court, your Honour, looked at the matter on the basis, firstly, of determining in relation to test articulated in March v Stramare and again in Wardley in Western Australia whether the “but for” test was an exhaustive test, to which this Court has already answered no and the Full Court agreed.  Having said that, the court then identified the conduct of the respondents as being a necessary condition, but not the cause of the ultimate loss suffered by the appellants, and it is ultimately described in the application book at page 95, between lines 15 and 20, in this way:

That is to say, Mr Henville’s “folly” or “error” –

picking up the words of Chief Justice Gibbs in Gould v Vaggelas –

in regard to the feasibility study operated as a subsequent, separate, entirely independent inducing factor.

We say, with respect, the court was entirely correct and that answer justified the question that the court posed to itself, that is, that there was a cause and that that was the cause and that the impugned conduct of the respondents, although in breach of section 52, was not in any common sense sense, the cause of a loss ‑ ‑ ‑

McHUGH J:   I must say I have real difficulty in understanding that, having regard to the fact that the Full Court found that the breach of section 52 still had a continuing effect as at the relevant time, and yet the court says that the conduct of the applicant was the sole cause in that he had negligently made a feasibility study.  The Full Court asked itself the question, “What would the applicant have done had the true position been represented?”  Perhaps it was equally valid to ask, what would have happened had he conducted a proper feasibility design which would have shown the true costs of the project?  You could hardly say in those circumstances that your client’s misrepresentation or breach of section 52 was not a cause of the damage if you asked that question.

MR McGOWAN:   That is right.  We say that the question is still properly the one that was posed.  The two ‑ ‑ ‑

HAYNE J:   How do you cope with page 95, the last three lines?

We are conscious of the fact that Mr Walker’s misleading conduct continued to play a part in inducing Mr Henville to proceed with the development even after the feasibility study had been completed.

Now, is that not a finding that is simply flatly inconsistent with the notion that the only cause of these events was the inappropriately thought out feasibility study?

MR McGOWAN:   Well, your Honour, I think the sentence that follows explains the issue of what caused the loss because the Full Court goes on:

That is because Mr Henville continued to assume that the units would realise $750,000.  Nevertheless, applying a common sense approach, we do not think that the misleading conduct caused Mr Henville to proceed with the development.  In our view, the cause was the feasibility study.

The two issues at play, with respect, are the general statement by the real estate agent to the respondent that the units being constructed would fetch between $250,000 and $280,000, without more, which, as the Full Court identifies, does not itself produce, nor is it capable of producing, a loss of which the appellant has complained.

What the appellants did before making an offer for the property, which is from the application book at page 78, is to prepare the feasibility study for the purpose of determining the ultimate question that the appellants posed for themselves, that is, is this a development which was likely to make the profit that they had set for themselves, that is $80,000 to $100,000?  That is the question which ultimately this development was all about and that is the question the Full Court, when looking at, determined ultimately was caused by the errors made by the appellants.  Because that really was what the development was all about; not merely an open‑ended question about what would the units, when built, sell for but was this a development which was going to make a profit, a question which did not involve, in any aspect, the agent – he was not involved in design, costing, pricing, time, availability of men and material, availability of a builder – none of that concerned the respondent at all.  All that was to do with the appellant and that single minded task undertaken by the appellant was, as the Full Court found, entirely determinative of the decision and therefore the loss made in this matter.

So it is in that sense, with respect, that at the top of page 95 leads to the result to which the Full Court came and which, in our respectful submission, explains that, in a causal sense, our impugned conduct was not the cause of the loss suffered.  That is the factual question.  In fact ‑ ‑ ‑

HAYNE J:   Now may not be the opportunity to explore it, but may not these kinds of questions be of the type that Professor Stapleton has looked at in her essay, which I think you will find in 4th series, Oxford Essays on Jurisprudence, and the need to unpack the notion of causation, that when it is asserted that A caused B, that may be making assertions about responsibility as much as anything.  Now is not the opportunity to examine these on this application. 

McHUGH J:   If leave is granted, it is an article that would pay you and your opponent to read, and read very carefully. 

MR McGOWAN:   I understand what your Honour says.  In fact, the point is further amplified by the extract from McKew v Holland, again on page 95, which follows a similar theme, that is to separate out several steps in a process which lead to a result for the purpose of determining in a legal context what is said to be the cause.  The analogy provided in that case, on which the Full Court relies, is a matter to which we have regard and we say again that the court, having identified out the separate conduct of the respondent from the folly of the appellant, was entitled to, and did, come to the conclusion that the true cause of the loss suffered by the appellant was, in this case on the facts, the appellant’s own folly which was subsequent, separate and independent.

I do not think there is anything more I can add to that, your Honours.  That is, essentially, the respondents ‑ ‑ ‑

McHUGH J:   Thank you, Mr McGowan.  We need not hear you in reply, Mr Mendelow. 

There will be a grant of leave in this particular case.

Mr Mendelow and Mr McGowan, have you any idea how long an appeal would be likely to take?

MR MENDELOW:   Your Honours, my estimation is one day.

McHUGH J:   Do you agree with that, Mr McGowan?

MR McGOWAN:   Yes, I do, your Honour.

McHUGH J:   Thank you.  The Court will now adjourn for 20, 25 minutes to allow the Court Reporting staff to have a rest from their rather strenuous activities.  So we will resume at 1.30 pm Canberra time, which I assume is 11.30 am Western Australian time, at all events in 25 minutes time.

AT 1.05 PM THE MATTER WAS CONCLUDED