HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd
[2004] HCATrans 160
[2004] HCATrans 160
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Brisbane No B99 of 2003
B e t w e e n -
HTW VALUERS (CENTRAL QLD) PTY LTD
Appellant
and
ASTONLAND PTY LTD
Respondent
GLEESON CJ
McHUGH J
GUMMOW J
KIRBY J
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON WEDNESDAY, 19 MAY 2004, AT 10.18 AM
Copyright in the High Court of Australia
MR P.A. KEANE, QC: May it please the Court, I appear with MR L.F. KELLY for the appellant. (instructed by Thynne & Macartney)
MR J.C. BELL, QC: If the Court pleases, I appear with MR G.D. O’SULLIVAN and MR D.H. KATTER for the respondent. (instructed by Russell Hanley Johnson)
GLEESON CJ: Yes, Mr Keane.
MR KEANE: Your Honours will have seen from the written submissions of the parties that the judgments below depend on two related propositions which are contained in paragraph [48] of the reasons of the learned trial judge at page 644 in volume 2 of the record. If I could ask your Honours to go to them and simply say, without taking your Honours to the Court of Appeal’s judgment, that these propositions were affirmed by the Court of Appeal in paragraphs [16] to [25] of that judgment which your Honours will find at pages 657 to 659.
Going to paragraph [48] at page 644, your Honours will see the first proposition that his Honour affirms, which is that misconduct by way of predictive opinion which induces a plaintiff to act to its prejudice by buying an asset is outside the usual rules for the assessment of damages. The second and related proposition is that this is because such misconduct does not give rise to a cause of action until the risks assumed by the purchaser have occurred.
As to the first point, it is, in our respectful submission, a proposition of some wide consequence in that, for example, the very presence of section 51A in the Trade Practices Act suggests that predictive opinions are something which gives rise frequently to this question. One might have expected there would be some authority to support the learned judge’s approach. The other thing that one might say is that in a sense, any valuation is a predictive opinion because it is a prediction of the price at which an asset will change hands.
KIRBY J: The issue here of the impact of the new development was specifically raised with your client. On the day after evaluation it would not have been possible to know whether or not that matter which was raised was accurately assessed or not, whereas when the development occurred you would know. The law tends to like facts rather than speculation.
MR KEANE: Quite. Where one can know, why speculate, as your Honour says. Nevertheless, where the question is, “What is the true value of the property”, that was ascertained.
McHUGH J: Well, that is a serious question in this case. It may well be that the judgments of the courts below are wrong in principle, but may not the correct solution of the case be captured basically in the respondent’s notice of contention and that you can apply the English valuation cases and show what the true value of the property was by reference to later events? That is exactly what the House of Lords did in the Merthyr Dare Steam Collieries Case where the House said that you are entitled to, in determining compensation, arrive at the sum which experience has now shown to be the correct amount.
MR KEANE: Yes, your Honour. In this case, the case that was advanced by the plaintiff was actually advanced on orthodox principles. We submit it should fail because of a want of the kind of evidence that your Honour adverts to. It is no doubt true, as was recognised in this Court in Kizbeau, that subsequent events can shed light on value. In this case, however, the two candidates that the respondents advance, as the true value as at April 1997, is the value established March 2000 when all the consequences of the risk had come home and become historical events, so that it was no longer a question of the property with risk recognised in the market factored into its value.
GLEESON CJ: You, perhaps, have to go back a step and ask what you mean by “value”. By “value” in this context, do you mean exchange value?
MR KEANE: Yes.
GLEESON CJ: That is, the price that a willing but not anxious buyer would pay to a willing but not anxious seller?
MR KEANE: Yes.
GLEESON CJ: When you are talking about exchange value as at a certain date, what does that tell you about the information you can take into account?
MR KEANE: It tells you, your Honour, as Justice McHugh said in Kenny & Good, that you take into account all the information that the market has, and that includes information about risks ‑ ‑ ‑
GLEESON CJ: As when?
MR KEANE: At that date.
GLEESON CJ: Is the predictive opinion, referred to on page 644, at about line 25 that that we find on page 635, at line 25?
MR KEANE: Yes, but with this qualification, your Honour, that while his Honour took the view that minds might differ about the significance, there was no qualification. The existence of this potential competitor was identified and opinion was expressed that, nevertheless, the rents at the Plaza would be maintainable, and the complaint appears at 637, paragraph [33], that he:
did not qualify his advice by reference to the potentially negative impact on rental levels and thus income in the Plaza of the opening of the Beach Road shops.
At page 638 in paragraph [35] at about line 30, where his Honour is referring to Mr Dodds’ evidence, he refers to the circumstance that:
As at April 1997, Mr Dodds was aware of the proposed Beach Road shopping centre . . . and of the view that . . . it would proceed. As early as 1996, valuations issued by [his office] in relation to [the] property . . . carried qualifications relating to the possible negative impact on existing premises ‑ ‑ ‑
GLEESON CJ: The trial judge, as I understand it, in the Court of Appeal attached a lot of importance to the fact that the supervening event, if I can use that expression, that caused the reduction in value was the very thing about which the valuer was asked to advise. It was not as though there was an oil crisis or war broke out or something like that.
MR KEANE: Quite, your Honour. That is so, and to that we say, as we said with respect to them, that in this case, it was never suggested that on our side we had given a promise or a warranty that there would not be a negative impact.
We were charged with a failure of duty in failing to qualify an opinion as to the maintainability of rents. In this context, where what we are charged with is misconduct which induces the other party to act to its disadvantage, what matters, in our submission, is an identification of the interest affected by that inducement, and the interest that was affected by that inducement was the interest in the acquisition, the interest in getting value for money on the exchange. It was not a promise that rents will never fall, nor was it a promise, to be more precise, that there would not be an impact on rents from competition.
We just mention in this context and remind your Honours, as your Honours no doubt know, that in Banque Bruxelles Lambert [1997] AC 191 at 213H to 214A, Lord Hoffmann observed that a result which would make the valuer liable, as if the valuer had given such a warranty, would indeed be paradoxical. Can we come back then, your Honours ‑ ‑ ‑
GUMMOW J:Banque Bruxelles did not have a very friendly reception here.
MR KEANE: No, your Honour, and we also recognise that we ‑ ‑ ‑
GUMMOW J:Yes, this example about a skier that Lord Hoffmann gave which was greatly ‑ ‑ ‑
MR KEANE: It is the example of the skier, your Honour. Your Honours will have seen we have not made a lot of it, because we appreciate we have to deal with the stark simplicity of the Trade Practices Act, but there are nevertheless observations in it that are weighty and worthy of consideration. To come back to your Honour the Chief Justice’s question, though, we are here concerned with the reliance interest. True it is that it seemed to loom large in the thinking both of the trial judge and the Court of Appeal that the risk that came home was the very risk against which we did not advise, or we have not informed, the other side. But, as we say, what matters is the disadvantage to the interests of the plaintiff which were affected by that misconduct.
Can we say this as well, your Honours, that the statement of a predictive opinion, guarded or unguarded, is apt to induce more than one act of reliance. It is apt to induce reliance which affects a range of interests, as the Court was at pains to point out in Kenny & Good. Particularly, one sees this in your Honour Justice Gummow’s judgment at paragraphs 80 to 84. In that case, for example, the interest of the person to whom the representations were made was in having cover for a liability at the end of a loan period, and the relevant interest they had was in recovering the shortfall at the end of a period of the loan, not a difference in valuation value the day after the loan was made.
So that while it can be accepted that a predictive opinion is apt to induce more than one act of reliance, what is required to assess damages under section 82 and for breach of contract and for negligence, where the relevant duty is a failure to exercise reasonable care in advising, the relevant question is, to what extent have the interests of the representee been prejudiced as a result of acting on the inducement?
It is true but it is no doubt possible that one might have a case where the relevant inducement continued to influence the purchaser after acquisition and into the future. It is true that one might have a case where one could establish that either because the representation was repeated or simply because, to take the example your Honour Justice Kirby gave, the situation was such that the purchaser was never in a position to realise the truth that the representation had been erroneous.
In those sorts of cases it may well be that the predictive opinion can be seen to induce detrimental reliance which leads to the kind of result that makes the representor liable for what your Honour the Chief Justice called subsequent loss. But in this case, only the purchase was said to have been induced by the predictive opinion. After we make some further introductory remarks, we want to take your Honours to the pleading, the findings and the evidence to make good that contention.
KIRBY J: I was thinking of something Justice Mahoney said in a case where I sat with him in an entirely different context but in relation to a claim under the Compensation to Relatives Act where, in the period between the trial and the appeal, the widow had remarried. At that time that was a very significant factor in the damages and the issue was: should the Court of Appeal receive the evidence? Justice Mahoney expressed the view that it was always preferable in calculating damages to get to the truth and the reality rather than to, as it were, be speculating and where there were facts in the court, you should concentrate on them rather than on, as it were, looking into the future without the facts and trying to work out what the damage would be.
MR KEANE: Indeed, your Honour. The authorities in relation to that are collected in the joint judgment in Kizbeau.
KIRBY J: In the special leave application you made a point in arguing for special leave that the result of the approach of the Court of Appeal adds a much heavier burden on professional people giving advice. I just do not have clearly in my head what is the policy difference of the approach that has been taken and the approach which you urge that the law is looking for in the calculation of the damage. We will have to look at the authority and so on, but at the heart of this I rather detected from your remarks that there is an important policy distinction. I do not quite have it in my brain yet.
MR KEANE: Your Honour, it can be indicated in this way, that the judgments in this case in which the only detrimental conduct asserted by the plaintiff was acquiring the property – we know that there is the overarching compensatory principle but we know that there is a rule that in the absence of something special, that rule assesses the damages by reference to the loss on that transaction. The loss on that transaction is the difference between what you get and what you pay for it. Whether one talks about non‑transaction cases or successful transaction cases, as Justice Dixon said in Toteff v Antonas, if the transaction had not happened, the plaintiff would have still had the money in his pocket.
So if that is that of which you complain, then in this case, subject to Justice McHugh’s point, on the uncontradicted, unchallenged evidence of the valuer called by the plaintiff, the value of this property at the date of the contract, when they had agreed and bound themselves to pay $485,000, was $400,000. That value was a value which reflected the existence of the risk of competition and the impact on rents of the Beach Road shops.
KIRBY J: Does that not omit the very important factual element of the specific request for advice on the impact of the rents? That seems to colour the way the primary judge looked at the matter.
MR KEANE: Your Honour, to that we say that the proposition is not complete unless you say, in relation to what interest of the plaintiff? And the interest of the plaintiff was in the acquisition. What your Honours will not see in the material, in the findings, in the evidence, is any suggestion that Mr Deacon was asked to give this advice in relation to some other interest, the interest in a long‑term borrowing arrangement or something of that order. The focus is on the investment. That is what is in contemplation. If you get that wrong, then, as Lord Browne‑Wilkinson said in Smith New Court – and we should perhaps take your Honours to this because this identifies an aspect of the area of policy which your Honour Justice Kirby was asking us about. It is Smith New Court [1997] AC 254, variously called Scrimgeour Vickers or Citibank NA.
The relevant passage that we refer your Honour Justice Kirby to, in response to your Honour’s question, commences at page 265H. Here, after his Lordship has dealt with the special case of fraud, in relation to which, of course, there are special policy considerations in the notion that an intention to harm really dispenses concern with remoteness and so forth, and also serves a restitutionary policy. Just before the letter H:
Turning for a moment away from damages for deceit, the general rule in other areas of the law has been that damages are to be assessed as at the date the wrong was committed. But recent decisions have emphasised that this is only a general rule: where it is necessary in order adequately to compensate the plaintiff for the damage suffered by reason of the defendant’s wrong a different date of assessment can be selected.
Then he goes over the page and there is a reference to authority and emphasis on the “overriding compensatory rule”. Of course, the question is compensation for the wrong done. What is the wrong? The wrong done is inducing the acquisition, we say. Then, if your Honours will read from paragraphs C to G on 266, the point is made that:
In many cases, even in deceit, it will be appropriate to value the asset acquired as at the transaction date if that truly reflects the value of what the plaintiff has obtained. Thus, if the asset acquired is a readily marketable asset and there is no special feature (such as a continuing misrepresentation or the purchaser being locked into a business that he has acquired) the transaction ‑ ‑ ‑
GUMMOW J: Just stopping there for a minute. Are there any cases in this Court in recent years that fall within the brackets, namely, “locked into a business” or “a continuing misrepresentation”?
GLEESON CJ: Henville v Walker?
MR KEANE: Henville v Walker is such a case, because in Henville v Walker what the plaintiff – I will call him the plaintiff – was induced to do was to pursue the development project to the end. I am reminded that in Henville v Walker at paragraph 22 in that judgment, the Chief Justice makes the point that that was a case where it was distinctly not a case.
GUMMOW J: Yes, you refer to that in your submissions.
MR KEANE: The other case that probably is an example of the point your Honour makes is Kenny & Good itself when you look at the interest the mortgage insurer had in the value of the property, at what day is the mortgage insurer interested?
GLEESON CJ: Well, it would be like the difference between buying shares in a company listed on the stock exchange and buying shares in a pastoral company, the business of which was subsequently affected by drought. You would have the problems of causation in the second case that Lord Browne-Wilkinson was referring to.
MR KEANE: Yes, and, indeed, Smith New Court itself was a case where the shares were brought for long holding at a price that was higher than would have been paid had they been required for ready turnover, and holding them for the period that they intended to hold them, I think Lord Browne‑Wilkinson puts it colourfully, the disaster with which the purchase was pregnant happened when the other fraud in the company whose shares were acquired emerged. So that in that sense there was no room to move. They were, in that sense, locked in, as their Lordships say, in that special way.
KIRBY J: Can I mention that you skipped over what Lord Wilberforce had said, and it was quoted by Lord Browne-Wilkinson when he said that it cannot be an absolute rule, it may lead to injustice in a particular case and:
the court has power to fix such other date as may be appropriate -
and by inference, to look at such other date as is appropriate, whereas in this case there was specifically directed a question as to the likelihood of the impact on rent of the new development, why is it not unjust to ignore the fact that that is, as it were, a predictive date and a predictive fact and that you then can go to that date and see it because that is what both parties were turning their minds to.
MR KEANE: Your Honour, we did not mean to jump over what Lord Wilberforce said in Johnson v Agnew.
GUMMOW J: Lord Wilberforce was talking about Lord Cairns’ Act, was he not?
MR KEANE: He was. He was talking about actions for specific performance.
GUMMOW J: Yes, and it is not exactly a universally welcomed decision actually.
MR KEANE: And the other thing is that in what is said at paragraph C and following, your Honours, it is made clear that the exercise is a not a “chancellor’s foot” exercise. The general rule ‑ ‑ ‑
KIRBY J: No, but Lord Browne-Wilkinson is here talking of the general rule in other areas of the law.
MR KEANE: Yes, and in the area of tort or tort measure, their Lordships go on to say that:
if the asset acquired is a readily marketable asset and there is no special feature . . . the transaction date rule may well produce a fair result.
We wanted to say this, your Honours, at D:
The plaintiff has acquired the asset and what he does with it thereafter is entirely up to him –
and we emphasise –
freed from any continuing adverse impact of the defendant’s wrongful act. The transaction date rule has one manifest advantage, namely that it avoids any question of causation. One of the difficulties of either valuing the asset at a later date or treating the actual receipt on realisation as being the value obtained is that difficult questions of causation are bound to arise. In the period between the transaction date and the date of valuation or resale other factors will have influenced the value or resale price of the asset. It was the desire to avoid these difficulties of causation which led to the adoption of the transaction date rule. But in cases where property has been acquired in reliance on a fraudulent misrepresentation there are likely to be many cases where the general rule has to be departed from in order to give adequate compensation for the wrong done to the plaintiff, in particular where the fraud continues to influence the conduct of the plaintiff after the transaction is complete or where the result of the transaction induced by fraud is to lock the plaintiff into continuing to hold the asset acquired.
Now, that is why we say to your Honour, that where one is dealing with a rule which says do not mislead people into acting to their detriment, one needs to focus on the acts that are induced and to say what loss has been inflicted by that.
McHUGH J: You say that in principle, a representation as to what the future income of the investment will be is no different from a representation as to what its past takings are when you are concerned with the acquisition of an asset.
MR KEANE: Because one is applying discounts to income streams on the basis that there is a level of certainty or uncertainty reflected in the discounts to the income stream, as his Honour held in this case.
GLEESON CJ: Did the opinion of the valuer that you referred to earlier as to what the market value of the property was at the time of the contract turn upon what, with the benefit of hindsight, would appear to be an underestimation of the effect of the competition?
MR KEANE: Your Honour, I have difficulty answering yes or no to that. The valuation question ‑ ‑ ‑
GLEESON CJ: I just mean, how did it come about that the valuer, knowing what we now know presumably, about the effect on rentals of the competition yet valued the property at amount on which you rely?
MR KEANE: His valuation, the executive summary is at volume 2, page 534, and your Honours will see it is a retrospective valuation, but he puts different values on the property as at April and at July, so that the value of it is dropped in the meantime. His evidence here was explained in‑chief in volume 2, at page 293, commencing at about line 10, where he says at line 17:
And by April 1997, did you consider that there was a serious risk of that shopping centre being completed? -- Yes, I did.
At the time of the – at the time of your assessment of value in April – sorry, let me start again. The value at April 1997, at $400,000, was one which took account of the risk of that shopping centre proceeding to completion? -- Yes. I felt that it would have had an impact on the market at that time.
Now, by July 1997, again, was account taken of the risk? -- Yes, it was.
So that seems to suggest that, as the risk looms larger, so the value drops.
GLEESON CJ: But this valuer was looking back at it with the benefit of complete hindsight, was he not?
MR KEANE: He was looking back at it with the benefit of complete hindsight, but it was also mentioned in paragraph 35, I think it is, of his Honour’s judgment at page 638, line 35, that in 1996 valuations issued by Mr Dodds’ office had carried qualifications relating to that possible negative impact. So that it was a risk that was identified ‑ ‑ ‑
GLEESON CJ: He was looking back with the benefit of knowledge of what his own sight had been at the time.
MR KEANE: Yes.
GLEESON CJ: Well, does that not mean that he had underestimated the risk?
MR KEANE: We submit not. To come to that conclusion is to assume that when, as appears at page ‑ ‑ ‑
McHUGH J: This is Mr Dodds’ valuation. This is not Deacon’s valuation, this is not the defendant’s ‑ ‑ ‑
GLEESON CJ: This is the expert witness.
MR KEANE: This is the expert witness called by the plaintiff, whose evidence was in no way challenged on this and who his Honour found to be impressive.
GLEESON CJ: I am just trying to work out how it came about that the expert witness, upon whose valuation you rely as setting the limits of the entitlement of your opponent, came to value the property so high, having regard to the later events by way of competition, of which he knew at the time he made his valuation.
MR KEANE: Well, I suspect the answer is, he was not challenged about that because it was in no one’s interest to challenge him.
GLEESON CJ: Was part of the answer that he was locked in by his own conduct at the time in issuing valuations?
MR KEANE: They were not his, your Honour, they were of his office. There were other people in the office. It is exhibits 29 and 30. They are not in the record, but I think it is clear that they are of his office.
McHUGH J: But does it not come to this, Mr Keane, that what Mr Dodds was saying was, “This is the value that would have been attributed to this complex by a prudent value as at the date of completion of the contract”?
MR KEANE: Well, he says it is the value that he expects that a willing, but not anxious, purchaser would have exchanged money for as at that date.
McHUGH J: As at that time. But, in this area, we are dealing with compensation and, as Kizbeau shows, that entitles you in some cases to look back at what happened. You can look at subsequent events to show what in fact was the true value, even though nobody would have guessed the correct amount at the time.
MR KEANE: Your Honour, I come back to the answer that I did not get around to giving your Honour before. The other side put two candidates forward. One is the figure of $130,000, which is the value as of March 2000, when the value of the property in April 1997 is no longer affected by risk, it is in a state of historical fact. So that what someone would pay for it back in April 1997 is not what someone would pay for it in ‑ ‑ ‑
McHUGH J: Yes, but, in the compensation area, you are dealing with a slightly different universe. You are trying to give fair compensation, and the principles of valuation are not necessarily fully applicable in that situation, although usually they are the best guide. I mean, this was not a case of an event that was not reasonably foreseeable. It was reasonably foreseeable, but the difficulty was to quantify it, and a prudent valuer taking it into account may say, “Well, you have to discount the value of this complex by 10 per cent or 15 per cent”, but it turns out that that is an underestimate. Why cannot the court then look at the subsequent events and say what the true value was?
MR KEANE: Well, the court could, but in this case the problem is the deficiency in the evidence.
McHUGH J: But is there? In this particular case the judge held that the decline in sugar prices did not affect the value, that the decline in housing approvals in the Sarina area did not affect the value of the business. He seems to have put it down fairly and squarely to the Beach Street development.
MR KEANE: Yes.
McHUGH J: Now, is there any relevant supervening event that could cause problems about causation in that situation?
MR KEANE: Your Honour, we accept that it is about compensation, but it is compensation for what? If it is compensation for inducing a bad bargain, then what is the value of the bad bargain? In this case, the courts below have approached that question not by looking at, “Is it fair and reasonable that these people should have done what they did?” or by looking at a series of values as reality became more the case than risk ‑ ‑ ‑
KIRBY J: And that, it seems to me, is the policy question because what you are saying is that the error that is involved in the approach of the primary judge of the Court of Appeal is the error of informing the valuation with a great deal of hindsight. They are there factoring in knowledge which was not available, yet the value of the negligence or the breaches have to be determined at the time without the benefit of the hindsight.
MR KEANE: Well, with respect, your Honour, it is not really a case where that is so. They have avoided the factual difficulty of trying to do that. That is why the other side have ‑ ‑ ‑
McHUGH J: But your point is a more fundamental point, is it? You say the courts below just simply got it wrong when they said there was no loss suffered until the Beach Street property started to operate. Now, subject to what Mr Bell says, that just seems to me to be plainly wrong. Given the misrepresentation by the defendant, the plaintiffs could have said the day after the contract was complete because they had suffered a loss at that time. It is just then a question of evaluating that loss. Now, you might have got a different figure then than you would by taking account of subsequent events, but the loss was suffered the day they signed the contract.
MR KEANE: Your Honour, the difficulty of taking into account subsequent events is that the plaintiff proves by admissible evidence from someone who is expert and unchallenged what the market value was. The courts do not accept the two candidates which your Honour might, as a matter of principle, regard as possible candidates in terms of subsequent events shedding light on the value back then. Those two candidates are $130,000 when it was no longer a risk and the other candidate is $193,000 which is the product of an exercise which is almost impossible to understand and which plainly the judge regarded as not indicating a true valuation and which the witness himself, Mr Dodds – Mr Dodds who actually gave the value at $400,000, Mr Dodds himself acknowledged was not a valuation.
So that in relation to the point in principle that your Honour Justice McHugh raises with us, that in principle could not one look at subsequent events to inform one as to the value at April 1997, the answer is yes. In terms of the evidence in this case, is there such evidence that the courts below could, or this Court could, act on to make such a finding, the answer is no. That is why, if one accepts that there is this fundamental error of principle in the decisions below, then the answer is, in our respectful submission, that we win.
GUMMOW J: You say in paragraph 15(c) in your submissions the point really is that this is not a warranty case and that the level of rents would be maintained.
MR KEANE: Quite. To return to your Honour Justice Kirby, ultimately that is the policy problem. This measure of damages makes the valuer liable as if the valuer had given a warranty, as if the valuer was an insurer. The valuers do not get premiums for giving those warranties. Insurance companies might; they do not.
KIRBY J: Except that this was a rather unusual case where the mind was expressly directed to a future prediction and the valuer, instead of cloaking it around and saying, “No one can know. Who knows? All I can do is to give the best and on these factors, this and that”, this is the complaint.
MR KEANE: But, your Honour, in this case the purpose of the exercise was to work out a value to buy it. In any event, every day when valuers do valuation, what they do is apply a discount rate to maintainable earnings from rents. So that the notion of identifying maintainable rents is an integer of most valuations of commercial property, as his Honour appreciated in this case. As his Honour points out, Mr Deacon’s expression of his view about maintainable rents was then used by Mrs Foster to work out value, and that is what she used it for.
McHUGH J: If there was no prediction about the future, one would have assessed the value of this place by reference to what had been earned in the past in terms of rental and discounted what was the expected cash flows based on those past rentals.
MR KEANE: If you did that, you would be applying your discount rate to 60,000 a year, which was what happened.
KIRBY J: Would you do that if you knew that nearby was being built a rival centre? I do not think so. It is like buying a newsagency and being told there is going to be a supermarket next door that is going to be selling lots of newspapers and magazines and there is going to be another newsagency just down the road. These things profoundly affect the value of a business.
MR KEANE: They do, your Honour. There is no suggestion that the plaintiff was not told about it. The letter in question identifies it. It says they are there, it says there is interest in them. It then expresses the view that nevertheless the Plaza rent should be maintainable. The basis for liability is the failure to give the warning that the competition might affect you. Some people might think that that is a fairly pharisaical view of the basis for liability, but we are not fighting about that. The point is that the existence of the competition was known. The question was: are rents maintainable? The answer we gave was yes and the reason we are liable is we failed to say, “But there may be some impact from the competition”.
KIRBY J: You were being gone to because you were expert valuers. You were experts and you were being relied upon and this factor was put to you and you obviously not only did not give a warning but you gave a valuation which you accept was erroneous.
McHUGH J: Well, you did not give a valuation. That was the odd thing about this case. In the reports at 506, 507 you do not say a word about value. What you have been held liable for is that you have said:
While the available information is only limited we believe it suggests that the current rental levels are maintainable, and some are at the lower end of the market range. However it may be difficult to increase rental levels to any significant degree without some titivation of the building.
What you were saying is that the cash flows up to date will be maintainable in the future and, therefore, that led the plaintiff to capitalise those cash flows at a level which was too high.
KIRBY J: The property being income‑producing property, that was effectively saying that the value would hold?
MR KEANE: It was, as is the case.
McHUGH J: No, it was not, was it? Why do you accept that? You were not given any warranty about the future value of the premises.
MR KEANE: No, that is right.
KIRBY J: This was an investment property. This was an investment.
MR KEANE: It was an investment property. The question was, should they buy it, and if so at what price? That was the relevant interest of the parties. Can we take your Honours just very briefly to the findings about this.
KIRBY J: Just before you do that, I do want to understand what you were saying. You told the Court, in getting the special leave, that the problem with this approach is that it excessively burdens people like your clients who give values. Now, I do want to understand that point, because that is a point of general significance.
MR KEANE: Your Honour, because until this case – we say that with respect, having regard to the absence of any invocation of authority other than in the footnotes in paragraph 48 – until this case, where a valuer was successfully charged with a failure to properly advise, and misleading and deceptive conduct, in circumstances where the relevant effect of his misconduct was to induce a purchaser to buy a property, the measure of damages recoverable from him was the difference between the price paid and the true value of the property at the date of the contract – see Kizbeau, see Wardley.
The result of this case is that now, if this decision be correct, the valuer will be liable in any case where he expresses a view as to maintainable earnings – whether or not that gets taken up into an expression of valuation – and, indeed, he will express a view about maintainable earnings in every case because that is how you do it – he will be liable on the footing that when the risks that earnings are not maintained turn bad, the valuer will be liable as if he had warranted that they would be maintained.
In that sweeping stoke, one avoids all the problems – and we would say the necessity – to look closely at just what the misconduct induced the plaintiff to do. You see, if you adopt this view, you do not have to worry about whether the plaintiff was induced to hold onto the property by the continuing operation of the representation. You do not even have to worry about whether the plaintiff acted unreasonably. You simply say, “Well, the measure of the loss is the difference between the price paid and the value of the property when the risks come home”.
GLEESON CJ: There is an additional element, is there not? If you are making the valuer liable as if he had given a warranty, you may be creating the injustice that if the valuer had been asked to give a warranty, he might have imposed contractual terms which eliminated or excluded his liability?
MR KEANE: Which would either have eliminated it or excluded it or would have ensured he had got paid for it.
GUMMOW J: Yes, I am puzzled about this. At page 12 of the appeal book it appears that the action was in tort for negligence, breach of contract and contravention of 52 and 51A of the Trade Practices Act. Which box are we in?
MR KEANE: His Honour held that all boxes were ticked on the footing that it was misconduct not to give the relevant warning. His Honour’s conclusion about that ‑ ‑ ‑
KIRBY J: Is your repeated use of the word “misconduct” not unnecessary? We are only talking here about negligence.
MR KEANE: Your Honour, I am using it as a compendium ‑ ‑ ‑
GUMMOW J: For actionable.
MR KEANE: ‑ ‑ ‑ for actionable. Perhaps I should say actionable. His Honour said actionable. But it is to cover the breach of contract, section 52 and negligence.
GUMMOW J: Paragraph [32] of the judgment says it is “essentially the same” whether it is negligence, contract or section 52. Is that right?
MR KEANE: We would submit it is unlikely to be correct in the sense that section 52 and the cases on section 82 seem to us to suggest a closer focus on the detrimental consequence of the relevant misleading conduct, in the sense that we had in mind that, as we have mentioned in the written submissions, your Honour’s observation in GIO v Marks following Hepples that language like that used in section 82 is not apt to comprehend the consequences of contributory causes or causa sine qua non, but rather to look more at the immediate cause. That may not be the case ‑ ‑ ‑
McHUGH J: But does not the judge cover this conclusion because of the date which he picked as the date of loss?
MR KEANE: Yes, that is right.
McHUGH J: If he had picked what prima facie seems to be the correct date, namely, the date of completion, then you have different tests of remoteness of damage in contract and in tort and you have questions as to whether or not they apply at all in section 52. You have all sorts of different problems, but the way the judge approached it, and affirmed by the Court of Appeal, is that those conceptual differences just do not matter.
MR KEANE: They do not matter. That is why we said to your Honour Justice Kirby earlier that if it be right and at a sweep all these problems have all gone away and they have gone away in a way that is contrary to what Lord Browne-Wilkinson suggested should be the proper approach in Smith New Court, the case the other side rely on.
KIRBY J: Except that his Lordship said what he said with the preface that there are no absolute rules here and that you have to be guided by the justice of the particular circumstance. Here, what is said is that the justice of the particular circumstance is that you, the expert valuer, had your minds specifically directed to a future event and therefore it is reasonable to see whether when that future event came to fruit you were right or you were wrong.
MR KEANE: Well, your Honour, if that is the question, then there can be absolutely no doubt that our client has been held to a contractual warranty for a promise he never gave. He was never paid for it and he was never asked to give it.
GUMMOW J: What would the contract have been?
MR KEANE: To give the warranty?
GUMMOW J: No, in the Act, the action in contract.
MR KEANE: In this case, it was that he was asked – if your Honour looks at page 629, paragraph [11]:
Mr Foster telephoned Mr Deacon in early April 1997 and spoke to him briefly. Mr Foster said that he told Mr Deacon that he and his wife were interested in making a commercial property investment and inquired generally –
and then at [19] at 632:
The next contact between Mr Foster and Mr Deacon was alleged to be on Monday morning 21 April 1997. Mr Foster says that he telephoned Mr Deacon on Monday morning and told him there looked like being an offer on the Plaza of $475,000 and not to worry about that aspect of the report.
Paragraph [23]:
The only work Mr Deacon had done on the property related to his retainer from the Fosters. If one takes the letter of advice at face value he was in a position to express an opinion as to future maintainable rents.
GUMMOW J: The contract pleaded was at page 8.
MR KEANE: Yes, I was about to take your Honours to that, and paragraph 6, the relevant term is alleged.
HEYDON J: What was the consideration?
MR KEANE: It was $200.
McHUGH J: The report at 506 says that:
We refer to our meeting of 17 April 1997 wherein you requested advice relating to:
·Retail rental levels in Sarina
·Industrial investment premises at Paget ‑ ‑ ‑
MR KEANE: Yes. While we have the pleading out ‑ ‑ ‑
GUMMOW J: Where do we see the $200?
MR KEANE: We will dig that out, your Honour. It is in Mr Deacon’s evidence, we will dig it out, and we should ‑ ‑ ‑
GLEESON CJ: I suppose that if he had been asked – if he has asked somebody to underwrite the future rents, the consideration would have been more than $200.
GUMMOW J: Yes.
MR KEANE: And he gave evidence that even to give a valuation, he would have put a lot more time into it, but that is right, your Honour. What your Honour the Chief Justice says is right.
KIRBY J: That is why it seems to me that somewhere in the difference between the two valuation approaches is what is said to be an error of including and factoring into the erroneous approach the future facts as they actually occurred, which no one can foretell exactly, that the suggestion of the approach that has been endorsed by the Court of Appeal is one which is armed with too much hindsight.
MR KEANE: And more than just too much hindsight, your Honour. It is holding a party to a measure of liability that it never assumed, and to do so, and we say this with great respect, by the rhetorical flourish that this was the very thing about which he was asked to advise. Of course it was, but the question is, how did that adversely affect the other side, not are they entitled to sue on a promise.
KIRBY J: They had investment funds and the suggestion is that, had you given an accurate estimation, they would have placed those funds elsewhere and not have suffered the loss.
MR KEANE: As Sir Owen Dixon said, they would have still had the money in their pockets.
KIRBY J: Yes, but they were not going to go around there jingling it in their pockets. It is too much to jingle; they put it out to some other investment.
McHUGH J: There is no claim for opportunity costs here.
MR KEANE: The only point we are making is that the only transaction about which we are sued is this bad bargain, and that is why we say that the consequence of not having entered into it is they would have had the money in their pockets. We should draw your Honours’ attention to page 10 of the record, what is actually said in terms of the other side’s case, that they entered into the contract and they entered into the contract in reliance on the contents of the letter and the oral representation. His Honour did not find that they acted in reliance on the oral representation, but that is the case. That is the case, that ‑ ‑ ‑
GLEESON CJ: If this representation had not been fraudulent, what would have been the measure of damages?
McHUGH J: It is Potts v Miller, is it not? It would have been a Potts v Miller case.
MR KEANE: It would. We would say the answer would still be the same. The other side would have an argument. The developments in England, Smith New Court and so forth, might suggest Doyle v Olby (Ironmongers) would make the fraudster liable for all consequences without concerning oneself with what is in reasonable contemplation or remoteness, on the footing that the intention to do deliberate harm waives any entitlement to such consideration, and, if it had been fraudulent, presumably there would be some element of restitution involved as well.
GLEESON CJ: What I am trying to understand is whether there is some intermediate position between your proposition that the measure of damages is the difference between what they paid and the value of what they got, on the one hand, and, on the other, the proposition that they are liable for all losses involved in the transaction, even if they resulted, for example, from an outbreak of war or from the plague.
MR KEANE: Your Honour, so far as fraud is concerned, there are the seven propositions that Lord Browne‑Wilkinson set out in Smith New Court [1997] AC 254 at 266 at the bottom, and going over to 267, which might suggest a greater level of recoverability, partly because his Lordship speaks in terms of the consequences of the transaction, as opposed to, we would submit, so far as 52, negligence and so forth are concerned, the consequences of the misconduct. It is on the basis of Lord Denning’s proposition in Doyle v Olby (Ironmongers) that, “If it had not been for your deceit, I would not have been here at all, and therefore you are liable for all the consequences of that transaction and how I have dealt with that transaction”, rather than simply, “What did you induce me to do?”, as we would submit is relevantly the question here.
GLEESON CJ: Does Murphy v Overton have anything to do with this case?
MR KEANE: We submit not. Our learned friends rely on it in support of the contingent loss argument, and this is an argument that emerges from paragraph 48 and footnote 24 at page 64. We submit in paragraph 3 of our submissions in reply that Murphy v Overton does not have anything to do to this case, and the suggestion that it does, the suggestion that it supports the contingent risk theory, which our learned friends propound and which the courts below propound, as opposed to the contingent loss theory, which is what Murphy v Overton is about, is to misunderstand Murphy v Overton and the other cases of which it is in the line. The point we make is that if one looks at Murphy v Overton (2004) 204 ALR 26, if your Honours would go to it, your Honours will see, commencing at page 37, paragraph 46, that this line of authority commences with Wardley, where:
a majority of the court held that risk of loss is not itself a category of loss, and that, if a plaintiff enters a contract which exposes the plaintiff to a contingent loss or liability, that plaintiff “sustains no actual damage until the contingency is fulfilled and the loss becomes actual”.
The point is made that:
Wardley illustrates that it is necessary to identify the detriment which is said to be the loss –
The point about Wardley was, with respect, it was a case where Western Australia was induced to give an indemnity by a misleading statement that Rothwells were financially sound.
The indemnity was contingent on the establishment, on the suffering and proof of loss. That did not occur for some little time. The court’s point was that that was not a case of expenditure of money and an immediate outgoing, so that you look at what you have on the other side for it. That was incurring a liability to pay ‑ ‑ ‑
McHUGH J: We actually made that point in Wardley.
MR KEANE: Quite. I was going to take your Honours to it, but that is so. That is also, in our respectful submission, the point about these passages in Murphy v Overton that the liability or the loss in Murphy v Overton was not about contingent risk. It was a contingent liability, that is to say an obligation to pay money that did not fall in, had not fallen in, and did not fall in into the future, and that is apparent from these passages at 46 and 55.
To come back to your Honour Chief Justice’s question, to step back a step to Wardley. Wardley was, incidentally, not a case about predictive opinions. It was concerned to identify when a loss had occurred, and significantly, for our purposes, and apropos of the point Justice McHugh just made, if one goes to Wardley, to the discussion in Wardley at 530 in the paragraph that begins at the top of the page:
In the case of a fraudulent or negligent misrepresentation which induces the plaintiff to enter into a contract to purchase property, the plaintiff’s loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the contract and the value of the property at the date of the contract. It will be noticed that, even in such a case, Dixon J. spoke in Potts v. Miller (an action in deceit) of the measure of damages consisting in “the loss or expenditure incurred by the plaintiff in consequence of the inducement upon which he relied, diminished by any corresponding advantage in money or money’s worth obtained by him on the other side”. It is that amount that, in such a case, represents “the prejudice or disadvantage” the plaintiff “has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant”, subject to any consequential damage. Putting aside the incurring of expenditure, these statements might be thought to indicate that a plaintiff does not sustain loss until that loss is ascertained or, at least, is capable of ascertainment.
We emphasised, with the greatest respect to the courts below and to our learned friends, that the contingent loss and contingent liability cases, stand to one side of the cases where there is an expenditure for an asset.
GLEESON CJ: Now what about the next sentence, the beginning of the following paragraph?
MR KEANE: And that consideration concludes, your Honour, at 531, in the first full paragraph after that discussion. Their Honours say:
It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry into an agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us, the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date.
So that if one has a case where one has expenditure and gets something for it and then suffers a further liability to pay money as in Murphy v Overton, where in that case the plaintiffs later became liable to pay more than they bargained for, it is in that sort of case that you can say that is when that contingent loss has occurred. But in Murphy v Overton, if it had been possible for the plaintiffs to show they had paid more for their interest than it was worth at the time, then that would have been the time at which to value that loss.
GLEESON CJ: Coming back to that first sentence beginning with the words “Be that as it may”, is the explanation of that sentence that the reference to the full extent of the plaintiff’s financial loss is a reference back to the possibility of consequential damage? If the full extent of the loss is the difference between what you have paid and the value of what you got, it is always capable of ascertainment at the time of the contract.
MR KEANE: It is in a case where you have an exchange. It may not be in a case where, for example, you agree to give a mortgage, as in Forster v Outred, or indeed as in Wardley, where there is no exchange, where you are giving an indemnity and not getting anything back, where you are assuming a liability to pay money on a contingency which may or may not occur. Just as in Murphy v Overton, the purchasers assumed a liability to pay an amount of money that was more than they bargained for because of the concealment.
GLEESON CJ: Your proposition is that if a predictive opinion negligently given leads you to enter into a contract to buy property, then the loss that you suffered by the negligence is and is only the difference between the price you pay for the property and the value of the property at the time of the contract.
MR KEANE: Yes. We accept that it might be possible as a matter of principle – indeed, as is affirmed in Murphy v Overton, there may be a number of losses. There may be separate acts of prejudice induced by the predictive opinion, but there is none urged here. What we submit, with respect, is the approach adopted below is unorthodox and it elides the need to prove such things.
GLEESON CJ: I am still slightly puzzled as to how the problem arises in a case like this. You have the valuer, Mr Dodds, the expert witness, who says, “The value of the property I now say at the time of the contract was X dollars”, and the trial judge says, “The loss that was suffered by paying the contract price for the property I now know was X plus Y dollars”. What does the judge know that Mr Dodds did not know?
MR KEANE: The judge knows that he does not do the assessment until the risk has come home, whereas Mr Dodds assessed the market value on the basis that the risk was a feature of the market.
GLEESON CJ: So Mr Dodds assessed the market value on the basis that a reasonable assessment of the risk would have underestimated it?
MR KEANE: No, Mr Dodds assessed it on the basis that at the time, the risk being not as imminent as it later became, had a less effect on value. As the risk became more immediate, so it adversely affected value.
McHUGH J: But the judge and Mr Dodds approached the case in fundamentally different ways, did they not? The judge found in paragraph [48] that no loss was suffered at the time when completing the contract.
MR KEANE: That is right.
McHUGH J: The judge said:
In such a case no loss is suffered until it is reasonably ascertainable that the purchaser is in fact worse off as a consequence of the negligence or other breach. The cause of action does not arise until that time.
MR KEANE: I will not repeat myself beyond saying it just once more, that the judge avoided a lot of problems on the evidence for the plaintiffs by adopting the approach he did.
KIRBY J: Was the point about the cause of action that the cause of action was not complete until damage was suffered because the cause of action was negligence?
MR KEANE: Yes.
KIRBY J: But is that true of a statutory claim?
GUMMOW J: The cause of action was said to be contract too. How could that possibly be so?
MR KEANE: Except, your Honour, the way his Honour has approached it fits with that because he is looking for the breach of the promise. He looks for when you can say the contract has been breached and that is when the risk comes home, as if there had been a promise that it would not.
KIRBY J: There was a problem here that at trial you did not seem to differentiate between the causes of action. You and the plaintiff seem to have gone ahead as if it was all one melange.
MR KEANE: Well, your Honour, we never accepted that we were liable ‑ ‑ ‑
KIRBY J: I realise that, but when it came to the focus on damage you did not really help the judge to, as it were, address the differential way in which you apply the statute, you apply the law of contract and you apply the law of negligence, because the view that negligence was not established until damage, that is arguable.
MR KEANE: Well, your Honour, I would say with great respect that neither side can be criticised for not assisting the judge or for assisting the judge to the approach which his Honour adopted.
KIRBY J: But did you focus on the differential way in which the matter should be approached in respect of the several causes of action in negligence, in contract and under the statute?
MR KEANE: No, I do not think we did, your Honour. All we can do in that regard is refer your Honour to what our submissions say at page 52, under the heading “Causation, Foreseeability, remoteness and mitigation”. We accept that what your Honour says as to not focusing on different tests, but it is a little hard, with respect, to be critical of us when out of the blue comes this approach, which is not to adopt any of the approaches urged by the parties.
The other side had had a go at getting the damages assessed at the trial date. His Honour did not accept that. It is apparent from paragraph 15 of the pleading, your Honour, at page 12 of the record. Your Honour will see that paragraph 15(a) is informed by the particulars in (ii) above, which says that “the value of the shopping centre is in fact”, and it is speaking in the present.
GUMMOW J: That is talking about the oral representation, which was not ‑ ‑ ‑
MR KEANE: I am sorry, your Honour. Your Honour is quite right.
GUMMOW J: You have to go back to paragraph 13, have you not, on page 10? The contents of the letter were:
(b) made without reasonable skill and care;
(c) thereby in breach of contract; and/or
(d) misleading and deceptive.
McHUGH J: The action in contract itself indicates the problems that the courts below overlooked. The breach of contract occurred on 21 April 1997 when the letter was sent or received. At that stage, the plaintiff was entitled to at least nominal damages for breach of the contract.
KIRBY J: And, in fact, the way the plaintiff appears to have approached the calculation on page 12 does appear to conform to your submission as to taking the value of the shopping centre as good buying and the value in fact.
MR KEANE: Yes. I think we have probably taken your Honours to most of the paragraphs in the findings that we wish to take your Honours to. In our submissions we have referred to some of the evidence, because we say that there was no case made against us that this predictive opinion was relied upon the other side for anything other than this acquisition. We say that particularly in relation to a suggestion that we might be made liable for the consequences of retention. On the approach adopted below, of course, that question does not arise, and his Honour did not making any findings about this. We would submit, of course, he could not, because no such case was made, but it is a little worse for the plaintiffs than that, in terms of any suggestion that our predictive opinion continued to operate on their mind.
If your Honours go to volume 1, page 271, at the bottom of that page there is, at line 59, a reference to a report from Mr Clacher. The question is:
that was in April 1998 and he attributed a value to the property of $350,000, didn’t he?--Yes.
Mr Clacher was a valuer operating in Mr Dodds’ office. Mrs Foster is asked:
You were made – you were more concerned in consequence of the receipt of that valuation than you had been earlier, weren’t you?--No. Because we were concerned we got the valuation done.
Exactly. I suggested to you that by no later than late 1997 you and your husband were very concerned about the situation of the shopping centre with the video tenant having gone, albeit still paying rent? –
there is a positive answer –
But the property not being re‑leased?--Uh‑huh.
And the Shop 8 having left?--Uh‑huh.
And also you pointed out to me Shop 2 having left but also paying rent?--Uh-huh. And I was concerned – very concerned because there was just absolutely no inquiry in town for commercial space.
And your concern was manifested some short time later by engaging Mr Clacher to prepare a valuation?--Well, yeah, we got him to prepare a valuation.
What was your purpose in doing that?--What was the purpose? The purpose was I had realised that the advice that I had got in April was extremely bad and I was inquiring about a legal matter and I was told that you can’t commence proceedings unless there is a loss and, of course, because the tenants are still paying rent I knew that the loss wasn’t going to come in until a couple of years, until those leases actually expired. I mean the loss would be a lot worse it is just that it was buffered by that, those leases being there and the tenants honoured their lease commitments but I knew that the value of the property would have gone down so I got the valuation done.
It is not a case where we wait around to see if someone has to pay some money. It is a case where one is looking at the effect of that feature of the marketplace to which they have not been alerted. The effect of that feature of the marketplace on the Astonland and what effect it had on them was that it induced them to pay $485,000 for the property. It did not induce them to assume a liability, for example, to make a bullet payment to a bank of $400,000 five years hence.
McHUGH J: It induced them to purchase an asset at that time, and if the judgments below are right, then it would seem that whenever a valuer or a merchant banker or an invest banker gives advice about the future operations of any business then their loss is going to have to be assessed at that time. If you say sales will be maintained in my opinion, market share should be okay, costs can be confined, et cetera, et cetera, they are all matters that go to assessing the value of the particular business and makes it worth more or less, as the case may be.
MR KEANE: Yes, your Honour. Your Honour, the other thing is that if the trial judge thought that he could not assess loss at the time of acquisition because the evidence was not satisfactory, then when he went off to look for a time when he could, he would not have passed over April 1998 when Mr Clacher and Mrs Foster knew there was a loss, and valued the property at $350,000. But he did because he was not looking for the loss in that sense. He was looking for something different in point or principle.
GLEESON CJ: Judges are always often looking to postpone the date of accrual of the cause of action because they can see the later damage with the benefit of hindsight, that would not be taken into account at an earlier stage.
MR KEANE: And in this kind of case, where the interest that is adversely affected by the contravention is in acquiring an asset ‑ ‑ ‑
GUMMOW J: In Murphy v Overton they acquired a lease.
MR KEANE: They did, and then later on ‑ ‑ ‑
GUMMOW J: The Full Court seems to have gone down the track you are trying to entice us to go down now.
MR KEANE: With respect not, your Honour. With respect, we submit that we are within the letter and the spirit of the decision to the effect that they could not prove that they had paid too much, but they were later obliged to pay more when, because of what had been concealed from them, they became liable to pay a larger sum of money, and in our respectful submission, that is not this case. That is a further disadvantage they are suffering, and that is why we ‑ ‑ ‑
GUMMOW J: I think that is the battleground of this dispute, actually.
MR KEANE: And your Honour, that is why we point to the passage at the top of 530 in Wardley because the Court is there putting to one side cases where there is actually expenditure, cases where you pay for what you get, and you do not get what you should.
Your Honours, the other thing we should mention is we have distributed the schedule that we put before the Court of Appeal which shows the calculation of the loss for which we contend. It shows the calculation of the loss for which we contend if your Honours accept the April 1997 figure as being the appropriate date. On the next page it shows the calculation if your Honours accept the July 1997 figure.
GLEESON CJ: Is that agreed?
MR KEANE: The figures are agreed. We are at odds about the date, but we are agreed about the figures.
GLEESON CJ: But are you agreed between you as to what the outcome will be if the appeal succeeds?
MR KEANE: On the figures, yes, and with the two possible options. Our learned friends, I think, have a similar calculation if their application for special leave to cross‑appeal is granted and is successful.
HEYDON J: That will be a verdict, will it, at what date, the date of the trial judge’s judgment, that $127,046, for example?
MR KEANE: Yes, I think it is, your Honour.
HEYDON J: So the judgment interest will be added onto that.
MR KEANE: Yes.
HEYDON J: On your bullet payment point that may be well be correct, but the Fosters were going to borrow to acquire the property and Mrs Foster saw the projected rate of return as making the investment entirely self‑funding. That must imply, must it not, some future repayment of capital as part of her calculations?
MR KEANE: That is why I was at pains to say what there is not a finding about is a suggestion that our advice was asked in relation to that type of proposition.
HEYDON J: So you say these findings of the trial judge relate only to her own internal thinking process. They were not disclosed to ‑ ‑ ‑
MR KEANE: Yes, and as to the nature of the retainer and what was said about that, to the extent there was any debate about it, his Honour resolved it at 635, paragraph [26]:
There was a debate over what Mr Deacon’s actual instructions were but I am satisfied that what they were is irrelevant in the sense that Mr Deacon tendered and the Fosters accepted the letter of 21 April as being in satisfaction of them.
So they asked for advice in relation to these things and that is what they get. Your Honours, in relation to our learned friend’s schedule of calculations,
can we hand those to the Court as well on their behalf. We are content with the figures.
GLEESON CJ: Thank you.
MR KEANE: Those are our submissions in reply, if it please the Court.
GLEESON CJ: Thank you, Mr Keane. We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.
AT 3.35 PM THE MATTER WAS ADJOURNED
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