Damages—Contract—Tort—Breach of contract or negligent discharge of obligations—Money paid away and lost—Damages for loss of use of money—Whether within reasonable contemplation of parties—Whether common law principles modified by statute—Supreme Court Act 1935 (S.A.),s. 30c. Practice (S.A.)—Damages—Contract—Tort—Breach of contract or negligence—Loss of use of money—Interest—Power to award unless good cause to contrary is shown—Supreme Court Act 1935 (S.A.), s. 30c.
Decisions
MASON C.J. AND WILSON J. This appeal raises the important question whether, at common law, a court, when awarding damages for breach of contract or negligence, can include in its award damages, assessed by reference to appropriate interest rates, for the loss of the use of money which the plaintiff paid away and lost as a direct consequence of the defendant's breach of contract or negligence. There is the further question whether the presence of s.30c of the Supreme Court Act 1935 (S.A.) ("the Act") inhibits any development of common law principles which would favour an affirmative answer to the primary question. The appellants would be entitled to an award of interest under s.30c in the absence of good cause shown. However, it has not been suggested that the relevant component of the damages awarded to the appellant could be accommodated within the ambit of the power conferred by the section: but cf. Wheeler v. Page (1982) 31 SASR 1, at p 5.
2. The appellants, who are accountants, were the defendants in an action in the Supreme Court of South Australia brought by the respondents. The respondents carried on business under the name of Radio Electrix, selling, hiring and servicing television sets and other electronic goods. In 1982 the business was transferred to Walker Stores Pty Ltd, that company having been incorporated to acquire and conduct thereafter the respondents' business. The appellants were engaged to prepare the partnership and individual income tax returns for the respondents for the years ended 30 June 1974 to 30 June 1981. The partnership paid the income tax of each partner out of its trading account and the amount was debited to the personal account of each partner in the books of the partnership.
3. In the partnership return for the year ended 30 June 1975 the appellants made an error in calculating the amount of depreciation allowable as a deduction. The error was carried through in the returns in succeeding years and it resulted in an overpayment of tax. Radio Electrix made provision in its books for depreciation of assets which exceeded that allowed for tax purposes. To calculate the firm's taxable income it was necessary to add to the profit shown on the firm's books the difference between the depreciation shown in the books and that allowed for taxation. The depreciation shown in the books was accumulated in a "Provision for Depreciation" account. In the first year for which the appellants prepared the returns the…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Hungerfords v Walker [1989] HCA 8
Case
[1989] HCA 8
Decision Date
CaseChat Overview and Summary
The High Court of Australia considered the appeal in *Hungerfords v Walker*. The dispute concerned the liability of a firm of accountants, Hungerfords, for negligent advice provided to a client, Mr. Walker, regarding a tax avoidance scheme. Mr. Walker suffered significant financial losses as a result of the scheme's failure and sought to recover these losses from Hungerfords.
The central legal issues before the High Court were whether the accountants owed a duty of care to Mr. Walker in providing the advice, whether that duty had been breached, and if so, what was the appropriate measure of damages for the loss suffered. Specifically, the Court had to determine if the accountants' negligence caused the loss, and if the loss was too remote or otherwise unrecoverable.
The Court held that the accountants did owe a duty of care to Mr. Walker. The reasoning focused on the reliance placed by the client on the professional expertise of the accountants. The breach of duty was established by finding that the advice provided was negligent. In determining damages, the Court applied the principle that damages in contract and tort are generally awarded to place the plaintiff in the position they would have been in had the contract been performed or the tort not committed. However, in this instance, the Court considered the "but for" test and the concept of causation, ultimately finding that the loss suffered by Mr. Walker was a direct consequence of the negligent advice. The Court also addressed the issue of contributory negligence, which was a factor in the assessment of damages.