I and L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd B48/2001

[2001] HCATrans 608

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B48 of 2001

B e t w e e n -

I & L SECURITIES PTY LTD

Appellant

and

HTW VALUERS (BRISBANE) PTY LTD

Respondent

GLEESON CJ
GAUDRON J
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 21 NOVEMBER 2001, AT 10.19 AM

Copyright in the High Court of Australia

MR P.A. KEANE, QC:   May it please the Court, I appear with MR J.D. McKENNA for the appellant.  (instructed by Deacons)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR P.D.T. APPLEGARTH, SC, for the respondent.  (instructed by Thynne & Macartney)

GLEESON CJ:   Yes, Mr Keane.

MR KEANE:   If your Honours please, in taking your Honours briefly to the issues as they arise on the judgments below, may we make one point about the issues in the case.  In this case the appellant suffered one loss; that was the loss on the failure of the loan.  That loss was the consequence of its decision to approve the loan.  It is quantified in the judgment of the learned trial judge at page 48 of the appeal book.  If your Honours look at it, you will see it comprises a number of items which his Honour then totals up and reduces by a third to achieve the amount of the judgment which he made in favour of the present appellant.

The misleading valuation by the respondent was held to be a major factor influencing the decision to make the loan.  Your Honours will see that at page 28 of the appeal book at about line 4 to line 9:

It is sufficient to say that, given the plaintiff’s clear policy of lending to a maximum of 66.6 per cent of the value of the property (here 60 per cent), the loan of $950,000 would never have been approved or made if the defendant had furnished the plaintiff with the correct market value.

GAUDRON J:   The trial judge did not ever find out what the true value was, I take it?

MR KEANE:   He did not, your Honour, and he says in the sentence above that, that it was not necessary for him to make a finding on that.  On our side we contended the true value was $610,000.

GAUDRON J:   What was the realisation on sale?

MR KEANE:   $592,000 net, your Honour.

GAUDRON J:   Thank you.

MR KEANE:   We should also take your Honours to what his Honour said at page 35, paragraph 51, that is line 20 at the bottom of the page.  Here his Honour has referred to deficits in the care which the appellant took for its own interest in making the valuation and, at line 20, his Honour said:

But that does not detract from the fact that the defendant’s negligent valuation was a major factor which influenced the plaintiff to approve the loan.  If a valuation at $1.76M had not been presented to the plaintiff undoubtedly more detailed enquiries would have been made.  In those circumstances the negligent valuation was the major cause of the plaintiff’s loss.

His Honour also held that the plaintiff had failed to make further and appropriate inquiries about the borrower’s capacity to service the loan and he held there would have been no loan had those further inquiries been made.  His Honour’s conclusion in that regard is at page 36, paragraph 53, in particular, lines 10 to 15.

GLEESON CJ:   Mr Keane, the trial judge dealt with, amongst other things, with a cause of action in negligence and made a finding of contributory negligence.  Had that disappeared from the picture by the time the case went to the Court of Appeal?

MR KEANE:   It had, your Honour, in the sense that, so far as our side is concerned, we are content to have our rights under section 82 such as they are.  We submit that they do not admit of reduction by way of contribution, rather like Astley v Austrust where, if a plaintiff has a cause of action in contract it is not affected by the contribution legislation.

GLEESON CJ:   So you can do better under the Trade Practices Act, but you cannot do worse?  In other words, the finding of negligence and contributory negligence puts a safety net under your position?

MR KEANE:   We would submit so, your Honour, yes.  We do not understand it to be contended otherwise.

GLEESON CJ:   But we do not have to concern ourselves with the claim in negligence or the finding of contributory negligence, except in so far as it bears upon the Trade Practices Act?

MR KEANE:   Quite, your Honour, in so far as what his Honour did in relation to the contributory negligence finding was to say that, for the reasons that he discussed in relation to contributory negligence in terms of failure to ensure that sales had been made and that the guarantor of the loan had means, his Honour relied on those findings of fact to apportion the loss when he came to section 82.

GAUDRON J:   One issue that might well bear upon apportionment of damages, if such is possible, is whether or not there is any scope for the operation of common law if section 52 applies.  I should have thought, to the extent that it does apply, there is no room for the common law of negligence to apply.

MR KEANE:   Your Honour, that is our submission, and that is our submission in relation to section 82.  We need to take your Honours a little deeper into the reasons to show how the case was resolved, because in the Court of Appeal it was resolved not on the footing of the application of common law doctrine within section 82, but rather by reference to the exercise of a discretion under section 87.

KIRBY J:   You do not contest the factual findings relating to your culpability, to use an imperfect word.  You just say they are irrelevant.

MR KEANE:   We would certainly accept the intimation that culpability is not the appropriate word, but we accept the findings of fact ‑ ‑ ‑

KIRBY J:   Responsibility or ‑ ‑ ‑

MR KEANE:   ‑ ‑ ‑ that we did not do things that we could have done.

KIRBY J:   You just say that it is irrelevant.  You just look at section 82 and section 87 does not speak.

MR KEANE:   That is our submission.

KIRBY J:   It is just a curiosity and ought really to be there ‑ ‑ ‑

MR KEANE:   Not at all, your Honour, no.  Rather, our submission is that section 87 provides remedies which are themselves intended to compensate for loss, but not intended to deny compensation.

GUMMOW J:   Now, this notion of contributory negligence, where does that come from?  It does not come from the common law, in this sense, does it?  It is all about apportionment here.

MR KEANE:   Yes, that is right.  That is what his Honour did.

GUMMOW J:   So they are talking about some State statute.  His Honour was talking about some State statute which is unidentified, which somehow has an impact on the Australian common law, in relation to which there is a federal law anyway, namely section 52.

MR KEANE:   I am not being coy about it, your Honour, but can we just take your Honour in a moment to what his Honour did do, because it is a little unclear.

GUMMOW J:   Yes.

MR KEANE:   Can we say, before we go to it, that in this case there is none of the complications that arose in Henville v Walker in terms of the consequences of subsequent conduct.  Here the loss was the loss and the failure of the loan ‑ ‑ ‑

GUMMOW J:…I think one thing should be made clear though – and this has to be faced – why would one pick up some State Act under section 79 in the face of the Trade Practices Act?  That is the question that Justice Gaudron and I think are worried about ‑ ‑ ‑

MR KEANE:   And our answer to that, your Honour, is one would not, and one should not.  In our submission the approach which is, we understand, urged in the alternative by our learned friends is to that extent, in our submission, unorthodox and indeed contrary to what this Court held in Henville v Walker.

GLEESON CJ:   The kind of complications to which you have referred that arose in Henville v Walker might have arisen here if there had been a lack of proper care in reselling the property.

MR KEANE:   Quite.  That is so.  That is right, your Honour.  That is the sort of complexity that does not arise here in terms of trying to assign particular losses or particular components of a loss to particular extra causes or other causes.  Questions of directness and the correctness of the approach in Doyle v Olby to matters of remoteness do not arise here, either, in our submission.  What his Honour the trial judge did in dividing responsibility for the loss suffered was firstly – this is in relation to section 82 and 87, your Honours - to refer to the decision of Justice Pincus, as his Honour then was, in S & U Constructions v Westworld Property.

His Honour does that at page 38 of the appeal book, paragraph 59, where his Honour, at the paragraph that commences at about line 18, says:

Of more relevance for present purposes is –

that decision.  Your Honours will see that in that decision his Honour had referred to section 87(1) as empowering the court to:

“assess the relative weight of causes of action or inaction resulting in the loss complained”.

HAYNE J:   What does that mean?

MR KEANE:   Your Honour, as elaborated in the judgment of the Court of Appeal in this case, it seems that it means that if there are two causes for a loss then section 87 confers a discretion to reduce the loss or damage for which section 82 provides compensation.

GLEESON CJ:   What would be the principles according to which that discretion might be exercised favourably or refused? 

MR KEANE:   Your Honour, one of the points we seek to make is that there is no indication in the statute of the principles by reference to which that would proceed.  What does seem to have happened is that there has been an analogy drawn with the approach taken pursuant to the law reform statutes, to say that, well, we can adjust by reference to what is just and equitable, in terms of fairness.  But, your Honour, it is as ‑ ‑ ‑

GLEESON CJ:   That is a different kind of discretion, is it not? 

MR KEANE:   Well, it is certainly an odd discretion to find being exercised against a plaintiff seeking relief under section 82, and, indeed, would be a funny thing to have happen to a plaintiff seeking relief under section 87. 

HAYNE J:   And is the hypothesis for its application a hypothesis of satisfaction of the conditions of section 82? 

MR KEANE:   In applying the discretion under section 87, your Honour? 

HAYNE J:   That is, do you get to apply this discretion having first concluded that 82 is not only engaged, but satisfied? 

MR KEANE:   Your Honour, I think, with respect, the answer is “probably not”.  It seems to us, with respect – and we say this with respect to the Court of Appeal, but it does seem to us that one of the consequences of their Honours’ view is that section 87 stands as a means of diminishing or destroying the right of action created by section 82; a consequence for which there is no support in the authorities.  It involves a view of the discretion which none of the authorities to which the Court of Appeal refers in its judgment lends support. 

HAYNE J:   It also depends on what you attach the phrase “in whole or in part” to, but we will no doubt come to that in due time.

MR KEANE:   Well, quite, your Honour, in whole or in part but, nevertheless, to compensate, in whole or in part, not to deny compensation.

KIRBY J:   The difficulty of your construction is, it seems to me, that it does not leave section 87 with very little, if any, work to do, but no doubt you will explain that it has a real purpose at some stage.  That is a factor that concerned the Court of Appeal that, unless you give section 87 a bite, it may as well not be there and has, in fact, been rarely used and the construction that their Honours preferred was one which, they say, reads that part as a whole and gives section 87 work to do, which one would assume from its history was the intention of the Parliament.

MR KEANE:   Your Honour, there is no doubt that it was intended to enable better compensation to be made.

GUMMOW J:   Section 87 enables rectification and all sorts of remedies.

MR KEANE:   Quite, and various forms of specific relief and in circumstances where damage does not need to have been proved.

KIRBY J:   I am referring to the addition of the words “in part” following the Swanson Report.

MR KEANE:   Your Honours, if we might go to that now.

KIRBY J:   Do not do it out of your time.

MR KEANE:   No, it is a little out of turn, but, your Honours, we have provided your Honours with copies of the relevant provision from the Swanson Report.  Their Honours in the Court of Appeal referred to it at page 61 of the appeal book at line 28 and they set out the remark from paragraph 9.158:

“In most instances the remedies under section 87 would be the more appropriate remedy”

Now, if we might invite the Court, with respect, to read what the Committee actually said - and might we say, with the greatest respect, that that paragraph lends no support at all to the suggestion that section 87 is intended to diminish the right of action conferred by section 82, rather, it makes it clear that it is intended to do better compensation to afford more ample relief.

McHUGH J:   Well, one large area where 87 applies and 82 does not is where a person is likely to suffer damage.  Section 82 looks at a person who has suffered damage; 87 looks at a person who has suffered or is likely to suffer loss or damage.

MR KEANE:   Quite, your Honour, and, indeed, that is, with the greatest respect, a point that your Honour Justice Kirby made in Marks v G  IO, which is the first case on the list, and it is a case to which reference was made in the Court of Appeal, at page 61, line 40, and the relevant passage in your Honour Justice Kirby’s judgment is at page 545 commencing at paragraph 145 where, to take up the point your Honour Justice McHugh was making, your Honour said:

There are material differ4ences between the relatively narrow provisions for the relief in s 82 of the TP Act and those provided under s 87.  In terms, s 87 is expressed much more broadly that s 82.  Section 82 is confined to the recovery of “the amount of the loss or damage”.  That phrase postulates that an amount is ascertainable.  The section contemplates that “loss or damage” has already been suffered.  It is concerned with conduct in contravention of a provision of Pt IV or V.  Section 87, on the other hand, in both sub-ss (1) and (1A), provides for orders as the court thinks appropriate.  It does so not only where a person who is a party to the proceedings “has suffered” the requisite “loss or damage” but where it is found that that person “is likely to suffer” such loss or damage.  In the case of both subsections, reference is made to contraventions of a provision of Pt V of the TP Act.

Then paragraph 146, if we can ask your Honours to read down to that:

The range of orders which may be made, as contemplated by sub-ss (1) and (1A) of s 87 includes the payment “to the person who suffered the loss or damage” of the “amount of the loss or damage”:  language which exactly parallels that in s 82(1).  The interrelationship between the two remedies, and the possibility that orders will be made both under ss 82 and 87, is made clear by the express language of s 87(1).  But the other remedies, contemplated in s 87(2), travel far beyond those available by the law of tort to whose analogy Gates referred in the context of s 82.  Not only do the remedies (apart from that in s 87(2)(d) and perhaps (c)) proceed much further than the traditional tort remedy of damages, but the variety of persons who might be affected by the orders exceeds even the extended ambit provided by s 82(1) which, in its turn, expanded the reach of a traditional action in tort.

GUMMOW J:   There is also the involvement of the Commission, is there not?

MR KEANE:   Under section 87(1A), yes.

GUMMOW J:   Section 87(1A), (1B), but not under 82.

MR KEANE:   No, that is quite right, with respect.  Your Honours, these dicta were relied upon by the Court of Appeal as indicating a view of the possible operation of section 87 in derogation of the cause of action created by section 82.  While your Honours have Marks out, can we draw your Honours’ attention in that to the observations of your Honour Justice Gummow at paragraph 109 where, after a discussion of section 82 and contrasting it with section 87, about eight lines from the bottom:

It is true that the discretionary remedies provided by s 87 are of sufficient width that, in an appropriate case, contractual terms themselves may be varied.

Returning to your Honour Justice Kirby’s point, that is a radical addition, of course.

Section 82 stands in a different light.  It confers a right of action not a discretionary remedy.  The purpose and scope of s 82 is to provide compensation for the injuries sustained by contravention, in the present case, of s 52. 

Your Honours, for the proposition that section 82 creates a right of action, not simply a claim on the exercise of a discretion, we have referred your Honours as well to the decision of this Court in Sent v Jet (1986) 160 CLR 540. We have referred to it in our outline, we will not take your Honours to it now, but at 544 the Court there draws the clear distinction between the right of action created by section 82 and the claim to a discretionary remedy under section 87.

McHUGH J:   We held, did we not, in that case that 87(1A) does not provide an independent cause of action?

MR KEANE:   Yes, and as the Court of Appeal point out in that regard at page 62, paragraph [14], that particular holding was reversed by statute by the addition of section 87(1C).  The point though, your Honour, is that there is today no more reason than there was then, when Sent v Jet was decided, to doubt the correctness of the proposition that section 82 creates a right of action, whereas section 87 provides a remedy, a discretionary remedy, which the party may claim.

GLEESON CJ:   Have you said everything you want to say about the decision of Justice Pincus in S & U Constructions?

MR KEANE:   No, not yet, your Honour.  Before we go on, with a view to going to that, might we, while we have your Honours with Marks v GIO, refer your Honours to what is said in the joint judgment of Justices McHugh, Hayne and Callinan at paragraph 43.  We do this, really, by way in part of further response to your Honour Justice Kirby’s question.  At 513 in paragraph 43 their Honours discuss the operation of section 87 and say:

Proof of loss or damage (actual or potential) is therefore the gateway to s 87 remedies.  But the identification of loss or damage is important in the operation of s 87 not only for this reason but also because the power to make orders under s 87 is limited to making orders “if the Court considers that the order or orders concerned will compensate . . . in whole or in part for the loss or damage or will prevent ore reduce the loss or damage . . . ” (s 87(1) and (1A)).  That is, the Court can make orders under s 87 only in so far as those orders will compensate (or prevent or reduce) the loss or damage that is identified.

It is a radically different deployment of section 87 to use it to reduce the damages otherwise properly assessed and available under section 82.

McHUGH J:   As we pointed out in Marks, section 87 has special application or scope in cases of misuse of market power contrary to section 46 of the Act or engaging in exclusive dealing, and so on.

MR KEANE:   With the broad range of activities that it complies to, yes, your Honour.  The only other things in Marks that we take your Honours to at the moment is in the judgment of Justice Gummow again at 526, in paragraph 95 where your Honour looked at the elements of section 82.  We would invite the Court to read what is there said, but might we emphasise particularly the fifth proposition, which is that:

the measure of compensation is “the amount of” the loss or damage sustained.

If we might go back to ‑ ‑ ‑

KIRBY J:   It may be that there is no ambiguity and I think that is what you are submitting but if there were an ambiguity, the construction to give the words “in part” a governing effect would be conducive to a just result.

MR KEANE:   Your Honour, one of the things we do say about that is that if it had been intended that there be some apportioning operation contemplated, one would have thought the principles by which it might be affected might be stated, even in the briefest terms, as indeed they have been in section 75AN, which was added in 1992 after there had been a number of decisions of the Federal Court and State Supreme Courts in which the possibility of apportionment under section 82 had been denied.  Section 75A ‑ ‑ ‑

KIRBY J:   What is that subsection?

MR KEANE:   Section 75AN, your Honour.  If your Honour has our written submissions we have it an annexure, or it is part of the annexure 1 to our written submissions.  Your Honours will see that this provision contemplates that where a loss in an:

action given by section 75AD or 75AE was caused by both:

(a)  an act or omission of the individual who suffers the injuries concerned; and

(b)  a defect of the action goods;

the amount of the loss is to be reduced to such extent (which may be to nil) as the court thinks fit having regard to that individual’s share in causing the loss.

KIRBY J:   Would section 75AN have been necessary if the view against you were correct?

MR KEANE:   We would submit not.  We would submit it would not have been necessary and the further point we make about it, your Honour, is that it is a remarkable thing that it is there in its own little niche in relation to claims under Part VA but not reproduced elsewhere, for example in Part VI, concerned with the broad range of remedies with which the Act is concerned.

GUMMOW J:   These sections 87 and 82 do not apply to Part VB, do they?

MR KEANE:   No, your Honour, because in our respectful submission they are little codes, if one might say so.

GUMMOW J:   Order 5A, do they, which is the particular one, is it not?

MR KEANE:   I am sorry, your Honour, I have not ‑ ‑ ‑

GUMMOW J:   75AN is in Part VA?

MR KEANE:   Yes, it is.

GUMMOW J:   Which is not one of the parts referred to in these sections in Part VI?

MR KEANE:   No, it is not, your Honour. 

GUMMOW J:   The idea, really, is that your remedy under Part VA as a common law remedy, is it not?  In damages.  As qualified, though, by the Act. 

MR KEANE:   Yes.  No doubt ‑ ‑ ‑

GUMMOW J:   So you can sue in the District Court, in the old days.

MR KEANE:   Yes, and no doubt the common law concepts would inform those provisions and their application. 

CALLINAN J:   Mr Keane, is there anything anywhere to throw any light upon why contributory negligence might apply in respect of defective goods, but not otherwise?  It seems to be the position, does it not, on your argument and on an ordinary reading of the Act. 

MR KEANE:   On an ordinary reading of the Act, one might say that a plaintiff had a share in causing the loss, for example, by putting a machine to an extreme use. 

CALLINAN J:   But there seems to be no difference in principle between that and some other form of contributory negligence. 

MR KEANE:   Except that in the Act it is characterised in terms of the share of the loss, and it is ‑ ‑ ‑

CALLINAN J:   It does not matter how you characterise it; it is still a form of contributory negligence.  I am not quibbling at the moment with your construction, I am just looking for some policy reason, that is all. 

MR KEANE:   Your Honour, I think the answer might be that what Part VA sets up is a system of absolute liability, so there would not need to be negligence in the manufacture of the product.  So hence ‑ ‑ ‑

CALLINAN J:   So, to ameliorate the harshness or the apparent strictness of that, you could have contributory negligence. 

MR KEANE:   Well, you would not call it “contributory negligence”, I suppose, because there is no negligence posited on the part of the manufacturer.  But you would have, as the section gives, an ability to recognise responsibility for a share of the loss and reduce the damages accordingly. 

McHUGH J:   But there was, if my recollection is right, a very powerful lobby on behalf of the manufacturers in relation to Part VA, and this may well reflect a legislative compromise. 

MR KEANE:   But, your Honour, a compromise that is at least rationally based on the footing that, if there is an absolute liability, there has to be ‑ perhaps, well, not has to be, but it makes sense to have a balance. 

CALLINAN J:   I suppose section 52, though, on your construction, really gives rise to an absolute liability.  Fraud is not necessary ‑ ‑ ‑

MR KEANE:   That is true.  Fraud is not necessary, and negligence is not necessary. 

CALLINAN J:   No, so it is very close to being an absolute liability, if you can show loss or damage.  But the answer might be what Justice McHugh has put to you. 

MR KEANE:   Yes.  Your Honours, we had mentioned that the learned primary judge had referred to S & U Constructions, and we will come back to that, if we may.  Having referred to S & U Constructions, his Honour then seems to have reached his conclusion by the application of section 82 of the Act.  If your Honours go to page 41 of the appeal book, paragraph 62, there his Honour is speaking after setting out passages from Marks v GIO and Kenny & Good v MGICA.  His Honour says: 

In my view none of those passages from the High Court judgments preclude a court from determining that there were two causes of the plaintiff’s loss, in other words a divided responsibility for that loss, and in consequence only allowing the plaintiff to recover by way of damages pursuant to s.82 that part of the loss which is attributable to the conduct in breach of s.52.  Experience shows that many, perhaps most, commercial losses have a number of causes which would satisfy the March v Stramare test.  It seems abundantly clear that the legislature did not intend to deprive someone who suffered loss as a result of deceptive and misleading conduct of the right to recover at all if there was some other demonstrable cause of that loss.  Equally, in my view, the legislature did not intend that the total loss should always be recoverable regardless of the number or significance of established causes other than the misleading or deceptive conduct in question. 

GUMMOW J:   Yes.  The problem with all this is that it construes 82 as if the only provision elsewhere in the Act it was connected to was 52 and, as Justice McHugh has pointed out, Part IV is enormously important.

MR KEANE:   Yes.

GUMMOW J:   And if there has been some predatory conduct under section  46, on Justice Pincus’ analysis, presumably 82 would mean one thing and it would mean something else if it was section 52 that was complained of.  That has to be faced up to.  I do not think it is faced up to in this matter.

GLEESON CJ:   Even if it is considered in the context of its relationship to section 52, section 52, as you pointed out, gives a right of action not a discretion.  Am I right in thinking that in a case such as the present, where I realise there was a concession of negligence and a finding of negligence, the right of action under section 52 and 82 would have existed even if the valuation had been made honestly and carefully and had been erroneous as a result of a fraud practised on the valuer by a third party?

MR KEANE:   Your Honour, in that case it might not have been misleading on the footing that there was a reasonable basis for it.  The question would be really whether there was a reasonable basis for the erroneous valuation.

GLEESON CJ:   The reasonable basis provisions relate to forecasts, do they not?

MR KEANE:   They do.  In this case the representation was as to its value and as to its suitability for mortgage lending purposes, the mortgage having a period of operation.

GLEESON CJ:   Leave aside a case of forecasting the future and reasonable basis for forecasting.  A person can be successfully sued under section 82 for a contravention of section 52, even though the person acted honestly and carefully.  Is that not the case?

MR KEANE:   If one leaves aside the need for a reasonable basis, yes.

GLEESON CJ:   So that this is providing a cause of action for damages for an innocent misrepresentation.

MR KEANE:   Yes, it may.

GLEESON CJ:   It may.

GUMMOW J:   The question is whether it is false or misleading.

MR KEANE:   Quite.  Misleading or deceptive.

GLEESON CJ:   Yes, and that does not involve any mental attempt.

MR KEANE:   No.

GLEESON CJ:   It seems to operate in that context, which is undeniable, fairly stringently in any event, does it not?

MR KEANE:   Quite.

GLEESON CJ:   Justice Pincus in S & U does seem to be dealing with a case that had what you referred to earlier as the kind of complications that arose in Henville v Walker.

MR KEANE:   Yes it does.  His Honour held that the failure on the part of the innocent party after settling the contract which they had been misled into making had exacerbated the problems that they had and it converted a possible loss into a certain one.

GLEESON CJ:   It looks like a problem that in another context would have been described as a problem about mitigation of damages.

MR KEANE:   Mitigation of damages or perhaps even possibly, depending on the facts and how they were found, the possibility of identifying a separate cause of extra loss because of the exacerbation of the position, that on settlement one gets a property that is presumably worth something less than what the party paid for it.

GLEESON CJ:   How does section 82 deal with, what in another context would be called mitigation questions?

MR KEANE:   Well, in this Court, in Henville v Walker, the majority view was that there may be cases where what the plaintiff has done is so extraordinary that it makes a finding of causation not possible, but they will be rare. In particular in the judgment of Justice McHugh in this regard, in the passage which commences at paragraph [102], in relation to Gorris v Scott, because Gorris v Scott is an example of a rare kind of case, and it concludes at paragraph [109].  The particular paragraph that is relevant to your Honour the Chief Justice’s question is [106]:

If the defendant’s breach has “materially contributed” to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage.  As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage.  In exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage.  But such cases are exceptional.

GLEESON CJ:   Well, take a common case.  Suppose that in the present case part of the ultimate financial loss that your client suffered resulted from negligence on the part of your client in the manner in which it went about realising the security.

MR KEANE:   There would then be a question, your Honour, and the question would be whether the loss, resulting from the manner in which the security was realised, could fairly be said to have been caused by the original misconduct.  Now, that question might be answered in the affirmative if, and to the extent, that the exigencies of the realisation process were affected by the original misconduct.  It might be that they were in no way affected by it and it would be the kind of example that his Honour refers to as exceptional.

We have been seeking to bring your Honours to his Honour the primary judge’s findings that there were two causes of the plaintiff’s loss.  His Honour does that at page 43 in paragraph 65, and we invite your Honours to read that, and it does seem that there his Honour is approaching the question or the resolution of the case as one which involves the application of section 82 rather than section 87, because his Honour is proceeding on the footing that there are two causes of the plaintiff’s loss.  Our submission as to that is that that is an approach which is contrary to the approach indicated by this Court in Henville v Walker and contrary to the language of the statute, which does not invite one to find what caused the loss, but simply to say if the contravention was a cause of the loss, then the right to compensation follows.

In the Court of Appeal their Honours relied explicitly and, we think, exclusively on section 87.  If your Honours go to page 61, starting at paragraph 9, and your Honours will see there, there is a reference to Kizbeau which is said not to encourage a reading‑down process.  Your Honours, Kizbeau is No 2 on our list.  If we can just ask your Honours to look at that, in particular to page 298, the page that is cited as affording support to the approach being taken by the Court of Appeal.  Your Honours may recall that Kizbeau was a case where the quantum of appropriate compensation was quite a complex issue.  At page 298 the passage to which the Court of Appeal refers is halfway down the page:

Section 87 of the Act confers a wide discretionary power on courts to make remedial orders in appropriate cases to ensure a fair result.

It refers to the various types of order that can be made.  What should be noted, in our submission, are really two ‑ ‑ ‑

GUMMOW J:   That is not quite right, is it, “Section 87(2) sets out the orders a court can make”?

GAUDRON J:   It may have been amended now.

MR KEANE:   I think that is perhaps, and with the greatest ‑ ‑ ‑

GUMMOW J:   The statutory text says that this includes what ‑ ‑ ‑

MR KEANE:   Yes, it does and, your Honours, the language there is perhaps a little loose.

GUMMOW J:   The primary sections 87(1) and (1A) are broader.  Then it says “including” what is in (2).

MR KEANE:   That is right, with respect, and the other thing about this passage is that if one looks at the first sentence that introduces it, this discussion is introduced by the Court’s recognition that:

An order for the payment of damages of $182,060 and interest is not sufficient to compensate –

so that what the Court is ‑ ‑ ‑

HAYNE J:   But can we go back to 87(1) a moment and just understand the statutory hypothesis on which this debate has to occur.

MR KEANE:   Yes.

HAYNE J:   The vexed words, “in whole or in part”, qualify or attach themselves to what phrase or part of the subsection, on your contention?

MR KEANE:   “Will compensate” or ‑ ‑ ‑

HAYNE J:   Is it not the “order or orders concerned”?  That is, have you not got to connect the “order or orders concerned”, the compensation they provide, a conclusion about whether that is whole or part compensation, and to do so on a particular set of hypothesis, in particular, for example, to take a common or garden Part V case where a defective motor car is sold with the misleading statement that it is a lovely little runner, clean throughout, well-shod, et cetera, and it is not, if a repair order is made under 87, the financial consequences to the person misled or deceived will differ from the consequences that that person might suffer if no repair order were made.  That must be so, must it not?

MR KEANE:   Yes.

HAYNE J:   So does one not need to begin consideration of 87, bearing in mind that consideration of compensation “in whole or in part” may vary according to the orders that are made, that is, may vary according to the circumstances in which monetary orders will bite?  Second, does one not approach it, bearing in mind that “in whole or in part” has to be attached to a particular order?

MR KEANE:   Yes, your Honour.

HAYNE J:   So that the order for money might be whole compensation, in which case, what are you going on making other orders for?  Or it might be part compensation, in which case, we will make another order which will partly compensate and then a still further order which will partly address some other consequence, leading to a conclusion that there is whole compensation.  But the words “in whole or in part”, at the moment at least, seem to me to be difficult words upon which to hang a conclusion give only part compensation overall.

MR KEANE:   Quite, your Honour, particularly since the order or orders which the Court may make are order or orders against – underline “against” – the person who engaged in the conduct and they are to be made against that ‑ ‑ ‑

GUMMOW J:   It is not just the person engaged in the conduct.  It includes persons involved in the contravention.

MR KEANE:   Quite, your Honour.  If the Court considers that the order or orders concerned will compensate and, with respect, we would adopt the observation that that language does not suggest an intention that there not be compensation and a fortiori it certainly does not suggest that a right to compensation arising under section 82 might be diminished or denied.

HAYNE J:   But if the argument against you is right, would it lead to the conclusion that by a series of orders directed to partial compensation you could get over-rounding; that is, you could get double or treble compensation?

MR KEANE:   Your Honour, I would not see that that would necessarily be so, with respect.  I mean, I suppose one approaches the problem that we have on the footing that, with the greatest respect, the use that has been made of section 87 in this case is as far‑fetched as one would wish to attribute to the judicial imagination.

HAYNE J:   I do not know about that, Mr Keane.  That is just a challenge.

MR KEANE:   Evidently it might be taken as such, your Honour.  In any event, your Honours, going back to the judgment, in our submission neither those observations in Kizbeau nor the observations in Marks v GIO forward any support for the approach the Court of Appeal has taken.  In relation to S & U Constructions, which is the next matter referred to at the bottom of page 61, that decision itself has been treated previously as a view not to be followed.  We deal with this in our submissions at paragraphs 14 and 15.  In particular, can we take your Honours to the observations of Justice Hodgson, as his Honour then was, in Tefbao v Stannic Securities (1993) 118 ALR 565, case 5 on our list. In particular the passage that commences below line 40 on page 575, where his Honour said:

I note that the possibility of reducing damages on the basis of contributory negligence was accepted in S & U Constructions Pty Ltd v Westworld Property Holdings Pty Ltd (1988) ATPR 40‑854. Pincus J reached that result on the ground that s 87 of the Trade Practices Act gave the court power, in an appropriate case, to award only part of the loss actually suffered. However, as pointed out by J C Campbell QC in 67 ALJ at 188 –

we have given your Honours a copy of that article –

this seems to involve a view that s 87 modifies the effect of s 82.  Certainly, it seems that s 82 has been recognised as not importing any concept of contributory negligence –

and there is reference to earlier authority.  His Honour goes on:

As I understand it, in no case other than S & U Constructions has it been suggested that apportionment of responsibility and consequent reduction of damages can be applied to claims under s 82; and, with respect to Pincus J, I do not think s 87 does disclose an intention to take away or qualify the right to damages given by s 82.  The same would apply to the claim brought under the Fair Trading Act.

McHUGH J:   Do you accept that under section 87 an order can be made for substitution for damages or part of the damages that could be recovered under 82?

MR KEANE:   Yes, but as the joint judgment said in Marks, with a view to providing compensation for the loss or damage.  The loss or damage, as in our respectful submission is clear, is the loss or damage suffered by the conduct, to use the text of 82.

GAUDRON J:   May we not have to be a bit more precise about that?  You keep asserting that the loss or damage is entering into the mortgage, do you?

MR KEANE:   Your Honour, we submit that the loss occurred here because we entered into a transaction which we would not otherwise have entered into.  As a result of that, the loan was not repaid and we lost interest in the sense that we could have gone into the marketplace and earned at least average interest.

GAUDRON J:   But if you take it one step further, that is to say you identify the loss not as entry into the transaction but the failure of the mortgagor to honour his obligations under the contract, then you may get different causal relationships.  For example, you might be able to say on that basis that the capital loss is referable to the misleading valuation and the income loss is referable to the failure to undertake credit checks, may you not?

MR KEANE:   Your Honour, we would submit not, with respect, for this reason, that if the transaction had not been entered into, we would not have laid out our money, which we did not get back in terms of the full return of the capital, and we would have suffered a loss of interest in that, as his Honour found, we could have at least earned average interest in the marketplace with our money on a good loan.  The point being that we would have recovered that on a good loan, and we made a bad one.  Your Honour, perhaps I should also mention ‑ ‑ ‑

GAUDRON J:   Yes, I understand that and I understand there are arguments about that.  What I am really asking is:  why does one identify the loss in question as the entry into the transaction?  It seems to me if you do that certain things follow on your argument, but if you identify it some other way different consequences might follow.

MR KEANE:   Money is laid out that might be laid out elsewhere in circumstances where the valuation says it is 1.576, and it is suitable for mortgage purposes and the property can be realised in six months.  In the event ‑ ‑ ‑

GLEESON CJ:   You began your submissions by saying that your client suffered one loss.  When?

MR KEANE:   The loss was quantified after the sale ‑ ‑ ‑

GLEESON CJ:   Suppose there had been a limitation question that had arisen in this case.  When did your client suffer the loss that you say is the single uncomplicated loss with which we are concerned?

MR KEANE:   When it made the bad loan.

HAYNE J:   Is that because this is a no transaction, rather than a different transaction case?

MR KEANE:   Yes it is, your Honour.  Might I just say, returning to your Honour Justice Gaudron’s questions, having regard to what your Honour said in Henville v Walker, it might be appropriate to mention to your Honour that if the valuation had been correct, there would have been full recovery, both of capital and interest.

GAUDRON J:   Yes.

MR KEANE:   Because the valuation was 1.576.  The loan was 955,000 and 592 was realised.  So, if the thing had been as it was represented, then there would have been a full recovery.  Whereas because it was not, money was lost and the possibility of earning interest on a good loan was also lost.  That all happened when we stepped off the precipice.  Your Honours, we were going to take your Honours then to ‑ ‑ ‑

GAUDRON J:   I am sorry to be difficult about this.  It is not necessarily against you.  It does seem, in the economic loss cases, which I think flows over into this area, that there is not always an identification of the loss other than in money terms at the end of the day.  Is there anything really that tells you the way in which you identify the loss, other than - I mean in tort, I know - at least I have suggested, you identify the loss by reference to the interest which the law is there to protect.  Beyond that, is there anything?

MR KEANE:  Our response to your Honour is that it is perhaps not as refined an instrument as your Honour would prefer, but if the case is one where there would not have been the transaction, had the misconduct not occurred, one looks at the position as it was in consequence of there being a transaction and what the consequence would have been had there not been one.  When one does that comparison here, it justifies us, in our respectful submission, in saying that the total loss is a loss suffered in consequence of making the loan, and that what is found certainly by the primary judge, that there were two causes for that happening.  Not that there were other causes for the interest loss.  We understand it is suggested in the last paragraph of our learned friend’s submissions that the interest loss was somehow attributable, solely, to a failure to ensure the credit worthiness of the borrower whereas, with respect, his Honour plainly has not approached it in that way.

GAUDRON J:   I suppose in the context of 52, it is easily enough said that the damage is the acting upon the representation involved in the misleading and deceptive conduct.  So that at least, ordinarily, it will be the entry into the transaction which, again, to use language from that area, the conduct was intended to induce.  I mean, there can be no doubt here in this case, I should not have thought, that that valuation was given so as to induce your clients to enter into that transaction.

MR KEANE:   It was expressly said to be able to be used for that purpose.

GAUDRON J:   Yes.  There was nothing unusual, I take it, about the interest rates?

MR KEANE:   They were high, your Honour.  The default rate was 19.5 per cent and the ordinary rate was 13.5 and the evidence is that the average interest rate that could have been obtained in the market at the time was 12.7.  We were wishing to take your Honours very briefly to only one other case where S & U has been discussed and that is in the decision of Justice Lockhart in Kinlace v Mortgage Finance Australia.  It is No 6 on our list.  Your Honours should, I think, have two documents.  One is a very skeletal report of it and the other is the case off the Internet.

If we could take your Honours to the case off the Internet, to page 16 and to what Justice Lockhart said in relation to contributory negligence on the second paragraph of that page.  We will not read it out to your Honours but we do invite your Honours to read it.  We submit, with respect, Justice Lockhart’s view ‑ ‑ ‑

GLEESON CJ:   I see Butterworths has copyright in this judgment.

MR KEANE:   Your Honour is ahead of me.  I see, yes.

GLEESON CJ:   That is only in the value adding, probably.

MR KEANE:   Your Honours, the next step in the reasons of the Court of Appeal is at page 62, paragraph [11], the citation of what was said by the New South Wales Court of Appeal in Akron Securities.  Akron Securities is case 4 on our list.  If we could ask your Honours to look at it, and particularly bearing in mind the citation from 364 to what President Mason said commencing at 364 at the top of the page, and really reading to 365F.

We will not read it out to your Honours but can we invite your Honours to read that and in reading it your Honours will note that in affirming the flexibility of section 87 remedies it is clear that what his Honour is saying is akin to what your Honour Justice Kirby was saying in GIO v Marks, that the provision of these remedies is not to be confined by reference to traditional concepts such as, for example, the usual restraints on the availability of rectification.

What it does not suggest is, in our respectful submission, the possibility that section 87 may deny a right of action otherwise provided by section 82.  The other case that we refer your Honours to in relation to the nature of the right conferred by section 82 – and we will not ask your Honours to go to it now – is the decision of the New Zealand Court of Appeal in Cox & Coxon v Leipst.  It is item 8 on our list.  We refer to it because ‑ ‑ ‑

GUMMOW J:   They have a different structure, do they not? 

MR KEANE:   They do, your Honour.  We refer to it because the Court of Appeal referred, at page 64, paragraph [23], to support from the decision of the New Zealand Court of Appeal in Goldsbro v Walker.  Your Honours will see that at the bottom of page 64.  Cox & Coxon v Leipst is a decision subsequent to Goldsbro v Walker, and it makes the point, at page 21, lines 15 to 35, and 37, lines 12 to 40, the point that was made in Goldsbro v Walker, as well, which is that the New Zealand statute is quite different from our statute, in the particular point that our statute contains section 82 which creates a right of action, whereas the New Zealand statute contains only the analogue of section 87. 

GUMMOW J:   Where do we see that? 

MR KEANE:   In Cox & Coxon, your Honour?  If your Honour goes ‑ ‑ ‑

GUMMOW J:   Section 43, set out at page 18. 

MR KEANE:   Then, your Honours, if we can return to the Court of Appeal’s judgment and, in particular, to the point of divisibility or indivisibility of loss, which your Honour the Chief Justice and Justice Gaudron raised with us.  If your Honours go to page 64, paragraphs [20] and [21], your Honours will see that the Court of Appeal there disclaims any possibility of dividing the loss and finding separate causes for separate losses, and goes on to say, in paragraph [21]: 

The divisibility or indivisibility of the loss should not be the criterion; nothing in the language in s 87(1) requires that the power to compensate for part of the loss be confined to losses which are divisible in the sense just discussed. 

Their Honours then go on to say that: 

No appellate court has ever, having considered the interrelationship between s 82 and s 87 with respect to pecuniary orders, decided that s 87 must be read down so as to have, in this respect, no practical effect. 

McHUGH J:   Can you say that you can agree in the whole of the analysis of the Court of Appeal in this case, when it just simply does not lead to the conclusion that it comes to?  

MR KEANE:   Their analysis of the facts? 

McHUGH J:   No, their analysis of section 87. 

MR KEANE:   Well, your Honour, the nub of section 87, or the nub of the use that is made of it, is in paragraphs ‑ ‑ ‑

McHUGH J:   For instance, in paragraph [22], their Honours say: 

We do not so decide, but think rather that s 87(1) should be given the effect which its terms appear to require, namely that an order may be made requiring that the defendant compensate the plaintiff for part only of a loss which is causally connected with the contravention complained of. 

But it does not follow from that, that ‑ ‑ ‑

MR KEANE:   You then make the extra leap and say, this order will trump your right under section 82, but that is ‑ ‑ ‑

McHUGH J:   You can live with that.

MR KEANE:   Yes, but our problem is that it is then used to diminish or to justify, as appears from paragraphs [26] and [27] where their Honours attribute to Justice Williams the view that under section 87 the Court may award only part of the loss and, of course, necessarily implicit in that – to come back to your Honour Justice McHugh’s question – is the Court may award that part of the loss but, implicitly, that is the only order that is going to be made and you do not get section 82 relief even though you have a right to it.

KIRBY J:   The steps in the reasoning to what you call the “trumping” is you have to read the part as a whole, you therefore have to read sections 82 and 87 together, you have to read it in light of the history and the introduction of the change in 1982 in the Swanson Report, and it cannot depend upon what a plaintiff asks for.  It must be a matter of the operation of the law.  That is the way in which, I take it, that the Court of Appeal has said you have to read the two together and that means 87 does trump 82.

MR KEANE:   Because you read it as expressing an intention that it may, that the exercise of the discretion to make an order against the defendant, in the language of the statute, for the evident purpose, the statutory purpose of compensating the plaintiff, can actually be made, in effect, against the plaintiff to deny the rights that exist otherwise in the Act.

McHUGH J:   It comes down to this, does it not?  The Court of Appeal says that because you have a power to compensate for part of the loss, by necessary implication, that means that you are not required to compensate for the rest of the loss?

MR KEANE:   Not only not required to, but may make an order denying compensation for the rest of the loss.  Your Honour, to come back to your Honour Justice Kirby’s point that having those be read together, sections 82 and 87 have to be read together, with the greatest respect, we adopt that and this approach that Justice McHugh and I have just been discussing does not read them together, it uses section 87 to override section 82.

KIRBY J:   Yes, but I think there is an added ingredient in the Court of Appeal’s reasoning and that is that unless you adopt this approach of trumping, as you put it, there really is nothing much for section 87 to do, and that is borne out by the history of the operation of the section as is referred to in the Court of Appeal’s reasons.

MR KEANE:   With respect, your Honour, it is not borne out by what was said in this Court in Marks v GIO and it is not borne out by what was said in Akron Securities where the possibility of making orders under section 87 has been shown to be manifold, it is simply ‑ ‑ ‑

KIRBY J:   That is the possibility under section 87 generally, but in respect of compensation or damage ‑ ‑ ‑

MR KEANE:   Your Honour, one does not need to read section 87 as having an operation, by reason of it exercising a discretion, trumping a…..to give it work to do.

McHUGH J:   In Kizbeau, at first instance, Justice Northrop awarded damages and he also varied the lease under section 87 to compensate the ‑ ‑ ‑

KIRBY J:   I think the Court of Appeal acknowledges, or they would have to acknowledge, that 87, in its totality, gives lots of remedies, but when it comes to the actual nitty-gritty of compensation, then it does not really have much to do on your construction.  You say you can use it for ancillary orders and the marginal note to the section supports that view, because it talks of power to make ancillary orders even where no orders under section 82 are made.

MR KEANE:   As do the observations in the Swanson Committee Report, which the Court of Appeal invoked, your Honour.  With the greatest respect, if one looks at that and says this is the fons et origo, then one can see that it simply was not in contemplation that this operation could be given to section 87 in relation to the right, the right that had been recognised and contrasted with the discretion in Sent v Jet ‑ ‑ ‑

McHUGH J:   Well, 87 contains no express power to award an amount of compensation.  It provides for the making of orders which will compensate or prevent or reduce the loss or damage.  There is no power, is there?

KIRBY J:   That is against you, is it not?

MR KEANE:   Section 87(2)(d) says:

The orders referred to in subsections (1) and (1A) are:

. . . 

(d)  an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;

and, in our respectful submission, the loss or damage that is there referred to is the quantification of a loss or damage or the loss or damage as quantified, not as reduced – it is as suffered, I should say.

Your Honour, finally, to return to your Honour Justice Kirby’s question, we do put particular reliance in relation to the approach to section 87 and the policy that informs it as being a policy to provide for compensation, not to deny it, on what was said in paragraph 43 in the joint judgment in Marks v GIO.  Your Honours, that is really what we wish to say in relation to section 87, unless your Honours have something further in relation to that, before we move on to section 82.

As to the contention raised by the respondent, that is to say, that the application of section 82 may involve an allocation against a party who has suffered loss or damage by conduct in contravention of section 52, of that party’s share in also causing the loss, we submit that that ‑ ‑ ‑

GUMMOW J:   Which paragraph is that?

MR KEANE:   That is in my learned friend’s submissions, really, your Honour, it is particularly from paragraphs 13 to 34.

GUMMOW J:   Yes, thank you.

KIRBY J:   Can this argument stand with Henville?

MR KEANE:   Your Honour, it is our submission that Henville is decisive of this issue against the respondent.  We have elaborated on that contention in our submissions in reply by reference to the observations of the members of the Court in that case.  On this precise issue we do not apprehend there was any division of view and, with respect, we submit that what was ‑ ‑ ‑

KIRBY J:   One can see an argument, that is to say – I did not sit in Henville.  One can see the argument that when you refer to loss or damage, you are referring to that loss or damage which is attributable to the breach of the Act.  But Henville seems to stand against that construction and it is so recent that it would be very difficult to have the Court change it.  It does not appear in Henville that the question of section 87 was specifically addressed.

MR KEANE:   In fact, your Honour, it is apparent from, I think, paragraph [7] in the Chief Justice’s judgment that the point was expressly left alone.

KIRBY J:   Which paragraph?

MR KEANE:   It is paragraph [7] in the judgment of the Chief Justice, I think, your Honour, at 1412 of the ALJR, where footnote 5 refers to I & L Securities.  So that the Court was evidently aware of the decision of the Court of Appeal, as were the parties ‑ ‑ ‑

McHUGH J:   We were.  We granted special leave in this case before we handed down judgment but ‑ ‑ ‑

MR KEANE:   To return to what your Honour Justice Kirby was putting to us ‑ ‑ ‑

McHUGH J:   I had written my judgment in Henville, I think, before the special leave application came in, but before it was delivered.

MR KEANE:   In relation to that, your Honour Justice Kirby, it is not just that it is recent.  With the greatest respect, we have excerpted passages from the judgments and we submit that, with the greatest respect, those passages are a faithful exposition of the language of section 82.  They confirm the view long held in decisions of the Federal Court and Supreme Courts of the States that are referred to in the decision.  There was no dissent on this issue and, with the greatest respect, it accords with the evident intention of the Parliament reflected in the amendment of the Act in 1992 to include section 75AN in Part VA, but not to make similar provision in any other part of the Act and, in particular, not in Part VI.  So that, in our respectful submission, the Court should not reconsider its decision and it is decisive, in our respectful submission.

As to the last point made in our learned friends’ submissions at page 15, paragraphs 49 to 51, the alternative argument, our submission is that the point sought to be made there is wrong.  As we have said earlier, his Honour quantified the loss suffered and brought interest into account as part of the global loss on the footing that interest would have been earned at the average rate had this transaction not occurred.  We refer your Honours particularly to page 45, paragraph 71.  So that, in our respectful submission, his Honour’s judgment justifies the orders we seek.

GLEESON CJ:   Mr Keane, can I just take you back to some questions you were asked earlier about what was the loss and when it was suffered.  It does not necessarily follow, does it, from the fact that you suffered loss when you advanced money on the security of this property that the quantification of loss is unaffected by subsequent events?

MR KEANE:   No, quite.

GLEESON CJ:   For example, it is possible that as a result of an unexpected increase in the value of real estate, you might have suffered no loss, even though there was negligence and misleading conduct on the part of the other side.

MR KEANE:   There would be a question, your Honour, whether we had suffered no loss or whether we had avoided a loss, I suppose.

GLEESON CJ:   Yes.  If mitigation questions had arisen in the present case, if, for example, it had been contended against you that you acted negligently in the realisation of the security, the fact that you had suffered loss when you entered into the transaction would not necessarily deny the possibility that a conclusion might be open that the ultimate financial outcome of the investment was not entirely caused by the negligence or misrepresentation of the other side.  That would raise the kind of issue on which the Court was divided in Henville.

MR KEANE:   Yes, we have said that.

GLEESON CJ:   But issues of that kind or complications, as I think you called them, of that kind do not arise in the present case.

MR KEANE:   No, your Honour, not on the findings that his Honour has made and findings which are not challenged, of course, except now by this late argument about the interest component which we submit is, (a), wrong and, (b), not open in any event, there never having been any challenge to his Honour’s findings, there being no cross‑appeal.

GLEESON CJ:   It just occurs to me that you could have a case in which a person, as a result of a misrepresentation that contravenes section 52, enters into an extremely complex business transaction and the ultimate financial resolution of the outcome of that investment might be influenced by all manner of events and contingencies that may or may not have a certain causal relationship with the original misrepresentation.

MR KEANE:   Quite, your Honour, and on one view, of course, Henville v Walker was such a case.  Henville v Walker was, I think, as your Honour characterised it, not simply a case where the action was brought to recover the loss suffered on the acquisition of the asset.  It was not that they had paid out more than they got in return.  It was distinctly, in your Honour’s view, not that.  Now, how one might work that out in a case like Henville v Walker does raise complications, perhaps, but in this case this is a case where the money was lent to someone who could not repay and did not have the security but if the security had been as it had been suggested, it would have been fully repaid, including interest.

GLEESON CJ:   And, as I understand it, the only – if I can use this expression – contributing conduct on the part of your client related to the decision to enter into the transaction.

MR KEANE:   That is right.  There is no criticism of our client’s conduct in any way after the entry into the transaction or apart from the entry into the transaction.

GLEESON CJ:   That is to say responding to an inducement.

MR KEANE:   Yes.

GLEESON CJ:   That is why I wondered what was meant on page 65, line 35, where the Court of Appeal says:

the plaintiff’s conduct of which the defendant complains is quite independent of the defendant’s breach.

What do you take those words, “is quite independent of” ‑ ‑ ‑

MR KEANE:   Your Honour, that is referring to the failure to make proper inquiries as to the credit worthiness of the borrower and the guarantor.  Now, with respect they had some difficulties with that, in that the trial judge had found, as we took your Honours to, that if the valuation had not come in, as it did, more inquiries might have been made about that, so that it is rather a difficult gloss to put on it to say that it is independent.

Your Honour, that apart, having regard to the views taken of section 82 in Henville v Walker, the question is not what caused this loss, but was the conduct of the respondent a contributing cause.  Was that conduct, conduct by which the loss was suffered and to that, in our respectful submission, there can only be one answer.  It is to pursue an irrelevance to say was there some other cause operating as well, unless it be the kind of exceptional case, that was referred to by Justice McHugh in Henville v Walker, which obliterates the causal nexus.

KIRBY J:   Is that on the word “by”?  Did his Honour’s exception rests on the word “by”?

MR KEANE:   Yes.  That, your Honour, has a history in cases of first instance, including the decision in Elna that Justice Gummow delivered.

CALLINAN J:   Mr Keane, could that be affected by which occurred first?  For example, here I think on the facts of this case, your client did not make the inquiries that it should have made.  It was the conduct that was said to be negligent.  Say the view was taken that on those inquiries, that had those inquiries been made, and had they been made before the valuation was received, then there would not have been any question of lending - I am not saying these are the facts, but assume these were the facts - the money, any money at all, to Camworth, no matter what the valuations were.  Would that affect the position?

MR KEANE:   Not if you add the extra fact that happened here, which is then the valuation comes in and they say, “Gee, if that’s the value and we’re lending for a year, and we’re being assured that we can realise this value, then we’ll take the risk.”  So that the valuation itself, the misconduct involves itself with the decision to disregard the results of the inquiries, as opposed to simply not make them.

CALLINAN J:   They might not have even got the valuation if they made the inquiries, before they sought any valuation.

MR KEANE:   That is possible.

CALLINAN J:   Is that not a possible view?  Would that not be what most prudent lenders would normally do?  They would look at the circumstances of the borrower to see what the borrower’s credit record was, what its liabilities were, and might form the view that this was just not a person or a company to which money would be lent?

MR KEANE:   That is a possibility, your Honour.  It is not a possibility that arises in this case.

CALLINAN J:   Well, is that right? 

MR KEANE:   As his Honour found.  We took your Honours to the finding that the valuation was the major cause of the decision to lend, perhaps in part because if it had not been for the valuation, the lender may have been more astute in the inquiries it made. 

GLEESON CJ:   Mr Keane, was that margin between the primary rate of interest and the default rate – the 19 per cent and the 13 per cent – was it a usual margin at the time? 

MR KEANE:   Between default rate and the usual rate? 

GLEESON CJ:   Yes.  As I understand it, the rate of interest was 19 per cent, reducible to 13 if they paid the interest on time. 

MR KEANE:   That is right. 

GLEESON CJ:   That, if I may say so, if the valuation is right, appears to give the lender a substantial interest in default on the part of the borrower. 

MR KEANE:   Your Honour, I do not know if the margin was usual.  I do not think there is any evidence about that. 

CALLINAN J:   His Honour held that your client was not a lender of last resort. 

MR KEANE:   He did. 

GLEESON CJ:   In fact, the lender had no personal interest in the transaction.  These were trust moneys, were they not? 

MR KEANE:   Well, they were moneys contributed by a syndicate of ‑ ‑ ‑

GLEESON CJ:   They were solicitors lending syndicated loans. 

MR KEANE:   That is right, your Honour. 

CALLINAN J:   Is there some sort of a potential liability, though, for the solicitors, under the legislation under which they make those loans?  The situation in Queensland, I think, is different from New South Wales, is it not?  It is relatively recently, only, that solicitors could syndicate loans, I think. 

MR KEANE:   Relatively recently, and I am not sure that they still can, your Honour. 

CALLINAN J:   But they had an interest in getting the fees, because the mortgagee’s legal fees were paid by the borrower, as, no doubt, were the ‑ there might have been a margin, anyway, between those fees and other fees that they would earn, directly payable by the mortgagee. 

MR KEANE:   Your Honour, one does not know about that.  Unless your Honours have any further questions for us, those are our submissions. 

GLEESON CJ:   Thank you, Mr Keane.  Yes, Mr Jackson. 

MR JACKSON:   Your Honours, may I commence by saying one thing in relation to the structure of the action.  One of your Honours mentioned the question what was contributory negligence being spoken about for, in circumstances where the claim was under the Trade Practices Act?  Your Honours will see that, in fact, there were three separate causes of action which were relied on.  They appear in the primary judge’s reasons, at page 21, in paragraph 1 of his reasons, where he says: 

Three causes of action were relied upon; negligence, breach of contract, and misleading or deceptive conduct under the Trade Practices Act. 

GAUDRON J:   One might wonder whether there is such a cause of action as negligence, in this context. 

MR JACKSON:   Your Honour, could I just say in relation to that, the position, of course, under, I think, section 75 of the Trade Practices Act is that, to the extent to which they are not in conflict, I suppose, with provisions of section 82 and so on, that they are preserved the rights under State laws. 

GAUDRON J:   No, this is the common law of Australia, Mr Jackson, negligence, is it not? 

MR JACKSON:   Quite, your Honour.  I am sorry, I am not certain, with respect, where your Honour is going on the point.  It is not a point we are taking, I might say. 

GAUDRON J:   No.  I would have thought that if there is a cause of action under a combination of 52 and 82, then there simply is no room for the common law to apply. 

MR JACKSON:   Well, your Honour, except ‑ ‑ ‑

GAUDRON J:   I mean, it may be an alternative, a true alternative, but ‑ ‑ ‑

MR JACKSON:   That is how the case was conducted, your Honour, separate cause of action.  No doubt the precise operation of section 75 is a question of some difficulty depending on the particular cases, but there is no reason to suggest that in an appropriate case it would not preserve, for example, the contributory negligence legislation of a State to the extent to which there would be applicable to an appropriate cause of action.

KIRBY J:   I know that section 52 has been blown up in the history of the Federal Court as it grew in vigour and operation but, I mean, in its terms, it is simply stated to be relating to a corporation, misleading and deceptive conduct, and that does not cover the whole ambit of the imperial realm of negligence.

MR JACKSON:   No, no.  Your Honour, all I was seeking to say was what one sees in this case is that there were three causes of action relied on.  It is made absolutely clear, with respect – and I will take your Honours to the passages very briefly in just a moment – by the primary judge that he distinguished between them and that he spoke of contributory negligence only in relation to the common law cause of action for negligence and he did not attempt to use it in relation to what he was doing so far as the damages were concerned.

CALLINAN J:   You conceded negligence too, I think.

MR JACKSON:   Yes, your Honour, we did.  Your Honours, may I go first for just a moment to the findings made by the primary judge.  After that what I propose to do is to take your Honours to – and I will do so as briefly as I can – a number of decisions in which, in our submission, over the years that the Trade Practices Act provisions have been in operation, the possibility of, if I can use a relatively neutral term for the moment, apportionment of damages in the way in which it was carried out by the primary judge has been recognised.

I wanted to go then, your Honours, to indicate – again I will do it simply by instance rather than going to the case in detail – the circumstances in which the damages that otherwise might be thought to flow from a contravention of section 52 have been limited by reference to a number of considerations.  Then, your Honours, to go from that to Henville v Walker, and what we would seek to demonstrate from the reasons in Henville v Walker is that the case does not decide what our learned friends suggest it does and that, in fact, the reasons leave open the question that we seek to raise in connection with section 82.  After that, your Honours, I propose to go to section 87, then to the alternative argument that we advance at the conclusion of our written submissions.

Your Honours, may I in dealing with those matters go first to the reasons of the primary judge in a few respects.  What your Honours will see is that his Honour’s findings demonstrate that there were, in our submission, two distinct reasons for the appellant’s entry into the loan.  Could I take your Honours in that regard to the finding that appears at page 36, about line 13, where his Honour said – having referred to the fact that there had been default in making the first monthly payment, he then proceeded to say in line 13:

There would have been no loan, regardless of the value placed on the land, if the plaintiff had made further and appropriate enquiries about the companies capacity to service the loan.

So that is the finding which he made in relation to that aspect of it and your Honours will see that in dealing with the question how that fitted in with the terms of section 82 and 87, your Honours, one needs to bear in mind that there were other relevant views expressed by the primary judge as part of the context in which he made that finding.  May I take your Honours to those.  First your Honours will see, at the top of the next page, page 37, his Honour repeats the finding, saying:

As found above, the plaintiff would not have approved the loan, regardless of the valuation represented by the defendant, if it had made the appropriate enquiries as to the borrower’s capacity to service the loan.

May I say, your Honours, that was a finding based upon the fact that there had been oral evidence given before the primary judge by one of the solicitors in question.  Your Honours will also see at page 37, about line 8 on the page, that his Honour says:

But as this cause of action is created by statute, and embraces situations which would not give rise to a cause of action in tort, it is not appropriate to speak of the defendant establishing contributory negligence.

His Honour was conscious, your Honours will see from that paragraph, that he was not speaking about contributory negligence in any traditional, if I can put it in that way, sense.

Your Honours will also see at page 41, in paragraph 62 at the bottom of the page, that the view his Honour expressed was that none of the passages from this Court’s judgments precludes:

a court from determining that there were two causes of the plaintiff’s loss, in other words a divided responsibility for that loss, and in consequence only allowing the plaintiff to recover by way of damages pursuant to s 82 that part of the loss which is attributable to the conduct in breach of s 52.

And, your Honours, in the end one sees then ‑ ‑ ‑

HAYNE J:   Just before you part from that, what do you say we should read his Honour as meaning by the words “a divided responsibility for that loss”?  What is his Honour there telling us?

MR JACKSON:   Speaking, your Honour, we would submit, in terms of who bears legal responsibility for the loss.  Your Honour, that, I think, is the concept his Honour was seeking to convey.

GLEESON CJ:   That seems to treat the word “by” in section 82 as requiring that the conduct of the defendant be the cause of the loss rather than a cause of the loss.

MR JACKSON:   With respect, your Honour, no.  May I come to that in just a moment?  There are really two aspects, of course.  It is sufficient for it to be a cause in order for there to be a cause of action.  That is one aspect of the matter.  But when one comes to see, in the light of the evidence that there is, what is the amount of the loss or damage that is caused by the contravention – your Honour, I appreciate the word “by” does a lot of work for a number of different aspects, but that is what one is looking at in the end.  May I come back to that in just a moment, your Honour.

The last thing I was going to say was that your Honours will see then the primary judge’s findings finally at page 43, paragraph 65.  It is in the light of what he had said earlier that he then expresses the view:

I have come to the conclusion that here there were two independent causes of the loss sustained by the plaintiff.

GAUDRON J:   Perhaps nothing depends on that but I do not understand the notion of “two independent causes of the loss”.  I can understand that either was sufficient but, again, I do not follow it in any discourse relating to causation.

MR JACKSON:   Could I say, your Honour, that one – first of all, if I can deal with what his Honour is saying.  What his Honour seems to be saying is to put it in other words what he had said earlier in the passages to which I referred, first, that of course the – I am sorry, can I put it this way:  first, that there would not have been the entry into the transaction, to put it in that form, had it not been for the provision of the valuation that was misleading.  On the other hand, he also finds that even if the valuation had been a proper one – I am sorry, whatever the valuation said, if there had been an investigation, which there was not, then there would not have been the entry into the transaction.  So he treats them as two separate things and, your Honours, that is the way it ‑ ‑ ‑

GAUDRON J:   But it is an omission, is it not?  What he is really talking about, I should have thought, in proper semantic analysis – leave aside the legal analysis – is something that positively caused it and an omission which in the circumstances failed to prevent.

MR JACKSON:   Your Honour, really one could use the latter description for both.  One could say that there was a failure to prevent by the failure to value the property properly.

GAUDRON J:   I wonder whether “failure to prevent” really has a lot of work to do in the context of a statement that, one may assume, was intended to and did induce a particular consequence.

MR JACKSON:   Your Honour, one is always speaking, of course, I suppose, about really two things, and we have sought to make this point in our written submissions.  One is what follows historically, in a sense, and the second is who is legally liable in respect of it and what is the extent of the liability.  Now, could I say in relation to the first, one could say that one of the reasons that we are here today – historically, of course – is the fact that the valuation was provided in contravention of section 52.  Equally, one could say that one of the reasons why we are here today is because of the fact that there was the failure to carry out the appropriate checks.  Both of them were reasons, causes, whatever one likes to say, but the question is, is the legal responsibility ‑ ‑ ‑

GAUDRON J:   I am really asking you if it is right to refer to them as causes in a context in which a statement was made and it can be assumed that was intended to and did in fact induce a certain course of conduct.  Now, I am wondering if in that context it makes any sense at all to describe the failure by the person who was induced to prevent the action happening as a cause.

MR JACKSON:   Your Honour, the term “cause” has to be seen in the context in which it was used by the judge.  Your Honour will see the ‑ ‑ ‑

GAUDRON J:   If I could just stop you there.  I could understand it in a context where there was some third party who was under a positive duty to act.  Let us assume for the moment here that it could be said that the solicitors acting for I & L had a positive duty to undertake certain inquiries, perhaps because they had been instructed so to do.  Now, then I could understand it being said that the failure to prevent was a cause, but when you come down to the individual who was intended to and was, in fact, induced to do something, I am just wondering how you fit it in.

MR JACKSON:   Your Honour, perhaps the starting point might be to look in a sense in the way in which the issue was described, perhaps not completely accurately, perhaps completely accurately, by the primary judge in the first sentence in paragraph 65 at page 43.

HAYNE J:   Let us take that as the starting point because is his Honour saying in that sentence any more than this:  the loan would not have been made if either (a) or (b) had been done; (a) being proper checks, (b) being proper valuation?

MR JACKSON:   Well, your Honour, he is saying that, whether ‑ ‑ ‑

HAYNE J:   Where his Honour then seems to go is neither (a) nor (b) happened.  Next step:  the loan happened.  Next step:  the financial consequences of the loan happening are known as a matter of history.  We can identify what they are.  But the last and critical step his Honour takes is taken at line 18 of that paragraph, is it not, where his Honour says, “attribute responsibility in the same way as you would with contributory negligence, namely, by comparison of degree of fault, comparison of degree of departure from reasonable behaviour.”  Now, where does one get that last step from, save as an act of faith?

McHUGH J:   Could I add to that, does the last sentence not give the game away:

To that extent, and to that extent alone, the deceptive and misleading conduct of the defendant caused loss to the plaintiff.

That cannot possibly be right, Mr Jackson?

MR JACKSON:   Your Honour, may I seek to answer some of those questions  ‑ ‑ ‑

HAYNE J:   Do take your time without interruption.

MR JACKSON:    Your Honours, what I had been endeavouring to say was that if one looks first of all at the opening sentence of paragraph 65, and if one looks also at the concluding sentence of paragraph 65, what your Honours will see is the judge, rather than engaging in a flight of heterodoxy, is really paraphrasing the words of section 82(1).  Your Honours, what I mean by that is that your Honours will see that paragraph 65 says “two independent causes of” and he speaks of “the loss sustained by the plaintiff”.  Then at the end of the paragraph, he says:

To that extent, and to that extent alone, the deceptive and misleading conduct of the defendant caused loss to the plaintiff.

Now, your Honours, if one goes from there to the words of section 82, what your Honours will see in subsection (1) is that the entitlement given by the provision - I am sorry, may I just pause to say one thing, your Honours, before I get to section 82(1), is just this.  This is not a case where the conduct of the plaintiff is carelessness of some kind in relation to the conduct in breach of section 52.  Your Honours, what I mean by that is that one very frequently sees observations to the effect that in relation to the Trade Practices Act contributory negligence cannot be relied on, in a context where what is contended for is that the person to whom the representation is made should have taken steps to verify it.  Your Honours, that is not in this case.

Your Honours, we are not talking about a case where the conduct consists of failure to check the representation.  Your Honours, having said that and added that caveat, may I go then to section 82.  Your Honours will see that the entitlement given by the provision is to recover what is described as “the amount of the loss or damage caused by the conduct of the person contravening the relevant provision”.  Your Honours, that means, we would submit, how much loss and damage, or how much of the loss and damage, we would submit, is caused by reason of, or as a result of, the contravention.

Your Honours, those words “by reason of” or “as a result of” come from the observation, or the reasons for judgment of the Full Court of the Federal Court, Justices Fisher, your Honour Justice Gummow and Justice Lee in the case named Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 286. The particular passage, your Honours, of the last paragraph on page 286 where your Honours will see the observation made:

Section 82 serves to identify the classes of applicants and respondents in the action, to identify loss or damage as the gist of the action, and to mark out the measure of damages as the amount of that loss or damage.  The measure of damages hangs on the words “by conduct”; the preposition “by” has been interpreted to mean “by reason of” or “as a result of.”

Then there is a passage - the next sentence, I think is one that has been referred to on a number of occasions, about the “telescoping” et cetera.

Now, your Honours, that expression “by reason of” or “as a result of” appears to be in effect the natural meaning of the expressions used in section 82(1).  Your Honours, that case, Munchies Management, is one of a number of cases which, in our submission, demonstrate that it is by no means the position that the conduct of the claimant, in causing the loss, has been regarded as irrelevant.  Could I take your Honours back to that case for just a moment and, in particular, to page 287, immediately after the passage to which I referred.  The court proceeded to refer, at the top of page 287, with apparent approval, to what had been said by Justice French in Pavich v Bobra Nominees Ptd Ltd.  Your Honours will see the quotation commencing between A and B:

the selection of a sufficient cause . . . was properly influenced by policy and not merely logic.

His Honour continued.  Your Honours, there are two aspects to this, to which I wish to refer.  The first is in the first four lines:

“The primacy of the causation principle in s 82 would seem to exclude reliance upon such concepts as mitigation or contributory negligence, unless it can be shown that the applicant’s own carelessness or disregard for his or her interest is the cause of all ‑ ‑ ‑

your Honours will see then the following words, “or some part of the claimed loss.”

Now, your Honours will see the remainder of the paragraph and then the last sentence in the paragraph:

the criteria for such selection may import concepts analogous to remoteness, mitigation or contributory negligence.

HAYNE J:   Now, in this case, what is the relevant criterion distinguishing particular historic financial consequences between those caused by misleading and deceptive conduct and those caused by failure to obtain a credit check.

MR JACKSON:   Well, your Honour, we put it in two alternative ways.  May I deal with the first argument first, arriving at the same result as that arrived at by the primary judge and, in the end, by the Court of Appeal, and it is this:  your Honours will appreciate, as I said before, that the primary judge had before him oral evidence from persons who were involved in the making of the loan.  Now, he was able to evaluate the part that their conduct played and our conduct played in leading to the entry into the loan.  Loss followed from that; loss followed also from the aspect of not being able to pay the first or any instalment of interest thereafter.  Having observed the witnesses, the judge was in a positions to say, “In relation to these transactions, both factors played a part in the transactions taking place.  In my view, the relevant weight of the two of them was two-thirds, one-third”, to put it shortly.

McHUGH J:   Yes, but that just seems to me to turn legal theory on its head.  How can you possibly say, as is said in the last sentence:

To that extent, and in that extent alone, the deceptive and misleading conduct of the defendant caused loss to the plaintiff.

Test it this way:  assume for the moment that there had been no failure on the part of the plaintiff in this case, could you contend that, in some way, the defendant had only caused two-thirds of the loss to the plaintiff?  The defendant is totally responsible for it?

MR JACKSON:   Well, your Honour, there would not be a choice in relation to it.

McHUGH J:   I know, but it is still causally connected.  What is really being done here is to use notions of contributory negligence, which do not have a causal connection in them.  The judge seems to be making the mistake, in one sense, that was made by the common law for a period, when it allowed contributory negligence to be raised under the issue of not guilty, because it was thought to go to causation.  That was exploded a century ago.

MR JACKSON:   Well, your Honour, could I say in relation to that, that your Honours will see that – and whether rightly or wrongly of course, but the way in which the primary judge went about it, in our submission, correctly, was to say, “I am not talking about contributory negligence” and your Honours will see when he deals with this issue what he does do is to use the words that come from, or a paraphrase of, section 82 itself.  Your Honour, when one looks to section 82(1), what it is saying is that you “recover the amount of the loss or damage”, that is, the loss or damage caused by conduct of the other person, from the person who is involved in the contravention.  Now, your Honour, in saying that, if there is no conduct which is the competitor, then it has to be 100 per cent, but ‑ ‑ ‑

McHUGH J:   I appreciate that, but you are really reading “by” as meaning, as the Chief Justice put to you, by the conduct.  You are really suggesting that it must be the cause of the loss and that the judge is saying there were two causes of this loss and therefore the defendant is only responsible for two-thirds of it.

MR JACKSON:   Well, your Honour, one sees used in the provision the expression – it says “may recover the amount of the loss or damage”, meaning, in our submission, the amount of the loss or damage suffered by the conduct, “by conduct of another person that was done in contravention”.  Now, “by”, no doubt, performs a lot of functions in section 82, but there is no reason, in our submission, if one looks at particular circumstances, where you say this was caused by A, and by some separate thing, B, not to be able to say there was loss or damage.  It was caused by two things.  Each, for example, is equally responsible.  The amount suffered by the conduct in contravention is 50 per cent. 

McHUGH J:   But that is not the way common law causation theory works.  If a car approaches an intersection at an excessive speed and then another driver coming along fails to sound his or her horn, which could have avoided the accident, both are responsible for the total loss, damage, that is suffered.  The statute will apportion damage according to what is fair and equitable but, for the purpose of the causal connection, they are both responsible for the whole of the damage. 

MR JACKSON:   Well, your Honour, since when, if I may say so, with respect, is section 82 one to be interpreted by simply applying over to it the common law concepts?  The Court has decided that, your Honour.  The Court seems to have decided that on a number of occasions. 

McHUGH J:   But one is applying this in the context of the history of the common law and questions of causation – if “by” introduces notions of causation. 

MR JACKSON:   “By” introduces a number of notions, but what one is looking to, in the end, is to see what a statutory provision, intended to provide a remedy and to delimit what the remedy is, does.  In that regard, if one simply follows the words of it through, one sees: 

A person who suffers loss or damage by conduct of another person that was done in contravention of a provision –

of one of the Parts –

may recover the amount of the loss or damage –

meaning, in our submission, how much was suffered by that conduct. 

GLEESON CJ:   I wondered, Mr Jackson – and I am not sure where this leads – if one of the things that the primary judge might have had in mind here was this, that where you have misleading conduct in connection with a business transaction that is entered into, in some cases, you might have conduct which directly induces the transaction, and in other cases, the connection might be slightly different.  For example, in the present case, your client did not advise these solicitors to make the loan.  What your client did was express an opinion in relation to value of the land which it knew was going to be used by somebody, some day, in relation to a possible making of a loan, but perhaps did not know it was going to be used by somebody who did not care whether the borrower had any money or not. 

I have an impression, reading Justice Williams’ judgment, that the sort of thing he might have been thinking of was that the actual decision to make the loan, to which your client was not a party and in respect of which your client gave only misleading information about a matter relevant to the decision, was a combined result of what he called two independent processes of reasoning, or action or inaction.  Was that part of the thinking? 

MR JACKSON:   Your Honour, that was something along those lines.  Undoubtedly, something along those lines is reflected in the fact if one looks, for example, at paragraph 65 on page 43, where he says “two independent causes of the loss”, of course, they, in the end, come in.  They combine to arrive at the result.  Then one comes to see how much is attributable to each and the judge forms a view about that.  Your Honours, it is not uncommon for judges to – sometimes it is possible to say, “This money is attributable to this, this is attributable to that”.  If you cannot do that then the next thing would be the judge says, “It is impossible to put a precise figure on it but my view of it is this is it:  two thirds/one third; half/half.

GLEESON CJ:   It may be the expression “independent causes” is an inaccurate or inapt expression, but what he seems to have had in mind was, a bad business decision was made.  The valuers did not advise them to make the decision, the valuers contributed in one way to the making of a bad business decision and the lenders made their own contribution to the making of a bad business decision, and it was the combined effect of those two errors.

MR JACKSON:   Yes.  Your Honour, the passages I referred to earlier are at, I think, page 36 and 37, where the judge says specifically that there are, for example at the top of page 37:

the plaintiff would not have approved the loan, regardless of the valuation represented by the defendant, if it had made the appropriate enquiries –

It tends to indicate the judge’s view was that there were two features which were quite separate but which had the combined result.

GAUDRON J:   What is the meaning of the word “appropriate” in that context?  The inquiries that a reasonably prudent lender, desirous of protecting his own interests, would make, or something like that?

MR JACKSON:   Your Honour, his Honour describes it a little more fully in ‑ ‑ ‑

GAUDRON J:   I am just wondering if there is a legal or equitable analogue that underlies that notion of “appropriate” that can be tied in to the notion of causation?

MR JACKSON:   Your Honours will see that in the passage which is at the bottom of page 28, through to page 33, for example, if one looks at page 33, paragraph 44, there is a reference to the:

prudent lender would always have regard to the financial capacity of the borrower to service the loan.

Then his Honour refers, in the next paragraph, to a general principle in relation to contributory negligence, that imprudent approval may amount to a failure to take sufficient care for one’s own situation and he referred also, of course, to the fact that there was the lender was lending moneys that was trust moneys.  Your Honours will see at page 34, line 47, it was conceded that they would not have lent if they had concluded that the borrower did not have the capacity to meet interest payments.

GAUDRON J:   I am sorry I am being difficult but I just do not understand this judgment at first instance.  Could that analysis lead to a conclusion that the lender was not misled or was not relatively misled?

MR JACKSON:   Your Honour, I cannot say that because the judge found it was a fact.

GAUDRON J:   But when you talk about what a reasonably prudent purchaser or lender should do, are you not talking about ultimately whether or not he or she should have been misled, in general terms, in this context?

MR JACKSON:   I am sorry, your Honour, with respect, it is not really in a sense the lender because one might think really that it is a question of our position.  What I mean by that is that we provide a valuation to persons who apparently are carrying on a lending business, they are a company, they carry on the lending business in what one would assume would be the ordinary prudent way of carrying on business.

GAUDRON J:   Why would you make that assumption?  I just wonder why you would make that assumption.

MR JACKSON:   Your Honour, if one looked at the situation, we are valuers, we are asked by a company which is a company conducted by, to put it neutrally, solicitors who carry on the business of lending what is likely to be, presumably, clients’ money.

GAUDRON J:   I would have thought that if you were a valuer you knew you were being asked for advice so that others could, if necessary, shelter behind it and not really for any other purpose.  If I go along and ask for advice about the state of land or building it is because I want to rely on it.

CALLINAN J:   You would expect the person seeking the advice not to act recklessly against its own interest, would you not?  Would you not make that assumption?

MR JACKSON:   Your Honour, one is not dealing with a situation of people who are, in effect, carrying on some business that would be perceived as wildcat, you are looking at people who are - and no doubt they are entitled to rely on the valuation.  Equally, however, one would expect that they are not putting the valuer in the position of an insurer without, as we would say, a premium, for every default of their own and it is, in our submission, something that one would expect the ordinary prudent lender to do, and that was the evidence.

CALLINAN J:   Mr Jackson, was not the situation here that the borrower had to be able to sell and be paid for - that is to say, have settled - a sale of one block of land within 30 days of the making of the loan simply to pay the first interest instalment.?

MR JACKSON:   Your Honour, the only other prospect was to win the Golden Casket.

GLEESON CJ:   Mr Jackson, I just want to check up on one aspect of the facts.  Was the valuation provided to the solicitors, or was it provided to the borrower?

MR JACKSON:   It was provided to the borrower, but, your Honour, it is right to say we said that the lender could rely on it.

GLEESON CJ:   Specifically, this lender?

MR JACKSON:   Yes.

GLEESON CJ:   Thank you.

HAYNE J:   Can I just test the area we have been debating most recently against a case where the valuer provides a valuation to the house company of a solicitor’s firm syndicating mortgages and provides a valuation which, to the eyes of the reasonable solicitor, would at once raise question marks:  values an ordinary three bedroom brick veneer suburban house at 3 million.  Now, that presents ‑ ‑ ‑

MR JACKSON:   That would not be in Sydney, your Honour.

HAYNE J:   ‑ ‑ ‑ the would-be claimant under section 52 with a difficult forensic problem.  It may be that that plaintiff cannot establish reliance to its cost.  But let it be assumed that it surmounts that difficult forensic problem and establishes that, perhaps carelessly, perhaps flagrantly carelessly, it relied on it.  What is the consequence under 82 of that set of facts?

MR JACKSON:   Well, your Honour, could I say two things.  Your Honour says “flagrantly carelessly” and in relation to that, one does need to look at two different situations.  Situation one is if the carelessness is in not endeavouring to check or do something about the representation, to put it shortly, made to it.

HAYNE J:   Yes.

MR JACKSON:   Case two is this case, where there is some other factor unrelated to that or the ‑ ‑ ‑

HAYNE J:   It is the former case that I seek to test. 

MR JACKSON:   Well, your Honour, in relation to the former case, the question ultimately would be whether there had been, in fact, reliance upon the valuation.

HAYNE J:   And assume that is resolved in favour of the plaintiff.

MR JACKSON:   Your Honour, that is probably the end of it.  It is possible, and one sees glimmers in the cases, that one does have to bear in mind that representations may be made to people who are gullible and one takes that into account.

GUMMOW J:   Yes.  Well, I think it is more than a glimmer.  We dealt with these erroneous assumption cases in Nike 202 CLR 45 at paragraphs 98 through to 107. So that there is a whole discussion of all of this, but it is at a pre‑section 82 stage.

MR JACKSON:   Yes.

CALLINAN J:   Mr Jackson – I am sorry, you want to add something.

MR JACKSON:   I am sorry.  Could I just add something to what I was going to say, your Honour, and it is this, that what one does see, however, is that there may be cases where the conduct that is engaged in is so bizarre, in effect, in connection in relation to the representation, that one could not have expected the representation to be relied upon in that way.  Now, your Honour, that may be an exception from the reliance cases.  I am sorry, your Honour.

CALLINAN J:   Mr Jackson, assume – and I do not know whether this was the case here, I suspect it was not – that there was evidence that the conventional way of proceeding by a moneylender was first to investigate the credit worthiness of the intending borrower and if that investigation demonstrated that the borrower did not have the capacity or was not the sort of person to whom money would be lent, that would be the end of the matter.  Then why would that not be, notwithstanding what might happen afterwards, to adopt the language of Justice Gummow in Elna Australia 16 FCR at 419, the “essential . . . or effective cause of the loss or damage”?

MR JACKSON:   Well, your Honour, that may well be.

CALLINAN J:   Well, was there any evidence of that kind in this case?

MR JACKSON:   Well, the order of events was reversed, of course, but the ‑ ‑ ‑

CALLINAN J:   The order of events was reversed, was it?

MR JACKSON:   Yes.  Well, as I understand it, your Honour.  The first thing was the evaluation, the second thing was the failure to make inquiries.  Your Honour, I will check that, but it was my understanding of it. 

Your Honours, what I was dealing was the observations have been made in the Full Court in Munchies Management, but could I just invite your Honours to note that – I will not go back to it, your Honours – but the passage quoted from Justice French was one which in Pavich did not exclude consideration of the possible causes of the loss and the issues was adverted to again by Justice French in the Federal Court in Kewside Pty Ltd v Warman International Ltd (1990) ASC 55-964 and, in particular, your Honours, at page 58-824 in the right column, the last paragraph on the page. His Honour said:

The damages recoverable under sec. 82 of the Trade Practices Act for contravention of sec. 52 are measured by the loss or damage suffered by reason of the contravention.

He referred again to the “common sense concepts”.  Then after the reference to The Coxwold, it said:

Selection principles influenced by policy and not merely logic operate.  Concepts such as contributory negligence and mitigation have no role as such in this process but analogous notions may apply to decide whether or not a claimed loss was truly caused by the contravention in question –

and your Honours will see he refers to that slightly over the top of the next page.  Now, your Honours, I should note in that case, not all the claims were allowed.  Your Honours will see that dealt with on the next page. 

GLEESON CJ:   That expression, “a claimed loss” might provide a key to what Justice French was thinking about.  It gets back again to this consideration that it is one thing to identify a person as having suffered loss and it is another think, then, to look at the way the person sets out to quantify the amount of the loss and there, as I would understand it, Justice French is referring to the process by which the plaintiff is seeking to quantify the measure of its damages.  In one sense, your Honour, no doubt it covers that, but his Honour was speaking in the context of a number of schedules of loss which are referred to at the bottom of page 58-823 and go through to the next page.  Your Honours, I will check this during lunch, but I think, in fact, he disallowed the first two items as a matter of evidence and your Honours will see at page 58-825, if one goes to the right column, your Honours will see that he says:

The perpetrator of misleading or deceptive conduct must to some extent take his victim as he finds him.  Loss and damage is not to be measured by what the victim would have lost had he been rich and competent.  At the same time –

he put it shortly, there was not what he described as “an eggshell wallet doctrine” and ‑ ‑ ‑

GLEESON CJ:   I wonder if his Honour mixed that metaphor himself. 

MR JACKSON:   Your Honours will see, for example, about the last six or eight lines of that paragraph: 

The loss of chance attributable to the compressor is in my opinion a small proportion of that amount when appropriate discounts are applied for the financial vulnerability of Kewside and other problems that it faced and which I think fell outside at least the quantitative if not the qualitative framework of the range of difficulties taken into account –

in the assessment.  Your Honours, I was going to say that I have referred so far to two cases in that regard.  May I take your Honours now to Justice Hill in Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112. I simply wanted to refer your Honours to the top of page 138.

In the first paragraph on page 138, your Honours will see that his Honour referred to cases where there might be a finding that an applicant had been so negligent that the representation was not “a real inducement”.  But your Honours will see in the next paragraph that he referred, without apparent disagreement, to the passage from Justice French in Kewside, to which I took your Honours earlier.  So, too, did Justice Rogers, Chief Judge of the Commercial Division in New South Wales, in Mehta v Commonwealth Bank of Australia (1990) Aust Torts Reports ¶81-046. At the page numbered 68,142 – I think we have only given your Honours an extract from the case – the first new paragraph on page 68,142, your Honours will see, his Honour said:

I do not accept that the plaintiffs should be relieved beyond the measure I have indicated.  They could have brought the loan back onshore on any rollover.  There was no good reason given why they did not do so and rely on their rights against the defendant. 

Then your Honours will see the two passages, Argy v Blunts, and then Justice French in Kewside, referred to in the same column. 

GLEESON CJ:   Is that a kind of mitigation of damages issue? 

MR JACKSON:   Yes, your Honour.  Now, our learned friends have relied on the remarks of Justice Hodgson in Tefbao Pty Ltd v Stannic Securities Pty Ltd (1993) 118 ALR 565. Your Honours were taken, at page 575, to the last paragraph on the page, where his Honour disagreed with the approach taken by Justice Pincus in S & U Constructions.  However, one sees further up the page, at about line 17, that his Honour expresses a view, not talking about S & U Constructions, which is not inconsistent with what we are submitting.  Your Honours will see that he said: 

It is clear that the contravention need not be the only cause of the loss or damage.  However, if some other cause is properly to be treated as “the real, essential, substantial, direct, appreciable or effective cause” of the damage, the fact that the damage would not have occurred but for the contravention need not be enough for liability. 

Your Honours will see the next sentence: 

If some part of the damage would not have occurred but for negligent conduct of the claimant, or failure to mitigate, then it may be appropriate to apply notions of reasonableness in assessing how much was in truth was caused by the contravention ‑ ‑ ‑

GAUDRON J:   Well, that simply directs you, does it not, really, to whether “damage” means the same there as “the loss or damage” in section 82?

MR JACKSON:   I suspect what his Honour is referring to – simply using a short form of words to describe the expression “the amount of the loss or damage”. 

GLEESON CJ:   It probably also directs you to the question of Pontius Pilate.  We will come back at 2.15. 

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.18 PM:

CALLINAN J:   Mr Jackson, can I just ask you a question.  It has been held that before the apportionment legislation, that contributory negligence can be a complete defence to a claim for breach of statutory duty under workers’ safety legislation, notwithstanding that that sort of legislation gives rise to an absolute duty, and that was said by Chief Justice Latham in Piro v Foster.  Now, subsequently, after apportionment legislation, courts, I think, have consistently held that contributory negligence can be a partial defence, a ground for reduction of damages for breach of statutory duty. 

What is it, if anything, about that sort of legislation which differs from the Trade Practices Act?  There may be lots of differences, I do not know, but in principle it seems perhaps anomalous that you could have, in respect of apparently absolute duties, contributory negligence as a partial answer.

MR JACKSON:   Your Honour, in the end I suppose the question is one of interpretation of the two statutes together, in the case of breach of statutory duty on the one hand, and on the other hand the contribution legislation.  The contribution legislation, of course, can vary from jurisdiction to jurisdiction.  For example, in Victoria, as I recall it, it goes to breaches of contract.  Other jurisdictions it has not ‑ ‑ ‑

CALLINAN J:   Yes, and then there have been recent amendments following Astley.

MR JACKSON:   Yes.

McHUGH J:   But may not one answer be, assuming that Piro was rightly decided – a dubious proposition, in my view; the House of Lords disagreed with it – but assuming it is rightly decided, perhaps the difference is that it is the common law that gives the right of action for damages for breach of the statute and, if it is the common law that gives it, then maybe the common law takes it away through contributory negligence, but here it is the statute that gives the cause of action, in terms.

MR JACKSON:   Your Honour, in relation to cases involving breach of statutory duty, what your Honour says is right.  The hypothesis upon which one usually works is that the statute does not deal with the issue, in a sense, one way or the other and it is the common law – a question of interpretation of the statute in the light of the underlying common law approach.  I do not know that I can give your Honour Justice Callinan a better answer than that at present, but what I would seek to say about it is that in the present case one is looking to see – and one does have the provision of section 82 and section 82 picks up, of course, many provisions of Parts IV and V, relevantly.  In relation to those, one seeks to derive from it what is the amount of the loss or damage caused by, or loss or damage by the contravention.

CALLINAN J:   It depends upon section 82 and section 87 in the context in which they are found.

MR JACKSON:   Yes.  Your Honour, I will come to section 87 a little bit later, if I may.  I was dealing with section 82 for the moment.

CALLINAN J:   Yes.

MR JACKSON:   Your Honours, if I could just deal with one further matter before continuing what I was seeking to say before the luncheon adjournment.  Your Honour Justice Callinan asked me what was the order of events.  It is page 23 and following.  Could I endeavour just to summarise it by saying this, that the position was that there were mortgage brokers acting for the borrower.  The mortgage brokers put in a submission.  The submission contained financial details and copies of the valuations.  There was then an approval in principle given, one of the terms of the approval being that there was what was described as an assignment of the valuations to the appellant.  The term “assignment” does not seem to have meant, in the end, more than our saying that they were entitled to rely upon them in making the loan.  Your Honours will see that on pages 23 and following. 

Your Honours, I was in the course of referring to some cases in which an apportionment of damage had been adverted to.  May I give your Honours two further references in which that has been mentioned in the context of section 87.  One is the decision of Justice Ipp in the Supreme Court of Western Australia in Reg Russell & Sons Pty Ltd v Buxton Meats Pty Ltd (1994) ATPR (Digest) ¶46-127. The relevant passage is at page 53,614 in the right column on that page where in the first new paragraph his Honour said:

In exercising its discretion the court will take into account whether there is a causal link between the loss or damage suffered or likely to be suffered by the plaintiff, whether and to what extent the plaintiff is the author of his or her own misfortune, and whether another remedy is or was at hand to recover the loss or damage of question –

referring to a decision of the Western Australian Full Court of which he is a member.  Your Honour, that passage was adopted by Justice Mason, with Justice Priestly agreeing, in the New South Wales Court of Appeal in Akron Securities v Iliffe (1997) 41 NSWLR 353 at 366.

HAYNE J:   In drawing the comparison that references like “whether the plaintiff is the author of his or her own misfortune” seem to invite, how does one set about that if one concludes that the contravention of the Act was deliberate and intended, and the plaintiff was careless for his or her own safety in relying on what was a deliberate untruth?

MR JACKSON:   Your Honour, what one is looking to see is this.  One starts with a situation where the commencing hypothesis, of course, is that there is some chain of events which leads, historically I think the question is, to the loss.  In relation to that, one looks to see what was the nature of the representation made, what were the circumstances in which it was made, to what extent would one regard reliance on it as an appropriate thing and, your Honours, I use that and say the last thing to reflect the caveat which your Honour Justice Gummow referred to this morning from the Nike Case.  But having said that, if all one is talking about is a case of someone being careless not to take further steps to investigate the correctness of the statement that was made or the representation that was made, ordinarily speaking we would not suggest that that was something that would be taken into account to reduce the damages that were attributable to it.

HAYNE J:   It seems to me that an invitation to compare culpability may make some sense, by analogy, if the two faults being compared concern failure to take reasonable care either for the safety for another or for one’s own safety.  One is in the same realm of discourse.  But to compare culpability between deliberate wrong doing and failure to take reasonable care for one’s own safety is a more difficult task and your last answer might perhaps be taken as suggesting that questions of apportionment would arise only in connection with non-intentional contraventions which, in turn, leads to a further set of questions of why would you select such a subset for application of such a proposition, “Where do you find it rooted in the Act?”

MR JACKSON:   Well, your Honour, one does have to start, of course, with the situation that the Act is giving a remedy for contraventions of it, in various circumstances, one of which is for the amount of loss or damage caused by misleading or deceptive statements or ones likely to be.  Now, in those circumstances, the range of possible statements can go from those that are innocent to those that are deliberately made and in the ordinary course of events, in determining the extent to which loss was caused by statements of that kind, one takes the ordinary principle that one can see, for example, in Justice Wilson in Gould v Vaggelas in saying that, if the position is that someone makes a statement which is intended to be acted upon in a particular way, then, prima facie, the Court would take the view that it has been acted on. 

Your Honours, that is a question both of what follows from – one thing following another; but also a question of degree.  So a court would not ordinarily, in our submission, in cases where there has been a deliberate making of a misleading or deceptive statement, take the view that something that followed from it, that was in the range of matters that one might ordinarily think could follow from it, did not do so.

So, your Honour, what I am perhaps saying is that one does have to look at the situation from a practical point of view, recognising that one is talking about a very large range of possible circumstances, and in dealing with that, there may be relatively few cases in which it is appropriate for there to be an apportionment of the kind to which we are referring.  One would not, in our submission, treat as appropriate such cases where all that is being said is that someone did not check what the representation itself was. 

HAYNE J:   But does it mean, for example, in the present case, that although not a necessary part of its proofs, the plaintiff might have ‑ perhaps even should have – gone on to mount a case that the misleading statement was deliberately made, in circumstances that would constitute deceit?  That is, are you injecting into section 52 plus 82 cases a further element of likely proof and contention on the part of plaintiffs? 

MR JACKSON:   No, your Honour.  What there would be, in our submission, is that – and again, I would refer back to Justice Wilson in Gould v Vaggelas.  What usually happens in cases of the broad kind is that if one establishes that a statement is made, which is of the kind that would be expected to be acted upon, then one draws the inference that it was.  But your Honour will see – and one is speaking in the sense one has to put reliance, in one respect, in this regard – it is perfectly possible, as Gould v Vaggelas shows, and various cases show – Jones v Acfold Investments, a decision of the Full Court of the Federal Court, on section 52 – it is possible to show that there was not, in fact, reliance.  In the ordinary course of events, the need to demonstrate – as a practical as distinct from a strict burden of proof question – that there was not reliance would lie on the party saying there was not. 

McHUGH J:   Mr Jackson, my recollection was wrong about Piro.  The history of the matter was that in Bourke v Butterfield this Court held that contributory negligence was not a defence to breach of statutory duty, and then the House of Lords held the opposite in Caswell’s Case in 1940, and so, our Court said, “We will follow the House of Lords instead of our own previous decision.” 

MR JACKSON:   Yes, your Honour, that is the reason why other cases principally are remembered these days, your Honours, principally was remembered in days when that matter ‑ ‑ ‑

CALLINAN J:   In Forrest v John Mills Himself 121 CLR 149, the High Court apportioned in a Queensland case negligence where the only cause of action was breach of statutory duty, the only one that succeeded.

MR JACKSON:   A machinery case, I think, your Honour, yes. 

CALLINAN J:   So, it is something of an unexplained anomaly, really, if it an absolute duty and the cases say that it is an absolute duty, that the safety legislation imposes an absolute duty, as does section 52.

MR JACKSON:   Well, your Honour, section 52 proscribes conduct of a certain kind.  It does not itself provide any remedy in relation to it.  If one is looking for a remedy ‑ ‑ ‑

CALLINAN J:   But nor does safety legislation.

MR JACKSON:   No, I appreciate that, your Honour.  All I am saying though is that when one gets to see what remedies there are, one has to go to sections like sections 82 and 87 and in relation to those, they are, in a sense, self-contained.  Then looking at that, your Honours, one derives from them what the answer is.  What I mean by that, your Honour, is that we would submit that the appropriate - if one looks at section 82, one arrives at the conclusion for which we are contending.  It does not really matter very whether one would get the same conclusion from looking at some other type of statute.

CALLINAN J:   Yes, but in terms of principle, the specific provisions of the statute are not relevant; the principle simply is, is the duty an absolute one or not, imposed by statute?

MR JACKSON:   Your Honour, the duty is absolute - I will accept that.  That is what the statute says.  There are some defences provided, in the case of individuals particularly.  Leaving that aside, the duty is absolute but what follows from making the duty absolute depends on the enforcements.

CALLINAN J:   The statutory remedies, is what you are saying?

MR JACKSON:   Yes.

CALLINAN J:   What if the statutory remedies are not necessarily exclusively the remeyies?  Or do you say they must be exclusively the remedies?

MR JACKSON:   Your Honour, certainly in this case there is not any suggestion to be found in the Act that the remedies - and I think there are some decisions to this effect - are to be found in that part of the Act in which section 82 appears.  Your Honour, there is a question of course whether one can rely upon a contravention of, say, section 52 by way of defence to some other claim; that is a different question.  So it really becomes a question of interpretation of the provision.

Your Honours, I have referred so far to decisions in which the possibility of apportionment of damages, as such, has been referred to.  Could we also say - and I do not want to take your Honours to cases one by one, but if I just give your Honours the references, to the fact that there is nothing novel in taking account of a plaintiff’s conduct in determining the extent of a defendant’s responsibility for loss and damage under section 82.

Your Honours, could I give some examples?  First of all, a purchaser’s ineptitude or inexperience in the conduct of a business, purchased as a result of a misrepresentation, may be taken into account.  At common law, one sees it in Gould v Vaggelas (1984) 157 CLR 215 at 267. In the Trade Practices Act context, one sees it in Brown v Jam Factory (1981) 35 ALR 79 at 90. One sees other such circumstances where there is a change in the method of operation of a purchased business. An example is Collins Marrickville Proprietory Ltd v Henjo Investments, (1987) ATPR 40-822 at 48-905.

GUMMOW J:   Is that in the Full Court?

MR JACKSON:   No, Your Honour.  That is Justice Wilcox at first instance, but not affected by the Full Court.

GUMMOW J:   It was reversed though, was it not, but not this point?

MR JACKSON:   Not this point.  Your Honours, one sees also losses incurred because the plaintiffs failed to act in their own interests and vacating leased premises earlier than they did.  That is the decision I referred to earlier, Pavich v Bobra Nominees, the decision of Justice French in (1988) ATPR (Digest) 46-039. Your Honours, there are losses incurred because a plaintiff failed to bring a foreign currency loan back onshore. Justice Rogers in Mehta & HTA v Commonwealth Bank of Australia (1990) Aust Torts Reports 81-046. Your Honours, losses where it can be said that the plaintiff was the author of his or her own misfortune. I have given your Honours the reference to Akron v Reg Russell.

Finally, one has damages resulting from a plaintiff’s willingness to pay too much per acre for land, purchased as the result of a misrepresentation about its area; that is the decision of Justice Hodgson in Tefbao (1993) 118 ALR 565 at 575. Your Honours, if I could endeavour to summarise what we say, in effect. What we would say is this. That the word “by” used in section 82(1) - and if I could pick up the words in Wardley, expresses the notion of causation without defining or elucidating it.  The notion of causation, as a legal matter, involves two types of inquiry.  Firstly, the role played by a factor in the history of the outcome and, secondly, there is the legal responsibility question, should it be attributed to the factor.  Your Honours, cases under section 82 routinely involve the second type of inquiry, and they so in the types of circumstances to which I have adverted, where the court refuses recovery for all or part of losses which have been claimed, despite the fact that as a matter of historical fact the defendant’s conduct was a cause of the loss, in the sense that it would not have occurred but for the defendant’s conduct.

As the Court of Appeal, in this case, pointed out sometimes that occurs because the losses were incurred beyond a certain date.  In other cases it is because the losses might be characterised as being too remote or too foreseeable.  In some cases the loss, although caused as a matter of historical fact by the defendant’s conduct, will not be recoverable because of extreme or unreasonable conduct by the plaintiff.

Your Honours, in each of those cases the court in limiting the recoverability of the losses, is limiting the recoverability of losses on the basis of a judgment about the appropriate scope of the legal responsibility for the conduct, not on the basis of an inquiry about historical fact.  Your Honours, if section 82 permits or requires that inquiry in relation to parts of losses sustained by a plaintiff where the plaintiff entered into a transaction as a result of the defendant’s conduct, there is no sound basis, in our submission, in principle, not to undertake a similar inquiry in relation to losses which are indivisible in the sense of one being, in the end, one sum.

McHUGH J:   Yes.  I have no problem with your general proposition that you have been expounding, but it does not seem to be the way the case is approached here.  It would be a different matter altogether if this trial judge had said, for instance, that of the $357,000 that represented the difference between the amount of loan and the proceeds of sale, $100,000 of it was due solely to the present appellant’s unreasonable failure to do this or that, and on that basis that loss would not be attributable to your conduct, but that is not the way this case is approached. 

If you look at what is found at page 48 it is all in globo and even if one looks at the individual items, $357,000, $120,000, on the findings of the judge both parties contributed to the loss, and so your client’s actions seem to me, at the moment anyway, to be causally responsible for that loss, as is the plaintiff’s.  Absent some apportionment statute, I do not see how the law of causation can assist you.

MR JACKSON:   Your Honour, could I say in relation to that, your Honour will have seen our alternative argument in relation to the interest but I will come to that a little later, but what I would seek to say about that is this.  Your Honour said the judge has not apportioned it.  Your Honour, what he has done is to look at the various items that go to make up the loss and in relation to those says, “It seems to me that the fairest way of working out who, in terms of section 82(1), or the amount of the loss attributable to the infringing conduct, is”, as courts commonly do, not to say $500 out of a thousand, but to say two thirds of the loss, whatever precisely it may be.

McHUGH J:   These notions of fairness may be attractive to some but it is much better to approach it as a matter or principle, and a principle requires a close analysis of the individual integers of the loss.  If you can point to one integer which can be sheeted home to the person who has been misled, then you can excise it from the damages or the amount recoverable.  This idea of just taking a global loss and saying, “You are 25 per cent responsible and you are 75 per cent responsible, I will put a knife through a quarter of it and take that away from you”, it just does not seem to me to be right in principle.

MR JACKSON:   Your Honour, could I say one does have to start from the terms of the statute itself, so the task is to arrive at the amount of the loss or damage caused by the conduct which contravenes the provision.  Having said that, the question is:  how does one quantify that amount?  In some cases it will be perfectly possible to say, “It is item A, item B, item C, but not D, E and F”.  In other cases it will be that it is not possible to say precisely how much it was because in the end you end up with the one sum, but it was a significant part and the significance is, in my estimation, a third, quarter, half, two-thirds.  Your Honour, that is something that happens in relation to all sorts of assessment of damages.

Your Honours, could I go then to our written submissions for a moment. We have dealt, I think, essentially with the matters to which we referred up to paragraph 18 of those written submissions at paragraph 7. Your Honours, could I just simply seek to say that the approach which we would submit is appropriate does not, in our submission, create particular difficulty. Could I refer your Honours to paragraph 19 of our written submissions and could we also say that the approach which we are suggesting is one which does not seem very different from that which was advocated by Mr Seddon in his article, “Misleading Conduct: The Case for Proportionality” in 71 ALJ 146. We have not extracted the whole article, but your Honours will see at page 150 in the last paragraph in the left column, a reference to:

Another factor which tends to reinforce the argument for proportionality is that, as already noted, full liability may be imposed even when the misleading conduct was a minor inducement to the other party to rely (for example, entering into a contract).

Your Honours will see – I will not read it out – if your Honours go to the bottom of that column and then through to about the middle of the next column, your Honours will see the observation:

In such a case the legislation could be used very simply to produce what might be regarded as a fairer result.  There is nothing to prevent a court from saying that A’s error was caused in part by R’s misleading conduct and that A’s loss was in part attributable to that error (or, more directly, to the misleading conduct) and then to award damages reduced by an appropriate percentage.

And your Honours will see in the last six or seven lines:

The wording of ss 52 and 82 does not preclude this approach.  Under s 82 the plaintiff must show that damage was suffered “by conduct of another that was done in contravention of” s 52.  The court’s task is therefore to ask, in a commonsense way:  what damage was caused to A by R’s conduct?  The answer may well be:  not all for which A is claiming.

McHUGH J:   Yes.  You can agree with that but it is just an illustration of what Justice Holmes once said, that general propositions do not decide concrete cases.  I mean, one can accept everything in that, but then the question is, what part of the – maybe you cannot.  Maybe when he says the loss was in part attributable, if he means by that that it was just merely as a contribution, or is he talking about separate losses.

MR JACKSON:   Your Honour, this is a pretty concrete case, this one, with respect.  It is a concrete case in the sense that what you do have, as we said at the start of our submissions, is the trial judge making findings that there were two separate causes and that the mortgage would not have been entered into if there had not been the conduct of the appellant in the particular case.  I was referring to Seddon’s notion to show that what we were saying was in connection with the cases to which I have referred.  Not a very surprising proposition, but when one applies it to a particular case, this is exactly the type of concrete case that throws up the issue.

HAYNE J:   To be solved by what this author refers to as a “rough and ready assessment”, is that right?

MR JACKSON:   Your Honour, “rough and ready assessment” in the circumstances.

HAYNE J:   One wonders what really that is intended to cover, Mr Jackson.  I mean, they are good mouth‑filling words that the author uses but what is the principle that is put forward?  “It feels like a result”, that is the principle.  It is not an especially intellectually satisfying one.

MR JACKSON:   Your Honour, authors, of course, in dealing with statutory provisions have to find paraphrases for them of more or less attractiveness.  All we would seek to say, your Honours, is that one does go back to the words of section 82 itself and what they – your Honour, if I could just pick up the “rough and ready” expression which comes really from the court – they require that there be a result which in the end is one in accordance with the terms of the statute and its policy and that, in our submission, is to achieve a fair result.

KIRBY J:   Mr Seddon might have been trying to say in less elegant words what the law reform statutes say in terms of what is just and equitable.  I mean, it does not give very much guidance.  Maybe it is better to stick to that longwinded expression rather than “rough and ready” otherwise you will be criticised.

MR JACKSON:   Your Honour, I think I am, again, with respect, playing with words at the moment, so perhaps I should move on.

KIRBY J:   I hope you will move on to Henville because Henville seems to stand against your propositions.

MR JACKSON:   Your Honour, may I come to that in just a moment.  What I am seeking to say is this, that the point we have set out in our written submissions in the paragraphs which go through, I think, from about 23 to 33, matters that I suspect I have really put to your Honours already orally and I do not intend to go back to them.  Could I go then to Henville v Walker (2001) 75 ALJR 1410. In Henville the primary judge had reduced the damages claimed because of the claimant’s own conduct in underestimating the cost of a development.

In the Full Court the Full Court held that that had amounted to a break in the chain of causation and so the plaintiff got nothing.  Could I just say, your Honours, the Australian Law Journal Report in the headnote seems to describe this as the Supreme Court of South Australia but it was Western Australia, of course.

GUMMOW J:   It is not the only erroneous headnote in that publication.

MR JACKSON:   I am sorry, your Honour?

GUMMOW J:   It is not the only erroneous headnote in that journal.

MR JACKSON:   Your Honours, this Court held, of course, that the Full Court had been in error in so holding and, your Honours, we would submit that the observations made in relation to damages in that case are not against the proposition for which we contend.  I do not intend to go through it paragraph by paragraph, but may I go in the reasons for judgment to a number of the paragraphs to seek to make out that proposition.  Your Honour the Chief Justice, paragraph [18] at page 1414, and your Honour there said at the bottom of the left column:

The only express guidance . . . is to be found in the concept of causation in the word “by”.  The task is to select a measure of damages which conforms to the remedial purpose of the statute and to the justice and equity of the case.

Your Honour elaborated upon that through that paragraph.  But then, more particularly, at page 1416, paragraph [35], your Honour said that the primary judge had been:

entitled, in principle, to reject the claim that the whole of an amount calculated in that manner represented loss that flowed directly from the contravention of s 52 or, to use the language of the statute, that it was, in whole, loss or damage suffered by conduct in contravention of s 52.

Your Honour said that the primary judge had been:

expressing a finding as to causation –

and your Honour took the view that it:

was open in the circumstances of the case.

Now, that follows, your Honour, through the remainder of that paragraph on that page through to the end of the paragraph on page 1417.  So that your Honour’s judgment does recognise that it does not follow that all the amount that flows from the conduct in contravention of section 52 historically, to use that expression, is recoverable.

Your Honour Justice Gaudron at page 1420, paragraph [63], referred to the general proposition and, in particular, said:

Nor is there anything in the Act to suggest that the loss or damage is to be calculated in any particular way –

Then, your Honours, at the next page, page 1421, paragraph [64], in the middle of the paragraph, about B, your Honour referred to questions being:

raised as to whether foreseeability and contributory negligence have a role to play –

and then at paragraph [66] on the same page said that:

It was held in Marks v GIO Australia Holdings that the relief available under s 82(1) of the Act is not to be confined by analogy either with actions in contract or in tort.  Rather, the task under that subsection is to ascertain the loss suffered by the contravening conduct and to assess the amount necessary to compensate for that loss.  Once that is accepted, it follows, in my view, that considerations of foreseeability and contributory negligence are irrelevant –

But your Honour then said:

However, that does not mean that, where the loss is the result of two or more acts or events, causation is irrelevant to the task of identifying the loss or the amount of the loss recoverable.  To treat causation as irrelevant would be to ignore the requirement in s 82(1) that a person suffer loss or injury by contravening conduct.

At paragraph [70] on page 1422, your Honour said: 

It follows that, under s 82(1) of the Act, it is for the person whose contravening conduct materially contributed to the loss or damage to establish what component of that loss or damage is referable to some act or event other than his or her contravening conduct –

and your Honour was speaking about the burden of proof, in a sense, there.  Could I just say, this is a case where there are findings.  If I could move then to your Honour Justice McHugh at page 1426, paragraph [99].  Your Honour referred to the fact that: 

answers to questions of causation will differ according to the purpose for which the question is asked. 

That is elaborated upon in paragraph 100, but if I could move on to paragraph [131] at page 1432.  Your Honour said, in paragraph [131], that: 

Indeed, general principles for assessing damages may have to give way altogether in particular cases to solutions best adapted to give the injured claimant an amount which will most fairly compensate for the wrong –

claimed.  Your Honour, at page 1434, paragraph [140], in the middle of the paragraph, having said there was: 

no ground for reading into s 82 doctrines of contributory negligence and apportionment –

your Honour then said: 

No doubt, if part of the loss or damage would not have occurred but for the unreasonable conduct of the claimant, it will be appropriate in assessing damages under s 82 to apply notions of reasonableness in assessing how much of the loss was caused by the contravention of the Act. 

Now, accepting that proposition for the moment, with respect, it would seem, we would submit, odd if the only circumstances in which that test could be applied were ones in which it is possible to say this is a separate and discrete, identifiable, number of dollars, something one can exactly separate out.  There is no reason, in our submission, why that approach is not appropriate to applying notions of reasonableness to say, in reality, one third of this loss was caused ‑ ‑ ‑

McHUGH J:   What I had in mind, I think, was that the defendant’s contribution to the damage is then spent, so that it is not responsible for that component that is outside ‑ ‑ ‑

GAUDRON J:   Mr Jackson, I do think the context of Henville v Walker has to be taken into account in reading this, because Henville v Walker was not just simply the purchase or other transaction.  It was a series of transactions.  It was purchase and building.  Now, it was not possible to identify the loss or damage in Henville v Walker simply as the purchase of the land.  You had to go on:  it was the purchase of the land and its subsequent development in accordance with plans.  Here, though, it seems to me, once you say the loss or damage is entry into the transaction, you are in a different realm of discourse. 

MR JACKSON:   Well, your Honour, could I say two things.  First of all, in Henville v Walker, no one was trying to get back the amount that Justice Anderson had taken off.  The issue that was before the Court was essentially whether the Full Court in Western Australia was right in saying that the chain of causation had been broken.  Once that happened, the result followed, so that the discussion about the extent to which Justice Anderson might or might not have been correct in taking off – or not allowing, if I can put it that way – some of the damages was, with respect, obiter and ‑ ‑ ‑

McHUGH J:   Well, not really, because in the forefront of the respondent’s argument in Henville v Walker was that even if the Full Court’s judgment was set aside, nevertheless, the damages should be reduced to $125,000 and some other figure, $200,000, I think, and so those matters had to be considered.

MR JACKSON:   Well, your Honour, that aspect of it, with respect, does not really readily appear.

McHUGH J:   Well it came in in the context of onus of proof and I think Justice Gaudron dealt with it by saying the onus was on the defendant to show what was or what was not and I am not sure – I thought the argument was really variations on the argument which it had rejected, but I think all members of the Court dealt with it.

MR JACKSON:   Your Honour, I do not know that I can take it beyond that, but all I was going to say, your Honour, was that this is a case where you do see there be an apportionment, if I could put it that way, and an allocation of responsibility.  This is a case where the matter is, in our submission, directly in issue.

McHUGH J:   At paragraph 71 in Justice Gaudron’s judgment she concluded her train of reasoning by saying:

The conclusion that it was for the respondents to identify what part of Mr Henville’s loss was referable to conduct . . . is also determinative of the matters raised by their notice of contention.

MR JACKSON:   That must be it, your Honour, yes.  Your Honour, could I say, however, that if I could just remain for a moment with your Honours’ reasons, if one goes, and finally, to paragraphs 146 to 148 on page 1435, what your Honours will see, in our submission, and in particular in the middle of paragraph [146]:

In the absence of evidence enabling such losses to be identified and assessed, there was no way to establish the amount of the loss that was attributable to Mr Walker’s misleading conduct.

So, your Honours, that was the approach taken by the Full Court.  Your Honour then said:

However, in the absence of evidence . . . the lack of evidence enabling these costs to be identified could not affect Mr Henville’s right to be compensated for his actual loss.

And then your Honour went on to say in at the end of that paragraph that:

Mr Walker bore at least an evidentiary onus of proving the costs of the overruns and delays.

And your Honour dealt then with the burden of proof in the next paragraph.  The point we would seek to make about it, your Honours, is that your Honour’s observations recognise the possibility of there being cases, in our submission, like this one, where there has been a finding as to matters of that kind; the burden has been satisfied.

Your Honour Justice Gummow agreed with Justice McHugh and Justice Hayne at page 1436, but your Honour Justice Hayne, at page 1437, referred in paragraph [165]:

to the limited question of the historical relevance of the contravening conduct to the loss or damage sustained.  It does not provide a basis for concluding that notions of contributory fault are to be given a place in its operation.

But your Honour then said in the next paragraph, to which I will not read out, recognised the possibility, in our submission, that there were cases in which one has to identify the nature and extent of the causal connection and your Honour said that at page 1438 in that paragraph, second line on the page:

Likewise, asking what is “reasonable” in assessing how much of the loss was caused by the contravention may invite attention to the nature –

and your Honour said –

extent of the causal connection between the loss and contravening conduct.

Your Honours, the point we would seek to make is that the observations of members of the Court in that case, are not against the proposition and do not decide it against us and we would submit that it is an appropriate case for the Court to deal with the issue here.

Your Honours, could I go then to section 87, and if I could take your Honours to the opening words of section 87(1).  As is apparent from those opening words, it comes into play in the circumstances there set out.  Those are:

where, in a proceeding instituted under, or for an offence against, this Part –

and, your Honours, could we note in passing that whilst section 87(1) says “Without limiting the generality of section 80”, it does not say the same thing about section 82.  Indeed, your Honours, the opening words of section 87(1) assume that proceedings, such as proceedings under section 82 are, in (1B), your Honours will see the words, “in a proceeding instituted . . . under this Part”.

The words used in section 87(1) require the Court to find that the person suffered loss or damage or is likely to suffer loss or damage, and has done so by conduct engaged in in contravention of a provision of, relevantly, Part V.  Your Honours, staying with the words of the provision, if the Court makes those findings, the Court has then power to make such order, and again to pick up the words of the provision, “as it thinks appropriate” if it considers that the order will compensate the person “in part, for the loss or damage”.

Your Honours, the case in which one might compensate in part, in our submission, is where the loss or damage is caused, in one sense, by the contravention, but in another by the conduct of the claimant.  What we would say is that the right given by section 82 is not a right which is freestanding, it has to be read in the light of the presence of section 87 and once proceedings are instituted on the basis of section 82, the court’s powers, under section 87, are enlivened.  In our written submissions in paragraph 37 what we have submitted is that the power under section 87(1) is a wide discretionary power to ensure a fair result.

Now, could we say in relation to section 87 the equivalent provision in New Zealand has been treated as one which does not require there to be the making of full compensation.  I will take your Honours to the case in a moment, but I appreciate immediately that there is no equivalent to section 82 in the New Zealand legislation but if I could just take your Honours to Goldsbro v Walker [1993] 1 NZLR 395.

Your Honours will see set out at page 397, commencing at about line 25, the proscription in section 9 and then section 43, “Other orders”.  Your Honours will see the wording of section 43(1) which allows the making of:

all or any of the orders referred to in subsection (2) of this section.

Subsection (2) sets out, relevantly, (2)(d):

An order directing the person who engaged in the conduct . . . to pay to the person who suffered the loss or damage the amount of the loss or damage:”.

There is an equivalent provision in section 87(2).  Your Honours will then see that the view that was taken appears first of all in the President’s reasons at page 399.  He referred at about line 20 to the fact that:

the New Zealand Act differs from s 82(1) . . . which takes the form that a person suffering loss or damage “may recover” the amount:  words which would seem to confer a right of action.

Could I pause to say that prima facie that is so but section 82 has to be read with section 87.

GAUDRON J:   Does it have to be read as impliedly repealed to some extent upon the enactment of section 87?

MR JACKSON:   No, your Honour.

GAUDRON J:   Would it not, because section 82 was there first, was it not?

MR JACKSON:   In the current form, yes.

GAUDRON J:   Were there no 87 – and let us assume you lose on what you have already put about 82 – one would think that there would be no basis for reading section 82 as saying “may recover the amount of the loss or damage or such part of the loss or damage as the court thinks fit”.

MR JACKSON:   Your Honour, I am working on the assumption that the first argument failed, yes.

GAUDRON J:   Yes.  But, section 82 was always there, and then came section 87.

MR JACKSON:   They were both there.  Section 87 was later amended.

GAUDRON J:   Yes, in the form it now is.

MR JACKSON:   The amendment, relevantly, to subsection (1) has the effect of saying two things, “in a proceeding instituted under” this Part, which picks up the section 82 proceeding, and also then adding the words at the end of subsection (1):

compensate the first‑mentioned person in whole or in part for the loss or damage ‑ ‑ ‑

GUMMOW J:   Probably it is 82 in its present form and 87(1) in its present form were both substituted by the same Act in 1977.

MR JACKSON:   Yes.

GUMMOW J:   They have been tinkered with as well.

MR JACKSON:   Perhaps it is right, your Honour, to say that in effect it is an implied repeal of part of section 82 but what it does do is to, as frequently happens where there has been an amendment to a statute or to the operation of it and ‑ ‑ ‑

GAUDRON J:   There seems to be no difficulty in putting that, if section 82 was, as it were, repealed and then re-enacted at the same time as section 87.

GUMMOW J:   They have to be made to live together, somehow.

MR JACKSON:   Your Honour, in making the household happy, where they live together, the way in which one does it, in our submission, is to say you are given by a statute, certain rights.  The rights are ones that are enforceable in court.  If you institute proceedings under section 82, then one of the things that comes with doing so is the fact that the court has power to make orders of the kind referred to in section 87(1).  You do not necessarily get all you want.

McHUGH J:   How does that come about?  Is that because the statement that the court may make orders, which will compensate a person in part, carries the negative implication, doing away with the power to aware a full compensation under 82?

MR JACKSON:   Yes.  Your Honour, bearing in mind too that the words of section 87(1) do not limit the relief that can be granted to that which appears in subsection (2), the words in parentheses.  Your Honours, all I want to refer to the New Zealand cases for was to say that one sees an example where the Court of Appeal in New Zealand has taken the view that a provision which does not contain the words “in part”, but which is directed to the same end as section 87, has been held to achieve the aim of getting a fair result by awarding inappropriate cases, part of the loss.

GUMMOW J:   I do not understand what Lord Cooke is saying on page 399, lines 30 to 35.

HAYNE J:   It seems to stem from this notion that it is a power and no right of action.  It is a power, “You can exercise a bit of the power.  By the way, I won’t tell you when you can exercise a bit of the power.”

GUMMOW J:   It just seems to me a great grab of judicial imperialism from the legislature.

MR JACKSON:   Your Honour, if one looks at the terms of section 43 at page 397 about line 45 it empowers the making of orders, and your Honours will see the way in which Lord Cooke puts it, at page 399 about line 35:

It enables the Court to grant a remedy that gives effect to the policy of the Act ‑ ‑ ‑

GUMMOW J:   It is two sentences above that:

Power to award the full amount of the loss of damage should naturally carry implicitly power to award part -

Why?

MR JACKSON:   Because, your Honour, what he is ‑ ‑ ‑

GUMMOW J:   Because I take a different view of what the Act is implementing by way of its policy.

MR JACKSON:   Well, not really, your Honour.  What we are saying is that it really appears, I suppose, about line 23 on the same page:

It is one of a range of discretionary remedies.  In that context, there is no compelling reason to hold that if the defendant’s misleading conduct has contributed to cause the plaintiff’s loss, the only course open to the Court, where no other form of relief is appropriate, is to order payment of a sum representing the full loss.

What he is seeking to say is that what is awarded is the damage that is attributable to the breach, speaking in a context of there being more than one cause, of course. 

Your Honours, to the same effect, one sees Justice Richardson at page 404 and, in particular, between about lines 5 and 14, commencing with the words:

The Fair Trading Act is important economic and social legislation.

And it goes through to the end of that paragraph.

McHUGH J:   That would seem to indicated that in New Zealand in the exercise of the court’s discretion, it could take into account the contributory negligence of a person and say, “Well, we will not give you all because you did not take care for your own property and your own interest.  Therefore, we will reduce the amount that would otherwise be awarded.”

MR JACKSON:   Your Honour, it goes further than we submit here.  But all I am seeking to say is - and I should also give the last reference as page 406, Justice Hardie Boys, from lines 1 to about 25, that it supports, in our submission, the view that when the statute actually says “in part”, that that is what it means.

HAYNE J:   Justice Hardie Boys is saying it would be wrong to attempt any categorisation of factors relevant to the exercise of the discretion.

McHUGH J:   It is hard to escape the feeling, perhaps the conclusion, that the judges in this case and in some of the other cases that you have referred to take the view that it is not fair in their eyes that the defendant should have to pay for all the consequences of its wrong, if the plaintiff could have taken some steps which would have ameliorated that damage.

MR JACKSON:   Your Honour, I do not know that that is quite the way it is put in ‑ ‑ ‑

McHUGH J:   I know it is not put that way, but Lord Cooke talked about it, if he awarded full damages, then it would result in the Act being draconian or doing injustice and it may be that legislation like section 52 was designed to protect the incompetent and the careless from faults and misleading statements in commerce.

MR JACKSON:   Well, your Honour, that is one aim of the enactment.

GLEESON CJ:   Which is an extraordinarily draconian piece of legislation when you bear in mind that misleading statements may be made perfectly honestly.

MR JACKSON:   Yes, and, your Honour, it becomes draconian, in our submission, where one sees circumstances akin to this, where there has been a finding that there are two reasons for this happening.  So we end up, as it were, being the unpremiumed insurer.

KIRBY J:   You do not want draconian consequences any more than anyone else, it is just a question of where lies Draco?

GLEESON CJ:   The New Zealand judges in this case of Goldsbro seem to have taken the view that there is something unjustly inflexible about what they called the “all or nothing” approach to the calculation of damages.

MR JACKSON:   Yes, and that is the view taken, of course, in the Court of Appeal in this case.  It is referred to, your Honours, in their Honours’ reasons.  Your Honours, in our submission, there is much to support that view because one sees that the terms of section 52 and the other provisions of Parts IV and V are capable of applying to a very wide range of circumstances.

That is perhaps why one sees, if one goes back to section 82 for a moment, that the remedy by way of damages that it has given is one which is expressed in terms which necessarily require the courts to apply a short provision to a variety of circumstances.  In doing so, your Honours, we would submit, if one looks at the words of it, one sees that it is seeking to do no more than to say the contravener has to pay the amount of the loss or damage caused by the contravener’s contravention.  So much, but no more.  Section 87 has a lot of functions to perform, but one of them is to say that very thing in terms.

Your Honours, could I say one other thing.  Our learned friends have referred to section 75AN.  Your Honours, we have dealt with that in our written submissions at some length in paragraphs 41 and following.  Your Honours, I do not think I need to add anything more to what we have set out there in relation to that.

Could I move finally, I think, to our written submissions in paragraphs 49 and 51 and that is to what we have described as the alternative argument.  Your Honours, could I say, this is a point that arises if the appeal will otherwise succeed.  It is not a question of a cross-appeal or notice of contention seeking to keep the same judgment; what we are simply saying is that if the appellant otherwise succeeds, then they should not succeed in full.  Your Honours will see, if I could take your Honours to the appeal book for a moment, that the amount of the judgment, or the calculation of the amount of the judgment, appears at page 48 and item ii consists of the “lost interest for period” of the year of the loan.  That is $120,650.  One also sees that the “interest pursuant to the Supreme Court Act 1995” item v, is $135,441.90.  Your Honours, could I just say that of that sum we have agreed between us that the amount of that interest attributable to interest on item ii is $29,253.  To those two sums the $120,650 and the $29,253 amount to a total of $149,903.  The point we will seek to develop is that if the appellant were otherwise to succeed, we would submit that the amount of the judgment should be reduced by that sum of $149,000-odd that I just referred to.

Your Honours, the reasons why we would make that submission are these:  your Honours have seen that item ii consists of the lost interests for the period of the loan and if one goes to the primary judge’s reasons at page 36, first of all, paragraph 53, your Honours will see that there was:

default in . . . making the first monthly payment –

and his Honour said that:

demonstrates the degree to which the plaintiff departed from the norm and indicates the seriousness of its fault.

Your Honours will then see at page 43 in paragraph 65 – a paragraph I have taken your Honours to earlier – and finally page 44 paragraphs 69 through to 71.  His Honour discusses the amount of the interest and your Honours will see that he allowed interest for the year of the loan.

What we would submit is that the claim for that interest is something that one can describe, perfectly properly, as a particular component, to use your Honour Justice Gaudron’s words in Henville v Walker, of the appellant’s loss which is directly referable to its own conduct.  So, too, we would submit, is the appropriate proportion of the interest ‑ ‑ ‑

GAUDRON J:   It may be fair to describe it as that, but one has to relate it back, I think, to section 82 and one must ask the question:  is the loss or damage that was suffered by the misleading conduct, to use that expression as a shorthand term, the entry into the mortgage or the default under the mortgage?  If it were the default, I can well see how you do that. 

MR JACKSON:   Your Honour, one bears in mind, of course, that section 82(1) is speaking, in the end, about loss or damage in terms of money.  One is speaking about the amount of the loss or damage.  In this case, there may never have been default.  It will be possible for – unlikely, no doubt, unless some fortuitous event happened, but it may have been that the first payment of interest was paid.  It may have been, by reason of an increase in the value of land, that there was no actual loss. 

If one were looking, in terms of section 82(2), to see when the cause of action arose in terms of proceedings under section 82(1), until the first payment of interest had not been paid, it would be very difficult to say, in our submission, that there was any loss or damage for the purposes of that provision.  Once that happened, of course, there is some loss or damage, because there has not been a payment, but that loss or damage, and the interest, in our submission, is something that is an identifiable, particular component directly referable to the fact that they had agreed to enter into a mortgage with people who could not afford to make those payments. 

HAYNE J:   Well, is that right?  Because am I right in understanding item ii, as appears from page 45, paragraph 71, as being allowed in the amount that could have been earned had an investment been made in an average mortgage?  That is, the 120 is a hypothetical amount, what would have been earned if there had been a different investment from the one that was made. 

MR JACKSON:   That appears from paragraph 69.  What your Honour says is right.  But the point I am seeking to make about it is that, in relation to interest, what one had was a situation where the interest was payable on the mortgage for a year.  What is obtained under – no interest was paid. 

HAYNE J:   There was no interest on this transaction, but the 120 is the amount that would have been earned had there been another good, average transaction. 

MR JACKSON:   Yes, your Honour, and the reason why the money was not available to do that is because, as the judge found – I have taken your Honours to the passage already – the transaction would not have been entered into had there not been separate conduct, and the cause of this loss is by reason of that conduct.  It is directly, in our submission, referable.  It is not the same money, but it is directly referable to it. 

Could I just say something in relation to the position in the United States.  One can see it in the third edition of Torts, Apportionment of Responsibility.  I will not do it now but I can give your Honours references to particularly section 7 and section 8 under that heading where they deal with what, initially, had been treated as comparative negligence, then became comparative fault, and the expression “comparative responsibility” is used now.  But in particular could I just say this, that section 8 of the restatement identifies the factors used for assigning shares of responsibility, which include “the nature of each person’s risk‑creating conduct”, including “awareness, intent, or indifference, with respect to the risks” created by the conduct and any intent with respect to the harm, and, again, the strength of the causal connection between the risk‑creating conduct on the one hand, and the harm on the other.  We can give your Honours a copy of that.

GUMMOW J:   Mr Jackson, could you just go to paragraph 39 of your written submissions, on page 12.  Does that express succinctly what you say is the relation between 87 and 82?

MR JACKSON:   Yes.  Not completely, but succinctly, yes, your Honour.  When I say not completely, it refers to the position between 82(1) and 87(1).

GUMMOW J:   Yes.

MR JACKSON:   It does not deal specifically with later provisions of section 87.  Your Honours, those are our submissions.

GLEESON CJ:   Thank you, Mr Jackson.  Yes, Mr Keane.

MR KEANE:   Thank you, your Honours.  In relation that last point, in relation to paragraph 39 of our learned friend’s submissions, might we say a couple of things.  Firstly, section 82 is not expressed to be subject to section 87 and, on the approach reflected in paragraph 39 of our learned friend’s submissions, section 82 has been converted from a right to recover full compensation for loss into an oddity, the only relevance of which is to engage section 87.

In our respectful submission, that is not an appropriate way in which to read the two provisions together.  The appropriate way in which to read the provisions together is to regard them as both serving the purpose of providing full compensation for loss that has been suffered and, in that regard, we refer again to what was said in the joint judgment in Marks v GIO at paragraph 43, where it was said, in relation to sections 87(1) and (1A):

That is, the Court can make orders under s 87 only in so far as those orders will compensate (or will prevent or reduce) the loss or damage that is identified.

Your Honours, going back to section 82, in relation to the authorities that our learned friend has referred to, Munchies Restaurant v Belperio, Kewside, v Warman, Argy v Blunts and so forth, can we say briefly that those cases are cases where the courts were concerned with divisible losses;  divisible either because there had been some supervening cause between the original misconduct and the incurring of the loss, or because there was some question of mitigation arising.  That that is so is apparent from Munchies Restaurant v Belperio.  Our learned friends took your Honours to page 286.  If we can read the passage at the top of 287, where the reference is to Justice French’s judgment in Pavich v Bobra Nominees.  At the top of 287 his Honour refers, with evident approval, to what Justice French said, or the court refers, with evident approval, to what Justice French said:

“The primacy of the causation principle in s 82 would seem to exclude reliance upon such concepts as mitigation or contributory negligence, unless it can be shown that the applicant’s own carelessness or disregard for his or her interest is the cause of all or some part of the claimed loss.  It may still be in such a case that the misleading or deceptive conduct complained of may be identified as a sine qua non of the loss claimed.  There may come a point, however, where the applicant’s own conduct is so dominant in the causal chain as to constitute a novus actus interveniens.  It is perhaps simply putting it another way to say that in such a case a selection principle of the kind adverted to [in the Elna Australia case] comes into operation to exclude liability.  The criteria for such selection may import concepts analogous to remoteness, mitigation or contributory negligence.”

But, your Honours, it is only in that respect that the possibility of partial compensation or the recovery of part of the loss under section 82 is contemplated.  If one looks at page 290 in the judgment one sees ‑ ‑ ‑

KIRBY J:   Can I just ask for your help on the words “or some part of the claimed loss”?  Does that not run against your argument that ‑ ‑ ‑

MR KEANE:   The cause, your Honour, the cause of all or some part.  The argument we are advancing is that where it can be identified in respect of a claimed loss that the conduct or the carelessness or the disregard by a plaintiff for its own safety is the cause of an identified part of that loss, then it will not be compensable.

KIRBY J:   Is the difference between you and Mr Jackson on this point that you insert the word “identified” there?

MR KEANE:   There are two things.  One, we underline and emphasise “the cause” and that is elaborated – the passage goes on to elaborate and explain why we emphasise it and the second is that we do say that one needs to identify the loss.

KIRBY J:   Well, query whether it stands with Henville but both the primary judge and the Court of Appeal here might be heard to say, “Well, what we are saying is it is the cause of a part of the loss but the other part of the loss has been caused by the plaintiff’s own action”, part being a section or proportion of the loss.

MR KEANE:   With respect, the Court of Appeal did not do that, your Honour.  One can see that the Court of Appeal actually eschewed such an exercise for the reason, no doubt, that, with the greatest respect, there is just one big loss.  It is not as if the plaintiff decided to lend an extra $100,000, not caring about its ratios, its lending ratios and the relevant valuation, but doing it simply because it was feeling particularly generous that day.  In that case, one could say that is the cause of that loss.

McHUGH J:   Well, there is a good illustration of it in Henville.  The trial judge had excluded in that case losses that were entirely due to one of the parties erroneous estimates of likely selling costs and it was of that nature and ‑ ‑ ‑

MR KEANE:   Or extravagance in terms of the fit-out in comparison with what they were trying to sell or delays in marketing.

GLEESON CJ:   Resulting from their problems with the bank.

MR KEANE:   Quite.  And to return to your Honour Justice Kirby, the paragraphs I was thinking of, which indicate that the Court of Appeal did not regard these losses as divisible, are at page 64, paragraphs [20] and especially [21], where their Honours say:

The divisibility or indivisibility of the loss should not be the criterion.

They rather took this more broad-brush approach, which in rational terms - if all one is doing is identifying loss flowing from cause, one cannot say that $130,000 worth of this loss was due to the failure to make proper inquiries as opposed to the reliance on the valuation.  It is just not a rational inference one can draw.  It is some sort of evaluation about responsibility.  Your Honours, in that regard, before we go on, can we just draw attention in Munchies v Belperio, to what is at page 290 between the letters C to D, where one can see that in that case their Honours were applying the principle in terms of identifiable divisible losses, in respect of which the cause was something other than the contravention.

Similarly in relation to Kewside v Warman - and we will not ask your Honours to go to that now, but can we just give your Honours the passage: at page 58,825 in the right-hand column, first full paragraph, your Honours will see what his Honour was doing there was identifying, and excluding from recovery, a segregable divisible loss and similarly ‑ ‑ ‑

GLEESON CJ:   That does not exclude the possibility that, where you draw a line, it might be an arbitrary line.  If, for example, somebody, in contravention of section 52, induces a person to purchase a business, unless you are going to have the consequence that the contravener then becomes the underwriter of the losses of that business for so long as it is carried on, you may have to draw a line, perhaps a fairly arbitrary line, somewhere and say, “After this time, the losses incurred by this business are no longer” – to use Justice Anderson’s expression in Henville – “down to the misleading conduct”. 

MR KEANE:   Your Honour, it might be that in such a case, the kind of result that occurred in MAN Automotive v Burns 161 CLR would occur, which is to say that the plaintiff was regarded as simply hanging on to a business which he knew to be moribund, at a time when to do so was quite unreasonable.  That was held not to be related to the misconduct of the other party. 

KIRBY J:   Otherwise, the risk is that the Act will be used in a very oppressive way to overcompensate people.  It is true.  It requires a lot to be done by that word “by” in section 82. 

MR KEANE:   It does, your Honour. 

KIRBY J:   But unless one takes that view, it is going to be an instrument for great injustice.  That is the argument – you can call it rough and ready, or fair, or equitable and just, but that is the argument for confining the operation of section 82 to that which can be attributed to the breach of the Act. 

MR KEANE:   But, your Honour, what one cannot do, in terms of principle and the proper construction of section 82, is to seek to confine it by reading it as if it read “any person who suffers loss or damage solely by conduct”.  With the greatest respect to our learned friends, his attempt to read the provision so as to provide for recovery only of loss and damage for which the contravener is responsible, or attributable to the conduct of the contravener only, inevitably involves reading section 82 as if it said “any person who suffers loss or damage solely by conduct of another person”, and, your Honours ‑ ‑ ‑

KIRBY J:   He says that you are trying to insert there in any old way “by conduct”.

MR KEANE:   No, your Honour.

KIRBY J:   I mean, each of you is trying to – and it is not your fault because you are just stuck with the statute with very enigmatic brief terms – but, on one view, he says, “No, no, I am not trying to say ‘solely’, I just want to only be liable for the loss or damage caused by my conduct”.

MR KEANE:   Quite, your Honour, and that formulation will do for me.  I do not need to try to verbal my learned friend more fiercely than that, that will do because in relation to that contest between his position and our position, we can rely upon the observations of the Court in Walker v Henville which make it clear that that proposition, which is essential for his reading of section 82, may not be maintained and in that regard, we will not read them out to your Honours; but, as we said in our submissions in‑chief, we have set out in our reply the passages from Walker v Henville which distinctly deny the possibility of that reading of section 82.

GUMMOW J:   Implicit, I think, in Walker v Henville is the idea that one does not read down this statute with the notion that at common law, you could not get damages for innocent misrepresentation.

MR KEANE:   No, your Honour.

GUMMOW J:   Implicit in a lot of the debate is the idea that, “Oh, my goodness, you cannot have changed that situation”, and if you have, you have to be treated as having done it in as narrow a fashion as possible.  So the common law controls the statute from the grave.

MR KEANE:   Your Honour, that should not occur, but also, your Honours, if the Parliament thought that the result that was achieved was inappropriate, then it has had ample opportunity to act and, importantly, when it did act in introducing section 75AN, did not seek to alter the situation which the line of cases like Munchies Restaurant seems to indicate were well established.

CALLINAN J:   You do not want to read the Act as saying “By contributory conduct”, section 82?

MR KEANE:   No, your Honour, we submit that ‑ ‑ ‑

CALLINAN J:   But are you not reading it that way?

MR KEANE:   No, we would read it simply as, if we could take your Honour to our submissions in reply to page 3 and we would rely on the passages we have set out from the judgment in Henville v Walker, your Honour, in paragraph (a):

Negligence on the part of the victim of a contravention is not a bar to an action under s.82 unless the conduct of the victim is such as to destroy the causal connection ‑ ‑ ‑

CALLINAN J:   I understand that and I know those passages, and that may be what the passages say, but, nonetheless, you want to read the section as saying contributory conduct is sufficient.

MR KEANE:   I am sorry, your Honour, in relation to that we agree, yes, if it is a real contributing cause.  A real contributing cause will suffice.

CALLINAN J:   The Act does not say that any more than it says, expressly, what Mr Jackson contends.

MR KEANE:   Your Honour, while one has to expound the Act to get that result, we have the advantage that is the exposition of the Act, of every Judge of this Court in Henville v Walker, and our learned friends do not seek to say it is wrong, they simply seek to say that there is scope left for their argument.  On the footing that those passages that we referred to correctly expound the Act, there is no such room.

CALLINAN J:   I understand the very powerful arguments that you have in that regard based upon the statements in Henville.  Was it not the law, or, say, shipping law, that if there were two causes, that was before apportionment legislation in maritime law, I think even before there was legislation.  The first apportionments were made in respect of shipping cases I think, is that not right?

GLEESON CJ:   Was that not a “both to blame collision” situation?  You had in shipping law a situation in which, if you had a “both to blame collision” where each could sue the other, then you had a procedure for apportionment.  What was the origin of the “all or nothing” approach of the common law which is referred to by the New Zealand Court of Appeal in Goldsbro?

CALLINAN J:   That is really what I am asking.

McHUGH J:   It comes out of Butterfield v Forrester does it not, which is an action in nuisance, and Lord Abinger just invented the doctrine, like he invented the doctrine of common employment.

GUMMOW J:   The idea of tort being linked to crime, historically, I think.

MR KEANE:   The idea of responsibility for all the consequences of one’s conduct.

GLEESON CJ:   The one thing that has been said right from the beginning, or two things have been said right from the beginning in relation to section 52.  The first is that although it was introduced for purposes said to be related to consumer protection, it has never been limited to protection of consumers, but the concept of consumer protection makes it obvious why negligence is not a bar in the sense of a complete defence to the action.  To put it bluntly, a consumer protection statute cannot be applied so that it does not protect dopey consumers.

The other thing that has been said over and over again right from the beginning is that you do not approach section 52 and section 82, as it were, controlled by common law notions.  All or nothing, is itself, a common notion, is it not?

MR KEANE:   Your Honour, “all or nothing” comes from treating the word “by”, “suffered by conduct”, as meaning of which that conduct was a cause.

GLEESON CJ:   But, as I understand part of the argument against you, whether it is right or wrong, it is that nothing could be a more obvious importation of an old common law idea into the construction of this statute and, in particular, into the construction of sections 82 and 87 together, than the assumption that damages are to be measured or awarded on an all or nothing basis.

MR KEANE:   What your Honour the Chief Justice puts to us is correct.  Indeed, in Munchies v Belperio at 286 at the bottom it is said:

The measure of damages hangs on the words “by conduct”; the preposition “by” has been interpreted to mean “by reason of” or “as a result of”.  There is thus an apparent telescoping of what to the common law would be concepts of causation, remoteness and measure of damages.

So that there is the use of language by the Parliament which engages concepts with which the common law is familiar.  Perhaps the adjurations are against confining the remedial provisions by reference to common law doctrines and limitations.

GLEESON CJ:   There seems to be kind of collective enthusiasm for the common law.

MR KEANE:   Your Honour, perhaps one can be instructed by it but not necessary allow the statutory language to be controlled by it, but one has to understand what the statutory language means.  Can I just return to your Honour Justice Callinan’s question though.

CALLINAN J:   Can I just ask you one further matter and you can probably deal with both.  If there are two contributory causes, then neither is the cause, is it?

MR KEANE:   That is right, your Honour.  If there are two equal operating causes, or, indeed, even if they are not equal.

CALLINAN J:   So, if there are two sets of conduct which are contributing to an event, then neither set of conduct is the causative conduct.

HAYNE J:   That is simply an invitation to over‑determination, is it not?

MR KEANE:   It is, with respect, that ‑ ‑ ‑

HAYNE J:   In any of these circumstances you can find any number of the features which together exist and say of any of them:  each of them was present, each of them had some significance in the history of the events that followed.

CALLINAN J:   Give them equal significance; each is of equal materiality and significance.

MR KEANE:   Your Honour, if there is a cause that contributes to the loss and that cause involves contravening conduct, then the statute gives the remedy.  The statute does not exclude the remedy where someone else is responsible as well or, indeed, where some neutral state of affairs contributes.

CALLINAN J:   It may be a lot to get out of the words “by conduct”, but you say of course it is not “by the conduct”.

MR KEANE:   No.

McHUGH J:   You get the same problem in workers compensation law in New South Wales:  “results from”.  It has been held again and again that you can have the necessary connection between the employment and the injury, even though the employment is only one of the causes of contributions to the injury.

MR KEANE:   Yes, we would adopt that, with respect.  Your Honours, finally, in relation to the distinction my learned friend sought to draw between what is regularly referred to in the cases as “there is no room for contributory negligence here”, our learned friend sought to distinguish the case of a failure to appreciate that the representation is untrue.  In our respectful submission, there is certainly no reason in the statute, nor indeed in the authorities, to treat culpable behaviour, or culpable failure to appreciate the representation is untrue, as the only kind of failure to take care for one’s safety which is irrelevant for the purposes of section 82.

McHUGH J:   I think what Justice Callinan is putting to you is that you are not entitled to recover anything ‑ ‑ ‑

MR KEANE:   No, quite.  That is right.  Because there is another cause, as well as the contravening conduct, and because there is another cause, you lose.  In our respectful submission, that is not to construe the statute.  That is not to consult the common law about construing the statute, and it is certainly not to apply the common law as it has been applied.

KIRBY J:   That may be taking tenderness to the unfortunate victim of the act a little too far.

MR KEANE:   Quite, your Honour.

KIRBY J:   May I ask you, have you said everything you wanted to say about that last point Mr Jackson raised?  That is the question of interest.

MR KEANE:   In relation to the question of interest, your Honours ‑ ‑ ‑

KIRBY J:   I must confess, I do not really understand it at the moment, but no doubt when I read the materials ‑ ‑ ‑

MR KEANE:   Well, your Honour, the point is this, that his Honour assessed a global sum with a number of components, one of which was the interest that the plaintiff would have earned had the plaintiff not made this loan, but made a loan and obtained only average interest.  Now, his Honour has found that we lost that by going into the transaction.  Our learned friends seek to say that there is a separate cause of that loss, which is segregable; able to be divorced from simply entering into the transaction and being related to the failure to investigate the circumstances of the borrower better than the plaintiff did.  In our respectful submission, that is, with the greatest respect, a red herring; the loss is the loss that was suffered by entering into this loan, and that includes the loss of the interest that would have been made had we not gone into this loan, but laid it out elsewhere, and his Honour certainly has not made any finding which would justify the view that is now being urged.

KIRBY J:   Yes, thank you. 

MR KEANE:   It is also a rather unattractive proposition, too, because even if that were to occur, even if that were to be deducted from what we should then recover, we would then be entitled to interest under the statute on the capital sum for that period which has not been allowed.  That would be a fall-back if we were forced to it, but, in our submission, that does not arise on the findings that have been made.  Your Honours, those are our submissions in reply. 

GLEESON CJ:   Thank you, Mr Keane.  We will reserve our decision in this matter. 

AT 4.00 PM THE MATTER WAS ADJOURNED