L and L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd B48/2001
[2001] HCATrans 609
•21 November 2001
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.
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
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