Travel Compensation Fund v Tambree

The High Court of Australia heard an appeal concerning a claim brought by the Travel Compensation Fund (the appellant) against an accountant and an auditor (the respondents). The Fund sought to recover losses it had incurred in compensating members of the public who had suffered financial detriment due to the unlawful trading activities of a travel agent, Travel Shop International (TSI). The Fund alleged that the respondents, by preparing and auditing TSI's financial statements, had engaged in misleading or deceptive conduct and had been negligent, knowing that the Fund would rely on this information to permit TSI's continued participation in the compensation scheme.

The central legal issues before the Court were whether the respondents' conduct in preparing and auditing TSI's financial statements constituted misleading or deceptive conduct in contravention of the *Fair Trading Act 1987* (NSW), and whether this conduct, along with the respondents' alleged negligence, caused the loss suffered by the Travel Compensation Fund. The Court was required to determine the appropriate approach to causation in the context of statutory claims for misleading or deceptive conduct and common law negligence, and whether policy considerations and value judgments were relevant to this determination.

The High Court, allowing the appeal, held that the extent of the respondents' liability was to be ascertained by applying the *Fair Trading Act*. While acknowledging the statutory context, the Court affirmed that in charting the limits of legal liability, both under statute and at common law, considerations of common sense, practicality, and reasonableness, which involve value judgments, are relevant. The Court found that the errors identified in the Court of Appeal's reasoning justified the restoration of the primary judge's judgment.

The High Court ordered that the appeal be allowed with costs, and that the orders of the Court of Appeal of the Supreme Court of New South Wales be set aside and replaced with an order dismissing the appeal to that Court with costs.