Wardley Australia Ltd v Western Australia - [1992] HCA 55

HIGH COURT OF AUSTRALIA

Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ

WARDLEY AUSTRALIA LIMITED AND ANOTHER v. THE STATE OF WESTERN AUSTRALIA

(1992) 175 CLR 514

28 October 1992

Trade Practices (Cth)—Federal Court

Trade Practices (Cth)—Misleading or deceptive conduct—Action for damages to be commenced within three years after cause of action accrued—Conduct inducing giving of indemnity—Accrual of cause of action to indemnifier—Trade Practices Act 1974(Cth), s. 82. Federal Court—Practice—Amendment—Statement of claim—Statute- barred cause of action introduced by amendment—Whether permitted by rules of Court—Trade Practices Act 1974(Cth), s. 82(2)—Federal Court of Australia Act 1976(Cth), s. 86—Federal court Rules 1979(Cth), O. 13, r. 2(1)

Decisions

MASON C.J., DAWSON, GAUDRON AND McHUGH JJ. The principal question in this appeal concerns the time at which a cause of action under s.82 of the Trade Practices Act 1974 (Cth) ("the Act") accrues if, as a result of misleading or deceptive conduct, a party enters into an indemnity which is subsequently called upon. A second question relates to the power of a judge of the Federal Court to allow, under the Rules of that Court, an amendment to a statement of claim which adds a cause of action otherwise statute barred.

The proceedings

The appeal is brought from a decision of the Full Court of the Federal Court (Spender, Gummow and Lee JJ.) ((1) Western Australia v.Wardley Australia Ltd. (1991) 102 ALR 213.) which, for reasons given in a joint judgment, allowed an appeal brought by leave from a decision of French J. ((2) Western Australia v. Bond Corp Holdings Ltd. (1991) 28 FCR 68) in which his Honour had struck out par.16(c) of an amended statement of claim in proceedings commenced on 24 October 1990 by the respondent, the State of Western Australia, against the appellants and others. The case pleaded by the respondent, so far as it is relevant to the present appeal, was that the appellants, Wardley Australia Ltd. and Wardley Australia Securities Ltd., which carried on business as merchant banks, engaged in misleading and deceptive conduct in connection with the execution by the respondent of an indemnity in favour of the National Australia Bank Ltd. ("the Bank") against a facility granted by the Bank to Rothwells Ltd. ("Rothwells"), by reason of which the respondent suffered loss or damage. Paragraph 16(c) was introduced into the pleading on 14 January 1991, more than three years after the execution of the indemnity on 26 October 1987, the date when, on the appellants' case, the respondent's cause of action, as pleaded, accrued.
Before the introduction of par.16(c), the respondent's case, as pleaded, may briefly be stated. In October 1987, following the worldwidecollapse in stockmarket prices, Rothwells, which carried on business as a merchant bank, was encountering severe liquidity problems as a result of substantial withdrawals of deposits by depositors. A concerted effort was made by various authorities, corporations and individuals to arrange a refinancing or "rescue" package for Rothwells. That effort culminated in meetings which led to the making of arrangements which included the execution of the indemnity in question. At a meeting held on Saturday, 24 October 1987, representations were made on behalf of the appellants to the respondent as follows:

"(i) that on the basis inter alia of Rothwells' 1987 audited accounts Rothwells had very substantial net assets and that the problems at Rothwells were not problems of capital deficiency but simply ones of liquidity ...; and (ii) that there were not any substantial amounts of loans by Rothwells to Connell (a further respondent before French J.) or to companies or partnerships in which Connell had financial interests". In reliance upon the representations, which were not correct, on 26 October 1987 the respondent executed an indemnity in favour of the Bank undertaking to hold it indemnified against any net loss which might arise if Rothwells did not satisfy in full its liability under a bills facility to be granted by the Bank to Rothwells. The facility was granted and, from about 27 October 1987, Rothwells drew down $150 million pursuant to the facility. This amount was repaid by Rothwells on or about 17 October 1988 but the repayment was challenged as a voidable preference by the provisional liquidators of

Rothwells appointed on the hearing of a winding-up petition presented on 3 November 1988. The Bank therefore called on the indemnity. The respondent disputed its liability. This dispute was settled so far as it concerned the Bank, the respondent and the provisional liquidators by the payment on 30 May 1989 of $33 million by the respondent to the provisional liquidators and by the payment on 8 December 1989 of $10.5 million by the Bank to the respondent.

By par.16(c), the respondent pleaded, for the first time, an additional representation made at a meeting on Sunday, 25 October 1987,on behalf of the appellants to the respondent "that Rothwells was a sound financial institution which had substantial net assets". The amended statement of claim alleged that the respondent executed the indemnity in reliance upon this representation as well as in reliance upon the representations made on the preceding Saturday. Paragraphs 21-23 of the amended statement of claim pleaded the falsity of the representations in these terms:

"21. At all material times Rothwells was not a sound financial institution and did not have substantial net assets. 22. Rothwells' 1987 audited accounts portrayed Rothwells as at 30 June 1987 as a sound financial institution which had substantial net assets. 23. At all material times there were substantial amounts of loans by Rothwells to Connell and to companies and partnerships in which Connell had financial interests."

The respondent alleged that it had been induced to enter the indemnity agreement under the influence of the misleadingrepresentations made, contrary to s.52 of the Act, by the appellants and others on Saturday, 24 October 1987, and Sunday, 25 October 1987, and, as a result, had suffered loss in the amount of $22.5 million. The respondent claimed damages under s.82 of the Act ((3) Section 82 provides: "(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."), giving as particulars the loss of $33 million between 30 May 1989 and 8 December 1989 and the loss of $22.5 million from 9 December 1989. The terms of the indemnity as pleaded and the particulars of the damage claimed are of significance, as will appear later.
In striking out par.16(c) of the amended statement of claim on the ground that it pleaded a cause of action which was outside the timelimit prescribed by s.82(2), French J. said ((4) (1991) 28 FCR, at pp 86-87):

"(O)n the pleaded facts, the (respondent) suffered loss the moment it executed the indemnity. If the facts are established, it assumed a risk of loss that was very much greater than it had been led to believe was the case on the representations made to it. ... (T)he assumption of a significantly greater than represented risk is a compensable loss in the context of s.82. To so conclude is to say that risk of loss is itself a category of loss. But to say that is not to say anything novel. ... It is no less logical than the proposition that the loss of a chance of benefit is the loss of a benefit. In a commercial context, the risk must not be negligible or fanciful." He held that the amendment introduced a new cause of action which had accrued outside the three year limitation period, the time of accrual being the date when the indemnity was entered, which was the time when, in his Honour's view, the respondent sustained its loss ((5) ibid.).

The Full Court of the Federal Court, in allowing the respondent's appeal, held that, on its true construction, the indemnity created anexecutory and contingent obligation which "crystallised at the earliest when the (Bank) ... requested the (respondent) to indemnify it in respect of the demand made ... by the provisional liquidators of Rothwells" ((6) (1991) 102 ALR, at pp 230-231). The Full Court concluded that, when a person seeks to recover under s.82 of the Act for loss or damage suffered in consequence of entering into an executory and contingent legal obligation, having been induced to do so by misrepresentations, the future performance of the obligation being more onerous than it would have been had the representations been true, that loss or damage is not incurred by the person at the time of entry into the executory and contingent obligation ((7) ibid., at p 229). On this view, the respondent did not suffer loss or damage, and the cause of action did not accrue, on the execution of the indemnity with the result that the amendment was not filed after the expiry of the limitation period in s.82(2). According to the Full Court, at the time of entry into the indemnity, the cause of action had not accrued, might never have accrued, and would not accrue whilst the suffering of the loss or damage remained a likelihood rather than a reality ((8) ibid.). In arriving at its decision, the Full Court declined to follow its earlier decision in Jobbins v. Capel Court Corporation Ltd. ((9) (1989) 91 ALR 314) and earlier decisions in England, notably Forster v. Outred and Co. ((10) (1982) 1 WLR 86) which was accepted and applied in Jobbins. Before discussing these decisions, it is convenient to examine the indemnity and the statutory provisions.
The indemnity Although the terms of the indemnity were not recited in the amended statement of claim, it was put in evidence on theapplication to strike out. The relevant terms of the indemnity, which was signed for and on behalf of the State by the then Premier, and their effect are described and set out in the judgment of the Full Court in this way ((11) (1991) 102 ALR, at pp 218-219):

"The consideration moving from the (Bank) is stated to be the granting by the (Bank) of financial accommodation to Rothwells to a maximum aggregate amount of $150 million. The indemnity is stated not to extend to liabilities in respect of bills drawn after 26 October 1989. The undertaking is to hold the (Bank) indemnified against any 'net loss' which might arise if Rothwells does not satisfy in full its liability under the terms of a particular bills facility (the facility) to be granted by the (Bank) to Rothwells in accordance with a letter of offer substantially in the form attached to the indemnity. Detailed provision is made, as follows, for the calculation of the 'net loss': 'In calculating the net loss where the (Bank) has granted any other facility to (Rothwells), any payment received by the (Bank): (a) from (Rothwells) at a time when default has occurred and is continuing under the facility or any such other facility; or (b) from a liquidator of (Rothwells) in respect of the facility and any such other facilities shall be applied as between the facility and those facilities in proportion to the amounts outstanding under them, except that: (c) the proceeds of the rights issue by (Rothwells) referred to in the letter of offer may be applied wholly in or towards discharge of liabilities under the bills acceptance/discounted/endorsed No 2 facility referred to in the letter of offer; and (d) the proceeds of any security held by the (Bank) may be applied in or towards discharge of any of the moneys secured by that security.' The indemnity concludes as follows:

'It is a condition of this indemnity that before the (Bank) may make any claim hereunder, it must proceed to the fullest extent of its rights against (Rothwells) (but not any director or officer of (Rothwells)) to obtain payment out of the assets of (Rothwells). The amount of any deficiency remaining after the (Bank) has received a final distribution in a liquidation of (Rothwells) may then be the subject of a claim under this indemnity. This indemnity shall be a continuing security and shall not be affected by the (Bank): (a) granting (Rothwells) any time or other indulgence; (b) recovering any judgment against (Rothwells) in respect of its liabilities under the facility; or (c) granting any other facility to (Rothwells), or receiving any payment under the terms of any such facility. I FURTHER UNDERTAKE for and on behalf of the (respondent) to pay on demand such sum pursuant to this indemnity as shall be demanded by the (Bank) to a maximum aggregate amount of $150 million if and when demanded by the
(Bank) in writing.'"

It follows, as the Full Court noted, that, before the Bank was entitled to call on the indemnity, it was necessary that Rothwells had failedto satisfy its liability under the facility and that the Bank had proceeded to the fullest extent of its rights against Rothwells to obtain payment out of its assets. It was contemplated that Rothwells might have been in liquidation when the Bank came to pursue its rights and to ascertain its "net loss" so that, in that event, the amount of the liability under the indemnity would have been the amount of any deficiency after the final distribution in the liquidation.
The indemnity was not one of a kind which generates an immediate non-contingent liability to pay upon execution of the instrument. Itwas neither a promise to meet a liability of the promisee to make a payment nor a promise to pay a debt owing by a third party to the promisee ((12) See the discussion by Barwick C.J. in Wren v. Mahony (1972) 126 CLR 212, at pp 225-229). In our view, the indemnity, on its true construction, was one which created a liability on the part of the respondent to the Bank to make payment if and when the Bank's relevant "net loss" was ascertained and quantified ((13) See Bradley v. Eagle Star Insurance Co. Ltd. (1989) AC 957, at p 966, though there the policy required that the existence and amount of the liability to a third party be established by action, arbitration or agreement), subject to the making of a demand for payment by the Bank. The liability was, therefore, in conformity with the opinion of the Full Court, contingent and executory. The likelihood, perhaps the virtual certainty, that there would be a loss, in the light of Rothwell's actual financial position as it stood when the indemnity was executed, did not transform the liability into an actual or present liability at that time. However, the appellants do not accept that this conclusion means that the respondent suffered no loss or damage unless and until the Bank's "net loss" was ascertained and quantified because the appellants' case is that, as the respondent's liability under the indemnity was greater than it would have been had the representations been correct, loss or damage was sustained on entry into the indemnity.
The statutory provisions By virtue of s.82(2) of the Act, the period of limitation begins to run at the time when the cause of actionunder s.82(1) accrues. As loss or damage is the gist of the statutory cause of action for which s.82(1) provides ((14) Elna Australia Pty. Ltd. v. International Computers (Australia) Pty. Ltd. (1987) 75 ALR 271, at p 279), the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s.82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v. Stramare (E and M. H.) Pty. Ltd. ((15) (1991) 171 CLR 506), except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so.
In the context of the Act, the concept of loss or damage, like the concept of causation, must be applied in a wide variety of situationsbecause the contraventions of Pts IV and V which give rise to causes of action under s.82(1) are diverse. Here we are concerned with contraventions of s.52(1) in the form of misleading conduct constituted by misrepresentations. In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connection to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s.82(1). In the context of the area of commercial conduct in which the Act operates, the reference to "loss or damage" in s.82(1) plainly includes economic or financial loss.
In determining when a plaintiff first suffers economic loss or damage in an action under s.82(1) based on misleading conductconstituting a contravention of s.52, it is necessary to have regard to the applicable measure of damages. In this respect, it would not be right to conclude that the measure of damages recoverable under the sub-section necessarily coincides with the measure of damages applicable in an action for deceit or in an action for negligent misrepresentation. The measure of damages recoverable under s.82(1) can only be fully ascertained after a thorough analysis of those provisions in Pts IV and V of the Act for contravention of which the statutory cause of action may be maintained. But the common law measure of damages will in many cases be an appropriate guide, though it will always be necessary to look to the provisions of the Act with a view to ascertaining the existence of any relevant legislative intention. In a case such as the present, it may safely be assumed that the plaintiff is entitled to recover "a sum representing the prejudice or disadvantage (the plaintiff) has suffered in consequence of his altering his position under the inducement" ((16) Toteff v. Antonas (1952) 87 CLR 647, at p 650; see also Potts v. Miller (1940) 64 CLR 282, at p 297; Gould v. Vaggelas (1984) 157 CLR 215, at p 220; Gates v. City Mutual Life Assurance Society Ltd. (1986) 160 CLR 1, at p 12 (where that measure of damages was applied in an action for damages for contraventions of ss.52 and 53(g) of the Trade Practices Act 1974 (Cth))) of the misleading conduct or "the actual damage directly flowing from" ((17) Clark v. Urquhart (1930) AC 28, at p 68; State of South Australia v. Johnson (1982) 42 ALR 161, at p 170) that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit. Whether the condition of foreseeability, applicable to claims for consequential damages in cases of negligent misrepresentation inducing the purchase of property ((18) State of South Australia v. Johnson (1982) 42 ALR, at p 170), would apply to a claim for consequential damages under s.82(1) is a question that may be put to one side for present purposes.
Under s.82(1), as under the common law, a plaintiff can only recover compensation for actual loss or damage incurred, as distinctfrom potential or likely damage ((19) Swingcastle Ltd. v. Gibson (1990) 1 WLR 1223, per Sir John Megaw at p 1236; see also (1991) 2 AC 223, per Lord Lowry at p 232, referring to the words of Sir John Megaw on the appeal to the House of Lords). In that respect, we agree with the comments of the Full Court of the Federal Court ((20) (1991) 102 ALR, at p 229) and we disagree with the statement of French J. "that risk of loss is itself a category of loss" ((21) (1991) 28 FCR, at p 87). The Act draws a clear distinction in Pt VI between loss or damage which may be recovered under s.82 and the likelihood of loss or damage which may be prevented or, if not prevented, reduced by one of the remedies under s.87.

The concept of loss or damage in the context of misrepresentations Economic loss may take a variety of forms and, as Gaudron J.noted in Hawkins v. Clayton ((22) (1988) 164 CLR 539, at pp 600-601), the answer to the question when a cause of action for negligence causing economic loss accrues may require consideration of the precise interest infringed by the negligent act or omission. The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected ((23) See Cane, Tort Law and Economic Interests, (1991), pp 16-17). With economic loss, as with other forms of damage, there has to be some actual damage ((24) Forster v. Outred and Co. (1982) 1 WLR, at p 94).

Prospective loss is not enough.

When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, theplaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of "loss or damage". And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater.
In UBAF Ltd. v. European American Banking Corporation ((25) (1984) QB 713, at p 725), Ackner LJ. said: "The mere fact that theinnocent but negligent misrepresentations caused the plaintiffs to enter into a contract which they otherwise would not have entered into, does not inevitably mean that they had suffered damage by merely entering into the contract." That is because it was not self-evident that the value of the chose in action which the plaintiff acquired, the right to repayment of a loan, was worth less than the amount paid to the borrower at the time of entry into the loan agreement. Evidence was required to establish that fact, if it were a fact.
The strongest statement in favour of the proposition that loss or damage is sustained on entry into an agreement induced by a false,negligent or misleading misrepresentation is contained in Jobbins. There, the Full Court of the Federal Court (Davies, Burchett and Hill JJ.) held that the applicant suffered loss or damage within the meaning of s.82 when it entered into an agreement to invest in a film, having been induced so to do by the respondents' misrepresentations to the effect that such investment would provide a guaranteed return. In the view of the Court, the investment from its inception lacked the qualities which it had been represented as having and was therefore less valuable than it would have been if the representations had been true. The Court therefore struck out parts of the applicant's statement of claim as being filed more than three years after the applicant entered into the agreement and invested his money. In reaching the conclusion that the cause of action accrued at that time, the Court said ((26) (1989) 91 ALR, at p 319.):

"(T)he applicant suffered damage immediately upon his entry into the agreement and the making of the payment thereunder, both of which occurred outside the three year period. According to the pleading, the investment lacked the represented qualities; as a consequence it was from the outset less valuable than it should have been. Counsel for the applicant sought to say loss or damage was not suffered until October when the representations proved false, but it is really beyond dispute that what happened then was merely a reaping of the tares sown with the crop. The case is analogous to Keen Mar Corp Pty Ltd v Labrador Park Shopping Centre Pty Ltd ((27) (1988) ATPR 40-853) where Pincus J held misrepresentations, leading in to the acceptance of a lease, resulted in loss at a time no later than the execution of the lease."

The Full Court referred, with evident approval, to the remarks of Dunn LJ. in Forster v. Outred and Co. In that case, it was held thatactual loss, and not merely prospective loss, was suffered by the plaintiff when, on the negligent advice of the defendant solicitors, she executed a mortgage over her property to secure the debts of her son, and not at the time when the mortgagee sought to enforce the security following the bankruptcy of the son. Dunn L.J. said ((28) (1982) 1 WLR, at p 99):

"(I)n cases of financial or economic loss the damage crystallises and the cause of action is complete at the date when the plaintiff, in reliance on negligent advice, acts to his detriment". His Lordship went on to say ((29) ibid., at p 100):

"In this case, as soon as she executed the mortgage the plaintiff not only became liable under its express terms but also - and more importantly - the value of the equity of redemption of her property was reduced. Before she executed the mortgage deed she owned the property free from encumbrances; thereafter she became the owner of a property subject to a mortgage."
(emphasis added)

Stephenson L.J. also remarked ((30) ibid., at p 98.) that, by executing the mortgage, the plaintiff reduced the value of her interest in the property and subjected herself to a liability according to the terms of the mortgage.

The decision in Forster v. Outred and Co. is explicable by reference to the immediate effect of the execution of the mortgage on thevalue of the plaintiff's equity of redemption, an aspect of the case to which Dunn L.J. attached particular importance. Jobbins is not explained quite so easily. That is because the Full Court of the Federal Court failed to specify whether the applicant first suffered loss or damage on entry into the agreement on or about 24 March 1986 or on payment on 9 April 1986 pursuant to the agreement of the sum of $60,000, each of which occurred more than three years prior to the filing of the applicant's statement of claim. The decision itself may be supported by reference to the payment alone. What is more, the applicant's loss and damage, as pleaded in the statement of claim, consisted in the payment of $60,000 on 9 April 1986. But we have difficulty in accepting that the applicant suffered loss or damage on entry into the agreement merely because the investment was alleged to lack the represented qualities. On this aspect of the case, the question was whether the investment was worth less than the applicant contracted to pay for it and, if so, when the applicant first sustained loss or damage. How that question could be answered in the absence of evidence is not evident to us. Although the investment lacked the represented qualities, it may have been worth no less than the consideration provided by the applicant.
In the case of a fraudulent or negligent misrepresentation which induces the plaintiff to enter into a contract to purchase property, theplaintiff's loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the contract and the value of the property at the date of the contract ((31) Potts v. Miller (1940) 64 CLR, at pp 297-299; Toteff v. Antonas (1952) 87 CLR, at pp 650-651; State of South Australia v. Johnson; Gates v. City Mutual Life Assurance Society Ltd.). It will be noticed that, even in such a case, Dixon J. spoke in Potts v. Miller ((32) (1940) 64 CLR, at p 297) (an action in deceit) of the measure of damages consisting in:

"the loss or expenditure incurred by the plaintiff in consequence of the inducement upon which he relied, diminished by any corresponding advantage in money or money's worth obtained by him on the other side". It is that amount that, in such a case, represents "the prejudice or disadvantage" the plaintiff "has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant" ((33) Toteff v. Antonas (1952) 87 CLR, at p 650), subject to any consequential damage. Putting aside the incurring of expenditure, these statements might be thought to indicate that a plaintiff does not sustain loss until that loss is ascertained or, at least, is capable of ascertainment.

Be that as it may, the English decisions have proceeded according to the view that, where the plaintiff is induced by a negligentmisrepresentation to enter into a contract and the contract, as a result of the negligence, yields property or contractual rights of lesser value, the plaintiff first suffers financial loss on entry into the contract, notwithstanding that the full extent of the plaintiff's financial loss may be incapable of ascertainment until some later date ((34) Melton v. Walker and Stanger (1981) 125 SJ 861; Baker v. Ollard and

Bentley (A Firm) (1982) 126 SJ 593; D.W. Moore and Co. v. Ferrier (1988) 1 WLR 267; Islander Trucking Ltd. v. Hogg Robinson Ltd. (1990) 1 All ER 826; Bell v. Peter Browne and Co. (1990) 2 QB 495). In part, the English approach appears to have been influenced by the general principle stated in Darley Main Colliery Co. v. Mitchell ((35) (1886) 11 App Cas 127) that damages in respect of a cause of action are awarded on a once and for all basis. But that principle tells us very little, if anything, about the time when the plaintiff first suffers loss or damage in the circumstances of a particular case, except that, properly understood, Darley Main Colliery emphasizes the need for actual, as distinct from prospective, damage before prospective damages can be included in the award.

Another element in some of the English decisions, as in Jobbins, is the conclusion that, because the subject-matter of the agreementlacked the qualities which it had been represented as having, that subject-matter was therefore less valuable than it would have been if the representations had been true. That conclusion is acceptable in cases in which the contract measure of damages is appropriate but it is not acceptable here where the contract measure of damages does not apply. The application of that measure of damages may, in some situations, enable a court to conclude more readily that the plaintiff first suffers loss or damage on entry into an agreement.
It has been contended that the principle underlying the English decisions extends to the point that a plaintiff sustains loss on entry intoan agreement notwithstanding that the loss to which the plaintiff is subjected by the agreement is a loss upon a contingency. For our part, we doubt that the decisions travel so far. Rather, it seems to us, the decisions in cases which involve contingent loss were decisions which turned on the plaintiff sustaining measurable loss at an earlier time, quite apart from the contingent loss which threatened at a later date ((36) Forster v. Outred and Co. and D.W. Moore and Co. v. Ferrier illustrate the point.).
In Islander Trucking Ltd. v. Hogg Robinson Ltd., Evans J. observed ((37) (1990) 1 All ER, at p 831), with reference to the cases inwhich solicitors have brought into existence defective documents: "The decision that damages are suffered at the time when the
defective document is executed may, it appears, be put on one or both of two bases. The first is because the chose in action which the client acquires, or parts with, as a result of executing the document is regarded as a form of property which is held or acquired by the plaintiff and which is found to be devalued, that is to say worth either nothing or less than it would be worth if it was free from the defect which has resulted from the solicitor's negligence. The second possible basis is perhaps this: in the case of a claim against a solicitor, unlike a claim for damages in the building cases, the plaintiff is entitled to recover for economic loss, as distinct from any injury to person or property ... The law is clear in relation to solicitors and has been authoritatively stated in these (cases). Where, in my respectful view, it might be said to depart from the earlier common law rules is by reason of the fact that it apparently contemplates, as a common law rule, that a cause of action may arise at a time when its existence is unknown and could not reasonably be known by the injured plaintiff."

His Lordship went on to say ((38) ibid., at p 832) that, in D.W. Moore and Co., the contractual chose in action could be equated to an interest in property. In that case, the defendant solicitors negligently prepared and advised the execution of an agreement containing an unenforceable covenant against competition. Notwithstanding that the damage actually complained of was not suffered until much later and was dependent on two contingencies, the Court of Appeal held that there was a cause of action for some measurable loss which occurred when the defective contract containing the unenforceable covenant was executed.

If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where,as a result of the defendant's negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, the plaintiff first suffers loss or damage on entry into the contract, we do not agree with them. In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred. A deferred liability may stand in a different position but there is no occasion here to discuss that matter.
In the result, we agree with the decision of von Doussa J. in S.W.F Hoists and Industrial Equipment Pty. Ltd. v. State GovernmentInsurance Commission ((39) (1990) ATPR 41-045.). There the insured sued the insurer for loss suffered as a result of a misrepresentation as to the extent of the indemnity or liability coverage provided by a proposed contract of insurance. His Honour held that actionable actual loss (as opposed to a mere potential for loss) occurred only when the insured was called on by a third party to make payments against which it would have been entitled to be indemnified by the insurer under the contract as represented. When the events entitling the third party to make the demand for payment occurred and when the insurer indicated, prior to the making of that demand, that it would not indemnify the insured against any such demand, there was no more than a potential for loss. S.W.F Hoists and Zoneff v. Elcom Credit Union Limited ((40) (1990) ATPR 41-058) are to be distinguished from the English insurance cases Iron Trade Mutual Insurance Co. Ltd.

v. J.K. Buckenham Ltd. ((41) (1990) 1 All ER 808) and Islander Trucking Ltd. in that the policies of insurance in the Australian cases were worth what was paid for them.

The conclusion which we have reached with respect to the time when the plaintiff first suffers loss in respect of contingent loss orliability accords with the comment of Gaudron J. in Hawkins v. Clayton ((42) (1988) 164 CLR, at p 601):

"(I)f the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible". (emphasis added) Gaudron J. went on to point out ((43) ibid., at p 602):

"It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value or increased
liability."

The conclusion which we have reached is reinforced by the general considerations to which we referred earlier. It is unjust andunreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled. Conclusion
It follows from what we have said that we agree with the approach adopted by the Full Court of the Federal Court in the present caseand in Magman International Pty. Ltd. v. Westpac Banking Corporation ((44) (1991) 104 ALR 575).
We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind underconsideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question. Magman International illustrates the problems which can arise, particularly in a case involving foreign loans.
In view of the construction which we have placed upon the indemnity, namely, that it generates an executory and contingent liabilityupon the part of the respondent, the respondent suffered no loss until that contingency was fulfilled and time did not begin to run until that event. Consequently, par.16(c) of the amended statement of claim was introduced before the expiration of the limitation period set by

s.82(2) and there is no occasion to discuss the power of a judge of the Federal Court to allow an amendment which adds a cause of action to a statement of claim when that cause of action is otherwise statute barred. We should make it clear, however, that we do not consider that the concept of "matter" in Ch.III of the Constitution, as reflected in s.86 of the Act, would provide any significant assistance in a consideration of this issue.

33. In the result we would dismiss the appeal.

BRENNAN J. The loss or damage for which an amount is recoverable under s.82(1) of the Trade Practices Act 1974 (Cth) ("the Act") is loss or damage by conduct that contravenes a provision of Pt IV or Pt V of the Act. It is loss or damage that would not have been suffered if the relevant conduct had not been engaged in. If the relevant conduct is misleading or deceptive conduct in contravention of s.52 of the Act consisting in false representations of fact, the conduct "is similar both in character and effect to tortious conduct, particularly fraudulent misrepresentation and negligent misstatement", as Mason, Wilson and Dawson JJ. pointed out in Gates v. City Mutual Life Assurance Society Ltd. ((45) (1986) 160 CLR 1, at p 14). Where economic loss or damage is caused by such conduct, the measure of damages in tort rather than the measure of damages in contract is ordinarily appropriate ((46) ibid., per Gibbs C.J. at pp 6-7; per Mason, Wilson and Dawson JJ., at pp 14-15). Assuming that the amount recoverable under s.82(1) in respect of false representations contravening s.52 is the same as the measure of damages in deceit ((47) Rather than the measure in negligence: see Wadsley, "Measures in Misrepresentation: Recent Steps in Awarding Damages", (1992) 55 Modern Law Review 698), the general principle is as Dixon J. defined it in Toteff v. Antonas ((48) (1952) 87 CLR 647, at p 650):

" In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant." In the usual case of deceit, the damages are measured by the difference between the real value of an asset purchased and what the plaintiff paid for it ((49) Potts v. Miller (1940) 64 CLR 282, at pp 289, 297) but, as Gibbs J. said in Gould v. Vaggelas ((50) (1985) 157 CLR 215, at p 220; see also pp 254-255.), that rule is "only a special application of the general principle". Where a fraudulent misrepresentation induces the purchasing of an asset and payment of a price greater than the value of the asset purchased, the difference between the price and the value of the asset represents "how much worse off is the plaintiff than if he had not entered into the transaction" ((51) Toteff v. Antonas (1952) 87 CLR 647, at p 650.). But the rule usually applied cannot be applied when the plaintiff is induced by the misrepresentation to become a surety for another's debt. The surety pays no price and acquires no asset. Where the plaintiff seeks to recover damages for a loss sustained as a surety, it is necessary to go back to the general principle: what is the prejudice or disadvantage the plaintiff has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentation? Substituting "loss or damage" for "prejudice or disadvantage", that test can be applied, mutatis mutandis, to the assessment of the amount recoverable under s.82(1) when the cause of action arises out of misleading or deceptive conduct consisting in the making of false representations of fact.

The question in this case is not how much worse off is the State than it would have been had the alleged misrepresentation been true,but how much worse off is the State than it would have been had it not relied on the alleged misrepresentation and entered into the transaction. The tortious measure, not the contractual measure, is in question. The State alleges that it is $22.5 million worse off as the result of giving the National Australia Bank the indemnity which Wardleys allegedly induced the State to give by misrepresenting that Rothwells Ltd. was a sound financial institution. When did the State suffer that loss? Four dates are offered for consideration: the date when the indemnity was given (26 October 1987), a date occurring between November 1988 and May 1989 when the Bank claimed payment under the indemnity, the date when the State agreed to a compromise with the Bank and the liquidator of Rothwells whereby the State was to pay the liquidator $33 million and the State was entitled to receive from the Bank $10.5 million (3 May 1989) and the date on which the State paid the liquidator $33 million (30 May 1989). The first - but only the first - of those dates is more than three years prior to the date on which the State delivered an amended statement of claim (14 January 1991) in which the State first pleaded a misrepresentation allegedly made by Wardleys on Sunday 25 October 1987 (the Sunday representation) which induced the State to give the indemnity. Section 82(2) of the Act limits the time for commencing an action under s.82(1) to "within 3 years after the date on which the cause of action accrued". As no cause of action accrues under s.82(1) until the plaintiff "suffers loss or damage" the question for determination is whether the State suffered the relevant loss or damage when it gave the indemnity. Wardleys submit that the State's cause of action, if any, accrued when it gave the indemnity on 26 October 1987. If that be so, the cause of action founded on the Sunday representation was pleaded too late. Wardleys submit that, as at that date, the financial position of Rothwells was such that it was inevitable that the State would be called on to pay under the indemnity. Nevertheless, the State responds, its liability at that time was contingent only and it had not then suffered the loss allegedly caused by the Sunday representation.
The cause of action created by s.82(1) has several elements, but it is a cause of action for the recovery of money representing loss ordamage suffered by the plaintiff - "the amount of the loss or damage". The loss or damage includes, of course, economic loss or damage which the plaintiff suffers. A plaintiff may suffer economic loss or damage in a number of ways: by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability. Whether loss or damage is actually suffered when any of those events occurs depends on the value of the benefit, if any, acquired by the plaintiff by paying the money, transferring the property, having the value of the asset diminished or incurring the liability. If the plaintiff acquires no benefit, the loss or damage is suffered when the event occurs. At that time, the plaintiff's net worth is reduced. And that is so even if the quantification of that loss or damage is not then ascertainable. But if a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time when the burden is borne - that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of the liability. A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur ((52) See per Sir John Megaw in Swingcastle Ltd. v. Gibson (1990) 1 WLR 1223, at p 1236). The quantification of the diminution in value of an asset or of a liability incurred or the value of any benefit acquired may not be ascertainable at the time when the burden of the transaction is borne. In that event, the suffering of any loss cannot be said to occur before it is reasonably ascertainable (not before it is ascertained) that the burdens which the plaintiff has borne are greater than the value of the benefits that the plaintiff has acquired or will acquire. In other words, no loss is suffered until it is reasonably ascertainable that, by bearing the burdens, the plaintiff is "worse off than if he had not entered into the transaction".
False representations contravening s.52, like fraudulent misrepresentations and negligent misstatements, may induce a plaintiff to actor to refrain from acting and the relevant loss or damage may flow from the plaintiff's own act or omission and only indirectly from the defendant's contravening conduct. The relevant transaction may be between the plaintiff and a third party, not between the plaintiff and the defendant. Each case requires an analysis of its particular circumstances in order to identify the transaction, the nature of the loss or damage actually suffered by the plaintiff and, where there are benefits and burdens, their components. Once the loss or damage is identified, the date when it was suffered can be ascertained.
If the facts pleaded in the amended statement of claim were established, the State's entitlement under s.82(1) would be to an amountrepresenting the difference between its liability to the Bank that was discharged by the payment to the liquidator of $33 million and the $10.5 million which it received from the Bank. Once it is understood that the amount awarded under s.82 is not damages for breach of warranty, it is clear that the amount is not to be calculated on the footing that the loss suffered by the State consisted in the greater risk that the Bank would call on the State for payment under the indemnity. There is a sense in which it is right to say that, when a misrepresentation induces a plaintiff to enter into a transaction in which the plaintiff suffers a loss, the loss is suffered once the plaintiff becomes bound to the transaction. The die is then cast and what follows can be viewed as evidence proving the extent of the loss suffered when the first binding step was taken. That may be the correct analysis when the first binding step is such that, whatever extrinsic circumstances may transpire, a loss must be suffered. For example, when an asset is purchased for a price and, by reason of an inherent defect, it is worth less than the price paid ((53) See Potts v. Miller (1940) 64 CLR 282, at p 298), a loss may be said to be suffered when the plaintiff pays the price or becomes bound to pay the price. Similarly, when an agreement imposes on a plaintiff an obligation to pay an amount of money without acquiring a benefit and the amount to be paid is quantified by no factors extrinsic to the agreement save the passing of time, it is right to say that the loss is suffered when the agreement to pay becomes binding on the plaintiff. But when the actual loss that a plaintiff suffers depends not only on the making of an agreement but also on circumstances extrinsic thereto, the loss is not suffered until those circumstances have transpired and, in benefit and burden cases, not until the loss is ascertainable. The present case does not involve any acquisition by the State of a contractual benefit: there was simply an indemnity given to the Bank which entitled the Bank to demand the payment of money upon certain contingencies. The State was not under any liability to pay until those contingencies occurred and the amount of the Rothwells deficiency was demanded by the Bank in writing. No liability to pay the Bank was incurred until the demand was duly made. In claims arising out of misleading or deceptive conduct, as in claims in tort, liability is for loss suffered or damage done, not for loss or damage merely foreseeable, threatened or imminent ((54) Sutherland Shire Council v. Heyman (1985) 157 CLR 424, at p 486). In a case where the relevant loss consists of a pecuniary liability, the liability must be absolute though it is not necessary that the amount be immediately payable.
Wardleys submit that the giving of the indemnity exposed the State to an almost certain liability and that the State's loss, if any, wasincurred when the indemnity was given. But the relevant loss or damage was not suffered by the State's giving of the indemnity. The State undertook a contingent liability which was allegedly more likely to crystallize than it would have been had the inducing representation been true. But the State did not suffer a relevant loss by the giving of the indemnity: there was no liability to pay money to the Bank until the liability crystallized. The State suffered loss only when it incurred an absolute liability to pay money in discharge of its obligations under the indemnity. That liability arose either when the Bank demanded payment or when the compromise was reached imposing on the State the liability to pay the liquidator $33 million. In either event, the loss must be quantified on the basis that the State's liability under the indemnity was $33 million. As that liability carried with it an entitlement to payment of $10.5 million, the net loss recoverable - if the cause of action is made out - will be $22.5 million. That is the loss which the respondent claims was caused by the conduct pleaded in par.16(c) of the amended statement of claim. That loss was suffered either when the Bank demanded payment or on 3 May 1989 when the respondent entered into a compromise with the Bank and the liquidator. Paragraph 16(c) was inserted in the statement of claim within 3 years of either date. The appeal must therefore be dismissed.
As the amendment to the statement of claim was made within time, it is unnecessary to consider the question whether the Rules of theFederal Court leave no room for the operation of the rule in Weldon v. Neal ((55) (1887) 19 QBD.394).

DEANE J. The assumed facts for the purposes of this appeal appear from other judgments. I turn at once to a consideration of the question whether the claim based on what has been described as the "Wardley Sunday Soundness Representation" ("the new claim") was barred by s.82(2) of the Trade Practices Act 1974 (Cth) ("the Act") at the time when the respondent State of Western Australia ("the State") first raised it in par.16(c) of the amended statement of claim filed on 14 January 1991. It is conceded by the State that the new claim, which was brought under s.82(1) of the Act, constituted a new and distinct cause of action. It will be convenient to refer to the National Australia Bank Limited as "the Bank" and to Rothwells Limited as "Rothwells".

Subject to a presently irrelevant exception ((56) See the Act, s.82(3)), s.82(1) of the Act entitles a person "who suffers loss or damageby conduct of another person that was done in contravention of a provision" of Pt IV or Pt V of the Act to "recover the amount of the loss or damage by action against that other person or against any person involved in the contravention". Clearly, an essential ingredient of a claim under s.82(1) is that the plaintiff has suffered loss or damage caused by the alleged contravening conduct. Under s.82(2), an action under s.82(1) "may be commenced at any time within 3 years after the date on which the cause of action accrued", that is to say, the date on which the facts necessary to found a right to recover damages under s.82(1) first existed ((57) See, e.g., Letang v. Cooper (1965) 1 QB 232, at pp 242-243.). In the circumstances of the present case, the cause of action first accrued in relation to the new claim when the requirement that the State "suffer loss or damage" caused by the appellants' alleged conduct was first satisfied. If, as the learned trial judge (French J.) found, the State suffered loss or damage for the purposes of s.82(1) immediately upon its execution of the document of indemnity, the period of 3 years allowed by s.82(2) had already expired at the time that the new claim was first raised by the amended statement of claim. If, as the Full Court of the Federal Court (Spender, Gummow and Lee JJ.) found, the State did not suffer loss or damage for the purposes of s.82(1) until it came under an actual liability to make (or actually made) some payment either under, or as a

consequence of, the indemnity, the amended statement of claim was filed and the action on the new claim was commenced within that period of 3 years.

In Hawkins v. Clayton ((58) (1988) 164 CLR 539), a majority of the Court implicitly ((59) ibid., per Brennan J. at pp 561-562, perGaudron J. at pp 599-602.) or explicitly ((60) ibid., per Deane J. at pp 587-588) rejected a submission that the Court should recognize a general overriding qualification of the prima facie position that a requirement of loss or damage as an ingredient of a cause of action is satisfied as soon as relevant loss or damage is in fact sustained. That suggested qualification was to the effect that, at least in the case of claims in negligence for damages for economic loss, time under a limitations provision does not commence to run until the stage is reached when the plaintiff discovers, or could on reasonable inquiry have discovered, that the loss has been sustained. If such a broad overriding qualification had been adopted in relation to such claims, reasoning by analogy would have lent strong support for the conclusion that, in a case such as the present where the action under s.82(1) is for damages for economic loss caused by misleading conduct in contravention of s.52 of the Act, time does not commence to run until the plaintiff knows or reasonably ought to know that the relevant conduct has in fact caused loss. The Court's rejection of such an overriding qualification does not, however, alter the fact that, in some of the cases where an action lies in negligence for pure economic loss, no relevant loss is actually sustained or suffered and no cause of action for damages accrues unless and until some actual adverse consequence of the negligence is known or becomes manifest (61) See, e.g., Murphy v. Brentwood District Council (1991) 1 AC 398, at pp 466-468). Nor does the rejection of such a qualification provide, by analogy or otherwise, a general answer to the question whether the mere incurring of a contingent liability to make a future payment of itself constitutes loss or damage for the purpose of determining when a cause of action of which loss or damage is a necessary ingredient accrues or arises ((62) See Hawkins v. Clayton (1988) 164 CLR, at p 588).
It is not possible to derive from the authorities ((63) There are no authorities binding on this Court directly in point and there is conflict injudgments in the decided cases: see, e.g., for at least prima facie support for the view that loss or damage is sustained immediately upon the assumption or coming into existence of a contingent liability: Forster v. Outred and Co. (1982) 1 WLR 86, at pp 98, 99-100; Baker v. Ollard and Bentley (A Firm) (1982) 126 SJ 593; Gillespie v. Elliott (1987) 2 Qd R 509; Deputy Commissioner of Taxation v. Zimmerlie

(1988) 2 Qd R 500; D.W. Moore and Co. v. Ferrier (1988) 1 WLR 267, at pp 278, 279-280; Jobbins v. Capel Court Corporation Ltd. (1989) 91 ALR 314, at p 319; Bell v. Peter Browne and Co. (1990) 2 QB 495, at pp 502-503, 510; and, for at least analogous support for the rejection of such a view: City of Kamloops v. Nielsen (1984) 10 DLR (4th) 641, at pp 684-685; Hawkins v. Clayton (1988) 164 CLR, at p 601; S.W.F Hoists and Industrial Equipment Pty. Ltd. v. State Government Insurance Commission (1990) ATPR 41-045, at pp 51,61251,613; Zoneff v. Elcom Credit Union Limited (1990) ATPR 41-058, at pp 51,747-51,748; BCNZ v. Progeni International (1990) 1 NZLR 109, at p 113; Magman International Pty. Ltd. v. Westpac Banking Corporation (1991) 104 ALR 575, at pp 590-591, 597-600) or from settled principle a simple negative or affirmative answer to the abstract question whether, for the purposes of a limitation provision, the mere incurring of a contingent liability to make a monetary payment in the future suffices to give rise to a cause of action of which loss or damage is a necessary ingredient. Nor, in my view, is it practicable or desirable for the courts to attempt to provide in advance an unqualified affirmative or negative answer to that abstract question. For one thing, the answer may vary according to the facts of the particular case, including the nature and implications of the contingent liability and whether the circumstances were such that, even without the benefit of hindsight, the distinction between contingent and certain loss or damage was illusory rather than real. Thus, as will be seen, it is important in the present case that the State's "liability" upon its execution of the indemnity was truly contingent (in the sense of uncertain) as both a theoretical and a practical matter: it was in no sense a primary obligation; it involved no more than an obligation to make good any "net loss" which might eventually be sustained by the Bank if certain events occurred in the future. It is also relevant that what was involved was an isolated or "one off" contingent liability in that there is no suggestion that the State was in the business of providing, or habitually provided, such indemnities in respect of financial accommodation made available to private (i.e. non-State) commercial entities. For another thing, once the relevant facts and the nature and implications of the contingent liability have been ascertained, the answer to the question whether it constituted loss or damage for the purposes of a cause of action conferred by a statutory provision will depend ultimately upon the construction of the particular statutory provision.

It follows that, in the absence of any overriding general rule or applicable binding authority, the question whether, on the basis of thefacts as pleaded by the State in the amended statement of claim, time began to run for the purposes of s.82(2) as soon as the State entered into the indemnity document resolves itself into a question of the scope of the words "suffers loss or damage" as used in s.82(1). Such a question of construction is commonly phrased in terms of the legislative intent to be discerned in the relevant statutory provision construed in its statutory context. So to say does little, however, to advance the present case since there is nothing in either the words of

s.82 or the context provided by the Act which really suggests that the Parliament ever directed its attention to the precise question whether to incur a liability to make a payment of money if some uncertain future state of affairs comes about is, of itself, immediately to suffer loss or damage for the purposes of s.82(1). The case is one in which the courts are constrained to impute a relevant legislative intent ascertained by reference to considerations of language, context, analogous principle and presumed policy. On balance, it appears to me that reference to those considerations favours a construction of s.82(1) which has the result that, in the circumstances of the present case, the State did not suffer loss or damage for the purposes of s.82 at the time when the indemnity was executed on its behalf. I turn to indicate my reasons for that conclusion.

It would be to do injustice to the appellants' argument simply to assert that execution of the indemnity exposed the State to a mere riskthat economic loss or damage might be suffered at some time in the future. The appellants' argument is not that a mere risk of future loss is "loss or damage" for the purposes of s.82. It is that, in the circumstances of the case, the State actually suffered "loss" for the purposes of the section, as distinct from a mere risk of such loss, immediately it subjected itself to the imprudent and potentially disastrous contingent liability under the indemnity. There is obvious force in that argument. Undoubtedly, upon the State's case, it was immediately placed in an economically disadvantageous position when it executed the indemnity and placed itself under a liability to make good any net loss which might ultimately be suffered by the Bank as a result of granting a $150 million line of credit to a company (i.e. Rothwells) which was not, in fact, financially sound. That disadvantageous position was obviously significantly worse than the position which would have existed if the alleged representation that Rothwells was financially sound had not been false. If the State had been a company, a responsible director, with knowledge of Rothwells' true financial situation, would have insisted that some immediate provision for the contingent liability be made in the company's accounts with consequential detriment to the bottom line of the profit and loss statement for the relevant accounting period.
On the other hand, as a matter of ordinary language, no relevant loss or damage actually came home to the State at the time itexecuted the indemnity. The detriment to which the State subjected itself at that stage was the risk or (in view of the falseness of the representations) greater risk that it would come under an actual liability to make a payment of money if a possible or (in view of the falseness of the representations) probable factual situation came about. If the course of subsequent developments had been different (e.g., if the bill facility had not been utilized; if Rothwells had subsequently prospered or been taken over and financially revived; or if no timeous steps had been taken to place it in liquidation after payment by Rothwells of the full amount owing to the Bank), the State may never have sustained any actual financial loss at all. In the event, the factual developments which ultimately turned the risk of future loss or damage into the reality of a loss of $22.5 million involved a combination of circumstances, including the presentation of a petition for the winding-up of Rothwells within six months ((64) See Companies Code 1981 (Q.), s.451(1); Bankruptcy Act 1966 (Cth), s.122.) of the repayment by Rothwells to the Bank of the whole of the amount due under the credit line facility. On balance, it seems to me that the mere assumption of such an isolated and truly contingent liability did not give rise to a factual situation within the prima facie meaning of the words "suffers loss or damage" until the stage was reached where subsequent events gave rise to actual or certain liability or other actual or certain financial detriment (e.g. a payment made to escape from the contingent liability).
In so far as context is concerned, the context provided by the fact that an action under s.82(1) is to recover "the amount of the loss ordamage" and by other provisions of the Act lends some support for the conclusion that loss or damage has not been suffered for the purposes of s.82 at a stage where all that is involved is an isolated contingent liability to make a future payment in the event that some possible or even likely, but nonetheless uncertain, future state of affairs comes about. In particular, s.87 of the Act expressly distinguishes between the actual suffering of loss or damage and the likelihood (or contingency) that loss and damage will be suffered in the future. In terms, it empowers "the Court", in respect of persons "likely to suffer" loss or damage by conduct in contravention of Pt IV ((65) s.87(1) of the Act.) or Pt V ((66) s.87(1) and (1A) of the Act.), to make appropriate orders which will "prevent or reduce" (emphasis added) actual loss or damage ((67) Note, also, that the obscurely worded provision of s.87(1CA)(b) arguably assumes that an independent cause of action arises under s.87(1A) for an order which "will prevent" loss or damage which would otherwise be "likely to be suffered". See, e.g., Magman International Pty. Ltd. v. Westpac Banking Corporation (1991) 104 ALR, at p 592.).
In so far as analogous principle is concerned, the obvious analogy is with principles governing the common law right to recoverdamages for loss or damage caused by negligent or fraudulent misstatement. Examination of the cases to which reference has already been made ((68) See n.63) discloses that the position is far from clear in those areas of the common law and that little is to be derived for the purposes of the present case from analogous reference to principles applicable in them. Certainly, the view remains open in this Court that, in those areas of the common law, the mere undertaking of an isolated contingent liability to make a payment of money if some uncertain event occurs in the future prima facie involves only a risk of future economic loss or damage and does not, of itself, suffice to found a cause of action. That is not, of course, to suggest that a risk of future economic loss may not be relevant to the assessment of common law compensation for some loss or injury which has actually been suffered. Where loss or damage has actually been suffered, the assessment of compensation will necessarily take account of a consequent risk of future economic loss flowing from that loss or injury ((69) See, e.g., Malec v. J.C. Hutton Pty. Ltd. (1990) 169 CLR 638, at pp 640, 642-643). Nor is it to deny that the loss of a mere chance of some future economic benefit may itself constitute loss or damage for the purpose of completing a common law cause of action ((70) See,

e.g., Chaplin v. Hicks (1911) 2 KB 786, at pp 792-793, 795-797, 798-799; Hall v. Meyrick (1957) 2 QB 455; Kitchen v. Royal Air Force Association (1958) 1 WLR 563; The Commonwealth v. Amann Aviation Pty. Ltd. (1991) 174 CLR 64, at pp 90-94, 103-104, 118-126). The loss of a chance of an economic benefit is not merely a risk of some future loss. The loss of the chance is itself a loss which has actually been sustained and which is, in an appropriate case, capable of sounding in damages. I have added the qualifications "isolated" and "prima facie" in what has been written above for the reason that I would not exclude the possibility that the circumstances of a particular case may be such that the incurring of a truly contingent liability to make a payment of money may itself represent immediate loss or damage. For example, I would leave until another day consideration of the case where the person incurring the contingent liability incurred it in the ordinary course of carrying on a business involving the undertaking of contingent liabilities.

Finally, it appears to me to be unlikely that the Parliament would have intended, as a matter of policy, that a cause of action shouldarise under s.82 in a case where all that was involved was the incurring of an isolated contingent liability involving a mere risk (or greater risk) of actual liability to make a payment at some future time. The implementation of such a policy would give rise to the situation where a cause of action would arise regardless of whether any actual concrete loss was ultimately sustained by reason of either the contingency liability becoming an absolute one or some other financial detriment being actually sustained (e.g. a payment made to escape the contingent liability). The result would be to require the institution of proceedings before it was known whether any concrete loss or damage would ever come home, in order to avoid the possible injustice of a legitimate claim being barred if action was not instituted until it could be seen whether the contingent liability would result in ultimate loss. Moreover, the difficulties and expense involved in establishing the present value of an isolated contingent loss and the potential injustice involved in requiring proceedings to be instituted within a limited time after a contingent or potential liability first arises provide further reasons for the rejection of such an approach. From the point of view of policy, the main disadvantage involved in a situation where no cause of action accrues unless and until a contingent liability becomes absolute or some actual financial loss or detriment comes home is that circumstances could well arise in which it is desirable that entitlement and liability under s.82(1) be determined at an earlier stage. The availability of declaratory remedies and of the anticipatory remedies under s.87 of the Act go some way, however, to diminish the practical significance of that disadvantage.
The appeal should be dismissed. Strictly speaking, it is unnecessary to deal with the question of the power of the Federal Court toamend a statement of claim so as to introduce a cause of action which otherwise would be statute barred. I would, however, indicate my general agreement with what is said by Toohey J. in relation to that question.

TOOHEY J. So far as is relevant, s.82 of the Trade Practices Act 1974 (Cth) ("the Act") reads:

" (1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued."

This appeal concerns the meaning and operation of the limitation provision contained in sub-s.(2) of s.82. Some reference to the historyof this litigation and its factual background is necessary to understand the issues before the Court.

The background

On 24 October 1990 the respondent ("the State") brought proceedings in the Federal Court of Australia against Bond CorporationHoldings Ltd. ("Bond Corporation"), Wardley Australia Ltd., the first appellant ("Wardley"), and Lawrence Robert Connell ("Connell"). The State brought separate proceedings against Wardley Australia Securities Limited ("Wardley Securities"), the second appellant. Both proceedings were consolidated on 19 November 1990.
The State alleges on the part of the present appellants and the other defendants to the proceedings various contraventions of s.52 ofthe Act arising out of the circumstances in which the State, on 26 October 1987, executed an indemnity whereby, in consideration of

National Australia Bank Ltd. ("the Bank") granting financial accommodation to a maximum aggregate amount of $150 million to Rothwells Ltd. ("Rothwells"), a merchant bank, the State would hold the Bank indemnified against any net loss which might arise if Rothwells did not satisfy in full its liability under the terms of a credit line facility to be granted by the Bank to Rothwells.

The State alleges that it was induced to execute the indemnity in reliance upon representations made at meetings on Saturday 24 October 1987 and Sunday 25 October 1987 by officers of Bond Corporation, Wardley and Wardley Securities and by Connell. In each case, it is said, the representations constituted misleading or deceptive conduct in terms of s.52 of the Act and the State claims damages from all defendants. Section 52 is within Pt V of the Act.
So far as what are described as "the Wardley Saturday Representations" are concerned (representations relating to Rothwells' assetsand loans by Rothwells to Connell), no question of limitations arises. "The Wardley Sunday Soundness Representation" was introduced into the consolidated statement of claim on 14 January 1991; it constitutes par.16(c) ((71) Further amendments to the statement of claim are proposed which will affect the numbering of this paragraph). In that regard the allegation against the appellants is that James Yong, an officer of each appellant: "represented that Rothwells was a sound financial institution which had substantial net assets". The statement of claim continues by pleading that the representations were false; that they constituted conduct in trade and commerce; and that, in making the representations, the appellants (and the other defendants) engaged in misleading or deceptive conduct.
On application by the present appellants, French J. struck out par.16(c) of the statement of claim because it "does introduce a newcause of action, which is out of time, and should therefore be struck out" ((72) Western Aust. v. Bond Corp Holdings (1991) 28 FCR 68, at p 87). On appeal, the Full Court of the Federal Court set aside the order striking out par.16(c) ((73) W.A v. Wardley (1991) 102 ALR 213.). The appellants now seek to restore and give effect to the relief granted by French J.
There is a further question, namely, whether the primary judge had power under the Rules of the Federal Court to allow theamendment notwithstanding that it added a new cause of action. I shall deal with that question later in this judgment. But it must be observed that the State has not argued that par.16(c) did not introduce a new cause of action, hence that no question of limitations arose.

Indeed the State has from the outset accepted that the amendment did introduce a new cause of action. We must proceed on that basis.

The question raised by the appeal

The primary question raised by the appeal is when the cause of action raised by par.16(c) "accrued" in terms of s.82(2) of the Act. Therepresentation in question is alleged to have been made on Sunday 25 October 1987. If the relevant cause of action accrued on that date, action was not commenced within three years (the amendment was not made until 14 January 1991) and, subject to consideration of the power of amendment mentioned earlier, a cause of action based on the Wardley Sunday Soundness Representation is statute barred. If, however, any such cause of action accrued after 13 January 1988, proceedings were brought within time. There is another possibility, namely, that at this stage of the proceedings it is not possible to say with certainty when the cause of action arose, hence the pleading in par.16(c) of the statement of claim should be allowed to stand until trial ((74) See UBAF Ltd. v. European American Banking (1984) QB 713.).
French J. held the cause of action to be out of time because ((75) Western Aust. v. Bond Corp Holdings (1991) 28 FCR, at pp 86-87): "on the pleaded facts, the State suffered loss the moment it executed the indemnity. If the facts are established, it assumed a risk of loss that was very much greater than it had been led to believe was the case on the representations made to it. ... In my opinion, however, the assumption of a significantly greater than represented risk is a compensable loss in the context of s82."
The Full Court (Spender, Gummow and Lee JJ.), in allowing the State's appeal, took a different view, which is encapsulated in thispassage from its judgment ((76) W.A v. Wardley (1991) 102 ALR, at p 229):

"(T)he mere assumption of an executory and contingent legal obligation, the future performance of which is likely to be more onerous than would have been the case had the representations in reliance upon which the obligation was assumed been true rather than false, is not the suffering of loss or damage the amount of which is forthwith recoverable by action under s82. At that stage, the cause of action will not have accrued, may never accrue, and will not accrue whilst the suffering of the loss or damage remains a likelihood rather than a reality."

Section 82 of the Act does not exist in a vacuum; its place in the Act and other sections may throw light upon its operation. And in theend the application of s.82 must be to facts as found by a court or, as here, to facts which, as pleaded in the statement of claim, must be taken as correct for the purpose of the strike-out application. It is convenient to say something of the facts as pleaded and inferences that may fairly be drawn from those facts before turning to the operation of s.82.

The facts as pleaded

The statement of claim pleads that at the meeting on Saturday 24 October 1987 Alan Bond ("Bond"), Chairman of the Board ofDirectors of Bond Corporation, told representatives of the State, as well as others, that Rothwells had severe liquidity problems that needed to be resolved by the following Monday for the company to be able to repay its short-term depositors; that Wardley or Wardley Securities had proposed that Rothwells should raise capital of about $150 million, for which purpose a credit line facility to Rothwells of a further $150 million was required; and that the Bank was willing to provide that facility only on the strength of a government guarantee or indemnity. Bond asked the State to provide such a guarantee or indemnity. It was in that context that the appellants are said to have made representations about the soundness of Rothwells. Those representations are said to have been repeated by the appellants on Sunday 25 October 1987 at a meeting of the budget sub-committee of the Government of the State.
The statement of claim continues by asserting that, in reliance on the representations made at the Saturday and Sunday meetings bythe appellants and other defendants, the State executed an indemnity on 26 October 1987 whereby it undertook to hold the Bank indemnified against any net loss which might arise by the Bank granting Rothwells financial accommodation to a limit of $150 million.
Although not part of the appeal book, the indemnity was in evidence on the strike-out application and its contents are referred to in thejudgments of the courts below. The indemnity is stated not to extend to liabilities in respect of bills drawn after 26 October 1989. The State holds the Bank indemnified against any "net loss" which might arise if Rothwells does not satisfy in full its liability under the bills facility to be granted by the Bank to Rothwells. The indemnity, which was given by the Treasurer on behalf of the State, concludes ((77) ibid., at p 219):

" 'It is a condition of this indemnity that before the bank may

make any claim hereunder, it must proceed to the fullest extent of its rights against (Rothwells) (but not any director or officer of (Rothwells)) to obtain payment out of the assets of (Rothwells). The amount of any deficiency remaining after the bank has received a final distribution in a liquidation of (Rothwells) may then be the subject of a claim under this indemnity. This indemnity shall be a continuing security and shall not be affected by the bank: (a) granting (Rothwells) any time or other indulgence; (b) recovering any judgment against (Rothwells) in respect of its liabilities under the facility; or (c) granting any other facility to (Rothwells), or receiving any payment under the terms of any such facility. I FURTHER UNDERTAKE for and on behalf of the State to pay on demand such sum pursuant to this indemnity as shall be demanded by the bank to a maximum aggregate amount of $150 million if and when demanded by the bank in writing.'"

The appellants' argument

It is the position, as the Full Court observed ((78) ibid.): "(B)efore the bank might make any claim under the indemnity upon the State, Rothwells would have to have failed to satisfy in full its liability under the facility and the bank would have to have proceeded to the fullest extent of its rights against Rothwells to obtain payment out of the assets of Rothwells". So much is clear from the language of the indemnity. That part of the document quoted above contemplates that Rothwells might go into liquidation, in which event the amount to be claimed under the indemnity would not be known until after a final distribution had been made. The point of these observations is that any amount to be met by the State by reason of its indemnity would not be known until some time after Rothwells defaulted in its obligations to the Bank.
The appellants in effect contend that the existence of conditions which have to be met before it is possible to quantify the State'sobligations under its indemnity say nothing as to when the State's cause of action against them accrued for the purposes of s.82. They say that the measure of damages under s.82 is ordinarily the measure of damages in tort ((79) Gates v. City Mutual Life Assurance

Society Ltd. (1986) 160 CLR 1, at p 14); that the measure of damages in deceit is diminution in value ((80) Toteff v. Antonas (1952) 87 CLR 647, at pp 650-651); that diminution in value is assessed at the time of sale (where appropriate) and that a plaintiff cannot add to the damages by pointing to further deterioration caused by some other extrinsic or supervening cause ( (81) Potts v. Miller (1940) 64 CLR 282, at p 298; Gould v. Vaggelas (1985) 157 CLR 215, at p 220), though consequential loss may be recovered for damage suffered after the contract was entered into if the plaintiff's reliance continues under the influence of the inducement ((82) Gould v. Vaggelas (1985) 157 CLR, at pp 221-222).

The appellants' argument accepts, as it must, that the present case is one of an assumption of a liability rather than the purchase ofan asset. But, they say, loss is suffered if at the time of the assumption of a contingent liability there was a real risk that payment would have to be made or, put another way, if the prospect of the contingency occurring was much greater than had been represented. Damages may then be assessed by placing a value on the likelihood that the contingency will occur. And they say further that, because the State took no further steps in reliance upon the misleading or deceptive conduct, there was no consequential loss to be taken into account.
The appellants were at pains to deal with various authorities concerning the time from which the particular limitation periods in thoseauthorities were held to have run. Many of those decisions are of English courts, involving the language of the legislation under consideration. That is not to say that the decisions may not be relevant to the issues raised by this appeal. But the starting point of any resolution of those issues must be the Act itself.

Section 82

Although it is customary to speak of a claim for damages for misleading or deceptive conduct, s.52 of the Act does not of itself giverise to any liability. The consequences of a contravention of the terms of s.52 are to be found in various sections of the Act ((83) Concrete

Constructions (N.S.W.) Pty. Ltd. v. Nelson (1990) 169 CLR 594, at pp 608-609; see also Bank of New Zealand v. Spedley Securities Ltd. (1992) 107 ALR 333, at pp 339-340). One of those consequences lies in s.82(1) whereby "(a) person who suffers loss or damage by conduct of another person that was done in contravention of (s.52) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention". Sub-section (2) then places a limit on the right of action created by sub-s.(1) by requiring action to be commenced within three years after the date on which the cause of action accrued. There can be no "action" under sub-s.(1) unless the plaintiff has suffered loss or damage. Until that time no cause of action has accrued. Does that mean when the plaintiff has suffered any loss or damage whatsoever? Or does it mean the loss or damage for which the plaintiff claims damages? Or does it mean something else?

One thing is clear. A person may not bring an action under s.82(1) unless he or she has actually suffered loss or damage ((84) Aitken,"'Loss or Damage' Under Section 82 of the Trade Practices Act", (1989) 1 Bond Law Review 107, at pp 108-109 discusses possible differences between "damage" and "damages" in relation to s.82). If this were left in any doubt by the language of the sub-section, it is made certain by a comparison of s.82 with s.87. The latter section, which deals with orders the Court may make in addition to those elsewhere spelt out in the Act, speaks of the Court finding that a person "has suffered, or is likely to suffer, loss or damage" ((85) s.87(1), (1A) and (1B)).

Application of s.82 to the facts

What then was the situation on 26 October 1987? The appellants say that the State suffered loss or damage on that day because,contrary to the representations said to have been made on the Saturday and Sunday, Rothwells was hopelessly insolvent at the time the indemnity was signed. Therefore, it is said, the likelihood that the State would be called on under the indemnity was so much greater than if Rothwells was, as represented, "a sound financial institution which had substantial net assets".
On the face of it, all that happened on 26 October 1987 was that the State undertook to hold the Bank indemnified "against any netloss which may arise in the event that the Company does not satisfy in full its liability under the terms of ... 'the Facility' ... to be granted by the Bank to the Company". As already noted, the Bank could make no claim against the State until the Bank had exhausted its remedies against Rothwells, to the extent of placing Rothwells in liquidation. It is necessary to trace events some distance further on. From the day following execution of the indemnity, Rothwells drew down moneys, which amounted to $150 million, pursuant to the facility granted by the Bank. On or about 17 October 1988 Rothwells repaid the $150 million to the Bank. At that time, the statement of claim alleges, Rothwells was insolvent. On 3 November 1988 a petition for the winding up of Rothwells was presented to the Supreme Court of Queensland. The provisional liquidators appointed by the Court contended that the payment of $150 million by Rothwells to the Bank constituted a voidable preference and demanded that the Bank pay them that sum. The Bank and the State denied that Rothwells' payment constituted a voidable preference; the Bank called on the State to indemnify it in respect of the liquidators' demand. As between the State and the Bank, the former contended that the payment by Rothwells of $150 million discharged the indemnity while the latter claimed that the indemnity remained in full force and effect.
The dispute arising out of the liquidators' demand was resolved by two deeds; one between the Bank and the State and the otherbetween Rothwells, its provisional liquidators and the State.
By the former deed the State indemnified the Bank in respect of any liability arising from any court order to repay any part of the $150 million, including interest, to any liquidator of Rothwells. The State covenanted to use all reasonable endeavours to procure and furnish to the Bank a duly executed release from the liquidators, upon which the Bank would pay to the State an amount described as "the Bank's contribution", calculated in accordance with provisions of the deed. If the State were to pay an agreed net amount to secure the liquidators' release and that amount were not less than $33 million, the Bank's contribution to the State would be $10.5 million. If the amount paid by the State were less than $33 million, the Bank's contribution would be reduced pro rata.
By the latter deed the State agreed to pay $33 million to the provisional liquidators once a scheme of arrangement had been approvedby the creditors of Rothwells and upon the happening of various events relating to the winding up of that company. It is unnecessary to mention other provisions of the deed but it may be noted that the State paid the $33 million to the liquidators on 30 May 1989. In turn, on 8 December 1989, the Bank paid $10.5 million to the State. The claim for damages made by the State is for the difference between the two amounts, namely, $22.5 million.
The question as to when the State's cause of action in damages in respect of the Wardley Sunday Soundness Representationaccrued is not answered by asking whether there was other relief available to the State on 26 October 1987. It must be answered by reference to s.82 of the Act. It may be, for instance, that the State could have invoked s.87 of the Act and claimed relief under that section. Indeed, it did so. In passing, it may be noted that there is a range of actions in Div.2A of Pt V of the Act, a division identified as

"Actions against Manufacturers and Importers of Goods". For those actions s.74J(2) spells out when, in each case, a cause of action "shall be deemed to have accrued". The reference point in each case, save for an action under s.74H, is when the consumer "first became aware, or ought reasonably to have become aware" of a particular circumstance. Again, those reference points do not help to answer the question raised by this appeal.

Counsel for the appellants referred to the decision of this Court in Gates v. City Mutual Life Assurance Society Ltd. ((86) (1986) 160 CLR, at p 14.) in which the Court said, in effect, that the measure of damages in tort is appropriate in most, if not all, cases under Pt V of the Act, especially those involving misleading or deceptive conduct and the making of false statements. Where an action in tort arises in connection with the purchase of property, the measure is "the difference at the time of purchase between the real value of the goods, and the price paid" ((87) ibid., at p 12). The position was put more broadly by Dixon J. in Toteff v. Antonas when he said ( (88) (1952) 87 CLR, at p 650):

Although the Court was taken in argument to many decisions relating to the time at which a cause of action accrues for the purpose ofvarious limitation statutes and while reference to some of those decisions is called for, it is a mistake to become too enmeshed in them. In particular, decisions relating to physical damage provide little, if any, assistance. In Hawkins v. Clayton McHugh J.A observed ((89) (1986) 5 N.S.WLR 109, at p 143):

"The present case, therefore, is quite different from cases where a person suffers physical damage either to his person or property. The cause of action is then complete according to the prevailing legal theory because damage has occurred whether or not the person concerned knows of that damage. But in a case where no physical damage occurs to anything owned or possessed by the plaintiff, his cause of action cannot accrue until he has a legal right or interest which is infringed."

It is true that in Jobbins v. Capel Court Corporation Ltd. ((90) (1989) 91 ALR 314, at p 317) a Full Court of the Federal Court said ofs.82(2):

"There is every reason to understand this language in the sense in which it has come to be understood in statutes of limitations." There may be no difficulty with this approach so long as analogies drawn from unlike situations are not pressed too far. It can be accepted, for example, that in relation to s.82(2) a plaintiff's unawareness of the existence of a cause of action ordinarily does not prevent time running ((91) Cartledge v. E Jopling and Sons Ltd. (1963) AC 758; Pirelli v. Oscar Faber and Partners (1983) 2 AC 1; Hawkins v. Clayton (1988) 164 CLR 539; Gillespie v. Elliott (1987) 2 Qd R 509).

However, I agree with the Full Court in the present appeal ((92) W.A v. Wardley (1991) 102 ALR, at p 223) that:

"it is unsafe in the process of statutory construction of s82 to turn first to, or to rely too heavily upon, analogies drawn from the interpretation by other courts of statutes of limitation controlling causes of action arising under the general law or other statutes".

It is important not to be diverted from the search for "the date on which the cause of action accrued". And it is important tokeep in mind that what sub-s.(2) of s.82 operates on is the action created by sub-s.(1), which in turn is an action by a person who has suffered loss or damage to "recover the amount of the loss or damage". The loss or damage under consideration must be relevant to the claim ((93) See Jobbins (1989) 91 ALR, at p 318). This does not mean that a plaintiff may arbitrarily ignore an aspect of loss or damage in order to keep an action alive. But, equally, a defendant may not point to an aspect of loss or damage which is not relevant to the plaintiff's claim and use that aspect to justify a contention that the plaintiff's claim is statute barred. Thus, for the purpose of the strike-out application, the appellants say in effect:
"Our conduct in making the Sunday representation was misleading or deceptive. And because it was misleading and deceptive in regard to Rothwells' financial condition, you, the State, suffered loss the moment you executed the indemnity."

But, a first step must be to look at what is alleged in the statement of claim: what does the plaintiff plead as misleading or deceptive conduct and as reliance on that conduct; and what loss or damage does the plaintiff allege it suffered by reason of that conduct? That is not to say that the court is merely concerned with a question of pleadings. But, until these matters are identified, there can be no proper consideration of the operation of s.82(2) upon the claim.

In Hawkins v. Clayton ((94) (1988) 164 CLR, at pp 600-601), which was concerned with the operation of the Limitation Act 1969 (N.S.W.) on a common law claim for negligence, Gaudron J. spoke of the considerations relevant to the answer as to when a cause of action for negligence causing economic loss accrues. Her Honour said that it may be relevant "to consider the precise interest infringed by the negligent act or omission" ((95) ibid., at p 601). She gave the following instance ((96) ibid. Gaudron J.'s approach was recently applied in Crisp v. Blake (1992) ATR 81-158, a case involving pure economic loss):

"So too, if the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible."

Without going over ground already trodden in this judgment, the State claims to have lost $22.5 million by reason of the defendants'misleading and deceptive conduct. The basis of that calculation has been mentioned earlier; it is a loss that was incurred by reason of the indemnity given by the State and the events that followed the giving of that indemnity. That loss was not and could not have been incurred at the time the indemnity was given and, in my view, it does not avail the appellants to say that on the very day the indemnity was given the State stood to suffer some loss because Rothwells was "hopelessly insolvent". The loss or damage for which the State seeks recovery is the loss or damage which it suffered once events had crystallised following the giving of the indemnity. No doubt Rothwells' insolvency at the time carried with it the potential for loss as soon as the indemnity was given. But, of itself, Rothwells' financial position was not loss or damage actually incurred by the State at that moment; nor is it the loss or damage for which the State seeks recovery.
It is true that in Forster v. Outred and Co. ((97) (1982) 1 WLR 86) the Court of Appeal held that a plaintiff who executed a mortgage assecurity for a loan made by a company to her son, in circumstances where her solicitors were liable for negligent advice, was held to have suffered actual damage at the time she executed the mortgage rather than when demand was made on her under the mortgage some two years later. The basis for this conclusion was expressed by Stephenson L.J. ((98) ibid., at p 98) in the following way:

"(T)he plaintiff has suffered actual damage through the negligence of her solicitors by entering into the mortgage deed, the effect of which has been to encumber her interest in her freehold estate ... and subject her to a liability which may, according to matters completely outside her control, mature into financial loss - as indeed it did"

Dunn L.J. said ((99) ibid., at p 100) that:

"the value of the equity of redemption of her property was reduced. ... That ... was a quantifiable loss".

With respect to their Lordships, this approach takes an overly-refined view of what happened. I share the misgivings expressed bySheppard J. in Magman v. Westpac((100) (1991) 100 ALR 575, at p 581) that "in truth and reality" the plaintiff in Forster lost nothing when she executed the mortgage. Certainly she put herself at risk but it was only on her son's default that she could be called upon to pay anything. Forster is, I think, distinguishable from the present case. If it is not, it should not be followed. In any event, the issue here is not one of discoverability of loss or damage; the issue is when loss or damage relevantly occurred((101) In Magman International Pty. Ltd. v. Westpac Banking Corporation (1991) 104 ALR 575, at p 597 Hill J. referred to a number of decisions in which Forster has been followed.

But some at least are decisions in which discoverability was at the forefront).

In Jobbins, a Full Court of the Federal Court (Davies, Burchett and Hill JJ.) held that a claim for damages under s.82(1) of the Act wasstatute barred, the cause of action having accrued when the applicant invested money under an agreement promising a guaranteed return. The applicant had argued that time began to run only from the failure of the respondent to pay the first instalment of the guaranteed return. In Jobbins the Full Court referred with apparent approval to Forster((102) (1989) 91 ALR, at p 317). In the appeal with which the Court is now concerned, the Full Court referred, with apparent disapproval, to both Forster and Jobbins((103) W.A v. Wardley (1991) 102 ALR, at p 232). In so far as Jobbins relied upon Forster, it is open to question. And the decision itself is, with respect, not easy to understand since it would be hard to say whether the applicant had suffered loss or damage in the absence of evidence as to the value of the investment.
Having warned against analogies in this area of the law, I must risk a charge of inconsistency by referring to Commercial Bank of

Australia Ltd. v. Colonial Finance, Mortgage, Investment and Guarantee Corporation Ltd., a case which concerned a continuing guarantee of a customer's overdraft with a bank, where the customer defaulted on payment of a portion of the debt demanded by the bank. Griffith C.J. commented((104) (1906) 4 CLR 57, at p 66):

"The debtors are asked to pay a certain sum, and that is all that is asked for. It is not paid immediately. It is contended that thereupon, on failure of the debtors to pay that sum immediately on demand, though the debtors may have subsequently done what they were asked, yet, as at that moment the guarantors could have been sued for the whole debt, the Statute began to run. In my opinion, on the construction of this guarantee, upon default in payment of any portion of the debt, the only right of action that arises as against the guarantors is for that portion as to which default has been made. Any other construction would defeat the object of the guarantee, which was that the guarantee should continue until the debt was paid, and would result in what was probably never intended by either party, that a peremptory demand of any part of the debt should give a right of action against the guarantors for payment, not only of that particular sum which the debtor was asked to pay and did not pay, but for the whole amount of the indebtedness, with a consequent obligation on the part of the creditor to enforce his claim within the statutory period, at the risk of losing his right of recourse to the guarantee altogther."

The point of quoting this rather lengthy passage is not that the case itself provides a useful analogy but rather that the judgment ofGriffith C.J. points up the need to identify with precision the right of action upon which the limitation statute is said to operate((105) See also Reynolds v. Doyle (1840) 1 Man. and G. 754 (133 ER 536), the headnote to which reads: "A party who requests another to 'lend his acceptance', impliedly engages to take up the bill at maturity, and to indemnify the acceptor against the consequences of non-payment. Upon a contract to indemnify an accommodation acceptor, the statute of limitations begins to run from the time at which the plaintiff is damnified by actual payment.").
In its ordinary acceptation, a cause of action means "every fact which it would be necessary for the plaintiff to prove, if traversed, inorder to support his right to the judgment of the Court"((106) Arcadi v. Colonial Mutual Life Assurance Society Ltd. (1984) ATPR 40-473, at p 45,454, quoting from Cooke v. Gill (1873) LR 8 CP 107, at p 116). Seen in that way, the State's cause of action depends upon it proving that, by reason of the misleading or deceptive conduct of the appellants on Sunday 25 October 1987, it lost $22.5 million in the manner pleaded. That loss or damage is not the increased likelihood of the State being called upon under the indemnity because of Rothwells' financial position. The implications of that position for the State on 26 October 1987 were at best speculative. More than that, it could not then be predicted with any certainty that the State would be called on under the indemnity. It is the amount which the State was called upon to pay under the indemnity, having regard to the deeds of settlement, the reasonableness of which must be assumed for the purposes of this appeal, that constitutes the loss or damage actually suffered by the State and for which it seeks recovery.
For these reasons the appeal should be dismissed. The case, however, provides a good illustration of the difficulty and undesirabilityof trying to determine a limitation point in interlocutory proceedings, unless the position is clear beyond peradventure((107) See Magman International.).

The power of amendment

Because the Full Court was right in its conclusion that the State's cause of action based on the Wardley Sunday Soundness

Representation was not barred by s.82(2), it is strictly unnecessary to deal with the power of the Federal Court to amend a statement of claim so as to introduce a cause of action which otherwise would be statute barred. But the point was fully argued and as it is of importance I shall say something about it.

Order 13 r.2(1) of the Federal Court Rules reads:

" The Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit."

The question argued before us essentially was whether the scope of this rule was affected by the so-called rule in Weldon v. Neal.

The headnote to Weldon v. Neal((108) (1887) 19 QBD. 394) reads simply:

"A plaintiff will not be allowed to amend by setting up fresh claims in respect of causes of action which since the issue of the writ have become barred by the Statute of Limitations." The judgments of Lord Esher M.R., Lindley and Lopes L.JJ. are brief and to the effect that, if the position were otherwise, a defendant would lose a defence which the Statute of Limitations provided.

In the present case French J. treated Weldon v. Neal as applicable and refused to allow par.16(c) of the statement of claim by way ofamendment. His Honour's decision is consistent with the approach generally taken in the Federal Court((109) See Zoneff v. Elcom Credit Union Limited (1990) ATPR 41-058, at pp 51,746-51,747). The State argues that the rule in Weldon v. Neal is no more than a rule of practice and that O.13 r.2 confers a discretion to amend which is unfettered.
The Full Court held that r.2 was wide enough in its operation to sustain an amendment in the terms sought by the State if its principalsubmission should be rejected((110) W.A v. Wardley (1991) 102 ALR, at p 235.). The reasoning by which the Full Court reached this conclusion calls for examination. It proceeded in the following way. The time limit specified in s.82(2) of the Act is procedural, that is, it is "a condition of the remedy rather than an element in the right"((111) ibid., at p 233). Section 59(1) of the Federal Court of Australia Act 1976 (Cth) confers upon the judges of the Federal Court power to "make Rules of Court, not inconsistent with this Act, making provision for or in relation to the practice and procedure to be followed in the Court". There being no express power to allow an amendment to a statement of claim that introduces a cause of action which otherwise would be statute barred((112) See the discussion of the power to amend in Bridge Shipping Pty. Ltd. v. Grand Shipping S.A (1991) 173 CLR 231), it might seem that O.13 r.2 could not be relied upon to support such an amendment. However, said the Full Court, it is necessary to have regard to s.86 of the Act which confers jurisdiction on the Federal Court "in any matter arising under this Act in respect of which a civil proceeding has ... been instituted under this Part".

Section 86 is within Pt V of the Act. For the purpose of s.76(ii) of the Constitution, matters arising under any laws made by the Parliament
"involve entire controversies identifiable as justiciable subject matters involving rights and obligations formulated in the law in question"

((113) W.A v. Wardley (1991) 102 ALR, at p 225. This is a reference to the judgment of Gummow J. in O'Toole v. Charles David Pty. Ltd. (1989) 90 ALR 112, at p 158. The decision was affirmed in (1991) 171 CLR 232). It follows that the jurisdiction of the Federal Court "is one to determine the whole of the controversy before it, including accrued or pendent claims, and the controversy is defined by a factual base or substratum"((114) W.A v. Wardley (1991) 102 ALR, at p 225).

The Full Court continued in this way. The Court is not seized of jurisdiction simply in respect of the "cause of action" referred to in

s.82. And the content of the "matter" may be more than the "action" of which s.82 speaks. In consequence((115) ibid., at p 234):

"(I)t is sufficient to meet the limitation provision of s82(2)

of the Act for a proceeding to be instituted in respect of a matter arising under the Act, the substance of which is defined by a factual base which would encompass conduct said to be in contravention of the provisions of Pt IV or Pt V of the Act. Once the court is seized of jurisdiction in such a 'matter', the conduct of the proceeding, including its pleading, is a matter of procedure placed under the control of the procedural rules of the court."

Notwithstanding the absence of an express power in O.13 r.2 to allow an amendment to a statement of claim that introduces a cause of action which otherwise would be statute barred, the power to control amendments conferred by that rule is broad enough to permit amendments which reflect causes of action which provide claims in the matter over which the Court obtained jurisdiction upon the institution of the proceeding in question.

I have set out at considerable length the approach taken by the Full Court because of its significance for the Act and for other federalstatutes containing limitation provisions. With much of the general reasoning of the Full Court there can be no quarrel. But in its application to s.82(2) of the Act and the facts of this case, the Full Court, in my respectful view, erred. It may be accepted that s.86(1) determines the jurisdiction of the Federal Court under the Act and that "any matter arising under this Act" is the touchstone of the Court's jurisdiction. If there is no "matter arising under this Act" in respect of which a civil proceeding has been instituted under Pt V, the Federal Court has no jurisdiction to deal with the civil proceeding. And, of course, the converse applies.
But the reasoning blurs notions of jurisdiction and power; importantly, it fails to accord due weight to a limitation provision expressed inthe Act itself. "Jurisdiction", it has been said((116) Halsbury's Laws of England, 4th ed., vol.10, par.715), means:

"the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision". In the exercise of its jurisdiction, a court has powers expressly or impliedly conferred by the legislation governing it and "such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred"((117) Parsons v. Martin (1984) 58 ALR 395, at p 401, quoted in Jackson v. Sterling

Industries Ltd. (1987) 162 CLR 612, at p 630 and in Harris v. Caladine (1991) 172 CLR 84, at p 136.). Once the Federal Court is seized of a matter under the Act, its powers in respect of that matter are measured, not only by the Act itself but also by the Federal Court of Australia Act and by whatever is incidental and necessary to the exercise of that jurisdiction and to the exercise of any powers conferred by legislation. But, what is "incidental and necessary" cannot override a clear statutory prohibition such as appears in s.82(2) of the Act.

When the Federal Court is faced with an application to amend a statement of claim by introducing allegations that, though they mayrelate to a time after the relevant limitation period has expired, do no more than expand a cause of action already pleaded, there is no difficulty in treating O.13 r.2 as wide enough to permit such an amendment. But when, as here, the proposed amendment introduces an admittedly new cause of action, the position is quite different. Section 82(2) presents a statutory barrier to any new cause of action; to this barrier, reference to express, implied or incidental powers provides no answer.
Even though it is inappropriate to argue by analogy from decisions on other statutes, it is apparent that the legislature, in enacting

s.82(2), chose the sort of language used in those statutes. I agree with Hill J. when he said in Magman International((118) (1991) 104 ALR, at p 595):

"Reference to s86 of the Act, and the conferral upon this court of jurisdiction to hear any 'matter' arising under Div 1 or 1A of Pt V of the Act, tell us nothing which assists the interpretation of (22(2)." And I would go further and say that those considerations tell us nothing which assists the interpretation of O.13 r.2. Section 82(2) strikes only at a cause of action under s.82(1), namely, action to recover loss or damage suffered by conduct done in contravention of Pt IV or V of the Act. As the appellants argued, a "matter" may support several causes of action, federal and non-federal. Section 82(2) operates only to bar an action under s.82(1).

The appellants argued further that the Wardley Sunday Soundness Representation was not part of the "matter" of which the Federal

Court became seized when proceedings were commenced. That "matter", it was said, related to a substratum of facts concerning only the Wardley Saturday Representations. Any debate as to the "matter" before the Federal Court is a diversion from the issues truly raised by the question of the Court's powers to amend the statement of claim. "Matter" is relevant to jurisdiction. It bears upon the extent of the

Court's jurisdiction when faced with several causes of action, some federal and some non-federal((119) See Stack v. Coast Securities

(No.9) Pty. Ltd. (1983) 154 CLR 261 and the cases there referred to). But "matter" is not relevant to the operation of s.82(2) of the Act. "Matter" may serve to confer jurisdiction upon the Federal Court but jurisdiction brings with it no mandate to ignore a clear statutory prohibition on the bringing of an action after a period of years.

Although the Commonwealth intervened in the appeal pursuant to a notice under s.78B of the Judiciary Act 1903 (Cth), as theargument developed no constitutional question arose for answer.
For the reasons given earlier, I would dismiss the appeal.

Orders

Appeal dismissed with costs.