Case: Kenny &amp; Good Pty Limited v MGICA (1992) Ltd [1999] HCA 25 ; (1999) 199 CLR 413
Outcome: followed
I find that had J-Mac properly reported in a prepurchase survey to Consort that the vessel had the deficiencies or a number of them which have been admitted as existing in the defence, Consort would not have purchased the vessel. In arriving at these findings I have also had regard to the evidence in the affidavits of Messrs Pasma, Woodall and Barrie as well as to so much of the affidavits of Messrs Perrott, Bleasdale, Dowell and McInnes and Capt Adhikari as was read. Accordingly, Consort's claim for damages is to be approached upon the basis that the cases have described as a 'no transaction' case ( Kenny &amp; Good Pty Limited v MGICA (1992) Ltd [1999] HCA 25 ; (1999) 199 CLR 413). 59 Thus, in Kenny &amp; Good Pty Limited v MGICA (1992) Ltd [1999] HCA 25 ; (1999) 199 CLR 413 at 457-458 [119] - [120] Kirby and Callinan JJ held that if a correct valuation had been given, there would have been no loss suffered by the mortgage insurer because it would not have provided mortgage insurance at all. They said that this approach gave content to, or defined, the contractual obligation to exercise reasonable care and the tortuous duty of care. It did this by having regard to the kind of loss or damage in respect of which the contract breaker or tortfeasor was required to exercise reasonable care. 60 In that case the valuation included a representation that the property was a suitable investment for trust funds, on the basis of the valuation, for a term of 3-5 years. Kirby and Callinan JJ said that the valuer had an obligation and a duty in giving the valuation to exercise reasonable care to enable the mortgage insurer to decide whether to enter into an insurance transaction at all. The obligation or duty was breached if an accurate representation would have suggested that the mortgage insurer should not have entered the transaction (the other justices took a similar approach: 199 CLR at 425-426 [19]-[21] per Gaudron J, 447 [83] and 449 [92] per Gummow J; but see per McHugh J at 431 [35]). The valuer was held liable for the whole of the loss which the mortgage insurer suffered, some of which resulted from a later fall in the property market. 61 Here, the advice sought from the professional surveyor related to the condition of the ship and its appropriateness for purchase by Consort. It was clearly within the contemplation of Consort and J-Mac at the time their contract was entered into that Consort would expose itself to financial loss if it acted on J-Mac's advice and J-Mac's prepurchase survey were inaccuracte. Such loss could occur if Consort purchased the ship itself or caused, as is usual in such commercial transactions, a subsidiary to be incorporated for the purposes of acquiring and holding the asset and the ship turned out not to be sound in respects the subject of the opinion provided by J-Mac. 62 The loss could be suffered by reason that, first, the price paid for the ship might be greater than its true worth or secondly, the cost to repair the ship, so as to bring it to the condition where it might operate and possess the characteristics the subject of the negligent opinion, was substantial. Who suffered that loss is a fundamental issue in this matter.