Case: I &amp; L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109
Outcome: applied
It was accepted by the respondents that if the relief being sought was pursuant to s 82 of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act ') then the position would be clear, and the plea of contributing fault sought to be relied upon the respondents could not be maintained based upon the authority of the High Court of Australia in I &amp; L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109. I &amp; L Securities [2002] HCA 41 ; 210 CLR 109 is binding authority for the proposition that the loss that can be claimed under s 82 of the Trade Practices Act cannot be apportioned between contributing causes, and that once the causal link is established between the injury and the contravention, the measure of the loss for which s 82 provides, to which the person bringing the action is entitled, is the amount of the loss or damage sustained and not some lesser amount. Further, s 87(1) does not confer a discretion to reduce or modify an award of damages made under s 82(1). 7 The issue before the court in that case was one of statutory construction of the Trade Practices Act . Similarly, the question here is one of statutory construction of the Commonwealth Legislation. 8 It was contended by the respondents that there is a relevant distinction between the provisions of the Trade Practices Act referred to by the court in I &amp; L Securities [2002] HCA 41 ; 210 CLR 109 and the various provisions that are now relied upon by the applicant in this matter, so that the plea of contributing fault could be maintained, or at least was not clearly untenable. The respondents sought to rely upon the difference in wording of the Trade Practices Act and the Commonwealth Legislation. 9 In my view the difference in wording is not sufficient to take away the force of the court's reasoning in I &amp; L Securities [2002] HCA 41 ; 210 CLR 109 . The use of the words "because", or "as a result of" found in the old Corporations Act (for instance) seems to me to be relevantly equivalent in their context to the word "by" in the Trade Practices Act , which was a focus of the attention of the court in I &amp; L Securities [2002] HCA 41 ; 210 CLR 109. 10 Further, just as a relevant purpose of the Trade Practices Act is to proscribe misleading and deceptive conduct and, in aid of that purpose, to provide for compensation by an award of damages to a victim of such conduct, so here the Commonwealth Legislation similarly makes the respondents, if found liable, legally responsible for the whole of the loss. 11 As Gleeson CJ said in I &amp; L Securities 210 CLR at [33]: The relevant purpose of the statute was to proscribe misleading and deceptive conduct in circumstances which included those of the present case. In aid of that purpose, the statute provided for compensation, by an award of damages, to a victim of such conduct. The measure of damages stipulated was the loss or damage of which the conduct was a cause. It was not limited to loss or damage of which such conduct was the sole cause. In most business transactions resulting in financial loss there are multiple causes of the loss. The statutory purpose would be defeated if the remedy under s 82 were restricted to loss of which the contravening conduct was the sole cause. What is there, then, in the justice and equity of the particular case that might lead to a conclusion that the respondent should not be regarded as legally responsible for the whole of the loss, even though the contravention was a cause of the whole of the loss? Upon what principle might such responsibility be diminished? In a financing transaction, a lender takes security to protect itself against the risk of default by the borrower. One aspect of that risk is that the lender might have failed adequately to assess the borrower's capacity to service the debt. I cannot see why, as a matter of principle, such failure by a lender should be treated, in the application of s 82 , as a factor which diminishes the legal responsibility of a valuer by negativing in part the causal effect of the valuer's misleading conduct. The statutory rule of conduct found in s 52 , when applied to the relationship between a valuer and a prospective lender, gives rise to a legal responsibility in a case such as the present which extends to the whole of the loss of which the valuer's misleading conduct is a direct cause. Further, as Gaudron, Gummow and Hayne JJ observed at [50]: If the causal link between injury and contravention is established, the measure of the compensation for which the section provides, and to which the person bringing the action is entitled, is the amount of the loss or damage sustained, not some lesser amount. In particular, it follows from the decision in Henville v Walker that there is nothing in s 82(1) , in other provisions of the Act, or in the policy of the Act, to suggest that a claimant's carelessness may be taken into account to reduce the amount of the loss or damage which the claimant is entitled to recover under s 82(1). Finally, as McHugh J stated at [102]-[104]: But there was one indivisible loss in this case. It might be just and equitable to hold that HTW should be held responsible for only two-thirds of that loss. But in terms of causation doctrine and in the absence of a statutory power of apportionment, it is liable for the whole loss. The approach of Williams J accords with apportionment cases involving contributory negligence. But, in the absence of any power in the Act to apportion responsibility for loss or damage under s 82 , it is not open to a court to make such an apportionment in making an award under s 82. HTW contends that, unless the approach of Williams J is adopted, the policy of the Act to control smart practices and encourage fair trading would be frustrated. It submits that the construction for which I &amp; L contends would encourage a sophisticated, commercial lender, to treat the Act as providing a form of mortgage guarantee insurance. However, as I said in Henville , the policy behind the legislation is furthered if the party whose conduct contravenes the legislation bears the entire loss. Moreover, relief under s 82 is available not only for breaches of s 52 but for breaches of other provisions in Pt V as well as those in Pt IV of the Act and Pts IVA , IVB and s 51AC after the amendments. The reasoning adopted by Williams J would be likely to lead to inconsistencies in applying s 82 across such a broad spectrum of regulatory provisions. Moreover, it is unlikely that rejecting the construction that Williams J placed on s 82 will have the consequences predicted by HTW. Intentionally refusing to make proper inquiries when advancing loan funds will usually be held to be a voluntary act that breaks the chain of causation between the breach of the Act and the lender's loss. A loss caused by the intentional conduct of the applicant will not ordinarily be characterised as a loss caused "by" the contravening conduct of the respondent. 12 In the same way, the contributing fault plea is contrary to the express purpose of the Commonwealth Legislation. The Commonwealth Legislation aims to regulate corporate and individual behaviour by prescribing rules of conduct and ascribing consequences for breaches of those rules of conduct. To allow the contributing fault plea would be to allow an interpretation of the Commonwealth Legislation contrary to its purposes in exactly the same way as reasoned by the court in I &amp; L Securities [2002] HCA 41 ; 210 CLR 109. 13 It is to be observed that the Commonwealth Parliament has introduced contributing fault provisions focusing on the conduct of an applicant in the Corporations Act 2001 (Cth) (' Corporations Act ') that would, if here applicable, found a basis for a contributing fault plea: see eg s 1041I(1B). However, Parliament has not extended those provisions to cover ss 945A and 947C (2)(e) of the amended Corporations Act (which are the corresponding provisions to ss 851 and 849 respectively of the old Corporations Act ) or to cover s 1012A of the amended Corporations Act . Thus, Parliament has enacted express statutory contributing fault mechanisms into some but not all parts of the amended Corporations Act . Parliament has also enacted a contributing fault mechanism into s 12GF of the ASIC Act (s 12GF(1B)), which applies to conduct in contravention of s 12DA (but not s 12DB) of the ASIC Act. 14 It was contended by the applicant that these amendments confirm that a plea of contributing fault is not available under the Commonwealth Legislation. In respect of ss 851 and 849 of the old Corporations Act and s 1012A of the amended Corporations Act it was contended that the position has been maintained by the subsequent legislative changes, whereas the introduction of an express provision allowing for contributing fault in s 12GF of the new ASIC Act showed (it was contended) that it was not envisaged such a plea of contributing fault was available under s 12DB of the ASIC Act. I do not consider it necessary to consider the impact of these subsequent amendments, as I have come to a clear view as a matter of construction of the Commonwealth Legislation. In any event, it may not be appropriate to interpret the applicable legislation by reference to amending provisions: see generally Pearce &amp; Geddes, Statutory Interpretation in Australia (6 th ed, 2006) p 97 et seq.