Case: Wardley Australia v Western Australia [1992] HCA 55 ; (1992) 175 CLR 514
Outcome: followed
a person claims to recover loss or damage under s 82(1) of the Act, the question of causation is whether he, she or it has suffered that loss or damage "... by conduct of another person that was done in contravention of ..." here, relevantly, s 52. In Wardley Australia Ltd v Western Australia [1992] HCA 55 ; (1992) 175 CLR 514 at 525 Mason CJ, Dawson, Gaudron and McHugh JJ said that the word "by" as used in s 82(1) clearly expressed the notion of causation without defining or elucidating it. They held that, in general, this required using the common law practical, or common-sense, concept of causation unless the provisions of the Act operated to modify or supplement that concept. They said that where the claim under s 82(1) was to recover for loss or damage by misleading conduct consisting of misrepresentations done in contravention of s 52(1) , as at common law, "... acts done by the representee in reliance on the misrepresentation constitute a sufficient connexion to satisfy the concept of causation": see too Travel Compensation Fund v Tambree [2005] HCA 69 ; (2005) 224 CLR 627 at 639 [30] per Gleeson CJ, 642-643 [44]-[49] per Gummow and Hayne JJ, 645-647 [53]-[60] per Kirby J, 653-654 [78]-[81] per Callinan J. Until 1 August 2000 the applicants had only a contingency of suffering loss depending on whether they completed their contracts. The economic interest of the applicants that would be infringed by Austcorp's misleading conduct was their obligation to complete their purchase consequent upon the registration of the strata plan and the loss of their right to rescind: Wardley 175 CLR at 532-533 per Mason CJ, Dawson Gaudron and McHugh JJ. Austcorp contended that this analysis overlooked the liability for legal costs before 1 August 2000 that the applicants (other than Ms Tan-Bounkeua) incurred. I reject that argument. First, Austcorp did not plead those matters as material facts. Secondly, the applicants in any event may have incurred a contingent liability for the legal costs of receiving advice on whether or not to enter into the contract. No solicitor rendered an invoice for those fees before 1 August 2000 and, thus, the applicants had no legal obligation to pay those fees before that date. Had Mr Owers been advised not to enter into the contract or of the effect of cl 20.9, he would have followed the advice. There is no evidence whether he would have been charged by Mr Joseph for the advice. The question was not in issue. Next, Austcorp argued that Luciani/Taldarmar had incurred legal fees of $1,700 as at 7 February 2000. However, Shephard &amp; Shephard, in the course of giving their fee estimate on that date advised, them that they would charge that amount for acting on the purchase. Shephard &amp; Shephard only invoiced that sum on 15 December 2000, being the day when the contract was completed. On 7 February 2000 Shephard &amp; Shephard had asked only for a sum of $200 on account of anticipated immediate disbursements. I am not satisfied payment of this sum (if it were paid) would amount to loss or damage, since it was sought to enable the solicitors to investigate and advise upon whether the applicants should go ahead with the purchase by binding themselves to a contract. That is, the expense would have been incurred in investigating whether the applicants could rely on Austcorp's representations. The applicants' claim was for damage caused by their entry into contracts which they became obliged to complete only on 1 August 2000. That was the first occasion of any relevant infringement of the applicants' economic interests, for they were then legally obliged to pay the price which the wrongdoer (misrepresentor) had misled them to agree to pay: Wardley 175 CLR at 533. In Wardley 175 CLR at 527 Mason CJ, Dawson, Gaudron and McHugh JJ explained the distinction between detriment, in a general sense, and damage suffered on entry into an agreement induced by a misrepresentation which is, or proves to be, to an applicant's disadvantage. The applicant will sustain a detriment in a general sense because the agreement subjects him, her or it to obligations and liabilities which exceed the value or worth of the benefits which it conferred on that person. But such a detriment will not necessarily amount to more than a contingency of future loss. In general, it is only when the contingency is fulfilled that an applicant will be found to have suffered loss or damage sufficient to infringe his, her or its economic interests for the purposes of an action under s 82(1): Wardley 175 CLR at 533. It is self-evident that the applicants would not have been able to sue for damages in respect of the losses they claim here before they completed or were legally bound to complete their contracts. Risk of loss is not actual loss. The mere entry into the contract did not, of itself, require each applicant to complete it since that obligation would only arise, or be able to be enforced by or against the applicant, once the strata plan was registered: Murphy v Overton Investments Pty Ltd [2004] HCA 3 ; (2004) 216 CLR 388 at 407-409 [46] - [54] . In Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 at 43C-D Burchett and Hill JJ (Sackville J agreed at 45C; see too at 48E) held that where a lessee had been induced by the lessor's misrepresentations as to takings into entering into a lease, the question for limitation purposes was " ... when was it that the loss which the [applicants] ultimately suffered (or a more than negligible part of it ) was either ascertained by them or reasonably ascertainable? " But, in any event, the relevant loss or damage that the applicants claimed under s 82 of the Act was that "by" Austcorp's contravention of s 52 they paid Landillo more for their apartments than they were worth: Wardley 175 CLR at 527, 532-533. I am of opinion that Mr Owers and Ms Tan-Bounkeau are not prevented by s 82(2) from recovering that loss The parties agreed (by the end of final address) the quantum of damages (before interest) that would be recoverable as expenditures incurred (other than the loss of value on the purchase price which I dealt with under the heading "Valuation") if the applicants succeeded except in two respects concerning Mr Owers. These were: (a) whether he made a recoverable loss since, after paying $48,837 more than he earned in returns from the apartment, Mr Owers obtained taxation deductions which left him a net $2,335 better off; (b) whether Mr Owers should recover damages on the $33,000 deposit that he paid from his bank account and did not borrow. (a) Tax benefits In final address Austcorp accepted that up to 31 March 2008 Ms Tan-Bounkeua and Luciani/Taldarmar had incurred agreed amounts that they would not have spent or become liable to pay as a result of their financing the acquisition of their apartments. Those amounts were agreed by the parties' expert accountant witnesses in a joint report. On this basis, Ms Tan-Bounkeua had incurred a loss of $52,473 and Luciani/Taldarmar had incurred a loss of $116,868. This recognised that those applicants had incurred these losses before taking account of income tax deductions or benefits which they obtained in consequence of their expenditures included in the total sums. The parties accepted that any taxation consequences for those applicants were not relevant to the amount of damages to which they were entitled. The individual applicants will have to deal with the taxation consequences of any award in due course.