104. I have had the advantage of reading the reasons of Lander J and those of the Chief Justice.

105. I very much regret that I am in dissent here. It is with great diffidence that I differ from the conclusion which my brothers have reached. But I am bold, perhaps reckless, enough to take a contrary view. I do not wish to prepare elaborate reasons for judgment. I do not think that a dissenting opinion will add anything to our jurisprudence. But I will offer a few remarks.

In my respectful opinion, when the case was remitted to him the learned trial judge followed a path which was closed to him. The Full Court returned the case to the learned trial judge for the assessment of damages.

107. In the Full Court King CJ said:- "In my opinion the natural inference from the materiality of the negligent misstatement and the circumstances of the case is that the plaintiffs relied to some extent upon the negligent misstatement and that that natural inference is not displaced by any cogent evidence that George Copping 'was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation'.

108. In my opinion the judgment in favour of the plaintiffs against the defendant should be set aside. There should be a finding that the plaintiffs relied upon the negligent misstatement, and that the defendant is liable to the plaintiffs for damages in respect of the same."

109. That is to say the issue of, amongst others, reliance was found in favour of the plaintiffs, contrary to the finding of the learned trial judge in the first instance.

110. In the last few lines of his reasons Millhouse J said:-

1. "Coming back to the main point, the appellants relied on Irvin's misrepresentations of 4 August 1984, contrary to His Honour's finding.

I suggest that the appeal be allowed, the cross appeals be dismissed and the action be remitted to His Honour to assess the appellants' damages."

The formal order was drawn up as the Chief Justice had suggested. So the action was remitted to the learned trial judge for the assessment of damages. Not for a determination whether the plaintiffs were entitled to damages. The Full Court had held that they were. But for how much? Let me quote the important part of the order of the Full Court:- "3. That there be a finding that the plaintiffs acted in reliance upon the negligent misstatement found by the trial judge, in entering into the foreign currency loan transaction and that the defendant is liable to the plaintiffs for damages for the loss sustained in consequence of the negligent misstatement.

4. That the judgment and order for costs in favour of Perball Pty Ltd be set aside.

5. That the action be remitted to the learned trial judge for assessment of damages and for entry of judgment for the plaintiffs against the defendant for the amount of such damages and costs, and in the case of Perball Pty Ltd for the additional amount of $183,898.62 already assessed."

The Full Court sent to the learned trial judge an action in which the claim of the plaintiffs based on negligent misstatement had been proved, was complete, save for the amount of damages. This follows from the findings of King CJ and Millhouse J and from the remitting of the action to have damages assessed. Paragraph 3 of the order consistently with the reasons of King CJ and Millhouse J said "... there be a finding that the plaintiffs acted in reliance upon the negligent misstatement... and that the defendant is liable to the plaintiffs for damages for the loss sustained in consequence of the negligent misstatement". A finding of liability to pay damages. It follows that the Full Court found that duty, breach of duty, inducement, reliance, causation and the fact of some loss was all proved. It could not have returned the matter to the learned trial judge merely for assessment of damages had all that not been found in favour of the plaintiffs.

The action came to the learned trial judge notionally labelled "Here I am, an established cause of action in favour of the plaintiff. How much should the defendant pay?".

The learned trial judge embarked on considerations of reliance and causation which, in my respectful opinion, was not open to him given the findings and orders of the Full Court. The learned trial judge said:- "True it is that in a very general sense, given the findings of the Full Court that there was reliance upon the negligent misrepresentation, I have to accept that the entry into the contract was in the legal sense induced by it. It does not follow that the negligent mis-statement should be regarded as productive of loss."

The Full Court had declared that the negligent misstatement was productive of some loss.

The learned trial judge said also:- "I do not see how it can be right to attribute a loss, if there was one in the relevant sense, to the making of a negligent misrepresentation when that misrepresentation was made good in the carrying out of the contract. If, as was clearly the case, the defendant in fact honoured what it had promised in the representation, I cannot see that any loss sustained by the plaintiffs in the working out of the contract can be attributed to the representation. If the plaintiffs in fact got what they thought they were bargaining for, and if thereafter the performance of the contract was productive of losses, those losses must be attributable to the realisation of the risk that Mr George Copping well knew was inherent in the transaction, namely, a risk that the off-shore loan could blow out to an amount in excess of a combination of the 10% buffer and the sinking fund, and not to the misrepresentation."

The idea that the effect of the negligent misrepresentation could have been changed by the method of performance of the contract was again, in my respectful opinion, not a matter open to the learned trial judge.

I think that the appeal should be allowed. The damages should be assessed either by this Court, by the learned trial judge or by an inquiry before a Master. As my opinion is a dissenting opinion I say no more.

The appellants Perball Pty Ltd, G S Copping, F J Copping, L S Copping, N G Copping and W M Copping brought an appeal, as of right, from a decision of Perry J given on 13 February 1996, an appeal by leave granted by the Full Court in private on 21 June 1996 against an order of Perry J made on 13 February 1996, and a Notice of Motion dated 27 February 1996 to the Full Court.

It is necessary to have some knowledge of the events that have transpired to understand how it is that the proceedings developed before this Court. The appellants brought an action against the respondent claiming inter alia that the respondent had been guilty of negligent mis-statements which the appellants relied upon and as a result the appellant Perball Pty Ltd suffered damage. Although the Statement Of Claim is unclear on this aspect because the pleader has interchangeably used "the plaintiffs" and Perball Pty Ltd I think the personal appellants did not claim to have suffered any damage as a result of the negligent mis-statements and it is difficult to understand why they are parties to the action and more particularly why they are appellants to this Court. In any event the respondent denied the negligent mis-statements but in turn issued third party proceedings claiming that if such negligent mis-statements had been made the respondent was entitled to be indemnified or in the alternative the third parties were obliged to contribute in relation to any damage suffered by reason of those negligent mis-statements.

The matter came on before Perry J who delivered judgment on 20 May 1994 (the trial). He dismissed the claim of all of the plaintiffs except the appellant Perball Pty Ltd but in relation to that appellant entered judgment for the appellant against the respondent in the sum of $183,898.62. He allowed the appellant Perball Pty Ltd 75 per cent of its costs of action to be taxed. He did not make an order in relation to the costs of the individual plaintiffs. In relation to the third party proceedings he ordered that the respondent recover against the third parties Hanel and Galliott Pty Ltd upon the basis that they were to be jointly and severally liable for a sum equal to 25 per cent of the respondent's liability to the corporate appellant. He dismissed the respondent's other third party proceedings brought against Tillett Nominees Pty Ltd and Fedor Kovaleff and, in relation to those third party proceedings, made a number of consequential orders which were of no importance in the appeal.

Whilst the appellant Perball Pty Ltd was successful in obtaining a verdict, the main aspect of the appellants' case against the respondent failed. On that aspect the appellants succeeded in establishing that the respondent had been guilty of a negligent mis-statement.

The finding was: "... the failure by Irvin clearly to distinguish between the purposes and operation of the 10% "excess" and the sinking fund, and in particular to suggest that the sinking fund would be available to absorb any overrun outside the 10% movement, was, in my opinion, misleading, and would amount to a negligent mis-statement if the element of reliance was present."

His Honour refused however, to find that the negligent mis-statement was relied upon by any of the appellants for the purpose of entering into the transaction. (AB2718)

Moreover His Honour dismissed the appellants' claim in so far as it claimed a number of other negligent mis-statements had been made.

The primary aspect of the appellants' case therefore failed upon the basis that only one negligent mis-statement had been made out and in relation to that mis-statement the appellants failed to establish that the mis-statement was relied upon.

The appellant Perball Pty Ltd appealed from that decision and by Ground 3 of its Notice of Appeal complained in relation to one of those other negligent mis-statements that His Honour had found not proved: "The Learned Trial Judge erred in ruling there was no mis-statement in the representation that the exchange rate between the AUD/CHF had been stable and had not varied much over a long period; and that His Honour erred in accepting the evidence of Professor Valentine to this effect; and further that His Honour ought to have found the representation "the CHF against the AUD was unlikely to move outside 10 per cent either way", was an actionable mis-statement. (AB2746)

The respondent cross appealed but, in relation to the appellants' proceedings, only as to costs.

However the respondent also cross appealed in relation to the orders made in the third party proceedings. In turn the third parties who had been found liable to contribute to the respondents liability to the appellant Perball Pty Ltd appealed from the orders of the Trial Judge.

The matter came before the Full Court (comprising King CJ, Matheson and Millhouse JJ) and on 24 April 1995 the Full Court (Matheson J dissenting) allowed the appeal by all of the plaintiffs and set aside the judgment dismissing the claims of the plaintiffs apart from the appellant, Perball Pty Ltd (the first appeal). The Full Court ordered (inter alia): "1. That the appeal by the plaintiffs against the defendant be allowed.

2. That the judgment dismissing the claims of the plaintiffs George Stanley Copping, Faye Joyce Copping, Layton Saxon Copping, Neville George Copping and Wayne Malcolm Copping be set aside.

3. That there be a finding that the plaintiffs acted in reliance upon the negligent misstatement found by the trial judge, in entering into the foreign currency loan transaction and that the defendant is liable to the plaintiffs for damages for the loss sustained in consequence of the negligent misstatement."

The curiosity about that order is that it gave relief to the personal appellants in circumstances where, in that appeal, they had not sought relief.

The appellants therefore succeeded before the Full Court by establishing that the negligent mis-statement found by the learned trial judge was relied upon by the appellants in entering into the transaction.

Consequentially the Full Court set aside the judgment and the order for costs in favour of the appellant Perball Pty Ltd and remitted the action to the learned trial judge for assessment of damages and for entry of judgment for the plaintiffs against the defendant for the amount of such damages and costs and in the case of Perball Pty Ltd for the additional amount of $183,898.62 already assessed.

As a further consequence of the finding referred to above, the Full Court set aside the judgment of the respondent against the third parties and also remitted the third party proceedings to the trial judge for further consideration.

The order made by the Full Court was sealed at the behest of the solicitors for the respondent shortly after the decision of the Full Court was announced and before an application for special leave to appeal to the High Court was made.

The respondent's application for special leave to appeal to the High Court from the decision of the Full Court was refused.

The ground of appeal to which I have already referred was not argued before the Full Court, it having been expressly abandoned prior to the appeal in written submissions put to the Full Court. That abandonment was confirmed by counsel who appeared for the appellant Perball Pty Ltd in the Full Court.

The matter went back in accordance with the order of the Full Court to the learned trial judge, who after a further hearing assessed the appellants damages at $1.00, made the same orders in relation to the third party proceedings as had previously been made and made consequential orders for costs in relation to the appellant Perball Pty Ltd and the respondent such that he allowed the appellant Perball Pty Ltd to recover 75 per cent of its costs to be taxed up to and including the first trial in March and April 1994, disallowed any order as to costs of the other appellants and ordered that the appellants (including the personal appellants) pay to the respondent its costs of the hearing of the assessment of damages consequent upon the order of the Full Court. (The damages hearing)

All of the plaintiffs have joined in the appeal to this Court. By Notice of Appeal dated 27 February 1996 they appeal against (AB 3900): "the orders of the Honourable Justice Perry made on 20th day of May 1994 and 13th day of February 1996 by which he ordered:-

1. The appellant have judgment against the respondent for $1.00.

2. The action with respect to the representations of 4th August 1994 be dismissed.

3. The appellants (sic) have 75% of the costs of the trial. (That was not the order made by the learned trial judge. His order allowed only Perball Pty Ltd 75% of the costs of trial.)

4. The respondent have costs against the appellants of the damages hearing."

It is to be noticed immediately that the Notice of Appeal purported to appeal against not only the orders made on the second hearing but also against the orders made on the trial. Whilst it claims to be an appeal against the orders made on 20 May 1994 it does not then, in terms, set out any of those orders but only refers, in terms, to the orders made on 13 February 1996. There is a curiosity about an appeal from the orders of 20 May 1994 because the appellants had previously appealed against the judgment and orders of 20 May 1994 and had been successful in persuading the Full Court to set aside those orders. In fact, therefore, this appeal purports to appeal from orders which have already been subject to appeal and have already been set aside.

However in the Notice of Appeal the appellants include a paragraph 2 which is in the same form as paragraph 3 of the Notice of Appeal from the first trial before the learned Judge, and which was the ground which had been abandoned before and during the hearing of the first appeal.

The appellants further seek in the Notice of Appeal: (AB 3906) "6. In so far as is necessary the appellants seek an extension of time in which to argue ground 2 hereof. Such grounds were raised in the appellant's first appeal dated 21 October 1994 but were not pursued because no cross appeal or notice of alternative contention was filed in the Full Court claiming that the original finding of His Honour should be upheld on other grounds and or because no such alternative contention was put at the trial."

The other grounds of appeal in the Notice of Appeal, apart from Ground 2 are all directed to the damages hearing before the learned trial judge.

The Notice of Appeal seeks the following orders on behalf of the appellants: 1. The appeal be allowed and the orders made on 13 February 1996 be set aside.

2. The orders No.1, 2 and 3 of the Full Court of 29 April 1995 be affirmed and/or that such orders or other orders as to damages as the court thinks fit be made afresh;

4. That the appellant (sic) do have the costs of this appeal, of the trial and of the assessment of damages."

The Notice of Appeal to this Court seeks to have the previous orders of the Full Court affirmed. That is not possible. Those orders cannot be subject to the affirmation of the same court. In any event I cannot see why the appellants would seek to have orders, which were made in their favour, affirmed.

On this occasion the appellants do not seek to have the matter remitted to the learned trial judge but instead ask this Court to assess the appellants' damages.

On the same day the appellants filed a Notice of Motion for hearing by the Full Court seeking orders: "1. That the judgment and order of the Full Court pronounced and made on 24 April 1995 be re-opened to the extent that the applicants be allowed to argue ground 3 of their notice of appeal dated 21 October 1994. (That ground was in the same terms as Ground 3 of the Notice of Appeal dated 21 October 1994).

2. Alternatively, that the applicants have leave to withdraw their abandonment (if they did so abandon) of the said ground of appeal." Appeal Against Costs

Again the same day, by separate application, the applicant applied to the Full Court for leave to appeal from the order of the Perry J dated 13 February 1996 awarding the appellant Perball Pty Ltd only 75 per cent of its costs. Leave to appeal was given on 21 June 1996 and a Notice of Appeal was filed accordingly.

It can be seen therefore that by the procedures adopted by the appellants a number of matters were listed for hearing by this Full Court.

Prior to the hearing, the Chief Justice directed that the parties first argue the Notice of Motion seeking to reopen the judgment and order of the Full Court pronounced on 24 April 1995, and at the same time argue whether or not the appellants should be entitled to an extension of time to argue the previously abandoned Ground 3 of the original Notice of Appeal to the Full Court, which became for the purposes of the second appeal Ground 2 of the Notice of Appeal of 27 February 1996.

That was done on the first day of hearing before the Full Court, and at the conclusion of the arguments the Chief Justice announced that the Court was of the opinion that the Notice of Motion ought to be dismissed and that the application for an extension of time within which to appeal ought to be refused and indicated that reasons for the Court's opinion would be given at a later time.

It is necessary to examine the facts in some detail to have an understanding of the proceedings and the matters which have transpired. By the time of this appeal most of the facts were not in dispute.

The appellant Perball Pty Ltd was incorporated on 19 September 1984 specifically for the purpose of entering into a transaction with the respondent which was settled on 31 October 1984.

The personal appellants are all farmers who, with the exception of the appellant Wayne Copping, farmed property at Lucindale in the South East of South Australia. Wayne Copping farmed property situated at Casterton in the State of Victoria.

The first four appellants were the only shareholders in the appellant Perball Pty Ltd and each owned one share. The first two appellants were at all material times the directors of Perball Pty Ltd.

The appellants had since about 1950 conducted almost all their banking business with the Australian and New Zealand Banking Group Limited and its predecessors. The respondent is a subsidiary of the ANZ.

At the time of the events, the respondent was known as AIFC. It later changed its name to ANZ Capital Markets and later again to the name by which it has been sued.

The third party Kerry Hanel was an employee of Galliott Pty Ltd and the third party Fedor Kovaleff was an employee of Tillett Nominees Pty Ltd (formerly Fred Kovaleff Pty Ltd). Tillett Nominees Pty Ltd and Galliott Pty Ltd traded under the names Kerry Hanel and Fred Kovaleff and all of the third parties carried on the business of financial advisers.

The appellants' farming operations had suffered in the early 1980's by reason of the rural recession and the decline in the rural economy. In late 1983 Mr George Copping was introduced to Mr Kerry Hanel and on 13 December 1983 Mr Hanel met with Mr George Copping and his two sons Layton and Neville. The purpose of the meeting was to have Mr Hanel give advice about borrowing off-shore.

At that meeting Mr Hanel told Mr Copping and his two sons that off-shore rates of interest were much lower than domestic interest rates applying in Australia at that time. The best currency in which to take an off-shore loan was the Swiss franc as it had been stable for the last two years or so, and future fluctuations in the Swiss franc were unlikely to exceed 10% either way. Off-shore interest rates were of the order of 7-8%.

His Honour made a number of findings in relation to what was said by Mr Hanel and "registered on the mind of George Copping and his two sons". For completeness I set out those findings: (AB 2639) "(a) Generally speaking, off-shore rates of interest were much lower than the domestic interest rates applying at that time in Australia.

(b) In Hanel's opinion the best currency in which to contemplate an off-shore loan was the Swiss franc as it had been stable for the last two years or so.

(c) Future fluctuations in the Swiss franc were unlikely to exceed 10% either way, that is, 10% above or below its current level. He illustrated the stability of the Swiss franc by reference to graphs, similar to, but not necessarily the same, as the graphs tendered in evidence at the trial.

(d) A part of the arrangements for any off-shore loan would be the creation of a "sinking fund" which would act as a buffer, and that any fluctuations should be contained within the limit of the sinking fund.

(e) That if an amount up to $40,000 per annum, being the approximate saving on interest as between domestic and off-shore interest rates, was paid into the sinking fund, it should be sufficient, with accrued interest, to repay the principal of the loan.

(f) Off-shore interest rates, including the interest rate applicable to a borrowing in Swiss francs, were of the order of 7% - 8%.

(g) The initial term of the loan would be three years, but that there should be "no problem" in obtaining rollovers or extensions up to ten years, or even more.

(h) The stability of the foreign currencies, including the Swiss franc, could not be guaranteed, and there were no certain predictions to be made as to future movements. There was a risk that it could move outside the 10% limit, but although there could be no guarantee about it, the movement should be contained within the sinking fund.

(i) Movements in the currency could create a situation in which they made a profit or loss.

(j) The security, evidenced by council valuations of the real estate, looked "really good".

I think it likely that Hanel spoke separately of a "buffer" as opposed to the "sinking fund".

The buffer was 10% which on a loan of $850,000 would be $85,000. This represented an amount notionally allowed beyond the principal advance of $850,000 within which the currency would be allowed to fluctuate without any requirement for repayment. The sinking fund would be an additional advance of $100,000, to be invested in an investment "on-shore" insurance policy which would earn interest, and which also would receive capital accretions by reason of periodic annual payments."

Mr Hanel spoke of a transaction whereby a loan would be taken for three years with roll overs or extensions of up to ten years or even more. The loan would include a sinking fund which could be used for the purpose of containing any fluctuations which might occur between the Swiss franc and the Australian dollar.

He told them if an amount of $40,000 per annum was paid into the sinking fund that ought to be sufficient in due course to repay the principal. The sum of $40,000 would be the approximate saving in interest between interest being paid on the then existing on-shore loan and interest which would be payable in an off-shore loan in Swiss francs.

The meeting concluded with it being agreed that Mr Hanel would find out, from the respondent, whether such a loan was available.

At the request of Mr Hanel the appellants compiled financial information for the purpose of submission to the respondent. That information showed that at that time (February 1984) the appellants were indebted to their bankers in the sum of $663,904. Moreover Mr George Copping believed that two of his sons required carry on finance totalling $60,000. An amount of $725,000 was therefore identified as being necessary for the purpose of carrying on the farming operations.

In about mid 1984 Mr Hanel put forward a formal application for finance in the sum of $750,000 to the respondent. That application included summaries of financial and other background information. Mr Irvin, the then Corporate Loans Manager of the respondent, considered the application and treated the application as one for $850,000 including a further $100,000 additional to the $750,000 sought as "initial contribution to 'sinking fund'". He recommended approval, and approval was given by the South Australian Manager. In due course on 3 August 1984 the Credit Manager of Head Office also approved the application and sent the application to the Credit Committee of the respondent for approval. The Credit Committee approved the loan on 6 August 1994, subsequent to the visit by Mr Irvin to the appellants property on 4 August 1994. On 4 August 1984, during the approval process Mr Irvin visited the Coppings.

This action was brought as a consequence of statements made by Mr Irvin at that meeting. There are other aspects to the action outside the alleged negligent mis-statements made on 4 August 1994 but they are unimportant for the purpose of this appeal.

Mr Irvin saw the Coppings for the purpose of emphasising the dangers inherent in off-shore borrowings and he explained the nature of the contemplated off-shore loan in similar terms to the explanation given by Mr Hanel at his meeting in December 1983. His Honour found that the Coppings made it plain that they wished to proceed with the application for a loan.

The learned trial judge made findings in relation to the meeting and the representations made by Mr Irvin at that meeting and I set out each of these findings: (AB 2687) "1) Irvin had much more to say than he was prepared to accept in the witness box.

2. He said that the Swiss franc had been stable, and illustrated its stability by referring to the two graphs which indicated the history of its movement over the preceding two years at least.

3. He said that given that stability, it was the best currency for the Coppings to adopt in the context of the proposed off-shore loan.

4. The Swiss franc against the Australian dollar was unlikely to move outside 10% either way, but if it did the "sinking fund" should be sufficient to cover any such movement.

5. He did not clearly distinguish between the purpose and operation of the 10% "excess" and the sinking fund.

6. He emphasised, to use the language of the witnesses, the upside rather than the downside but did not eliminate the possibility that the movement in the franc could exceed the sinking fund. Putting it another way, he did not eliminate entirely the possibility that the sinking fund could be exceeded by adverse movements.

7. The impression left in the mind of George Copping was that although the risk of a movement beyond 10% and beyond the limit of the sinking fund could not be eliminated, it was a small risk.

8. He said that the plaintiffs would be at liberty to bring the loan "on" and "off-shore" as they thought fit.

9. He said that there should be no difficulty in extending the term of the loan to ten years."

It was only one of those representations which His Honour found to be negligent and that related to finding 5. I shall return to that finding in more detail.

The materiality and the relevance of the representations can only be understood by first understanding the transaction which was entered into.

On the 21 August 1984 the respondent made a formal offer of a loan to the appellants.

The offer was necessarily made to the personal appellants. As already stated the appellant Perball Pty Ltd was not incorporated until 19 September 1984. The offer of a loan included a condition that the proposed loan be made to a corporate entity formed for the purpose of borrowing the monies and upon the further condition that all members of the partnership would execute a Cross Deed of Covenant.

The loan was to be in the sum of $850,000 for a term of three years funded as a loan in cash but with an option on the part of the lender to convert all or part of the advances to commercial bill funding.

The purpose of the loan was to consolidate existing debts and provide a $100,000 contribution to a "sinking fund" insurance investment policy with Aetna Life and Casualty and not for any other purpose without the lender's written consent. The current outstanding mortgages and debts were identified in the offer as totalling $725,000 which sum included the working capital which Mr Copping had previously identified as being necessary in the sum of $700,000. The offer contemplated that the remaining $25,000 borrowed would be used for the purpose of the fees for the establishment of the facility. (AB 2092) The facility was to be secured by mortgages over the farming properties and, as I have already mentioned, a Cross Deed of Covenant. The offer contemplated that the insurance investment policy would be assigned to the lender.

Moreover, it was a condition of the offer: "In addition to the initial deposit of $100,000 the Borrower is to contribute a minimum of $40,000 per annum (commencing 12 months from the date of the advance), to the Aetna Life Investment Policy ("sinking fund") mentioned under 'Security'. The Lender reserves the right to review the contribution amount on an annual basis and request an increase if considered necessary."

The offer of the respondent contemplated a separate offer of a foreign currency advance being made by Australian International Limited, Vila (AIL, Vila), which company is a subsidiary of the respondent.

The offer was to remain open only until 31 August 1994.

On 28 August 1984 AIL Vila wrote to G S Copping and Sons, care of the respondent, offering a foreign currency advance facility to a new corporate entity to be formed for G S Copping and Sons. The amount of the facility was to be $850,000 equivalent in foreign currencies for a term of three years and the facility was to include: "Multi currency loan available to be drawn in major euro currencies as agreed by AIL and the Borrower, with no more than two currencies outstanding at any one time."

It is to be noted, of course, that the amount of the facility was the same amount as was proposed for the loan from the respondent.

The facility provided a foreign exchange risk in the following terms: "Any foreign exchange risk is to be borne by the Borrower. The facility will include an exchange rate buffer of $A85,000 within which the A$ equivalent of the amount outstanding can fluctuate. Any excess above this limit will necessitate maintenance of a deposit margin account with AIFC, and the paydown of any excess above the level of the buffer at the commencement of the next interest period."

Security was to be taken in the name of the respondent which would in turn guarantee AIL, Vila.

The second offer of course is not in substitution for the first but is to be understood as co-existing with the first.

It is clear enough that someone must have approached Mr Irvin in relation to the requirement to contribute $40,000 per annum to the sinking fund prior to 27 August 1984. On that date there is a memorandum from him to Pat Hannah, Credit Department about this transaction. It reads: (AB 2096) "TO: PAT HANNAH - CREDIT DEPARTMENT

SUBJECT: LOAN APPLICATION - G.S. COPPING & SONS - $850,000 Our letter of offer relating to the above foreign currency advance is currently with the applicants for acceptance.

One matter requires amendment and it relates to the "sinking fund" investment policy to be arranged through Aetna Life.

The original proposal was that a contribution was to be made to the fund of $40,000 per annum. This was subsequently amended to an additional "up front" contribution of $100,000; the apparent intention was that the annual $40,000 investment would not then be necessary.

1. Leave the approval as it stands (which will most likely result in us losing the deal);

2. Accept a "sinking fund" with just $100,000 in it which will increase to approximately $133,000 at the end of three years (we also have a 10% buffer limit included in the foreign currency facility);

3. Increase our loan to make available a further $100,000 for deposit in the fund (a total of $200,000 which will result in a balance at the end of year three of approximately $265,000, which is around the figure available on the original basis.

Options 1) and 3) pose drawbacks in that the former will most likely be unacceptable to the applicants and the latter will necessitate a fresh approval, new telex and letter of offer from AIL.

Our margins, at around 25%, are very favourable and therefore we recommend approval to proceed as outlined in option 2). Please confirm.

That proposal was approved in the following terms: "Approved as to option 2 if absolutely necessary to retain the business but surely you can persuade them to make some annual contribution? Your powers of persuasion with us seem to get you most things you want."

On 31 August 1994 Mr Copping met again with Mr Hanel. He told Mr Hanel that there was "no way" that the appellants could pay the $40,000 per annum into the sinking fund. There was some further discussion and it was agreed that, subject to the agreement of the respondent, the contribution would be reduced to $20,000 per annum with the proviso that it would be reviewed annually "with a view of increasing to the prescribed amount over the next few years".

That conversation is of course not unimportant because it demonstrates that the appellants would not be able to apply the difference between the interest contemplated being paid in relation to the off-shore loan and the interest that they would have to pay in relation to an on-shore loan, to the repayment of the capital.

It demonstrates the inability of the appellants to continue to finance on-shore because, but for this transaction, that interest would have been payable in any event.

Following upon the meeting of 31 August 1984, on 3 September 1984 the third parties returned the letter of offer with the establishment fee to the respondent and requested a variation in the terms of the offer such that the appellants were under an obligation only to contribute $20,000 per annum. (AB 2103). The letter was in the following terms: (AB 2103) "Attention: Mr. Ken Irvin

Enclosed is the letter of offer from G.S. Copping and Sons with the establishment fee attached.

I had a two-hour discussion with George and it was decided that we would adjust the sinking fund arrangements to the following:

(3) Review the account at that stage with the view to increasing the contribution.

(4) It was agreed upon by all parties that it was necessary to get back to the $40,000 annual contribution.

It was also agreed upon that if surplus moneys were available then they would be deposited in this account.

In all, it was a very amicable discussion with George now understanding the concept fully. Documentation can commence as soon as possible."

The transaction went forward and can be understood in the following terms. The respondent lent the sum of $850,000 to Perball Pty Ltd for the purpose of that company retiring the debts amounting to about $725,000 of its shareholders and the partners of its shareholders in various farming operations in the South East of South Australia and in Western Victoria. Of the sum of $850,000 the further sum of $25,000 was used for the purpose of fees and disbursements associated with the obtaining of the facility.

The respondent took, as security for that loan, mortgages over various properties owned by the personal appellants, although not apparently over the Victorian land. As further security, if it may be called that, the appellants were obliged to execute a Cross Deed of Covenant. That deed obliged each of the appellants to repay any indebtedness due to the respondent on almost every account held by any one of them.

It was a further term of the advance that of the sum of $850,000 advanced, $100,000 would be invested by Perball Pty Ltd in a sinking fund, which was in fact an investment by way of purchase of a sinking fund policy with Aetna Life and Casualty.

The loan agreement between the respondent and the appellants is a straightforward short document evidencing the matters previously described. Contemporaneously with the execution of that loan agreement the policy was purchased. The policy provided that: "(i) The company will pay to the Policyowner such moneys as may be required by the Policyowner to meet its liabilities as determined in accordance with the provisions of this policy and the formal terms of repayment of the loan. The Company may require a certificate from the Policyowner as evidence of moneys so required."

1. The amount standing to the credit of the Account will be payable at the Maturity Date (1st November 1994)."

The policy allowed for further contributions to be made by Perball Pty Ltd and provided that interest would be paid upon the initial contribution and on the further contributions in accordance with a rate of interest determined and certified by the company's actuary. The policy would be subject to management charges, which were dependent to an extent upon the amount of contribution made in any one year.

The policy had a maturity date ten years after its issue, but it was capable of being terminated by either party giving to the other six months notice in writing provided the company could not terminate the policy within five years from the commencement date.

It also allowed for withdrawals by the policyholder in accordance with the terms of repayment of the loan, but limited to 25% of the amount outstanding.

The policy had significant tax advantages provided the policy was in existence for ten years. Those tax advantages allowed the policy to accrue interest, free of income tax. It was envisaged in the transaction that the policy would, by reason of accruals of tax free interest and by way of further deposits, be sufficient to discharge the principal outstanding to the respondent at the expiration of ten years.

Therefore the transaction envisaged from the appellants' point of view a significant saving in interest by reason of the difference in the interest rate payable on loans in Swiss francs as against on-shore rates. By borrowing a sum of $100,000 from the respondent and investing it in this policy and making periodic payments of substantially less than that which would have been payable by way of on-shore interest the whole of the principal in any event would be extinguished after ten years.

Clearly enough the transaction was in those circumstances very attractive.

Contemporaneously with that aspect of the transaction the appellants entered into a Multi Currency Floating Rate Loan Agreement with AIL, Vila, the subsidiary of the respondent, whereby that company would take the loan which had been advanced by the respondent off-shore.

By Clause 8 of that document the respondent was under an obligation to provide a 10% buffer in the event of exchange fluctuations, if called upon by AIL Vila.

In the event that the exchange rate fluctuations exceeded 10% then AIL, Vila was entitled to call upon the respondent to either provide cash security in dollars to the full extent of any such movement beyond 10% or provide AIL, Vila with further security acceptable to it.

The transaction therefore contemplated that if the AUD suffered adverse currency fluctuations relative to the CHF, the respondent would be obliged to advance a sum equal to 10% of the facility to provide a buffer for the appellants against these currency exchange losses.

The documents do not contemplate that the sinking fund policy will be used in any way for the reduction of the principal during the currency of the loan, nor be used for the purpose of meeting currency exchange losses during the currency of the loan, but contemplate that the sinking fund will increase in the manner which I have described with a view to repayment of the principal at the end of the ten year period.

It was the confusion created by Mr Irvin in his description of the use of the sinking fund in relation to ongoing exchange fluctuations which in due course gave rise to the negligent mis-statement found by the learned trial judge and which in turn gave rise to the finding of reliance as found by the Full Court.

The transaction contemplated that there would be roll overs in the interim period.

The respondent used the sinking fund policy as further security for its lending.

There are some curiosities about the transactions arising out of the requirement by the respondent that the appellants take out the sinking fund policy. That is so because the transaction really contemplates that the more the appellants borrowed, the better the prospects of their repaying the principal in due course. That is made clear in the intercompany memorandum of 27 August 1994 which in considering the appellants' plea to be allowed to pay only $20,000 into the sinking fund, suggested option 3, which meant lending $200,000 for deposit into the sinking fund. In due course the respondent required the appellants to borrow $100,000 (to establish the sinking fund) which would be subject to the same facility with AIL, Vila, and therefore subject to the same risks during the currency of the loan, but would in due course, in the contemplation of the parties or at least the respondent, be sufficient to repay the principal outstanding in ten years time.

Very shortly after the transaction was entered into the appellants required further capital to meet ongoing shearing expenses. Mr George Copping raised the matter with Mr Irvin, of the respondent, and by a letter of 6 December 1984 the respondent offered an additional $100,000 as a short term loan repayable by 30 November 1985. The advance was an on-shore loan and was not initially, at least, to form part of the ongoing facility with AIL, Vila although it was intended that the money would be taken off-shore at the next roll over date. A supplementary loan agreement was executed on 4 January 1985 and the monies advanced. $35,000 of the monies were repaid on 22 March 1985.

Soon after the transaction was entered into the AUD began to weaken against the CHF. This had a two fold effect. First it increased the principal outstanding on the facility and secondly it increased the amount of interest payable, by reason of the increased principal.

By 22 March 1985 the 10% buffer provided for in Clause 8 of the Multi Currency Floating Rate Loan Agreement had been exceeded and the full amount of $935,000 had been advanced. On that date the respondent wrote to Perball Pty Ltd in the following terms: "We advised you that due to the adverse movement in the Swiss Franc exchange rate the buffer limit on your Foreign Currency loan account has been exceeded as follows:

A$ equivalent of CHF $1,799,195 at 1.9199=$937,130Limit (including 10% "buffer")=$935,000

In view of the funds held in the Aetna Life and Casualty Investment Policy, we have noted the excess of $2,130 against the policy, over which we hold an assignment."

The letter claimed that the policy had been assigned although it would appear from the annexure to the policy that in fact the policy was not assigned until 12 April 1985, but nothing turns on that.

If the respondent had acted in accordance with the strict terms of the transaction, as documented, the respondent would have been entitled to require Perball Pty Ltd to make payment in cash of the sum of $2,130.

The extent and speed at which the AUD devalued against the CHF is demonstrated by the fact that by 3 April 1985 the total indebtedness had reached $996,122 therefore exceeding the limit by $61,122. There had been an increase in the amount of principal outstanding by $59,000 in a period of a few days.

In a letter of that date the respondent wrote: (AB 2316) "In accordance with Clause 8 of the Multi Currency Loan Agreement and on behalf of Australian International Limited, Vila, we hereby inform you of the situation which currently exists and further advise that the excess amount will, for the time being, be applied against the funds held in Managed Investment Bonds, over which we have an assignment. Should the excess amount exceed the amount of the Bonds, it will be necessary for you to place such excess on deposit with us pending an improvement in the exchange rate."

Again the transaction, as documented, did not require the respondent to apply the excess against the managed investment bond but to do so was an act of grace on the respondent's part.

However by 15 April 1985 the amount of principal exceeded the limit including the buffer of $85,000 by $106,864.

On that date the respondent wrote to Perball Pty Ltd in the following terms: (AB 2322) "In accordance with Clause 8 of the Multi Currency Loan Agreement and on behalf of Australian International Limited, Vila, we hereby inform you of the situation which currently exists and further advise that part of the excess amount will, for the time being, be applied against the funds held in Managed Investment Bonds, over which we have an assignment. The excess amount however exceeds the amount of the Bonds by $6,864.00 and it will be necessary for you to place such excess on deposit with us pending an improvement in the exchange rate. Please forward $6,864.00 within seven days to AIFC Limited."

The AUD continued to fall in the exchange rate against the CHF. The appellant Perball Pty Ltd took out a hedge contract but did so at a time when the Australian dollar moved against the hedge thereby incurring greater losses. It was necessary for Perball Pty Ltd to borrow a sum of $82,864.00 to meet the cost of the hedge contract.

On 30 July 1985, when the foreign currency loan was rolled over, the two short term loan facilities, the hedge contract of $82,864 and the sum of $65,000 still owing in relation to the loan taken in late 1984, were merged. On the next roll over on 31 January 1986 the amount repayable expressed in Australian dollars had risen to $1,245,117.65.

Throughout the whole of 1985 the respondent tried to convince the appellants that they ought to bring the loan on-shore because of the fall in the Australian dollar exchange rate but the appellants resisted any such pressure.

The respondents continued to urge the appellants to bring the loan on-shore in 1986 but it was not until 24 July 1986 that the respondent received those instructions from Mr Copping. At that stage an amount of $63,730.73 was outstanding in relation to interest, and withholding tax and a guarantee fee and the total amount on conversion to Australian dollars was $1,711,888.65.

Therefore in the space of less than two years the loan of $850,000 which had been advanced to repay debt of about $725,000 had ballooned to a figure of $1,711,888.65.

When the monies were brought on-shore they became subject to Australian interest rates which at that stage were in excess of 17%.

It was simply impossible for the appellants to meet the interest payments and in December 1986 they sold their farming properties and settled with the respondent on 23 December 1986 by paying the amount of the indebtedness.

The appellants' claim against the respondent is that an employee of the respondent (Mr Irvin) made a number of negligent misrepresentations to the appellants, which induced them to enter into a transaction involving an offshore loan and as a result of currency fluctuations adverse to the Australian dollar (AUD) they suffered a substantial loss. In fact, as I have already mentioned it is only the appellant Perball Pty Ltd which claims to have suffered loss although on a reading of the pleadings it might be thought that the personal appellants claim damages but such was expressly disclaimed by Mr Tilmouth, counsel for the appellants.

At the trial before Perry J it was alleged that the respondent had made a number of misrepresentations. His Honour made the findings of fact relevant to the representations as to the nature and effect of the transactions to which I have already referred.

Whilst in the finding numbered 4 His Honour found a representation that the sinking fund should be sufficient to cover the movement of the Swiss franc against the Australian dollar, His Honour expressly found that the impression in the mind of George Copping was that a movement beyond 10% and beyond the limit of the sinking fund could not be eliminated, although it was a small risk.

I will in due course explain the relevance of the representations to the facts of the transaction, but in the meantime and for the purpose of dealing with the preliminary applications I shall continue to identify the findings relevant to those applications.

Having made those findings His Honour found that of those representations only Mr Irvin's failure to distinguish between the purposes and operation of the 10% excess and the representation relating to the sinking fund amounted to a negligent mis-statement.

I have set out the representation which His Honour found to be negligently made earlier in these reasons (Page 2):

The learned trial judge said: (AB2716) "But as the only mis-statement which I have found, namely, a mis-statement as to the operation of the sinking fund, was clearly descriptive of what was then proposed as a term of the contract to be entered into, it would be actionable if the other elements of negligent mis-statement were present."

His Honour rejected the appellants' case that any of the other representations, which he found to have existed, were capable of being actionable as negligent mis-statements.

His Honour then went on to consider the other elements of negligent mis-statement and said: (AB2722) "On the other hand, the failure by Irvin clearly to distinguish between the purposes and operation of the 10% "excess" and the sinking fund, and in particular to suggest that the sinking fund would be available to absorb any overrun outside the 10% movement, was, in my opinion misleading, and would amount to a negligent mis-statement if the element of reliance was present."

It is clear that on His Honour's findings the only representation which he believed had been made negligently was not actionable because the negligent mis-statement was not relied upon.

His Honour said: (AB2723/2724) "It seems to me that at the time when the contractual documents were executed, insofar as they relied, as they clearly did, on the understanding of George Copping of the transaction, the plaintiffs were aware that there was a risk, albeit not rated very highly by Irvin, that the 10% fluctuation could be exceeded, and that if it was, the plaintiffs would have to pay the excess of any fluctuation over $85,000.

I reject the evidence of George Copping that he would not have been party to the taking out of the foreign currency loan if he had realised that the liability under it might exceed the sinking fund. Similarly, I reject the evidence of Neville Copping to much the same effect."

His Honour made some alternative findings upon the question of reliance but they are not relevant to this question.

It can be seen that from the statements of His Honour, to which I have already referred, that His Honour was not persuaded that the element of reliance was present. Indeed he specifically found that there was no reliance in fact by the appellants upon the representations in question.

His Honour did find other misrepresentations had been made, which specifically related to Perball Pty Ltd and which the learned trial judge found to be actionable and for which he gave judgment in the sum of $183,898.62, but they are unimportant for the purpose of this appeal.

Therefore at the conclusion of the trial before Perry J, the appellant Perball Pty Ltd had succeeded to the extent to which I have referred i.e. Perball Pty Ltd had obtained a judgment for $183,898.62. However as to the principal relief in the action sought, although they had succeeded in establishing a number of representations, to which I have referred, they had only persuaded the learned trial judge that one of those was made negligently, but had failed to establish that there had been any reliance on that one negligent mis-statement.

The appellant Perball Pty Ltd appealed from that decision claiming that His Honour erred in failing to find that the appellant had relied upon the negligent mis-statement which His Honour had found to have been made.

It also asserted that His Honour erred in failing to find the representations referred to in Ground 3 of their Notice of Appeal were made negligently. The representations included in Ground 3 were: "that the exchange rate between the AUD/CHF had been stable and had not varied much over a long period" and further "The CHF against the AUD was unlikely to move outside 10% either way."

There were other grounds of appeal to the first Full Court, which were also abandoned prior to the hearing in the Full Court. They are unimportant except to notice that they were abandoned in exactly the same terms as Ground 3 was abandoned.

The appellant Perball Pty Ltd was content, in the appeal to the first Full Court, to rest its appeal upon the complaint that whilst the learned trial judge was correct in finding the negligent mis-statement he did, he erred in failing to find the appellant had relied upon that mis-statement. The appeal to that first Full Court proceeded simply upon the ground that the learned trial judge should have found reliance.

The appellants' applications to this Full Court require an examination of the circumstances in which Perball Pty Ltd came to abandon the ground (which all appellants now seek to argue) at the first hearing of the Full Court. The appellants contend that the conduct of the respondent induced the abandonment of the ground. The respondent on the other hand denies any conduct which might have caused the appellant Perball Pty Ltd to wrongly abandon the appeal and asserts that as the appellant Perball Pty Ltd previously elected to abandon the ground of appeal that all appellants ought now to be held to its election.

The Appellants' Claim For An Extension Of Time Within Which To Appeal

In conformity with a direction of the then Chief Justice the appellant reduced its argument to writing and, in respect of three grounds of the Notice of Appeal to that Full Court, wrote this: (AB 3263) "Duty to Explain Entire risks (Appeal Ground No. 2); Further Misrepresentations (Appeal Ground 3); Negligence - No 'stop loss' Advice (Appeal Ground 4); 'only to be argued if any Notice of Alternative Contentions attacks ruling on negligence/ misrepresentations'.

There was no "Notice of Alternative Contention", so it was that prior to the hearing of the appeal the appellants had made it known that those other grounds including the one now sought to be re-agitated had been abandoned.

The respondent did not file a Notice of Contention pursuant to Rule 95.05 of the Supreme Court Rules, nor in my opinion in the circumstances of the appeal was there any obligation upon the respondent to do so.

"Where a respondent wishes to contend that the decision of the Judge or tribunal appealed from should be affirmed on grounds other than those relied upon by that Court or tribunal, he shall not less than three clear days before the first day of the appeal sittings for which the appeal is set down: (a) file a notice of his contention stating the grounds relied upon in support thereof; (b) ... (c) ..."

The respondent simply argued on the first appeal that His Honour's decision at trial was right for the reasons which His Honour gave. The respondent did not seek to contend that the decision of the learned trial judge ought to be affirmed on grounds other than those found by His Honour. In those circumstances there was no obligation on the part of the respondent to file a Notice of Contention.

Mr Tilmouth suggested in this Court that the purpose of Rule 95.05 is to discourage multiplicity of appeals. I do not agree with that. The Supreme Court Act and The Supreme Court Rules envisage that there shall be only one appeal to the Full Court from any order or decision of the court below. Rule 95.05 was not made for the purpose of dealing with a multiplicity of appeals but for the purpose of ensuring that appellants are given proper notice of a respondent's contentions and so that the court can deal more efficiently with its business. By giving appropriate notice to the appellants and the court the risk of appellants being taken by surprise and thereby needing an adjournment or the risk of a point not being fully argued is obviated.

It seems to me because the appeal which was brought from the learned trial judge to the first Full Court only sought to have overturned findings of fact in relation to negligent mis-statements and reliance upon those negligent mis-statements and specifically sought, if the appeal was successful, that the matter be referred back to the learned trial judge for the purpose of the assessment of the damage, there was no obligation upon the respondent to file a Notice of Contention if the respondent simply wished to argue that the learned trial judge's decision was right for the reasons which he gave. Indeed in the first appeal counsel for the respondent did not attack either by way of a Notice of Contention, or otherwise the findings on negligence/misrepresentations.

I therefore reject the submission made by the appellants that there was any obligation upon the respondent to file a Notice of Contention.

The abandonment of the ground of appeal was the subject of discussion in the hearing before the first Full Court, and counsel on the first appeal said this in opening the appeal: (AB3317) "Just on the preliminary matters as well and further to orders your Honour the Chief Justice made, your Honour would, of course have a written outline we filed some time ago, some 27 pages in all. There has been no notice of alternative contention, therefore the grounds of appeal which were only to be argued on that contingency now disappear and your Honours can therefore ignore paragraphs 8, 9 and 10 of the written outline which is pp 22 to 26, because they were only back up arguments if there was going to be a contention that Perry J was right for other reasons. They were only back ups on alternative basis of negligence. Since that is not in dispute by the defendant respondent, they are now not pressed."

He went on to say: (AB3317) "As I have said, the main reason from the appellant's point of view is the issue of reliance."

Later during the appeal King CJ said to the appellants' counsel; (AB3354) "But in deciding that question, it is necessary to know, is it not, which of the representations were regarded by the judge as being in breach of the bank's duty. Is that spelt out somewhere in the reasons? I am having the greatest difficulty with that in trying to identify in my own mind which of the representations the judge considered to be in breach of duty. It is really necessary to know that to consider this question of whether the plaintiffs placed reliance upon the representations which were in breach of duty."

There was then some discussion and King CJ said: (AB3355) "Yes. But, in fact, why this all arose in my mind when we were considering what the significance of the latter process might be, because if that is the only representation that was held to be negligent, in fact, the bank did use the sinking fund, so the occasion for protest didn't really arise at that point. Is that your contention, that the only respect in which the Irvin representations were held to be negligent in breach of duty is that?"

Counsel responded in these terms: "It is now that that is not challenged. Previously, of course, we said that there were on the findings his Honour made, there were other misrepresentations, but we have abandoned those.

King CJ: "When we come to reliance, it is necessary to identify what is the representation upon which reliance is said to have been placed. You say that the finding should have been that the Coppings relied upon that particular representation..."

During submissions made by counsel for the respondent, King CJ said this to counsel: (AB3395) "...I am finding this whole issue troublesome in approaching this affair, you have probably gathered that from what I have said to Mr Tilmouth. At this point we are in a position where Mr Tilmouth at point 8 of his written argument asserted a duty to explain the entire risks. In other words, submitted that Irvin was at fault in a further respect to that in which it was found by the judge. But he has not proceeded with that because, there being no notice of alternative contention attacking the finding of negligent misrepresentation, he didn't consider that necessary. But I am not sure that that is right, you see, we have to consider the issue of reliance, that might take on a different colour according to the nature of the misrepresentation.

I appreciate a party must present its case as it sees fit, and the other party is entitled to answer the case that is put against it, but I feel that this court might find itself in an impossible situation if we are called upon to decide the issues on the basis of the findings in the judgment as to what constituted the mis-statement when there is a contention that he was wrong in that, that he should have gone further. If we thought that that was meritorious, having looked at all of this material, we would then be in a very difficult situation."

In response to His Honour's comments counsel for the respondent said: "It would be an impossible situation for this reason; first of all it was clearly open to my friend to contend to raise these matters and activate them. Now for his own reasons he has chosen not to do so, quite correctly, because from a forensic point of view we would say it is hopeless to proceed on the material which was before his Honour and the way his Honour has expressed himself in his judgment. Nevertheless it hasn't been done. Indeed when he got to his feet this morning he told you they had been abandoned, that is the end of the matter we would say."

During the hearing the appellants' counsel reiterated the abandonment of the ground of appeal again in unequivocal terms and did not seek to resile from that abandonment even after King CJ raised the matters to which I have referred.

It seems to me to be beyond argument that the appellant Perball Pty Ltd clearly and unequivocally abandoned Ground 3 of its Notice of Appeal before the first Full Court, because no Notice of Contention attacking the ruling on negligence/misrepresentations was filed. Whether the appellant was right to do that is not to the point, the fact is that it did so for the reasons it stated.

The personal appellants did not appeal from the decision of the learned trial judge at trial and in those circumstances never sought to agitate this ground of appeal. It was as far as they were concerned abandoned at judgment.

Clearly enough, as counsel for the respondent said, on both the first appeal and before this Court a forensic decision was made by counsel for the appellants to concentrate upon what was perceived to be the error in the learned trial judge's reasons in failing to find reliance. In due course the forensic decision proved to be correct in that the Full Court was persuaded that His Honour had erred in failing to find reliance and made the order to which I have already referred.

When the matter returned to the learned trial judge the respondent argued that notwithstanding the finding of the Full Court the appellants were entitled to only nominal damages (in addition to the damages already awarded). First it was said that when the respondent carried out the transaction it did so in a way which reflected what had been represented to the plaintiffs. Secondly it was said that the appellants failed to prove what they would have done had they not relied on the representations or alternatively it was submitted there should be a finding that if the appellants had not relied on the representations the likelihood was that they would still have borrowed substantially the same amount in a foreign currency loan. Thirdly there was no reason to suppose that if Mr George Copping's attention had been drawn to the matter of the mis-statement, the contractual documents would not have been brought into line with the representation.

In due course the respondent succeeded on all three arguments and His Honour assessed damages at $1.00.

The appellants now say that if they had been aware prior to the hearing of the first appeal of the arguments which the respondent proposed to put to the learned trial judge, they would not have abandoned this ground of appeal. Instead, they say, they would have agitated what was said to be a short point to attempt to persuade the Full Court that there were further negligent mis-statements apart from the one which the learned trial judge found. They say in those circumstances they have been the victims of a procedural unfairness.

Whether or not the learned trial judge was right to allow the respondents to raise matters, which the appellants said were not pleaded and had not been put to any of the witnesses, one of whom was dead at the time of the damages hearing, is a matter, it seems to me, to be considered in relation to the appeal from His Honour's decision on damages. If there has been a denial of procedural fairness in those respects in that hearing then that might be a matter for allowing the appeal from the damages hearing. However the fact that those arguments were advanced on the re-hearing in my opinion is not relevant for a determination as to whether or not the appellants ought to be entitled to reopen a ground of appeal abandoned on the first appeal.

It seems to me that the respondent's contention is correct and that the abandonment of this ground of appeal was a forensic decision made by counsel, because of a belief on the part of counsel that the establishment of reliance in relation to the negligent mis-statement, which had been made out before the Trial Judge, would be sufficient for the appellants ultimately to succeed in damages. Whether that decision was right or wrong is not to the point but it is a decision, in my opinion, which ought to be binding upon the appellants. I shall deal, however, with the particular arguments advanced.

The appellants claim, as I have mentioned, an extension of time within which to appeal in relation to the Notice of Appeal and in the alternative an order that the judgment and order of the Full Court be reopened. In my opinion there is a degree of confusion in relation to both applications.

Mr Tilmouth urged upon us that this Court has power to extend the time within which to appeal, and of that there can be no doubt. See Rule 3.04; Rule 95.02(b) and Section 48Limitation of Actions Act. However such an order would not be of any assistance, because the Judgment of the Full Court on the first appeal would still stand. No appeal can be brought to this Court from that order. Moreover it would not be appropriate in my opinion to extend the time within which to appeal from a judgment or order, which has already on the application of the same party been overturned by a previous decision of the Full Court. The application for an extension of time within which to appeal to the Full Court from an order which has already been overturned by a previous decision of the Full Court is inappropriate and procedurally misconceived.

The application in the Notice of Motion is also in my opinion misconceived. The sealed judgment of the Full Court will stand unless it is varied or revoked. It is not possible to apply to reopen a judgment for the purpose of arguing a ground of appeal.

There is no jurisdiction for this Court to allow a judgment to be "re-opened" for the purpose of a party arguing a further ground of appeal. If there is any jurisdiction at all it is that this Court would have jurisdiction only to revoke, set aside or vary a judgment or order of the first Full Court.

Notwithstanding that the Notice of Motion says otherwise I think in form the appellants are seeking to revoke or set aside or vary the orders of the first Full Court. I will consider the matter upon the basis that what is being sought is not a reopening but a revocation, setting aside or variation of the judgment of the first Full Court in order that the appellants may be allowed to argue the formerly abandoned ground of appeal.

Mr Nicholas argued that the application in the Notice of Motion should be dismissed for two reasons. First because this Court lacks jurisdiction to revoke, vary or set aside a judgment or order once that judgment or order has been perfected and sealed. Secondly and in the alternative he argued if there is jurisdiction to set aside the order of the first Full Court, in the circumstances of this case and, in the exercise of this Court's discretion the application ought to be refused.

May I say immediately that I agree with the alternative submission put by Mr Nicholas that in the circumstances of this case it would be inappropriate for the Court to exercise a discretion in favour of the appellants and revoke, set aside or vary the judgment. In those circumstances it is not strictly necessary for me to consider the first argument, but having regard to the matters raised by Mr Nicholas, and because they may need to be considered elsewhere, I will give my reasons for disagreeing with the submission which he put.

There is power at common law to revoke correct or vary an order which has not been sealed: Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 and Autodesk Inc v Dyason and Others (No. 2) [1993] HCA 6; (1993) 176 CLR 300.

However there is no inherent power in the Court to revoke or vary an order once made and perfected by sealing: Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529.

Barwick CJ said at 530: "In particular, I regard the decision of this Court in Goodwin v Southern Tablelands Finance Co Pty Ltd (1968) 42 ALJR 309 both as correct and conclusive of the question this appeal raises. Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed. In my opinion, none of the decided cases lend support to view that the Supreme Court in this case had any inherent power or jurisdiction to make the order it did make, its earlier order dismissing the appeal having been perfected by the processes of the Court."

Gibbs J, in a dissenting judgment, stated the rule more narrowly and gave examples of occasions and circumstances in which a sealed order had been varied. He said at 539: "It is a well-settled rule that once an order of a court has been passed and entered or otherwise perfected in a form which correctly expresses the intention with which it was made the court has no jurisdiction to alter it: In re Suffield and Watts; Ex parte Brown; In re Swire; Mellor v Swire; Preston Banking Co v William Allsup & Sons; Woods v Sheriff of Queensland; Ivanhoe Gold Corporation Ltd v Symonds; MacCarthy v Agard; Arnett v Holloway. The rule rests on the obvious principle that it is desirable that there be an end to litigation and on the view that it would be mischievous if there were jurisdiction to re-hear a matter decided after a full hearing. However, the rule is not inflexible and there are a number of exceptions to it in addition to those that depend on statutory provisions such as the slip rule found in most rules of court. Indeed, as the way in which I have already stated the rule implies, the court has the power to vary an order so as to carry out its own meaning or to make plain language which is doubtful, and that power does not depend on rules of court, but is inherent in the court : Lawrie v Lees; Thynne v Thynne. Further, it has been held that a court may amend a part of a judgment or an order which is "not the operative and substantial part": Pearlman (Veneers) S.A. (Pty) Ltd v Bernhard Bartels; such an amendment, which may be far from being merely formal in its effect, could, as Singleton LJ pointed out in Thynne v Thynne, only be made under the inherent jurisdiction. Similarly the rule that a court may review an order made ex parte has been said to be "a rule of natural justice" (Woods v Sheriff of Queensland) or "an elementary rule of justice" (Owners of the s.s. "Kalibia" v Wilson) and this can only mean that the power is traceable to the inherent jurisdiction. Moreover, it has been held that in certain cases circumstances occurring since the judgment may warrant the making of a supplemental order: Preston Banking Co v William Allsup & Sons and see Prestney v Corporation of Colchester and this seems to be another example of the inherent power."

Bailey v Marinoff was followed by the High Court in Gamser v Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145. In that case Gibbs J considered himself bound by Bailey v Marinoff. He said at 147: "I agree that appeal no. 148 of 1976 must be dismissed for the reasons which my brother Aickin has given. I regard it as unfortunate that the inherent power of an appellate court does not extend to varying its own orders when the interests of justice require it. It is of course a most important principle, based on sound grounds of policy, that there should be finality in litigation. However, exceptional cases may arise in which it clearly appears from further evidence that has become available that a judgment which has been given rested on assumptions that were false and that it would be manifestly unjust if the judgment were allowed to stand. In my opinion it is desirable that the Court of Appeal should have a discretion - however guardedly it might have to be exercised - to reopen its judgments in cases such as that in which the needs of justice require it. I agree, however, that the decision in Bailey v Marinoff shows that the Court of Appeal lacks that inherent power."

Aickin J said at 154: "As to the question of whether there was in the Court inherent jurisdiction to make the order sought, Glass J.A. took the view that the decision of this Court in Bailey v Marinoff was fatal to the argument. In that case this Court held that when an appeal has been finally disposed of in a court of appeal by an order duly entered it has no inherent power to reopen the case on an application made after the order has been entered. That general proposition is no doubt subject to the rule that a judgment apparently regularly obtained may be impeached upon the ground of fraud, and there would seem to be no reason why that rule should not also apply to judgments upon appeal, although it is difficult to visualize how a judgment of an appellate court could be obtained by fraud, other than in circumstances in which the original judgment which the appellate court had upheld had itself been obtained by fraud. The majority judgments in Bailey v Marinoff appear to me to make it clear that there is no inherent power to set aside judgments by reason of changed circumstances on application made after the case has been finally disposed of."

In University of Wollongong v Metwally (No. 2) (1985) 59 ALJR 481 the High Court assumed, without deciding, that the High Court did have power to vacate one of its own orders notwithstanding that the order had been perfected. It said however that if such a power existed the power must be exercised with great caution "after weighing what might otherwise be irremediable injustice against the public interest in maintaining the finality of litigation."

In FAI General Insurance Co Ltd v Southern Cross Exploration N.L. [1988] HCA 13; (1988) 165 CLR 268 at 285 Wilson J (with whom Brennan, Deane and Dawson JJ agreed) said that Bailey v Marinoff dealt only with the inherent power of the Court and that no statutory rule was involved. Wilson J did not consider the correctness of Bailey v Marinoff because the respondents did not press for such a consideration. Brennan J specifically left open whether a court, absent special statutory power to extend time, is functus officio once the time for fulfilment of a condition has passed. Gaudron J also left open the correctness of Bailey v Marinoff.

Whilst the decisions in Goodwin v Southern Tablelands Finance Co Pty Ltd and Bailey v Marinoff have been doubted in the High Court the decisions remain binding on this Court until the High Court decides otherwise.

It must be accepted therefore for the purpose of this appeal that this Court does not have an inherent jurisdiction to revoke, set aside or vary the order of the Full Court made on 24 April 1995 to enable the appellants to argue a ground previously abandoned.

However it is clear enough from the authorities to which I have referred that, notwithstanding the absence of an inherent jurisdiction in the Court to set aside a perfected judgment, a Court may be invested with the power by statute or can by the making of its own rules of practice and procedure arrogate to itself the power to set aside, vary or revoke a judgment, even after that judgment has been sealed.

In my opinion this Court has done that by the passing of Rule 84.12 which reads: "The Court may vary or set aside a judgment or order at any time if the justice of the case so requires."

Mr Nicholas urged this Court to find that Rule 84.12 is no more than a statement of the common law and only allows the Court to interfere in the manner described in the rule prior to the sealing of the order. I reject that submission.

Rule 84.12 was first made at the time of the introduction of the 1987 Rules. It had no corresponding rule in the 1947 Rules. If it did no more than state the common law position namely that a court had no jurisdiction to vary or set aside a judgment after it was sealed, there was no point in its introduction. Moreover if it was limited in its application to a time before the sealing of a judgment or order it would have said so, and it would not be in terms that talk of an exercise of power "at any time". The Rule makers would have been acutely aware of the decisions of the High Court limiting the inherent jurisdiction of the Court in the manner described and would therefore have seen this as a remedial rule enabling the Court, whether exercising jurisdiction at nisi prius or banco, to vary or set aside sealed judgments or orders if the justice of the case requires.

The Rules as well provide for other circumstances in which this Court may interfere with a judgment or order. Rule 3.04(f) provides: "3.04 The Court shall have power to act at any time to give effect to the purpose of these Rules, and, without limiting the generality of this power, it may in any case in which it thinks it just to do so:

(f) correct, revoke or vary any order by a subsequent order;"

Rule 3.04 (f) is a primary source of power, and in my opinion, contemplates the exercise of jurisdiction to correct orders in the circumstances envisaged in the slip rule (R53.10) but as well to revoke or vary orders as envisaged in Rule 84.12.

Rule 3.04 speaks of the jurisdiction being exercised "at any time" and therefore contemplates in respect of paragraph (f), the exercise of that jurisdiction after a judgment or order has been sealed. As the rule itself provides, the jurisdiction is exercised to give effect to "the purpose of these Rules". The purpose of the Rules is set out in Rule 2.01 and that is: "2.01 These Rules are made for the purpose of establishing orderly procedures for the conduct of litigation in the Court and of promoting the just and efficient determination of such litigation. They are not intended to defeat a proper claim or defence of a litigant who is genuinely endeavouring to comply with the procedures of the Court, and are to be interpreted and applied with the above purpose in view."

I think Rule 3.04(f) gives the Court jurisdiction to correct, revoke or vary an order once sealed, as does in my opinion Rule 84.12.

There are other rules that provide for the setting aside of judgments. Rule 23.04 allows for a default judgment to be set aside or varied by the Court upon such terms as the Court thinks fit. Rule 51.06 allows the Court to set aside or vary any judgment entered in default of a pleading. Rule 75.15 allows for the Court to set aside a judgment which has been obtained in circumstances where a party did not appear at trial. Rule 55.12 provides that on the hearing of any application for directions the Court has the power in addition to any other rule: "(f) to reorder or vary any order or direction which has been made or given upon the application for directions unless such direction or order shall have been confirmed upon appeal and the effect of the revocation or variation of the direction would be to affect the result of the appeal."

There is no reason to read Rule 23.04, Rule 51.06 or Rule 75.15 as applying only to judgments or orders which have not been sealed. Indeed to do so would leave those Rules with little work to do. Rule 55.12(f) specifically contemplates the exercise of a jurisdiction even after appeal. An appeal would not have proceeded without the order of the Court below being sealed. Rule 55.12(f) applies to orders which have been perfected.

All of those rules contemplate, in my opinion, the setting aside by the Court of judgments which have been sealed.

There is a further power to set aside judgments and that is the power contained in Rule 53.10; "the Slip Rule". That Rule specifically contemplates that the order the subject of amendment has been sealed but limits the jurisdiction to the amending of errors in the judgment or order arising from slip or omission.

I believe therefore that Rule 84.12 by itself or, if necessary, in conjunction with Rule 3.04(f) does allow for the variation or setting aside of a judgment or order after the judgment or order has been sealed.

There is no reason to read the rule as Mr Nicholas submitted and for the reasons to which I have referred I reject his submission in favour of an interpretation which gives the rule the wider meaning.

In Commonwealth Bank of Australia v Forshaw (1990) 55 SASR 247 the Full Court of this Court determined that Rule 84.12 was not ultra vires the rule making power and that the Court did have power to set aside a sealed order of the Court, but refused to do so in the circumstances in that case. Mr Nicholas submitted, as his argument obliged him, that the decision was wrong. This Court is always slow to depart from previous decisions of its own, Devlin v Collins (1984) 37 SASR 98; Pooraka Holdings Pty Ltd v Participation Nominees Pty Ltd [1989] SASC 1802; (1989) 52 SASR 148, and would only do so if satisfied that the previous decision was plainly wrong. In any event, in my opinion, the decision in Commonwealth Bank v Forshaw was plainly right.

I therefore reject the argument that this Court does not have power to vary or set aside the order of the previous Full Court. I should say that Mr Nicholas did not seek to argue that the changed composition of the Court prevented it from varying or setting aside the decision of the Court differently composed. I do not think there would have been anything in the point but it was simply not argued and it need not be addressed.

Although this Court does have jurisdiction to vary or revoke a sealed order of the Court it is a jurisdiction that would be exercised only sparingly. A fundamental principle of litigation requires that there be an end to litigation: Wentworth v Woollahra Municipal Council [1982] HCA 41; (1982) 149 CLR 672: State Rail Authority of New South Wales v Codelfa Construction Pty Ltd [1982] HCA 51; (1982) 150 CLR 29. A judgment regularly entered after both parties have had full opportunity to present argument on either side, could be only varied or revoked if the justice of the case compelled the variation or revocation of the order.

In my opinion a forensic decision made by a party or the party's advisers during the hearing of an appeal ought, except in exceptional circumstances, to be binding upon the party and therefore disentitle that party to any right to revoke set aside or vary the judgment or order made upon that forensic decision.

In University of Wollongong v Metwally (No. 2) (supra) at 483 the High Court said: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had and opportunity to do so."

See also Autodesk v Dyason (No. 2) (supra) per Brennan J at 310.

In my opinion there was no conduct on the part of the respondent which could have misled the appellants into abandoning the ground of appeal. The appellants well knew that the first appeal would only decide the question of reliance and that in due course that Perball Pty Ltd would have to establish that it had suffered damage. The decision to abandon any complaint about any other representation was made in that light and must be binding upon the appellants.

Proposed Orders On The Application For An Extension Of Time And The Notice Of Motion

In these circumstances the formal orders ought to be. 1. Application for an extension of time within which to appeal from the decision of Perry J made on 20 May 1994 refused.

2. Ground 2 of the Notice of Appeal dated 27 February 1996 dismissed.

308. The grounds of the appeal not otherwise dealt with are: (AB 3901) "1. The Learned Trial judge erred in assessing damages at $1.00 and in particular, His Honour in his reasons of 9 February 1996:-

1.1. failed to comply with the direction of the Full Court by order dated 24 April 1995 finding that the appellants acted in reliance upon the negligent mis-statement found by his Honour and that the respondent was liable to the appellant for damages for the losses sustained in consequence of such negligent mis-statements.

1.2. failed to act in accordance with the reasons of the majority of the said Full Court that:-

1.2.1. "It follows that they were not at that time committed to proceeding with the offshore loan ... but they needed further information and reassurance from the bank itself" (King CJ p5).

1.2.2. "George Copping's evidence that he wanted reassurance from a direct interview with someone from AFFC (sic) because he was accustomed to rely on the bank manager, has the ring of truth about it" (King CJ p11).

1.2.3. "The prospect that they might be called upon to make payments by reason of currency fluctuations would have been alarming. To be given to understand that in addition to the 10% loan buffer there was recourse to a sinking fund initially of $100,000 and increasing each year as an additional buffer must have been very reassuring indeed" (King CJ p11).

1.2.4. "It is true that the plaintiff's strongly desired to avoid selling land and that, before meeting Irvin, they saw an offshore loan as the means by which they might avoid doing so. That course, however, could only be attractive if it would not get them into further difficulty. Their financial position was tight and they could not afford to incur any obligation to make payments. There was no point in the transaction if it might worsen their position. Re-assurance by the bank officer must have been a very significant factor in their decision. I do not think that the pre-existing anxiety to avoid selling land and the development of their interest offshore loan to the point of lodging an application with AIFC, can reasonably be regarded as rebutting the inference of reliance which arises naturally from the materiality of the negligent mis-statement." (King CJ pp13-14).

1.2.5. "In my opinion the natural inference from the materiality of the negligent misstatement and the circumstances of the case is that the plaintiffs relied to some extent upon the negligent misstatement and that that natural inference is not displaced by any cogent evidence that George Copping "was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation." (King CJ p15).

1.2.6. "His Honour's finding that George Copping did not rely on Irvin's representations at the Redbank meeting is based on wrong inferences. We may, therefore, set it aside and reach a fresh finding". (Millhouse J p16).

1.2.7. "My view is that George Copping continued to rely on what Irvin said ... (T)he appellants did rely on Irvin's misrepresentations .." (Millhouse J p17).

1.3. made findings that George Copping would have proceeded with a foreign currency loan (pp12-14) which are inconsistent with his original judgment of 20th May 1994 namely:-

1.3.1. "I have no doubt that it was the impression on his (George Copping's) mind left by the various people with who (sic) he dealt before taking out the loan in question was decisive in terms of Perball's entry into the transaction ..." (p32);

1.3.2. " ... I am satisfied that he (George Copping) made an honest endeavour to recollect the salient features of the dealings between the parties." (p37).

1.3.3. " ... I come ... to findings of fact as to statements made by Irvin on the occasion in question which do not differ very much from the allegations in the statement of claim ... I have relied substantially on the evidence of George Copping ..." (p50).

1.3.4. "It is true, as the defendant contends, that there had already been extensive dealings with the plaintiffs' own agent, Hanel, particularly on the occasion of the meeting in December 1983. This included advice from Hanel as to the nature of the transaction which they were entering. The plaintiffs were nonetheless concerned to know what the representative of the bank had to say about the transaction, and there is no question but that they put a number of questions to him designed to elicit more information. The fact that that information was, generally speaking, confirmatory of what they had been told by Hanel is not to the point. The plaintiffs were inexperienced in loan transactions of this kind, as Irvin well knew. Looked at from his point of view, one would have thought that he would or should have been aware of the fact that what he had to say bout the transaction would, in a general sense, be likely to be relied upon by the plaintiffs in coming to a decision as to whether or not to proceed with the loan application. Irvin produced the graphs, answered questions and volunteered some remarks with respect to the characteristics of the off-shore loan, and might properly be taken to have assumed that those present were relying on what he had to say." (pp8213).

FURTHER/OR IN THE ALTERNATIVE the finding is inconsistent with the original judgment of 20 May 1994 in that no such finding was made in an exhaustive judgment disposing of all the issues. AND IN THE FURTHER ALTERNATIVE such findings were against the evidence and weight of the evidence.

1.4. wrongly allowed the respondent to advance an argument which had not been submitted at the original trial and which was not advanced by it by way of cross appeal or on notice of alternative contentions in the Full Court AND FURTHER OR IN THE ALTERNATIVE in finding (p19) there was no procedural unfairness from the appellant's point of view.;

1.5. made findings inconsistent with his findings in relation to the "Redbank representations" (judgment 20 May 1994 pp53-4) that the Swiss franc as against the Australian dollar was unlikely to move outside 10% either way but if it did the "sinking fund" should be sufficient to cover any such movement;

1.6. erred in finding (p5) that there was an absence of complaint by George Copping as to the demand for repayment of $6,864.00;

1.7. erred in finding (p8) that there was no evidence that the defendant sought payment in cash of any amount with respect to the capital of the loans;

1.8. erred in finding (p13) that the respondent (defendant) would have agreed to embody in the contractual documents what in fact it did once the contract was on foot AND THAT such finding was against the evidence and weight of the evidence;

1.9. erred in treating the case (pp15-16) as one in which the defendant in fact honoured what it had promised to do in the representation relating to the sinking fund;

1.10. erred in treating (p16) the actionable misrepresentation as one limited to the availability of the sinking fund to offset fluctuations;

1.11. erred in holding (p16) that the sinking fund in fact operated in accordance with the misrepresentation;

1.12. wrongly considered the misrepresentation out of context and divorced from the total representations made on 4 August 1989 (judgment 20.5.94 pp53-4);

1.13. treated damages flowing from the misrepresentations as if causation in a case of rectification AND/OR dealt with that question contrary to principle;

1.14. The Learned Trial Judge erred in assessing damages on the basis the probabilities as to what George Copping was likely to have done AND THAT his Honour ought to have assessed damages on the basis of lost opportunities, namely that the (or any) foreign currency loan would or might not have been taken out.

3. The appellants appeal pursuant to s.50(1) of the Supreme Court Act 1935 from the order of His Honour dated 13 February 1996 awarding the appellant Perball Pty Ltd only 75% of its costs on the grounds that:-

3.1. the appellant succeeded on all major issues at the trial and costs should have been awarded in the event.

3.2. his Honour wrongly reinstated his original order without having regard (or sufficient regard) to the fact that the Full Court reversed his findings on reliance;

3.3. the grounds on which the respondent ultimately succeeded were not raised on the trial or in the Full Court;

3.4. His Honour erroneously held that "nothing has occurred which would provide a proper basis for me to reconsider those orders".

IN THE ALTERNATIVE so far as is necessary the appellants seek leave to appeal from that order.

4. The appellants appeal against the order of 13 February 1996 for costs in favour of the respondent on the hearing for damages (leave to appeal having been granted by his Honour on 13 February 1996), on the grounds that his Honour paid no or insufficient regard to the facts that:-

4.1. the respondent only succeeded on damages on matters first raised by it in October 1995.

4.2. no such argument was put at trial or on the appeal before the Full Court.

5. The appellants appeal by leave of his Honour given on 13 February 1996 against the order for costs against the natural appellants of that date on the grounds that;-

5.1. there were in substance no live issues after 23 May 1994 between the natural plaintiffs (or any of them) and the respondent;

5.2. his Honour dismissed the action on behalf of the natural appellants on 20 May 1994 and no appeal was instituted against such order;

5.3. the appeal by notice dated 21 October 1994 to the Full Court was one in substance solely by Perball Pty Ltd, and no order was sought or submission was made in that appeal on behalf of or against the natural plaintiffs;

5.4. the damages hearing before his Honour in October 1995 was in substance an application solely by Perball Pty Ltd and was one in which no order was sought or submissions made by either party with respect to the natural plaintiffs.

6. ... " 1. Apart from the complaints about the orders for costs, it can be seen that the thrust of the appellants' complaints are that the learned trial judge failed to assess the appellants' damages in accordance with the orders of the Full Court made on 24 April 1995.

A starting point for a consideration of those complaints must be a consideration of the orders of the first Full Court.

The order of the Full Court, was as I have stated: "That there be a finding that the plaintiffs acted in reliance upon the negligent mis-statement found by the trial judge, in entering into the foreign currency loan transaction and that the defendant is liable to the plaintiffs for damages for the loss sustained in consequence of the negligent mis-statement."

Again, as I have already stated, the Full Court ordered that the action be remitted to the learned trial judge for assessment of damages and for entry of judgment for the appellants against the respondent for the amount of such damages and costs, and in the case of Perball Pty Ltd for the additional amount of $183,898.62 already assessed.

Each of the members of the Full Court gave reasons for his decision. King CJ after identifying the negligent mis-statement and the issue to be resolved namely, reliance, turned to the learned trial judge's rejection of Mr George Copping's evidence as to reliance.

Having identified the learned trial judge's findings and his criticisms of Mr George Copping, King CJ concluded that it was plain from the reasons of the judgment of the learned trial judge that he did not reject Mr Copping's evidence as a consequence of any observations of his demeanour but did so because he thought the matters to which the learned trial judge referred rendered reliance by Mr Copping on Mr Irvin's statements implausible.

King CJ then concluded that His Honour erred in his consideration of some facts (which he identified) and in his reasoning and that those errors vitiated the learned trial judge's assessment of Mr Copping's evidence as to reliance and therefore did not amount to a sound basis for rejecting that evidence. In those circumstances King CJ believed it was necessary for the Full Court to examine the evidence for itself in order to determine whether the appellants had made out their case on reliance.

He concluded that Mr Copping to a certain extent depended upon the advice given by the third parties prior to having any contact with the respondent in relation to this matter, but he thought that Mr Copping's evidence, to the effect that he wished to receive a reassurance from the respondent in relation to these matters, had a ring of truth about it. King CJ concluded that the negligent mis-statement was "very material" for the various reasons he gave.

He went on to say: (AB 3755) "It is clear from those principles that the materiality of the representation itself legitimately gives rise to an inference that it operated on the mind of the representee. It is sufficient if it plays "only a minor part in contributing to the formation fo (sic) the contract. There is then a natural inference from the making of Irvin's reassuring representation that the sinking fund would be available as an additional buffer against currency fluctuations, that it operated in the mind of George Copping so as to produce reliance upon it at least to some extent. The natural inference may of course be rebutted by evidence that he did not rely upon the representation."

He then discussed the evidence which might have been said to be indicative of a failure to rely upon the representation, rejected that evidence and went on to say: (AB 3757) "In my opinion the natural inference from the materiality of the negligent mis-statement and the circumstances of the case is that the plaintiffs relied to some extent upon the negligent mis-statement and that that natural inference is not displaced by any cogent evidence that George Copping 'was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.'

In my opinion the judgment in favour of the plaintiffs against the defendant should be set aside. There should be a finding that the plaintiffs relied upon the negligent mis-statement, and that the defendant is liable to the plaintiffs for damages in respect of the same. The matter be remitted to the trial judge to assess the damages flowing from the negligent mis-statement and to enter judgment for those damages together with damages for the amount already awarded in respect of the hedge contract."

Millhouse J concluded, after an examination of the evidence, that the appellants did rely on Mr Irvin's representations made on 4 August 1984 and he concluded that the appeal ought to be allowed and the matter be remitted to His Honour to assess the appellants' damages. Clearly enough His Honour agreed with the order proposed by King CJ because that proposed order became the order of the Court. It cannot be doubted that the judgment and orders of the Full Court mean that the court was satisfied that the negligent mis-statement, which His Honour had found (and in respect of which they remitted to him the task of assessing damages), was material to Mr Copping's decision and therefore the appellant Perball Pty Ltd's decision, and thereby induced Perball Pty Ltd to enter into the transaction with the respondent.

In my opinion the corollary of that proposition was also made out by the finding of the Full Court, which must be that, but for the material representation the appellant Perball Pty Ltd would not have entered into this transaction with the respondent. Whilst Mr Nicholas was prepared to accept the first proposition he was not prepared to accept that the corollary of that proposition flowed.

It therefore follows that the learned trial judge was under an obligation to approach the assessment of damages upon the basis that the negligent mis-statement induced the appellant Perball Pty Ltd to enter into the transaction with the respondent or, to put it on the alternative basis, but for the material representation the appellant Perball Pty Ltd would not have entered into the transaction with the respondent.

It would also follow that if His Honour made any findings inconsistent with the propositions to which I have referred then he has, in my opinion, fallen into error. However I do not think that he did fall into that error.

When it came to assessing the damages the learned trial judge reminded himself of both the factual and legal consequences of the findings and orders of the first Full Court. He said: (AB 3861) "I could have added, as clearly it would have been so, that, of course, this did not mean that they would have entered into an off-shore loan on any terms. Accepting, as I must, the view of the Full Court that they would not have entered into an off-shore loan on the terms contained in the contract documents, it does not follow that they would not have endeavoured to secure a loan contract on terms which were satisfactory to them. Clearly, the represented terms were satisfactory to them, as it was on those terms that they proceeded."

He said: (AB 3862) "True it is that in a very general sense, given the findings of the Full Court that there was reliance upon the negligent misrepresentation, I have to accept that the entry into the contract was in the legal sense induced by it. It does not follow that the negligent mis-statement should be regarded as productive of loss."

It is also the case that this Court, on this appeal, must accept the correctness of the previous decision. It is not to the point that this Court might think that the mis-statement was, in the context of this transaction, not material. As the damages hearing had to go forward upon the premise contained in the order of the Full Court made on 24 April 1995, so also must this appeal.

The matter therefore was remitted to the learned trial judge to assess damages upon the premise to which I have referred, that is that by reason of the negligent statement the appellant Perball Pty Ltd entered into the transaction with the respondent.

It is convenient to commence the inquiry into damages by a consideration of the appellants' pleadings. The appellants' claim was built upon a number of foundations. First they claimed the representations made by Mr Irvin on 4 August 1984 were misrepresentations. I have dealt with His Honour's findings and the Full Court deliberations on that matter. Secondly they claimed that other representations relating to the hedge contract taken out on 18 April 1985 were misrepresentations. They claimed that those misrepresentations induced the appellant Perball Pty Ltd to take out a hedge contract as a consequence of which Perball Pty Ltd suffered further loss. His Honour found in favour of Perball Pty Ltd in respect of that hedge contract and those matters need not be further examined.

They also claimed that the respondent owed a duty of care which was breached. Lastly they claimed for a breach of a collateral contract. The learned trial judge rejected a claim based on a collateral oral or implied contract and the appellants did not appeal from that aspect of His Honour's reasons.

In relation to the representations of 4 August 1984 (one of which only was found to be a misrepresentation) it was pleaded: 1. "15. Acting on the representations facts and matters referred to in paragraphs 7, ... herein and induced thereby the Plaintiffs:-

15.2 gave notice and converted their borrowings from $A into CHF on or about the 31st day of October, 1984.

15.3 entrusted to the Defendant the monitoring, management and the provision of advice to the Plaintiffs with respect to the off-shore facility and of the Plaintiffs' exposure thereunder.

15.4 executed the documents necessary for each of the roll-over periods referred to in paragraph 12.7 herein.

15.5 continued the off-shore facility until the 24th July, 1986.

15.7 took no other steps to protect their position or exposure under the off-shore facility.

15.8 executed the irrevocable authorities referred to in paragraphs 14.1 and 14.2 herein."

The appellants further pleaded: 1. "20. But for the representations referred to in paragraph 7 herein and/or the breaches referred to in paragraph 18 and 19 herein the Plaintiffs would not have entered into the off-shore facility.

21. Further or in the alternative the representations referred to in paragraphs 7 and ... herein were misrepresentations by reason of the facts and matters referred to in paragraph 18.10 herein, which representations if made fraudulently, would render the Defendant liable to the Plaintiffs for damages in tort in respect of losses suffered by them as a consequence of entering into the off-shore facility pursuant to section 7 of the Misrepresentations Act 1971."

Not only did the appellants frame their case under the Misrepresentation Act but they also claimed that the respondent owed to Perball Pty Ltd, and the natural appellants as directors, shareholders and guarantors of Perball Pty Ltd, a duty of care and that that duty of care had been breached. It is not necessary for an understanding of these reasons to understand how the duty of care was said to arise because His Honour at trial found that in the circumstances a duty of care existed. Moreover that duty of care included a duty in relation to the representation which he found Mr Irvin had made on 4 August 1984. He also found that the representation would have amounted to a negligent misstatement if the element of reliance had been present. Of course the finding of the Full Court completed the finding that the tort had been committed.

His Honour then went on to discuss the claim under the Misrepresentation Act.

In his reasons for judgment in the trial he said: (AB 2724) "If the statements by Irvin of that date are approached from the point of view of an action for misrepresentation at common law actionable by virtue of s.7 of the Misrepresentation Act (1972), the result is the same.

It is true that an action for misrepresentation at common law is, in certain respects, wider in its potential ambit than an action for negligent misstatement. In the case of the latter, a statement is only actionable if fault exists, in the sense that the statement is made carelessly. In the case of the former, except in cases of deceit, where the question of the representator's fraud is relevant, the representation may be actionable even if innocent, and even if the representator was not at fault in any way.

However, an innocent misrepresentation is not actionable unless the elements of inducement and materiality are both satisfied. While it is true that in certain respects the concept of inducement in the law of misrepresentation may differ from the concept of reliance in the context of negligent mis-statement, the practical application of both concepts on the facts in this case does not give rise to any different result. For the same reasons as those which led me to the conclusion that there was no reliance in the sense necessary to allow recovery for negligent mis-statement, the plaintiffs have not made out the elements of inducement necessary to sustain an action for misrepresentation at common law."

It is clear enough that at trial His Honour dismissed the claim under the Misrepresentation Act for the same reason as he did the claim for breach of duty of care.

The learned trial judge said after discussing the order of the Full Court remitting the matter back to him for assessment (AB 3850): "It follows from the terms of the judgment of the Full Court on appeal that I am to confine myself to the question of damages referrable to negligent mis-statement and not to any of the other causes of action relied upon by the plaintiffs."

It is right that the action of the first Full Court only made a finding of reliance in relation to negligent mis-statement. However I do not think that the Court meant, on the one hand, to make a finding that the appellants had relied upon the negligent mis-statement and on the other hand confirm that the learned trial judge had been correct to find that the appellants had not been induced to enter the contract with the respondent by reason of the negligent misrepresentation. Such a result would be inconsistent with the learned trial judge's reasoning.

It does not appear that the appellants argued at the damages hearing that their cause of action under the Misrepresentation Act was still alive by reason of the finding in paragraph 3 of the order of the first Full Court.

As well the appellants did not argue in this Court that they were entitled to have their damages assessed in accordance with the Misrepresentation Act. Having regard to the provisions of the Misrepresentation Act, the failure to put that argument was, at least, surprising.

In those circumstances the damages hearing before the learned trial judge and the hearing of this appeal proceeded absent any argument as to the applicability of the Misrepresentation Act.

I think in the framing of the order (which is based upon the reasons of King CJ (AB 3760)) the Full Court overlooked the appellants' claim under the Misrepresentation Act and in my opinion the first Full Court did not mean by its order to exclude a consideration of damages under the Misrepresentation Act. I am prepared to proceed upon the basis that that was the intention of the majority in that Court. I proceed upon that basis because a claim for damages under the Misrepresentation Act is the high water mark of the appellants' claim, because for the reasons which I will shortly mention the measure of damages in a claim under the Misrepresentation Act is that of deceit, and if that claim for damages cannot succeed, then it must follow that the learned trial judge was right to assess damages as he did.

In State of South Australia v Johnson (1982) 42 ALR 161 the High Court (Gibbs CJ, Mason, Murphy, Wilson and Brennan JJ) discussed the difference between the measure of damages in deceit and negligent misrepresentation and said (169): "The principle which underlines the award of damages in tort is, generally speaking, that of restitutio in integrum. The object is to restore the plaintiff to the position in which he would have been placed if the wrongful act had not been committed. The measure will vary as between deceit and negligence. In deceit, the plaintiff recovers the difference between the amount paid and the value of the property acquired, the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place. The defendant being guilty of a deliberate wrong, the damages will include the whole loss directly flowing from the fraudulent inducement because, as Lord Denning MR declared in Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 QB 158 at 167, "it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen."

1. It is otherwise in cases of negligent misrepresentation. Although the wrongdoer is liable for the damage which flows directly from his wrongful act or omission, the plaintiff's damages are limited to that which was reasonably foreseeable. This limitation applies in accordance with the general principle in negligence."

341. The appellants did not argue, at least in this Court, that the order of the first Full Court kept alive that claim under the Misrepresentation Act. Indeed as the Notice of Appeal shows no complaint was made in relation to the learned trial judge's statement and approach that he would proceed only to consider negligent misstatement. Ordinarily in those circumstances it would be inappropriate to consider the appellants' case other than as framed in negligent misstatement, especially since the respondent has not had an opportunity to address an argument. However as this litigation has caused two trials and two appeals to this Court and an application for special leave to appeal to the High Court and as it may be anticipated that the appellants, if unsuccessful, will continue to seek to agitate this concern elsewhere, it would be as well to consider the appellants' case at its highest unless to do so would cause unfairness to the respondent.

342. Because of the conclusion at which I have arrived it is not unfair to the respondent to proceed upon that basis.

343. I think that the finding of the Full Court must lead to the conclusion, although not expressed in the order to which I have referred, that the appellant Perball Pty Ltd's claim under the Misrepresentation Act also succeeded to the extent that inducement was made out in respect of that one misrepresentation. The finding of the Full Court completed the elements necessary to make out a claim under the Act in circumstances where Perball Pty Ltd was induced to enter into a contract by a person acting for or on behalf of another party to the contract, or by a person who has received any direct or indirect consideration or material advantage as a result of the formation of the contract. The finding, however, still required proof by the appellants of damage as a consequence of the misrepresentation made by Mr Irvin on behalf of the respondent.

344. The relief that was sought in the prayer for relief was:- 1. "AND the Plaintiffs claim

3. Damages under section 7 Misrepresentations Act 1971.

5. Such further or other order as the court sees fit."

Section 7(1) of the Misrepresentation Act provides: "7. (1) Where a contracting party is induced to enter into a contract by a misrepresentation made_

(b) by a person acting for, or on behalf of, another party to the contract; or

(c) by a person who receives any direct or indirect consideration or material advantage as a result of the formation of the contract,

and any person (whether or not he or she is the person by whom the misrepresentation was made) would, if the misrepresentation had been made fraudulently, be liable for damages in tort to the contracting party subjected to the misrepresentation in respect of loss suffered by him or her as a result of the formation of the contract, that person is, subject to subsection (2), so liable to that contracting party, in all respects as if the misrepresentation had been made fraudulently and were actionable in tort."

345. Mr Irvin was, of course, an employee of the respondent and AIFL was a subsidiary of the respondent. The representation which was made induced the appellant Perball Pty Ltd to enter into a contract with both the respondent and AIFC. In these circumstances the misstatement qualifies to be considered under section 7 of the Misrepresentation Act.

346. A corresponding but not identical section to that in the Misrepresentation Act was considered by the Court of Appeal in Royscot Trust Ltd v Rogerson [1991] EWCA Civ 12; [1991] 2 QB 297. In that case the court concluded the proper measure of damages for an innocent misrepresentation was the tortious measure for fraudulent misrepresentation. The section, the subject of the proceedings, read: "Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently..."

347. Balcombe L J said at 305: "In view of the wording of the subsection it is difficult to see how the measure of damages under it could be other than the tortious measure and, despite the initial aberrations referred to above, that is now generally accepted. Indeed counsel before us did not seek to argue the contrary.

The first main issue before us was: accepting that the tortious measure is the right measure, is it the measure where the tort is that of fraudulent misrepresentation, or is it the measure where the tort is negligence at common law? The difference is that in cases of fraud a plaintiff is entitled to any loss which flowed from the defendant's fraud, even if the loss could not have been foreseen: See Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 Q.B. 158. In my judgment the wording of the subsection is clear: the person making the innocent misrepresentation shall be "so liable," i.e., liable to damages as if the representation had been made fraudulently. This was the conclusion to which Walton J came in F & B Entertainments Ltd v Leisure Enterprises Ltd (1976) 240 E.G. 455, 461. See also the decision of Sir Douglas Frank Q.C., sitting as a High Court judge, in McNally v Welltrade International Ltd (1978) I.R.L.R. 497. In each of these cases the judge held that the basis for the assessment of damages under section 2(1) of the Act of 1967 is that established in Doyle v Olby (Ironmongers) Ltd. This is also the effect of the judgment of Eveleigh L.J. in Chesneau v Interhome Ltd already cited ((1983) 134 N.L.J. 341): "By 'so liable' I take it to mean liable as he would be if the misrepresentation had been made fraudulently."

348. The South Australian section is even in plainer terms than the English section. First the section makes it clear that the measure of damages is tortious. Secondly in my opinion the section makes it quite clear that the proper measure of those damages is arrived at by reference to the measure of damages in deceit. I will proceed therefore upon the basis that the appellants' damages fell to be assessed by reference to the measure of damages in deceit.

349. The relevant aspects of the appellants' claim were particularised on the Statement of Claim as follows: "23. On or about the 31st July, 1986 the Defendant continued to provide funds to Perball in the amount of $A1,711,888.68 at an interest rate of 17.05% per annum under the aforesaid Multi-Currency Floating Rate Loan Agreement.

24. On or about the 23rd day of December, 1986 Perball repaid the off-shore facility in the amount of $A1,711,888.68 to the Defendant together with interest for the period from 31st day of July, 1986 to the 23rd day of December, 1986 of $A116,750.79.

25. On the 21st day of March, 1985 the Plaintiffs repaid the Defendant $A35,000.00 of the supplementary loan.

26.1 In March, 1986 the Plaintiffs borrowed $A150,000.00 by way of a Commercial Bills (sic) from the ANZ and together with working capital repaid the hedge loan ($A82,864.00) referred to in paragraph 13 herein and the balance of the supplementary loan ($A65,000.00).

26.2 Immediately prior to payout of the aforesaid hedge loan Perball had incurred $A14,737.39 in interest and charges on the said hedge loan.

27. In January 1987 and April 1987 the Plaintiffs repaid the Commercial Bill facility referred to in paragraph 26.1 herein after incurring $A25,454.00 in interest.

28. By reason of the facts and matters referred to in paragraphs 13, 14, 15, 16, 17, 18, 19 and 20 herein the Plaintiffs have suffered damage loss and expense.

28.1 The indebtedness of CHF under the offshore loan facility was converted to $A on the 30th day of July, 1986 at which time the principal due was $A1,711,688.68 producing a capital loss to the Plaintiffs of $A861,688.68 (during the period from the initial draw-down on 28th October, 1984 to the 31st July, 1986 the CHF had fallen from 2.1167:$A1 to 1.10510:$A1).

28.4 The Plaintiffs have suffered the loss of $A213,455.39 with respect to interest payments made by them referred to in paragraphs 12.8, 24, 26.2 and 27.

28.5 The Plaintiffs have lost the use of the respective sums referred to in paragraphs 28.1 - 28.4 inclusive herein and accordingly claim the loss of use of money at compound interest rates."

The Statement of Claim is deficient in its particulars. It does not identify the causal link between the misrepresentation and the damage. It also sometimes refers to the plaintiffs as having entered into the transaction and sometimes Perball Pty Ltd as the party which entered into the transaction and suffered loss. In fact it was only the appellant Perball Pty Ltd which entered into the offshore loan transaction. Mr Tilmouth argued that as the first Full Court had found that the appellant Perball Pty Ltd was induced to enter into the contract by the negligent mis-statement of the respondent the measure of damages to which his client Perball Pty Ltd was entitled ought to be assessed upon the basis of restoring the appellant to the position in which the appellant was before the appellant was induced to enter into the contract. The object of tortious damages is "to place the plaintiff in the position he would have been but for the commission of the tort": Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1; per Mason Wilson & Dawson JJ at 13; State of South Australia v Johnson (supra). However it was not the appellants case at trial or even on appeal that but for the misrepresentation the appellant or appellants would have done nothing. That was not the way the appellant Perball Pty Ltd sought to have damages assessed at trial. Indeed the appellant sought to have damages assessed upon the basis that it would have, but for this representation, re-financed by borrowing on-shore, which borrowings it would have been capable of servicing. Contrary therefore to the primary submission made by Mr Tilmouth the appellant sought damages upon the basis that it was entitled to the difference between what this transaction ultimately cost the appellant and what it would have cost the appellant assuming it had re-financed on-shore. If that was the correct measure, approached that way, the appellant needed to establish on the balance of probabilities that it would have and could have re-financed on-shore, and could have serviced the on-shore borrowings without the need to sell land. In the end, of course, the appellant failed because the learned trial judge concluded that the appellant would not have re-financed on-shore. Implicit in His Honour's findings is the finding that the appellant would have entered into a similar transaction to that which it did enter into with the same disastrous consequences when the Australian dollar weakened against the Swiss franc.

The starting point for the assessment of damages in an action for deceit, where a party has been induced to enter into a contract, is to allow as damages the difference between the sum actually paid and the value obtained under the contract at the time of purchase. That measure of damages has been described as "the usual rule." Gibbs CJ said in Gould v Vaggelas (1985) 157 CLR 215 a case involving deceit at 220: "It is well established that in an action of deceit where the plaintiff has been induced by the fraudulent misrepresentation of the defendant to enter into a contract of purchase, the measure of damages usually applicable is the difference between the real value of the property at the time of the purchase and what the plaintiff paid for it: Holmes v Jones; Potts v Miller; Toteff v Antonas, Foster v Public Trustee, Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd."

He went on to say at 220: "The usual rule is, however, only a special application of the general principle that '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': Toteff v Antonas [1952] HCA 16; (1952) 87 CLR 647 at 650. In other words, the general principle is that the plaintiff is to be put, so far as possible, in the position he would have been in if he had not acted on the fraudulent inducement: Holmes v Jones; see also Canavan v Wright; Doyle v Olby (Ironmongers) Ltd; and South Australia v Johnson."

Gibbs CJ further observed in Gould v Vaggelas (221) that Jordan CJ in referring to actions in deceit in McAllister v Richmond Brewing Co (NSW) Pty Ltd [1942] NSWStRp 17; (1942) 42 SR NSW 187 at 192 said: "The rule is well settled, and exceptional circumstances are necessary to justify an award of anything more by reference to the general principle, but such circumstances may occur."

Notwithstanding those decisions Mr Tilmouth did not press for an assessment of damages upon the basis that the appellants were entitled to be compensated in accordance with the difference in the price paid under the transaction and the value received.

I think that in not pursuing damages under that head he implicitly recognised that "the advantage of the use of the sinking fund to offset currency fluctuations" was almost valueless. Any adverse currency fluctuations to the extent of $85,000 would be first met by the 10% buffer. The sinking fund was available to meet the next $100,000. The use of the sinking fund to offset currency fluctuations in excess of $935,000 simply meant that the borrower was relieved from borrowing $100,000 with the consequent interest costs associated with the borrowing. Of course if the sinking fund could be used to offset the currency fluctuations to the extent of the sinking fund the borrower would lose the advantage of the tax free interest which was accruing to the borrower. There is a paradox about that result. The first Full Court reached the decision that the negligent mis-statement was 'very material'. However when one analyses the representation it would appear to be worth, if it had been translated to a benefit in the transaction, very little.

What was contemplated in the transaction was that the appellant Perball Pty Ltd would borrow $100,000 more than the amount for which it had immediate need. The lender would have a separate liability to meet currency fluctuations by lending a further 10% of $850,000 to meet these currency fluctuations.

The only negligent statement established by the first Full Court decision was in telling the Coppings that the $100,000 could also be used to meet currency fluctuations. In fact the $100,000 was earmarked to earn interest free of tax and form the nucleus of a fund to be supplemented by contribution by the borrowers which would be used for repayment of the principal in 10 years time.

Whatever was to be used for meeting currency fluctuations had to be borrowed. That is because the Coppings and Perball Pty Ltd were so heavily indebted. They had borrowed the whole of the $850,000, and indeed had been forced by reason of their own circumstances to borrow a further sum after the original transaction. So that if the transaction did not allow for the use of the sinking fund to meet currency fluctuations the appellants would have to borrow the money. That would be at a cost. But in having to borrow that money to meet any currency fluctuations over $935,000 (i.e. original loan plus 10%) and not applying the sinking fund to the loss on the currency exchange fluctuations, the sinking fund would continue to accrue tax free interest and that would be a gain. In any event the sinking fund could only be used for the first $100,000 after the further borrowing of $85,000, which the respondent was obliged to lend.

In these circumstances the appellant Perball Pty Ltd would only have suffered a loss if the transaction proceeded as agreed if the cost of the amount necessarily borrowed exceeded the tax free income which accrued to Perball Pty Ltd on the amount invested in the sinking fund.

There may well have been some confusion on the part of the appellants as to exactly what finding had been made by the learned trial judge as to the misstatement. When the matter went back to the learned trial judge it was submitted that the learned trial judge and inferentially the Full Court had found that the misstatement was that the sinking fund would not be exceeded by exchange rate movements.

That was not the learned trial judge's finding nor, of course, the finding of the Full Court which only determined the question of reliance. If that had been the finding of the learned trial judge then, of course, as the events showed, that would have been very material because it would have been a misstatement as to the total extent of the potential loss which might be suffered by the appellants. In the learned trial judge's reasons for damages he said: (AB 3853) "During the course of the hearing before me on the question of the assessment of damages, Mr Tilmouth QC for the plaintiffs suggested that I had in fact made a finding that there had been a representation that the sinking fund would not be exceeded by exchange rate movements. Clearly, I made no such finding. Although in finding (4) I found that it had been suggested to the plaintiffs by Irvin that "the sinking fund should be sufficient to cover any such movement", as I found in finding (6): "... he did not eliminate the possibility that the movement in the franc could exceed the sinking fund ... he did not eliminate entirely the possibility that the sinking fund could be exceeded by adverse movements."

That finding, together with all of my other findings as to the content of the relevant representations, was not affected by the decision of the Full Court."

In my opinion the learned trial judge was right. The misstatement he found was quite different to that contended for by counsel for the plaintiffs at the damages hearing.

The appellants were always aware that the transaction might be affected by currency exchange fluctuations. The appellants did not adduce any evidence supporting an assessment of damages upon the basis mentioned, probably because an inquiry would show the appellants did not in fact suffer any loss. I suspect that the tax free interest on $100,000 would offset the tax deductible interest on a borrowing of $100,000.

That the transaction was not in value worth less than was paid because the negligent mis-statement did not increase the cost or lower the value does not necessarily mean that the negligent statement was not material. In fact, as I have said, it must be assumed that the negligent mis-statement was as King CJ said 'very material' because the appellants did not have to put up cash.

Whilst that was important, i.e. being relieved of the necessity to put up cash, if the transaction was to take place as represented, the relief came at a price, the price being the loss of the tax free interest accumulating on the sinking fund.

There is another reason why the appellants probably did not seek to have damages assessed upon the basis that the transaction was in value worth less than was paid, and that was because, notwithstanding that the documents did not so provide, the respondent did in fact perform the transaction in accordance with the negligent statement. The respondent did not seek to claw back, as the contractual documents would have allowed, any payments of cash from the appellants before the equivalent of the sinking fund had been exceeded.

True it is there was no formal debit of the sinking fund account, nor having regard to the investment with Aetna Life and Casualty could there have been, but the respondent treated the sinking fund as if it was available to be offset against adverse currency fluctuations up to its total investment.

I have already referred to the correspondence of 22 March 1985, 3 April 1985 and 15 April 1985 which demonstrates the respondents willingness, notwithstanding the transactional documents to allow the sinking fund to be used in a de facto sense as a further buffer against the currency exchange fluctuations.

Assessment Of Value Of Property Obtained By Reference To Subsequent Events

I have in that analysis assumed that the value received was, as at the date of the transaction, the face value. If the value received was less, because the property received had an intrinsic flaw, then that may demonstrate a loss or further loss.

It is possible that a plaintiff would not be able to establish that a loss had been suffered by reason of the amount paid on the transaction because the value obtained was apparently not less at the time the transaction was completed, but still claim that by reason of subsequent events the property obtained in the transaction had depreciated in value thereby indicating that at the time the transaction was completed the property was so inherently flawed that its true value was substantially less: Potts v Miller [1940] HCA 43; (1940) 64 CLR 282.

A plaintiff could in these circumstances lead evidence to show that the property acquired was inherently flawed in that its intrinsic value was substantially less than its apparent value. In Kizbeau v W G & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281, which was an action based on Section 52 of the Trade Practices Act, an action closely analogous to an action in deceit, the Court (Brennan, Deane, Dawson Gaudron & McHugh JJ) said at 291: "Nevertheless, although the value is assessed as at the date of the acquisition, subsequent events may be looked at in so far as they illuminate the value of the thing as at that date."

That is no more than proving the true value of the property acquired as at the date of acquisition.

That is to be distinguished, however, from the circumstance where property acquired at the date of acquisition has an identifiable value but less value thereafter by reason of extrinsic, independent, supervening or accidental causes. In circumstances where the loss of value is caused by factors extraneous to the property but has the effect of depreciating the value of the property after the acquisition of the property the law does not allow for damages: Kizbeau v W G & B Pty Ltd at 291: "Thus, the takings of a business subsequent to purchase are generally admissible, not only to prove that a representation concerning the takings was false but also to prove the true value of the business as at the date of purchase. Even when some difference exists between the conditions under which the business was conducted before and after purchase, evidence of subsequent takings may be admissible, "subject to due allowance being made for any differences in relevant conditions". But if it is established that the decline in takings has been caused by business ineptitude or unexpected competition, evidence of subsequent takings is not admissible to prove the value of the business as at that date, events such as ineptitude and unexpected competition being regarded as supervening events. In some cases of deceit, it may also be proper to compensate the defrauded party not only for the difference between the value of the thing acquired and the price paid for it but also for losses induced by the fraud and directly incurred in conducting the business. All of these principles are appropriate to the assessment of damages under s 82 where a breach of s 52 of the Act has induced a person to purchase a business."

In Gould v Vaggelas at 220, Gibbs CJ referred to the usual measure of damages including the time at which those damages are assessed and the circumstances in which subsequent events can play a part in the assessment of those damages. He said: "Events that happen after the time of the purchase may throw light on the real value of the property at that time: Potts v Miller. Where the property has depreciated in value after the purchase, and the depreciation was due to some cause inherent in the property itself, the depreciation must be considered in determining the real value of the property at the relevant time, but where the cause of the depreciation was "independent", "extrinsic", "supervening" or "accidental", the additional loss is not the consequence of the inducement and it should not be taken into account in arriving at the value of the property at the time of the purchase: Potts v Miller."

It follows, although again the appellants did not put their case on damages this way, that if the subsequent losses by reason of the adverse currency fluctuations are indicative of the value obtained as at the date of settlement of this transaction on 31 October 1994, then the appellants loss ought to be calculated by reference to the difference between what was paid and what was obtained. That approach would mean that what was obtained would be valued by reference to the intrinsic value of the transaction as subsequent events have shown the transaction to be worth.

That raises for consideration whether the subsequent losses are recoverable in the manner described and for the reasons given by these appellants. The losses ought to be brought to account if they are indicative of the value of the transaction but are not recoverable if they happened by reason of "independent", "extrinsic", "supervening" or "accidental" causes or events.

In Potts v Miller [1940] HCA 43; (1940) 64 CLR 282 Dixon J said at 298/299: "This reasoning makes it necessary to distinguish between the kinds of cause occasioning the deterioration or diminution in value. If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be "independent", "extrinsic", "supervening" or "accidental", then the additional loss is not the consequence of the inducement. "If a man buys a horse, as a racehorse, on the false representation that it has won some great race, while in reality it is a horse of very inferior speed, and he pays ten or twenty times as much as the horse is worth, and after the buyer has got the animal home it dies of some latent disease inherent in its system at the time he bought it, he may claim the entire price he gave; the horse was by reason of the latent mischief worthless when he bought it; but if it catches some disease and dies, the buyer cannot claim the entire value of the horse, which he is no longer in a condition to restore, but only the difference between the price he gave and the real value at the time he bought" (per Cockburn CJ Twycross v Grant (1877) 2 C.P.D. 469 at 545)).

I do not think that upon the basis of the case presented by the appellants that it can be said that this case should be approached with those principles in mind. It was not said by the appellants that what was purchased had a value substantially less than was paid at the date of the transaction.

The appellants' argument was not that Perball Pty Ltd suffered loss by reason of a difference between the sum actually paid and the value obtained either upon the facts as known at the time of the purchase or as demonstrated by subsequent events. The appellants do not seek therefore on behalf of Perball Pty Ltd damages upon the usual rule. They put their case more simply in that they claim damages upon the basis that but for this misrepresentation Perball Pty Ltd would not have entered into this transaction at all. They argued that as the misrepresentation induced the entry into the contract they, and particularly Perball Pty Ltd, are entitled to all of the losses which flowed including the losses caused by the currency fluctuations. Had it not been for the misrepresentation, it was put, they would have re-financed but by taking on-shore finance.

If in truth there is no damage able to be identified because there is no difference between what was paid and the value of that which was obtained then an alternative method of assessment of damage is to determine what the appellant would have done if the representation had not been made, bearing in mind that the object of damages, in tort, is to place the injured party in the same position as the party would have been, absent the representation. If that leads to a conclusion that the appellant would have conducted itself in some other way than it did in entering into the transaction at less cost to itself, then the measure of damages would be the difference between the amount of money expended by the appellant in this transaction and the amount of money the appellant would have expended if the representation had not been made. The respondent did not argue that damages could not be assessed upon that basis but simply that if an inquiry into damages did proceed upon that basis inevitably the inquiry would conclude, as indeed His Honour did, that the appellants had suffered no loss.

The method of assessment proposed may be appropriate because as Gibbs CJ observed in Gould v Vaggelas, the usual measure of damages is often not appropriate in transactions entered into as a result of inducement, and that in those other cases it would be more appropriate to assess damages, having regard to the loss occasioned by the reliance on the misrepresentation.

In Clarke v Urquhart; Stracey v Urquhart [1930] AC 28 at 68 Lord Atkin left open the question whether the measure of damages based upon the usual rule was expressed in too rigid terms. He said in talking about the appropriate measure of damages: "I should have thought it would be based on the actual damage directly flowing from the fraudulent inducement."

In Potts v Miller at 297/299 Dixon J pointed to the rigidity of the usual rule subject to the qualifications he mentioned, if the usual rule is to be the only measure of damages.

I have already referred to the judgment of State of South Australia v Johnson (supra) where the Court said, after referring to the assessment of damages under the usual rule, that "the damages will include the whole loss directly flowing from the fraudulent inducement."

In Gould v Vaggelas (supra), Gibbs CJ after discussing the dictum of Jordan CJ in McAllister v Richmond Brewing (to which I have referred) concluded that there was no reason in principle why a plaintiff could not recover, in some cases, consequential losses not included in the difference between price and value if those losses flowed directly from the fraudulent conduct. He determined that if the losses flowed directly from the fraud they ought to sound in damages.

Gibbs CJ said this at 221/222: "There is no reason in principle why the defrauded purchaser should not recover damages for all the loss that flowed directly from the fraudulent inducement (unless, possibly, the loss was not foreseeable). If the purchaser, besides paying more for the business that it was worth, has suffered additional losses which resulted directly from the fraud he ought to be compensated for them. Of course, the court must be satisfied that the loss did result directly from the fraud and not from some supervening cause such as the folly, error or misfortune of the purchaser himself, and must ensure that no additional compensation is given for losses when those losses, or the probability of their occurrence, has already been taken into account in determining the value of the business."

In the passage already quoted from Kizbeau v W G & B Pty Ltd (291) the Court said that in some cases damages may include the losses induced by the fraud and directly incurred in conducting the business.

In Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 the High Court considered the proper measure of damages in actions under section 52 of the Trade Practices Act. Gibbs CJ after considering the question of whether the proper measure was contractual or tortious said at 7: "I have recently discussed the measure of damages in an action for deceit in Gould v Vaggelas. The appellant in the present case was entitled to recover the difference between the price paid to have the total disability clauses included in the policies (that is, the amount of $2.09 per month in each case) and the value of those clauses at the time the policies were issued. He was also entitled to recover consequential loss, at least if it was foreseeable."

The majority Mason, Wilson and Dawson JJ said at 12: "In deceit the measure of damages is the difference at the time of purchase between the real value of the goods, and the price paid: Potts v Miller; Toteff v Antonas; Gould v Vaggelas. But this has been treated as a prima facie measure only, the true measure being reflected in the proposition stated by Dixon J in Toteff v Antonas in these terms:

"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."

As his Honour then pointed out, it is a question of determining how much worse off the plaintiff is as a result of entering into the transaction which the representation induced him to enter than he would have been had the transaction not taken place. This entitles the plaintiff to all the consequential loss directly flowing from his reliance on the representation (Potts v Miller; Doyle v Olby (Ironmongers) Ltd, at least if the loss is foreseeable; see Gould v Vaggelas."

They went on to say at 13: "Because the object of damages in tort is to place the plaintiff in the position in which he would have been but for the commission of the tort, it is necessary to determine what the plaintiff would have done had he not relied on the representation. If that reliance has deprived him of the opportunity of entering into a different contract for the purchase of goods on which he would have made a profit then he may recover that profit on the footing that it is part of the loss which he has suffered in consequence of altering his position under the inducement of the representation. This may well be so if the plaintiff can establish that he could and would have entered into the different contract and that it would have yielded the benefit claimed: cf Esso Petroleum Co Ltd v Mardon; Doyle v Olby (Ironmongers) Ltd. The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation. In this respect the measure of damages in tort begins to resemble the expectation element in the measure of damages in contract save that it is for the plaintiff to establish that he could and would have entered into the different contract."

It is not entirely clear whether the damage needs to be foreseeable. The unqualified statement in State of South Australia v Johnson (169) would suggest that deceit stands in a different footing to that of negligent misstatement and that the damage does not have to be foreseen. The more recent dicta in Gould v Vaggelas approved by the majority in Gates v City Mutual Life Assurance Society Ltd would suggest that the plaintiff must establish that the loss was foreseeable. It does not matter in this case whether the law requires that the damage is foreseeable or not.

The damage was clearly foreseeable. Indeed the whole transaction recognised that damage of the kind complained of could occur. That was the reason for the manner in which the transaction was structured. It could not be argued that the damage was not foreseeable.

A plaintiff therefore is entitled to the damages directly flowing from the fraudulent inducement; (Urquhart); (Johnson); losses flowing directly from the fraudulent conduct; losses resulting directly from the fraud (Vaggelas); losses induced by the fraud (Kizbeau); consequential loss (Gibbs CJ in Gates); all the consequential loss directly flowing from his reliance on the representation (Mason Wilson and Dawson JJ in Gates); lost benefits referrable to opportunities foregone by reason of reliance on the misrepresentation (Mason, Wilson and Dawson JJ in Gates).

The dicta to which I have referred would suggest that the plaintiff is entitled to all consequential losses directly flowing from the plaintiff's reliance upon the fraudulent involvement, conduct or representations. That seems to be the case even though the High Court has approved the statement of Lord Denning in Doyle v Olby (Ironmongers) Ltd which would allow for actual damage directly flowing from the entry into the transaction.

The House of Lords has recently had to consider the measure of damages in deceit in Smith New Court Securities Ltd v Citibank [1996] UKHL 3; (1996) 3 WLR 1051. In response to a submission that "the measure of damages is, in general, the difference between the contract price and the true open market value of the property purchased, valued as at the date of the contract of purchase", Lord Browne - Wilkinson (with whom Lord Keith of Kinkel, Lord Mustill, and Lord Slynn of Hadley, agreed and Lord Steyn did not disagree) observed that with the exception that the true market value could be assessed by reference to subsequent events, this was the law as laid down in a series of cases decided at the end of the nineteenth century. His Lordship then dealt with a number of cases which had commented upon the usual rule including Potts v Miller and Toteff v Antonas [1952] HCA 16; (1952) 87 CLR 647 saying that Dixon J loyally applied the old inflexible rule but "was plainly unhappy with it." His Lordship specifically approved Doyle v Olby (Ironmongers) Ltd (which Gibbs CJ had also approved in Gould v Vaggelas and which the Court had approved in South Australia v Johnson) and said: "Doyle v Olby (Ironmongers) Ltd establishes four points. First, that the measure of damages where a contract has been induced by fraudulent misrepresentation is reparation for all the actual damage directly flowing from (i.e. caused by) entering into the transaction. Second, that in assessing such damages it is not an inflexible rule that the plaintiff must bring into account the value as at the transaction date of the asset acquired: although the point is not adverted to in the judgments, the basis on which the damages were computed shows that there can be circumstances in which it is proper to require a defendant only to bring into account the actual proceeds of the asset provided that he has acted reasonably in retaining it. Third, damages for deceit are not limited to those which were reasonably foreseeable. Fourth, the damages recoverable can include consequential loss suffered by reason of having acquired the asset.

In my judgment Doyle v Olby (Ironmongers) Ltd was rightly decided on all these points. It is true, as to the second point, that there were not apparently cited to the Court of Appeal the 19th century cases which established the "inflexible rule" that the asset acquired has to be valued as at the transaction date: the successful appellant was not legally represented. But in my judgment the decision on this second point is correct. The old "inflexible rule" is both wrong in principle and capable of producing manifest injustice. The defendant's fraud may have an effect continuing after the transaction is completed e.g. if a sale of gold shares was induced by a misrepresentation that a new find had been made which was to be announced later it would plainly be wrong to assume that the plaintiff should have sold the shares before the announcement should have been made. Again, the acquisition of the asset may, as in Doyle v Olby (Ironmongers) Ltd itself, lock the purchaser into continuing to hold the asset until he can effect a resale. To say that in such a case the plaintiff has obtained the value of the asset as at the transaction date and must therefore bring it into account flies in the face of common sense: how can he be said to have received such a value if, despite his efforts, he has been unable to sell."

He later said at 1060. "In sum, in my judgment the following principles apply in assessing the damages payable where the plaintiff has been induced by a fraudulent misrepresentation to buy property: (1) the defendant is bound to make reparation for all the damage directly flowing from the transaction; (2) although such damage need not have been foreseeable, it must have been directly caused by the transaction; (3) in assessing such damage, the plaintiff is entitled to recover by way of damages the full price paid by him, but he must give credit for any benefits which he has received as a result of the transaction; (4) as a general rule, the benefits received by him include the market value of the property acquired as at the date of acquisition; but such general rule is not to be inflexibly applied where to do so would prevent him obtaining full compensation for the wrong suffered; (5) although the circumstances in which the general rule should not apply cannot be comprehensively stated, it will normally not apply where either (a) the misrepresentation has continued to operate after the date of the acquisition of the asset so as to induce the plaintiff to retain the asset or (b) the circumstances of the case are such that the plaintiff is, by reason of the fraud, locked into the property. (6) In addition, the plaintiff is entitled to recover consequential losses caused by the transaction; (7) the plaintiff must take all reasonable steps to mitigate his loss once he has discovered the fraud."

I do not think that the High Court has yet agreed with the first of His Lordship's propositions but it may be that the decisions in Gould v Vaggelas and Kizbeau v WG&B are consistent with the approach in the House of Lords.

However, until the High Court says otherwise I think the law to be that any consequential losses must result directly from the fraud rather than the transaction (Gould v Vaggelas per Gibbs CJ at 222; Kizbeau v WG&B; State of South Australia v Johnson; Gates v City Mutual Life Assurance Society Ltd ).

There are good reasons of course for making a person, who has deliberately and fraudulently induced a party to enter into a transaction, responsible for all of the consequences of the other party's relying upon the fraudulent inducement. There is less reason to visit those consequences upon a party who has made an innocent misrepresentation which has induced a party to enter into a transaction and whilst involved in that transaction that other party has suffered losses which could not be foreseen and are not directly referrable to the innocent misrepresentation. But if that is so it is a consequence of the Misrepresentation Act.

However, for reasons that follow, it in fact does not matter, in this case, whether the law in Australia is the same as Lord Browne-Wilkinson declared it to be in England or whether the measure of damages is as I have understood it to be on a reading of the decisions of the High Court. That is because I do not believe the appellant made out the premise upon which the claim for damages relied.

I should also say, before departing from this aspect that, whilst the appellants did plead the case as I have mentioned, no argument was addressed to us that damages ought to be assessed in deceit, nor as of course it would follow, that the law in Australia was as stated by Lord Browne-Wilkinson.

The onus was on the appellant to establish, on the balance of probabilities, that it would and could have re-financed on-shore and that the cost of such finance was less than the cost of the transaction. As to the second matter there was no doubt, whilst interest rates were considerably higher on-shore, the real cost of the transaction off-shore was the currency exchange losses which over the period the loan was off-shore were in excess of $800,000.

The appellants failed to persuade the learned trial judge that they would have re-financed on-shore. He specifically found that Mr George Copping who had overall responsibility for the family in relation to finances would not have re-financed on-shore and that he would have, even absent the negligent misstatement, obtained a foreign currency loan. Moreover he found that if the negligent misstatement had been corrected and he was aware of the true nature of the sinking fund he would have gone ahead with this transaction. The last point to a certain extent denies the materiality of the negligent misstatement but is not necessarily inconsistent with a finding that the appellant relied upon the negligent misstatement for the entry into the transaction.

The learned trial judge put it this way: (AB 3859) "The plaintiffs' case at trial, and as it was pursued in the argument before me following the decision by the Full Court, was that if the negligent misrepresentation, which I found to have been made had not been made, they would not have entered into the loan transaction with the defendant, and indeed, would not have taken up an off-shore loan at all. As I have already noted, the plaintiffs maintained that in the circumstance they would have remained 'on-shore' in the sense that they would have re-financed their existing debt levels by restructured borrowings from sources within Australia. The plaintiffs' case is that if they had done so, making a comparison of their situation as it would then have been, they would have been better off to the extent of approximately $1.8 million. They invited me to assess damages in that amount.

The difficulty with that approach is that I am not satisfied with the starting point, namely, that if Mr George Copping had not been misled as to the terms of the transaction, that would have meant on the balance of probabilities, that he would have looked to alternative methods of re-financing the farming operations from on-shore as opposed to off-shore sources."

The appellants' claim in damages necessarily fails if the appellant Perball Pty Ltd did not make out, upon the balance of probabilities, that it would have entered into a re-financing agreement on-shore rather than obtaining finance by re-financing off-shore.

The appellants in this Court did not argue so much that such finding that the appellant would not have financed on-shore and would have taken a position off-shore could not be made upon the evidence, but rather that such a finding was necessarily inconsistent with a finding that the appellants had relied upon the negligent misstatement.

Such an approach is to confuse reliance with the assessment of damage.

The fact that the Full Court determined that the appellants had relied upon the negligent misstatement did not absolve the appellants from the responsibility of establishing, if they wished to pursue damages upon the basis they did, that but for the negligent misstatement they would have done something other than that which they did. That put a positive obligation upon the appellants to establish upon the balance of probabilities that they would have done what they claimed. The finding of reliance by the Full Court did not necessarily conclude that matter.

The learned trial judge's reasons for the conclusion at which he arrived depended to a large extent on: "my observations of Mr George Copping while he was in the witness box, the manner in which he went about the transaction in question, and the financial situation in which the family was at the time"

In respect of the first matter His Honour had the advantage of hearing and seeing Mr Copping, who indeed he found to be a credible witness. His Honour in fact relied upon Mr Copping's own evidence in determining that the appellant both could not and would not have re-financed on-shore. Whilst at trial His Honour rejected Mr Copping's evidence on the subject of reliance, which the Full Court determined was in error, His Honour otherwise accepted Mr Copping's evidence both at trial and in the damages hearing. His Honour's reference therefore to the observations of Mr Copping and his consideration of the evidence as a whole is not meant to be a criticism of that evidence or a finding adverse to the appellants upon a consideration of Mr Copping's demeanour but instead it is Mr Copping's evidence that His Honour has relied upon for the findings adverse to the appellants case.

I turn to the other two matters upon which the learned trial judge relied for determining that the appellants would not have re-financed on-shore.

Immediately prior to the first conversation with the insurance agents the Copping family was suffering financial stress. The family as a whole was in debt to the extent of about $663,000 and paying interest at the rates of 12-13 per cent. As Mr Copping frankly acknowledged the family was finding it difficult in paying the interest payments and re-paying the loan. As at March 1984 Mr Copping believed that he and his sons could not continue to sustain, at domestic interest rates, the level of debt which then existed. He said apart from a foreign currency loan the only thing they could have done was to sell property, probably Wayne's property, and probably one of the outside properties, which did not adjoin any other properties. (AB 201)

The evidence is clear that the appellants had not only sought accommodation from the bank in the years prior to 1984 but also accommodation from Bennett Farmers and, as Mr Copping admitted, without Bennett Farmers accommodation to the extent of $60,000 in 1983 the family would not have had sufficient funds to enable them to continue to drench the sheep.

Indeed they had been suffering financial stress for some years. In previous years they had needed to resort to carry on finance at Bennett Farmers because as Mr Copping said: (AB 234): "We were always running pretty close to the wind on the farm".

It is instructive to examine in some detail the financial circumstances of the appellants in the period from about 1981 leading up to and through the transaction entered into. Those financial circumstances are best understood by reference to Mr George Copping's evidence.

In cross examination he was asked this: (AB234) Q You would not, during 1981 and 1982, I suggest, have been able to - and I don't put this critically - to carry on the day-to-day running of the operation unless you had access to borrowings through Bennett Farmers. Would you agree with that?

A Not entirely. I was still being able to borrow at the bank.

Q Just deal with Bennett Farmers first. You would agree with me that the Bennett Farmers' accommodation was necessary to assist you in the day-to-day running of your operations. You would agree with that, wouldn't you?

In 1981 the insufficiency of funds was causing problems within the family. Mr Copping complained to the bank that his son Neville and Neville's wife spent far too much money on things not related to the farm. Neville at that stage was seeking extra funds for himself and asked the bank to contact Mr Copping for his agreement to assist. Mr Copping refused. By August 1982 Neville had indicated to Mr Copping that he was dissatisfied with the farming operations because he was in financial troubles. At that stage Neville told his father that he doubted the viability of the farming operations. Moreover by that time Neville had advised that he was exceeding the limits imposed upon him by the bank and that the bank had told him that they would not provide him with any further accommodation. In fact in September 1982 Neville did approach the ANZ Bank at Lucindale for carry on finance and was refused.

The family's financial problems continued all through 1982. The impression one gets from reading the evidence is that the Copping family was lurching from crisis to crisis but continuing with the hope and expectation that either land prices would improve or they would be able to secure better returns from the farming operations.

At that stage the family disagreed about the necessity or the desirability of selling any land. It was Mr Copping's view that no land ought to be sold because the land was very good land and in a very sound area (AB 254). On the other hand Neville was keen to sell land to relieve the family of financial stress.

By April 1983 Neville was in financial difficulties with the bank and had to meet a loan repayment and interest totalling approximately $33,000. Neville expressed the view that it was unlikely he could trade his way out of the situation.

At that stage Neville and Layton suggested to their father that they should take over the management of the various properties and sell off one of them. They proposed that a property known as Katani Park be sold and thereby the loan commitments of the family would be reduced.

The matter was discussed amongst the family and in particular by Mr Copping and his two sons Neville and Layton. Q You will accept, won't you, that at this time in April 1983 the immediate prospects of trading out, or something like that, were very gloomy indeed weren't they?"

Notwithstanding that that was the position Mr Copping refused to agree to the sale of the property. He was only prepared to proceed upon the basis that things might improve. It was his view, which prevailed, that they would proceed upon that basis and hope that the bank or Bennetts would provide carry on finance from time to time as required. "Q I want you to agree, if you will, that, as at that time, unless you did receive carry on finance from either the bank or from Bennett, then you would have no prospect of trading out of your financial difficulties.

At the same time as his sons proposed the selling of property, they also proposed that they take a greater share in the overall management of the family businesses. Mr George Copping refused.

There were a number of conversations about the selling of property but as Mr Copping said: "Selling land is a last resort." (AB 260)

Moreover Mr Copping at this stage discriminated between the family's finances and Neville's. He did believe that Neville and his wife spent far too much money outside the family operations and that Neville's financial predicament was largely caused by his own fault. He said that he and Layton had no financial difficulties.

By the middle of 1983 the position had worsened. Mr Copping acknowledged that without the support of Bennetts and the bank the farming operations could not continue. At that stage the operation was not generating enough funds from the business to avoid having to incur further borrowings. Mr Copping's attitude was that throughout this period he recognised the financial difficulties but was not prepared to liquidate assets to reduce borrowings, because he hoped and expected things would change.

In the middle of 1983 Mr Copping again saw the bank manager about their circumstances and he again told the bank manager that he would only consider disposing of property in the case of need or as a last resort.

By August 1983 the position had deteriorated further, in that Bennetts had approached the ANZ advising them that they were not, any longer prepared to underwrite the liabilities of the appellants and requesting that the bank take over Bennetts position. Bennetts advised Mr Copping they certainly would not continue unless security was given.

It was in those circumstances that Mr George Copping came to speak to Mr Harrap in October 1983. He told Mr Harrap that he had financial problems and that he had seen something in the paper about low interest foreign currency loans. It was that conversation which led to the conversation with Mr Hanel, which subsequently led to the conversation with Mr Irvin.

After the conversation with Mr Harrap, Mr George Copping contacted his son Wayne by telephone with a view to telling him that a meeting had been arranged for the purpose of discussing a foreign currency loan. At that stage Wayne was also in financial troubles. Mr Copping described Wayne's financial position: "It wasn't real good". (AB 291)

Wayne was then carrying a heavy debt in relation to the purchase of a property known as Chetwyn and was in further difficulties by reason of the drought. Wayne's circumstances had led him to have to borrow $30,000 privately as carry on finance. Mr George Copping had it in mind to provide Wayne's financial circumstances to Mr Hanel to include his borrowings in an off-shore loan.

It is right to say that by this stage the family's position was acute. The family were heavily indebted and the farming businesses were not providing sufficient income to meet the interest payments on their indebtedness, let alone to reduce the indebtedness itself. Mr George Copping was not prepared to agree to the sale of any of the property to reduce that indebtedness, and indeed it was that very attitude which induced him to speak to Mr Harrap and then to Mr Hanel and subsequently Mr Irvin in relation to an off-shore loan. Mr George Copping saw the real advantage of an off-shore loan to be the low interest rates. He was cross examined in the following terms: (AB 294) Q His Honour could take it, couldn't he, that it was your view that it was important to obtain a low interest loan if it was at all possible to do so?

Q The boys indicated to you that they were of the same view, did they not?

A Yes. We were all within the same mind on that, I think.

Q That was because, in your case at least, you appreciated that a reduction of borrowing expenses would relieve you from pressure from the bank and from Bennett?

By this stage the family's finances had reached their lowest ebb. In fact before meeting Mr Hanel on 13 December 1993 Mr Copping realised that there would be no income coming to the family before March of 1984, when the wool cheque was expected to arrive.

Mr George Copping saw the low interest rate loan as relieving him of any pressure to sell land.

Mr Copping said that following the meeting with Mr Hanel he received some correspondence relating to an off-shore loan in early January 1984. In cross examination the following exchange took place: (AB 324) 1. "Q You were, by this time, completely satisfied that the foreign currency loan was what you required in order to overcome the difficulties that we have talked about.

Q It is right to say, isn't it, that by January 1984, by the time that you had got this letter, you had made up your mind to proceed with this facility based on what Mr Hanel had to tell you at that meeting?

A I think we had made up our mind. I'm not real positive at that stage.

Q Certainly, from what Neville and Layton had told you, they had made up their minds, hadn't they?

Q There was no doubt in your mind that that is what -

Q Did you discuss it with Wayne - after you had had the meeting in December, did you get on the phone and say 'we have had this meeting with this chap'?

A I contacted him, or would see him at various places or shows, or whatever.

Q There was no doubt in your mind, from what Wayne told you, that he wanted you to proceed with the application to get this facility as soon as you could do it?

Q 'The same opinion' being, to put it beyond doubt, that you wanted this facility and you wanted it as soon as it could be arranged?

Q It is also true to say, isn't it, that, having reached that position, you made no alternative inquiries as to other sources of finance, did you?

Q For example, you didn't go back to Mr Smith at Lucindale and say 'Look, can you advise me as to re-financing?'

Q Indeed, in fairness to Mr Smith, you never told him that you were investigating a foreign currency loan at all, did you?

Q You made no inquiries of organisations - like the Primary Industry Bank or the Commonwealth Development Bank, or bodies of that kind - for alternative assistance, did you?

Q The situation was that, by this time, given what Mr Hanel had told you, you weren't interested in exploring other avenues for re-financing, were you?

After that date the family's position worsened.

Mr Wayne Copping became liable to pay penalty interest rates, by reason of a late payment of interest on 24 February 1984. (D1438) On 27 March 1984, he was advised that the principal and interest in relation to the mortgage over his property was due for repayment on 17 April 1984. (D1442) Mr Wayne Copping sought an extension of the time for repayment of principal, and on 13 April 1984 the mortgagee's agents advised him as follows: (D1444)

"Before considering your request for an extension of the above mentioned mortgage to this firm would you please have your substitute lender advise us as a matter of urgency that your loan has been approved and that the monies will be advanced to you in the near future."

It can be seen that an extension of time within which to repay the principal was dependant, in part, upon Mr Wayne Copping being able to re-finance in the longer term.

Mr Neville Copping's financial position worsened during this period as he came under further pressure from the ANZ Bank.

This interchange occurred in the cross examination of Mr George Copping (AB 355): "Q You probably were aware of that interest rate that the bank was seeking from Neville at this time, 17.25 per cent.

Q Certainly, it signalled to you the importance of pressing on to secure this low interest loan as soon as possible."

Q Because one thing that was becoming blindingly apparent to you at this time was that domestic rates were going up fast, weren't they?

Q That members of your family concerned with this proposed off-shore borrowing were being subjected to very high rates of interest, weren't they?

Q And you reasoned that the higher the interest obligations they had, the more disastrous your financial position would become. Correct.

Later in cross examination (AB 356) Mr Copping was asked:

Q You are aware that Neville, at least, was obliged to pay a very high interest rate.

Q I take it that you also were under such an obligation.

Q You appreciated, on your own account, that the higher the interest rate, the greater financial difficulty you would be placed in?

Q Hence your concern in April 1984 to do whatever you reasonably could to secure this low interest foreign currency loan as soon as you could.

Q Of course, as each week went by at this time, you knew that the financial situation of both yourself and Neville and Wayne at least was deteriorating, didn't you.

That his answer was right is clear enough from the fact that on 4 June 1984 Wayne Copping's mortgagees advised that they were not prepared to extend the existing mortgage indefinitely and requested that repayment be made of the principal together with interest within fourteen days of the date of that letter. (P47) On 27 June 1984 the mortgagee's agents advised that unless Mr Wayne Copping presented a satisfactory proposal for repayment they would serve a notice of default and "proceed to exercise the powers conferred upon this writer pursuant to the Power of Attorney dated the 13 October 1983". (D1449)

Mr Copping was asked in cross examination about his son Neville's financial position as at June 1984: (AB 360) "Q At this time you, and to your knowledge the boys, were in effect hanging on until salvation came through this loan.

A Well, there was other means, but we would like the loan, yes.

Q Certainly, but that was a matter of last resort, wasn't it.

Q It was either the loan arranged by Mr Hanel or selling land by this time, wasn't it.

Q You were going nowhere else other than through Mr Hanel for this loan, were you.

Q You understood as at June 1984 that if by some reason or other your application was turned down, you would have no choice but to sell land to get out of financial difficulty.

A bank diary note shows the increasing frustration of the bank. Neville was apparently ignoring the Bank and Dalgetys. The Bank officer recorded: "Rang and spoke to Bev and advised her that the account has cracked the limit and that is as far as we can go without him calling." (P525)

By July 1984 the position had not improved. At that time Neville was advised that his interest rates were due for review and that they would be increased from 11 to 16.5 per cent for the next three years. The bank had indicated to Neville that they would extend his accommodation to the end of August 1984 to enable Neville to make arrangements in respect of the loan.

Mr George Copping recognised at this time, from his own appreciation of the situation, and from discussions with Wayne that it was becoming increasingly urgent to know how the application, to which the third parties were then attending, was progressing. Mr Copping made a number of enquiries with Mr Harrap during July asking him to chase up Mr Hanel to enquire as to the progress of the application. He accepted that he was anxious about progress (AB 377). Mr George Copping was asked as to his state of mind in July 1984 (AB 385): "Q And it is right to tell his Honour, isn't it, that by at least the end of July, early August 1984 there was no doubt or lack of understanding in your mind about any aspect of the proposal at all, was there.

Q There was only one proposal, wasn't there, that you knew about.

Q Exactly. Let me put it to you again, you would tell his Honour, wouldn't you, that the truth is that by the end of July, early August 1984 there was no doubt in your mind about any aspect of the proposal that you knew Mr Hanel was processing with the lender.

A I think there still would have to be some doubt in your mind.

A I would say so. With a foreign currency loan there is always doubt, isn't there.

Q Let me bring you back to this period of time. I asked you a moment ago that had you any doubts from December to this time, it was open to you to speak to Hanel about it, correct.

Q I am suggesting to you that there were no doubts in your mind about any aspect of the proposal during that period, were there.

Q And Hanel, of course, was the only person that you had been speaking to.

Q And as far as you were concerned you had no doubts or reservations about what you were seeking to undertake.

A I think I might have still had doubts but we were still going to undertake the loan.

Q And I take it then that at least as far as you were concerned, by July 1984 at least your mind was made up, wasn't it.

Q You wanted to take the loan regardless of the risk of loss that you appreciated, correct. Does that sum it up.

Q And that risk plainly being that you could suffer grave loss if the currency exchange rate moved adversely, correct.

Q I am trying to bring you back, and I know it is a long time ago, to the period when you were making application for and considering the proceeds and consequences of the transaction, you follow.

Q Let me endeavour to be clear about it at the risk of repetition and, more importantly, so you are clear about what I am asking you, that by July your mind was made up regardless of any doubts that you might have had about any aspect of the transaction, correct.

Q Because you took the view that weighing up the proceeds and consequences, including risk of loss, in the circumstances of the time it was in your commercial interests to take the chance and proceed with the loan.

Q Again so that there is absolutely no doubt about it, that risk, you appreciated from what Hanel had told you as far back as December 1983, might very well extend to a fluctuation in excess of the 10% within which it had moved in the past, correct.

A I don't think we really realised at that stage that it could do that.

Q But just going back to the December 1983 meeting, Hanel had made it clear to you that there could be no certainty as to the extent of fluctuations, didn't he.

Q And he also said to you in almost as many words, but certainly in substance, that the $100,000 in the sinking fund might be lost in the event that the exchange rate moved beyond 10%, correct.

A Yes, it was always emphasised that it could happen but not very likely. That's what we were always told.

Q And in fairness to Mr Hanel, you would say, would you not, that you appreciated that such an adverse movement could happen, and you were prepared to take the risk that it would not happen, correct.

A 'That such an adverse movement', that is a bit hard to comprehend.

Q I only referred to one adverse movement by way of example and you can't remember that. Let me put it to you, you appreciated from what Mr Hanel told you that the exchange rate could move so adversely as to swallow up the run $100,000 in the sinking fund, didn't you.

Q And it remained your hope that such an event would not happen if you proceeded with the loan, didn't it.

Q It would be fair to say, wouldn't it, that having been told of the possibility that it could happen you took the view that it was worth taking the risk that it would not happen, correct.

Q And it would be right to say, wouldn't it, that had Mr Hanel in, for example, May or June 1984 said to you that your application was successful, say he had told you then, it is right to say, isn't it, that you would have proceeded with it and undertaken the loan without any further discussion.

A No, I think we were going to meet Mr Irvin before we would have done anything positive.

Q Is that because there were some outstanding matters troubling you.

A No, but we knew in July that Mr Irvin was going to visit us.

Q Sure, but I want to be clear about this before we get to Mr Irvin coming to your house, and you correct me if I am missing something, but as I understand it as far as aspects of the proposal were concerned, you had no doubts about what you were seeking.

Q So you were clear in you own mind about what it involved from what Hanel had told you.

Q There was nothing at that point of time, namely July 1984 which you felt you did not understand, was there.

A We thought we understood anyhow, put it that way.

Q And that was the reason you had no doubts in your mind about wanting to proceed, correct.

Q At that point of time you in your own mind did not require any further information about any aspect of the loan in order to enable you to decide whether or not to proceed, did you.

I have already detailed the circumstances of the meeting between the appellants and Mr Irvin of 4 August 1984.

At the time of and immediately after that meeting Mr Copping and the family wanted the loan as soon as possible. Mr Copping in cross-examination said that it had been urgent for some months that they re-finance.

It cannot be overlooked that some nine months had passed since Mr Copping had made his initial inquiries in relation to off-shore borrowings. Those initial inquiries of Mr Hanel were precipitated because Mr George Copping had refused to agree to his sons' request to sell land and it was the possibility that he would have to sell land to continue which drove him to seek the advice of Mr Hanel. An off-shore loan was the answer because as he saw it the income from the properties would be sufficient, but only just, to service the lower payments of interest consequent upon he lower interest rates applicable to off-shore loans.

Moreover the financial position of the family had continued to deteriorate through the whole of the period of 9 months since the meeting with Mr Hanel and the financial stresses had increased significantly. The family had in truth committed themselves to an off-shore loan because they had failed either to sell property or to make inquiries in the whole of that time in relation to any other loan.

The fact of the matter is that the off-shore loan carried with it a significant reduction in interest rates which allowed for the continuation of the farming businesses on all of the properties. Their financial position was so parlous that by August 1984 they were obliged, by their own circumstances, to proceed off-shore.

The fact that the reduction in interest rates was significant is demonstrated by the fact, as I have already mentioned, that the family was not able to use the money saved in interest rates for the purpose of investment in the sinking fund for repayment of capital. There was simply not the money available.

Notwithstanding all of that however as has already been indicated by December 1984 the family was in a position where it had to borrow a further $100,000 to continue its operation.

Mr Copping rightly admitted, in my opinion, the family's position was such that unless they sold a substantial amount of land then it was inevitable that the businesses would fail.

The appellants were aware of the risk of currency fluctuations. His Honour has found as much and the evidence supports that finding. Moreover they were also prepared to assume the risks associated with an off-shore loan for the purpose of obtaining the lower rates of interest to which I have referred.

As Mr Copping said, he saw it in the commercial interests of the family to assume the risks of adverse currency fluctuations for the purpose of obtaining a low rate of interest.

In my opinion the evidence did support a finding that the probabilities were that if this representation had not been made that the Coppings and of course inferentially Perball Pty Ltd would still have re-financed off-shore. I think the probabilities are, as His Honour found, that having regard to the attitude of Mr George Copping, the family and again inferentially Perball Pty Ltd would not have re-financed on-shore. Re-financing on-shore required very significant interest payments, which having regard to recent history, were not able to be met, at least in the minds of the family, by the income generated from the farming businesses. I think the imminent loss by Wayne of his property and the prospects of having to sell Neville's property all for the purpose of consolidating the family unit would have, as the learned trial judge found, caused the family and inferentially Perball Pty Ltd to reject on-shore re-financing.

It must also not be overlooked that the family had really committed itself to off-shore financing by failing to take any steps to either liquidate assets in late 1983 through to August 1984 or to make any further inquiries about any alternative financing. They had, by committing themselves so specifically to Mr Hanel's advice, really left themselves no alternative but to re-finance in accordance with off-shore arrangements.

There is a good deal of evidence to support the finding of His Honour that Mr Copping would not have re-financed on-shore. I cannot say that His Honour was wrong to make that finding and indeed, on my examination of the evidence, the finding is right.

To that extent therefore the appellants case failed on its premise.

However His Honour went further and concluded that the probabilities were that the appellants would have financed off-shore in a transaction of the kind that the appellant Perball Pty Ltd eventually entered.

It seems to me that having concluded that the appellants would simply have not re-financed on-shore it is necessary to determine whether they would have re-financed by the sale of assets or alternatively pursued finance off-shore.

There is no doubt, in my mind, that the evidence clearly supports the finding that Mr George Copping would not have agreed to the sale of any land except as a last resort. A last resort, upon the evidence, would have been only if he was unable to obtain an off-shore loan acceptable to him. I think therefore the first inquiry would be whether or not he would have been able, upon the balance of probabilities, to obtain an off-shore loan.

The evidence as already discussed shows the clear willingness on the part of the appellants to re-finance off-shore.

There seems to me to be a corresponding willingness on the part of this respondent to enter into such a transaction.

I think an internal memorandum of 27 August 1994 (AB 2095) suggests a flexibility on the part of AIFC. So also the handwritten note on the internal memorandum of 27 August 1994 (AB 2096) from Mr Irvin to Pat Hannah.

So also the fact that AIFC was prepared to reduce the obligations on the part of Perball Pty Ltd to contribute only $20,000 per annum to the sinking fund. In due course the fact that the respondent did not call upon the obligations in the transactional documents supports such a finding.

I think the evidence does support the finding at which His Honour arrived. The respondent would have entered a transaction of this kind in any event.

That would have exposed them necessarily to the same currency fluctuations which in due course they experienced.

In those circumstances again the appellants' claim in damages fails in its premise.

In my opinion the findings to which His Honour arrived in relation to the question of damages were available to him and were not in conflict with the directions given to him by the Full Court.

I have referred to the appellants' complaints about the respondent's arguments at the damages hearing which were said to have been advanced for the first time. It was submitted that in allowing those arguments to be put and to succeed was to deny the appellants procedural fairness. I have rejected the relevance of that submission in the application for an extension of time and in a consideration of the Notice of Motion (Page 28 of these reasons).

I am prepared to consider, for the sake of completeness, the appellants argument as to procedural fairness at the damages hearing notwithstanding that it is not a ground of appeal. Because of the conclusion at which I have arrived that is not unfair to the respondent.

The appellants recognised, when this matter was remitted back to the learned trial judge, that the finding of the first Full Court did not necessarily give rise to damages. The learned trial judge said at (AB 3856/3857): "Mr Tilmouth quite properly did not attempt to argue that simply because the plaintiffs, in light of the Full Court decision, must be taken to have been induced to enter into the loan transaction by reason of the negligent misstatement, the alleged losses said to have been incurred thereafter must necessarily sound in damages. I say "alleged" losses as it by no means follows that because a contract becomes more expensive to perform than was anticipated when it was entered into, this is indicative of a "loss" in the relevant sense.

Be that as it may, a simplistic "but for" contention can no longer be regarded as reflecting the proper legal principles regarding causation: March v Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506. Quite properly, Mr Tilmouth's argument embodied the concession that the first step in approaching the question of quantification of alleged loss was to establish on the balance of probabilities what the plaintiffs might have done if the negligent misrepresentation had not been made.

As will be seen, he contended that the most likely option which the plaintiffs would have pursued in that event was to re-finance themselves from onshore sources."

The appellants in fact presented their case in that way.

The appellants' Statement of Claim does not identify the appellants' claim for damages with that particularity. The appellants merely claim they would not have entered into the transaction but for the representation (Paragraph 20 Statement of Claim AB35). It was not until trial that it was claimed that the appellants would not only have not entered into this transaction but would have entered into some other transaction. Apparently the respondent made no complaint about that and the matter proceeded both at trial and on assessment of damages on the basis recorded by the learned trial judge.

It is quite clear from the evidence led by the appellants and the cross examination by the respondent that apart from the alleged misstatements reliance was an issue as was damages. It is quite clear the respondent's case was that the appellants would have entered into this or a similar transaction in any event by borrowing substantially the same amount in a foreign currency loan. Those issues were clearly alive at the trial.

There was no obligation on the part of the respondent to put its arguments on damages to the first Full Court. That Full Court was not considering any question of damages as the Notice of Appeal to that Court and its order demonstrates.

The appellants' counsel complained to the learned trial judge that the respondent had not put to the first Full Court any argument that damages would not flow in any event. It was put to the learned trial judge that the failure to do so misled the appellants into abandoning aspects of the appeal. I have already rejected the submission that the conduct of the respondent induced the appellant, Perball Pty Ltd to argue the appeal to the first Full Court in the way that it did. Of course the personal appellants did not appeal to that Full Court so nothing done by the respondent could have affected their position. As to Perball Pty Ltd, it decided when no Notice of Contention was filed, to abandon aspects of its appeal. Again I have determined there was no obligation on the part of the respondent to file a Notice of Contention.

In the damages hearing counsel for the appellants did not seek an adjournment, nor did he seek to call further evidence. He did not point to how it was in the assessment of damages the appellants might be prejudiced.

On this appeal the appellants did not identify any prejudice or disadvantage in those proceedings.

Whilst it is true that the respondent's pleading does not specifically address the matters argued, the appellants' statement of claim does not identify the claim for damages which was pursued at the hearings. Both parties to that extent failed to observe the pleading rules.

However even absent any pleading, the judge was obliged, unless if by reason of the course of the trial or that it would be unfair to do so, to grant all such relief on any cause of action to which the parties might be entitled on the evidence whether or not the relief granted was expressly requested in the pleadings (Rule 46.04).

In the circumstances which developed there was no procedural unfairness to the appellants.

At the trial Perry J ordered judgment for the appellant Perball Pty Ltd in the sum of $183,898.62. He dismissed that part of the claim of Perball Pty Ltd which was said to arise out of the representations made by Mr Irvin on 4 August 1984. He dismissed the claims of the individual plaintiffs/appellants. He ordered that the appellant Perball Pty Ltd recover against the respondent 75% of its costs to be taxed. (AB 2742) He made no order as to the costs of action of the individual plaintiffs/appellants.

In his reasons for the order as to costs his Honour said: (AB 3878) "As I said at the outset of the argument, I was disposed to think at that stage that the justice of the case might best be met by an order that each party bear its and their own costs.

On reflection, however, after hearing Mr Tilmouth, I am inclined to think that the plaintiff should recover costs. I do so bearing in mind the remarks of his Honour Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 9 at 16, in the course of which his Honour stressed the fact that when a plaintiff comes to court and succeeds on some issues, failing on others, the court should not be astute to deprive the plaintiff of an element of the costs, or attempt to dissect costs with respect to issues on which the plaintiffs might have succeeded on the one hand, or failed on the other.

The fact remains, however, that in money terms the rump of the plaintiff's claim was decided on issues as to which the defendant succeeded. The plaintiff's claim, as finally quantified, was of the order of $2.4 million. It succeeded in obtaining judgment only on a secondary aspect of its claim, that is, to do with the hedge contract, upon which its recovery was of the order of $183,000.

I think, however, that Mr Tilmouth is right when he suggests that, had the hedge contract claim proceeded on its own, the trial would not have been very much shorter. It seems to me that a good deal of time was spent with respect to the hedge contract claim, and that amount of time is not truly reflected by the disparity in the amount of that claim as opposed to the claim overall."

The appellants appealed against the learned trial judge's orders and the respondent purported to cross appeal against the order as to costs claiming that the learned trial judge had erred in awarding any costs to Perball Pty Ltd and seeking an order that Perball Pty Ltd and the individual appellants pay 75% of the respondent's costs of action, or that the Full Court order that all parties bear their own costs of action. (AB 2748)

During an interlocutory hearing the appellants indicated that they would, in due course, argue that the respondent's cross appeal on costs was incompetent. (section 50(2) Supreme Court Act). The respondent thereupon, in conformity with section 50(2) sought leave to appeal from the learned trial judge's order as to costs. Leave was refused. During the hearing of that application his Honour said that he was not persuaded that his reasoning was arguably wrong. He said that his order was "a pure exercise of discretion": (AB 3884) He stated a case to the Full Court in relation to the application of section 50(2) of the Supreme Court Act: Copping v ANZ McCaughan [1995] SASC 4917; (1995) 63 SASR 523 which confirmed that a trial judge has an unfettered discretion as to costs.

As has already been recited, the appeal from the decision of Perry J given at the trial was successful and the Full Court determined that reliance had been made out. It set aside the judgment and order for costs in favour of the appellant Perball Pty Ltd and remitted the matter to the learned trial judge "for assessment of damages and for the entry of judgment for the plaintiffs (sic) against the defendant for the amount of such damages and costs, and in the case of Perball Pty Ltd for the additional amount of $183,898.68 already assessed." (AB 3845)

His Honour assessed the appellants' damages in the nominal sum of $1.00. For the reasons I have given, it is my opinion that the learned trial judge was not wrong to reach that conclusion. He ordered that the appellant Perball Pty Ltd recover against the respondent the sum of $183,898.62 and made consequential orders for interest.

The learned trial judge then went on, in his reasons for judgment on the assessment of damages, to consider the question of costs. He observed that the order that there be no order as to the costs of the individual plaintiffs was not set aside by the Full Court. On a literal reading of the order of the Full Court that is probably right. (AB 3844) However as the Full Court allowed the appeal of the individual plaintiffs against the judgment dismissing their claims, it would have been odd for the Full Court to intend that an order depriving those individual plaintiffs of their costs be allowed to stand. I think in that respect there is an oversight in the order of the Full Court. I will return to that.

In dealing with the claim of Perball Pty Ltd for its costs the learned trial judge said referring to the previous order as to costs: "The reduction made by my order as trial judge in the costs otherwise recoverable by Perball was a reflection of the fact that it had failed on the issue of reliance with respect to the representations associated with its entry into the off-shore loan agreement.

Although by reason of the decision of the Full Court it succeeded on that issue, it has nonetheless failed to satisfy me that it suffered a loss sounding in damages. In those circumstances it seems to me that there is no reason why the order that it have 75% of its costs should not be restored."

He however did not then pronounce an order as to costs but invited further submissions from the parties.

Submissions were made and at the conclusion of those submissions the learned trial judge in ex tempore reasons said: "Both counsel have made what I can only describe as heroic efforts to persuade me that in the light of the decision which I have given following the argument before me as to the assessment of damages with respect to the misrepresentations which have been described as the Redbank misrepresentations, I should reconsider the costs order made in favour of Perball.

Mr Nicholas QC argued that the plaintiff Perball should get less than 75% and Mr Tilmouth argued that it should get more.

In my opinion, no variation with respect to that order is now called for.

I have previously given reasons as to why I made the orders which I did on 23 May 1994 with respect to costs. All I can say is that, having regard to the course of events since then, nothing has occurred which would provide a proper basis for me to reconsider in either direction the content of those orders.

Due to the fact that the orders in question were vacated by order of the Full Court, I will in due course, after I have heard counsel as to other matters, make an order restoring paragraphs 3 and 4 of my order of 23 May 1994."

His Honour then dealt with the costs of the hearing of the assessment of damages. He awarded the respondent its costs of that hearing against all of the appellants, except in the case of Mr George Copping (who has died) the order was not to be effective unless and until an executor or administrator was appointed to carry on the action on his behalf.

The learned trial judge made the following orders in relation to the costs of the appellants and respondent. (AB 3876) "6 That as to the costs of the action up to and including the trial conducted in March and April 1994:

(a) the plaintiff Perball Pty Ltd do recover against the defendants 75% of the said costs to be taxed; and

(b) there be no order as to the said costs of the plaintiffs George Stanley Copping, Faye Joyce Copping, Lynton Sexton Copping, Neville George Copping and Wane Malcolm Copping.

7 That the costs of the hearing as to assessment of damages consequent upon the said order of the Full Court be taxed and paid by the plaintiffs to the defendant, save that as regards the plaintiff George Stanley Copping, deceased, the said order will not be effective unless and until an executor or administrator is appointed to carry on the action on his behalf."

Grounds 3, 4 and 5 of the Notice of Appeal (Page 41 of these reasons) identify the complaints in relation to the orders for the costs of the trial and of the assessment of damages.

Ground 3 complains of the order in relation to the trial where Perball Pty Ltd received 75% of its costs.

The order made in paragraph 6 confirming the costs of Perball at the trial as 75% of the costs to be taxed was made on the day following the entry of judgment and the orders as to costs of the hearing of the assessment of damages.

The appellants, including the individual appellants, sought leave to appeal from that order. I am not sure why the individual appellants sought leave to appeal as they were not affected by the order of Perry J. They had been previously disallowed their own costs by Perry J and in the consideration of costs after the assessment of damages he made no further order in relation to the individual appellants upon the basis that that part of his order had not been set aside.

Apparently, although the draft order on the Appeal Books does not record, Perry J gave leave to appeal, presumably to the personal plaintiffs/appellants: (Grounds 4 and 5 of the Notice of Appeal.) Leave was required because the personal appellants were not otherwise appealing against the learned trial judge's orders.

Leave to appeal was granted to the appellants (Doyle CJ, Olsson and Duggan JJ) on 21 June 1996 allowing the appellants leave to appeal against paragraphs 6 and 7 of the orders of Perry J. The leave given in respect of paragraph 7 was otiose, because leave had already been given by Perry J.

The effect of all of the orders as to costs is this. First that the personal appellants were refused their costs. That is not surprising because they failed to claim damages and failed to establish damages. Why they have remained as parties and why the order of the first Full Court was drawn so as to allow them to pursue damages and why after again failing to prove damages they have appealed against the award of damages is all unclear. Their presence in the action has led to continuing uncertainty and confusion. An order disallowing their costs was inevitable.

The appellant, Perball Pty Ltd succeeded in part but not upon the main thrust of its action. The order made at trial for 75% of Perball Pty Ltd's costs was in the circumstances, and with respect to his Honour, generous. The main issues at the trial were whether the appellants had made out misstatements by Mr Irvin on 4 August 1984 and whether they or any of them had relied upon these misstatements and if so whether damage had been caused to Perball Pty Ltd. The learned trial judge decided adversely to the appellants to all but one misstatement and to any reliance and therefore did not have to consider damages upon that claim.

When called upon, as he was by the Full Court to consider damages the learned trial judge found adversely to the appellants on that issue. The appellants therefore in the major aspect of the claim made out only one misstatement which was not productive of loss.

I think that an order in favour of Perball Pty Ltd for 75% of its costs was not outside the proper exercise of the discretion which undoubtedly reposed in the learned trial judge.

There are two aspects of the complaint about the order for costs of the damages hearing made in favour of the respondent. First it was put that the order ought not to have been made at all because the respondent had not put the arguments at trial or on the appeal before the first Full Court and these matters were first raised in October 1995. Secondly it was put that no order ought to have been made against the personal appellants. I have already dealt with the argument that the appellants were not accorded procedural fairness. It is enough to notice that the Notice of Appeal does not raise the issue of a want of procedural fairness. Nor in fact were the appellants denied procedural fairness. The appellants were obliged, after the decision of the first Full Court to prove that damage was caused as a consequence of the misstatement. The respondent was perfectly entitled to argue, as it did, that on the appellants' own case they had not made out a claim for damages. The respondent was not obliged to put that argument to the first Full Court. That Court was not, as the Notice of Appeal to that Court and the order of that Court showed, concerned with questions of damages. The failure to put that argument was not a reason to refuse an order for costs in favour of the respondent, where the appellants failed to prove any damage to any one of them on this issue. The fact that the respondent had not put that argument at the trial, if that is the fact, again was no reason to preclude it from putting the argument on the assessment of damages when the issues had been refined in the way that they had by the learned trial judge and by the Full Court.

In my opinion no error has been shown in the exercise of discretion by the learned trial judge in favour of the respondent for the costs of the assessment of damages, on which it was successful.

The personal appellants complain in Ground 5 about the order made requiring them as well as Perball Pty Ltd to pay the respondent's costs of the assessment of damages. It is said there were in substance no live issues between the personal appellants and the respondent after the learned trial judge's orders at trial on 23 May 1994 and that the personal appellants did not appeal against the judgment and orders of the learned trial judge made on 20 May 1994. That is correct. The Notice of Appeal to the first Full Court shows one appellant only and it would appear from the heading shown in the document to be Perball Pty Ltd. The order made by the first Full Court (which is in the form of the orders proposed by King C J (AB 3760)) allowed the appeal for all plaintiffs and in the manner described (AB 3845). That would appear to reflect a misapprehension by King C J of the parties appealing and the nature of the damage alleged to have been suffered. The order was eventually sealed at the behest of the respondent not the appellants. It was the case therefore that the personal appellants were given an order they did not seek and which sent them back to the learned trial judge for an assessment of damages which they also did not seek. At the assessment of damages they did not contend for an award in their favour but consistent with their not appealing from the decision at trial simply allowed Perball Pty Ltd to agitate its claim for damages.

Where, in due course Perball Pty Ltd failed in the claim for costs against all appellants his Honour said (AB 3872). "Furthermore, on a full working out of some of the arguments which Mr Tilmouth QC addressed to me during the hearing commencing on 18 November 1995, if I had acceded to the submission which he made that damages should be assessed against the yardstick of the financial position of the plaintiffs, on the footing that there would have been an on-shore loan rather than the off-shore loan to Perball, it is clear that it would have been necessary to have regard to the position of the individual plaintiffs and not just to Perball.I say that because it could not be assumed in the case of an on-shore loan that a lender would have insisted upon the imposition of the company Perball as a vehicle to receive the loan. Furthermore, insofar as alternative bases for damages were suggested which would have involved sale of some of the properties, or at least one of the properties of the individual plaintiffs, again, that would have brought the individual plaintiffs into the reckoning on the question of damages.I think it is highly unreal and unlikely that Mr Tilmouth at the hearing of the assessment of damages before me would have suggested, if the point had expressly arisen for discussion, that he sought damages for Perball only. On the contrary, for him to have suggested that would have clipped his wings with respect to a number of the arguments which he was advancing.In those circumstances, it seems to me that it cannot be suggested that the hearing of the assessment of damages before me was something which was advanced only by the plaintiff Perball as opposed to the plaintiffs as a whole.In those circumstances, it is proper that the order for costs of that hearing, which I award in favour of the defendant, be made against the plaintiffs."

I agree with the learned trial judge that in the assessment of damage suffered by Perball Pty Ltd regard had to be had to the probabilities of what the personal appellants would or would not have done. But it seems to me that such an inquiry did not mean that the personal appellants were advancing an argument for an award of damages in their favour, nor did it mean that if Perball Pty Ltd did seek damages a failure on its part to make out a claim for damages would mean that the personal appellants who were not making a claim ought to be mulcted in costs.

In my opinion up until the costs hearing before Perry J the personal appellants had not so conducted themselves so that they ought to have been made responsible for the costs of that assessment of damages.

Although, because of the error in the order of the Full Court the action of the personal appellants was remitted to the learned trial judge, in fact they did not seek an award for damages at that hearing.

It is true that since that hearing the personal appellants have appealed against the assessment of damages arrived at by the learned trial judge, but that is not a factor which ought to be considered in the determination of the appropriate order for costs in the hearing of the assessment of damages.

I therefore suggest that the order for costs made in favour of the respondent and against the personal appellants ought to be set aside and that the respondent's entitlement to costs be limited to an order for costs against Perball Pty Ltd.

Proposed Orders For Appeals Against The Orders As To Costs

1. The appeal against paragraph 6 of the orders of Perry J made on 13 February 1996 be dismissed.

2. The appeal against paragraph 7 of the orders of Perry J made on 13 February 1996 be allowed and the order set aside and in lieu thereof an order made:"That the costs of the hearing as to the assessment of damages consequent upon the said order of the Full Court be taxed and paid by the plaintiff Perball Pty Ltd to the defendant." Conclusion

518. I would make the following orders:- 1. Application for an extension of time within which to appeal from the decision of Perry J made on 20 May 1994 refused.

2. Ground 2 of the Notice of Appeal dated 27 February 1996 dismissed.

4. That the appeal instituted by notice dated 27 February 1996 be dismissed.

5. The appeal against paragraph 6 of the orders of Perry J made on 13 February 1996 be dismissed.

6. The appeal against paragraph 7 of the orders of Perry J made on 13 February 1996 be allowed and the order set aside and in lieu thereof an order made: "That the costs of the hearing as to the assessment of damages consequent upon the said order of the Full Court be taxed and paid by the plaintiff Perball Pty Ltd to the defendant."