163 However, on any view the Campbells were a wealthy couple. Mrs Campbell did not seem to me to be a person who would have reacted in the way she obviously did if the only issue was the loss of the deposit. It is clear from the rest of her evidence that the statement in par 40 of her written statement does not represent the real position or, at least, not all of it. The real position is that she had two conflicting interests. On the one hand, she disagreed in principle to a wife giving a guarantee in support of her husband's investments and she fundamentally disagreed with giving any security which could place her property at Wanguri at risk. This was the reason and the only reason that she had any concerns. As she said in her evidence:
'HIS HONOUR: Mrs Campbell, you weren't in a state of uncertainty about the sale contract prior to the news of the personal guarantee though, were you?‑‑‑No.
You were perfectly happy for the deal to proceed?‑‑‑Essentially, yes.
So that if it appeared, for example, that there was a time limit that had been exceeded and people may well have been able to bring the contract to an end for that reason, nothing to do with a personal guarantee, you would have been happy for the contract to continue notwithstanding that?‑‑‑Sorry, if ‑ ‑ ‑
There were various time limits in this contract that various things had to be done by?‑‑‑Yes.
Management agreement entered into, and other things, which may have given various parties the right to bring the contract to an end, unrelated to your guarantee?‑‑‑Yes.
And it seems the parties made the decision that they would continue with the contract?‑‑‑Yes.
Again, unrelated to your guarantee. You had no problem with that. You would have been happy for the contract to continue?‑‑‑If I didn't have to sign the personal guarantee?
Yes?‑‑‑Yes, I think so.'
164 On the other hand, she did not wish to refuse to give the guarantee if the result of doing so would be her husband 'losing the farm'. This is the reason given by Mrs Campbell to Mrs Christopher as to why she did not simply refuse to give the guarantee. It is what she said in her oral evidence as to the reason why she gave the guarantee, notwithstanding her unhappiness in doing so:
'So is that true, you did not want to give a personal guarantee but you were aware that Dan wanted the property?---Yes
…
I was aware that my husband wanted to buy the farm.
Is that true?‑‑‑That's what my belief was at the time.
And you felt that you had to support your husband?‑‑‑Yes'
165 So understood, Mrs Campbell's distress on hearing that she was required to give a guarantee is much more understandable. It is not simply distress at the risk of her husband losing his deposit, it is distress at her husband losing Larrakeyah Station which he wanted.
166 This does not mean that the potential loss of deposit was irrelevant. As Mr Robinson SC put to me, it might be expected that if Mrs Campbell had known that the deposit was repayable, this was a matter that she might have raised with her husband in order to convince him to agree to the termination of the sale contract. I accept this, although there does not seem to have been any meaningful discussion on 17 or 18 February 1999 between Mr and Mrs Campbell as to the issues as they then understood them. Nevertheless, as Mrs Campbell said in her evidence, her husband's agreement to the termination of the sale contract would be significant to Mrs Campbell 'on an emotional level'. But if Mr Campbell had maintained his desire to keep Larrakeyah Station, the possibility of a refund of the deposit would not have resolved the problem as Mrs Campbell perceived it. She would still have the same conflicting interests. If Mr Campbell had maintained the position that he still wanted the farm then I can see no reason why Mrs Campbell would not have proceeded exactly as she did do - to contact her father and then rely upon the advice of Mrs Faehse and her father and give the guarantee.
167 So considered, the chain of causation in relation to the counterfactual question of what Mrs Campbell would have done turns entirely on whether I am satisfied that Mr Campbell would have been agreeable to terminating the sale contract if he had known that the deposit was repayable. As to that, I am not satisfied as to what he would have done. At trial he gave evidence that by the end of January he had significant concerns about the purchase of Larrakeyah Station, particularly in relation to Mr Wainwright's suitability. He said that he conveyed those concerns both to his wife and to Mrs Faehse. This is inconsistent with Mr Campbell's written statement; it is inconsistent with Mrs Campbell's evidence and it is inconsistent with what Mrs Faehse told Mrs Christopher. It is probably sufficient to say that the action was not pleaded on this basis and both parties submitted to me that I should proceed on the basis that Mr Campbell was keen for the transaction to proceed at least up to the date of settlement. In any event, I so find.
168 I note that this finding is sufficient to dispose of any claim based upon any failure of Mrs Christopher to advise on the effect of the expiration of the time limit in cl 29.1.1 of the sale contract on 12 January 1999. It is clear that that breach of duty did not cause any loss to the Campbells.
169 This is not to say that I think Mr Campbell was deliberately untruthful. I think he probably summarised the position quite well in his own evidence:
'What I want to suggest to you is that it is difficult today to recall accurately the events which occurred on 17 and 18 February 1999?---That's true.
And, naturally - and I am not suggesting anything improper about this - your version that you have given here today involves a degree of reconstruction?---I think it is a process of evolution over time with some prompting as well with facts and reappraisal of what my actual thoughts on the day were. You'd know that.
I'm suggesting to you it is difficult enough to remember precisely who said what and the sequence of events at this time removed from those events. Do you agree with that?---Yes.'
170 I find that Mr Campbell's recollection of relevant events does involve a significant degree of 'reconstruction' and 'evolution'. I am not prepared to rely upon his evidence, particularly in relation to the events of 17 and 18 February 1999, unless it is independently confirmed elsewhere. This is particularly so in relation to his evidence of what he would have done if he had known that the deposit was repayable if Mrs Campbell refused to give the guarantee. Mr Campbell gave evidence that he had decided by the morning of 18 February 1999, that he would not go ahead with the transaction. As I have already mentioned, I am not satisfied that he did come to that decision. Although he says that he told Mrs Campbell about it, she does not recall being told. I do not think that she was told. Mr Campbell says that he told the bank officer that the deal was off. The bank officer's note only records that Mr Campbell was exploring what options there were and that he expressed a preparedness to terminate the transaction, if necessary. What this suggests to me is that Mr Campbell was still keen for the sale transaction to proceed. However, he was aware that his wife was very upset about the prospect of giving a guarantee and putting the Wanguri property at risk. In these circumstances, if the guarantee was essential to obtaining finance and his wife remained opposed to giving the guarantee then he was prepared to terminate the sale contract. I accept that the reason Mr Campbell was prepared to do so was that which he gave in his evidence:
'Well, she was actually due to give birth the following week, so she was in a profoundly pregnant state, she didn't need extra duress in a supposedly felicitous sort of occasion, awaiting a second child. She was inconsolable, as far as the personal guarantee was concerned. I saw no option but to - the only way I was going to get any peace, now and forever, was to get her out of that personal guarantee problem.
When you say now and forever, to what are you referring to when you say 'and forever'?‑‑‑No doubt she would bring that back on me over the years. She had gone - gone against her principles, and allowed me to use her personal guarantee to buy a farm that she really didn't want.'
However, if the need for the guarantee could have been avoided (for example, by reaching some accommodation with the bank), or if Mrs Campbell was agreeable to giving the guarantee (as she was after her discussion with her father), then Mr Campbell was still keen to proceed.
171 In the result I am not satisfied that the return of the deposit was critical to any decision that Mr Campbell might make. I do not doubt that it was a relevant consideration. As Mr Campbell said in his evidence, that knowledge would have made it easier for him to decide that the sale contract should be terminated. But the reason for him wishing to continue with the contract was not the risk of losing the deposit, but his wish to purchase Larrakeyah Station. The reason for terminating the contract was the adverse response by his wife, not the desire to get back the deposit. Both of those reasons continued to be applicable whether or not Mr Campbell knew that the deposit was repayable.
172 Of course, all of the above discussion is predicated upon the assumption that the deposit would have been repaid if the contract was terminated. If the deposit had been paid to the vendor's solicitor to hold as a stakeholder, as the contract specified, then that assumption might be a reasonable one. But in this case the deposit was paid directly to Mr Wainwright's company. Obviously this involved some greater risk that there might be difficulties in obtaining repayment. What the Campbells might have understood about those risks and what effect it would have had on any hypothetical decision they may have made was not explored in any detail in the evidence, although Mr Campbell did say that he would not have expected to be able to get any money back from Mr Wainwright without an expensive legal case. However, that evidence may involve the same process of reconstruction as did his evidence that he wished to terminate the contract at that time.
173 Finally with respect to Mrs Campbell's evidence in relation to causation I should mention that in some of her evidence there is at least a suggestion that she believed that she was contractually bound to give the guarantee. This was not explored in her evidence. If she did have such a belief it cannot be laid at the door of Mrs Christopher. It is clear that Mrs Christopher advised Mrs Campbell not to give the guarantee. That advice clearly implied that Mrs Campbell was not legally obliged to give it.
174 In the result I am not satisfied that Mrs Campbell would have refused to give her personal guarantee if either she or Mr Campbell had known that the deposit was repayable. This also is fatal to Deloittes' case: see Hall v Foong (1995) 65 SASR 281 at 301.
175 Consequently, even assuming that the test of causation is merely the 'but for' test suggested by Deloittes, I am not satisfied on the facts that Deloittes have discharged that test.
176 However, I am also of the view as a matter of law that the application of that test is not sufficient to establish causation. As it was put by Gummow and Kirby JJ in Tame v New South Wales (2001) 191 ALR 449 at 501[211]: 'The "but for" test is neither a comprehensive nor exclusive test of causation in tort; value judgments and policy considerations necessarily intrude.' In order to establish liability in tort, and particularly in negligence, it is necessary to establish that the relevant breach of duty was a legally effective cause of the relevant loss, not merely that the loss would not have occurred 'but for' the breach. The difference may best be explained by an example. Assume, for example, that a vehicle driven by person A collided with another vehicle driven by person B. The cause of the collision was the negligent driving of person A. The journey being undertaken by person B was delayed as a result of that collision. Subsequently, on that same journey the vehicle driven by person B collided with an animal on the road. As a matter of fact the collision with the animal would not have occurred but for the delay from the first collision. 'But for' the first collision, the second collision would not have occurred. Even so, it is clear that the negligence of person A was not the legally effective cause of the second collision.
177 The problem is in identifying the criteria by which a legally effective cause can be identified. Traditionally courts have avoided identifying any specific criteria by holding that legally effective causation is to be determined as a matter of applying common sense to the facts of the case: see, for example, Henville v Walker (2001) 206 CLR 459 at 480-481, 490-493 ('Henville'), Medlin v State Government Insurance Commission (1995) 182 CLR 1 at 6 and see the discussion by Mason CJ in March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515-517; contrast McHugh J at 528 ff. It is, perhaps, a consequence of the imprecision of this approach that there has been some recent disagreement between the High Court and the House of Lords on the application of the causation test in relation to the losses flowing from negligent property valuations: contrast Kenny & Good with South Australia Asset Management Corporation v York Montague Ltd [1997] AC 191 ('SAAMCO').
178 Notwithstanding that impression, it is clear that the legal and factual context in which the breach of duty occurs are critical to the 'common sense' analysis. This is pointed out by Gummow J in Rosenberg v Percival (2001) 205 CLR 434 at 460-461:
'It is well understood that the legal concept of causation differs from notions of causation which appear in the speculations of philosophers and the perceptions by scientists of the operation of natural laws. This is because the legal concept of causation is primarily concerned with attributing responsibility. It has been said that the test of causation is one of common sense, but, as Lord Hoffmann has observed:
"[C]ommon sense answers to questions of causation will differ according to the purpose for which the question is asked. Questions of causation often arise for the purpose of attributing responsibility to someone, for example, so as to blame him for something which has happened or to make him guilty of an offence or liable in damages. In such cases, the answer will depend upon the rule by which responsibility is being attributed."
Again, in Chappel v Hart, Gaudron J said:
"Questions of causation are not answered in a legal vacuum. Rather, they are answered in the legal framework in which they arise. For present purposes, that framework is the law of negligence. And in that framework, it is important to bear in mind that that body of law operates, if it operates at all, to assign a duty to take reasonable steps to prevent a foreseeable risk of harm of the kind in issue". [Footnotes omitted]'
Kenny & Good provides a practical example of this approach. In that case a negligent valuation was given. It was clear that the purpose for which the valuation was sought was to enable the party who sought it to determine whether to enter into the transaction. In that circumstance it is not surprising that the losses arising out of the transaction, including unexpected losses from changes in the market, were recoverable from the negligent adviser: see Kenny & Good at 424-425, 446-447, 456-457.
179 As discussed above, in this case the duty of care that arose was a duty of care in relation to the sale contract. It was a duty of care to explain what would happen if finance was not available on acceptable conditions. That circumstance never arose. As it turned out, finance was available on acceptable conditions.
180 The case brought by Deloittes is that, if Mrs Campbell had been properly informed of her options she would not have given her guarantee and therefore the sale contract would have been terminated. Assuming for this purpose that that had been established, the breach of duty was not directly related to the sale contract - rather, the duty was directly related to the giving of the guarantee by Mrs Campbell. This identification of the duty of care is reinforced by the factual analysis above that Mr and Mrs Campbell were keen, or at least content, for the sale to proceed. The only issue that concerned them was the giving of the personal guarantee by Mrs Campbell.
181 The identification of the relevant breach of duty and its practical consequences to the Campbells has necessary consequences in relation to causation. Assume, for example, that a lawyer is retained to give advice to a prospective borrower as to the terms of a mortgage to be given to secure a loan. The lawyer negligently advises that the mortgage has a particular meaning. In reliance upon that advice the borrower gives the mortgage. If properly advised the borrower would not have given the mortgage. As a result of giving the mortgage the borrower secures the loan. The borrower uses the loan to purchase and operate a business. For reasons having nothing to do with the legal advice, the business fails. Clearly enough the lawyer may be liable for any losses suffered by the borrower in relation to the mortgage. But, as Mr Robinson SC properly accepted, the lawyer would not be liable for the losses on the failed business. True it is that 'but for' the negligent advice those losses may not have occurred, but the effective legal cause of those business losses was not the breach of duty by the lawyer.
182 The analysis by McClelland CJ in Trust Co of Australia v Perpetual Trustees WA Ltd (1997) 42 NSWLR 237 would seem to be to the same effect. In that case a firm of solicitors was retained by a trustee company to advise on whether the trustees would have a conflict of duty if they purchased a particular property. The solicitors negligently advised that there was no conflict of interest. In fact there was. In reliance upon that negligent advice the trustees purchased the property. The trustees suffered no losses directly related to whether or not there was any conflict of interest. However, they did lose on the transaction which his Honour found to be 'commercially hazardous and improvident'. His Honour held that the solicitors had not relevantly caused the losses arising from the transaction (see at 248-250). Admittedly, his Honour in reaching that result relied upon the reasoning of the House of Lords in SAAMCO which reasoning was rejected by the High Court in Kenny & Good. Nevertheless, I do not think that there is anything in the reasoning of the High Court in Kenny & Good which would raise any doubt as to the conclusion reached by McClelland CJ. For my part I think that conclusion is clearly correct.
183 It would seem to me that this case is analogous. Although the duty of care was one in respect of the sale contract the relevant breach of duty as alleged was a breach relating to the effect of the guarantee. That breach of duty if it had been established would not have caused the losses that are claimed. It would be different if Cridlands had been engaged to advise on the financial wisdom of the sale contract and had breached their duty of care in that regard. But they were not. Deloittes were.
184 Consequently Deloittes have not established, either factually or legally, that Cridlands are joint tortfeasors in relation to any of the losses claimed by reason of the improvident purchase of Larrakeyah Station. I note that if it had been established that Mrs Campbell would not have given a guarantee if Cridlands had discharged its duty of care (which it has not) then Mrs Campbell may have been able to recover some part of Mr Garraway's fees and charges, but the claim has not been presented this way. Given that the factual background necessary to show that the relevant breach of duty was causative of this loss has not been established, it is unnecessary to consider even this limited aspect any further.
185 Consequently, I find that Cridlands is not a joint tortfeasor with Deloittes in relation to the same damage. The claim for contribution under s 12(1) of the Law Reform (Miscellaneous Provisions) Act (NT) must be dismissed.
186 I note that this reasoning also means that the claim on the assigned causes of action would fail (save, perhaps, for nominal damages for the contractual claim) even if the assignment was valid and effective.
187 In relation to costs it is appropriate that Cridlands have its costs against the Campbells up to the date of the settlement and that it have its costs against Deloittes from that date onwards. I set aside the order for costs made on 10 October 2003.
I certify that the preceding one hundred eighty-seven (187) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Selway.