The respondents' damages
27 Putting aside nominal damages for breach of contract, the respondents were entitled to such damages as would put them in the position they would have been in had the appellant done what he should have done; that is, had he sought instructions as to whether the contracts for the sale of No 33 and No 126 should be made interdependent or suggested that they should be made interdependent. That position was not limited to having interdependent contracts, but extended to the commercial outcome of having interdependent contracts; the contracts were steps in achieving a commercial transaction. Deciding what the respondents' position would have been involved past hypothetical events. If the appellant had so suggested and sought instructions, would the respondents have instructed him that the contracts should be made interdependent? Would Skyworld have agreed? Even if contracts were exchanged with interdependency clauses, it was not inevitable that Skyworld would have completed the contracts: would it have completed them?
28 As a general proposition past hypothetical events in the assessment of damages are not decided on the balance of probabilities, by which satisfaction that it is more likely than not that they would in fact have occurred establishes for the assessment that they would have occurred. Rather, the damages are assessed according to the degree of probability that the events would have occurred, provided that the probability is not so low as to be speculative or so high as to be practically certain: Malec v J C Hutton Pty Ltd (1990) 169 CLR 638 at 643. As was stated with particular reference to commercial transactions in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 355, "damages for deprivation of a commercial opportunity … should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued".
29 There is, however, an initial question of causation: has the negligence or other wrong caused the loss of a chance? This is decided on the balance of probabilities. As was also stated in Sellars v Adelaide Petroleum NL at 355 -
" … the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities."
30 In the present case, what the respondents lost by the appellant's negligence was the opportunity, or less formally the chance, of achieving the commercial outcome of receiving $2,100,000 on the sale of No 33 and No 126 to Skyworld. Providing they established causation, they were entitled as damages to the value of that lost chance. Damages from a negligent solicitor on the basis of loss of a chance has been recognised in a number of cases, and it is unnecessary to cite them.
31 In many of the cases the negligence has lain in failure to bring proceedings within time, and whether it caused the loss of a chance of some value has not been in issue. In the present case, the respondents lost the chance which would have arisen through advice to make the contracts interdependent, and in order to establish causation had to prove that if properly advised they would have instructed the appellant to do so. The principle was stated in Sellars v Adelaide Petroleum NL at 353 -
" … when the issue of causation turns on what the plaintiff would have done, there is no particular reason for departing from proof on the balance of probabilities notwithstanding that the question is hypothetical."
32 Whether the respondents would have instructed the appellant that the contracts should be made interdependent is just as much a past hypothetical event as whether Skyworld would have agreed. As Professor Fleming observed in "Probabilistic Causation in Tort Law: a Postscript" (1991) 70 Can Bar Rev 136 at 140, all causal inquiries involve might-have-beens, but the balance of probabilities has been applied to what the plaintiff would have done if properly advised by the defendant solicitor in, for example, Sykes v Midland Bank Executor & Trustee Co Ltd (1971) 1 QB 113; Allied Maples Group Ltd v Simmons & Simmons (1995) 1 WLR 1602; Hanflex Pty Ltd v NS Hope & Associates (1990) 2 Qd R 218; and Hall v Foong (1995) 65 SASR 281. See also Daniels v Anderson (1995) 37 NSWLR 438, an auditor's negligence case in which, after a detailed consideration of Sellars v Adelaide Petroleum NL and other cases, this Court said at 530 that "the issue of causation should be approached upon the basis of proof upon the balance of probabilities with the qualification that an assessment of whether the chance which is said to have been lost had a value is to be made upon the possibilities or probabilities of the case" and for the issue of causation asked whether the directors would have acted to avert the loss if properly informed by the auditor.
33 I adopt this approach to whether the respondents would have instructed the appellant that the contracts should be made interdependent. As will appear, it would not matter if what the respondents would have done was according to the degree of probability. Whether Skyworld would have agreed and whether it would have completed the contracts, however, are part of the valuation of the lost chance, to be ascertained by reference to the degree of probabilities or possibilities.
34 I should, however, refer to Gove v Montague Mining Pty Ltd [2000] FCA 1214 on which the respondents relied. The plaintiff claimed against its solicitors for negligent advice in relation to a commercial agreement. It was held that the plaintiff had failed to prove that any negligence caused it loss because it did not call evidence of what it would have done if the correct advice had been given. Some of their Honours' discussion at [31]-[70] appears to have regarded proof on the balance of probabilities as applicable not only to what the plaintiff would have done if the correct advice had been given, but also to whether the opposite party would have agreed to an additional clause in the agreement and whether the absence of the clause "was a material cause of putting [the plaintiff] in the situation where it had to accept a less valuable bargain". However, it appears that the focus of the discussion was on what the plaintiff would have done, and so far as the discussion went further it was influenced by an earlier decision of the Full Federal Court in WCW Pty Ltd v Bolster (6 January 1993, unreported) which in turn relied on Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984) 157 CLR 149. Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd must now be read in the light of Sellars v Adelaide Petroleum NL and Daniels v Anderson, and of the principles now established. In my view whether Skyworld would have agreed was to be approached according to the degree of probability rather than on the balance of probabilities.