Jamieson & Ors v Westpac Banking Corporation [2014] QSC 32

[1] JACKSON J: In May and June 2007, Mark and Lorrell Jamieson and the trustee of their self-managed superannuation fund made investments based on a written statement of advice. The statement of advice was prepared by Robert Tindall who was a financial planner in the employ of the defendant ("the Bank"). Mr and Mrs Jamieson and the trustee, Jamieson Investments Qld Pty Ltd ("the Trustee"), claim damages for alleged breaches of contract, negligence and contraventions of statute in preparing and giving the advice.

[2] The statement of advice was first given in draft on 1 May 2007 and subsequently updated on 16 May 2007. The claims are based on the updated statement of advice. It recommended strategies and particular investments. There were two major strategies, both to be effected in the financial year ending 30 June 2007. First, it recommended that Mr Jamieson borrow $5 million from Macquarie Bank Limited under a Macquarie Structured Product Investment Loan for a three year term at an interest rate of 7.95 percent per annum. The proceeds of the loan were to be invested in a basket of different classes of units in a registered managed investment scheme described as the "MQ Gateway Trust". The investment was to be for a three year term. Over that period, the aim was that the growth of the value of the units would provide an investment return greater than the costs of the loan and other administrative costs. Mr Jamieson borrowed $5 million from Macquarie Bank Limited and invested in the MQ Gateway Trust.

[3] The second strategy was that Mr Jamieson or Mr and Mrs Jamieson borrow $600,000 from the Bank to make substantial undeducted contributions to a self-managed superannuation fund which would invest the funds in self-funding instalment warrants. Mr and Mrs Jamieson and the Trustee executed the trust deed of the M&L Super Fund. The Trustee was thereby constituted the trustee of that fund. Mr and Mrs Jamieson borrowed $700,000, rather than $600,000, from the Bank. The sum borrowed was contributed by them to their accounts under the M&L Super Fund. The Trustee invested that amount in self-funding instalment warrants in Australian shares. The particular warrants selected for investment were recommended by Ian Elks from Macquarie. Mr Elks was a stockbroker responsible for managing Mr Jamieson's substantial pre-existing share portfolio.

[4] Both strategies and investments were unsuccessful. The plaintiffs' claims for damages are calculated so as to the restore them to the positions as if no borrowing or investment had been made, although it will be necessary to deal in some detail with the basis of the amounts claimed.

[5] The Bank denies any breach of contract, negligence or contravention of statute. It also denies that it caused the plaintiffs any loss they would not otherwise have suffered. There are numerous factual disputes between the parties, including what was said at or before the time of giving the advice, whether the plaintiffs would have made the investments or obtained the associated loans had the alleged breaches of contract, negligence or contraventions of statute not occurred and what consequences would have ensued had the plaintiffs not made the investments or taken out the loans.

[6] In April and May 2007, Mr Jamieson was the chief executive officer of APN News & Media Limited ("APN"), an ASX listed company. He was 48 years of age. Mr and Mrs Jamieson married in 1980 and had three children. In 2007, one of the children was still a dependant.

[7] Mr Jamieson was a long term customer of the Bank. From about 2003, Greg Halliday had been his banker at the division of the Bank described as Westpac Private Bank. It was Mr Halliday who introduced Mr Tindall to Mr and Mrs Jamieson.

[8] Mr and Mrs Jamieson were directors of the Trustee. The Trustee was not incorporated for the purpose of becoming trustee of the self-managed superannuation fund. Reference is made in some of the documents tendered at the trial to a family trust, although neither a trust deed nor any financial statements relating to any family trust were put into evidence.

[9] Mostly from information supplied by Mr Jamieson to Mr Tindall, it appears that Mr Tindall recorded a summary of Mr and Mrs Jamieson's financial situation in April 2007 as follows:

Mr Jamieson loan 651216, 154975, 536981, 545781 and 165239

[10] Mr Jamieson says there are inaccuracies in that statement of assets and liabilities. It will not be necessary to resolve all those allegations. However, that summary of financial situation was the basis on which Mr Tindall gave the draft statement of advice and the updated statement of advice to Mr and Mrs Jamieson.

[11] In April and May 2007, the Aspect apartment was Mr and Mrs Jamieson's official principal place of residence. However, at that time, they were living at 17 Mayfair Lane. In about February 2007, the Aspect apartment was listed for sale and an offer was made to purchase it for the sum of $2,300,000. A contract was entered into. However, that contract did not proceed. In 2008, after advertising the property for sale for a period at $2,500,000, Mr and Mrs Jamieson sold it for $2,300,000.

[12] In April and May 2007, in my view, Mr Jamieson was an experienced and astute businessman. The experience included management of a listed public company as well as personal investment experience in residential and rural real property and the Australian share market.

[13] Mr Jamieson had grown up in a rural environment. In his teenage years, he moved to Hervey Bay. From 1981, he had some experience selling real estate in Maryborough. In 1982 and 1983, whilst living in Hervey Bay, he and his brothers built and sold a couple of "spec" homes. In March 1995, whilst living and working in Toowoomba, he purchased "Cashelmara" which is a 40 acre property. After a period of time when he was working in Rockhampton, Mr Jamieson and his family moved to the Sunshine Coast. In early July 2001, Mr and Mrs Jamieson purchased 17 Mayfair Lane. The Aspect apartment followed. Mr and Mrs Jamieson bought it off the plan in 2003. The purchase was settled in June 2006. They bought another apartment in Aspect at the same time. It was furnished and sold after settlement. Effective 1 January 2005, Mr Jamieson was made the chief operating officer for APN. Mrs Jamieson acquired The Hudson apartment in Brisbane. Mr Jamieson rented it from Mrs Jamieson.

[14] The shares held by Mr Jamieson were acquired at least in part through a margin loan of approximately $2 million provided to him by Macquarie Bank Limited or a related company. As at April 2007, there was about $1 million of excess cover of the value of the shares to the balance of the loan. At that time, Mr Jamieson had an ongoing relationship with Mr Elks as his stock broker.

[15] Over the prior years, Mr Jamieson made a number of investments in managed investment schemes described by him as "agribusiness". In the 2003 tax year, he invested in the Great Southern Plantations 2003 Project; in the 2004 tax year, the Great Southern Plantation 2004 Project, Forestry Enterprises and Barossa Vines; in the 2005 tax year, the Great Southern Plantations, Forestry Enterprises and Barossa Vines; in the 2006 tax year, the Great Southern Plantations and Barossa Vines; in the 2006 tax year Great Southern Cattle; and in the 2007 tax year, Great Southern, Barossa Vines 2007 and FEA.

[16] As well, through these years, Mr Jamieson carried on the business of primary production on Cashelmara. The business comprised cattle production, buying and selling hay and growing olives.

[17] Although he had left school at a relatively young age, it appears from Mr Jamieson's progress and success in various positions of employment that he acquired considerable business experience. At April 2007, he had been the chief executive officer of APN since 1 July 2006, having been the chief operating officer of that company since 1 January 2003. Prior to that, he had a long history of experience in marketing within the publishing industry in Queensland, starting with Provincial Newspapers Queensland at the Hervey Bay Fraser Island Sun newspaper. In 1996, he obtained a Bachelor of Business degree with majors in marketing and human resources and management from the University of Southern Queensland.

[18] For many years, Mr and Mrs Jamieson retained the services of an experienced tax accountant, Terrance Lynch of Canning, Lynch McGrath, in connection with their personal and business affairs. Mr Lynch had been their accountant since 1984 or 1985. He knew Mr Jamieson well. He did the income tax compliance work for Mr and Mrs Jamieson, their family trust and a couple of other trusts as well. No evidence was given about those trusts at the trial. From documents tendered at the trial, it appeared that Mr Jamieson consulted Mr Lynch in relation to investment advice or financial advice beyond tax compliance work. However, it was not suggested that Mr Lynch was involved in giving any advice in relation to the investments the subject of this proceeding, at the time when those investments were made.

[19] Further, over a number of years Mr Jamieson consulted Danny Mattson as a financial advisor. Mr Mattson was an authorised representative of Professional Investment Services Pty Ltd. He gave advice in connection with investments in agribusiness. It also appears from some documents that Mr Mattson may have been involved in obtaining the deed of trust and rules of the M&L Super Fund.

[20] By the time of the trial of this proceeding in August 2013, more than six years had elapsed since the central events had occurred. The statement of claim alleges that Mr Halliday introduced Mr Tindall to Mr and Mrs Jamieson in or about February or March 2007. That allegation is admitted in the defence. It was not in dispute that there were a number of meetings between Mr and Mrs Jamieson on the one hand and Mr Tindall and Mr Halliday, on the other, in March or April 2007.

[21] However, at the trial the Bank's case was that the first meeting of any consequence occurred on 10 April 2007. There is no dispute that there was a meeting on that date at 17 Mayfair Lane. There is also no dispute that Mr Tindall made notes at the meeting. The notes were not tendered in evidence, even though the experts who gave evidence had been supplied with them.

[22] The plaintiffs' case is that there was more than one meeting at 17 Mayfair Lane before 10 April 2007. Mr Jamieson described the first meeting as more of a "meet and greet". Nothing of particular substance is alleged to have occurred at that meeting, so it probably does not matter if it did happen, except insofar as a view about that might reflect upon the reliability of one witness or another in general.

[23] In the same vein, the plaintiffs relied on Mrs Jamieson's recollection of meeting Peter McGrath at the first or subsequent meeting between Mr and Mrs Jamieson and Mr Tindall and Mr Halliday. In particular, Mrs Jamieson recalled discussing with Mr McGrath mutual friends who lived in Milmerran. Her evidence was not clear about when that meeting occurred. On the Bank's part, it was contended that Mr McGrath could only have attended a meeting at a much later time. But Mr McGrath's evidence did not make that clear one way or another. However that may be, Mr McGrath was neither involved in giving any of the advice which was complained about nor in making any selection of the self-funding instalment warrants which were purchased by the Trustee with the contributions made by Mr & Mrs Jamieson to the M&L Super Fund.

[24] Mr Jamieson claimed a real and detailed recollection of the meeting or meetings which occurred prior to and after receiving the draft statement of advice. In cross-examination he was challenged on the footing that his evidence was largely a reconstruction. It was reasonably clear that he had read the disclosed documents. He made reference to that fact and also to the timing of some of the disclosure in terms of when he had first seen relevant documents. I formed the view that significant parts of his evidence were a regurgitation of the contents of the documents, against which he had reconstructed what he believes happened. I doubted the extent of his genuine recall.

[25] The reality is that none of the witnesses to the early meeting or meetings from which the updated statement of advice of advice emerged can be relied upon as having an accurate recollection of what was said. To the extent that Mr Jamieson or Mr Tindall purported to urge clear recollections, in my view, it is likely that their evidence is coloured both by reconstruction and their beliefs as to what would have happened. It will be necessary to deal with specific matters as they arise.

[26] One of Mr Jamieson's central complaints in respect of his investment in the MQ Gateway Trust and associated loans was that the investment strategy put at risk more than ten percent of the overall net asset wealth of Mr and Mrs Jamieson. A particular aspect of that complaint is the allegation in paragraph 9(f)(iii) and (iv) of the statement of claim that, when Mr Tindall sought information from Mr and Mrs Jamieson as to the value of their properties, he informed them to the effect that the Bank would need valuations to support their estimates of value, and that Mr Jamieson then gave an express instruction to obtain those valuations.

[27] In April 2007, there were four real properties potentially in question: 17 Mayfair Lane, the Aspect apartment, Cashelmara and The Hudson apartment.

[28] It was not disputed that in late April 2007 the Bank in fact commissioned valuations of the Aspect apartment and 17 Mayfair Lane. The valuations obtained were dated 24 April 2007. However, no valuations were commissioned or obtained for either Cashelmara or The Hudson apartment.

[29] The Bank's position was that the two valuations were obtained in connection with a proposal by Mr and Mrs Jamieson to borrow funds to acquire an apartment at "The Bellagio" in Brisbane. Mr and Mrs Jamieson each denied this in evidence. Their case was that there was no reason why the Bank would have obtained the valuations of the Aspect apartment or 17 Mayfair Lane, except for the arrangement or instruction that they would be obtained to support the estimates of value given by Mr and Mrs Jamieson for the statement of advice.

[30] I reject Mr and Mrs Jamieson's evidence in this regard because it is inconsistent with the contemporaneous documents and it is unlikely that the Bank would have obtained valuations for the purpose of giving investment advice.

[31] On 25 March 2007, Mr Jamieson sent an email to Mr Halliday advising that he had seen a place in Brisbane he may like to buy and requesting a calculation of the amount that he could borrow. On 2 April 2007, Mr Halliday prepared an internal application for the purpose of obtaining an approval to assist with making a bid at an auction for a unit in "Bellagio" in Brisbane to the amount of $3,100,000. Both Mr and Mrs Jamieson in oral evidence sought to distance themselves from any suggestion that they seriously intended to bid for the unit at "Bellagio". However, there is no rational explanation for Mr Halliday to have prepared an internal application for finance at the bank on 2 April 2007 for that purpose all of his own accord.

[32] Consistently with Mr Jamieson's oral evidence, Mr Halliday recorded in the application that, at the time, the Aspect apartment was on the market for $2,500,000. On 10 April 2007, the internal application was approved by another bank officer. The approval suggested that two properties be valued (which subsequently occurred). Also on 10 April 2007, as previously mentioned, Mr and Mrs Jamieson met with Mr Tindall and Mr Halliday. On 11 April 2007, Mr Jamieson sent an email to Syd Walker requesting the name of a valuer who "will go close to valuing my Aspect unit ... at $2.5 million? ... I need to get someone to value for Westpac". Also on 11 April 2007, having received a recommendation from Mr Walker, Mr Jamieson sent an email to Mr Halliday identifying the recommended valuer and requesting Mr Halliday to follow him up and to arrange a valuation to $2,500,000. On 17 April 2007, Mr Halliday responded that he would organise the unit valuation and would phone the recommended valuer. He also said: "We should do Mayfair Lane at the same time is that okay? ..." Mr Jamieson responded in the affirmative. None of that course of correspondence refers in any way to obtaining any valuation for the purpose of the investment advice which Mr Tindall was preparing following the 10 April 2007 meeting.

[33] As stated above, Mr and Mrs Jamieson's position is that there was no reason why valuations would have been obtained at the time for lending purposes to purchase the unit because they had no intention to do so. Another important contemporaneous document is inconsistent with that. On 1 May 2007, Mr Tindall sent the draft of the statement advice to Mr Jamieson by email. Page nine of the document is headed "Strategy". There are 11 dot points under that heading. The sixth dot point is: "Purchase your investment property for approximately $3,000,000 in joint names".

[34] In my view, that was a reference to the proposal to buy the unit identified in the earlier correspondence and Mr Halliday's internal application. It does not matter, in my view, whether or not the unit at "Bellagio" had already been auctioned. The Bank was operating on the footing that there was an intention to purchase an investment property for approximately $3 million and, as the internal approval and Mr Halliday's correspondence with Mr Jamieson suggests, the Bank was obtaining updated valuations on the two properties in connection with such proposals.[1]

[35] I note as well that the superannuation strategy recommended in both the draft and updated statement of advice included rolling over existing superannuation to a new self-managed superannuation fund "as discussed with your accountant". The updated statement of advice also included the strategy to: "establish a loan against existing property for $600,000 and make an undeducted contribution to your newly established self-managed superannuation fund. This is to be organised by Greg Halliday. The interest on this debt will not be tax deductable. All debt repayments should be focussed firstly towards reducing and eliminating this loan." In other words, by 16 May 2007, at the latest, it was proposed that either Mr Jamieson or Mrs Jamieson or both would borrow monies from the Bank for the purpose of making superannuation contributions to their self-managed superannuation fund.

[36] Finally, apart from the prospect that Mr and Mrs Jamieson might borrow funds to implement one or other part of the strategies referred to in the draft or updated statement of advice, there is no other logical reason why the Bank would have requested valuations of the relevant properties. It was neither Mr Tindall's practice nor was there any evidence that it was usual practice for a financial planner such as Mr Tindall to obtain valuations in order to prove the value of properties taken into account in the assessment of a client's financial situation for the purpose of giving investment advice. Neither of the experts who were called to give evidence suggested that a financial planner would ordinarily do that.

[37] In my view, neither did Mr and Mrs Jamieson instruct Mr Tindall to obtain valuations for that purpose, nor did Mr Tindall say that he or the Bank would do so. The purpose for which any valuation was to be obtained was in connection with the proposed borrowings by Mr and/or Mrs Jamieson.

Risk of loss on MQ Gateway Trust and associated loans

[38] The updated statement of advice contained a section on page 14 which included the following in relation to investment in the MQ Gateway Trust and associated loans:

Based on the assumptions in the illustrations attached to this Statement of Advice, the following illustrates the potential outcomes in three different investment horizons:

We have assumed the highest marginal tax rate on profits at 46.5%"

[39] A close analysis reveals that there are a number of errors or inaccuracies in that statement of potential outcomes. However, it is unnecessary to discuss some of them because they were not pleaded as a relevant breach of contract, negligence or contravention of statute.

[40] Paragraph 46 of the statement of claim alleges that in contravention of s 12DA(1) of the Australian Securities and Investment Commission Act 2001 (Cth) ("ASIC Act"), the statement of advice did not adequately or completely describe the nature and effect of the investment and loans or misstated their nature and effect "in engaging in the conduct pleaded in paragraph 39".

[41] Although paragraph 39 contains numerous different allegations, including a number as to the failure of the statement of advice to sufficiently describe the Capitalised Interest Assistance Loan (which I refer to later in these reasons), in oral evidence Mr Jamieson said, in effect, that he understood that his investment risk was $601,875 if the investment in the MQ Gateway Trust returned no profit, being approximately the amount of the three annual interest payments of $198,750 he was required to make on the $5 million loan. He was aware that he was required to fund those amounts in cash in each of the three years of the investment.

[42] I accept that Mr Jamieson did not fully understand the amount of his exposure or liability under the loans associated with investment in the MQ Gateway Trust. But I reject that he believed his only exposure was the amount of the three annual interest payments of $198,750.

[43] First, Mr Jamieson was aware that the effect of investing in this Macquarie product was that he would be able to claim a tax deduction of $375,000 for interest associated with the loan in each of the relevant tax years, starting in 2007. It is not easy to accept that an astute investor concerned to maximise their available allowable deductions for the purposes of reducing their taxable income would readily accept that a tax deduction for interest of $375,000 could be obtained for a payment of or liability to pay interest of $198,750.

[44] On 22 May 2007, Mr Jamieson wrote to Mr Lynch:

"I intend to proceed with the offshore investments through Westpac for $5 million... Interest is $375,000 which is fully deductible but I only need to pay 50% up front, ie, $187,500."

[45] Other documents passing between Mr Jamieson and Mr Tindall in 2009 are inconsistent with Mr Jamieson's statement in evidence that he believed that he had no exposure other than the payment of the three annual amounts of interest of $198,750. In 2008 and 2009, Mr Tindall continued to act as Mr and Mrs Jamieson's financial planner or contact with the Bank in some respects. Before March 2009, the impact of the so-called global financial crisis upon equity markets had come home to roost.

[46] On 12 March 2009, Mr Tindall sent an email to Mr Jamieson setting out an analysis of three scenarios of liquidation of Mr Jamieson's investment in the MQ Gateway Trust and associated loans. In the analysis, the amount to be repaid in July 2009 for the Macquarie interest assistance loan was stated to be $664,832.

[47] On 20 March 2009, Mr Jamieson sent an email to Mr Tindall stating, inter alia, as follows:

"I would like confirmation on the following please:

1. My exposure to Macquarie for the Gateway Investment is limited to $601,875 (as per SOA) if the original investment runs its course to July 30, 2010? This being three years of interest assistance?

2. I understand you are examining ways to further reduce this amount? Can you give me any more detail on what the opportunity is? ..."

[48] On 20 March 2009, Mr Tindall responded by email to Mr Jamieson upon those two points as follows:

"1. Exposure is correct - however there is an interest expense on the interest assistance loan itself.

1. A. The interest expense is one issue that is not highlighted and needs addressing.

B. Rolling into a short dated strategy to pick up some market movement.

C. Fully analysing the break costs and having Macquarie meet us half way.

D. We are having a lawyer go over the Macquarie loan documents to see if there are any avenues to avoid some of the costs ..."

[49] Mr Jamieson's reference to $601,875 as the "exposure" and as "three years of interest assistance" was pointed. It came in response to the earlier email from Mr Tindall to Mr Jamieson sent on 12 March 2009 which included reference to repayment of the amount of the Macquarie interest assistance loan in July 2009 in the larger sum of $664,832.

[50] Mr Tindall's statement that the "exposure is correct" was wrong. He had made an error in calculating the amount of $601,875, (even as an after tax value) because he had forgotten that "interest assistance", which was capitalised interest, itself carried interest that should have been included in the calculation. Mr Tindall subsequently acknowledged in his emails that he had left that component out of his calculations in April and May 2007 for both the draft and updated statement of advice. But the point, for present purposes, is that in responding to the amount required to pay out the Macquarie Structured Product Investment Loan in March 2009, Mr Jamieson did not say that his understanding was that he would not have to pay the amount of the interest assistance at the end of the loan term as a sum additional to the annual payments on account of interest he had previously made. Rather, his point was that he thought the amount of the additional sum would be limited to $601,875. As will subsequently appear, the amount of $601,875 did not represent the amount required to pay out the Macquarie Structured Product Investment Loan at all. It was something else. But that does not matter for this point.

[51] Thus, on 20 March 2009 Mr Jamieson sent a further email to Mr Tindall saying:

The interest in the assisted amount is my major concern given that the maximum potential loss was $601K ..."

[52] Mr Tindall responded on 20 March 2009 as follows:

I am absolutely working on it. It was definitely my oversight. May take some time but I am sure we will have a suitable solution"

[53] Consistently with the view I have reached, on 12 March 2009, Mr Jamieson had forwarded Mr Tindall's email of 12 March 2009 to Mr Lynch saying:

Not sure why the losses on option 1 are now larger than the 601K in the proposal.

Somehow I have got to reduce the deficit going forward. Perhaps I can pay the total interest ie. $5m x 7.95% with no assistance and get some of the earlier interest subsidy to reduce my exposure and proceed with option 1 or 3. ..."

[54] Also, after receiving Mr Tindall's acknowledgement of his oversight in relation to the interest payable on the interest assistance, Mr Jamieson forwarded that email to Mr Lynch on 20 March 2009 saying:

"This admission of responsibility (oversight) may be helpful down the track."

[55] Down the track, Mr Jamieson ended up in dispute with the Bank about the amount of his exposure. On 17 May 2010, he made a formal complaint to which the Bank responded. By then, the amount outstanding to Macquarie in connection with the Interest Assistance Loan was approximately $700,756.73. On 4 June 2010, the Bank wrote to Mr Jamieson summarising its understanding of his complaint as follows:

"We understand that you believe that your expected net financial position arising from the maturity of the above product does not reflect the 'worst-case' scenario that was disclosed to you when you were given the recommendation.

You believe that a shortfall of around $90,000 exists between the amount due shortly on the loan and the estimate of what your total after tax loss position would be in the event of negative market performance of the underlying funds.

You are seeking an explanation and compensation for this shortfall."

[56] On 21 June 2010, Mr Jamieson sent an email to Frank Gomez of the Bank about the resolution of his complaint, saying:

"The issue is straight forward in that I relied on representations from Rob Tindall and my private banker Greg Halliday to invest in the MQ Gateway product. I relied on their advice which I understand would have been scrutinised and approved by Westpac Legal. I entered into the investment on the understanding that my maximum exposure based on the interest assistance provided by Macquarie Bank would be $601,875 in the event of zero or less capital growth.

I accepted the SOA as it was presented and whilst I wished the investment had resulted in a positive outcome I have accepted my liability up to the amount of $601,775 which was clearly illustrated in the executive summary ..."

[57] Nothing in that chain of correspondence suggests that Mr Jamieson believed that the amount of $601,875 described as his maximum exposure was confined to the sum paid by him by way of annual instalments in the amount of $198,750 for the three years of the term of the loans associated with investing in the MQ Gateway Trust. That suggestion is one which appears to have been arrived at by Mr Jamieson late in the piece. I reject that it was an assumption made by Mr Jamieson on which he acted in entering into the MQ Gateway Trust investment and associated loans.

[58] A number of allegations are made in paragraph 39(a) of the statement of claim about the content of the updated statement of advice, in relation to the proposed loan or loans associated with investment in the MQ Gateway Trust. The loans were described as a "Macquarie Structured Product Investment Loan". The operative parts of the loan documents comprised a loan and security agreement and terms contained in a loan application form. For MQ Gateway Trust investors, appendix A also contained a deed of variation to the loan and security agreement for investors who utilised the Capitalised Interest Assistance Loan. Provision was also made in the loan application form for an accountant's certificate.

[59] On 23 May 2007, Mr Jamieson completed the loan application form - part A. On the same day, he completed a copy of the deed of variation relating to investors utilising the Capitalised Interest Assistance Loan. The particular form of variation provided for capitalisation of fifty percent of the interest payable on the investment loan. On 12 June 2007, Mr Lynch completed the accountant's certificate as to Mr Jamieson's financial position.

[60] Mr Jamieson's evidence was that he received the relevant parts of the application form for the loan and the interest assistance loan for execution from Mr Tindall.

[61] Mr Jamieson said that he read the forms that were sent to him. However, he did not receive the balance of the documents relating to the loans. I accept that evidence. Although Mr Tindall said that it was his and the Bank's practice to provide copies of the documents, there is no copy on file or other note or documentary evidence to show that he did so. The information in the updated statement of advice about the loans was brief, to say the least. The recommendation was to "borrow $5,000,000 through a Macquarie Structured Product Investment Loan". It was said that there would be:

"a capital protection level of 100 percent at capital protection date ... [and] an effective fixed rate loan of 7.5 percent with 100 (sic) percent interest assistance of 7.5 percent. Total outlay up front is approximately $198,750 with a rebate from Westpac back in August of $44,750. The rate will be achieved through a fee rebate provided by Westpac".

[62] The executive summary also described the upfront cash outlays for years 1, 2 and 3, as "(net) $187,500". The reference to "net" is a reference to the effective rate of 7.5 percent.

[63] In fact, the rate of interest on the Macquarie Structured Product Investment Loan was 7.95 percent. The amount of the required annual payment of interest in the sum of $198,750 reflected that rate. That sum, $198,750, was 50 percent of the annual interest payable on the loan of $5 million. The arrangement made by Mr Tindall with Mr Jamieson was that Westpac would provide a rebate, so as to reduce the amount of the annual payments by Mr Jamieson to the net amount of $187,500. That was to be 50 percent of the "net" amount of interest per annum of $375,000. The basis of the calculation of the rebate at $44,750 is not clear.

MQ Gateway Trust - breach of contract or negligence - Capitalised Interest Assistance Loan

[64] The first complaint made about the content of the updated statement of advice as to the associated loans for the MQ Gateway Trust is that it did not mention the Capitalised Interest Assistance Loan. The updated statement of advice stated on the executive summary page that "interest payments totally deductable approx $375,000 06/07 financial year" in association with the statement that the "upfront cash outlay (net) [would be] $187,500". Because the "upfront" component was half of the total annual "payment" of interest it is a fair deduction that half of the interest "payment" was to be capitalised, but no more than that. However, there is no reference to the "capitalised" interest bearing interest.

[65] Paragraph 39(a) of the statement of claim further alleges that the reference to interest assistance in the updated statement of advice did not explain that it was a reference to a Capitalised Interest Assistance Loan. In my view, that is correct. Thirdly, paragraph 39(a) of the statement of claim alleges that the updated statement of advice did not state that Mr Jamieson would be required to borrow 50 percent of the interest on the Macquarie Structured Investment Loan in accordance with the Capitalised Interest Assistance Loan to be repaid by Mr Jamieson at the date of maturity of the loans. In my view that is also correct. It was far from clear on the face of the updated statement of advice that 50 percent of the interest would have to be repaid on maturity. However, it was a fair deduction that it would be so, given the statement that the interest payments of $375,000 net per annum would be deductable for an upfront net amount of $187,500 per annum.

[66] Paragraph 39(a)(ii) of the statement of claim sets out an alternative thesis. It is that the plan recommended in the updated statement of advice "contemplated that Macquarie would fund 50 percent of the interest on the Macquarie structured investment loan as 'interest assistance' to be recouped by it if the investment in the MQ Gateway Trust earns sufficient income to allow that to occur, the consideration for this being the ... loan participation rate ... in the investment".

[67] The only reference to a "participation rate" in the updated statement of advice appears on page 11 under the heading "Reasons" for investment by borrowing through the Macquarie Structured Product Investment Loan and investing the funds in the MQ Gateway Trust. The third dot point under that heading states:

"We have decided to forego income from the portfolio for simplification purposes. This has had the effect of reducing the interest payable and increasing the participation rate."

[68] On the prior page, each of the classes of "units" identified as proposed for investment in the Macquarie Gateway Trust is stated to have a "participation" of a particular percentage amount or between two nominated percentage amounts.

[69] In my view, by those references, the updated statement of advice did not "contemplate" that Macquarie would "fund" 50 percent of the interest on the Macquarie structured investment loan as interest assistance, in the sense that repayment of that 50 percent of the interest would not be required. There is no link on the face of the updated statement of advice between the "participation" or the "participation rates" and any requirement or non-requirement to repay 50 percent of the interest on the Macquarie Structured Product Investment Loan at maturity. In my view, the objective reader of the updated statement of advice would not make that assumption.

[70] Paragraph 39(a)(iii) of the statement of claim alleges that the updated statement of advice provided that it would not put at risk more than ten percent of the net worth of Mr and Mrs Jamieson quantified at $663,887.70.

[71] The calculated amount of Mr and Mrs Jamieson's net worth on page five of the updated statement of advice was $6,638,877, generally in accordance with the table I have previously set out.[2] Hence, the plaintiffs quantify ten percent of their net worth as $663,887.70, although that number does not directly appear in the updated statement of advice.

[72] The reference to risk of loss appears on page 11, in the first dot point under the heading "Reasons" for the solution recommending borrowing $5 million through a Macquarie Structured Product Investment Loan to invest funds in the MQ Gateway Trust. It provides that the advice to so invest was appropriate as:

"By using $5,000,000 in gearing we put less than ten percent of your overall net wealth at risk of loss".

[73] The other relevant part of the document was the table of losses or gains appearing under the heading "Investment Risk" which has previously been set out. For an investment return of zero percent or less, the loss was described as $601,875 after tax. That is apparently the amount stated to be at risk of loss.

[74] The plaintiffs submitted that the basis of the calculation of that amount does not appear anywhere, but it can be deduced without too much difficulty. As appears in the heading to the table that is an amount calculated "after tax" and, as appears from the sentence below the table, Mr Tindall assumed the marginal tax rate of 46.5 percent. The executive summary was proposing that net annual interest "payments" of $375,000 would be made over three years which is a total of $1,125,000. As a matter of arithmetic, $601,875 equals 53.5 percent of $1,125,000. That is, the "after tax" statement of the loss is a statement that the loss represents the value of $601,875 after tax because the payments totalling $1,125,000 will be tax deductible. As previously stated, the calculation was wrong, in any event, even as an after tax "value". It did not take account of the requirement to pay interest on the capitalised interest to Macquarie. I also leave to one side whether the net annual amount of $375,000 was an accurate assumption.

[75] Paragraph 39(a)(iii) of the statement of claim alleges that the MQ Gateway Trust investment and associated loans in fact put at risk approximately $1,300,000. The difference between $1,125,000 and $1,300,000 is not explained in the pleading, but would include the amount of interest payable on capitalised interest which Mr Tindall accepted that he had omitted. The expert called by the Bank said the amount was $1,293,740, but it was not clear what interest rate he had applied. In any event, Mr Jamieson's complaint is that even if it is accepted that ten percent of Mr and Mrs Jamieson's overall net wealth was $663,887, the amount that the loans put at risk before tax was approximately twice that.

[76] In my view, there is substance in this complaint. The statement that less than ten percent of Mr and Mrs Jamieson overall net wealth is at risk of loss must be a statement of the amount of money that is put at risk. The net wealth which was calculated on page five of the updated statement of advice did not incorporate any adjustments for any potential tax liabilities (or credits) that might be associated with the realisation of any of the assets. The calculation of loss or gain through the investment on an "after tax" basis tended to understate the amount of the overall cash exposure in such a way that it appeared that only ten percent, namely the sum of $663,887, or less, was at risk. In fact, the gross sum at risk was in excess of $1,125,000 by at least the amount of the interest on the capitalised interest.

MQ Gateway Trust - breach of contract or negligence - accuracy of calculation of net wealth

[77] Mr Jamieson alleges that the bank overvalued Mr and Mrs Jamieson's property in assessing their overall net wealth, so that the statement that their net wealth was $6,638,877 was wrong. In support of that allegation, he alleges that the values set out in the table extracted earlier in this judgment were erroneous because each of the Aspect apartment, 17 Mayfair Lane, Cashelmara and the The Hudson apartment was overvalued. Mr Jamieson sought to prove the values of those properties by reference to valuations which had been obtained by the Bank at various times. However, the valuations were successfully objected to as evidence of the opinion of the valuers, on the ground that the valuers were not called as witnesses. There was thus no actual admissible opinion evidence from those valuations as to the property values at the relevant time. In any event, two of the valuations in question were well out of date as at April 2007.

[78] Further, the plaintiffs allege that the value of the Aspect apartment was $2,000,000 at 24 April 2007. Yet, Mr Jamieson gave evidence that Mr and Mrs Jamieson entered into a contract of sale of that apartment in or around February 2007 for the sum of $2,300,000. that contract did not complete. However, in the first half of 2008 they sold the Aspect apartment for that amount.

[79] Mr Jamieson also alleges that in circumstances where he had given instructions for the properties to be valued for the purpose of the advice to be prepared by Mr Tindall, he was not informed that the Bank had the valuations to hand or of their amounts. I have previously found that Mr Jamieson and Mrs Jamieson did not instruct Mr Tindall or Mr Halliday to obtain valuations for the purpose of the advice to be prepared by Mr Tindall. There is no dispute that Mr Tindall did not inform Mr and Mrs Jamieson of the amounts of the valuations which were obtained by the Bank at any time or that up to date valuations had not been obtained over Cashelmara or the The Hudson apartment. I also accept that Mr Tindall did not tell Mr and Mrs Jamieson that the values utilised in the updated statement of advice were not based on valuations by valuers.

[80] However, in my view, there was no reason for Mr Tindall to have told Mr and Mrs Jamieson those things. It was not a departure from the ordinary practice of a financial planner not to do so and in my view there was nothing particular in the facts relating to the preparation of the statement of advice for Mr and Mrs Jamieson which obliged Mr Tindall or Mr Halliday to take that course. At the time, it must have been apparent to Mr and Mrs Jamieson on reading either the draft statement of advice or the updated statement of advice that the values of those assets in the summary of their financial situation were the values which Mr Jamieson had given to Mr Tindall on 10 April 2007 or thereabouts.

MQ Gateway Trust - breach of contract or negligence - failure to provide terms and conditions

[81] Paragraph 39(e) of the statement of claim alleges that the bank failed to provide Mr Jamieson with the full terms and conditions of the Macquarie Structured Investment Loan, the Capitalised Interest Assistance Loan or the MQ Gateway Trust before he made his investment in the MQ Gateway Trust and associated loans. In my view, that allegation is correct. An associated allegation in paragraph 39(g) is that the Bank altered the signature page of the application for units in the MQ Gateway Trust after he had signed it and faxed it back. The alteration consisted of placing a cross in a box on the form acknowledging that Mr Jamieson had received and understood the relevant parts of the product disclosure statement ("PDS"). Mr Jamieson gave evidence, which I accept, that although he signed the relevant part of the application form he left the box uncrossed because he had not in fact received or read the PDS for the MQ Gateway Trust.

[82] I observe that Mr Jamieson later gave evidence that he had in fact not read the application form or paid any close attention to it, quite inconsistently with his earlier evidence. This was one of a number of instances where Mr Jamieson gave evidence which he thought would suit his case on a particular point. In this instance, I prefer the evidence he gave that he did not check the box acknowledging receipt, reading or understanding of the PDS because he did not in fact receive the document.

MQ Gateway Trust - breach of contract or negligence - other allegations

[83] There are a number of other particulars of breach of contract or negligence in paragraph 39 of the statement of claim. However, I have sought to deal with the substance or gist of the complaints in accordance with the findings which, in my view, follow from the evidence and in such a way that it makes it unnecessary to deal with further sub-categories.

MQ Gateway Trust - breach of contract or negligence - conclusions

[84] The Bank admitted the plaintiffs' allegation that, in or about February or March 2007, Mr and Mrs Jamieson retained the Bank to supply financial services and in particular to provide a statement of advice recommending a financial plan.

[85] It also admitted that financial services were provided to Mr and Mrs Jamieson as consumers under s 12ED of the ASIC Act and that the financial services were supplied by Mr Tindall to Mr and Mrs Jamieson in the course of the business of the Bank. In that context, the Bank admitted that it was an implied warranty in the contract that the Bank would take reasonable care in the provision of the statement of advice.

[86] The Bank further admits that it owed a duty of care (in tort) to take reasonable care in the provision of financial advice to Mr and Mrs Jamieson.

[87] The alleged "duty" under the contract is co-extensive and concurrent with the duty of care in tort. Accordingly, it is a "duty" as defined in the Civil Liability Act 2003 (Qld) ("CL Act"), although neither the plaintiffs nor the Bank expressly relied on that Act. As well, no one relied on the operation of Division 5 of Part 1 of the CL Act, relating to the liability of professionals.

[88] Having regard to the findings I have made above, the question is whether those facts constituted a failure to render the financial services the subject of the contract, with respect to the MQ Gateway Trust and associated loans, with due care and skill either in breach of contract or negligently.

[89] First, in my view, it was a breach of contract and negligent for Mr Tindall to fail to mention the Capitalised Interest Assistance Loan or to describe more accurately its operation, and in particular that interest would be payable on the capitalised interest in a significant amount.

[90] Secondly, in my view, it was a breach of contract and negligent for Mr Tindall to state in an unqualified way that investment in the MQ Gateway Trust and associated loans put less than ten percent of Mr and Mrs Jamieson overall net wealth at risk of loss.

[91] Thirdly, in my view, it was a breach of contract and negligent for Mr Tindall to fail to provide to Mr and Mrs Jamieson both the full terms and conditions of the Macquarie Structured Product Investment Loan, including the Capitalised Interest Assistance Loan, and the PDS for the MQ Gateway Trust. Investment in the MQ Gateway Trust and the associated loans was a highly complex contractual arrangement based on investments in derivative financial products. It is unnecessary to go into the detail but even the statement of claim makes assumptions about how the concept of "participation" operated in relation to investment in units of a class in the scheme, in a way not consistent with the PDS. Quite apart from any statutory obligation to do so, it seems to me that it was incumbent upon the Bank, in recommending such a complex product, to provide copies of the relevant documents to the client, so that the risks and benefits could be assessed by the client. That conclusion is not affected by the level of Mr Jamieson's experience or his skills as an astute businessman.

[92] No more support for that proposition is needed than appears from the list of ten dot points under the heading "Other Factors" in the updated statement of advice. In two places, Mr Tindall made specific reference to the PDS which was described as the "product booklet". He said:

"You should refer to the product booklet for details on the types of material events that could trigger any termination" and that "the risk factors [are] detailed in the product booklet".

[93] In paragraph 9(d) of the statement of claim the plaintiffs allege that Mr Jamieson told Mr Tindall that the financial plan to be prepared by him should take into account that Mr Jamieson wanted to protect his assets and grow his wealth, did not want to risk on any investment more than ten percent of the net asset worth of him and his wife, wanted to improve his tax position and wanted to make best use of his employee share options.

[94] In paragraph 42 of the statement of claim, Mr Jamieson alleges that the updated statement of advice was provided for the purposes pleaded in paragraph 9(d) and that, for the reasons pleaded in paragraph 39, warranties as to fitness for purpose and as to the nature and quality of the services and the materials supplied in connection with them were breached.

[95] For the reasons set out above, it is unnecessary to separately consider these allegations of breach of contract as breaches of statutory warranties under s 12ED. However, in my view, the statements that Mr Jamieson wanted to protect his assets and grow his wealth did not amount to a statement of purpose of a kind which supports the alleged implied warranties as to protection of assets. Aspirational statements about a proposed course of investment action, if successful or unsuccessful, are not such a purpose in my view.

[96] Similarly, I do not consider that there was an implied term that the services and materials to be provided by Mr Tindall on behalf of the Bank would not risk on any investment more than ten percent of the net asset worth of the first and second plaintiff or that they might reasonably be expected to have risked no more than ten percent of the net asset worth of Mr and Mrs Jamieson. In context, the statement that less then ten percent of overall net wealth was at risk was representational, not promissory.

[97] In paragraph 46 of the statement of claim, Mr Jamieson alleges that by engaging in the conduct pleaded in paragraph 39, the Bank engaged in conduct in relation to financial services that was misleading or deceptive or likely to mislead or deceive and in doing so contravened s 12DA(1) of the ASIC Act in six particular ways. As to those allegations, each of the findings of breach of contract or negligence I have made above, in my view, was also misleading or deceptive conduct or conduct that was likely to mislead or deceive in contravention of s 12DA(1).

[98] As to the other allegations made in paragraph 46, some of them have been dealt with as a matter of substance previously. It is unnecessary to further expand on those reasons for rejecting the relevant allegations of contravention.

[99] I have not previously dealt with the allegation in paragraph 46(e) of the statement of claim that alteration of the signature page on the application for units in the MQ Gateway Trust by checking the box was a breach of contract or negligent or misleading or deceptive. The further allegation is that had the box not been checked Macquarie would not have entered into the relevant contracts with Mr Jamieson to invest in the MQ Gateway Trust and make the associated loans. However, there was no evidence one way or the other as to what the Macquarie entities would have done. One of the accountants commented on this point in his report but, in my view, this is not within any subject of expertise upon which expert opinion evidence is receivable. I am not prepared to infer what would have happened in the absence of evidence. It is unnecessary, therefore, to pursue this allegation further.

[100] As previously set out, Mr Jamieson claims damages for loss suffered by reason of the investment he made in and the associated loans he obtained for the MQ Gateway Trust. The total amount of $1,289,232.45 is made up of three components.

[101] First, there were interest payments made by Mr Jamieson to Macquarie on the $5 million loan as follows:

[102] Secondly, at the end of the three year term of the $5 million loan Mr Jamieson paid Macquarie the amount of $688,499.59 on 30 June 2010, representing the financed interest component for the $5 million loan, together with interest on that amount.

[103] The net principal amount of the investment in the MQ Gateway Trust "realised" on maturity, plus the interest on that balance taking into account a payment on account, are credited as discharging the principal of the Macquarie Structured Investment Loan.

[104] Thirdly, an amount of an unpaid "rebate" in the sum of $7,750 is claimed. Mr Jamieson contends that this is part of the amount that the Bank promised to pay him by way of rebate for the difference between the rate of 7.95 percent per annum interest payable to Macquarie and the rate of 7.5 percent per annum which Mr Tindall had represented would be the rate payable.

[105] Mr Jamieson alleges that he would not have entered into the MQ Gateway Trust investment and associated loans but for the Bank's breach of contract, negligence or breach of statutory duty. Thus he would have avoided the alleged loss.

[106] Such a claim is often described as a "no transaction" case. That label serves to distinguish it from other categories of claims for loss whether made for breach of contract, in tort or under equivalents of former ss 52 and 82 of the Trade Practices Act 1976 (Cth) ("TPA"), such as s 12DA(1) and s 12GF of the ASIC Act.

[107] In a "no transaction" case, the question is not whether the breach of contract, or tortious or contravening conduct is a cause of the alleged loss. Where liability is based on that causal concept, a plaintiff is not required to show that but for the conduct they would not have entered into the relevant transaction. It is enough if it was a material cause of the loss. In contrast, a plaintiff in a "no transaction" case will seek to prove, on the balance of probabilities, that they would not have entered upon the transaction, so as to prove that they have suffered the alleged loss.

Loss on MQ Gateway Trust and associated loans - summary

[108] First, has Mr Jamieson proved on the balance of probabilities that had Mr Tindall not failed to mention the Capitalised Interest Assistance Loan or to more accurately describe its operation, and in particular that interest would be payable on the capitalised interest in a significant amount he would not have made the investment in the MQ Gateway Trust? In my view he has.

[109] Secondly, has Mr Jamieson proved on the balance of probabilities that had the representation that less than ten percent of overall net wealth was at risk of loss not been made he would not have made the investment in the MQ Gateway Trust and associated loans? In my view, he has.

[110] Thirdly, has Mr Jamieson proved on the balance of probabilities that had Mr Tindall not failed to provide to Mr and Mrs Jamieson the full terms and conditions of the Macquarie Structured Investment Loan, Capitalised Interest Assistance Loan and the PDS for the MQ Gateway Trust Mr Jamieson would not have invested in the MQ Gateway Trust and associated loans? In my view, he has.

[111] Curiously, none of the parties analysed the case having regard to the operation of s 11 of the CL Act in respect of causation for a breach of duty within the meaning of that Act, which provides that:

(1) A decision that a breach of duty caused particular harm

(a) the breach of duty was a necessary condition of the

(b) it is appropriate for the scope of the liability of the

person in breach to extend to the harm so caused (scope

(2) In deciding in an exceptional case, in accordance with

established principles, whether a breach of duty - being a

breach of duty that is established but which can not be

established as satisfying subsection (1)(a) - should be

accepted as satisfying subsection (1)(a), the court is to

consider (among other relevant things) whether or not and

why responsibility for the harm should be imposed on the

(3) If it is relevant to deciding factual causation to decide what the

person who suffered harm would have done if the person who

was in breach of the duty had not been so in breach -

(a) the matter is to be decided subjectively in the light of all

relevant circumstances, subject to paragraph (b); and

(b) any statement made by the person after suffering the

inadmissible except to the extent (if any) that the

(4) For the purpose of deciding the scope of liability, the court is

to consider (among other relevant things) whether or not and

why responsibility for the harm should be imposed on the party who was in breach of the duty."

[112] Notwithstanding the parties' approach, it does not seem to me that I can proceed without reference to the CL Act where it applies and its provisions may modify or affect what might otherwise have been the application of the common law.

Loss on MQ Gateway Trust and associated loans - causation in fact

[113] The question of causation under s 11 of the CL Act requires an answer to the question whether the breach of duty was a necessary condition of the harm. In this case, as a "no transaction" case, that question adapts to whether Mr Jamieson would not have entered into the investment in the MQ Gateway Trust and associated loans had the found breaches of contract or negligence not occurred.

[114] Mr Jamieson said in evidence that at the time of Mr Tindall's approach and advice on behalf of the Bank that: "we were probably considering reducing debt". He also said that if he had known the amount of the eventual liability under the Macquarie Gateway Trust and associated loans at the outset he: "would not have entered into the investments".

[115] Under s 11(3)(b) of the CL Act, Mr Jamieson's statements as to what he would have done are inadmissible upon those questions in relation to any breach of duty within the meaning of the CL Act. However, the Bank did not object to Mr Jamieson giving evidence of that kind on those questions.

[116] Assuming that the Bank might thereby have elected to waive the benefit of the protection of s 11(3)(b), I still reject Mr Jamieson's evidence as to what he would have done. In my view, his evidence as to his intention otherwise to pay down debt was completely unbelievable. First, as at April and May 2007, he was undoubtedly an aggressive investor. Secondly, he was a person who in the prior years determinedly arranged his affairs to reduce the incidence of taxation, by looking for negatively geared investments. Thirdly, at that time his assessable income from other sources including salary, employee options and investment income was apparently rapidly rising. Fourthly, at March and April 2007 he and Mrs Jamieson were looking to borrow $3 million from the Bank to fund the acquisition of another expensive apartment, although at the same time they were selling or marketing the sale of the Accent apartment for $2.5 million. Fifthly, in 2007 Mr Jamieson made further investments in agribusiness managed investment schemes, in addition to the MQ Gateway Trust investment. It is unnecessary to go further.

[117] It is difficult to accept that in giving evidence Mr Jamieson could have honestly believed, even with the benefit of hindsight, that reducing debt was considered by him to be an option in 2007. Upon making the investments, his forward plan about repayment of the $700,000 of non-deductible borrowing made to fund the 2007 superannuation contributions, was to convert that amount of debt to a tax deductible form, not to reduce the amount of debt, per se.

[118] In the circumstances, in my view, it would be unsafe to make any finding based on Mr Jamieson's evidence as to what he would have done absent the found breaches of contract, negligence or contraventions of s 12DA(1). But the rejection of his evidence does not justify the opposite conclusion, namely that he would have invested in any event. The only safe course is to proceed on the objective evidence.

[119] This raises a question as to the hypothetical state of affairs as at April and May 2007 against which the question as to what Mr Jamieson would have done is to be answered? First, Mr Jamieson would have known or had the opportunity of knowing the terms of the Macquarie Structured Investment Loan, the Capitalised Interest Assistance Loan and the Macquarie Gateway Trust. It must be possible that Mr Jamieson would not have carefully read them, but in my view there is no reason to assume that he would not have done so.

[120] Had Mr Jamieson read and considered those documents with care it would have been apparent to him that the true amount of the exposure upon the Macquarie Structured Product Investment Loan including the Capitalised Interest Assistance Loan would have been in excess of $1,125,000 by a substantial amount, in cash flow terms. Even if the updated statement of advice had fairly or accurately disclosed the effect of the loan documents, that exposure would have been apparent to Mr Jamieson. In my view, it was not apparent to him at the time.

[121] In my view, had Mr Jamieson known those facts he would not have invested in the MQ Gateway Trust and associated loans, because the full cash flow amount of his true exposure on the associated loans would have detracted from the attraction of the immediate taxation benefits of the proposed investment.

[122] Next, had Mr Jamieson been aware that the exposure was in excess of $1,125,000 by a substantial amount, and that the amount at risk substantially exceeded ten percent of Mr and Mrs Jamieson's overall net wealth, in my view he would not have invested in the MQ Gateway Trust and associated loans for an amount of $5 million because the amount of the exposure exceeded the amount that Mr and Mrs Jamieson agreed with Mr Tindall was appropriate to expose as a percentage of their net wealth.

[123] As well, if Mr Jamieson had read the MQ Gateway Trust PDS with care, it would have become clear that the hurdle rate of return required to make a profit on the investment on its conditions was significant, having regard to the 7.95% gross or 7.5% net interest rate applying to the associated loans and other likely expenses to be taken into account. In my view, this would have made it even more likely that he would not have invested in the MQ Gateway Trust and associated loans.

[124] Accordingly, in my view, the found breaches of contract and negligence in relation to the MQ Gateway Trust and associated loans constituted a necessary condition of the harm alleged.

Loss on MQ Gateway Trust and associated loans - scope of liability and causation in law

[125] Under s 11(1)(b) of the CL Act, a decision that a breach of duty caused particular harm involves, as an element, whether it is appropriate for the scope of the liability of the person in breach to extend to the harm so caused.

[126] In my view, it is appropriate that the Bank's liability to Mr Jamieson extend to the losses associated with Mr Jamieson's investment in the MQ Gateway Trust and associated loans. There is no apparent reason and none was identified by the Bank why the Bank should be found not to have caused Mr Jamieson's loss in law if it is found that it caused that loss as a matter of fact, except for the points to be considered below.

Causation and measure of damage at common law - the Bank's contentions

[127] The Bank contends that, in any event, Mr Jamieson did not prove any recoverable loss. This contention is advanced in two ways. First, the Bank contends that the applicable measure of loss is calculated in accordance with the so-called "rule in Potts v Miller"[3] as the difference between the price paid and value of what was acquired at the time of entering into the MQ Gateway Trust investment and associated loans, and that the loss so calculated is nil.

[128] Secondly, the Bank contends that Mr Jamieson would have entered into some other similar transaction, in any event, and that because he would have done so, he was required to prove that alternative transaction in order to demonstrate that he has suffered compensable loss, by comparison with the actual investment and associated loans.

[129] In my view, both contentions should be rejected, stated at that level of generality.

[130] As to the "rule in Potts v Miller",[4] the starting point is that damages calculated in accordance with the rule are the ordinary measure of loss where a plaintiff purchases an asset under a fraudulent inducement. In such a case, the plaintiff has parted with their money in exchange for the asset purchased. The amount of the loss is measured by the difference between the price paid and the "true" or "fair" value of the asset acquired. It was the price paid that was the detriment and the interest of the plaintiff in that money which was infringed by the fraud. The true value of the asset purchased was a benefit received by the plaintiff in exchange for the detriment. The difference represents the value of the amount of the loss or damage suffered by reason of the fraudulent inducement after giving credit for the benefit received. Upon being restored to that amount, the plaintiff is returned, as at the date of the purchase, to the equivalent economic position as if the plaintiff had not purchased the asset on the faith of the fraudulent inducement.[5]

[131] Although that measure of loss is called the rule in Potts v Miller, that case did not first establish that measure as the applicable approach to damages for the tort of deceit. The decision of the High Court in Holmes v Jones[6] is the first decision of that court applying that measure and distinguishing between that measure as applicable to the tort of deceit and the different measure applicable in a case of damages for breach of contract. Griffith CJ said:

"The true rule, as I understand it, was laid down by Buckley J. in the case referred to by my learned brother Isaacs, Broome v. Speak, which was an action against directors of a company, claiming damages for fraudulent misrepresentation in a prospectus. The learned Judge there said: - 'The result of this is that the plaintiff is entitled to damages as against all the defendants. The measure of damages is well fixed. It is the difference between the price which the plaintiff paid for the thing, and the fair value of the thing at the date at which he got it.'..." (citations omitted)

[132] I note at the outset that it was said recently by the High Court in HTW Valuers Pty Ltd v Astonland Pty Ltd ("Astonland")[7] that the measure applied in Potts v Miller does not apply in all cases.

[133] As well, it has been recognised at the highest level that, beyond the measure of the difference between price paid and true or fair value, a plaintiff may be entitled to recover consequential losses, such as trading losses,[8] or interest on borrowings to fund losses or interest on the damages.

[134] In Astonland, it was also recognised that the recoverable loss may not be measured by the difference between price and value at the date of suffering damage caused by the wrong. Instead, the assessment of the losses incurred over the period to the date of the hearing and estimated beyond that date may be required. This may occur where the plaintiff has contended that it would not have entered into the transaction under which it has suffered those ongoing losses. I will return to this alternative.

[135] In the present case, to the extent that Mr Jamieson succeeded in showing that the Bank's breach of contract, negligence or contraventions of statute caused him to enter in to the MQ Gateway Trust investment and associated loans when he would not otherwise have done so, I do not accept the Bank's submission that he suffered no loss measured according to the rule in Potts v Miller on the basis that the price paid by him for the MQ Gateway Trust investment was the same as its true value.

[136] By purchasing the MQ Gateway Trust investment and entering into the associated loans, Mr Jamieson exposed himself to the contingency and risk of loss from market movements that he subsequently suffered. The alleged breaches of contract, negligence or contraventions of statute by the Bank were material to assuming the risk of suffering that loss. If otherwise he would not have done so, in my view, the principle of compensation requires a comparison of the actual case of his losses to the past hypothetical case had he not entered into the investment and loans. That conclusion is not necessarily repelled by the rule in Potts v Miller. On the contrary, the rule in Potts v Miller is intended to operate as a methodology to assess compensation on the principle of restoring the plaintiff to the equivalent economic position they would have been in if they had not acted on the fraudulent inducement.

[137] The Bank's other contention, that Mr Jamieson would have entered into a similar or alternative transaction, engages both a legal contention and a factual question. The factual question is whether it should be concluded on the balance of probabilities that Mr Jamieson would have entered into another similar or alternative transaction. The legal question is whether Mr Jamieson's claim for damages must then fail because he failed to prove the similar or alternative transaction.

[138] Mr Jamieson contends that if he would not have entered into the MQ Gateway Trust investment and associated loans, there is no basis to inquire what similar or alternative transaction he might have entered into.

[139] In support of his contention, Mr Jamieson relies on Downs & anor v Chappell & anor.[9] That is a difficult case. The plaintiff was induced to enter into the purchase of a book shop by the deceit of the vendor as to the business's takings and the negligence of a reporting accountant as to the reliability of that information. The primary Judge found that the plaintiff failed to prove that had they known the true information they would not have purchased the business. The Court of Appeal overturned the primary Judge's finding. However, the reasoning is not necessarily consistent with the reasoning of the High Court on the question of causation in March v E & MH Stramare Pty Ltd.[10] As was said in March, the negative application of the "but for" test, that is, where the plaintiff would have suffered the damage claimed in any event, "will commonly exclude causation for the purposes of the law of negligence".

[140] Subsequent Australian cases have also confirmed that whether a plaintiff suffers loss is a subjective consideration - meaning that in assessing the past hypothetical case the question is what this plaintiff would have done. Although McHugh J was in the minority in Chappell v Hart,[11] he wrote on the topic of causation in that case as follows:

"Furthermore, a defendant is not causally liable, and therefore legally responsible, for wrongful acts or omissions if those acts or omissions would not have caused the plaintiff to alter his or her course of action. Australian law has adopted a subjective theory of causation in determining whether the failure to warn would have avoided the injury suffered. The inquiry as to what the plaintiff would have done if warned is necessarily hypothetical. But if the evidence suggests that the acts or omissions of the defendant would have made no difference to the plaintiff's course of action, the defendant has not caused the harm which the plaintiff has suffered." (citations omitted)

[141] That point was reiterated in later cases and is now embodied in s 11(3)(a) of the CL Act.

[142] The Bank relied upon Leadenhall Australia Ltd & ors v Peptech Ltd,[12] as supporting the contentions that, once it is concluded that the plaintiff would have entered into a similar or alternative transaction, it is "necessary to determine what different transaction or transactions would have been entered into, and then to compare the position[s]..." and "[i]t [i]s incumbent on [Mr Jamieson] to lead evidence on which that exercise could be carried out."

[143] Leadenhall is also a difficult case. The plaintiff failed at first instance because the primary Judge concluded that the plaintiff, if not misled, would have deferred concluding the negotiations for acquisition of the purchased shares but still would have negotiated an agreement for their purchase at a later time and that any reduction in the price or consideration "would not have been significant". Although statements in terms of the quoted passages relied upon by the Bank set out above appear in the reasons of Giles JA,[13] the positive finding of fact just mentioned was enough to decide the case. There was an application for special leave to appeal to the High Court.[14] It was dismissed because the outcome of the case turned on the factual view taken by the trial Judge.

[144] If Leadenhall is set up in support of a general proposition that the plaintiff must prove what different transaction or transactions would have been entered into, difficulties soon emerge. For example, in Henville v Walker[15] a plaintiff invested in a development project and suffered loss by the defendant's contravening conduct in misrepresenting the state of the market for the sale of high-end home units. However, the plaintiff had also erred in assessing the cost of developing the units. A question arose whether the defendant had caused the plaintiff's loss. That point was resolved in the plaintiff's favour, on the footing that the plaintiff's error did not break the causation chain between the contravention and suffering the loss. However, a second question was whether, if part of the loss was due to the plaintiff's own error, the onus lay on the plaintiff or the defendant to disentangle that part from the whole? That question was undecided.[16] But s 12 of the CL Act now provides that "[i]n deciding liability for breach of duty, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation".

[145] In my view, the approaches taken in Downs and Leadenhall do not resolve the causation or measure of loss questions in the present case.

[146] The starting point in answering those questions is the characterisation of the kind of interest and loss under consideration. For each of the found breaches of contract, negligence or contravention of s 12DA, the interest involved is the risk of loss of the money paid for the investment. The potential loss that might be suffered is a loss of the MQ Gateway Trust investment and any loss of profit that might have been made otherwise. That loss would be suffered once it is reasonably ascertainable that the plaintiff is "worse off than if he had not entered into the transaction".[17]

[147] It seems to me that there is an analogy between the present case in relation to the MQ Gateway Trust and associated loans and Kenny & Good Pty Ltd v MGICA (1992) Ltd,[18] ("Kenny & Good") which is sufficient to conclude that the claimed loss could be recoverable, as a matter of principle. The plaintiff in Kenny & Good entered into a mortgage insurance contract acting on the faith of a representation as to the value of a mortgage security property and a recommendation as to the suitability of the property as security for a loan over a proposed term or period of the mortgage. Kirby and Callinan JJ rejected that the application of the rule in Potts v Miller had the effect that the plaintiff could not recover the losses it sustained when the property proved to be inadequate security some years after making the advance.[19] Gummow J agreed.[20]

[148] In the result, I do not accept that Mr Jamieson was necessarily confined as a matter of law to a claim for damages measured by the difference between price and true value as at the date of making the MQ investment and loans. Nor do I accept that Mr Jamieson failed to prove any loss without proving what similar or alternative transaction he would have entered into if he had not entered into the MQ Gateway Trust investment and associated loans.

[149] A further causation question is whether this is a case where it is sought to hold the Bank "liable for the consequences which would have arisen even if the advice... had been correct?"[21] It is only because Mr Jamieson would not have entered into the MQ Gateway Trust investment and associated loans, that he would have avoided the loss. That is, because it is a "no transaction" case. Further, the representation that ten percent of overall net wealth at risk of loss was not material to the amount of the loss or the risk that it would be suffered. It only went to the proportionate impact of the postulated loss upon Mr and Mrs Jamieson's financial position.

[150] However, according to Kirby and Callinan JJ in Kenny & Good, once it is accepted that had the correct representation been made the plaintiff would not have entered in to the transaction, it is not a case where it is sought to hold the Bank liable for the consequences which would have arisen even if the advice had been correct.[22]

[151] In my view, I should follow the view of Kirby and Callinan JJ. I will return to a consideration of the impact of what Mr Jamieson might have done instead of investing in the MQ Gateway Trust and associated loans.

[152] Mr Jamieson contended that the applicable principles as to whether he suffered loss or damage under s 12DA and s 12GF of the ASIC Act operate more broadly than at common law, relying in particular upon Murphy v Overton Investments Pty Ltd.[23]

[153] Under s 12GF, "a person who suffers loss or damage by conduct of another person that contravenes...[s 12DA] may recover the amount of the loss or damage by action against that other person...". Sections 12DA and 12GF operate in parallel to former ss 52 and 82 of the TPA which were considered in Murphy.

"...it is wrong to approach the operation of those provisions of Pt VI of the Act which deal with remedies for contravention of the Act by beginning the inquiry with an attempt to draw some analogy with any particular form of claim under the general law. No doubt analogies may be helpful, but it would be wrong to argue from the content of the general law that has developed in connection, for example, with the tort of deceit, to a conclusion about the construction or application of provisions of Pt VI of the Act. To do so distracts attention from the primary task of construing the relevant provisions of the Act. In the present case, analogies with the tort of deceit appear to have led to an assumption, at least at trial, that a person can suffer only one form of loss or damage as a result of a contravention of Pt V of the Act."[24]

[155] Mr Jamieson submitted that the plaintiffs have suffered loss in this case "because they could have acted in some other way or refrained from acting in some way which would have been of greater benefit or less detriment to them than entry into the transactions" and that "they could have reduced debt or entered into other transaction[s] that would have placed them in the same or a better position than the MQ Gateway Trust..."

[156] Murphy is relied on as showing that it is an error for the Bank to submit that if Mr Jamieson would have entered into another transaction, no loss is proved (in the absence of proof of what Mr Jamieson would have done instead).

[157] Regrettably, the plaintiffs' reliance on ss 12DA and 12GF and Murphy as the answer to some of the difficulties that their cases face on the questions of causation and measure of loss at common law requires a somewhat detailed analysis of that case and ss 52 and 82 as the comparators of those sections.

[158] Stripped of its constitutional underpinnings in the references to a "corporation" and conduct "in trade or commerce", s 52 was a prohibition against misleading or deceptive conduct or conduct that is likely to mislead or deceive. Thus, reading ss 52 and 82 together, a person who suffered loss or damage by the conduct of another person that was misleading or deceptive or likely to mislead or deceive may recover the loss or damage from the contravener or any other person involved in the contravention.

[159] Pre-contractual misrepresentations inducing contracts form the backbone of the body of cases in which s 52 came to be applied. In this context, "misrepresentation" is wider than its common law counterpart,[25] because a representation as to a future matter, sometimes described as a prediction, is a representation, not merely as to the state of mind of the person making it, but also as to the existence of reasonable grounds for making the prediction.[26]

[160] Accordingly, there were ready analogues for the application of ss 52 and 82 in the torts of deceit and negligent misstatement. A remedy for both torts is an award of damages at common law. A fraudulent pre-contractual misrepresentation, which induces a person to enter into a contract, and thereby causes loss, is capable of being characterised as misleading or deceptive conduct by which the person suffers loss or damage.

[161] Nevertheless, there is a difference of substance between the two causes of action. It is the absence of any requirement under s 52 that the misrepresentation be made knowingly, or recklessly, not caring whether it be true or false. The prohibition under s 52 did not require such a mental element. The possible exception to that was conduct constituted by an omission. Conduct was defined to include a not inadvertent omission and in those circumstances the fault element of the tort of deceit and s 52 were more closely aligned than otherwise.[27]

[162] For simplicity in analysis, I will confine attention to the comparison between ss 52 and 82 and the tort of deceit. If the analysis were expanded to include negligent misrepresentation it would need to take account of more cases, but the principles and outcomes would not significantly differ.

[163] A claim for damages for the tort of deceit requires and a claim for damages under ss 52 and 82 requires that recoverable loss be caused by the impugned conduct. It is convenient to begin the comparison of the remedies in the relevant causal principles.

[164] In deceit, the element of causation is set at a low threshold. Where a plaintiff is induced to enter into a loss-making contract by a fraudulent misrepresentation, all that is required is that the inducement be a cause of the loss.[28] It is not necessary for it to be the only cause, or the dominant cause, or a cause but for which the plaintiff would not have entered into the contract.

[165] Under ss 52 and 82, the causal element was contained in the requirement that the loss or damage be suffered "by" the contravening, ie misleading or deceptive, conduct. Not surprisingly, the low threshold of causation that applies in deceit has been applied under ss 52 and 82.[29] As previously stated, this is a point of similarity between the remedies of damages for the two causes of action.

[166] At common law, it is no defence to a claim for damages for deceit that the plaintiff was guilty of contributory negligence in failing to take reasonable care for their own protection.[30]

[167] An attempt was made to limit the damages recoverable under s 82 for loss or damage suffered by misleading or deceptive conduct in contravention of s 52 through negligent omission by deciding that to the extent that a plaintiff's loss was caused by their own fault, the loss was not caused by the contravening conduct. It was rejected in the High Court.[31] Later amendments to the TPA introduced a defence of that kind.

[168] Remoteness of damage is a cognate concept to the causal aspect of s 52 and 82. It is unnecessary for present purposes to fully explore the potential application of remoteness as a concept limiting recoverable loss under ss 52 and 82. For the purposes of the present comparison, it is enough to note that in a claim for damages for the tort of deceit, remoteness may be approached differently from the tort of negligence. Where the plaintiff proves that the fraudulent misrepresentation was a cause of entering into the transaction complained of, the losses which flow directly are recoverable. It may not matter whether or not the loss was foreseeable.[32] There is no discord observable between that approach and the outcome of giving a broad operation to ss 52 and 82.

[169] In my view, the central principle in awarding damages for either the tort of deceit or under ss 52 and 82 is that damages are compensatory.[33] The object of that principle is that the plaintiff is to be restored to the position as if the wrong had not occurred.

[170] As previously stated, in the tort of deceit, where a fraudulent misrepresentation induces a contract under which property is acquired, the well established prima facie measure of loss is the difference between the price paid and the value of what is acquired at the time of the transaction, ie when the loss is suffered. There are several notable features of the rule in Potts v Miller, including that:

(a) if the value of what was acquired at the time of the acquisition was equal to or more than what was paid, there is no loss, even if the property acquired would have been worth more if the representation had been true;

(b) the object in mind is to place the plaintiff in the position as if they had not altered position on the faith of the misrepresentation, not to restore to the plaintiff a hoped for benefit or protection which does not materialize;

(c) this is the fundamental difference in outcome between a pre-contractual misrepresentation and a contractual warranty which is breached;

(d) the value of the property acquired is assessed by the court and the inquiry is not constrained by market value at the time, if the market was not fully informed. That is, the inquiry is as to true or fair value; and

(e) in assessing true or fair value as part of assessing damages, a court is not bound at a later trial to ignore matters which have in fact occurred after the transaction as if they were still hypothetical contingencies at the date of entering into the transaction. The task is the assessment of damages at trial, not the determination of market value at the date of entering into or completion of the contract.

[171] Despite rumblings of other possibilities in High Court cases,[34] in the practical world of litigation, the usual measure in accordance with the rule in Potts v Miller is every-day stuff. It has been consistently applied in misrepresentation cases at common law and in claims for damages under ss 52 and 82.

[172] Also, as previously stated, the usual measure is intended to compensate by putting the plaintiff in the position they would have been in if the misrepresentation had not induced them to enter into the transaction. However, as the causation discussion above also shows, the plaintiff is not required in every case to go so far as to prove that they would not have entered into the transaction if the inducing misrepresentation had not been made. This is a simple enough forensic advantage given to a plaintiff. It compensates the plaintiff without the need for an inquiry as to relative causal significance. The financial detriment of the transaction is compensated by notionally returning the plaintiff's money, the purchase price, but subtracting the value of what they got under the transaction, so they are not over compensated. It usually follows that if what the plaintiff acquired was worth what was paid for it or more, there is no compensable loss. This is a proper application of the compensation principle in damages for the tort of deceit. It is consistent with the application of the principle in awarding damages for tort generally, which is often identified with Livingstone v Rawyards Coal Co.[35]

[173] The operation of the compensation principle in damages for breach of contract is different. There, generally speaking, the object of an award of damages is to put the plaintiff in the position they would have been in if the contract had been performed without the breach complained of. It is not to put them into the position as if they had not entered into the contract. On the contrary, the plaintiff is entitled to the value of any benefit which performance of the contract should have given them. The application of the compensation principle in awarding damages for a breach of contract is often identified with Robinson v Harman.[36]

[174] Butler v Egg & Egg Pulp Marketing Board[37] is a leading High Court case in which the plurality reasons for judgment elegantly articulated the compensation principle in a way that took account of both categories of cause of action as follows:

"...But such a result would not accord with the general principle upon which compensatory damages are assessed, whether in actions of contract or of tort. That principle is that the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed." (citations omitted)

[175] It should not be forgotten that the difference between the application of the compensation principle in damages for tort and damages for breach of contract was clearly made long before ss 52 and 82 came to pass. The different "measure" in each category of cause of action was not arrived at in any way which was arbitrary or capricious. It reflected the different purposes of the compensation sought to be achieved by the award of damages in the different contexts, worked out by the common law over many cases. The common law method informs the robust nature of the distilled principles.

[176] An important consequence of the difference can be illustrated by further reference to Holmes v Jones.[38] In that case, the plaintiff was found at trial to have been induced to purchase a grazing property and cattle located on the property by a misrepresentation as to the number of cattle. It was also found at trial that the misrepresentation was fraudulent. The plaintiff was compensated at trial by an award of damages representing the value of the cattle which it had been falsely represented were on the property, that is the breach of contract measure. On appeal, the plaintiff contended that the measure for damages for breach of contract could be applied. The High Court rejected that contention, having regard to authority and as a matter of principle. Griffith CJ said of the principles that apply for the tort of deceit:

" ... 'the proper mode of measuring the damages is to ascertain the difference between the purchase-money and what would have been a fair price to be paid for the article at the time of the purchase.' That, I conceive, is the English rule of law, and any other rule would lead to the most extraordinary consequences. Suppose that a man was induced by fraudulent misrepresentation to give £10,000 for a property worth £20,000, on a representation that it was worth £30,000. If the law were as the plaintiffs contend, the purchaser would be entitled to recover from the vendor the whole of the purchase money, and have a property worth £20,000 for nothing, and would get that as compensation for the injury done him by the defendant".[39]

[177] It is necessary to briefly essay the history of ss 52 and 82 cases in the High Court before Murphy. The first notable case for present purposes was Gates v City Mutual Life.[40] It is a remarkable case because of the clarity of the judgments in the context of the facts. For ten years, it stood as a statement of principle for claims for damages under ss 52 and 82.

[178] The facts in Gates picked up nicely the difference at common law between an innocent misrepresentation and a contractual warranty.[41] Mr G was induced to enter into a contract of insurance with the insurer by an agent's misleading representation as to the scope of cover. When he was injured the policy did not respond to his claim. If the representation as to the scope of cover had been true, the policy would have responded.

[179] Mr G sought relief under ss 52 and 82 on the footing that he should have as damages the amount he would have obtained under the policy if the misleading representation had been true. Not surprisingly, the High Court rejected the claim because there was no proof that if he had not acted on the misleading representation he could and would have obtained that benefit under another policy. The joint judgment said of the principles which apply in tort:

"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 [1976] EWCA Civ 4; [1976] Q.B. 801, at pp. 820-821, 828-829; Doyle v. Olby (Ironmongers) Ltd. [1969] 2 Q.B., at p 167). 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."[42]

[180] The same reasoning was held to apply to Mr G's claim under ss 52 and 82. As can be seen from the extracted passage, the requirement of proof that the plaintiff could and would have obtained the lost benefit was vital. Subsequent cases on causation under ss 52 and 82 have considered whether it is right to require that a plaintiff show that they could have obtained the lost benefit, where the loss is of a valuable commercial opportunity. In that context, it has been held that if it is shown on the balance of probabilities that the lost commercial opportunity was valuable, that is enough to conclude that loss has been suffered, with the value of the opportunity to be assessed on the possibilities rather than the probabilities.[43] However, for present purposes, the analogy between damages in deceit and damages under ss 52 and 82 was clearly made in Gates.

[181] It is not necessary, for present purposes, to distract attention further by a detailed analysis of all the High Court cases decided subsequent to Gates but before Murphy, in particular Wardley v State of Western Australia,[44] Sellars v Adelaide Petroleum NL[45] or Kizbeau Pty Ltd v WG & B Pty Ltd.[46] Each was significant in the statement of principles relevant in applying ss 52 and 82, but none was fundamentally concerned with the nature of damages as compensation. Wardley was directed more to the limitations aspect of s 82. Kizbeau was concerned with the proper approach to determining past hypothetical facts in assessing the value of what was acquired at the time of the wrong when those facts are ascertained at the time of trial. And Sellars was concerned with the onus of proof of loss where the past hypothetical fact is a lost commercial opportunity and the assessment of damages for that species of loss.

[182] The next step in the march of High Court cases considering ss 52 and 82 was made in Marks v GIO Australia Holdings Ltd.[47] For a reason which is not entirely clear, the Judges in Marks were at pains to point out that the question of loss under ss 52 and 82 is what damages are recoverable under the statute, which is not necessarily the same as damages at common law for the tort of deceit. So much may be granted, and the point has been often repeated since. However, it is a distinction without much substance if there is no call for the application of a different principle. And what is remarkable is that no different principle emerged from Marks. There was criticism in Marks of the contrast made in Gates between reliance loss and expectation loss at common law and the analogy drawn between reliance loss or loss measured in damages for a tort and damages recoverable under ss 52 and 82. In fairness to the Judges in Gates, it must be said that nothing in the language of the judgment in that case foreclosed the wider application of the statutory language in a particular context in which it comes to be applied. There was also an appeal by some of the Judges in Marks to the high public purpose that the TPA served. Again, that may be granted. But it may be doubted that the Judges in Gates misapprehended that. It may also be doubted that the public purpose in providing a remedy of damages for misleading or deceptive conduct by which loss or damage is suffered is higher than the public purpose served by the common law remedy of damages for deceit. Parliament's sovereign power will trump inconsistent common law, but nothing gives statutory laws a higher or better purpose than the common law, as such. The relevant principle of statutory interpretation is that a construction which furthers the purpose of the sections under consideration is to be preferred to one that does not. Nothing more or less is called for. It should also not be forgotten that although s 52 appeared in a part of the TPA headed "Consumer Protection", its operation was in no way confined to consumer style transactions, as the wide range of cases decided under ss 52 and 82 undeniably attests. Its operation has had pervasive significance in ordinary commercial dealings, a truth illustrated by the alternative plea made under those sections in many commercial cases. It is a misnomer to label ss 52 and 82 taken together as "consumer protection".

[183] It can be suggested that Marks did not establish a great deal as a matter of principle because of two points. First, the decision actually made in that case was consistent with the assessment of damages in tort. Because no other banking institution offered the represented benefit under a loan for the same consideration which had moved from the plaintiff, the appeal was dismissed. Secondly, despite what can be described as some judicial sabre rattling, the Court did not abandon the compensation principle that governs the assessment of damages at common law in tort. Thus the damages were to be assessed so as to place the plaintiff in the position as if the wrong had not been done to them, by not acting to their detriment because of the misleading conduct. That Marks lacks great significance is perhaps exemplified by the cryptic reference in Murphy to what the separate reasons in Marks established.[48]

[184] Murphy was an unusual case in a number of respects. First, it had an extraordinarily long history by the time that it came to the High Court. Secondly, although the plaintiffs had failed, as a matter of fact, on the case that they had articulated in the courts below and partly repeated in the High Court, the result in the High Court was that the proceedings were remitted for decision on a basis that had not been relied on in the courts below. It was thus a hard case, at best.

[185] Mr and Mrs M were retirees who wished to acquire and live in a unit in a retirement village. O was the developer and owner of the village in which they "purchased" a unit. Pre-contractual representations were made by O as to the amounts of charges for outgoings payable by an owner of a unit in the complex. The representations were misleading or deceptive, as it was found, because they failed to disclose the full details of the basis of the calculation of the outgoings. In reliance on the misleading misrepresentation Mr and Mrs M purchased the unit, meaning that they entered into a lease for which they paid a premium and under which they assumed obligations including payment of an amount for outgoings as determined by the landlord and charged to the unit holders. The outgoings were charged periodically. After some years, the landlord increased the charges for outgoings in a way that included items that had been omitted in the pre-contractual representations as to the amounts of the charges.

[186] It was found that s 52 had been contravened. Notwithstanding that, Mr and Mrs M failed in the Full Court of the Federal Court because they did not prove that they had suffered loss or damage by the contravening conduct under s 82. The problem was that the unit was worth what Mr and Mrs M paid for it, even with the increased amount of the charges for outgoings. On the tortious measure, calculated in accordance with the rule in Potts v Miller, Mr and Mrs M had suffered no loss. This caused their claim to fail in the Full Court of the Federal Court. Yet they succeeded in the High Court on the basis that there was another head of damage to be considered, which had not been dealt with previously. As to principle, it was said:

"Loss or damage may be a loss of capital. But there may also be a loss on revenue account which, unless some other remedy is granted which will prevent it continuing into the future, will, or may, continue into the future. And the losses on capital account may be sustained at a time different from any loss on revenue account. The latter form of loss may, in many cases, be sustained after the loss on capital account has been suffered. In some cases the loss on capital account may overlap with a loss on revenue account. If that is so, it is necessary to mould relief in a way which will avoid double compensation.

A loss on revenue account, whether past or future, can be reduced to a single capital sum. Courts often undertake that exercise, and in doing so may acknowledge that it is difficult and that the result is imperfect. But the frequency with which the courts have had to grapple with the problem of translating a continuing stream of future losses (sometimes of uncertain amounts, over an indefinite and uncertain time) into a single capital sum does not mean that the only kind of loss which a person may sustain as a result of conduct of the kind now in issue is the loss of a capital sum. Nor does it mean that remedies other than an award of damages may not be made under the Act to compensate for, prevent or reduce those future losses.

It would be wrong, therefore, to assume that, where a person is induced by misleading or deceptive conduct to undertake a continuing future obligation, the remedy to be awarded for a contravention of Pt V of the Act must be, or even ordinarily will be, a lump sum award of damages. There will be cases in which that will be the appropriate remedy. But that is a conclusion to be reached only after identifying the loss or damage which has been or will likely be suffered. That loss or damage may take several forms. It may be incurred at different times. Whether damages are to be awarded in compensation may depend upon what other forms of relief are to be awarded. In particular it will be much affected by what orders to prevent or reduce the loss or damage are made under s 87."[49]

[187] The remitter was made so that the court below could assess the difference between an obligation to pay the represented stream of outgoings and the obligation to pay the actual stream of outgoings as a head of loss.

[188] There are ultimately two criticisms that can be made of the reasoning that prevailed in Murphy. First, however it is dressed up, the end result was to require the defendant to make good the representation as to the extent of the outgoings, much as if a continuing contractual warranty had been given that the outgoings would not exceed a certain amount. This is difficult to comprehend under ss 52 and 82 in a case where the plaintiffs do not contend that but for the misleading or deceptive conduct they could and would have obtained the represented benefit elsewhere for the same price.[50] That is, Murphy is inconsistent with the basis of the decisions in Gates and Marks.

[189] The reason why that outcome is troubling is that damages calculated on that basis do not compensate the plaintiffs for a wrong done to them by restoring them to the position as if the wrong had not been committed. Instead, it gives them a benefit they could not and would not have obtained if there had been no misleading or deceptive conduct. This can only be justified on the footing that it is better to make the defendant pay on that basis than it is to leave the plaintiffs without a remedy in damages. Parliament could create a power to award such a monetary sum for contravention of s 52. But it would not be compensation, unless it is accepted that the role of s 82 for a contravention of s 52 is to make good the plaintiff's disappointed expectation under the transaction caused by the misleading conduct. Otherwise, it would be punishment of the wrongdoer, not compensation to the victim of the wrong. Is that what is intended by s 82?

[190] The text of s 82 is simple enough: the right is to "recover loss or damage suffered by the" contravening conduct. There is no warrant I can find in the statutory language, or in the context, for the Delphic references in Murphy to other kinds of unidentified loss or other kinds of unidentified orders by way of damages. An order made by way of a lump sum judgment reducing a recurring loss to a single amount is everyday stuff. The suggestion that such an order will not even "ordinarily" be the appropriate remedy seems extraordinary. A search for examples of some other form of order under s 82 shows that a lump sum form of order is the commonplace, not something which is out of the ordinary. And given that the claim in Murphy was for damages, which are claimed and awarded under s 82 as of right, not as a matter of discretion, reference in this context to s 87 only serves to distract.

[191] Secondly, what did the High Court's resort to analysis based on the differences between revenue and capital based losses add to the argument in support of what was otherwise an extraordinary (some would say counterintuitive) outcome? Generally speaking, compensatory damages are not concerned with whether loss is on a revenue or capital account. On the contrary, the accounting or tax incidents of a particular loss are not generally relevant here.[51] Accountants who value discounted cash flows, both inflows and outflows, for compensatory damages awards, would be surprised to hear lawyers say that there are two different losses involved, one on "capital" account and another on "revenue" account, although they can and often do make allowance for the incidence of taxation. Cash flow analysis operates independently of that division.

[192] Generally speaking, where a plaintiff is compensated for financial loss on revenue account, such as lost rent, under a recurring obligation to pay and correlative right to receive that rent, the methodology is clear. Past losses are calculated to the date of the judgment. Future losses are assessed by a hypothetical cash flow basis discounted for present receipt, so as to represent a capital sum which would produce the lost cash flow, if invested. The total is the amount of the judgment on a lump sum basis. The capital value of the same loss, being the reduced market value of the property at the date of the wrong due to the lost rent, is not also recoverable, because that would be double compensation.

[193] I can find nothing in Murphy to explain how resort to the distinction between losses on the capital account and losses on the revenue account made what was not compensation on ordinary principles, on a capital account basis, compensation when looked at from the revenue account perspective. The analysis in this respect appears to change the characterisation of something which otherwise was not a loss as a "loss" under s 82. Before that case, it would have been characterised as an expected benefit or protection that was neither promised by the defendant nor obtainable by the plaintiffs elsewhere for the same price as was paid in the transaction in question.

[194] Lastly, there is another potential problem with the Murphy approach. The High Court took the trouble to articulate the proposition that different losses may be suffered at different times for contravention of s 52. That is true. But the implied suggestion seems to have been that different claims could be made for each of the losses. This is dangerous ground. For a start, if different losses are treated as creating different causes of action, then a cause of action for a later loss does not accrue until that loss is suffered. This means that time does not run on a claim for damages under s 82 until the later loss accrues, notwithstanding that it arose from the same contravening conduct as an earlier suffered loss. The plaintiff is no longer able to sue under s. 82 for all the future losses from the same contravening conduct, provided there is some presently suffered loss.[52] A virtue of the "once and for all" rule embodied in Darley Main Colliery Co v Mitchell[53] is that a plaintiff is able to recover all the losses in one proceeding. However, there is an even more important problem of principle.

[195] It may be that Murphy postulates that separate heads of loss may be recovered as separate causes of action. This approach may have been intended to avoid the problem that on the evidence the lease was worth what was paid for it, even taking into account the increased outgoings. But let it be assumed that the lease was worth more than was paid for it. Murphy might be said to suggest that a plaintiff who has a separate loss can sue for that loss, even though overall the transaction was profitable.

[196] This approach has never been accepted in applying the compensation principle in damages for deceit. The passage from Griffith CJ's judgment in Holmes set out above shows why. The allied problem of separating the transaction into elements was confronted and rejected for the tort of deceit in Toteff v Antonas.[54] The reason is that the detriment constituting loss was that caused by entering into the whole transaction, not any loss caused by one aspect of the transaction not proving to be as advantageous as expected. The High Court's reasoning in Murphy appears to permit and encourage an approach under which, unlike the limits of the compensation principle at common law, a plaintiff can recover the difference in value between an expected benefit or protection and the actual outcome, perhaps even though the induced transaction overall was profitable.

[197] The proof of the pudding, that Murphy is a difficult case, lies in the absence of any later robust analysis that will support the outcome. If there was a firm foundation for the decision, one might have expected that by now there would be cases that have applied the reasoning or referred to it as establishing some useful principle. There is not much of that kind.

[198] Astonland[55] is now a leading later case concerned with the operation of ss 52 and 82. The High Court reiterated a number of core principles about the assessment of compensatory damages including that:

(a) the primary measure of damages is assessed in accordance with the rule in Potts v Miller;

(b) the difference is between price paid and true value at the time of the transaction, not market value when the market is ill informed;

(c) there is a potential alternative approach of net gains or losses at the time of trial in accordance with some of the English restitution cases[56] (cf. the measure in accordance with Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 QB 158 and Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 344).

[199] There was a wide ranging discussion of principle in Astonland, but nothing was said to support the idea that the compensation principle for the assessment of damages is old hat because, on the principle of Murphy, the Court is not confined to awarding damages as compensation or on a lump sum basis. However, Murphy was invoked in support of the following passage:

"In any event, whatever anomalies in relation to damages may be revealed by comparing liability for negligently supplied information with liability for breach of warranty, no error in assessment is demonstrated by comparing the contractual measure of damages with the s 82 measure of damages. The wide language of s 82 is compatible with a legislative desire to broaden the scope of recovery, not to keep it within the bounds of some comparison with the common law."[57] (citations omitted)

[200] As well, Murphy was further invoked as supporting the potential alternative approach of net gains or losses at the time of trial:

"There is certainly no reason why an approach of that kind is not open under s 82 of the Act. The deduction of true value at the acquisition date from the price paid is no more than a guide to the assessment of damages under s 82. Section 82 does not in terms refer to that method, and the width of s 82 permits other approaches to the assessment of damages so long as they work no injustice."[58] (citations omitted)

[201] For those over-lengthy reasons, whatever may have been the reason for the result in Murphy, in my view it is difficult to extract from that case any useful principle to be applied in the present case for ss 12DA and 12GF of the ASIC Act.

[202] Given that Astonland expressly recognised the possibility of a net gains or losses approach, is it appropriate to apply that approach in the present case, in preference to the rule in Potts v Miller?

[203] At the outset, it must be recognised that the two approaches capture different things. Because the rule in Potts v Miller measures the difference between price and value at the date when the plaintiff acquires the property acting under the inducement of the fraudulent inducement, it excludes subsequent or continuing losses, such as a later fall in general market value. These are not treated as part of the plaintiff's loss arising from the wrong.

[204] On the other hand, because the net gains or losses approach looks at the position as at the date of the trial it will necessarily pick up gains or losses which occur after the acquisition. It thus operates to include gains or losses irrespective of whether they would otherwise be seen as attributable to the plaintiff's wrong.

[205] To date, there is no High Court case applying the net gains or losses approach, so it is necessary to look to other authority as to its potential operation.

[206] The leading case is Smith New Court Securities Ltd v Citibank N A.[59] The question in that case was the extent of the damages recoverable by plaintiff who had purchased listed shares in a company under the inducement of a fraudulent misrepresentation. Had the misrepresentation not been made, the plaintiff would not have acquired the shares. The plaintiff sought to recover the difference between the price paid on acquisition and the amount realised on sale of the shares. The House of Lords rejected the defendant's contention that the amount recoverable was limited to the difference between the price paid and the true value of the shares at the date of acquisition. Because the recoverable damages for the tort of deceit are those "directly flowing" from the fraudulent inducement, including consequential losses that are recoverable, "it is not an inflexible rule that the plaintiff must bring into account the value of the assets acquired as at the transaction date".[60] The result was that the plaintiff was able to recover the difference between the value of the shares at the date of the acquisition and their lower market value at the date of sale.

[207] Such an approach may be accepted. At the risk of over-simplification, it may also be accepted that such an approach is appropriate in the context of a claim for damages under s 12DA and 12GF of the ASIC Act. But that does not say much about its application to the particular facts of Mr Jamieson's investment in the MQ Gateway Trust investment and associated loans.

[208] In contending for the assessment of damages in accordance with Potts v Miller, the Bank's submission that Mr Jamieson's investment was worth what was paid for it at the date of acquisition is questionable. When marketable assets are acquired, the application of the method of comparison of price and true or fair value is relatively straightforward. That is because the market provides information as to value which enables the comparison to be made. The market value may need to be adjusted to reflect true or fair value if the market is misinformed or the data is incomplete. But the assets acquired will have a value that can be ascertained by comparison or other valuation methodologies.

[209] The very nature of the MQ Gateway Trust as an investment product was that it provided an investor with an interest based on an investment strategy of a three year exposure to international and other market securities. There was no evidence of any secondary market for units in the trust. There was a potential for gain or loss in the "value" of the units over the term, according to a complicated averaging process having regard to performance at quarterly intervals over that period. The investment was to be purchased with funds borrowed by the investor through the associated loans. The associated loans were to be repaid by way of partial periodic interest payments, until maturity, when repayment of the initial loan principal, the interest assistance loan and interest thereon were required. The capital guarantee was limited to the loan principal amount. Commercial attractions of this "structured" product were that the lender "financed" part of the interest payments on the principal loan by providing the interest facility, thereby "gearing" the amount of the investment, and agreed to limit recourse on the loan principal to the amount "realised" on the redemption of the units, thereby limiting the exposure of the investor to losses.

[210] Thus, Mr Jamieson did not acquire an investment in the MQ Gateway Trust and associated loans that could be sold on market. The product had some characteristics like an investment in marketable securities. That part was represented by his acquisition of units in the Macquarie Gateway Trust. But that part of the investment was linked to the associated loans for a three year term on particular terms and conditions. In my view, the acquisition of the units cannot be looked at separately from the associated loans. There was no suggestion that Mr Jamieson might have sold (the benefit of) the units together with (the burden of) the loans on any available market. The evidence was clear that this was an illiquid investment. No doubt Mr Jamieson might at any time have negotiated with the responsible entity and Macquarie for the redemption of his units and the repayment of the associated loans. But there was no evidence that at any time, including the date of acquisition of the investment, he could have done so without payment or penalty.

[211] In my view, there is a question whether a measure of damages based on the difference between price paid and true or fair market value at the time of the transaction could be applied to Mr Jamieson's investment in the Macquarie Gateway Unit Trust. However, assuming that it could be done, it does not seem to me that the circumstances of the present case require that it should be applied.

[212] In my view, once it is accepted that there will be cases where it is appropriate to assess damages at a date later than the time of the transaction, on the principle of net gains and losses, that approach may be appropriate in a "transactional" case where it is difficult to attempt an assessment of damages as at the date of the wrong because of the lack of an available market or information as to value, or where the plaintiff was unable to sell the thing acquired and should not have acted to sell the thing acquired before the trial or some earlier date when the loss crystallised.

[213] In those circumstances, the loss or damage suffered by the plaintiff as measured by a net gains or losses approach is the actual loss, not a hypothetical amount of loss that would have been suffered in hypothetical circumstances that did not and could not reasonably have occurred. As well, it is important that there be no circumstances justifying why the losses which were sustained should be treated as not having been caused by the contravening conduct in whole or in part. The guiding principle remains: a plaintiff should be restored to the position as if it had not acted detrimentally on the inducement of the misleading representation.

[214] The objection of the Bank to that approach in the circumstances of this case is that it captures loss caused by a general market decline. It contends that the general market loss is extraneous and not caused by the contravening conduct.

[215] Questions of that kind have troubled courts for a long time in "no transaction" cases. In the context of ss 52 and 82 and negligence, the High Court has approached this and cognate arguments about causation and extraneous loss in numerous cases.[61] The judgments as between one case and another do not always sit comfortably together. Sometimes, the reasons in the one case as between Judges who agree in the result are also divergent. It would not be helpful to further essay the differences or to attempt their reconciliation to decide this case. The same may be said of intermediate appellate court decisions that inform the approach to such questions.[62]

[216] In my view, Kenny & Good and Astonland provide a sufficient basis to conclude that loss caused by the general market decline associated with the global financial crisis should not be regarded as extraneous in measuring the loss caused or suffered by the breaches of contract, negligence or breach of s 12DA in respect of Mr Jamieson's investment in the MQ Gateway Trust and associated loans.[63]

Loss on MQ Gateway Trust and associated loans - quantum

[217] The final question in relation to Mr Jamieson's claim for damages for the MQ Gateway Trust investment and associated loans is the assessment of the quantum of that loss.

[218] Once the contention that the amount of damages is to be assessed in this case according to the rule in Potts v Miller is rejected, there are three points which remain in assessing the amount that would place Mr Jamieson in the position as if he had not invested in the MQ Gateway Trust and associated loans.

[219] First, Mr Jamieson claims as damages for investment in the MQ Gateway Trust and associated loans a shortfall in the amount that he says he was paid on account of the agreed rebate. The alleged amount is $7,750. It will be recalled that the rebate was to be paid to reduce the effective interest rate on the associated loans from 7.95% to 7.5%.

[220] It seems to me that the amount of the unpaid rebate is not an additional amount that is recoverable. Mr Jamieson already claims to recover as damages the gross amounts of all the payments made to Macquarie for interest or in repayment of the associated loans. In seeking to be restored to the position he would have been in if he had not invested in the MQ investment and loans, Mr Jamieson would not have also received this sum, which was intended to reduce his interest exposure. The amounts already assessed will restore him to the position as if he had not paid the interest at all.

[221] Similarly, in his calculation of loss, Mr Jamieson does not give credit for the received rebate and ex gratia payments made by the Bank in the sums of $44,750 and $15,000. They should be deducted from the payments made.

[222] Secondly, the amount claimed is the gross amount of payments made by Mr Jamieson in respect of interest and the repayment of interest on the loans, where he has claimed the amount of them as tax deductions for interest. The Bank submits that the amounts by way of tax deductions need to be brought into account. I interpret that to mean that the tax benefit of the amounts of the deductions should be deducted from the gross amount of the payments made.

[223] A similar argument was accepted in Osric Investments Pty Ltd v Woburn Downs Pastoral Pty Ltd[64] in relation to payments made under a tax-driven investment scheme. The plaintiffs did not submit that because any award of damages for the payments of interest by Mr Jamieson would be taxable it was not appropriate as a matter of law to reduce the damages that might be otherwise awarded.[65] Further, the plaintiffs did not submit that the damages would be taxable in Mr Jamieson's hands.

[224] The plaintiffs' expert calculated the amount of an award grossed-up to reflect that outcome in the sum of $1,240,809. The details of the calculation were not explained, as far as I am aware. The assumptions on which it is based are not stated. It was said to be made upon the loss calculated by the defendant's expert. However, that reference does not identify the relevant assumptions, although I expect that it was intended to take account of the receipt by Mr Jamieson of the rebate of $44,750.

[225] In my view, Mr Jamieson's investment in the MQ Gateway Trust and associated loans was always tax-driven, in the sense that a major benefit which he sought to obtain by the investment was a net tax deduction of $375,000 per annum over three years, taking into account the benefit of the rebates to be paid by the Bank to reflect the difference between the rate of 7.95% payable on the loan and the rate of 7.5% which Mr Tindall initially led him to expect. Having obtained that benefit, it would be appropriate, therefore, that Mr Jamieson bring it into account, unless to do so would have the effect of under-compensating him.

[226] The amount of the tax benefit to Mr Jamieson in investing in the MQ Gateway Trust and associated loans is set out in Exhibit 4. Part of the analysis is unclear. But it seems to show that the total amount of the tax benefit at $574,879. In the absence of any further evidence, I will proceed on the basis of that as the maximum amount which might be deducted for the tax benefit of the payments made. However, that calculation proceeds on the basis that all of the payments made are to be taken into account as loss without any reduction.

[227] In Tomasetti v Brailey,[66] the plaintiff claimed damages for negligent advice to invest in agricultural investments in order to reduce the plaintiff's taxable income. Following the global financial crisis, the value of these investments fell. Damages were assessed by reducing the amount of the tax deductible expenses made by the plaintiff to an after tax loss. However, the primary Judge concluded that as the damages were assessable as statutory income, comfortably fitting within the concept of being an assessable recoupment under s 20-20 of the Income Tax Assessment Act 1997 (Cth), it was appropriate that they be grossed-up to an amount that would after tax restore the plaintiff to the position as if he had not entered into the investments.

[228] On appeal,[67] it was also held that if the expenses were not ordinary income, they would nonetheless be assessable under s 20-20 as recoupments of losses or outgoings that could be deducted for income tax purposes. As such, it was held that the primary Judge correctly concluded that the principal amount of any damage to be awarded should be grossed-up for tax.[68]

[229] In the result, in my view, Mr Jamieson should be compensated in the grossed-up amount of his after tax loss, because any amount received by him as damages by way of compensation for that loss will itself be taxable. An amount of damages limited to the after tax loss would under-compensate him because it will be liable to tax as an assessable recoupment.

[230] Mr Jamieson did not submit that the amount of any receipt by him under a judgment should be grossed-up because it will be taxable in his hands. However, as previously noted there was evidence of the amount of a grossed-up award, using the defendant's expert's calculations.[69] But as I have said, the basis of the grossed-up calculation was not explained. It seems to me that an appropriate calculation of the likely amount of tax can and should be made and that the amount of the judgment for damages should reflect an appropriate calculation. That calculation should also take account of any reduction in the amount of any damages awarded to Mr Jamieson for other contingencies.

[231] The third point is whether Mr Jamieson is entitled to compensation in the full amount of the payments that he made, or whether that amount should be reduced or discounted because of the possibility, or likelihood, that he would have made an alternative loss making investment.

[232] As previously discussed, I reject as a proposition of law that once it is determined that Mr Jamieson would not have invested in the MQ Gateway Trust it is irrelevant to have regard to what he would or might have done instead. As well, I reject as a proposition of law that, if it is reasonably likely that he would have made an alternative investment, he must fail in showing any loss unless he proves what the alternative investment would have been and what the outcome of that investment would have been.

[233] Those propositions fail to recognise two points of principle. The compensation principle has the purpose of restoring the plaintiff to the position as if they had not made the loss making investment on the faith of the representation or contravening conduct. But that does not mean that the plaintiff should be restored to a position which is better than they would otherwise have been in. If it is reasonably likely that the plaintiff would have made another loss making investment, to assess damages on the footing that the plaintiff would have made no investment at all could do just that. A principle of law that has that effect might be justified on the policy basis that the inquiry as to what the plaintiff would have done is too speculative. In my view, there is no recognisable binding principle of that kind, notwithstanding the statements made in Downs previously mentioned.

[234] The inquiry as to the hypothetical state of affairs - what the plaintiff would have done instead of the actual facts - is an inquiry of fact. As a matter of evidence, it is attended by the notorious difficulty that the plaintiff is likely to give evidence as to what they would have done with the benefit of hindsight. This point was made in the High Court in the context of negligent advice in Chappell v Hart[70] and Rosenberg v Percival.[71] Parliament stepped in, to outlaw direct evidence of that kind, in breach of duty cases under s 11(3)(b) of the CL Act.

[235] It was not suggested that s 11(3)(b) applies to the claim made under the ASIC Act provisions. That claim is not a claim for "breach of duty" as defined in the CL Act, so it seems clear enough that s 11(3)(b) does not apply to it.

[236] Where a claim for damages is based on a loss of opportunity to make a profit, once it is accepted that the lost opportunity was valuable, damages are to be assessed on the possibilities. Under that methodology, the assessment of the past hypothetical scenario to be compared with the actual facts takes into account various contingencies or risks that may affect the quantification of the amount of the damages. The amount of the damages is discounted, depending on the degree of the likelihood of the past hypothetical scenario. For example, a conclusion that the plaintiff lost an opportunity assessed as a 40 percent chance of obtaining the hypothetical profit will be reflected by an assessment of 40 percent of the amount of the difference between the hypothetical scenario and actual facts.

[237] However, this is not the usual approach in a claim for damages represented by the difference between the financial outcome of a hypothetical "no transaction" case and the actual losses sustained by the plaintiff in making an investment. In that kind of case, a plaintiff who can prove that the defendant's wrong caused loss of the money invested will usually receive an award of damages measured by the full amount of the difference between the hypothetical scenario and the actual facts.

[238] It is necessary to approach different classes of case with care. The actual loss suffered by a plaintiff who loses money invested in a transaction is not assessed on the footing that what has been lost is the chance of not making that investment. The successful plaintiff receives compensation on the footing that it may recover all the losses actually suffered and caused by the wrong or contravening conduct (subject, where relevant, to questions of remoteness or mitigation).

[239] In the present case, there is a reasonable likelihood that had Mr Jamieson not invested in the MQ Gateway Trust and associated loans he would have sought out an alternative investment that had the effect of substantially reducing his liability to income tax. In the prior years, he had on successive occasions invested in agribusiness products in a way that reduced that liability to nil. The consequence was that the amount of taxation paid by his employer by deduction of instalments during the year was returned to Mr Jamieson. In effect, Mr Jamieson was investing in a way where the return of the sum paid on account of his income tax for the year "funded" the agribusiness investments he made, at least in part.

[240] In my view, had Mr Jamieson not invested in the MQ Gateway Trust and associated loans, it is more likely that not that he would have made another or other agribusiness investments similar to those he had made in prior years for the purpose of reducing or eliminating his liability to pay tax for the 2007 tax year.

[241] There is no reason, as a matter of law, why it is not relevant to consider that fact in assessing Mr Jamieson's loss. As previously mentioned, in a "no transaction" case, a plaintiff may claim a loss of profit based on a hypothetical alternative transaction. Damages of that kind may be recovered without establishing the particular alternative transaction. A regular example occurs where the plaintiff carries on business as a moneylender and claims that if it had not invested in the loss making loan transaction, it would instead have lent on another similar transaction which would have been profitable. In that context, intermediate appellate courts in Australia have assessed the loss of profit having regard to the possibility that the alternative transaction would have been unprofitable or less profitable than claimed.[72]

[242] Is there any reason why the fact that Mr Jamieson would have made an alternative hypothetical transaction which cannot be established with precision to be treated differently in principle because the fact is set up in diminution of actual loss rather than in diminution of a claim for loss of profit? In my view, in principle, it should not make any difference. I am assisted in coming to that conclusion by the penetrating analysis of the problem given by Leggatt J in Yam Seng Pte Ltd v International Trade Corp Ltd.[73]

[243] Accordingly, in my view, Mr Jamieson's claim for damages for the loss he made by investing in the MQ Gateway Trust and associated loans should be reduced on the basis that he would have made an alternative investment in agribusiness in 2007 in the global amount of $200,000. Whether he may have made a similar investment in the year ending 30 June 2008, by which time there were significant tremors in equity markets consequent upon the dislocation which spread through credit markets in the second half of 2007, is a matter I am unable to find on the evidence. The evidence was that such an investment in agribusiness would have been unprofitable and would have been lost, because of the universal or almost universal collapse of those schemes in the global financial crisis.

[244] Beyond the 2007 tax year, in my view, it is speculation whether Mr Jamieson might have made any other investment. It is also speculation as to what the outcome of any other alternative investment might have been. I note that he made an unsuccessful investment in buying two expensive apartments off the plan in 2009, resulting in the loss of the deposits. But I am unable from that to find what he would have done in either 2008 or 2009 if he had not invested in the MQ Gateway Trust and associated loans for those years.

[245] The amount of the reduction to Mr Jamieson's loss should therefore reflect the after tax effect of an alternative agribusiness investment of $200,000 in the year ended 30 June 2007, which would have been lost. According to Exhibit 4, the investment made in the MQ Gateway Trust and associated loans before 30 June 2007 of just under $199,295 by way of payment of interest was a loss of $199,295 in that year. The deduction for that interest delivered a tax reduction of $159,497 which Mr Jamieson brings to account in the year ended 30 June 2008 because that is when he received the relevant refund of tax paid in the 2007 year. Mr Jamieson sets off the refund by way of cash flow against the amount of $198,750 paid by way of interest in the 2008 tax year. The assumption I draw from that is necessarily imprecise, but assuming the tax deductibility of the hypothetical alternative agribusiness investment (which would have been lost), one way to approach the calculation would be to reduce the after tax quantum of the loss by about $200,000 in 2007, in the calculation in Exhibit 4 and to remove the countervailing tax reduction of approximately $160,000 in 2008. That would reduce the total of Mr Jamieson's damages for investing in the Gateway Trust, before interest, as the amount assessed on a "no transaction" basis. To that must be added an amount to "gross up" any receipt under a judgment for that sum for the tax liability on that sum.

[246] Statutory pre-judgment interest[74] is to be calculated at the rate of 10% on the after tax amount from time to time to the date of judgment as a separate calculation and is not required to be grossed-up.

[247] As previously indicated, it is appropriate to invite the parties to make further submissions about that calculation.

[248] There are a number of discrete questions raised by the statement of claim as to that part of the updated statement of advice which recommended that Mr and Mrs Jamieson borrow $600,000 from the Bank, use the proceeds of the loan and other monies to make undeducted contributions to their self-managed superannuation fund and (by the Trustee through their superannuation fund) invest the contributions in self-funding instalment warrants.

[249] The Bank relied upon an email by Mr Jamieson to Mr Lynch dated 11 April 2007, to show that Mr Jamieson was keen to establish a self-managed superannuation fund. I accept that he was keen. But in my view, his interest in doing so was generated or advanced on or before 10 April 2007 by his discussions with Mr Tindall. Mr Tindall informed him as to the advantages of making a large contribution to a self-managed superannuation fund in the 2007 financial year. The M&L Fund Super Fund was established on 20 April 2007. After that, Mr and Mrs Jamieson borrowed $700,000 in private borrowings from the Bank, as recommended by Mr Tindall. The borrowings were used to make contributions to the fund before 30 June 2007. The Trustee invested the amount contributed. The investment was made in self-funding instalment warrants. All of those steps had been advised by the Bank, in principle. I accept, however, that in April and May 2007 the Bank had no knowledge of the Trustee, in particular. Mr Jamieson organised the establishment of the M&L Super Fund without the Bank's involvement. In giving advice to Mr and Mrs Jamieson by the updated statement of advice, they were the Bank's clients. The Trustee was not.

Superannuation investment - Corporations Act provisions

[250] There was a dispute between the parties as to the application of ss 945A, 945B and 947B of the Corporations Act 2001 (Cth) ("CA").

[251] The dispute turned, first, on whether the Bank gave advice to the plaintiffs in relation to a "financial product" namely the acquisition of a "superannuation interest"[75], so that the updated statement of advice as to superannuation was "financial product advice",[76] constituting "personal advice",[77] and provision of a "financial service".[78]

[252] The parties joined issue on the question whether the updated statement of advice or Mr Tindall recommended the establishment of a self-managed superannuation fund to Mr and Mrs Jamieson. It does not seem to matter to me to matter much whether Mr Tindall was the originator of the idea. The M&L Super Fund was established on 20 April 2007, before the updated statement of advice was given. But that followed Mr Tindall's encouragement as to the general superannuation strategy of contributing as much as possible, up to $1 million, to a self-managed superannuation fund before 30 June 2007. That was part of the discussion which occurred on 10 April 2007 at the meeting between Mr and Mrs Jamieson and Mr Tindall and Mr Halliday.

[253] In any event, in my view, the updated statement of advice plainly recommended that Mr and Mrs Jamieson make superannuation contributions, including a sum of $600,000 to be borrowed from the Bank. If made, such a contribution would be "a beneficial interest in a superannuation entity". It was, therefore, a "superannuation interest". That, in turn, was a "financial product". The recommendation in the updated statement of advice was intended to influence Mr and Mrs Jamieson to make a decision in relation to that financial product. That was "financial product advice". Providing that advice was, in turn, a "financial service".

[254] There was also a dispute about whether the "financial service" provided by the updated statement of advice, in recommending Mr and Mrs Jamieson make superannuation contributions, was provided to them or each of them as a "retail client".[79] The "financial service" described above, which was provided to Mr and Mrs Jamieson, related to a "superannuation product"[80] (the "superannuation interest") so it was provided to them or each of them as a "retail client".[81]

[255] The Bank alleges in the defence that Mr and Mrs Jamieson did not "make a financial investment".[82] That contention is correct because they had "day-to-day" control over the use of the contributions. Under the CA, "control" is measured by "the capacity to determine the outcome of decisions" and in determining whether Mr and Mrs Jamieson have that capacity "the practical influence" they "can exert... is the issue to be considered". [83] There was no submission advanced by Mr and Mrs Jamieson that they did not have sufficient practical influence to satisfy the control test under the CA. However, it does not matter that they did not "make a financial investment". They do not rely on the definition of "financial product" under s 763A(1) of the CA. They rely, on s 764A(1)(g) for the finding that the relevant "financial product" was the "superannuation interest" constituted by the contributions to their self-managed superannuation fund.

[256] Accordingly, in my view, s 944A applied Division 3 of Part 7.7 of the CA to the provision of the updated statement of advice in respect of the recommendations to Mr and Mrs Jamieson to make superannuation contributions, as "personal advice" by a "providing entity" to a "retail client".

[257] The Trustee also alleged that it was a "retail client", but the factual and legal pathway for that conclusion was not set out in either the statement of claim or in submissions. The statement of advice did not recommend to the Trustee to make a superannuation contribution. That was advice to Mr and Mrs Jamieson. No advice was particularly directed to the Trustee as such. However, the recommendation that concerned the Trustee was the recommendation to invest the contributions, when made, in instalment warrants. That was investment advice. No careful consideration was given by the parties to whether it was "financial product advice" or "personal advice" to the Trustee as a "retail client".

[258] It is obvious enough that a self-funding instalment warrant is a "financial product"[84] because it is a "security".[85] A recommendation intended to influence a person in relation to a particular class of financial products is "financial product advice".[86]

[259] However, "financial product advice" is not "personal advice" unless it is "given or directed to a person"[87] in the defined circumstances. Those circumstances relate to consideration of the person's objectives, financial situation and needs. In my view, the recommendation was not "given or directed to" the Trustee. It was given or directed to Mr and Mrs Jamieson, although it was foreseeable that a trustee of any superannuation fund which they organised might suffer loss if it acted on the recommendation. Therefore the "financial product advice" was not "personal advice" to the Trustee.

[260] Accordingly, Division 3 of Part 7.7 of the CA, including ss 945A, 945B and 947B, does not apply to the Bank in relation to the Trustee in connection with the recommendation to invest in self-funding instalment warrants.[88]

[261] In giving that advice the Bank was therefore obliged to "determine the relevant personal circumstances of" Mr and Mrs Jamieson.[89] Paragraph 60(a) of the statement of claim alleges a number of breaches of that obligation. However, they were not the subject of relevant evidence, except for the effect on Mr and Mrs Jamiesons' ability to repay debt or to invest in other investments. In this context, "relevant personal circumstances" means the person's "objectives, financial situation and needs as would reasonably be considered to be relevant to the advice".[90] In my view, it was not proved that Mr Tindall breached the obligation to determine relevant personal circumstances by the particularised breaches.

[262] The Bank was also obliged to make reasonable inquiries in relation to the relevant personal circumstances.[91] Paragraph 60(b) of the statement of claim alleges breach of that obligation, but there are no particulars of what ought to have been done and was not done. In my view, the allegation was not proved.

[263] The Bank was further obliged "to give such consideration to, and conduct such investigation of, the subject matter of the advice as is reasonable in all of the circumstances".[92] Paragraph 60(c) of the statement of claim alleges breach of that obligation but does not particularise the breach. However, the content of the obligation is analogous to the obligation to take reasonable care in providing the statement of advice and the matters dealt with under that rubric may also be considered as potential breaches of this obligation to consider and investigate.

[264] Lastly, the Bank was also obliged to provide advice "appropriate to the client, having regard to that consideration and investigation".[93] Paragraph 60(c) of the statement of claim alleges breach of that obligation but does not particularise the breach. Again, the content of the obligation is analogous to the obligation to take reasonable care in providing the statement of advice and the matters dealt with under that rubric may also be considered as potential breaches of this obligation to provide appropriate advice.

[265] The Bank was obliged to warn Mr and Mrs Jamieson "if... the advice is based on information relating to the... relevant personal circumstances that is incomplete or inaccurate" and the Bank "[knew] that the information [was] incomplete or inaccurate or [was] reckless as to whether it [was] incomplete or inaccurate".[94] Paragraphs 62 to 64 of the statement of claim allege that obligation was breached. The alleged breaches can be gathered into relevant classes.

[266] The first class was based on the alleged inaccuracy of the values of Mr and Mrs Jamieson's real properties in the updated statement of advice. For the reasons previously discussed, in my view, Mr and Mrs Jamieson did not prove that the actual value of those properties at the time of giving the updated statement of advice was overstated. Alternatively, also for the reasons previously given, in my view the Bank by Mr Tindall neither knew nor was reckless to whether the values were overstated.

[267] The second class of alleged breach was that the updated statement of advice understated the amount owed by Mr Jamieson on the margin loan for his share portfolio and overstated the value of his interest in the shares jointly owned by him and his brother. The statement of assets recorded the value at $298,155. It described the shares as being held by Mr Jamieson and his brother. Mr Jamieson's half interest was, therefore, worth $149,077. On 12 April 2007, Mr Jamieson sent a facsimile to Mr Tindall listing the shares and their value on which was written "50/50 with brother". This was information provided to Mr Tindall by Mr Jamieson. Clearly, the statement of assets overvalued Mr Jamieson's interest by $149,077. Did Mr Tindall know that or was he reckless as to whether the information was incomplete or inaccurate? Apart from Mr Jamieson saying that he told Mr Tindall of the error in the draft statement of advice as to the value of his interest in the jointly owned shares, which I do not accept, there was no evidence to suggest that Mr Tindall knew or acted recklessly as to any inaccuracy. I do not believe that Mr Tindall's error in the updated statement of assets was made knowingly or that he was reckless. However, in my view, he made a negligent error in compiling the asset values by failing to deduct the value of the half-interest in the parcel of shares held.

[268] The third class of alleged breach was that the updated statement of advice understated the amount of relevant liabilities, as set out in Annexure A, being:

(a) the debt owed to the Bank by Mr and Mrs Jamieson in respect of the Aspect apartment, by $414,569;

(b) the exercise price of some of Mr Jamieson's employee options, by $30,000; and

(c) liabilities associated with investments in the agribusiness MIS schemes, in the same amounts as the values of the investments, totalling $636,900.

[269] The defence does not admit these allegations.

[270] As to the debt in respect of the Aspect apartment, Mr Jamieson said the liability for the Caloundra home (referring to this property) was incorrect because the "loan available" on that property was $1,456,000. He also said that he had seen a "statement at that date that showed the balance of $1,041,000" and that he made "the point to Tindall that it was $1,456,000". Mr Tindall did not recall whether that was said. For reasons previously stated, I am not prepared to accept that Mr Jamieson said that to Mr Tindall. No statement as to the true amount of the debt was tendered by either party.

[271] I find the evidence about the amount unsatisfactory. If Mr Jamieson is correct as to the amount, on his own evidence, the understatement of the balance of the loan was known to him. I am not satisfied that it was known to Mr Tindall. It seems more likely that if there was an error, Mr Tindall did not know of it. Mr Tindall had received information on a sheet from Mr Halliday. But the sheet was not put into evidence.

[272] As to the understatement of $30,000 in the amount of the exercise price of Mr Jamieson's employee options, that question was not raised in evidence with Mr Tindall. I do not know whether the amount was understated. If it was, I do not know of any reason why Mr Tindall either knew of the error or might have been reckless about it. No submissions were addressed to that question.

[273] As to the alleged liabilities associated with investments in the agribusiness MIS schemes, there was no evidence led from Mr Jamieson that there was any liability in the amounts alleged. Mr Tindall was not asked about them. The only basis for them in the evidence appears to be in the plaintiffs' expert's report as to his conclusion of the net worth of Mr and Mrs Jamieson as set out in appendix 10 to that report. There is no factual basis set out for his adoption of the amounts of the liabilities. Perhaps it was based on an opinion that at April and May 2007 the agribusiness investments made by Mr Jamieson up to that date were valueless, but that is not said in the report. There is just no factual basis for the adoption of those liabilities identified in the submissions of the parties or which I observed in the evidence. In my view, there is no basis for any conclusion that in April and May 2007 Mr Tindal knew or was reckless to any understatement of the amount of any liabilities associated with those investments.

[274] In the result, I do not make any finding that the Bank contravened s 945B.

Superannuation investment - s 947B

[275] Under s 946A of the CA, the Bank was obliged to give Mr and Mrs Jamieson a statement of advice in accordance with Subdivision C and Subdivision D of Division 3 of Part 7.7 of the CA. Under s 947B(2)(b), the statement of advice was required to include "information about the basis on which the advice is given". Paragraph 66 of the statement of claim alleges a breach of that obligation. No particulars of the breach are given. No evidence or submission identified what the information about the basis on which the advice was given which was not set out was, except for a vague reference to "submissions made above", possibly referring to submissions made about any number of matters.

[276] It is not really possible to further analyse this possible breach of obligation. The Bank has not been fairly apprised of any relevant respect in which it is said that it has been breached. I therefore do not make a finding of contravention of s 947B.

Superannuation investment - breach of contract or negligence

[277] By paragraph 52 of the statement of claim, Mr and Mrs Jamieson and the Trustee make numerous allegations of breach of contract or negligence in connection with the recommendations in the updated statement of advice that Mr Jamieson borrow $600,000 from the Bank and contribute the borrowed amount and other amounts as undeducted contributions to their self-managed superannuation fund and that be invested in self-funding instalment warrants.

[278] However, among the allegations there are a few themes. First, it is alleged that the Bank failed to exercise due care and skill in failing to advise the nature of self-funding instalment warrants or the risks associated with investing in them.

[279] Mr Jamieson's evidence was that Mr Tindall did not discuss instalment warrants with him "in great detail". He said that he understood that investing in instalment warrants "was a means by which you could purchase a share for a price less than the full price, where the balance would be funded by dividends and it would create leverage for growth".

[280] Mr Tindall had no recollection of any use about what was discussed, although he urged that there was relevant discussion. This is not all that surprising. However, it leaves the evidence in an unsatisfactory state. There was some discussion about the use of self-funding instalment warrants. But I am unable to make a finding about what was discussed. However, the updated statement of advice did not explain the nature of self-funding instalment warrants or the risks associated with investing in them.

[281] A purpose of investing in self-funding instalment warrants, as opposed to investing directly in the underlying shares, is to "gear" or increase the investor's exposure to movements in the share price, because more warrants can be purchased with the same investment amount. The return is greater if there is a favourable movement in the share price. However, the risk is also greater, because the loss will be increased if there is an adverse movement in the share price.

[282] It is significant, in my view, that Mr Jamieson did not say that he did not understand the investment exposure on self-funding instalment warrants, in particular that where an investment of a particular sum is made in such warrants, as opposed to using the sum to acquire a lesser number of share outright, the investor's exposure to gains and losses due to movement in the market price of the shares and warrants is increased.

[283] No other aspect of the "nature of" or "risks associated with investing in" self-funding instalment warrants was identified in evidence.

[284] The assessment of what was required by way of explanation to Mr and Mrs Jamieson in presentation of the updated statement of advice, in discharge of the Bank's contractual duty and the corresponding duty of care in negligence, must be made against the context, known to Mr Tindall, that Mr Jamieson was an investor with experience in the Australian share market as chief executive officer of a listed public company who had a large personal share portfolio with an associated margin loan. In my view, it was no breach of contract or negligence not to explain the relatively leveraged exposure of an investment in self-funding instalment warrants, in comparison to a direct investment in shares in the Australian share market in the updated statement of advice.

[285] The second subject of complaint which emerges from paragraph 52 of the statement of claim is the allegation that Bank failed to exercise due care and skill in failing to advise as to the detriments of using borrowed money to make undeducted contributions to superannuation. In the pleading, that allegation is associated with the purpose of investing in self-funding instalment warrants. However, it seems to me that tends to confuse the detriment associated with the strategy of using borrowed money with the allegation as to the nature and risks of investing in those warrants, which I have considered above.

[286] In assessing the viability of the investment strategy of borrowing to make a superannuation contribution, the cost of borrowing (here about 7%) and the tax payable on income of the superannuation fund (15%) have to be taken into account. The borrowing is non-deductible, so there is no offsetting tax benefit of borrowing to make the investment. In the result, if the aim of the investment is growth, while the borrowing exists, the rate of return needs to exceed the cost of borrowing and the tax costs of earnings in the fund, as well as any inflation. The relevant comparison would be made with borrowing for a direct investment by Mr or Mrs Jamieson. A complete comparison would also require consideration to be given to any tax payable on a notional distribution on the scenario that the investment is held for a period and sold for a profit or loss.

[287] The Bank relies on the recommendation in the updated statement of advice that that Mr and Mrs Jamieson repay the non-deductible borrowing (ultimately $700,000) as soon as possible. Had that occurred, the effect of borrowing $700,000 to make the contributions would have been avoided.

[288] However, in my view, in April and May 2007, the Bank can have given little or no consideration to from where the cash flow to repay that debt as soon as possible might come. Mr and Mrs Jamieson were relatively highly geared before this borrowing, including an amount of excess of $1 million for the Aspect unit as their official principal place of residence. Other assets which were held as investments were likely to have tax liabilities associated with any sale to fund repayment of the non-deductible borrowing proposed. As well, Mr Jamieson's investment in the Macquarie Gateway Trust and associated loans would produce an additional negative net cash flow of about $200,000 per annum for the next three years to his existing investments. In the absence of a likely source of cash flow to pay down the non-deductible borrowing, in my view the strategy of borrowing $700,000 from the Bank to make undeducted contributions of superannuation in the 2007 year was flawed. In my view, without proper explanation of that flaw, the Bank's recommendation of that strategy was made in breach of contract or negligently.

[289] I note that in April and May 2007, the Aspect unit was on the market for $2.5 million. I suppose that if it sold for about $2.5 million it might have produced the cash flow to eliminate the private debt for the proposed private borrowing (whether $600,000 or $700,000). However, that scenario was not put to Mr Jamieson as a proposal which was considered as to how the additional private debt of $700,000 might have been repaid. In fact, as it turned out, the recommendation to repay the non-deductible borrowing as soon as possible was not followed. After discussion between Mr Jamieson and Mr Tindall or Mr Halliday, Mr and Mrs Jamieson and the Bank agreed to fix the interest rate on the $700,000 loan. The loan has not yet been repaid.

[290] In my view, the Bank was in breach of contract and negligent in failing to advise Mr and Mrs Jamieson as to the detriments of using borrowed money to make undeducted contributions to superannuation.

[291] There are other allegations of breach of contract or negligence about the recommendation to make the superannuation investment. One is that the updated statement of advice failed to recommend an alternative plan to achieve the objectives stated on page 4. The plaintiffs' expert adopted the position in his report that an alternative plan was to do nothing. In my view, the Bank was not in breach of contract or negligent in failing to recommend, as an alternative, to Mr and Mrs Jamieson that they make no investment by way of contribution to a self-managed superannuation fund.

[292] It is alleged that by borrowing to make superannuation contributions, Mr and Mrs Jamieson were converting "accessible equity into debt and inaccessible assets... until [the funds] were able to be accessed in accordance with the rules relating to accessing superannuation". The "equity" referred to was the ability to borrow against pre-existing assets, including the real properties previously mentioned. In my view, putting the strategy of borrowing to make the contributions to one side, the Bank was not in breach of contract or negligent in recommending to Mr and Mrs Jamieson that they invest by making superannuation contributions, because the restriction on use of the funds in superannuation cannot "achieve the... objective of... creating wealth efficiently". The "price" of investing, by making superannuation contributions, is that the funds invested are inaccessible until they can be distributed in accordance with the rules relating to superannuation. A significant investment advantage is the relatively tax sheltered environment. In my view, there is nothing inefficient about that framework as a method of wealth creation, per se.

[293] It is also alleged that the updated statement of advice recommended investment in self-funding instalment warrants by borrowing against the security of Mr and Mrs Jamieson's existing assets, thereby not protecting those assets. In my view, although one of the stated objectives of Mr and Mrs Jamieson was to protect existing assets, it does not follow that it was a breach of contract or negligence for the Bank to recommend an investment in the share market or in self-funding instalment warrants, per se, by borrowing against existing assets.

[294] Finally, it is alleged that it was a breach of contract or negligent for the updated statement of advice not to explain or warn Mr and Mrs Jamieson as to each of the separate subject matters already dealt with.

[295] I accept that the Bank's breach of contract and negligence in failing to advise Mr and Mrs Jamieson as to the detriments of using borrowed money to make undeducted contributions to superannuation included failure to do so in the updated statement of advice. However, that is not an additional breach of contract or negligent omission. It is part of that breach of contract or negligent omission.

[296] On the other hand, I do not accept that the Bank was in breach of contract or negligent in failing to explain or warn in the updated statement of advice as to each of the alleged risks or disadvantages, or whether the recommendations as to superannuation investment could or would achieve the objectives on page four as a separate subject matter from the alleged breaches of contract or negligence in respect of the previously discussed matters.

[297] I have so far dealt with the Bank's obligations to Mr and Mrs Jamieson for breach of contract or negligence in relation to the superannuation investment. The Trustee also alleges breach of contract and negligence in relation to the superannuation investment. The plaintiffs did not distinguish between the breaches that are alleged to relate to Mr and Mrs Jamieson on the one hand and the Trustee on the other hand.

[298] From my earlier findings, it follows that the Bank was not in a contractual relationship with the Trustee. However, the facts previously outlined show that a trustee of the self-managed superannuation fund to be organised by Mr Jamieson was plainly in the Bank's foresight and actual contemplation in making the recommendation that the amount to be borrowed by Mr and Mrs Jamieson be contributed to their self-managed superannuation fund and that it be invested in self-funding instalment warrants. In my view, there is no call to discuss the facts in more detail in order to come to the conclusion that the Bank owed a duty of care to the Trustee in making that recommendation.

[299] However, the Trustee's only complaints about that recommendation as a discrete subject matter were that the Bank failed to advise the nature of self-funding instalment warrants or the risks associated with investing in them. For the reasons previously given in relation to Mr and Mrs Jamieson's claims, in my view, the Bank was not negligent in failing to give advice about that.

[300] In paragraph 56 of the statement of claim, Mr and Mrs Jamieson allege that the updated statement of advice was provided for the purposes which were those pleaded in paragraph 9(d), as previously discussed, and that the warranties implied under s 12ED of the ASIC Act as to fitness for purpose and as to the nature and quality of the services and the materials supplied in connection with them were breached, for the reasons pleaded in paragraph 52.

[301] I refer to the reasons set out previously in relation to the operation of s 12ED in connection with the MQ Gateway Trust investment. For those reasons, in my view, the Bank did not breach s 12ED in relation to the superannuation investment.

[302] Mr and Mrs Jamieson claim damages for loss in relation to borrowing $700,000 from the Bank to make contributions to their self-managed superannuation fund to be invested in self-funding instalment warrants made up of two components. First, they claim the amount of the interest paid (and payable in the future) on the $700,000 borrowed by them from the Bank for the period from the year ended 30 June 2008 calculated to judgment.

[303] Secondly, the Trustee claims $433,239 as the difference between the prices paid by it for the investment in self-funding instalment warrants as at 28 June 2007 and the value of that investment as at 10 February 2012, when it was liquidated.

[304] As to the interest paid and payable on the $700,000, Mr and Mrs Jamieson allege that they would not have implemented the Superannuation Plan or any of the transactions but for the Bank's breaches of contract, negligence or contravention of statute.

[305] The plaintiffs devoted little of their evidence or their submissions to the questions of causation and loss which the arrangements made under the Superannuation Plan presented.

[306] The detriment Mr and Mrs Jamieson suffered at the time of making the superannuation investment was that they became liable to repay the principal and interest. The benefit they received was the $700,000 of borrowings which they contributed to their superannuation fund. They do not claim that the principal borrowed is a loss they suffered. That is consistent with the benefit they obtained of being able to make the contributions to their superannuation fund.

[307] Thus, the loss claimed by Mr and Mrs Jamieson is the cost of borrowing the $700,000 from May 2007 until the present. The amount claimed is the actual interest paid up to the time of judgment.[95] That is for a period of about six years and seven months. They also claim damages for their future liability, but neither the amount nor the period is quantified.

[308] Is the interest they have paid and are liable to pay to the Bank a loss? Is it a loss caused by the Bank's breaches of contract, negligence or contravention of statute?

Superannuation investment - interest on $700,000 loan - causation in fact

[309] The plaintiffs contend that had Mr Jamieson not invested in the MQ Gateway Trust and associated loans he also would not have accepted the Bank's recommendation that Mr and Mrs Jamieson borrow $700,000 to fund their 2007 non-deductible superannuation contributions. In my view, that conclusion does not follow from Mr Jamieson not investing in the MQ Gateway Trust and associated loans. There is no reason to conclude that the reasons for not investing in the MQ Gateway Trust and associated loans were such as to answer the question whether or not Mr and Mrs Jamieson would have made their investments by way of undeducted superannuation contributions in the 2007 year. I'm not prepared to accept Mr Jamieson's contrary evidence.

[310] However, as I have found, the overall strategy of the advice to borrow from the Bank to make undeducted superannuation contributions in 2007 was poorly conceived, and given in breach of contract and negligently. The advice caused Mr and Mrs Jamieson to borrow $700,000 and to contribute the borrowed funds to the M&L Super Fund.

[311] The starting point on the question of causation is whether that breach of duty was a necessary condition of the occurrence of the particular harm under s 11(1)(a) of the CL Act in respect of the found breach of contract or negligence. Again, as a "no transaction" case, that question is adapted to whether the plaintiffs would not have entered into the investment by borrowing the $700,000 had the found breaches of contract or negligence not occurred.

[312] As before, in my view it would be unsafe to make any finding based on Mr Jamieson's evidence as to what he would have done absent the found breach of contract or negligence.

[313] The hypothetical state of affairs against which the question is to be answered includes that Mr Jamieson was contemporaneously investing in the MQ Gateway Trust and associated loans. Thus, he was committed to fund at least an annual net payment of $187,500 per annum towards that investment from cash flow over the three years following May 2007.

[314] As well, there were other amounts Mr and Mrs Jamieson were committed to pay in accordance with their existing loans and negatively geared investments, consistent with the statement of liabilities in the updated statement of advice.[96]

[315] Had Mr and Mrs Jamieson carefully analysed the impact of following the recommendations of the updated statement of advice they would have appreciated that the principal advantage to them of making the undeducted contributions would be the tax protection accorded to the earnings upon superannuation investments in a complying fund in comparison with privately held investments. However, borrowing for the purpose of making the relevant contributions affected the net advantage of contributions to the fund as a tax sheltered environment. Logically, the cost of the borrowing had to be taken into account in weighing up the pros and cons of the strategy.

[316] In my view, in so doing, Mr and Mrs Jamieson would have questioned whether it was a good financial strategy to borrow $700,000 as the amount necessary to make the contributions for the purpose of the Trustee investing in self-funding instalment warrants. Had Mr and Mrs Jamieson considered the strategy, with the benefit of accurate advice as to the tax effectiveness of the outcomes if the funds were not readily available to repay the non-deductible borrowing, they would have had reason to pause and to consider whether the prospect of profit upon investment in self-funding instalment warrants was so appealing that they would carry the cost of the non-deductible borrowing in the longer term.

[317] In my view, on the balance of probabilities, had Mr and Mrs Jamieson not been advised to borrow $700,000 from the Bank to make the undeducted contributions to their self-managed superannuation fund, they would not have done so.

Superannuation investment - interest on $700,000 loan - scope of loss and causation in law

[318] In my view, it is appropriate that the Bank's liability to Mr and Mrs Jamieson extend to the initial interest payments made. The question is not so easily answered in relation to ongoing interest payments. A detriment to Mr and Mrs Jamieson in accepting the Bank's recommendations as to borrowing so as to make undeducted superannuation contributions is that once contributed, the funds were not available to them to mitigate any loss associated with the loan.

[319] In calculating the loss in an ordinary case, where a plaintiff borrows funds to make an unsuccessful investment and the resultant loss is recoverable as damages for a wrong or contravention of statute, credit is given for the benefits obtained, including the value of the investment made. When judgment is given, the amount recovered on the judgment debt may be used to repay any lost borrowed amount, thereby eliminating any ongoing loss for interest.

[320] Of course, as a result of their contributions, Mr and Mrs Jamieson had relevant credit balances in their accounts in the M&L Super Fund. Subsequently, the balances of their accounts were reduced by the losses made by the Trustee in investing in the self-funding instalment warrants. However, Mr and Mrs Jamieson did not claim those reductions as their losses as a result of the borrowing from the Bank in order to make the superannuation contributions. Instead, the Trustee makes a claim in relation to those losses as losses suffered by it as trustee of the M&L Super Fund.

[321] By the plaintiffs splitting their losses in that way, Mr and Mrs Jamieson claim as loss their ongoing interest liability for the full period to date and for the future.

[322] For a number of reasons, in my view the Bank is not liable on that basis. The ongoing periodic interest loss is suffered because the loan has not been repaid. Were Mr and Mrs Jamieson to repay the loan, there would be no ongoing loss. In fact, that was part of the strategy and recommendation of the updated statement of advice. So stated, the ongoing interest claim can be seen to be for the indefinite cost of replacing the $700,000 borrowed from the Bank. The capital value of that basis of compensation could be measured by taking the future cash flow of the interest to be incurred and discounting it for present receipt. However, to do so would be to treat Mr and Mrs Jamieson as having lost the full amount of the $700,000 by reason of the Bank's breach of duty or breach of statute. That would be an error.

[323] Ongoing trading losses are sometimes recoverable by a plaintiff where compensation is awarded according to the rule in Potts v Miller. In particular, that is accepted where a plaintiff is "locked in" to an unprofitable purchase. However, there are limits. Sometimes the limit is reached by application of the concept of remoteness of damage. In the context of different causes of action, the principles of remoteness are expressed differently and may operate differently for damages for breach of contract, damages for deceit or damages for negligence. Directness, not forseeability, distinguishes the limit of recovery of damages for the tort of deceit as opposed to the tort of negligence. In breach of contract, the formulation of the limit is different again, being the reasonable contemplation of the parties flowing from the breach, as expressed by the rule in Hadley v Baxendale.

[324] In Burns v MAN Automotive (Aust) Pty Ltd,[97] the plaintiffs claim was for damages for breach of warranty as to the qualities of a truck. The claim included trading losses incurred over a lengthy period. The trial Judge rejected the claimed losses beyond the "determination of that point in time, beyond which any damage suffered by the [plaintiff] could not be said to have been within the reasonable contemplation of the parties as flowing from the breach". His view was upheld as correct by the

[325] How then is Mr and Mrs Jamieson's claim for the loss by way of interest to be dealt with? In my view, a practical assessment of their loss can be approached on the footing that, first, they should be compensated for the interest paid as a loss unless they should have avoided that liability already. In my view, there was no immediate reason for Mr and Mrs Jamieson to realise that the advice they had been given to borrow for the purpose of making superannuation contributions was negligent.

[326] However, even at the time of receiving the updated statement of advice, the recommendation was that the borrowing of $700,000 should be paid down as soon as possible. Mr and Mrs Jamieson did not do so. The reasons were not clear. Looked at from another perspective, from the time when they ought to have realised that the strategy of the private borrowing was flawed, Mr and Mrs Jamieson should have taken steps to repay the debt. Any reflection upon the cost of the borrowing in comparison to the performance of the assets acquired with them in the M&L Super Fund would have renewed the obvious need to repay the debt. That would have required them to sell other assets, because the proceeds of the loan had been contributed by them to their superannuation fund. It may have been that they were unable to do so because of other financial pressures, or unwilling to do so because they thought that market conditions were not optimal for sale. However, they did not say that they were locked in generally.

[327] In my view, and recognising this is a rough estimate at best, it is reasonable in the circumstances to treat the interest payable for two years as caused by and as not too remote for the purpose of assessing damages. In my view, by mid 2009, Mr and Mrs Jamieson should have been able to realise other assets to repay the borrowing of $700,000.

Superannuation investment - ongoing interest - quantum

[329] Statutory pre-judgment interest must be added to those amounts. The borrowing was and is private and the interest paid was non-deductible. No adjustment by reason of tax is required.

Superannuation investment - loss on sale of self-funding instalment warrants

[330] When the $700,000 borrowed by Mr and Mrs Jamieson from the Bank was contributed by them to the M&L Super Fund, the Trustee invested the contributions, in accordance with the recommendation in the updated statement of advice, in self-funding instalment warrants in Australian shares. It invested that amount in such warrants, as selected by Mr Elks.

[331] Because of the impact of movements in the market value of shares the warrants lost value over time and were sold by the Trustee at a loss. The Trustee claims the difference between the amount of the initial investment in the warrants, $700,000 and the amount realised on sale as a loss, $249,739, being $450,261 and statutory pre-judgment interest on that sum.

[332] Although I have found that the Bank was not in breach of contract or negligent or a contravener of a provision of Division 3 of Part 7.7 of the CA in respect of the recommendation to invest in self-funding instalment warrants, it is convenient to make findings on the Trustee's claim for loss on the assumption that there could have been a breach of contract or duty of care or contravention owed by the Bank to the Trustee.

[333] In passing it is convenient to note a curious feature of Mr Jamieson's evidence, which I also reject, being his assertion that Mr Tindall and the Bank were responsible for selecting the warrants acquired. I observe that no complaint is made in the statement of claim about the particular warrants in which the investment in self-funding warrants was made. Despite Mr Jamieson's dogged efforts in the witness box to make Mr Tindall responsible for the selection, it was clear on the documents that it was Mr Elks, not Mr Tindall, who recommended the particular warrants. His involvement was in a practical sense spent in recommending the strategy and discussing it with Mr Jamieson's other advisors, including Mr Elks.

Superannuation investment - loss on sale of self-funding instalment warrants - causation in fact

[334] The question for decision is whether the Trustee's loss on the warrants was caused by any breach of contract, negligence or contravention of statute by the Bank.

[335] The Trustee received the amount of $700,000 as contributions to Mr and Mrs Jamieson's superannuation accounts. The Trustee contends that had Mr and Mrs Jamieson not borrowed $700,000 from the Bank and had the Bank not recommended the general strategy of investing the contributions in (high yielding) self-funding instalment warrants, the Trustee would not have received Mr and Mrs Jamieson's contributions to the M&L Super Fund and would not have made the investment in warrants.

[336] The starting point is whether any breach of duty was a necessary condition of the occurrence of the particular harm under s 11(1)(a) of the CL Act in respect of the found breaches of contract or negligence. Again, as a "no transaction" case, that question is adapted to whether the Trustee would have entered into the investment by investing in self-funding instalment warrants in June 2007, if the alleged breach of contract or negligence not occurred?

[337] If the alleged breach is simply the recommendation that the Trustee invest in self-funding instalment warrants, the question of causation in fact is difficult to answer. I accept Mr Tindall's evidence that Mr Jamieson was attracted to the feature of investing in such warrants because it "geared" the investment that could otherwise be made in the underlying shares when in other circumstances gearing was restricted or prohibited in the investment of superannuation funds.

[338] It is difficult to find in the face of both that evidence and Mr Jamieson's evidence of his understanding about such warrants, as previously set out, that a better explanation of the nature or risks of investing in self-funding instalment warrants would have altered the course he took in investing in those warrants in June 2007.

Superannuation investment - loss on sale of self-funding instalment warrants - scope of liability and causation in law

[339] Under s 11(1)(b) of the CL Act, a decision that a breach of duty caused particular harm involves, as an element, whether it is appropriate for the scope of the liability.

[340] It is an inherent risk of investment in self-funding instalment warrants that if there is a general adverse share market movement such as experienced in the global financial crisis, the value of the warrants, which is linked to the share value of the companies in which the warrants are issued, will fall.

[341] Mr Jamieson, as an experienced investor in the share market, would not have failed to understand this. He did not say that he did not understand it. The Trustee's investment in self-funding instalment warrants was not caused by Mr Jamieson's failure to understand that risk.

[342] In my view, the self-funding instalment warrants were liquid marketable securities. At the time the Trustee acquired them, it was not suggested that they were worth less than what was paid for them. They might have been sold at any time thereafter, in accordance with the Trustee's view as to the prospects in the market. At June 2007, Mr Jamieson's market view might have been bullish.

[343] On 25 June 2007, Mr Elks sent an email to Mr Jamieson attaching a spreadsheet of the warrants purchased for the M&L Super Fund. Thereafter, the particular warrants might have increased in value, or fluctuated in value, long before any impact from the forces that developed into the global financial crisis were felt. At any time, the Trustee, via Mr Jamieson, might have altered its view about continuing the investment in self-funding instalment warrants, either about the prospects of the share market in general or about any of the particular warrants, as investors in the share market do every day. Nothing locked the Trustee into any particular view or course of action about that. Nothing done by the Bank obscured the view of the Trustee about the prospects of continuing investment in the warrants.

[344] In my view, the harm constituted by the Trustee's loss on sale of the self-funding instalment warrants is not appropriately within the scope of the liability of the Bank for any breach of duty in recommending the strategy of investing in self-funding instalment warrants to the Trustee.

[345] Turning to the cause or causes of action based on breach of statute, a similar conclusion must be reached. There is no principled basis, in my view, for concluding that the Trustee's loss on the investment in self-funding instalment warrants was caused in law by the Bank's contravention of statute. To do so would mean that satisfaction of the "but for" test of causation as a matter of fact amounts to causation in law under the statutory provisions, in these circumstances. In my view, that conclusion should be rejected.

[346] The conclusion which follows, in my view, is that the Bank's updated statement of advice and found negligence, breach of contract or contravention of statute in connection with the recommendations made as to the superannuation investment did not cause the Trustee's losses on investment in the self-funding instalment warrants.

[347] For the reasons previously given, in my view:

(a) Mr Jamieson is entitled to judgment for damages in the sum to be calculated in accordance with paragraphs [217] to [247] above and to interest at the rate of ten percent per annum on the after tax amount from time to time until the date of the judgment;

(b) Mr and Mrs Jamieson are entitled to judgment for damages in the sum of $106,587 plus interest at ten percent from the dates of the payments referred to in paragraph [328] above to the date of the judgment; and

(c) The Bank is entitled to judgment on the Trustee's claim for damages.

[348] I will hear the parties as to the further orders or judgment that should be made in accordance with these reasons.

[1] I note that the strategy to purchase investment property for approximately $3,000,000 in joint names was deleted in the updated plan prepared by Mr Tindall on 16 May 2007.

[2] I have altered some of the descriptions for ease of understanding.

[3] An expression coined in the wake of Sir Frederick Jordan's reasons in McAllister v Richmond Brewing Co (NSW) Pty Ltd [1942] NSWStRp 17; (1942) 42 SR (NSW) 187, 192. In the High Court see Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388, 403 [31] and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640.

[4] [1940] HCA 43; (1940) 64 CLR 282.

[5] Statutory interest on the amount up to the date of judgment is a separate consideration.

[6] [1907] HCA 35; (1907) 4 CLR 1692, 1702-1703.

[7] [2004] HCA 54; (2004) 217 CLR 640, 656-7 [35].

[8] Gould v Vaggelas (1985) 157 CLR 215, 221-222.

[9] [1997] 1 WLR 426.

[10] [1991] HCA 12; (1990-1991) 171 CLR 506, 515, 522.

[12] [2001] NSWCA 272; (2001) 39 ACSR 265.

[14] Leadenhall Australia Ltd & ors v Peptech Ltd [2002] HCA Trans 307.

[15] [2001] HCA 52; (2001) 206 CLR 459.

[16] Gleeson CJ, Gaudron J and McHugh J appear to have favoured the conclusion that the defendant carries the onus: see 475-7 [41], 483 [70] and 507 [148]. Hayne J did not decide the question: see 510 [166]. Gummow J agreed with both McHugh J and Hayne J: see 507 [152].

[17] Wardley v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 527.

[18] [1999] HCA 25; (1999) 199 CLR 413.

[21] Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413, 457 [119].

[23] [2004] HCA 3; (2004) 216 CLR 388.

[24] [2004] HCA 3; (2004) 216 CLR 388, 407 [44].

[25] Edgington v Fitzmaurice (1885) 29 Ch D 459.

[27] There is no need to stray further into the operation of s 52 when there is no misrepresentation, such as a deliberate omission to correct a misapprehension, or failure to discharge a legal duty to speak, or the more amorphous concept of an omission which is neither of those things but which is misleading in context.

[28] Gould v Vaggelas (1985) 157 CLR 215.

[29] I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109.

[30] Standard Chartered Bank v Pakistan Notional Shipping Corp (Nos 2 and 4) [2002] UKHL 43; [2003] 1 AC 959, 967; Alliance & Leicester Building Society v Edgestop Ltd [1993] 1 WLR 1462, 1477.

[31] I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109.

[32] South Australia v Johnson (1982) 42 ALR 161, 170.

[33] This is not intended to deny the possibility of exemplary damages for the tort of deceit.

[34] For example, HTW Valuers (Central Queensland) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640, 667-8 [65].

[35] (1879-1880) 5 App Cas 25, 39.

[36] [1848] EngR 135; (1848) 1 Ex 850, 855; [1848] EngR 135; 154 ER 363, 365.

[37] [1966] HCA 38; (1966) 114 CLR 185, 191.

[38] [1907] HCA 35; (1907) 4 CLR 1692.

[41] A distinction illustrated by the High Court's treatment of the subject in JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435.

[43] Sellars v Adelaide Petroleum NL (1994) 179 CLR 332.

[44] [1992] HCA 55; (1992) 175 CLR 514.

[45] (1994) 179 CLR 332.

[46] [1995] HCA 4; (1995) 184 CLR 281.

[47] [1998] HCA 69; (1998) 196 CLR 494.

[48] [2004] HCA 3; (2004) 216 CLR 388, 406-7 [43].

[50] Leaving aside the question of onus of proof under Sellars.

[51] Except to adjust for the tax incidents of the outcome where that is done. See, for example, the masterful summary by Gzell, "The Courts, Tax and Commercial Litigation" (2007) 81 Australian Law Journal 866.

[52] Section 87 may come to the rescue, but that analysis is outside the scope of the present discussion.

[53] (1886) 11 App Cas 127.

[54] [1952] HCA 16; (1952) 87 CLR 647.

[55] [2004] HCA 54; (2004) 217 CLR 640. A more recent collection of the background case law appears in North East Equity Pty Ltd v Proud Nominees Pty Ltd .(2010) [2010] FCAFC 60; 269 ALR 262.

[56] North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60; (2010) 269 ALR 262, 283-296 [122] - [178].

[57] [2004] HCA 54; (2004) 217 CLR 640, 666 [62].

[59] [1996] UKHL 3; [1997] AC 254. Smith New Court was followed and applied by the New South Wales Court of Appeal in Viera v O'Shea [2012] NSWCA 21 [44]-[45] and by the Western Australian Court of Appeal in Morellini v Adams [2011] WASCA 84 [47]-[49].

[60] [1996] UKHL 3; [1997] AC 254, 264-265. The approach of Lord Steyn at 284 is similar.

[61] See Wallace v Kam (2013) 87 ALJR 383; Tabet v Gett [2010] HCA 12; (2009-2010) 240 CLR 537; Campbell & anor v Backoffice Investments Pty Ltd & anor [2009] HCA 25; (2009) 238 CLR 304; Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627; HTW Valuers Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640; Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2001-2002) 210 CLR 109; Henville v Walker ; ; ;

[62] For example, Viera v O'Shea [2012] NSWCA 21; Hay Property Consultants Pty Ltd & anor v Victorian Securities Corporation Ltd & ors (2010) 29 VR 503; Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd [2008] NSWCA 206; (2008) 73 NSWLR 653; Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) [2006] NSWCA 282; (2006) 67 NSWLR 341.

[63] See also Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 [3365]-[3464].

[64] [2002] WASC 121; (2001) 48 ATR 184, 231-235 [179]-[192].

[65] Compare Daniels v AWA Ltd (1995) 37 NSWLR 438, 586.

[66] [2011] NSWSC 1446.

[67] [2012] NSWCA 399; (2012) 274 FLR 248, 253 [149].

[68] Compare Commissioner of Taxation v Rowe [1997] HCA 16; (1996-1997) 187 CLR 266, 276, 279.

[69] Compare Territory Sheet Metal Pty Ltd v Australia and New Zealand Banking Group Limited [2010] NTSC 3; (2010) 26 NTLR 1, 43-4 [233]-[238].

[71] [2001] HCA 18; (2001) 205 CLR 434, 467-8 [109].

[72] St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666; La Trobe Capital & Mortgage Corporation Ltd v Hay Property Consultants Pty Ltd [2011] FCAFC 4; (2011) 190 FCR 299.

[73] [2013] 1 CLC 662, 713-717 [209]-[217].

[74] Civil Proceedings Act 2011 (Qld) s 58.

[75] CA, s 764A(1)(g) CA and Superannuation Industry (Supervision) Act 1993 (Cth) s 10.

[95] There is also a claim for statutory interest on the amounts so paid under s 58(3) of the Civil Proceedings Act 2011 (Qld.).

[96] I do not consider that the alleged error in the understatement of the amount that they owed on the loan for the Aspect apartment is important for this purpose.

[97] [1986] HCA 81; (1986) 161 CLR 653.