Mallesons Stephen Jaques v Trenorth Ltd [1998] VSCA 15

[1998] VSCA 15

82. The authorities have established that, in the law of tort, the question whether a negligent act or (as here) omission is to be regarded as a cause of some alleged loss or damage is to be determined by reference to common sense and experience: see, for example, March v. E. & M.H. Stramare Pty. Limited & Anor. [1991] HCA 12; (1991) 171 C.L.R. 506, at 515, 522, 524, 525; Medlin v. The State Government Insurance Commission [1995] HCA 5; (1995) 182 C.L.R. 1, at 6; Curmi v. McLennan [1994] VicRp 37; [1994] 1 V.R. 513 at 524; and Kenny & Good Pty. Ltd. & Anor. v. MGICA (1992) Ltd. (1997) 147 A.L.R. 568, at 581. In March v. E. & M.H. Stramare Pty. Limited Deane, J. said at 522:

The question was not, the majority said, to be resolved simply by reference to Gilbert's mind: it was to be resolved by reference to the will of Trenorth. Citing Tesco Supermarkets Ltd. v. Nattrass [1971] UKHL 1; [1972] A.C. 153, at 170 (being that part of Lord Reid's speech approved in Hamilton v. Whitehead [1988] HCA 65; (1988) 166 C.L.R. 121, at 127) and Dunlop v. Woollahra Municipal Council [1975] 2 N.S.W.L.R. 446, at 485, the majority continued, at 583, as follows:

122. This case is, however, quite unlike Curmi's Case or the other cases in which a deliberate wrongful act by a third party has been said not to break the chain of causation. Not uncommonly, those cases have concerned a breach of duty of care in relation to dangerous objects, hazardous situations and children: cf. Clark v. Chambers (1878) 3 Q.B.D. 327; Smith v. Leurs [1945] HCA 27; (1945) 70 C.L.R. 256, at 261-2; Parramatta City Council v. Lutz (1988) 12 N.S.W.L.R. 293; and Curmi v. McLennan [1994] VicRp 37; [1994] 1 V.R. 513, at 520-521. This is not such a case. I do not think it can be said, as a matter of common sense and experience, that the perpetration of a fraud by Trenorth was something which "in the ordinary course of things" was likely to occur if Mallesons was negligent in advising its client on the sale of the Preston premises. The supervening act, namely the fraud, was so irregular as to break the chain of causation. The true analogy is with the circumstances and decision in Weld-Blundell v. Stephens.

"Perhaps the most recent authoritative judicial pronouncement on the question of causation is that of the House of Lords in South Australian Asset Management Corporation v. York Montague Ltd. [1996] UKHL 10; [1997] A.C. 191. (Despite the different title to the proceeding in the House of Lords this decision concerns an appeal from the Court of Appeal in the case cited, earlier, as Banque Bruxelles S.A. v. Eagle Star Insurance Co Ltd.) In rejecting the principle stated as to causation in the Court of Appeal, Lord Hoffman, with whom all other members agreed, identified, at p.6, the difference in approach between the Court of Appeal and their Lordships, as follows: