Trade Practices - Misleading and deceptive conduct - Damages Deprivation of commercial opportunity - nether plaintiff must establish on balance of probabilities that benefit would have been derived from opportunity - Whether sufficient to establish some prospect of benefit - Trade Practices Act 1974 (Cth), s. 82(1).

Applications for special leave to cross-appeal refused with costs.

MASON CJ, DAWSON, TOOHEY AND GAUDRON JJ. These appeals raise an important point of principle in a claim for damages for breach of s.52 of the Trade Practices Act 1974 (Cth) ("the Act"), which is contained in Pt V of the Act. Section 82(1) of the Act provides:

another person that was done in contravention of a provision

of Part IV or V may recover the amount of the loss or damage

by action against that other person or against any person

opportunity to obtain a commercial advantage or benefit amounts to "loss or damage" within s.82(1). Is it necessary for the applicant to prove on the balance of probabilities that a benefit would have been derived from the opportunity had it not been lost and, if so, the extent of that benefit? Or is it sufficient for the applicant to show, not on the balance of probabilities but by reference to the degree of possibilities and probabilities, that there were some prospects of deriving a benefit from the opportunity had it not been lost and, if so, then to ascertain the value of the opportunity or benefit by reference to such possibilities and probabilities? The question whether the applicant has sustained loss or damage is necessarily related to the ascertainment or measurement of that loss or damage. In the discussion which follows, we have dealt with those matters together without distinguishing between them before reaching our ultimate conclusion.

2. The two appeals before the Court arise out of a reconstruction of Adelaide Petroleum N.L. ("Adelaide"), the first respondent in each appeal, which was attempted in 1988. Early in 1988, Adelaide, an oil and minerals exploration company, had insufficient working capital and faced heavy expenditure commitments to retain its various exploration opportunities. Adelaide's directors entered into parallel negotiations with two different companies with the object of persuading one of them to acquire the directors' shareholdings in Adelaide, or part of them, as an element in a restructuring arrangement. One company was Poseidon Limited ("Poseidon"), the appellant in matter No.P14 of 1992. The other was Pagini Resources N.L. ("Pagini"). By the middle of May 1988, Adelaide's directors had come close to an agreement with Pagini and, on 27 May 1988, a draft contract ("the draft Pagini agreement") was submitted by Pagini's solicitors to Adelaide for consideration. In June 1988, however, Adelaide's directors decided not to pursue the negotiations with Pagini any further and decided instead to enter into an agreement with Poseidon ("the Poseidon agreement") which resulted from the parallel negotiations with persons representing Poseidon. Heads of Agreement with Poseidon and other parties was signed on or about 14 June 1988.

3. The Heads of Agreement involved the sale to Poseidon of the directors' shares in Adelaide, the transfer to Adelaide of certain oil interests held by Poseidon Oil Pty. Ltd. in consideration of the issue of Adelaide shares, the purchase by the directors of Adelaide's mineral interests and the termination of benefits accruing under certain management service agreements. The Heads of Agreement required as a condition precedent an agreement with a stockbroker to underwrite a $2.8 million share issue and placement by Adelaide and the passing of appropriate resolutions at a general meeting of Adelaide.

4. About three weeks after the Heads of Agreement was signed, Poseidon notified Adelaide that the Heads of Agreement had been prepared and its signing procured by an executive of Poseidon who had exceeded his authority. The document did not reflect correctly the transaction which had been authorized by the Poseidon board at a meeting on 6 June 1988. Mark Sellars, the executive responsible, is the appellant in matter No.P13 of 1992. The transaction authorized by the Poseidon board would have involved the acquisition by Adelaide of cash flow producing assets funded by a capital raising well in excess of the $2.8 million referred to in the Heads of Agreement. Poseidon indicated that it would comply with the Heads of Agreement, if desired, but would not assume management control of Adelaide if the restructuring proceeded according to the agreed terms. Nor would two key directors of Poseidon consent to act as directors of Adelaide. Adelaide took the view that the adoption of this position by Poseidon was calculated to ensure that the conditions contained in the Heads of Agreement as to the proposed underwriting of the reconstruction would fail and, further, that it amounted to a repudiation of the agreement. On 29 July 1988, Adelaide accepted the repudiation.

5. Subsequently, negotiations between Adelaide and Pagini led to an agreement ("the second Pagini agreement") for a restructuring of Adelaide of the type initially contemplated but, Adelaide and its directors alleged, on terms less favourable than those which would have resulted if the original Pagini negotiations had been pursued to a conclusion. Adelaide, its directors and certain associated companies commenced actions against Poseidon and Sellars in the Federal Court of Australia seeking, amongst other relief, damages under s.82 of the Act. They alleged that they did not proceed to the conclusion of the draft Pagini agreement as a result of misrepresentations made to them by Sellars and Poseidon that Poseidon intended, upon completion of the proposed agreement, (1) to acquire control of and to assume management of Adelaide; and (2) to nominate and to support the election to the board of Adelaide of three directors of Poseidon, Messrs de Crespigny, Zehnder and Webb. The misrepresentations were alleged to have been in contravention of s.52 of the Act and to have resulted in loss or damage, particularized as follows:

"As a result of acting upon the representations ... the

(respondents) have suffered loss and damage in that but for

the representations the (respondents) would have entered the

(draft) Pagini Agreement but they have now lost the benefit

of that agreement and suffered losses as follows:

(a) (one of the Adelaide directors and a number of companies

associated with directors of Adelaide) lost the

opportunity to dispose of their shares, contributory

shares and options in respect of shares and contributory

shares in the capital of Adelaide at the prices

stipulated in the (draft) Pagini Agreement and claim the

difference between those prices and the value of the

shares, contributory shares and options as at 26 April

1989, or alternatively as at the date of the trial;

(b) (two other directors of Adelaide) lost the opportunity

to acquire Adelaide's 7,959,000 shares in Australmin

Holdings Limited at the price of $580,000 and have lost

the opportunity of selling those shares at a profit;

(c) (two companies controlled by directors of Adelaide and

by virtue of contracts with which the directors provided

their services to Adelaide) have lost the opportunity of

terminating their management contracts with Adelaide in

consideration of the payment of a lump sum equivalent to

two years management fees and the issue of options ...;

(d) Adelaide has lost the opportunity of raising $5,000,000

by way of a rights issue or by way of the placement of

20,000,000 shares and as a result has suffered the

following losses;

(i) it has lost the funds it would otherwise have

raised being $5,000,000 less expenses ("the

Pagini Agreement Funds");

(ii) in the alternative to (i) it has lost the

difference between the Pagini Agreement Funds and

the amount it could have raised as at 26 April

1989, alternatively could raise at the time of

trial, by an equivalent rights issue or by the

placement of 20,000,000 shares;

(iii) it has lost the return it would have derived from

investing the Pagini Agreement Funds or in the

alternative the sum claimed in (ii) in its

business;

(iv) by reason of its consequent lack of capital it

has been prevented from developing its business

and earning a return on its assets;

(e) In the alternative to the loss pleaded in sub-paragraph

(a) above each of (those referred to in that

sub-paragraph) have suffered a loss in that by reason

of the matters pleaded in sub-paragraph (d) the value

of their shares in Adelaide has diminished."

6. The trial judge (French J.) found that the representations were misleading or deceptive and that Sellars was a person knowingly concerned in the making of the representations and therefore involved in the contravention, pursuant to s.75B of the Act ((1) Adelaide Petroleum N.L. v. Poseidon Ltd. (1990) 98 ALR 431.). He found also that the three directors of Adelaide who are respondents in the two appeals believed in the truth of the representations and those beliefs were a substantial factor in their decision to enter the Poseidon agreement and to decline to proceed further with the draft Pagini agreement ((2) ibid at 527.). The trial judge, having found that the alleged contravention of s.52 was made out, then proceeded to consider the cause of action under s.82(1) in relation to that contravention.

7. The loss pleaded and particularized in each of the sub-paragraphs set out above (save for sub-par.(e)) was the loss of an opportunity. In considering whether damages were available under s.82 for such loss, the trial judge referred to the joint judgment of Mason, Wilson and Dawson JJ. in Gates v. City Mutual Life Assurance Society Ltd. ((3) (1986) 160 CLR 1 at 13.) which stated that, if reliance on a misrepresentation has deprived a person of the opportunity of entering into a different agreement on which a profit would have been made, then the person may recover that profit in an action in tort or under s.82 as loss resulting from the misrepresentation. Their Honours said that it was for the appellant to establish, evidently on the balance of probabilities, that he could and would have entered into the contract and that it would have yielded the benefit claimed.

8. In the present case, the trial judge ostensibly proceeded to assess the loss pleaded on this basis. He said ((4) (1990) 98 ALR at 528.):

"In this case the loss is measured by reference to the

benefits that were forgone when (Adelaide) decided not to

continue (its) negotiations with (Pagini). But the actual

loss cannot be assessed by simply equating it to the benefit

forgone. There was no certainty and many contingencies

attaching to the successful conclusion of the (Pagini)

transaction. It is appropriate, however, to take as a base

for assessment, the amount of the benefit forgone on the

assumption that an agreement with (Pagini) would have been

concluded in June 1988".

After calculating the amounts that would have been derived under this hypothetical agreement and setting off the amounts derived under the second Pagini agreement, his Honour said ((5) ibid at 531.):

"These figures are no more than a starting point for

calculation of the loss of chance represented by the

decision not to proceed with the (Pagini) transaction. The

logic of loss of chance assessment, at first blush, does not

sit too easily with the cause-effect logic of s.82. For if

there be a finite probability which is less than even that

a benefit would have been obtained but for the impugned

conduct, how can it be said that the loss of that benefit

has been proved to the required standard? It is perhaps not

an entirely satisfactory answer to say that the existence

of the chance is proven to the required standard. That

nevertheless seems to have been accepted in the cases".

"The contingencies to be taken into account in relation

to the loss of benefit of the (Pagini) agreement are various

and do not readily lend themselves to assignment of

probabilities. The threshold contingency was that the

parties might have failed to reach agreement. In my

opinion, although there were matters unresolved between

them, including the role of Schroders, the probability of an

agreement being reached basically along the line of the aide

memoire and the draft of 27 May was high. And as I have

already found, there was at least an even chance that the

necessary underwriting for the agreement to proceed would

have been secured".

The trial judge's findings with respect to contingencies arising in connection with the draft Pagini agreement

9. In order to understand the trial judge's findings in relation to the contingencies, it is necessary to refer to the draft Pagini agreement. When Adelaide discontinued its negotiations with Pagini, those negotiations had reached the point where the parties were in substantial agreement. However, there was an outstanding question, namely, what was to be done about the refusal by Schroders Australia Limited ("Schroders") to take up shares in Adelaide. The parties then had under consideration a draft which was expressed to be the draft of an agreement between Pagini, Adelaide, Messrs Naughton, Clarke, Counsell and Atkins (who were directors of Adelaide) and Lytton Nominees Pty. Ltd. ("Lytton") and Moublon Pty. Ltd. ("Moublon"), two of the respondents, which were companies associated with Adelaide. In the draft agreement, the shares in Pagini Oil and Gas N.L. ("Pagini Oil and Gas") and Pagini Mining N.L. ("Pagini Mining") were referred to as "contract shares" and the fully paid and partly paid shares and options in Adelaide held by Lytton and Moublon were referred to as "contract securities". The draft provided for the sale of the Pagini Oil and Gas and Pagini Mining shares to Adelaide and the sale of the Lytton and Moublon shareholdings to Pagini. By way of consideration for the acquisition of the Pagini Oil and Gas and Pagini Mining shares, Adelaide was to issue and allot to Pagini or its nominee the following:

1. 17,296,011 ordinary fully paid Adelaide shares of 20 cents each;

2. 5,400,000 ordinary 20 cent Adelaide shares paid to 1 cent each;

3. 4,636,006 options over fully paid 20 cent shares in Adelaide; and

4. 4,000,000 options over Adelaide shares paid to 1 cent.

10. The draft agreement provided that Pagini was to pay Lytton and Moublon the sum of $2,475,000 for the acquisition of their Adelaide shares. Of this amount, $1,925,000 had to be paid on completion and a further $550,000 upon the acquisition by Naughton and Clarke of certain shares held by Adelaide in two other companies ("Australmin" and "Sabminco") for $550,000. Clause 3.1 of the draft agreement contained seven conditions precedent which are crucial to the issues in this case. The clause provided:

"The obligations of Pagini to sell and (Adelaide) to

purchase the contract shares and of the shareholders to sell

and Pagini to purchase the contract securities are subject

to the fulfilment of all of the following conditions

precedent:

(a) authority in terms of the Central Banking (Foreign

Exchange and Gold) Regulations Chapter 138 from the

Bank of Papua New Guinea being obtained by Pagini with

respect to the sale of the contract shares and the

acquisition of the contract securities;

(b) no material breach or material inaccuracy of any of the

warranties given by Pagini and collectively (Adelaide)

or the Directors herein becoming apparent to (Adelaide)

or Pagini respectively;

(c) no breach occurring of any of the obligations covenants

or undertakings of any of the parties hereunder;

(d) the approval of the issue of the (Adelaide) Shares and

the options to Pagini or its nominee pursuant to cl.2.3

being approved by the shareholders of (Adelaide) as

required by the Companies Code, the Companies

(Acquisition of Shares) (S.A.) Code and the Listing

Rules of the Australian Stock Exchange Ltd;

(e) the approval of the members of (Adelaide) to the

acquisition of the contract securities by Pagini as

provided for by s.12(g) of the Companies (Acquisition

of Shares) (S.A.) Code and such other parties whose

consent may be required;

(f) that, pursuant to the Foreign Takeovers Act 1975, the

Treasurer of the Commonwealth of Australia consents to

the proposed transfer of the contract securities and

the allotment of the options and (Adelaide) shares to

Pagini and the Treasurer shall be deemed to have so

consented:

(i) if a notice is issued pursuant to s.26(2)(b)(ii)

of the Foreign Takeovers Act stating that the

Commonwealth Government does not object to the

proposed transfer and the proposed issue; or

(ii) if notice of the proposed transfer and the proposed

issue having been given to the Treasurer pursuant to

s.25 or s.26 of the Foreign Takeovers Act, the said

Treasurer is, by reason of lapse of time, not

empowered to make any order under Pt II of the

Foreign Takeovers Act in relation to the proposed

transfer or the proposed issue;

(g) the obtaining by Pagini of financial accommodation upon

normal commercial terms and conditions to enable it to

make payment pursuant to cl.5."

11. The clause went on to provide that Pagini and Adelaide could waive by written notice any of the conditions to be satisfied by the other. It also provided that the parties were to take all practicable steps within their power to enable the conditions to be fulfilled. If any of the conditions were not fulfilled as at 15 September 1988, then either Pagini or Adelaide could give 14 days notice of intention to terminate the agreement. The proposed completion date was a date occurring within five business days of all conditions being satisfied or such other date as might be agreed. The draft agreement also contained provisions for the termination of management agreements with Lytton and Moublon and for a rights issue or placement by Adelaide of not less than 17,296,011 shares at 30 cents per share after completion, in terms of an underwriting agreement which was annexed to the draft. According to the evidence of witnesses for both Adelaide and Pagini, those negotiating the agreement believed that it would be concluded.

12. The trial judge gave specific consideration to the question whether each of the conditions precedent was likely to be satisfied. In this respect, his Honour made the following findings ((7) ibid at 531- 532.):

(a) that there was at least an even chance that the consent of the

Bank of Papua New Guinea to the share transactions referred to in

cl.3.1(a) would be obtained;

(b) that there was no basis for speculating that the condition in

cl.3.1(b), that no material breach or material inaccuracy in any

of the warranties become apparent, would not be satisfied;

(c) that, likewise, there was no basis for speculating that the

condition in cl.3.1(c) that there be no breach of obligations,

covenants or undertakings, would not be satisfied;

(d) and (e) that it was unlikely that the provisions prescribed in

cl.3.1(d) and (e) would have been withheld;

(f) that it was likely that the Treasurer's consent required by

cl.3.1(f) would be obtained; and

(g) that Pagini had a reasonable prospect of obtaining the financial

accommodation required by cl.3.1(g).

13. Evidently the trial judge was persuaded, on the balance of probabilities, that the Pagini agreement would have been entered into but for the misrepresentations but he was not persuaded, according to that standard of proof, that all the various conditions precedent to its performance would have been satisfied. His Honour held that there was more than a speculative possibility that the Pagini agreement would have been concluded and completed. He accepted that, had the agreement been completed, the applicants would have derived the benefits calculated by Mr Gorey, an accountant, except for certain capital losses. The trial judge then discounted the resulting figure to 40 per cent to allow for the probability that the agreement would not have proceeded and allowed for certain additional discounts in relation to particular items. In the result he awarded to the applicants damages for the lost commercial opportunity and interest totalling $1,212,193. The total sum awarded excluded Adelaide's claim for damages in respect of the capital loss arising from the failure of the anticipated placement to take place. All that Adelaide lost, he held, was the use of the funds which would have been raised - the capital sum being shareholders' funds.

14. The appellants' appeal to the Full Court of the Federal Court (Sheppard, Burchett and Lee JJ.) against the award of damages on the loss of opportunity basis was dismissed ((8) Poseidon Ltd. v. Adelaide Petroleum N.L. [1991] FCA 663; (1991) 105 ALR 25.). The same ground is taken in the appeals to this Court. In matter No.P13, the grounds of appeal are expressed as follows:

"1. the 'loss of chance' suffered by the respondents as

a result of their decision not to enter into the

potential Pagini contract was not loss or damage within

Section 82(1) of the Trade Practices Act and that in

order to prove that they had suffered such loss and

damage the respondents were required to prove, on the

balance of probabilities, that they could and would

have entered into the potential Pagini contract and

would thereby have obtained benefits; and

2. on the findings of the trial judge, who had erred in

favour of the respondents by determining the prospect

of the potential Pagini contract yielding benefits as

if the issue involved the assessment of damages and not

proof of the fact of damage, it was improbable that the

potential Pagini contract would have proceeded and

produced benefits and thus that the respondents had

failed to prove loss or damage within Section 82(1)".

In matter No.P14, the single ground is expressed as follows:

"(T)he court erred in holding that there was evidence

that the Respondents suffered loss by reason of the lost

opportunity to conclude and complete a contract with Pagini

Resources NL when there was no evidence that the completion

of that contract was probable".

15. Adelaide's cross-appeal to the Full Court against the refusal of the claim in respect of the disallowance of the claim for its capital loss was dismissed. The point was sought to be raised again on appeal to this Court by way of notices of applications for special leave to cross-appeal but, on the hearing of the appeals, no argument was put in respect of the applications.

Section 82(1) of the Act

16. Under s.82(1), as under the common law, an applicant can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage ((9) Wardley Australia Ltd. v. Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 526.). Loss or damage under s.82(1) is "the gist of the action" under s.52 ((10) Elna Aust. Pty. Ltd. v. International Computers (Aust.) Pty. Ltd. [1987] FCA 230; (1987) 75 ALR 271 at 279 per Gummow J.). The Act draws a clear distinction between loss or damage which may be recovered under the section and the likelihood of loss or damage which may be prevented or, if not prevented, reduced by one of the remedies under s.87 ((11) Wardley Australia (1992) 175 CLR at 527.).

17. In the context of contraventions of s.52(1) in the form of misleading conduct constituted by misrepresentations, acts done by the representee in reliance upon the misrepresentations amount to a sufficient connection to satisfy the concept of causation. And, if those acts result in economic or financial loss, it will ordinarily be recoverable under s.82(1). So, in a case such as the present, the applicant is entitled to recover "a sum representing the prejudice or disadvantage (the applicant) has suffered in consequence of his altering his position under the inducement" ((12) Toteff v. Antonas [1952] HCA 16; (1952) 87 CLR 647 at 650; Wardley Australia (1992) 175 CLR at 526.).

18. The prejudice or disadvantage which the respondents suffered in the present case was the loss of the opportunity or chance of securing commercial benefits which entry into the Pagini agreement and completion of it would have brought. The lost opportunity or chance, assuming it to have value, is a form of economic loss. The question, therefore, is: how is the value of that lost opportunity or chance to be measured?

19. The appellants argue that, on the civil standard of proof and the findings made by the trial judge, the opportunity or chance of which the respondents were deprived was worth nothing. That is because it was more likely than not that the Pagini agreement would not be completed.

Assessment of damages in contract, tort and under the Trade Practices Act for loss of a chance

20. In the realm of contract law, the loss of a chance to win a prize in a competition resulting from breach of a contract to provide the chance is compensable, notwithstanding that, on the balance of probabilities, it is more likely than not that the plaintiff would not win the competition ((13) Chaplin v. Hicks (1911) 2 KB 786; McRae v. Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377 at 411-412.). As the contract contained a promise to provide the chance, the breach of the contract resulted in the loss of the chance and that loss was for relevant purposes an actual loss, in the sense in which Dixon and McTiernan JJ. used that expression in Fink v. Fink ((14) [1946] HCA 54; (1946) 74 CLR 127 at 143.). And, where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages ((15) ibid). The damages will then be ascertained by reference to the degree of probabilities, or possibilities, inherent in the plaintiff's succeeding had the plaintiff been given the chance which the contract promised.

21. This approach is not confined to contracts relating to games of chance, sporting contests or other competitions. Fink v. Fink concerned a contract to provide an opportunity for a reconciliation, breach of which was held to entitle the wife to damages. And there can be no doubt that a contract to provide a commercial advantage or opportunity, if breached, enables the innocent party to bring an action for damages for the loss of that advantage or opportunity ((16) The Commonwealth v. Amann Aviation Pty. Ltd. [1991] HCA 54; (1991) 174 CLR 64.). So, in The Commonwealth v. Amann Aviation Pty. Ltd., Mason CJ and Dawson J. ((17) ibid at 92.), Brennan J. ((18) ibid at 102-104.) and Deane J. ((19) ibid at 118-119.) concluded that a lost commercial advantage or opportunity was a compensable loss, even though there was a less than 50 per cent likelihood that the commercial advantage would be realized. Damages for breach of contract were assessed by reference to the probabilities or possibilities of what would have happened.

22. Damages in tort have also been assessed by reference to the probabilities or possibilities of what will happen or what would have happened. That approach has been frequently adopted in the assessment of damages for personal injuries where a court has been called upon to assess future possibilities and past hypothetical situations. In Malec v. J.C. Hutton Pty. Ltd. ((20) [1990] HCA 20; (1990) 169 CLR 638.), this Court drew a distinction between, on the one hand, proof of historical facts - what has happened - and, on the other hand, proof of future possibilities and past hypothetical situations. The civil standard of proof applies to the first category but not to the second, particularly when it is necessary to determine future possibilities and past hypothetical situations for the purpose of assessing damages ((21) ibid at 639-640 per Brennan and Dawson JJ., 642-643 per Deane, Gaudron and McHugh JJ.).

23. In Malec, Deane, Gaudron and McHugh JJ. explained the way in which the matter is to be approached in these terms ((22) ibid at 643.):

"If the law is to take account of future or hypothetical

events in assessing damages, it can only do so in terms of

the degree of probability of those events occurring. ...

But unless the chance is so low as to be regarded as

speculative - say less than 1 per cent - or so high as to be

practically certain - say over 99 per cent - the court will

take that chance into account in assessing the damages.

Where proof is necessarily unattainable, it would be unfair

to treat as certain a prediction which has a 51 per cent

probability of occurring, but to ignore altogether a

prediction which has a 49 per cent probability of occurring.

Thus, the court assesses the degree of probability that an

event would have occurred, or might occur, and adjusts its

award of damages to reflect the degree of probability."

The same approach has been adopted in England ((23) Mallett v. McMonagle (1970) AC 166 at 174; Davies v. Taylor (1974) AC 207 at 212, 219.) and Canada ((24) Janiak v. Ippolito (1985) 16 DLR (4th) 1.).

24. Neither in logic nor in the nature of things is there any reason for confining the approach taken in Malec concerning the proof of future possibilities and past hypothetical situations to the assessment of damages for personal injuries. The reasons which commended the adoption of that approach in assessments of that kind apply with equal force to the assessment of damages for loss of a commercial opportunity, as the judgments in Amann acknowledge.

25. But Amann concerned damages for breach of contract. The question here is whether the same approach is to be adopted in determining whether an applicant has suffered loss or damage under s.82(1) for a contravention of s.52 and, if so, in assessing damages. Unlike contract, loss or damage is the gist of the action for contravention of s.52. Is this a convincing point of distinction? That, it seems to us, is the critical question.

26. The adoption of the Malec principle in the assessment of damages for personal injury for negligence would seem to deny the validity of such a distinction. But, in cases of that kind, the fact that the plaintiff has suffered some damage and therefore has a complete cause of action is normally established by evidence which satisfies the civil standard of proof.

27. More to the point are authorities in Australia and England which suggest that, in some hypothetical fact situations, causation and the incurring of some loss or damage must be established according to the civil standard of proof. In Sykes v. Midland Bank Executor and Trustee Co. Ltd. ((25) (1971) 1 QB 113.), the defendant solicitor negligently advised the plaintiff clients and, as a result of this advice, it was alleged that they failed to take certain action. Because the plaintiffs failed to prove on the balance of probabilities that they would have acted differently had they not been negligently advised, they failed to prove that loss had been caused by the defendant's negligence. The Court of Appeal rejected the argument that the loss of a chance that the plaintiffs would have acted differently had they not been negligently advised was loss for which damages could be recovered. The decision in Sykes has been criticized on the ground that, when unknowable facts are in issue, damages should be given for the loss of a chance ((26) Waddams, The Law of Damages, 2nd ed. (1991), para 13.360; see also Waddams, "The Principles of Compensation" in Finn (ed.), Essays on Damages, (1992) at 10-12.).

28. Moreover, and more relevantly, there are two decisions of this Court which, on the appellants' argument, might be taken to indicate that the incurring of consequential loss (and causation) are to be established in accordance with the general standard of proof in civil actions. In Gates v. City Mutual Life Assurance Society Ltd. ((27) (1986) 160 CLR 1.), the case on ss.52(1) and 82(1) to which the trial judge referred, the appellant entered into a policy of insurance, induced by the misrepresentation that it would entitle him to benefits if he were totally disabled from following his occupation as a builder. In fact the policy entitled him only to benefits if he was disabled from following any occupation, so that he was not entitled to benefits when disabled only from following his occupation as a builder. The Court held that, if the appellant had been able to establish that he could and would have entered into a policy of insurance containing a disability clause of the kind represented to him had it not been for his reliance on the representation, he might have been awarded damages equal to the benefits that would have been payable under that policy less the premiums paid or payable. Having failed to establish that matter, the appellant was not entitled to damages on that account.

29. However, Gates is not a decision on the question now under consideration. There was no evidence as to what the appellant would have done had he known that the respondent insurance company did not offer insurance on the terms he wanted; nor was there any evidence that insurance was available on those terms elsewhere ((28) ibid at 7, 14.). Consequently, there was no evidence to show that there was a chance of making alternative arrangements for insurance in Gates. What is more, the observations on which the appellants in the present case rely ((29) ibid at 13 per Mason, Wilson and Dawson JJ.) are directed to a hypothetical situation in which a plaintiff seeks to recover as damages for misrepresentation the profit the plaintiff would have made on another contract had he or she not been deprived of the opportunity of doing so as a result of the misrepresentation sued on.

30. The second case, Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd. ((30) [1984] HCA 59; (1984) 157 CLR 149.), is more significant because it seems to require past hypothetical facts to be proved on the balance of probabilities and because it treated the opportunity to avoid loss as not being compensable. In that case, the plaintiff's fishing vessel, the Sonoma, was destroyed by fire. The insurer refused to accept liability under the policy, relying on an exclusion clause in the policy. The plaintiff sued the broker and the fishing co-operative which had offered the policy to the plaintiff, alleging that they had negligently failed to warn the plaintiff that the policy contained an unusual exclusion clause. The co-operative was held to be in breach of a duty of care and damages were awarded. On appeal to this Court the award of damages was not disturbed.

31. Gibbs CJ, Mason, Wilson and Dawson JJ said ((31) ibid at 160.):

"Of course the onus of proving its damage rests upon

Norwest. Therefore, in order to sustain the judgment of the

Full Court, it must point to evidence showing that, on the

balance of probabilities, had the Co-operative discharged

its duty of care Norwest could have secured at no higher

cost effective insurance cover against the risk that

ultimately destroyed the Sonoma."

"The Co-operative's negligent failure to inform (Norwest)

that it had not obtained effective insurance for the Sonoma

caused Norwest to lose an opportunity of applying elsewhere

to obtain a policy which would have given it effective

cover pending the obtaining of a survey certificate, or an

opportunity of trying to have the machinery and equipment

survey completed and a survey certificate issued so as to

satisfy the conditions of the fleet policy. But the damage

which Norwest suffered was the absence of effective

insurance, at the time when the Sonoma was lost. The onus

was on Norwest to prove that damage was caused by the

Co-operative's negligence. ... Before Norwest's cause of

action was established it had to prove that it could have

and that it would have taken steps which would have resulted

in effective insurance of the Sonoma at the time of her

loss."

The comments quoted above were not critical to the decision in the case as the award of damages was upheld.

33. It may be that Sykes, Gates and Norwest are to be treated as cases which turn primarily on the issue of causation which is ordinarily governed by the general civil standard of proof. The distinction between proof of causation and damages was emphasized in Hotson v. East Berkshire Area Health Authority ((33) [1988] UKHL 1; (1987) AC 750.). There Lord Ackner stated that the first issue that fell to be determined was that of causation. This was to be determined on the balance of probabilities. Once liability was established, the assessment of the plaintiff's loss could proceed, taking into account any reductions arising from the uncertainty of future events ((34) ibid at 792-793; see also at 782-783 per Lord Bridge of Harwich.). When the issue of causation turns on what the plaintiff would have done, there is no particular reason for departing from proof on the balance of probabilities notwithstanding that the question is hypothetical.

34. In Johnson v. Perez ((35) [1988] HCA 64; (1988) 166 CLR 351.), Brennan J (dissenting) adopted an approach similar to that suggested by Norwest. In Johnson, the plaintiff sued his solicitor for negligence in allowing the plaintiff's cause of action against a third party to become statute barred. His Honour said ((36) ibid at 372.):

"(T)he court must find whether or not he has lost something

of value. If he would have failed in the original action,

he has lost nothing; if he would have succeeded, he has

lost what he would have received at the time he would have

received it. ... Or, if it is doubtful whether or not he

would have succeeded in the action and it is not probable

that the action would have been compromised, the court

assessing the damages must determine as best it can on the

balance of probabilities whether the plaintiff would have

succeeded (and, if so, to what extent) or failed."

35. On the other hand, in a similar situation, the English Court of Appeal, in Kitchen v. Royal Air Force Association ((37) (1958) 1 WLR 563.), concluded that the plaintiff had been deprived of a cause of action which had some value. Parker LJ observed ((38) ibid at 576.):

"If the plaintiff can satisfy the court that she would have

had some prospect of success, then it would be for the court

to evaluate those prospects, taking into consideration the

difficulties that remained to be surmounted."

36. In Amann ((39) (1991) 174 CLR at 119.), Deane J expressed a similar view, saying:

"(A) plaintiff whose action against a third party has become

statute-barred by reason of a defendant solicitor's breach

of contract may recover damages by reference to the court's

assessment of what the chance of success in the action

against the third party would have been even though that

assessment is 50 per cent or less".

Of course, Johnson, Kitchen and the example given by Deane J are cases of breach of contract.

37. In New Zealand, the Court of Appeal has held that a commercial opportunity lost as a result of the defendant's negligence is compensable and that it is to be evaluated by reference to the degree of probabilities or possibilities. In Takaro Properties Ltd. v. Rowling ((40) (1986) 1 NZLR 22.), the negligent refusal of the Minister to consent to the issue of shares to a foreign corporation led to the failure of property development which the plaintiff was to undertake with funds to be provided by the share issue as well as other finance. The plaintiff sought to recover damages for the lost commercial opportunity. The trial judge rejected the claim on the ground that causation was not established because, although it was possible that the development would be profitable, on the probabilities it would be unprofitable. The Court of Appeal held unanimously that the trial judge was in error. The correct approach, according to the Court of Appeal, was to ascertain, first, whether, in the absence of the negligent conduct, there was some prospect of success and then to value the lost opportunity by reference to the degree of probabilities or possibilities ((41) ibid at 63-64, 68-70, 74-75.). The Privy Council reversed the decision of the Court of Appeal but on a ground which is not of present relevance ((42) Rowling v. Takaro Properties Ltd. [1987] UKPC 2; (1988) AC 473.). The Court of Appeal subsequently adopted the same approach in Craig v. East Coast Bays City Council ((43) (1986) 1 NZLR 99.).

38. Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s.52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.

39. On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.

40. The conclusion which we have reached on this question finds support in other considerations. The approach results in fair compensation whereas the all or nothing outcome produced by the civil standard of proof would result in the vast majority of cases in over-compensation or under-compensation to an applicant who has been deprived of a commercial opportunity. Furthermore, it is an approach which conforms to the long-standing practice of taking into account contingencies in the assessment of damages.

41. On the findings made by the trial judge, the Pagini contract would have been entered into but for the contraventions of s.52(1). Although, on the probabilities, it would not have been completed, there was a significant chance that it would be completed. It follows that the Full Court of the Federal Court were not in error in dismissing the appeals.

42. The appeals and applications for special leave to cross-appeal must be dismissed.

BRENNAN J I gratefully adopt the statement of the circumstances giving rise to these appeals contained in the reasons for judgment of the majority. The critical question which those circumstances raise for consideration is: was any, and what, loss caused by the conduct of the appellants done in contravention of s.52 of the Trade Practices Act 1974 (Cth) ("the Act")? The appellants (whom I shall call the defendants) contend that no loss was proved or, alternatively, no loss for which an amount might be recovered in proceedings under s.82(1) of the Act. That sub-section provides:

" A person who suffers loss or damage by conduct of

another person that was done in contravention of a

provision of Part IV or V may recover the amount of the

loss or damage by action against that other person or

against any person involved in the contravention."

The sub-section creates a statutory cause of action. A person seeking to enforce this cause of action bears the onus of proving that the statutory terms are satisfied. The discharge of this onus requires, in accordance with the text of the sub-section, proof of four elements:

1. conduct done in contravention of a provision of Pt IV or Pt V

(hereafter "contravening conduct");

2. the suffering of loss or damage by a person;

3. a causal link between the contravening conduct of another

person and the loss or damage suffered; and

4. the amount of the loss or damage.

When conduct done in contravention of s.52 of the Act consists in the making of false representations inducing a person to act or to refrain from acting, the relevant loss or damage may flow from that person's own act or omission and only indirectly from the other person's contravening conduct ((44) Wardley Australia Ltd. v. Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 537.). In such a case, the person's own act or omission is a link - not a break - in the chain of causation which stretches from the contravening conduct to the loss thus produced and the amount of the loss is recoverable by the person who has suffered it. The existence of a compensable loss and the amount of compensation is ascertained by inquiring whether and by how much that person is worse off as a result of acting or refraining from acting on the inducement of false representations by the other person ((45) Gates v. City Mutual Life Assurance Society Ltd. (1986) 160 CLR 1 at 12.). The defendants in this case would draw a distinction between the fact of loss and the assessment of the amount of loss, submitting that unless the fact of loss is proved on the balance of probabilities there is no occasion to make an assessment. Where an alleged loss or damage is sensible, as in a case of personal injury, the loss which must be proved to have been the result of a defendant's tortious or unlawful act or omission may be self-evident. But where an alleged loss is purely economic, its existence, causation and the assessment of its amount can present a more difficult problem, as the present case illustrates. The findings made by the learned trial judge (French J) throw up the problem for decision.

2. French J found that, because the respondents (I shall call them the plaintiffs) relied on Poseidon's false representations, they "declined to proceed with the Pagini transaction" and he measured what he saw as their loss "by reference to the benefits that were foregone when the (plaintiffs) decided not to continue their negotiations with Pagini Resources". When the plaintiffs declined to proceed with the Pagini transaction, they lost whatever opportunity they had to enter into a contract with Pagini and to obtain the financial benefits which completion of the contract would have produced. The likelihood of the plaintiffs entering into a contract with Pagini was dependent on two factors: first, a satisfactory conclusion of the negotiations with Pagini in substantial accordance with an Aide Memoire prepared by the Chairman of Pagini and a draft agreement of 27 May 1988 which had been prepared to give effect to that Aide Memoire; second, the obtaining of an underwriter for the share issue necessary to support the proposed transaction with Pagini. French J was of the opinion that "the probability of an agreement being reached basically along the lines of the 'Aide Memoire' and the draft of 27 May was high". His Honour also found that "there was at least an even chance that the necessary underwriting for the agreement to proceed would have been secured". This opinion as to what might have occurred if the plaintiffs had not been induced to break off negotiations with Pagini supported his Honour's making of an estimate of the benefits foregone by the plaintiffs "on the assumption that an agreement with Pagini would have been concluded in June 1988". But, even on the assumption that the Pagini contract would have been concluded, there were further contingencies which stood in the way of its completion and the yielding of the financial benefits that the plaintiffs thereby hoped to obtain.

3. The draft contract contained seven paragraphs of conditions precedent. His Honour estimated the prospects of compliance with each of these conditions if the contract with Pagini had been concluded in June 1988. Although the prospects of compliance with the several conditions precedent were, to adopt his Honour's estimation, "reasonable", an "even chance" or better, his Honour did not find that the contract would have proceeded to completion. He found that "there was more than a merely speculative possibility that the Pagini agreement would have been concluded and completed". Nevertheless, he did not assess the amount which he awarded to the plaintiffs on the footing that the contract would have been completed and would have yielded to the respective plaintiffs the financial benefits for which the contract provided. His Honour first found whether and to what extent the respective plaintiffs would have benefited if the Pagini agreement had proceeded to completion. Then he discounted those respective amounts "to 40% to allow for the probability that the agreement would not have proceeded". Some of those amounts were discounted to a lesser figure to allow for other contingencies.

4. As French J found that it was improbable that the Pagini contract would have proceeded to completion, the defendants argue that his Honour must have found that it was improbable that the plaintiffs would have obtained financial benefits under the contract. In the defendants' submissions, the loss of those benefits is the only loss in respect of which the plaintiffs could have recovered under s.82(1) and, as they failed to prove on the balance of probabilities that that loss was the result of the contravening conduct, the plaintiffs' action must fail.

5. The ultimate objective of the plaintiffs was to acquire the financial benefits that would have flowed to them if the Pagini contract had been entered into and completed. Before that objective could be attained, there were several contingencies which had to be satisfied: the continuation of negotiations with Pagini, their satisfactory conclusion, the obtaining of an underwriter for the proposed share issue, the execution of the contract with Pagini, the satisfaction of the seven conditions precedent which were to be contained in the contract and performance of the contract by Pagini. If the relevant loss be identified as the financial benefits which it was the ultimate objective of the plaintiffs to acquire, the plaintiffs must fail for they failed to prove all the links in the chain of causation. That, indeed, is the defendants' submission. But if the loss of an opportunity to continue the negotiations with Pagini be identified as a loss entitling the plaintiffs to recover under s.82(1), they succeed for they were induced to lose that opportunity. The amount of that loss can be assessed by evaluating the prospects or possibilities of satisfying all the contingencies that stood between the continuing of the negotiations and the ultimate acquisition of the financial benefits that would have flowed from the completion of the Pagini contract. And that, indeed, is the plaintiffs' submission. The parties cited passages from a number of cases in support of their respective submissions. The cases illustrate what had to be shown in the particular circumstances of each case in order to identify and establish the plaintiff's loss and thereby to identify the final link in the chain of causation.

6. The cases where a plaintiff seeks damages only for breach of a contractual promise to afford the plaintiff an opportunity to acquire a benefit are in a different category from cases under s.82(1) and cases in tort where damage is the gist of the cause of action. In a case like Chaplin v. Hicks ((46) (1911) 2 KB 786.), the relevant loss is identified by the contractual promise to afford the plaintiff an opportunity to acquire a benefit or to avoid a detriment ((47) McRae v. Commonwealth Disposals Commission [1950] HCA 12; (1951) 84 CLR 377 at 412.). A breach of the promise to afford that opportunity necessarily establishes that the loss flows from the breach. In contract cases, a plaintiff may be entitled to nominal damages for loss of the opportunity promised even though the plaintiff fails to prove what, if any, value performance of the unfulfilled promise would have had ((48) Luna Park (N.S.W.) Ltd. v. Tramways Advertising Pty. Ltd. [1938] HCA 66; (1938) 61 CLR 286 at 301, 312.). But in cases arising under s.82(1) of the Act, as in cases of tort where damage is the gist of the action, a lost opportunity may or may not constitute compensable loss or damage. In such cases, the existence and causation of a compensable loss cannot be proved by reference to an antecedent promise to afford an opportunity. The plaintiff, who bears the onus of proving a loss suffered as the result of the defendant's contravening or tortious conduct, must prove the existence and causation of the alleged loss in some other way. The manner of discharging the plaintiff's onus will presently be mentioned.

7. In Sykes v. Midland Bank Executor Co. ((49) (1971) 1 QB 113.), the plaintiffs sued their solicitors for damages for negligence. The solicitors had been retained to advise the plaintiffs about an underlease they were to take and had failed to warn them that the underlease contained a covenant against subletting. Permission to sublet was subsequently refused by the landlords and the plaintiffs lost the benefit of subletting. The taking of the underlease was identified as the alleged "loss" and, as the plaintiffs failed to prove that they would not have taken the underlease if they had been given the warning, they failed. Although the absence of the warning lost the plaintiffs a chance to refuse to take the underlease, the plaintiffs were not entitled to damages for the loss of that chance. In rejecting a submission that the plaintiffs were entitled to damages for the loss of that chance, Salmon LJ said ((50) ibid at 129.):

"It would lead to the strange result that, unless the

defendants could prove with certainty that they had not

caused damage, they would be liable for the remote chance

that they might have done so. This seems to me to turn

the onus of proof on its head. In my view, the plaintiffs

cannot succeed unless they can prove that the negligence

was probably a cause of their executing the underleases.

Since they failed to do so, their claim does not get off

the ground."

8. The defendants placed some reliance on my reasons for judgment in Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd. ((51) [1984] HCA 59; (1984) 157 CLR 149 at 172-173.). In that case, a vessel that was out of survey, and on that account not covered by a policy of insurance, was destroyed by fire. The owner sued a fisherman's Co-operative for negligence for not informing the owner that the insurance policy purportedly covering the vessel contained a condition that the vessel have a current certificate of survey. The owner claimed damages for the loss of opportunity to seek effective cover elsewhere, or to obtain a survey certificate. I said ((52) ibid):

"The question is whether a specific loss sustained by

Norwest - the absence of effective insurance of the Sonoma

when she was lost - was caused by the Co-operative's

negligence. The immediate opportunities which Norwest lost

when it was not informed of the Co-operative's failure to

obtain effective insurance are not themselves heads of

damage to be valued as though they were compensable lost

rights. They are links in an alleged chain of causation.

The other links in the chain were the fact that Norwest

could have obtained effective insurance elsewhere or could

have satisfied the conditions of the fleet policy and the

fact that Norwest would have adopted one of those courses

to obtain effective insurance. A failure to prove either

of those links in the chain did not mean that Norwest could

recover diminished damages for loss of a chance to obtain

insurance; it meant failure to establish the cause of

action."

I was in dissent in that case, but not in the identification of the loss which had to be proved. The loss which had to be causally linked to the negligent omission by the Co-operative was the absence of effective cover when the Sonoma was lost or, to adopt the majority's description ((53) ibid at 160.), Norwest's ability to secure "at no higher cost effective insurance cover against the risk that ultimately destroyed the Sonoma". The majority found that, if the Co-operative had apprised the owner of the necessity for a completed survey, "the survey would have been completed and the fleet policy effectively extended to the Sonoma before the loss was suffered" ((54) ibid at 162.). The plaintiff owner suffered no loss before the Sonoma was destroyed, though it lost an opportunity to avoid the loss which it ultimately suffered.

9. Similarly, in Gates v. City Mutual Life Assurance Society Ltd. ((55) (1986) 160 CLR 1.) a lost opportunity to acquire a financial benefit was not treated as a loss attracting an award under s.82(1). There the plaintiff arranged insurance cover which he was induced to believe would entitle him to benefits if he sustained physical injury resulting in his continuous inability for 90 days to carry on his occupation as a builder. In fact the policy required a continuous inability to perform any act of work for a period of 90 days. As the plaintiff was unable to prove that he could and would have entered into policies of insurance containing a disability clause of the kind represented to him he failed to recover his benefits. When he was refused benefits on the ground that, though he was unable to carry on his occupation as a builder, he was not disabled from performing other work, he sued for damages equivalent to the insurance benefits under ss.52 and 82(1) of the Act. Mason, Wilson and Dawson JJ said ((56) ibid at 13.):

" Because the object of damages in tort is to place the

plaintiff in the position in which he would have been

but for the commission of the tort, it is necessary to

determine what the plaintiff would have done had he not

relied on the representation. If that reliance has

deprived him of the opportunity of entering into a

different contract for the purchase of goods on which he

would have made a profit then he may recover that profit

on the footing that it is part of the loss which he has

suffered in consequence of altering his position under the

inducement of the representation. This may well be so if

the plaintiff can establish that he could and would have

entered into the different contract and that it would have

yielded the benefit claimed: cf. Esso Petroleum Co. Ltd. v.

Mardon ((57) [1976] EWCA Civ 4; (1976) QB 801 at 820-821, 828-829.); Doyle v. Olby

(Ironmongers) Ltd. ((58) (1969) 2 QB 158 at 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." (Emphasis added.)

This passage is consonant with the judgments in Norwest Refrigeration Services Pty. Ltd. v. Bain Dawes (W.A.) Pty. Ltd. where the issue on which I parted company from the majority was whether the owner of the Sonoma could and would have been covered by an effective policy when the Sonoma was lost. Gates v. City Mutual Life Assurance Society Ltd. shows that, for the purposes of s.82(1) of the Act, the loss of a mere opportunity to acquire a benefit is not in itself a loss, but the loss of the benefit will be such a loss if the plaintiff proves that he could and would have taken the opportunity and that the benefit would then have been yielded. That is tantamount to saying that the benefit is a loss in respect of which an amount may be recovered if the links in the chain of causation up to the loss of the benefit are proved. In this respect the law under s.82(1) is no different from the law of torts.

10. However, the loss of a right to obtain a benefit is itself a loss in respect of which an amount may be recovered. When a plaintiff's cause of action becomes statute barred by reason of the negligence of a solicitor, the loss is identified as the unavailability of the barred cause of action. In Kitchen v. Royal Air Force Association Lord Evershed MR said ((59) (1958) 1 WLR 563 at 575.):

" In my judgment, what the court has to do (assuming that

the plaintiff has established negligence) in such a case as

the present, is to determine what the plaintiff has by that

negligence lost. The question is, has the plaintiff lost

some right of value, some chose in action of reality and

substance? In such a case, it may be that its value is

not easy to determine, but it is the duty of the court to

determine that value as best it can."

11. There is another category of case to be mentioned, namely, an opportunity to acquire a benefit (or to avoid a detriment) which is more than a mere opportunity in the sense that the opportunity is itself something of value. Although The Commonwealth v. Amann Aviation Pty. Ltd. ((60) [1991] HCA 54; (1991) 174 CLR 64.) was a case in contract, it is instructive that the commercial advantage which Amann Aviation would have enjoyed as a tenderer for future contracts was itself treated as a head of damage for breach of its current contract. The opportunity to make a competitive and profitable tender was treated as something valuable in itself ((61) ibid at 111-112.). Deane J, dealing with proof of damages for breach of contract and putting aside cases where only nominal damages might be recovered, said ((62) ibid at 118.):

" The frequent inability of curial procedures to determine

with certainty what has happened in the past, let alone

what would have been or what will be, necessarily gives

rise to a need for a number of subsidiary rules governing

the determination of the loss or injury which a plaintiff

has actually sustained by reason of a wrongful act. One

such subsidiary rule is that ... a plaintiff bears the onus

of establishing the extent of his loss or injury on the

balance of probabilities. To satisfy the requirements of

that rule, a plaintiff must, if he is to recover more than

a nominal amount in such an action, affirmatively establish

assessable damage, that is to say, loss or injury which is

capable of being measured in monetary terms ((63) See, e.g. Luna Park

(N.S.W.) Ltd. v. Tramways Advertising Pty. Ltd. (1938) 61 CLR at 301,

307, 311, 312.). In many

cases, proof of the full extent of the loss or injury

sustained will involve establishing an evidentiary

foundation for positive and detailed ultimate findings by

the court upon the balance of probabilities. There are,

however, cases where considerations of justice or the

limitations of curial method render ultimate findings,

about what would have been or will be, impracticable or

inappropriate. In such cases, damages must be assessed

on some (other) basis ... In particular, it may be

appropriate that damages be assessed by reference to the

probabilities or the possibilities of what would have

happened or will happen rather than on the basis of

speculation that probabilities would have or will come to

pass and that possibilities would not have or will not."

His Honour takes as an example the loss of a ((64) (1991) 174 CLR at 118-119.)

"real and valuable chance ... of being the successful

tenderer for some commercial undertaking or of deriving

some other advantage, in circumstances where a court

can decide that a proportionate figure precisely or

approximately reflects the chance of success but can do no

more than speculate about whether, but for the defendant's

wrongful act, the plaintiff would have actually won the ...

tender or derived the advantage".

There is no rational basis for distinguishing between a loss for which more than nominal damages may be awarded in contract and a loss for the purposes of s.82(1) of the Act and the law of torts.

12. As a matter of common experience, opportunities to acquire commercial benefits are frequently valuable in themselves, not only when they will probably fructify in a financial return but also when they offer a substantial prospect of a financial return. The volatility of the market for speculative shares testifies to both the valuable character of commercial opportunities and the difficulty of assessing the value of opportunities which are subject to serious contingencies. Provided an opportunity offers a substantial, and not merely speculative, prospect of acquiring a benefit that the plaintiff sought to acquire or of avoiding a detriment that the plaintiff sought to avoid, the opportunity can be held to be valuable. And, if an opportunity is valuable, the loss of that opportunity is truly "loss" or "damage" for the purposes of s.82(1) of the Act and for the purposes of the law of torts. In a statute which is intended to govern commercial transactions, it would be pedantically inappropriate to exclude the loss of a valuable commercial opportunity from the categories of "loss" and "damage" in s.82(1) of the Act.

13. However, a causal relationship between the loss of such an opportunity and the defendant's contravening or tortious conduct must be proved before any issue of assessment of the amount of the loss arises. As the Full Court of the Federal Court observed in Enzed Holdings v. Wynthea ((65) [1984] FCA 373; (1984) 57 ALR 167 at 183.):

"If the court finds damage has occurred it must do its best

to quantify the loss even if a degree of speculation and

guess work is involved. ... We emphasize, however, that

the principle applies only when the court finds that loss

or damage has occurred."

Although the loss of a valuable opportunity and the assessment of its amount are concepts that can be logically separated, in practice it will usually be the same body of evidence that tends to establish both the existence of a loss and the amount to be recovered. That evidence may establish the loss of a valuable opportunity more clearly than the value of the opportunity lost. The court approaches the determination of these issues in different ways, as discussed later in this judgment.

14. To prove the substantiality of a prospect of acquiring a benefit or of avoiding a detriment and what would have been the plaintiff's actions if the opportunity had been offered, it will usually be necessary to tender evidence to establish the plaintiff's objectives and the contingencies in the way of their achievement. Evidence of that kind will bear upon both the existence and the value of the lost opportunity. In the present case, for example, there is a dual significance in his Honour's finding that the probability of the Pagini contract proceeding to completion was of the order of 40%. This finding shows that the opportunity which the plaintiffs had of obtaining the benefits they sought from completion of the contract was substantial and it shows that the value of the opportunity was only a fraction of what those benefits would have been worth if the contract had been completed. If, as was likely, the Pagini contract had been concluded, would not the contract have been of commercial value to the plaintiffs even though the seven conditions precedent were awaiting fulfilment? Surely it would have been. As counsel for the plaintiffs pointed out, Adelaide Petroleum would have had to disclose the concluding of the Pagini contract to the appropriate stock exchanges because it may well have affected the price of the companies' shares.

15. In a case like the present, where the plaintiffs' objectives were the financial benefits that would flow from the performance of the Pagini contract, the prospect of acquiring those objectives became more substantial as the series of contingencies in the way of achieving those objectives were, one by one, fulfilled. In the progress of events, a point is reached at which it can be said that the plaintiffs had a substantial prospect of acquiring the benefits they were seeking. Although it could not be proved that the plaintiffs would ultimately have acquired the benefits they were seeking, that was no barrier to the evaluation of the lost opportunity to acquire them. As Deane J said in Amann Aviation ((66) (1991) 174 CLR at 119.):

"In such a case, considerations of justice require that the

plaintiff be entitled to recover the value of the lost

chance itself and that the defendant be not allowed to take

advantage of the effects of his own wrongful act to escape

liability by pointing to the obvious, namely, that it is

theoretically more probable than not that a less than 50

per cent chance of success would have resulted in failure."

16. As the existence and assessment of the value of a valuable opportunity usually depend on an evaluation of hypothetical situations or future possibilities, it is clear that the manner in which a plaintiff discharges the onus of proving his case is different from the manner in which he would discharge it if an issue depended upon the existence of historical facts. In Malec v. J.C. Hutton Pty. Ltd. ((67) [1990] HCA 20; (1990) 169 CLR 638 at 639-640.) Dawson J and I observed:

"Hypothetical situations of the past are analogous to future

possibilities: in one case the court must form an estimate

of the likelihood that the hypothetical situation would

have occurred, in the other the court must form an estimate

of the likelihood that the possibility will occur. Both

are to be distinguished from events which are alleged to

have actually occurred in the past."

We cited what Lord Diplock said in Mallett v. McMonagle ((68) (1970) AC 166 at 176.):

" The role of the court in making an assessment of damages

which depends upon its view as to what will be and what

would have been is to be contrasted with its ordinary

function in civil actions of determining what was. In

determining what did happen in the past a court decides

on the balance of probabilities. Anything that is more

probable than not it treats as certain. But in assessing

damages which depend upon its view as to what will happen

in the future or would have happened in the future if

something had not happened in the past, the court must make

an estimate as to what are the chances that a particular

thing will or would have happened and reflect those

chances, whether they are more or less than even, in the

amount of damages which it awards."

In Malec ((69) (1990) 169 CLR at 642-643.) Deane, Gaudron and McHugh JJ said:

" When liability has been established and a common law

court has to assess damages, its approach to events that

allegedly would have occurred, but cannot now occur, or

that allegedly might occur, is different from its approach

to events which allegedly have occurred. A common law

court determines on the balance of probabilities whether an

event has occurred. If the probability of the event having

occurred is greater than it not having occurred, the

occurrence of the event is treated as certain; if the

probability of it having occurred is less than it not

having occurred, it is treated as not having occurred.

Hence, in respect of events which have or have not

occurred, damages are assessed on an all or nothing

approach. But in the case of an event which it is alleged

would or would not have occurred, or might or might not yet

occur, the approach of the court is different. The future

may be predicted and the hypothetical may be conjectured."

These observations relate not so much to the standard of proof as to the way in which a court views the material bearing on the issues for determination. They can affect the determination not only of the issues of loss and its assessment but also the issue of causation.

17. Even in a case where a plaintiff is suing for damages for negligence occasioning personal injury, causation of the personal injury is proved only by the adoption of an hypothesis that that injury would not have befallen the plaintiff but for the negligence of the defendant. But, as Hotson v. East Berkshire Area Health Authority ((70) [1988] UKHL 1; (1987) AC 750 esp. at 792.) shows, if the facts preclude the adoption of that hypothesis, the plaintiff fails to establish an essential element in the cause of action. Of course, in many cases it is clear that the loss would not have befallen the plaintiff if the defendant had not been guilty of contravening or tortious conduct. In those cases, there is no need to advert to hypotheses when determining the issue of causation of loss or damage: the chain of causation will appear, if at all, from the historical facts allegedly intervening between the conduct of the defendant and the loss or damage suffered by the plaintiff. In respect of those alleged facts, the plaintiff bears the onus of proof on the balance of probabilities. But what is the standard of proof in cases where the issue of causation depends on competing hypotheses? There is no reason why the balance of probabilities should not be the standard of proof required to establish both causation and the existence of a loss, though that standard is inappropriate to the assessment of the amount of a loss where the assessment is merely an evaluation of future possibilities.

18. In Bennett v. Minister of Community Welfare ((71) [1992] HCA 27; (1992) 176 CLR 408 at 422-423.) Gaudron J said:

" It might be said that, where questions of causation

depend on hypothetical considerations, allowance should

be made, as in the assessment of damages, for the

possibility that some event would not have occurred

((72) See, in relation to the assessment of damages,

Malec v. J.C. Hutton Pty. Ltd.).

Possibilities, if they are not fanciful, must be taken into

account, at least in a general way, when ever causation or

the related issue of prevention is in issue. But questions

of that kind are not answered 'maybe' or, even, 'more

probably than not'. They are answered 'yes' or 'no'

depending on the probabilities for or against. In this

respect, they are indistinguishable from the question

whether an event happened ((73) As to the "all or nothing"

approach to whether an event happened, see

Malec v. J.C. Hutton Pty. Ltd. (1990) 169 CLR at 642-643.)

where possibilities are

taken into account but, once the question has been

answered, those possibilities have no further bearing on

the matter."

I respectfully agree. Unless it can be predicated of an hypothesis in favour of causation of a loss that it is more probable than competing hypotheses denying causation, it cannot be said that the plaintiff has satisfied the court that the conduct of the defendant caused the loss. Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities. A constant standard of proof applies to the finding that a loss has been suffered and to the finding that that loss was caused by the defendant's conduct, whether those findings depend on evidence of historical facts or on evidence giving rise to competing hypotheses. In any event, the standard is proof on the balance of probabilities.

19. Although the issue of a loss caused by the defendant's conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation ((74) See Fink v. Fink [1946] HCA 54; (1946) 74 CLR 127 at 143 per Dixon and McTiernan JJ). However, where the amount of a loss depends upon the happening or non-happening of some event, it is unnecessary to speculate on the possibility that it might have happened ((75) Johnson v. Perez [1988] HCA 64; (1988) 166 CLR 351 at 368-369.) and it is impermissible to do so. A plaintiff seeking to prove the amount of a loss does not obtain the right to argue for a possibility by refraining from adducing evidence of the fact. Nor, in my opinion, is it necessary or permissible to speculate on the prospects that a court might have awarded a pecuniary sum to a plaintiff who has lost a cause of action. The court will determine what, if anything, it would have awarded in an action to enforce that cause of action and that determination determines whether anything of value was lost and what its value was ((76) ibid at 372; but cf. Amann Aviation (1991) 174 CLR at 119 per Deane J). Neither of these situations is relevant to the present case.

20. In the present case, at the time when the plaintiffs discontinued the Pagini negotiations it was more likely than not that a contract would have been concluded had negotiations continued. And if the contract had been concluded, the plaintiffs would have had a substantial prospect of acquiring the benefits that completion of the Pagini contract would have yielded. The opportunity to conclude the Pagini contract and thereby to acquire benefits under it was lost; it was a valuable opportunity and its loss falls within the ambit of s.82(1) of the Act. The opportunity was lost because the plaintiffs were induced by the defendants' false representations to discontinue the Pagini negotiations.

21. The plaintiffs' case was thus established. The appeals should be dismissed. In the absence of argument, the applications for special leave to cross-appeal should also be dismissed.