Precis: The assessment of damages under the Australian Consumer Law for misleading or deceptive conduct or breach of consumer guarantees often involves comparing the price paid for an asset or good and the value of the thing purchased. The purchase of a business by reason of misleading conduct as to its earnings or worth is an example. When assessing loss, comparison is ordinarily made between the purchase price and the “true value”, rather than “market value”. The two may differ significantly.
The purpose of this note is to identify the differences between “market value” and “true value”, how each may be assessed and the circumstances in which they might be applied. While “true value” is generally applied for the assessment of loss under the ACL, it is “market value” that is relevant in the valuation of land for rating and tax purposes, and to compensation for the compulsory acquisition of land.
The assessment of “true value” or “real value”[1] permits reference, with one important exception, to circumstances which occurred after the time at which value is to be assessed. This is the essential distinguishing feature from the assessment of “market value”.
The issue of the evidence relevant to the assessment of “true value” arose recently in Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211. Dwyer’s case was a representative proceeding. The appellant alleged that Volkswagen had supplied vehicles in which the driver side airbag fitted to them carried a risk that it would mis-deploy. The appellant claimed damages pursuant to s 271 of the ACL, for breach of a consumer guarantee under s54, that the vehicles be of acceptable quality.
For reasons which are unnecessary to detail here, the Court found there had not been a breach of the statutory guarantee of acceptable quality. But there was an interesting discussion about loss.
By the time of the trial, a recall notice had been issued in respect of vehicles carrying the airbag, including Volkswagens. Volkswagen replaced the airbags at no cost to the owners. The issue was whether that fact was relevant to the assessment of damages. The appellant accepted that, by reason of the replacement of the airbag, the vehicle was as valuable at trial as it would have been if supplied originally with non-defective airbags and that if the replacement airbag could be brought to account, it was fatal to his case. Instead, the appellant complained that at the time of supply his vehicle was worth less than the price he paid for it by reason of the defective airbag; and that he had still suffered loss and damage, notwithstanding the replacement of the airbag some six years after purchase. The fact of the replacement of the airbag was held relevant to the assessment of loss, and the appellant failed.
So, in Dwyer, although the time at which damages were to be assessed was at the time of the supply,[2]evidence which occurred after the time of supply could be brought to account in assessing “true value”. Hence, there was no loss.
More broadly, s 272 sets out the damages that may be recovered against a manufacturer for failure to comply with a consumer guarantee. Relevantly, it provides that recoverable damages include any reduction in the value of the goods below (again, relevantly) the price paid for the goods.
In its terms, s 272 does not define the method that must be adopted to determine “the reduction in value”, and it must be recognized that the approach to be taken is not inflexible.[3]
That said, the measure of damages under s 272(1)(a) is generally the difference between the “true value” of the good and the price paid.[4] Regard may be had to subsequent events, “because they may illuminate or indicate or reflect the true value at the time of supply”.[5] Such an approach is not unusual. The same approach is taken when assessing damages for deceit.[6] It was also the approach commonly taken under s 82 of the Trade Practices Act 1974 (Cth) (now s 236 of the ACL) when assessing damages under the ACL for misleading and deceptive conduct[7]
The method of determining “true value” is set out in Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4 at [16]:
Nevertheless [in the assessment of damages for deceit], although the value is assessed as at the date of the acquisition, subsequent events may be looked at in so far as they illuminate the value of the thing as at that date. A distinction is drawn, however, between subsequent events that arise from the nature or use of the thing itself and subsequent events that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement. Events falling into the former category are admissible to prove the value of the thing, those falling into the latter category are inadmissible for that purpose.
The reasoning above identifies the exception to the rule that subsequent events may be considered when assessing “true value”: subsequent events arising from sources supervening upon or extraneous to the inducement may not be brought into account. The Court gave a useful example:
Thus, the takings of a business subsequent to purchase are generally admissible, not only to prove that a representation concerning the takings was false but also to prove the true value of the business as at the date of purchase… But if it is established that the decline in takings has been caused by business ineptitude or unexpected competition, evidence of subsequent takings is not admissible to prove the value of the business as at that date, events such as ineptitude and unexpected competition being regarded as supervening events… All of these principles are appropriate to the assessment of damages under s 82 where a breach of s 52 of the Act has induced a person to purchase a business.
The distinction is not always easy to make, but in Potts v Miller (1940) 64 CLR 282 Dixon J put it this way (at 298):
“If the cause in inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be ‘independent’, ‘extrinsic’, ‘supervening’ or ‘accidental’, then the additional loss is not the consequence of the inducement” [8].
“Market value”, on the other hand, is generally not used in the assessment of loss caused by deceit, misrepresentation, misleading conduct or breach of consumer guarantee. That is so for a number of reasons. Fundamentally, the assessment of price against market value may not truly identify the plaintiff’s loss. The market may be mistaken at the time of acquisition (it may overvalue shares, for example). It may have been manipulated by the conduct of which complaint is made, or other conduct. Finally, the assessment of market value presupposes a sale when, in fact, the plaintiff is not bound to sell and may not have sold.[9]
Market value is, however, the value used when assessing compensation for the compulsory acquisition of land, and in the assessment of land value for the purposes of land tax or rates.[10] Both the Acquisition of Land Act 1967 (Qld) and the Land Valuation Act 2010 (Qld) contain their own statutory formulae, but the statutes essentially follow the long-established common-law position.
The leading case is Spencer v Commonwealth (1907) 5 CLR 418, which concerned the compulsory acquisition of land. In Spencer, Isaacs J said at 441:
To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.”[11]
There are a number of features of “market value” worth noting. First, it assumes a hypothetical sale of (the land) between a vendor and purchaser, neither of whom so anxious to buy or sell as would compel them to overlook any ordinary business consideration. Secondly, it assumes that each is fully acquainted with the land, cognizant of all circumstances which may affect its value, including all those matters which may cause a rise or fall in its value. Finally, and importantly in the context of this discussion, the buyer and seller are assumed only to have access to the information reasonably available at the time of the hypothetical sale.[12]
Although it is relevant to consider future possibilities, such as would at the time of assessment have been known to the hypothetical parties, future events which are unexpected, or unanticipated, cannot be considered: Brisbane City Council v Mio Art Pty Ltd [2011] QCA 234, Fryberg J (with whom the others agreed) at [33]. There used to be authority for the proposition that regard could be had to information subsequent to the date of assessment “to confirm a foresight”. If ever that was the law, it is no longer.[13]
Note that reference to sales on dates subsequent to the date of assessment are nonetheless admissible and may be relevant, being evidence of market value at the time at which it is to be assessed (see Mio Art at [79]).
In summary, “real value” and “market value” are different. The assessment of real value permits reference to events after the date at which is to be assessed, save where those events are extrinsic, supervening, or accidental. In that way, when the Court assesses loss, it may have regard to all available material at trial. The assessment of market value permits reference only to evidence reasonably available to the hypothetical parties at the time at which value is to be assessed. Real value is ordinarily used in the assessment of damages for misleading or deceptive conduct, or for breach of consumer warranties under the ACL. Market value is generally used in the valuation of land for rating and tax purposes, and (recognising it is ultimately the value of the property acquired to the owner, see footnote 10) for the assessment of compensation for the compulsory acquisition of land.
[1] “True value” may also be described as, for example, “real value”, or “intrinsic value” or “what the asset was “truly worth”: see HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] 217 CLR 640 at [36]
[2]Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211 at [215]; cf Toyota Motor Corporation Australia Ltd v Williams [2023] FCAFC 50 at [98].
[3] Cf HTW Valuers v Astonland Pty Ltd [2004] 217 CLR 640 at [35]
[4] Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211 at [230]
[5] Ibid at [230]
[6] Gould v Vaggelas (1985) 157 CLR 215 at 220, 255, 265
[7] HTW Valuers v Astonland Pty Ltd [2004] 217 CLR 640 at [35]; Kizbeau Pty Ltd v WG & B Pty Ltd [1995] HCA 4 at [16], a case concerning s 82 of the Trade Practices Act 1974 (Cth), but which applies equally to s 236 of the ACL
[8] See also Gould v Vaggelas (1985) 157 CLR 215 at 220 per Gibbs J
[9] See HTW Valuers v Astonland Pty Ltd [2004] 217 CLR 640 at [37]
[10] Note that in the assessment of compensation for compulsory acquisition, it is the “value to the owner” which technically is to be assessed. Generally, this will be the market value of the land, to be assessed generally in accordance with Spencer v The Commonwealth (1907) 5 CLR 418. In exceptional cases, land may be more valuable to an owner than it is to the market generally: see Pastoral Finance Association Ltd v The Minister [1914] AC 1083 at p1088: “Probably the most practical form in which the matters can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it”.
[11] See also Griffith CJ at 432 and Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 59 at [51] per McHugh J
[12] See Mio Art at [78]; Kenny & Good Pty Ltd v MGICA (1992) (Ltd) (1999) 199 CLR 413 at 436
[13] Mio Art at [78]. “For direct proof of market value [that] was an aphorism best forgotten” (Mio Art at [78], citing the discussion by Murray CJ under the heading “Hindsight Bias” in Shire of Gingin v Coombe [2009] WASCA 92 at [43].
The March Issue of Hearsay saw a detailed consideration of Barristers’ use of Generative AI:
Generative AI and the Bar – A Long Way from the Horse and Cart but still a Fair Way to Travel!
In a recent (28 May 2024) decision of the United States Court of Appeal for the Eleventh Circuit, the presiding judge (Newsom J), in concurring with the opinion of the other court members, descended in detail in his reasons as to his access to Generative AI platforms to test the result.
He concluded that the exercise was a worthwhile avenue for research – including as to the meaning of contractual language – in argument and adjudication. His reasons – written in digestible form for a US case – are worthy of perusal by lawyers involved in advising and litigating for clients.
The decision may be found here.
Abstract
In the vexed area of purely economic loss, described as the most difficult in the common law, policy decisions based on concepts such as vulnerability raise uncertainty and provide legal advisers with no guidance as to the potential outcome of litigation. This is not so where legal principles are the foundation for judicial determinations, since these principles provide a signpost and guidance as to a likely outcome.
The application of vulnerability is a policy decision which gives unwarranted dominance to contract, ignoring the independence and concurrent operation of tort and thereby denying compensatory justice.
The uncertainty involved in a determinant such as vulnerability, arises from issues as to when and how it will be applied. If the law persists with vulnerability as a relevant factor in tort claims for purely economic loss, guidance and clarification as to its application are needed.
Introduction
There is obvious judicial diversity as to the interrelationship of contract and tort in the adjudication of purely economic loss claims (see, for instance, the majority 5/minority 4 split decision in the Supreme Court of Canada in Ontario Inc. v Maple Leaf Foods Inc 2020 SCC 35). On one side there is the view that economic interests are the domain of contract, and a claim in tort to recover purely economic loss is an unwarranted interference into the matrix of contract. On this view, tort is the appropriate vehicle for the protection from physical harm to person or property. This historical understanding of the role of contract and tort underpins a reluctance to raise a duty of care where there is a network of contractual arrangements between commercial parties. A further impetus to deny a duty of care between parties to contractual arrangements, stems from an unwarranted, underlying floodgates fear if tort actions are superimposed on the existing contractual risk allocations.
A view that purely economic interests are the domain of contract, has led to the development of vulnerability, whereby if a claimant in tort for purely economic loss could have protected its economic interests under contract, then no duty of care arises. (see in Australia; Brookfield Multiplex Ltd v Owners Corporation Strata Plan [2014] HCA36; 88 ALJR911 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; 78 ALJR 628
The opposing view in judicial analysis is that, where there is fault or delict causing economic damage and the elements necessary for a successful tort action in negligence are present then the fact that the parties were only brought into a close and direct relationship from a network of contracts (eg builder-original owner-subsequent purchaser) will not bar the tort action. It will be suggested below that this latter view accords with commercial reality, providing recourse in circumstances where the claimant is unlikely to have contractual protection. If the tort action is barred then the party must rely on prohibitive loss insurance.
Vulnerability: Policy or Principle
The application of vulnerability in purely economic loss cases has occurred in situations where a claimant for economic loss from negligence, has not sought an indemnity under contract.
If the victim had sought and received a contractual indemnity against the very risk of negligence for which they now seek tortious compensation there would be a convincing argument, on principle, that the claimant’s intention was to shift the risk of economic loss to the contractual party giving the indemnity and thereby relinquishing any right to sue in tort.
However, where the claimant in tort for purely economic loss has not sought nor received any contractual indemnity for the very risk they now seek compensation, any presumption that the claimant likely would have received such a contractual indemnity is commercially unrealistic. As McLachlin J (as she then was) stated in Canadian National Railway Co v Norsk Pacific Steamship Co[1]:
“the contractual allocation of risk argument rests on a number of important but questionable assumptions. First, the argument assumes that all persons or business entities organise their affairs in accordance with the laws of economic efficiency, assigning liability to the ‘least-cost risk avoider’. Second, it assumes that all parties to a transaction share an equality of bargaining power which will result in the effective allocation of risk. It is not considered that certain parties who control the situation may refuse to indemnify against the negligence of those over whom they have no control, or may demand such an exorbitant premium for this indemnification that it would be more cost-effective for the innocent victim to insure itself.”[2]
Perhaps most convincing in the comments of McLachlin J, is that a party to a contract is unlikely to indemnify against the negligence of those over whom they have no control, or that they would seek such an exorbitant premium for the indemnity that the innocent victim would opt to insure itself.
Furthermore, the presumed intention of the claimant in tort, where the claimant has not sought contractual protection, should be that they are preserving their tort rights in negligence.
The unlikelihood of the claimant obtaining a contractual warranty suggests that vulnerability is merely a label to deny a tort action where there are contractual arrangements between parties. The application of vulnerability to negate a duty of care where a claimant in tort has not sought a contractual indemnity is a policy decision.
Nor is it appropriate to mask that policy decision behind a label such as proximity (discarded in Australia as meaningless for the very reasons outlined below) by a conclusion that no relationship of proximity sufficient for duty of care exists where the parties’ expectations are based in their contractual arrangements. Contractual arrangements say nothing and do not inform the tortious question of proximity, namely, how close and direct was the relationship between tortfeasor and victim in terms of cause and effect, measured by physical, circumstantial and causal closeness.[3] This causal closeness may result and arise from a network of contracts.[4] As Le Dain J giving judgment for a unanimous Supreme Court of Canada stated in Central and Eastern Trust Co v Rafuse;
“The common law duty of care that is created by a relationship of sufficient proximity….is not confined to relationships that arise apart from contract. Although the relationships in Donoghue v Stevenson, Hedley Byrne and Anns were all of a non-contractual nature and there was necessarily reference in the judgments to a duty of care that exists apart from or independently of contract, I find nothing in the statements of general principle in those cases to suggest that the principle was intended to be confined to relationships that arise apart from contract. Indeed, the dictum of Lord Macmillan in Donoghue v Stevenson concerning concurrent liability…would clearly suggest the contrary. Junior Books Ltd v Veitchi Co Ltd in which an owner sued flooring sub-contractors directly in tort, is authority for the proposition that a common law duty of care may be created by a relationship of proximity that would not have arisen but for a contract.”[5]
Where there is clear proximity between parties, under the historical meaning of that term (see, for instance, in the Supreme Court of Canada, Karakatsanis J’s finding of a close relationship of proximity between supplier and franchisees arising from contractual arrangements between supplier, franchisor and franchisees in Ontario Inc v Maple Leaf Foods Inc) it is unfortunate and distorts the utility of the concept to deny a relationship of proximity on a policy ground of vulnerability. This reduces the concept to a mere label to attach to a policy decision, the latter having no relevance to the historical principle. As Brennan CJ stated in the High Court of Australia in Bryan v Maloney:
“If the only role for proximity in the broader sense were to provide an umbrella of terminology to cover the different requirements for the existence of different categories of duty of care, and thereby assist in understanding and identifying them – in other words, if the requirement of proximity were not invoked as a working criterion of liability in particular cases – it would have little practical significance.”[6]
It has been suggested that the use of proximity as a mere label encompassing policy factors not related to nearness or closeness, equates the term with the duty of care question itself.[7] Dawson J in the High Court of Australia, in reference to the use of proximity as a label covering disparate circumstances unrelated to nearness or closeness of relationship, has stated that it is ‘to expect more of the term than it can provide’.[8]
Vulnerability and Uncertainty
A threshold question is whether the law should reject vulnerability altogether as a relevant policy factor in a tort claim for purely economic loss. Such a rejection would be justified on the basis that to deny a tort action for negligence because of potential contractual rights is an unjustified interference and fetter on the independence of tort law. On this view, contractual rights and obligations are irrelevant to independent tort rights which can operate concurrently.
This was the approach of the majority in the High Court of Australia (French CJ, Gummow, Hayne, Crennan and Bell JJ.) in Barclay v Penberthy[9]. In a joint judgment on the issue of a claim for negligence for purely economic loss by an employer against the tortfeasor for causing permanent injury to, and loss of services of key employees, the court ignored and dismissed as irrelevant any potential right the employer may have had to protect itself under contract from such loss of services. The majority in the High Court stated:
“Further, in order to establish the existence of a duty of care owed to [the employer] …. it was not incumbent upon the employer to establish that it could not have bargained…..for a particular contractual provision. The presence or absence of a claim in contract would not be determinative of a claim in tort”[10][the parenthesis is mine].
This was a clear rejection of vulnerability in the context of potential contractual rights, as a relevant issue in a tort claim for purely economic loss.
The abandonment of vulnerability as a potential determinant in purely economic loss would remove the uncertainty it has brought to an already vexed area of the law. At a more theoretical level, the availability and sanction of tort law as a deterrent to negligent conduct is maintained. As was stated by McLachlin J in reference to the aims of tort law, in contrast to the consensual rights and obligations of contracting parties, tort law has “an historical centrality of personal fault” and its role “in curbing negligent conduct and thus limiting the harm done to innocent parties, not all of whom are large enterprises capable of maximising their economic situation,”[11]should not be overlooked.
Alternatively, if the policy of the law is that vulnerability is a relevant issue in the adjudication of purely economic loss claims then clarification of the legal approach to its application is required. The law could adopt any of the following three approaches:
Approach 1
Where parties are linked by contractual arrangements, one approach by the law may be an absolute bar to any tort action arising between those parties. This would mean that the protection of economic interests and risk allocation are determined solely in the contractual matrix.
On this approach, the actual vulnerability of a party is irrelevant, since even if a party was vulnerable in the sense of an inability under contract to protect against an economic risk from negligence, there is an absolute bar to any duty of care arising. Such a policy approach reduces the meaning of vulnerability to a mere label.
Approach 2
A second approach to the application of vulnerability is that where parties have entered a network of contracts and one of those parties is seeking a tort remedy in negligence for its economic loss, it must have sought contractual indemnification against the very risk for which it now seeks compensation. The claimant under this approach must produce evidence of a failed attempt to obtain contractual indemnity against the risk for which it now seeks tortious compensation.
This approach to vulnerability casts the onus of proof on the claimant to prove a negative, namely, that they sought and could not obtain a contractual warranty, thereby leaving them vulnerable.
Under this approach, if the claimant in tort either did not seek a contractual warranty, or was successful in obtaining such a warranty, then in either instance the claimant has not satisfied the onus of proof of vulnerability and a duty of care does not arise.
This second approach is that advanced by Heydon J in the High Court of Australia in Barclay v Penberthy.[12] Heydon J in that case made reference to a submission by the claimant in tort, the submission being that there was no evidence that the claimant could have negotiated [a contractual warranty]. Heydon J commented on that submission as follows:
“But that impermissibly reverses the burden of proof. The correct question was: was there evidence that it could not have negotiated a warranty? On that question the evidence was silent……..there was no evidence about whether [the party with whom the claimant contracted] was open to change [the terms] after negotiation.”[13] [the parentheses are mine].
Approach 3
A third approach to the issue of vulnerability would be that the law does not require a claimant in tort actually to have sought an indemnity in contract. But the claimant still carries the onus of proof, on the totality of evidence, to establish that it is more probable than not that they would have been unable to obtain any contractual warranty, thus leaving them exposed and vulnerable to economic loss from negligence.
Under this third approach, for the reasons given earlier in this paper, and in the absence of specific evidence to the contrary, probabilities are (in accordance with commercial reality) that no contractual indemnity would be given.
Whatever approach is adopted, vulnerability should be examined as a separate issue from principles such as reasonable foreseeability and proximity. This is the Anns approach (see Anns v Merton London Borough Council[14]) to adjudication of purely economic loss claims, whereby reasonable foreseeability and proximity establish a prima facie case of duty and policy issues are then examined to determine if there is a reason to negate the prima facie duty. The Anns approach was applied by Karakatsanis J, in giving judgment on behalf of the minority in the Supreme Court of Canada in Ontario Inc v Maple Leaf Foods Inc.[15]In a clear and compelling judgment by Karakatsanis J[16], concepts of reasonable foreseeability and proximity (the latter in its historical context) were analysed and then policy was addressed.
In the interests of certainty, the Anns approach to adjudication of purely economic loss claims should be the methodology of the common law of Australia.
Conclusion
There are strong policy grounds to conclude that the negation of tort rights in the face of contractual arrangements is an unjustified and unwarranted interference, preventing a victim of negligence from any legal recourse for its loss. The commercial improbability of a party either seeking or obtaining a contractual indemnity for the economic loss it now claims adds impetus to the injustice of denying tort rights on the basis of vulnerability
If vulnerability is to continue as a potential determinant in purely economic loss claims, the uncertainty surrounding its application provides no guidance to legal advisers on the likely outcome of potentially large economic claims. Clarification as to its application is needed either by legislative intervention or judicial pronouncement.
*LL.B, LL.M, PhD (Barrister at Law)
[1] [1992] 1 SCR 1021
[2] Ibid at [1158],[1160]
[3] See the exhaustive analysis and articulation of the concept of proximity in the High Court of Australia in the judgment of Deane J in Jaensch v Coffey (1984) 155 CLR 549
[4] Central & Eastern Trust Co v Rafuse [1986] 2 SCR 147
[5] Ibid at [204-205]
[6] (1995) 182 CLR 609 at 654 per Brennan CJ
[7] M H McHugh “Neighbourhood, Proximity and Reliance” in Finn (Ed) Essays on Torts (Law Book Company Limited, Sydney, (1989) p38
[8] Hill v Van Erp [1997] HCA 9; 188 CLR 159 per Dawson J
[9] [2012] HCA 40; 246 CLR 258
[10] Ibid at [47]
[11]Canadian National Railway Co v Norsk Pacific Steamship Co [1992] 1 SCR 1158,1160
[12] Barclay v Penberthy [2012] HCA 40
[13] Ibid at [87] per Heydon J
[14] [1978] AC 73
[15] 2020 SCC 35
[16] Ibid at [97] ff, per Karakatsanis J
Address delivered by the the Hounourable Chief Justice Helen Bowskill at the Commercial Law Association of Australia Arbitration Conference, Brisbane, 7 March 2024.
The Court’s Role in Supporting Commercial Arbitration and Giving Effect to Arbitration Clauses
Harris Society Annual Lecture, presented by the Right Honourable Lord Leggatt, Justice of the Supreme Court UK at Keble College, Oxford on 26 April 2024.
Precedent in English Law
An edited version of a speech delivered by the Honourable Justice Robert Beech-Jones, Justice of the High Court of Australia, to the Corporate Conduct and Class Actions Symposium 2024, Sydney, 2 May 2024.
Federalism, the Courts and Class Actions
Date: Thursday, 1 August 2024Time: 5:30pm – 6:45pm AESTPlace: Banco Court, Level 3, 415 George Street, Brisbane QLD andOnline: This is a free public event and a link will be provided prior to it if you cannot attend in person.
Over the past decade or so the use of royal commissions and other public inquiries as an adjunct of government has expanded exponentially. They are often led by a judge, generally retired, or a senior member of the legal profession and, on occasion, by an academic. It is essential for those leading an inquiry and those otherwise involved in it to appreciate how much an inquiry differs from litigation, whether as a judge, a lawyer, or an interested party.
The speakers will discuss the large topic of the role and value of commissions of inquiry in the Westminster system, and range over the question of who should lead an inquiry, the role of counsel assisting, the pitfalls of celebrity and relations with the media, the difficulties in offering procedural fairness within the time constraints of an inquiry, relations with the commissioning government, issues of privilege, variations across jurisdictions, getting and managing the material, and obtaining and nurturing staff.
Please see attached flyer for more information and to register.
Presented by Her Honour Judge Vicki Loury KC at the Pacific Judicial Integrity Program at Port Vila, Vanuatu on 13 March 2024.
On the Admissibility of Common Forms of Evidence in Fraud/Corruption Trials
Paper presented by Judge A J Rafter, S C. at a CPD event sponsored by the Crown Prosecutors’ Association of Queensland in conjunction with the Bar Association of Queensland, Brisbane, 7th May 2024.
The Impact and Use of Inconsistent Statements in a Criminal Trial
The Honourable Dean Wells was Attorney General of Queensland between 1989 and 1995, and is currently in practice at the Queensland Bar. The Honourable Rod Welford was Attorney General of Queensland between 2001 and 2005, and in 2003 introduced into the Queensland Parliament the Bill which was enacted as the Civil Liability Act 2003 (Qld). Hearsay thanks them for this contribution apropos of the provision of such Act pertaining to proof of causation in breach of duty of care causes of action.
But for a seminar supported by the Bar Association we would not have thought to write this note. In September last year Professor Stapleton gave a presentation entitled “Unnecessary and Insufficient Factual Causes”,[1] in which she examined the jurisprudence underlying the role of causation in tort law. The commentator at the seminar was Pat Keane KC, then very recently retired from a distinguished term on the High Court Bench.
Professor Stapleton’s discussion focussed on the traditional role of necessary and sufficient conditions in tort law. Drawing examples from many jurisdictions, she advanced the thesis that a large number of cases in modern tort law could not really be explained in terms of the “but for” test of causation. Although the main thrust of her argument was of universal application, and her examples were international, she did mention one specifically Queensland matter: in particular she suggested that Queensland’s Civil Liability Act[2]opened the door to finding liability in circumstances in which the “but for” test would not permit it to be found.
This note is about only the small part of Professor Stapleton’s thesis that related to the Civil Liability Act.
The Minister’s Second Reading Speech introducing the Bill for the Act, made on 11 March 2003, did not address whether the Parliament intended to any extent do away with the “but for” test. It did note that the Bill was not intended to create any new cause of action, and that it was not meant to be a codification of the law. The authors of this note are very conscious of the fact that in the absence of an explicit statement relating to the “but for” test, the only useful information as to the intention of the legislature is obtained by judicial statutory interpretation. So we are not purporting to give evidence on what the parliament intended.
What we can do is to draw attention to some propositions of legal philosophy that appealed to us at the time and would justify the prescriptions in the Act in question. In summary, we suggest that the jurisprudence that would justify the legislature’s language in the Act is entirely consistent with a world in which the courts continue to apply a necessary and sufficient test. Indeed we suggest that there is nothing in the Act with which Hart and Honore would have a problem.[3]
For ease of reference, we set out section 11 of the Act so far as is relevant to this discussion:
(1) A decision that a breach of duty caused particular harm comprises the following elements—
(a) the breach of duty was a necessary condition of the occurrence of the harm (factual causation);
(b) it is appropriate for the scope of the liability of the person in breach to extend to the harm so caused (scope of liability).
(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 cannot 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 party in breach.
Rather obviously the Act grants the courts a very wide discretion. Tort law is an area in which a sensible legislature would want to allow courts the flexibility to have regard to all of the particular circumstances of a case. We note however, that this wide discretion was not given in a vacuum: the provision specifically refers to the retention of “established principles”. The legislature thus accorded the courts that wide discretion in circumstances in which the same test of causation had the place it did under common law.
Deploying the concept of “responsibility for the harm”, the Act allows that a person, whose contribution to the harm in question is not of itself necessary or sufficient to cause the harm, may be held liable if their conduct nevertheless contributed to the cause of the harm (to an extent that the court considers such conduct entails “responsibility”). When seen in its full legal context, this does not do away with the necessary and sufficient test: it makes it possible for the courts, if they choose to do so in a particular case, to refocus it. Reading the legislative provision together with the common law at the time, if one looks for the philosophical position a lawgiver would have to hold to prescribe it, it can be seen to be a provision based on the jurisprudence that a court should be able to hold a person liable in tort if their act was part of a set of conditions which, taken as a whole, were necessary and sufficient to cause that civil wrong.
The Queensland Parliament has often used such a device. For example, in the party provisions of sections 7 and 8 of the Criminal Code. The guilt of a person who is a party to a crime does not depend on whether his or her contribution was independently sufficient to ensure the commission of the crime. Culpability is established by their participation, with others, in a set of actions which did in fact culminate in the commission of a crime. Whether their participation was effective or not is not the question. The question under the Code is whether a crime was committed, and if so whether the accused was a party. A legal philosopher might justify such a provision in the Code by noting that what the accused is alleged to have done was a malum in se.
The jurisprudence that would explain section 11(2) of the Civil Liability Act is, we suggest, that it should be open to a court to find liability if someone has done something that made them a party to the commission of tortious harm. As we noted above, Pat Keane KC was the commentator on Professor Stapleton’s paper. He has made the point that historically responsibility for causing harm in tort law was resolved as a question for the jury. To use his phrase, there was thus always a moral squint necessarily involved in the determination of this question. He also noted that nothing in the legislation suggested an intention to alter the nature of the question.
The public policy that would justify treating a party to a tort as a tortfeasor is simply a public policy to discourage the infliction of public harm. Which, after all, is the core business of any legislature. A legal philosopher might argue that the legislature was extending the concept of “malum in se” by analogy from the criminal sphere to the sphere of civil wrongs.
The point is that the provision provides the courts with the discretion to find that even when the actions of a defendant are not of themselves a necessary or primary causal trigger for the resulting harm, the actions may nevertheless give rise to a level of culpability that constitutes sufficient grounds for holding the defendant accountable for the harm. The application of this principle is most evident in the context of two or more defendants contributing to the resulting harm.
However, it is not unreasonable to expect that it could apply equally to a single participant in the civil wrong. The Act makes it clear that liability can be found if, for example, the act was performed in circumstances where the defendant’s action was likely to have consequences, which would not have occurred in the absence of those circumstances. The thinking here has obvious analogies to the jurisprudence that courts rely upon in “egg shell skull” cases. This, we respectfully suggest, can also be explained as viewing the act in question in the way we suggest above: as part of a set of conditions which, taken as a whole, were necessary and sufficient to cause that civil wrong.
Accordingly, we submit that the underlying jurisprudence of the Civil Liability Act is not such as to set aside or overturn the precedents based on the existing “necessary and sufficient” test in Queensland law. It simply expands its ambit of application. Thus, for example, if a number of persons recklessly or negligently pursue a course of action that is apt to cause harm, or is apt to contribute to causing harm, to another person, then to ask whether the actions of a particular agent alone were both necessary and sufficient to cause that harm, is to ask only one of the questions permitted by the Act. The other question is whether the action of that agent was part of a set of conditions which were, collectively, necessary and sufficient to cause the harm.
[1] Jane Stapleton KC (Hon) FBA, Life Fellow, Christ’s College Cambridge, Hon Prof. U Sydney Law School: her seminar “Unnecessary and Insufficient Factual Causes” was held in the Banco Court on 14 September 2023.
[2] Civil Liability Act (Qld) 2003.
[3] Hart and Honore, Causation in the Law, Oxford University Press 1959.
