FEDERAL COURT OF AUSTRALIA Blacker v National Australia Bank Ltd [2000] FCA 681 FEDERAL JURISDICTION – accrued jurisdiction – whether State "double function" legislation can be source of accrued jurisdiction CONSTITUTIONAL LAW – whether s 51AA(1) of Trade Practices Act invalid TRANSFER OF PROCEEDINGS – whether in interests of justice to transfer part of proceeding after judgment reserved TRADE PRACTICES – s 51A(2) of Trade Practices Act – nature of burden thereby imposed on corporation – how burden may be satisfied TRADE PRACTICES – reliance on misleading or deceptive conduct – how established – significance of fact that conduct intended to induce reliance LIMITATIONS – trade practices – when causes of action for breaches of ss 51AA and 52 of Trade Practices Act accrue NEGLIGENT MISREPRESENTATION – duty of care – whether respondent had assumed position of business adviser to applicants CONTRIBUTORY NEGLIGENCE – whether defence available when negligent misrepresentor intends to induce reliance on misrepresentation DAMAGES – negligent misrepresentation inducing acquisition of property – availability of reasonably foreseeable consequential damages where applicant cannot prove that value of property acquired was less than what was paid for it Trade Practices Act 1974 (Cth) ss 51A, 51AA(1), 52(1), 82, 87 Fair Trading Act 1987 (NSW) s 42 Contracts Review Act 1980 (NSW) s7(1) Judiciary Act 1903 (Cth) s 78B Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 5(4)(b)(iii) Federal Courts (State Jurisdiction) Act 1999 (NSW) s 11(2) Rochester Communications Group Pty Ltd v Adler (1996) 65 FCR 572 followed Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 167 ALR 303 discussed Re Wakim; Ex parte McNally (1999) 163 ALR 270 referred to Byrnes v The Queen (1999) 164 ALR 520 referred to Edensor Nominees Pty Ltd v Australian Securities & Investments Commission (1999) 168 ALR 676 referred to Jeffcoat v Queensland Coal & Oil Shale Mining Industry (Superannuation) Ltd [2000] FCA 655 (Kiefel J, 19 May 2000, unreported) referred to Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324 discussed Hooper v Kirella Pty Ltd (1999) 167 ALR 358 referred to McIntosh v National Australia Bank (1988) 17 FCR 482 referred to Ting v Blanche (1993) 118 ALR 543 referred to Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) ¶ 46-179 referred to ACCC v IMB Group Pty Ltd (1999) ATPR ¶ 41-704 referred to Sykes v Reserve Bank of Australia (1998) 88 FCR 511 referred to Gould v Vaggelas (1985) 157 CLR 215 discussed Henderson v Amadio (No 1) (1995) 62 FCR 1 referred to Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 referred to Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 discussed Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 applied Bate v International Computers (Aust) Pty Ltd (1984) 2 FCR 526 referred to Dorfler v Australia and New Zealand Banking Group (1991) 103 ALR 699 referred to Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 referred to Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170 referred to Smith v Commonwealth Bank (von Doussa J, 11 March 1991, unreported) discussed Commonwealth Bank v Smith (1991) 42 FCR 390 and (1991) 102 ALR 453 applied San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 referred to Perre v Apand Pty Ltd (1999) 164 ALR 606 referred to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241, referred to State of South Australia v Johnson (1982) 42 ALR 161 discussed Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 discussed Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 referred to Kyogle Shire Council v Francis [1988] 13 NSWLR 396 referred to L Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] (1981) 150 CLR 225 discussed Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 followed Luntz and Hambly Torts: Cases and Commentary 4th ed. 1995 at p. 811 Phegan "The Tort of Negligence into the New Millenium" (1999) 73 ALJ 885 PETER RAYMOND BLACKER & CHRISTINE BLACKER v NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) NG 997 of 1997 KATZ J 25 MAY 2000 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 997 of 1997 BETWEEN: PETER RAYMOND BLACKER & CHRISTINE BLACKER APPLICANTS/CROSS-RESPONDENTS AND: NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) RESPONDENT/CROSS-CLAIMANT JUDGE: KATZ J DATE OF ORDER: 25 MAY 2000 WHERE MADE: SYDNEY MINUTES OF ORDER THE COURT ORDERS THAT: 1. the applicants file and serve on respondent by 1 June 2000 proposed short minutes of order giving effect to the Court's reasons on their claim; 2. the respondent, if it contends that the applicants' proposed short minutes of order do not properly give effect to the Court's reasons on their claim, file and serve on the applicants by 4 June 2000 alternative proposed short minutes of order; 3. the cross-claimant file and serve on the cross-respondents by 1 June 2000 proposed short minutes of order giving effect to its cross-claim; 4. the cross-respondents, if they contend that the cross-claimant's proposed short minutes of order do not properly give effect to its cross-claim, file and serve on the cross-claimant by 4 June 2000 alternative proposed short minutes of order; and 5. the matter be listed for further hearing at 9.30 am on 8 June 2000. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 997 of 1997 BETWEEN: PETER RAYMOND BLACKER & CHRISTINE BLACKER APPLICANTS/CROSS-RESPONDENTS AND: NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) RESPONDENT/CROSS-CLAIMANT JUDGE: KATZ J DATE: 25 MAY 2000 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicants (and cross-respondents) in the present proceeding, Mr Peter and Mrs Christine Blacker, are husband and wife. They own a farm called "Springbrook", situated near Bega in southern New South Wales, on which farm they operate a dairying business. The former owners of the farm, Mr Richard Vincent Bateman and Mrs Mary Margaret Bateman, had also operated a dairying business on it. In September 1993, the Blackers paid about $1.53M to the Batemans and about $70,000 in legal fees and stamp duty in order to buy from the Batemans certain milk quotas which they then held, the farm, certain plant on it devoted to dairying and the herd of cattle then on it. For the purpose of the Blackers' entering into the dairying business on Springbrook, the National Australia Bank ("the NAB"), the respondent (and cross-claimant) in the proceeding, agreed to make to them three loans totalling $1.05M. One of the three loans was for $900,000 and was to be expended as part of the $1.6M required to acquire from the Batemans the assets which I have mentioned above (with the remaining $700,000 or so to come from the Blackers' own resources). Another of the three loans was for $100,000 and was to be expended on capital improvements to the farm once acquired. The third of the three loans was for $50,000 and was to be available to be expended on the day-to-day operation of the dairying business once begun. 2 The Blackers' dairying business on Springbrook has not been a success and a consequence of that lack of success has been the present proceeding, started by the Blackers more than four years after they had begun to operate that business. In the proceeding, the Blackers have made a number of claims against the NAB and, in turn, the NAB has made, by way of cross-claim, a number of claims against the Blackers. 3 As for the NAB's claims against the Blackers, it is sufficient for present purposes merely to say that they are claims for the enforcement, according to their tenor, of rights acquired by the NAB as against the Blackers as a result of various loans made by it to them in connection with the Blackers' dairying business on Springbrook. 4 As for the Blackers' claims against the NAB, however, it is not so easy to summarise them in a few words. There has been a plethora of claims made by the Blackers against the NAB during the course of the proceeding, with one being added to, and then two being subtracted from, their five original claims. 5 Before, however, cataloguing those claims made by the Blackers against the NAB, I mention that, at the forefront of the allegations which the Blackers have made from the outset of the proceeding in support of those claims against the NAB has been the allegation that they were induced to enter into the dairying business on Springbrook by misrepresentations made to them by the NAB relating to such proposed business. 6 Such misrepresentations are alleged to have been made on behalf of the NAB by Mr John Neagle, who was, throughout most of the process of the Blackers' borrowing money from the NAB for the purpose of entering into the dairying business on Springbrook, the manager of the NAB's Bega branch. (He had held that position since 1989.) Not surprisingly, the Blackers had much contact with Mr Neagle in the course of the process which I have just mentioned. However, Mr Neagle did not continue as Bega branch manager throughout the entirety of that process. Just days before it was completed, Mr Neagle was dismissed without notice by the NAB, for what was shortly thereafter described to Mrs Blacker by Mr Neagle's temporary replacement as serious wrongdoing. The serious wrongdoing relied on by the NAB to dismiss Mr Neagle had had nothing to do with the Blackers themselves, although, subsequently, NAB officials did form the view that, as well as having engaged in the serious wrongdoing relied on to dismiss him, Mr Neagle had also engaged in serious wrongdoing regarding the Blackers' borrowing of money from the NAB for the purpose of entering into the dairying business on Springbrook. 7 Given the allegation to which I have referred above, it is not surprising that much of the evidence in the present proceeding has related to Mr Neagle's conduct as it was said to have induced the Blackers to enter into the dairying business on Springbrook and, in particular, to Mr Neagle's preparation and supply to the Blackers of certain cash flow (and associated) forecasts regarding that business when, according to the Blackers, they had not yet made a decision to enter into it. 8 Nor is it surprising that two claims relying on that allegation have been made by the Blackers from the outset of the proceeding and were given the greatest prominence at the trial of the proceeding. They are that the making by Mr Neagle, in the forecasts to which I have referred above, of the alleged misrepresentations amounted both to a breach by the NAB of its duty under subs 52(1) of the Trade Practices Act 1974 (Cth) ("the TPA") (with the Blackers placing reliance in that respect on s 51A of the TPA) and to a breach by the NAB of its duty of care to the Blackers under the general law, with resulting loss by the Blackers. 9 Three other claims made by the Blackers against the NAB from the outset of the proceeding, which claims did not assume the prominence at the trial of the proceeding of the two just mentioned, were: first, breach by the NAB of its duty under s 42 of the Fair Trading Act 1987 (NSW), with resulting loss by the Blackers; secondly, breach by the NAB of a contract to provide financial advice to the Blackers; and, thirdly, that the circumstances mentioned in s 7(1) of the Contracts Review Act 1980 (NSW) ("the CRA") existed in respect of a number of contracts entered into between the Blackers and the NAB in relation to the Blackers' dairying business on Springbrook. 10 As to the first of those three other claims, the Blackers acknowledged during (what were expected to be) final submissions before me that they gained no practical advantage by persisting with it and accordingly invited me to put it aside for present purposes. As to the second of those three other claims, the Blackers expressly abandoned it during the scheduled final submissions before me. As to the third of those three other claims, however, the Blackers have persisted with it and I will shortly discuss it further. 11 As well as the five claims which the Blackers had made from the outset of the proceeding, they had added, before the trial of the proceeding began before me, yet a sixth claim, namely, that the NAB had breached its duty under subs 51AA(1) of the TPA, with resulting loss by them. Again, that claim assumed little prominence at the trial of the proceeding compared to the first two which I have mentioned above, although the Blackers have also persisted with it. I will shortly discuss it further also. 12 It is convenient now to mention two decisions of this Court of which I became aware after the scheduled final submissions before me had been concluded and I had reserved my judgment in the proceeding: first, I discovered the existence of the decision of Beaumont J in Rochester Communications Group Pty Ltd v Adler (1996) 65 FCR 572, a decision to which neither the Blackers nor the NAB had drawn my attention during the hearing of the proceeding (although I consider that they should have); and, secondly, I became aware of the decision of French J in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 167 ALR 303, a decision made only after the conclusion of the scheduled final submissions. It is necessary that I should say something more about each of those two decisions. 13 Dealing first with Rochester Communications, I have already mentioned that the Blackers started the present proceeding more than four years after they had begun to operate their dairying business on Springbrook. (To be more precise, they started the proceeding on 27 November 1997, having begun to operate their dairying business on Springbrook immediately after having settled, on 23 September 1993, the purchase from the Batemans of the assets which I have mentioned above.) I have also already mentioned that, at the time when they started the proceeding, their claims included a claim that the circumstances mentioned in s 7(1) of the CRA existed in respect of a number of contracts entered into between the Blackers and the NAB in relation to the Blackers' dairying business on Springbrook. At that time, it was unnecessary for the question of this Court's jurisdiction to entertain such a claim to loom large in anyone's thinking, given the fact that s 7(1) of the CRA conferred jurisdiction on (relevantly) the Supreme Court of New South Wales (as will be seen in the next paragraph of these reasons for judgment) and given also the existence of the general cross-vesting scheme, so far as that scheme purported to cross-vest this Court with the jurisdiction in State matters of (relevantly) the Supreme Court of New South Wales. However, after the High Court's decision in Re Wakim; Ex parte McNally (1999) 163 ALR 270, it became obvious that, unless the Blackers' CRA claim fell within this Court's accrued jurisdiction, it did not fall within this Court's jurisdiction at all. A question therefore necessarily arose as to whether the Blackers' claim under s 7(1) of the CRA fell within this Court's accrued jurisdiction. 14 Section 7(1) of the CRA provides, "Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract; (b) it may make an order declaring the contract void, in whole or in part; (c) it may make an order varying, in whole or in part, any provision of the contract; (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument; or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument." The word "Court", as appearing in s 7(1) of the CRA, is defined in s 4(1) thereof as follows: "Court'' means: (a) the Supreme Court of New South Wales; or (b) in accordance with section 134B of the District Court Act 1973, and without affecting the jurisdictional limitations referred to in that section, the District Court of New South Wales; or (c) in accordance with section 12A of the Local Courts (Civil Claims) Act 1970, and without affecting the jurisdictional limitations referred to in that section, a Local Court; or (d) in accordance with section 89D of the Home Building Act 1989, and without affecting the jurisdictional limitations referred to in that section, the Fair Trading Tribunal." 15 It is apparent from the form of s 7(1) of the CRA that it is a "double function" provision: for a recent reference to such provisions, see Byrnes v The Queen (1999) 164 ALR 520 at 533, [37] (Gaudron, McHugh, Gummow and Callinan JJ). The provision both deals with substantive legal relations and gives a jurisdiction to specified New South Wales courts and a specified New South Wales tribunal with reference to those substantive legal relations. 16 When I discovered the existence of the decision of Beaumont J in Rochester Communications, it appeared to me that the jurisdictional issue dealt with in that case was materially identical to that raised by the form taken by s 7(1) of the CRA. 17 Rochester Communications was a case in which a question arose whether, in addition to having jurisdiction to entertain certain claims made under (relevantly) the TPA, this Court had jurisdiction to entertain a claim made under s 275(1) of the Industrial Relations Act 1991 (NSW). That subsection provided: "The Industrial Court may make an order declaring wholly or partly void, or varying, either from its commencement or from some other time, any contract or arrangement or any related condition or collateral arrangement under which a person performs work in any industry if the Industrial Court finds that the contract or arrangement or any related condition or collateral arrangement: (a) is unfair; or (b) is harsh or unconscionable; or (c) is against the public interest; or (d) provides or has provided a total remuneration less than a person performing the work would have received as an employee performing the work; or (e) was designed to, or does, avoid the provisions of an award or former industrial agreement; or (f) was designed to, or does, avoid the provisions of an agreement registered, or contract determination made, under Chapter 6." The "Industrial Court" being referred to in the provision was (not surprisingly) the Industrial Court of New South Wales. 18 Beaumont J said (at 573-74), "It is common ground that the allegations made in pars 64 and 79 of the amended statement of claim and the claims for relief made in pars h and 12-15 inclusive of the amended application depend for their ultimate source of jurisdiction upon the availability in these proceedings of the provisions of s 275 of the NSW Act. That jurisdiction is sought to be invoked in several ways by the applicants. They say that this Court is invested with the s 275 jurisdiction by virtue of the Court's accrued or pendent jurisdiction or, if that is not available, by virtue of the Court's associated jurisdiction granted by the terms of s 32 of the Federal Court of Australia Act 1976 (Cth). It should be noted at the outset, even if the jurisdiction claimed to exist might otherwise have been available, the applicant is immediately confronted by one significant threshold in this context, that is, in its terms, s 275(1) of the NSW Act vests the jurisdiction in question in the Industrial Court, but not in any other court. Indeed, a similar and, in my view, properly analogous situation was considered by the High Court of Australia in Smith v Smith (1986) 161 CLR 217. There it was held that the Family Court had no accrued or other jurisdiction to exercise the power of approval conferred on the Supreme Court of New South Wales by s 31 of the Family Provision Act 1982 (NSW). Referring to the accrued jurisdiction of federal courts, Gibbs CJ, Wilson and Dawson JJ said (at 237-238): 'The word 'controversy' is hardly apt to describe the present situation between the parties, who are in agreement in seeking orders from the Family Court. If, however, one inquires what was the subject-matter for determination in the proceedings in the Family Court, the answer to that question must be that two separate matters fell for determination — first, whether the maintenance agreement should be approved and secondly, whether the Family Court, acting for the purposes of s 31 of the Family Provision Act, could and should approve of the release contained in cl 7(a) of the agreement. That the questions are clearly severable is shown by the fact that they are committed by federal and State laws respectively to the decision of two different tribunals, and by the fact that approval under the Commonwealth Act is fully effective for the purposes of that Act although it has no effect whatever on the rights given by the State Act. If, however, contrary to our opinion, it be assumed that the two issues form part of a single justiciable controversy, of which the approval of the agreement forms an integral part, it does not follow that the Parliament has given the Family Court jurisdiction to resolve the whole of that controversy. Although, on the authority of the cases mentioned, the Parliament would on that assumption have power to invest the Family Court with jurisdiction, the question whether it has done so depends on the effect of the Family Law Act 1975 (Cth). For reasons we shall give, the jurisdiction of the Family Court does not extend to a 'matter' of which the grant of approval under s 31 of the Family Provision Act is a part.' On the question of accrued federal jurisdiction, Mason, Brennan and Deane JJ said (at 251): 'The Solicitor-General for New South Wales submitted that, in order to validly invest a federal court with accrued jurisdiction to determine a non-federal claim, the accrued jurisdiction must involve the exercise of the judicial power of the Commonwealth or something incidental to that exercise. The next step in the argument was to say that the object of a proceeding for approval of a release under s 31 of the State Act [the Family Provision Act] is to ascertain and declare, but not to enforce, what, in the opinion of the Court, ought to be the rights of the parties under a State law ... This function, so the argument ran, stands outside the judicial power of the Commonwealth and outside the concept of 'matter' in s 76 of the Constitution. It is unnecessary to decide whether this submission is well founded. It is sufficient for us to say that if the Family Court assumed an accrued jurisdiction to make an order under s 31 of the Family Provision Act approving a release in a maintenance agreement, the order would none the less not be an order of the Supreme Court. It therefore would not amount to an approval by the 'Court' which is referred to in s 31(3), with the consequence that the release would have no effect by virtue of s 31(2). It is quite impossible to read the reference to 'Court' in s 31, viewed in the light of the definition of 'Court' in s 6(1), otherwise than as a reference to the Supreme Court. It follows that the Family Court does not possess accrued jurisdiction to approve a release for the purposes of the State Act.' In my opinion, that reasoning is squarely on point in the present case and, of course, I must follow it." 19 (I make the incidental point about Rochester Communications that, even though the case was being dealt with before the High Court's decision in Wakim, the applicants in it were unable to seek support for their position from the general cross-vesting scheme, in so far as that scheme purported to cross-vest in this Court (relevantly) New South Wales State jurisdiction. That was because the general cross-vesting scheme purported to cross-vest in this Court only the State jurisdiction of (relevantly) the Supreme Court of New South Wales, not the State jurisdiction of other New South Wales courts, such as the Industrial Court of New South Wales.) 20 Given that the jurisdictional issue dealt with in Rochester Communications appeared to me to be materially identical to that raised by the form taken by s 7(1) of the CRA and given also that I consider it appropriate, as a matter of comity, to follow decisions of other single Judges of this Court unless satisfied that those decisions are plainly wrong, I formed the provisional view that this Court had no jurisdiction to entertain the Blackers' CRA claim. I therefore sought the written submissions of the parties on the question whether Rochester Communications was either distinguishable or plainly wrong. 21 Turning now to Berbatis, I have already mentioned that, before the trial of the proceeding began before me, the Blackers had added to those claims which they had made from the outset of the proceeding a claim of breach by the NAB of its duty under subs 51AA(1) of the TPA, with resulting loss by them. 22 In Berbatis, the applicant had also made a claim of breach of duty under subs 51AA(1) of the TPA, but, at the outset of the hearing of that claim, French J raised the question of subs 51AA(1)'s validity. Taking the view that the provision's invalidity was "seriously arguable" (see at 306, [7]), French J also took the view that, despite the respondents' having made a conscious decision before the hearing not to take any point at the hearing about subs 51AA(1)'s validity, s 78B of the Judiciary Act 1903 (Cth) prohibited the Court from proceeding to hear and determine that claim unless there had been compliance with its provisions. In French J's view, once the Court had itself formed the view that a real question arose as to subs 51AA(1)'s validity, s 78B operated, irrespective of the attitude to that question of the parties to the proceeding. He therefore required the applicant to send out notices under the section and adjourned the proceeding for argument on the validity of subs 51AA(1). 23 Given my attitude to the decisions of other single Judges of this Court which I mentioned three paragraphs ago in these reasons for judgment, I formed the provisional view that I should take steps to ensure that notices were sent out under s 78B of the Judiciary Act, raising the question of the validity of subs 51AA(1) of the TPA, and should then hear argument on that question. I therefore sought the written submissions of the parties on the question whether Berbatis was plainly wrong. 24 On the Rochester Communications issue, I received substantive written submissions from the Blackers and contrary substantive written submissions from the NAB. On the Berbatis issue, I received substantive written submissions from the NAB only, which submissions the Blackers, in effect, adopted. 25 I will deal first with the Rochester Communications issue. 26 In spite of the fact that I am unable to see how I could have made any clearer than I did my desire to receive submissions from the parties on the question whether the decision of Beaumont J in Rochester Communications was either distinguishable or, if not, plainly wrong, the Blackers' submissions on their CRA claim were notable for their not even condescending to make reference to the existence of that decision, let alone seeking either to distinguish it or to establish that it was plainly wrong. I mention also that, as the Blackers were aware at the time of making their submissions, a Full Court of this Court, in Edensor Nominees Pty Ltd v Australian Securities & Investments Commission (1999) 168 ALR 676 (Hill, Sundberg and Mansfield JJ), had recently referred to Rochester Communications: see at 684, [27]. Such reference appears to me plainly to have been an approving one. In the circumstances, I propose to act on the provisional view which I had earlier formed and hold that this Court has no jurisdiction to entertain the Blackers' CRA claim. I may express my conclusion briefly by saying that, not only was the decision of Beaumont J in Rochester Communications not distinguishable or plainly wrong, but it was on point and right; a State statutory provision performing a double function (see par 15 above) cannot be a source of accrued jurisdiction in this Court. (See also, to similar effect, Jeffcoat v Queensland Coal & Oil Shale Mining Industry (Superannuation) Ltd 2000 [FCA] 655 (Kiefel J, 19 May 2000, unreported), [22].) I will, however, mention before leaving this issue that the submissions which the Blackers actually made on it were pervaded by a failure to distinguish between, on the one hand, statutory provisions which confer subject-matter jurisdiction on a court and, on the other hand, those which either confer on it powers capable of being exercised, or prescribe rules of decision to be applied, in the course of the exercise of such jurisdiction. 27 I will deal next with the Berbatis issue. 28 Perhaps surprisingly, the submissions which I received on that issue from the NAB were to the effect that French J had been plainly wrong in Berbatis and that I should therefore not take steps to ensure that notices were sent out under s 78B of the Judiciary Act, raising the question of the validity of subs 51AA(1) of the TPA, and then hear argument on that question. Furthermore, the submissions on the issue by the Blackers, in effect adopting those of the NAB, were not filed until the last day of the law term in 1999. That meant that, if I were to decide to require the sending out of notices under s 78B and then hear argument on the question of the validity of subs 51AA(1), such argument could not realistically occur until, at the very earliest, the start of the law term in 2000. In those circumstances, I decided to postpone considering whether French J had been plainly wrong in Berbatis, in order to see whether he might decide the substantive question in the intervening period. In the result, he did: see Australian Competition & Consumer Commission v CG Berbatis Holdings Pty Ltd (2000) 169 ALR 324. In spite of the view which his Honour had earlier taken that the invalidity of subs 51AA(1) of the TPA was seriously arguable, he held in the result that the subsection was not invalid. Given the attitude taken by the parties in their submissions on the s 78B question, I have not sought their further submissions on the question whether French J's second Berbatis decision was plainly wrong; it is apparent to me that they would submit that it was not. Furthermore, I am not satisfied that it was plainly wrong. In the result, I propose to proceed on the basis that the Blackers' claim of breach by the NAB of its duty under subs 51AA(1) of the TPA, with resulting loss by the Blackers, is properly before me for determination. 29 (Before leaving the question of the claims by the Blackers with which I am to deal in this proceeding, I should mention two further matters arising out of the Blackers' written submissions on the Rochester Communications issue. First, the Blackers applied in a conditional way in those submissions for leave to amend further their statement of claim to introduce yet another claim, the condition being that I was of the view that their claims under the CRA and of breach of duty under subs 51AA(1) of the TPA with resulting loss were both incompetent. That application was, not surprisingly, opposed by the NAB. However, as I am proceeding herein on the basis that their claim of breach of duty under subs 51AA(1) of the TPA with resulting loss is competent, the condition on which their application for further amendment of their statement of claim was made has not been satisfied and I therefore need not deal with that application. Secondly, as I understood their submissions, the Blackers submitted that, if I were of the view that their CRA claim was incompetent, I should "transfer that aspect of the case to the Supreme Court [of New South Wales] for that court to exercise the relevant remedial jurisdiction pursuant to the Cross-Vesting legislation which still remains on foot". As I understand the quoted words, what was being submitted was that, if I were of the view that the Blackers' CRA claim was incompetent, I had power under subpar 5(4)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) to transfer that claim to the Supreme Court and should exercise that power. On the assumptions that: first, that was what was being submitted; secondly, subpar 5(4)(b)(iii) is valid, despite Wakim (compare Hooper v Kirella Pty Ltd (1999) 167 ALR 358 at 374-75, [71] (FCA: Wilcox, Sackville and Katz JJ)); thirdly, subpar 5(4)(b)(iii) was intended to have any potential operation in the present circumstances, given the presence in the TPA of s 86A; fourthly, subpar 5(4)(b)(iii) was intended to permit the transfer of part only of a proceeding; and, fifthly, subpar 5(4)(b)(iii) is capable of being construed as permitting the transfer of a part of a proceeding, over which part the Court has no jurisdiction (compare McIntosh v National Australia Bank (1988) 17 FCR 482 (Gummow J)), and is so construed; I nonetheless reject the application as not being in the interests of justice, given the stage which the present proceeding has reached. (Of course, my rejection of that application, will not prevent the Blackers, if so advised, from making application to the Supreme Court of New South Wales for an order pursuant to s 11(2) of the Federal Courts (State Jurisdiction) Act 1999 (NSW), on the basis that I have made a relevant order within the meaning of s 11(1) of that Act by deciding or determining that this Court has no jurisdiction to hear and determine their CRA claim.)) 30 With the outlines of the Blackers' and the NAB's respective claims against each other now, I hope, relatively clear, it is convenient to turn to the facts of the matter, concentrating, in the first instance at least, on those relevant to the Blackers' claims of breach by the NAB of its duty under subs 52(1) of the TPA and of breach by the NAB of its duty of care to the Blackers under the general law, with resulting loss by the Blackers. I begin with certain background information about the Blackers which takes one up to the end of 1992. 31 Mr Blacker was born in Bega in 1953. He lived with his family (apparently consisting of his parents, one brother and two sisters) in Bega until 1966, at which time he moved with them to a nearby beef farm which, I gather, they had owned and operated since the time of his birth. He worked on the beef farm from his early years. He also attended primary and secondary school in Bega (even after the family's move to the beef farm) and completed the school certificate in 1969. In the following year, he completed a farm management course at an agricultural college in Yanco, New South Wales, which course included brief exposure to the theory and practice of dairy farming. Having completed the course, he returned to Bega, where he began to work full time on the family beef farm. In 1974, his father died, leaving to one of his sisters "East Quira", one of the three separate properties which had together constituted the family beef farm, and to the other of his sisters "Willow Park", another one of those three separate properties. The third of those three separate properties was "Kanoona", a property of some 780 acres in area which his mother appears to have owned even before her husband's death. In 1975, he and his brother together bought East Quira from the sister who owned it. I gather that he and his brother operated the property as a beef farm (as well as continuing to work on Kanoona). In 1977, he and Mrs Blacker were married. In 1982, he sold his interest in East Quira to his brother and acquired from his mother at a nominal price a part of Kanoona, known thereafter as "South Kanoona". (I gather that, at the same time, his brother acquired the balance of Kanoona.) Mr Blacker operated South Kanoona as a beef farm. In 1985, he bought "Willow Park" from the sister who owned it. I gather he then operated a beef farm on Willow Park, as well as on South Kanoona. In 1989, he sold Willow Park. At that time, he began deer farming, as well as beef farming, on South Kanoona. However, deer farming was not successful and by about late 1992, the Blackers could not make a living from South Kanoona, even from the combination of beef and deer. Mr Blacker was then finding it necessary to spend up to five days a week off the farm, working for others, in order to supplement his income. 32 It is convenient to mention now that Mr Blacker appears to have made a practice, during his ownership of it, of carving out of South Kanoona by subdivision a number of relatively small blocks of land, which blocks he then sought to sell. The last such subdivision occurred around 1989, when three blocks were created for the purpose of sale. As of the end of 1992, one of those three blocks (usually called in the evidence the "bush block") remained to be sold. 33 As to Mrs Blacker, I do not know the place or year of her birth, but do know that she left high school in Cowra, New South Wales, in 1973, having obtained the school certificate. In 1974, she attended the Cowra Technical College, taking a secretarial course. She then worked at a pharmacy in Cowra and, in 1975, became employed by the Bank of New South Wales in Bega as a junior ledger machinist and batch machinist. While employed at the bank, she undertook a teller course. As I have already mentioned, in 1977, she and Mr Blacker were married. She remained with the bank until 1980, but the first of her and Mr Blacker's two children was born in that year and she has not worked off the family's farm since then. 34 Given their difficulties by about late 1992 in surviving on South Kanoona, the Blackers were then considering finding some entirely different means of earning a living than beef or deer farming. Among the things which they considered was the purchase of an existing menswear business in Bega. Being then customers of the Bega branch of the NAB (Mr Blacker having been one, according to him, since 1971 and Mrs Blacker having been one, according to her, since about 1980), they were in contact with the bank about the menswear business. For instance, Mr Ewan Munro, who was the Blackers' accountant, wrote to Mr Neagle on 29 January 1993, enclosing certain financial information about the business and promising more. The Blackers also met with Mr Neagle about the proposed purchase of the business. (I should perhaps add here that the menswear business discussions had not been the Blackers' first contact, as customers, with Mr Neagle. They had had contact with him on numerous occasions throughout his tenure as the Bega branch manager, in particular, regarding an overdraft which they had from the bank and, in connection with that overdraft, the blocks subdivided around 1989.) 35 Some time later, when Mrs Blacker was at the bank for another purpose, Mr Neagle approached her and told her that a competitor of the business which they were contemplating buying was about to move into larger premises, which move would increase competition with the business which they were contemplating buying. 36 In the scheduled final submissions before me, it was submitted on behalf of the Blackers that I should conclude that, in reliance on Mr Neagle's information about the competitor, the Blackers had ceased to pursue the menswear business proposal. However (in just one of many breaches of a solemn assurance given to me by both the Blackers and the NAB before the scheduled final submissions began that I would be asked to make no finding of fact without my being directed to the specific evidence relied on in support of that finding), no specific evidence to that effect was pointed to, nor am I aware of any myself among the thousands of pages of affidavits, transcript of oral evidence and documentary exhibits in the proceeding. Instead, I am aware only of Mrs Blacker saying in evidence that, "At about the same time [that is, the same time as her conversation with Mr Neagle] the menswear shop we were contemplating buying was taken off the market". In those circumstances, no question appears to me to arise as to the effect of Mr Neagle's information on the Blackers' willingness to consider further the purchase of the menswear business. However, I should record now two matters about Mr Neagle's warning to Mrs Blacker about the menswear business: first, Mrs Blacker asserted in evidence that it had caused her to form the view that she and her husband could trust Mr Neagle to provide them with advice which was in their best interests; and, secondly, it was conduct by Mr Neagle which certainly went beyond the mere role of deciding whether or not to grant (or to recommend to his superiors whether or not to grant) finance in connection with a proposed business venture by a customer. As to the second of those matters, Mr Neagle's oral evidence was that: he had thought that, by giving them the warning which he did, he would be able to give the Blackers "a bit of a helping hand"; he had intended them to take the warning "seriously"; and he had wanted them to "trust and rely on" the warning. 37 After the false start with the menswear business, the Blackers turned their attention to the possibility of acquiring a local dairying business, a type of business of which, in substance, neither of them had had any prior experience. (It appears that they had given consideration to acquiring such a business even earlier, but that nothing had come of it at that time.) Their consideration of that possibility led them to become aware of the Batemans' business, which was not then being offered for sale. However, after some preliminary discussions between the Blackers and Mr Bateman, Mr Bateman told them that the asking price for his and his wife's milk quotas, farm, and the plant and cattle herd on it was $1.68M and invited the Blackers to obtain certain financial information from his and his wife's accountant. 38 Shortly thereafter (at about the end of April 1993), the Blackers spoke to Mr Munro (their accountant) about the Batemans' assets. They told him what Mr Bateman was asking for those assets and what he had said about obtaining financial information from his and his wife's accountant. They told Mr Munro that they could pay for the Batemans' assets by selling South Kanoona (excluding the bush block) and borrowing $1M. 39 After obtaining certain financial information from the Batemans' accountant, Mr Munro prepared a two-page document making cash flow (and associated) forecasts regarding the operation by the Blackers on Springbrook of a dairying business. Mr Munro described those forecasts in evidence (having been called as a witness by the Blackers) as having been of a preliminary kind. (Those forecasts, and the broadly similar forecasts later done by Mr Neagle which are at the heart of the present proceeding, were usually referred to before me as "budgets"; I will adopt the same terminology hereafter.) Mr Munro's assessment of his budget as having been of a preliminary kind was one with which Mr Neagle (having been called as a witness by the NAB) agreed in the course of his cross-examination, saying that Mr Munro's budget had been "simply a very preliminary view of the matter", as far as he was concerned. Further, Mr Richard Ivey, an expert witness called by the NAB, also agreed in substance with Mr Munro's assessment of his own budget, acknowledging in his (Mr Ivey's) evidence that Mr Munro's budget was "very much an overview type of document". It is appropriate, however, even though Messrs Munro, Neagle and Ivey all considered that it was preliminary in character, that I set out in some detail the substance of Mr Munro's budget, because it assists in understanding both the budgets subsequently prepared by Mr Neagle and the criticisms which may be made of them. 40 The first thing which Mr Munro did in his budget was to predict the milk production from the operation of a dairying business on Springbrook over a thirty-six month period, beginning in July (1993, although the year was not actually mentioned). 41 Mr Munro began the thirty-six month period showing 175 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the twenty-second month of the thirty-six to 220 and he finally increased in the twenty-seventh month of the thirty-six to 250. The starting number was Mr Munro's prediction of the number of cows being milked on Springbrook as of July 1993, based on some numbers as to cows then being milked on the property, which numbers Mr Munro appears to have had at the time. As to the source of the increase in numbers, it appears that Mr Munro expected that it would come both from natural increase of the herd and from purchase, such purchase to be financed by the sale of the bush block. As to Mr Munro's choice for his timing of his three increases, the evidence was silent. 42 For each of the thirty-six months in the period, Mr Munro multiplied the number of cows being milked that month by an average number of litres of milk produced per cow per day. The latter number was a variable number, depending both on the particular month of the year and on the particular year in the three year period. According to Mr Munro, he had obtained those variable numbers from a generally-available document published by the Bega Co-operative, which document was applicable to the local district. 43 Having multiplied the number of cows being milked in a month by the average number of litres of milk produced per cow per day for that month, Mr Munro then multiplied the product of that multiplication by the number of days in that month (with some distortions in that respect) to arrive at a total number of litres of milk produced per month by the dairy herd. The monthly figures were then added to one another to produce yearly totals. Those yearly totals were 1,238,000 litres for the first year, 1,358,000 litres for the second year and 1,607,000 litres for the third year, a total of 4,203,000 litres over the three-year period. 44 (All of the information from Mr Munro's budget to which I have been referring above appeared on the first page of Mr Munro's two-page document, which page was headed "Milk Production Budget". All of the remaining information from Mr Munro's budget to which I am now about to refer appeared on the second page of Mr Munro's two-page document, which page was headed "Cash Income Budget".) 45 Having arrived at figures for total annual milk production over each of the three years, Mr Munro then calculated the proceeds of the sale of that milk, showing sales in each year which were equal to the exact number of litres of milk produced in that year. He treated a fixed quantity of that milk as New South Wales quota milk, which would be sold at a rate per litre which did not vary over the entire three years, therefore producing an identical dollar amount each year. The balance of each year's production, he treated as either Australian Capital Territory quota milk or non-quota milk, treating all that milk as bringing a rate per litre (less than that for New South Wales quota milk) which also did not vary over the entire three years. (Although his budget did show that the rate per litre for Australian Capital Territory quota milk and non-quota milk was greater in the first year than in the second and third years, that was merely a typographical error.) He then multiplied the total of the non-NSW quota milk for each year by that fixed rate per litre, arriving at a dollar amount for the proceeds of that milk for each year. He then added together the NSW quota milk dollar amount and the non-NSW quota milk dollar amount in order to obtain a total dollar amount for proceeds of milk sales for each of the three years. (In calculating the price each litre of milk would bring, Mr Munro used a net price per litre, that is to say, excluding certain freight costs and levies which would necessarily be deducted from the gross price per litre.) 46 Mr Munro then added to those dollar amounts one more dollar amount, namely "Cattle Sales & Calves", showing the same dollar amount for each of the three years. 47 Having arrived at a total income for each year, Mr Munro then deducted expenditure from that total income, under four headings: "Salaries", "Fodder", "Farm Costs" and "Interest". 48 Salaries were subdivided into two in the first of the three years, representing drawings by the Blackers themselves and an employee's wages. The total salaries figure increased slightly in the third year, having remained constant for the first two, but was not subdivided in the second and third years. 49 As to the amounts for fodder, they were $120,000, $125,000 and $140,000 for the three years respectively. Those amounts represented direct fodder costs only and not such indirect costs of fodder as seed and fertiliser, repairs and maintenance, fuel and oil and irrigation; in other words, they represented the cost of buying fodder, as opposed to the cost of growing it on Springbrook. (Indirect fodder costs (together with other, non-fodder related, farm costs) were subsumed under Mr Munro's heading "farm costs".) 50 Mr Munro calculated his direct fodder costs in the same way that he had calculated the average number of litres of milk produced per cow per day, that is to say, by using generally-available information from the Bega Co-operative. That information was that it cost between $300 and $350 per cow per year "to maintain purely in fodder, grain and hay as feed". 51 Of course, in order to make use of that information, Mr Munro had to multiply it by the average number of cows which he was predicting would be on Springbrook each year. I have already set out above information as to the number of cows which Mr Munro was predicting would be milked on Springbrook during each month of the thirty-six month period. From those figures, one discovers that Mr Munro was predicting that there would an average of: 194 cows being milked on Springbrook during the first year; 205 cows being milked during the second year; and 245 cows being milked during the third year. 52 However, Mr Munro did not merely multiply an amount derived from the Bega Co-operative's information by the average number of cows being milked on Springbrook in a particular year in order to arrive at his fodder cost for that year. It is recognised that in order to have a herd containing a certain number of cows being milked at any one time, the usual farm will have a herd of a greater number. That greater number is required in order to take account of the facts that a mature cow does not produce milk for about two months every year (the "drying-off" period) and that heifers are introduced into the herd to replace mature cows about to end their lives as milk producers, whether through old age, illness or some other cause. I am satisfied that, as a rule of thumb, if a herd contains one hundred cows being milked, it will also contain at the same time an additional twenty "dry" cows (a number equal to 20% of the milking cows) and an additional seventy-two heifers (a number equal to 60% of the mature cows, both milking and "dry") or, in other words, that the total herd will be 192% of the number of cows being milked. 53 Instead, however, of multiplying an amount derived from the Bega Co-operative's information by 192% of the average number of cows which he was predicting would be milked on Springbrook in a year, Mr Munro, according to his evidence, multiplied an amount derived from the Bega Co-operative's information by 200% of the average number of cows which he was predicting would be milked on Springbrook in a year, in order to produce his yearly fodder costs. Dividing each of Mr Munro's three yearly fodder allocations by double the average number of cows which he was predicting would be milked in that year yields the following figures for fodder costs for each cow in the herd: $310 for the first year, $305 for the second year and $286 for the third year. (Why Mr Munro's figure for the third year fell below the Bega Co-operative's minimum figure of $300 per cow per year was not explained in the evidence; however, if Mr Munro had actually used a multiple of 1.9, rather than a multiple of 2.0, as he said, that would have meant that his yearly figures for fodder costs per cow per year (ignoring cents) began at $325 in the first year (the midpoint between the two figures in the Bega Co-operative's range) and then fell to $320 in the second year and to $300 in the third year (the lower of the two figures in the Bega Co-operative's range). It may be that, in his evidence, Mr Munro wrongly recollected the multiple which he had used. The yearly figures derived from the use of a multiple of 1.9 are so striking by reference to the Bega Co-operative's range of figures that a false recollection in that respect by Mr Munro does not seem unlikely.) 54 As to the amounts for farm costs, Mr Munro intended by them to comprehend "the normal overheads of insurance, fuel, electricity, things like that. Normal operating costs" (obviously including indirect fodder costs, as already discussed). His farm costs amounts increased in each of the second and third years. 55 The amounts for interest, which remained constant over the three-year period, were said to represent interest of 12% on a loan of $1M. 56 After deducting the nominated expenditure from the total income, Mr Munro concluded that there would be a positive net cash flow of $9,000, $29,500 and $65,750 respectively for each year of the three-year period. Part, at least, of those positive net cash flows would, no doubt, have been available to reduce the outstanding amount of the $1M borrowing then in contemplation. 57 Mr Munro discussed his budget with the Blackers. According to his evidence, he told them that the position disclosed by it was "tight", but he recommended neither for nor against the proposal. Instead, "I asked them to see, to have a yarn to, John…." 58 That suggestion by Mr Munro was the subject of considerable debate before me. It was the Blackers' evidence that Mr Munro had merely referred to "John", without adding a surname, and that they had understood him to be recommending that they speak to John Neagle, their bank manager, in order to get a second opinion about the proposal's viability. In the scheduled final submissions before me, the NAB submitted that it "defie[d] rationality" to say, as the Blackers had done, that Mr Munro had merely referred to "John" without adding a surname; for him to have done so could only be explained, it was said, on the basis that he had "suffered some temporary mental aberration involving a serious lapse in his professionalism and dealings with his clients, which was entirely out of character". The NAB further submitted that Mr Munro's evidence had been that what he had said to them was that they should see "John Hukins", the latter being another accountant experienced in the dairy industry. 59 I reject those submissions by the NAB. Mr Munro neither said in terms in his evidence that, nor was he asked in terms in cross-examination by the NAB whether, he had said "John Hukins", rather than just "John", to the Blackers. Furthermore, Mr Munro's whole sentence, part only of which I have quoted in the next preceding paragraph, read as follows, "I asked them to see, to have a yarn to, John, and meaning John Hukins, to another accountant to check their [sic] figures". I take Mr Munro's use of the word "meaning" to imply that he did use to the Blackers the word "John" only, although he intended to convey by the use of that word "John Hukins". In the result, I accept the Blackers' and Mr Munro's evidence that Mr Munro did refer to "John" only and the Blackers' evidence that they understood Mr Munro to be referring to Mr Neagle, although at the same time I accept Mr Munro's evidence that his intention had been to refer to Mr Hukins. 60 As I have been dealing above with Mr Munro's evidence, there is one more matter referred to in that evidence which I should now mention. 61 Mr Munro said that he knew, at the time of which I have been speaking, that the Blackers intended to make the contents of his budget known to the NAB. At the same time, however, based on his experience of the making of applications for finance such as that which the Blackers were contemplating making, Mr Munro did not expect that the NAB would be content to receive from him merely the budget which he had thus far produced when deciding whether to lend money to the Blackers; instead, it would require from him more detailed figures. However, that did not occur in the Blackers' case. 62 The matter to which I have just referred was also the subject of some evidence by Mr Neagle and it is convenient to refer to that evidence now. It was suggested to Mr Neagle in cross-examination that Mr Munro's budget was not something that Mr Neagle "could possibly go forward with by itself in relation to any proposed loan", to which Mr Neagle replied, "No, I couldn't submit it just like that". Later in Mr Neagle's cross-examination, reference was made to the various budgets prepared by Mr Neagle himself, which budgets are central to the Blackers' misrepresentation case, and the following exchanges occurred: "In terms of preparing cashflow budgets, you undertook that processweknow, commencing on 12 May, correct? --- For Blackers, yes. Setting Blackers to one side for a moment, in terms of other farm lending, the usual practice was it, was to insist upon the production of budgets of that type, that is to say the type that you have prepared up [sic] on and after the 12 May, but from the client or customer's own accountants? --- Not necessarily, some of the clients prepared their own budgets. In the case of the Blackers, they didn't personally prepare their own budgets, did they? --- No. And we know that Mr Munro didn't prepare the sort of cash flow budget of the type that would ordinarily be expected from a client or from a client's accountant, don't we? --- Yes." It thus appears that, in the preparation of budgets in the case of the Blackers, Mr Neagle, contrary to the NAB's usual practice, performed, not only his own usual function, but also simultaneously a function which would usually have been performed by the accountant of a prospective borrower (assuming that that prospective borrower had an accountant). Furthermore, Mr Neagle did so, knowing full well when he did so that the Blackers did have an accountant. Why he did so is a matter about which he was not specifically asked, nor did he volunteer an explanation. 63 To return now to the chronology of events, shortly after being advised by Mr Munro to see "John", the Blackers first (in about early May 1993) saw Mr Neagle about Springbrook. Naturally, the Blackers gave in evidence their accounts of what had been said at that meeting and Mr Neagle was cross-examined about (most of) the assertions contained in those accounts. By and large, Mr Neagle agreed in cross-examination with the Blackers' accounts of what had been said at that meeting, although, as to one or two of the matters put to him as having been said, he either answered that he did not recall or that he denied it. Further, as to some of his answers, it is not easy to tell precisely what Mr Neagle was intending to convey. In what follows, I propose to deal only with Mr Neagle's evidence as to what was said at the meeting, rather than dealing with the Blackers' evidence as well. I do so because I find it unnecessary to resolve such conflicts as exist between their respective accounts as to what was said. As will be seen below, looked at from the Blackers' point of view, it is sufficient for their purposes that I proceed on the basis of acceptance of Mr Neagle's evidence about what was said between them, not only at this meeting, but on subsequent occasions as well. 64 I first set out a number of matters put to Mr Neagle about the Blackers' accounts of things said by the Blackers at that meeting with which, as I understand his evidence, Mr Neagle agreed: the Blackers had said that they were looking at Dick Bateman's dairy; the Blackers had told him something of the set up of the property, including that there was a "travelling" irrigation system; the Blackers had said that Mr Bateman's price was $1.68M; Mr Blacker had said that his brother was going to buy South Kanoona for $700,000 and that that sum would be used as a deposit; the Blackers had told him what the milk quota attached to the property was; Mr Blacker had said that, if he purchased the property, he would convert the existing irrigation system from the "travelling" type to the "[motor]bike shift" type; the Blackers had said that the existing milk vat was too small and would need to be upgraded (although Mr Neagle qualified his acceptance that that had been said by adding, "Over a period of time"); the Blackers had said that they had never run a dairy farm themselves; the Blackers had asked him to do a budget, which should be "conservative"; and the Blackers had said that they were there [that is, seeing Mr Neagle] "to give them an opinion about it [that is, entering into the dairying business on Springbrook] by reason of what the cashflows would show". 65 I next set out a number of matters put to Mr Neagle about the Blackers' accounts of things said by him at that meeting with which, as I understand his evidence, Mr Neagle agreed: he had told the Blackers immediately that he could run a budget on the bank's computer system; he had asked the Blackers about the number of cows being milked at Springbrook; he had told the Blackers that most of his dairy clients did monthly herd recording to show which cows were more profitable; he had told the Blackers that he had all the figures he needed; he had told the Blackers that, having produced a budget, he would "then let them know whether or not they could proceed"; he had asked the Blackers for some time to do the figures and had told them to come back; and he had told the Blackers that it would be necessary to get an answer from Canberra. 66 I next set out a number of matters put to Mr Neagle about the Blackers' accounts of things said by the Blackers at that meeting as to which I am not certain what Mr Neagle's response was intended to mean. He was asked whether the Blackers had told him that the costs of changing the type of irrigation and upgrading the milk vat should be included in the budget; he answered, "All the improvements [sic] costs that we discussed were put in the budget". He was asked whether the Blackers had told him that they would need to buy replacement heifers, because Mr Bateman was not rearing any at that time; he answered, "I allowed for heifer purchase in the budget". He was asked whether the Blackers had told him that they were intending to take their machinery with them; he answered, "Not all their machinery. They discussed the little four wheel bike or what--I can't remember the sort of bike it was, to do the ---". He was then asked whether the Blackers had said that they would take their motor bike for moving the irrigation system and their post driver, because extra fencing would be needed; he answered, "I can't remember the post driver. I remember the bike." I take Mr Neagle's first two answers as probably intended to convey assent to the questions asked. I take his last two answers as probably intended to convey that the only machinery which he remembered the Blackers' telling him about was their motor bike. 67 I next set out a number of matters put to Mr Neagle about the Blackers' accounts of things said by him at that meeting as to which I am not certain what Mr Neagle's response was intended to mean. He was asked whether he had told the Blackers that the budget he would do would be "based on the bank's own computer records". His answer was, "Banks - I could punch up a budget, yes, out of the computer". He was asked whether he had told the Blackers that milk production would be significantly higher in the spring. He answered, "Normally it is, yes". He was asked whether he had told the Blackers that they should be able to produce some specified number of litres of milk. His answer was, "I can't remember saying that - I can't remember what exactly what litres I said". Whether the first of those answers was intended to convey assent to the question, I am unable to say. The second and third answers appear to have been intended to convey assent to the question. 68 Mr Neagle was asked whether he had said to the Blackers that the bank had all of the milk prices and freights and levies on the computer. His answer, which (like so many of his answers to questions put to him, some of which I have already set out above) was not directly responsive, was, "I had them available to me, yes". He was next asked whether he had said to the Blackers that there were other input figures which he could use for the purpose of working out the cash flow for them, which question he answered in the affirmative. 69 Mr Neagle was asked some questions specifically relating to discussion at the meeting about Mr Munro, with which it appears to me to be appropriate to deal separately. He was asked whether the Blackers had told him that they had been advised by Mr Munro and that he had done a budget for them. Mr Neagle's answer was, "Yes, they said they'd seen Ewan Munro, yes". (He also acknowledged that, at the time of the first meeting with the Blackers, he had a copy of Mr Munro's budget.) Mr Neagle was asked whether the Blackers had said to him that Mr Munro had advised them that the figures were "pretty tight". He answered that he could not recall that. Mr Neagle was also asked whether he had told the Blackers that he would not use Mr Munro's figures in preparing his own budget. Mr Neagle said he could not remember saying that. 70 Mr Neagle was also asked a number of questions, not about what had been said at the meeting, but about what he had known at the time. He agreed that he knew at that time that the Blackers were not dairy farmers, had never run a dairy farm themselves, had no capacity to do any budgets for themselves and had "no familiarity with prices of feed and freight and running costs". 71 About two weeks later, the Blackers again saw Mr Neagle, by which time he had prepared a budget dated 12 May 1993. It covered the same three-year period as Mr Munro's budget had. It will obviously be necessary for me to deal in some detail with the content of that budget (as well as dealing with certain aspects of two subsequent budgets relating to Springbrook prepared by Mr Neagle, so far as they differed from those of his first). Before I do so, however, I will mention certain evidence by Mr Neagle about what he said to the Blackers at the meeting at which he gave them the 12 May 1993 budget. 72 First, according to Mr Neagle, at that meeting, "I said they [that is, the figures in the budget] were good". Secondly, Mr Neagle was asked some questions in cross-examination about whether (as they asserted) he had told the Blackers at that meeting that the budget showed that they would have "a $70,000 profit in the second year". The relevant evidence was as follows: "So is it possible that you said to them that at the end of the second year … [they] would have a [$]70,000 profit?---No. … You've got no recollection, one way or the other, as to what you said to them about the profit at the end of the second year?---I thought I told them there was going to be a profit of about [$]30,000. I can't remember. You've got a recollection that you told them that there was a profit of about [$]30,000 in the second year?---I can't remember. … You now say, do you, that you think instead of saying that there would [be] a [$]70,000 profit in the second year … in fact you said to them there will be a [$]30,000 [profit] - - -?---No, I can't remember what I said to them. I wouldn't have said there would [be] a [$]70,000 [profit] because it [that is, the budget, did not] show a [$]70,000 profit. But you've offered up today a reference to a [$]30,000 profit?---No, I didn't offer that all, sorry, that's what - - - That's what what?---That's what the budget shows there but I'm not saying that's what I told them then. … You gave them the document to take away, you didn't say anything at all about profit even though you say today that you think that there was a $30,000 profit---No, I can't remember saying there[ ] was a [$]30,000 profit then." About the evidence which I have just quoted, I make the following observations. It was obviously Mr Neagle's belief, at the time when he gave his evidence before me, that his 12 May 1993 budget had shown that the Blackers would have about a $30,000 profit in the second year from the operation of a dairying business on Springbrook. If Mr Neagle had the belief at the time when he gave his evidence before me that his first budget had shown a profit of about $30,000 in the second year, I infer that he also had that belief at the time of his meeting with the Blackers at which he gave them that budget. In those circumstances, I am prepared to accept, in spite of his later refusals to be positive about it, that he "told them there was going to be a profit of about [$]30,000" in the second year, as he at first said in oral evidence he thought he had. 73 (I should, perhaps, add here that, according to other evidence which he gave, Mr Neagle reached his conclusion that his 12 May 1993 budget had shown that the Blackers would have about a $30,000 profit in the second year from the operation of a dairying business on Springbrook by subtracting the amount of the closing balance in the Blackers' working account #1 at the end of July 1994 ($27,240) from the amount of the closing balance in their working account #1 at the end of June 1995 ($55,310), both of those figures being shown in his budget. Why that difference, which was actually $28,070, was thought by him to represent the profit predicted to be earned from the operation of a dairying business on Springbrook between the dates of those two closing balances, Mr Neagle did not explain in his evidence. Furthermore, I note that, on the assumption that the process of comparing two closing balances in the Blackers' working account #1 would yield the profit to be earned by a dairying business between the dates of those two closing balances, then Mr Neagle's calculation did not compare the correct closing balances in order to determine the profit for the second year. That is because he compared the closing balance at the end of June 1995 with the one at the end of July 1994, rather than with the one at the end of June 1994. If one compares the closing balance at the end of June 1995 ($55,310) with the closing balance at the end of June 1994 ($38,270), one discovers that the difference (and, therefore, according to Mr Neagle, the profit predicted for the second year) is not about $30,000, but only $17,040.) 74 Turning now to the content of Mr Neagle's first budget, like Mr Munro had done with his budget, Mr Neagle began by predicting milk production in each month of a thirty-six month period beginning in July 1993. 75 I may say immediately that, when one adds together Mr Neagle's thirty-six monthly milk production predictions, one gets a predicted total milk production over the thirty-six month period of 4,678,040 litres, as compared to Mr Munro's 4,203,000 litres. There were three causes of that difference. 76 The first was that, as I have already mentioned, Mr Munro had not always multiplied the total number of litres of milk produced by the herd each day by the exact number of days in the relevant month. When Mr Munro's figures are changed in that respect to accord with Mr Neagle's (although Mr Neagle also made one error in that respect, ignoring the fact that 1996 was a leap year), Mr Munro's number of litres over the thirty-six month period increases by 9,955 litres. Treating Mr Munro's total predicted production, therefore, as 4,212,955 litres, rather than as 4,203,000 litres, Mr Neagle's extra litres of predicted production over the thirty-six month period become 465,085, thereby exceeding Mr Munro's predicted litres by over 11%. 77 Such a difference is obviously a significant one. To give a rough idea of its economic significance, I mention that the average sale price of non-quota milk which was shown in Mr Neagle's budget was twenty-three cents per litre ("˘/l"). Applying that price to those extra 465,085 litres would mean that they had led to an addition to the gross income predicted to be received in Mr Neagle's budget of almost $107,000 over the thirty-six month period. (That figure may itself be compared with the positive net cash flow predicted by Mr Neagle over the entire thirty-six month period of almost $119,000.) 78 To turn now to the second and third causes of difference between Mr Munro's and Mr Neagle's total litres of production, of Mr Neagle's extra 465,085 litres (after adjustment), a mere 3,600 arose because of Mr Neagle's using different figures than Mr Munro's for the average number of litres of milk produced per cow per day–in the twelfth month of the thirty-six months, Mr Neagle used a figure of 16.5 litres of milk produced per cow per day instead of Mr Munro's (effectively, the Bega Co-operative's) 16 litres. The vast majority of Mr Neagle's extra 465,085 litres arose, instead, from a difference between himself and Mr Munro in the predicted number of cows being milked on Springbrook during many months in the thirty-six month period. 79 It will be recalled that Mr Munro had begun the thirty-six month period showing 175 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the twenty-second month of the thirty-six to 220 and he finally increased in the twenty-seventh month of the thirty-six to 250. Mr Neagle instead began with 190 cows being milked, a number which he increased in the fourth month of the thirty-six to 200, he then increased in the fifth month of the thirty-six to 210, he then increased in the seventh month of the thirty-six to 220, he then increased in the ninth month of the thirty-six to 230, he then increased in the eleventh month of the thirty-six to 240 and he finally increased in the thirteenth month of the thirty-six to 250, at which level it remained throughout the rest of the three-year period. Thus, whereas Mr Munro's number of cows being milked began at 175, Mr Neagle's began at 190; further, whereas it is true that both Mr Munro and Mr Neagle showed a maximum number of cows being milked of 250, Mr Munro's number of cows being milked did not reach 250 until the twenty-seventh month of the thirty-six month period, whereas Mr Neagle's number of cows being milked reached 250 in the thirteenth month of the thirty-six month period; finally, whereas Mr Munro's number of cows being milked reached 250 in three steps, an increase of 25 in the fourth month of the thirty-six, a further increase of 20 in the twenty-second month of the thirty-six and a final increase of 20 in the twenty-seventh month of the thirty-six, Mr Neagle's reaching 250 occurred in six steps, each increase being of 10 cows and those increases occurring in the fourth, fifth, seventh, ninth, eleventh and thirteenth months of the thirty-six. (Another way of comparing Mr Munro's predicted numbers of cows being milked with Mr Neagle's is to compare the average numbers of cows predicted to be milked per year over each of the three years: whereas, as I have already mentioned, Mr Munro three yearly figures were 194, 205 and 245 respectively, Mr Neagle's were 214, 250 and (again) 250.) 80 A question immediately arises as to the grounds on which Mr Neagle made what amounted to thirty-six predictions in his budget as to the number of cows being milked, one prediction for each month of the thirty-six month period. 81 Before discussing that question, however, it is convenient that I make some comment about the context in which it (as well as other questions regarding Mr Neagle's budgets which I will also discuss) is to be answered. 82 I have already mentioned that the Blackers have alleged against the NAB a breach by it of its duty under subs 52(1) of the TPA with resulting loss by them and that they have placed reliance regarding the breach issue on s 51A of the TPA. Subsection 51A(1) of the TPA provides that, for the purposes of (relevantly) subs 52(1) of the TPA, where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for doing so, the representation shall be taken to be misleading. Subsection 51A(2) of the TPA provides that, for the purposes of the application of subs 51A(1) in relation to a proceeding concerning a representation made by a corporation with respect to a future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making that representation. 83 It is accepted in the cases (see Ting v Blanche (1993) 118 ALR 543 at 552 (FCA: Hill J), followed in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) ¶ 46-179 at 54,432 (FCA: Goldberg J) and in ACCC v IMB Group Pty Ltd (1999) ATPR ¶ 41-704 at 43,021, [13] (FCA: Drummond J)) that, in spite of its reference merely to the adducing of certain evidence by the corporation concerned, the effect of subs 51A(2) of the TPA is to impose on that corporation the burden of persuading the trier of fact that it had reasonable grounds for making the representation concerned, in default of which persuasion it will be held to have breached (relevantly) subs 52(1) of the TPA. Certainly, the NAB did not argue in the present case for a different construction of subs 51A(2) of the TPA. 84 It may be noted that, given the construction of subs 51A(2) of the TPA to which I have just referred, that provision makes it easier for an applicant to establish a breach of subs 52(1) of the TPA in respect of a representation with respect to a future matter than it is to establish a breach of duty of care under the general law in respect of that same representation: see Luntz and Hambly Torts: Cases and Commentary 4th ed. 1995 at p. 811, who say also that legislative developments such as s 51A of the TPA "have made the common law right of action in the area [that is, the area of negligence in relation to economic loss] largely … redundant". It is because of the relative ease with which an applicant can, by reference to s 51A of the TPA, make out a case of breach of subs 52(1) of the TPA in respect of a representation with respect to a future matter, as compared to making out a case of breach of duty of care under the general law in connection with the same representation, that I will focus my attention in the first instance on the former case by the Blackers, rather than the latter. All other things being equal, if the Blackers cannot succeed with the former case, they cannot succeed with the latter. 85 As well as not disputing the construction of subs 51A(2) of the TPA to which I have referred above, the NAB did not submit that I should conclude that the predictions made by Mr Neagle in his various budgets were not representations by it as to future matters within the meaning of s 51A of the TPA. (I have referred only to Mr Neagle's budgets in what I have just said, because, as the Blackers fought their case, those budgets were the real source of misleading conduct by the NAB ultimately relied on by them). Instead, the NAB submitted that I should conclude that Mr Neagle had had reasonable grounds for the making of those predictions. 86 In doing so, the NAB submitted that the question whether "the Bank had reasonable grounds for making the said representations … is to be determined at the time the budgets were prepared". I accept that submission: see to that effect, for example, the reasons for judgment of Heerey J in Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513 (FCA: Heerey, Sundberg and Emmett JJ). It is also worth repeating what Heerey J said more generally in that case about the effect of subs 51A(2) of the TPA, "If there was a representation as to a future matter, s 51A requires the representor to show: · some facts or circumstances · existing at the time of the representation · on which the representor in fact relied · which are objectively reasonable and · which support the representation made." 87 Applying subs 51A(2) of the TPA as Heerey J's statement dictates to each of Mr Neagle's thirty-six predictions in his 12 May 1993 budget as to the number of cows being milked on Springbrook, it was incumbent on the NAB to prove, in order to avoid a conclusion of breach by it of subs 52(1) of the TPA, that Mr Neagle, in making that prediction, had in fact relied on certain facts or circumstances existing at the time of his making it, which facts or circumstances were objectively reasonable and supported his prediction. 88 In considering whether the NAB has done so, it is important to keep steadily in mind the nature of the predictions presently under discussion. They were not qualitative predictions (for instance, "your profits will be good") or "fuzzy" quantitative predictions (for instance, "your profits will be between ten and twenty percent"); they were precise quantitative predictions. 89 Given that the NAB had the benefit in the present proceeding of Mr Neagle's being available to give and actually giving evidence on its behalf, one might have expected that the NAB's first step in satisfying its burden of persuasion under subs 51A(2) of the TPA would be to establish by his evidence, whether given by reference to his unaided recollection or (more likely) given by reference to his recollection aided by contemporaneous documents, what were the facts or circumstances existing at the time of the preparation of his budget on which he had in fact relied in order to make each of his precise quantitative predictions as to the number of cows being milked. Then, that having been done, the NAB's next step would be to seek to establish that those facts or circumstances on which he had in fact relied provided objectively reasonable support for the prediction concerned. 90 As to the actual grounds for Mr Neagle's predictions, he might, for instance, have been asked first why he had chosen, as his starting number of cows being milked, 190. One might have expected him in response to demonstrate that he had had information at the time, on which he had relied, as to the number of cows actually being milked on Springbrook at a particular point in time and, if that number differed from 190, to explain the ground upon which he had decided to alter it. Then, the ground of his having predicted his starting number having been established, he might have been asked about the method(s) by which he had expected the milking herd to grow in the way which he had predicted. One might have expected him in response to refer either to natural increase or to subsequent purchase or both. If he referred to the former method, one might have expected him to demonstrate that he had had information at the time, on which he had relied, about an expected rate of natural increase, either past information specific to the Springbrook herd or information which was general in nature. If he referred to the latter method, one might have expected him to disclose such matters as the age of the cows he had expected would be purchased, their number, their cost and the date of their purchase and then to demonstrate that he had had information at the time, on which he had relied, establishing the likely availability of cows of such ages in such numbers at such cost at such date. 91 However, that is not the way in which the NAB proceeded. It made what could, at best, be described as a perfunctory attempt to obtain from Mr Neagle himself an account of the facts or circumstances existing at the time of the preparation of his budget on which he had in fact relied in order to make each of his predictions as to the number of cows being milked. Further, in its scheduled final submissions, it relied on very little indeed of such evidence as Mr Neagle had given which might be thought to bear on the topic, in seeking to satisfy its burden of persuasion on the question of the grounds on which he had in fact relied when making those predictions. (That question is, of course, logically anterior to any question of the reasonableness of those grounds). 92 The evidence of Mr Neagle on which the NAB ultimately relied may be summarised as follows: at the time of making his predictions as to the numbers of cows being milked, Mr Neagle had a copy of Mr Munro's budget; Mr Neagle overwrote twenty-five of the thirty-six figures representing numbers of cows being milked on his copy of the first page of Mr Munro's budget (increasing in every case those which he overwrote and then using those increased numbers in his own budget); in increasing those numbers, Mr Neagle relied on the fact that the Blackers had put forward to him a "program" to "rapidly increase the numbers" of animals. (I should say immediately that the evidence to which I have just referred was no more specific than that. Mr Neagle gave no evidence as to the details of that asserted program and certainly did not say that those numbers which he had used which had exceeded those of Mr Munro had, in effect, been dictated to him by the Blackers.) 93 In addition to the evidence of Mr Neagle which I have just summarised, the NAB relied on the Blackers' own evidence that they had provided to Mr Neagle for the purpose of his preparing his budget the information that they "hoped to increase the size of the milking herd to milk 250 cows". 94 Based on that evidence, the NAB's submission was, in essence, that, "… Mr Neagle relied on Mr Munro's production figures to establish the likely production levels and adjusted them to accommodate the Blackers['] plans to accelerate the herd build up through purchase of cattle (which [was] allowed for in [Mr] Neagle's budget)…." 95 Dealing with the evidence on which the NAB relied, I make the following findings. 96 First, as to eleven of Mr Munro's thirty-six predictions of milking cow numbers (those for the fourth month and the twenty-seventh through thirty-sixth months), Mr Neagle decided to transfer them unaltered to his own budget. I am prepared to conclude that Mr Neagle relied, in making those predictions, on the fact or circumstance that Mr Munro had made the same prediction. It appears to me that the existence of predictions by the Blackers' own accountant provided objectively reasonable support for the making by Mr Neagle of the eleven predictions concerned; I am therefore persuaded that Mr Neagle had reasonable grounds for making the predictions concerned. 97 Next, as to the remaining twenty-five of Mr Munro's thirty-six predictions of milking cow numbers, accepting that the facts or circumstances on which Mr Neagle in fact relied were those on which the NAB submitted he had relied, I am not persuaded that those facts or circumstances provided reasonable grounds for making the predictions concerned. Some imprecise expression by the Blackers of a desire rapidly to increase the number of milking cows to 250 did not, in my view, provide grounds which were reasonable for the precise numbers of milking cows which Mr Neagle predicted. (I should, perhaps, add here that the NAB appeared to think it helpful to its case to establish that such expression had not occurred first with Mr Neagle; it had already occurred with Mr Munro. Far from assisting the NAB's case, such a sequence of events may be thought to be harmful to that case. If Mr Munro's predictions had already been based on such expression, why did its mere repetition to Mr Neagle (and there is no evidence that more than mere repetition was involved) justify his increasing Mr Munro's predictions? It could, of course, have done so if the Blackers had told Mr Neagle, contrary to the fact, that they had not already communicated such desire to Mr Munro; such a conclusion is not, however, supported by the evidence.) 98 Further, in so far as the Blackers' imprecise expression of a desire rapidly to increase the number of milking cows could be said to have provided some support for Mr Neagle's precise predictions (even though the Blackers were, at the time, as Mr Neagle was aware, inexperienced in dairying, while he considered himself, according to his evidence, to be "very familiar as at 1993 with most aspects of dairying" "[f]rom the bank's side [sic] of view"), there existed at the relevant time other countervailing facts or circumstances which had the effect that Mr Neagle's reliance on such an expression to make his precise predictions was not reasonable. I refer, in particular, to his predictions that there would be 190 cows being milked at the start of the thirty-six month period and that the number of cows being milked would increase from 200 in the fourth month of the thirty-six month period (the same prediction as Mr Munro's) to 210 in the fifth month of the thirty-six month period, 220 in the seventh month of the thirty-six month period, 230 in the ninth month of the thirty-six month period, 240 in the eleventh month of the thirty-six month period and 250 in the thirteenth month of the thirty-six month period. 99 I take first Mr Neagle's prediction that there would be 190 cows being milked at the start of the thirty-six month period. 100 Mr Neagle had, at the time of making his prediction, Mr Munro's prediction of 175 cows being milked at the start of the three-year period. At one point in his cross-examination, Mr Neagle was being questioned, not as to his budget predictions about the number of cows being milked each month, but as to his budget predictions about the average number of litres of milk produced per cow per day. He was asked whether he had given consideration to reducing Mr Munro's predicted figures as to the average number of litres of milk produced per cow per day because of the Blackers' known inexperience in dairying. Mr Neagle's response was, "No, no, I went through with Ewan Munro those budgets [Mr Neagle was there referring to the two parts of Mr Munro's one budget, the milk production part and the cash income part] and he said he was conservative with that [that is, with the average number of litres of milk produced per cow per day] and I agreed with him." On Mr Neagle's account, therefore, he "went through" Mr Munro's budget with Mr Munro for the purpose of preparing his own. (Mr Munro's evidence was that he remembered no such conversation, but he did concede that a telephone conversation might have occurred about the matter.) Then, at a time which must have been no later than one month after Mr Neagle's and Mr Munro's going through Mr Munro's budget together (assuming that event occurred), Mr Neagle told his superiors, when submitting an application for credit on behalf of the Blackers on 1 June 1993 (close to three weeks after completing his budget), "Budgets were compiled by Accountant Ewan Munro … & they were based on actual figures employed by present farmer who was only milking 150 cows (due to recent hospitalisation)…. Present operated [sic] has incresed [sic] herd to be milking 185 at even date." The obvious inference, accepting for present purposes the accuracy of Mr Neagle's evidence that he and Mr Munro "went through" Mr Munro's budget together and the accuracy of the statement which I have just quoted, is that, very shortly before preparing his own budget, Mr Neagle had been made aware by Mr Munro, when the two of them had gone through Mr Munro's budget together, that Mr Munro's prediction as to the number of cows being milked at the start of the three-year period, namely, 175, already represented an increase of twenty-five from the number then actually being milked. Such awareness by Mr Neagle militates against a conclusion that Mr Neagle's starting prediction of 190 milking cows had been based on reasonable grounds. 101 As well as the evidence to which I have just referred, the NAB tendered as part of its case certain answers by the Blackers to interrogatories, in which they had asserted that they had informed Mr Neagle for the purpose of his preparing the budget that Mr Bateman was milking 180 cows. Again, such awareness by Mr Neagle, very shortly before preparing his own budget (though not as destructive as his awareness of what Mr Munro had apparently told him), militates against a conclusion that Mr Neagle's starting prediction of 190 milking cows had been based on reasonable grounds. 102 I take next Mr Neagle's predictions that the number of cows being milked would increase from 200 in the fourth month of the thirty-six (the same prediction as Mr Munro's) to 210 in the fifth month, 220 in the seventh month, 230 in the ninth month, 240 in the eleventh month and 250 in the thirteenth month. 103 Although the NAB did not seek to establish through Mr Neagle himself how he had perceived at the time that such build up would occur, it is apparent from that part of its submissions which I have quoted above that it asks me to infer that Mr Neagle believed at the time that such increases would occur "through purchase of cattle (which [was] allowed for in [Mr] Neagle's budget)". 104 It is true that Mr Neagle's budget of 12 May 1993 did allow for the purchase of cows. Relevantly for present purposes, $30,000 was allowed for "Purchase Heifers 12 months" in the first month of the thirty-six month period, while $15,000 was allowed for "Purchase Heifers 3 months" in the thirdmonth of the thirty-six month period. 105 However, given that cows are incapable of producing milk before they are two years old, any purchase of three month old heifers in the third month of the thirty-six month period could provide no accretion to the milking herd until long after the thirteenth month of the thirty-six month period, so that that projected purchase could have provided no reasonable grounds for predicting increases in the milking herd during a time ending in the thirteenth month of the thirty-six month period. 106 On the other hand, a purchase of twelve month old heifers in the first month of the thirty-six month period would (in the absence of some calamity) provide an accretion to the milking herd in the thirteenth month of the thirty-six month period, provided that such heifers became pregnant no later than two months thereafter, cows having a ten month gestation period. The question then arises how great that accretion would be. In the first instance, that would depend on the number of twelve month old heifers which could be bought for the $30,000 allocated by Mr Neagle in his budget. As I have already mentioned, neither Mr Neagle's belief about that matter at the relevant time, nor his belief about other matters relevant to the issue presently under discussion, was the subject of evidence by Mr Neagle himself, as one would have expected them to be. However, Mr Ivey (the NAB's expert witness), gave evidence from which I infer that the heifers could have been bought for between $800 to $1,000 each. That would mean the purchase of between thirty and (say) thirty-eight such heifers. It is obvious that an allocation of money for the purchase in the first month of the thirty-six month period of between thirty and (say) thirty-eight twelve month old heifers could have provided no reasonable grounds for a prediction that in the thirteenth month of the thirty-six month period the number of cows being milked would have increased by fifty from the fourth month of the thirty-six month period. Still less could such an allocation have provided reasonable grounds for a prediction that, in the months between the fourth and thirteenth months of the thirty-six month period, milking cow numbers would be progressively increasing. 107 (Before I leave the topic of the purchase of the twelve month old heifers, I should mention something further about Mr Ivey's having put forward the purchase price of $800 to $1,000 per heifer to which I have referred above. He did so in the first of a number of reports which he prepared in relation to the present proceeding. Having done so, he then, in a manner which, I regret to say, was not unusual so far as his evidence was concerned, continued, "With the expenditure allowed in the Neagle budgets, around 45-55 head of heifers could have been purchased in the first three months". Mr Ivey's figure of forty-five to fifty-five heifers (rather than thirty to (say) thirty-eight) was, however, based, not on the expenditure actually allowed for in Mr Neagle's budget, but on Mr Ivey's silently adding together Mr Neagle's two allocations for the purchase of heifers and treating the $15,000 allocation in the third month of the thirty-six month period as having been, not for the purchasing of three month old heifers, as was allowed for, but for the additional purchasing of twelve month old heifers.) 108 Having found that the NAB has not satisfied its burden of persuading me that Mr Neagle had reasonable grounds for making twenty-five of his thirty-six predictions regarding the number of cows being milked in a month, I mention that that finding has what I may call a "cascading" effect. For instance, in so far as Mr Neagle's predictions of milk production in various months were dependent on his predictions of the number of cows being milked in those months, a finding that Mr Neagle had no reasonable grounds for making the latter predictions means also an absence of reasonable grounds for making the former predictions. The same reasoning also applies to Mr Neagle's predictions of gross income to be received from the sale of milk produced. 109 Having now discussed the question of whether there existed reasonable grounds for Mr Neagle's predictions as to the number of cows being milked during each month of the thirty-six month period, I mention briefly the question of whether he had reasonable grounds for his predictions as to the average number of litres of milk produced per cow per day in each of those thirty-six months. As I have already mentioned, in the case of thirty-five of those thirty-six months, Mr Neagle simply adopted Mr Munro's (effectively, the Bega Co-operative's) figure and I treat those predictions just as I did Mr Neagle's adoption of Mr Munro's figures as to the number of cows being milked during each month of the thirty-six month period. However, as to the thirty-sixth prediction, namely, 16.5 litres of milk produced per cow per day for the twelfth month of the thirty-six, rather than 16, although the difference in terms of milk production is slight, still the fact is that Mr Neagle made no attempt to explain the grounds upon which he had made that particular prediction, nor did the NAB seek to prove otherwise what those grounds had been. In the absence of such proof, I conclude that there were no reasonable grounds for that particular prediction. 110 I turn next to various predictions which Mr Neagle made as to the gross income to be received during each month of the thirty-six month period from the sale of milk. 111 For each month of that period, Mr Neagle showed receipts from milk sales, those receipts being divided into three of four possible categories and each category bringing a different price. The four possible categories and the price per litre which was predicted to be received for each category were as follows: New South Wales quota milk (48˘/l); Australian Capital Territory quota milk (32˘/l); non-quota milk sold between February and July (25/˘l); and non-quota milk sold between August and January (21˘/l). 112 To illustrate, in July 1993, the first month of the thirty-six month period, Mr Neagle showed: $19,870 received for New South Wales quota milk; $4,960 received for Australian Capital Territory quota milk; and $10,890 received for 25˘/l non-quota milk. 113 Mr Neagle did not show the quantities of milk which had been sold in order to generate those receipts, but one can work them out by dividing the receipts for a particular category of milk sold by the price per litre for that category. When one performs that exercise, one sees that, so far as the first month's milk receipts are concerned, Mr Neagle proceeded on the basis that they would have been generated by the sale of: 41,396 litres of New South Wales quota milk; 15,500 litres of Australian Capital Territory milk; and 43,560 litres of non-quota milk. In other words, total receipts from milk sales for the first month of the thirty-six month period would have been generated by the sale of a total of 100,456 litres of milk. 114 When, however, one compares the litres of milk needed in order to generate the first month's total receipts predicted by Mr Neagle, namely, 100,456, with the number of litres of milk predicted by Mr Neagle to be produced during that month (by multiplying the number of cows being milked by the average number of litres of milk produced per cow per day by the number of days in the month), namely, 94,240, one discovers that Mr Neagle's prediction as to receipts was dependent on the sale of about 7% more milk than he had predicted would be produced during that month. Further, when one performs a similar exercise for each of the remaining thirty-five months of the thirty-six month period, one discovers that there is no month in the entire thirty-six month period in which the litres of milk needed in order to generate that month's total receipts predicted by Mr Neagle is equal to the number of litres of milk predicted by Mr Neagle to be produced during that month. In nineteen of the thirty-six months, the milk needed to generate the receipts exceeds the milk predicted to be produced, whereas in the remaining seventeen months, the milk predicted to be produced exceeds the milk needed to generate the receipts. 115 Finally, if one compares the number of litres of milk needed in order to generate the total receipts predicted by Mr Neagle over the entire thirty-six month period with the number of litres of milk predicted by Mr Neagle to be produced over the entire thirty-six month period, one finds that Mr Neagle predicted receipts over the entire thirty-six month period which were dependent on litres of milk being sold which exceeded litres of milk being produced by over 80,000 litres. Using the 23˘/l figure which I have used before for such purposes, that means that Mr Neagle predicted gross income from those additional litres of close to $19,000. 116 (I note, incidentally, that in his first report, Mr Ivey performed a similar exercise to the one which I have just described above. However, he understated the extent of the difference over the entire thirty-six month period between Mr Neagle's litres of milk sold and litres of milk produced, primarily because he (Mr Ivey) used the wrong sales figures for Australian Capital Territory quota milk during the third year.) 117 The question immediately arises as to the grounds on which Mr Neagle actually made his 108 predictions as to the income to be derived during each month of the period from the sale of the three categories of milk relevant to that month (acting, for the sake of the inquiry, on the (false) basis that every one of Mr Neagle's thirty-six predictions of litres of milk produced during the month had itself been made on reasonable grounds). 118 It was, of course, the NAB's obligation to satisfy me as to the grounds on which Mr Neagle had made his predictions as to the income to be derived during each month of the period from the sale of the three categories of milk relevant to that month and then to satisfy me further that those grounds were reasonable. It made no attempt to do so and it is obvious from what I have already said that those predictions were significantly awry in some respect. Perhaps the monthly discrepancies are explicable (I do not know) on the basis that Mr Neagle was expecting that payments for milk sales would be received in a month later than the month in which the milk sold had been produced, although I do not find it easy to reconcile such a possible explanation with the fact that Mr Neagle showed receipts from milk sales in the very first month of the thirty-six month period. However, even if there be an acceptable explanation for the monthly discrepancies, I am not able presently, without assistance, to think of an acceptable explanation for the basing of receipts over the entire thirty-six month period on the sale of over 80,000 apparently non-existent litres of milk (nor, I add, did Mr Ivey offer one when he identified the problem). As the NAB did not seek to offer me such assistance, it must bear the consequence, which is a lack of satisfaction by me that Mr Neagle had reasonable grounds for making his predictions as to the income received from milk production during the thirty-six month period. 119 There remains one aspect of Mr Neagle's predictions as to the income to be received during each month of the thirty-six month period from the sale of milk with which I wish to deal further. In every month of the thirty-six month period, Mr Neagle predicted the receipt of income from the sale of Australian Capital Territory quota milk. Over the first twenty-four months of the thirty-six month period, he showed income dependent on the sale of an average of 500 litres per day in that category, while in each of the last twelve months of the thirty-six month period, he showed income dependent on the sale of an average of almost 510 litres per day in that category. 120 I have already said that no attempt was made by the NAB to establish the grounds upon which Mr Neagle had made his predictions as to the income to be received from milk sales during each month of the period, an omission which obviously applies as well to his thirty-six predictions as to the income to be derived from the sale of Australian Capital Territory quota milk. In fact, however, in making the first twenty-four of those particular predictions, Mr Neagle appears to have relied on information which he had that Springbrook's Australian Capital Territory milk quota was 500 litres. However, that information was that that quota was 500 litres per week, not 500 litres per day. As to the grounds upon which he made his last twelve predictions, I am able only to speculate. In any event, it is plain that Mr Neagle had no reasonable grounds for the thirty-six predictions under discussion, even if there exists some unoffered explanation for his other seventy-two monthly milk income predictions. As to the economic significance of those thirty-six predictions, their effect was to overstate the quantity of milk capable of being sold at 32˘/l over the entire thirty-six month period by 298,500 litres. If one were to apply to those litres the 23˘/l figure which I have used before for such purposes, rather than the sale price for Australian Capital Territory quota milk, that would mean a reduction in Mr Neagle's gross milk income prediction over the entire thirty-six month period of almost $27,000. 121 (It is appropriate to record here that, in his first report, Mr Ivey, having concluded (as I have already mentioned) that Mr Neagle had predicted receipts over the entire thirty-six month period which were dependent on litres of milk being sold which exceeded litres of milk being produced and having concluded as well that Mr Neagle had predicted receipts over the entire thirty-six month period which were dependent on litres of milk being sold in the Australian Capital Territory quota milk category which actually fell into the non-quota milk category, then sought to quantify the effect on Mr Neagle's income predictions of those errors. While I have already said (by implication) that their effect appears to me to have been that Mr Neagle overstated gross income over the entire three-year period by about $46,000, according to Mr Ivey, their effect was to overstate gross income over the entire three-year period by almost $72,000. I do not find, in any of Mr Ivey's evidence, an explanation of his figure and I am unable to discern it myself.) 122 To sum up the point which I have now reached, the NAB has not satisfied me that Mr Neagle had reasonable grounds for making: many of his predictions as to the number of cows being milked in a month; one of his predictions as to the average number of litres of milk produced per cow per day in a month; many of his predictions as to the number of litres of milk produced by the herd in a month; or any of his predictions as to the monthly income to be received from milk sales. Further, the substitution for those predictions not based on reasonable grounds of ones based on grounds which I would accept as having been based on reasonable grounds would have had a significant adverse impact on the income side of Mr Neagle's budget, reducing Mr Neagle's predictions of gross income to be earned from the sale of milk over the entire thirty-six month period by close to 10% (or, if I use Mr Ivey's figure of almost $72,000 referred to above, by close to 12%). 123 I turn now from the income side of Mr Neagle's 12 May 1993 budget to the expenditure side. It will be recalled that Mr Munro had shown in his budget only four expenditure categories: salaries, fodder, farm costs and interest. Mr Neagle's expenditure categories were far more detailed than that, Mr Munro's first three categories being replaced by twenty-three separate categories, with categories related to capital, as opposed to operating, expenditure being added as well. It may be useful to set out Mr Neagle's twenty-three operating expenditure categories, simply in order to give a sense of the number of expenditure predictions involved in Mr Neagle's budget. Those categories were: accountancy; artificial breeding; bank and government fees; cattle registrations; dairy requisites; drawings; electricity; fodder; fuel and oil; hay purchases; herd testing; insurance; motor vehicle expenses—repairs and maintenance; pest control; rates and taxes; repairs and maintenance; school fees (!); seed and fertiliser; share farmer; subscriptions; telephone; veterinary expenses; and superannuation. 124 I do not propose to deal, in the same detail as I did with Mr Neagle's predictions on the income side, with his predictions on the expenditure side, given the sheer number of such predictions. However, the fundamental issues concerning Mr Neagle's expenditure predictions are naturally the same as those concerning his income predictions. First, it was necessary for the NAB to satisfy me as to the facts or circumstances existing at the time of the preparation by Mr Neagle of his budget on which he had in fact relied in order to make each of his expenditure predictions. Then, assuming that it had satisfied that burden, the NAB's next burden was to establish that those facts or circumstances on which Mr Neagle had in fact relied in making each of those expenditure predictions had provided objectively reasonable support for the prediction concerned. 125 As to Mr Neagle's expenditure predictions, there was considerable evidence before me from Mr Neagle on them and I turn to that evidence now. 126 Mr Neagle swore two affidavits in the proceeding, both of which were read before me. The first was sworn on 3 November 1998 and the second was sworn on 30 June 1999. Mr Neagle also gave oral evidence before me on 5 through 8 July 1999, just a few days after swearing his second affidavit. (Although I have no independent recollection of the matter, I note that the transcript of Mr Neagle's oral evidence says that he made an affirmation, rather than swearing an oath, before giving that evidence. His making an affirmation before giving his oral evidence, as opposed to his swearing an oath, as he had done with his two affidavits, reminds me of the story told by Wigmore in his treatise on evidence of a witness who said he wished to affirm, rather than swear an oath, before giving evidence. The judge said in response that he recalled the witness having given evidence before him on an earlier occasion, at which time the witness had sworn an oath; why, the judge asked, was he not prepared to do so now? The witness's explanation: "Your Honour, I was more sure of my facts that time".) 127 In the first of his two affidavits, Mr Neagle deposed that, "The expenditure figures in the cash flows [that is, in Mr Neagle's budgets, including the one which I am presently discussing, his first] were based on Ewan Munroe's [sic] budget and other dairy farmer customers of the bank". However, in that affidavit, Mr Neagle did not identify either the other dairy farmer customers of the NAB to which he was referring, the information of those other customers on which he had based those budgets or the manner in which he had used that information. As to his use of Mr Munro's budget, Mr Neagle did depose that he had "adopted Ewan Munroe's [sic] expenditure estimates", but, as even a cursory comparison of the two budgets shows, that statement was plainly incorrect. 128 In the second of his two affidavits, Mr Neagle deposed that he had been contacted on behalf of the NAB "[d]uring preparation for the hearing of this matter" (the time was not more precisely identified) "and asked to provide the names of the customers whose files I compared with Mr Munroe's [sic] budget to assist me in assessing the Blackers['] loan application". He had provided in response the names of four customers, Schukraft, Wallis, Parbery and Hukins, relying solely on his memory in order to do so. Those customers were four among about thirty to forty dairy farmer customers which he had had while Bega branch manager. Then, in December 1998, during a conference with the NAB's counsel, he had first (since leaving the NAB) had the opportunity of inspecting the files of those four customers. "On inspecting the files", he deposed, "I realised that I had provided … the wrong names". He was then asked for the correct names, and provided instead the names of three other customers, Cochrane, Moffitt and Roberts. It is apparent from his affidavit that Mr Neagle's account was that he had also provided those names solely in reliance on his memory, because he deposed (my emphasis), "Having now inspected cash flow budgets from those customers['] files [that is, Cochrane, Moffitt and Roberts], I believe that they are the files that I compared with Mr Munroe's [sic] budget because those customers had operations which were more comparable to that of Springbrook" (than those of Schukraft, Wallis, Parbery and Hukins). Mr Neagle then exhibited a number of documents which he described as "the cash flow budgets I believe I had regard to". (That description of the exhibited documents was plainly inaccurate in at least one respect, because the documents included some which disclosed on their face that they had been brought into existence after Mr Neagle's employment as Bega branch manager had been summarily terminated for misconduct by the NAB.) 129 As to the Hukins, Schukraft and Wallis businesses (those of three of the four customers which he had at first identified to the NAB), Mr Neagle deposed that he now believed that they were not comparable to Springbrook, because they had used a "feed lot program", a different and more intensive type of feeding program from that contemplated by the Blackers. (Why that alleged difference would have excluded reference to all expenditures by Hukins, Schukraft and Wallis, as opposed to those related specifically to the different type of feeding program, was not explained.) As to the Parbery business, Mr Neagle deposed that "it is not really comparable to Springbrook because it is a much bigger operation than that conducted on Springbrook (i.e. 600 to 700 head of cattle)". Having denied the Parbery business's real comparability, however, Mr Neagle deposed, figuratively in the same breath, "I may also have compared that operation to the Blackers['] budget on a pro-rata basis". 130 As to the businesses Mr Neagle now believed to be comparable, he deposed that he believed that the Roberts business was comparable to Springbrook for two reasons: first, both "were normal grazing operations (as opposed to 'feed lot' operations …)"; and, secondly, "both … had approximately 200 head of cows"; the Moffitt business was comparable to Springbrook for the first of those two reasons only; and the Cochrane business was comparable to Springbrook for the second of those two reasons only. 131 As to the Roberts business, Mr Neagle deposed that he believed that he had "compared … the Roberts total expenditure" (as shown in a budget prepared by him on 28 April 1993 for the period from May 1993 to April 1994) with "the Blackers['] budgeted expenditure … after deducting expenses which the Blackers did [sic] not have". He then listed nine items of operating expenditure on the Roberts May 1993 to April 1994 budget, totalling $66,408, which he believed he had deducted (as being ones which the Blackers would not have) from the total operating expenditure of $305,383, leaving an operating expenditure figure of $238,975. No explanation was given as to why the items deducted were ones which the Blackers would not have; as to some, it was obvious on their face, as to others, not. The figure of $238,975 was, Mr Neagle deposed, "comparable to the total expenditure estimated for Springbrook in 1993/94 of $225,190". What the significance of that so-called comparability was for his many specific expenditure predictions for the Blackers was not explained. 132 As to the Cochrane business, the only budget for it which Mr Neagle exhibited to his affidavit, under the description of "the cash flow budgets I believe I had regard to" by way of comparison with Mr Munro's budget when preparing the Blackers' budgets, was one which he had prepared in April 1992. For a particular twelve month period, beginning in April (I infer 1992) and ending in March (I infer 1993), that budget had shown a total operating expenditure of $279,171. 133 As to the Cochrane business for April 1992 to March 1993 (which was a twelve month period which did not overlap with that of the Roberts budget, no justification being given by Mr Neagle for his having used for comparative purposes budgets covering two different periods), Mr Neagle deposed to the following: "13. In relation to the Cochrane file, I believe that when comparing that operation with the budget for the Blackers, I deducted the following amounts from the Cochrane's total expenditure of $279,171: (i) $3,996 being the difference between the amount allowed for share farmers in each case. In the Cochrane budget, $39,996 was allowed for a share farmer and in the Blackers['] budget, $36,000 was allowed; (ii) $12,000 which is the difference between the Cochrane's [sic] salaries and wages (which includes the Cochranes' drawings) and the Blackers['] drawings. Mr Cochrane drew $18,000 and paid $12,000 in salary and wages. The Blackers did not pay salaries and wages but drew $18,000; (iii) $4,800 for agistment. The Blackers did not have agistment costs; (iv) $7,000 for irrigation energy. I can recall that the Cochrane's [sic] were intensifying irrigation; leaving a total expenditure of $251,375. 14. The Cochrane budget also allows for more fodder and seed and fertiliser than the Blackers['] budget. I recall that Mr Cochrane was intensifying feeding (similar to a feed lot operation …) therefore, the Cochrane's [sic] feed costs were greater than the Blackers. Their seed and fertiliser costs were also greater than the Blackers['] because they were intensifying irrigation which required more seed and fertiliser." (On the basis of what was asserted in par 14 of his affidavit, just quoted, it thus appears that in substance the very matter which had led Mr Neagle ultimately to deny the comparability to the Blackers' proposed business of the Hukins, Schukraft and Wallis businesses had not led him to deny the comparability to the Blackers' proposed business of the Cochrane business.) 134 As to the Moffitt budget, as to which, it will be recalled, Mr Neagle had deposed that he believed that he had compared it with Mr Munro's budget because Moffitt had a business which was more comparable to that proposed for Springbrook than those of Schukraft, Wallis, Parbery and Hukins, Mr Neagle's whole explanation of the use which he had made of it was as follows: "In relation to the Moffitt file, that operation is not as comparable to Springbrook [presumably, as Roberts and Cochrane] because the Moffitt operation had 500 head of cattle however, I still believe I would have compared that file with the Blackers['] budget on a pro rata basis." (On that basis, it thus appears that in substance the very matter which had led Mr Neagle ultimately to deny the comparability to the Blackers' proposed business of the Parbery business had not led him to deny the comparability to the Blackers' proposed business of the Moffitt business.) 135 There is one final matter in Mr Neagle's second affidavit to which I should now refer. Having deposed in his first affidavit that he had "adopted Ewan Munroe's [sic] expenditure estimates", he deposed in his second, "I do not know how Mr Munroe [sic] calculated the Blackers['] expenditure". 136 If Mr Neagle's evidence as to the facts or circumstances existing at the time of the preparation by him of his budget on which he had in fact relied in order to make each of his expenditure predictions had stopped there, a real question would have arisen in my mind as to whether the NAB had satisfied its burden of persuading me what those facts and circumstances had been, let alone of persuading me that those facts and circumstances provided objectively reasonable support for his expenditure predictions. However, his evidence obviously did not stop there; it included also his oral evidence. That evidence, however, rather than improving Mr Neagle's position, made it significantly worse, since much of it contradicted his affidavit evidence. I will now refer to a number of aspects of that evidence. 137 First, I mention that, in his oral evidence, Mr Neagle effectively resiled from his assertions in his first affidavit that he had "adopted Ewan Munroe's [sic] expenditure estimates" and that the expenditure figures in his Blacker budgets "were based on Ewan Munroe's [sic] budget". The relevant evidence was as follows, "Do you see there in paragraph 12 you talk about the expenditure figures based on Ewan Munro's budget? --- Yes. Now, didn't you tell me this afternoon that so far as Mr Munro's budget was concerned you didn't have regard to that? --- Well I had Ewan Munro's budget there. Yes? --- But whether [sic] I didn't pay much attention to it. So the expenditure figures in the cash flows were not based on Munro's budget at all, were they? --- They were there for my reference if I wanted to use them. But you understand the expression that appears in that sentence, that they were based on Ewan Munro's budget, that's communicating the idea that the expenditure figures in his cash flow were a starting point for your budgets? --- No, I just referred to them. I didn't actually - - - So in that paragraph it should read, 'The expenditure figures in the cash flow were not based on Ewan Munro's budget'? --- Or referred to. It should say 'were referred to by me', is that right? --- I based them mainly on the other clients. So it should say, 'The expenditure figures in the cash flows were referred to by me but totally disregarded'? --- No. Not taken into account? --- Just used as a starting point". 138 I deal next with the circumstances under which Mr Neagle ultimately fixed on the Roberts, Cochrane and Moffitt businesses as the ones to which he had had regard in some way in preparing the Blacker budgets. 139 According to Mr Neagle's oral evidence, although their names did not appear in his affidavit of 3 November 1998, it was before swearing that affidavit, his first, that he had provided to the NAB's solicitors the names of Hukins, Schukraft, Parbery and Wallis as those whose businesses he had believed in 1993 to be comparable to the Blackers' proposed business and on whose budgets he had relied in preparing the Blacker budgets. Why none of those names had appeared in that affidavit was not explained. Nor, despite very extensive cross-examination on the matter, was Mr Neagle able to offer any explanation which is not discreditable to him as to why he had at first been in error as to all four of the names which he had provided. At one stage in his cross-examination, Mr Neagle was specifically asked about having wrongly provided the names of Schukraft, Hukins and Wallis. He had already acknowledged that he had understood at the time that he had been asked to provide the names of farmers because they were the ones on whose businesses he had based his Blacker budgets: "Are you suggesting that you offered up the name Schukraft without turning your mind to the nature of the enterprise that was undertaken by Schukraft, you simply offered it up as a name?---I might of [sic]. There was a farmer I was involved with – dairy farm down there. Similarly, in relation to Hukins, when you had exhausted your recollection and that name suddenly sprang to mind, you offered up that name without any reference at all to the activities engaged in by Hukins on the Hukins property?---Yes, they were the names that I could think of at the time, yes. Similarly, in relation to Wallis?---Yes." It thus appears that Mr Neagle's ultimate explanation for having provided at least three of the four wrong names was that he had simply provided those names without reference to whether they had been ones on whose businesses he had relied at the relevant time, even though he knew that that was what he was being asked. (I may say that I do not find such an explanation by Mr Neagle inherently implausible, because I gained the distinct impression during the course of his cross-examination that many of his answers were similarly given simply in the hope that they would end the particular line of questioning, regardless of whether or not they were responsive to that questioning.) 140 It will also be recalled that, in his second affidavit, sworn 30 June 1999, Mr Neagle had deposed that it was at a conference with the NAB's counsel in December 1998 that he had first realised his error in providing the names of Hukins, Schukraft, Parbery and Wallis before swearing his first affidavit. That realisation had come about, he had deposed, because of his inspection of those customers' files at that conference, at which time he been asked for and had supplied the correct names. However, under cross-examination only a week after swearing that second affidavit, Mr Neagle began by offering an entirely different account as to how he had come to realise that the four names were wrong and to provide the three right ones. According to his oral evidence on the matter, which was extensive, his realisation about the first four names had come about over the course of months after first providing them, merely as a result of his turning the matter over in his mind and without reference to any documentation, and he had then volunteered the three new names to the NAB without prompting by it to do so. Then, when taxed with the account which he had so recently given in his second affidavit, he immediately resiled from the oral evidence which he had just given at such length, claiming, "My memory failed me". (Mr Neagle apparently meant by saying that that he had forgotten that, a week earlier, he had sworn to the truth of an entirely different account from the one he had just been offering.) 141 One type of expenditure prediction in the Blackers' budgets the subject of much evidence before me, and not only by Mr Neagle, was that for fodder. (The importance of that type of expenditure prediction can be seen from the fact that Mr Munro had chosen in his budget, in spite of its preliminary character, to separate fodder costs out from other expenditures.) I will therefore deal with Mr Neagle's fodder predictions specifically. 142 It will be recalled that Mr Munro had predicted fodder expenditure of $120,000, $125,000 and $140,000 respectively for each of the three years covered by his budget and that I have already explained the basis on which he had made such predictions (see pars 49-53 above). In spite of his having sworn in his first affidavit that he had "adopted Ewan Munroe's [sic] expenditure estimates", Mr Neagle had plainly not done so in his 12 May 1993 budget so far as fodder was concerned. That budget showed fodder expenditures (under the combined headings of "fodder" and "hay purchases") of $68,000, $75,000 and $84,000 respectively for each year of the three year period. 143 None of Mr Neagle's three fodder predictions was greater than 60% of Mr Munro's equivalent prediction, while, at the same time, Mr Neagle was planning on his figures to provide purchased fodder for a herd of greater numbers on average during each of the three years concerned than that for which Mr Munro was planning to provide purchased fodder. If one divides each of Mr Neagle's annual fodder expenditure predictions by the product of multiplying the number of cows he predicted would be milked during that year by 1.9, one obtains a fodder cost per cow (ignoring cents) of $167, $157 and $176 for each of the three years respectively. Those figures are far below the Bega Co-operative's minimum figure of $300 per cow per year (and the equivalent figures for Mr Munro of $325, $320 and $300 for each of the three years respectively). (On the other hand, if one ignores the need to increase the number of cows being milked during any one year to take account of "dry" cows and heifers (that is to say, by using some multiple of the number of milking cows), one obtains figures for Mr Neagle which do fall within the Bega Co-operative's range of figures, namely, $318, $300 and $336 for each of the three years respectively. Although it is unnecessary for me to decide whether it be so, an explanation for Mr Neagle's predictions of expenditure for fodder may lie in part at least in his having intended when making them to use the Bega Co-operative's figures, but having omitted to make provision for the feeding of the "dry" cows and heifers.) 144 It was part of Mr Neagle's oral evidence before me that he kept himself aware of information provided by the Bega Co-operative (which information would, I infer, have included the information about fodder costs on which Mr Munro had relied in making his fodder predictions). He also gave oral evidence of being aware of the need to predict production costs for a dairy herd based on a number of cows greater than those actually being milked at any one time, to take account of "dry" cows and heifers. Further, he gave oral evidence (to which I have already referred above) that he "went through" Mr Munro's budget with him. If that latter evidence is to be accepted, it is difficult indeed to believe that such an exercise would not have included discussion about Mr Munro's estimates of fodder costs, given the relatively few matters dealt with in Mr Munro's budget and the significance of fodder costs. Accepting for present purposes all of the evidence to which I have just referred, what explanation could Mr Neagle have had for making the fodder expenditure predictions which he did, expenditure predictions which even Mr Ivey, the NAB's expert witness, agreed in cross-examination were inadequate? 145 It will be recalled that, to his second affidavit, Mr Neagle had exhibited documents which he had described as "the cash flow budgets I believe I had regard to" by way of comparison with Mr Munro's budget when preparing the Blackers' budgets. Mr Neagle's explanation in oral evidence of his fodder expenditure predictions in effect abandoned reliance on those budgets of other customers as justification for the Blackers' budgets. Instead, he said, he had had regard to the profit and loss statements of those other customers (none of which statements he had either exhibited or annexed to, or even so much as mentioned the existence of in, his second affidavit, sworn just a week earlier). That change of front by Mr Neagle was understandable, because, as he himself in effect conceded in cross-examination, one prediction by him as to future expenditure could not provide reasonable grounds for another prediction by him as to future expenditure unless his first prediction had itself been based on reasonable grounds. That necessarily drives one, not to Mr Neagle's budgets for customers other than the Blackers (as stated in his second affidavit), but rather to their historical financial records. 146 As to the Roberts business, Mr Neagle was shown in cross-examination, in light of his evidence to which I have just referred, a number of profit and loss statements for that business, including one for 1991-92. That statement, which was the most recent in existence at the time he prepared the Blacker budgets, showed actual fodder expenditure for the Roberts business during 1991-92 of $62,260. Mr Neagle was asked whether he had taken account of that figure in predicting the Blackers' fodder expenditure. His answer was, "If I … would have had the profit and loss statement, yes…. But there's no guarantee I would have had it". That was because, he said, farmers were notoriously late with their profit and loss statements. Later, however, it transpired from documentation prepared by Mr Neagle at the same time as he had prepared the Roberts budget for the period from May 1993 to April 1994 that he had had the Roberts' profit and loss statement for 1991-92 at the time he had prepared the Blackers' budget. From that, it follows that it was Mr Neagle's position that he had had regard to the figure of $62,260 for the purpose of predicting the Blackers' fodder expenditure. However, Mr Neagle gave no explanation as to how he had used that figure (or, indeed, any of the other profit and loss statement figures on which he claimed to have relied). Nor were there among the NAB's records any copies of customers' profit and loss statements bearing evidence of having been used by Mr Neagle in the preparation of the Blackers' budget, in the same way that there existed a copy of Mr Munro's milk production budget showing on it Mr Neagle's alterations of milking cow numbers. The question naturally arises how Mr Neagle might have used the Roberts fodder expenditure figure. 147 Given an actual fodder expenditure by Roberts of $62,260 in 1991-92 and Mr Neagle's predictions of fodder expenditure by the Blackers of $68,000 in 1993-94, $75,000 in 1994-95 and $84,000 in 1995-96, one might imagine that Mr Neagle had converted the Roberts gross fodder expenditure figure into a cost per cow and then multiplied that figure by the number of cows he was predicting for the Blackers in each of the three years. However, according to Mr Neagle's oral evidence, he had been aware at the relevant time that Roberts had been milking 170 cows in 1991-92. Dividing $62,260 by the product of multiplying 170 by 1.9 results in a cost of fodder per cow (ignoring cents) for Roberts during 1991-92 of $192. As I have already mentioned, the equivalent Neagle figures were only $167 for 1993-94, $157 for 1994-95 and $176 for 1995-96. In those circumstances, it must surely be less probable than not that Mr Neagle did in fact rely on the Roberts actual fodder expenditure figure for 1991-92 in predicting the Blackers' fodder expenditure for the succeeding three years. If, however, he did, then I am unable to be satisfied that that reliance was reasonably based. 148 Indeed, the inherent implausibility of Mr Neagle's having relied on the Roberts actual fodder expenditure figure for 1991-92 in predicting the Blackers' fodder expenditure for the succeeding three years is reinforced by certain other evidence. I have already referred in another connection to a document in which Mr Neagle gave certain information to his superiors when submitting an application for credit on behalf of the Blackers on 1 June 1993. In that document, Mr Neagle had told his superiors that "expenses [had been] loaded [in his budget for the Blackers] to combat [their] inexperience [in dairying]". In cross-examination, Mr Neagle was asked about that statement and insisted on its accuracy, although he did qualify it by describing the loading as a "small" one. According to him, he had begun with expenditures of other farmers as disclosed in their profit and loss statements and had then added a small loading to those expenditures in order to produce the Blacker expenditure predictions. He was asked who those other farmers were. His answer was, "I can't really exactly [recall] but I think it was the Roberts, Cochrane and Moffitts in a sense, yes". He also gave the following evidence, "I … don't think we've determined precisely how you undertook the loading exercise, just exactly what the methodology was. Just in general, rather than being specific to any farmer, can you just give us the general methodology? --- Yes. You increase the general running costs, for fodder mainly, with probably seed and hay, fertiliser. But what's the methodology? I mean, you increase it, but in what sort of factoring? You don't just pluck figures out of the air obviously. You tether it to some norm or some reality don't you? --- Well, it gives them a chance to feed their cattle a bit more and, you know, produce a bit more milk." It is apparent from those two answers of Mr Neagle's that he was either unwilling or unable to nominate any percentage by which he had loaded (relevantly) the Roberts fodder expenditure figure for 1991-92 in order to produce the Blacker fodder expenditure figures for the succeeding three years. In truth, the obvious conclusion is that he engaged in no such loading exercise whatever, so far as the Roberts fodder expenditure figure for 1991-92 was concerned, and did not even use that figure in predicting the Blackers' fodder expenditure. 149 (Incidentally, that I have used above an actual fodder expenditure figure for Roberts in 1991-92 of $192 per cow, when the Bega Co-operative's figures ranged from $300 to $350, does not cause me to doubt the reasonableness of using the Bega Co-operative's figures for the purpose of making fodder expenditure predictions at the relevant time, as Mr Munro did. First, there was evidence before me to suggest that the Roberts fodder expenditure figure is understated, because it does not include the cost of renting some land off the Roberts farm specifically for the purpose of permitting cows to graze on it, a cost which may appropriately be treated as a direct fodder cost (one is merely speaking of "eat-in" fodder, as opposed to "takeaway"); and, secondly, there was evidence before me to suggest that the Roberts business was able to produce enough of its own fodder on farm in order to permit it to reduce below the typical level the quantity of fodder which it was required to purchase. So far as that latter matter is concerned, I should, perhaps, mention here that, although Mr Neagle's budget included proposed expenditure for the purpose of improving the irrigation on Springbrook, it was no part of Mr Neagle's evidence when seeking to justify his Blacker fodder expenditure predictions that he believed that any irrigation improvements would mean that their business would be able to produce enough of its own fodder on farm in order to permit it to reduce below the typical level the quantity of fodder which it was required to purchase.) 150 Finally, so far as Mr Neagle's evidence regarding expenditure predictions generally is concerned, he was asked some questions in cross-examination about the Cochrane budget for April 1992 to March 1993 which he had exhibited to his second affidavit under the description of "the cash flow budgets I believe I had regard to" by way of comparison with Mr Munro's budget when preparing the Blackers' budgets. His evidence on that particular Cochrane budget included the following: "So at the time that you prepared the Blacker budgets is Cochrane a matter that you took into account in preparing the budgets for Blackers or not? --- Not this cash flow. Any cashflows before this were. I'm sorry? --- Cashflows before this, but not this one. Not this cashflow? --- No. It is relative in a sense that he was developing into a more of a feedlot operation but it wasn't intense of the others as you ..... . HIS HONOUR: Mr Neagle, I'm sorry, I don't understand. Are you saying that when you prepared the Blackers' budget you did have regard to budgets for Mr Cochrane, but earlier ones than the one of 14 April 1992? --- Yes I'd have to and his actuals prior to that, yes." 151 Then, literally moments later, I asked Mr Neagle some further questions about the Cochrane budget exhibited to his affidavit. His evidence was as follows, "HIS HONOUR: … Mr Neagle, I'm looking now at paragraph 8 of your second affidavit. In the last sentence of paragraph 8 you say that there were exhibited to you at the time of swearing the affidavit copies of the cash flow budgets that you believe you had regard to. I just want to understand. In connection with the Cochrane operation, in fact, as I understand your evidence now, there are no cash flow budgets of his [exhibited] that you did have regard to and all that's [exhibited] there is one that you say you didn't have regard to? --- Sorry, I said, the points of this one you could take. I said, the one I had already, I did look at these and there was points that you could take out of this budget that would refer to either [sic] similar operations of this size. So I was wrong to gain the impression from your evidence earlier that what you said was that you took into account cash flow budgets earlier than 19 April 1992? --- Sorry, then I said that I could check these and take out the water points and adjust the fodder and those things. So you did have regard to this one? --- Yes, in a sense, yes. And I gather you had regard to other earlier ones as well? --- That were available on his file, yes. But you didn't have those exhibited to your affidavit? --- No. So, I should read the last sentence of paragraph 8 as though it says, 'Exhibited to me at the time of swearing this affidavit and marked 'JRNA' are copies of some of the cashflow budgets….'? --- Yes." 152 That evidence by Mr Neagle typified the extraordinary difficulties which I encountered in trying to discern just what it was that Mr Neagle was asserting about the basis on which he claimed to have made his Blacker expenditure predictions. 153 Having now dealt with relevant aspects of Mr Neagle's evidence regarding his expenditure predictions in his first Blacker budget, I sum up that evidence in the following way. 154 Mr Neagle took a number of different positions over time as to the facts or circumstances existing at the time he had prepared that budget on which he had in fact relied in order to make the expenditure predictions contained in it. 155 He began by asserting that he had in part relied on, indeed, adopted, Mr Munro's expenditure predictions in making his own. He later resiled from that position, pleading an inability at the relevant time to understand the basis of Mr Munro's expenditure predictions. (That plea, incidentally, is not easy to reconcile with his further evidence that he and Mr Munro had gone through the latter's budget together before Mr Neagle prepared his own.) 156 Mr Neagle also began by asserting that he had in part relied on information from other customers, although he did not then deign to identify who those customers were, what was that information or how he had used it. 157 Next, he asserted that he had relied on budgets which he had prepared for other bank customers. He later resiled from that position as well, recognising the inability of one budget which he had prepared to provide reasonable grounds for the contents of another which he had prepared, unless the first budget had itself been based on reasonable grounds. 158 That led Mr Neagle to his ultimate position, which was that he had relied on actual expenditure figures in the profit and loss statements of those other customers and had then added an "inexperience" loading to those expenditure figures to produce his Blacker expenditure predictions. 159 An integral part of that position was Mr Neagle's account of having at first wrongly identified (in discreditable circumstances) the customers concerned. It is not easy to discern how Mr Neagle sought to justify a conclusion that he had wrongly identified the first set of customers, since each of their businesses appears to have exhibited at least one characteristic on the basis of which he claimed to have included the customers in his second set. Be that as it may, testing which occurred of Mr Neagle so far as his ultimate position was concerned immediately revealed its untenability as well. I refer to the Roberts fodder expenditure figure for 1991-92. Far from some loading having been applied to that figure in order to predict the Blackers' fodder expenditure for the succeeding three years, that figure without any loading significantly exceeded Mr Neagle's fodder expenditure predictions for the Blackers for each of the succeeding three years, when one adjusts for the difference in cow numbers between Roberts and Blacker. 160 In the result, I simply find myself unable to believe Mr Neagle's evidence that he relied, in order to predict the Blackers' expenditure, on actual expenditure figures for Roberts, Cochrane and Moffitt and then added a loading to those figures and I therefore conclude that the NAB has not satisfied me as to the facts or circumstances existing at the time of the preparation by Mr Neagle of his budget on which he had in fact relied in order to make each of his expenditure predictions. I add, however, that, even if I had been minded to proceed on the basis of Mr Neagle's third position, namely, that he had relied on actual expenditure figures for Roberts, Cochrane and Moffitt and then added a loading to those figures, the NAB would not have satisfied me (nor did it seriously attempt to do so) that those figures (let alone those figures plus some loading) provided objectively reasonable support for each of Mr Neagle's many specific expenditure predictions for the Blackers. 161 When discussing Mr Neagle's income predictions for the Blackers, I mentioned, in connection with some of those predictions, what would be the economic effect of substituting for that prediction, which I was not satisfied had been made on reasonable grounds, another prediction which I would have been satisfied had been made on reasonable grounds. I propose to do the same regarding Mr Neagle's fodder expenditure predictions, although not in respect of any of his other operating expenditure predictions. 162 The matter can be approached in a number of ways. If one were to substitute for Mr Neagle's yearly fodder costs per cow those used instead by Mr Munro, that would have the effect of increasing Mr Neagle's fodder cost predictions by $158 per cow, $163 per cow and $124 per cow respectively for each of the three years concerned, which would mean that Mr Neagle's fodder cost predictions over the three year period would increase by almost $200,000. If, instead, one were to substitute for Mr Neagle's yearly fodder costs per cow the minimum figure used by the Bega Co-operative, that would have the effect of increasing Mr Neagle's fodder cost predictions by $133 per cow, $143 per cow and $124 per cow respectively for each of the three years concerned, which would mean that Mr Neagle's fodder cost predictions over the three year period would increase by almost $180,000. Finally, if, instead, one were to substitute for Mr Neagle's yearly fodder costs per cow the figure which I have used above for the Roberts' actual fodder expenditure for 1991-92 (although there may well be reasons which make that figure unusually low, as I have already explained), that would have the effect of increasing Mr Neagle's fodder cost predictions by $25 per cow, $35 per cow and $16 per cow respectively for each of the three years concerned, which would mean that Mr Neagle's fodder cost predictions over the three year period would increase by over $33,000. Even using the $33,000 figure just mentioned, rather than either the $180,000 or $200,000 figures, it is apparent that the increase is an economically significant one, so far as Mr Neagle's budget is concerned. 163 Having now dealt to the extent to which I propose to do so with Mr Neagle's 12 May 1993 budget, I will deal quite briefly with two subsequent budgets of his, one a budget of 25 May 1993 and the other a budget of 7 June 1993. Each of those two budgets was intended to supersede its predecessor and there is no dispute that at least the 25 May 1993 budget was given to the Blackers, although the NAB did dispute in its scheduled final submissions that the 7 June 1993 budget was. 164 So far as operating income and expenditure is concerned, there is only one difference between the budgets of 12 May 1993 and 25 May 1993. That is in Mr Neagle's predictions of operating expenditure under the heading of "Seed & Fertiliser". Whereas the three annual figures under that heading in the 12 May 1993 budget had been $15,000, $17,000 and $20,000 respectively, the three annual figures under that heading in the 25 May 1993 budget were $20,000, $22,500 and $23,500 respectively. 165 There is a dispute between the Blackers, on the one hand, and Mr Neagle, on the other, as to the circumstances under which those substitutions occurred. Mr Neagle's evidence was, in effect, that he had been directed by Mr Blacker to substitute those precise figures, whereas the Blackers' evidence was, in effect, that they had asked Mr Neagle to increase the predicted expenditure, but had not nominated any particular increase. 166 In my view, it is unnecessary for me to resolve that dispute (although I should mention that there appears to be some incongruity between Mr Neagle's position in the dispute and his evidence that, at the relevant time, the Blackers, to his knowledge, had "no familiarity with …running costs"). If I accepted Mr Neagle's evidence on the matter in dispute, then that would lead me to be satisfied that Mr Neagle did have reasonable grounds for making those particular predictions in his 25 May 1993 budget (and again in his 7 June 1993 budget). However, his having had reasonable grounds for the making of those particular predictions would have no effect on the multitude of other predictions in his budgets as to which I have already said that I am not satisfied that he had reasonable grounds for making them. For that reason, resolving the dispute presently under discussion would seem to me to be a matter of little consequence in the resolution of the present case. 167 Turning now to Mr Neagle's 7 June 1993 budget, before dealing with certain changes made in it, it is appropriate to mention yet again the fact that on 1 June 1993 Mr Neagle had submitted to his superiors an application for credit by the Blackers. That application had contemplated that, for the first two years after they began to operate their dairying business, the Blackers not repay any of the principal owing on their $900,000 loan from the NAB, but that they would begin to repay principal on the loan in the third year, the principal sum then being amortised over a certain number of years. Mr Neagle's superiors were, however, troubled about the Blackers' capacity to begin repaying principal on the $900,000 loan from the start of the third year of operation of their dairying business, given the figures for the third year contained in Mr Neagle's 25 May 1993 budget. Mr Neagle's superiors also appear to have wanted a shorter amortisation period for the $900,000 loan than Mr Neagle had proposed. 168 It was in that setting that Mr Neagle produced his 7 June 1993 budget. It will be recalled that, in his 12 May 1993 budget, Mr Neagle had predicted milking cow numbers reaching 250 in the thirteenth month of the thirty-six month period and remaining at that level throughout the rest of the period. (The 25 May 1993 budget was the same in that respect.) In his 7 June 1993 budget, Mr Neagle instead predicted that, in the twenty-fifth month of the thirty-six month period, milking cow numbers would increase from 250 to 275 and then remain at that level throughout the rest of the period. 169 That predicted 10% increase in milking cow numbers during the third year of the period should obviously have led to a predicted milk production in the third year of the period which was 10% greater than that which had been predicted in the 12 May 1993 and 25 May 1993 budgets. In fact, due to arithmetic error on Mr Neagle's part, it led to a prediction by him of milk production in the third year of the period which was over two thousand litres less than a 10% increase. Be that as it may, the extra litres now predicted to be produced were all predicted to be sold as non-quota milk and their sale apparently led to an increase in the predicted gross operating income in the third year of almost $35,000. 170 However, what is striking about Mr Neagle's changes in his 7 June 1993 budget to his predictions as to the number of cows being milked and as to the resulting receipts from the sale of milk is that he found it unnecessary to predict at the same time any increase in operating expenditure in the third year in order to accommodate the predicted increase in cow numbers involved. To take just one example, either the additional cows would require to be fed no bought fodder at all or else the original cows would each have to make do with less bought fodder than first planned, with the difference going to the additional cows. Neither of those alternatives was realistically possible, without a corresponding decline in milk production. 171 Given the views which I have already expressed as to whether the NAB has satisfied me that Mr Neagle had reasonable grounds for making many of the predictions in his 12 and 25 May 1993 budgets, it appears to me that determining whether Mr Neagle had reasonable grounds for the changes which he made (and did not make) in his 7 June 1993 budget is a matter of little consequence in the resolution of the present case (even assuming that he gave that budget to the Blackers). However, his failing to provide for any increased operating expenditure whatsoever in that budget in consequence of his increase in milking cow numbers appears to me to typify the approach which Mr Neagle took to the preparation of his Blacker budgets generally. In a memorandum dated 5 April 1994, Mr Robert St John, one of Mr Neagle's successors as Bega branch manager, said that Mr Neagle's Blacker budgets had been "inflated to reflect a viable situation", an assessment with which it is hard to disagree, especially in light of Mr Neagle's conduct in connection with his 7 June 1993 budget. It seems plain that, in his 7 June 1993 budget, Mr Neagle simply used a device to improve the Blackers' predicted positive net cash flow in the third year for the purpose of allaying his superiors' concerns about the Blackers' ability to switch, in that year, from payments of interest only to payments of principal and interest both on the $900,000 loan and as well accommodating a shorter amortisation period for the $900,000 loan. 172 (There is, perhaps, one other aspect of Mr Neagle's 7 June 1993 budget which I should mention briefly. It will be recalled that in his memorandum to his superiors dated 1 June 1993, Mr Neagle had told them that Mr Bateman was milking 185 cows as of that date. Accepting the accuracy of that statement, the fact that Mr Bateman was milking 185 cows on 1 June 1993 militates against the reasonableness of Mr Neagle's persisting, in a budget dated only six days later, with his earlier predictions of 12 and 25 May 1993 that the number of cows being milked at the start of the three year period would be 190.) 173 I have already mentioned that there exists a dispute as to whether Mr Neagle gave the Blackers his 7 June 1993 budget. It will be apparent from what I have already said about that budget that it is a matter of little moment that I should resolve that dispute. However, I note that in cross-examination Mr Neagle did give evidence that he discussed with the Blackers at some stage a budget increasing milking cow numbers from 250 to 275 and that he might have had a meeting with them at which he told them that he had redone the budget for Canberra in light of the shorter amortisation period. In those circumstances, it would, to say the least of it, not be straining credulity to conclude that Mr Neagle did give the Blackers his 7 June 1993 budget. 174 In the result, I have identified many predictions with respect to future matters in Mr Neagle's budgets, particularly, that of 12 May 1993, but carried over into his subsequent budgets as well, to the extent to which those budgets are of any significance, as to which the NAB has not discharged its burden under subs 51A(2) of the TPA, with the consequence that, by reason of subs 51A(1) of the TPA, those predictions amounted to misleading conduct by the NAB under subs 52(1) of the TPA. I should add now that, although I have not mentioned them specifically before, it must follow from what I have just said that the NAB has also failed to satisfy me that Mr Neagle had reasonable grounds for predicting, as he did in each of his three budgets with which I have dealt, that the Blackers' dairying business on Springbrook would produce certain positive net cash flows in each of its first three years of operation. Those predictions therefore amounted to misleading conduct as well. 175 I turn now to the question whether the Blackers relied on the NAB's misleading conduct when they entered into the dairying business on Springbrook. 176 It is convenient to introduce that question by setting the appropriate framework for its answer. In that connection, I will first adapt to the present case a series of propositions enunciated by Wilson J in the context of the tort of deceit in Gould v Vaggelas (1985) 157 CLR 215 at 236, which propositions have frequently been accepted as equally applicable to claims based on breach of subs 52(1) of the TPA: · notwithstanding that a representation is misleading, if the representees do not rely on it, the representees have no case; · if a material representation is made which is calculated to induce the representees to engage in certain conduct and they in fact engage in that conduct, there arises a fair inference of fact that they were induced to do so by the representation (later (at 238) his Honour said that such an inference "would ordinarily be drawn"); · the inference may be rebutted, for example, by showing that the representees, before they engaged in the conduct, made it plain that they did not rely on the representation; and · the representation need not be the sole inducement. It is sufficient so long as it plays some part, even if only a minor part, in contributing to the engaging in of the conduct. 177 The case for the Blackers on the reliance issue may be summarised as being that those representations made to them by Mr Neagle in his budgets which I have identified as misleading conduct by the NAB were calculated to induce them to enter into the dairying business on Springbrook. They in fact entered into the dairying business on Springbrook. A fair inference of fact therefore arises, would ordinarily be drawn and should be drawn in the present case that those representations played at least a minor part in contributing to their doing so. 178 The NAB, on the other hand, although it does not deny that Mr Neagle's representations to the Blackers in his budgets were calculated to induce them to enter into the dairying business on Springbrook, says that the inference of fact that those representations played at least a minor part in contributing to their doing so is rebutted by other evidence which establishes that, even before approaching Mr Neagle, the Blackers had made a concluded decision to enter into the dairying business on Springbrook. 179 The NAB pointed to a number of matters which, in its submission, established that, even before approaching Mr Neagle, the Blackers had made a concluded decision to enter into the dairying business on Springbrook and that they therefore did not rely on any of Mr Neagle's representations in doing so. I summarise those matters on which the NAB relied as follows: before they first approached Mr Neagle, the Blackers had already formed the desire to enter into the dairying business in the Bega area, had searched for a dairy farm themselves and had located Springbrook, after having rejected other farms during the search; they had seen their own accountant about operating a dairying business on Springbrook and he had prepared and discussed with them a budget which showed that doing so would be viable; the Blackers had the capacity to and did understand what their accountant told them about the proposed business's viability; the Blackers approached in connection with the purchase of Springbrook, not only the NAB, but also the Commonwealth Bank; and the Blackers did not, being aware in March of 1994 of their business's financial difficulties, complain to the NAB that they had entered into that business in reliance on misrepresentations by Mr Neagle. (I should perhaps add here that there were a number of matters pointed to by the NAB which I have not just summarised, those matters tending to show that the Blackers had been warned before approaching Mr Neagle that entering into the dairying business on Springbrook would be unwise. Far from assisting the NAB on the reliance question, those matters appear to me to support a conclusion that the Blackers did rely on Mr Neagle's subsequent misleading representations. At best, from the NAB's point of view, those matters appear to be amphibolous.) 180 Accepting for present purposes, without deciding, that the NAB has satisfied me of the existence of all five of the matters to which I have referred above, I am nevertheless not satisfied by them that, even before approaching Mr Neagle, the Blackers had made a concluded decision to enter into the dairying business on Springbrook and that they therefore did not rely, to some non-trivial extent at least, on Mr Neagle's misleading representations in doing so. It will be recalled that it was Mr Neagle's own evidence that the Blackers had told him when they first met with him that they were seeing him "to give them an opinion about it [that is, entering into the dairying business on Springbrook] by reason of what the cashflows would show". Accepting the accuracy of Mr Neagle's evidence in that respect, which I see no reason not to do, the obvious inference from the Blackers' statement to him is that they had not yet made a concluded decision on the matter before seeing him. I see no reason not to draw that inference in the circumstances. That the Blackers should have been seeking the opinion of Mr Neagle before reaching a concluded decision on the matter is consistent both with his having assisted them recently regarding the proposed acquisition of the menswear business and with Mr Munro's suggestion "to see, to have a yarn to, John" to check the figures. Further, to conclude that their statement to Mr Neagle had not been sincere would require attributing to them a deviousness which I am not prepared to attribute to them (and would, it appears to me, be quite out of the ordinary). (I note, incidentally, that the NAB made no submission in its scheduled final submissions about the evidence of Mr Neagle with which I have just been dealing.) 181 It is their statement to Mr Neagle, coupled with the fact that Mr Neagle's representations which I have identified as misleading conduct by the NAB were calculated (in the sense of objectively likely: see, for example, Henderson v Amadio (No 1) (1995) 62 FCR 1, 166 (Heerey J)) to induce the Blackers to enter into the dairying business on Springbrook (a matter not disputed by the NAB) and that the Blackers in fact entered into the dairying business on Springbrook, which has persuaded me, in spite of the matters relied on by the NAB, that it is more probable than not that Mr Neagle's misleading representations played at least a minor part in the Blackers' doing so. (I add that my conclusion in that respect is reinforced by my view that Mr Neagle's misleading representations were intended by him to induce the Blackers to enter into the dairying business on Springbrook. In that respect, I refer, in particular, to his having told the Blackers when giving them his first budget that the figures in it were good and that they showed a $30,000 profit in the second year. In such circumstances, the inference that those misrepresentations played at least a minor part in the Blackers' subsequent conduct is the "natural inference": see Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 33 (Burchett J; Sheppard J agreeing (see at 26)).) 182 The next questions which arise are whether, in relying on Mr Neagle's misleading representations, the Blackers suffered loss and, if so, when. The "when" question is important because the NAB has defended the Blackers' claim based on breach by it of subs 52(1) of the TPA together with resulting loss by them by raising limitation defences. I will concentrate in what immediately follows on the timing question, assuming in the Blackers' favour for the moment that they did suffer loss. 183 In their final submissions, the Blackers sought, in respect of the alleged breach by the NAB of subs 52(1) of the TPA with resulting loss by them, an order for damages pursuant to s 82 of the TPA or other orders pursuant to s 87 of the TPA. (Although their application had also mentioned s 80 of the TPA, they did not submit in their scheduled final submissions that any relief should be granted to them under that section, but confined themselves to seeking relief under either s 82 or s 87.) 184 So far as the Blackers' attempt to obtain damages under s 82 of the TPA is concerned, subs 82(1) provides for the commencement of an action for damages, while subs 82(2) provides that an action under subs 82(1) may be commenced at any time within three years after the date on which the cause of action accrued. 185 It was the NAB's submission that, assuming a breach by it of subs 52(1) of the TPA with resulting loss by the Blackers, the Blackers' cause of action in damages had accrued more than three years before the date on which they had started their proceeding (which date, as I have already mentioned, was 27 November 1997). Three possible dates of accrual were nominated: first, 31 August 1993, when the Blackers exchanged contracts to buy the Batemans' assets; secondly, 23 September 1993, when settlement occurred; and, thirdly, March 1994, when, it was submitted, "it became obvious that the Blackers could not generate enough income to service the debt and required further accommodation from the Bank". 186 Although it goes without saying that the Blackers submitted that their cause of action in damages had accrued less than three years before 27 November 1997, it took some time before I was able to discover precisely what the basis of that submission was. Their written submissions had merely repeated certain propositions of law relating to subs 82(2) of the TPA, without attempting to apply any of those propositions to the facts of their case. However, they naturally dealt with the issue orally as well as in writing and, as I understood their oral submissions, they at first put forward two events in the alternative on the occurrence of which their cause of action for damages had accrued. (One of those events, I may say, occurred, as I understand it, after they had started their proceeding, from which would follow that, although not too late in seeking damages, they had been too early!) Ultimately, however, their position appears to have been encapsulated in the following submission (which I have silently edited in a way which I consider makes its meaning clearer): "We accept that under subs 82(2) of the TPA an action has to be brought within three years of the accrual of the cause of action. But as Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 makes plain, the question of when the cause of action accrues depends upon recognising that it is not as if the time runs from the first point at which it is perceived that there is, for example, some diminution in the value of the asset or some difficulty associated with repaying the loan; it is really at a point where, taking all material facts into account, the inability to repay the loan arises that the cause of action accrues." 187 I make two points immediately about the submission which I have just set out. First, although the submission did not then identify the time at which it was submitted that the Blackers had become unable to repay what they had borrowed from the NAB, I infer from other parts of the Blackers' oral submissions that their position is that that inability arose in late 1997, just shortly before the start of the present proceeding. Secondly, I am unable to accept that the High Court's decision in Wardley makes plain that which the Blackers submitted it did. 188 What it is that the High Court's decision in Wardley actually makes plain, so far as is relevant to the present case, was, it appears to me, explained by a Full Court of this Court (Burchett, Hill and Sackville JJ) in Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, a decision to which neither the Blackers nor the NAB referred me. 189 Karedis was a case in which a representation was made that the gross income to be received from a coffee shop business which the representees were then contemplating starting, on premises which they would lease for that purpose, would be $14,000 to $15,000 a week. Induced by that representation, which was one with respect to a future matter for the making of which the representors had had no reasonable grounds, the representees had acquired a leasehold interest in the premises and had begun to operate the coffee shop business on those premises. They had acquired the leasehold interest in October 1988 and had begun the coffee shop business in December 1988. Then, in November 1992, the representees had started a proceeding claiming damages from the representors under subs 82(1) of the TPA for breach by them of subs 52(1) of the TPA together with resulting loss. The representors had taken in the proceeding a limitation point under subs 82(2) of the TPA. 190 In their joint reasons for judgment, Burchett and Hill JJ discussed the relevance of the High Court's decision in Wardley to the factual situation which I have just described, which factual situation obviously bears important similarities to the present factual situation. 191 Their Honours began by saying (at 40) that the reasons for judgment in Wardley made it "clear that loss or damage will not necessarily be suffered at the time a contract is entered into on the faith of misrepresentations made by a respondent. The question will be one of fact". Their Honours then dealt with a particular factual situation, saying (at 40), "In a simple case where a plaintiff purchases an asset on the faith of a misrepresentation and that asset is shown by evidence to have been worth less than it was represented to be, the loss or damage has generally been held to have been suffered at the time the contract was entered into or perhaps at the time when the purchase money under the contract is paid." Their Honours later continued (at 40), "However, the High Court in Wardley made it clear that in other cases [that is, in cases other than the simple case just described] the disadvantageous character or effect of an agreement entered into on the faith of a misrepresentation might not be ascertained until a future date." Having referred (at 41-42) to the individual reasons for judgment in Wardley, their Honours then said (at 42), "The present is a case where the mere entry into the lease produced only a situation where the Antonious [the representees] had the potential to suffer loss. That loss could only be calculated by reference to receipts and outgoings of the business over time. Certainly it could not be said at the time the lease was entered into that they had actually incurred loss or damage as distinct from potential or likely damage. In the language of the majority in Wardley: '... the disadvantageous character or effect of the agreement [could not] be ascertained until some future date when its impact upon events as they unfold[ed] [became] known or apparent ... It was only when their loss was ascertained or ascertainable that it could be said that they had suffered loss.' The learned judge below recognised that the mere entry of the lease did not equate to the suffering of loss. His Honour said: 'But this situation did not manifest itself immediately. The applicants' claim relates to future takings that they did not contemplate, and no-one could have contemplated, would be available from the first day of trading. The applicants were obliged to wait at least 12 months to see if the projections regarding takings were realised before they could show a misrepresentation upon which to base an action. The misrepresentation acquired its nature not from the fact that it did not come true but because, in the circumstances in which it was made, there were no reasonable grounds upon which it could have been made. Although the applicants were, from the beginning, tied into rental obligations far in excess of the value of the leasehold, and expert advice could have appraised of them of that situation as soon as or before they entered the lease, it was not until some time later, I find at least one year after trading commenced, that trading had settled into a pattern demonstrating that they were suffering losses as a result of the representations.' It was for this reason his Honour concluded that the cause of action did not arise until a date not earlier than December 1989." 192 Their Honours disagreed with the approach which the primary Judge had taken in reaching the conclusion that the representees' cause of action had not accrued until December 1989 at the earliest. 193 Their Honours first drew attention (at 42) to evidence before the primary Judge which had shown the average weekly takings for the coffee shop in its first thirteen months of operation, which takings were all substantially below the $14,000 to $15,000 per week predicted. Then, their Honours referred (at 42-43) to other evidence which showed that "financial problems quickly appeared in the course of trading" and that the representees had obtained advice from an accountant in mid-1989. That advice was that the coffee shop was losing over $2300 per week and that the representees should seek to reduce their costs. The representees did so, which led their accountant shortly thereafter to conclude that they could "cover the loan programme" from the bank which had financed them and "trade out of their difficulties", but that their position should be reviewed monthly. However, such reviews appear not to have occurred and the representees stopped paying rent as from June 1989. 194 Having referred to the evidence to which I have just referred, their Honours then said (at 43), "His Honour's conclusion [on the limitation point] as expressed seems to have depended upon an obligation that the Antonious wait at least twelve months to see if the projections regarding takings were realised. With respect to his Honour it is difficult to see how any such inflexible rule could be applied. The question for determination in a case such as the present, consistent with the views expressed by their Honours in the High Court in Wardley, will be when was it that the loss which the Antonious ultimately suffered (or a more than negligible part of it) was either ascertained by them or reasonably ascertainable? No question in the present case arises as to the point of time at which the loss was in fact ascertained. Essentially therefore the question was an objective one, namely, at what time could it be said that it was reasonably ascertainable that the Antonious would suffer loss. This was a question of fact to be determined by reference to the trading figures of the cafe business. It is not a question which could be resolved by reference to an arbitrary period of 12 months. On the figures …, it would seem likely that by some time before December [1989] it was reasonably manifest that the cafe business would never take anything like the represented weekly takings and that each week losses would continue to be incurred which were unlikely ever to be made up. However, it would also be necessary to take into account both the advice given by the accountant and the fact that from at least June [1989] rental ceased to be paid. In our view it would be inappropriate for an appeal court to embark upon a study of the evidence which bears on the issue. Clearly the question is one on which expert accounting evidence would have been useful. We were not taken by counsel for either party through all relevant evidence that would bear upon the matter and are of the view that the appropriate course is that the matter be remitted to his Honour to determine as a matter of fact when the loss which the Antonious ultimately suffered was reasonably ascertainable, for that would be the time when the cause of action accrued. As presently advised, however, we think it is likely that that time would be sooner than December 1989." 195 The third member of the Full Court in Karedis, Sackville J, delivered separate reasons for judgment, in which he agreed with the reasoning of Burchett and Hill JJ and added some observations on the limitations point. Among other things, his Honour said (at 48), "[T]he present is a case where the Antonious obtained both advantages and disadvantages from the lease transaction, which they were induced to enter by the appellant's misleading conduct. It was not the entry into the lease which of itself produced the loss. The lease may have enabled the lessees to pursue a profitable undertaking. The losses claimed by the Antonious flowed from the pursuit of a particular business which they were encouraged to undertake by the appellants' representations. Only when the course of events allowed the lessees the opportunity to ascertain that the business could not succeed was loss sustained in the relevant sense. In a case of this kind, in order to determine whether loss had been sustained at a particular stage after the lease had been entered into, I think it is necessary to inquire whether the lessees had ascertained, or could reasonably have ascertained, that they were worse off than if they had not entered into the transaction. In the circumstances of the present case, it is difficult to see how the Antonious, acting reasonably, could have failed to ascertain by the second half of 1989 that they had sustained losses in the relevant sense. However, I agree that the matter should be remitted to his Honour to make findings of fact on the issue." 196 It is apparent from the approach of the Full Court in Karedis that, contrary to the submissions of the parties in the present matter, I should resolve the limitation issue presently under consideration by asking myself when it was either reasonably ascertainable or ascertained by the Blackers that they had suffered more than negligible loss as a result of their operating their dairying business on Springbrook, into which business they had been induced to enter by the NAB's misleading conduct. It was at that point that their cause of action in damages accrued. 197 As to when that matter was reasonably ascertainable, I am satisfied that it was reasonably ascertainable more than three years before 27 November 1997. 198 In that connection, I mention by way of introduction that, by 13 January 1994 at the latest, the Blackers' operation of their dairying business had begun to cause them to doubt certain predictions which had been made by Mr Neagle in his budgets. It was on that day that Mr Blacker apparently first contacted the NAB about those doubts. Then, according to Mrs Blacker, in February 1994, she expressed to the NAB the view that Mr Neagle's budgets had been unreliable in specific respects, to some of which respects I have already referred. 199 However, of greater significance than the matters to which I have just referred is evidence concerning the activities of Mr John Miller. In early 1994, the Blackers obtained the services of Mr Miller, an expert in rural finance. Mr Miller in effect replaced Mr Munro at that time, so far as the giving of independent expert financial advice to the Blackers about the operation of their dairying business was concerned. Mr Miller appears to have met with the Blackers in person for the first time in April 1994. Thereafter, he prepared a number of budgets for them. 200 Significant for present purposes was a budget prepared for the Blackers by Mr Miller, dated 7 May 1994 and intended to cover a thirty-six month period beginning in the month of its preparation. It predicted a negative net cash flow from the operation of the Blackers' dairying business on Springbrook between May 1994 and April 1995 of almost $76,000 (which figure might be reduced to almost $62,000 in certain eventualities). It further predicted a negative net cash flow in the next twelve month period of over $27,000 and a positive net cash flow in the last twelve month period of almost $29,000. (Mr Miller, incidentally, gave evidence that, "because of the great uncertainty", "I don't think you can go out any further than 3 years in a rural budget".) Mr Miller also gave evidence that his 7 May 1994 budget had been based on "raw data" provided by the Blackers, in other words, actual figures from the Blackers' operation of their dairying business in the preceding seven months or so. Also, according to Mr Miller, he and the Blackers "were endeavouring to get the closest possible projections that were available given the information at hand at the time". 201 One feature of Mr Miller's 7 May 1994 budget to which I should draw attention is that the results which it predicted for each of its three years were based on the assumption that the Blackers would receive a payment of $20,000 in that year by way of governmental rural assistance. At the time of the preparation of that budget, however, the Blackers had no assurance that they would receive such assistance and, indeed, an application which they had made for it had recently been refused. 202 However, in August 1994, the Blackers made a further application for such governmental rural assistance, having in the intervening period obtained from the NAB agreement to increase their borrowings by $138,000. At that time, Mr Miller made further cash flow forecasts for the succeeding three years' trading by the Blackers, which showed a negative net cash flow in the first year of over $107,000, a negative net cash flow in the second year of over $55,000 and a positive net cash flow in the third year of over $34,000. I see no reason to conclude that those forecasts were not based on actual figures from the Blackers' operation of their dairying business in the time since they had commenced it, just as the forecasts in the 7 May 1994 budget had been. 203 I infer from Mr Miller's two forecasts, in May and August 1994, of significant negative net cash flow, over the succeeding two years at least, that examination of the actual figures from the Blacker's operation of their dairying business, on which actual figures those forecasts had been based, would have disclosed at the time of the preparation of each of those forecasts that that business had already suffered by that time both a significant negative net cash flow and a significant net loss. 204 The inference that the business had already suffered a significant net loss by May 1994, the date of the earlier of the two Miller forecasts presently under discussion, is confirmed by what appeared in the Blackers' partnership income tax return for 1993-94. It is apparent that that return had already been completed and submitted by August 1994, because, on 11 August 1994, Mr Munro forwarded a copy of the trading figures which had formed part of it to the New South Wales Rural Assistance Authority in connection with the Blackers' further application for governmental assistance to which I have already referred above. In his letter forwarding those figures, Mr Munro said, "These [trading] figures do not reflect the true operating results for the above [that is, the Blackers] from dairy farming, as the year was a transitional year, with the sale and 'winding up' of beef and deer farming, to [sic] the purchase and establishment of the dairy farm." Accepting that that is so, nevertheless the Blackers' revenue account showed a net loss of over $77,000 for the financial year 1993-94, for the last three quarters of which year the Blackers had been involved in the dairying business. That result is strongly suggestive of the Blackers' having already suffered a significant net loss in their dairying business by May of 1994. 205 In light of the above evidence, I am satisfied that, by May 1994 (and, even if not by then, then certainly by August 1994 at the latest), it was reasonably ascertainable by the Blackers that they had already suffered more than negligible loss as a result of their operating their dairying business on Springbrook, which business they had been induced to enter into by the NAB's misleading conduct. Indeed, given Mr Miller's evidence about the circumstances of the preparation of his 7 May 1994 budget, it appears likely that, by then, the Blackers had already actually ascertained that they had suffered more than negligible loss by operating their dairying business. In those circumstances, the Blackers' claim for damages under subs 82(1) of the TPA for breach by the NAB of subs 52(1) of the TPA with resulting loss must fail for limitation reasons. 206 I mentioned above that, as well as seeking an order for damages under subs 82(1) of the TPA in respect of alleged breach by the NAB of subs 52(1) of the TPA with resulting loss by them, the Blackers also sought other orders under s 87 of the TPA in respect of that alleged breach with resulting loss. So far as the relief sought under s 87 is concerned, the Blackers did not make plain whether they were seeking such relief under subs (1) of that section or under subs (1A). (Neither their written nor their oral submissions were of any assistance in that respect; in fact, their written submissions regarding s 87 seem to have been recycled from some other proceeding altogether, a proceeding in which no limitation issue had arisen. I say that because those s 87 submissions referred to the Blackers at one point as "the cross-claimant" and at another as "it".) However, as the Blackers conducted their case, they did not dispute that, if their subs 82(2) claim for an order for damages for breach of subs 52(1) with resulting loss was statute-barred, then so was their claim for other orders under s 87 in respect of the same alleged breach with resulting loss. 207 Their not disputing that matter may have been the result of their acceptance that failure would be the inevitable outcome of their doing so: as to a claim for other orders under subs 87(1) for alleged breach of subs 52(1), when resulting actual loss or damage is alleged and the claim is made together with a claim for damages under subs 82(1), see Bate v International Computers (Aust) Pty Ltd (1984) 2 FCR 526 at 527 (Woodward J); Dorfler v Australia and New Zealand Banking Group (1991) 103 ALR 699 at 702 (Spender J); as to a claim for other orders under subs 87(1A) for alleged breach of subs 52(1), when resulting actual loss or damage is alleged, see par 87(1CA)(b) of the TPA and Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 at 18 (Beaumont J), Black CJ and Gummow, von Doussa and Hill JJ agreeing (at 2, 19, 20 and 20 (again) respectively). 208 Since I have decided that the Blackers' subs 82(2) claim for an order for damages in respect of an alleged breach of subs 52(1) with resulting loss is statute-barred, I decide that their s 87 claim for other orders in respect of that alleged breach with resulting loss is likewise statute-barred. 209 Thus far in these reasons for judgment, I have been concentrating on the Blackers' misrepresentation case against the NAB and, in particular, on their claim of breach by the NAB of subs 52(1) of the TPA with resulting loss. Having decided that that claim must fail for limitation reasons, I must obviously deal with the Blackers' common law claim against the NAB for negligent misrepresentation, as to which claim no limitation problem arises in the circumstances (as was conceded by the NAB). Before I do so, however, I will deal with the Blackers' claim of breach by the NAB of its duty under subs 51AA(1) of the TPA, with resulting loss by the Blackers. 210 That claim, one of unconscionable, rather than of misleading, conduct by the NAB, involved the Blackers' applying for orders against the NAB under subs 87(1A) of the TPA. That application was resisted by the NAB on the ground, among others, that it was statute-barred. It is convenient to deal with that ground immediately. 211 The effect of par 87(1CA)(a) of the TPA is that an application under subs 87(1A) in respect of an alleged breach of subs 51AA(1) must be commenced within two years of accrual of the cause of action. As I have already mentioned, it was the NAB's submission (in reliance on par 87(1CA)(a)) that the Blackers' application for orders against it under subs 87(1A) in respect of its alleged breach of subs 51AA(1) with resulting loss was out of time. The Blackers actually made no submissions in opposition to that submission by the NAB. Indeed, the Blackers made no oral submissions about their subs 51AA(1) claim at all, telling me they were content to rest on their written submissions in that respect; however, their written submissions about their subs 51AA(1) claim could politely be described as skeletal at best and, in any event, did not include anything about s 87. (Such written submissions as they made regarding s 87 were concerned solely with their misleading conduct claim and did not deal with their unconscionable conduct claim.) However, I am prepared to infer that, had they made submissions on the aspect of the matter presently under discussion, they would have submitted that time started running in respect of their claim of breach of subs 51AA(1) with resulting loss at the same time as it started running in respect of their claim of breach of subs 52(1) with resulting loss, namely, when they became unable to repay what they had borrowed from the NAB. 212 I am unaware of any reason why questions of accrual of a cause of action should not be dealt with in respect of a claim of breach of subs 51AA(1) with resulting loss in the same way as they would be in respect of a claim of breach of subs 52(1) with resulting loss. Certainly, that was the approach taken by Heerey J in Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170 at 244-45. Given the conclusion which I have already reached about the time of accrual of the Blackers' cause of action in respect of their claim of breach of subs 52(1) with resulting loss, it follows that I conclude that their cause of action, if any, in respect of their claim of breach of subs 51AA(1) with resulting loss must have accrued more than two years before 27 November 1997. For limitation reasons, therefore, that claim must be dismissed, irrespective of its merits, about which I say nothing in the circumstances. 213 I turn now to the Blackers' claim against the NAB of negligent misrepresentation. 214 I have already expressed my lack of satisfaction that Mr Neagle had reasonable grounds for making many of the predictions which he did in his budgets. Given what I have already said on that topic in these reasons for judgment, it should be apparent that, when considering those predictions of Mr Neagle's on the basis that I must be affirmatively satisfied that they were made carelessly, I am so satisfied. In fact, it does not appear to me to be going too far to describe Mr Neagle's budgets as "hopeless", as was done at one point in his oral evidence before me by Mr St John, who, as I have already mentioned, was one of Mr Neagle's successors as Bega branch manager. I have also already expressed my conclusion that the Blackers relied on Mr Neagle's predictions when entering into the dairying business on Springbrook. However, in spite of the conclusions to which I have just referred, there is an anterior question which must be resolved in the Blackers' favour before the NAB can be held to have breached a duty of care to them not to make negligent misrepresentations, namely, whether the NAB owed to the Blackers such a duty of care in the circumstances. 215 It is convenient to begin my discussion of that issue by referring to the reasons for judgment of von Doussa J in Smith v Commonwealth Bank (FCA: 11 March 1991, unreported) and to the subsequent unanimous reasons for judgment of a Full Court of this Court (Davies, Sheppard and Gummow JJ) in Commonwealth Bank v Smith, affirming the judgment of von Doussa J. (The Full Court's reasons for judgment in the matter are reported both in (1991) 42 FCR 390 and in (1991) 102 ALR 453; however, while the latter report is a full one, the former report is a partial one only.) 216 In that case, Mr and Mrs Smith, who asserted the existence of factual circumstances similar to those asserted by the Blackers in the present matter, claimed damages from the Commonwealth Bank for breach of subs 52(1) of the TPA, for negligent misstatement and for breach of fiduciary duty. It was held by von Doussa J that the Smiths succeeded on all three of their causes of action and he awarded them damages accordingly. 217 In his reasons for judgment, von Doussa J stated (at 29-30; citations omitted) some general principles relating both to the Smiths' breach of fiduciary duty claim and to their negligent misstatement claim. I will set out below that statement as it applied to both of those claims by the Smiths (even though in the present case, as is apparent from the catalogue of claims which I set out at the outset of these reasons for judgment, the Blackers made no claim against the NAB of breach of fiduciary duty): "The relationship of banker and customer does not necessarily give rise to a fiduciary relationship even in the case of longstanding customers. A bank will have its own interests to service. Where a customer approaches a bank to provide finance for a transaction, in obtaining particulars of the proposed transaction and in assessing the implications of the transaction, the bank will commonly do so entirely for its own ends. In such cases the bank will not be subject to the duties of a fiduciary, nor will it owe a duty of care to the borrower to exercise an advisory function in relation to the merits of the transaction. However there will be cases where a bank goes further and assumes the role of an adviser. Where it does so, depending on all the circumstances of the case, the bank may become a fiduciary to the customer and also come under a general duty of care to exercise reasonable care and skill in the provision of advice. The obligation resting on a bank in a particular case depends on the facts and is not to be treated as if it were a matter of pure law." 218 Subsequently (at 30-33), von Doussa J applied those principles to the facts before him, saying, "In the present case I consider the Bank and Mr Dungan [the manager] became fiduciaries to the applicants by reason firstly of the role assumed by Mr Dungan as adviser to the applicants on the merits of the transaction, and secondly … …. In my opinion the respondents [that is, both the bank and Mr Dungan] … came under a duty of care to exercise reasonable care and skill in fulfilling the advisory function which Mr Dungan assumed. In relation to earlier business proposals which the applicants had taken to Mr Dungan, his advice to the applicants had gone beyond advising them whether or not the Bank would make finance available. The applicants were relying on Mr Dungan for guidance and advice on the merits of the proposals. In relation to the Weeroona Hotel [the hotel business entered into by the Smiths on Mr Dungan's advice] this must have been apparent to Mr Dungan when Mr Smith made repeated contact with him to discuss the … [vendor's] figures, to show him calculations based on those figures, to question different aspects of the hotel business, and to raise the topic of seeking advice from an accountant. It must have been clear to Mr Dungan that the applicants were seeking his advice as they trusted in his superior knowledge, and that they would rely on his answers. These enquiries were on a serious business matter. I find that in answering the enquiries made of him in the way he did, Mr Dungan intended the applicants to act on those answers. It was reasonably foreseeable that if the advice or information given by Mr Dungan turned out to be incorrect, the applicants would be likely to suffer loss. These findings fulfil the conditions on which a duty of care is imposed on someone who gives information: San Sebastian Pty Ltd & Anor v. The Minister Administering the Environmental Planning and Assessment Act 1979 and Anor (1986) 162 CLR 340 at 355, 372. The advice which he gave about the suitability of the hotel business for the applicants and about the desirability of obtaining advice from an accountant was wrong. It was negligent advice." 219 I propose now to turn to the Full Court's reasons for judgment on appeal from the judgment of von Doussa J, but, before doing so, I should mention that the FCR report of the case is not helpful for present purposes, since it dealt (relevantly) only with that aspect of the appeal relating to the Smiths' successful claim of breach of fiduciary duty by the bank, a claim which the Blackers had not made before me. I will therefore refer only to the ALR report of the Full Court's reasons. (For reasons not apparent to me, in their scheduled final submissions, the Blackers took me to certain passages in the FCR report of the case, but did not take me to the ALR report of the case at all, nonetheless though only the ALR report contained the Full Court's reasoning on the Smiths' negligent misstatement claim.) 220 In dealing with the Smiths' negligent misstatement claim, the Full Court said (at 475), after having dealt with the Smiths' subs 52(1) claim, "We turn to the question of negligence. All that we have so far said is relevant to this question. The evidence establishes that Mr Dungan, on behalf of the bank, assumed the position of business adviser to the respondents. He was not merely acting in the interests of the bank; he had another capacity, namely, that of adviser to the respondents as well. He was therefore under a duty to advise them with due care and skill. He failed in this duty because the advice he gave the respondents about the appropriateness of the transaction was wrong. For reasons earlier given, he had no basis, let alone any reasonable basis, for making the statements which he did. No valuation or other material available to him justified him in giving advice about the matter particularly in the categorical way in which he did. It follows that his Honour's conclusions that the cause of action in negligence was made out should not be disturbed." 221 It is apparent from the passage which I have just quoted that the Full Court approached the question whether the bank was under a duty of care to advise the Smiths with due care and skill by asking itself whether, in the circumstances, the bank manager had not merely acted in the interests of the bank, but had assumed on behalf of the bank the position of business adviser to the Smiths. That was in substance the same approach as had been taken by von Doussa J in express reliance on the decision of the High Court in San Sebastian. No doubt, the Full Court, in approaching the matter as it did, also intended to give effect to the High Court's decision in San Sebastian. 222 Although there have, of course, been subsequent developments in the High Court in the area of the duty of care in negligence where claims for damages are made for purely economic loss (see, recently, Perre v Apand Pty Ltd (1999) 164 ALR 606 and see also Phegan, "The Tort of Negligence into the New Millennium", (1999) 73 ALJ 885), those developments do not appear to me to require that I approach the question of the existence of a duty of care in the NAB in the present circumstances in a manner different from that in which the equivalent question was dealt with by both von Doussa J and the Full Court in Smith: see, for example, McHugh J's description in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 274 of San Sebastian as "the leading case in this Court on tortious liability for negligent misstatements"; and see also, in Perre, the reasons of: Gleeson CJ at 610, [7] and 611, [10]; and Gaudron J at 615, [28]-[30]. Certainly, no suggestion was made by the parties before me that I was required by any authority subsequent to Smith either in the High Court or in a Full Court of this Court to approach the question of the existence of a duty of care in the NAB in the present circumstances in a manner different from that in which the equivalent question was dealt with both by von Doussa J and by the Full Court in Smith. 223 Asking myself, then, whether in the present case Mr Neagle on behalf of the NAB assumed the position of business adviser to the Blackers, my conclusion is that he did and that he was therefore under a duty on behalf of the NAB to advise them with due care and skill. 224 A number of matters combine to lead me to the conclusion which I have just expressed, which matters I summarise as follows: in early 1993, the Blackers approached Mr Neagle about their prospective entry into the menswear business; on that occasion, Mr Neagle had not merely acted in the interests of the NAB; he had in fact advised the Blackers as to the merits of their proposed entry into the business, wanting, as he said in evidence, to give them a bit of a helping hand and to have them trust and rely on what he told them; his conduct in that respect had, not surprisingly, led the Blackers to conclude that they could trust Mr Neagle to provide them thereafter with advice about entering into a business, which advice was in their best interests; shortly thereafter, in about early May 1993, the Blackers came to Mr Neagle again about a further proposed entry into a business; the business was now dairying, a type of business with which, as Mr Neagle knew, the Blackers were in substance unfamiliar, but with most aspects of which he considered himself to be very familiar from the NAB's point of view; at that time, the Blackers expressly asked Mr Neagle to give them his opinion, based on a cash flow forecast which he would make, about their entering into the business; that request was obviously on a serious business matter, involving, as it did, the Blackers' possibly borrowing about $1M and investing about a further $700,000 of their own money (which sum represented most of their net worth, as Mr Neagle knew); Mr Neagle intended the Blackers to enter into the dairying business in reliance on the contents of his budgets, as was evidenced by his telling them in connection with his first budget that the figures in it looked good and that they would have about a $30,000 profit in the second year; and, finally, it was reasonably foreseeable that if Mr Neagle did not exercise due care and skill in advising the Blackers on their proposed entry into the dairying business, there was a risk of their suffering economic loss. 225 (There is one matter to which I have not referred in the list of matters which I have just set out, but which I mention now, and that is Mr Neagle's not having involved Mr Munro further in the Blackers' loan application process, as would normally have been the case, after Mr Munro had prepared his budget which I have discussed above. I have considered whether I should conclude (and therefore include in my list) that Mr Neagle's omission in that respect was an attempt by him to avoid the Blackers' receiving from Mr Munro further advice which might counteract the optimistic picture which Mr Neagle was presenting to them while they were still considering their entry into the dairying business on Springbrook. In the end, while I am suspicious about the matter, I have decided that I should not rely on it and do not do so.) 226 For the reasons given above, I find that the Blackers' have established the existence of a duty of care in Mr Neagle. 227 I turn therefore to the questions whether the Blackers have established that they suffered any damage as a result of the NAB's negligent misstatements and, if so, what the quantum of their damages is. 228 It is convenient to begin discussion of those questions by referring to some of the relevant judicial decisions. 229 In State of South Australia v Johnson (1982) 42 ALR 161, the High Court of Australia (Gibbs CJ and Mason, Murphy, Wilson and Brennan JJ) discussed the principles applicable in assessing damages both for fraudulent and for negligent misstatement. The Court said (at 169-70), "The principle which underlines the award of damages in tort is, generally speaking, that of restitutio in integrum. The object is to restore the plaintiff to the position in which he would have been placed if the wrongful act had not been committed. The measure will vary as between deceit and negligence. In deceit, the plaintiff recovers the difference between the amount paid and the value of the property acquired [assuming, of course, that the deceit is one which has induced the acquisition of property], the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place. The defendant being guilty of a deliberate wrong, the damages will include the whole loss directly flowing from the fraudulent inducement because … it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen…. It is otherwise in cases of negligent misrepresentation. Although the wrongdoer is liable for the damage which flows directly from his wrongful act or omission, the plaintiff's damages are limited to that which was reasonably foreseeable. This limitation applies in accordance with the general principle in negligence. Subject to this limitation, the consequence is that if the effect of the negligent misrepresentation is that the victim has lost profits or income which he would otherwise have earned, he should recover damages in respect of them. We are speaking here, not of loss of profits under a contract into which the plaintiff enters by reason of the misrepresentation, but of profits which the plaintiff would have made had he not acted on the misrepresentation….. The measure of damages recoverable in the United States for negligent misrepresentation is similar. There the plaintiff recovers what is necessary to compensate him for the pecuniary loss caused by the misrepresentation, including (a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) other pecuniary loss suffered as a consequence of the plaintiff's reliance upon the misrepresentation…." 230 (Although it does not matter for present purposes, I note that the High Court appears afterwards to have resiled from its treatment in the above passage of the measure of damages in deceit, acknowledging the appropriateness of imposing a foreseeability requirement in that case as well: see Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 12 (Mason, Wilson and Dawson JJ), relying on what Gibbs CJ had said in Gould v Vaggelas at 223-24; and see also Marks v GIO Australia Holdings Ltd (1998) 158 ALR 333 at 346, [41] (McHugh, Hayne and Callinan JJ). (The relevant passage from Gates is quoted below.)) 231 Subsequently, in Wardley Australia Ltd v Western Australia, Mason CJ and Dawson, Gaudron and McHugh JJ said (at 530), "In the case of a fraudulent or negligent misrepresentation which induces the plaintiff to enter into a contract to purchase property, the plaintiff's loss, apart from any question of consequential damage, is measured by the difference between the price paid or payable under the contract and the value of the property at the date of the contract." 232 As I understand the effect of the two passages which I have quoted above, in a case such as the present, the prima facie measure of damages is the difference between the price paid by the representee to purchase the property concerned and the value of that property as at the date of entry into the contract to purchase it. However, in addition to seeking damages on the usual basis, the representee may seek reasonably foreseeable consequential damages. (Of course, in a case in which the representee seeks reasonably foreseeable consequential damages in addition to damages on the usual basis, care must be taken to avoid double counting.) 233 Further, as I understand the position, the representee may seek reasonably foreseeable consequential damages alone, even if the representee could not have established an entitlement to damages on the usual basis. That appears to be implicit in the passage from the reasons for judgment of Mason, Wilson and Dawson JJ in Gates to the existence of which I have already referred above. The passage deals with fraudulent misrepresentation inducing the purchase of goods, but there is no difference between fraud and negligence or between goods and other assets, at least for present purposes. The passage is as follows (case references omitted): "In deceit the measure of damages is the difference at the time of purchase between the real value of the goods, and the price paid…. But this has been treated as a prima facie measure only, the true measure being reflected in the proposition stated by Dixon J … in these terms: 'In an action of deceit a plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage he has suffered in consequence of his altering his position under the inducement of the fraudulent misrepresentations made by the defendant.' As his Honour then pointed out, it is a question of determining how much worse off the plaintiff is as a result of entering into the transaction which the representation induced him to enter than he would have been had the transaction not taken place. This entitles the plaintiff to all the consequential loss directly flowing from his reliance on the representation …, at least if the loss is foreseeable…." (I also note now that it was implicit in the manner in which the NAB made its final oral submissions before me that it accepted that the Blackers might recover reasonably foreseeable consequential damages for negligent misrepresentation, even if unable to recover damages on the usual basis.) 234 As mentioned in South Australia v Johnson, reasonably foreseeable consequential damages of the type of which I have been speaking may include profits foregone by reason of the representee's having purchased the property concerned (which are to be distinguished from those profits which would have been gained under the contract to purchase the property concerned if the inducing misrepresentation had been true or come to pass). An example of such consequential damage was given by Mason, Wilson and Dawson JJ in Gates (at 13): "If that reliance [that is, the plaintiff's reliance, in buying goods, on the defendant's fraudulent misrepresentation] 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…. The lost benefit is referable to opportunities foregone by reason of reliance on the misrepresentation…. [I]t is for the plaintiff to establish that he could and would have entered into the different contract." (For a case in which the distinction became crucial between, on the one hand, profits foregone because of a failure to enter into a different contract to purchase property and, on the other hand, profits which would have been gained under the very contract induced by the misrepresentation if that misrepresentation had been true or come to pass, see Kyogle Shire Council v Francis [1988] 13 NSWLR 396 (Mahoney and Clarke JJA; Kirby ACJ dissenting).) 235 Reasonably foreseeable consequential damages of the type of which I have been speaking may also include expenses incurred in connection with the property acquired, as appears from L Shaddock & Associates Pty Ltd v Parramatta City Council [No1] (1981) 150 CLR 225. 236 Shaddock was a case in which, induced by a negligent misstatement by the defendant that some land which the plaintiffs were considering purchasing from a third person for redevelopment was not affected by any road widening proposal by the defendant, the plaintiffs agreed in May 1973 to pay to that third person about $417,000 to purchase that land. At that time, the land had on it a disused service station and it was the plaintiffs' intention to hold the land for three to five years and then to build on it an office building. The plaintiffs financed the purchase by borrowing the purchase price at interest. The road widening proposals which existed would, if implemented, have substantially reduced the size of the land concerned and made it unsuitable for the construction of the office building proposed by the plaintiffs. 237 The plaintiffs sought from the defendant damages for negligent misstatement, both on the usual basis and for consequential losses. At trial, the judge held that the defendant had owed no duty of care to the plaintiffs, but also discussed the question of the damages which he would have awarded to the plaintiffs if he had held that the defendant had owed a duty of care to the plaintiffs. On appeal from the decision of the New South Wales Court of Appeal affirming the decision of the trial judge, the High Court held that the defendant had owed the plaintiffs a duty of care which it had breached and so the question of the assessment of their damages arose. That question was dealt with by the High Court itself, the court doing so by reference to the trial judge's approach. 238 The trial judge had first dealt with the plaintiffs' claim for damages on the usual basis. He had found that the land purchased had been worth $284,000 in May 1973, or $133,000 less than the plaintiffs had paid for it, and would have awarded the plaintiffs the latter amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $133,000 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount. 239 As well as dealing with the plaintiffs' claim for damages on the usual basis, the trial judge had also dealt with their claim for consequential damages and would have awarded the plaintiffs certain consequential damages if he had held for them on the duty of care issue. All of the damages concerned were expenses incurred by the plaintiffs, some of them of a recurring nature. It was the trial judge's view, however, that any expenses should be allowed only until the end of 1994 "because until then they [that is, the plaintiffs] were exploring what could be done with the land and making efforts to salvage what they could from what was in fact a disastrous purchase" (see (1978) 38 LGRA 23 at 47). 240 One such expense was the interest paid on the money borrowed to purchase the land. The trial judge assessed that amount at $22,193 and would have awarded the plaintiffs that amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $22,193 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount. 241 Another such expense was fees paid to architects and surveyors and to the defendant for a development application. Those totalled $5,530 and the trial judge would have awarded the plaintiffs that amount in damages if he had held for them on the duty of care issue. The defendant not disputing in the High Court that the plaintiffs were entitled to the $5,530 if it had breached a duty of care which it owed to them, the High Court awarded the plaintiffs that amount. 242 The remaining expenses for which consequential damages were claimed totalled $13,215 and were for rates and tax on the land, for insurance and for the additional stamp duty and solicitors' costs paid because the price of the land had been about $417,000, instead of its actual value, $284,000. The trial judge would have awarded the plaintiffs $13,215 in damages for those items of expense if he had held for them on the duty of care issue, but the defendant disputed in the High Court that the plaintiffs were entitled to the $13,215, even assuming that the defendant had breached a duty of care which it owed to them. 243 It was held unanimously by the High Court (Gibbs CJ and Stephen, Mason, Murphy and Aickin JJ), however, that the plaintiffs were entitled to the disputed $13,215. Murphy J so held without giving any reasons therefor (see at 256), from which one may infer that he simply agreed with the reasoning of the trial judge on that issue. Stephen J (at 244) and Aickin J (at 256) expressly agreed with the reasons for judgment of Mason J on that issue. Gibbs CJ (at 236-37) and Mason J (at 254-55) each gave separate sets of reasons for holding that the plaintiffs were entitled to the disputed amount, although the substance of each of those separate sets of reasons for judgment appears to me to have been the same. 244 Gibbs CJ said (at 237; emphasis added), "It was submitted on behalf of the Council that if the appellants, who had the land, were given $133,000 in addition, they would be in the same position as if the land had not been affected by the proposals and that the payment to them of the additional items would give them a windfall benefit. It was submitted that if they had received the land unaffected by the road widening proposals they would have been bound to meet the additional expenses in question, and that since they were to be given an amount which would mean that they would receive the full value of the land in the condition in which they intended to buy it they should not be paid in addition the amounts which they would have been required to spend if the Council's representation that the land was unaffected by the proposals had been true. No question of directness, remoteness or foreseeability arises. The only question is whether in fact there has been a duplication in the assessment of damages. The appellants are entitled to be put, so far as money can do, in the same position as if they had not made the purchase. If the purchase had not been made the appellants would have kept the money paid to the vendor and would not have made the other payments in question. The award of $133,000, when added to the actual value of the land bought, recompensed the appellants for the payment out of the purchase money, but did not recompense them for the other expenses that they had to meet. It is true that the rates, tax, insurance, stamp duty and costs would have been payable if the land had not been affected by the road widening proposals, but it was so affected, and the payments would not have been made if the Council had not made the negligent mis-statement on which the action is founded. Of course the appellants were bound to mitigate their loss, but the learned trial judge was entitled to find that it was reasonable for the plaintiffs to continue to hold the land until the end of 1974, while they were exploring what could be done with the land and endeavouring to salvage what they could from the disastrous purchase. For these reasons the challenge made to the assessment of damages should not succeed." 245 Mason J said (at 254-55; emphasis added), "The respondent submits that the approach to damages taken by the judge was to place the appellants in the same position as if the land had not been affected by the road-widening proposal and that there was no justification for giving them any compensation beyond that. The respondent says that the items in question were all expenses to which the appellants would have been subject if they had bought the land free from the road-widening proposal. The primary judge considered that the appellants would have been entitled to recover all items of consequential damage up to the end of 1974 because until that time 'they were exploring what could be done with the land and making efforts to salvage what they could from what was in fact a disastrous purchase'. His Honour found that the period up to the end of 1974 was a reasonable period. The respondent is right in saying that the items were expenses to which the appellants would have been subject had the land been free from the road-widening proposal. However, this does not prevent the expenses from constituting recoverable damage. The judge found that, but for the negligent mis-statement, the appellants would not have bought the land, the land being useless for the purpose for which it was acquired. Consequently, the appellants' loss includes, not merely the diminution in value of the land, but also the expenses of acquisition and retention for a reasonable time, expenses which would not have been incurred had the respondent not been negligent. It was not suggested that the items in question fell outside the boundary of foreseeability. The measure of recoverable damages for negligent mis-statement is the amount of money necessary to restore the plaintiff to the position he was in before the statement, subject to the loss being foreseeable." 246 If, in the present case, the Blackers were seeking damages on the usual basis, one would have expected them in their final submissions to submit that the Batemans' assets had had a value on the date of the contract to purchase them, 31 August 1993, of less than $1.53M, to nominate what that value was and then, in accordance with the clear understanding on which the present case was conducted, accepted by both sides of the record from the outset, that I would be asked to make no finding of fact which they desired me to make without being directed to the evidence on which they were relying in support of that finding, to identify that evidence which supported their submission as to the Batemans' assets' actual value on 31 August 1993. 247 Next, if, in the present case, the Blackers were seeking consequential damages for lost profits, one would have expected them in their final submissions to submit that, as a result of purchasing the Batemans' assets, they had lost profits from a certain alternative business in a certain amount and then, in accordance with the understanding to which I have just referred, to identify that evidence which supported their submission that they "could and would have entered into"a"different contract" to purchase a dairying (or other) business"and that it would have yielded the benefit claimed" (to adapt the statement from Gates quoted above). 248 Finally, if, in the present case, the Blackers were seeking consequential damages for expenses incurred, one would have expected them in their final submissions to submit, as in Shaddock, that they had incurred expenses of certain amounts in certain categories and then, again in accordance with the understanding to which I have referred, to identify that evidence which supported their submission as to those amounts and categories. 249 However, none of the things to which I have referred in the preceding three paragraphs occurred (nor, perhaps I should add at this point, had the Blackers put before me any expert financial evidence on their claimed damages which would have made the basis of that claim apparent.) 250 Instead, in their scheduled final written submissions, the Blackers merely made the following submissions (which I have re-ordered to some extent, as will be apparent from their paragraph numbers), "34 The measure of damages is the direct and foreseeable consequence of the negligent advice being the amount necessary to restore the Applicants to the position they were in before the making of the representations and the giving of advice subject only to the losses being foreseeable. 35 The measure of recoverable damages for negligent misstatement is the amount of money necessary to restore the plaintiff [sic] to the position he [sic] was in before the statement, subject to the loss being foreseeable. The test is somewhat different from that applied in deceit and breach of warranty: L Shaddock & Associates Pty Ltd v Parramatta City Council (No1) (1981) 150 CLR 225. 5 When the Blackers entered into the agreement to purchase 'Springbrook' they had net assets of $857,000 consisting of real property 'South Kanoona' $700,000, a bush block worth approximately $70,000, plant and equipment worth $40,000 and stock worth $70,000. They had an overdraft debt of $23,000…. At the date of trial the Blackers' equity has been entirely eroded, because the outstanding bank debt is significantly greater than the present value of 'Springbrook'. 6 … [B]y way of damages for negligent advice …, the Applicants seek relief which places them as nearly as possible into the position they would have been in but for their entry into the agreement to purchase 'Springbrook'. Shortly put, the available remedy should be fashioned to restore the Blackers to their pre-purchase equity position. 36 The Applicants claim interest under section 51A Federal Court of Australia Act 1976." 251 As I understand those written submissions, what the Blackers were submitting in them was that their damages for negligent misstatement were to be quantified at $857,000. (I add also that I understood the NAB not to be disputing that the Blackers' net worth before purchasing the Batemans' assets had been $857,000, but was nil at the date of trial, although, not surprisingly, the NAB did not concede that if duty of care and breach of that duty had been made out against it, then the Blackers were entitled to the $857,000 claimed.) 252 To the extent to which the matter of the Blackers' damages was the subject of attention during their final oral submissions, that attention was as brief as it had been during their scheduled final written submissions. However, such attention as there was disclosed that, in so far as the Blackers relied on previous authority for their claim that their damages should be quantified at $857,000, that authority consisted solely of the emphasised portions of those passages in the reasons for judgment of Gibbs CJ and Mason J in Shaddock which I have set out above. 253 It is apparent, however, that those emphasised portions do not support the submission made (which submission appears to have been made in an attempt to avoid confronting, rather than to overcome, any problems of causation, remoteness and mitigation). Neither those emphasised portions, nor the entirety of the passages which I have quoted from Shaddock, would justify an approach to damages which amounts in substance simply to saying that: before they bought the Batemans' assets, the Blackers had a net worth of $857,000; at trial, after buying those assets, their current net worth was nil; they bought those assets as a result of negligent misrepresentations by the NAB; therefore the NAB was liable to them for $857,000. All that those passages would justify would be: first, awarding damages on the usual basis; and, secondly, awarding reasonably foreseeable consequential damages of the "expenses incurred" type. As the High Court said of Shaddock in South Australia v Johnson (at 170), "In Shaddock, as no question of loss of profits arose, it was appropriate to award the plaintiff compensation by reference to the difference between the amount paid by the plaintiff for the property and its actual value plus other incidental expenses." 254 The question obviously arises what I am now to do, faced with the inadequate manner in which the Blackers have presented their case on damages. In considering that question, there are a number of matters which I keep in mind. 255 First, if the Blackers had submitted that, at the date of the contract to purchase the Batemans' assets for $1.53M, those assets had had a value of less than that sum, then it would have been, to say the least of it, difficult for me, on the evidence which I have before me, to accept such a submission. The evidence which is most relevant in that respect is a report prepared by Mr Colin Alfred Ferguson in October 1998. Mr Ferguson was a registered valuer who had been valuing rural properties in the Bega area for about twenty years. In his report, Mr Ferguson said that he had been asked (by the NAB) to assess Springbrook's market value "in early 1994 (say March 1994)". However, Mr Ferguson appears to have understood that task as being one to value only some of the assets which the Blackers had purchased from the Batemans. Excluded from that valuation, according to Mr Ferguson, were "the dairy stock, and movable farm plant and equipment". According to Mr Ferguson, the market value in March 1994 of those assets whose value he did assess was $1.173M, which is $357,000 less than the price which the Blackers had agreed to pay for all of the Batemans' assets in August 1993. However, there was no expert evidence before me as to the value in March 1994 of the dairy stock and movable farm plant and equipment which were excluded from Mr Ferguson's valuation and so I am unable to say how their value at that time compared to $357,000. In any event, even if there had been expert evidence before me causing me to conclude that the value of the dairy stock and movable farm plant and equipment in March 1994 had been less than $357,000, a question would have arisen whether I should infer that the value of all of the assets which the Blackers had agreed to purchase had been no greater in August 1993 than their value in March 1994, some seven months later. Of course, I need not consider that question in the circumstances. 256 Secondly, if the Blackers had submitted that they had suffered reasonably foreseeable consequential damages of the "lost profits" type, then it would have been impossible for me to accept such a submission, given the state of the evidence before me. There was no evidence of the existence of any specific alternative dairying (or other) business which the Blackers were considering at the relevant time, let alone any evidence as to the subsequent profitability of such a business. 257 Thirdly, if the Blackers had submitted that they had suffered reasonably foreseeable consequential damages of the "expenses incurred" type, then there was evidence before me on which they could have constructed such a claim, although, by no stretch, am I able to imagine that a properly prepared and presented case along those lines would have yielded total damages of $857,000, even if one were to ignore all questions of causation, remoteness and mitigation. 258 Fourthly, in its final oral submissions, the NAB did submit that the Blackers had failed to establish a case for damages on the usual basis. At the same time, however, the NAB conceded, "No doubt, there were expenses associated with the acquisition which would represent some damage…." The NAB also submitted, "[I]n the absence of any satisfactory demonstration of what their [that is, the Blackers'] damages are, any award in their favour should be discounted to the minimum extent that the court can have sufficient confidence is actual loss they suffered. The discountable bill will be larger for their failure to adduce evidence as to what it might be." Later, the NAB returned to that topic, submitting, "[T]hey have failed to produce any satisfactory evidence of what their loss was and as I have pointed out the onus is on them[. I]n the absence of satisfactory evidence, your Honour should significantly limit the loss." Finally for present purposes, the NAB submitted, "[T]he only appropriate remedy available on the material adduced in this case would be an assessment of an amount representing loss[,] which we say should be established as of mid 1994". (The mid-1994 date was selected by the NAB on the basis that that was the date by which, it was submitted, the Blackers should have should have mitigated their losses by reselling the assets which they had purchased from the Batemans.) 259 I consider that the submissions of the NAB to which I have referred in the preceding paragraph amounted to an invitation to me in the circumstances (and regardless of what I would have done in the absence of those submissions) to award to the Blackers a global sum representing consequential damage of the "expenses incurred" type for the period ending at the end of June 1994. I am prepared to accept that invitation, rather than simply to dismiss the Blackers' claim for failure adequately to establish their damages (as I would otherwise have done, in light of their failure to adhere to what they had agreed at the outset of the case as to the way in which I was to engage in the fact-finding exercise on their claim). 260 The global sum which I consider appropriate in the circumstances is $92,500, representing about $10,000 a month between the time when the Blackers acquired the Batemans' assets and the end of June 1994. There was evidence before me that, for about four years after acquiring the Batemans' assets, the Blackers had paid to the NAB $10,000 a month in interest in connection with their loans from it, although they had ceased to pay any interest thereafter. If that figure were accurate, then the $92,500 to which I have referred would represent the Blackers' interest payments to the NAB over the period to the end of June 1994. However, I have some doubt about the accuracy of that figure, since the Blackers' revenue account for 1993-94, to which I have already referred above in another connection, showed total interest paid in 1993-94 (all of it to the NAB) of only $78,308, some of which appears inevitably to have been attributable to the business in which the Blackers were engaged before they began dairying, some months into 1993-94. To the extent that the $10,000 a month exceeds the actual interest payments to the NAB, it may, of course, be treated as representing other relevant expenses incurred by the Blackers' during the period. 261 I add that I have not considered it appropriate to reduce the sum of $92,500 by reference to the existence of contributory negligence by the Blackers. That I should do so had been submitted by the NAB in its scheduled final written submissions, although the issue was not the subject of any submission by it in its final oral submissions. (I note, incidentally, that some of the matters relied on by the NAB in its scheduled final written submissions as establishing contributory negligence by the Blackers were in truth matters which would have established instead a failure by them to mitigate their losses.) In declining to give effect to the NAB's contributory negligence submission, I am content to adopt the approach to the matter taken by Sir Donald Nicholls V-C in Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560 at 574-75. 262 I consider that the Blackers should also be awarded interest on the sum of $92,500. I add that, although I understood the NAB to resist the payment of interest on any sum which represented the difference between the value of the Batemans' assets at the time of purchase and the price paid for those assets by the Blackers, it made no submission that I should not award interest on any sum which represented expenses incurred and it is on the latter basis that I am awarding the $92,500. Such interest should run from 1 February 1994, which is about halfway through the relevant period. 263 I will order the Blackers to file and serve on the NAB, within seven days of the date of publication of these reasons, proposed short minutes of order giving effect to my reasons on their claim. I will also order the NAB, if it contends that the Blackers' proposed short minutes of order do not properly give effect to my reasons on their claim, to file and serve on the Blackers, within ten days of the date of publication of these reasons, alternative proposed short minutes of order. 264 As to the NAB's cross-claim, it was not the subject of any real attention during the hearing before me. The Blackers did not in truth dispute that cross-claim, except in so far as they relied on those matters which were the subject of their claim. In so far as their reliance on those matters was successful, that will be reflected in my judgment on their claim, so that the NAB's cross-claim must succeed in its entirety. As I am doing with the Blackers in respect of their claim, I will order the NAB to file and serve on the Blackers, within seven days of the date of publication of these reasons, proposed short minutes of order giving effect to its cross-claim. I will also order the Blackers, if they contend that the NAB's proposed short minutes of order do not properly give effect to its cross-claim, to file and serve on the NAB, within ten days of the date of publication of these reasons, alternative proposed short minutes of order. 265 Finally, I will order that the matter be listed for further hearing fourteen days after the date of publication of these reasons. On that further hearing, any dispute about the orders to be made on the claim and cross-claim will be dealt with. I will also deal then with the question of costs. I certify that the preceding two hundred and sixty-five (265) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. Associate: Dated: 25 May 2000 Counsel for the Applicants: Messrs D McGovern & L Aitken Solicitor for the Applicants: Commins Hendriks Counsel for the Respondent: Messrs J E Thomson & G Lucarelli Solicitor for the Respondent: Dibbs Crowther & Osborne Dates of Hearing: 25, 26, 27, 30 November 1998, 1, 2, 3, 4 December 1998, 5, 6, 7, 8, 9 July 1999, 12, 13, 14, 15, 16 July 1999, 16, 17 August 1999 Dates of Further Written Submissions: 20 August 1999, 22 November 1999, 17 December 1999, 13 January 2000 25 May 2000 Date of Judgment: