FEDERAL COURT OF AUSTRALIA Blacker v National Australia Bank Ltd [2001] FCA 254 TRADE PRACTICES – borrowers induced to purchase dairy business by misrepresentations made by Bank – whether cause of action under s 82(1) of the Trade Practices Act 1974 (Cth) statute barred – when cause of action accrued – whether loss accrued only when purchasers ascertained that business was not viable. DAMAGES –borrowers relying on Bank's advice to purchase dairy business – whether damages for breach of duty include loss of borrowers' "equity" – whether consequential losses compensable. REMEDIES – s 87(1) of the Trade Practices Act 1974 (Cth) – whether loan transaction should be set aside. Trade Practices Act 1974 (Cth), ss 51A, 52(1), 82(1), 82(2), 87(1), 87(1CA), 87(2). Limitation Act 1969 (NSW), s 14. Dairy Industry Act 2000 (NSW). Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, applied. Hawkins v Clayton (1988) 164 CLR 539, cited. Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, discussed. Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, applied. Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, cited. Potts v Miller (1940) 64 CLR 282, cited. Gould v Vaggelas (1985) 157 CLR 215, cited. South Australia v Johnson (1982) 42 ALR 161, discussed. Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, cited. Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167, cited. Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305, applied. Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307, cited. Anema E Core Pty Ltd v Aromas Pty Ltd [1999] FCA 904, cited. Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, cited. PETER RAYMOND BLACKER & ANOR v NATIONAL AUSTRALIA BANK LTD N 723 OF 2000 WHITLAM, TAMBERLIN & SACKVILLE JJ SYDNEY 19 MARCH 2001 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 723 OF 2000 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: PETER RAYMOND BLACKER and CHRISTINE BLACKER APPELLANTS AND: NATIONAL AUSTRALIA BANK LTD RESPONDENT JUDGES: WHITLAM, TAMBERLIN & SACKVILLE JJ DATE OF ORDER: 19 MARCH 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellants pay the respondent's costs. 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 N 723 OF 2000 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: PETER RAYMOND BLACKER and CHRISTINE BLACKER APPELLANTS AND: NATIONAL AUSTRALIA BANK LTD RESPONDENT JUDGES: WHITLAM, TAMBERLIN & SACKVILLE JJ DATE: 19 MARCH 2001 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT the proceedings 1 In this appeal it is not now in dispute that the appellants were induced to purchase a dairy farm and other assets by misrepresentations made by a branch manager of the respondent ("the Bank"). Nor is it in dispute that, by reason of the misrepresentations, the Bank engaged in misleading and deceptive conduct in contravention of s 52(1) of the Trade Practices Act 1974 (Cth) ("TP Act") and breached a duty of care it owed to the appellants. 2 The question before the Court is whether the primary Judge erred in limiting the relief granted in favour of the appellants to an award of damages of $92,500, plus interest. The appellants say that they should be compensated in full for the loss of their "equity" in the business, amounting (so it is said) to $857,000. Alternatively, the appellants say that orders should be made pursuant to s 87(1) or s 87(1A) of the TP Act relieving them from their liability to repay moneys borrowed from the Bank, although this would seem to provide more extensive relief than an award of damages to compensate for their loss of equity. 3 The proceedings instituted in this Court arose out of the purchase by the appellants, Peter and Christine Blacker, of a dairy farm known as "Springbrook", located near Bega in southern New South Wales. The appellants purchased the farm, together with a cattle herd, dairy plant and certain milk quotas (collectively referred to as the "dairy business") under a contract of sale, which was completed on 23 September 1993. The appellants paid $1.53 million for the dairy business and (according to the primary Judge) a further $70,000 in stamp duty and legal fees. In order to enable the appellants to purchase the dairy business, the Bank advanced $900,000 by way of an interest only loan for a term of twenty-four months. This advance and other accommodation provided by the Bank was secured on certain of the assets of the dairy business. In May 1994, the appellants arranged with the Bank to make available an additional $125,000 to facilitate the installation of additional irrigation works on Springbrook, thereby substantially increasing the area of irrigated land. After some further transactions (referred to in [40]-[43] below), these loans, together with small additional sums, were refinanced by the Bank in 1995 and 1996, on the security of various mortgages, stock mortgages, guarantees and indemnities. 4 The appellants' dairy business was not successful, although the appellants continued to make payments to the Bank in accordance with their financing arrangements until about September 1997. They did not commence proceedings against the Bank until 27 November 1997, more than four years after they had acquired the dairy business. The institution of the proceedings prompted the Bank to file a cross-claim seeking, inter alia, judgment on moneys due under the 1996 refinancing arrangements and an order for possession of Springbrook by reason of the appellants' default under mortgages of that property. 5 The trial commenced on 25 November 1998 and lasted for some twenty hearing days, the last of which was on 17 August 1999. It appears that some hearing time was lost because of abortive settlement negotiations between the parties. The proceedings also had to be adjourned because the initial estimates by the parties of the duration of the trial proved to be overly optimistic. After receiving written submissions during the period August 1999 to January 2000, his Honour delivered judgment on 25 May 2000. 6 The primary Judge rejected the appellants' claim to damages under s 82(1) of the TP Act by reason of the Bank's misleading and deceptive conduct: Blacker v National Australia Bank Ltd [2000] FCA 681. His Honour held that the appellants had suffered more than negligible losses in the conduct of the dairy business by May 1994 or, at the latest, by August 1994. It followed that their cause of action under s 82(1) had accrued more than three years before the proceedings were instituted and, accordingly, was barred by virtue of s 82(2) of the TP Act. 7 The primary Judge also rejected the appellants' claim to relief under s 87 of the TP Act. His Honour did so because the appellants (at [206]): "did not dispute that, if their subs 82[(1)] 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." 8 It was common ground before the primary Judge that the appellants' claim against the Bank for damages in respect of breach of duty was not statute barred, since the applicable statute provided for a six year limitation period: Limitation Act 1969 (NSW), s 14(1)(b). His Honour characterised the appellants' approach to the assessment of damages as follows (at [253]): "before they bought the [dairy business, the appellants] 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 Bank]; therefore [the Bank] was liable to them for $857,000." 9 His Honour recorded that the Bank did not dispute that the appellants' net worth before purchasing the dairy business was $857,000 and that it was nil at the date of trial. He noted, however, that the Bank did not concede that if the appellants established that the Bank had breached its duty of care, they would be entitled to recover the sum of $857,000 as damages in respect of that breach. 10 The primary Judge expressed the view that the authorities did not support the approach to damages taken by the appellants. He thought that their simple approach avoided rather than confronted problems of causation, remoteness and mitigation. He took the view that the Bank's submissions in effect conceded that the appellants should receive a global sum representing consequential damage of the "expenses incurred" type for the period from the purchase of the business until 30 June 1994 (the date at which, according to the Bank, the appellants, acting prudently, should have resold the dairy business). His Honour said that he was prepared to accept what he regarded as the Bank's "invitation" to award a global sum (at [259]): "rather than simply… dismiss [the appellants'] claim for failure adequately to establish their damages (as I otherwise would have done in the 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)". The passage in parentheses is a reference to the "clear understanding" on which the case was conducted, namely that the primary Judge would not be asked to make a finding of fact without him being directed to the evidence upon which the parties were relying to support that finding. 11 His Honour considered that the global sum that was appropriate was $92,500, representing about $10,000 per month from the time the appellants' acquired the dairy business (23 September 1993) to the end of June 1994. According to his Honour, this figure corresponded roughly to the amount of interest paid by the appellants to the Bank during this period. In addition, the primary Judge awarded interest on the sum of $92,500. 12 It should be noted that, although his Honour assessed damages by reference to the nine month period from the acquisition of the dairy business in September 1993 to the end of June 1994, he made no finding that the appellants had acted reasonably in retaining the business until the latter date. Nor did he find that the appellants acted unreasonably in retaining the business beyond June 1994. Rather, his Honour chose the end of June 1994 as a "cut-off date" because of what he regarded as a concession by the Bank that the appellants should be awarded a global sum encompassing losses until that date. 13 The primary Judge pointed out that the Bank's cross-claim had not been the subject of any "real attention" and that the appellants had not in truth disputed the claims made by the Bank except insofar as they made affirmative claims themselves. Accordingly, his Honour found for the Bank on the cross-claim. 14 In the result, the primary Judge made orders to the following effect: 1. Judgment for the appellants against the Bank in the sum of $153,968.15 (being $92,500 plus interest). 2. The appellants give possession of Springbrook to the Bank. 3. The appellants deliver up possession to the Bank of cattle subject to a stock mortgage. 4. The Bank have judgment against the appellants on the cross-claim in the sum of $1,551,475.68 (apparently the amount of principal and interest due to the Bank under the refinancing arrangements, although these were not identified in the reasons for judgment). 5. The appellants authorise the New South Wales Dairy Corporation to pay to the Bank the proceeds of surrender of the appellants' milk quota. 6. The Bank pay the costs of the appellants of their claim up to 3 November 1998, and the appellants pay the Bank's costs on an indemnity basis thereafter. (This and the following order presumably reflected the terms of an offer made by the Bank on 3 November 1998 to settle the proceedings.) 7. The appellants pay the Bank's costs of the cross-claim until 3 November 1998 on a party and party basis and thereafter on an indemnity basis. 15 One of the many curious features of this case is that, despite the appellants' lack of success in running the dairy business, they continued to operate the business up to and throughout the trial. It is common ground that from 1995 to 1997, the appellants took some steps to sell the dairy business, although both at the trial and on the appeal the Bank disputed whether these steps should be regarded as genuine efforts to sell the business at market value. 16 In the event, Springbrook was sold by the Bank in the exercise of its power of sale some time after his Honour delivered judgment (we were not told the exact date of the sale). We were informed that the sale of Springbrook by the Bank yielded the sum of $692,776.64. We were also informed that the sale price was adversely affected by the then impending deregulation of the dairy industry in New South Wales (implemented by the Dairy Industry Act 2000 (NSW), which came into force on 1 January 2001). 17 We were not given any precise information as to the fate of the other assets forming part of the dairy business, except that we were informed from the bar table that, over a period of time, the Bank sold the cattle belonging to the appellants and that the appellants were entitled to some compensation under the so-called Dairy Adjustment Scheme. Mr McGovern, who appeared with Mr Aitken for the appellants, also told us from the bar table that a bankruptcy notice had been served on each of the appellants requiring payment of the sum of $771,000 said to be the amount due to the Bank after the sale of Springbrook. The bankruptcy notices were not tendered and the precise make up of the amount said to be due to the Bank in those notices is not clear. the legislation 18 Section 52(1) of the TP Act provides as follows: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 51A(1) provides that, for the purposes of Div 1 of Part V of the TP Act (which includes s 52), where a corporation makes a representation with respect to any future matters and the corporation does not have reasonable grounds for making the representation, the representation is to be taken as misleading. 19 Part VI of the TP Act is headed "Enforcement and Remedies". Section 82, which is within Part VI, provides as follows: "(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. (2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued." 20 Section 87, also within Part VI, relevantly provides: "(1) Without limiting the generality of section 80, where, in a proceeding instituted under…this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in…in contravention of a provision of Part…V, the Court may, whether or not it grants an injunction under section 80…, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in subsection (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage. (1A) Without limiting the generality of section 80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in…in contravention of a provision of Part… V..., make such order or orders as the Court thinks appropriate against the person who engaged in the conduct…(including all or any of the orders mentioned in subsection (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person. … (1CA) An application under subsection (1A) may be commenced: (a) …; or (b) in any other case – at any time within 3 years after the day on which the cause of action accrued. … (2) The orders referred to in subsection (1) and (1A) are: (a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct, or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order; (b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date before the date on which the order is made as is so specified; (ba) an order refusing to enforce any or all of the provisions of such a contract; (c) …; (d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage." the appellants' submissions 21 The primary Judge remarked on several occasions on the difficulty of following the precise case the appellants wished to present. The same difficulty was evident in the conduct of the appeal, as the appellants shifted ground or sought to raise new contentions. In the event, the appellants applied for and were granted leave to amend the already amended notice of appeal on two further occasions during the course of the appeal. 22 The grounds of appeal ultimately pressed by the appellants can be summarised as follows: · First, they contended that the primary Judge had erred in finding that the appellants' cause of action under s 82(1) of the TP Act had accrued more than three years prior to the institution of proceedings and therefore was barred by virtue of s 82(2). It followed, so it was argued, that the appellants were entitled to claim damages under s 82(1) of the TP Act or to seek a compensation order under s 87(1A) of the TP Act (both provisions being subject to three year limitation periods). · Secondly, Mr McGovern sought to resile from the concession he had made to the primary Judge, namely that if the appellants' claim under s 82(1) of the TP Act was statute barred, so was their claim to relief under s 87(1). He did not dispute that if the appellants' cause of action under s 82(1) was statute barred, the cause of action under s 87(1A) would also be barred by virtue of s 87(1CA) of the TP Act. However, he argued that, even if the s 82(1) claim was statute barred, there was no time bar applicable to the appellants' claim for relief under s 87(1). He submitted that orders should be made under s 87(1) extinguishing the appellants' liability to the Bank in respect of moneys due under the financing arrangements or, alternatively, "setting aside the judgment…on the [Bank's] cross-claim and ordering in lieu thereof that the receipt by the [Bank] of any moneys from the proceeds of the exercise of any power of sale by it under the aforesaid [security instruments] operate as a complete discharge of the appellants' liabilities under the said [instruments]." · Thirdly, the appellants contended that the primary Judge had erred in limiting the award of damages for breach of duty to $92,500, plus interest. Mr McGovern adhered to the submission that the appellants were entitled to be compensated for their loss of equity in the venture. He conceded in the course of argument, however, that in order to make out that submission the appellants needed, at the least, a finding that they had acted reasonably in conducting the business during the four year period leading up to the trial. He accepted that no such finding had been by the primary Judge. 23 Mr McGovern expressed a preference, should the appeal be allowed, for orders to be made remitting the proceedings to the primary Judge, rather than for this Court to make the necessary findings and to assess damages or grant other final relief. Although he did not explain precisely why this was the preferred course, Mr McGovern seemed to be influenced by the absence of findings on issues critical to his case and a recognition on his part that it would be difficult for an appeal to make findings which would depend on an assessment of the appellants' credit. He may also have been influenced by the fact that the relief sought by the appellants under s 87(1) of the TP Act is framed by reference to the proceeds of the exercise of the Bank's power of sale under various security instruments. Not only did the sales occur after the primary Judge delivered judgment, but there was no evidence (as distinct from incomplete assertions from the bar table) before this Court as to the results of the Bank's exercise of its power of sale of various assets. Indeed, not once in the course of three days of argument on the appeal did either counsel refer, otherwise than in passing, to the refinancing arrangements that took place in 1995 and 1996. further background events leading to the purchase 24 As has been pointed out, the Bank has not challenged the findings by the primary Judge that it contravened s 52(1) of the TP Act and that it breached its duty of care to the appellants. Nor is there any challenge to his Honour's findings that the appellants were induced by the Bank's misrepresentations to purchase the dairy business. Nonetheless, a brief account of the factual background and of the primary Judge's reasoning on these issues is of assistance in understanding the issues on the appeal. 25 The appellants were married in 1977. In about 1989, Mr Blacker began deer farming on a property he then owned, known as South Kanoona. By late 1992, the deer farming venture was proving unsuccessful. This difficulty prompted the appellants to consider purchasing a new business. 26 The appellants became aware of a dairy business (comprising Springbrook, the milk quotas, dairy plant and the cattle herd) being on the market, at an asking price of $1.68 million. They informed their own accountant, Mr Munro, that they would pay for the business by selling South Kanoona (except for a small lot known as the "bush block") and borrowing $1 million. Mr Munro prepared cash flow budgets for them, showing a positive net cash flow in each of the first three years of the business. 27 Before deciding to purchase the dairy business, the appellants consulted the then manager of the Bank's Bega branch, Mr Neagle. The evidence revealed that Mr Neagle had been subsequently dismissed by the Bank for what was described in evidence as "serious wrongdoing", unrelated to the appellants' transaction. 28 Mr Neagle discussed the proposed purchase with the appellants, who had had no previous experience conducting a dairy business. He prepared three cash flow budgets relating to the business the appellants proposed to acquire, dated 12 May 1993, 25 May 1993 and 7 June 1993 respectively. His Honour devoted most attention to the accuracy of the first of these budgets, which predicted a positive cash flow in the first year of operations of some $64,000 and in the second year of about $17,000 (according to the budget) or $30,000 (according to the information conveyed by Mr Neagle directly to the appellants). 29 The primary Judge found that Mr Neagle, and therefore the Bank, had no reasonable grounds for including in the budget a number of predictions as to revenue to be derived from the business. In particular, Mr Neagle had no reasonable basis for his assumptions as to milking cow numbers for twenty-five of the thirty-six months covered by the budget; the milk yield per cow over the whole thirty-six month period; and the gross income to be derived from sales of milk during that period. His Honour found that Mr Neagle had overstated likely income from the dairy business by some $46,000 over the whole period. 30 The primary Judge also found that Mr Neagle had no reasonable basis for important predictions as to expenditure likely to be incurred in the dairy business. Specifically, he considered that fodder expenditure was understated by at least $33,000 over the three year period and possibly by substantially more than that figure. 31 His Honour concluded that the same deficiencies affected the later budgets prepared by Mr Neagle. He expressed his conclusion in this way (at [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 [Bank] 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 [Bank] 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 [Bank] 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." 32 His Honour then found that the appellants had relied on Mr Neagle's budgets, at least to some extent, in making their decision to purchase the dairy business and borrow funds from the Bank. They had therefore been induced by the Bank's misleading and deceptive conduct to enter the various transactions completed in September 1993. In addition, his Honour found that Mr Neagle had assumed the position of business adviser to the appellants. It followed that the Bank had assumed a duty to advise the appellants with appropriate care and skill. The Bank had breached that duty. 33 The primary Judge made these findings of fact without expressing any general view as to the credit or reliability of the evidence of each of the appellants. His Honour considered it unnecessary to resolve any conflicts in evidence between the appellants and Mr Neagle, since Mr Neagle accepted sufficient of the appellants' evidence to enable the relevant findings of fact to be made. Later in the judgment, the primary Judge rejected particular portions of Mr Neagle's evidence, but this did not cause his Honour to express any general view as to the reliability of the appellants' evidence. the purchase and subsequent events 34 The following account of the purchase of the dairy business and subsequent events relies mainly on documents in the Appeal Book, as his Honour did not make detailed findings on these matters. Nor were these events the subject of careful analysis on the appeal. They illustrate, however, that the case does not simply involve a one-off transaction induced by the Bank's misleading or deceptive conduct or breach of duty. 35 By letter dated 7 September 1993, the Bank offered the appellants three facilities: (i) an overdraft with a limit of $50,000 expiring on 30 September 1994; (ii) a fixed rate interest only loan of $900,000 for a term of 24 months; and (iii) an advance facility of $100,000 expiring on 30 September 1994. One of the "additional conditions" applicable to the facilities was that by "9/1995 the total debt is to be placed on a Principal & Interest reduction facility over a maximum of 10 Years." The appellants accepted the loan facilities, including this condition. The agreed securities were a registered first mortgage over Springbrook; a registered stock mortgage; an irrevocable order in respect of moneys held by the New South Wales Dairy Corporation; and a personal guarantee from Mr Blacker supported by an existing registered first mortgage of the "bush block". 36 On 23 September 1993, the purchase of the dairy business was completed. The purchase price of $1.53 million and stamp duty and legal expenses of $70,000 were obtained from the drawdown of the term loan ($900,000) and the sale proceeds of Kanoona ($700,000). The interest rate on the term loan was fixed at 10.25 per cent per annum. 37 Two mortgages over "Springbrook" (each in respect of four separate parcels of land) were registered in favour of the Bank on 16 November 1993. A stock mortgage dated 31 January 1994 was registered on 14 February 1994. 38 In March 1994, the appellants sought additional funding from the Bank. At this stage no part of the agreed $100,000 facility had been drawn down. 39 In May 1994, the Bank agreed to increase the overdraft limit by $20,000 to $70,000 and to increase the advance facility by $75,000 to $175,000. The appellants declined to give an undertaking that they would sell Springbrook if the dairy business did not achieve a positive cash flow after three years. The documentation for the increased facilities (which the appellants signed on 1 June 1994) provided that the securities were to include the existing registered mortgages and a fresh guarantee from Mr Blacker for the increased sum of $1,145,000. However, the Bank agreed to release its security on the "bush block" so that it could be sold and the proceeds utilised as working capital for the dairy business. 40 In August 1994, the appellants applied under the Rural Adjustment Scheme for an interest subsidy of $20,000 per annum for three years. The application was based on the "additional funding for productivity enhancement" approved by the Bank in May 1994. The New South Wales Rural Assistance Authority approved a grant of $20,000 per annum for two years only, subject to the Bank agreeing to provide continuing support during that period. A "commercial lender's undertaking" to the Authority was executed by the Bank on 2 September 1994, and the Authority agreed to pay annually in advance a subsidy of $20,000 on 30 September 1994 and 30 September 1995. 41 At the end of September 1994, the overdraft facility was renewed until 31 March 1995. By the end of October 1994, just under $130,000 had been drawn down on the advance facility. This sum was apparently used for capital expenditure on irrigation improvements. 42 In mid-October 1994, the appellants sought lease finance for a new milk vat costing $55,978. Finance was approved at an interest rate of 11.2 per cent per annum for a lease period of 60 months with a residual value of ten per cent. The lease was executed on 17 November 1994. 43 The "bush block" was sold on 7 February 1995 for $51,500 and the proceeds were made available to the appellants for working capital. 44 On 21 April 1995, the overdraft facility was extended to expire on 30 September 1995. On 26 September 1995, it was renewed until 30 September 1996. The margin over the Bank's base lending rate for the interest was reduced from four per cent to two per cent. The other facilities were amalgamated and an interest only loan of $1,075,000 was made for a term of 12 months. Interest was fixed at 10 per cent for a period of six months. The appellants refused to agree to a condition that they keep the Bank informed about the sale of the business. In addition to the existing registered mortgages and the order in respect of moneys held by the Dairy Corporation, a fresh stock mortgage was required as security. A new stock mortgage dated 2 November 1995 was registered on 14 November 1995. 45 On 9 April 1996, the fixed rate loan was re-priced at 10.84 per cent per annum to expire on 5 October 1996. 46 On 13 May 1996, the appellants sought lease finance for a silage cart costing $17,100. Finance was approved for a lease period of 36 months with payment of the first 12 months in advance and a residual value of 40 per cent. The lease was executed on 5 June 1996. 47 On 19 August 1996, the appellants applied once more to the Rural Assistance Authority for an interest subsidy of $60,000 over 3 years. On 5 September 1996, the Authority refused the application. The appellants lodged an appeal against that decision by letter dated 24 September 1996. 48 On 10 October 1996, the Bank offered the appellants a farm management account facility by way of an overdraft expiring on 31 March 1997 with a limit of $70,000, and an interest only loan of $1,075,000 for a term of 6 months at a fixed rate of 9.435 per cent per annum. The appellants refused to agree that their estate agent should provide a written report to the Bank on the price at which Springbrook was being offered for sale. The loans were extended against the securities already held. The appellants accepted the terms and conditions of the loans on 22 October 1996. 49 On 18 December 1996, the Authority wrote to the appellants informing them that an Appeal Committee had confirmed the initial decision to refuse their application for assistance. 50 As we have noted, the appellants continued to make payments to the Bank under the various financing arrangements until about September 1997. These proceedings were instituted in November 1997, and Springbrook was sold by the Bank in exercise of its power as mortgagee some time after the primary Judge delivered judgment. the limitation question 51 The parties placed the limitation issue at the forefront of their submissions. Yet neither party suggested that assessment of the appellants' damages under s 82(1) of the TP Act would yield a result different from an assessment of their damages under the general law flowing from the Bank's breach of duty. On the contrary, both Mr McGovern and Mr Graham QC, who appeared with Mr Thompson for the Bank, disavowed any such suggestion. Moreover, if the appellants are correct in their submission that s 87(1) of the TP Act is not subject to an unexpressed limitation period, they would not be precluded from seeking relief under s 87(1) even if their cause of action under s 82(1) of the TP Act and their claim for relief under s 87(1A) were both statute barred. Nonetheless, since the parties devoted so much attention to this issue, we shall follow their approach and address the limitation issue first. the primary judge's reasoning 52 The primary Judge approached the limitation issue by asking (at [196]) "when it was either reasonably ascertainable or ascertained by the [appellants] 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 [Bank's] misleading conduct. It was at that point that their cause of action in damages accrued". 53 In answering this question, his Honour made a series of factual findings, as follows: · In February 1994, Mrs Blacker expressed to Mr Neagle's successor at the Bank the view that Mr Neagle's budget had been unreliable in important respects. · In April 1994, the appellants engaged Mr Miller, an expert in rural finance. Mr Miller prepared a cash flow budget on 7 May 1994, covering a three year period from that date. This budget, which was based on actual figures from the dairy business in the preceding seven months, predicted a negative cash flow of $76,000 in the first twelve months, and $27,000 in the next twelve months. Mr Miller predicted a surplus of $29,000 in the third year of operations. · Mr Miller prepared a second cash flow budget in August 1994, again utilising actual figures derived from the appellants' operation of the dairy business. This forecast showed a negative cash flow in the first year of $107,000 and in the second year of $55,000. This budget predicted a positive cash flow in the third year of $34,000. · At the time Mr Miller prepared his budgets, the business had already suffered a significant cash flow and a significant net loss, a conclusion supported by the appellants' partnership tax return for the year ended 30 June 1994. · By May 1994 or, at the latest, by August 1994, the appellants could reasonably have ascertained that they had already suffered more than negligible loss as a result of operating their dairy business on Springbrook. Indeed, it was likely that, by the time Mr Miller prepared his budget of 7 May 1994, the appellants had actually ascertained that they had suffered more than negligible loss by operating the dairy business. 54 In these circumstances, the primary Judge concluded that the appellants' cause of action under s 82(1) of the TP Act had accrued more than three years prior to the institution of proceedings on 27 November 1997. Accordingly, he held that their cause of action had been statute barred. the appellants' submissions 55 In his initial submissions on the limitation question, Mr McGovern did not challenge the findings of fact made by the primary Judge. He submitted that his Honour had erred in failing to balance the benefits and burdens of the transaction that the appellants had been induced to enter. Mr McGovern pointed out that it was no part of the appellants' case to suggest that the value of Springbrook or of the dairy business, on the date of acquisition, had been less than the purchase price paid by them. Rather, the basis of their claim was that they had suffered loss by being induced to borrow moneys from the Bank (he did not specify whether under the 1993 arrangements or the refinancing in 1996) which they were ultimately unable to repay because the business proved not to be financially viable. 56 In these circumstances, so Mr McGovern argued, it was not until the appellants had the opportunity to determine whether the business was viable could it be said that the disadvantages of the purchase of the dairy business outweighed the advantages. They could not be said to have had that opportunity until at least September 1995 (when the original interest-only loan became due for repayment). Throughout this period, the appellants were endeavouring to make the business "viable" and were supported in their efforts by the Bank's advance of additional funds in May 1994. the principal authorities 57 The starting point for analysing when a cause of action under s 82(1) of the TP Act is barred by reason of the expiration of the three year limitation period found in s 82(2) is Wardley Australia Ltd v Western Australia (1992) 175 CLR 514. In that case, the issue was when the State had suffered loss or damage in circumstances where (so the State alleged) it had been induced by misleading and deceptive conduct to grant an indemnity to a bank. Under the terms of the indemnity, the State had agreed to indemnify the bank against the net loss arising from the failure of a third party to satisfy a liability under a bill facility. All members of the High Court held that, in the case of a contingent liability, loss or damage is not suffered, for the purposes of s 82 of the TP Act, until the contingency is fulfilled. 58 The facts of Wardley are different from the present case, which is not concerned with a person being induced by misleading or deceptive conduct to undertake a contingent liability. Nevertheless, the observations made by the Court are important in determining when an applicant first "suffers loss or damage" for the purposes of s 82 of the TP Act. 59 The joint judgment (Mason CJ, Dawson, Gaudron and McHugh JJ) observed (at 525) that "[a]s loss or damage is the gist of the statutory cause of action for which s 82(1) provides, the cause of action does not accrue until actual loss or damage is sustained". (Emphasis added.) It follows that under s 82(1) a claimant can recover compensation only for actual loss or damage incurred, as distinct from potential or likely damage (at 526). 60 Their Honours pointed out that the concept of loss or damage, while limited to actual loss, must be applied in a wide variety of circumstances. In order to determine when a claimant first suffers economic loss or damage, by reason of misleading or deceptive conduct, it is necessary to have regard to the applicable measure of damages. In a case such as Wardley, their Honours considered that the claimant is (at 526): "entitled to recover 'a sum representing the prejudice or disadvantage [the claimant] has suffered in consequence of his altering his position under the inducement' (Toteff v Antonas (1952) 87 CLR 647, at 650; see also Potts v Miller (1940) 64 CLR 282, at 297; Gould v Vaggelas (1984) 157 CLR 215, at 220; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, at 12 (where that measure of damages was applied in an action for damages for contraventions of ss 52 and 53(g) of the Trade Practices Act 1974 (Cth)) of the misleading conduct or 'the actual damage directly flowing from' (Clark v Urquhart [1930] AC 28, at 68; South Australia v Johnson (1982) 42 ALR 161, at 170) that conduct, to take up and adapt well-known statements of the measure of damage applicable in an action of deceit." 61 The joint judgment referred (at 527) to the analysis of Gaudron J in Hawkins v Clayton (1988) 164 CLR 539, at 600-601, where her Honour said that in order to determine when a cause of action for negligence causing economic loss accrues, it may be necessary to consider the precise interest infringed by the negligent act or omission. Their Honours continued (at 527): "When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But…detriment in this general sense has not universally been equated with the legal concept of 'loss or damage'. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." 62 In the case of a contingent liability, their Honours considered it would be "unjust and unreasonable" to expect a plaintiff to commence proceedings before the contingency is fulfilled. Such an action would fail if no loss were actually incurred. In any event, damages would have to be estimated on a contingency basis which would create the risk of under-compensation. 63 Brennan J pointed out (at 536) that a claimant may suffer economic loss or damage in a number of ways: "by payment of money, by transfer of property, by diminution in the value of an asset or by the incurring of a liability. Whether loss or damage is actually suffered when any of these events occurs depends on the value of the benefit, if any, acquired by [the claimant] by paying the money, transferring the property, having the value of the asset diminished or incurring the liability." His Honour continued (at 536-537): "[I]f a benefit is acquired by the plaintiff, it may not be possible to ascertain whether loss or damage has been suffered at the time when the burden is borne – that is, at the time of the payment, the transfer, the diminution in value of the asset or the incurring of the liability. A transaction in which there are benefits and burdens results in loss or damage only if an adverse balance is struck. If the balance cannot be struck until certain events occur, no loss is suffered until those events occur. The quantification of the diminution in value of an asset or of a liability incurred or the value of any benefit acquired may not be ascertainable at the time when the burden of the transaction is borne. In that event, the suffering of any loss cannot be said to occur before it is reasonably ascertainable (not before it is ascertained) that the burdens which the plaintiff has borne are greater than the value of the benefits that the plaintiff has acquired or will acquire. In other words, no loss is suffered until it is reasonably ascertainable that, by bearing the burdens, the plaintiff is 'worse off than if he had not entered into the transaction'." 64 Deane J emphasised the facts of Wardley, describing (at 545) the State as having incurred "an isolated contingent liability involving a mere risk (or greater risk) of actual liability to make a payment at some future time." He considered it unlikely that Parliament intended that such a transaction should give rise to a cause of action under s 82. 65 Toohey J took the view (at 555) that the loss or damage covered by s 82 had to be relevant to the claim: "This does not mean that a plaintiff may arbitrarily ignore an aspect of loss or damage in order to keep an action alive. But, equally, a defendant may not point to an aspect of loss or damage which is not relevant to the plaintiff's claim and use that aspect to justify a contention that the plaintiff's claim is statute barred." The loss for which the State sought recovery was the loss it suffered once events had crystallised following the grant of the indemnity. The loss had not occurred at the time the indemnity was granted (at 556). 66 It is not necessarily easy to apply the comments of the High Court in the special circumstances of Wardley to a case where an applicant who has been induced by misrepresentations to enter a lease, or to purchase a business, seeks damages for the losses flowing from the misleading or deceptive conduct. In Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, tenants were induced to enter a lease of premises in which they intended to operate a coffee lounge by the landlord's misrepresentations as to likely takings from the business. The lease was executed on 14 October 1988, the coffee lounge opened in December 1988 and closed in February 1991. The tenants commenced proceedings in November 1992. 67 The primary Judge awarded damages to the tenants including lost capital expenditure and two years of accumulated trading losses, from the opening of the business in December 1988 until December 1990, when the landlords offered to sell the business on behalf of the tenants. His Honour held that the mere entry into the lease by the tenants did not amount to the suffering of loss and that they were obliged to wait twelve months to see if the projections relating to takings were realised. For these reasons, he concluded that the tenants' cause of action had not accrued prior to December 1989 and was therefore not barred by s 82(2) of the TP Act. 68 On appeal to the Full Court, Burchett and Hill JJ, with whom Sackville J generally agreed, pointed (at 42) to evidence which showed that "problems quickly appeared in the course of trading". In mid-1989, some six months after the opening, an accountant had analysed takings and expenditure, concluding that the business was losing over $2,000 each week of trading. The accountant expressed the view that, if labour and food costs were revised, the tenants might trade out of their difficulties. In the event, the tenants simply stopped paying rent. 69 Burchett and Hill JJ rejected the notion that an "inflexible rule" of twelve months, as the primary Judge suggested, could be applied to the takings of the business. Their Honours identified (at 43) the question for determination as "when was it that the loss which the [tenants] 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 [tenants] would suffer loss. This was a question of fact to be determined by reference to the trading figures of the café business…. On the figures prepared by counsel for the [tenants], it would seem likely that by some time before December it was reasonably manifest that the café 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 rental ceased to be paid." Their Honours considered the appropriate course was to remit the proceedings to determine as a matter of fact the time at which the loss or damage suffered by the tenants was reasonably ascertainable. They expressed the view, however, that that time was likely to be earlier than December 1989. 70 It follows from the observations of Burchett and Hill JJ in Karedis v Antoniou that the Court, in order to determine when an applicant first incurred loss or damage in consequence of a respondent's conduct, must consider when the applicant ascertained, or could reasonably have ascertained, that more than a negligible part of the loss or damage had been sustained. It is therefore not necessary, in order to fix the time at which loss or damage was first sustained, that the full extent of the loss flowing from the respondent's conduct be ascertained or ascertainable. 71 Before turning to the present case, reference should also be made to Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494. Marks v GIO was not concerned with the date on which claimants suffered loss for the purposes of s 82(1) of the TP Act, but rather whether the claimants had suffered any loss at all. All members of the Court agreed, however, that relief available under s 82(1) is not to be confined by analogy either with actions in contract or tort: see at 503, per Gaudron J. The joint judgment of McHugh, Hayne and Callinan JJ said this (at 510-512): "[B]oth ss 82 and 87 require examination of whether a person has suffered (or in the case of s 87, is likely to suffer) loss or damage 'by conduct of another person' that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that ss 82 and 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit (eg, s 52) or with equity (eg, s 51AA [unconscionable conduct]) but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies. … This is not to say that no help can be had from the common law in deciding what damages may be allowed under s 82 in cases of conduct contravening s 52. Very often, the amount of the loss or damage caused by a contravention of s 52 will coincide with what would have been allowed in an action for deceit. But that is because the inquiry in both cases is to find out what damage flowed from (in the sense of being caused by) the deceit or contravention. Leaving aside questions of remoteness of damages in assessing damages for deceit…the damages for deceit will be the sum representing the loss suffered by the plaintiff because the plaintiff altered its position in reliance on the defendant's misrepresentation. But the analogy cannot be pressed too far. It should not be pressed to the point of concluding that the only damages that may be allowed under s 82 are those that would be allowed in an action for deceit. The question presented by s 82 is not what would be allowed in deceit, it is what loss or damage has been caused by the conduct contravening the Act." (Emphasis in original). It follows from Marks v GIO that the ultimate inquiry in a case involving a claim for damages under s 82(1) of the TP Act in respect of misleading or deceptive conduct is what loss or damage has been caused by the contravening conduct. See also Kenny and Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413, at 459-461, per Kirby and Callinan JJ. THE PRESENT CASE 72 Mr McGovern seized upon the observations of the Full Court in Karedis as supporting the contention that the present appellants had not suffered loss in consequence of the Bank's misleading conduct until they had the opportunity to ascertain that the dairy business could not be "viable" and that early trading losses could not be recouped. Care must be taken, however, not to transform comments made with reference to the facts of a particular case into inflexible principles of law. The comments in Karedis about losses "unlikely ever to be made up" and the inability of the business to succeed reflected the evidence in that case. That evidence showed that the tenants stopped trading nearly two years before the proceedings were commenced, having at that stage accumulated losses of some $200,000. The losses suffered by the tenants were plainly inextricably linked with the failure of their business. The Full Court approached the case on that basis. In that context, Burchett and Hill JJ took the view that it would have been "reasonably manifest" before December 1989 that the business had sustained irrecoverable losses. 73 We do not regard the judgments in Karedis as establishing that an applicant who leases premises on the faith of misrepresentations by a landlord suffers no loss by reason of the misleading conduct until it becomes manifest that the business conducted on the leasehold premises can never be "viable", or that trading losses can never be made up. Whether more than a negligible part of the losses suffered by the applicant was ascertained, or was reasonably ascertainable, by a particular date is a question of fact dependent on the circumstances of the case. Those circumstances include the nature of the losses the applicant claims to have suffered, the extent to which the losses have become manifest by the relevant date and the nature of the information concerning the losses that was available to the applicant. 74 In the case of the purchase of a business induced by the misleading conduct of the vendor or a third party, losses may be suffered independently of the viability of the business or the recoverability of any trading losses. The obvious case is where the value of the business is less than the price paid by the applicant: see Potts v Miller (1940) 64 CLR 282, at 289-290; Gould v Vaggelas (1985) 157 CLR 215, at 220, per Gibbs CJ. But the purchaser of a business may be entitled to recover so-called "consequential losses" such as trading losses: Gould v Vaggelas, at 220-224, per Gibbs CJ; at 242-243 per Wilson J; at 255-256, per Brennan J (a case of deceit). Again, the question of when the consequential losses (or more than a negligible part of those losses) were suffered is one of fact. The answer is not necessarily coincidental with the date on which it becomes manifest that the business will not be viable or the losses irrecoverable. 75 In the present case, contrary to Mr McGovern's submissions, the appellants did not rest their claim to damages simply on their inability to meet payments due under financing arrangements with the Bank. In the amended statement of claim they alleged that the representations made on behalf of the Bank were misleading or deceptive, inter alia, because "(v) The estimates and calculations made by the respondent concerning cash flow forecasts were far greater than a realistic assessment of the cash flow that could reasonably be expected to be generated by the conduct of a dairy enterprise at Springbrook. (vi) The carrying capacity of Springbrook was far less than represented to the applicants by the respondent. (vii) The cash flow forecasts and budgets prepared by the respondent were unreliable, inaccurate and unprofessional." 76 The amended statement of claim also specified the particulars of loss or damage said to have been suffered by the appellants. Apparently no further particulars of loss or damage were ever sought or supplied. The particulars in the amended statement of claim were as follows: "As part of the purchase of Springbrook the applicants had equity in their farming and associate land and business in excess of $850,000. By reason of the unprofitability of Springbrook [sic] from 1993 to date the applicants' equity has been significantly eroded." (Emphasis added.) The appellants' claim for damages therefore rested on an allegation that the dairy business has been unprofitable from the very outset. 77 In our view, the findings made by the primary Judge support his Honour's conclusion that it was reasonably ascertainable by the appellants by May 1994 that they had suffered more than negligible losses as a result of acquiring the business. By that time, as his Honour found, the business had sustained significant net losses and significant negative cash flows. These findings imply that the appellants had to inject significant additional resources into the business during the first year of its operation. The appellants were not only aware of these adverse developments, but were also aware that an expert, engaged by them, had predicted in August 1994 that they would experience a negative cash flow of some $107,000 in the succeeding year and a further $55,000 in the next year. Moreover, Mrs Blacker was aware by January 1994 that Mr Neagle's budgets were unreliable in important respects. Indeed, it is difficult to see how the appellants could have come to any other conclusion, since it was a simple matter to compare Mr Neagle's assumptions with their daily experience in the conduct of the dairy business. 78 It is true that Mr Miller's budgets held out the prospect of a relatively modest cash flow in the third year of operations (that is, the year commencing August 1996). It may also be accepted that, in August 1994, and even later, the appellants still hoped to make their business viable in the long run. But none of this detracted from the fact that (as pleaded) the appellants had suffered not insignificant operating losses and negative cash flows from the very beginning of the venture and were very likely to suffer further significant losses and negative cash flows over the succeeding two years. Given the nature of the case the appellants attempted to make out, there would have been nothing premature about proceedings being instituted against the Bank in August 1994 or shortly thereafter. 79 In their circumstances, the primary Judge was correct to conclude that the appellants had suffered loss or damage no later than August 1994. Accordingly, their cause of action under s 82(1) of the TP Act accrued outside the three year period prescribed by s 82(2) and was statute barred. Similarly, the appellants were barred from seeking relief under s 87(1A) of the TP Act: s 87(1CA). AN ALTERNATIVE SUBMISSION 80 In the course of the hearing, Mr McGovern sought and was granted leave to add a further ground of appeal challenging the primary Judge's findings of fact relevant to the limitations issue. In substance, Mr McGovern submitted that his Honour had misinterpreted the appellants' partnership tax return for the years ended 30 June 1994. He contended that, when allowances were made for activities unconnected with the dairy business, the loss sustained by the appellants was not approximately $77 000 (as the tax return showed) but some $35 000, of which $24 245 was a charge for depreciation. 81 It is clear, however, that his Honour appreciated that not all of the net loss shown in the relevant accounts for the year ended 30 June 1994 was attributable to the dairy business. His findings concerning the losses and negative cash flows were based primarily on the budgets prepared by the expert, Mr Miller. Those budgets, as his Honour found, were based on actual figures. His Honour regarded the partnership tax returns as merely confirmatory of what the other documentary evidence suggested. 82 In our view, the evidence supported the challenged findings of fact made by the primary Judge. Those findings provided the foundation for his conclusion that the appellants' cause of action under s 82(1) of the TP Act was statute barred. the APPELLANTS' claim FOR RELIEF 83 It might be thought strange that the appellants' claim for damages under s 82(1) of the TP Act should be statute barred because they suffered loss or damage prior to 27 November 1994, yet (as the primary Judge held) they had failed adequately to establish that they had suffered any compensable loss. (As we have noted, his Honour ultimately awarded damages of $92,500, but did so by reason of what he saw as a concession by the Bank). It must be said, however, that difficulties faced by the appellants on the question of damages are attributable to the manner in which they put their claim for relief both before the primary Judge and on the appeal. 84 It will be recalled that, apart from the appellants' claim for damages under s 82(1) of the TP Act, they sought damages under the general law by reason of the Bank's breach of duty. They also invoked s 87(1) of the TP Act, arguing that an order should be made extinguishing the appellants' liability to the Bank under the various loan and security instruments executed by them. We approach the appellants' claim for relief on the assumption that they are entitled to rely on s 87(1) of the TP Act notwithstanding that their cause of action for damages under s 82(1) of the TP Act is statute barred. the principles 85 Some of the authorities relating to the assessment of damages have already been referred to in our discussion of the limitation point. His Honour commenced his analysis by citing the comments of the High Court in South Australia v Johnson (1982) 42 ALR 161, at 169-170: "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, 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, as Lord Denning MR declared in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 at 167, '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 principles in negligence." 86 In this passage, the Court seems to have accepted the principle that the usual measure of damages in deceit is the difference between the price paid for the property acquired and its true value, reflecting the approach taken in Potts v Miller. In Gould v Vaggelas at 221-222, Gibbs CJ indicated that the principle is not inflexible: "There is no reason in principle why the defrauded purchaser should not recover damages for all the loss that flowed directly from the fraudulent inducement (unless, possibly, the loss was not foreseeable). If the purchaser, besides paying more for the business than it was worth, has suffered additional losses which resulted directly from the fraud he ought to be compensated for them. Of course, the court must be satisfied that the loss did result directly from the fraud and not from some supervening cause such as the folly, error or misfortune of the purchaser himself, and must ensure that no additional compensation is given for losses when those losses, or the probability of their occurrence, has already been taken into account in determining the value of the business." (Emphasis added.) See also Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1, at 12, per Mason, Wilson and Dawson JJ. 87 Of course, before any question of assessing damages arises, the applicant must establish on the balance of probabilities that he or she has sustained some loss or damage: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, at 355, per Mason CJ, Dawson, Toohey and Gaudron JJ. If the Court finds that loss or damage has been caused by the respondent's breach of duty, "it must do its best to quantify the loss even if a degree of speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages." Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167, at 183, per curiam; see Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, at 83, per Mason CJ and Dawson J. 88 Since the appellants also relied on s 87(1) of the TP Act, some further reference should also be made to its language and scope. In Marks v GIO, the joint judgment of McHugh, Hayne and Callinan JJ pointed out (at 509-510) that the power in s 87(1) is predicated upon the Court finding "that [the applicant] has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in … contravention of a provision of Part…V". Moreover, the Court's power is to make "such order or orders as the Court thinks appropriate … if the Court considers that the order or orders concerned will compensate [the applicant] in whole or in part for the loss or damage or will prevent or reduce the damage." 89 In a passage we have already quoted ([71] above), the joint judgment pointed out that the orders that may be made under s 87(1) are not limited by analogy with the law of contract, tort or equitable remedies. The apparent breadth of this proposition is, however, qualified by a later comment in the judgment (at 513): "Proof of loss or damage (actual or potential) is therefore the gateway to the s 87 remedies. But the identification of loss or damage is important in the operation of s 87 not only for this reason but also because the power to make orders under s 87 is limited to making orders 'if the Court considers that the order or orders concerned will compensate…in whole or in part for the loss or damage or will prevent or reduce the loss or damage…' (s 87(1) and (1A)). That is, the Court can make orders under s 87 only in so far as those orders will compensate (or will prevent or reduce) the loss or damage that is identified." (Emphasis added.) the appellants' case at first instance 90 The primary Judge noted that the appellants had not put forward any expert evidence that would have made the basis of their claim apparent. His Honour went on to say this (at [250]): "Instead, in their scheduled final written submissions, the [appellants] 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." 91 The appellants' written submissions before his Honour also asserted that the conduct of the Bank caused loss or damage which would be made good by orders under s 87. In particular, they contended that the transactions (which were not precisely identified) should be rescinded and the parties placed in the position they would have been had the purchase never been made. In substance, they urged the primary Judge to do what was practically just and submitted that it was for the Court to work out the appropriate conditions of relief when formulating its orders. reasoning 92 In addressing the appellants' contentions, we assume that the principles governing the assessment of damages for breach of duty are not materially different from those applicable to a claim founded on deceit. This assumption, if anything, is favourable to the appellants. 93 On this assumption, there is a basic difficulty with the way in which the damages case was put to the primary Judge. It was never part of the appellants' case that the dairy farm was worth less than they paid for it. Mr McGovern accepted that there was no evidence to this effect. Rather, the appellants seem to have proceeded on the basis that it was sufficient for them to show that the misleading conduct or negligence of the Bank had caused them to purchase the dairy business and that they had thereafter suffered losses in conducting the business. 94 That the appellants' approach was incorrect is shown by the decision of a Full Court of this Court in Netaf Pty Ltd v Bikane Pty Ltd (1990) 26 FCR 305. After referring to Gould v Vaggelas and other authorities, Sheppard and Pincus JJ said this (at 308): "These cases illustrate the proposition that allowance of trading losses is by no means automatic, particularly in businesses of a kind where trade is particularly prone to fluctuation, as in restaurants: see Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 100. In our opinion, it may be very difficult to determine to what extent trading losses were a product of the 'inherent vice' of the business and to what extent they were avoidable by the purchaser. … We reiterate that, where a purchase has been induced by misleading conduct, it is not enough, in order to recover losses subsequent to the purchase, to prove that but for the misleading conduct or as a partial consequence of it, the agreement to purchase would not have been made; that is so in every successful application of that kind. It is not the law that in every such case the party held to have been engaged in misleading conduct (who may have acted quite innocently) becomes the insurer of the other's success and prima facie liable to indemnify him against the consequences of the purchase. As the trial judge said in the present case: 'To recover a loss sustained in the business, the applicant must show more than that it was sustained in the conduct of that business; for to show only that is to establish what is perfectly consistent with the loss having arisen from his own misguided management decisions, or even total neglect.' His Honour said that he was '…not, however, persuaded the applicant has discharged the onus of showing that losses suffered after the completion of the purchase are attributable to the breach…'." (Emphasis added.) 95 The same point was made by the Full Court in Kenny v Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307 (aff'd Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413), at 328: "This formulation recognises that the defrauded purchaser is not necessarily entitled to all losses flowing from the transaction he or she was induced to enter. It is not enough that the fraud caused the purchaser to enter the transaction and that the losses would not have been incurred but for the transaction. As Doyle CJ has recently remarked, the exclusion of losses from a 'supervening cause' imposes a limiting factor on an otherwise wide test: Copping v ANZ McCaughan Ltd (1997) 67 SASR 525 at 537. Examples of supervening causes include losses attributable to business ineptitude or unexpected competition: Kizbeau v W G & B Pty Ltd [(1995) 184 CLR 281] at 291." See also Anema E Core Pty Ltd v Aromas Pty Ltd [1999] FCA 904 (FC), at [43]. 96 Because of the erroneous assumption made by the appellants, the primary Judge was not asked to make and did not make findings that were essential if the appellants were to recover consequential losses said to flow from the Bank's conduct. This, after all, was a case where the appellants acquired an asset worth no less than the price they paid for it. The onus was on them to establish that the losses sustained in the running of the dairy business (which they presumably say caused or contributed to their loss of "equity") were attributable to the Bank's misleading or deceptive conduct or breach of duty. 97 Mr McGovern conceded in argument that the appellants, in order to be compensated for their loss of equity, would have had to obtain a finding that they had acted reasonably in conducting the business throughout the four year period leading up to the trial. In the absence of that or a similar finding, the losses apparently sustained by the appellants might have been the result of one or more "supervening causes". They might, for example, have resulted from the appellants' failure to conduct the business in a prudent manner; an ill-advised decision to refinance their borrowings in 1995 and 1996; or from factors that might be regarded as "extrinsic", such as losses attributable to the severe drought in the Bega Valley which affected productivity (according to documentary evidence) from August 1995 to November 1995 or to the impending deregulation of the dairy industry. Indeed, on the limited findings made by the primary Judge, some portion of the appellants loss of "equity" might have resulted from factors entirely unrelated to the profitability of the dairy business, such as spending on personal requirements or on legal fees incurred as the result of instituting the proceedings against the Bank. 98 On the appeal, the appellants' argument was essentially that put to the primary Judge. Neither the further amended notice of appeal (the final version) nor the appellants' submissions raised a contention that the primary Judge had failed to make the necessary factual findings that would have enabled the appellant to recover an amount equivalent to their so-called lost "equity". 99 In the course of the appeal, the Court invited, if not pressed, Mr McGovern to formulate particulars of the nature and quantum of the damages or compensatory orders sought by the appellants. The invitation was designed to ascertain whether, despite the flaw in the appellants' case as presented to the primary Judge and on the appeal, there might not be a sustainable basis for the appellants' contention that they were entitled to recover a sum of about $850,000 in damages. We had in mind, too, that an error in presenting a claim for damages at trial should not necessarily prevent an appellate court from correcting the error, if this can be done without injustice to the other side: Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, at 166, per Lord Denning MR. 100 In response to the Court's request, Mr McGovern furnished a set of figures which referred to: (i) the costs of acquisition of the farm, including legal costs and stamp duties said to total $84,847.10 (although the primary Judge found that these items amounted to some $70,000); (ii) interest paid on the loan to 30 June 1997 of $424,857; and (iii) Bank charges of $23,712 to 30 June 1997. These amounts totalled $533,416. 101 These figures, which were not before the primary Judge, compound rather than resolve the difficulties confronting the appellants. For example, it is not clear (and Mr McGovern did not explain) why the appellants would be entitled to recover the whole of the interest paid by them (assuming the calculations were correct) until June 1997, without any allowances being made for revenue derived from the dairy business during that period. The principles governing the assessment of consequential loss flowing from misleading or deceptive conduct or breach of duty do not entitle a claimant simply to claim compensation for a particular outgoing or expense without regard to offsetting revenue. Much the same comment can be made about the inclusion of bank charges in the calculation. Moreover, the assumption underlying the calculations appears to be that any outgoings incurred by the appellants until 31 June 1997 were attributable to the Bank's misleading and deceptive conduct or breach of duty. The selection of and justification for the cut-off date were not explained. 102 In response to further requests by the Court for assistance from the appellants on this question, Mr McGovern submitted a document entitled "Appellants' Claim for Damages". This document contended that the appellants' claim for loss of their capital arose from the following factors: "(i) the uplift in the level of their borrowings over the term of their relationship with the Bank which included entry into additional lease facilities and the expenditure of money for irrigation improvement; (ii) the inability to continue paying the interest on those borrowed moneys after September 1997 having regard to the negative variances on the profitability of the farm; (iii) the compounding effect of inability to pay the Bank interest after September 1997; boosting the debt to in excess of $1.2m as at February 1998 and to more than $1,463,000. At the present time the Springbrook property now having been sold for $692,776.64, yet the Bank debt under the Bankruptcy Notice is $771,000. (iv) Some decline in the value of the Springbrook property which was the only resource to which the Blackers had recourse for the purpose of discharging their liability to the Bank." 103 These submissions make no attempt to relate the claimed loss of net worth or capital to the conduct of the Bank except in the most general way, by asserting that all losses were caused by or directly flowed from the conduct of the Bank. They refer to events, such as the sale of Springbrook and the issue of a bankruptcy notice, that not only were not the subject of evidence but actually occurred after the trial. And there is no attempt to address the significance of supervening events, such as the prolonged drought or the foreshadowed deregulation of the dairy industry, on the profitability of the dairy business. 104 In our view, there is simply no satisfactory basis for concluding that his Honour's assessment of the appellants' damages was wrong. None of the bases advanced by the appellants for assessing damages is supportable. No complaint has been made that the primary Judge erred in failing to make findings that might have supported an award greater than that made by his Honour. 105 The appellants might perhaps have advanced an alternative argument that the global sum of $92,500 awarded by the primary Judge was insufficient to compensate them for the consequential losses sustained between the purchase of the dairy business and June 1994, the date apparently accepted by the Bank as a reasonable "cut-off point" for losses flowing from the conduct. The appellants might have contended that they should have received an award representing the stamp duty and legal expenses incurred by them in respect of the purchase of the dairy business, together with the "more than negligible" losses incurred in conducting the business until about June 1994. But, perhaps for tactical reasons, that contention was never put, either at first instance or on appeal. In any event, even if the contention had been advanced, at best it would have resulted only in a modest increase in the award made by the primary Judge and certainly nothing like the amounts sought by them. 106 This leaves the appellants' claim for relief under s 87(1) of the TP Act. As we have explained, the powers conferred on the Court by that provision are compensatory in nature. The Court can make orders only insofar as they will compensate for, or prevent or reduce, the loss or damage that is identified. Since the appellants have not succeeded in establishing any greater loss or damage flowing from the Bank's conduct than the damages assessed by the primary Judge, there is no basis for further orders under s 87(1) of the TP Act. 107 In any event, there is simply no foundation in the evidence for the particular orders sought by the appellants (see [22] above). Not only did orders formulated on their behalf refer to refinancing arrangements that were not the subject of any findings or submissions, but the relief sought was framed by reference to events (such as the Bank's exercise of its power of sale) that had not even occurred by the time the primary Judge gave judgment. section 87(1) and the limitation point 108 Because we consider that the appeal must be dismissed, it is not necessary to consider whether the appellants were entitled to invoke the powers conferred by s 87(1) of the TP Act notwithstanding that their cause of action under s 82(1) was statute barred. Although this issue was raised in argument, it was not fully debated. In these circumstances we prefer to express no view on it. conclusion 109 The appeal should be dismissed. The appellants should pay the Bank's costs. I certify that the preceding one hundred and nine (109) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Whitlam, Tamberlin & Sackville. Associate: Dated: 19 March 2001 Counsel for the Applicant: Mr D B McGovern with Mr L Aitken Solicitor for the Applicant: Commins Hendriks Counsel for the Respondent: Mr P R Graham QC with Mr J Thomson Solicitor for the Respondent: Dibbs Barker Gosling Date of Hearing: 5-7 February 2001 Date of Judgment: 19 March 2001