Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Chand v Commonwealth Bank of Australia [2015] NSWCA 181 Hearing dates: 14 and 15 April 2015 Date of orders: 01 July 2015 Decision date: 01 July 2015 Before: Bathurst CJ at [1]; Beazley P at [2]; Ward JA at [3] Decision: Appeal dismissed with costs. Catchwords: CONTRACTS – breach admitted – failure to implement redemption request – causation – novus actus interveniens – whether failure to lodge a fresh redemption request broke the chain of causation – whether free and informed decision CONTRACTS – breach – mitigation – whether appellant acted unreasonably DAMAGES – assessment of damages – contract – where no actual loss suffered at date of breach – where loss suffered was prospective Cases Cited: Adams v Eta Foods Ltd [1987] FCA 402; (1987) 78 ALR 611 Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 Allianz Australia Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 Bak v Glenleigh Homes Pty Ltd [2006] NSWCA 10 Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 British Westinghouse Co v Underground Railway [1912] AC 673 Building Insurers' Guarantee Corporation v The Owners Strata Plan No. 57504 [2010] NSWCA 23 Castle Constructions Pty Ltd v Fekala Pty Ltd [2006] NSWCA 133; (2006) 65 NSWLR 648 Clark v Macourt [2013] HCA 56; (2013) 304 ALR 220 County Ltd v Girozentrale Securities [1996] 3 All ER 834 Darbishire v Warren [1963] 3 All ER 310 Driver v War Services Homes Commissioner (1923) 44 ALT 130 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 In Re a Solicitor [1945] KB 368 Janos v Chama Motors Pty Ltd [2011] NSWCA 238 Johnson v Agnew [1980] AC 367 Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351 Joyner v Weeks [1891] 2 QB 31 Knott Investments Pty Ltd v Fulcher [2013] QCA 67; [2014] 1Qd R 21 Koch Marine Inc v D'Amica Societa di Navigazione A.R.L (The 'Elena d'Amico') [1980] 1 Lloyd's Rep 75 Medlin v The State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 Orica Investments v McCartney [2010] NSWSC 488 Sherson & Associates Pty Ltd v Bailey [2000] NSWCA 275; (2000) Aust Torts Reports 81-591 Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 Smith New Court Securities Ltd v Citibank NA [1997] AC 254; [1996] 3 WLR 1051 Sotiros Shipping Inc. and Aeco Maritime S.A. v Sameiet Solholt (The "Solholt") [1983] 1 Lloyd's Rep. 605 St Vincent's Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 The Golden Victory [2007] UKHL 12, [2007] 2 AC 353 The Mortgage Corporation v Halifax (SW) Limited [1999] Lloyd's Rep P.N. 159 Vieira v O'Shea [2012] NSWCA 21 Wallace v Kam [2013] HCA 19; (2013) 297 ALR 383 Willis v Commonwealth [1946] HCA 22; (1946) 73 CLR 105 Weld-Blundell v Stephens [1920] AC 956Wenkart v Pitman (1998) 46 NSWLR 502 Texts Cited: Edelman J, "Unnecessary Causation" (2015) 89 ALJ 20 H.L.A Hart and A.M Honore, Causation In The Law (2nd ed 1985, Oxford University Press) H McGregor, McGregor on Damages (19th ed 2014, Sweet & Maxwell) Category: Principal judgment Parties: Simon Anish Chand (Appellant) Commonwealth Bank of Australia (Respondent) Representation: Counsel: MJ Neil QC with WJ Wilcher (Appellant) MLD Einfeld QC with D Roche (Respondent) Solicitors: Prime Lawyers (Appellant) HWL Ebsworth Lawyers (Respondent) File Number(s): 2014/00186066 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2014] NSWSC 708 Date of Decision: 02 June 2014 Before: Robb J File Number(s): 2011/294335 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This Headnote is not to be read as part of the judgment] On 25 September 2007, the appellant (Mr Chand) sent a redemption request by facsimile transmission to the respondent (the Commonwealth Bank of Australia: "the Bank') in relation to certain investments which he had made through the Bank's subsidiary. The investments in question were rated high risk and were highly geared. The Bank failed to implement the redemption request. Had the request been implemented, Mr Chand would have received a net amount of around $1.034 million and would not have remained exposed to the risk associated with those investments. Mr Chand, after becoming aware that the redemption request had not been implemented, did not lodge a further request. For the period between 25 September and 7 November 2007, the value of Mr Chand's investments exceeded their redemption value as at 25 September 2007 and from 8 November to 13 December 2007 the net redemption value was in excess of $1 million on all but 14 days. From 13 December 2007 however, as a result of the Global Financial Crisis, the redemption value of Mr Chand's investments steadily fell and margin calls were made on his bank loan. Mr Chand lost all, or the substantial part, of the money that he had invested. Mr Chand brought proceedings against the Bank, alleging, amongst other things, that the Bank was in breach of contract in failing to implement the redemption request. The Bank ultimately admitted that it was in breach but denied that it was liable for more than nominal damages. It alleged that any loss suffered by Mr Chand was caused by his intervening conduct in failing to issue a fresh redemption request upon becoming aware that the Bank had not acted on his request of 25 September 2007, and in determining to maintain and not redeem the investments after so becoming aware. Alternatively, the Bank contended that Mr Chand had failed to take reasonable steps to mitigate his loss. The Bank's principal argument in defence of the claim was successful. The primary judge found that Mr Chand was not entitled to more than nominal damages for the Bank's admitted breach of contract because no actual loss was suffered on 25 September 2007 and the prospective loss flowing from the breach of contract could have been entirely avoided by Mr Chand. The primary judge also found, in obiter, that Mr Chand had unreasonably failed to mitigate his (then largely, if not wholly, prospective) loss in the period up to 13 December 2007. On appeal, Mr Chand challenged certain factual findings made by the primary judge, including that his conduct was unreasonable, and the ultimate conclusions in relation to causation and mitigation of loss, as well as the approach taken by the primary judge in the assessment of loss for damages for breach of contract. Held dismissing the appeal (per Ward JA, Bathurst CJ and Beazley P agreeing): 1. Mr Chand's conduct, in not pursuing any further enquiry of the Bank or lodging a further redemption request, and adopting his previous market monitoring process, was unreasonable having regard to the high risk nature of the investments, the volatility of the market and his knowledge of the facts giving rise to the breach: [105] – [107]. Darbishire v Warren [1963] 3 All ER 310 referred to. 1. the primary judge did not err in the approach to, or application of, the principles relating to the assessment of loss for damage for breach of contract that were confirmed in Clark v Macourt: [152]. For Mr Chand to be put in the position in which he would have been had the redemption request been redeemed, it was necessary for there to be an assessment of his prospective loss; it was not a case where Mr Chand was seeking the monetary substitute or equivalent of a product that the Bank had agreed to supply him: [151]. Clark v Macourt [2013] HCA 56; (2013) 304 ALR 220 considered. 1. Mr Chand suffered no actual loss at the date of breach. He suffered a prospective loss that was properly able to be assessed having regard to what was known of events coming after the breach. When considering whether the Bank was to be liable for that loss, it was appropriate to have regard to whether Mr Chand's conduct was an intervening act breaking the chain of causation, as well as having regard to other possible contingencies including mitigation: [166]. Willis v The Commonwealth [1946] HCA 22; (1946) 73 CLR 105 applied. 1. Mr Chand's decision not to issue a fresh redemption request and to assume his prior market monitoring process was a novus actus interveniens that had the effect that Mr Chand was the author of his own misfortune: [170]. It was a deliberate, freely made and informed decision; Mr Chand was aware of the facts giving rise to the breach and was well aware that absent a fresh redemption request his investments would not be redeemed and he would remain on risk: [167]-[169]. Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310; Allianz Australia Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 considered. Janos v Charma Motors Pty Ltd [2011] NSWCA 238 applied. Vieira v O'Shea [2012] NSWCA 21; County Ltd v Girozentrale Securities [1996] 3 All ER 834 distinguished. 1. (obiter) as Mr Chand's conduct was unreasonable, had the matter turned on the question of mitigation, the appeal would still have failed: [183]. Judgment 1. BATHURST CJ: I agree with the orders proposed by Ward JA and with her Honour's reasons. 2. BEAZLEY P: I have had the advantage of reading in draft the reasons of Ward JA. I agree with her Honour's reasons and the order she proposes. 3. WARD JA: The appellant, Mr Chand, appeals from the dismissal of his claim against the Commonwealth Bank of Australia ("the Bank") for loss sustained following the Bank's failure to implement Mr Chand's redemption request in relation to certain investments which he had made through the Bank's subsidiary, Colonial First State Investments Limited ("CFS"). The investments in question were rated high risk and were highly geared. 4. The redemption request was sent by facsimile transmission on 25 September 2007. Had the redemption request been implemented, Mr Chand would have received a net amount of around $1.034 million and would not have remained exposed to the risk associated with those investments. As it was, the global financial crisis in late 2007/early 2008 resulted in a dramatic fall in the value of the share market in which Mr Chand's investments were placed. The Bank made successive margin calls (totalling $500,000) on the loan facility through which, along with around $1 million of his own funds, Mr Chand had acquired the investments. He lost all, or the substantial part, of the money that he had invested. 5. Mr Chand commenced proceedings against the Bank in 2011, alleging breach of contract, negligence, unconscionable conduct and misleading and deceptive conduct. At the hearing, he did not press the unconscionable conduct or misleading and deceptive conduct claims (see [16] of his Honour's reasons). The Bank, though it had up to the hearing denied a breach of contract ([57] of its amended defence), ultimately admitted that its failure to act upon the redemption request was a breach of contract. However, it denied negligence and it also denied liability for more than nominal damages as a result of the admitted breach of contract. 6. Mr Chand particularised his loss as comprising his "equity loss" (i.e., the amount he would have received had the Bank redeemed his investments in accordance with the request); interest charged by the Bank on his margin loan after 25 September 2007; and the amount of the two margin call payments he had made; less what was said to be the then present value of Mr Chand's residual investments ($33,870.70). The primary judge proceeded on the basis (which is not challenged by the Bank) that if Mr Chand were entitled to be paid damages for the whole of the loss that he had suffered, the quantum should be $1,536,618.04 ([265]). 7. In answer to the whole of Mr Chand's claim, the Bank pleaded that any loss suffered by Mr Chand was caused by the intervening conduct of Mr Chand in failing to issue a fresh withdrawal instruction, upon becoming aware that the Bank had not acted on his 25 September 2007 instructions, and in determining to maintain and not redeem the investments after so becoming aware (Further Amended Defence [64](g)). Alternatively, the Bank contended that Mr Chand had failed to take reasonable steps to mitigate his loss (Further Amended Defence [66]). 8. The Bank's principal argument in defence of the claim was successful. In essence, his Honour concluded that Mr Chand was not entitled to more than nominal damages for the Bank's admitted breach of contract because no actual loss was suffered on 25 September 2007 (since the net value of Mr Chand's investments at that time was equal to the amount of the claimed equity loss) and the prospective loss flowing from the breach of contract could have been entirely avoided by Mr Chand. Thus, his Honour accepted that Mr Chand was the only real cause of the loss actually occurring. On the Bank's alternative failure to mitigate defence, his Honour, in what was an obiter finding, concluded that Mr Chand had unreasonably failed to mitigate his (then largely if not wholly prospective) loss in the period up to 13 December 2007, but did not act unreasonably in the following period in not acting to crystallise the actual losses that were thereafter sustained or in making the two margin call payments. 9. The principal issues raised on the appeal, as was also the case at first instance, are those of causation and mitigation. For the reasons that follow, I am of the opinion that the appeal should be dismissed. Background 1. In June 2006, Mr Chand, who had previously invested in similar investment products, lodged an application to invest the sum of $2 million in Colonial First State – FirstChoice Wholesale Investments. That application was made in accordance with the procedure set out in a Product Disclosure Statement dated 6 March 2005 that was issued by Colonial First State Investments Limited, as responsible entity, in respect of those investments. Mr Chand identified the five products in which he wished to invest and in due course he acquired units in those five CFS wholesale investment funds. 2. Mr Chand's initial $2 million investment was funded as to $900,000 out of his own funds and as to the balance by way of a loan advance from the Bank to do so. The loan advance was drawn down under an existing margin loan facility Mr Chand had entered into with the Bank, the credit limit of which was increased from $1 million to $1.5 million for that purpose. Under the terms of that margin loan facility, the investments were held as security for the loan. 3. Mr Chand had previously invested in other CFS securities, in both 2004 and 2005, and had declined investment advice when so doing. He similarly declined investment advice in relation to the 2006 investments. 4. In June 2007, Mr Chand increased the credit limit on his margin loan to $2.1 million and increased his CFS investments by $800,000 (using $100,000 of his own funds and $700,000 in borrowed funds). The whole of that amount was applied at his direction to the acquisition of units in one of the five funds in which he had earlier invested (the Platinum Wholesale International fund). In July 2007, Mr Chand switched the whole of his investment in the Platinum Wholesale International fund, the withdrawal amount being $1,098,526.68, to another fund – the CFS Wholesale 452 Geared Australian Share fund. He appreciated that this was a geared fund potentially carrying higher risk (and greater return) than the Platinum fund but said that other "drivers" in his decision to switch funds were that the Platinum fund was an international fund so it was a lot more difficult to predict its movements compared to Australian shares, and it was not performing as well. 5. As at 12 July 2007, the value of Mr Chand's total investment in CFS investment products was $2,964,601.59, as per the advice confirming the July 2007 investment switch. 6. On 25 September 2007, by facsimile transmission, Mr Chand lodged an application to redeem the entirety of his CFS investments ("the redemption request"). In his 4 October 2012 affidavit, Mr Chand deposed that he did so in the following circumstances: [43] Upon the global market volatility starting in mid-August 2007, I considered highly geared stock to no longer be a safe investment option. The volatility also required extra constant monitoring of my investments. I made a decision to exit my investments with CFS at the next available opportunity. (my emphasis) 1. By "the next available opportunity", Mr Chand clearly did not mean as soon as it was practicable for him to lodge a redemption request, since that could have been done without delay merely by completing and forwarding the requisite form. Rather, as may be gleaned from [48] of his affidavit, Mr Chand seems to have meant at the next time that he could be satisfied that the net redemption value of his investments would be approximately $1 million (which he regarded as his "break even" figure) even if the market were to fall slightly. 2. Mr Chand explained in his affidavit that withdrawals submitted before 3pm on a particular day used the unit prices for that day, but that each day's prices were not published on the CFS website until after 3pm the next day ([44]). He said that, as unit prices on the CFS website were at least 2 day's old, he had no "real-time data" and had to observe market trends to "plan an exit" ([44]-[45]). 3. In accordance with the terms and conditions of Mr Chand's CFS investments, the amount payable on redemption was one that was calculated at the "next determined unit price" after receipt of a withdrawal request. At the time a withdrawal or redemption request was submitted, therefore, Mr Chand would not know precisely what the actual redemption value would be. Mr Chand was, in effect, looking to redeem in a buoyant or rising market to offset the risk that redemption values would go down in the interim between lodgement and processing of the redemption request. 4. On the evening of Monday 24 September 2007, Mr Chand calculated that the redemption value of his units, if a redemption request were lodged the following day, would be approximately $1 million even if the market fell slightly on 25 September 2007. The value of his investment portfolio as at 21 September 2007, as shown on the CFS website on 24 September 2007 – there having been an intervening weekend, was $2,910,251.94 and he had an approximate loan balance of $1.9 million. Based on this calculation, Mr Chand made the decision to redeem ([48]-[49]). 5. Mr Chand did not receive a response from the Bank to his lodgement of the redemption request. He deposed (at [53]) that, based on his previous dealings with CFS, it would usually take "perhaps ten working days" before he would receive written confirmation in the post from CFS. As 25 September 2007 was a Tuesday, this means that in the ordinary course he would have expected written confirmation by about 9 October 2007. 6. Nevertheless, Mr Chand was aware before then that his redemption request had not yet been processed. Mr Chand agreed in cross-examination that he had checked on-line within, at the outside, two working weeks to ensure that the redemption amount had been paid into his bank account and he said that he found it had not been. Indeed, he agreed that he was aware within five days (i.e., by about 30 September or 2 October 2007, depending on whether the period was limited to business days) that the money had not been paid into his account. 7. Mr Chand deposed that he was "not too concerned" about an initial delay in the redemption being processed because units would have to be sold from more funds than previously redeemed and he considered that this might require more time ([54]). He nevertheless considered it unusual when he did not hear anything for a month (i.e., by about 25 October 2007) regarding his withdrawal ([55]). 8. Mr Chand did not contact the Bank to enquire as to the status of the redemption request until about 5 November 2007 when he rang a call centre operator. When Mr Chand did so, he was informed by the call service operator that there was no record of the redemption request on the Bank's system. This date (i.e., about 5 November 2007) is the date on which Mr Chand says he became aware for the first time that, for whatever reason, the redemption had not, as a matter of fact, been processed. 9. Mr Chand's explanation for not making further enquiry of the Bank at that stage as to the fate of his redemption request, in his affidavit at [56], was that he came to a conclusion that "it was probably a technical fault of some sort that may have caused a possible dropout during transmission" of his facsimile transmission and that the Bank had not received his redemption request. There was, however, evidence that Mr Chand's fax machine had produced at the time a successful confirmation report that disclosed no error in the transmission to the Bank of the redemption request. Mr Chand accepted in cross-examination that he had received this fax confirmation report and that, in a later conversation with a Bank representative in July 2008, he had referred to this report. 10. In cross-examination, Mr Chand suggested a further possibility for the Bank not having processed his request, namely, that the facsimile transmission, though received by the Bank, might have been corrupted or unreadable. However, he accepted that he had not said in his affidavit that this was a possibility that had occurred to him at the time. 11. Mr Chand deposed that following his conversation with the Bank's call operator he had to decide how to deal with the CFS investments ([59]). Implicitly, therefore, as at 5 November 2007, he seems to have accepted that, for whatever reason (i.e., whether the transmission had been corrupted or was unreadable or, contrary to his fax confirmation report, had not been received at all by the Bank), his September 2007 redemption request had not been and would not (absent any further action on his part) be acted upon by the Bank. He proceeded to make a decision as to what then to do. He did not suggest that he had made no decision before the market fell or that he had been unable to do so. Rather, he went on in his affidavit to explain that: [60] For me to ensure that I was no worse off compared to 25 September 2007, a fairly accurate value of the redemption value as at 25 September needed to be calculated for comparison purposes. Since I was not monitoring markets while waiting for the Withdrawal Form to be processed, there was also a need to reacquaint myself with the market to ensure the most optimal next exit date could be determined. This was a repetition of the process used in August – September. 1. In other words, he made a positive decision to remain in the market (on-risk) and to select another exit date, notwithstanding that he had earlier reached the view that highly geared stock was no longer "a safe investment option". He said that was "the easiest decision to make". 2. Mr Chand's evidence was that he started the monitoring process again on the weekend of 10/11 November 2007. I interpose to note that his Honour was not prepared to accept Mr Chand's evidence as to the period in which Mr Chand was actively pursuing the determination of a suitable new exit date without corroboration ([181]). His Honour considered that the 11 November 2007 date was too convenient and improbable to be accepted on Mr Chand's word alone, pointing out that it enabled Mr Chand to "sidestep" the problem of explaining why he did not redeem in October 2007 when the redemption value was consistently greater than at 25 September 2007. This becomes relevant when considering the emphasis placed by Mr Chand, in his submissions on this appeal, as to the recommencement of monitoring first occurring on the weekend of 10/11 November 2007. There was no finding to that effect and his Honour's comments made clear that he did not accept Mr Chand's evidence on this point. 3. Mr Chand deposed that, after examining general market trends for October 2007, he came to the conclusion that the market had risen in October 2007 "so it was safe to start monitoring the market again to pick another exit point preferably in a rising market" ([61], my emphasis). In re-examination he explained that the ideal situation was to look for a rising market, over what had happened in the last couple of days, "to eliminate the possibility of basically negative fluctuations the next day". The suggestion that this could be done having regard to what had happened "in the last couple of days" rather belies the notion that a minimum of 4 weeks was required for that process. 4. Mr Chand then deposed that, from early December 2007, it became impractical for him constantly to monitor the market with a busy full-time job and that he made the decision to wait for dividends to be paid before exiting the market, which would "make up for the shortfall" ([65]). There was no explanation provided of the work demands that Mr Chand says had made it impractical to monitor the market as he had previously done. 5. On 16 December 2007, Mr Chand received approximately $52,000 in distributions referable to his CFS investments. In the period through to June 2008, Mr Chand received further distributions, the total distributions in the period from December 2007 to June 2008 amounting to around some $173,000. (It is not clear what account was taken, in Mr Chand's quantification of loss, of sums Mr Chand had received by way of distribution on his investments in the period after they would, but for the Bank's failure, have been redeemed, but nothing turns on this.) 6. For the period from 25 September 2007 to 7 November 2007, the value of Mr Chand's investments exceeded their redemption value as at 25 September 2007. From 8 November 2007 through to 13 December 2007, the net value was in excess of $1 million on all but 14 days. Mr Chand suggested in re-examination that there was an unusual sudden spike for a very short window in the unit prices between 6 and 13 December 2007, which he seemed to explain by reference to unit prices not being updated prior to payment of dividends on 16 December 2007. It was not made clear why a "spike" for a week, even if, unexplained, would not have satisfied Mr Chand's requirement for the kind of rising or buoyant market in which he could have had some confidence in securing his "break even" redemption value. His Honour ultimately found that there were occasions during the period to 13 December 2007 when Mr Chand's criteria for a suitable "exit date" had objectively been satisfied ([339]). 7. From 13 December 2007, as the global financial crisis deepened, the redemption value of Mr Chand's investments steadily fell. Margin calls were made on his Bank loan in April 2008 and again in July 2008. Those margin calls were met. Mr Chand also pre-paid one year's interest in advance on his margin loan balance in June 2008 (as he had done the previous year). 8. By 30 July 2008, the redemption value of Mr Chand's CFS investments had fallen to $276,545.75. By 31 July 2008, the investments had a negative redemption value. On 30 July 2008, Mr Chand had a telephone conversation with a Bank representative who had contacted him about a further margin call. (Although the date of this conversation is variously put in submissions as 30 or 31 July 2008, the Bank's internal emails make clear it must have been the former). 9. In the course of that conversation, Mr Chand says he asked that the Bank double check its records as to the withdrawal request sent in September 2007. Mr Chand deposed (at [73]) that he was then informed that there was a withdrawal request on the system which was received on 25 September 2007 but that the form, as it was filled out, instructed that all proceeds be put into his personal bank account without paying off the loan and that the Bank needed explicit instructions on how the loan should be paid. 10. In opening submissions on the appeal, the date of this conversation was identified by Senior Counsel for Mr Chand as being the time when, on Mr Chand's case, he first became aware that the redemption request had in fact been received by the Bank but not processed by it. That submission is inconsistent with Mr Chand's evidence that he had received a facsimile confirmation report showing that the redemption request had been received by the Bank on 25 September 2007 and his knowledge, by about 2 October 2007 at the latest, that no funds had been deposited in his bank account (as would have been the case had the request been processed). It requires acceptance of the explanation Mr Chand proffered in the witness box of what he meant by "not received" by the Bank. His Honour did not accept that explanation. 11. Following correspondence from Mr Chand to the Bank on 4 August 2008 complaining as to the failure of the Bank to process his request (in which he said it became apparent to him "[a]fter a period of a couple of weeks" that the request had not been executed for some reason), the Bank's in house solicitor wrote to Mr Chand, on 11 September 2008, stating that: We confirm that your redemption request was received by Colonial in September 2007. However, we were unable to approve your request as the transfer of funds to your personal bank account would have left the margin loan exposed with an uncleared loan balance. 1. The letter also expressed the view that any issues Mr Chand had with the redemption request should have been raised back in September or October 2007. 2. The Bank's internal records make clear that the explanation given in the 11 September 2008 letter was no more than a self-serving reconstruction of events, since the Bank's officers could not themselves determine why it was that the request had not been processed. 3. In response, in 2009, lawyers acting for Mr Chand wrote stating that Mr Chand (who had approved the contents of the letter before it was sent) was not concerned about the state of the redemption until after October 2007. The letter went on to assert that Mr Chand had three options in the circumstances (as at 5 November 2007): first, to pursue the whereabouts of the original redemption; second, again to give instructions to redeem; and, third, to determine another exit date "given that the value of his portfolio was generally unchanged". The letter stated that the first option seemed inappropriate, time consuming and uncertain, and the second option was considered inappropriate given that the value of his portfolio was generally unchanged and so Mr Chand had decided to adopt the third option. 4. Mr Chand's explanation in the witness box as to what was inappropriate about the second of the three options (which, if implemented, would have meant that he would have suffered no loss from the Bank's earlier failure to redeem) was unenlightening. He said: …this is generally going back to the challenges I've had with this investment. Although the portfolio value had been unchanged, there was still fluctuations in the market and the value which I had available to me most recently was two days old. 1. The 2009 letter from his solicitors also stated that in determining another exit date Mr Chand had to examine the five weeks' extra history between 25 September and 5 November 2007 to assess why the market went higher in October 2007 and to determine whether sometime during the period commencing 5 November and ending mid-December 2007 "there was any chance of the market recovering to that October 2007 high". The letter stated that: The aim was to redeem for the maximum value possible – if possible, higher than 25 September 2007, but not lower – and this possibility could only be determined by looking at the October 2007 trends. … this took him some time to do. The market was then monitored as closely as practicable to pick an exit date when the value of the redemption would be at least the value as at 25 September 2007 or higher. (emphasis as per his Honour's reasons at [170]). Primary judgment 1. As noted earlier, Mr Chand did not pursue his allegations as to unconscionable or misleading and deceptive conduct. His claim in negligence was limited to a claim that the Bank was negligent in failing to process the 25 September 2007 redemption request (Amended Statement of Claim ([58]). His Honour was not satisfied that a case in negligence was made out against the Bank (for the reasons set out at [242]-[246]) and there is no appeal from that finding. 2. That left Mr Chand's contract claim. At [6], the primary judge identified the principal issue in the proceedings as being the issue whether Mr Chand's conduct (characterised by the Bank as freely, deliberately and knowingly electing to continue his investment rather than to renew his redemption request) constituted a novus actus interveniens. This was the basis on which his Honour dismissed Mr Chand's claim. Factual findings 1. His Honour set out (from [193]) his principal findings of fact, expressly noting that those supplemented the conclusions earlier drawn in his consideration of the evidence. Some of the findings overlap and some findings are expressed differently in different places in the judgment. Where findings to the same or similar effect are made later in his Honour's reasons, I have endeavoured to include reference to them in the summary below for completeness. 2. In summary, his Honour found that: (i) Mr Chand: * appeared to be an intelligent man, with a significant level of computer and mathematical competence ([193]); did not have formal qualifications and experience as to the making of this type of investment but had immersed himself in a substantial amount of the financial and market information that was available to enable him to follow market trends and make judgments as to how those trends might affect the value of his investments ([194]); * was confident about his ability to interpret the available information and to make judgments in relation to his investments and principally acted on his own judgment in relation to the management of his investments ([195]); * was sufficiently confident of the adequacy of his own judgment that he made his initial investments contrary to the explicit advice of a bank officer as to the unsuitability of the level of risk for a proposed short term investment ([196]); * appears to have had a high appetite for risk; choosing to invest uniformly in products that the Bank had given a high risk rating, and understanding that his investments were "aggressive" and that the values were volatile and could move up or down ([197]). * must have understood fully the nature of the risks posed by margin lending agreements ([197]); * understood (in late August or early September 2007) that there were features of the market that made it prudent for a person with his investment profile to leave the market; (his Honour noting that Mr Chand did not suggest that he changed this opinion at any time before 21 December 2007) ([198] & [199]); and * would not readily tolerate a continuation of investment risk while he was on holidays with his family in Fiji, without the same level of access to market and financial information ([200]). (ii) The decision to redeem was made on 24 September 2007 because that was the first day during the relevant period that Mr Chand's redemption value exceeded $1 million and that was Mr Chand's break-even point ([201]). (iii) It was probable that Mr Chand reviewed the fax transmission report soon after it was produced and satisfied himself that the transmission had succeeded ([208]). (iv) Mr Chand became aware "relatively soon" after 25 September 2007 that the Bank had not redeemed his investments ([209]). His Honour considered it "overwhelmingly likely" that Mr Chand monitored his bank records and concluded that Mr Chand was aware that the $1 million had not been paid into his bank account "no later than about two weeks, give or take, after 25 September 2007" ([209]). (At [339], his Honour said he had found that Mr Chand realised that the Bank had not paid the $1 million into his account "a couple of weeks or so" after 25 September but that it was not possible to decide the precise date when Mr Chand realised that the Bank had not implemented the request.) (v) Mr Chand "kept an eye" on published unit prices, at least to a degree that was adequate to enable him to form a general understanding of movements in his redemption value after 25 September 2007, and did not entirely ignore unit prices up to the beginning of November 2007; and it was probable that, at least in a general way, Mr Chand had satisfied himself that the redemption price for his investments had consistently exceeded that which applied on 24 September 2007 ([211]). (vi) Mr Chand made a call to the call centre and the call centre operator told him that he could not "see" any withdrawal requests against Mr Chand's account, which must have meant to Mr Chand that the receipt by the Bank of the redemption request had not been entered into the Bank's computer system ([212]-[213]). (His Honour was not able to make a positive finding as to when Mr Chand called the call centre but said that if Mr Chand did delay making the call until about 5 November 2007 then the only explanation for such an unusual delay was that he was aware the value of his investments had risen and remained buoyant ([210]).) (vii) It was probable that Mr Chand had concluded that the fax, though received, had gone astray for some unexplained reason ([214]). (His Honour said that he could not positively find that the relevant officers of the Bank were entirely unaware that the Bank had received Mr Chand's faxed redemption request, even though he considered it improbable that the Bank's officers would have failed to process the request or to contact Mr Chand for further instructions if they were aware that it had been received; nor could his Honour make a positive finding that the redemption request had gone astray for some reason that was entirely accidental and inadvertent ([207]).) (viii) Mr Chand must have been "at least content" to remain in the market ([215]). (His Honour drew this conclusion on the basis that Mr Chand did not follow up his discussion with the call centre operator, which his Honour considered was a significant omission and unlikely if Mr Chand had continued to expect the Bank to implement his request.([215])) (ix) Mr Chand did what he said, through his solicitor's letter of 2009, he had done (see above at [40] – [42]); i.e., to look for a new exit date and redeem for the maximum value possible, if possible higher than September 2007 'but not lower' or 'at least the value at 25 September 2007 or higher', and did so for the reasons there given; and that Mr Chand had waited to see whether the market would rise again to the levels experienced in October 2007 ([221]) but that he intended to realise his investments by late December 2007 ([222]). (His Honour did not accept that Mr Chand had simply changed his mind and intended to stay in the market indefinitely in the hope of achieving a substantially better result in due course.([222])) (x) Mr Chand decided not to pursue enquiries with the Bank (i.e., after 5 November 2007) about the fate of his September 2007 application because he was satisfied that he was likely to do better, or at least not worse, if he reconsidered his position ([223]). (xi) Mr Chand made a deliberate decision to stay in the market (albeit for no more than up to six weeks) to see whether he could achieve a result that was equivalent to that which he would have achieved had he redeemed at an appropriate time in October 2007; and he made that decision relatively shortly after he became aware that the Bank had not paid the $1 million into his bank account and at a time when he was aware that he could redeem his investments at any time by sending a further redemption request and was aware of the risky nature of his investments and that negative market circumstances had increased his risk ([225]). (At [341] his Honour found that Mr Chand deliberately decided to stay in the market in the hope of achieving a better result. At [348] his Honour found that Mr Chand had acted in the hope of getting a better outcome than if the Bank had implemented his redemption request. At [372] his Honour found that Mr Chand made a deliberate decision to stay in the market for the purpose of attempting to secure the same result as he would have enjoyed if he had submitted his redemption request on a date in October 2007, rather than on 25 September 2007. At [376] his Honour found that, contrary to Mr Chand's case that he was trying to secure the same result as if the Bank had implemented his redemption request, he was in fact waiting to see if he could do better. (xii) At some point it occurred to Mr Chand that if he waited until mid-December 2007 his redemption value would be augmented by a distribution ([226]). His Honour considered that it was probable that Mr Chand was influenced to decide not to redeem between 30 November and 13 December 2007 by his expectation that he would get the benefit of the distribution if he waited ([230]). (At [342] his Honour said that Mr Chand at some stage made a deliberate choice to stay in the market in order to receive the mid-December 2007 distribution.) (xiii) Mr Chand decided not to give a second instruction to the Bank to redeem, after he became aware that the Bank had not processed his original request, because the value of his portfolio had increased and appeared to be buoyant (his Honour there referring to the cross-examination of Mr Chand) ([232]). (xiv) Mr Chand made a decision to determine another exit date deliberately, voluntarily, and knowing that at any time his unit prices could go up or down ([232]). (xv) Mr Chand initially understood that he had suffered the consequences of his own deliberate decision to stay in the market, rather than to renew his redemption request when he could have recovered his equity loss; this was the only explanation his Honour could see for the delay in pursuing the fate of his redemption request with the Bank ([233]). (xvi) There were a number of periods in which, to a reasonable degree, recent market values satisfied Mr Chand's objective of redeeming in a rising or at least buoyant market ([339]). The period between 6 and 13 November 2007 satisfied the requirements given by Mr Chand for a propitious redemption of his investments ([339]). (xvii) Mr Chand's conduct before 13 December 2007 was unreasonable ([373], [381]). (xviii) The fall in the redemption value of his investments from 13 to 20 December 2007 was sufficient to dissuade Mr Chand from giving the Bank a second redemption request in that period; it was understandable that he made a decision not to realise a loss of about 25% of the redemption value following a fall of that magnitude in a seven day period; it was reasonable for Mr Chand then to wait and see, in the expectation that it was possible that the redemption value of his investments would rebound at least from the low figure on 20 December 2007 ([234]). (xix) In a general way the redemption value of Mr Chand's investments declined after 28 January 2008 and there was nothing in the evidence of the redemption values that suggested that at any time over the period after 21 December 2007 the value increased markedly to an amount that ought reasonably to have caused Mr Chand to understand that he should renew his redemption request to crystallise and cut his losses at any particular time after that ([236]-[237]). (xx) It was reasonable for Mr Chand to risk losing the margin call payments in order to give himself a chance of recovering a substantial part, if not all, of the equity loss ([239]). 1. Later, in the context of considering the mitigation defence, his Honour reiterated (at [383]) that he had not accepted that: * Mr Chand did not appreciate that the Bank was not going to implement his redemption request until early November 2007; * Mr Chand believed the Bank did not effectively receive his request; * Mr Chand looked for an exit point from the market at the same redemption value as at 25 September 2007 (rather, his Honour said, Mr Chand took his chances on the market recovering to October 2007 values); and nor had he accepted that no exit point occurred between 30 November and 13 December 2007 that satisfied Mr Chand's criteria for a suitable exit date. Primary judge's conclusions as to causation/mitigation of loss 1. At [254], his Honour identified the three principal issues in dispute between the parties as being: the nature of the contractual obligation that had been breached; the proper basis for assessing the loss, namely as to when Mr Chand suffered the individual components of his loss; and how the principles concerning causation and mitigation were to be applied in the circumstances of this case. Essentially this appeal turns on the third of those issues, as did the proceedings at first instance. 2. His Honour referred (at [295]) to the principle (recognised in Allianz Australia Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 at [106] as being one that was generally accepted) that the "free, deliberate and informed act or omission of a human being negatives causal connection" (see Professors Hart and Honore, Causation In The Law (2nd ed 1985, Oxford University Press) at 136 and Weld-Blundell v Stephens [1920] AC 956 per Lord Sumner (at 986)). His Honour clearly considered that this principle extended beyond the situation where a plaintiff embraced an actual known loss to the situation (which his Honour considered the present case to be) where the plaintiff deliberately abandoned an opportunity to avoid a prospective loss and adopted a course that maintained the risk ([348]). 3. His Honour concluded that Mr Chand's own actions were the operative cause of his loss ([350]) because he had made a free, deliberate and informed decision to stay in the market and not to make a new redemption request to the Bank. 4. In reaching that conclusion, his Honour held: (at [340]) that Mr Chand was free in making a choice as to whether to redeem his investments; (at [341]-[342]) that he made a deliberate choice to stay in the market in the hope of achieving a better result than if the Bank had implemented his redemption request and in order to receive the distribution that he expected would be paid in mid-December 2007; and (at [345]) that he did so knowingly. From his Honour's subsequent observations (at [353]) it is clear that his Honour concluded that Mr Chand's conduct in this regard was unreasonable ([353], [373]). 5. His Honour went on to consider (from [351]), in obiter, whether (if his conclusion as to the application of the principle in Allianz was incorrect) Mr Chand's failure to avoid the loss that he suffered, after the Bank's breach of contract gave rise to his prospective loss, was sufficiently unreasonable as between himself and the Bank that Mr Chand could not really be said to have incurred that loss, using the terminology adopted by Heydon JA, as his Honour then was, in Sherson & Associates Pty Ltd v Bailey [2000] NSWCA 275; (2000) Aust Torts Reports 81-591 at [77]. In Sherson, Heydon JA summarised the relevant principles as follows: A plaintiff "cannot be said to have really incurred any loss which might have been avoided by his taking such steps as a reasonably prudent man in his position would have taken to avoid further loss to himself": Driver v War Services Homes Commissioner (1923) 44 ALT 130 at 134 per Irvine CJ (emphasis added). A plaintiff cannot recover damages for losses "which he would not have incurred had he acted reasonably in the ordinary course of his business": TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 162 per Priestley JA (emphasis added). Subject to the criterion of reasonableness, the plaintiff "is completely free to act as he judges to be in his best interests": The Soholt [1983] 1 Lloyd's Rep 605 at 608 per Sir John Donaldson MR (emphasis added). "The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those existing circumstances of which the actor, called on to act reasonably, knows or ought to know": In re a Solicitor [1945] KB 368 at 371 per Scott, Lawrence and Morton LJJ; see also Adams v Eta Foods Ltd (1987) 78 ALR 611 at 621 per Gummow J. (at [77].) 1. His Honour concluded that Mr Chand's conduct would not pass any applicable test of reasonableness, having regard to the voluntariness of Mr Chand's "embracing the continuation of his risk of loss" ([353]). His Honour referred to the ease with which Mr Chand could renew his redemption request and concluded that reasonable persons in the position of the parties would expect Mr Chand to exercise his discretion as to whether, and if so when and in what circumstances, he should renew his redemption request after learning of the Bank's failure to implement his initial request ([365]). His Honour said that the opportunity for salvation lay entirely in Mr Chand's own hands ([369]) and that the Bank could not be on risk indefinitely for legal responsibility or, in effect, the insurer against the risk of a fall in the market value occurring ([370]). 2. His Honour concluded at [373] that Mr Chand could not reasonably elect intentionally to stay on risk, when he had a sufficient opportunity to avoid any loss caused by the Bank's breach, but still hold the Bank accountable for the ultimate consequences of its breach, without even telling the Bank of its position, and hence that Mr Chand's conduct was unreasonable and absolved the Bank from liability for the consequences of its breach. 3. His Honour restated that conclusion at [381] in the following terms: I have found that Mr Chand's conduct in failing to renew his redemption request on an appropriate date in the period between the time that he became aware that the Bank had not implemented his redemption request and about 13 December 2007 relieved the bank from legal responsibility for the loss suffered by Mr Chand after that time. 1. His Honour then went on, again in obiter, to consider the question whether Mr Chand had unreasonably failed to mitigate his loss, in the event that his conclusion at [381] (#[55] above) was wrong. 2. In this regard, his Honour divided the period between Mr Chand's discovery that the Bank had not acted on his instruction (presumably there referring to 5 November 2007, though Mr Chand was aware from as early as 30 September 2007 or 20 October 2007 that no money had been deposited into his bank account) and mid-2008 into two sub-periods: the first, between the time Mr Chand first learnt that the redemption request had not been implemented and mid-December 2007 (when the loss was in substance prospective); and the second, from mid-December 2007 (when his Honour said that Mr Chand was thrust by circumstances into a loss-making position) ([388]). 3. As to the first period, his Honour concluded that the standard of conduct required of Mr Chand to avoid the prospective loss becoming actual was the same whether the question was approached as one of causation or mitigation ([389]), with the consequence that the conclusion of unreasonableness he had reached at [373] ([54] above) applied to both, but that after the end of 2007 the Bank had not established that Mr Chand unreasonably failed to act to mitigate his loss as it materialised during 2008 and afterwards ([393]). Appeal 1. Mr Chand raises a number of appeal grounds. I propose to consider first the challenges made (in grounds 10A and 10B) to particular findings of fact, and then the specific challenges raised by grounds 8, 9 and 3, before addressing the challenges to his Honour's ultimate conclusions in relation to causation and mitigation of loss. Grounds 10A and 10B – factual findings 1. The factual findings challenged by Mr Chand on this appeal (as per ground 10A of the grounds of appeal) are identified as being that: Mr Chand made a deliberate decision to remain in the market to try and obtain a redemption higher than would have been available on 25 September 2007; he deliberately elected to stay on risk; his conduct was unreasonable; and he knew of the breach of contract by 5 November 2007. 2. Mr Chand contends (ground 10B) that his Honour should instead have found that: the Bank's conduct forced him to recommence monitoring the market in a programme that would ordinarily take four weeks and that he was unable to find a satisfactory exit date during that time; he did not deliberately elect to stay on risk; his conduct was not unreasonable; and he did not know of the breach of contract until 30 July 2008. 3. I will deal with the challenged findings in a slightly different order from that in which they appear in the notice of appeal. Findings that there was a deliberate decision to remain in the market to try and obtain a redemption higher than would have been available on 25 September 2007 and that Mr Chand deliberately elected to stay on risk (grounds 10A(i)-(ii) and 10B(i)-(ii)) 1. The first point to note in this regard is that his Honour expressed in different ways the deliberate decision he found Mr Chand had made to stay in the market or on risk (i.e., the decision not to issue a further redemption request) after Mr Chand had become aware that the Bank had not processed his September 2007 redemption request (see his Honour's findings at [215], [221], [223], [225], [230], [232], [341] and [342], summarised at [460] above). 2. On one view the finding that Mr Chand's decision not to redeem between 30 November and 13 December 2007 was influenced by the forthcoming December distribution and the finding that Mr Chand made a decision to stay in the market in order to receive the mid-December 2007 distribution (see [230] and [342]) might be seen as separate from the decision to stay in the market per se. Leaving any such argument aside (as nothing was put by way of submissions on that issue), his Honour expressed in a number of ways the relevant decision by Mr Chand. 3. His Honour variously referred to: a decision by Mr Chand to wait to see if the market would rise again to the levels experienced in October 2007 (see [221]); a decision to stay in the market in the hope of achieving a "better result" ([341]) or "better outcome" than if the Bank had implemented his September 2007 request ([348]); a decision to stay in the market for the purpose of attempting to secure the same result as he would have enjoyed if he had submitted his redemption request on a date in October 2007, rather than on 25 September 2007 ([372]); Mr Chand waiting to see if he could do better than if the Bank had implemented his September 2007 request ([376]); and Mr Chand having not looked for an exit point at the same redemption value as at 25 September 2007 but having taken his chances on the market recovering to October 2007 values ([383]). 4. Insofar as Mr Chand cavils with the finding that he was, in effect, only seeking to redeem for a higher amount than he would have received had the Bank processed his September 2007 redemption request, there is force to that criticism. The letter from Mr Chand's solicitor in 2009, which his Honour accepted as recording what Mr Chand had in fact done, certainly referred to Mr Chand waiting to see if the markets would reach the same levels experienced in October 2007 but this was in the context of the stated aim of redeeming at "not lower [than]" or "at least [at] the value at" September 2007. 5. The significance of Mr Chand looking for the market to recover to the October 2007 "high" was explained by reference to his preference that he redeem in a rising market. While reference was also made in the 2009 letter to the aim of achieving the maximum redemption value and to the possibility of redeeming at higher than the September 2007 value, the letter does not support a conclusion that Mr Chand was only looking for a redemption value higher than that available on 25 September 2007. Mr Chand's position was put as being that he was looking to achieve not less than the September 2007 figure or possibly higher. 6. However, nothing ultimately turns on this because the relevant finding (for the purposes of the defence based on a novus actus interveniens) was that there was a deliberate decision (described at [372] as a positive election) by Mr Chand to remain in the market and not to issue a new redemption request. The fact remains that Mr Chand did make a deliberate decision (and did not at any stage alter that decision throughout the period between 30 September and 13 December 2007) not to issue a further redemption request (or, for that matter, not to press the Bank further in relation to the status of his September 2007 request). 7. The unreasonableness of that decision, as articulated by his Honour at [373] and [381], was not because Mr Chand was looking for a redemption value necessarily higher than that which would have been available as at 25 September 2007. It was because Mr Chand chose (voluntarily) not to issue a further redemption request at a time when he knew that: he thereby remained on risk with his investments; they were high risk, highly geared investments in a market that had become sufficiently volatile for him no longer to consider them to remain a "safe investment option"; and when there was nothing preventing the making of a further request. Hence nothing turns on any error in the finding challenged at 10A(i). 8. The finding challenged at 10A(ii) is amply supported by the evidence. Mr Chand's submissions on these grounds of appeal in effect contend for a finding that Mr Chand did not voluntarily make a deliberate decision to remain in the market but, rather, that this was a position "forced" on him by the Bank's failure to implement his redemption request. It is in that sense, as I understand it, that Mr Chand argues that he did not "freely, deliberately and knowingly" decide or elect to stay on risk – instead, it is contended that he was "put back on risk" by the Bank. Mr Chand argues that he did not abandon any opportunity to avoid a prospective loss but was "stuck" in the market, forced to recommence his monitoring "in a programme that would ordinarily take four weeks", and unable to find a satisfactory exit date in that time. 9. Much emphasis is placed on what was said to be Mr Chand's "entitlement" to "go back to square one" and to follow his "ordinary course of business" in order to find another exit date. Reliance is placed on the fact that there was no challenge to Mr Chand's evidence that he had spent about four weeks monitoring the market before making the redemption request on 25 September 2007; and no challenge to his "methodology" or "heuristics". 10. Two comments may, however, be made as to the evidence given at [60] of Mr Chand's affidavit as to what he was required to do when he learnt the redemption request was not on the Bank's system. 11. First, the perceived need to ensure that Mr Chand was "no worse off" compared to 25 September 2007 is, at least, on one view, suggestive of Mr Chand having had an understanding of an entitlement to a particular redemption amount as at that date. He did not, for example, say that what he needed to do was to calculate when the redemption value of his units would next produce a "break even" outcome for him. However, he could only have had such an entitlement if the redemption request had in fact been received (in readable form) by the Bank. On Mr Chand's evidence, he did not believe that to be the case as at 5 November 2007. Similarly, the reference to a "shortfall" (at [65] of his affidavit) is interesting since as at 5 November 2007 there was no reason to assume that there would in fact be a shortfall, since Mr Chand's own monitoring had led him to conclude that the market had risen in October 2007. 12. Nevertheless, I do no more than note what may simply have been an infelicitous use of language in this regard. What is clear is that Mr Chand thenceforth seems to have set the amount he would have received in accordance with the 25 September 2007 request (his "initial target") as a benchmark for any future redemption. 13. Second, the "process" to which Mr Chand referred in his affidavit seems to have been market monitoring of the kind he had carried out from the end of August 2007 to late September 2007 in order to plan the 25 September 2007 exit date (see [47]). This apparently involved keeping up to date with general economic and financial developments and finance news to enable Mr Chand to understand which events were contributing to market movements and then correlating new events and market movements with movements in unit prices or fund values of his investments (see [40]-[42]). In later correspondence from his lawyers, reference was made to use of his "heuristics" but without elaboration as to any particular such strategies employed by him. Relevantly, in light of the submissions here made as to Mr Chand's "ordinary business practice", there was very little evidence as to what that practice comprised. His Honour expressly commented on the inadequacy of the evidence in this respect (at [180]). 14. Significantly, there was no explanation at all of the suggestion that the process of market monitoring or heuristics that Mr Chand felt necessary to undertake or employ (so as to determine whether the market was rising, and/or whether it was likely to remain buoyant enough to give him confidence when choosing a new exit date) was a process that of necessity, or even ordinarily, required a period of four to six weeks to complete. The fact that Mr Chand monitored the market for four to six weeks before lodging the September 2007 redemption request says nothing about the length of time ordinarily or necessarily required for that process to be completed. Indeed, Mr Chand's own evidence suggests that he did not regard a four to six week time frame as being either immutable or inevitable. Nor is it apparent that this was part of any "ordinary course of business" as such. It simply seems to have been what had occurred at one particular point in time leading up to the September 2007 redemption request. 15. There is therefore no basis for the suggestion, implicit in Mr Chand's submissions, that his Honour should have concluded that Mr Chand's monitoring process or heuristics would necessarily have taken until at least 10 December 2007 to complete once Mr Chand had recommenced monitoring. The most that can be gleaned from Mr Chand's very general description of the process he undertook was that it involved an assessment of historical unit prices and consideration of events that might have affected those prices. There is nothing to suggest that Mr Chand could not have completed that process within a relatively short period of time. Mr Chand himself seems to have accepted that the process of time would be shorter depending on when the monitoring recommenced. 16. Whether or not the market profile over the period 10/11 November 2007 (when Mr Chand says, but his Honour did not accept, his market monitoring recommenced) and 13 December 2007 (when redemption values, in hindsight, commenced their drastic downward movement) ever met Mr Chand's requirements for him to be satisfied that it was "safe" or suitable to lodge a further redemption request does not detract from the conclusion that Mr Chand made a deliberate decision, at the latest by about 5 November 2007, to remain in the market. He said that was the "easiest decision to make". He was not "locked" into the market or forced to remain in the market in any real sense. 17. Thus the finding that Mr Chand made a positive decision to remain in the market and not to issue a further redemption request, in the knowledge that the investments were high risk and that his redemption value could go up or down, was supported by Mr Chand's own evidence. There was no error on the part of his Honour in so concluding. 18. Grounds 10A(ii) and 10B(ii) are not made out. Although the finding challenged at 10A(i) was inconsistent with his Honour's acceptance that Mr Chand did what the solicitors' 2009 letter said he had done, it does not detract from the deliberate nature of Mr Chand's decision to remain in the market. Ground 10B(i) is not made out. Finding that Mr Chand knew of the breach of contract by 5 November 2007 (grounds 10A(iv) and 10B(iv)) 1. Mr Chand contends that his Honour erred in finding that he knew of the breach of contract by 5 November 2007 and maintains that he did not know of the breach of contract until 30 July 2008. 2. Mr Chand refers in this context to his Honour's comment (at [187]), to the effect that if Mr Chand believed that the redemption request had in fact been received but not processed for some unknown reason then the absence of enquiry or complaint would tend to support the conclusion that Mr Chand had had second thoughts about withdrawing from the market at that time. 3. The relevant finding to which this ground of appeal is addressed appears to be the finding at [349] (made, in obiter, in the course of considering what his Honour described as the normative question addressed in Wallace v Kam [2013] HCA 19; (2013) 297 ALR 383), that the circumstances should have caused Mr Chand to appreciate, once he knew that the Bank had not implemented the redemption request, that his request may have gone astray "and that the Bank did not know that it was in breach". His Honour concluded that this was the most probable position. 4. His Honour went on to say that it followed from Mr Chand's knowledge that the redemption request was not on the Bank's computer system that "Mr Chand knew that there was a real likelihood that the Bank was not in a position to protect itself from its own breach". Implicit in this is that his Honour considered that, as at 5 November 2007, Mr Chand was on notice of facts that would constitute a breach of contract on the part of the Bank. Indeed, Mr Chand accepts that, unless overturned, his Honour's findings that he knew the redemption form had been received by the Bank and that some time between 25 September 2007 and 5 November 2007 he must have realised that the Bank had failed to comply with its obligations ([349]) amount to a finding that he became aware of a breach of contract. 5. Knowledge of the Bank's breach, or at least of the facts giving rise to the breach, is relevant when considering the reasonableness of Mr Chand's conduct both in the context of the alternative failure to mitigate defence and also in the context of the defence based on a novus actus interveniens. 6. In Bak v Glenleigh Homes Pty Ltd [2006] NSWCA 10, for example, Handley JA said (at [5]): I am not aware of any authority on the nature of the "duty" to mitigate in contract where the innocent party was not aware of the facts giving rise to the breach, and the question must be considered in principle. The duty is only to do what is reasonable, and the prima facie measure of damage is only reduced if the innocent party has neglected to take reasonable steps. If the innocent party is not aware of the facts giving rise to the breach he cannot, by doing nothing, be said to act unreasonably. The question therefore must be whether he ought, acting reasonably, to have been aware of the breach. 1. Similarly, in Smith New Court Securities Ltd v Citibank NA [1997] AC 254; [1996] 3 WLR 1051 (at p 1060) Lord Browne-Wilkinson noted that no question of a duty to mitigate could arise for so long as the plaintiff was unaware of the wrong (which in that case was fraud); and in County Ltd v Girozentrale Securities [1996] 3 All ER 834 at 858d-f Hobhouse LJ made clear that no question of mitigation of loss arose until the relevant breach was discovered. 2. Complaint is made by Mr Chand that his Honour rejected his evidence that he thought there had been some technical fault even though the product disclosure statement had itself drawn attention to the fact that fax machines might not always be reliable. Relevantly, the product disclosure statement included the following: If a query arises over what information we receive by fax, we will not accept a fax transmission report from your machine as evidence that we received the fax. This is because, although your fax machine may have confirmed that the fax was sent, we may not have received the complete fax at our end. 1. However, that disclaimer in the product disclosure statement does no more than draw to the attention of an investor that there might be an evidentiary dispute over the receipt or otherwise of a faxed document. Mr Chand had received a successful transmission report that disclosed no error in the transmission and was not on notice of anything to suggest that the transmission had not been successfully received. 2. The credibility of Mr Chand's evidence as to the possibility that the redemption request might have been received but in a corrupted or unreadable form must have been weakened by the fact that it was an explanation proffered for the first time in the witness box and, seemingly, in an attempt to explain away the inconsistency between Mr Chand's affidavit evidence to the effect that he had thought the facsimile transmission must not have been received by the Bank due to some technical fault or possible drop out during the transmission and the fact (to which there was no reference in his affidavit) that he was in possession of a successful fax confirmation report and had drawn that to the Bank's attention in his conversation in July 2008. It appears from the transcript of the proceedings before his Honour that Mr Chand's attention had been drawn only shortly before the hearing to the existence of a recording of his conversation with a Mr Lam from the Bank in which he had expressly referred to the fax confirmation report. Up until then, the case Mr Chand was running was that he believed that the redemption request must not have been received at all. 3. His Honour had the benefit of observing Mr Chand in the witness box and gave careful consideration to the credibility and reliability of Mr Chand's evidence including as to the issue whether he believed at the relevant time that the redemption request had been received by the Bank (see [182]-[188]). There is no basis for this Court to conclude that his Honour erred in rejecting Mr Chand's explanation on this issue, bearing in mind that there are well recognised limitations on the ability of the Court to reject findings based on the credibility of witnesses (Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29]). 4. It is submitted by Mr Chand that his Honour overlooked the reaction on 30 July 2008 when Mr Chand did complain to the Bank about the failure to process his redemption request and was informed that the redemption request had been received; and his subsequent correspondence with the Bank. It is submitted that the only inference to be drawn from that is that, had Mr Chand known, in September or November 2007 that the Bank had in fact received the redemption request and not acted upon it, he would have reacted in the same manner as he did in late July 2008. However, the stark difference between the position in July 2008 and that which pertained from September to November 2007 is that by July 2008 it was clear that the market had drastically fallen. As at 5 November 2007, that was not the case. There was certainly room for the inference that his Honour considered to be open, namely that given the rise in the market in October 2007 when he learnt it had not been processed Mr Chand had had second thoughts as to whether to pursue the September 2007 redemption request. 5. Finally, on this issue, it is submitted for Mr Chand that the findings, first, that he was aware that $1 million had not been banked into his bank account no later than about two weeks, give or take, after 25 September 2007 ([209]) and, second, that "relatively shortly" thereafter Mr Chand made a deliberate decision to stay in the market to see if he could achieve a result equivalent to that which he would have achieved had he redeemed in October 2007 ([225]) are glaringly inconsistent and improbable. Mr Chand contends that it is "absolutely inconceivable" that he would not have redeemed during the period between 9 October and 5 November 2007, when the redemption values were considerably higher than the September 2007 figure, had he known then of the Bank's breach. 6. There is no obvious or glaring inconsistency or improbability in those findings. Mr Chand himself agreed that he had monitored his bank account and was aware within a short time of lodging the September 2007 redemption request that the redemption amount had not been paid into his bank account. His letter of complaint in August 2008 placed this as being after about two weeks from his redemption request. There can be no challenge, and there is none, to the finding to that effect at [209]. As to the finding at [225], his Honour made it clear that the precise time when Mr Chand's decision to stay in the market was made could not be determined. His Honour placed the time as being "relatively shortly" after Mr Chand became aware that the Bank had not paid the $1 million into his account; i.e., dating this from the end of the two weeks "give or take" from 25 September 2007, within a relatively short time after around 9 October 2007. 7. At that time, Mr Chand was, as his Honour found, aware at least in a general way that the market was buoyant. This is the time at which, on Mr Chand's own evidence, he was content to remain in the market. That must have been the case since otherwise he would surely have contacted the Bank sooner to query the status of the redemption request. The fact that Mr Chand did not issue another redemption request before 5 November 2007 does not cast doubt on the implicit conclusion by his Honour that, as at 5 November 2007, Mr Chand was on notice that the Bank was in breach of contract by failing to process the redemption request that he had sent in September 2007. Nor does the fact that he thereafter chose to recommence monitoring rather than act immediately to issue another request. 8. I am not persuaded that the conclusion (implicit in his Honour's reasons at [349]) that Mr Chand was on notice on 5 November 2007 of the facts giving rise to the Bank's breach was erroneous. 9. As at 5 November 2007, Mr Chand: had submitted by facsimile transmission a redemption request; had received electronic confirmation that the request had been transmitted without error to the Bank; had received no communication from the Bank as to the request, which he said he would have expected to receive by around 16 October 2007 in the ordinary course; knew (and had known since around 30 September or 2 October 2007 at the latest) that the Bank had not in fact processed that request, since the redemption amount had not been deposited into his bank account; and was then informed that the request was not on the Bank's system. Mr Chand must be taken to have known that the terms and conditions of his investment obliged the Bank (in the absence of exceptional circumstances of which there was no suggestion there were any in this case) to redeem his investments in accordance with such a request. In those circumstances, he was clearly on notice as at 5 November 2007 of facts giving rise to a breach of contract on the part of the Bank. 10. Grounds 10A(iv) and 10B(iv) are not made out. Finding that Mr Chand's conduct was unreasonable (grounds 10A(iii) and 10B(iii)) 1. His Honour concluded (having regard to his finding at [349]) that Mr Chand could not reasonably have expected the Bank to remain at risk of the consequences of its breach for any significant period and that the deliberate decision made by Mr Chand to stay in the market in the circumstances relieved the Bank of continuing exposure for the consequences of its breach "and effectively reset the original arrangement as between Mr Chand and the Bank, which required Mr Chand to take responsibility for his own decision as to when to leave the market" (see [3493]). 2. Mr Chand submits that his Honour wrongly assumed that any further redemption request would have been acted upon by the Bank "when in fact it would have been rejected". This is the subject of ground 8 of the grounds of appeal and is considered below (from [109]). 3. Mr Chand also submits in this context that his Honour wrongly found that there were opportunities in the relevant period (i.e., up to 13 December 2007) for redemption at the amount that would have been available as at 25 September 2007 and that he 'should have simply sent in another redemption request rather than go back to his ordinary course of business'. 4. As to the existence of opportunities to redeem, Mr Chand emphasises that the analysis of redemption values over the period (Annexure A as an Addendum to his Honour's reasons) was not a document that was available to him at the time. It was a document he created by reference to material obtained from the Bank in the course of preparation for the Court proceedings. However, what was available to Mr Chand at the relevant time was information from which, as he accepted he was aware, it could be determined that the market remained buoyant. Though Mr Chand described the market as pretty "flat", redemption values were nevertheless above the 25 September 2007 level for much of the period to 13 December 2007. With hindsight, it is clear that there were opportunities for Mr Chand to redeem at or around the September 2007 figure during the period to mid-December 2007. His Honour did not err in so finding. 5. As to the suggestion that his Honour made a finding in or to the effect of the words quoted at [101] above, this somewhat misstates the findings made by his Honour. What his Honour was saying was not that Mr Chand should not have recommenced a market monitoring process but, rather, that in the circumstances he was acting unreasonably in so doing over the period from when he became aware that the redemption request had not been processed through to mid-December 2007. 6. The submission is made for Mr Chand, arguably inconsistent with the findings made by his Honour as to Mr Chand's profile as an investor which are not challenged on this appeal, that Mr Chand was acting prudently and cautiously in recommencing his market monitoring process. It is submitted that what Mr Chand did was "perfectly reasonable" but that he simply could not find an exit date; and that the very nature of the investment product and the arrangements for redemption, including lack of "real time" valuations, meant there was a "real problem" for any person who wished to redeem (see submissions at [39]), and that he was "entitled" to resume his ordinary course of business. 7. Mr Chand's decision not to renew the redemption request was made at a time when he knew not only that the investments were high-risk and had been made on a margin loan basis but also that the market had been sufficiently volatile to cause him to conclude that it was no longer a safe option to retain the investments. In those circumstances, the decision not to pursue any further enquiry of the Bank and not to lodge a further redemption request even though redemption values had remained buoyant can hardly be described as cautious. 8. Moreover, to speak as Mr Chand does of an "entitlement" to pursue his particular market monitoring process or ordinary course of business is apt to cloud the issue. In Darbishire v Warren [1963] 3 All ER 310 (at 315), Pearson LJ indicated that a plaintiff is fully entitled to be as extravagant as he pleases but not at the expense of the defendant. Mr Chand could monitor the market for as long as he chose and could adopt whatever heuristics he chose. However, if (as his Honour concluded) his conduct in so doing was unreasonable having regard to the high risk nature of the investments, the volatility of the market and his knowledge of the facts giving rise to the breach, then the decision to do that was one that might later be held (as it was held) to be at the expense of his ability to recover from the Bank any losses suffered as a result of that decision. 9. The conclusion that Mr Chand's conduct was unreasonable was a finding of fact open on the evidence before the primary judge. His Honour did not err in so concluding. Mr Chand had already concluded these investments were no longer a "safe" investment option and was aware that the redemption values remained buoyant. 10. The delay in "real time" redemption values, to which Mr Chand attributed his difficulty in simply issuing a further redemption request, was such that there would always have been a risk that the market would fall during the relatively short period between lodgement of the redemption request and the time the next exit price was determined. Nevertheless, on the information available to him at the relevant time there were periods in which the redemption values satisfied what he had himself identified as the criteria for a suitable exit date. The reasonableness of Mr Chand's conduct must also be assessed having regard to his knowledge of the facts amounting to a breach of contract by the Bank. To accept Mr Chand's submissions on unreasonableness would, as his Honour perceived, unreasonably cast the Bank into the position of insurer of Mr Chand's risk indefinitely and in circumstances where Mr Chand did not alert the Bank to his claim at a time when the investments could have been redeemed with little or no loss. Ground 8 – ability to make further redemption request 8. His Honour erred in finding that it was open to the Appellant at all relevant times to make a further redemption request in that such a finding was not open because the only evidence on the matter was to the effect that any such further redemption request would have been rejected. 1. Mr Chand cavils with the observations made by the primary judge to the effect that it would have been open to him to lodge another redemption request at any relevant time (referring to what was said by his Honour at [271], [282], [299], [332], [339], [349], [363], [365], [376], [389]). His Honour variously referred to the ease of lodging a redemption request (at [349] and [363]) and to the feature of the redemption process as being that a request could be delivered at any time, without any relevant cost or inconvenience and could be delivered repeatedly ([349]); that the process was simple ([376]); and that it was one that is "simply and reliably repeatable" ([363]). 2. Mr Chand submits that the primary judge erred in assuming that any further redemption request in the same form would have been successful and says that his Honour should have concluded that the Bank had made a deliberate decision to refuse the request and that any further request in the same form would also have been refused. 3. Mr Chand also challenges his Honour's statement that he did not put a positive case that the Bank was aware of receipt of the redemption request. Mr Chand refers to the evidence that the redemption request was scanned in the records of the Bank on 3 October 2007 and was date-stamped 'received 25 September 2007'. Oral submissions were made at the hearing before his Honour to the effect that the letters from Mr Li and Mr Tilley had completely misled Mr Chand and in closing submissions it was said for Mr Chand that the Bank had taken the position that if it had received the redemption form it would not have acted on it. Mr Chand therefore submits that the submission was squarely put that the Bank would not have acted on a further redemption request. 4. The Bank argues that it was never contended that the failure to renew the redemption request was attributable to a belief by Mr Chand that, if lodged, it would not be implemented. It points out that the bank officers who gave evidence were not cross-examined as to this. In those circumstances the Bank contends that it was open to his Honour to conclude that there was no impediment to the making and implementation of a fresh request. The Bank further disputes that the evidence supported a conclusion that any further redemption request would have been refused. 5. The issue arises due to what the Bank maintains was an ex post facto rationalisation by it of the fact that the request was not processed. That this was the case emerges from a review of the internal Bank correspondence. 6. By email dated 30 July 2008 Mr Lam referred to the conversation with Mr Chand in which the latter had inquired why the request had not been actioned. Mr Lam recorded that he had advised Mr Chand he was unable to see any notes relating to this "though the most likely reason why it was not actioned was due to the fact that this request only provided the crediting details of his personal bank. A request which we would not approve as this leaves the [margin loan] exposed with an uncleared loan balance". The email makes it clear that Mr Lam was not sure what had happened. 7. Further internal Bank correspondence on 31 July 2008 similarly indicated that others in the Bank (in this instance a Mr Taiyab) had been unable to ascertain what had happened. Mr Taiyab recorded his doubt that the request "came to redemptions" as it had not been scanned under the title of redemption (rather, it was scanned under the header Margin Lending Correspondence) but made clear this was only an assumption. 8. An internal Bank email of 5 August 2008 from Mr Lam referred to confirmation that CFS had received "no such request" and made reference to the form being "invalid", apparently by reference to the fact there was no mention of repayment of the margin loan on the form. The comment as to the invalidity of the form was made in the context of Mr Lam expressing an opinion as to whether the Bank should admit fault. 9. Mr Chand had pressed for a response in writing from the Bank. By an internal email of 2 September 2008, Mr Collins of the Bank advised the Bank's in-house solicitor, Mr Li, that "[U]nfortunately, I can't see any reason why this was not actioned and there are no notes to help with this". 10. Against that background, Mr Li wrote his letter dated 11 September 2008 to Mr Chand confirming that the redemption request was received by CFS in September 2007 but stating that it was unable to approve the request as the transfer of funds to his personal bank account would have left the margin loan exposed with an uncleared loan balance. The letter stated that normal procedure in that situation would have been to call Mr Chand or his adviser. 11. Subsequently, by letter dated 17 March 2009, the Senior Legal Counsel of the Bank, Mr Tilley, wrote to Mr Chand's lawyers in respect to the claim for damages that had been by then made, advising that the redemption request in September 2007 would have placed Mr Chand's margin loan in margin call and, as such, there was no obligation to act on the redemption request. 12. The facts that the request was date-stamped as having been received and that the Bank ultimately admitted both receipt and that it had not processed the request, do not compel the conclusion that a further request would have suffered the same fate. 13. At [379], his Honour said that the probabilities supported the conclusion that the redemption request went astray. That finding was open on the evidence. In saying this, I would place little weight on Mr Chand's acceptance that every other request he made to the Bank had been carried out without a problem and that the Bank's failure to process that request was a "one-off" and a "complete aberration". The real question is whether one should infer (from the fact that the Bank had proffered a particular, and hardly creditworthy explanation in hindsight for the fact that the request had not been processed) that it would not have implemented (nor raised any query in relation to) any fresh redemption request in the same form had one been lodged after 5 November 2007. I do not accept that the only available inference is that such a further redemption request would have been refused. The Bank's own evidence (though again with hindsight) was that if there was an issue with the validity of a request the normal course would have been to contact the investor. 14. It is clear from the Bank's internal correspondence, on which Mr Chand relied to support his submissions on this ground, that the explanation proffered by the Bank when pressed for one by its customer was no more than a reconstruction of events. While the Bank can certainly be criticised for asserting to Mr Chand, as fact, matters which its officers in their own internal communications acknowledged were no more than assumptions, in order to deny what the Bank was ultimately forced to concede (namely that it was in breach of its contract with Mr Chand), that does not warrant a conclusion that his Honour erred in concluding that, on the probabilities, the request simply went astray after it was received by the Bank. If anything, the reference to the apparently incorrect scanning of the request seems to supply the most likely reason why the request was not processed. 15. Ground 8 is not made good. Ground 9 – interpretation of solicitors' letter 9. His Honour erred in his interpretation of the Appellant's letter of 4 August 2008 and the Appellant's solicitor's letter of 12 February 2009. 1. I have extracted above (at [40] and [42]) the relevant text of the 2009 solicitor's letter. The other letter to which this ground of appeal refers is Mr Chand's letter of 4 August 2008 to the Bank in which he stated that "after a period of a couple of weeks it became apparent that the request had not been executed for some reason"; that this forced him to plan for another exit date in the following weeks and months, and that "market uncertainty and volatility which then followed and currently ongoing made timing another exit difficult". 2. Mr Chand submits that his Honour erred in interpreting these letters as saying that Mr Chand waited to see whether he could achieve a result equivalent to that which he would have received at an appropriate time in October 2007. Mr Chand says that the need to assess why the market went higher in October 2007 (and, presumably, whether there was any chance of the market recovering to that high) did not mean that he was seeking to exit at the same level as October 2007 (see [78] of his submissions). I have already addressed this issue (at [66] – [69] above). 3. I accept that his Honour appears incorrectly to have read this correspondence as indicating that Mr Chand was looking to redeem at a higher figure than that available in September 2007, whereas the solicitor's 2009 letter in fact stated that Mr Chand's aim was to redeem at a figure if possible higher but not lower than the September 2007 figure. 4. However, as noted above, nothing turns on this. The real issue on causation was whether Mr Chand made a free, informed and deliberate decision not to issue new redemption request and did so unreasonably so as to have the result that the actual loss he suffered (when his earlier prospective loss crystallised) was due to his own conduct and not due to the Bank's breach of contract. The same conclusion as to unreasonableness would follow whether Mr Chand was seeking only to redeem at a higher figure than the September 2007 redemption values (as his Honour thought) or at a value, if possible, above the September 2007 figure but not lower (as the 2009 letter stated). 5. Ground 9, though made good as indicated above, does not assist Mr Chand. Ground 3 – onus of proof 1. The complaint made in ground 3 of the grounds of appeal is as to where the relevant onus of proof lay: 3. His Honour erred in failing to find that the Respondent bore the onus of proof on the issues of causation and mitigation of damages. 1. His Honour accepted (at [277]) that established legal principle required that Mr Chand carried the burden of proving that his loss was caused by the Bank's breach (referring to Medlin v The State Government Insurance Commission [1995] HCA 5; (1995) 182 CLR 1 at 21; Castle Constructions Pty Ltd v Fekala Pty Ltd [2006] NSWCA 133; (2006) 65 NSWLR 648 at [24], [94]); but that the Bank was required to plead and prove that Mr Chand did not act reasonably to mitigate the plaintiff's damage (Medlin at 22; St Vincent's Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297 at [36]). The primary judge also referred in this context to Knott Investments Pty Ltd v Fulcher [2013] QCA 67; [2014] 1Qd R 21 at [26], [43]-[46] as applying the principles in Medlin in the context of a claim for breach of contract. 2. At [283], his Honour suggested that where a single set of circumstances called for the application of the principles of both causation and mitigation there might be a basis for saying that the two principles fuse into one. 3. Mr Chand submits that his Honour erred in two respects in relation to onus. First, he says that the Bank bore the onus on both causation and mitigation (submissions [25]), on the basis that the onus of proving the unreasonableness of his conduct lay on the Bank whether approached on the question of novus actus interveniens or mitigation. Second, Mr Chand complains that his Honour conducted the fact finding exercise without first identifying which party carried the onus of proof. 4. As to the first, Mr Chand points to the statement by McHugh J in Medlin at p 22 (the text of which is extracted at [315] of his Honour's reasons) where McHugh J stated that whether the act there in question (the plaintiff's early retirement) was attacked as a novus actus interveniens or as a failure to mitigate loss, the onus was on the defendant to prove that the plaintiff had acted unreasonably. There, his Honour accepted that the defendant's negligence had caused the conditions which in that case produced the loss and hence the negligence was a material cause of the plaintiff's financial loss unless the act of early retirement was to be treated as breaking the causal chain or was a breach of the "duty" of mitigation of loss. 5. McHugh J reached the conclusion as to onus because the plaintiff's early retirement would be a novus actus interveniens or a failure to mitigate only if it was unreasonable in all the circumstances. 6. The plurality (Deane, Dawson, Toohey and Gaudron JJ) emphasised (at p 13) that any question of reasonableness should be framed in terms of what is reasonable in terms of the context of assessing damages for negligence. 7. Nowhere does his Honour suggest that his finding as to the unreasonableness of Mr Chand's conduct was determined by reference to where the onus of proof lay. Indeed, his Honour made clear that in the present case he considered that the question of who bore the onus of proof was immaterial. This is clear from [278], where his Honour said: At least where the facts have been proved with sufficient clarity, the fact that Mr Chand has the burden of proving causation of loss, while the Bank must prove a failure to mitigate, is likely to be immaterial. This potential problem only need be addressed if and when it arises. as well as his Honour's statement (at [317]) that any difference between who bore the proof on the two issues was likely to be inconsequential if the evidence established all of the relevant facts; and later (at [383]) that he had not relied on the burden of proof in forming the view that it was Mr Chand's conduct that was the legally responsible cause for his prospective losses becoming real. 1. His Honour reached his conclusion as to unreasonableness on the basis that, irrespective of those aspects of Mr Chand's evidence that he did not accept, the whole of the evidence sufficiently proved the facts necessary for that conclusion. His Honour, further, stated that "even if" Mr Chand had the burden of proof (implicitly accepting that, on the issue of reasonableness, he did not) he had proceeded on the basis that he should not find Mr Chand's conduct absolved the Bank from the consequences of his conduct unless he was "comfortably persuaded that the whole of the evidence justified a finding to that effect" ([384]). 2. In those circumstances, no complaint can be made that his Honour misapprehended where the onus lay because he approached the task of determining liability on the assumption that Mr Chand did not bear the onus on the question of the reasonableness or otherwise of his conduct. 3. As to the second complaint, there was no instance to which Mr Chand pointed in the fact finding that demonstrated an error had arisen because of any failure to identify where the onus of proof lay on any particular issue. True it is that, at [383] his Honour said that Mr Chand had failed to prove crucial aspects of his case, but that those conclusions did not mean that Mr Chand had failed to carry the burden of proving that the Bank continued to be responsible for his realised loss. However, in the same paragraph his Honour made clear that none of his findings as to whose conduct was "truly responsible" for the loss becoming realised turned on the onus of proof. 4. Therefore, ground 3 goes nowhere. Grounds of appeal relating to assessment of damages/causation/mitigation 1. I turn then to the remaining grounds of appeal. Grounds 1 and 2 – application of principles in Clark v Macourt 1. The first two grounds of appeal raise the question of the application on the facts of this case, of the principles confirmed in Clark v Macourt [2013] HCA 56; (2013) 304 ALR 220. Mr Chand contends that his Honour erred in failing to find: 1. that the admitted breach of contract by the Respondent resulted in the Appellant not being placed in the same situation as he would have been in if the contract had been performed. 2. that because the breach resulted in the Appellant not being placed in the same situation as he would have been in if the contract had been performed events thereafter were irrelevant save as to the calculation of damages. 1. His Honour noted (at [259]) that the parties were agreed that Mr Chand's loss was to be assessed as at the date of the Bank's breach and that damages for breach of contract should put Mr Chand in the same situation with respect to damages, so far as money could do, as he would have been had the promise been performed. His Honour expressly referred in this regard to what was said in Clark v Macourt (see Keane J at [106] and [109]). 2. His Honour considered that the decision in Clark v Macourt concerned the proper way in which to identify loss (referring to what Hayne J said at [8]-[10]) but had no relevant application in the present case because the Bank had accepted the manner in which Mr Chand defined his claim for loss ([270]). 3. His Honour noted (at [271]), that as at the date of breach (which seems to have been treated as being on or about 25 September 2007, although the precise time period within which a redemption request was required to be processed was not specified in the CFS product disclosure statement) Mr Chand retained investments that had a value equal to the value of the money that would have been paid into his account if the Bank had performed the contract, but that he involuntarily retained the risk of owning the investments and being party to the margin loan contract. 4. Mr Chand does not cavil with that assessment of his position as at 25 September 2007, though he emphasises the difference between receiving money in hand and having an investment subject to daily changes in value. 5. Mr Chand maintains that, if the contract had been performed, he would have obtained not only the net redemption amount ($1.034 million) but he would have been left with no further obligations on his margin loan facility, no exposure to ongoing interest or the risk of loss and (though no claim was made for this) with the opportunity to invest his funds elsewhere. His Honour recognised this when referring to the 'involuntary' retention by Mr Chand of his investments. 6. At [272], his Honour said that it was in principle and in practice impossible as at the date of the breach to be sure that Mr Chand would suffer a loss and that the amount of any such loss could not be determined. His Honour accepted the Bank's argument that, as at the date of the breach of contract, Mr Chand's loss was prospective, rather than actual or immediate ([273]). His Honour saw this as a case where the amount of the loss could be assessed at the date of the breach but considering later events, on the application of the principle in Willis v Commonwealth [1946] HCA 22; (1946) 73 CLR 105 (referring to the application of that principle in a contract case in Janos v Chama Motors Pty Ltd [2011] NSWCA 238 at [1], [2], [36]-[42]). 7. Mr Chand does not appear to take issue with the above statements of principle other than the statement by his Honour that Clark v Macourt is not relevantly applicable on the issues of causation/mitigation in the present case. Mr Chand contends that Clark v Macourt is an example of a case where there can be "liability without causation", i.e., liability without proof of causative damage (see discussion in oral submissions at AT 18/19); and that his case is another example of such a situation. He refers to the discussion by Edelman J, writing extra-judicially in "Unnecessary Causation" (2015) 89 ALJ 20, of cases where causation is or may be unnecessary for the imposition of liability. There, reference was made to Joyner v Weeks [1891] 2 QB 31, where damages were awarded for breach of a covenant to repair even though the landlord was intending to demolish part of the premises at the end of the lease. In that context, Edelman J cited Clark v Macourt as a case where on one view the effect was that compensation for loss was awarded for a breach of contract in circumstances in which no actual loss had been suffered; and suggested that causation of loss may be irrelevant if, as in the claim for payment of a debt, the obligation to pay money is in the nature of a substitute for performance (see at p 29). 8. Mr Chand's complaint is that the practical effect of his Honour's decision was that he was not in fact put back in the position in which he would have been had the Bank redeemed his investments because, though left with the value of the investments, he remained on risk and then his loss crystallised when the market fell. It is clear from his Honour's reasons that this was the outcome because of the application of the principles of causation relating to the import of a novus actus interveniens. That finding is the subject of grounds 4 and 6. 9. Insofar as the complaint in grounds 1 and 2 is that his Honour should have treated this as a case where there was no need for a causal link in order for the Bank to be liable, I cannot agree. In Clark v Macourt, the "loss" for which compensation was claimed was identified by Hayne J at [9] as the loss of the value of what the promisee would have received if the promise had been performed. For Mr Chand to be put in the position in which he would have been had the redemption request been redeemed, it was necessary for there to be an assessment of his prospective loss. The manner in which he quantified his claim for damages made that clear – he was seeking not simply the equity loss but also compensation for the loss flowing from the fact that the investments had been retained. This was not a claim, akin to that in Clark v Macourt, where Mr Chand was seeking the monetary substitute or equivalent of a product that the Bank had agreed to supply to him. 10. I see no error in his Honour's approach to or application of the principles relating to assessment of loss for damage for breach of contract that were confirmed in Clark v Macourt. Grounds 1 and 2 are not made out. Grounds 4, 6 - causation 1. Grounds 4 and 6 relate to his Honour's application of the principles of law in relation to causation: 4. His Honour erred in failing to apply the correct principles of law in relation to causation. 6. To the extent that his Honour found that there had been a novus actus interveniens His Honour failed to apply the correct principles of law in relation thereto. 1. Mr Chand submits that, once his Honour found that there had been a breach of contract by the Bank, subsequent events were irrelevant save as to the assessment of damages. That submission fails to take into account the operation of the principle recognised in Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 (at p 361 per McHugh JA) that: Notwithstanding that a defendant's act or omission has a causal connection with the damage of the person aggrieved, no liability arises if an independent intervening act or event in conjunction with the defendant's act or omission has brought about the plaintiff's damage and the intervening act or event can be treated in a practical sense as the sole cause of the damage. 1. Insofar as his Honour placed reliance on the application or extension in Allianz of the above principle, Mr Chand submits that this is restricted to cases involving successors in title in building defect title cases (referring to the statement by Handley AJA in Building Insurers' Guarantee Corporation v The Owners Strata Plan No. 57504 [2010] NSWCA 23 at [57] to the effect that Allianz does not support any wider proposition than that a successor in title may fail to recover damages his predecessor would have recovered because he cannot prove causation). However, Ipp JA (at [104] in Allianz) made clear that he considered the principle stated in Alexander v Cambridge Credit to be one of application under the general law, irrespective of whether the claim is brought in tort or contract. There is no basis for reading his Honour's judgment down in the fashion suggested by Mr Chand. 2. Mr Chand goes on to argue that the present case is one falling within the example given in Medlin of a case where it may be misleading to pose the question of causation in terms of whether an intervening act has broken the chain of causation, namely where the negligent act or omission was itself a direct or indirect contributing cause of the intervening act or decision (at [6] per Deane, Dawson, Toohey and Gaudron JJ). (Similarly, McGregor on Damages notes that an intervening act will not relieve the defendant of liability if it is dependent or if, although independent, it could reasonably be expected to happen as a consequence of the breach ([8-152]).) 3. Mr Chand submits that he did not abandon any opportunity or voluntarily elect to stay on risk but was put "back on risk" by the Bank and, in a difficult position, was doing his best to resolve the problem acting reasonably. The suggestion appears to be that Mr Chand was "forced" into the position where he had no option but to make the decision that caused or contributed to his prospective loss being crystallised or becoming actual. I have already concluded that his Honour did not err in not accepting such a proposition. 4. Mr Chand submits that, but for the Bank's breach of contract, none of the three options referred to in the 2009 letter of his former solicitor would have arisen and therefore that each of the options was a direct or indirect result of the breach. On that basis he contends that even if (as I have concluded) the finding challenged by ground 10A(i) is not overturned, there should still have been a verdict in his favour. The Bank contends, and I agree, that the relevant question is not whether the options available to Mr Chand as a consequence of the Bank's failure to redeem his investments were indirectly a result of the breach but whether, in light of Mr Chand's intervening conduct, the Bank's omission should be considered the legal cause of Mr Chand's misfortune. 5. Mr Chand points to the exception identified in Allianz (at [107]) to the general rule where "the contractual duty of which the defendant is in breach was to guard against the very act that occurred". However, there was no case put by Mr Chand that the Bank had an ongoing duty to guard against harm arising from his free and deliberate conduct for a failure to pay on lodgement of a redemption request. The only allegation of negligence was the failure to implement the request. 6. Mr Chand further argues that the case comes within the exception referred to in Allianz (at [107]) where there is a link between the breach of duty and the damage; that link (between the Bank's breach of duty and the damage) being identified by him as resorting to re-monitoring the market (at [107]). This again seems to be dependent on acceptance of the proposition that Mr Chand was effectively locked into the market and forced to recommence his individual monitoring practice. That proposition has not been made good. 7. In this regard, Mr Chand's submission (at [38] of his written submissions) that his Honour "seemed to accept" that he "recommenced detailed monitoring on 12 November 2007" (referring to [118] – [120] of his Honour's reasons) cannot be accepted. It is squarely contradicted by his Honour's express finding that he could not accept Mr Chand's evidence on this issue without corroboration. (At [119] – [120], for example, his Honour is simply recounting Mr Chand's evidence as to what he did.) As to the finding that there was a sufficient opportunity for Mr Chand to redeem with little or no loss, this has not been shown to be inconsistent with the state of the market values over the relevant period. 8. In Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351 at 357, the High Court earlier recognised that the general rule that damages will be assessed at the date of breach will yield if "in the particular circumstances, some other date is necessary to provide adequate compensation" (and see also Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 236 CLR 272 (at [13]); Vieira v O'Shea [2012] NSWCA 21 at [45]). 9. In Janos v Chama Motors, where the landlord became entitled on termination of a lease to unliquidated damages for loss of its bargain during the balance of the term of the lease, Handley AJA noted not only that the principle that damages are to be assessed as at the date of breach is not inflexible (at [35]) (referring to Johnson v Agnew [1980] AC 367, 400 – 401, The Golden Victory [2007] UKHL 12, [2007] 2 AC 353 at 380-2, 389, 396 – 398) but also, relevantly, that in awarding damages for prospective loss the court takes into account later events that increase or diminish that loss (at [36]) (citing Willis v The Commonwealth). 10. However, relevantly, in Janos, Handley AJA also noted that the possible contingencies to which the landlord's prospective loss was subject included any further mitigation of that loss which should have been achieved or was achieved ([30]). 11. That reasoning is applicable to the situation in the present case. 12. Mr Chand suffered, as he acknowledges on this appeal, no actual loss at the date of breach. Rather, he suffered a prospective loss. That prospective loss was properly able to be assessed having regard to what was known of events occurring after the breach (Willis) but, when considering whether the Bank was to be liable for that loss, it was appropriate to have regard to whether Mr Chand's conduct was an intervening event breaking the chain of causation, as well as having regard to other possible contingencies including mitigation. 13. In Vieira v O'Shea (at [45]) one of the examples given as to when the general rule may have to give way is where for some other reason the plaintiff who has acquired an asset is "locked in" to holding the asset; in which case the plaintiff may not have acted unreasonably in retaining the asset (citing HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 at [63] and [66] and Smith New Court Securities Ltd v Citibank NA at 265 – 266). Here, however, as I have noted above, Mr Chand was not in any real sense "locked" into holding onto his investments. He could have issued a fresh redemption request. He made a deliberate decision not to do so. 14. In County Ltd v Girozentrale, Hobhouse LJ said that conduct which is undertaken without an appreciation of the existence of the earlier causal factor will normally only suffice to break the causal relationship if the conduct was reckless and that "[i]t is the character of reckless conduct that it makes the actual state of knowledge of that party immaterial" (see 857c – d). Here, however, Mr Chand was aware of the facts giving rise to the breach and was well aware that absent a fresh redemption request his investments would not be redeemed and he would remain on risk. 15. Here, Mr Chand's decision was freely made (he said it was "the easiest decision to make") and was an informed one (having regard to his knowledge as to the nature of the investments and the market generally). 16. His Honour therefore did not err in concluding that Mr Chand's decision was a novus actus interveniens that had the effect that Mr Chand was the author of his own misfortune. 17. Mr Chand next submits that insofar as his Honour effectively found was that the chain of causation had been broken, his Honour fell into error because he failed to consider whether or not the actions of the Bank were a cause of the damage, even if the actions of Mr Chand were also a cause, and hence compensable (referring to what was said in Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 by Samuels JA at 346E). However, it is clear from his Honour's reasons that his Honour had concluded that the failure to redeem at a point between 5 November and 13 December 2007 was the sole effective cause of Mr Chand's loss because, had he not made the decision to stay in the market and had he instead made a fresh redemption request, Mr Chand would have suffered no loss at all. 18. Grounds 4 and 6 are not made out. Ground 7 - affirmation 1. In ground 7 Mr Chand contends that: 7. His Honour erred in failing to find that either the actions of the Appellant affirmed the contract with an entitlement to recover damages for breach or alternatively accepted the breach with an entitlement to recover damages. 1. Mr Chand submits that, assuming that such a finding stands, he was entitled at that point either to hold the Bank to its promise (and recover damages for any loss sustained) or to accept the breach but still seek to recover damages. 2. Mr Chand argues that either, by recommencing to monitor the market, he was affirming the contract or alternatively, he was accepting the breach, but in either event, he was nonetheless entitled to recover damages for the breach that had already happened (assessable in light of later events). 3. The language of affirmation or acceptance of breach is not of assistance in the present case. The Bank admitted breach (albeit not until the hearing). There was no suggestion that the Bank's breach amounted to a repudiation of the contract. Hence the question whether he affirmed the contract does not arise. Mr Chand did not seek specific performance of the obligation to redeem his units nor were any statutory damages in lieu of such relief sought. 4. Ground 7, as framed, is a challenge to his Honour's reasons that goes nowhere. His Honour accepted that there was a breach of contract, for which subject to the operation of the principles of causation and mitigation Mr Chand was entitled to recover damages. No error has been shown in this regard. Ground 5 - mitigation 1. Turning to the remaining issue, mitigation, his Honour's finding was obiter. It is contended that: 5. His Honour erred in failing to apply the correct principles of law in relation to mitigation of damages. 1. The Bank accepted that the onus of proof lay on it to establish the failure of Mr Chand to take reasonable steps after 25 September 2009 to mitigate the damage (Wenkart v Pitman (1998) 46 NSWLR 502 at 523). 2. Although often expressed as a "duty" to mitigate loss (see, for example, British Westinghouse Co v Underground Railway [1912] AC 673 at 689; The Mortgage Corporation v Halifax (SW) Limited [1999] Lloyd's Rep P.N. 159 at p 182), there is no "duty" owed to the party in breach (here the Bank) in the sense of an independent obligation owed by the innocent party (as recognised in Halifax at p 183). Rather, the plaintiff cannot recover for what McGregor on Damages terms "avoidable loss", i.e., loss consequent upon the defendant's breach that could by reasonable action have been avoided (see from [9-014]). 3. In Sotiros Shipping Inc. and Aeco Maritime S.A. v Sameiet Solholt (The "Solholt") [1983] Lloyd's Rep 605, Sir John Donaldson MR thus emphasised that the reason a plaintiff cannot recover for loss avoidable by reasonable action on the plaintiff's part is because it is not regarded as loss caused by the wrongdoer. It was emphasised in The Solholt that the plaintiff is under no duty to mitigate; the plaintiff is completely free to act as he judges in his best interest but the defendant is not liable for all loss suffered by the plaintiff in consequence of his so acting but is only liable for such part of the plaintiff's loss as is properly caused by the defendant's breach of duty (see at p 608). 4. As noted in Halifax (at p 182), the plaintiff's conduct in not taking positive steps to reduce his or her loss will not be weighed in nice scales at the instance of the party who has occasioned the loss (reference there being made to the way in which this was put in Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452). In Orica Investments v McCartney [2010] NSWSC 458 Ball J noted (at [56]) that, ultimately, the question is not whether there was a better way of doing things but whether what the plaintiff did was reasonable. 5. Here, there is no error in his Honour's finding of unreasonableness. Therefore, had the matter turned on the question of mitigation, Mr Chand's appeal would still have failed. Conclusion 1. Whether or not, as Robert Goff J said in Koch Marine Inc v D'Amica Societa di Navigazione A.R.L (The 'Elena d'Amico') [1980] 1 Lloyd's Rep 75: … these three aspects of mitigation are all really aspects of a wider principle which is that, subject to the rules of remoteness, the plaintiff can recover, but can only recover, in respect of damage suffered by him which has been caused by the defendant's legal wrong. In other words, they are aspects of the principle of causation (see at 80) in the present case, his Honour correctly analysed the Bank's liability for the crystallisation or actualisation of Mr Chand's prospective loss by considering, first, whether a breach of duty had caused a particular loss before addressing whether there had been a failure to mitigate ([278]) (see, for example the order in which it is suggested such issues should fall for consideration by the authors of McGregor on Damages at [6–013]). If, as a matter of legal rather than factual causation, there was no loss caused by the breach (say, as here, where the sole effective cause was found to be some other act or event) then the question of mitigation would not arise. 1. It is accepted that, had the redemption request been properly implemented, Mr Chand would have received the net redemption amount (his claimed equity loss) and would not have been exposed to any risk associated with the retention of those investments. He suffered no actual loss at the date of breach, as Mr Chand accepts, because he retained the value of the investments. There was the potential for him to make a profit or a loss depending on movements in the value of his investments. The cause of his prospective loss becoming real was his deliberate, voluntary and informed decision not to issue a further redemption request in circumstances where he not only knew that the Bank had not processed his request but he also knew the facts by reference to which this amounted to a breach of duty on the part of the Bank. That decision was unreasonable for the reasons set out above and was the sole effective cause of his ultimate loss. 2. The appeal should be dismissed with costs. ********** Amendments 24 July 2015 - Typographical amendments to headnote DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2015