FEDERAL COURT OF AUSTRALIA
SHARON CARMELLA WYZENBEEK
EAGLEHAT PTY LTD ACN 002 008 933 AS TRUSTEE FOR THE N&S WYZENBEEK FAMILY TRUST
GOLD COAST MARINA PTY LTD ACN 083 695 283
DEAN PARKER LEIGH-SMITH (and others named in the Schedule)
DATE OF ORDER:
27 September 2019
THE COURT ORDERS THAT:
1. On or before 4 October 2019 the parties file and serve agreed short minutes of order to give effect to the reasons for judgment delivered today and in the event that the parties are unable to agree, each party file and serve short minutes of the orders for which he, she or it contends.
2. On or before 4 October 2019 if any of the second, third or fourth respondents contends that it or he should not be ordered to pay the costs of the trial, that party file and serve written submissions limited to 2 pages as to why.
3. If any submissions are filed pursuant to order 2, on or before 11 October 2019 the appellants file and serve any written submissions in response limited to 2 pages.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 The appellants, Norbert and Sharon Wyzenbeek and Eaglehat Pty Ltd as trustee for the N&S Wyzenbeek Family Trust, purchased a motor yacht named Cadeau from the first respondent, Australasian Marine Imports Pty Ltd (in Liq) (AMI) (which was in liquidation by the time of trial and did not appear in the appeal). Mr Wyzenbeek acted on behalf of the appellants throughout the transaction. Eaglehat was the original purchaser on 10 September 2010. Later, on 25 January 2011, Mr and Mrs Wyzenbeek were substituted as purchasers, as we explain below. The primary judge found that Mr Wyzenbeek was induced to acquire Cadeau by the misleading and deceptive conduct of AMI and the second to fourth respondents, Gold Coast City Marina Pty Ltd (ACN 083 695 283) (GCCM), Mr Dean Parker Leigh-Smith and Mr Ryan Anthony Leigh-Smith (together, the Marina parties).
2 His Honour found that the Marina parties had made two misleading and deceptive representations, namely that the vessels (including Cadeau) that they were offering for sale to the appellants were or would be suitable for, first, trans-ocean crossing and, secondly, extended passage in open ocean crossing. In substance, the representations caused Mr Wyzenbeek to be deceived that Cadeau was an ocean-going vessel, but she was not. The appellants’ case below was that they would not have purchased Cadeau had they known that the representations concerning her ocean-going capabilities were false. However, the primary judge gave the appellants relief only against AMI for breach of an implied warranty of seaworthiness in the contract of sale, based on their not being able to use Cadeau while she was laid up for 9 months undergoing repairs for the breach of warranty, and dismissed their claim for relief under s 82 of the Trade Practices Act 1974 (Cth) (the TPA). We set out in further detail below the background to the sale, the misleading and deceptive conduct, and the subsequent history.
3 The central question raised by this appeal concerns what is the proper analysis as to causation and to the assessment of loss where, but for the wrongdoer’s misleading and deceptive conduct, the transaction in question would not have occurred. For the reasons that follow, with respect to his Honour, we do not agree that the appellants’ remedy should be limited to damages for breach of warranty, nor with his Honour’s approach to the assessment of relief or compensation for loss or damage under the TPA. In our view, the appellants are entitled to recover compensation assessed in accordance with the approach explained by the High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640.
4 It was common ground that the Marina parties’ acts and omissions that comprised the misleading and deceptive conduct the subject of the false representations all occurred before the commencement of the Australian Consumer Law on 1 January 2011. The TPA as in force in December 2010 applied to those acts and omissions by force of item 6(1) of sch 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth).
5 The primary judge made unchallenged findings of fact as to the circumstances in in some detail in his principal reasons for judgement. We set out below so much of them as are necessary for the disposition of this appeal.
6 Mr and Mrs Wyzenbeek are keen sailors. Prior to purchasing Cadeau, the Wyzenbeeks had had two other vessels built for them, a thirty-eight foot sailing yacht called Upriver in 1987, and, later, a fifty-nine foot sailing yacht called Swanky. Mr Wyzenbeek had Swanky constructed in Finland and when she was completed in 1999 the Wyzenbeeks sailed from Finland to Australia over the next three and a half years. That trip was a three-quarter circumnavigation of the globe. The Wyzenbeeks desired to complete a full circumnavigation. To do so, however, required them shifting to a motor vessel, as Mrs Wyzenbeek’s health had deteriorated such that ocean-going voyages on a sailing yacht were no longer practical.
7 Dean and Ryan were employees of GCCM; Ryan was GCCM’s ‘shipyard manager’ and Dean was its director. Dean was also a director and employee of AMI. GCCM operated a marina at Coomera on the Gold Coast. The primary judge found that AMI and GCCM “effectively operated as one” and that Ryan and Dean had acted on behalf of both companies in their dealings with Mr and Mrs Wyzenbeek.
8 Mr Wyzenbeek attended the marina over the years between 2002 and 2010 and on some occasions discussed his and Mrs Wyzenbeek’s desire to replace Swanky with a motor vessel and to use the replacement to complete their global circumnavigation.
9 In or around October 2009 Mr Wyzenbeek provided Dean with a list of specifications for the type of vessel that he required. The first specification on his list was that the boat be “Class A, US Coastguard and IMO Standard, Sea State 5, who rates CAT A vertical acceleration, stability”. The experts at the trial agreed that this was the internationally recognised standard for an ocean going vessel. The primary judge found that Mr Wyzenbeek did not develop this list of specifications personally, but had obtained them, in particular, from the website of Marlow Yachts, a United States-based manufacturer.
10 Mr Wyzenbeek was also negotiating with Marlow in parallel to his negotiations with the Marina parties. He carried out much of the negotiation with the Marina parties in the shadow of a potential alternative purchase of a Marlow vessel. As will be more fully explained below, the existence of the Marlow alternative was of significance to the primary judge’s analysis of causation and to the assessment of loss.
11 After Mr Wyzenbeek sent the specifications to Dean they spoke on the phone. During this call Dean claimed that vessels in the Hampton Endurance series, of which Cadeau was one, were ideally suited to meet Mr Wyzenbeek’s purpose and his specifications, and were suitable for trans-oceanic crossing. Following this conversation, Dean, Ryan and Mr Wyzenbeek exchanged a series of emails concerning the suitability of Hampton Endurance vessels.
12 On 15 October 2009 Dean sent an email to Mr and Mrs Wyzenbeek suggesting several Hampton vessels which might be of interest. Dean praised the Hampton vessels, stating that he and two of his engineers visited the factory in China regularly to ensure that every ship sold was “100% right prior to departing the factory”.
13 On 28 October 2009, after further discussions, Dean emailed Mr and Mrs Wyzenbeek attaching comments from the naval architect who designed Hampton vessels. The naval architect’s comments included a statement that because Hampton Endurance vessels were rated for ocean service to US Coastguard IMO [scil: International Maritime Organisation] standards:
they are thereby considered capable of handling anything that comes along in a long open sea voyage. That does not mean one should go challenge a hurricane. At least these boats have the speed to avoid such things.
14 On 25 November 2009 Dean sent an email to Mr and Mrs Wyzenbeek copied to Ryan, offering a price for a Hampton Endurance 65 foot Skylounge vessel. Dean said that the vessel was built for offshore conditions, adding that:
I believe that the vessel we have specified is ideally suited to your requirements & will serve you both very well. I look forward to hearing from you soon to discuss further.
15 The email also stated that Dean was still awaiting the:
A1 offshore rating to be supplied with the vessel – same as Marlow website.
16 On 1 December 2009 Dean emailed Mr Wyzenbeek copied to Ryan, concerning the A1 offshore rating. Dean’s email forwarded on comments from Mr Chen, a representative from Hampton in China, who stated that the A1 offshore rating was a European EC rating and that the standard of the Endurance Series was equal to, or surpassed, such a rating. This statement was false because, as his Honour found, there was no such rating.
17 From around the end of January 2010 Mr Wyzenbeek began dealing with Ryan directly rather than Dean.
18 On 9 February 2010 Mr Wyzenbeek emailed Ryan a new list of specifications, largely similar to those provided in October 2009, that relevantly included the “Class A, US Coastguard and IMO Standard”. Mr Wyzenbeek said that he had booked a trip to the Fort Lauderdale Boat Show, where he would inspect Marlow yachts, and that he could visit the Hampton Yachts factory on his return journey. Subsequently Ryan and Mr Wyzenbeek communicated on several occasions, including in person at a boat show held at the marina. In substance, Ryan affirmed the previous representations that a Hampton Endurance yacht would be suitable to Mr Wyzenbeek’s needs and that such a vessel would be built to his specifications.
19 On 20 July 2010 Ryan sent Mr Wyzenbeek an email regarding an Endurance 750 offered for sale. This model was an elongated version of the previous Endurance vessels offered. The email had a number of attachments including a document outlining the capabilities of the Endurance 750. The email described the vessel as being perfect for long-range cruising.
Entry into the contract of sale
20 In September 2010 Mr Wyzenbeek attended at the marina to have anti-fouling and maintenance work performed on Swanky. Ryan approached Mr Wyzenbeek with an offer for a trade-in value for Swanky of $1,000,000 to be applied towards the purchase price of a new Endurance 750 which had been completed in China and could be delivered in November 2010. Ryan told Mr Wyzenbeek that Patrick Gay (the fifth respondent below but not a party to the appeal), the chairman of GCCM, and Jeff Leigh-Smith, the director of GCCM, had authorised this offer. Ryan told Mr Wyzenbeek that the vessel had been manufactured virtually to Mr Wyzenbeek’s specifications.
21 On 10 September 2010, Mr Wyzenbeek on behalf of what was then then the trustee of his family trust, Eaglehat, entered into a contract of purchase for Cadeau with AMI. The primary judge found that this contract was amended on 25 January 2011 (after the Australian Consumer Law came into force on 1 January 2011) by substituting Mr and Mrs Wyzenbeek as the purchasers and that all parties had accepted that the contract, as amended, was the one under which the sale took place.
Delivery and defects
22 After signing the contract, further negotiations occurred as to the exact final specifications of the vessel. On 27 January 2011 the vessel was delivered to the marina at which time she was named Cadeau.
23 Several defects in Cadeau were readily apparent on delivery, including a window in the upper deck that had cracked, her batteries were not charging properly and were bulging; and an oil hose had come loose, causing oil to be sprayed in the engine room and on the gear box. There was also a dispute as to other defects requiring rectification. The Marina parties contended that some of the works that Mr Wyzenbeek required were upgrades not repairs. This dispute is of no moment save that in the result, the Wyzenbeeks paid an additional $231,460.21 in respect of additions and modifications. Taking this payment into account, the total purchase price for Cadeau was $4,181,460, of which $1,000,000 was paid by the trade in of Swanky.
24 Following delivery the Wyzenbeeks took Cadeau on a series of voyages over which time further defects became apparent. After a trip to the Torres Strait they discovered that a significant amount of sea water had leaked through the port lights, bollards and deck fittings. GCCM rectified these defects.
25 By September 2011 the Wyzenbeeks had made a large number of warranty claims including complaints of persistent leaking. Over about the same period, the Marina parties also had received similar warranty claims from another customer to whom they had sold another Hampton yacht. On 19 September 2011, Dean emailed Mr Chen copied to Ryan, stating as follows:
In short the existing PORTLIGHTS are not working… I expect that Hampton will “FIX THE PROBLEM”, your inference that “Norbert is using the vessel in extreme circumstances” is not the case. We sell every Endurance as being capable of “trans ocean crossings”. You market the boats on the Hampton website as “US Coast Guard Offshore Rating 1 vessel” & they are obviously falling short in this case. I’d ask that Hamptons stand by the product & uses the appropriate equipment. (emphasis added)
26 Mr Chen replied to this email on 20 September 2011, stating:
We want to clarify that we never advertise the Endurance to be Capable of “Trans Ocean Crossing”. In order to be Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or R0. This is a total difference design criteria and construction method. We want to emphasis that we advertise the Endurance to be a Long Range Cruiser, and we should not mis-lead the customer. (emphasis in original)
27 In cross-examination Ryan accepted that the contents of Mr Chen’s email were true. Hence, from at least 20 September 2011 the Marina parties were aware that Cadeau was not an ocean going vessel to the standard that they had represented to the Wyzenbeeks. Further, the primary judge found that the Marina parties did not inform Mr Wyzenbeek of what Mr Chen had written until Cadeau had experienced an on-water incident at Port Macquarie in October 2012 (the Port Macquarie incident) to which we now turn.
28 In late October 2012 Mr and Mrs Wyzenbeek embarked on a voyage up the Hastings River. Leaving and entering the river requires crossing the Port Macquarie bar. On 24 October 2012, when Cadeau was seeking to exit the river, as she was crossing the bar, waves of approximately 1.6 meters broke over her bow resulting in significant damage to her. The damage included the destruction of several of the fore windows of the galley and the Portuguese doors positioned on the forward deck of Cadeau. The broken doors and glass allowed sea water to flood into the vessel’s sleeping quarters. In addition, Cadeau lost power, and needed to be towed back to the marina.
29 On 25 October 2012, at the marina, Mr Wyzenbeek told Dean that he was concerned that the glass on the vessel was not strong enough, nor were the Portuguese doors. He said that in light of this he was not confident Cadeau was suitable for trans-oceanic journeys. The primary judge found that Dean replied that Cadeau was never designed for trans-oceanic voyaging. That left Mr Wyzenbeek “absolutely flummoxed”.
30 On 26 October 2012, Mr Wyzenbeek wrote to the Marina parties stating his concerns about Cadeau. In particular he stated that he had expected she would meet A1 offshore ratings in all respects, including in relation to the glass, and that the Portuguese doors were inadequate. He stated:
During discussions with Dean yesterday morning, he surprisingly said to me that Cadeau is not designed to cross oceans. You were both fully aware that crossing oceans was always our intentions. We relied in our purchase decision on yours and Hampton’s correspondence, marketing, brochures, specifications, websites and ‘YouTube’ clip http://www.youtube.com/watch?v=V4hAzqli4S4 etc states that the Hampton Endurance is an extended passage maker for open ocean service, built to exacting specifications with the finest attention to detail, creating a new benchmark that others can only attempt to emulate. We were advised that a team of designers, engineers, naval architects, and experienced craftsmen pour dedication and passion into every last detail. A passion to make our cruising a memorable and enjoyable experience. Please refer to the email below, the attachment above and also your emails dated 28th October, 2nd December 2009; and there are other emails that I have received from you regarding Hampton Endurance ocean sustainability, quality and engineering excellence.
31 The Marina parties did not respond to deny the correctness of Mr Wyzenbeek’s email of 26 October 2012. However, at all other times throughout the disputes concerning repairs and upgrades, they denied that they had misrepresented the ocean-going capabilities of Cadeau. Indeed, at the trial the Marina parties adduced expert evidence concerning the ocean going capabilities of Cadeau. The primary judge found that the Marina parties:
vigorously fought every issue in the matter. In their defences they denied allegations which their witnesses freely admitted whilst giving evidence. They argued points of law which were not genuinely sustainable. Indeed, the overwhelming portion of the trial was taken up considering issues which, in the light of the evidence, were not truly in contest. The defences filed did more than merely put the applicants to proof, they contained denials which were very regularly shown to be disingenuous.
32 After the Port Macquarie incident, Cadeau was repaired and, among other repairs, some of the glass was replaced and the Portuguese doors were restored. The Wyzenbeek’s insurer paid for some, if not all, of the repairs. However, the discovery of yet more defects in Cadeau continued to occur. In addition, significant work was necessary to bring Cadeau up to Australian standards for the purpose of insuring her. Subsequently, from March 2014 onwards, the Wyzenbeeks undertook additional repair and rectification works. The primary judge found that there was “much disputation” about who was liable for these defects and that Mr Wyzenbeek sought to have GCCM and or AMI pay for them.
The primary judge’s findings on liability
33 His Honour found that each of the Marina parties made both representations on which Mr Wyzenbeek relied in entering into the initial contract on 10 September 2010, during the negotiations that had continued during 2009 and up to at least July 2010, when Ryan sent him an email indicating that an Endurance 750 yacht was better than smaller vessels that Mr Wyzenbeek had been shown and was capable of trans-ocean crossing. The primary judge found that there was little doubt that both Ryan and Dean were aware of Mr Wyzenbeek’s intention to take the vessel that he wished to acquire across oceans. He inferred that this was the purpose for which Ryan and Dean sent Mr Wyzenbeek the email.
34 He found that both Mr and Mrs Wyzenbeek had relied upon the misrepresentations although the former was the driving force behind the acquisition and that his decision to acquire Cadeau was determinative. Crucially his Honour found “[t]he history of Mr Wyzenbeek’s boating activities and his expressed desire, as admitted and acknowledged by Ryan and Dean, to use the vessel for trans-ocean crossings, leaves no doubt this was his intended purpose…The representation was a significant factor in Mr Wyzenbeek’s decision”.
35 The primary judge found that both representations were false and misleading. He also found that to the extent that each representation was as to a future matter, namely that Cadeau was ocean-going, the Marina parties had not established the existence of reasonable grounds for making it, and therefore it was misleading or deceptive.
36 The operative effect of the representations continued uncorrected until at least immediately after the Port Macquarie incident on 25 October 2012.
37 His Honour found that the vessel as delivered to Mr Wyzenbeek “was obviously not suitable for trans-ocean crossings”. That was because of three particular defects, namely, first, the deficiency of the port lights which allowed ingress of substantial amounts of water, secondly, the insufficiency of the strength of the Portuguese doors at the front of the vessel to withstand green water breaking over the bow, and thirdly, the windows on the forward cabin were not of sufficient quality to permit the use of the vessel at sea. He also found that “[t]here is some degree of likelihood the vessel was not suitable for ocean crossings for other reasons, including its construction and design, but that was not in issue before the Court”. Importantly, he found that Cadeau was not built to any particular internationally recognised standard, that she was not suited for crossing oceans or for extended ocean crossings and that no recognised standard was identified by the respondents at trial. There was no challenge to any of those findings.
38 The primary judge found that the repair work for the port lights was substantial and that the need for that work to be done was sufficient by itself to make Cadeau unsuitable for crossing the open ocean. He accepted Mr Dovell’s expert evidence that the strength of the glass on the cabin windows around the forward cabin and across the vessel was not of sufficient strength for any category of vessel, or any category of service, and therefore Cadeau was not suitable for ocean crossings, or at all. He also accepted the more limited conclusion of Mr Dovell that Cadeau was not suitable for ocean crossings or extended ocean voyages as a result of her forward cabin windows being of insufficient strength that fell well below the accepted international standards. He found that the inadequate design of the Portuguese doors rendered her unsuitable for trans-ocean voyaging and that she was non-compliant with the European Community Recreational Craft Directive (RCD) standards. He found that each of those three deficiencies, taken together, singularly or in any combination, supported the conclusion that the vessel was not suitable for crossing oceans or extended ocean voyages.
39 His Honour also found that Mr Dovell had a well-founded doubt as to whether the rest of the vessel’s structure would comply with any standard or protocol for trans-ocean crossings or extended passage in the ocean. The primary judge found that a warranty repairs report of August 2011, that Mr Bone and Mr Fernance of AMI prepared, revealed, among other things, that the vessel had difficulty with water leakage through the port lights and that this, as well as difficulties with the engines, were only the more significant of the many issues with the vessel that Mr and Mrs Wyzenbeek had encountered to that time. The primary judge accepted that for the period from April 2011 to October 2012 the large number of difficulties that Mr and Mrs Wyzenbeek had experienced from their use of Cadeau necessarily had the consequence that she was not an ocean going vessel, including because of her lack of water tightness. Crucially, his Honour found:
195 A further indicator of Cadeau’s lack of suitability for the uses to which it was put, were the number of days during which it was not able to be used because it was under repair. Mr Wyzenbeek gave evidence that, in its first year of operation, being 15 April 2011 to the end of the year, Cadeau was laid up for 76 days whilst being rectified. In 2012 it was laid up for rectification work between 8 March to 8 May, 4 June to 19 October and subsequently from 25 October 2012 until 20 July 2013. It also spent 64 days being rectified in 2014 and a further 21 days in 2015. Although Mr Wyzenbeek claimed that all of this work related to rectification, that was not entirely true. Some of it related to modifications and additions although not to a substantial degree. Ultimately, it can be concluded that the rectification work required on Cadeau in the period since its acquisition to the date of trial, tended to support the conclusion it was not suitable for the uses to which it was being put. Certainly, it undermined the conclusions of Messrs Burge and Akacich that it was seaworthy because it had been used extensively and “without incident”.
196 The only conclusion which can be reached on the material before the Court is that Cadeau was not, in fact, suitable for crossing oceans or for extended passage on the open ocean. It is even doubtful whether it was suitable for coastal cruising although no conclusion needs to be reached about that. The report of Mr Dovell as to the inadequacies of Cadeau and the proof of that by the incidents which have occurred over time, figure significantly in that conclusion. For the reasons identified I have rejected the contrary opinions of Messrs Burge and Akacich on this topic. (emphasis added)
40 The finding at  has to be read as the culmination of his Honour’s detailed consideration of the evidence, including of not only Mr Wyzenbeek and Mr Fernance, but of the two experts called by the Marina parties, Mr Burge and Mr Akacich. That finding is not, as all the respondents sought to portray it, some casual or loose finding on a matter that his Honour dealt with more completely later in his reasons at -. In those paragraphs, his Honour was attempting to quantify loss as opposed to identifying the deficiencies with the vessel, that his Honour had already done in detail, to arrive at his conclusion at . Immediately after making those findings, at  he found that both representations that Ryan and Dean had made for each of the Marina parties were misleading or deceptive.
The primary judge’s statement of the issues
41 His Honour summarised, at , the statement of claim and the way in which the case, as framed at trial, had been put. His summary included the two representations and the allegations of misleading and deceptive conduct by each of the Marina parties. He summarised the claims for relief for breach of the implied warranty of fitness for purpose and for contraventions of s 52 of the TPA (or s 18 of the Australian Consumer Law), identifying the loss and damage as “including” the following six items:
(i) Costs of repairing defects;
(ii) Costs of and incidental to repairing and rectifying the vessel;
(iii) Costs of rendering the vessel closer to fitness for the purpose for which it was purchased;
(iv) Diminution in value of the vessel being the difference between the cost of the vessel and its present value;
(v) Loss of use; and
(vi) Other damages.
42 His Honour summarised the way in which the parties had put their damages arguments at -. First, he acknowledged that the appellants had argued that, had the representations not been made, they would not have entered into the contract to acquire Cadeau and that, in addition, the damage suffered by them as a consequence of the misleading conduct had to be ascertained by adding to the purchase price the cost of remedying the defects to her, and subtracting that from her present value. They submitted that theirs was a “no transaction” case and that the damage was “best” ascertained by examining the value of the asset acquired as at the date of the trial, being her value as left in their hands, and comparing that to the purchase price based on Astonland 217 CLR 640.
43 The primary judge said that the respondents denied that the case fell within the concept of a “no transaction case” and that their argument was that had the representations not been made, Mr and Mrs Wyzenbeek would have acquired a different vessel, quite probably a Marlow yacht, “and they would be in substantially the same position that they are if they had done so”. He noted, at , that it was apparent that there was a difference between the appellants and respondents as to the meaning of a “no transaction case”, and that the appellants had freely admitted that, had they known the true position, they would not have entered into any transaction to acquire Cadeau and would have acquired a different vessel, probably from a different seller.
44 The appellants had also sought relief against Chubb Insurance Australia Ltd and The Underwriters of Lloyds Syndicate 5000 TRV (the insurers), respectively the fifth and sixth respondents in the appeal. The primary judge noted that the Wyzenbeeks had made claims in the then current statement of claim against the insurers concerning their obligations to indemnify the directors of GCCM and AMI. However, his Honour did not deal with issues relating to the insurers’ liability because the parties had agreed that that would occur at a further hearing after he had decided the question of the Marina parties’ liability. The insurers were active parties at trial and on appeal and made submissions to us directed to the primary claims against the Marina parties. Because the primary judge found only against AMI, the question whether the insurers are liable to indemnify any of the Marina parties must now be remitted to his Honour, having regard to the conclusions we have reached concerning the Wyzenbeeks’ claims against the Marina parties.
The primary judge’s analysis of the damages claim
45 His Honour said:
210 From the submissions made it is apparent there is a difference between the applicants and respondents as to the meaning of the nomenclature, “no transaction case”. The applicants freely admitted that, had they known the true position, they would not have entered into any transaction to acquire a Hampton 750 and they would have acquired a different vessel probably from a different seller. In essence, whilst they would not have acquired an Endurance 750, they would have acquired a large, ocean going motor vessel. Contrary to that being a “no transaction” case scenario, those submissions suggest this is a “different transaction” case. However, as Applegarth J in Westpac Banking Corporation v Jamieson  1 Qd R 495 at 543 – (Westpac v Jamieson) explained, the use of labels such as “no transaction” and “different transaction” case tend to obscure the real issue, being to assess the loss or damage sustained by the applicant because of, or by reason of, the misleading or deceptive conduct. That undertaking necessitates a comparison between the position of the applicant prior to the misleading or deceptive conduct, or more accurately prior to it being acted upon, and their subsequent position. In cases where the applicant claims to have suffered loss as a consequence of relying upon the misleading or deceptive conduct by engaging in a course of conduct, a necessary consideration is to ascertain what the position of the applicant would have been had the misleading or deceptive conduct not occurred. In other words, it requires an assessment of the hypothetical scenario which the applicant would be in if they had not been induced to act by reason of the misleading or deceptive conduct. That position is sometimes referred to as the “counterfactual”, which may be a different transaction or simply the position the applicant was in immediately prior to acting on the misrepresentation. (emphasis added)
The last two sentences emphasised above were the foundation of his Honour’s conclusions on damages and, in our opinion, are erroneous.
46 The primary judge then analysed the statutory provisions. He said:
212 Despite the simplicity of the provision’s structure, issues of causation and damage in relation to claims for statutory misleading or deceptive conduct have provided fertile ground for extensive debate and diverging opinions, especially in relation to causation and assessment of loss. However, a review of the more recent authorities suggest that some general principles have now crystallised.
213 The statutory prohibition on misleading and deceptive conduct under s 18 of the ACL (or s 52 of the TPA) concerns conduct engaged in “in trade or commerce”. The reference to “trade and commerce” suggests the section is usually focused upon the detrimental impact on the economic interests of those affected by a breach of it. It is not limited to conduct impacting the economic interests of consumers. It proscribes certain conduct in all forms of trade and all forms of commerce. As such it establishes a legislatively imposed standard of normative behaviour for persons (now both corporations and individuals alike) in relation to their activities in trade or commerce, the main object of which is to avoid damaging the economic interests of others by engaging in misleading conduct. (emphasis added)
47 In his analysis, his Honour did not take into account s 4K of the Act which provided that a reference to loss or damage included “loss or damage…in respect of an injury”. He noted (at ) that Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 407  left open the award of compensation for other forms of prejudice or detriment, observing, “although the nature and content of that relief is unclear. In this case, where the compensation sought is for economic loss, there is no need to consider what might constitute that alternative relief”. However, we note that while the appellants’ loss of use claim was not one for economic loss of an income producing chattel, that claim still had to be valued.
48 The primary judge then summarised what he understood the authorities to hold. He encapsulated his understanding of the authorities saying that the overriding concern was to compensate a claimant for any diminution in their economic position that had been caused by the misleading conduct but that a “causal nexus between the misleading conduct and recoverable loss is essential”.
49 His Honour opined that, “presently”, it was not a requirement of a valid cause of action that a claimant postulate some counterfactual position that represented an enhanced economic position to the one the claimant had assumed because of the misleading conduct. But, he said (consistently with his earlier reasons (at )) that there was an implicit assumption in a person seeking to recover on the basis of a “no transaction” case that, in the absence of the misleading conduct, the claimant would have retained the money that he, she or it had expended. His Honour said that this implicit assumption was itself a counterfactual scenario. He referred to Travel Compensation Fund v Tambree (t/as R. Tambree and Associates) (2005) 224 CLR 627 at 640  where Gleeson CJ said that if a risk that was the subject of the misleading conduct later materialised causing loss, “it is consistent with the purpose of the statute to treat the loss as resulting from the misleading conduct” (but, as we explain, he failed to apply this to the facts of the present case).
50 Again, his Honour was concerned only with considering the economic position and not the definition of loss or damage, including prejudice by loss of use of the vessel which he said had “no place in the damages claim under the TPA or [Australian Consumer Law]”. Indeed, incongruously with his findings at -, in  he said that there was nothing in the evidence to suggest that the repairs during which the ship was laid up for over 629 days (the appellants said that 664 was an overstatement) “were consequential upon the misleading representations”. He said that the authorities had shown that it was a necessary, but not sufficient, requirement that the loss would not have occurred “but for” the conduct. He found that the appellants had not shown that the repairs were “consequential upon anything but its acquisition”.
51 However, in our respectful opinion, that was all the appellants had to show since they would not have needed to have the ship repaired (including for expenses covered by others under the warranty or insurance claims) had they not entered into the transaction. And, the primary judge had made extensive findings leading up to his conclusion at  that the reason Cadeau needed all this work was because she was not fit for the uses to which Mr and Mrs Wyzenbeek had, and intended to, put her, including crossing oceans. This was a clear connection between the loss and the misleading conduct. The simple fact is, Mr and Mrs Wyzenbeek would not have acquired the ship, and therefore they would never have suffered this loss, had they been told the truth or given accurate information. They would not have spent other moneys on improving her in the mistaken belief that she did have the capacity to cross oceans, at least up to the time of the Port Macquarie incident. Moreover, since that incident, the Marina parties had continued to deny that the ship was not capable of crossing oceans right up to the point of calling experts at the trial. In that context, it is little wonder that the Marina parties did not suggest that it was unreasonable for Mr and Mrs Wyzenbeek to have acted as they did.
52 The primary judge then said (in [216(h)]) that difficulties arose when the diminution in a claimant’s economic position had been contributed to by other factors that were not a direct consequence of the misleading conduct. In that conclusion, the primary judge failed to apply the decision of the majority in Henville v Walker (2001) 206 CLR 459. Rather, he said that it was necessary to quantify the amount of the loss which the contravener’s conduct had caused, and to exclude losses arising from other causes and that this could be done in various ways. He contrasted the approaches in Potts v Miller (1940) 64 CLR 282 with that in Astonland 217 CLR 640, saying that they were “quantification” tools, applied in appropriate cases to accurately identify the actual losses caused by misleading conduct. He said that the rule in Potts was used to assuage subsequent extraneous factors operating to accentuate the loss where those factors were not inherent in the thing purchased, so that the true value of the property could be ascertained from a comparison between the purchase price and its value, unaffected by subsequent events. He said that it was only where the inherent characteristics of the thing purchased appeared at a later time that those should be taken into account in ascertaining its true value.
53 He said that the Astonland approach was most applicable where the consequence of the conduct persisted, causing the claimant’s economic position to deteriorate further and where extraneous factors did not independently contribute to the deterioration. He gave the example in Gould v Vaggelas (1985) 157 CLR 215 that trading losses sustained after the acquisition of a business in reliance on the misleading conduct were recoverable if they were unavoidable and not compensated by an award of damages for the primary loss. He said that:
However, the Court is not limited to these two approaches and some other point in time might be more appropriate for the assessment of loss caused by the misleading conduct. Whichever date is selected, the losses subsumed in the calculation must be causally related to the misleading conduct and losses which are only connected by the application of the “but for” test are excluded. (emphasis added)
54 The primary judge then said that, ultimately, his analysis did not improperly seek to conflate the statutory entitlement to loss or damage with that of a common law formulation applicable in respect of tortious conduct, but that the measure he had arrived at was similar to the object of damages in tort, saying (in ) that:
the very clear reason why a claimant cannot recover under the ACL for the non-fulfilment of a misrepresented benefit in a transaction is because that non-fulfilment did not amount to a loss; being a diminution in their economic position. The mere making of a representation that a benefit will be conferred does not, at law, afford the claimant an entitlement to its receipt in the absence of consideration and the non-conferment of that benefit does not cause the claimant a “loss” of that benefit. (emphasis added)
55 The primary judge then discussed the rule in Potts which he noted had been referred to at length in the parties’ submissions, along with Astonland when concentrating on identifying what “true value” was. He said that the true value test for the purposes of the rule in Potts “necessitates disregarding those causes of the diminution in value which are “‘independent’…to the fraudulent inducement” relying on Gould 157 CLR at 220 per Gibbs CJ and Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 291. He distinguished what the Full Court said in ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1 at 186 , 189 . His Honour said that the rule in Potts was not generally applicable where the impact of the misleading or deceptive conduct did not occur immediately but was experienced over an extended period, of which Astonland was an example, as it was where the person relying on the misleading representations could not easily extricate themselves from their altered economic position.
56 The primary judge then considered the left in hand approach in Astonland, saying that (at ) it “has the same overriding objective as the rule in Potts v Miller, being the ascertainment of the diminution of the claimant’s economic position occurring by or because of the misleading conduct”. His Honour held that once a claimant had established that they had suffered loss as a result of misleading conduct, that necessitated a consideration of whether they had also suffered consequential losses if those losses “are directly related to the consequences of the wrongful conduct and did not arise from independent causes such as folly, error or misfortune of the claimant themselves”, relying on what Gleeson CJ had said in dissent in Henville 206 CLR at 472-473 -. He said that while the appellants had relied upon the decision in Overton as holding that the rule in Potts was not the only method of calculating loss and that as they did not seek to rely upon Overton for any other proposition as to the correct measure of damages under the TPA, there was no need to consider it further. The primary judge noted that there were “difficulties” with that decision that Jackson J had analysed as a trial judge in Jamieson v Westpac Banking Corporation (2014) 98 ACSR 63. He said that it was not relevant to the pleaded case of causation. However, (we note) here there was no pleaded case of causation except to say that by reason of the misrepresentation, Mr and Mrs Wyzenbeek entered into the contract to purchase Cadeau.
57 His Honour then examined what Jackson J and the Court of Appeal of the Supreme Court of Queensland did in Westpac Banking Corporation v Jamieson  1 Qd R 495, a case where an investment advisor advised on the making of an investment (at -). He considered (at -) when Astonland might provide an appropriate measure of damages. He then discussed a new issue under the heading “The extent to which the claimant or defendant must demonstrate the counterfactual” (at ). His Honour stated that regardless of which method of assessment was applied to the calculation of damage consequent upon the claimant having been induced to enter into a transaction, “a further issue arises as to what they would have done had they not been so induced”. He said that this was a separate step to the quantification of loss arising directly from the entry into the transaction and concerned the claimant’s counterfactual economic position. He said that either the claimant or the defendant could rely upon such a counterfactual, and (critically to his reasoning) that the damages to which a claimant was entitled would depend upon how the claim was framed and the nature of the evidence adduced. He stated that where the evidence is that if the claimant had not been induced to enter into the subject transaction, he or she would have entered into a similar transaction which would have caused the same or similar loss, the court was entitled to take that into account, citing the reasoning of Leggatt J in Yam Seng Pte Ltd v International Trade Corporation Ltd  1 Lloyd’s Rep 526 and what Applegarth J had said in Jamieson  1 Qd R 495 in giving the principal reasons (with which Margaret McMurdo P (at 513 ) and Morrison JA (at 514 ) agreed).
How the primary judge determined the claim for damages
58 The primary judge then applied his above discussion to the facts of the case and the appellants’ claim to recover damages on the Astonland measure. His Honour said that the prima facie difficulty was that Cadeau was a chattel that was apparently readily saleable and that Mr and Mrs Wyzenbeek had always intended to acquire a vessel that would be “a loss making venture in the sense that any vessel acquired would depreciate over time”. His Honour said that that was critical given that the damages claim included a significant amount for depreciation of the vessel, even though that had occurred as a result of their constant use of her. He said that the “only pleaded consequence of the misrepresentation was the entry into the contract of purchase”, although he did not “ignore” the exceptionally general allegation in para  of the statement of claim that “as a result of” the misleading conduct the appellants suffered the alleged damage. His Honour criticised that conventional form of pleading as being a “deficient” and a failure to plead the material facts that supported an inference that the alleged acts complained of gave rise to such loss and damage. He said that the appellants did not plead or call evidence to the effect that “once acted on, the representations continued to operate upon and affect their interests”.
59 However, in our opinion, the law is clear. If one is induced to enter into a transaction by misleading conduct, that, together with loss flowing from the inducement, is all that one needs to prove.
60 It became common ground during the hearing of the appeal that his Honour did not advert to the fact that, in the first half of 2013, Mr and Mrs Wyzenbeek had spent $102,283.50 for the replacement of all of the external glass windows on Cadeau, that were made of the same unsuitable glass as those damaged by the Port Macquarie incident. Unlike the glass damaged in the Port Macquarie incident, those other glass windows were not the subject of any insurance claim and, because that glass could not withstand ocean conditions, it was unsafe to retain it on Cadeau. Thus, at a minimum, Mr and Mrs Wyzenbeek were entitled to an award of damages under s 82 in that amount. This is because they had to spend that sum in order to bring the glass windows up to a condition where the windows would be sufficiently strong to enable Cadeau to undertake ocean voyaging. The appellants only relied on appeal on their claims under s 82 of the TPA that they based on the Marina parties’ contravention of s 52.
61 The primary judge found that Cadeau was readily saleable. He based this finding upon parts of the expert evidence of Mr Lack which his Honour found to be admissible. His Honour used this finding as a basis for his conclusion that the measure of damages should be that in Potts 64 CLR 282 and not Astonland 217 CLR 640.
62 On appeal, the appellants referred to Mr Wyzenbeek’s evidence that in the eighteen month period from early 2017 to the time of the trial he attempted to sell Cadeau for $2,650,000 but was unable to do so. The primary judge did not refer to this evidence in his reasons. The primary judge at  found that the appellants were not “locked in” to retaining the vessel. While that conclusion may be accepted insofar as the vessel was presumably capable of being sold at a (undetermined) price, that does not preclude the Astonland approach. However, for the reasons we shall discuss below, as the respondents did not plead nor seek to prove a failure to mitigate loss by the appellants’ failure to sell the vessel at a price, or within a price range, it is unnecessary for us to make any finding concerning whether the vessel was readily saleable.
The respondents’ submissions
63 The Marina parties made the principal submissions in support of the primary judge’s decision, but each of the insurers, after adopting those arguments, added additional contentions in further support. The respondents’ central argument was that his Honour was correct for the reasons that he gave. They contended that the appellants had failed to prove that any of their alleged losses (beyond the limited sum that his Honour awarded for breach of warranty and the overlooked $102,283.50 for the replacement of the external glass) had been caused by the Marina parties’ contravention of s 52 of the TPA. They called in aid what Applegarth J had held in Jamieson  1 Qd R at 534 , namely:
A court may refuse recovery of all or part of claimed losses, despite, as a matter of incontrovertible fact, the defendant’s conduct being a cause of the loss, in the sense that the loss would not have occurred but for the defendant’s conduct. Sometimes this occurs because the losses were incurred beyond a certain date. In other cases it is because the losses are characterised as too remote or not foreseeable. In some cases the loss, although having been caused as a matter of historical fact by the defendant’s conduct, will not be recoverable because extreme or unreasonable conduct by the plaintiff occurs, such that the court concludes that the defendant’s conduct should be found not to have “caused” the plaintiff’s loss. In other cases, recovery of all or part of claimed losses may be denied because of a supervening factor. In each of these cases the court limits the recovery of losses on the basis of a judgment about the appropriate scope of legal responsibility, not on the basis of an enquiry into historical fact.
64 The respondents argued that the primary judge’s selection of the measure of damages in Potts 64 CLR 292 was correct. They contended that, because the appellants had failed to prove that they were “locked in” to the retention of Cadeau, and, indeed, had retained, spent money on and continued to use her after the Port Macquarie incident, it would be “unfair to hold the [Marina parties] liable for any depreciation in value caused by use of the boat”. They also submitted that the appellants had not proved any loss or damage on the Potts measure. Central to their argument was that senior counsel appearing for the appellants at the trial had opened their case saying “the counterfactual, of course, is that Mr Wyzenbeek would have bought something different, at a level of generality. So we have to be careful to exclude things like insurance and mooring fees and all of that” (emphasis added). They noted too that Mr Wyzenbeek gave evidence in cross-examination without objection, that his Honour accepted, that he probably would have purchased a Marlow vessel had he not bought Cadeau. The respondents submitted that (what in our view was obvious and common sense) evidence created the need for the primary judge to analyse the case as a “different transaction”, rather than a “no transaction”, case.
65 The respondents argued that the way in which Mr and Mrs Wyzenbeek had sought to prove their additional expenditures as loss or damage, by tendering over 200 pages of invoices totalling over $900,000 that they had incurred on Cadeau was misconceived. The respondents maintained that argument on appeal in respect of the similar, but reduced, claim. On appeal the appellants claimed for over $460,000, based on some only of the invoices they had tendered at the trial. In essence, this dispute centred on what the appellants had contended before his Honour and on appeal. They argued that the appellants would not have spent either total sum on Cadeau had the Marina parties not contravened s 52 and that it was unnecessary for them to have proved any further connecting cause for the expenditures (MWS27-33).
66 In addition, the respondents said that the appellants had not proved the value of Cadeau at the time of her purchase or at the time of the trial. They argued that it was not open to Mr and Mrs Wyzenbeek to use his Honour’s finding that Cadeau and like vessels depreciated at the rate of 6% per annum to deduce a “left in hand” value for her.
The authorities on causation and compensation for cases under ss 52, 82 and 87 of the TPA
67 We set out below the legal principles on which the appeal turns. In Overton 216 CLR at 403  Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ said:
the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property. As the trial judge said, there may also be questions of consequential damage. It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses. In particular, care must be exercised before seeking to apply what it described as the “rule in Potts v Miller” [(1940) 64 CLR 282. See also Toteff v Antonas (1952) 87 CLR 647 at 650-651] to claims made for relief under Pt VI of the Act. This is especially so when it is recalled that while the only monetary remedy for the tort of deceit is damages, a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding. (emphasis added)
68 Their Honours said that it was wrong to approach the provisions in Pt VI of the TPA, such as ss 82 and 87, that dealt with remedies for contravention of that Act, “by beginning the inquiry with an attempt to draw some analogy with any particular form of claim under the general law” (216 CLR at 407 ). They observed that the primary task of the court in relation to a claim for a statutory remedy under Pt VI of the TPA was to construe the relevant provisions in the legislation and that (Overton at 407 -):
In the present case, analogies with the tort of deceit appear to have led to an assumption, at least at trial, that a person can suffer only one form of loss or damage as a result of a contravention of Pt V of the Act.
The Act’s references to “loss or damage” can be given no narrow meaning. Section 4K of the Act provides that loss or damage includes a reference to injury. It follows that the loss or damage spoken of in ss 82 and 87 is not confined to economic loss [Marks (1998) 196 CLR 494 at 513 , per McHugh, Hayne and Callinan JJ; at 526-527 -, per Gummow J]. What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. Especially is that so when it is recalled that remedies may be awarded to compensate, prevent or reduce loss or damage that has been or is likely to be suffered by conduct in contravention of the Act. (emphasis added)
69 They held that s 87 invited a court to consider whether any of that section’s wide range of orders might be made to compensate, in whole or in part, for the loss or damage or to prevent or reduce the loss or damage (216 CLR at 408 ) and that it could not be assumed that the loss or damage that a person suffered from a contravention of Pt V “is necessarily singular” (216 CLR at 408 ).
70 In Overton 216 CLR at 409-410 -, there was no evidence that the lessees had paid more for their lease of a home unit in a retirement village than the market value of the property that they had acquired and there was no misrepresentation about its nature and quality. However, there was a misrepresentation in the estimate of outgoings that the lessor had given the lessees to induce their entry into the lease. That was because that estimate did not provide for all the outgoings that were then being incurred (which the lessor, nonetheless, was entitled to seek, but was not then seeking, to recoup from the lessees). The High Court held that the representee/lessees only suffered loss or damage when the contingency eventuated (that is when the lessor eventually began including those other outgoings). The Court held that the lessees’ loss or damage amounted to their continuing financial obligation to pay for the additional outgoings that had not been included in the misrepresented estimate (Overton 216 CLR at 413 ). And, their Honours held that after the contingency came to pass, the onus was on the lessor to raise any issue as to whether the lessees had acted reasonably in continuing to hold, rather than to sell (or assign), their lease (at 414 ).
71 In Astonland 217 CLR at 656-657 , Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ explained that while the approach of subtracting value (“sometimes described as the rule in Potts v Miller”) from price was commonly employed where deceit has induced the acquisition of land, chattels, businesses or shares, it is not an inflexible approach that is universal or rigid. They held that, “provided that there is some evidence of damage, in the field of assessing damages for fraud, ‘as in other fields, a tribunal of fact must do the best it can in assessing damages’” (Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23 at 26 per Barwick CJ) (Astonland 217 CLR at 661 ). Moreover, their Honours said (at 663 ) that both the estimate of market value and the assessment of damages based on an estimate of true value “must be an inexact process”. They also rejected the argument that there could not be an award of damages under s 82 of the TPA that equated to the amount that a plaintiff (or applicant) could recover in an action for breach of contractual warranty, saying (217 CLR at 666 ; and see too at 665-666 -):
In any event, whatever anomalies in relation to damages may be revealed by comparing liability for negligently supplied information with liability for breach of warranty, no error in assessment is demonstrated by comparing the contractual measure of damages with the s 82 measure of damages. The wide language of s 82 is compatible with a legislative desire to broaden the scope of recovery, not to keep it within the bounds of some comparison with the common law [Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 407 ].
72 Moreover, their Honours held that (at 667 ):
The deduction of true value at the acquisition date from the price paid is no more than a guide to the assessment of damages under s 82. Section 82 does not in terms refer to that method, and the width of s 82 permits other approaches to the assessment of damages so long as they work no injustice [Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 503-504 , per Gaudron J; at 510 , 512 , per McHugh, Hayne and Callinan JJ; at 529 , per Gummow J; at 549 , per Kirby J; Henville v Walker (2001) 206 CLR 459 at 470 , per Gleeson CJ; at 501-502 -, per McHugh J; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 124-125 -, per Gaudron, Gummow and Hayne JJ; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 403 , 407 , per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ].
73 They illustrated, as an example of injustice that may occur in the assessment of damages, a scenario involving a comparison of the price paid for an asset and its true value when acquired, if this took into account losses that resulted from extraneous factors in the later history of the asset (at 667 ). They said that s 82 allowed a court to assess loss or damage on the basis of the loss flowing directly from the transaction without any reference to the date of the transaction or to any particular date. Thus, they held a plaintiff (or applicant) could recover under s 82 the purchase price of the asset “less whatever was ‘left in its hands’” (217 CLR at 666-667 -). Their Honours subsequently discussed this approach to assessment as one that could be appropriate where the misrepresentation had caused the plaintiff or applicant to be “locked into” holding the asset, or where the asset was not readily marketable (217 CLR at 667-668 -). However, Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ did not state that the use of the ‘left in hands’ approach depended on the asset’s lack of marketability.
74 The High Court has repeatedly denied that the loss or damage recoverable under ss 82 and 87 for a contravention of s 52 of the TPA and their analogues is constrained by analogies to remedies available under the general law. In particular, since the decision in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, in an appropriate case, a person may recover loss or damage that is causally connected to a contravention of the statutory norm of conduct expressed in s 52: see e.g. Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 459-461 - per Kirby and Callinan JJ with whom Gummow J agreed on this point at 449 ; I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 121-122  per Gleeson CJ; at 128-129  per Gaudron, Gummow and Hayne JJ; at 142-144 - per McHugh J; 179-180  per Callinan J.
75 In I & L Securities 210 CLR at 130  Gaudron, Gummow and Hayne JJ said (see too at 128 ; and also at 121  per Gleeson CJ; at 135-138 - per McHugh J; and at 175  per Callinan J):
As was recognised in Henville v Walker [(2001) 206 CLR 459 at 474 , per Gleeson CJ; at 481-483 -, per Gaudron J; at 493 , per McHugh J; at 507 , per Gummow J; at 510 , per Hayne J], there may be cases where it will be possible to say that some of the damage suffered by a person following contravention of the Act was not caused by the contravention. But because the relevant question is whether the contravention was a cause of (in the sense of materially contributed to) the loss, cases in which it will be necessary and appropriate to divide up the loss that has been suffered and attribute parts of the loss to particular causative events are likely to be rare. Further, it is only in a case where it is found that the alleged contravention did not materially contribute to some part of the loss claimed that it will be useful to speak of what caused that separate part of the loss as being “independent” of the contravention. (bold emphasis added)
76 Gleeson CJ identified the reason that it is sufficient to attract the remedial provisions in ss 82 and 87 if the misleading conduct in contravention of s 52 is a cause of the injured party’s loss or damage in I & L Securities 210 CLR at 121-122  (and see too at 129-130 - per Gaudron, Gummow and Hayne JJ; 138 - per McHugh JJ; and 179-180  per Callinan J) as follows:
The relevant purpose of the statute was to proscribe misleading and deceptive conduct in circumstances which included those of the present case. In aid of that purpose, the statute provided for compensation, by an award of damages, to a victim of such conduct. The measure of damages stipulated was the loss or damage of which the conduct was a cause. It was not limited to loss or damage of which such conduct was the sole cause. In most business transactions resulting in financial loss there are multiple causes of the loss. The statutory purpose would be defeated if the remedy under s 82 were restricted to loss of which the contravening conduct was the sole cause. (emphasis added)
77 In the present case, as we have noted, the primary judge placed considerable weight on the decision of Jamieson  1 Qd R 495, where Applegarth J held that it can be relevant to inquire into the hypothetical or counterfactual position that a person, claiming to have suffered loss or damage by a wrongdoer’s contravening conduct, would have been in had the person not entered into the impugned transaction but instead had entered into either some variation of it or a different transaction yet nonetheless the person would have suffered some or all of the amount of the claimed loss or damage (at 542-546 -).
78 In commencing his analysis, Applegarth J referred to the observation of Hobhouse LJ (with whom Butler-Sloss and Roch LJJ agreed) in Downs v Chappell  1 WLR 426 at 441B-C that it is, in general, irrelevant to inquire into what a representee would have done if a different representation had been made or what other transactions the representee might have entered into if he, she or it had not entered into the impugned transaction. Applegarth J asserted that in Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd  AC 254 at 283 (per Lord Steyn) the House of Lords had overruled Hobhouse LJ’s observation. Applegarth J also relied on Yam Seng  1 Lloyd’s Rep at 555 - where Leggatt J discussed the measure of damages under s 2(1) of the Misrepresentation Act 1967 (UK). Applegarth J held that it may be relevant to inquire into a counterfactual scenario about what other transaction a claimant might have entered into had the misleading misrepresentation not been made ( 1 Qd R at 543 ). His Honour agreed with the obiter observations of Leggatt J in Yam Seng  1 Lloyd’s Rep at 557  that, in circumstances where a claimant can claim that he, she or it would have entered into a different, profitable transaction had a misleading misrepresentation not been made and recover loss or damages for that lost opportunity, so too must the representor be able to have the loss or damages assessed on the counterfactual that, had the impugned representation not been made, the claimant would have entered into a different transaction and suffered a loss: Jamieson  1 Qd R at 544-546 -.
79 In our respectful view, the analysis of the cases that Applegarth J and Leggatt J engaged in was flawed. First, Lord Steyn (with whom Lords Keith of Kinkel, Mustill and Slynn of Hadley agreed) did not disapprove what Hobhouse LJ had said in Downs  1 WLR at 441B-C. However, his Lordship (along with Lord Browne-Wilkinson at 267D-F) did disapprove what Hobhouse LJ said later (at 443-444), namely, that in a case of deceit, it was appropriate “to compare the loss consequent upon entering into the transaction with what would have been the position had the represented, or supposed state of affairs, actually existed”. Lord Steyn said that, on this point, Downs  1 WLR at 444B was wrongly decided: Smith New Court  AC at 283D-G. Moreover, Lord Steyn held ( AC at 283F-G) conformably with what Hobhouse LJ had said earlier in his reasons in Downs  1 WLR at 441B-C in the very passage that Applegarth J understood to have been overruled:
the orthodox and settled rule that the plaintiff is entitled to all losses directly flowing from the transaction caused by the deceit does not require a revision. In other words, it is not necessary in an action for deceit for the judge, after he had ascertained the loss directly flowing from the victim having entered into the transaction, to embark on a hypothetical reconstruction of what the parties would have agreed had the deceit not occurred (emphasis added)
80 Leggatt J (in Yam Seng  1 Lloyd’s Rep at 556-557 -) sought to distinguish or qualify Lord Steyn’s remarks based on what Simon Browne LJ (with whom Sedley LJ agreed) later held in Clef Aquitaine SARL v Laporte Materials (Barrow) Ltd  QB 488. In the latter case the claimant argued that it would not have entered into a long term distributorship for the defendant’s products had the defendant not fraudulently represented that the prices it charged were lower than any available to its other trade customers in the United Kingdom. The trial judge had assessed damages on the basis of profits that the claimant would have made had it been charged the lower prices that the defendant charged other customers of its trade.
81 Simon Brown LJ held ( QB at 498E-F) that the plaintiff could recover damages in tort for the loss of a more profitable transaction with the defendant than that which the fraudulent misrepresentation induced. He said ( QB at 500B-D):
…I conclude, there will be particular cases, of which this is one, where to give effect to the overriding compensatory rule it will be both possible on the facts, and appropriate in law, to hypothesise. Not every hypothesis involves irrelevant speculation.
I have, in short, reached the conclusion that there is no absolute rule requiring the person deceived to prove that the actual transaction into which he was induced to enter was itself loss-making. (Indeed that concept itself is an uncertain one: is a business which survives only by dint of the proprietor limiting himself to subsistence wages loss-making or profitable?) It will sometimes be possible, as it was here, to prove instead that a different and more favourable transaction (either with the defendant or with some third party) would have been entered into but for the fraud, and to measure and recover the plaintiffs' loss on that basis. (emphasis added)
82 Leggatt J, in obiter dicta, said ( 1 Lloyd’s Rep at 557 ) that “it must in principle be equally relevant to take account of any loss” and that:
(iv) There is no difference in principle between an alternative transaction which would have been more profitable and one which would have been less profitable than the actual transaction such that it can be relevant to take account of the former but not the latter.
(v) The evidential burden will be on the defendant, however, to show that if the misrepresentation had not been made the claimant would have incurred a loss. In seeking to discharge this burden, the defendant (unlike the claimant) does not have the benefit of the principle that if the financial outcome of the alternative transaction is uncertain the court will make reasonable assumptions in its favour (for example by allowing damages to be calculated on a loss of a chance basis) to assist in the proof of loss.
(vi) Unless the defendant can demonstrate with a reasonable degree of certainty, therefore, both the fact that the claimant would probably have suffered a loss from entering into an alternative transaction and the amount of that loss, the damages will not be reduced on that account. In this respect there is a disparity, but a principled one, between hypothetical transactions which would have made the claimant worse off and those which would have made the claimant better off.
83 And as Applegarth J noted (Jamieson  1 Qd R at 546 ), Beazley JA, with whom Ipp and Tobias JJA agreed, had expressly followed Hobhouse LJ’s views in Downs  1 WLR at 441B-C that, in general, it is irrelevant in a proceeding seeking relief under s 82 of the TPA to inquire what the representee would have done if a different representation were made or into what other transactions the representee would have entered if a different representation were made: Abigroup Contractors Pty Ltd v Sydney Catchment Authority (No 3) (2006) 67 NSWLR 341 at 354-355 -. Her Honour held that, there, the trial judge had erred by considering an alternate hypothesis (67 NSWLR at 354 ). She rejected the defendant’s arguments that in assessing loss under s 82 of the TPA, a comparison should be made of the plaintiff’s position, had the misrepresentation not been made, with its position had it made a different contract. Beazley JA said (67 NSWLR at 353 ):
In order to establish its entitlement to damages, the appellant has to establish that it suffered a loss by conduct which contravenes the Act…. in any event s 82 does not operate so simplistically. As Gleeson CJ said in Travel Compensation Fund v Tambree, the question of causation is to be found in the “purpose of the statute” as “related to the circumstances of the particulars of the case”. (bold emphasis added)
84 There was no reason for Jamieson  1 Qd R 495 to depart from the ratio decidendi in Abigroup 67 NSWLR 341.
85 The Marina parties also relied on the decision of the Court of Appeal of the Supreme Court of New South Wales in Leadenhall Australia Ltd v Peptech Ltd (2001) 39 ACSR 265 in support of their argument that a counterfactual scenario could be used to reduce or eliminate the loss or damage for which a contravenor will be liable under ss 82 and 87. The Marina parties contended that that decision showed that one answer to a claimant’s “no transaction” case could be that the claimant would have entered into an alternate transaction and thus would not suffer any or all of the claimed loss or damage.
86 However, as the separate reasons of RP Meagher JA and Giles JA, with both of whom Handley JA agreed, show, that case was concerned with a challenge to the trial judge’s finding that he did not accept the evidence of the witness, who was the corporate appellant’s controlling mind, that he would not have entered into the impugned share purchase transactions had he been aware of the alleged misrepresentation: see 39 ACSR at 267-268 - per RP Meagher JA and 271-275 - per Giles JA. Having reached that finding of fact, the trial judge then explained that, based on his assessment of the witness’ evidence, the appellant, if aware of the alleged misrepresentation, would have invested in the same shares anyway but under a modified or different agreement with the vendor, and that the appellant had not established by evidence what that other agreement would have provided or what financial difference there would have been for the appellant as a result (see 39 ACSR at 268 , 275-276 , 276 , 277 -, 278 -). Thus, their Honours held that it was open to the trial judge, after rejecting the witness’ evidence that he would not have entered into the impugned transactions at all, to find that the appellant would still have proceeded to invest in the very property (shares) in that case, but on a different basis, and that the appellant had not proved any loss or damage on this alternate evidentiary basis. Giles JA described this as a “different transaction” case (39 ACSR at 277 ). That was because the trial judge found that the appellant would have bought the same property even if aware of the true position.
87 In Leadenhall 39 ACSR 265, the appellant failed to prove its “no transaction” case because the trial judge found that it would have entered into a different transaction with the vendor on other terms that it did not prove. As RP Meagher JA said of the appellant’s original case, namely that it would not have gone ahead with any transaction had it been aware of the true position (at 268 ):
But such a case is contrary to Mr Lebbon’s own evidence: he said that if he had found out he would have “waited”, not that he would have walked away from the transaction. He said this not once, but many times. He did not condescend to inform the court what he would have done when he finished “waiting”, nor how long that process would take, not [scil: nor] what he was waiting for. Most importantly, he did not say what he would have done once he realised the fact, found by the judge, that the release of the escrowed shares had no effect on the price of the company’s shares. (emphasis added)
88 In that factual context, the Court of Appeal upheld the trial judge’s finding that the appellant had not proved that it had suffered any loss or damage because it had not identified what it would have done differently. Such a context is substantively different to the position of Mr and Mrs Wyzenbeek in purchasing a non-income producing vessel for use in giving them pleasure.
89 It is always open to a person who claims under s 82 of the TPA to have suffered loss or damage by a misleading representation made in contravention of s 52 to allege that, if aware of the true position, he, she or it would have either entered into a different transaction or not entered into any transaction at all. In a “no transaction” case the claimant asserts that he, she or it would not have entered into the transaction and, so, should be granted relief on the basis of being restored to the position that would have existed if there had not been any transaction. In a “different transaction” case, the claimant asserts that he, she or it would have acted differently, had the true position been revealed, and hypothesises on a factual scenario of what would have occurred on which basis the claimant seeks relief. Thus in a “different transaction” case, the claimant is not seeking to be restored to his, her or its original position, but to a hypothetical one based on the postulated difference.
90 In essence, the primary judge’s investigation of a counterfactual scenario eschewed the principle that a claimant is entitled to compensation or damages if he, she or it establishes on the applicable causation principles or test for the cause of action that the wrongdoer’s act or omission caused the loss or damage claimed. Ordinarily, it is irrelevant to that inquiry to speculate about whether, hypothetically, had the wrongdoer not acted in breach of the legal norm giving rise to the cause of action, the claimant would have done something else, and the claimant also would have suffered some other loss. The corollary of such a line of reasoning is that the court would have to evaluate the chance of whether, and to what extent, the claimant would have arrived at some hypothesised similar loss. This changes the analysis from examining the actual facts of the case at hand to one that compares that existing state of affairs to a chance that had the claimant acted differently, he, she or it would have had the opportunity to incur like or some other loss or damage.
91 In Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348, Mason CJ, Dawson, Toohey and Gaudron JJ said:
Under s. 82(1), as under the common law, an applicant can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage [Wardley Australia Ltd. v Western Australia (1992) 175 CLR 514 at 526]. Loss or damage under s. 82(1) is “the gist of the action” under s. 52 [Elna Aust. Pty. Ltd. v International Computers (Aust.) Pty. Ltd. [No. 2] (1987) 16 FCR 410 at 418, per Gummow J]. The Act draws a clear distinction between loss or damage which may be recovered under the section and the likelihood of loss or damage which may be prevented or, if not prevented, reduced by one of the remedies under s. 87 [Wardley 175 CLR at 527].
In the context of contraventions of s. 52(1) in the form of misleading conduct constituted by misrepresentations, acts done by the representee in reliance upon the misrepresentations amount to a sufficient connexion to satisfy the concept of causation. And, if those acts result in economic or financial loss, it will ordinarily be recoverable under s. 82(1). So, in a case such as the present, the applicant is entitled to recover “a sum representing the prejudice or disadvantage [the applicant] has suffered in consequence of his altering his position under the inducement” [Toteff v Antonas (1952) 87 CLR 647 at 650; Wardley 175 CLR at 526]. (emphasis added)
92 This makes apparent the substantive difference between the correct approach to causation and damages and the approach taken in Jamieson  1 Qd R 495 which we respectfully consider to be plainly wrong. In essence, there, Applegarth J considered that the proof of causation and damage required the court to undertake a comparison between the loss caused by the wrongdoer’s act or omission that a claimant actually suffered with the evaluation of a chance that the claimant may have engaged in some other hypothetical transaction in which he, she or it would have incurred similar loss or damage. This reasoning was flawed and ignored the principle that Mason CJ, Dawson, Toohey and Gaudron JJ stated in Sellars 179 CLR at 355:
the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. (emphasis in original)
93 But, the appellants in the present case were is not required to prove, and, in our opinion, the respondents could not seek to prove, that there were other courses of action open, such as the purchase of another vessel, that, if taken, would have resulted in the claimant being in a similar position as that induced by the wrongdoer’s contravention of s 52. That analytical approach is contrary to established and binding principle: I&L Securities 210 CLR at 121-122 , 130  (see ,  above); Overton 216 CLR at 403 , 407 - (see - above); Smith New Court  AC at 283D-G (see  above). It involves assessing the chance that the claimant would have entered into a different commercial or other opportunity and what financial outcomes that opportunity would have resulted in for the claimant. Such an analysis would deflect the court from its task of deciding whether the claimant suffered loss or damage in accordance with the rule expressed in s 82, namely by the wrongdoer’s contravention of s 52. If that contravention is a cause of the loss or damage, ordinarily, it is not necessary or appropriate to divide up that loss or damage and analyse the operation of other possible causes: I&L Securities 210 CLR at 130 .
94 That, in our respectful opinion, is the error in the reasoning in Jamieson  1 Qd R 495; namely, it failed to examine what the wrongdoer did that caused the claimant to suffer damage. It embarked on an irrelevant inquiry to the question posed by s 82; namely, has the claimant proved that he, she or it suffered loss or damage by the wrongdoer’s contravention of s 52. As the High Court authorities show, it is sufficient for the claimant to prove that the wrongdoer’s conduct is a cause of the loss claimed.
95 The key error in the primary judge’s reasoning on the operation of the provisions in ss 52, 82 and 87 in respect of the assessment of damages appeared in the following passage in his reasons:
251 The applicants submitted that the Court should not apply the rule in Potts v Miller because it would leave them “under compensated”. That submission may have been prompted by the absence of evidence of the vessel’s true value at the date of sale (despite a strained submission to the contrary in paragraph 70(a) of the written submissions). It was submitted that even if the vessel was worth close to the purchase price that would be inadequate because the applicants did not acquire it for what it was worth, but for what they believed it would do and it cannot do those things. However, that submission misunderstands the nature of damages for misleading conduct under the Act. They are to compensate the claimant for any loss occasioned “because of” or “by” the contravention of the statutory norm. They do not apply to improve the claimant’s position by putting them into a better position than if the representation was not made. The damages provision of the TPA and ACL do not permit compensating a claimant for bargained-for benefits which do not materialise in actions founded upon misleading or deceptive conduct. At the very least, they do not do so in this case.
252 The applicants also submitted that the representation had a continuing effect until the Port Macquarie incident or, even to the present because the respondents do not admit that the vessel is not suitable for trans-ocean voyaging. That submission also must be rejected. As mentioned, the question is not whether the claimant remained unaware of the falsity of the representation and oblivious to the true situation. It is whether the representation had a continuing operative effect on the claimant which prevented them from ascertaining the true position and thereupon avoiding the continuing loss. Here, the operative effect of the representation and, indeed, the only pleaded operative effect, was to induce the purchase of the vessel. There is no other pleaded reliance on it. In any event, as the evidence emerged, when the applicants became aware of the falsity of the representation after the Port Macquarie incident, they retained the vessel and continued to use it for a number of years. In a similar situation, a case might be agitated that in reliance on the representation the vessel was purchased and then used for trans-ocean crossing but, because it was not so suitable, it was lost or damaged. In that scenario, the continuing operative effect of the representation would be relevant to the method of assessing damages, but nothing of the like arises in the present case. (emphasis added)
96 The issue was not whether the Marina parties’ false representations that Cadeau was suitable for trans-ocean crossing and extended passage in open ocean service had a continuing effect after the representations had induced Mr and Mrs Wyzenbeek to purchase her. It was, as s 82(1) stated, what loss or damage did they suffer by relying on the Marina parties’ conduct in making that representation? That loss or damage was that they entered into and completed the purchase of the ship and assumed the ongoing burden of paying for her maintenance, running and (while at least they were ignorant of the misrepresentation) improvement in the mistaken belief that she had been constructed in such way that she could undertake ocean voyaging when, had they known the true position, they would never have agreed to buy her or spend more money on her.
97 The error in his Honour’s adoption of the Marina parties’ submissions is exposed by the very reasoning that the primary judge deployed to find that a counterfactual negated that Mr and Mrs Wyzenbeek had suffered any loss.
98 His Honour reasoned, as the Marina parties had suggested he should, that had Mr and Mrs Wyzenbeek not acquired Cadeau (which the primary judge found was not constructed to any international standard to undertake the ocean voyaging for which they had purchased her), Mr and Mrs Wyzenbeek would have acquired another vessel, probably a Marlow (that was constructed to undertake ocean voyages) for a similar price and with, he assumed, similar if not the same ongoing burdens to pay for her maintenance, running and improvement. The primary judge found (at -) that the depreciation in value of Cadeau over time would be similar to that of the hypothetical Marlow. He said:
287 On that basis, if the depreciation in the value of Cadeau was loss suffered by Mr and Mrs Wyzenbeek, any assessment of damages to put the applicants into the economic position which they would have been had the representations not been made, would necessarily take into account that the vessel which they would otherwise have acquired in 2011 (which was suitable for trans-ocean travel) would had [scil: have] aged and depreciated in value as had Cadeau. There is nothing to suggest the Wyzenbeeks would not have used any such vessel less extensively than they have used Cadeau over the past seven years and, therefore, it too would have depreciated at generally the same rate. This demonstrates the fallacy of the applicants’ attempt to secure as damages an amount equivalent to Cadeau’s depreciation over time. (emphasis added)
99 Rather than demonstrating what his Honour found was the fallacy of the appellants’ submission, the example demonstrated that Mr and Mrs Wyzenbeek were using Cadeau differently to what they wanted from her and had been told she could do, namely undertake ocean voyaging. That was a substantive difference that his Honour had found, based on his findings (at ) that there was no suggestion that Cadeau was built (or promoted by its Chinese shipyard manufacturer) to comply with any standard or protocol for trans-ocean crossings or extended passage in the open ocean and (at ) that other manufacturers, such as Marlow, advertised vessels that were built so as to comply with such a standard or protocol.
100 His Honour’s analysis left out of account two critical factors of the case: first, the misrepresentations had caused Mr and Mrs Wyzenbeek to buy and maintain Cadeau for their pleasure, when she was not capable and (as his Honour found) had not been constructed to a standard where she could or, as they wished did, undertake ocean voyaging, and, secondly, the incapability of Cadeau to do what the Marina parties represented, had a financial value to Mr and Mrs Wyzenbeek.
101 Suppose a salesperson (not the owner) at a wine store misrepresented to a customer that a 1983 vintage branded bottle of wine that sells for $100 less than a 1982 vintage of a different branded bottle of wine that the customer was interested to buy for the pleasure of consuming it, are as good as each other and the customer acted on the representation, bought and consumed the 1983 bottle. On consuming the 1983 bottle’s contents, the customer discovers that it is vastly inferior to the quality of the 1982 bottle that he or she wanted. It cannot be correct that the customer has not suffered loss or damage by the misleading conduct of the salesperson. Yes, in either case, the customer would open the bottle and consume its contents, thus demonstrating that the asset he or she had acquired for consumption (or use) lost value (as would always be the case after drinking the contents), because after drinking the contents, the residuum of that purchase would be the empty bottle, which would be of equal value to other empty bottles. But it defies common sense to say that the customer has not suffered any loss or damage by the salesperson’s misrepresentation that caused him or her to make a purchase and consume something that the customer bought for pleasure that he or she did not receive. The customer, in such a case, would never have bought the 1983 bottle had the misrepresentation not been made.
102 Similarly, to adopt an example Dixon CJ, Webb and Taylor JJ gave in Bellgrove v Eldridge (1954) 90 CLR 613 at 617, if a property owner asks a builder to paint a house white, and the builder engages a painter, instructing the painter to do so, but he paints the house black, it is no answer to say that owner has no remedy because the house has been freshly painted with paint of the quality (but not the colour) specified. The builder will have breached a contract with the owner (as their Honours found) but the painter will have acted negligently in failing to carry out the instruction in circumstances where he knew that the owner wanted the house to be painted white.
103 There is an obvious difference in substance between what the customer or property owner sought and what was provided in each of those examples, as there was between the capabilities of Cadeau and those of a vessel constructed to comply with a standard or protocol for undertaking ocean voyages. In each case the purchaser gets a ship, a bottle of wine, or a painted house, but not the one the purchaser required or was misled into thinking, that the characteristics that he or she wanted or could use or consume in the way that purchaser sought. The discrepancy in each case is substantive. The task of the court under ss 82 and 87 in such a case is to ascribe a value, as best money can do, or provide another remedy to compensate the purchaser for the loss or damage caused by the contravention of s 52.
104 Mr and Mrs Wyzenbeek own Cadeau which cannot undertake ocean voyages. Had they purchased another ship instead of her, that vessel would have been capable of doing so. They are not in the same position as they would have been if the Marina parties had not made the misrepresentations. Instead they have a ship that they would never have purchased and that is not capable of sailing over oceans as and where they want. To place them in the position that they would have been in had the misrepresentations been accurate, the Marina parties must compensate them with a sum of money that will restore them today with money or money’s worth equivalent to what they paid for Cadeau and for the improvements and other expenditures. We address below the measure of compensation appropriate in the present case, having regard to the way in which it was conducted at trial and on appeal.
105 In a “no transaction” case, the purchaser will have discovered, some time after becoming aware of the true position, that what he, she or it bought is not what the representor had asserted. In most cases, the asset purchased will have become impaired or less valuable because some event has revealed a flaw in it. But there can be cases where, after a time, the purchaser, having used the asset, realises that it is not what it was represented to be, even though it has retained its market value. Here, for example, if Mr and Mrs Wyzenbeek had realised a week after taking delivery of Cadeau that she could not undertake ocean voyages, but AMI had gone into liquidation, it could not be an answer to a claim under ss 82 or 87 for the other Marina parties to say that Mr and Mrs Wyzenbeek had suffered no loss or damage. They held an asset that they did not want because it was not what the Marina parties had represented her to be. Had they sold Cadeau immediately and sustained a loss, that would have been recoverable from the other Marina parties together with all the costs incurred in the acquisition and sale.
106 A “no transaction” case is a legal construct to accommodate the position of a person who claims to have been injured by entering into a contract by, or induced by, conduct or a representation of someone, including by a person who was not a party to the contract. The construct would be unnecessary in a case between contracting parties where rescission of the transaction with restitutio in integrum is still possible, including if the Court can make allowances for deterioration of the subject-matter of the transaction which, in some instances, can also include a claim for damages: cf: Alati v Kruger (1955) 94 CLR 216 at 222-225 per Dixon CJ, Webb, Kitto and Taylor JJ. It is not necessary for present purposes to discuss the juridical requirements and constraints governing the making and resolution of claims to rescind based on innocent, negligent or fraudulent misrepresentations.
107 The Trade Practices Act and its analogues contemplate the ability of the court to give a similar remedy in an appropriate case. However, where the innocent party seeks relief against a person who is not the contractual counterparty, ordinarily, damages or statutory compensation is the only available remedy because the innocent party cannot hand back, or restore, to the third party the property or subject matter of the contract as might be ordered in a claim for rescission. The point to be made is that in a “no transaction” case, where restitutio in integrum is not possible, if the Court finds for the injured party it must then calculate a monetary sum, as damages, to put him, her or it in the position that the party would have been in had the transaction not occurred. In cases of a contract induced by fraud, as Dixon CJ, Webb, Kitto and Taylor JJ explained in Alati 94 CLR at 223-224:
equity has always regarded as valid the disaffirmance of a contract induced by fraud even though precise restitutio in integrum is not possible, if the situation is such that, by the exercise of its powers, including the power to take accounts of profits and to direct inquiries as to allowances proper to be made for deterioration, it can do what is practically just between the parties, and by so doing restore them substantially to the status quo: Erlanger v. New Sombrero Phosphate Co. [(1878) 3 App Cas 1218, at 1278, 1279]; Brown v. Smitt [(1924) 34 CLR 160, at 165, 169]; Spence v. Crawford [ 3 All ER 271, at 279, 280]. It is not that equity asserts a power by its decree to avoid a contract which the defrauded party himself has no right to disaffirm, and to revest property the title to which the party cannot affect. Rescission for misrepresentation is always the act of the party himself: Reese River Silver Mining Co. v. Smith [(1869) LR 4 HL 64, at 73]. The function of a court in which proceedings for rescission are taken is to adjudicate upon the validity of a purported disaffirmance as an act avoiding the transaction ab initio, and, if it is valid, to give effect to it and make appropriate consequential orders: see Abram Steamship Co. Ltd. v. Westville Shipping Co. Ltd. [ AC 773]. (emphasis added)
108 Likewise, in a no transaction case, if the court finds that the injured party would not have entered into the transaction, this enables the court to use its remedial powers available under ss 80, 82 and 87. Those powers are extensive enough to make orders appropriate to place that party in the position where, although he, she or it may still hold property the subject of the impugned transaction, the wrongdoer will be ordered to pay compensation or damages in a sum that, together with the value of what the innocent party still holds (or is “left in hand”), will “do what is practically just between the parties” so as to, in effect, restore him, her or it to the position that he, she or it would now obtain had the transaction not occurred: cf: Alati 94 CLR at 223-224.
109 Here, the question is whether, and if so what, damages can be awarded in respect of a “no transaction” case for a non-income producing chattel, such as Cadeau. Well over a century ago, the House of Lords resolved some of the difficulties in estimating damages for loss of use of a non-income producing ship during the period in which the damage to her caused by the wrongdoer is being repaired. In Owners of Steamship ‘Mediana’ v Owners, Master and Crew of Lightship ‘Comet’ (The ‘Mediana’)  AC 113 at 116, the Earl of Halsbury LC said that the principle is that “where by the wrongful act of one man something belonging to another is either itself so injured as to not be capable of being used or is taken away so that it cannot be used at all, that of itself is a ground for damages”. He went on to explain that the damages were to be assessed like other common law general damages, such as for pain and suffering. And the Lord Chancellor made the pertinent observation that despite the difficulty in calculating a monetary award for pain and suffering, the law had long recognised that the injured party is entitled to substantial damages under this head.
110 In cases heard and decided at the same time by the same appellate committee, Admiralty Commissioners v S.S. Chekiang  AC 637 (at 646 per Lord Sumner; at 652-653 per Lord Phillimore) and Admiralty Commissioners v S.S. Susquehanna (The Susquehanna)  AC 655, the House of Lords held that the injured party is entitled, in addition to the cost of the repairs, to general damages for loss of use. In an entertaining speech in Chekiang  AC at 642-643 that he gave with “lively satisfaction”, Lord Sumner explained that the damages in such a case were at large and, in essence, were a “jury question”. He said that such a calculation could, but need not necessarily, be based on a rate of depreciation of the vessel and interest on the written down purchase price. And in the Susquehanna  AC at 659-660, Viscount Dunedin reasoned that when a warship was rendered useless by a collision caused by a wrongdoing ship, the Admiralty Commissioners as her owners were entitled to damages “fixed by your Lordships much as a jury would fix it”: see too: McGregor on Damages (20th ed: 2018) at [19-024]; [37-047]; Owners of No 7 Steam Sand Pump Dredger v Owners of S. S. Greta Holme (The Greta Holme)  AC 596 at 605 per Lord Herschell. In Consort Express Lines Ltd v J-Mac Pty Ltd (2006) 232 ALR 341 at 356-357 -, Rares J applied those principles, which Hebridean Coast  AC 545 at 576-578 per Lord Reid, 580 per Lords Morton of Henryton and Tucker, 583 per Lord Morris of Borth-y-Gest had reaffirmed: see too Anthanasopoulos v Moseley (2001) 52 NSWLR 262 at 273-274  per Beazley JA, with whom Handley JA agreed.
111 In addition, the Marina parties’ argument that Mr and Mrs Wyzenbeek had to give credit for the benefit they derived from the use of the vessel must be rejected in the context of a “no transaction” case in light of the following passage from Lord Sumner’s speech in Chekiang  AC 646-647:
That a tort-sufferer is not to go short of compensation for damage at a tortfeasor’s hands, merely because he does not trade for profit, is well settled. … The only principle as to this measure that I can find there stated is in Lord Herschell’s words:
“How can they the less be entitled to damages because, instead of hiring a dredger, they invested their money in its purchase? The money so invested was out of their pockets, and they were deprived of the use of the dredger, to obtain which they had sacrificed the interest on the money spent on its purchase. A sum equivalent to this, at least, they must surely be entitled to.” (emphasis added)
112 The amount of depreciation of a non-income producing chattel not able to be used because of the wrongdoer’s conduct is another measure of damages during the period of unavailability for use instead of an amount based on interest on the purchase price.
113 After the Port Macquarie incident, Mr and Mrs Wyzenbeek had more information that tended to confirm that Cadeau could not undertake ocean voyages. But, the Marina parties falsely continued to deny that they had ever told them that she could. They also maintained those denials, until Ryan and Dean were cross examined at the trial. In that context, the Marina parties, not having alleged that Mr and Mrs Wyzenbeek unreasonably failed to sell Cadeau, can hardly complain that the damages sum necessary to compensate them are the equivalent of what Mr and Mrs Wyzenbeek outlaid in the purchase and their consequential loss expenditure (as now claimed) less the depreciated value as at today of the ship.
114 Nor should any allowance or a deduction be made for the uses to which Mr and Mrs Wyzenbeek have put Cadeau.
115 In any event, at common law no such deduction is available, for, as the Earl of Halsbury LC said (with the agreement of the other Law Lords) in The ‘Mediana’  AC at 117:
What right has a wrongdoer to consider what use you are going to make of your vessel? …Supposing a person took away a chair out of my room and kept it for twelve months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? The proposition so nakedly stated appears to me to be absurd; but a jury have very often a very difficult task to perform in ascertaining what should be the amount of damages of that sort.
116 The claim here has been narrowed to one only for economic loss, not for a more general concept of loss of enjoyment, or of opportunity to enjoy, a ship that could undertake ocean voyages.
117 The English cases, of course, are not decisions as to the construction or application of the TPA and, at most, can only be of persuasive force for their reasoning. Crucially, those cases are of limited assistance in construing or applying ss 82 and 87. That is because they did not consider the purpose of the remedial provisions of the TPA and, indeed, may have been informed by very different notions of causation in English law that are not the law here: Sullivan v Moody (2007) 207 CLR 562 at 579  per Gleeson CJ, Gaudron, McHugh, Hayne and Callinan JJ; Tambree 224 CLR at 643 - per Gummow and Hayne JJ. In Tambree 224 CLR at 640 , Gleeson CJ (with whom, at 641 , Gummow and Hayne JJ, and at 653  Callinan J, agreed) said:
Misrepresentation will rarely be the sole cause of loss. If, in reliance on information, a person acts, or fails to act, in a certain manner, the loss or damage may flow directly from the act or omission, and only indirectly from the making of the representation [Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 356-357; Henville v Walker (2001) 206 CLR 459 at 469 ]. Where the reliance involves undertaking a risk, and information is provided for the purpose of inducing such reliance, then if misleading or deceptive conduct takes the form of participating in providing false information, and the very risk against which protection is sought materialises, it is consistent with the purpose of the statute to treat the loss as resulting from the misleading conduct. (emphasis added)
118 The purpose of s 82 is to compensate a person who has suffered loss or damage by misleading conduct that contravened the TPA, where that conduct was a cause that materially contributed to the loss or damage. The statutory purpose of s 52 is to prescribe a norm of conduct (not to engage in conduct that is misleading or deceptive) and to give a person whom the representor has misled or deceived a remedy under ss 82 and 87 for the loss or damage the representee suffered by that contravening conduct. The statutory purpose is not served by an hypothetical or counterfactual exegesis into what else might have happened that the representor seeks to raise as an exculpation or mitigation of its liability under ss 82 and 87: Abigroup 67 NSWLR at 354-355 -. It could hardly serve the statutory purpose for a contravenor to be able to say that, despite having misled and deceived the representee, the latter is really no worse off because he would have suffered the same loss as that suffered by the misleading conduct in some other transaction that did not eventuate: cf: I & L Securities 210 CLR at 121-122  and 130 .
119 Here the information that Mr and Mrs Wyzenbeek sought from the Marina parties before entering into the contract to purchase Cadeau was whether the proposed vessel that they were considering could undertake ocean voyages. The Marina parties gave them the false information that it could. By the time of the Port Macquarie incident that falsity became evident but, by then, Mr and Mrs Wyzenbeek had spent not only the purchase price of over $4 million but other sums on her, having been misled by the false information
120 In our respectful view, the primary judge ought to have found, consistently with the purpose of the TPA, that the expenditure of the purchase price and the sums the subject of the consequential or additional loss claim, less the current value of Cadeau, was loss resulting from or caused by the misleading conduct: Tambree 224 CLR at 640 . As Callinan J pointed out (224 CLR at 655 ), the determination under a statute, on the one hand, and in a common law cause of action, on the other, of whether a person suffers a loss caused by conduct can proceed differently depending on the purpose for which the causation rule or criterion operates. For example, the rules for the recovery of loss under the common law of contract are different from those under various tortious causes of action which also differ among themselves.
121 A claimant does not need to prove which component of his, her or its loss or damage is referable to the contravening conduct. Indeed, s 82 permits recovery of the whole of the loss or damage suffered by a person who establishes that a contravention of s 52 was a cause of that loss or damage: Henville 206 CLR at 482-483 -, 502 , 503-504 -, 506-507 - per McHugh J; 508 , 509-510 -,  per Hayne J with both of whom Gummow J agreed at 507 .
Value left in hand
122 The Astonland measure of damages is the amount expended on the purchase of the property less the true value of the property “left in hand” assessed at or about the time of the trial. It was common ground on appeal that the purchase value was $4,181,460.00 (being $3,950,000 and further payments of $231,460.21 for modifications pre delivery).
123 The value of Cadeau at the time of the trial presented difficulties of proof. The appellants sought to prove her then value through their expert, Mr Lack. His Honour, however, rejected much of Mr Lack’s report.
124 In his report, in effect, Mr Lack offered two methods of valuation of Cadeau. He used, first, a ‘flat line’ depreciation rate between 3% and 6% per annum, which we discuss further below and, secondly, a comparable sales analysis based on the average price of a set of adjusted listing prices or actual sale prices of vessels which he considered to be ‘comparable vessels’. Mr Lack identified six such comparable listings, or sales, ranging in prices from $1.65 million to $3.85 million (at ). However, his Honour rejected all of the examples on which Mr Lack relied as evidence of comparable sales or listings, and concluded that (at ):
[i]t follows that there was no evidence of the value of Cadeau at the date of trial on which the Astonland measure could be applied, even assuming that it would be an appropriate method.
125 Mr and Mrs Wyzenbeek did not challenge on appeal his Honour’s rulings on the admissibility of the report of Mr Lack and his rejection of Mr Lack’s evidence.
126 However, his Honour noted Mr Lack’s evidence that vessels like Cadeau (at ):
depreciate at a rate of between 3% and 6% annually or indeed at a greater rate. At the higher rate of depreciation, 6%, the value of Cadeau, caused merely by the effluxion of time and ordinary use, would fall to about $2.8m after five years and about $2.67m after six years.
127 His Honour made the following findings on the appellants’ claim for loss of use of Cadeau while she was being repaired over nine months after the Port Macquarie incident (at  and ):
330 In the absence of any other evidence, I take the depreciation rate in respect of Cadeau as being 6%. It would follow that in the second year of service, it would have been worth $3,760,000.00. In broadbrush terms the vessel was out of commission for nine months of the following year. That being so, three quarters of the depreciation sustained by the vessel in that following year ($224,400.00) amounted to $168,300.00.
331 If the vessel had met the contractual standard and was reasonably fit for crossing oceans and, therefore, did not have the defects identified by Mr Dovell, those defects would not have caused the damage they did and the vessel would not have been out of commission for that nine month period. The loss of the use of the vessel for that time can be compensated by an award of damages in an amount representing the depreciation which occurred while it could not be used. On that basis, Mr and Mrs Wyzenbeek are entitled to damages against AMI in the amount of $168,300.00 representing the only amount of loss proven to have been caused by the breach of the condition that the vessel was not reasonably fit for the purpose of crossing oceans or engaging in extended ocean passage. (emphasis added)
128 Based on that finding, the appellants contended that the appropriate measure of depreciation of Cadeau is 6% per annum. On this basis the depreciated value of Cadeau at the time of trial was $2,711.583.12.
129 We accept that the depreciation rate of 6% as used by the primary judge should be applied to arrive at the present value of Cadeau.
130 We turn now to the appellants’ claim for additional costs that they incurred in owning and operating Cadeau. During the hearing of the appeal, Mr and Mrs Wyzenbeek narrowed this claim principally to include only their expenditure on necessary repairs and maintenance costs and no longer pressed claims for items such as travel expenses that were not sufficiently connected with ownership and use of Cadeau. As we noted above, at trial, the appellants tendered a large bundle of invoices that they said evidenced their consequential losses.
131 The respondents challenged several of these invoices as examples of the inappropriateness of allowing the appellants to prove these expenditures as part of their loss or damage in a no transaction case, on the basis that they were for upgrades and not repairs, and so, they argued, not recoverable on the Astonland approach or otherwise. The appellants’ position at trial, as on appeal, was that if their no transaction case were accepted, then consistent with the Astonland approach, it was unnecessary to differentiate between costs for repairs or upgrades or any other form of consequential or additional costs.
132 The primary judge briefly considered some of the items that the Wyzenbeeks claimed at  to . Because he rejected the Astonland approach, he concluded that he did not need to consider the claim in its totality (at ). However, his Honour did make the important findings about the nature of the works undertaken on Cadeau.
133 During the appeal, the appellants handed up a document titled “Table summarising elements of consequential loss arising from defect repairs”. This contained items from the original bundle before the primary judge, but excluded items that could be characterised as ‘upgrades’.
134 In submissions in reply counsel for the appellants sought to take the Court through several of the invoices in the folder to make good the proposition that five items of the work went to rectification or repair and not upgrades, as the respondents contended. These five items were hydraulic pumps works, engine repairs, plumbing, the installation of a fire suppression system and works to the swim platform. The respondents objected to this approach but we gave the parties the opportunity to file short written submissions after the hearing of the appeal as to whether the appellants’ had shown that the five items were in the nature of rectification or repair work.
135 We are satisfied that the modified claim for consequential losses comprised expenditures for the repair of defects, maintenance and associated work to enable Cadeau to sail. Mr and Mrs Wyzenbeek are entitled to damages for the additional costs of maintenance and repair of Cadeau in the modified sum that they claimed on appeal, being $410,677.01.
Loss of use
136 As noted above, the primary judge awarded damages for loss of use of Cadeau, but only for the nine months during which she was laid up while being repaired after the Port Macquarie incident (at  and ). His Honour valued this time out of service on the basis of the depreciation occasioned to the vessel during that time at a rate of 6% per annum.
137 The appellants submitted that this calculation undercompensated them. They contended that, as his Honour found, Cadeau was laid up in total for 629 days before the trial, and it would be incorrect to limit compensation for loss of use only to the period associated with the Port Macquarie incident.
138 In our opinion, had we not found that the appellants are entitled to damages assessed on a no transaction basis, they would have been entitled to compensation for loss of use of Cadeau for the entirety of the period during which the vessel was unable to be used. Such a loss of use has an economic value, notwithstanding that the ship was used only for personal enjoyment. The economic value of that loss of use is in our view a species of loss which would not have been suffered had the appellants not been induced to purchase a vessel not suitable for the purposes for which she was represented to be suitable. We accept that the vessel was laid up for 629 days. An appropriate economic measure of that loss would be to apply the depreciation rate, as the primary judge did: cf: Cattanach v Melchior (2003) 215 CLR 1 at 39  per McHugh and Gummow JJ (and see too at 37 -; 66 - per Kirby J, 107  per Callinan J). However, if they were not able to recover on a no transaction or left in hand basis, then they would have been entitled to damages for loss of use of about 21 months of the asset for which they had expended over $4 million. That would result in a loss (using the primary judge’s figure of $168,300 for nine months) of $386,705.75 applying a depreciation rate of 6%.
139 However, based on our conclusion that the appellants are entitled to compensation calculated on the basis of a no transaction case, they would be overcompensated by receiving both an award of damages on that basis and, in addition, an award for loss of the ability to use Cadeau during the 629 days while she was laid up or to take her on ocean voyages (cf: The Mediana  AC at 117). That is because the purpose of the no transaction award is to put the appellants in the position that they would have been had the transaction for the purchase of Cadeau never occurred. Once they receive that sum they cannot complain further that they were damaged because they could not use the ship for a period while they owned her, since they will already have recovered all the damage that they suffered by entering into the unwanted purchase.
Total loss recoverable
140 The primary judge allowed the loss of use claim only against AMI for breach of the warranty that the vessel was suitable for its stated purpose. There was no appeal against that award. For the reasons given above, we do not agree that only this category of loss was recoverable.
141 In our opinion, Mr and Mrs Wyzenbeek are entitled to be compensated by the Marina parties under s 82 of the TPA on a no transaction basis in the sum of the total expended on the acquisition of Cadeau ($4,181,460) less her depreciated value at the time of judgment calculated at 6% per annum, plus the total of the consequential costs or losses now claimed of $410,677.01 (which, as we assume, included the cost of replacing all the glass of $102,283.50), plus interest.
142 That sum will restore Mr and Mrs Wyzenbeek to the position that they had at the time of the purchase: namely the sum (being the present value of Cadeau plus depreciation and their claimed extra expenditure) that is equivalent, when interest is added, in today’s money to what they paid for Cadeau. Mr and Mrs Wyzenbeek will then be able to sell Cadeau, if they choose, and buy a ship which can undertake ocean voyages.
143 The appeal should be allowed and in addition to the orders made by the primary judge, the Marina parties should be ordered to pay the appellants compensation under s 82 on the basis set out in - above. We will direct the parties to bring in draft orders to dispose of the appeal and, to the extent necessary, to allow the insurance questions to be remitted to be determined by the primary judge. All of respondents must pay the costs of the appeal and, unless any of the Marina parties wishes to contend otherwise in written submissions limited to 2 pages, the trial. The insurers’ costs of the trial will need to abide the result of the remitted issues.
Dated: 27 September 2019
NSD2081 of 2018
RYAN ANTHONY LEIGH-SMITH
CHUBB INSURANCE AUSTRALIA LTD
THE UNDERWRITERS OF LLOYDS SYNDICATE 5000 TRV