FEDERAL COURT OF AUSTRALIA

Burke v LFOT Pty Ltd [2000] FCA 1155

CONTRACT – whether the first appellant, in scrutinising a draft contract for the sale of a tenanted property by the first respondent to the second appellant and effectuating exchange, was acting in his capacity as a director of the second appellant or as a solicitor pursuant to a retainer – if there was such a retainer, whether it was a retainer to act generally in the purchase or whether it was a limited retainer to execute the conveyancing aspects of the purchase – whether the retainer included an implied duty of care which the first appellant breached by failing to advise the second appellant as to the desirability of making inquiries concerning the financial situation of the tenants – whether the second appellant, if it had made inquiries concerning the financial situation of the tenants, would have discovered the truth – whether, in circumstances in which the first respondent’s contravention of s 52 of the Trade Practices Act 1974 (Cth) (TPA) was found to have been an operative cause of the second appellant’s decision to purchase the property and the loss thereby sustained, it was open to the primary Judge to find that the first appellant’s failure to advise the second appellant to make inquiries, by which the falsity of the first respondent’s misrepresentation would have been discovered, was also a cause of the loss

DAMAGES – measure of damages in respect of loss caused by the first appellant’s breach of his retainer – measure of damages under s 82 TPA in respect of loss caused by the first respondent’s contravention of s 52 – relevance of the second appellant’s allegedly incompetent management of the property after settlement – method of calculation of the true value of the property at the time of sale

CONTRIBUTION - right to contribution at common law and in equity - whether the first respondent (having been held liable to pay damages to the second appellant under s 82 TPA in respect of its contravention of s 52) and the second respondent (having been held liable to pay damages to the second appellant under s 82 in respect of his involvement, within the meaning of s 75B, in the first respondent’s contravention of s 52) were entitled to claim contribution against the first appellant (who had been held liable to pay damages to the second appellant in respect of a breach of his contract of retainer) - whether contribution may only be claimed by one party from another if the first party has fully discharged, or has been adjudged liable fully to discharge, a common obligation to a third party, or whether the first party may cross-claim for contribution against the second party in the proceeding in which the first party’s liability to the third party is to be determined - whether the loss caused by the breach of contract was the same loss as that resulting from the conduct infringing s 52 - whether the measure of damages payable in respect of the breach of contract is the same as that payable in respect of the contravention of s 52 - whether a claim for contribution is to be refused or adjusted by reference to the perceived degree of culpability of each of the wrongdoers - whether contribution would be required if it were established that one wrongdoer was obliged to indemnify the other, and whether a right to indemnity had been established in this case – apportionment of contribution

Trade Practices Act 1974 (Cth), ss 52 and 82

Fair Trading Act 1985 (Vic)

Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5

Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337, referred to

Craythorne v Swinburne (1807) 14 Ves Jun 160; 33 ER 482, referred to

Lingard v Bromley (1812) 1 V & B 114; 35 ER 45, referred to

Holmes v Williamson (1817) 6 M & S 158, referred to

Boulter v Peplow (1850) 9 CB 493, referred to

Spottiswoode’s Case (1855) 6 De GM & G 345, referred to

Marsack v Webber (1860) 6 H & N 1, referred to

Lowe v Dixon (1885) 16 QBD 455, referred to

Re Denton’s Estate, Licenses Insurance Corporation and Guarantee Fund Ltd v Denton [1904] 2 Ch 178, referred to

Spicer v Spicer (1931) 47 CLR 151, referred to

McLean v Discount and Finance Limited (1939) 64 CLR 312, referred to

Eyre v NZ Press Association Limited [1968] NZLR 736, referred to

Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342, referred to

Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302, referred to

Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562, referred to

Sutton v Thompson Pty Ltd (1987) 73 ALR 233, referred to

B P Petroleum Development Ltd v Esso Petroleum Co [1987] SLT 345, referred to

Johnson v Perez  (1988) 166 CLR 351, followed

Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394, followed

Spika Trading Pty Ltd v Harrison (1990) 19 NSWLR 211, referred to

Argy v Blunts & Lane Cove Real Estate Pty Limited (1990) 26 FCR 112, referred to

Re La Rosa; ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83, referred to

Trade Practices Commission v Manfal Pty Ltd (No 3) (in liq) (1991) 33 FCR 382, referred to

March v E & M H Stramare Pty Ltd (1991) 171 CLR 500, referred to

Mahoney v McManus (1991) 180 CLR 370, referred to

Wardley Ltd v Western Australia (1992) 175 CLR 514, referred to

Deanplan Ltd v Mahmoud  [1992] 3 All ER 945, referred to

Capita Financial Group Ltd v Rothwells Ltd (1993) 30 NSWLR 619, referred to

Cummings v Lewis (1993) 41 FCR 559, distinguished

Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 46‑152, referred to

Street & Halls v Retravision (NSW) Pty Ltd (1995) 56 FCR 588, referred to

Henderson v Amadio (No 1) (1995) 62 FCR 1, followed

Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281, followed

Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418, referred to

Austotel Management Pty Ltd v Jamieson (1996) ATPR 41‑454, referred to

Yenald Nominees Pty Ltd v Como Investments Pty Ltd (1996) 18 ATPR 42,349, referred to

Trumble Szanto Braham (a firm) v Soultanides (Victorian Court of Appeal, unreported, 9 May 1996), followed

ABCOS v Jones (1997) 150 ALR 488, referred to

Como Investments Pty Ltd (in Liq) v Yenald Nominees Pty Ltd (1997) 19 ATPR 43,617, referred to

Henderson v Amadio (No 1) (1998) 81 FCR 149, followed

Bialkower v Acohs Pty Ltd (1998) 83 FCR 1, referred to

James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53, referred to

Allison v Uatar Management Services Limited NZCA, 17 December 1999 CA146/98, referred to

Bowler v Hilda Pty Ltd [2000] FCA 899, referred to

Austral Pacific Group Pty Ltd v Airservices Australia [2000] HCA 39, referred to

GIO Finance Ltd v Cockburn [2000] NSWSC 362, referred to

Meagher, Gummow and Lehane, Equity – Doctrines and Remedies (3^rd ed, 1992), referred to

Goff and Jones, The Law of Restitution (4^th ed, 1993), referred to

Mason and Carter, Restitution Law in Australia (1995), referred to

Goff and Jones, The Law of Restitution (5^th ed, 1998), referred to

Fleming, The Law of Torts (9^th ed, 1998), referred to

WILLIAM ROBERT BURKE AND HANAVE PTY LIMITED v LFOT PTY LIMITED AND PAUL EWEN MITCHELL TRESSIDER AND JOSEPH RAYMOND GLEW

N 1394 OF 1999

LEE, HEEREY AND LEHANE JJ

18 AUGUST 2000

SYDNEY

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         The appeal be dismissed.

2.         The appellants pay the respondents’ costs of the appeal.

3.         The cross‑appeal be dismissed.

4.         The cross‑appellants pay the cross‑respondents’ costs of the appeal.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

LEE J:

1                     I have had the advantage of reading the reasons of Heerey J with which I agree except for the issue of contribution.

Contribution

2                     Tressider and Jagar were each held liable under s 82 of the Trade Practices Act 1974 (Cth) (“the TPA”) for loss suffered by Hanave by reason of the conduct of Jagar. Judgment was entered against them in the amount of the assessed loss. By cross-claim Tressider and Jagar claimed a right to recover contribution from Burke in respect of their liability to pay the judgment sum, the right said to be an equitable right arising out of Burke’s liability in negligence to Hanave. The statutory power to order contribution between “tortfeasors” provided in s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) was not relied upon. It was assumed that a person liable under s 82 of the TPA is not a “tortfeasor” within the meaning of that section: Bialkower v Acohs Pty Ltd (1998) 83 FCR 1 at 11. His Honour determined that “equitable contribution” could be ordered and directed that Burke contribute one-half of the judgment sum entered against Jagar and Tressider.

3                     It has been long recognised that co-sureties, co-trustees, co-tenants, partners, co-contractors and insurers of the same risk under separate contracts of insurance have rights of contribution inter se to maintain equal distribution of the burden shared by them: Goff & Jones, The Law of Restitution 5^th ed 1998 at 394. Further, where several parties are bound by a single judgment, each party is obliged to make equal contribution to the discharge of the judgment, the obligation being based on the liability of each judgment debtor to the judgment creditor to discharge the whole of the judgment. The fact that prior to the entry of judgment the respective liabilities of the parties may have been based on separate and disparate causes of action becomes irrelevant after the parties are bound by the one judgment. A right of contribution at law or in equity may also arise out of statutory provisions which impose joint and several liabilities on parties, for example, the liability imposed on directors and others involved in the management of a corporation to pay the debts of a corporation: Spika Trading Pty Ltd v Harrison (1990) 19 NSWLR 211.

4                     The doctrine of contribution, now said to be governed by equitable principles, was, equally, a product of the common law and, indeed, the same principle based on the ancient rule for general average contribution between parties to a common maritime adventure governed the development of the doctrine at law and in equity, namely the application of reason and natural justice: Goff & Jones at 427-428; Albion Insurance Co Ltd v GIO (1969) 121 CLR 342 per Kitto J at 349-351. The principal difference between law and equity was that equity would make a declaration quia timet and not require prior payment by the party seeking contribution before an order would be made: McLean v Discount and Finance Limited (1939) 64 CLR 312 per Starke J at 341.

5                     In equity, equality of contribution will be required although in respect of insurers and co-trustees particular circumstances may arise that may cause differential contributions to be ordered: Goff & Jones at 409-413, 422.

6                     Tressider and Jagar submitted that the order for contribution his Honour made was supported by cases such as Cockburn v GIO Finance Ltd Supreme Court of NSW, Foster AJ, 19 May 2000; and BP Petroleum Development Ltd v Esso Petroleum Ltd [1987] SLT 345 in which, it was said, “equitable compensation” was ordered.

7                     In Cockburn,by reason of orders made in equity, GIO lost the right to enforce a mortgagor’s covenant to repay monies advanced by GIO and was directed to discharge a mortgage granted by the mortgagor to secure performance of the covenant. The orders made in equity were based on GIO’s knowledge, actual or imputed, that the mortgagor’s father, by undue influence, had caused the mortgagor to execute a loan agreement and grant a mortgage to GIO and allow the monies borrowed to be applied to use of the mortgagor’s father. Solicitors retained to advise the mortgagor, who also had knowledge of the father’s conduct, were held liable to the mortgagor for breach of their contract of retainer. Although not raised in argument in that case, it would seem to follow from the order setting aside GIO’s right to recover from the mortgagor the monies advanced, that GIO had a right at law, or in equity, to recover from the mortgagor’s father any loss suffered by GIO by reason of that person’s conduct.

8                     At first blush, it may appear that Colemans and GIO did not share a common burden to pay a sum to the mortgagor or that the liability of the solicitors to the mortgagor may not have been coincident with GIO’s obligations to the mortgagor. The obligation of the solicitors was to indemnify the mortgagor against loss whilst GIO was bound not to enforce its contract. A particular example of that difference may have arisen if the solicitors had been required to pay to the mortgagor costs incurred by the mortgagor in obtaining the order that the mortgage be set aside, being costs not recoverable from GIO, to wit solicitor and client costs. In respect of the burden of that obligation, there would be no mutuality between GIO and the solicitors, and the solicitors could not claim a right of contribution from GIO in respect of the payment of that sum. Similarly, if GIO had taken third party proceedings against the mortgagor’s father for an order that GIO be indemnified against loss, it could not be said that GIO had a right to have the solicitors contribute to any shortfall in the worth of that indemnity.

9                     The foundation for the decision in Cockburn, however, was that, in effect, by the judgment entered against them, GIO and the solicitors had been made liable to the mortgagor to the same extent, namely to restore the mortgagor to his former position: Capita Financial Group Ltd v Rothwells Ltd (1993) 30 NSWLR 619. It was determined, therefore, that GIO had a right to recover contribution from the solicitors in respect of the sum GIO had lost by reason of that judgment. Whether, if the orders had not been made, GIO would have been able to recover from the mortgagor the whole of the sum advanced or would have suffered some loss in any event, was not an issue in the proceedings.

10                  Perhaps there is an unanswered question that remains in Cockburn, namely would the order for contribution continue to be just if GIO, after obtaining from the solicitors one-half of the loss GIO claimed to have suffered – a loss for which the solicitors had no liability - took proceedings against the mortgagor’s father to recover the remainder of that loss? If GIO recovered that sum from the mortgagor’s father, or part of it, then, as between GIO and the solicitors, the latter would have been the sole or principal contributor to the restitution of the loss suffered by GIO. That would not seem to be a result in accordance with natural justice when the loss suffered by GIO occurred by reason of an order in equity that GIO not enforce a contract that GIO knew, or ought to have known, had been obtained by unconscionable conduct.

11                  In BP v Esso, BP, as operator of an oil terminal under a contract made between BP and the port authority, agreed to indemnify the port authority in respect of any damage caused to the terminal. Pursuant to statutory provisions, Esso, as owner of a vessel that damaged the terminal, was liable to the port authority for the cost of repairing that damage. In neither case did the liability of BP or Esso to the port authority depend upon demonstration of fault. It was held that the right of relief pursued by BP against Esso in the Scottish court was governed by laws equivalent to that applied in English courts, namely rights based in equity. Thus, BP had to show that the parties were liable for the same debt or were bound by a common obligation to the port authority.

12                  BP and Esso shared a common obligation - albeit created from distinct sources - to pay the port authority the sum required to compensate the authority for damage to the terminal and, therefore, BP, upon payment of that sum, was entitled to equal contribution from Esso.

13                  For the principle of equality of contribution to apply in equity there must be mutuality between the parties in respect of the burden to be discharged. That is, the parties must share a common burden in respect of obligations owed to a third party and as a result must have mutual rights and obligations inter se. For example, if A and B are sureties for C - albeit by distinct and separate instruments - for the payment of a debt to D, A and B are obliged to make equal contribution as co-sureties in the event that D calls upon either to pay. But if A is a surety for B for the liability of B as surety for C, then A and B are not co-sureties and a claim by D against B will not provide B with a right of contribution from A, notwithstanding that it may be said that both A and B have undertaken a burden to D to ensure that the sum payable to D is paid. Although the burden relates to the same sum owing to D, it is not a “common” burden or a coordinate liability of A and B: Craythorne v Swinburne (1807) 14 Ves Jun 160; 33 ER 482; Re Denton’s Estate, Licenses Insurance Corporation and Guarantee Fund Ltd v Denton [1904] 2 Ch 178.

14                  If parties are not on the same level of liability, there is no common interest and no common burden with joinder in a common end and purpose by the several obligations: Scholefield Goodman & Sons Ltd v Zyngier [1986] AC 562 at 575; Spicer v Spicer (1931) 47 CLR 151 per Dixon J at 181; Street v Retravision (1995) 56 FCR 588 per Gummow J at 600. In Zyngier the guarantor of an indorser of a bill of exchange was not on the same level of liability to the holder or payee of the bill as the drawer, and the latter could not recover contribution from the guarantor when the drawer was called upon to meet the bill after it had been dishonoured by the indorser upon presentation by the holder or payee. The sum for which liability had been undertaken by the drawer, and the guarantor of the indorser, was the same and the liability was owed by each to the same party but it was not a coordinate liability for which equity provided contribution.

15                  By parity of reasoning it must follow that in equity no obligation to contribute will arise where the party seeking contribution is liable to indemnify the party from whom contribution is sought in respect of a sum a third party may recover from either of them.

16                  Thus if BP had a right to be indemnified by Esso, in respect of any sum BP was required to pay to the port authority, the common burden Esso shared with BP to indemnify the port authority would not have given Esso a right in equity to obtain equal contribution from BP in respect of a payment made to the port authority by Esso. Similarly, in Cockburn, if the mortgagor’s father had met a claim made against him by GIO, payment of that sum would not have given the mortgagor’s father a right of contribution from the solicitors merely because he, GIO and the solicitors “shared” an obligation to restore the mortgagor.

17                  In Jones v Mortgage Acceptance Nominees Limited (1996) 63 FCR 418 at 421-422, Davies J opined that the general law of contribution may order contribution between concurrent tortfeasors if a gap has been left by statute and if justice requires it. However, his Honour was not required to determine if law or equity did so provide being satisfied in that case that contribution could be ordered under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Accordingly, his Honour made such an order and that order was upheld on appeal: ABCOS v Jones (1997) 150 ALR 488 at 548-549.

18                  It was suggested that Bialkower provided authority for the order made by his Honour in this matter but examination of the decision shows that is not so. At first instance, judgment was entered against three respondents for loss sustained by the applicant by reason of the conduct of two of the respondents that had contravened s 52 of the TPA, the liability of the third respondent flowing from his participation in that conduct. The two respondents whose conduct contravened the TPA, brought a cross-claim against the third respondent which alleged that they had suffered loss by misleading or deceptive conduct engaged in by the third respondent in contravention of the Fair Trading Act 1985 (Vic) and negligence, and sought an order that they be indemnified by the third respondent in respect of their liability to the applicant and in respect of their costs. The trial judge did not make findings on the cross-claim for indemnity but treated the cross-claim as an application for an order for contribution and ordered that the third respondent contribute 75 per cent of the judgment sum payable by the three respondents.

19                  As noted earlier, in equity, pursuant to the doctrine of contribution, the three respondents, as judgment debtors, became obliged to each other upon pronouncement of the judgment to contribute equally to the common burden imposed on each of them by the judgment. Therefore, in equity, the third respondent could not be ordered to contribute more than one-third of that sum if one or other of the first or second respondents discharged the judgment, assuming, of course, that all remaining respondents were solvent when contribution was sought: Mahoney v McManus (1991) 180 CLR 370 at 376.

20                  On appeal, therefore, the order made by the trial judge was not upheld as an order made in equity, and the order for contribution made against the third respondent was grounded on the statutory power provided in s 23B of the Wrongs Act 1958 (Vic), which states that a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage. It may be noted that that provision was of wider ambit than s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Bialkower, therefore, did not provide authority for the order made in this matter.

21                  His Honour referred to Street and the comment made by Gummow J therein that different “causes of action” will not prevent co-obligors having a common obligation out of which rights of contribution may arise. However, the essence of the decision in Street, was that a surety for a debtor could not recover contribution from parties made liable as principals by statute for the debts of the debtor. The liabilities of the guarantor and of the statutory debtors related to the same sum and the liability was owed to the same party, but the “level of liability” of each was conceptually distinct: Street per Gummow J at 600. Street, therefore, does not provide support for a contention that equity will order contribution between concurrent, as opposed to joint, tortfeasors.

22                  Whether persons made liable by s 82 of the TPA for loss caused by conduct in contravention of s 52 of the TPA, or joint tortfeasors, each being parties who have engaged in concerted action towards a common end (see: Eyre v NZ Press Association Limited [1968] NZLR 736) may be regarded in equity as co-obligors for the purpose of the doctrine of contribution is unnecessary to decide. Historically, prior to intervention by law reform statutes, joint tortfeasors were liable under a single and indivisible cause of action. That joint liability, which involved common issues and defences between the joint tortfeasors and the injured party, provided a foundation in equity for an order for contribution, but if one, or some, of the joint tortfeasors suffered judgment to be entered or compromised the action, that event released the remainder of the joint tortfeasors from liability and from any obligation to contribute: Deanplan Ltd v Mahmoud  [1992] 3 All ER 945; Allison v Uatar Management Services Limited NZCA, 17 December 1999 CA146/98. In principle, although the liability is imposed by statute and is not a joint liability arising at law, persons made liable under s 82 of the TPA, being persons whose conduct has contravened s 52 of the TPA and persons who have been involved in that contravention are liable in the same degree in respect of the loss caused by that conduct and the relationship between those parties as created by statute may sustain an order in equity for contribution.

23                  Statutory provisions providing a right to recover contribution from other persons liable for the same damage have made it unnecessary to consider whether similar rights exist in equity. The doctrine of contribution has not been relied upon in this case because of the limitations of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) which restricts the right to recover contribution to joint and concurrent tortfeasors: James Hardie & Coy Pty Limited v Seltsam Pty Limited (1998) 196 CLR 53 per Gaudron and Gummow JJ at 58-61. But, any attempt to apply the doctrine of contribution to either concurrent tortfeasors, or persons with concurrent liabilities in respect of a loss suffered by a third party, would be beyond the principles of the equitable doctrine and such circumstances may only be addressed by statutory provisions which create the appropriate rights and remedies: James Hardie per Gaudron and Gummow JJ at 59-61.

24                  A proceeding by one person against another under a concurrent liability to a third party is one between independent and unrelated parties requiring determination of rights arising at law or under statute. An application for an order in equity for contribution is a proceeding between parties who share a common burden that arises out of a pre-existing relationship, the character of which demands an order that there be equality of contribution to the discharge of that burden to give effect to reason and natural justice.

25                  A proceeding seeking an order for contribution between persons related only by concurrent liabilities does not satisfy that test. The grounds of liability and the acts or omissions of the respective parties will differ and different relationships will exist between those parties and the party affected by the separate conduct. Defences that may be raised to the respective acts or omissions will differ markedly and may include cross-claims which raise further issues. In the absence of a single judgment against persons under concurrent liabilities to compensate an injured party, one of those persons cannot apply by cross-claim for an order in equity that the other make contribution to any sum the former has paid in discharge of a judgment or in compromise of litigation. Any order for indemnity or contribution against a person under a concurrent liability must be grounded on rights arising out of contract or tort, or be provided by statute.

26                  If the foregoing analysis is not accepted, the circumstances in the instant case prevent Jagar and Tressider obtaining contribution in equity in any event.

27                  In the present case, Jagar’s conduct, and Tressider’s participation therein, caused Hanave to act to its detriment and suffer loss. The actions of Hanave were carried out by Burke as the natural person who constituted the organic form of a non-corporeal entity. Burke may claim that in respect of his act or omissions as the solicitor acting for Hanave - instructed by himself so to act - he was misled by the misleading or deceptive conduct of Jagar, participated in by Tressider, to the same extent that he was misled whilst acting on behalf of Hanave. Asking whether Burke, in the performance of his duties as solicitor for Hanave, should have been more diligent or astute, would not answer the question whether Burke was entitled to recover from Jagar and Tressider any loss he had suffered as a result of the conduct of Jagar. The essential question of fact would be whether Burke relied upon Jagar’s conduct and did so to his detriment, namely by incurring liability to Hanave.

28                  It would be reasonable to conclude that conduct which misled Burke when he decided on Hanave’s behalf to enter an agreement to purchase the property, also constituted conduct likely to mislead Burke in his concurrent capacity as solicitor for Hanave. Conduct that would be in contravention of the TPA is not conduct that meets the requirements of the TPA by reason only of lack of diligence of a party to whom the conduct is directed. Where that party has professional skills which, if duly applied, may expose and thereby negate the misleading nature of the conduct, liability for that conduct will still attach under s 82 of the TPA if, in fact, the party is induced by the conduct to act contrary to that party’s interests or professional obligations:  Argy v Blunts & Lane Cove Real Estate Pty Limited (1990) 26 FCR 112 at 138.

29                  In cases such as this where the circumstances provide the inference that the conduct of Jagar was intended to mislead the parties with whom Jagar dealt in trade or commerce, the conclusion that those parties were misled becomes more compelling, notwithstanding that one of those parties had professional skill and commercial experience. The TPA provides a remedy for the broad spectrum of people likely to be affected by conduct of a corporation that contravenes the TPA. The TPA does not restrict the relief it provides to the astute and intelligent and to those who have taken appropriate steps to protect themselves against such conduct. A right of remedy is extended to the careless and inattentive and those less than diligent in protecting their own interests. Failure by a party to make enquiries that may have exposed misleading or deceptive conduct will not absolve the breach of the TPA constituted by that conduct: Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302; Sutton v Thompson Pty Ltd (1987) 73 ALR 233.

30                  It is more likely that it will be careless, inattentive and less diligent persons who succumb more readily to conduct the TPA seeks to extirpate. It is to be noted that the TPA does not control conduct that contravenes s 52 by the imposition of a penalty but by providing a statutory right for a person affected by that conduct to recover from the offending corporation, and from persons involved in the conduct of the corporation, the loss suffered by that conduct. That is, enforcement of the standard of corporate conduct that is set out in s 52 of the TPA relies upon private litigation of actions for compensation against persons who contravene or participate in contravention of s 52 of the TPA.

31                  The foregoing circumstances show that no right of contribution was available in equity to Jagar and Tressider. Although Burke made no cross-claim against Jagar and Tressider to recover loss suffered by Burke by conduct of Jagar that contravened s 52 of the TPA, the question whether Burke has such a right would be a relevant issue in determining whether it is appropriate, in equity, that an order for contribution be made in favour of Jagar and Tressider. The relevant analogy in Cockburn would have been a claim by the mortgagor’s father against the solicitors retained by the mortgagor for contribution to the sum the mortgagor’s father was ordered to pay to GIO or to the mortgagor. It would have been inequitable, being neither reasonable nor just, to order that contribution be made by the solicitors to the mortgagor’s father whose unconscionable conduct had caused the loss, and who had received an improper benefit in that amount. There must be equality of liability on which a right to obtain contribution is grounded and no bar in equity to the order being made. In the instant case either the liability of Jagar and Tressider is on a different level from that of Burke, in that Burke may be entitled to be indemnified by Jagar and Tressider, or the deceptive nature of the conduct from which the liability of Jagar and Tressider has arisen bars the making of an order in equity: Street per Gummow J at 599-600. In effect, the order made against Jagar and Tressider was to disgorge a benefit improperly received. That judgment provided no basis in equity for an order that Burke contribute to that restitution.

32                  Furthermore, although no argument was addressed to the issue, it is not obvious that the measure of damages for the breach of contract by Burke is coincident with the loss Hanave may recover from Jagar and Tressider under s 82 of the Act. If the measure under each cause of action does not correspond there can be no order for contribution: Albion per Kitto J at 352.

33                  If, despite the foregoing, it were determined that an order for contribution could be made against Burke in respect of discharge by Jagar and Tressider of the judgment entered against them, that order must reflect equal division of the common burden to make payment of the judgment sum. Burke, therefore, could not be ordered to pay more than one-third of that sum. Although it was the conduct of Jagar that contravened the TPA, liability for the consequence of that conduct was imposed severally on Jagar and Tressider by s 82 of the Act and the liability imposed on Tressider was that of a principal. Jagar and Tressider, severally, were liable to discharge the whole of the judgment. As judgment debtors, each was obliged to make equal contribution. In equity no order could be made that Burke contribute 50 per cent of that judgment sum, thereby fixing the contributions of Jagar and Tressider respectively at 25 per cent each.

Damages

34                  It was not in issue that in this case the proper measure to be applied by his Honour to assess the loss suffered by Hanave was the difference between the price paid by Hanave for the Leichhardt property and the value of the property at the time of purchase. It was not submitted that Hanave had suffered other loss. Although his Honour stated that the management of the Leichhardt property by Hanave could be “fairly described as ‘a difference in relevant conditions’ for which some allowance should be made in assessing Hanave’s loss”, that was a comment made in respect of the valuation provided by Hanave’s valuer which purported to assume that events occurring after the date of sale could be taken into account to determine the value at the date of sale: Kizbeau Pty Ltd v W G & B Ltd (1995) 184 CLR 281 at 291. Those remarks in Kizbeau were of particular relevance to the worth of a business sold as a going concern where the takings of the business after purchase remained relevant to establishing the true worth of the business at the time of sale notwithstanding that there may have been some difference between conditions under which the business was conducted before and after sale. However, such a circumstance was not relevant to calculation of the value of the Leichhardt property where it was accepted that at all relevant times the property would be occupied by tenants at market rent. There was no inherent element in the Leichhardt property, affecting its value, that may have been revealed by events subsequent to sale. (See: Bowler v Hilda Pty Ltd [2000] FCA 899 per Finn J at [120].)

35                  The parties presented evidence to his Honour from two expert valuers. The valuer called by Hanave stated that, in round terms, the property was worth between $1.3m and $1.96m. The valuer called by Jagar and Tressider calculated the parameters of value to be $1.87m and $2.1m.

36                  It was agreed by both valuers that the market rent receivable for the property was approximately $174,980 per annum. The range of valuations provided to his Honour resulted from calculations being made, on the one hand, on the above-market rents payable by lessees, and on the other, on market rent. His Honour preferred the evidence of the method of valuation adopted by the valuer called by Jagar and Tressider and determined that the value of the property was $1.8m. On appeal, Hanave contended that the value of the property at time of sale was $1.3m and by cross-appeal Jagar and Tressider submitted that it was $2m.

37                  The proper manner of valuation was a calculation based on capitalisation of market rent to which was added an assessment of the capital worth of the prospective receipt of above-market rents after providing an appropriate discount for contingencies in that regard.

38                  Some of the contingencies to be taken into account were:

·          the current worth of the tenants who had undertaken to pay substantially more than the market rent;

·          whether securities had been provided for the payment of that rent;

·          the terms of the leases under which such rents were payable and other matters relevant to the assessment of surrounding risks.

39                  Only the valuer called by Jagar and Tressider prepared a valuation pursuant to that method. That valuation was $1.87m which the valuer, after making concessions in cross-examination, reduced to $1.84m. There was no issue on appeal that proper capitalisation rates had been applied to reach this valuation.

40                  Although his Honour did not state that he accepted a valuation so calculated, and stated that he had struck a balance between the valuations provided by the two valuers, in fact, the value determined by his Honour was, in round terms, the figure calculated by the valuer preferred by his Honour, less, perhaps, a greater provision for contingencies.

41                  It follows, therefore, that his Honour’s calculation of the loss suffered by Hanave involved no error: Yenald Nominees Pty Ltd v Como Investments Pty Ltd (1996) 18 ATPR 42,349 at 42,359; Como Investments Pty Ltd (in Liq) v Yenald Nominees Pty Ltd (1997) 19 ATPR 43,617 at 43,621.

Costs

42                  By an amended notice of appeal, Burke appealed from an order made by his Honour on 31 March 2000 that Burke pay the costs of the cross-claim of Jagar, Tressider and Glew. I would set aside the orders made on the cross-claim and, therefore, allow the appeal against the order for costs.

Orders

43                  I would order that the appeal be allowed in part by setting aside the orders his Honour made on the cross-claim and order that the cross-claim be dismissed with costs. I would dismiss the cross-appeal. The parties should be directed to file submissions on the question of costs if unable to reach agreement thereon.

Associate:

Dated:              18 August 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

HEEREY J:

Introduction

44                  On 20 July 1994 contracts were exchanged for the sale of a property consisting of seven tenanted shops at 21 Lords Road, Leichardt in the State of New South Wales.  The vendor was the first respondent, then called Jagar Projects Pty Ltd (“Jagar”).  Two of its directors were the second respondent Mr Paul Tressider and the third respondent Mr Joseph Glew. 

45                  The purchaser was the second appellant Hanave Pty Ltd (“Hanave”).  Hanave was the trustee of a trust of which the beneficiaries included the first appellant Mr William Robert Burke, a solicitor who carried on practice under the firm name Gilbert Mane.  Mr Burke was a director of Hanave.

46                  A major tenant was Barbara’s Storehouse Pty Limited (“Barbara’s Storehouse”) which occupied two of the shops and contributed about a third of the total rental income.  Prior to the exchange Barbara’s Storehouse had assigned its lease to Adelights Pty Ltd (“Adelights”), a company with the same shareholders and directors.

47                  In September 1995 Hanave commenced proceedings against Jagar and Messrs Tressider and Glew.  For present purposes it is only necessary to refer to some of the claims made.  Hanave alleged a contravention of s 52 of the Trade Practices Act 1974 (Cth) (“TPA”) said to be constituted by a representation by Jagar that Barbara’s Storehouse was “an established high quality tenant” and also a failure to disclose that a lease incentive of $60,000 had been paid by Jagar to Barbara’s Storehouse in the year before the sale.  It was alleged that Messrs Tressider and Glew were liable under s 75B of the TPA. 

48                  By a cross-claim the respondents alleged Mr Burke was acting as solicitor for Hanave and that he negligently failed to advise Hanave to make proper enquiries as to the financial position of tenants.  Equitable contribution was sought.  No claim has been made by Hanave against Mr Burke.  Throughout this litigation Hanave and Mr Burke have been represented by the same solicitors and counsel.  

49                  In a judgment delivered on 31 August 1998, (1998) ATPR 41-658, Moore J dismissed Hanave’s claim.  In essence his Honour found that the alleged representations had been made and that they were false, but that Mr Burke, who conducted negotiations on behalf of Hanave, had not relied on them.  It was thus not necessary for his Honour to consider the liability of Mr Tressider and Mr Glew or the claim for contribution, or damages.  Hanave appealed successfully to the Full Court (Wilcox and Kiefel JJ, Emmett J dissenting):  Hanave Pty Ltd v Lfot Pty Ltd [1999] FCA 357, (1999) ATPR 41-687.   The Full Court ordered that judgment be entered for Hanave against Jagar and that the matter be remitted to Moore J for determination of the issues of the liability of Mr Tressider and Mr Glew, the cross-claim against Mr Burke and the assessment of damages.

50                  On 11 November 1999 Moore J delivered a further judgment:  [1999] FCA 1568.  His Honour found that Mr Burke was acting as solicitor for Hanave both before and after the exchange of contracts and that his retainer was not limited to conveyancing aspects of the transaction.  He found that Mr Burke had been negligent and was liable in equity to make contribution.  His Honour found that Mr Tressider was aware of the term of the contract requiring disclosure of lease incentives and that the $60,000 had not been disclosed.  He was thus involved in the contravention of the TPA constituted by Jagar’s conduct. His Honour found, however, that Mr Glew, not having knowledge of material facts, was not a person involved in that contravention.  His Honour assessed damages in the sum of $750,000 and ordered that Jagar and Mr Tressider pay that amount to Hanave and that upon satisfaction of that order Burke make contribution to Jagar and Mr Tressider in the sum of $375,000.

51                  Mr Burke and Hanave appeal.  Mr Burke attacks his Honour’s finding that he was retained as Hanave’s solicitor and that he was liable to make any contribution to Jagar or Tressider.  Hanave attacks his Honour’s findings that it was inappropriate to determine the value of the property, as at the date of purchase, having regard to events which took place later.  Hanave contends that the damages should be $1,243,042.

52                  Jagar and Mr Tressider cross-appeal. Mr Tressider attacks the finding of liability against him and the amount he was ordered to pay.  Further, Jagar and Mr Tressider contend that his Honour should have found that the carelessness of Hanave and/or Mr Burke was such as to break the causal nexus between any breach of the TPA and any loss or damage suffered by Hanave.  They say that his Honour should have found that the conduct of Hanave after the purchase was not reasonable in all of the circumstances and that it failed to mitigate its loss.  They contend that they should not be liable for all of the loss or damage sustained by Hanave when that loss or damage had been caused in whole or in part by the “ineptitude and recklessness” of Hanave and its failure to take reasonable steps to protect its own interests.  They say the quantum of damages should be no more than $550,000.

The sale

53                  The building had been constructed in 1992 and was tenanted from the following year.  Barbara’s Storehouse had a lease for ten years.  It conducted several retail outlets elsewhere in Sydney and was well known.  On 25 June 1994 an advertisement in the Sydney Morning Herald of a forthcoming auction of the property referred to Barbara’s Storehouse and other tenants, Orrefors Kosta Boda and Just Jeans, as “established retailers” and to the income generated from the group of shops as $312,644 per annum.  Mr Burke saw the advertisement and contacted the selling agents who forwarded to him a “property report”.  This document of some eleven pages contained details of the land and buildings, title particulars and town planning information.  The property description was in these terms:

“4.00   Property Description

This recently constructed, high exposure, single level, corner retail location, with 7 established high quality tenants including Barbara’s Storehouse, Orrefors Kosta Boda and Just Jeans amongst others.

These 7 shops have a net lettable area of 929 square metres, situated on a site area of 1338.73 square metres. 

Known as the Leichardt Factory Outlet Headquarters all retailers use these premises as an outlet for factory goods, and thus becoming [sic] a destination for consumers who want quality goods at discounted prices.”

54                  Annexed to the report was a tenancy schedule which identified each of the tenants and provided rental figures according to the leases held.

55                  The auction was held on 19 July.  The property was passed in, Hanave being the highest bidder.  Prior to the auction Mr Burke had received a draft contract and copies of the leases.  He checked the contents of the leases with the schedule in the property report but otherwise did little or nothing to verify the accuracy of what was stated.

56                  The contract contained the following provision as to lease incentives:

“8.       Sale subject to commercial lease or leases

8.1       Lease incentives

            The land is sold subject to the lease or leases particularised in Schedule 1 (“the Lease”)

8.2       The vendor warrants that the details of every guarantee given in support of the lease are as set out below, provided that any guarantee, the terms of which are incorporated in the Lease, need not be particularised.

8.3       The vendor warrants that all incentives for the benefit of the tenant under or in connection with the Lease are either disclosed in the Lease or as set out below.”

57                  No detail was included in the blank space below cl 8.3.  The schedule stated that shops 1 and 2 were let to Barbara’s Storehouse.  The transfer to Adelights was noted.  The term was said to expire on 18 May 2003 and the annual base rent was $108,150. 

58                  In April and May 1993 a company associated with Messrs Glew and Tressider had paid two cheques totalling $60,000 to Barbara’s Storehouse.  Correspondence at the time between Barbara’s Storehouse and Mr Glew referred to this amount as a “fitout contribution”. There was no evidence as to how those monies were expended.  When the interest of Barbara’s Storehouse as lessee was assigned to Adelights in May 1994 Adelights did not receive any of the $60,000.  The lease contained no disclosure of any incentive provided to Barbara’s Storehouse.

59                  A schedule tendered at the trial, but which was not itself in existence or available to Hanave at the time of the purchase, disclosed that Barbara’s Storehouse was in default of prompt rental payments from an early stage.  For some months it paid rent by two payments in the month.  No rental was paid in March 1994 and the balance of rent outstanding at the end of April, May, June and July 1994 was $5,000, $2,000, $2,000 and $3,000 respectively.  His Honour accepted that there was a “measure” of preferential payment in that Barbara’s Storehouse/Adelights paid its suppliers rather than the landlord.  After settlement of the purchase on 17 August 1994 this pattern worsened.  The lowest figure in 1994 was $9,050 in December and for most of the following year the arrears were constantly of the order of $20,000. 

60                  Another relevant clause of the contract was cl 11 which provided that the purchaser acknowledged having inspected the leases (cl 11.1) and that the purchaser was not entitled to rescind if the leases were void, unenforceable or illegal (cl 11.2).  Clause 11.3 provided:

“The Vendor makes no warranty as to the solvency or financial standing of any tenant and the purchaser is taken to have satisfied itself in this regard.”

61                  On the evidence before his Honour the rent paid by Barbara’s Storehouse was a little under three times the market rent.  Prior to the sale Mr Slatyer of Barbara’s Storehouse advised Mr Tressider that the business at the premises was not doing well.  In May 1994 a variation of the lease (by this time held by Adelights as assignee) was agreed upon.  It removed the automatic annual increase of eight per cent and substituted a provision for an increase according to the consumer price index. 

The first judgment of Moore J

62                  His Honour held that reference to “high quality” involved a representation about the experience of the vendor in relation to the historical operation of the lease and that the tenant had been, in relation to its obligations under the lease, an extremely satisfactory tenant:  Smith v Land & House Property Corporation (1894) 28 Ch D 7 at 15 per Bowen LJ, referred to with approval by the Full Court in RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164.  His Honour concluded that the circumstances relevant to Barbara’s Storehouse made the representation in the property statement false.  In his Honour’s view, a tenant with its history of default in payment of rent could not reasonably be described as a high quality tenant, a description that bore the connotation that it was an extremely satisfactory tenant.  His Honour held that Jagar was not contractually obliged to disclose the incentive payment of $60,000.  His Honour’s view of cl 8 was that Adelights was the tenant for the purposes of cl 8.3 and no incentive had been paid to that company “under or in connection with the lease”.  His Honour however found that Mr Burke did not rely on the property report.  His Honour concluded that Burke

“proceeded with the sale unaware of the true position in relation to the circumstances of Barbara’s Storehouse because of the combination of complacency and careless disregard for matters of detail and his reliance on his own knowledge and perfunctory enquiries.”

63                  Having found other allegations not made out, his Honour dismissed the application. 

Judgment of the Full Court

64                  The principal judgment of the majority was that of  Kiefel J.  Her Honour differed from the trial judge as to the construction of cl 8.1.  An incentive had been paid in relation to the lease and the assignment to Adelights did not obviate the obligation to provide that information.  In any event, the clause and schedule conveyed positively that no incentives had been paid.  A complication here was the trial judge’s rejection of Mr Burke’s evidence that he did not become aware of the payment of $60,000 until March 1997.  His Honour found that to be an untruth and that Mr Burke had known it from a discussion with Mr Slatyer in February 1995.  Generally Moore J was not impressed with Mr Burke’s credit and observed that on some occasions he appeared to tailor his evidence to suit Hanave’s case. Kiefel J noted the lateness of a complaint about the $60,000 (it not being raised until the commencement of the trial).  However her Honour thought that this non-disclosure “took on a different complexion in the background of the misrepresentation found to have been made” i.e that Barbara’s Storehouse was a good and reliable tenant, contrary to the true position. Kiefel J noted that the question of causation can be sometimes resolved not by direct evidence as to what part a misrepresentation played in a process of entry into contract, but by a  court determining what effect must be taken to have resulted:  Gould v Vaggelas (1985) 157 CLR 215 at 236-7, Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993) 41 FCR 229, Henderson v Amadio Pty Ltd (No.1) (1995) 62 FCR 1 at 166.  After analysis of the evidence her Honour concluded that the likelihood that Hanave felt assured about Barbara’s Storehouse when it made its offer was strengthened by the further misrepresentation that no incentive payment had been made to it.  Her Honour said (at par 51):

“The combination of this misstatement of fact and Jagar’s assurance about it as a tenant must be taken to have been of significance to any rational prospective purchaser and to operate as influential when considering an investment in the centre, or the price paid for it.”

65                  In her Honour’s view that conclusion was inescapable, regardless of the view taken of Burke’s credit. 

66                  As to the question of Mr Burke’s carelessness, her Honour considered (at par 52) that once it was accepted that the misrepresentations were effective as a cause of Hanave’s entry into the contract it was no answer that it may have discovered the untruths had Mr Burke undertaken more extensive enquiries:  Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302 at 309.  Her Honour said that the “(l)oss suffered by Hanave was caused ‘by’ the conduct of Jagar within the meaning of s 82(1) TPA”. 

The second judgment of Moore J

67                  As to the aiding and abetting allegations against Messrs Glew and Tressider, his Honour noted that in his first judgment he had accepted Mr Glew’s evidence that he did not know the description of Barbara’s Storehouse as a “high quality tenant” had been used in the property report.

68                  His Honour recorded his understanding of the majority judgments in the Full Court as treating the contravening conduct of Jagar as a cumulation of the high quality tenant representation and the failure to disclose the incentive payment.  Thus, in his Honour’s view, because Mr Glew did not know of the former he was not a person involved in the contravention of the TPA by Jagar.

69                  As to Mr Tressider however, his Honour found that he knew of both the description in the property report and Barbara’s Storehouse record of rent payment.  His Honour also found that Tressider was aware at the time of the sale that the contract required disclosure of lease incentives, that the payment of the $60,000 could be characterised as an incentive, and was not disclosed.  He thus knew of the essential elements of the conduct which the majority in the Full Court had concluded contravened s 52.

70                  Turning to the cross-claim against Mr Burke, his Honour noted that it was not in issue that after exchange of contracts Mr Burke’s firm Gilbert Mane acted for Hanave in the conveyance.  The question was the role, if any, of the firm before exchange.  Gilbert Mane had acted for Hanave since about 1992.  Much of the work Gilbert Mane had been doing for Hanave before and after the purchase of the Leichardt property was acting for the company as a lessor of property.  For that work Gilbert Mane’s costs were met by the lessees.  Mr Burke agreed in cross-examination that on occasions he had chastised clients of Gilbert Mane who had failed to consult the firm prior to purchasing a property at auction and prior to exchange of contracts. 

71                  There was no express retainer for Gilbert Mane to act before, or indeed after, exchange.  His Honour referred to his first judgment where he dealt with Mr Burke’s evidence about the capacity in which he acted before exchange.  Mr Burke had stated in evidence that when he attended the auction, and prior to that, he was acting in his capacity as director of Hanave and not as its solicitor, as he also had been at the time of exchange.  There were letters of 28 June, 18 July and 20 July 1994 from the agent addressed to “Mr Burke, Hanave Pty Ltd”.  However on 19 July, shortly after the auction and before exchange, Mr Burke received a facsimile from Kyle (the agent) addressed to Gilbert Mane.  This was the one enclosing the revised tenancy schedule.  Mr Burke’s explanation for this fax was that he must have given Kyle a Gilbert Mane business card at the auction because he did not have any Hanave cards.

72                  In the contracts exchanged on 20 July the purchaser’s solicitor was identified as Gilbert Mane.  Next to the typed “ref” there was written “Robert Burke”.  In his first judgment his Honour said (at 54):

“During the course of his evidence Burke said that when he read the draft contract he did so as a director of Hanave.  The clear import of his evidence was that he thought about the matter at the time and consciously elected to act as a director and not as a solicitor.  I have not found his evidence on these matters at all convincing.  In my view Burke simply acted as himself.  He was the solicitor conducting a legal practice in which he regularly acted for Hanave in a comparatively informal way.  For example, no register was kept of when files on Hanave matters were opened.  He was also a director of that company.  In my opinion, he would generally have given no thought to the capacity in which he acted in situations such as when he was reading the draft contract.  The fact that he gave Kyle a Gilbert Mane business card simply exemplifies that, at any give time, he was not drawing a comparatively rigid distinction which he sought to maintain when giving evidence.”

73                  After citing a passage from Mr Burke’s cross examination his Honour concluded (at 55):

“This evidence is disingenuous.  In my opinion the distinction constantly drawn by Burke about acting as director on the one hand and solicitor on the other was one of convenience only, designed to answer the cross claim.”

74                  In his second judgment his Honour observed that it was “relatively clear” from Mr Burke’s evidence that in reviewing the draft contract for sale prior to auction he was exercising his legal professional skill and judgment.  His Honour continued (at par 12), after referring to Waterford v The Commonwealth (1987) 163 CLR 54 at 86 and Standard Chartered Bank of Australia Ltd v Antico (1995) 36 NSWLR 87 at 93:

“While these cases concern legal professional privilege they illustrate situations where it is necessary to ascertain the capacity in which a legally qualified officer of a company is acting.  In the present case the steps Burke took of scrutinising the draft contract and effectuating exchange were of the essence of the work of a legal practitioner:  cf Solicitors Liability Committee v Gray & Winter (1997) 77 FCR 1.  That his firm later acted on the conveyance tends to confirm the capacity in which he acted prior to exchange when scrutinising the draft contract as being that of solicitor for Hanave.”

75                  His Honour considered that the existing relationship between Hanave and Gilbert Mane in which that firm was doing all the company’s legal work associated with property transactions, the use by Mr Burke of his professional skill and judgment in reviewing the draft contract before exchange, the conceded existence of a retainer, never expressly given, after exchange and the view Mr Burke held that solicitors should be retained prior to exchange all pointed to the existence of a retainer prior to exchange.

76                  As to whether the retainer was breached, his Honour referred to affidavits from two solicitors as to the practice usually followed.  Those were received over objection.  His Honour noted cl 11.3 of the contract (see par 60 above).  His Honour concluded that, having regard to these express provisions, it would be prudent for a solicitor retained generally to act on the purchase to advise that enquiries be made before exchange.  It would then be a matter for the client to make a considered judgment of the commercial risks of not doing so.  There was no evidence of any such advice being given and indeed Mr Burke appeared to have misunderstood what the clause meant.  He thought it was a warranty relating to the future payment of rent.  His Honour concluded (at par 18) that there was a breach of retainer and that had the advice been given there was

“no reason to believe that the advice would not have been acted on and inquiries made.  It is probable the true position would have been disclosed and the purchaser would not have proceeded at least on the terms it did.”

77                  As to the existence of a right of contribution, his Honour noted that it was not suggested that s 5 of the Law Reform (Miscellaneous) Provisions Act 1946 (NSW) applied in relation to TPA s 82 liability.  But contribution could be ordered by applying long established equitable principles:  Albion Insurance Co Ltd v Government Insurance Office (NSW) 1969 121 CLR 342 at 350-352.  His Honour took it that before a court could order equitable contribution between parties they must share a “common obligation” or “co‑ordinate liabilities” to “make good the one loss”.  In his Honour’s opinion the liabilities of Jagar and Mr Tressider on the one hand and Mr Burke on the other were to make good the same loss, namely Hanave’s loss resulting from the purchase of the shopping centre and the liabilities were co‑ordinate. 

78                  As to the amount or proportion, his Honour, after reviewing authorities, concluded that the rule was that the burden and the benefit are ordinarily to be divided equally unless there are “suitable circumstances” in which “a true equality of treatment” required “proportionate equality”.  His Honour treated the Full Court judgment as a finding of fact that the contravening conduct of Jagar “must be taken to have been of significance” to Mr Burke in deciding, on behalf of Hanave, to purchase a property which was worth less than the purchase price.  Mr Burke’s carelessness may at least have contributed to Hanave’s decision to purchase but as a matter of law that carelessness provided no answer to a claim founded on s 52 and 82 of the TPA.  His Honour said (at par 29) that when Mr Burke received the draft contract

“… he should have appreciated, as Hanave’s solicitor, the desirability of undertaking enquiries about the solvency and financial standing of the tenants.  There was no practical or commercial reason why those enquiries could not have been undertaken prior to exchange and, if properly advised, Hanave would have undertaken them.  In my opinion a cause of Hanave’s loss was Burke’s failure to advise Hanave to undertake the enquiries.  It is inconceivable, in my opinion, that the combined effect of the description of the tenants as high quality tenants and the failure to disclose the incentive payments would have caused Burke, in his capacity as a director of Hanave, to reach such a level of confidence about the solvency and financial standing of the tenants as to ignore or not act on advice that should have been given about making further enquiries.”

79                  His Honour said that while it was “somewhat artificial” to speak of Mr Burke effectively giving himself advice, nevertheless because he was also acting as Hanave’s solicitor he should have realised that further enquiries were desirable because of the terms of cl 11 and realised there was no impediment as to them being made on Hanave’s behalf.  Had he realised the enquiry should have been made, he would have made them on behalf of Hanave even if, in making them, he was doing so in his capacity as a director.  His Honour said (at par 29):

“Had this occurred and had for example, he read the tenancy files maintained by Jagar and accessed rent records, the position of the tenants would have been made apparent to Hanave at least in substantial part.”

80                  The measure of damage was accepted to be the difference between the purchase price of the property ($2,550,000) and its true value at the time of purchase.  Both parties called valuers to provide valuations of the property as at 20 July 1994 based on a number of assumptions.  Mr Phillip Barlow for Hanave provided valuations of $1,962,183 and $1,697,330.  Mr John Howes for Jagar provided valuations of $2.1 million, $2.15 million and $1.87 million.  He ultimately proffered a valuation of $2 million.  His Honour noted there was agreement as to the net annual market rent at the time of exchange, namely $174,980.  The two valuers also made valuations on an assumption that the shops were let at market rents.  Their figures on this basis were quite close:  $1,306,958 (Barlow), $1,367,769 (Howes).  However issues arose about the treatment of the rents due under the leases to the extent that they exceeded market rent and to the extent to which events following exchange, and rents received thereafter should be considered.  His Honour considered the evidence of Howes “compelling”.  As to Mr Barlow’s evidence his Honour said (at par 34):

“Barlow’s valuations were based substantially on his knowledge of events occurring after the purchase of the property by Hanave.  Hanave’s management of the property after purchase was in my opinion markedly different from that of Jagar prior to sale.  Jagar was committed to promoting the complex as a factory seconds outlet and did so with some success.  Hanave was not.  It did little more than collect rent, effect necessary repairs and when a vacancy arose attempt, with no measure of sophistication, to secure a new tenant.  The Leichardt property was but one of a considerable number of properties managed by Hanave and it received limited attention.  Hanave’s management approach was not pro-active like that of Jagar and it did not maintain the character of the complex which Jagar had gone to some lengths to create.  These changes make it inappropriate, in my opinion, to determine without qualification a valuation based on events that occurred after the acquisition of the property by Hanave and, in particular, on vacancies that arose and their effect on the rental stream and the pattern of rental payment after acquisition.  The way in which the property was managed by Hanave can, in my opinion, be fairly described as ‘a difference in relevant conditions’ for which some allowance should be made in assessing Hanave’s loss.”

81                  His Honour thought that some balance had to be struck between the approaches of the two valuers in determining Hanave’s loss, although there was an element of imprecision in the balancing process.  His Honour assessed the loss at $750,000 and awarded damages on that basis. 

Contentions on the appeal

82                  The appellants contended

(i)                  There was no retainer of Mr Burke to act as Hanave’s solicitor prior to exchange. 

(ii)                If there was such a retainer, it did not extend to giving advice as to the desirability of making enquiries concerning the solvency of tenants. 

(iii)               If Mr Burke had given such advice to Hanave it would not have found out the true position. 

(iv)              Mr Burke’s failure to advise was not a cause of Hanave’s loss.

(v)                Mr Burke was not liable to make contribution to Jagar and Mr Tressider for Hanave’s loss.

(vi)              Allowance should not have been made for Hanave’s method of managing the shops after purchase and allowance should have been made for the difficulties of tenants in paying rent both before and after the purchase.

(vii)             The true value of the property at the time of sale was $1.3 million.

Contentions on the cross-appeal

83                  On the cross appeal the respondents contended

(viii)      Hanave’s loss was caused by its own ineptitude and recklessness.

(ix)       Hanave failed to mitigate its loss.

(x)        Contribution of Mr Burke should have been fixed at 90 per cent rather than 50 per cent.

(xi)       The true value of the property at the time of sale was $2 million.

84                  I now turn to consider these issues.

(i)         Retainer of Mr Burke

85                  The test is an objective one.  I adopt what was said by Hayne JA (with whom Winneke P agreed) in Trumble Szanto Braham (a firm) v Soultanides (Victorian Court of Appeal, unreported, 9 May 1996) at 2 where the issue was also whether there had been a retainer of solicitors.  His Honour said after referring to Masters v Cameron (1954) 91 CLR 353 at 362, Gissing v Gissing [1971] AC 886 at 906, Toyota Motor Corporation v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 and Australian Broadcasting Commission v 14th Commonwealth Games (1980) 18 NSWLR 540 at 449-550:

“Thus the questions whether any contract of retainer was made between the parties and, if it was, what were its terms, were to be determined according to an objective test, not according to what the parties themselves may have believed or intended.”

86                  See also Henderson v Amadio (No 1) (1995) 62 FCR 1 at 135, on appeal (1998) 81 FCR 149 at 207.

87                  The circumstances referred to by the learned primary judge provided ample foundation for his finding as to the existence of the retainer.  Counsel for the appellants contended that it should have been found there was no intention to create legal relations, particularly because of “the family nature of the company”.  The evidence does not disclose whether Hanave was in truth the alter ego of Mr Burke.  There were other directors, Mr Burke’s brother and an accountant.  As to the identity of all the beneficiaries of Hanave’s trust, and whether they were all members of Mr Burke’s immediate family, the evidence is silent.  But in any event Hanave was a separate entity, no doubt established to secure tax and other benefits.  So its existence has to be accepted.  More importantly, once it is accepted that, family nature or not, a retainer existed after settlement there can be little logic in a conclusion that there was no earlier retainer.  Objectively speaking, the expertise of a solicitor is just as important – perhaps more so – at a time when the putative client has not become contractually bound. 

(ii)        Extent of retainer

88                  Counsel for the appellants submitted that his Honour’s reasons contained inconsistent findings.  His Honour said (par 13):

“It can be implied, in my opinion, that Gilbert Mane was retained prior to exchange to take all reasonable steps necessary to permit the purchase of the property by exchange of contracts and thereafter to take all reasonable steps to effectuate the purchase up to and including settlement.”

89                  Later (at par 16) his Honour said after quoting cl 11:

“In my opinion a solicitor retained generally to act in the purchase, as Gilbert Mane, should advise a client, in this case Hanave, that having regard to the express provisions of cl 11.3, it would be prudent for inquiries to be made about these matters before exchange.”

90                  Reading his Honour’s reasons as a whole, I do not think there is any inconsistency.  In the first passage his Honour was dealing with the existence of the retainer, in the second with its content.  In any case, steps necessary to permit the purchase of the property would include a step relevant to whether the purchase should be permitted in the interests of the purchaser, those interests including not purchasing a property for more than it was worth.  Moreover his Honour (at par 14-15) referred to and accepted the evidence of two experienced solicitors whose evidence was that a solicitor acting in accordance with usual practice would advise a client purchasing a shopping centre such as the Leichardt property to make enquiries as to the status of leases and the commercial viability of tenants.

91                  Counsel for the appellants argued that if there was a retainer of Mr Burke prior to exchange it was limited to the “conveyancing type of things” he was retained to do after exchange.  Counsel conceded that such a retainer would be a  limited one and  also that if there was a general retainer prior to exchange it would extend to advice as to enquiries of the sort mentioned.  But there was no basis on the evidence for a finding as to a limited retainer.  Mr Burke’s case was that, prior to exchange, there was no retainer at all.  Thus I agree with his Honour’s conclusion  that Mr Burke’s retainer extended to  advice of the kind in question and was not limited to the mechanics of conveyancing.

(iii)       Result of hypothetical enquiries by Hanave

92                  At this stage I need to refer to a transaction which took place in early August 1994 between Mr Slatyer of Barbara’s Storehouse/Adelights on the one hand and Messrs Glew and Tressider on the other.  After a careful analysis of conflicting versions Moore J in his second judgment made the following findings.

93                  Mr Slatyer went to see Messrs Glew and Tressider.  He said he was aware the complex had been sold and referred to his intention to sell the Leichhardt business and move to Batemans Bay where he was opening a new business.  He said that because of past financial problems they could not borrow from the banks and needed capital to open the new store.  He said that turnover at Leichardt had dropped because of the construction of the carpark next door though he was confident that when the carpark was complete turnover would return to previous levels.  He then said that he knew Jagar was making a substantial profit on the sale of Leichardt and that if Messrs Glew and Tressider could not help him he would go and see the buyer.  Mr Glew responded by asking what would be the point of doing that.  He also told Mr Slatyer that to do so would cause problems for all of them and it would not fix his problem.  After further discussion Mr Glew said to Mr Slatyer that what he, Slatyer, was telling them was that he had a short term cashflow difficulty because he was opening a new business and he had not sold the Leichardt one.  Mr Glew then suggested they talk about a loan.  Mr Slatyer agreed and the terms of the loan were discussed.  The amount agreed upon was $8,000, guaranteed by Mr Slatyer and his wife, and to be repaid at the end of the year.  Mr Glew accepted in cross-examination that he did not want Mr Slatyer to go to the purchaser as it may have resulted in the purchaser seeking to renegotiate the purchase price and might have led to litigation.  He also accepted that he said he would go with Slatyer to see Hanave on the condition that Slatyer had a purchaser for the business.  Mr Glew accepted that one of the possible outcomes of that discussion was a reduction in the rent. 

94                  On 2 September 1994 Mr Tressider wrote to Mr and Mrs Slatyer confirming the agreement for a loan of $8,000.  On 15 September a cheque for this amount payable to Adelights was drawn on Jagar’s account and signed by Mr Glew.  His Honour commented as follows:

“I accept there are a number of curious aspects to this whole transaction.  However, it is relatively clear that Slatyer was seizing the opportunity created by the impending sale of the property to seek a commercial advantage from Jagar.  He did so by demanding the payment of money.  It is also relatively clear that both Tressider and Glew were prepared to accede to Slatyer’s demand in order to pacify him, in the sense of offering him a sufficient inducement not to speak to the purchaser of the property.  An element in pacifying Slatyer was Glew’s offer to see the purchaser with Slatyer if Slatyer had a purchaser for the business.  I do not infer that the offer was made because Glew knew that Barbara’s Storehouse could not pay the rent.  Glew and Tressider were anxious to ensure that Slatyer did not say anything which would deter the purchaser from buying the property.  It is not entirely clear why there was a delay of nearly a month between the time of the meeting in early August and the confirmation of the arrangement in the letter of 2 September 1994. Glew’s evidence was that he had no idea and Tressider was not asked directly about the issue.  Tressider did say, however, that after the arrangement was reached he gave thought to how he could avoid paying Slatyer the money.

There is also the delay between the time of the agreement (probably early August 1994) and the time of the payment of the cheque on 15 September 1994.  However the money was, in a sense, being extorted by Slatyer.  I accept that having secured Slatyer’s silence, there was no enthusiasm on Glew or Tressider’s part to finalize the arrangement by confirming it in writing and actually making the payment even if only by way of loan.”

95                  Counsel for the appellants argued that this amounted to a bribe to Mr Slatyer, whose company was the anchor tenant, not to talk to a purchaser.  In those circumstances, counsel submitted, it cannot be inferred that Mr Burke would have been told the truth.  Further, Jagar’s tenant records were not put in evidence and there was no basis for his Honour’s finding that the position of the tenants would have been made apparent to Hanave.

96                  As to the latter point, it was not entirely clear to me what records were in fact in evidence.  It seemed to be accepted by the parties that not all evidence found its way into the appeal books.  But in commercial litigation such as this, his Honour was entitled to draw inferences from the circumstances and the way business of this kind, that is to say the letting of retail tenancies, is normally conducted.  Given that there were seven shops returning an annual rental of almost a third of a million dollars, it seems inconceivable that there did not exist records of rental payments in documentary or electronic form, or both.  If such an unusual state of affairs existed, it is something which could have been established in evidence by the appellants, but was not.

97                  There has already been reference to the evidence relating to the rental performance of Barbara’s Storehouse/Adelights.  Apparently there was no dispute at the trial as to these matters so it is reasonable to infer that the parties’ agreement must have been based on some contemporaneous records.  And if records were available a properly advised purchaser would have insisted on seeing them.  If there was a bribe, it was not paid for Jagar refusing to disclose such records, and any refusal would have only excited a purchaser’s suspicions.

(iv)       Causative effect of Mr Burke’s failure to advise

98                  Counsel argued that the “real and proximate cause” of Hanave’s loss was the fact that the anchor tenant Barbara’s Storehouse/Adelights was not able to pay its rent and vacated its two shops within seven months of the purchase.  Reliance was placed on Trust Co v Perpetual Trustees Co Ltd (1997) 42 NSWLR 237 at 247-9.

99                  However, the Full Court held that Jagar’s misrepresentation was an operative cause of the decision to purchase, and the loss thereby sustained.  Consistently with this finding, his Honour held that a failure to advise the purchaser to make enquiries by which the falsity of the same misrepresentation would have been discovered was also a cause of the loss.  This conclusion is logically compelling and was well open on the evidence, applying the common law practical or common-sense concept of causation:  March v E & M H Stramare Pty Ltd (1991) 171 CLR 500, Wardley Ltd v Western Australia (1992) 175 CLR 514 at 525.

(v)        Contribution

100               Counsel for the appellants argued that Mr Burke on the one hand and Jagar and Mr Tressider on the other were not liable for the same loss.  This was for two related reasons.  First, the “real and proximate” cause of the loss was the inability of the anchor tenant to pay its rent.  Secondly, the loss was caused when the anchor tenant ceased to pay its rent.  After the purchase the trading of the anchor tenant might have improved thereby enabling it to pay its rent.  It was only when this failed to eventuate, and Adelights vacated the premises, that Hanave’s loss arose.  I have already dealt with the first argument (par 98 above).  As to the second, the true nature of Hanave’s loss was the purchase of a property which was worth less than Hanave paid for it.  The extent of that loss is to be assessed as at the time of purchase, even though subsequent events may be relevant in quantifying the extent of that loss “in so far as they illuminate the value of the thing as at that date”:  Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 291.  See also Johnson v Perez  (1988) 166 CLR 351 at 367-369, Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394 at 399.  

101               Both the negligence of Mr Burke and the representation of Jagar (to which Mr Tressider was a party) were effective causes (albeit not the only causes) of the same loss by Hanave, viz the purchase of a property worth less than the purchase price.  There is the further circumstance that both Mr Burke’s negligence and Jagar’s misrepresentation related to the same subject matter namely the viability of the Barbara’s Storehouse/Adelights tenancy.

102               The general doctrine of contribution forms part of the common law.  The basic concept was accepted by both law and equity as one of natural justice:  Albion Insurance Company Limited v Government Insurance Office of New South Wales (1969) 121 CLR 342 at 350.  A critical element of liability for contribution between two parties is that payment by one is for the benefit of both:  Albion at 346.  That element is present here; Hanave could not recover its loss from Jagar and recover again from Mr Burke, or vice versa, and this would be so whether the question arose before or after judgment.

103               To give rise to contribution the liabilities do not have to have arisen from the same instrument, or at the same time, or with knowledge on the part of each putative contributor of the other’s liability:  Street v Retravision (NSW) Pty Ltd (1995) 56 FCR 588 at 597 citing Dering v Earl of Winchelsea (1787) 1 Cox Eq Cas 318, 29ER 1184. 

104               Nor does it matter that the liabilities arose from different causes of action:  B P Petroleum Development Ltd v Esso Petroleum [1987] SLT 345 at 347, cited with approval by Gummow J in Street at 597.  In B P Petroleum an oil tanker owned by Esso damaged a jetty in the Shetlands.  By contract with the port authority, BP was liable to it for the damage to the jetty and by statute Esso was liable to the port authority for the same damage.  Lord Ross held that, BP having paid the authority, it might recoup half of its outgoing from Esso.  It was not to the point that the common obligations to the port authority arose as to BP from contract and as to Esso from statute.  The liability of the parties was “of the same nature and the same extent” because each was liable to the authority to make good the damage to the jetty (at 348).

105               B P Petroleum is on all fours with the present case.  Both Esso and Jagar/Mr Tressider were liable under statutes (which incidentally imposed liability regardless of fault in the sense of fraud or negligence) for the same damage (the damage to the jetty and the purchase of an overpriced property) as was the other party in contract (BP’s contract with the authority, Mr Burke’s retainer with its implied duty of care).

106               Counsel for the appellants argued that it was “against the very basis of equitable intervention” that Jagar and Mr Tressider, having been found to have engaged in misleading and deceptive conduct, could “in conscience” bind Mr Burke the very person whom they misled and deceived, to contribute to Hanave’s loss.  However liability under s 52 of the TPA does not depend on any finding of fraud or moral obloquy.  And in any case contribution is not exclusively a doctrine of equity:  Albion (supra). 

107               The question of contribution in a TPA s 52 context was recently considered by a Full Court of this Court in Bialkower v Acohs Pty Ltd (1998) 83 FCR 1.  A and B, at the request of C, published in a trade newsletter a statement which was found by the trial judge to be misleading and deceptive and a cause of damage to C’s trade rival D.  In a judgment reported at (1997) 144 ALR 528 the trial judge awarded damages of $20,000 in favour of D against A, B and C and further ordered that C indemnify A and B in an amount equal to 75 per cent of the damages and costs ordered to be paid by them.  The Full Court upheld this award.  Their Honours noted (at 12) that the trial judge did not purport to make the contribution order under s 87 of the TPA which had been held in Lezam Pty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535 not to confer such power.  Rather his Honour had in mind the general law of contribution.  The Full Court treated this as correct (at 12).  However their Honours doubted (at 13) whether the general law authorised contribution in unequal shares.  But in their Honours’ view the apportionment could be supported under s 23B of the Wrongs Act 1958 (Vic), this being a procedural provision picked up by s 79 of the Judiciary Act 1903 (Cth) for a case heard in Victoria:  Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1 at 200-201.  Their Honours noted (at 13) that in some other jurisdictions the comparable legislation was in terms different from s 23B and the question of power to order unequal contribution would be a live one.  An example was s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

108               In my view, Bialkower is clear authority for the application of the general law of contribution in the present case.  Their Honours referred (at 12) with approval to the statement of Davies J in Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418 at 422 that joint tortfeasors were earlier refused relief by way of contribution, not because of the absence of a common or co-ordinate obligation, but because it was thought that such relief should not be granted to wrongdoers.  But the cause of action under s 82 for damage caused by contravention of s 52 is entirely statutory and not an action in tort:  Bialkower at 11. 

(vi)       Allowances in valuation

109               For the reasons given by Lee J (par 34) I think that the primary judge was in error in treating Hanave’s management of the property after settlement as relevant, given the circumstances of this case where the agreed measure of damages was price less true value at the time of sale.  However the actual rental performance of tenants before and after settlement was relevant to that part of the valuation process which took into account contingencies weighing against the prospective receipt of above-market rents (Lee J par 38, first dot point.)

(vii)      Was the true value lower?

110               However, for the reasons given by Lee J (pars 36) the value the primary judge finally reached as a basis for his assessment of damages ($1.8 m) was open on the evidence and should not be disturbed on appeal. 

(viii)     Causation of Hanave’s loss

111               Counsel for the respondents argued on the cross-appeal that Moore J should have found that the negligence of Mr Burke, in his capacity as solicitor, broke the chain of causation between the TPA contravention by Jagar and the loss suffered by Hanave.

112               In my view, this argument is inconsistent with the decision of the Full Court and is not open to the respondents.  Kiefel J dealt with the question of Mr Burke’s carelessness in a passage to which I have already referred (see par 66 above).  The finding that loss suffered by Hanave was caused by Jagar within the meaning of s 82(1) of the TPA necessarily precludes any argument that Mr Burke’s carelessness (whether in his capacity as solicitor or as director of Hanave, or both) was the only cause of Hanave’s loss.

(ix)       Mitigation

113               Counsel for the respondents argued that Hanave failed to mitigate its loss because of its incompetent management of the property after settlement. As already explained, in the circumstances of this case damages are to be assessed by reference to the difference between sale price and true value at the time of sale.  If there was incompetence by Hanave after that date it would not have increased its loss assessed on that basis.  Strictly speaking, the argument has to be that Hanave should have done something, namely exercise competent management, and that in not doing so it failed to mitigate its loss.  But the true value of the property at the time of loss has been fixed without reference to the quality or otherwise of the post-settlement management.  So even if Hanave exercised the most astute management, the loss and consequent damages would remain the same.

(x)        Apportionment of contribution

114               Counsel argued that if Mr Burke had not breached his duty of care the subject of the misrepresentation would have been revealed.  However it can equally be said that if Jagar had not made the misrepresentation in the first place, any breach of duty on the part of Mr Burke would have caused no loss to Hanave.  I do not see such exercises as particularly helpful on this issue.  In the light of my earlier conclusion that both Jagar’s misrepresentation and Mr Burke’s negligence were effective causes (albeit not the only causes) of Hanave’s loss, an equal apportionment appears a rational conclusion.  In any event for the reasons given by the Full Court in Bialkower (at 13) it is doubtful that the general law of contribution authorises an unequal apportionment.

115               The appellants did not contend that the contribution of Mr Burke should have been only one-third on the basis that Mr Tressider should be treated as separately liable from Jagar, each attracting one-third liability.  Without expressing any concluded view, I would not, in the absence of argument, disturb his Honour’s finding on this point.

(xi)       Was the true value higher?

116               For the reasons already given, the value arrived at by Moore J was correct.

(xii)      Conclusion

117               Both appeal and cross appeal should be dismissed with costs.

Associate:

Dated:              18 August 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

LEHANE J:

118               I have had the advantage of reading, in draft, the judgments of Lee and Heerey JJ.  I need not repeat Heerey J’s account of the facts and the earlier course of this litigation.

119               I agree with Heerey J’s conclusions and reasons as to the existence of Mr Burke’s retainer, the scope of the retainer, the result of hypothetical inquiries by Hanave (I shall refer to the parties in the same way as Heerey J) and the causative effect of Mr Burke’s failure to advise.  Mr Burke’s acceptance that there was a retainer after exchange of contracts, combined with the evidence of other circumstances in which he had acted as solicitor for Hanave and the circumstance that, if Mr Burke was, as a director, the primary decision‑maker for Hanave, nevertheless Hanave was a separate legal entity with other directors and – importantly – beneficiaries (whose identity the evidence did not reveal) requires, in my view, rejection of the submission that, before exchange, there was no intention to enter into a legal relationship and therefore no contract of retainer.  And there is no basis in the evidence for a conclusion that the retainer was limited so as to exclude the requirement to take the steps which, according to the expert evidence, a competent solicitor, instructed to act on a purchase of a tenanted shopping centre, would take (and there is no doubt, in my view, that that evidence was properly admitted and taken into account: Boland v Yates Property Corporation Pty Ltd (1999) 167 ALR 575 at 588, 589).

120               I agree with Lee J as to the measure of damages.  The only aspect of the matter on which I wish to add some comments is the application of the principles of contribution.

121               The learned authors of Goff and Jones, The Law of Restitution (4^th ed, 1993) stated, as a general proposition, that contribution between those against whom damages claims are made is dealt with only under the Civil Liability (Contribution) Act 1978 (UK); contribution at general law is not available, there being no liability to meet a common demand.  The authors continue at p 304:

“Consequently, there was no contribution if tortfeasors independently caused damage to a third party, or if the liability of contractors to a third person arose from separate and independent contracts.”

(Compare the introduction to the chapter on contribution in the 5^th edition, 1998, pp 394‑398, especially at pp 396, 397).

122               Certainly it is true that neither the common law nor equity, before the intervention of statute, permitted a claim for contribution by one joint tortfeasor against another (see James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53 at 75 per Kirby J; Austral Pacific Group Ltd Pty v Airservices Australia [2000] HCA 39 at par 11 per Gleeson CJ, Gummow and Hayne JJ).  Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337 was a case at law.  An action, which included a count in trover, was brought by a plaintiff against two defendants; the plaintiff recovered damages the whole of which he levied on one of the defendants, who thereupon brought an action for contribution against the other.  He was non-suited.  The report continues:

“Lord Kenyon, Ch. J. said, there could be no doubt but that the nonsuit was proper: that he had never before heard of such an action being brought, where the former recovery was for a tort: that the distinction was clear between this case and that of a joint judgment against several defendants in an action of assumpsit: and that this decision would not affect cases of indemnity, where one man employed another to do acts, not unlawful in themselves, for the purpose of asserting a right.”

123               Lingard v Bromley (1812) 1 V & B 114; 35 ER 45 was a case in equity.  Sir William Grant MR explained the basis of the rule, at 116, 117 (ER at 45) as follows:

“Where entire Damages are recovered against several Defendants guilty of a Tort, a Court of Justice will not interfere to enforce Contribution among the Wrong‑doers ...”

124               I have quoted the reference, in Merryweather v Nixan, to contribution between defendants liable under a joint judgment in an action of assumpsit.  However, in the early cases claims for contribution appear to have been upheld only in cases where the plaintiff had performed (or had been called upon to perform) an obligation (particularly to discharge a liquidated claim) arising under a contract, which the defendant also was obliged to perform, not where the plaintiff had been found liable in damages for breach (or had been sued for breach) in circumstances where the defendant also was liable.  Spottiswoode’s Case (1855) 6 De GM & G 345 is a well known example; see also Holmes v Williamson (1817) 6 M & S 158; Marsack v Webber (1860) 6 H & N 1; Boulter v Peplow (1850) 9 CB 493; Lowe v Dixon (1885) 16 QBD 455.

125               Cases such as B P Petroleum Development Ltd v Esso Petroleum Co [1987] SLT 345 and Street & Halls v Retravision (NSW) Pty Ltd (1995) 56 FCR 588 take that aspect of the law no further.  B P Petroleum Development was concerned with the obligation of each of two parties, one arising under statute and the other contractual, to pay for damage caused by a vessel to berthing dolphins and underwater piles.  Each obligation was, in principle, indistinguishable from that of an insurer.  Similarly, in Street, the obligations in question were those of persons who had taken part in the management of an insolvent company: statute made them jointly and severally liable with the company, as principals, for certain of its debts.  In both B P Petroleum Development and Street, what was in question was a claimed right to receive contribution to performance of a common obligation, not in respect of a liability in damages for breach of a shared obligation.

126               At least in the cases of guarantors and insurers it became clear, of course, that it was no bar to a claim for contribution that obligations to make good the same loss arose out of separate contracts.  What was not clear, however, until the decision of the High Court in Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342, was that contribution might be required between insurers whose policies covered different but potentially overlapping classes of loss (in Albion itself, a workers’ compensation policy and a motor vehicle third party policy), but where both policies gave rise to an obligation to indemnify an insured against a particular loss sustained.  It is useful to quote reasonably fully from the judgment of Kitto J in Albion (with which Windeyer J agreed), where his Honour derived from the old authorities a general principle on which he based the conclusion that there should be contribution between the two insurers.  Kitto J said, at 350‑352 (footnotes omitted):

            “The general doctrine of contribution, as I have said, forms part of the common law.  It was applicable by Lord Mansfield in Godin v. London Assurance Co. and Newby v. Reed no less than by Lord Chief Baron Eyre when exercising the equitable jurisdiction of the Court of Exchequer in Dering v. Winchelsea (Earl).  This was because the basic concept was accepted by both law and equity as one of natural justice, as indeed it had been by the law of other countries since ancient times.  (The historically‑minded may care to consider, with Lord Watson’s reference to the maritime law of Rhodes in Strang, Steel & Co. v. A. Scott & Co, Mr. Justice Story’s Commentaries on Equity Jurisprudence, 3^rd English ed. (1920), arts. 490 et seq., and an article on the Rhodian Law in the Yale Law Journal (1909), p. 225.)  Lord Mansfield put the matter squarely on that ground:  ‘If the insured is to receive but one satisfaction, natural justice says that the several insurers shall all of them contribute pro rata, to satisfy the loss against which they have all insured’; and indeed Mr. Justice Park, in his work on Marine Insurance, had described the principle of contribution as a principle of natural justice: see Sir William Blackstone’s note to his report of Godin v. London Assurance Co.  The justification for the description may be seen from Dering v. Winchelsea itself and the notes to that case in White and Tudor’s Leading Cases in Equity, 9^th ed. (1928), vol. 2, pp. 488 et seq.  The principle proceeded, as Lord Redesdale said in Stirling v. Forrester which Lord Halsbury approved in Ruabon Steamship Co. v. London Assurance, ‘on a principle of law that must exist in all countries, that where several persons are debtors, all shall be equal’.  Lord Redesdale had observed that the principle was universal ‘that the right and duty of contribution is founded in doctrines of equity’; and the reference was not to doctrines peculiar to chancery but to doctrines of equity in the sense of ‘reason, justice and law’, the expression used by Martin B. in Marsack v. Webber.  The judgment in Dering v. Winchelsea itself had said that ‘If we take a view of the cases both in law and equity, we shall find that contribution is bottomed and fixed on general principles of justice’ – ‘founded on equality, and established by the law of all nations’ (to quote the same judgment as differently reported) – and it had gone on to show that law and equity were at one as to the nature of the right, though the doctrine of equality operated more effectually in a court of equity than in a court of law, and there were differences as to the mode and conditions of its application : see generally Halsbury’s Laws of England, 3^rd ed., vol. 14, pp. 492, 493, pars. 934, 935; vol. 22, pp. 266‑268, pars. 527, 528.  The right arises at law when ‘one of several persons has paid more than his proper share towards discharging a common obligation’:  Davies v. Humphreys; Dimdore v. Leventhal, and it arises in equity when a liability of one of several to pay more than his share has been ascertained: Wolmershausen v. Gullick; McLean v. Discount & Finance Ltd.; but for present purposes this difference is immaterial:  what is important is the reason, namely that payment by the one discharges not only himself but each of the others, and qui sentit commodum sentire debet et onus.

            What attracts the right of contribution between insurers, then, is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained; for that is the situation in which ‘the insured is to receive but one satisfaction’ (to use Lord Mansfield’s expression) and accordingly all the insurances are ‘regarded as truly one insurance’: Sickness and Accident Assurance Ltd. v. General Accident Assurance Corporation Ltd.”

127               It is, of course, entirely consistent both with that reasoning and with the result in Albion to conclude, as Lord Ross did in B P Petroleum Development, that parties may be subject to a common burden although the source of the obligation of one is of a different kind than that of the obligation of the other.  Thus, in Street, Gummow J said at 597:

“It would be taking too narrow a view of the matter and give insufficient weight to the preference equity has for substance to form to hold that there would be no common obligation if there were different ‘causes of action’ against the co‑obligors.”

128               It is necessary to turn to the question of contribution between persons liable to pay damages or compensation for breach of an obligation.  There is no doubt that a trustee who made good a loss resulting from a breach of trust could claim compensation from co‑trustees.  Lingard v Bromley is a case in which that principle was applied as between assignees in bankruptcy.  The assignees committed a breach of duty resulting in loss to the estate.  They were ordered to pay to the estate the amount of the loss together with interest and costs.  The plaintiff, one of the assignees, paid the amount for which both were liable; and he sought an account and contribution from the other.  It was argued for the defendants, at ER 45, that:

“The Proposition, that Contribution and Average constitute a common Head of Equity, where the Demand arises out of Contract, cannot be disputed: but its Application is denied, where a Party is charged with respect to a Tort.”

Sir Samuel Romilly replied, for the plaintiff:

“If this Case is to be determined upon the Distinction between Tort and Contract, the Consequences will be most prejudicial.  In Equity there is no such Distinction: Torts being only known at Law.  …’

129               The judgment of Sir William Grant MR begins, at ER 45:

“The first Defence made in this Case seems to me to be quite untenable. Where entire Damages are recovered against several Defendants guilty of a Tort, a Court of Justice will not interfere to enforce Contribution among the Wrong‑doers: but here is nothing but the Non‑performance of a civil obligation.”

130               Lingard v Bromley and Merryweather v Nixan suggest, as I have mentioned and as the High Court has recently pointed out, that there was a well-established rule that contribution would not be enforced between tortfeasors.  That might well have been based, to some extent, on a view of the nature of liability in tort which would not generally be accepted today.  The cases precede the development of the modern law of negligence; and, in the words of Professor Fleming (The Law of Torts, 9^th ed, 1998 at 3, 4), “the principal concern of the law of torts nowadays is with the casualties of accident, that is, of unintended harm.”  Gummow J acknowledged, in Street at 597, that “contribution involving a tortfeasor stands in a special position” which had made legislation necessary.  But the old authorities do not lay down any general rule that the mere circumstance that a shared obligation is a liability to pay damages or compensation for a civil wrong excludes rights of contribution, and the cases allowing contribution among defaulting trustees are inconsistent with any such rule.  There is a good deal to be said for the view expressed by Davies J in Jones v Mortgage Acceptance Nominees Ltd (1996) 63 FCR 418 that, in circumstances otherwise giving rise to rights of contribution, the fact that one or both of the parties was a tortfeasor should not exclude it: not, perhaps (see at 422), because equity follows the law, in the form of the statute, but because of changed perceptions of the nature of liability – or at least particular kinds of liability – in tort.  It is unnecessary in this case to pursue that topic further, however, because Mr Burke, against whom contribution is sought, is liable in contract even if he is also liable in tort; it is equally unnecessary to consider whether, in the light of authority, including Austral Pacific, it would be open to this Court to adopt the view expressed in Jones.

131               The cause of action under s 82 of the Trade Practices Act 1974 (Cth) for damage caused by contravention of s 52 is entirely statutory and not an action in tort: Bialkower v Acohs Pty Ltd (1998) 83 FCR 1.  The preceding analysis demonstrates, in my view, that there is nothing in the nature of liability for damages under s 82 which excludes it from being the subject of an order for contribution.  Although it was not necessary, ultimately, for the decision in Bialkower, the Full Court expressed the clear opinion, at 12, 13, that contribution under the general law might be ordered as between persons liable under s 82.  That decision followed a series of decisions on pleading and joinder issues in which single judges of the Court had refused to exclude the possibility that contribution might be ordered in such cases: Re La Rosa; ex parte Norgard v Rodpat Nominees Pty Ltd (1991) 31 FCR 83; Trade Practices Commission v Manfal Pty Ltd (No 3) (in liq) (1991) 33 FCR 382; Dorrough v Bank of Melbourne Ltd (1995) ATPR (Digest) 46‑152; Austotel Management Pty Ltd v Jamieson (1996) ATPR 41‑454.

132               The analysis demonstrates equally that where two persons share a common liability to make good the same loss, one by way of damages for breach of contract and the other under s 82, the fact that the liabilities arise from different causes of action does not exclude contribution.  Circumstances may exist, in particular cases where persons are liable under different causes of action, which exclude contribution or affect the operation of the principles.  That may be so, for example, if the measures of damages are different, giving rise, perhaps, to a question whether the loss for which each party is liable is not the same loss so that they are not subject to a common burden.  Equally, questions may arise where the liability of one party, but not the other, is reduced by reason of contributory negligence or where, as between the party suffering loss and one of the parties liable, there are offsetting or countervailing claims which do not affect the claim against the other party liable.  Equally, circumstances may exist which give one party liable a right of indemnification against the other.

133               In addition, I think, the analysis shows that the law has advanced beyond the stage where it is possible to limit rights of contribution to cases where a common liability arises from an (antecedent) common design to achieve a common end (cf K Mason and J W Carter, Restitution Law in Australia (1995), par 622).  It may be that cases where contribution is required between a corporation liable to pay damages under s 82 of the Trade Practices Act in respect of a contravention of s 52 of that Act and persons found to have been involved in that contravention within the meaning of s 75B would fit within some such limitation.  But it is not easy to fit BP Petroleum Development or Street within it.  Nor is it easy to see why any such limitation is required.  What the principle expounded in Albion requires, in my view, is that two or more persons are each liable in respect of the same debt or to make good the same loss sustained by a third party, in circumstances where discharge of the obligation by one relieves the other(s).  The object is to ensure that equity as between persons liable in those circumstances is not defeated by the caprice of the person entitled to the benefit of the obligation.  That principle is the basis of the recent decision of Foster AJ, to which we were referred, in GIO Finance Ltd v Cockburn [2000] NSWSC 362; see particularly the passage quoted by his Honour from Story, Equity Jurisprudence (3^rd ed, London, par 493) at par 25.  Although the decision in Capita Financial Group Ltd v Rothwells Ltd (1993) 30 NSWLR 619 might be explained on the basis of a narrower principle, what I have said is, I believe, consistent with the judgment of Priestley JA, with whom Kirby P and Cripps JA agreed, in that case.  There is nothing, in my view, to the contrary in the decision of the Full Court (cited by Mason and Carter in the passage to which I have referred) in Cummings v Lewis (1993) 41 FCR 559: in that case, no common obligation was established.

134               There is authority for the proposition that contribution may be claimed only by a party who has fully discharged, or has been adjudged liable fully to discharge, the common obligation: see the cases cited in Meagher, Gummow and Lehane, Equity – Doctrines and Remedies (3^rd ed, 1992, par 1020).  The purpose is to avoid multiplicity of actions.  That can be no objection where, if an action is brought against A by a third party for the purpose of recovering judgment for the full amount of an obligation A shares with B, A seeks contribution from B by cross-claim in the same proceeding.  Nor, in my view, is it an objection to such a claim by A that the liability of both A and B has not yet been established by judgment.  Certainly many of the old cases involved claims for contribution between parties against all of whom judgment had been entered, contribution being sought in circumstances where the successful plaintiff proceeded to enforce the judgment against one only of them.  Bialkower is a similar case, as also is Jones and, perhaps, GIO Finance.  But no such principle applies in cases involving co‑sureties or co‑insurers (Albion is itself sufficient authority for that) and there is no obvious reason why a common liability in damages should be regarded differently.  Of course, the liability of the party from whom contribution is sought must be established; and it must be established that it is a liability to make good the same loss for which the party claiming contribution is responsible.  There is no reason, however, why that cannot be done in a proceeding, such as the present, where all necessary parties are joined.  That, after all, is the basis on which cases such as Austotel Management proceed.

135               This case has proceeded on that footing.  It has been found that Hanave is entitled to recover from Jagar and Mr Tressider, under s 82 of the Trade Practices Act, the amount of the loss or damage it has suffered by reason of Jagar’s infringement of s 52.  It has also been found that Mr Burke is liable in damages for his breach of the contract of retainer; that the loss caused by the breach of contract is the same loss as that resulting from the conduct infringing s 52; and, in the circumstances, that the measure of damages payable in respect of that loss under s 82 and in contract is the same.  The trustee cases (of which Lingard v Bromley is a useful example) make it clear that there is no basis for refusing or adjusting contribution by reference to perceived degrees of culpability: the doubts on that score expressed by the Full Court in Bialkower at 13 were, with respect, fully justified.  That Mr Burke is liable because, in breach of his contractual duty of care, he failed to take steps which might (incidentally) have uncovered Jagar’s infringing conduct does not put him in a position analogous to that of a guarantor of Jagar’s principal obligation.  This is a case where Hanave, being entitled to select its victim, has for understandable reasons selected Jagar and its directors, not Mr Burke.  But Jagar and Mr Tressider should not suffer, Mr Burke also being responsible for the loss for which they are liable, simply because Hanave has made that choice.

136               Contribution would not be required, of course, if it were established that Jagar was obliged to indemnify Mr Burke.  In my view, however, Mr Burke is not entitled to an indemnity simply because it was through him, as the controller of Hanave, that Hanave was led to act to its detriment by the misleading conduct of Jagar.  As Hanave’s solicitor, Mr Burke had, and breached, duties which he owed irrespective of Jagar’s conduct.  It is not theoretically impossible that a solicitor in the position of Mr Burke could maintain a claim for an indemnity against a contravener of s 52, such as Jagar.  But that would require, I think, that the solicitor (here, Mr Burke) establish that he suffered loss, resulting from his liability for breach of duty, by reason of the contravening conduct.  That causal connection is not established, in this case, merely because Mr Burke caused Hanave to act on the basis of the conduct and thus to suffer loss.  It is one thing to say that both Jagar’s contravening conduct and Mr Burke’s breach of duty were effective causes of the loss suffered by Hanave; it is quite another to say that Jagar’s contravening conduct was, relevantly, the cause of the loss sustained by Mr Burke through his liability for breach of his duty as Hanave’s solicitor.  In any case, Mr Burke did not clearly plead, appears not to have sought to make out at trial and certainly did not seek to make out on appeal any such case.

137               Because both Jagar and Mr Tressider on the one hand and Mr Burke on the other are equally liable for the full amount of the loss sustained by Hanave, the contribution required by equity is equal contribution.  There was no suggestion that, if that were so, the primary judge was in error in holding that the amount for which Mr Burke was liable was one half of the damages established by Hanave.  Accordingly, his Honour’s decision in that respect should not be disturbed.

138               I agree with the orders proposed by Heerey J.

Associate:

Dated:              18 August 2000