International Trade amp Business Law Annual Vol VIII

International Trade
&
Business Law Annual


Information For Contributors
International Trade & Business Law Annual is the official publication of the
Australian Institute of Foreign and Comparative Law of The University of
Queensland, Australia. The Annual acknowledges the financial support of
Mayer, Brown, Rowe & Maw, Lawyers, Chicago. The Annual is published by
Cavendish (Australia) Pty Ltd.
International Trade & Business Law Annual publishes articles, comments and
book reviews dealing with international commercial law, foreign law and
comparative law. This issue of the Annual may be referred to as (2002) 7
ITBLA.
International Trade & Business Law Annual welcomes the submission of
manuscripts for consideration by the editors with a view to publication.
Manuscripts should be sent to:
The Editors
International Trade & Business Law Annual
The Australian Institute of Foreign and Comparative Law
TC Beirne School of Law
The University of Queensland
St Lucia, Qld 4072
Australia
Telephone: 61 07 3365 3053
Facsimile:
61 07 3365 1466
Email:
International Trade & Business Law Annual is a fully refereed publication. At

present, the Annual is published once a year. Contributors are requested to
comply with the style guide, a copy of which is available on request from the
editors. A manuscript should not normally exceed 10,000 words and should be
an unpublished work or a work over which the contributor has copyright. The
manuscript should be typed, double spaced, on one side only of A4 paper.
Footnotes should be numbered consecutively through the article and should
appear at the end of each page. Contributors are required to submit a hard copy
and a copy on a 3½ inch disk (Word 7) or CD-ROM


International Trade
&
Business Law Annual


First published 2003 by Cavendish Publishing (Australia) Pty Ltd
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ISBN 1-87690-515-8
1 3 5 7 9 10 8 6 4 2
Printed and bound in Great Britain


International Trade & Business Law Annual

Volume 8 2003

Editors
Roger Jones, Partner, Mayer, Brown, Rowe & Maw, Chicago
Gabriël A Moens, Garrick Professor of Law, TC Beirne School of Law,
University of Queensland, Brisbane

Student Editor
Radha Ivory

Book Review Editor
Peter McDermott, Senior Lecturer in Law, TC Beirne School of Law, University
of Queensland, Brisbane

Editorial Advisory Board
Nicholas Aroney, Senior Lecturer in Law, TC Beirne School of Law, University
of Queensland, Brisbane
Peter Gillies, Professor of Law, Macquarie University, Sydney
Peter McDermott, Senior Lecturer in Law, TC Beirne School of Law, University
of Queensland, Brisbane
John O Honnold, Emeritus Professor of Law, University of Pennsylvania
Albert H Kritzer, Pace University, New York
Gabriël A Moens, Garrick Professor of Law, TC Beirne School of Law,
University of Queensland, Brisbane
Bruce Purdue, Asian Development Bank, Manila, The Philippines
The Hon Kevin W Ryan QC, former Judge, Supreme Court of Queensland


vi

International Trade & Business Law

Alice ES Tay, Challis Professor of Jurisprudence, University of Sydney;
President, Australian Human Rights and Equal Opportunity Commission
Tang Thanh Trai Le, Emeritus Professor of Law, University of Notre Dame,
Indiana
Hans Van Houtte, Professor of Law, University of Leuven, Belgium
Geoffrey de Q Walker, Emeritus Professor of Law, formerly Dean and Head, TC
Beirne School of Law, University of Queensland, Brisbane

Contributors
Peter Gillies, Professor of Law, Division of Law, Macquarie University, Sydney
Alan Davidson, Lecturer, TC Beirne School of Law, University of Queensland,

Brisbane
Margaret Stephenson, Senior Lecturer, School of Law, TC Beirne School of
Law, University of Queensland, Brisbane
Darren Peacock, University of Cambridge, UK
Kate Brown, Freshfields Bruckhaus Deringer, Paris
Quan Hien Nguyen, Consultant, eBusiness Management Consulting Ltd,
Brisbane
Ann Black, Lecturer, TC Beirne School of Law, University of Queensland,
Brisbane
J Clifton Fleming, Jr, Associate Dean, Ernest L Wilkinson Professor of Law, J
Reuben Clark Law School, Brigham Young University, Provo, Utah
Ted Tzovaras, Managing Partner, Tzovaras Lawyers, Sydney
Alun A Preece, Lecturer, TC Beirne School of Law, University of Queensland,
Brisbane
Daril Gawith, Associate Lecturer, TC Beirne School of Law, University of
Queensland, Brisbane


International Trade & Business Law Annual is sponsored by the Tax
Controversy Practice of the law firm of Mayer, Brown, Rowe & Maw.
The tax controversy group consists of 35 lawyers, including 20 partners, with
broad experience representing corporate taxpayers in audits, IRS appeals and
competent authority, as well as in the Tax Court, the Court of Federal Claims
and other federal courts. They also have a highly regarded appellate tax practice.
Collectively, Mayer, Brown, Rowe & Maw’s attorneys have litigated more than
100 tax cases. The International Tax Review recently ranked five of the firm’s
partners among the leading transfer pricing advisors in the US—more than any
other similarly sized law firm—and The National Law Journal named the head
of practice, Joel Williamson, one of the top 20 tax lawyers in the US.
Mayer, Brown, Rowe & Maw has litigated several significant Tax Court cases

concerning intangible assets (Tele-Communications, Inc, RJR Nabisco), transfer
pricing (Westreco (Nestlé), Seagate, National Semiconductor, United Parcel
Service, Inc), investment in US property and offshore manufacturing activities
(The Limited), income sourcing issues (Intel) and foreign tax credits
(Continental Bank, Riggs Bank).
The tax appellate practice, led primarily by Tom Durham and Roger Jones,
has had a succession of noteworthy victories in the Courts of Appeals on behalf
of The Limited, Riggs Bank, Saba Partnership (Brunswick Corporation),
Bankers Trust, Nestlé, Tele-Communications, Inc, Continental Bank and United
Parcel Service, Inc. In the US Supreme Court, they served as lead counsel in the
Boeing Corporation case and wrote an amicus brief in the Newark Morning
Ledger case.
The group’s attorneys have extensive experience in representing clients in
large case audits, answering IDRs, dealing with IRS agents and formulating
overall audit strategies. They handle many cases in the IRS Appeals Office,
including several large cases involving customer based intangibles, transfer
pricing issues, and corporate issues such as like-kind exchanges and the
deducibility of interest on debt incurred to redeem stock.


viii

International Trade & Business Law

Mayer, Brown, Rowe & Maw frequently advise multinational enterprises with
respect to structuring their international transfer pricing and complying with
documentation requirements. In addition to significant transfer pricing
experience in audits at IRS Appeals and in litigation, they have helped many
corporate taxpayers in obtaining Advance Pricing Agreements and in competent
authority proceedings. Their Advance Pricing Agreement practice is headed by a

former IRS Special Assistant to the Chief Counsel, Charles Triplett, and the
former Treasury Department International Tax Counsel, James Mogle.
Mayer, Brown, Rowe & Maw’s European practice encompasses offices in the
UK, France and Germany. In the UK, the tax controversy practice is one of the
most high profile in the City of London. Some of the cases have been landmark
in nature and heard at every level of the UK courts (including the House of
Lords) as well as the European Court of Justice. Taxpayers represented have
included EMI, Kingfisher, Granada Thorn, Zurich Financial Services, Prebon
Marshall Yamane and M & G.


Contents

Articles
Assessment of Damages Under the Australian Trade Practices Act
Peter Gillies
Fraud, the Prime Exception to the Autonomy Principle in Letters of Credit
Alan Davidson

1
23

Canadian Provincial Legislative Powers and Aboriginal Rights Since
Delgamuukw: Can a Province Infringe Aboriginal Rights or Title?
Margaret Stephenson

57

Avoidance and the Notion of Fundamental Breach Under the CISG:
An English Perspective

Darren Peacock

95

The Availability of Court-Ordered Interim and Conservatory Measures
in Aid of International Arbitration in the United States of America
and France—A Comparative Essay
Kate Brown

135

Cross-Border Transactions in Vietnam and the Vietnam-US Bilateral
Trade Agreement
Quan Hien Nguyen

159

Finding the Equilibrium for Dispute Resolution: How Brunei Darussalam
Balances a British Legacy With Its Malay and Islamic Identity
Ann Black

185

American Offshore Business Tax Planning: Can Australian Lawyers
Get a Piece of the Action?
J Clifton Fleming, Jr

215

Comments

The Rise and Fall of National Sovereignty
Alun A Preece
A Comparison of Model Laws as a Starting Point for the Development
of an Enforceable International Consumer Protection Regime
Daril Gawith

229

247


x

International Trade & Business Law

The European Union’s Approach to Legal Non-Retrospectivity:
Are There Problems for International Businesses?
Des Taylor
The New Belgian Legislation on Euthanasia
Walter De Bondt

275
301

International Arbitration Moot
The Willem C Vis International Commercial Arbitration Moot 2002–2003
Sabine Erkens, Ryan Allan Goss, Andrew Edward Hodge,
Marion Alice Jane Isobel, Benjamin John Jackson,
Siobhan Maree McKeering, Elena Christine Zaccaria,
and Gabriël Moens

311

Book Reviews
Moens and Biffot: The Convergence of Legal Systems in the 21st Century:
An Australian Approach
Alun A Preece

427

Dal Pont: Law of Agency
Douglas Hassall

429

Wei: Investing in China: The Law and Practice of Joint Ventures
Oanh Thi Tran

431

Edwards and Waeldend: Law & the Internet: A Framework for Electronic
Commerce
Peter Walsh

433

Bryde Andersen: IT-Retten
Henrik Norsk Hoffmann

434

Gillies: Business Law
Sabina Langenham

436

Jack, Malek and Quest: Documentary Credits—The Law and
Practice of Documentary Credits Including Standby
Credits and Demand Guarantees
Lindsey Alford JD

437

Book Notices
Watson: Recollections of a Bleeding Heart (A Portrait of Paul Keating PM) 441
Holborn: Sources of Bibliographic Information on Past Lawyers

441


Assessment of Damages Under the Australian
Trade Practices Act

Peter Gillies1

Introduction
The Trade Practices Act provides for recovery of damages 2 by persons in
defined cases of contravention of the Act. Sections 82 and 87 are the core
provisions.
Section 82 provides that a ‘person who suffers loss or damage by conduct of

another person that was done in contravention of a provision of Parts IV, IVB or
V or s 51 AC may recover the amount of loss or damage by action against that
other person or against any person involved in the contravention’.
Section 87 provides for the recovery of damages by a person who ‘has
suffered, or is likely to suffer, loss or damage by conduct of another person that
was in contravention of a provision’ in one or more of the stipulated Parts in the
Act (see sub-ss (1), (1A), (1B) and (2)). (Section 87 also provides for the
making of such other remedial orders, as the court considers appropriate.) The
compensation to be awarded to ‘the person who suffered the loss or damage’ is
equivalent to ‘the amount of the loss or damage’ (s 87(2)(d)). This language
parallels that used in s 82. Section 87 has rarely been used to ground an award
of damages.3
As has often been observed, s 82 (parallelling the common law) requires
proof that the defendant has caused actual damage (although this need not be
economic in nature),4 while s 87 is satisfied with proof of causation either of
actual damage or the likelihood of damage.5

1
2
3
4
5

Professor of Law, Division of Law, Macquarie University, Sydney.
See Atkin, LJW, ‘“Loss or damage” under section 82 of the Trade Practices Act’ (1989) 1 Bond
Law Review 1, 107; D Skapinker, “‘Other remedies” under the Trade Practices Act—the rise and
rise of section 87’ (1995) 21 Monash Law Review 188.
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2000) ATPR 41–779 at 41–203 (McPherson,
Pincus and Thomas JJA, Moynihan SJA and Atkinson J, noting that the section has only been resorted
to in order to ground pecuniary payments on two occasions, including in this case).

See Nixon v Slater and Gordon (2000) ATPR 41–765 at 41–012 (Merkel J, in a case where ss 52
and 82 were used to ground damages for misleading and deceptive conduct causing damage to
reputation).
Wardley Australia Ltd v WA (1992) 175 CLR 514 at 527, 545, 551; Sellars v Adelaide Petroleum NL
(1994) 179 CLR 332 at 349; C-Shirt Pty Ltd v Barnett Marketing and Management Pty Ltd (1997)
ATPR (Digest) 46–172 at 54–381; Tantipech v IOOF Australia Trustees (NSW) Ltd (1998) ATPR


2

International Trade & Business Law

Two issues raised by these provisions will be examined—causation of loss or
damage, and assessment of damages.

Causation of loss or damage
Overview
Both ss 82 and 87 vest an entitlement to damages in the party who has suffered
loss or damage (or, additionally in the case of s 87, who is likely to suffer loss
or damage) ‘by conduct of another person’ that contravened a provision in the
Act. The word ‘by’ (which is ‘a curious word to use’) imports a requirement
that the defendant’s conduct has caused the loss or damage complained of.6 This
concept of causation is not defined in the Act, but it may be viewed as ‘taking
up the common law practical or commonsense concept of causation’ endorsed in
the High Court’s decision in March v E & MH Stramare Pty Ltd,7 except to the
extent that it is modified or supplemented by provisions in the Act.8
The March concept of causation will be commented on immediately below.
Its application in the context of ss 82 and 87 raises a number of issues. An
obvious one is whether the older causation principles have a role in determining
ss 82 and 87 issues of causation.

The March v Stramare concept of causation
The courts have long sought to limit criminal and civil liability at the level of
causation, recognising that an expansive concept of causation—one attributing
causation too readily—will make liability too expansive. Thus, it has been
remarked that the legal concept of causation differs from those concepts of
causation encountered in such disciplines as science and philosophy because,
at the end of the day, legal causation is ‘primarily about attributing
responsibility’.9
The leading High Court decision on the concept of causation is March v E &
MH Stramare Pty Ltd,10 which was a torts case. The concept is easily stated: in

6
7
8
9
10

41–614; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 509, 513, 545; Callings
Construction Co Pty Ltd v Australian Competition and Consumer Commission (1998) 152 ALR
510 at 522, 532ff.
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525 (Mason CJ, Dawson, Gaudron
and McHugh JJ).
(1991) 171 CLR 506.
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525.
Rosenberg v Percival (2000) 178 ALR 577 at 596.
(1991) 171 CLR 506.


Assessment of Damages Under the Australian Trade Practices Act

3

most cases the determination of whether event A caused event B to occur is
‘one of fact and, as such, to be resolved by the application of commonsense’.11
This broad concept of the process of determining an issue of causation has been
discussed or approved on numerous occasions since.12 Most of these decisions
have dealt with causation in the torts context, but they do not in terms limit
their remarks on this topic to torts.
The March formula grapples with the inherent difficulties of trying to
resolve issues of causation by resort to more refined formulas, such as the
causa sine qua non test. In the words of McHugh J, the courts should no
longer ‘sanction the use of formulas which allow tribunals of fact, under the
guise of using commonsense, to determine legal responsibility by applying
their own idiosyncratic values’. 13 Of course, an explicit commonsense
approach would also permit the court to apply its own idiosyncratic values,
but the use of a broader test will at least have the virtue of making the
approach more transparent, by emphasising that the determination of causation
is an almost purely factual exercise, subject to the broadest of legal guidelines,
namely that the determination of causation is a matter of practical
commonsense, and that it is to be determined objectively and not subjectively
in most (but not all)14 cases.
Does acceptance of the March approach to causation make the older formulas
redundant? These include the causa sine qua non, or ‘but for’ test, the notion of
the novus actus interveniens and its associated metaphor of the ruptured causal
chain, and foreseeability. Does March displace the more intricate doctrines
associated with causation in contract and tort?
The traditional test of causation in contract, entrenched in Hadley v
Baxendale15 (that is, that the defendant is liable for those losses which arise
naturally in the usual course, or which on an objective view were within the

reasonable contemplation of the parties at the time of contracting as the
probable outcome of breach), has survived March.16

11
12
13
14

15
16

Ibid at 515, per Mason CJ. Similarly, see the comments of Deane J at 523, Toohey J at 525 and
McHugh J at 533.
Medlin v State Government Insurance Commission (1995) 182 CLR 1; Marks v GIO Australia Holdings
Ltd (1998) 196 CLR 494 at 512; Chappel v Hart (1998) 195 CLR 232 at 243–55, 268–69.
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 533.
Where a patient alleges that he or she suffered avoidable injury resulting from a medical procedure
because he or she was not warned by the doctor or dentist of the risks inherent in the procedure,
the test of whether the patient would have undergone the treatment had the warning been given
is a subjective and not an objective one, ie, the question is whether the particular patient would
have proceeded notwithstanding the warning: see Rogers v Whitaker (1992) 175 CLR 479; Rosenberg
v Percival (2000) 178 ALR 577 at 582 (McHugh J), 597 (Gummow J), 616 (Kirby J).
(1854) 9 Ex 341.
Such is assumed in, eg, Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 163 ALR 611 at 623,
626 (McHugh J).


4

International Trade & Business Law

The ‘reasonable foresight’ test approved in the torts context in The Wagon
Mound (No 1) and (No 2),17 pursuant to which loss or damage is caused by a
tortious act provided that its occurrence was, on an objective view, reasonably
foreseeable as a possible consequence of this act, has been modified.
‘Reasonable foresight’ is no longer a test of causation; rather, it merely ‘marks
the limits beyond which a wrongdoer will not be held responsible for damage
resulting from his wrongful act’.18 In these terms, the ‘reasonable foresight test
is not an exclusive test—at best it is a negative test of causation. It cannot by
itself establish causation, but where causation is otherwise prima facie
established, it can exclude it. In this tangential way, it operates to make the
distinction between direct consequences, which are attributable to the
contravening conduct in question, and the remote consequences, which are
not.19
The ‘but for’ test is presently viewed by the courts as not being a
comprehensive or exclusive test. 20 It is, however, useful if applied in a
commonsense way,21 and it can operate as an important negative criterion, but
not as an exclusive test.22 One obvious problem is that where there are two or
more causal events operating, each of them sufficient to cause the loss, the ‘but
for’ test logically operates to exclude each as a legal cause.23
The concept of novus actus interveniens can also be of use in evaluating
causation, but likewise it can operate anomalously. In particular, it will often be
unclear as to whether the first act has been rendered causally ineffective by the
new act, or whether the first act continues to operate as an effective concurrent
cause. The novus actus criterion, that is, cannot reliably yield sensible outcomes
on a consistent basis.24
The present state of the law of causation, certainly in the torts context, is that
the March commonsense analysis governs the determination of legal causation,

17

18

19
20

21
22
23
24

Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] AC 388; Overseas Tankship
(UK) Ltd v The Miller Steamship Co Pty Ltd [1967] 1 AC 617.
See Mason CJ in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 510, citing Chapman
v Hearse (1961) 106 CLR 112 at 122 and Mahoney v J Kuschich (Demolitions) Pty Ltd (1985)
156 CLR 522 at 528 (not an exclusive test of causation). Likewise, see March v E & MH Stramare
Pty Ltd (1991) 171 CLR 506 at 524 (Toohey J), 525 (Gaudron J) and 534 (McHugh J).
That reasonable foresight still has a role is reflected in comments by Kirby and Callinan JJ in the
post-March decision of Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 163 ALR 611 at 645,
deciding that the defendant was liable for a loss which was ‘readily foreseeable’.
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 522 (Deane J); Medlin v State Government
Insurance Commission (1995) 182 CLR 1; Marks v GIO Australia Holdings Ltd (1998) 196 CLR
494 at 512 (McHugh, Hayne and Callinan JJ); Chappel v Hart (1998) 195 CLR 232 at 255 (Gummow
J), 269 (Kirby J), 283 (Hayne J); Kenny, ibid at 618 (Gaudron J).
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 533 (McHugh J).
See the comments in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 522 (Deane J);
Medlin v State Government Insurance Commission (1995) 182 CLR 1; Chappel v Hart (1998) 195
CLR 232 at 283 (Hayne J).
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506 at 516 (Mason CJ), 523 (Deane J).
See March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 531, 535 (McHugh J, noting that
it is a rule of policy and not a test; and that its application involves a value judgment).

Assessment of Damages Under the Australian Trade Practices Act

5

with the older, familiar tests now relegated to the status of guidelines (to the
extent that they were ever more than this)—not comprehensive tests but, at best,
prima facie negative tests.
Given the comprehensive tenor of the March formula, the distinction between
‘direct’ and ‘remote’ outcomes—with the latter not being within the province of
events caused in law—is no more or less relevant than hitherto. It never was, of
course, a legal test of causation; rather, it does no more than raise the question
of where the boundaries of legal causation end.

Does the March analysis apply to the issues of causation of loss
or damage for the purposes of the Trade Practices Act?
To judge from the cases, issues of causation in the ss 82 and 87 context arise
infrequently. The High Court in Wardley Australia Ltd v Western Australia25
expressed prima facie support for the application of the March concept of legal
causation to s 82(1), ‘except to the extent [it] is modified or supplemented
expressly or impliedly by the provisions of the Act’.26 It was not necessary to
resolve the issue in Wardley. In Marks v GIO Australia Holdings Ltd,27 members
of the High Court noted in an obiter comment that the ‘but for’ test of causation
had been found wanting in other contexts (citing March), and that ‘it may well
be that it is not an exclusive test of causation’ in the context of a claim for
damages under s 52 in conjunction with s 82.28
Logically, the March analysis does apply to the determination of issues of
causation in the ss 82 and 87 context. The fondamental premise of the March
analysis is that causation cannot be resolved by a specific and conclusive

formula; instead, determination is a factual and discretionary process involving
practical commonsense. Exactly the same considerations apply to the
determination of causation for the purposes of a statutory remedy.
A practical instance of resolving an issue of causation for the purposes of s
82 is encountered in Marks v GIO Australia Holdings Ltd. The High Court
held that where borrowers were induced to enter into a loan contract after a
misrepresentation as to future changes in the applicable interest rate, they
suffered no loss in law (that is, none was caused), given that the proven
circumstances were such that they would have borrowed the money in any
event, and that they would not have been able to enter into an alternative
agreement that was more favourable. As has just been noted, several members
of the court commented on the limitations of the ‘but for’ test as a conclusive
test. They did not resolve the instant issue of causation by reference to it,

25
26
27
28

(1992)
Ibid at
(1998)
Ibid at

175 CLR 514.
525 (Mason CJ, Dawson, Gaudron and McHugh JJ).
196 CLR 494.
513.

6

International Trade & Business Law

although had they done so the outcome would have been the same. Instead,
their reasoning was consistent with the broader March analysis: causation was
to be assessed objectively, not by reference to the hopes or expectations of a
party. The fact that a misled party (as here) may have thought that it was to
obtain some advantage from the transaction was not relevant, in a case where
the ‘contravening conduct has left the party…no worse off than it was before
the contravention occurred’.29 In this case, the misled parties had ‘suffered and
will suffer no loss or damage as a result of the misleading and deceptive
conduct’, with the result that no order could be made under ss 82 or 87.30
Traditional common law tests of causation (such as that applied in contracts
by Hadley v Baxendale) have excluded consequential losses which are beyond
reasonable foresight. Are losses of his type causally significant for the purposes
of ss 82 and 87, and thus compensable? The question is particularly pertinent
given that the most litigated provision in the Act, that is, s 52, imposes strict
liability. The March commonsense principle may be relied upon, but there may
well be a continuing explicit role for the application of the ‘reasonable
foresight’ test as a negative, rather than a comprehensive or inclusive test of
causation.31

Other aspects of causation
Concurrent causes
At common law, it is well established that the defendant’s act does not have to
be the sole cause of the loss complained of. If it is a material, although
concurrent cause, and it otherwise fulfils the legal requirements of causation,
it is legally sufficient. There is no reason why an issue of concurrent causation
for the purposes of ss 82 and 87 should be different; a proposition recognised

in the cases. The formulations differ as they do in the common law
authorities: a concurrent cause is a legally sufficient cause provided that it is a
‘real, essential and substantial’ cause of the loss (the restrictive test), or
perhaps it is sufficient if it plays some part, even if only a minor part, in
contributing to the loss (the expansive test);32 it is a sufficient cause provided
29
30
31

32

Ibid at 514, 515 (McHugh, Hayne and Callinan JJ).
Ibid at 516.
Note the comment in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526, per
Mason CJ, Dawson, Gaudron and McHugh JJ, raising the issue of whether the condition of
foreseeability applicable to claims for consequential damages for negligent misrepresentations
inducing the purchase of property, is applicable to a claim for consequential damage under s 82(1).
They did not consider that it was necessary to resolve it on this occasion. If s 52 was relied upon
to ground a claim for damages in a case where a defendant was alleged to have caused a loss by
negligently inducing the plaintiff to enter into a contract for purchase, the common law requirement
of reasonable foresight that governs determination of whether a duty of care existed in the first
place would not govern application of s 52, given that the provision imposes strict liability.
See Australian Protective Electronics Pty Ltd v Pabflow Pty Ltd (1996) ATPR 41–524 at 42–737
(Parker J), and note the cases cited there.


Assessment of Damages Under the Australian Trade Practices Act

7

that it had some substantial rather than negligible effect;33 or it is sufficient if
it was a real and effective cause.34
Can the plaintiff ’s own conduct rupture the causal chain?
On the assumption that a causal link between the defendant’s conduct and the
plaintiff’s loss or damage can otherwise be established, can the plaintiff’s
conduct—most obviously, his or her failure to protect his or her own interests—
have the consequence that the causal does not exist in law? To employ the
familiar (if non-technical) metaphor—is the causal chain ruptured?
In practice, the issue arises in situations of misrepresentation which induces a
party to act in such a way that a financial loss is suffered, as in the classic s 52
case of a misrepresentation inducing purchase. In an extreme case, where the
misrepresentee knows that the representation is false, or learns of its falsity
before contracting, the situation is not one of operative misrepresentation, and
the causal link is not present even prima facie. The more problematic case is
one where, perhaps, the misepresentee is negligent in protecting his or her
interests.
In this latter class of case, the authorities support the proposition that in an
extreme case the misrepresentee’s lack of care may rupture the causal chain;
but the hurdle for the plaintiff is very high. On one formulation, if the facts
are that ‘an applicant is so negligent in protecting his own interests’, with the
result that a proper view is that ‘the representation complained of was not in
the circumstances a real inducement to his entering into a contract’, then ‘the
element of causation between the misrepresentation and damage will have
been severed by the intervention of the negligence of the applicant’.35 Similar
sentiments are found in other cases in this context.36 In none of them was the
plaintiff’s alleged negligence sufficient to destroy any causal link otherwise
apparent. In Campomar Sociedad, Limitada v Nike International Ltd,37 a Full
Bench of the High Court confirmed that there was no general proposition of
law that ‘intervention of an erroneous assumption between conduct and any
misconception destroys a necessary chain of causation with the consequence

that the conduct itself cannot properly be described as misleading or deceptive
or as being likely to mislead or deceive’. 38 The case involved a claim of
passing off and s 52, it being alleged that the defendant had used a trade mark

33
34
35
36

37
38

Como Investments Pty Ltd (In Liq) v Yenald Nominees Pty Ltd (1977) ATPR 41–550 at 43–619
(Burchett, Ryan and RD Nicholson JJ).
Embo Holdings Pty Ltd v Camm (1998) ATPR (Digest) 46–184 at 50–333 (Millane JR).
Argy v Blunts & Lane Cove Real Estate (1990) ATPR 41–015 at 51–281 (Hill J).
O’Hara v Williams (1996) ATPR (Digest) 46–156 at 53–322; Embo Holdings Pty Ltd v Camm (1998)
ATPR (Digest) 46–184 at 50–333 (Millane JR); Hill v Tooth & Co Ltd (1998) ATPR 41–649 at
41–219. Pavich v Bobra Nominees Pty Ltd (1988) ATPR (Digest) 46–039; and see Henville v Walker
(2001) 206 CLR 459.
(2000)169 ALR 677.
Ibid at 705, citing Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 352 (Deane
and Fitzgerald JJ).


8

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in marketing goods with the consequence that the prospective purchasers of

the defendant’s goods had been misled into thinking that the goods were
manufactured and marketed by the applicant. One of the issues raised was the
familiar one of what test of believability was to be applied in a fact situation
where s 52 was relied upon to ground liability where the target of misleading
conduct was a class of consumers. Is it sufficient for liability that
unreasonably gullible members of the class would have been misled, or is the
test more robust? The formulas tend to revolve around notions of the ordinary,
or reasonable, members of the class. This is reflected in a passage in
Campomar, one which also recognises that in very unusual cases extreme
credulity (and by implication, gross negligence in failing to protect one’s
interests) may destroy an otherwise extant causal link:
…in an assessment of the reactions or likely reactions of the ‘ordinary’ or
‘reasonable’ members of the class of prospective purchasers of a mass-marketed
product for general use, such as athletic sportswear or perfumery products, the court
may well decline to regard as controlling an application of s 52 those assumptions
which are extreme or fanciful.39

(In the instant case, the court held the trial judge was not wrong in finding that
the conduct in question was misleading.)
The passage deals with the assessment of the reactions of a class of
consumers; but it is consistent with earlier authority that when the misleading
conduct targets an individual or a smaller group in the context of a specific
transaction, an extreme or fanciful reaction from the target—such as might
happen where the latter is grossly neglectful of his or her own interests—can
dissipate a prima facie causal link. The conclusion that this has happened will
rarely be drawn, as the history of litigation in the ss 52, 82 class of case makes
clear. This is because these provisions reflect a public interest in preventing
misleading and deceptive conduct in trade or commerce.40 Thus in the average
case, attributing ‘a certain level of rashness or carelessness’ to an applicant will
not dispel a finding of causation where the facts clearly show a ‘sufficient nexus

between the misleading and deceptive conduct and damage’ to establish liability
under s 52 and damages under ss 82 or 87.41
As a consideration of this class of cases reflects, issues of causation for the
purposes of s 52 and s 82 (and s 87) respectively, tend to merge. In theory they
are separate: where s 52 is concerned, the issue is whether the misleading or
deceptive conduct (or conduct likely to mislead or deceive) caused the person
targeted to act in error, while the s 82 causation issue is whether there is a
causal link between the target’s acting in error and the loss or damage
complained of. In practice, in the normal case the issue will be whether there is

39
40
41

Ibid at 705.
See the comment by Einfeld J in Hill v Tooth & Co Ltd (1998) ATPR 41–649 at 41–219.
Ibid.


Assessment of Damages Under the Australian Trade Practices Act

9

a causal link between the misleading conduct and the loss or damage
complained of, an inquiry which will examine the factual continuum between
these events. Whether the issues of causation are examined in two consecutive
stages, or as one overarching stage, will normally make no difference: ‘…the
ultimate issue is one of causation of loss or damage and the outcome should be
the same.’42

Assessment of damages
Overview
Section 82, it has been noted, grounds damages only where a person has
suffered loss or damage, that is, actual loss or damage, although this damage or
loss need not be economic in nature.43 A person can also seek damages under s
87 for either loss or damage, or where loss or damage is a likely outcome of the
defendant’s breach of the Act. As noted, damages have rarely been awarded
under s 87;44 rather, the section is normally relied upon to ground some other
remedy.
Where a person who is merely exposed to the likelihood of loss or damage
seeks damages under s 87, the provision is silent as to any broad principle of
assessment (in contrast to s 87(2)(d), which provides for damages equal to the
amount of an actual loss). In principle, damages can be sought for the
likelihood of loss, but s 87 perhaps contemplates that in such an event some
other remedy will be sought, such as an order voiding a contract, in whole or
part (sub-s (2)(a)), or an order varying a contract or arrangement (sub-s (2)(b)),
and so on (the list of possible orders in sub-s (2) is non-exhaustive).45
In an appropriate case, the court can make orders under both ss 82 and 87, if
this is needed.46 Or a court can make an order under s 87 in preference to s 82,
even one for damages, where this is required in the interests of justice (see p 17,
below).

42
43
44
45

46

Australian Protective Electronics Pty Ltd v Pabflow Pty Ltd (1996) ATPR 41–524 at 42–736 (Parker J).

Nixon v Slater and Gordon (2000) ATPR 41–765 at 41–013 (damages awarded under s 82 in respect
of a contravention of s 52 causing damage to reputation).
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2000) ATPR 41–779 at 41–203.
See the discussion in Collings Construction Co Pty Ltd v ACCC (1998) 152 ALR 510 at 520ff,
and the authorities cited there, while noting that these comments now need to be read in light of
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 (which holds that in assessing damages
under ss 82 and 87, the court is not bound to reason by analogy with one or another of the common
law damages assessment regimes applying in contracts and torts).
Marks v GIO Australia Holdings Ltd, ibid, per Kirby J, noting that such is made clear by s 87(1);
Tantipech v IOOF Australia Trustees (NSW) Ltd (1998) ATPR 41–614 at 40–741 (damages coupled
with order relieving from liability under a lease); Moorna Constructions (NSW) Pty Ltd v Denmatu
Pty Ltd (1998) ATPR 41–616 (damages under s 82 coupled with order for rescission of lease
under s 87).


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International Trade & Business Law

A person who loses an opportunity for commercial benefit in consequence of
another’s contravention of the Act can get damages under s 82, but, as it will be
seen below, this does not involve recovery for a likely loss—the lost opportunity
must have an actual value.

Principles of assessment—does the common law guide
assessment?
Where loss or damage is suffered the award of damages is the sum needed to
compensate for ‘the amount of the loss or damage’ (ss 82, 87(2)(d)). A question
which arose early in the construction of these broad provisions, was whether
common law principles afforded a guide to the task of damages assessment

pursuant to this statutory formulation. For a number of years, the courts
proceeded on the basis that the principles of damages assessment applied at
common law, principally in the torts context, were to be resorted to in
construction of these words, although subject to the qualification that the court
was not bound to apply torts principles. A subsidiary issue (if indeed the torts
principles are de facto to be applied in construing the damages provisions in the
Act) has been: is there ever a role for the application of the principles of
damages assessment applied in contracts cases?
Most of the reported cases have involved actions for contraventions of s 52,
which prohibits corporations in trade or commerce from engaging in conduct
that is misleading or deceptive or which is likely to mislead or deceive, in
conjunction with the damages provisions in ss 82 and 87.
The preference for resorting to common law principles in applying s 82
was reflected in comments in the High Court’s decision in Gates v City
Mutual Life Assurance Society Ltd.47 The case involved an unsuccessful claim
for, inter alia, breach of s 52, by an insured in respect of a statement made by
the insurer’s agent. According to Gibbs J, actions based on ss 52 and 53
(involving misleading conduct) were analogous to actions in tort; accordingly,
damages for breach of either (relying on s 82) were to be assessed by resort to
the principles applicable in tort. He added that ‘the acts referred to in ss 52
and 53 do not include the breach of a contract, and in awarding damages
under s 82 for a breach of either of those sections, no question can arise of
damages for loss of a bargain. The contractual measure of damages is
therefore inappropriate in such a case’.48 Mason, Wilson and Dawson JJ noted
that in a class of case such as the present one, the court was not bound to
make a definitive choice between the contracts and torts measure of damages
so that one applied to the exclusion of the other; however, ‘there is much to
be said for the view that the measure of damages in tort is appropriate in

47

48

(1986) 160 CLR 1.
Ibid at 6.


Assessment of Damages Under the Australian Trade Practices Act

11

most, if not all, Part V cases, especially those involving misleading or
deceptive conduct and the making of false statements. Such conduct is similar
both in character and effect to tortious conduct, particularly fraudulent
misrepresentation and negligent misstatement’.49
These comments were not prescriptive as to approach, it will be noted. They
do, however, express a strong preference. Part V of the Trade Practices Act
comprehends the consumer provisions, which range well beyond instances of
misleading conduct. Most of the provisions target conduct which does not
necessarily involve the formation of a contract between complainant and
defendant, although equally, fact situations disclosing their contravention may in
a particular case have involved the formation of a contract between these
parties. In contrast, ss 69ff do envisage contract formation, because they operate
to imply stipulated terms into consumer contracts for the sale of goods. Section
74 implies certain warranties into contracts for the supply of services to a
consumer.
In its decision of Wardley Australia Ltd v The State of Western Australia,50
which involved a claim for damages for misleading conduct in contravention
of s 52, Mason CJ, Dawson, Gaudron and McHugh JJ were of the opinion that
where damages for economic loss or damage were sought under s 82, in
reliance on a breach of s 52, it was not true that these damages were

necessarily to be assessed by reference to the principles applied in cases of
deceit or negligent misstatement, viz, torts principles. Where breaches of Parts
IV or V were concerned, ‘the common law measure of damages will in many
cases be an appropriate guide, though it will always be necessary to look at
the provisions of the Act with a view to ascertaining the existence of any
relevant statutory intention’. In a case such as the present, the damages could
be assessed by reference to those applied in a case of deceit. It was
unnecessary to express a view as to whether the condition of foreseeability,
applicable in a case of negligent misrepresentation inducing the purchase of
property, would apply to a claim for consequential damages under s 82(1).51
Brennan J was of the opinion that a claim for damages pursuant to s 52, in
conjunction with s 82 damages, were usually to be assessed by reference to
torts principles (those applying in the case of deceit or negligent
misrepresentation as appropriate).52
As in the case of Gates, the non-prescriptive preference in Wardley was for
the application of the appropriate torts principles in assessing damages, certainly
in respect of ss 52 and 82 claims. A similar approach was taken in other

49
50
51
52

Ibid at
(1992)
Ibid at
Ibid at

14.
175 CLR 514.

526.
534.


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International Trade & Business Law

decisions, most of them involving claims for misleading conduct in
contravention of s 52, inducing the purchase of a business or property.53 In such
cases, the standard approach has been that in ‘an action for damages for deceit
for inducing a person to enter a contract of purchase, which is an action
…closely analogous to an action for damages for breach of s 52, the courts have
consistently held that the proper measure of damages is the difference between
the real value of the thing acquired as at the date of acquisition and the price
paid for it’.54
In an uncommon application of s 52, damages were awarded for misleading
conduct causing injury to reputation. The court held that the damages to be
awarded were to be assessed by reference to the principles governing damages
assessment for the common law tort of defamation.55
The High Court’s decision in Marks v GIO Australia Holdings Pty Ltd56 is
consistent with the non-prescriptive approach to assessment. The case also
involved a claim for damages in reliance on s 52 in conjunction with s 82 (a
claim which was unsuccessful, given that causation of damage or loss could not
be established). According to Gaudron J, ‘there is no basis for thinking that
relief under s 82 is to be confined by analogy either with actions in contract or
in tort’,57 a view expressed by other members of the court.58 Nonetheless, the
common law could aid in assessing damages for contravention of s 52—‘very
often the amount of loss or damage caused by contravention of s 52 will
coincide with what would have been allowed in an action for deceit’—subject to

the qualification that the analogy should not be pressed to the point of
permitting recovery for contravention of s 52 only those damages which would
be recoverable for deceit.59
Cases since Marks have been consistent with this approach—assessment of
damages payable pursuant to s 82 based on a contravention of s 52 is not
constrained by any requirement to follow contracts or torts principles, but
nonetheless, ‘very often the amount of the loss or damage caused by a
contravention of s 52…will coincide with the damages recoverable in an action
at common law for deceit’.60

53

54
55
56
57
58
59
60

Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 290 (apply deceit principles); Gentry
Bros Pty Ltd v Wilson Brown & Associates Pty Ltd (1996) ATPR 41–460; O’Hara v Williams (1996)
ATPR (Digest) 46–156 at 53–324 (apply deceit principles); Australian Protective Electronics Pty
Ltd v Pabflow Pty Ltd (1996) ATPR 41–524 at 42–743; Embo Holdings Pty Ltd v Camm (1998)
ATPR (Digest) 46–184 at 50–334 (apply deceit principles); Thompson v Ice Creameries of Australia
Pty Ltd (1998) ATPR 40–673 at 40–704ff.
Kizbeau, ibid at 291 (Brennan, Deane, Dawson, Gaudron and McHugh JJ).
Nixon v Slater and Gordon (2000) ATPR 41–765 at 41–013 (Merkel J).
(1998) 196 CLR 494.
Ibid at 503.

Ibid at 510 (McHugh, Hayne and Callinan JJ), 529 (Gummow J).
Ibid at 512 (McHugh, Hayne and Callinan JJ).
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 163 ALR 611 at 646 (Kirby and Callinan JJ);
Radferry Pty Ltd v Starborne Holdings Pty Ltd (1998) ATPR (Digest) 46–189.


Assessment of Damages Under the Australian Trade Practices Act

13

The current judicial orthodoxy may be summarised. Where damages are to be
assessed pursuant to s 82, the courts may resort to common law principles of
damages assessment as a guide. But the common law analogies are truly only a
guide—‘a servant not a master’.61 In particular, where damages are sought for
breach of s 52 or one of its cognates, such as in the standard case of a
misleading statement inducing a purchase, the principles of the tort of deceit are
a guide. Logically, this will be so whether the misleading conduct was innocent,
negligent or advertent, given that s 52 and cognates do not require proof of
fault. The authority on the assessment of damages for contraventions of the Act
is overwhelmingly focused on breaches of s 52 and like provisions. Authority on
the assessment of damages for contraventions of other provisions is sparse.
Consistent with the approach to assessment of damages for breaches of s 52,
common law principles may afford a guide to damages assessment for breaches
of other provisions in the Act. Three members of the court in Gates v City
Mutual Life Assurance Society Ltd,62 it has been seen, remarked that there is
‘much to be said for the view that the measure of damages in tort is appropriate
in most, if not all, Part V cases, especially [but not exclusively] those involving
misleading or deceptive conduct’. 63 Like reasoning could be applied to the
analogous provisions in Parts IVA (Unconscionable Conduct) and VA (Liability
of Manufacturers and Importers for Defective Goods). Where they have been

litigated, the tendency has been to seek remedies other than damages in the case
of contraventions of Part IV.
The decisions reveal little enthusiasm for resort to the rules governing
assessment of damages in contracts in preference to torts in assessing damages
under the Act, but in appropriate cases, that is, where the gist of a complaint
under the Act is loss of a contractual bargain, contract principles may play a role.

A pplying tor ts principles
On the assumption that the principles governing assessment of damages in tort
are prima facie a guide to assessment of damages for contravention of the Act,
it follows that damages are to be assessed on the basis that the party who has
suffered loss is to be put in the position he or she would have enjoyed had the
contravening conduct (parallelling the tortious act) which has caused this loss
not occurred. In contrast, the damages for breach of contract are assessed on
the basis that the plaintiff is to be put in the position that he or she would
have been in had the contract been duly performed by the defendant.64 Both

61
62
63
64

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 529 (Gummow J).
(1986) 160 CLR 1.
Ibid at 14 (Mason, Wilson and Dawson JJ).
Robinson v Harman (1848) 1 Ex 850 at 855; 154 ER 363 at 365. See the comments of Mason,
Wilson and Dawson JJ in Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at
11ff, contrasting the application of contracts and torts principles to the assessment of damages.

14

International Trade & Business Law

damages regimes permit the recovery of reliance losses, including expenditure
incurred. The contracts principles also permit the recovery of loss of bargain
or expectation losses. 65 Does the torts regime preclude loss of a prospective
profit?
Authority supports the notion that lost profits, or a loss of a commercial
opportunity of value, are recoverable in an action against a tortfeasor. This is
implicit in the basic formulation of principles governing assessment of damages
in torts. If the tortious conduct has deflected the plaintiff from pursuing a
realisable profit, then damages—which are to be assessed on the basis of
placing this party in the position he or she would have enjoyed had the tort not
been committed—must necessarily be assessed in such a way as to capture the
value of this (lost) opportunity.66
Where those principles of damages assessment applicable in the context of
the tort of deceit are concerned, it is clear that a loss of opportunity for profit is
compensable (see 3.4.1, below).
Moreover, whether or not torts principles are invoked specifically, a line of
cases directly on ss 82 and 87 recognises that damages for contravention of the
act are to be assessed to capture a loss of commercial opportunity (see p 15,
below).

Loss of commercial oppor tunity
Where a contravention of the Act has caused a loss of commercial profit, or
other commercial opportunity, the cases are unanimous in holding that such an
opportunity is to be reflected in the damages assessed. The cases have, as noted,
concerned alleged breaches of s 52, in the context of misleading representations
inducing a contract of purchase. This has not always been the case, however.

Applying the deceit analogy
Where deceit principles have been applied by analogy, the courts have
approved recovery of lost profits. Prima facie, as has been noted at p 10
above, the measure of damages in a case of tortious deceit involving a
contract of purchase induced by misrepresentation is the difference, at the
time of contract, of the real value of the thing purchased and the price
actually paid. More specifically, the plaintiff is ‘entitled to recover as damages
a sum representing the prejudice, or disadvantage, he has suffered in
consequence of his altering his position under the inducement of the

65
66

Gates, ibid at 12.
Ibid at 12–13; likewise see the comment in Australian Protective Electronics Pty Ltd v Pabflow
Pty Ltd (1996) ATPR 41–524 at 42–744 (Parker J, Kennedy and Murray JJ concurring); Thompson
v Ice Creameries of Australia Pty Ltd (1998) ATPR 41–611 at 40–704 (Lehane J).