Professional Liability Guide

CHAPTER 4 – QUANTUM

In finding for the plaintiffs, the Court noted the difficulty faced by the defendants in light of the trial judge’s finding (noted above) as to what would have happened had the plaintiffs not entered into the impugned transactions. It was also noted that the plaintiffs had not sought the advice of financial advisors other than the defendants and, if the defendants had given appropriate advice to the plaintiffs, it would not have involved a high-risk investment. The Court concluded there was no basis to contend that the plaintiffs would have embarked on some other high-risk and inappropriate investment. 312 Further, it was thought that the plaintiffs’ need for income to satisfy the mortgage repayments was interdependent with the investment in the company (as neither would have proceeded without the other) and was, therefore, causally related. The plaintiffs were awarded damages for both the loss of their initial investment and the consequential loss. Damages on an ‘alternative transaction’ basis ‘ Alternative transaction ’ damages arise when a plaintiff alleges that, had it known of the defendant’s acts or omission, it would have entered into an alternative transaction – either the same transaction on different terms or a wholly separate transaction. Assessing damages on the alternative transaction basis involves drawing a comparison between the set of circumstances a plaintiff is actually in and the alternative set of circumstances that the plaintiff would have been in had the contravening conduct not occurred, and the plaintiff had engaged instead in the alternative transaction. 313 As with other types of damages, alternative-transaction damages aim to put the plaintiff back in the position they would have been in had the relevant acts or omission not occurred. The marked difference is that alternative-transaction damages may result in the plaintiff being awarded more than the amount of its initial investment if the plaintiff can prove that the alternative transaction would have yielded a profit. Equally, however, it may be open for a defendant to plead and prove that the plaintiff would have entered into an alternative, but also lossmaking, transaction in order to reduce any damages award. In Westpac Banking Corporation v Jamieson, 314 the plaintiff sought damages against the defendant bank following the provision of deficient advice, alleging a no-transaction case. The plaintiff further alleged that if the Court accepted his evidence that he would not have entered into the relevant transactions, it became irrelevant to consider what he might have done instead (such matters being ‘ irrelevant speculations ’). Despite finding that the plaintiff would not have entered into the lossmaking transactions but for the deficient advice, 315 the Court was of the view it could not disregard what might otherwise have happened. It said: ‘A claimant is not necessarily required to plead and prove an alternative transaction in order to establish loss. A defendant may seek to demonstrate that a different, loss- making transaction probably would have been undertaken. In a particular case a court may determine that an award of compensation should take into account a hypothetical, alternative transaction which probably would have resulted in a loss. In doing so the court is not engaging in impermissible speculation.’ 316

312 Ibid [230]. 313 Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 338 [731]. 314 [2016] 1 Qd R 495.

315 Ibid 542. 316 Ibid 543.

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