Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

Impact of the effect of a decline in the market on quantum In Westpac Banking Corporation v Jamieson, the defendant bank argued that, notwithstanding its negligent advice, it should not be liable because that loss (a decline in value of an investment it recommended) was at least partly the result of the GFC (global financial crisis). 334 The Court, however, was of the view that the bank should be held to account for that loss because its breaches caused the plaintiff to enter into the lossmaking transaction in circumstances where he would not have done so but for the negligent advice, and the risk of capital loss was the very thing the plaintiff had sought the bank’s advice to avoid. 335 Damages for misleading or deceptive conduct As discussed in chapter 1, claims for misleading and deceptive conduct are often made against professionals andarise frommyriadcircumstances, includingclaims relating tomisrepresentations regarding: The Victorian Court of Appeal in Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG 336 set out the principles relevant to assessing damages for misleading and deceptive conduct. The following observations emerge. A plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage suffered in consequence of altering their position under the inducement of the misrepresentations made by the defendant. However, under section 236 of the ACL, as under the common law, a plaintiff can only recover compensation for actual loss or damage incurred as distinct from potential or likely damage. In determining whether a plaintiff has suffered loss or damage, it is usually necessary to compare the position the plaintiff is in now with the position they would have been in but for the misrepresentation. Through this comparison a court can determine whether the plaintiff is worse off because of relying on the misrepresentation made by the defendant. The legislation requires a causal link between loss or damage and the conduct done in contravention of the Act. The question of causation is relative to the purpose of section 236, applied to the circumstances of a particular case. Determining the question of causation will often involve considering how much worse off the plaintiff is for entering into the transaction that the representation induced them to enter than it would have been had the transaction not taken place. This entitles the plaintiff to all the consequential loss directly flowing from their reliance on the representation, at least if the loss is foreseeable. Analysing the question of causation only by reference to what is, in essence, a ‘ but for ’ test has been found wanting in other contexts. It should not be treated as an exclusive test of causation, especially where there is more than one cause of the loss. ƒ the performance or characteristics of an investment; ƒ the characteristics of a property; and ƒ the nature and extent of cover provided by an insurance policy.

334 [2016] 1 Qd R 495, 539. 335 Ibid 537 and 540. 336 [2014] VSCA 338 [540], endorsed in Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430 [193].

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