Professional Liability Guide

CHAPTER 4 – QUANTUM

A party that is misled suffers no prejudice or disadvantage unless it is shown that that party could have acted in some other way (or refrained from acting in some way) that would have been of greater benefit or less detriment to them than the course in fact adopted. It is accordingly necessary to ask what the plaintiff would have done had they not relied on the representation. A court should not, however, speculate about multiple possibilities of past hypotheticals to which no specific evidence has been directed. Once the causal connection is established, there is nothing in the legislation that suggests the amount that may be recovered under that section should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Rather, provided the defendant’s breach has ‘ materially contributed ’ to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. If the breach materially contributed to the damage, a causal connection would ordinarily exist even though the breach without more would not have brought about the damage. In exceptional cases, however, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of the damage. But such cases are exceptional. Damages for loss of valuable opportunity Professional negligence proceedings commonly give rise to claims that the client has suffered damage in the form of a lost opportunity to make a profit. There are three steps to proving a claim for the loss of a valuable opportunity. First, the plaintiff must prove, on the balance of probabilities, that the defendant’s breach of duty has caused it some loss. In this regard, as noted by the High Court in Sellars v Adelaide Petroleum NL , 337 the plaintiff can show that ‘ some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value) …’ Second, the plaintiff must establish on the balance of probabilities that it would have pursued the lost chance. Where realisation of the chance depends on a plaintiff’s own decision to take it up, the plaintiff must establish on the balance of probabilities that it would have been taken up. Third, the value of the lost opportunity is then determined ‘ by reference to the degree of probabilities or possibilities’ . Notwithstanding the demarcation between proving that there is some chance (step one) and ascertaining the value of that chance (step three), ‘ it will usually be the same body of evidence that tends to establish both the existence of a loss and the amount to be recovered’ . When considering the probabilities and possibilities, the Court ordinarily takes a ‘ broad brush approach ’. 338 In Sellars, the plaintiffs sought to restructure the company and agreed the terms of a draft contractual agreement with Pagini Resources NL (‘Pagini’). The plaintiffs allege they were subsequently induced by representations made by Poseidon Ltd (‘Poseidon’) and therefore proceeded to sign a contract with Poseidon. When Poseidon refused to proceed on the terms of the agreement, the plaintiffs accepted Poseidon’s repudiation and sought to renegotiate with Pagini. When the plaintiffs were unable to negotiate equally favourable terms, they commenced proceedings against Poseidon and Sellars (one of Poseidon’s executives), seeking damages under section 82 of the TPA for the loss of opportunity to complete the Pagini contract on the terms previously negotiated.

337 (1994) 179 CLR 332. 338 Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394, 404.

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