Simon Anish Chand v Commonwealth Bank of Australia

Judgment

1. [1]

   The plaintiff, Mr Simon Anish Chand, sues the Commonwealth Bank of Australia for damages. Mr Chand claims that he suffered loss as a result of the Bank failing to implement a request that Mr Chand made on 25 September 2007 to redeem investments that he had made with the Bank, that were redeemable on request. The Bank accepts that it received Mr Chand's redemption request. It also now accepts that the request contained all of the information necessary to make it effective. The Bank agrees that it failed to implement the request in accordance with the contract between itself and Mr Chand.

2. [2]

   Mr Chand did not immediately complain to the Bank about its apparent failure to implement the redemption request. He did not deliver to the Bank a new redemption request, either after he discovered that the equity from his investments had not been paid into his bank account in the time expected, or after he was advised by the Bank's call centre that his redemption application had not been entered into the Bank's computer system.

3. [3]

   Mr Chand's case is that, after his call to the call centre, he concluded that his attempt to send the redemption application to the Bank had failed, and it had not been received, or not received in any intelligible form. He then started the process of selecting a new and appropriate time to exit from his investments. He claims that this required him to monitor the market and the unit prices of his investments over a period, so that he could determine when he could exit in a way that would yield the same return as if the Bank had implemented his initial redemption request. He also wanted to avoid any unexpected loss from the redemption process that might be caused by a time delay between redemption values published before he decided to redeem, and the later prices obtainable upon actual redemption.

4. [4]

   Unfortunately for Mr Chand, he had not delivered a second redemption request to the Bank, before mid-December 2007, when a sudden and substantial reduction in the value of Mr Chand's investments occurred. Mr Chand reacted by adopting a wait and see approach in the hope that the value of his investments would recover. Unfortunately, the value of Mr Chand's investments progressively collapsed. That in turn led to the Bank making a number of margin calls on Mr Chand. That required him to contribute further funds of his own, and to realise his investments, to comply with the terms of his margin loan agreement with the Bank.

5. [5]

   Mr Chand did not make any enquiry of the Bank's officers concerning the fate of his 25 September 2007 redemption request until the end of July 2008. After investigation the Bank informed Mr Chand that it had in fact received the request at the time it was made. The reason why the Bank failed to implement the request is not known.

6. [6]

   The Bank, having admitted that it breached its contract with Mr Chand when it failed to act upon his request, claims that Mr Chand's loss was not caused by its breach of contract. It says the loss was caused by the conduct of Mr Chand. Mr Chand had ample time to renew his redemption request. He could have done so on many days before the market fell, and realised the same amount as he would have realised if the Bank had implemented his original request. The Bank claims that Mr Chand changed his mind, and decided to stay in the market in the hope of enjoying a better return than if the Bank had implemented his 25 September 2007 request. He freely, deliberately and knowingly elected to continue his investment rather than to renew his redemption request. In taking that course, he acted unreasonably, and brought his whole loss onto himself. The Bank submits that Mr Chand's conduct constituted a novus actus interveniens. That is the principal issue in these proceedings.

Parties

1. [7]

   Mr Chand describes himself as a technical architect (IT specialist). He holds a Bachelor of Applied Science - Computing from the Queensland University of Technology. Mr Chand specialises in designing data management computer systems. He agreed in cross-examination that by 2006 he had become quite an astute and active funds investor, with experience with certain of the portfolio products offered by the Bank. He was proficient in the use of computers, and was familiar with the use of websites.

2. [8]

   Mr Chand started to bank with the Bank in June 1995. He invested mainly in term deposit accounts, until about mid-April 2005. He was then advised by a teller at the Bank's Macquarie Centre branch to see an in-house financial planner of the Bank in order to better invest his funds.

3. [9]

   The Bank admitted in its defence that it carried on business under the name "Colonial Geared Investments", among other names; that it was the ultimate holding company of Colonial First State Investments Ltd ("Colonial First State"), and also that it was the ultimate holding company of Commonwealth Financial Planning Ltd ("Commonwealth Financial Planning"). Mr Chand pleaded that Mr Daniel Molesworth was an employee of Commonwealth Financial Planning. The Bank responded in its defence by admitting that Mr Molesworth was an employee of the Bank.

4. [10]

   Mr Chand pleaded that at all material times Mr Molesworth provided investment advice to Mr Chand, and that Commonwealth Financial Planning received a regular adviser service fee from Mr Chand in respect of that advice. The Bank made limited admissions concerning these allegations.

5. [11]

   It is not necessary to resolve this issue, as the Bank accepted that it was responsible for any actions of Colonial Geared Investments, Commonwealth Financial Planning, and Mr Molesworth, and the case was conducted on that basis with the apparent acceptance of Mr Chand.

6. [12]

   It should be noted, however, that strictly Mr Chand's application to make his investments was made to Colonial First State under a Product Disclosure Statement issued by that company. Mr Chand's margin loan agreement was entered into with the Bank itself, trading as Colonial Geared Investments.

7. [13]

   Mr Chand's allegations concerning the financial planning advice that he was given do not require further consideration, save insofar as they are relevant to his claim against the Bank for failing to implement his redemption request. Mr Chand does not claim that any advice that he was given was inadequate, or caused him to suffer any loss.

8. [14]

   Mr M J Neil QC appeared with Mr W J Wilcher for Mr Chand. Mr M Einfeld QC appeared with Mr D J Roche for the Bank.

Pleaded issues

1. [15]

   In his amended statement of claim filed on 9 March 2012, after making allegations as to the material facts in pars 1 to 47, Mr Chand pleaded a breach of contract claim against the Bank (pars 50 to 57); a claim in negligence (par 58); a claim based upon alleged unconscionable conduct by the Bank "within the meaning of the unwritten law of the States and Territories" (par 59); a claim alleging unconscionable conduct within the meaning of s 12CA of the Australian Securities and Investments Commission Act, 2001 (Cth); and finally a claim alleging misleading and deceptive conduct within the meaning of s 12DA of the same Act.

2. [16]

   In final submissions Mr Chand abandoned his two unconscionable conduct claims, as well as his misleading and deceptive conduct claim. Those claims need not be considered further.

Contract claim

1. [17]

   Mr Einfeld described Mr Chand's contract claim in his final submissions as being based upon the "premise that the Bank had an obligation, albeit unpleaded, and by way of implication into its contractual arrangements with the plaintiff, to act in a timely fashion upon request duly received to withdraw or redeem his investments" (T 220.45). By this submission the Bank appears to claim that Mr Chand did not expressly plead the substance of his contract claim, and that he should be taken to rely upon a term that must be implied into his contract with the Bank. The Bank made it clear that, even if Mr Chand's pleading contained this defect, the Bank was content to deal with Mr Chand's case on that basis.

2. [18]

   Mr Chand identified the documents he received from the Bank that contained the terms that governed the investments in par 23. Mr Chand relied upon the Colonial First State FirstChoice Wholesale Investments Product Disclosure Statement ("PDS"), Parts 1 and 2, Issue No 4, dated 6 March 2006, which was issued by Colonial First State. Mr Chand alleged that it was a condition of the investment contract that, when Colonial First State received Mr Chand's withdrawal request, the proceeds were to be calculated at the next determined exit unit price (par 25). It was a condition of the investment contract that the Bank could suspend withdrawals in extraordinary circumstances and reject applications at the discretion of the Bank (par 26)). He alleged that it was an implied term of the investment contract that the exercise of the discretion to reject applications for withdrawals would be exercised fairly (par 27). Mr Chand further alleged in par 44 that it was the practice of the Bank that a request to redeem investments would be effected by the customer completing a withdrawal request form and sending the completed form to the Bank. The Bank then implemented the request, and if it was approved, passed the instructions on to Colonial First State. Mr Chand alleged in par 47 that he completed a request for redemption by using a document created by Colonial First State for that purpose, and transmitted it to the Bank, directing Colonial First State to close his account and make a full withdrawal of the investments made under the investment contract, with the balance being paid into Mr Chand's nominated bank account. The request was made on 25 September 2007. Mr Chand alleged in par 48 that the Bank received the redemption request, and in par 49 that Mr Chand authorised the Bank to apply the proceeds of the redemption of the investments to clear the balance of the margin loan owed by Mr Chand. Mr Chand then alleged in par 50, that the Bank failed to act upon Mr Chand's redemption request, and in pars 51 to 54 that Mr Chand received no notice of the existence of any extraordinary circumstances, and no notice of a rejection of the redemption request from relevant parts of the Bank. Finally, Mr Chand alleged in par 57 that it was a breach of contract for the Bank to fail to act upon Mr Chand's redemption request.

3. [19]

   It may be correct, as the Bank submitted, that Mr Chand did not specifically plead the term of his contract with the Bank that governed the time that was available to the Bank before it was required to implement a redemption request made by its customer, Mr Chand. However in par 25 of the amended statement of claim Mr Chand pleaded that the contract contained a "condition .... that when Colonial First State received [Mr Chand's] withdrawal request, the proceeds were to be calculated at the next determined exit unit price". The particulars given were the PDS in its entirety, without reference to the relevant part of that document. The terms of the investment contract between Mr Chand and the Bank will be considered below. It will become apparent that Mr Chand's claim was based upon breach of an express term of his contract.

4. [20]

   In any event, the claim was for breach of a promise by the Bank to implement a request by Mr Chand to redeem his investments in accordance with the request. The claim was for breach of an absolute promise in the contract. It was not a claim for breach of any term to be implied into the contract that the Bank would act with reasonable care and diligence in responding to any redemption request received from Mr Chand.

5. [21]

   The Bank pleaded that when Mr Chand became aware that the Bank had not acted on Mr Chand's 25 September 2007 redemption request, Mr Chand "decided not to issue a fresh withdrawal request" (par 64(d)), and if Mr Chand had given instructions to the Bank to redeem his investments between the time that he discovered that the Bank had not implemented his request to mid-December 2007 "he would have suffered no or negligible loss" (par 64(f)). The Bank pleaded that the whole of Mr Chand's loss was caused by his own "intervening conduct" in failing to issue a fresh withdrawal instruction and in determining to maintain and not to redeem his investments (par 64(g)).

6. [22]

   Additionally, the Bank pleaded that, if it was found to be negligent, for the purposes of s 5D of the Civil Liability Act 2002 (NSW), it was not appropriate for the scope of the Bank's liability to extend to the loss, if any, suffered by Mr Chand. Alternatively, the Bank alleged that Mr Chand's loss was caused or contributed to by his own negligence for the purposes of s 9 of the Law Reform Miscellaneous Provisions Act 1965 (NSW) and s 5R and s 5S of the Civil Liability Act (par 65). The Bank also alleged that Mr Chand had failed to mitigate his loss, essentially for the same reasons relied upon for the Bank's claim that Mr Chand's conduct was the real cause of his loss (par 66).

7. [23]

   Finally, in par 64(h) of its defence, the Bank "otherwise" denied the allegations in par 64 of Mr Chand's amended statement of claim, which contained Mr Chand's claim to damages. In his amended statement of claim Mr Chand gave particulars of damage of $1,447,124, without any detail as to how that claim was made up.

Negligence claim

1. [24]

   Mr Chand pleaded his negligence claim in par 58 of his amended statement of claim in the following terms: "Further, or in the alternative, the [Bank] through its servants or agents, was negligent in failing to process [Mr Chand's] redemption request dated 25 September 2007". It may be that the Bank did owe some form of duty of care to Mr Chand. However, Mr Chand did not specifically plead the existence of such a duty, or give particulars as to how it arose, or what its content was. He simply alleged in par 58 that the Bank was negligent. In that paragraph Mr Chand set out six particulars of negligence. Particulars 2 to 5 were concerned with an alleged failure by the Bank to warn Mr Chand that the effect of his redemption request, by not expressly requiring that the redemption proceeds first be applied by the Bank in repayment of Mr Chand's margin loan, would be to require the Bank to make a margin call. Those particulars are now irrelevant for reasons that I will deal with below. The sixth particular concerned the failure of the Bank to warn Mr Chand that extraordinary circumstances existed that enabled the Bank either to suspend applications or reject applications. That particular is also irrelevant, as the Bank has not claimed it did not redeem the investments because it had made a determination that there were extraordinary circumstances that justified the suspension or rejections of applications.

2. [25]

   The only operative particular of negligence is: "58.1 Failing to process [Mr Chand's] redemption request dated 25 September 2007". Plainly, that is an allegation that the failure to act upon the request was sufficient of itself to demonstrate that the Bank's conduct was a breach of duty that it owed to Mr Chand.

3. [26]

   The Bank, in its defence, denied the allegation that it had been negligent. It was not given an opportunity to admit or deny that it owed a duty of care to Mr Chand. In final submissions Mr Neil maintained Mr Chand's case in negligence. As the Bank has admitted a breach of contract, it is not clear how the maintenance of the negligence claim could advance Mr Chand's case. It will be convenient to defer further consideration of the negligence claim until after the contract claim has been considered, as that course will facilitate an understanding of the proper course to take in relation to the negligence claim.

Resolved pleading issues

1. [27]

   It is necessary to consider three relatively obscure issues, that appear to arise on the pleadings. They can be disposed of shortly because they concern issues that were resolved by the course of the proceedings.

2. [28]

   First, Mr Chand provided two particulars of the allegation of breach of contract by the Bank in par 57. The first was the failure to redeem Mr Chand's investments in accordance with his redemption request dated 25 September 2007. That is the claim that Mr Chand pursued at the hearing. The second was the alleged failure by the Bank to advise Mr Chand that, by processing the redemption request, Mr Chand's loan would be placed in margin call. Mr Chand's redemption request gave a direction that the proceeds of redemption be paid into his personal account. It did not specifically instruct the Bank to pay out his margin loan first, and then to pay the balance into his personal account. If the instruction was complied with literally, the Bank would not retain any part of the redemption proceeds to secure the margin loan. The loan to security ratio would be breached, and the Bank would be required to make a margin call to restore its security. This particular of breach appears to be an attempt by Mr Chand to anticipate a defence, which the Bank did raise, but then abandoned.

3. [29]

   Secondly, the Bank responded in its defence to Mr Chand's allegation in par 47, that on 25 September 2007 he transmitted a redemption request to the Bank "to close his account and to make a full withdrawal from the CFS Investments with the balance being paid into [Mr Chand's] nominated bank account", by admitting receipt of the instruction, but saying that the effect of the instruction was that the Bank should credit Mr Chand's personal account with the whole of the proceeds (thereby implying that the proceeds would not first be used to pay out Mr Chand's margin loan). The Bank denied Mr Chand's allegation, in par 49, that he had authorised the Bank to apply the proceeds of the redemption of his investments to clear the margin loan balance.

4. [30]

   Mr Einfeld made it clear during the hearing that the Bank did not challenge the adequacy of the terms in which the redemption request made by Mr Chand was expressed. That, with respect, was a sensible approach, as it would seem to be self-evident that the form that Mr Chand submitted contained an implied request to the Bank to use the proceeds to pay out the margin loan first. That concession by the Bank had the effect that it admitted the allegations made by Mr Chand in pars 47 and 49 of his amended statement of claim.

5. [31]

   As the Bank did not pursue the defence that it pleaded, based on the literal meaning of the redemption request, the basis for the second particular of breach of contract pleaded by Mr Chand has disappeared, and it is no longer relevant.

6. [32]

   Thirdly, the Bank, in its defence, denied Mr Chand's allegation, in par 57, that it was a breach of contract for the Bank to fail to act upon Mr Chand's redemption request. The only positive basis for that denial pleaded by the Bank was the effect of two exclusion terms in clauses 37.1 and 37.4 of the revised terms of the margin loan agreement between Mr Chand and the Bank.

7. [33]

   Mr Einfeld made it clear in final submissions that the Bank accepted that its conduct constituted a breach of its contract with Mr Chand. He acknowledged that the Bank's "omission was the trigger that, as it were, set off the chain of events that ultimately led to Mr Chand's financial losses" (T 230.2).

8. [34]

   The Bank did not refer to the effect of the exclusion clauses in the margin loan agreement in its final submissions. The Bank appears to have abandoned reliance on the exclusion clauses.

Damages claimed by Mr Chand

1. [35]

   Mr Chand now claims damages of $1,570,480.81, plus interest.

2. [36]

   Mr Chand provided particulars of the damages that he claims in par 37 of his plaintiff's outline of case dated 27 November 2013, and in a document headed "Quantum" that was handed up as an aid to submissions. The later replaced the former, and as the structure of the claim is the same in each case, it is sufficient to refer to the latter.

3. [37]

   The Quantum document is in two parts. The first assesses damages as at 31 July 2008, which was the date when the Bank acknowledged to Mr Chand that it had received his redemption request. The second assesses damages as at the date of the trial. As I understand it, in submissions Mr Neil accepted that the second assessment is the one upon which Mr Chand asks the court to act (T 219.24). The structure of the claim is that it contains four parts, being (a) loss of equity of $1,034,636.81; plus (b) net interest charged by the Bank on the margin loan after 25 September 2007of $35,853; plus (c) $500,000, being the margin calls of $400,000 and $100,000; less (d) $33,870.70, being the present value of Mr Chand's residual investments. For convenience I will sometimes call the loss described in (a) the "equity loss", or the "$1 million". I will call the two margin call payments the "margin calls". I do not follow the calculation of the amount of $35,852 in par (b), but that does not matter to the decision that I have made.

4. [38]

   Mr Chand claims that he suffered the equity loss on or about 25 September 2007, when the Bank failed to pay the $1 million into his bank account. He says that he lost the margin calls on 22 April 2008 and 31 July 2008 when he paid the amounts of $400,000 and $100,000 respectively to the Bank.

5. [39]

   According to Mr Chand, the equity loss occurred because of the failure by the Bank to redeem Mr Chand's investments in accordance with his redemption request, its failure to pay out the margin loan, and its failure to pay the balance of $1,034,636.81, to be precise, into Mr Chand's bank account. The $1 million was then lost because in the ensuing period to 31 July 2008 the portfolio value of Mr Chand's investments fell below the amount of his margin loan, and never recovered.

6. [40]

   The margin calls are, however, in a different position. While those payments were made as a result of the Bank making calls under the margin loan agreement, the actual payments did not involve conduct by the Bank (although officers of the Bank may have given advice to Mr Chand about whether he should make the margin call payments, rather than redeem his investments). Mr Chand elected to pay the margin calls rather than to redeem all of his investments. The value of the margin calls was subsequently lost, because of further falls in the portfolio value of Mr Chand's investments. Mr Chand's own conduct therefore increased his loss by some $500,000 above the equity loss caused by the Bank's breach. In principle, an issue therefore arises as to whether Mr Chand is entitled to recover damages based upon the loss of the margin calls, notwithstanding that his actions increased the amount of his loss.

7. [41]

   The Bank's position in relation to Mr Chand's damages claim, as set out principally in its further amended defence filed on 1 May 2013, is that it denies that Mr Chand is entitled to any damages, notwithstanding that the Bank admits that it breached its contract with him. The Bank submitted, in its note as to assessment of damages dated 9 December 2013, that Mr Chand suffered no more than nominal damage on 25 September 2007, as at that date the value of his investments, less the amount of his margin loan, was equal to the amount of the equity loss. No loss was actually suffered on that date. Thereafter, for some three months to mid-December 2007, the net value of Mr Chand's equity was either more than his equity loss, or only slightly less.

8. [42]

   As I understand the Bank's submissions, it does not contest the amounts that formed the elements of Mr Chand's damages claim in the Quantum document. It submitted that Mr Chand is not entitled to more than nominal damages, because the prospective loss flowing from its breach of contract could entirely have been avoided by Mr Chand, and his own voluntary actions became the only real cause of his loss actually occurring.

Witnesses

1. [43]

   Mr Chand was the only witness in his own case. He affirmed an affidavit on 4 October 2013, which contained the substance of the evidence that he chose to give. For convenience I will simply call this affidavit "Mr Chand's affidavit".

2. [44]

   Mr Chand affirmed a further affidavit on 29 November 2013. The purpose of this affidavit was to respond to evidence provided by the Bank's witnesses. Mr Chand annexed to this affidavit an Annexure A that set out, among other things, Mr Chand's calculation of what he called the "Redemption Value" of his investments on a daily basis between 1 September 2007 and 31 July 2008. The redemption value was, in substance, the amount that Mr Chand would have calculated on the identified day, as being the amount which he would have received if the Bank had duly processed a hypothetical redemption application submitted to it on that day. Mr Chand said that the only information published by Colonial First State on its website was the portfolio value for the investments, which according to Mr Chand was two days old when published, if looked at on a particular business day. The portfolio value was the amount of the proceeds of the redemption of the investments, before repayment of the margin loan. The redemption value on any day was calculated by Mr Chand as being the latest published portfolio value, less the margin loan balance, plus the repayment pro rata of the unused portion of the prepaid interest that Mr Chand had paid to the Bank, less the monthly adviser's fee charged by the Bank. Mr Chand made it clear that the figures for redemption value represented the best estimate that Mr Chand himself would have made on the given dates, based upon his need to make running estimates on the basis of the limited information available to him.

3. [45]

   The Bank subjected Mr Chand to thorough cross-examination on his affidavit, but in effect accepted the figures in Annexure A to the second affidavit.

4. [46]

   Mr James John Noel Dickson swore an affidavit in the Bank's case on 2 November 2012. Broadly, Mr Dickson gave evidence as to the objective facts relevant to Mr Chand's dealings with the Bank. He also provided a spreadsheet that set out Mr Chand's portfolio values and loan balances for the period 1 September 2007 to 31 January 2008. In a second affidavit, sworn on 15 November 2013, Mr Dickson explained in detail how he had caused the data in his spreadsheet to be compiled. He also extended the spreadsheet to cover the period 1 September 2008 to 31 July 2008. Mr Matthew Colin Thomson swore an affidavit in the Bank's case on 15 November 2013, which supported the figures for the portfolio values of Mr Chand's investments for the period 1 September 2007 to 31 July 2008. Mr Dickson and Mr Thomson were not cross-examined by Mr Neil. The spreadsheets provided by Mr Dickson, and supported by Mr Thomson, provided the starting point for the preparation by Mr Chand of Annexure A to his second affidavit.

2004 - 2005 investment

1. [47]

   The first investment in the Bank's Colonial First State - FirstChoice Wholesale Investments that Mr Chand acknowledged in his affidavit was made by application form dated 22 April 2005. However, he agreed in cross-examination that he first made an investment in that product on 12 November 2004.

2. [48]

   On that date Mr Chand signed an application form to invest $595,000 of his funds into seven "single manager single sector" options, in the amount of $85,000 each.

3. [49]

   Mr Chand agreed that he discussed the proposed investment with Mr Molesworth before he completed the application form. Mr Molesworth advised Mr Chand to adopt a long-term strategy, and to invest in Australian shares for a minimum timeframe of around six years. Mr Chand declined to accept this advice, as it was not his intention to invest for that long. In those circumstances Mr Chand agreed with Mr Molesworth that the latter would process the application on the basis that it was, what was called, a "Transaction Without Advice". Mr Chand agreed that Mr Molesworth warned him on several occasions that the Bank bore no responsibility for his investment, as no advice had been given. On 12 November 2004 Mr Chand signed a Client Acknowledgement, which was part of a letter from Mr Molesworth to him called "Transaction Without Advice". Mr Chand acknowledged in the document that "no advice was either sought from, or given by [the Bank]" in respect of the transaction; and that the Bank "takes no responsibility for any outcomes resulting from the above transaction". The Client Acknowledgement included a warning that Mr Chand "may risk financially committing [himself] to a product that might not be appropriate to [his] needs and objectives".

4. [50]

   Mr Chand said in cross-examination that he preferred a short-term to a long-term investment strategy because he was looking to buy a house, and his purpose in making the investment was to increase the amount of his capital for the purpose of purchasing a house.

5. [51]

   On 22 April 2005 Mr Chand made an application to the Bank for a margin loan facility with a credit limit of $1 million. Mr Chand provided his existing investments in First Choice Wholesale Investments products as the initial security for the margin loan. The application form indicated that Mr Chand intended to make a total investment worth $1,315,000.

6. [52]

   It is not necessary to consider the terms of the original margin loan agreement that the Bank entered into with Mr Chand in detail, as those terms were superseded at a later date

7. [53]

   Mr Chand met with Mr Molesworth again on 22 April 2005 in order to organise the margin loan from the Bank, and to increase his investment. Mr Molesworth's notes say that Mr Chand wished to make a drawdown from the margin loan facility, for which he applied to the Bank on that date, of $756,000. It appears from the cross-examination that Mr Chand required $700,000 to increase his investment, and $56,000 to fund prepaid interest. The notes record the following: "... I informed him that he needs to have a long-term investment outlook when negative gearing and a financial plan will need to be completed. He refused, he also stated that he wanted tax relief in the short run only. I strongly advised that I could not be able to endorse this decision and a TWA would have to be completed if he wanted a margin loan through me. He was aware of the dangers + risks associated with this investment and authorised me to go ahead on a TWA basis..."

8. [54]

   Mr Chand agreed that this note reflected the substance of the advice that he was given.

9. [55]

   Mr Molesworth provided Mr Chand with a "Transaction Without Advice" letter in similar terms to that dated 12 November 2004. It contained the same "Client Acknowledgement", which Mr Chand signed on 22 April 2005.

10. [56]

    On 22 April 2005 Mr Chand made an application to the Bank to increase the amount of his investment. The application records the selection of the same seven options that Mr Chand selected on 12 November 2004; this time with an individual value of $100,000 each, giving a total of $700,000 for the additional investments.

11. [57]

    Mr Chand was cross-examined concerning the steps that he took to monitor his investments and to protect him from the risk of incurring losses. He said that, once he had taken out the margin loan, he followed the financial markets generally and the value of his investments with a keen interest. He said that, because he could not monitor things all the time and his investments were short term, "if there was any volatility in the market" his investments would have to be withdrawn (T 34.25). If Mr Chand's investments had started to fall in value at any point, he might have taken some urgent action to avoid suffering a loss (T 36.40).

12. [58]

    On 21 September 2005 Mr Chand forwarded to the Bank an application to redeem part of his investments worth $81,709.38. He gave instructions to sell $10,000 worth of each of six of the options that he had acquired, and to sell $21,708.38 worth of the seventh. Mr Chand said that, before he made the redemption application, he telephoned the Bank to obtain the precise value of his current loan. At that time he was told that he could redeem his units and pay off part of the loan by sending an instruction by fax on 8292 5252. That was the number he used for making his application.

13. [59]

    Mr Chand agreed that, after he made his redemption application on 21 September 2005, the Bank confirmed the redemption request within two days.

14. [60]

    On 26 October 2005 Mr Chand made an application to the Bank to switch his entire investment in "Barclays Wholesale Australian Share", which had a value of $190,626.01, into an investment called "CFS Geared Share" for the same amount. Mr Chand did not refer to this transaction in his affidavit. Mr Chand agreed in cross-examination that he understood that the new fund was a geared fund, and that meant that there was a potential for greater capital growth. Mr Chand did not seek any professional advice about the desirability of this change. He made his own decision based upon statements received from the fund manager.

15. [61]

    On 24 November 2005 Mr Chand made an application to the Bank to redeem the entirety of his current investments. He said that he did so because he proposed to have an extended holiday in Fiji, partly for the purpose of attending his sister's wedding. Mr Chand's passport, an extract of which was in evidence, shows that he was given a Fiji entry visa for four months from 25 November 2005, and that he departed from Nadi to return to Australia on 15 January 2006.

16. [62]

    Mr Chand said he redeemed the whole of his investment because he would not be able to monitor his funds, as he was going away on an extended holiday. He regarded holidays as "down time", and he "would not be monitoring funds or looking at the internet, answering phones" (T 41.35).

17. [63]

    Mr Chand agreed that the Bank sent him an acknowledgement of receipt of his redemption request dated 25 November 2005, the next day. He said that he might not actually have received the acknowledgement until he returned from Fiji. The Bank also sent Mr Chand a withdrawal confirmation on 29 November 2005, five days after the date of the redemption application. The total amount credited to Mr Chand's bank account was $1,430,833.08.

18. [64]

    On 7 December 2005 Mr Chand sent an email to the Bank to advise that the Bank had failed to credit Mr Chand with the unused portion of the prepaid interest of $61,708.38 on the margin loan, which had been paid on 23 September 2005. Mr Chand sent this email while he was in Fiji. He said that he sent it from an internet cafe while he was in Suva. In cross-examination Mr Chand explained the email by suggesting that he must have withdrawn some money from his bank account, and noticed that the amount of money he had been expecting to be paid following the redemption was not received (T 45.30). Mr Chand agreed that his absence from Australia in Fiji did not prevent him identifying the date upon which his account had been closed. He said that he probably knew the amount of the expected refund of prepaid interest, because he had taken notes with him when he left Australia. Mr Chand accepted, however, that he did not have a present recollection in the witness box of taking notes with him to Fiji. Mr Chand agreed that he had access to his emails, if he chose to use the services of an internet cafe, which was relatively close to where he was staying in Suva. He also agreed that, while he was in Fiji, he used the internet to access details of his account to determine both the amount of the repayment he was expecting, and whether it had been paid (T 50.30).

19. [65]

    After this redemption of the whole of his investment, Mr Chand maintained his funds in a low interest deposit account with the Bank, until he renewed his investments in the Bank's Colonial First State - FirstChoice Wholesale Investments product on 7 June 2006.

2006 Investment contract

1. [66]

   In early June 2006 Mr Chand had another meeting with Mr Molesworth; according to Mr Chand, after he sought advice from a teller employed by the Bank as to how he could obtain a better interest return on his funds.

2. [67]

   Mr Molesworth provided Mr Chand with a copy of the current Product Disclosure Statement for Colonial First State's FirstChoice Wholesale Investments product. The PDS was in two parts, and was Issue No 4 dated 6 March 2006.

3. [68]

   Following his discussion with Mr Molesworth, Mr Chand submitted an investment application form to Colonial First State on 7 June 2006. The second page of the PDS (not given the page number 2) made it clear that the PDS contained the terms upon which Colonial First State offered to enter into agreements with investors; for example in the statement: "The offer made in this PDS is available only to persons receiving this PDS within Australia" (emphasis added). The application form (page 41 of the PDS) contained a number of matters to which Mr Chand signified his agreement, including that: "I...am...bound by any terms and conditions contained in this PDS and the provisions of the Constitutions of the options that I...am invested in as amended from time to time" (emphasis added).

4. [69]

   The PDS therefore set out, at least in part, the contractual terms of the investment agreement between Mr Chand and the Bank. The terms of the agreement concerning account management are the most material to the resolution of the present dispute. Those terms are found in Part 1. (Part 1 is divided into Sections, but the individual paragraphs are not numbered. The analysis of the PDS therefore requires the identification of relevant page numbers. The PDS that is in evidence is in Exhibit 1 Volume 1 Tab 15. Many relevant page numbers have not been reproduced in the process whereby the PDS was included in the Exhibit. For the purpose of the analysis set out below, relevant page numbers have been reconstructed using the copy of the PDS that commenced at page 129 of Exhibit SAC-12 to Mr Chand's affidavit).

5. [70]

   The following provisions of Part 1 of the PDS are material. Section 4, commencing at page 15, dealt with account management. On that page potential investors were invited to manage their investment by internet, telephone, email or fax. The fax number given was (02) 9303 3267. That was a different number to the 8292 5252 number that Mr Chand used at the time he made his 25 September 2007 redemption request. The Bank has not taken any point based upon the failure by Mr Chand to use the fax number in the PDS.

6. [71]

   There was a table on pages 16 and 17 that outlined the various ways that investors could establish and transact on their accounts. There was a column headed: "Information I need to know". Beside this heading there was a footnote reference 1, which was set out at the foot of page 17. It said: "Completed request, received into our office on New South Wales (NSW) business day prior to 3 PM (Sydney time) will be processed as at the date of receipt. Funds will be debited from your nominated account on the day we receive your application." Although in express terms the footnote could only be applicable to transactions that required the transfer of funds from investors to the Bank, the heading to which the footnote relates would apply, by reason of the set out of the table, to the making of withdrawals.

7. [72]

   The making of withdrawals was dealt with specifically in the table on page 17. The options for requesting withdrawals included the use of faxes. The part of the table dealing with withdrawals contained the statement: "Withdrawal requests received on a NSW business day prior to 3 PM (Sydney time) will be processed using that day's unit price and generally paid within seven working days."

8. [73]

   Page 18 contained information concerning "Accessing information on your account." The PDS stated that the Bank "will ensure that you are kept informed about your investment by sending you... a confirmation for each investment, switch or withdrawal..." The Bank also stated that investors would be provided with an Online Identity Number and Personal Identification Number in order to access information about their investments on the internet. Investors were also invited to access information on their investments by calling Investor Services on 13 13 36.

9. [74]

   Page 20 contained information concerning "Transactions and unit pricing". The following was set out concerning "Withdrawals": "Withdrawals When we receive your withdrawal request the proceeds are calculated at the next determined exit unit price. In extraordinary circumstances we may suspend withdrawals. Transaction cut-off times If your valid transaction request is received in our office before the relevant cut-off time as shown in the table below, it will be processed that day using the next determined unit price. [The relevant cut-off time for withdrawals is 3 PM (Sydney time) on a NSW business day]. If your valid transaction request is received after the cut-off times shown above your transaction will be processed the following NSW business day. Transaction processing and unit prices We calculate unit prices each NSW business day. If your valid investment, switch or withdrawal request is received by the relevant cut-off time, you will receive the next determined unit price. The next determined unit price for any NSW business day is calculated at the close of trading of all markets of that day. Therefore, the next determined unit price is not known until the following business day. It is important to consider this when making your transaction request."

10. [75]

    The following "Limitation of liability" was set out on page 25. (In its defence the Bank relied upon exclusion clauses contained in the relevant margin lending agreement, and not upon these provisions. They are set out for completeness). "Limitation of liability →... → Subject to the paragraph above, we are not liable in any way (including in negligence) for any losses that you suffer (however caused) through using or supplying information by phone, fax, email, FirstNet or FirstLink. →... We are not liable for, and you release and indemnify us against any liabilities, claims, losses or costs arising from our acting in accordance with any communication that we received by phone, fax or email about your account or investments with us or arising from the use of FirstNet or FirstLink by you or any person using your OIN and PIN".

11. [76]

    Page 25 also contained the following provision concerning the receipt of information by the Bank by fax: "→Fax machines may be convenient, but they are not always reliable. If a query arises over what information we received by fax, we will not accept a fax transmission report from your machine as evidence that we received the fax. This is because, although your fax machine may have confirmed that the fax was sent, we may not have received the complete fax at our end".

12. [77]

    The PDS therefore contained specific terms that governed how the Bank would confirm the receipt of withdrawal applications, process valid withdrawal applications, the withdrawal price to which investors would be entitled, and the time investors could expect to receive the proceeds of the withdrawal.

13. [78]

    The Bank was required to send a confirmation of withdrawal to the investor, but no time limit was specified.

14. [79]

    The provisions in the PDS under the heading "Withdrawals", which are set out above, required that withdrawal requests received on a day before the cut-off time "will be processed using that day's unit price". The PDS contained an elaboration that withdrawal requests received before the cut-off would be processed "using the next determined unit price". That statement is explained by reference to the calculation of unit prices daily. The next determined unit price is calculated at the close of trading of all markets on that day. The next determined unit price is therefore not known until the following business day.

15. [80]

    It would appear to follow that, for a withdrawal request made before the cut-off on Monday, the unit price could only be calculated after the close of trading of all markets on that day. Monday's unit price could only be published after close of business on Monday, or on Tuesday. An investor who contemplated making a withdrawal on Tuesday after publication of Monday's unit prices could not know what Tuesday's unit prices would be. The investor would have to take a risk on movements in unit prices after the close of the markets on Monday. The effect of these provisions is that investors were required to act upon unit prices that were not the actual prices upon which their portfolio values would be calculated.

16. [81]

    However, if an investor submitted to the Bank a valid withdrawal request, the Bank was obliged to process the withdrawal and pay to the investor an amount calculated by reference to the "next determined unit price". That was an absolute obligation on the part of the Bank, in the sense that the investor would be entitled to payment based upon the next determined unit price, irrespective of whether or not the Bank actually processed the application, and whether or not any failure to process the application was due to the Bank's negligence or any other cause.

17. [82]

    Investors were given an expectation that they would receive the proceeds of any withdrawal application into their nominated accounts within seven days, although the Bank was not bound to pay in that time.

18. [83]

    The agreement contained a term that the Bank would not be bound to accept a fax transmission report from an investor's fax machine as evidence that the Bank had received the fax.

2006 investment

1. [84]

   Part 2 of the PDS that Mr Molesworth gave Mr Chand contained, among other things, a list of the available investment options, and also a brief description of each option, which generally included a statement of its objectives and strategy, as well as an identification of the underlying managers. In the case of many of the options there was a brief description of the nature of the investment such as "defensive", "conservative", "high growth" et cetera. In many, but not all cases, a "Minimum suggested timeframe" for the duration of the investment was given, as well as an indication of the level of risk involved, which was done by the use of an arrow pointing to part of a semicircular diagram that ranged from low to medium to high risk.

2. [85]

   On 9 June 2006 Mr Chand completed the Bank's Credit Limit Increase Application Form to increase the credit limit of his margin loan to $1,500,000, and forwarded the application to the Bank. The credit limit increase was approved on 15 June 2006.

3. [86]

   On the same date Mr Chand completed an application form taken from Part 1 of the PDS to make investments in Colonial First State's Colonial First State - FirstChoice Wholesale Investments product. Mr Chand applied to invest $400,000 in each of five options. He funded the $2 million price by contributing $900,000 from his own funds, and drawing down $1,100,000 from the margin loan.

4. [87]

   On 16 June 2006, that is 7 days after the date of the application, the Bank (under the name Colonial Geared Investments) confirmed to Mr Chand by letter that it had received and processed his instructions to make the $2 million investment.

5. [88]

   The Bank also, on 21 June 2006, (under the name Colonial First State) confirmed the making of the investments. Colonial First State was the nominee that held the investments for Mr Chand, subject to the requirements of the margin loan agreement.

6. [89]

   Mr Chand agreed in cross-examination that, on the next day or so after his meeting with Mr Molesworth, he received a Statement of Advice. (The copy of this document in Exhibit 1 is falsely dated 29 November 2011, which may be connected with the date that a copy of the document was printed out of an electronic database). Mr Chand agreed that he did not inform Mr Molesworth that anything in the Statement of Advice was wrong (T 55.30). The document establishes at page 5 that the advice contained in it was based on Mr Chand's request for financial planning advice. However, it stated that, as Mr Chand had declined to provide full personal information, Mr Molesworth had not been able fully to assess Mr Chand's financial needs, circumstances and objectives in making his recommendation. The document, at page 8, recorded a number of answers given by Mr Chand to questions concerning his risk profile. Mr Chand had stated that he was: "Experienced with all investment sectors and understand the various factors which may influence performance". In response to a question concerning his attitude to "volatility of returns" he said: "I am interested in aggressive growth strategies, including borrowing for investment purposes, and understand the possibility of negative returns". Mr Chand hoped to achieve: "High capital growth and minimal income". In order for his investments to be "tax-advantaged", Mr Chand said: "...my main objective is to minimise income tax and I am prepared to accept capital fluctuation to achieve this." Mr Molesworth described Mr Chand as having an "Aggressive investor profile", and stated that the most appropriate strategy for someone with that profile was to invest 100% in growth assets. In cross-examination Mr Chand agreed in substance that he had provided all of this information to Mr Molesworth, and he accepted Mr Molesworth's description of his investment profile.

7. [90]

   The Bank, on or shortly after 4 June 2007, approved an application by Mr Chand to increase his credit limit to $2,100,000.

8. [91]

   On 6 June 2007 Mr Chand sent a further application to the Bank for the purpose of acquiring an additional $800,000 worth of units in Colonial First State FirstChoice Investments - Wholesale. He funded the investment by contributing an additional $100,000 of his own funds, and by borrowing a further $700,000 under the margin loan agreement.

9. [92]

   The Bank notified Mr Chand that it had received and processed his instructions for the additional investment by letter dated 15 June 2007; nine days after Mr Chand made the request.

10. [93]

    On 10 July 2007 Mr Chand forwarded to the Bank an application to switch 100% of his investments in "Platinum Wholesale International" worth $1,098,526.68 into the same value of units in "Colonial First State 452 Geared Australian Shares".

11. [94]

    The Bank notified Mr Chand by letter dated 16 July 2007, five days later, that his instructions had been processed.

12. [95]

    Mr Chand gave evidence of the steps that he took to properly manage his investments in pars 40 to 42 of his affidavit. He said that he tried to keep up-to-date with general economic and financial developments, and financial news. He monitored market movements, and tracked the movement of his portfolio value to determine the effects of market events on his portfolio. He read publications such as the business section of the Sydney Morning Herald, the Financial Review, and websites such as Yahoo! Finance and Bloomberg. He monitored the movement and values of indices such as the ASX, Dow and Nikkei. He correlated new events with market movements, and then correlated market movements with movements in unit prices or fund values for his investments.

Revised Margin Loan terms

1. [96]

   Mr Chand accepted that "in 2007" the Bank sent to him new terms and conditions for the margin loan (affidavit par 29). The new terms are included in Exhibit 1 Volume 1 at Tab 23. Mr Chand has not contested in these proceedings that the Bank was entitled to make the margin calls that it made on Mr Chand during 2008. It is therefore not necessary to consider in any detail the terms of the margin loan agreement that imposed the loan to security ratio, or the terms upon which the Bank could make margin calls.

2. [97]

   It is sufficient to note that clause 4.1 of the margin loan terms and conditions required that, "if at any time the current loan-to-security ratio is equal to or exceeds the margin call loan-to-security ratio, then you must act within the time period specified in Clause 4.2 to ensure that the current loan-to-security ratio does not exceed the base loan-to-security ratio, except where we have acted in accordance with Clause 4.2(d)." The italicised terms in clause 4.1 are defined in a dictionary that follows clause 37. Clause 4.2(d) entitled the Bank to act unilaterally in certain exceptional circumstances to sell the security provided by the borrower.

3. [98]

   The Bank, however, in par 57 of its defence relied upon the following terms of the margin loan agreement: "37.1 We may exercise a right or remedy or give or refuse our consent in any way we consider appropriate including by imposing conditions... 37.4 We are not liable for loss caused by the exercise or attempted exercise of, failure to exercise, or delay in exercising a right or remedy, whether or not caused by our negligence."

25 September 2007 redemption application

1. [99]

   On 25 September 2007 Mr Chand sent a redemption request to the Bank by fax in which he requested the Bank to redeem all of his current investments. The failure of the Bank to act upon this request has given rise to the present proceedings.

2. [100]

   Mr Chand commenced his explanation for his ultimate decision to redeem all of his investments by offering the following statement in par 43 of his affidavit: "Upon the global market volatility starting in mid-August 2007, I considered highly geared stock to no longer be a safe investment option. The volatility also required extra constant monitoring of my investments. I made a decision to exit my investments with the Bank at the next available opportunity."

3. [101]

   Mr Chand gave, as an additional reason for his decision to realise his investments, that he intended to leave Australia on 21 December 2007 to visit his mother in Fiji, and while he was away he would not be able to monitor his investments with the same level of rigour that he could whilst in Australia. The evidence shows that Mr Chand had followed the same course before he left Australia for a holiday in Fiji in November 2005.

4. [102]

   In cross-examination Mr Chand agreed that by September 2007 he "considered highly geared stock to no longer be a safe investment (T 80.7). He said that "because there was a lot of volatility around" he needed more details on the market and had to read up more on finance news from the finance websites. He said, "the volatility was mainly overseas" (T 80.17).

5. [103]

   Mr Chand provided evidence of the process that he adopted in selecting an appropriate exit point to submit his application (affidavit pars 44 to 49). Mr Chand set himself an exit target of $1 million, which would have seen him break even on the capital he personally had paid for his investments. (Mr Chand had received a number of income distributions). He said that the Bank did not provide unit prices in real time, and that the unit prices that were put on the Colonial First State website were at least two days old. Each day's unit prices were published after 3 PM the next day. Withdrawals submitted before 3 PM used unit prices for that day that would be published, according to Mr Chand, after 3 PM the next day. Mr Chand said that he monitored the market from the end of August 2007 to late September 2007 to pick an exit date. He made his decision on the evening of 24 September 2007, when, according to his calculations, he was likely to receive $1 million net from the realisation of his portfolio.

6. [104]

   One of the reasons why Mr Chand decided on 24 September 2007 to act was that he "noted that it was a rising market", so that "the redemption value would have been approximately $1 million even if the market fell slightly the next day" (par 48). Mr Chand's proposition was that, as the latest published unit prices were a couple of days old, if Mr Chand committed himself to redeem his investments on a particular day, and the unit price was calculated after the close of markets on that day, there was a risk of loss over the transaction period because of unpredictable movements in unit prices. If, in the period immediately preceding the application to redeem, unit prices had been trending upwards, then that fact would justify some confidence that the implementation of the redemption would not cause an unexpected loss.

7. [105]

   As has been noted, the Bank did not process the application, even though at a later time the Bank discovered that it had received the application, which bore a received stamp dated 25 September 2007. The reason why the Bank failed to act on the application has not clearly been unexplained.

8. [106]

   The Bank proved that, at the time Mr Chand faxed his 25 September 2007 application to the Bank, the fax machine that he used produced a transmission report, that indicated that the transmission of the whole four pages of the redemption application had been completed successfully, and there was no apparent error in the transmission. Mr Chand produced the transmission report in response to a notice to produce. The notice to produce is not in evidence, and the date it was served is not established.

Mr Chand's response to Bank's failure to redeem

1. [107]

   After Mr Chand lodged his redemption request on 25 September 2007, he did not, according to his own evidence, seek to make any enquiry of the Bank until late October or early November 2007, most probably about 5 November 2007. Mr Chand dealt with events in the period between the lodgement of his request and the making of his enquiry in four brief paragraphs of his affidavit (pars 52 to 55). He said that he did not receive from the Bank or Colonial First State an immediate response to his application form. He said that, from previous dealings, he found that it would usually take perhaps 10 working days before he would receive written confirmation in the post. He was not too concerned about an initial delay, as it appeared to him that units would have to be sold from more funds than had previously been redeemed, which may require more time to act on. After he did not hear anything for a month regarding the withdrawal, "it seemed unusual". He then made the enquiry that I will discuss below.

2. [108]

   Mr Chand agreed in cross-examination that he expected his request to be implemented soon. He expected the net proceeds of the realisation of his investments to be paid into his Net Bank Saver account with the Bank in accordance with his instructions. Mr Chand was cross-examined as to whether his asserted expectation that it would take 10 working days for his instructions to be implemented was an over-estimate of the likely time, by reference to the response times of the Bank in relation to Mr Chand's earlier transactions (T 89.8 to 91.34). He justified his estimate by reference to the most recent switch he had done (T 89.23), and also said it was based upon the time "it took the initial investment to come through" in early June 2006 "that had taken roughly 3 working weeks" (T 89.31). Mr Einfeld put to Mr Chand that he actually expected to get a response within a week, although if it took a little longer than normal, it might take as much as 10 working days (T 89.18).

3. [109]

   Mr Chand agreed that he checked online within, at the most, two working weeks, to ensure that the deposit had been made into his Net Bank Saver account (T 91.45). He agreed that he was aware after five days that the $1 million had not been paid into his account (T 92.11).

4. [110]

   Ultimately, Mr Chand agreed that, even if three weeks were to be allowed, which would be to 16 October 2007, he was aware by at least that time that his instructions had not been carried out (T 94.49 to 95.40).

5. [111]

   Mr Chand agreed that, upon becoming aware, at some time in September, or on or before 16 October 2007, that his instructions had not been carried out, he did nothing. He did not telephone Colonial First State, or the Bank, or Mr Molesworth, or send an email to anyone at the Bank (T 93.41 to 94.14 and 94.37).

6. [112]

   After 25 September 2007, Mr Chand agreed, the market remained "buoyant", and he was aware also that his units had remained "buoyant". He agreed that he checked (T 94.14 to 20). Asked whether he had been "content to remain in the market at that time" Mr Chand responded: "it wouldn't have bothered me" (T 95.20 to 33).

7. [113]

   Mr Chand denied that he remained in the market in the hope that it would improve further (T 96.5 to 97.30). He said: "I had given them enough time to basically process it, and then I called them" (T 97.14).

8. [114]

   Mr Chand gave the following evidence concerning the conversation that he says that he had with a call centre operator that he made on about 5 November 2007, by calling 13 13 36. After his identity was validated (par 56) the following conversation took place: "Me: Could you please check the status of a withdrawal request which was faxed on 25 September? Operator: I'll have a look on the system. Operator: I cannot see any withdrawal requests against your account. Are you sure it was sent on 25 September? Me: Yes that's correct. Operator: Sorry I still cannot see any withdrawals from you. I thought about that response. Since I had no reason to doubt the operator, as he had no personal interest at stake, or to question the integrity of [Colonial First State] or the [Bank] at the time as my previous investments had been trouble-free when I had transmitted my redemption request to the [Bank] by facsimile, I came to the conclusion that it was probably a technical fault of some sort that may have caused a possible dropout during transmission of my fax and that the Bank had not received the Withdrawal Form. Me: Thank you. I then hung up".

9. [115]

   Mr Chand did not contact the Bank directly about the whereabouts of the withdrawal form until late July 2008.

10. [116]

    Mr Chand agreed in cross-examination that he did not make any notes of the conversation. Mr Einfeld did not suggest to Mr Chand that the conversation with the call centre operator did not occur at all. Mr Einfeld did obtain from Mr Chand an acceptance that, when he prepared his affidavit in 2012, he was doing his best to recall a conversation that had occurred some four years earlier (T 101.20). Mr Einfeld then continued the cross-examination on the basis that: "I will assume that your recollection is entirely accurate" (T 101.23). Mr Chand had given evidence in par 57 of his affidavit that he did not subsequently contact the Bank about the whereabouts of the withdrawal form "as they had made it quite clear that they had not received it and I had no grounds for doubting them". The words just set out within quotation marks were rejected when Mr Chand's affidavit was read, on the objection of the Bank. Nonetheless, Mr Einfeld cross-examined Mr Chand on the issue of whether he believed, or was entitled to believe, that his application form had not been received by the Bank, given that all that the call centre operator had said to him was that the operator could not see any withdrawal request on the system. It will be convenient to deal with this issue more fully below in the course of considering the attack that the Bank made on the credibility of Mr Chand's evidence.

11. [117]

    Mr Chand's evidence as to his actions, between his conversation with the call centre operator and his departure from Australia to visit his mother in Fiji on 21 December 2007, was given in pars 59 to 66 of his affidavit. He said that, to ensure that he was no worse off as compared to 25 September 2007, he needed to determine a fairly accurate redemption value as at that date for comparison purposes. He said that, since he was not monitoring markets while waiting for the withdrawal form to be processed, there was a need for him to reacquaint himself with the market to ensure the most optimal next exit date.

12. [118]

    As noted above, in the period after 25 September 2007, Mr Chand agreed, he did monitor at least the value of his investments. It would have been incredible had he claimed not to have done so, given that the redemption value was about $1 million, and he was subject to onerous obligations under his margin loan agreement. Mr Chand must have meant by his evidence in his affidavit, that he ceased to conduct the detailed monitoring of the financial and market sources that it had previously been his practice to carry out.

13. [119]

    Mr Chand said that, on the weekend of 10-11 November 2007, he used the evidence available to him to carry out a more accurate calculation of the redemption value of his investments on 25 September 2007, and assessed that value at approximately $1,030,000. He then set his redemption target value as $1,030,000.

14. [120]

    From 12 November 2007 to early December 2007, Mr Chand said he monitored markets as closely as possible. As he was unable to monitor markets during working hours, it was necessary for him to monitor his investments at night. He said that "rising markets" would act as a "safety net, in case there were corrections the next day when the redemption was actually submitted" (par 63). He said, in the period up to early December 2007, "it was not possible to pick a stable point" because redemption values "fluctuated heavily between $900,000 and $1,010,000" (par 64).

15. [121]

    From early December 2007, Mr Chand claimed, it became impractical for Mr Chand to constantly monitor the markets because of a "busy full-time job". Mr Chand explained in cross-examination that, as the firm for which he worked closed down for Christmas holidays, extra work was required to complete work in progress. Mr Chand said: "given the fluctuations observed in the past four weeks and the need to exit before 20 December 2007 because of pre-planned overseas holidays, I decided to wait for dividends to be paid which would make up for the shortfall" (par 65).

16. [122]

    Mr Chand denied in cross-examination that, when in par 65 of his affidavit he said that he decided to "wait for dividends to be paid which would make up for the shortfall", the shortfall to which he was referring was a redemption value less than his target of $1,030,000 (T 130.25). He insisted that the shortfall referred to the possibility that he could make a loss as a result of the redemption transaction because he had to commit himself to the redemption on the basis of unit prices that were two days old (T 128.35).

17. [123]

    Mr Chand received a distribution of around $52,000 on 18 December 2007. However, by that date the redemption value had fallen to $815,000. By 20 December 2007 the redemption value had fallen further to $800,000. By this time, according to Mr Chand, it was not possible to withdraw without incurring substantial losses. He decided to wait for a recovery in the New Year (par 66). Mr Chand said that while he was overseas from 21 December 2007 to 26 January 2008 "there was next to no monitoring by me of unit values during that period": (par 68).

18. [124]

    When asked in cross-examination why he did not send another request to the Bank from the same or a different fax machine the next day after his conversation with the call centre operator, Mr Chand said that he went back to monitoring the market; basically following the same process that he had done in September (T 109.10). He accepted that he could have provided a fresh withdrawal form in a physical sense: "...but I would not have done anything without reassessing my position" (T 109.25). Mr Chand accepted that there was "no physical bar" to his asking the operator to put him through to a supervisor so that he could follow up the enquiry, or to go to the Bank or ring Mr Molesworth to follow up what he was told by the operator (T 109.27 to 49). He accepted that he "made a positive decision not to do any of those things" (T 110.5). Asked whether "it was a deliberate and considered decision" Mr Chand said: "it was the easiest decision to make" (T 118.42). Finally, Mr Chand agreed that, at the time he spoke to the operator, the market "was higher than in September" (T 117.31).

19. [125]

    Mr Chand accepted that, after his conversation with the operator, the market had remained quite "buoyant" (T 110.21) and that the value of his units had risen over October (T 110.32). His position was that he decided to stay in the market in order to monitor the market to pick another exit date (T 114.25), and that, because the unit prices available to him were two days old, it was necessary for him "to pick a rising market" (T 115.7). In essence, Mr Chand asserted that "the market was flat" (T 115.38), and that appears to be his justification for not having submitted to the Bank a further redemption request

20. [126]

    When asked in cross-examination whether it was his expectation, in the second half of 2007, that, if he stayed in the market, he would receive a dividend of around $50,000 in December, Mr Chand said "no" (T 119.39). Mr Chand's position was that he was not expecting to receive a distribution, but he was "stuck" in the market longer than he had expected (T 119.43), and he understood that a distribution could be expected if he was still in the market towards the end of December.

21. [127]

    Mr Chand agreed that he took the "deliberate course" to stay in the market and do what he wanted to do because there was "no need to panic" (T 121.15).

22. [128]

    Mr Chand accepted that he understood that his "units were high risk investments" (T 123.32), but claimed that he was able to protect himself by means of the "stringent monitoring process" that he had recommenced (T 123.41). He understood that the words "high risk" meant that the units were volatile, both upwards and downwards (T 124.10).

23. [129]

    Mr Chand denied that it was his position that, if he could not calculate an exit point over $1,030,000, he was "going to stay in the market to kingdom come even if [his] units were falling and were volatile downwards at a rapid rate" (T 124.24). He agreed that there was nothing mandatory about $1,030,000, and that it was "just my initial target" (T 125.14).

24. [130]

    Mr Chand said that "I pretty much had a point where I was just going to get to the point I wanted but the drop was too sudden and I didn't have a plan B so that's, that's what caught me out" (T 125.29).

Movements in Mr Chand's redemption value to 21 December 2007

1. [131]

   As has been noted, Annexure A to Mr Chand's second affidavit contained a calculation made by Mr Chand, based upon data provided by the Bank's witnesses, showing what he would have estimated the redemption value of his investments to have been for every day between 1 September 2007 and 31 July 2008. As noted above, the redemption value is equal to the value of Mr Chand's portfolio of investments, less the amount owing under his margin loan, less any amount payable for financial planning advice, plus the proportion of the pre-paid interest that was returnable if the investments were redeemed on that day. Annexure A is included at the end of these reasons for judgment.

2. [132]

   The evidence of the redemption value and movements in that value over the period may be relevant to a number of issues in these proceedings. First, the evidence may bear upon the veracity of Mr Chand's explanation of the process that he adopted in selecting 25 September 2007 as the initial exit date for the redemption of the whole of his investments. Secondly, the information may assist in a judgment about whether, when Mr Chand discovered that the Bank had not implemented his redemption request, he changed his mind and made a definite decision to stay in the market in the hope of achieving a better return than he would have achieved if the Bank had implemented his 25 September 2007 request. Thirdly, the evidence may be material to a consideration of Mr Chand's true state of mind in the period between 25 September and about 5 November 2007, when he progressively came to understand, initially that the Bank had not acted upon his request, and then that it may not effectively have received the request or entered it into its computer system. Fourthly, and critically, the evidence of daily redemption values may be important to an examination of Mr Chand's state of mind and intentions in the period between 5 November and 21 December 2007, in which he says that he was looking for an appropriate exit date, that he did not find before the significant fall in the market that occurred in mid-December. Finally, the evidence may have a bearing on the issues raised by the Bank whereby it alleged that Mr Chand was guilty of contributory negligence, and failing to mitigate his loss.

3. [133]

   Although Mr Chand tendered Annexure A, he made no attempt to explain in any detail how the amounts of the redemption value for any periods related to the general evidence that he had given. He did not take any of the figures and demonstrate how those values caused him specifically to act in any relevant situation.

4. [134]

   It is fair to assume that Mr Chand had a reasonably clear understanding of his redemption value on a day-to-day basis for the period between 1 and 25 September 2007, as this was the period in which, according to his evidence, he was giving detailed attention to picking an appropriate exit date.

5. [135]

   The opening redemption value on 1 September was $931,558.88, and the equivalent figure on 25 September 2007 was $1,034,636.81. The redemption value first exceeded $1 million on 24 September 2007. It was on the evening of that day that Mr Chand decided to submit his redemption request the following day. As the breakeven point for Mr Chand's investments was $1 million, the figures provide evidence that Mr Chand waited until the apparent redemption value reached his breakeven point, and then decided to redeem.

6. [136]

   The redemption value appears to have fluctuated a number of times over this period. It increased about $13,000 between 1 and 4 September. It fell about $65,000 between that date and 10 September. It then increased by about $67,000 to 14 September, before it fell by about $60,000 to 18 September. There were daily falls of about $25,000 from 4 September, $39,000 from 9 September, $30,000 from 16 September and $30,000 from 17 September. The redemption value jumped by about $85,000 between 18 and 19 September and then rose relatively consistently to top $1 million on 24 September 2007.

7. [137]

   Given the absence of detailed evidence and explanation about the significance of the figures, it will only be safe to draw relatively general conclusions. The figures for redemption value between 1 and 25 September 2007 appear to provide broad support for the evidence given by Mr Chand. There is enough evidence of volatility to provide some support for his expressed concern about making an unexpected loss from a change in the redemption value over the period in which his redemption was effected. There was an upward trend between 18 and 24 September 2007. However, as I have noted, there is reason to conclude that Mr Chand's decision to redeem was also influenced by the fact that the redemption value had reached his breakeven position.

8. [138]

   In the period from 25 September to 5 November 2007, Mr Chand agreed, he was aware of the market value of his units and the situation of the market generally, which he accepted as being "buoyant". Mr Chand must have followed the market price of his units at least sufficiently to make an educated judgment as to the amount, from day to day, of the redemption value. Otherwise, his conduct in not pursuing the Bank and making further enquiries, once he knew that the expected $1 million had not been deposited into his bank account, would be inexplicable.

9. [139]

   The most notable feature of the redemption values during this period is that they did not fall below $1,034,636.81. The redemption value reached a high point of $1,189,246.40 on 11 October 2007. On a significant number of days the redemption value was in the order of $100,000 higher than the value on 25 September 2007.

10. [140]

    The redemption value figures still exhibited some volatility, with the greatest daily increases and falls being in the order of $60,000.

11. [141]

    Although the redemption values were consistently greater over this period than the whole of the period between 1 and 25 September 2007, they were relatively stable, as if the market was flat. To the inexpert eye the figures do not appear to suggest that the market had entered a period of sustained growth in value.

12. [142]

    The figures for redemption values in the period between 5 November and 21 December 2007 suggest that the market value of Mr Chand's investments had fallen generally when compared to the period between 25 September and 5 November. If Mr Chand reinstated his practice of assessing the redemption value on a daily basis from about 11 November 2007, he would have noted that the value had been over $1 million for the previous week. In the period between 12 November and 29 November 2007 the redemption value fell below $1 million except for four days. The lowest values were about $913,000 between 22 and 25 November 2007.

13. [143]

    However, the redemption value jumped by about $40,000 between 29 and 30 November 2007 and stayed just above $1 million between the latter date and 5 December 2007, when it increased by about $45,000 overnight and then by about $35,000 to 7 December 2007. The value stayed at about $1,082,000 on 7, 8 and 9 December 2007, and then gradually decreased over the next five days to $1,030,270.98 on 13 December 2007. That last value is, of course, almost identical to the redemption value on 25 September 2007.

14. [144]

    It is true that the redemption values between 6 and 13 December 2007 do not suggest a rising market, as opposed to a market that was flat. However, the redemption value was slightly over $1 million between 30 November and 5 December 2007. Collectively those circumstances should have satisfied Mr Chand's description of the rising market that he was looking for, in order to choose an appropriate and safe exit point. During the 6 to 13 December period the redemption value was also at or above Mr Chand's chosen target value.

15. [145]

    One of the consequences of the fact that Mr Chand did not, in either of his affidavits, explain his actions at a level of detail that related his general descriptions with the day-to-day redemption values, is that Mr Chand did not provide any real explanation of why he did not send a redemption request to the Bank on some day in the period 6 to 13 December 2007, except to the extent that he suggested that, at a date that was not specifically identified, he became distracted by increasing employment obligations.

16. [146]

    After 13 December 2007 the amount of the redemption value progressively decreased from $984,336.67 to $783,633.07 on 20 December 2007, the day before Mr Chand left Australia for Fiji. As Mr Chand received a distribution of $52,000 on 18 December 2007, that may explain the drop in value from $814,415.19 on 18 December to $783,633.07 on 20 December 2007.

Plaintiff's Fiji holiday

1. [147]

   Mr Chand's passport shows that he entered Fiji on 21 December 2007, and left that country on 27 January 2008. During that period the redemption value of Mr Chand's investments fell from $832,449.81 on 21 December 2007 (having increased by about $50,000 from the preceding day) to $548,725.96 on 27 January 2008. The low point in the period was $218,967.52 on 22 January 2008, which represented a fall of some $278,000 over two days. Mr Chand said that: "Relying on fund managers to make decisions to minimise losses seemed to me to be the only option" (affidavit par 70).

Movements in Mr Chand's redemption value after 21 December 2007 and responses to margin calls

1. [148]

   13 December 2007 was the last date upon which the redemption value of Mr Chand's investments was equal to the equity loss. The redemption value fell from $1,030,270.98 on that date to $783,633.07 on 20 December 2007. In the period between 21 December 2007 and 22 April 2008, when Mr Chand made the first margin call payment, the redemption value decreased reasonably steadily to a low point , as already noted, of $218,967.52 on 22 January 2008, before increasing to $548,725.96 on 25-27 January 2008. It then fluctuated, reaching a low point of $104,833.40 on 17 March 2008, before, after further fluctuations, it was $310,842.48 on 21 April 2008.

2. [149]

   The movements in Mr Chand's redemption value, in the period up to 21 April 2014, are too erratic to justify any clear finding on how Mr Chand ought reasonably to have considered the possibility that the redemption value would improve to a level that would retrieve his equity loss. The only evidence in the case is what is contained in Annexure A, which is confined to the bare values of portfolio value, loan balance, net equity and redemption value. There was no evidence of any external market advice or projections that Mr Chand had, or was available to him. Therefore, there was no evidence that either supported or undermined Mr Chand's failure to make a positive decision to redeem all of his investments, as opposed to the course that he took of partially redeeming his investments and making payments in response to margin calls.

3. [150]

   There were a number of emails in evidence between Mr Chand and representatives of the Bank concerning the first margin call. At 12:22 PM on 22 April 2008 the Bank sent to Mr Molesworth a copy of Mr Chand's Statement Report for the period 16 June 2006 to 20 April 2008. It also advised Mr Molesworth that Mr Chand's investments were valued at $2,277,680.80. The portfolio valuation was $2,303,990. Mr Chand's loan was $2,058,883, which represented a gearing of 89.36%. The email stated: "We lend 66.7% of CFS with a margin call at 76.7%." It then stated: "Worst-case, for him to meet his margin call we will have to sell approximately $1,500,000 of his investment or deposit $522,123 or lodge additional securities, the amount will depend on the securities LVR." At 12:51 PM Mr Molesworth sent Mr Chand an email in which he asked Mr Chand to call him urgently "re Margin Call on your managed funds". There is no direct evidence of the conversation that followed. Mr Molesworth sent the Bank's Statement Report to Mr Chand at 1:14 PM. At 1:31 PM Mr Chand advised Mr Molesworth that he had transferred $400,000 into the account that offset the margin loan. At 3:22 PM he advised Mr Molesworth that to settle the remainder of the margin call, all units in the investment "Arcadian Wsale Aust Equity LS" should be sold, and all proceeds paid into the margin account. Mr Molesworth passed those instructions on to the relevant officers of the Bank.

4. [151]

   It appears from Annexure A that $400,000 was paid off Mr Chand's margin loan on 22 April 2008, and a further $485,286.73 reduction occurred on 28 April 2008, presumably from the sale of the Arcadian Wholesale investment.

5. [152]

   The result of the transaction on 22 April 2008 was to increase Mr Chand's redemption value to $695,022.68. Between that date and 27 April 2008 the redemption value decreased to $210,738.99. That appears to suggest that Mr Chand almost immediately lost the advantage of his making the $400,000 payment, by reason of a further significant fall in the portfolio value. On 28 April 2018, when the sale of the Arcadian Wholesale investment took place, Mr Chand's redemption value rose again to $694,647.05. Thereafter, the redemption value rose to a high point of $814,355.51 on 19 May 2008, before it commenced a relatively steady decline to the point where, on 31 July 2008, the redemption value was a deficit of $27,799.09.

6. [153]

   Mr Chand did not in his evidence in chief provide any admissible evidence of his discussion with Mr Molesworth, or his reasons for paying the $400,000 margin call, rather than declining to risk the additional money, and redeeming the whole of his investment at that date. Had he redeemed his investment, he would have received a net $310,842.48. That would have crystallised a loss of $723,794.33. Mr Chand would not have lost the amount of the margin call payment.

7. [154]

   Mr Chand was cross-examined on this subject (T 133.30 - 137.44). Mr Chand agreed that the Global Financial Crisis had taken full hold overseas by early 2008. It was put to Mr Chand that, if he had given an instruction to the Bank to realise the whole of his investments when he received the first margin call, he "still would have salvaged something in the order of quarter of a million dollars" (T 134.10). Mr Chand was taken to the emails concerning the margin call, and he agreed that he discussed with Mr Molesworth how much cash to put in and which stock should be sold (T 135.15). Mr Chand agreed that he did not utter one word or make one enquiry of the Bank about the possibility that the Bank had been at fault in failing to carry out his redemption request (T 135.44). Mr Chand denied that the reason that he made no complaint was that in September to November 2007, he had decided to take his "chances in the market in the hope the market would go up again" (T 136.15).

8. [155]

   Mr Chand received a second margin call from the Bank at 3:05 PM on 30 July 2008. He was advised that he had to act by 2 PM the next day. He could lodge additional approved security valued at $437,729.43, reduce his debt by making a cash payment of $306,410.60, or sell or redeem his investments to increase his equity to $1,021,368.67. It appears that this margin call triggered Mr Chand's enquiries with the Bank concerning the fate of his 25 September 2007 redemption request.

9. [156]

   Mr Chand paid an additional $100,000 to the Bank to reduce the amount of his margin loan. The evidence as to how he met the balance of the margin call is not entirely clear. The following transactions occurred (noting that the first occurred before 31 July 2008, and a number occurred after that date):

   1. (1)

      Mr Chand instructed the Bank on 15 July 2008 to sell part of his investment in Barclays Wholesale Australian Shares for $41,002.44, and on 31 July 2008 Mr Chand instructed that the balance of that investment be sold for $311,950.47.

   2. (2)

      On 13 August 2008 the whole of Mr Chand's investment in FirstChoice Wholesale Global Share Hedge was sold for $326,328.23.

   3. (3)

      On 19 December 2008 the whole of Mr Chand's investment in Perpetual Wholesale Industrial Share was sold for $230,332.57.

   4. (4)

      Part of Mr Chand's investment in 452 Geared Australian Shares was sold on 19 December 2008 for $89,667.53.

   5. (5)

      A further part of that investment was sold on 4 September 2009 for $82,000.

   6. (6)

      The balance of that investment was sold on the same date for $54,500.

10. [157]

    Mr Chand said in cross-examination, concerning his response to the 30 July 2008 margin call, that in relation to the initial margin call: "So I did have a discussion with Daniel Molesworth as to the best course of action to take then, and the general advice was to try and prop up my portfolio as much as I can ..."

11. [158]

    That evidence is consistent with the emails concerning the initial margin call, as there is no suggestion in them that Mr Molesworth advised Mr Chand that he should consider cutting his losses by redeeming the whole of his investments.

1. [159]

   Mr Chand said in par 73 of his affidavit that, following receipt of a margin call made by the Bank by telephone on around 31 July 2008, "out of sheer frustration with the situation" he asked the caller "to double check my withdrawal request". This led the caller to report that a withdrawal request had been received on 25 September 2007. Mr Chand asked why the request had not been processed, and received the answer that the form had instructed that all proceeds be paid into Mr Chand's personal bank account, without first paying off the margin loan. Mr Chand said that, if that were the case, he would have expected to receive a call from the Bank. The next day the caller called back, and advised Mr Chand that the Bank could not confirm or deny if anyone was called. Mr Chand requested a written explanation. Mr Chand said that he did not receive a formal response from the Bank.

2. [160]

   Mr Chand said in par 78 of his affidavit (referring to the same subject matter that he had dealt with at par 56): "To this point I was under the impression that a technical fault of some sort had resulted in the original withdrawal form not being received by the [Bank]".

3. [161]

   The Bank's records of email communications between itself and Mr Chand show that, on 30 July 2008 at 3:06 PM, Ms Joyce Tan on behalf of the Bank sent an email to Mr Chand in which she advised that his facility was "now in Margin Call", and suggested the options that were available to Mr Chand to put his account in order. At 4:36 PM Mr Chand sent an email to Michael Lam in which he gave an instruction to sell 100% of his Barclays Wholesale Australia Share investment to settle the margin call. Mr Lam sent an internal email at 4:52 PM to various employees of the Bank in which he said, referring to Mr Chand: "he's pretty unhappy right now. If you check out my note today on 30/07/08 (4:48 PM) he's claiming foul-play on some other issue..."

4. [162]

   Mr Chand agreed in cross-examination that, on 30 July 2008, he told Mr Lam: "It wasn't actioned, I've still got the fax confirmation saying it was actually received by you guys" (T 150.10). Mr Chand was obviously referring to the faxed redemption application that he delivered to the Bank on 25 September 2007.

5. [163]

   It is probable that Mr Chand called Mr Lam between the time he received the Bank's email at 3:06 PM, and the time Mr Chand sent his instruction to sell his Barclays investment. At that time Mr Chand was aware that he had evidence that the Bank had received his fax transmission on 25 September 2009.

6. [164]

   Mr Chand agreed in cross-examination that he had read a transcription of his conversation with Mr Lam about two weeks before he gave evidence. The transcription was not put in evidence. Mr Einfeld offered to tender the transcription during the course of submissions, after the Bank's case had been closed. The tender was rejected following objection by Mr Neil.

7. [165]

   On 4 August 2008 Mr Chand wrote a letter to "Customer Relations" at the Bank, in which he said in part: "I refer to the withdrawal request sent to Colonial Margin Lending requesting the withdrawal of 100% of the units held...on the 25 September 2007. After a period of a couple of weeks, it became apparent that the request had not been executed for some reason. This consequently forced me to plan for another exit date in the following weeks and months. However market uncertainty and volatility which then followed and currently ongoing made timing another exit difficult. The portfolio therefore exists to date and has suffered substantial losses due to margin calls and decline in the value of units held... This explanation does not cover off why more information or clarification was not sought if it was required - note that there is also a Financial Adviser attached to the account. It appears the request was silently ignored and no notification of any sort was issued to explain or indicate the outcome. I would have expected a transaction such as this whose outcome is critical to the value of investment to have been treated more seriously".

8. [166]

   It is to be noted that Mr Chand's case against the Bank for breach of contract rested upon his claim that the Bank simply failed to implement his withdrawal request. Mr Chand did not plead any alternative claim based upon any obligation on the part of the Bank to respond to the receipt of the instruction, by communicating with him to seek further instructions, if there was any defect in the initial withdrawal form.

9. [167]

   A number of aspects of Mr Chand's 4 August 2008 letter may be significant. First, Mr Chand made no reference to his telephone enquiry of the call centre operator that he claims to have made in about early November 2007. Secondly, he said that it became apparent "after a period of a couple of weeks" that his redemption request had not been executed. This time period is consistent with concessions that Mr Chand made in cross-examination. It is a much shorter time period than that which expired between 25 September 2007 and early November of that year. Thirdly, Mr Chand's assertion that there was "market uncertainty and volatility", after he discovered that his redemption request had not been executed, does not fit neatly into the picture that flows from an analysis of Annexure A. While the redemption value of Mr Chand's investments experienced some ups and downs, in the period up to mid-December 2007 the description of "uncertainty and volatility," is not particularly apt, especially in the period between 25 September and 5 November 2007.

10. [168]

    An internal Bank email, which was apparently prepared in the course of the Bank's investigations concerning the fate of the 25 September 2007 withdrawal request, stated on 2 September 2008 that the writer could not "see any reason why this was not actioned and there are no notes to help with this".

11. [169]

    The Bank wrote to Mr Chand on 11 September 2008. It confirmed that his redemption request was received in September 2007. It repeated the earlier suggestion that the Bank was unable to approve the request, as the transfer of funds to Mr Chand's personal bank account would have left the margin loan exposed with an uncleared loan balance. The letter also stated that it was normal procedure in that situation for the Bank to call either Mr Chand or his adviser. The writer stated that he believed this had been done, although the Bank had no evidence. Finally, the Bank stated that its view was that any issues Mr Chand "had with the redemption request should have been raised with Colonial Geared Investments back in September or October 2007".

12. [170]

    Mr Chand instructed solicitors, LeighAdams Lawyers, to respond to the Bank's 11 September 2008 letter, which they did on 12 February 2009. Mr Chand agreed in cross-examination that he discussed the letter with his solicitor before it was sent, and approved its contents (T 160.48 to 161.5). The letter claimed that Mr Chand "was not concerned about the state of his redemption until after October 2007". That was on the basis that it had taken the Bank about two weeks to confirm a fund switch made by Mr Chand in July 2007. It asserted that Mr Chand made enquiries of the Bank "during the week of 5 November 2007". The letter then suggested that Mr Chand had three options in the circumstances. First, he could "pursue the whereabouts of the original redemption". Secondly, he could "again give instructions to redeem at that time". Thirdly, he could "determine another exit date given that the value of his portfolio was generally unchanged". The solicitor said: "... The first option seemed inappropriate, time-consuming and uncertain as to its outcome, given the denial of receipt of the request in the first place. The second option was considered inappropriate given that the value of his portfolio was generally unchanged and so my client decided to adopt the third option. As things transpired, the existence of the original redemption request was not confirmed by Colonial First State until July 2008... My client was not following the markets after 25 September 2007 as he understood that his investments had been redeemed, or were in the process of being redeemed. Accordingly, in determining another exit date, my client had to examine the five weeks' extra history between 25 September 2007 and 5 November 2007 to assess why the market went higher in October 2007 and to determine whether, some time during the period commencing the week of 5 November 2005 and ending mid-December 2007, there was any chance of the market recovering to that October 2007 high. He was due to fly out to Fiji to see his mother for the Christmas vacation on 21 December 2007. It must be noted that this data was not available on 25 September 2007 and my client used his heuristics in endeavouring to pick another exit date, factoring this data into his decision-making process. The aim was to redeem for the maximum value possible - if possible, higher than 25 September 2007, but not lower - and this possibility could only be determined by looking at the October 2007 trends. Accordingly, my client reacquainted himself with market developments since 25 September 2007 to determine another exit date. Given that he had a full-time job, this took him some time to do. The market was then monitored as closely as practicable to pick an exit date when the value of the redemption would be at least the value as at 25 September 2007 or higher. However, the market continued to slide and there was no way of recouping the losses that would have crystallised on a sale..." (Emphasis added).

13. [171]

    This letter provides evidence that, when Mr Chand appreciated that the Bank had not implemented his redemption request, he understood that there were three avenues available for him. One was to pursue the whereabouts of the original request with the Bank. The second was immediately to give the Bank a second instruction to redeem. Mr Chand clearly chose the third option, which was to try to determine a new exit date.

14. [172]

    The letter also provides evidence that, in following the third alternative, Mr Chand decided to pursue the chance of "the market recovering to that October 2007 high." Clearly, that high post-dated Mr Chand's 25 September 2007 redemption request. The reference to the October 2007 high is consistent with the evidence provided by Annexure A, which shows that, during periods in October 2007, the redemption value of Mr Chand's investments reached about $150,000 greater than the value on 25 September 2007. The letter clearly states that Mr Chand looked "at the October 2007 trends" with the aim of redeeming at a value higher than at 25 September 2007, "but not lower".

Credibility of plaintiff's evidence

1. [173]

   The Bank submitted that the court should not accept Mr Chand's evidence in the absence of corroboration, and that his evidence in relation to some matters bordered upon trifling with the court and the truth (T 232.12 and 30).

2. [174]

   I do not accept this submission, except in relation to one matter. There were flaws in the evidence given by Mr Chand, but the submission goes, with respect, too far.

3. [175]

   My impression of the way Mr Chand gave his evidence is that, with some exceptions, his responses were direct and a genuine attempt to give a proper and truthful answer to the questions. He made many concessions that were reasonably clearly against his interests. He occasionally suffered from a tendency, as many truthful witnesses do from time to time, to answer what he thought the question was getting at, and to fail to give a direct answer to the actual question. He also occasionally gave the answer that he wanted to give, which was not an answer to the question actually asked. Generally, however, once he grasped the real question, he answered it.

4. [176]

   The difficulty with Mr Chand's evidence was not so much its reliability, but its adequacy. The first word in the expression "burden of proof" may often not be given sufficient attention. A party with the burden may need to grapple with the detail of events in order to make their case persuasive. Much of Mr Chand's evidence was too general, in the sense that it did not explain, in a way that was intelligible and persuasive, how the proposition for which Mr Chand contended was supported by the detail of the evidence.

5. [177]

   That was true of his evidence concerning the period up to 25 September 2007, during which Mr Chand selected his exit date. It was more true for the period between that date and the time that he spoke to the call centre operator. It was decidedly true for the subsequent period up to 21 December 2012.

6. [178]

   Taking the second period, Mr Chand had to explain his actions over a period of some six weeks in which he ought to have expected that $1 million would be paid into his bank account about seven days after 25 September 2007. His evidence on the subject could fairly be described as casual, and he omitted to relate in a satisfactory way the steps that he must have taken to see whether the money was in his account, when it was he came to appreciate that his instruction had not been implemented, why it was that he was content to wait, and why it took him, on his case, until about 5 November 2007 to make an enquiry.

7. [179]

   In relation to the third period, it is obvious that Mr Chand was required to explain persuasively why he did not give a second instruction to the Bank, and to do so in a way that was explicable in terms of the information as to redemption values that is contained in Annexure A. He did not do so. More seriously, he did not advert to the statements that he made himself in his 4 August 2008 letter to the Bank, and that his solicitor made on his instructions in the 12 February 2009 letter. I will consider those statements more fully below. However, on the face of it, they are inconsistent in important ways with the case that Mr Chand sought to make in his testimonial evidence.

8. [180]

   Mr Chand claimed through his solicitor's 12 February 2009 letter that, in order to determine another exit date, Mr Chand "had to examine the five weeks' extra history between 25 September 2007 and 5 November 2007 to assess why the market went higher in October 2007 and to determine whether, some time during the period commencing the week of 5 November 2005 and ending mid-December 2007, there was any chance of the market recovering to that October 2007 high". Apart from suggesting that Mr Chand was looking for a better return than he would have received on 25 September 2007, the letter claimed that Mr Chand had to carry out additional market investigations. Mr Chand did not give evidence as to what was involved in undertaking that process, and did not explain how long it took him. The court has no basis for finding that Mr Chand was not free to deliver a new redemption request to the Bank at any time of his own choosing, because of delays caused by necessary investigations of the market prevented him from doing so.

9. [181]

   I have said above that there is one matter as to which I am unwilling to accept Mr Chand's evidence in the absence of corroboration. It concerns the period during which Mr Chand was actively pursuing the determination of a suitable new exit date. Mr Chand claims the period began on about 11 October 2007 when he recommenced his detailed investigation of the market after his 5 November 2007, call to the call centre. It ended when in "early December 2007" Mr Chand was required to spend more time fulfilling his obligations to his employer. It is inherently improbable that, if Mr Chand knew that the Bank had failed to pay the expected $1 million into his account two weeks or so after 25 September 2007, he would have waited a further month to call the call centre. More significantly, however, the 11 November 2007 date allows Mr Chand to sidestep the problem of explaining why he did not redeem in the previous month, while his redemption value was consistently greater than at 25 September 2007. Further, if Mr Chand became distracted in early December 2007, that allows him to sidestep the fact that his redemption value exceeded $1 million between 30 November 2007 and 13 December 2007, which was the obvious opportunity for Mr Chand to redeem and avoid suffering any loss. By early December 2007, the imminence of Mr Chand's planned departure from Australia for Fiji on 21 December 2007 was stark, and Mr Chand must have understood that he was approaching a 'now or never' situation. The dates given by Mr Chand are too convenient and improbable for me to be prepared to accept them on his word alone.

10. [182]

    The Bank made a number of specific challenges to the reliability of Mr Chand's evidence, and I find that a number of those challenges were warranted. That finding has not caused me to reject the whole of Mr Chand's evidence unless independently corroborated, but some of the evidence cannot be accepted as reliable.

11. [183]

    The Bank challenged the evidence given by Mr Chand in pars 56 and 78 of his affidavit that his conversation with the call centre operator caused him to conclude that a "technical fault of some sort" had had the result of "a possible drop out during transmission", so that the Bank "had not received the Withdrawal Form". At the time the transition took place a transmission report was automatically prepared that told Mr Chand that all of the pages had successfully been transmitted. Mr Chand retained the transition report, and was able to assert positively to the Bank's employees at the end of July 2008 that he had evidence that the redemption request had been received.

12. [184]

    Mr Chand attempted to explain his position in a manner that did not do him any credit, and which he ultimately was forced to abandon. His initial justification for his asserted belief that the Bank had not received the fax was that he believed it was more likely that the Bank's procedures were more reliable than those of his employer, whose fax machine was used to send the redemption request (T 107.30). The conclusion that the Bank had not received the redemption request at all is not a compelling result of knowledge that the instruction had not been entered into the Bank's computer system. Mr Chand responded in cross-examination by asserting that, what he really understood, was that, even if the fax was received, it must have been corrupted so that it was not intelligible (T 153.39). Mr Chand said that the corruption must have been absolute, because if there was enough information to notify the Bank that Mr Chand was the sender, he believed the Bank would have contacted him to confirm his instructions (T154.15). He had no explanation for why nothing was said in his affidavit about the possibility of the fax being received in a corrupted state.

13. [185]

    Mr Chand engaged in an exchange with Mr Einfeld concerning the provenance of par 58 that was not convincing (T 121.40 to 122.29). He said that he relied upon the statement by the Bank "that the Withdrawal Form had not been received." On his own evidence the operator did not say that the form had not been received. Mr Chand suggested that the words that he used "may have been altered slightly... to make it more readable." He could not confirm or deny that his words had been altered in the drafting process. He then said that the words "are probably more legal words than the ones I would ordinarily use."

14. [186]

    Mr Chand was ultimately forced to concede that what he said in par 56 about his redemption request not being received by the Bank was inconsistent with what he told Mr Lam on 30 July 2008, and that: "I guess I need to qualify that" (being that the Bank did not receive the request) (T 51.24).

15. [187]

    It was highly significant whether, in fact, the Bank did not receive Mr Chand's redemption request at all, or whether it was received but went astray for some reason after receipt. If Mr Chand believed that his request had not been received, then his subsequent failure to make strenuous enquiries and demand that the Bank implement his instruction would be explicable. If Mr Chand believed that the redemption request had in fact been received, but not processed for some unknown reason, the natural reaction of any investor would be to complain and pursue the matter. In that case the absence of the making of any enquiry or complaint by Mr Chand in fact would tend to support the conclusion that Mr Chand had had second thoughts about withdrawing from the market at that time.

16. [188]

    It appears that - whether consciously or unconsciously, it is difficult to decide - Mr Chand's evidence that he believed his redemption request had not been received, and particularly the prominence of that evidence, was influenced by an appreciation that his case would significantly be weakened if it was found that, in truth, Mr Chand believed that his request had simply gone astray after it had been received by the Bank.

17. [189]

    The Bank also relied upon a schedule that was handed up during the course of submissions, which sets out further aspects of Mr Chand's evidence that the Bank suggests diminishes the credibility of that evidence (T 240.26).

18. [190]

    It will be sufficient to deal with these additional submissions in a relatively summary way. I accept that, in suggesting in his affidavit (pars 53 and 54) that Mr Chand did not become concerned about the fate of his redemption request until late October or early November 2007, he omitted to give complete evidence of the steps that he must have taken, and indeed admitted in cross-examination, that must have caused him to appreciate long before that time that the Bank had not paid the $1 million that he expected into his bank account. As a separate matter Mr Chand suggested in evidence that the Statement of Advice that Mr Molesworth provided to him in connection with his 7 June 2006 investment related only to the future investment of Mr Chand's superannuation fund. That evidence was clearly inconsistent with the terms of the advice, which dealt with the whole of Mr Chand's investments (T 75.25). Additionally, Mr Chand also suggested that he did not have access to the internet when he was in Fiji in 2005 (T 44.17), which was untrue because the evidence established that Mr Chand sent an email to the Bank from Fiji about its failure to pay into his bank account an unused portion of pre-paid interest at the time Mr Chand redeemed his earlier investments in full. Finally, the evidence justifies the conclusion that Mr Chand probably exaggerated his understanding of the time that it would ordinarily take for the Bank to process his 25 September 2007 redemption request, as being between two and three working weeks (T 42.40 to 46; 89.22), when virtually all of the Bank's responses took significantly less time than that.

19. [191]

    The Bank also submitted that Mr Chand's evidence, in par 44 of his affidavit, that the unit prices provided on the Bank's website were at least two days old was false, and that Mr Chand admitted this (T 142.42). Mr Chand in fact said that each day's unit prices are published after 3 PM the next day, and that withdrawal applications submitted before 3 PM on a particular day will be processed on the basis of unit prices for that day, which will be published after 3 PM the next day. That evidence is consistent with the finding that I make below. Mr Chand's use of the expression "at least two days old" was inexact. What he actually described in par 44, correctly, was that a decision to redeem made, say, after 3 PM on Tuesday would have to be based on Monday's unit price. If, following the decision on Tuesday, a redemption application was actually made on Wednesday, the effective transaction price would be Wednesday's price, which would be calculated after the close of the markets on Wednesday, and published on Thursday. In that case two days would elapse between Monday's and Wednesday's prices.

Principal findings

1. [192]

   I will now set out the principal findings of fact that I have made relevant to Mr Chand's contract claim, as raised by the issues in contest between the parties. These findings supplement the conclusions that are set out in the earlier parts of these reasons in the course of my consideration of the evidence.

2. [193]

   Mr Chand appears to be an intelligent man, with a significant level of computer and mathematical competence.

3. [194]

   He did not have any formal qualifications or experience with the making of investments in the type of product offered by the Bank, but at least from the time of his first investment on 12 November 2004, Mr Chand immersed himself, on what might have been a daily basis during some periods, in a substantial amount of the financial and market information that was available to enable him to follow market trends, and make judgments as to how those trends might affect the value of his investments.

4. [195]

   Mr Chand was confident about his ability to interpret the available information, and make judgments about the appropriate time to enter into transactions to increase or reduce his investments. Mr Chand obtained some advice from Mr Molesworth in relation to the initial selection of his investments, but thereafter he acted principally on his own judgment in relation to the management of his investments.

5. [196]

   Mr Chand was sufficiently confident of the adequacy of his own judgment that he made his initial investments contrary to the explicit advice of Mr Molesworth, that the level of risk involved in the investments that Mr Chand proposed to make was only suitable in the case of long-term investments, whereas Mr Chand only intended to invest on a short-term basis. Mr Chand proceeded upon a basis that required him to execute a "Transaction Without Advice" acknowledgement.

6. [197]

   It may be difficult to assess objectively and reliably the level of risk that individual investors may be prepared to take. In relative terms, however, for an individual private investor, Mr Chand appears to have had a high appetite for risk. Not only was he prepared to ignore Mr Molesworth's advice, and to rely upon his own judgment as to how to manage his portfolio, but he also chose to invest uniformly in products that he understood to have been given a high-risk rating by the Bank. He understood that his investments were "aggressive", and that meant that values were volatile, and that values could move up or down. He was prepared to invest in products that used leveraging to increase the prospects of higher returns within the particular fund. Mr Chand eventually invested $1 million of his own money into the investments offered by the Bank, even though he did not own his own home. Mr Chand appears to have entered readily into the margin loan agreement with the Bank, and from time to time to have significantly increased his exposure under that agreement. Given Mr Chand's professional mathematical literacy, he must have understood fully the nature of the risks posed by margin lending agreements. Mr Chand believed that, provided that he could monitor the market and his investments closely, in the manner that he described in evidence, he could safely choose an appropriate "exit point" to ensure that he did not suffer any loss from his investments.

7. [198]

   Mr Chand decided, in late August or early September 2007, to take steps towards realising all of his investments with the Bank. He did so for two reasons, according to his own evidence. First, his view of the market was that global market volatility had started to appear in mid August 2007, and he considered that his highly geared investments were no longer safe. Secondly, he had decided to leave Australia in late December 2007 to have a holiday with his mother in Fiji for about one month.

8. [199]

   Mr Chand did not elaborate the reason for his change in sentiment about the market, or explain in detail the level of the risk that he perceived. In the light of subsequent events, Mr Chand was plainly correct in developing a concern about the safety of the market. His evidence about his concern should be understood in the context of his subsequent conduct. He did not foresee the doom that was actually approaching, and he did not act as if he understood that the need to exit from the market was dire. However, his evidence does establish that he understood that there were features of the market that made it prudent for a person with his investment profile to leave. He did not suggest in his evidence that he changed this opinion at any time before 21 December 2007.

9. [200]

   I accept Mr Chand's evidence that he believed that he could not safely monitor the investments while he was in Fiji. On 25 November 2005 Mr Chand submitted to the Bank a request to redeem the whole of his then investments for the same reason, that he was going to travel to Fiji. Mr Chand was apparently able to cope with the risk of his investments because of the level of his confidence that he could protect himself by a relatively intense level of day-to-day monitoring of the markets and his investments. That supports a finding that he would not readily tolerate a continuation of the risk while he was on holidays with his family, without the same level of access to market and financial information. I accept that Mr Chand did not consider the availability of an internet cafe in Suva to be adequate.

10. [201]

    Mr Chand's decision, made on the evening of 24 September 2007, to redeem all of his investments was made substantially because that was the first day during the period that Mr Chand was considering his exit that his redemption value exceeded $1 million. That was Mr Chand's break-even point.

11. [202]

    Mr Chand was encouraged to make his decision to redeem all of his investments, because his redemption value had generally moved upwards between 18 and 24 September 2007. I accept that, in a broad sense, Mr Chand would have gained confidence that he would not incur an unexpected transaction loss, because his redemption value was generally trending upwards.

12. [203]

    However the redemption values in Annexure A do not suggest that the market performed in any neat, or symmetrical way, and while an upward trend would instil some confidence, falls in the order of $50,000 or more could occur without warning at any time.

13. [204]

    It was the Bank's practice to strike unit prices on a daily basis after the value of a particular fund had been determined, after the close of the relevant market on that day. Unit prices were published at approximately 3 to 4 PM the following day, except on Fridays when they were published the next Monday, or public holidays when they were published the next business day. The Bank's Mr Dickson gave this evidence in his 2 November 2012 affidavit, at par 46. That means that the unit prices for Monday would be published after 3 or 4 PM on Tuesday. If Mr Chand made a decision on Tuesday evening to send a withdrawal request to the Bank by his employer's fax machine the next day, Wednesday, if he did so before the cut-off time of 3 PM, his transaction would be processed on that business day, according to the Product Disclosure Statement concerning withdrawals. Mr Chand would then receive "the next determined unit price". That price should be the price published after 3 or 4 PM on Thursday. That price would be the price calculated for Wednesday. If that reasoning is correct, then Mr Chand would on Tuesday and Wednesday have to act on Monday's price, and his transaction would be processed on Wednesday's price.

14. [205]

    The Bank received Mr Chand's 25 September 2007 fax. That fact was admitted. The fax that was received was complete. It bears the Bank's received stamp dated 25 September 2007.

15. [206]

    The evidence does not permit a positive finding about what happened to Mr Chand's redemption request, after it was received on the Bank's fax machine. The evidence establishes that Mr Chand sent the redemption request on the fax number appropriate for dealings with the Bank's margin lending arm, rather than the internal organisation that processed investment transactions. However, earlier transactions concerning Mr Chand's investments were processed effectively by the Bank notwithstanding that he used the wrong fax number. The Bank abandoned any reliance on the use of the wrong fax number being the cause for the redemption request to have gone astray. The Bank apparently found the redemption request relatively easily after Mr Chand raised the issue at the end of July 2008. The Bank did not call evidence to explain how the redemption request was found, or where it was. An internal Bank email, referred to above, suggested there were no records that explained what had happened with the redemption request after its receipt. However, the officer of the Bank who acknowledged receipt of the redemption request on 31 July 2008 suggested to Mr Chand that the form had not been processed because it instructed that all proceeds be paid into Mr Chand's personal bank account, without first repaying the margin loan. The Bank made the same claim in its 11 September 2008 letter. The Bank did not pursue this issue as a basis for exonerating it for failing to implement the redemption request. Nor did the Bank call evidence to explain the true position. Of the two parties to the proceedings, only the Bank was in a position to explain its internal processes, or prove why it could not do so. Furthermore, the Bank did not call any evidence to explain why, if it did receive a redemption request that it believed was defective, it did not immediately communicate with Mr Chand.

16. [207]

    On this state of the evidence I could not find positively that relevant officers of the Bank were entirely unaware that the Bank had received Mr Chand's redemption request on its fax machine. Such evidence as there is suggests that the Bank's record's do not contain any explanation of how the redemption request went astray. It is improbable that the Bank would have failed to process the request if its officers were aware it had been received by the Bank, and improbable that the officers would not have contacted Mr Chand for further instructions if they thought there was some defect in the request. However, improbable events do occur. I could not make a positive finding simply from the evidence that the redemption request was not entered into the Bank's computer system, that the redemption request had gone astray for some reason that was entirely accidental and inadvertent.

17. [208]

    From the time Mr Chand sent the fax to the Bank on 25 September 2007, he retained a fax transmission report that confirmed that the transmission had completely been successful. It is probable that Mr Chand reviewed the fax transmission sheet soon after it was produced and satisfied himself that the transmission had succeeded. Mr Chand did not give evidence that he did not read the transmission report until soon before he relied upon it in mid- 2008 during his conversation with Mr Lam.

18. [209]

    Mr Chand became aware relatively soon after 25 September 2007 that the Bank had not redeemed his investments, and paid the redemption value of approximately $1 million into his bank account. It is overwhelmingly likely that Mr Chand would have monitored his bank records. The PDS suggested that ordinarily deposits would be made within seven days. Mr Chand said, in the letter that he wrote personally to the Bank on 4 August 2008, that it became apparent that the request had not been executed "after a period of a couple of weeks". Mr Chand said in his affidavit that, in his experience, it would usually take perhaps 10 working days before he would receive a confirmation from the Bank of a transaction. Mr Chand's 10-day estimate is reasonably consistent with the two weeks referred to in his letter. Mr Chand was aware that the $1 million had not been paid into his bank account no later than about two weeks, give or take, after 25 September 2007.

19. [210]

    Mr Chand said that, after he did not hear anything for a month regarding his withdrawal, it seemed unusual, and around late October 2007, or early November 2007, he telephoned the Bank on 131336 and talked to the call centre operator. Mr Chand gave 5 November 2007 as the most likely date. If Mr Chand realised that the Bank had not implemented his redemption request some weeks after 25 September 2007, when the expected time for payment of the $1 million dollars into his account expired, it would be expected that he would make an enquiry of the Bank relatively quickly. It is implausible that he would simply have waited until about 5 November 2007 in the expectation that $1 million would appear in his account. Annexure A shows that Mr Chand's redemption value stayed significantly above $1,034,636.81 until 8 November 2007. It fell about $60,000 between 4 and 5 November 2007. I cannot make a positive finding on the evidence as to when Mr Chand called the call centre. If Mr Chand did delay making the call until about 5 November 2007, the only explanation I can see for such an unusual delay is that Mr Chand was aware that the value of his investments had risen after 25 September 2007, and remained "buoyant". It is possible that, if Mr Chand did wait until early November, some fall in the value of his investments triggered his desire to make an enquiry.

20. [211]

    I find that Mr Chand kept his eye on the published unit prices, at least to a degree that was adequate to enable him to form a general understanding of movements in his redemption value after 25 September 2007. Even though Mr Chand may have expected that his request would have been processed at the unit prices applicable for 26 February 2007, I do not accept that he would entirely have ignored unit prices up until the beginning of November 2007. It is probable that, at least in a general way, Mr Chand satisfied himself, as the values in Annexure A demonstrate, that the redemption price for his investments had consistently exceeded that which applied on 24 September 2007.

21. [212]

    Mr Chand did make a call to the call centre. On balance I accept Mr Chand's evidence that the call took place, although there is no evidence to corroborate Mr Chand's assertion. Furthermore, it should be noted that Mr Chand did not refer to the making of any such call in his 4 August 2008 letter to the Bank. It is unlikely that Mr Chand would have ignored the unexplained failure of the Bank to process the redemption request, as it was contractually obliged to do, and simply proceeded without making some enquiry of the Bank, such as he said he did to the call centre.

22. [213]

    The call centre operator told Mr Chand that the operator could not "see" any withdrawal requests against Mr Chand's account, which must have meant to Mr Chand that the receipt by the Bank of the redemption request had not been entered into the Bank's computer system.

23. [214]

    Mr Chand therefore had evidence that the fax had successfully been transmitted, but it had not been entered into the Bank's computer system. I do not accept that Mr Chand concluded that the Bank had not received the request at all, in the sense that the fax transmission had failed, or been corrupted completely. It is probable that Mr Chand concluded that the fax, though received, had gone astray for some unexplained reason. As he said in his 4 August 2008 letter, "it became apparent that the request had not been executed for some reason".

24. [215]

    Mr Chand did not follow up the discussion with the call centre operator, by contacting responsible officers of the Bank, or Mr Molesworth. He did not claim to have done so. That is in the circumstances a significant omission. It is unlikely Mr Chand would have been satisfied with the call centre's responses, if he continued to expect the Bank to implement his request. Mr Chand must have been at least content to remain in the market.

25. [216]

    I accept that Mr Chand did not re-engage in the extensive level of monitoring of the market that he had engaged in before 25 September 2007, until after he realised that the Bank had failed to implement his redemption request.

26. [217]

    After Mr Chand learned during his call to the call centre operator, that his redemption request had not been entered into the Bank's computer system, the three possible courses of action listed by his solicitor in the 12 February 2009 letter to the Bank occurred to him, either immediately or within a short space of time.

27. [218]

    Unless, at that time, Mr Chand already had a relatively clear and adequate understanding of the redemption values that had applied in the period after 25 September 2007, Mr Chand must have assiduously investigated what those values had been, soon after he leant that the Bank had not processed his application. The reason that Mr Chand's solicitor gave for why Mr Chand did not adopt the second possibility, being to give further instructions to redeem immediately following the discussion with the call centre operator, was that it "was considered inappropriate given that the value of his portfolio was generally unchanged". If Mr Chand knew enough about recent redemption values to make that decision, he must have known that they had generally been higher than they were on 24 September 2007.

28. [219]

    The solicitor said that Mr Chand did not adopt the first course of pursuing the whereabouts of the original redemption application, because that "seemed inappropriate, time-consuming and uncertain as to its outcome, given the denial of receipt of the request in the first place." The Bank did not, by means of the response of the call centre operator, deny that the Bank had received the instruction. All that was said was that the instruction did not appear on the computer screen where the operator expected.

29. [220]

    I accept that it is unlikely that Mr Chand would readily have committed himself to a significant argument with the Bank, let alone contemplate any legal proceedings at that time, given the potential for factual uncertainty and difficulties of proof. However, the making of a firm request for a satisfactory explanation would have been a simple step to take.

30. [221]

    Mr Chand's solicitor said in his letter that Mr Chand had to examine the five weeks' extra history, between 25 September 2007 and 5 November 2007, "to assess why the market went higher in October 2007 and to determine whether, some time between the period commencing the week of 5 November 2007 and ending mid-December 2007, there was any chance of the market recovering to that October 2007 high". The solicitor also said that Mr Chand's "aim was to redeem for the maximum value possible - if possible, higher than 25 September 2007, but not lower - and this possibility could only be determined by looking at the October 2007 trends". It is an important finding that I find Mr Chand did what he said through his solicitor he had done, and for the reasons that were given. Mr Chand waited to see whether the market would rise again to the levels experienced October 2007.

31. [222]

    I do not accept the Bank's submission that Mr Chand simply changed his mind entirely, and decided to stay in the market indefinitely, in the hope of achieving a substantially better result in due course, than he would have received, had the Bank processed his 25 September 2007 request. I accept that Mr Chand intended to realise his investments before he left Australia for Fiji in late December 2007.

32. [223]

    Mr Chand decided not to pursue enquiries with the Bank about the fate of his 25 September 2007 application, because he was satisfied that he was likely to do better, or at least not worse, if he reconsidered his position.

33. [224]

    Given Mr Chand's concern about the volatility in the market, and the inappropriateness of maintaining the geared investments that he had made, it would have been prudent for Mr Chand to have submitted a new instruction to the Bank after he learned of the Bank's failure, if he could identify when he could recover the same, or nearly the same, redemption value as at 25 September 2007.

34. [225]

    Mr Chand made a deliberate decision to stay in the market, albeit for no more than up to 6 weeks, in order to see whether he could achieve a result that was equivalent to that which he would have achieved had he redeemed at an appropriate time in October. The highest increase during that period over the 25 September 2007 value was $155,000 on 11 October 2007. The decision was made relatively shortly after Mr Chand became aware that the Bank had not paid the $1 million into his bank account. The precise time when the decision was made cannot be determined. When Mr Chand made the decision, he was aware that he could redeem his investments at any time by sending a further redemption request to the Bank. Mr Chand remained aware of both the risky nature of his investments, and that negative market circumstances had increased his risk, which was one of the primary reasons for his initial decision to redeem his investments on 25 September 2007.

35. [226]

    At some point it occurred to Mr Chand that, if he waited until mid-December 2007, his redemption value would be augmented by a distribution. Mr Chand said that the significance of the possible distribution was that it enabled him to reduce the level of his monitoring of the market during December, when his employment substantially distracted him from managing his investments. Mr Chand's suggestion was that it became less necessary for him to search out a rising market to avoid an unexpected transaction loss, as the expected distribution would probably cover the difference.

36. [227]

    There is some logic in Mr Chand's claim, that redemption transactions were at risk of causing unexpected losses because of changes in redemption value over the few days relevant to the transaction. There is also some logic in the proposition that, if the transaction is executed at a time of rising values, there is at least a lower likelihood that an unexpected loss will be realised. It is difficult, however, to confirm, simply by reviewing the consecutive redemption values in Annexure A, that waiting for convenient short-term rising values was realistic or prudent. One does not see in the figures a neat series of rising markets followed by decreasing ones. It is true that values go up and down, but it is not easy to fit the movements in value into the profile that Mr Chand says he was waiting for to enable him to choose a new exit date.

37. [228]

    There is some force in the argument that the expected income distribution might reduce the risk of the transaction loss that Mr Chand says that he feared, but the reality should not be ignored that the distribution would also have increased the overall return to Mr Chand, given the generally reduced redemption values from about 12 November 2007, provided of course that Mr Chand could affect a redemption before the fact of the distribution being made itself depressed values.

38. [229]

    Mr Chand has not adequately explained why he did not give the Bank an instruction to redeem his investment in the period between 30 November and 13 December 2007, when the redemption value was above $1 million. That period may not have fitted neatly into the description of the rising market that Mr Chand said he was looking for, but it did, to a reasonable degree, when it is seen that redemption values were significantly under $1 million between 20 and 29 November 2007, and then above $1 million between 30 November and 13 December 2007. Between 6 and 13 December the redemption values exceeded $1,030,000.

39. [230]

    It is probable that Mr Chand was influenced to decide not to redeem between 30 November and 13 December 2007 by his expectation that, if he waited, he would get the benefit of the distribution.

40. [231]

    Mr Chand claimed in his 4 August 2008 letter that "market uncertainty and volatility which then followed and ongoing made timing another exit difficult". His solicitor said that his "client used his heuristics in endeavouring to pick another exit date". Mr Chand's case was, in essence, that, using the information that was available to him, he was unable between about 10 November 2007 and 21 December 2007 to select an appropriate date to deliver a second redemption request to the Bank, in a manner that was reasonably likely to achieve his target without undue risk of an unexpected transaction loss. He did not make any real attempt to explain or justify that proposition. I am not satisfied, from a consideration of the information in Appendix A, that Mr Chand's claim is valid. There were many days upon which Mr Chand could, with reasonable safety, have delivered a new redemption request to the Bank and received $1 million in redemption value, or close to that amount.

41. [232]

    I find, in the terms to which Mr Chand agreed in cross-examination (T 166.4 to 34), that Mr Chand decided that he would not give a second instruction to the Bank to redeem, after he realised that the Bank had not processed his original request because the value of his portfolio had increased and appeared to be "buoyant". He made a decision to determine another exit date deliberately, voluntarily, and knowing that at any time his unit prices could go up or down. When it was put to Mr Chand that he "gambled and lost", Mr Chand responded: "I believe it was a calculated move based on my assessment of the situation. I wouldn't call it a gamble. A gamble is essentially making an assessment without understanding the situation" (T 166.30).

42. [233]

    It is necessary to consider whether there is any significance in the delay of some nine months or so between the time Mr Chand understood the Bank had not processed his request and the end of July 2008, before Mr Chand sought to pursue the fate of his redemption request with the Bank by making a direct enquiry. The delay would be consistent with Mr Chand believing that his fax transmission of the redemption request had failed, but for the fact that Mr Chand had proof that it had succeeded, and Mr Chand asserted that fact to Mr Lam. Mr Chand suffered the whole of his equity loss and also the additional loss of his first margin call payment without demur, until he finally complained at the time he received the second margin call. The only explanation I can see for that conduct is that Mr Chand initially understood that he had suffered the consequences of his own deliberate decision to stay in the market, rather than to renew his redemption request when he could have recovered his equity loss.

43. [234]

    The fall in the redemption value of Mr Chand's investments from $1,030,270.98 on 13 December 2007 to $783,633.07 on 20 December 2007, which was the eve of Mr Chand's departure to Fiji, was sufficient to dissuade Mr Chand from giving the Bank a second redemption request during that period. The fall of some $250,000 in redemption value, or about 25%, must have come as a shock to Mr Chand. His observation that he had no 'Plan B' is probably an accurate description of his position. It is understandable that he made a decision not to realise a loss of this magnitude. The fall happened over a period of some seven days. Nothing in the evidence suggested that Mr Chand ought reasonably to have known that the situation was going to get worse. A comparison of the redemption values during this period with the values shown for earlier dates in Annexure A suggests that it would have been reasonable for Mr Chand to wait and see, in the expectation that it was possible that the redemption value of his investments would rebound, at least from the low figure on 20 December 2007.

44. [235]

    The evidence does not permit any specific finding as to the level of monitoring that Mr Chand gave to his investments while he was in Fiji. It is probable that he would have made the best attempt possible to ascertain what was happening. Mr Chand would have been blasé in the extreme, if he were able to ignore the issue while he was in Fiji, given the events of December 2007.

45. [236]

    As I have noted above, Mr Chand left Fiji to return to Australia on 27 January 2008. The low point in value was $218,967.52 on 22 January 2008. By 27 January 2008 the value had risen to $548,725.96. That would have reasonably encouraged Mr Chand to hope that his situation would improve. It did not, and indeed the redemption value of $533,738.80 on 28 January 2008 was the highest value until the date of the Bank's first margin call on 21 or 22 April 2008, when it was $374,792.04. After that later date the apparent redemption values in Annexure A cannot directly be compared with earlier values, because of the effect of contributions of capital by Mr Chand, and the sale of portions of his investments. In a general way the redemption value of Mr Chand's investments declined after 28 January 2008.

46. [237]

    There is nothing in the evidence of the redemption values that suggests that, at any time over the period after 21 December 2007, the value increased markedly to an amount that ought reasonably to have caused Mr Chand to understand that he should renew his redemption request to crystallise and cut his losses. There was no other evidence of information available in the market to persons in the position of Mr Chand that ought reasonably have caused him to cut his losses at any particular time.

47. [238]

    Although the evidence is not detailed, it appears that Mr Chand had some communications with Mr Molesworth, and perhaps other officers of the Bank, for the purpose of attempting to manage his financial predicament. There is no evidence that anyone on behalf of the Bank advised Mr Chand to take any course that was different than that which he took. In fact, it appears that Mr Chand generally acted in accordance with such advice as was given by the Bank. Mr Chand gave evidence in cross-examination that Mr Molesworth advised him to try to prop up his portfolio as much as he could. That evidence was not contradicted. It is consistent with Mr Chand's conduct.

48. [239]

    I have noted above that Mr Chand did not provide any positive evidence concerning his process of reasoning in relation to his making the two margin call payments that totalled $500,000. Those payments in fact increased Mr Chand's loss. It is not obvious from an examination of Annexure A that it was a reasonable commercial decision for Mr Chand to risk increasing his loss. However, first, Mr Chand must have been in a serious quandary as to the best course for him to follow. He was effectively in a 'dammed if he did' and 'dammed if he didn't' position. In making the payments he was responding to a demand made by the Bank, albeit that he could meet the demand in a number of alternative ways. On the evidence, Mr Molesworth advised Mr Chand to prop up his investments, and Mr Molesworth at least acquiesced in the decision of Mr Chand to make the additional margin call payments. In those circumstances, I find that it was reasonable for Mr Chand to risk losing the margin call payments in order to give himself a chance of recovering a substantial part, if not all, of the equity loss. I am fortified in that conclusion by the fact that the Bank did not make a thoroughgoing challenge to the commercial wisdom of Mr Chand making the margin call payments.

Claim in negligence

1. [240]

   The Bank has admitted that it breached its contract with Mr Chand, but denied that it was negligent.

2. [241]

   The only particulars that Mr Chand has given of his negligence case is, as noted above, that the Bank failed to comply with Mr Chand's 25 September 2007 redemption request.

3. [242]

   I am not satisfied that Mr Chand has made out a case of negligence against the Bank. He did not in any substantial or adequate way attempt to do so. It does not necessarily follow from the fact that the Bank did not implement Mr Chand's instructions that it failed to exercise reasonable care towards Mr Chand in breach of a duty of care, assuming such a duty was identified and established.

4. [243]

   The evidence shows that Mr Chand sent his 25 September 2007 fax on a number that was different to that which Mr Chand was invited to use by the Bank's Product Disclosure Statement. Mr Chand sent the fax to the part of the Bank that dealt with his margin loan, and not to the part that dealt with his investments. Mr Chand gave evidence that he had consistently communicated his instructions to the Bank using the same fax number that he used on 25 September 2007. It is possible that the unexplained failure of the Bank to act on the instruction that it received was caused, or influenced, by the fact that Mr Chand's fax was sent to the wrong number. It is possible that the Bank's internal procedures and protocols miscarried.

5. [244]

   There is an alternative possibility, that the relevant officers of the Bank were aware that the redemption request had been received, but took the view that the Bank was not required to implement it because, read literally, it instructed the Bank to pay the whole of the portfolio value realised on redemption of Mr Chand's investments into Mr Chand's bank account, without first paying out his margin loan.

6. [245]

   The evidence establishes that the Bank in fact received the redemption request in a form that was clear and intelligible. Mr Chand did not establish any basis for a claim that the Bank was negligent in not contacting him to get a better explanation of the fax transmission.

7. [246]

   Mr Chand has not, on the evidence, established that the failure of the Bank to implement his redemption request was a breach of a duty of care that the Bank owed to him.

8. [247]

   In any case Mr Chand did not suggest that there would be any difference in the outcome to this case, if he succeeded on a negligence claim, instead of his contract claim. As the Bank has admitted that it breached its contract, so that the only issue is one of causation, I would, on the state of the evidence, have declined to make specific findings on Mr Chand's negligence claim, if I had not come to the conclusion that the evidence claim should be dismissed for want of evidence.

Principal issues

1. [248]

   The Bank accepts that its failure to implement the redemption request that Mr Chand delivered to it on 25 September 2007 was a breach of its contract with Mr Chand.

2. [249]

   If the Bank had properly performed the contract, it would have redeemed all of Mr Chand's investments, paid out his margin loan, and paid the remaining $1,034,636.81 into his bank account. The amount that Mr Chand has described as his equity loss would have been safely in his bank account. Mr Chand would have been freed from the risk of subsequent movements in the market that could reduce the portfolio value of his investments. He would have been freed from his obligations under the margin loan agreement, including the risk of having to meet margin calls if falling portfolio values caused his current loan-to-security ratio to fall below the agreed ratio.

3. [250]

   The Bank accepts Mr Chand's claim as to the objective consequences of the breach. In the events which happened, Mr Chand suffered the whole of the equity loss that he claimed, being $1,034,636.81. Mr Chand also lost the two amounts of the margin calls that he paid of $400,000 on 22 April 2008 and $100,000 on 31 July 2008. As stated above, it is my understanding of the outcome of the argument on the quantification of Mr Chand's loss that the Bank does not challenge that in addition Mr Chand suffered further interest charges, and that the net position was, at the date of the trial, that the objective loss suffered by Mr Chand was $1,536,618.04.

4. [251]

   That sum is the amount that Mr Chand would need to receive in order to put him in the same position that he would have been in if the Bank had performed, rather than breached, the contract.

5. [252]

   As noted, the Bank admits that Mr Chand would not have suffered this objective loss 'but for' its breach of contract.

6. [253]

   The Bank nonetheless argues that it is not liable to pay compensation to Mr Chand equal to this objective loss, and that, at most, it is liable for nominal damages. It says that Mr Chand's conduct was the effective cause of the whole of his loss. Alternatively, Mr Chand failed to act reasonably to avert his loss, in circumstances in which he could have avoided it in its entirety. As a separate matter, the Bank argues that, if its claims as to causation and mitigation are not accepted, the amount of damages that are awarded to Mr Chand should be reduced to reflect the contribution to his loss by his own negligence. Mr Chand denies that any conduct on his part should disentitle him from being awarded damages equal to the whole of his loss.

7. [254]

   The parties are in dispute about three principal issues. The first concerns the nature of the Bank's contractual obligation, and the basis upon which it breached that obligation. The question is whether the Bank breached an absolute contractual promise, or whether its liability arises effectively in negligence, because it breached a term of the contract that required it to act with reasonable diligence in implementing Mr Chand's redemption request. The second issue concerns the proper basis for assessing Mr Chand's loss, for the purpose of quantifying the measure of damages to which he may be entitled. In practical terms, this issue resolves into identifying when Mr Chand suffered the individual components of his loss, and accordingly how the principles concerning causation and mitigation are to be applied. Thirdly, the parties were at issue as to the result of applying the principles concerning causation and mitigation to the conduct of Mr Chand in relation to the circumstances in which his loss was realised.

8. [255]

   In relation to the first of these issues, it has already been noted above that the Bank asserted relatively early in the trial that Mr Chand's contract claim was not fully pleaded, and in fact was based upon breach of an implied term in the contract. The Bank pleaded in its further amended defence that, if the bank was negligent, that negligence did not cause the loss suffered by Mr Chand, within the meaning of s 5D of the Civil Liability Act 2002 (NSW), because it is not appropriate for the scope of the Bank's liability for negligence to extend to the loss suffered by Mr Chand. Mr Einfeld clarified the Bank's position during the course of Mr Neil's submissions by saying "upon the assumption that there is an implied term to implement a request and that we had a duty to do that, a breach of the term we say is tantamount to a breach of a duty of care towards the plaintiff" (T 189.20).

9. [256]

   I have found that the term of the contract that the Bank breached is contained in the PDS, which was the basis of Mr Chand's application to make his investments. The term imposed upon the Bank an express obligation to take identified steps upon receipt of a proper redemption request from Mr Chand. Those steps included procuring the redemption of the individual investments by taking the necessary steps with the managers of the particular funds. The Bank was required to pay an amount into Mr Chand's bank account, which was calculated on the basis of values identified in the PDS, being, depending upon the time that the Bank received the redemption request, the published market values of the individual investments calculated after the close of the markets on a particular day. The only part of the Bank's obligation that was implied was its obligation, and entitlement, to apply the necessary part of the realised portfolio value to pay out Mr Chand's margin loan. The precise nature of this implied component of the Bank's obligation was not explored, because ultimately the Bank did not pursue its original stance that it did not breach the contract because Mr Chand did not give it an express instruction to apply part of the proceeds of the redemption of his investments to pay out his margin loan. It may be that the express obligation of the Bank was to pay the net balance of the realised portfolio value, after repayment of the margin loan, into Mr Chand's account. Adjustments for paying the outstanding fees to which the Bank was entitled for providing investment advice to Mr Chand, and Mr Chand's entitlement to be reimbursed a part of his pre-paid interest, may have occurred later. That does not matter, as ultimately the adjustments would lead to Mr Chand receiving the redemption value that was applicable on the date upon which the contract required the redemption request to be implemented.

10. [257]

    I have found that the Bank's liability is not based upon negligence, whether in contract or tort.

11. [258]

    For reasons that will appear from my consideration of the third issue, concerning the effect of applying the principles of causation and mitigation, the outcome of this case does not depend upon whether in fact the Bank breached an express term of the contract, or whether it failed to act with reasonable diligence in performing its obligations. In short, the proposition that finds expression in s 5D(1)(b) of the Civil Liability Act, that a determination that negligence has caused particular harm does not only require proof of causation in fact, but also requires a finding that it is appropriate for the scope of the negligent person's liability to extend to the harm caused, has an equivalent under the general law in relation to breaches of absolute obligations in contracts. On the present state of the authorities, it is appropriate for a trial judge to treat the question whether that equivalent principle should be expressed in terms of the appropriate scope of the contract defaulter's liability (using the terminology in s 5D(1)(b)), or whether it remains necessary to apply historically accepted principles associated with the concept of novus actus interveniens, as a matter to be resolved by courts of higher authority. The application of the equivalent approach gives the same result in this case

12. [259]

    In relation to the second issue between the parties, the parties took different stances as to how and when the court should treat Mr Chand's loss as having occurred. Both parties agreed that Mr Chand's loss should be assessed as at the date of the breach.

13. [260]

    Mr Chand's contention was that the equity loss occurred on 25 September 2007. Each of the two margin call losses occurred on the dates when Mr Chand made the payments to the Bank. The individual interest charges constituted losses at the time the amounts were charged to Mr Chand. The net loss involved aggregating these amounts, and offsetting the residual value of Mr Chand's investments, as stated in the Bank's statement of account, immediately before the commencement of the hearing. Mr Chand argued that, as he had suffered actual loss on 25 September 2007, the significance of how he subsequently dealt with his investments was a matter going to the application of the principle of mitigation.

14. [261]

    The Bank, on the other hand, pointed to the fact that, even though it was true that an effect of the Bank's breach was that it did not pay the $1 million into Mr Chand's bank account on or about 25 September 2007, at that date Mr Chand owned the investments, which had a redemption value that precisely equalled the amount that the Bank had failed to pay into the account. Mr Chand did not suffer an actual loss as a result of the breach, and at most he is entitled to nominal damages. Thereafter, according to the Bank, from the time Mr Chand came to realise that his redemption request had not been implemented, Mr Chand could readily have submitted a new request, and if he had done so he could have realised a redemption value that, for a considerable part of the time up to mid-December 2007, was greater than the equity loss, and, for other parts of the time, a redemption value that was only a little less than the equity loss. The Bank argued that, in fact, Mr Chand made a deliberate and voluntary decision to stay in the market, so that his ultimate loss was caused by that decision rather than the Bank's breach. Alternatively, the Bank argued that Mr Chand's conduct was so unreasonable that the court should find that the scope of the Bank's liability should not extend to the loss actually suffered by Mr Chand, notwithstanding that that loss was caused in fact by the breach. As a further alternative, the Bank submitted that Mr Chand failed to mitigate his loss, when he could have avoided that loss entirely.

15. [262]

    Essentially, Mr Chand's position was that he suffered an immediate loss equal to his equity loss, although other consequential losses followed. The Bank's position was that its breach of contract did not directly cause an actual loss, but created a risk of loss (and indeed profit).

16. [263]

    Aspects of the recent decision of the High Court of Australia in Clark v Macourt (2013) 304 ALR 220; [2013] HCA 56 may be important to the resolution of this issue. The principal judgment was delivered by Keane J. Hayne J [23], and Crennan and Bell JJ [24], agreed with the reasons for decision of Keane J, but offered observation of their own. Gageler J dissented.

17. [264]

    The decision reiterates "the principle according to which damages for breach of contract are awarded is that the damages should put the promisee in the same situation with respect to damages, so far as money can do it, as it would have been in had the broken promise been performed": Keane J [116]. His Honour repeated the statement of the High Court in Tabcourt Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [13] that applied the "ruling principle" established by Parke B in Robinson v Harman (1848) 1 Exch 850 at 855.

18. [265]

    As I have noted, the parties to the present proceedings accepted this principle. The consequence is that, if Mr Chand is entitled to be paid damages for the whole of the loss that he suffered, the quantum should be $1,536,618.04.

19. [266]

    A company controlled by Dr Macourt contracted to sell the assets of a fertility clinic to Dr Clark. Dr Macourt guaranteed the obligations of the company under the contract. The company warranted that certain of the assets, being straws of donor sperm, satisfied specified criteria. A portion of the assets did not satisfy the criteria, and were accordingly useless. Dr Clark framed her claim for damages in terms of the price that she would have had to pay on the date of completion of the contract for replacement donor sperm that complied with the criteria. Dr Macourt contended that Dr Clark's claim was not for the value of the non-compliant assets, had they complied with the requirements of the contract at the date of completion. Dr Macourt argued that Dr Clark's damages should be assessed on the basis that the contract was a contract for the purchase of a business, not the acquisition of assets. The terms of the contract did not permit the identification of the portion of the purchase price that was paid for the delivery of the non-compliant assets. Dr Macourt argued that Dr Clark had not suffered any loss, because, in the subsequent operation of the fertility clinic, Dr Clark recovered from her patients, from supplying them fertility services, more than her costs of acquiring replacement compliant straws of donor sperm.

20. [267]

    The trial judge accepted Dr Clark's argument. Dr Macourt succeeded on appeal to the New South Wales Court of Appeal. As Gageler J noted at [57], the Court of Appeal held that the true measure of damages available to Dr Clark was "that part of the overall cost of sourcing straws of replacement sperm already acquired which had not been recouped from patients up to the date of trial, together with an amount representing the capitalised value of that part of the overall cost of sourcing replacements for the rest of the 1996 straws which could be expected not to be able to be recouped from patients in the future". Dr Clark did not claim damages measured in that way.

21. [268]

    Keane J held at [103]: "The appellant was entitled to frame her claim in the manner most advantageous to her, and to have that claim determined." His honour further said: "[109] The value to be paid in accordance with the ruling principle is assessed at the date of breach of contract, not as a matter of discretion, but as an integral aspect of the principle, which is concerned to give the purchaser the economic value of the performance of the contract at the time that performance was promised. In this way, the measure of damages captures for the purchaser the benefit of the bargain and so compensates the purchaser for the loss of that benefit. [110] The application of the ruling principle to measure value lost at the date of breach of contract serves the important end of bringing finality and certainty to commercial dealings. It ensures that whatever might befall the purchaser after the date of the breach, for good or ill, and whether by reason of the purchaser's acumen, or lack of it, in dealing with other persons who were not party to the contract, and whatever movements may occur in the market, these developments have no bearing on the entitlement of the purchaser and the liability of the seller."

22. [269]

    In essence, Gageler J found, at [68]-[70], that the case did not fit within the "standard category" of a contract for the sale of marketable goods, as for ethical reasons Dr Clark was bound not to charge patients more than the costs and expenses of acquiring the sperm, whatever those costs and expenses happened to be. The goods therefore had a "limited value" to Dr Clark. If Dr Clark had taken possession of compliant goods, she would have had the benefit of being relieved of the need to source sperm from somewhere else as and when she needed sperm to treat her patients. Gageler J had earlier [60] referred to the 'ruling principle' that the injured party 'is, so far as money can do it, to be placed in the same position, with respect to damages, as if the contract had been performed' as well as to its corollary that the injured party 'is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed'" (citations omitted).

23. [270]

    The question is whether the decision in Clark v Macourt determines which of the parties' approaches, as to how the individual components of Mr Chand's loss occurred, should be accepted. The better view is that it does not. That case was concerned with the proper way to identify Dr Clark's loss: see Hayne J at [8]-[10]. In the present case the Bank accepted the manner in which Mr Chand framed his claim for loss. The difference was as to when components of the loss occurred, for the purpose of applying the principles of causation and mitigation.

24. [271]

    At the date of the Bank's breach Mr Chand retained investments that had a value equal to the value of the money that would have been paid into his account, if the Bank had performed the contract. However, as a result of the breach, Mr Chand involuntarily retained the risk of owning the investments and being party to the margin loan contract. The value of the investments could have increased, and in fact did so for about six weeks. The value could have remained above that which would have yielded an amount equal to the equity loss, and ultimately been realised by Mr Chand in an amount whereby Mr Chand's redemption value was greater than the equity loss. If that had happened, the breach of contract would not have caused Mr Chand to suffer any loss at all. It is in the nature of the value of investments in trading markets that it fluctuates, and that is what happened in the present case. At least up until mid-December 2007, variations in market values produced notional profits and losses to Mr Chand above or below a redemption value equal to the equity loss. A decision by Mr Chand to deliver a new redemption request to the Bank at particular times would have crystallised an advantageous or disadvantageous outcome compared to the Bank's performance of the contract. That was so at least to mid-December, when the portfolio value of Mr Chand's investments commenced its inexorable decline. Even then Mr Chand could have minimised his ultimate loss by redeeming at the most propitious time. Mr Chand had a choice when to act, save in the cases where he was compelled to act under the terms of the margin loan contract.

25. [272]

    Although the loss suffered by Mr Chand must be calculated as at the date of the breach, it was in principle and in practice impossible at that time to be sure that he would suffer a loss, and the amount of any such loss could not be determined. This is a case where the amount of the loss can be assessed at the date of the breach, but considering later events on the principle in Willis v Commonwealth 73 CLR 105; [1946] HCA 22, as applied in the context of a contract case by the Court of Appeal in Janos v Chama Motors Pty Ltd [2011] NSWCA 238 at [1], [2] and [36]-[42]. As noted by Handley AJA at [36]: "In awarding damages for prospective loss the court takes into account later events that increase or diminish that loss". There was no real issue between the parties concerning the application of this principle to the present case, although they did not embrace it.

26. [273]

    I agree with the Bank's argument that, at the date of the Bank's breach of contract, Mr Chand's loss was prospective rather than actual or immediate. However, if that conclusion is incorrect, whether because of the statements of principle in Clark v Macourt, or otherwise, the error will not affect the outcome unless different results arise from the different ways that the parties claim the principles of causation and mitigation should be applied to the different ways in which the parties categorised the occurrence of Mr Chand's loss. That is so because the subsequent history of relevant events up to the date of the trial is known with sufficient certainty. It will only be if differences in the burden of proof on the issues of causation and mitigation, or differing applicable standards of reasonable conduct imposed upon Mr Chand, lead to different results, that it will make any difference as to how the occurrence of Mr Chand's loss is characterised.

27. [274]

    It is therefore appropriate to consider the third issue between the parties, concerning how the principles of causation and mitigation should be applied. That is the paramount issue in this case.

28. [275]

    Mr Chand emphasised the relevance of the principle of mitigation, while the Bank approached the determination of the dispute from the perspective of causation, on the implicit assumption that the application of the different principles might be of advantage to their respective cases.

29. [276]

    That assumption may not be correct, and it will be necessary to address it in the reasons that follow.

30. [277]

    Established legal principle requires that the plaintiff carry the burden of proving that the plaintiff's loss was caused by the defendant's breach: see Medlin v The State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5 per McHugh J at 21 and Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133 per Mason P at [24]; Beazley JA (as her Honour then was) agreeing at [94]. On the other hand, the defendant is required to plead and prove that the plaintiff did not act reasonably to mitigate the plaintiff's damage: see for example Medlin per McHugh J at p 22 and St Vincent's Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297 per Warren J (as her Honour then was) at [36].

31. [278]

    At least where the facts have been proved with sufficient clarity, the fact that Mr Chand has the burden of proving causation of loss, while the Bank must prove a failure to mitigate, is likely to be immaterial. This potential problem only need be addressed if and when it arises.

32. [279]

    In theory a problem may arise as to how the two principles should be applied, whether concurrently to the same fact situation, or consecutively. It is perhaps natural to think firstly about whether a breach of duty has caused a particular loss, before addressing the question whether the plaintiff has failed to mitigate that loss. If that is the natural approach to adopt, it is because one is inclined to ask the question first whether a loss has been caused, before considering the question whether the loss could have been reduced. This natural approach may be something of an illusion, as it presumes a clear distinction between the existence or occurrence of a loss and its reduction.

33. [280]

    I do not wish to stray unduly into conceptual complexity. In the common case where the wrongful conduct causes a direct, actual loss, it may appear that there is only scope for the application of the principle of mitigation, which imposes upon the plaintiff the risk that if reasonable steps are not taken to reduce the loss, the obligation on the defendant to pay compensation will correspondingly be reduced. However, particularly in cases of economic loss, the immediate effect of the wrongful conduct may only to be cause a prospect of loss, which may or may not eventuate, and if it does, may do so in different ways, at different times, and in different monetary amounts. In such cases the question whether the plaintiff's action or inaction has caused the loss to occur, or has failed to reduce a loss that has occurred, may lose its meaning. Particularly where, as will be seen below, the reasonableness of the plaintiff's conduct may govern whether that conduct is the true cause of the loss, and also whether it is a failure to avoid or reduce the loss, the very basis for conceiving of the possibility that the two principles may apply to the one set of facts in different ways may vanish.

34. [281]

    The present case may exemplify this situation. The Bank committed a breach of its contract on about 25 September 2007 by failing to redeem Mr Chand's investments, repay the amount owing on his margin loan agreement, and pay the redemption amount into his bank account. That gave rise to the prospect that Mr Chand would suffer a loss. Had Mr Chand redeemed his investments over the next six weeks he would have increased the redemption amount. On various days after that there were what might be described as virtual losses and virtual profits. They would only become actual if they were crystallised by redemption on a particular date. After mid-December 2012, Mr Chand's position was consistently one of loss. The amount of his prospective loss rose and fell. By the date of the trial it was known that Mr Chand had suffered an actual loss. That is all that it was really necessary to know for the purpose of determining whether Mr Chand had suffered loss. At various times Mr Chand's loss was increased by the charging of interest on his margin loan. On two dates Mr Chand increased his ultimate loss by paying margin calls in the hope that he could stay in the market, so that if his portfolio value rebounded, his loss position might be reversed or diminished. If the rebound had occurred, ultimately no loss may have been suffered.

35. [282]

    In practical terms, Mr Chand had one instrument that he may have used at any time to prevent the occurrence of prospective loss, or reduce the amount of realised loss. If, at a particular time, some prospective loss has been realised, the one instrument of making a new redemption request might at the one time mitigate realised loss and prevent the occurrence of loss that remains prospective. It is difficult to conceive how at the one time the principles of causation could be applied to prospective loss, and mitigation applied to realised loss, in any manner that would require different standards of conduct by Mr Chand, or have inconsistent results when applied to identical circumstances.

36. [283]

    As will be seen from the discussion of the authorities that follows, the courts have relatively readily equated the principles of causation and mitigation where a single set of circumstances calls for the application of the two principles. There may even be a basis for saying that in those circumstances the two principles fuse into one.

Principles governing causation and mitigation

1. [284]

   The authorities upon which the Bank relied included Paul v Cooke [2013] NSWCA 314 per Leeming JA at [86], [87] and [89]. The Court of Appeal in that case was concerned primarily with the operation of s 5D(1)(b) of the Civil Liability Act in relation to "scope of liability" in a case alleging medical negligence. Section 5A(1) of that Act has the effect that s 5D would have applied to the breach of contract that has been admitted in the present case, if Mr Chand's damage had resulted from negligence, even though the claim is in contract. As the damage did not result from negligence, s 5D is not applicable.

2. [285]

   The Court of Appeal in Paul v Cooke did, however, confirm that, at common law, the position "plainly" was that "factual causation is not a sufficient condition for legal causation", which is exemplified in notions of remoteness and novus actus interveniens (Leeming JA [86]); (Ward JA [14]). See also Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 per Mahoney JA at 331 and 333-334, and McHugh JA at 361, 362; Allianz Australia Insurance Ltd v Waterbrook at Yowie Bay Pty Ltd [2009] NSWCA 224 at [30], [104] and [105]; and Hay Properties Consultants Pty Ltd v Victorian Securities Corporation Ltd [2010] VSCA 247 [87]; 241 FLR 335. This principle applies under the general law, whether the claim is brought in tort or contract.

3. [286]

   It is necessary to consider the principles addressed by the High Court in Travel Compensation Fund v Robert Tambree t/as R Tambree and Associates (2005) 224 CLR 627; [2005] HCA 69. In that case the action was for common law damages arising from the defendant's negligence, or loss and damage recoverable under s 68, in conjunction with s 42, of the Fair Trading Act 1987 (NSW), as a result of misleading or deceptive conduct. Gleeson CJ at [28], [29], with whom Callinan J agreed at [78], said: "[28] It is not in doubt that issues of causation commonly involve normative considerations, sometimes referred to by reference to "values" or "policy". However, as Stephen J pointed out in Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad", the object is to formulate principles from policy, and to apply those principles to the case in hand... [29] To acknowledge that, in appropriate circumstances, normative considerations have a role to play in judgments about issues of causation is not to invite judges to engage in value judgments at large. The relevant norms must be derived from legal principle. In this case, the primary task of the Court is to apply the legislative norms to be found in the Fair Trading Act, although the outcome is not materially different to applying the common law of negligence."

4. [287]

   The Chief Justice concluded at [35]: "The answer to the problem of causation in the present case is to be found, not in a value judgment, but in an accurate identification of the nature of the risk against which the appellant sought protection and of the loss it suffered, considered in the light of the kind of wrongful conduct in which the first and second respondents engaged."

5. [288]

   Gummow and Hayne JJ at [40] agreed that what happened in that case could "be described as the occurrence of the very risk against which the appellant sought to protect itself by seeking and obtaining the accounting information that it did". Their Honours said: "[45] It is now clear that there are cases in which the answer to a question of causation will differ according to the purpose for which the question is asked. As was recently emphasised in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd, it is doubtful whether there is any "common sense" notion of causation which can provide a useful, still less universal, legal norm. There are, therefore, cases in which the answer to a question of causation will require examination of the purpose of a particular cause of action, or the nature and scope of the defendant's obligation in the particular circumstances. [46] In Allianz, McHugh J noted that considerations of legal policy may enter into the selection of those causative factors which are determinative of liability. However, to accept that proposition, as it should be, is not to adopt a quite different proposition that in any given case the ultimate issue is whether "the defendant ought to be held liable to pay damages for [the] harm [suffered]". This approach to questions of causation taken by Ipp J A in Ruddock v Taylor was adopted by the Court of Appeal in the present case." [Citations omitted]

6. [289]

   Their Honours then in [47] and [48] referred to the rejection by the High Court in Sullivan v Moody (2001) 207 CLR 562; [2001] HCA 59, at 579 [49] of the "criterion of what in the given situation was 'fair, just and reasonable'" in the determination of recoverable loss as being caused by a wrongful act. They set out the following extract from Sullivan v Moody at 579 [49]: "The question as to what is fair, and just and reasonable is capable of being misunderstood as an invitation to formulate policy rather than to search for principle. The concept of policy, in this context, is often ill-defined. There are policies at work in the law which can be identified and adopted to novel problems, but the law of tort develops by reference to principles, which must be capable of general application, not discretionary decision-making in individual cases."

7. [290]

   Gummow and Hayne JJ concluded that the rejected approach had been applied by the New South Wales Court of Appeal in Ruddock v Taylor [2003] NSWCA 262, and the case under appeal.

8. [291]

   Although it also concerned the principles governing causation in negligence established by s5D of the Civil Liability Act, the decision of the High Court in Wallace v Kam (2013) 297 ALR 383; [2013] HCA 19 requires consideration. The High Court said (discussion concerning the relevant medical duty of care, and footnotes, omitted): "[11] The common law of negligence requires determination of causation for the purpose of attributing legal responsibility. Such a determination inevitably involves two questions: a question of historical fact as to how particular harm occurred; and a normative question as to whether legal responsibility for that particular harm occurring in that way should be attributed to a particular person. The distinct nature of those two questions has tended, by and large, to be overlooked in the articulation of the common law. In particular, the application of the first question, and the existence of the second, have been obscured by traditional expressions of causation for the purposes of the common law of negligence in the conclusory language of "directness", "reality", "effectiveness" and "proximity". [12] Statute now requires that the two questions be kept distinct. [The Court then set out s 5D of the Civil Liability Act]... [22] In a case falling within an established class, the normative question posed by s 5D(1)(b) is properly answered by a court through the application of precedent. Section 5D guides but does not displace common law methodology. The common law method is that a policy choice once made is maintained unless confronted and overruled. [23] In a novel case, however, s 5D(4) makes it incumbent on a court answering the normative question posed by s 5D(1)(b) explicitly to consider and to explain in terms of legal policy whether or not, and if so why, responsibility for the harm should be imposed on the negligent party. What is required in such a case is the identification and articulation of an evaluative judgment by reference to "the purposes and policy of the relevant part of the law". Language of "directness", "reality", "effectiveness" or "proximity" will rarely be adequate to that task. Resort to "common sense" will ordinarily be of limited utility unless the perceptions or experience informing the sense that is common can be unpacked and explained...

9. [292]

   Leeming JA in Paul v Cooke remarked at [90], referring to the observations made by the trial judge in that matter, that "the analysis of causation may be decisively influenced by, in Lord Hoffmann's phrase, the 'rule by which responsibility is being attributed' (Environment Agency v (Empress Car Co (Abertillery) Ltd [1999] 2 AC 22 at 29..."

10. [293]

    In contract cases the source of the duty is the agreement of the parties to include in the contract the term that the defendant has breached. The scope of the defendant's obligation depends upon the meaning of the term as a matter of the proper construction of the contract. By parity of reasoning with the negligence and related cases, the determination of the scope of the defendant's legal responsibility for loss caused in fact by breach of the contract should be influenced, perhaps decisively, to use Leeming JA's expression, by analysing the defendant's responsibility in terms of the outcome that the defendant promised to achieve.

11. [294]

    As I have noted, in the present case the Bank put its case that it should not be found to be legally liable to pay damages to Mr Chand for, the loss that he would not have suffered 'but for' the Bank's breach of contract, on two bases. First, the Bank argued that, after he found out that the Bank had not implemented his redemption request, Mr Chand decided of his own free will to remain in the market to see whether he could obtain a more favourable return than he would have enjoyed if the bank had executed his first redemption request. This, the Bank submitted, was a novus actus interveniens. Secondly, the Bank argued that it was reasonably, and indeed readily, available to Mr Chand to avert any prospective loss by delivering a new redemption request to the Bank when his portfolio value was above, or only slightly below, the value as at 25 September 2007, and his failure to do so absolves the Bank of liability.

Plaintiff's free, deliberate and knowing conduct

1. [295]

   In support of its first argument the Bank relied on the decision of the Court of Appeal in Allianz Australia v Waterbrook. In that case the Court held by majority (Hodgson JA at [30] agreeing with Ipp JA at [33]) that "a successor in title who acquires a building in full knowledge of its defects, suffers no loss from the existence of those defects", where "full knowledge" is "not only knowledge of the existence of the defects but also knowledge of their significance" [110], [111]. On the way to reaching this conclusion Ipp JA said at [106]: "[104] In Alexander v Cambridge Credit Corporation Ltd Mahoney JA said (at 361): Notwithstanding that a defendant's act or omission has a causal connection with the damage of the person aggrieved, no liability arises if an independent intervening act or event in conjunction with the defendant's act or omission has brought about the plaintiff's damage and the intervening act or event can be treated in a practical sense as the sole cause of the damage. ... [106] Traditionally, it is generally accepted that the free, deliberate and informed act or omission of a human being negatives causal connection... A case where the plaintiff knowingly and deliberately decides to act in a way that causes himself or herself injury, is an a fortiori situation."

2. [296]

   His Honour then considered a number of exceptions to, and applications, of this principle.

3. [297]

   It would appear that the circumstances considered by the Court of Appeal in Allianz Australia v Waterbrook were relatively extreme. The purchaser entered into the contract to purchase the relevant property, not only with knowledge that the property was subject to defects, as a result of a breach of duty by the builder, but also with knowledge that money would have to be spent to rectify the defects. The purchaser was free to buy, or not to buy, given its knowledge of the defects, and, moreover, it was not possible to determine whether the purchase price contained an unexpressed discount to reflect the diminution in value of the property that resulted from the existence of the defects. The purchaser might not have suffered any loss at all. If there was a loss, the knowledge and deliberateness of the purchaser actually extended to the very loss for which the purchaser sued.

4. [298]

   There may be a question whether the principle stated by the Court of Appeal requires that the plaintiff deliberately accept a known existing loss. In my view the Court of Appeal expressed a principle of more general application, which may be distilled from the observations made by Ipp JA at [106]. In the case of breaches of contract that give rise to a prospective loss, where the plaintiff has knowledge of the breach and the prospective loss, and where the plaintiff has a ready means to avoid the loss by the plaintiff's own action, a deliberate decision by the plaintiff not to terminate the risk, but to continue it, is capable of absolving the defendant of legal responsibility for the actual loss, when it occurs.

5. [299]

   At least as may be relevant to the present case, if Mr Chand, with adequate knowledge of the breach of contract by the Bank, and the risks involved in not delivering a new redemption request to the Bank, at a time when he could have secured the same, or nearly the same, result as if his original redemption request had been implemented, knowingly and deliberately decided to remain in the market, that would be a ground for relieving the Bank from the factual consequences of its breach of contract.

6. [300]

   The Court of Appeal in Building Insurers' Guarantee Corporation v The owners - Strata Plan No 57504 [2010] NSWCA 23 considered the effect of the judgment of Ipp JA in Allianz Australia v Waterbrook. Handley AJA, with whom Tobias JA [1] and Campbell JA [2] agreed, stated [57]: "That decision establishes that a successor may fail to recover damages his predecessor would have recovered because he cannot prove causation. It does not support any wider proposition." That conclusion seems to be based upon the circumstance that in the case before the court "the defects were latent and there was no conduct by the owners' corporation which could be a new and independent cause of its loss..." This conclusion does not appear to exclude the validity of the general statement of principle made by Ipp JA at [106].

7. [301]

   A question may arise as to how the principles discussed in Allianz Australia Ltd v Waterbrook relate to the normative question concerning the scope of a defendant's responsibility for loss caused in fact by the defendant's wrongful conduct referred to in Wallace v Kam at [11] and [23]. A trial judge should follow the authority of the Court of Appeal, rather than stray into an attempt at a grand synthesis of the modern principles of causation as they apply to breaches of common law duties.

8. [302]

   The reasoning in the two cases is consistent, in the sense that they fit together. If, once it is established that the defendant's wrongdoing has caused the plaintiff to suffer loss in fact, it is then necessary to identify and articulate an evaluative judgment as to whether the loss should be held to fall within the scope of the defendant's responsibility for the loss, a proper basis for making the evaluative judgment must be found. There may be many such bases, and the identification of the relevant one may be sensitive to the facts and circumstances of the particular case. One relatively obvious basis for deciding that a defendant should not be held responsible for a loss caused by the defendant's breach, is that the facts justify a finding that the plaintiff could have avoided the loss entirely, but instead has freely, deliberately and knowingly decided not to prevent the loss occurring, but instead to maintain the situation that gives rise to the risk of the prospective loss becoming real.

Plaintiff's unreasonable conduct

1. [303]

   In support of its argument that Mr Chand is not entitled to recover loss that he ought reasonably to have avoided, the Bank also relied upon Sherson & Associates v Bailey [2000] NSWCA 275. In that case the Court of Appeal was concerned with a claim in negligence, by the owners of a building, against the architect and the engineer responsible for the construction of the building. The plaintiffs became concerned with the structural adequacy of the roof supports for the building. The engineer assured the plaintiffs of the structural adequacy of the roof supports. The plaintiffs made further enquiries, and were advised by the firm that manufactured the metal components for the roof that additional bracing was required. The engineer again assured the plaintiffs that the roof was structurally adequate. For the purposes of a proceeding that they commenced against the builder, the plaintiffs obtained an expert report that advised that the roof may not withstand the wind forces placed upon it in the future, and recommended that the roof be given extra bracing and stiffening. A further report was obtained by the plaintiffs that recommended remedial work be undertaken. The plaintiffs did not have any remedial work carried out to the building, which collapsed at a later time in extraordinarily windy conditions.

2. [304]

   Heydon JA (as His Honour then was) said at [77]: "A plaintiff cannot be said to have really incurred any loss which might have been avoided by his taking such steps as a reasonably prudent man in his position would have taken to avoid further loss to himself: Driver v War Services Homes Commissioner (1923) 44 ALT 130 at 134 per Irvine CJ (emphasis added). A plaintiff cannot recover damages for losses which he would not have incurred had he acted reasonably in the ordinary course of his business: TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 162 per Priestley JA (emphasis added)... "The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those existing circumstances of which the actor, called on to act reasonably, knows or ought to know: In re R Solicitor [1945] KV 368 at 371 per Scott, Lawrence and Morton LJJ; see also Adams v Eta Foods Ltd (1987) 78 ALR 611 at 621 per Gummow J".

3. [305]

   Priestley JA agreed at [2] with the reasons of Heydon JA.

4. [306]

   The trial judge had found that the remedial work that had been recommended by the expert would not have saved the building from collapse.

5. [307]

   Heydon JA held, at [78], that "the question is what was reasonable for persons in the position of the plaintiffs, and in particular for a person in the position of Mr Bailey, consulting his own interests in relation to his own building project". None of the reports had suggested that there was any urgency in carrying out the steps recommended. There was no evidence that the plaintiffs recognised that there was a possibility that the building would collapse. His Honour held, at [79], that it was open to the plaintiffs to assume that if they kept an eye on the building to observe the progress of any cracking, the remedial work could be postponed until the severity of the problem became clear; and that, since no cracks had appeared in the two years or so before the storm, the wall did not require remedial work.

6. [308]

   Fitzgerald JA, who also agreed that the appeal should be dismissed, said at [39]: "The response which was reasonably required of the plaintiffs was related to the risk which they confronted". His Honour noted at [41]: "None of the critical expert opinions which the plaintiffs had obtained in connection with their dispute with the builder clearly indicated that there was a serious risk that the building would collapse or that remedial work was urgent."

7. [309]

   Other authorities have considered the reasonableness of the conduct of the plaintiff in causing, or failing to avoid, suffering a loss in the context of the issue of causation.

8. [310]

   The High Court in Medlin v The State Government Insurance Commission (1995) 182 CLR 1; [1995] HCA 5 considered a claim by a plaintiff for a loss that would not have occurred but for the defendant's negligence, but also would not have happened if the plaintiff had not taken a voluntary step.

9. [311]

   The plaintiff was a university professor of philosophy. He suffered physical injuries in a motor accident caused by the negligence of the defendant. The plaintiff recovered sufficiently to return to his position with the University, although he continued to suffer pain and disability. He elected to retire four and a half years before he would have been obliged to retire in the normal course. The issue was whether the plaintiff was entitled to damages for loss of earning capacity measured by reference to the income that he would have earned, if he had retired at the normal time.

10. [312]

    It is convenient to start with a consideration of the reasons given by McHugh J, as in their judgment at [13] Deane, Dawson, Toohey and Gaudron JJ said that, subject to one qualification, they agreed with McHugh J's reasons for finding that the negligent act of the driver had caused the loss.

11. [313]

    McHugh J set out the material findings of fact made by the trial judge at p 14. In summary, at the time of his early retirement, the plaintiff was still suffering from chronic back pain at a low level, the pain caused him to wake on most nights, which left him feeling tired, and he sometimes suffered intense pain requiring medication, if he over-exerted himself. The pre-eminent reason for the plaintiff's retirement was his desire to devote as much time as possible to research and creative philosophy. Another reason for his retirement was the plaintiff's belief that he should resign because he was not performing his duties at the level he thought desirable. That was not, however, the main reason. The plaintiff was still a competent teacher who would have retained his position had he decided to do so. There was no evidence that the University believed that his performance of his duties was unsatisfactory.

12. [314]

    McHugh J held at p 21: "However, the ultimate question is whether, as a matter of common sense, the financial loss that the plaintiff has suffered was caused by the plaintiff's act in resigning his office rather than by the defendant's negligence. If the plaintiff acted unreasonably in retiring early, then the law will disregard the defendant's negligence as a cause of the plaintiff's financial loss. That negligence and its effects will be treated as background conditions of the plaintiff's loss and, as a matter of common sense, not material causes of the plaintiff's loss. A further question, and one that can be conveniently considered at this point, is whether, having regard to the loss of earning capacity, the plaintiff failed to mitigate his financial loss by not continuing in employment which would have continued to give him the earnings which he was receiving before the accident..."

13. [315]

    Further, McHugh J said p 22: "It does not seem to me to matter in this case whether the plaintiff's act of early retirement is attacked as a voluntary act that was a novus actus interveniens or as a failure to mitigate loss. His retirement would be a novus actus interveniens or a failure to mitigate loss only if it was unreasonable in all the circumstances. If the retirement is treated as going to mitigation, the onus is on the defendant to prove that the plaintiff failed to mitigate his loss. If it is treated as going to causation, the onus is on the defendant. In Adams [at 139] Walsh JA said, correctly in my opinion, that, if a person has the post-accident capacity to do a particular job but a question as to the reasonableness of the refusal to do it arises, the onus is on the defendant to show that the refusal was unreasonable... Whatever approach is followed in this case, therefore, the onus is on the defendant to prove that the plaintiff acted unreasonably in retiring early."

14. [316]

    McHugh J found at p 22 that it was not unreasonable for the plaintiff to retire early. Finally his Honour said at p 23: No doubt it is true that the plaintiff's act of early retirement created a financial loss where none had been present or was likely to arise. But if the defendant's negligence caused the conditions which produced the loss, that negligence is a material cause of the financial loss unless the plaintiff's act of retirement is to be treated as "breaking the causal chain" or was a breach of his duty to mitigate his loss. Because the act of retirement was not unreasonable and the reasons for it were the result of his injuries, the plaintiff's loss was causally related to the defendant's negligence. When the matter is looked at as one of mitigation of damage, the plaintiff's act of early retirement was not unreasonable and did not result in a failure to mitigate his damage."

15. [317]

    It must be noted that McHugh J effectively found that the reasonableness of the Professor's conduct in resigning early had the same legal effect, in the context of whether his conduct was a novus actus interveniens, as it did in relation to whether he had failed to mitigate his damage. The standard of reasonableness imposed upon the Professor was the same in each context. That the standard should be the same appears to have been seen as so obvious that it did not call for comment. There may be a question about how the burden of proof should apply to the issues of causation and mitigation, as it generally falls upon the plaintiff in the former case and the defendant in the latter. With respect, there may possibly be some inconsistency in what was said by McHugh J in relation to the burden of proof on the causation issue. Any difference between who bears the burden of proof on the two issues is likely to be inconsequential if the evidence establishes all of the relevant facts.

16. [318]

    In their judgment at p 11 the other Justices said: "... With due respect, however, the question whether a sixty-year-old man who has sustained permanently incapacitating injuries of the kind sustained by the plaintiff "should" continue in his employment or is "acting reasonably" in accepting premature retirement was not the appropriate one... In these circumstances, the relevant question was not whether the plaintiff "should" have continued in his University post or whether his decision to retire was not "reasonable" but whether, in the context of what was reasonable between the plaintiff and the defendant in determining the defendant's liability and damages, the premature termination of the plaintiff's employment was the product of the plaintiff's loss of earning capacity notwithstanding that it was brought about by his own decision to accept voluntary retirement."

17. [319]

    Further, at p 13: "... Subject to one qualification, we also agree with [McHugh J's] reasons for that answer in all the circumstances of this case. The qualification is that, as indicated, any question of reasonableness should be framed in terms of what is reasonable as between the plaintiff and the defendant in the context of assessing damages for negligence rather than as a question of whether the plaintiff acted reasonably or unreasonably in resigning his post. However, that qualification is not important for the purposes of the present case since we consider that, for the reasons which McHugh J gives, the learned trial judge's finding that the plaintiff's decision to retire was not reasonable cannot stand and that any question of reasonableness should be answered favourably to the plaintiff."

18. [320]

    Earlier in their judgment at p 6 Deane, Dawson, Toohey and Gaudron JJ said (footnotes omitted): "For the purposes of the law of negligence, the question whether the requisite causal connection exists between a particular breach of duty and particular loss or damage is essentially one of fact to be resolved on the probabilities, as a matter of common sense and experience. And that remains so in a case such as the present where the question of the existence of the requisite causal connection is complicated by the intervention of some act or decision of the plaintiff or a third party which constitutes a more immediate cause of the loss or damage. In such a case, the "but for" test, while retaining an important role as a negative criterion which will commonly (but not always) exclude causation if not satisfied, is inadequate as a comprehensive positive test. If, in such a case, it can be seen that the necessary causal connection would exist if the intervening act or decision be disregarded, the question of causation may often be conveniently expressed in terms of whether the intrusion of that act or decision has had the effect of breaking the chain of causation which would otherwise have existed between the breach of duty and the particular loss or damage. The ultimate question must, however, always be whether, notwithstanding the intervention of the subsequent decision, the defendant's wrongful act or omission is, as between the plaintiff and the defendant and as a matter of common sense and experience, properly to be seen as having caused the relevant loss or damage. Indeed, in some cases, it may be potentially misleading to pose the question of causation in terms of whether an intervening act or decision has interrupted or broken chain of causation which would otherwise have existed. An example of such a case is where the negligent act or omission was itself a direct or indirect contributing cause of the intervening act or decision. It will be seen that, on the plaintiff's evidence, the present was such a case."

19. [321]

    The Court of Appeal in Blaxter v The Commonwealth [2008] NSWCA 89 per Basten JA at [40] - [45] (Mason P and McColl JA agreeing) followed the statements of principle in Medlin concerning the reasonableness of the plaintiff's response to the consequences of the defendant's breach. Basten JA referred at [45] to the acceptance of these principles by the Queensland Court of Appeal in Hirst v Nominal Defendant [2005] QCA 65; [2005] 2 Qd R 133 per Keane JA (as his Honour then was) at [29]. See also New South Wales v Nominal Defendant [2009] NSWCA 225 at [26] - [35]; Knott Investments Pty Ltd v Fulcher [2013] QCA 67; [2014] 1 Qd R 21 at [26], [43] - [46]; Gratrax Pty Ltd v T D & C Pty Ltd [2013] QCA 385; and MacKinlay v Derry Dew Pty Ltd [2014] WASCA 24 at [159] - [162].

20. [322]

    Knott Investments is significant because it is a case in which the principles stated in Medlin were applied in the context of a claim for breach of contract.

21. [323]

    Muir JA, with whom Holmes JA and Atkinson J agreed, stated (footnotes omitted): "[43] In determining whether "as a matter of commonsense and experience", the decision of the Fulchers' to cease tomato growing operations after the wrongful conduct should "properly ... be seen as having caused the relevant loss or damage", all of the factors discussed above are relevant and must be considered in combination: they had a cumulative effect. Of particular significance was the need to borrow "a large sum of money" and the risk of failure of the recommenced business. [44] The reasonableness of the conduct of a plaintiff in response to, or as a result of, a defendant's wrongful conduct is directly relevant to the question of whether the wrongful conduct has caused the plaintiff's loss. In my view the company acted reasonably in all the circumstances.

22. [324]

    These authorities establish that the plaintiff's own conduct may have the result that the plaintiff is held responsible for his own loss, and the defendant is absolved from responsibility for loss that would not have occurred 'but for' the defendant's wrongdoing, if as between the plaintiff and the defendant the plaintiff has acted unreasonably, and absent the plaintiff's conduct the particular loss would not have occurred.

23. [325]

    As is the case where the question is whether the defendant should be absolved from responsibility for loss caused in fact by the defendant's wrongdoing, because the plaintiff has freely, deliberately and knowingly subjected the plaintiff to the risk of prospective loss becoming real, when the plaintiff could have avoided that occurrence, a question may arise as to how the possibility that the unreasonableness of the plaintiff's conduct may absolve the defendant from responsibility fits within the normative question posed in Wallace v Kam at [11] and [23]. The identification of the conduct of the plaintiff required to meet a standard of reasonableness requires an investigation of the scope of the defendant's responsibility, arising in the context that the plaintiff's own conduct has been a cause in fact of the plaintiff's loss. If the question is whether the plaintiff has acted reasonably, it will be necessary to identify and articulate an evaluative judgment as to what the standard of reasonableness requires.

24. [326]

    The normative question may arise in situations where the issue of the scope of the defendant's responsibility for loss caused in fact by the defendant's breach does not include any consideration of the significance of conduct by the plaintiff. However, where it does, it may be on the one hand that the plaintiff has contributed to prospective loss becoming real by the plaintiff's own free, deliberate and knowing conduct. In other cases the plaintiff's conduct may not be voluntary in that sense, but nonetheless be causative of the loss occurring. In the latter case the law requires a basis for distinguishing cases in which the plaintiff's conduct absolves the defendant from those in which it does not. If the basis chosen is the time honoured one of reasonableness, that inescapably attracts the need to address the normative question.

Mitigation of loss

1. [327]

   Knott Investments is another case in which the court has recognised that the reasonableness of the plaintiff's conduct may go to the issue of causation as well is mitigation. The court appears to recognise the separate operation of those principles, but to have equated the outcome of their application in the case before it.

2. [328]

   Muir J recited, with approval, the following submission by counsel concerning the relationship between causation and mitigation (footnotes omitted: "[31] The following proposition stated in McGregor on Damages was also relied on: "the claimant must act with the defendant's as well as his own interests in mind". The learned authors cited Smailes & Son v Hans Dessen & Co; Darbishire v Warran; and Dimond v Lovell in support of the proposition which was disputed by counsel for the respondents. The cases, however, do support the proposition. [32] Channell J, in Smailes said: "The ordinary principles of the law in reference to damages apply - that a man may not increase damages by unreasonable conduct. He is bound to act not only in his own interests, but in the interests of the party who would have to pay the damages, and keep down the damages, so far as it is reasonable and proper, by acting reasonably in the matter.""

3. [329]

   His Honour added: [45] In considering the reasonableness of the respondents' conduct, principles applicable to mitigation of damages may be thought to have relevance. In that regard it has been held that a plaintiff is not under "any obligation to do anything other than in the ordinary course of business [to mitigate his loss] ... [and that] the plaintiff is not required to sacrifice or risk any of his property or rights". In Metal Fabrications (Vic) Pty Ltd v Kelcey, Murphy J, Brooking and Nicholson JJ agreeing, relevantly observed: 'The respondents were under a duty only to act reasonably to mitigate their loss. This did not require them to chance their arm further, to risk any capital they might borrow too far or to take steps which would cause their financial ruin, if they failed: see Payzu v. Saunders [1919] 2 K.B. 581; Lesters Leather & Skin Co. v. Home and Overseas Brokers (1948) 64 T.L.R. 569; Clippens Oil Co. Ltd. v. Edinburgh & District Water Trustees [1907] A.C. 291, and Banco de Portugal v. Waterlow & Sons Ltd. [1932] A.C. 452, at p. 506; [1932] All E.R. Rep. 181, at p. 204. As Lord Macmillan remarked in the lastmentioned case, the measures which the sufferer from a breach of contract may be driven to adopt 'ought not to be weighed in nice scales'. So long as the respondents can be seen to have acted reasonably and justifiably in the circumstances, they should not be debarred from recovering the actual loss flowing to them simply because it is asserted that, by taking some other course, the loss might well have been lower.'"

4. [330]

   I respectfully adopt these observations, and those of Warren J (as her Honour then was) in relation to the principle of mitigation of damages in St Vincent's Hospital (Melbourne) Inc v University of Adelaide [2002] VSC 297 (footnotes omitted): "[35] The principles with respect to mitigation are well established. A plaintiff must act with the interests of the defendant in mind as well as the interests of itself: see Smailes v Hans Dessen; Darbishire v Warran. Nonetheless a plaintiff " ... is not bound to nurse the interests of the contract breaker": Harlow and Jones v Panex (International). A plaintiff is only required to act reasonably and the standard of reasonableness is not high because the defendant is an admitted wrong doer. As observed by Lord Macmillan in Banco de Portugal v Waterlow: "Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken." [36] Whether a plaintiff has acted reasonably is a question of fact: see Payzu v Saunders; also, The Solholt. However, whether there is a need to mitigate at the outset is a question of law. Further, the onus of proving failure to mitigate loss lies with the defendant: see Metal Fabrications (Vic) Pty Ltd v Kelcey."

Consideration

1. [331]

   I turn now to the application of the principles established by the authorities that have been examined, to determine whether, on the facts that I have found, Mr Chand's loss was caused by the Bank's breach of contract in circumstances that make the Bank legally responsible to compensate Mr Chand for his loss, and whether Mr Chand has failed to take steps reasonably available to him to mitigate the loss that he has suffered.

2. [332]

   The first question to be addressed is whether legal responsibility for causing his own loss should be attributed to Mr Chand because he made a free, deliberate and informed decision to stay in the market, and not to leave it by making a new redemption request of the Bank.

3. [333]

   What is required in this context for a finding that Mr Chand's conduct was relevantly free?

4. [334]

   In one sense Mr Chand was not free, because an effect of the Bank's breach was to subject Mr Chand involuntarily to the need to renew his consideration of the propitious time to redeem his investments. If a person at a party on a riverbank is forcefully thrown into the river, the person does not really have a free choice. If the person tries to swim back to the bank, and drowns, the person will not freely have decided to take that course. On the other hand, if the person decides to swim to the other side of the river, because the party happening there appears more attractive, the person's choice may be free notwithstanding that the person was not given a choice to decide whether or not to swim at all. The fact that the Bank's breach did not give Mr Chand any alternative but to make a new decision, does not of itself exclude a finding that Mr Chand's conduct was free.

5. [335]

   Freedom in this context must require that Mr Chand not be constrained by circumstances to take the course that has caused a prospective loss to become real. It must be entirely a matter within Mr Chand's own choice whether he takes the course that avoids the loss, or the course that causes it.

6. [336]

   There must not only be freedom of choice, but freedom of opportunity. There must be a ready means available for Mr Chand to avoid the loss by some clear action that will lead to a relatively immediate avoidance of the loss, without subjecting Mr Chand to any significant risk or cost that might impinge upon the reality of his freedom of choice.

7. [337]

   In the present case it is clear that Mr Chand had that opportunity, because he could renew his redemption request to the Bank at any time of his choosing. Although his first redemption request miscarried, he could have ensured that any new request was implemented by informing the Bank that it had not complied with his first request.

8. [338]

   Freedom in this sense probably requires that Mr Chand had the opportunity to avoid the loss in its entirety. If Mr Chand only had the opportunity to avoid part of the prospective loss becoming real, it is hard to say that he truly had a free choice. Given the nature of the market, a virtual loss on one day may turn into a potential profit the next. If Mr Chand's actions are considered on a day when redemption would realise a loss, it is hard to say that Mr Chand has a free choice to avoid the balance of his potential loss occurring if he has in mind that if he waits until the next day his virtual loss may disappear. As the reality of the law in practice is hardly ever black and white, it may be that Mr Chand's freedom will exist where the amount of any loss crystallised by a decision to redeem is relatively insignificant.

9. [339]

   In the present case in the period between 25 September 2007 and 13 December 2007 there were many days on which Mr Chand could have redeemed his investments in a way that would have avoided his loss entirely. There were a number of periods in which, to a reasonable degree, recent market values satisfied Mr Chand's objective of redeeming in a rising, or at least buoyant, market. Plainly Mr Chand was not called upon to consider making a new redemption request until he learned that the Bank had not implemented his request. I have found that Mr Chand realised that the Bank had not paid the $1 million into his account a couple of weeks or so after 25 September 2009. The redemption value of Mr Chand's investments remained above $1,034,636.81 until 7 November 2007. I have not accepted Mr Chand's claim that he did not address himself to the possibility that the Bank would not actually implement his redemption request until about 5 November 2007. It has not been possible to decide the precise date when Mr Chand realised that the Bank had not implemented his request. It is likely that, at least for some weeks after he did so, his redemption value was more than it was on 25 September 2009. Mr Chand could not reasonably be expected to have acted immediately to renew his redemption request. However, in the period between, say, 9 October 2007 and 11 November 2007, the redemption value was above or only slightly below the 25 September 2009 figure. In the period between 30 November 2007 and 5 December 2007 Mr Chand's portfolio value was above $1 million, though slightly less than the value at 25 September 2007. The value had risen from an amount of $913,664.49 on 22 November 2007. As, by this time, Mr Chand was clearly monitoring the market again, he must have been aware that market values were trending upwards towards the value that would enable him to redeem without making a loss. Then in the period between 6 and 13 December 2007 his redemption value exceeded the value that would avoid a loss, or virtually so. Those circumstances satisfied the requirements given by Mr Chand for a propitious redemption of his investments.

10. [340]

    While it is not possible to form a definite view as to when Mr Chand was able to determine that he could redeem his investments in a way that would avoid his making a loss, I find that there was sufficient opportunity to do so before mid-December 2012. In that sense I find that Mr Chand was free in making a choice as to whether or not to redeem his investments.

11. [341]

    It is clear that Mr Chand made a deliberate choice. That follows from the evidence contained in Mr Chand's solicitor's letter of 12 February 2009. Mr Chand considered three alternatives. One of them was to quickly renew his redemption request. Another was to stay in the market to see whether prices would rise to October 2007 levels, which would permit Mr Chand to redeem his investments at a time that might yield him a return up to $150,000 more than he would have received if the Bank had acted on his redemption request. Mr Chand deliberately decided to stay in the market in the hope of achieving a better result. That is the natural explanation for the fact that Mr Chand did not redeem his investments in the early part of December 2007, if not earlier.

12. [342]

    Mr Chand also made a deliberate choice at some stage to stay in the market in order to receive the distribution that he expected would be paid in mid-December 2007.

13. [343]

    The next question is whether Mr Chand acted knowingly. It is possible that Mr Chand did not follow the markets closely in the period after 25 September 2007, while he was waiting in the expectation that the Bank would implement his request. It is probable that, when Mr Chand started to become concerned about the delay of the Bank in paying the $1 million into his account, Mr Chand at least renewed his observation of market prices, even if he did not renew his intense examination of the market until a later time. Mr Chand became aware of the higher prices that had existed in the market in October 2007 by no later than at, or soon after, his call to the call centre. At a time that cannot now be identified, he renewed his intense observation of the market in order to decide the likelihood that values would rebound to October 2007 levels, and to be able to choose a new exit point. I am satisfied that Mr Chand had the necessary knowledge of the amount of his redemption value in the period up to mid-December 2007. It may be that Mr Chand became distracted to some extent in the period leading up to Christmas by reason of his employment duties, but I have not accepted that Mr Chand entirely lost sight of changes in his redemption value, or that he entirely missed the opportunity to redeem without loss in early December 2007. Mr Chand did not give direct evidence that he missed that opportunity through ignorance.

14. [344]

    A question may arise as to whether the requirement for knowledge on Mr Chand's part extends beyond knowledge on a day-to-day basis of opportunities to redeem his investments in a way that would avoid his loss entirely, to include some level of knowledge or suspicion of the seriousness of the consequences that might follow from delay on his part. Was it necessary that Mr Chand appreciate that doom was in the offing? As I have noted, it appears from Mr Chand's conduct that he did not fear an imminent collapse in the value of his investments.

15. [345]

    That level of knowledge is in my view not required. Mr Chand's own evidence established that he made his 25 September 2007 redemption request because his understanding of the market caused him to notice circumstances that led him to believe that it was no longer prudent for him to continue his exposure to the high-risk investments that he had chosen. It is significant that Mr Chand knew that his investments were all high-risk, and that he had ignored positive advice from Mr Molesworth to choose different investments if he wanted to invest on a short-time basis. At some time before 25 September 2007 Mr Chand formed an actual appreciation of danger, and that appreciation did not leave him until it became too late.

16. [346]

    These are important considerations because the knowledge that is relevant must be knowledge of the risk that must be avoided. In a different market, perhaps involving experience of consistent increases in value and benign economic circumstances, some different conclusion might be drawn, at least in relation to the urgency of the need for Mr Chand to take an available opportunity to avoid his potential loss becoming real.

17. [347]

    I add that it might be assumed that Mr Chand's loss was some entirely unexpected consequence of the occurrence of the Global Financial Crisis, and that that event was the real economic cause of Mr Chand's loss. The evidence does not justify that assumption, and the issue was not explored. It is not clear whether Mr Chand's experience was common amongst investors, or whether, even though the GFC may have been the trigger of the decline in the value of Mr Chand's investments, the calamity that ensued was a realisation of the significant risks inherent in the investments that Mr Chand had chosen, coupled with the risk that flowed from his exposure to the margin loan agreement.

18. [348]

    Mr Chand's conduct in deciding not to redeem his investments when he could have entirely avoided the loss that he eventually suffered, and to stay in the market in the hope of gaining a better outcome than if the Bank had implemented his redemption request was therefore free, deliberate and knowing in the sense required by Allianz Australia Ltd v Waterbrook. That proposition assumes that I am correct in concluding that the principle enunciated in that case extends beyond the plaintiff embracing an actual, known loss, to the situation where the plaintiff deliberately abandons an opportunity to avoid a prospective loss and adopts a course that maintains the risk.

19. [349]

    Lest there be a further requirement for considering the normative question that was addressed in Wallace v Kam, than the straightforward application of the free, deliberate and knowing test, I would add the following observations. In the present case the promise that the Bank breached was not an obligation that required the Bank to achieve any particular economic result for Mr Chand, and in particular it did not impose on the Bank a positive obligation to ensure that Mr Chand did not suffer loss. The Bank's obligation was ministerial, and it required the Bank to comply with any redemption request irrespective of the reason that Mr Chand had for delivering it. Mr Chand could have had reasons ranging from personal whim to a desire to avoid the consequences of an imminent collapse in the market. That does not mean that the obligation was insignificant, as it was the instrument that permitted Mr Chand to regulate his risk. As I have noted above, the reason why the Bank did not implement the request is not known. It is also not known whether any officers of the Bank consciously appreciated that the Bank had received the redemption request. However, the circumstances should have caused Mr Chand to appreciate, once he knew that the Bank had not implemented his request, that the request may have gone astray, and that the Bank did not know that it was in breach. Whatever the reality was, that was the most probable position. After Mr Chand's call to the call centre, Mr Chand knew that his redemption request was not on the Bank's computer system. It follows that Mr Chand knew that there was a real likelihood that the Bank was not in a position to protect itself from its own breach. A feature of the right to deliver a redemption request to the Bank is that such a request could be delivered at any time, without any relevant cost or inconvenience, and could be delivered repeatedly. The practice adopted by Mr Chand of investing in high-risk investments on a margin loan basis meant that changes in market values on a day-to-day basis could have serious negative consequences to Mr Chand's investment position. A combination of these features, being the ease of renewing a redemption request, and the danger in delaying the making of such a request, is that reasonable and informed commercial people would only expect the Bank to remain liable for the consequences of its breach for a relatively short time after Mr Chand became aware that his investments had not been redeemed. Put another way, a party in the position of the Bank would not reasonably expect to continue to be on risk from its breach for a significant period after the breach became known to Mr Chand, provided Mr Chand had a proper and reasonable opportunity to correct the situation. It was Mr Chand alone who had the practical capacity to achieve that result. Mr Chand could not reasonably have expected the Bank to remain at risk of the consequences of its breach for any significant period, if Mr Chand decided deliberately to stay in the market. In these circumstances the decision that Mr Chand made, in a relatively straightforward way, relieved the Bank of continuing exposure for the consequences of its breach, and effectively reset the original arrangement as between Mr Chand and the Bank, which required Mr Chand to take responsibility for his own decision as to when to leave the market.

20. [350]

    I find that the Bank has established its case that Mr Chand's own actions were the operative cause of his loss, for which he alone should be held responsible.

21. [351]

    I will now consider, alternatively, whether Mr Chand's failure to avoid the loss that he suffered, after the Bank's breach of contract gave rise to that prospective loss, was sufficiently unreasonable, as between himself and the Bank, that Mr Chand "cannot really be said to have incurred [that] loss", to use the words of Heydon JA in Sherson & Associates v Bailey that have been set out above.

22. [352]

    If the principle considered in Allianz Australia Ltd v Waterbrook does not apply unless the plaintiff has freely, deliberately and knowingly embraced an existing, known loss, then the only basis available to the Bank to escape responsibility for Mr Chand's loss because Mr Chand's own conduct justifies that result will be the application of the principles concerning the consequences of the unreasonableness of Mr Chand's conduct.

23. [353]

    However, if I am correct in the findings that I have made above concerning what may be described as the voluntariness of Mr Chand's embracing the continuation of his risk of loss are correct, it would seem to follow directly that Mr Chand's conduct would not pass any applicable test of reasonableness.

24. [354]

    How is the court to determine whether, as between Mr Chand and the Bank, Mr Chand has acted so unreasonably that the Bank should not be held accountable for the consequences in fact of its breach of contract? This is a particular form of normative question. It is necessary to derive the criteria for answering the question from legal principle (Travel Compensation Fund at [29]), and it will be necessary to identify and articulate "an evaluative judgment by reference to 'the purposes and policy of the relevant part of the law'" (Wallace v Kam at [23]).

25. [355]

    It is necessary to start with an "identification of the nature of the risk against which [Mr Chand] sought protection and of the loss [Mr Chand] suffered, considered in the light of the kind of wrongful conduct in which [the Bank] engaged" (Travel Compensation Fund at [35]).

26. [356]

    The source of the Bank's obligation is the contract into which Mr Chand and the Bank entered.

27. [357]

    As already noted, the term of the contract that the Bank breached was not a promise by the Bank to avert the loss that has occurred. It was a promise to implement effectively an instruction by Mr Chand that would allow him to redeem his investments, and extinguish his margin loan obligations, at a time of his own choosing.

28. [358]

    The requirements of reasonable conduct, as between the parties, after the breach of the contract by one of them, should arise from a determination of the objective expectations of reasonable persons in the position of the parties, having regard to their mutual knowledge of the circumstances of each party, in the context of all of the relevant events known, or which ought to have been known, by the parties. The principal objective expectation of the parties to contracts is that the contractual obligations of the parties will faithfully be performed. It is a reality, however, that contractual obligations are not always performed, for reasons ranging from the culpable to the inadvertent, or unavoidable. Parties to contracts will have reasonable objective expectations as to how each party should respond to particular breaches by the other, even if, at the inception of the contract, those expectations are suppressed by optimistic expectations of performance.

29. [359]

    Fundamental objective expectations of parties to contracts extend beyond the expectation of performance, to the expectation that each party will act reasonably to fulfil the other parties' expectation of benefit, that each party will act positively, but only to a reasonable extent, to avoid loss following a breach by one of them, and that even the innocent party will have regard to the interests of the party in default to minimise its own loss for the benefit of both itself, and the defaulting party.

30. [360]

    The requirements of reasonable conduct by an innocent party to a breach of contract by the party in default must flow from an analysis of the terms of the contract, in the context of the circumstances of the breach. This analysis may require (a) the identification of the term breached; (b) the identification of all possible consequences of the breach; (c) consideration of the risk of serious consequences occurring; (d) consideration of the possible severity of those consequences; (e) an ascertainment of the knowledge of the existence of the breach by each party; (f) an analysis of the respective capacities of the parties to take available actions to avert the risk or minimise the consequences; and (f) consideration of the extent to which each party knows that it has the capacity to avert or minimise the consequences, because of an absence of knowledge or means on the part of the other parties to do so. Perhaps other considerations may arise in cases that involve different facts than the present.

31. [361]

    In the present case the term breached required the Bank to carry out ministerial steps that would effect the redemption of Mr Chand's investments, the repayment of his margin loan, and the payment of the balance into his bank account. As the redemption process was Mr Chand's only instrument for terminating his risk to the market, and his consequential risk under his margin loan agreement, any breach of the term had potentially serious consequences.

32. [362]

    If Mr Chand had suffered a loss by reason of a fall in the value of his investments between the time of the breach and the time when Mr Chand became aware of the breach, it is clear that the Bank would have been legally responsible for the consequences. For one thing, the reasonableness or otherwise of Mr Chand's own conduct would not come into consideration, because he would not have had an opportunity to renew his redemption request.

33. [363]

    However, as noted above, a feature of the redemption process is that it is simply and reliably repeatable.

34. [364]

    Further, as it is in the nature of markets that prices fluctuate up and down, it follows that a breach of the obligation to redeem may not necessarily lead to any loss being incurred. There is a clear risk of loss. However, depending upon the circumstances of the market, at least in the short term, there was a possibility that Mr Chand's position would be improved by an opportunity to select a later date to renew his redemption request, just as there was a possibility that he would suffer loss.

35. [365]

    The ease with which Mr Chand could renew his redemption request, after he learned of the Bank's failure to implement his initial request, justifies a conclusion that reasonable persons in the position of Mr Chand and the Bank would expect him to exercise his discretion as to whether, and if so when and in what circumstances, he should renew his redemption request.

36. [366]

    That conclusion is supported by the consideration that the existence of the risk of the market remained constant, and the nature of the risk fluctuated and required monitoring on a continuous basis.

37. [367]

    It was clear as between Mr Chand and the Bank that only Mr Chand was in a position to monitor his investments, and to react to changes in market risk, and market opportunities. The Bank did not provide that service to Mr Chand.

38. [368]

    Further, the right to renew his redemption request was in the discretion of Mr Chand alone. Even if the Bank had discovered the redemption request a short time after 25 September 2007, it would not have been entitled under the contract simply to execute the request without obtaining prior confirmation from Mr Chand. The PDS set out timing requirements for the process of redemption, and did not authorise the Bank to initiate the process at a time not contemplated by the redemption request. If the Bank had learned of its breach, all that it could have done was to bring the breach to the attention of Mr Chand, to seek further instructions, and to hope that Mr Chand would either co-operate in a process of redeeming his investments in a way that avoided loss, or kept it to a minimum, or alternatively that Mr Chand decided to stay in the market and release the Bank from the consequences of its breach.

39. [369]

    In these circumstances the opportunity for Mr Chand's salvation lay entirely in his own hands.

40. [370]

    On any view the Bank could not in these circumstances be on risk indefinitely for legal responsibility for the consequences in fact of its breach of contract, irrespective of what those consequences might be. It seems clear that Mr Chand could not simply stay his hand so that, if market values increased he could redeem at a time of his choice and enjoy the improved return, but look to the Bank to make up any shortfall if market values ultimately fell. Mr Chand could not, by inaction, effectively make the Bank his insurer against the risk of a fall in market value occurring. The essential question must be, not if, but when and in what circumstances, would Mr Chand's conduct have the effect that Mr Chand had, so to speak, reset the arrangement between himself and the Bank so that he had re-assumed the risks that he originally knowingly accepted in making his investments.

41. [371]

    The initial decision that Mr Chand was required to make was whether he would seek to hold the Bank responsible for its breach, and consequently seek to achieve the result that he would have enjoyed if the Bank had acted on his redemption request, or whether he was content with the outcome of the failure of his initial redemption request, so that he would stay in the market and choose a later time for redemption. Because of the continuing, unpredictable nature of the risk, reasonable parties would expect the party in the position of Mr Chand to address the issue positively and make a decision over a reasonably short time. The duration of the reasonable decision-making period would depend upon the circumstances, but once Mr Chand acclimatised himself to the fact that he continued involuntarily to be exposed to the market, and after he had an opportunity to reacquaint himself with developments in the market since he submitted his redemption request, he would be expected to make an election.

42. [372]

    In the present case it may not be necessary to consider the consequences of Mr Chand's failure to advise the Bank of its breach, or to consider whether Mr Chand took too long in making his election as to whether to hold the Bank of the consequences of its breach, or to voluntarily stay in the market at his own risk. The evidence shows that Mr Chand made a deliberate decision to stay in the market for the purpose of attempting to secure the same result as he would have enjoyed if he had submitted his redemption request on a date in October 2007, rather than on 25 September 2007. Mr Chand positively elected to stay on risk.

43. [373]

    If my conclusion is correct that Mr Chand could not reasonably elect intentionally to stay on risk, when he had a sufficient opportunity to avoid any loss caused by the Bank's breach, but still hold the Bank accountable for the ultimate consequences of its breach, without even telling it of its position, then it follows that Mr Chand's conduct was unreasonable, and as he has caused his own loss when he could equally have caused that lost to be avoided, his conduct satisfies a test of unreasonableness that absolves the Bank from liability for the consequences of its breach.

44. [374]

    The Court of Appeal held in Sherson & Associates v Bailey that the plaintiffs did not act unreasonably in failing to reinforce the roof supports before the roof collapsed, even though they had been warned that additional bracing was required. Although each case depends upon its own facts, it is necessary to consider whether, by parity of reasoning, Mr Chand's inaction in the present case should be excused. In that case the court held that the expert reports did not suggest that there was a need for urgency in carrying out the steps recommended. The evidence did not establish that the plaintiffs recognised that there was a possibility that the building would collapse. It was open to the plaintiff to assume that, if they kept an eye on the building to observe the progress of any cracking, the remedial work could be postponed until the severity of the problem became clear. Fitzgerald JA stressed that the response that was reasonably required of the plaintiffs was related to the risk which they confronted, and that the expert opinions that the plaintiffs had obtained did not clearly indicate that there was a serious risk that the building would collapse, or that remedial work was urgent.

45. [375]

    Furthermore, in that case the plaintiffs would have been required to obtain expert advice that directly dealt with the remediation work that was necessary to prevent the building suffering substantial damage as a result of the defendants' defaults. While the issue of the cost of obtaining the necessary advice and carrying out the remediation was not specifically addressed, it seems clear that the cost would probably have been significant, so that it was reasonable for the plaintiffs to defer incurring that cost, except in response to the appearance of signs of structural deterioration that warranted the expenditure.

46. [376]

    The circumstances of the present case are in my view materially different. Until mid-December 2007 Mr Chand's loss was entirely prospective. Mr Chand believed that it was no longer prudent for him to remain in the market, given changed market circumstances, the high-risk nature of his investments, and that his own position was highly geared, as were some of his investments. Mr Chand's own case was that he was attempting to exit the market. I have found, however, that, contrary to Mr Chand's case that he was trying to secure the same result as he would have enjoyed if the Bank had implemented his redemption request, he was in fact waiting to see if he could do better. Mr Chand had a simple means to redeem his investments at any time. Importantly, he was able to issue a new redemption request without incurring any cost, or subjecting himself to any risk. He had no basis for believing that, if he ignored an opportunity to redeem without loss, and the market suffered a significant fall, he would have any subsequent opportunity to recover his position. Finally, it is also important that, on the findings I have made, Mr Chand decided to stay in the market with knowledge of the risks that were involved.

47. [377]

    I therefore find that Mr Chand's conduct during the period up to mid-December 2007 was the cause of his loss in a manner that requires that he, rather than the Bank, be legally responsible for that outcome.

48. [378]

    In considering the issue of the reasonableness of Mr Chand's conduct I have not ignored the element of doubt, which I have considered above, concerning whether Mr Chand's redemption request simply went astray after it was received by the Bank, or whether some officer of the Bank became aware of the request, decided that it was not an instruction that should be acted upon by the Bank, but neglected to contact Mr Chand to obtain further instructions. In principle the reasonableness of the Bank's conduct should be weighed in the balance when determining responsibility for the realisation of Mr Chand's loss. As I have said above, the positive evidence and the probabilities weigh in favour of the conclusion that Mr Chand's redemption request simply went astray. There is some ground for concern, however, that arises because the Bank made claims that the redemption request could not be implemented because it did not contain an instruction to pay out Mr Chand's redemption request. The Bank actually pleaded that fact, but did not pursue it. It cannot be known whether the point was a retrospective rationalisation, of which the Bank subsequently thought better. I have asked myself the question: what if an officer of the Bank did become aware of the receipt of the redemption request, and decided not to act upon it, or contact Mr Chand - would that make any difference, and if so what difference?

49. [379]

    After the Bank committed its breach, it could not have changed its mind and simply redeemed Mr Chand's investments outside the timeframe contemplated by the redemption request, without obtaining a further instruction from Mr Chand. The most the Bank could have done was to contact Mr Chand to advise him that it had not implemented his request, and ask him what Mr Chand wanted the Bank to do. It is a matter for speculation what then would have happened. Mr Chand may have instructed the Bank to redeem, and depending upon the timing, that may have yielded a better or worse result than as at 25 September 2007. Mr Chand may have instructed the Bank not to act upon the redemption request. Mr Chand did not make anything of this issue in his case, or in his final submissions. In particular, he did not put a positive case that the Bank was aware on or soon after 25 September 2007 that it had received his redemption request. He did not try to establish what he would have done, had he received advice from the Bank at any particular time that it had failed to act upon his request. Given my view that the probabilities support the conclusion that the redemption request went astray, and the necessarily speculative enquiry as to what might have happened if my view is incorrect, I have concluded that it is not appropriate for me to attempt to weigh the possibility that the Bank knew that it had received the redemption request in the balance in considering the reasonableness of Mr Chand's conduct.

50. [380]

    It is appropriate that I return to make a number of observations about the issues of burden of proof, and the standard of reasonable conduct that is required of the plaintiff in the context of proof of causation and mitigation of loss.

51. [381]

    I have found that Mr Chand's conduct in failing to renew his redemption request on an appropriate date in the period between the time that he became aware that the Bank had not implemented his redemption request and about 13 December 2007 relieved the bank from legal responsibility for the loss suffered by Mr Chand after that time. If that conclusion is wrong, then the significance of Mr Chand's conduct after mid-December 2007 becomes relevant.

52. [382]

    In the period up to mid-December 2007 Mr Chand's loss was for all practical purposes prospective. As I have said, at times there were virtual gains, and at other times virtual losses, compared to the position at 25 September 2007. It is perhaps fortuitous that the most propitious time for Mr Chand to renew his redemption request, if he did so after the October high values ended in the first week of November, was the week ending 13 December 2007. After that time his equity loss was progressively realised, albeit somewhat erratically as the value of his investments fluctuated significantly, though with an underlying downward trend. The first additional interest charge was made in December 2007, and subsequent charges followed. Mr Chand made margin call payments in April and July 2008, and they were also lost. On the particular facts of this case it is a reasonable and practical approach to view Mr Chand's conduct in the period up to mid-December 2007 from the perspective of his ability to act reasonably to avoid the whole of his prospective loss becoming realised. Once, however, the value of his investments fell substantially after mid-December 2007, his position changed fundamentally. It might not have immediately been obvious, but from that time Mr Chand was in a loss-making position. At least from the low point of redemption value of $218,967.52 on 22 January 2008, it must have appeared to Mr Chand to be a matter of complete uncertainty as to whether he would ever be able to substantially recover his equity loss and consequential losses. The only choice available to Mr Chand was to cut his losses, and the fluctuations in values, and the impenetrability of future events, put Mr Chand in an entirely different position than he was in up to mid-December 2007.

53. [383]

    I do not see that I have had to rely upon the burden of proof in forming my view that it was Mr Chand's conduct that was the legally responsible cause for his prospective losses becoming real. It is true that Mr Chand failed to prove crucial aspects of his case. I have not accepted that Mr Chand did not appreciate that the Bank was not going to implement his redemption request until early November 2007. I have not accepted that he believed the Bank did not effectively receive his request. In fact Mr Chand had evidence that it did. I have not accepted that Mr Chand looked for an exit point from the market at the same redemption value as at 25 September 2007. Rather, he took his chances on the market recovering to October 2007 values. I have not accepted that no exit point occurred that satisfied Mr Chand's criteria. There was such an exit point between 30 November and 13 December 2007. Those conclusions do not, however, mean that Mr Chand failed to carry the burden of proving that the Bank continued to be responsible for his realised loss, as a result of some inadequacy of the evidence put forward by Mr Chand. The whole of the evidence sufficiently proved the facts necessary to make a positive decision on the issue of whose conduct was truly responsible for the loss becoming realised.

54. [384]

    In fact, even if it be the case that Mr Chand had the burden of proof, I have proceeded on the basis that, as the Bank's conduct caused Mr Chand's loss in fact, I should not find that Mr Chand's conduct absolved the Bank from those consequences, unless I was comfortably persuaded that the whole of the evidence justified a finding to that effect.

55. [385]

    It is my view that in the period up to mid-December 2007 the standard of reasonable conduct expected of Mr Chand should be the same whether the conduct is considered as going to the causation of the realisation of his loss, or the mitigation of his prospective loss. As appears to have been the case in both Medlin and Knott Investments, there is no reason to conclude that Mr Chand had to achieve different standards of reasonable conduct in relation to the avoidance of loss for the purposes of causation and the mitigation of loss. Indeed, the statement of principle by Heydon JA in Sherson & Associates v Bailey at [77] is put as a matter of general principle, as if it was sufficient to say: "A plaintiff cannot be said to have really incurred any loss which might have been avoided by his taking such steps as a reasonably prudent man in his position would have taken to avoid further loss to himself", without being too troubled about whether this is a statement going to causation or mitigation, or both.

56. [386]

    If, in the context of determining legal responsibility for loss that has resulted from the conduct of both Mr Chand and the Bank, "any question of reasonableness should be framed in terms of what is reasonable as between the plaintiff and the defendant", as stated by the plurality in Medlin at p 13, and if the reasonable steps required of Mr Chand to mitigate his loss required Mr Chand to act in the interests of the Bank as well as his own interests, as was acknowledged in the St Vincent's Hospital case, it is difficult to see how the standard of conduct required on the part of the plaintiff could, as a general rule, differ as between causation and mitigation.

57. [387]

    I have set out above the statement of the principles that govern mitigation that was given in the St Vincent's Hospital case. I accept that the courts usually impose a standard of reasonable conduct upon the plaintiff that is not high, because the wrongdoing of the defendant has put the plaintiff involuntarily in the position where the plaintiff must act to reduce loss, which is likely to be "a position of embarrassment" so that the plaintiff should not be expected to embrace significant risk in the interests of attempting to diminish the defendant's liability. However, the reference to the significance of the embarrassing position into which the defendant's breach may thrust the plaintiff should not be taken to be a statement of invariable principle, which applies without reference to the nature of the breach, its consequences and the relative capacities of the plaintiff and the defendant to avoid loss occurring, or to minimise it, on the particular facts of the case. As a matter of common experience the defendant's wrongful act may put the plaintiff in a position of serious disadvantage, where the steps available to the plaintiff to attempt to avoid or reduce the loss that will flow from the breach are themselves risky, time-consuming or expensive. However, that may not always be the case. The standard of the conduct required of the plaintiff to take reasonable steps to avoid or reduce loss may in some cases be much higher than is usually expected, because of special features of the case such as the ease and reliability of the steps available to the plaintiff to avoid or reduce the loss.

58. [388]

    In my opinion it is appropriate to divide the period between Mr Chand's discovery that the Bank had not acted on his instruction and mid-2008, by which time the whole of Mr Chand's loss had effectively been realised, into two separate sub-periods. Between the time Mr Chand realised that the Bank had not implemented his redemption request, and mid-December 2007, Mr Chand's loss was in substance prospective. That is the first period. Following the relatively dramatic fall in the portfolio value in mid-December 2007, Mr Chand's world, so to speak, changed significantly. He was thrust by circumstances into a loss-making position. That is the second period.

59. [389]

    In the first period the Bank's breach did not in fact cause Mr Chand to experience disadvantage and embarrassment, save to the limited extent that involuntarily he remained at risk of changes in the market, and in respect of his liability under the margin loan agreement. Mr Chand therefore was exposed to the need to reconsider making a redemption request, so that he might suffer loss if he failed to do so at a propitious time. However, as noted, Mr Chand was in a position of strength in that he was able by a simple means to renew his redemption request at a time of his own choosing, and he could have done so on occasions that would have avoided his loss. As it happens, the best time for him to leave the market would have been between when he learned that his request had not been acted upon and about 7 November 2007, or between 6 and 13 December 2007, which was at the end of the first period. In the first period, as a practical matter, Mr Chand had the opportunity to avoid his prospective loss becoming actual. The standard of conduct required of him to achieve that result is the same, in my view, whether the question is approached from the perspective of Mr Chand's conduct causing the loss, or failing to mitigate a prospective loss.

60. [390]

    After mid-December 2007, however, it is appropriate to regard Mr Chand as having suffered a loss, and as having been thrust more clearly into the position of disadvantage and embarrassment that generally causes the courts to be solicitous towards plaintiffs in relation to the standard of reasonable care that is imposed upon plaintiffs in respect of the mitigation of loss.

61. [391]

    The standard of the obligation upon Mr Chand to mitigate his loss during the second period is substantially less than it was during the first period to avoid his prospective loss becoming actual loss. It is probably more natural to consider Mr Chand's conduct during the second period as being more a matter of mitigation, than causation.

62. [392]

    That proposition may not be true in relation to the payment by Mr Chand of the two margin calls, as those payments actually increased Mr Chand's loss. There may be scope for debate about whether, by making the payments, Mr Chand caused his loss to increase, or whether the payments should be regarded as a reasonable attempt by Mr Chand to mitigate his loss, which unfortunately was unsuccessful.

63. [393]

    I have considered the reasonableness of Mr Chand's conduct after the end of 2007 above, in the context of the subsequent variations in the portfolio value of his investments and the circumstances in which he responded to margin calls. I have already explained why I find that the Bank has not established that Mr Chand unreasonably failed to act to mitigate his loss, as it materialised during 2008, and afterwards.

64. [394]

    As Mr Chand's claim has failed, the contributory negligence defence that the Bank pleaded in par 65 of its further amended defence does not arise. However, as I have held that Mr Chand's loss arose from a breach by the Bank of a contractual term that did not amount to "a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort" for the purposes of the definition of "wrong" in s 8 of the Law Reform (Miscellaneous Provisions) Act 1965 (NSW), s 9 of that Act would not have applied, and the principle in Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 would have operated to defeat a contributory negligence defence.

65. [395]

    Had it been necessary to do so, I would have held that the Bank's defence in par 57 of its further amended defence, based upon the terms of clause 37 of the margin loan agreement failed. The Bank did not place positive reliance upon this defence in its final submissions. It is difficult to see in the context of this case how any limitation terms in the margin loan agreement could absolve the Bank for liability for failure to perform its obligations under the contract that was formed when Mr Chand accepted the terms of the PDS. The Bank's submissions did not explain how clauses 37.1 and 37.4 applied. It does not appear from an examination of those provisions how they could do so.

Orders

1. [396]

   I make the following orders:

   1. (1)

      Order that the plaintiff's claim be dismissed.

   2. (2)

      Order the plaintiff to pay the defendants' costs

   3. (3)

      Order pursuant to UCPR r 31.16A and r 33.10, and Practice Note No S C Gen 18 par 26:

   4. (1)

      that the exhibits be returned forthwith to the parties who tendered the exhibits to be held by them in compliance with Practice Note No S C Gen 18 par 28;

   5. (2)

      that the parties return any exhibits that were produced to the Court by any person in answer to a subpoena or notice to produce to the person who produced the document forthwith upon the expiry of any time for which the party to whom the exhibit is returned is required to retain the exhibit;

   6. (3)

      that all material produced directly to the Court by any party in answer to any notice to produce that has not become an exhibit be returned forthwith to the party who produced the material; and

   7. (4)

      that the Registry should forthwith return, or otherwise deal with in accordance with Practice Note No S C Gen 18 par 27, all material produced to the Registry in answer to any subpoena or notice to produce."

   8. (4)

      **********

   9. (4)

      Addendum (PDF)