Counterfactual causal analysis raises fundamental philosophical questions with far-reaching practical implications for the assessment of compensatory damages. Australian courts frequently skirt around this vexed issue rather than pursuing a coherent, principled approach. The High Court has recently provided much-needed practical guidance on the operation of counterfactuals and the ‘but for’ test. This case note examines Lewis v Australian Capital Territory (‘Lewis’), in which the High Court reaffirmed the centrality of counterfactuals and the ‘but for’ test to the assessment of compensatory damages. This case note canvasses the facts of Lewis, analyses the High Court’s application of counterfactual causal reasoning to give effect to the fundamental compensatory principle, and examines the competing ‘but for’ and ‘material contribution’ causal tests. This case note draws parallels between Lewis (a false imprisonment claim) and Berry v CCL Secure Pty Ltd (a misleading conduct claim), arguing that the two cases (handed down on the same day) are an unambiguous indication from the High Court that Australian courts should apply counterfactual reasoning when calculating loss, subject to certain exceptional circumstances where the ‘but for’ test malfunctions. This case note also addresses the High Court’s sensible rejection in Lewis of the availability of substantial ‘vindicatory damages’ in the absence of loss.
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