Professional Liability Guide

CHAPTER 3 – DEFENCES

In Selig v Wealthsure Pty Ltd, 185 the High Court considered a situation where a claim was made under provisions of the Corporations Act 2001 (Cth), including a claim involving section 1041H (misleading or deceptive conduct). The question for determination was whether claims for damages under section 1041H as well as other sections are to be treated as apportionable claims. The High Court concluded that the ‘ apportionable ’ nature of a claim based upon a contravention of section 1041H does not extend to claims based on conduct of a different kind even if a claim includes a breach of section 1041H and another section. The result was that the claim was not apportionable, and the plaintiffs recovered the entirety of their loss from the defendants. That interpretation can be applied to the CCA and the ASIC Act, which contain almost identical definitions of ‘ apportionable claims ’, including most notably the requirement that the claims be based on misleading or deceptive conduct. Concurrent wrongdoer The Commonwealth Acts all define a concurrent wrongdoer as a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. 186 Similarly, under the State schemes, a concurrent wrongdoer is generally defined as a person who is one of two or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim. It does not matter if that concurrent wrongdoer is insolvent, in the process of being wound up, or has ceased to exist. 187 While this definition is largely consistent between the State-based schemes, Queensland and South Australia omit the term ‘ jointly ’ in their definition of concurrent wrongdoers. 188 The effect of the omission of this word is that in Queensland and South Australia, a wrongdoer and the party vicariously liable for the actions of that wrongdoer are not concurrent wrongdoers. Whether a concurrent wrongdoer ‘caused’ damage or loss that is the subject of the claim is a question of fact. 189 In Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd, 190 the High Court considered the issue of ‘cause’ in the context of the proportionate liability provisions of the Civil Liability Act 2002 (NSW) and did so by reference to common law principles pertaining to ‘material cause’. In that matter, Mr Caradonna and his solicitor cousin Mr Flammia (the fraudsters) committed fraud by forging the signature of their business partner, Mr Vella, to obtain a mortgage through Mitchell Morgan, secured by Mr Vella’s property. When the fraud was uncovered, and Mitchell Morgan was unable to recover the advanced loan, Mitchell Morgan commenced proceedings against the solicitors in the transaction, Hunt & Hunt. At first instance, the Supreme Court of New South Wales found that the fraudsters and Hunt & Hunt were liable to Mitchell Morgan as concurrent wrongdoers, with Hunt & Hunt’s apportionment of liability judged at 12.5%. On appeal, the Court of Appeal found that Hunt & Hunt were not able to apportion their liability because their actions caused a different type of loss from that of the fraudsters such that they were 100% liable. Hunt & Hunt appealed this decision to the High Court. 185 (2015) 255 CLR 661. 186 ASIC Act s 12GP(3); CCA s 87CB(3); Corporations Act 2001 (Cth) s 1041L(3). 187 See CLA (NSW) s 34(2); CLA (ACT) s 107D(1); PLA (NT) s 6(1)); CLA (Tas) s 43A(2); Wrongs Act (Vic) s 24AH(1); CLA (WA) s 5AI. 188 CLA (Qld) s 30(1); LRA (SA) s 3(2)(b). 189 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613, 635. 190 (2013) 247 CLR 613.

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