Australia: Same Or Different? Victoria Puts A Hurdle In The Path Of Proportionate Liability

Introduction

In St.George Bank Limited v Quinerts Pty Ltd [2009] VSCA 245, the Victorian Court of Appeal undertook a level of analysis that has not been undertaken previously in determining when a party will be a concurrent wrongdoer for the purposes of the proportionate liability regime. The Court acknowledged that its conclusion was at odds with the decision in Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 but not with the decision in Chandra v Perpetual Trustees Victoria Ltd (2007) ANZ ConvR 481 (both New South Wales Supreme Court decisions). The Victorian decision is a troubling one and, if applied in New South Wales, has the potential to significantly limit a defendant's ability to contend successfully that a third party is a concurrent wrongdoer.

Comment

In Quinerts, St.George brought a claim against a valuer alleging that it suffered loss as a result of the valuer's overvaluation of a property. The valuer contended that the borrower and the guarantor were concurrent wrongdoers. The Court of Appeal concluded that in order to seek contribution from another wrongdoer, that person must be liable for the same damage as the damage that is the subject of the plaintiff's claim.

The Court held that the loss or damage caused by the valuer was not the same as that caused by the borrower or the guarantor. The loss caused by the valuer was to cause the bank to accept inadequate security from which to recover the loan whereas the loss caused by the borrower and the guarantor was their failure to repay the loan.

The Vella and Chandra cases both concerned mortgage fraud. In each case, the New South Wales Supreme Court found that the solicitors and the fraudster were concurrent wrongdoers.

The Victorian Court of Appeal disagreed with the reasoning in Vella. In its view, the loss caused by the solicitors was the loss occasioned by their failure to draw a mortgage effectively whereas the loss caused by the fraudster was the loss that comprised the lender parting with its money.

However, the decision in Chandra was not inconsistent. The Court of Appeal said that the loss or damage caused by the solicitors (whose negligence allowed the fraudster to obtain a certificate of title to commit the fraud) and the loss or damage caused by the fraudster was the same; it was the loss which resulted from the lender making a loan it would not otherwise have made.

Conclusion

If the Victorian decision is followed in New South Wales, the precise nature of the loss or damage that is the subject of the plaintiff's claim will be a critical factor. Only if the third party is (or would be) liable to the plaintiff for the same loss as the loss that is the subject of the plaintiff's claim can the third party be a concurrent wrongdoer.

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