Commonwealth Bank of Australia v Witherow [2006] VSCA 45

Court of Appeal (Vic)|2006-02-17|Before: MAXWELL, P., BUCHANAN, J.A. and REDLICH, A.J.A.

Apportionment of liability - Wrongs Act 1958 Part IVAA - Action on guarantee - No defence to claim - Guarantor makes third party claim against accountant for negligent advice - Third party claim does not make plaintiff's claim an "apportionable claim" under Part IVAA - Guarantor and third party not "concurrent wrongdoers" - Judgment for plaintiff.

"(1) This Part applies to -

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care ..."

10 The Bank's claim is not a claim in an action for damages. It is a claim in an action for a sum certain, namely - as set out in the statement of claim - $150,606.90.

11 Less still is the Bank's claim made "in an action for damages ... arising from a failure to take reasonable care". The Bank sues on a guarantee. It seeks, in effect, specific performance of the contract of guarantee. No question of failure to take reasonable care arises in that claim, or could possibly arise. It is understandable that Mr Witherow has wanted to join, and has now joined, his accountant, Dennington, as a third party, on the ground that her negligence - as he says it was - in failing to advise him accurately of the financial position of the borrower company has resulted in his exposure to loss pursuant to the calling up of the guarantee. But for present purposes, the proposed seeking by Mr Witherow of contribution from Dennington is wholly irrelevant.

12 True it is that the third party claim would be founded - and properly founded - on an allegation that Mr Witherow has suffered damage because of the accountant's failure to take reasonable care. It hardly need be pointed out, however, that the duty of care on which Mr Witherow will rely is a duty owed to him. There is no suggestion - nor could there be on these facts - that Dennington owed any duty of care to the Bank nor, therefore, that the Bank had any cause of action against Dennington.

13 It seems to me to be perfectly clear what Part IVAA was intended to achieve. Where an action for damages is brought based on an alleged failure by the defendant to take reasonable care, and there are concurrent wrongdoers (that is, "two or more persons whose acts or omissions cause, independently of each other or jointly, the loss or damage that is the subject of the claim"), then the liability of a defendant who is one of those concurrent wrongdoers is, in the language of paragraph 24I(1)(a) -

"limited to an amount reflecting that proportion of the loss or damage claimed that the Court considers just having regard to the extent of the defendant's responsibility for the loss or damage."

14 Obviously enough, that is not this case. It would, of course, be impossible to make an apportionment between, on the one hand, Mr Witherow's liability in contract to the Bank and, on the other, the liability of Dennington in tort to Mr Witherow. Plainly, Parliament did not have in mind when it enacted Part IVAA that the Court could be asked to take into account in an action such as this, on a contract of guarantee, the fact that the guarantor has a claim in negligence against a third party on whose advice he relied in giving the guarantee.

15 So far as the submissions for the respondent relied on the former provisions of s.131 of the Building Act, it seems to me that the provisions of Part IVAA adopt precisely the same basic approach to apportionment of liability as did that section, save that Part IVAA is not confined to apportionment between parties to a proceeding. As to what implications Part IVAA may have for claims arising in relation to building work, no occasion arises on this appeal to say anything at all.

16 So far as interest is concerned, there is no contractual entitlement to interest under the guarantee, and the Bank conceded as much. The Bank does, however, have an entitlement to interest under s.58(1) of the Supreme Court Act. In my opinion, there has been no "good cause shown to the contrary."

17 Accordingly, in my opinion, the appeal should be allowed. I would order as follows:

1. The orders made by the County Court on 15 April 2005 be set aside and in lieu thereof it be ordered that -

(a) there be judgment for the plaintiff in the sum of $150,606.90 plus interest of $20,037.48 calculated at the statutory rate pursuant to s.58 of the Supreme Court Act, from 21 December 2004 to 17 February 2006.

(b) the defendant pay the plaintiff's costs of the proceeding, including reserved costs.

2. The respondent pay the appellant's costs of the appeal.

3. The respondent be granted a certificate under the Appeal Costs Act.

19 I agree, for the reasons given by the President, that the appellant's claim in the proceedings is not an apportionment claim for the purposes of Part IVAA and that neither the company or Dennington is a concurrent wrongdoer for the purposes of Part IVAA. I would allow the appeal and make the orders proposed.

At a glance

Court

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Before

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Judgment (11 paragraphs)

Parties