First Plaintiff v Defendants

PROPORTIONATE LIABILITY - Whether third defendant's liability is proportionate - claim is an apportionable claim to which Part IVAA of the Wrongs Act 1958 applies and third defendant is "concurrent wrongdoer" - liability is proportionate to third defendant's responsibility for loss and damage, Wrongs Act 1958, ss 24AI, 24 AH.

1 Marco, Luciano and Patrizia Trani are siblings[1]. In 1981, their parents purchased a house at Safety Beach as an investment, putting it into the names of their children as equal owners. In 1988 their father built a house on the property, and since that time the family has used it as a family holiday home. The parents have both since passed away.

2 On 13 March 2018, Patrizia instructed Melbourne Conveyancing Group, the business of the third defendant who is a licenced conveyancer. Her instructions were to prepare a sale contract for the property as it was to be sold to a third party purchaser, to settle the sale, execute the transfer of the land and disburse the sale proceeds. She purported to do this on behalf of herself and her two brothers. However, the brothers allege she acted without their knowledge or authorisation.

3 The brothers commenced this proceeding alleging that Patrizia, without their knowledge, consent or authority, entered into a contract of sale for the sum of $1,350,000 fraudulently executing the contract of sale and receiving funds from transfer of the property.

4 The second defendant, Ascended Mastery Pty Ltd, is a company of which Patrizia is sole director and shareholder. She directed that the part of the settlement sum received by the conveyancing company be disbursed to the company. The plaintiffs claimed that the company, fixed with knowledge of Patrizia's fraudulent conduct, received funds from the sale to which it had no legal entitlement. The third defendant admits that an amount of $837,237 was paid into a bank account of the second defendant at the direction of Patrizia.

5 Patrizia represented to the conveyancer that she had authority to act on behalf of her brothers. The third defendant acted on Patrizia's instructions without verifying that the two brothers had agreed and consented to the sale and that they had authorised her to act on their behalf. The claim alleges negligence and breach of duty of care by the third defendant.

6 Judgment in default of filing a defence was entered as against the first and second defendants on 1 November 2018. The third defendant filed a defence to the proceeding. The third defendant admitted that she owed a duty of care to the plaintiffs. Ultimately, in an amended defence for which leave was granted on the morning of the hearing, she admitted breach of that duty subject to the Court being satisfied of fraud.

7 In addition to the claim of negligence against the third defendant, the plaintiffs claim damages for contravention of the Competition and Consumer Act 2010[2] in her conduct and the representations made by her to the Registrar of Titles. Those representations were alleged to be misleading and deceptive. By her defence, liability under the Australian Consumer Law was denied.

8 Marco and Luciano both gave sworn evidence that they knew nothing about the transfer of the property on 17 July 2018 to the purchaser, a person unknown to them. They first knew of the transfer of the property on 11 September 2018 through their solicitor. Their solicitor subsequently obtained a copy of the contract of sale dated 1 April 2018. Each of them says that the signature on that document is not their signature and is a forgery. Their solicitor then obtained the whole conveyancer's file. In it was a statutory declaration as to the loss of the title deed which also carried signatures purporting to be those of the brothers. The plaintiffs say that those signatures are also forged. Their evidence is: that they never authorised any person to act on their behalf to sell the property, that their sister Patrizia never communicated to either of them regarding the steps she was taking to sell the property, and that at no time had anybody from the third defendant's conveyancing firm contacted either of them about the sale of the property or about verifying their identity. They have not received any proceeds from the sale of the property. They were not cross-examined on their evidence.

9 I accept the unchallenged evidence of Marco and Luciano, which demonstrates fraud on the part of Patrizia.

10 The conveyancer gave evidence and was cross-examined by counsel for the other parties. I will refer to that evidence further when dealing with the argument as to whether the plaintiffs' claim is an apportionable one. For present purposes her evidence was that prior to being retained in March 2018 she had no involvement or association with either plaintiffs or other defendants. In support of the representation to the third defendant that she had authority to act for her brothers, Patrizia provided a signed copy of the contract of sale ostensibly executed by all three siblings, a statutory declaration ostensibly signed by all three siblings in support of an application for the reissue of the title, and personal and tax file number information for all three siblings. The conveyancer relied on such evidence and assumed its accuracy. I accept this evidence.

11 By reasons of default judgment and the amended defence the questions for me to determine are as follows:

(1) What is the quantum of damages to be awarded to the plaintiffs?

(2) Is the claim against the third defendant an apportionable claim to which Part IVAA of the Wrongs Act 1958 (Vic) ('Wrongs Act') applies?

(3) If the claim is an apportionable claim then, as provided for by s 24AI of the Wrongs Act, I have to determine the proportionate liability of the third defendant in an amount reflecting that proportion of the loss or damage claimed that I consider just, having regard to the extent of the third defendant's responsibility for the loss or damage.

Interlocutory Default Judgment - First and Second Defendants

12 Judgment in default of a defence was entered under Order 21.02 of the Supreme Court (General Civil Procedure) Rules 2015. Such judgment is interlocutory as the claim is one for damages.[3] It requires there to be an assessment of the quantum of damages before final judgment can be entered. That assessment is carried out in accordance with Order 51. In particular, as the claim against the third defendant is defended, the assessment is carried out at the trial in accordance with rule 51.03.

13 Although interlocutory judgment has been entered, the effect of the failure to file a defence is that the assessment of damages is undertaken on the basis that the first and second defendants are taken to have admitted the matters in the statement of claim.[4] Unless set aside by order of the Court, judgment in default is final as to the right of the plaintiff to recover damages, and is interlocutory only in respect of the assessment of those damages.[5]

14 The first and second defendants previously applied to set aside the judgment entered against them. They had argued that this Court lacked jurisdiction to hear the claim. This argument was rejected. The affidavit sworn by Patrizia in support of the application was noted not to depose to any defence to the proceeding on its merits.[6] The application to set aside the default judgment was not successful before Associate Justice Daly[7], nor on appeal before Kaye JA.[8]

15 Relevantly from the statement of claim, the first and second defendants are taken to have admitted that:

1. On or about 1 April 2018, Patrizia Trani without the Plaintiffs' knowledge or consent or authority entered into a contract of sale (''the contract of sale'') to sell the property to Ayla Han, for the sum of $1,350,000, and fraudulently executed the contract of sale by purporting to sign each of the Plaintiffs' signatures on the contract of sale.

PARTICLUARS

...

A deposit of $270,000 was received by Patrizia Trani from Ayla Han.

1. On or about 11 July 2018 the sale of the property to Ayla Han settled and the balance of the purchase price in the sum of $1,080,139.00 was paid to the First Defendant and/or to the Second Defendant on Patrizia Trani's instructions.

16 The harm that has been suffered by the plaintiffs is the loss of their interest in the land which they jointly owned. Damages are to be awarded to put the plaintiffs as far as it is possible to do so in the position as if the wrong had not been done. The only evidence of the economic value of the land is that of the contract sale price of $1,350,000. No-one has suggested that the sale price is other than a fair reflection of market value. The property was held jointly as tenants in common. The plaintiffs and the third defendant both submitted that damages for the loss of interest in the property should reflect one third of the gross sale price.

17 The first and second defendants submitted that the plaintiffs have not proved their loss because they have failed to lead evidence of the reasonable value of the property at the time of sale.[9] They say that reasonable value is not the same as the purchase price because the plaintiffs are not seeking an accounting of funds from the purchase. This argument has its origins in the decision of Kaye JA on the appeal against the refusal to set aside default judgment.

18 In the judgment of Kaye JA it was made clear that the remedy sought by the plaintiffs was damages or compensation for the loss of their interest in the property by fraud and not an accounting between co-owners of the proceeds. Kaye JA observed:

The damages, which might be awarded to the plaintiffs in respect of that claim, may not necessarily equate to the proportionate share of each plaintiff to the purchase price paid by Mr Han to the first and second defendants. If, for example, the reasonable market value of the property, at the time of the sale of it, exceeded the contract price paid by Mr Han, the plaintiffs would be entitled to damages proportionate to their share of that fair market price. In addition, they may also be entitled to other consequential damages resulting from the fraud of the first and second defendants, including, for example, damages for loss of use of the property, and other expenses resulting from the fraud committed by the first and second defendants.[10]

19 Absent evidence to the contrary, an assessment of the economic loss and damage to be compensated would ordinarily be guided by the sale price. There is no evidence in this case that the sale was other than at market value and as such I have no hesitation in accepting the purchase price as reflecting a fair market price at the time of sale. There is no evidence of, nor do the plaintiffs claim, any other consequential loss or damage as a result of the fraud. Finally, to demonstrate that acceptance of the sale price as guiding the appropriate quantum of damages is not the same as an accounting of proceeds, no regard should be had of adjustments or selling expenses that might reduce the nett payments to co-owners in an accounting. I do not reduce the quantum of damages by any of the adjustments or expenses associated with the sale.[11]

20 Accordingly I find that each plaintiff is entitled to damages in the sum of $450,000.

21 Given my finding of fraud by the first defendant and the admission of conduct amounting to breach of duty by the third defendant, there remains the question of whether the liability of the conveyancer is limited to an amount reflecting her proportionate liability. Two things are necessary for this to occur. First, the plaintiffs' claim must be an apportionable claim under Part IVAA of the Wrongs Act. Second, the third defendant must be "a concurrent wrongdoer" as defined by s 24 AH. If both of these elements are present then liability is to be proportionate to the third defendant's responsibility for the loss and damage.[12]

22 If Part IVAA applies, then the claim in negligence and under s 18 of the Australian Consumer Law are both apportionable.[13] I will deal separately with the claim under s 29 of the Australian Consumer Law.

23 An apportionable claim is simply defined as one to which Part IVAA applies. Part IVAA applies, by s 24AF(1), 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; and

(b) a claim for damages for contravention of section 18 of the Australian Consumer Law (Victoria).

Claims that are excluded are set out in sub-paragraphs (2) and (3) none of which apply here.

24 The claim for a loss of a proprietary interest in property is a claim for economic loss or damage.

25 The proper approach in considering whether the claim is one that involves a failure to take reasonable care and is therefore apportionable was set out in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd.[14] Middleton J set out in his reasons the following propositions:

(a) The failure to take reasonable care should be given a broad interpretation consistent with the use of the phrase "arising from" in s 24AF(1)(a);

(b) It is not necessary that the claim be one based on negligence or breach of duty;

(c) If a failure to take reasonable care is not a necessary element of the claim, and therefore not necessary to be exposed by the pleadings, an additional inquiry may be relevant during trial to see if there is evidence of a failure to take reasonable care that may make Pt IVAA applicable;

(d) Because a failure to take reasonable care might only be exposed as a matter of evidence, it is not appropriate to determine the applicability of Part IVAA as a preliminary matter.

26 The application of Part IVAA to the third defendant's liability depends upon establishing that she failed to take reasonable care. In this case, against the third defendant this is both exposed by the pleadings and the evidence. The admission of conduct amounting to a breached her duty of care was pleaded. The third defendant's evidence was that she did not attempt to contact the plaintiffs because she wrongly assumed that the first defendant was acting on behalf of all three siblings. This amounts to a failure to take reasonable care.

27 Secondly, an apportionable claim only gives rise to a defence of proportionate liability for a defendant who is a "concurrent wrongdoer". A "concurrent wrongdoer" is defined. Section 24AH provides:

(1) A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 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.

28 Section 24AI provides:

Proportionate liability for apportionable claims

(1) In any proceeding involving an apportionable claim -

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is 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; and

(b) judgment must not be given against the defendant for more than that amount in relation to that claim.

29 All defendants submit that the third defendant is a concurrent wrongdoer so that s 24AI applies. The plaintiffs submit that the third defendant is not a concurrent wrongdoer with either of the other defendants as the defendants have not caused the same loss and damage.

30 In Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd & Ors,[15] the High Court considered the provisions of the Civil Liability Act 2002 (NSW) where Part 4 establishes circumstances where a defendant may seek to limit liability to a plaintiff to a proportionate liability. It is in terms similar to the regime imposed by Part IVAA of the Wrongs Act. The facts in Hunt & Hunt were also similar. A fraudster used properties as security for a loan by forging the signature of the title holder on the loan and mortgage documents. Then he obtained by his cousin, a solicitor, false certification of the signature of the title holder on the loan documents. Mitchell Morgan provided the loan funds based upon mortgage and loan documents drawn by its solicitors, Hunt & Hunt. The solicitors breached their duty of care to Mitchell Morgan by failing to prepare documents containing a covenant to repay the stated amount. At trial the claim against the solicitors was held to be apportionable and they were said to be concurrent wrongdoers with the fraudsters.

31 On appeal to the New South Wales Court of Appeal it was held that although the claim was an apportionable claim the solicitors were not concurrent wrongdoers as the loss and damage caused by the solicitors' negligence was not the same loss and damages suffered as a result of the fraudsters' negligence. That is, the appeal upheld the first requirement but not the second one for apportionment.

32 In the High Court, the parties took no issue with the characterisation of the claim against the solicitors as an apportionable claim: one for economic loss arising from a failure to take reasonable care.[16] The lender's claim was clearly based upon a failure to exercise proper skill, care and diligence in breach of the solicitors' retainer. The cause of action was different to that which the lenders might have had against the fraudsters. The issue canvassed by the Court was whether the action or omissions of the fraudster and the solicitors caused the same loss or damage so as to meet the definition of a concurrent wrongdoer. Ultimately the Court found that it did.

33 The analysis of the High Court separates the identification of the damage or harm suffered from the causes of that damage. The harm or damage suffered by Mitchell Morgan was its inability to recover the funds advanced. By pointing to the different effects of the fraudsters conduct (falsifying documents leading to the lack of security for the money advanced) and the solicitors' negligent conduct (in preparing the loan documents), the court identified important differences on the issue of causation. However, the High Court said of the differences "they cannot be equated with that loss and damage".[17]

34 In St George Bank v Quinerts Pty Ltd,[18] the Victorian Court of Appeal dealt with Part IVAA in respect of a claim that a valuer (Quinerts) negligently overvalued a property which was security for funds advanced by the bank. The borrower and guarantor defaulted on the loan and at sale the property fetched less than the amount advanced. Nettle JA found that the damage caused by the borrower and guarantor was their failure to repay the loan. The loss caused by the valuer was to cause the bank to accept inadequate security from which to recover the loan. As a result the Court held that, as the loss or damages was not the same, the borrower and guarantor were not concurrent wrongdoers. In reasoning the judge used the analogy of a thief who steals from a bank where the bank's insurance broker has negligently failed to insure against risk of theft. The thief caused the loss of the money. The insurance broker caused the inability to obtain indemnity.

35 In Hunt v Hunt,[19] referring to the analogy of the thief and the insurance broker, the High Court said:

In that analogy, it is correct to describe the damage or loss suffered by the bank as its inability to recover the moneys stolen. One source of recovery could have been its insurer, hence the brokers were a cause of its loss. The other possible source of recovery is the thief. The harm to the bank's economic interests, at a certain point, is the inability to recover from either source[20].

36 The Quinerts' analysis, tested the damage identified by reference to causation. The High Court said there is no such requirement that one wrongdoer contribute to the wrongful actions of the other wrongdoer in order that they cause the same damage. Referring to the analysis in Quinerts, the Court said

In doing so his Honour appears to have assumed that there is some requirement that one wrongdoer contribute to the wrongful actions of the other wrongdoer in order that they cause the same damage. There is no such requirement in Pt 4 of the Civil Liability Act. To the contrary, Pt 4 acknowledges, as does the common law[21], that a wrongdoer's acts may be independent of those of another wrongdoer yet cause the same damage[22].

The High Court distinguished the question of identifying the relevant loss and damage from questions of causation of that damage. What causes the damage might involve acts that "occur successively, rather than simultaneously".[23] Causation is determined by the concept of material contribution in accordance with the principles set out in March v Stramare (E &MH) Pty Ltd.[24] The Court said on the issue of identifying whether the same loss or damage has been suffered that "[t]he proper identification of damage should usually point the way to the acts or omissions which were its cause".[25]

37 Here the plaintiffs describe the third defendant's certification as "an act independent of Patrizia's fraudulent conduct."[26] They submit that act of negligently certifying matters set out in the Transfer of Land document when in fact no such steps had been taken, "caused the plaintiffs loss of their legal interest."[27] The plaintiffs submit that the first defendant's conduct in subsequently retaining the whole of the proceeds of the sale either herself or through the vehicle of the second defendant, did not cause the same damage as that caused by the third defendant.

38 The actions of the first and third defendant may well be independent of each other. In light of the analysis compelled by Hunt & Hunt[28] not to identify damage or harm by reference to different causes for the loss, I cannot accept the submissions of the plaintiffs that the actions of each caused a different loss. The plaintiffs have suffered the loss of their proprietary interest in the land. Both the fraud of their sister and the negligence of the conveyancer have been independently a cause of that loss.

39 It was also submitted that the loss or damage suffered by the plaintiffs by reason of the actions of the second defendant is not the same loss or damage. The damage caused by the second defendant was said to be its failure to pay the money that it wrongfully received. The pleaded claim against the second defendant, which is admitted in default of a defence is wider than a claim that it held and expended funds to which it was never entitled. The second defendant is taken to have admitted that it:

1. In the circumstances set out in paragraph 3 hereof, the Second Defendant possessed all of Patrizia Trani's knowledge about the matters set out in paragraphs 5, 6, 7, 9, 10 to 15 hereof and knowledge of each was the knowledge of both and in particular the fact that the Plaintiffs had not authorised or consented to the sale of the property and never executed the contract of sale.
2. By reason of the matters set out in the preceding paragraph the Second Defendant:

(a) knowingly assisted Patrizia Trani in her said fraudulent conduct in selling the property to Ayla Han; and

(b) Received the sum of $1,080,139.05 well knowing of Patrizia Trani's said fraudulent action in selling the property and the execution of the contract of sale without the Plaintiffs consent or authority.[29]

40 It is clear that the second defendant is taken to know of the fraud and acted in knowledge of the fraud. The claim against it is one of knowledge of fraud, not just of holding money to which it was not entitled. The liability of the second defendant is described by the plaintiffs as one under both limbs of the principles in Barnes v Addy.[30] Liability under the first limb attaches to the company on the basis that it is a vehicle that has received funds from the sale of the property by Patrizia. Under the second limb it is assisting with knowledge of a dishonest and fraudulent design on the part of Patrizia as was pleaded in paragraphs 16 and 17 set out above.

41 As such I find that all three defendants are concurrent wrongdoers whose acts have independently or jointly caused the loss or damage that is the subject of the claim. The requirement of s 24AH of the Wrongs Act is met.

42 Before coming to apportion liability of the third defendant I will deal with the provision of s 24AM. This provision deals with the circumstance where a finding of fraud is made against a defendant who is found liable for damages. It provides:

Despite sections 24AI and 24AJ, a defendant in a proceeding in relation to an apportionable claim who is found liable for damages and against whom a finding of fraud is made is jointly and severally liable for the damages awarded against any other defendant in the proceeding[31].

43 The first and second defendants submit that as interlocutory judgment was entered against them for damages to be assessed, there is no 'finding of fraud' as required for s 24AM to have application. It was submitted that such a finding must occur at trial. As a result, it was submitted that fraud is only pleaded against them and as a consequence s 24AM has no application to them.

44 In support of this submission the first and second defendants rely on three cases. In the first case, Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd and Ors,[32] Croft J declined to determine the applicability of Pt IVAA on an application to join potential concurrent wrongdoers. He followed the approach outlined by Middleton J in Dartberg.[33] The second case_; P-Value Pty Ltd v Vicland Group No 1 Pty Ltd,_[34] was said to be an example where findings of fraud were made resting on 'the strongest of evidentiary foundations'[35] illustrating the requirement that it not be a finding based upon a pleaded case. In the third case, Dual Homes Pty Ltd v Moores Legal Pty Ltd & Anor[36] I was referred to paragraph 384 where Dixon J said:

It has been settled since the early decision of Barrett J (as he then was) in Reinhold v NSW Lotteries Corporation (No 2), that although a case will ordinarily be pleaded and proved by one or more defendants so as to engage the statutory provisions, the findings ultimately made at trial determine whether the statutory conditions compelling the court to apportion damages are engaged[37].

45 I do not accept the submission that because the claim of fraud is pleaded against the first and second defendant, there is no finding of fraud at trial to enliven s 24AM. First, unlike a contested case where findings are made on the evidence adduced and not the pleadings, where an interlocutory judgment has been obtained, an assessment of damages proceeds on the basis that the defendant had admitted the pleaded elements entitling the plaintiff to damages.[38] That in itself is sufficient to distinguish this case from the cases relied on which establish that it is not appropriate to deal with the matter on pleadings where evidence as to liability at trial is anticipated by a pleaded defence.

46 Second, the assessment of damages has taken place at trial and I have heard evidence of the plaintiffs and the third defendant upon which I have made factual findings, including a finding of fraud by the first defendant. Accordingly, if it be necessary to do so, I have made necessary findings of fraud at trial. The claim against the second defendant also fixes it with the knowledge of the fraud.

47 Third, the limitation on liability of a defendant that is raised by Part IVAA of the Wrongs Act is a defence that can defeat the position that a plaintiff can recover the totality of damages against any tortfeasor. It is for a defendant to plead and then to prove the statutory preconditions necessary to avail itself of the provisions. Having interlocutory judgment entered against them from a failure to file a defence, the first and second defendants have advanced no basis upon which they could rely on a provision that gives them a limitation for civil liability if there was no finding of fraud.

48 I find that s 24AM applies so that the first and second defendants are jointly and severally liable for all of the damages awarded.

49 The task of arriving at an amount reflecting a proportion of the loss and damage claimed that the Court considers just is an exercise similar to the task of apportioning contributory negligence by a plaintiff or contribution between defendants. The principles outlined in Podrebersek v Australian Iron & Steel Pty Ltd[39] guide the value judgment.

"A finding on a question of apportionment is a finding upon a "question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinions by different minds."[40]

....

The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involved a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris [1956] HCA 26; (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage (citations omitted)."[41]

50 The approach to apportioning responsibility of the third defendant proceeds from the basis that each concurrent wrongdoer's action or omission has been a cause of the loss or damage such that each defendant is liable to the plaintiff. But, as was said in Hunt & Hunt, a finding of causation[42] does not determine whether a defendant should bear sole responsibility or whether and to what extent it should be apportioned between other wrongdoers.

The value judgments involved in that exercise [of apportionment] differ from, and are more extensive than, those which inform the question of causation.[43]

51 In relation to relative culpability the plaintiffs emphasised in particular that the breach of duty involved a false certification and breached the specific obligations imposed by s 106A of the Transfer of Land Act 1958 (Vic) ('Transfer of Land Act'). The duty of care pleaded and admitted was one requiring the third defendant to verify four matters -

(i) that the plaintiffs were in truth selling the property;

(ii) that the plaintiffs had executed the contract of sale;

(iii) that the plaintiffs had authorised Patrizia to act on their behalf; and

(iv) had authorised her to execute the Transfer of Land on their behalf.

The content of the duty was particularised with reference to s 106A. The breach was also particularised as a failure to verify identities in compliance with the Registrar of Titles requirements.

52 The plaintiffs submitted that the degree of departure from the standard of care by the third defendant was significant and greater than other cases because of the operation of s 106A of the Transfer of Land Act. In submissions it was described as a deliberate and extraordinary breach of statutory duty, critical to the loss of interest in the property.

53 Section 106A informs the content of a common law duty of care owed by a conveyancer. Section 106A gives to the Registrar power to determine requirements for paper conveyancing. The Registrar has published on 14 December 2017 such requirements for matters addressed in s 106A(1)(a) - (g) inclusive.

54 The Registrar's requirements set out procedures for verification of identity (s 106A(1)(a) of the Transfer of Land Act) and verification of authority (s 106A(1)(f) of the Transfer of Land Act). In both cases the conveyancer is required to take "reasonable steps". Following the procedure of applying the "Verification of Identity Standard" will constitute taking of reasonable steps but this is not prescribed and it remains open to establish another process of verification that constitutes reasonable steps. As to authorisation, a particular form must be used and again 'reasonable steps' are required to verify the authority of the person signing the Authorisation form (be that the client or their agent).

55 The certifications provided by the third defendant confirmed compliance with the relevant requirements of s 106A that is, she held the relevant documents and had taken reasonable steps to verify identity and authorisation when it was not so. The admitted breach of duty centres on the failure to obtain verification that the plaintiffs had authorised the sale and the agency of their sister to deal with the land. The plaintiffs submitted that by 'ignoring the requirements of the legislation you expose yourself to a very high range of culpability'[44] and that this case is unlike other decided cases on proportionate liability because of a statutory duty imposed by s 106A of the Transfer of Land Act[45].

56 I do not accept this submission. First, any breach is that of the Registrar's requirements not of the statutory provision itself. Nor is a breach of statutory duty pleaded as a separate cause of action, only as a particular of negligence. Second, any breach as to authorisation and verification is a failure to take reasonable steps and to obtain the requisite forms. In light of the forged signatures on those documents that were provided, there must be some concern that the appropriate forms, if sought, might also have been forged. Fundamentally therefore the failure is a departure from the appropriate standard of care and culpability is assessed on that basis of the degree of that departure. In that sense the Registrar's requirements are part of the factual matrix but do not themselves elevate the standard of care or magnify the degree of departure.

57 Second it was submitted that the third defendant failed to take reasonable care by falsely certifying the transfer documentation. In my view the certification is a part of the failure to take reasonable care, or perhaps better described as the consequence of the failure to take reasonable care. It is not something separate or deliberate. The certification is clearly false in the sense that it is untrue. However I find that there was no element of fraud or deliberation by the third defendant in so certifying. Her evidence was that she made an assumption based upon Patrizia's representations and the statutory declaration ostensibly signed before a police officer with identity verification[46] and further made the assumption that her employee had obtained the necessary documentation.[47] I accept that she therefore signed the certification on a negligently held belief as to authorisation to do so, but not on a falsely held belief.

58 The plaintiffs referred me to two cases. The case of Solak v Bank of Western Australia Ltd & Ors[48] was advanced as an illustration of a case involving negligent professionals and an unknown fraudster. The fraudster, impersonating Mr Solak, induced the principal of a financial services provider to obtain loan funds from Bank West secured by a mortgage over Mr Solak's property. The evidence of Mr Solak was that his house had been broken into during his absence and the duplicate certificate of title and other documents had been stolen. The case was decided by Pagone J on other grounds and apportionment of liability was discussed only in case it became relevant later. Apportionment between three non-fraudster parties (the financial services company, Bank West and the loans agent of the bank (Aussie)) were apportioned 70%, 30%, 0% respectively. When considering the fraudster's portion of liability and apportioning it at 50% his Honour said:

The fraudster's portion of liability would swamp that of the others if moral blameworthiness were the overriding criteria to determine apportionment. However, it seems to me that the primary focus of the apportionment provisions is not to give expression to moral sanction but to apportion as between operative causes....it may be true that the fraudster caused loss by deceiving others, but those deceived in this case were partly responsible by the way in which their conduct enabled the deceit to be effected"[49].

This led to an overall apportionment of 50% fraudster, 35% financial services company and 15% Bank West.

59 I was also referred to State Bank of New South Wales Ltd v Yee.[50] The case was not one about proportionate liability but about causation. It was relied on to illustrate the submission that the third defendant's representation to the Registrar of Titles was a substantial cause of the plaintiff's loss. Mr Yee, a solicitor, falsely attested that a loan facility was signed in his presence when he had not witnessed the signature. The signature turned out to be a forgery. The bank acted upon that original solicitor's attestation and also upon later forgeries extending the loan facility (documents which did not require the solicitor's attestation). In a claim against the solicitor for damages for negligence the Court held that the solicitor's representations rather than the later forgeries caused the Bank's loss. Critical to that finding was that Mr Yee not only represented that the loan facility had been duly executed by being signed in his presence, but that Mr Yee knew that the representation he made was false. This finding is in contrast to my finding in this case that the third defendant's conduct, though negligent was not to her known to be false.

60 The third defendant submitted that Chandra v Perpetual Trustees Victoria Ltd[51] provides guidance. Mr Miller was a solicitor instructed by a fraudster to obtain a duplicate certificate of title. He accepted that the fraudster had authority from the plaintiff title holders. The fraudster obtained forged statutory declarations which were provided to the solicitor who acted upon them. The solicitor played no part in the subsequent use of the duplicate title to obtain funds from Perpetual Trustees and made no representations to the Registrar General of New South Wales. Applying the equivalent provision of s 35(1) of the Civil Liability Act, his Honour said that the solicitor's responsibility was "altogether overwhelmed" by the fraudsters' responsibility for the loss. His Honour held:

"Mr Miller was deceived and conducted an apparently small piece of professional work in a way which fell short of appropriate skill."[52]

61 The third defendant also relies on Pedulla v Panetta & Ors[53] in which Mr Yee, another solicitor, was a defendant along with two fraudsters, Fernando and Anna. Fernando was the brother of the plaintiff and fraudulently transferred title to himself and later sold the property while the plaintiff was living abroad with an order of nuns. Mr Yee, on instructions, took steps to obtain a certificate of title and took steps necessary to lodge the transfer for registration. The trial judge found that Mr Yee made a number of communications falsely describing that he acted on behalf of the plaintiff, deliberately concealing the true facts. Fernando had said nothing to Mr Yee about the plaintiff's wishes, only that he (Fernando) wished the property to be transferred to him. Mr Yee had a prior relationship with Anna who subsequently married Fernando. On the basis that Fernando and Anna were concurrent wrongdoers, Mr Yee's culpability, including findings that reflect on his probity by knowingly making a false declaration, was assessed at 30%. Pembroke J said of Mr Yee "I do not regard him as an innocent dupe of whom Fernando and Anna took advantage"[54].

62 In all the circumstances of this case, I regard the certification of the transfer documents, in light of the obligations imposed by the Registrar to have been more than an incidental piece of work by the third defendant. The certification does go to the heart of the checks and balances required for the protection of interests in land associated with registration and had a real facilitative role in the fraud. However the elaborate and deliberate deception played on the third defendant who had no association or prior relationship with the first defendant has strong causal potency and blameworthiness. In all the circumstances I have reached the conclusion that an appropriate proportionate responsibility of the third defendant under s 24AI is 15%.

63 The statement of claim pleaded representations by the third defendant to the Registrar of Titles on or about 29 June 2018 by her execution and lodgement of the Transfer of Land document on that date. The third defendant admits that these representations were made in the course of trade or commerce. She does not admit that the representations were false, misleading or deceptive as she believed that the plaintiffs had consented to and authorised the transfer.

64 The relevant representations as set out in the Transfer of Land document[55] comprised four certifications executed on behalf of each of the three purported vendors. Those certifications were representations that the third defendant:

1. has taken reasonable steps to verify the identity of the transferor.
2. holds a properly completed Client Authorisation for the Conveyancing Transaction including the Registry Instrument or Document.
3. has retained the evidence supporting this Registry Instrument or Document.
4. has taken reasonable steps to ensure that this Registry Instrument or Document is correct and compliant with relevant legislation and any Prescribed Requirement.

65 Section 18 of the Australian Consumer Law provides:

(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

66 The third defendant submits that whether the representations contravene s 18 of the Australian Consumer Law depends upon a finding of the falsity of the representations and reliance upon them. As to falsity this depended upon the plaintiffs satisfying the Court of fraud, which they have done. In saying that the representations are false, I find that they were wrong, based upon the representations of Patrizia, which were knowingly fraudulent. I accept that the third defendant believed in the accuracy of the representations she made to the Registrar, albeit her belief was based upon assumptions which amounted to a breach of her duty of care.

67 The intention or belief of the accuracy of the representations or conduct by the person is not relevant to the question of whether it is "misleading or deceptive conduct".[56] The third defendant made a number of unfortunate assumptions regarding the certification process. They included: acceptance of the fraudulent representations of Patrizia that she had the necessary authority,[57] relying on a statutory declaration regarding loss of the certificate of title (where signatures of all three siblings were purportedly witnessed by a police sergeant) as evidencing sufficient proof of identity and authority,[58] relying on the contract of sale (fraudulently executed) and other personal information provided by Patrizia as satisfaction of identity and authority, and on the assumption that her employee had obtained the requisite verifications and authorisations (which had not in fact occurred).[59]

68 The third defendant also submits that reliance on the representation by the Registrar of Titles is necessary and that no evidence of reliance has been adduced. The plaintiff submits that reliance is not necessary but in any event the requirement is necessary, the fact that the Registrar of titles has acted upon the document is sufficient to infer a reliance. In support of the submission that reliance on the representation is not a necessary element of a claim under s 18 of the Australian Consumer Law, I need only quote briefly from Murphy J:

The respondents seek to rely upon the absence of such evidence [that some person has in fact been misled]. However, evidence that some person has in fact been misled is neither required nor conclusive. The question as to whether conduct is misleading or deceptive is an objective one for determination by the Court having regard to all the relevant facts.[60]

Evidence of reliance may nevertheless be relevant and can be of weight, particularly in assessing damages. What is critical is that evidence of a person actually being misled or deceived is unnecessary to establish a breach.[61] The wording of the section, including circumstances where conduct is likely to mislead or deceive', also supports such an approach.

69 Accordingly I find the claim for breach of s 18 of the Australian Consumer Law made out. This breach gives rise to an entitlement to a compensation order under s 238 to reflect the plaintiffs' loss or damage. Such a claim, like the common law claim, is an apportionable claim and the damages to be awarded are here no different to that determined at common law above.

Claim under s 29 Australian Consumer Law

70 The plaintiffs also claim damages for breach of s 29 of the Australian Consumer Law. Unlike s 18 a liability to pay damages under s 29 is not described in the Wrongs Act an apportionable claim. The plaintiffs rely on subparagraphs (d), (g) and (m). Section 29 deals specifically with false or misleading representations in particular circumstances. It relevantly provides that:

(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

...

(d) make a false or misleading representation that a particular person has agreed to acquire goods or services; or

...

(g) make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits; or

...

(m) make a false or misleading representation concerning a requirement to pay for a contractual right that:

(i) is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); and

(ii) a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law)

71 In oral submissions the plaintiffs characterised the relevant representations to the Registrar of Titles as being 'in connection with the supply or possible supply of goods and services' because the certifications represented that the conveyancer was authorised or her services had been acquired by the plaintiffs which statements were misleading or deceptive.

72 It was submitted that the provisions of s 29 of the Australian Consumer Law in this case apply to the supply or possible supply of conveyancing services. No representation by the conveyancer going to the supply of her services is alleged. While the representations to the Registrar of Titles, are clearly made in the course of trade of commerce, they stem from her engagement by the first defendant and from the first defendants false and misleading representations to the conveyancer. They do not seem to me to be connected with the supply of her services as a conveyancer to clients or potential clients seeking to acquire her services. I cannot see a basis for concluding that the certifications made by the conveyancer were connected with the supply or promotion of her services to those who might seek to acquire them so as to attract the particular provisions of s 29 of the Australian Consumer Law. A representation that the vendors have authorised the conveyancer to execute the transfer in these circumstances is not a representation as to the supply or possible supply of services.

73 I accept the third defendant's submission that a representation that a person has sold an interest in property is not a representation about the acquisition of goods or services. If the representations are not in the course of supply or possible supply of conveyancing services then none of the subparagraphs of s 29 relied on can have application.

74 I find that a claim for breach of s 29 of the Australian Consumer Law is not made out.

75 Accordingly I find that the plaintiffs are each entitled to damages for the loss of their proprietary interest in the property at Safety Beach in the sum of $450,000. The third defendant is liable to each plaintiff to the extent of 15% of the damages.

76 The plaintiffs' obtained interlocutory freezing orders in relation to the sum of approximately $430,000 which remained in the account of the second defendant at the time the freezing orders were sought. The frozen sum is now held in the plaintiffs' solicitors trust account pending further order of the Court. The third defendant submitted that these frozen funds reduce the loss and damage sustained by the plaintiffs and the proportionate liability is to be applied only to damages not satisfied by these proceeds of sale. On that analysis the third defendant would be liable for 15% of the smaller amount of two thirds of the sale price less the frozen funds.

77 I disagree with this analysis. The damages awarded represents the loss of the proprietary interest. Although the sale price may best reflect the extent of loss and damage, the proceeds of sale are not themselves damages. There is no doubt that the frozen funds can and should be applied in partial satisfaction of the damages awarded. But the fact that the plaintiffs obtain their damages in part from a distribution of the proceeds of sale does not lessen the damages awarded for the loss of the property. The plaintiffs cannot recover more than the $450,000 damages that each is entitled to, nor can the third defendant's contribution to those damages exceed $67,500 (15%) to each plaintiff. The proper analysis is to apportion liability for the damages awarded, not for only a lesser component of those damages. This is clear from the principle that freezing orders are to prevent frustration or abuse of process and not to provide security for any judgment or order.

78 I will hear the parties on the appropriate form of orders in light of the frozen funds and my findings and on questions of interest and costs.

[1] In this judgment, for ease of reading I will refer to the siblings by their first names only.

[2] Competition and Consumer Act 2010 (Cth) sch 2 ('Australian Consumer Law').

[3] Supreme Court (General Civil Procedure Rules) 2015 (Vic) r 21.03(1)(b).

[4] Stewart v Coughlan [1885] VicLawRp 59; (1885) 11 VLR 279; National Bank of Australasia v Cohen [1897] VicLawRp 50; (1896) 22 VLR 269; Cribb v Freyberger [1919] WN 22; Nixon v W Phelan & Son Pty Ltd [1959] VicRp 14; [1959] VR 83; Lombank Ltd v Cook [1962] 3 All ER 491 at 498_;_ Parkville Court v Salvaris [1975] VicRp 38; [1975] VR 393.

[5] Victorian Economic Development Corporation v Cloverdale [1992] VicRp 40; (1992) 1 VR 596.

[6] Trani & Anor v Trani & Anor [2019] VSC 294 ('Trani & Anor v Trani v Anor') (Kaye JA) [4].

[7] Trani & Anor v Trani & Ors [2019] VSC 2 (Daly AsJ).

[8] Trani & Anor v Trani & Anor (n 6_)_.

[9] Transcript of Proceedings, Trani & Anor v Trani & Ors, (Supreme Court of Victoria, S ECI 2018 01356, Justice Forbes, 23 October 2019) ('Transcript of Proceedings - 23 October 2019') 47.

[10] Trani & Anor v Trani & Anor (n 6) [40].

[11] Plaintiffs' Exhibit no 1 'Statement of Adjustments, Financial Update and Land Information Certificate' 79-81.

[12] Wrongs Act 1958 (Vic) ('Wrongs Act') s 24AI.

[13] Ibid s 24AF.

[14] [2007] FCA 1216; (2007) 164 FCR 450 ('Dartberg').

[15] [2013] HCA 10; [2013] 247 CLR 613 ('Hunt & Hunt').

[16] Civil Liability Act 2002 (NSW) s 34(1)(a).

[18] [2009] VSCA 245; (2009) 25 VR 666 ('Quinerts').

[21] Hunt & Hunt (n 15) [41] citing Mahony v J Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522 at 527.

[24] [1991] HCA 12; (1991) 171 CLR 506.

[26] Marco Trani and Luciano Trani, 'Plaintiffs' Outline of Submissions', Submission in Trani & Anor v Trani & Ors, S ECI 2018 01356, 22 October 2019 [85].

[29] Statement of Claim filed in Trani & Anor v Trani & Ors (n 2), S ECI 2018 01356, dated 17 September 2018.

[30] (1874) LR 9 Ch App 244.

[32] [2010] VSC 5.

[34] [2016] VSCA 223.

[36] [2016] VSC 86; (2016) 50 VR 129.

[38] as set out above in paragraph [13].

[39] [1985] HCA 34; [1985] 59 ALR 529 ('Podrebersek').

[42] A finding in accordance with the principles of March v E & M M Stramare Pty Ltd [1989] SASC 1394; (1989) 50 SASR 588 that included a common sense approach that permits more than one cause to lead to liability to a plaintiff.

[44] 'Transcript of Proceedings - 23 October 2019' (n 9) 86 (Mr Panna).

[45] Plaintiffs' Outline of Submissions (n 26) [127].

[46] Transcript of Proceedings - 23 October 2019 (n 9) 43 (Ms Farfoud).

[47] Third Defendant's Exhibit "A", 'Amended Outline of Evidence for Michelle Farfoud' ('Exhibit D3-1') [9(a)].

[48] [2009] VSC 82 ('Solak').

[50] (1994) 33 NSWLR 618.

[51] [2007] NSWSC 694; (2007) 13 BPR 24,675 ('Chandra').

[53] (2011) 16 BPR 30,229 ('Pedulla').

[55] Court Book filed in Trani & Anor v Trani & Ors, S ECI 2018 01356, 181-183.

[56] See Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682.

[57] Transcript of Proceedings - 23 October 2019 (n 9) 41 (Ms Farfoud).

[58] Plaintiffs' Exhibit no 1 'Statutory Declaration', 75. The Statutory Declaration was declared 27th June 2018, see Transcript of Proceedings - 23 October 2019 (n 9) 44 (Ms Farfoud).

[59] Evidence-in-chief, adopted from Exhibit D3-A (n 47) [9].

[60] Australian Competition and Consumer Commission v Kingisland Meatworks and Cellars Pty Ltd [2012] FCA 859 [62].

[61] See also Middleton J in Vendor Advocacy Australia Pty Ltd v Seitanidis [2013] FCA 971; 103 IPR 1 [55].