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[2026] NSWDC 150
General information, not legal advice.
District Court of NSW
2026-05-21
Cole DCJ
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: MJ Concepts Kotara Pty Ltd v Pandora Jewellery Pty Ltd [2026] NSWDC 150
Hearing dates: 12 May 2026
Date of orders: 21 May 2026
Decision date: 21 May 2026
Jurisdiction: Civil
Before: Cole DCJ
Decision: (1) The notice of motion filed by the defendant on 8 May 2026 is dismissed.
(2) The notice of motion filed by the plaintiff on 24 April 2026 is allowed.
(3) The subpoena issued by the defendant to The Proper Officer, Stephen & Donna Matthews Pty Ltd ACN 109 332 149 on 16 April 2026 is set aside.
(4) The subpoena issued by the defendant to GoDaddy Online Services Australia Pty Ltd ACN 604 834 237 on 16 April 2026 is set aside.
(5) The subpoena issued by the defendant to The Proper Officer, Matthews Jewellers Pty Ltd ACN 003 110 530 on 16 April 2026 is set aside.
(6) The subpoena issued by the defendant to The Proper Officer, MJ Concepts Kotara Pty Ltd ACN 135 969 561 on 16 April 2026 is set aside.
Catchwords: CIVIL PROCEDURE — Pleadings — Amendment – application to file a further amended defence to plead that the claim is an apportionable claim and that there are concurrent wrongdoers – whether claim for breach of contract is a claim arising from a failure to take reasonable care under s 34(1)(a) Civil Liability Act 2002 (NSW)
CIVIL PROCEDURE — Subpoenas — Application to set aside
Legislation Cited: Civil Liability Act 2002 (NSW), s 34
Civil Procedure Act 2005 (NSW)
Cases Cited: Angius v Perez [2025] NSWSC 954
Bingo Holdings Pty Ltd v GC Group Company Pty Ltd [2021] NSWCA 184
Factory Direct Fencing Pty Ltd v Kong Ah International Company Limited [2013] QDC 239
Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232
Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111
Rahme v Benjamin & Khoury Pty Ltd [2019] NSWCA 211
The Owners – Strata Plan No 87265 v Saaib [2021] NSWSC 150
The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd trading as Buildcorp Interiors (leave to amend) [2025] NSWSC 1210
Ucak v Avante Developments [2007] NSWSC 367
Category: Procedural rulings
Parties: MJ Concepts Kotara Pty Ltd (Plaintiff)
Pandora Jewellery Pty Limited (Defendant)
Representation: Counsel:
G M McGrath (Plaintiff)
C L W Street (Defendant)
Solicitors:
Sparke Helmore Lawyers (Plaintiff)
Corrs Chambers Westgarth (Defendant)
File Number(s): 2024/00293325
Publication restriction: Nil
This judgment relates to two notices of motion.
The plaintiff filed a notice of motion on 24 April 2026, seeking orders setting aside four subpoenas issued by the defendant.
The defendant filed a notice of motion on 8 May 2026 seeking leave to file and serve a further amended defence, together with orders as to costs.
An indication was given on behalf of the defendant, by its counsel, Mr Street, that, in the event that the application for leave to file and serve the further amended defence was refused, the defendant would not resist the plaintiff’s application in relation to the subpoenas, because the subpoenas had been issued in relation to the amendments sought to be made to the defence in the further amended defence.
It is pleaded in the statement of claim, filed on 9 August 2024, that the plaintiff was the franchisee of a Pandora shop. On 18 July 2023, the defendant notified the plaintiff that the franchise agreement would not be renewed and offered an early termination of the franchise agreement, with the repurchase of stock and the purchase of assets.
On 22 January 2024, the parties entered in to an agreement for the sale of the stock and assets of the franchised business by the plaintiff to the defendant for the purchase price of $467,378.00.
It was an express term of the asset sale agreement that the defendant must pay the purchase price to the plaintiff by way of a bank cheque or any other method permitted, including electronic funds transfer, within five business days of the completion date, which was 4 March 2024.
The plaintiff complied with its obligations on or before 4 March 2024 and the respondent took possession of the stock and assets.
The plaintiff alleges that the defendant did not pay the purchase price within five days of 4 March 2024, or at all.
The plaintiff alleges that the defendant is in breach of contract and claims damages in the sum of $467,378.00 together with interest and costs.
In its Amended Defence, filed on 10 March 2025, the defendant admits most of the factual allegations in the statement of claim which relate to the time prior to the time when payment was due under the Asset Sale Agreement, whilst reserving the right to rely upon the whole of the Asset Sale Agreement.
The defendant pleads, among other things:
- In answer to paragraph 8 of the SOC, the defendant:
(a) says that the Asset Sale Agreement permitted the defendant to pay the Purchase Price by EFT to a bank account nominated in writing by the plaintiff; and
Particulars
Schedule 1, item 7 and clause 8.3 of the Asset Sale Agreement.
(b) otherwise admits the paragraph.
10 In answer to paragraph 10 of the SOC, the defendant:
(a) says that on 8 March 2024 at 2:16am, it received a notice by email from Donna Matthews of the plaintiff, directing it to pay the Purchase Price into a nominated account at the National Australia Bank (the NAB Account).
(a1) says by that email, the plaintiff nominated in writing a bank account, namely the NAB Account, within the meaning of clause 8.3 of the Asset Sale Agreement;
(b) says that on 8 March 2024 at 9:11am, it responded to that email, indicating that it would make payment into the NAB Account;
(c) says that on 8 March 2024, it paid the Purchase Price into the NAB Account.
(d) says that it thereby complied with its obligations under the Asset Sale Agreement in a manner permitted by the Asset Sale Agreement as pleaded at paragraph 8(a) above;
(e) says that on 8 March 2024 at 2:12pm, it responded further to the emails referred to at (a) and 0 above [sic], copying the response to Danielle Stevenson, Finance & Human Resources Manager of the plaintiff, confirming that it had paid the Purchase Price; and
(f) otherwise denies the paragraph.
In its Reply, filed on 17 March 2025, the plaintiff denies that the email referred to in paragraph 10(a) of the Amended Defence was sent by Donna Matthews. It is asserted that Donna Matthews did not send the email and had no knowledge that it would be sent.
It is further asserted in the Reply that Donna Matthews had no authority to act for the plaintiff by nominating a bank account for the receipt of funds under the Asset Sale Agreement.
It was pleaded that, in any event, the email sent to the defendant at 2:16am on 8 March 2024 could not be a nomination in writing by the plaintiff as required by clause 8.3 of the Asset Sale Agreement.
- In answer to paragraph 3 of the reply, the defendant says that at all material times prior to and on 8 March 2024:
a. the sole director and company director of the plaintiff was Stephen Matthews;
b. the sole shareholder of the plaintiff was Stephen & Donna Matthews Pty Ltd (ACN 109 332 149);
c. Donna Matthews was:
i. the wife of Stephen Matthews;
ii. a director and the company secretary of Stephen & Donna Matthews Pty Ltd (Stephen Matthews being the other director);
iii. a 50% shareholder in Stephen & Donna Matthews Pty Ltd (Stephen Matthews being the other shareholder);
iv. a party to the Franchise Agreement as Guarantor of the plaintiff’s obligations (the other Guarantor being Stephen Matthews);
v. a party to the Asset Sale Agreement as Covenantor (the other Covenantor being Stephen Matthews);
vi. an employee of the plaintiff with responsibility for the franchise granted by the defendant to the plaintiff pursuant to the Franchise Agreement (the Pandora Franchise)
vii. a person who assisted Stephen Matthews with the operation of the Pandora Franchise; and
viii. a person who, with the knowledge of the plaintiff (including through Stephen Matthews), habitually communicated with the defendant in relation to the Pandora Franchise on behalf of the plaintiff.
Particulars
See the particulars to paragraph 3a below.
The defendant pleads, in the rejoinder, that Donna Matthews had ostensible authority to act on behalf of the plaintiff. Instances of written and oral communication by Donna Matthews on behalf of the plaintiff were referred to.
The defendant also pleads, in the rejoinder, that, if Donna Matthews did not send the 8 March 2024 email, the plaintiff had failed to mitigate its loss. It is pleaded, to summarise, that following receipt of the emails referred to at paragraphs 10(b) and 10(e) of the amended defence, the plaintiff ought to have read the emails and contacted the defendant to inform it that payment had not been made to the account originally nominated by the plaintiff. The defendant would then have stopped the payment to the NAB bank account nominated in the 8 March 2024 email.
The defendant further pleads that the plaintiff is estopped by its conduct from denying that the defendant complied with its obligation under the Asset Sale Agreement by making payment of the purchase price to the NAB Account. The conduct relied upon is the failure by the plaintiff to take any steps prior to 14 March 2024 to respond to the emails sent to it by the defendant subsequent to the payment to the NAB bank account. The plaintiff’s conduct is said to be a representation that the defendant had complied with the Asset Sale Agreement in making the payment.
In its Notice of Motion filed on 8 May 2026, the defendant seeks leave to file a further amended defence. The draft further amended defence proposed to be filed was provided with the Notice of Motion. The further amended defence contains five new paragraphs over about three pages.
The principles relevant to an application for leave to amend pleadings are conveniently set out in The Star Entertainment Sydney Properties Pty Ltd v Buildcorp Group Pty Ltd trading as Buildcorp Interiors (leave to amend) [2025] NSWSC 1210 (‘Star Entertainment’) at [32] – [33]:
- The Court has power to amend pleadings "at any stage of proceedings" having regard to the dictates of justice and for the purpose of determining the real questions raised by the proceedings, correcting defects or errors, and avoiding multiplicity of proceedings: ss 58, 64(2), Civil Procedure Act 2005 (NSW). As the learned authors of Ritchie’s Uniform Civil Procedure (NSW) observe at [s 64.50]:
“… leave to amend particulars will usually be granted where the amendment is in accordance with the substance of the existing pleadings: Clarapede and Co v Commercial Union Assn (1883) 32 WR 262; and especially where the amendment sought is in accordance with evidence that has actually been given: Dare v Pulham (1982) 148 CLR 658; 44 ALR 117; BC8200139; Mummery v Irvings Pty Ltd (1956) 96 CLR 99; [1956] ALR 795; Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446; 50 ALJR 666.”
- As to whether leave ought be granted, considerations include the stage of the proceedings and the ability of the opposing party to meet that additional evidence or contention. All parties relied on the principles in Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (a firm) [2015] FCA 1098, Gleeson J provided a summary of the principles relevant to late amendments at [127]:
… Relevant matters the Court is to consider include:
(1) The nature and importance of the amendment to the party applying for it: Aon at [102];
(2) The extent of the delay and the costs associated with the amendment: Aon at [102];
(3) The prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [100] and [102];
(4) The explanation for any delay in applying for that leave: Aon at [108]; and
(5) The parties’ choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 (“Luck”) at [44];
(6) The detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and
(7) Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30].
The principal purpose of the proposed amendments is to plead that the claim is an apportionable claim within the meaning of s 34 of the Civil Liability Act 2002 (NSW) and to plead the consequences that the defendant alleges flow from that.
The defendant has issued four subpoenas seeking documents which may be relevant to the claim, if it is an apportionable claim, from Stephen & Donna Matthews Pty Ltd ACN 109 332 149, GoDaddy Online Services Australia Pty Ltd, Matthews Jewellers Pty Ltd and the plaintiff. These subpoenas are the subject of the plaintiff’s notice of motion filed on 24 April 2026. The defendant is now content to have the subpoena issued to GoDaddy Online Services Australia Pty Ltd set aside. The defendant has indicated that, in the event that it is not given leave to file the further amended defence, it will not resist the setting aside of the other three subpoenas.
The action is listed for trial on 15 June 2026 for four days.
The Civil Liability Act provides, in s 34:
34 Application of Part
(1) This Part applies to the following claims (apportionable claims)—
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,
(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law.
(1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
(2) In this Part, a concurrent wrongdoer, in relation to a claim, is 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.
(3) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).
(3A) This Part does not apply to a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the Home Building Act 1989 and brought by a person having the benefit of the statutory warranty.
(4) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
b. The claim is an apportionable claim on the face of the pleading: …the state of the pleadings is such that if the defendant did not act reasonably in relying on the representation as to Donna Matthews’ authority, at least that strand of the nomination defence fails, and the defendant is liable to the plaintiff for the loss; namely the absence of receipt of payment of the purchase price. That is the same loss that the plaintiff claims from the defendant; That is a loss which “arises from” a failure to take reasonable care in respect of which the defendant seeks to establish that there are “concurrent wrongdoers”; that is to say that there are others which can be said to have caused the damage the plaintiff claims independently of the defendant’s acts. That is the substance of the proposed amendments.
c. The existence of concurrent wrongdoers: The defendant has identified four concurrent wrongdoers consistently with the requirements of the CLA.
The “four concurrent wrongdoers” referred to in the draft further amended defence are:
The owner of the domain, mail servers or mailboxes associated with the email domain and email addresses that sent email from the “matthewsjewellers.com” domain and/or (if different) the entity or entities responsible for administering and securing the plaintiff’s mail server, systems, domain and/or email domain for matthewsjewellers.com (including the cloud infrastructure upon which the email hosting environment for accounts using the domain was stored) (the Domain Owner/Administrator).
If Donna Matthews did not send the email referred to in paragraph 10(a), the person or persons who perpetrated the fraud which is the subject of these proceedings (the Threat Actor).
Donna Matthews.
MAE S.P.A Pty Ltd, a company registered in Australia with a registered office in Fortitude Valley, Queensland. The draft further amended defence alleges that the NAB Account into which the defendant paid the purchase price of $467,378.00 on 8 March 2024 “was held in the name of, or was associated with, an entity with a name almost identical to MAE S.P.A (being MAE SPA Pty Ltd”) and the NAB account statement listed the same address in Fortitude Valley”.
The plaintiff opposes the giving of leave to the defendant to file a further amended defence.
In summary, the plaintiff argued that the claim is not an apportionable claim under s 34(1)(a) of the Civil Liability Act. The plaintiff says, in its written submissions:
- The plaintiff’s claim does not arise from a failure by the defendant to take reasonable care. The claim is a simple liquidated debt claim in contract for breach of contract by failing to pay the agreed priced for the business assets. There is no element of negligence or failure to take reasonable steps of any kind involved. Whether or not the defendant acted carefully in making a payment to a third party is utterly irrelevant to the plaintiff’s claim.
- Clause 3b simply alleges that the defendant was unable to make out one of the elements for an equitable estoppel by representation, namely that the detrimental reliance on the representation must be reasonable reliance before it can satisfy that element of equitable estoppel and it was not. In no way does this allegation make the plaintiff’s breach of contract claim into a claim based on the defendant’s failure to take reasonable care. The plaintiff’s claim is not an apportionable claim, Part 4 of the Civil Liability Act 2002 (NSW) does not apply to it and proportionate liability has no role in the proceedings.
…
- Under section 34 Civil Liability Act 2002 (NSW), proportionate liability arises (relevantly) when there is a non-personal injury claim for damages based on a failure to take reasonable care. The plaintiff claimed that any reliance by the defendant on the plaintiff’s inaction was not reasonable reliance and accordingly could not satisfy that element of equitable estoppel concerning the authority of Donna Matthews. In no way does this make the plaintiff’s breach of contract claim into a claim based on the defendant’s failure to take reasonable care. To say otherwise is no more than a play on the word “reasonable”. The plaintiff’s claim relies upon ignoring the distinction between a breach of a duty to take reasonable care and a requirement that detrimental reliance be reasonable for an equitable estoppel about Donna Matthews’ authority to be claimed by the defendant.
Pleading concurrent wrongdoers
- In Ucak v Avante Developments [2007] NSWSC 367, Hammerschlag J at [35]–[42] set out the requirements that must be met for a pleading of concurrent wrongdoers under Part 4 of the CLA (emphasis in original):
[35] It follows in my view, that for a defendant to assert that there is a person who is a current wrongdoer the defendant must plead the necessary elements which result in the asserted conclusion. Those elements are:
a. the existence of a particular person;
b. the occurrence of an act or omission by that particular person; and
c. a causal connection between that occurrence and the loss that is the subject of the claim.
[36] What the defendant in this case has done is to assert a conclusion without the material facts upon which that conclusion depends. This is a course which is not permissible.
[37] Here the material facts would have to be the identification of the particular person, the identification of the act or omission of that particular person and the facts which if proven at trial would establish that that act or omission caused the loss or damage that is the subject of the claim.
[38] Paragraph 20 fails with respect of each of the elements and accordingly is liable to be struck out.
[39] It was put on behalf of the defendant, and accepted by the plaintiffs for the purposes of this application, that the defendant is not yet in a position to plead the material facts with respect to the supposed concurrent wrongdoers. The approach which should be taken, it was submitted, was that the plaintiffs should seek to administer interrogatories with respect to the facts the defendant should have alleged. Support for this approach, it was said, is to be found in the decision of Einstein J in Ferdinand Nemeth v Prynew Pty Limited [2005] NSWSC 1296 in which His Honour gave leave to a defendant to plead in the following terms, “In the alternative, the third defendant’s liability is limited to such other proportion as the Court determines is just and equitable, having regard to the extent of its liability for any damage.” The plaintiff in that case opposed leave to amend unless as a condition the third defendant be required to identify the particular person or persons who the third defendant had reasonable grounds to believe may be the concurrent wrongdoer in relation to the claim. His Honour ordered interrogatories.
[40] That decision does not assist the defendant in this case. There was apparently no opposition to the amendment based on the proposition that it did not disclose a defence, and His Honour was not asked to, and therefore did not, consider whether it did or did not. The third defendant was at that point apparently content to proceed on the basis of being satisfied with interrogatories. Plainly, had the terms of the proposed defence been subject to scrutiny on the basis that it did not properly plead or disclose a defence, it would have been found wanting.
[41] I agree with the view expressed by R J McDougall J in his paper “Proportionate Liability in Construction Litigation” (2006) vol 22(6) Building and Construction Law Journal 394 at 400 that a defendant should plead with the same degree of precision and particularity as it would have done before the Act if it were bringing a cross-claim against an alleged concurrent wrongdoer.
[42] This approach is consistent with s 345(1) of the Legal Profession Act 2004 (NSW) under which a law practice must not provide legal services on a defence of a claim for damages unless a legal practitioner reasonably believes, on the basis of provable facts, and a reasonably arguable view of the law, that the defence has reasonable prospects of success. The defence should not be put on before there are sufficient provable facts available to the practitioner to found the necessary belief.
- The approach in Ucak has been followed in H.S.D. Co Pty Ltd v Masu Financial Management Pty Ltd [2008] NSWSC 1279, Rothman J at [18]; Permanent Custodians Ltd v King [2010] NSWSC 509, Schmidt J at [17]–[19]; The Owners Strata Plan v Brookfield Multiplex Limited [2010] NSWSC 360, McDougall J at [3]–[4]; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; [2007] FCA 1216, Middleton J at [31]; and Bingo Holdings Pty Ltd v GC Group Company Pty Ltd [2021] NSWCA 184, Meagher, Payne and Brereton JJA at [21].
- In The Owners – Strata Plan No 87265 v Saaib [2021] NSWSC 150, Henry J summarised the approach in Ucak, at [514] as follows:
As has been said, an obvious precondition to limiting liability on the basis that others are also responsible for the damage is that it is necessary to prove that those others have caused the damage and are legally responsible for it. If the provisions are to operate appropriately, it is essential that any defendant be required to plead the proportionate liability defence in a manner that discloses the cause of action and damage in at least as detailed a manner as would be required for any initiating process for a cause of action: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [35]–[42]; H S D Co Pty Limited v Masu Financial Management Pty Limited [2008] NSWSC 1279 at [18].
- For s 34(1)(a) to apply the plaintiff’s claim must inter alia be one “arising from a failure to take reasonable care”. As I concluded in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58, it is necessary for this purpose that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds. I repeat as follows the reasons I there gave:
“22 For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded. As observed by Professors McDonald and Carter in "The Lottery of Contractual Risk Allocation and Proportionate Liability" (2009) 26 Journal of Contract Law 1 at 18, the contrary view would produce the absurd result that a party to a contract who failed to perform a strict contractual obligation would benefit from being found to have acted negligently rather than "innocently". If claims could be apportioned where negligence is not an element of the successful cause of action, but merely arises from the facts, a plaintiff could lose his or her contractual right to full damages from a party whose breach of a contractual provision of strict liability happened to stem from a failure to take reasonable care.
23 My view accords with that which I reached in relation to the similarly worded, and in my view relevantly indistinguishable, provision in s 5A of the Act which renders Part 1A applicable only to a "claim for damages for harm resulting from negligence (Perpetual Trustee v Milanex at [87]; see also Monaghan Surveyors Pty Ltd v Stratford Glen-Avon Pty Ltd [2012] NSWCA 94 at [76] and [77]). It appears to differ from that expressed by Barrett J (as his Honour then was) in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 at [20] - [30] and in other first instance decisions to which his Honour referred. Unless his Honour was simply saying that it is necessary to examine the court's findings to identify the cause, or causes, of action upon which the plaintiff succeeded, I cannot, with respect, agree with his Honour that the ‘nature of the claim, for the purposes of Pt 4, is to be judged in the light of the findings made and is not determined by the words in which it is framed’ (at [30]). In my view the application of Part 4 turns not on the facts that happen to be found but on the essential character of the plaintiff's successful cause of action. Subject to cases that are conducted without regard to the pleadings, if negligence is an essential element of that cause of action, it will have been pleaded in the Statement of Claim. If it is not, it will not have been pleaded. It would be curious indeed if, to attract Part 4 of the Act, the defendant pleaded and proved his or her own negligence when that was not alleged by the plaintiff. The text of s 34(1) does not, in my view, contemplate that occurring. The natural meaning of the words used indicates that a failure to take reasonable care must be part of, and therefore an element of, the plaintiff's successful cause of action.”
- Whilst Barrett JA expressed a different view in the same case ([37]-[42]) the approach which I consider to be correct is supported by the reasoning in Milanex and Monaghan Surveyors, to which I have referred above at [135], and of Emmett AJA (with whom Sackville AJA relevantly agreed) in Cassegrain v Cassegrain [2016] NSWCA 71 at [83]-[84].
- Notwithstanding this, it is appropriate to record that I have some doubt as to the correctness of the statement of this Court in Rahme v Benjamin & Khoury Pty Ltd (2019) 100 NSWLR 550; [2019] NSWCA 211 at [135] (Macfarlan JA, Bathurst CJ and McCallum JA agreeing) (“Rahme”), relied upon by the primary judge at J[509], that, to fall within the ambit of s 34(1)(a), a failure to take reasonable care must be an element of the cause of action upon which the plaintiff succeeds.
- Rahme was a case in which solicitors were found to owe fiduciary duties to the client, and to have breached those duties by acting in circumstances in which the interests of the client conflicted with the financial interests of the solicitors, who stood to gain considerably by the plaintiff entering into the relevant agreement (see Rahme at [88], [97], [117]). In that context, Macfarlan JA found, as a matter of principle, that a defence of proportionate liability was not available. His Honour found that it was necessary for this purpose that “the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds” (at [135]). As is apparent, however, in Rahme the successful cause of action did not involve any finding at trial that the solicitors acted without reasonable care. Liability was based upon them acting when they had a conflict of interest.
- In Rahme, Macfarlan JA relied upon what his Honour had said in Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 at [22]-[23] (“Perpetual v CTC”). Perpetual v CTC was a case where the defendant was found liable in damages for breaching its obligations of care under a mortgage origination deed. Macfarlan JA found that the apportionment provisions in the Civil Liability Act did not apply having regard to s 3A, which provided that the Civil Liability Act does not prevent the parties to a contract making express provision under the contract with respect to any matter to which the Act applied. In Perpetual v CTC, Macfarlan JA found that the parties had made such provision. However, “for completeness”, his Honour went on to consider whether the claim was an apportionable claim under s 34(1) of the Civil Liability Act on the assumption, favourable to the plaintiff, that it was entitled to succeed on at least one cause of action that did not require it to prove that the defendant had failed to exercise reasonable care (even though it was also entitled to succeed on other causes of action that did involve a failure to exercise reasonable care) (at [21]). On that assumption, Macfarlan JA would have found in favour of the plaintiff (had it been necessary to decide) that s 34(1)(a) did not apply, because his Honour considered, at [22], that:
“For a successful action for damages to have arisen from a failure to take reasonable care, it is in my view necessary that the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeded.”
- Meagher JA in Perpetual v CTC preferred not to express any view on this reasoning, albeit that his Honour otherwise agreed with the reasons of Macfarlan JA. In this regard, Meagher JA said at [36]:
“It must be remembered that the "claim" referred to is one that has been determined or decided and established as a source of liability: Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 at [18]. Here, the only basis upon which this Court held that CTC was liable to Perpetual was that CTC failed to exercise reasonable care in identifying the proposed borrower and confirming his authority to submit the loan application: Perpetual Trustee Company Ltd v CTC Group Pty Ltd [2012] NSWCA 252 at [4], [5], [23], [33], [34].”
- Barrett JA in Perpetual v CTC also did not agree with the reasons of Macfarlan JA set out above. Barrett JA said at [42]:
“It cannot be suggested (nor do I think it has been suggested in any decided case) that the nature or quality of a ’claim‘ is, for relevant purposes, to be determined solely by looking at the court's decision in relation to it. Nor is the nature or quality of a ’claim‘ to be determined solely by looking at the terms in which it is framed. Rather, it is a combination of the terms in which the claim is framed (or pleaded) and relevant findings of the court in relation to it that must be assessed in order to decide whether it is a claim ’in an action for damages… arising from a failure to take reasonable care‘ and has the other attributes of an ‘apportionable claim‘ under s 34(1)(a).”
- Barrett JA referred to his own earlier analysis in Reinhold v NSW Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [19]-[30] (“Reinhold”) and to the decision of the Victorian Court of Appeal in Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84; [2008] VSCA 208 at [105] (Ashley JA, Nettle and Neave JJA agreeing) (“Godfrey Spowers”), considering Victorian statutory provisions equivalent to s 34(1) of the Civil Liability Act. In Reinhold, Barrett J (as his Honour then was) had found that the nature or quality of a claim for the purposes of s 34(1) of the Civil Liability Act could not be determined without taking into account the court’s decision on the claim and that it will be the findings ultimately made that determine whether the statutory conditions for proportionate liability are satisfied (at [30], [32]). In Godfrey Spowers, at [109], Ashley JA expressly agreed with the analysis in Reinhold.
- Subsequent to Perpetual v CTC and Rahme, in Herridge Parties v Electricity Networks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111, the Western Australian Court of Appeal, considering equivalent legislation in Western Australia, said at [321]-[323]:
“We do not accept the plaintiffs' submission that the reference to a ‘claim’ in s 5AI is to the elements of a form of action, such as negligence. If a claim referred to a cause of action it would, on the post-Judicature Act approach, be taken to be the facts giving rise to liability. Since the Judicature Act, reference to a ‘cause of action’ is generally to the fact or combination of facts which give rise to a right to sue, rather than the old form of action.
We see no reason for reading the term ‘claim’, as it appears in s 5AI of the Civil Liability Act, in any restrictive fashion. It is sufficient that the claim is for, relevantly, ‘damage to property’. The claims in the present case for property damage consequent upon the fire are clearly of that character. The words in parentheses - ‘whether in contract, tort or otherwise’ - indicate that the form of action is not material.
If the claim is for damage to property, it will be an apportionable claim if it is made in ‘an action for damages’ that arises ‘from a failure to take reasonable care’ within the meaning of para (a) of the definition of ‘apportionable claim’ in s 5AI of the Civil Liability Act. The phrase ‘an action for damages’ refers to any civil proceeding for the recovery of damages. A civil proceeding for the recovery of damages will arise ‘from a failure to take reasonable care’, within the definition of ‘apportionable claim’, where, as here, establishing liability in the action for damages requires the plaintiff to prove that the defendant failed to take reasonable care in some respect. The plaintiffs accept that proving an unreasonable interference for the purposes of the law of nuisance in this case requires them to prove a failure to take reasonable care.” (footnotes omitted)
- Notwithstanding this, the Court went on to consider whether the apparently stricter rule propounded in Rahme was satisfied. However, it is apparent that the Court in the paragraphs set out above had rejected the position, upheld in Rahme, that a failure to take reasonable care must be an element of the cause of action.
- This question was also considered by the Victorian Court of Appeal in Tanah Merah Vic Pty Ltd v Owners Corp No 1 of PS613436 [2021] VSCA 72. The Court held, at [117], that the correct approach was as set out by Barrett JA in Perpetual v CTC. In so finding, the Court found that the “terms in which a claim is framed … are an essential determinant of whether the claim can be said to arise from a failure to take reasonable care” (at [120]). The Court concluded at [124] that, having regard to the analysis of Barrett JA in Perpetual v CTC, the earlier Victorian case of Godfrey Spowers:
“is not authority for the proposition that a claim which does not itself arise from a failure to take reasonable care, can be transformed into an apportionable claim by a defendant establishing that the circumstances upon which the plaintiff relies arose out of a failure to take reasonable care.”
- As is apparent, there remains considerable support at the appellate level for an approach to s 34(1)(a) that looks to both how a claim is framed, and to the findings of the court, but is not limited in its focus to the narrow question whether a lack of reasonable care is an element of the cause of action. As is also apparent, in Rahme, the claim did not rely in any way upon a lack of reasonable care. It was thus unnecessary for the Court to determine whether a claim which did rely upon a lack of reasonable care could fall within the ambit of s 34(1)(a) of the Civil Liability Act. In these circumstances, there is room to doubt that the narrow approach adopted in Rahme is required to be adopted. I would add that the approach of Barrett JA in Perpetual v CTC appears to more closely accord with the statutory language and purpose of s 34(1)(a) of the Civil Liability Act.
- However, given my findings, it is unnecessary to reach any concluded view as to these matters.
- For these reasons, this Court should follow the analysis of s 34(1) adopted by Barrett J in Reinhold, approved by the Victorian Court of Appeal in Godfrey Spowers, and explained in CTC Group, not being inconsistent with Herridge Parties. The Court should not have adopted a different view in Rahme unless comfortably satisfied that the reasoning in Godfrey Spowers either did not apply or was erroneous: it did neither. Furthermore, the reasoning relied upon in Rahme was almost entirely dependent upon acceptance of Macfarlan JA’s minority view in CTC Group, which, for the reasons set out above, is not persuasive.
- Section 34(1)(a) should not be construed as extending to a claim found to have arisen absent any failure to take reasonable care. On the other hand, a claim, whatever the pleaded cause of action, which has been upheld on the basis that there was a failure to take reasonable care will constitute an apportionable claim under s 34(1)(a). Notably, Gemi 130 filed a cross-claim alleging that Toltz had acted for it and had failed to take reasonable care in assisting and advising it.
The Civil Procedure Act 2005 (NSW) gives the Court power to give the defendant leave to amend its defence.
I bear in mind that the pre-trial process is well advanced and that the action is listed for hearing for four days, commencing on 15 June 2026.
The plaintiff has indicated that, in the event that the defence is amended and the subpoenas in relation to it are not set aside, the plaintiff will be put to a considerable amount of work and expense. The plaintiff has indicated that it will do everything possible in an effort to keep the hearing dates allocated.
It is clear from the submissions on behalf of the defendant that the defendant places considerable importance upon the amendments which it seeks to make to its defence.
The explanation for any delay in applying for leave to amend the defence is a factor relevant to the exercise of the power to amend. The application to amend was filed on 8 May 2026 and the trial is listed to begin on 15 June 2026. The statement of claim was filed on 9 August 2024 and an amended defence was filed on 10 March 2025. The explanation given for the delay in making the application to file a further amended defence is that the defendant changed solicitors at the end of March 2025. It was submitted that the application to amend was made just over one month from the new solicitors coming on to the record. A letter dated 6 June 2024 from Norton Rose Fulbright, solicitors for the defendant, to Sparke Helmore Lawyers, who were then solicitors for the plaintiff, was tendered in the hearing of the motions. That letter is part of an exchange of correspondence between the solicitors for the parties, debating aspects of the dispute between the parties. In the letter, the solicitors for the defendant cite Factory Direct Fencing Pty Ltd v Kong Ah International Company Limited [2013] QDC 239 (‘Factory Direct’) at [108] – [135] as authority for the proposition that there is no tortious duty of care owed by one party to a commercial transaction to another. The defendant’s solicitors go on, in the letter, to discuss the impact of the absence of a duty of care on the issue of the apportionment of liability between the defendant and “any fraudster”. The determination in Factory Direct, at [136], that questions in relation to apportionment with concurrent wrongdoers were unnecessary to decide in those proceedings, because duties of care in tort and in contract are not owed in the context of a commercial transaction, is referred to in the letter (see footnote 6 of the letter). It is clear that the issue of apportionment and concurrent wrongdoers was considered by the defendant as early as 6 June 2024 and that a decision was made that the case for a pleading such as the pleading now set out in the draft further amended statement of claim could not be established. Presumably that decision was made on instructions. This is a factor which weighs against the application to file the draft further amended statement of claim.
34 Application of Part
(1) This Part applies to the following claims (apportionable claims)—
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,
…
(1A) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
In 2019, the Court of Appeal, in Rahme, decided, as part of the ratio decidendi of that appeal, that it was necessary, in order for a claim to be an apportionable claim for the purpose of s 34(1)(a) of the Civil Liability Act, that “the absence of reasonable care was an element of the, or a, cause of action upon which the plaintiff succeeds”.
In 2025, two of the three appeal judges in Gerrard Toltz, in obiter dicta, expressed doubt about the determination in Rahme on the issue, and preferred the view that the question of whether an action constitutes “an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care” within the meaning of s 34(1)(a) of the Civil Liability Act does not require a failure on the part of the defendant to take reasonable care to be an element of the cause of action, but falls to be decided by consideration of the way the claim is framed together with any relevant factual matters which may found a finding, as an element of the basis of upholding the claim, that the defendant failed to take reasonable care.
I am bound by the decision in Rahme. The statement of claim in this matter pleads a simple breach of contract by reason of a failure on the part of the defendant to pay to the plaintiff the purchase price for the assets of the business agreed in the contract. A failure to take reasonable care is not an element of the cause of action pleaded. On this basis, the defendant’s application to file its draft further amended statement of claim must fail. The plaintiff’s claim is not an apportionable claim.
Even if the broader sense of “failure to take reasonable care” were to prevail, the claim in this action would not come within it.
In Herridge Parties v Electricity Networ**ks Corp t/as Western Power (2021) 59 WAR 69; [2021] WASCA 111, the Western Australian Court of Appeal said that proceedings will arise from a failure to take reasonable care for the purposes of s 34(1)(a) of the Civil Liability Act where establishing liability in the action for damages requires the plaintiff to prove that the defendant failed to take reasonable care in some respect. Nothing in the plaintiff’s pleadings suggests that it will be required to prove that the defendant failed to take reasonable care to establish liability. The allegations regarding the email appear for the first time in the defence.
As I have set out at [28], above, the defendant argues that “the state of the pleadings is such that if the defendant did not act reasonably in relying on the representation as to Donna Matthews’ authority, at least that strand of the nomination defence fails, and the defendant is liable to the plaintiff for the loss.” It is argued that this amounts to a loss which arises from a failure to take reasonable care for the purposes of s 34(1)(a) of the . I reject this argument. The plaintiff can prove its claim if it proves the allegations in its statement of claim, none of which require a finding that the defendant failed to take reasonable care. The question of whether the defendant’s defence that its payment in response to the email it received at 2:16am on 8 March 2024 was in accordance with the terms of the contract which bear on the circumstances for the payment of the purchase price will be an exercise in interpreting the relevant clauses of the contract, making findings of fact in relation to the steps which led to payment and determining whether what was done by the defendant was done in compliance with the terms of the contract or not. No part of that exercise will or can transform the claim from a simple claim for damages for breach of contract into a claim arising from a failure to take reasonable care.
3.b. … if it be found that the defendant did rely upon the representation alleged (noting both the representation and reliance are denied) the defendant acted or failed to act unreasonably in so doing…
Particulars of the asserted unreasonable inaction are provided.
Paragraph 3 of the surrejoinder is a response by the plaintiff to an elaboration by the defendant, in its rejoinder, of its defence. This does not change the character of the plaintiff’s claim, which is for breach of contract. Paragraph 3 of the surrejoinder simply responds to an aspect of the asserted defence. As the plaintiff argued, “whether or not the defendant acted carefully in making a payment to a third party is utterly irrelevant to the plaintiff’s claim”.
Part 4 of the Civil Liability Act does not apply to the claim the subject of these proceedings because the claim does not arise from a failure on the part of the defendant to take reasonable care. The defendant’s notice of motion filed on 8 May 2026 will be dismissed.
There are additional reasons to dismiss the defendant’s application to file its further amended defence. As I have set out, above, at [32], the requirements described in Ucak v Avante Developments [2007] NSWSC 367 (‘Ucak’) which must be met for a pleading of concurrent wrongdoers are set out in Angius. Below, I set out the three “necessary elements” and discuss whether the draft further amended defence complies:
- A defendant seeking to rely upon a proportionate liability limitation of recovery under Part VIA of the Competition and Consumer Act must identify each particular alleged concurrent wrongdoer. Part VIA does not allow a defendant to describe a population of individuals and assert that within that class there may be one or more concurrent wrongdoers. Bingo’s construction, if correct, would make the concurrent wrongdoer provisions incoherent. Dealing first with the text, s 87CB(3) defines “concurrent wrongdoer” as:
… a person who is one of 2 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.
- The critical integers of “concurrent wrongdoer” are the identification of a person whose acts or omissions caused the loss or damage the subject of the claim. The satisfaction of all three integers (acts or omissions, cause and damage or loss the subject of the claim) by a particular person is required to meet the statutory description. Each must be pleaded. The word “is”, in identifying a person with those characteristics, suggests that the concurrent wrongdoer defence requires a defendant to plead and establish that there is one or more other persons who caused the damage or loss the subject of the plaintiff’s claim.
As I have said, at [29] above, the defendant identifies four asserted “concurrent wrongdoers” in the draft further amended defence:
The owner of the domain, mail servers or mailboxes associated with the email domain and email addresses that sent email from the “matthewsjewellers.com” domain and/or (if different) the entity or entities responsible for administering and securing the plaintiff’s email server, systems, domain and/or email domain for matthewsjewellers.com (including the cloud infrastructure upon which the email hosting environment for accounts using the domain was stored) (the Domain Owner/Administrator).
If Donna Matthews did not send the email referred to in paragraph 10(a), the person or persons who perpetrated the fraud which is the subject of these proceedings (the Threat Actor).
Donna Matthews.
MAE S.P.A Pty Ltd (ACN 674 876 049)
The first two asserted “concurrent wrongdoers” constitute a descriptor of people or entities which may be comprised of a group of people and/or entities or may be an individual. Neither of the descriptors can be said to identify “a person”.
17(c)(iv) Donna Matthews either sent the payment direction email of 8 March 2024 and/or failed to take reasonable steps to prevent and/or detect unauthorised access to, or misuse of, her email account.
17(d)(ii) The NAB Account into which the defendant paid the purchase price of $467,378.00 on 8 March 2024 was held in the name of, or was associated with, an entity with a name almost identical to MAE S.P.A (being “MAE SPA PTY LTD”) and the NAB account statement listed the same address in Fortitude Valley.
(iii) The defendant repeats paragraph 10(c) above. MAE S.P.A (or any person acting through it) received the sum of $467,378.00 paid by the defendant into the NAB Account.
The causal connection is not spelt out in either subparagraph 17(c) of 17(d). No material facts specifically relating to the act or omission and its causal connection are provided.
As Henry J said, in The Owners – Strata Plan No 87265 v Saaib [2021] NSWSC 150 at [514], which is set out above at the end of the quote from Angius at [32], above, “… it is essential that any defendant be required to plead the proportionate liability defence in a manner that discloses the cause of action and damage in at least as detailed a manner as would be required for any initiating process for a cause of action”. The proposed further amended defence falls well short of this requirement.
The defendant indicated that, in the event that it was not given leave to file its further amended defence, it would not seek to pursue the subpoenas the subject of the plaintiff’s notice of motion of 24 April 2026.
Orders setting aside the four subpoenas issued by the defendant will therefore be made.
The following orders will issue:
The notice of motion filed by the defendant on 8 May 2026 is dismissed.
The notice of motion filed by the plaintiff on 24 April 2026 is allowed.
The subpoena issued by the defendant to The Proper Officer, Stephen & Donna Matthews Pty Ltd ACN 109 332 149 on 16 April 2026 is set aside.
The subpoena issued by the defendant to GoDaddy Online Services Australia Pty Ltd ACN 604 834 237 on 16 April 2026 is set aside.
The subpoena issued by the defendant to The Proper Officer, Matthews Jewellers Pty Ltd ACN 003 110 530 on 16 April 2026 is set aside.
The subpoena issued by the defendant to The Proper Officer, MJ Concepts Kotara Pty Ltd ACN 135 969 561 on 16 April 2026 is set aside.
**********
MJ Concepts Kotara Pty Ltd
Pandora Jewellery Pty Ltd
[2021] WASCA 111
[2009] HCA 27
(2021) 59 WAR 69
(1982) 148 CLR 658
(1956) 96 CLR 99
(1976) 9 ALR 437
(2009) 239 CLR 175
(2007) 164 FCR 450
(2019) 100 NSWLR 550
(2008) 82 NSWLR 762
(2008) 21 VR 84
The defendant, in paragraph 3 of its rejoinder, pleads, in summary, that Donna Matthews had the plaintiff’s ostensible authority to act on the plaintiff’s behalf. The plaintiff, in paragraph 3 of the surrejoinder, denies paragraph 3 of the rejoinder and pleads: