Perpetual Trustee Company Ltd v Milanex Pty Ltd

Judgment 1CAMPBELL JA : I agree with Macfarlan JA. 2MACFARLAN JA : TABLE OF CONTENTS Summary of case and conclusions [3] The factual circumstances [10] The judgment at first instance [21] The issues on appeal [35] Misleading and deceptive conduct [41] Reliance on the misleading and deceptive conduct [52] Causation of Perpetual's loss [70] Repurchase under the MOMA [74] Contributory negligence [84] Proportionate liability [90] Perpetual's loss [108] Costs [122] Orders [124]

Summary of Case and Conclusions 3On 29 November 2005 Mr Milan Vlasic, acting on behalf of the respondent mortgage broker ("Milanex"), submitted to Good Home Loans Pty Ltd ("GHL") documents that purported to constitute an application by Mr Alexander Kotevski to borrow up to 80 per cent of the value of his home at Kogarah, this property being offered as security for the borrowing. Mr Kotevski was then aged 74, lived on his own, was a pensioner and spoke little English. GHL was a mortgage manager engaged by Calibre Financial Services Pty Ltd ("Calibre"), which was a trust manager appointed by the appellant, Perpetual Trustee Company Ltd ("Perpetual"), to act on Perpetual's behalf in relation to mortgage lending. 4Following Perpetual's acceptance of the purported application in January 2006, Mr Kotevski signed a Loan Offer document and a mortgage in the presence of an independent solicitor, Mr Kevin Lo. 5On 24 January 2006 an amount of $221,935.75 advanced by Perpetual was deposited into a bank account in Mr Kotevski's name and a mortgage in favour of Perpetual over Mr Kotevski's property was registered. Also on 24 January 2006 $220,000 was transferred from Mr Kotevski's account to the account of Mr Marko Micic, a friend of Mr Kotevski who had communicated with Mr Vlasic in relation to the loan to Mr Kotevski. Subsequently various cash deposits were made to Mr Kotevski's account and other amounts were transferred from Mr Micic's bank account into Mr Kotevski's bank account. This led to a number of loan instalments being paid to Perpetual from Mr Kotevski's account. Mr Kotevski denied knowledge of these transactions on his account. 6Following subsequent default under the mortgage Perpetual commenced proceedings against Mr Kotevski for possession of his property. These proceedings, including various cross-claims filed in the proceedings, were heard in September and October 2009 by Patten AJ sitting in the Common Law Division of the Supreme Court. In a judgment of 16 November 2009 Patten AJ concluded, in upholding a defence relied upon by Mr Kotevski, that the loan contract between Perpetual and Mr Kotevski was unjust at the time that it was made. His Honour declared pursuant to s 7 of the Contracts Review Act 1980 that it and the mortgage over Mr Kotevski's property were void. Whilst the declaration concerning the mortgage was ineffective because the mortgage was registered (s 19 Contracts Review Act ), his Honour also made an order facilitating its removal from the title. 7The cross-claims that his Honour heard and determined included a claim by Perpetual against Milanex for damages for misleading and deceptive conduct in contravention of the then operative s 52 Trade Practices Act (Cth) and s 42 Fair Trading Act. In essence Perpetual alleged that Milanex had represented to GHL on behalf of Perpetual that Milanex had verified Mr Kotevski's identity and that Mr Kotevski was a builder with an annual income of $75,000 who wished to borrow up to 80 per cent of the value of his home property for investment purposes; that Perpetual had relied upon these representations in advancing the loan to him; and that the representations constituted conduct that was misleading and deceptive. 8The primary judge found that Milanex had engaged in misleading and deceptive conduct but held that Perpetual had not established that it relied upon the representations, the cause of Perpetual's loss being the intervening conduct of GHL and to a lesser extent of Mr Paul Fabian, a solicitor who acted for Perpetual in the transaction, in not making proper enquiries and following standard procedures. The primary judge accordingly dismissed Perpetual's Cross-Claim against Milanex. Perpetual now appeals against that dismissal. 9My conclusions on the issues for determination on the appeal are, in summary, as follows: (a) Milanex made representations to Perpetual, including that it acted for Mr Kotevski, that Mr Kotevski wanted to mortgage his property and to borrow up to 80 per cent of its value and that Mr Kotevski had signed the various documents (including the Loan Application) that Milanex submitted to Perpetual's agent, GHL (see [41] - [48] below). (b) The representations that Milanex made were misleading and deceptive because, inter alia, Milanex did not have instructions from Mr Kotevski and Mr Kotevski had not signed the documents that were submitted to Perpetual (see [49] - [51] below). (c) GHL, acting on Perpetual's behalf, relied upon the representations in progressing the Loan Application and in effect recommending it to Perpetual. The fact that Ms Pogson on behalf of GHL may have been careless and failed to comply with standard procedures did not affect that conclusion (see [52] - [69] below); (d) Perpetual proved that it suffered loss as a result of Milanex's misleading and deceptive conduct by proving that the advance that it made to Mr Kotevski in reliance on that conduct was largely irrecoverable (see [70] - [73] below). (e) Milanex's contention that Perpetual suffered no loss because Perpetual had a right under the MOMA to require GHL to purchase from Perpetual the mortgage granted by Mr Kotevski should be rejected (see [74] - [83] below). (f) A defence of contributory negligence was not as a matter of law open to Milanex to raise in response to Perpetual's claim against it (see [84] - [89] below). (g) Milanex was entitled to rely upon the proportionate liability provisions of the Civil Liability Act 2002. For the purpose of those provisions, Mr Lo, the solicitor who purported to give legal advice to Mr Kotevski concerning the advance to him and the mortgage over his property, was a "concurrent wrongdoer" and was 35 per cent responsible for Perpetual's loss. As a result Perpetual's claim against Milanex is to be limited to an amount reflecting Milanex's 65 per cent share of responsibility as between it and Mr Lo for Perpetual's loss (see [90] - [107] below).

Those involved in the transaction 10The primary judge found that Mr Kotevski was "an unsophisticated man with very little formal education and virtually no business experience" and that whilst Mr Kotevski "had some knowledge of spoken English, he was certainly not fluent in it and had no capacity to understand more than very simple concepts. Nor could be read or write in English" (Judgment [187] and [193]). 11Mr Kotevski gave evidence that he had met Mr Micic through friends in the Slavic community, Mr Kotevski being of Macedonian descent and Mr Micic of Serbian descent. Mr Kotevski thought that Mr Micic would have been about 40 years of age when they met in 2000. 12As at November 2005 Mr Micic was an existing client of Milanex. Milanex was one of a number of mortgage brokers that referred business to GHL. Ms Jane Pogson commenced employment with GHL in October 2005. She gave evidence that she had by then worked in the mortgage industry for over 20 years and in the previous five years had worked on some 40 to 50 loans proposed by Mr Vlasic, the principal of Milanex, to her previous employer. 13By Master Mortgage Servicing and Management Agreement and Master Mortgage Origination Agreement, both dated 10 June 2005, Perpetual appointed Calibre as a trust manager to submit loan requests to Perpetual and manage any resulting loan transactions on behalf of Perpetual. 14Calibre appointed GHL by written Mortgage Origination and Management Agreement ("MOMA") dated 22 November 2005 to act on its behalf as a mortgage manager. By Clause 2.2 of the MOMA GHL was required to comply with the Operations Manual that Calibre issued and from time to time varied. The Operations Manual, inter alia, specified steps to be taken, and documents to be submitted by GHL to Calibre, in relation to loan requests that GHL submitted to Calibre.

The purported loan application of Mr Kotevski 15On 29 November 2005 Mr Vlasic sent to Ms Pogson an email that commenced as follows: "Please find the new deal for your Low Doc [sic] loan where the client wants to mortgage his mortgage free property and to borrow up to 80% of its value". 16The heading to the email gave its subject as "New application - Kotevski" and a covering handwritten note referred to the submission of "new app for Mr Kotevski". 17Ms Pogson described the documents comprising an attachment to the email as follows: "(a) a handwritten note from Mr Vlasic to me; (b) a facsimile cover sheet from Milanex to GHL dated 28 November 2005; (c) a GHL document entitled Applicant's Personal Details completed with Mr Kotevski's details; (d) a document entitled Loan/Security Details; (e) Monthly Income/Statement of Assets & Liabilities signed by Mr Kotevski; (f) Applicant Declaration signed by Mr Kotevski dated 28 November 2005; (g) Joint Borrowers Nomination Form Address for Notices signed by Mr Kotevski dated 28 November 2005; (h) Declaration Under the Consumer Credit Code Where Credit is to be Applied Wholly or Predominately For Business Or Investment Purposes signed by Mr Kotevski dated 28 November 2005; (i) Acknowledgement and Authority to Give and Receive Credit Information signed by Mr Kotevski dated 28 November 2005; (j) Privacy Consent signed by Mr Kotevski dated 28 November 2005; (k) Verification of Borrower - 100 Point Check List in respect of Mr Kotevski dated 28 November 2005; and (l) LoDoc Declaration signed by Mr Koteveski dated 24 November 2005". 18The "Verification of Borrower" document referred to in subparagraph (k) was signed by Mr Vlasic. It gave details of a Citizenship Certificate and a Driver's Licence of Mr Kotevski that Mr Vlasic had apparently sighted. The LoDoc Declaration referred to in subparagraph (l) described Mr Kotevski's occupation as "Builder" and stated that his income was $75,000 per annum. 19Ms Pogson said that later on 29 November 2005 she attempted to call a contact number for Mr Kotevski that was shown on one of the forms, found that it was incorrect, obtained the correct number from Mr Vlasic and spoke on that number to a male person whom she believed to be Mr Kotevski. Ms Pogson asked the person some questions about the proposed loan, including questions concerning Mr Kotevski's occupation and income. She obtained answers consistent with the information in the documents that Mr Vlasic had sent to her. She gave the following evidence about the call: "The purpose of my telephone call to the male was to verify with Mr Kotevski that the information I had been given in the documents provided by Milanex about him was correct. It was not the purpose of this call to interview Mr Kotevski like I would interview a borrower who approached GHL directly. It was the responsibility of Milanex, as the broker, to conduct a full interview with Mr Kotevski and advise him of his loan choices and it was not GHL's role to advise Mr Kotevski or be seen to be advising Mr Kotevski about his loan choices". 20Thereafter Ms Pogson took various steps in relation to the loan application, including: applying for and obtaining Lender's Mortgage Insurance; applying for and obtaining a valuation of the property; on 13 December 2005 submitting to Calibre a Loan Purchase Request; after obtaining approval of the Loan Purchase Request from Calibre, instructing Paul Fabian and Co, solicitors, to act for Perpetual on the loan and mortgage transaction; obtaining two credit reports in relation to Mr Kotevski, each of which referred to his employer as "DSS Rockdale"; and engaging in post-settlement correspondence and conversations with Mr Vlasic and a male person whom Ms Pogson believed to be Mr Kotevski.

Ms Pogson's evidence 21The observations that the primary judge made in relation to Ms Pogson's evidence included the following: "55 In cross-examination, Ms Pogson told [counsel for Mr Kotevski] that she was aware that at the time of the loan Mr Kotevski was 74 and that the loan was to be for 30 years. She said that she did not consider raising that circumstance with Calibre or Perpetual as she did not regard it as relevant. 56 [Ms Pogson] told [counsel for Mr Kotevski] that she also did not regard it as relevant to inform Calibre of the default indicated on the Baycorp search. She said that she could not recall noticing that the search indicated that Mr Kotevski's employer was stated as 'DSS Rockdale'. She seemed to me reluctant to admit what I regard as rather obvious, namely that the initials 'DSS' might well refer to the Department of Social Security. Nor did she consider that, having regard to his age, Mr Kotevski might have been a pensioner. ... 70 I do not question the honesty of Ms Pogson, or the reliability of her evidence, with the qualification that I do not accept that she had a conversation with Mr Kotevski on or about 29 November 2005 during which he allegedly verified the matters set forth in paragraph 24 of her affidavit of April 2009 and referred to in paragraph 30 above. The testimony seems to me to be inconsistent with her own note of the conversation and also inconsistent with the capacity of Mr Kotevski to understand spoken English. Moreover, in my opinion, it is improbable that Mr Kotevski would have made patently false statements, the truth of which could easily be checked as to his occupation, his income, his period of residence in Baxter Street and his assets. In the outcome, in my view, Ms Pogson does not, however, emerge from this particular transaction with a great deal of credit. It is all very well for her to say that she relied on Milanex and Mr Vlasic but the fact is her own conduct was regulated by a very detailed agreement, of which multiple breaches were plainly committed, not the least of which being the obligation to 'act prudently in the sourcing and ongoing servicing of high quality assets for the Calibre program' as required by clause 2.1 of the MOMA agreement. ... 72 As it seems to me, no sensible person would make, or participate in making, a loan of $224,000 to a 74 years old aged pensioner for a term of 30 years without at least a close consideration of the purpose of the loan. Ms Pogson knew, from more than one source, that Mr Kotevski was born on 24 August 1931. 73 If she had thought about it for a moment, she should have reali[s]ed that the reference in the Baycorp credit search to DSS Kogarah may mean that Mr Kotevski was in receipt of a pension paid by the Department of Social Security. If she did not reali[s]e this then, in my view, she had an obligation to make a further inquiry, particularly as the bald statements in the LoDoc declaration that Mr Kotevski was a builder in receipt of $75,000 per annum, plainly begged a number of questions".

Ms McKinniery's evidence 22Ms Lenore McKinniery was a director of Calibre. In that capacity she received and processed the Loan Purchase Request that GHL submitted to Calibre. The primary judge pointed out that Ms McKinniery received only some of the documents generated in the transaction and that "the documents she saw neither put her on notice of Mr Kotevski's age, nor that he was, or might be, the recipient of a pension paid by the Department of Social Security" (Judgment [82]).

Mr Fabian's evidence 23In acting as solicitor for Perpetual Mr Fabian altered the Loan Offer and Mortgage that Mr Kotevski signed by adding a second title reference. The primary judge found that an Authority to Complete with which Mr Fabian had been provided did not, on its proper construction, authorise him to do this. More generally, the primary judge said that Mr Fabian "failed to comply in several respects with the 'Solicitors Pack'", which was a document of some 26 pages emanating from Perpetual or Calibre specifying steps to be taken by solicitors acting on behalf of Perpetual in mortgage transactions (Judgment [83] and [101]). Mr Fabian however did obtain an "Acknowledgement of Legal Advice by Proposed Borrower" which was a form referred to in the Solicitors Pack. This Acknowledgement was signed by Mr Kevin Lo, solicitor.

Mr Lo's evidence 24Mr Lo gave evidence that Mr Micic, for whom he had acted in the past, attended with Mr Kotevski at his office on 20 December 2005 for the purpose of Mr Lo giving Mr Kotevski independent advice concerning the loan and mortgage transaction. 25The primary judge said that it was clear that the loan and mortgage documents were signed by Mr Kotevski at this meeting (Judgment [109]) and expressed the following conclusions in relation to Mr Lo's evidence: "The evidence of Mr Lo provides, in my opinion, a good example of my earlier remark concerning persons in this transaction who acted without dishonesty, but yet without the application of common sense or reasonable competence. To my mind it beggars belief that a competent solicitor would act as Mr Lo did in this case. He established no file and made no record, yet he purported to explain to a 74 years old man the significance of documents whereby he borrowed $224,000 over the security of his unencumbered home for a term of 30 years, a man whose first language was obviously not English. Significantly, to my mind, in neither his affidavit nor his oral evidence was Mr Lo able to identify a single word uttered by Mr Kotevski in the English language. Every aspect of this transaction, as it was presented to Mr Lo should, in my opinion, have caused a competent solicitor to regard it with very considerable suspicion and to act with the greatest of care. Mr Lo patently did neither" (Judgment [115]).

Mr Kotevski's evidence 26Mr Kotevski gave evidence that his only income since retirement in 1996 had been an aged person's pension paid through Centrelink. Prior to that time he had worked for 20 years as a carpenter in the Australia Post workshop in Martin Place. He did not recall signing the Loan Application or other documents that appeared to bear his signature and of which Mr Vlasic sent copies to Ms Pogson on 29 November 2005. Examination of these documents did not enable Mr Kotevski to confirm that the signatures were his. He said that in 2005 Mr Micic put a lot of pressure on him to lend Mr Micic money and that he was intimidated by Mr Micic. He recalled attending with Mr Micic to see a solicitor (presumably Mr Lo) to sign the documents but said that he did not know what the documents were that he signed (Judgment [137]). 27The primary judge's conclusions in respect of Mr Kotevski included the following: "187 I found it difficult to assess Mr Kotevski's credibility. He was, I think, an honest witness but many of his answers were unresponsive, he was vague, his memory seemed poor and there were contradictions, discrepancies and unresolved internal inconsistencies. This may, at least in part, be explained by language difficulties and the unfamiliarity of the court atmosphere. He was also, I am satisfied, an unsophisticated man with very little formal education and virtually no business experience. 188 He seemed to believe that it was in his interests (either for the purposes of this litigation or possibly to avoid embarrassment with his children) to distance himself as much as possible from involvement with Mr Micic, to the extent that he often sought to make this point, whether or not it was relevant to the question. It seems to be the case that in the second half of 2005 his relationship with Mr Micic was very close, possibly as a consequence of Mr Micic setting out for a nefarious purpose to ingratiate himself with a much older and potentially gullible man. Despite being given a number of opportunities to do so, Mr Kotevski never articulated clearly, to my mind, what he thought he was doing when he signed the documents, which, I am satisfied, Mr Micic took to Mr Lo's office. The closest he came to an explanation was that he was providing temporary financial assistance to Mr Micic for three months but that does not sit entirely easily with the rest of the transaction. I think the truth is that he did what Mr Micic asked of him without really comprehending at all what he was being asked to do. 189 On the very important question of whether Mr Kotevski received any benefit from the loan, I am satisfied that he received no benefit whatever and had no role in the funding of such payments as were made to GHL. It is clear to me that Mr Kotevski had no income apart from his pension and perhaps a few dollars here and there for odd jobs. Although the proceeds of the loan were paid into a bank account in Mr Kotevski's name, I am satisfied, on the probabilities, that this was done as part of Mr Micic's scheme to take advantage of a vulnerable man. I accept Mr Kotevski's evidence that he received no benefit from the loan proceeds paid into the account established by him on 10 January 2006. That account was, as I have indicated, in debit by the end of the following month. ... 193 As to Mr Kotevski's proficiency in the English language, I am satisfied that while Mr Kotevski had some knowledge of spoken English, he was certainly not fluent in it and had no capacity to understand more than very simple concepts. Nor could he read or write in English. I do not for that reason accept that he held the conversation with Ms Pogson to which she deposed prior to the preparation of mortgage documents. 194 Apart from the one conversation with Ms Pogson, which I have mentioned, Mr Kotevski's evidence is also, in a significant way, in conflict with the evidence of Mr Vlasic and to a lesser extent with Mr Lo. Despite what I regard as Mr Lo's gross departures from the standard of competence expected of a solicitor, I think he probably spent a little more time with Mr Kotevski and the documents than Mr Kotevski would have the court believe. However, such explanations as Mr Lo did provide were so ineffective that nothing turns on this finding. In my view, Mr Kotevski received no benefit whatever from Mr Lo's advice".

The evidence of Mr Vlasic and Ms Radanovic 28The primary judge's conclusions in relation to the evidence of Mr Vlasic and Ms Ranka Radanovic included the following. Ms Radanovic was an employee of Milanex who had some involvement in the subject transaction. "255 For a number of reasons, I do not regard either Mr Vlasic or Ms Radanovic as reliable witnesses. I formed the opinion that neither had an independent recollection of the events from November 2005 to January 2006 to which they deposed and instead were reconstructing what they thought occurred from documents. 256 When tested Mr Vlasic could not remember what in particular had occurred at either of the two meetings, which he said took place in his office in November 2005. He referred on more than one occasion to 'clients' as encompassing both Mr Kotevski and Mr Micic and seemed to regard them as being in the same interest. He could offer no explanation for the fact that all the signatures on documents, purportedly signed by Mr Kotevski and exhibited to his affidavit, may have been forged. As to this, if, as seems probable, they were forged, I find it difficult to believe that if Mr Kotevski had, in truth, attended the office of Milanex twice in November 2005, some if not all of the documents would not have been signed by him while there. ... 264 Despite the imperfections, discrepancies and contradictions in his evidence, I prefer the testimony of Mr Kotevski in relation to his dealings with Milanex to the testimony of Mr Vlasic and Ms Radanovic. I think the probability is that Mr Kotevski attended the Milanex office only once, as he testified, in January 2006. On[e] small factor which supports this conclusion is Mr Kotevski's initially faulty description of Milanex' office. He is, I think, more likely to have made a mistake that it comprised two rooms, having been there once for a short time only, than if he had been there three times, the first two for significant periods while important matters were discussed. 265 In my view, the probability is that the documents exhibited to Mr Vlasic's affidavit were prepared in Milanex' office, from information provided by Mr Micic; they were sent to or taken away by Mr Micic and subsequently returned apparently signed by Mr Kotevski. It is probable that each of those purported signatures was forged. 266 Although I have made adverse findings about the evidence of Mr Vlasic, I should add that, in my opinion, the evidence in the case stops short of establishing fraud on his part. There is no evidence that he sought to gain anything other than a commission from the transaction. It would not have been in his interests to promote a loan likely to go into immediate default".

The Contracts Review Act 29As noted above, the primary judge concluded that an order should be made declaring the loan contract between Perpetual and Mr Kotevski void. His reasons are encapsulated in the following extracts from his judgment: 275 It seems to me that Mr Kotevski's age and unsophisticated mental state rendered him vulnerable to the importuning of Mr Micic and thus not reasonably able to protect his interests. He was also disadvantaged within s9 (2)(f) by his very limited formal education and literacy which, in my view, rendered him incapable of understanding the contract within s9 (2)(g). 276 Although it is true that legal advice was purportedly provided to Mr Kotevski, it was not done at his instigation and, in my opinion, the legal advice provided was, on the evidence, quite useless. 277 There was, in my opinion, undue influence or undue pressure on the balance of probabilities, exerted on Mr Kotevski by Mr Micic, but there was no evidence that this was by, or on behalf of, Perpetual or anyone for whose acts it was responsible. 278 However, I am not confined in my consideration of the matter to the circumstances specifically listed in s9 (2). I am bound to consider also the more general terms of s9 (1). Although there is a strong public interest in upholding contractual obligations, it seems to me that the blindness of Perpetual, Calibre and GHL to the reality of the transaction being entered into with Mr Kotevski reversed the public interest factor in this case to the extent that, far from being in the public interest for the contractual obligations to be upheld, it becomes in the public interest that they be set aside. It is difficult to understand how it could be in the public interest to uphold a contract providing for a loan of $224,000 repayable over 30 years to a 74 year old man whose only income was an aged persons pension and whose only significant asset was his home. ... 281 In my opinion, the loan contract in this case, was unjust at the time it was made within s7 of the Review Act. This leads to consideration of what relief, if any, is appropriate. Central to that question, as it seems to me, is whether any benefit was derived by Mr Kotevski from the loan. As I have found, he, in truth, received no benefit due to the persuasive powers of Mr Micic. 282 However, it was submitted on behalf of Perpetual that he received the full benefit of the loan when the cheque handed to him by Mr Vlasic was paid into his St George Bank account. I reject that submission, in so far as it suggests that the payment of the cheque into Mr Kotevski's account forecloses the need for further investigation. 283 One of the dangers of Perpetual making a loan such as this one was that the borrower may be under the influence of a third party for his or her own purposes. This danger was plainly recognised by Perpetual as, for example, in the Solicitors Pack provided to Fabian, referred to above. Although Milanex may not have been Perpetual's agent, GHL certainly was, and its acts and state of mind governed and represented the state of mind of Perpetual as if they were its own (Khoshaba per Handley JA) GHL, being aware of the involvement of Milanex, made no inquiry of it as to the purpose of the loan, or as to the circumstances in which Mr Kotevski came to be introduced as a borrower. The telephone call, which Ms Pogson said she made to Mr Kotevski, did not purport to overcome this problem even though, in any event, my view of the probabilities is that she did not actually speak to Mr Kotevski at that time. 284 In my opinion, the failure to make reasonable inquiry, the carelessness of GHL, both attributable to Perpetual, and the multiple failures of GHL and Fabian to comply with their contractual obligations, all facilitated the wrongdoing of Mr Micic and all contributed towards the making of a loan which, in my view, should never have been made. I disagree with [counsel for Perpetual's] submission that the only entity that could be described as assisting Mr Micic to exploit Mr Kotevski was Milanex. Both GHL and Fabian, in my view, made significant contributions. 285 So far as Perpetual is concerned, it received payment of some instalments during 2006 and [counsel for Mr Kotevski] has indicated that his client, if the loan contract is set aside, would hold the proceeds of his verdict against Mr Lo on trust for Perpetual. 286 In my opinion, in all the circumstances, the justice of this case requires an order declaring the loan contract void. It should never have been made. Perpetual should be held entitled to the benefit of all monies paid to it previously and there should be a declaration that Mr Kotevski holds on trust for Perpetual the net proceeds of his verdict against Mr Lo. Perpetual has not cross-claimed against either Calibre or GHL against whom, directly or indirectly, it has contractual rights. However, I need to consider its action against Milanex".

Perpetual's Cross-Claim against Milanex 30Perpetual alleged in its Cross-Claim that Milanex engaged in misleading and deceptive conduct upon which Perpetual relied in approving the Loan Application purportedly made by Mr Kotevski. 31Perpetual pleaded that the following conduct of Milanex was misleading and deceptive: "5. In sending the facsimile, Milanex by its conduct represented the following: (a) Milanex acted for and represented Mr Kotevski; (b) Mr Kotevski wanted to mortgage his mortgage free property, being 3/3 Baxter Street, Kogarah (" the Property "), and to borrow up to 80% of its value; (c) Mr Kotevski had signed a loan application (" the Loan Application "), which sought a loan for $240,000 to be repaid over 30 years and to be secured against the Property; (d) Mr Kotevski was seeking a Low Doc [sic] loan; (e) Mr Kotevski had made a declaration that the credit pursuant to the proposed loan is to be applied wholly or predominantly for business or investment purposes or for both purposes (" the UCCC Declaration "); (f) Mr Kotevski had made a further declaration (" the LoDoc Declaration ") that: (i) he had an ABN of 59 811 955 289; (ii) his occupation was builder; (iii) he was aware of his financial obligations under the proposed loan, had carefully considered his ability to afford the loan repayments as well as his ability to meet his other financial obligations (including living expenses) as and when they fall due and can do so without incurring financial hardship; and (iv) his annual income was $75,000; (g) Mr Vlasic of Milanex had verified the identity of Mr Kotevski by meeting with him and sighting his citizenship certificate, his driver's licence and a rate notice for the Property. 6. Subsequently, Milanex made the following further representations to Good Home Loans: (a) Mr Kotevski could be reached on the telephone number 9588 9786; and (b) Mr Kotevski had been self-employed for 6 years" (Further Amended Second Cross-Claim). 32Perpetual alleged that relying upon this conduct, GHL made a "Loan Purchase Request" to Perpetual and, in reliance upon that request, Perpetual advanced $224,000 to Mr Kotevski (ibid [8] and [9]). 33The primary judge's conclusions in relation to this claim were expressed as follows: "291 ... The Cross Claim raises four issues to be decided by the Court; did Milanex make the representations alleged; were they false and misleading; did Perpetual rely on them and, if so, did Perpetual as a consequence suffer loss and damage. 292 Some of the representations, as it seems to me, create no difficulty in particular those contained in subparagraphs (a), (b), (d) and (g) of paragraph 5 and the representations contained in paragraph 6. However, in my view, nothing would turn on the fact that any of these representations were false and misleading. The remaining representations involve the question whether Milanex was representing that Mr Kotevski had himself signed the documents referred to or was merely passing on documents without knowing whether Mr Kotevski had signed them or not and possibly whether Milanex was representing the truth of the matters set out in the documents. ... 295 In the circumstances of this case, I think it would be unreal to conclude that Milanex was merely acting as a 'conduit' or 'post box'. It purported to be much more involved than that. While I doubt that it represented the truth of the statements in the documents, of many of which it could have had no knowledge, in my opinion, it plainly represented that Mr Kotevski had signed those documents which purported to be signed by him and probably it also represented that the source of the information in the documents was Mr Kotevski himself. 296 As, in my opinion, none of the documents sent by Milanex to GHL on 29 November 2009 was actually signed by Mr Kotevski, in my view, Milanex should be held to have engaged in conduct that is misleading or deceptive or likely to mislead or deceive within s 52 of the Trade Practices Act and s42 of the Fair Trading Act". 34The primary judge then referred to a number of authorities on the question of whether Milanex's misleading or deceptive conductive was causative of Perpetual's loss. These authorities included Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, Gould v Vaggelas [1985] HCA 75; (1985) 157 CLR 215 and Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd (1993) 41 FCR 229. His Honour then expressed the following views: "301 In my opinion, the facts, which I have found in this case, do not establish reliance in any relevant sense upon the representations of Milanex. Ms Pogson conceded that if she had reali[s]ed that the application was made on behalf of a 74 year old aged pensioner, she would not have approved it. Yet she knew he was seventy four years old and she knew, or should have known, from her own inquiries that he was an aged pensioner. Moreover, she telephoned a male whom she believed to be Mr Kotevski on a telephone number shown to her in his name. She relied on this conversation as confirming the matters contained in the documents sent by Milanex. She apparently chose not to ask any of the rather obvious questions the material exposed. 302 In light of my finding that Perpetual did not rely on any representation made by Milanex within the principles stated above, it follows that its cross-claim against Milanex, relying on the TPA and FTA and the [ Australian Securities and Investments Commission Act 2001 (Cth)], must be dismissed. There is no other basis, in my view, which entitled it to relief against Milanex. Having regard to the conclusions earlier expressed, it is unnecessary for me to consider the cross claim by Mr Kotevski against Milanex. 303 [Counsel for Perpetual] submitted that I should, in any event determine Mr Kotevski's cross claim against Milanex and Mr Vlasic in order that its rights may be subrogated to those of Mr Kotevski in respect of any judgment found in Mr Kotevski's favour. I do not consider it appropriate to pursue this hypothetical question in respect of a contract I propose to set aside. Mr Kotevski will in the result suffer no loss. However, in any event, in my opinion, the negligence of Milanex and Mr Vlasic did not cause Mr Kotevski's loss, for the same reason that Perpetual's cross claim against Milanex should fail. The intervening cause of loss was the conduct of GHL and to a lesser extent Fabian."

THE ISSUES ON APPEAL 35On appeal Perpetual challenged the primary judge's finding that Perpetual did not rely upon representations that Milanex made and contended that, in determining the issue of reliance, the primary judge should have considered that Milanex's contravening conduct included not only the representations that it was found to have made but also "the continued involvement of the respondent on behalf of Mr Kotevski in the process of the loan being advanced in the period between 29 November 2005 and when the respondent received the cheque constituting the loan proceeds on behalf of Mr Kotevski ... " (Notice of Appeal [3(b)]). 36By its Notice of Contention Milanex: (1) contended that it did not make any of the representations alleged; (2) contended that there were reasons additional to those that the primary judge gave for concluding that Perpetual did not rely upon any misleading or deceptive conduct of Milanex; (3) contended that Milanex did not cause Perpetual's loss or damage because: "(a) the appellant satisfied itself that Mr Kotevski intended to use the monies for an 'investment purpose '; (b) the monies advanced by the appellant were given to Mr Kotevski and deposited by Mr Kotevski into his bank account; and (c) the loan to Mr Kotevski was declared void pursuant to the Contracts Review Act 1989 (NSW)" (at [3]). 37Although not expressly referred to in the Notice of Contention, Milanex also contended that "if Milanex made a representation to the effect that Mr Kotevski wanted to mortgage his property, the representation was accurate" (Respondent's Written Submissions dated 8 August 2011 [4(2)]). 38During the hearing of the appeal Milanex was permitted to contend also that Perpetual did not suffer any loss by reason of a right that Perpetual had under the MOMA to require GHL to "repurchase" (or, more accurately, purchase) Perpetual's mortgage rights against Mr Kotevski. This argument was put at first instance but was not considered by the primary judge, presumably because his Honour found against Perpetual's claim on other grounds. 39By its Notice of Cross Appeal Milanex contended that any judgment to which Perpetual was otherwise entitled should be reduced both: (a) because Perpetual was guilty of contributory negligence; and (b) because Mr Lo was a concurrent wrongdoer and bore a significant degree of responsibility for Perpetual's loss (s 35 Civil Liability Act and s 87CD Trade Practices Act ). 40It is convenient to deal with these issues under the following headings: (1) Misleading and deceptive conduct. (a) Were the representations made? (b) Were they misleading or deceptive? (2) Reliance on the misleading and deceptive conduct. (3) Causation of Perpetual's loss. (4) Repurchase under the MOMA. (5) Contributory negligence. (6) Proportionate liability.

Were the representations made? 41The primary judge found that Milanex made the pleaded representations. In Judgment [292] (see [33] above) his Honour made that finding in relation to sub-paragraphs (a), (b), (d) and (g) of paragraph 5 and also (a) and (b) of paragraph 6 of Perpetual's Cross-Claim (see [31] above). In Judgment [295] his Honour found that Milanex represented that Mr Kotevski had signed the documents purporting to be signed by him. This amounted to a finding that the representations pleaded in (c), (e) and (f) of paragraph 5 of Perpetual's Cross-Claim were made (see Judgment [292]). 42Mr Vlasic's email of 29 November 2005 and its attachments clearly contained express or implied statements to the effect of the representations alleged in paragraph 5 of the Cross-Claim. Likewise it is clear that Mr Vlasic made statements to the effect of the representations alleged in paragraph 6 of the Cross-Claim as he gave the telephone number there referred to to Ms Pogson (see [31] above) and informed her that Mr Kotevski had been self employed for 6 years (Ms Pogson's affidavit of April 2009 [33]) 43Milanex however contended that it did not make the alleged representations as it did no more than pass on information, without adopting or endorsing it. The primary judge rejected this argument, holding that Milanex was not merely acting as a "conduit" or "post box" (Judgment [295] quoted in [33] above). 44The principles to be applied in this context were described in the plurality judgment in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 in the following terms: " 38 The relevant principles. In Yorke v Lucas ([1985] HCA 65; (1985) 158 CLR 661 at 666) Mason A-CJ, Wilson, Deane and Dawson JJ said that a corporation could contravene s 52 even though it acted honestly and reasonably: 'That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.' 39 In applying those principles, it is important that the agent's conduct be viewed as a whole. It is not right to characterise the problem as one of analysing the effect of its 'conduct' divorced from 'disclaimers' about that 'conduct' and divorced from other circumstances which might qualify its character. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: 'Did the agent realise the purchasers were relying on the diagram?' To do that would be impermissibly to dilute the strict liability which s 52 imposes." 45Their Honours concluded as follows: "40 For the following reasons, the agent did not engage in conduct towards the purchasers which was misleading. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it. That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself." 46In the present case I consider that Milanex adopted and endorsed such of the information as was supplied by it in Mr Vlasic's email of 29 November 2005 (and subsequently) and is the subject of the representations alleged in paragraph 5 of the Cross-Claim. Thus in my view Milanex did not simply pass on that information but by adopting and endorsing it represented the information it passed on to be accurate. This conclusion follows from the nature of the parties, the character of the transaction contemplated and the subject matter of the alleged representations. 47The parties' relationship was one of mortgage broker and mortgage manager. It was Milanex's job as mortgage broker to submit loan proposals to GHL as mortgage manager. A reasonable person in the position of GHL would have expected the mortgage broker to know whether it had a real client who wanted to borrow money through GHL and who had signed the required forms. That is not to say that Milanex should be regarded as having adopted or endorsed every statement made in the documents. There was no doubt much in them that Milanex may not have been expected to have verified, for example whether Mr Kotevski's occupation was builder and whether his annual income was $75,000. Paragraph 5 of Perpetual's Cross-Claim did not however allege that Milanex verified that type of information. As to Mr Kotevski's occupation and income for example, it alleged that Mr Kotevski had made a "LoDoc Declaration" stating those matters, not that Milanex itself had stated those matters. Nor did that paragraph allege that Milanex represented that it had witnessed Mr Kotevski's signatures on the documents submitted. It simply alleged that Milanex represented that Mr Kotevski had signed various documents without alleging that Milanex represented that it had any particular means of knowing that to be the case (for example by Mr Vlasic being present when they were signed). 48Milanex submitted that "[i]t is commonplace for a finance broker to pass on material without independently verifying it" (Respondent's Written Submissions dated 8 August 2011 [15(2)]). This is no doubt true about much material that is passed on, in the same way that in Butcher v Lachlan Elder Realty the respondent real estate agent, on the High Court's findings, passed on a survey diagram without impliedly representing that it had verified it. However the topics with which the representations alleged in paragraph 5 of the Cross-Claim dealt were in my view in a different category. I consider that a mortgage broker who communicated to a mortgage lender or mortgage manager that it had a client who wanted to borrow money and who had signed a loan application and associated documents would reasonably be understood to have been representing the truth of those matters, they being fundamental to the existence of the relationship of lender and borrower that the mortgage broker was proposing be created.

Were the representations misleading or deceptive? 49The primary judge expressly found that the representations alleged in paragraph 5(c), (e) and (f) of the Cross-Claim were misleading or deceptive, or likely to mislead or deceive (Judgment [296] quoted in [33] above). His Honour did not make any express finding as to whether the representations alleged in paragraph 5(a), (b), (d) and (g) of the Cross-Claim were misleading or deceptive (Judgment [292] quoted in [33] above) but his general findings as to the forgeries of Mr Kotevski's signature; Mr Kotevski's non-attendance at Milanex's office in November; and Ms Pogson not having the conversation with Mr Kotevski that she thought that she had (Judgment [193], [256], [264], [265] and [296]) require that conclusion. 50Milanex's Notice of Contention clearly challenged the primary judge's findings that it made relevant representations but did not, at least expressly, challenge the view that such representations as were made were misleading or deceptive. As noted earlier, in argument on the appeal Milanex however submitted that "if Milanex made a representation to the effect that Mr Kotevski wanted to mortgage his property, the representation was accurate" (Respondent's Written Submissions dated 8 August 2011 [4(2)]). In support of this submission Milanex contended that there were inconsistencies between Mr Kotevski's affidavit and oral evidence and that the primary judge should have accepted Mr Vlasic's evidence that Mr Kotevski attended the Milanex office on three occasions, including one or more occasions in November 2005. Milanex appeared to submit that it followed that Mr Kotevski gave his approval to the loan application before it was submitted on 29 November 2005. 51This submission should in my view be rejected. The primary judge's findings were credit-based ones and his Honour took into account what he described as the "unresolved internal inconsistencies" and "imperfections, discrepancies and contradictions" in Mr Kotevski's evidence (Judgment [187] and [264]). To challenge the findings Milanex had to surmount the significant hurdle of satisfying the test for appellate intervention as stated in Fox v Percy [2003] HCA 22; (2004) 214 CLR 118. In my view none of the matters upon which Milanex relied indicated that his Honour's findings were contrary to "incontrovertible facts" or "uncontested testimony", or "glaringly improbable" or "contrary to compelling inferences" as the Fox v Percy principles would require for the challenge to be successful (at [28] - [29]). Such inconsistencies in Mr Kotevski's evidence as Milanex was able to point to were in my view of a relatively minor nature and fell well short of compelling the conclusion that his Honour's findings were erroneous.

RELIANCE ON THE MISLEADING AND DECEPTIVE CONDUCT 52The primary judge's reasons for finding that Perpetual did not rely upon the representations that his Honour found that Milanex made by its email of 29 November 2005 are quoted at [34] above. They seem to involve two strands. 53The first is that if Ms Pogson did not appreciate that Mr Kotevski was an aged pensioner that lack of knowledge resulted from her own unreasonable conduct (see particularly the words "should have known, from her own inquiries that he was an aged pensioner" in Judgment [301], and see also Judgment [73] quoted in [21] above, and the reference in Judgment [301] to Ms Pogson not asking "rather obvious questions" in her conversation with the person she believed to be Mr Kotevski). 54Secondly the primary judge appears to have considered that Ms Pogson relied upon her telephone conversation with the person she believed to be Mr Kotevski rather than upon the documents she received from Milanex (Judgment [301]). 55Both these matters appear to be encompassed by his Honour's observation at the end of Judgment [303] that "[t]he intervening cause of loss was the conduct of GHL ... " (see [34] above). 56To supplement this reasoning of the primary judge, Milanex contended that Ms Pogson gave no evidence that she relied upon Milanex's representations. It is convenient to deal with this point first. 57It is correct that Ms Pogson did not in so many words say in her evidence in chief that she relied upon the contents of Milanex's email of 29 November 2005. However she did give evidence that was in my view equivalent, if not superior, to such an express assertion of reliance. 58Ms Pogson identified an Operations Manual with which Calibre directed GHL to comply. This contained many detailed requirements including as to the documents that GHL was required to obtain from a prospective borrower in order to initiate a loan application (Affidavit of April 2009 [11]). Ms Pogson said that shortly after receiving Mr Vlasic's email of 29 November 2005 she checked the documents that were attached and "made sure that all documents were completed and that no details were missing" (ibid [18]). She then took the further steps to which I have referred at [19] - [20] above. These included having the telephone conversation with the person she believed to be Mr Kotevski (see [19] above). Ms Pogson's description of the purpose of that phone call (ibid) does not in my view indicate that she intended it to be the only matter upon which she relied in relation to the information she was given. The fact that she sought to "verify" information with Mr Kotevski does not mean that she did not also rely upon the source from which she had received the information, that is, Milanex. She did not say that to be the case and I do not consider that there was anything in her evidence that implied it to be so. In fact her reference to it being the responsibility of Milanex "as the broker, to conduct the full interview with Mr Kotevski" suggests the contrary, as does the manner in which she was concerned to check the documents received from Milanex. 59Furthermore various answers given by Ms Pogson in cross-examination supported Perpetual's case as to reliance. For example she said that "we [referring to GHL] assume everything in an application is accurate" (Transcript p 127.41; see also pp 51.10-.11, 64.46-.50, 89.40 and 134.44-.47). 60To my mind it is clear that Ms Pogson's evidence, which was not challenged in any presently relevant respects, indicates that she was induced to act as she did, in part, by Mr Vlasic's email of 29 November 2005 and its assertions that he had a client named Mr Kotevski who wanted a loan as described and had signed various of the documents attached to the email. The fact that Ms Pogson did not rely solely on those representations is not to the point ( I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109 [33], [57] - [58]). As Wilson J stated in the following oft-cited passage in Gould v Vaggelas : "The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract" (at 236) 61I do not consider that it is significant in this case that Ms Pogson may, as the primary judge appears to have found (see Judgment [70] quoted in [21] above), have acted in some respects carelessly and otherwise than in conformity with the Operations Manual. 62The correct approach is indicated by what Gaudron, Gummow and Hayne JJ said in I & L Securities v HTW Valuers as follows: "In the present case, there were two events to which particular attention must be given - the contravention of the Act constituted by giving a misleading valuation of the land, and the lender's failure to act prudently by omitting to make adequate inquiries about the borrower's capacity to pay interest. It can be said of each of those events that, had it not happened, the loan would not have been made and the lender would, therefore, have suffered no loss. That is, it can be said of both events that, but for it happening, there would have been no loss. If the valuation had not been misleading, there would have been no loan. Likewise, if the lender had made adequate inquiries, there would have been no loan. But to show that, if either of two events had not occurred, a loss which has been suffered would not have been suffered, does not demonstrate that one rather than the other event was the cause of the loss, any more than it demonstrates that neither was a cause of that loss. But the fact is that both did happen and both contributed to the decision to make the loan" (at [58], original emphasis). 63The question to be addressed is whether the representations that Milanex made played a part in causing Ms Pogson to act as she did. The fact that she might have discovered the falsity of the representations, or some of them, if she had been more astute, for example, in noticing the reference to the Department of Social Security as Mr Kotevski's employer in the credit reports that she obtained (see [20] above) is not to the point. In my view it is clear that those representations did play a role in inducing Ms Pogson to submit the Loan Purchase Request to Calibre, and therefore, in Calibre causing Perpetual to make the subject loan to Mr Kotevski. 64I do not consider it to be of significance that Ms Pogson did not give express evidence of reliance. As I have said earlier (see [57] - [59] above), she gave evidence that was at least equivalent to that. The present situation bears some analogy to that in National Commercial Banking Corporation of Australia Ltd v Batty [1986] HCA 21; (1986) 160 CLR 251 in which there was an issue as to whether a bank that collected the proceeds of cheques had been induced to do so by the representation of the depositor of the cheques that he was entitled to deposit them. Gibbs CJ said the following on this issue: "It was a fair inference of fact in the present case that the Bank collected the proceeds of the cheques because it was induced to believe that Mr Davis was entitled to deposit them. If it had known that Mr Davis had no authority to deposit the cheques it is inconceivable that it would have collected the proceeds: cf. Reg. v. Lambie [1982] AC, at p 460. By acting on the representation the Bank became liable for the conversion of the cheques. It is true that the Bank was negligent in collecting the cheques - the finding to that effect made in the Supreme Court, and the rejection of the Bank's defence to the company's action based on s 88D of the Bills of Exchange Act 1909 (Cth), as amended, are not now the subject of appeal. However, the fact that the Bank was negligent does not mean that it did not act on the faith of the representation: see Spencer Bower and Turner, Actionable Misrepresentation , 3rd ed. (1974), pp. 217-219 and cases there cited" (at 258 - 259). 65Brennan J spoke in similar terms: "Yeldham J. found that Mr Davis had been guilty of fraud, though there was no direct evidence that a Bank officer had been induced to collect the cheques or pay money in reliance on any representation that Mr Davis had made. The absence of such evidence was not necessarily a bar to recovery, however, for inducement may be inferred from the doing of something after the making of a representation calculated to induce the doing of that thing: Smith v. Chadwick (1884) 9 App. Cas. 187, at p 196" (at 273; see also at 297 per Deane J). 66For these reasons I consider that the primary judge erred in concluding that Perpetual did not rely upon the misleading and deceptive conduct of Milanex. 67I should add that I do not regard Perpetual's contention referred to in [35] above as of any force as it in my view involves an attempt by Perpetual to extend its pleaded case by asserting that it relied upon conduct of Milanex additional to that which the pleading asserts was relied upon. The conduct referred to in the pleading and considered by the primary judge occurred on or shortly after 29 November 2005 (see [15], [19] and [31] above). Perpetual's contention appears to relate to subsequent conduct of Milanex. 68I also add that in my view, contrary to a submission that Milanex made, the primary judge's finding that Ms Pogson did not rely upon Milanex's representations was not a credit-based finding that attracts the significant inhibitions on appellate intervention identified in Fox v Percy . Ms Pogson did not give any general evidence of reliance that the primary judge rejected. Rather the primary judge took the view that her evidence did not demonstrate relevant reliance. For the reasons I have given I take a different view of the effect of her evidence. 69The point is emphasised by the fact that the primary judge said that he did not question Ms Pogson's honesty or reliability save that he took the view that she was mistaken in thinking that it was Mr Kotevski to whom she spoke on or about 29 November 2005 (Judgment [70]).

CAUSATION OF PERPETUAL'S LOSS 70The contentions that Milanex made on this topic are referred to in [36] above. The first of those submissions is encompassed by those concerning inducement with which I have already dealt. As I have indicated, the inference is not reasonably available that Perpetual satisfied itself of the subject matters of Milanex's representations to the exclusion of any reliance on those representations. 71Milanex's next contention was to the effect that Perpetual suffered no loss because Mr Kotevski received the loan monies into his bank account. This is no answer to Perpetual's claim. As I have concluded, Milanex's misleading and deceptive conduct induced Perpetual to advance money to Mr Kotevski. The fact that the bulk of the advance is irrecoverable is sufficient to demonstrate that Perpetual has suffered loss as a result of the inducing conduct. 72Milanex's third contention was to the effect that the cause of Perpetual's loss was that the mortgage given by Mr Kotevski was unenforceable as a result of the primary judge's orders. Milanex submitted his Honour's conclusion in that respect was based upon the following matters, none of which were "attributable to Milanex": "(1) Kotevski's age (74 at the time) which led to the inability to comply with the repayments over a 30 year period until he was 104. Pogson of GHL knew this (2) The 'DSS Rockdale' material was significant (3) The legal advice of Mr Lo was quite useless (4) The failures by Perpetual's agents (GHL and Fabian) facilitated the wrongdoing of Mr Micic (5) The blindness of Perpetual, Calibre and GHL" (Respondent's Supplementary Notes for Oral Argument dated 22 August 2011 [5], references omitted). 73This submission does not take account of the fact that the present is in effect a "no transaction" case. That is, Perpetual's case, which I consider to be well-founded, was that it was induced by Milanex's misleading and deceptive conduct to make the advance to Mr Kotevski. It is not relevant in these circumstances to examine why Mr Kotevski has not repaid the advance or, in particular, to conclude that he has not repaid the advance because the loan to him has been declared void pursuant to the Contracts Review Act . Perpetual's loss is demonstrated by proving what it outlaid in the transaction and deducting what it has recovered (see I & L Securities v HTW Valuers ).

REPURCHASE UNDER THE MOMA 74In an alternative answer to Perpetual's claim Milanex contended that Perpetual suffered no loss because Perpetual had a right under Clause 12.2 of the MOMA to require GHL to purchase the mortgage from Perpetual. This clause was in the following terms: "12.2 Repurchase of Non-Complying Mortgages (a) The Mortgage Manager must purchase or cause to be purchased each Mortgage in respect of which any of the representations and warranties contained in clause 12.1 are untrue (each a Non-Complying Mortgage ) on the date (the Completion Date ) specified in the written notice from Calibre, which must be not less than 30 days after the date of the notice. (b) The Mortgage Manager must, at its cost, promptly do all things and execute all documents as Calibre or the relevant Mortgagee may reasonably require to perfect or give effect to any purchase pursuant to paragraph (a)" 75The Mortgage Manager there referred to was GHL and the "relevant Mortgagee" was, in the circumstances of this transaction, Perpetual. The representations and warranties contained in Clause 12.1 included representations and warranties that the provisions of the Operations Manual had been complied with. On the primary judge's findings, this was not the case. 76At least two of the submissions that Perpetual made in response to this argument provide good answers to it. I refer to them as follows, but do not suggest that these points constitute an exhaustive set of reasons that Milanex's argument must fail. 77One reason that Milanex's argument fails is that it was not pleaded and Milanex has not suggested that the proceedings were conducted in a manner that would enable it to be relied upon notwithstanding that it was not pleaded. 78Perpetual established its prima facie loss by proving its advance and that it had received only limited repayments and interest. Milanex's argument was to the effect that Perpetual should have required Calibre to give the notice referred to in Clause 12.2 with a view to Perpetual or Calibre thereafter enforcing the right of purchase to reduce Perpetual's loss. When Milanex first raised this point in its closing written submissions at first instance, Perpetual responded by asserting, inter alia, that the contention had not been pleaded and that Perpetual would be prejudiced if it were allowed to be raised. Perpetual said that it had not had an "opportunity to lead evidence about any rights it may have had against GHL" (Submissions dated 2 November 2009 [39]). The primary judge did not refer in his judgment to Milanex's contention or to Perpetual's response (compare Judgment [76]). 79Milanex should have pleaded the contention because it was, or was analogous to, one of an alleged failure of Perpetual to mitigate its loss and the onus of proof therefore rested upon Milanex. In any event it was one that was likely to take Perpetual by surprise if it were not pleaded (r 14.14 Uniform Civil Procedure Rules 2005). If the contention not being pleaded arguably prejudiced Perpetual, it is not the type of point that would be entertained on appeal even though not litigated at first instance (see Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418). 80The prejudice to which Perpetual referred in its submissions at first instance (see [78] above) was referred to in its submissions on appeal as follows: "If it was pleaded, Perpetual could have sought Calibre's co-operation in suing GHL (rather than calling its employee [Ms Pogson] as its main witness) and Ms Sourlas [a guarantor] under the MOMA. GHL could then have sued Milanex on a claim similar to the one Perpetual made against Milanex" (Submissions dated 23 August 2011 [7]). 81There is no basis upon which this claim of prejudice can be rejected as implausible. I accordingly accept that Perpetual was arguably prejudiced in this fashion. 82A second reason that Milanex's point should in my view fail is that by reason of the primary judge having declared the mortgage void (and that declaration not being challenged on appeal) and the mortgage consequently having been removed from the title, there was not at any relevant time anything to require GHL to purchase. The MOMA defined "Mortgage" as "a registered (or pending registration, registrable) mortgage over land" arising out of a Loan Application referred by GHL to Calibre. As this Court was told that the mortgage previously registered against Mr Kotevski's property has presumably been removed from the register as a result of his Honour's orders, there is no mortgage of this description. Whilst there was such a mortgage in existence prior to its removal from the register, Milanex has not shown that Perpetual acted unreasonably in not requiring GHL to purchase the mortgage before it had been determined in the proceedings at first instance that Mr Kotevski's complaints were well-founded and that GHL had failed to comply with the terms of the Operations Manual. 83As Milanex's point fails for the reasons above it is unnecessary to consider whether the point would fail because, as Perpetual submitted, Clause 12.2 of the MOMA is analogous to a right to insurance, the proceeds of which do not reduce the loss of a plaintiff (see National Insurance Co of New Zealand Ltd v Espagne [1961] HCA 15; (1961) 105 CLR 569 and Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333).

CONTRIBUTORY NEGLIGENCE 84At first instance Milanex raised a defence of contributory negligence but it was not considered by the primary judge. 85On appeal Perpetual contended that as a matter of principle no defence of contributory negligence was available to Milanex. I agree, for the following reasons. 86Whilst a defence of contributory negligence is, by statute, available in relation to claims for damages for contravention of s 52 Trade Practices Act (see s 82(1B)) and of s 12GF(1) Australian Securities and Investments Commission Act 2001 (Cth) (see s 12GF(1B)) (which latter provision was one of the bases of Perpetual's claim), the Fair Trading Act (upon which Perpetual also based its claim) does not contain any comparable provision. Milanex did not contend that Perpetual was not entitled to rely upon the cause of action most favourable to it, that is, that under the Fair Trading Act . 87Further, no other statute or principle of law gives Milanex the right to rely upon a defence of contributory negligence. Milanex relied upon s 5R and s 5S of the Civil Liability Act but those sections do not confer a right to raise a defence of contributory negligence. They operate where that right otherwise exists. In any event Part 1A Civil Liability Act , of which ss 5R and 5S form part, applies only to claims "for damages for harm resulting from negligence" (s 5A), requiring in my view that negligence be an element of the relevant cause of action (although, as s 5A makes clear, it does not matter whether the claim is brought in tort, in contract, under statute or otherwise). However, negligence is not an element of a claim for damages arising out of contravention of s 42 Fair Trading Act (as the section appeared prior to enactment of the Fair Trading Amendment (Australian Consumer Law) Act 2010, Schedule 1). A contravention of that section may occur whether or not the defendant has been negligent. That a defendant might as a matter of fact have been careless does not convert a claim against it under s 42 into one based upon negligence. 88Milanex also relied upon ss 8 and 9 Law Reform (Miscellaneous Provisions) Act 1965 but those sections are only concerned with the reduction for contributory negligence of claims in respect of a "wrong", where a "wrong" is defined as an act or omission giving rise to a liability in tort or related contractual duty of care. Neither tort nor contractual liability is alleged in the present case. The claims here are under statute. 89For these reasons Milanex is not entitled to have Perpetual's claim reduced as a result of Perpetual's alleged contributory negligence.

PROPORTIONATE LIABILITY 90Part 4 Civil Liability Act is concerned with proportionate liability. By s 34(1)(b), Part 4 is expressly rendered applicable to claims for economic loss for a contravention of s 42 Fair Trading Act . As a result Perpetual did not contend that its claim was not potentially apportionable. 91Sub-sections 35(1) and (4) Civil Liability Act , which fall within Part 4, are in the following terms: " 35 Proportionate liability for apportionable claims (1) In any proceedings 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 damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b) the court may give judgment against the defendant for not more than that amount. ... (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings." 92Section 34(2) provides as follows: "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." 93Milanex contended that if Milanex were liable to Perpetual, Mr Kevin Lo was a concurrent wrongdoer and that Perpetual's claim against Milanex should be reduced to take account of Mr Lo's share of responsibility for Perpetual's loss. At first instance Milanex particularised the circumstances that made Mr Lo a concurrent wrongdoer by reference to a cross-claim filed in the proceedings under which Mr Kotevski claimed damages from Mr Lo and by reference to affidavits of Mr Kotevski dated 20 October 2008 and 4 June 2009. 94As Perpetual submitted, "concurrent wrongdoers" within the meaning of Part 4 Civil Liability Act are people who are, or at least were, liable to a plaintiff (who is advancing an apportionable claim) in respect of the same loss suffered by that plaintiff ( St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666 at [64]). It is not however necessary that all concurrent wrongdoers be parties to the proceedings (see s 35(4)). 95The paragraphs of Mr Kotevski's Cross-Claim against Mr Lo upon which Milanex relied included an allegation that Mr Lo owed Mr Kotevski (as distinct from Perpetual) a duty of care. These paragraphs are not of assistance to Milanex because they do not allege facts that support a conclusion that Mr Lo had a liability to Perpetual. However other paragraphs alleged that Mr Lo was guilty of misleading and deceptive conduct in making representations to Perpetual and its agents (including GHL) to the effect that Mr Lo had given independent legal advice to Mr Kotevski concerning the loan and mortgage, and "was satisfied that Mr Kotevski freely and voluntarily signed the loan and mortgage". The primary judge's findings indicate that the former representation, if made, was misleading and deceptive and that the second representation, if it is understood (as I consider it should be) as a representation that Mr Lo had a reasonable basis for the satisfaction referred to, was also misleading and deceptive if made (Judgment [115] and [194] quoted in [25] and [27] above). I add that for the first representation not to have been misleading and deceptive, it would in my view have been necessary for Mr Lo to have uttered words of advice and to have had a reasonable basis for believing that Mr Kotevski understood. The primary judge's findings indicate that this did not occur (ibid). 96Mr Paul Fabian, who acted as Perpetual's solicitor in the transaction, gave the following evidence relevant to this topic: (a) After he received instructions from GHL to act on behalf of Perpetual in relation to the proposed advance to Mr Kotevski, his firm's computer system was used to produce the loan documents that the Solicitors Pack (with which he had been supplied by or on behalf of Perpetual) required be completed and signed prior to the loan being made. These documents included forms entitled "Declaration By Borrower" and "Acknowledgement Of Legal Advice By Proposed Borrower". (b) Mr Fabian's firm forwarded these forms, together with other documents, to Milanex on 14 December 2005. (c) The completed and signed documents, were returned to Mr Fabian's office on 12 January 2006. (d) If his firm had not received either those forms duly completed or an acknowledgement signed by Mr Kotevski that he had chosen not to obtain independent legal advice, the loan would not have proceeded to settlement. Mr Fabian said that "[i]n accordance with the Solicitors Pack, it was only mandatory that guarantors [and therefore not borrowers such as Mr Kotevski] receive independent legal advice" (Affidavit dated 21 January 2009 [16]). 97The "Declaration By Borrower" contained a declaration by Mr Kotevski that he had received independent legal advice and had "freely and voluntarily" signed the loan documents. The form of declaration provided for it to be witnessed by a "Solicitor". Mr Lo's signature as witness appears on the document above that word with the words "KEVIN LO SOLICITOR" stamped near to it. It can be inferred that Mr Lo was responsible for this stamp being placed on the document. 98The "Acknowledgement Of Legal Advice By Proposed Borrower" was, on the primary judge's findings, signed by Mr Kotevski. In it Mr Kotevski acknowledged that he had received legal advice from Mr Lo concerning the loan transaction. There was no provision on the form for Mr Kotevski's signature to be witnessed or for anyone else otherwise to sign it. Understandably Mr Lo did not therefore sign the form although it is clear that Mr Kotevski signed it in Mr Lo's office and in Mr Lo's presence. 99This description of the forms that Mr Kotevski signed in Mr Lo's office and Mr Fabian's evidence (to which I have referred in [96] above) in my view indicate that Mr Lo made to Perpetual the alleged representations referred to in [95] above. By affixing his name as witness and applying the stamp identifying himself as a solicitor, Mr Lo in my view implicitly endorsed the assertions that Mr Kotevski made in the "Declaration By Borrower" that he had received legal advice and had signed the loan and mortgage documents "freely and voluntarily". The conclusion that Mr Lo made these representations is supported by the facts that Mr Kotevski signed in Mr Lo's presence the "Acknowledgement of Legal Advice By Proposed Borrower" referring to Mr Lo having given legal advice to Mr Kotevski and that Mr Lo must have known that the document would be submitted to Perpetual's representatives and acted upon by Perpetual. 100As I have noted, the primary judge's findings indicate that the relevant representations were misleading and deceptive. Mr Fabian's evidence also indicates that his belief, induced in part by Mr Lo's conduct, that Mr Kotevski had received independent legal advice was a material factor in Perpetual proceeding with the loan, although Mr Fabian recognised that if he had not believed that Mr Kotevski had received independent legal advice, the loan would nevertheless have proceeded if Mr Kotevski had signed an acknowledgement that he had chosen not to obtain such advice. 101As the loan to Mr Kotevski has proved to be largely irrecoverable, Perpetual suffered loss by making it. Accordingly Milanex has made good its submission that Mr Lo was liable to Perpetual for loss resulting to it from Mr Lo's misleading and deceptive conduct. Mr Lo is thus a "concurrent wrongdoer" within the meaning of s 35 Civil Liability Act and Perpetual's claim against Milanex needs to be limited to reflect the fact that Milanex has proved that it is not the only wrongdoer who is responsible for Perpetual's loss 102In determining the amount to which Perpetual's claim should be limited, it is in my view appropriate to take the approach that Barrett J took in Reinhold v New South Wales Lotteries Corporation (No 2) [2008] NSWSC 187 His Honour described that approach as follows: "60 Because the legislature has seen fit to adopt in s 35(1)(a) of the Civil Liability Act a form of words concerning apportionment which is almost indistinguishable from that which has long been used in statutes concerning contributory negligence and contribution among tortfeasors, I consider it appropriate to follow approaches to the meaning of those words developed and sanctioned by appellate courts. I therefore approach the matter before me on the basis that my principal task is to make findings about (a) the degree of departure from the standard of care of the reasonable man, as regards the causative conduct of Lotteries and the Newsagents [the concurrent wrongdoers]; and (b) the relative importance of the acts of Lotteries and the Newsagents in causing the economic loss suffered by Mr Reinhold, making a comparative examination of the whole conduct of each of Lotteries and the Newsagents in relation to the circumstances in which the loss was sustained". 103In my view the degree of departure of both wrongdoers, that is, Milanex and Mr Lo, from the standard of care of the reasonable man was substantial. Milanex purported to act on behalf of Mr Kotevski in putting forward a loan application to Perpetual without, on the primary judge's findings, having had any communication with him and apparently without having taken any other steps to satisfy itself of Mr Kotevski's instructions. This occurred notwithstanding that the information that Milanex was given indicated that Mr Kotevski was a man of advanced years and that Milanex's instructions appear to have come from Mr Micic who was much younger than, and unrelated to, Mr Kotevski. 104The strength of the primary judge's findings concerning Mr Lo's conduct make it clear that his departure from the standard of a reasonable person was also substantial. However, it can be said in his defence that, unlike Milanex, he attempted, albeit in an inadequate fashion, to confirm directly with Mr Kotevski that he wished to borrow money and mortgage his property. 105So far as the causative potency of the conduct of the two wrongdoers is concerned, Milanex's conduct commenced the process which led to the advance being made to Mr Kotevski and established the assumptions as to his knowledge and intentions upon which those persons who thereafter became involved proceeded. Although steps subsequently taken by those persons might, and should, have dispelled these assumptions, the significance of Milanex's conduct in creating them remained. 106Mr Lo's conduct should be regarded as somewhat less significant in a causative sense in light of Mr Fabian's evidence that, even if Mr Lo had not made the representations that he did, Perpetual would have been prepared to proceed with the advance if Mr Kotevski had signed the alternative form of acknowledgement to which I have referred at [96(d)] above. On the primary judge's findings, it is unlikely that Mr Kotevski would have resisted doing this if someone had placed the alternative form before him for signature. 107Taking these various factors into account, I consider that for the purposes of s 35 Civil Liability Act , as between the two concurrent wrongdoers, Milanex should be regarded as 65 per cent responsible for Perpetual's loss and Mr Lo as 35 per cent responsible for that loss. I shall deal with the monetary consequences of this view under the next heading.

PERPETUAL'S LOSS 108The parties agreed that, leaving aside questions of contributory negligence and proportionate liability, Perpetual's loss as at 31 August 2011 was as follows:

Primary amount $224,000.00 "Total repayments/recoveries to be allowed" -$115,390.32 Interest sum to 31/8/2011 $ 71,680.00 Total $180,289.91 Daily interest amount for balance of 2011 $ 20.09

(Respondent's post-hearing submission #2) 109The amount in respect of "Total repayments/recoveries" included an amount that Perpetual received from Mr Kotevski following the settlement of Mr Kotevski's Cross-Claim against Mr Lo. Mr Lo agreed to pay to Mr Kotevski $105,000 plus costs. Mr Kotevski passed on to Perpetual only the amount of $81,014.25, the difference of $23,985.75 between this amount and $105,000 allegedly representing the solicitor/client costs incurred by Mr Kotevski which were not covered by Mr Lo's agreement to pay Mr Kotevski's costs of the Cross-Claim against him. Such a deduction was in principle consistent with the declaration made by the primary judge in the following terms: "I declare that Mr Kotevski holds in trust for Perpetual the verdict payable to him by Mr Lo, less any costs as between solicitor and client properly payable by Mr Kotevski in respect of his cross claim against Mr Lo." 110Although not a recovery as a result of a direct claim by Perpetual against Mr Lo, Perpetual's receipt of $81,014.25 was tantamount to that: it was a receipt resulting from Mr Kotevski's attempt by cross-claim to pass on to Mr Lo the liability to pay the amount that Perpetual was claiming from Mr Kotevski in the proceedings. It was thus in effect a payment by Mr Lo towards discharging his responsibility for Perpetual's loss. In these circumstances the claim of Perpetual that should be considered in giving effect to my conclusion on proportionate liability (see [107] above) is the agreed principal amount of Perpetual's loss without account being taken of the receipt of $81,014.25. This is the amount of $189,623.93, representing $224,000 less recoveries of $34,376.07 from sources other than the settlement of Mr Kotevski's Cross-Claim against Mr Lo. 111Taking 65 per cent of that amount, representing Milanex's share of the concurrent wrongdoers' responsibility for Perpetual's loss, Perpetual's claim against Milanex is limited to $123,255.55 plus interest. Perpetual does not have to give credit to Milanex in respect of its receipt of $81,014.25 because that was a receipt attributable to the share of Perpetual's loss for which Mr Lo was responsible. The amount received by a plaintiff from a non-party "concurrent wrongdoer" may be more or less than the amount by which the plaintiff's claim against the defendant is reduced by reason of the non-party wrongdoer's partial responsibility for the plaintiff's loss. Those engaged in settling a claim against that wrongdoer may take, or may have taken, into account considerations different than those that the court takes into account in its proportionate liability decision (for example whether the wrongdoer has the means to meet a judgment) or they may simply form a different view about the issues to that formed by the court. 112If the amount received from the non-party wrongdoer is less than its share as calculated by the court, the calculation of the party wrongdoer's share can proceed in the way that I have indicated in [110] above and judgment may be entered accordingly. Whether the plaintiff has a right to recover any further money from the non-party wrongdoer is not a matter that arises for consideration in these proceedings. 113On the other hand if the amount received from the non-party wrongdoer is in excess of that wrongdoer's share as calculated by the court, the judgment against the party wrongdoer will have to be reduced by the amount of that excess to prevent the plaintiff obtaining double recovery (see Baxter v Obacelo Pty Limited [2001] HCA 66; 205 CLR 635 at [46], [57] and [89]). This principle is reflected in s 37(2) Civil Liability Act , although that subsection is inapplicable to the present case as it relates to a situation in which a plaintiff has earlier recovered judgment against another concurrent wrongdoer: Perpetual did not obtain judgment against Mr Lo. 114Milanex has not shown that the money that Perpetual received from Mr Lo exceeds Mr Lo's share as I have calculated it and that Perpetual would therefore obtain double recovery unless its judgment were further reduced. Mr Lo's share is $66,368.38 (that is 35 per cent of $189,623.93) before interest. Perpetual has received $81,014.25. That exceeds Mr Lo's calculated share before interest by $14,645.87. As Mr Lo's alleged negligence and Perpetual's consequent loss occurred in late 2005/early 2006 and the settlement between Mr Lo and Mr Kotevski occurred in September 2009 it cannot be assumed that that amount is not accounted for by interest. 115Milanex's submission that Perpetual's damages cannot finally be assessed until determination of whether Mr Kotevski was entitled to deduct the whole or part of the amount of $23,985.75 (for solicitor/client legal costs) before passing on to Perpetual the settlement proceeds he received from Mr Lo should be rejected. If Perpetual receives the whole or part of that additional amount in the future, that may affect, pro tanto , its ability to enforce its judgment against Milanex if Milanex is able to establish that that additional payment constitutes a payment in excess of Mr Lo's share and thus in part a satisfaction of the judgment against Milanex for its share: double satisfaction of a judgment not being permitted (see Baxter v Obacelo Pty Ltd [2000] NSWCA 69; 48 NSWLR 532 at 530-1). The possibility of Perpetual receiving such a payment is in these circumstances not a reason to defer assessment of Perpetual's damages. 116A further matter is Perpetual's contention that it is entitled to recover from Milanex its legal costs incurred in bringing the claim against Mr Kotevski, which constituted the principal claim in the proceedings. Perpetual's contention does not extend to costs of Mr Kotevski that Perpetual was ordered to pay. 117Perpetual put this contention on two bases. First it submitted that it was entitled to recover the relevant costs as damages, apparently on the basis that the costs would have been recovered from Mr Kotevski under the mortgage given by him if that mortgage had been enforceable. However the primary judge concluded that "it is impossible to calculate [from the evidence adduced by Perpetual] what amount, if any, may be properly claimed against Mr Kotevski under the mortgage" (Judgment [124]). Perpetual did not argue on the appeal that this conclusion was not well founded but argued that assessment of the costs should be referred to a costs assessor. Having had the opportunity to prove the amount of costs incurred, having attempted to do so and having failed, I do not consider that Perpetual should be afforded another such opportunity. To afford it would conflict with the principle that, other than in exceptional circumstances, court proceedings provide a once-only opportunity for plaintiffs to make and prove their claims. 118The second basis upon which Perpetual put its contention was that the costs order that it would expect to obtain if it were successful against Milanex on the appeal should cover the costs incurred by Perpetual in bringing the unsuccessful principal proceedings against Mr Kotevski. The costs covered by such an order would not be as extensive as those recoverable if the first basis of Perpetual's contention were upheld. The costs recoverable on this basis would be limited to party/party litigation costs. 119I consider that it is appropriate to make an order in this form. Whilst the order sought is not the usual type of Bullock or Sanderson order that is made (see Council of the City of Liverpool v Turano (No 2) [2009] NSWCA 176) because the order sought is one relating to a plaintiff's costs of unsuccessfully suing another party rather than that other party's costs that the plaintiff is ordered to pay, nevertheless the principles referable to the making of such orders appear to me to be relevant. 120Before making such an order it is necessary for the Court to be satisfied that "the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant" ( Gould v Vaggelas at 230, quoting Blackburn CJ in Steppke v National Capital Development Commission (1978) 39 LGRA 94). Ordinarily responsibility of the unsuccessful defendant for the loss will not suffice as this will be present in every case in which a defendant is unsuccessful. Usually it will be necessary to identify some conduct of the unsuccessful defendant that induced the plaintiff to sue the successful defendant. 121The Court's attention was not drawn to any evidence that such conduct occurred in the present case. However for Perpetual to succeed against Milanex it was essential that the Court find that Perpetual was not entitled to claim against Mr Kotevski and that the mortgage he gave to Perpetual was void. If Perpetual had not brought its proceedings against Mr Kotevski this would not realistically have occurred as findings to this effect would not have been binding on Mr Kotevski as a non-party. It was therefore not just reasonable for Perpetual to proceed against Mr Kotevski, but it was in practical terms essential for it to do so. In my view this is a sufficient basis for the making of the costs order that Perpetual sought.

COSTS 122Milanex requested that the Court reserve the question of costs for argument and decision after the Court delivered its judgment on the appeal. Perpetual opposed this course and I do not see any reason why it should be adopted. 123For the reasons I have given, Perpetual's appeal should succeed. Whilst Perpetual's claim should be limited by application of the proportionate liability provisions of the Civil Liability Act , that limitation does not appear to have a marked effect on the quantum of Perpetual's claim, certainly not a sufficient effect to warrant the Court depriving Perpetual of the costs to which it is prima facie entitled as the successful party on the appeal.

ORDERS 124In accordance with the parties' request, they should have the opportunity to make submissions as to the amount of pre-judgment interest that should be awarded. When identified, this amount will be added to the principal amount of $123,255.55 to comprise the amount for which judgment will be entered in favour of Perpetual. 125On 3 August 2011 Perpetual filed a Notice of Motion returnable on the first day of the hearing of the appeal seeking leave to adduce further evidence, principally comprising correspondence passing between the parties. This Notice of Motion became unnecessary when, at the commencement of the hearing, Milanex consented to the reading of the affidavit of Mr I R Marsden sworn 3 August 2011 in which the evidence was contained. The evidence does not have any impact on the conclusions at which I have arrived. 126For the reasons I have given I propose the following orders: (1) Appeal allowed. (2) If the parties are able to agree as to the amount of interest to be awarded to Perpetual, direct that they lodge with the Court a form of consent order to enable judgment to be entered in chambers. (3) If the parties are unable to so agree, direct that: (a) within 7 days of the date of this judgment Perpetual lodge with the Court a submission as to the appropriate amount of interest; (b) Milanex respond within 7 days thereafter; and (c) Perpetual lodge any reply within a further 7 days. (4) Note that if it is necessary for the Court to determine the amount of interest to which Perpetual is entitled, the Court will do so on the basis of the written submissions that it has directed be filed. (5) Order Milanex to pay Perpetual's costs of Perpetual's cross-claim against Milanex at first instance and to pay Perpetual's costs of its claim against Mr Kotevski. (6) Order Milanex to pay Perpetual's costs of the appeal. (7) Direct that Milanex have a certificate under the Suitors' Fund Act 1951, if qualified. 127YOUNG JA : With one exception, I agree with Macfarlan JA. 128Macfarlan JA assesses Mr Lo's contribution at 35%. With respect, I consider that to be too high. 129In Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505; 13 BPR 25,343 at 25,405-6, I analysed some of the authorities in this Court on the quantum of blame of solicitors in mortgage cases. Though there were only a few cases and, of course, so much depends on the facts of each case, the range appears to be 10-15%. However, in State Bank of NSW Ltd v Yee (1994) 33 NSWLR 618, 625, a solicitor who falsely certified that he had witnessed the mortgagor signing a mortgage was held liable for the whole loss caused to the lending bank because the mortgage was in fact a forgery. 130The degree of culpability by Mr Lo appears to have been greater than in some of the previous cases. However, it was not, in my view, more than double the top of the usual range. 131Thus, I propose that Milanex should bear 75% of the damages, ie $142,218 plus interest. 132Thus, I agree with the orders proposed by Macfarlan JA, with the substitution of $142,218 for his figure of $123,255.55 in proposed order 2. 133I should also make some comments on the submission that Mr Lo was not a concurrent wrongdoer. 134This submission (Orange 129 [41]) is based on Shrimp v Landmark Operations Ltd [2007] FCA 1468; 163 FCR 510 and St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; 25 VR 666. 135There is some doubt as to the reliability of those decisions, but assuming they are correct, they seem to be authority for the proposition that a person is only to be classed as a concurrent wrongdoer if he or she has a liability to the plaintiff for the same damage as the defendant. 136On Macfarlan JA's analysis with which I agree, Mr Lo owed a duty of care to Perpetual as a person that he must have had in contemplation as affected by his actions. He also was liable to Perpetual under s 42 of the Fair Trading Act 1987 as in force at the relevant time. 137Mr Lo is thus properly classed as a concurrent wrongdoer. 138Part 4 of the Civil Liability Act 2002 was thus attracted by either or both s 34(1)(a) or 34(1)(b) of that Act.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 November 2011