Decision on Contributory Negligence
877In determining contributory negligence, a comparison is required of the degree of fault or culpability on the part of each of the parties. That consideration occurs in the context of a comparison between the lack of care of one party with the lack of care of the other and then a determination, having assessed the culpability and the causal potency of the relevant acts, of the degree of contributory negligence on the part of the plaintiff: see Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 at 523; Ghunaim v Bart [2004] NSWCA 28 per McColl JA at [71]. As the High Court observed in Podrebersek, it is the whole of the conduct of each negligent party in relation to the circumstances of the case that must be subjected to comparative examination.
878However, it is also necessary to take into account the nature of the duty owed to a plaintiff. In Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 at 14 [30] the majority observed:
"A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in other cases the nature of that duty may reduce the plaintiff's share of responsibility for the damage suffered; and in yet other cases the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property."
879The following propositions were enunciated in Astley v Austrust Ltd, supra, in the joint judgment (Gleeson CJ, McHugh, Gummow and Hayne JJ) at 11-16:
(i) At common law, contributory negligence consisted in the failure of a plaintiff to take reasonable care for the protection of his or her person or property: at [21].
(ii) Although conduct amounting to contributory negligence may also constitute the breach of a duty which the plaintiff owes to the defendant, a plaintiff can be guilty of contributory negligence notwithstanding that he or she owes no duty to the defendant or any third person: at [21].
(iii) There is no rule that apportionment legislation does not operate in respect of the contributory negligence of a plaintiff where the defendant, in breach of its duty, has failed to protect the plaintiff from damage in respect of the very event that gave rise to the defendant's employment: at [29].
(iv) Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property: at [30].
(v) Courts, including the High Court, have accepted that contributory negligence can be made out in non-contractual situations, notwithstanding that the defendant was under a duty to protect people in the class of which the plaintiff was a member: at [31].
(vi) The standard of care required of a plaintiff is determined objectively by reference to what a reasonable person would have done in all the circumstances of the case: at [35].
880In addition to the above, the standard of contributory negligence is a matter addressed in s 5R of the Civil Liability Act. Those provisions, of course, to an extent overlap the principles summarised in [879] above. See also Origin Energy LPG Ltd v BestCare Foods Ltd [2012] NSWCA 407 per Hoeben JA (with whom Macfarlan and Ward JJA agreed), at [217].
881In the present case, the submissions on behalf of the defendants placed emphasis on the fact that the plaintiff did not seek independent legal advice. In examining the whole of the evidence, including the evidence on that matter, the following matters are relevant:
(i) The Scheme was described and promoted as an "investment" to members of the public with an interest in investing. In essence, it was a scheme involving the placement of loan monies at the disposal of Skyder/Silkwater for a promised return.
(ii) Whilst the terms of the Investor Loan Agreements were deficient (in particular, the absence of provisions that would ensure that the Scheme would be conducted as represented), the primary cause of the plaintiff's lost investment was that the Scheme was in fact an unprotected and insecure form of investment that allowed the Scheme's operators to deploy investors' funds as they chose.
(iii) The representations made by Ms Fowler were made in her capacity as a lawyer supposedly with a certain level of understanding of the Scheme, even if not a full understanding. Those representations, I have earlier determined, acted as a powerful factor in influencing investors, in particular the plaintiff, to enter the Scheme.
(iv) Ms Fowler made the representations, although conveyed as based upon her knowledge of the Scheme, when she had no verified or adequate primary knowledge of any underpinning facts for those representations. That fact was not disclosed to representees, including the plaintiff.
882The defence of contributory negligence in this case is one that must be considered in the context of the relevant facts and matters including, in particular, the nature of the duty of care upon Ms Fowler as a solicitor and one who made the representations.
883In determining contributory negligence in the present case, it is necessary to bring to account that there is a distinction between an omission by a solicitor to do something and the making of express representations that assert or convey facts and matters that are not true or are misleading in circumstances where it may be anticipated that representees will accept and act upon them. This distinction is discussed below:
884In some cases, as the High Court observed in Astley v Austrust, it may be proper for a plaintiff to rely upon a defendant to perform its duty. The nature of the duty owed by a particular defendant, the High Court observed in that case, may exculpate the plaintiff from a claim of contributory negligence. In Astley, the plaintiff succeeded in its case against the solicitors in negligence. In the course of considering the issue of contributory negligence it was noted that Austrust had sought general advice from its solicitors about its intention to become trustee of an investment trust to be set up to establish a piggery on land in New South Wales. Having received advice, Austrust became the trustee of the trust and borrowed substantial funds to purchase the land.
885The trust business failed shortly after its establishment. Austrust sued the solicitors in negligence for failing to advise that it should not have accepted the office of trustee without excluding or limiting personal liability,.
886The finding of contributory negligence in the particular circumstances of that case is to be seen in light of the fact that the plaintiff, being a commercially sophisticated entity, had a high level of expertise available to it. The Chairman of its Board was an experienced chartered accountant and its General Manager had a background in commercial finance and it had available other qualified personnel. The trust, although required to borrow substantial funds to complete the purchase, took no steps to investigate the viability of the venture. This was an aspect for consideration in light of the fact that the scope of the solicitors' retainer, based on original instructions to Astley, was to give advice, the request for such advice having been expressed in very general terms.
887In other cases, those involving express representations by a solicitor, there has developed over many years a recognition that contributory negligence is to be considered in terms of whether it is just and equitable where a representee acts upon an express representation made to another person (not being the solicitor's client) upon which that person then proceeds to act.
888It was long ago observed in Nocton v Lord Ashburton [1914] AC 932 at 962 by Lord Dunedin:
"No one is entitled to make a statement which on the face of it conveys a false impression and then excuse himself on the ground that the person to whom he made it had available the means of correction."
889That approach, cited in Gran Gelato Ltd v Richcliffe (Group) Ltd [1992] 1 All ER 865, is a further exemplification of a case involving negligent misrepresentation by a solicitor in which damages for breach of duty of care was sought.
890In that case, the first defendant had granted the plaintiff an underlease of a basement in ground floor shop premises for a term of 10 years. Unknown to the plaintiff and its solicitors, the head leases contained redevelopment break clauses giving the head lessor the right to terminate the head leases.
891In the course of negotiations leading to the grant of the underlease, the plaintiff's solicitors sent inquiries to the first defendant's solicitors asking whether there were any rights affecting the superior leasehold title. The solicitors answered "Not to the Lessor's knowledge".
892The plaintiff's claim was brought against both Richcliffe and its solicitors for damages for negligent misrepresentation at common law and for breach of the Misrepresentation Act 1967.
893In the course of his judgment, Nicholls VC observed:
"In my view it would not be just or equitable to make any reduction in Gran Gelato's damages. The essential feature of the present case is that Gran Gelato's claim, both at common law and under the 1967 Act, is based on misrepresentation. Richcliffe intended, or is to be taken to have intended, that Gran Gelato should act in reliance on the accuracy of the answers provided by [the solicitors]. Gran Gelato did so act. In those circumstances it would need to be a very special case before carelessness by Gran Gelato, the representee, would make it just and equitable to reduce the damages payable to compensate Gran Gelato for loss suffered by it in consequence of doing the very thing which, in making the representation, Richcliffe intended should happen, viz that Gran Gelato should rely on the representation. In principle, carelessness in not making other inquiries provides no answer to a claim when the plaintiff has done that which the representor intended he should do. This is a well-established principle when misrepresentation, whether innocent or fraudulent, is being relied on as a ground for seeking recision of the ensuing contract ...
In my view, the like approach is applicable when considering what is Gran Gelato's share in the responsibility for the damage flowing from the misrepresentation. It may be surprising that Mackenzie Mills did not advise their clients against proceeding without seeing the head leases containing the covenants their clients were undertaking to perform. But that has no relevance to the loss suffered by Gran Gelato in consequence of its reliance on the representation in answer 3(A)." (at p 876)
894In the present case, the plaintiff heard the express representations by Ms Fowler and on the findings made above, she acted upon them, they having been made by a solicitor with assumed knowledge of the Scheme. The plaintiff, as earlier discussed, may be properly considered for the purpose of this case to have been a relatively unsophisticated investor in that she had no experience in investments of the kind in question. She, apart from having purchased residential real estate with her former husband, had no other known investment experience. It was reasonable in the particular circumstances of this case for her to act upon the representations of a solicitor that were directed to particular issues concerned with the security or safety of the investment in circumstances in which no warning or qualification or disclaimer was made. It is relevant to have some regard to the fact that she was not alone in this respect and that other investors on their evidence, which I accept, were very much influenced by the fact that the representations, in the nature of assurances, were given by a solicitor.
895The evidence, as earlier discussed, establishes that the plaintiff was hesitant and nervous about investing her own monies and the monies she subsequently received from her matrimonial settlement. In that context, she turned to Mr Dorian and received his views from time to time in favour of investing in the Scheme. She also was subjected to persuasion at the hands of Mr Hraiki and, in particular, Mr Tombleson.
896However, it is not without significance that up to 19 September 2005, that is before she heard the representations of Ms Fowler, despite the "advice" or "selling" of the Scheme to her by Messrs Dorian, Tombleson and Hraiki, the plaintiff was not yet ready to be persuaded.
897As the High Court in Astley v Austrust Ltd, supra, stated the "duties and responsibilities of the defendant" are a central consideration in determining contributory negligence. Depending upon the nature and scope of the responsibility assumed by a defendant, the Court observed that the nature and duty owed by a defendant may exculpate the plaintiff from a claim of contributory negligence.
898In the present case, unlike in Astley v Austrust Ltd, the central issue is not concerned with determining the scope of the retainer of the solicitor. This is a case involving affirmative statements (the "representations") made at a meeting of potential investors by a solicitor upon matters capable of influencing investment decisions. Further, as discussed above, and as noted in the defendants' written submissions, notwithstanding the fact that Ms Fowler experienced obstruction on the occasions when she sought information on the Scheme from its proponents, Messrs Tombleson and Hraiki, no attempt was made by her to convey or emphasise to the plaintiff that she herself was not or had not been in a position to verify the representations before the plaintiff commenced to place her funds with Skyder/Silkwater.
899As indicated above, this is a representation case and not only a case involving a failure or omission by a solicitor, although the failure in this case is, of course, also a matter of significance.
900I have concluded on the basis of the matters to which I have referred and the provisions of ss 5R(1) and (2) of the Civil Liability Act that there is no proper basis for a finding of contributory negligence.