valcorp's appeal in respect of contributory negligence
95 Valcorp contended that the primary judge had not given reasons for his assessment of 25% contribution to its loss by each of the respondents. Valcorp said that the primary judge had given detailed reasons for the conclusion that each of the respondents was guilty of contributory negligence, but, by contrast, there was an absence of factual findings and reasons to explain the apportionment of the responsibility between Valcorp and each of the respondents of 25%.
96 Further, said Valcorp, the logical inference from the primary judge's finding that, had the respondents made proper inquiries about the Opies' financial position, the loans would not have been made, was that the failure of each of the respondents to make such inquiries was the sole cause of the loss. Therefore, said Valcorp, the claim for damages by each of the respondents should be dismissed. This is because, according to Valcorp's contention, the apportionment should have been 100% to each of the respondents, and 0% to Valcorp.
97 Valcorp, also, argued that the position of each of the three respondents in respect of contributory negligence should have been considered separately, and that Barker and KWS undertook no independent inquiries in relation to the proposed loans to the Opies. Valcorp went on to contend that because each of Barker and KWS was at a higher risk of suffering a loss in the event that the borrowed sum was not repaid, it was required to take more rigorous steps to protect itself, than Angas. Valcorp said that the primary judge did not explain why he chose to treat each of the respondent's culpability as if it was common to each of them and without distinction. Valcorp went on to refer to the reference by the primary judge, to the way in which the case was conducted in [160] of his reasons (see [84] above), in support of his finding of like apportionment of responsibility for each of the respondents. Valcorp contended that the way the respondents chose to conduct their case was a matter for them, but it did not bind Valcorp. Therefore, said Valcorp, in the event that the Court was to find that Angas's responsibility was less than 100%, the responsibility of each of Barker and KWS should be apportioned at the higher percentage than that of Angas's responsibility.
98 Therefore, contended Valcorp, this Court should allow the appeal and dismiss each respondent's claim, alternatively, make an assessment of contributory negligence in respect of each party in a proportion which was just and equitable and which attributed a higher percentage of responsibility to each of the respondents for the loss that each suffered, than the 25% apportioned by the primary judge.
99 The respondents contended that the question of apportionment in relation to contributory negligence by a trial court was a matter of "individual choice or discretion, as to which there may well be differences of opinion by different minds". The respondents referred to the decision of the High Court in Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALR 592 (Podrebersek). This Court, said the respondents, should, therefore, act with great restraint before interfering in an assessment of contributory negligence.
100 As to the complaints that the primary judge did not give adequate reasons for the apportionment of 25% to Angas, Barker and KWS and 75% to Valcorp, the respondents contended, that the explanation for the apportionment was to be implied from the reasons given by the primary judge when assessing the liability of Valcorp and the contributory negligence of Angas, Barker and KWS. The respondents contended that the primary judge had found that there was a "gross overvaluation" between the stated value of $3.6 million and the true value; and that he had found that the valuation fell "well short" of the standards of a reasonably competent valuer. Also, the respondents said that the rationale for the extent of the apportionment was to be inferred from the fact that the primary judge took into account that the respondents operated outside the traditional bank market, and were lenders which placed primary reliance upon property as security, and regarded the ability of the borrower to service the loan, as a secondary consideration.
101 As to the complaint that the position of Barker and KWS was not considered separately, the respondents contended, that Angas, Barker and KWS shared a common director and there was no further inquiries that were needed to be made by the person or persons concerned.
102 It is the case that an appeal court will not lightly interfere with a finding by a trial court as to the apportionment of responsibility on a just and equitable basis, in relation to contributory negligence. That principle of appellate restraint was stated by the High Court in Podrebersek and repeated more recently in the case of Liftronic Pty Ltd v Unver (2001) 179 ALR 321.
103 However, that does not, of course, mean that an appeal court will not interfere in cases where there has been error by the primary judge and it is, therefore, appropriate to exercise an appellate jurisdiction.
104 An example of appellate intervention is to be found in the High Court case of Pennington v Norris (1956) 96 CLR 10 (Pennington). In that case, Mr Pennington brought an action in the Supreme Court of Tasmania against Mr Norris claiming damages for personal injuries when Mr Pennington, a pedestrian, was struck at night by a motor vehicle driven by Mr Norris. The accident occurred on a road in the vicinity of several hotels shortly after closing time. The primary judge found that the defendant driver was negligent in failing to keep a proper look out, but also found that the plaintiff, Mr Pennington, was guilty of contributory negligence by failing to keep a proper look out. The primary judge apportioned responsibility equally between the plaintiff and the defendant.
105 On appeal, the High Court observed at 15-16:
Much latitude must be allowed to the original Tribunal in arriving at a judgment as to what is just and equitable. It is to be expected, therefore, that cases will be rare in which the apportionment made can be successfully challenged. But, giving full weight to these considerations in the present case, we are unable to avoid the conclusion that, in apportioning the responsibility equally, his Honour must have overlooked certain features of the case, and that the amount by which he reduced the assessed damages cannot really be supported.
106 The High Court went on to observe at 16:
What has to be done is to arrive at a "just and equitable" apportionment as between the plaintiff and the defendant of the "responsibility" for the damage. It seems clear that this must of necessity involve a comparison of culpability. By culpability, we do not mean moral blameworthiness but the degree of departure from the standard of care of the reasonable man.
107 The High Court then embarked upon a comparison of culpability between the two parties. The High Court observed at 16-17:
Here, in our opinion, the negligence of the defendant was in a high degree more culpable, more gross, than that of the plaintiff. The plaintiff's conduct was ex hypothesi careless and unreasonable but, after all, it was the sort of thing that is very commonly done : he simply did not look when a reasonably careful man would have looked. We think too that in this case the very fact that his conduct did not endanger the defendant or anybody else is a material consideration. The defendant's position was entirely different. The learned judge found only that he was negligent in not keeping a proper look-out, but there were several other important elements in the case, as Mr Wright pointed out. We think, indeed, that the equal allocation of responsibility by his Honour must have proceeded from an overlooking of these elements. The first matter is his speed. It could not on the evidence have been found to be less than thirty miles per hour. Again, there was a large number of people in the vicinity,-the defendant himself says that he noticed "quite a number of people about". The hotels, of which there were three in the immediate vicinity, had closed a very short time previously. It was a misty night, and the road was wet. Visibility must have been impaired by these factors, and it was further impaired by mistiness on the inside and outside of the windscreen. To drive at thirty miles per hour in a town at night under these circumstances seems to us to have been to do an obviously dangerous thing, and to have amounted to negligence of far greater culpability than anything that can possibly be attributed to the plaintiff.
Having regard to these factors, and to all the circumstances of the case, we are of opinion that a fair and reasonable allocation of the responsibility for the damage done is to attribute it, as to eighty per cent to the defendant and, as to twenty per cent to the plaintiff. The appeal should be allowed, and the judgment of the Supreme Court of Tasmania varied so as to give effect to this apportionment. (Original emphasis.)
108 In the case of Podrebersek, Mr Podrebersek, the plaintiff, brought an action against his employer, Australian Iron and Steel Pty Ltd, the defendant, for damages for personal injuries. Mr Podrebersek was employed as a gas regulator and was engaged in cleaning gas pipes when an explosion of gas caused the injuries in respect of which he brought his claim. The jury determined that the plaintiff had been responsible for the damage suffered to the extent of 80%. Before the High Court, Mr Podrebersek complained that the primary judge had not properly instructed the jury on the question of apportionment in relation to contributory negligence. At 532-533, the High Court said:
The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42-49 and Broadhurst v Millman [1976] VR 208 at 219, and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.
109 The High Court found that the primary judge had not instructed the jury in accordance with the appropriate principles, but dismissed the appeal because of the effluxion of time between the accident and the appeal, and the fact that it would have been open to the plaintiff to correct the primary judge at the time that the direction was given.
110 In each of Pennington and Podrebersek, the claim made against the defendant was in negligence. Therefore, in comparing the degree of culpability between the plaintiff and the defendant there would have been no difficulty in applying the standard described in the observations made in those cases which referred to the "degree of departure from the standard of care of a reasonable man". However, there may be cases when some adjustment may need to be made to the application of those observations, where an apportionment for contributory negligence is made pursuant to s 137B of the Competition and Consumer Act 2010 (Cth) (previously s 82(1B) of the Trade Practices Act). This is because a party may contravene s 52 of the Trade Practices Act, even in the absence of negligence.
111 In this case, however, the question of whether, and, if so, how, to adapt the observations, did not arise. This is because the respondents impugned Valcorp's conduct as contravening s 52 of the Trade Practices Act, on the basis that Valcorp's conduct comprised a representation that the valuation was based on reasonable grounds and was the product of due care and skill, which was misleading or deceptive. The respondents, also, claimed that Valcorp was negligent in making the impugned valuation. The primary judge made an assessment of the conduct of Valcorp, both in respect of the statutory and common law causes of action, by reference to the standard of a "reasonably competent valuer".
112 As is emphasised by the authorities, much latitude must be given to a primary judge in arriving at the judgment as to what is just and equitable. However, the authorities, also, state that the assessment in relation to apportionment is to made by reference to a comparison of the relative culpability of each of the applicant and the respondent, and the causative potency of the impugned conduct of each party.
113 In considering whether a judge has erred in failing to provide adequate reasons, it is not appropriate to have regard only to a part of the judge's reasons. It is the reasons as a whole that must be examined.
114 In this case, it is clear that the primary judge was aware of the criteria by which to apportion liability in relation to contributory negligence. The primary judge referred specifically to the observations in Podrebersek, which are set out at [108] above. However, the primary judge did not explicitly engage in an analysis of the relative culpability of each of Valcorp and the respondents of the nature undertaken by the High Court in Pennington, or of the relative causative potency of the impugned conduct of each of the parties.
115 The question, then, is whether it is possible, as the respondents contended, to discern from the reasons for decision, the primary judge's rationale for finding why, on application of the test in Podrebersek, it was just and equitable to make an apportionment of 25% responsibility for the loss suffered, in respect of the contributory negligence of each of the respondents. This is a finding which implied that Valcorp's default was more than twice as responsible for the respondents' loss than the respondents' own default.
116 The primary judge's reasons, do not distinguish between the causal potency of each of the respective party's conduct. The primary judge found in respect of each party that, but for its default, the loans would not have been made. The primary judge's findings do not, in our view, provide a basis upon which to discern the rationale for a conclusion that the causal potency of Valcorp's default was more than twice as potent as each of the respondent's default.
117 As to the question of relative culpability of the parties, as mentioned, at the heart of the primary judge's decision that Mr Taormina fell short of the standard of a reasonably competent valuer, was his finding, set out at [67] above, namely, that Mr Taormina failed to confine his valuation to a comparison of the sale price of properties in Glenelg, which was a separate market in which prices were falling, rather than by reference to the January 2007 sale price of penthouse apartment 139 in the Air Apartments, Eastwood, and a penthouse apartment in Place on Brougham, North Adelaide, which the primary judge found not to be comparable sales.
118 The primary judge did not find that Mr Taormina was grossly negligent. The primary judge, however, did refer in his reasons, to the respondents' contention at trial, that he should find that Mr Taormina's valuation report was negligently prepared because of the "gross disparity" between the stated value and what they contended to be the true value of the property at the time, namely, $2.4 million. The primary judge said that such an approach was open to him, but he did not need to adopt it, because he was able to conclude that the valuation report was prepared without reasonable care. The primary judge, then, went on to find that Mr Taormina's valuation report was prepared negligently for the reasons already referred to at [61]-[68] above. In our view, the primary judge's observations do not give rise to the inference that the primary judge regarded the departure by Mr Taormina from the standard of a reasonably competent valuer as being of a gross dimension. The primary judge's reference to a "gross disparity", was made in the context of explaining why he was not going to adopt the approach being advocated by the respondents at trial, of inferring negligence from the extent of the disparity between the valuation and the true value of the property; and the observations were made before he embarked upon the assessment of Mr Taormina's conduct.
119 Further, there is no finding made by the primary judge that the conduct of Mr Taormina fell "well below" the standard of a reasonably competent valuer. The primary judge used those words when recording the respondents' submission to that effect. In our view, the primary judge went no further in characterising the default of Mr Taormina, than that it fell below the standard of a reasonably competent valuer.
120 The respondents, also, referred to the primary judge's observations, made when dealing with the question of the contributory negligence of the respondents, that the respondents operated outside of the traditional bank market, primarily as asset-based lenders, which viewed security as the principal consideration and serviceability as a secondary consideration. In our view, it is not at all apparent that the primary judge treated these factors as relevant in determining the extent of the culpability of the respondents. In our view, in assessing the extent of the obligation of the respondents to make a proper assessment of serviceability, the primary judge, in [151] of his reasons, put those matters to one side. The primary judge assessed whether the respondents had complied with the obligation to investigate serviceability, by reference to the standards which the respondents had prescribed for themselves.
121 In our view, the primary judge went no further in characterising the default of each of the respondents, than that it fell below the standards of a reasonably competent lender.
122 In our view, the primary judge's reasons do not permit this Court to discern the basis for a conclusion that the appellant's responsibility for each respondent's loss should be twice that of each respondent's responsibility for such loss. In particular, there is nothing in the primary judge's reasons to indicate that his Honour considered that the appellant's departure from the standards expected of a reasonably competent valuer was greater than each respondent's own departure from the standards expected of a reasonably prudent lender. In our view, in this respect, the primary judge erred.
123 For the following reasons, it is our view, that it cannot be concluded, on the findings of the primary judge, that the negligence of Mr Taormina reflected a substantially greater degree of departure from the conduct of a reasonably competent valuer, than did the negligence of each of the respondents reflect a departure from the conduct of a reasonably prudent lender.
124 The essence of the primary judge's finding that Valcorp was negligent was that Mr Taormina valued the property by reference to the wrong market, namely, a wider Adelaide market, rather than the Glenelg market, which was a falling market, and by reference to sales which were not comparable. This determination was made on the basis of the primary judge preferring the expert evidence of Ms Gaetjens to that of Mr Taormina. This kind of negligence is in the nature of a professional misjudgment by Mr Taormina.
125 The negligence of the respondents was of a different character. It was not necessary for the primary judge to have regard to expert evidence and to prefer the opinion of one professional to another. The primary judge found, in essence, that the respondents were aware as late as October 2007, that on the information that they had, the Opies would not be able to service the loans, but, nevertheless, lent money to the Opies without taking steps to allay their concerns, in circumstances when their concerns should have been heightened, not allayed. The primary judge found, that information which Mr Opie provided in response to the respondents' conditions of offer, was so plainly inadequate as to raise questions as to the reliability of the information provided by Mr Opie. The character of that negligence reflected an indifference by the respondents as to whether Mr Opie was reliable and as to whether the Opies had the financial capacity to service the loans, and, therefore, an indifference to the protection of its own interests and, in Angas's case, to the integrity of the representations it had made in the prospectus.
126 In assessing the relative culpability of the parties, the indifference shown by the respondents, reflected a serious failure to comply with the standards of a reasonably prudent lender. In our view, it reflected a departure from those standards, at least as serious as the departure by Mr Taormina from the standards of a reasonably competent valuer.
127 Accordingly, having regard to our findings in relation to the relative culpability of each party, and applying our view that the reasons of the primary judge do not disclose a basis to distinguish between the causal potency of the impugned conduct of each party, it is, in our view, just and equitable that each of the parties should be found to have been equally responsible for the loss suffered by each of the respondents. We, therefore, find that each of the respondents is guilty of contributory negligence to the extent of 50%.
128 Valcorp did not found its appeal on a complaint that the primary judge's discretion miscarried. However, it would have been our view, as it was the High Court's view in Pennington, that in making the apportionment that he did, the primary judge must have left one or more relevant circumstances out of account in coming to his view that Valcorp was more than twice as responsible for the loss and damage as each of the respondents.
129 It is apparent from our findings, that we do not accept the argument of Valcorp that each of Barker and KWS should be held guilty of contributory negligence in a greater proportion than that which applied to Angas. It is the case that Barker and KWS engaged in riskier lending practices than did Angas. This is reflected in the substantially higher interest rates charged by each of Barker and KWS when compared to Angas. However, as mentioned, the primary judge put to one side the question of whether the riskier nature of the lending practices engaged in by each of the respondents by lending monies to borrowers who fall into the sub-prime category, affected the nature of the obligation on the respondents to investigate the capability of the Opies to service the loans. Rather, the primary judge assessed negligence by reference to the standards which they set for themselves. In their letters of offer made in October 2007, each of Barker and KWS, also, imposed conditions requiring the establishment by the Opies of serviceability. In our view, the primary judge did not err in approaching the question of the contributory negligence of Barker and KWS in the way that he did.
130 There was, also, a complaint that the primary judge did not make a finding under s 7(1) of the Law Reform (Contributory Negligence and Apportionment of Liability) Act, namely, that each of the respondents was, by reason of its contributory negligence, 100% responsible for its loss. It was said that this was the logical consequence of the primary judge's finding that if the inquiries as to serviceability had been made, the loans would not have been made.
131 In our view, it does not follow axiomatically, from the primary judge's finding that, but for the respondent's contributory negligence, the loan would not have been made, that each respondent is responsible for its loss to the extent of 100%. It was open to the primary judge to find, as he impliedly did, that the impugned conduct of each of the parties was causally connected to the loss.