One of the most significant professional liability cases in Queensland in 2014 was the Queensland Court of Appeal decision in Hadgelias Holdings and Waight v Seirlis Ors (2014) QCA 177. This case was noteworthy because it dealt with many of the issues that cause problems in assessing and managing these claims.

FACTS

  • Real estate agency made misleading representations when selling an apartment that a storage area could be used as a third car park.
  • In fact, the property included two car spaces and a third area containing a plinth on which a storage shed could be constructed.
  • An existent development approval legally precluded use of the storage space for parking.
  • Purchaser pleaded that, had she known of the legal impediment (development approval), she would not have entered contract.
  • Vendors directed, and accordingly caused, the agents to make representations as to the availability of the car park without imparting their knowledge of the development approval.
  • The apartment was then advertised by the agents on three occasions as having three car parks (Hadgelias responsible for publication) – contravention of s 52 TPA.
  • The agent contractor, Mr Waight, told purchaser many apartment owners had removed the plinth and used as a parking space (speaking on behalf of the vendors and Hadgelias) – contravention of s 52 TPA.
  • Agent contractor assured purchaser the he would personally see to the removal of the plinth, paying for it himself, upon committing to contract – no authority from vendors or Hadgelias to make this promise. Agent separately responsible for misleading & deceptive conduct under s 38 Fair Trading Act (liability could not be limited).

TAKE AWAY FINDINGS

The important findings or discussions in the case were:

1.MEASURE OF LOSS

Counsel for all the parties accepted that the Potts v Miller measure of loss of the difference between the price paid and the real value as at the date of completion was the proper measure in the unexceptional circumstances of this ‘no transaction’ case.

2.MISLEADING CONDUCT BY THE AGENT

The court had no difficulty in accepting that, even though the vendor had directed the agency to make the representations as to the availability of the car park, the acts of the agency constituted its own misleading and deceptive conduct.  That was so notwithstanding the agency itself not specifically directing its independent contractor, Mr Waight, to make the representations.  

Mr Waight had personally adopted the representations as his own (by assuring the purchaser he would personally see to the removal of the plinth, paying for it himself, upon the purchaser committing to contract).  He was not authorised or directed by either the agency or the vendor to make that representation (and so was also himself liable personally for misleading and deceptive conduct under section 38 of the Fair Trading Act 1989 (Qld)).  

The agency and the vendor remained liable for their own conduct.

3.APPORTIONMENT:- WHERE TO APPORTION – CONCURRENT WRONGDOERS

     3.1   APPORTIONMENT OF LIABILITY PROVISIONS

Section 87CB and Section 87CD of the Trade Practices Act respectively govern whether a claim is apportionable and if so how liability under it is to be apportioned. Section 87CB is in the following terms:

  1. This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 82 for:
    1. economic loss; or
    2. damage to property;

caused by conduct that was done in a contravention of section 52.

  1. For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
  2. In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused,independently of each other or jointly, the damage or loss that is the subject of the claim.
  3. For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).

…         

Section 87CD provides:

  1. In any proceedings involving an apportionable claim:
    1. 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
    2. the court may give judgment against the defendant for not more than that amount.
  2. If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:
    1. liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and
    2. liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.

3.2  ​“CONCURRENT WRONGDOER”

In applying these provisions, the court looked at whether, in this case, there were “concurrent wrongdoer(s)”.

Holmes JA observed the equivalent definition in the Civil Liability Act 2002(NSW) discussed in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd, which posed two questions –

 a.  What is the damage or loss that is the subject of the claim?

In this case loss suffered by purchaser (Mrs Seirlis) was “the amount she paid less ’the real value of the thing [she] got’”.

b.  Is there a person, other than the defendant, whose acts or omissions also caused that damage or loss? (At page 627).

While the vendor’s direction to make representations as to the availability of the car park was the cause of the agent’s actions and the source of the vendor’s liability for them, it was not an act causing the purchaser to contract and it was not the cause of her loss.

In summary, Holmes JA said the section was;

“…concerned with distinct acts (or omissions) or sets of acts (or omissions) by different actors, combining or working independently to cause loss or damage and consequently inapplicable where there is but a single act or set of acts causing loss, attributable to more than one person.”

JA Holmes also discusses the phrase “independently of each other or jointly”, stating it qualifies the verb “caused”, rather than describing the acts or omissions -

“…the issue is not whether the acts or omissions are jointly undertaken but whether they either independently produce the same outcome or combine in their effect to do so.”

Therefore, for example, “although Mr Waight (agent) was not jointly liable with the other defendants for the statement found to have been made without their authority, it caused Mrs Seirlis’ loss jointly with the statements they made to the same effect.”

Hence, here, the agents and vendors performed a single set of acts which caused loss (not ‘concurrent wrongdoers’ so as to attract the application of s 87CD).

A comparison was drawn with Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd; where the fraud of parties who had forged documents to obtain a mortgage and the negligence of the mortgagee’s solicitor in failing properly to secure the loan were independent causes of the loss.

4. APPORTIONMENT:- HOW TO APPORTION – EXTENT OF APPORTIONMENT

Even though in this case there was no apportionment because they were not concurrent wrongdoers, the court considered what the outcome might have been if they had been concurrent wrongdoers.

The court held that determination of the extent of liability apportioned cannot be made solely on the basis that a single set of acts by the vendors and agents caused the loss. Cf Tomasetti v Brailey. While the acts of Hadgelias Holdings (agent) and the vendors were the same, their minds were not.

Accordingly, where the vendors knew the representations were false, but procured their making nonetheless, there is a strong argument that their responsibility for the loss was greater.

5. APPORTIONMENT – DIFFERENT TYPES OF CLAIMS/LEGISLATION

5.1 “SINGLE APPORTIONABLE CLAIM”

While section 87CB(2) makes clear that the loss or damage must be the same, a degree of ambiguity is added by the words ‘even if the claim is based on more than one cause of action’ (whether or not of the same or different kind). The debate around this wording is discussed by our Ingrid Lehmann in the Australian Insurance Law Bulletin.[1]

As Ingrid observes, this judgment makes a significant contribution to that issue because the claims against the vendor and agency could have been brought under s 53A TPA which is not an apportionable claim.

5.2 IMPACT OF SECTION 53A TPA BREACH

The court made it clear that the contravention of section 53A of the Trade Practices Act did not preclude the claim from being apportionable under section 52 of the same Act, had it been found that the vendors, Hadgelias and Mr Waight had been concurrent wrongdoers.

CONCLUSION

The Court of Appeal dismissed all of the appeals from the judgment of the trial judge upholding the liability of the real estate agency and the vendor severally without apportionment.

Emily Burns