Impact of Apportionment

The High Court decision in Hunt & Hunt v. Mitchell Morgan Nominees Pty Ltd ((2013) HCA 10) highlights the impact of proportionate liability where it applies. In that case the High Court apportioned 87.5% of the liability to bankrupt fraudsters with only 12.5% of the liability being apportioned to the solicitors who had failed to protect the plaintiff from the fraud. Without the impact of apportionment Hunt & Hunt would have been liable severally for 100% of the loss.

The court considered that each of the defendants materially contributed to the finance company’s inability to recover the monies it advanced. The plaintiff had argued the loss or damage caused by Hunt & Hunt was the failure to ensure accurate security (by including a covenant to repay the debt in the mortgage) so that Hunt & Hunt was not a concurrent wrongdoer and was 100% responsible (following the reasoning of the Victorian Court of Appeal decision in St George Bank v. Quinerts Pty Ltd). The High Court did not interpret “concurrent wrongdoer” so narrowly.

Contracting Out

There has been much jurisprudence on the ability of parties, either deliberately or inadvertently to contract out of the apportionment provisions. This should be the subject of a separate paper, particularly as the position is different in each state and the ability of commercial parties to allocate risk is so important in the business context.

Misleading and Deceptive Conduct

The Commonwealth statutory provision relating to misleading and deceptive conduct in trade or commerce is located in section 18 of the Australian Consumer Law (ACL) scheduled to the Competition and Consumer Act 2010 (Cth) (CCA). The ACL has also been adopted as a law of each of the States, for example see Part 3 of the Fair Trading Act 1989 (Qld) (FTA).

However, the Commonwealth statutory provisions dealing with apportionment of, and contribution from the plaintiff to, claims for damages for contravention of section 18 of the ACL are located in the CCA itself, and not the ACL (see Part VIA and section 137B of the CCA respectively). Therefore, claims for apportionment and contribution under the State legislation will be subject to the laws of each State.

In Queensland:

  1. Apportionment is governed by Chapter 2, Part 2 of the Civil Liability Act 2003 (Qld) (CLA). By section 32F, CLA a concurrent wrongdoer in a proceeding in relation to an apportionable claim who contravenes section 18 of the ACL (Qld) is severally liable for damages ordered against any other concurrent wrongdoer to the apportionable claim.
  2. The FTA, unlike the CCA, has never had a provision governing contribution from the plaintiff.

What that means of course is that a claim for misleading and deceptive conduct under the ACL (Qld) will entitle a defendant to neither contribution from the plaintiff nor apportionment with other concurrent wrongdoers. Where possible, plaintiffs will (or should) bring their claims under the ACL (Qld).

Professional Liability Claims

The Civil Liability Act (CLA) in Queensland does not apply to personal injuries actions but does apply to claims against professionals other than those made by consumers. Consumer is defined under the CLA as follows:

“… an individual whose claim is based on rights relating to goods or services where the particular goods or services:

  1. are being acquired for personal, domestic or household use or consumption; or
  1. relate to advice given by a professional to the individual for the individual’s use other than for a business carried on by the individual (solely or in partnership).”

The definition of consumer under sub-paragraph (b), was considered by the Federal Court in Selig and Wealthsure (2013) FCA 348. The defendant argued that the financial advice given to husband and wife investors who were also directors of a property and construction business took the plaintiffs outside the definition of consumers because the advice ultimately benefitted the business. The court rejected that argument and preferred a much broader definition of consumer.

Claims against professionals such as brokers, accountants and lawyers not involving advice but other services of a personal, domestic or household nature (e.g. residential conveyancing, family law, contracts for the acquisition of household goods, personal tax or family trust compliance services) might also be outside the apportionment provisions of the CLA because the claimant will fall within subsection (a) of the definition of Consumer.

There has been a surprising lack of authority as to what does or does not constitute a consumer.  We are keeping a close eye on developments in the area because of their potential impact.