The 'Hunt' For Clarity On Apportionment

Summary

The High Court has for the first time considered the application of the proportionate liability provisions of the Civil Liability Act 2002 (NSW) (CLA)1, which are mirrored in equivalent legislation in other Australian jurisdictions. The court considered whether, in order for liability for "damage" to be apportioned to a concurrent wrongdoer, that damage must be "caused" by each concurrent wrongdoer and what analysis the court should undertake in making that assessment.

In a 3-2 decision, the majority of the High Court reinstated the first instance decision, relevantly concluding that a wrongdoer's acts may be independent of those of another wrongdoer and yet be said to cause the same damage for the purposes of apportionment.

Background

In 2005 Mr Caradonna and Mr Vella entered into a business venture to arrange a boxing bout between Anthony Mundine and Danny Green. A joint account was opened, requiring both their signatures before a withdrawal could be made.

On the same day the joint account was established, Mr Vella took possession of the certificates of title to 3 properties. Unbeknownst to Mr Vella, Mr Caradonna took those certificates of title and used them as security to apply for a loan in the amount of AUD 1 million from Mitchell Morgan Nominees Pty Ltd and Mitchell Morgan Nominees (No.2) Pty Ltd (Mitchell Morgan).

Mr Caradonna also forged Mr Vella's signature on various loan documents and arranged for his solicitor, Mr Flammia (who also happened to be his cousin), to represent to Mitchell Morgan's solicitors (Hunt & Hunt) that he had witnessed Mr Vella's signature. The mortgage was registered and Mitchell Morgan paid AUD 1 million into the joint account. Those funds were immediately withdrawn by Mr Caradonna, who again forged Mr Vella's signature in the process.

Hunt & Hunt prepared the mortgage documents for Mitchell Morgan, but failed to ensure that they were drafted adequately. As a result, the mortgage was ineffectual as security.

On discovery of the fraud, Mr Vella commenced proceedings against, amongst others, Mitchell Morgan. Mitchell Morgan brought cross-claims against Hunt & Hunt, on the grounds it had negligently prepared the mortgage documents, and against Mr Caradonna and Mr Flammia on the basis of their fraudulent behaviour.

First instance decision

At first instance, Young CJ held that Hunt & Hunt was liable to Mitchell Morgan in negligence but also held that Mr Caradonna and Mr Flammia were concurrent...