Cam & Bear Pty Ltd v McGoldrick

Cam & Bear Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the primary judge concerning claims of negligence against an auditor of a self-managed superannuation fund. The dispute arose from the appellant's alleged losses due to the auditor's failure to identify and report doubts regarding the recoverability of assets described as cash in the fund's financial statements.

The Court of Appeal was required to determine whether the primary judge erred in their assessment of the appellant's case, specifically in relation to the breadth of the negligence claim against the auditor. Further issues included whether the auditor's breach of duty caused the appellant's loss, the extent to which the appellant's damages should be reduced for contributory negligence, and the application of proportionate liability principles in light of concurrent liability of directors. The Court also considered whether the company that compiled the financial statements bore any liability to the appellant.

The Court found that the primary judge had erred in failing to consider the full scope of the appellant's case regarding the auditor's breach of duty. It held that the auditor's negligence caused the appellant's loss, but reduced the appellant's damages by 10% for contributory negligence, noting the appellant's lack of financial sophistication and the auditor's role in preventing such losses. Crucially, the Court determined that the appellant's damages should not be further reduced due to the directors' concurrent liability, as this would result in a double deduction for the same conduct that led to the contributory negligence finding. The Court also found no evidence to establish the liability of the company that compiled the financial statements.

Consequently, the Court of Appeal allowed the appeal and ordered that judgment be entered for the appellant. The parties were directed to attempt to agree upon the quantum of damages, with draft orders to be submitted within 21 days.