JUDGE:	DAVIES J
WHERE HELD:	Melbourne
DATE OF HEARING:	21-22 April 2009, 24 April 2009, 27-28 April 2009 and 4 May 2009
DATE OF JUDGMENT:	3 July 2009
CASE MAY BE CITED AS:	Cameron v McMahon & anor
MEDIUM NEUTRAL CITATION:	[2009] VSC 277

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NEGLIGENCE – Professional negligence – Accountant – Whether duty of care existed in absence of retainer – Whether relationship of proximity existed – Whether assumption of responsibility and reasonable reliance – Alleged representation to prepare loan agreements and protect the interests of the plaintiff – Whether defendant prepared the loan documents – Conflict of interest – Whether defendant warned the plaintiff to seek independent legal advice.

TRADE PRACTICES – Misleading and deceptive conduct – Whether representations made – s 9 Fair Trading Act 1999 (Vic) – s 52 Trade Practices Act 1974 (Cth).

EQUITY – Fiduciary duty – Whether duty existed – Conflict of interest.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T D Best	Frank Randle Lawyer
For the Defendants	Mr R S Hay	DLA Phillips Fox

HER HONOUR:

Introduction

The plaintiff (“Cameron”) has made claims against the defendants in tort and in equity for breach of duties and under statute for contravention of the provisions of the Trade Practices Act1974 (Cth) (TPA) and the corresponding provisions of the Fair Trading Act1985 (Vic) (FTA).[1] The claims are based on representations that the first defendant (“McMahon”), a director of the second defendant (“the Firm”) allegedly made to Cameron and the inadequacy of documents that he allegedly prepared for her. Cameron seeks damages for the loss of funds that she had lent to two companies purportedly in reliance on the representations and documents.
[1]The plaintiff abandoned all other claims in the statement of claim at the hearing.

The context of Cameron’s claim is the failure of a business venture that Cameron embarked on with two brothers, Justin and Greig Sewell (collectively “the Sewells”), being the establishment and operation of a retail store in Sunbury selling extreme sports equipment and clothing. The store was the brainchild of the Sewells who, in conjunction with another interested party, Ben Alexander (“Alexander”), had developed a business plan, identified potential locations for the store and had some consultations with McMahon about store location, set up costs and potential profitability, as well as about how the business should be structured. When Alexander pulled out of the proposed venture in about June 2002, the Sewells, who knew Cameron socially, involved her in his place. Cameron’s first contact with McMahon, though not with his Firm, was when she and the Sewells met with him to discuss the proposed venture. Cameron was already a client of the Firm. Her contact was with another…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Cameron v McMahon

Details

AGLC: Cameron v McMahon [2009] VSC 277
Case: [2009] VSC 277
Decision Date: 3 July 2009

CaseChat Overview and Summary

In Cameron v McMahon, the plaintiff sought to establish that the defendant, an accountant, was negligent in his professional capacity by failing to prepare loan agreements in a way that protected the plaintiff’s interests. The dispute arose out of an alleged representation by the defendant that he would prepare the loan agreements and act in the plaintiff's best interests, without the existence of a formal retainer. The case was heard by the Supreme Court of Victoria.

The primary legal issues for the court to decide were whether a duty of care existed between the parties in the absence of a formal retainer, whether the relationship between the plaintiff and the defendant exhibited sufficient proximity, and whether there was an assumption of responsibility by the defendant that was reasonably relied upon by the plaintiff. Additionally, the court had to determine whether the defendant breached a fiduciary duty, whether there was misleading or deceptive conduct under the Fair Trading Act 1999 (Vic) and the Trade Practices Act 1974 (Cth), and whether the defendant adequately warned the plaintiff of a potential conflict of interest.

The court found that a duty of care did exist between the parties, despite the lack of a formal retainer, based on the assumption of responsibility by the defendant and the reasonable reliance by the plaintiff. The relationship between the parties was deemed to have the necessary proximity, and the court concluded that the defendant had indeed assumed responsibility for preparing the loan agreements. However, the court determined that the defendant did not breach any fiduciary duty. Furthermore, the court found that there was no misleading or deceptive conduct under the relevant statutes. The court also noted that the defendant had warned the plaintiff to seek independent legal advice, mitigating any potential conflict of interest.

The court ordered that the defendant pay damages to the plaintiff for the breach of the duty of care. The specific amount of damages was to be determined in a subsequent hearing.

Orders