Commonwealth Bank of Australia v Witherow - [2006] VSCA 45

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 3730 of 2005

COMMONWEALTH BANK OF AUSTRALIA
COMMONWEALTH BANK OF AUSTRALIA	Appellant
v.
NORMAN LEON WITHEROW	Respondent

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JUDGES:	MAXWELL, P., BUCHANAN, J.A. and REDLICH, A.J.A.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 February 2006
DATE OF JUDGMENT:	17 February 2006
MEDIUM NEUTRAL CITATION:	[2006] VSCA 45

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Apportionment of liability – Wrongs Act 1958 Part IVAA – Action on guarantee – No defence to claim – Guarantor makes third party claim against accountant for negligent advice – Third party claim does not make plaintiff’s claim an “apportionable claim” under Part IVAA – Guarantor and third party not “concurrent wrongdoers” – Judgment for plaintiff.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr A.C. Archibald, Q.C. with Mr A.P. Trichardt	Gadens Lawyers
For the Respondent	Mr G.R. McCormick	Goldsmiths

MAXWELL, P.:

This is an appeal by the Commonwealth Bank of Australia, by leave, from orders made by a Judge of the County Court on 15 April 2005. In the proceeding, the Bank claimed against Mr Witherow, the defendant, a sum of $150,606.90, with interest, on the basis of a deed of guarantee dated 24 March 2004. Under the guarantee, Mr Witherow guaranteed to the Bank the due payment by W.G. Jago & Sons Pty Ltd (“the company”) of all money which the company is or was liable to pay under an overdraft facility between the Bank and the company, subject to a limit of $150,000 plus the Bank's enforcement expenses. As at 21 October 2004 the company was in breach of the overdraft facility and was in arrears in the amount of $147,204.19. Payment of that amount was demanded, with interest accruing from that date. Despite demand, both the company and Mr Witherow have failed to pay any amount to the Bank.

The County Court proceedings were commenced by writ issued 21 December 2004. The Bank issued a summons for summary judgment on 31 March 2005, seeking an amount of $159,595.76 which was said to be the amount due and owing plus interest, plus enforcement expenses. The application for summary judgment came on for hearing on 15 April 2005. The learned Judge dismissed the summons, giving Mr Witherow leave to defend and leave to join the company and one Lois Dennington as second and third defendants respectively and as third parties to the proceeding within 28 days. The Judge ordered that costs be in the cause.

The Bank filed an application in this Court for leave to appeal on 29 April and on 3 June last year the then President and Buchanan, J.A. granted leave to appeal and ordered that the costs of the application be the Bank's costs in the appeal. In the meantime, Mr Witherow joined the company and Dennington, his own accountant, as second and third defendants respectively and filed an amended notice of defence on 10 May last.

On the hearing of the application for summary judgment before the Judge, Mr Witherow did not dispute the amount owing, but raised two contentions. He…

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.

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Details

Case: [2006] VSCA 45
Decision Date: 17 February 2006

CaseChat Overview and Summary

The Commonwealth Bank of Australia filed a claim against Mr. Witherow, who had guaranteed a debt owed by a company to the bank. Mr. Witherow, in turn, initiated a third-party proceeding against the accountant, alleging that the accountant's negligent advice regarding the guarantee had caused his loss. The case was heard in the Supreme Court of Victoria. The central issue was whether the third-party claim transformed the bank's claim into an apportionable claim under the Wrongs Act 1958 Part IVAA, thereby allowing for apportionment of liability between the guarantor and the accountant.

The court examined whether the third-party proceeding made the bank's claim an "apportionable claim" under the statute. It determined that the third-party claim did not elevate the bank's claim to an apportionable claim, and consequently, the guarantor and the third party were not considered "concurrent wrongdoers." The court held that the third-party proceeding did not impact the bank's right to seek full recovery from the guarantor, as the statute's provisions did not apply to this situation. The accountant's negligence did not shield the guarantor from his primary liability to the bank.

As a result, the court found in favour of the bank, ruling that the guarantor remained fully liable to the bank for the guaranteed debt. The third-party claim against the accountant was dismissed as it did not affect the bank's claim against the guarantor. The court's decision underscored the distinction between claims that are subject to apportionment under Part IVAA and those that are not, emphasising that the third-party claim did not alter the primary liability of the guarantor. The final orders confirmed that the guarantor was liable to pay the full amount of the debt to the bank, without any reduction due to the accountant's negligence.

Orders