Deloitte Touche Tohmatsu v Cridlands Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Deloitte Touche Tohmatsu v Cridlands Pty Ltd [2003] FCA 1413

CONTRACT – assignment of causes of action in tort – maintenance and champerty

NEGLIGENCE – duty of care of solicitors – causation – contribution between joint tortfeasors

Trade Practices Act 1974 (Cth) ss 52, 82, 86, 87
Law Reform (Miscellaneous Provisions) Act (NT) ss 12, 13
Federal Court of Australia Act1976 (Cth) s 19
Judiciary Act 1903 (Cth) ss 39B, 79
Federal Court of Australia Act1976 (Cth) s 32

Dowdell v Knispel Fruit Juices [2003] FCA 851
Redman v The Permanent Trustee Company of New South Wales Ltd (1916) 22 CLR 84
Re Daniel Efrat Consulting Services Pty Ltd (in liq) (1999) FCR 154
Re Addstone Pty Ltd (in liq) (1998) 83 FCR 583
Re Movitor Pty Ltd (in liq) (1996) 64 FCR 380
Brownton Ltd v Edward Moore Inbucon Ltd [1985] 3 All ER 499
Trendtex Trading Corporation v Credit Suisse [1980] QB 629
Vangale Pty Ltd (in liq) v Kumagai Gumi Co Ltd [2002] QSC 137
South Australian Management Corporation v Sheahan (1995) 16 ACSR 45
Poulton v Commonwealth (1953) 89 CLR 540
Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd (1997) 72 FCR 261
Giles v Thompson [1994] 1 AC 142
Stocznia Gdanska SA v Latvian Shipping Co (No 2) [1999] 3 All ER 822
Freehill Hollingdale & Page v Bandwill Pty Ltd [2000] WASCA 150
Bandwill Pty Ltd v Spencer-Laitt (2000) 23 WAR 390
R v Andrews [1973] 1 QB 422
R v Kellett [1975] 3 All ER 468
A v Hayden (1984) 156 CLR 532
Jamieson v The Queen (1993) 177 CLR 574
Plating Company v Farquharson (1881) 17 Ch D 49
Australian Competition & Consumer Commission v FFE Building Services Limited [2003] FCA 1181
Re Daley; ex parte National Australia Bank Ltd (1992) 37 FCR 390
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635
Allison and Van Dorsten v Uatar Management Services Limited [1999] NZCA 324
Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574
Jameson v Central Electricity Generating Board [2000] AC 455
Bitumen and Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200
Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213
Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574
James Hardie & Co Pty Ltd v Seltsam Pty Ltd (1998) 196 CLR 53
National Australia Bank Ltd v Pollak (2001) 186 ALR 44
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603
Thompson v Australian Capital Television Pty Ltd (1996) 186 CLR 574
Jones v Dunkel (1959) 101 CLR 298
Cadwallader v Bajco Pty Ltd [2002] NSWCA 328
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413
British Racing Drivers Club Ltd v Hextall Erskine & Co [1996] 3 All ER 667
Fox v Everingham (1983) 50 ALR 337
Hawkins v Clayton (1988) 164 CLR 539
Austrust Pty Ltd v Astley (1993) 60…

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Details
Case
[2003] FCA 1413
Decision Date

CaseChat Overview and Summary

Deloitte Touche Tohmatsu and Cridlands Pty Ltd were involved in a legal dispute concerning the alleged liability of Deloittes in relation to the purchase of Larrakeyah Station by Mr and Mrs Campbell. The case was heard in the Supreme Court of the Northern Territory. The court had to decide whether Deloittes, who provided advisory services to Mr and Mrs Campbell, were negligent in their advice regarding the purchase of Larrakeyah Station, and if so, whether Cridlands Pty Ltd, who were the sellers, were liable for the losses incurred.

The central legal issue was whether Deloittes were negligent in their advice and whether Cridlands were liable for the losses incurred by Mr and Mrs Campbell. The court examined the conduct of Deloittes in providing their services, including whether they followed the appropriate standards and whether they provided accurate and reliable advice. The court also considered whether Cridlands had any liability for the losses incurred by Mr and Mrs Campbell.

The court found that Deloittes were not negligent in their advice and that Cridlands were not liable for the losses incurred by Mr and Mrs Campbell. The court concluded that Deloittes had followed the appropriate standards in providing their services and that they had provided accurate and reliable advice. The court also found that Cridlands had no liability for the losses incurred by Mr and Mrs Campbell, as they had not been negligent in their conduct.

The court dismissed the proceedings against Deloittes and Cridlands and ordered that the costs incurred by the parties be apportioned as specified in the orders. The court also set aside a previous order for costs made on 10 October 2003.

Orders

Orders of the court

1. The proceedings be dismissed.

2. The fourth, fifth and sixth respondents are jointly liable for the costs incurred by the third respondent up until 29 September 2003.

3. The fourth and fifth applicants are liable to indemnify the fourth, fifth and sixth respondents in respect of their liability under Order 2.

4. The fourth and fifth applicants are jointly liable for the costs incurred by the third respondent from 29 September 2003.

5. Set aside the order for costs made herein on 10 October 2003.

Background

Background to the litigation

I find that I do have jurisdiction to deal with the reconstituted proceedings between Deloittes and Cridlands. In exercising that jurisdiction I note that the common law to be applied is the Australian common law. I also note that, subject to any other applicable laws of the Commonwealth, the statute laws of the Northern Territory are applicable in these proceedings by virtue of s 79 of the Judiciary Act 1903 (Cth).FACTUAL BACKGROUND The parties were in broad agreement about much of the evidence. The documentary record was basically agreed. In relation to the events giving rise to the alleged liability of Deloittes on the one hand and Cridlands on the other Deloittes called Mr and Mrs Campbell, who were the alleged victims, and Cridlands called Mrs Christopher and Mr Black, the solicitors who dealt with the matter. Cridlands also called Mr Perkins, an agricultural agronomist, who gave evidence of what he would have done if he had been engaged by Deloittes to carry out a ‘due diligence’ of the proposed purchase of Larrakeyah Station. Deloittes also called Mr Garraway, a chartered accountant, who provided accounting services to Mr and Mrs Campbell following the failure of the farming operation in an attempt to resolve their financial position in an orderly manner. His evidence was primarily related to the proof of his own costs and expenses as part of the damages claim. Deloittes also tendered the report of Mr Vincent, a forensic accountant, in relation to the calculation of the losses suffered by Noonbrave Pty Ltd and by Mr and Mrs Campbell in the purchase of Larrakeyah Station and in the farming operation conducted there. Cridlands tendered an answering report from Mr Holmes. Finally, Cridlands called Mr O’Dwyer, an accountant, to give expert evidence on whether the services provided by Deloittes were consistent with the standards expected by accountants providing that sort of service. His evidence was received subject to various objections. Some of the objections had some substance. However, Mr O’Dwyer did go through the Deloittes’ file (which had been discovered) and was able to give some evidence of various matters in that file. Most importantly, he gave evidence as to the process apparently followed by Deloittes in making financial projections in relation to the purchase of the Larrakeyah property. I have relied upon Mr O’Dwyer’s report at least for this purpose. At least two witnesses who might have been expected to give evidence were not called by either party. The first is Mrs Faehse. She was the employee of Deloittes who had the primary role in advising and in managing the affairs of the Campbells. In addition no-one from the National Australia Bank (‘NAB’)was called to give evidence of the bank’s position in relation to the finance of the purchase of Larrakeyah Station. The absence of any evidence supportive of the Deloittes’ case from these witnesses has a significant effect upon the ultimate findings in this case. This is discussed further below.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

SELWAY J

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Ratio Decidendi

Legal Principle Established

Established by: SELWAY J

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