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Derring Lane Pty Ltd v Fitzgibbon

Derring Lane Pty Ltd v Fitzgibbon

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 5697 of 2005

DERRING LANE PTY LTD

(ACN 000 450 684)

JAMIE FITZGIBBON

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JUDGES:	BUCHANAN and ASHLEY JJA and KELLAM AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	27 March 2007
DATE OF JUDGMENT:	4 May 2007
DATE OF MENTION:	9 May 2007
DATE OF FURTHER ORDERS:	10 May 2007
MEDIUM NEUTRAL CITATION:	[2007] VSCA 79

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Torts – Negligence – Negligent misstatement – Whether duty of care owed by valuer to purchaser of land in respect of preparation and publication of a valuation – Effect of disclaimer – Whether breach of duty, as found, incapable of being causative of loss and damage alleged by purchaser – Whether necessary for purchaser to prove that conduct resulting in loss and damage had been induced by “active” reliance on misstatement – Valuer knowing that purchaser obliged by contract between vendor and purchaser to act consonantly with valuation - Purchaser so acting to its loss - thereby proof that loss and damage caused by misstatement – Availability, alternatively, of inducement analysis – Quantum of damages – Issue not raised by appeal – Section 148(1), Victorian Civil and Administrative Tribunal Act 1998.

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APPEARANCES:	Counsel	Solicitors
Appellant	Mr M Clarke with Mr J J Isles	Mr S P Byrne
Respondent	Mr C M Caleo SC with Mr E F Wheelahan	Phillips Fox

BUCHANAN JA:

I agree with Ashley JA.

ASHLEY JA:

Derring Lane Pty Ltd (“Derring Lane” or “the appellant”) brought a claim against Jamie Fitzgibbon (“Fitzgibbon” or “the respondent”) in the Victorian Civil and Administrative Tribunal claiming damages for negligence and for misleading and deceptive conduct under s 9 of the Fair Trading Act 1999. The claim arose out of a valuation made by Fitzgibbon of a property situate at the rear of 854A Centre Road, Bentleigh East.[1] The property was purchased by Derring Lane from the City of Glen Eira by contract of sale dated 23 May 2002. The purchase price was $2,250,000 plus GST. Under the contract, settlement was to take place on 10 January 2003. The purpose of the valuation was to enable calculation of GST under a so-called margin scheme. Derring fixed its claim against the respondent in an amount of $70,000, being the difference between GST paid of $115,000, and $45,000 which it claimed that it should have paid as GST had the property been valued in an appropriate amount for the purposes of the margin scheme.
[1]The land described in Certificate of Title, Vol 10638, Folio 634.

Derring Lane’s claim failed in the Tribunal for want of proof of causation. Its appeal to the Trial Division under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 was dismissed. Now it appeals by leave to this Court. It contends, for different reasons, that the learned judge in the Trial Division misdirected himself as to the applicable principles of causation. The respondent denies that there was any such error. Further, by notice of contention he seeks to support…

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: [2007] VSCA 79
Decision Date: 4 May 2007

CaseChat Overview and Summary

Derring Lane Pty Ltd commenced proceedings against Fitzgibbon, a valuer, in the County Court of Victoria, seeking damages for losses incurred due to a negligent misstatement. Derring Lane, the plaintiff, alleged that Fitzgibbon had negligently prepared and published a valuation that was misleading, resulting in significant financial losses when the plaintiff purchased a property based on that valuation. Fitzgibbon contended that any duty of care owed to Derring Lane was negated by a disclaimer in the valuation report, and that even if a duty existed, the misstatement could not have caused the losses claimed. The primary legal issues before the court were whether a duty of care was owed by Fitzgibbon to Derring Lane, whether the alleged breach of duty was causative of the losses claimed, and if so, the quantum of damages owed.

The court held that Fitzgibbon owed a duty of care to Derring Lane in preparing the valuation, notwithstanding the disclaimer. The court found that the disclaimer did not absolve Fitzgibbon of liability for the misstatement, particularly given the circumstances that Fitzgibbon knew the valuation would be relied upon by Derring Lane in its contractual obligations with the vendor. The court rejected the argument that Derring Lane needed to prove active reliance on the misstatement to establish causation. Instead, it found that the reliance was implicit in Derring Lane's contractual obligations to act in accordance with the valuation, and thus the misstatement directly caused the losses. The court also noted that an inducement analysis was alternatively available to establish causation. Regarding the quantum of damages, the issue was not contested in the appeal.

The County Court of Victoria ruled in favour of Derring Lane, awarding damages for the losses incurred due to the negligent misstatement. The court’s decision underscored the importance of the duty of care in professional valuations and the limitations of disclaimers in absolving liability for negligent misstatements.

Orders