IPG Finance Aust P/L v Crouch and Lyndon

The plaintiffs, IPG Finance Aust P/L, brought proceedings against Crouch and Lyndon, the first and second defendants respectively. The first defendant is a firm of solicitors and the second defendant was a partner of that firm. The plaintiffs sought damages for services obtained from the first defendant through the second defendant in respect of a number of commercial loans. The plaintiffs claim to have suffered loss and damage as a consequence of the second defendant’s conduct. The second defendant had pleaded guilty to two counts of fraud, as a trustee, and one count of forgery in relation to conduct whilst a partner of the first defendant. The fraudulent conduct included the creation of sham loan transactions.

The primary legal issues for the court to determine were whether the first defendant was liable for the wrongful acts of the second defendant pursuant to sections 13 and 14 of the Partnership Act 1891 (Qld), and whether the first defendant was liable in negligence for failing to exercise reasonable care, skill and diligence in the services provided to the plaintiffs. The first defendant contended that the second defendant’s conduct was without authority, was unlawful, and amounted to a criminal frolic. The first defendant also contended that each transaction was undertaken by the second defendant without the knowledge or authority of the other partners of the first defendant.

The court found that the second defendant’s conduct did not constitute wrongful acts undertaken whilst the second defendant was acting in the ordinary course of the business of the first defendant. The court determined that the first defendant was not liable for the wrongful acts of the second defendant pursuant to sections 13 and 14 of the Partnership Act 1891 (Qld). The court also found that the first defendant was not liable in negligence for failing to exercise reasonable care, skill and diligence in the services provided to the plaintiffs. The court found that the plaintiffs’ claim was statute-barred under the Limitation of Actions Act 1974 (Qld). The court dismissed the plaintiffs’ claim in its entirety.

No orders for costs were made.