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Kayteal Pty Ltd v Dignan

Kayteal Pty Ltd v Dignan

Case [2011] NSWSC 197 24 March 2011

Professional Negligence

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Supreme Court

New South Wales

Medium Neutral Citation: Kayteal Pty Ltd v John Joseph Dignan & ors [2011] NSWSC 197
Hearing dates: Monday 26, Tuesday 27 and Thursday 29 July 2010
Decision date: 24 March 2011
Before: Brereton J
Decision:
Solicitors breached duty of care to mortgagee to advise of matters discovered or discoverable from usual inquiries which cast doubt on reliability of valuation.
Solicitors' proportionately liable for 12.5% of mortgagee's loss.
Cross-claim of solicitors for indemnity against concurrent wrongdoer not sustainable.

Catchwords:
SOLICITORS - Professional negligence - mortgages - general principles - duty and breach - solicitor's duty to mortgagee usually framed by retainer - general duty to exercise reasonable care in obtaining a valid and enforceable security - duty does not extend to advising on valuation of security - obligation to pass on information obtained in course of investigating title that may cause mortgagee to doubt correctness of valuation or bona fides of mortgagor - solicitors did not owe duty to ascertain creditworthiness of mortgagor - solicitors discharged duty to obtain a legally efficacious mortgage -solicitors failed to advise client of matters known or which ought to have been known from usual inquiries which would have caused client to doubt reliability of valuation -reasonably prudent and competent solicitor should have appreciated and advised that contrary to assumption stated in valuation land was subject to flooding

SOLICITORS - Professional negligence - mortgages - loss and damage - measure of damage and loss is difference between actual position of mortgagee and hypothetical position but for negligence of solicitors - claim for economic loss from failure to take reasonable care - apportionable claim under Civil Liability Act - proportionate liability of defendants as concurrent wrongdoers - responsibility derived from comparing blameworthiness and causative potency of conduct of alleged concurrent wrongdoers being borrower, valuer, finance broker and solicitors - where borrower fraudulent and valuer grossly negligent - solicitors responsibility assessed at 12.5%.
SOLICITORS - claim against valuer for negligence - no duty of care owed by valuer to solicitor - valuer owed duty to borrower only - misleading and deceptive conduct claim against valuer - solicitor's loss not caused by reliance on misrepresentations of valuer but solicitor's failure to take reasonable care - concurrent wrongdoer cannot recover contribution or indemnity against other concurrent wrongdoer except an excluded concurrent wrongdoer - valuer not an excluded concurrent wrongdoer.
Legislation Cited: (CTH) Bankruptcy Act 1966, s 58.
(NSW) Civil Liability Act 2002, s 34, s 34A, s 35, s 36, s 38.
(NSW) Fair Trading Act 1987, s 68.
Cases Cited: Bank of East Asia v Shepherd & Wedderburn [1995] SLT 1074.
Chandra v Perpetual Trustees Victoria Ltd (2007) 13 BPR 24,675.
Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch. 384.
Mortgage Express Ltd v Bowerman & Partners [1996] 2 All ER 836.
Mortgage Funding Corporation v Tisdell Nelson Nari & Co [1998] PNLR 81.
Nationwide Building Society v Balmer Radmore [1999] PNLR 606; [1999] All ER (D) 95.
National…

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 Kayteal Pty Ltd v Dignan

Details

AGLC: Kayteal Pty Ltd v Dignan [2011] NSWSC 197
Case: [2011] NSWSC 197
Decision Date: 24 March 2011

CaseChat Overview and Summary

Kayteal Pty Ltd brought an action against Dignan, a solicitor, for professional negligence in the handling of a mortgage. The case revolved around the solicitor's duty in obtaining a valid and enforceable mortgage, and whether he failed to exercise reasonable care in providing advice. The dispute came before the court to determine whether the solicitor had breached his duty and whether such a breach led to loss for the mortgagee.

The central legal issues were the extent of the solicitor's duty to the mortgagee and whether the solicitor breached that duty by failing to advise on matters that could have led to doubts about the reliability of the valuation. The court also had to determine the measure of damages, considering the proportionate liability of the solicitor in comparison to other parties involved, such as the borrower and the valuer, and whether the valuer owed a duty of care to the solicitor.

The court found that the solicitor did not owe a duty to ascertain the creditworthiness of the mortgagor or to advise on the valuation of the security. However, the court held that the solicitor had a duty to pass on information that might cause the mortgagee to doubt the correctness of the valuation or the bona fides of the mortgagor. In this instance, the solicitor failed to advise the client that the land was subject to flooding, a fact that should have been apparent from usual inquiries. The court assessed the solicitor's responsibility for the loss at 12.5%, considering the borrower's fraudulent conduct and the valuer's gross negligence. The court also dismissed the claim against the valuer for professional negligence, finding that the valuer did not owe a duty of care to the solicitor.

The court's final orders reflected the proportionate liability of the solicitor and dismissed the claim against the valuer. The court determined that the measure of damages was the difference between the mortgagee's actual position and the hypothetical position but for the solicitor's negligence. The court further ruled that the solicitor could not recover contribution or indemnity from the valuer, as the valuer was not an excluded concurrent wrongdoer.

Orders