Metzke and Allen v Sali - [2010] VSCA 267

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2009 3760

FRANK METZKE AND RUSSELL ALLEN (TRADING AS METZKE & ALLEN)	Appellants/ Cross- Respondents
FRANK METZKE AND RUSSELL ALLEN (TRADING AS METZKE & ALLEN)	v.
SAM SELAMI SALI (WHO SUES ON HIS OWN BEHALF AND IN HIS CAPACITY AS ADMINISTRATOR OF THE ESTATE OF ALAN ASLAN SALI DECEASED)	First Respondent/ Cross-appellant
	and
S. SALI & SONS PTY LTD (ACN 005 210 319)	Second Respondent/ Cross-appellant

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JUDGES:	WARREN CJ, NEAVE JA, BEACH AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	9, 10 August 2010
DATE OF JUDGMENT:	15 October 2010
MEDIUM NEUTRAL CITATION:	[2010] VSCA 267
JUDGMENT APPEALED FROM:	[2009] VSC 48 (Whelan J)

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CONTRACT AND TORT – Accountant - Retainer – Standard of reasonable care and skill - Whether trial judge erred in finding negligence - Whether trial judge wrong to conclude negligence had no relevant consequence - Whether finding open to trial judge on pleadings.

CONTRIBUTORY NEGLIGENCE – Causation - Whether trial judge erred in finding no contributory negligence.

APPORTIONMENT - Concurrent wrongdoer – Whether trial judge erred in finding of concurrent wrongdoer – Whether error in calculation of apportionment - Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 - Spies v The Queen (2000) 201 CLR 603 - St George Bank Limited v Quinerts Pty Ltd [2009] VSCA 245 - Wrongs Act 1958 ss 24AH(1), 26(1)(b) – Appeal allowed in part – Cross appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr C M Caleo SC with Mr J P Slattery	Norton Rose Australia
For the Respondents	Mr G Golvan QC with Mr S V Palmer	Kaine Lawyers

WARREN CJ
NEAVE JA
BEACH AJA:

Introduction

Metzke & Allen, the appellants, are the former accountants of the respondents, Sam Selami Sali, Alan Sali (deceased) and S Sali & Sons Pty Ltd (‘S Sali & Sons’) collectively referred to as the ‘Sali parties’. The Sali parties brought proceedings against Metzke & Allen claiming damages for negligence and breach of contract. After a trial lasting 11 days, judgment was entered for S Sali & Sons against Metzke & Allen in the sum of $129,736. The damages were assessed at $432,452, but were reduced by 70 per cent under the proportionate liability provisions of the Wrongs Act1958.

Following judgment, Metzke & Allen appealed and the Sali parties cross-appealed. In the cross-appeal, Metzke & Allen filed a notice of contention. In summary, Metzke & Allen contend that no finding of liability should have been made against them, and the Sali parties contend that the trial judge was wrong in failing to award damages in respect of certain losses claimed by them, and was also wrong in reducing the assessment ultimately made under the proportionate liability provisions of the Wrongs Act 1958. The underlying facts may be briefly stated as follows.

On 9 March 2001 an administrator was appointed to a company named Universal Logistics Pty Ltd (‘Universal Logistics’). At the time of that appointment, Sam Sali and his brother, Alan Sali, were non-executive…

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: [2010] VSCA 267
Decision Date: 15 October 2010

CaseChat Overview and Summary

In the case of Metzke and Allen v Sali, the plaintiffs sought to recover damages for the alleged negligence of the defendant, an accountant, in his handling of their tax affairs. The case was heard in the Supreme Court of Victoria, with the trial judge finding that the accountant was negligent in his retainer but that this negligence did not have any relevant consequence on the plaintiffs' financial position. The plaintiffs appealed the decision, contending that the trial judge had erred in his findings of negligence, no relevant consequence, and contributory negligence. The defendant cross-appealed, arguing that the trial judge had erred in finding that he was a concurrent wrongdoer and in the calculation of apportionment.

The court was required to determine whether the trial judge's findings of negligence, no relevant consequence, and contributory negligence were correct. The court also needed to determine whether the trial judge erred in finding the defendant to be a concurrent wrongdoer and in the calculation of apportionment. The court considered the relevant legal principles, including the standard of reasonable care and skill expected of an accountant, the principles of causation, and the relevant statutory provisions.

The court found that the trial judge had erred in his finding of negligence, as the plaintiffs had established that the accountant's failure to comply with relevant tax laws and regulations constituted a breach of the standard of reasonable care and skill. The court also found that the trial judge had erred in his finding of no relevant consequence, as the plaintiffs had demonstrated that the accountant's negligence had resulted in a financial loss. The court held that the trial judge's finding of no contributory negligence was open to him on the evidence. Finally, the court found that the trial judge had erred in his finding of concurrent wrongdoer and in the calculation of apportionment, as the evidence did not support this finding.

The court allowed the appeal in part and dismissed the cross-appeal. The case was remitted to the trial judge for reassessment of the damages and apportionment of liability in accordance with the court's findings.

Orders