Mitchell Morgan Nominees Pty Ltd & Anor v Vella & Ors [2011] NSWCA 390
Hearing dates:
8, 9, 10 November 2011
Decision date:
15 December 2011
Before:
Bathurst CJ at [1], Giles JA at [5], Campbell JA at [94], Macfarlan JA at [101], Sackville AJA at [102]
Decision:
The parties to provide agreed short minutes of orders no later than 30 January 2012, in default of agreement their respective short minutes and written submissions of no more than three pages in support thereof within the same time.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Courts computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:
PROPORTIONATE LIABILITY - loan and mortgage transaction - fraudsters forged signatures of purported borrower/mortgagor - mortgage registered but lender's interest not indefeasible as security for loan amount - fraudsters liable to lender for fraud - lender's solicitors liable to lender for negligence in failing to word mortgage so as to be indefeasible as security for loan amount - whether solicitors concurrent wrongdoer together with fraudsters within Pt 4 of Civil Liability Act 2002 - whether fraudsters' acts or omissions caused the damage or loss the subject of lender's claim against solicitors - lender's claim a claim for economic loss - difference between damage and damages - identification of economic interest harmed - "mutual discharge test"- same loss not caused by respective wrongdoings- consideration of St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666 - solicitors not concurrent wrongdoer.
[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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Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390
Case
[2011] NSWCA 390
Decision Date
CaseChat Overview and Summary
In *Mitchell Morgan Nominees Pty Ltd v Vella*, the New South Wales Court of Appeal considered a dispute arising from a fraudulent loan and mortgage transaction. The purported borrower's signatures were forged, leading to the registration of a mortgage. The lender, Mitchell Morgan Nominees Pty Ltd, suffered a loss because its interest was not indefeasible as security for the loan amount. The lender sought to recover this loss from its solicitors, alleging negligence in failing to ensure the mortgage provided indefeasible security. The central question was whether the fraudsters who perpetrated the forgery were concurrent wrongdoers with the solicitors under Part 4 of the *Civil Liability Act 2002* (NSW).
The Court was required to determine whether the acts or omissions of the fraudsters caused the damage or loss that formed the subject of the lender's claim against the solicitors. Specifically, the Court had to consider whether the claim was one for economic loss and, in that context, how to distinguish between "damage" and "damages." A key aspect of the determination involved identifying the specific economic interest that had been harmed and applying the "mutual discharge test" to ascertain if the same loss had been caused by the respective wrongdoings of the fraudsters and the solicitors. The Court also had to consider the principles established in *St George Bank Ltd v Quinerts Pty Ltd* [2009] VSCA 245; (2009) 25 VR 666.
The Court reasoned that the solicitors were not concurrent wrongdoers with the fraudsters. The loss suffered by the lender was the failure to obtain indefeasible security for the loan amount, which was a direct consequence of the solicitors' negligence. The fraudsters' actions, while fraudulent, did not cause the specific economic loss claimed against the solicitors, which related to the inadequacy of the security documentation. The Court found that the "mutual discharge test" was not satisfied because the respective wrongdoings did not cause the same loss.
The Court ordered that the parties were to provide agreed short minutes of orders no later than 30 January 2012. In the event of disagreement, each party was to submit their own short minutes and written submissions of no more than three pages in support thereof within the same timeframe.
Orders
Orders of the court
The parties to provide agreed short minutes of orders no later than 30 January 2012, in default of agreement their respective short minutes and written submissions of no more than three pages in support thereof within the same time.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Courts computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]