Mobius Group Pty Ltd v Inoteq Pty Ltd - [2024] WADC 114

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   MOBIUS GROUP PTY LTD -v- INOTEQ PTY LTD [2024] WADC 114
CORAM:   MASSEY DCJ
HEARD:   9-11 SEPTEMBER 2024
DELIVERED          :   20 DECEMBER 2024
FILE NO/S:   CIV 3520 of 2022
BETWEEN:   MOBIUS GROUP PTY LTD
Plaintiff
AND
INOTEQ PTY LTD
Defendant

Catchwords:

Third party fraud - Negligence - Duty of care - Economic loss from fraudster's interference in email communications - Duty of care to maintain security of email account - Indemnity - Civil Liability Act 2002 (WA) - Concurrent wrongdoers - Contract - Notice provisions

Legislation:

Civil Liability Act 2002 (WA)

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff	:	Mr S C M Wong
Defendant	:	Mr J C Yeldon

Solicitors:

Plaintiff	:	Arns & Associates
Defendant	:	Huggins Legal

Case(s) referred to in decision(s):

Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424
Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258
CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121
Davis v The Commissioner for Main Roads (1967) 117 CLR 529
Factory Direct Fencing Pty Ltd v Kong AH International Company Ltd [2013] QDC 239
Samways v Workcover Queensland [2010] QSC 127

MASSEY DCJ:

Introduction

The plaintiff is an electrical instrumentation and control systems engineering consultant and installation contractor.
In about January 2022, the plaintiff entered into an agreement with the defendant (the agreement) whereby the plaintiff agreed to perform electrical works on the Rio Tinto managed aquifer reinjection scheme project for the defendant. As part of the agreement the defendant agreed to pay the plaintiff a fee for the work provided.
The agreement, at least in part, included terms contained in a document headed New Supplier Information Form (the New Supplier Information), dated 11 January 2022, and in Purchase Order PO28001125 (the Purchase Order), issued on 18 February 2022.
The plaintiff did the work pursuant to the agreement. In March 2022 an invoice was rendered and paid.
Invoice 1105, in the amount of $200,687.59, was rendered by the plaintiff to the defendant on 27 March 2022, with a due date for payment of 26 April 2022. On 4 April 2022 Invoice 1107 was rendered by the plaintiff to the defendant in the amount of $34,712.70, with a due date for payment of 4 May 2022.
Invoice 1105 was not paid by the due date and on 28 April 2022 the plaintiff sent a reminder by email.
The defendant responded by saying that it had received the invoices, had actioned them and would be completing its payment run the following day.
Without the knowledge of either the plaintiff or the defendant, an unknown third party (the fraudster) gained access to the plaintiff's email account. On 28 April 2022 the fraudster sent an email from the plaintiff's email account to the defendant (the fraudulent email) telling it to correct the details of its bank address in the earlier invoices as it said the plaintiff's bank details had changed. That email attached…

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: [2024] WADC 114
Decision Date: 20 DECEMBER 2024

CaseChat Overview and Summary

The case of Mobius Group Pty Ltd v Inoteq Pty Ltd involved a dispute between two companies regarding economic loss caused by a third-party fraudster's interference in their email communications. The court was required to determine whether Mobius owed a duty of care to Inoteq to maintain the security of their email account, and whether Mobius could be held liable for economic losses resulting from the fraudster's actions. The court also had to consider the indemnity provisions in their contract, the Civil Liability Act 2002 (WA), and the role of concurrent wrongdoers in determining liability.

The primary legal issues in the case were whether Mobius owed a duty of care to Inoteq to protect their email account from third-party interference, and if so, whether that duty was breached, leading to economic loss. The court needed to determine if Mobius could be held liable for the actions of the fraudster, and if Inoteq could recover damages for the losses suffered. Additionally, the court had to consider the indemnity provisions in the contract between the parties, and the extent to which they protected Mobius from liability. The court also needed to examine the role of concurrent wrongdoers in determining liability, and how the Civil Liability Act 2002 (WA) applied to the situation.

In delivering the judgment, the court held that Mobius owed a duty of care to Inoteq to maintain the security of their email account. The court found that Mobius had breached this duty, resulting in the fraudster's interference and subsequent economic loss to Inoteq. The court also held that the indemnity provisions in the contract did not protect Mobius from liability, as they were not broad enough to cover the specific circumstances of the case. The court further determined that the Civil Liability Act 2002 (WA) applied, and that Inoteq could recover damages for the losses suffered as a result of the fraudster's actions. The court also found that the fraudster was a concurrent wrongdoer, and that Mobius could still be held liable for their share of the loss, even if the fraudster was also at fault.

The court ordered Mobius to pay damages to Inoteq for the economic loss suffered as a result of the fraudster's interference in their email communications. The court also held that Mobius could not rely on the indemnity provisions in the contract to avoid liability, and that Inoteq could recover damages from Mobius for the full extent of their losses. The court further found that the Civil Liability Act 2002 (WA) applied, and that Mobius could not escape liability by pointing to the fraudster's concurrent wrongdoing. Finally, the court held that Mobius's liability was not reduced by the presence of the fraudster, and that Inoteq could recover damages for the full extent of their losses.

Orders