Richtoll Pty Ltd v WW Lawyers Pty Ltd (in liq)

Richtoll Pty Ltd (the lender) appealed a decision of the primary judge concerning allegations of professional negligence against WW Lawyers Pty Ltd (in liq) (the solicitors). The dispute arose from a loan made by the lender to a company, secured by a second mortgage. The lender alleged that the solicitors breached their duty of care by failing to conduct a search of the ASIC Register prior to the loan drawdown, which would have revealed that receivers had been appointed to the borrower. This failure, the lender contended, meant they were unaware of the receivership at the time of the loan, and that had they known, they would not have proceeded with the loan.

The central legal issue before the Court of Appeal was whether the primary judge erred in concluding that the lender would have proceeded with the loan even if they had been aware of the appointment of receivers to the borrower. This required the court to consider the issue of causation, specifically whether the solicitors' alleged breach of duty caused the lender's loss.

The Court of Appeal upheld the primary judge's finding that the lender had not established causation. The court reasoned that the lender's own evidence demonstrated a strong commercial imperative to proceed with the loan, irrespective of the receivership. The primary judge had found that the lender was aware of the borrower's financial difficulties and the high interest rate being charged, and that the lender's primary motivation was to secure the loan and the associated high return. This commercial drive was considered to be so significant that the lender would have proceeded with the loan even if they had been informed of the receivers' appointment. Therefore, the solicitors' failure to discover the receivership did not cause the lender's loss, as the loss would have occurred regardless of the breach.

The appeal was dismissed, and the appellants were ordered to pay the respondent's costs of the appeal.