The plaintiffs purchased land from the defendant vendor, as part of a larger development known as Twin Creeks, allegedly in reliance upon various representations made by and/ or contained in promotional material provided to them by the vendor's real estate agent.
Essentially, these representations fell into four main categories, one of which was that the purchasers had expected that a resort hotel would open at Twin Creeks and that the managers of that hotel would manage the various recreation and restaurant facilities at Twin Creeks. However, even at the time of the proceedings, there was no such resort hotel and the recreation and restaurant facilities were managed by a third party.
Following a detailed analysis of the evidence, the Court found that the representation outlined above was misleading and deceptive and therefore in contravention of section 52 of the Trade Practices Act 1974 (Cth) as the vendor could not establish reasonable grounds for making it. Although an alternative claim was made pursuant to section 53A of the Trade Practices Act 1974 (Cth), which was concerned with representations pertaining to the sale or grant of interests in land, the Court found that this additional claim added nothing to the case under section 52. It was not even suggested by Counsel for the purchasers that it added anything.
The Court was also required to consider the impact of proportionate liability pursuant to the Civil Liability Act 2002 (NSW), given the vendor's allegations that the solicitor who acted for the purchasers on the sale transaction was a concurrent wrongdoer. These allegations were based on the solicitor's failure to advise the purchasers that the representations and promotional material (which included various disclaimers) was/were not contractual in nature. In addition, the solicitor failed to advise the purchasers that the special conditions of the contract made it clear that there was no contractual obligation on the vendor to implement the development in accordance with the representations.
The Court found that a solicitor using due competence and prudence ought to have advised the purchasers that there was no legal obligation on the vendor to implement the development in accordance with the representations and that their legal rights were those contained in the contract and no more. Based upon the evidence before it, the Court accepted that the conduct of the solicitor in question had fallen short of the standard expected of a solicitor acting for and advising a purchaser in these circumstances.
Accordingly, the solicitor was found to be a concurrent wrongdoer for the purposes of the proportionate liability provisions.
Turning then to the question of how to apportion liability between the solicitor and the vendor, the Court noted that, in most of the cases where a solicitor's proportionate liability has tended to be around 10%, the other wrongdoer has been guilty of fraudulent misrepresentation. In this case there was no such allegation, let alone finding, against the vendor.
Based upon the relevant legal principles outlined in Kayteal Pty Ltd v John Joseph Dignan & Ors  NSWSC 197 (reported at pages 187 and 188 of the September 2011 edition of this journal), the Court accepted that, in cases such as this where a misrepresentor is not guilty of fraud, their share of the responsibility should be less and the negligent solicitor's share should be greater.
Accordingly, based upon the facts of this case and noting that 'the apportionment of responsibility in this type of situation is necessarily a broad-brush one', the Court apportioned liability two-thirds to the vendor and one-third to the solicitor.
Following on from Kayteal, this case provides further guidance as to how responsibility will be apportioned between two or more wrongdoers in a property transaction, especially in circumstances where fraud is not alleged, or found. Obviously, the facts of individual cases will/may lead to different percentages of responsibility/wrongdoing.
As readers of this journal may recall, in Kayteal, the solicitor's share of responsibility was found to be 12.5%, while the valuer (who was grossly negligent) was found to be 40% responsible and the borrower (who engaged in fraudulent/intentional misrepresentations) was found to be 47.5% responsible. However, assuming that the valuer was not 'grossly' negligent and the borrower had only made 'innocent' misrepresentations, following the rationale in Awad, one would expect the shares of responsibility apportioned to the valuer and the borrower under proportionate liability law to be reduced, with the solicitor's share of responsibility increased.
This case is therefore particularly relevant to the potential liability of solicitors involved in lending transactions where a valuer is also sued.
Likewise, it is a stark reminder to plaintiffs/claimants that, in order to obtain a judgment against concurrent wrongdoers, they need to be joined to the proceedings. In this case, the solicitor was not joined to the proceedings by the purchasers - maybe in part because he was a member of the firm of solicitors who acted for the purchasers in these proceedings. By dint of this election, the purchasers were unable to recover onethird of their entitlement to damages.
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