Australia: Proportionate Liability under the microscope - when both parties are in the wrong

Insurance Update March 2012

Mitchell Morgan Nominees Pty Limited Pty Ltd v Vella [2011] NSWCA 390


On 15 December 2011, the New South Wales Court of Appeal handed down its decision in Mitchell Morgan Nominees Pty Limited Pty Ltd v Vella [2011] NSWCA 390 (Vella). In doing so, the Court clarified how proportionate liability operates in New South Wales pursuant to Part 4 of the Civil Liability Act 2002 (CLA). In short, it is now more difficult to successfully reduce a defendant's liability due to the requirement that, for the proportionate liability provisions to apply, any alleged wrongdoers must have each caused the plaintiff to suffer the same loss or damage. The New South Wales situation is now confirmed as similar to that in Victoria.

Facts of the case

Messrs Vella and Caradonna formed a joint venture in 2005 for the purpose of selling tickets to a boxing match between Anthony Mundine and Danny Green. The income from the joint venture was to be put into a joint account opened with the ANZ bank.

During this time, Mr Vella decided to consolidate all his loans. To that end, he attended his solicitor's office to collect his property title certificates. Mr Caradonna also attended this meeting. While the loan consolidation did not proceed, at some stage Mr Caradonna came into the possession of Mr Vella's certificates of title.

Without the knowledge of Mr Vella, Mr Caradonna forged Mr Vella's signature on mortgage documents and used the certificates of title to borrow money from Mitchell Morgan Nominees Pty Ltd and Mitchell Morgan Nominees (No 2) Pty Ltd (together, Mitchell Morgan). Mr Caradonna's solicitor cousin, Mr Flammia, misrepresented to Hunt & Hunt, solicitors for Mitchell Morgan, that Mr Vella had signed the mortgage documents before him. The forged mortgage was registered and Mitchell Morgan paid $1,001,748.85 into the joint ANZ account. Mr Caradonna subsequently forged Mr Vella's signature again and withdrew these funds.

The Court of Appeal overturned the earlier decision in Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505 in which the Supreme Court held that Mr Vella was not liable to Mitchell Morgan. While the forged mortgage had gained indefeasibility of title upon registration, as it was worded to secure money payable by Mr Vella to Mitchell Morgan, and no such money existed, the mortgage was to be discharged. Hunt & Hunt, and Messrs Flammia and Caradonna, were found to be concurrent wrongdoers in negligence and fraud respectively.

By virtue of the operation of s 35 of the CLA, Hunt & Hunt's liability was reduced to 12.5 per cent. However, as Messrs Flammia and Caradonna had since become bankrupt, an appeal was commenced to increase the proportion for which Hunt & Hunt was liable. The Court of Appeal increased Hunt & Hunt's liability to 100 per cent.


The key issue for the Court of Appeal was whether Hunt & Hunt and Messrs Flammia and Caradonna were concurrent wrongdoers under section 34(2)A of the CLA. Section 34(2)A provides that a concurrent wrongdoer is "a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim." Thus, the question was whether the acts of Messrs Flammia and Caradonna caused the loss which was the subject of Mitchell Morgan's claim against Hunt & Hunt.

The Court of Appeal found that, in the claim against Hunt & Hunt, Mitchell Morgan's loss arose because its money could not be recovered from the security, and not because it was lent in the first place. Therefore, Hunt & Hunt were not concurrent wrongdoers with Messrs Flammia and Caradonna.

In finding that they were not concurrent wrongdoers for the purposes of an apportionable claim, the Court of Appeal approved the Victorian case of St George Bank v Quinerts [2009] VSCA 245 (Quinerts). By way of background, Quinerts established that it is necessary to analyse the part played by each potential wrongdoer in causing the plaintiff's loss. Only then can the Court establish, for the purposes of the proportionate liability regime, whether they are a concurrent wrongdoer.

The Court found assistance in the case of Hurstwood Developments Ltd v Motor and General & Andersley & Co Insurance Services Limited [2001] EWCA Civ 1785, in which Lord Hope of Craighead stated, "the mere fact that two or more wrongs lead to a common result does not of itself mean that the wrongdoers are liable in respect of the same damage. The facts must be examined more closely in order to determine whether or not the damage is the same."

In light of this, Giles JA made the important distinction between damage and damages. Giles JA noted that "damage" was the actual injury suffered, while "damages" were the compensation paid as a result.

This distinction helps in determining whether parties are concurrent wrongdoers. Two or more parties will not be found to be concurrent wrongdoers merely because they are liable to pay the same amount of damages in compensation. They must instead be liable for the same loss or damage. In this way, it is the underlying reason why the damages are being paid that is paramount.

In Vella, the Court of Appeal found that the damage, or loss, caused by Hunt & Hunt on the one hand, and Messrs Flammia and Caradonna on the other, did not match. Hunt & Hunt was liable for negligently failing to secure Mitchell Morgan's loan with a valid mortgage. Messrs Flammia and Caradonna were liable for inducing Mitchell Morgan to pay the money through fraud. For this reason, the parties were not concurrent wrongdoers and liability could not be apportioned.

In finding Hunt & Hunt liable for the entirety of damages, the Court of Appeal established that a person who negligently acts and protects another person from fraudulent behaviour by a third party cannot reduce their liability by pointing towards the wrongdoer and arguing for the loss to be apportioned.

It is important to note that where the loss is not the same and there can be no proportionate liability, one party compensating the victim does not lessen the liability of the other wrongdoer. An equitable remedy can be sought should the victim receive double recovery.


The Court of Appeal decision in Vella provides clarification as to the operation of the proportionate liability regime in New South Wales. The implication is that legal practitioners must pay close attention when advising insurers and pleading proportionate liability. Practitioners and insurers alike may need to reassess their potential share of liability if it was previously assessed taking into account another liable concurrent wrongdoer. This is because proportionate liability can now only be used to reduce a party's liability where they have caused the same loss or damage as the other party. As has been seen, professionals must be alert to the fact that a party may now be liable for the entire loss even where another party is involved. Concurrent wrongdoer defences will need to be considered carefully in light of this case.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.