Australia: The High Court talks sense about proportionate liability

Key Points:

The High Court's decision in the Hunt & Hunt case will mean a court is more likely to find that defendants are concurrent wrongdoers.

One of the original aims of the proportionate liability regime was to ensure that deep pocket defendants (including insurance companies) are not held entirely liable for loss to which others' conduct contributed. However, in recent years we have seen a number of cases where the courts have interpreted the relevant legislation in a way which ensured maximum recovery to plaintiffs (and arguably failed to achieve the original aims of the regime).

The majority's decision in the recent High Court case of Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10 is a refreshing look at proportionate liability.

The High Court has taken the regime back to its roots and the purpose for which it was created, clarifying when parties will be found to be concurrent wrongdoers for the purposes of apportioning liability under sections 34 and 35 of the Civil Liability Act 2002 (NSW) (and their equivalent provisions in other jurisdictions1) and specifically considering when one or more people will have caused the damage or loss the subject of the claim.

This is good news for potential deep pocket defendants to litigation.

Key points:

  • the regime requires one or more persons to cause the damage or loss that is the subject of the claim;
  • damage or loss should be seen as the harm to a plaintiff's economic interest rather than the underlying myriad of causes – ie. artificial distinctions between the damage or loss caused by one or more people should be avoided;
  • this practical approach to the interpretation of the Civil Liability Act in NSW means that a court is more likely to find that defendants are concurrent wrongdoers; thus assisting the regime to meet one of its initial aims of preventing deep pocket defendants from being held liable for the whole of the loss where others are also responsible.

Proportionate liability under Part 4 the Civil Liability Act 2002 (NSW)

Under Part 4 of the Civil Liability Act 2002 (NSW), courts apportion liability between concurrent wrongdoers in claims for economic loss or damage to property (not personal injury) arising out of actions for damages (such as for negligence or breach of contract). The liability of a concurrent wrongdoer is limited to an amount reflecting the proportion of the damage or loss that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss.

The term "concurrent wrongdoer" is defined in section 34(2), and may be broken down into the following elements:

  • a person who is one of two or more persons;
  • whose acts or omissions independently of each other or jointly;
  • caused the damage or loss that is the subject of the claim.

The last element is highlighted because that was the specific issue which the Court had to consider in Hunt & Hunt.

Summary of the facts and the issue put to the High Court

The matter arose out of fraud committed by a Mr Angelo Caradonna, who, with assistance from his cousin, solicitor Mr Lorenzo Flammia (the fraudsters), forged business partner Mr Alessia Vella's signature and used the certificates of title to a number of his properties to secure loans amounting to just over $1 million from the first and second respondents (Mitchell Morgan). In other words, the fraudsters induced Mitchell Morgan into a loan agreement to which it would not otherwise have agreed.

Despite being forged, the mortgage had gained indefeasibility and was effective upon registration under the Real Property Act 1900 (NSW). As a result of negligent drafting by Mitchell Morgan's legal representatives at Hunt & Hunt Lawyers, the mortgage was worded to secure money owed by Mr Vella to Mitchell Morgan. As Mr Vella was the victim of fraud and not liable to pay Mitchell Morgan, the mortgage effectively secured nothing.

The contentious issue on appeal was whether Hunt & Hunt were concurrent wrongdoers with the fraudsters, and were therefore liable only for the proportion of Mitchell Morgan's loss that reflected their responsibility. The resolution of this issue depended upon two legal questions:

  • how to characterise Mitchell Morgan's loss/damage; and
  • whether Hunt & Hunt and the fraudsters could both be said to have caused the loss or damage, concurrently.

The majority's pronouncement on proportionate liability: Definition of "loss or damage"

Under section 34(2), concurrent wrongdoers must each have caused the "damage or loss that is the subject of the claim". The majority, Chief Justice French and Justices Hayne and Kiefel, stated that "loss or damage", in the context of economic loss, was "the harm suffered to a plaintiff's economic interests", and characterised the loss or damage of Mitchell Morgan as its inability to recover the sum advanced.

This is to be distinguished from Justice Giles' characterisation of "loss or damage" (in the Court of Appeal). He found Mitchell Morgan had suffered two different "losses":

  • the loss caused by the fraudsters, which resulted from Mitchell Morgan paying out money it would not have otherwise done so; and
  • the loss caused by Hunt & Hunt, which was not having security for the money paid out.

The majority stated that Justice Giles had incorrectly equated the immediate effects of the fraudulent and negligent conduct, with the loss and damage suffered as a result. The Court considered that these immediate effects were important to showing how it was that each of the concurrent wrongdoers "caused" the loss or damage but they could not be equated with such loss and damage. Rather, the damage only manifested itself (and the cause of action only accrued) later, when recovery was said to be impossible.

The minority opinion

Justices Bell and Gageler in the minority took a different approach. They stated that identifying the loss claimed by the plaintiff involves comparing the position of the plaintiff had the act or omission of the defendant not occurred to the position of the plaintiff as it has come to exist. Applying this approach, the minority explained that had Hunt & Hunt not breached its duty to protect Mitchell Morgan from fraud, Mitchell Morgan would have had the security of the mortgage notwithstanding the fraud. The fact that the loan transaction would not have occurred at all were it not for the fraud was "not to the point".

Accordingly, the minority held that the NSW Court of Appeal was correct in holding that Hunt & Hunt was solely responsible for the lack of security, not a concurrent wrongdoer and the loss was not apportionable.

The minority took issue with the alteration of rights caused by the majority's judgment, saying that the majority's decision had the effect of transferring not only the insolvency/recoverability risk to the plaintiff, but also transferring some or all of the very risk which in this case the defendant (Hunt v Hunt) had an obligation to assist the plaintiff to avoid.

What does the decision mean for parties to potential litigation?

The majority's decision is practically significant because it gives effect to the intention of the proportionate liability regime, by transferring liability to the plaintiff for loss caused by the wrongful act or omission by another who is impecunious. The deep pocket defendant will only be held liable for that proportion of the loss that reflects its responsibility.

This practical approach to the interpretation of the Civil Liability Act in NSW means that a court is more likely to find that defendants are concurrent wrongdoers, thus assisting the regime to meet one of its initial aims of preventing deep pocket defendants from being held liable for the whole of the loss where others are also responsible. It's good news if you are a deep pocket defendant, particularly if you are in the business of providing assurances, as your liability is likely to be limited to that for which you are responsible.

Of course, as pointed out by the minority, the outcome is not such good news for parties entering business transactions where they are reliant upon the services of assurance-givers. Those parties arguably now bear the precise risk that they had retained a third party to give them assurance about. Such parties may want to consider contracting out of the proportionate liability regime (if permitted in the relevant jurisdiction).

You might also be interested in...


1Note that the proportionate liability provisions in the relevant South Australia and Queensland legislation operate differently

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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)
Related Video
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.