mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Argy v Blunts &amp; Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112
Outcome: cited
There would normally be much force in this submission. After all, it may just be a question of degree as to whether there will be a finding of contribution or a finding of no causation because of the actions of an applicant: see eg Argy v Blunts &amp; Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 138. However, for the purposes of proper case management, I consider it will assist in the further conduct of this proceeding to make a decision now on this issue, particularly as I have come to a clear view on the matter. In any event, my later consideration of the applicability of Pt IVAA of the Wrongs Act necessarily includes a consideration of this issue.
Case: Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39 ; (2000) 203 CLR 136
Outcome: cited
However, even if Pt IVAA applies to these proceedings according to its own terms, I am of the view that Pt IVAA is not picked up by s 79 of the Judiciary Act because the Commonwealth Legislation "otherwise provides". In my view, the operation of the Commonwealth Legislation would so reduce the ambit of Pt IVAA of the Wrongs Act that the provisions of the Commonwealth Legislation are irreconcilable with it: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553 at [78] to [83] per Gleeson CJ and Gummow J, and at [135] per Gaudron J; Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39 ; (2000) 203 CLR 136 at [17] per Gleeson CJ, Gummow and Hayne JJ, at [53] per McHugh J, and at [106] per Callinan J; Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287 at [22] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ.
Case: Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334
Outcome: cited
However, the Wrongs Act cannot apply of its own force to proceedings in this Court exercising federal jurisdiction: John Robertson &amp; Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65; Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at [35] ; Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119 at [21] ; British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30 at [3] and [44] to [45]; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38 ; (2005) 223 CLR 251 at [58] .
Case: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146
Outcome: cited
Of course, there are other policy considerations that may impact upon whether the court should deny the duty of care alleged here, namely the impact of prolonged and multiple actions against auditors, the availability of other civil and criminal proceedings against auditors, and the public interest in ensuring there are auditors ready and willing to perform their duties at a reasonable cost. These matters were raised in Esanda [1997] HCA 8 ; 188 CLR 241 at 282 to 289 per McHugh J. They are matters which need to be considered, but none in my view are of sufficient weight in the context of my inquiry to conclude that the facts and elements relied upon by the respondents could not give rise to a duty of care as alleged. It is still not possible to identify precisely a line of demarcation between the cases of pure economic loss in which damages are recoverable and those in which they are not recoverable, but I am not satisfied, even adopting the test under s 31A of the Federal Court Act, that this is a case where damages may not be recoverable: see generally Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146.
Case: British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30
Outcome: cited
However, the Wrongs Act cannot apply of its own force to proceedings in this Court exercising federal jurisdiction: John Robertson &amp; Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65; Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at [35] ; Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119 at [21] ; British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30 at [3] and [44] to [45]; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38 ; (2005) 223 CLR 251 at [58] .
Case: Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605
Outcome: considered
It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor &amp; Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst &amp; Young [1997] 2 SCR 165 at [37]. 53 In addition it was argued by KPMG that where audit reports are prepared pursuant to a statutory regime, the existence of potential civil and criminal liability under the relevant regime weighed against the further recognition of a separate duty to avoid economic loss owed by auditors to third parties, and the regime may be a determinative indication that audit reports were prepared for a statutory purpose rather than for the purpose of reliance by investors. Reference was made to Caparo v Dickman [1990] 2 AC at 652 to 653 and 661; Hercules Management [1997] 2 SCR at [49] to [57].
Case: Commonwealth Bank of Australia v Witherow [2006] VSCA 45
Outcome: discussed
In view of the definition of "damages" in s 24AE of the Wrongs Act , Pt IVAA would apply to the claims such as those made in these proceedings. I note that the definition includes "any form of monetary compensation". In my view, Pt IVAA would also apply to a claim for a sum certain (contrast with Commonwealth Bank of Australia v Witherow [2006] VSCA 45 at [10] to [11] although the extended definition of "damages" does not seem to have been discussed). 18 There are no proportionate liability provisions in the old Corporations Act . Proportionate liability provisions were introduced into the amended Corporations Act by the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) ('CLERP Act'), Sch 3(4), which commenced on 26 July 2004: see s 2(1) of the CLERP Act. They are contained in Div 2A of Pt 7.10 and apply only to conduct done in contravention of s 1041H (which prohibits misleading or deceptive conduct in relation to a financial product or a financial service). They do not apply to ss 945A and 947C(2)(e) of the amended Corporations Act . Nor do they apply to s 1012A of the amended Corporations Act . Accordingly, there is no provision of the old Corporations Act or the amended Corporations Act which applies a proportionate liability regime to the causes of action pleaded by the applicant. 19 The proportionate liability provisions in subdiv GA of Div 2 of Pt 2 of the ASIC Act were introduced by Sch 3(2) of the CLERP Act, and apply to claims for damages under s 12GF for conduct done in contravention of s 12DA. They do not apply to the cause of action pleaded by the applicant under s 12DB of the ASIC Act. 40 For the reasons set out above, Pt IVAA cannot be relied upon by the respondents for the purposes of seeking relief against KPMG. If reliance could be placed upon Pt IVAA of the Wrongs Act , it was argued by the respondents that the existence of a duty of care being owed by KPMG to the applicant to avoid the relevant economic loss, as distinct from some other relevant party, may not be required. In my view, having regard to the language of ss 24AH(1) and 24AI (1), the operation of s 24AJ , and the fact that the loss or damage referred to in s 24AH(1) is not divisible in terms of causation, it seems to me that the concurrent wrongdoers must each have committed the relevant legal wrong against the applicant. This conclusion seems to be implicit in the reasoning of the Court of Appeal in Witherow [2006] VSCA 45 , although the issue does not appear to have been addressed specifically.
Case: D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1
Outcome: considered
It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor &amp; Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst &amp; Young [1997] 2 SCR 165 at [37].
Case: Gordon v Tolcher [2006] HCA 62 ; (2006) 81 ALJR 507
Outcome: cited
In support of the contention of the respondents that the provisions of Pt IVAA of the Wrongs Act should be seen as complementary, reliance was placed upon s 5E(1) and 5E (4) of the Corporations Act . Even if otherwise applicable to the Commonwealth Legislation, s 5E(1) and 5E (4) themselves cannot be of any assistance to the respondents in this regard. They deal with not excluding or limiting the concurrent operation of any State law provided there is no direct inconsistency. For the same reasons as indicated in Gordon v Tolcher [2006] HCA 62 ; (2006) 81 ALJR 507 at [30] , s 5E can have no impact in the present proceeding. Of its own force, the Wrongs Act can have no application in this proceeding without the aid of s 79 of the Judiciary Act . 36 Therefore, Pt IVAA of the Wrongs Act cannot be relied upon by the respondents in this proceeding. 37 Finally on this issue, I mention that in the applicant's written outline, reference was made to s 109 of the Constitution although this matter was not further elaborated upon by the parties. In view of my conclusions, the operation of s 109 does not need any specific attention by me.
Case: Hercules Management Ltd v Ernst &amp; Young [1997] 2 SCR 165
Outcome: considered
It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor &amp; Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst &amp; Young [1997] 2 SCR 165 at [37]. 53 In addition it was argued by KPMG that where audit reports are prepared pursuant to a statutory regime, the existence of potential civil and criminal liability under the relevant regime weighed against the further recognition of a separate duty to avoid economic loss owed by auditors to third parties, and the regime may be a determinative indication that audit reports were prepared for a statutory purpose rather than for the purpose of reliance by investors. Reference was made to Caparo v Dickman [1990] 2 AC at 652 to 653 and 661; Hercules Management [1997] 2 SCR at [49] to [57].
Case: John Robertson &amp; Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65
Outcome: cited
However, the Wrongs Act cannot apply of its own force to proceedings in this Court exercising federal jurisdiction: John Robertson &amp; Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65; Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at [35] ; Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119 at [21] ; British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30 at [3] and [44] to [45]; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38 ; (2005) 223 CLR 251 at [58] .
Case: Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287
Outcome: cited
However, even if Pt IVAA applies to these proceedings according to its own terms, I am of the view that Pt IVAA is not picked up by s 79 of the Judiciary Act because the Commonwealth Legislation "otherwise provides". In my view, the operation of the Commonwealth Legislation would so reduce the ambit of Pt IVAA of the Wrongs Act that the provisions of the Commonwealth Legislation are irreconcilable with it: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553 at [78] to [83] per Gleeson CJ and Gummow J, and at [135] per Gaudron J; Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39 ; (2000) 203 CLR 136 at [17] per Gleeson CJ, Gummow and Hayne JJ, at [53] per McHugh J, and at [106] per Callinan J; Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287 at [22] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ.
Case: Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549
Outcome: cited
Ultimately, the question of whether discovery should be ordered is a matter involving the exercise of judicial discretion. The discretion is to be exercised having regard to the particular circumstances of each case: see Paxus Services 99 ALR at 733 to 734; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549 at [27] .
Case: Moorabool Shire Council v Taitapanui [2006] VSCA 30 ; (2006) 14 VR 55
Outcome: cited
The respondents accepted that it was unlikely that the applicant itself relied upon or was induced to take any act by reason of statements made by KPMG in its audit reports. I should indicate at the outset, contrary to the submission of KPMG, that this concession does not necessarily preclude an entitlement to relief. The potential cause of action against KPMG concerns not simply negligent misstatement; rather it involves allegations of negligent execution of an audit involving alleged negligent conduct. In these circumstances a duty of care to avoid pure economic loss may arise, based on vulnerability, without actual reliance on the part of an applicant: see eg Moorabool Shire Council v Taitapanui [2006] VSCA 30 ; (2006) 14 VR 55 at [37] to [43] per Maxwell J and the cases referred to therein and [179] per Ormiston and Ashley JJA.
Case: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553
Outcome: applied
However, even if Pt IVAA applies to these proceedings according to its own terms, I am of the view that Pt IVAA is not picked up by s 79 of the Judiciary Act because the Commonwealth Legislation "otherwise provides". In my view, the operation of the Commonwealth Legislation would so reduce the ambit of Pt IVAA of the Wrongs Act that the provisions of the Commonwealth Legislation are irreconcilable with it: Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553 at [78] to [83] per Gleeson CJ and Gummow J, and at [135] per Gaudron J; Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39 ; (2000) 203 CLR 136 at [17] per Gleeson CJ, Gummow and Hayne JJ, at [53] per McHugh J, and at [106] per Callinan J; Macleod v Australian Securities and Investments Commission [2002] HCA 37 ; (2002) 211 CLR 287 at [22] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ.
Case: Price Waterhouse v Kwan [2000] 3 NZLR 39
Outcome: distinguished
I mention one further matter for completeness. Whilst reliance was placed by the respondents on the decision in Price Waterhouse v Kwan [2000] 3 NZLR 39, I do not consider that decision is of much assistance to them. That case concerned whether auditors of a solicitors' trust account owed a duty of care to clients of the solicitors who had invested money through the trust account by means of the solicitors' nominee company. The court concluded that in light of the facts presented to it and in light of the relationship between the auditors, the solicitors and the latter's clients, there was sufficient proximity between the auditors and the clients to justify the imposition of a duty of care in tort, subject to such policy considerations as may suggest otherwise. 71 The factual circumstances of the decision in Kwan [2000] 3 NZLR 39 were quite different to this case, particularly having regard to the legislative environment and the policy considerations relied upon by the court. Of course, proximity is not the touchstone of liability in Australia. Whilst the special purpose nature of York Street and Market Street is similar to the special purpose of a solicitor's trust account, one cannot automatically apply the decision reached in Kwan [2000] 3 NZLR 39 to the facts and elements relied upon by the respondents in this case, particularly where the law in Australia in relation to this issue differs in its exposition from that in New Zealand. 72 However, for the reasons set out above, within the context of O 15A r 6, there is reasonable cause to believe that KPMG may owe a duty of care to the applicant to avoid pure economic loss as alleged by the respondents. 73 The next question is whether there is sufficient evidence before the Court to conclude that there may have been a breach of that duty and that that breach was causative of any loss.
Case: R Lowe Lippman Figdor &amp; Franck v AGC (Advances) Ltd [1992] 2 VR 671
Outcome: considered
It was contended by KPMG that a company's auditor does not owe to a third party, such as a shareholder as an individual investor (rather than as a member of the company) or any other investor, a duty of care to avoid pure economic loss save in circumstances where the auditor has specifically and intentionally assumed responsibility for providing the third party with the relevant information for the purpose that it be relied upon by the third party in doing precisely what the third party did. Reference was made to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8 ; (1997) 188 CLR 241 at 252, 258, 266 and 289; D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 ; (2005) 223 CLR 1 at 35 per McHugh J; R Lowe Lippman Figdor &amp; Franck v AGC (Advances) Ltd [1992] 2 VR 671 at 682 and 685; Caparo Industries plc v Dickman [1990] UKHL 2 ; [1990] 2 AC 605 at 629, 654 and 662; Hercules Management Ltd v Ernst &amp; Young [1997] 2 SCR 165 at [37].
Case: Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119
Outcome: cited
However, the Wrongs Act cannot apply of its own force to proceedings in this Court exercising federal jurisdiction: John Robertson &amp; Co Ltd (in liq) v Ferguson Transformers Pty Ltd [1973] HCA 21 ; (1973) 129 CLR 65; Bass v Permanent Trustee Company Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at [35] ; Solomons v District Court (NSW) [2002] HCA 47 ; (2002) 211 CLR 119 at [21] ; British American Tobacco Australia Ltd v Western Australia [2003] HCA 47 ; (2003) 217 CLR 30 at [3] and [44] to [45]; Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38 ; (2005) 223 CLR 251 at [58] .
Case: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367
Outcome: cited
In these circumstances, where a respondent desires to rely upon Pt IVAA of the Wrongs Act , it will need to plead and prove each of the statutory elements, including the failure to take reasonable care. In a proceeding where the applicant does not rely upon any such failure, then the need for a particularised plea by a respondent may be particularly important for the proper case management of the proceedings: see eg Ucak v Avante Developments Pty Ltd [2007] NSWSC 367 at [41] . It would be desirable at an early stage of proceedings for a respondent to put forward the facts upon which it relies in support of the allocation of responsibility it contends should be ordered. If a respondent calls in aid the benefit of the limitation on liability provided for in Pt IVAA of the Wrongs Act , then the respondent has the onus of pleading and proving the required elements. The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care.
Case: Ultramares Corporation v Touche (1931) 174 NE 441
Outcome: cited
Therefore, I do not consider that KPMG's liability could be described as fitting within the concept of being "in an indeterminate amount for an indeterminate time to an indeterminate class": see Ultramares Corporation v Touche (1931) 174 NE 441 at 444 per Cardozo CJ.
Case: Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2004) 216 CLR 515
Outcome: cited
The concept of vulnerability is now an important requirement in providing a basis for a duty of care to avoid economic loss. It cannot be said that the decision in Esanda [1997] HCA 8 ; 188 CLR 241 should not be considered in light of the concept of vulnerability. Both these propositions follow from the passage in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2004) 216 CLR 515 at [23] (footnotes omitted): Since Caltex Oil , and most notably in Perre v Apand Pty Ltd , the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. "Vulnerability", in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, "vulnerability" is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of a defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant. So, in Perre , the plaintiffs could do nothing to protect themselves from the economic consequences to them of the defendant's negligence in sowing a crop which caused the quarantining of the plaintiffs' land. In Hill v Van Erp , the intended beneficiary depended entirely upon the solicitor performing the client's retainer properly and the beneficiary could do nothing to ensure that this was done. But in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords , the financier could itself have made inquiries about the financial position of the company to which it was to lend money, rather than depend upon the auditor's certification of the accounts of the company.
Case: Helfenbaum v St George Bank Ltd [2001] FCA 1392
Outcome: cited
determining whether Mr Young is able to pay his debts I am not entitled to assume that he will realise assets that are necessary for him to maintain a reasonable level of existence, such as household goods: see Alpaca at [16]; Helfenbaum v St George Bank Ltd [2001] FCA 1392 at [24] .