Conclusion

The imposition of tortious liability on professional advisors in the wake of Hedley Byrne v Heller has increased the frequency of claims for contribution or reim­bursement between professional advisors and the contract-partners of their clients.

Where the advisee claims damages for breach of contract from the contract­partner, it is first necessary to decide how the advisor's liability is measured. In some cases, the measure was simply the value of everything the advisee has given away under the induced contract. In other cases, the value of the advisee's claim against the contract-partner was taken into account, limiting the advisor's liability to the amount (if any) not recoverable from the contract-partner. The first meas­ure is preferable, since it allows the advisee to claim compensation for the whole reliance loss from the advisor, and prevents the risk of a shortfall in compensation if it turns out that a smaller sum than estimated can actually be obtained from the contract-partner (because of insolvency, for example).

Under a regime of joint and several liability, the question arises whether a mutual right to contribution exists between the two wrongdoers.

The Victorian Court of Appeal in St George Bank Ltd v Quinerts Pty Ltd refused to limit the advisor's liability to a proportion of the advisee's loss by virtue of proportionate liability legislation. This is correct on principle. A proportionate liability regime ought to apply only where a mutual right to contribution would otherwise exist. As just mentioned, a right to contribution should not exist where the advisee claims a contractual debt or damages for breach of contract from the contract-partner.

Things are different where the advisee was induced to enter into the contract not only by incorrect information from the advisor, but also by incorrect infor­mation from the contract-partner, and the advisee pursues the misrepresenta­tion claim against the contract-partner. In those circumstances, it cannot be said that—as between the two wrongdoers—the contract-partner is always primarily, and the advisor always secondarily, liable for the whole of the common obligation (in the absence of an agreement between the two wrongdoers). Under a regime of joint and several liability, a mutual right to contribution should in principle exist between the wrongdoers. Under the Australian proportionate liability regime, the advisor's liability should be limited to a proportion of the advisee's loss, as should the contract-partner's liability if his misrepresentation falls within the scope of the proportionate liability statute. Such a limitation of liability is indeed the likely effect of the decision by the High Court of Australia in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd.