COMINO v MANETTAS, COONEY v MANETTAS [1993] NSWCA 305

COMINO v MANETTAS, COONEY v MANETTAS

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, SHELLER and CRIPPS JJ 3 and 4 November 1992, 5 March 1993

[1993] NSWCA 305

APPEAL from Commercial Division — Transaction financed by GIO upon guarantee and by directors. LIABILITY of guarantors upon guarantees given to GIO — One guarantor instructed solicitor to guarantee only one third of liability severally — Solicitor drafted documents making guarantor liable jointly and severally — Solicitor acting for GIO and for guarantor — Solicitor negligent in not clarifying instructions — Held: GIO may enforce guarantee against a guarantor for full (not limited) amount. — LIABILITY of solicitors to guarantor Manettas in negligence — Solicitor partner negligent in failing to clarify instructions — Firm liable for damages to Manettas — Number of partners increased during period of transaction — Whether original or enlarged firm liable — Judgment given against enlarged firm at trial — No objection at trial to form of judgment — Trial judge refused leave to amend judgment at trial level — Held: Not open to enlarged firm to claim on appeal that only original firm liable.

RIGHT of solicitors to indemnity from Lawcover insurer — Insurer claims that liability to Manettas arose from "the dishonest or fraudulent act or omission of the Insured within exemption" — Solicitor dishonestly or fraudulently attested signatures of witnesses and certified in respect of guarantees — Negligent failure to clarify instructions not dishonest or fraudulent — Liability not "brought about by dishonest or fraudulent act or omission" within exemption.

Mahoney JA The Government of Insurance Office of New South Wales (GIO) has sued Nicholas Peter Manettas, Nicholas John Wall and James John Caralis upon guarantees given by them of loans made by the GIO to Dylcu Pty Ltd (Dylcu) and Presabout Pty Ltd (Presabout). The GIO lent some $4,000,000 to Dylcu and some $3,000,000 to Presabout to enable those companies to purchase and develop properties at Newtown and Leichhardt. The GIO called upon the guarantors under their guarantees. The guarantors defended the proceedings and there have been third party proceedings and cross claims.