Ahrens Engineering Pty Ltd v Leroy Palmer & Associates Pty Ltd - [2009] SASC 300

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
AHRENS ENGINEERING PTY LTD v LEROY PALMER & ASSOCIATES PTY LTD & ORS
[2009] SASC 300
Reasons of Judge Burley a Master of the Supreme Court
23 September 2009
PROCEDURE
Proceedings relating to alleged defective design and construction of grain silos - builder brought proceedings against defendants who were allegedly responsible for defective design and construction - settlement of claim against third defendant - discontinuance having the effect of a final judgment in favour of the defendant - whether arguable that third defendant could maintain contribution proceedings against the other defendants.
Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 Section 6, referred to.
Hall v Bonnett [1956] SASR 10; Wimpey Ltd v BOAC [1955] AC 169, considered.

AHRENS ENGINEERING PTY LTD v LEROY PALMER & ASSOCIATES PTY LTD & ORS
[2009] SASC 300

JUDGE BURLEY: These reasons concern two applications involving the defendants to these proceedings. The first is an oral application by the third defendant (Worley Parsons) for leave to amend two cross claims (contribution notices) (FDN 28 and 29) directed respectively against the first defendant and the second defendant (the Palmer defendants) and the second is a written application (FDN 59) whereby the Palmer defendants seek an order dismissing the cross-actions (contribution notices) brought respectively against them by Worley Parsons. The latter application was originally directed to the cross-claims (FDN 28 and 29) noted above. The oral application of Worley Parsons is for leave to amend those cross-claims in terms of part 6 of Exhibit LCB1. As explained by Mr Whitington QC, counsel for Worley Parsons (T 20/2 et seq):
Our application to amend is really only technical to provide a vehicle for my learned friend to say our contribution claim is bad in substance, whatever its form. We then reciprocate with our application because we say this: If my learned friend is right and our contribution notice goes – on the basis that it’s been put to us in correspondence, there would be a reciprocal logic that his contribution notice against us should go, so there are competing or [sic] cross-contribution notices.
As a result, the submissions put by Mr Trim QC, counsel for the Palmer defendants, were directed not only to the sufficiency of the pleading in the proposed amended contribution notices, but also to the question of whether or not Worley Parsons is able to pursue a contribution claim at all.
Worley Parsons relied upon the affidavit of Mr Buchanan (FDN 65) which was received without objection. The Palmer defendants relied upon the affidavit of Ms Hunt (FDN 61) which was also received on the application without objection. The background to these applications is as stated by Mr Whitington at the commencement of argument (T 24/26 et seq). I shall summarise what he said.
In about May 2002 AWB Limited, a grain dealer, wished to build some grain silos. It engaged a principal contractor called Bardavcol Pty Ltd to design and construct silos at various locations around Australia. The plaintiff was engaged by Bardavcol as a sub-contractor to design and construct the silos. The plaintiff in turn retained the first defendant to prepare design calculations and specifications for the silos. Between June 2002 and November 2002 the plaintiff proceeded with the construction of the silos at Crystal Brook, Malalla and Pinaroo, among other sites.
The third defendant was retained by Bardavcol to perform an oversight role in connection with the design and construction of the silos.
On 28 November 2002 one of the two silos constructed at Crystal Brook collapsed and imploded. According to the plaintiff, the design and construction of the collapsed silo and five others was defective. The collapsed silo had to be completely replaced. Rectification work had to be carried out on the other five silos.
The plaintiff has settled its dispute with Worley Parsons and a discontinuance against that defendant has been filed. Nevertheless, Worley Parsons remains the respondent to a cross-claim pursued by the Palmer defendants. In broad terms, the Palmer defendants contend that if they and Worley Parsons are found to be joint tortfeasors, then contribution would apply between them.
After the plaintiff and Worley Parsons settled their dispute, Worley Parsons asserted that the Palmer defendants remained liable to contribute to the amount paid by Worley Parsons to the plaintiff. The proposed amended cross-claims (contribution notices) make assertions to this effect. The Palmer defendants dispute this contention.
Part of their opposition is based on the fact that, upon the discontinuance by the plaintiff in respect of Worley Parsons, the Court ordered, on 23 December 2008:
(1)That the notice of discontinuance filed by the plaintiff, Ahrens Engineering Pty Ltd (Ahrens) against the third defendant, Worley Parsons Services Pty Ltd (Worley) shall pursuant to 6R 108 exception 2 have the same effect as a final judgment in favour of Worley against Ahrens.
The Palmer defendants contend that because the discontinuance against Worley Parsons had the effect of a final judgment, Worley Parsons was no longer able to claim contribution from the Palmer defendants. Worley Parsons says in response that the fact that the discontinuance had the effect of a final judgment did not preclude it from seeking contribution from the Palmer defendants in respect of the amount that it paid in settlement to the plaintiff. Worley Parsons advanced the alternative argument that if it was precluded from seeking contribution against the Palmer defendants, the Palmer defendants were likewise precluded from seeking contribution from Worley Parsons. These are the issues which require consideration in the context of Worley Parson’s application for leave to amend the contribution notices and the Palmer defendants’ application to dismiss the contribution proceedings.
During the course of the argument I asked counsel whether their expectation was that I would finally decide the points raised or, as is more in keeping with an interlocutory application, merely decide whether the points, one way or the other, are arguable. Both counsel accepted that the appropriate approach to take was to determine whether or not their respective contentions were arguable. That meant that where the Palmer defendants have asked me to dismiss the existing contribution proceedings brought by Worley Parsons against them, I should not do so unless I came to the conclusion that the contentions of Worley Parsons in support of the amended contribution notices were untenable.
One of the proposed contribution notices is directed to the first defendant, Leroy Palmer & Associates, and the other is directed to the second defendant, Leroy Russell Palmer. They are each in almost identical terms. It is asserted that if Worley Parsons is a person who is liable in damages to the plaintiff then such loss or damage was caused by or contributed to by the first and second defendants respectively. The notices refer to s 6(1) of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (the Act). Paragraph 6 of the notices pleads that the “settlement sum” paid by Worley Parsons to the plaintiff, either completely or partially “has satisfied [respectively the first and second defendants’] liability in damages for harm” suffered by the plaintiff as referred to in paragraph 1 of the contribution notices.
Worley Parsons also relies upon equitable contribution.
The orders sought on the contribution notices are:
(a)Complete indemnity in respect of the settlement sum or alternatively contribution or contribution in equity.
The “settlement sum” is the amount paid by the third defendant to the plaintiff in settlement of the claim between the plaintiff and the third defendant which in turn led to the discontinuance of the plaintiff’s claim against the third defendant.
The submissions of Mr Trim QC, counsel for the Palmer defendants, may be divided into two categories: first, that as a matter of statutory interpretation, the third defendant does not come within s 6(1) of the Act; second, arguments based on res judicata and estoppel. The latter involves an examination of the principles of (a) res judicata, (b) issue estoppel and (c) reliance upon Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
Section 6(1) of the Act
Section 6(1) of the Act is as follows:
6(1)A person who is liable in damages for harm suffered by another may recover contribution from a third person who is also liable in damages for the same harm.
Mr Trim submitted that it could not be said that Worley Parsons is presently liable in damages because, when the plaintiff discontinued the proceedings against Worley Parsons, the discontinuance had the effect of a judgment in favour of Worley Parsons against the plaintiff. Consequently, it was argued, Worley Parsons could not bring itself with s 6(1) of the Act because it was not liable in the matter specified in s 6(1). If Worley Parsons did not come within the provisions of the Act, no claim for contribution in accordance with the provisions of the Act could be made.
If s 6(1) is taken in isolation, and if the section is read literally, there is some force in Mr Trim’s submission. However, an examination of the cases reveals that the position is not as clear as it might be. In Hall v Bonnett [1956] SASR 10, the Full Court had to consider the provisions of s 25(c) of the Wrongs Act 1936-51 which was one of the predecessors to s 6 of the Act. Section 25(c) was in turn a reproduction of s 6 of the Imperial Act, the Law Reform (Married Women and Tortfeasors) Act 1933. The relevant parts of the section are as follows:
Where damage is suffered by any persons as the result of a tort …..
(c)any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise.
The majority decision (Napier CJ and Abbott J) referred to the House of Lords decision in Wimpey Ltd v British Overseas Airways Corporation [1955] AC 169. In that case the House of Lords determined that s 6(1)(c) of the Imperial Act referred to two categories of persons from whom contribution might be sought: first, a tortfeasor who is liable to the person who has suffered harm; and second, a tortfeasor who would, if sued, have been liable to the person who suffered harm.
Section 6(1)(c) has not been reproduced in the modern South Australian legislation, but comments made by some of the members of the House of Lords in Wimpey v BOAC may have a bearing upon how s 6(1) of the Act is to be interpreted. For example, Lord Porter said of s 6(1)(c) of the Imperial Act:
It stipulates nothing as to time …..
By this I take his Lordship to have meant that the provision is not specific about the time at which the person from whom contribution was sought “would … have been liable in respect of the same damage …”. This point was developed by Lord Reid (at 185 et seq) as follows:
The subsection [section 6(1)(c) of the Imperial Act] appears to be intended to be generally applicable to cases in which one tortfeasor seeks to recover contribution ‘from any other tortfeasor who is, or would have sued, liable in respect of the same damage’. I agree with your Lordships that the word ‘liable’ in this context must necessarily mean held liable by judgment, and, so reading the word, the subsection in my judgment first requires an answer to the question whether that other tortfeasor has already been held liable in respect of that damage. If he has, and if the other conditions of the section are satisfied, then the Act gives a right to contribution. But if he has not, a second question must be asked: would that other tortfeasor if sued had been liable in respect of that damage? I do not think that it is disputed that this must mean if sued by the person who suffered the damage. But still there are many cases where that question as it stands cannot be answered Yes or No. A person may be held liable if sued at one time but not if sued at another time: for example, a person who would have been held liable if sued at an earlier date may at a later date have a good defence under the Limitation Act or because he has had his liability discharged by the grant to him of the release. If the subsection is to be capable of application to such cases the words “if sued” must have a temporal connotation. The words “would have been liable” show that the hypothetical action must be supposed to have been brought at some time between the date when the damage was suffered and the date when the claim for contribution is determined, but, as I have said, that is often not sufficiently definite to enable the question to be answered. No matter what may be the true construction of the rest of the subsection, this difficulty remains, and if it is to be operative generally something beyond the bare words of the enactment must at this point be read into it. There are least four possibilities. The meaning may be “would if sued immediately after the damage was suffered have been held liable,” or it may be “if sued when the tortfeasor claiming contribution was sued,” or it may be “if sued when the claim for contribution was made” or it may be enough that there was at least some time between those dates when the action would have succeeded.
In my opinion it is at least arguable that such an analysis could apply to s 6(1) of the Act. It could be said that the provision, where it refers to “a person who is liable in damages” makes no stipulation as to time. If there then arises a “temporal connotation”, the four categories referred to by Lord Reid may need to be considered. To that extent, in my opinion, it is at least arguable by Worley Parsons that it was liable, within the meaning of s 6(1) of the Act, up to the point that the order was made on 23 December 2008 that the discontinuance against it would have the same effect as a final judgment. It is arguable that Worley Parsons may then rely upon that fact as bringing it within the provisions of s 6(1) of the Act.
If I am correct in this view, it is not necessary to consider the arguments advanced about res judicata and any other form of estoppel based on a Court judgment. That does not mean that, at trial, the Palmer defendants would be precluded from arguing that the various principles of res judicata and estoppel prevent Worley Parsons from obtaining contribution from them. That being the case I do not think it appropriate to set out my views on those matters if they, in any event, will fall for determination at the trial.
Worley Parsons’ resistance to the claim for contribution brought by the Palmer defendants against it was confined to an argument that, if Worley Parsons was estopped from seeking contribution from the Palmer defendants, the reverse position applied. That argument has not been made out because I have not found it necessary to determine whether or not it is arguable that a res judicata or any other form of estoppel by record has arisen.
I have not to this point specifically set out in these reasons the submissions put by Mr Trim as to the sufficiency of the pleading. In my opinion, the proposed contribution notices are sufficient to give adequate notice to the Palmer defendants of the nature of the contribution claims made against them and I would not decline permission to amend by reference to those arguments.
For these reasons I proposed to give permission to Worley Parsons to amend its contribution notices as sought. That means that the Palmer defendants’ application to dismiss the contribution proceedings against it must be dismissed. I will hear the parties as to what orders should be made and as to costs.
I adjourn the applications to 29 September 2009 at 9.30 am.