Australian Pacific Airports (Melbourne) Pty Ltd v CPB Contractors Pty Ltd and Anor (Ruling)

[2024] VCC 357

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BUILDING CASES LIST

Case No. CI-21-03765

Australian Pacific Airports (Melbourne) Pty Ltd (ACN 076 999 114)	Plaintiff
v
CPB Contractors Pty Ltd (ACN 000 893 667)	Defendant
and
Nilsen (Vic) Pty Ltd (004 139 904)	Third Party

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JUDGE:	HER HONOUR JUDGE KIRTON
WHERE HELD:	Melbourne
DATE OF HEARING:	22 March 2024
DATE OF RULING:	26 March 2024
CASE MAY BE CITED AS:	Australian Pacific Airports (Melbourne) Pty Ltd v CPB Contractors Pty Ltd and Anor (Ruling)
MEDIUM NEUTRAL CITATION:	[2024] VCC 357

RULING
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Subject:application to amend defence; proportionate liability.

Catchwords: application to amend defence; proposed pleading of proportionate liability; whether this means third party must have a legal liability to plaintiff as well as having caused the loss and damage on the facts; majority and minority views in Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613; the question of a legal liability may be inextricably bound up with an examination of the facts causing loss; principles applicable to allowing an amendment to a pleading; proposed amendment not patently hopeless or futile.

Legislation Cited:      Wrongs Act 1958 (Vic); Civil Liability Act 2002 (NSW); Supreme Court (General Civil Procedure) Rules 2005; Civil Procedure Act 2010 (Vic).

Cases Cited:Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613; Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2015] VSCA 98; McClafferty v Greg Smith Pty Ltd (Building and Property) [2019] VCAT 299; Tanah Merah Vic Pty Ltd (ACN 098 935 490) v Owners Corporation No 1 of PS613436T & Ors [2021] VSCA 72; Melbourne Water Corporation v Vaughan Constructions Pty Ltd [2022] VSCA 241; Woodhouse v Fitzgerald [2021] NSWCA 54; 104 NSWLR 475; Equal 54 Pty Ltd v Dennis Galimberti [2016] VSC 588; Cosmetic Laser Clinic Pty Ltd v Pirintji [2015] NSWSC 983; Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd [2014] FCA 880; 224 FCR 519; St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; ABL Nominees Pty Ltd v MacKenzie (No. 2) [2014] VSC 529.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	J Lipinski (of counsel)	Landers & Rogers
For the Defendant	J Rudd (of counsel)	Wotton & Kearney
For the Third Party	C Viti (solicitor)	Moray & Agnew

HER HONOUR:

Background

1By summons dated 20 December 2023, the defendant sought leave to file an amended defence. The effect of the amended defence is to allege that the third party (Nilsen) is a concurrent wrongdoer within the meaning of Part IVAA of the Wrongs Act 1958 (Vic) (the Wrongs Act). Nilsen has already been joined to the proceeding for the purposes of a contribution claim brought by the defendant against it.

2The plaintiff does not oppose the introduction of a proportionate liability defence, and subject to one aspect of the pleading, it largely does not oppose the proposed amended defence being filed. However, it opposes paragraphs 23 - 26 of the proposed pleading and seeks that any leave to file the proposed amended defence should be subject to those paragraphs (and subsequent references to those paragraphs) being struck out.

3In general terms, the proposed amended defence pleads the following matters:

(a)   The plaintiff has alleged in its Amended Statement of Claim that the defendant is liable to it for breach of contract, or alternatively, for breach of a duty of care, as a result of the flooding of a utilities tunnel near the T4 terminal at Melbourne Airport following a burst water main in September 2015.

(b)   The defendant entered into a subcontract with Nilsen for it to provide electrical services in accordance with the electrical specifications set out in the head contract between the defendant and the plaintiff.

(c)   If the plaintiff’s claim is accepted, then :

(i)Nilsen is in breach of its subcontract with the defendant;

(ii)alternatively, Nilsen has breached a duty of care owed to the plaintiff;

(d)   and the acts or omissions of Nilsen have caused the plaintiff’s loss and damage.

4The plaintiff’s objection to the proposed amended defence relates to the reference to the subcontract between the defendant and Nilsen. The plaintiff’s contention is that there can be no legal liability in contract from Nilsen to the plaintiff and so those paragraphs of the pleading do not give rise to a cause of action and should not be allowed, or they are irrelevant and should be struck out.

5The defendant concedes that as there was no contract between the plaintiff and Nilsen, Nilsen has no legal liability to the plaintiff for breach of contract. However, it says that those paragraphs are not objectionable and they are relevant and necessary in order to establish the fact of causation of the plaintiff’s loss and damage.

The proposed amended defence

6The proposed paragraph 23 sets out the fact of the subcontract. The proposed paragraph 24 sets out the terms Nilsen was to comply with, and these terms include the electrical specifications in the head contract.

7Paragraph 25 alleges further terms that Nilsen made representations and gave warranties, including “to exercise the standard of care, skill, judgment and diligence that would be expected of a contractor that is skilled and experienced in performing work of a nature similar to the Nilsen Works” and to undertake the Nilsen works “with due care and skill”.

8Paragraph 26 states that if the defendant is liable to the plaintiff, then the plaintiff’s loss or damage was caused by Nilsen’s breach of the subcontract, with particulars of those breaches listed in six subparagraphs, and which include breaches of the care and skill terms described above.

9The proposed defence goes on to plead that Nilsen owed a duty of care to the plaintiff and that if the defendant is liable to the plaintiff, then the plaintiff’s loss or damage was caused by Nilsen’s negligent conduct.

10The pleading concludes at paragraph 29 that if the matters pleaded at paragraphs 22 - 28 are found proven and the defendant is found liable for the loss and damage claimed by the plaintiff, then the plaintiff’s claim against the defendant is an apportionable claim within the meaning of the Wrongs Act.

11In his oral submissions, Counsel for the defendant explained the intention of the proposed pleading. He said that the question of whether Nilsen caused the plaintiff’s loss and damage is a question of fact and law. A variety of factual issues caused the loss and damage. These material facts are inextricably bound up with legal analysis, and the particulars of the breaches listed at paragraph 26 are necessary and relevant. In summary, the breaches are that the defendant was obliged to do certain works under the head contract, Nilsen was engaged to do those works, Nilsen promised the defendant they would do them in that certain way, and it is their failure to do that which caused the plaintiff’s loss and damage. The promises made by Nilsen in the subcontract are the same promises as made by the defendant to the plaintiff in the head contract.

The plaintiff’s objection

12The plaintiff’s objection is that at law, the meaning of “having caused the plaintiff’s loss and damage” in Part IVAA of the Wrongs Act requires Nilsen to have a legal liability to the plaintiff. As it does not have a legal liability in contract, these paragraphs of the proposed pleading should be struck out.

13The plaintiff relied on the minority decision in Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd[1]  (Hunt & Hunt) at paragraph 91, as authority for the proposition that causation involves a legal liability.

[1] [2013] HCA 10; (2013) 247 CLR 613.

14Alternatively, Counsel submitted that if I were to accept the majority decision in Hunt & Hunt and find that the defendant need only show causation as a matter of fact, then the facts pleaded relating to the breach of contract vis-à-vis the defendant, are not relevant to the facts between Nilsen and the plaintiff in any event. Accordingly, the proposed paragraphs should be struck out as they are a distraction and are irrelevant to the apportionment of liability between the defendant and Nilsen.

15Counsel also submitted that if the proposed amended pleading was liable to be struck out, then leave to amend would not ordinarily be given: per Sugar Australia Pty Ltd v Lend Lease Services Pty Ltd [2] (Sugar).

[2] [2015] VSCA 98 at [118].

The defendant’s response

16The defendant referred me to the majority decision at paragraph 47 of Hunt & Hunt.

17Counsel further submitted that insofar as there is a question about the interpretation of the applicable legal principles, this is a matter for trial.

The interpretation of the meaning of causation

18As noted above, both parties relied on the decision of Hunt & Hunt. This was a decision of the High Court involving an analysis of apportionment between concurrent wrongdoers under Part 4 of the New South Wales Civil Liability Act 2002 (the NSW Act)[3]. Part 4 of the NSW Act is similar to Part IVAA in the Victorian Wrongs Act, but there are differences.

[3]        New South Wales Civil Liability Act 2002.

19A summary of the facts in Hunt & Hunt was used fully provided by Senior Member Farrelly in McClafferty v Greg Smith Pty Ltd[4],  and I adopt it as follows:

39.In Hunt & Hunt, Morgan Nominees Pty Ltd (Morgan) provided a loan on the application of two persons, Mr C and Mr V. Mr C had forged Mr V’s signature on the loan application and mortgage documentation. The loan and mortgage documentation had been drawn by Morgan’s solicitors, Hunt & Hunt. Mr C’s cousin, a solicitor Mr F, provided false certification that he had witnessed Mr V’s signature to the documentation. The loan monies were paid into a joint account in the name of Mr C and Mr V. Forging Mr V’s signature, Mr C withdrew the money over a period of a few months. By the time Mr V became aware of the fraud, all the loan monies advanced had been withdrawn by Mr C. In a proceeding brought by Mr V, at which time Mr C and Mr F had both become bankrupt, it was held that the loan agreement was void by reason of the forgery and Mr V was not liable to Morgan. It was also held that because the mortgage purported to secure Mr V’s indebtedness by reference to the void loan agreement, it secured nothing and was liable to be discharged.

40.Morgan brought a proceeding against Hunt & Hunt alleging negligence in preparation of the mortgage documentation. Young CJ, in the New South Wales Supreme Court, found that Hunt & Hunt had breached their duty of care owed to Morgan in that they failed to prepare a mortgage containing a covenant to repay a stated amount.

41.Young CJ also found that Mr C and Mr F were, in respect of Morgan’s claim against Hunt & Hunt, concurrent wrongdoers under the relevant provisions of the NSW Act. Young CJ assessed Hunt & Hunt’s liability as a concurrent wrongdoer to be limited to 12.5% of Morgan’s loss, with the remaining 77.5% of the loss apportioned to Mr C and Mr F. That judgement was set aside by the NSW Court of Appeal which held that because the loss suffered by Morgan as a result of Hunt & Hunt’s negligence was different from the loss caused by the fraudulent acts of Mr C and Mr F, Mr C and Mr F were not concurrent wrongdoers in respect of Morgan’s claim against Hunt & Hunt. Hunt & Hunt appealed the Court of Appeal’s decision in this regard.

42.The High Court, by the majority joint decision of French CJ, Hayne and Kiefel JJs, allowed the appeal. They found that the Court of Appeal had erred in its finding that the loss and damage caused by Mr C and Mr F was not the loss and damage caused by Hunt & Hunt. The High Court found that Morgan’s loss or damage was properly characterised as its inability to recover monies it had advanced, and although Morgan’s cause of action against Hunt & Hunt was different to the cause of action Morgan would have had against Mr C and Mr F, the acts and omissions of each of Hunt & Hunt, Mr C and Mr F materially contributed to Morgan’s inability to recover the monies advanced. As such, Hunt and Hunt, Mr C and Mr F were concurrent wrongdoers in respect of Morgan’s claim for loss or damage.

[4] (Building and Property) [2019] VCAT 299 at [39] - [42].

20The High Court concluded that there was no doubt, on the findings of the primary judge, that Hunt & Hunt was a wrongdoer whose actions were a cause of Mitchell Morgan’s inability to recover the moneys advanced. The question under s 34(2) of the NSW Act was whether the fraudsters’ acts, independently of Hunt & Hunt, also caused that damage. This involved an analysis of the meaning of “caused” in s 34(2).

21The majority (French CJ, Hayne and Kiefel JJ) in Hunt & Hunt held at paragraph 47 (footnotes excluded)[5]:

The word “caused”, in a statutory provision in terms similar to s 34(2), has been read as connoting the legal liability of a wrongdoer to the plaintiff. The language of liability is used in contribution legislation, but not in Pt 4 of the Civil Liability Act. Nevertheless, it would usually be the case that a person who is found to have caused another’s loss or damage is liable for it. References to the liability of a wrongdoer should not, however, distract attention from the essential nature of the inquiry at this point, which is one of fact.

[5] Hunt & Hunt at [47].

22The minority (Bell and Gageler JJ) held at paragraph 91[6] (footnotes excluded):

To answer the description of “a person … whose acts or omissions (or act or omission) caused” that damage or loss or harm, C (in common with B) must be (or have been) legally liable to A for the damage or loss that is the subject of the claim. The reference in the definition to “acts or omissions (or act or omission)” is to one or more legally actionable acts or omissions. The reference in the definition to acts or omissions having “caused … the damage or loss that is the subject of the claim” is not, as has correctly been held, merely to causation in fact. “Questions of causation are not answered in a legal vacuum” but “are answered in the legal framework in which they arise”. The reference here is to causation that results, or would result, in legal liability.

[6] Hunt & Hunt at [91].

23It was not disputed that s 34(2) of the NSW Act is the equivalent of s 24AH(i) of the Wrongs Act[7].  Initially, Counsel for the plaintiff contended that the majority at paragraph 47 were not expressly referring to s 34(2); however he may have withdrawn that submission. In any event, I do not accept his contention. The wording of paragraphs 46 and 47 make it clear that the majority were considering the meaning of causation in s 34(2).

[7]        Tanah Merah Vic Pty Ltd (ACN 098 935 490) v Owners Corporation No 1 of PS613436T & Ors [2021]

VSCA 72 at [132] (Tanah Merah).

24From the above two extracts, it appears there is a tension between the findings of the majority and the minority. This tension has been identified in subsequent authorities. See for example:

(a)   Melbourne Water Corporation v Vaughan Constructions Pty Ltd[8], a decision of the Victorian Court of Appeal;

(b)   Woodhouse v Fitzgerald[9],  a decision of the NSW Court of Appeal

(c)   Equal 54 Pty Ltd v Dennis Galimberti[10],  a decision of Kennedy J of the Victorian Supreme Court;

(d)   Cosmetic Laser Clinic Pty Ltd v Pirintji[11],  per Garlin J of the NSW Supreme Court on an application for leave to amend a defence;

(e)   Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd[12],  a decision of Mortimer J of the Federal Court of Australia;

(f)    McClafferty v Greg Smith Pty Ltd[13],  a decision of Senior Member Farrelly of the Victorian Civil and Administrative Tribunal;

(g)   Note also Nettle JA’s decision in St George Bank Ltd v Quinerts Pty Ltd[14]   which predated Hunt & Hunt.

[8] [2022] VSCA 241 (Sifris, Kennedy and Walker JJA) at [143] - [145].

[9] [2021] NSWCA 54; 104 NSWLR 475 (Basten, Meagher and Payne JJA) at [90] - [96].

[10] [2016] VSC 588, at [302] - [306].

[11] [2015] NSWSC 983 at [86] - [87].

[12] [2014] FCA 880; 224 FCR 519 at [23].

[13]        Op. cit. at [39] - [52].

[14] [2009] VSCA 245.

25The majority of the views expressed in these (and other) authorities tend towards a conclusion that French CJ, Hayne and Kiefel JJ in Hunt & Hunt were not discounting the need for a legal liability on the part of a concurrent wrongdoer. However there is no clear binding precedent to that effect.

26In any event, these decisions are consistent in noting that the question of a legal liability may be inextricably bound up with an examination of the facts causing loss.  As Mortimer J said in Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd at [23]:

Minds may differ on the application of the causation analysis required by the proportionate liability provisions, as the departures in characterisation between the majority and minority in Hunt & Hunt demonstrate. The essential nature of the causation inquiry is one of fact (see Hunt & Hunt 247 CLR 613; [2013] HCA 10 at [47] per French CJ, Hayne and Kiefel JJ), and this emphasises the need for careful examination of the evidence in order to reach a conclusion about whether a person is or is not a “concurrent wrongdoer” for the purposes of the proportionate liability provisions.

27The decision of Garlin J in Cosmetic Laser Clinic Pty Ltd v Pirintji was a similar application to the present, involving leave to amend a defence. His Honour held at [86] - [87]:

In [Hunt & Hunt], Bell and Gageler JJ, in a joint judgment which dissented as to the outcome, said at [91] of the concept of a concurrent wrongdoer, that in order for a person to be a concurrent wrongdoer under Part 4 of the Act, it is necessary that such a person “… must be (or have been) legally liable to [the plaintiff] for the damage or loss which is the subject of the claim”. The view of the plurality seems to accord with this: see [Hunt & Hunt]at [47]. However, it is unnecessary for the purposes of this judgment to reach a concluded view on this question of law.

In the circumstances of this case, the categorisation of the loss and an exploration of whether the loss and damage caused by the directors and Body Technology, was the same or substantially the same as the loss suffered by the plaintiff, is a complex matter of fact which is not suitable for determination on an amendment application. Put differently, if the Court were to allow this amendment, the complexity of the questions of fact and law are such that it would not be appropriate for a court to deal with the matter summarily, or on a strike out basis. These are matters which properly must await a final hearing.

28I agree with Garlin J that questions of causation involving fact and law are complex. In the present matter, the defendant relies on warranties, representations and promises in a subcontract which are alleged to be the same promises made in the head contract. Further, the warranties, representations and promises are to use reasonable care and skill. A failure to do so is also relied on as part of the claim for a breach of a duty of care. A careful examination of the evidence as to the facts will be required before a determination can be made as to the precise nature of the legal liability of Nelson to the plaintiff.

29The defendant acknowledges that for Nilsen to be a concurrent wrongdoer with it sharing responsibility in respect of the plaintiff’s claim, Nilsen must be liable by way of cause of action known to law for the damage that is the subject of the plaintiff’s claim. The plaintiff acknowledges that the allegation of a breach of duty between Nilsen and the plaintiff in the amended defence provides a basis for such a claim.

30There was no submission made of any prejudice to the plaintiff if the defendant is allowed to also plead the breach of subcontract. I am not aware of any extra cost or time in the running of the proceeding or the trial that such an amendment would cause.

The test for leave to amend a pleading

31The principles relating to leave to amend a pleading are well established. They were set out and discussed by Derham AsJ in ABL Nominees Pty Ltd v MacKenzie (No. 2)[15]. Reference was made in that decision to r 36.01(1) of the Supreme Court (General Civil Procedure) Rules 2005, to s 63 of the Civil Procedure Act 2010 (Vic), and to other decisions. His Honour concluded at [22]:

On the other hand, pleadings are not an end in themselves. They are a means of ensuring that real issues of controversy are raised for determination in a way that is procedurally fair, both to a plaintiff and a defendant. This allows claims and defences to be clearly articulated, granting parties an opportunity to present their case properly prepared, on clear notice of allegations and defences raised in the proceedings. On this basis, the authorities clearly establish that, absent extraordinary circumstances, leave to amend will be granted.

[15] [2014] VSC 529 at [17] ‑ [22].

32More recently, in Sugar Australia[16] at [118]:

In an application for leave to amend a pleading, the court proceeds on the basis that the application will be granted (subject to other issues), provided that the amended pleading would not be one which would be liable to be struck out on a summary application. Thus, the court ordinarily allows an amendment, unless it is plainly demurrable.

[16]        Op. cit. at [118] (footnotes omitted).

Conclusion

33In the present matter, having regard to the arguments outlined above as to the interpretation of “causation” in Part IVAA, and noting the inextricable intertwining of fact and law which may only be determined at trial, I am satisfied that the matters pleaded in the proposed amended defence are not “obviously bad in law”[17], “patently hopeless”[18], “futile”[19], with “no real prospect of success” [20], or “plainly demurrable”[21].

[17]        ABL Nominees, op.cit. at [18].

[18] Ibid. at [18].

[19] Ibid. at [18].

[20] Ibid. at [19].

[21]        Sugar Australia, op.cit. at [118].

34The matters pleaded at paragraphs 23 - 26 of the proposed amended defence are triable issues and it is appropriate that leave to file the amended defence, including those paragraphs, be granted. I will make those orders along with the timetabling orders discussed and agreed during the directions hearing.

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Certificate

I certify that these 13 pages are a true copy of the ruling of her Honour Judge Kirton delivered on 26 March 2024.

Dated: 26 March 2024

Tracey Huang

Associate to her Honour Judge Kirton