Baxter v Obacelo Pty Ltd [2001] HCA 66 15 November 2001 S10/2001
ORDER
Appeal dismissed with costs.
On appeal from the Supreme Court of New South Wales
Representation:
D F Jackson QC with D P Robinson for the appellant (instructed by Baker & McKenzie)
A J Sullivan QC with D T Miller for the respondents (instructed by Moray & Agnew)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Baxter v Obacelo Pty Ltd
Torts – Joint tortfeasors – Satisfaction – Settlement with one tortfeasor – Entry of consent judgment against one tortfeasor – Settlement figure less than total damages claimed by the respondents – Whether settlement prevented respondents continuing claim against other tortfeasor – Whether cause of action against joint tortfeasors is one and indivisible – Whether settlement was paid and received in "full satisfaction" of respondents' loss.
Practice and procedure – Rule against "double satisfaction" – Settlement amount in first action less than amount otherwise recoverable in second action – Respondents conceded that credit is to be given for the amount recovered upon settlement of the first action – Whether second action in breach of rule against "double satisfaction" – Nature of the rule against "double satisfaction".
Words and phrases – "full satisfaction" – "double satisfaction" – "action" – "cause of action".
GLEESON CJ AND CALLINAN J. The respondents commenced an action for damages against two alleged joint tortfeasors, one of whom was the appellant. They settled their case against the co-defendant, and entered judgment against him. The amount of the judgment was satisfied. They continued their action against the appellant. The appellant contends that it was not open to them to do so. Whether that contention is correct depends in part upon the meaning and effect of s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("the Act"), which was transcribed from s 6(1) of the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) ("the UK Act"), and in part upon principles concerning recovery and satisfaction in the case of claims against persons subject to co-ordinate liabilities.
There are many circumstances in which a person with a claim against a number of joint tortfeasors may wish to settle with one, or some, of them, and continue with, or commence, proceedings against others. The situation which arose in the present case is not unusual.
Section 5(1) of the Act provides, so far as presently relevant:
"5(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -
(a)judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Baxter v Obacelo Pty Ltd [2001] HCA 66
Case
[2001] HCA 66
Decision Date
CaseChat Overview and Summary
The appeal concerned a dispute between the appellant, Mr Baxter, and the respondents, Obacelo Pty Ltd and Mr Moon. The respondents had initiated proceedings against Mr Baxter, alleging negligence. Mr Baxter sought to have the respondents' action against him summarily dismissed, arguing that prior proceedings and a settlement with another party, Mr Whitehead, precluded the respondents from pursuing their claim against him. The matter ultimately reached the High Court of Australia following decisions in the Supreme Court of New South Wales.
The central legal issues before the High Court were whether the respondents' settlement with Mr Whitehead, a joint tortfeasor, and the entry of a consent judgment against him for a sum less than the total damages claimed, prevented them from continuing their claim against Mr Baxter. Specifically, the court had to consider the rule against "double satisfaction" and whether the settlement with Mr Whitehead constituted "full satisfaction" of the respondents' loss, thereby barring the action against Mr Baxter.
The High Court reasoned that while the policy of the law generally favours allowing parties to settle issues severally, the rule against double satisfaction is a significant common law principle. The court noted that the respondents had conceded that credit would be given for the amount recovered from Mr Whitehead. However, the critical question was whether the settlement and judgment against Mr Whitehead, which was for a sum less than the total damages, amounted to "full satisfaction" in law. The court found that the facts pleaded by Mr Baxter did not, on their face, entitle him to succeed in his preliminary objection.
The appeal was dismissed with costs.
Orders
Orders of the court
Appeal dismissed with costs.
Background
Background to the litigation
The present appeal is not concerned with the exact problem that arose in Seltsam. The decision in that case does not yield a rule governing the outcome in this. Here it is not a question of securing consent of multiple defendants to a settlement or of recovering compensation as between such defendants for a sum paid to the plaintiff. However, in my view, the policy of the law is relevantly the same. Unless the Act clearly obliges a different conclusion or unless a clear principle of the common law or of equity mandates the opposite result, it is ordinarily desirable that parties should be able to settle severally, as between each other, the issues they have brought to court for resolution according to law. Any inhibition upon that attribute of personal and economic freedom has to be clearly justified and based on statutory language or legal authority that is certainly applicable. The facts and common ground The facts of the dispute between the appellant, Mr Baxter and Obacelo Pty Ltd and Mr Moon ("the respondents") are described in the reasons of Gleeson CJ and Callinan J[73]. So are the details of the course of the proceedings that took the parties first to a Master, then to a single Judge of the Supreme Court of New South Wales (Hulme J) and finally to the Court of Appeal of that Court[74]. It is from the judgment and orders of the Court of Appeal that, by special leave, this appeal now comes to this Court. There was no dispute about the facts nor about the description of the two issues presented for decision. These issues concern the requirements of s 5(1)(b) of the Act and of the rule of the common law or of equity that limits the recovery by a plaintiff of damages where the plaintiff has already obtained judgment and recovered full satisfaction against another tortfeasor liable in respect of the same damage. [73]Reasons of Gleeson CJ and Callinan J at [5]-[11].[74]Baxter v Obacelo Pty Ltd (2000) 48 NSWLR 522. It is important to note the limited issue that was before the Court of Appeal, even after it enlarged the issues by formulating a separate question of law for determination[75]. The Court was not engaged, as such, in an exploration of the facts of the respondents' claims of negligence against Mr Baxter. Nor was it concerned to resolve defences to that claim raised by Mr Baxter, including a defence of contributory negligence which was available to meet such a claim (framed in the tort of negligence) whereas it would not have been available to respond to the claims of the respondents against Mr Whitehead, Mr Baxter's employer (who was sued in contract)[76]. [75]Explained reasons of Gleeson CJ and Callinan J at [13].[76]Astley v Austrust Ltd (1999) 197 CLR 1. The sole question for decision was whether, upon the facts pleaded and elaborated slightly by matters taken to be agreed, those facts, on their face without more, entitled Mr Baxter, in law, to succeed. In short, Mr Baxter mounted a preliminary objection to the maintenance of the respondents' action against him. His was in the nature of a pre-emptive strike. If successful, it would obviate the necessity of any further litigation. If it failed, it would not deprive Mr Baxter of any other defences or answers he might have to the respondents' action against him.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
GLEESON CJ
CALLINAN J
GUMMOW AND HAYNE JJ
(dissent)
KIRBY J
The appellant filed an amended defence which included the following:"16In further answer to the whole of the Further Amended Statement of Claim at all material times Baxter was employed as a solicitor in the law practice of Whitehead and acted in the course of that employment in carrying out his duties in relation to the affairs of the Plaintiffs.17At all material times Whitehead was vicariously liable for the acts and omissions of Baxter acting in the course of that employment in carrying out his duties in relation to the affairs of the Plaintiffs.18If (which is denied) Baxter was a tortfeasor with respect to the Plaintiffs by reason of the matters alleged in the Further Amended Statement of Claim then Whitehead was a joint tortfeasor.19By deed of release dated 16 December 1987 and in consideration of the sum of $250,000 the Plaintiffs released Whitehead from all actions claims expenses and demands whatsoever in respect of the circumstances which allegedly gave rise to these proceedings.20On or about 11 February 1988 the Supreme Court entered judgment for the Plaintiffs against Whitehead in these proceedings in the sum of $250,000.21On or about 16 February 1988 Whitehead paid the judgment sum to the Plaintiffs.22In further answer to the whole of the Further Amended Statement of Claim Baxter says the action on behalf of the Plaintiffs is brought in respect to the same damage as that sought and fully recovered against Whitehead." Decisions in the Supreme Court of New South Wales The appellant applied for summary dismissal of the respondents' action against him pursuant to Pt 13 r 5 of the Supreme Court Rules (NSW). In brief, he argued that the facts set out in pars 16 to 22 of the defence, which (subject to one qualification) were not in contest, meant that the action was bound to fail, that the test for summary dismissal formulated in General Steel Industries Inc [1](1964) 112 CLR 125.v Commissioner for Railways (NSW)[1] was satisfied, and that the case should be dismissed without the parties being required to litigate the issues of negligence and quantum of damages. Master Harrison ruled against the appellant, declining summary dismissal of the action. An appeal to Hulme J failed. The appellant then sought leave to appeal to the Court of Appeal[2]. In the Court of Appeal, for the purpose of avoiding the possibility that the case might go off on questions relating to the standard of conclusiveness required to make good an application for summary dismissal, an application was made under Pt 31 r 2 of the Supreme Court Rules for the Court to determine, as a separate question, whether the matters of defence in pars 16 to 22 of the defence provide a defence to the respondents' claim against the appellant. The precise expression of the question was a matter of argument, but the Court of Appeal ultimately decided to treat that as a separate question. The Court of Appeal dismissed the application for leave to appeal from Hulme J, and answered the question in the negative[3].[2]Baxter v Obacelo Pty Ltd & Anor (2000) 48 NSWLR 522.[3]Baxter v Obacelo Pty Ltd & Anor (2000) 48 NSWLR 522 at 546.