Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 4] - [2008] WASC 293

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 4] [2008] WASC 293

CORAM: EM HEENAN J

HEARD: 23 OCTOBER 2008

DELIVERED : 23 OCTOBER 2008

FILE NO/S: CIV 1707 of 2003

BETWEEN: CLAMBAKE PTY LTD (ACN 009 242 371)
Plaintiff
AND
TIPPERARY PROJECTS PTY LTD (ACN 054 744 713)
First Defendant
WARREN PERRY ANDERSON
Second Defendant

FILE NO/S :CIV 2093 of 2003

BETWEEN :OWSTON NOMINEES No 2 PTY LTD (ACN 001 769 099)
First Plaintiff
TIPPERARY PROJECTS PTY LTD (ACN 054 744 713)
Second Plaintiff
AND
CLAMBAKE PTY LTD (ACN 009 242 371)
First Defendant
LAND CAPITAL PTY LTD (ACN 058 548 806)
Second Defendant
IVOR FREDERICK COHEN
Third Defendant

Catchwords:

Bailment - Negligence - Nuisance - Claim by first and second plaintiff in CIV 2093 of 2003 for damages for destruction of property - Bailor and bailee bringing simultaneous claims - Application for election before judgment

Legislation:

Nil

Result:

No election required

Category: B

Representation:

CIV 1707 of 2003

Counsel:

Plaintiff:     Mr P J Deakin QC & Mr S E McCarthy
First Defendant             :     Mr S Rushton SC & Mr J Giles
Second Defendant         :     Mr S Rushton SC & Mr J Giles

Solicitors:

Plaintiff:     Minter Ellison
First Defendant             :     Solomon Brothers
Second Defendant         :     Solomon Brothers

CIV 2093 of 2003

Counsel:

First Plaintiff                :     Mr S Rushton SC & Mr J Giles
Second Plaintiff            :     Mr S Rushton SC & Mr J Giles
First Defendant             :     Mr P J Deakin QC & Mr S E McCarthy
Second Defendant         :     Mr G R Hancy
Third Defendant           :     Mr P J Deakin QC & Mr S E McCarthy

Solicitors:

First Plaintiff                :     Solomon Brothers
Second Plaintiff            :     Solomon Brothers
First Defendant             :     Minter Ellison
Second Defendant         :     Sparke Helmore
Third Defendant           :     Minter Ellison

Case(s) referred to in judgment(s):

Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22
Mears v London and South Western Railway Company (1862) II CBNS 850
O'Sullivan v Williams [1992] 3 All ER 385
The Winkfield [1902] P42
Wilson v Lombank [1963] 1 All ER 740

EM HEENAN J: This issue before me requires prompt resolution in order to determine the future course of this trial and for that reason I propose to deal with it immediately, although I am very conscious that because of the complexities which it entails and the breadth of issues which have been canvassed with counsel and which are contained in the helpful submissions which I have received, it cannot be addressed fully in the reasons I am about to deliver. I will, however, supplement these reasons either later in the course of the case or in final reasons for decision.
I have been sitting now for some days at the joint trial of two separate actions. I need only mention the second, CIV 2093 of 2003, a claim by Owston Nominees and Tipperary Projects for damages against Clambake Pty Ltd, Land Capital Pty Ltd and Mr Ivor Frederick Cohen. This action is a claim for damages for the destruction of property by fire in storeroom premises leased by Clambake to Tipperary Projects which were managed by agents, Land Capital Pty Ltd, of which the prominent spokesman and agent is Mr Cohen.
The fire which destroyed the premises on Stirling Highway, Claremont, also destroyed a large quantity of valuable property said to be stored in the warehouse by Tipperary for Owston. That property comprised a variety of valuable antiques, antique and Eastern carpets, collections of art and other precious valuables and is alleged to be worth something in the region of $17 million, although that value is very much in contest in the proceedings; but it is clear that the property was extremely valuable.
The two companies, Owston and Tipperary, are related in the sense that they have a common shareholding and common directorate, each being part of a group of companies controlled by Mr Warren Anderson. Nevertheless, they are two distinct entities and I have no doubt that I should treat them as entities quite distinct in law.
The claim for damages brought by Owston is as the owner of the goods destroyed for their full value. The claim brought by Tipperary Projects is as bailee of the goods, but again for their full value. It is important to note that Tipperary Projects does not assert any special or limited interest in the property.
The arrangement for the storage of these goods at the warehouse has not been fully explored yet in the evidence, but in the pleadings, which I consider I should take as being determinative of the possibilities for present circumstances, both Owston and Tipperary assert that Tipperary was bailee of the property under, in effect, a gratuitous bailment entitling Owston to demand possession and obtain possession of the goods at any time.
Alternatively, Owston and Tipperary put their case on the basis that Owston was a licensee of Tipperary for part of the area of the premises and held possession of the goods itself and had stored them in the warehouse under the licence. It is in those circumstances that the various causes of action by the two plaintiffs are advanced.
Tipperary, as bailee, claims damages for breach of covenants in the lease, negligence, nuisance, breach of statutory duty under the Occupiers Liability Act 1985 (WA), misleading and deceptive conduct under s 52 and s 82 of the Trade Practices Act 1974 (Cth) and under s 9 and s 10 of the Fair Trading Act 1987 (WA). Owston maintains all of those claims as well, with the exception of the claim for breach of covenant under the lease to which it was not a privy.
All those claims are advanced against Clambake. The claims for breach of covenant are of course not maintained against Land Capital or Mr Cohen, but the claims for misleading and deceptive conduct under both the state and federal statute are.
We have reached the point in the trial where the case has been fully opened, together with the associated case referred to as the rent action, and we are about to go into evidence by the claimants, Owston and Tipperary. At this point an application has been made by counsel for Clambake and Mr Cohen, supported to an extent by counsel for Land Capital, that as presently cast, the claims should not be permitted to proceed and that Owston and Tipperary should be required to elect at this point which of the two plaintiffs is to pursue the various claims for damages on the footing that one, but not two plaintiffs, can maintain this claim or these claims.
The basis for the contention relied on in the written submissions which I have received from Owston and Tipperary invokes a number of propositions; namely, that the continuation of both claims simultaneously constitutes a variety of abuse of process; that it will unnecessarily require the court to determine both claims when it is acknowledged that at the end of the case there will have to be an election, in the event of success by both plaintiffs, to take a judgment in one but not both cases; and also because of the special rules relating to claims arising from possession and bailment such as I will describe in a moment.
The basis of the arguments in relation to the special claims arising out of bailment derive from the principle explained by the Court of Appeal in the case of The Winkfield [1902] P42. That case is authority for the proposition, applied consistently in England and Wales ever since and applied in Australia, including by the highest authority, that in a case of bailment, the bailee of goods may bring an action for damages for the loss, destruction or damage of the bailed goods and recover damages for the full extent of the value of the goods, notwithstanding that he, the bailee, may only have a limited interest in the goods, or no interest in the goods, and also may not be liable over to the bailor in any respect in case of a loss.
The principle in The Winkfield is that the lawful possession of the goods by the bailee is sufficient to provide a title to sue and a basis for the recovery of the full value, in which case the bailee must account to the bailor or others with interests in the property for their aliquot shares in the interest of the property claimed as applied to the amount recovered, and that once recovery by a bailee in these circumstances is achieved following judgment, that recovery is a bar to claims by the true owner or others with an interest in the property destroyed.
The corollary to that proposition, as it is sometimes called, is that in such circumstances the bailor's remedy is exclusively against the bailee and that he has no rights against the third party wrongdoers concurrent with those of his bailee. This rule, as discussed in the books on real property and bailment, is subject to many exceptions, one of which is that if the bailor has a right of immediate possession, as where the bailment is at the will of the bailor or is terminable by the acts which caused the loss or destruction of the goods, a right of immediate possession may be present and justifies a possessory claim for damages by the bailor for trespass, detinue, conversion and other associated causes.
It is also acknowledged on the authorities that these principles extend not merely to the possessory actions but to claims for damages for breach of contract and for negligence. There is an issue which I am yet to address as to whether or not the principle applies to a claim for damages for breach of statutory duty or claims for damages pursuant to the Trade Practices Act or the Fair Trading Act.
Before I develop this aspect of the case further I should return to the submissions which were made in support of the proposition that the plaintiff should be put to an election based on a general set of principles associated with abuse of the process of the court and prevention of double recovery and election between inconsistent remedies. I hasten to add that counsel for the first and third defendant did not put his application on the footing that this was a case where there was an obligation to avoid double recovery at this stage of the proceedings.
I have had put to me, and I will deal in written reasons later, extensive submissions dealing with the headings which I have just described, but it seems to me with respect that this is not a case of a plaintiff being required to elect between inconsistent remedies against the same defendant or of a plaintiff being put in a position where he may sue one defendant with the possible consequences that that excludes an action against another. This seems to me to be a special situation in which the question is whether two or more plaintiffs may simultaneously maintain claims against the same defendants in respect of what is essentially the same or a similar cause of action.
To come back to the bailment issues. In this case, as already mentioned, all the goods in the storeroom which were destroyed and in respect of which the claim for damages is advanced, belonged to Owston. There was no special property or limited interest in the goods asserted by Tipperary. Accordingly, if Tipperary sues on The Winkfield principle and succeeds and recovers damages, it will be accountable to Owston for the entirety of the damages recovered. If Owston were to succeed and recover damages for the value of the goods, it would not be accountable to Tipperary because Tipperary asserts no interest in the goods.
That being the case, the situation takes on the complexion that Tipperary is in effect, by right of being a bailee in possession, advancing the whole of the claim for the benefit of Owston and that Owston is simultaneously advancing its own claim. The fact that Owston is advancing its own claim, at least in relation to the possessory claims, implies that it is asserting that it is entitled or was entitled to immediate possession of the goods, and there is some authority to support the proposition that in those circumstances it is only Owston who may maintain the claim. In Clerk and Lindsell On Torts (19^th ed, 2006), at par 17.54 there is a paragraph which provides:
Certain bailments give an exclusive right of possession to the bailee. This is true, for instance, if goods are pledged or hired for a fixed period; and in such a case the bailee can, until his right be determined, sue the bailor himself and resist any action by the latter for conversion. The bailee, however, may lose his right if he does any act altogether inconsistent with the terms on which he holds the goods; the right to immediate possession will then revert to the owner, who may thereupon sue the wrongdoer or anyone claiming under him.
This seems to be the situation in the present case, although I hasten to add that there can be no basis for concluding that this bailment was terminated by any wrongdoing by Tipperary. Returning to the text:
In such a case the bailee's right to claim against the owner presumably disappears. Moreover, the contract of bailment may expressly provide that on the happening of a particular event the bailor's right of possession shall revive, in which case the same conclusion will follow.
In a case in the Supreme Court of New South Wales in the Court of Appeal, Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22, the question of the right of a bailee in such circumstances to make a claim was under examination and in a judgment by the Chief Justice in Equity, his Honour Young CJ, with whom Santow and Basten JJ agreed, his Honour traced the rule in The Winkfield and associated doctrines and said:
The answer is that in law, either bailor or bailee might sue for the loss. However, there could be only one action and so, if the bailee sued, the bailor was prevented from suing. The bailee, however, may well have to account to the bailor for a proportion of the damages [115].
This notion that there can only be one action maintained based on the possessory right appears elsewhere in the cases and in the commentaries. It appears to me to be implicit in the decision of Wilson v Lombank [1963] 1 All ER 740 and it has some support in the writings of Professor Palmer in his work on Bailment and in his earlier work as editor of Crossley Vaines On Personal Property. However, it is by no means a universal rule and there are many cases dealing with multiple claims arising out of the destruction of property, typically warehouses being flooded or burned down when the property of many different owners were destroyed or damaged, or cargo on ships being damaged in collisions or sinkings where there were many owners.
The proposition which appears to emerge from those cases is that simultaneous claims for damages by both the owner as bailee of the ship or the warehouse and the individual owners of the cargo can be and often are commenced, but that if each claim represents a claim for the damage to all the property destroyed or injured, the first to judgment resulting in recovery bars claims by the others and makes the successful judgment creditor accountable to the others for their various interests. Many criticisms have resulted from this which I need not go into at present, and some legislative changes in Britain in the shape of the Torts (Interference With Goods) Act 1977 have been introduced to bring, or to allow to have brought, before the courts all persons with interests in the subject matter of the property.
The question is in the present case, without comparable legislation in Western Australia, is whether the rules alluded to by Young CJ and the author of Clerk and Lindsell On Torts require that only one of these actions can be maintained.
Before I return to this crucial point for decision, there are many other cases, some of which have been cited to me but not all of which have been mentioned, where claims for limited interests in the chattel are brought simultaneously, one being O'Sullivan v Williams [1992] 3 All ER 385, and acknowledgements in the texts where notwithstanding the rule of bailor out of possession and where the bailment continues cannot bring an action for damages for the whole of the value of the goods damaged or destroyed, he nevertheless has a right to sue in conversion or to bring a special action on the case for damage done to his reversionary interests in the goods. A case which supports that proposition is Mears v London and South Western Railway Company (1862) II CBNS 850. There are examples where although being entitled to sue for the full interest of the property, the bailee may sue only for his or its limited interest in which case it is acknowledged that the owner should be at liberty to sue for his residual interest.
It seems to me that there is support both for and against the proposition which is being argued for by counsel in the present case and that the final resolution of this matter is fraught with difficulty, nevertheless the application is being brought and the defendants to this fire claim have, in my view, an entitlement to have it to be determined conclusively. I have already indicated that the interests being advanced by Tipperary and Owston in the present case are in respect of the same property and amount to the entirety of the interest in the property by Owston and where Tipperary advances no special interests itself.
The basis for the claims differ, as I have already mentioned, in that Tipperary but not Owston has the claim for breach of covenant and there remains the uncertainty as to whether or not Tipperary, not having any actual ownership of the goods, can maintain a claim for damages under the Trade Practices Act, s 82, or the equivalent provisions in the Fair Trading Act, a proposition upon which I do not think there is any binding authority and which has only been touched on briefly in the arguments before me.
By their counsel, both Owston and Tipperary acknowledge that in the event of success in this action Tipperary would have to account for the damages to Owston and that there could be no double recovery. It seems to me that in the circumstances the principle of avoiding double recovery will be maintained and secured if, as they will have to, Owston and Tipperary are required to make an election at the point of judgment and recovery and not before.
As to the issue of whether the existing state of authority or proper management of this case to avoid abuse requires that they should be put to an election in respect of what is essentially the one claim at this point, I have much greater hesitation.
I appreciate the direction in which some expressions of principle indicate and I am also appreciative of the authorities to which I have referred, but I am by no means persuaded that the two claims are really identical or that the fate of one necessarily indicates the fate of the other. That being so, for reasons I have already given and which I will enlarge upon either later in the case or in final judgment, I do not consider that Owston or Tipperary should be required to make any such election as is being sought at this point of the trial.