Cole v Hurst and Ors B35/2002

[2003] HCATrans 831

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B35 of 2002

B e t w e e n -

CAROL COLE

Applicant

and

MICHAEL WILLIAM HURST

First Respondent

WESFARMERS FEDERATION INSURANCE LTD

Second Respondent

JAE-WON KIM and DONG HEE KIM

Third Respondents

Application for special leave to appeal

GLEESON CJ
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON WEDNESDAY, 25 JUNE 2003, AT 11.36 AM

Copyright in the High Court of Australia

__________________

MR S.S.W. COUPER, QC:   If the Court pleases, I appear for the applicant.  (instructed by Gadens Lawyers) 

MR M.K. CONRICK:   If the Court pleases, I appear for the third respondent.  (instructed by McDonald Brown Solicitors) 

GLEESON CJ:   There is a certificate from the Deputy Registrar that she has been advised by Broadbent Radich Sampson, solicitors for the first respondent, that the first respondent will not be appearing at the hearing of this matter and will submit to the decision of the Court save as to costs, and HBM Lawyers, solicitors for the second respondent, have advised her that the second respondent will submit to any order of the Court save as to costs.  Yes, Mr Couper. 

MR COUPER:   Your Honours, in this case – your Honours have – part of this matter in the previous application – Ms Cole, the applicant, was the owner of a pizza store and the owner of a gas oven.  Mr Hurst, who is the first respondent, was the gasfitter who replaced a “failsafe” valve with a quarter‑turn valve.  The learned primary judge found that either Ms Cole or her husband, for whom she was responsible, left the gas on.  The consequence was a gas explosion and the plaintiff was the owner of the property which was substantially damaged. 

The plaintiff obtained judgment against both the applicant and Mr Hurst as tortfeasors.  Ms Cole made a claim against Mr Hurst, both under the contribution legislation and for damages for breach of the implied term of his contract of engagement, that he would take reasonable care in advising and in fitting the quarter‑turn gas valve.  The learned primary judge found that Mr Hurst had breached his contractual duty, but found that he was not liable in damages in contract to Ms Cole, because his Honour took a view of causation which was that unless Mr Hurst’s acts were regarded as being a cause of greater or equal potency to the cause being the leaving on of the gas valve by Ms Cole, he was not liable in damages. 

The Court of Appeal overturned that view of the causation aspect, but then proceeded to approach the matter in a way in which, in our submission, they fell into error.  Mr Justice McPherson’s judgment is the leading judgment on that point.  If we could take your Honours to the application book page 27, it becomes clear the approach that his Honour Justice McPherson took.  If we take your Honours to paragraph [15] on that page, having discussed the factual position, his Honour says: 

In respect of that judgment debt they were jointly liable.  It then became a matter of apportioning the loss between them.  Ms Cole’s claim for indemnity against or contribution from Mr Hurst was framed in both tort and contract. 

So much is true.  Then his Honour framed the question which he then proceeded to consider at the foot of paragraph [15]: 

The immediate questions are whether it authorises the court –

under section 7 of the contribution legislation –

to assess their shares or contributions to the damage where, as here, one of the defendants is also liable to the other under a contract, and, in doing so, to arrive at a result that is different from that reached in tort. 

In brief summary, his Honour’s ultimate conclusion, with which the learned President agreed, was that section 7 of the contribution legislation controlled the situation, that the respective rights or the rights of the applicant in contract were but a factor to be taken into account in apportionment under the legislation. 

GLEESON CJ:   We were looking at a case a few days ago in relation to, I think it was the Victorian apportionment legislation, which had a specific provision dealing with a case where one of the tortfeasors had a right of indemnity against the other. 

MR COUPER:   Section 6 of the Queensland legislation, which is extracted in the judgment at page 28, has, I think, the material identical provision.  Your Honour will see at paragraph [17] section 6(c) set out.  The proviso, as your Honours see, provides: 

however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by the person in respect of the liability –

The submission that I make, based on the New South Wales cases referred to in the outline in the application book, Oxley and Redken, is that the matter can be approached on one of two bases.  The basis taken by his Honour Justice Fitzgerald in Redken was that where a party has a contractual right to damages, which damages include sums which the party is liable to pay to another, then that is relevantly a right of indemnity for the purposes of provisions such as section 6(c).  In my respectful submission, that is a correct approach. 

GLEESON CJ:   In your submission, is there a conflict of approach between the New South Wales courts and the Queensland courts on this? 

MR COUPER:   Yes, your Honour, there is.  The New South Wales courts make it plain that the rights of a party in the position of Ms Cole in contract are unaffected by the contribution legislation.  If the party has a claim for damages for breach of an implied term of a contract to take reasonable care and those damages include the sum payable to a plaintiff, as in this case, then that party is entitled to recover the whole of those damages without reduction by reference to the apportionment legislation.  Oxley finds that explicitly; Redken finds that explicitly.  More recently, in a decision of New South Wales in a case which we have included ‑ ‑ ‑

GLEESON CJ:   Is there a contradictor on this point?  Who will be putting the argument against you?  You are here to advance the view that has been taken in New South Wales. 

MR COUPER:   Yes, your Honour. 

GLEESON CJ:   Who will be here to support the Queenslanders? 

MR COUPER:   Well, as I at presently understand it, your Honour, we are not sure that there is one.  Your Honours heard from our learned friend, Mr Bain, that the obvious contradictor, Mr Hurst, has not appeared on this application.  Given the Court’s decision on the previous application, the insurer has no further interest in appearing.  We accept the difficulty that there is a likelihood there will be no contradictor.  That gives us a problem, in our submission, if not a reason for refusing leave, where the point is a stark one and where, in my respectful submission, the decision below was plainly wrong. 

The other aspect we point to, going to that issue, is that, with great respect to the court below, the point upon which Justice McPherson found against the applicant was not taken by the respondent below.  The argument by the party was confined to the causation question in contract.  Your Honours will see that his Honour did not refer to the reasons in Oxley or in Redken in his Honour’s decision.  Those cases had been referred to by both parties in respect of the causation issue in their written submissions.  The respondent did not seek to support the judgment of the learned primary judge on a construction of the legislation which found favour with his Honour Mr Justice McPherson. 

HEYDON J:   That means the decision below is not an authority.  It is not an authority against the New South Wales cases.  It is not an authority binding the courts in Queensland in future. 

MR COUPER:   Your Honour, it is a decision of the Court of Appeal, which has as its ratio that understanding and construction of the contribution legislation.  It is the sole basis upon which the case was decided against the applicant below. 

HEYDON J:   But an assumption is not really a reason for a decision binding later courts.  The reasons for a decision have to be the result of colliding arguments. 

MR COUPER:   One would accept that that is the course which would be expected, that the court would hear arguments before making a decision.  Nonetheless, the court in this case has given a decision ‑ ‑ ‑

HEYDON J:   It may be unjust to your client, but it is one of your problems in getting special leave, that it is not actually a decision which binds anyone in Queensland in the future, strictly speaking. 

MR COUPER:   Your Honour, we hesitate to accede to your Honour’s point.  I confess, I have not looked to the cases on the point.  The approach that the applicant has taken, unsurprisingly, is that given that the ratio of the decision in the court below was this construction of the contribution legislation, it is on its face – and may we say that the court does not say in its judgment that this was done without argument by the parties – on its face it has all the appearance of being a considered judgment of the court to construing the legislation. 

GLEESON CJ:   Was the Court of Appeal referred to the New South Wales cases? 

MR COUPER:   Yes, your Honour. 

GLEESON CJ:   How did it distinguish them? 

MR COUPER:   I take a step back, your Honour.  The court was referred to the New South Wales cases only in respect of the causation issue, not in respect of the interaction between the legislation and the claim in contract. 

GLEESON CJ:   Which is the point you want to ‑ ‑ ‑

MR COUPER:   Which is…..and that is the case, because the parties below conducted themselves on the basis that the issue was the causation issue, that if the causation issue was decided in favour of the applicant, the appellant below, that disposed of the matter.  But what happened was that the court determined the causation issue in favour of the applicant, the appellant below, and then proceeded – uninvited, we would say – to construe the legislation in a way which meant the result did not change. 

GLEESON CJ:   But construed it in a manner that you say is inconsistent with the way the New South Wales Court of Appeal has ‑ ‑ ‑

MR COUPER:   Yes, your Honour.  We were going to ‑ ‑ ‑

GLEESON CJ:   This legislation is different from the New South Wales legislation, is it not? 

MR COUPER:   Your Honour, it is not materially different, in our submission.  The New South Wales legislation ‑ ‑ ‑

HEYDON J:   It is based on the English Act. 

MR COUPER:   Yes.  We were going to make the point that so far as New South Wales is concerned in the more recent decision of Climax Management v Scansash [2002] NSWCA 167, which is included in the cases that we provided to the Court, his Honour Justice Meagher in paragraph [13] at page 6 made the point:

It is well settled that one tortfeasor may recover damages for breach of contract from a co‑tortfeasor, even to the full extent of the former’s liability to the plaintiff, notwithstanding that it has been held in the same proceedings that it is “just and equitable” for each tortfeasor to contribute to the damages awarded to the plaintiff. 

And reference is made to Oxley and to Redken.  So the position in New South Wales is regarded as well settled and is directly contrary to the position taken in Queensland. 

GLEESON CJ:   Where do we find the clearest statement of the Queensland position in this judgment? 

MR COUPER:   The clearest statement is found at page 33 of the application book in the reasons by Mr Justice McPherson at paragraph [31], commencing in the second line: 

It is, in my opinion, a mistake in law to segregate those two forms of liability –

that is tort and contract –

and arrive at separate and differing apportionments of liability in respect of them.  There was only one apportionment to be made under the Act of 1995. 

GLEESON CJ:   But it is not a question of apportionment, at all, in contract, is it? 

MR COUPER:   No, that is so, your Honour.  What his Honour did was to subsume the question of the damages in contract as being merely a factor in determining an apportionment under the legislation. 

GLEESON CJ:   You mean, a factor relevant to what is “just and equitable”? 

MR COUPER:   Yes, which, in our submission, is both plainly wrong and plainly contrary to the New South Wales cases.  Those are our submissions, your Honour. 

GLEESON CJ:   Thank you.  Now, Mr Conrick, what is your interest in this matter? 

MR CONRICK:   Your Honour, the third respondent has no interest other than that if leave be granted, it ought to be on terms that the third respondent is not a party to the appeal.  The third respondent was not a party below.  The third respondent was the plaintiff at first instance and succeeded at first instance.  None of the findings in its favour were the subject of the appeal between the two defendants at first instance and the third party insurer to the Court of Appeal. 

GLEESON CJ:   Your clients are the owners of the premises. 

MR CONRICK:   My clients were the owners of the premises, your Honour. 

GLEESON CJ:   They were parties to the original proceedings. 

MR CONRICK:   They were, your Honour. 

GLEESON CJ:   And I suppose they can please themselves on whether they participate in the appeal, if special leave is granted, at their own risk as to costs. 

MR CONRICK:   Well, your Honour, in my submission ‑ ‑ ‑

GLEESON CJ:   We cannot drop parties out of proceedings.  The proceedings are as they were originally constituted.  We cannot change that. 

MR CONRICK:   My clients were not parties to the appeal to the decision below, which is the subject of this appeal.  They have, in effect, been brought back in for the application. 

GLEESON CJ:   On the basis that they were parties to the original action. 

MR CONRICK:   On that basis, but not on the basis that any right or interest of theirs was the subject of the appeal below, or that ‑ ‑ ‑

GLEESON CJ:   We cannot change the constitution of the action, but your clients can stay away or come along as they please.  You just do not want an order for costs made against you, I presume? 

MR CONRICK:   Your Honour, since the issue in this application is between the applicant and the first respondent, any leave to appeal, in my submission, could be confined to an appeal against the first respondent. 

GLEESON CJ:   That is all you want to say? 

MR CONRICK:   That is the ‑ ‑ ‑

GLEESON CJ:   Mr Couper, the lack of representation of Mr Hurst is troubling.  Sometimes we can manage to overcome a problem like this by making an appeal to the Bar Association to provide representation.  I will ask the Registrar of the Court to see if anything can be done in that regard.  It is obviously unfair to your client to refuse special leave because the respondent is unrepresented, but it would assist everybody concerned, I should think, to see if some practical solution to that problem can be found. 

MR COUPER:   I accept the force of what your Honour says.  Your Honour is, of course, right to say that it would be unfair if the result was that the respondent could retain the judgment below, which would attract an application for leave, merely by not being here. 

GLEESON CJ:   In this matter there will be a grant of special leave to appeal.  As I said, Mr Conrick, if your client does not wish to turn up at the hearing of the appeal, then that will be a perfectly understandable course. 

AT 11.54 AM THE MATTER WAS CONCLUDED