Fabfloor and Danfoss v BNY Trust Company
[2015] VSC 434
•21 August 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
| S CI 2012 07202 | |
| FABFLOOR (VIC) PTY LTD (ACN 119 006 245) (and others according to the attached Schedule) | Plaintiffs |
| - and - | |
| S CI 2013 00175 | |
| DANFOSS (AUSTRALIA) PTY LTD (ACN 004 385 997) (and others according to the attached Schedule) | Plaintiffs |
| -v- | |
| BNY TRUST COMPANY OF AUSTRALIA LIMITED (ACN 050 294 052) (and others according to the attached Schedule) | Defendants |
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JUDGE: | DERHAM AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 12 March 2015 |
DATE OF JUDGMENT: | 21 August 2015 |
CASE MAY BE CITED AS: | Fabfloor and Danfoss v BNY Trust Company |
MEDIUM NEUTRAL CITATION: | [2015] VSC 434 |
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PRACTICE AND PROCEDURE – Application to add defendants – Plaintiff’s claim involving claim for breaches of duty to exercise reasonable care ‑ Addition of defendants for the purposes of invoking the proportionate liability regime under Part IVAA of the Wrongs Act 1958 (Vic) – Whether evidence necessary to establish arguable case – Some evidence required to substantiate arguable claims ‑ Whether sufficient substantiation of arguable claims – Evidence insufficient ‑ Application to join defendants refused ‑ Part IVAA of the Wrongs Act1958 – Rule 9.06(b)(ii) of the Supreme Court (General Civil Procedure) Rules 2005.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff in Fabfloor (Vic) Pty Ltd (S CI 2012 07202) | Mr Michael Roberts QC of Counsel | Moray v Agnew, Lawyers |
| For the Plaintiff in Danfoss (Australia) Pty Ltd (S CI 2013 00175 | Mr G McArthur QC of Counsel | Lander & Rogers, Lawyers |
| For the First Defendant | Mr A Harding, solicitor | HWL Ebsworth, Lawyers |
| For the Second Defendant | Mr C E Shaw of Counsel | Norton Gledhill, Commercial Lawyers |
| For the Third Defendant | Mr A M Weber, solicitor | King & Wood Mallesons |
HIS HONOUR:
Introduction
There are two applications by the second defendant (‘DTM’), one in each of the above proceedings, for the addition of the same proposed defendants to each proceeding as concurrent wrongdoers pursuant to s 24AL(1) of the Wrongs Act 1958 (‘the Act’).[1] For that purpose, DTM seeks leave to file and serve an amended defence in each proceeding setting out the claims against those concurrent wrongdoers and to make some further amendments. The matters the subject of the proposed claims for apportionment are currently raised in proceeding S CI 2014 6541, by which DTM has sought contribution from the concurrent wrongdoers, amongst others.
[1]Summons dated 15 December 2014 in each proceeding. In addition, by each summons, DTM seeks to be released from the implied undertakings in relation to documents obtained on discovery in each proceeding for use in the other proceeding, as well as in the new proceeding commenced by DTM claiming contribution. This application was dealt with on the day of the hearing.
The two proceedings are related. They each concern a fire at a warehouse at 2–10 Gaine Road, Dandenong South (‘the Warehouse’) on 17 January 2007. The two proceedings are as follows:
(a) Proceeding 2013 00175 (‘Danfoss proceeding’) in which the plaintiffs were the owners of goods stored in the Warehouse; and
(b) Proceedings 2012 07202 (‘Fabfloor proceeding’) in which the plaintiffs were the owners of goods stored in the Warehouse and the registered proprietors of adjoining premises that were also damaged by the fire.
The plaintiffs in each proceeding oppose the joinder of the proposed added defendants.
Summary of Conclusions
Where a defendant applies to add other persons as defendants on the basis that they are concurrent wrongdoers, with the defendant, under Part IVAA of the Act, and so as to limit its liability to the plaintiffs, there must be some evidence showing that there is substance to the claims proposed to be raised, and that the claims are not hopeless. That evidence may be, and often is, on information and belief. Whatever the basis of the evidence, it must reveal an arguable foundation for the claims proposed to be made.
The affidavits in support of the applications in these two proceedings do not provide sufficient evidence to sustain arguably viable claims against any of the persons proposed to be added as defendants. Importantly in this case, there is no evidence whatever to support the claims against three of the proposed added defendants and the evidence to support the claims of the other two is insufficient.
Background Facts
A generally endorsed writ was filed by the plaintiffs in the Fabfloor proceeding on 21 December 2012 and in the Danfoss proceeding on 16 January 2013. Assuming the damage suffered by the plaintiffs in consequence of the fire was suffered on the date of the fire (17 January 2007), the six year limitation period prescribed by s 5(1)(a) of the Limitation of Actions Act1958 (Vic) expired on 18 January 2013. Thus the writ in the Fabfloor proceeding was issued less than a month before the expiry of that limitation period, and the writ in the Danfoss proceeding just two days.
The writs were not served on the defendants until December 2013. DTM filed its appearances on 7 January 2014. Statements of Claim were filed and served in January 2014. On 17 February 2014, DTM filed and served its defences. In paragraph 61 to 64 of those defences, DTM alleged that the plaintiffs’ claims were apportionable claims, that certain parties were concurrent wrongdoers, and that the liability of DTM should be limited pursuant to s 24AI of the Act. However, a number of the alleged concurrent wrongdoers were not named or joined as defendants and a fully pleaded claim for apportionment was not set out.
The present solicitors for DTM commenced to act in August 2014. Discovery was completed in September 2014. According to affidavits of Miranda Ellen Bordignon sworn in support of the applications in each proceeding on 15 December 2014, it was necessary for DTM to await inspection of discovered documents before making any application to join the proposed defendants because it was necessary to review that discovery before forming a final view as to whether DTM’s liability should be limited and who should be joined as a concurrent wrongdoer. This was because many of DTM’s files and records were destroyed in the fire and it was necessary to piece together the relevant facts from the discovered documents before making this application. In particular, DTM identifies the following documents discovered by other parties:[2]
(a) A certificate of acceptance issued by Philip John Marks of Mektromach dated 23 April 1999 and discovered by the first defendant; and
(b) A fire fighting equipment report issued by Fire Marshall, trading as AJ Neate Pty Ltd, dated 24 November 1998, and discovered by the plaintiffs in each proceeding.
[2]Affidavits of Miranda Ellen Bordignon sworn 15 December 2014, at [13] and Exhibit MEB-1.
On 9 December 2014, DTM filed a generally indorsed writ in this court against each of the proposed defendants, referring to this proceeding and claiming contribution pursuant to s 23B of the Act for a portion of the damages awarded against DTM in this proceeding.
The Claims Against DTM
In each proceeding, DTM was the occupier of the Warehouse under a lease and carried on a transportation and storage business at the Warehouse. In both proceedings, it is claimed that DTM owed a duty of care to the plaintiffs, which it breached in various ways. Importantly to the subject matter of the proposed claims against the persons DTM seeks to add, are the allegations that as the bailee of goods stored at the Warehouse, DTM owed a duty of care to both the plaintiffs who stored goods in the Warehouse, as well as to the plaintiffs who were neighbours, to ensure that the Warehouse and the operations carried on within did not expose the plaintiffs to a risk of property damage by exceptional dangers, including fire. It is alleged that DTM breached its duty of care by failing to install or maintain an automatic fire detection and alarm system appropriate to the risk posed by its storage of hazardous materials and/or failing to ensure that the automatic sprinkler system, and automatic fire detection and alarm systems, were connected to the fire brigade, amongst an array of alleged breaches of duty.
Claims are brought against the other defendants, as follows:
(a) The first defendant, which is the registered proprietor of the Warehouse land;
(b) The third defendant, a company providing security monitoring services of alarm systems installed at the Warehouse;
(c) The fourth defendant, a company providing external security patrols and checks at the Warehouse; and
(d) The fifth defendant, a company carrying on the business of assessing, designing and installing fire, smoke-detection and security alarm systems for commercial premises.
The persons DTM seeks leave to add as defendants for the purposes of claiming apportionment under Part IVAA of the Act are:
(a) A building surveyor, Howard Craig Owen (‘Owen’);
(b) An inspector of fire fighting equipment John Henry Neate (‘Neate’);
(c) The owner/builder of the Warehouse, Lettieri Constructions Pty Ltd (‘Lettieri’);
(d) A fire safety practitioner, Philip John Marks (‘Marks’); and
(e) A fire security, sales and maintenance consultant, Peter J Larkin (‘Larkin’).
Applicable Law
The proportionate liability provisions (ss 24AE to 24AS) are contained in Part IVAA of the Act. Section 24AE defines an ‘apportionable claim’ to mean ‘a claim to which this Part applies’. The sections that are relevant on this application are ss 24AF, 24AH, 24AI, 24AL and 24AP, and they are set out in the Schedule to these reasons.
To establish a proportionate liability defence that has a real (and not a fanciful) prospect of success,[3] a defendant must allege material facts that demonstrate:[4]
[3]s 63 Civil Procedure Act, 2010 (Vic).
[4]Utility Services Corporation Ltd v SPI Electricity Pty Ltd & Ors [2012] VSCA 158 per Dixon AJA at [24], Bongiorno JA and Beach AJA, agreeing; Wheelahan & Anor v City of Casey & Ors (No 12) [2013] VSC 316 at [129].
(a) That the claim against it is an apportionable claim;
(b) That in relation to that claim, the defendant is a concurrent wrongdoer;
(c) That another defendant to the proceeding is a concurrent wrongdoer, or, that another person, not a party to the proceeding, who is dead or has been wound up, is a concurrent wrongdoer in relation to the plaintiff’s claimed loss and damage;
(d) In relation to all of the apportionable claims in the proceeding for the same damage, the extent of that defendant’s responsibility for the plaintiff’s damage, which can include regard to the comparative responsibility of other defendants for the plaintiff’s damage;[5] and
(e) If the plaintiff has not alleged a claim against a concurrent wrongdoer (whose comparative responsibility is alleged by the defendant to be material), the responsibility of that other concurrent wrongdoer[6] for the loss and damage claimed by the plaintiff in the proceeding.
[5]It is important to bear in mind the requirement, peculiar to Victoria, that a concurrent wrongdoer must be a party to the proceeding – see s 24AI(3), s 24AL and the definition of ‘defendant’ in s 24AE. See generally Woods v De Gabriele and ors [2007] VSC 177, (Hollingworth J); Atkins v Interprac Financial Planning Pty Ltd and Anor [2007] VSC 445, (Hargrave J); P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209 (Judd J); Suncorp Metway Ltd v Panagiotidis & Anor [2009] VSC 126 (Evans AsJ); and Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd & Ors [2010] VSC 5 (Croft J).
[6]The wrongdoer must be joined as a party to the proceeding to satisfy s 24AI(3) - see s 24AL.
Section 24AL of the Act specifically authorises the Court to give leave for any persons who are concurrent wrongdoers in relation to an apportionable claim to be joined ‘as defendants’ in a proceeding in relation to that claim. ‘Defendant’ is defined in s 24AE as including any person joined as a defendant or other party to the proceeding (except a plaintiff), whether joined under Part IVAA of the Act, under Rules of Court or otherwise.
It is clear from the authorities that proposed defendants may be joined even though a plaintiff does not (and does not desire to), make a claim against it, and that apart from pleading the basis of the liability of the added defendant to the plaintiff as a concurrent wrongdoer, the defendant itself need make no claim against that concurrent wrongdoer.[7]
[7]P & V Industries Pty Ltd v Secombs (a firm)[2008] VSC 209; Atkins v Interprack Financial Planning Pty Ltd (No.2) [2008] VSC 99; Cowen v Greatorex, [2008] VSC 401; Tulip Investments Pty Ltd v Edwards [2009] VSC 492. (Also known as Edwards v Kyriackou [2009] VSC 492);
There are no rules of court dealing specifically with the joinder of a defendant, by a defendant, for the purposes of limiting the liability of the existing defendant under the proportionate liability provisions of the Act.
Although no party made express mention of the power of the Court to permit the joinder of the proposed defendants, it is relevant to note the power arises under r 9.06 of the Rules. That rule provides, so far as relevant, that:
At any stage of a proceeding the Court may order that‑
(a) …
(b) any of the following persons be added as a party, namely-
(i) …..;
(ii)a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding.
For the purposes of the application of r 9.06(b)(ii), it is sufficient if the new question sought to be raised arises out of, or relates to, or is connected with, the existing question in the proceeding: See Batt JA in Boral Resources (Vic) Pty Ltd v Robak Engineering & Construction Pty Ltd.[8] There are a number of propositions established by the authorities relevant to the current application:
[8][1999] 2 VR 507 at 513-14; [1999]VSCA 66.
(a) The expression ‘all questions in the proceeding’ is not restricted to questions between existing parties; the question whether the person sought to be added is also liable to the plaintiff in respect of the relief or remedy sought by the plaintiff against the original defendant, is also such a question. The position is the same whether the plaintiff’s claim against the person sought to be added is alternative to that against the defendant or the plaintiff claims that both the other person and the defendant are liable;[9]
[9]Sharp v McGivney [1951]VLR 143; Birtles v Commonwealth [1960] VR 247; Qantas Airways Ltd v Little Pty Ltd [1981] 2 NSWLR 34; NCSC v Monsoon Nominees Pty Ltd (No 3) (1990) 9 ACLC 66 (WASC); Williams, Civil procedure Victoria, at paragraph 9.06.6.
(b) An application by a plaintiff under r 9.06 for leave to add a person as defendant is ordinarily made without notice to that person.[10] If the application is allowed, the writ must then be amended under r 9.11(1), and served on the person added in accordance with r 9.11(3)(b);
[10]Murphy v Burns Philp & Co Ltd (VSC, Smith J, No 12377/91, 21 April 1993, unreported).
(c) The proceeding commences against the added defendant when the filed writ is amended: r 9.11(3)(a). If the new defendant, after service of the amended writ, objects to being added on the ground that the claim against him was already statute-barred before the writ was amended in accordance with r 9.11(3)(a), he should file a conditional appearance under r 8.08 and then apply to have the amended writ and its service set aside;[11]
[11]Williams, Civil procedure Victoria, at paragraph 9.06.7.
(d) If on the application to add the person as defendant it appears to the court that the question of the expiry of the limitation period is plainly arguable, the court may require the plaintiff (or as in this case, a defendant) to give notice of the application to the person concerned and adjourn the further hearing of the application to allow the person to attend;[12]
(e) It must be ‘just and convenient’ that the new question be determined in the same proceeding as the existing question; and
(f) Leave to add a party may be refused where the application was not made promptly and the addition would prejudice an existing party in a way that could not be fairly met by an adjournment, an award of costs or otherwise.[13]
[12]Williams, Civil procedure Victoria, at paragraph 9.06.7.
[13]Carborundum Realty Pty Ltd v RAIA Archicentre Pty Ltd, Victorian Supreme Court, Harper J, No F8708/91, 2 June 1992, unreported, cited in Williams, Civil procedure Victoria, at paragraph 9.06.3.
Submissions of DTM
DTM submits that:
(a) The claims by the plaintiffs in both proceedings against DTM are plainly claims for economic loss or damage to property (namely goods stored at the warehouse or properties adjacent to it) in an action arising from a failure to take reasonable care;
(b) It need only establish an arguable case that the proposed amendments are with respect to apportionable claims that either go to the proportion or liability of it, or to the reduction in the proportion of liability of the plaintiffs. On an application such as this, the defendants need only establish that the pleadings contain factual allegations which, if established at trial, could arguably found one or more of the causes of action alleged. If the Court is satisfied such an arguable case has been put forward, joinder should be allowed;
(c) The allegations in the proposed amended defences in each proceeding show that each proposed added defendant is a concurrent wrongdoer in relation to the claim because he or it is a person who is one of two or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim. Thus they are concurrent wrongdoers pursuant to section 24AH of the Act. In those circumstances, DTM claims that each of these defendants is a non-party concurrent wrongdoer and, accordingly, the Court ought give leave for them to be joined;
(d) In addition to amendments to join the concurrent wrongdoers, DTM seeks to make some further amendments to its defence, particularly in paragraph 31 to allege that at all material times it took reasonable care in its storage of the plaintiffs’ goods and to particularise that allegation; and
(e) In circumstances where no trial date has yet been set, leave should be given in order to allow DTM to put the case at trial that it seeks to bring.
Accordingly, DTM submitted, it should have leave to join the additional defendants and to file and serve the further amended defences.
After the plaintiffs made their criticisms of DTM’s evidence in support of the applications (as to which see below), DTM made no application to adjourn the application or to submit further evidence in support.
Submissions of the Plaintiffs
Fabfloor Proceeding
Mr Michael Roberts QC, counsel for Fabfloor, submitted that before the proposed defendants can be added for the purposes of apportioning liability pursuant to Part IVAA of the Act, DTM must first establish an arguable basis for the Court ultimately to find legal liability on the part of the proposed defendants.[14] He relied on the elements to which I have referred above,[15] which were summarised by Dixon AJA in Utility Services Corporation Ltd v SPI Electricity Pty Ltd & Ors[16] and repeated by him in Wheelahan v City of Casey.[17]
[14]P&V Industries v Seccombs (a firm) [2008] VSC 209; Utilities Services Corporation Ltd v SPI Electricity Ltd [2012] VSCA 158 and Wheelahan v City of Casey(No 12) [2013] VSC 316.
[15]At paragraph 14.
[16][2012] VSCA 158 at [24], Bongiorno JA and Beach AJA, agreeing.
[17][2013] VSC 316 at [129].
The affidavit of Ms Bordignon in support of the application contains only one paragraph that in any manner relevantly bears upon the proposed claim, namely paragraph 13 where she exhibits documents obtained from the discovery of the first defendant and a fire fighting report discovered in the Danfoss proceeding. No material facts said to found the basis for the imposition of a duty of care are deposed to by Ms Bordignon, nor pleaded. There is no pleading of any vulnerability on the part of any of the plaintiffs, nor any allegation of any reliance by the plaintiffs on the conduct of the proposed added defendants. The plaintiffs submitted that the material in support of the application falls well short of establishing any arguable basis upon which a claim for apportionment should be permitted to proceed.
Danfoss Proceeding
Mr McArthur QC, who appeared for Danfoss, submitted that leave to add the proposed defendants should be refused for two broad reasons. First, because there was no evidentiary basis for the claims against the five further proposed defendants.[18] Secondly, because of defects in the pleading of the claims. He also submitted that because the limitation periods applicable to claims by the plaintiffs against the proposed defendants had expired that it would not be just or convenient to join them.
[18]See Woods v De Gabrielle [2007] VSC 177 at [18]-[23] per Hollingworth J; Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd [2014] FCA 880 at [1], [30], [35] and [57]; Main Road Property Group Pty Ltd v Pelligra and Sons Pty Ltd [2010] VSC 5 at [16]; Wimmera-Mallee Rural Water Authority v FCH Consulting Pty Ltd [2000] VSC 102 at [21] and [22].
It was contended that:
(a) One of the alternative claims the plaintiffs make against DTM is that there was no operational automatic fire detection and alarm system at the time of the fire as a result of one not being installed or maintained. DTM’s primary defence is that such a system was installed (see amended defence at [31(a)]). DTM seeks leave to join Owen, Neate, Lettieri and Marks on the basis of facts that are alleged contrary to DTM’s defence. That is, the proposed joinder of these persons is on the basis that no fire detection and alarm system was ever installed. If such a system was in fact installed as claimed by DTM in its defence, the entire basis for joining these parties vanishes. In such a situation, before these parties are vexed by being joined, and the existing parties are themselves vexed by the disruption by their joinder, there must be a proper evidentiary basis put forward by DTM for the allegation that no such system was ever installed. The evidence put forward in Exhibit MEB-1, being the certificate dated 23 April 1999, contradicts this proposition. Thus, there is no evidence to support the essential fact for joinder of these persons;
(b) There are other facts essential to any liability of the proposed further defendants that is lacking:
(i) In relation to the claim against Owen, there is no evidence to support the allegations in the proposed paragraphs 62F (that if there were no fire brigade connections at the Warehouse at the time of the issue of the Occupancy Permit, he breached his duty of care by failing to note that fact and to report it to any person - see below at paragraph 30(d)) and 62G (had he done so, the owner/builder, Lettieri, would have installed the fire brigade connections before occupation of the Warehouse by DTM ‑ see below at paragraph 30(e));
(ii) In the case of the claim against Neate, there is no evidence he was obliged to inspect the system to determine whether it was installed. The document in Exhibit MEB‑1 suggests the scope of his inspection was much more limited. There is no evidence to support the allegations proposed in paragraphs 62N (see below at paragraph 32(b)) and 62O (see below at paragraph 32(c));
(iii) In relation to the claims against Marks, there is no evidence to support the allegations in proposed paragraph 62FF;
(iv)In relation to Larkin, there is no evidence of the scope of his engagement, including inspecting whether the system was installed or operating as is necessary for the claim against him (see paragraphs 62LL to 62NN);
(c) Although the question of breach of duty is now the subject of questions 48 and 49 in Part X of the Act, the existence of the duty of care remains the subject of the Common Law. In this case the harm in question is damage to property by fire. It may be accepted that the installers and operators of the fire detection system owed a duty of care to those whose property comes to be in the Warehouse and is to be protected by that system. It follows that Lettieri Constructions would owe such a duty of care to the plaintiffs. But the other four proposed defendants have involvement remote in time from the fire itself and were variously involved in the survey, inspection, issuing of certificates and subsequent servicing distant in time from the fire. These four proposed defendants are not shown to be in an accepted category of a duty being owed: that is, the duty should be considered to be a novel one. The question of whether they owe a duty of care will be determined by an analysis of the salient features described in Caltex (Qld) Pty Ltd v Stavar.[19] Owen, Neate and Marks, whose involvement is about eight years removed from the fire itself (one year in the case of Larkin) never apparently dealt with the plaintiffs, were not engaged to install or operate the detection system and more than mere foreseeability would be required to be shown from amongst the salient features for a duty of care to be found to exist in favour of the plaintiffs, even accepting that the harm is property damage as distinct from pure economic loss. All that is pleaded is foreseeability and knowledge that gives rise to foreseeability; knowledge of reliance is not itself pleaded. Therefore DTM has not discharged its obligation to properly plead its case of liability of those parties to the plaintiffs.
[19][2009] NSWCA 258 at [103], applied in Victoria in Ultra Thoroughbred Racing Pty Ltd v Those Certain Underwriters [2011] VSC 589 at [279].
Neither plaintiff submitted that the application should be made on notice to the proposed defendants.
Consideration
The Proposed Claims
To deal with the contentions of the plaintiffs in the two proceedings it is desirable to give an account of the proposed pleadings in the proposed amended defences. A summary of those allegations is set out below.[20]
[20]The references to numbers are to the paragraph numbers in the proposed amended defences. They are the same in each proceeding.
Owen
DTM seeks to join Owen as the sixth defendant on the basis that he was a registered building surveyor, who was the surveyor for the construction of the Warehouse in 1998 or 1999 (62A). On 7 May 1989 he issued an Occupancy Permit for the Warehouse, which included a condition requiring that the fire brigade connections be inspected or tested weekly in accordance with the applicable Australian Standard (62B), but did not note that no fire brigade connections were installed at the warehouse and, accordingly, if as the plaintiffs allege, no fire brigade connections were installed, he breached his duty of care.
It is alleged that:
(a) Owen knew or ought to have known that persons storing goods in the Warehouse or whose land was in close proximity to the Warehouse, including the plaintiffs, would rely upon Owen having carried out his duties with reasonable care and skill and that such persons would be likely to suffer loss and damage if he carried out his duties without reasonable care and skill (62C);
(b) It was reasonably foreseeable that if he did not take reasonable care with all of the tasks involved with carrying out his duties as a surveyor, that the plaintiffs would suffer loss and damage (62D);
(c) As a result, he owed duties of care to the plaintiffs to ensure he carried out his duties as a building surveyor with reasonable care and skill so as not to expose them to the undue risk of property damage by fire (62E);
(d) If there were no fire brigade connections at the Warehouse at the time of the issue of the Occupancy Permit, he breached his duty of care by failing to note that fact and to report it to any person (62F);
(e) Had he done so, the owner/builder, Lettieri, would have installed the fire brigade connections before occupation of the Warehouse by DTM (62G); and
(f) In the premises, if DTM is liable to the plaintiffs (which it denies), any loss or damage suffered by them was caused by Owen’s breaches as alleged in paragraph 62F in that those breaches permitted the fire to spread to the plaintiff’s goods and property when it would not otherwise have done so (62H).
Neate
The proposed claim against Neate as the seventh defendant arises from the fact that Neate was an approved inspector of fire fighting equipment (62I). On 24 November 1998, before the Warehouse was occupied by DTM, Neate inspected the fire fighting equipment and issued a report stating that there were no variations to the Australian standards and the Building Code of Australia (‘BCA’) (62J). Therefore if, as the plaintiffs allege, an automatic fire detection and alarm system complying with Australian Standards and the BCA were not installed, Neate was negligent in stating that there were no variations to Australian Standards and the BCA.
Allegations are then made in terms substantially similar to those made against Owen, giving rise to a duty to act with reasonable skill and care (62K, 62L and 62M), with the changes necessary having regard to the role he is alleged to have had, in particular that:
(a) If (which is denied) an automatic fire detection and alarm system complying with the applicable Australian Standard was not installed at the Warehouse at the time he issued his report, Neate breached his duty of care by failing to note that fact and report that fact to any person (62N);
(b) If Neate had noted that there was no fire detection and alarm system complying with the applicable standard, a complying system would have been installed (62O); and
(c) Thus, if DTM is liable to the plaintiffs (which DTM denies) then the plaintiffs’ damage was caused by Neate’s breach of duty pleaded in paragraph 62N, in that those breaches permitted the fire to spread to the plaintiffs’ goods and property when it would not otherwise have done so (62P).
Lettieri
The proposed claim against Lettieri as the eighth defendant arises by reason of the fact that on or about 22 July 1998, DTM and Lettieri entered into an agreement for lease whereby Lettieri agreed to construct the Warehouse in accordance with certain plans and specifications and that upon completion of that construction DTM would take a lease at the premises (‘Agreement’) (62Q). It is alleged that there were express terms of the Agreement that the Warehouse would be erected in a proper and workmanlike manner in accordance with the plans and specifications as approved by the relevant authorities (62R), and those plans noted that an automatic fire detection and alarm system in accordance with the applicable Australian Standard was to be provided (62S). If the warehouse was not constructed in accordance with the plans and specifications as approved by the building surveyor, in that an automatic fire detection and alarm system in accordance with the applicable Australian Standard was not provided (as alleged by the plaintiffs), Lettieri breached the agreement and his duty of care to the plaintiffs.
Allegations are then made in terms substantially similar to those made against Owen and Neate giving rise to a duty to act with reasonable skill and care (62T, 62U and 62V), with the changes necessary having regard to the role Lettieri is alleged to have had, in particular that:
(a) If the Warehouse was not constructed in accordance with the plans and specification as approved by the building surveyor, in that an automatic fire detection and alarm system in accordance with the applicable Australian standard was not provided, Lettieri breached the Agreement and its duty of care to the plaintiffs (62W);
(b) If Lettieri had performed the Agreement and not breached its duty of care to the plaintiffs an automatice fire detection and alarm system in accordance with the applicable Standard would have been installed in the Warehouse (62X); and
(c) Thus, if DTM is liable to the plaintiffs (which is denied) it says any damage suffered by them was caused by Lettieri’s breach of its duty of care and that breach permitted the fire to spread to the plaintiffs’ goods and property when it would not otherwise have done so (62Y).
Marks
The proposed claim against Marks as the ninth defendant arises by reason of the fact that Marks was a registered fire safety practitioner (62Z). It is alleged that on 23 April 1999 he issued a certificate of acceptance for an automatic smoke detection and alarm system arranged to communicate a fire alarm directly to DTM’s security system (62AA). If, as alleged by the plaintiffs, such a system was not installed, then Marks breached his duty of care by failing to note that this was not installed at the warehouse and by failing to report that fact to any other person.
Allegations are then made in terms substantially similar to those made against Owen, Neate and Lettieri giving rise to a duty to act with reasonable skill and care (62BB, 62CC and 62DD), with the changes necessary having regard to the role Lettieri is alleged to have had, in particular that:
(a) If (which is denied) an automatic fire detection and alarm system arranged to communicate a fire alarm directly to DTM’s security system was not installed at the time he issued his report, then he breached his duty of care by failing to note that fact or to tell any person (62EE);
(b) If he had noted that such an automatic fire detection and alarm system was not installed, that fact would have been reported to Lettieri and such a system would have been installed (62FF); and
(c) Thus, if DTM is liable to the plaintiffs (which is denied) any damage suffered by the plaintiffs was caused by Marks’ breaches of duty in that his breaches permitted the fire to spread to the plaintiffs’ goods and property when it would not otherwise have done so (62GG).
Larkin
The proposed claim against Larkin as the tenth defendant is that he was a fire security, sales and maintenance consultant retained by DTM to regularly service the fire fighting equipment and fire detection system at the Warehouse (62HH). In about February and August 2006 Larkin carried out inspections and checks of the fire fighting equipment and fire detection system (62II). If an automatic fire detection and alarm system was not installed and the fire detection system was not fully functional, as the plaintiffs allege, Larkin breached his duty of care to the plaintiffs by failing to note those facts and by failing to report those facts to any person.
Allegations are then made in terms substantially similar to those made against Owen, Neate, Lettieri and Marks giving rise to a duty to act with reasonable skill and care (62JJ, 62KK and 62LL), with the changes necessary having regard to the role Larkin is alleged to have had, in particular that:
(a) If (which is denied) an automatic fire detection and alarm system complying with the applicable standard was not installed at the Warehouse or the fire detection system was not fully functional, then Larkin breached his duty of care by failing to note those facts or report them to any person (62MM);
(b) If he had done so, a compliant fire detection system would have been installed or the system would have been serviced and repaired so as to be fully functional (62NN);
(c) Thus, if DTM is liable to the plaintiffs (which is denied) it says any damage suffered by the plaintiffs was caused by Larkin’s breaches of duty which permitted the fire to spread to the plaintiffs’ goods and property when it would not otherwise have done so (62OO).
The Issues
It is not in dispute that the claims by the plaintiffs against DTM in both proceedings are claims for economic loss or damage to property in an action arising from a failure to take reasonable care, so that the claims fall within s 24AF of the Act.
The arguments raised by the plaintiffs rested primarily, although not entirely, on two issues, as follows:
(a) Whether in order to establish an arguable case that the proposed amendments are with respect to apportionable claims, does DTM need only establish that the pleadings contain factual allegations which, if established at trial, could arguably found one or more of the causes of action alleged, or must there be evidence substantiating those claims?; and
(b) Whether the pleading of the claims is sufficient in law to sustain a claim for economic loss or damage to property?
In addition it was contended that because of the likely expiry of the limitation periods applicable to the claims against the proposed added defendants, or some of them, it was not ‘just and convenient’ to join the proposed added defendants.
Is Evidence Needed?
In support of the submission that evidence is needed to substantiate the pleaded claims, the plaintiffs relied on Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd & Ors;[21] Wimmera-Mallee Rural Water Authority v FCH Consulting Pty Ltd;[22] Woods v De Gabriele & Ors;[23] and Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd & Anor.[24]
[21][2010] VSC 5.
[22][2000] VSC 102.
[23][2007] VSC 177.
[24][2014] FCA 880; 224 FCR 519.
In Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd & Ors Croft J noted that it is plainly necessary for the applicants to establish an arguable case for the amendments they sought, and, referred to the decision of Hargrave J in Atkins v Interprac Financial Planning Pty Ltd[25] where his Honour observed:[26]
Having considered the matter I am now of the view that the proposed pleadings by the defendants against PIR do not raise a case which is so hopeless that it does not emit of argument. Issues such as whether a duty of care is owed, a class of persons to whom a duty of care is owed and whether an arguably misleading statement was the cause of loss to persons relying upon it are all questions to be resolved on the basis of the evidence presented at trial. On an application such as this, the defendants need only establish that the pleadings contain factual allegations which, if established at trial, could arguably found one or more of the causes of action alleged. If the court is satisfied such an arguable case has been put forward, joiner should be allowed. [Emphasis added]
[25][2008] VSC 99.
[26][2008] VSC 99 at [12].
In Wimmera-Mallee Rural Water Authority v FCH Consulting Pty Ltd, Byrne J had before him an application to add a third party as a defendant for the purposes of ss 131 and 132 of the Building Act1993. His Honour applied[27] the test that the defendant must demonstrate that there exists a viable cause of action in the plaintiff against the proposed added defendant and that this demonstration must be based on proper material. In his opinion, the question whether a cause of action is viable in this sense requires the application of the conventional pleading test.[28] Accordingly, he held that he should treat the cause of action as viable unless he was satisfied that it is clearly hopeless.[29] He then went on to say:[30]
Since the application is not a true pleading application, but an application to join a party, the applicant must adduce material, including, if need be, hearsay in accordance with Rule 43.03(2), sufficient to satisfy the court of these matters as well as to matters which may be relevant to the exercise of the discretion of the court.
[27][2000] VSC 102 at [8].
[28]Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
[29]Boral Resources Pty Ltd v Robak Engineering & Construction Pty Ltd [1999] VSCA 66 at [13], per Batt JA.
[30][2000] VSC 102 at [8].
It happened in that case that there was affidavit material providing some basis for the liability of the proposed added defendant to the plaintiff under section 131 of the Building Act1993, a provision with similar consequences for the liability of defendants as Part IVAA of the Wrongs Act. The extent of the material is not clear from the judgment, but after the plaintiff pointed out deficiencies in the material, further affidavit material was filed that added an expert report as to the causes of failure of the tank in issue in that case.[31]
[31][2000] VSC 102 at [9].
The case is also relevant for another reason, to do with whether it is just and convenient for the joinder in question. That is because Byrne J noted that the defendant in that case sought to impose upon the plaintiff further defendants for the purpose of diluting its own liability. In such a case, there is a potential for abuse if a defendant introduces a large number of co-defendants so as to make the trial unmanageable. It may be that the plaintiff has, for good reason, taken the position that its claim against them or some of them is speculative or so weak as not to warrant the expense of suing them itself. It may be that a reason for this is that the party is of no substance. It may be that the plaintiff has some commercial or other non-legal reason for not suing them. He noted the prospect of unmanageability was put to one side by Chernov JA as a reason for refusing to permit Rule 9.06 to be used in the circumstances of the Boral Resources case,[32] with the following observation:
In many ways, the conduct of a building action with a number of defendants who are added by the original defendant, would be no different from the conduct of a proceedings where the same persons are third and fourth parties. The Court will no doubt have to be vigilant to ensure that the applicant has made out on proper material, a basis for its contention that the person sought to be added is at least in part responsible for the damages claimed by the plaintiff. But this and other like requirements would have to be worked out by the Court in order to accommodate the requirements of particular cases. It will not, however, be a novel experience for the Court.[33] [Emphasis added]
[32]Boral Resources Pty Ltd v Robak Engineering & Construction Pty Ltd [1999] VSCA 66; [1999] 2 VR 507.
[33][1999] 2 VR 507; [1999] VSCA 66, per Chernov JA at [76].
Woods v De Gabriele & Ors concerned claims arising out of an investment made by the plaintiff in a company within the Westpoint group of companies on the advice of De Gabriele. There was an application by two other defendants, who were alleged to be De Gabriele’s employer or principal, to join another company, in liquidation, which was also alleged to have been employer or principal of De Gabriele at the relevant time. The two defendants relied on the affidavit of their solicitor who deposed that he had been informed by De Gabriele that during the relevant period De Gabriele was employed as a financial planner by the proposed defendant. The plaintiff produced some evidence to the contrary. Justice Hollingworth concluded after referring to the evidence produced that:[34]
No doubt the precise nature of the relationship between de Gabriele and SPM will need to be examined at trial, on all the evidence. If the defendants are unable to satisfy the trial judge that the relevant employment or agency relationship existed at the relevant times, that may well have significant costs consequences for them. But for the purposes of these applications, it cannot be said (as the plaintiff asserts) that there is no evidentiary basis for allowing Chimaera and Pyxus to plead that de Gabriele was employed by, or an agent of, SPM.
[34][2007] VSC 177 at [23].
In Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd & Anor, Mortimer J rejected an application to join a person as a respondent in part because there was no admissible evidence to support the claim on which the joinder was based.[35]
[35][2014] FCA 880; 224 FCR 519 at [35].
It is not contended by the plaintiffs, as I understand it, that DTM must prove the basis for the liability of the proposed defendants, merely that there must be some evidence showing that there is substance to the claims proposed to be raised and the claims are not hopeless. All the cases referred to support this proposition. Indeed the Court of Appeal has in Boral Resources Pty Ltd v Robak Engineering & Construction Pty Ltd[36] made it clear that there must be some basis, often on information and belief, to reveal an arguable foundation for the claims. That may involve little more than evidence of the role and responsibility of the proposed defendant in the matter or project the subject of a plaintiff’s claim so as to provide a foundation for the allegation of negligence. Inferences may sometimes be relied upon to complete the elements giving rise to a duty of care.
[36][1999] VSCA 66; [1999] 2 VR 507 per Tadgell JA at [7] and per Batt JA at [13].
There are cases where the parties do not take the point that there is insufficient evidentiary basis to warrant the joinder of defendants. Much depends on the circumstances of the particular case. Many parties are added on the slightest evidence to show the potential liability of the proposed party.
But in this case the plaintiffs have taken the point and it must be dealt with. Mr Shaw, who appeared for DTM, contended that the evidentiary basis was made out. However the affidavits of Ms Bordignon in each proceeding went no further than to include two exhibits that provided some evidence of the involvement of Marks and Neate in the construction of the Warehouse. As Mr McArthur submitted, there is no evidence Neate was obliged to inspect the system to determine whether it was installed. The document in Exhibit MEB-1 suggests the scope of his inspection may have been more limited. There is also no evidence to support the allegations proposed in paragraphs 62N (see above at paragraph 32(b)) and 62O (see above at paragraph 32(c)). Importantly in this case, there is no evidence whatever (or at least none was pointed to and I can find none on the Court file) to support the claims against Owen, Lettieri or Larkin, beyond the pleading itself.
One might ask, what evidence would be sufficient? To take just one of the proposed defendants, Lettieri, one would need some evidence, as starting propositions, that (as pleaded):
(a) DTM and Lettieri entered into the Agreement for lease whereby Lettieri agreed to construct the Warehouse in accordance with certain plans and specifications and that upon completion of that construction DTM would take a lease at the premises;
(b) There were express terms of the Agreement that the Warehouse would be erected in a proper and workmanlike manner in accordance with the plans and specifications as approved by the relevant authorities;
(c) Those plans noted that an automatic fire detection and alarm system in accordance with the applicable Australian Standard was to be provided.
Not to mention the facts necessary to sustain any of the consequences said to flow from these starting propositions. But there is no evidence of that at all, whether direct or hearsay, or even hearsay on hearsay.
I should note that I do not conclude, as Mr McArthur QC submitted I should, that it is a proper objection to the proposed joinder of Owen, Neate, Lettieri and Marks that their joinder is on the basis that no fire detection and alarm system was ever installed, contrary to DTM’s defence. As the summary of the claims above shows, Owen (as an example) is proposed to be joined on the footing that if, as the plaintiffs plead, the automatic fire detection and alarm system was not connected to the fire brigade then he breached his duty of care in failing to note that fact and report it. That is not inconsistent with the contention of DTM that there was such a system installed. But even if it were inconsistent, a part of the plaintiffs’ claims is that there was no such system installed and DTM would ordinarily be entitled to make an allegation against another party on the footing that the plaintiffs’ allegations are proven correct, despite the fact that that is contrary to the defendant’s case in answer to the plaintiff.
No doubt Mr McArthur’s point was that there needs to be evidence when such a contradictory position is taken. But the better point is that there needs to be some evidence to show the claims are viable and that is almost completely lacking in these applications.
There were submissions made about the pleading of the claims that in the circumstances do not need to be dealt with. Reference was made to a number of cases particularly relevant to the pleading of claims of pure economic loss since the High Court decision in Perre v Apand Pty Ltd,[37] including Caltex Refineries (Qld) Pty Ltd v Stavar,[38] and Ultra Thoroughbred Racing v Those Certain Underwriters & Ors.[39]
[37](1999) 198 CLR 180.
[38](2009) 75 NSWLR 649.
[39][2011] VSC 589, particularly at [277]-[289].
The last matter to mention is the effect of r 9.11(3)(a) in the circumstances of this case. The plaintiffs’ proceedings were commenced at the end of the applicable limitation periods, and not served for almost 12 months after issue. By force of r 9.11(3)(a) the proceedings against the added defendants commences upon the amendment of the filed originating process in accordance with r 9.11(1) or (2). The effect of the Rule is that the claims against the added defendants would, were the point taken, be statute barred because the claims against them do not relate back to the commencement of the plaintiffs’ proceedings. But neither the plaintiffs nor DTM desire to make any claim for relief against those proposed defendants. It may be supposed that in those circumstances the expiry of the limitation period would not be raised in answer to the claims. In cases not involving proportionate liability legislation, it has been established as a rule of practice that that the plaintiff will not be given leave to add or substitute a defendant after the limitation period applying to the claim against that defendant has expired.[40]
[40]Ketteman v Hansel Properties Ltd [1987] AC 189; [1988] 1 All ER 38; Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 731-3; Williams, Civil Procedure Victoria, paragraph 9.06.20; Simplot Australia Pty Ltd v PSL Industries [2001] VSC 419.
Whether this rule should be applicable to claims under Part IVAA of the Act, where no relief is sought against the proposed added defendants, was not argued before me and it is not clear whether it has been considered in other cases. But should DTM seek to renew its application, it is a matter that will need to be addressed.
As I understand the submissions of the plaintiffs, there is no objection to the minor amendment sought to be made to paragraph 31 of DTM’s defence.
Conclusion
Where a defendant applies to add other persons as defendants on the basis that they are concurrent wrongdoers with the defendant under Part IVAA of the Wrongs Act1958, and so as to limit their liability to the plaintiffs, there must be some evidence showing that there is substance to the claims proposed to be raised and the claims are not hopeless. That evidence may be, and often is, on information and belief. Whatever the basis of the evidence, it must reveal an arguable foundation for the claims proposed to be made.
The affidavits in support of the applications in these two proceedings do not provide sufficient evidence to sustain arguably viable claims against any of the persons proposed to be added as defendants. Importantly in this case, there is no evidence whatsoever to support the claims against three of the proposed added defendants, and the evidence to support the claims of the other two is insufficient.
Schedule A
Wrongs Act 1958
Relevant Provisions of Part IVAA
24AE Definitions
In this Part—
apportionable claim means a claim to which this Part applies;
court includes tribunal and, in relation to a claim for damages, means any court or tribunal by or before which the claim falls to be determined;
damages includes any form of monetary compensation;
defendant includes any person joined as a defendant or other party in the proceeding (except as a plaintiff) whether joined under this Part, under rules of court or otherwise;
injury means personal or bodily injury and includes—
(a)pre-natal injury; and
(b)psychological or psychiatric injury; and
(c)disease; and
(d)aggravation, acceleration or recurrence of an injury or disease.
24AF Application of part
(1) This part applies to:
(a)a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statue or otherwise) arising from a failure to take reasonable care; and
(b)a claim for damages for a contravention of section 9 of the Fair Trading Act 1999.
(2)If a proceeding involves two or more apportionable claims arising out of the different causes of action, liability for the apportionable claims is to be determined in accordance with this part as if the claims were a single claim.
(3)A provision of this Part that gives protection from civil liability does not limit or otherwise affect any protection for liability given by any other provision of this Act or by another Act or law.
24AG What claims are excluded from this Part? [this section is not presently relevant. It excludes claims arising out of an injury and certain statutory claims]
24AH Who is a concurrent wrongdoer?
(1)A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.
(2)For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died.
24AI Proportionate liability for apportionable claims
(1)In any proceeding involving an apportionable claim—
(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and
(b) judgment must not be given against the defendant for more than that amount in relation to that claim.
(2)If the proceeding involves both an apportionable claim and a claim that is not an apportionable claim—
(a)liability for the apportionable claim is to be determined in accordance with this Part; and
(b)liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
(3)In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.
24AJ Contribution not recoverable from defendant
Despite anything to the contrary in Part IV, a defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim—
(a)cannot be required to contribute to the damages recovered or recoverable from another concurrent wrongdoer in the same proceeding for the apportionable claim; and
(b)cannot be required to indemnify any such wrongdoer.
24AK Subsequent actions [this section is not presently relevant]
24AL Joining non-party concurrent wrongdoer in the action
(1)Subject to sub-section (2), of the court may give leave for any one or more persons who are concurrent wrongdoers in relation to an apportionable claim to be joined as defendants in a proceeding in relation to that claim.
(2)The court is not to give leave for the joinder of any person who was a party to any previously concluded proceeding in relation to the apportionable claim.
SCHEDULE OF PARTIES
(DANFOSS PROCEEDING)
S CI 2013 00175
BETWEEN
| DANFOSS (AUSTRALIA) PTY LTD (ACN 004 385 997) | First Plaintiff |
| INFASTECH (AUSTRALIA) PTY LTD (ACN 000 482 986) (formerly TEXTRON FASTENING SYSTEMS PTY LTD) | Second Plaintiff |
| - and - | |
| BNY TRUST COMPANY OF AUSTRALIA (ACN 050 294 052) | First Defendant |
| DTM PTY LIMITED (ACN 002 985 195) | Second Defendant |
| SECURITY MONITORING CENTRES AUSTRALIA PTY LTD (ACN 002 610 568) | Third Defendant |
| ENDEAVOUR SECURITY PTY LTD (ACN 097 705 283) | Fourth Defendant |
| RESCUE FORCE SECURITY PTY LTD (ACN 074 979 267) | Fifth Defendant |
SCHEDULE OF PARTIES
(FABFLOOR PROCEEDING0
S CI 2012 07202
BETWEEN
| FABFLOOR (VIC) PTY LTD (ACN 119 006 245) | First Plaintiff |
| EUREKA TUSCANY PTY LTD (ACN 102 587 799) | Second Plaintiff |
| HONEYWELL SAFETY PRODUCTS AUSTRALIA PTY LTD (ACN 002 548 272) | Third Plaintiff |
| BACOU-DALLOZ USA INC | Fourth Plaintiff |
| TOOLTECHNIC SYSTEMS (AUST) PTY LTD (ACN 090 458 576) | Fifth Plaintiff |
| GILHAVEN PTY LTD (ACN 098 118 873) | Sixth Plaintiff |
| AND BETWEEN | |
| BNY TRUST COMPANY OF AUSTRALIA (ACN 050 294 052) | Firstnamed Defendant |
| DTM PTY LIMITED (ACN 002 985 195) | Secondnamed Defendant |
| SECURITY MONITORING CENTRES AUSTRALIA PTY LTD (ACN 002 610 568) | Thirdnamed Defendant |
| ENDEAVOUR SECURITY PTY LTD (ACN 097 705 283) | Fourthnamed Defendant |
| RESCUE FORCE SECURITY PTY LTD (ACN 074 979 267) | Fifthnamed Defendant |
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