Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No 3748 of 2008

GODFREY SPOWERS (VICTORIA) PTY LTD

(ACN 005 950 505)

v

LINCOLNE SCOTT AUSTRALIA PTY LTD

(ACN 005 113 468)

AND ORS

---

JUDGES:	NETTLE, ASHLEY and NEAVE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 September 2008
DATE OF JUDGMENT:	22 October 2008
MEDIUM NEUTRAL CITATION:	[2008] VSCA 208

---

Damages – Appeal against summary judgment under r 23.01 of Chapter 1 – Inter-relationship between Parts IV and IVAA of the Wrongs Act 1958 (Vic) – Interaction of sections 24AJ and 24AO – Whether Part IVAA applies to ‘compromise cases’ – Whether trial judge erred in holding that settlement amount related to appellant’s potential proportionate liability under s 24AI(1) - Appeal allowed – Respondents’ oral application under r 23.01 of Chapter 1 of the Rules dismissed.

---

APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr A G Uren QC with Mr M H Whitten	Monahan & Rowell Lawyers
For the First Respondent	Mr J J Gleeson SC with Mr C G Juebner	Minter Ellison
For the Second and Third Respondent	Mr J R Dixon SC with Mr A P Horan	DLA Phillips Fox

NETTLE JA:

Part IVAA of the Wrongs Act 1958 was introduced to provide for proportionate liability of concurrent wrongdoers in relation to claims for damages for economic loss, or damage to property, arising from failure to take reasonable care or for contravention of s 9 of the Fair Trading Act 1999.[1]
[1]Wrongs Act 1958, s 24AF(1).

It achieves that objective by providing in s 24AI that the liability of a concurrent wrongdoer is limited to the proportion of the claim which the court determines to be just having regard to the extent of the concurrent wrongdoer’s responsibility for the loss and damage suffered.

It also excludes rights of contribution under Part IV in relation to the proportion of the claim for which judgment is given against the concurrent wrongdoer. Section 24 AJ provides that:

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.[2]

[2]Emphasis added.

The principal question in this appeal is whether s 24AI prohibits a concurrent wrongdoer who settles an apportionable claim, and thus against whom no judgment is given under Part IVAA, from claiming contribution under Part IV in relation to the settlement sum.

As Ashley JA demonstrates in his incisive analysis of the legislation, the answer to that question is no. There is nothing in s 24AI or elsewhere in Part IVAA which prohibits a concurrent wrongdoer from settling an apportionable claim for a settlement sum which is greater than the proportion of the claim that the court would have determined to be just if the claim had gone to judgment. Consequently, if a concurrent wrongdoer settles an apportionable claim for more than that amount, there is nothing in s 24AI or elsewhere in Part IVAA which prohibits the concurrent wrongdoer from claiming contribution in relation to the settlement sum.

Nor in my view is there anything at all surprising about that result once it is remembered that, although the rights of contribution created by Part IV are purely statutory,[3] they and Part IVAA reflect the equitable doctrine of contribution that ‘persons who are under co-ordinate liabilities to make good the one loss … must share the burden pro rata’.[4] Consequently, whether a settlement sum exceeds the proportion of a claim for which a settling wrongdoer would be adjudged to be responsible under Part IVAA (I shall call that: the wrongdoer’s ‘proportionate liability’) depends not only on the amount of the apportionable claim and the number and degrees of responsibility of concurrent wrongdoers, but also upon the terms and effect of the settlement.
[3]They are based upon the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) and the Civil Liability (Contribution) Act 1978 (UK).
[4]Albion Insurance Co Ltd v GIO (NSW) (1969) 121 CLR 342, 350 (Kitto J).

So, for example, if the amount of an apportionable claim were $1 million and there were four concurrent wrongdoers, each of whom was equally responsible for the loss and damage suffered, and one of them settled with the plaintiff for $250,000 without prejudice to the plaintiff’s rights as against the three remaining concurrent wrongdoers,[5] a claim for contribution by the settling concurrent wrongdoer would surely fail; for it would be seen that the settling wrongdoer had paid no more than his proportionate liability.
[5]Did not stipulate for the other wrongdoers to be discharged.

On the other hand, if in consideration of the $250,000 settlement sum, the

settling wrongdoer procured not only his own release from the claim but also the release or release pro tanto of one or more of the other concurrent wrongdoers, the settling wrongdoer would have a good claim for contribution against those concurrent wrongdoers. To persist with the example, and take it one step further, if in consideration of the settlement sum of $250,000 the settling wrongdoer procured not only his own release but also procured or caused each of the concurrent wrongdoers wholly to be released or discharged from liability, the settling wrongdoer’s proportionate liability would be one quarter of $250,000, namely, $62,500, and he would have a good claim for contribution against the other concurrent wrongdoers for $62,500 per wrongdoer.[6]

[6]Walker v Bowry (1924) 35 CLR 48, 56 and 59.

In this case, the appellant has not yet procured the release of the alleged concurrent wrongdoers, although it has procured the means to cause their release, and thus it cannot yet be said that the appellant has necessarily paid more than its proportionate liability. But equally, until and unless there has been a trial of the appellant’s claim for contribution (and, in that trial, an assessment of the plaintiff’s claim and the degree of responsibility of each alleged concurrent wrongdoer for the loss and damage suffered) it cannot be said that the appellant has not paid more than its proportionate liability. There is also the possibility that the appellant may yet procure the release of one or more of the alleged concurrent wrongdoers and so amend its Third Party Statement of Claim to include that fact (albeit a fact arising after the institution of the claim).[7]
[7]Supreme Court (General Civil Procedure) Rules 2005, Rule 36.01(3); cf Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484, 489, which proceeded introduction of the rule.

I would allow the appeal, set aside the judgment below and in lieu thereof order that the respondents’ claim for summary judgment be dismissed.

ASHLEY JA:

On 8 April this year a judge of the Trial Division entered summary judgment

under r 23.01 of Ch 1 in favour of Lincolne Scott Australia Ltd, Wilsmore Consulting Pty Ltd and Leonard Nelson (‘the respondents’) in third party proceedings brought by Godfrey Spowers (Vic) Pty Ltd (‘Spowers’). Spowers was one of two defendants to a proceeding brought by Surrowee Pty Ltd and Green Projects Pty Ltd. Central to his Honour’s resolution of the respondents’ oral applications was his analysis of the inter-relationship between Parts IV and IVAA of the Wrongs Act 1958 (Vic) (‘the Act’), having regard to the circumstances of the particular case as he took them to be.

Now Spowers appeals. In my opinion, for the reasons which follow, its appeal should be allowed.

The pleadings

It is necessary, in order to explain my conclusion, to begin with an account of the relevant pleadings.

According to their amended statement of claim, filed on or about 23 June 2006, the plaintiffs sued Hansen and Yuncken Pty Ltd (‘the contractor’) and Spowers (‘the architect’) in relation to the construction of premises at 60-66 Leicester Street, Carlton (‘the site’).

By the statement of claim the plaintiffs pleaded that –

· They successively engaged Spowers under an interim design consultancy and a main design contract with respect to the erection of an office complex (‘the works’) on the site.

· By agreement dated 30 March 2001 they engaged the contractor to construct the works. By agreement made in or about March 2001 they engaged Spowers to act as superintendent of the works.

· In many ways, each of the architect and the contractor breached their agreements.[8]

· Further, Spowers owed them a common law duty of care, which it breached in many ways.

· They suffered loss and damage, by reason of the defendants’ breaches, quantified at about $10 million.

[8]In the case of the architect, the plaintiffs alleged that there were breaches of the main design contract and the superintendent’s agreement.

Pausing for a moment, the plaintiffs’ claims against Spowers and the contractor were for economic loss which was said to arise from a failure to take reasonable care – the failure being in breach of contract; and, in the case of the architect, in breach of a common law duty of care. Each defendant, according to the plaintiffs’ case, was liable for the full extent of the alleged loss and damage. The statement of claim was silent, as might be anticipated, about the possible relevance of Part IVAA of the Act.

By its defence, Spowers -

· Admitted entering into the three agreements alleged by the plaintiffs – although not exactly in the terms pleaded in the statement of claim.

· Admitted that it had owed the plaintiffs a common law duty of care under the interim design consultancy and the main design contract – but not under the superintendent’s contract.

· Denied breach of the main design contract, the superintendent’s agreement, and breach of the common law duty of care.

· Having denied all breach, pleaded –

19.Alternatively, if which is denied, the Architect is held liable for any part of the Plaintiffs’ claimed loss and damage, then –
19.1The Plaintiffs’ claim is an ‘apportionable claim’ within the meaning of that term in Part IVAA of the Wrongs Act 1958 (‘the Act’); and
19.2To the extent that the Architect is a ‘concurrent wrongdoer’ within the meaning of that term in the Act, its liability in relation to the Plaintiffs’ claim is limited to an amount reflecting the proportion of the loss or damage claimed that the Court considers just having regard to the extent of the Architect’s responsibility for loss or damage; and
19.3In the premises, the Architect’s (sic) is entitled to an apportionment of any liability between itself, the First Defendant and any other parties who may be joined to this proceeding who are responsible for the Plaintiffs’ alleged loss and damage.

Spowers commenced third party proceedings against the respondents.[9] As framed by an amended statement of claim filed on or about 14 December 2006 it sought relief[10] against -
[9]Whether that was a suitable procedure, so far as Spowers sought to rely upon Part IVAA of the Act, may be doubted. See P&V Indusries Pty Ltdv Secombs [2008] VSC 209, where Judd J considered the procedural difficulties which arise where a defendant seeks to call in aid Part IVAA of the Act by bringing in (to use a neutral expression) alleged concurrent wrongdoers.
[10]In part, by seeking to deflect the plaintiffs’ claim by resort to Part IVAA; in part, by reliance upon Part IV.

o Lincolne Scott (‘the engineer’)

o Wilsmore (‘the surveyor’)

o Nelson (‘the nominated surveyor’)

Having set out the gist of the plaintiffs’ claim against it, Spowers pleaded that -

· It had denied liability in respect of the plaintiffs’ claims.

· If it was found liable to the plaintiffs, then the engineer and the surveyors[11] had ‘caused or contributed to or are otherwise responsible for any loss or damage suffered by the plaintiffs’ by reason of circumstances thereafter set out.
[11]They were treated as a single entity, and I will so refer to them.

· It had retained the engineer, on behalf of the plaintiffs, in about July 1999 and January 2001, to provide consulting engineering services in relation to the design and construction of the works – in particular, with respect to fire protection and air-conditioning systems.

· Alternatively, the engineer had owed the plaintiffs a common law duty of care.

· The engineer had purportedly performed the services for which it had been engaged.

· In the event that the Court found in favour of the plaintiffs, then certain of the alleged defects had been caused by the engineer’s breaches of retainer and/or negligence, in consequence of which the plaintiffs had suffered loss and damage.

· In about July 1999, it had engaged Wilsmore, on behalf of the plaintiffs, to provide building surveying services with respect to the works. Nelson had been nominated as the relevant building surveyor and had purportedly exercised that function.

· The surveyors had been under a number of obligations to the plaintiffs – some being express, others being implied by operation of certain sections of the Building Act 1993 (Vic) and provisions of the Building Code of Australia, and yet others being implied by law.

· Further, the surveyors had owed the plaintiffs a common law duty of care; and, additionally, a statutory duty pursuant to the Building Act.

· If the plaintiffs succeeded, certain of the alleged defects in the works had been caused by the surveyors’ breaches of retainer, breaches of common law duty and/or breach of statutory duty.

Then Spowers pleaded this:

29.The plaintiffs’ claims herein are ‘apportionable claims’ within the meaning of that term as defined in and to which Part IVAA of the Wrongs Act 1958 (‘the Act’) applies.
30.If the Court finds in favour of the Plaintiffs’ claims herein as against the architect, then by reason of the matters contained herein, the engineer and the building surveyor will also be ‘concurrent wrongdoers’ and ‘Defendants’ within the meaning of those terms in and for the purposes of Part IVAA of the Act, being persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the Plaintiffs’ claim.
31.In the premises, pursuant to s.24AI of the Act, the architect’s liability shall be limited to, and the engineer and building surveyor shall each be liable for, such amounts reflecting that proportion of the loss or damage claimed that the Court considers just having regard to the extent of each of their respective responsibilities for the Plaintiffs’ loss or damage.
32.Alternatively, and only in the event that Part IVAA of the Act does not apply to the Plaintiffs’ claims or to any of the other parties to the proceeding:-
(a)If the architect is found liable in respect of any damage suffered by the Plaintiffs as claimed or at all;
(b) … the engineer shall also be liable in respect of the same damage;
(c) … the building surveyor shall also be liable in respect of the same damage; and
(d)In the premises, the architect shall be entitled to recover contribution from the engineer and/or the building surveyor pursuant to s.23B of the Act in respect of any such loss or damage for which the architect may be found liable to the Plaintiffs.

AND THE SECOND DEFENDANT CLAIMS AGAINST EACH OF THE THIRD PARTIES:
A. Apportionment pursuant to Part IVAA of the Wrongs Act 1958.
B.Alternatively, contribution or indemnity pursuant to Part IV the Wrongs Act 1958.

By its defence the engineer –

· Admitted that it had been retained by Spowers.

· Admitted that it had owed the plaintiffs a duty to exercise reasonable care and skill in the performance of the retainers.

· Denied breaches of retainer and negligence.

· Denied that the plaintiffs had suffered loss or damage by reason of any breach of retainer or negligence on its part.

· Admitted that the plaintiffs’ claims were ‘apportionable claims’ as that term is defined in Part IVAA of the Act.

· Denied that it was a ‘concurrent wrongdoer’ for the purposes of that Part.

· Denied any liability to make contribution pursuant to s 23B of the Act.

· Pleaded that if, contrary to the denials which it had made, findings were made which would give rise to the application of s 24AI of the Act, then its liability would be in an amount proportionate to its responsibility for the plaintiffs’ loss or damage.

Pausing again, on the hearing of the appeal counsel for the engineer sought to make a good deal of what he claimed was the significant admission by his client that the plaintiffs’ claims were apportionable claims within Part IVAA of the Act. But, as I perceive it, the engineer pleaded no more than that, on the face of the statement of claim, the plaintiffs were alleging an apportionable claim as against the two defendants. It is to be noted that the engineer specifically denied, if the Court found in favour of the plaintiffs’ claims as against Spowers, that by reason of matters pleaded in the third party statement of claim, it would also be a concurrent wrongdoer. Further, emphasising the language of s 29AI of the Act, the third party statement of claim proposed that ‘if the Court finds in favour of the plaintiffs’ claims’ then, by reason of matters alleged, the engineer and the surveyors would become concurrent wrongdoers. What was thereby underlined, rightly as it will appear, was the significance of judgment to the operation of Part IVAA.

The surveyors’ defence dated 22 February 2007 -

· Admitted that Wilsmore had been retained by Spowers, the retainer being more confined in its scope than the retainer alleged by the architect.

· Admitted Nelson’s nomination.

· Denied that Wilsmore or Nelson had owed a common law duty of care to the plaintiffs.

· Denied that they had owed a statutory duty to the plaintiffs.

· Denied breach of retainer, breach of common law duty of care and breach of statutory duty.

· Denied, if there had been any breach, that it had caused the plaintiffs loss and damage.

· Did not admit that the plaintiffs’ claims were apportionable claims.

· Denied, if the Court found in favour of the plaintiffs, that they would become concurrent wrongdoers, and liable to pay a proportionate amount of the plaintiffs’ damages.[12]

· Denied Spowers’ alternative claim to contribution under s 23B of the Act.

[12]They called in aid s 24AJ of the Act.

Compromise and re-pleading

The plaintiffs and Spowers compromised their differences in December 2007. At that stage Spowers and the contractor remained the only two defendants named by the plaintiffs. That is, the plaintiffs had not added the present respondents as defendants to meet the fear that, if the claim went to judgment, and if it proved to be one governed by Part IVAA of the Act, then they would be unable to recover the entirety of their damages if it was held that the respondents had owed and breached duties of care to the plaintiffs, which breaches were causative of the loss and damage.

A Deed of Settlement, dated 13 December 2007, was executed by the plaintiffs and Spowers. It is necessary to draw attention to some of its provisions.

First, by recital D the plaintiffs’ claim for damages against both the contractor and Spowers was identified, and it was stated that -

The plaintiffs seek compensation from Spowers for alleged loss and damage caused by Spowers’ alleged negligence and alleged breach of retainer as set out in Schedule D to the Amended Statement of Claim … and set out in the schedule attached to the plaintiffs’ Offer of Compromise dated 18 June 2007 being the loss and damage claimed at 31 May 2007 and any additional interest and claims since that time.

In terms, then, the claim which was compromised was the claim made by the plaintiffs against Spowers for the entirety of their alleged loss and damage.

Second, by recital E it was noted that Spowers denied liability for the claim.

Third, Spowers agreed to pay the plaintiffs $3.9 million inclusive of costs.

Fourth, the settlement was conditional upon the plaintiffs settling their proceeding against the contractor. It was not in debate that such a settlement was effected, although the amount of the settlement was not disclosed.

Fifth, the plaintiffs undertook to discontinue the proceeding against Spowers, with no order as to costs, upon payment of the settlement sum. In fact, on 1 February 2008 it was ordered that ‘the proceedings as between the plaintiffs and the defendants be struck out with no order as to costs but with a right of reinstatement to the second defendant’. Protection of Spowers’ position by reserving right of reinstatement was no doubt connected with the ongoing third party proceedings which are the subject of this appeal.

Sixth, the Deed provided by clause 2.3 that -

If requested by Spowers, the plaintiffs will release either or both of the third parties from the subject matter of the proceeding. Such release will be prepared by Spowers’ lawyers.

Spowers thereby had the right to call upon the plaintiffs to release the third parties from the risk of action being brought against them as alleged concurrent wrongdoers under Part IVAA of the Act.

Seventh, the Deed specified that -

The Third Party proceedings remain the responsibility of Spowers.

Eighth, by clause 2.7 the Deed provided as follows:

If the Plaintiffs, make any claims against any Third Party (other than the Defendants) in respect to the subject matter of the claim and proceeding, and should Spowers be joined or in anyway implicated in these claims, the Plaintiffs agree to indemnify Spowers and hold them harmless in respect to any loss, liability, damages and costs incurred by reason of Spowers being joined to these claims.

What this provision seems to have contemplated was the possibility that the plaintiffs would proceed with suit against parties other than the defendants – whether it be against the present respondents or against others unidentified. In such circumstances the plaintiffs were to hold Spowers harmless. The clause implied a situation in which the plaintiffs had not made the request, then acted upon by the plaintiffs, which I identified at [31].

Ninth, the release was expressed in broad language as follows:

The Plaintiffs hereby release and forever discharge Spowers from all claims, actions, suits, demands, damages and causes of action of every description whatsoever which they, directors, officers, successors, transferees or assignees may have or may have had but for this Deed of Settlement against Spowers in respect of damages, losses, taxes, costs, interest or expenses of any kind suffered or incurred by reason of or arising out of in anyway connected with the claim and the proceeding.

So much for the Deed. I turn to developments in the pleadings.

Pursuant to an order made by a judge of the Trial Division on 1 February 2008, Spowers filed a further amended statement of claim in the third party proceedings. The circumstance that it had compromised the plaintiffs’ claim, and the way in which it now sought to pursue recovery against the respondents was first revealed by amendments to paragraphs 12 and 26 of the third party statement of claim. Those paragraphs were in generally the same form, one of them referring to the engineer and the other to the surveyors. Paragraph 12 provided:

~~In the event that the Court finds in favour of the Plaintiffs herein, then c~~Certain of the ~~alleged~~ defects claimed by the Plaintiffs ~~have been~~were caused or contributed to by the engineer’s breaches of retainer and/or negligence.

Next, paragraphs 29-32(a) of the existing document were deleted, and were replaced by paragraphs 33-35. There was a consequential amendment of the prayer for relief. Paragraphs 29-35 in their amended form were as follows:

29.~~The plaintiffs’ claims herein are ‘apportionable claims’ within the meaning of that term as defined in and to which Part IVAA of the Wrongs Act 1958 (‘the Act’) applies.~~
30.If the Court finds in favour of the Plaintiffs’ claims herein as against the architect, then by reason of the matters contained herein, the engineer and the building surveyor will also be ‘concurrent wrongdoers’ and ‘Defendants’ within the meaning of those terms in and for the purposes of Part IVAA of the Act, being persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the Plaintiffs’ claim.
31.In the premises, pursuant to s.24AI of the Act, the architect’s liability shall be limited to, and the engineer and building surveyor shall each be liable for, such amounts reflecting that proportion of the loss or damage claimed that the Court considers just having regard to the extent of each of their respective responsibilities for the Plaintiffs’ loss or damage.
32.~~Alternatively, and only in the event that Part IVAA of the Act does not apply to the Plaintiffs’ claims or to any of the other parties to the proceeding:~~
(a)~~If the architect is found liable in respect of any damage suffered by the Plaintiffs as claimed or at all;~~

33.On or about 13 December 2007, the architect settled the Plaintiffs’ claims against it herein by payment to the Plaintiff of the sum of $3,900,000.00 (‘settlement sum’).
PARTICULARS
The settlement is in writing comprising a Deed of Settlement, a copy of which may be inspected by at the offices of the solicitors for the architect by prior arrangement.
34.Pursuant to section 23B of the Wrongs Act 1958 (‘the Act’):
(a)the architect is a person liable in respect of damage suffered by the Plaintiffs and was so liable immediately before the architect made or agreed to make payment of the settlement sum;
(b)the architect made or agreed to make payment of the settlement sum in good faith in settlement or compromise of the Plaintiffs’ claims for loss and damage herein;
~~(b)~~(c) by reason of the matters referred to in paragraphs 12 and 13 hereof, the engineer ~~shall~~ is also be liable in respect of the same damage;
~~(c)~~(d) by reason of the matters referred to in paragraphs 26 to 28 inclusive hereof, the building surveyor ~~shall~~ is also be liable in respect of the same damage~~; and~~.

35.In the premises, the architect ~~shall be~~is entitled to recover and hereby claims contribution up to and including full indemnity from the engineer and/or the building surveyor pursuant to section 23B of the Act in respect of ~~any such loss or damage for which the architect may be found liable to the Plaintiffs.~~the settlement sum in such amounts as may be found by the court to be just and equitable having regard to the extent of their respective responsibilities for the Plaintiffs’ damage.

In the event, Spowers’ claim against the respondents became one solely for contribution or indemnity pursuant to Part IV of the Act. All reference to Part IVAA of the Act was eliminated.

Neither of the respondents filed an amended defence to the further amended statement of claim in the third party proceeding. Rather, they made the oral applications for summary judgment, the success of which has led to this appeal.

The decision below

The learned judge first observed that Spowers’ claim was founded upon s 23B of the Act, the particularly relevant parts of which were sub-s (1) and (4). Those subsections read as follows:

(1)Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).
(4)Subject to section 24(2B), a person who in good faith has made or agreed to make any payment in settlement or compromise of a claim made against that person in respect of any damage (including a payment into court which has been accepted) shall be entitled to recover contribution in accordance with this section without regard to whether or not the person who has made or agreed to make the payment is or ever was liable in respect of the damage provided that that person would have been liable assuming that the factual basis of the claim against that person could be established.

It is convenient to note, at this point, the content of s 24(2) and (2B):

(2)Subject to subsections (2A) and (2B), in any proceedings for contribution under section 23B the amount of the contribution recoverable from any person shall be such as may be found by the jury or by the court if the trial is without a jury to be just and equitable having regard to the extent of that person's responsibility for the damage; and the jury or the court if the trial is without a jury shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
(2B)If in any proceedings for contribution under section 23B the jury or the court, if the trial is without a jury, finds that the amount of any payment made or agreed to be made in settlement or compromise of a claim was excessive the jury or the court (as the case requires) in assessing the amount of the contribution recoverable from any person shall disregard any part of the payment which appears to it to have been excessive.

The judge noted the respondents’ contention that the further amended statement of claim in the third party proceeding disclosed no cause of action against them – because, as they claimed, they were not persons ‘liable in respect of the same damage’ within the meaning of s 23B(1) of the Act.

His Honour rejected the submission. The respondents do not now challenge that conclusion.

His Honour accepted, on the other hand, the respondents’ submission that the amount for which Spowers had settled with the plaintiffs could only have related to its potential proportionate liability pursuant to an assessment by the Court made under s 24AI(1) of the Act. His Honour said this –

It seems to me that this submission is logical. If the amount of any good faith settlement by Spowers can only reflect the amount for which it, exclusive of other defendants and third parties, was responsible, then such amount cannot be the subject of a contribution claim against such other defendant or third party by Spowers.

His Honour noted that Spowers had placed reliance upon s 24AO of the Act. He reasoned that it was a necessary consequence of s 24AI(1) that a defendant against whom judgment was entered in favour of a plaintiff could not seek contribution against other defendants and third parties. In his Honour’s opinion a defendant who made a bone fide settlement with a plaintiff could not be in a better position than a defendant against whom judgment had been given.

His Honour said this:

It seems to me to be a necessary corollary, where judgment is entered against the defendant, that other defendants and third parties cannot seek contribution against that defendant. It would thus seem that s 24AJ of the Act merely confirms what would follow in any event from the application of s 24AI(1). Although s 24AJ does not apply to settlements but only to judgments, it would seem to necessarily follow that a defendant who settles with a plaintiff cannot be the subject of a claim for contribution by another defendant against whom the plaintiff proceeds to judgment.

and accordingly –
… it seems to me that a defendant who has settled with a plaintiff in respect of an apportionable claim cannot be in any better position than a defendant against whom a plaintiff has obtained judgment and that s.24AO cannot be interpreted so as to preclude or debar the valid contention that the contribution claims in this case must be futile and doomed to failure. To put it another way, a court would be unable to conclude under Part IV of the Act that it was ‘just and equitable’ that any amount should be recoverable by way of contribution by such a defendant and in this case would be obliged to ‘exempt’ the third parties from liability to make contribution. [Footnotes omitted]

and
A conclusion to the contrary of the foregoing in my opinion flies in the face of the policy underlying Part IVAA. It would mean that benefits which Parliament was intending to confer upon litigants in relation to apportionable claims would be diminished or lost if any one of them settled a claim made against it. It is a regrettable feature of this legislation that its drafting creates many difficulties but I see it as the clear intent of the legislature to create a regime which with respect to the claims to which it applies, provides for the separate liability of each of the defendants before the court.

His Honour summarised his conclusions this way:

… while (having regard to the terms of s.24AO) the present claims for contribution are not rendered incompetent, they cannot succeed, so that no good purpose would be served by permitting them to go forward. For the foregoing reasons, the third parties are entitled to summary judgment against Spowers in the third party proceedings.

The parties’ submissions on the appeal

In order that the submissions of the parties may be the more clearly understood, it is necessary to draw attention, in as preliminary way, to a number of the provisions of Part IVAA of the Act.

First, the term ‘apportionable claim’ is defined by s 24AE to mean a claim to which the Part applies. Relevantly, s 24AF(1) provides that ‘this part applies to – (a) a claim for economic loss … in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care …’

Second, the generality of that description is cut down by exclusions set out in s 24AG. Nothing need be said about those exclusions in this case.

Third, s 24AH defines a ‘concurrent wrongdoer’ as follows:
(1)A concurrent wrongdoer, in relation to a claim, is a person who is one of 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.
By sub-s (2), ‘it does not matter that a concurrent wrongdoer is insolvent, is being wound-up, has ceased to exist or has died’.

Fourth, the main operative section, s 24AI, relevantly provides –

(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.

Fifth, sub-s (3) of s 24AI says this –

(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.

The consequence of s 24AI(3) is that, if a defendant wishes to have the distinct advantage of the proportionate liability regime, and if the plaintiff has not named as defendants all of those persons which it considers might be held to be concurrent wrongdoers, then it is the defendant which must bring them into the proceeding – that is, unless the person sought to be implicated is dead or, being a corporation, has been wound up.

The further consequence of s 24AI(3) is this: if a defendant brings in putative concurrent wrongdoers, and if the plaintiff does not make them defendants to its proceeding, and if they are found to be concurrent wrongdoers, then the plaintiff will only recover – by operation of s 24AI(1) - such proportion of its damages as are attributable to the proportionate liability of the defendant (or defendants) to its proceeding.

Sixth, joinder of a putative non-party concurrent wrongdoer is facilitated by s 24AL. There is, however, an inhibition upon joinder. By s 24AL(2) -

(T)he 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.

The reference to ‘any previously concluded proceeding’, having regard to the repetitive references in the earlier sections of Part IVAA to judgment, should be understood, in my opinion, as being a reference to a proceeding which culminated in judgment.

Seventh, the protection given by s 24AL(2) to a party which has been made liable by judgment is part of a regime which attempts to ensure that such a party is freed from attack – whether by the plaintiff or by a concurrent wrongdoer. So it is that s 24AJ provides that –

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.

Eighth, Part IVAA has something else to say about its inter-relationship with Part IV of the Act. Section 24AO provides that -

(E)xcept as provided in s 24AJ, nothing in this Part affects the operation of Part IV.

Ninth, s 24AP specifically preserves joint and several liability in particular circumstances in respect of claims which are determined within the confines of Part IVAA. It is unnecessary to refer to the provisions which produce that outcome.

Submissions for Spowers

Counsel for Spowers submitted that the answer to the appeal lay first in an understanding of what had been compromised, and second in the exercise of an orthodox process of statutory interpretation.

The compromise, counsel submitted, was simply a compromise of the claim raised by the plaintiffs against Spowers for an agreed sum. Their claim against his client had been one for the entirety of their loss and damage. They had not pleaded that theirs was an apportionable claim, or that Spowers was a concurrent wrongdoer. At the time when the compromise was made, whatever might be the appearance of the claim as a matter of pleading, a number of matters remained unproven: whether the claim was in fact an apportionable claim; whether, if it was, Spowers had been a concurrent wrongdoer; in the event that Spowers had been a concurrent wrongdoer, what proportionate liability it should bear in respect of the plaintiffs’ asserted loss and damage.

In those circumstances, counsel submitted, this was simply a conventional instance of a defendant claiming contribution, pursuant to Part IV of the Act, against others who were liable for the same damage.

Counsel further submitted that, on the face of the release, his client had paid an amount which bought not only its release from the plaintiffs’ claims; but also release of the respondents. Whilst, at the time when the respondents’ application was heard, Spowers had not made the request upon the plaintiffs which would oblige the release of the respondents, that remained a course which Spowers could take - and one which it could be expected to take before trial. Counsel submitted that the likely explanation why clause 2.3 had been inserted – rather than the Deed being drawn to immediately release the respondents from their potential liability to the plaintiffs - was his client’s apprehended concern about the effect of James Hardie & Coy Pty Ltd v Seltsam Pty Ltd.[13]
[13](1998) 196 CLR 53.

Counsel submitted that the working out of the contribution proceedings would not produce the undesirable consequences that Part IVAA was designed to avoid. The plaintiffs would not be able to recover the entirety of their damages against a wrongdoer which was only partly responsible. Moreover, Part IVAA would not apply at trial of the third party proceedings. Spowers’ claims, made by a defendant against third parties, were not comprehended by that Part.

Further again, counsel submitted, there was no objection in principle to the course taken by Spowers. By paying an amount which the plaintiffs were prepared to accept to settle the entirety of the their claims against it, and to settle their prospective claims against the respondents, Spowers had put itself in control of the contribution proceedings. There was nothing objectionable in that.

Upon the question of statutory construction, counsel emphasised that what was required was simply the application of the words of the statute.

He accepted, as I understand it, that the claim pleaded by the plaintiffs met the description of an apportionable claim. But that, he submitted, said nothing about whether and how Part IVAA would apply. For the application of the Part depended upon there being concurrent wrongdoers, and then determination of the proportionate liability of the concurrent wrongdoers – that being expressed, ultimately, in judgments for money sums.

Counsel referred to and relied upon the judgment of Barrett J in Reinhold v NSW Lotteries Corporation (No 2).[14]Counsel submitted that his Honour had rightly concluded that the application of the corresponding New South Wales legislation depended upon findings having been made of relevant circumstances.
[14][2008] NSWSC 187.

Counsel further submitted that s 24AO emphasised the limits of the inhibition upon the operation of Part IV of the Act which flowed from s 24AJ. Those inhibitions were concerned with the consequences of judgment, not compromise.

Upon the question whether it was just and equitable that Spowers should recover any amount by way of contribution from the respondents – see s 24(2) of the Act - counsel submitted that his Honour’s conclusion that it would not be just and equitable for Spowers to do so, depended upon his view of what it was that Spowers had paid. That view had been erroneous in two respects. First, because it assumed that the payment equated Spowers’ proportionate liability as it would have been assessed under s 24AI(1). Second, because his Honour had not taken into account the fact that Spowers’ payment had secured the respondents against their prospective liability to the plaintiffs.

Submissions for the Respondents

Counsel for the engineer emphasised that counsel for Spowers below had conceded that the plaintiffs had raised an apportionable claim. In addition to that concession, Spowers had alleged, and the engineer had admitted, that the plaintiffs’ claim was an apportionable claim. The concession and the state of the pleadings compelled an assumption that such was the situation. This was important, because it bore upon the nature of the claim made against the engineer under Part IV of the Act. That claim was futile. In a claim for contribution under s 23B(4), one must assume a hypothetical situation: that is, the situation had the plaintiffs proceeded against Spowers. The fact of limitation of Spowers’ liability, by operation of s 24AI, was established by the pleadings. All that remained was for the liability to be quantified. The situation was not one of ‘wait and see’ whether Spowers’ liability was limited, as would have applied in litigation of the plaintiffs’ claim against Spowers and others.

These submissions led on to a contention that it must be assumed that Spowers’ liability to the plaintiffs as a concurrent wrongdoer, arising from want of reasonable care, quantified at $3.9 million.

To meet the argument that the settlement had been for an amount which bought a release for the respondents from potential action against them by the plaintiffs, counsel next submitted that within the Deed of Settlement was an assumption that the plaintiffs could still sue the respondents. In those circumstances, it could not be said that Spowers had paid an amount in full satisfaction of the plaintiffs’ claims against the respondents. At least it was open to conclude that the plaintiffs had not settled their claim against Spowers and the respondents for the entirety of what could have been recovered against them by trial and judgment.

Focussing upon the state of pleadings at the time when the compromise was struck between the plaintiffs and Spowers, counsel further submitted that because Spowers had pleaded against the engineer an apportionable claim, and because this had been admitted, Spowers’ alternative claim for contribution was no longer alive at the time of the compromise.

Counsel noted that his client had not been privy to the settlement between the plaintiffs and Spowers. He submitted that such a settlement could not have the effect of altering the respondents’ liability to the plaintiffs, so as to give rise to an obligation upon the respondents to make contribution to Spowers. He referred to difficulties associated with settlement of Part IVAA claims identified by Byrne J in Gunston v Lawley.[15] He also submitted that the construction of the legislation urged by Spowers would discourage settlements
[15][2008] VSC 97, [62], [65].

According to counsel’s submission, the appellant was contending that Part IV of the Act had primacy, and would not operate only if s 24AO applied. Such an approach was unjustified.

Counsel submitted, as I understand it, that in certain circumstances a contribution proceeding could be pursued although a plaintiff’s claim was an apportionable claim which apparently involved concurrent wrongdoers. He gave two examples, contrasting them with the circumstances of the present case. First, a defendant might settle with the plaintiff for the full amount of the claim, take an assignment of the plaintiff’s right of action against other possible wrongdoers, and bring a proceeding for contribution against them. Second, a defendant might not join concurrent wrongdoers, become subject to a proportionate liability determination – which in the circumstances would be for the full amount of the plaintiff’s loss and damage - and then use Part IV to bring a contribution proceeding against the other wrongdoers.

Counsel for the surveyors submitted that Spowers had elected to raise the proportionate liability issue. It had become part of the matrix of facts. Spowers had joined concurrent wrongdoers. The surveyors had pleaded that they would be protected by s 24AJ. Spowers had compromised its liability to the plaintiffs based upon the material facts alleged. Those facts included its having raised the application of Part IVAA, and its joinder of the engineer and the surveyors. The factual basis of the claim against Spowers, for the purposes of s 23B(4), had become different once Spowers joined the respondents. At that stage, the claim against Spowers had become a claim rooted in Part IVAA.

Counsel submitted that Reinhold represented no obstacle to his argument because it had been concerned with the determination of actual circumstances within a Part IVAA context, and not with an assumption of circumstances for the purposes of a s 23B(4) claim.

Nettle JA asked counsel what would occur if a plaintiff sued only two of four possible defendants to an apportionable claim, and there was judgment against each of them for 50 per cent of the plaintiff’s loss and damage. Could one of those defendants seek contribution from the other potential defendants? Counsel answered that a defendant could maintain suit for contribution in those circumstances. But then he distinguished the present case - on the basis that the respondents had been parties to the proceeding, notwithstanding that they had not been made defendants to the plaintiffs’ claim.

Counsel agreed that Part IVAA says nothing about settlement. He submitted, however, that the answer to the present claim lay in the language of s 23B(4) - by reference to which Part IVAA was in substance introduced into the contribution analysis.

Like counsel for the engineer, counsel for the surveyors submitted that the approach of the learned judge at first instance would provide greater certainty to a concurrent wrongdoer defendant. It could settle with a plaintiff secure in the knowledge that, even if judgment was not entered in favour of the plaintiff, other concurrent wrongdoer defendants could not pursue contribution proceedings against it. This would encourage settlements.

Whilst, as can be seen, a number of submissions were pressed on behalf of the respondents, it seems to me that two propositions were placed at the forefront:

· First, that the plaintiffs’ claim was an apportionable claim, in consequence of which Spowers, as a concurrent wrongdoer, was only ever liable to the plaintiffs for the extent of its proportionate liability. Spowers was precluded from claiming contribution or indemnity in respect of that liability, which been quantified by payment of the compromise amount.

· Second, that the factual basis of the claim against Spowers, for the purposes of s 23B(4), was not simply the plaintiffs’ claim as pleaded against it, but that claim as affected by (or understood in the light of) Spowers’ assertion, in its defence, and by its original third party statement of claim, that the claim was an apportionable claim and that it, Spowers, was only one of a number of concurrent wrongdoers.

There were two corollaries implicit in those contentions. First, if Spowers’ claims for contribution were maintainable, it had the prospect of achieving an outcome which it could not have achieved had the plaintiffs’ claim gone to trial. The statute should be construed to prevent such an outcome. Second, it could not in any event be just and equitable that Spowers recover any contribution from the respondents.

Reply by Spowers

Counsel for Spowers, in reply, submitted that the ‘factual basis of the claim’ against his client was the claim by the plaintiffs, not the defences raised by his client, still less allegations made by his client in the third party proceedings. He submitted further that the arguments of counsel for the respondents showed the availability of Part IV in some circumstances where there was an apportionable claim, but illogically denied it operation in other circumstances.

Resolution of the appeal

As I noted at the outset, this appeal concerns the interrelationship of Parts IV and IVAA of the Act in the circumstances of the particular case. Part IV, although it has been amended from time to time, is of long standing. Part IVAA, however, was only inserted in 2003,[16] and since its insertion has scarcely been amended.
[16]By Act No 60/2003.

Part IV, headed ‘Contribution’, relevantly deals with the recovery of contribution – which may amount to an indemnity – when more than one person is liable in respect of the damage suffered by another. It can apply whether the liability has evolved into a judgment, or has been the subject of a compromise.

Part IVAA, headed ‘Proportionate Liability’, is one of a number of similar but not identical statutory regimes adopted by the Commonwealth, States and Territories at about the same time.[17]
[17]In the case of the Commonwealth, see Part VI of the Trade Practices Act 1974, Part 7.10 Division 2A of the Corporations Act 2001 and Part 2, Sub-Division GA of the Australian Securities and Investment Commission Act 2001. In the case of NSW, see Part 4 of the Civil Liability Act 2002. In the case of Western Australia, see Part 1F of the Civil Liability Act 2002, and the Civil Liability Amendment Act 2003. In Queensland, see Part 2 of the Civil Liability Act 2003. In Tasmania, see the Civil Liability Act 2002, Part 9A. In the Northern Territory, see the Proportionate Liability Act 2005. In the Australian Capital Territory, see the Civil Law (Wrongs) Act 2002. South Australia has enacted the Law Reform (Contributory Negligence and Apportionment of Liability Act 2001) Part 3, and is in the process of adopting a proportionate liability regime.

In recent years, there has been a debate within the High Court as to the proper approach to statutory construction. Broadly speaking, there has been the approach of Kirby J, and the approach of other judges. The most recent instance of the divergent approach (although it did not yield a different outcome) is Minister Administering the Crown Lands Act v NSW Aboriginal Lands Council.[18]
[18][2008] HCA 48. Compare Hayne, Heydon, Crennan and Kiefel JJ, [44], [48] and [68] with Kirby J, [2]-[7]. The particular focus of the contrary views was the significance, for purposes of statutory construction, of legislation being remedial in character.

This Court is, of course, bound by the majority view, which emphasises the importance of focusing at the outset upon the words of the statute. But it would matter not in the present case which approach was adopted. The outcome, I consider, would be the same.

Not for a moment relegating the significance of the words of the Act, I think it can be said at the outset that the broad intent of Part IVAA, like that of its fellows, is clear enough. It was put this way in Shrimp & Anor v Landmark Operations Ltd & Ors:[19]

… the mischief to which the amendments were directed was a plaintiff being able to recover 100% of his damages from any one of several wrongdoers when that wrongdoer’s ‘fault’, when compared with the other wrongdoers, was less or far less than that. In other words, the amendment was directed to what were considered to be the undesirable consequences of the joint and several liability rule. There is no suggestion that the mischief the amendments were designed to remedy was any wider than that.[20]

[19](2007) 163 FCR 510, 523 [62], (Besanko J).

[20]Professor JRL Davis, in his recent paper ‘Proportionate Liability: Proposals to Achieve National Uniformity’, proposes that ‘the guiding principle which should inform all proposals for amendment to the … legislation is that the purpose of the legislation is to be a replacement for joint and several liability …’. That principle might be broad enough, if implemented, to remove contribution provisions from operation where the proportionate liability regime applies. But that is not to say that current legislation had such a broad objective in mind; still less that it achieved it.

The perceived mischief could arise under the previously applicable law if, for instance, a plaintiff sued only one of a number of wrongdoers liable for the same damage; or if a plaintiff sued a number of wrongdoers liable for the same damage, but only sought to recover judgment damages from one of them. In either situation, a solvent or insured defendant was the most likely target. When such a defendant had paid damages, its prospect of recovering contribution or indemnity would depend upon the means of the other wrongdoers; and in any event recovery might be delayed – for instance, if not all the wrongdoers were defendants, or if contribution proceedings (whether by separate writ or third party notice) were heard at a distinctly later time than the proceeding between plaintiff and defendant.

The response of Part IVAA is most importantly in two parts. First, in cases to which it applies, a plaintiff is only able to obtain judgment against a so-called ‘concurrent wrongdoer’ in an amount reflecting that proportion of the plaintiff’s loss or damage which the Court considers just having regard to the extent of the particular defendant’s responsibility for the loss or damage. Judgment must not be entered against the defendant for any greater sum. Second, once judgment is given against a concurrent wrongdoer, that party cannot be required to contribute to the damages recovered or recoverable from another concurrent wrongdoer in the same proceeding; and cannot be required to indemnify any such wrongdoer.

The second part of the response is contained in s24AJ. By that section, within its sphere of operation, Part IV of the Act is specifically excluded from operation. The section, which impinges upon the operation of Part IV, implicitly recognises that the circumstances which will give rise to the operation of Part IVAA will ordinarily be circumstances which would give rise to an entitlement to contribution under s 23B.

But the extent of the impingement of Part IVAA upon the operation of Part IV is specifically limited by the interaction of ss 24AJ and 24AO. The latter provision is not replicated in similar statutes. Whilst it might be said, with some force, that s 24AJ, standing alone, would show the limited extent of the impingement of Part IVAA upon Part IV, s 24AO makes explicit what would otherwise be implicit.

Related to what I have just said is the fact that Part IVAA is wholly silent about the compromise of claims between plaintiff and defendant.[21] The key to the operation of the Part is the finding of relevant facts and the entry of judgment. The determination that a defendant is a concurrent wrongdoer in an apportionable claim triggers the limitation upon the amount of the judgment which can be entered against that defendant, and in turn protects the defendant against claims for contribution or indemnity by other concurrent wrongdoers.
[21]By ‘defendant’ I mean a defendant in the true sense and not a defendant within the extended meaning given that word by Part IVAA.

Part IV, on the other hand, specifically addresses compromise. A conclusion that Part IV applies to a contribution proceeding which arises out of a compromise between plaintiff and defendant in a case which, if it went to judgment, might turn out to be a claim by the plaintiff falling within Part IVAA, and a claim in respect of which the defendant was a concurrent wrongdoer, is in my opinion consistent with the interaction of ss 24AJ and 24AO. The concession for the respondents that Part IV can operate upon apportionable claims in some circumstances supports that conclusion.

I have used the phrase ‘cases to which [Part IVAA] applies’. But when does the Part apply? As will be apparent, the respondents placed considerable emphasis upon Spowers’ pleading, by its defence and the third party statement of claim in its original form, that the plaintiffs’ claim was an ‘apportionable claim’ and that it was a concurrent wrongdoer,[22] and by its counsel’s concession below that the plaintiffs’ claim was an apportionable claim. There were two aspects to that emphasis: first, that once a claim was admittedly an apportionable claim and a defendant was admittedly a concurrent wrongdoer, the liability of that defendant was, as it were, sectioned-off; so that any amount paid in compromise of the plaintiffs’ claim could only be in respect of the sectioned-off liability. Second, that the admissions were part of the assumed ‘factual basis of the claim against‘ the defendant for the principles of s 23B(4).
[22]Expressed in qualified language in paragraph 19.2 an 19.3 of the defence, and by implication in paragraphs 30 and 31 of the third party statement of claim in its original form

For two reasons, I do not agree with the proposition contained in the first of those aspects.

First, if pleadings rather than judgment could ever render a matter an ‘apportionable claim’, and a defendant a ‘concurrent wrongdoer’ they did not do so in this instance. Spowers, by its defence, denied the plaintiffs’ claims. It pleaded, but only as an alternative, if its principal answer to the plaintiffs’ claim failed, that the claim was an apportionable claim. It pleaded, in language which was not free of qualification, that it would be a concurrent wrongdoer in that eventuality. The plaintiffs did not file a reply to the defence. They did not have to do so in order to join issue with the pleas last-mentioned.[23] Further, the third party statement of claim, in its original form, again took as a starting point Spowers’ denial of the plaintiffs’ claims. From that beginning, Spowers went on to plead that each respondent had owed a duty of care[24] to the plaintiffs, had breached such duty, and that breach had been causative of loss. This was followed by allegations which raised the application of Part IVAA of the Act, and Part IV in the alternative. The engineer’s defence to the third party statement of claim, having denied any breach of duty, did admit that the plaintiffs’ claim was an apportionable claim. But it denied that the engineer was a concurrent wrongdoer. The surveyors by their defence denied breach of duty, denied that the plaintiffs’ claim was an apportionable claim and denied that they were concurrent wrongdoers.
[23]See r 13.13(1)(2) of Ch 1.
[24]In fact, duties arising from multiple sources; but nothing turns on it.

In all, no more can be said than that Spowers raised a defence, secondary to its principal denial of any liability to the plaintiffs, that their claim was an apportionable claim and that it was a concurrent wrongdoer, upon each of which allegations the plaintiffs joined issue; and that it pleaded, inter alia, in the original third party statement of claim, against the background of its denial of the plaintiffs’ claim, that such claim was an apportionable claim and that the respondents were concurrent wrongdoers – the first of which allegations was admitted by one respondent and not by the other, and the second of which each of them denied.

The second reason why I do not agree with the proposition that the liability of Spowers was, as it were, immediately confined by operation of the pleadings to proportionate liability under Part IVAA is that, in my opinion, the operation of Part IVAA is dependent upon judgment by a plaintiff against a defendant. I consider, contrary to the submission of counsel for the engineer, that it is not simply the quantum of the limitation on liability which depends upon judgment.

The definition of ‘apportionable claim’ by s 24AE, and the description in s 24AF of circumstances in which Part IVAA applies do not mean that, once something that looks like an apportionable claim is pleaded, a defendant forthwith becomes a ‘concurrent wrongdoer’. Section 24AH(1) emphasises that whether a wrongdoer is of that character depends upon the person having been one of two or more persons whose acts or omissions caused the plaintiff’s loss and damage. At least absent highly unusual pleadings, determination of the critical circumstances will depend upon findings having been made. Section 24AI(1) is consistent with such an analysis. It limits the liability of a concurrent wrongdoer to an amount reflecting the proportion of the plaintiff’s loss or damage claimed which the Court considers just in all the circumstances, the Court being obliged to take into account the responsibility of other concurrent wrongdoers who are parties to the proceeding, but ordinarily not others. The importance of the Court’s adjudication is emphasised by this provision, as it is by s 24AJ, which naturally flows from it. The same may be said of s 24AK(1), which takes as its standing point judgment against a concurrent wrongdoer.

Such an analysis of similar provisions was made, as counsel for Spowers submitted, by Barrett J in Reinhold v NSW Lottery Corporation (No2).[25] It is true, as counsel for the surveyors submitted, that Reinhold was a case conducted within the confines of the NSW equivalent of Part IVAA. But in my opinion it gives the lie to the idea that, without judgment, a defendant who might turn out to be a concurrent wrongdoer in an apportionable claim attains that status, and is fixed with liability under Part IVAA – judgment merely fixing the quantum of the liability.
[25][2008] NSWSC 187.

Barrett J said this:

19It seems to me clear that a person will be a ‘concurrent wrongdoer’ only if the court makes findings about the existence of ‘loss or damage’ and about which acts or omissions ‘caused’ the loss or damage. It is only when those findings are made that it is possible to identify, as contemplated by s 34(2), each person whose acts or omissions, as found, ‘caused’ the ‘loss or damage’, as found. At that point, and not before, a person can be seen to be a ‘concurrent wrongdoer’.
20The relevant ‘claim’ – that is, the claim in relation to which the identified person is a ‘concurrent wrongdoer’ - can only be the claim in respect of which the findings concerning loss or damage and causation are made. That claim is, of necessity, a claim already litigated, not a pending or foreshadowed claim. Its nature and content (and, therefore, its status under s 34(1)) will be discoverable by looking at the findings that cause it to be determined as it is determined. If, on those findings, it is seen that the loss or damage (as established in ‘an action for damages’) arose from a failure to take reasonable care and did not arise out of personal injury, the case will be within s 34(1)(a); and if it is seen that there was a contravention of s 42 of the Fair Trading Act, the case will be within s 34(1)(b). In either such case, the already litigated ‘claim’ will be an ‘apportionable claim’ because of s 34(1) and, if, on the findings made, the acts or omissions of several persons ‘caused’ the ‘damage or loss’ as found, the persons will be ‘concurrent wrongdoers’.
21The need to know the outcome of the claim in order to apply Part 4 is emphasised by s 34A. The operation of that section – and, therefore, the ambit of Part 4 as a whole – depends on the ability to know, among other things, whether a person ‘intended to cause’ or ‘fraudulently caused’ the ‘loss or damage that is the subject of the claim’. These things can be judged only after the loss or damage and its causes have been identified through a process of fact finding and analysis. Viewed in prospect and in its pending state, a claim might allege an intentional or fraudulent act or omission, but it is impossible to say, at that point, whether any loss or damage was caused and, if it was, what caused it – in particular, whether it was intentionally caused or fraudulently caused.
22On this basis, the nature of a ‘claim’, for the purposes of Part 4, will be determined by what the court has decided in the case, not by what might be prayed or pleaded in an initiating process or points of claim. In short, ‘claim’ refers to a claim as proved and established, not a claim as made or advanced.

His Honour added that –

30I respectfully agree that a claim may properly be regarded as one ‘arising from a failure to take reasonable care’ if, ‘at the end of the trial’, the evidence warrants a finding to that effect and regardless of the absence of ‘any plea of negligence or a ”failure to take reasonable care”’. The nature of the claim, for the purposes of Part 4, is to be judged in the light of the findings made and is not determined by the words in which it is framed.

and
32The provisions of Part 4 are compulsory. They change substantive rights, so that a plaintiff’s ability to obtain an adjudication of joint and several liability is removed where the circumstances are of the type to which the alternative regime of proportionate liability is applied. A case no doubt needs to be pleaded and proved by one or more defendants so as to engage the statutory provisions. But it will be the findings ultimately made that determine whether the statutory conditions compelling the court to adopt the proportionate approach are satisfied.

Those observations emphasised the importance of trial to the determination of the application of the relevant legislation.

As will be apparent, I respectfully agree with his Honour’s analysis.[26] I do not consider that it is at odds with pertinent observations by Byrne J in Gunston v Lawley and ors.[27]
[26]Which was consistent with observations made by Middleton J on pleadings applications in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd and Anor (2007) 164 FCR 450, 458, [29]-[31]. The observations were strictly obiter dicta, because his Honour held that Part IVAA was not applicable to the Commonwealth proceeding which was before him.
[27][2008] VSC 97, [56]-[58] and [65]. Note also that in his paper ‘Proportionate Liability. Some Creaking in the Superstructure’, delivered by his Honour to the Judicial college of Victoria on 19 May 2006, Byrne J observed that ‘An enquiry to determine whether a person is one of a number of concurrent wrongdoers involves each of three questions: (a) Did the act or omission of each person cause the loss to the plaintiff? – A question of fact. (b)Was the act or omission of each person a wrongful one? – A question of law. (c) Is the plaintiff’s loss in each case the same loss? – A question of fact and law.’ Definitive answers to those questions can only be given by a court.

Byrne J characterised a plaintiff’s claim under Part IVAA of the Act as a series of separate suits against concurrent wrongdoers, with recovery of a separate judgment against each of them. He described the phrase ‘loss or damage claimed’ in s 24AI as a ‘shorthand version’ of the expression ‘the proved loss or damage which is the subject of the claim’.

Whilst what his Honour said emphasised the self-contained nature of judgments against individual defendants under Part IVAA, it also emphasised the significance of a judgment to the operation of the key provision. Nothing that his Honour said could be taken to mean that a plaintiff’s claim assumed such a self-contained character from the moment that the plaintiff raised allegations which might, if proved, make it so; or that a defendant’s conditional pleading could make it so.

It was contended by counsel for the engineer that s 24AL(1) stood against a conclusion that a concurrent wrongdoer was only identifiable once a Court had made findings. But I am not persuaded that this is so. Use of the present tense of the verb ‘to be’ should be regarded, on a consideration of the tenor of Part IVAA, as being anticipatory; or, in a practical sense, as requiring only that a defendant

… put forward a pleading which raises an arguable case that the party is a concurrent wrongdoer… that the defendant need only plead a case which is ‘not hopeless’.[28]

In other words, this is a procedural provision only, which does not determine that a person is a concurrent wrongdoer for the purposes of Part IVAA.

[28]Woods v De Gabriele and ors [2007] VSC 177, [9] (Hollingworth J); Atkins v Interprac Financial Planning Pty Ltd and anor [2007] VSC 445, [10] (Hargrave J).

In the event, the proper construction of Part IVAA does not make it obligatory to approach consideration of Spowers’ contribution claims on the footing that its payment of $3.9 million to the plaintiffs represented no more than quantification of its sectioned-off liability to the plaintiffs as a concurrent wrongdoer under that Part.

Because it cannot be said that the pleadings, or the concession made below, meant that the plaintiffs’ claim against Spowers was an apportionable claim in respect of which Spowers was a concurrent wrongdoer, those circumstances cannot found a conclusion that the payment of $3.9 million represented no more than Spowers’ putative liability to the plaintiffs as a concurrent wrongdoer. The contention that the amount was of that character also faces difficulty on two other fronts. First, as between plaintiffs and Spowers, the compromise was not so expressed. It was simply a compromise of the plaintiffs’ claim against Spowers, a claim for the entirety of their loss and damage; and a claim which, on their case, had nothing to do with Part IVAA.[29] Second, the contention that Spowers had settled only in respect of its putative liability as a concurrent wrongdoer runs into the difficulty that Spowers paid a sum which entitled it to request the release of the respondents from any prospective liability to the plaintiffs, and which obliged the plaintiffs to comply with such request. The respondents’ argument that this was not what it seemed, because there was no immediate release, and because, notionally, the plaintiffs could still have sued them (in which case the plaintiffs undertook to hold Spowers harmless) was readily explicable. It is in my view clear that part of the price which the plaintiffs agreed to pay in return for payment of the settlement sum was that, on request by Spowers, they would release the respondents from any liability which they might have to the plaintiffs.
[29]Remembering that the plaintiffs were taken to have joined issue with Spowers’ pleading which sought to invoke Part IVAA; and that they did not join the respondents as defendants to their claim.

I turn to the respondents’ submission, in effect, that the ‘factual basis of the claim against’ Spowers, which the Court was required to assume for the purpose of determining that Spowers ’would have been liable’ to the plaintiffs, was that –

(1) The plaintiffs had made an apportionable claim.

(2) Spowers was a concurrent wrongdoer.

(3) The respondents were concurrent wrongdoers.

(4) Spowers had paid no more than the quantum of its putative liability under s 24A(1).

In my opinion that submission fell down at a number of points.

First, what must be assumed, in my opinion, was the factual basis of the claim which was brought by the plaintiffs against Spowers; not issues raised by Spowers as part of its multi-faceted defence. That is emphasised by reference, in s 23B(4), to ‘settlement or compromise of a claim made against’ a person; and by reference to it being enough that ‘the person would have been liable’ upon an assumption ‘that the factual basis of the claim against that person could be established’. That claim was here the plaintiffs’ claim against Spowers. Its factual basis lay in the allegation of circumstances giving rise to duty, breach of duty and resulting loss and damage.

What I have just said does not mean that defences will necessarily be irrelevant in the context of a claim made under Part IV. It means simply that they are not relevant to the s23B(4) enquiry. Where there has been a compromise, a defendant might wish to argue – see s 24(2B) - that the amount paid was excessive because a particular defence had evident merit. But that is not this case. For the respondents wished to argue that Spowers had paid an amount which quantified its proportionate liability as a putative concurrent wrongdoer – and not a penny more.

Second, implicit in the submissions for the respondents was the proposition that the factual basis of the claim against Spowers could in part be disclosed by Spowers’ allegations, made on a contingent basis, in the third party proceedings. I do not accept that proposition.

Third, for reasons already given, it cannot be said that the compromise sum was no more than a quantification of Spowers’ putative liability as a concurrent wrongdoer.

I should next mention the engineer’s submission in effect, that if the settlement was given the operation attributed it by Spowers, it would have the effect – which it could not have – of altering the liability of the respondents to the plaintiff, and of giving rise to a new obligation of the respondents to Spowers.

If clause 2.3 was invoked by Spowers, the plaintiffs would be required to release the respondents from their prospective liability to the plaintiffs. Having paid nothing for the privilege, the respondents could hardly complain about that.

The respondents could say that the compromise meant, if Parts IV and IVAA of the Act were construed as Spowers urged, that that they were now open to contribution proceedings when, if the plaintiffs’ claim had proceeded to judgment, and Part IVAA had been held applicable, they would not have been.[30] But that would be a consequence of the legislation, in particular its application to settlements. All that could be said is that the compromise enlivened the application of particular provisions.
[30]And might have faced no money liability, except if they had been added as defendants to the plaintiff’ claim, or had later been sued.

I should mention also the respondents’ submission that the construction of the legislation urged by Spowers would, if accepted, encourage uncertainty and discourage settlements. I doubt that this is so. The judgment of Byrne J in Gunston v Lawley and ors[31] shows that there is room for substantial uncertainty as to the wisdom and impact of settlement between a defendant and a plaintiff in respect of a claim which may turn out to be an apportionable claim with a number of concurrent wrongdoers. At most, it could be conjectured that the success of this appeal might add to the uncertainties. But I think it is far from certain that this would be so. It could reasonably be argued that the availability of Part IV in some circumstances would be likely to encourage settlement between a defendant and a plaintiff. Why should a plaintiff be resistant to settling with a defendant for a fair sum, agreeing to release other potential concurrent wrongdoers as well as that defendant, and leaving it up to the defendant to recover contribution? Why should a defendant be resistant to making such a settlement, if the same were to give it control of contribution proceedings? Again, why should the prospective defendants to contribution proceedings be resistant to a settlement of the kind described? Although the issue was not debated in this appeal, I doubt that determination of proportionate liability under s 24AI should yield a different result to a determination of just and equitable contribution under s 24(2) of the Act.
[31][2008] VSC 97, see particularly [51]-[52] and [64]-[65].

To this point, I have focused upon the application of s23B in the circumstances of the case. For the reasons given, it applied. The language of the Act dictates that it should do so. It is also compatible with the accepted application of Part IV to some instances of issues resolved between plaintiff and defendant within Part IVAA that it should do so.

The question which then arises is whether the application of s 23B would necessarily be an exercise in futility. I cannot so conclude. Neither conceptually, nor in fact in the particular circumstances of the case so far as they are known to this Court, can it be said that Spowers only paid to the plaintiffs the amount of its putative proportionate liability as a concurrent wrongdoer.[32] Moreover, the payment, in substance, bought the release of the respondents. It cannot be forecast that it would not be just and equitable that Spowers recover contribution from the respondents. As presently advised, indeed, the contrary would seem likely to be the situation.
[32]Even if it appeared that it had done so, s 23B might still apply – at least if the compromise bought the release of a third party.

Out of deference to the careful reasons of the learned judge at first instance, I should add this. His Honour reasoned, in part, that it would be wrong to read Part IV to operate so as to place ‘a defendant who has settled with a plaintiff in respect of an apportionable claim … in any better position than a defendant against whom a plaintiff has obtained judgment’; and that a conclusion to the contrary ‘would fly in the face of the policy underlying Part IVAA’, having the effect that ‘benefits which Parliament was intending to confer upon litigants in respect of apportionable claims would be diminished or lost if any one of them settled a claim made against it’. It is implicit in what I have already said that I respectfully disagree with a number of aspects of that analysis. It assumed that the compromised claim would have proved at trial to be an apportionable claim, and that the particular defendant would have proved to be a concurrent wrongdoer (or else that a trial was unnecessary to establish those matters). It assumed that the settlement sum was the amount which the defendant would have been ordered to pay after a trial which established it to be a concurrent wrongdoer. It did not distinguish between a case in which a defendant agreed to pay the entirety of the plaintiff’s claim, and a case in which the agreement was to pay something less. It did not allow for a settlement in which, as here, the defendant bought the release of other parties. It did not reflect the fact that the amount of contribution which the defendants to a contribution proceeding might be ordered to pay would at least be very unlikely to exceed - and might be less than – the amount which they might have been ordered to pay to the

plaintiff as concurrent wrongdoers under Part IVAA.[33] It did advert to the problem that a settling defendant does not have the protection of s24AJ.[34] But that does not touch the application of Part IV.

[33]The liability of concurrent wrongdoers in a Part IVAA context may derive from apportionable causes of action which are of different character. It has been suggested that this might cause difficulties in apportionment under that Part which would not occur in a contribution setting: Byrne J, ‘Proportionate Liability. Some Creaking in the Superstructure’ (19 May 2006). But even if that be so, it does not suggest the contrary of the proposition which I have stated.
[34]A corollary of which is that such a defendant may well be advised to oblige the plaintiff to enter judgment against it for the settlement sum.
Orders

I would order that the appeal be allowed, and that in lieu of the orders made below the oral application made by the respondents in reliance upon r 23.01 of Chapter I of the Rules be dismissed with costs.

NEAVE JA:

For the reasons given by Ashley JA I would also allow the appeal. I agree with him that s 24AI of the Wrongs Act 1958 does not prohibit a defendant, who has settled an apportionable claim, from claiming a contribution under Part IV of that Act, from a person who is liable in respect of the same damage. Sections 24AI to 24AJ of the Act apply to apportionable claims where judgment is given against a concurrent wrongdoer[35] and not to situations where the claim is settled. Section 24AO preserves the operation of Part IV in other circumstances. The language of these provisions may be compared with ss 23(4) and 24(2B) which deal specifically with cases where a person makes a payment in settlement of a claim.
[35]As defined in s 24AH

Where a person makes a payment in settlement or compromise of a claim, the matters referred to by Nettle JA in paragraphs [7]-[9] of his reasons will be relevant in determining the amount of contribution which it is just and equitable for that person to recover under s 24(2) of the Wrongs Act.

Actions

Download as PDF Download as Word Document

Citations

Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208

Most Recent Citation

Dezic Pty. Ltd. v McCluskys Lawyers [2010] VCC 1360

Cases Citing This Decision

31

Gerrard Toltz Pty Ltd v City Garden Australia Pty Ltd (in liq) (No 2) [2024] NSWCA 232

Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58

Cases Cited

7

Statutory Material Cited

0

Albion Insurance Co Ltd v Government Insurance Office (NSW) [1969] HCA 55

P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209

R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50

[2008] VSCA 208

22 October 2008