INDRESCO Pty Ltd v Hawker Noyes Equipment Pty Ltd

[1999] WASCA 60

INDRESCO PTY LTD -v- HAWKER NOYES EQUIPMENT PTY LTD [1999] WASCA 60

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[1999] WASCA 60
Court:	THE FULL COURT (WA)
Case No:	FUL:168/1998	Heard:	13 NOVEMBER 1998
Coram:	KENNEDY J WALLWORK J	Delivered:	18/06/99
No of pages:	7	Judgment Part:	1 of 1
Result:	Appeal dismissed
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Parties:	INDRESCO PTY LTD (ACN 005 078 526) HAWKER NOYES EQUIPMENT PTY LTD (ACN 009 832 026)
Catchwords:	Torts Contributory negligence Whether claim for contribution available when person claiming contribution has been held liable in contract, although liability could have been established in tort
Legislation:	Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947, s 7
Case References:	Astley v Austrust Ltd [1999] HCA 6; 73 ALJR 403 AWA Ltd v Daniels trading as Deloitte Haskins & Sells (1992) 7 ACSR 759 Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261 Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30 Henderson v Merrett Syndicates Ltd [1994] 2 AC 145 James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; 73 ALJR 238 Macpherson v Prunty & Associates [1983] VR 573 McLaren Maycroft & Co v Fletcher Development Co Ltd [1973] 2 NZLR 100 Rap Industries Pty Ltd v Royal Insurance Australia Limited (1988) 5 ANZ Insurance Cases 60-876 Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 Hawkins v Clayton (1988) 164 CLR 539 Mainguard Packaging Ltd v Hilton Haulage Ltd [1990] 1 NZLR 360 New Zealand Forest Products Ltd v Attorney General [1986] 1 NZLR 14 Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 2) [1987] VR 281

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : INDRESCO PTY LTD -v- HAWKER NOYES EQUIPMENT PTY LTD [1999] WASCA 60 CORAM : KENNEDY J

WALLWORK J

HEARD : 13 NOVEMBER 1998 DELIVERED : 18 JUNE 1999 FILE NO/S : FUL 168 of 1998 BETWEEN : INDRESCO PTY LTD (ACN 005 078 526)

Appellant (Fourth Party)

AND

HAWKER NOYES EQUIPMENT PTY LTD (ACN 009 832 026)
Respondent (Third Party)

Catchwords:

Torts - Contributory negligence - Whether claim for contribution available when person claiming contribution has been held liable in contract, although liability could have been established in tort

Legislation:

Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947, s 7

Result:

Appeal dismissed

(Page 2)

Representation:

Counsel:

Appellant (Fourth Party) : Mr K E Yin
Respondent (Third Party) : Mr M T McKenna

Solicitors:

Appellant (Fourth Party) : Jackson McDonald
Respondent (Third Party) : Hunt & Humphry

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

Astley v Austrust Ltd [1999] HCA 6; 73 ALJR 403
AWA Ltd v Daniels trading as Deloitte Haskins & Sells (1992) 7 ACSR 759
Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261
Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30
Henderson v Merrett Syndicates Ltd [1994] 2 AC 145
James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; 73 ALJR 238
Macpherson v Prunty & Associates [1983] VR 573
McLaren Maycroft & Co v Fletcher Development Co Ltd [1973] 2 NZLR 100
Rap Industries Pty Ltd v Royal Insurance Australia Limited (1988) 5 ANZ Insurance Cases 60-876

Case(s) also cited:

Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
Hawkins v Clayton (1988) 164 CLR 539
Mainguard Packaging Ltd v Hilton Haulage Ltd [1990] 1 NZLR 360
New Zealand Forest Products Ltd v Attorney General [1986] 1 NZLR 14
Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 2) [1987] VR 281

(Page 3)

1 KENNEDY J: This is an interlocutory appeal against a decision of a Master granting the appellant, the fourth party in the substantive proceedings, leave to amend its fourth party notice and its statement of claim.

2 The appeal raises issues in relation to s 7 of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947, which relevantly provides:

"7(1) Where damage is suffered by any person as the result of a tort -

(a) …

(b) …

(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is or would if sued have been liable in respect of the same damage whether as a joint tortfeasor or otherwise but so that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability for which contribution is sought."

3 The plaintiffs operate an engineering business known as Kununoppin Engineering. In 1987, they entered into a hire purchase agreement with the defendant hire purchase company in relation to the hiring of a bulldozer. They claim that the bulldozer was not fit for earthmoving and dam sinking, which was the purpose for which it was hired, and that it frequently broke down by reason of defects. In 1990, they varied their agreement by a deed of variation, whereby a substitute bulldozer was hired in the place of the original bulldozer. The plaintiffs claim that the substitute bulldozer was not fit for the purpose for which they required it and that it also frequently broke down by reason of various defects. The plaintiffs sued the defendant for damages for breach of contract. They made no claim based in tort.

4 The defendant had purchased both the original and the substituted bulldozer from the respondent. The defendant issued a third party notice against the respondent, based solely on an alleged breach of contract. The respondent then issued a fourth party notice against the appellant. The claim against the appellant was formulated in the following manner:

(Page 4)

"The third party claims against you damages, and to be indemnified against the defendant's claim and the costs of the action or contribution on the grounds that you sold the Original Machine and the Substituted Machine (as defined in the Statement of Claim in the principal action) to the third party in breach of an express warranty under a Distributor Sales and Service Agreement between the Third Party and you dated 19 July 1985 (the "Agreement") that all products sold under the Agreement would be free from defects in material and workmanship. Further or in the alternative, on the grounds that you sold the Original Machine and the Substituted Machine to the third party in breach of an implied warranty under the Sale of Goods Act 1895 (WA) that each was of merchantable quality or fit for its purpose."

5 In the original statement of claim in the third party proceedings against the appellant, pars 2 and 3 read as follows:

"2. The defendant claims against the third party that it is entitled to indemnity in respect of the plaintiffs' claims and damages by reason that the original machine and the substituted machine were supplied by the third party as appears from the defendant's statement of claim against the third party in this action.

3. The third party disputes the claims of the plaintiffs and the defendant in this action, but if it should be held that the third party is liable, it claims that it is entitled to be indemnified by the fourth party and to damages for breach of contract and costs on the following grounds."

The grounds which followed were directed solely to matters of contract. The prayer for relief sought damages for breach of contract or warranty, together with an order that the appellant indemnify the respondent against any liability that it may have in the action. There was no claim for contribution, although that had been sought in the original fourth party notice, albeit, on the face of it, based on the breach of an express warranty. As to claiming an indemnity in an action for damages for breach of contract, see Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261, at 274 - 275. And as to claiming contribution in anticipation of the resolution of the main action, see James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; 73 ALJR 238, at [30].

(Page 5)

6 The amendments to the statement of claim sought by the respondent, and allowed by the Master, added an alternative claim in tort for the breach of a duty of care not to supply to the respondent equipment which was defective, or which was not merchantable, or which was not reasonably fit for its purpose.

7 It must be appreciated that the task of this Court is not to try the fourth party claim, or to try a preliminary issue. The question before us is whether the learned Master erred in permitting the amendments to its fourth party notice and to its statement of claim sought by the respondent. As indicated above, the original notice claimed breach of express and implied warranties and an indemnity against the defendant's claim, or contribution, whilst the statement of claim sought damages for breach of contract and an indemnity. The amendments added a claim against the appellant for negligently causing economic loss. There is no plea that, if the respondent is liable to the defendant, then it is entitled to an indemnity or to contribution from the appellant on the footing that, as between them, there exists a common liability in tort. If that were to be established, the fact that the claim against the respondent was based solely in contract would not be a bar to recovery. A claim for an indemnity or for contribution should not fail merely for the reason that a plaintiff (or third party) has elected to sue in contract, notwithstanding that he could just as easily have sued in tort. In my opinion, this conclusion is supported by the more recent authorities.

8 The learned Master, in his reasons for judgment, suggested that Professor Fleming, in his work, The Law of Torts, 9th edn at 294, was not correct in saying that a defendant who is sued only in contract cannot get contribution under s 7 of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947. It appears to me that this view proceeds on a misunderstanding of the text. Having stated that there must first of all be a common liability in tort, Professor Fleming goes on to say that this excludes not only claims lying only in contract, but also claims between a tortfeasor and someone liable only for breach of contract. It is, however, observed in a footnote to this statement that this problem has lost its importance since the defendant can now be sued in tort as well as contract, citing the Victorian Full Court's decision in Macpherson v Prunty & Associates [1983] VR 573 and the New Zealand decision of Thomas J in Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30.

9 In Macpherson's case, the plaintiffs, who were not parties to the appeal, had made claims in both contract and tort against two firms of solicitors. The trial Judge found that the appellant solicitors were liable to

(Page 6)

the plaintiffs only in contract and not in tort, and for that reason this could not have recourse to the contributory negligence legislation. The majority of the court, Lush and Beach JJ, held that the appellants were entitled to a contribution order against the other firm of solicitors. It was pointed out by Lush J, however, at 582, that the contractual duty in that case was co-extensive with any duty which the law might have implied independently of contract.

10 In the Dairy Containers Ltd case, the decision of the New Zealand Court of Appeal in McLaren Maycroft & Co v Fletcher Development Co Ltd [1973] 2 NZLR 100, having regard to the subsequent decision of the House of Lords in Henderson v Merrett Syndicates Ltd [1994] 2 AC 145, was not followed, and Thomas J held that a wrongdoer sued in contract may be also sued in tort. He was prepared to hold that the phrase "tortfeasor liable in respect of that damage" includes a wrongdoer who is actually liable in tort, although that wrongdoer may have been sued and held liable only in contract. See also Rap Industries Pty Ltd v Royal Insurance Australia Limited (1988) 5 ANZ Insurance Cases 60-876 and AWA Ltd v Daniels trading as Deloitte Haskins & Sells (1992) 7 ACSR 759. Although the High Court has recently confirmed in Astley v Austrust Ltd [1999] HCA 6; 73 ALJR 403 that the apportionment legislation cannot reduce the damages for breach of contract, this has no impact upon the present problem.

11 Counsel for the respondent acknowledges that there are deficiencies in the fourth party notice and in the statement of claim, and he apparently intends to seek leave to make further amendments to them in due course. It is not necessary for me to say anything as to that. Nor do I suggest that, there having been no argument on the merits, there may not be a substantial defence available to the appellant to resist an amended claim.

12 The question which arises is where this leaves the statement of claim as presently amended. In my view, the statement of claim adequately pleads a claim against the fourth party, in the alternative, for negligent conduct causing economic loss, as to which see generally Fleming, op cit, at 193 and following, and ch I and ch II in Torts in the Nineties, ed Nicholas J Mullany (1997). It is properly included in the respondent's claim. The fact that the statement of claim may not, and probably does not, adequately claim contribution does not lead to the conclusion that the amendments should not have been allowed. Any claim for contribution or indemnity was not inserted in the fourth party notice or in the statement of claim by the amendments which are now being challenged.

(Page 7)

13 In the circumstances, although this matter has followed a somewhat tortuous path, I would dismiss the appeal.

14 WALLWORK J: I agree with the reasons for judgment of Kennedy J and the order proposed by his Honour.