James Hardie & Co Pty Ltd v Wyong Shire Council

[2000] NSWCA 107

Reported Decision: [2000] 48 NSWLR 679
[2000] 19 NSWCCR 679

New South Wales

Court of Appeal

CITATION:	James Hardie v Wyong Shire Council [2000] NSWCA 107
FILE NUMBER(S):	CA 40464/99
HEARING DATE(S):	31 March 2000
JUDGMENT DATE:	2 May 2000
PARTIES :	James Hardie & Coy Pty Limited v Wyong Shire Council
JUDGMENT OF:	Handley JA at 1; Giles JA at 27; Heydon JA at 46

LOWER COURT JURISDICTION :	Dust Diseases Tribunal
LOWER COURT FILE NUMBER(S) :	DDT 119/96
LOWER COURT JUDICIAL OFFICER :	Armitage J

COUNSEL:	CC Gee QC/TGR Parker (Appellant) JD Hislop QC/G Seib (Respondent)
SOLICITORS:	Phillips Fox (Appellant) McCulloch & Buggy (Respondent)
CATCHWORDS:	JOINT & CONCURRENT TORTFEASORS - CONTRIBUTION - WHETHER CONTRIBUTION INCLUDES COSTS PAYABLE TO PLAINTIFF - LAW REFORM (MISCELLANEOUS PROVISIONS) ACT 1946 (NSW), s5
LEGISLATION CITED:	Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Dust Diseases Tribunal Act 1989 (NSW) Courts Legislation Amendment Act 1998 (NSW) Civil Liability (Contribution) Act 1978 Lord Cairns' Act 1858 Suitors Fund Act 1951 (NSW)
CASES CITED:	Wilkinson v Rea Ltd [1941] 1 KB 688 CA, 704-5 Jerred v T Roddam Dent & Son Ltd [1948] 2 All ER 104 Broken Hill Pty Co Ltd v Duffy (1943) 16 ALJ 374 A V Jennings Construction Pty Ltd v Maumill (1956) 30 ALJ 100 Soblusky v Egan (1960) 103 CLR 215 Chapman v Hearse (1961) 106 CLR 112 Voli v Inglewood Shire Council (1963) 110 CLR 74 Commissioner for Government Transport v Bitumen & Oil Refineries (Australia) Ltd (1953) 54 SR (NSW) 1 Sinclair v William Arnott Pty Ltd (1963) 64 SR (NSW) 88 Barisic v Devenport [1978] 2 NSWLR 111 Brazendale v Kenna [1961] Tas SR 199 FC, 202 Sherras v Van der Maat [1989] 1 Qd R 114 Hanson v Matthew Bros Contractors Ltd (1991) 55 SASR 183 Richard West & Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 The Millwall [1905] P 155 CA, 174 Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 348 Commercial and General Insurance Co Ltd v Government Insurance Office (1973) 129 CLR 374 Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 Trustees Executors & Agency Co Ltd v Reilly (1941) VLR 110 State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 McDowell v Baker (1979) 144 CLR 413 Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337 Fitzpatrick v Waterstreet, NSW CA, 17/12/98 unrep Floreani Bros Pty v Woolscourers (SA) Pty Ltd (1976) 13 SASR 313 Whitham v Bullock (1939) 2 All ER 310 Bonner v Tottenham & Edmonton Permanent Investment Building Society (1899) 1 QB 161 Morgan Equipment Company v Rodgers (1993) 32 NSWLR 467 Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741 Catt v Coveyduck [1950] OWN 176 Colonial Coach Lines Ltd v Bennett (1967) 66 DLR (2d) 396 Stewart v London Transport Commission (1968) 1 DLR (3d) 550 Smith v Bray (Wickham, Third Party) (1939) 56 TLR 200
DECISION:	Leave to appeal granted - orders made

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40464/99
DDT 119/96

HANDLEY JA
GILES JA
HEYDON JA

2 May 2000

JAMES HARDIE & COY PTY LIMITED v WYONG SHIRE COUNCIL

JOINT & CONCURRENT TORTFEASORS - contribution - whether contribution includes costs payable to plaintiff - Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5 The appellant company was sued for negligence by a former employee of the respondent Council who had contracted fibrosis as a result of exposure to asbestos in the course of his employment. The company cross-claimed against the Council seeking contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (the 1946 Act).
The plaintiff’s claim against the company was settled for $80,000 inclusive of costs. Proceedings on the cross-claim for contribution continued, it being agreed that $50,000 of the settlement represented damages, and $30,000 represented the plaintiff’s costs.
Armitage J held that the Council should contribute to one third of the damages of $50,000 but should not contribute to the payment for the plaintiff’s costs. His Honour concluded that there was no power to order the Council to contribute to the plaintiff’s costs either under the 1946 Act or under s 29 of the Dust Diseases Tribunal Act.
The company filed a summons for leave to appeal against the Judge’s decision arguing that (1) there was power under the 1946 Act to order contribution to the plaintiff’s costs or (2) there was such power under s 29 of the Dust Diseases Tribunal Act.
HELD: Granting leave to appeal and allowing the appeal: (1) The decision of the trial Judge raises an important question on the construction of a statute of general application and disturbs a long established practice to the contrary effect. Leave to appeal should therefore be granted. (2) per Giles JA (Heydon JA agreeing): Regarding costs as part of the tortfeasor’s liability in respect of the damage is not excluded by the requirement that the third party tortfeasor be liable in respect of the same damage. The phrase “in respect of” is of wide import and provided the textual basis for the established practice by which contribution has been ordered as to costs as well as damages. (3) Moreover, such a construction gives effect to fundamental principle that persons under co-ordinate liability must bear the burden pro rata. The doctrine of co-ordinate liabilities is based on the principle of natural justice, operating both at law and in equity, directed to achieving equality of burden and benefit. In order for there to be complete recognition of this principle, costs should be treated in the same way as damages. Dillingham Constructions v Steel Mains Pty Ltd (1975) 132 CLR 323, Trustees Executors & Agency Co v Reilly (1941) VLR 110, Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342 referred to. (4) There is a long line of practice in Australia and England of awarding contribution towards the plaintiff’s costs as well as the damages. This line of practice should not be disturbed unless clearly shown to be wrong. Richard West & Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 referred to. (5) per Handley JA: The costs payable by the company to the plaintiff did not form part of “the same damage” within s 5(1)(c) or s 5(2) because the Council was never liable for those costs. However the right of contribution should be construed as extending to costs payable to the plaintiff because the purpose of s 5 was to remedy the injustice of the common law rule that imposed the entire burden of damages and costs on the defendant chosen by the plaintiff. The 1946 Act was intended to bring concurrent tortfeasors into line with other persons owing co-ordinate obligations to another, and a construction limiting the right of contribution to damages would only provide a partial remedy. Hanson v Matthew Bros Contractors Ltd (1991) 55 SASR 183 followed, Sherras v Van der Maat [1989] 1 Qd R 114, Brazendale v Kenna [1961] Tas SR 199 referred to.

ORDERS

(1) Leave to appeal granted.

(2) Subject to the filing of a notice of appeal within 14 days appeal allowed with costs.

(3) Order of the Dust Diseases Tribunal for contribution in favour of the appellant against the respondent varied by substituting the sum of $26,667 for the sum of $16,667 with effect from 27 May 1999.

(4) Respondent to have certificate under the Suitors Fund Act if qualified.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40464/99
DDT 119/96

HANDLEY JA
GILES JA
HEYDON JA

2 May 2000

JAMES HARDIE & COY PTY LIMITED v WYONG SHIRE COUNCIL

JUDGMENT

1    HANDLEY JA: Cecil Drake was employed as a carpenter by the Wyong Shire Council between 1963 and 1982. During this period he was exposed to asbestos supplied to the Council by the appellant company (the company) and as a result contracted fibrosis in his lungs. On 14 August 1996 he commenced proceedings against the company in the Dust Diseases Tribunal claiming damages for its negligence in connection with its supply of asbestos products to the Council. The company brought a cross-claim against the Council seeking contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (the 1946 Act). 2 The trial commenced on 25 May 1999 before Armitage J and the plaintiff’s claim against the company was settled on the afternoon of the second day for $80,000 inclusive of costs. Proceedings on the cross-claim for contribution continued, it being agreed between the company and the Council that $50,000 of the verdict represented damages, and the balance of $30,000 represented the plaintiff’s costs. 3 The trial Judge held that the Council should contribute to the extent of one third to the damages of $50,000 awarded to the plaintiff but should not contribute to the payment for the plaintiff’s costs. He ordered the Council to pay the company’s costs of the cross-claim. His Honour concluded that there was no power either under the 1946 Act or under s 29 of the Dust Diseases Tribunal Act to order that the Council make any contribution towards the plaintiff’s costs paid by the company. He added that if he had such a power he would refuse, in the exercise of his discretion, to make such an order. 4    On 23 September 1999 the company filed a summons for leave to appeal against the Judge’s decision refusing to order the Council to contribute to the amount paid to the plaintiff for his costs of the proceedings. The appeal, having been instituted after the commencement of the Courts Legislation Amendment Act 1998 on 4 December that year, is limited to questions of law. 5 Section 5(1)(c) of the 1946 Act provides:

“… any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint-tortfeasor or otherwise … ”.

6 Section 5(2) of the Act provides:

“In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court 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”.

7 The trial Judge held that while s 5(1)(c) and s 5(2) of the 1946 Act conferred a right on a defendant tortfeasor to recover contribution from a concurrent tortfeasor in respect of any damages recoverable by the plaintiff, they conferred no right in respect of the costs recoverable by the plaintiff. His decision raises an important question on the construction of a statute of general application and disturbs a long established practice to the contrary. Leave to appeal should therefore be granted. 8 The relevant provisions of the 1946 Act do not, in terms, confer a right to recover contribution in respect of costs recoverable by a plaintiff from a defendant. Section 5(1)(c) applies where a tortfeasor is liable “in respect of that damage” - being the damage referred to in the opening words of the section (“Where damage is suffered by any person …”). The right is to recover “contribution” from any other tortfeasor “liable in respect of the same damage”. The existence of this co-ordinate liability identifies both the party entitled to recover contribution and the party from whom it is recoverable. However the contribution which is recoverable is not defined. 9 Section 5(2) provides that “the amount of the contribution recoverable … shall be such as may be found … to be just and equitable having regard to the extent of that person’s responsibility for the damage”. This specifies the method of determining the extent of the contribution, but does not define its subject matter. 10 The right to contribution must cover any damages payable to the plaintiff, but whether it extends to costs payable to the plaintiff depends on the meaning of “contribution” in this context. The question cannot depend on whether the defendant’s liability for the plaintiff’s costs is a liability “in respect of that damage”, because contribution is recoverable from a third party tortfeasor “liable in respect of the same damage”, and the third party is not liable for the plaintiff’s costs. 11 Under the common law rules displaced by s 5, the selection by a plaintiff of the person or persons who would be sued in the action, and the selection of the defendant against whom any judgment in the action would be enforced, determined which tortfeasor would bear the burden of the judgment. A concurrent tortfeasor who satisfied a judgment against him could not recover contribution in respect of that judgment from other tortfeasors who were originally liable for the same damage. 12 The recovery of contribution could not arise until satisfaction of the judgment in favour of the plaintiff. Any such judgment would include amounts for both damages and costs and the burden of that judgment on the defendant selected by the plaintiff extended to the costs as well as the damages. 13 Section 5 was intended to remedy the injustices caused by these common law rules, and a construction which limited the right of contribution to the damages payable to the plaintiff would only provide a partial remedy. The costs properly incurred by the plaintiff in establishing liability and quantifying his damages had to be incurred against one or more of the tortfeasors before any right to contribution from the other tortfeasors could arise. There is therefore every reason for construing the right to contribution as extending to costs payable under the judgment to the plaintiff if such a construction is fairly open. 14 This legislation was adopted in England in 1935, in this State in 1946, and at various dates in the other States and Territories. In the intervening periods (in England until the Civil Liability (Contribution) Act 1978) the courts in both countries, it seems without debate, regularly, if not invariably, ordered contribution in respect of the plaintiff‘s costs as well as his damages. Cases in which such orders have been made or affirmed without comment include in England Wilkinson v Rea Ltd [1941] 1 KB 688 CA, 704-5; Jerred v T Roddam Dent & Son Ltd [1948] 2 All ER 104, 110 and in the High Court Broken Hill Pty Co Ltd v Duffy (1943) 16 ALJ 374; A V Jennings Construction Pty Ltd v Maumill (1956) 30 ALJ 100; Soblusky v Egan (1960) 103 CLR 215, 239; Chapman v Hearse (1961) 106 CLR 112, 114; and Voli v Inglewood Shire Council (1963) 110 CLR 74, 101. In this Court the cases include Commissioner for Government Transport v Bitumen & Oil Refineries (Australia) Ltd (1953) 54 SR (NSW) 1, 6; Sinclair v William Arnott Pty Ltd (1963) 64 SR (NSW) 88, 97; and Barisic v Devenport [1978] 2 NSWLR 111, 154. Similar orders were made in Brazendale v Kenna [1961] Tas SR 199 FC, 202, 214; Sherras v Van der Maat [1989] 1 Qd R 114, 118, 120; and Hanson v Matthew Bros Contractors Ltd (1991) 55 SASR 183, 196, 198. 15 As Megarry J said in Richard West & Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 at 431-2, such a course of practice is a source of authority which should be followed unless shown to be clearly wrong. The seminal textbook on this topic is Glanville Williams Joint Torts and Contributory Negligence 1951 which stated at p 488 that the equivalent of ss 5(1)(c) and 5(2) in the 1935 Act:

“… which give a right of contribution among concurrent tortfeasors, are perfectly general in their wording, and enable the Court to order contribution towards costs payable to the injured party. Normally contribution will be ordered in the same proportions as the wrongdoers are held liable between themselves in respect of the plaintiff’s damages. Where the plaintiff has sued only one wrongdoer, D1, and obtains a judgment for damages and costs, D1 may … be given a final judgment against D2 for the latter’s contribution to the costs payable to P”.

16    A number of reported cases deal with claims for contribution in respect of the costs incurred by the defendant to his own solicitors in defending the plaintiff’s action, where liability to contribute to the costs payable to the plaintiff was not challenged. See Brazendale v Kenna [1961] Tas SR 199 (FC), 202, 214; Sherras v Van der Maat [1989] 1 Qd R 114, 118, 120; and Hanson v Matthews Bros Contractors Ltd (1991) 55 SASR 183, 198. 17 In Brazendale v Kenna above at 212, the Full Court said that “where a defendant’s claim against a third party is founded on an indemnity arising ex contractu or ex lege there is a well established rule that the defendant may add to the damages for which he is entitled to be indemnified any costs reasonably incurred in resisting the plaintiff’s claim”. The Full Court said that such costs were recoverable as damages, and this is correct where there is a contractual right to an indemnity, but it cannot be the basis for such claims where the indemnity arises by operation of law. 18    They declined to follow the dictum of Collins MR in The Millwall [1905] P 155 CA, 174 “that costs reasonably incurred in defending an action in which there was a liability over to a third person in respect of the damages [are] properly recoverable, as well as the damages, against that other person” stating (212-3) that this was not an independent principle but merely a restatement of the rule that a party entitled to indemnity may recover costs reasonably incurred as part of his damages. However in The Millwall (ibid 176) Cozens-Hardy LJ approved this statement of the Master of the Rolls and cited in support decisions that a lay trustee was entitled to be indemnified by a solicitor trustee against his liability to a beneficiary for breach of trust including any costs payable by that trustee to the plaintiff beneficiary. 19    Equity did not award damages before Lord Cairns’ Act and the right of a lay trustee to be indemnified by his solicitor co-trustee against costs cannot be a right to damages. It can only reflect one aspect of a right to an indemnity arising by operation of law. A right to contribution is inherently of the same nature being in effect a right to a partial indemnity. 20    In Sherras v Van der Maat [1989] 1 Qd R 114, Thomas J held that contribution under the equivalent of the 1946 Act did not extend to the defendant’s own costs of defending the proceedings brought by the plaintiff but at 118 he said:

“There is of course no difficulty in ordering the unsuccessful defendant to pay such sums as a claimant defendant may pay the plaintiff, including payments discharging the defendant’s liability to the plaintiff for costs, because such liability has been ascertained by judgment, and is the very liability against which the legislation gives protection”.

21    In Hanson v Matthew Bros Contractors Ltd (1991) 55 SASR 183, 192 Cox J said that:

“… liability in respect of a claimant’s damage is made the means of identifying a tortfeasor who must contribute, but does not necessarily denote the extent of his contribution. The word ‘contribution’ is not defined”.

22    In that case the right to recover contribution in respect of costs payable to the plaintiff was not disputed, and Cox J referred to the co-insurance cases of Albion Insurance Co Ltd v Government Insurance Office (1969) 121 CLR 348, 352; and Commercial and General Insurance Co Ltd v Government Insurance Office (1973) 129 CLR 374, 384 where the insurers claiming contribution were held entitled to recover a proportion of the costs payable to the successful plaintiffs in addition to a share of the damages, but were not entitled to recover anything in respect of their own costs. Cox J held that the legislation was intended to bring concurrent tortfeasors into line with other categories of persons owing co-ordinate obligations to another under the general law. (See generally Mason & Carter “Restitution Law in Australia” pp 222-3). He concluded (197):

“This means that the contribution that may be ordered in third party proceedings … cannot include any share of a defendant tort-feasor’s own costs of defending the claimant’s action against him”.

23 In my judgment the right to contribution conferred by s 5 extends, as a matter of right, to the costs payable to the plaintiff in addition to the damages. The third party’s responsibility for the damage assessed under s 5(2) will determine his contribution to both damages and costs. This construction does not leave a third party at the mercy of a defendant’s unreasonable conduct in defending the plaintiff’s action. The defendant may well have no right to contribution in respect of the costs he incurs to his own solicitors, and the third party can protect himself by an offer to contribute under the Rules of Court which deal with offers of compromise, or by a Calderbank letter. 24 The appellant has established that the trial Judge erred in law in denying contribution in respect of the costs payable to the plaintiff. The appeal should therefore be allowed, and the order for contribution enlarged, to include a proportion of the costs payable to the plaintiff. 25 My conclusion on the effect of s 5 of the 1946 Act makes it unnecessary to decide whether the Tribunal’s power under s 29 of the Dust Diseases Tribunal Act to make orders for costs authorises orders against persons who are not a party to the proceedings, or would support an order that a third party contribute to the payment of a plaintiff’s costs. In any event the first question does not arise because the Council was a third party joined pursuant to s 3(1) of the 1946 Act and became a party to the principal proceedings pursuant to s 3(2). 26    The following orders should be made:

(1) Leave to appeal granted.

(2) Subject to the filing of a notice of appeal within 14 days appeal allowed with costs.

(3) Order of the Dust Diseases Tribunal for contribution in favour of the appellant against the respondent varied by substituting the sum of $26,667 for the sum of $16,667 with effect from 27 May 1999.

(4) Respondent to have certificate under the Suitors Fund Act if qualified.

27    GILES JA: I have had the advantage of reading the reasons of Handley JA in draft. For the following reasons, which differ to some extent from those of his Honour, I agree with the orders he proposes. 28    Handley JA sets out the circumstances in which the company applied for leave to appeal (paras 1-4). Three questions were argued on the application, namely -

(i) whether there was power under the 1946 Act to order that the Council contribute to the costs payable by the company to the plaintiff;

(ii) whether there was power under s 29 of the Dust Diseases Tribunal Act to make such an order. (It would really not be contribution, and a better statement of the question would be whether there was power under s 29 to order that the Council pay some or all of the costs payable by the company to the plaintiff); and

(iii) the status of the alternative exercise of discretion and, if regard were to be had to it, whether it was appealably flawed.

29 The first of these questions is of general importance and, as Handley JA says, the decision of Armitage J disturbs a long established practice to the contrary effect. Armitage J did not decide the second question, passing from it to the first question and apparently regarding the 1946 Act as relevantly covering the field, and the third question is of significance only to the present parties and with minor pecuniary impact. While the second and third questions would not normally warrant leave to appeal, they fall away upon resolution of the first. Leave to appeal should be granted. 30 Section 5 of the 1946 Act relevantly provides -

“5(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -
…
(c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, 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 in respect of which the contribution is sought.
(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court 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.”

31 Contribution under s 5 requires that there be a liability for the pecuniary consequences of which the amount of contribution recovered partially compensates, by s 5(2) even completely indemnifies, the tort feasor found liable. The liability is the tort feasor’s liability in respect of the damage suffered by the plaintiff as a result of the tort. 32 Damage here means the physical or economic injury or harm caused by the tort feasor (Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323 at 327, 329). With the utmost respect to Handley JA, it seems to me that regarding costs as part of the tort feasor’s liability in respect of the damage is not excluded by the requirement that the contributing tort feasor be liable, actually or presumptively, in respect of the same damage. Both tort feasors are correctly described as liable in respect of the damage. The tort feasor’s liability is for damages and costs. For the purposes of s 5 the contributing tort feasor’s liability is notional, even if the contributing tort feasor has been found liable, and notionally can also be for damages and costs. Section 5 clearly recognises these two elements of “action brought in respect of [the] damage”, see s 5(1)(b). 33 In my view this provides the textual basis for the established practice by which contribution has been ordered as to costs as well as damages. The phase “in respect of” is wide. In Trustees Executors & Agency Co Ltd v Reilly (1941) VLR 110 at 111 Mann CJ said that it has “the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer”. This passage has been cited with apparent approval by the High Court, in State Government Insurance Office (Queensland) v Crittenden (1966) 117 CLR 412 at 416 and McDowell v Baker (1979) 144 CLR 413 at 419. There is an undoubted connection or relation between the injury or harm caused by a tort feasor and the tort feasor’s liability for costs when successfully sued, and if there were a contractual indemnity from the plaintiff’s claim it would extend to costs (The Millwall [1905] P 155 at 174, 176). Costs can readily be regarded as part of the tort feasor’s liability in respect of the damage suffered by the plaintiff as a result of the tort. 34 Beyond textual analysis, there are sound reasons for costs being part of the tort feasor’s liability in respect of the damage. 35 Prior to the 1946 Act the common law rule was that there was no contribution between joint or concurrent tort feasors - the so-called rule in Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337. But it was not a universal rule, and was in truth an exception, suggested in Williams, Joint Torts and Contributory Negligence, para 26 to have been based on the maxim ex turpi causa non oritur actio, from the principle now usually stated in the terms that persons who are under coordinate liabilities to make good the one loss should bear the burden pro rata: see Albion Insurance Co Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342 at 349-52 per Kitto J. 36 The principle is one of natural justice, operating both at law and in equity, directed to achieving equality of benefit and burden. It is now being brought within the concept of unjust enrichment, see Fitzpatrick v Waterstreet (NSWCA, 17 December 1998, unreported per Mason P). A passage from the judgment of Kitto J in Albion Insurance Co Ltd v Government Insurance Office of New South Wales (at 350-352) bears repeating -

“The general doctrine of contribution, as I have said, forms part of the common law. It was applicable by Lord Mansfield in Godin v. London Assurance Co [(1758) 1 Burr. 489; 97 E.R. 419] and Newby v. Reed [(1763) 1 Bl. W. 416; 96 E.R. 237] no less than by Lord Chief Baron Eyre when exercising the equitable jurisdiction of the Court of Exchequer in Dering v. Winchelsea (Earl) [(1787) 1 Cox. Eq. Cas. 318; 29 E.P. 1184]. This was because the basic concept was accepted by both law and equity as one of natural justice, as indeed it had been by the law of other countries since ancient times. (The historically-minded may care to consider, with Lord Watson's reference to the maritime law of Rhodes in Strang, Steel & Co. v. A. Scott & Co [(1889) 14 App. Cas. 601, at p 607], Mr. Justice Story's Commentaries on Equity Jurisprudence , 3rd English ed. (1920), arts. 490 et seq., and an article on the Rhodian Law in the Yale Law Journal (1909), p 225.) Lord Mansfield put the matter squarely on that ground: ‘If the insured is to receive but one satisfaction, natural justice says that the several insurers shall all of them contribute pro rata, to satisfy the loss against which they have all insured’ [(1758) 1 Burr. 489, at p 492; 97 E.R. 419, at p 420]; and indeed Mr. Justice Park, in his work on Marine Insurance , had described the principle of contribution as a principle of natural justice: see Sir William Blackstone's note to his report of Godin v. London Assurance Co [(1758) 1 Bl. W., at p 105; 96 E.R., at p 59]. The justification for the description may be seen from Dering v. Winchelsea [(1787) 1 Cox. Eq. Cas. 318; 29 E.R. 1184] itself and the notes to that case in White and Tudor's Leading Cases in Equity , 9th ed. (1928), vol. 2, pp 488 et seq. The principle proceeded, as Lord Redesdale said in Stirling v. Forrester [(1821) 3 Bli. 575, at p 596; 4 E.R. 712, at p 719] which Lord Halsbury approved in Ruabon Steamship Co. v. London Assurance [(1900) A.C. 6, at p 11], ‘on a principle of law that must exist in all countries, that where several persons are debtors, all shall be equal’. Lord Redesdale had observed that the principle was universal ‘that the right and duty of contribution is founded in doctrines of equity’ [(1821) 3 Bli., at p 590; 4 E.R., at p 717] and the reference was not to doctrines peculiar to Chancery but to doctrines of equity in the sense of ‘reason, justice and law’, the expression used by Martin B. in Marsack v. Webber [(1860) 6 H. & N. 1, at p 6; 158 E.R. 1, at p 3]. The judgment in Dering v. Winchelsea [(1787) 1 Cox Eq. Cas. 318, at p 321; 29 E.R. 1184, at p 1185] itself had said that ‘If we take a view of the cases both in law and equity, we shall find that contribution is bottomed and fixed on general principles of justice’— ‘founded on equality, and established by the law of all nations’ (to quote the same judgment as differently reported [(1787) 2 B. & P. 270, at p 274; 126 E.R. 1276, at p 1278]) — and it had gone on to show that law and equity were at one as to the nature of the right, though the doctrine of equality operated more effectually in a court of equity than in a court of law, and there were differences as to the mode and conditions of its application: see generally Halsbury's Laws of England , 3rd ed, vol. 14, pp 492, 493, pars. 934, 935; vol 22, pp 266-268, pars 527, 528. The right arises at law when ‘one of several persons has paid more than his proper share towards discharging a common obligation’: Davies v. Humphreys [(1840) 6 M. & W. 153, 168-169; 151 E.R. 361, at pp 367, 368]; Dimdore v. Leventhal [(1936) 36 S.R. (N.S.W.) 378, at p 385], and it arises in equity when a liability of one of several to pay more than his share has been ascertained: Wolmershausen v. Gullick [(1893) 2 Ch. 514]; McLean v. Discount & Finance Ltd [(1939) 64 CLR 312, at p 341]; but for present purposes this difference is immaterial: what is important is the reason, namely that payment by the one discharges not only himself but each of the others, and qui sentit commodum sentire debet et onus.”

37    So far as the principle requires that persons be under coordinate liabilities, it has been said that the notion of coordinate liability “defies exclusive or narrow definition” (Mason and Carter, Restitution Law in Australia, para 622). There are established categories, but what underlies the notion is not common liability to be sued but a common risk the burden of which should, if it falls unequally, be adjusted - see Floreani Bros Pty v Woolscourers (SA) Pty Ltd (1976) 13 SASR 313 at 320-1 per Bray CJ -

“The doctrine [of contribution] is an old one. It exists both at law and in equity, though the right in equity is more extensive than the right at common law. It has been variously formulated. It is clear enough from the classic expositions in Dering v Earl of Winchelsea [(1787) 1 Cox 318; 29 ER 1184] and Stirling v Forrester [(1821) 3 Bligh 575; 4 ER 712] that it is not founded on contract but on general principles of equity and justice. I agree with Mr Fisher that it does not depend, in equity at any rate, upon a common liability to be sued. In many of the typical cases, such as the case of goods thrown overboard to save a ship from wreck, or, to take the example in Dering’s case [(1787) 1 Cox 318, at p 320; 29 ER 1184, at p 1185], of prisage of wines, when the king had the right in certain cases to take two tons of wine off a ship laden with wine, there was no liability to be sued at all. The various owners of the goods on the ship or of the tons of wine on the ship were merely subject to a common risk of having the goods thrown overboard or taken by the royal prerogative. I think the general principle is stated clearly and explicitly in Rowlatt on Principal and Surety , 3rd ed., p 173, cited by Clauson LJ in Whitham v Bullock [(1939) 2 All ER 310, at 314] as follows:
‘If as between several persons or properties all equally liable at law to the same demand, it would be equitable that the burden should fall in a certain way, the court will so far as possible, having regard to the solvency of the different parties, see that, if the burden is placed inequitably by the exercise of the legal right, its incidence should be afterwards readjusted.’
I refer also to the remarks of Vaughan Williams LJ in Bonner v Tottenham & Edmonton Permanent Investment Building Society [(1899) 1 QB 161], a case strongly relied on by Mr Fisher. The learned Lord Justice said at p 176:
‘But the plaintiff may be entitled to recover within the equitable principle, if he has been compelled to pay or bear the burden, and can establish that the defendant has such an interest or benefit as to make the maxim apply “ Qui sentit commodum, sentire debet et onus ” … The equitable principle seems to me based upon natural justice requiring that equity should neutralise “ inter se ” the accident that the burden had been borne by one for the benefit of others associated with him in interest, whether such incidence of burden is the result of election of a plaintiff who might have sued all those interested, or whether it is the result of the requirements of the law as to the parties to actions, or whether it is the result of what may be more properly called “accident” like the “jettison” of a part of a cargo severally owned, or the seizure of wines on behalf of the Crown in right of prisage. In each of these cases the application of the equitable principle depends on community of interest in something in respect of which one has borne a burden for the benefit of another or others’.”

38    Consistently with this, at least in equity contribution as to costs can be obtained. The cases were discussed in Morgan Equipment Company v Rodgers (1993) 32 NSWLR 467, where I concluded that a surety is entitled to contribution from a co-surety for costs reasonably incurred in the successful defence, in whole or in part, of the creditor’s claim where that defence would ensure to the benefit of the co-surety. I there said (at 482) -

“It must still be asked upon what principle Wright J acted in Wolmerhausen v Gullick , because the sureties were strictly not under co-ordinate liabilities to pay the costs. The fundamental equitable principle is to achieve equality of burden and benefit, according to the maxim "qui sentit commodum sentire debet et onus": see Dering v Earl of Winchelsea (1787) 1 Cox 318 at 322-323; 29 ER 1184 at 1186; McLean v Discount and Finance Ltd (1939) 64 CLR 312 at 328, 336-337; Albion Insurance Co Ltd v Government Insurance Office (NSW) (at 351-352); Mahoney v McManus (1981) 55 ALJR 673 at 675, 680; 36 ALR 545 at 548-550, 558-560. If all sureties are benefited by discharge of the debt, they should all contribute to the burden. Discharge by successful defence of the creditor's claim on grounds which will enure to the benefit of the co-surety is as much a discharge as payment. It is but a short step to say that costs reasonably incurred in achieving the benefit should form part of the burden, and that a co-surety who has benefited from the discharge of the debt will be required in equity to contribute to the costs.
Consistently with the fundamental equitable principle, therefore, contribution should be available for costs reasonably incurred in the successful defence, in whole or in part, of the creditor's claim where that defence will enure to the benefit of the co-surety. That appears to be what Wright J had in mind when he referred to the plaintiff acting reasonably and in the interests of all parties in resisting and reducing the creditor's claim. To broadly similar effect, although there are some differences in detail, are the statements found in Halsbury's Laws of England , 4th ed, vol 20, para 228, Rowlatt on the Law of Principal and Surety , 4th ed (1982) at 161, Phillips and O'Donovan, The Modern Contract of Guarantee , 2nd ed (1992) at 556 and Goff and Jones, The Law of Restitution , 3rd ed (1986) at 281 (fn 58).”

39    See also Leigh-Mardon Pty Ltd v Wawn (1995) 17 ACSR 741 at 753. In Commercial and General Insurance Co Ltd v Government Insurance Office of New South Wales (1973) 129 CLR 374 there was contribution by a co-insurer to the costs payable to the insured by the insurer found liable, although not to the insurer’s own costs (see at 384). 40 Returning to s 5 of the 1946 Act, the tort feasor found liable and the contributing tort feasor are under coordinate liabilities to make good the one loss as to damages. The 1946 Act reinstated the principle of natural justice by abolishing the rule in Merryweather v Nixan, and went further by specifically providing for unequal contribution between the tort feasors. The tort feasor found liable and the contributing tort feasor are in one sense not under coordinate liabilities to make good the one loss as to costs, because the order in favour of the plaintiff is only made against the tort feasor found liable. But if there is to be complete recognition of the principle of natural justice, and equality of benefit and burden, costs should be treated in the same way as damages. The plaintiff could have sued either the tort feasor found liable or the contributing tort feasor, or both. Recovery from the tort feasor found liable will discharge the contributing tort feasor. If the plaintiff had sued the contributing tort feasor instead of, or as well as, the tort feasor found liable, the contributing tort feasor would have been ordered to pay the costs. So it is just and equitable that the burden of the plaintiff’s costs should be shared between the tort feasors, so that the burden will not fall on one of them to the exclusion of the other because the plaintiff chose to sue only the one. 41 This presupposes that the litigation would have proceeded in the same way, with the same costs incurred by the plaintiff if the plaintiff had sued the contributing tort feasor instead of the contributing tort feasor. The effect of s 5(2) is that the contribution as to costs is by the same measure as the contribution as to damages, that which is just and equitable having regard to the extent of the contributing tort feasor’s responsibility for the damage. There is no room to adjust the contribution as to costs if it be thought the tort feasor’s conduct of the litigation unreasonably increased the plaintiff’s costs. But self-interest is a powerful influence on conduct, and mis-management is not to be assumed. The tort feasor’s own interests call for minimisation of the plaintiff’s costs, and I do not see this as sufficient reason to conclude that the contribution does not extend to contribution as to costs. 42 The wording of s 5 permits the contribution to extend to contribution as to costs, and construing it as extending to costs gives effect to fundamental principle. It is perhaps not surprising that, as Handley JA’s reasons record, Professor Williams said without discussion that contribution could be ordered towards costs payable to the injured party (para 15), and that many instances of such orders are to be found (paras 14, 16). To the instances cited by his Honour may be added cases in Ontario on a similar, but not identical, statute, see Catt v Coveyduck [1950] OWN 176; Colonial Coach Lines Ltd v Bennett (1967) 66 DLR (2d) 396; and Stewart v London Transport Commission (1968) 1 DLR (3d) 550. 43 In my opinion, there was power under the 1946 Act to order that the Council contribute to the costs payable by the company to the plaintiff. Contribution to the tort feasor’s own costs is another matter, as to which I say nothing. 44 Since the measure of the contribution is found in s 5(2), the question of the power under s 29 of the Dust Diseases Tribunal Act does not arise, nor does the question concerning discretion. As I earlier indicated, those questions fall away upon resolution of the first question. 45    To repeat, I agree with the orders proposed by Handley JA. 46    HEYDON JA: I agree with Giles JA and, subject to the qualifications advanced by Giles JA in relation to Handley JA’s reasoning, with Handley JA. 47    Some judicial support for the correctness of the conclusions they have reached is to be found in Smith v Bray (Wickham, Third Party) (1939) 56 TLR 200. After Hilbery J found for the plaintiff in a negligence action, and awarded her £185 damages, he found that a third party joined by the defendant “should pay half the damages”. Counsel for the defendant “asked that the contribution should extend to the costs payable by the defendant to the plaintiff.” At 201 Hilbery J is reported as saying: “Is that within the Act?” The report continues as follows:

“[Counsel] submitted that it was. It had certainly been done in many cases, and he understood that the usual form of order had been drawn up by four of the Judges. He submitted that ‘responsibility for the damage’ [in the then English equivalent to
s 5(2)] meant ‘for the whole liability of the tortfeasor’, not only ‘for damages awarded by the Court’.”

48    Hilbery J then said:

“Very well. I am satisfied for the moment that I have power to order the third party to contribute part of the costs recoverable from the defendant. But the third party appears in person and is not able to argue this question of construction of the Act, so I reserve the right to alter this view in the future if the point is fully argued. There will be judgment for the plaintiff for £185 and costs against the defendant, and for the defendant against the third party for half those damages and half those costs, with such costs as are attributable to the third-party proceedings.”
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