James Hardie & Coy Pty Ltd v Seltsam Pty Ltd

[1998] HCATrans 159

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S116 of 1997

B e t w e e n -

JAMES HARDIE & COY PTY LTD

Applicant

and

SELTSAM PTY LTD

Respondent

Application for special leave to appeal

McHUGH J
KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 19 MAY 1998, AT 12.03 PM

Copyright in the High Court of Australia

MR C.G. GEE, QC:   May it please the Court, I appear with my learned friend, MS R.A. PEPPER, for the applicant. (instructed by Diamond Peisah & Co)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR G.P.F. RUNDLE, for the respondent. (instructed by Toomey Pegg & Drevikovsky)

McHUGH J:   Yes, Mr Gee.

MR GEE:   Your Honours, the brief outcome was this, that the present applicant, one of three defendants in the Dust Diseases Tribunal, settled with the plaintiff.  That settlement also involved a payment by the then second defendant not concerned with the present application.  The respondent before your Honours did not join in the settlement and, by agreement between the plaintiff and the present respondent, there was a consent judgment in favour of the present respondent in the action. 

The judgment in favour of the plaintiff against the applicant, which had been arrived at also by agreement, was satisfied.  It has now been held, however, that the cross claim which the present applicant wished to pursue against the respondent for contribution or indemnity pursuant to the Law Reform Act has been barred effectively by the entry of the judgment.  There is also a question which it was not necessary for the court below to determine as to whether satisfaction, as such, of the judgment by the present applicant brought about that result and I am going to concentrate my submissions, your Honours, on the first question of whether the mere fact of the consent judgment standing alone acts as a bar.

McHUGH J:   You have to deal with the issue that what you are really seeking to do is to disturb what has, for more than 30 years, been the clearly understood effect of section 5 of the Law Reform (Miscellaneous Provisions) Act in cases where a plaintiff compromises a claim against one of several alleged joint tortfeasors.

MR GEE:   Your Honours, we give these answers to the argument based on antiquity.  The first is that, in our respectful submission, notwithstanding what was said in the court below, Castellan did not really deal with the point.  In Castellan the target tortfeasor, if I may so describe the person in the position of today’s respondent, the target tortfeasor had succeeded by judgment entered by direction of the trial judge on statutory counts against it.  Incidentally, the Full Court or the Court of Appeal then in Castellan thought that that was wrong and then divided on what the outcome would be.  Castellan said nothing about a circumstance in which there has been no hearing whatever on the merits and in which simply by bilateral action between the plaintiff and the target tortfeasor in the form of, in this case, consent judgment, the claimant tortfeasor can be robbed of an independent right of action given to it by the contribution statute.

There is, with respect, no particular reason for thinking that if Castellan had concerned itself with the device whereby, as between the plaintiff and the present respondent, the plaintiff barred himself ever from proceeding, that the outcome would necessarily have been the same.

KIRBY J:   Has this Court ever endorsed Castellan or Wimpey?  I appreciate that there are various dicta on the matter but has this Court ever itself passed on the matter?

MR GEE:   No, not in terms, your Honour.  The closest that the Court seems to have done is in the matter which we have set out in our writing to the effect that in Brambles v Helmers Justice Windeyer delivered himself of some remarks which suggested that the matter would be disposed of against the claimant tortfeasor only after a hearing, in effect, on the merits.  I should say ‑ ‑ ‑

KIRBY J:   That is in support of your proposition.

MR GEE:   Yes, that is quite so, your Honour.  Now the other answer that we would respectfully give to your Honour the Presiding Justice’s first observation is this, that light has been thrown on the operation of the Law Reform Act, the very provisions with which we are now asking the Court to deal, in very recent times.  When the Court in XL Petroleum held, for example, that the concept of the unity of action against joint tortfeasors had been displaced, they did so 40 years after the legislation had been passed.  Similarly, when recently ‑ ‑ ‑

McHUGH J:   Not 40 years after there was a decision which, professionally, was taken as settling the point.

MR GEE:   Your Honours, with great respect, it might have settled the point given that there was a finding in favour of the tortfeasor by the presiding judge but, with respect, it said nothing about the situation that has here arisen.  After all, the condition, in our respectful submission, that Justice Windeyer makes it clear in Brambles v Helmers has to be satisfied by the claimant tortfeasor, is that there was a time when there was another tortfeasor who, if sued, might have been liable.  Brambles, after all, in our respectful submission, shows that the fact that the plaintiff can no longer do anything against that target tortfeasor, that defendant, does not in any way detract from the capacity of the claimant tortfeasor to pursue his independent right.

KIRBY J:   It is not very fair, is it, the result that has occurred, because it means that A and B can settle this between themselves and foist you with a result.

MR GEE:   I was going to put exactly the point, your Honour, in these terms which I hope is a little different from what your Honour has just said.  One could conceive of it being rational that the target tortfeasor would be free and clear, if a court, on whatever ground had said, “You are out, we have heard it and you are out.”  But this is simply not that case.  This is a case where by the equivalent of a release inter partes, although it happens to take the form of a consent judgment, the claimant tortfeasor can be deprived of a right of action which a moment before that device was adopted was available.  I do not say that it had to succeed but that is not the present test, with great respect.

HAYNE J:   Why is your client not in a position to defend itself adequately against that kind of behaviour if single suit is brought against all tortfeasors, as was the case here?

MR GEE:   It arises out of the event of settlement, your Honour.  If the matter had gone through to a conclusion the court ‑ ‑ ‑

HAYNE J:   I understand that.  But if the plaintiff for whatever reason good in his eyes - the injured person, for reasons good in his eyes, releases one of his targets and chooses to pursue only two, why is there unfairness to the two remaining?  The person with principal economic reason to pursue all three makes the decision.

MR GEE:   Your Honour, in our submission, the answer to that lies in the fact that the right of contribution given by the statute is a separate independent true right vested, for want of a better word, in the claimant tortfeasor.

KIRBY J:   But his Honour’s question was directed at the fairness.  It is not the answer that you would give that it is not fair that A and B can settle as between them and thereby affect C.

MR GEE:   That is the short answer, your Honour.  I suppose I was trying to put an answer on a more technically founded basis but, at the end of the day, that is the short answer to the fairness.

KIRBY J:   It is said that you can move to set aside the judgment.

MR GEE:   No, that could not have been done, with respect.

KIRBY J:   Is that a procedure that is available to you?  I could not see how you could do that.

MR GEE:   I so argued below and that did not meet with acceptance, but there was no basis on which we could have intervened to say that consent judgment ought never to have been entered merely because A and B agreed to do so.  May I emphasise, your Honours, since I am trying to put matters relating to leave and not to the ultimate correctness of matters, that the practical inconvenience of the present outcome needs little emphasis.  I will give it a little but the result is that, particularly in the Dust Diseases Tribunal where special pressures are involved, frequently the plaintiff is nearing the end of his life or her life.  It must be very wrong, looking at it, shall we say, socially, that we should want to settle with the plaintiff, we should want to pay the plaintiff and yet be out of court against somebody who might well have been a major contributor to the ‑ ‑ ‑

HAYNE J:   That is a matter in your control.  You can offer to pay the plaintiff on terms that there is no consent judgment entered.

MR GEE:   Yes.

HAYNE J:   It is a matter for you.  You are big boys in the area.

MR GEE:   No, but with great respect, your Honour, it is not a matter for us.  If that offer is made and the plaintiff goes to the target tortfeasor and says, “I can settle with G if you do not want judgment”, the target tortfeasor will just say, “I am not agreeing to that.  Why should I?  I want a judgment.”  So that he can then hold up the settlement process if the claimant tortfeasor in our position then foresees that he can never make a claim.

HAYNE J:   The person who has the real economic power is the person who should have it, the plaintiff.  It is the plaintiff who is the injured person and that is where the economic power lies.

MR GEE:   Your Honour, the plaintiff is the injured person but if one defendant says, “I will only see the end of this litigation if I get a consent judgment” and the other defendant says, as he must in the present state of the law, “I cannot settle with you, plaintiff.  I am sorry.  I would love to, but I cannot because, if I do, it must be on terms that the other party insists upon, namely a consent judgment and therefore, much as I would like to I cannot do it without depriving myself of a right.”, thus introducing inconvenience that I respectfully submit needs no further emphasis.

In my respectful submission, the essential core error below, if I may put it with respect, is that their Honours in the Court of Appeal simply determined that the consent judgment which could not be the subject of further scrutiny simply meant that it was determined conclusively that the respondent was not liable.  That was only as between the plaintiff and the present respondent, just as Brambles tells us that there came a point at which the plaintiff was out of court against the target tortfeasor because of the passage of time.  That did not affect the rights of the claimant tortfeasor for the good reason, your Honours, in my submission, that as the Court made it clear in Brambles there is no reason for reading into the legislation in that case a temporal provision, but we would say any provision, other than the one which his Honour Justice Windeyer made it clear was that which had to be established as a necessary but sufficient condition, namely that there was a time, and let me add if it is necessary, before satisfaction of any judgment resulting from a settlement, there was a time at which the target tortfeasor could, if sued, have been liable.  If the plaintiff has chosen not to proceed it is impossible to see, with respect, your Honours, how the condition that was well satisfied a moment before the consent judgment ceased to be satisfied simply because A and B did something between themselves.

The only effect, relevantly, in our submission, of the consent judgment was that A shut himself out for the future.  What we submit, with respect, is the core error is to be found, your Honours, at page 24 of the application book, lines 25 and following and page 26 lines 39 and following.  In particular, in the latter passage, his Honour the President said, after saying that he would not grant leave to reopen Castellan:

Unless and until the appellant can show that the respondent should have been found liable to the plaintiff then a vital step in its claim for contribution is missing. 

Your Honours, that is the question to be determined on the contribution suit, not something that bars the suit even before it is permitted to go forward.  Then he went on:

Since no attempt was made either below or here to challenge the judgment in the plaintiff’s favour against the respondent, whether by appeal or otherwise, the fact that that judgment stands precludes the right of contribution.

We submit, your Honour, for the reason that we have been over, that that does not produce that result.  As was indicated in the Oceanic Shipping Case, to which I will not go in detail, his Honour - I think it is still correct to say his Honour the Chief Justice, in any event, Sir Gerard - said that while the judgment in that case stood, favouring the target tortfeasor, there could be no claim.  But that again was a case in which there had been an adjudication and a finding or holding in favour of that target tortfeasor.

McHUGH J:   What do you say about what was said at pages 27, 28 of the record by the President concerning the court being cautious before setting out upon its own law reform exercise, having regard to the fact that this legislation has been known for a generation as needing reform?  Is not this the piece of legislation that Sir Owen Dixon said is a piece of law reform which is urgently in need of reform itself?

MR GEE:   He did, your Honour, and that was echoed by Sir Garfield Barwick in Brambles.  All of that is accepted.

KIRBY J:   But this Court has never passed on the matter.  This is a matter of statutory construction.  It is an Act of an Australian Parliament and in so far as I understand it, the Court or Justices have ever dealt with the question which is now before us.  Chief Justice Barwick reserved it.  Justice Windeyer is on your side.  Justice Walsh in the Court of Appeal is on your side.

MR GEE:   Yes.

KIRBY J:   Justice Walsh’s decision is approved by Justice Brennan and by Justice Deane in Oceanic so that you have got a line up of six of the Justices of this Court on your side and none, as I understand it, expressed a view against the proposition.

MR GEE:   Could I add to that, your Honour, one other, perhaps peripheral, proposition, namely that in Brambles Sir Garfield Barwick also had reservations about Wimpey which is the basis on which we have been defeated fairly and squarely in the court below.

KIRBY J:   I suppose the ultimate question is it has stood for so long and there were earlier opportunities; it is an Act that is applied many times every week, and it has not been disturbed.  It is said that for us to disturb it now is not statutory construction but law reform.

MR GEE:   Your Honour, there are two answers which I must give briefly.  The first is that if error there be, and our first position would be that Castellan did not really pass on the matter, but assuming that it did, if error there be it does not improve with age.  Secondly, it is not an exercise, with great respect, in law reform any more than the recent judgment of the Court in Thompson v Australian Capital Television reaffirming that release of one joint tortfeasor is not a release of others was to be regarded as an act of law reform even though it emerged from the legislation, which was by then 50 years old, nor is it likely, your Honour, with great respect, that this precise point has been the subject of opportunity in the past.

HAYNE J:   Is the problem unique to New South Wales and its legislation?

MR GEE:   With the possible exception Victoria, your Honour, where the wording seems to be different.

HAYNE J:   It is.

MR GEE:   In the contribution statute.

HAYNE J:   Yes.  So the problem is the construction of a New South Wales Act that has stood for 30 years.

MR GEE:   And an Act which is echoed in other States, your Honour, and in the Australian Capital Territory.

HAYNE J:   Hence my question.  Is the problem unique to New South Wales?

MR GEE:   No, it is not unique to New South Wales, your Honour.

HAYNE J:   What is there that identifies that the problem is of more general application?  There is not a word of it in your papers.

MR GEE:   Your Honour, it can be of general application either on a national or semi‑national view or it can be of general application to a large number of pending cases which in this State ‑ ‑ ‑

HAYNE J:   The world extends beyond this State.

McHUGH J:   It is very difficult for those of us who live in Sydney to remember that from time to time.

MR GEE:   Your Honour, it is ‑ ‑ ‑

KIRBY J:   It is not unusual, Mr Gee, for us to have, on special leave applications in other States, comparative conspectus of the legislative provisions and this is an Imperial or was an English Act that was followed throughout the Empire at the time, I think.

MR GEE:   Yes, it was, your Honour, and it must be ‑ ‑ ‑

HAYNE J:   It has since been amended in every other State, I think, and New South Wales has left it stand for 30 years in this respect.

MR GEE:   Not in the Capital Territory, your Honour, and the situation in Tasmania, at least, and I am saying this against myself, is a little clearer in that it was expressly provided that release of one joint tortfeasor was not release of others, so that to that extent there was a gloss on the original Imperial Act.

KIRBY J:   I said Imperial, I think it was just an English Act.  The days of Empire had really passed by 1946.

MR GEE:   If leave were given, your Honours, we would then seek to pray in aid on the final application questions of the true effect of the consent judgment about which we have said something in our writing and also the effect of other English decisions in which there are dicta to the effect that there has to be a fighting out on the merits before there will be an ultimate bar against the claimant tortfeasor.  Those are our submissions, your Honours.

McHUGH J:   Thank you, Mr Gee.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, the first thing is, if one goes to the terms of section 5(1)(c) which you will see set out on page 11 in the application book, the situation which one has is that we are a person who has been sued and has been held not to be liable in respect of that damage and your Honours, one does not fit easily within the terms of 5(1)(c).  No doubt, there is another view that 5(1)(c) can be read more widely.

KIRBY J:   You say “held”; there was a settlement.

MR JACKSON:   Judgment, your Honour, consent judgment, yes.

KIRBY J:   It was not a hearing on the merits that determined it.

MR JACKSON:   No, no, I do not suggest that for a moment, your Honour.  What I suggest, however, is that it was a final judgment.

KIRBY J:   But it is a judgment between you and A, it is not a judgment between you and C.

MR JACKSON:   I appreciate that, your Honour.

KIRBY J:   It is not just that you be able to determine a case between you and A and thereby to determine C’s claim to contribution.

MR JACKSON:   Your Honour, the position, of course, is that each of the parties, one assumes, was originally a person who could be described as a tortfeasor.  There might have been recovery by the plaintiff against one in full or recovery against another in full.  The right of one of the tortfeasors to recover against the other was given by section 5(1)(c) and given to the extent to which section 5(1)(c) gives it.  To that extent, your Honours, what I am seeking to say is that the ambit of 5(1)(c) and the right, concession, or however one cares to describe it thus given is one, the ambit of which is to be found in that provision.  There are view no doubt open as to the interpretation of the provision but the view that was taken in Castellan is one that has proceeded for many years, as your Honours will see from the observation at the bottom of page 27 and the top of page 28.

Indeed, your Honours, the issue has, in fact, been dealt with in quite recent times by the New South Wales Law Reform Commission.  Can I give your Honours some copies and I am sorry these were not before the Court before.  I have given copies to my learned friend of the discussion paper issued in September last year of that body and the part that your Honours are given is relevant only to the present issue.  What your Honours will see is that a recommendation, which is proposal 7 on the last photocopied page, is the proposal and it moves to the situation where the judgment is one that has been on the merits.  That is the situation which it proposes.

KIRBY J:   They also see the error of this but from a point of view of justice, I mean it is so glaring that it is almost impossible to deny that it is an unjust result, but they say it is a thing which Parliament should fix up.  But this Court has never passed on the construction and therefore, the issue, save for the argument that one should not interfere 30 years on, is still a live one and in so far as one looks to whatever the Justices of this Court, including Justice Walsh in the Court of Appeal, have said on it, it has all been favourable to Mr Gee’s point.  We do not need Parliament.  We can fix it up ourselves.

MR JACKSON:   What I have given your Honours is but an extract, of course, from the report and no doubt your Honours can fix things up and no doubt it would be a question of how satisfactory the result is, but what I would seek to say is also that whilst what your Honour puts to me is correct in one sense, of course, what one does see is that the day-to-day considerations in the paragraphs that are referred to at page 27, 28 are ones of significance.  We would also seek to say, your Honours, that the decision with the observations or dicta of members of the Court do not quite go to

the extent to which your Honours put and may I take your Honours in that regard to what was said in the Oceanic Case 160 CLR 626.

At page 670 Justice Brennan, on the page before he came to Castellan said ,under the heading, “Is or would if sued have been liable” about five lines down he said:

But when Pilbara’s exoneration from liability to Hamersley was affirmed by the Full Court, the shipping company did not appeal.....So long as the judgment holding Pilbara not liable stands on the record, the shipping company is unable to assert that Pilbara is a tortfeasor who “is or would if sued have been liable” -

Your Honours, that is stating the general proposition.  His Honour is recognising that that is the case.  He then seeks to go on to deal with ways in which that situation might be got around but he is not, with respect, denying the correctness of the general proposition.  So, your Honours, we, as our written submissions indicate, we recognise the issue is one on which, if the slate were clean, as it were, one might arrive at one conclusion or perhaps another, but the slate is not clean, your Honour, and my learned friend referred to antiquity and your Honours will be aware that antiquity can bring with respect ‑ ‑ ‑

KIRBY J:   This is hardly antiquity.

MR JACKSON:   Antiquity can bring with it respectability, your Honours.

McHUGH J:   Yes, Mr Gee.

MR GEE:   Your Honours, we would draw some comfort from the fact that the Law Reform Commission is proposing now that it should be clear that the target tortfeasor will be barred only following a hearing of the merits.  We respectfully submit that that rather tends to suggest that our position should be adopted.  We reiterate, with respect, that ‑ ‑ ‑

KIRBY J:   It is put against you that that is a suggestion for legislation.

MR GEE:   Yes.

KIRBY J:   And that given the long record of adhering to this view of the statute, that if it is to be fixed up, it should be fixed up by Parliament.

MR GEE:   Yes, but then it would have to be fixed up retroactively, your Honour, to deal with a lot of cases that have already passed through the system down at the DDT where, if this result stands and leave is not

granted, et cetera, then those claimant tortfeasors will forever have lost their rights.  The only other thing we wanted to say ‑ ‑ ‑

KIRBY J:   Is there anything you could have done at the trial by kicking up a fuss or jumping up and down?

MR GEE:   Mr McIntyre, who appeared below, your Honour, is on the record as ‑ ‑ ‑

KIRBY J:   I see he reserved the situation.

MR GEE:   He did more than reserve it, your Honour, he said, “I do not consent to this process and I do not regard it as impugning my right to claim contribution”.  He was later, and so far, held to be in error but that was his position at the hearing and the problem that has arisen, your Honour, was actually foreseen, oddly enough, in the last line of the, admittedly, dissenting speech of Lord Keith in Wimpey where he said:

It is to be observed further that the construction of the statute contended for by the respondents would put it in the power of the injured party, whether by accident or design, to determine in many cases whether contribution could be got or not.

That was at page 196 (1955) AC, your Honours, and that is the anomaly which, if I may put it with great respect, your Honours, intervention by this Court is capable of remedy.

McHUGH J:   Thank you, Mr Gee. 

Yes.  By majority, there will be a grant of special leave in this matter.

MR GEE:   Yes, I ask for costs, your Honour, of the application.

McHUGH J:   I am afraid the usual practice is that the costs are in the appeal.

MR GEE:   I will say no more, your Honour.

McHUGH J:   You may end up paying the costs.

MR GEE:   Well, one can only try, your Honour.

McHUGH J:   The Court will now adjourn to reconstitute.

AT 12.33 PM THE MATTER WAS CONCLUDED