L and a Fazzini Pty Ltd v Amaca Pty Ltd

[2020] NSWDDT 12

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:

L & A Fazzini Pty Ltd v Amaca Pty Ltd [2020] NSWDDT 12

Hearing dates:

27 August 2020

Date of orders:

27 November 2020

Decision date:

27 November 2020

Before:

Scotting J

Decision:

(1)   The first cross-claim is dismissed.

(2)   Fazzini is to pay Amaca’s costs of the first cross-claim on the ordinary basis, as agreed or assessed.

(3)   The costs order in (2) can be enforced forthwith.

(4)   I will hear the parties on an alternate costs order if an application is made within 7 days by written notification to the other party and my Associate.

Catchwords:

DUST DISEASES TRIBUNAL – relief - restitution claim – contribution and/or indemnity

Legislation Cited:

Civil Procedure Act 2005

Dust Diseases Tribunal Regulation 2013

Law Reform (Miscellaneous Provisions) Act 1946

Cases Cited:

Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560

Broers v Australian Co-operative Foods Ltd [2008] NSWDDT 38

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89

Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] 2 Qd R 390

Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548

Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221

Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107

Roxborough v Rothmans of Pall Mall Australia Pty Ltd (2001) 208 CLR 516

Sempra Metals Ltd v Inland Revenue Commissioners [2008] 1 AC 561

Stewart v QBE Insurance (Australia) Ltd [2008] NSWDDT 32

Texts Cited:

Keith Mason, J W Carter and G J Tolhurst, Mason and Carter’s Restitution law in Australia, 2nd ed, Lexis Nexis Butterworths, Sydney, 2016.

Category:

Principal judgment

Parties:

L & A Fazzini Pty Ltd (First Defendant/Cross Claimant)
Amaca Pty Ltd (Second Defendant/Cross Defendant)

Representation:

Counsel: D T Miller SC with M Smith ( First Defendant/Cross Claimant)
J C Sheller SC (Second Defendant/Cross Defendant)

Solicitors: Mills Oakley (First Defendant/Cross Claimant)
Moray & Agnew (Second Defendant/Cross Defendant

File Number(s):

2020/155084

Publication restriction:

None

Judgment

Introduction

1. On 17 June 2019 the defendants, L & A Fazzini Pty Ltd (Fazzini) and Amaca Pty Ltd (Amaca), settled with the plaintiff, Anton Muskardin, on the basis that, without admission of liability, there would be verdict and judgment entered for the plaintiff against both defendants for $500,000 inclusive of costs. The defendants agreed to pay the judgment sum in accordance with the Contributions Assessment Determination (CAD) so that Fazzini paid the plaintiff $300,000 and Amaca paid the plaintiff $200,000.

2. Fazzini has brought claims against Amaca Pty Ltd. The first cross-claim seeks relief in the form of restitution for the money it paid to the plaintiff (the restitution claim). In separate proceedings, Fazzini seeks contribution and/or indemnity pursuant to s 5 Law Reform (Miscellaneous Provisions) Act 1946 (the s 5 proceedings). Fazzini pressed the Tribunal to have the restitution claim heard first and to hold the s 5 proceedings in abeyance, because the restitution claim could be decided on the pleadings and by legal argument. Amaca’s position was that the restitution claim and the s 5 proceedings should be heard together.

3. Fazzini’s argument on the restitution claim is that the payment it made to the plaintiff was required by the Claims Resolutions Process (CRP) provided for by the Dust Diseases Tribunal Regulation 2013 (the Regulations), and that it is incumbent on Amaca to demonstrate that Fazzini had a liability to the plaintiff to be entitled to keep the benefit of the payment that Fazzini made to the plaintiff in partial discharge of a judgment for indivisible damage.

Facts

4. In or about September 2018 the plaintiff was diagnosed with mesothelioma.

5. On 16 October 2018 the plaintiff filed an Amended Statement of Claim alleging that between about 1964 and 1968 when he was employed by Fazzini that he was exposed to asbestos in the mixing and application of vermiculite that was sprayed onto the ceilings of buildings during their construction. The plaintiff also alleged that he was exposed to asbestos when working with products manufactured by James Hardie and Coy Pty Ltd (James Hardie) as a self-employed builder between about 1978 and 1983. [1]

   1. For which Amaca is responsible.

6. The plaintiff filed a Statement of Particulars as required by the Regulations which set out how he was exposed to asbestos by each defendant. The plaintiff alleged that during the first 12 months of his employment with Fazzini he was responsible for mixing vermiculite with asbestos at Fazzini’s factory in Tempe to make a “fire rated and heat resistant” product that was later sprayed onto buildings. He described a process involving the emptying of hessian bags filled with asbestos imported from South Africa. After the first 12 months of his employment with Fazzini, the plaintiff was sent out to building sites to apply the vermiculite spray. As against Amaca, the plaintiff alleged cutting and installing asbestos cement sheeting manufactured by James Hardie, including the cutting of thick compressed sheets with power tools. It can be accepted that all of the processes described by the plaintiff would have exposed him to considerable dust, and if the dust contained asbestos, then each exposure would have been causative of his mesothelioma.

7. On 6 February 2019 Amaca filed an Amended Reply. Amaca admitted that it manufactured and sold relevant asbestos containing products in the relevant period.

8. On 7 February 2019 Fazzini filed an Amended Reply. Fazzini denied that it used asbestos in the vermiculite mixture and stated that it could call oral evidence to prove that. In addition, it provided a copy of an industrial hygienist’s report on a vermiculite spraying job being undertaken by Fazzini on 6 and 9 October 1972, which did not indicate that the vermiculite spray contained asbestos.

9. On 7 February 2019 a CAD was issued by a Contributions Assessor that in applying the formulas and assumptions provided for by the Regulations, allocated 60% of the liability to Fazzini and 40% to Amaca.

10. On 16 May 2019 the plaintiff’s claim was settled with the defendants at mediation.

11. On 17 June 2019 the plaintiff’s claim was settled by the entry of a Consent Judgment in the following relevant terms:

By consent and without admission of liability:

Verdict and Judgment for the Plaintiff against the First Defendant and the Second Defendant in the total sum of $500,000 inclusive of legal costs and disbursements (“the Judgment Sum”).

The First Defendant and the Second Defendant agree that the Judgment Sum is to be paid to the Plaintiff:

by the First Defendant in the amount of $300,000;

by the Second Defendant in the amount of $200,000;

in accordance with the Contribution Assessor’s Determination dated 7 February 2019.

...

12. On 20 June 2019 the plaintiff was cross-examined before the mediator in accordance with the Regulations. The plaintiff was cross-examined by counsel for Fazzini about the process of mixing the vermiculite at the factory. It is fair to say that counsel had been given detailed instructions on that process. The plaintiff’s evidence was that he thought that the vermiculite had asbestos in it because it created a lot of dust, but he did not actually know if the mixture contained asbestos and had not been told by anyone at Fazzini what it contained.

13. On 11 March 2020 Fazzini filed the restitution claim. That pleading contained the following relevant paragraphs:

1. Notwithstanding that Fazzini and Amaca made payment to the plaintiff in accordance with the apportionment prescribed by the [CAD], the [CAD] was only an interim or provisional determination of issues of apportionment between Fazzini and Amaca.

2. In order for Amaca to retain the benefit of the monies paid by Fazzini in accordance with the [CAD], it is necessary for Amaca to pursue a claim for contribution against Fazzini.

3. Fazzini repeats the allegations made by the plaintiff against Amaca in the [Amended Statement of Claim].

4. Fazzini further says that Amaca was in breach of the duty of care it owed to the plaintiff and that such breach of duty caused the plaintiff’s injury, the consequence being that Amaca would have been found liable to the plaintiff had the Court determined the plaintiff’s claim.

5. In the premises of paragraph 14, and by reason of the principle of solidary liability, Amaca would have been liable for the entirety of the plaintiff’s loss, although Amaca would have had the right to seek contribution from any other tortfeasors that would have been liable to the plaintiff.

6. Amaca has not alleged that Fazzini:

(a)   breached any duty of care owed to the plaintiff or otherwise caused or materially contributed to the plaintiff’s mesothelioma;

(b)   is a tortfeasor that would have been liable to the plaintiff;

(c) is liable to pay contribution to Amaca pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or for any other reason.

1. In the context of the matters pleaded in paragraphs 12 and 14-15 above, and given that Amaca has not alleged that Fazzini is a tortfeasor that would have been liable to the plaintiff, Amaca is not entitled to retain the benefit of the amount of $300,000 paid by Fazzini in accordance with the [CAD].

2. In the premises, Amaca must make restitution to Fazzini in the sum of $300,000.

   14. In its Defence to the First Cross-Claim filed on 17 April 2020, Amaca denied that Fazzini was entitled to the relief claimed. In response to [11] of the First Cross-Claim it said that the CAD was no longer interim or provisional where Fazzini had elected not to defend the plaintiff’s claim. Amaca denied [12] and [17] on the basis that in order for Fazzini to get restitution it had to demonstrate that it had no liability to the plaintiff and that it was estopped from doing so by reason of the settlement. Amaca admitted [13] and [16] and denied [14]-[15] and [18].

   15. On 19 August 2020 Dr Ian Gardiner, consultant chest physician, opined the assumption that the plaintiff was not exposed to asbestos in the course of his employment with Fazzini, that the plaintiff’s exposure to James Hardie products would have been sufficient to cause his mesothelioma.

Fazzini’s submissions

16. Fazzini contends that the plaintiff’s evidence established that Amaca was a tortfeasor, but fell short of establishing that it exposed the plaintiff to asbestos. In the restitution claim, Amaca has not alleged that Fazzini was a tortfeasor or relied on evidence to establish that it would have been liable to the plaintiff.

17. Fazzini contends that the CAD process constitutes a preliminary determination of the issue of contribution and that Amaca can only retain the benefit of an apportionment determination if it can prove that Fazzini would have been liable if the case had not settled: Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107. In circumstances where Amaca has not sought to do so, the Tribunal should grant a remedy in restitution by ordering Amaca to pay Fazzini’s portion of the judgment.

18. Fazzini submits that it is in the same position as the cross-defendant in Power Technologies and that based on that authority it does not bear any onus to prove that it is an innocent defendant or that the CAD was wrong. On the conventional principle “he who asserts must prove”, Amaca must demonstrate that Fazzini was a tortfeasor if it wants to make the CAD permanent.

19. Fazzini submits that the purpose of the CRP is to provide for the prompt payment of any judgment obtained by the plaintiff, leaving disputes between original defendants and cross-defendants to be determined later. The CRP provides a mechanism by which defendants and cross-defendants are required to pay proportions of any judgment entered to allow that to occur: Power Technologies at [6]. Fazzini submits that Amaca’s position in this case would defeat the purpose of the CRP because it would have required the plaintiff to have his case proceed to trial and that course would have only served to delay the plaintiff receiving damages in circumstances where it was clear that he was entitled to a judgment against Amaca.

Amaca’s submissions

20. Amaca submits that there must be some recognisable basis for making an order for restitution, such as unjust enrichment or some other injustice.

21. Amaca’s position is that Power Technologies should be distinguished on the basis that Fazzini entered into the settlement with the plaintiff voluntarily and had the option of requiring the plaintiff to prove his case before the CAD operated to require it to pay the plaintiff any proportion of his damages: Broers v Australian Co-operative Foods Ltd [2008] NSWDDT 38 at [27]-[32].

22. Amaca submits that Fazzini has taken a contrary approach by filing the s 5 cross-claim in which it must accept that it is a tortfeasor in order to succeed. Amaca submits that the Tribunal should not make findings of fact that would be relevant to the s 5 cross-claim without a hearing on the merits.

Consideration

23. A defendant is liable to make restitution wherever the circumstances indicate that the receipt or retention of a benefit obtained by the defendant from the plaintiff is unjust. The elements of restitution are:

1. the existence of a benefit or enrichment in the defendant’s hands;

2. which benefit was gained at the plaintiff’s expense;

3. the existence of some “unjust” factor justifying restitution: Sempra Metals Ltd v Inland Revenue Commissioners [2008] 1 AC 561 at 584 (Lord Hope, Lord Walker agreeing).

24. Satisfaction of each of the elements is required, before considering the recognised defences to restitution: Keith Mason, J W Carter and G J Tolhurst, Mason and Carter’s Restitution law in Australia, 2^nd ed, Lexis Nexis Butterworths, Sydney, 2016, [141], p 49.

25. Restitution is a remedy used to prevent unjust enrichment in a defined category of cases: Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221.

26. Unjust enrichment is a concept which may explain the basis of recognised causes of action or claims but is not a definitive principle according to its own terms: Roxborough v Rothmans of Pall Mall Australia Pty Ltd (2001) 208 CLR 516 at [172] (Gummow J) and Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [151].

27. Although injustice is to be determined on the facts of each case, there must be a recognised basis for the conclusion: Farah Constructions at [150]. Established bases for restitution include:

1. mistake of fact or law;

2. compulsion including duress;

3. total failure of consideration; and

4. acceptance of benefit.

28. In Power Technologies, an injured worker commenced proceedings in the Tribunal against his two former employers, Energy Australia (EA) and Eraring Energy (Eraring). EA and Eraring issued cross-claims against a number of cross-defendants including Power Technologies (PT). The CAD provided that PT was required to contribute 7.5% of any judgment obtained by the plaintiff. PT’s position was that it was not liable to contribute pursuant to s 5 Law Reform (Miscellaneous Provisions) Act 1946 because it was not a tortfeasor that would have been liable to the plaintiff. EA and Eraring paid the injured worker the full amount of the settlement and later obtained orders pursuant to clause 56 of the Regulations and s 90 Civil Procedure Act 2005 that PT pay them the equivalent of 7.5% of the settlement sum to give effect to the CAD. EA and Eraring then later obtained a judgment on the cross-claims in accordance with the CAD but without a hearing on the merits. The Court of Appeal allowed the appeal of PT on the following bases:

1. the CAD was binding on the defendants, including cross-defendants, for the limited purposes in clause 44(1) of the Regulations, namely of a settlement or determination by the Tribunal of the plaintiff’s claim and payment of the plaintiff’s damages;

2. the CAD was not binding for the purposes of a determination by the Tribunal of an apportionment dispute on the merits of the claim;

3. EA and Eraring were not entitled to judgment on the cross-claims otherwise than after a hearing on the merits. If they did not want to proceed with their cross-claims, then they may be liable in restitution to repay the money received as a result of the CRP, because it would be unjust for EA and Eraring to retain the benefit of the money paid to them pursuant to the CAD without a hearing on the merits of the cross-claims.

29. I am satisfied that Fazzini can establish the first and second elements of restitution for the reasons that follow. The plaintiff sued Fazzini and Amaca for indivisible damage. He was entitled to have the entirety of any judgment satisfied in full by either of the defendants. The fact that the plaintiff’s damages were paid in the proportions set out in the CAD demonstrates that Amaca received a benefit by paying less than the full judgment sum to the plaintiff and that benefit was at Fazzini’s expense because it paid the remaining amount, thereby satisfying a joint liability to the plaintiff.

30. In order to establish injustice, Fazzini relied on the application of Power Technologies. In my view, Power Technologies should be distinguished and Fazzini has failed to establish the third element of restitution for the reasons that follow.

31. Fazzini voluntarily agreed to settle the plaintiff’s claim by agreeing that it was liable to pay an amount towards the plaintiff’s damages. At the time that Fazzini agreed to settle it had denied liability, represented that it could present oral and documentary evidence to prove it did not expose the plaintiff to asbestos and had sufficient knowledge of the processes at the factory in 1964 to 1968 to comprehensively brief its legal representatives. It was open to Fazzini to require the plaintiff to prove his case by proceeding to trial. Nothing in the Regulations affected Fazzini’s right to do so. The Regulations did not require Fazzini to pay the plaintiff any amount by reference to the CAD or otherwise, unless Fazzini agreed to do so or was found liable to the plaintiff by the Tribunal after a hearing on the merits of the plaintiff’s claim.

32. In contrast, PT as a cross-defendant in Power Technologies was not in a position to participate in negotiations with the plaintiff, or to require a hearing on the merits of the cross-claim before it was legally obliged to pay the amount apportioned to it by the CAD. The Court of Appeal’s obiter reasoning in Power Technologies is based on a simple unjust enrichment analysis, which is a recognised basis for establishing the injustice element of restitution. EA and Eraring received a provisional benefit from PT by operation of the CRP, but could not treat PT’s contribution as permanent without PT’s agreement or a hearing on the merits of the cross-claims, neither of which had occurred in that case. If EA and Eraring could have permanently retained the benefit of PT’s contribution to the CAD, each would have been unjustly enriched because PT would have been obliged to contribute to the settlement with the plaintiff without EA and Eraring establishing that it was liable to do so.

33. In the present case, it is clear that Fazzini has suffered no injustice. Fazzini finds itself in a position of its own making. It voluntarily agreed to settle with the plaintiff and thereby it became legally obliged to pay the plaintiff an amount in damages. It did so as a considered compromise with the benefit of legal advice, notwithstanding its denial of liability. When it agreed to a judgment against it in favour of the plaintiff, it became liable by operation of the Regulations to pay the apportionment assigned to it by the CAD. The CAD apportionment remains a provisional position and can still be challenged by Fazzini in the s 5 cross-claim, potentially to the extent of a complete indemnity. The effect of Fazzini’s settlement with the plaintiff, which it voluntarily agreed to and must have been known to it at the time of the agreement, is that it cannot subsequently deny that it would have been liable to the plaintiff in damages for some amount, if it had been sued by him.

29. Amaca’s position is that it has not sought to disturb the apportionment provided for by the CAD, but nothing turns on that. Fazzini has exercised a legal right open to it by commencing the s 5 proceedings in which it bears the onus of establishing an entitlement to contribution and the appropriate apportionment between the defendants. The submission that Power Technologies is authority for the proposition that Amaca has assumed an onus to prove that it is entitled to retain the benefit received by it by operation of the CRP is misconceived. In this case, Fazzini has agreed that it is liable to the plaintiff in damages and the extent of that liability is to be determined in the s 5 proceedings.

30. Whilst the failure to establish the third element is fatal to the restitution, there also appears to me to be two significant defences available to Amaca which also would each defeat the restitution claim. These were not the subject of any detailed argument before me, but the latter was raised as an estoppel in Amaca’s defence to the restitution cross-claim, so I will refer to them only briefly.

31. First, Fazzini’s agreement to settle the plaintiff’s claim represented an election between inconsistent rights (putting the plaintiff to proof and settlement) and it cannot now assert that it is entitled in restitution by way of a complete indemnity from Amaca on the basis that it has not been proved to be liable to the plaintiff, when it has agreed that it was so liable: Freshmark Ltd v Mercantile Mutual Insurance (Australia) Ltd [1994] 2 Qd R 390.

32. Second, Fazzini’s agreement to settle with the plaintiff represented a change in position to the extent that Amaca acted to its detriment by agreeing to the settlement rather than putting the plaintiff to proof, on faith that the settlement established that Fazzini was liable to the plaintiff to some extent: Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 580 approved in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560 at [17] (French CJ), [72] (Hayne, Crennan, Kiefel, Bell and Keane JJ) and [144] (Gageler J).

Orders

38. The orders I make are as follows:

1. The first cross-claim is dismissed.

2. Fazzini is to pay Amaca’s costs of the first cross-claim on the ordinary basis, as agreed or assessed.

3. The costs order in (2) can be enforced forthwith.

4. I will hear the parties on an alternate costs order if an application is made within 7 days by written notification to the other party and my Associate.

**********

Endnote

Decision last updated: 17 December 2020