Mills v Sheahan - [2006] SASC 162

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MILLS & ORS v SHEAHAN
[2006] SASC 162
Judgment of The Honourable Justice Besanko
2 June 2006
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT
TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - IN GENERAL
TORTS - THE LAW OF TORTS GENERALLY - JOINT AND SEVERAL TORTFEASORS - CONTRIBUTION - GENERALLY - LIABILITY IN RESPECT OF "SAME DAMAGE"
Defendant sought order that plaintiffs’ statement of claim be struck out as disclosing no reasonable cause of action and/or that plaintiffs’ claim be dismissed as disclosing no cause of action – where, in separate proceedings, plaintiffs ordered to pay equitable compensation to trustee company of family trust for breach of fiduciary duty in relation to trust assets – where defendant, in his capacity as trustee in bankruptcy of bankrupt guarantors of bank debt owed by trustee company and as provisional liquidator of trustee company, had sold land of bankrupts and plant and equipment of trustee company and used proceeds to repay bank debt – where trustee company had right of indemnity against trust assets in relation to bank debt – where plaintiffs alleged that defendant negligently sold land and plant and equipment at undervalue, thereby failing to reduce bank debt by proper amount and therefore failing to reduce their liability to trustee company for equitable compensation – where first plaintiff further alleged right of contribution from defendant.
Held, not arguable that defendant owed plaintiffs duty of care – no element of known reliance or dependence, assumption of responsibility on part of defendant, or vulnerability on part of plaintiffs – further, imposition of duty of care to judgment debtors or potential judgment debtors inconsistent or incompatible with powers, duties and functions of trustee in bankruptcy or liquidator – not arguable that first plaintiff had right of contribution – liability not in respect of same damage – plaintiffs’ statement of claim struck out.
Words and Phrases - “duty of care”.
Supreme Court Rules 1987, r 46.18; Bankruptcy Act 1966 (Cth), s 19, s 178, s 179; Corporations Act 2001 (Cth); Federal Courts (State Jurisdiction) Act 1999, s 11; Wrongs Act 1936, s 25; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001, s 6, referred to.
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Egan v Commonwealth Minister for Transport (1976) 14 SASR 445; Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; In re Suco Gold Pty Ltd (In Liquidation) (1983) 33 SASR 99; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; Sullivan v Moody (2001) 207 CLR 562; Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529; Perre v Apand (1999) 198 CLR 180; Halech v State of South Australia (2006) 93 SASR 427; In re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262; Adsett v Berlouis (1992) 37 FCR 201; Jovanovic v Commonwealth Bank of Australia (2004) 87 SASR 570, considered.

MILLS & ORS v SHEAHAN
[2006] SASC 162
Civil

BESANKO J: In 2004, Mr Robert John Mills, Ms Noelene Michelle Cooper and Belgravia Pty Limited (“Belgravia”), the plaintiffs, instituted an action in this Court against Mr John Sheahan, the defendant. The particulars of the plaintiffs’ claim against the defendant are set out in a document entitled “Further Amended Statement of Claim/Orders Sought”, which, for convenience, I will refer to as “the statement of claim”.
On 6 February 2006, the defendant issued a notice for specific directions in the action, seeking an order that the plaintiffs’ statement of claim be struck out as disclosing no reasonable cause of action. In addition, or in the alternative, he sought an order that the plaintiffs’ claim be dismissed as disclosing no cause of action known to law.
The defendant’s application is made pursuant to r 46.18 of the Supreme Court Rules 1987, which gives this Court the power to strike out a pleading if it discloses no reasonable cause of action.
There is no dispute between the parties as to the applicable legal principles on an application of this nature. The application is to be determined on the assumption that the allegations in the statement of claim are correct. In order to succeed, a defendant must clearly show that no reasonable cause of action is disclosed, or, put another way, it must be shown that the case of the plaintiff is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Egan v Commonwealth Minister for Transport (1976) 14 SASR 445. The onus on the defendant is a heavy one.
The facts
General
The facts surrounding the plaintiffs’ claim are complex and what follows is a summary of the salient facts taken from the statement of claim.
Rothmore Farms Pty Limited (“RFPL”) is a company which was appointed the trustee of the Jill Cooper Family Trust by deed on 6 October 1981. I will refer to this as “the trust”. Pursuant to the trust deed, RFPL was entitled to be indemnified from the assets of the trust against the liabilities it incurred as trustee. From 6 October 1981 to 10 February 1993, RFPL conducted a farming business on land known as Rothmore Farm (“the land”).
From time to time between June 1985 and April 1993, RFPL borrowed substantial sums of money in connection with the operation of the farming business from the Commonwealth Development Bank of Australia and the Commonwealth Bank of Australia (“the bank”). I will refer to the moneys borrowed as “the bank debt”. The bank debt was secured by:
1.Guarantees dated 1 September 1986 provided by Jillian Helen Mills (“JHM”), Richard John Cooper (“RJC”), Simon Vincent Cooper (“SVC”) and Rothmore Pty Limited (“RPL”).
2. Mortgages granted by JHM, RJC, SVC and RPL over the land.
3. A registered charge granted by RFPL over its assets.
The land was owned by JHM, RJC, SVC, Andrew Charles Cooper (“ACC”), Martin James Cooper (“MJC”) and RPL. It is comprised and described in various certificates of title and Crown leases. The registered owners held different interests in the land, the details of which are set out in the statement of claim. For the purposes of this application, it is not necessary to set out those details. The shares in RPL were owned by JHM, SVC, RJC and ACC, but, again, for the purposes of this application, it is not necessary to set out the details of the various ownership interests.
The third plaintiff, Belgravia, was incorporated on 9 February 1993. At all material times, the first plaintiff, Mr Mills, and the second plaintiff, Ms Cooper, were directors and shareholders of Belgravia. On 10 February 1993, Belgravia was appointed the trustee of the trust and the assets of the trust were transferred to it.
On 20 February 1995, the bank sought to recover the bank debt and it brought proceedings in this Court on the guarantees against JHM, RJC, SVL and RPL. On 22 August 1997, judgment for the bank debt was entered in favour of the bank against JHM, RJC and SVC.
At all material times, the defendant was a registered trustee in bankruptcy under the Bankruptcy Act 1966 (Cth) (“the BA”).
On 20 April 1998 sequestration orders were made in relation to the estates of JHM, RJC and SVC, respectively, and the defendant was appointed the trustee of their bankrupt estates. The defendant became owner of their shares in RPL.
At all material times, the defendant was a registered liquidator under the Corporations Act 2001 (Cth) (“the CA”) and its predecessors.
On 14 September 1998, RFPL was placed into provisional liquidation and the defendant was appointed the provisional liquidator of the company. The bank lodged a proof of debt for the bank debt in the provisional liquidation and it claimed the sum of $2,154,143.44.
On 26 March 1999, the defendant was appointed the liquidator of RPL.
By reason of the various securities referred to earlier, the bank debt was jointly and severally owed by the bankrupt estates of JHM, RJC and SVC, respectively, and RPL and RFPL.
In order to repay the bank debt, the defendant took steps in his capacity as the trustee in bankruptcy of the estates of JHM, RJC and SVC, respectively, and as the liquidator of RFPL, to realise the land and certain plant and equipment on the land as at 6 May 1999. A summary of the steps he took is as follows:
The land
1.On 7 September 1998, the defendant, as trustee in bankruptcy of the bankrupt estates of JHM, RJC and SVC, respectively, commenced partition and sale proceedings in the Federal Court of Australia against various parties alleged to have an interest in the land. Orders were subsequently made in those proceedings for the sale of the land.
2.On 1 April 1999, the defendant sold part of the land and, on 21 April 1999, he sold the balance of the land.
I pause at this point to say that the plaintiffs allege that the land was sold at an undervalue and that that resulted from the defendant failing to exercise reasonable care in connection with the sale. The defendant sold the land in his capacity as the trustee of the bankrupt estates of JHM, RJC and SVC, respectively. The plaintiffs are not creditors of those bankrupt estates; nor are they in any other way interested in those bankrupt estates, or, at least, they are not claiming that they suffered a loss in those capacities. Rather, they claim that they suffered a loss by reason of a liability incurred in proceedings by RFPL (“the Belgravia proceedings”, which I will describe in a moment), which they allege would not have been incurred, or would have been less, had the land not been sold at an undervalue.
The plant and equipment
1.On 6 May 1999, the defendant took possession of certain trading stock, work in progress and components situated on Rothmore Farm. This is referred to as the plant and equipment.
2.On 10 September 1999, the defendant, in his capacity as the provisional liquidator of RFPL, sold the plant and equipment.
Again, I pause at this point to say that the plaintiffs allege that the plant and equipment was sold at an undervalue and that that resulted from the defendant failing to exercise reasonable care in connection with the sale. The defendant sold the plant and equipment in his capacity as the provisional liquidator of RFPL. The plaintiffs are not creditors of RFPL and they are not claiming that they suffered a loss in that capacity; nor are they claiming that they are shareholders of the company or beneficiaries under the trust. Rather, as with the land, they claim that they suffered a loss by reason of a liability incurred in proceedings by RFPL, which they allege would not have been incurred, or would have been less, had the plant and equipment not been sold at an undervalue.
The Belgravia proceedings
I turn now to describe the Belgravia proceedings brought against the plaintiffs by RFPL. On 14 September 1998, and therefore before the sale of the land and the plant and equipment, the defendant, as the provisional liquidator of RFPL, instituted proceedings in the Federal Court of Australia against, inter alia, the plaintiffs, seeking various orders in relation to the transfer that took place on 10 February 1993 whereby Belgravia was appointed trustee of the trust, and the assets of the trust were transferred to it. Various orders were sought in the proceedings, including orders for damages and equitable compensation.
On 4 June 1999, Mansfield J made orders in the proceedings as follows:
1.A declaration that RFPL was entitled to be indemnified from the assets of the Jill Cooper Family Trust to the extent of its current indebtedness, including accumulated interest, to the bank.
2.A declaration that RFPL had an equitable charge or lien over the assets from time to time of the Jill Cooper Family Trust to the full extent of its entitlement to indemnity, which equitable charge or lien was enforceable against certain third parties (including Belgravia) who from time to time held title to the assets of the Jill Cooper Family Trust.
3.An order for an account and inquiry to be held for the purposes of identifying all and every of the assets of the Jill Cooper Family Trust, and all moneys either paid or received in relation to the conduct of the farming business using these assets.
On 26 August 1999, RFPL instituted proceedings in this Court pursuant to s 11 of the Federal Courts (State Jurisdiction) Act 1999 in relation to the continuation of the Belgravia proceedings. The proceedings thereafter continued in this Court.
On 2 November 2001, and pursuant to the orders which Mansfield J made on 4 June 1999, a master of this Court made an order that the value of the assets of the trust and the moneys received in relation to the conduct of the farming business, less moneys paid in the conduct of the business, was $1,189,989. By reason of the orders of Mansfield J and those of the master, the value of the right of indemnity was therefore $1,189,989.
Pursuant to the orders of Mansfield J, the defendant recovered property that was part of the assets of the trust to the value of $53,511.73.
On 21 November 2002, a judge of this Court (Perry J) granted leave to RFPL to vary the orders of Mansfield J in order to permit RFPL to proceed with its summons for orders against the first and second plaintiffs for:
1.equitable compensation and/or damages for knowing participation in a breach of fiduciary duty;
2. damages for the tort of conspiracy; and
3. damages for the tort of unlawful interference with economic interests.
RFPL sought damages from each of the plaintiffs in an amount equivalent to the value of the right of indemnity ($1,189,989) less the recoveries ($53,511.73) plus the pre-judgment interest.
On 30 March 2005, Perry J entered judgment for RFPL in those proceedings for the sum of $1,575,265.15. He did so on the basis that the plaintiffs had acted in breach of fiduciary duty. He did not need to decide if the plaintiffs were also liable on the basis of conspiracy or unlawful interference with economic interests.
On 26 August 2005, RFPL and each of the plaintiffs executed a deed pursuant to which, inter alia, the first plaintiff agreed to pay to RFPL the sum of $316,000 in full and final settlement of the judgment debt, and RFPL agreed, upon payment of the settlement sum, to release, discharge and hold harmless each of the plaintiffs from the balance of the judgment sum of $1,575,265.15.
Important allegations in the action
In this action, the plaintiffs claim damages against the defendant being the settlement sum and the excess defence costs (which are defined in the statement of claim as the costs of defending the Belgravia proceedings), less the amount of the bank debt that would have been owing if the bank debt had been reduced by the sale of the land and plant and equipment at the best price reasonably obtainable in the circumstances.
Two important allegations in the statement of claim about the defendant’s knowledge and intention about the defendant’s knowledge and intention are as follows:
32.     At all material times, Sheahan well knew that:
32.1   the proceeds obtained from the sale of the Land owed to the bankrupt estates of JHM, RJC and SVC, and owed to RPL, would be used, in part, to repay the Bank Debt.
32.2   the proceeds obtained from the sale of the Plant and Equipment would be used, in part, to repay the Bank Debt.
32.3   any variation in the proceeds obtained from the sale of the Land, and/or the Plant and Equipment would affect the amount of the indemnity sought by RFPL pleaded in paragraph 25 above; and
32.4   accordingly, any such variation would affect the quantum of equitable compensation and/or damages sought against Mills, Cooper and Belgravia pleaded in paragraph 25 above.
…
34.At all material times, Sheahan intended to sue all the defendants in the Federal Court Belgravia proceedings, including Mills, Cooper and Belgravia, for loss suffered by RFPL, being the amount of the Bank Debt that was not otherwise recovered by reason of the sale of the Land, and the Plant and Equipment.
In relation to the sale of the land, the plaintiffs allege that the defendant owed them a common law duty of care. The duty is pleaded in the following terms:
42.By reason of the matters pleaded in paragraphs 5, 18, 19, 20, 21, 22, 23, 24, 25, 26, 30, 27, 32 and 34 above, Sheahan:
42.1   in his capacity as trustee of the bankrupt estates of JHM, RJC and SVC; and/or
42.2   liquidator of RPL,
owed Mills, Cooper and Belgravia a duty:
42.3   to exercise all reasonable care, skill, diligence and competence in the performance of his duties as trustee of the bankrupt estates of JHM, RJC and SVC; and
42.4   to take all reasonable and proper care to sell the Land for the best price that is reasonably obtainable having regard to the circumstances existing when the Land was sold.
There are detailed allegations by the plaintiffs in the statement of claim as to why they allege that the defendant acted in breach of duty in relation to the sale of the land. This application concerns the question of whether it is arguable that there was a duty of care and it is not necessary to set out the plaintiff’s allegations of breach.
In relation to the sale of the plant and equipment, the plaintiffs allege that the defendant owed them a common law duty of care. The duty is pleaded in the following terms:
44.By reason of the matters pleaded in paragraphs 5, 18, 19, 20, 21, 22, 23, 24, 25, 26, 30, 27, 32 and 34 above, Sheahan in his capacity as provisional liquidator and/or liquidator of RFPL owed Mills, Cooper and Belgravia a duty:
44.1   to exercise all reasonable care, skill, diligence and competence in the performance of his duties in his capacity as provisional liquidator of RFPL;
44.2   to take all reasonable and proper care in taking into his custody and control all the Plant and Equipment and taking necessary steps to preserve and protect the Plant and Equipment; and
44.3   to take all reasonable and proper care to sell the Plant and Equipment for the best price that was reasonably obtainable having regard to the circumstances existing when the Plant and Equipment was sold.
As with the land, it is not necessary to set out the allegations of breach of duty.
In relation to the plant and equipment, and in addition to a claim based on a common law duty of care, the first plaintiff, who was liable for the settlement sum, claims a right of contribution from the defendant pursuant to the Wrongs Act 1936 (“the 1936 Act”), or, in the alternative, the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (“the 2001 Act”).
It follows that there is a common question on this application in relation to both the land and the plant and equipment, and that is whether it is arguable that the defendant owed a duty of care to the plaintiffs, in the case of the sale of the land, as trustee in bankruptcy of the bankrupt estates of JHM, RJC and SVC, respectively, and controller/liquidator of RPL, and, in the case of the sale of the plant and equipment, as provisional liquidator and then liquidator of RFPL. Neither party on this application suggested that the answer to the question might differ as between the land, on the one hand, and the plant and equipment, on the other. A second question which arises only in relation to the sale of the plant and equipment is whether it is arguable that the plaintiffs have a claim for contribution against the defendant under the 1936 Act, or, if the later Act applies, the 2001 Act.
A summary of the key facts

I will now summarise the key facts. RFPL was a trustee which was carrying on a farming business. It incurred liabilities in the course of doing so and was entitled to a right of indemnity against the trust assets in relation to those liabilities. Its right of indemnity was such that it had a charge or right of lien over the trust assets: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 per Stephen, Mason, Aitkin and Wilson JJ; In re Suco Gold Pty Ltd (In Liquidation) (1983) 33 SASR 99. For the purposes of the present case, the liability incurred by RFPL in the course of carrying on the farming business was the bank debt and that liability was the measure of its right of indemnity. A court found that RFPL’s right of indemnity was enforceable by it against third parties into whose hands the trust assets passed. The plaintiffs were held liable to RFPL because they committed a breach of fiduciary duty in relation to the trust assets. They were held liable for equitable compensation for the amount necessary to restore RFPL to the position it would have been in had no breach of fiduciary duty occurred. Perry J found it unnecessary to consider the alternative causes of action against the plaintiffs of conspiracy and unlawful interference with economic interests. The measure of their liability was the right of indemnity, which was based on, and quantified by reference to, the bank debt.
It seems to be the case that had the defendant in his capacity as trustee in bankruptcy and liquidator realised a higher price for the land and plant and equipment, the claim by RFPL against the plaintiffs would have been reduced pro tanto. However, that is not because they were liable for the bank debt. They were held liable to RFPL because of their conduct in relation to the trust assets, and the measure of their liability was the loss to RFPL, which in turn was linked to the company’s right of indemnity. The company’s right of indemnity is for the bank debt.
As far as the sale of the land is concerned, the defendant is sued for conduct carried out in his capacity as trustee in bankruptcy of three bankrupt estates and as controller/liquidator of RPL, and the plaintiffs sue in their capacity as potential judgment debtors in a different administration, namely, the administration of RFPL. The link between the defendant’s conduct and loss or damage to the plaintiffs comes about because the judgment creditor’s claim (ie, RFPL’s claim) against the plaintiffs is affected by the price realised on the sale of the land. As far as the sale of the plant and equipment is concerned, the position is the same except for one matter, namely, the alleged conduct by the defendant is carried out in the same administration as that in which the plaintiffs are sued.
Duty of care
The type of loss that the plaintiffs are claiming from the defendant is economic loss. There will be no duty of care if the plaintiffs are not able to show that the risk of loss or damage to them was reasonably foreseeable. For the purposes of this application, the defendant concedes that the risk of loss or damage to the plaintiffs was reasonably foreseeable.
This case is not one of the well-established cases where a duty of care is readily assumed: see, eg, Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at 262 [13] per Gleeson CJ. Furthermore, although something more than reasonable foreseeability of loss or damage is required before a court will hold that a duty of care arises, it is clear that the concept of proximity is no longer used to describe the additional requirement: Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 529-530 [21] per Gleeson CJ, Gummow Hayne and Heydon JJ; Sullivan v Moody (2001) 207 CLR 562 at 578-599 [48].
The parties correctly identified the matters I should consider in determining if it is arguable that the defendant owed a common law duty of care to the plaintiffs. They are:
1.The general principles identified in the leading cases in the relevant field of discourse as relevant to whether a defendant owed a duty of care to the plaintiff. The relevant field of discourse for the purposes of this case is claims for pure economic loss.
2.Any factors identified in the leading cases as negating, or tending to negate, a court holding that the defendant owes a duty of care to the plaintiff. For the purposes of this case it is relevant to consider if the imposition of a common law duty of care would be inconsistent or incompatible with the defendant’s other duties.
3.Whether a court has held that there is or is not a duty of care in any cases which are closely analogous to the case under consideration.
In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529, the High Court held that there are cases in which recovery for pure economic loss will be allowed. Stephen J identified a number of factors which were present in that case and which were sufficient to bring the parties into a close relationship such that recovery for pure economic loss was permitted (at 576-578). An important fact in that case was the defendant’s knowledge that to damage the pipeline was inherently likely to produce economic loss to those who relied directly upon its use.
In Perre v Apand Pty Ltd (1999) 198 CLR 180, the High Court again considered what factors, in addition to reasonable foreseeability, were necessary to enable an injured party to recover for pure economic loss. On the facts of that case, the matters that the Court considered relevant were actual foresight of the likelihood of harm, knowledge or means of knowledge in the defendant of an ascertainable class of vulnerable persons who were unable to protect themselves from harm, the fact that the imposition would not impair the defendant’s pursuit of his or her own legitimate commercial interests, and the fact that the activities which caused the loss were within the defendant’s control.
In WoolcockStreet Investments Pty Ltd v CDG Pty Ltd (supra) Gleeson CJ, Gummow, Hayne and Heydon JJ discussed the importance of the plaintiff’s vulnerability to the question of whether he or she was owed a duty of care. Their Honours said (at 530-531 [23]–[24]) (footnotes omitted):
Since Caltex Oil, and most notably in Perre v Apand Pty Ltd, the vulnerability of the plaintiff has emerged as an important requirement in cases where a duty of care to avoid economic loss has been held to have been owed. “Vulnerability”, in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, “vulnerability” is to be understood as a reference to the plaintiff’s inability to protect itself from the consequences of a defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.
…
In other cases of pure economic loss (Bryan v Maloney is an example) reference has been made to notions of assumption of responsibility and known reliance. The negligent misstatement cases like Mutual Life & Citizens’ Assurance Co Ltd v Evatt and Shaddock & Associates Pty Ltd v Parramatta City Council [No 1] can be seen as cases in which a central plank in the plaintiff’s allegation that the defendant owed it a duty of care is the contention that the defendant knew that the plaintiff would rely on the accuracy of the information the defendant provided. And it may be, as Professor Stapleton has suggested, that these cases, too, can be explained by reference to notions of vulnerability. (The reference in Caltex Oil to economic loss being “inherently likely” can also be seen as consistent with the importance of notions of vulnerability.) It is not necessary in this case, however, to attempt to identify or articulate the breadth of any general proposition about the importance of vulnerability. This case can be decided without doing so.
The Court, by a majority, held that there was no duty of care because there was no element of known reliance or dependence, no assumption of responsibility and no vulnerability (per Gleeson CJ, Gummow, Hayne and Heydon JJ at 532-533 [26] and [31]).
I do not think that this is a case of known reliance or dependence in the relevant sense. Nor is it a case where the defendant has chosen to assume responsibility for the protection or safeguarding of the plaintiffs’ interests. Nor is it a case in which the plaintiffs were vulnerable in terms of the defendant’s acts or omissions. In a general sense, they were vulnerable because the defendant’s acts or omissions might in the circumstances affect the amount recovered from them. However, I do not think that that is vulnerability in the relevant sense, because the main and direct cause of the position they found themselves in was their own wrongdoing in relation to RFPL.
These considerations suggest that the defendant does not owe a duty of care to the plaintiffs.
I turn now to consider those cases in which the court has said a duty of care will not be imposed if to do so would be inconsistent or incompatible with other duties owed by the defendant.
In Sullivan v Moody (supra), doctors who examined young children who it was suspected had been sexually abused were held not to owe a duty of care to the suspected abusers in relation to their examination and report. An important reason for refusing to hold that there was a duty of care was that it would be inconsistent or incompatible with the relevant statutory scheme under which the examinations were conducted. The Court said (at 582 [62]):
The statutory scheme that formed the background to the activities of the present respondents was, relevantly, a scheme for the protection of children. It required the respondents to treat the interests of the children as paramount. Their professional or statutory responsibilities involved investigating and reporting upon, allegations that the children had suffered, and were under threat of, serious harm. It would be inconsistent with the proper and effective discharge of those responsibilities that they should be subjected to a legal duty, breach of which would sound in damages, to take care to protect persons who were suspected of being the sources of that harm. The duty for which the appellants contend cannot be reconciled satisfactorily, either with the nature of the functions being exercised by the respondents, or with their statutory obligation to treat the interests of the children as paramount. As to the former, the functions of examination, and reporting, require, for their effective discharge, an investigation into the facts without apprehension as to possible adverse consequences for people in the position of the appellants or legal liability to such persons. As to the latter, the interests of the children, and those suspected of causing their harm, are diverse, and irreconcilable. That they are irreconcilable is evident when regard is had to the case in which examination of a child alleged to be a victim of abuse does not allow the examiner to form a definite opinion about whether the child has been abused, only a suspicion that it may have happened. The interests of the child, in such a case, would favour reporting that the suspicion of abuse has not been dispelled; the interests of a person suspected of the abuse would be to the opposite effect.
Clearly, that case turned, to some extent at least, on the particular statutory scheme involved.
In a case involving a claim for pure psychiatric harm and economic loss, this Court held that it would be inconsistent with the duties of police officers at the scene of an accident to impose on them a duty of care to relatives of a deceased person in relation to the identification of that person: Halech v State of South Australia (2006) 93 SASR 427. Duggan J said (at 436-437 [43]):
Furthermore, it is my view that the nature of the activity in which the police were involved is inconsistent with the imposition of a duty of care of this kind. As I have said, the allegedly negligent acts of the police officers at the scene of the accident consisted of the expression of opinion based on available information. In my view, it would be contrary to the interests of the community if the recording in official reports of opinions formed in the course of police investigations was to be inhibited by the possibility of proceedings such as those which have been instituted in the present case. The investigation of road accidents is an important and necessary function which serves a variety of purposes, all of which are in the interests of the community. It would be inappropriate to impose a duty of care which could inhibit this investigational role.
I said (at 450 [109]-[110]):
Clearly, there are degrees of inconsistency or incompatibility, some of a direct nature and others less direct. There is the notion … of constraining the proper performance of undisputed duties, or, as the defendant put it in its written submission, the conflict may arise at an anterior stage, in that the imposition of a duty owed to one individual would require an officer to devote more time and care on discharging that duty to the disadvantage of his other responsibilities and the interests of others.
In [37] above, Duggan J sets out the duties of police officers at the scene of a serious traffic accident and, in my opinion, it would constrain the proper performance of those duties to impose a duty of care on a police officer in relation to the identification of a victim to the relatives of that victim.
A trustee in bankruptcy owes duties to the creditors of the bankrupt and to the bankrupt. In addition, he or she must exercise the powers and functions of a trustee having regard to the public welfare. The duties owed by a trustee in bankruptcy arise at common law and by reason of the provisions of the BA. The common law duties of a trustee in bankruptcy have been discussed in a number of cases. It is sufficient to refer to In re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262; Adsett v Berlouis (1992) 37 FCR 201; Keay and Murray, Insolvency: Personal and Corporate Law and Practice (4^th ed, 2002), pp 32-35. Section 19(1) of the BA sets out some of the statutory duties of a trustee in bankruptcy. It provides:
19(1) The duties of the trustee of the estate of a bankrupt include the following:
(a) notifying the bankrupt’s creditors of the bankruptcy;
(b)determining whether the estate includes property that can be realised to pay a dividend to creditors;
(c)reporting to creditors within 3 months of the date of the bankruptcy on the likelihood of creditors receiving a dividend before the end of the bankruptcy;
(d)giving information about the administration of the estate to a creditor who reasonably requests it;
(e)determining whether the bankrupt has made a transfer of property that is void against the trustee;
(f)taking appropriate steps to recover property for the benefit of the estate;
(g)taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt’s duties under this Act;
(h)considering whether the bankrupt has committed an offence against this Act;
(i)referring to the Inspector-General or to relevant law enforcement authorities any evidence of an offence by the bankrupt against this Act;
(j)administering the estate as efficiently as possible by avoiding unnecessary expense;
(k)exercising powers and performing functions in a commercially sound way.
I would emphasise in particular, the duties identified in s 19(1)(j) and (k).
The Court is able to exercise powers of supervision and control over a trustee in bankruptcy: BA, ss 178, 179.
In terms of the duties he or she owes, a liquidator of a company is in a similar, but not identical, position to a trustee in bankruptcy. A liquidator owes fiduciary duties to the company, its creditors and members, in addition to the particular duties specified in the CA. A good deal might be said on this topic, but I think it is sufficient to refer to the discussion in Keay and Murray (supra) at 231-238.
In my opinion, it would be incompatible with the duties owed by a trustee in bankruptcy or a liquidator to various groups, and with the requirement to have regard to the public welfare, to hold that a trustee in bankruptcy owed a duty in realising property to a judgment debtor, or potential judgment debtor in another administration, or to hold that a liquidator owed a duty in realising property to a judgment debtor or potential judgment debtor in the same administration. A trustee in bankruptcy or a liquidator must already have regard to a wide range of interests in exercising his or her powers and must act commercially and efficiently, and it would inhibit the exercise of the existing powers, duties and functions of a trustee in bankruptcy or a liquidator to impose a duty of care to a judgment debtor or potential judgment debtor.
Having regard to the two matters I have just discussed, I hold that it is not arguable that the defendant owes a common law duty of care to the plaintiffs.
I have considered whether there are any closely analogous cases in which a court has considered if there is a common law duty of care. There is certainly no case directly on point. I was referred to the court’s refusal to hold that a receiver or mortgagee in possession exercising a power of sale owed a common law duty of care to the mortgagor or a guarantor of the mortgage debt: Jovanovic v Commonwealth Bank of Australia (2004) 87 SASR 570 and the cases cited therein at 592-593 [91]-[92]. This is perhaps suggestive of a conclusion that there was no duty of care in this case, but I prefer not to base my decision on this ground in view of the fact that the differences between, on the one hand, a receiver or mortgagee in possession exercising a power of sale and, on the other, a trustee in bankruptcy or a liquidator realising property, were not fully explored in argument before me.
Contribution
The contribution claim relates only to the plant and equipment and does not rely on a common law duty owed by the defendant to the plaintiff. Rather, the claim is that the defendant owed a duty to RFPL in connection with the sale of the plant and equipment. The plaintiffs were found guilty of breach of fiduciary duty and ordered to pay compensation to RFPL. The claim is that the first plaintiff is entitled to recover contribution from the defendant. I am not sure why the claim is limited to the first plaintiff; perhaps it is because he was the one liable to pay the settlement sum. In any event, for present purposes, it does not really matter.
The first plaintiff was held liable to pay compensation to RFPL for breach of fiduciary duty in connection with the transfer of trust assets over which RFPL had a right of indemnity. In other words, he was held liable in equity. There was no need for Perry J in the Belgravia proceedings to deal with the tortious claims against the first plaintiff of conspiracy and unlawful interference with economic interests. The allegation against the defendant is that in selling the plant and equipment he breached a common law duty of care which he owed to RFPL.
The defendant submitted that the first plaintiff’s claim against him for contribution was not arguable for two reasons, namely:
1.Section 25 of the 1936 Act applied, and under that Act there is no right of contribution because the first plaintiff was not another tortfeasor. The first plaintiff has not pleaded that he was another tortfeasor who is, or would have been, liable.
2.Section 25 of the 1936 Act only gives a right of contribution if there is a liability in respect of the same damage. The damage here is different because the damage for which it is said the defendant is liable is economic loss arising from the sale at an undervalue of plant and equipment on the land on 6 May 1999, whereas the liability of the first plaintiff relates to the economic loss arising from the loss of different assets of RFPL. The defendant submits that even if the 2001 Act, or the 2001 Act as amended in 2005, applied, the same result follows because under both forms of s 6 the relevant harm for which contribution is sought must be the “same harm”. “Harm” is defined under both the 2001 Act and the 2001 Act as amended in 2005 as follows:
… includes loss of life, personal injury, damage to property, economic loss and loss of any other kind (whether the harm is primary or derivative).
The definition, which is not an exhaustive one, includes economic loss and loss of any other kind.

The defect in the pleadings identified in the defendant’s first submission has now been overcome because, after the submissions and with my leave, the first plaintiff put forward a proposed Draft Second Further Amended Statement of Claim/Orders Sought in which he alleged that he was a tortfeasor within s 25 of the 1936 Act. I am prepared to consider this aspect of the application by reference to that proposed plea. I am inclined to think the substantive point in the defendant’s first submission (ie, whether the first plaintiff was in fact another tortfeasor) is a matter for trial, but I do not need to decide this point in view of my conclusion with respect to the defendant’s second submission.
I think that the defendant’s second submission is correct and is correct whether the relevant concept be that under the 1936 Act of “same damage” or that under the 2001 (or as amended in 2005) Act of “same harm”. The first plaintiff alleges that the defendant breached a duty he owed to RFPL in connection with the sale of certain assets. The assets were different assets from those which were the subject of the Belgravia proceedings and the economic loss was a different economic loss than that which resulted from the first plaintiff’s wrongful conduct. The damage or harm allegedly caused by the defendant was economic loss representing the value of certain assets minus what was received for those assets on the sale thereof. The damage or harm caused by the first plaintiff was the economic loss consequent upon the transfer of different assets from RFPL to third parties. In my opinion, it is not arguable that there is a right of contribution in those circumstances.
Conclusion
In my opinion, the causes of action pleaded by the plaintiffs are not arguable. The plaintiff’s statement of claim should be struck out. I will hear the parties as to whether any other orders are appropriate.