Re La Rosa; Ex parte Norgard v Rodpat Nominees Pty Ltd

[1991] FCA 510

Re: FRANCESCO CANDELORO LA ROSA and LYNDA ROBYN LA ROSA
Ex parte: ROSS STEWART NORGARD AS TRUSTEE IN BANKRUPTCY
And: RODPAT NOMINEES PTY LTD; FRANCESCO CANDELORO LA ROSA; THE RURAL AND
INDUSTRIES BANK OF WESTERN AUSTRALIA and RODNEY JOHN FERGUSON
No. 616C of 1988
FED No. 510
Bankruptcy - Equity - Trade Practices
(1991) 13 ATPR 41-139
104 ALR 237
(1991) 31 FCR 83

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
French J.(1)

CATCHWORDS

Bankruptcy - recovery action - preferential payments - settlement - disposition of bankrupts' property - cross-claim by creditor bank against respondent to principal claim alleging participation in breach of duty by creditor's officers - constructive trust - alleged misleading or deceptive conduct - cheque exchange transactions - claim for repayment of moneys under trust and for damages - respondent seeking leave to cross-claim for contribution and indemnity against officers of bank and other parties in related transactions - contribution - principles - whether contribution available under s.87 Trade Practices Act and at equity.

Equity - equitable contribution - principles - co-ordinate liabilities - common obligations - width of concepts.

Trade Practices - misleading or deceptive conduct - whether contribution available in favour of contravenor against persons involved in contravention - construction of s.87.

Bankruptcy Act 1966 s.120(1), s.122

Trade Practices Act 1974 s.52, s.75B, s.87

Fair Trading Act 1987 (WA) s.10, s.68, s.79

Meagher Gummow and Lehane - Equity Doctrines and Remedies 2nd ed.

Goff and Jones - The Law of Restitution 3rd Edition

Albion Insurance Co. Ltd v. Government Insurance Office (NSW) (1969) 121 CLR 342

Commercial and General Insurance Co. Ltd v. Government Insurance Office (NSW) (1973) 129 CLR 374

Merryweather v. Nixan (1799) 8 TR 186

Scholefield Goodman and Sons Ltd v. Zyngier (1986) 1 AC 562

Craythorne v. Swinburne (1807) 14 Ves Jun 160

Borg-Warner (Aust) Ltd v. Switzerland General Insurance Co. Ltd (1989) 16 NSWLR 421

HEARING

PERTH

#DATE 19:8:1991

Counsel for Ross Stewart Norgard : Mr W.S. Martin and
as Trustee in Bankruptcy of Mr S. Tudjman
the Estate of F.C. and L.R. La Rosa

Solicitors for Ross Stewart Norgard : Blake Dawson Waldron

Counsel for Rodpat Nominees Pty Ltd : Mr G.R. Donaldson
and Rodney John Ferguson

Solicitors for Rodpat Nominees and : Bennett and Co.
Rodney John Ferguson

Counsel for the Rural and Industries : Mr M. Pendlebury
Bank of Western Australia

Solicitors for the Rural and : Robinson Cox
Industries Bank of Western Australia

Counsel for John Dolling : Mr M. Ritter

Solicitors for John Dolling : Dwyer Durack

Counsel for Richard O'Neale : Mr B.F. Stokes

Solicitors for Richard O'Neale : B.F. Stokes and Associates

Counsel for Alfredo Barbagallo : Mr T.E. O'Connor QC and

Mr P.J. Bogue

Solicitors for Alfredo Barbagallo : Bogue and Pass

Counsel for Vernon Charles Wheatley : Mr M.J. McCusker QC and
and John Hughes : Mr C.F. McLeod

Solicitors for V.C. Wheatley and : Parker and Parker
J. Hughes

ORDER

1. There be leave to Rodpat Nominees Pty Ltd and Rodney John Ferguson to file a third cross-claim against John Dolling and Richard O'Neale.

2. Rodpat Nominees Pty Ltd and Rodney John Ferguson to pay the costs of Messrs. Samuel Alister Norwood, Alfredo Barbagallo, Vernon Charles Wheatley and John Hughes on this motion. The costs otherwise to be reserved.

Note: Settlement and entry of Orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

REASONS FOR JUDGMENT ON MOTION FOR LEAVE TO FILE CROSS-CLAIM

Outline of Claims

The principal proceedings in this case were instituted on 2 December 1988. By a further reamended statement of claim filed on 19 June 1991 the Trustee of the Bankrupt Estate of Francesco Candeloro and Lynda Robyn La Rosa claims against Rodpat Nominees Pty Ltd ("Rodpat") an order for the payment of $4,064,000. That sum is said to represent moneys paid to Rodpat by the bankrupts under dispositions voidable against the Trustee as settlements by virtue of s.120(1) of the Bankruptcy Act 1966 or as preferences by virtue of s.122, and alternatively as dispositions of property of the bankrupts after the commencement of their bankruptcies.

1. The Trustee pleads that Francesco La Rosa and Rodpat made an agreement on or about 20 April 1988 under which two firms owned by La Rosa, G. and R. Auto Clean and Moor Motors would receive cheques from Rodpat drawn on its account with the ANZ Bank in exchange for cheques drawn on the firm's account with the R. and I. Bank. For each such transaction, Rodpat was to receive a sum equivalent to 10% of the amount provided by La Rosa. In this case it is in substance the premium amount which the Trustee seeks to recover. In his pleading the Trustee relies upon a payment of $250,000 to Mr La Rosa's parents on 31 March 1988, which payment allegedly constituted a voidable settlement and had the effect that the relation back period for the purposes of the bankruptcy commenced on that day.

2. By its further reamended defence filed 16 August 1991, Rodpat says that it was a purchaser in good faith and for valuable consideration in respect of any benefit it received. It contends that the transactions were performed at the request of Mr La Rosa to the advancement and advantage of the large scale and apparently successful business of the La Rosas and of their business dealings in general. In support of this plea a number of particulars are set out, including the fact of the knowledge, consent, co-operation and supervision of the Rural and Industries Bank ("the Bank") in relation to the transactions through senior responsible officers, including its branch manager at Albany one John Dolling. The receipt of the alleged benefits is also said not to be capable of constituting a settlement. And the payments to Mr La Rosa's parents relied upon as defining the relevant relation back period, are said to have been for valuable consideration in that they had foregone a claim to an invalid pension. In any event, the parents, having repaid the benefit they received to the Bank, the "settlement" was allegedly not operative when the La Rosas became bankrupt.

3. A further plea relies directly upon the alleged knowledge, consent, co-operation and supervision of the Bank in relation to the transactions. The Bank is the major creditor in the estate with a claim of some $29,635,000 out of total creditors' claims of $29,888,915. The defence alleges that the Bank represented to Rodpat, through its director Ferguson, that the transactions were valid and efficacious in all respects and would not expose Rodpat to financial risk. Rodpat claims that it relied upon these representations in entering into the transactions. It is said to be unjust and unconscionable for the Bank to participate in the proceedings of any recovery by the Trustee. Rodpat should not therefore be ordered to repay any more than a sum representing the duly admitted debts of creditors of the estate, other than the Bank and the costs of the bankruptcy reasonably attributable to such creditors.

4. In addition to raising these issues by way of defence to the Trustee's claim, Rodpat has cross-claimed against the Bank seeking a declaration that the Bank is not entitled to "participate in any shape or form" (sic) in the proceeds of any moneys recovered by the Trustee and an injunction restraining it from "participating in the proceeds". This is the first cross-claim.

5. The Bank in turn has cross-claimed against Rodpat and its director, Ferguson (the second cross-claim). The second cross-claim alleges that between 3 January 1985 and 10 June 1988, John Dolling was the manager of the Bank's Albany branch. Richard O'Neale is said to have been a clerk at the branch to whom Dolling had delegated responsibility for the supervision of the G. and R. Auto Clean and Moor Motors accounts in February 1988 and for the period from 25 to 31 March 1988. La Rosa, it is alleged, entered into cheque exchange transactions with Hobourne Pty Ltd, another Ferguson company, and did so pursuant to an arrangement with O'Neale. Similar transactions were to be entered with Rodpat. In April 1988, Dolling is alleged to have agreed with La Rosa that he could continue to enter into transactions of the kind arranged with Rodpat in order to conceal from the Bank the fact that the G. and R. Auto Clean account was overdrawn beyond its permitted limit and that the Moor Motors account was also overdrawn. Both O'Neale and Dolling are said to have acted without the authority of the Bank in making the arrangements they did with La Rosa. Exchanges of cheques between the La Rosas on the one hand and Hobourne and Rodpat respectively one the other, are pleaded, as is the approval of various of the G. and R. Auto Clean and Moor Motor cheques by O'Neale and Dolling. Both are said to have known that they were approving payments against provisional credits created by the deposit of cheques exchanged in successive cheque exchanges. Each is thereby said to have breached his duty to the Bank and to have made improper use of his position to confer a benefit on another, to cause detriment to the Bank and to have failed to act honestly and in good faith for the benefit of the Bank. Ferguson is said to have known at all material times in his dealings with La Rosa that O'Neale and Dolling were breaching their duties. As a result of these breaches, the Bank claims that it suffered a net loss, by reason of the resultant combined overdraft of G. and R. Auto Clean and Moor Motors, amounting to $30,613,123.60. Ferguson and Rodpat allegedly knowingly participated in and benefited from these breaches of duty by Dolling and O'Neale. Rodpat is alleged to have gained financial benefits totalling $4,064,000 which, in the premises, it received as constructive trustee for the Bank. Properties purchased by Ferguson in Victoria Avenue, Dalkeith out of the benefits so gained by Rodpat are also, it is claimed, held on trust for the benefit of the Bank. The benefit so obtained is said to constitute an unjust enrichment of Ferguson and Rodpat.

6. Hobourne and Rodpat's conduct in providing cheques to La Rosa and in agreeing that such cheques could be deposited immediately while delaying the deposits of the cheques provided by La Rosa is said to have constituted, in each case, a representation to the Bank that the cheques provided to La Rosa were valid and unconditional orders for payment of the amount of money shown on them. These representations are said to have been false because the clearance of the Hobourne and Rodpat cheques was conditional upon prior clearance of the cheques provided by La Rosa. The conduct of the companies was therefore, it is alleged, misleading or deceptive in contravention of s.52 of the Trade Practices Act 1974 and caused the Bank to suffer loss and damage in the amount of $30,613,123.60. Ferguson is alleged to have aided and abetted Hobourne and Rodpat and to have been knowingly concerned in their contravention of s.52. The Bank claims against Rodpat and Ferguson by virtue of their participation in the breaches of duty by Dolling and O'Neale and the constructive trust arising thereby, an order for payment of the sum of $4,064,000 and damages and, as against Ferguson, an order for the transfer of the Victoria Avenue properties. Damages of $30,613,123.60 are claimed against Rodpat and Ferguson by virtue of s.82 of the Trade Practices Act. Reliance is also placed on s.79 of the Fair Trading Act 1987 (WA).

7. Rodpat and Ferguson now seek leave of the Court to institute a cross-claim (the third cross-claim) against Samuel Alister Norwood, John Dolling, Richard O'Neale, Alfredo Barbagallo, Vernon Charles Wheatley and John Hughes. The motion is opposed by the proposed respondents on the basis that no cause of action is disclosed in the proposed claim and on discretionary grounds.
   The Proposed Third Cross-Claim

8. The proposed third cross-claim begins with a recitation of the allegations made against Rodpat and Ferguson in the second cross-claim and the fact that Rodpat and Ferguson, by their defences, deny various of the allegations made by the Bank, dispute its claim and deny its entitlement to any relief. In the event that Rodpat and/or Ferguson are found to be liable to the Bank, they claim they are entitled to be indemnified or to a contribution from Dolling and O'Neale. This is pleaded on the assumption that these officers of the Bank occupied the positions, committed the acts and breached the duties alleged by the Bank in the second cross-claim. On that basis, it is said their conduct was:
   

1. conduct of Dolling and O'Neale in trade and commerce within the meaning of that expression in s.52 of the Trade Practices Act 1974 and s.10 of the Fair Trading Act 1987;

2. misleading and deceptive or likely to mislead and deceive

(sic) within the meaning of that expression in s.52 of the Trade Practices Act 1974 and s.10 of the Fair Trading Act 1987;

3. involved the use of postal, telegraphic or telephonic services by Dolling and O'Neale.

Indemnity or contribution is claimed against Dolling and O'Neale alternatively on the basis that they were involved in the conduct of Rodpat within the meaning of s.75B of the Trade Practices Act and in the conduct of Ferguson within the meaning of s.68 of the Fair Trading Act 1987 (WA).

1. Indemnity or contribution is sought from Norwood on the basis of a cheque exchange transaction in May 1988 whereby La Rosa provided Norwood with a cheque drawn on the Moor Motors' account for $21,120,000 in exchange for Norwood's cheque of $20,000,000 payable to that account. Norwood's conduct, it is said, constituted a false representation to the Bank that the cheque he provided to La Rosa was a valid and unconditional order for payment of the amount nominated in it. This conduct is said to have been misleading or deceptive under s.10 of the Fair Trading Act 1987 (WA) causing the Bank to suffer a loss in the amount of $1,120,000. Indemnity and contribution is claimed on a similar basis against Barbagallo in respect of three cheque exchange transactions, two involving $1,000,000 with a premium of $10,000 to Barbagallo in one and $40,000 in the other and a further exchange involving $10,000,000 with a premium of $250,000. The indemnity and/or contribution claimed against Wheatley and Hughes rests upon the proposition that they were directors of Hobourne at the time of the transaction involving that company and involved in its contravention of s.52.

2. The relief claimed under the proposed third cross-claim is as follows:
   

"AND THE CLAIMANTS BY THIRD CROSS CLAIM CLAIM: A. A declaration that they are entitled to be indemnified by the Respondents by Third Cross Claim as claimed herein. B. Further and in the alternative, a declaration that they are entitled to contribution from each of the Respondents by Third Cross Claim as claimed herein. C. Further and in the alternative, a declaration pursuant to s.87 of the Trade Practices Act 1974 that Rodpat is entitled to be indemnified by each of the Respondents by Third Cross Claim as claimed herein.

D. Further and in the alternative, a declaration pursuant to s.68 of the Fair Trading Act 1987 that Ferguson is entitled to be indemnified by each of the Respondents by Third Cross Claim as claimed herein.

E. Further and in the alternative, a declaration pursuant to s.87 of the Trade Practices Act 1974 that Rodpat is entitled to a contribution from each of the Respondents by Third Cross Claim as claimed herein.

F. Further and in the alternative, a declaration pursuant to s.68 of the Fair Trading Act 1987 that Ferguson is entitled to a contribution from each of the Respondents by Third Cross Claim as claimed herein.

G. Judgment for any amount that may be found due by Ferguson and/or Rodpat in favour of the R. and I. pursuant to paragraphs (c),

(d), (e) and/or (f) of the Prayer for Relief of the Second Cross Claim. H. Judgment for any costs that may be found due by Ferguson and/or Rodpat in favour of the R. and I. pursuant to the Second Cross Claim. I. Costs of the Third Cross Claim."

The Bases of the Third Cross-Claim

1. The orders for indemnity and contribution sought against Dolling and O'Neale rely upon an application of s.87(1A) of the Trade Practices Act to achieve that result, and in the alternative, on the principles of equitable contribution. The claim against Norwood and Barbagallo rests solely upon equitable contribution, while that against Wheatley and Hughes is entirely dependent upon s.87(1A).

2. So far as the statutory claim is concerned, the threshold question is whether s.87 of the Trade Practices Act confers authority on the Court, upon the application of a corporation or person who is liable for damages because it has contravened the Act, to make an order for indemnity or contribution against a co-contravenor or one who is involved in the contravention. The relevant provisions are those of s.87(1A) and s.87(2)(d). Sub-section 87(1A) provides:
   

"87(1A) Without limiting the generality of s.80, the Court may, on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part V or on the application of the Commission in accordance with sub-section

(1B) on behalf of such a person or two or more such persons, make such order or orders as the Court thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2)) if the Court considers that the order or orders concerned will compensate the person who made the application, or the person or any of the persons on whose behalf the application was made, in whole or in part for the loss or damage, or will prevent or reduce the loss or damage suffered, or likely to be suffered, by such a person."

Sub-section 87(2) provided, inter alia:

"87(2) The orders referred to in sub-sections (1) and

(1A) are:

.

.

.

(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage."

1. It was stated from the bar table that there is no authority on the question whether s.87(1A) can be invoked to provide for indemnity or contribution under the Trade Practices Act. In my opinion, the reason for that scarcity is that the proposition is untenable. Section 87(1A) contemplates an application by "a person who has suffered or is likely to suffer loss or damage by conduct of another person...in contravention of a provision of Part V". Now it was contended that this would extend to a person who has suffered a judgment for contravention of the Act in which contravention another person was involved. But the Act contemplates that the applicant for relief under s.87(1A) is not the person who contravenes the relevant provisions of Part V. That becomes clearer when it is seen that before the Court can make an order under this sub-section, it must consider that the order or orders will compensate the person who made the application. And to the extent that s.87(2)(d) is relevant, it does not define the categories of person who may seek damages. In my opinion, there is no mechanism in s.87, nor in the Act generally which would enable the Court to make orders for contribution or indemnity against other contravenors of the Act or persons involved in the primary contravention. On this basis the third cross-claim could not succeed at all against Wheatley or Hughes nor, to the extent that it relies upon s.87, against Dolling and O'Neale.

2. The second foundation for the third cross-claim, in its entirety against Barbagallo and Norwood and in part against Dolling and O'Neale, is equitable contribution. Counsel for Rodpat and Ferguson submitted that an entitlement to equitable contribution arises where there are co-ordinate liabilities on the part of the persons from whom contribution is sought. Reliance was placed upon some observations in Albion Insurance Co. Ltd v. Government Insurance Office (NSW) (1969) 121 CLR 342. That case concerned the existence of a right to contribution between two insurers with different policies covering the same loss. The loss arose out of an employer's liability for negligence causing personal injuries to one of its employees in connection with the use of a motor vehicle. One of the employer's insurers was liable under a common law indemnity clause endorsed on a workers compensation policy. The other insurer was liable under a motor vehicle third party insurance policy to indemnify the employer against liability for damages for that injury. The High Court held, reversing the decision of the Supreme Court of New South Wales, that there was a right of contribution as between the insurers. The discussion in the joint judgment of Barwick CJ, McTiernan and Menzies JJ. focussed upon the position of double insurers. Kitto J. (with whom Windeyer J. agreed) essayed a more general treatment of the principle of contribution noting that the doctrine is part of the common law as well as finding its place in equity. This is 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". Referring to the origin of the rule as to contribution between insurers as an arbitrary rule of marine insurance evolved apparently by Lord Mansfield, his Honour said at 349:
   

"...what Lord Mansfield was doing (sitting in a court of law, not equity, be it noted) was simply bringing together two principles. The first, a principle applicable at law no less than in equity, is that persons who are under co-ordinate liabilities to make good the one loss (e.g. sureties liable to make good a failure to pay the one debt) must share the burden pro rata. The second is that since a policy of marine insurance is a contract of indemnity only, so that where several insurers have separately insured the one person against the one loss that person, though he may upon suffering the loss sue any or all of the insurers, may not recover more in total than a single reparation for the loss, the relation between the insurers in such a case is analogous to the relation between several sureties for a debt."

The underlying principle in relation to insurance was stated at 352:

"What attracts the right of contribution between insurers, then, is not any similarity between the relevant insurance contracts as regards their general nature or purpose or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained; for that is the situation in which "the insured is to receive but one satisfaction" (to use Lord Mansfield's expression) and accordingly all the insurances are "regarded as truly one insurance": Sickness and Accident Assurance Association Ltd v. General Accident Assurance Corporation Ltd (1892) 19 Rettie, at p.980"

So far as the indemnity claims are concerned, there is no tenable generalisation of the principle underlying the doctrine of contribution as enunciated in the Albion Insurance case that would allow one of two persons under co-ordinate liabilities to claim a complete indemnity from the other. A claim for contribution is, by its very nature, one to rateable relief. The very purpose of the doctrine where it applies, is to avoid throwing the whole burden of liability on one of those liable to the exclusion of others - Commercial and General Insurance Co. Ltd v. Government Insurance Office (NSW) (1973) 129 CLR 374 at 380.

1. Counsel for Rodpat and Ferguson placed considerable store on the term "co-ordinate liabilities" used by Kitto J. in the Albion Insurance case. Whatever it means, that concept does not embrace liabilities merely because they arise out of related transactions or similar relationships between the claimant and others. In Smith v. Cock (1911) AC 317, the Privy Council held that for a right of contribution to arise it is essential that the parties share an obligation which can be described as co-ordinate. The case involved trusts under different wills in favour of the same beneficiary and at 326 Lord Mersey, delivering the judgment of the Judicial Committee, said:
   

"Without attempting to give a comprehensive definition of the expression "equitable contribution", it is clear that the present case does not fall within it. Before there can be any question of contribution there must be a common obligation upon those who are required to contribute. Here there is none."

In Meagher Gummow and Lehane Equity Doctrines and Remedies 2nd ed. at para.1001 a number of relationships cognisable at law and equity which involve co-ordinate liabilities are identified including co-sureties, co-insurers under contracts of indemnity insurance, co-contractors, parties liable to the holder of a bill of exchange, joint tenants and tenants in common. Joint tortfeasors, as is pointed out, were long in a different position - Merryweather v. Nixan (1799) 8 TR 186, 101 ER 1337, until the introduction of statutory rights of contribution. At para.1006 the learned authors observe that there is a dearth of discussion as to the meaning of the phrase "co-ordinate liabilities". In particular, it is noted that there are lacking judicial pronouncements as to whether liabilities are not co-ordinate unless they are of the same nature and attract the same remedy for enforcement. The learned authors suggest that:

"...the proper view appears to be that contribution may be recovered where the liabilities of the co-obligors to the principal claimant are such that enforcement by him against either co-obligor would diminish that obligor in his material substance to the value of the liability. Any alternative or additional requirement in the doctrine of contribution of similarity or consubstantial nature between the liabilities to which the co-obligors are exposed would produce intolerable uncertainty and obscure the true objects of the doctrine."

The learned authors of Goff and Jones - The Law of Restitution 3rd Edition at 272 propose that any obligor who owes with another a duty to a third party and is liable with that other to a common demand should be able to claim contribution. The basis of a right to contribution in such cases is said to be unjust enrichment. It is because there could be no contribution if there was no liability to a common demand that there was no contribution if tortfeasors independently caused damage to a third party or if the liability of contractors to a third person arose from separate and independent contracts.

1. More recently the Privy Council held that the drawer of a dishonoured bill of exchange had no right to contribution from a third party who gave security to the bank discounting the bill - Scholefield Goodman and Sons Ltd v. Zyngier (1986) 1 AC 562. The generality of the equitable principles underlying the right of one of two or more co-sureties to contribution whether or not they were bound by the same instruments and with knowledge of each other, was affirmed with a reference at p 571 to the words of Lord Eldon L.C. in Craythorne v. Swinburne (1807) 14 Ves Jun 160 at 165:
   

"The principle of equity operates...upon the maxim, that equality is equity: the creditor, who can call upon all, shall not be at liberty to fix one with payment of the whole debt; and upon the principle, requiring him to do justice, if he will not, the court will do it for him."

The fundamental question in the Scholefield Goodman case was seen to be whether upon the true construction of the bargain between the bank and the giver of security (Mrs Zyngier) she had placed herself in the position of a co-surety alongside the drawer or endorser or whether, upon the true construction of the bargain, her liability to the bank upon a bill was intended to be limited to a case of default by the parties liable upon the bill. It was held that she had not placed herself in the position of a co-surety. Although the decision turns upon its own facts, it does not evidence any trend to a broadening of the concept of "co-ordinate liabilities" which would attract rights of contribution to obligations merely because they are owed to the same party and related to the same transaction or otherwise connected in time or circumstance.

1. On the other hand where a common loss flows from two distinct injuries covered by different insurers, a right of contribution may arise - Borg-Warner (Aust) Ltd v. Switzerland General Insurance Co. Ltd (1989) 16 NSWLR 421. There Cole J. said after quoting at length from the judgment of Kitto J. in Albion Insurance:
   

"In my view it accords with doctrines of equity in the sense of "reason, justice and law" that two insurers should equally contribute to indemnify an employer where the employer has attracted a liability flowing equally from an event occurring within the period insured by each insurer, coupled with a common act of the employer crystalising (sic) liability in a given quantum under each insurance policy. Whilst it is true to say that if there be double insurance, principles of contribution between insurers may apply, it does not follow, in my view, that it is only if there be double insurance that principles of contribution may apply. In my view, so much appears from the analysis of Kitto J. in Albion Insurance. In circumstances of several partial continuing incapacities arising from separate injuries deemed total incapacity ... with each injury being insured by a separate insurer, under similar policies, and there being one award in consequence based upon the deemed total incapacity flowing from each partial incapacity and each injury, the principles of equity, in the sense used by Kitto J., may require the application of contribution principles. A fortiori if common loss, as distinct from risk, is sufficient to constitute double insurance." (432)

In the present case it seems to me that the restitutionary claims against Rodpat and Ferguson, resting upon their participation in and benefiting from breaches of duty by Dolling and O'Neale arguably give rise to a co-ordinate liability which can be the subject of contribution proceedings. I do not consider that an indemnity claim is open, and certainly no claim based upon s.87 of the Trade Practices Act. As to the question whether, on the basis that all parties may be joint wrongdoers, principles of public policy of the kind deriving from Merryweather v. Nixan should have any operation, that is best left to argument in the context of all the evidence.

1. So far as Norwood and Barbagallo are concerned, the pleading alleges that they each caused the Bank to suffer a loss by their participation in separate cheque exchange transactions. It is not clear that the loss is part of that claimed by the Bank against Rodpat and Ferguson. If it is included in that claim, then a question of causation will no doubt arise and may be pleaded by way of defence. But in my opinion, no co-ordinate liability or common obligation of the kind necessary to support a claim for contribution is disclosed. In the circumstances, leave will not be granted to bring the third cross-claim against Norwood or Barbagallo.
   CONCLUSION

2. In my opinion the proposed third cross-claim discloses an arguable case only against Dolling and O'Neale. This gives rise to the discretionary consideration whether they should be joined at this late stage at all. The case is provisionally listed for October. It would be unfair so late in the proceedings to expect them to be required to be ready for it at that time and if the claim is to proceed against them, those dates will have to be vacated. It appears however that there may be reason in any event that those dates should be vacated having regard to the length and complexity of this and related actions which it is sought to have tried concurrently with it. There is, however, no other prejudice which stands in the way of the joinder of those individuals and I will grant leave for them to be joined accordingly. If the third cross-claim is to proceed in light of these reasons, then Rodpat and Ferguson will have to bring in an amended cross-claim naming only those parties and time limits will have to be fixed for that purpose. I will however hear the parties as to further directions.