(re Monteath) Eraring Energy v Babcock International Limited

[2010] NSWDDT 18

NEW SOUTH WALES DUST DISEASES TRIBUNAL

CITATION:
(re Monteath) Eraring Energy v Babcock International Limited & Ors [2010] NSWDDT 18
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES:
Eraring Energy (Cross Claimant)
Babcock International Limited (First Cross Defendant)
Babcock Australia Pty Limited (Second Cross Defendant)
Power Technologies Pty Limited (Third Cross Defendant)
Amaca Pty Limited (Fourth Cross Defendant)
Wallaby Grip Limited (Fifth Cross Defendant)

MATTER NUMBER(S):
236/2010/CC1

CATCHWORDS:
DUST DISEASES TRIBUNAL :- dust diseases; cross claims; Contributions Assessment; one cross-defendant accepted Contributions Assessment as to percentage, but did not accept quantum of plaintiff's settlement; whether Tribunal may make order for payment against that cross-defendant for its percentage of plaintiff's settlement

LEGISLATION CITED:
Dust Diseases Tribunal Regulation 2007

CASES CITED:
QBE Insurance (Australia) Ltd v Wallaby Grip Ltd & Ors [2007] NSWCA 43
Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107

TEXTS CITED:

CORAM:
Kearns J

DATES OF HEARING:
16/12/2010

DATE OF JUDGMENT:
23 December 2010

LEGAL REPRESENTATIVES

Ms T Moisidis, instructed by Goldrick Farrell Mullen, appeared for the cross-claimant
Mr D J Russell SC, instructed by DLA Phillips Fox, appeared for the fourth cross-defendant

JUDGMENT:

1.  The plaintiff sued three defendants for damages.  He had contracted mesothelioma and alleged the defendants were negligent.  Five cross-defendants were added to the proceedings.  One was Amaca.

2.  On 9 November 2010, a Contributions Assessor, in accordance with cl 9(4) of the Regulation, determined the contribution that each defendant and cross-defendant was to make.  Amaca's contribution was determined at four per cent.  Amaca does not dispute that determination.

3.  The plaintiff settled his case against the three defendants.  On 16 December 2010, verdict and judgment was entered against each of the three defendants.  The total of each judgment sum was $475,000 inclusive of costs.  Also on 16 December 2010, all cross-defendants, bar Amaca, consented to judgments, on terms, in relation to the cross-claims.

4.  Amaca has not joined in settlement of the cross-claims because it says the figure of $475,000 in resolution of the plaintiff's claim is not an appropriate figure.  An appropriate figure is $405,000.

5.  Eraring, the first defendant, now seeks an order that Amaca pay four per cent of $475,000 to the plaintiff.  Amaca resists this but remains willing to pay four per cent of $405,000.

6.  The question is whether Eraring is entitled to the order for payment it seeks.  This is the first time this particular issue has arisen.  Accordingly, it is not covered by the earlier Court of Appeal cases of QBE Insurance (Australia) Ltd v Wallaby Grip Ltd & Ors [2007] NSWCA 43 and Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107.

7.  Mr Russell, of senior counsel, who appeared for Amaca, with his customary clarity and conciseness, argued that, whilst Amaca still was willing to pay four per cent of $405,000, it could not be subjected to an order for payment of four per cent of $475,000.  I am against his submissions for reasons which follow.

8.  Several prior cases have explained the history and processes of the claims resolution process.  I shall not touch on this except to the extent it is necessary to do so to explain my reasons.

9.  Part 4 of the Regulation sets up a claims resolution process.  There are several aspects of it.  The principal one for present purposes is the contributions assessment.  It is covered in Div 5.  Clause 47 defines "defendant" to include a cross-defendant and for ease of reference, references in these reasons to a defendant may be taken to include a cross-defendant unless the context otherwise indicates.

10.  Clause 48(1) rather hopefully compels defendants to agree as to the contribution each is liable to make to a plaintiff's damages.  Apparently appreciating the futility of that, the Regulation then proceeds to deal with the situation where defendants do not agree.

11.  Clause 49(1) provides that if the defendants have not agreed within a certain time the Registrar is to refer the matter to a Contributions Assessor for determination.  The Contributions Assessor is then to determine the contribution that each defendant is to make to the plaintiff's damages.  The  Contributions Assessor does that on the basis of information provided to him and on "standard presumptions".  It is, as the Court of Appeal has said more than once, a "rough and ready" procedure.

12.  It is worth noting at this point that matters that are referred to a Contributions Assessor are matters where usually, if not predominantly, there has been no agreement or determination as to the amount of the plaintiff's damages.  When such matters are referred to the Contributions Assessor there are then two unknowns to the defendants.  They are the amount of damages the plaintiff will receive and the percentage contribution to those damages that will be assessed by the Contributions Assessor in respect of any defendant.  After the Contributions Assessor has made a determination, one of the unknowns becomes known, and that is the percentage contribution of each defendant towards the plaintiff's damages.  There still remains unknown the amount of those damages.

13.  I shall come to it, but the assessment of the Contributions Assessor is binding on all defendants for certain purposes.  In my view, it is binding even though there remains an unknown.  It cannot depend for its binding effect on all defendants agreeing on the amount of the plaintiff's damages.  When the amount of the plaintiff's damages is known, the amount each defendant is liable to pay then crystallises.

14.  It seems to me there is no material difference between a defendant who disagrees with a percentage contribution allocated to it and one who disagrees with the amount to which the percentage contribution is to be applied.  The contribution assessment is binding in either instance.  In either instance, the defendant's remedy lies later in any contest between defendants.

15.  There are two important clauses to consider.  Clause 49(8) provides:

A determination of a Contributions Assessor under this Division cannot be challenged, reviewed, quashed or called into question before any court of law or administrative review body in any proceedings. This subclause does not prevent the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment.

16.  This clause provides a finality to the contributions assessment but with a reservation.  The reservation is that if there remains a dispute between defendants as to apportionment, it may be heard and determined by the Tribunal subsequently.

17.  That clause is to be read with cl 52.  Clause 52(1) provides:

An agreement or determination as to apportionment among defendants for the purposes of this Division is conclusively binding on the defendants for the purposes of the settlement, or determination by the Tribunal, of the plaintiff’s claim and payment of the plaintiff’s damages.

18.  Clause 52(2) provides:

The agreement or determination is not binding for the purposes of the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment.

19.  Clause 52(2) is plainly complementary to cl 49(8).

20.  Clause 52(1) is significant in the resolution of the dispute in this case.  It provides that the contributions assessment is binding for certain purposes.  It is evident there are three purposes:  (1) settlement of the plaintiff's claim, (2) determination of the plaintiff's claim, and (3) payment of the plaintiff's damages.  The second purpose is not relevant here.

21.  Mr Russell's submissions focused on the first purpose.  Argument was not expressly directed by either party to the third purpose, namely, payment of the plaintiff's damages.  Presumably that purpose does not arise here because though the plaintiff has not been paid his damages, this dispute should not affect that.  The plaintiff should receive his full damages from the three defendants he has sued.

22.  Mr Russell's argument however, bears analysing by reference to the third purpose.  To do this, it is useful to take an example away from this case.  A plaintiff may have contracted asbestosis and sued several defendants for damages.  He settles.  One of the defendants is or becomes financially unviable and cannot pay its judgment sum.  This is significant because asbestosis is a divisible disease and a plaintiff cannot recover the whole of his damages against each defendant.  He can recover against each defendant only that portion of his damage which each defendant caused.  The financially unviable defendant is dependent on cross-claims it has brought to satisfy its judgment.  A Contributions Assessor has made determinations in respect of all defendants.  If one of the cross-defendants to the cross-claim of the financially unviable defendant disagrees with the settlement figure and refuses to pay its share of the figure as determined by the Contributions Assessor, there will be a shortfall to the plaintiff.  In this instance, that cross-defendant, in my view, must be bound by the determination of the Contributions Assessor and the settlement figure.  That determination is binding, "for the purposes of settlement ... and payment of the plaintiff's damages."

23.  In my view, this approach must be universal and not limited to cases like the example I have used.  Indeed, the problem in the example I have used was exposed in the course of one of Mr Russell's submissions.  He acknowledged his client's willingness to pay four per cent of $405,000 and indicated his client would not stand in the way of the plaintiff receiving his money, "from anyone who wants to pay it".  Whilst it seems to me that the problem does not arise in this case, because the plaintiff can recover his full damages from defendants he has sued, if the problem does arise there is a potential shortfall.  The problem in this scenario is that if every defendant is willing to pay what the Contributions Assessor has determined and no more, the plaintiff will receive full contributions from all defendants bar Amaca.  In respect of the Amaca contribution there will be a shortfall.  That can be made up in one of two ways:  (1) one or more of the defendants, other than Amaca, may be willing to make up the shortfall; (2) an order can be made for Amaca to pay as sought by Eraring.  The matter cannot be left with the first alternative.  That would mean that if no defendant was willing to make up the shortfall, and if Mr Russell's submission is correct, there will indeed be a shortfall for the plaintiff.  That would be a case of the contributions assessment not being, "binding on the defendants for the purposes of settlement ... and payment of the plaintiff's damages".

24.  Accordingly, in my view, no defendant can escape the effect of the contributions assessment by taking the view that the amount of the plaintiff's damages is not appropriate.  That could certainly not be done if the plaintiff's damages were a result of judicial determination.  It makes no difference in my view, if the plaintiff's damages are the result of a settlement.

25.  At this point, it is worth recalling that the system set up by the Regulation is a rough and ready one.  In this case its purpose is to ensure payment of the plaintiff's damages and that can be done with certainty only if all defendants are bound to the settlement figure and to the Contribution Assessor's determination.

26.  A defendant who disagrees with the amount of the plaintiff's damages and who, as a result, disagrees with the contribution it is required to pay, may subsequently have the issue determined by the Tribunal.  There are costs penalties for not "materially improving" the position, but that is part of the process.  It does not support an interpretation of the Regulation that it is not binding in this situation.

27.  One of the submissions put by Mr Russell was that cl 52(1) could not bind a defendant where it was not a party to a settlement with the plaintiff.  Mr Russell correctly pointed out that a settlement is a contract and his client was not a party to the contract of settlement.  I do not think this affects cl 52(1).  That clause does not require all defendants to be parties to the settlement.  It speaks of "the settlement ... of the plaintiff's claim".  It is in the nature of cases in the Tribunal with multiple parties that not all parties will necessarily agree on percentage contributions or on an amount of the plaintiff's damages.  The clause does not depend for its binding effect on all defendants being parties to the settlement.  The clause speaks of settlement of the plaintiff's claim.  It does not speak of settlement with all parties to the litigation.  This case demonstrates that a plaintiff's case may be settled without all parties to the litigation being parties to the settlement.  The clause does not depend for its operation on all parties to the litigation being parties to the settlement.

28.  Machinery for settling the plaintiff's claim with multiple defendants is provided in Div 7.  It provides for the selection of a Single Claims Manager.  Clause 60(1) provides that the SCM is to "negotiate" resolution of the plaintiff's claim.  Mr Russell submitted that did not include "settle" the plaintiff's claim.  That may be, but I think this is covered by cl 62(4).

29.  Clause 62(4) provides:

Each defendant is taken to authorise the SCM to settle the matter with the plaintiff both informally and at any formal mediation.

30.  In relation to this, Mr Russell submitted that that authority to settle is subject to having instructions that would bind in the same way a barrister has authority to settle.  This does not mean that an SCM may not settle with a plaintiff if he exceeds his authority.  A barrister may exceed the authority given to him by a client and still effect a settlement with his opponent.  The client's remedy, if any, then is against the barrister.  Further, an SCM operates in the context of multiple defendants where as in this case, it may be impossible to get agreement amongst all defendants.  The SCM's authority to settle cannot have to await and be dependent on all defendants agreeing and then giving the SCM authority to settle.  Many plaintiffs with mesothelioma could well die waiting for defendants to sort themselves out and this was one of the very things the CRP was designed to avoid.

31.  The authority to settle given to the SCM is not to be limited as submitted by Mr Russell, nor, it seems to me, contrary to Mr Russell's submission, had the role of the SCM ceased.  Clause 63(3)(b) provides:

The role of the SCM concludes:

…

(b)  if the plaintiff’s claim is not settled before mediation of the claim is required to be completed—when the parties or the defendants reach agreement on which issues are in dispute between them or conclude their efforts to reach agreement.

32.  It is not clear to me that the plaintiff's claim did not settle before mediation was required to be completed.  That was required to be completed within 60 business days after service of the plaintiff's particulars on the last of the original defendants - cl 33(1)(b).  I do not have evidence as to when this service was effected.  It may be then that cl 63(3)(a) rather than (b) applies, in which event, the role of the SCM continued up until the final implementation of the settlement.

33.  Even if the plaintiff's claim did not settle before the mediation was required to be completed, that does not mean that the role of the SCM was concluded.  Cl 63(3)(b) provides in this instance when it is that the role of the SCM is concluded.  It is concluded:

…when the parties or the defendants reach agreement on which issues are in dispute between them or conclude their efforts to reach agreement.

34.  The parties reached agreement on the issues in dispute but they had not concluded their efforts to reach agreement.  This is evident by what must have been subsequent negotiations and ultimate settlement.  The two items in cl 63(3)(b) are expressed as alternatives but I think they must both be satisfied.  This is because the second item, namely "conclude their efforts to reach agreement", is something that occurs either before or after the first item.  If it occurs before the first item, then there is no need to introduce the second item in the clause.  It must be included in the clause to cover the case of parties continuing to negotiate after the conclusion of the mediation.  The role of the SCM therefore continues until the parties "conclude their efforts to reach agreement".  In this case, therefore, the role of the SCM was still continuing up until settlement.

35.  In any event, I do not think it matters whether the role of the SCM was still continuing when the plaintiff reached agreement to settle his case with the three defendants.  Right up until the time of reaching agreement he and one or more of the three defendants negotiated towards a settlement and ultimately settlement was achieved.  Clause 52(1) does not depend for its effect and operation on the negotiations being undertaken with the SCM.  It operates, "for the purposes of the settlement ... and payment of the plaintiff's damages".

36.  For reasons I have expressed, Amaca is bound by the determination.  There is no dispute that if it is so bound then it is required to pay four per cent of $475,000 and I shall make an order accordingly. 

37.  It is plain, however, that Amaca is bound only on an interim basis.  Any outstanding disputes between defendants may still be determined by the Tribunal.  In the agitation of such disputes, the amount of $475,000 as an appropriate figure for settlement of the plaintiff's claim may be very much in issue.  In this regard, I reject Eraring's submission that Amaca was unreasonable in imposing any limit in respect of the settlement figure.  I do so for three reasons:  (1) this submission really does not meet the point of Mr Russell's submissions in this case, (2) it cannot be my role on this application to enter upon an inquiry as to what an appropriate figure was or whether Amaca’s conduct was unreasonable, (3) in any event, no evidence has been offered as to whether $475,000 or $405,000 or any other figure between or outside those figures is an appropriate figure, and it my be that all defendants, other than Amaca, were unreasonable in their settlement.

38.  For reasons I have expressed, I make an order in accordance with the form of order handed to me which I sign and date today.

AMENDMENTS:

07/03/2011 - typographical error - Paragraph(s) 19