Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd - [2001] NSWCA 461

NEW SOUTH WALES COURT OF APPEAL

CITATION: Rolls Royce Industrial Power (Pacific) Limited (Formerly John Thompson (Australia) Pty Limited) v James Hardie & Coy Pty Limited; James Hardie & Coy Pty Limited v The State of New South Wales; James Hardie & Coy Pty Limited v Rolls Royce Industrial Power (Pacific) Limited (Formerly John Thompson (Australia) Pty Limited) [2001] NSWCA 461

FILE NUMBER(S):
40851/99
40852/99
40432/00

HEARING DATE(S): 2 - 4 October 2001

JUDGMENT DATE: 12/12/2001

PARTIES:
Rolls Royce Industrial Power (Pacific) Limited (Formerly John Thompson (Australia) Pty Limited) - Appellant/Respondent/Opponent
James Hardie & Coy Pty Limited - Appellant/Respondent/Claimant
The State of New South Wales - Respondent
Electricity Commission of New South Wales - Respondent

JUDGMENT OF: Stein JA Fitzgerald AJA Davies AJA

LOWER COURT JURISDICTION: Dust Diseases Tribunal

LOWER COURT FILE NUMBER(S): DDT 34/94

LOWER COURT JUDICIAL OFFICER: Curtis J

COUNSEL:
P Hall QC/Ms D Stewart/R Dalgleish - Rolls Royce - Appellant/Respondent/Opponent
F M Douglas QC/G M Watson - James Hardie - Appellant/Respondent/Claimant
J M Ireland QC/J Burn - The State of New South Wales - Respondent
V Goldrid - Electricity Commission of NSW - Respondent

SOLICITORS:
Hunt & Hunt - Rolls Royce - Appellant/Respondent/Opponent
Allens Arthur Robinson - James Hardie - Appellant/Respondent/Claimant
Crown Solicitor - The State of New South Wales - Respondent

CATCHWORDS:
TORT - negligence - mesothelioma - contribution - s 5 Law Reform (Miscellaneous Provisions) Act 1946 - claim by employer for contribution by manufacturer and supplier - no warning of danger given - claim against State of New South Wales - premises inspected by State - whether inspectors subject to control by State - whether State had knowledge of danger and failed to adequately protect workers
TORT - negligence - indemnification - exemption from liability - s 5(2) Law Reform (Miscellaneous Provisions) Act 1946 - whether exemption power available where both tortfeasors independently at fault - whether discretion miscarried
TORT - liability - contribution - apportionment - comparison of culpability - whether trial judge's discretion miscarried - whether apportionment unreasonable - whether employer entitled to a complete indemnity - independent tortfeasors - whether manufacturer had an overriding duty - inherently dangerous product
COSTS - party successful on one aspect of case - whether issue raised reasonably - whether proper exercise of discretion
COSTS - Calderbank letter - change of circumstance - cross-claim filed after Calderbank letter
PROCEDURE - leave to amend cross-claim refused - when discretion exercised unreasonably - 'relevant period' extended - no relevant cross examination - no pre-trial inquiry and preparation - whether qualified as a point of law under s 32 Dust Diseases Tribunal Act
PROCEDURE - previous settlement of related action - whether settlement amounted to binding admission - whether Tribunal bound by apportionment figures - whether settlement can affect third party proceedings - D

LEGISLATION CITED:
Dust Diseases Tribunal Act 1989
Law Reform (Married Women & Tortfeasors) Act 1935
Law Reform (Miscellaneous Provisions) Act 1946
Limitation Act 1969
Limitation Act 1939 (UK)
Sale of Goods Act 1923
Scaffolding and Lifts Act 1902

DECISION:
See paragraph 152 for orders

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40851/99
CA 40852/99
CA 40432/00
DDT 34/94

STEIN JA
FITZGERALD AJA
DAVIES AJA

Wednesday, 12 December 2001

ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LIMITED (FORMERLY JOHN THOMPSON (AUSTRALIA) PTY LIMITED) v JAMES HARDIE & COY PTY LIMITED
JAMES HARDIE & COY PTY LIMITED v THE STATE OF NEW SOUTH WALES
JAMES HARDIE & COY PTY LIMITED v ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LIMITED (FORMERLY JOHN THOMPSON (AUSTRALIA) PTY LIMITED)
The court heard, in effect, two appeals and an application for leave to appeal. They arose out of an action by Mr Warren Hay, who had contracted mesothelioma as a result of exposure to asbestos dust and fibre when employed as a fitter’s assistant in the construction of Wallerawang Power Station for what is now Pacific Power. His employer, John Thompson Australia Pty Ltd was the head contractor and is now Rolls Royce Industrial Power (Pacific) Limited (Rolls Royce). Mr Hay sued Rolls Royce and Pacific Power in the Dust Diseases Tribunal, with the principal action settled for a total verdict of $370 000, being divided equally between Rolls Royce and Pacific Power.
Both Rolls Royce and Pacific Power pressed cross-claims against James Hardie and Coy Pty Limited (James Hardie) for contribution under s5 of the Law Reform (Miscellaneous Provisions) Act 1946 because the asbestos products which Mr Hay was exposed to were manufactured, sold and supplied by James Hardie without any warning as to its toxic potential. Pacific Power settled it’s cross-claim against James Hardie, with James Hardie paying a sum equal to 70% of Pacific Power’s liability to Mr Hay. Consequent upon this settlement being entered as a judgment, James Hardie sought contribution from Rolls Royce for its liability to Pacific Power, as well as further claiming contribution from the State of NSW on the basis that NSW had knowledge of the danger to which Mr Hay was exposed and did not adequately exercise its powers to protect him. Rolls Royce’s cross-claim against James Hardie continued, and was amended in December 1996 to include a claim for damages for breach of contract in relation to the sale of the asbestos products. Curtis J extended time under the Limitation Act 1969 to permit the bringing of the contract claim. This decision is an issue on appeal.
At trial, Curtis J dismissed the contract claims brought by Rolls Royce against James Hardie, and found that both Rolls Royce and James Hardie were in gross breach of their duty of care to Mr Hay. The apportionment of responsibility was found to be equal between Rolls Royce and James Hardie, and a net verdict was entered in favour of Rolls Royce against James Hardie for the sum of $37,750. James Hardie was ordered to pay Rolls Royce’s costs with the exception of the contract claim, and this is the subject of the leave application. Curtis J found that NSW was not liable to Mr Hay and even if it had been, held that it was not just and equitable that it should contribute to the liability of James Hardie.
In its appeal against James Hardie, Rolls Royce sought a complete indemnity under s5 of the Law Reform (Miscellaneous Provisions) Act 1946 or, alternatively, a contractual indemnity arising out of the supply contracts. James Hardie contended that the extension of time for Rolls Royce’s bringing of a contract claim was beyond power. There are questions of costs in relation to a Calderbank letter and the bringing of the failed contract claim. James Hardie, in its case against NSW, submitted that the State had the power to control the risk producing activity and that a duty of care was owed to Mr Hay, as well as that although Curtis J found the plaintiff’s damage had resulted in part from the fault of NSW he held James Hardie wholly responsible. The State of NSW contended that Curtis J decided to ‘exempt’ the state from liability under s 5(2) Law Reform (Miscellaneous Provisions) Act 1946.
Held: Per Stein JA (Fitzgerald and Davies AJJA agreeing):
Rolls Royce v James Hardie

The extension of time granted by Curtis J under s60G of the Limitation Act 1989 in respect of the breach of contract claim by Rolls Royce was beyond power. The injury claimed by Rolls Royce was economic loss by reason of breach of contract, it was not an action for damages for personal injury. The words ‘for damages for personal injury’ require the identification of the loss for which the damage is claimed, and it is clear that the loss is economic.
- Unsworth v Commissioner for Railways (1958) 101 CLR 73 considered
- Ackbar v CF Green & Co Ltd [1958] 1 QB 582 considered
There was sufficient evidence for Curtis J to infer that Rolls Royce had actual knowledge of the dangers of asbestos dust at the relevant time. This inference was clearly open and made after a careful analysis of the evidence. His Honour’s discretion did not miscarry nor was the apportionment unreasonable or plainly unjust.
Asbestos products are not in themselves inherently dangerous products, rather it is the manner in which they are used or processed which creates the danger. It is unclear to what extent any such category of tort still survives. The proposition that James Hardie, due to the nature of the product, had an overriding duty to ensure that Rolls Royce took necessary steps to negate the risk, amounts to saying that James Hardies’ duty to Rolls Royce renders the negligence of Rolls Royce irrelevant.

- Putt v James Hardie & Co Pty Limited (1998) 43 NSWLR 554 applied
- Muller v Lalic [2000] NSWCA 50 considered

If Wynbergen v Hoyts Corporation Ltd (1997) 72 ALJR 65 is applied to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, then it is not possible to have a 100% contribution.

Curtis J undertook an orthodox exercise of discretionary power under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 to apportion liability. The evidence did not justify a 100% or complete indemnity.

The settlement between the two sole defendant’s to Mr Hay’s action cannot bind the apportionment with other tortfeasors. James Hardie was a tortfeasor who would, if sued, have been liable to Mr Hay. Matters pertaining to the settlement between Rolls Royce and Pacific Power cannot operate to bar James Hardie from seeking contribution from Rolls Royce. Curtis J assessed what was just and equitable between the tortfeasors present in the contribution proceedings before him. There was no error in his approach.

- Maxfield v Llewellyn (1961) 1 WLR 1119 applied

The filing of a cross-claim for contribution by James Hardie after the receipt of a Calderbank letter made by James Hardie to Rolls Royce constituted a relevant change of circumstance.

-              Gaskins v British Aluminium Co Ltd [1976] 1 QB 524 applied
-              Preotta v Times Newspaper Ltd [1991] 4 All ER 46 applied
-              Fowdh v Fowdh (Unreported, NSWCA 4 November 1993) per Mahoney JA applied

The principle referred to by Hodgson J in Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Unreported NSWSC, 3 June 1998), that a successful party gets their costs where an issue has been raised reasonably and was not disproportionate to the case as a whole, was not inconsistent with Curtis J’s earlier statement about the costs of severable claims.
James Hardie v The State of New South Wales
The exercise of his Honour’s discretion in refusing the application to amend the cross-claim of James Hardie to extend the relevant period up to November 1961 did not miscarry.
Curtis J was purporting to exercise the exemption power under s 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946. The discretion is a very wide one and should not be construed so as to be subject to a limitation which is not apparent in the ordinary meaning of the words conferring the power. No miscarriage of discretion by his Honour is revealed, particularly when read in light of the findings made about the extreme culpability of James Hardie. It was open to his Honour to exempt the State of NSW from contribution.
There is no principle of law that where two tortfeasors are independently at fault, there can never be a complete indemnity or exemption.

-              Ryan v Fildes [1938] 3 All ER 517 considered
-              Higgins v William Inglis & Son Pty Ltd [1978] 1 NSWLR 649 considered
-              Sherras v Van der Maat (1989) 1 Qd R 114 considered
-              Ward Enterprises Pty Ltd v Ahern [2000] NSWCA 184 considered
-              K v P (J third party) [1993] Ch 140 distinguished

Per Fitzgerald AJA:

The principles that restrict an appellate court’s power to review a trial judge’s decision on apportionment have been repeatedly reaffirmed. It is insufficient for an appellant to persuade an appeal court that the trial judge’s apportionment is different from that the appeal court would have decided. An appeal court is not entitled to interfere if the trial judge’s apportionment is reasonably open.

- Dunnet v Brennan [2000] NSWCA 211 applied
- Fitzgerald v Dansey [2001] NSWCA 339 applied

As Rolls Royce received less on its claim for contribution and overall than offered by James Hardie in a Calderbank letter, and James Hardie succeeded in its contribution claim, James Hardie was entitled to the costs of the contribution proceedings between it and Rolls Royce.
Orders:
Rolls Royce Industrial Power (Pacific) Limited (formerly John Thompson (Australia) Ltd) v James Hardie & Coy Limited [CA 40851/99]
Appeal dismissed with costs
James Hardie & Coy Pty Limited v The State of NSW [CA 40852/99]
Appeal dismissed with costs
James Hardie & Coy Pty Limited v Rolls Royce Industrial Power (Pacific) Limited (formerly John Thompson (Australia) Ltd) [CA 40432/00]
Leave to appeal refused with costs
IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
CA 40851/99
CA 40852/99
CA 40432/00
DDT 34/94
STEIN JA
FITZGERALD AJA
DAVIES AJA
Wednesday, 12 December 2001
ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LIMITED (FORMERLY JOHN THOMPSON (AUSTRALIA) PTY LIMITED) v JAMES HARDIE & COY PTY LIMITED
JAMES HARDIE & COY PTY LIMITED v THE STATE OF NEW SOUTH WALES
JAMES HARDIE & COY PTY LIMITED v ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LIMITED (FORMERLY JOHN THOMPSON (AUSTRALIA) PTY LIMITED)
JUDGMENT
STEIN JA :
Introduction
In effect the court is hearing two appeals. One by Rolls Royce against James Hardie, and the second by James Hardie against the State of New South Wales. Also before the court is an application by James Hardie for leave to appeal on costs.

The litigation

The appeals arise in this way. The plaintiff, Mr Warren Hay, contracted mesothelioma as a result of exposure to asbestos dust and fibre between 1958 and 1961. He was then employed as a fitter’s assistant in the construction of the Wallerawang Power station for what is now styled Pacific Power. His employer, John Thompson Australia Pty Limited was the head contractor and is now Rolls Royce Industrial Power (Pacific) Limited (Rolls Royce). The plaintiff sued Rolls Royce and Pacific Power in the Dust Diseases Tribunal. On 27 June 1994 his principal action was settled and a judgment entered in his favour against Pacific Power in the sum of $185,000 and also against Rolls Royce in the same sum, ie a total verdict of $370,000.
Before this judgment was entered, Rolls Royce had filed a cross-claim against Pacific Power seeking contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (the Act). This claim was dismissed by consent orders also filed on 27 June 1994.
Thereafter, both Rolls Royce and Pacific Power pressed cross-claims against James Hardie and Coy Pty Limited (James Hardie) for contribution under s 5 because the asbestos products to which the plaintiff was exposed were manufactured, sold and supplied by James Hardie to Rolls Royce without any warning as to the toxic potential of asbestos dust.
Pacific Power’s cross-claim against James Hardie was settled on 24 June 1999. Judgment was directed in favour of Pacific Power against James Hardie in the sum of $129,500, being 70% of Pacific Power’s liability to the plaintiff. Rolls Royce’s cross-claim against James Hardie was not settled but continued.
On 13 December 1996 the cross-claim by Rolls Royce against James Hardie was amended to include, in addition to a s 5 claim for contribution, a claim for damages for breach of contract in relation to the sale of the asbestos products by James Hardie to Rolls Royce. The Sale of Goods Act 1923 was also relied upon. His Honour extended time under the Limitation Act 1969 to permit Rolls Royce to bring the contract claim against James Hardie. This decision is in issue in the appeal.
Consequent upon suffering judgment in the cross-claim by Pacific Power, James Hardie claimed contribution from Rolls Royce under s 5 in respect of that liability.
Furthermore, James Hardie claimed a s 5 contribution from the State of New South Wales (NSW), alleging that NSW would, if sued by the plaintiff, have been found liable to him in negligence. In essence, the claim was that NSW had knowledge of the dangers to which the plaintiff was exposed and adequate power to protect him, yet unreasonably failed to exercise those powers.
Judgment of trial judge
In giving judgment on 15 October 1999, Curtis J dismissed the contract claims brought by Rolls Royce against James Hardie. His Honour found that James Hardie was in breach of its duty of care to the plaintiff and that its breach was gross. Rolls Royce was also found to be in breach of its duty of care to the plaintiff and his Honour embarked upon the task of apportionment between it and James Hardie. Curtis J concluded that apportionment of responsibility should be equal between James Hardie and Rolls Royce. On the mathematics, this meant that both of them were liable for $147,250 of the plaintiffs’ judgments totalling $370,000. His Honour noted that that was 39.8% of the total liability, while Pacific Power bore 15% of the liability and another party, Wallaby Grip (which had contributed $20,000) 5.4%.
In the result, his Honour entered a verdict of $37,750 in favour of Rolls Royce against James Hardie and ordered the latter to pay Rolls Royce’s costs of the hearing, with the exception of the costs of the contract claim, which he ordered that each party bear itself. This latter aspect of the costs order is in dispute, as is the disputed effect of a Calderbank letter.
His Honour then turned to the claim for contribution by James Hardie against NSW.
His Honour found that the relevant powers in the Scaffolding and Lifts Act 1902 as amended did not confer power on NSW to control the risk producing activity at Wallerawang. The statute conferred that power on inspectors, who were not subject to ministerial control or direction in the performance of their duties. Having dealt with the issue of breach of its statutory powers and obligations, his Honour turned to what he described as the ‘general law duty’. He said that if the correct approach was the ‘spectrum analysis’ of Kirby J in Pyrenees Shire Council v Day (1998) 192 CLR 330, then there were good reasons to impose a duty of care on the State, of which it was in breach. Further, that that breach was causative of the plaintiff’s injury and NSW, had it been sued by the plaintiff, would have been found liable.
However, on the other hand, his Honour said that if the correct approach was the incremental one referred to by Brennan CJ and McHugh J in Pyrenees, the result might well be different, but ‘because of my views on apportionment’ he found it unnecessary to decide the nature of any duty owed or its breach.
Turning immediately to apportionment, his Honour said that even if NSW should have been liable to Mr Hay (contrary to the finding) it was not just and equitable that it should contribute to the liability of James Hardie. His Honour added:
… James Hardie created a danger which the State merely failed to avoid. James Hardie made large profits from selling vast quantities of asbestos products heedless of the dangers to others which James Hardie knew to be created by the use of these products. Essentially James Hardie submit that a loss inevitably flowing from these commercial activities should be borne in part, not out of James Hardie’s profits or risk capital, but by the taxpayers of New South Wales. Such a result would in my opinion be neither just nor equitable having regard to the State’s responsibility for the damage.
Accordingly, his Honour entered judgment for NSW against James Hardie.

The appeals in summary

In its appeal against James Hardie, Rolls Royce claims to be entitled to a complete indemnity under s 5 in respect of the judgment entered against it in favour of the plaintiff. Alternatively, it claims to be entitled to a contractual indemnity arising out of James Hardie’s breach of implied terms in the supply contracts entered into between it and James Hardie.

It was submitted that when a comparative examination is made between the acts and omissions of each tortfeasor, the result should have been that contribution be to the level of full indemnity or that Rolls Royce should have been exempted from liability under s 5(2). Counsel for Rolls Royce, Mr Hall QC, sought to demonstrate from the evidence that the comparative culpability of James Hardie and Rolls Royce was such as must lead to a complete indemnity for his client.
In attacking his Honour’s findings of fact, Rolls Royce submit that there was no sufficient evidentiary basis to infer that it had actual knowledge of the dangers of asbestos dust during the relevant time. However, in so submitting, Rolls Royce conceded that it should have known, at least in general terms, of the dangers of asbestos dust. It conceded that it was guilty of negligence in not paying heed to the publicly available information. But, so it submitted, its failure fell short of gross negligence or recklessness.
Rolls Royce further submitted that the settlement between it and Pacific Power, made and entered as a judgment, resolved its cross-claim against Pacific Power. The settlement constituted binding admissions by each defendant that the apportionment of liability between them was 50/50. Accordingly, it was not open to Curtis J to contradict this apportionment, as he purported to do. Further, Rolls Royce contended that James Hardie was not permitted to bring contribution proceedings against it.
James Hardie submit that Rolls Royce cannot be entitled to a complete indemnity because both tortfeasors were independently at fault. It also argues that it was entitled to bring a contribution claim against Rolls Royce. The consent judgment in 1994 could not operate to bar any claim against Rolls Royce for contribution by James Hardie as it was against Rolls Royce in favour of Mr Hay. Rolls Royce’s liability to the plaintiff under the 1994 judgment satisfied the second limb of the statute.
In relation to Rolls Royce’s claim concerning the calculation of apportionment of damages, James Hardie submits that Rolls Royce has ignored the realities of multi-party litigation. The calculations were a product of how the litigation was conducted.
So far as the contract claim of Rolls Royce is concerned, James Hardie submits that it was statute-barred and that his Honour’s purported extension of time to bring the claim was beyond power. Alternatively, it submits that Rolls Royce’s actual knowledge of the dangers of asbestos dust, as found by his Honour, defeats the claim for any implied warranty. Additionally, it contends that even if a breach of a contractual warranty by James Hardie was found, Rolls Royce would only be entitled to nominal damages only.
There are also two disputes as to the costs awarded by his Honour. One concerns the effect of a Calderbank letter and the other the costs related to the failed contract claim.
In its case against the State, James Hardie submit that his Honour was wrong to find that NSW lacked governmental control over the construction of the power station at Wallerawang. On the contrary, it had the power to control the risk producing activity and its inspectors were subject to control by the State. The case was decided by his Honour prior to the High Court decision in Crimmins v SIFC (1999) 74 ALJR 1 and the later case of SIFC v Gibson [2000] NSWCA 179 in the Court of Appeal. James Hardie submits that, in accordance with Crimmins and Gibson, the knowledge of the inspectors could be imputed to the State, or at the least, it ought to have known of the dangers at Wallerawang and that this was sufficient to create a duty of care.
James Hardie also attack his Honour’s conclusion on apportionment. It says that his Honour took into account irrelevant considerations, or accorded them undue weight. Also, he failed to take account of relevant considerations. In effect, James Hardie submit that his Honour held James Hardie wholly responsible for the plaintiff’s damage, even though he found that the plaintiff’s damage had also resulted from the fault of the State. The power of complete indemnity or exemption in s 5(2) could not justify his Honour’s decision, although in its written submissions James Hardie submitted that Curtis J did not in fact purport to exercise the exemption power.
James Hardie submits that, as between it and NSW, an order for 50/50 apportionment would be appropriate.
The State says that there is no finding by his Honour that it was reasonably foreseeable by it that a failure to exercise its statutory powers would result in injury to Mr Hay. Indeed, they are to the contrary. Unlike Crimmins, there is no analogy between the State’s powers and the control exercised by the employer over the workplace conditions. Thirdly, this was not a case like Pyrenees, where the State had embarked upon the exercise of statutory powers but left that exercise uncompleted.
As to James Hardie’s attack upon his Honour’s conclusion on apportionment, NSW submits that it is not permissible in light of s 32 of the Dust Diseases Tribunal Act 1989 because there cannot be said to be an error of law in his Honour’s discretionary judgment.
NSW submits that Curtis J in fact decided to ‘exempt’ the State from liability to make contribution within the first limb of the concluding words of s 5(2). The exemption discretion is in unrestricted terms. Indemnification or exemption under s 5(2) is not limited to cases where there is no independent fault. The court’s discretion is unconfined by James Hardie’s suggested criterion of independent fault.
There is also dispute about the amendment of James Hardie’s claim against NSW, which was refused by the trial judge.
Rolls Royce v James Hardie
Was the contract claim statute-barred?
Although his Honour dismissed Rolls Royce’s claim in contract, James Hardie have filed a Notice of Contention seeking that his Honour’s decision should be affirmed on additional grounds. The first is that the contract claim was statute-barred and that his Honour had no power to extend the time in which to bring that claim.
The application by Rolls Royce to extend the time in which to bring its claim in contract arose in the following circumstances. On 3 June 1994 Rolls Royce filed a cross-claim against James Hardie for contribution or indemnity under s 5. This was a claim alleging tortious conduct (negligence) by James Hardie in relation to the verdict which Rolls Royce had accepted on 27 June 1994 be entered against it for $185,000.
On 13 December 1996 Rolls Royce filed an amended cross-claim which added paragraphs 10 – 31. These paragraphs sought to raise a cross-claim for damages for breach of contract. Rolls Royce conceded that the claim was out of time and sought an extension.
On 17 December 1996 his Honour granted Rolls Royce an extension of time to bring the contract claim, purportedly under s 60G of the Limitation Act 1989.
It is important to examine the pleading. The relevant paragraphs set up a series of contracts between the parties between 1955 and 1961 for the supply of a large quantity of asbestos products by James Hardie. These products were manufactured by James Hardie and used by Rolls Royce in the construction of the power station. The pleading proceeds to allege certain implied warranties and implied terms and conditions in the contracts, including Sale of Goods Act implied conditions, and their breach by James Hardie.
Paragraph 28 states that:
The Cross-Claimant, having been adjudged liable to the Plaintiff, suffered damage by reason of the breach of the said implied terms and conditions of the Contracts for Sale and the Cross-Claimant claims from the Cross-Defendant an Order for damages for breach of contract to the extent of indemnifying it against the damages it has been made liable for against the Plaintiff and the further relief set out in paragraph 31.
The amended cross-claim concludes with paragraph 31 which claims ‘damages for breach of contract’ which include the damages judgment which it consented to in favour of the plaintiff, as well as interest and the costs incurred by Rolls Royce in contesting the plaintiff’s claim.
Prima facie, the applicable limitation period for a cause of action founded on contract is 6 years from the date on which the cause of action first accrued, see s 14 of the Limitation Act. However, s 18A is to be noted. It employs the same language as s 60G, but limits the time within which a cause of action for personal injury is brought to 3 years.
Section 60G(1) applies to ‘a cause of action … founded on negligence, nuisance or breach of duty, for damages for personal injury …’.
The simple argument of James Hardie is that the claim for damages for breach of contract was not a claim ‘for damages for personal injury’ but rather a claim for damages for economic loss, where the measure of damages happened to be calculated in part by reference to the moneys paid by Rolls Royce in settlement of the plaintiff’s claim against it for damages for his personal injury.
Before turning to the authorities, it is useful to examine other relevant provisions in the Limitation Act. It will be observed that s 60G (and other provisions) include the words ‘breach of duty’ and that this is defined in s 11 as follows:
Breach of duty, when used in relation to a cause of action for damages for personal injury, extends to the breach of any duty (whether arising by statute, contract or otherwise) and includes trespass to the person.
Section 14, which deals with the general limitation period in contract and tort of 6 years, does not apply to an action for contribution under s 26. This provision, relating to a claim for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act, contains its own limitation periods. From his Honour’s judgment of 17 December 1996 it appears that the extension of time application was not brought under s 26 and that Rolls Royce was out of time against James Hardie to claim contribution. However, s 60K makes it plain that an extension granted under s 60G extends any associated contribution action under s 26.
This conclusion is understandable when one looks to the pleading. Unlike paragraphs 1 – 9, paragraphs 10 – 31 are not a claim for contribution or indemnity under s 5, but a claim for damages for breach of contract ‘to the extent of indemnifying it [Rolls Royce] against the damages it has been made liable for against the plaintiff …’.
Rather, the application for an extension of time was in respect of what the Limitation Act terms an ‘Ordinary Action’.
I have already referred to s 60G. Provisions pertinent to s 60G are s 60I and cl 4 of Schedule 4.
In granting the extension of time to bring the contract claim, his Honour’s conclusions appear to be that s 60G includes a derivative action for economic loss and that the phrase ‘damages for personal injury’ in the section are sufficiently broad to cover damages for breach of contract concerning the moneys Rolls Royce paid to the plaintiff for his personal injury.
Unsworth v Commissioner for Railways (1958) 101 CLR 73 is of some assistance. Fullagar J (at 86) noted a submission of the appellant that his claim for contribution was not an action to recover damages in respect of personal injury within the meaning of the relevant legislation. His Honour said that the submission was right. He added (at 87) that:
… the natural reading of the words “action brought to recover damages or compensation in respect of personal injury” is to read them as referring to personal (i.e. physical) injury to the plaintiff himself or herself. …
Taylor J said (at 91):
The next question is whether the appellant’s claim against the commissioner was “an action to recover damages in respect of personal injury”. Clearly it was not. …
Unsworth, although distinguished in Genders v GIO (1959) 102 CLR 363 and GIO v Crittenden (1966) 117 CLR 412 in circumstances where a claim is made under an insurance policy indemnifying the claim ‘in respect of’ damage from personal injury, has been applied. See, for example, Smart J in Yates v Costain Australia Ltd (1989) 18 NSWLR 312 at 315 and earlier by Isaacs J in Spain v Metropolitan Meat Industry Board [1971] 1 NSWLR 91 at 99 - 100.
While Unsworth deals with different legislation and not with the present question of an action for damages for breach of contract under the Limitation Act, some assistance is derived from the approach of Fullagar and Taylor JJ by analogy with the present case. Genders and Crittenden on the other hand are concerned with when ‘for’ may be read as equivalent to ‘in respect of’ accidental bodily injury. I do not see that these authorities assist in the present context. Section 60G is concerned with claims for damages ‘for’ personal injury not ‘in respect of’ personal injury.
Ackbar v CF Green & Co Ltd [1975] 1 QB 582 although from England, is also helpful. The plaintiff, who was injured while a passenger in his own motor vehicle, sued his insurance brokers for damages for breach of contract for failing to obtain insurance. It was held that the measure of damages claimed did not consist of or include damages for personal injury. Croom-Johnson J noted that the claim was in contract and was a derivative one. The legislation under consideration, the Limitation Act 1939 (UK), contains words which, although different, are analogous to s 60G. At 588 his Honour posed the question: What is this action all about? The answer was that it was about an alleged breach of contract as a result of which the plaintiff lost the chance to recover his loss from the driver. That was not damages in respect of personal injuries.
Further, when an examination of the history of the introduction of s 60G into the Limitation Act in 1969 is undertaken, it is apparent that it is directed to personal injury claims by injured persons and not to claims for economic loss by third parties where that loss happens to consist, in whole or part, of damages for personal injury.
This construction of s 60G is assisted by the stated purpose in s 60F of the particular subdivision of the Act. It is to provide a procedure for ‘a further discretionary extension … where the plaintiff was unaware of the … cause of injury …’. Further, the sorts of discretionary factors to be considered by a court set forth in s 60I (referring back to s 60G), all concern a plaintiff’s situation of awareness.
Rolls Royce’s contention that s 60G may include a contract claim, such as the present, may have unforeseen consequences. For example, if a solicitor was sued for professional negligence in allowing a personal injury claim to get out of time, the limitation period would be 3 years (under s 18A) and not 6 years under s 14.
His Honour placed reliance on the definition of ‘breach of duty’ in s 11 as encompassing contract. However, the definition is directed to when the words are ‘used in relation to a cause of action for damages for personal injury’ and it is to be applied unless the context or subject matter otherwise indicate or require. Section 60G does not refer to a cause of action for damages for personal injury but to a cause of action ‘founded on negligence, nuisance or breach of duty, for damages for personal injury’.
In any event, even if the claim in contract is for ‘breach of duty’, it is still a claim for damages for breach of contract and not a claim for damages for personal injury. The injury to Rolls Royce was the economic loss suffered by reason of the breach of contract. It was not an action for damages for personal injury. The words ‘for damages for personal injury’ require the identification of the loss for which the damages are claimed. When this is done, it is clear that the loss is an economic one and not damages for personal injury.
Accordingly, it is my opinion that his Honour erred in granting the extension of time as he lacked the power to do so. The amendment to add the contract claim was impermissible. It follows that it is not strictly necessary to consider whether his Honour was correct to reject the claim in contract at the trial.
It also follows that it is unnecessary to consider James Hardie’s further Notice of Contention points regarding the contract claim. Nor to consider his Honour’s rejection of the contract claim itself, although I am of the opinion that Curtis J was correct to reject it.
Rolls Royce’s contribution claim against James Hardie
It is appropriate to start with the obvious statement that to set aside an apportionment of liability under s 5, it must be shown that the failure to properly exercise the discretion involved an apportionment which was unreasonable or plainly unjust, Oxley City Council v MacDonald [1999] NSWCA 126 at [55] referring to House v The King (1936) 55 CLR 499 at 525.
As Hayne J reminded us in Wynbergen v Hoyts Corporation Ltd (1997) 72 ALJR 65 at 68, the task involves comparison of the culpability of the parties and the relative importance of the acts of the parties in causing the damage. Further, the whole conduct of the each negligent party must be subjected to comparison, (Podrebersek v AIS (1985) 59 ALJR 492 at 494).
In Podrebersek the court said (at 493 – 494):
A finding on a question of apportionment is a finding upon a “question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds”.
The High Court recently reiterated this approach in Liftronic Pty Limited v Unver [2001] HCA 24 at [2], [33] and [64]. Kirby J noted the obviously very wide discretion in s 10 (cf s 5). The repository of power was the primary decision-maker and not the appellate court. His Honour referred to what was said in British Fame (Owners) v Macgregor (Owners) [1943] AC 197 at 201, endorsed by the court in Podrebersek.
To this brief discussion I should add a reference to James Hardie v Roberts [1999] NSWCA 314 at [89] – [92], per Sheller JA.
Curtis J found James Hardie to be a tortfeasor who would, if sued by the plaintiff, have been liable to him. James Hardie was in breach of its duty of care to Mr Hay in various ways and its breach was found to be causative of his injury. He described the breach as gross.
His Honour considered the responsibility of Rolls Royce. It was found to be in breach of its non-delegable duty as the employer of the plaintiff. Senior management of Rolls Royce were in breach of a duty to inform its supervisors at Wallerawang of the dangers of asbestos. Further, it was in breach of its statutory obligations under Regulation 73 of the Scaffolding and Lifts Act. Indeed, the conduct of Rolls Royce ‘fell far short of the standards expected of a reasonable employer’. Importantly, his Honour found that Rolls Royce had actual knowledge of the dangers of asbestos. The findings of knowledge by Rolls Royce were made in the context of a very detailed examination of the working conditions at Wallerawang. I will quote only one such finding that asbestos was ‘allowed to drift freely through the premises and accumulate on the floor only to be recirculated in the atmosphere’. Having noted the concession of Rolls Royce that it ought to have known of the dangers of asbestos, his Honour found that it was improbable that it did not actually know. It was most improbable that its design staff did not have actual knowledge of the dangers.
In an exhaustive analysis of the facts, Rolls Royce seeks to submit that there was insufficient evidentiary basis for his Honour to infer that it had actual knowledge of the dangers of asbestos dust at the relevant time. I would reject this. Rolls Royce is only able to appeal questions of law (s 32 Dust Diseases Tribunal Act). It is apparent that there was evidence upon which his Honour could draw the inference complained of and it may be noted that Rolls Royce conceded that it ought to have known of the dangers of asbestos. The inference drawn by his Honour was clearly open. It was made after a careful analysis of the evidence. In commenting on the failure of Rolls Royce to call any design staff, his Honour did not infringe Jones v Dunkel. His conclusion was only that their absence permitted an inference that it would not assist Rolls Royce in contending that it did not know of the risks of asbestos.

His Honour was engaged in a task involving weighing and balancing. Some may not agree with his emphasis on particular matters. Some may have come to a result other than 50/50 apportionment. However, that is not the point. His Honour found both parties in serious breach of their duties of care which each separately owed to the plaintiff and that the breaches of both were causative of the mesothelioma suffered by Mr Hay. I am unable to conclude that his Honour’s discretion miscarried. It cannot be concluded that the apportionment was unreasonable or plainly unjust.
His Honour’s conclusion was as follows:
Upon a consideration of facts as I have reviewed them, I cannot find myself actually persuaded that either Rolls Royce or James Hardie was more, or less, responsible for the damage than the other. It may be that the conduct of James Hardie was more blameworthy but as against that, John Thompson had actual control of the environment in which Mr Hay worked and its failures had greater causal potency. I believe it appropriate to apportion responsibility 50 per cent as against James Hardie and 50 per cent as against John Thompson.
Indemnity
However Rolls Royce’s principal submission is that it is entitled to a complete indemnity under s 5. Both Rolls Royce and James Hardie were found to be tortfeasors independently at fault. Most leading texts on Torts conclude that it is only in circumstances where a tortfeasor is himself blameless, that an indemnity can be recovered. See for example Trindade and Cane, The Law of Torts in Australia (2nd Ed at 737). RTA v Fletcher [2001] NSWCA 63 at [53] is an example where the court refused to indemnify a party against all liability since it was not blameless. The most obvious illustration is with vicarious liability, Lister v Romford Ice and Cold Storage Co [1957] AC 555 and see McGrath v Fairfield Municipal Council (1985) 156 CLR 672 at 679 – 680. The court added in McGrath (at 680):
Unless that interpretation of “indemnity” would give the Act an operation that Parliament could not have intended, we would construe s.2(3) of the Act as applying to an employee’s liability under s.5(1)(c) to contribute the whole of the damages for which his employer is vicariously liable. However, Glass J.A. is surely right in saying that the Act would have an absurd operation if personal negligence on the part of the employer, which would limit an employer’s rights under s.5(1)(c) to a contribution of something less than the whole of the damages, were to make the Act inapplicable. If that were the Act’s operation the employer, on proof of his own negligence, would acquire a right to recover contribution from an employee although he could not claim an indemnity. In our opinion, that is not the operation to be attributed to that Act.
In Sinclair v William Arnott Pty Limited (1963) 64 SR (NSW) 88 at 95 the Full Court said:
But the present case is not a case of that kind. It is not a case in which one party, although not guilty of any actual fault itself, is nevertheless legally liable for the consequences of the actual fault of the other party. Here each party is liable for its own negligence, and its liability does not arise from the negligence of the other. There is no relevant contractual or other relationship between the two parties which would render it just and equitable that, as between them, one should bear the whole burden and the other should be exonerated.
Other exceptions where a complete indemnity have been allowed include Edwards v Joyce [1954] VLR 216, where a servant or agent committed a tort in bona fide execution of orders, and Burrows v Riorden [1899] 1 QB 816, where the claimant’s complicity was procured by the other parties fraud. See also s 7 of the WA statute.
On behalf of Rolls Royce Mr Hall submits that James Hardie had an overriding duty to warn Rolls Royce and to ensure that it took the necessary steps to negate the risk. This overriding duty is said to arise because James Hardie was manufacturing an inherently dangerous product. In other words, Rolls Royce’s breach of duty to the plaintiff was directly caused by James Hardie. He submits that this should translate to 100% apportionment or something very close to it.
I cannot accept this proposition. It amounts, in effect, to saying that James Hardie’s duty to Rolls Royce renders Rolls Royce’s negligence irrelevant or it is somehow cancelled out. Asbestos products themselves are not inherently dangerous products, rather it is the way in which they are used or processed which creates the danger, see Putt v James Hardie & Co Pty Limited (1998) 43 NSWLR 554 at 565. We are not here dealing with raw asbestos. In any event, it is unclear to what extent such a category still survives, see Muller v Lalic [2000] NSWCA 50 at [33].
Further, if one applies Wynbergen, a contributory negligence case on s 10, to s 5, then one cannot have a 100% contribution. However, it must be conceded that it is not obvious that the reasoning of Hayne J in Wynbergen should be extended to contribution or indemnity under s 5.
In my view, what Curtis J was doing was an orthodox exercise of the discretionary power under s 5 to apportion liability. The facts as found, indeed the evidence as a whole, did not justify a 100% or complete indemnity or anything close to it. The court should not interfere with his Honour’s 50/50 apportionment.
Did settlement between Rolls Royce and Pacific Power bind the apportionment and was James Hardie able to claim contribution from Rolls Royce?
As mentioned earlier in these reasons, Rolls Royce and Pacific Power had settled in June 1994. Under the terms of the settlement, the two parties agreed to share the plaintiff’s judgment on a 50/50 basis.
It is submitted on behalf of Rolls Royce that this amounts to binding admissions by each defendant that the apportionment of liability between them was equal. Accordingly, it was not open to the Tribunal to contradict this apportionment between Rolls Royce and Pacific Power. It is maintained that the judgment did so because its split of 50/50 between James Hardie and Rolls Royce meant that the ultimate global apportionment or net result between all of the parties meant that Rolls Royce was liable for 39.8% but Pacific Power only 15%. Further, it is submitted that a 30/70 split between Pacific Power and James Hardie (by settlement) and a 50/50 split between Rolls Royce and James Hardie by his Honour, necessarily implied a 30/70 split between Pacific Power and Rolls Royce. But this, so it was said, directly contradicts the 50/50 split between Pacific Power and Rolls Royce arising out of the settlement. Rolls Royce accordingly submits that his Honour must have ignored the 50/50 settlement in June 1994 between Rolls Royce, Pacific Power and the plaintiff.
Furthermore, Mr Hall submits that as a pre-condition to a tortfeasor recovering contribution from another tortfeasor, the first tortfeasor had to be sued by the plaintiff and found liable to it by judgment or settlement. James Hardie was never a defendant and therefore never had its liability to the plaintiff determined. James Hardie accordingly did not qualify under s 5 to claim contribution against Rolls Royce. The appellant sought to demonstrate the alleged error by reference to some rather complex mathematics which I would require actuarial assistance to properly appreciate. It seems to me, however, that the result (of which Rolls Royce complains) arises out of the way in which the litigation was conducted and developed, including the various settlements.
Mr Hall candidly acknowledges that there is no authority that he knows of which supports his submission regarding James Hardie’s contribution claim against Rolls Royce. Further, he accepts that it is not uncommon for third parties to issue a third party claim in case liability is found against them.
Mr Hall highlights what he submits is the anomalous result in this case. However, as against that, it seems to me that it would be quite anomalous if a tortfeasor could not obtain contribution simply because of the plaintiff’s choice as to who he decided to sue as defendants. It would mean that a tortfeasor (who was not a defendant) but was joined by a defendant tortfeasor as a third party, could not join another tortfeasor and seek contribution.
In my opinion, the fact that the only defendants to the plaintiff’s claim (Rolls Royce and Pacific Power) agreed to equally share the plaintiff’s damages can not affect any third party proceedings or bind the apportionment exercise. The anomaly pointed to by Rolls Royce arose because it had entered into an agreement with Pacific Power when they were the only defendants to the plaintiff’s claim.
There is no doubt that James Hardie was a tortfeasor liable under s 5 for the plaintiff’s mesothelioma. If sued by the plaintiff, it would have been found to be liable. The essence of Pacific Power’s claim against James Hardie for contribution was proof of negligence by James Hardie as regards the plaintiff. Rolls Royce was also, according to James Hardie, a tortfeasor liable to the plaintiff by reason of the consent judgment in June 1994. I cannot see how matters pertaining to the settlement between Rolls Royce and Pacific Power can operate to bar James Hardie seeking contribution from Rolls Royce. The settlement of the plaintiff’s claim by Rolls Royce and Pacific Power does not prevent either of them from bringing a contribution claim against any other tortfeasor who would, if sued, have been liable, as indeed they did. Nor does it prevent any other tortfeasor, who would if sued have been liable, from bringing a contribution claim against any other tortfeasor who would if sued have been liable.
Simply put, the settlement between the two sole defendants, Rolls Royce and Pacific Power, cannot bind the apportionment with other tortfeasors. The task of the court is to assess what is just and equitable between the tortfeasors present in the particular contribution proceedings before the court. That is what his Honour did and I can see no error in his approach.
In particular, his Honour was correct to allow James Hardie to rely on its cross-claim for contribution against Rolls Royce.
The only relevant case cited to the court was Maxfield v Llewellyn (1961) 1 WLR 1119. The essence of the decision is that it is the duty of the court to apportion damages having regard to the parties before the court. Ormerod LJ noted a submission that the liability of anyone who could possibly be liable must be taken into account, including a possible defendant who was not a party to the action.
His Lordship said:
I think I should say here that this submission of Mr. King-Hamilton, interesting as it was, was not received with any very great sympathy by the various members of this court, and, indeed, it does appear, if the submission is right, to be a construction of the section which would give rise to many anomalies. That cannot be the proper construction of this section. It appears to me that the court must have regard to a person’s responsibility for the damage having regard to the parties who are before the court, whose share of the damage can be taken into account and who have had the opportunity of putting arguments for and against their share of blame and generally of being heard in the action. In those circumstances, for my part, I would reject Mr. King-Hamilton’s interesting submission and say that it is the duty of the court on finding more than one defendant liable to make an assessment of the contribution which each defendant should make according to his share of blameworthiness
.
Upjohn LJ was even more emphatic in his reasons for agreeing with Ormerod LJ, see 1123.
It follows from the above that the appeal of Rolls Royce should be dismissed.
The costs issues
James Hardie seeks leave to appeal on two aspects of his Honour’s decision as to costs.
The first question involves the effect of a Calderbank offer made by James Hardie to Rolls Royce on 4 June 1999. His Honour found that the offer was ineffective to protect James Hardie from costs. The offer was to pay Rolls Royce $129,500, being 70% of the amount which Rolls Royce paid to Mr Hay, and to also pay Rolls Royce’s costs of its cross-claim. The offer was open for 14 days but not accepted. Meanwhile a similar offer was made by James Hardie to Pacific Power, which was accepted on 24 June 1999.
On 22 July 1999 James Hardie gave Rolls Royce notice of its intention to claim from Rolls Royce contribution or indemnity under s 5 with respect to the $129,500 which it had paid to Pacific Power. On 16 August 1999 His Honour ruled that James Hardie was permitted to bring the claim, which ultimately succeeded to the extent of a 50% contribution.
His Honour said that overall Rolls Royce was the successful party. Accordingly, James Hardie was to pay its costs, excluding those relating to the contract claim. James Hardie argue that his Honour should have given effect to the Calderbank offer which Rolls Royce did not ‘better’. In rejecting James Hardie’s submission, his Honour said that Rolls Royce did not receive notice of the cross-claim by James Hardie in respect of the Pacific Power judgment until after the time for acceptance of the Calderbank offer had expired. This was a change of circumstance relevant to the discretion.
His Honour said that before the Calderbank offer expired, Rolls Royce did not have an informed opportunity to assess its chances because the cross-claim was brought at a later point of time.
I can see no error in his Honour’s decision on the failure of the Calderbank offer. The cross-claim by James Hardie was late and was not a circumstance at the time of the offer of 4 June 1999. Surely what must be relevant is the circumstances which exist at the time the offer is made? The cross-claim produced a change of circumstance which, if in existence as at 4 June 1999, would have been likely to have produced a different complexion to the litigation so far as Rolls Royce was concerned.
There is English authority which supports this – Gaskins v British Aluminium Co Ltd [1976] 1 QB 524 and Preotta v Times Newspaper Ltd [1991] 4 All ER 46. A similar stance was adopted by Mahoney AP in Fowdh v Fowdh (Unreported, NSWCA, 4 November 1993) cited by Curtis J.
Mahoney AP noted that after expiry of the offer and the time in which to accept it, two things emerged which significantly changed the situation.
He said:
… It is one thing for a plaintiff to present her evidence, make an offer of compromise, and to succeed at the trial on that evidence. In such a case, indemnity costs may be warranted. It is another thing for the plaintiff to present a case and make an offer of settlement, and then to succeed at the trial upon a relevantly different case. A plaintiff who has done that may not readily receive indemnity costs. I do not mean by this that minor differences between the case at offer and the case at trial will be of significance or that, if the difference be significant, a discretionary judgment for indemnity costs may not be given. But where the difference between the position at offer and the position at trial be as the Master assessed it to be, a decision to refuse indemnity costs may readily be understood.
See also Van Doore v Mendez (Unreported, NSWSC, 30 June 1997).
Whether Rolls Royce perceived the case as a test case does not alter the way in which the Calderbank offer should be viewed.
I can see no error by his Honour and would refuse leave to appeal on this aspect of the costs order made below.
The second aspect of costs which is in dispute concerns his Honour’s costs order which excepted the costs associated with the contract case brought by Rolls Royce, which James Hardie had succeeded upon, from the general costs order in favour of Rolls Royce. James Hardie argues that it should have been awarded the costs of that issue.
Curtis J referred to Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (Unreported NSWSC, 3 June 1998) and held that while the contract claim was clearly severable and Rolls Royce should not get its costs of the issue, it was not brought unreasonably and Rolls Royce ought not to have to pay James Hardie’s costs of the issue.
It is submitted that his Honour misapplied Hodgson CJ in Eq in Permanent Trustee in that the principle relied on, that the issue was raised reasonably and was not disproportionate to the whole case, was not relevant. It is claimed to be relevant only where multiple issues are raised by the successful party as alternative ways of supporting the claim.
Apart from the fact that the contract claim was an alternative way of supporting Rolls Royce’s claim, I do not see that the principle referred to by Hodgson J is inconsistent with the earlier statement about the costs of severable claims. His Honour was speaking in general terms. He said:
Apart from that consideration, in general terms I accept that if an issue is raised reasonably and is not disproportionate to the whole case, then normally the successful party should get his or her costs. However, particularly in relation to severable issues, the lesser the strength of the point raised and the greater the proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay the costs of that issue.
Again, I can see no error in his Honour’s approach or order. It was a proper and available exercise of the discretion. I would also refuse leave to appeal on this aspect of the costs order.
James Hardie v The State of New South Wales
Introduction
Pursuant to a claim for contribution under s 5, James Hardie sought to make the State of New South Wales liable. The essential basis of its claim was that the State, armed with various statutory powers and knowing of the dangers of asbestos, was in a position to prevent or minimise the risk of harm to Mr Hay through his exposure to asbestos at Wallerawang. It alleged that NSW failed in its duty to do so. Curtis J dismissed James Hardie’s claim. Before turning to the appeal of James Hardie against this dismissal, it is convenient to deal with a procedural issue which arose during the trial.
Refusal of amendment of James Hardie’s cross-claim
James Hardie sought leave to amend its cross-claim against the State to substitute the period of Mr Hay’s employment from 1953 to November 1961 from 1953 to 1958 (para 8). James Hardie submits that in refusing it the amendment on 11 August 1999, his Honour exercised his discretion so unreasonably as to warrant appellate intervention.
The amendment application arose in the following circumstances. On 21 June 1999 James Hardie informed the court that it had settled with Pacific Power. It then sought, and obtained, leave to amend the fourth cross-claim, as it then stood, on terms that James Hardie would be bound by particulars which it had previously given to NSW on 8 June 1999.
The leave which the court granted was exercised by James Hardie on 23 June 1999 when it included paragraphs 8 to 14 in the cross-claim against the State. Paragraph 9 introduced a new concept into the pleading, that of ‘the relevant period’, which period was stated to be between 1953 and 1958. James Hardie’s case against the State was postulated on NSW’s involvement at Wallerawang throughout that relevant period by reason of the activities of the Department of Labour and Industry and the Department of Public Health. It also relied on the co-existence of Elcom’s (Pacific Power) involvement in the construction of the power station during the same period.
On the eighth day of the trial (11 August 1999) the application to amend was made by James Hardie. It was first mentioned by James Hardie’s counsel after the conclusion of the cross-examination of Mr Trevor Jones from the Department of Health, who had visited the site in May 1958 and later reported on his visit. Rolls Royce had by then closed its case, having called three witnesses who gave evidence about the working conditions at Wallerawang, which overlapped with the period that the plaintiff worked there. James Hardie’s counsel opened at length but did not mention any amendment application and proceeded to call Mr Jones as its first witness.

No relevant cross-examination of any of the witnesses had been directed by NSW to any period after 1958. It is obvious that if the case had, from its outset, alleged that NSW was liable to the plaintiff up until November 1961, then the cross-examination would have been different. Further, the activities of the inspectors from the two government departments would have been pursued. The period between 1958 and 1961 would also have been subject of pre-trial inquiry and preparation by the State. The State may well have obtained information to cross-examine on events after 1958 and to call evidence of its own.
His Honour noted that senior counsel for NSW had indicated that forensic elections had been made in the preparation and conduct of the trial on the basis of the pleading and that such conduct may have been different if the longer period had been raised at the outset.
Bearing in mind the circumstances referred to earlier and that the trial had reached its eighth day, it cannot be said that his Honour’s discretion in refusing the amendment miscarried.
As there were weighty considerations in favour of refusal of the amendment, It was a proper exercise of the discretion. Granting an adjournment to NSW in exchange for the amendment was not a course that his Honour was bound to adopt in exercising his discretion. Nor does Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 require that the amendment should have been granted.
Although his Honour’s discretion has not been shown to have miscarried, it also needs be said that it is difficult to see how this matter qualifies as a ‘point of law’ under s 32 of the Dust Diseases Tribunal Act.
Apportionment
I turn to the issue of apportionment because, as made clear in my summary of the trial judge’s findings (see paras 13 – 15), his Honour did not determine the issue of liability of the State. If the court does not see fit to intervene in his Honour’s decision on apportionment, it will be unnecessary to enter upon the debate on the liability of NSW.
What Curtis J said on apportionment was quite short, bearing in mind his Honour’s lengthy judgment. I have set forth most of the relevant section of the judgment in paragraph 15 of these reasons and will not repeat it.
It is important to set out the text of s 5(2) of the Act in order to emphasise that it contains two powers in the last part of the clause following the semi colon. That is the power to exempt a person from liability and of ‘complete indemnity’. The provision is as follows:
In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity. [my emphasis]
In its written submission in chief James Hardie suggested that his Honour did not purport to exercise the exemption power. However, its written submission in reply and oral address accepts the State’s contention that his Honour was in fact purporting to utilise the exemption power in s 5(2).
A fair reading of what his Honour said leads me to accept that his Honour was purporting to exercise the exemption power in s 5(2) and I proceed on that basis.
However, James Hardie submits that his Honour had no power to do so because there are limits to the exemption power. It submits that the exemption power is not available where both tortfeasors are independently at fault. James Hardie relies on K v P (J third party) [1993] Ch 140 and dicta of Hayne J in Wynbergen.
Further, contrary to the submissions of the State, indemnity cases are relevant to be considered. Lastly, James Hardie submits that the discretion, which it concedes was being exercised by his Honour under s 5(2), miscarried in any event.
NSW submits that there is no statutory warrant to limit the exemption power (or for that matter the indemnification power) to cases where there is no independent fault by the tortfeasors. The power to exempt is unconfined by any criterion of independent fault and circumscribed only by what is assessed as ‘just and equitable having regard to the extent of that person’s responsibility for damage’. Section 5(2) is, of course, predicated on the basis that both James Hardie and NSW are liable to the plaintiff.
I should mention here that the argument about the use of the exemption power by his Honour assumes a finding of liability by the State to Mr Hay. In fact, his Honour made no finding of liability by the State because, as I mentioned earlier, he stayed from such a finding as being unnecessary to be made.
The State submits that the exemption power is discretionary and untrammelled, except to the extent mentioned above and to be found in the words of s 5(2). NSW maintains that it cannot be said that the discretion exercised by his Honour miscarried. Further, it submits that the discretionary decision is not amenable to appeal since it is not a point of law.
Notwithstanding the lengthy history of s 5(2), both in Australia and England, there are remarkably few reported cases on the power to exempt or grant complete indemnity. And even those cases provide little insight or guidance in the application of the powers.
The two powers are of course mirror images. On the one hand, to exempt a person (who would if sued have been liable) from making any contribution. On the other, that the contribution to be recovered from a tortfeasor be a complete or 100% indemnity. Therefore, cases on both exemption and complete indemnity may be relevant.
The starting point must be that the courts have repeatedly emphasised that the discretion in s 5 (as in s 10) is a very wide one. Most recently this was re-emphasised in Liftronic (a case on s 10). Gleeson CJ repeated the often quoted passage in Podrebersek, referred to earlier in para 62 of these reasons. As I have already mentioned (para 63), Kirby J emphasised the very wide discretion and the limited role of an appellate court with respect to a miscarriage of the exercise of the discretionary power.
One difference between s 10 and s 5 to be kept in mind is that s 10 contains no equivalent to the complete indemnity and exemption powers in s 5(2). This means that care should be taken in considering the remarks of Hayne J in Wynbergen [at 69] that it was not possible to have 100% contributory negligence of a plaintiff, no matter how culpable he or she was.
Likewise the comments of Sheller JA in James Hardie v Roberts [at 91] that the same principles apply to s 5(1)(c) as do to s 10. His Honour was, of course, not directing himself to the part of s 5(2) which refers to exemption and complete indemnity.
Turning to the reported cases on exemption and indemnity, some of which have already been referred to (paras 70 – 72) it will be noted that many deal with the situation of vicarious liability. There must be doubt that they would necessarily be decided in the same fashion today and in NSW the principle in Lister v Romford Ice has been abrogated by statute. In that case, Viscount Simonds (579 - 580) saw no reason why the employer should not be entitled to recover contribution from its employee ‘to the extent of 100%’. He considered Ryan v Fildes [1938] 3 All ER 517 to have been rightly decided. Lord Morton of Henryton was of the same view (584 - 585). Their Lordships were a bare majority on the point and the decision has been much criticised.
In Ryan v Fildes Tucker J found that a schoolteacher, who had exceeded reasonable and lawful correction in punishing a pupil, and her employer, the school managers, were jointly liable to the plaintiff. His Honour noted that the provision in the Law Reform (Married Women and Tortfeasors) Act 1935 (in almost identical terms to our s 5(2)), contained the exemption and complete indemnity powers.
He said at (524 –525):
That is to say, two persons having been found legally liable to pay, prima facie, the whole of the damage, one of them, for reasons which may appear sufficient to the court, may be exempted altogether from his liability. On the other hand, although the section is dealing with contribution, it is said in terms that the court may direct that a contribution to be recovered from any persons shall amount to a complete indemnity. It is clearly contemplated in that case that a contribution may amount to 100 per cent contribution, and may become in effect an indemnity.
In ordering contribution amounting to a complete indemnity, Tucker J recorded that a discretion was involved and different facts may require a different result.
Higgins v William Inglis & Son Pty Ltd [1978] 1 NSWLR 649 is a case closer to home. The judgment of Glass JA (Moffitt P and Reynolds JA agreeing) dealt with the question of contribution or indemnity under s 5(2) claimed by the owner of a bull who had savaged a man at a livestock auction, against the auctioneer.
His Honour said (at 656):
Having regard to the evidence that the owner’s son, when making delivery of the bull made full disclosure of its dangerous tendencies, I do not think that any responsibility for the ensuing damage can be attached to the owner. I would, accordingly, propose that he recover a full indemnity from the auctioneer in respect of the damages which he is liable to pay to the plaintiff.
In Sherras v Van der Maat (1989) 1 Qd R 114 Thomas J (at 117 – 118) endorsed a concession made by a defendant, who had been found to have negligently caused the plaintiff’s injuries, that it bear a 100% contribution. The liability of the other defendants arose not from negligence but from absolute statutory duties owed by them.
Ward Enterprises Pty Ltd v Ahern [2000] NSWCA 184 involved an apportionment appeal. The trial judge had applied a 50/50 apportionment between two tortfeasors. All of the court agreed that this could not stand and the majority (Mason P and Clarke AJA) substituted an 85/15 split. Clarke JA said that he was not persuaded that the principal tortfeasor (TNT) should bear 100% of the damages. Meagher JA dissented on this issue. He said that all the negligence was by TNT and Wards was only liable on an insurance basis. Therefore TNT should indemnify Wards to 100%.
I have mentioned the reliance by the appellant on K v P (J third party). However, I do not think that the case provides much assistance. It is however a case which deals with the exemption power, rather than complete indemnity. A third party sought to be exempted from liability to make a contribution. The summons was premature and meant that the court had to assume that the defendant would be found guilty of conspiracy and fraud (alleged by the plaintiffs) and also that the third party would be found to be negligent as regards the plaintiffs.
In dismissing the third party’s summons, Ferris J said at 150:
If, as I must assume for present purposes, the plaintiffs have a good cause of action in professional negligence against the third party, then it must be at least possible, if not indeed likely, that the damages recoverable by the plaintiffs from the third party would include damages under at least some of these heads. I can see that the third party would have a cogent argument that even if he were liable to compensate the plaintiffs in respect of these matters it would not be just and equitable to require him to make a contribution to the third defendant’s liability. But what the court has to consider is the third party’s responsibility for the damages in question. Once it is assumed that the third party would be liable to the plaintiffs for damages of a particular kind, it must follow that he has some responsibility for those damages. In order to carry out the exercise required by s 2(1) it would be essential, in my judgment, to evaluate the relative responsibilities of the third defendant and the third party. I do not see how this can be done without a trial of both the action and the claim to contribution. Certainly I feel unable at this stage to say, with the degree of certainty necessary to make a striking-out order, that the third party will inevitably be exempted from making contribution under s 2 (2).
The statement by Trindade and Cane, referred to earlier in para 70, that a complete indemnity cannot be recovered where both tortfeasors are independently at fault needs to be examined. There is no authority that I can find which expressly says so. One can accept that if a person is blameless, but held to be legally liable for the tort of another, a full indemnity may be allowed, see eg. Pantalone v Alaouie (1989) 18 NSWLR 119 at 141. But we are here dealing with a wide discretion which should not be lightly encroached. The discretion should not be construed so as to be subject to a limitation which is not apparent in the ordinary meaning of the words conferring the power. See Patton v Buchanan Borehole Collieries Pty Ltd (1992 – 1993) 178 CLR 14 at 17, 23 and 29, also Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 at 205.
In my view, there is no principle of law that where two tortfeasors are independently at fault, there can never be a complete indemnity or exemption.
Turning to the exercise of the discretion in the instant case, although Curtis J gave sparse reasons for granting the exemption, the context in which he so found must be taken into account. In giving his conclusion on the exemption, a large number of earlier findings by his Honour regarding James Hardie’s culpability must have been taken into account. I will mention some of his Honour’s findings:
.The appalling conditions in which the men worked at Wallerawang was known to James Hardie, whose officers were on occasions present on site.
.James Hardie had a duty to Mr Hay to protect him by providing a warning label on its products and bring the dangers to the attention of his immediate supervisors. James Hardie had actual knowledge of the dangers.
.The workers on the site remained ignorant of the risks of asbestos products and James Hardie had a duty to address this.
.As manufacturer of the asbestos products, James Hardie had an acute and unique perception of the gravity of the risk.
.James Hardie’s duty to Mr Hay was conditioned by his vulnerability and the ignorance of his supervisors, while James Hardie had actual knowledge and the power to reduce the imbalance.
.The failure of James Hardie to give a specific warning to Rolls Royce setting out the reality and gravity of the risks created by its products was causative of the plaintiff’s mesothelioma.
.James Hardie had a duty to bring home to those affected by the asbestos in its products that the risk was neither improbable nor remote. James Hardie’s breach of duty was causative of Mr Hay’s injury.
.James Hardie’s failure to fulfil its duty fell far short of the standard required of a reasonable man as to be almost inexplicable.
.James Hardie’s failure to include warnings with its products was because it was concerned that ‘ignorance and fear’ in the public would be increased by the perception that the products were sufficiently dangerous to require warning and careful use.
.James Hardie made a conscious management decision to take no steps to warn end users of the serious risks associated with use of its asbestos products. It did not do so because this may have adversely affected its market.
.The standard of care required by a manufacturer and distributor of a product it knows to be potentially lethal is so high as to require considerable effort and expense to discharge that duty.
.James Hardie made no effort and expended no expense in discharging its duty to the plaintiff.
These conclusions may be contrasted with the State’s responsibility for the damage to the plaintiff. The highest his Honour stated this was in not following-up the Jones report in 1958, and alerting its inspectors to the dangers of visible concentrations of asbestos. According to his Honour, Mr Slade, an inspector, should have arranged for a follow-up of the Jones report and it was careless of him not to do so. However, his Honour found the circumstances known to Mr Slade were not such as to enliven the duty to exercise the statutory powers contained in s 15 of the Scaffolding and Lifts Act.
Again, it must be emphasised that his Honour did not find that NSW had breached its duty of care although the exemption finding must assume liability by the State. On one approach his Honour said it was liable, but on another it may not be. I have summarised these parts of his judgment in paras 13 and 14 earlier. His Honour added that it was unnecessary to decide the ‘difficult question’ (of the State’s liability) because of his views on apportionment.
In my opinion, what his Honour said on apportionment does not reveal any miscarriage of the discretion, particularly when read in the light of the findings made earlier about the extreme culpability of James Hardie. It was not an error for his Honour to say that James Hardie created the danger which NSW merely failed to avoid. Further, the evidence entitled him to refer to James Hardie being heedless of the dangers that it knew were created by its products and, at the same time, continuing to make profits from their sale.
It cannot be said that Curtis J was not entitled to conclude that, having regard to NSW’s responsibility for the damage to the plaintiff, it would not be just or equitable that the State contribute to that loss.
At the very least, bearing in mind the very wide discretion, it cannot be said that the discretion miscarried. It was open to his Honour to exempt the State from contribution under s 5(2). This conclusion means ultimately that no point of law arises under s 32 of the Dust Diseases Tribunal Act.
As a result, it is unnecessary to consider the arguments about whether the State was in breach of its duty, fascinating as they may be.
The appeal should be dismissed with costs.
Orders
Rolls Royce Industrial Power (Pacific) Limited (formerly John Thompson (Australia) Pty Limited) v James Hardie & Coy Pty Limited (CA 40851/99)
Appeal dismissed with costs.
James Hardie & Coy Pty Limited v The State of New South Wales (CA 40852/99)
Appeal dismissed with costs.
James Hardie & Coy Pty Limited v Rolls Royce Industrial Power (Pacific) Limited (formerly John Thompson (Australia) Pty Limited) (CA 40432/00)
Leave to appeal refused with costs.
FITZGERALD AJA: The circumstances giving rise to these proceedings are set out in the reasons for judgment of Stein JA, which enable me to be brief. I will use the same abbreviations as his Honour.
Between 1955 and 1961, Rolls Royce purchased asbestos products from James Hardie for use in Rolls Royce’s construction of the Wallerawang Power Station for Pacific Power. Mr Warren Hay, who worked for Rolls Royce on that project between 1958 and 1961, contracted mesothelioma from asbestos dust and fibre to which he was exposed in the course of his employment.
Mr Hay sued Rolls Royce and Pacific Power in the Dust Diseases Tribunal. On 27 June 1994, consent judgments, each for $185,000, were entered in Mr Hay’s favour against Rolls Royce and Pacific Power. Rolls Royce’s claim against Pacific Power for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1996 (the “Law Reform Act”) was dismissed by consent.
Each of Rolls Royce and Pacific Power then prosecuted a cross-claim for contribution against James Hardie under s 5 of the Law Reform Act. Rolls Royce only commenced its cross-claim against James Hardie on 3 June 1994. Pacific Power did not commence its cross-claim against James Hardie until 27 June 1994.
On 13 December 1996, a claim for damages for breach of contract was added to Rolls Royce’s cross-claim against James Hardie pursuant to leave granted by the trial judge.

On 4 June 1999, James Hardie made a Calderbank offer of $129,500 to each of Rolls Royce and Pacific Power.
Pacific Power accepted the offer, and on 24 June 1999, a consent judgment for $129,500 was entered in its favour against James Hardie. James Hardie recovered $20,000 of that amount from another company, Wallaby Grip.
James Hardie subsequently cross-claimed against Rolls Royce for contribution under s 5 of the Law Reform Act.
The trial judge held that Rolls Royce and James Hardie were equally responsible for Mr Hay’s damage and ordered each to pay the other half of the amount for which it had been held liable (less the amount recovered by James Hardie from Wallaby Grip), resulting in a net verdict of $ 37,500 in favour of Rolls Royce. Rolls Royce’s contract claim against James Hardie was dismissed.
The trial judge also dismissed a claim by James Hardie for contribution from the State of New South Wales under s 5 of the Law Reform Act.
Rolls Royce’s contract claim against James Hardie
In its appeal to the Court, Rolls Royce argued that its contract claim against James Hardie should not have been dismissed. James Hardie filed a Notice of Contention. One of the bases on which it sought to uphold the trial judge’s dismissal of Rolls Royce’s contract claim was that his Honour erred in giving Rolls Royce leave to add that claim because it was out of time and there was no power to extend the time.
In this Court, Rolls Royce accepted that an extension of time was necessary and that there was no power to extend time except under cl 4(1) of Schedule 5 of the Limitation Act 1969 which extends the operation of s 60G of the Act.
Section 60G provides that it only applies “to a cause of action that accrues on or after 1 September 1990, founded on negligence, nuisance or breach of duty, for damages for personal injury …”. However, by clause 4(1) of Schedule 5, “[s]ection 60G also applies to a cause of action, founded on negligence, nuisance or breach of duty, being a cause of action that accrued before 1 September 1990 …”. It was not disputed that, if Rolls Royce had a claim for damages for breach of contract against James Hardie, it was a “cause of action … founded on breach of duty” (Limitation Act, s 11) that had accrued before 1 September 1990. Rolls Royce argued that its claim need not be, but in fact was, “for damages for personal injury” within the meaning of s 60G. According to Rolls Royce, since James Hardie’s breach of its contract with Rolls Royce caused Rolls Royce’s liability to Mr Hay for damages for personal injury, Rolls Royce’s claim against James Hardie for damages for breach of contract was “for damages for personal injury”. Rolls Royce submitted that “for” should be read as equivalent to “in respect of” (State Government Insurance Office v Crittenden (1966) 117 CLR 412), and, when so read, applied to Rolls Royce’s contract claim against James Hardie (Genders v Government Insurance Office of NSW (1959) 102 CLR 363). See also Rheem Australia Ltd v Manufacturers Mutual Insurance Ltd (1984) 2 NSWLR 370. In effect, Rolls Royce argued that James Hardie’s liability to it for damages for breach of contract is a liability “for” i.e. “in respect of”, “damages for personal injury“, so that Rolls Royce’s cause of action against James Hardie was “a cause of action … for damages for personal injury”.
There is a threshold question concerning whether the requirement in s 60G that the cause of action be “for damages for personal injury” applies when s 60G is applicable, not because of its own terms but because of clause 4(1) of Schedule 5. Rolls Royce’s submission that, when (as in this case) reliance is placed on clause 4(1), there is no requirement that the cause of action must be for “damages for personal injury” is inconsistent with the manifest purpose of the material portion of the Limitation Act and, to my mind, with its structure and language. When cl 4(1) of Schedule 4 is notionally added as a further subsection to s 60G, it would be extremely artificial to read it as applying to causes of action other than causes of action for damages for personal injury, especially in the context of the other provisions of Part 3 Division 3 Subdivision 3 of the Limitation Act, including s 60 I: see, generally, Dedousis v The Water Board (1994) 181 CLR 171.
Rolls Royce’s other argument that its claim for damages for breach of contract is “for damages for personal injury” within the meaning of s 60G should also be rejected. What is properly described as “a cause of action … for damages for personal injury” for that purpose depends on the particular context of Part 3 Division 3 Subdivision 3. Rolls Royce’s claim for damages equivalent to its liability to Mr Hay for his personal injury is not “a cause of action … for damages for personal injury” in that context. The only personal injury was suffered by Mr Hay. Each of Rolls Royce and James Hardie is liable to Mr Hay “for damages for personal injury”. James Hardie was also liable to Rolls Royce for a breach of contract between them which caused Rolls Royce’s liability to Mr Hay. James Hardie’s liability to Rolls Royce was not “for” the material injury, namely, that suffered by Mr Hay.
I agree with Stein JA that Rolls Royce’s appeal against the rejection of its contract claim against James Hardie should be dismissed.
The claims for contribution
So far as presently material, s 5 of the Law Reform Act provides:
“Proceedings against and contribution between joint and several tort-feasors
(1)         Where damage is suffered by any person as a result of a tort …
…………………………………………………………….
(c)          any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.
(2)         In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
…………………………………………………………….”.
Because of the manner in which this case has been conducted, the other parties’ contributions have not been determined by reference to their respective responsibilities overall for Mr Hay’s damage but by reference to the respective responsibilities of Rolls Royce and Pacific Power as between themselves, the respective responsibilities of Pacific Power and James Hardie as between themselves, the respective responsibilities of Rolls Royce and James Hardie as between themselves, and the respective responsibilities of James Hardie and the State as between themselves: cf Maxfield v Llewellyn (1961) 1 WLR 1119. This is illustrated by the contribution issues which were debated in the Court. James Hardie was a party to two separate disputes with respect to contribution, one with Rolls Royce and one with the State. Any change to the judgment below in either dispute had the potential to affect the ultimate outcome in the other dispute. For example, if the State was held liable to James Hardie, that would reduce James Hardie’s liability and the total amount for which it and Rolls Royce would be liable between them. The exemption of the State from any obligation to make contribution therefore adversely affected Rolls Royce as well as James Hardie. However, although the proceedings in this Court were all listed for hearing on the same date and proceeded in an order which was acceptable to the parties, Rolls Royce did not seek to support James Hardie’s claim for contribution from the State.
The amount for which the trial judge gave judgment in favour of Rolls Royce against James Hardie was based on the amounts of the respective judgments against them and his Honour’s conclusion that, as between them, it was just and equitable having regard to their respective responsibilities for Mr Hay’s damage that each should contribute half of the total amount for which they were liable. His Honour’s dismissal of James Hardie’s claim against the State of New South Wales appears to have been based upon his conclusion that, even if the State would have been liable to Mr Hay if he had sued it, as between James Hardie and the State it was just and equitable, having regard to their respective responsibilities for Mr Hay’s damage, that the State be exempted from liability. These conclusions have been challenged in this Court.
The High Court and this Court (see, e.g. Dunnet v Brennan [2000] NSWCA 211; Fitzgerald v Dansey [2001] NSWCA 339) have repeatedly reaffirmed the principles which restrict an appellate court’s power to review a trial judge’s decision on apportionment. Despite those principles, the Court is regularly asked to change an apportionment determined on trial. It is insufficient for an appellant to persuade an appeal court that, when all material factors are considered, the trial judge’s apportionment is different from that which the appeal court would have decided. An appeal court is not entitled to interfere if the trial judge’s apportionment was reasonably open.
James Hardie’s contribution claim against the State of New South Wales
Section 5 (1)(c) of the Law Reform Act recognises that one of two or more tortfeasors liable in respect of the same damage may be entitled to be indemnified by another of those tortfeasors: see e.g. Redken Laboratories (Australia) Pty Ltd v Docker [2000] NSWCA 100. Section 5(2) provides that one tortfeasor may be required to indemnify another when that is just and equitable having regard to their respective responsibilities for the damage for which each is, or if sued would be, liable. Section 5 (2) also provides that one tortfeasor may be exempted from liability to make contribution when that is just and equitable. There is no implicit limitation in s 5 (2) which restricts the power to order indemnification or exemption when each tortfeasor is independently at fault. The question is the same in all cases, namely, what is just and equitable having regard to the extent of each tortfeasor’s responsibility for the damage.
Although (on the assumption on which I am presently considering this aspect of its dispute with James Hardie) the State was separately negligent and by its negligence caused Mr Hay damage, in a practical sense it was the negligence of James Hardie which was the operative negligence. The State’s (assumed) negligence was its failure to prevent James Hardie’s negligence from causing damage to Mr Hay. While the trial judge was not bound in the circumstances to exempt the State from any liability to make contribution to James Hardie in respect of its liability, it was open to his Honour to do so: cf Redken, at para 72.
In the circumstances, it is unnecessary for me to discuss the trial judge’s refusal to allow James Hardie to expand its claim against the State other than to say that I agree with Stein JA that James Hardie failed to demonstrate any error by his Honour on a point of law within the meaning s 32 of the Dust Diseases Tribunal Act 1989.
I agree with Stein JA that James Hardie’s appeal against the rejection of its claim for contribution from the State of New South Wales should be dismissed.
Contribution claims between Rolls Royce and James Hardie
The remaining contribution claims are those between Rolls Royce and James Hardie.
One of Rolls Royce’s arguments was that James Hardie was not entitled to claim contribution from Rolls Royce because James Hardie was not a “tortfeasor liable” in respect of Mr Hay’s damage since it had not even been sued by him. The liability in respect of which James Hardie sought contribution from Rolls Royce was James Hardie’s liability to Pacific Power to contribute in respect of Pacific Power’s liability to Mr Hay.
There appear to be at least two simple answers to this unmeritorious argument. One is that James Hardie’s liability to Pacific Power is a liability “in respect of” Mr Hay’s damage: cf Crittenden, Genders and Rheem, the cases relied on by Rolls Royce to support an extension of time for its contract claim against James Hardie. The second is that it is just and equitable (having regard to their respective responsibilities for Mr Hay’s damage) for James Hardie’s liability to Pacific Power to be taken into account in determining the amount that it should be ordered to pay Rolls Royce in respect of its contribution claim against James Hardie. Irrespective of whether James Hardie successfully claimed contribution from Rolls Royce or James Hardie’s liability to Pacific Power was merely brought to account in James Hardie’s defence of Rolls Royce’s claim for contribution against James Hardie, the amount payable by James Hardie to Rolls Royce would be the same.
Another of Rolls Royce’s arguments was based on the consent judgments between Mr Hay and Rolls Royce, Mr Hay and Pacific Power, Rolls Royce and Pacific Power and Pacific Power and James Hardie. According to Rolls Royce, the apportionment between Rolls Royce and James Hardie determined by the trial judge was inconsistent with those judgments, which either entitled Rolls Royce to an order that James Hardie indemnify it or to a different apportionment between Rolls Royce and James Hardie which was consistent with the consent judgments.
Although superficially more complex, on analysis this argument seemed to involve the following steps. Judgments between Mr Hay, Rolls Royce and Pacific Power established that Rolls Royce and Pacific Power were equally liable for Mr Hay’s damage, and the judgment between Pacific Power and James Hardie established that their respective liabilities were in the proportion 30% and 70%. Taken in conjunction, therefore, the judgments established that the respective liabilities of Rolls Royce and James Hardie were 30% and 70%, and the contribution which James Hardie was ordered to make to Rolls Royce should be increased accordingly.
It is unnecessary to decide whether the judgments between Mr Hay, Rolls Royce and Pacific Power establish that Rolls Royce and Pacific Power were equally liable for Mr Hay’s damages. The material judgments were consent judgments between those parties which were entered without James Hardie’s consent. Indeed, the time for James Hardie to plead to Rolls Royce’s cross-claim had not expired when the consent judgments were entered between Mr Hay, Rolls Royce and Pacific Power, and Pacific Power only commenced its cross-claim against James Hardie on the day when the consent judgments were entered. Other considerations aside, even if it was legitimate to enter consent judgments in those circumstances, it would not be just and equitable to hold that James Hardie is bound by them in its contribution dispute with Rolls Royce: cf Insurance Exchange of Australia v Dooley & Anor [2000-2001] 50 NSWLR 222.
Once this point is reached, the only question is whether the trial judge’s apportionment was reasonably open. I agree with Stein JA that it was.
I also agree with his Honour that Rolls Royce’s appeal should be dismissed.
Costs
The other members of the Court would refuse James Hardie leave to appeal in respect of the costs orders made between Rolls Royce and James Hardie. There is no purpose to be served in more than a brief statement of the reasons for my disagreement.
Rolls Royce received less on its claim for contribution and less overall than it had earlier been offered by James Hardie in a Calderbank letter. Further, Rolls Royce’s contract claim was dismissed. Finally, James Hardie succeeded on its claim for contribution.
In the circumstances, James Hardie was entitled to the costs of the contribution proceedings between it and Rolls Royce.
In summary I would make the following orders:
(a)Rolls Royce v James Hardie
Appeal dismissed with costs.
(b)James Hardie v State of New South Wales
Appeal dismissed with costs.
(c)James Hardie v Rolls Royce
Leave to appeal granted, appeal allowed with costs including the costs of the application for leave, order that Rolls Royce pay James Hardie’s costs of the contribution proceedings between those parties.
DAVIES AJA: I agree with Stein JA.

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LAST UPDATED: 19/12/2001