Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd
[2014] NSWSC 846
•27 June 2014
Supreme Court
New South Wales
Medium Neutral Citation: Sanderson Motors Pty Ltd v Lindsay Bennelong Developments Pty Ltd [2014] NSWSC 846 Hearing dates: 10 June 2014 Decision date: 27 June 2014 Before: Ball J Decision: 1. Paragraphs 28(f) and 28(g) of the document entitled "Commercial List Response" filed on 28 March 2014 by the fifth defendant be struck out;
2. The underlined parts of paragraphs 24.2 (other than in the last line of that paragraph) and paragraphs 24.5, 24.6 and 24.7 of the Amended Technology and Construction List Response filed on 27 March 2014 by the sixth defendant be struck out;
3. The fifth and sixth defendants each pay the plaintiffs half the plaintiffs' costs of their motion filed on 5 May 2014, the fifth defendant's motion filed on 20 May 2014 and the sixth defendant's motion filed on 16 May 2014.
Catchwords: PROCEDURE - civil - pleadings - application to strike out amendments to List Response - where List Response amended to identify further potential "concurrent wrongdoers" in "apportionable claim" under Civil Liability Act 2002 (NSW), Pt 4, s 34 - where amendments not properly pleaded or particularised - whether delay in amending List Response caused substantial prejudice to plaintiffs
TORTS - proportionate liability - whether claims for contribution by defendants against other potential concurrent wrongdoers precluded by operation of Civil Liability Act 2002 (NSW), s 36Legislation Cited: Civil Liability Act 2002 (NSW)
Civil Procedure Act 2005 (NSW)
Law Reform (Miscellaneous Provisions) Act 1946 (NSW)
Limitations Act 1969 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Wrongs Act 1958 (Vic)Cases Cited: Dymocks Book Arcade Pty Ltd v Capral Ltd [2010] NSWSC 195
Gallagher Bassett Services NSW Pty Ltd v Murdock [2013] NSWCA 386
Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613
Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390; (2011) 16 BPR 30,189
Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231
Owners Strata Plan No 62660 v Jacksons Landing Development Pty Ltd [2011] NSWSC 415
Owners Corporation Strata Scheme 56120 v Allianz Australia Insurance Ltd [2009] NSWSC 1480
Ucak v Avante Developments Pty Ltd [2007] NSWSC 367
Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505; (2008) 13 BPR 25,343Category: Procedural and other rulings Parties: Sanderson Motors Pty Ltd (First Plaintiff)
Sanderson Eastern Suburbs Pty Ltd (Second Plaintiff)
Lindsay Bennelong Developments Pty Ltd (First Defendant)
Bennelong Developments Pty Ltd (Second Defendant)
Boronia Investments Holdings Pty Ltd formerly Kell & Rigby Holdings Pty Ltd (Third Defendant)
Civil Foundations Pty Ltd (Fourth Defendant)
International Insurance company of Hannover Ltd (Fifth Defendant)
QBE European Underwriting Services (Australia) Pty Ltd (Sixth Defendant)Representation: Counsel:
M Ashhurst SC with F Hicks / Ms M Kloucek (Plaintiffs)
M P Cleary (First and Second Defendants)
C Purdy (Fifth Defendant)
ATS Dawson (Sixth Defendant)
Solicitors:
Yates Beaggi (Plaintiffs)
Berry Buddle Wilkins (First and Second Defendants)
Moray & Agnew (Fifth Defendant)
Yeldham Price O'Brien Luck (Sixth Defendant)
File Number(s): 2011/206208 Publication restriction: None
Judgment
Introduction
Before the Court are 3 notices of motion, each concerned with Amended Technology and Construction List Responses (the Amended List Responses) filed on behalf of the fifth defendant (InterHannover) and the sixth defendant (QBE). The notices of motion filed by QBE on 16 May 2014 and InterHannover on 20 May 2014 seek leave to file their respective Amended List Responses. The notice of motion filed by the plaintiffs (together, Sanderson) on 5 May 2014 seeks orders that various paragraphs of the Amended List Responses be struck out. The relevant paragraphs raise defences to the effect that Sanderson's claims are apportionable claims within the meaning s 34 of the Civil Liability Act2002 (NSW) (the CL Act) and that other entities are concurrent wrongdoers whose acts or omissions caused the loss or damage in respect of which Sanderson sues with the result that the liability in respect of which InterHannover and QBE are sued should be reduced to an amount reflecting that proportion of the damage or loss claimed that the Court considers just having regard to the responsibility of those other entities (among others) for Sanderson's loss or damage.
The proceedings
The first plaintiff (Sanderson Motors) owns a large commercial site at Rushcutters Bay (the Sanderson Property) on which the second plaintiff (Sanderson Eastern) conducts a Mercedes-Benz dealership with associated repair and service facilities.
The first and second defendants (together, the Developers) owned properties adjoining the Sanderson Property. They retained the third defendant, Boronia Investments Holdings Pty Ltd (formerly Kell & Rigby Holdings Pty Ltd) (K&R), to construct a residential development on those properties. K&R took out a contract of insurance in respect of the works with InterHannover. The fourth defendant, Civil Foundations Pty Ltd (CF), performed the foundation and related works on the site pursuant to a subcontract dated 14 December 2007. CF took out a contract of insurance in respect of the works with QBE.
CF engaged D F Dickson & Associates Pty Ltd (Dickson) to provide engineering design services. It also subcontracted demolition work to Mann Group Pty Ltd (Mann) and excavation work to J A Bradshaw Contracting Pty Ltd (Bradshaw). In addition, in May 2008, Frankipile Australia Pty Ltd (Frankipile) was engaged to install footing piles adjacent to the sheet piling wall that had been constructed along the boundary with the Sanderson Property.
On 18 December 2007, cracking developed in the driveway on the Sanderson Property, and, on 17 January 2008, further cracking developed in the rear workshop rendering two workshop bays unfit for use.
In April 2010, Sanderson Eastern relocated its business due to further damage that was sustained to the Sanderson Property.
On 24 June 2011, Sanderson Motors commenced these proceedings against the Developers and K&R claiming compensation in respect of the damage to its property. It joined CF as a party to the proceedings on 23 November 2011.
K&R was placed into liquidation on 2 April 2012, and CF was placed into external administration on 24 May 2012. On 20 July 2012, Sanderson Motors filed a motion for leave to join InterHannover and QBE as defendants in the proceedings pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act1946 (NSW) (the Reform Act).
The hearing of that motion was postponed while Sanderson Motors served its evidence in chief, including expert evidence concerning the causes of the damage to the Sanderson Property. After at least 2 extensions of time, that evidence was filed by 7 May 2013, and, on 31 May 2013, the Court ordered that InterHannover and QBE be joined as defendants in the proceedings pursuant to s 6 of the Reform Act.
In the meantime, on 3 April 2013, QBE gave notice under s 35A of the CL Act that it considered Dickson and Frankipile may be concurrent wrongdoers. In relation to Frankipile, the only explanation it gave for that assertion was that:
... it entered into a subcontract with Kell & Rigby for the installation of driving piles for the building's foundations which it installed in close proximity to Civil's sheet piles (we refer you to the report of Williams Consulting Engineers Australia Pty Ltd, dated 18 February 2013).
On 8 July 2013, InterHannover filed its List Response, and, on 11 July 2013, QBE filed its List Response. Both named Dickson as an additional concurrent wrongdoer. The two List Responses are in similar terms. Taking the List Response filed by InterHannover as an example, it relevantly provided in para 25:
In further answer to paragraph 25 of the contentions, InterHannover says that:
(a) the plaintiff's claim against Kell & Rigby is an apportionable claim as defined under s34 Civil Liability Act 2002 (NSW) ('CLA');
(b) ...
(e) D. F. Dickson & Associates Pty Limited ('Dickson') is a concurrent wrongdoer (as defined under s34(2) CLA) whose acts or omissions caused the plaintiff's loss or damage;
Particulars
(i) DF Dickson undertook the design of the sheet piling system, the shoring wall system, and the temporary anchor system;
(ii) Civil Foundations owed the plaintiff a duty of care to the plaintiff [sic] while undertaking the design of the sheet piling system, the shoring wall system, and the temporary anchor system not to cause damage to the Property or improvements on the Property
(iii) DF Dickson failed to exercise reasonable care in the design of the sheet piling system, the shoring wall system, and/or the temporary anchor system;
(iv) DF Dickson's negligence in the design of the sheet piling system, the shoring wall system, and the temporary anchor system caused the plaintiff's loss or damage;
(f) ...
Sanderson Motors did not join Dickson as a defendant. Nor did it request any particulars of the defence.
On 12 July 2013, InterHannover and QBE were ordered to file their evidence in reply by 31 October 2013. They did not comply with that order. In part, at least, the delay was due to the difficulties in obtaining access to the documents and former employees of their insureds, and the work involved in obtaining relevant documents and in retaining experts and obtaining reports from them. Most of InterHannover and QBE's evidence was filed by 21 February 2014, and, on that day, the matter was set down for hearing commencing on 20 October 2014.
One of the expert reports obtained by QBE was a report from a Mr Mostyn, who expresses the opinion that damage to the Sanderson Property on or about 16 December 2007 was likely to have been caused by demolition or excavation work and was not likely to have been caused by the installation of sheet piles. Mr Mostyn also expresses the view that possible causes of the damage on or about 17 January 2008 were demolition, excavation, and sheet pile installation. The conclusion that the installation of sheet piles was not likely to have been the cause of the damage on or about 16 December 2007 was based on vibration monitoring records to which QBE's solicitors first obtained access on 21 October 2013. Those reports were provided by Mr Derham, who was a director of CF. Ms Williams, a solicitor acting for QBE, gave evidence that it was not until she received Mr Mostyn's report that QBE was in a position to identify Mann and Bradshaw as possible concurrent wrongdoers.
On 7 March 2014, the defendants consented to Sanderson Eastern being joined as a plaintiff in the proceedings, and, on that day, Sanderson filed a Second Further Amended Technology and Construction List Statement.
On 27 March 2014, QBE filed its Amended List Response, and, on 28 March 2014, InterHannover filed its Amended List Response. Both List Responses identify Mann and Bradshaw as further alleged concurrent wrongdoers. In addition, the QBE Amended List Response identifies Frankipile as a further alleged concurrent wrongdoer. The structure of the pleading is similar in each case, and that structure is similar to the structure of the pleading that Dickson was a concurrent wrongdoer, which was included in the original List Responses. Again, to take the InterHannover Amended List Response as an example, it is alleged in para 28(f) that Bradshaw is a concurrent wrongdoer whose acts or omissions caused the loss or damage suffered by Sanderson, and, in para 28(g), Mann is alleged to be a concurrent wrongdoer whose acts or omissions caused the loss or damage suffered by Sanderson. The following particulars are given of the allegation in para 28(f):
Particulars
(i) Bradshaw was retained by Kell & Rigby to undertake demolition and/or excavation work on the Site;
(ii) Bradshaw owed a duty of care to Sanderson Motors and/or Sanderson Eastern while undertaking the demolition and excavation works on the Site;
(iii) Bradshaw failed to exercise reasonable care whilst undertaking the demolition and excavation work on the Site;
(iv) Bradshaw's negligence in performing the demolition and excavation works on the Site caused the loss or damage suffered by Sanderson Motors and/or Sanderson Eastern.
The following particulars are given of the allegation in para 28(g):
Particulars
(i) Mann Group was retained by Kell & Rigby to undertake demolition and/or excavation work on the Site;
(ii) Mann Group owed a duty of care to Sanderson Motors and/or Sanderson Eastern while undertaking the demolition and excavation works on the Site;
(iii) Mann Group failed to exercise reasonable care whilst undertaking the demolition and excavation work on the Site;
(iv) Mann Group's negligence in performing the demolition and excavation works on the Site caused the loss or damage suffered by Sanderson Motors and/or Sanderson Eastern.
QBE's allegation that Frankipile is a concurrent wrongdoer is in these terms:
24.7 as against Frankipile, the sixth defendant [QBE] further says that:
(a) K&R engaged Frankipile to carry out the installation of footing piles on the Site;
(b) Frankipile had a duty to carry out the installation of footing piles with due and proper care, skill and diligence;
(c) to the extent that the cause of damage to the first plaintiff's property and the second plaintiff's business (which is not admitted) was the installation of footing piles by Frankipile on the Site then Frankipile breached its duty of care.
It is noteworthy that Sanderson did not join Dickson or Frankipile as defendants to the proceedings following the filing of InterHannover and QBE's original List Responses and the service on 3 April 2013 by QBE of a notice under s 35A of the CL Act identifying Dickson and Frankipile as possible concurrent wrongdoers.
The issues
Sanderson accept that the question of amendment is governed by Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 19.1(2) and r 19.4. UCPR r 19.1(2) provides:
If a plaintiff amends his or her statement of claim under subrule (1) after the defendant has filed a defence, the defendant may amend his or her defence at any time within 14 days after service of the amended statement of claim.
UCPR r 19.4 provides:
(1) If a party amends a pleading, as referred to in rule 19.1 (1) or (2), the court may, by order, disallow the amendment.
(2) Unless the court orders otherwise, notice of motion for such an order must be filed within 14 days after the date on which the amended document was served on the applicant.
(3) If, on the hearing of an application for an order under this rule, the court is satisfied that, had an application for leave to make the amendment been made, it would not have granted leave to make the whole or some part of the amendment, the court must disallow the amendment or that part, as the case may be.
It follows from these rules that InterHannover and QBE do not need leave to file their Amended List Responses. Rather, Sanderson must satisfy the Court that, had an application for leave to make the amendments been made, the Court would not have granted leave to make the whole or some part of them.
Sanderson's application for an order under UCPR r 19.4 was brought outside the 14 day period provided for in r 19.4(2). However, neither InterHannover nor QBE objected to Sanderson being granted an extension of time in which to bring their application.
Mr Ashhurst SC, who appeared for Sanderson, accepted that Sanderson cannot object to the defence based on the allegation that Dickson was an alleged concurrent wrongdoer since that defence was raised by the original List Responses. However, he submitted that the Court should order that InterHannover and QBE provide particulars of that defence.
Sanderson raise 2 objections to the defences based on the allegation that Bradshaw, Mann and (in the case of QBE) Frankipile are concurrent wrongdoers. First, they submit that those amendments are sought to be made at a late stage in the proceedings, that no adequate explanation has been given for the delay in raising the defences and that the defences would now cause Sanderson Motors substantial prejudice. That prejudice is said to arise because Sanderson Motors is at risk of having the damages it is entitled to recover reduced under the CL Act on the basis that Bradshaw, Mann and Frankipile are concurrent wrongdoers, but it is no longer able to join those entities as defendants in the proceedings because any claim against them would be statute barred. That is so because the damage suffered by Sanderson Motors first manifested itself at the latest on 17 January 2008 (when further cracking developed in the rear workshop), which is outside the 6 year limitation period that it is accepted applies to Sanderson's claims. Sanderson Eastern, of course, may suffer a similar prejudice. However, as Mr Ashhurst rightly accepted, there has been no delay on the part of InterHannover and QBE in seeking to raise the defence to the claim brought by Sanderson Eastern since that claim was only brought in March this year. Any prejudice that Sanderson Eastern suffers arises from its delay in bringing a claim, not in InterHannover and QBE's delay in raising the defence.
Secondly, Sanderson submit that the defences are not properly pleaded or particularised and should be struck out for that reason.
Proportionate liability
Before dealing with the issues directly, it is necessary to say something about the proportionate liability regime implemented by Pt 4 of the CL Act.
Section 35 of the CL Act relevantly provides:
35 Proportionate liability for apportionable claims
(1) In any proceedings involving an apportionable claim:
(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and
(b) the court may give judgment against the defendant for not more than that amount.
(2) ...
(3) In apportioning responsibility between defendants in the proceedings:
(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and
(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.
(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.
"Apportionable claim" is defined in s 34(1) to include "a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care". "Concurrent wrongdoer" is defined in s 34(2) to mean "a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim". A claim is a single apportionable claim whether or not it is based on the same cause of action or causes of action of the same type: s 34(1A). Section 34(4) provides:
For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.
Sections 35A, 36, 37 and 38 are also relevant. They provide:
35A Duty of defendant to inform plaintiff about concurrent wrongdoers
(1) If:
(a) a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the other person) may be a concurrent wrongdoer in relation to the claim, and
(b) the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about:
(i) the identity of the other person, and
(ii) the circumstances that may make the other person a concurrent wrongdoer in relation to the claim, and
(c) the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim,
the court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff.
(2) The court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise.
36 Contribution not recoverable from defendant
(1) A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim:
(a) cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant), and
(b) cannot be required to indemnify any such wrongdoer.
37 Subsequent actions
(1) In relation to an apportionable claim, nothing in this Part or any other law prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any damage or loss from bringing another action against any other concurrent wrongdoer for that damage or loss.
(2) However, in any proceedings in respect of any such action the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the plaintiff in respect of the damage or loss, would result in the plaintiff receiving compensation for damage or loss that is greater than the damage or loss actually sustained by the plaintiff.
38 Joining non-party concurrent wrongdoer in the action
(1) The court may give leave for any one or more persons to be joined as defendants in proceedings involving an apportionable claim.
(2) The court is not to give leave for the joinder of any person who was a party to any previously concluded proceedings in respect of the apportionable claim.
A number of points can be made about these provisions.
First, Pt 4 sets out the rules of substantive law relating to apportionable claims as defined. The purpose and effect of Pt 4 was explained in the following terms by French CJ, Hayne and Kiefel JJ in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613 at 626-7:
[16] The evident purpose of Pt 4 is to give effect to a legislative policy that, in respect of certain claims such as those for economic loss or property damage, a defendant should be liable only to the extent of his or her responsibility. The court has the task of apportioning that responsibility where the defendant can show that he or she is a "concurrent wrongdoer", which is to say that there are others whose acts or omissions can be said to have caused the damage the plaintiff claims, whether jointly with the defendant's acts or independently of them. If there are other wrongdoers they, together with the defendant, are all concurrent wrongdoers.
[17] The purpose of Pt 4 is achieved by the limitation on a defendant's liability, effected by s 35(1)(b), which requires that the court award a plaintiff only the sum which represents the defendant's proportionate liability as determined by the court. For that purpose, it is not necessary that orders are able to be made against the other wrongdoers in the proceedings. Section 34(4) provides that it does not matter, for the purposes of Pt 4, that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died. Thus under Pt 4 the risk of a failure to recover the whole of the claim is shifted to the plaintiff. [Footnote omitted]
However, Pt 4 does not set out a mechanism for the identificiation of all those persons who may be concurrent wrongdoers and between whom the claim is to be apportioned. In any particular case, that will depend on the pleadings. Any apportionment by the court will only occur between those persons who are identified by the pleadings as concurrent wrongdoers. It is not for the court to determine independently of the pleadings who the concurrent wrongdoers might be.
The conclusion of the previous paragraph is not affected by s 35A. That section simply gives the court power to award costs against a defendant who does not notify a plaintiff as soon as practicable of the existence of other potential concurrent wrongdoers. It does not require the plaintiff to join those concurrent wrongdoers. Nor does it relieve the defendant of the obligation to plead the existence of those concurrent wrongdoers as a ground for reducing its own liability.
Second, from a practical point of view, it will often be a defendant, rather than the plaintiff, who has an interest in identifying all the concurrent wrongdoers since the existence of other concurrent wrongdoers provides a mechanism by which the liability of the defendant may be reduced. The plaintiff, on the other hand, has no interest in identifying concurrent wrongdoers against whom it may not recover (because, for example, they are insolvent) since the effect of doing so may simply be to reduce the plaintiff's recoverable loss. In cases where a defendant seeks to reduce its liability by reference to the existence of other concurrent wrongdoers who have not been joined by the plaintiff as defendants in the proceedings, it is for the defendant to plead properly and to prove the existence of those concurrent wrongdoers: Ucak v Avante Developments Pty Ltd [2007] NSWSC 367. That requires a defendant to plead "with the same degree of precision and particularity as it would have done before the Act if it were bringing a cross-claim against an alleged concurrent wrongdoer": Ucak at [41]. It is not sufficient for the defendant "to assert a conclusion without the material facts upon which that conclusion depends": Ucak at [36].
Third, where an entity is joined as a defendant in the proceedings, that entity cannot be made liable for more than its proportionate share. The court cannot give judgment against that entity for more than that amount: s 35(1)(b); and that entity, once judgment is given against it, cannot be liable for contribution or indemnity to another concurrent wrongdoer: s 36. Nor can it be joined in subsequent proceedings concerning the apportionable claim: s 38. The judgment must be given "under this Part". There is a question whether that expression simply means a judgment in respect of an apportionable claim or whether it means a judgment in which the court has apportioned liability in accordance with s 35(1)(a): see Owners Strata Plan No 62660 v Jacksons Landing Development Pty Ltd [2011] NSWSC 415.
Fourth, in apportioning liability to a particular defendant, the court must take into account the extent of the defendant's responsibility for the damage or loss having regard to the extent of the responsibility of other defendants for that damage or loss and may (but need not) take into account the comparative responsibility of any other concurrent wrongdoer who is not a party to the proceedings (but who has been identified by the pleadings as a concurrent wrongdoer). The first limb of this proposition follows from s 35(1). That section limits the defendant's liability to an amount "reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss" and prevents the court from giving judgment for more than that amount. The second limb of the proposition follows from s 35(3)(b), which states that the court "may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings" (emphasis added). To put the point another way, read in isolation, s 35(1) appears to limit a defendant's liability by reference to its responsibility having regard to the responsibility of all concurrent wrongdoers (whether a party to the proceedings or not). However, s 35(3) appears to confer a discretion on the court to take account of the responsibility of non-parties. That section would have no work to do unless s 35(1) is read subject to it. To make sense of the whole section, s 35(3) must be read as a qualification on the principle stated in s 35(1).
Fifth, there is a question concerning the effect of Pt 4 on a defendant's right to claim contribution or an indemnity from a concurrent wrongdoer against whom judgment has not been given. Such a claim for contribution is not expressly excluded by Pt 4. In Vella v Permanent Mortgages Pty Ltd [2008] NSWSC 505; (2008) 13 BPR 25,343, Young CJ in Eq held that such a claim was maintainable. In that case, his Honour had determined that Hunt & Hunt Lawyers was liable for 12.5 per cent of the loss claimed by the plaintiff. Hunt & Hunt sought indemnity from a joint tortfeasor, Mr Flammia, for the whole of that amount. Mr Flammia, who was bankrupt, had not been joined as a defendant by the plaintiff. Hunt & Hunt succeeded before Young CJ in Eq. Young CJ's decision that Hunt & Hunt was liable for 12.5 per cent of the loss was overturned by the Court of Appeal (see Mitchell Morgan Nominees Pty Ltd v Vella [2011] NSWCA 390; (2011) 16 BPR 30,189) on the ground that the claim against Hunt & Hunt was not an apportionable claim because the loss in respect of which they were sued was different from the loss in respect of which the other tortfeasors were sued. That decision itself was overturned by a majoity of the High Court in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2012) 247 CLR 613. The High Court did not deal with Hunt & Hunt's claim for contribution against Mr Flammia. It said nothing to suggest that claims for contribution were excluded, except to the extent that they were excluded by s 36: see [2013] HCA 10; (2012) 247 CLR 613 at [21].
However, in Dymocks Book Arcade Pty Ltd v Capral Ltd [2010] NSWSC 195, McDougall J thought that such a claim was impliedly excluded by s 35. In that case, the plaintiff claimed damages from the defendants in respect of damage said to have been caused by water penetration through a metal roof of a building owned by the plaintiff. The first defendant supplied the roofing material. It was alleged that the second defendant, the architect, with others, had given negligent advice in relation to how the roof should be affixed to the underlying steel rafters. The architect asserted, in its response to the plaintiff's List Statement, that the plaintiff's claim was apportionable and nominated the engineer, among others, as a potential concurrent wrongdoer on the basis that the engineer had given advice on the suitability of certain screws for affixing the roof to the rafters. The architect also filed a cross-claim for contribution or indemnity under s 5 of the Reform Act from a number of parties, including the engineer. However, the plaintiff did not join any of those named parties as defendants in the proceedings.
McDougall J summarily dismissed the architect's claim for contribution. In doing so, his Honour said (at [9]):
...The purpose of contribution under s 5 is to adjust rights and liabilities between, on the one hand, defendants to suits who are adjudged to be liable, and, on the other, those who are joined as cross-defendants and are adjudged also to have been liable for the loss in respect of which the defendant is adjudged liable. By contrast, the purpose of Part 4 of the Civil Liability Act is to enable that apportionment of liability to occur in the action brought by the plaintiff, whether or not those responsible for any damage suffered by the plaintiff have been joined as concurrent wrongdoers. Thus, as Part 4 of the Civil Liability Act works its way out, the judgment given against a concurrent wrongdoer who is a defendant will represent only that concurrent wrongdoer's proportion of responsibility. It will not reflect any proportion of responsibility that the court attributes to any other concurrent wrongdoer. It follows, in my view necessarily, that when a judgment is given against a concurrent wrongdoer in respect of an apportionable claim, that judgment is not one in respect of which the concurrent wrongdoer is entitled to contribution or indemnity from any other concurrent wrongdoer. That is because, on the hypothesis that Part 4 requires to be considered, no other concurrent wrongdoer has contributed to the particular loss which is the particular or apportioned responsibility of the concurrent wrongdoer who is sued and against whom a judgment is given.
The issue was also considered by Campbell JA in Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231. That case, like the present one, involved an application for leave to amend a defence to plead that another party was a concurrent wrongdoer with the result that the defendant's liability for the plaintiffs' loss should be reduced. In that case, the defendant had consented to judgment against it, and the matter had been set down for hearing on the question of quantum before the application for leave to amend was made. The Court of Appeal refused leave to appeal against the primary judge's refusal to allow the amendment. Basten and Barrett JJA did so on the basis that the primary judge was correct to conclude that the judgment precluded the amendment sought. Campbell JA (with whom Basten JA agreed on the point) did so on the basis that the primary judge was correct to refuse the amendment on discretionary grounds. Campbell JA accepted that one matter the court could take into account was the prejudice the defendant suffered if the amendment was refused. In his Honour's view, that prejudice was not substantial because the defendant was still able to claim contribution from the other party in separate proceedings:
Even if it were the case that, by reason of evidence not placed before the primary judge or this Court, there were to be a realistic prospect of the Applicant being able to recover contribution from the Builder, the apportionment provisions in the Civil Liability Act do not prevent the Applicant from bringing such an action for contribution in separate proceedings: Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208; (2008) 21 VR 84. In the abstract one can say that it would impose an additional burden on the applicant to bring separate proceedings seeking contribution, by comparison with what would be involved in litigating the claim in the present proceedings. However, when the Applicant has not shown that it has rights of any substance against any alleged concurrent wrongdoer it is difficult to accord any significant weight to that consideration. The Applicant has not shown that refusal of the amendment would cause it any significant prejudice. (at [151])
His Honour did not refer to the decision of McDougall J. Moreover, it is not clear that Godfrey Spowers (Victoria) Pty Ltd v Lincolne Scott Australia Pty Ltd [2008] VSCA 208 stands for the broad proposition for which his Honour cited it. There, the defendant had settled a claim and then sought contribution. No judgment had been obtained against the defendant. Consequently, it was open to the defendant to contend that the amount for which it settled was greater than its proportionate share. Moreover, the Victorian equivalent of the CL Act expressly provides that "In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up": Wrongs Act 1958 (Vic), 24AI(3).
Despite that, and even assuming Campbell JA's statement is not binding on me, I prefer the approach adopted by Campbell JA. Part 4 does not expressly limit rights of contribution except in s 36. For the reasons given by McDougall J, s 35(1) must be construed as impliedly preventing a defendant from making a claim for contribution in the same proceedings. That is because such a claim for contribution would necessarily fail. Under s 35(1), the court is required to determine the defendant's responsibility for the judgment or loss and may not give judgment for more than the court considers just having regard to that responsibility. It cannot give judgment against a defendant which also reflects the extent of some other defendant's responsibility for the damage or loss. "Defendant" in this context includes a cross-defendant from whom contribution is sought: see s 35(5).
On the other hand, if a concurrent wrongdoer is not joined as a party to the proceedings, a defendant's liability could be greater than the amount that is just having regard to that defendant's responsibility. That could be so because the court exercises its discretion not to take into account the comparative responsibility of the concurrent wrongdoer who is not joined or because that person is not identified as a concurrent wrongdoer on the pleadings. In those cases, it is difficult to see why a person against whom judgment has been obtained under Pt 4 should not be entitled to make a claim for contribution against that concurrent wrongdoer. Certainly, there is nothing in Pt 4 which expressly prevents such a claim.
The last point to note is that the existence of other concurrent wrongdoers is available as a defence even if the plaintiff's claim against those persons is statute barred: see Owners Corporation Strata Scheme 56120 v Allianz Australia Insurance Ltd [2009] NSWSC 1480 at [7] per Einstein J.
Should the relevant proportionate liability defences be struck out?
As I have said, Sanderson seeks to strike out the defences on 2 grounds. One is that they are not properly pleaded. The other - available only in the case of Sanderson Motors - is that InterHannover and QBE should not be permitted to raise the defences at this late stage of the proceedings.
Mr Dawson, who appeared for QBE, submitted that the present case should not simply be seen as a case where InterHannover and QBE seek to raise a defence based on the existence of other concurrent wrongdoers. Rather, in his submission, the proportionate liability regime makes a fundamental change to the way in which liability is determined in the case of apportionable claims. An aspect of that change is said to be that the plaintiff is required to do everything it can to get all relevant concurrent wrongdoers into the one action. Consequently, in Mr Dawson's submission, normal case management principles do not apply to dealing with apportionable claims. Those principles must give way to the overall objective that all concurrent wrongdoers be joined in the one proceeding, and the responsibility is primarily on the plaintiff to bring that about.
I do not accept that submission. As I have said, Pt 4 sets out the legal framework that is applicable to apportionable claims. However, it does not provide a mechanism for identifying all potential concurrent wrongdoers and for joining them to the proceedings. It contemplates the possibility that, for whatever reason, potential concurrent wrongdoers will not be joined in the proceedings. It does not place any obligation on the plaintiff to join potential concurrent wrongdoers. The issues of apportionment that need to be resolved by the court will be defined by the pleadings. For the reasons I have given, in many cases, it will be a defendant who seeks to establish that another person is a concurrent wrongdoer since that provides a mechanism for reducing the defendant's liability.
Whether a defendant should be permitted to raise a defence that there are other concurrent wrongdoers raises the same issues as any other amendment sought to be made by a defendant. The relevant principles are set out in s 58 of the Civil Procedure Act 2005 (NSW), which provides:
(1) In deciding:
(a) whether to make any order or direction for the management of proceedings, including:
(i) any order for the amendment of a document, and
(ii) any order granting an adjournment or stay of proceedings, and
(iii) any other order of a procedural nature, and
(iv) any direction under Division 2, and
(b) the terms in which any such order or direction is to be made,
the court must seek to act in accordance with the dictates of justice.
(2) For the purpose of determining what are the dictates of justice in a particular case, the court:
(a) must have regard to the provisions of sections 56 and 57, and
(b) may have regard to the following matters to the extent to which it considers them relevant:
(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,
(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,
(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,
(iv) the degree to which the respective parties have fulfilled their duties under section 56(3),
(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,
(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,
(vii) such other matters as the court considers relevant in the circumstances of the case.
Section 56 sets out the overriding purpose of the Act and the rules - namely, to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 57 provides that, for the purpose of furthering the overriding purpose, proceedings are to be managed having regard to the following objects:
(a) the just determination of the proceedings,
(b) the efficient disposal of the business of the court,
(c) the efficient use of available judicial and administrative resources,
(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
In the present case, InterHannover and QBE were joined as parties to the proceedings on 31 May 2013. It is not entirely clear when they first became aware of the roles played by Mann, Bradshaw and Frankipile. However, InterHannover and QBE submit that it was apparent from expert reports obtained by Sanderson Motors that each of them was involved in the building project and that each of them carried out activities that caused vibrations that may have contributed to the damage suffered by Sanderson. Those expert reports were largely obtained in February and March 2013 and were served on InterHannover and QBE in connection with the application to join them as defendants. Consequently, by the time InterHannover and QBE were joined as parties, they largely knew as much as Sanderson Motors about the possible causes of the damage that it suffered and, in particular, the role of Mann, Bradshaw and Frankipile. Indeed, as I have said, QBE gave notice under s 35A of the CL Act that Frankipile was a potential concurrent wrongdoer before it was joined as a party, although the particulars given at that time hardly provided a sufficient basis on which to join Frankipile as a concurrent wrongdoer. It is apparent that Sanderson Motors elected not to join any of those parties as defendants on the basis of the information it had. That, however, did not relieve InterHannover and QBE of the duty to act promptly if they wanted to raise as a defence that those entities were concurrent wrongdoers.
Neither InterHannover nor QBE gave evidence of the investigations they undertook to determine whether there were other concurrent wrongdoers. Ms Williams, who is one of the solicitors acting for QBE, gave extensive evidence of the steps that she took to prepare the case for trial. Those steps were appropriate having regard to the complexity of the issues involved and the time it took Sanderson Motors to prepare its own evidence. Ms Williams took the approach that it was appropriate to marshall all the relevant material before preparing a brief for the expert that had been retained by QBE. That that took some time is not surprising having regard to the nature of the case. But Ms Williams' conduct is to be measured by reference to the task that she was undertaking, which was to prepare a pleaded case for trial. Ms Williams does not suggest that QBE, having filed its defence and identified the entities that it believed were concurrent wrongdoers, was still investigating whether other parties should be named in the defence as concurrent wrongdoers. If that is what QBE wanted to do, it is to be expected that it would give that task priority since the identification of the issues in the case would affect preparation by all the parties involved. It would also affect the allocation of a hearing date since, in the normal course of events, the case would not be set down for hearing until the issues had been defined and the evidence largely prepared. That is because it is not until that time that the parties and the court are able to make a proper assessment of the expected length of the case and the court can be confident that the hearing date will not have to be vacated because the parties are not ready for a trial.
Even before it was joined, QBE did identify Frankipile as a potential concurrent wrongdoer. However, it was not possible to make an assessment of the strength of the case against Frankipile so as to make an informed judgment about whether it should be joined, nor to plead a proper case against Frankipile, from the circumstances identified by QBE. The effect of the notice given by QBE was that Frankipile had been responsible for drilling close to the boundary of the Sanderson Property. But that, without more, does not establish that Frankipile breached a duty of care that it owed Sanderson Motors. It might be inferred from the fact that QBE chose not to plead that Frankipile was a concurrent wrongdoer that it had itself concluded that there was insufficient evidence, at least at the time it filed its defence, to justify a claim against it.
The position of InterHannover is no different. Like QBE, it faced difficulties in preparing the case for hearing because of the nature of the case and the fact that its insured was in external administration. However, it is apparent from the affidavit evidence of Mr Toogood, the solicitor for InterHannover, that it did not conduct any particular investigations into whether additional parties should be named in its defence as concurrent wrongdoers. It decided to name Mann and Bradshaw as concurrent wrongdoers after it had read the report obtained by QBE from Mr Mostyn.
It is difficult to make any assessment of the strength of the cases against Mann, Bradshaw and Frankipile. In each case, the material facts alleged to give rise to their liability are not pleaded. Instead, all that is pleaded is that a duty of care was owed, that it was breached and that it caused the damage in respect of which Sanderson claim. However, the nature of the duty that Sanderson was owed and how it was breached and how it caused the relevant loss are not pleaded. As I understand it, InterHannover and QBE's case is that it became apparent from Mr Mostyn's report that vibration must have been caused by the activities of Mann and Bradshaw since vibration was detected on days when they were working and the contractor performing the sheet piling work was not. Mr Mostyn also expresses the opinion that the installation of the footing piles by Frankipile could have been a cause of any damage that was caused to the Sanderson Property. But the fact that Mann, Bradshaw and Frankipile carried out work that caused vibration does not itself establish that they breached a duty of care they owed Sanderson. That would depend on a range of matters, including whether there were other means of carrying out the work that they did, whether they should have appreciated the possibility of damage to the neighbouring property, whether and what measures could have been taken to prevent that damage and whether they were responsible for taking those measures.
There can be little doubt that Sanderson Motors will suffer prejudice if the amendments are permitted. The significance of that prejudice will depend on the strength of the claim that Mann, Bradshaw and Frankipile are concurrent wrongdoers. If that claim is weak, the prejudice will be small, but so too, in that event, will the prejudice suffered by InterHannover and QBE if they are not permitted to raise the defence that Mann, Bradshaw and (in the case of QBE) Frankipile are concurrent wrongdoers. On the other hand, if the claim is strong, Sanderson Motors runs a substantial risk that its claim for damages will be reduced because Mann and Bradshaw, and, in the case of the claim against QBE, Frankipile, are found to be concurrent wrongdoers in circumstances where it has now lost the opportunity to join those parties as defendants. It is true that Sanderson Motors did not join Dickson after it had been named as a concurrent wrongdoer. But the fact that Sanderson Motors did not pursue one opportunity does not mean that it will not be prejudiced if it is deprived of the opportunity to pursue another.
On the other hand, in my opinion, InterHannover and QBE will not suffer a corresponding prejudice if the relevant defences are struck out. To the extent that they are liable to Sanderson Motors, that liability will reduce the liability of their respective insureds. If they are liable, they will be subrogated to their insureds' rights. To the extent that their or their insureds' liability has not been reduced to take account of the concurrent liability of Mann, Bradshaw and Frankipile, for the reasons I have given, their insureds will retain a right of contribution to which they will be subrogated. The limitation period in respect of that claim is governed by s 26 of the Limitations Act 1969 (NSW). Under that section, the limitation period in respect of a claim for contribution under s 5 of the Reform Act does not expire until the earlier of (a) a limitation period of two years running from the date on which the cause of action for contribution first accrues; and (b) a limitation period of four years running from the date of the expiration of the limitation period for the principal cause of action. The limitation period in respect of a cause of action for contribution does not start to run until judgment is given in the proceedings in respect of which the claim for contribution is made, or the proceedings are settled: see s 26(2); Gallagher Bassett Services NSW Pty Ltd v Murdock [2013] NSWCA 386 at [36]ff per Barrett JA (with whom Leeming and Gleeson JJA agreed). It is apparent, therefore, that the limitation period in respect of a claim for contribution has not expired and will not do so for some time yet. It would, of course, be necessary for InterHannover and QBE to bring separate proceedings to enforce their insureds' rights of contribution. But the prejudice they suffer will be the inconvenience of additional proceedings and irrecoverable legal costs. That prejudice cannot be equated to the prejudice that Sanderson Motors will suffer if the defences are permitted.
It follows from what I have said that the amendments should be struck out against Sanderson Motors on the basis that it is not in the interests of justice to permit them. There is a real question whether the defences InterHannover and QBE seek to raise by those amendments have substance. But if they do, Sanderson Motors will suffer substantial prejudice because it has lost the opportunity to join the relevant parties as defendants in circumstances where InterHannover and QBE had adequate time to consider whether there were other concurrent wrongdoers but chose not to consider that question independently of the preparation of the case for trial. It appears they made that choice because that was a convenient way for them to proceed and it was principally for Sanderson Motors to join all concurrent wrongdoers. For the reasons I have explained, I do not consider that that is the effect of Pt 4 of the CL Act, and, in my opinion, if InterHannover and QBE wanted to raise defences based on Pt 4, it was incumbent on them to do so promptly, particularly in circumstances where the limitation period in respect of the relevant claims was close to expiring.
It also follows from what I have said that the amendments should be struck out against both Sanderson Motors and Sanderson Eastern on the ground that they fail adequately to plead and to particularise the material facts on which the defences depend. In each case, the relevant pleading does no more than assert bare conclusions concerning the existence of a duty, breach and damage. The material facts which would justify those allegations are not pleaded. The fact that Sanderson Motors failed to object to an inadequate pleading that Dickson was a concurrent wrongdoer is not a reason for permitting InterHannover and QBE to maintain inadequate pleadings to which objection is taken.
It is open to InterHannover and QBE to seek leave to file amended List Responses to the claim by Sanderson Eastern raising the defence that Mann, Bradshaw and Frankipile are concurrent wrongdoers. But those claims must be properly pleaded. It is not appropriate to give leave in advance to InterHannover and QBE to file amended List Responses. Whether leave should be granted will depend on the form of the amended List Responses that InterHannover and QBE seek to advance.
Finally, with respect to Sanderson's application that they be provided with particulars of the claim that Dickson is a concurrent wrongdoer, in my opinion, it is not appropriate to order that InterHannover and QBE provide particulars of that claim in the abstract. InterHannover and QBE have now filed their evidence. To the extent that the nature of the allegation cannot be determined from that evidence, Sanderson should identify the particulars they require and seek them. It is open to Sanderson to make an application for particulars if any response they receive is inadequate.
Costs and orders
Sanderson have been largely successful in their motion. The motions filed by InterHannover and QBE were unnecessary. In any event, they raised the same issues as the issues raised by Sanderson's motion, and it would not be possible to separate the costs of those 2 motions from the costs of Sanderson's motion. Nor would it be possible to separate out the costs of the argument advanced by Sanderson Motors from the one advanced by both it and Sanderson Eastern. In those circumstances, it is appropriate that InterHannover and QBE each pay half of Sanderson's costs of the 3 motions.
The orders of the Court are:
(1) Paragraphs 28(f) and 28(g) of the document entitled "Commercial List Response" filed on 28 March 2014 by the fifth defendant be struck out;
(2) The underlined parts of paragraphs 24.2 (other than in the last line of that paragraph) and paragraphs 24.5, 24.6 and 24.7 of the Amended Technology and Construction List Response filed on 27 March 2014 by the sixth defendant be struck out;
(3) The fifth and sixth defendants each pay the plaintiffs half the plaintiffs' costs of their motion filed on 5 May 2014, the fifth defendant's motion filed on 20 May 2014 and the sixth defendant's motion filed on 16 May 2014.
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Decision last updated: 27 June 2014
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