Shark Fin Burwood Pty Ltd v Ducgo Pty Ltd
[2003] VSCA 20
•20 March 2003
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 4828 of 2001
| SHARK FIN BURWOOD PTY. LTD. |
| Appellant |
| v. |
| DUCGO PTY. LTD. |
| Respondent |
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JUDGES: | WINNEKE, P., CHARLES and CALLAWAY, J.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 17 February 2003 | |
DATE OF JUDGMENT: | 20 March 2003 | |
MEDIUM NEUTRAL CITATION: | [2003] VSCA 20 | |
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Damages - Contract - Respondent's breach exposing appellant to liability to third person - Whether amount of that liability recoverable as damages for breach of contract - Election - Whether appellant elected to rely on Part IV of Wrongs Act 1958.
Courts - Practice and procedure - Appeal - Application further to amend notice of appeal - Application for extension of time to file and serve notice of contention - Supreme Court (General Civil Procedure) Rules 1996, r.64.17(5).
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J. Ruskin, Q.C. with | Ligeti Partners |
| For the Respondent | Mr D.F.R. Beach, S.C. with Mr W.C. Grainger | Mills Oakley |
WINNEKE, P.:
For the reasons given by Callaway, J.A., I agree that this appeal must be allowed. Relevantly the “third party claim” made by the appellant, which fell to be considered by the trial judge, was the claim for indemnity for breach of contract made in accordance with the County Court Rules (Order 11.01); it was not, as the judge appears to have thought, the claim made for contribution between concurrent tortfeasors in accordance with the Wrongs Act 1958.
I, too, for the reasons given by his Honour, would refuse the respondent’s application for extension of time for the filing of its proposed notice of contention. I also agree, again for the reasons given, that the appellant’s application for leave to further amend its notice of appeal to include within the scope of its indemnity “its own costs of defending the proceedings, including bringing the proceedings against the third party” should be refused.
CHARLES, J.A.:
For the reasons given by Callaway, J.A., I agree that this appeal must be allowed and orders made as proposed by his Honour.
CALLAWAY, J.A.:
The appellant operates a restaurant. A patron of the restaurant, Mr Ma, fell ill after attending a banquet at which a number of courses were prepared from a fish supplied by the respondent which was unfit for human consumption. Mr Ma sued the appellant for damages in the County Court and the appellant joined the respondent as a third party. When Mr Ma joined the respondent as a second defendant, the third party notice was treated as a notice seeking contribution or indemnity between the defendants.
The statement of claim indorsed on the third party notice relied, among other things, on the contract for the supply of the fish by the respondent to the appellant.
It was pleaded that there were implied terms of the contract to the effect that -
(a)the fish would be reasonably fit for the purpose of re-sale by the appellant at its restaurant to members of the public;
(b)the fish would be of merchantable quality; and
(c)the respondent would indemnify the appellant in respect of any action for damages brought by any person who suffered injury, loss or damage as a consequence of a breach of the contract by the respondent.
The particulars referred, among other things, to s.19 of the Goods Act 1958.
It was further pleaded that, if Mr Ma suffered injury, loss and damage as alleged in his statement of claim, that injury, loss and damage was caused by a breach of terms (a) and (b) above; and that, in the event that Mr Ma was awarded damages against the appellant, the appellant would suffer loss and damage as a consequence of that breach.
The third party statement of claim concluded as follows:
"18.In the circumstances, the defendant is entitled to indemnity or contribution from the third party in respect of the plaintiff's claim to the extent of the total amount that the plaintiff may recover against the defendant, or such part thereof as may be found to be just and equitable having regard to the third party's responsibility for the plaintiff's said loss and damage.
AND THE DEFENDANT CLAIMS AGAINST THE THIRD PARTY
A.Indemnity or contribution in respect of any amount for which it may be found liable to the plaintiff.
B.Judgment for any amount for which it may be found liable to the plaintiff.
C.Judgment for the amount of any costs the defendant may be ordered to pay the plaintiff and for the amount of its own costs of defending this action and of these proceedings against the third party."
The fish was a Maori Wrasse. There was undisputed evidence at the trial that that is "a species of fish known to cause ciguatera poisoning", that "[t]here is no part of the fish that is safe for its consumption" and that "there is no reliable testing available that can be used to detect ciguatera toxins prior to consumption". The learned trial judge found each of the defendants liable in negligence to Mr Ma and further found that the appellant was in breach of its contract with him, in that the fish served to Mr Ma was not of merchantable quality.
After referring to the status of the third party notice as a notice of contribution or indemnity between the defendants, his Honour continued:
"The notice, in effect, pleads an agreement by the first defendant with the second defendant, whereby the second defendant has supplied to the first defendant a live fish for resale by the defendant at its restaurant.
In addition to the primary finding of negligence against it, I find that the second defendant was in breach of a condition implied by law of that agreement that it had with the first defendant, in that it had supplied a fish that was clearly not of merchantable quality, in that it was unfit for human consumption.
I find very little merit in the second defendant's argument that the second defendant did no more than deliver to the first defendant what was asked of it, namely a live Maori Wrasse, or Coral Trout.
In the circumstances, this court considers it just and equitable that the second defendant should contribute 50 per cent of the total amount that the plaintiff will recover from the first defendant, having regard to the second defendant's responsibility for the plaintiff's loss and damage."
The order of the Court was that there be judgment for Mr Ma against the defendants in the sum of $22,000, being damages of $20,000 plus $2,000 damages in the nature of interest; that the respondent indemnify the appellant "to the extent of 50 per cent on the judgment and orders herein"; and that the defendants pay Mr Ma's costs. It is from that order that the present appeal is brought, solely as between the appellant and the respondent.
The language of the last paragraph quoted from his Honour's reasons in [9] above derives from Part IV of the Wrongs Act 1958. Section 23B of that Act provides for proceedings for contribution by a person liable in respect of any damage suffered by another person against a third person liable in respect of the same damage. Section 24(2) provides that, subject to certain qualifications, in any proceedings for contribution under s.23B, the amount of the contribution is to be such as may be found by the court (if the trial is without a jury) to be just and equitable having regard to the extent of the third person's responsibility for the damage. Section 24(2) goes on to provide that the court may direct that the contribution "shall amount to a complete indemnity".
There are six grounds of appeal but they raise a single issue. The appellant's contention is that, instead of applying the provisions of the Wrongs Act, the judge should have found that the appellant was entitled to be fully indemnified by the respondent having regard to the latter's breach of term (b) in the third party statement of claim.[1] The orders sought in the notice of appeal, which has already been amended once pursuant to leave granted last year, are:
"That the order made on 26 February 2001 whereby the second defendant was ordered to indemnify the first defendant to the extent of 50% on the third party notice be set aside and in lieu thereof the second defendant be ordered to pay the first defendant the full amount of the damages and costs recovered by the plaintiff herein, as damages for breach of contract." (Emphasis added.)
[1]See [5] above.
In my opinion the appellant's contention is correct. The judge found that the respondent was in breach of term (b) in the third party statement of claim. The damages flowing from that breach include an amount equal to the damages and costs recovered by Mr Ma against the appellant. But for the respondent's breach of contract, the appellant would not have been liable to Mr Ma and he would not have been able to recover those damages and costs against it.[2] It matters not that the appellant was in breach of a duty of care it owed to Mr Ma.
[2]The damages are unproblematic and no distinction was drawn in argument between the damages and the costs payable to Mr Ma, as opposed to the appellant's own costs and the costs of the third party proceedings. The inclusion of such costs depends on the facts. Compare Mowbray v. Merryweather [1985] 2 Q.B. 640 at 645-646 with Vogan & Co. v. Oulton (1899) 16 T.L.R. 37 at 38, The Kate [1935] P.100 at 113 and Redken Laboratories (Australia) Pty. Ltd. v. Docker [2000] NSWCA 100 at [51].
So much may be ascertained as a matter of principle but, as it happens, there is a good deal of authority to the same effect. Mr Ruskin relied on Mowbray v. Merryweather, Brittania Hygienic Laundry Co. Ltd. v. John I. Thornycroft & Co. Ltd.[3], Lexmead (Basingstoke) Ltd. v. Lewis[4], Regal Pearl Pty. Ltd. v. Stewart[5], RTA v. Fletcher & Leighton Contractors[6] and Hardchrome Engineering Pty. Ltd. v. Kambrook Distributing Pty. Ltd.[7]. Other cases citing, approving or applying Mowbray v. Merryweather were also mentioned in the appellant's outline of submissions.
[3](1925) 41 T.L.R. 667, appeal allowed on a different point at (1926) 42 T.L.R. 198.
[4][1982] A.C. 225.
[5][2002] NSWCA 291.
[6][2001] NSWCA 63.
[7][2000] VSC 359.
Subject to a point relating to contributory negligence, to which I shall come later, Mr Beach did not contest that that was the law. He endeavoured to meet the point by arguing, first, that the appellant had not claimed such damages for breach of contract in the third party notice; secondly, that the appellant had elected at the trial to rely only on the provisions of the Wrongs Act; and, thirdly, that in any event the judge erred in finding that the respondent was in breach of term (b) in the third party statement of claim, because the fish was of merchantable quality.
The first argument depended partly on the phraseology of the third party statement of claim and partly on passages in the transcript below. It became abundantly clear in the course of the argument, both from the portion of the transcript included in the appeal book[8] and from further transcript with which Mr Ruskin was permitted to supplement it,[9] that the appellant's claim against the respondent was framed as a claim for damages for breach of contract.
[8]See especially 112-114, 152-154 and 187.
[9]See especially 131.
Paragraph 18 of the third party statement of claim, on which counsel relied, is in two distinct halves. Only the second reflects the language of the Wrongs Act. Indeed the expression "indemnity or contribution" in the first half of paragraph 18 does not strictly reflect the language of the Act, which speaks of contribution only, albeit contribution that may "amount to a complete indemnity".[10] Whatever may be said of paragraph A of the prayer for relief, paragraphs B and C comprehend damages for breach of contract.[11]
[10]Section 24(2).
[11]See also [6] above.
That being so, the second argument stands or falls on the following exchanges between the judge and counsel after his Honour had given his reasons for the orders he was about to make:
"MR BROOKES: … Just while my friend's making some calculations; Your Honour, the first defendant of course seeks damages for breach of contract, according to the finding that Your Honour has found on the second contract, and in my submission, there ought to be an order consequential upon that finding of breach of agreement, that the damages for breach of agreement be the full extent of the plaintiff's loss, as Your Honour has found.
HIS HONOUR: Yes.
MR BROOKES: In addition to the 50 per cent tortious finding that Your Honour has found; I'd seek an order that the second defendant pay the first defendant, by way of damage for breach of agreement; the sum of $20,000 plus the costs plus the interest.
HIS HONOUR: What do you say as to that, Mr Grainger?
MR GRAINGER: Such an order would be inappropriate, Your Honour. Mr Brookes's client, or the first named defendant's entitlement is under the Wrongs Act.
HIS HONOUR: Yes.
MR GRAINGER: That is the sole - it is in accordance with that as to their contribution of 50 per cent.
HIS HONOUR: Fifty per cent it seems to me should be the appropriate figure, yes."
Mr Brookes was counsel for the appellant and Mr Grainger was counsel for the respondent. Not only had Mr Brookes made it clear in the course of the trial that he was seeking damages for breach of contract that would entitle his client to a complete indemnity in respect of the damages and costs that might be recovered by Mr Ma, but he had also at one stage expressly disclaimed reliance on the Wrongs Act.[12]
[12]Transcript at 131.
Even so, Mr Beach argued, Mr Brookes accepted the 50 per cent award pursuant to the Wrongs Act before asking in addition for 50 per cent by way of damages for breach of contract. Read literally that may be so, but I do not think that counsel's words amounted to an election to abandon the claim in contract. The first submission he made reiterated that his client sought damages for breach of contract and that those damages should be to the full extent of Mr Ma's loss. He then sought an order that the respondent pay the appellant, by way of damages for breach of contract, the full sum of $20,000 plus costs and interest. The words "In addition to the 50 per cent tortious finding that Your Honour has found" were probably motivated by a desire to be courteous to the judge.
The third argument requires a notice of contention. In most jurisdictions it would have to be filed and served within 14 or 21 days after service of the notice of appeal, but in Victoria such a notice may be filed and served at any time up to 14 days before the day fixed for the hearing of the appeal.[13] That was designed, like other differences between the Victorian rule and the rules in force in other jurisdictions,[14] to cater for the possibility of fresh solicitors or counsel but to prevent surprise and last minute changes of tack. That is not to say that an extension of time within which to file and serve a notice of contention would be refused if justice required a late point to be considered.[15]
[13]Supreme Court (General Civil Procedure) Rules 1996, r.64.17(5).
[14]Rule 64.17(5) extends to a ground, whether of fact or law, which was not decided or was erroneously decided or was not raised for decision below.
[15]An arguably more liberal approach has been taken under the narrower rule dealing with notices of contention in the High Court: see Owners of the Ship"Shin Kobe Maru" v. Empire Shipping Co. Inc. (1994) 120 A.L.R. 12 at 14-15.
The proposed notice of contention on which the appellant sought to rely was served on Wednesday 12th February 2003. The appeal was listed for hearing on the following Monday. Mr Beach sought leave to file the notice out of time. We permitted the argument to be put but reserved our ruling on the application for an extension of time.
The argument is that the judge concluded that Maori Wrasse were at all material times known to cause ciguatera poisoning and that no part of that fish was safe for human consumption; that the appellant specifically ordered a Maori Wrasse from the respondent; and that it had not been shown that, as goods of that description, the fish was defective. The contract called for the supply of a Maori Wrasse, the parties were bound to deliver and accept goods of that description and, so the argument proceeded, the fish from which the banquet was prepared was normal for goods of that description.[16]
[16]Reference was made to George Wills & Co. Ltd. v. Davids Pty. Ltd. (1957) 98 C.L.R. 77 at 88-89 and Speedway Safety Products Pty. Ltd. v. Hazell & Moore Industries Pty. Ltd. [1982] 1 N.S.W.L.R. 255 at 261-262.
Although a similar argument was advanced below[17], in my opinion an extension of time should be refused. Justice does not require the point to be considered. There was no evidence that the appellant, by any of its servants or agents, knew that Maori Wrasse was a species of fish known to cause ciguatera poisoning and that no part of it was safe for human consumption. The judge considered that the servants and agents of both defendants should have known those facts, but that is a different matter. This was a simple case of the supply of a fish by a fishmonger to a restaurant. It was no different from the supply of a motor car, known in the trade to have defective brakes, to a purchaser who was unaware of that fact.
[17]See the third paragraph of the passage set out at [9] above.
I said earlier that Mr Beach's acceptance of the law exemplified by Mowbray v. Merryweather was subject to a point about contributory negligence. Paragraph 7 of the respondent's outline of submissions read:
"7.Even if the appellant is permitted to amend and elect to claim damages for breach of contract, it is not inevitable that those damages assess at an amount equal to the plaintiff's claim and costs. Issues as to contributory negligence (as to which see Part V of the Wrongs Act as amended by the Wrongs (Amendment) Act 2000) and the recoverability in respect of a loss which the appellant ought to have avoided would arise (it being known that Maori Wrasse is a species of fish known to cause ciguatera poisoning: …)."
It will be observed that the point is dependent on the appellant's not having put its case in contract. As the appellant did frame its claim in contract, the point does not arise. It may be doubted in any event that it would succeed, because the liability of the respondent to the appellant for breach of term (b) is not liability for "a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort"[18].
[18]Wrongs Act, s.25 as amended by s.4 of the Wrongs (Amendment) Act 2000.
For these reasons I consider that the appellant is entitled to the relief sought in its notice of appeal. In the course of argument Mr Ruskin applied for leave further to amend the notice of appeal and raised a question about the form that the order should take.
The orders sought in the notice of appeal are set out at [12]. Counsel sought to amend the notice so that it would also seek "judgment in favour of the appellant in respect of its own costs of defending the proceedings, including bringing the proceedings against the third party". It was submitted that such costs were within the scope of the loss recoverable for breach of term (b).[19] It was conceded that, although this additional head of damages was mentioned in paragraph C of the prayer for relief in the third party statement of claim, no argument was directed to it in the Court below, unless such argument could be teased out of the words "plus the costs" in the second submission made by Mr Brookes after his Honour had given his reasons.[20]
[19]Compare the Brittania Hygienic Laundry case at 668-669 and The Kate at 113-114, but those cases do not answer all the questions that might arise if the notice of appeal were amended as proposed.
[20]See [18] above.
In my opinion it can not be teased out of those words. Moreover the part of the pleading summarized at [6] above did not foreshadow this claim and paragraph 18 of the third party statement of claim, which drew the previous paragraphs together, expressly limited the appellant's entitlement to indemnity or contribution to "the total amount that the plaintiff may recover against the defendant".[21] It would not be in the interests of justice to allow this new head of damages to be claimed, effectively for the first time, at this late stage.[22] I would refuse leave further to amend the notice of appeal.
[21]I express no opinion as to whether the claim, or part of it, should have been advanced below. Mr Brookes did not draw the third party statement of claim.
[22]Geelong Building Society v. Encel [1996] 1 V.R. 594 at 604-609 and Fry v. Oddy [1999] 1 V.R. 557 at [75].
Because there are or may be other proceedings in which the appellant proposes to rely, or seek to rely, on its contract with the respondent, Mr Ruskin asked us to express the order in favour of his client as an order that the respondent indemnify the appellant. I would be prepared to do that simply as a matter of following the language used in the Court below and adopting a word that is often used when third party proceedings or proceedings for contribution are successful, but in doing so I imply no departure from what I have written above. The appellant is entitled to that order because there has been a breach of term (b) in the third party statement of claim and because the damages for that breach include an amount equal to the damages and costs recovered by Mr Ma.[23] The judge made no finding regarding the alleged term (c)[24] and his order did not, as I apprehend it, purport to enforce that term. The order we substitute should be taken to have the same operation as the order made in the County Court.
[23]As McCardie, J. said in the Britannia Hygienic Laundry case at 668 (second last sentence), a breach of contract may carry with it a measure of damages which substantially amounts to an indemnity.
[24]See [5] above.
In summary, I propose orders in accordance with the following minutes:
1.Refuse leave to the appellant further to amend the notice of appeal.
2.Refuse an extension of time within which to file and serve a notice of contention.
3.Allow the appeal.
4.Set aside paragraph 2 of the order made by the County Court on 26th February 2001 and in lieu thereof order that the second defendant indemnify the first defendant in respect of the whole of its liability to the plaintiff under that order.
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