Singleton v Freehill Hollingdale & Page

SINGLETON & ANOR v FREEHILL HOLLINGDALE & PAGE
[2000] SASC 278

OLSSON J

The Applications

I have before me two separate matters.
By application filed on 14 June 2000, the defendant sought a variety of interlocutory orders, some only of which have been pursued and argued at this stage. At this point it seeks that the plaintiffs’ claim be dismissed or, alternatively, stayed on the grounds that the Further Amended Statement of Claim, on the face of it, does not disclose any viable cause of action - for reasons to which I shall come in due course; the pleaded circumstances reveal the existence of a situation as between the plaintiffs which constitutes unlawful maintenance and champerty; and, in any event, the defendant is entitled to invoke the “Anshun” principle against the plaintiffs.
By application filed on 31 May 2000 the plaintiffs seek leave, to the extent that leave is required, to file the Further Amended Statement of Claim presented by it to the Court on 25 May 2000. An issue arises as to the extent to which, if at all, such leave is required. The defendant also raises questions as to certain alleged deficiencies in the proposed pleadings, in the event that its primary applications do not succeed. However, by agreement, these have been put to one side, pending the determination of the strike out or stay application.

Relevant Background Context

The matters debated before me were argued on the basis of the content of the document “Further Amended Statement of Claim” presently on file. The relevant asserted factual context is, therefore, to be derived from it. I will recite the highlights of the pleaded factual history and also some details not in dispute, in narrative form.
At relevant times, the plaintiff, Singleton, was a director of Kia Ora Gold Limited (“Kia Ora”), which subsequently changed its name to The Duke Group Limited (“Duke”). Duke was, ultimately, the subject of a winding up order.
In 1992 an action was commenced in this Court by the liquidator of Duke against a variety of defendants, including its directors and various accountants, in relation to their involvement in a takeover by Duke (then Kia Ora) of a company known as Western United Limited - which takeover, in the circumstances in which it occurred, gave rise to disastrous financial consequences for Duke. (The full details of what occurred are set out at length in the judgment of Mullighan J in Duke Group Limited (In Liq) v Pilmer & Ors (1998) 144 FLR 1 (“the trial judgment”). I need not here rehearse most of them. The history is both lengthy and complex.)
Inter alia, for reasons expressed in the trial judgment, Mullighan J held the directors of Duke (including Singleton) liable to pay damages to Duke for breach of statutory and fiduciary duties as Directors of Duke, in relation to the Western United Limited takeover.
Appeals as to various aspects of the trial judgment were prosecuted by various parties before the Full Court. Its judgment as to them was pronounced on 13 August 1999 (Duke Group Limited (in liquidation) v Pilmer & Ors (1998-99) 73 SASR 64 (“the appeal judgment”)). A cross appeal as to quantum of damages was allowed and the Full Court reserved for further consideration its decision on the issue of contribution as between the defendants. The damages adjudged to be paid by the directors jointly amounted to a sum in excess of $188 m.
Pursuant to special leave, an appeal as to certain issues has been argued before the High Court. No decision has been published in relation to them at this time.
The present defendant, Freehill Hollingdale & Page, was not a party to the action heard by Mullighan J.
It is the plaintiffs’ case that, in 1987, the Chairman, a director and the Chief Executive Officer of Duke retained the defendant to act as solicitor for both the corporate entity and the members of its board and to advise them in relation to all aspects of the proposed takeover, including advice to ensure that the directors did not breach their fiduciary and statutory obligations.
The plaintiffs seek to aver the existence of many and varied duties of the defendants to both the corporate entity and the directors in relation to matters said to arise from the above retainer and breaches of them amounting to negligence. Specifically, it is said that the defendant was negligent in relation to its obligations to both Singleton and Duke whereby Singleton suffered the loss arising from the judgment entered against him pursuant to the appeal judgment. It is also asserted that, by reason of the above recited situation, the defendant is a joint tortfeasor who, by virtue of s 25 of the Wrongs Act 1936, is liable to indemnify the plaintiffs against, or make contribution in relation to, the damages awarded against them.

The Parties to the proceedings

The present action was commenced by summons on 28 January 2000.
The nominated plaintiffs were Keith Daniel Singleton and The Duke Group Limited (in liquidation) ACN 007 554 690. The “defendant” stipulated in the summons was “Freehill Hollingdale & Page and the persons set forth in ‘Schedule A’ [to that summons]”. The persons listed in the Schedule are those who were asserted to be the principals or partners of the defendant firm.
The document titled “Further Amended Statement of Claim”, inter alia, sets out to plead that, by a deed of assignment made on 24 December 1999, the plaintiff Singleton assigned to Duke “his causes of action that are the subject of these proceedings” and “authorised Duke to pursue the causes of action in his name subject to the terms expressed in” the relevant deed.
It is common ground that the deed in question is that which is titled “SETTLEMENT AGREEMENT” and comprises exhibit “BCR3” to the affidavit of Brendan Charles Roberts filed in these proceedings on 14 June 2000. That document and the attachments to it are of vital importance in relation to certain issues ventilated before me. They read as follows:-

“SETTLEMENT AGREEMENT
THIS AGREEMENT is made on 24 December 1999
BETWEEN:
THE DUKE GROUP LIMITED (IN LIQUIDATION) ACN 007 554 690 of C/- Level 8, 26 Flinders Street, Adelaide, South Australia (“Company”)
KEITH DANIEL SINGLETON of 2 Dartmouth Avenue, City Beach, Western Australia (“Singleton”)
INTRODUCTION
A...... The parties are in dispute, which dispute has been the subject of the proceedings. A judgement has been made against Singleton in such proceedings for in excess of $30 million.
B.The parties have agreed to resolve this dispute in the manner set out in this document.
TERMS
1.Definitions
......... “Dispute” means the dispute between the parties the subject of the proceedings in the Supreme Court of South Australia Action No 1874 of 1992.
2.Interpretation
......... In this document
2.1neuter includes masculine and feminine;
2.2singular includes plural and vice versa;
2.3reference to a person includes a corporation and partnership and vice versa;
2.4headings do not affect interpretation;
2.5reference to a party:
2.5.1if no more than 1 means each of them jointly and severally;
2.5.2..... includes a successor to the rights or obligations of that party.

3...... Condition Precedent
The forbearance, release and indemnity given in this document are subject to the condition precedent that Singleton makes a written offer to the Company to assign certain rights to the Company, such offer to be in the form of the Schedule to this document and to remain open for acceptance for at least 5 days after receipt by the Company (“the Offer”).
4...... Forbearance and Release
Subject to the satisfaction of the condition precedent specified in clause 3:
4.1and subject to Singleton’s continuing compliance with the terms of any agreement resulting from the Offer, the Company;
4.1.1agrees not to take any further action, suit or proceedings against Singleton in respect of or relating to or in connection with any matter the subject of the Dispute; and
4.1.2..... indemnifies Singleton against all liability or costs in respect of any action, claim, suit or proceedings taken against Singleton arising out of any action, claim suit or proceedings brought against any third party by the Company relating to the Dispute (but limited to the amount actually recovered by the Company as a result of the action, claim, suit or proceedings against the third party).
4.2Singleton releases the Company from all liability known or unknown, present or future, certain or contingent which might but for this document arise;
4.2.1..... in respect of or relating to or in connection with any matter the subject of the Dispute; or
4.2.2as a result of Singleton being a creditor or shareholder of the Company.

5.Entire Agreement
This document and the Offer (if accepted) constitute the entire agreement between the parties with respect to the settlement of the Dispute and contains all of the representations, warranties, covenants and agreements of the parties in relation to the settlement of the Dispute as at the date of this document. Each party acknowledges that it has not relied on any oral or written statement, representation, undertaking, covenant or agreement made before the date of this document relating to the matters the subject of this document and not contained in this document.
6.Reservation of Rights
The Company reserves its rights against all parties other than Singleton involved in the Dispute and nothing in this document is to be taken as expressly or impliedly constituting any release of such other parties.
7.Severance
If any part of this document is or becomes void or unenforceable that part is or will be severed from this document so that all parts that are not or do not become void or unenforceable remain in full force and effect and are unaffected by that severance.
8.Proper Law
This document is governed by and to be interpreted in accordance with the laws of South Australia and where applicable the laws of the Commonwealth of Australia.
9.Further Assurances
Each party must execute and do all things necessary or desirable to implement and give full effect to the provisions and purpose of this document.
10.Costs and Stamp Duty
Each party is liable for its own legal costs in relation to this document but the parties agree that the Company will pay the stamp duty on this document.
11.Variation
This document may be varied only by written agreement.
12.Counterparts
This document may be executed in counterparts, each of which is an original instrument and all of which constitute one and the same instrument.
EXECUTED as an agreement
THE COMMON SEAL of THE DUKE GROUP               )
LIMITED (IN LIQUIDATION) ACN 007 554 690 )
was hereunto affixed in the presence of:  )
(signed)
Liquidator
JOHN SHEAHAN
Name (please print)
SIGNED by KEITH DANIEL SINGLETON in                 )
the presence of:  )       (signed)
(signed)
Witness
Amber Goodard
Name of Witness

SCHEDULE
OFFER
BY
KEITH DANIEL SINGLETON
TO
THE DUKE GROUP LIMITED (IN LIQUIDATION)
OFFER dated 23 December 1999
BY

KEITH DANIEL SINGLETON of 2 Dartmouth Avenue, City Beach, Western Australia (“Singleton”)
TO
THE DUKE GROUP LIMITED (IN LIQUIDATION) (ACN 007 554 690) of c/- Level 8, 26 Flinders Street Adelaide SA 5000 (“Company”)
INTRODUCTION
A...... Singleton has or may have certain rights of action as specified in the schedule (“the Rights”).
B.Singleton wishes to make an offer to the Company to assign Singleton’s interest in the Rights on the following terms.
TERMS
1.Interpretation
......... In this document:
1.1neuter includes masculine and feminine;
1.2singular includes plural and vice versa;
1.3reference to a person includes a corporation and partnership and vice versa;
1.4headings do not affect interpretation;
1.5reference to a party:
1.5.1if more than 1 means each of them jointly and severally;
1.5.2..... includes a successor to the rights or obligations of that party under this document or any agreement resulting from acceptance of this offer.

2.Offer
Singleton offers to assign to the Company all Singleton’s interests in the Rights for a consideration of among other things:
2.1the forebearance and indemnity provided by the Company to Singleton in a Settlement Agreement between them dated or intended to be dated approximately the same date as this Offer; and
2.2$10.00;
(“the Offer”)

3.Acceptance
The Offer may only be accepted by the Company by oral acceptance of the Offer by the liquidator of the Company or a person appointed in writing by him and no provision contained in this document constitutes an agreement unless such acceptance is made.
4.Warranties and Acknowledgments by Singleton
4.1Singleton warrants that he has done nothing to prejudice the Rights except as disclosed in writing to the Company.
4.2Singleton acknowledges that for the Company to obtain the full benefit of the Rights, the Company will need to pursue the Rights in the name of Singleton. For this purpose, and on the terms of this Offer, Singleton agrees to allow the Company to take all such actions and do all such things in the name of Singleton as are considered by the Company or its legal representatives to be reasonably necessary to enforce the Rights and otherwise to obtain full benefit and enjoyment of the Rights.

4.3Without limiting Clause 4.2:
4.3.1Singleton must provide all reasonable co-operation and assistance to the Company including by providing information and statements (if necessary by affidavit) in relation to the Rights; and
4.3.2..... Singleton must not do anything to prejudice the Company’s exercise or other dealings with the Rights.

5.Exercise of the Rights
5.1Singleton must comply with all reasonable written directions of the Company or its legal representatives (“Directions”) in relation to dealings with the Rights including their enforcement, enjoyment, settlement or compromise (“Dealings”).
5.2Singleton must not take any action in relation to Dealings without the Company’s prior written consent which may be withheld for any reason.

6.Company’s Discretion
6.1The Company is not obliged to pursue the Rights or conduct any Dealings and may at any time without consultation with Singleton, abandon, settle or compromise the Rights either in whole or in part.
6.2The Company has a complete discretion in relation to Dealings and the conduct of all actions comprising the Rights.

7.Indemnity
The Company indemnifies Singleton for Singleton’s reasonable costs and expenses and all liability incurred by Singleton in complying with Directions or otherwise complying with his obligations under any agreement resulting from acceptance of the Offer (other than under clause 9). Such indemnity immediately ceases to apply as if it was not given where Singleton breaches his obligations under such agreement and fails to remedy such breach within 48 hours of notice of the breach from the Company.
8.Confidentiality
8.1Singleton must not disclose the existence or contents of the Offer or of any agreement resulting from acceptance of the Offer or the assignment of the Rights or the Dealings to any person except:
8.1.1as required by law;
8.1.2..... for the purposes of obtaining legal advice;
8.1.3as permitted in writing by the Company.
8.2The Company may at any time give notice in writing of the assignment to any person.

9.Costs
9.1A party must pay its own costs of negotiation, preparation and execution of the Offer.
9.2Duke will pay within the statutory time the stamp duty (if any) on any agreement arising from acceptance of the Offer.

SIGNED by KEITH DANIEL SINGLETON in        )
the presence of  )       (signed)
(signed)  Witness
  Name of Witness
SCHEDULE
THE RIGHTS OF ACTION
Any claim, cause of action, chose in action or right now or at any time directly or indirectly available to Singleton arising from:
(a)... Singleton’s position as director of the Company in 1987 or 1988; and
(b)Singleton’s status as a defendant and judgment debtor to the Company in Supreme Court of South Australia Action No. 1874 of 1992.”

It is immediately obvious that Singleton has merely joined in these proceedings as a plaintiff for the purpose of discharging his obligations under the deed; and not for the purpose of pursuing any beneficial goal of his own. Duke plainly has the carriage of the proceedings, which it seeks to prosecute for its own sole benefit. However, it does so not in its own right, but exclusively in its capacity as an assignee of any causes of action available to Singleton.
The broad effect of the deed is that, in return for the relevant assignment, Duke must not take any steps to enforce its judgment against Singleton. In other words, despite the fact that, by virtue of the deed, Singleton can never be called upon to actually satisfy the judgment entered against him in favour of Duke, it is contended that, nevertheless, the latter is entitled, through the former and by use of his name, to recover the amount of the judgment from the defendant.

Do the propounded causes of action run foul of the principles of maintenance and champerty?

A useful exposition of the ancient concepts of maintenance and champerty is to be found in the judgment of the Full Court in Magic Menu Systems Pty Ltd and Anor v AFA Facilitation Pty Ltd & Ors (1997) 142 ALR 198 at 205-207 (“Magic Menu”).
It was there pointed out that maintenance, which consisted of the assistance or encouragement of a party to an action in which the maintainor had no legal interest, was, from an early time, regarded as a crime. It later became recognised as a civil wrong.
Champerty was a species of maintenance, in which an arrangement was come to, whereby the maintainor and the plaintiff would share in the outcome of the action. It was especially feared that the champertor’s financial stake in the litigation provided a strong temptation to suborn witnesses and pursue worthless claims.
So it was that, essentially on public policy grounds, the courts strongly set their faces against champertous arrangements and declared them to be unlawful and invalid. Their concern was that the remedial processes of the law might be used as a tool of oppression.
However, the Full Court pointed out in Magic Menu that a consideration of published authority on the topic reveals that what maintained actions were thought to produce, and which was inimical to the public interest, had altered over the course of time with changing social conditions, as had the recognition of interests which were sufficient to justify interference in another’s litigation, by supporting it.
The Full Court observed that, in Martell & Ors v Consett Iron Co Ld [1955] 1 Ch 363, Danckwerts J commented that, as at that time, support of legal proceedings based on a bona fide common interest, financial or philosophical, must be permitted if the law itself was not to operate as oppressive. It went on to comment that “The courts today, in our view, are likely to take an even wider view of what might be acceptable, particularly if procedural safeguards are present or able to be applied.”
I take the Full Court to have accepted that, whilst the torts of maintenance and champerty have been abolished in various States by statute (in this State in 1992 by means of paragraph 3 of Schedule 11 to the Criminal Law Consolidation Act 1935), nevertheless, the ability of the Courts to treat agreements for maintenance as contrary to public policy, and therefore illegal, remains unaffected, having regard to the terms of the statutory abolition. (Reference is made to Trendtex Trading Corporation and Anor v Credit Swisse (1980) QB 629 at 653 [and see also the same case on appeal reported as (1982) AC 679 at 695], McFarlane v EE Caledonia Ltd (No 2) [1995] 1 WLR 366 at 370, Roux & Ors v Australian Broadcasting Commission (1992) 2 VR 577 at 605 and Giles v Thompson (1994) 1 AC 142). It is, the Full Court concluded, necessary to have regard to each case in its particular circumstances; and the questions of public policy with which the courts will be concerned are those which have regard to litigation and its funding in the contemporary world.

That type of reasoning is consistent with what fell from Williams J in Elfic Limited (ACN 007 606 206) & Ors v Peter Ivan Macks & Ors and GIO Insurance Limited (ACN 052 179 647) and The Commonwealth Bank of Australia Limited (ACN 123 123 124) [2000] QSC 18. In the course of his judgment in that case he had this to say:-
“As long ago as 1946, Dixon J, speaking of the ‘law of maintenance’ said: ‘The law of maintenance is founded not so much on general principles of right and wrong or a natural justice as on considerations of public policy ... Notions of public policy are not fixed but vary according to the state and development of society and conditions of life in a community’ (Stevens v Keogh (1946) 72 CLR 1 at 28). That statement applies with equal force to the law of champerty. In an age when few can afford the luxury of litigation even where fundamental rights are involved, if the rule of law is to be upheld and rights of individuals protected then funding assistance for litigation within certain bounds becomes a matter of public interest and importance.
There are now a number of authorities in which it is recognised that a litigation funding agreement enabling a liquidator to conduct litigation for the benefit of the winding up stands outside public policy considerations which might otherwise result in the arrangement being held to be void as champertous. Byrne J in Roux v Australian Broadcasting Commission (1992) 2 VR 577 at 605 said: ‘This public policy is not that of medieval times, but a modern public policy which must have regard to litigation and its funding in the contemporary world’. That is the approach which should be adopted in considering whether or not a funding agreement such as that in issue here is unenforceable or void because it is contrary to public policy. I adopt without quoting what was said by Byrne J at 606 on this issue. Of course, the courts would prevent trafficking or speculating in causes of action, but this is not such a case.”
I unreservedly associate myself with these processes of reasoning, which accord with contemporary notions of fairness and plain common sense.
In the instant case, the liquidator of Duke is faced with a major task of taking all reasonable steps to recover the fruits of the judgments which he has obtained, so that he can apply them for the benefit of the creditors and shareholders. It is plain that Singleton is, for all practical purposes, bereft of assets with which to satisfy the judgment against him. The only asset which he has is any proper right of indemnity or contribution against the defendant. Any reasonable arrangement come to between him and the liquidator, whereby the latter can access such a right (which Singleton personally has no financial capacity to pursue), is prima facie proper. This is, in no sense, a trafficking or speculating in causes of action. Distilled to the essence, the present proceedings are, in a broad sense, conceptually akin to enforcing a process of execution against Singleton.
I would therefore hold that, absent any contrary binding authority or other clear legal impediment, there is no public policy bar against the prosecution by Duke of the present proceedings - utilising the name of Singleton for the purpose, as necessary.
It was said in the course of argument that Poulton v The Commonwealth & Ors (1953-54) 89 CLR 540 (“Poulton”) stands as clear authority for the proposition that there cannot be any lawful assignment of a right of action for tort, either in law or in equity.
Whilst it is true that, in the course of their joint judgment in that case, Williams, Webb and Kitto JJ, made the comment (p 602) that “according to well-established principle, the right [in tort] was incapable of assignment either at law or in equity: Dawson v Great Northern & City Railway Co (1905) 1 KB 260 at pp 270-271; Defries v Milne (1913) 1 Ch 98”, nevertheless as Cohen J pointed out in Monk v Australia and New Zealand Banking Group Ltd (1994) 34 NSWLR 148 at 151, this dictum was not part of the ratio decidendi of Poulton. It reflected the effect of quite early English decisions. It certainly does not stand as authority binding on this court and has not rigidly been applied in more recent decisions of Australian courts.
As Cohen J has indicated, whilst the general common law principle remains that there can be no assignment of a mere cause of action in tort, nevertheless, the qualification of that principle espoused by the House of Lords in Trendtex Trading Corporation v Credit Suisse (1982) AC 679 has been widely applied in both Australia and New Zealand.
In Trendtex (at p 703) Lord Roskill said:-
“... But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of a claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance ...
If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance.”
That approach has found favour in cases such as Re Timothy’s Pty Ltd and the Companies Act (1981) 2 NSWLR 706 and Re Daley; Ex parte National Australia Bank Ltd (1992) 37 FCR 390, First City Corporation Ltd v Downsview Nominees Ltd (1989) 3 NZLR 710 and Beatty and Anor v Brashs Pty Ltd (1995) 13 ACLC 925, particularly at 937. It was accepted by Debelle J as a correct statement of principle in the course of his reasons in South Australian Management Corporation v Sheahan & Ors (1995) 16 ACSR 45 at 58. I am content to adopt it.
In the instant case the liquidator of Duke has a clear genuine commercial interest in enforcing any rights which Singleton has against the defendant, in the proper discharge of his duties. There can be no reasonable suggestion that what has occurred is some inappropriate trafficking in litigation. To the extent that what fell from Lindgren J in National Mutual Property Services (Australia) Pty Ltd and Ors v Citibank Savings Ltd and Ors (1995) 132 ALR 514 (“National Mutual”) appears to be to the contrary, I respectfully disagree.
I unhesitatingly hold that the arrangement arrived at between Singleton and the liquidator is not contrary to public policy as being of the nature of a champertous transaction. Nor is it an unlawful situation of maintenance.
As Singleton is a party to the action, the issue as to whether any rights which he may have against the defendant are assignable is, to some extent, academic. However, it seems to me that there is clear authority for the proposition that a right in tort is no less assignable than a right in contract (Beatty and Anor v Brashs Pty Ltd (supra)). Alternatively, I consider that Mr Conti QC, of senior counsel for the plaintiffs, is undoubtedly correct when he contends that an arrangement such as that here under consideration is, at the very least, effective to operate as an equitable assignment of the fruits of any valid cause of action (Glegg v Bromley (1912) 3 KB 474 at 484).

Is a claim under s 25 of the Wrongs Act viable?

As earlier recited, one prong of the plaintiffs’ case is that, in the relevant circumstances, Singleton is entitled, pursuant to s 25 of the Wrongs Act 1936, to seek indemnity or, alternatively, contribution, from the defendant on the footing that the loss and damage occasioned to Duke, in relation to the takeover of Western United Limited, was caused or contributed to by the negligence of the defendant.
In this regard the plaintiffs seek to plead:-

. a specific retainer of the defendant by Duke and its directors;

. a relevant duty of care in favour of both of the latter;

. reliance by Singleton on the advice of the defendant;

. breaches of duty to the plaintiffs amounting to negligence;

. foreseeability of damage to both plaintiffs in the event of breach; and

.the actual occasioning of damage to each of them, as a consequence of the pleaded breaches.

[Note: the Further Amended Statement of Claim may be defective in that it does not specifically plead damage to other than Singleton. However, counsel were content to advance their submissions on the basis that it was the intention of the plaintiffs to aver reliance, foreseeability and actual damage to both plaintiffs, by appropriate further amendment.]

Mr Myers QC, of senior counsel for the defendant, sought to contend that any claim based on s 25 was patently bad in law and incapable of cure by amendment.
He pointed out that the relevant provision of the Wrongs Act is couched in these terms:-
“25(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -
...
(c) Any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would at any time have been, liable in respect of the same damage, whether as a joint tortfeasor 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.”
The initial point advanced by Mr Myers QC is that it is a pre-condition to the statutory cause of action that both the claimant party and the party from whom contribution is sought are tortfeasors liable in respect of the same damage (Goodwin v Ron Heath Tyre Service (SA) Pty Ltd (1999) 74 SASR 508 at 517). Only Singleton nominally satisfies the statutory descriptions of “tortfeasor” and being “liable in respect of the same damage”. Duke does not satisfy either of those descriptions and is a mere assignee. (Cf National Mutual at 539.)
He further contended that, even given that Singleton may properly have claimed to be a tortfeasor liable as at time of accrual of the cause of action, it was also incumbent on him to demonstrate that he remained so liable as at time of action brought. By virtue of the contractual arrangement entered into with Duke, Singleton ceased to answer the s 25 description. He had not discharged his original liability, nor did he retain that liability. He had been released from it by Duke.
Mr Myers QC submitted that the concept of liability under s 25 implies that, as at time of action brought, the person concerned must still be subject to an enforceable obligation to pay the damages in question. (Cf Hall v Bonnett (1956) SASR 10 at 15-17, Brambles Constructions Pty Ltd v Helmers (1965‑66) 114 CLR 213 at 217, 219.) Having regard to the reasoning in Hall v Bonnett (supra), Mr Myers QC contended that the contribution contemplated by s 25(1)(c) is an aliquot part of the sum which the claimant has paid or has to pay; and that, accordingly, the right to contribution cannot be enforced merely on judgment entered - it arises only upon payment (in this case by Singleton) in excess of his just and equitable share ie the right is in the nature of subrogation, to seek reimbursement or relief in respect of actual payment made, or present liability to pay. Thus, it was said that the claim for contribution by Singleton, in circumstances where he will never be liable to meet any portion of the damage suffered by Duke, is directly inconsistent with the objective of the right of contribution under the Wrongs Act.
Mr Conti QC advanced several ripostes to the foregoing lines of argument.
First, he contended that s 25(1)(c) of the Wrongs Act did not, either expressly or impliedly, erect a requirement that not only did the claimant have to be a tortfeasor liable as at time of accrual of the statutory cause of action, but, also, he had to have paid the damages in question as at time of action brought.
In my opinion this submission must be accepted. As was stressed by Barwick CJ and Windeyer J in Brambles Constructions Pty Ltd v Helmers (supra) the section, as it stood at that time, did not import any temporal element. The South Australian section, in its current form, has actually incorporated the phraseology which the High Court was prepared to imply. The sole requirement to achieve status to invoke the statute is that, at a point in time prior to action brought, the claimant was liable or would, at any time, have been liable in respect of the relevant damage. At that point the statutory right of action accrued.
The statutory cause of action, inter alia, exists as soon as the claimant’s liability as a tortfeasor has been ascertained by judgment against him. (See Bitumen and Oil Refineries (Australia) Limited v Commissioner for Government Transport (1954-55) 92 CLR 200 at 210.) As Mr Conti QC put it, an entitlement to adjustment of rights between tortfeasors arises at that stage. That right is not dependent on prior payment of the judgment liability, which a judgment creditor may not have the capacity to meet. That creditor may even have become bankrupt.
Second, Mr Conti QC submitted that the fallacy in the defendant’s argument was that it proceeded on an unfounded premise that the effect of the deed entered into by Singleton with Duke was that the former’s liability to the latter had been extinguished in law.
He said that the effect of the deed and the annexures to it was simply that, upon satisfaction of his obligations, the liquidator undertook not to take enforcement steps against Singleton. The cause of action possessed by Singleton thus remains unimpaired and on foot, the liquidator having been empowered to pursue it, if necessary, in Singleton’s name. There has been no release. He remains liable as a tortfeasor under the judgment against him and he has specifically authorised the liquidator to pursue his cause of action in his name and on his behalf - albeit on terms favourable to him. Although Duke itself is not a tortfeasor, it is entitled both to sue in Singleton’s name and, itself, also procedurally join in the proceedings as his assignee to enforce the rights which he possesses. That assignment is valid by reason of the Trendtex principle.
Without finally deciding the point I consider that the above lines of argument sought to be pursued by Mr Conti QC are fairly arguable.

The claim by Singleton to damages in negligence

The defendant’s argument in this regard is of simple compass.
Once again it is averred that, because the sustaining of quantifiable damage is an essential ingredient in an action for negligence and, by reason of the effect of the deed, Singleton is not liable to meet the judgment for damages entered against him, the claim in negligence is patently not maintainable. He has, in practical terms, sustained no loss.
It seems to me that the issues in this regard stand upon the same footing as those discussed above in relation to the statutory cause of action. At the end of the day the matter turns on the legal affect of the deed and whether it can fairly be said that the unequivocal impact of that document is to erect a situation whereby, notwithstanding the judgment against Singleton, he has, relevantly, suffered no loss because he is not under any obligation to satisfy that judgment.
Once again, what is in question is the correct characterisation of the effect of the deed - as to which the lines of argument advanced by Mr Conti QC as, above recited, are pertinent.
I repeat, I consider that those contentions are by no means ephemeral. On the contrary, they are fairly arguable.

The Anshun issue

The defendant argues that, other issues aside, the failure of the plaintiffs to raise the present claims against the defendant within, and as portion of the main action tried by Mullighan J, was so unreasonable that they ought not now to be permitted to pursue them. This contention is advanced by way of analogy with the principle established in Port of Melbourne Authority v Anshun Pty Ltd (1980-1981) 147 CLR 589.
It is conceded that no issue was ever raised in the so-called main action which sought to impute negligence against the defendant, nor was there any attempt to impugn its conduct. However, it is said that there is some possibility that, in a separate trial such as that now sought, a vast amount of evidence led in the main action will need to be retraversed and this could lead to inconsistent ultimate findings. It would have been possible to litigate the various matters now in issue in third party proceedings, or otherwise, in the main action; and it is unreasonable that the defendants be confronted with a major retracing of evidentiary ground some thirteen years after the cause of action accrued. Mr Myers QC submits that responsibility between various tortfeasors for the subject loss has already been ventilated in the main action. The present action will, in practical terms, require the court, potentially, to reassess any apportionment of responsibility.
In essence the defendant further argues that the present action is tantamount to an abuse of process because:-

. it is an attempt to evade a limitation bar which would otherwise arise;

.it is also an attempt at what is, in effect, a double recovery by a party who made a conscious decision not to sue the defendant in the main action; and
.if the present action goes ahead, the defendant will, in all probability, need to join all of the original parties to the main action and re-litigate most issues dealt within that section.

As the defendant was constrained to concede, the instant situation does not fall within the four corners of the Anshun principle. In that case the High Court held that an estoppel arose against a claimant under a contractual indemnity clause which had not specifically been relied upon in earlier proceedings, although Wrongs Act contribution issues had been litigated. The majority held that such estoppel arose because:-

(a)the claimant had been unreasonable in refraining from raising the contractual indemnity clause in the earlier action, since the indemnity agreement was a defence to the claim for contribution which had actually been made; and was so closely connected with the subject matter of that action that it was to be expected that the party entitled to it would raise it as a defence; and
(b)a judgment in the second action based on the alleged indemnity would conflict with the judgment entered in the contribution proceedings.

In the instant case there is simply no scope for any such estoppel to arise; nor is there any basis for a conflict of the nature there in contemplation.
As Mr Conti QC emphasized, the very concept of s 25(1)(c) of the Wrongs Act denies the relevance of the Anshun principle. As he put it, that statute “enables particular parties to be able to say ‘It is possible that we could involve a third party, a fourth party, a fifth party and a sixth party, and make already complex litigation three times as complex, but we are also entitled to see how the evidence comes out, because we have the protection in the period of two years commencing from when the decision has been ultimately published in the first round of litigation to determine whether it is worthwhile to be able to seek contribution” ie the very scheme of the statute envisages the type of scenario which has here developed.
Moreover, it is stating the obvious to say that the detailed factual and legal issues which will arise as between the plaintiffs and the defendant are by no means the same as those which were before Mullighan J, although there would plainly be some areas of overlap.
There is, in my view, nothing in the limitation point. Section 25 of the Wrongs Act expressly sets up its own limitation regime and it cannot be said that resort to a remedy conferred by it is somehow an attempted circumvention of other limitations. To adopt such a stance would be to negate the express provisions of the statute. Nor is there any relevant attempt at double recovery. As I have pointed out, what is in contemplation is merely an indirect process of enforcing or receiving the fruits of the primary judgment.

True it is that, to some extent, there will be a need to re-canvass material considered by Mullighan J. That type of process is necessarily inherent in many, if not most, types of situation in which separate recourse is had to the section.
In short, I am unable to perceive any basis of principle on which to deny the plaintiffs the potential fruits of the claim which it now seeks to prosecute, on a basis remotely analogous to Anshun. My attention has not been directed to any authority which would support such an approach.
I accordingly reject that prong of the defendant’s application.

The test to be applied

It must firmly be borne in mind that the primary application of the defendant is to strike out or dismiss the whole of the plaintiffs’ proceedings, on the basis that they disclose no cause of action known to the law. The power to strike out or dismiss is to be exercised with caution. Its exercise can only be justified on the basis that, on the facts pleaded, the claims made are patently unsustainable and no legitimate amendment could cure obvious defects. (Chapman and Anor v Australian Broadcasting Corporation [2000] SASC 146, General Steel Industries Inc v Commissioner for Railways (NSW) & Ors (1964‑65) 112 CLR 125, Attorney-General of The Duchy of Lancaster v London and North Western Railway Co (1892) 3 Ch 274, Wall v The Bank of Victoria Ltd [1890] 16 VLR 2, Republic of Peru v Peruvian Guano Company (1887) 36 Ch D 489.) If it can fairly be said that there is a real question of fact or law to be determined, it is inappropriate to strike out (National Mutual Life Association of Australasia Limited v Coffey & Partners Pty Ltd (1991) 2 Qd R 401).

The test applied

Having regard to the conclusions which I have above expressed it is immediately apparent that the defendant’s applications debated before me cannot succeed. In my opinion the contentions based on the principles of maintenance and champerty and Anshun are untenable. Those relied upon in relation to the s 25(1)(c) aspects and the direct claim in negligence fall short of convincing me that the plaintiffs’ claims are not fairly arguable and are obviously unsustainable. Equally, it simply has not been demonstrated that the claims ought to be stayed as an abuse of process. Plainly this is not the case.
Accordingly, the defendant’s application of 14 June 2000 must be dismissed as to paragraphs 3 and 4.
It remains open to the parties to proceed with their contentions as to detailed pleading aspects and any further desired amendments of the statement of claim. I will adjourn those matters for the consideration of a Master.

[2000] SASC 278

17 August 2000