TCM Builders Pty Ltd v Olyvia Nikou
[2013] VSC 322
•20 JUNE 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 02692 of 2012
| TCM BUILDERS PTY LTD | Plaintiff |
| v | |
| OLYVIA NIKOU | First Named Defendant |
| And | |
| GEORGE KAY | Second Named Defendant |
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JUDGE: | VICKERY J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 6 JUNE 2013 | |
DATE OF JUDGMENT: | 20 JUNE 2013 | |
CASE MAY BE CITED AS: | TCM BUILDERS PTY LTD v OLYVIA NIKOU & ANOR | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 322 | |
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DAMAGES - Some defendant parties settle claims in VCAT proceeding with the payment of money – Remaining defendant party fails to settle VCAT proceeding – Matter proceeds to trial with adverse order made against remaining defendant party – Whether defence of ‘double compensation’ established in relation to settlement monies paid by the settling defendants – Principles of ‘double compensation’ defence – Evidentiary onus of proof shifts - Payment of settlement money not in respect of concurrent claims – Defence fails.
PRACTICE AND PROCEDURE - Order pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) that leave be granted to appeal decision of VCAT member – Principles as to leave to appeal VCAT order - Some defendant parties settle claims in VCAT proceeding with the payment of money – Remaining defendant party fails to settle VCAT proceeding – Matter proceeds to trial with adverse order made against remaining defendant party – Whether defence of ‘double compensation’ established in relation to settlement monies paid by the settling defendants – Principles of ‘double compensation’ – Evidentiary onus of proof shifts – Payment of settlement money not in respect of concurrent claims - Appeal dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Shnookal SC with Mr G Hellyer | Telford Story & Associates |
| For the Defendants | Mr T Mitchell | GPZ Legal |
HIS HONOUR:
This is an application for leave to appeal and an appeal from orders made following the delivery of reasons of the Victorian Civil and Administrative Tribunal, Civil Division, Domestic Building List (the “Tribunal”) in a matter which was the subject of a proceeding before the Tribunal (the “VCAT Proceeding”).[1]
[1]TCM Builders Pty Ltd v Oliyvia Nikou and George Kay and Ors [2012] VCAT 277 (12 April 2012) (Senior Member Riegler)
The Plaintiff (the appellant), TCM Builders Pty Ltd is a builder and the Defendants (the respondents), Olyvia Nikou and George Kay, are the property owners who engaged the Plaintiff as a builder under an architect administered domestic building contract.
The Plaintiff commenced the VCAT Proceeding seeking the balance of the adjusted contract sum which it claimed was due and owing to it. The Defendants counterclaimed against the Plaintiff in respect of defects.
A number of other building professionals were joined by counterclaim in the VCAT Proceeding by the Defendants. Prior to the Tribunal hearing, the Defendants settled with all of the other building professionals (the “Settling Parties” comprising the Designer and Contract Administrator, the Landscapers and three groups of Engineers) in three separate settlement agreements. However, no settlement was achieved between the Plaintiff and the Defendants. Consequently, only the Plaintiff and the Defendants took part in the Tribunal hearing, although orders were made against the Settling Parties with their consent pursuant to the settlement agreements that were before the Tribunal.
The central question is whether, and to what extent, settlements made in the VCAT Proceeding between the Defendants and the Settling Parties ought to have been taken into account in assessing any residual liability of the Plaintiff, which was a party which did not settle the claims made against it.
The trial of the proceeding before the Tribunal proceeded between the Defendants and the Plaintiff for 10 days. The issues before the Tribunal centred on whether the Plaintiff, as the builder, was entitled to the balance of the contract sum which it said was unpaid by the Defendants. On the other hand, the Defendants claimed against the Plaintiff for seven identified defects for which they said the Plaintiff was responsible.
The Tribunal determined that the Defendants were entitled to $38,746.89 in their claims against the Plaintiff. The Tribunal also held that the Plaintiff was entitled to $54,450.80 on its claims against the Defendants. The net result was that the Defendants were required to pay the Plaintiff the sum of $15,703.91. However, from 30 July 2011 the Plaintiff had access to a retention amount ($38,358.79) held in a bank account as a result of actions taken by the Defendants. Thus, the Tribunal held that from 30 July 2011 the Plaintiff was indebted to the Defendants in the sum of $22,654.98 and made an order for that amount. On that basis the Tribunal ordered that from 30 July 2011 the Plaintiff pay the Defendants’ costs on a party/party basis. The Tribunal also ordered that the respondents pay the appellant’s costs prior to 30 July 2011.
The Plaintiff contends the settlements made by the Settling Parties, when considered in the light of the pleadings, raise the presumption that the Defendants had been fully compensated for the loss and damage claimed by them against it and no evidence was presented to the Tribunal rebutting that presumption.
The Plaintiff, as the prospective appellant, seeks the following substantive relief in its originating motion dated 10 May 2012 and the summons thereon filed 17 May 2012:
1.An order pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) that leave be granted to appeal in relation to:
(a)paragraph 6 of the orders made by the Victorian Civil and Administrative Tribunal (“the Tribunal”) constituted by Senior Member E. Riegler dated 12 April 2012 (“the decision”);
(b)paragraph 2 of the orders made by the Tribunal on 8 May 2012 (“the costs decision”)
2.An order that pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act1998 (Vic) the appeal be allowed and that:
(a)the decision and the costs decision be varied and/or set aside, alternatively,
(b)a decision be made by this Honourable Court in substitution for the decision and the costs decision, alternatively,
(c)the proceeding be remitted to the Tribunal for further hearing subject to any directions which this honourable Court deems appropriate.
By the agreement of the parties, if leave was to granted to appeal the decision and the costs decision, the Court would proceed to finally determine the matter on the basis of the submissions made in the leave application. This agreement was effected by order made by consent 7 February 2013, pursuant to which the parties agreed that the hearing of the appellant’s leave application and the appeal be heard at the same time.
Tribunal Findings
In its principal reasons dated 13 March 2012 (the “Reasons”) the Tribunal found that the principle of double recovery resulting from the settlements was not engaged. In this respect, the Tribunal reasoned as follows:
145.In my view, there is a clear distinction between the loss claim against TCM and the loss claimed against the non-participating respondents. The proposition advanced by any Mr Hellyer would only eventuate where the Tribunal has determined that two or more respondents are proportionately responsible for the same loss or damage. For example, if TCM and the Engineer were held to be each 50% responsible for the damage to the east wall and the Engineer had settled for the full amount of the damaged claimed, then recovery of a further 50% of the loss against TCM would result in over compensation. However, that scenario does not arise in the present case because I have not determined that any of the other non participating respondents are proportionately responsible for the same loss for which I have held TCM liable.
[…]
153.Further, I am not satisfied that there is sufficient evidence establishing that any of the settlement monies paid to the Defendants represent payment or part payment of the damages sufficient as a result of the defects claimed against TCM. The settlement agreements produced during the course of the hearing did not adequately disclose how monies were to be allocated in respect of the items of defective work described in the reports prepared by Mr Casamento. In those circumstances, I am unable to find that the settlement monies were paid in satisfaction or part satisfaction of any of the defective work claims that I have determined against TCM. [2]
[2]TCM Builders Pty Ltd v Oliyvia Nikou and George Kay and Ors [2012] VCAT 277 (12 April 2012), [145] and [153] (Member Riegler).
Thus the Tribunal determined that no part of any amounts paid by the Settling Parties should be taken into account in assessing the liability of the appellant because the Settling Parties and the Plaintiff were not concurrent wrongdoers.
The Tribunal’s determination that the Plaintiff and the Settling Parties were not concurrent wrongdoers in terms of the proportionate liability legislation is not appealed.
However, the Tribunal’s conclusion that it followed from this finding that no part of the settlement consideration should be taken into account in determining whether the Defendants had an entitlement for the same loss or damage under the principles of double recovery, is appealed by the Plaintiff as being wrong at law.
The Plaintiff contends that the claims made against the Settling Parties and the consideration the Defendants received in settlement of those claims should have been examined and taken into account by the Tribunal.
Principles Relating to Leave to Appeal
Section 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (the “VCAT Act”) provides relevantly as follows:
(1)A party to a proceeding may appeal, on a question of law, from an order of the Tribunal in the proceeding
(b) to the Trial Division of the Supreme Court
if … the Trial Division … gives leave to appeal.
Although s 148 uses the word “appeal”, the High Court in Roy Morgan Research v The Commissioner of Revenue[3] held that the Court was exercising original jurisdiction in a proceeding such as this, which was in the nature of a judicial review. The High Court reasoned as follows on the issue:
Although s 148 uses the word “appeal”, it is clear that the Supreme Court is asked to exercise original, not appellate, jurisdiction and to do so in proceedings in the nature of judicial review … It is important to recognise that the essential character of s 148 is that it provides for the institution of proceedings in the Supreme Court, by leave, in which the legal correctness of what the Tribunal has done can be challenged.[4]
[3](2001) 207 CLR 72 [15].
[4]Ibid [15] (per Gaudron, Gummow, Hayne and Callinan JJ).
As articulated by Phillips JA in the decision Secretary to the Department of Premier & Cabinet v Hulls,[5] the following principles are relevant:
[5][1999] 3 VR 331.
(a)the applicant must identify a question of law (as distinct from a question of fact) which is important to the appeal succeeding or failing;[6]
[6]Ibid [9].
(b)on an application for leave, it cannot be expected that error below be established: that is for the appeal itself. Something less must be sufficient on the application for leave to appeal and ordinarily the applicant will be required to show that there is a real or significant argument to be put that error exists. This has sometimes been called “a prima facie case” or “an arguable case”;[7]
(c)sometimes the public or general importance of the question of law may be a consideration;[8]
(d)it is not possible to lay down, in advance, any useful guidelines on the degree to which the court from which leave is sought must be satisfied that the question of law which has been identified is arguable in the would-be appellant’s favour;[9]
(e)another favoured expression of the test has been that the decision below should be “attended by sufficient doubt to justify the grant of leave to appeal” (as articulated in Niemann v Electronic Industries Limited[10] (‘Neimann’));[11]
(f)Rule 4.09 of Chapter II of the Supreme Court Rules merely grants power to the Court to refuse leave in certain circumstances. It does not provide a test by which leave shall be granted;[12]
(g)Once a question of law has been identified which bears directly upon the relief which will be sought on the appeal, and once it has been shown that there is sufficient doubt attending that question to justify the grant of leave to appeal, it may be supposed that leave will ordinarily go if the order below is a final order. That must always be subject to its being just to grant leave, a consideration which will in some cases be determinative. It directs attention to the position of the parties — and perhaps third parties if directly affected by the order below or the proposed appeal — and perhaps the simplest example arises when the order below is plainly interlocutory;[13]
(h)Where the order sought to be appealed is interlocutory (or “interim” in the terminology of the VCAT Act), there may be particular reasons, based in justice to both parties, for not granting leave to appeal. There are strong considerations against the fragmentation of any proceeding, whether it be criminal or civil. Where a court is invited to grant leave to appeal from an order which is simply interlocutory, the litigation will be interrupted by the appeal, if leave is granted. Usually it is better if litigation is left to run its course, the parties being remitted to such rights of appeal as they have at the end of the day. Not only does that ensure that the litigation is not unnecessarily interrupted and completion not delayed without warrant; it also ensures that any interlocutory dispute will be seen and adjudged in its final context. Indeed, in the context of the final judgment the interlocutory dispute may be seen as having, or having had, little or no significance. Hence, in Niemann it was said that an applicant for leave to appeal from an interlocutory order must show, not only sufficient doubt about the correctness of the order, but also that there would be substantial injustice in leaving that order unreversed;[14]
(i)Where the order which is under challenge is final, the injustice of allowing the determination below to stand uncorrected, if indeed it is attended by error, will be more readily discerned. It will be apparent, at least in many cases, that to leave a final order standing which would be reversed if error of law were established is unjust to the party adversely affected by the order: the prejudice lies in that party's being bound to comply with an order that ought not to have been made as a matter of law.[15]
(j)What was said in Niemann might then still be a useful guideline under s 148, whether the order below be final or interlocutory — provided it is recognised that the injustice attending an order's continuing to stand is probably more readily discernible if it is final rather than interlocutory. That is consistent with practice, where leave has been more readily granted from an order which, though interlocutory, is “final in effect”.[16]
[7]Ibid [10]
[8]Ibid [11]
[9]Ibid [12]
[10][1978] VR 431, 441-2.
[11]Secretary to the Department of Premier & Cabinet v Hulls [1999] 3 VR 331, [12].
[12]Ibid.
[13]Ibid [13]
[14]Ibid [14]
[15]Ibid [15].
[16]Ibid.
I will apply these principles in consideration of the application for leave to appeal, and insofar as they are applicable, to the determination of the appeal.
Factual and Procedural Background
The Plaintiff is a builder who is specialised in architecturally designed residential construction work.
The Defendants are the owners of a property situated at 13 Mowbray Street, East Hawthorn, Victoria (the “Property”). The Property consists of approximately 1376 square metres on which was originally located an existing home.
The project was substantial and involved the construction of a three storey residence on the Property comprising some 100 square metres, a basement car park, swimming pool, spa, tennis court, gymnasium and sauna (the “Works”).
On or about 30 November 2005 the Defendants engaged Anton Makea Pty Ltd (the “Architect and Contract Administrator”) to carry out design services for the new dwelling on the Property and on or about 22 August 2006 the firm was engaged to carry out contract administration of the building works on the Property.
In the course of the project, the Defendants engaged Neil Hocking & Associates Pty Ltd (the “Engineer”) to prepare engineering drawings and computations. The Engineer subcontracted certain aspects of the engineering design to two other engineers, Serafin Konsantinou and Les Kroenert & Associates Pty Ltd (the “Sub-contracted Engineers”).
On or about 30 August 2006 a building contract was entered into between the Defendants and the Plaintiff to undertake the Works.
In the month of September 2006 various items were removed from the contract between the Plaintiff and the Defendants including cabinetry, stonework, heating and cooling, landscaping, pool and spa, tennis court, light fittings, security system, intercom and ducted vacuum system. The amount deducted from the contract sum in respect of these items was $449,999 inclusive of GST. This resulted in an amended contract price of $1,531,005. Pursuant to special condition 11 of the building contract, the Defendants were fully responsible for the deleted works including any deficiencies in relation to such works.
The Plaintiff commenced the Works in October 2006 soon after the building permit had issued.
In about December 2007 the Defendants engaged Exquisite Gardens Australia Pty Ltd and Exquisite Asset Holdings Pty Ltd (the “Landscapers”) to carry out landscaping works including excavation works, drainage, tiling and the construction of retaining walls for the agreed sum of $133,023.
During the course of the works the Plaintiff submitted a total of 24 progress claims, substantially on a monthly basis. With the exception of six of the progress claims, the progress claims were paid by the Defendants reasonably promptly.
The Defendants took possession of the house soon after 8 September 2008.
The Defendants released the half of the retention in the sum of $38,358.79 on or about 19 September 2008, but did not pay the amount claimed pursuant to the Plaintiff’s progress claims 20-24 in the sum of sum of $15,291.10.
VCAT Application
On 16 April 2009 the Plaintiff issued its application in the VCAT Proceeding against the Defendants in which the Plaintiff alleged that in breach of the contract the Defendants failed and/or refused to release the balance of the retention or to pay the sum of $15,291.10 in respect to the balance of variations the subject of progress claims 20–24. The Defendants in their Points of Defence dated 18 August 2009 admitted that those sums had not been paid but otherwise denied the allegations and alleged further that the Plaintiff had failed to complete the works and therefore it was not entitled to make a further claim. The Defendants also alleged that the cost of rectification of alleged defects exceeded the amount unpaid by them under the contract.
By application dated 1 October 2009, the Landscapers also raised a claim against the Defendants for payment of the sum of $13,017.82 plus ongoing interest until settlement in respect of the balance of monies due for landscaping works.
In the VCAT Proceeding, pursuant to Amended Points of Claim dated 28 August 2011, the Plainitff claimed it is entitled to payment of the sum of $66,474.72 in respect of claim and interest, as follows:
Payment of retention and interest on retention monies since 16 April 2008 $41,251.33 Interest on retention monies prior to 16 April 2008 $ 4,323.61 Interest in respect of delay in payment of progress claim 2 $ 800.92 Balance due in respect of variations $15,291.10 Interest on variations $ 4,807.76 Total $66,474.72
Against this claim, the Defendants’ counterclaim dated 18 August 2009 raised six alleged defects against the Plaintiff involving the following items of work: the east pool retaining wall; gymnasium; basement car park; eaves; footpath crossover; and fireplaces.
Claims Against the Settling Parties
The Landscapers issued an application in VCAT against the Defendants for claimed outstanding invoices in the sum of $13,017.82. The Defendants joined the Landscapers by way of counterclaim in which the Defendants claimed damages for defective works assessed by the Defendants at approximately $231,611.00.
On or about 15 December 2010 the Defendants joined the Architect and Contract Administrator to the VCAT Proceeding by way of counterclaim in which the Defendants claimed damages for breach of contract and negligence.
The Defendants also joined the Engineer, Neil Hocking & Associates Pty Ltd, as the fourth respondent to the VCAT Proceeding.
On 29 April 2010 the Engineer obtained leave to join as sixth and seventh respondents to the counterclaim in the VCAT Proceeding the Sub-contracted Engineers, Mr Konstantinou and Les Kroenert & Associates Pty Ltd.
Appeal to Supreme Court
On 8 May 2012 the Tribunal made its final orders on costs in the VCAT Proceeding.
The Plaintiff filed its Originating Motion in the present proceeding before the Court and its summons thereon on 17 May 2012.
On 14 December 2012 the Mukhtar AsJ made an order in which his Honour refused the application of the Plaintiff for leave to appeal under s 148 of the Act, and dismissed its originating motion with costs. In short reasons delivered in support of the orders made, his Honour said, inter alia:
Grounds 1 to 5 concern double recovery. I agree with the respondent’s submissions that there can be no doubt that the Tribunal applied the correct legal principles concerning double recovery and that in truth the builder’s complaint is about the findings of fact made by the Tribunal which rendered the principle inapplicable.[17]
[17]TCM Builders Pty Ltd v Nikou and Kay (Unreported, Supreme Court of Victoria, 19 December 2012) [7] (Mukhtar AsJ).
Settlement of the Defendants’ Claims against the Settling Parties
On 5 May 2011 the Defendants and the Landscapers agreed to compromise their claims against each other on the basis that the Landscapers would pay $1,764.00 to the Defendants and would undertake works on the Property described in a “costing schedule”. A Deed of Settlement and Release was entered into between the Defendants and Exquisite Asset Holdings Pty Ltd and Exquisite Gardens Australia Pty Ltd dated 5 May 2011.
Terms of Settlement were also entered into between the Defendants and the Architect and Contract Administrator Anton Makea Pty Ltd dated 4 July 2011. The Defendants and the Architect and Contract Administrator agreed to compromise the claims on the basis that the Designer and Contract Administrator would pay $35,000.00 to the Defendants.
Terms of Settlement were also entered onto between the Defendants and the Engineers, Neil Hocking & Associates Pty Ltd, and the Sub-contracted Engineers, Les Kroenert & Associates Pty Ltd and Serafim Konstantinou, dated 22 July 2011. The Engineers and the Sub-contracted Engineers agreed, pursuant to the settlement, to pay the Defendants a total sum of $210,000, payable as to $160,000 by Neil Hocking & Associates Pty Ltd, and as to $50,000 by Les Kroenert & Associates Pty Ltd.
Submissions of Plaintiff
The Plaintiff submitted that of the total sum of $246,764 paid to the Defendants pursuant to the three settlements, the parties have ascribed the sum of $179,264 to the Defendants’ defects claim and $67,500 to costs as follows:-
Claim Costs Landscapers $1,764 Architect $20,000 $15,000 NHA $120,000 $40,000 LKA $37,500 $12,500 $179,264.00 $67,500.00
The Plaintiff further submitted that the value of the works carried out by the Landscapers pursuant to the Landscapers’ Terms of Settlement by reference to the Defendants’ claim is $19,265 as follows:
Item number(s) Description Amount 39-40 Footpath & kerb $5,300 50-52 Paving $1,682 69-70 Pool equipment enclosure, paving $5,676 71-78 Front planter boxes $5,904 $18,562.00 Plus proportion of preliminaries (item 1) $ 703 $19,265
In addition, it was submitted that it is appropriate to take into account the amount of the Landscapers’ claim against the Defendants in the sum of $13,018 for the balance of moneys due for work done which pursuant to the Terms of Settlement was foregone by the Landscapers.
Hence it was put that, pursuant to the Terms of Settlement with the other parties, the Defendants have received payments in respect of claim in the sum of $179,264, rectification work carried out by the Landscapers to the value of $19,265 and relief from the obligation to pay the balance of monies due to the Landscapers in the sum of $13,018, a total of $211,547.
The amount of the Defendants’ claim in this proceeding was $231,611.
Hence it was submitted that in respect of the balance in the sum of $228,032 ($231,611-$3,579), the Defendants have received payment, work and/or allowance in the total sum of $211,547 leaving a balance in the sum of $16,230.
This represents a recovery by the Defendants of approximately 93% of their claim.
The Plaintiff submitted that the balance in the sum of $16,230 is the maximum extent of the Defendants’ entitlement against the Plaintiff in respect of the quantification of the Defendants’ defects claim.
Further, after deducting the full amount of the Defendants’ defects claim in respect of the tennis court retaining walls, from the settlement of the claims against the other parties, the Defendants have “in hand” the sum of $70,524. The relevant analysis (which does not take into account the value of the works carried out by the Landscapers in respect of the “Landscapers items of claim”) is as follows:-
Amount paid by the Landscapers, the architect, NHA and LKA as referred to in paragraph 129 above $179,264 Amount of Landscapers’s claim for work done which was foregoing by the Landscapers $ 13,018 $192,282 Less amount of claim for tennis court retaining walls $121,758 $ 70,524
The Plaintiff submitted that the sum of $70,524 exceeds by a considerable margin the amount to which the Defendants are entitled, if any, for the remaining items of the defects claim.
In fact, it was submitted that when this amount is credited to the claims pressed against the Plaintiff, the Defendants’ claim is not only extinguished, but there is a net sum payable to the Plaintiff of $54,450.80. On any view, it was contended that the Defendants’ claims for damages against the Plaintiff was entirely extinguished by the settlements.
The Plaintiff submitted that the Tribunal made an appealable error of law in failing to take the settlement sums into account in arriving at its decision, giving rise to the relief sought by the Plaintiff in this proceeding.
In particular, it was put that the Tribunal fell into error of law in finding that the principle of double recovery only came into play when two parties were proportionately liable for the same loss. It was submitted that the Tribunal was in error in deciding on the basis of a comparison between its finding on the causal actions of the Plaintiff and the causal actions of the Settling Parties. The Plaintiff submitted that such a comparison was the test for concurrent wrongdoers only relevant to the proportionate liability legislation. In this respect, the Plaintiff observed that the Tribunal held:
The proposition advanced [that the settlements had to be taken into account] would only eventuate where the Tribunal has determined that two or more respondents are proportionately responsible for the same loss and damage. For example, if the appellant and the engineer were held to be each 50% responsible for the damage to the east wall and the engineer had settled for the full amount of the damage claimed, then recovery of a further 50% of the loss against the appellant would result in overcompensation. However, that scenario does not arise in the present case because I have not determined that any of the non participating respondents [settling parties] are proportionately responsible for the same loss for which I have held the appellant liable.[18]
[18]TCM Builders Pty Ltd v Oliyvia Nikou and George Kay and Ors [2012] VCAT 277 (12 April 2012), [145], (Member Riegler).
Later, and to the same erroneous effect, is was submitted that the Tribunal held:
The settlement sums only become relevant to the question of double recovery where they are paid to compromise a claim for which the non-participating respondents [Settling Parties] share responsibility with [the Plaintiff].[19]
[19]Ibid [154].
The Plaintiff submitted that what the Tribunal directed itself to consider was the question of what findings of fact it made on whether or not the Plaintiff and a Settling Party shared responsibility for any of the defects. It directed itself to consider the facts on causation as it found them to be in the proceeding. Its focus was on the outcome of the proceeding. It did not consider at all the compensation the Defendants had received and to what the consideration related.
However, the Plaintiff contended that the findings as to liability of a settling party in a proceeding are not relevant to considerations of double recovery. What is important is the claims made and the settlement of them from the perspective of the claimant. It is the character of the money the claimant recovers having regard to its claims for loss and damage and the quantification of those claims that is important.
The Plaintiff further contended that the correct approach in law which ought to have been followed by the Tribunal, but was not, was to take the following steps:
1.The Tribunal should compare the loss and damage claimed against the defendants to the counterclaim to assess on the claims made the extent to which the claims overlap.
2.Where an amount is paid by one defendant in respect of overlapping claims and non-overlapping claims (or separate or distinct claims) the amounts paid in respect of the non-overlapping claims is taken off the amount paid for the purpose of the double recovery calculation.
3.The onus of showing that the amounts paid were in respect of non-overlapping claims falls on the claimant. There is a presumption that where overlapping claims are made and settled for a payment of money, the money paid was in respect of the overlapping claims.
4.Amounts paid in respect of the overlapping claims by one party (or even a stranger) but in respect of overlapping claims reduce the total damages the plaintiff can succeed on against the continuing defendant.
5.The focus of the Rule is on looking at what, in total, the claimant receives in respect of overlapping claims and preventing a claimant from recovering more than the loss and damage that it actually.
Submissions of the Defendants
A key element of the submissions made on behalf of the Defendants was that the Tribunal found it was not satisfied that the Defendants received any payment that compensated them for any liability owed by the Plaintiff.
The Defendants refer to the finding made by the Tribunal that:
I am not satisfied that there is sufficient evidence establishing that any of the settlement monies paid to the Owners represent payment or part payment of the damages suffered as a result of the defects claimed against TCM.[20]
[20]TCM Builders Pty Ltd v Oliyvia Nikou and George Kay and Ors [2012] VCAT 277 (12 April 2012), [153] and [154] (Member Riegler).
It was put that this finding provides the complete answer to the double recovery submission mounted by the Plaintiff in the present appeal. This is so because an appellant in the position of the Plaintiff is not in a position to ask this Court to substitute its own findings of fact for those of the Tribunal.
It was submitted further that the decision of the Tribunal on this issue is not attended by doubt, nor does any substantial injustice flow if the decision was wrong but was left to stand. Indeed, a successful defence of double recovery would result in a windfall to the builder.
It was contended that the onus of proof to make out a claim for double recovery rests with the party seeking to maintain the defence. In this case, the onus rested with the Plaintiff and is not reversed by any common law presumption. The Plaintiff failed to discharge the burden it assumed, resulting in the finding of fact being made against it by the Tribunal.
For these reasons, it was submitted that leave to appeal should be refused and the application should be dismissed with costs.
Legal Principles Applicable to “Double Recovery”
The starting point in consideration of the principles of law to be applied in dealing with an issue of double recovery in Victoria are set out in Boncristiano v Lohmann[21] (‘Boncristiano’). In Boncristiano, Winneke P quoted with approval the observations of Oliver LJ in Townsend v Stone Toms and Partners[22]:
The starting point, and one on which there is a good deal of authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another , that recovery goes in diminution of the damages that will be awarded against the defendant.
A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due. [23]
[21][1998] 4 VR 82.
[22](1984) 27 BLR 26.
[23]Ibid 28.
Winneke P went on to set out the relevant principle:
The principle so stated is sometimes called the ‘rule against double compensation’. The law, which now embraces equity, will not permit a plaintiff, whatever procedural device is used, to recover more than the damages which have been suffered, no matter what the cause of action upon which he proceeds against the various defendants: see per Purchas LJ in Townsend’s case at 49. This principle was accepted by Steyn J (as he then was) in Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880 at 881-2.[24]
[24] Boncristiano [1998] 4 VR 82, 89.
This was accepted by the Plaintiff and the Defendants as the general principle to be applied in this case.
However, in Boncristiano, Winneke P preceded this statement of general principle with an important qualification. It is only in cases where the claims for damages are concurrent, in the sense that the claims “overlap” that recovery by a claimant party of the whole or part of the loss from one defendant will be taken into account in assessing the damages to be recovered from the other.[25]
[25]Ibid 88.
As was made clear by Winneke P in Boncristiano, the issue of assessing the degree of overlap is not to be undertaken from an analysis of the causes of action which may be available against different defendants. These causes of action may well be pleaded on different bases. The fundamental question “is whether the claims against the various defendants are ‘concurrent’ in the sense that the relief sought is the same”.[26] Nor is the source of the funds provided to the plaintiff or the basis on which those funds are provided (whether, for example pursuant to terms of settlement, acceptance of funds paid into Court, or otherwise), relevant.[27]
[26]Ibid 89 (emphasis added).
[27]Ibid 89.
However, where the parties differed in their legal analysis was as to the onus of proof. The Defendants contended that the onus of proof to make out a claim for double recovery rests with the party seeking to maintain the defence – in this case, the Plaintiff. On the other hand, the Plaintiff contended that once payment of the settlement sums went into evidence, the onus then shifted to the Defendants to explain how the settlement monies were not paid, in whole or in part, in relation to overlapping claims made against the Plaintiff as the Defendants being in the best position to do so.
In SAS Trustee Corporation v Budd,[28] the New South Wales Court of Appeal stated the defence of double compensation in the following terms:
A defendant who invokes the rule against double compensation must establish that the plaintiff has already been compensated with respect to the relevant loss. Sometimes all that can be shown is that the plaintiff has received money from a third party without it being known what the payment was for. It might, for example, relate to legal costs of proceedings that were withdrawn. There may be uncertainty as to the nature of the receipt. In such circumstances, the defendant will have failed to make good the defence.[29]
[28][2005] NSWCA 366 (per Mason P, Handley and McColl JJA).
[29]Ibid,[37].
However, in SAS Trustee Corporation v Budd, Mason P also referred to the line of cases with apparent approval (including the observations of Winneke P in Boncristiano) in the following passages:[30]
There is a line of cases dealing with the rule against double compensation, holding that where the person invoking the rule (usually the defendant) establishes that money was paid to the other party in circumstances capable of attracting the rule (eg with respect to a concurrent claim), it is for the recipient to show that the money was not received by way of compensation for the loss (Townsend v Stone Toms & Partners (1984) 27 BLR 26 at 41, 51, 56 (Eng CA), Boncristiano at 89-90).
I incline to the view that these cases involve an evidentiary onus being cast upon the party having access to the relevant information rather than a free-standing principle forming part of the rule against double compensation.
[30]Ibid, [49] and [50].
The issue of the onus of proof was explored in Boncristiano by Winneke P. Referring again to Townsend v Stone Toms and Partners[31] Winneke P said:
[I]t seems to me that the fact of payment raises against the owners a presumption that the amount of the settlement was offered and accepted in satisfaction of the concurrent claim made by the owners against the solicitors and the builders [the two defendants].
As Oliver J said in Townsend’s case at 41:
It is said that the burden lies on the defendant to show that a part of the claim against him has already been satisfied and to demonstrate the extent to which recovery has already been completed by the plaintiff … Allowing this, however, it seems to me that payment-in, in causes of action where there are concurrent claims against him. If it is to be said that the payment-in relates to some claims which are not concurrent, or which could not succeed against the defendant, the only person capable of providing that guidance is the plaintiff himself, who has accepted the payment. [32]
[31](1984) 27 BLR 26.
[32][2005] NSWCA 366, 89-90.
To my mind, the question of the onus of proof where double compensation is raised as a defence is resolved in the case law in the following way: first, the defendant needs to establish that the plaintiff was paid or received sums of money or compensation in respect of concurrent claims, in the sense that they were claims made to recover the same damage. The initial evidentiary burden of bringing forward evidence that, at least prima facie, the claims are concurrent, in the sense that they are claims in respect of the same damage, resides with the defendant party who raises the defence. Second, the evidentiary burden then appropriately shifts to the plaintiff, who may displace the prima facie case by establishing that the money or compensation received was not in respect of the same damage, or only partially so, in which case evidence may be adduced as to the degree of the overlap (if any), the plaintiff being the only party who is realistically in a position to provide such evidence.
Conclusion
In my opinion, the Plaintiff failed in the VCAT Proceeding to establish a prima facie case that the plaintiff was paid or received sums of money or compensation in respect of concurrent claims, in the sense that they were claims made to recover the same damage, and this was found by the Tribunal as a finding of fact.
So much is plain from the ultimate conclusions of the Tribunal in its Reasons at [153] and [154], which have been already referred to.
The earlier reasoning of the Tribunal to the effect that the settlements could only be taken into account where it determined that two or more respondents were proportionately responsible for the same loss and damage, although strictly wrong in law, did not detract from these ultimate conclusions.
Indeed, it is difficult to see how the claims could be concurrent in the requisite sense, given the vastly different roles which the various defendants were engaged to perform, albeit on the same project, ranging from landscaping to engineering computations in respect of the building structure, and the distinctly different components of damage likely to arise from a failure to adequately perform those separate engagements.
I am satisfied, however, that the Plaintiff, the applicant for leave to appeal, has identified a question of law (as distinct from a question of fact) which is important to the appeal succeeding or failing. This question of law is that in the light of the lack of precise definition in the case-law as to how the onus of proof is to work in cases where the defence of “double compensation” is raised, there is a real or significant argument to be put that error in the Reasons of the Tribunal exists.
Accordingly, I will grant the application for leave to appeal pursuant to s 148 of the Act.
However, in determining the appeal, I am satisfied that no error of law has been demonstrated in the Reasons of the Tribunal.
I will make the following orders:
1. Pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) leave be granted to appeal in relation to paragraph 6 of the orders made by the Victorian Civil and Administrative Tribunal constituted by Senior Member E. Riegler dated 12 April 2012.
2. The appeal be dismissed.
I will hear the parties on costs.
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