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Availability of cross claims in apportionable claims July 3, 2019

Landpower Australia Pty Ltd v Penske Power Systems Pty Ltd [2019] NSWCA 161

Bell P:

Further consideration
39. In Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 at [16], French CJ, Hayne and Kiefel JJ said:

“The evident purpose of Pt 4 [of the CLA] is to give effect to a legislative policy that, in respect of certain claims such as those for economic loss or property damage, a defendant should be liable only to the extent of his or her responsibility. The court has the task of apportioning that responsibility where the defendant can show that he or she is a “concurrent wrongdoer”, which is to say that there are others whose acts or omissions can be said to have caused the damage the plaintiff claims, whether jointly with the defendant’s acts or independently of them. If there are other wrongdoers they, together with the defendant, are all concurrent wrongdoers.”

40. Section 34(2) of the CLA defines “concurrent wrongdoer”, in relation to a claim, as “a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim”. “Apportionable claim” is defined in s 34(1) as:

“(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,
(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law.”

41. Just because a defendant names other parties as concurrent wrongdoers (and, as Ball J pointed out in Sanderson, it will generally be a defendant rather than a plaintiff who does this), it does not follow that a plaintiff or, ultimately, the court will accept this characterisation. That may be, for example, because the court does not ultimately accept that one or more of the parties nominated as concurrent wrongdoers owed any duty of care to a plaintiff or was otherwise under any liability to the plaintiff or caused the damage or loss that is the subject of the claim.
42. This is a matter that does not fall to be determined simply on the pleadings. But rather the question whether or not a claim is “apportionable” will generally involve a characterisation of a claim based on the evidence before the court: Reinhold v New South Wales Lotteries Corporation (No 2) (2008) 82 NSWLR 762; [2008] NSWSC 187 at [25]-[27]. Whether or not a person or entity is a concurrent wrongdoer is not usually capable of being determined on the pleadings and may be far from straightforward where, for example, a novel duty of care is alleged or a multifactorial analysis of the kind referred to by Allsop P (as he then was) in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 is required.
43. Where factual inquiries of this character are potentially in play, summary dismissal of the kind that occurred in the present case is quite inappropriate: cf Spellson v George (1992) 26 NSWLR 666. In Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57], the plurality said:

“It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court’s jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.” (Footnote omitted)

44. In Dey v Victorian Railways Commissioner (1949) 78 CLR 62 at 91; [1949] HCA 1, Dixon J said that “once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process”. It might be noted that the language of “frivolous” and “vexatious” and “abuse of process” survives in r 13.4 of the UCPR pursuant to which Penske moved for dismissal of the Amended Cross-Claim in the present case.
45. Legal and factual questions relating to a party’s status as a wrongdoer for the purposes of the definition of “concurrent wrongdoer” and to questions of causation of loss for the purposes of that definition and also for the purposes of assessing whether or not the claim for economic loss or damage arises from a failure to take care for the purposes of the definition of “apportionable claim” will frequently, if not invariably, need to go to trial. As Middleton J observed with regard to apportionable claims in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; [2007] FCA 1216 at [31]:

“If a respondent calls in aid the benefit of the limitation on liability provided for in Pt IVAA of the Wrongs Act, then the respondent has the onus of pleading and proving the required elements. The court, after hearing all the evidence, will then need to determine, as a matter of fact, whether the relevant claim brought by the applicant is a claim arising from a failure to take reasonable care.”

46. By way of contrast, the reasons why cross-claims for contribution pursuant to s 5 of the LRMPA may be and frequently are dealt with summarily is that such claims are predicated on effectively the same criteria as determine proportionate liability, as McDougall J pointed out in Dymocks.
47. If the nominated concurrent wrongdoer is not in fact found to have that character, namely of a concurrent wrongdoer, because, for example, he, she or it owed no duty to the plaintiff or did not cause or contribute to the cause of the plaintiff’s loss but the nominated wrongdoer did owe a relevant duty to the defendant and breached it or was otherwise under a liability to the defendant, the defendant will be entitled to cross-claim to recover damages from that party in the event that the breach or contravening conduct is found to have caused loss or damage to the defendant/cross-claimant. In some cases, that damage may be represented by a liability the defendant/cross-claimant has to the plaintiff. Implicit support for this conclusion may be derived from the judgment of Campbell JA in Rennie Golledge Pty Ltd v Ballard (2012) 82 NSWLR 231; [2012] NSWCA 376 at [151] who spoke in terms of a putative cross-claimant with “rights of any substance against any alleged concurrent wrongdoer”. The proportionate liability regimes in both State and federal legislation were not designed to emasculate such independent substantive rights.
48. Another example of a case where a defendant may bring a cross-claim against an alleged concurrent wrongdoer is where the cross-claim is founded on a contract which may give rise to an express right to damages or indemnity. Perpetual Trustee Company Ltd v CTC Group Pty Ltd (No 2) [2013] NSWCA 58 (Perpetual) was such a case although, as Macfarlan JA explained at [11], the availability of such a claim was driven by s 3A(2) of the CLA which provides:

“This Act (except Part 2) does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract with respect to any matter to which this Act applies and does not limit or otherwise affect the operation of any such express provision.”
In such a case, a cross-claim would be available even if the cross-defendant was also found to be a concurrent wrongdoer; see also B McDonald, “Proportionate Liability in Australia: The Devil in the Detail” (2005) 26 Aust Bar Rev 29, 44 and B McDonald “Indemnities and the Civil Liability Legislation” (2011) 27 JCL 56, 62.

49. Cross-claims for declaratory relief against named concurrent wrongdoers who are not joined as defendants by a plaintiff have also been permitted: see, for example, Fudlovski v JGC Accounting & Financial Services Pty Ltd (No 3) [2013] WASC 476; Lion‐Dairy & Drinks Pty Ltd v Sinclair Knight Merz Pty Ltd (No 3) [2014] FCA 386; cf. Rivercity Motorway Finance Pty Ltd (Administrators Appointed) (Received and Managers Appointed) v AECOM Australia Pty Ltd (No 2) [2014] FCA 713. In the Lion-Dairy case, it should also be noted that a cross-claim based upon a direct claim in negligence against one of the nominated concurrent wrongdoers was not opposed: see at [13].
50. One possible way of viewing and seeking to understand the primary judge’s decision and, in particular, her statement that “the cross-claim does not disclose a bona fide cause of action”, is that her Honour may have assumed that the claim was apportionable and that Penske was a concurrent wrongdoer because Landpower had pleaded as much in its Defence and the Northcotts had accepted, at least by the time the notice of motion was heard, that the claim was apportionable. In my opinion, a defendant who in its defence nominates a party as a concurrent wrongdoer is not by reason of that fact alone precluded from bringing a cross-claim against such an entity based upon an independent cause of action it has against that entity.
51. Such a claim may be warranted by way of what is, in effect, an alternative plea against the possibility that the cross-defendant is not found to be a concurrent wrongdoer and/or the plaintiff’s claim is not held to be apportionable. So long as the cross-claim is brought bona fide and is not demurrable, the fact that it may not ultimately succeed (wholly or in part) in the event that the cross-defendant is ultimately held on the evidence at the trial to be a concurrent wrongdoer whose want of reasonable care has contributed to the plaintiff’s loss, does not mean that the cross-claim should be summarily dismissed. The cross-claimant will be at risk of costs in this eventuality but that is a matter for it.
52. It would be highly undesirable for a defendant who has raised but failed to establish that a particular entity was a concurrent wrongdoer should have to wait until after a case had been determined to bring separate proceedings against that entity under an independent cause of action it had. That course would be contrary to s 63 of the Supreme Court Act 1970 (NSW) which provides that:

“The Court shall grant, either absolutely or on terms, all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided.”

53. It may also be highly prejudicial to the defendant, both in terms of cost and the potential running of any limitation periods. In Perpetual, Macfarlan JA contemplated a defendant bringing a cross-claim against a nominated concurrent wrongdoer to guard against the possibility that the court might hold that the apportionment provisions of the CLA were inapplicable.

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