Barber v Kylow Pty Ltd & Ors

CATCHWORDS : PRACTICE AND PROCEDURE - Application by plaintiff for interim payment from second defendant pursuant to section 82(3)(c) Civil Procedure Act 2005 - plaintiff brain damaged when fork of his bicycle collapsed - no issue as to application of section - quantum of interim payment of damages - order made - APPLICATION by second defendant for interim contribution/indemnity from cross-defendants with respect to interim payment - second defendant unable to bring itself within section 82(3)(c) - order refused.

Civil Procedure Act 2005 LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1946 Sale of Goods Act 1923 Trade Practices Act 1974 (Cth)

CASES CITED : Barber v Kylow Pty Limited [2010] NSWSC 519 Power Technologies Pty Limited v Energy Australia [2010] NSWCA 107

Ben Barber by his tutor Justine Tennille Barber (Plaintiff) Kylow Pty Ltd t/as Rod Martin Cycles (First Defendant/ Second Cross Claimant) PARTIES : Southcott Pty Ltd (Second Defendant/First Cross Claimant) Felt Gesellschaft Mit Beschrankter Haftung (First Cross Defendant/Third Cross Claimant) Sanfa Bicycle Industrial Co Ltd (First Cross Defendant to the Third Cross Claim) SR Suntour Inc (Second Cross Defendant to the Third Cross Claim)

AJ Black SC/Mr Smith - Plaintiff R Cheney - First Defendant COUNSEL : PS Jones - Second Defendant J Sheller - Felt GMBH DF Villa - Suntour Mr Chen - Sanfa

Stacks/Goudkamp Lawyers (Plaintiff) SOLICITORS : Lee & Lyons (First Defendant) Ebsworth Lawyers (Second Defendant) Maddocks (First Cross Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2008/289409 - Ben BARBER by his tutor Justine Tennille BARBER v KYLOW PTY LTD t/as ROD MARTIN CYCLES & Ors (No 2)

JUDGMENT 1 HIS HONOUR: Nature of proceedings The Court has before it two notices of motion. The first has been brought by the plaintiff. In it he seeks an interim payment of damages pursuant to s 82(3)(c) of the Civil Procedure Act 2005 (CPA). That relief is only sought from the second defendant, Southcott Pty Limited (Southcott). 2 The second motion has been brought by Southcott. It seeks what amounts to an interim order for contribution or indemnity from the first cross-defendant, Felt Gesellschaft Mit Beschrankter Haftung (Felt) and the first cross-defendant to the fourth cross-claim, SR Suntour Inc (Enterprise Uniform Number 22318868) (Suntour). The second motion is also brought pursuant to s 82(3)(c) CPA.

Factual background 3 Similar motions were heard by Harrison J on 11 June 2010. On that occasion the plaintiff's application was based on the need of the plaintiff's parents for respite care from their role as his primary carers pending the hearing and final determination of all issues in the proceedings. Southcott's motion was brought against the first defendant, Kylow Pty Limited, and a cross-defendant, Sanfa Bicycle Industrial Co Limited (Sanfa) seeking an interim order for contribution or indemnity. 4 His Honour handed down judgment on 18 June 2010 (Barber v Kylow Pty Limited [2010] NSWSC 519). The effect of his Honour's judgment was an order that Southcott make an interim payment of $46,200 to the plaintiff to cover respite care for eleven weeks up to 6 September 2010 which was the date fixed by his Honour for the final hearing of the proceedings. His Honour dismissed the claim for indemnity and/or contribution brought by Southcott against Kylow and Sanfa. The payment of interim damages was duly made by Southcott. 5 In order to understand subsequent events, it is necessary to say something about the factual background to the matter generally. The plaintiff's claim arose from an accident which occurred on 19 August 2005 when he was aged 15. He was cycling with friends when the fork of his bike collapsed which led to him suffering serious head injuries and brain damage. He is now aged 20 and continues to suffer from profound intellectual disabilities and is subject to aberrant behaviour. 6 Kylow is the retailer which sold the bicycle. Southcott imported the bicycle into Australia. Felt is a German company which manufactured the bicycle. Sanfa is a Taiwanese corporation which manufactures and/or assembles bicycles for resale. Suntour is also a Taiwanese corporation which manufactures bicycle components, including bicycle forks, and is alleged to have been the manufacturer of the bicycle fork which the plaintiff says collapsed and caused him to suffer his injuries. 7 The matter came before me for case management in July 2010. At that time Felt had a motion before the Court seeking to vacate the hearing date. The basis for the motion was Felt's inability to properly serve a cross-claim on Suntour. On 29 July 2010 Suntour filed an unconditional appearance as a result of which Felt withdrew its motion. Suntour, however, then filed a motion seeking to vacate the hearing date on the basis that it would not be ready for a hearing on 6 September 2010. 8 When that motion was heard, it became apparent that Southcott also intended to cross-claim against Suntour. I concluded that the complexities of the matter were such that Suntour would not be ready by 6 September 2010. I also concluded that all relevant parties and issues should be before the Court when the matter was heard. Accordingly, I vacated the hearing date on 6 September. I fixed the matter for hearing on 28 February 2011 with an estimate of four weeks. 9 On 6 September evidence was placed before the Court to the effect that the strain of looking after the plaintiff had led to the plaintiff's parents developing psychiatric conditions and that they were no longer able to look after him. The two motions presently before the Court were foreshadowed.

Plaintiff's motion 10 As with the motion before Harrison J, Southcott accepted that if proceedings went to trial the plaintiff would be able to obtain judgment for substantial damages against it as the importer of the bicycle under the Trade Practices Act 1974 (Cth) (TPA). Accordingly the only issue before the Court was the quantum of the interim payment. The interim payment now sought was for the full care of the plaintiff for the next 26 weeks. 11 The plaintiff submitted that the Court should make an order for the payment by Southcott of $8,395 per week for 26 weeks. This figure was made up of $7,450 per week to pay for carers, a case manager and a registered nurse. $250 per week was identified as an allowance for the plaintiff to enable appropriate entertainment and activities to be provided for him. $695 per week was the rent for a two bedroom serviced apartment. This was the only accommodation on the Central Coast which the plaintiff's legal advisers had been able to find for the plaintiff and a resident carer. 12 Southcott disputed the reasonableness of those figures. It submitted that the entertainment allowance was excessive and that $100 per week was appropriate. It also submitted that $695 per week for a serviced apartment was excessive when one had regard to the availability of properties on the Central Coast. In support of that proposition, a list of available properties was placed before the Court which indicated an average rental of $400 per week for properties on the Central Coast. Southcott agreed that this was only a list and that none of the landlords or agents had been specifically approached with a view to accommodating a person with the plaintiff's disabilities and his carers. 13 The most substantial area of dispute, however, related to the amount to be applied for the weekly care of the plaintiff. Southcott submitted that an amount of $5,185 per week was appropriate. This assessment was based on carers being arranged and supervised by the Sunshine Home Group. This is an organisation which specialises in providing care and accommodation for intellectually disabled people. It has an office on the Central Coast. 14 On behalf of the plaintiff, evidence was placed before the Court from Ms Castle-Burton, occupational therapist, who has been providing advice for the management of the plaintiff for the last couple of years. There was a report from Ms Morris, occupational therapist, who has been the plaintiff's rehabilitation case manager. There was also a report from Dr Jungfer, psychiatrist, who had examined the plaintiff. 15 The effect of that material was a strong recommendation that the plaintiff required fulltime care, including overnight care. This would comprise 24 hours one-on-one supervision from an attendant care worker (ACW) experienced in working with individuals who suffer from complex brain injury impairment. There was also a need for a registered nurse (RN) to be involved in the care program. The role of the registered nurse was to assess occupational health and safety risks to the plaintiff and his care team as he attempted to live as independently as possible in the local community. There was a continuing need for a case manager. 16 At the present time, the plaintiff is still residing with his parents but due to the difficulties which they have experienced in dealing with him, most of the care is being provided by external ACWs. Even so, the present circumstances have not been entirely satisfactory. Ms Morris described some of the difficulties at paragraphs 2.5 - 2.7 of her report of 19 October 2010 as follows: "2.5 His current ACWs have reported constant frustrations and challenges with meeting Ben's needs. These have become more evident as Ben has engaged in domestic and personal care activities around his parents' home. For example, Ben is inattentive and impulsive when performing self-care activity. He needs to be prompted and observed performing each step of self-care to ensure that tasks are completed. He even requires a prompt to recheck that he has wiped his bottom properly and washed his hands after a bowel motion, due to his haste to move on to something else. 2.6 Three months into the care program and signs of carer burnout are becoming evident. Narelle, Ben's mother, has reported overhearing carers venting small frustrations at continually repeating instructions to Ben. For Ben to process new information when his levels of inattention and distractibility are high, he needs to hear the information at least five times over a short period of time. The constant nature of repeating instructions can be frustrating for carers on a daily basis. The case manager and the care agencies are working closely to monitor carer fatigue and burnout. 2.7 Over time, less experienced and competent carers have ceased working with Ben. The demands of the carer support required and the level of fitness to chase after Ben when out in the community has been challenging. In the future, it may be necessary that two carers support Ben in busy environments in his local community to minimise risk, redirect undesirable behaviours and to ensure Ben's safety and reduce the risk of carer burnout." 17 Some of the undesirable behaviours to which reference is made are asking for cigarettes from bystanders or patrons of coffee shops, an obsession with female underwear and sanitary products and a tendency to shoplift items of female underwear. There are, of course, the obvious problems associated with impulsive and erratic behaviours on the part of a fit and vigorous 20 year old male. 18 In the defendant's case the Court was provided with DVD material showing the activities of the plaintiff in December 2009, January and August 2010. This DVD material showed the plaintiff to be physically strong and quite fit. The 2010 material showed the plaintiff to always be accompanied by another adult. 19 Evidence was given by Ms Feltes, who is the General Manager, Operations and Corporate Relations, of the Sunshine Home Group. I found Ms Feltes to be an extremely impressive witness. She was by no means an advocate but rather seemed to be stating her understanding of the plaintiff's situation in an honest, compassionate and informed way. I wish to make it clear that although I have rejected the defendant's submissions as to care, I did not do so on the basis of any scepticism or non-acceptance of the evidence of Ms Feltes. In fact at the time of trial should this matter proceed that far, her prescription of care may prove to be a more viable solution in the long term for the plaintiff. That, of course, is a matter entirely for the trial judge. 20 The opinion of Ms Feltes can be best understood by extracts from her oral evidence: "A. An important consideration when you are commencing support for an individual with an intellectual disability is clearly to understand the myriad of needs involved. The people who are best able to offer the most comprehensive understanding of those needs would clearly be Ben's parents and his extended family. A transition period or plan would need to be developed, and by that I mean some discussions that sits down with all the relevant individuals to determine what and how future living arrangements might look like for Ben. I think what gets to the very heart of a success is knowing what those needs are, understanding those needs and agreeing on the strategies that would best meet them.

Because Ben has clearly a loving family environment, his family have provided his social engagement. It would be important to consider what a change to that environment would need to consider, so it would be about stepping that through, and they are the elements that I would talk about and that's what I mean when I talk about a transition plan. So it is the how, it's about agreeing on the location or the particular environment, it is about the steps that we would need to take and the plan A, B and C should our intended processes not go to plan." (T.30.12) "A. I think I would hark back a little bit to my sense of a transition plan for Ben. I would like to create the opportunity where - we are clearly going to need a bit of time for Ben to get used to the idea of a new place, and whilst of course it doesn't preclude Ben going home, I certainly would get a sense that if his family could come to Ben and it was his place and he had a sense of it being his own place then that might assist in his transition ultimately into his own home." (T.31.9) "A. We have certainly implemented both responses for other individuals that we have assisted in the past. My short answer would be that in an ideal setting we would be negotiating and discussing that with family. I think the family would clearly have a better idea as to what may best work for Ben. Because they have been so significant in his life and he has had little experience in other sorts of environments, perhaps I see an initial phase looking like Ben maybe spending, you know, Monday to Friday in his new home and perhaps going back on a Saturday or Sunday or vice versa, or it could be a day of a week that he goes home so that it doesn't feel like a significant abrupt change for him. These are all obviously a little speculative and I think the importance of looking at a transition plan for Ben is about any service to be quite nimble and responsive to those changing needs." (T.31.20) "A. In our discussion with Ben's Mum and Dad, Mr and Mrs Barber, they clearly talked through a number of their experiences, both with staff that they felt were great for Ben but they also had a number of experiences of staff who they felt were not suitable. An immediate example that comes to mind really relates to the fitness level of a staff member, so I think having staff that were fit and able, and in many instances perhaps a male staff member would be beneficial for Ben." (T.33.1) 21 Ms Feltes recommended that a three bedroom home with a yard would afford the most appropriate accommodation so that the plaintiff could obtain some exercise. One of the major differences between her prescription for care and that put forward on behalf of the plaintiff was that because he was a very sound sleeper for approximately 9 hours at night, the care then provided should be of a sleepover kind which her organisation paid at the rate of 3 hours per night. The need for someone being there at night was that the plaintiff was such a heavy sleeper he was unlikely to wake up for emergencies and had apparently previously slept through the activation of a smoke alarm. 22 Ms Feltes advised that her estimate of costs did not include those of a case manager and so her figures would need to be increased by approximately $200 per week. She did not accept the need for a RN. She explained that although Sunshine Homes had clients on the Central Coast, if it took over the plaintiff's care, it would be necessary for more care staff. 23 In general terms, both the suggested regimes of care seem to be adequate. My function, however, is not to prescribe a long-term solution for the plaintiff's care needs. That is something which the trial judge will do, having before him or her much more detailed evidence than I. My function is to make sufficient monies available to the plaintiff for the next six months to allow him to function effectively and to be able to participate in his trial. My focus has to be primarily on the welfare of the plaintiff for that period. 24 As Ms Feltes made clear in her evidence, the movement of the plaintiff from his home to his own accommodation is going to be a very difficult and disruptive time for him. He will not only be in new surroundings, he will have to learn the geography of his new area, the location of shops etc. The transition period is likely to take a considerable amount of time. The assistance and full co-operation of his parents is essential if this process of change is to be successful. 25 It was apparent to me from the body language of his parents that they have adopted a somewhat adversarial approach to this matter (which is understandable) and that they see Southcott as putting forward an alternative, cheaper regime which may not provide the best care for their son. That is also an understandable reaction, although perhaps unfair. Nevertheless, it is a real problem which needs to be addressed. 26 I am of the opinion that the least disruption will be caused to the plaintiff if he has around him during this difficult transitional phase, carers with whom he is familiar and advisers such as Ms Castle-Burton and Ms Morris with whom he is also familiar. His parents know these persons and are likely to co-operate more fully and effectively with them than if a new regime, substantially involving strangers, were involved. 27 By accepting the plaintiff's proposals, I am also minimising the possibility of further disruption in the plaintiff's life. If in due course the trial judge decides to implement substantially the defendant's recommendations then there will, of course, be a change in the management of the plaintiff but that is a change, it seems to me, which would not take place for at least six months and could be more easily managed in that the plaintiff would have been living in his own accommodation for a substantial period of time when that occurred. 28 It would, however, be more disruptive if I were to implement a change in care providers at this stage on an interim basis and then the trial judge decides that the care regime proposed by the plaintiff should be implemented. What I am endeavouring to do is to minimise the disruption to the plaintiff and I believe this is best achieved by putting into effect the plaintiff's proposal. 29 In that regard I do think that $250 per week for entertainment is somewhat excessive and I propose to allow on an interim basis $150 per week. In relation to accommodation, $695 for a serviced apartment does seem excessive, particularly since it is agreed that the plaintiff does not need to have an apartment serviced since it would be therapeutic for him to carry out housekeeping tasks himself. On the other hand, it was pointed out that one of the benefits of a serviced apartment is that it is already furnished and such expenditure does not have to be incurred by the plaintiff at this time. Accordingly, I propose to allow in the plaintiff's favour accommodation expenses on an interim basis of up to $700 per week with a strong recommendation that this money be used to rent a three bedroom home with a yard on the Central Coast. 30 I also propose to order that Southcott make the sum of $12,077 available to allow the plaintiff to undergo a Behaviour Support or Modification program on a trial basis for the next six months. This proposal was put forward on behalf of Southcott and instructions were received on behalf of the plaintiff that he was prepared to undergo such a course of treatment. In relation to care, I propose to order that Southcott make an interim payment of damages of $193,700 for the provision of care for the plaintiff over the next 26 weeks.

Second Motion 31 Southcott's motion sought an order in the following terms: "In the event that the plaintiff succeeds in his Notice of Motion dated 27 August 2010 for interim relief under section 82 of the Civil Procedure Act 2005 (NSW) against the Second Defendant (the Plaintiff's Notice of Motion), the Second Defendant be indemnified or alternatively, contribution be ordered from the First Cross-Defendant to the Fourth Cross-Claim (Suntour) on such terms as this honourable Court deems to be just and equitable." 32 Southcott put forward two bases upon which it submitted it should be entitled to the relief which it sought. The first was that the need to vacate the hearing date of 6 September had only arisen because of the conduct of Felt and Suntour. Firstly, Felt had put forward a motion to vacate the hearing date on the basis that Suntour needed to be properly joined and that having been properly joined, Suntour then successfully obtained a vacation of the hearing date. Southcott submitted that at that time it was ready and able to proceed with the hearing on 6 September 2010. It was not through any fault on its part that the hearing date was vacated. 33 Southcott submitted that in those circumstances it was not fair to burden it with substantial interim payments as a consequence of events which were not caused or contributed to by its conduct. Southcott submitted that it mattered not that it might ultimately be reimbursed with interest for those payments, since it had to incur the detriment of making them in the meantime. 34 The second basis put forward by Southcott was that this was not a particularly complicated matter. It submitted that there was no dispute that the fork failed, there was no dispute that the failure of the fork brought about the injuries to the plaintiff. Similarly there was no dispute that the fork was manufactured by Suntour and that Felt manufactured the bicycle. Felt might have involved subcontractors but it was the manufacturer. Finally, there was no dispute that Southcott had contracted with Felt for the supply of the bicycle. 35 Southcott also referred to an indemnity clause in the contract between it and Felt which obliged Felt to indemnify Southcott in circumstances which were covered by the facts of this case. Southcott submitted that as against Felt, it had the benefit of the Sale of Goods Act 1923 with its implied warranties as to merchantability and fitness for purpose. 36 In relation to evidence, Southcott submitted that it relied upon the same evidence against Felt and Suntour as the plaintiff relied upon in his case against it. Southcott sought to distinguish the observations of the Court of Appeal in Power Technologies Pty Limited v Energy Australia [2010] NSWCA 107 at [107 - 108] on the basis that the Court of Appeal was concerned with a decision of the Dust Diseases Tribunal. In such cases causation issues were notoriously difficult and could only be determined once the facts of exposure had been finally determined by a trial judge. 37 Southcott's submissions on this motion cannot succeed. 38 As the form of its motion makes clear, Southcott has to bring itself within the provisions of s 82(3)(c) CPA if it is to establish an entitlement to contribution and/or indemnity from Felt and/or Suntour. That requires Southcott to satisfy the Court that if proceedings went to trial, it would obtain judgment for a substantial contribution against Felt and/or Suntour. On the material before me, I could not be so satisfied. 39 The submission that Southcott did not cause the hearing date of 6 September 2010 to be vacated raises an argument that may be effective when the Court comes to assess who should pay the costs thrown away by the vacation of that hearing date but it is irrelevant to the application of s 82(3)(c) CPA. 40 In relation to Southcott's second submission, I cannot agree that as between it and Felt and Suntour the case is simple and straightforward. Firstly, I do not have all the evidence before me but only a very small part, mainly that which was before Harrison J. It goes without saying that submissions from the bar table are not a substitute for evidence. Accordingly, I do not have sufficient evidence before me to decide in any meaningful way whether Southcott is likely to obtain a verdict in its cross-claims against Felt and/or Suntour. 41 Even if there were evidence before me of the kind required, my understanding of this case is that it is going to involve a decision between competing expert opinion as to the reason why the fork failed. Insofar as the indemnity clause is concerned, I do not have a copy of the contract before me but even if I did, the application of such clauses is notoriously difficult unless and until factual findings are made. It is only on the basis of those factual findings that the Court can determine whether the indemnity clause would apply. 42 As between Southcott and Suntour, there is another difficulty. The plaintiff's claim against Southcott is based on negligence and breaches of the TPA. The claim under the TPA is virtually unanswerable as Southcott implicitly conceded by not contesting liability in relation to the plaintiff's motion. Southcott's claim against Suntour, however, is based on s 5 of the Law Reform (Miscellaneous Provisions) Act 1946. There is a substantial body of authority which says that s 5 does not encompass liability found under the TPA. 43 In those circumstances, as with the earlier judgment of Harrison J, the observations of the Court of Appeal in Power Technologies Pty Limited v Energy Australia apply to Southcott's motion. There Basten JA said: "Interim Payments

107 So far I have not referred to Part 6 Div 5 of the CP Act , which neither party mentioned it in their submissions. Section 82(1) of the CP Act provides that in any proceedings for the recovery of damages, the Court (or Tribunal) may order a defendant in the proceedings to make one or more payments to the plaintiff as part of the damages sought to be recovered in the proceedings. An order can be made only in the application of a plaintiff and only against a defendant: s82(2). However, " plaintiff " includes cross-claimant and " defendant " includes cross-defendant: (s 3).

108 The limitations on the making of an order for interim payment are such that Part 6 Div 5 is unlikely to be a suitable mechanism for giving effect to an apportionment determination. In particular, the Tribunal is not to make an order for interim payments unless satisfied that if the proceedings went to trial, the plaintiff/cross-claimant would obtain judgment for " substantial damages " against the defendant/cross-defendant: (s 82(3)(c))." 44 Southcott's motion should be dismissed and it should pay the costs of Felt and Suntour in respect of the motion.

Conclusion and orders 45 I make the following orders:

(1) Order that pursuant to s 82(1) of the Civil Procedure Act 2005 the second defendant pay to the plaintiff as part of the damages sought by him on an interim basis the following:

(a) $193,700 for the provision of care. (b) $12,077 to allow the plaintiff to undergo a Behaviour Support or Modification program.

(c) $3,900 for the plaintiff's entertainment expenses. (d) $21,000 for rent of suitable premises (this includes an allowance for a four week rental bond).

(2) Order that the costs of the plaintiff's motion against the second defendant be costs in the cause.

(3) Dismiss the second defendant's notice of motion against Felt and Suntour.

(4) Order that the second defendant pay the costs of Felt and Suntour in respect of its motion against them. **********

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