Climax Management v Scansash

COUNSEL : Appellant: Mr Harrison SC with Mr Ogborne Respondent: Mr M Slattery QC with Mr M Grant SOLICITORS : Appellant: Blake Dawson Waldron Respondent: Connery & Partners CATCHWORDS : Workers' Compensation Act 1987 - estoppel - whether appellant is estopped from bringing proceedings as a result of a determination under s 151Z(2) of the Workers' Compensation Act - appeal allowed. LEGISLATION CITED : Workers' Compensation Act 1987 Law Reform (Miscellaneous Provisions) Act 1946 CASES CITED: Oxley County Council v MacDonald [1999] NSWCA 126 Redken Laboratories (Aust) Pty Ltd v Docker [2000] NSWCA 100 DECISION : 1. Appeal allowed; 2. Respondent to pay the appellant's costs; 3. Further orders to be made in an agreed form of order signed by the parties and filed in Court.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40695 of 2001 DC 4250 of 2000

MEAGHER JA IPP AJA PEARLMAN AJA

Friday, 21 June 2002 CLIMAX MANAGEMENT PTY LTD v SCANSASH PTY LIMITED Facts The second respondent, Mr C Negus, was an employee of the appellant, Climax Management Pty Ltd, which carried on the business of gold-mining. The first respondent, Scansash Pty Limited, was an independent contractor engaged by Climax to keep its tanks in good repair. Whilst checking certain tanks, the second respondent, fell and was severely injured, and successfully sued Climax Management Pty Ltd and Scansash Pty Limited in negligence. The trial judge awarded him $537,167.000 and determined the liability of the employer and contractor at 65% and 35% respectively.

On 23 August 1999, the appellant filed a claim (the fourth cross-claim) by which it asserted that the respondent, Scansash Pty Limited, had committed breaches of contractual obligations to comply with certain Acts and Regulations. At trial, his Honour ordered that the cross-claims between the defendants be stood over for separate hearing because Scansah, the present respondent, was "not in a position then to deal with the claim in contract".

On appeal, the respondent, Scansash claimed that his Honour's judgment disposed of all questions which arose on the cross-claim. The appellant contended the cross-claim was a separate claim made in contract between the two parties, and not a claim in tort against both of them. The issues raised by the cross-claim were (a) whether there was an agreement as alleged in the cross-claim, (b) whether the present respondent committed breaches of that agreement and (c) whether the appellant suffered loss and damage as a result of those breaches. These issues were not decided by his Honour.

Held: Per Meagher JA (Ipp AJA and Pearlman AJA agreeing) (i) The trial judge was not required to determine any issue arising out of the contract between the appellant and the respondent. He was merely required to determine the proper contribution as between two concurrent tortfeasors. (ii) It is well settled that one tortfeasor may recover damages for breach of contract from a co-tortfeasor, even to the full extent of the former's liability to the plaintiff, notwithstanding that it has been held in the same proceedings that it is "just and equitable" for each tortfeasor to contribute to the damages awarded to the plaintiff: Oxley County Council v MacDonald NSWCA 126; Redken Laboratories (Aust) Pty Ltd v Docker NSWCA 100. ORDERS

1. That the appeal be allowed
2. That the respondent pay the appellant's costs.
3. That further orders be made in an agreed form of order signed by the parties and filed in Court.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40695 of 2001 DC 4250 of 2000

MEAGHER JA IPP AJA PEARLMAN AJA

Friday, 21 June 2002 CLIMAX MANAGEMENT PTY LTD v SCANSASH PTY LIMITED Judgment 1 MEAGHER JA: The plaintiff, a Mr Craig Negus, who is second respondent in this appeal, was an employee of the appellant Climax Management Pty Ltd. That company's business was gold-mining, which it carried on at various places, including Mandurama, the site of the accident with which these proceedings are concerned. His tasks included the checking of certain tanks. On 20 September 1995 he was doing this when he fell into one such tank and was severely injured. 2 For these injuries he sued his employer in negligence. He also sued as a defendant the present first respondent, Scansash Pty Limited, which was an independent contractor engaged by the employer to keep the tanks in good repair. His Honour Judge O'Reilly in the District Court found for Mr Negus against both defendants, the employer because it did not provide a safe system of work, and the contractor because one of its employees had negligently left open the hatch through which Mr Negus fell. 3 His Honour entered a verdict against each of the defendants in the sum of $537,167.00. He also determined that the employer was liable for 65% of the verdict, and the contractor for 35%. 4 Before I come to the matters in issue on the appeal, I should like to observe that the results I have recounted in the last paragraph are extraordinary. To begin with, some of the items in the verdict against the employer are capped, whilst those against the contractor are not. This factor alone should indicate that the plaintiff should have recovered one verdict against the employer and another against the contractor. But, to make the result more extraordinary still, the Court cannot understand, and no counsel was able to explain, how or why the 65%-35% apportionment took place. We were assured it was not an apportionment under the Law Reform (Miscellaneous Provisions) Act 1946. Nor has it anything to do with capping. We were told it was an apportionment called for by s151Z (2)(c) of the Workers' Compensation Act 1987, but it is not immediately clear how that section calls for an apportionment of this character. We were asked, in effect, to proceed to hear the appeal despite all these unresolved mysteries, each side content that there should be one only verdict against the defendants and that the 65%-35% apportionment should stand. It was on this (possibly false) basis that we heard the appeal. 5 In this case, the employer (the appellant) filed on 23 August 1999 a claim (the fourth cross-claim) by which it claimed that Scansash (the respondent) had committed breaches of contractual obligations to comply with certain Acts and Regulations and to effect and maintain public liability insurance. 6 The contract between the appellant and the respondent is in evidence. In it the appellant is called "The Principal" and the respondent is called "The Contractor". Clause 11 of that contract provided: "11.0 RISK STRUCTURE The Contractor shall indemnify and hold harmless the Principal from and against any and all claims, costs, demands, liabilities, expenses, suits or legal actions (including legal fees) for the death of, or injury to any person, including the Contractor's personnel, and/or the loss, or damage to, the property or any person (including the property of the Contractor and the Principal) resulting from an act, omission or event arising out of or connected with the performance of the Services or the provision of the Scheduled items by the Contractor save where the same has been caused by the negligence of the Principal or any of its employees."

Clause 13 provided as follows: "13.0 COMPLIANCE WITH LAWS AND REGULATIONS 13.1 The Contractor and all persons employed by it or under its control shall in the performance of the Services in around or upon the Mining Lease comply with: 13.1.1 All Acts and Regulations (both Commonwealth and State) and in particular without limiting the generality of the foregoing the relevant provisions of the Mines Inspection Act 1992 (as amended) and the Regulations thereunder and also the lawful requirements of all public, municipal, governmental and other authorities in any way relating to safety of the performance of the Services. 13.1.2 All directions, rules and regulations which may be given or made from time to time by the Principal. 13.1.3 The General Industrial Regulations as published from time to time by the Principal (copies of which regulations will be made available to the Contractor on request). 13.2 The Contractor shall ensure compliance with the provision of this Clause 13.0 by all persons employed by it or under its control. 7 When the main case (i.e. that brought by Mr Negus against both the present appellant and the present respondent) came on for hearing, his Honour ordered that the cross-claims between the defendants be stood over for separate hearing because Scansash (the present respondent) was "not in a position then to deal with the claim in contract". The plaintiff's claim then proceeded, and resulted, as I have said, in a verdict in his favour of $537,167.00 against them both. 8 On 30 May 2001, the present respondent filed a motion, which, in effect, was a prayer for judgment in its favour on the fourth cross-claim. On 17 August 2001 his Honour granted that relief. 9 The basic claim of the present respondent was that his Honour's judgment in the principal proceedings in effect, by estoppel or otherwise, disposed of all questions which arose on the cross-claim. The present appellant's basic answer was that this could not be so, as the cross-claim was a separate claim made in contact between the two parties, not (as were the principal proceedings) a claim in tort against both of them; and, moreover, a claim which his Honour had ordered should be tried separately. 10 The issues raised by the cross-claim were (a) was there such an agreement as alleged? (b) did the present respondent commit breaches of that agreement (particularly of clause 13)? and (c) did the present appellant suffer loss and damage as a result of those breaches? The present respondent admits the existence of the contract, but denies both breach and damage. None of these issues has been decided by his Honour. 11 I find it very difficult to understand on quite what basis his Honour made his orders. An example of his Honour's reasoning is as follows: "But so far as the allegation in relation to the Mines Inspection Act and regulation is concerned I agree with Mr Slattery that that is an issue that cannot be litigated at this point of time. It is part and parcel of the apportionment. It was open to Mr Kearns had he wished to improve his position qua Scansash by adducing evidence or cross-examining to establish any particular statutory breaches that he wanted to rely on, he chose not to do that. In my finding it is too late to try to do it now." 12 But, in the main proceedings, his Honour was not required to determine any issue arising out of the contract between the appellant and the respondent; he was merely required (on the mysterious interpretation of s151Z of the Workers' Compensation Act 1987 adopted by the parties) to determine the proper contribution as between two concurrent tortfeasors. In that exercise it is difficult to see what part the alleged breaches of the Mining Regulations played. Although the plaintiff pleaded these, he did not seem to rely on them in evidence; nor did either defendant. But, whether the Mining Regulations had or had not anything to do in his Honour's mind in fixing the contributions between the parties - and a perusal of his Honour's reasons on the principal proceedings would suggest it played no part at all - there is no reason why that matter cannot be raised now in an entirely different context in the contractual case which the employer wishes to make against the contractor. 13 It is well settled that one tortfeasor may recover damages for breach of contract from a co-tortfeasor, even to the full extent of the former's liability to the plaintiff, notwithstanding that it has been held in the same proceedings that it is "just and equitable" for each tortfeasor to contribute to the damages awarded to the plaintiff. Hence, in the present case, there would be no inconsistency between the decision that the employer was liable to contribute 65% of the damages awarded to the plaintiff, as a concurrent tortfeasor with the contractor, and a decision that it was entitled to recover the full amount of its 65% share from the contractor as damages for breach of contract. See generally Oxley County Council v MacDonald [1999] NSWCA 126 and Redken Laboratories (Aust) Pty Ltd v Docker [2000] NSWCA 100. 14 We spent some time listening to submissions as to the meaning of the various clauses in the contract between the parties, but in my view the proper forum for deciding these submissions is the Court which will adjudicate upon the cross-claim. 15 In my view the Court should uphold the appeal, the respondent to pay the appellant's costs. Further details of the orders to be made should be made by an agreed form of order signed by the parties and filed in Court. 16 IPP AJA: I agree with Meagher JA. 17 PEARLMAN AJA: I agree with Meagher JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.