CSR LIMITED & ANOR v MAREE ANNE D'ARCY

CSR LIMITED & ANOR v MAREE ANNE D'ARCY - [1999] NSWCA 216 - NSWCA 1999 case summary — Zoe

[19]

1 MASON P: In December 1995 Mr Rowland D'Arcy (the plaintiff) suffered symptoms of what were later diagnosed as asbestosis and lung cancer, apparently in consequence of exposure to blue asbestos dust and fibres. 2 On 19 January 1996 the plaintiff commenced proceedings in the Dust Diseases Tribunal. He sued Manufacturers Mutual Insurance Limited ("MMI") as first defendant and the appellants CSR Limited ("CSR") and Midalco Pty Limited ("Midalco") as second and third defendants. The plaintiff had been employed by Australian Asbestos Products Pty Limited ("AP"), a wholly owned subsidiary of CSR, from about 1940 until 1957, and by CSR from 1957 until 1964. In the course of his employment he was exposed in various ways to blue asbestos produced by Midalco and distributed by CSR. 3 AP was dissolved in 1968. The claim based on the negligence of the dissolved company was brought against MMI as its insurer pursuant to s6 of the Law Reform (Miscellaneous Provisions) Act 1946. MMI had been AP's statutory insurer in relation to workers compensation and common law claims by employees, its common law cover being limited to £20,000 until 1958 (Workers' Compensation Act 1926, s18). 4 The plaintiff claimed damages, interest and costs against all three defendants, pleading his case in negligence and in reliance upon various statutory counts. The claims against CSR included allegations based upon its power to control the operations of AP, the plaintiff's employer between 1940 and 1957. Midalco was sued as the producer of the blue asbestos fibre that was used in the manufacturer of asbestos cement products by AP. 5 Defences were filed, the Defences of the appellants being filed on 5 March 1996. Liability was put in issue and the plaintiff's claims were said to be statute-barred. No Cross Claims were filed. 6 The hearing took place on a number of dates in May, July and August 1996 before Judge Johns sitting in the Dust Diseases Tribunal. 7 On about 13 May 1996 the plaintiff's solicitors agreed with MMI to discontinue the proceedings against MMI in consideration of a payment of $40,000 (cf the limit of AP's common law cover at the relevant time). With the leave of the Tribunal (cf Dust Diseases Tribunal Rules, r2; Supreme Court Rules, Pt 21 r2) a Notice of Discontinuance was filed on behalf of the plaintiff on 22 May 1996. It merely stated that the plaintiff discontinued the proceedings as against the First Defendant [MMI] with each party to bear its own costs. The evidence does not disclose that any release was negotiated. The $40,000 has not yet been paid. 8 While the appellants did not know the reasons for discontinuance or the consideration offered to the plaintiff, they learnt of the discontinuance at about the time it was filed. MMI ceased therefore to play any part in the ongoing trial. On 26 July 1996 the plaintiff filed an Amended Statement of Claim which deleted reference to MMI as a defendant and made consequential and other amendments to some of the plaintiff's claims against the appellants as the remaining defendants. However, the continuing claims against the appellants included allegations relating to the plaintiff's exposure during his employment with AP. 9 On 5 August 1996 each of the appellants filed Amended Defences. CSR's Amended Defence included the following new paragraphs 10. In further or alternative answer to the whole of the statement of claim the second defendant says that, if the plaintiff suffered any loss or damage, which is denied, then such loss or damage has been wholly or partly satisfied by an agreement made between the plaintiff and Manufacturers' Mutual Insurance Limited, the insurer of Asbestos Products Pty Limited, whereby the plaintiff has or will receive a payment of money in respect to the plaintiff's cause of action. 11. Alternatively the second defendant claims as a set-off against any amount payable by it to the plaintiff, the amount of any payments made or to be made to the plaintiff by Manufacturers' Mutual Insurance Limited. 12. Alternatively the plaintiff, by discontinuing his action against the first defendant, the insurer of Asbestos Products Pty Limited, an alleged joint tort feasor with the second and third defendants, has thereby released the second defendant from any liability it may have to the plaintiff. 10 Paragraphs 11-13 of Midalco's Amended Defence were in similar terms, except for the substitution of "third defendant" in place of "second defendant". 11 On 6 August 1996 senior counsel for the plaintiff objected to the three additional paragraphs in the Amended Defences on the basis that the issues which they raised were "entirely new and not arising out of any amendments made to the particulars or to the Statement of Claim" (T152). The judge indicated that he was not prepared to allow those paragraphs in the absence of any evidence. There was debate as to the right of the remaining defendants to amend their Defences generally. What was troubling his Honour was the fact that the amendments were raised in the course of a hearing that had been set down some time previously and had actually commenced. Judge Johns acceded to the plaintiff's application to disallow the three paragraphs, expressing his reasons in the following terms: …it raises matters relating to satisfaction between the plaintiff and the insurer of Asbestos Products Pty Limited, against whom the plaintiff discontinued. I do not have any evidence put before me that would persuade me that such defences and the need to amend the defence to include those particular defences, are relevantly matters to be dealt with before me. The amendments that are sought are not purely consequential and I propose therefore to disallow those amendments that relate to paragraphs 11, 12 and 13. This decision has not been challenged. It was clearly correct (see Bowes v Chaleyer (1923) 32 CLR 159). 12 Immediately after this ruling was given, counsel for the appellants politely but firmly submitted that his clients were entitled to the opportunity "to lead affidavit evidence" in support of an application to amend the Defences in accordance with the three paragraphs (T157). The judge made it plain that his ruling did not preclude such application being made. He said: …I am allowing you the opportunity to make that application, if you wish, provided it is supported by evidence upon which I can make a ruling that you be granted liberty to amend. Now, it is a matter for you. (T157) 13 Counsel for the appellants then sought and was granted a short adjournment to obtain instructions. Nothing was done at that stage. 14 After the hearing resumed that day, the plaintiff gave evidence. During cross-examination by counsel for the appellants he was asked whether he had been told by his solicitors that they had come to an arrangement on his behalf with MMI. He said that he had not been told. The matter was pressed a little further, but nothing emerged which would have armed the appellants with the evidence they were seeking. The transcript (AB 32-33) shows that the plaintiff had little understanding about the separate corporate identity of the three defendants initially sued. As far as he was concerned, it had been "the CSR" or "Sugar Refinery" that had employed him. AP was another manifestation of CSR in his understanding. He had heard of MMI, but was clearly confused as to its involvement in the litigation. All of this is understandable in relation to an elderly labourer who was suffering terminal illness (the plaintiff died on 21 January 1997). The plaintiff made it clear that he had left everything in the hands of his solicitors, Turner Freeman. 15 In this Court, the appellants accept that the plaintiff's evidence on this matter was true. 16 Nothing further was done in the trial to explore the terms of the discontinuance involving MMI. No further questions were asked. No subpoenas were issued. No further amendments to the pleadings were sought. No cross claim was filed. 17 Judgment was given on 2 October 1996. Based upon negligence, CSR and Midalco were found jointly and severally liable to pay the plaintiff damages of $161,201. This was on the ground that the plaintiff's injury was one and indivisible. The damages were apportioned between those defendants in the proportion of 75% to CSR and 25% to Midalco, although it is unclear whether any formal order to that effect was pronounced or taken out. 18 The appellants appealed to this Court, limiting their appeal to a challenge as to the damages awarded for future medical expenses. They joined the plaintiff as the sole respondent. MMI was not a party to the appeal. The appeal was allowed and the damages were reduced to $136,731 (see CSR Limited & Anor v D'Arcy (1996) 40 NSWLR 721). That judgment was given on 23 December 1996. The order has not been entered. 19 The plaintiff died on 21 January 1997. 20 On 27 February 1997 the appellants filed a Notice of Motion in the Tribunal. The respondents to the Notice of Motion are named as:

The estate of the plaintiff, the late Rolland Joseph D'Arcy.
Maree Ann D'Arcy, 11 Waverley Crescent, Bondi Junction NSW 2022. The Notice of Motion sought the following relief:
The proceedings continue in the absence of a person representing the estate of the late Rolland Joseph D'Arcy. 2. In the alternative, an order that Maree Ann D'Arcy, the daughter of the late Rolland Joseph D'Arcy, be appointed to represent the estate of the late Rolland Joseph D'Arcy. 3. Verdict and judgment in favour of the late Rolland Joseph D'Arcy in the sum of $136,731.00 be set aside and verdict and judgment in favour of the late Rolland Joseph D'Arcy in the sum of $96,731.00 substituted. 4. Such further or other orders as this Honourable Tribunal deems appropriate. 5. Costs. 21 The supporting evidence was an affidavit by Mr Sinnadura, a solicitor in the employ of Toomey Pegg & Drevikovsky, the solicitors for the appellants. The affidavit established the death of the deceased and the fact that probate had not yet been granted to his daughter, Maree Ann D'Arcy who was said to be the executor of his will. The affidavit also annexed a letter dated 6 January 1997 from MMI's solicitor to the appellants' solicitor confirming that: we agreed to contribute $40,000 towards a settlement of the matter on behalf of all defendants. However, the matter did not settle and was run to conclusion. As we did not wish to expend and incur unnecessary costs, we agreed with the Plaintiff's solicitors that we would pay them $40,000 in return for a discontinuance, and the Plaintiff accordingly discontinued against our insured. We note that the Judgment in this matter is purely against the 2nd and 3rd Defendants, and in respect of the liability of the 2nd and 3rd Defendants only. We feel that the judgment is wrong in that His Honour should have apportioned the damages. In any event, the Plaintiff's solicitors require us to pay them the sum of $40,000. We propose to pay no-one until you and Turner Freeman agree on the appropriate sum. [Turner Freeman were the plaintiff's solicitors.] 22 The only other evidence were some agreed facts, the effect of which has already been stated. 23 This Court was informed that the judgment sum of $136,731 was paid to the plaintiff, less $40,000 which has been withheld by the appellants. 24 Judgment on the Motion was given on 4 June 1997. By consent, Judge Johns ordered that Ms D'Arcy be appointed to act on behalf of the plaintiff's estate. However, he refused the substantive relief sought by the appellants, with costs. 25 Judge Johns observed that the application was based upon s13(6) of the Dust Diseases Tribunal Act 1989, ("the Act") which provides: Whenever appropriate, the Tribunal may consider any matter that it has previously dealt with, or rescind or amend any decision that the Tribunal has previously made. 26 The scope of that provision is discussed in CSR Ltd & Anor v Bouwhuis (1991) 7 NSWCCR 233 ("Bouwhuis"). It is an exceptional power, to be used "whenever appropriate" in the context of the long settled principle that there should be finality to litigation, a principle of importance in the kind of matters for which the Tribunal was established. One situation where it might be appropriate to exercise the power would be where something basic to the decision has been clearly falsified by subsequent events (cf Mulholland v Mitchell [1971] AC 666 at 679-80). The discussion in Bouwhuis (esp at 242 per Samuels JA and at 247 per Priestley JA) suggests that it is highly unlikely that any other circumstance would properly enliven the power. 27 Judge Johns recounted the facts relevant to the plaintiff's discontinuance against MMI, the refusal to allow the defendants to amend on the basis that there was no evidence supporting the proposed defences, and the reservation of the liberty to the defendants to raise the matter again providing it was supported by evidence. 28 Judge Johns held that the evidence of the agreement by MMI to pay $40,000 to the plaintiff's solicitors did not falsify the evidence before him at the trial. It may have been relevant to the appellants' rights of contribution, but it would not have affected the amount of the verdict and the judgment in favour of the plaintiff. The plaintiff was clearly entitled to the sum concluded finally by the Court of Appeal and he (or his estate) was entitled to seek satisfaction of that sum from the appellants, as they were jointly and severally liable for the damage. The additional circumstances of the reasons lying behind MMI's discontinuance, if communicated, would not have rendered the basis of the judgment untrue. Nor did the new evidence affront common sense or the judge's sense of justice (cf Bouwhuis at 243 per Samuels JA). 29 After brief reference to possible alternative remedies open to the appellants, his Honour re-iterated that no payment has been made or is presently intended to be made by MMI; and that, whatever may be the agreement between MMI and the plaintiff, it involved no admission in respect of liability. 30 In these circumstances, Judge Johns held that it would not be appropriate to exercise any discretion to amend or rescind the orders that have been made. 31 In the concluding portion of the judgment his Honour gave an additional and clearly alternative reason. He held that it was not open for the Tribunal to utilise its powers pursuant to s13(6) in circumstances where the Court of Appeal had made a final order. He cited Kirby P in Bouwhuis (at 237), a passage which I shall set out below (par 48). The appellants' submissions 32 In its original formulation, the appeal was presented as an appeal as of right from the judgment of Judge Johns on 4 June 1997. It was submitted that the decision, although discretionary, was affected by error. Two specific submissions were advanced, namely:-

Notwithstanding that it was open to the appellants to have learnt the full facts in relation to the discontinuance, the plaintiff's solicitor was in breach of his duty in taking no steps to disclose the consideration for the discontinuance (Vernon v Bosley (No 2) [1999] QB 18). 33 During argument in the Court of Appeal it was pointed out that the order made on 4 June 1997 was interlocutory, with the consequence that the appeal was incompetent (cf s32(2)(a) of the Act). The appellants submitted to the contrary, but the reasoning of Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246 is compelling. The respondent to the present appeal, Ms D'Arcy, had taken no steps to challenge the competency of the appeal (cf Supreme Court Rules, Pt 51 r25). The appellants sought leave to appeal, if necessary. In my view this is a proper case for such leave to be given, having regard to the complexity of the issues involved and the practical finality of the order appealed from (at least as regards rights against the plaintiff's estate). 34 Faced with the argument that the challenged decision stands upon two independent bases, the appellants presented a radically different, alternative ground. As indicated above (par 30), Judge Johns indicated that he lacked power to rely upon s13(6) of the Act because the application sought to vary the Court of Appeal's order made on 23 December 1996 in the earlier appeal from the final judgment. Embracing that finding, the appellants submitted that the Court of Appeal should in effect receive the fresh evidence and re-open the orders made by the differently constituted Court in the earlier appeal. This Court's power to vary the orders made in disposition of the earlier appeal was invoked on two alternative grounds:- (a) It was submitted that the powers conferred in terms on the Tribunal by s13(6) were available to the Court of Appeal by reason of the Supreme Court Act 1970, 75A(6) and (10). (b) Alternatively, re-opening was sought on the basis that the earlier orders of the Court of Appeal had not been entered (cf Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265). A new trial would not have affected the plaintiff's verdict 35 In my view Judge Johns was correct in holding that the new evidence of MMI's agreement to pay $40,000 did not falsify the evidence before him at trial. No error of fact or law affected the exercise of his discretion to decline the application on the primary ground referred to. 36 The main argument of the appellants was that the judge erred because he failed to give effect to the principle referred to by Winneke P in Boncristiano v Lohmann (1998) 4 VR 82 at 89 as the "rule against double compensation". Winneke P summarised this rule in the following terms (at 89): 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. 37 Boncristiano was a case in which there were "concurrent" or "overlapping" claims for damages arising out of a building dispute. The owners had sued the builders and the local shire, alleging deficiencies in relation to the weatherboard cladding and foundations of a house. By way of defence the builders alleged that the owners were estopped by an earlier compromise from making their claims. In consequence, the owners joined as further defendants the solicitors who had advised them in respect of the compromise. Before trial, the owners settled their claim against the solicitors for $5,000 and this sum was actually paid to them. The trial judge awarded the owners $7,600 against the builders for rectification work plus $1750 general damages. However, he held that $3,000 of the settlement sum of $5,000 paid by the solicitors should be deducted from the damages. (He had not been asked to offset the full $5,000.) 38 The challenge to this component of the damages award was rejected by the Victorian Court of Appeal. Winneke P (with whom Charles JA and Batt JA concurred) cited the English Court of Appeal decision in Townsend v Stone Toms & Partners (1984) 27 BLR 26. The facts were similar to Boncristiano in the sense that there were concurrent or overlapping claims in respect of the same total damage sustained by a building owner. The claim against one of the persons liable was settled by acceptance of a payment into court. The Court held that the owner should be required to give credit for the sum received. The relevant principle was stated by Oliver LJ (at 38) as being 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 which will be awarded against the defendant. (emphasis added) 39 Winneke P cited this passage from Townsend and applied it to the facts in Boncristiano. He emphasised (at 89) that the fundamental question was whether the claims against the various defendants were "concurrent" in the sense that the relief sought was the same. It was not to the point "that the damages received from one defendant have been received pursuant to a compromise of the claim against that defendant, by way of acceptance of moneys in court or otherwise" (emphasis added). See also Jameson v Central Electricity Generating Board [1999] 2 WLR 141 (HL). 40 His Honour then addressed an argument that the trial judge was in no position to call upon the owners to bring to account a portion of the settlement sum paid by the solicitors because there was nothing in the material before him which could have enabled him to find out what, if any, portion of the settlement sum was attributable to the satisfaction of the substance of the owners' claim as distinct from a claim, say, for the costs of that claim. Winneke P held that "the fact of payment" (emphasis added) raised 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. 41 I respectfully agree with the decision in Boncristiano. See also Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159 at 176, 187-8, Farrow Finance Company Ltd (in liq) v ANZ Executors and Trustees Company Ltd and Trustee Company Ltd [1998] 1 VR 50 at 79, Re Wakim; Ex parte McNally [1999] HCA 27 at [147]. But this case is distinguishable. 42 The passages which I have emphasised demonstrate the vital distinction between Townsend and Boncristiano on the one hand and the present case on the other. Here the sum agreed to be paid by MMI "towards a settlement" was in return for a discontinuance against it; and it has not been paid. There was neither accord nor satisfaction. In these circumstances the "true facts" would not, if disclosed, have provided the appellants with any defence to the judgment sought by the plaintiff and entered at trial (subsequently reduced on appeal). The rule against double compensation prevents receipt of payment which, in aggregate, exceeds the amount owed by several defendants (see Midland Montagu Aust Limited v Harkness (1994) 35 NSWLR 150 at 159). It was not engaged in this case. 43 Whatever the rights of contribution and/or indemnity as between the respective defendants and whatever rights may accrue to one defendant if and when the plaintiff or his estate receives full satisfaction, the plaintiff was entitled to have judgment entered for a sum representing the proper compensation for the injury he suffered at the hands of all three defendants concurrently. Nothing had happened by the time of the application before Judge Johns to displace this. 44 The appeal should accordingly be dismissed. 45 The learned trial judge recognised that, in the event that the plaintiff or his estate obtained satisfaction from the appellants, there would be no entitlement to pursue the agreement made with MMI. I would add that the converse may well be true. It has not been necessary to determine this issue in the present proceedings. As to the equity to prevent double satisfaction, see United Australia Limited v Barclays Bank Limited [1941] AC 1 at 20; D'Angola v Rio Pioneer Gravel Co Pty Limited [1979] 1 NSWLR 495 at 499; Registrar-General (NSW) v Behn (1981) 148 CLR 562 at 569; Midland Montagu Aust Limited v Harkness (1994) 35 NSWLR 150 at 159; Deputy Commissioner of Taxation v Richard Walter Pty Limited (1995) 183 CLR 168 at 202, 214. Does an appeal to this Court preclude resort to s13(6)? 46 It becomes unnecessary to consider the alternative arguments of the appellant. 47 However, I would not want it to be thought that I necessarily agreed with Judge Johns' alternative ground for rejecting the application. 48 As indicated above (par 30), his Honour held that it was not open for the Tribunal to utilise s13(6) in circumstances where the Court of Appeal had made a final order. He cited and applied a dictum of Kirby P in Bouwhuis (at 237) where the President had said: Here, the appellants have an undoubted right to apply to the Tribunal for reconsideration. Unless they do so before this Court's final order they would lose that right by reason of section 32 of the Act. 49 It is clear that Kirby P was referring to s32(3) of the Act as it stood in 1991 (see Bouwhuis at 236E). That subsection was to be found in the section conferring a right of appeal to the Court of Appeal. Subs (3) stipulated that the decision of the Court of Appeal on the hearing of an appeal under subs (1) "is binding on the Tribunal and on all parties to the proceedings from which the appeal was made". 50 Section 32 was repealed and replaced by the Courts Legislation Further Amendment Act 1995. The new provision conferred and regulated the right of appeal to this Court, but (when re-enacted) nothing was said as to the binding nature of an order made on appeal at an earlier stage of the litigation. Subsection (3) was only restored when s32 was re-enacted a further time by the Courts Legislation Amendment Act 1998. The 1998 Act relevantly commenced on 4 December 1998. This was after Judge Johns made the decision appealed against. The relevant transitional provision stipulates that s32 as in force before the commencement of the relevant part of the 1998 Act "does not apply to decisions of the Tribunal made before that commencement". Whether this provision would have such retrospective effect that it would deem the latest version of s32(3) to have been in force when Judge Johns made his decision on 4 June 1997 is highly doubtful. 51 It would appear that the primary judge's attention was not drawn to the repeal of s32(3) by the 1995 Act. Nor was his Honour referred to the unreported decision of the Court of Appeal in Merdanic v Pongrass Operations Pty Limited (Court of Appeal, unreported, 8 November 1994). In that case this Court held that a judge of the Compensation Court had not erred in law in his determination of a workers' compensation claim. A document had been put into evidence for the first time in the Court of Appeal. It was one which the members of this Court were inclined to think might have led the trial judge to a different conclusion had the document been in evidence before him. But the appeal was dismissed because there was no error of law in the manner that the trial judge responded to the material that had been before him. Both Mahoney JA (at p2) and Priestley JA (at p23) indicated that there was no impediment to a fresh application being brought in the Compensation Court pursuant to s17(4) of the Compensation Act 1984 for reconsideration of the award. As far as I can ascertain, there was no equivalent of s32(3) of the Act as it stood prior to 1995 and after 1998 to be found in the Compensation Court Act 1984. There is, however, a significant distinction between the subject matter of s13(6) of the Act and s17(4) of the Compensation Court Act (see Bouwhuis), and this may limit the application of Merdanic in the present context. 52 I would therefore reserve for further determination the question whether s13(6) was necessarily spent by the intervening Court of Appeal order made in an appeal that had nothing to do with the issue said to enliven the s13(6) application made in 1997. Likewise, I merely note the appellants' alternative argument that the s13(6) powers that are in terms conferred on the Tribunal devolve upon the Court of Appeal via s75A(6) of the Supreme Court Act in the adventitious circumstance where the same litigation returns to the Court of Appeal a second time. Unnecessary to consider whether there was a breach of professional duty 53 It also becomes unnecessary to consider the application of the English Court of Appeal decision in Vernon v Bosley (No 2). That decision provides a timely reminder of the paramount duties resting upon legal practitioners stemming from their role as officers of the court (see generally Ipp, "Lawyers' Duties in the Court" (1998) 114 LQR 63). In a proper case, those duties will extend to taking active steps to prevent factual as well as legal error by a judge, even where the risk of error does not stem from the practitioner's own prior conduct (see also Meek v Fleming [1961] 2 QB 366). Cf New South Wales Barristers' Rules, r23. 54 The Court is spared the task of considering whether these principles were engaged in the present case. 55 I propose the following orders.

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