Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd

High Court of Australia|1975-07-01|Before: Murphy JJ

High Court of Australia Barwick C.J. Gibbs, Stephen, Mason and Murphy JJ. Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd [1975] HCA 23

ORDER Appeal allowed with costs. Order of the Supreme Court of New South Wales (Court of Appeal Division) set aside and in lieu thereof order that the appeal to that Court be dismissed with costs.

A workman in the employ of Steel Mains Pty. Ltd. (the cross-claimant) sued that company in the Supreme Court of New South Wales for damages for personal injuries received by him in the course of his employment and as the result of the negligence of his employer. The cross-claimant paid its workman workers' compensation, and filed a defence to the workman's action; but it also filed a cross-claim against Dillingham Constructions Pty. Ltd. (the cross-defendant) for contribution or indemnity in respect of any sum its workman might be awarded in the action and also in respect of the workers' compensation payment made by the cross-claimant.

The basis of the cross-claim as set out therein was that the plaintiff in the action had been employed by the cross-defendant at a time prior to the commencement of his employment by the cross-claimant, and that whilst so employed had suffered by the negligence of his then employer injuries of a like kind to those for which the plaintiff was now suing in the action. The cross-defendant, the now appellant, moved the Supreme Court for an order striking out the cross-claim on the ground that it disclosed no reasonable cause of action.

The cross-defendant's motion was heard by the Master of the Supreme Court, before whom it appeared that the plaintiff in the action had sued the cross-defendant in the Supreme Court for negligence in causing his personal injuries. In that proceeding, the workman had claimed for loss of earning capacity and the enjoyment of life by reason of the injuries received in the cross-defendant's employment, disabilities which he conceded ended at a date which was prior to his employment by the cross-claimant. The proceedings by the workman against the cross-defendant were settled by the entry of a verdict for the workman for a stated sum which, less the amount of workers' compensation paid, was duly paid to him.

The Master, for reasons which I need not discuss, refused to strike out the cross-claim [1] . On appeal to a judge of the Supreme Court, the cross-claim was struck out, as "so obviously untenable that it cannot possibly succeed" [2] .

[1973] 1 N.S.W.L.R. 175. 2. [1973] 1 N.S.W.L.R. 598, at p. 602.

The cross-claimant brought an appeal from the order of the judge to the Court of Appeal Division, which reversed that order and restored the cross-claim except in so far as the same related to a claim to indemnity under the Workers' Compensation Act, 1926 N.S.W. [3] .

The cross-defendant now appeals to this Court, but there is no cross-appeal by the cross-claimant as to the claim to be indemnified in respect of the payment of workers' compensation. That is therefore a matter with which I am not presently concerned. It may be that the Court's decision in an appeal pending judgment, Public Transport Commission (N.S.W.) v. J. Murray-More (N.S.W.) Pty. Ltd. [4] , will bear upon the question raised in that part of the proceeding between the parties in the Supreme Court.

The cross-claimant founded its cause of action for contribution or indemnity in respect of the damages which its workmen might recover from it, first, upon s. 5 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1946 N.S.W. and, secondly, upon s. 78 of the Supreme Court Act, 1970 N.S.W., which had its prototype in s. 3 of the Law Reform (Miscellaneous Provisions) Act, 1946 N.S.W..

(1) Where damage is suffered by any person as the result of a tort (c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise

To apply this provision to the instant circumstances results, in my opinion, in the clear conclusion that the cross-claim is insupportable. The plaintiff in the action against the cross-claimant had suffered damage; that is to say suffered an injury causing damage, at the hands, and by the negligence, of the cross-claimant who was therefore a tortfeasor in respect of that injury. It is, to my mind, beyond question that the cross-defendant could not have been sued by the plaintiff for the injury which he had received by the negligence of the cross-claimant whilst in his employ. The cross-defendant quite clearly was not, in my opinion, a tortfeasor in relation to the plaintiff and his injury thus received at the hands of the cross-claimant.

But it was said in argument and strongly asserted that the injury of the workman by the cross-claimant was an event foreseeable as at the time of the receipt of the workman's injury sustained whilst in the employ of the cross-defendant: and that therefore the damage subsequently suffered by the workman whilst in the cross-claimant's employ was the same, or at least in part the same, as the damage suffered by him whilst in the employment of the cross-defendant. To my mind, this has only to be stated to be rejected. Even if the results of the subsequent injury could have formed part of the damage suffered by the workman by reason of the cross-defendant's negligence, it cannot and does not follow that the cross-claimant, as a tortfeasor in respect of the subsequent injury, can recover any contribution from the cross-defendant to the damages which he may be called upon to pay for the injury caused. By no stretch of language can the earlier injury be said to be the same injury as the later injury. There are two injuries, two unrelated acts of negligence, two separate and distinct torts, though occurring to the same man at different times.

The injury suffered through the later tort may have exacerbated a condition initially induced by the prior tort. It was said that included in the result of the first tort was a physical deterioration which carried the potential of further deterioration of the kind evident as the result of the second tort, particularly if some event of a foreseeable kind supervened, cf. Chapman v. Hearse [5] . But, until such event occurred and the further deterioration resulted, the injury suffered by the first tort and the compensating damages therefor could include no more than that potential; the money compensation could only include a sum to reflect the possiblity or the probability of further deterioration. If such a possibility or probability of further deterioration became a reality by virtue of the subsequent tort, the amount of compensation payable for that subsequent injury may be lessened because of the deteriorated condition of the worker already present at the time of the receipt of the further injury. But it would rest upon the subsequent tortfeasor to establish the pre-existing condition for which he was not responsible - see Watts v. Rake [6] and Purkess v. Crittenden [7] . Performance Cars Ltd. v. Abraham [8] is illustrative of such a situation. The subsequent tortfeasor is not in any sense liable for the injury which the first tortfeasor caused or for its consequences, though if he is unable in point of proof to establish the pre-existing disability of the injured person the damages he may be required to pay will not be diminished by reason of the pre-existing condition of the injured person. But even in that case there is in truth no identity between the "damage" or any part of it respectively caused by the two separate torts. I find nothing in Baker v. Willoughby [9] which weakens that conclusion. In fact, the speeches of Lord Reid and Lord Pearson support it.

(1961) 106 C.L.R. 112. 2. (1960) 108 C.L.R. 158. 3. (1965) 114 C.L.R. 164. 4. [1962] 1 Q.B. 33. 5. [1970] A.C. 467.

I ought to add that in point of fact I cannot accept that, however much the workman's deteriorated condition caused by the first tort exposed him to the possibility of further harm, an injury of the nature of that suffered by the plaintiff in the employ of the cross-claimant was relevantly foreseeable. Also, the amount of the damages properly to compensate the workman for the results of the cross-defendant's negligence had been assessed and indeed paid. Those damages must be taken to have included compensation for the possibility of further deterioration in the workman's condition caused by the injury he had then received.

The question is not, as the members of the Court of Appeal Division seemed to think, whether the "damage", using the word as signifying the consequences of the injury or harm received, is single and indivisible but whether the cross-defendant was liable as a tortfeasor for the "damage", in the sense of injury, caused by the cross-claimant as a tortfeasor. Further, where tortfeasors are liable as such in respect of the same injury, it may be that in contribution proceedings the responsibility for the resulting damages may be unevenly apportioned. But that circumstance or its possibility does not deny that the two tortfeasors were liable in respect of the same "damage", again using that word in the sense of injury or harm.

Nor is the question whether there is what Glass J.A. calls an "overlap" [10] - meaning, I assume, whether some part of the result of a prior injury formed part of the result of the subsequent injury. No doubt, as I have pointed out, sometimes where the second tortfeasor cannot satisfy the proof which the reasoning in Purkess v. Crittenden [11] would require, the damages which he is called upon to pay would be larger because what I might call the total condition of the injured person must be the subject of compensation in damages payable by the second tortfeasor. This may be so whether or not the condition of the injured person before receipt of the second injury had been the subject of compensation by an award of damages payable by the first tortfeasor. But that situation is not in any relevant sense an "overlap" of the injuries received or of the liability therefor.

[1974] 1 N.S.W.L.R., at p. 346. 2. (1965) 114 C.L.R. 164.

Section 5 (1) (c) is dealing, and in my opinion only dealing, with the case of joint or concurrent tortfeasors in relation to the same injury. Thereafter there is a separate question as to their relative responsibility as between themselves for the resulting damages, the answer to that question determining the extent of the contribution to be made by the one to the other. The section has no place where there are the successive injuries, unrelated both in occasion and in cause, by tortfeasors where each is not a tortfeasor in respect of both of those injuries.

Little need be said about the alternative basis for the cross-claim said to be found in s. 78 of the Supreme Court Act. If the cross-claim cannot be supported by s. 5 (1) (c) for the reasons I have given, there can be no footing on which it can properly be said that the cross-claim relates to or is connected with the subject of the first proceedings, i.e. the claim by the plaintiff for damages for injuries caused by the cross-claimant - see s. 78 (3), which is a procedural provision.

In my opinion, the appeal should be allowed and the order of Collins J. striking out the cross-claim should be restored. I am in general agreement with the reasons expressed by his Honour for making that order.

I have had the advantage of reading the judgment prepared by the Chief Justice and agree with the reasons he has given for holding that the cross-claimant has no right to recover contribution from the cross-defendant under s. 5 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1946 N.S.W..

The effect of the judgment of the Court of Appeal is to treat all the physical disabilities of the plaintiff that have resulted from the two accidents as the "damage" suffered by the plaintiff within the meaning of s. 5 (1) (c). The learned members of that Court appear to have considered that because both the cross-claimant and the cross-defendant have contributed to the plaintiff's present condition, both have therefore caused the same damage; they further held that it would be immaterial if the cross-defendant had caused only part of that damage. With all respect, I find it impossible to hold that the damage suffered by the plaintiff as a result of the tort committed by the cross-claimant on 27th October 1970 is the same damage as that suffered by the plaintiff as a result of the tort committed by the cross-defendant on 1st August 1968. Let it be assumed that the injury caused by the cross-defendant rendered the plaintiff more likely to suffer ill effects if he subsequently sustained a similar injury. On that assumption, it would of course be necessary, in assessing the damages to be paid by the cross-defendant, to take into account the fact that the condition of the plaintiff had been depreciated so as to render him more vulnerable in that way. If, then, the cross-claimant by his tort caused the plaintiff to suffer a similar injury and this aggravated the plaintiff's condition, the damages payable by the cross-claimant would be measured by the extent to which the plaintiff's condition had been rendered worse by the second injury. (In this brief statement of the matter I am not concerned with the questions of onus of proof dealt with in Watts v. Rake [12] and Purkess v. Crittenden [13] .) In the circumstances just mentioned, the damage - in the sense of physical injury or harm - caused by the cross-defendant is not the same as that caused by the cross-claimant, although the different damage caused by each tortfeasor may have been combined to cause the sum of the plaintiff's present disabilities. Even if the consequences of the injury caused by the cross-claimant were greater because of the condition of the plaintiff that had resulted from the tort of the cross-defendant, the damage caused by the cross-claimant in such circumstances was subsequent to and different from that caused by the cross-defendant.

(1960) 108 C.L.R. 158. 2. (1965) 114 C.L.R. 164.

Glass J.A., in the course of his judgment, with which the other members of the Court of Appeal agreed, gave examples of cases in which, he thought, two tortfeasors would both become liable for damage done to a plaintiff although the extent of the damage done by each tortfeasor did not wholly coincide [14] . One such suggested case was that of a plaintiff pedestrian who was knocked down and injured by one negligent driver and then, while lying on the roadway, was run over by another negligent driver and suffered further injuries. In such a case, it would be clear that the first driver would be solely responsible for the injuries caused before the pedestrian was run over by the second driver. However, if, in the circumstances, the injuries caused by the negligence of the second driver were a foreseeable consequence of the negligence of the first driver, both drivers would be responsible for the injuries caused when the plaintiff was run over for the second time, but that would be because the negligence of the two concurrent tortfeasors contributed to cause the same damage.

The provisions of s. 78 of the Supreme Court Act, 1970 N.S.W. are purely procedural. They permit a defendant in any proceeding to obtain relief against another person without having to institute a separate proceeding for that purpose. Section 78 in no way assists the cross-claimant once it is decided that he has no right to contribution under s. 5 (1) (c) of the Law Reform (Miscellaneous Provisions) Act, 1946.

I have read the reasons for judgment of the Chief Justice and agree both with the conclusion reached by his Honour and with the course of reasoning leading to that conclusion.

I would allow the appeal and restore the order of Collins J.

I have had the advantage of reading the reasons for judgment prepared by the Chief Justice, with which I agree.

Accordingly, I would allow the appeal and restore the order of Collins J. striking out the cross-claim.

The plaintiff in an action brought in the Supreme Court of New South Wales was injured on 27th October 1970 while employed by the present respondent, Steel Mains Pty. Ltd. His action in negligence was based on allegations of breach by the respondent of its duty as an employer.

The plaintiff claimed that as a result of the respondent's negligence he was injured in an accident involving a steel pipe and suffered shock as well as damage to his back.

Steel Mains Pty. Ltd. has now filed a cross-claim against Dillingham Constructions Pty. Ltd., the present appellant, for contribution or indemnity. This cross-claim arises out of an earlier injury to the plaintiff when he was employed by the appellant. On or about 1st August 1968, he suffered shock and injury to his back when a load of steel dropped from a crane. He sued the appellant in negligence and this action was settled by an agreed verdict for the plaintiff. The judgment was satisfied by payment of the amount of the verdict less the amount of workers' compensation previously paid. The settlement occurred after the cross-claim by Steel Mains Pty. Ltd.

Steel Mains Pty. Ltd. based its cross-claim on negligence on the part of Dillingham Constructions Pty. Ltd. which resulted in injury to the plaintiff on or about 1st August 1968.

Dillingham Constructions Pty. Ltd. sought an order for the striking out of the cross-claim, which Master Cantor Q.C. of the Supreme Court refused [15] .

An appeal to Collins J. was successful, and the cross-claim was struck out as being untenable [16] .

On further appeal, the Full Court of the Supreme Court of New South Wales (sitting in its Court of Appeal Division) unanimously reversed the decision of Collins J. and restored the relevant part of the order of Master Cantor Q.C. The reasons for the decision of the Court of Appeal were given in a careful judgment delivered by Glass J.A. which was concurred with by Reynolds and Bowen JJ.A. [17] . The appeal to this Court means that a fourth decision must be given.

More than usual weight should be given to the judgment of the Full Court of any Supreme Court in a matter concerning the practice and procedure of its own court. This striking out application is such a matter of practice and procedure.

However, the question in this instance is governed ultimately by legislative provisions which are not peculiar to New South Wales and which affect substantive rights and obligations.

The provisions appear in s. 5 (1) (c) of the Law Reform (Miscellaneous Provisions) Act 1946 N.S.W. which is as follows:

(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -

(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise-so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.

The point for decision is whether the damage suffered by the plaintiff as the result of the tort by Dillingham Constructions Pty. Ltd. is the "same damage" as that he suffered as a result of the alleged tort by Steel Mains Pty. Ltd. within the meaning of s. 5 (1) (c) of the Act.

The plaintiff alleges that he was the victim of two separate and distinct torts committed against him by two different employers at different places and different times. The fact that the plaintiff suffered similar injuries in both episodes, namely shock and injury to back, does not mean he suffered the same damage as that word is used in s. 5 (1) (c) of the Act. 1. [1973] 1 N.S.W.L.R., at p. 601.

Although the first injury may have made the plaintiff more susceptible to the second injury, the damage caused on each occasion is distinguishable. It was not the same damage. This conclusion is assisted by a consideration of the history of s. 5 (1) (c).

Section 5 (1) (c) in Pt III of the Law Reform (Miscellaneous Provisions) Act 1946 N.S.W. was passed as a result of the Third Interim Report (1934) of the Law Revision Committee set up by the Lord Chancellor in the United Kingdom.

This was a very strong Committee chaired by the Master of the Rolls, Lord Hanworth, and included Lord Wright, Romer L.J., Swift and Goddard JJ. and other distinguished lawyers. The Committee was appointed inter alia to consider, having regard to statute law and judicial decision, how far such legal maxims and doctrines as the Lord Chancellor from time to time referred to the Committee, might require revision in modern conditions and "to report specially as soon as may be upon the following: (1) The doctrine of no contribution between tortfeasors. (Merryweather v. Nixan [19] with special reference to the remarks of Herschell L.C. in Palmer v. Wick and Pultneytown Steam Shipping Co. Ltd. [20] )".

(1799) 8 Term R. 186 [101 E.R. 1337]. 2. [1894] A.C. 318.

This report was taken into account by this Court on the construction of this same section in Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport [21] .

In my view, the use of the report by this Committee is not only permissible but desirable in this case. There should be no need to engage in the semantic exercise of justifying such use as merely being for the purpose of ascertaining what was the mischief or defect in the common law. (See Assam Railways and Trading Co. Ltd. v. Commissioners of Inland Revenue [22] .)

Since ascertaining the mischief is part of the process of ascertaining the legislative intent (see Heydon's Case [23] ), it is pointless to draw a distinction between the two.

(1613) 11 Co. Rep. 5a at 5b [ 77 E.R. 1150, at pp. 1150-1152].

The problem in the common law and the solution proposed are clear from the report and the recommendations of the Committee. The problem was expressed as follows:

When two or more persons jointly commit a wrongful act, the person injured can recover the full amount of his damage from any one of them. If he does so, the wrongdoer who has paid the whole damage has to bear the whole loss and the other wrongdoers escape liability by reason of the rule of the common law that there can be no contribution between joint tort-feasors.

The rule is different in cases of breach of contract, for where one of several persons, jointly, or jointly and severally, liable under a contract is called upon to perform the contract in full or to discharge more than his proper share, he has, as a general rule, a right to call upon persons jointly, or jointly and severally, liable with himself to contribute to the liability which he has incurred. (Halsbury's Laws of England, vol. VII, at p. 375).

We think that the common law rule should be altered as speedily as possible.

The simplest way of altering the law would seem to be to follow the lines of s. 37 (3) of the Companies Act, and to give a right of contribution in the case of wrongs as in cases of contract.

If this were done, joint tort-feasors in the strict sense would be given a right of contribution inter se. We think, however, that such a right might with advantage also be conferred where the tort is not joint (i.e. the same act committed by several persons) but where the same damage is caused to the plaintiff by the separate wrongful acts of several persons. This is the position which frequently arises where the plaintiff sustains a single damage from the combined negligence of two motor car drivers, and recovers judgment against both.

We think therefore that when two persons each contribute to the same damage suffered by a third, the one who pays more than his share should be entitled to recover contribution from the other.

The proposals were then expressed formally in a summary of recommendations which were given legislative effect in the United Kingdom Law Reform (Married Women and Tortfeasors) Act 1935. That Act was copied in the Law Reform (Miscellaneous Provisions) Act 1946 N.S.W. as well as in other States of Australia and other parts of the Commonwealth of Nations.

It is clear that the damage suffered by the plaintiff as a result of a tort by Steel Mains Pty. Ltd. is not the same damage for which Dillingham Constructions Pty. Ltd. were liable, within the contemplation of the report and s. 5 (1) (c). This section is not intended to cover cases such as the present, but has a much more restricted application.

I doubt that if the Court of Appeal Division had been referred to the Third Interim Report even if only to "ascertain the mischief in the common law" which the legislation was intended to correct, they would have reached the conclusion they did.

If the respondent's contention were correct, one consequence would be a tendency to increase the multiplicity of trials. More important than such multiplicity would be the exposure of a tort-feasor, even one who has satisfied a judgment, to a liability to make further contribution every time the plaintiff's injury was exacerbated by tortious conduct of others, but apparently not when the exacerbation was due to non-tortious conduct. Such consequences were not intended.

Section 5 (1) (c) has been the subject of much judicial criticism. For example, this Court said of it in Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport [24] : "It represents a piece of law reform which seems itself to call somewhat urgently for reform." But the law reform adopted in that section was intended to correct the mischief in the common law which was created by the decision in 1799 in Merryweather v. Nixan [25] . The inappropriateness of the rule in Merryweather v. Nixan was evident certainly by 1894. In that year, Lord Herschell L.C. said of it:

Much reliance was placed by learned counsel for the appellant upon the judgment of the English case of Merryweather v. Nixan [25] . The reasons to be found in Lord Kenyon's judgment, so far as reported, are somewhat meagre, and the statement of the facts of the case is not less so. It is now too late to question that decision in this country; but when I am asked to hold it to be part of the law of Scotland, I am bound to say that it does not appear to me to be founded on any principle of justice or equity, or even of public policy, which justifies its extension to the jurisprudence of other countries. (Palmer v. Wick and Pultneytown Steam Shipping Co. [26] .) 1. (1955) 92 C.L.R., at p. 211. 2. (1799) 8 Term R. 186 [101 E.R. 1337] 3. (1799) 8 Term R. 186 [101 E.R. 1337] 4. [1894] A.C. 318, at p. 324.

The failure to develop the common law rationally by a judicial reversal of Merryweather v. Nixan [25] necessitated legislative intervention by a number of parliaments in countries which follow the English common law.

Although the legislative intervention followed very closely the recommendations of the Lord Chancellor's Committee, it has not been entirely successful. It has given rise to numerous cases, characterized by divided and conflicting judicial opinion.

In the present case, the initial decision by the Master of the Supreme Court was reversed by Collins J. who in turn was reversed by the unanimous decision of the Court of Appeal Division of the Supreme Court which is now being reversed by this Court.

When it becomes evident that an error of principle has occurred by judicial decision, the error should be corrected judicially. The courts can continue then the inductive process which is the method of the common law. The law can be adapted to previously unforeseen situations and to changing social needs. That is the daily task of judges.

When there is an abdication of judicial responsibility by clinging to a settled principle that is no longer appropriate, the only recourse is legislative intervention. This often leads to unfortunate results as it has in this instance of legislative reform.

The reason is that it is impossible for legislators (or anyone else) to anticipate all the problems which may arise, and to provide for them in advance. When the legislative reform has been made, the scene changes. From then on, the courts operate deductively deducing the intention of Parliament from the words frozen in an Act and applying it to factual situations. This means the virtual abandonment of the inductive and evolutionary techniques of the common law.

Whether, instead, the common law technique should be applied to the adaptation of statutes to fulfil legislative purpose is highly controversial. See Ministry of Housing v. Sharp [27] , where Lord Denning said: "But we do not now in this Court stick to the letter of a statute. We go by its true intent. We fill in the gaps. We follow what I said in Seaford Court Estates Ltd. v. Asher [28] ."

[1970] 2 Q.B. 223, at p. 264. 2. [1949] 2 K.B. 481, at pp. 498-499.

Similar views were stated in Stradling v. Morgan [29] and quoted with approval by Lord Halsbury L.C. in the great case of Cox v. Hakes [30] . For a contrary view, see Magor and St. Mellons Rural District Council v. Newport Corporation [31] where Lord Simonds said: "It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation."

(1560) 1 Plowd. 199, at p. 205a [75 E.R. 365, at p. 314]. 2. [1890] A.C. 506, at p. 518. 3. [1952] A.C. 189, at p. 191.

In the absence of such application of common law techniques, legislative intervention necessitated by judicial persistence with outmoded principles will often lead to criticism similar to that of s. 5 (1) (c).

Adherence to settled principles when they are clearly inappropriate is to elevate the doctrine of stare decisis above the interests of society which it is the function of the law to serve.

The appeal should be upheld and the order of Collins J. striking out the cross-claim restored.

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