Ferdinand Nemeth & Anor v Prynew Pty Limited and Ors

Supreme Court of NSW|2005-12-02|Before: Einstein J, Mr J, Mr P

CITATION : Ferdinand Nemeth & Anor v Prynew Pty Limited and Ors [2005] NSWSC 1296

Equity Division JURISDICTION : Technology and Construction List

DECISION : Interrogatories to be allowed upon short minutes being brought in.

Civil Liability Act 2002 (NSW) LEGISLATION CITED : Civil Procedure Act 2005 (NSW)

CASES CITED : Platt v Nutt (1988) 12 NSWLR 231

Ferdinand Nemeth (First Plaintiff) Virginia Nemeth (Second Plaintiff) Prynew Pty Limited (First Defendant) PARTIES : Peter Tsu (Second Defendant) Piling Contractors (Qld) Pty Limited (Third Defendant) QBE Mercantile Mutual Limited (Cross Defendant to Second Cross Claim)

Mr D Weinberger (Plaintiff) Mr J Simpkins SC, Mr F Hicks (First and Second Defendants) COUNSEL : Mr S Kettle (Third Defendant) Mr P Dodson (Cross Defendant to Second Cross Claim)

Salim Lawyers (Plaintiff) Avendra Singh Strati & Kam Lawyers (First and Second Defendants) SOLICITORS : Thompson Cooper Lawyers Pty Ltd (Third Defendant) Curwood & Partners (Cross Defendant to Second Cross Claim)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION TECHNOLOGY AND CONSTRUCTION LIST

Friday 2 December 2005 ex tempore Revised 13 December 2005

55037/03 Ferdinand Nemeth v Prynew Pty Limited & Ors JUDGMENT

The proceedings 1 The plaintiff claims damages arising from the subsidence of premises at 46 Mona Road, Darling Point. At the time of the subsidence the first and second defendants were apparently developing the adjoining lot, 44 Mona Road. 2 Claims are made that the subsidence was caused by a breach of duty of care owed by the first and second defendants, a breach of duty of care owed by the third defendant and breaches of statutory duty by the first, second and/or third defendants. Claims are also made in nuisance against the first, second and third defendants. 3 The first and second defendants cross-claim against the third defendant claiming damages for negligence and contribution as joint tortfeasors. In consequence the plaintiff joined the third defendant in the amended summons. 4 A number of issues in the proceedings have been referred out to Ms Janet Gray for report. 5 A parameter of the present proceedings concerns the second cross-claim brought by the first defendant against QBE Mercantile Mutual Limited ["QBE"] The notices of motion and applications 6 I return to the notices of motion and applications presently before the Court. Discovery from QBE 7 The first and second cross-claimants seek an order for discovery from QBE. QBE opposes that application, principally upon the bases that: · the cost of compliance by QBE with discovery would be substantial; · depending on the net result after the reference and the adoption or rejection of the referee's report, it may ultimately eventuate that the proceedings against QBE are never required to be pursued. 8 In that regard it has seemed to me that a principled exercise of the Court's discretion was to offer an election to the first and second cross-claimants. The Court would have been prepared to order the discovery, but only upon the basis that the first and second defendants accept as a condition of that order, that in the event that ultimately the cross-claim against QBE was not pursued, the cross-claimants against QBE would pay the costs of QBE of discovery on an indemnity basis. 9 Mr Hicks, who appears for the first and second defendants, has taken instructions and that condition is not one which his clients are prepared to accept. 10 In consequence, it seems to me that the principled exercise of the Court's discretion is simply to stand over the application for further discovery against QBE until some appropriate time following the reference, and to reserve the costs of that notice of motion. The parties have liberty to restore that notice of motion to the list as the occasion may suggest appropriate. Leave to file amended defences 11 That leaves extant only the applications by all defendants for leave to file amended defences. No dispute concerning the first and second defendants application 12 In the circumstances described below there is no opposition by the plaintiff to the first and second defendants' proposed amended defence. Leave to file and serve the document, which is entitled "First and Second Defendants Point of Defence and Statement of Issues", will be granted. 13 During the course of the submissions taken from the Bar Table, Mr Hicks, on instructions, has made plain to the plaintiff, that the first and second defendants, insofar as their amendment claims in the alternative, that the proportionate liability of the first and/or second defendants in respect of plaintiffs claims is zero percent, the first and second defendants undertake to confine their contention that some other party is liable on a proportionate liability basis, to the allegation that the other party is and is only the third defendant [cf section 34 of the Civil Liability Act 2002]. That is the basis upon which leave is granted to the first and second defendants to file their amended points of defence.

The dispute concerning the third defendants application 14 The real dispute in relation to the amendments has been between the plaintiff and the third defendant. The third defendant's proposed amendment to this defence of present relevance is in the following terms:

"14. In the alternative, the third defendant's liability is limited to such other proportion as the Court determines is just and equitable, having regard to the extent of its liability for any damage." 15 Mr Weinberger, who appears for the plaintiff, has opposed the Court granting leave to the third defendant to so amend. The basis of the plaintiffs opposition to that leave being granted has been squarely based on the proposition that as a condition of obtaining such leave, the third defendant should be required to identify the particular person or persons whom the third defendant has reasonable grounds to believe may be the concurrent wrongdoer in relation to the claim. The proportionate liability provisions 16 None of the counsel at the bar table has been in a position to assist the Court in relation to the proportionate liability provisions of the Civil Liability Act which allocate liability to two or more concurrent wrongdoers according to their respective shares of responsibility. This may be the first case in which the Court is required to deal at case management level, with the claims of a party to a direction that the identity of the concurrent putative wrongdoer be communicated. 17 In an article "Proportionate Liability in Australia: The devil in the detail" by Professor Barbara McDonald, 2005, 26 Australian Bar Review 29, the learned author includes the following [at pages 39 to 40]:

" When and how is a court to determine that a defendant is a 'concurrent wrongdoer' rather than a sole wrongdoer? Who bears the onus of proof of concurrent wrongdoing ? The legislation is silent as to which party bears the onus of proving that the defendant is a concurrent wrongdoer, whose liability will be limited to its proportion of responsibility, rather than what might be called a sole wrongdoer. This silence is only significant in jurisdictions other than Victoria, as in those jurisdictions a court may consider the contribution of concurrent wrongdoers who are not parties to the action: therefore, the fact that the plaintiff has joined only one defendant does not necessarily mean that that defendant will be treated as a sole wrongdoer.

Obviously where a plaintiff has sued more than one defendant in relation to any loss and it is implicit that, if the plaintiff succeeds against each one, they are each liable as a concurrent wrongdoer. In other cases it may be obvious from the plaintiff's pleading that more than one person was to blame, eg, where defendant A's negligence is a failure to supervise B (who may or may not be a party) or a failure to prevent loss caused by B, who was also negligent. In such cases, it will be clear that the facts involve concurrent wrongdoers. But in other cases, the contributions of other parties may not be obvious on the facts pleaded by the plaintiff , eg, A is a head contractor who has been negligent, but part of the work was in fact carried out by a reputable sub-contractor B who was also negligent.

The legislation stops short of explicitly placing an onus on defendant A to plead and prove that other wrongdoers also caused the relevant loss and that therefore the apportionment provisions apply to limit his liability. It merely states that in the case of concurrent wrongdoing, A's liability is limited.

Is this a defence which A must plead? It seems just that if a defendant wishes to have the benefit of a limitation on liability, then the defendant should bear the onus of pleading and proving the elements of that limitation. In Platt v Nutt ( 1988) 12 NSWLR 231, Kirby P, in a dissenting judgment, referred to 'the general rule which obtains in our courts namely that "those who assert must plead". That principle applies throughout the law'. If the onus is on a defendant to plead and prove a defence under limitations of actions statutes then, by analogy, the onus should be on the defendant to prove the limitation of liability under apportionment legislation. It will sometimes be the case that a defendant is in a better position than the plaintiff to identify who else was to blame. Under previous models the plaintiff was put in an invidious position if, in ignorance of B's contribution, it sued only A, its recovery of 100 percent of its damages could be limited by A alleging, well into the proceedings, that B was also to blame, yet there was no explicit obligation on A to inform the plaintiff of the contribution by B. Indeed, there could be said to have been an incentive under this model for A to keep quiet about B's involvement and to adduce evidence that non-parties were to blame.

The federal reforms and the NSW Act provide for a limited deterrent on defendants against keeping silent about wrongdoers at an early stage in proceedings: they provide that if the defendant does not give the plaintiff written notice 'as soon as practical' of circumstances it knows which, on reasonable grounds, make another person a concurrent wrongdoer, then it will be liable, possibly on an indemnity basis, for the plaintiff's 'unnecessary .... costs in the proceedings'. But this provision is a long way short of a more effective guarantee of co-operation by a defendant in the bringing of all relevant parties to court: eg, a provision which would estop it from relying on the contribution of non-parties to reduce its own liability unless it gave early notice, say, in its pleadings, of its intention to do so. A plaintiff will not necessarily want to halt proceedings at a later stage and set about joining another party, even if the defendant has to bear the costs of it doing so." [Emphasis added] 18 No counsel has suggested that there is any relevant provision of the Uniform Civil Procedure Act which engages the issue presently for determination. 19 To my mind the position is made quite clear by the terms of sections 35 and 35A of the Civil Liability Act:

"35 Proportionate liability for apportionable claims

(1) In any proceedings involving an apportionable claim:

(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and

(b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part, and

(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law, and

(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.

(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.

(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 35A Duty of defendant to inform plaintiff about concurrent wrongdoers

(1) If: (a) a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the other person ) may be a concurrent wrongdoer in relation to the claim, and

(b) the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about: (i) the identity of the other person, and (ii) the circumstances that may make the other person a concurrent wrongdoer in relation to the claim, and

(c) the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim, the court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff. (2) The court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise." 20 As Professor McDonald observes, the fact is that the Legislature has eschewed making provision for an effective guarantee of co-operation by a defendant in being required for the purposes of the proceedings, to identify all persons reasonably believed to be 'in the frame' as concurrent wrongdoer. There is no provision which would estop a defendant from relying on the contribution of non-parties to reduce its own liability unless it gave early notice, for example in its pleadings, of its intention to do so. 21 The sole statutory inhibition upon a defendant is that which permits the Court in an appropriate case to order that the defendant pay all or any of the costs of a plaintiff, where one or other of the matters referred to in section 35A(1)(a)(b) or (c) of the Act is established: the Court in that circumstance being empowered to order costs to be paid by a defendant on an indemnity basis or otherwise. 22 Mr Weinberger has sought as a principled exercise of the Court's discretion, an order permitting his clients to administer interrogatories to the third defendant directed to eliciting the facts, if any, giving rise to the third defendant having reasonable grounds to believe that a particular person may be a concurrent wrongdoer in relation to the claim. Interface between the legislation and the Court's power to give directions by way of case management provisions 23 Part 6 of the Civil Procedure Act 2005 entitled "Case Management and Interlocutory Matters" now includes a suite of powerful provisions permitting the court to make orders and to give directions in case managing proceedings consistently with the overriding purpose of the Act and of the rules of Court in their application to civil proceedings: "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". In particular and of present relevance, s57 (1) provides that for the purpose of furthering the overriding purpose, proceedings are to be managed having regard to the following objects: (a) the just determination of the proceedings,

(b) the efficient disposal of the business of the Court,

(c ) the efficient use of available judicial and administrative resources,

(d) the timely disposal of the proceedings, and all other proceedings in the Court, at a cost affordable by the respective parties. 24 In the circumstances which presently obtain, a principled exercise of the Court's discretion would permit the situation to be case managed in a number of alternative ways, including a requirement to furnish particulars and/or the grant of leave to administer interrogatories. 25 The present application being to administer interrogatories, it is germane to note that interrogatories are generally only permissible where a party seeks to interrogate as to facts. With limited exceptions, interrogatories directed to a party's state of mind are impermissible, usually because they do not relate to a matter in question in the proceedings. 26 There are however, circumstances in which interrogatories may be directed to a defendant's state of mind as to a particular matter the paradigm example being where allegations of fraud are made. 27 Section 61 of the Civil Procedure Act empowers the court by order to give such directions as it thinks fit (whether or not inconsistent with rules of the court) for the speedy determination of the 'real issues' between the parties to the proceedings and in particular empowers the court to direct any party to proceedings to take specified steps in relation to the proceedings. Interrogatories to be allowed 28 In my view s61 may be presently mobilized to permit the grant of leave to administer interrogatories in the present situation. Such a direction is perfectly consistent with the obligations provided for in Division 1 of Part 6. The procedure especially caters for efficiency in terms of the disposal of the business of the court. 29 The pragmatic approach to utilising here interrogatories[but alternatively particulars] is important to be taken to avoid: · ambush · surprise · the need for a defendant to be open in terms of its anticipated case · aborted hearings 30 None of the above observations foreclose a defendant from relying on new information as to a further concurrent wrongdoer, as for example information which may only emerge during the hearing. None of the above observations are inconsistent with the legislative scheme. 31 Additionally the Court may impose a continued obligation on each defendant to update its previously communicated state of mind concerning other entities upon whose conduct, as further concurrent wrongdoers, the defendant may seek to rely. This is the same obligation as the continuing obligation to give discovery. 32 I have already dealt with costs of the application for further discovery. As far as costs of the resistance by the plaintiff to the third defendant's application for leave to amend are concerned, it seems to me that no order for costs should be made for the reason that both parties have succeeded in principle to a certain extent in obtaining an accommodation, moving forward from the strictures they took forward. The plaintiff opposes leave, but the leave will be granted in tandem with the interrogatories administration procedure.

I certify that paragraphs 1 - 32 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 2 December 2005 and revised 13 December 2005

      Susan Piggott
      Associate

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Particulars Civil Liability Act 2002(NSW)

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