GC Group Company Pty Ltd v Bingo Holdings Pty Ltd

Judgment

1. The plaintiff, GC Group Company Pty Ltd, was a subcontractor in a large residential development project at Albion Park. GC Group purchased recycled aggregate from the defendants, to whom I will refer collectively as "Bingo".
2. GC Group alleges that aggregate supplied by Bingo was contaminated and that, as a result, GC Group was obliged to effect substantial reconstruction works at its own cost, thereby suffering loss and damage.
3. By its Technology and Construction List Statement, GC Group alleges that Bingo is liable to it in damages for breach of contract and for breaches of alleged representations and consumer warranties under the Australian Consumer Law. [1]
4. On 20 May 2020, I ordered that paragraphs in Bingo's then Technology and Construction List Response that sought to establish that GC Group's claim against Bingo was an "apportionable claim" for the purpose of s 34 of the Civil Liability Act 2002 (NSW) ("the Act") be struck out. [2]
5. By notice of motion filed on 31 July 2020, Bingo sought leave to amend its Response to re-plead an apportionable liability defence.
6. On 6 October 2020 I refused to grant that leave. [3]
7. Now, by notice of motion filed on 16 November 2020, Bingo makes a further application to amend its Response to re-plead an apportionable liability defence.

Decision

1. I have concluded that Bingo should not be given leave to amend its Response as it proposes.

Must Bingo identify a particular concurrent wrongdoer?

1. GC Group alleges that Bingo supplied the contaminated recycled aggregate between 1 June 2017 and 21 July 2017.
2. In its proposed Response, Bingo identifies some 700 "Customers" who delivered "B&D Waste" (defined as waste generated from building and demolition activities) to its facility between 1 May 2017 and 1 July 2017.
3. Bingo identifies those Customers in Part A and Part B of the Schedule to the proposed Response. The persons and companies listed in Part A are alleged to be persons who delivered B&D Waste to the facility during that period. The persons and companies identified in Part B to the Response are alleged to be the registered operators of motor vehicles used to deliver B&D Waste to Bingo's facilities during the relevant period.
4. Bingo has thus gone further than in the iteration of its proposed Response with which I dealt with in my 6 October 2020 judgment. In that iteration of the Response, Bingo went no further than identifying the registered owners of vehicles that delivered B&D Waste to its facility. I held that this was not sufficient to establish that such registered owners actually delivered material to the facility. [4]
5. Now, in addition to identifying such parties in Part B of the Schedule, Bingo identifies, in Part A of the Schedule, parties it alleges actually delivered B&D Waste to the facility. For present purposes, I must assume that Bingo can establish this as a matter of fact.
6. Mr Larkin SC and Mr To, for Bingo, summarised Bingo's position as follows: "With one exception, mentioned below, the source of any contaminated material in the recycled aggregate [supplied to GC Group] can only be from material delivered by the Customers. This is a closed class of persons who delivered B&D Waste to the Facility Premises, in the relevant period of time, so as to be a source of the recycled aggregate supplied to [GC Group]. [Bingo], however, [is] unlikely at trial [to] be able to prove which particular Customers, within this class, was the source of contamination. It is certain, however, that it must have been one or more of the class … The one exception …, is that the business operated at the Facility Premises was acquired by [Bingo] shortly before the supply in question. A stockpile of already-processed recycled aggregate (Existing Stockpile) was acquired as part of the business acquisition. The Existing Stockpile has been identified by [Bingo] as the only other source (other than Customers' deliveries) of possible contamination of recycled aggregate. As such, [Bingo] seek[s] to identify the former operator, [Wollongong Recycling and Building Supplies Pty Ltd or "WRBS"], also as a person who may be a concurrent wrongdoer." (My emphasis)
7. In those circumstances, Bingo proposes to plead in its Response: [5] "[Bingo] did not generate any waste from which the recovered aggregate supplied to GC Group was created. To the extent that recovered aggregate supplied to GC Group contained Contaminated Material, such contamination was not added to the recovered aggregate by [Bingo]. Instead, any such contamination in the recovered aggregate supplied to GC Group came from, and only from, two possible sources viz: An Existing Stockpile …; [6] and B&D Waste delivered by Customers …"
8. And: [7] "… WRBS, to the extent that the Existing Stockpile contained Contaminated Material, caused the damage or loss that is the subject of GC Group's claim. … each Customer that delivered to the Facility Premises B&D Waste containing Contaminated Material, caused the damage or loss that is the subject of GC Group's claim".

Part 4 of the Civil Liability Act

1. Section 34(1) of the Act defines an "apportionable claim" as follows: 34 Application of Part (1) This Part applies to the following claims ("apportionable claims") -- (a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury, (b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 of that Act (as in force before its repeal by the Fair Trading Amendment (Australian Consumer Law) Act 2010) or under the Australian Consumer Law (NSW) for a contravention of section 18 of that Law.
2. Section 34(2) of the Act defines "concurrent wrongdoer" as: … a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.
3. Section 35(1) of the Act provides: 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.
4. Section 35A of the Act provides: 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.
5. Thus, the scheme of the Act is that in a case involving an apportionable claim: [8] 1. the liability of a defendant who is a concurrent wrongdoer is to be limited to an amount reflecting the just proportion of the defendant's responsibility for the loss in question; [9] 2. to be a concurrent wrongdoer entitled to seek such limitation, a defendant must be a "person" who is "one of two or more persons" whose acts or omissions have caused the loss; [10] and 3. if such a defendant has reasonable grounds to believe that a "particular person" may be a concurrent wrongdoer but fails to give the plaintiff written notice of the "identity of the other person", that is, the identity of the other "particular person", then certain cost consequences may follow. [11]
6. In order to be a "concurrent wrongdoer" for the purpose of s 34(2), Bingo must show that there is at least one other "person" whose acts or omissions have caused the loss of which GC Group complains. That is, Bingo must show that there is at least one other "concurrent wrongdoer".
7. The question is, is it necessary that Bingo identify, individually, and not merely as a member of a closed class, that other "concurrent wrongdoer"?
8. This gives rise to a question of the proper construction of s 34(2) and s 35 of the Act.
9. In that regard, in its proposed Response, Bingo proposes two alternative constructions of those sections: [12] "[O]n the proper construction, and for the purposes of sections 34(2) and 35 of the CLA, in circumstances where, WRBS and the Customers are a closed class of persons collectively from whom any Contaminated Material in the recycled aggregate supplied to GC Group can only have come, it is unnecessary for the Defendants to be able to specifically or positively identify, or plead, which of WRBS or the Customers in fact caused such damage or loss; [I]n the alternative, on the proper construction, and for the purposes of sections 34(2) and 35 of the CLA, there is no requirement for a defendant to specifically or positively identify a particular other concurrent wrongdoer, as distinct from identifying the acts or omissions, which the defendant says caused, independently of the defendant's conduct, the damage or loss that is the subject of the claim; …" (My emphasis)
10. That is, Bingo contends that on the proper construction of the definition of "concurrent wrongdoer" in s 34(2), Bingo is a "concurrent wrongdoer" because it is one of two or more persons whose acts or omissions have caused the damage of which GC Group complains. This notwithstanding the fact that it cannot identify, in the sense of name, which other person caused that damage.
11. On the other hand, GC Group contends that Bingo must identify a particular person or persons as concurrent wrongdoers, and cannot refer to a class of persons, even a closed class of persons, as concurrent wrongdoers.
12. My attention has not been drawn to any case dealing with this question, although in Perpetual Trustees Australia Limited v Paladin Wholesale Funding Pty Limited [13] Emmett J adverted to it [14] .
13. The question posed by Bingo's proposed pleading has high significance in this case.
14. If Bingo is correct, it can name "persons" within a closed class (that is, WRBS or one or more of the Customers) as concurrent wrongdoers and seek to have its liability limited accordingly under s 35(2); and yet because the particular "persons" cannot be identified, GC Group is left unable to obtain redress by joining them as defendants.
15. The question potentially has wider significance.
16. The example given in argument was of a wholesaler sued for economic loss after having sold retailers punnets of strawberries into which an unknown and unidentifiable saboteur had secreted needles.
17. If Bingo is correct, that wholesaler, for the purpose of s 34(2) could nominate the unidentifiable saboteur as a "person" whose acts caused the damage complained of, and seek to have its liability limited under s 35(1); but without the plaintiff retailer having any prospect of joining the saboteur as a defendant [15] .
18. On the other hand, there are potentially serious consequences for Bingo if its contentions are not correct. In that event it will be exposed to a claim to compensate GC Group for all of the loss that GC Group has suffered, notwithstanding that Bingo itself did not cause any of the aggregate it supplied GC Group to be contaminated.
19. The effect of the introduction of the proportionate liability regime into the Act in place of the solidary regime of the common law, was to shift the risk of a wrongdoer's insolvency from the defendant to the plaintiff. [16] The point is emphasised by the provision of s 34(4) of the Act, that for the purposes of Part 4 of the Act: "[I]t does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died."
20. Bingo's contentions here raise the question of whether the proportionate liability regime imposes a further risk on the plaintiffs, namely that the defendant may be able to have its liability limited by reference to the role played by wrongdoers whose role in causing the loss can be identified, but whose individual identity cannot be ascertained.
21. Both parties sought to call in aid the provisions of s 35A in support of their competing contentions.
22. Mr Corsaro SC and Mr Byrne, for GC Group submitted that: "…[Bingo]'s submission that it is unnecessary for them to identify a particular person, is contrary to a defendant's obligations under s 35A … That provision requires that a defendant identify any particular person who a defendant has reasonable grounds to believe may be a concurrent wrongdoer. It is not permissible for [Bingo] to assert that there is a class comprised of some 710 individuals or companies who may be responsible." (My emphasis)
23. Section 35A does not, in terms, "require" a defendant to do anything. Rather it provides that if a defendant believes a "particular person" may be a concurrent wrongdoer but fails to identify that particular person to the plaintiff, the defendant may be ordered to pay costs that the plaintiff thereby unnecessarily incurs.
24. However, the section has been construed as imposing a duty [17] on a defendant who invokes the proportionate liability provisions. The duty involves identifying the "particular persons" the defendant contends to be concurrent wrongdoers; thus complementing that defendant's entitlement to seek to limit its liability by reason of those "particular persons'" alleged responsibility for damage.
25. Thus, in Ucak v Avante Developments Pty Ltd, Hammerschlag J said: [18] "It follows in my view, that for a defendant to assert that there is a person who is a current wrongdoer the defendant must plead the necessary elements which result in the asserted conclusion. Those elements are: a. the existence of a particular person; b. the occurrence of an act or omission by that particular person; and c. a causal connection between that occurrence and the loss that is the subject of the claim."
26. And in HSD Co Pty Ltd v Masu Financial Management Pty Ltd, Rothman J held: [19] "The fundamental principle underpinning the promulgation of legislation permitting proportionate liability is that persons, who are one only of a number who have occasioned the same damage, should bear the damage proportionately to the number of persons who are responsible. The obvious precondition to limiting liability, on the basis that others are also responsible for the damage, is to prove that those others have caused the damage and are legally responsible for it. There is a complementary duty (s 35A of the Civil Liability Act, above) on the defendant, who invokes the provisions, to inform the plaintiff of relevant information on any person, who may be a concurrent wrongdoer, in default of which there are consequences in costs. As seems obvious from the foregoing, the scheme extends protections that would otherwise be available by issuing a cross-claim. In order to utilise a cross-claim, a defendant must allege a cause of action by it against the cross-defendant. The proportionate liability provisions allow the defendant to allege a cause of action by the plaintiff against the concurrent wrongdoer. Such a right brings with it the correlative duty to specify, in the same way as if there were a cross-claim, the basis for proportionate liability and the basis for identifying a person as a concurrent wrongdoer. It is essential, if these provisions are to operate appropriately, that any defendant be required to plead the proportionate liability defence in a manner that discloses the cause of action and damage in at least as detailed a manner as would be required of any initiating process for such a cause of action. The information should include: (a) the identity of the concurrent wrongdoer; (b) the basis for the cause of action - if it be contract, identify the contract; if it be tort, identifying the duty, its scope and the breach; and (c) the damage - the aspects of causation; the alleged extent and proportion of the damages, and the causal connection with the damage said to be suffered by the plaintiff in the substantive proceedings. In this regard, I agree, with great respect, with the view expressed by McDougall J in his paper "Proportionate Liability in Construction Litigation"; [20] see also UCAK v Avante Developments [21] and Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd [22] ." (my emphasis)
27. Those observations have been approved in many subsequent decisions, [23] including by the Queensland Court of Appeal in Meandarra Aerial Spraying Pty Ltd v GEJ Geldard Pty Ltd atf G&M Geldard Family Trust where Fraser JA (with whom White JA and Mullins J agreed) said: [24] "As was submitted for the respondent, the authorities speak with one voice in favour of the trial judge's construction. Hammerschlag J concluded in Ucak v Avante Developments Pty Ltd [25] that under the similar provisions in the Civil Liability Act 2002 (NSW) a concurrent wrongdoer was one whose acts or omissions caused the claimed damage or loss and that a defendant who asserted that a person was a current wrongdoer must prove "… the existence of a particular person; … the occurrence of an act or omission by that particular person; and … a causal connection between that occurrence and the loss that is the subject of the claim." In Dartberg Pty Ltd v Wealth Care Financial Planning Pty Ltd [26] Middleton J held that if a respondent relies upon the similar provisions of Pt IVAA of the Wrongs Act 1958 (Vic), the respondent bears the onus of pleading and proving the elements of the limitation of liability. Barrett J referred to that decision and adopted the same construction of the New South Wales legislation in Reinhold v New South Wales Lotteries Corporation (No 2). [27] In HSD Co Pty Ltd v Masur Financial Management Pty Ltd [28] Rothman J adopted the same construction, referring to Ucak v Avante Developments and Dartberg Pty Ltd v Wealth Care Finance Planning Pty Ltd and expressing his agreement with the view expressed extrajudicially by McDougall J [29] ."
28. All of this is consistent with the Commercial and Technology and Construction List Practice Note, [30] which requires that: Proportionate Liability Any party in proceedings involving an apportionable claim, who has reasonable grounds to believe that a particular person may be a concurrent wrongdoer in relation to the claim(s) must, as soon as practicable, give written notice to all other parties to the proceedings of: (a) the identity of that person and (b) the alleged circumstances that may make that person a concurrent wrongdoer.
29. Thus, s 35A should be seen as being complementary to s 35(1) and as requiring a defendant who seeks to invoke s 35(1) to limit its liability for the alleged damage by reference to the asserted responsibility of another person, to identify that other concurrent wrongdoer to the plaintiff with sufficient particularity to enable the plaintiff, if so advised, to join that party as a defendant.
30. Here, the fact that Bingo is not able to identify the particular person that brought the contaminated B&D Waste to its facility means that it cannot follow the procedure set out in s 35A.
31. In its proposed Response, it purports to do so, thus [31] : "For the purposes of s 35A of the [Act], as distinct from s 35, the defendants: - identify the persons listed in the Schedule, and WRBS, as persons who may be concurrent wrongdoers in relation to GC Group's claim; and - say the circumstances that may make persons listed in the Schedule, and WRBS, concurrent wrongdoers in relation to GC Group's claim, are the circumstances set out [earlier in the Response]." (My emphasis)
32. As the purported s 35A notice does not identify which of WRBS and the Customers, or which Customers, may be concurrent wrongdoers, it is of no assistance to GC Group in determining who it should join as a defendant.
33. Bingo, on the other hand, points to the fact that s 35A speaks of a "particular person" who may be a concurrent wrongdoer, whereas s 34(2) speaks only of "persons" whose acts or omissions, along with those of the defendant, caused the damage in question.
34. There is a presumption, although not a strong one, that "where legislature could have used the same word but chose to use a different word, the intention was to change the meaning". [32] That presumption has less weight when an Act has been frequently amended. [33] All of Part 4 of the Act, including s 35A, came into effect on 1 December 2004 but s 35A was added to Part 4 after the legislation in which Part 4 was passed. [34]
35. In those circumstances, any presumption that Parliament intended "persons" and "particular persons" to have a different meaning is not strong.
36. To the contrary, in the context in which Parliament has used those expressions in Part 4 of the Act, they should in my opinion be read as having the same meaning, namely particular identified persons. This would ensure that ss 35 and 35A have the complementary and harmonious operation to which the authorities I have cited refer; and which Part 4 of the Act clearly calls for.
37. Therefore, in my opinion, the construction of ss 34(2) and 35 for which Bingo contends is not correct and leave to amend the Response should be refused.

Is it necessary to plead that the plaintiff has a cause of action against the wrongdoer?

1. As was the case when I dealt with the earlier iteration of Bingo's Response, [35] a further matter that was debated before me was whether a defendant to an apportionable claim must show that the plaintiff has a cause of action against the parties named by the defendant as concurrent wrongdoers.
2. There is very recent Court of Appeal authority that this is necessary. [36]
3. Mr Larkin submitted that this authority was obiter, "made with insufficient attention to the clear words of the statute and without sufficient analysis" and contrary to High Court authority. [37]
4. However, as was the case with that earlier iteration of the Response, Bingo in its proposed Response does plead that the Customers and WRBS owed a duty to third parties (such as GC Group) to ensure that the Existing Stockpile (in the case of WRBS) and the B&D Waste delivered to Bingo's facility (in the case of the Customers) did not contain any contaminated material. [38]
5. Further, unlike the earlier iteration of the Response, Bingo now alleges that third parties, such as GC Group, were relevantly vulnerable. [39]
6. GC Group submitted that it was "unlikely" that Bingo would establish vulnerability. However, that would be a question of fact and not a matter apt to be determined summarily.

Conclusion

1. I refuse to grant leave to the defendants to amend their Technology and Construction List Response in the manner set out in Annexure "A" to the affidavit of Dorian Kratsas sworn on 16 November 2020.
2. The defendants' notice of motion of 16 November 2020 is dismissed with costs.
3. The matter will be listed for directions on 26 March 2021.

Endnotes

1. Competition and Consumer Act 2010 (Cth), Sch 2 ("Australian Consumer Law").
2. GC Group Co Pty Ltd v Bingo Holdings Pty Ltd [2020] NSWSC 598.
3. GC Group Co Pty Ltd v Bingo Holdings Pty Ltd (No 2) [2020] NSWSC 1360 ("Bingo (No 2)").
4. Bingo (No 2) (n 3) at [19] and [20].
5. At C45 to C47, including C47.1 and C47.2.
6. That is, the Existing Stockpile acquired by Bingo from WRBS.
7. At C75 to C76.
8. There is now no longer any dispute that GC Group's claim is an "apportionable claim"; cf my 6 October 2020 judgment at [36].
9. Section 35(1).
10. Section 34(2).
11. Section 35A.
12. At C77(c) and (d).
13. [2011] FCA 473
14. At [48] to [51]: it was not necessary for his Honour to determine the question as the pleadings in question had other difficulties
15. Another example is an unidentifiable fraudster of the kind referred by Emmett J in Perpetual Trustees v Paladin - see [28] above
16. Eg see the discussion in Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 at [10], [16] and [17] (French CJ, Hayne and Kiefel JJ).
17. Consistently with the Second Reading Speech of the Minister for Health, Mr Morris Iemma for the Civil Liability Amendment Bill 2003, which introduced s 35A into Part 4 of the Act: " … the new provisions will place a duty on the defendant to help identify other potential defendants who may have contributed to the loss. This will ensure that plaintiffs are not disadvantaged by defendants who fail to identify other potential wrongdoers early in the proceedings". (My emphasis)
18. [2007] NSWSC 367 at [35].
19. [2008] NSWSC 1279 at [14]-[18].
20. (2006) 22 BCL 394 at 400.
21. [2007] NSWSC 367 (per Hammerschlag J)
22. [2007] FCA 1216; (2007) 164 FCR 450 (per Middleton J)
23. Owners - Strata Plan No 87265 v Saaib [2021] NSWSC 150; Re Kupang Resources Ltd [2018] NSWSC 1872 at [41]; Hart v JGC Accounting & Financial Services Pty Ltd [2015] WASCA 22 at [25]-[26]; Owners - Strata Plan No 68372 v Allianz Australia Insurance Ltd [2013] NSWSC 1095 at [14]; CHSM Hill Australia Pty Ltd v New South Wales [2012] NSWSC 963; Perpetual Trustees Australia Ltd v Paladin Wholesale Funding Pty Ltd [2011] FCA 473 at [47]-[52]; Permanent Custodians Ltd v King [2010] NSWSC 509 at [19]; Owners Corporation Strata Plan 70579 v Midwest Constructions Pty Ltd [2012] NSWSC 644 at [50]; Perpetual Trustee Co Ltd v Kotevski [2009] NSWSC 954 at [7]-[8].
24. [2012] QCA 315 at [60].
25. At [34-[35]
26. (2007) 164 FCR 450 at 458[31]
27. [2008] NSWSC 187 at [32].
28. [2008] NSWSC 1279 at [14]-[18].
29. "Proportionate Liability in Construction Litigation" (2006) 22 BCL 394.
30. Practice Note SC Eq 3 at [56].
31. At C78
32. DC Pearce and RS Geddes, Statutory Interpretation in Australia (8th Ed, 2014, LexisNexis Butterworths) at [4.6] and the authorities referred to; see also P Herzfeld and T Prince, Interpretation (2nd Ed, 2020, Thomas & Reuters) at [5.180].
33. P Herzfeld and T Prince, Interpretation (2nd Ed, 2020, Thomas & Reuters) at [5.180].
34. Civil Liability Amendment (Personal Responsibility) Act 2002 No 92 (NSW); Civil Liability Act 2002 No 22 (NSW), Historical version for 1 December 2004 to 13 April 2005.
35. At [32]ff of my 6 October 2020 judgment.
36. Trajkovski v Simpson [2019] NSWCA 52 at [195] (Brereton JA; Basten JA and Sackville AJA agreeing that the relevant party was not a concurrent wrongdoer); followed in Liprini v Hale [2020] NSWCA 130 at [105] (Macfarlan JA albeit in dissent); cf Woodhouse v Fitzgerald and McCoy (No 2) [2020] NSWSC 450 at [348] (Schmidt AJ whose attention was evidently not drawn to Trajkovski which was decided several weeks earlier).
37. Viz Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613; [2013] HCA 10 at [47] (French CJ, Hayne and Kiefel JJ; cf Bell and Gageler JJ at [91]).
38. At C56 in the case of WRBS and C69 in the case of the Customers.
39. At C55 in the case of WRBS and at C66 in the case of the Customers.

Amendments 18 March 2021 - Typo corrected in para [43] 22 March 2021 - Para [35], line 1: The word "fact" amended to "effect" 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. Decision last updated: 22 March 2021