GLENMONT INVESTMENTS PTY LTD v O'LOUGHLIN & ORS

DOYLE CJ The Court has already published reasons disposing of the main issues argued on appeal: Glenmont Investments Pty Ltd v O'Loughlin & Ors [2000] SASC 429 ("Glenmont No 1").

In its reasons the Court said that there were three matters on which it wished to hear further submissions. First, whether the damages awarded to the Plaintiff ("Glenmont") should have included an allowance for sales tax: Glenmont No 1 at [426]. Secondly, the question of contribution orders as between the Defendants who remain liable to Glenmont: Glenmont No 1 at [449]-[450]. Thirdly, the question of costs of the trial and of the appeal.

The Court has now heard short submissions from counsel for Glenmont, for the defendant, O'Loughlin, and for the defendants, Parker and Edwards. Mr Foote attended the hearing, but was not represented by counsel.

The Defendants do not deny that the award of damages for the costs of replacing Glenmont's dinosaur should include an allowance in respect of tax. The issue is whether the allowance should be on the basis adopted by the trial Judge at [160], being referrable to the amount of sales tax likely to be payable on purchases made for the purpose of reconstruction, or whether the allowance should be referrable to the amount likely to be payable by way of Goods and Services Tax ("the GST"). There was no suggestion that if the Judge's approach was correct, his choice of a rate of 22 per cent was erroneous. The Defendants submitted that if the GST was the appropriate basis, the allowance should be at the rate of 10 per cent. Again, there was no suggestion by Glenmont that that was an inappropriate rate in that event. The submissions were confined to the question of the appropriate basis upon which to proceed.

I record, for convenience, that when the Judge delivered judgment on 25 November 1999, sales tax was still payable, but it was then known that the sales tax regime would be replaced by the GST regime, as it later was.

No party referred the Court to any authorities on the point, or to any discussion of the issue in text books. Nothing was put to the Court to assist it in identifying the relevant principles by which it should proceed.

I am not satisfied that the Judge was wrong to award damages assessed as at the date of trial. The general rule in a case like this is that damages are assessed as at the date of the wrong, at least in tort, but there is no inflexible rule to that effect: Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351 Mason CJ at 355-356. In a case like this, where damages are assessed by reference to the cost of constructing a replacement dinosaur, and in which the Plaintiff lacked the funds to construct the replacement, unless and until it recovered damages, it was appropriate for the Judge to assess damages by reference to the cost of the replacement as at the date of trial. Before the Court no-one submitted that the Judge should have selected an earlier date, and in relation to this issue nothing would have been achieved by doing so, from the point of view of the Defendants.

In the interests of certainty, a court assessing damages must select a date as at which damages are to be assessed, and once that date is selected, subsequent events will be disregarded. This is necessarily so. A court cannot accommodate changing circumstances as they occur. At a certain point, the interests of certainty must take over. No principle was identified by the Defendants by reference to which the Court should take account of events occurring after the date at which the Judge assessed damages. The relevant principle cannot be, for the reasons just indicated, that the date is adjusted by reference to the occurrence of a circumstance that would affect the award of damages. Nor am I satisfied that in the circumstances of this case the Judge's approach has worked any unfairness. My general knowledge suggests that after the introduction of the GST, the cost of constructing the dinosaur may have decreased, but whether the decrease is of the order suggested by the Defendants is a matter of speculation. If I were to allow for the impact of the GST, fairness would equally suggest that I should allow for increases in cost since the date of judgment, if increases have occurred. I also take account of the fact that the Judge rounded down the figure that he calculated, after making an allowance for sales tax.

In the end, I am not satisfied that the Judge erred. Accordingly, I would not vary this component of the damages awarded by the Judge.

The Court has found the Defendant O'Loughlin liable to Glenmont for breach of contract. The Court has found the Defendants Foote, Parker and Edwards liable to Glenmont in tort. The Defendants Parker and Edwards are vicariously liable to Glenmont for the negligence of Mr Foote.

The Defendants are liable for the same loss, and for the same damages, even though the legal basis of their respective liabilities differs.

I remain of the view that I am not given power to make contribution orders by s 25(1)(c) of the Wrongs Act 1936 (SA). No contrary submission was put to the Court.

In its earlier reasons the Court said that if it were to make an order under that provision, it would be inclined to apportion liability as to 40 per cent to the Defendant O'Loughlin, and as to 60 per cent to the Defendants Parker and Edwards. Having heard Ms Maharaj, counsel for the Defendant O'Loughlin, I am of the view that that figure should be revised. In my opinion as between the Defendant O'Loughlin and the Defendants Parker and Edwards, the Defendant's O'Loughlin's responsibility should be of the order of 20 per cent. However, it is not necessary for me to express a final view on this, because the order that I propose to make is not made under the legislative power referred to.

In its reasons the Court alluded to the possibility that orders for contribution might be made under the general law, drawing in particular on the equitable principle of contribution: Glenmont No 1 at [450]. Counsel for the Defendant O'Loughlin and for the Defendants Parker and Edwards embraced this suggestion, in the sense that each of them urged that an order be made, although they differed on the order that should be made. The Court did not have the assistance of submissions as to the sources of the power to be exercised, or as to the scope of the power. I add that there was no submission that the Court lacked power.

From my own researches, I am not aware of any authority that binds the Court on the issue. The issue is an important one. In short, it is whether a court may order contribution as between defendants liable to a plaintiff respectively in contract and in tort, independently of the Wrongs Act provisions, and on the basis that those defendants are liable to the plaintiff for the same loss and for the same damages. This case does not raise the further question of whether an order for contribution can be made as between defendants all of whom are tortfeasors: see Austral Pacific Group Ltd (In Liq) v Air Services Australia [2000] HCA 391; (2000) 173 ALR 619 at [11].

As I have said, this is an important point of principle. It is not a point that should be decided without the benefit of a careful consideration of the authorities. The cases referred to in the Court's earlier reasons, and the cases to which it was referred on this occasion, do suggest that the Court has the necessary power. Ms Maharaj referred the Court to the decision of the Full Court of the Federal Court in Bilakower v ACOHS Pty Ltd (1998) 83 FCR 1. The reasons of the Court in that case suggest that a court has power to make a contribution order under general law principles as between persons liable for damages under s 52 and s 82 of the Trade Practices Act 1974 (Cth). However, in the end the case was decided by applying a statutory provision for contribution. Mr Trim QC referred the Court to the more recent decision of the Full Court of the Federal Court in Burke v LFOT Pty Ltd [2000] FCA 1155. The reasons of the majority in that case likewise suggest that the Court has power to make an order for contribution. In that case the Court made orders as between parties who were liable respectively in damages for breach of contract and under s 52 and s 82 of the Trade Practices Act. However, I note that Lee J dissented on this point, and his reasons warrant careful consideration.

In view of the fact that dicta in a number of cases support the existence of the power to order contribution, and in view of the fact that counsel for each Defendant asked the Court to make an order, I am prepared to do so. However, as I have already said, this decision is made without the benefit of full argument on the authorities and should not be taken as intended to determine authoritatively the Court's power in this respect.

The cases to which I have referred satisfy me that contribution under the general law is not awarded by reference to the Court's assessment of the fault or culpability of the parties in question. The principle is one of equality, although at times that will require the Court to determine just what equality means in a particular situation.

In the present case it is appropriate to treat the Defendants Foote, and Parker and Edwards, as one party for the purposes of contribution. The Defendants Parker and Edwards are jointly liable as partners. They are liable vicariously for the negligence of Mr Foote. Contribution should be ordered as between them as one group, and the Defendant O'Loughlin as another Defendant.

On that basis I would make an order for contribution as between them on the basis that the Defendant O'Loughlin is liable to contribute to the judgment to the extent of 50 per cent and that the other Defendants are liable to contribute in the same amount.

Mr Foote is in a special position because he is entitled to an indemnity from the Defendants Parker and Edwards pursuant to s 27C of the Wrongs Act 1936 (SA). The submissions before the Court proceeded on that basis.

The Court has already decided that Glenmont should pay the Society's costs of the trial and of the appeal.

Mr Besanko QC, counsel for Glenmont, seeks an order that Glenmont recover those costs from the Defendants other than the Society.

The principles by reference to which such an order may be made were canvassed by the members of the High Court in Gould v Vaggelas (1985) 157 CLR 215 ("Gould"). The application of those principles was considered in this Court in Fennell v Supervision and Engineering Services Holdings Pty Ltd & Santos Ltd (1988) 47 SASR 6 ("Fennell"). In Gould there is some difference in the manner in which the principle is expressed by the members of the High Court. For present purposes I consider the effect of that decision was accurately summarised by von Doussa J in Fennell when he said (at 19):

"In my opinion the principle to be discerned from Gould v Vaggelas is that a Bullock order may be made where the costs in question have been reasonably and properly incurred by the plaintiff as between him and the unsuccessful defendant; as between them those costs will be so incurred where the conduct of the unsuccessful defendant in relation to the plaintiff's claim show that the joinder of the successful defendant was reasonable and proper to ensure recovery."

I emphasise that neither the observations of the members of the High Court in Gould, nor this passage from the judgment of von Doussa J, are to be treated like a statute. The Court is dealing with a discretion as to costs, which discretion is to be exercised on the basis of a principle. There is no precise rule.

In the present case it was reasonable for Glenmont to join the Society. Glenmont had an arguable case against the Society. But that alone is not enough. The issue is whether the conduct of the other Defendants, before proceedings were instituted and after they were instituted, made it reasonable that Glenmont should joint the Society, and reasonable in the sense that the other Defendants should incur the costs resulting from that.

It is helpful to consider the circumstances in Fennell. In that case the Plaintiff sued for personal injury suffered in the course of his employment. At first the Plaintiff sued his employer. The employer administered interrogatories to the Plaintiff, and some of these interrogatories raised the issue of Santos having control over or the management of the Plaintiff's work place. The Plaintiff then joined Santos as a Defendant, and thereafter the action proceeded against both Defendants. The Plaintiff's claim against the employer was dismissed, but the claim against Santos succeeded. As Jacobs J said (at 15), after the employer implicated Santos, a prudent plaintiff had no choice but to join Santos as a defendant. When the Plaintiff first instituted the proceedings against his employer he did not know the full facts about the relationship between the employer and Santos. In that case an order was made that Santos meet the costs payable by the Plaintiff to his employer.

In the present case, the claim against Mr Foote seems always to have turned in substance on his conduct when dismantling the structure on the day in question. The claim against the Defendants Parker and Edwards has always rested on the arrangement between them and the Defendant O'Loughlin, and on principles of vicarious liability. The claim against the Defendant O'Loughlin has always rested on his involvement on the dismantling of the structure, and on the relationship between him and Mr Foote and the Defendants Parker and Edwards. Obviously enough, there was always scope for any one of them to try to implicate the Society as well. It was always possible that one of them would raise the question of the provision of fire fighting equipment, and the question of the adequacy of the response to the fire by the Society's employees. But, in my opinion, this is not a case in which, from Glenmont's point of view, liability turned on relationships between the Society and the other Defendants which were unknown to Glenmont, nor is it a case in which there was no way in which Glenmont could, before trial, identify the part played by the Society and the other Defendants respectively. It is not a case in which it was the other Defendants who raised issues that suggested that the Society might be liable. Nor did the other Defendants seek to escape liability on the basis that the Society was liable to Glenmont, rather than the other Defendants. It is not a case in which only the Defendants knew what had happened, and in which it was open to them to leave Glenmont in the dilemma of not knowing which Defendant might be liable, and running the risk of failing if it brought proceedings against some only of them. The case seems to me to be one in which Glenmont, quite reasonably, brought proceedings against all Defendants potentially liable, but that seems to me to reflect nothing more than a sensible decision that it was in Glenmont's interests to do so. Nothing has been brought to the Court's attention about the conduct of the Defendants before the proceedings were instituted, or afterwards, which makes it reasonable as between Glenmont and the other Defendants that those other Defendants should meet the costs payable by Glenmont to the Society. In particular, it is not a case in which the Defendants attempted to shift all of the blame to the Society.

For those reasons I decline to make the order sought.

For much the same reason I decline to make an order that the other Defendants meet the costs of the appeal payable by Glenmont to the Society. There is nothing at all to support the making of such an order. At this stage of the appeal, there is no reason to suggest that the case mounted by the other Defendants made it appropriate for Glenmont to resist the appeal by the Society. Although the Defendants made common cause on damages, the cases on liability were discrete.

As to the costs of the appeal, my view is that the order should be that there be no order as to the costs of the appeal. As between Glenmont and the other Defendants, the outcome is that the Defendants have failed on the question of liability, but have had a substantial success on the question of damages. The fact that the submissions on damages were presented by counsel for the Society is neither here nor there. That was done because the Court discourages duplication of submissions. The case is one in which I consider it appropriate to reflect the outcome on the issues of liability and damages by the form of the order of costs.

Accordingly, the Judge's assessment of the cost of constructing a replacement should stand, I would make orders for contribution on a footing of equality, I would decline to order that the Defendants remaining liable pay to Glenmont the amount of costs payable by Glenmont to the Society, and as between Glenmont and the Defendants remaining liable I would order that there be no order as to the costs of the appeal. I would give the parties liberty to speak to the minutes of order.

NYLAND J I agree with the reasons given by the Chief Justice and with the orders proposed.

MARTIN J I agree with the orders proposed by the Chief Justice and with his reasons.