Hobbs Haulage P/L v Zupps Southside P/L & Anor [2013] QSC 319

[1] JACKSON J: The plaintiff, which I will call Hobbs, applies pursuant to UCPR 171 for an order striking out paragraphs 19 to 21 of the second further amended defence of the defendant, which I will call Zupps, filed on 19 September 2013. Those paragraphs raise a defence of proportionate liability under section 31 of the Civil Liability Act 2003 (Qld), which I will call the CLA.

[2] The question of substance is whether, on the facts pleaded, the third party in the proceeding, which I will call Trakka, is a "concurrent wrongdoer" within the meaning of section 30 of the CLA. Specifically, the application resolves to the question whether paragraphs 19 to 21 disclose no reasonable ground of defence because Trakka is not a person whose acts or omissions caused the loss or damage, that is the subject of the claim, independently of Hobbs' acts or omissions which caused that loss or damage.

[3] In 2009, Zupps supplied and Hobbs acquired a new truck for the price of $240,583.42. Under the contract of sale or supply, dated 18 June 2009, they agreed that the specifications of the truck would be modified by extending the wheelbase and chassis, and by fitting a custom made tray body and gates. I'll call that the modification work. The value of the modification work was included in the price. Under the contract of sale or supply, Hobbs alleges breaches of the conditions as to fitness for purpose or merchantable quality implied by section 17(a) and 17(c) of the Sales of Goods Acts 1896 (Qld). Alternatively, Hobbs alleges breaches of the cognate conditions of fitness for purpose and merchantable quality implied under section 71(2) and 71(1) of the Trade Practices Act 1974 (Cth), which I'll abbreviate to the TPA. Further or alternatively, Hobbs alleges breaches of the warranty that services will be rendered with due care and skill, implied under section 74(1) of the TPA, to the extent that the contract was one for the supply of services

[4] Zupps subcontracted the modification work to Trakka for the price of $36,410. Zupps joined Trakka as the third party to the proceeding.

[5] Zupps' claim against Trakka includes a claim for damages for breach of contract in the sum of Zupps' liability, if any, to Hobbs. Zupps also claims damages for negligence, although the pleading alleges a duty of care owed by Trakka to Hobbs.

[6] Inconsistently with Zupps' cross-claim against Trakka, Zupps alleges by way of defence to Hobbs' claim that its liability to Hobbs, if any, is reduced to nil by reason of the proportionate liability defence under section 31 of the CLA.

[7] In paragraph 20 of the defence, Zupps alleges that Zupps' liability, if any, to Hobbs for breach of contract, including breach of the implied warranty of due care and skill under section 74 subsection (1) of the TPA, is an "apportionable claim" within the meaning of section 28(1)(a) of the CLA.

[8] In paragraphs 19 to 21 of the defence, Zupps alleges that Trakka:

(a) owed an independent duty of care to Hobbs to perform the modification work with due care and skill;

(d) is a concurrent wrongdoer within the meaning of section 30 (1) of the CLA.

[9] In paragraph 21A of the defence, Zupps alleges that if Hobbs succeeds against Zupps then Hobbs' loss was caused by Trakka, not Zupps. That is inconsistent with the allegation in paragraph 20A(u) of the defence, that Trakka is a concurrent wrongdoer, since there must be two or more persons whose acts caused the loss or damage before any one of them can be a concurrent wrongdoer with another for the purpose of the application of section 31 of the CLA. I proceed on the footing that paragraph 21a is an error, and should be amended to strike through the word "not".

[10] Zupps alleges that the amount of Zupps' liability is limited to the amount of nil, as that is the amount that is just - and I interpolate - and equitable, having regard to the extent of Zupps' responsibility for the loss and damage.

[11] Section 28(1)(a) of the CLA provides:

"(1) This part applies to either or both of the following claims (apportionable claim) -

(a) a claim for economic loss or damage to property in an action for damages arising from a breach of a duty of care..."

[12] Thus a claim "arising from a breach of duty of care" may be an apportionable claim. In schedule 2 of the CLA, "duty of care" is defined to mean a duty to take reasonable care or to exercise reasonable skill (or both duties). As well, "duty" is defined to mean a duty of care in care in tort or a duty of care under contract that is concurrent and coextensive with a duty of care in tort, or another duty under statute or otherwise, that is concurrent with a duty of care of either of those kinds.

[13] None of Hobbs' claims for damages for breach of any implied condition, as to fitness for purchase or merchantable quality as previously mentioned, is an "apportionable claim" within the meaning of section 28(1)(a), because none of them is a claim arising from a duty to take reasonable care or to exercise reasonable skill.

[14] There is a question whether Hobbs' claim for damages under section 74(1) of the TPA for breach of the implied warranty that services will be rendered with due care and skill is also not an "apportionable claim" within the meaning of section 28(1)(a) because it is not a claim from a breach of "duty of care". A claim for damages for breach of the implied warranty under section 74(1) of the TPA is a claim for damages for breach of the contract. Section 74(1) implies the warranty into a contract for the supply of services to a consumer. On its proper construction, it operates to create the term of the contract which in law obliges the supplier corporation as promisor to render the services with due care and skill. A breach of the promise is remediable by an action for damages for breach of contract in an appropriate court. At the time relevant for this claim, the TPA did not provide a remedy for breach of the implied term. If Hobbs succeeds, the available remedy is a judgment for damages at common law.

[15] A promisor's contractual obligation to render services with due skill and care is, in a general sense, a duty to take reasonable care or to exercise reasonable skill. Therefore, it could be a "duty of care" within the meaning of that expression in schedule 2 of the CLA and section 28(1)(a) of the CLA, provided that the obligation is a duty within the meaning of the definition of "duty" in schedule 2 and section 28(1)(a).

[16] In order to constitute such a "duty", the promisor's obligation must answer the description of "a duty of care under contract that is concurrent and coextensive with a duty of care in tort".[1] That is, a duty based in contract is not a "duty" as defined unless there is a co-extensive duty of care in tort owed by the promisor to the promisee. The scope of a concurrent duty of care in tort was examined by the High Court in relation to a contract for the provision of professional services in Astley v Austrust Ltd.[2] A question exists then whether Zupps arguably owed a duty of care to Hobbs in tort, which is concurrent and coextensive with the implied contractual term under section 74(1) of the TPA. Zupps' contract with Hobbs does not readily fit the description of a contract for the supply of professional services. However, because Hobbs did not argue that Zupps did not owe a duty of care in tort, it is unnecessary to consider that point further in order to dispose of this application.

The requirement of independent loss causing acts or omissions

[17] For the purposes of this application, Hobbs accepted that it was reasonably arguable that Trakka owed a duty of care to Hobbs for the tort of negligence.[3]

[18] However, Hobbs contends that Trakka is not a "concurrent wrongdoer" within the meaning of section 30 of the CLA in relation to a single apportionable claim because Trakka is not a person whose acts or omissions caused the loss or damage that is the subject of the claim, independently of Hobbs' acts or omissions.

[19] Hobbs contends that Zupps has not pleaded any acts or omissions on Zupps' part which are independent of the acts or omissions pleaded against Trakka. Hobbs contends that the same acts or omissions are the basis of the liability of each because Zupps' liability, to the extent that it is liable for failure to render any services with due skill and care under the contract, is for the same acts or omissions which caused the loss or damage for which Trakka is alleged to be liable to Zupps.

[20] In support of this contention Hobbs relies on Hunt & Hunt v Mitchell Morgan Nominees[4] and Seirlis v Bengston & Ors.[5]

[21] In Seirlis, McMurdo J considered whether a vendor and agent were concurrent wrongdoers in respect of claims made against them for damages for misleading or deceptive conduct. The representations alleged were made in an advertisement as to the number of car parks which were attached to an apartment for sale in a building, and in a statement about the possible physical alteration of a concrete plinth in the area of the suggested third car park. McMurdo J found that the advertisements as to the number of car parks and the statements and promises about the plinth and use of the area as a third car park were conduct which was misleading or deceptive or likely to have misled or deceived, and thereby engaged liability under section 82 of the TPA, concluding that the agent was liable for the misleading or deceptive conduct of publishing the advertisements, that the vendor was liable for the conduct of the agent in placing the advertisements, and that an independent contractor of the agent who made the statement was personally liable under the Fair Trading Act 1989 (Qld) for his statement about removal of the concrete plinth.

[22] The defendants relied on the defence of proportionate liability. The provisions involved were section 87CB and section 87CD of the TPA. Those provisions relevantly correspond to section 30 and section 31 of the CLA. McMurdo J held that because the acts of the vendor and the agent which caused the loss or damage were one and the same. They could not be concurrent wrongdoers.

[23] In reaching that conclusion McMurdo J followed Tomasetti v Brailey.[6] That case concerned the operation of the proportionate liability provisions under part 4 of the Civil Liability Act 2002 (NSW). Sections 34(2) and 35(1) of that act relevantly correspond to sections 30(1) and 31(1) of the CLA. The plaintiff's claim was made against his financial advisor and a corporation that conducted a financial planning business of which the advisor was a member for damages for misleading or deceptive conduct under the Fair Trading Act 1987 (NSW) for negligence.

[24] The defendant's liability for misleading or deceptive conduct and negligence comprised the financial advisor's conduct, acting in the main on behalf of the corporation, whether as agent or on the footing that the financial advisors conduct was that of the company itself.

[25] It was held that the acts or omissions of the financial advisor in advising the plaintiffs were the corporate acts of the corporation, and that accordingly, they were both responsible for the plaintiff's losses, "their acts and mine being the same".[7] The court found nothing in the terms of section 35(1) of the New South Wales Act that required responsibility for a loss to be apportioned "between concurrent wrongdoers of this type".[8]

[26] While the reasons for judgment in Tomasetti refer to "concurrent wrongdoers of this type", in my view, once it is concluded that the loss-causing acts and omissions of each wrongdoer are the same, they are not "persons whose acts or omissions cause, independent of each other, the loss or damage that is the subject of the claim", and they are not, therefore, "concurrent wrongdoers" as defined in section 30(1) of the CLA.

[27] It is not difficult to conclude that where putative "concurrent wrongdoers" are each liable to a plaintiff for the same acts or omissions, because one is vicariously liable to the plaintiff for the wrong of the other, they are not "concurrent wrongdoers" within the meaning of section 30(1). That is because there is no separate cause of the loss or damage as between the acts or omissions of one and the acts or omissions of the other. The same conclusion may or may not apply to defendants who are each liable to a plaintiff as joint tortfeasors for other reasons, such as comprising a joint enterprise. That is not to say that cases of joint tortfeasors and vicarious liability necessarily exhaust the universe of claims where two or more persons acts or omissions do not, independently of each other, cause the loss or damage that is the subject of the claim.

[28] In the hearing of oral argument today, Zupps sought to advance another alternative contention in support of its defence of proportionate liability. Exhibit one is a copy of a proposed third further amended defence. It adds, for this purpose, in paragraph 20B, the allegation that the defendant incorporates by reference and thereby pleads the allegations in paragraphs 1-24A (both inclusive) of the amended statement of claim. Zupps also relied on paragraphs 10 and 11 of its outline of submissions as raising the contention that for the purposes of considering a defence of proportionate liability, the relevant "apportionable claim" is one that Hobbs does not presently make against Trakka.

[29] Returning to section 28(1)(a) of the CLA, Zupps submits that the claim not made by Hobbs against Trakka is, for the purposes of that section, an apportionable claim. In my view, that contention is not sustainable. The structure of sections 28, 29, 30, and 31, leaving aside the later sections in part 2 of chapter 2 of the CLA which affect their operation, operates by identifying a claim for economic loss or damage to property in an action for damages arising from a breach of duty of care as the first step, so far as section 28(1)(a) is concerned. Where there is such an apportionable claim, if the conditions which engage the operation of section 31 exist, then in any proceeding involving that apportionable claim, the liability of a defendant who is a concurrent wrongdoer in relation to the claim is limited.

[30] In my view, there is nothing in the text and there is nothing in the structure of sections 28 to 31 that supports the contention that the relevant apportionable claim, also referred as the single apportionable claim under those sections, is identified by reference to a claim not made by the plaintiff against a person who is not even a party to proceeding, or any proceeding brought by the plaintiff. The text and structure of sections 28 through to 31, and without forgetting the way in which their operation is affected by subsequent sections in part 2, is carefully drawn, although it is not without its difficulties.

[31] Mr Harding for Zupps submitted that the court should approach the interpretation of section 28 with a view to the conclusion that where there are parallel claims in contract or tort against a number of defendants the liability of each should be reduced, or where there are potential defendants, the liability of the defendants should be reduced by limitation under section 31, even if to achieve that result what is required is to construe section 28 so that the apportionable claim in view is one not brought by the plaintiff against any existing defendant. In my view, it's not permissible to interpret the text or structure of the sections so as to achieve such a general aim.

[32] There is no safe harbour for their operation once the language that they employ to identify the scope of their operation is abandoned. Thus, in my view, the claim which is referred to in section 28(1)(a) is a claim which is brought against a defendant, not one that has not been brought but might have been. Accordingly, the additional ground on which the defendant Zupps sought to sustain the defence of proportion of liability by reference to the proposed third further amended defence and the submissions which were, at least, foreshadowed in paragraphs 10 and 11 of the outline of submissions, do not alter the conclusion to which I have otherwise come.

[33] The result is that in the present case, in my view, the acts or omissions constituting any breach of the implied warranty by Zupps, that it would exercise due care and skill in rendering the services supplied to Hobbs under the contract in carrying out the modification work, must be the same acts or omissions that would constitute Trakka's breach of any duty of care owed to Hobbs in tort to carry out the modification work with reasonable care, or to exercise reasonable skill.

[34] It follows, in my view, that Zupps and Trakka are not "concurrent wrongdoers," because their acts or omissions did not cause the loss or damage independently of each other, and for that reason the application must succeed.

[1] It is unnecessary to consider par (c) of the definition of "duty".

[2] [1999] HCA 6; (1999) 197 CLR 1 at [42]- [48].

[3] See, however, Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180; Valley Field v Primac Ltd & Anor [2003] QCA 339; and Tarangu Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd & Anor [2013] QSC16 at [57] - [67].

[4] [2013] HCA 10; (2013) 87 ALJR 505.

[5] [2013] QSC 240 at [108]- [122].

[6] [2012] NSWCA 399.