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CATCHWORDS: TORTS - THE LAW OF TORTS GENERALLY - JOINT OR SEVERAL TORTFEASORS - CONTRIBUTION - APPORTIONMENT - whether determination of liability in contract and tort shall be segregated - whether differing apportionment of liability appropriate / TORTS - NEGLIGENCE - APPORTIONMENT OF RESPONSIBILITY AND DAMAGES - APPORTIONMENT IN PARTICULAR SITUATIONS AND CASES - whether apportionment different if liability arises from contract rather than tort - whether causes of damage must be “of equal or close to equal potency” in contract / CONTRACTS - GENERAL PRINCIPLES - DISCHARGE BREACH AND DEFENCES TO ACTION FOR BREACH - PERFORMANCE - breach caused property loss to party – whether whole amount of loss recoverable where damaged party contributed / INSURANCE - GENERAL - POLICIES OF INSURANCE - CONSTRUCTION - whether implied addition of “take reasonable care to comply” before “comply … with all statutory obligations …” justified – whether a breach causing damage can be a “simple breach of regulation or by-law” / CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES ILLEGAL AND VOID CONTRACTS - EFFECT OF ILLEGALITY OR INVALIDITY - IN GENERAL - Gas Regulations intended to protect consumers - whether illegality of contract denies party benefit of regulations / Gas Act 1965 (Qld) s 61(1), s 64 / Gas Regulation 1989 (Qld) s 80(2B), s 81(1)(b), s 100(1) / Law Reform Act 1995 (Qld), s 6, s 7 / Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310, followed / Astley v Austrust Ltd (1999) 197 CLR 1, applied / Brooke v Bool [1928] 2 KB 578, applied / Collins v Hertfordshire County Council [1947] 1 KB 598, considered / Croston v Vaughan [1938] 1 KB 540, discussed / Employers Corporate Investments Pty Limited v Cameron (1977) 3 ACLR 120, applied / Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 Qd R 162, distinguished / Heskell v Continental Express Ltd [1950] 1 All ER 1038, applied / James Hardie & Co Pty Ltd v Roberts (1999) 47 NSWLR 425, applied / Simonius Vischer & Co v Hold & Thompson [1979] 2 NSWLR 322, followed

COUNSEL: S Couper QC for the appellant in Appeal No 7772 of 2001 / R Bain QC for the respondent in Appeal No 7772 of 2001 / SC Williams QC for the appellant in Appeal No 8074 of 2001 / R Bain QC for the respondent in Appeal No 8074 of 2001

SOLICITORS: Gadens Lawyers for the appellant in Appeal No 7772 of 2001 / David A Lobbezoo Lawyers for the respondent in Appeal No 7772 of 2001 / HBM Lawyers for the appellant in Appeal No 8074 of 2001 / David A Lobbezoo Lawyers for the respondent in Appeal No 8074 of 2001

1. McMURDO P: I have read the reasons for judgment of McPherson JA in which the facts and issues are set out.

Appeal No 7772 of 2001

2. I agree that for the reasons given by McPherson JA there are no grounds for interfering with the learned primary judge's apportionment of the damage suffered by the plaintiffs between the appellant, Ms Cole, and first respondent, Mr Hurst, under Division 2 of Part 3 Law Reform Act 1995 (Qld).

3. I also agree that his Honour erred in stating that for the first respondent's breach of contract to have caused the damage suffered by the appellant in contract, it must have been of near equal potency to the immediate cause. The first respondent, in recommending and then installing a manual valve rather than the "failsafe" miniset valve, breached his contract with the appellant to exercise reasonable care and skill in advising on the repair of the Blodgett pizza oven, having regard to the dangers to people and property associated with gas and gas-operated appliances. Whilst his Honour found that the appellant's act of leaving on the valve was the immediate and dominant cause of the resulting property damage, the first respondent's breach was undoubtedly "a" cause. In Simonius Vischer & Co v Holt and Thompson¹ Samuels JA, with whom Moffett P and Reynolds JA agreed on this point, stated:

"It was, of course, sufficient for the plaintiffs to establish that the defendants' breaches were a cause of the loss notwithstanding that there may have been other concurrent causes. Hence, the defendants' argument must show that the plaintiffs' lack of care was the sole cause of the loss, to the exclusion of any causative influence exerted by the defendants' breaches. I take the correct principle to be that stated in Chitty on Contracts, General Principles, 23rd ed., p 670, par 1448:

'If a breach of contract is one of two causes, both co-operating and both of equal efficacy in causing loss to the plaintiff, the party responsible for the breach is liable to the plaintiff for that loss.'

This statement is supported by the authority of Devlin J., as he then was, in Heskell v Continental Express Ltd [1950] 1 AllER 1033 at 1046-1048, and the cases there cited. In particular, I refer to what was said by Lord Wright with whom Lord Atkin agreed, in Smith Hogg & Co Ltd v Black Sea & Baltic General Insurance Co Ltd [1940] AC 1997 at 1007. His Lordship's remarks although delivered in a context different from that which obtains here, are of undoubted application. Lord Wright said: 'The sole question apart from express exception, must then be: "Was that breach of contract 'a' cause of the damage."'

It may be preferred to describe it as an effective or real or actual cause though the adjectives in my opinion in fact add nothing. If the question is answered in the affirmative the shipowner is liable though there were other co-operating causes, … ."

See also Wylie v The ANI Corporation Limited.²

4. The first respondent's breach of the contract with the appellant, though not the sole or even the dominant cause of the damage suffered by the appellant and the plaintiffs, was a cause, and indeed an effective real or actual cause, of that damage. The first respondent is liable to the appellant for breach of contract.

5. What effect does this have on the orders made at first instance? The plaintiffs brought an action for the damages they suffered against the appellant and the first respondent. The appellant issued a third party notice against the first respondent claiming damages suffered by her as a defendant in this action. She also claimed damages against the first respondent for her own injured property the quantum of which was agreed at $25,000.

6. As McPherson JA explains, s 6(c) Law Reform Act 1995 (Qld) provides that where, as here, the plaintiffs have suffered damage as a result of a tort and both the appellant and the first respondent have been found liable in respect of that damage, then either the appellant or the first respondent may recover contribution from the other. That is not affected by Astley v Austrust³ which held that damages for breach of contract may not be reduced under apportionment of liability legislation for contributory negligence where a plaintiff has sued in contract, even if the plaintiff has or could have also sued in tort. Astley was concerned, not with contribution between tortfeasors, but with reducing contractual damages because of a plaintiff's contributory negligence. Regardless of the first respondent's liability in contract to the appellant for the plaintiffs' damage, he is entitled to recover contribution from the appellant for 85 per cent of that damage under s 6(c) Law Reform Act 1995 (Qld).

7. But what of the appellant's claim against the first respondent in contract for the property damage directly suffered by her? In Astley Gleeson CJ, McHugh, Gummow and Hayne JJ stated that:

"Absent some contractual stipulation to the contrary, there is no reason of justice or sound legal policy which should prevent the plaintiff in a case such as the present recovering for all the damage that is causally connected to the defendant's breach even if the plaintiff's conduct has contributed to the damage which he or she has suffered."⁴

8. The first respondent and the appellants were not joint and several tortfeasors in respect of the property damage suffered directly by the appellant and s 6(c) Law Reform Act 1995 (Qld) does not apply to the appellant's claim in contract for that damage. The provisions of the Law Reform Act 1995 (Qld) allowing for apportionment of liability for contributory negligence⁵ do not ordinarily apply to breaches of contract: Astley. The appellant is entitled to damages for breach of contract in the agreed sum of $25,000.

9. I agree with the orders proposed by McPherson JA.

Appeal No 8074 of 2001

10. I agree with McPherson JA that for the reasons he has given, appeal no 8074 of 2001 brought by the appellant Wesfarmers Federation Insurance Ltd should be allowed. I agree with the orders proposed by McPherson JA.

11. McPHERSON JA: In February 1998 the plaintiffs Mr and Mrs Kim were the owners of a multi-tenanted shop building on the Gold Coast Highway at Miami. At about 5 am on Wednesday 5 February the building was destroyed by an explosion which was sufficiently severe to damage some of the neighbouring buildings as well. Investigation showed that the explosion had taken place in the premises let by the Kims to Ms Cole, who is the first defendant in the action and the appellant in proceedings now before this Court.

12. Ms Cole conducted a pizza shop in those premises using for that purpose a Blodgett oven that was fuelled by LP gas. On the preceding Friday evening, which would have been 31 January 1998, she found that the oven was not working properly. She called in the second defendant Mr Hurst, who carried on business as a plumber and gasfitter. Mr Hurst traced the problem to a miniset valve, which is a device controlling the flow of gas that, when ignited, fuels and heats the oven for cooking purposes. He telephoned the supplier and ordered a new miniset, but was told that it would not be available until early in the following week. That meant that Ms Cole would not be able to cook and sell pizzas until the oven was repaired, which would affect her business and was not acceptable to her.

13. A discussion then ensued between Mr Hurst and Ms Cole, attended by a Mr Umstad, who was Ms Cole’s fiancé whom she has since married. Mr Umstad often helped out in the shop and was experienced in fitting gas heaters to spas. He asked if some other valve could be fitted, so that the oven could be used pending receipt of the new miniset valve. Mr Hurst then produced a quarter-turn valve which he explained was, unlike the miniset valve, not “failsafe”. It required manual operation to turn it on and off by moving a handle slightly and lighting the gas burners. Having explained what was required to use it and having seen Mr Umstad demonstrate this procedure, Mr Hurst was satisfied that Mr Umstad was proficient in its operation and he fitted the manual valve to the oven for use until the miniset valve was available.

14. The oven was operated successfully over the next few days including Monday 3 February. On Tuesday the miniset valve arrived, and Mr Hurst offered to fit it. It was a day on which the shop was closed and Ms Cole had a social engagement which she said she could not break. Consequently, it was not fitted then. Unfortunately, on Monday night someone left the manual valve on the oven in the “open” position. The learned trial judge found that it was Ms Cole who had done so, and this finding was not challenged on appeal. The burners were not lit and, under those conditions, there was a build-up of gas which was ignited probably by an item of electrical equipment in the kitchen. In point of law, it made no difference which of Ms Cole and Mr Umstad was responsible for leaving the valve open. They were joint tortfeasors and liable as such to the plaintiff: Brooke v Bool [1928] 2 KB 578. So was Mr Hurst. Judgment was given for the plaintiffs against Ms Cole and Mr Hurst for $160,000, which represented the amount of the loss the plaintiffs had sustained as a result of the negligence of the two defendants.

15. In respect of that judgment debt they were jointly liable. It then became a matter of apportioning the loss between them. Ms Cole’s claim for indemnity against or contribution from Mr Hurst was framed in both tort and contract. Acting under s 7 of the Law Reform Act 1995, his Honour assessed their shares of responsibility for the loss at 85% to Ms Cole and 15% to Mr Hurst. That assessment apportioned the contributions to their joint liability for the damage, but it purported to do so only in tort. Division 2 of the Act, which provides for contribution between defendants, consists of ss 6 and 7. Section 6 opens with the words “When damage is suffered … as a result of a tort …”, and it is headed Proceedings against and contribution between … tortfeasors. Section 7 directs the court to assess contributions according to the extent of their responsibility for the damage, confines the jurisdiction to do so to “proceedings for contribution under this division …”. The immediate questions are whether it authorises the court to assess their shares or contributions to the damage where, as here, one of the defendants is also liable to the other under a contract, and, in doing so, to arrive at a result that is different from that reached in tort.

16. Given the assessment of Mr Hurst’s share (15%) of the responsibility in tort for the explosion and consequent loss to the plaintiffs, his Honour considered it would “not be right for the purpose of attributing responsibility in contract to characterize Mr Hurst’s intervention as an effective cause of Ms Cole’s loss”. At this point in his reasons, the learned trial judge was in fact addressing not the issue of Mr Hurst’s contribution to the plaintiffs’ loss of $160,000, but his contribution to Ms Cole’s property loss (which was agreed at a figure of $25,000) as a result of the explosion. It was specifically with respect to that issue that his Honour held that there was no causal connection between her own loss or damage and his breach of contract, and that her contractual claim for that amount failed. Mr Hurst’s contribution of 15% to Ms Cole’s own property loss of $25,000 amounts to the comparatively small figure of $3,750. As to that, it is not clear why she was not entitled to recover it, or 15% of$25,000, from Mr Hurst as damage done to her in tort. The point seems to have been overlooked in the judgment against him that followed; but, on behalf of Mr Hurst on appeal, Mr Bain QC said he had no objection to that small sum being included in a judgment in favour of Ms Cole. Her major concern is, however, not the amount of that loss, but the much greater component of her loss resulting from her having to bear 85% of the plaintiffs’ loss of $160,000 for which judgment was given against her. It is against that assessment and especially against the failure of the judge to hold Mr Hurst liable to her in contract, that she now appeals.

17. So far as material, ss 6 and 7 of the Act are in the following terms:

“6. Where damage is recovered by any person as a result of a tort (whether a crime or not) -

“(a) …

…

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 the person in respect of the liability in respect of which the contribution is sought.

7. In any proceedings for contribution under this division the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contributions, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.”

The italics in s 6 are, of course, my addition.

18. In Croston v Vaughan [1938] 1 KB 540, 565, Scott LJ remarked of the corresponding provisions in the English Act of 1935 that s 6(c) of the Act is “illogical”:

“because it assumes the joint liability of two tortfeasors, which is indeed a postulate of the proceedings for contribution; but goes on to give the Court power to exempt one of such persons from liability to make any contribution at all, or, conversely, to make the other person pay the whole”.

The power to exempt one person from, or to limit his liability to, another may, and commonly does, arise from the terms of a contract between them, just as, in the converse case of making the other person pay the whole, it ordinarily stems from the terms of a contract to indemnify. In assessing the contribution recoverable in that way, the court is under s 7 arriving at what is “just and equitable” having regard to the contractual term or terms providing for the exemption or indemnity as the case may be. In the light of the contract between them, it would hardly be just and equitable to do otherwise. Bringing into account the contractual arrangements, express or implied, of the parties that regulate the right to exemption or indemnity, wholly or in part, is something that, in any event, appears clearly enough to be contemplated by both s 6(c) and s 7. For those provisions to operate, there must be at least two joint tortfeasors; and they must both be liable in respect of the same damage. Those are postulates as Scott LJ described them, of the court’s power to assess contribution under the legislation; but, given that they are present, it is not necessary that the liability to contribute or indemnify should be found to arise from liability in tort. It may, as s 6(c) specifically envisages, be a liability “whether as a joint tortfeasor or otherwise”; that is, one that has its origin, for example, in a contract, or perhaps a statute, or in some other way that is recognised by law.

19. I have found only one case in which this question has been considered, which is rather surprising having regard to the length of time the legislation has been in force in various jurisdictions. In Employers Corporate Investments Pty Limited v Cameron (1977) 3 ACLR 120, the corporate plaintiff sued the defendants for breach of their contract to perform the duties of auditors with skill and care. Those defendants cross-claimed against the directors for failing to act honestly and use skill and diligence in the discharge of their duties. The directors moved to strike out the cross-claim against them on the ground that the primary action was brought against the auditors as defendants not in tort but in contract, with the result, so it was submitted, that the contribution procedure was not available under a provision corresponding to s 6(c) of the Law Reform Act 1995 in Queensland. In refusing the application to strike out, Sheppard J said (3 ACLR 120, 124-125):

“… I tend to the view that a person may avail himself of the provisions of the section notwithstanding that he is either under a liability in contract or is sued in contract if in respect of the damage for which he is sued he is also liable as a tortfeasor. It is not necessary … for me to express a final view … It is enough for me to say that I do not think that the matters relied on by the cross-claimants have been clearly demonstrated to be unsound. Indeed, my tentative view, as I have said, is that in respect of them the cross-claimants are right.”

20. His Honour went on to consider and to hold that the cross-claiming defendant auditors were being sued in contract but for breach of an obligation for which they might also have been sued in tort. They therefore satisfied the postulate of being a tortfeasor within the meaning of s 6(c), who would, if sued, be liable in respect of the same damage. In the present case that element is now not open to question. Both defendants were not only sued but held liable as tortfeasors in respect of the same damage to the plaintiffs. The first defendant Ms Cole then claimed against the second defendant both in tort and in contract. In tort, the learned trial judge assessed the two defendants’ contributions at 85% and 15%. In contract, he held that she was not entitled to recover anything by way of contribution. The question therefore is whether the result is or ought, as his Honour held, to be different if Mr Hurst’s liability to Ms Cole is considered as arising in or from a contract rather than in tort.

21. His Honour decided that this relevant difference existed between the two, viz that the applicable test for determining the cause of the loss was not the same. His Honour held that, in the case of contractual liability, a breach does not qualify as a cause of loss unless it can be regarded as “of equal or close to equal potency” with other causes. A rule to that effect is sometimes ascribed to Heskell v Continental Express Ltd [1950] 1 All ER 1038, 1048, where, after discussing the matter, Devlin J said:

“Whatever the true rule of causation may be, I am satisfied that if a breach of contract is one of two causes, both co-operating and both of equal efficacy, as I find in this case, it is sufficient to carry judgment for damages.”

For my part, I am, with respect, unable to read that statement as supporting the conclusion that a breach of contract ceases to be a cause of loss because, by comparison with other causes, it is a cause of lesser efficacy than the others. His Lordship’s conclusion was not expressed in negative terms like that. What he said was that, whatever the true rule might be, a breach of contract that was (as he found it in that case to be) of an efficacy or cogency equal to others was a cause (by which he meant a legally sufficient cause) of the loss resulting from the breach of contract.

22. Others have taken a similar view of his Lordship’s statement. See Simonius Vischer & Co v Hold & Thompson [1979] 2 NSWLR 322, 346, per Samuels JA, with whom Moffitt P and Reynolds JA agreed on this point. See also Alexander v Cambridge Credit Corporation (1987) 9 NSWLR 310, 315, where Glass JA said that the existence of another concurrent cause which combined to produce the loss was irrelevant. McHugh JA said (9 NSWLR 310, 350) that, in the law of contract, it is sufficient that the breach “causally contributed” to the same loss, relying on Norton Australia Pty Ltd v Streets Ice Cream Pty Ltd (1968) 120 CLR 635, 643. Recent English decisions in Galoo Ltd v Bright Grahame Murray [1994] 1 WLR 1360 and County Ltd v Gironzentrale [1006] 3 All ER 834, 846, 849, on which Mr Couper QC for the appellant Ms Cole relied, are to similar effect. What Devlin J in Heskell v Continental Express Ltd [1950] 1 All ER 1033, 1047-1048, was concerned to do was to repel the suggestion that it was necessary to show that the breach of contract relied on should be the “dominant” cause of the loss sought to be recovered. In this respect his Lordship referred to the speech of Lord Wright in Smith Hogg & Co v Black Sea & Baltic General Insurance Co [1940] AC 907.

23. Given the trial judge’s finding of responsibility of 15% for the loss sustained in the present case, it is to my mind difficult to view Mr Hurst’s contribution to the explosion and damage as not being a cause of the liability incurred jointly by him and Ms Cole for the total loss of $160,000 sustained by Mr and Mrs Kim, even if it was far from being the dominant cause of that loss. Indeed, his Honour found it to have been a cause in tort, but in contract not an effective cause, of Ms Cole’s loss. Before the apportionment between them, they were each jointly liable in tort for the whole amount. Without the statutory intervention in the form of s 7 of the Law Reform Act 1995, or its predecessor in Queensland, which was the Act of 1952, no apportionment of responsibility or contribution between tortfeasors was in general possible even after judgment. That was because of the common law rule laid down in Merryweather v Nixan (1799) 8 Term Rep 186; 101 ER 1337, which was based on notions of the illegality of the cause of action (ex turpi causa non oritur actio). See Glanville Williams, Joint Torts and Contributory Negligence §26, at 80-83. That rule is thought to have been abrogated in Queensland by the Act of 1952, which was re-enacted in 6(a) of the Act of 1995.

24. In contract, the rule was different. There, the common law applied the equitable principle that co-debtors contributed in equal proportions: Dering v Earl of Winchelsea (1787) 2 Bos & Pul 270; 126 ER 1276. In discussing the principle in Joint Obligations §86, at 166, Professor Glanville Williams said it required all co-debtors to contribute in equal proportions to the sum payable. If applied in this case to the joint liability of the two defendants as co-debtors under the contract of record constituted by the judgment against them, the result would be that liability under that judgment would be apportioned between them equally. That would satisfy Ms Cole, for whom Mr Couper QC contended on appeal that an equal apportionment of the loss of $160,000 was the very least that was appropriate.

25. To arrive at that result by applying the principle in Dering v Lord Winchelsea would, however, run counter to Lord Halsbury’s statement in Palmer v Wick Steam Shipping Co [1894] AC 318, 334, that in England the transmutation of the cause of action into a judgment would not prevent the application of the principle of Merryweather v Nixon (1799) 8 Term Rep 186. It is, in any event, right to say that Mr Couper did not rely on the principle in Dering v Earl of Winchelsea, but simply submitted that, whether considered in tort or in contract, his Honour’s apportionment of 85% of the responsibility to his client Ms Cole involved a wrong exercise of the trial judge’s discretion under s 7 of the Act of 1995, and that a proper apportionment of the responsibility of the parties was, or should have been, at least 50% each.

26. In making apportionments under s 7 of the Act, the approach adopted to the significance of the causal element has not been uniform. In Collins v Hertfordshire County Council [1947] 1 KB 598, 624, Hilbery J said that if the provisions of the section corresponding to s 7 had stopped at the words “just and equitable” it would have been comparatively easy to distribute the damages according to the relative degrees of negligence on the part of the tortfeasors; but that the presence of the words “having regard to the extent of that person’s responsibility for the damage” qualified those words and made it necessary to decide the extent the to which negligence of one party or the other was “causal in bringing about the damage”. It was, his Lordship said (at 624):

“difficult to conceive how anything other than causal acts resulting in the damage can show the extent of a person’s responsibility for the damage”.

In my opinion, however, an approach to apportionment that, as a matter of law, ascribes primacy to causal potency does not accord with the provisions of s 7. On the contrary, after discussing the question in James Hardie & Co Pty Ltd v Roberts (1999) 47 NSWLR 425, 433, Meagher JA accepted that “all relevant circumstances are to be taken into consideration when adjudicating upon a claim for contribution”. Sheller JA, with whom the other three judges of appeal in that case agreed, spoke (at 448) of “the need to examine the whole conduct of each party”, which he said should not be obscured by the conventional regard to culpability and causation.

27. Among the circumstances to be considered are, in my opinion, the terms of any contract governing the rights and liabilities of the parties at the time the damage was done. Those terms may provide for a complete indemnity by one party in favour of the other as regards the damage for which they both are liable to another; or conversely, they may provide a complete exemption from or partial limit on liability for one against the other with respect to damage to be apportioned. Such an indemnity may be express, or it may result from the application of ordinary legal principles regulating contracts of that kind, as, for example, the legal liability to the buyer of a seller of defective goods, as in Mowbray v Merryweather [1895] 2 QB 640 Alternatively, there may be a complete or partial limitation of liability in favour of one of the tortfeasors arising, for example, from agreement as in Alex Kaye Pty Ltd v Fife (1966) 9 FLR 246, 252; or from a specific statutory provision, as in Unsworth v Commissioner of Railways (1958) 101 CLR 73; or, again, it may be the effect of the nature and terms of the contract between them that one of two tortfeasors should contribute a disproportionately larger share than the other to the loss or damage for which both are liable.

28. The present case is an illustration of that kind. In claiming contribution or indemnity from Mr Hurst, Ms Cole alleged a contract between them under which he undertook to do such work and to supply and install parts and equipment as might be necessary and appropriate to cause the oven to safely operate. It was further alleged that it was an implied term of the contract that Mr Hurst would exercise such skill and care in advising Ms Cole and in carrying out the work and supplying and installing parts as was reasonable having regard to gas operated appliances.

29. The contract alleged was, it will be seen, not one that embodied anything in the nature of an absolute warranty that the oven would, after repair, be safe to operate, although it came close to alleging such a state of affairs. In contracts like this for work, labour and materials there is ordinarily an implied warranty, in the absence of special circumstances, that the materials supplied will be reasonably fit for their intended purpose: see Martin v McNamara [1951] St R Qd 225; Helicopter Sales Australia Pty Limited v Rotor-Work Pty Limited (1974) 133 CLR 1. But the installation here of a manually operated valve was not intended by either party to serve as a permanent replacement for the “failsafe” minivalve; and, in that sense, the contract was not for “repair” of the oven according to the ordinary sense of that word as meaning repair by replacement of an inoperative part. On the contrary, as Mr Bain QC for Mr Hurst submitted, the parties agreed that the substitution of the manual valve was to be a provisional measure, which was to last only until it was replaced as soon as the miniset valve became available early in the following week. Mr Hurst in fact duly tendered performance of that part of his contract on the following Monday, but Ms Cole, for reasons of her own, rejected the tender. Had she not done so, the cataclysm that followed might well have been avoided.

30. The defendant Mr Hurst in his defence to these allegations and the claim by Ms Cole did not admit that a contract had been made between them in the terms alleged by Ms Cole. Instead, he set out the substance of the conversations between them leaving it to the court to determine its nature and its terms. He might perhaps have alleged, but did not, that Ms Cole had given a reciprocal promise that the oven and valve would be operated strictly in accordance with the advice given by Mr Hurst for its safe use. Nevertheless, his Honour found that the contract made between them was substantially in the terms alleged by Mr Hurst, except that he rejected the allegation that Ms Cole implicitly assumed all responsibility between the two of them for the risks involved in the course adopted of temporarily installing a manual valve. Instead, his Honour found that in Ms Cole’s interest Mr Hurst should not have proposed that the oven be operated with the manual valve. That advice, said his Honour:

“encouraged her to run what Mr Hurst ought reasonably to have regarded as an unacceptable risk of an explosion with potentially serious consequences, despite Mr Umstad’s proficiency, the assurances that he would work the oven in accordance with Mr Hurst’s instructions, and the brief period during which the [manual] valve would be in use.”

To that extent, his Honour found that the installation of the manual valve breached what his Honour held was an implied term of Mr Hurst’s contract, which was to exercise reasonable care in advising on rectification of the defective oven. “His decisions to recommend”, his Honour also said, “and then to install a valve that was not ‘failsafe’ also involved a departure from the standard of care reasonably to be expected of him”.

31. The first of these two statements expresses Mr Hurst’s liability in contract; the second his liability in tort. It is, in my opinion, a mistake in law to segregate those two forms of liability and arrive at separate and differing apportionments of liability in respect of them. There was only one apportionment to be made under the Act of 1995. It was an apportionment of the loss between the two tortfeasors that by s 7 of the Act was required to be the amount of the contribution “as may be found … to be just and equitable … having regard to the extent of that person’s responsibility for the damage”. In arriving at such a contribution, the court was required to take into consideration all relevant circumstances and to examine the whole conduct of each party, both from the standpoint of culpability and causation. James Hardie & Co Pty Ltd v Roberts (1999) 47 NSWLR 425, 433, 448. Among those circumstances were the terms of the contract between the parties. Both Ms Cole and Mr Hurst were joint tortfeasors who were liable to the plaintiff in respect of the same damage of$160,000. They therefore satisfied the first postulate of s 6(c) of the Act. That being so, Ms Cole was entitled to recover contribution from Mr Hurst “whether as a joint tortfeasor or otherwise”, which included his liability under a contract which his Honour found had been broken by him.

32. The contribution assessed against Mr Hurst as his share of the responsibility for the loss in tort was 15%. Reference was made to the following passage in the joint judgment of Gleeson CJ, McHugh, Gummow, and Hayne JJ in Astley v Austrust Ltd (1999) 197 CLR 1, 37.

“Absent some contractual stipulation to the contrary, there is no reason of justice or sound legal policy which should prevent the plaintiff in a case such as the present recovering for all the damage that is causally connected to the defendant’s breach even if the plaintiff's conduct has contributed to the damage which he or she has suffered. By its own voluntary act, the defendant has accepted an obligation to take reasonable care and, subject to remoteness rules, to pay damages for any loss or damage flowing from a breach of that obligation. If the defendant wishes to reduce its liability in a situation where the plaintiff’s own conduct contributes to the damage suffered, it is open to the defendant to make a bargain with the plaintiff to achieve that end. Of course, the result of such a bargain may be that the defendant will have to take a reduced consideration for its promise to take reasonable care. But the bargain will be the product of the parties’ voluntary agreement to subject themselves to their respective obligations.”

Their Honours were there concerned not, as here, with contribution between tortfeasors but with reduction of damages on account of the plaintiff’s contributory negligence. They proceeded to distinguish the operation of the relevant legislation under which liability is reduced in tort from its prospective operation in contract, by saying (at 37):

“In an action in tort, however, the duty of the defendant to take reasonable care and the obligation of the plaintiff to take reasonable care for his or her own safety or interest are imposed on the parties by law. Absent a contractual situation varying the rights of the parties, it is the general law that defines their rights and liability. It is one thing to apportion the liability for damages between a person who has been able to obtain the gratuitous services of a defendant where the negligence of each has contributed to the plaintiff’s loss. It is another matter altogether to reduce the damages otherwise payable to a plaintiff who may have paid a very large sum to the defendant for a promise of reasonable care merely because the plaintiff’s own conduct has also contributed to the suffering of the relevant damage.

Perhaps the apportionment statute should be imposed on parties to a contract where damages are payable for breach of a contractual duty of care. If it should, and we express no view about it, it will have to be done by amendment to that legislation. If courts are to give effect to the will of the legislature, it is not possible to do so having regard to the terms of apportionment legislation based on the United Kingdom legislation of 1945, and the evil that it was designed to remedy”.

33. There are analogies between the legislation facilitating apportionment between tortfeasors and the legislation providing for reduction of recoverable damages for contributory negligence; but a fundamental difference between the two is, as I have said, that in the case of the former, s 6(c) of the Act envisages that the apportionment will take place against the matrix of the contractual rights and obligations, if any, of the parties that bear upon that process. In tort, the general duty of the defendant to take reasonable care is, as their Honours say, imposed by the law; but it is open to the parties to enlarge or to circumscribe the extent of that duty by the express or implied terms of the contract between them. Those terms are among the circumstances that are to be considered in arriving at a just and equitable apportionment of, or contribution to the loss or damage as between tortfeasors who are parties to such a contract. Where the contract impacts upon and affects the scope of that general duty of care in some relevant way, it must be the duty of care as so affected that governs the apportionment or contribution that falls to be determined under s 7. It follows, in my opinion, that in applying s 7 in a case like this, there will never be two separate and competing assessments of apportionment or contribution, one in contract and the other in tort, between tortfeasors who are jointly liable for the same damage in contract and in tort. There can be only one such assessment that takes into account the effect, if any, of the nature and terms of the parties’ contract upon the duty to take care. That is so in the present case.

34. Having undertaken that exercise for the purposes of assessing Mr Hurst's contribution in tort, there was no occasion to carry out a separate assessment in contract. The nature and terms of the contract between the parties were circumstances of which account was taken in the assessment that was made. The contractual arrangement between them so affected that assessment as to dominate the apportionment that was in fact arrived at. The question remains whether that assessment can stand, or whether, as Mr Couper QC urges, it ought to be altered on appeal. A factor that strongly weighs against the latter course is the traditional reluctance of appellate courts to interfere with such apportionments because of the discretionary character of the process involved at first instance. Given that the course in fact adopted here was the combined result of Ms Cole's representation that she could not afford to close her business; that Mr Hurst satisfied himself that Mr Umstad was competent to operate the manual valve in the manner instructed and understood the importance of doing so; and that Mr Hurst's attempt to install the appropriate minivalve on the Monday before the explosion was rebuffed by Ms Cole, it does not seem to me that an assessment or apportionment of 85:15 was wrong or such as ought in the circumstances to attract revision on appeal. Mr Hurst has not appealed against it, and the only discernible error in his Honour's approach to the question was, as I conceive it to be, that he regarded it as necessary to duplicate the process in contract, although, as it turned out, without affecting the initial assessment arrived at.

35. It follows, in my opinion, that the appeal (no 7772/01) by the appellant Ms Cole against that part of the judgment ordering that contribution to the plaintiffs' damages as between her and the first respondent Mr Hurst be in the proportion of 85 per cent and 15 per cent respectively should be dismissed with costs. It will, however, also be necessary for the appeal to be allowed and the judgment to be varied to such an extent as to ensure that it caters for the additional sum of $25,000 representing the value of Ms Cole's own property lost in the explosion. As to that, there being no question of an apportionment or reduction on account of contributory negligence in the amount of Ms Cole’s own property loss arising from Mr Hurst’s breach of contract towards her (Astley v Austrust (1999) 197 CLR 1), and having concluded that his breach of contract was a cause of that loss, she is entitled to recover the whole amount of that loss agreed at $25,000.

36. From that I turn to the second appeal (no 8074 of 2001), which is an appeal by Wesfarmers Federation Insurance Ltd. It was the insurer under what is described in a Commercial Plan Policy Booklet as a Legal Liability Policy no 02 CPR 9434795 issued to Mr Hurst. The relevant sections of the police headed Section 1 – General Liability declares that "we" – the first plural is used to connote the insurer and the second person to connote the insured –

"… will pay to you all sums … which you shall become legally liable to pay for compensation in respect of:

…

Damage to Property

occurring during the Period of Cover as a result of a happening in connection with the Business."

The limit of the indemnity under this part of the policy was $5,000,000, in return for a premium in 1997 of $455.81. It was not in dispute that Mr Hurst satisfied these requirements; but the policy also incorporated a series of exclusions from general liability, of which one (h) is for claims arising out of a breach of a duty owed in a professional capacity, and another for claims arising out of or caused by treatment prescribed.

37. On the appeal some reliance was placed by Wesfarmers on this particular exclusion; but it is not necessary to reach a final conclusion with respect to its applicability or otherwise because I am satisfied that there is another reason that justifies the insurer's refusal to indemnify Mr Hurst. It is based on the General Conditions of the policy, of which a part is contained in a paragraph entitled Your obligations:

"In addition to any other provisions set out in the Policies you shall:

take all reasonable measures to prevent … damage to property …

take all reasonable precautions for the safety of property insured;

comply … with all statutory obligations, By-laws and Regulations imposed by any Public Authority,"

Subparas (a) and (b) have no direct relevance to the present issue except to the extent that they bear on the interpretation of subpara (c). It will be seen that, unlike(a) and (b), it is not introduced by the words "take all reasonable precautions …". His Honour, however, construed subpara (c) as if it incorporated those words. I am persuaded that such an interpretation is not permissible, and that subpara (c) is to be construed as it stands without importing the phrase in question into it. In other words, the obligation of the insured is to comply with all statutory obligations, etc, and not merely to take all reasonable precautions to do so.

38. The problem for Mr Hurst arises in this way. The supply of gas in Queensland is governed by the Gas Act 1965, under which the Gas Regulation 1989 has been made. Section 80(2B) of that regulation provides that a person shall not in respect of gasfitting or other work, carry out any instruction which is contrary to a provision of that Regulation. What is more important, s 81(1)(b) provides:

"(1) A person shall not

…

install or use or permit to be installed or used any … fitting which is not in compliance with this regulation."

The Regulation specifies a number of requirements, but in s 100(1) of it the following provision appears:

"(1) In addition to the requirements prescribed by this regulation, the standards, rules and codes specified in column 1 of the following table shall be observed and complied with by all persons concerned in the installation, operation and maintenance of appliances, containers, fittings and systems."

Mr Hurst, of course, satisfied the description in s 81(1)(b), and, in fitting the valve to Ms Cole's oven, he was therefore bound by that provision to comply with the standards, rules and codes specified in the table to the Regulation.

39. In this instance the relevant standard in column 1 of the table is AG 601-1989- Installations Code for gas-burning appliances and equipment. The area of application of that standard is defined in column 2 of the table as:

“Design construction location and testing of gas piping systems meters and regulators, fuelling and appliance installation for all fuel gases (except for LP gas installations on caravans and marine craft)."

Clause 5.2.10 of the Gas Installation Code AS601 is as follows:

“5.2.10 Automatic control to fail safe

A control or control system which operates an appliance automatically, or unattended, or by remote control, shall fail safe."

Furthermore, cl 5.2.6 of the Code provides:

“5.2.6 Appliance installation to be safe

Where, as part of an installation, the safe operation of an appliance or the safety of a consumer may be affected by –

not fitting certain components, then these shall be fitted."

The miniset valve was a control system that fulfilled the requirements of cl 5.2.10 in that it would "fail safe". If such a fitting was not installed, the safe operation of the Blodgett oven, or the safety of a consumer, might, within the terms of cl 5.2.6, be affected. There was therefore a statutory duty or obligation under the Gas Regulation 1989 resting upon Mr Hurst to fit that component to the oven. Instead, he installed the manually operated valve, which was, of course, not fail safe.

40. The result is that Mr Hurst was in breach of subpara (c) of that part of the General Conditions of the policy headed Your Obligations. He failed to comply with all statutory obligations and regulations imposed by any public authority, who in this case was the Governor in Council, who, acting under s 64 of the Gas Act made the Regulation in question. I do not see any escape from the conclusion that this has the consequence that he loses the benefit of the cover that would otherwise have been provided under Section 1: General Liability in the Legal Liability Policy issued by Wesfarmers. His Honour considered that such a result might be avoided by regarding s 100(1) of the Gas Regulation as applying only to the installation of appliances and not to their subsequent modification. I am not persuaded that this is so; but, even if it can be so confined, s 81(1)(b) of the Regulation makes it clear that Mr Hurst ought not to have installed a fitting (the manual valve) that was not "failsafe" within the meaning of cl 5.2.10, but ought to under cl 5.2.6 have fitted a component such as a minivalve that would achieve the safe operation of the appliance.

41. On this aspect of the appeal, reference was made to some remarks in the judgment of the Full Court in Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 QdR 162, 173, to the effect that "a simple breach of a regulation or by-law" would not be enough to constitute breach of a policy provision requiring reasonable care to be taken to comply with all regulations and by-laws. As already mentioned, no such qualification ("take reasonable care to comply") appears in subpara (c) of the relevant portion of Section 1 – General Conditions in the present case, and, in my opinion, it cannot be implied. Even if it could be, it would scarcely be correct to regard what happened as a simple breach of a regulation or by-law. It is a statutory provision that is plainly intended to serve the interests and ensure the safety both of consumers and members of the public whose persons and property would be placed at serious risk if it were to be omitted. As events showed here, it was not somewhere at the periphery but at the very centre of the Gas Regulation as a measure designed to guard against the very risk that eventuated.

42. This leads on to another question which was briefly mentioned in the course of the appeal hearing before us. It is whether Ms Cole should be permitted to enforce the contract between her and Mr Hurst. That contract was an agreement between them to do an act (ie install a manual valve) that is declared to be an offence. Section 61(1) of the Gas Act makes it an offence to contravene or fail to comply with any provision of that Act, which by s 7(1) of the Acts Interpretation Act 1954 includes subordinate legislation like the Gas Regulation 1989. By s 542(1) of the Criminal Code, a conspiracy to commit a crime is a misdemeanour, and, by s 22(1) of the Code, ignorance of the law affords no excuse. The civil law does not enforce contracts or agreements to commit criminal conspiracies. How, then, can Ms Cole enforce against Mr Hurst a claim to contribution founded on a contract that itself amounts to a criminal conspiracy?

43. The point was not raised by any of the parties at trial or on appeal, although that is not necessarily a complete response to illegality when on appeal it appears from the face of the record. On reflection, however, there are, I think, two answers to the question posed. One is that s 6 of the Law Reform Act 1995 is quite explicit in saying that contribution is recoverable under s 6(c) where damage is recovered by any person "as a result of a tort (whether a crime or not)." The other is that it is plain from the general nature and provisions of the Gas Act and Gas Regulation that their purpose is to protect the public in general and consumers in particular from contravention of or failure by gasfitters to comply with its provisions. In fact, cl 5.2.6 of Code AG 601-1989 is specific in saying that a component must be fitted if not fitting it may affect the safe operation of an appliance or the safety of a consumer. It would be an odd result, and one that the legislature could hardly have intended, that Ms Cole should be deprived of the benefit of a provision that is so clearly intended to safeguard her from the very thing that, through contravention of the Gas Regulation, happened in this case. It is perhaps a surprising feature of the case that Ms Cole did not, as part of her pleaded case, rely on an implied term or warranty in her contract with Mr Hurst that he would comply with the provisions of the Act and Regulation in carrying it out. Whether, if she had done so, it would have made a difference to the apportionment arrived at is something that it is not necessary to investigate on this appeal.

44. The result is in my opinion that the appeal (no 8074 of 2001) by Wesfarmers must be allowed with costs; the judgment must be set aside with costs; and instead there should be judgment dismissing with costs the third party proceedings against the appellant brought by the respondent second defendant. As regards the appeal (no 7772 of 2001) by the appellant Ms Cole, I have already said that that part of the judgment ordering that contribution to the plaintiffs' damages by that appellant as first defendant and the second defendant Hurst in the proportion of 85 per cent and 15 per cent respectively should be dismissed with costs. There must also be judgment with costs on the magistrates court scale for the appellant Ms Cole for the sum of $25,000 previously referred to, and her appeal against the judgment must to that extent be allowed with costs. Having regard to this and to questions of accrued interest arising since the date of the loss on 5 February 1998, it seems preferable to give the parties in appeal no 7772/01 the opportunity to prepare for submission to this Court within 10 days a form of judgment in money terms that gives effect to these reasons.

45. HELMAN J: I have had the advantage of reading in draft the reasons prepared by McPherson J.A. I agree with his Honour’s account of the facts of the case, with his reasons, and with the orders the President and he propose except as to one matter: Ms Cole’s claim to the agreed sum of $25,000 as damages from Mr Hurst. That claim was originally framed as one for damages for breach of contract and for damages for negligence, but, as the learned trial judge noted, the claim in tort was not pursued: see his footnote 19.

46. The learned trial judge found that Mr Hurst breached an implied term of his contract with Ms Cole that he would exercise reasonable care in advising her on the repair of the oven. Accepting that that finding is correct, I am not persuaded that his Honour was in error in determining that Ms Cole’s claim for damages for breach of contract should fail because there was no causal connexion between Ms Cole’s damage and Mr Hurst’s breach of contract.

47. It is necessary to distinguish, by the application of common sense, between a breach of contract that causes a loss to a plaintiff and one that merely gives the opportunity for the plaintiff to sustain the loss: Quinn v. Burch Bros. (Builders) Ltd [1966] 2 Q.B. 370; Galoo Ltd v. Bright Grahame Murray [1994] 1 W.L.R. 1360 at pp. 1369-1375 per Glidewell L.J., with whom Evans and Waite LL.J. agreed; Jones v. Persal & Co. [2002] Q.C.A. 385 at paras. 54 and 55 per White J.; and Chitty on Contracts, 28th ed. (1999), vol. 1, para. 27-029, pp. 1283-1284. The facts found by the learned trial judge reveal that Mr Hurst’s breach of contract most decidedly fell into the second category. As his Honour observed at para. 45: ‘Mr Hurst’s decisions created the opportunity for Ms Cole or Mr Umstad to bring about the explosion’. It follows that Ms Cole should not recover the $25,000 or any portion of it from Mr Hurst. That result would not follow of course had Mr Hurst merely installed the quarter-turn valve without having been prevailed upon by Ms Cole to do so as a temporary measure, and had he not taken the precautions of explaining how it could be operated safely and satisfying himself that Mr Umstad could operate it satisfactorily in the brief period until the miniset valve could be installed. Since Mr Hurst did take those precautions – which he could reasonably have concluded would be effective for the short time in question - his part in bringing about Ms Cole’s loss receded into insignificance.

48. In the result although Mr Hurst must contribute a small portion of the sum recovered by the plaintiffs, he cannot be treated as guilty of a breach of contract that caused the damage suffered by Ms Cole.