Krobar Investments Pty Ltd v Wallaby Grip

Court of Appeal (NSW)|2005-10-31|Before: Curtis J

CITATION : Krobar Investments Pty Ltd v Wallaby Grip (BAE) Pty Ltd; (in liquidation) (Re Daniels) [2005] NSWDDT 58

Krobar Investments Pty Ltd (cross-claimant) PARTIES : Wallaby Grip (BAE) Pty Ltd (in liquidation) (cross-defendant)

LEGISLATION CITED: s5(1)(c) Law Reform (Miscellaneous Provisions) Act 1946

Rolls Royce Industrial Power (Pacific) Ltdv James Hardie & Co Pty Ltd (no 4) 18 NSWCCR 653; Re Hunt: ex parte Sean Investments Pty Ltd (1979) 180 CLR 322; James Hardie & Co Pty Ltd v Roberts (1998) 47 NSWLR 425; CASES CITED: Wallaby Grip Ltd v State Rail Authority (NSW) &Ors (2001) 21 NSWCCR 650; Rolls Royce Industrial Power (Pacific) Ltd v James Hardie &Coy Pty Ltd [2001] NSWCA 461; Maxfield v Llewellyn [1961] 1 WLR 1119

FOR CROSS-CLAIMANT: Mr DRJ Toomey instructed by Hicksons LEGAL REPRESENTATIVES: FOR CROSS- DEFENDANT: Mr DJ Russell SC instructed by Middletons Lawyers

Dust Diseases Tribunal of New South Wales Matter Number DDT 452 of 2003/3 (Re: David Charles Clifford Daniels) Krobar Investments Pty Limited (Cross-Claimant) v Wallaby Grip (BAE) Pty Ltd (in liquidation) (Cross-Defendant) 9 November 2005

JUDGMENT CURTIS J The claim

Pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946, Krobar Investments Pty Limited (Krobar) claims from Wallaby Grip (BAE) Pty Ltd (in liquidation) (BAE), a supplier of asbestos products, contribution to a judgment entered against Krobar in favour of a former employee, David Charles Clifford Daniels, in the sum of $100,000.
Mr Daniels sued both Krobar and another employer, Bluescope Steel (AIS) Pty Limited (Bluescope), for damages, after contracting the disease of mesothelioma in consequence of exposure to asbestos dust and fibre in the course of his employment with each of them. This litigation was concluded by the entry of separate judgments against each defendant, that against Bluescope being in the sum of $250,000. Agreed facts
During his employment with Krobar, Mr Daniels was not exposed to asbestos fibre liberated from BAE's products, however the asbestos products to which he was exposed in his employment with Bluescope were as to 60 per cent supplied by Amaca Pty Limited (formerly James Hardie and Co Pty Limited), and as to 40 per cent supplied by BAE. In consequence, conceding breach of duty, BAE accepts that, if sued, it would have been held liable to Mr Daniels for the same damage the subject of the judgment against Krobar. Earlier proceedings
Cross claims between Bluescope and Krobar were, after the entry of the separate judgments, dismissed by consent.
Cross claims by both Bluescope and Krobar against Amaca and BAE have resulted in Bluescope's recovering $90,000 from Amaca and $50,000 from BAE. Krobar has recovered $45,000 from Amaca. In the result Krobar presently bears a net liability of $55,000 in respect of the plaintiff's total damages of $350,000. The issue
Should BAE contribute further to Krobar although Mr Daniels was not exposed to any of BAE's products when he was employed by Krobar? Relative contributions to the plaintiff's fibre burden
Mr Daniels was employed by Bluescope as a labourer to work at its Port Kembla premises between 21 September 1970 and 7 April 1971. He was, between some later day in April 1971 and about November 1972, employed by Krobar as a painter, 95 per cent of his work being performed at the Port Kembla premises of Bluescope.
While in the employment of Bluescope, Mr Daniels was exposed to asbestos in the maintenance and repair of furnaces and coke ovens. With Krobar he was exposed when he scraped and sanded asbestos cement sheets in preparation for painting. Thirty per cent of his time was spent painting asbestos cement sheets and 50 per cent of that time was spent in the preparatory work. In addition to this exposure, Mr Daniels was exposed in the course of his employment with Krobar to asbestos fibre liberated by the activities of carpenters and laggers who worked at times in his vicinity.
Mr Daniels estimated that 60 per cent of his exposure to asbestos occurred during his employment with Bluescope and 40 per cent during his employment with Krobar. This assessment is consistent with the balance of the evidence given in his trial and I accept it as a reasonable apportionment of the causal contributions made to his disease in the respective periods of employment.
By deduction, the breach of duty by BAE contributed 24 per cent (40 per cent of 60 per cent) to the plaintiff's total fibre burden. The breach of duty by Krobar contributed 40 per cent. The primary question
To what matters may I have regard in assessing contribution pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946? Section 5(2) of the Act provides: In any proceedings for contribution under this section 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; ….

Mr Toomey for Krobar submits that I may have regard only to the judgment against Krobar and the relative causal contributions and culpability of BAE and Krobar, to the exclusion of all other facts and considerations which may bear upon the justice and merits of the case.
I believe this submission to be wrong. A legislative direction that a decision maker "have regard to" specified matters requires that he or she take into account those matters and "give weight to them as a fundamental element in his determination". He or she is not bound to reach his or her decision exclusively by reference to those matters: Re Hunt; ex parte Sean Investments Propriety Ltd (1979) 180 CLR 322.
Mr Russell SC for BAE submits that in determining the amount of contribution recoverable by Krobar, if any, I may have regard to: (1) the fact that the liability of Krobar to which it claims contribution was, as to causation, entirely referable to the period when Krobar employed the plaintiff during which he was not exposed to any of BAE's products (causation) ; (2) the $50,000 contribution made by BAE to Bluescope in respect of the plaintiff's damage (prior contribution); and (3) the contributions which Bluescope, Amaca and BAE have already made to the total amount of the plaintiff's judgments in comparison with the outstanding liability of Krobar (Overall proportionality). I accept the first two of these these propositions and reject the third. Apportionment if I were to accept Krobar's submissions
Against the possibility that Mr Toomey may be correct I propose to record appropriate findings. A preliminary question
How is the contribution of Amaca to Krobar to be included in the calculation? One approach is to require that, after the relevant contribution from BAE to Krobar's judgment liability of $100,000 is assessed in dollar terms, there should be deducted from that sum $45,000, being Amaca's contribution to Krobar, and judgment entered against BAE for the balance, if any. An alternative approach is that the $45,000 be first deducted from Krobar's judgment liability of $100,000, and the balance of Krobar's liability, $55,000, be then apportioned between Krobar and BAE, with judgment being entered against BAE for the amount corresponding to its proportional liability for this lesser sum.
The different approaches give rise to very different results. By way of example, if a cross-claimant is liable to the plaintiff in the judgment sum of $100,000 and has received a contribution of $50,000 from another tortfeasor who is a stranger to the instant cross-claim, then, if the liability is apportioned 50-50 as between the cross-claimant and cross-defendant now before the court, then, on the first approach, the cross-claimant after deduction of the stranger's contribution, fails altogether in its cross-claim. On the second approach, upon the same assumptions, the cross-claimant would be entitled to judgment against the cross-defendant in the sum of $25,000.
On the first approach, it is the cross-defendant in every case who receives the benefit of the contribution to the cross-claimant from a potential cross-defendant not before the court. On the second approach, it is the cross-claimant who receives the benefit of such a contribution made to it as a result of its persuasive or litigious efforts.
In Rolls-Royce Industrial Power (Pacific) Ltd v James Hardie and Coy Pty Limited (No4) (1999) 18 NSWCCR 653 the parties proceeded upon the basis that the second approach was appropriate. The Court of Appeal in considering other matters did not demur from the orders which I made in consequence.
Although the alternative was raised in discussion, Mr Toomey conducted the case for Krobar upon the first basis. He said that "We want contribution to $100,000 giving credit for the amount we have already received from Amaca, yes, Your Honour." (Transcript page 12 line 47; see also Transcript page 47 line 26). Mr Russell SC directed no submissions to this question and, after some hesitation, I have concluded that the adoption of my own view in order to resolve the dispute as it has been presented by the parties would in the circumstances constitute a breach of the rules of procedural fairness.
If Krobar is entitled to any contribution from BAE, then it is BAE who is to have credit against that contribution for the sum of $45,000 contributed by Amaca. Apportionment
Upon my earlier findings, 40 per cent of the total causative exposure of Mr Daniels to asbestos was in the employment of Krobar, and the products of BAE were implicated in only 24 per cent of that total exposure.
Although BAE may have had actual knowledge of the risks against which it was its duty to guard, the evidence is silent as to what Krobar knew of those risks. That circumstance makes it difficult, without conjecture, to assess the relative culpability of BAE and Krobar on this significant matter. Krobar bears the onus of establishing material facts sufficient to permit the relative assessment. Similarly there is no evidence as to the relative size of Krobar's undertaking although I accept that it was probably a relatively small concern.
Nevertheless upon the basis that it was the business of BAE to manufacture and trade asbestos products and that of Krobar to undertake painting contracts I regard BAE as more culpable than Krobar.
In the light of the relevant causal potency of each breach of duty, and the extent to which each departed from the standards of a reasonable man, I apportion the liability equally between BAE and Krobar.
Such an apportionment would result in BAE bearing responsibility for one half of $100,000, that is $50,000, less credit for $45,000 being Amaca's contribution, and a net liability to Krobar of $5,000. The merits of BAE's contentions Causation
This was a case in which causation could not be demonstrated but was to be inferred from exposure to risk. In James Hardie and Coy Pty Ltd v Roberts (1998) 47 NSWLR 425 Sheller JA said at 448: In cases of this sort, where causation is proved by evidence of exposure to risk and there is a rational basis for distinguishing between the degrees of exposure, it is not correct to say that there is no rational basis for the division of causation. Nor, indeed, should the conventional regard to culpability and causation obscure the need to examine the whole conduct of each party, an examination of which in circumstances of inability to quantify comparative causal potency could itself lead to differential responsibility by regard to the degree of exposure to risk.

The liability of Krobar was, before agreement with Bluescope and settlement with the plaintiff, at large, and Krobar was liable for the whole of the plaintiff's damage. Had Krobar satisfied a judgment for the whole of the damage it may have fairly claimed contribution from BAE. However, in coming to terms with Bluescope and the plaintiff, Krobar implicitly accepted a liability discretely referable to, and only referable to, its own breach of duty. This inference is supported by a letter from Krobar's solicitor to the solicitors for BAE dated 27 April 2005 in these terms: We refer to your letter dated 21 April 2005.

Cross Claims issued by Krobar against Bluescope and Bluescope against Krobar were dismissed with no order as to costs.

The total settlement with the plaintiff was $350,000 inclusive of costs to which Krobar contributed $100,000 inclusive of costs.

The plaintiff swore an affidavit on 26 March 2004 estimating that 60% of his exposure to asbestos dust and fibre occurred while he was employed by BHP and 40% occurred while he was employed by Krobar.

Having considered all relevant matters including but not limited to the competing duties owed by Bluescope and Krobar to the plaintiff at different times, the extent to which the conduct of Bluescope and Krobar departed from the standard of care required, the respective size of their operations, the intensity of the plaintiff's alleged exposure, it was considered that contribution of approximately 28.5% by Krobar was appropriate.

The present amount of Krobar's liability is coloured by its implied admissions as to the causal contribution of its own breach of duty and its perceptions of the causal contribution by Bluescope. As Mr Russell put it in submissions … these two employers have recognised that each has made a material contribution to the disease and that each have turned around and picked a figure which reflects their contribution, and which also, I might say, reflects their perception of the other employer's contribution

The limited liability to the plaintiff to which Krobar subjected itself by agreement with Bluescope did not expand beyond Krobar's own perceptions as to the relative causal contribution made to Mr Daniels' total fibre burden in the course of his employment with Krobar in comparison with the causal contribution made in the course of his employment with Bluescope. 30. In Roberts v James Hardie and Coy Pty Limited (DDT 15 of 1997 unreported 22nd August 1997) I apportioned liability exclusively by reference to causation (culpability being equal), an approach approved by the Court of Appeal in James Hardie and Coy Pty Ltd v Roberts (1998) 47 NSWLR 425. 31. In Wallaby Grip Ltd v State Rail Authority (NSW) & Ors (2001) 21 NSWCCR 650 at 664, Priestley JA considered the contributions Hardies and Wallaby Grip, both suppliers of asbestos products, should make to a cross claimant Ampol, who employed the plaintiff at a later time than another tortfeasor, SRA, which was also responsible for the plaintiff's damage. He there said: It was against that background that (the trial judge) had to consider Ampol's contribution claim against Hardie and WG, each of whom he had found, in my opinion correctly, was an "other tortfeasor" within s5(1)(c). In considering the comparative responsibility of the three tortfeasors, Ampol, Hardie and WG for the same damage and then deciding what amount it would be just and equitable for Hardie and WG to contribute to Ampol, it was then open to the trial judge to take into account his view of the extent of Ampol's material contribution to Mr Rayner's mesothelioma in comparison to that of the other tortfeasors. This is what Curtis J did in James Hardie and Co Pty Ltd v Roberts and which this court approved of on appeal: (1999) 47 NSWLR 425. In my respectful opinion Curtis J should have done the same thing in the present case.

For reasons earlier expressed, I regard BAE's breaches of duty to the plaintiff as more culpable than those of Krobar. That factor however, is to my mind cancelled by the circumstance that, although BAE's breaches were causative of the plaintiff's damage, they were not causally related to the discrete and separate liability which Krobar bears to the plaintiff and to which it now seeks contribution.
I accord due weight to the extent of BAE's responsibility for the plaintiff's damage. However, I am of the opinion that in all the circumstances, which include the discrete period of the causal contribution by BAE, the separate liability of Krobar to the plaintiff, which, in its own assessment, is not referable to any period when the plaintiff was exposed to the products of BAE, and the contribution by BAE to Bluescope in respect of the period when the plaintiff was so exposed, it would not be just or equitable that BAE should contribute to the liability of Krobar.
The refusal of an order for contribution does not, in a case such as this, raise the conceptual problems which occur when a tortfeasor/cross-defendant, liable to the plaintiff, not vicariously, but for a personal and culpable breach of duty, submits that it should be exempted from liability to a cross-claimant. BAE is not exempt from liability to the plaintiff. It has paid $50,000 in respect of his damage.
Against the event that I am wrong in this conclusion I will address the further arguments of BAE. Prior contribution
In Rolls-Royce Industrial Power (Pacific) Ltd v James Hardie and Coy Pty Limited; re Hay (DDT 34 of 1999 unreported 16 August 1999) I held that a payment by a cross-defendant/tortfeasor in contribution to a cross-claimant's liability to the plaintiff conferred on that tortfeasor a right of action pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 to claim contribution to that payment from another tortfeasor who is, or if sued would be, liable to the plaintiff in respect of the same damage.
If I am right in my conclusion as to the relevance of causation to apportionment, then the contribution made by BAE to Bluescope is not in respect of exactly the same damage as that to which Krobar seeks contribution. BAE, if it were to seek contribution from Krobar, would encounter the same bar to recovery. If however the problem is approached on the basis that the plaintiff's injury and damage is indivisible for all purposes then Bluescope, Krobar, Amaca and BAE are each tortfeasors liable to him for the whole of his damage. There is no suggestion that verdicts totalling $350,000 were unreasonable as compensation for that damage. The actions of Bluescope and Krobar in distributing the burden of judgments between themselves do not bind the cross defendants (Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Coy Pty Limited [2001] NSWCA 461) and BAE has already contributed to satisfaction of that damage the subject of Krobar's claim to contribution.
Maxfield v Llewellyn [1961] 1 WLR 1119, upon which Krobar relies, is authority for the proposition that an order pursuant to s5(1)(c) may be made apportioning liability between any two or more tortfeasors although there be another tortfeasor not before the court. It is not in terms authority for the proposition that a prior contribution made by a tortfeasor/cross-defendant to another tortfeasor liable for the same damage may not be taken into account in determining the apportionment which is just and equitable between the parties who are before the court.
If a receipt of contribution by another tortfeasor to the cross-claimant is to be taken into account, it seems reasonable that a payment made by the cross-defendant to another tortfeasor in respect of the same damage should also be taken into account.
The sequential determination of cross claims can give rise to potential injustice. Take for example three tortfeasors whose responsibility for a plaintiff's damage is equal. If the plaintiff proceeds only against TF(1) and recovers judgment in the sum of $100,000, TF(1) may then recover $50,000 from TF(2), their responsibility being equal. TF(1) and TF(2) may then proceed against TF(3) and recover $25,000 each, again on the basis that the responsibility is equal. In the result TF(1) and TF(2) each bears $25,000 of the plaintiff's judgment and TF(3) bears $50,000. If, however, TF(3) is permitted to bring into account payments made to other tortfeasors, he may pay to TF(2) $16,666 and assert at the trial of TF(1)'s claim against him for one half of $50,000, that justice and equity require a contribution not of $25,000 but of $16,666 only. Each tortfeasor would then bear one third of the plaintiff's damages.
In the present case the payment of $50,000 by BAE to Bluescope conferred on BAE a statutory right to claim contribution to that sum from Krobar, a tortfeasor who is by judgment liable to the plaintiff for the same damage, although not in the same amount. Although BAE have not pleaded this counter claim, the facts upon which it is based have been led without objection and their import has been the subject of debate. I believe I am entitled to take into account the legal consequence of those facts in considering that which is just and equitable in apportioning the liability of Krobar.
Apportioning liability 50-50, for reasons already expressed, BAE would be liable to contribute $50,000 to Krobar. In respect of Krobar's liability to the plaintiff, BAE is to have credit however for $25,000, being one half of the $50,000 which it has paid to Bluescope, and a further credit of $50,000 in respect of the contribution by Amaca to Krobar. In the result the liability of BAE to Krobar is extinguished. Overall proportionality
The third submission by BAE is that I have regard not only to the whole of the plaintiff's damages fixed in the sum of $350,000, but also to the extent of responsibility, and the contributions made to the plaintiff's damages, by Bluescope, Amaca and BAE compared to the extent of responsibility and the contribution which Krobar is presently liable to make to those damages.
To the total judgment sums of $350,000, Bluescope has now contributed $110,000 (31.4 per cent), Amaca has contributed $135,000 (38.6 per cent) and BAE has contributed $50,000 (14.3 per cent) leaving a balance of $55,000 (15.7 per cent) to be paid by Krobar.
It is BAE's contention that, having regard to Krobar's responsibility for the plaintiff's damage, which in BAE's contention exceeds 15.7 per cent of total responsibility, and BAE's previous contribution of 14.3 per cent to that damage, it would be neither just nor equitable that Krobar should recover further contribution from BAE. That is, Krobar is already contributing less than its fair share to the plaintiff's damage and it would not be reasonable that it recover more from BAE.
I cannot accept this argument. The effect of a tortfeasor/cross-claimant obtaining generous contributions from other tortfeasors is merely to reduce the outstanding balance to which it later seeks contribution. If a tortfeasor/cross-defendant has not previously contributed it shares in the good fortune of the cross-claimant. If that tortfeasor/cross-defendant has already contributed to another tortfeasor in respect of the damage, it is that factor alone which is relevant to the apportionment between the cross-claimant and the cross-defendant; not the contributions of other tortfeasors. The cross-defendant cannot avoid contribution by arrogating to itself the fruits of the cross-claimant's previous exertions in securing contribution. A cautionary note
This judgment does not constitute the determination of any general issue for the purpose of s25B of the Dust Diseases Tribunal Act 1989. There are circumstances, illustrated by Mr Toomey in discussion, in which the negligent supplier of asbestos products to one employer of a plaintiff contracting an asbestos related disease may be fairly called upon to contribute to the liability of another employer who did not use those products. Orders
Judgment for the cross-defendant Wallaby Grip (BAE) Pty Ltd (in liquidation). Order the cross-claimant to pay the costs of the cross-defendant. Mr DRJ Toomey instructed by Hicksons appeared for the cross-claimant Mr DJ Russell SC instructed by Middletons appeared for the cross-defendant

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.

(2001) 21 NSWCCR 650

(1999) 18 NSWCCR 653

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