Solicitors:
Moray & Agnew (Appellant)
Mills Oakley Lawyers (Respondent)
File Number(s): 2020/341834
Decision under appeal Court or tribunal: Dust Diseases Tribunal of NSW
Citation: [2020] NSWDDT 12
Date of Decision: 27 November 2020
Before: Scotting DCJ
File Number(s): DDT 2020/155084
[2]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[3]
HEADNOTE
[This headnote is not to be read as part of the judgment]
The appellant, L & A Fazzini Pty Ltd ("Fazzini"), and the respondent, Amaca Pty Ltd ("Amaca"), were defendants to a claim brought in the Dust Diseases Tribunal by a Mr Anton Muskardin who contracted mesothelioma as a result of his exposure to asbestos. A Contributions Assessor determined that Fazzini was liable to pay 60% of damages payable to Mr Muskardin and Amaca was liable to pay 40% of such damages. By consent and without admission of liability, orders were made giving effect to the determination of the Contributions Assessor and the parties paid their respective shares.
Fazzini brought further proceedings in the Tribunal seeking restitution from Amaca of the moneys it had paid to Mr Muskardin. Fazzini contended that in order for Amaca to retain the benefit of the moneys paid by it in accordance with the determination, it was necessary for Amaca to pursue a claim for contribution against Fazzini. Amaca, on the other hand, contended that for Fazzini to establish an entitlement to restitution it was necessary for Fazzini to demonstrate that it had no liability to Mr Muskardin. Scotting DCJ rejected Fazzini's claim on the basis that, although Amaca had gained a benefit at Fazzini's expense (which assumed Fazzini was not liable), it was for Fazzini to make out some "injustice" entitling it to restitution.
Fazzini appealed this decision. Amaca contended that the appeal should be dismissed because no finding was sought below that Fazzini was not liable to Mr Muskardin, despite the primary judge's finding to that effect.
The Court (per White JA, Payne and McCallum JJA agreeing) held:
Per Payne JA, agreeing with White JA at [1] but adding: It is accepted that if a defendant to a claim in the Tribunal joins a cross-defendant, then in any claim by the defendant for restitution, the defendant would have had the onus of proving the cross-defendant's liability. The onus of proof in a claim like the present, where both parties were original defendants, should be no different. To do otherwise would deny coherence to the operation of the Dust Diseases Tribunal Act 1989 (NSW) and the Dust Diseases Tribunal Regulation 2013 (NSW): at [7]-[10].
Per White JA: Fazzini's cross-claim depended on either its alleging and proving that it was not a tortfeasor liable to Mr Muskardin (which it did not seek to do), or on its successfully establishing that Amaca bore the onus of proving that it was: at [70]. But he who asserts must prove. In Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107, the onus of proof remained on the defendants because they had joined the cross defendants; the case did not change but rather affirmed the principle that he who asserts must prove: at [71]. Here, where both parties were original defendants, the onus lay on Fazzini, as the party bringing the claim in restitution.
Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107, considered.
Per McCallum JA, agreeing with White JA at [73] but adding: Fazzini's concession that it would have been open to it to put Mr Muskardin to proof of his claim against Fazzini reflected an acceptance of the decision of the Dust Diseases Tribunal in Broers v Australian Co-Operative Food Limited [2008] NSWDDT 38, which concerned the Dust Diseases Tribunal Regulation 2007 (NSW). The inclusion in cl 56(2) of the 2013 regulation of the additional words "in a separate proceeding" tends to reinforce the conclusion that the onus of proof in cases where apportionment is disputed is on the person making the assertion: at [76].
[4]
Judgment
PAYNE JA: I have read the judgment of White JA in draft. I agree with his Honour's analysis of the primary judge's reasons.
The real question is whether Amaca's notice of contention point, which counsel for Fazzini Mr Walker SC accepted was open to be argued without filing a document, is correct. That is, in circumstances where two defendants are sued by an injured plaintiff in a dust diseases case, and each by settlement or order under a contribution assessment determination (CAD) makes a payment to the injured plaintiff, who bears the onus of proving in a cross-claim seeking restitution that the defendant seeking restitution was not in truth liable to the injured plaintiff.
Fazzini contended that, for the purposes of its cross-claim seeking restitution, in circumstances where the evidence established that Amaca was a tortfeasor, Amaca was required to establish that Fazzini was also a tortfeasor liable to Mr Muskardin in order to be entitled to retain the benefit of Fazzini's $300,000 contribution towards settlement of Mr Muskardin's claim.
If, as the primary judge found, Amaca had gained a benefit at Fazzini's expense by Fazzini paying money to Mr Muskardin when Fazzini had no liability to him, or by paying more than what might be concluded after a hearing was its proper share (thereby relieving Amaca from having to pay its full share), then Amaca's retention of the benefit would be unjust and the appeal must be allowed. Framing the relevant question in terms of this case it is as follows: is Fazzini entitled to recoup from Amaca the money it paid to the injured plaintiff in the settlement, without itself proving that Fazzini had no liability to Mr Muskardin?
Authorities in this Court, in particular Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107, make clear that the purpose of the contributions assessment determination process is to encourage settlement with the plaintiff. To require a defendant to contest liability to the plaintiff at the outset, rather than in a later cross-claim against another defendant or cross-defendant following payment of the settlement sum, would be inimical to the scheme.
For that reason, I was initially attracted to Fazzini's submission that an implication of the scheme was that an original defendant in Fazzini's position was materially indistinguishable from the cross-defendant in Power Technologies.
As White JA explains, the strength of Fazzini's case is that if Amaca had been the only defendant to Mr Muskardin's claim and Amaca had joined Fazzini as a cross-defendant, in any claim by Fazzini for restitution, Amaca would have had the onus of proving that Fazzini was liable to Mr Muskardin. The question posed by this case is whether Fazzini would be in the same position if it had not been sued by the plaintiff as an original defendant but had only been joined as a cross-defendant by Amaca. If the answer is yes, then the reasoning in Power Technologies would apply. Consequently, given that Amaca now admits that it was liable as tortfeasor to Mr Muskardin (and would have been liable for the full amount of damages of $500,000) and given that Amaca also admits that it had not alleged that Fazzini was also a tortfeasor, Fazzini would be entitled to restitution from Amaca of the moneys it had paid to Mr Muskardin.
Upon analysis, however, I have concluded that White JA is correct to conclude that the onus of proof in this cross-claim remained on Fazzini to show that it had no liability to Mr Muskardin. Although not the present case (Amaca having ultimately admitted liability to Mr Muskardin), to test Fazzini's suggested implication arising from the scheme, counsel for Fazzini was asked what the position would be if two defendants sued by a plaintiff in a dust disease case made a payment in accordance with a CAD to settle the claim without admission of liability, and both defendants later made a restitution claim against the other on the basis that it did not admit that it was a tortfeasor liable to the plaintiff.
Senior counsel for Fazzini's principal response was that each defendant could maintain its position of no liability and bring a cross-claim for restitution. In such a case the defendant/cross‑claimant would need to prove that it was not a tortfeasor liable to the plaintiff. I agree with counsel for Fazzini's conclusion. That is, in such a case the onus of proof in making the restitution claim would be placed upon the particular defendant/cross‑claimant to prove that it was not liable to the plaintiff (and the other defendant was so liable).
My problem with Fazzini's claim in the present case is that the scheme comprising the Dust Diseases Tribunal Act 1989 (NSW) and the Dust Diseases Tribunal Regulation 2013 (NSW) would not have a coherent operation if the onus of proof was different in circumstances where, as here, one of two defendants sued by a plaintiff admitted liability to the plaintiff and a CAD ordered both to make a payment. That is, in a subsequent restitution claim, the onus on proof is not different to the example addressed immediately above. That onus of proof remains upon the defendant/cross‑claimant, here Fazzini, to prove that it was not liable to the plaintiff. This is something that Fazzini did not set out to do before the primary judge. By reason of the notice of contention, the orders made by the primary judge were correct.
I recognise that this conclusion has a potentially undesirable consequence, namely that there is an incentive for a defendant in the position of Fazzini to have "required Mr Muskardin to run his claim against it", as Amaca submitted it should have done. In that case Mr Muskardin would have borne the onus of proving that Fazzini was liable to him.
For the reasons given by White JA, however, the onus of proof in a restitution claim brought by one of two defendants sued by a plaintiff who have made a payment to that plaintiff remains on that defendant/cross-claimant. I agree with the orders proposed by White JA.
WHITE JA: This is an appeal from orders of the Dust Diseases Tribunal of 27 November 2020 (Scotting DCJ) (L & A Fazzini Pty Ltd v Amaca Pty Ltd [2020] NSWDDT 12). The appeal lies on a point of law (Dust Diseases Tribunal Act 1989 (NSW), s 32). There is no dispute that the appeal is competent.
The appellant, L & A Fazzini Pty Ltd ("Fazzini"), and the respondent, Amaca Pty Ltd ("Amaca"), were defendants to a claim brought in the Tribunal by a Mr Anton Muskardin who contracted mesothelioma as a result of his exposure to asbestos.
Mr Muskardin pleaded that he was employed by Fazzini from about 1964 to about 1968 as a labourer and sprayer of vermiculite, as a consequence of which he was exposed to and inhaled asbestos dust and fibre.
Amaca was sued on the basis that from about 1978 to 1983, as a self-employed plasterer, Mr Muskardin was exposed to asbestos dust and fibre from his exposure to cement building materials supplied by Amaca.
The claims resolution process provided for by Pt 4 of the Dust Diseases Tribunal Regulation 2013 applied to the claim.
Neither defendant filed a cross-claim seeking to join any other party as a cross-defendant, nor did either defendant file a cross-claim against the other defendant, within the time provided by cl 26 of the Regulation. That did not affect the right of either defendant to pursue a cross-claim in separate proceedings (cl 26(9)).
The defendants did not agree as to the contribution that each was liable to make to the damages claimed by Mr Muskardin. Accordingly, the Registrar referred the matter to a Contributions Assessor. In accordance with cl 53(4) the Contributions Assessor was required to determine the contribution that each defendant was liable to make, and to make that determination on the assumption that the defendants were liable, and solely on the basis of the plaintiff's statement of particulars, the defendants' replies on the claim, and the standard presumptions as to apportionment determined by Ministerial Order. (The relevant order was the Dust Diseases Tribunal (Standard Presumptions-Apportionment) Order 2007).
The Contributions Assessor determined that Fazzini was liable to pay 60% of damages payable to Mr Muskardin and Amaca was liable to pay 40% of such damages.
Fazzini does not dispute that notwithstanding the terms of cl 56(1) of the Regulation it would have been open to it to deny liability to Mr Muskardin and put him to proof. It does not challenge the Tribunal's decision in Broers v Australian Co-Operative Foods Limited [2008] NSWDDT 38.
Clause 53(9) of the Regulation provides:
A determination of a Contributions Assessor under this Division cannot be challenged, reviewed, quashed or called into question before any court of law or administrative review body in any proceedings. This subclause:
(a) is not binding on the plaintiff, and
(b) does not change any law relating to causation as between the plaintiff and the defendants, and
(c) does not displace any law relating to the joint and several liability of the defendants, and
(d) does not prevent the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment in a separate proceeding.
The purpose of the claims resolution process is to facilitate settlement of a plaintiff's claim. That purpose was achieved. On 17 June 2019 orders were made as follows:
"By consent and without admission of liability:
1. Verdict and Judgment for the Plaintiff against the First Defendant and the Second Defendant.in the total sum of $500,000 inclusive of legal costs and disbursements (''the Judgment Sum").
2. The First Defendant and the Second Defendant, agree that the Judgment Sum is to be paid to the Plaintiff:
a. by the First Defendant in the amount of $300,000;
b. by the Second Defendant in the amount of $200,000;
in accordance with the Contributions Assessor's Determination dated 7 February 2019.
…"
Fazzini and Amaca paid their respective shares of the judgment.
Judgment was consented to by both Fazzini and Amaca without admission of liability. In their replies to Mr Muskardin's statement of particulars, both Fazzini and Amaca denied liability. Amaca admitted that it manufactured and supplied Villaboard and compressed fibro, and said that it was one of a number of manufacturers of asbestos cement fibro sheeting.
Fazzini's consent to judgment by Mr Muskardin was given without admission of liability. That judgment created no estoppel against Fazzini's denying it was a tortfeasor (Isaacs v The Ocean Accident and Guarantee Corporation Ltd and Winslett (1957) 58 SR (NSW) 69).
On 4 September 2019 Fazzini filed a statement of claim in a new proceeding (324/2019) against Amaca claiming contribution or indemnity pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).
Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 relevantly provides:
Proceedings against and contribution between joint and several tort-feasors
(1) Where damage is suffered by any person as a result of a tort (whether a crime or not):
…
(c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.
Fazzini does not admit that it was a tortfeasor liable in respect of the damage suffered by Mr Muskardin. It consented to judgment against it but without admission of liability.
In its defence to Fazzini's statement of claim, Amaca pleads that the relief sought by Fazzini assumes that Fazzini is a tortfeasor liable to Mr Muskardin. Amaca pleads that, absent an admission by Fazzini that it is a tortfeasor liable, there is no cause of action for contribution or indemnity available against Amaca.
In its defence to Fazzini's statement of claim Amaca also denied that it was liable to Mr Muskardin. As purported particulars of that allegation it repeated against Fazzini the allegations made by Mr Muskardin against Fazzini in his statement of claim.
On 11 March 2020, Fazzini filed a cross-claim against Amaca in the proceedings commenced by Mr Muskardin (whose claim had been resolved by the consent orders made on 6 May 2019). Fazzini sought restitution from Amaca of the $300,000 it had paid to Mr Muskardin pursuant to the consent orders of 17 June 2019. (Amaca took no point about the late filing of that cross-claim. No issue in relation to cl 26 of the Regulation arose on appeal.)
Fazzini pleaded that Mr Muskardin had alleged:
that he had been exposed to asbestos during the course of his employment with Fazzini and as a consequence of dust emanating from Amaca's products (para 3(b) and (c));
that each caused or materially contributed to his mesothelioma (para 3(d)); and
that both were liable to him in damages as a result (para 3(e)).
Fazzini pleaded its denial that Mr Muskardin had been exposed to asbestos during the course of his employment with Fazzini and its liability to him (para 4). Fazzini pleaded the contributions assessment determination and that Mr Muskardin's claim had been resolved by Fazzini and Amaca agreeing to pay him $500,000 in accordance with the apportionment prescribed by the contributions assessment determination (paras 7-10).
All of those matters were admitted.
Fazzini pleaded that the contributions assessment determination was only an interim or provisional determination of issues of apportionment between Fazzini and Amaca (para 11).
In its defence to Fazzini's cross-claim, Amaca pleaded that the determination was no longer interim or provisional as to the liability of Fazzini in circumstances where Fazzini elected not to defend Mr Muskardin's claim (para 4).
Fazzini pleaded that in order for Amaca to retain the benefit of the moneys paid by it in accordance with the determination, it was necessary for Amaca to pursue a claim for contribution against Fazzini (para 12). Amaca denied this allegation and pleaded that for Fazzini to establish an entitlement to restitution it was necessary for Fazzini to demonstrate at least that it had no liability to Mr Muskardin. It pleaded that Fazzini was estopped from doing so as it had not defended Mr Muskardin's claim (Defence para 5).
Fazzini also pleaded:
"13. Fazzini repeats the allegations made by the plaintiff against Amaca in the plaintiff's amended statement of claim filed on 16 October 2018.
14. Fazzini further says that Amaca was in breach of the duty of care it owed to the plaintiff and that such breach of duty caused the plaintiff's injury, the consequence being that the (sic) Amaca would have been found liable to the plaintiff had the Court determined the plaintiff's claim.
15. In the premises of paragraph 14, and by reason of the principle of solidary liability, Amaca would have been liable for the entirety of the plaintiff's loss, although Amaca would have had the right to seek contribution from any other tortfeasors that would have been liable to the plaintiff for his injury.
16. Amaca has not alleged that Fazzini:
(a) breached any duty of care owed to the plaintiff or otherwise caused or materially contributed to the plaintiff's mesothelioma;
(b) is a tortfeasor that would have been liable to the plaintiff;
(c) is liable to pay contribution to Amaca pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) or for any other reason.
17. In the context of the matters pleaded in paragraphs 12 and 14-15 above, and given that Amaca has not alleged that Fazzini is a tortfeasor that would have been liable to the plaintiff, Amaca is not entitled to retain the benefit of the amount of $300,000 paid by Fazzini in accordance with the Determination.
18. In the premises, Amaca must make restitution to Fazzini in the sum of $300,000."
Notwithstanding the particulars included in Amaca's defence to Fazzini's statement of claim claiming contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, referred to at [31], Amaca admitted paragraphs 13 and 16. It denied paragraphs 14, 15, 17 and 18. It repeated its allegation that to establish an entitlement to restitution, Fazzini was required to demonstrate, at least, that it had no liability to the plaintiff and was estopped from doing so by not having defended Mr Muskardin's claim (paras 6-9).
[5]
Consideration
The claims resolution process that led to the Contribution Assessor's determination is a rough and ready process that provides an interim and provisional determination of Fazzini's and Amaca's liability to contribute to Mr Muskardin's damages. As noted above at [19] the determination was made on the assumption that both named defendants were liable, on the basis of the plaintiff's statement of particulars and the defendants' replies, and by applying the standard presumptions as to apportionment determined by the Ministerial Order.
In QBE Insurance (Australia) Ltd v Wallaby Grip Ltd & Ors [2007] NSWCA 43 (Handley AJA, with whom Hodgson and Campbell JJA agreed), the plaintiff sued one defendant who filed a cross-claim seeking a contribution from two cross-defendants who had not been joined as defendants. The appeal concerned the operation of the Dust Diseases Tribunal Regulation 2001 (NSW) dealing with the resolution of contribution claims. The cross-defendants were bound by the contributions apportionment determination to contribute the determined amounts towards the plaintiff's damages. Handley AJA held:
"[40] Their remedy may be a claim or cross-claim in the Tribunal (cl 42(5)) for restitution for having discharged, by compulsion of law, an obligation for which the defendants on the record were liable. They would have the onus of proving that the defendants should bear a greater share of responsibility than that determined by the Assessor. If they succeeded the defendants would be ordered to refund the difference between the amounts paid by the opponents and their contributions as judicially determined. These views are tentative because the matter was not fully argued."
This observation as to the cross-defendants' onus was obiter.
Power Technologies also concerned a claim for contribution made by the defendants against companies whom they joined as cross-defendants and who had not been joined as defendants by the plaintiff. Sackville AJA said:
"[96] What, then, is the position of a cross-defendant who denies liability but is forced, in consequence of an apportionment determination, to pay the sum assessed and seeks a refund of the contribution overpaid? Division 5 does not directly address this question. However, in Wallaby Grip, Handley AJA considered (at 338-339 [40]) that the cross-defendant would have a remedy in restitution for having discharged, by compulsion of law, an obligation for which the defendants on the record were liable. His Honour thought that the remedy could be pursued by a claim or cross-claim in the Tribunal, but that the cross-defendant would bear the onus of proving that the defendants should bear a greater share of responsibility than that determined by the Contributions Assessor.
[97] I respectfully agree that the cross-defendant has a remedy, but not that it can pursue the remedy only on the basis that it bears the onus of proving that the defendants' share should be greater than that assessed by the Contributions Assessor. If I have construed cll 42 and 44 correctly, Div 5 of Part 4 of the DDT Regulation 2001 is not intended to alter the principles governing contributions among defendants and cross-defendants in asbestos-related claims. Division 5 is intended only to establish a rough and ready procedure for determining contributions solely for the purposes identified in cl 44(1): that is, the settlement or determination of the plaintiff's claim. The object is to ensure that the resolution of the claim of a plaintiff, who is often gravely ill, is not delayed by contribution disputes.
[98] The entitlement of the defendant/cross-claimant to recover the contribution assessed by the apportionment determination, even after settlement or determination of the plaintiff's claim (as Wallaby Grip decides), is intended to achieve the same purposes. A defendant can contribute to the plaintiff's settlement in the knowledge that it is entitled to obtain an order for payment of the cross-defendant's assessed share of the settlement. However, this is an interim or provisional resolution of the apportionment issue, which will become lasting only if the parties accept it as such.
[99] In my opinion, Div 5 is not intended to give the defendant/cross-claimant a forensic advantage by allowing it to obtain an order on the basis of the apportionment determination, discontinue the cross-claim and force the cross-defendant to bear the burden of displacing the Contribution Assessor's determination. If the defendant/cross-claimant pursues the cross-claim to finality, but fails to establish that the cross-defendant is liable to contribute to the plaintiff's damages, the basis of the defendant/cross-claimant's entitlement to retain the moneys paid by the cross-defendant on a provisional basis is removed. The foundation of the defendant/cross-claimant's entitlement to retain those moneys beyond the limited purpose specified in cl 44(2) rests on the merits of its cross-claim against the cross-defendant. If that cross-claim is dismissed, the Tribunal has determined that the cross-claim is without merit and that the defendant/cross-claimant is not entitled to any contribution from the cross-defendant.
[100] In these circumstances, the Tribunal, having disposed of the cross-claim on the merits, can give effect to the cross-defendant's entitlement to be repaid the moneys paid by it under compulsion of law. Sections 10(1), (2) and 11(1A) of the DDT Act confer jurisdiction on the Tribunal to hear and determine proceedings by a tortfeasor liable in respect of damages to a person suffering from a dust related condition, seeking contribution from another tortfeasor. In addition, the Tribunal has jurisdiction under s 11(4) to determine any matter that is ancillary or related to a matter that is the subject of proceedings brought under s 11(1A). This jurisdiction includes claims founded on restitution and certain non-statutory claims for contribution: see Wallaby Grip, at 338 [40]; CSR Ltd v Amaca Pty Ltd [2007] NSWCA 107, at [19]-[20], per Young CJ in Eq (with whom Hodgson JA agreed), cf Mason P, at [1]. The jurisdiction of the Tribunal in matters within s 11(4) of the DDT Act appears not to be exclusive (Amaca Pty Ltd v CSR Ltd [2001] NSWSC 263; 51 NSWLR 476 (Bergin J)), but nothing turns on this for present purposes. Section 22(1) of the CP Act provides that the court (including the Tribunal) may grant to a defendant (including a cross-defendant) such relief against another person (including the cross-claimant) as the Tribunal can grant in separate proceedings. Section 90(1) of the CP Act, as I have noted, permits the Tribunal to make such order as the nature of the case requires.
[101] If a defendant/cross-claimant, having obtained an order for payment of money in reliance on an apportionment determination, seeks to discontinue or otherwise terminate the cross-claim without any intention to pursue it further, the position is essentially the same. A defendant/cross-claimant who seeks to discontinue the cross-claim or does not wish to proceed to a hearing on the merits, does not intend to establish its entitlement to retain the moneys paid to it under compulsion of law. In such circumstances, the Tribunal has the power to ensure that the defendant/cross-claimant does not retain the moneys previously paid to it by the cross-defendant. Thus there is ample authority for the proposition that the Tribunal's broad discretion to grant (or withhold) leave to a cross-claimant to discontinue the proceedings (UCPR, Pt 12 r 12.1) can be exercised in a manner that avoids injustice to the cross-defendant: SCI Operations Pty Ltd v Trade Practices Commission [1984] FCA 52; 2 FCR 113, at 142-143, per Sweeney J; at 161-162, per Lockhart J; at 184-185, per Sheppard J; Trade Practices Commission v Manfal Pty Ltd (No 3) [1991] FCA 650; 33 FCR 382 (Lee J). That power can be exercised so as to grant leave to the defendant to discontinue its cross-claim, but on condition that it repays the moneys to the cross-defendant. In the present case, had the respondents sought leave to discontinue their claims (as they foreshadowed in their motions of 7 November 2008), the Tribunal may well have decided to grant leave, but on condition that the respondents refund to the cross-defendant the amount paid by it pursuant to the Determination.
[102] If a defendant/cross-claimant, having obtained an order against the cross-defendant enforcing the apportionment determination, shows no inclination to proceed with its cross-claim, there may be a question as to whether the Tribunal can force the defendant, against its will, to pursue its cross-claim to a hearing on the merits. But the Tribunal has ample powers under the CP Act to ensure that the cross-claim is finalised one way or another. Moreover, this can be done without undue delay and without prejudicing the position of a cross-defendant who denies the entitlement of the defendant/cross-claimant to retain the moneys paid to it: see CP Act, ss 56(1), (2), (3), 57(1), (2), 59, 61; UCPR Pt 2 r 2.1 (power to give directions), Pt 12, r 12.7 (want of prosecution)."
Although Amaca had denied that it was liable as a tortfeasor, it accepted, on appeal, that it was so liable.
Although Amaca did not file a pleading in which it alleged that Fazzini was a tortfeasor, it did not admit that Fazzini was not a tortfeasor. It made no claim against Fazzini. Rather, it resisted Fazzini's claim for restitution of the amounts that Fazzini had paid towards Mr Muskardin's damages.
Fazzini did not seek to prove that it was not liable to Mr Muskardin. It said that it had no such onus to discharge.
The essential issue between the parties was as to the onus of proof.
This was not how the primary judge addressed the question. His Honour accepted (at [29] quoted at [45] above) that Amaca had gained a benefit at Fazzini's expense because it had to pay less than the full amount of the damages for which it was liable to Mr Muskardin.
This finding assumed both that Amaca was a tortfeasor liable to Mr Muskardin and that Fazzini was not a tortfeasor liable to contribute 60% of the damages.
The primary judge did not address the issue of whether Fazzini was or was not also liable to Mr Muskardin, or who bore the burden of proving that Fazzini was or was not liable. Rather, his Honour held that Amaca was not unjustly enriched by Fazzini's payment because Fazzini could have chosen to defend Mr Muskardin's claim.
Fazzini does not dispute that it could have defended Mr Muskardin's claim ([21] above). But the purpose of the provisions for a rough and ready determination of the proportions in which both defendants and cross-defendants should contribute to an award of damages to the plaintiff is to avoid delays in an assessment, and to allow both defendants and cross-defendants to litigate later who should bear the burden of the damages paid to the plaintiff. If, as his Honour found, Amaca had gained a benefit at Fazzini's expense by Fazzini paying money to Mr Muskardin when it had no liability to him, or by paying more than what might be concluded after a hearing was its proper share, then Amaca's retention of the benefit would be unjust. The scheme of the contributions assessment process is to encourage settlement with the plaintiff. To require a defendant to contest liability to the plaintiff rather than in a later cross-claim against another defendant or cross-defendant would be inimical to the scheme. It would be inconsistent with the observations of Sackville AJA in Power Technologies at [120] that Division 5 of Part 4 of the 2001 Regulation (now Division 5 of Part 4 of the 2013 Regulation) does not have a different meaning when applied to cross-claims between original defendants.
With respect to the primary judge, his Honour did not address the real issue between Fazzini and Amaca. That issue was whether Fazzini could claim restitution from Amaca, whom his Honour implicitly found was a tortfeasor liable to Mr Muskardin, without asserting that it was not a tortfeasor liable.
Sackville AJA's reasoning in Power Technologies was that, where a defendant had brought a cross-claim for contribution against a cross-defendant, the contribution apportionment determination, being only an interim and provisional determination not made on the evidence, did not impose an onus on the cross-defendant to show that it was an innocent party. If a defendant sought to discontinue its cross-claim, having received a favourable contribution apportionment determination, it would need leave. Such leave should only be given if the defendant/cross-claimant paid the cross-defendant the moneys paid by the cross-defendant pursuant to the contribution apportionment determination.
Sackville AJA added:
"[119] The present appeal involves cross-claims between the respondents, the original defendants in the proceedings instituted by the plaintiff, and the appellant, a cross-defendant but not an original defendant in the proceedings. The appellant was compelled to submit to the CRP because it had been joined as a cross-defendant.
[120] The position where original defendants are the subject of an apportionment determination was not the subject of argument. Division 5 of Part 4 of the DDT Regulation 2001 would not have any different meaning when applied to cross-claims between original defendants. The procedural mechanisms for resolving such claims will need to take into account the procedural requirements applicable to cross-claims between original defendants: see cl 21(2)-(4), (8), 41(1), 42(2). The working out of these matters should await a case in which they arise."
The clauses of the 2001 Regulation to which his Honour referred have their equivalents in cll 26(2)-(4), (9), 52 and 53 of the 2013 Regulation.
Sackville AJA did not consider where the onus of proof would lie as between defendants where a defendant who initially denied but ultimately admitted it was a tortfeasor (Amaca), did not itself bring a cross-claim but did not admit that another defendant (Fazzini) was not a tortfeasor.
The issue is whether Fazzini's denial that it was a tortfeasor, and Amaca's ultimate admission that it was a tortfeasor, means that Fazzini is entitled to restitution of the moneys it paid to Mr Muskardin, where Fazzini does not allege and does not seek to prove its innocence.
The strength of Fazzini's case is that if Amaca had been the only defendant and Amaca had joined Fazzini as a cross-defendant, Amaca would have had the onus of proving that Fazzini was liable to Mr Muskardin. Given that Amaca now admits that it was liable to Mr Muskardin (and would have been liable for the full amount of damages of $500,000), should Fazzini be in the same position as if it had not been joined as a defendant but had been joined as a cross-defendant by Amaca? If so, because it was admitted that Amaca had not alleged that Fazzini was a tortfeasor, in accordance with Power Technologies, Fazzini would be entitled to restitution for the moneys it paid to Mr Muskardin.
Ideally questions of onus of proof between defendants and cross-defendants should not depend upon the plaintiff's choice as to whom to sue. But absent findings or admissions as to a defendant's or cross-defendant's liability, the onus of proof will depend upon how proceedings are constituted.
In Power Technologies the onus of proof remained on the defendants because they had joined the cross-defendants. It was fortuitous for the cross-defendants that the plaintiff had not joined them as defendants. In this appeal the primary judge implicitly found that Amaca was liable to Mr Muskardin, and Amaca accepted that it was so liable.
But Fazzini's cross-claim depended on either its alleging and proving that it was not a tortfeasor liable to Mr Muskardin, or on its successfully establishing that Amaca bore the onus of proving that it was. It did not seek to establish the former. Accordingly its claim depended on its establishing that Amaca bore the onus of proof.
Power Technologies did not change the principle that he who asserts must prove. Rather it affirmed that principle. It was because the defendants in Power Technologies were required to join the cross-defendants (they not having been joined as defendants by the plaintiff), that the defendants as cross-claimants bore the onus of proof, rather than the cross-defendants bearing the onus to prove that they were not liable for the amounts determined by the contributions assessment.
Accordingly I would uphold Amaca's oral notice of contention. I propose that the appeal be dismissed with costs.
McCALLUM JA: I agree with the orders proposed by White JA. Subject to the following remarks, which are intended by way of further explanation rather than any qualification to my agreement with White JA, I also agree with his Honour's reasons.
White JA has noted at [21] that Fazzini did not dispute that it would have been open to it to deny liability to Mr Muskardin and put him to proof. My agreement with his Honour's conclusion is not predicated on an acceptance of that proposition, which seems to me to be unrelated to the question of onus as between defendants in a dispute as to apportionment.
Fazzini's concession that an available course was to put Mr Muskardin to proof of his claim against Fazzini evidently reflected an acceptance of the decision of the Dust Diseases Tribunal in Broers v Australian Co-Operative Foods Limited [2008] NSWDDT 38 (Broers). That decision was concerned with the provisions of the Dust Diseases Tribunal Regulation 2007, particularly cl 52. The effect of the contribution assessment in the present case was governed by cl 56 of the Dust Diseases Tribunal Regulation 2013. There is a small but potentially important difference between the wording of the two clauses. Clauses 52(1) and (2) of the 2007 regulation provided that an agreement or determination as to apportionment among defendants was "conclusively binding on the defendants for the purposes of the settlement, or determination by the Tribunal, of the plaintiff's claim and payment of the plaintiff's damages" but "not binding for the purposes of the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment". Clauses 56(1) and (2) of the 2013 regulation were in identical terms save for the fact that the specified effect of a determination on any dispute between defendants as to apportionment was confined to a dispute "in a separate proceeding". The proposed 2013 regulation was foreshadowed in a Regulatory Impact Statement published in July 2013 which explained, enigmatically:
"The words 'in a separate proceeding' have been added to end of clause 56(2) to clarify that a challenge to a contributions assessment is separate proceeding."
The fact that any dispute between defendants as to apportionment is constituted a separate proceeding under the 2013 regulation tends to reinforce the conclusion that the onus of proof in such a case is on the person making the assertion. Whether the decision in Broers warrants revisiting in light of the 2013 amendments is a question for another day.
[6]
Endnote
The effect of s 11(4) is that the Tribunal has jurisdiction to entertain Fazzini's cross-claim for restitution. Section 90 of the Civil Procedure Act provides:
"(1) The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires.
(2) If there is a claim by a plaintiff and a cross-claim by a defendant, the court -
(a) may give judgment for the balance only of the sums of money awarded on the respective claims, or
(b) may give judgment in respect of each claim,
and may give judgment similarly where several claims arise between plaintiffs, defendants and other parties."
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Decision last updated: 14 December 2021
Fazzini did not allege in its cross-claim against Amaca that it was not liable to Mr Muskardin. Counsel for Fazzini submitted to the primary judge that Fazzini did not have to prove that it was innocent and did not seek to do so. Counsel submitted:
"Fazzini does not have to (and does not seek in these proceedings to) "prove" that it is innocent. Fazzini does point to the absence of evidence of the plaintiff (Mr Muskardin) being exposed to respirable asbestos fibre whilst employed with Fazzini. Fazzini also points to the evidence of the plaintiff being exposed to respirable asbestos fibre from Amaca products whilst he was a self-employed plasterer, sufficient to cause or materially contribute to his condition of mesothelioma. On this final hearing of Fazzini' s "Statement of First Cross-Claim" (DDT 257/2018 - filed with leave of Judge Russell on 9 March 2020: CB 219-222) that is sufficient for an order to be entered ordering full restitution to it by Amaca of the $300,000 (a sum consistent with the contributions assessment determination) and paid by Fazzini on a "without admissions" subsequent to the consent order of 17 June 2019."
Over Amaca's opposition Fazzini's cross-claim was fixed for a separate hearing. The primary judge observed that Fazzini had pressed to have its "restitution claim" heard first because it contended that it could be decided on the pleadings and by legal argument ([2]).
Notwithstanding Fazzini's contention that the cross-claim could be decided on the pleadings, it adduced some evidence directed to showing that Amaca was a tortfeasor and to indicate that there was an absence of evidence suggesting that Fazzini was a tortfeasor. In regard to the former issue, Fazzini tendered notices under s 25B of determinations made in other proceedings as to Amaca's liability for the supply of asbestos products. In regard to the latter issue, Fazzini tendered the transcript of evidence given by Mr Muskardin before a mediator following the settlement of the claim. That evidence was taken in accordance with cl 43(1) of the Regulation. Mr Muskardin's evidence was to the effect that he did not know whether or not the vermiculite he sprayed when employed by Fazzini contained asbestos.
In oral submissions before the primary judge, counsel for Fazzini relied on the decision of this Court in Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107. He submitted that the effect of that decision was that where a tortfeasor (Amaca) received the benefit of a payment through the claims resolution process, by another party that did not accept that it was a tortfeasor, that other party did not have to prove that it was innocent, if the tortfeasor did not positively prosecute a claim to vindicate its entitlement to retain the benefit of the payment. Rather, pursuant to s 90 of the Civil Procedure Act 2005 (NSW) and s 11(4) of the Act, the Court may make orders requiring the tortfeasor (Amaca) to pay Fazzini the contribution that it made pursuant to the Contribution Assessor's determination. [1] Fazzini submitted that this was a consequence of the scheme provided by the Regulation for the interim or provisional determination of the liability of defendants or cross-defendants to contribute to the plaintiff's claim. It did not rest on any "equitable basis" or need to prove unjust enrichment, unjustness or innocence. Fazzini submitted that the onus remained with Amaca to prosecute a cross-claim which it had not done.
The primary judge did not accept this analysis of the effect of Power Technologies. His Honour said:
"[23] A defendant is liable to make restitution wherever the circumstances indicate that the receipt or retention of a benefit obtained by the defendant from the plaintiff is unjust. The elements of restitution are:
(a) the existence of a benefit or enrichment in the defendant's hands;
(b) which benefit was gained at the plaintiff's expense;
(c) the existence of some "unjust" factor justifying restitution: Sempra Metals Ltd v Inland Revenue Commissioners [2008] 1 AC 561 at 584 (Lord Hope, Lord Walker agreeing).
…
[27] Although injustice is to be determined on the facts of each case, there must be a recognised basis for the conclusion: Farah Constructions at [150].
Established bases for restitution include:
(a) mistake of fact or law;
(b) compulsion including duress;
(c) total failure of consideration; and
(d) acceptance of benefit.
…
[29] I am satisfied that Fazzini can establish the first and second elements of restitution for the reasons that follow. The plaintiff sued Fazzini and Amaca for indivisible damage. He was entitled to have the entirety of any judgment satisfied in full by either of the defendants. The fact that the plaintiffs damages were paid in the proportions set out in the CAD demonstrates that Amaca received a benefit by paying less than the full judgment sum to the plaintiff and that benefit was at Fazzini's expense because it paid the remaining amount, thereby satisfying a joint liability to the plaintiff.
[30] In order to establish injustice, Fazzini relied on the application of Power Technologies. In my view, Power Technologies should be distinguished and Fazzini has failed to establish the third element of restitution for the reasons that follow.
[31] Fazzini voluntarily agreed to settle the plaintiff's claim by agreeing that it was liable to pay an amount towards the plaintiff's damages. At the time that Fazzini agreed to settle it had denied liability, represented that it could present oral and documentary evidence to prove it did not expose the plaintiff to asbestos and had sufficient knowledge of the processes at the factory in 1964 to 1968 to comprehensively brief its legal representatives. It was open to Fazzini to require the plaintiff to prove his case by proceeding to trial. Nothing in the Regulations affected Fazzini's right to do so. The Regulations did not require Fazzini to pay the plaintiff any amount by reference to the CAD or otherwise, unless Fazzini agreed to do so or was found liable to the plaintiff by the Tribunal after a hearing on the merits of the plaintiffs claim.
[32] In contrast, PT as a cross-defendant in Power Technologies was not in a position to participate in negotiations with the plaintiff, or to require a hearing on the merits of the cross-claim before it was legally obliged to pay the amount apportioned to it by the CAD. The Court of Appeal's obiter reasoning in Power Technologies is based on a simple unjust enrichment analysis, which is a recognised basis for establishing the injustice element of restitution. EA and Eraring received a provisional benefit from PT by operation of the CRP, but could not treat PT's contribution as permanent without PT's agreement or a hearing on the merits of the cross-claims, neither of which had occurred in that case. If EA and Eraring could have permanently retained the benefit of PT's contribution to the CAD, each would have been unjustly enriched because PT would have been obliged to contribute to the settlement with the plaintiff without EA and Eraring establishing that it was liable to do so.
[33] In the present case, it is clear that Fazzini has suffered no injustice. Fazzini finds itself in a position of its own making. It voluntarily agreed to settle with the plaintiff and thereby it became legally obliged to pay the plaintiff an amount in damages. It did so as a considered compromise with the benefit of legal advice, notwithstanding its denial of liability. When it agreed to a judgment against it in favour of the plaintiff, it became liable by operation of the Regulations to pay the apportionment assigned to it by the CAD. The CAD apportionment remains a provisional position and can still be challenged by Fazzini in the s 5 cross-claim, potentially to the extent of a complete indemnity. The effect of Fazzini's settlement with the plaintiff, which it voluntarily agreed to and must have been known to it at the time of the agreement, is that it cannot subsequently deny that it would have been liable to the plaintiff in damages for some amount, if it had been sued by him.
[34] Amaca's position is that it has not sought to disturb the apportionment provided for by the CAD, but nothing turns on that. Fazzini has exercised a legal right open to it by commencing the s 5 proceedings in which it bears the onus of establishing an entitlement to contribution and the appropriate apportionment between the defendants. The submission that Power Technologies is authority for the proposition that Amaca has assumed an onus to prove that it is entitled to retain the benefit received by it by operation of the CRP is misconceived. In this case, Fazzini has agreed that it is liable to the plaintiff in damages and the extent of that liability is to be determined in the s 5 proceedings."
The primary judge also held that Amaca had additional defences to the claim of election and estoppel ([36] and [37]). On appeal Amaca did not seek to uphold that part of the primary judge's reasons.
The primary judge dismissed Fazzini's cross-claim with costs. On 3 February 2021 the primary judge ordered that Fazzini pay Amaca's costs on the ordinary basis up to 31 July 2020 and thereafter on the indemnity basis (L & A Fazzini Pty Ltd v Amaca Pty Ltd [2021] NSWDDT 1). This order was made on the basis of an offer of compromise served by Amaca.
Amaca supported the primary judge's orders on different grounds. Fazzini accepted on appeal that this court should entertain those submissions without the need for the filing of a notice of contention. Amaca submitted that the appeal should be dismissed because no finding was sought below that Fazzini was not liable to Mr Muskardin. In essence, Amaca's oral notice of contention turns on the onus of proof.