Consideration
29 For the following reasons, I would dismiss both interlocutory applications.
30 As noted above, the argument that there is no utility in the declaratory relief sought against AJM and Labpoint was previously considered and rejected in granting leave to file the cross-claims. In particular, consistently with the approach taken by Kenneth Martin J in Fudlovski (No 2) at [41]-[43], I saw important practical advantages in an alleged concurrent wrongdoer being made a party in the proceedings in order that issues of apportionment could be meaningfully assessed and determined. I was also concerned to minimise the risk of a multiplicity of proceeding or inconsistent findings if the applicants were subsequently to seek relief against either or both AJM and Labpoint. Of course, it remains a matter for the party joined under the cross-claim to determine whether or not they wish to participate in the proceeding.
31 Mr Cox SC emphasised that the Court's attention had not been drawn to authorities such as Miletich, which support his argument that a declaration that a cross-respondent is a concurrent wrongdoer is unnecessary. A similar approach was adopted by Finkelstein J in BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 2) [2008] FCA 1656 (BHPB). Mr Cox also drew my attention to some recent observations by Nicholas J on this topic in Rivercity Motorway Finance Pty Ltd (Administrators Appointed) (Received and Managers Appointed) v AECOM Australia Pty Ltd (No 2) [2014] FCA 713 (Rivercity), which was handed down after my earlier interlocutory judgment. In that case declaratory relief was sought against various cross-respondents relating to proposed contribution claims and apportionment defences. Justice Nicholas held that the apportionment declarations served no useful purpose and he adopted the approach taken by Finklestein J in BHPB Freight.
32 In BHPB Freight, Finklestein J observed at [12] that a dispute between concurrent wrongdoers about proportionate liability "is a dispute without any legal significance". As noted above, his Honour refused leave to the respondent (Cosco) to bring a cross-claim against a third party (Seascope) seeking an order that Cosco's liability to the applicant (BHBP) was limited because it was an apportionable claim under s 87CD of the TPA. The only claim by BHBP brought against Cosco in that proceeding was a claim for damages pursuant to s 82 for a contravention of s 52 of the TPA, which plainly was an apportionable claim. His Honour held that although it would be necessary to determine proportionate liability between Cosco and Seascope in relation to the claim for damages under s 82, it did not follow that Cosco could raise an issue against Seascope in its own claim. His Honour observed at [10] that, with few exceptions, a plaintiff is only permitted to bring an action to enforce some right against, or to restrain the commission of some wrong by, the defendant. He said that Cosco's defence that it was only proportionately liable under the TPA for the damages claimed by BHPB involved a dispute between those two parties, which did not affect the rights or obligations of Seascope. His Honour stated at [11] that, even if Cosco was able to shift some of the blame to Seascope, that conferred no right in Cosco against Seascope that could be enforced in a court. His Honour then summed up the position in [12] in the following terms:
It is, I suppose, theoretically possible for Cosco to bring an action against Seascope seeking a declaration that as between Cosco and Seascope their liability to BHPB is proportionate and ask for a determination on what those proportions are. The jurisdiction to grant declaratory relief is available though there has been no contravention of rights or breach of obligations: Forster v Jododex Australia Pty Limited (1972) 127 CLR 421. It is sufficient if there be a legal controversy between the parties to the suit. But in this case any dispute (if there be one) between Cosco and Seascope about proportionate liability is a dispute without any legal significance. If Cosco is found to have breached s 52 it will be necessary in BHPB's action to determine its proportionate share of the responsibility. Raising the issue in a cross claim against Seascope serves no purpose, so far as I can see. Moreover, cases such as Atkin v Interprac Financial Planning Pty Ltd 2007 VSC 445 and P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209 are not in point. They are cases where a defendant was given leave to add a concurrent wrongdoer as a party to the proceeding. But adding the party was necessary to ensure that the proportionate liability regime in the Wrongs Act would apply.
…
33 In Rivercity, Nicholas J also made reference to Kenneth Martin J's observations in Fludlovski (No 2) and to my adoption of those observations in Lion-Dairy & Drinks (No 3). It is to be noted that Nicholas J accepted at [91] that the desirability of giving a person who is alleged to be a concurrent wrongdoer the opportunity to participate in the proceeding in which the allegation is raised in order to defend their position or reputation "may be an important consideration in some cases". His Honour gave that matter no weight in the particular case because the joinder was opposed by the affected party.
34 His Honour also seemed to agree that in an appropriate case weight should be given to the difficulties presented in assessing apportionment when a concurrent wrongdoer is not a party to the proceeding but again his Honour gave the matter little weight in the particular case because the joinder was opposed.
35 Nicholas J also appeared to acknowledge that a desire to avoid a multiplicity of proceedings or inconsistent outcomes could be another relevant consideration (see at [93]), but his Honour gave that matter no weight in Rivercity because the applicants there were willing to give an undertaking that they would not commence any further proceedings against persons who might be concurrent wrongdoers.
36 As noted above, Jacobs does not merely seek declaratory relief against AJM and Labpoint in its cross-claim. It also seeks orders that there be an apportionment of liability under the relevant provisions of both the CLA and the TPA. Alternatively, it seeks contribution pursuant to s 5 of the Law Reform (Miscellaneous Provision) Act 1946 (NSW) (although, as was pointed out, this relief falls away if the applicants' concession is accepted that apportionable claims are made in the proceeding). Even if the declaratory relief sought were to be set aside on the basis of it lacking utility, I consider that Jacobs is entitled to seek an order that there be an apportionment of liability between it and the cross-respondents. Accordingly, the cross-claim would not fall away.
37 In my opinion, different considerations are presented here to those which arose in either Rivercity or Miletich. In particular, it is notable that the applicants here have not stated unequivocally that they will not proceed against AJM or Labpoint if they establish liability on the part of Jacobs but receive a reduced amount of damages which reflects the operation of s 87CD of the TPA (or the analogue under the CLA). Section 87CG of the TPA makes clear that, in relation to an apportionable claim, a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any damage or loss is not prevented from bringing another action against another concurrent wrongdoer for that damage or loss. In Rivercity, the applicants stated that they had no intention of bringing subsequent proceedings against any other concurrent wrongdoers. Significantly, the Court required them to give an undertaking to that effect as a condition of the orders which were made.
38 Miletich is also distinguishable in my view because, as Jacobs emphasises, all relevant wrongdoers remained parties in those proceedings, with the consequence that the risk of multiplicity of proceedings and consequential inconsistent findings did not arise. In my view, the position is very different here.
39 As indicated above, there has been a degree of "forensic parrying" in these proceedings and the cross-claims were brought only after the applicants repeatedly declined to join either AJM or Labpoint as respondents. The applicants were silent regarding any future plans they may have had to bring subsequent proceedings against either of those persons in the event that they were not content with the quantum of any award of damages made in their favour against Jacobs. They did not rule out any such future litigation.
40 I do not accept AJM's submission that there is only a slight risk of multiplicity of proceedings because the applicants are likely to be estopped from advancing a subsequent claim against AJM. That submission was not developed further in oral argument and I have some difficulties with it, including the fact that it cannot easily be reconciled with the express terms of s 87CG of the TPA. In my view, there is a real risk of multiplicity of proceedings and, consequently, the making of inconsistent findings. I attach particular weight to those considerations in this litigation, which I consider to be distinguishable from that in BHPB, Miletich or Rivercity.
41 Of course, it is a matter for AJM and Labpoint to decide the extent to which each proposes to participate in the proceeding. I remain of the view, however, there are proper forensic benefits in having them joined as cross-respondents in circumstances where they are said to be concurrent wrongdoers and Jacobs seeks specific orders for an apportionment of liability. Those benefits include:
(a) the clarification of the nature and scope of any issues in dispute by providing pleadings;
(b) the making of discovery by a party in the proceeding, as opposed to a non-party; and
(c) the option to call witnesses in defence of their position and the entitlement of the other parties to cross-examine the joined parties' witnesses rather than taking their evidence in chief.
42 I do not consider any of these benefits to amount to an abuse of process. On the contrary, I accept Jacobs' submission that it has a legitimate interest in prosecuting a claim against another alleged concurrent wrongdoer with a view to establishing that such a party must share a degree of responsibility for any liability which is found to exist.
43 Nor do I accept that the substantial legal costs which both AJM and Labpoint say they will incur (and in the case of AJM, the added risk of being placed in administration) outweigh the other considerations which I have described above. Such costs are the unfortunate reality of contemporary litigation which can arise from the conduct of commercial activities. Furthermore, it is largely a matter for those parties to determine the nature and extent of their involvement in the proceedings and, if they are successful, they can reasonably expect to receive a favourable costs order.
44 Finally, for the following reasons I do not accept Labpoint's separate submission that the cross-claim should be summarily dismissed because Jacobs has no reasonable prospects of successfully prosecuting that cross-claim.
45 Jacobs makes the following primary allegations against Labpoint. First, it alleges that Labpoint failed to perform the laboratory analysis of the wastewater samples with reasonable care and skill and that, in particular:
it failed to comply with the standard method for determining BOD;
failed to dilute or properly dilute each sample and consequently the reported BOD results were too low and incorrect;
it misstated the BOD concentration in the samples; and
it misstated the ratio of COD to BOD, in that the COD: BOD ratios set out in the Labpoint data were too high.
46 Secondly, Jacobs alleges that the laboratory analysis produced by Labpoint was inaccurate and unreliable, relying on essentially the same matters as particularised immediately above.
47 Labpoint denies these allegations in its amended defence, which contains the following primary allegations:
the Labpoint test reports were prepared for one of the applicants;
the test reports speak for themselves and set out the BOD to COD values;
any competent person could calculate the BOD to COD ratios;
any error was made by Jacobs in failing to calculate the BOD to COD ratios; and
Jacobs did not make any inquiry of Labpoint about those ratios.
48 In the light of the foreshadowed evidence from Dr Bhat and Mr Subedi, Labpoint contends that Jacobs has an impossible task of making good its allegations some seven years after the relevant events took place. It also says that Labpoint's documentation does not support the allegations made against it and that the evidence of Dr Bhat and Mr Subedi will demonstrate the hopelessness of Jacob's allegations against Labpoint.
49 Part of the applicants' pleaded case against Jacobs is that various reports by Jacobs were not the product of the exercise of due skill and care because reported BOD concentrations in those reports were substantially understated. Those allegations are denied by Jacobs but, in its cross-claim against Labpoint, SKM pleads that if the applicants' claims are established, Labpoint is a concurrent wrongdoer because it failed to perform the laboratory analysis on wastewater samples with reasonable care and skill and its laboratory analysis was inaccurate and unreliable.
50 Jacobs also draws attention to the fact that, in their reply dated 20 December 2013, the applicants make an admission that Labpoint's laboratory analysis was inaccurate and unreliable. Obviously this concession does not bind Labpoint.
51 Jacobs also relies upon the minutes of the meeting held on 15 July 2010, which were discovered by the applicants and relate to a meeting between representatives of the applicants and representatives of AJM. The minutes record that the "Characterisation report showed large variation of BOD to COD ratio which suggests that tests were not being carried out properly". Jacobs says that the Characterisation report referred to in those minutes relates to tests which were performed by Labpoint. Jacobs also refers to other discovered documents which contain similar statements to the effect that Labpoint underestimated BOD and did not dilute it sufficiently.
52 Finally, Jacobs submits that it proposes to call evidence from one of its engineers who will give evidence that:
(a) Jacobs expressed doubts about the accuracy of the characterisation data that was being reported on;
(b) the Characterisation report states that the COD: BOD ratio arising from the characterisation data was 4.4:1, which is an unexpectedly high ratio for wastewater produced by a fruit juice processing facility; and
(c) it is possible that the laboratory analysis data provided by Labpoint to one or more of the applicants was inaccurate or unreliable.
53 In addition, Jacobs says that it proposes to call expert evidence going to the question of whether Labpoint incorrectly performed the BOD tests, such that the BOD results were substantially understated.
54 Having regard to the summary of the evidence proposed to be relied upon by Jacobs and Labpoint it is plain that some important facts are in dispute and will need to be determined after a full hearing. In my opinion, the case is plainly unsuitable for summary dismissal on the primary ground advanced by Labpoint.
55 The other matter relied upon by Labpoint in support of its interlocutory application substantially reflects AJM's arguments concerning the cost and inconvenience of its participation in the proceedings and the allegations of abuse of process. For similar reasons to those advanced above, I reject those arguments.
56 For all these reasons I consider that the interlocutory applications should be dismissed. It is difficult to see why costs would not follow the event as is the usual course but I will now hear any oral submissions on that matter.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.