Lion-Dairy & Drinks Pty Limited v Jacobs Group [2014] FCA 897 | Case summary

Lion-Dairy & Drinks Pty Limited v Jacobs Group [2014] FCA 897 | Case summary | Zoe

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REASONS FOR JUDGMENT 1 On 15 April 2014 judgment was delivered on an earlier interlocutory application in these proceedings: see Lion-Dairy & Drinks Pty Limited v Sinclair Knight Merz Pty Limited (No 3) [2014] FCA 386. For reasons which were then given, the respondent (Jacobs) was granted leave to file and serve a notice of cross-claim and statement of cross-claim on both Labpoint Pty Limited (Labpoint) and Ovivo Australia Pty Ltd (AJM). Leave was granted despite opposition from the applicants. Neither Labpoint nor AJM appeared at the hearing on 15 April 2014. 2 There is one other important point to emphasise at the outset. Jacobs' applications to have Labpoint and AJM joined as parties to the proceedings under the cross-claims occurred against the background of some evident forensic parrying between the applicants and Jacobs as the respondent. The application was made by Jacobs only after the applicants repeatedly declined to join those parties in the primary proceedings brought by the applicants against Jacobs. 3 There is no need to repeat the reasons for granting leave to file and serve the notice and statement of cross-claim. It suffices to note that particular reliance was placed on a similar approach adopted by Kenneth Martin J in Fudlovski v JGC Accounting and Financial Services Pty Limited (No 2) [2013] WASC 301 and Fudlovski v JGC Accounting and Financial Services Pty Limited (No 3) [2013] WASC 476. In that litigation, his Honour granted leave to file a counter-claim against a third party in order to have concurrent wrongdoers brought before the Court under relevant provisions relating to apportionment claims in both State and Federal legislation. As will be developed further below, I remain of the view that the approach taken by Kenneth Martin J is applicable in the particular circumstances here. 4 Pursuant to the earlier grant of leave, the respondent filed a notice of cross-claim and a statement of cross-claim against both Labpoint and AJM. Labpoint has since filed an amended defence to the cross-claim. To date, AJM has not filed a defence to the cross-claim. Both Labpoint and AJM now seek to have the cross-claims dismissed. 5 In broad terms, in the statement of cross-claim, the Jacobs pleads that Labpoint is a concurrent wrongdoer because it failed to perform a laboratory analysis of wastewater samples collected from the Smithfield wastewater treatment facility with reasonable care and skill. It is also alleged that Labpoint's laboratory analysis was inaccurate and unreliable. Jacobs further contends that Labpoint owed it a duty to exercise all reasonable care and skill in performing the laboratory analysis and that it breached that duty, in respect of which Jacobs has suffered loss and damage (being any amount awarded by the Court in favour of the applicants against Jacobs). Jacobs also pleads against Labpoint that it made certain representations to the applicants that it had performed the laboratory analysis with reasonable care and skill, that the laboratory analysis was accurate and reliable and that its data was also accurate and reliable. Jacobs pleads that if the applicants establish the allegations set out in the amended statement of claim, Labpoint has engaged in misleading or deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) (TPA). Jacobs alleges that Labpoint is a concurrent wrongdoer in relation to the applicants' claims, because it is a person who, together with Jacobs, engaged in conduct which caused the applicants' loss or damages. 6 Jacobs further pleads in the statement of cross-claim that AJM failed to undertake all proper investigations and inquiries in preparing the tender documentation for the proposed Smithfield wastewater treatment plant, which is said to be a breach of a duty of care allegedly owed by AJM to the applicants. Jacobs also pleads that AJM made certain representations to the applicants concerning its involvement in designing and commissioning the proposed wastewater treatment plant and that those representations are also in breach of s 52 of the TPA because AJM failed inter alia to undertake all proper investigations and inquiries in preparing its tender and failed to design, construct, commission and install a wastewater treatment facility that was fit for its intended purpose. Jacobs alleges that AJM is a concurrent wrongdoer. 7 In both the notice and statement of cross-claim, Jacobs seeks various relief against both Labpoint and AJM. The relief sought includes declarations that both Labpoint and AJM are concurrent wrongdoers within the meaning inter alia of s 87CB of the TPA. The relevant State legislation under which apportionment is also sought is the Civil Liability Act 2002 (NSW) (CLA). Separate orders are also sought against both Labpoint and AJM that there be an apportionment of liability between them and Jacobs having regard to the extent of each parties' responsibility for such loss or damage as may be found by the Court to have occurred on the basis that they are each concurrent wrongdoers. Alternatively, declaratory relief is sought as to an entitlement to contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). 8 It is convenient to set out ss 87CB - 87CD and ss 87CF - 87CH of the TPA as at the relevant times (in the interests of brevity I will not set out the broadly analogous but not identical provisions of the CLA): 87CB Application of Part (1) This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 82 for: (a) economic loss; or (b) damage to property; caused by conduct that was done in a contravention of section 52. (2) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind). (3) In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim. (4) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1). (5) For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died. … 87CD Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. … 87CF Contribution not recoverable from defendant A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim: (a) cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant); and (b) cannot be required to indemnify any such wrongdoer. … 87CH Joining non-party concurrent wrongdoer in the action (1) The court may give leave for any one or more persons to be joined as defendants in proceedings involving an apportionable claim. (2) The court is not to give leave for the joinder of any person who was a party to any previously concluded proceedings in respect of the apportionable claim.

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Outline of parties' submissions 11 Mr Cox SC, appeared for AJM. His submissions in support of AJM's application for summary dismissal of the cross-claim against it may be summarised as follows. First, relying on s 31A of the Federal Court of Australia Act 1976 (Cth) (FC Act) and rule 26.01 of the Federal Court Rules 2011 (the 2011 rules), Mr Cox argued that the cross-claim should be dismissed because: (a) Jacobs has no reasonable prospects of successfully obtaining the relief sought in the cross-claim; (b) the declaratory relief sought by it in the cross-claim is not necessary for the determination of the apportionment of liability against Jacobs in the proceedings brought by the applicants; and (c) the cross-claim is an abuse of process because it seeks only to obtain the benefit of Court processes to assist Jacobs' defence of the amended statement of claim. 12 Mr Cox also relied on s 23 of the FC Act and rule 1.32 in arguing that the cross-claim is an abuse of process, because Jacobs is seeking collateral, procedural advantages. He further submitted that, even if those advantages exist and are proper, they are wholly outweighed by the substantial injustice to AJM of it having been joined as a party given: (a) the substantial amount of legal expenses that AJM would incur to participate in the proceeding; (b) AJM was not insured for legal expenses incurred in proceedings which did not involve a civil monetary claim; and (c) AJM was at risk of being placed into administration if it took an active role in the proceedings. 13 Mr Cox also submitted that the risk of a multiplicity of proceedings and the making of inconsistent findings was slight given that the applicants were likely to be estopped from advancing a subsequent claim against AJM. He contended that the forensic advantages to Jacobs of having AJM as a party could be addressed by other means. 14 Mr Cox drew attention to the fact that, at the hearing on 15 April 2004 (i.e. prior to the filing of the cross-claims against AJM and Labpoint), the applicants conceded that its claims against Jacobs were apportionable claims but that, despite that concession, Jacobs proceeded to file cross-claims against both AJM and Labpoint. Mr Cox submitted that, in view of the applicants' concession that the claims were apportionable claims, no order for contribution or indemnity could be made against AJM as a matter of law. 15 AJM relied on four affidavits sworn by its instructing solicitor, Mr David Meegan. Mr Meegan gave evidence about the potentially devastating effects on AJM if it was to take an active role in the proceedings. His evidence, which was unchallenged, was that AJM's staff had reduced from 73 to 14 employees, its offices had reduced from three to one and its gross sale revenue had dropped from $25 million in 2012 to an estimate of $7 million for 2015. He said that AJM had sustained substantial losses in the period 2012-2014 and that that part of AJM's business that was involved in the Smithfield wastewater plant no longer existed because it had closed in 2013. He also said that none of the persons who worked in that part of AJM's business remained with the company because all those employees had been retrenched during 2013. Mr Meegan estimated AJM's costs, if it were to take an active role in the proceedings, as between $350,000 - $500,000 up to and including the trial. He explained that AJM would have to meet its own legal costs because its professional indemnity insurance policy only covered damages claims (and not mere declaratory relief). 16 Mr Cox argued that there is no utility in the declaratory relief sought by Jacobs against AJM to the effect that AJM is a concurrent wrongdoer because, if Jacobs were found to be liable to the applicants, judgment could be entered for less than the full amount to reflect the nature and extent of AJM's liability as a concurrent wrongdoer. He cited Miletich v Murchie (2012) 297 ALR 566 (Miletich) in support of his submission that a cross-claim which seeks only a declaration that a cross-respondent is a concurrent wrongdoer should be dismissed on the ground of lack of utility. Mr Cox emphasised that this decision had not been drawn to the Court's attention at the hearing on 15 April 2014. Mr Cox submitted that Justice Gray's decision in Miletich was correct, or at least not "clearly wrong", and that it should be followed. 17 Mr Cox also made submissions in support of his client's application that the cross-claim against it be dismissed on the grounds of abuse of process and the practical impact of the cross-claim on his client. 18 Mr Levingston, who appeared for Labpoint, adopted Mr Cox's submissions regarding the lack of utility in the declaratory relief sought by Jacobs and he also made the following additional submissions in support of his client's interlocutory application seeking summary dismissal of the cross-claim against it. First, he submitted that Labpoint was not a party to any of the agreements relating to the design, supply, installation and commissioning of the Smithfield facility. Labpoint's involvement arises from water testing results which it provided to one of the applicants for a purpose which it claims was never revealed to it. Labpoint emphasises that the applicants make no claim against it. 19 In contrast, under the cross-claim, Jacobs pleads the following matters against Labpoint: breach of agreement with one of the applicants; breach of duty of care owed to one of the applicants; misrepresentations about BOD to COD ratios in the test reports; a concurrent wrongdoer apportionable claim under both the CLA and the TPA; and an alleged liability to make contribution under the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). 20 As noted above, unlike AJM, Labpoint has filed a defence to the cross-claim against it, which broadly pleads: 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 (which any competent person could have calculated); and any error was made by Jacobs in failing to calculate the BOD to COD ratios and Jacobs did not make any inquiries of Labpoint about those ratios. 21 Labpoint contended that Jacobs has no reasonable prospects of successfully prosecuting its claim against Labpoint and it claimed that the Labpoint documents do not support the allegations made against it by Jacobs. Labpoint also drew attention to proposed evidence from a Dr Bhat and Mr Subedi, which it said would be to the following effect: Labpoint was an accredited laboratory; Dr Bhat was well qualified and experienced; it conducted testing of water samples as it was directed to with a view to detecting BOD's and COD's and other matters; the sampling and testing was conducted in accordance with relevant standards and methodology; after three days of sampling, Dr Bhat noticed the BOD to COD ratio was higher than he had expected and he discussed the matter with a representative of the applicants, Mr Thistleton; and sampling and reporting to the applicants continued and reports were provided to the applicants. 22 Labpoint also contended that the cross-claim is an abuse of process for substantially similar reasons to those advanced by AJM in respect of the cross-claim against it. 23 Finally, Labpoint submitted that it was also being put to a great deal of trouble and expense as a cross-respondent and that it cannot take the risk of not fully participating to protect its interests. It said that it is uninsured and will bear the legal of the proceedings itself, which its solicitor estimates to exceed $260,000. 24 In response, Jacobs made the following broad submissions in opposition to the summary dismissal of the cross-claims. First, merely because a joined party will incur legal costs in defending a cross-claim does not support summary dismissal of that cross-claim. 25 Secondly, the Court had already rejected the argument that there is no utility in the declaratory relief sought and neither cross-respondent has raised any new argument which warrants a different conclusion on that point. Jacobs submitted that Miletich does not establish a general rule that a respondent cannot join another party who is alleged to be a concurrent wrongdoer if the applicant refuses to do so. It says further that Miletich is distinguishable because there were two respondents in that proceeding and they both remained parties after the relevant claim was dismissed. It submits that Gray J's reference to the cross-claim being unnecessary "to enable the intended result to be achieved" was a reference to all relevant wrongdoers remaining as parties to the proceeding. Jacobs submitted that the making of the cross-claim was consistent with the policy objective that all persons who bear responsibility for a loss should be brought before the Court at the same time so that matters can be completely and finally disposed of and without a multiplicity of proceedings. 26 Thirdly, the respondent emphasised that the applicants' claims against it were founded on an allegation that the Smithfield plant as constructed does not treat the wastewater so as to reduce its BOD level to meet Sydney Water's requirements. Jacobs submitted that AJM played a pivotal role in the upgrading of the Smithfield plant because it was engaged by the applicants to design, supply, install and commission the plant. Jacobs further submitted that if it is found liable to the applicants AJM is also likely to be found to be a concurrent wrongdoer because of its responsibility for the design, supply, installation and commissioning of the plant. 27 Fourthly, as to the contention that the cross-claims are an abuse of process, Jacobs submitted that it has a legitimate interest in prosecuting its cross-claims against the other alleged concurrent wrongdoers in order to obtain an apportionment of liability which reflects the parties' individual degrees of responsibility. 28 Finally, Jacobs emphasised the high threshold before a claim will summarily be dismissed, citing the Full Court's decision in Jefferson Ford Pty Limited v Ford Motor Company of Australia Ltd [2008] FCAFC 60; 246 ALR 465. In my view, reference should also have been made to the High Court's important judgment on the effect of s 31A of the FC Act in Spencer v The Commonwealth (2010) 241 CLR 118. In particular, the following observations of French CJ and Gummow J in Spencer at [24] are apt (to similar effect, see at [56]-[60] per Hayne, Crennan, Kiefel and Bell JJ): The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried. More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following: Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. There would seem to be little distinction between those approaches and the requirement of a "real" as distinct from "fanciful" prospect of success contemplated by s 31A. That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.

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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.

Lion-Dairy & Drinks Pty Limited v Jacobs Group

At a glance

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Judgment (19 paragraphs)

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Legislation Cited (5)

Cases Cited (10)