REASONS FOR JUDGMENT
1 The Court has before it an application for leave to file two proposed cross-claims. The respondent makes this application in circumstances where it did not file any cross-claims at the time it filed its defence as required by r 15.04 of the Federal Court Rules 2011 (Cth). Consequently, the respondent requires leave pursuant to r 15.05 of those rules. The proposed cross-claims relate to two companies whose involvement in the factual background to the matter has been referred to in earlier interlocutory judgments of the Court: Lion-Dairy & Drinks Pty Limited v Sinclair Knight Merz Pty Limited [2013] FCA 869 and Lion-Dairy & Drinks Pty Limited v Sincair Knight Merz Pty Limited [2014] FCA 114. Those two parties are Labpoint Pty Limited (Labpoint) and Ovivo Australia Pty Limited (AJM).
2 The respondent also seeks directions in respect of the filing and service of the notice of the proposed notice of cross-claim as well as a revised statement of cross-claim, which was made available to the Court yesterday. The respondent relies in support of its application on an affidavit of its instructing solicitor, Mr Andrew McAdam. It is relevant to point out at the outset that although the respondent refers to it having made an application, in fact no formal interlocutory application was filed. The respondent apparently proceeded on the basis of its belief that it was open to it to make the application that it now makes by reference to the liberty to apply, which was granted in orders made on 18 February 2014.
3 In my view, the case is one where a formal interlocutory application ought to have been filed and served.
4 The proposed cross-claims are primarily intended to have the Court make a declaration relating to the apportionment between concurrent wrongdoers of their individual responsibility for the applicants' loss or damage. The respondent says that the claims made by the applicants in the amended statement of claim are apportionable claims in accordance with the relevant provisions of various legislation including the Civil Liability Act 2002 (NSW) (CLA), the Trade Practices Act 1974 (Cth) (TPA) and also the Competition and Consumer Act 2010 (Cth) (CCA).
5 It further alleges that Labpoint and AJM are each concurrent wrongdoers within the meaning of s 34(2) of the CLA. The respondent says that its own liability, to the extent that such liability is ultimately established, ought to be limited to an amount which reflects the proportion of the loss or damage claimed that the Court considers just having regard to the extent of the respondent's responsibility for the loss or damage.
6 It contends that it is entitled to a declaration that there be an apportionment of liability and it points to the power of the Court under s 21 of the Federal Court of Australia Act 1976 (Cth) to grant declaratory relief even if there is no other consequential relief. The respondent relies on a decision of O'Loughlin J in St George Bank Limited v M J K Pty Limited [1999] FCA 1752. That decision preceded the apportionability provisions of the CLA and dealt with a claim for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (LRA).
7 In the alternative, the respondent claims that in the event that it is found to be liable to the applicants in accordance with the causes of action raised in the amended statement of claim, and those claims are not apportionable under any of the legislation described above, then it is, in any event, entitled to contribution from both of the proposed cross-respondents, pursuant to s 5 of the LRA.
8 The broad background to the case has been described by me in two earlier interlocutory decisions in the proceedings (see case citations at [1] above).
9 It suffices for current purposes to note that essentially the applicants' claims against the respondent are made in contract, tort and for breach of s 52 of the TPA in relation to advice and services provided by the respondent concerning the treatment of wastewater from a blending and bottling fruit juice plant, situated at Smithfield in New South Wales.
10 In paragraph 74 and 75 of its defence in the proceedings, the respondent says that both Labpoint and AJM are concurrent wrongdoers within the meaning of s 34 of the CLA and s 87CB of the TPA.
11 Although the applicants did file a reply, they did not plead to paragraphs 74 and 75. More recently, however, as a result of an exchange of correspondence between the solicitors, the applicants have indicated that they will admit those paragraphs of the defence with the consequence, they say, that it is incontrovertible for the purpose of the proceedings that the respondent, Labpoint and AGM are concurrent wrongdoers for the purposes of s 34 of the CLA.
12 The applicants say that there is no need to join AJM in the proceedings by way of the proposed cross-claim.
13 Their position is different with regard to Labpoint. In circumstances where the applicants accept that there is a direct claim made against Labpoint in negligence by the respondent and that Labpoint needs to be brought into the proceedings to deal with that direct claim, the applicants do not oppose leave in respect of Labpoint.
14 The applicants take a different position with regard to the application for leave to serve the cross-claim on AJM. They do not make submissions as to whether or not the Court has jurisdiction to entertain the cross-claim and they appear to accept that the proposed cross-claim does have a relationship with the subject matter of the proceedings.
15 The applicants' key argument, as put forward by Mr Pike SC, was that the proposed cross-claim against AJM nevertheless was not a valid claim. In support of that submission, reliance was placed on a decision of McDougall J in the New South Wales Supreme Court in Dymocks Book Arcade Pty Ltd v Capral Ltd [2010] NSWSC 195. That case involved a cross-claim which had been filed seeking contribution or indemnity under s 5 of the LRA. At [9], McDougall J said the following:
[9] But that does not mean that the architect's cross-claim, as originally propounded, was maintainable. The purpose of contribution under s 5 is to adjust rights and liabilities between, on the one hand, defendants to suits who are adjudged to be liable, and, on the other, those who are joined as cross-defendants and are adjudged also to have been liable for the loss in respect of which the defendant is adjudged liable. By contrast, the purpose of Pt 4 of the Civil Liability Act is to enable that apportionment of liability to occur in the action brought by the plaintiff, whether or not those responsible for any damage suffered by the plaintiff have been joined as concurrent wrongdoers. Thus, as Pt 4 of the Civil Liability Act works its way out, the judgment given against a concurrent wrongdoer who is a defendant will represent only that concurrent wrongdoer's proportion of responsibility. It will not reflect any proportion of responsibility that the court attributes to any other concurrent wrongdoer. It follows, in my view necessarily, that when a judgment is given against a concurrent wrongdoer in respect of an apportionable claim, that judgment is not one in respect of which the concurrent wrongdoer is entitled to contribution or indemnity from any other concurrent wrongdoer. That is because, on the hypothesis that Pt 4 requires to be considered, no other concurrent wrongdoer has contributed to the particular loss which is the particular or apportioned responsibility of the concurrent wrongdoer who is sued and against whom a judgment is given.
16 Mr Pike SC placed particular emphasis on the last two sentences of that passage. He also emphasised that Pt 4 of the CLA, operates such that where judgment is given against a concurrent wrongdoer in respect of an apportionable claim, the judgment is one which is not one in respect of any entitlement to contribution or indemnity from some other concurrent wrongdoer. Mr Pike SC further emphasised the concluding sentence of [9] from McDougall J's judgment above. That sentence highlights that, at the heart of Pt 4, is the concept that no other concurrent wrongdoer has contributed to the particular loss which is the particular or apportioned responsibility of a concurrent wrongdoer who is successfully sued and against whom judgment is given. Initially, I thought that there was some force in Mr Pike SC's submissions. On further reflection, however, I consider that the circumstances here are such as to justify leave being granted to the respondent to file a cross-claim, not only in respect of Labpoint, but also in respect of AJM.
17 The Court's attention was drawn by Mr Margetts SC, who appeared with Mr Connolly for the respondent, to some recent decisions of Kenneth Martin J. The first is dated 16 August 2013: Fudlovski v JGC Accounting & Financial Services Pty Ltd (No 2) [2013] WASC 301(Fudlovski (No 2)) and, more recently, his Honour gave judgment on 10 December 2013 in Fudlovski v JGC Accounting & Financial Services Pty Ltd (No 3) [2013] WASC 476 (Fudlovski (No 3)).
18 Fudlovski (No 3) in particular has some bearing upon the application before the Court. Paragraph 6 of that judgment describes the defendant's application there to file a counter-claim in terms of what were described as apportionable claims involving declaratory relief which would apportion responsibility for any economic damage found in favour of the plaintiffs between themselves and the defendants to the counter-claim. That bears a strong resemblance to that aspect of the proposed cross-claim here which seeks, as part of the prayers of relief, declaratory relief which would have a similar effect. It is evident from paragraph 20 of his Honour's judgment in Fudlovski (No 3) that he was willing to grant leave under both the provisions of the Western Australian legislation and under s 87CH of the TPA for an alleged concurrent wrongdoer, whose name is Mr Hart, to be brought into the proceedings by way of a counter-claim.
19 In Fudlovski (No 2), Kenneth Martin J also helpfully sets out some relevant forensic implications which point to the desirability of concurrent wrongdoers being before the Court in circumstances similar to those here. At [41] - [43] his Honour said:
[41] But scenarios of courts reaching liability conclusions adverse to someone, without that person having an opportunity to participate to defend their position or reputation, are unusual. Even in civil proceedings, courts are normally hesitant against reaching liability findings adverse to persons not before it. They, axiomatically, do not in such a situation have the opportunity to put their position. An absentee fault attribution defence by the defendants may also effectively raise something of a forensic burden upon the plaintiffs at the trial, to resist the attempted tactical allocation of responsibility to the person who is absent, by seeking, in effect, to defend that absentee person's exposure position. Here, Mr Hart might not even be called as a witness at a trial confined to a battle only as between the plaintiffs and the defendants. Or questions might arise as to who calls Mr Hart as a witness or who would cross-examine him at a trial. Issues may also arise as to what inferences, if any, are to be drawn in terms of responsibility as an alleged concurrent wrongdoer, in the absence of the person being called to give evidence at a trial.
[42] More concerning is a scenario in which the court might assess a measure of responsibility against an alleged concurrent wrongdoer like Mr Hart, in his absence, only to see subsequent litigation directly against Mr Hart by the plaintiff. That hypothesis assumes, for the sake of argument, there arises no Anshun estoppel considerations. Such considerations could possibly arise from a plaintiff's explicit disavowal of the intention to pursue the absentee party in the proceedings despite ample opportunity; although the subsequent litigation scenario is recognised by s 5 AM(1).
[43] Absent Anshun estoppel considerations, liability findings at a civil trial reached against the non-participant non-party, seem to escape the reach of an issue estoppel, leaving open the possibility of subsequent litigation - at which inconsistent findings may be reached, as the alleged concurrent wrongdoer now does participate and defend the same arguments as a party. The concurrent wrongdoer could successfully resist a plaintiff's claim, or achieve a different allocation of responsibility at a subsequent trial. If at all possible, the scenario of inconsistency of outcome considerations in distinct actions should be avoided from a policy respective.
20 It should be observed at this point that there may be some differences between the Civil Liability legislation in Western Australia and the relevant provisions of the CLA. However, it is also to be noted, as I have indicated above, that the counter-claim which his Honour gave leave to file in that case, relied not only on the Western Australian legislation but also on relevant provisions of the TPA, which are relied upon here.
21 For these reasons, I cannot accept the submission advanced by the applicants that there is no utility in leave being granted to proceed with a cross-claim against AJM. I am satisfied that the circumstances do warrant leave being granted.
22 For all those reasons, I make the orders set out above.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.