//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] ACTCA 8
mixed. Appeal allowed in part; the first-instance damages order was confirmed, subject to the Owners crediting any part of the settlement sum exceeding $17,100.94 plus one third of their solicitor-and-client...
The Owners received $200,000 from the building certifier after settling their claim against it. They later obtained damages against the Builder for defective work. Because some of the losses overlapped, the court deciding the Builder’s damages had to consider whether the settlement had already compensated the Owners for some of that same loss. The appeal court said it did, but only to a limited extent: the Builder was not entitled to deduct the whole $200,000 because some damages were solely the Builder’s responsibility and the settlement also included costs. The Builder’s separate attempt to avoid the site-cut rectification award failed because that contractual defence was not properly raised at trial, and the contract did not support it on the evidence before the Court.
AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.
2,456 words · generated 07/10/2026
3 cited instruments linked from this judgment.
M Johnson Building Pty Ltd built a residential dwelling in Latham for the Owners. The Owners alleged failures to comply with the building contract, plans and building standards. The primary judge found breaches of contract, including a failure to excavate the site in accordance with the approved plans. The excavation breach finding was not challenged on appeal ([3], [13]–[14]).
The litigation involved a second defendant, Capital Certifiers Pty Ltd, the building certifier. The Owners settled their claim against the Certifier on 20 April 2023. The consent orders entered judgment against it, and required payment of $200,000 inclusive of costs, without identifying a separate damages component ([65(a)]). The Certifier paid that sum on 17 May 2023, after the Builder’s hearing but before the final assessment of damages against the Builder ([65(b)]–[h]).
The primary judge assessed total damages at $287,084. The parties agreed that s 141 of the Building Act 2004 (ACT) applied to apportion responsibility between the Builder and Certifier. They proceeded on an 85 per cent responsibility allocation for the Builder and 15 per cent for the Certifier in relation to shared loss. Some damages related to work outside the Certifier’s supervisory role, and were attributed wholly to the Builder. The final damages payable by the Builder were $269,982.66 ([5]–[8], [91]).
The appeal raised two main issues. First, the Builder argued that it should not have to pay the rectification cost for the inadequate site cut, relying on a $3,000 siteworks allowance and an alleged exclusion for landscaping. Secondly, it argued that the settlement payment from the Certifier should reduce the damages payable by the Builder, to avoid double recovery ([10]).
The Court of Appeal dismissed the site-cut arguments. It allowed the appeal in part on the settlement issue. It confirmed the damages order but required credit for any part of the settlement sum exceeding $17,100.94 and one third of the Owners’ solicitor and client costs up to 20 April 2023 ([107]).
The site-cut issue failed first as a matter of appellate procedure. The Builder had not pleaded that a contractual limit or exclusion made the Owners responsible for the rectification cost. Its pleaded responses denied breach, asserted waiver based on alleged conversations, and disputed damages by reference to rectification cost or diminution in value ([22]–[28]). The Court held that simply pleading and relying on the contract was not enough: the Builder had to identify the particular term said to defeat the claim and provide particulars of the defence ([26]–[28]).
The point also depended on matters that could have required evidence. Evidence about what the parties intended, the nature and cost of work before the house was built, and the relationship between excavation and landscaping could have been relevant. The Owners might have responded with evidence about the original excavation and the loss caused by not doing it as planned ([33]–[38]). The Court therefore applied the rule that a party generally cannot raise on appeal a point that could have been answered by evidence at trial ([20]–[21]).
The Court nevertheless considered the contract and concluded that the Builder’s arguments would fail on the material before it. The contract defined the Works to include construction shown on the approved plans. Those plans included the excavation. The $3,000 figure appeared as a siteworks allowance, but no provisional sum was specified in the relevant part of the contract; the contract did not say that excavation beyond $3,000 was the Owners’ responsibility ([40]–[48], [53]–[59]). The Court also relied on the Builder’s evidence that he would “dig down to the correct level” and “won’t charge for the extra work” ([60]–[62]). This supported the view that the excavation was part of the ordinary contractual work, not an excluded landscaping task.
The double-recovery issue turned on the timing and overlap of the claims. The Court described the rule as applying where a plaintiff has recovered all or part of a loss from another party: the recovery diminishes damages against the remaining defendant to the extent it compensates the same loss ([70]–[78]). It is not confined to claims in one legal category. The authorities discussed by the Court included claims in contract and negligence, and the Court treated the principle as one of general application ([74]–[77]).
The primary judge had declined to account for the settlement, reasoning that its basis and the degree of overlap were unclear. The Court of Appeal accepted that those uncertainties existed, including uncertainty about the costs component and the precise claims resolved by consent judgment. But uncertainty did not justify declining to address double recovery altogether. The Court said the payment “has to be taken into account in some way” ([79], [86]–[90]).
The rule was limited to concurrent or overlapping loss. Of the $287,084 total damages, $173,077.76 related only to the Builder. The remaining $114,006.24 related to work for which both the Builder and Certifier had responsibility. The Court held that the rule could not reduce recovery for the non-overlapping $173,077.76, but could apply to the shared-loss amount and relevant legal costs ([91]–[94]).
The eventual credit reflected both the apportionment and the procedural history. The Builder was not liable for $17,100.94, being the Certifier’s 15 per cent share of the shared damages. The Certifier’s settlement could appropriately be allocated first to that amount, which the Owners could recover only from the Certifier ([100]–[101]). The Certifier’s settlement was also inclusive of costs, and one third of costs up to 20 April 2023 was not payable by the Builder. Those costs were unknown in the appeal record, so it was not possible to determine whether they absorbed the rest of the settlement ([102]–[104]). The Court adopted a credit formula rather than a fixed deduction of $200,000.
The judgment presents the double-recovery rule as established law rather than creating a new general rule. It draws on authorities including Townsend v Stone Toms & Partners, Baxter v Obacelo, SAS Trustee Corporation v Budd and Boncristiano v Lohmann ([70]–[78]). The central proposition is that a plaintiff cannot obtain compensation twice for the same damage, regardless of whether the claims are framed in contract, tort or statute ([72]–[76]).
The judgment’s contribution is its application of that rule to a particular combination of circumstances: different causes of action, only partial overlap in damages, a consent judgment without a specified damages amount, a settlement inclusive of costs, statutory apportionment between defendants, and payment after the hearing but before final quantification ([1]–[2], [65], [91]–[104]). It makes clear that these complications affect how the credit is calculated, not whether the court must consider the rule.
The judgment also explains the evidentiary position where allocation is uncertain. The defendant invoking double recovery first has to show that payment occurred in circumstances capable of relating to concurrent loss. The recipient may then bear an evidentiary onus to explain that the payment related to other claims or costs, because the recipient is better placed to know how the settlement was reached ([80]–[83]). The Court treated this as an evidentiary onus, rather than a free-standing substantive rule ([82]).
However, the Court did not mechanically impose that onus in this appeal. The Builder raised the issue after judgment on liability and the affidavit it relied on was not properly before the primary judge. The Owners had responded within the process ordered by the court and had not been given a proper evidentiary opportunity to address the material relied on by the Builder ([95]–[99]). The judgment therefore illustrates that the procedural history can affect how uncertainty is resolved.
On pleading and appeal procedure, the judgment applies established principles: a contractual defence must be identified with adequate particularity, and a party generally cannot introduce an argument on appeal if further evidence could have answered it ([20]–[38]). The judgment also applies s 141 of the Building Act to the damages calculation as the parties had presented it, while distinguishing apportionment between defendants from the separate question of whether the Owners had already received compensation for shared loss ([7]–[8], [91]–[93]).
At [70], the Court adopts the proposition that payment received for a loss “goes in diminution” of damages against another defendant. In plain English, if one defendant has already paid for a particular loss, that payment may reduce what remains payable by another defendant for that same loss.
At [76], the Court identifies the “fundamental question” as whether the claims are concurrent or overlapping “in respect of the damage sustained”. This prevents the rule from becoming a blanket deduction whenever a plaintiff settles with any other party. The relevant comparison is the loss compensated, not merely the identity of the parties or the existence of a settlement.
At [79], the Court says that the fact that allocation may be difficult does not relieve the judge from attempting the task. The phrase “in some way” is important: the Court did not insist on one universal calculation method. The approach depends on the evidence and the conduct of the particular case.
At [89], the Court explains why the rule required consideration here: the pleadings showed overlap, payment had occurred before damages were assessed, the payment could relate to concurrent claims, and the uncertainty had not been resolved. At [90], it identifies the error as declining to consider the principle at all.
At [93], the Court fixes the scope of the relevant overlap in this case: $114,006.24 of damages and the component of legal costs related to that concurrent loss. At [104], it translates that assessment into the operative credit. The decision does not say that every settlement inclusive of costs should be treated in this way; the formula responds to the specific figures and evidentiary gaps in this dispute.
For the site-cut issue, [26]–[28] explain that a defendant cannot rely on a contract in general terms to defeat a claim without identifying the provision said to do so. At [54], the Court summarises its reading: the Builder had to undertake the Works, the Works included building according to the approved plans, the plans included the excavation, and the contract did not exclude it.
The double-recovery reasoning is most relevant where a plaintiff pursues more than one defendant for loss that is wholly or partly overlapping, and receives money from one defendant before the amount recoverable from another is finally assessed. The timing mattered here because the Certifier paid the settlement before the damages order was made ([65], [68], [71]).
A settlement need not identify a separate amount for damages for the rule to require consideration. Here, the judgment was entered against the Certifier for $200,000 inclusive of costs, without dividing that figure between compensation and costs. The Court still required the payment to be considered, while recognising that this made the precise credit difficult ([65(a)], [99]–[104]).
Partial rather than complete overlap is also central. The Court did not deduct the whole settlement from all damages. It distinguished damages for which only the Builder was responsible from damages relating to shared responsibility, then considered costs that could only be recovered from the Certifier ([91]–[104]). A fact pattern involving distinct losses, shared losses, and separately allocated costs may therefore require a careful breakdown rather than an all-or-nothing deduction.
For the pleading issue, the judgment is relevant where a party seeks to rely on a specific contractual allocation, allowance or exclusion to defeat a damages claim, but did not identify that defence in the pleadings. Its reasoning is particularly engaged if resolving the point would have required evidence about the parties’ intentions, conversations, work scope or quantum ([19]–[38]).
The case does not establish that the particular credit formula applies whenever there is a settlement. The Court described its approach as responsive to the context, including the settlement’s timing, the lack of allocation evidence, the statutory apportionment and the way the issue was raised ([83]–[84], [95]–[104]).
The judgment text supplied for this analysis does not identify any later decisions applying, distinguishing, following or criticising M Johnson Building Pty Ltd v O’Toole. It is therefore not possible, on this source alone, to describe how later courts have treated the decision.
Within this judgment, the Court itself draws on several earlier authorities. It uses Townsend and Boncristiano to explain how a payment may be presumed to relate to concurrent loss once an initial evidentiary burden is met ([79]–[83]). It discusses Budd on the defendant’s initial burden and the possibility of an evidentiary onus falling on the recipient ([82]). It also refers to Baxter for the equitable and common law bases of preventing double satisfaction ([74], [78]).
The Court refers to Thompson v Australian Capital Television Pty Ltd as recognising a possible later application for equitable relief where enforcement of a judgment would produce double recovery, but considers that approach less attractive than resolving the credit when damages are assessed ([84]). These are the authorities and relationships visible in the judgment itself; no later treatment can be inferred from them.
The judgment does not prescribe a universal method for allocating a global settlement between damages, costs and concurrent or non-concurrent claims. It says that the trial judge’s method must depend on “the context and the conduct of each individual case” ([83]). In this case, the settlement judgment specified a total inclusive of costs but no damages figure, and the appeal record did not establish the costs ultimately relevant to the calculation ([99]–[104]).
The judgment also leaves open how a court should resolve the recipient’s evidentiary onus where the settlement issue is properly pleaded and both parties have a fair opportunity to put on evidence. The Court explains the general evidentiary principle but does not set out a complete process for every settlement dispute ([80]–[83], [98]–[104]).
A further practical question is how the principle interacts with different statutory apportionment schemes. The Court dealt with s 141 of the Building Act 2004 (ACT), in circumstances where the parties agreed that the section applied and accepted an 85/15 allocation for shared loss ([7]–[8]). It did not decide how the same reasoning would operate under other legislation or where the statutory status of a settled defendant was contested.
The site-cut issue is also fact-specific. The Court relied on the contract’s definition of Works, the approved plans, the absence of a specified provisional sum, the lack of an express excavation exclusion, and the Builder’s evidence about undertaking extra excavation without charge ([40]–[62]). The decision does not determine how another contract with express siteworks limits or a clearly drafted landscaping exclusion should be construed.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on or relying on this analysis, have it checked by a qualified Australian lawyer.
Source: the ACT Courts (www.courts.act.gov.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY COURT OF APPEAL
Case Title: M Johnson Building Pty Ltd v O’Toole Citation: [2026] ACTCA 8 Hearing Date: 21 May 2024 Decision Date: 13 March 2026 Before: Mossop, McWilliam & Taylor JJ Decision: Appeal allowed in part. Respondents ordered to give partial credit for settlement sum. Catchwords: APPEAL – CIVIL LAW – Appeal against judgment in building dispute – where two defendants sued – where plaintiffs and second defendant settled before trial – where consent judgment entered against second defendant – where damages claimed partially concurrent against defendants – where damages apportioned in respect of first defendant – where settlement monies paid before damages assessed – whether plaintiffs doubly compensated – application of rule against double recovery Legislation Cited: Building Act 2004 (ACT) s 141 Court Procedures Rules 2006 (ACT) rr 405(4), 430(1)(b) Supreme Court Act 1933 (ACT) s 37E Cases Cited: Australian Capital Territory v Crowley [2012] ACTCA 52; 7 ACTLR 142 Baxter v Obacelo Pty Ltd [2001] HCA 66; 205 CLR 635 Boncristiano v Lohmann [1998] VSC 228; 4 VR 82 Brozinic v The Federal Capital Press Pty Limited trading as The Canberra Times [2015] ACTCA 8 Coulton v Holcombe [1986] HCA 33; 162 CLR 1 Government Insurance Office of NSW v Aboushadi [1999] NSWCA 396 Lee v Lee [2019] HCA 28; 266 CLR 129 O’Toole & Anor v M Johnson Building Pty Ltd (No 2) [2023] ACTSC 171 O’Toole & Anor v M Johnson Building Pty Ltd [2023] ACTSC 116 Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1995] UKPC 54; [1996] AC 514 Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511 SAS Trustee Corporation v Budd [2005] NSWCA 366; 3 DDCR 382 Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; 186 CLR 574 Townsend v Stone Toms & Partners (1984) 27 BLR 26 Whisprun Pty Ltd v Dixon [2003] HCA 48; 77 ALJR 1598 Parties: M Johnson Building Pty Ltd (Appellant) Kate Mary O’Toole (First Respondent) Farooq Ahmed (Second Respondent) Representation: Counsel P Walker SC & J Masters (Appellant) D Robens (Respondents) Solicitors O’Connor Harris (Appellant) Harrington Hall (Respondents) File Number: AC 29 of 2023 Decision Under Appeal: Court: ACT Supreme Court Before: Balla AJ Date of Decision: 7 July 2023 Case Title: O’Toole & Anor v M Johnson Building Pty Ltd (No 2) Citation: [2023] ACTSC 171 THE COURT: Introduction
The critical point in this appeal concerns what happens when a plaintiff sues more than one defendant, settles against one of them shortly before hearing, and obtains a judgment against the other following a contested hearing, in the following circumstances: (a) The causes of action are different. (b) The damages claimed against the defendants overlap but are not entirely concurrent. (c) The settlement involves judgment being entered against one defendant but not for a specified amount. (d) The settlement also involves payment of a sum of money inclusive of costs. (e) The judgment obtained against the other defendant involves a statutory apportionment between the two defendants that only operates to bind one of them. (f) The recovery of a sum of money through the settlement only occurred after liability had been determined but before final orders were made as to the quantum of damages payable. (g) Beyond the final settlement figure and the fact of payment, the details of the settlement are unknown.
At first instance, the settlement against one defendant was known about but not taken into account in the assessment of damages against the other defendant. Applying general principles preventing double recovery in respect of the same loss, we have determined that it should have been. These reasons explain that conclusion, as well as the conclusion that a separate argument about contractual construction should be dismissed.
Dispute giving rise to the appeal
Nature of the appeal
The award and apportionment of damages and costs
Following the primary judgment, the parties dealt with quantifying the damages and costs by way of a separate hearing, resulting in an award of damages of $287,084: O’Toole & Anor v M Johnson Building Pty Ltd (No 2) [2023] ACTSC 171 (damages judgment).
The Builder was only ordered to pay $269,982.66 in damages because he had the benefit of legislation requiring the court to apportion damage. The proceeding had previously included a claim by the Owners against a second defendant, being Capital Certifiers Pty Ltd, the building certifier (Certifier). That claim against the Certifier was settled shortly before the hearing commenced. Judgment was entered by consent for the Owners against the second defendant in the sum of $200,000.00 inclusive of costs (settlement sum). There was no cross-claim by the Builder against the Certifier and it is not a party to this appeal.
In terms of the apportionment, the parties proceeded on the basis that because judgment was entered in a building action against each defendant to the action (albeit by consent in the case of the Certifier), s 141 of the Building Act 2004 (ACT) operated. That provision required the court to give judgment against the Builder “for the proportion of the total amount of the damages that the court considers to be just, having regard to the extent of that defendant’s responsibility for the loss or damage”. The Builder is then only liable for the amount for which judgment is given against him. In this case, the parties agreed on an apportionment of 85% as the Builder’s responsibility for the loss or damage, and 15% as the Certifier’s responsibility.
However, there was a complicating factor, because some of the items for which damages were awarded were not subject to the Certifier’s supervision. For those components of damage, it was agreed that the Builder was wholly responsible. The parties thus agreed on a schedule of damages categorised according to whether the work was under the Certifier’s supervision or not, which ultimately resulted in $269,982.66 being payable by the Builder to the Owners: damages judgment at [16].
Orders were also made that the Builder pay the Owners’ costs, in the proportion of two thirds up until the settlement with the Certifier (on 20 April 2023) and 100% thereafter. Such costs were to be paid on an indemnity basis due to effective Calderbank offers made before proceedings were commenced: damages judgment at [21]-[24].
Issues on appeal
There are two primary issues for determination on the appeal. They are referred to in these reasons as follows: (a) Issue 1: Inadequate site cut. A component of damages was awarded for a failure to undertake a site cut (excavation) behind the house, being the removal 3 of 88m of land at a cost of $95,746.57. The builder was responsible for 100% of the damages awarded for that breach. The complaint on appeal was that, notwithstanding the breach, the primary judge should not have awarded damages for that component because of certain terms of the building contract which made the Owners entirely responsible for that expense. The argument was put in two ways. First, an allowance of $3,000 for ‘siteworks’ was the extent of the sum for which the Builder was liable, with any amount above that being the Owners’ responsibility. The second way, put in the alternative, was that landscaping was excluded from the contract. (b) Issue 2: Double recovery. The Builder says that both defendants were liable for the total damages, that the Certifier had paid a settlement sum pursuant to that liability and that this should have been fully taken into account, reducing the award of damages he is ultimately liable to pay. The complaint is that the primary judge erred in not taking into account the settlement sum.
Depending on the outcome of the appeal, the court may need to revisit the question of costs at first instance.
Issue 1 – no error is established
The breach found by the primary judge and its consequence for rectification
The primary judge dealt with the inadequate site cut at [111]-[114] of the primary judgment. Her Honour referred to the acceptance by the Builder that he had not excavated the site in accordance with the approved plans. The primary judge then found at [114]: I am satisfied that the plaintiffs have shown that the builder has breached the contract because the excavation work was not carried out in accordance with the contract and was not done in a proper and skilful manner.
That finding is not challenged. Nor were the rectification costs of $95,746.57 in issue. The complaint is in part about [191] of the primary judgment: Counsel for the builder said the cost should not be allowed because landscaping was not included in the contract. It may be that, after the site has been excavated to the state it should have been pursuant to and included in the contract, some landscaping will need to be done. The claim is for the work the builder did not do which it should have done. 3
It is implicit in what was said that the primary judge did not accept excavation of 88m of land was “landscaping”.
The primary judge’s reasoning on this point at [192]-[199] is also relevant to consideration of the appellant’s alternative argument. The primary judge said at [192]- [193]: In considering whether the amount is reasonable, I take into account that the site is unsafe. Mr Johnson agreed that at one point, the excavation of the cut is about a metre and a half down from the gutters. In a horizontal orientation you would be able to touch it if you reached up. He agreed as the builder he was required to leave the site cut in a safe way.
Her Honour then summarised the evidence of the engineering experts, all of whom explained why the current site excavation was “a safety hazard due to its height and near-vertical formation.” The primary judge then continued at [197]-[199] (footnote omitted): The experts in their joint report have said the location of the site cut relative to the house is not in line with reasonable building practice, the site excavation is not compliant with good engineering practices and the site cuts are not safe. To make the site excavations compliant with good engineering practices landscaping works are required, including the formation of site cuts to a safe angle and the construction of retaining walls. Mr Johnson agreed with the proposition that on this site as the builder he was required to leave the site cut in a safe way. I am satisfied that the cost of rectification is a reasonable course to adopt and I allow the amount claimed.
The point to note is that the damages were awarded for more than just work specified in the approved plans that had not been carried out by the Builder. This was remedial work now required to make the site safe.
The issue was not pleaded and cannot be raised on appeal
The Owners submitted that the Builder should not be permitted to raise an argument about any contractual limitation of $3000 for the first time on appeal in circumstances where the point could have been met by further evidence at trial.
That argument relies on established principles set out in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Coulton v Holcombe (1986) 162 CLR 1 at 7-8; Whisprun Pty Ltd v Dixon [2003] HCA 48; 77 ALJR 1598 at [51]. They are to the effect that where the point is a question of law, such as the construction of a document, or on facts admitted or proved beyond controversy, the court has discretion to entertain the plea. However, where evidence could have been given in the court below which in turn could have prevented the point from succeeding, the point cannot be taken on appeal.
We accept that principle applies here. The breach having been established, it fell to the Builder to raise a defence as to why he should not have to pay for the remedying of the breach. As will be explained, while the Builder raised a number of defences, none of them were to the effect that the Builder was not obliged under the building contract to pay for rectifying the inadequate site cut because that expense was the Owners’ responsibility.
Starting with the pleadings and the amended statement of claim, it expressly referred to the breach as being a failure “to carry out the site cut in accordance with the architectural drawings requiring further extensive excavation”. The claim then pleaded (at [27]) that as a result of the breaches, the Owners had and will suffer damage, including the cost of rectification of the Works (as defined elsewhere in the claim) and for the cost of demolition and re-construction of the Works. The Owners claimed those damages from the Builder.
In the defence to the claim addressing the inadequate site cut (the excavation works), the Builder denied the breach, and contended that if any breach was found, the Owners had waived their right to claim compensation for that issue, because of conversations that were said to have been had on site, where the Owners “authorised [the Builder] to carry out the works in the manner proposed.”
The Builder also denied the damages claimed in [27], stating: The [Builder] denies the allegations of fact in paragraph 27, and says, further in the alternative, that the Plaintiffs’ damages are, at law limited to the [lesser] of either the cost of rectification or the diminution in value of the resulting property.
It is clear that the issue of any express or implied $3000 limit on excavation works, or exclusion of any damages on the grounds that such works were landscaping, did not arise for determination on these material parts of the pleadings.
The Builder argued on appeal that it was enough to plead the terms of the building contract and rely on them for their full meaning and effect. However, that submission cannot be accepted in circumstances where what is now sought to be argued was a distinct defence against the entire cost of rectification referable to the site cut. Such a matter must be expressly pleaded pursuant to r 405(4) of the Court Procedures Rules 2006 (ACT) (Rules) and further, it was a matter that required particulars sufficient to identify the case the Owners were required to meet pursuant to r 430(1)(b) of the Rules.
On the proper construction of the contract, the site cut works were not the Owners’ responsibility
Contractual provisions
The relevant parts of the building contract were as follows: “Contract” means Parts 1 and 2 of this Agreement, its Appendixes, the Approved Plans and Specifications, any drawing and attachments. “Works” means the building and construction work being undertaken by the Builder pursuant to this Contract, as described in the terms of the Contract, the Specifications and Approved Plans or as varied under the Contract. “Provisional Sum” means an estimate of Actual Cost for the supply and installation of work, goods and services, which cannot be entirely foreseen, defined or detailed at the time of signing this Contract.
The works required to be performed under the building contract included the following: 1. Standards of Construction a) The Builder will carry out the Works shown on the Approved Plans and described in the Specifications and in the terms of this Contract in a proper and skilful manner. …
The Specifications accompanying the building contract provided under “External”: Siteworks Allowance $3000
The building contract provided a regime for variations, including through extras or omissions or for additional work to be carried out. It is unnecessary to set out the detailed regime for variations, because there was no suggestion that the site cut was anything other than part of the work to be done under the Approved Plans. It was not work to be performed under a contractual variation.
Significantly, it was also not work that was the subject of any provisional sum. In that regard, the building contract did provide for the identification of “Provisional Sums”. The costs of such expenses were to be calculated separately. If the actual cost was less than the Provisional Sum, that amount was to be deducted from the contract sum, which in this case was $339,420. If the actual cost was more, then (relevant to the arguments here) the following applied: …the excess, together with the [builder’s margin of 20%] will be added to the Contract Sum, save that the Builder’s margin may be added to an excess of no more than 10% of the original estimated Provisional Sum for a particular Item…
However, and in our view fatal to the appellant’s argument, no provisional sums were specified as being included in the contract itself. (That is, item B3 of Appendix B in the building contract was left blank).
With regard to landscaping, under A19 “Materials to be Supplied by, or items of work to be carried out by the owner” were the following items: Landscaping Supply and install of shower screens Supply mirrors for bathroom ensuite
Landscaping also formed part of the exclusions within the Specifications schedule.
The effect of the contractual documents is that neither the contract permitting the identification of provisional sums nor the exclusions contained in the Specifications schedule specified any sum capturing “excavation work beyond $3000”.
Resolution of the parties’ competing positions on the contract
As stated at the outset, the Builder sought to rely on the terms of the contract in two ways: (a) The site cut formed part of a provisional sum for external “Siteworks”, for which an allowance of $3,000 was specified; or alternatively, (b) The site cut constituted landscaping, which was excluded under the contract.
The Builder submitted that the Owners were not entitled to damages for rectifying the inadequate site cut, because: (a) If the site cut was part of the “Siteworks” allowance, under the contract, any sum above the $3000 provisional allowance should have been paid by the Owners and the allowance had already been exhausted. (b) Alternatively, if the site cut was properly characterised as landscaping, the building contract provided that the Owners were responsible for landscaping, not the Builder.
The Owners contended that there was nothing in the contract to support the excavation works as being either landscaping or the Siteworks for which an allowance was provided.
Taking the words of the building contract and construing them according to their own meaning, the Owners’ submission is the proper construction of the building contract.
The Builder’s argument has difficulties because it depends on the court ignoring the express provision for the creation of provisional sums in the document and instead implying from other parts of the contractual document that the excavation work was to be treated as a provisional sum. Even that implication has difficulties because it relies on two further implied terms, namely: (a) the mention of an allowance of $3000 for Siteworks was intended to include substantial excavation work, as opposed to site preliminaries such as fencing, survey work and getting a toilet on site; and (b) notwithstanding that even in the specifications document siteworks beyond $3,000 were absent as an exclusion, the Owners were impliedly to be responsible for any amount that exceeded the allowance stated.
The better view is that taken by the primary judge, which may be summarised simply in these terms: (a) the Builder’s obligation under the contract was to undertake the Works, (b) the Works as expressly defined included building according to the approved plans, (c) the approved plans included the excavation work in question, and (d) there was nothing in the contract to exclude such work or its cost from forming part of the Builder’s responsibilities under the contract.
As to the alternative argument that the excavation work was landscaping, as seen in the extract from the primary judgment at [191] (set out at [14] above), that alternative construction was not accepted by the primary judge, who made the distinction between earthworks that were part of the Builder’s obligations and landscaping that may be required to that area after the building work by way of the site cut had been undertaken.
There was no error in the primary judge’s finding, which not only reflected a plain reading of what constituted landscaping under the contract but was an interpretation that was consistent with what was required by reference to the approved plans.
The evidence supported the site cut being included as part of the ordinary works of the contract
Perhaps the most telling reason why the Builder’s contractual arguments must fail is to be found in the Builder’s own evidence. The principal of the Builder deposed to a conversation with one of the Owners, where he said: Yes, we will dig down to the correct level now that you have seen the problem and approved it. I know you are on a tight budget so I won’t charge for the extra work.
The evidence indicates that the Builder appreciated the site cut was inadequate (for whatever reason), accepted that this was part of the Works and not landscaping and indicated that he would not be charging for the work. There was some suggestion that the Builder then did dig down further and did not charge the Owners. However, even that further work appears to have been inadequate.
Accordingly, there is no discernible error in relation to the primary judge’s award of damages for the inadequate site cut, either in the finding that such damages should be awarded at all or in the amount that was awarded. Issue 1 is not made out.
Issue 2 – the settlement sum was required to be taken into account
The Builder’s second complaint was that the settlement sum paid to the Owners by the Certifier was required to be taken into account in accordance with the rule against double compensation, such that the Builder’s liability should have been reduced by $200,000.
As stated at the outset of these reasons, we have accepted part of that argument, finding that the primary judge should have taken the settlement with the Certifier into account when assessing damages payable by the Builder. However, the context and conduct involved here mean that the consequences are not straightforward.
The nature and timing of the settlement sum
The primary judge’s finding and reasons
The reasoning that is the subject of this complaint is at [8]-[16] of the damages judgment. The primary judge dealt with the issue as part of discussing apportionment at [8]-[13] as follows: Decision on apportionment 8. I am not persuaded that either of the authorities referred to in the parties’ written submissions have any direct relevance to the matters to be determined by me. 9. In Hyblewski v Bellerive Homes Pty Ltd [2019] ACTSC 44 the Court noted that s 141 of the Building Act 2004 (ACT) only permits apportionment between “each defendant to the action who is found to be jointly or severally liable for the damage”. In that case, the claim against one of the two parties had settled on the first day of the hearing on the basis that the proceedings against that party were discontinued. The Court held this meant that there was only one defendant when the liability finding was made and, as a consequence, no apportionment under the section was possible. 10. That is not the case in these proceedings. The proceedings against the second defendant were not discontinued. Neither counsel suggested that the settlement of the claim against the second defendant meant that s 141 of the Building Act did not apply. 11. The decision of the High Court in Baxter v Obacelo [2001] HCA 66; (2001) 205 CLR 635 was considering the meaning and effect of s 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and not on legislation in the ACT. The only ACT legislation pleaded in these proceedings or referred to in written submissions, providing proportionate liability, is s 141 of the Building Act. 12. I do not accept the approach suggested by counsel for the builder. There is no evidence before me as to the basis on which the settlement with the second defendant was calculated. Nor is there any persuasive evidence as to whether there is a significant overlap between the plaintiffs’ costs as against the builder and the second defendant as suggested by counsel for the builder. Accordingly, it is not possible to ascertain whether there would be “double recovery” by the plaintiffs if I used the approach sought by counsel for the plaintiffs. 13. The quantum of each head of damage has been agreed. The apportionment of liability as between the builder and the second defendant has been agreed. As I have said, the outcome of this has been documented and agreed on in a spreadsheet as $269,982.66.
The primary judge then set out s 141(1) of the Building Act at [14], before concluding at [15]-[16]: 15. I accept the submission made by counsel for the plaintiffs that it is not my role to assess the damages payable by the second defendant, the purpose of the section is to determine the respective liability of each of the two defendants. The section provides that damages are to be assessed having regard to a party’s liability for the loss or damage. I am satisfied that this is reflected in the approach used by counsel for the plaintiffs. 16. I propose to enter judgment for the plaintiffs against the first defendant in the sum of $269,982.66.
The rule against double compensation or recovery
The rule against double compensation or double recovery is well-established. It is a principle that cuts across actions in tort, contract and statute. It was stated in Townsend v Stone Toms & Partners (1984) 27 BLR 26 at 38 per Oliver LJ in this way (emphasis added): The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered all or part of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant.
The emphasised words link the principle with the factual chronology in this case, in that the payment in question had been received by the Owners before arguments on quantum were heard and determined on the papers.
In Townsend, Purchas LJ explained the rule in this way (at 49): It follows that if in the first action a plaintiff recovers all that he is entitled to, then there is nothing left to recover in the second action. The law, now embracing equity, will not permit a plaintiff, by whatever procedural device he employs, to recover more than the damage that he has suffered, whether he claims in contract, tort or both. (The rule against double recovery.)
In an equitable context, the principle has been described as “full satisfaction prevents double recovery”: Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1995] UKPC 54; [1996] AC 514 at 522.
The principle reflects the concern of the law to ensure fairness, and as the appellant submitted, applies in Australia, as seen in the leading authorities of Baxter v Obacelo Pty Ltd [2001] HCA 66; 205 CLR 635 at [38]-[49], SAS Trustee Corporation v Budd [2005] NSWCA 366; 3 DDCR 382 at [33], and Boncristiano v Lohmann [1998] VSC 228; 4 VR 82 at 89.
It is a principle of general application, as stated in Townsend at 49. Both Townsend and Boncristiano were building cases involving mixed causes of action in contract and negligence. As a further example, in Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511, in the course of discussing cross-vesting legislation, Gummow and Hayne JJ referred at [147] to different defendants being sued on different causes of action (being a statutory action under bankruptcy legislation and negligence) and passing reference was made to those circumstances being: … a single claim for damages that [the plaintiff sought] to pursue against each of the parties he has sued. And judgment and recovery against one will diminish the amount that may be recovered from the others.
The “fundamental question” is whether the claims are concurrent or overlapping in respect of the damage sustained: Boncristiano at 89. As stated in Budd at [33] (emphasis added): The rule against double compensation may be invoked by one or more defendants. If it can be shown that the plaintiff/claimant has already received recompense in any form in respect of the loss for which compensation is claimed against the defendant invoking the rule, then the plaintiff’s loss requiring compensation from that defendant is regarded as discharged pro tanto. To award compensation with respect to that loss against that defendant would be to permit double recovery by the plaintiff in respect of a loss no longer calling to be compensated.
The rule against double recovery required consideration here
In this case, the application of the principle is not straightforward. The causes of action against the Certifier and the Builder overlapped, but only partially.
As reasoned by the primary judge in the damages judgment, there were difficulties in determining the application of the rule and whether it applied to any extent, because there was no evidence before the primary judge as to the basis on which the settlement with the Certifier was calculated. Her Honour was also correct in stating that there was a lack of “persuasive evidence as to whether there is a significant overlap between the [Owners’] costs as against the builder and the [Certifier]”.
The Owners submitted (in summary) that the payment was a commercial settlement that bought out the risk of potential liability and further costs, and that it was not possible to assess the costs component and deduct it from the $200,000 in order to arrive at the damages component of that sum. Further, it was not possible to know what part of the causes of action were being resolved by the consent judgment. There were aspects of the loss that were not concurrent because the Certifier was not liable for various parts of the construction where there was no supervisory role.
All of that may be accepted. However, applying the authorities discussed above, that the evidence was unclear on the point or difficult to untangle did not absolve the court from attempting to work out whether the principle applied, and the approach to be taken in giving effect to the principle if it did apply.
In this case, the rule against double recovery required consideration because: (a) On the pleadings, the claims against each defendant overlapped; (b) Before damages were assessed, there was a payment of $200,000 made by the Certifier to the Owners; (c) The prima facie evidence of payment was capable of applying to concurrent claims, with judgment entered against the Certifier in the same proceeding; and (d) In the circumstances outlined, it was not the Builder, but the Owners who had an evidential onus to deal with the uncertainty, and this was left unresolved.
Error is established because the primary judge declined to consider the application of the principle. The authorities set out above indicate that the reasons given for not considering the application of the principle were incorrect. Although it was not the primary judge’s role to assess the damages payable by the Certifier, it was part of the task to be satisfied that the Owners had proved they had an outstanding loss which was thus recoverable against the Builder as at the date the final orders as to damages were made.
The application of the principle in the circumstances of this case
The following table assists in understanding the calculations involved in applying the principle to the circumstances of this case: DAMAGES A Total Damages $287,084.00 B Damages attributable only to $173,077.76 Builder C Damages attributable to things $114,006.24 which both builder and certifier responsible (Shared Responsibility Damages) D Certifier’s apportioned 15% responsibility E 15% of the Shared $17,100.94 Responsibility Damages F Damages for which Builder is $269,982.66 liable A (Total Damages) - E (15% Shared Responsibility Damages) SETTLEMENT G Settlement sum (inc. costs) $200,000.00 H Amount of settlement sum $17,100.94 attributable to Certifier’s apportioned responsibility of Shared Responsibility Damages (E) I Amount of settlement sum $182,899.06 remaining as possible double compensation (G-H)
In addition to the circumstances listed at [89] above, which together gave rise to the need to consider the operation of the principle, the following matters are taken into account: (a) The assessment of the Owners’ loss was $287,084, plus the costs of the litigation. The litigation having concluded at first instance, those costs are now fixed and known to the Owners. Thus, although the total loss inclusive of costs is not before the court, it is ascertainable. (b) A review of the pleadings demonstrated that the Certifier was not sued in respect of work that he was not required to supervise. The corollary was that, of the sum awarded, there were breaches of contract for which the Builder was found to be 100% liable. These amounted to $173,077.76. (c) The principle of double recovery has no operation to those losses, because they did not overlap. The two defendants were not concurrent wrongdoers in respect of those damages. However, the remaining $114,006.24 constituted a concurrent loss as between the Certifier and the Builder.
The rule against double recovery applies, but its application is limited to the sum of damages relating to concurrent claims ($114,006.24) and the component of legal costs that relates to that concurrent loss.
Crafting an approach to give effect to the rule in the context and conduct of the case
The material question then, is whether credit was required to be given in any way to the portion of damages for which there was potential concurrency and if so, how that was to be done. The Builder argued that credit should have been given for the entire $200,000 against the total damages awarded (so that he was only liable for $87,084 plus costs). We reject that submission because as just explained, the rule only applies to the concurrent aspect of the damages claim, which was clearly ascertainable on the pleadings and evidence that was properly before the court.
This is where the context and conduct of the case becomes significant for the approach to be taken now. It must be acknowledged that this entire issue was only raised after the primary judgment had been delivered. That is not to be taken as a criticism because the settlement sum giving rise to the issue was only paid after the case had been heard and shortly before delivery of that judgment.
However, the issue having been raised, orders were made on 2 June 2023 providing only for the filing of submissions on the point. What in fact occurred was that without leave to file further evidence, the Builder emailed an affidavit directly to chambers. While it is not the case that the Owners had no notice of the point being taken, the way in which the point was belatedly raised and the irregularity meant that the evidence relied upon was not properly before the court.
As the Owners submitted, they complied with the order that had been made by filing submissions seven days later. The issue was then determined on the papers without further opportunity to deal with the additional evidence that was relied upon but never formally tendered as evidence in the proceedings.
In those circumstances, it would be unfair to resolve the question of uncertainty on the components of damages and costs through an evidentiary onus cast on the Owners when the defence was never formally amended to raise the point and the key document that may have given rise to any such onus was not even properly before the court.
That context influences the approach to take on appeal now. Although judgment was entered against the Certifier, it was not entered for any sum. This of course makes it difficult to separate the settlement sum into damages and costs, let alone to breakdown the damages into amounts that relate to concurrent claims. The artificiality of any such exercise is also accepted. However, there are features of this case that assist in the task of giving effect to the rule.
What is known is that of the $114,006.24 sum, the Builder is not liable, by reason of apportionment, for $17,100.94. While the apportionment does not bind the Certifier, it does bind both the Owners and the Builder. That means recovery of that aspect of the damages assessed can only be against the Certifier. It is at the very least appropriate for part of the settlement sum paid by the Certifier to be allocated to the proportion of damages for which the Builder is not liable.
Costs
The appeal proceeded on the basis that if the appeal were allowed, it may be necessary to revisit the costs orders made in the court below. That is because the costs orders were made on an indemnity basis having regard to effective Calderbank offers that were made but rejected before proceedings were commenced.
As the Builder remains liable for at least $173,077.76 and that liability far exceeds the amounts the Owners were willing to accept under any Calderbank offer before proceedings were commenced, whether any credit is given in payment of damage or costs for which the Builder is liable to the Owners is likely to be immaterial. However, in accordance with how the hearing of the appeal proceeded, the parties will be given the opportunity to be heard on costs.
Orders
I certify that the preceding one hundred and seven [107] numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: Date:
M Johnson Building Pty Ltd
O'Toole [2026] ACTCA 8
(1950) 81 CLR 418
(1986) 162 CLR 1
(2001) 205 CLR 635
Appeal allowed in part; the first-instance damages order was confirmed, subject to the Owners crediting any part of the settlement sum exceeding $17,100.94 plus one third of their solicitor-and-client costs to 20 April 2023, and the parties were directed to file and serve costs submissions within 14 days, with replies due within 21 days and the costs issue to be decided on the papers unless a party requests a further oral hearing.
Just as it is not enough for a plaintiff to claim a breach of contract merely by pleading and relying upon the contract for its full meaning and effect without identifying which term was breached, it is similarly not enough for a defendant to generally rely on a contract to defeat the claim without identifying which term it is that operates to defeat the claim.
Given the Builder’s defence made no mention of the particular clause of the contract that purported to make the Owners responsible for the excavation works, we accept that this was not a matter in issue on the pleadings at first instance.
Moving from the pleadings to how the case was run, we accept that the issue was similarly not addressed in the evidence. The only evidence that might have been relevant was ultimately not pressed by the Builder, and when the Builder sought to make submissions about the purported $3,000 limit, they too were the subject of objection on the basis that the issue was not before the court at first instance.
The Builder sought to characterise what occurred from an evidentiary perspective at first instance as the Builder not pressing evidence of a conversation with one of the Owners which concerned the $3,000 limit. The Builder submitted that notwithstanding that the conversation in the affidavit was not pressed, the argument that the contract imposed a $3000 limit by reference to an allowance was still maintained. It was said that this distinction was misunderstood by the primary judge.
We do not accept that argument as a fair characterisation of what occurred. The affidavit evidence led for the Builder was the subject of an objection by the Owners. In an exchange with the primary judge, the Builder was asked to explain the relevance of the conversation. The Builder submitted that the conversation went to the excavation works being landscaping which was a live issue. Counsel for the Builder was then expressly asked why the figure of $3,000 was relevant and counsel stated that he could not advance that. The primary judge thus rejected the evidence.
In closing submissions, the Builder attempted to submit that the contract only contemplated that the Builder would be liable for the first $3,000 regardless of what the excavation was. The primary judge and the Owners revisited the rejection of the affidavit evidence and the pleadings, and the primary judge held that the argument had been abandoned. There was no misunderstanding. The primary judge understood that the Builder sought to maintain the argument but ruled against him. That ruling cannot be criticised in circumstances where the point was not raised on the pleadings, the point was not explained when evidence directed to it was under challenge, and the position for which the Builder now contends was not articulated until after the close of evidence.
Turning to consider whether this was a strict point of law that could be determined by reference solely to the terms of the contract (such that it may be expedient in the interests of justice to entertain the point on appeal), those circumstances do not exist here. More is required than a straightforward construction of a contractual document on its face for two reasons.
First, the terms of the building contract relied upon by the Builder to exclude the cost of excavation works from the damages awarded are not express terms. The difficulties with the arguments based on the plain words of the building contract are discussed below. In such circumstances, evidence of the surrounding circumstances as to the objective intention of what was agreed on this issue could have been led, in the form of conversations (or lack thereof) between the Owners and the Builder.
Second, the expert evidence as to the quantum of the rectification required was all directed to the cost of the excavation works after the house was built, with the need to work around the house with limited access. There was some evidence from one expert of about $7000 being the cost of providing a safe site cut at 45 degrees, had the excavation work been carried out prior to the house being built. However, given the issue with the pleadings, it cannot be said that this was agreed or proved beyond controversy.
To the extent that the Builder relied on the excavation falling within landscaping, which was an aspect of the building contract expressly excluded as being the Owners’ responsibility, the same issue arises. For the purposes of that argument, it does not matter whether the work to be done, or even just the additional expense as a result of the breach, is described as excavation work or landscaping.
We therefore accept the Owners’ submission that, had the issue been raised at trial, additional evidence on quantum would have been necessary to address the possibility that the Builder’s argument would be accepted. The Owners submitted that they would have addressed the initial excavation work and its costs, in order to establish the Owners’ loss as a result of the work not being undertaken in accordance with the plans before the house was constructed, with the result that the site was now unsafe.
Applying established principles, it is not open to the appellant to raise Issue 1 on appeal.
The Builder’s alternative argument was directly inconsistent with the primary construction propounded. On the Builder’s primary case, the excavation was part of the work to be done, it was just that it was an additional expense for the Owners. On the alternative case, if the excavation earthworks were “landscaping”, then those works were not contractually required to be done by the Builder at all. It is difficult to reconcile those two positions.
Moreover, the construction of landscaping in the building contract as including the excavation work is against the express terms of the building contract to the contrary. The “Works” the Builder was required to perform were those that were the subject of the approved plans. The excavation work was specified on the approved plans (most clearly on the approved design shown on the elevation plans).
The Builder’s argument rests on a construction of the contract that work specified on the approved plans was impliedly excluded from the Works because of a contractual exclusion of “landscaping” which itself impliedly extended to the site cut. It is a construction that does not accord with the objective documentation in the form of detailed plans as to what the Builder was required to do.
The appellant submitted that the primary judge did not take into account the settlement sum at all and that was an error. We agree that in circumstances where part of the damages sought against the Builder were also sought against the Certifier, and the settlement sum had been paid to the Owners shortly before the delivery of the primary judgment and where the parties were heard on the issue before the final orders were made, the settlement sum was required to be taken into account. However, the manner in which that should have been done was not straightforward.
We will first explain the principle that founds this complaint and why it applied to the circumstances of this case and then address the most appropriate course to take now.
See also Government Insurance Office of NSW v Aboushadi [1999] NSWCA 396 at [26]- [31]) and in the Territory, Brozinic v The Federal Capital Press Pty Limited trading as The Canberra Times [2015] ACTCA 8 at [7].
Significantly for this case, if the claim is for the same damage, settlement with one wrongdoer (and subsequent recovery) will have a consequence for what may be recoverable from the second wrongdoer. This was explained by reference to both equity and common law in Baxter, with Gleeson CJ and Callinan J stating at [46]: …the significance of the contractual basis upon which a plaintiff settles with one tortfeasor, and its consequences as between the plaintiff and another tortfeasor, may be found both in the equitable principle which prevents double satisfaction, and in the common law principle that a plaintiff who has fully recouped the loss cannot obtain a further award of damages. If a plaintiff has agreed with one tortfeasor to accept a sum upon the basis that it will be received in full discharge of all claims for compensation for the loss or damage incurred by the plaintiff, it would ordinarily be unconscientious to pursue a further claim in relation to the same damage against another tortfeasor. And if a single loss has been fully recouped, there is no further remedy for a plaintiff to pursue. The approach to take where the evidence is unclear
In Townsend, it was squarely acknowledged that there may be difficulties in applying the principle where the losses claimed are not entirely concurrent, but that does not mean that the principle does not operate at all. Oliver LJ stated at 41: But granted for the moment that there may appear to be a question of apportionment of the sum between claims which are good, claims which are bad, and claims which are not concurrent, the mere fact that this may not be altogether straightforward does not, to my mind, absolve the Judge from attempting the task. … …That the payment has to be taken into account in some way seems to me to be beyond doubt.
Where the circumstances of payment to a plaintiff are unclear, courts have addressed this by directing attention to where the onus lies, and specifically, the evidential onus. Although the rule against double recovery is a defence, and it is for the defendant to prove that double recovery has or will occur, it is the plaintiff who receives the payment and is therefore best placed to clear up the uncertainty as to the allocation of the money paid.
Thus, Townsend (at 41) and Boncristiano (at 89) each held that once a defendant discharges the initial burden of showing an acceptance of a payment-in apparently referable to a concurrent claim, a presumption arises that the sum is for the concurrent loss. If the plaintiff wishes to argue that such payment relates to some claims which are not concurrent, or which could not succeed against that defendant, it is the plaintiff who is required to lead that evidence.
How this works was explained in Budd at [37], [49]-[50]: [37] A defendant who invokes the rule against double compensation must establish that the plaintiff has already been compensated with respect to the relevant loss. Sometimes all that can be shown is that the plaintiff has received money from a third party without it being known what the payment was for. It might, for example, relate to legal costs of proceedings that were withdrawn. There may be uncertainty as to the nature of the receipt. In such circumstances, the defendant will have failed to make good the defence. … [49] There is a line of cases dealing with the rule against double compensation, holding that where the person invoking the rule (usually the defendant) establishes that money was paid to the other party in circumstances capable of attracting the rule (eg with respect to a concurrent claim), it is for the recipient to show that the money was not received by way of compensation for the loss (Townsend … at 41, 51, 56 (Eng CA), Boncristiano at 89-90). [50] I incline to the view that these cases involve an evidentiary onus being cast upon the party having access to the relevant information rather than a free-standing principle forming part of the rule against double compensation. …
In Townsend, Purchas LJ (agreeing with Oliver LJ) similarly referred to the initial onus on the defendant, before stating that there was no one correct approach for giving effect to the rule, as seen at 51-52: …Where a payment has been accepted generally, the plaintiff must still show that he has suffered damage in respect of any cause of action he chooses to pursue. … Beyond these general principles, the way in which the trial Judge approaches the determination of these questions must depend very much upon the context and the conduct of each individual case. It would, therefore, be in my judgment unwise for this Court to lay down general rules.
Other approaches have been canvassed in the authorities. Where there has been recovery but the extent to which the sum relates to concurrent claims is unclear and the sum has not been taken into account at all upon judgment, an approach may be to acknowledge the lack of credit and order that execution shall not issue for more than whatever is the appropriate amount, having regard to the moneys accepted on the payment in (the approach was acknowledged to be theoretically available in Townsend at 40, albeit subsequently rejected in the circumstances of that case). In a similar vein, the Builder might have subsequently been able to apply to the court for relief by way of an equitable injunction to prevent enforcement of a judgment against it, where to do so would lead to double recovery: Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; 186 CLR 574 at 608. The necessity for further litigation and inquiry makes each of those approaches less attractive than endeavouring to give credit without the benefit of clear evidence at the time the assessment is carried out, but they are available.
That leaves $96,905.30 of assessed damages that relate to concurrent claims and against which part of the settlement sum may potentially be credited.
It also leaves $182,899.06 of the settlement sum, which was inclusive of costs. One third of the Owners’ costs up to 20 April 2023 (which were to be assessed on an indemnity basis) is not payable by the Builder: damages judgment at [21]. As with the reasoning on damages, recovery of that sum of money by the Owners can only be against the Certifier. It is therefore appropriate that part of the settlement sum paid by the Certifier also be credited to those costs.
Those costs are unknown. As a result, it is unknown whether one third of the Owners’ costs up to 20 April 2023 absorbs the entirety of the remaining $182,899.06 paid by the Certifier, or whether there is an excess that might be credited toward the costs payable by the Builder up to 20 April 2023 or the component of the assessed damages for which the Builder is concurrently liable ($96,905.30).
Tracing all those calculations through, we consider that the fairest approach is to require that credit be given for any part of the settlement sum that exceeds the value of $17,100.94 and one third of the Owners’ costs up to 20 April 2023 and to leave it to the parties to determine how such credit is given.