Orcher v Bowcliff Pty Ltd

LEGISLATION CITED : Law Reform (Miscellaneous Provisions) Act 1946

CASES CITED : James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 196 CLR 53

John James Orcher (Plaintiff) Bowcliff Pty Ltd t/as The Bridge Hotel (First Defendant) PARTIES : Tamiano Paseka (Second Defendant) Richard Francis Keough (Third Defendant)

J Sexton SC with C Heazelwood (Plaintiff) COUNSEL : R Sheldon SC (First Defendant) S G Campbell SC (QBE Insurance (Australia) Limited)

Carneys Lawyers (Plaintiff) SOLICITORS : Wotton + Kearney (First Defendant) HWL Ebsworth Lawyers (QBE Insurance (Australia) Limited)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2009/296392 John James Orcher v Bowcliff Pty Ltd t/as The Bridge Hotel & Ors

JUDGMENT 1 HIS HONOUR: Mr Orcher was seriously injured when he was allegedly assaulted by Tamiano Paseka outside the Bridge Hotel at Rozelle in the early hours of 25 October 2007. He brought proceedings against Mr Paseka and Bowcliff Pty Ltd, the corporate manifestation of the Bridge Hotel. Mr Orcher alleged, among other things, that Mr Paseka was employed by the hotel. The matter is currently part heard. It remains a live issue in the proceedings whether or not Mr Paseka was actually working for the hotel at the time. 2 Mr Orcher's claims provoked a series of cross-claims. The first cross-claim was brought by Bowcliff against Australian Corporate Protection Pty Ltd trading as Australian Crowd Management Services (NSW) and Mr Paseka. The second cross-claim was brought by Australian Corporate Protection against DSSS Cousins Pty Ltd. The second cross-claim was subsequently amended to substitute QBE Insurance (Australia) Limited as the cross-defendant. It was alleged that QBE was the insurer of DSSS Cousins, which in the meantime had gone into liquidation. In due course, but before the hearing of the proceedings commenced before me on 5 October 2010, both cross-claims were settled. In relation to the first cross-claim there was a verdict and judgment for Australian Corporate Protection with an order that the parties to that cross-claim pay their own costs. In relation to the amended second cross-claim there was a verdict and judgment for QBE with an order that the parties to that cross-claim also pay their own costs. 3 On the third day of the hearing before me, Mr Orcher indicated that he wanted to join Richard Francis Keogh, who was the licensee of the hotel at the time of the assault. That application was uncontroversial in isolation and in due course Mr Orcher filed a further amended statement of claim joining Mr Keogh as a third defendant. However, apparently as a consequence of this, both Mr Orcher and Bowcliff then each filed notices of motion seeking various orders including, relevantly for present purposes, applications for leave pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 to commence proceedings against QBE. 4 QBE opposes the grant of leave to commence proceedings against it upon the basis of the principles most notably considered in James Hardie & Coy Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; (1998) 196 CLR 53. For the reasons that follow, I consider that the applications to join QBE are ill founded and should be dismissed with costs. Background 5 UCPR 36.11 provides relevantly as follows: " 36.11 Entry of judgments and orders

(1) Any judgment or order of the court is to be entered.

(2) Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court's computerised court record system.

(2A)…" 6 The judgments on the cross-claims were entered in accordance with this rule on 24 September 2010. 7 Section 6 of the Law Reform (Miscellaneous Provisions) Act is relevantly as follows: "6 Amount of liability to be charge on insurance moneys payable against that liability

(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.

(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up.

(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured: Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken.

(5)…" 8 Both cross-claims sought contribution and/or indemnity from the cross-defendants pursuant to s 5 of the Act. That section is relevantly as follows: " 5 Proceedings against and contribution between joint and several tort-feasors

(1) Where damage is suffered by any person as a result of a tort (whether a crime or not):

(c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.

(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity." 9 Each cross-claim recited the facts and allegations contained in the statement of claim and sought contribution and/or indemnity from the respectively named cross-defendants for any liability that the cross-claimants might have for Mr Orcher's loss or damage. For present purposes it is important to observe that Mr Orcher sued the first cross-claimant Bowcliff directly in the statement of claim. However, the second cross-claimant Australian Corporate Protection was only joined to the proceedings as a cross-defendant at the suit of Bowcliff. Accordingly, QBE only became a cross-defendant at the suit of Australian Corporate Protection, and not by any party that had been sued directly by Mr Orcher. 10 Mr Orcher and Bowcliff both contended that it was significant that QBE had not been sued directly by either of them and that in such circumstances James Hardie v Seltsam did not apply to prevent them joining QBE to the proceedings. This was said to be so despite QBE having been earlier joined as a party to the proceedings by Australian Corporate Protection and having been adjudged not to be liable in accordance with the consent orders entered on 24 September 2010. In contrast, QBE contended that this made no difference and that James Hardie v Seltsam provided it with a complete answer to the present applications. Consideration 11 I was referred to no authority by any party other than James Hardie v Seltsam, to which all parties took me at length and in detail. It will be recalled that in that case a plaintiff sued three defendants as concurrent tortfeasors in the Dust Diseases Tribunal. Two of the defendants cross-claimed against each other for contribution under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. Consent judgments were entered after the commencement of the trial in favour of the plaintiff against two of the defendants and judgment was entered for the third defendant against the plaintiff with no order as to costs. Before the judgments were pronounced, counsel for one of the defendants against whom judgment was to be entered stated that his client did not consent to judgment in favour of the third defendant against the plaintiff and contended that judgment in favour of the third defendant would not impede his client's claim for contribution against it. The trial judge agreed and deferred hearing the cross-claim against the third defendant. Before that occurred, the third defendant obtained an order from the Tribunal, differently constituted, striking out the cross-claim for contribution on the basis that the entry of judgment in its favour meant that it was not liable to the other defendant. 12 By majority the High Court agreed, holding that the third defendant was not a joint tortfeasor who was liable with the other defendant in respect of the damage suffered by the plaintiff within s 5(1)(c) because the entry of judgment in favour of the third defendant established that it was not liable to the plaintiff and thereby absolved it from liability to the other defendant. It held further that since the third defendant had been sued by the plaintiff and the plaintiff's action had been brought to an end by a final order, the third defendant was not a person yet to be sued for the purposes of s 5(1)(c). Accordingly, the other defendant had no entitlement to contribution from the third defendant under either limb of s 5(1)(c). 13 The majority of the Court held that the consent judgment of the Tribunal, as a court of record, in favour of the third defendant was no less effective to absolve it from liability in the contribution proceeding than if the judgment had been given after a trial. It was for the other defendant to take steps to oppose the entry of judgment and put itself in the position to appeal against that. The other defendant had a right to be heard before consent judgment was entered in favour of the third defendant. As the judgment remained on the record, neither limb of s 5(1)(c) was satisfied. 14 In the present case the final orders on the cross-claims were made by consent and without admission of "the parties". It has not been suggested either by Mr Orcher or Bowcliff that they opposed, or were denied an opportunity to oppose, the orders that disposed of the cross-claims. 15 For present purposes, some portions of the joint judgment of Gaudron and Gummow JJ are particularly instructive. The following extracts bear this out: "[19] The appellant might have sought deferral of the entry of judgment in favour of the respondent until determination of the issue of liability of the appellant to the plaintiff for the purposes of the appellant's contribution claim against the respondent. In the process of negotiation between the parties, various options might have been available. A release agreed between the plaintiff and one tortfeasor would not necessarily have released the others. Further, the respondent concedes that, if the plaintiff had released the respondent without a judgment, then the appellant could have maintained its action for contribution.

[25] The first step is to identify those upon whom the new statutory right is conferred and the time from which that conferral is operative. This is answered by the construction placed by authority upon the opening words of par (c) of s 5(1). The reference to the right of a tortfeasor who is 'liable in respect of ... damage' to recover contribution is, as Windeyer J put it, 'to a person whose liability as a tort-feasor has been ascertained, ordinarily by judgment, perhaps in some cases in some other way'. The scheme of the legislation is that, as his Honour said, a 'person thus found liable may seek relief from having to bear the whole burden'.

[28] Whilst the liability ascertained as between the plaintiff and the claimant tortfeasor is a condition precedent to the assertion by that tortfeasor of its statutory right to recover contribution, the amount of that liability so ascertained is not determinative of the amount recoverable on that statutory action from other tortfeasors. Further, the connection between the liability of the claimant tortfeasor to the tort victim and the standing of the claimant to bring the statutory action for contribution does not carry the consequence that the statutory action is subjected to the same limitation or other procedural regime imposed upon an action by the tort victim against the claimant tortfeasor.

[29] However, George Wimpey & Co Ltd v British Overseas Airways Corporation established that the outcome of any action between the plaintiff and the claimant tortfeasor is determinative of satisfaction by the claimant tortfeasor of the condition precedent to a claim by it under the statute…

[30] The condition precedent may not have been satisfied at the time when the claim for contribution was instituted. That step of claiming contribution may be taken in anticipation of resolution of the main action…

[31] The claimant tortfeasor who satisfies the condition precedent may recover contribution from those other tortfeasors who bear responsibility in respect of the same damage in a fashion which answers a description in the balance of par (c). The defendant tortfeasor must be one (i) 'who is ... liable in respect of the same damage' or (ii) 'would if sued have been, liable in respect of the same damage'. Only those who satisfy (i) or (ii) are amenable to a claim for contribution under the statute. Further, those who have been sued to judgment, whatever its outcome, do not fall within (ii). That is the effect of settled authority in this Court.

[32] In Brambles Constructions Pty Ltd v Helmers , Barwick CJ identified the House of Lords in George Wimpey & Co Ltd v British Overseas Airways Corporation as having:

'decided that a tort-feasor who had been sued by the injured party and had successfully defended the action, no matter on what ground, could not be required to pay any contribution to any other tort-feasor who suffered judgment at the hands of the injured party in respect of the same damage. He was neither a tort-feasor liable to pay damages nor a tort-feasor who had not been sued.'

[34] It should be accepted that the relationship between the two limbs in par (c) is that identified by Barwick CJ in Brambles Constructions Pty Ltd v Helmers . The persons against whom there is an entitlement to recover contribution are (i) those who have come under an obligation to pay money in respect of the same damage and (ii) those who, not having been sued by the injured party, would, had they been sued, have been found to have caused or contributed to the same damage by a tortious act.

[35] The first limb of s 5(1)(c) identifies those who, like the respondent, have been sued by the injured party but fixes only upon those who have been made liable. The second limb identifies those who would, if sued at any time, have been liable, not those who were sued but obtained the entry of judgment in their favour, whether by consent or otherwise. There is no third category which identifies a person from whom contribution may be recovered by reference to the circumstance that this person has been sued and has been held not liable. Unless the first or second limb is satisfied, there is, in the terms of s 5(1)(c) itself, no person 'entitled to recover contribution under this section'. *****

[40] However, in the present litigation, the order dismissing the plaintiff's action against the respondent was a final order which brought that action to an end. It would be a distortion of the text and structure of par (c) of s 5(1) to hold in those circumstances that the respondent thereafter answered the description of one yet to be sued. The plaintiff's cause of action against the respondent merged in the judgment, thereby destroying its independent existence." 16 Mr Orcher and Bowcliff sought to emphasise what Kirby J said in his dissenting judgment at [87], with which McHugh J agreed. His Honour said this: "[87] It is clearly contrary to principle to place a plaintiff and a tortfeasor, against whom contribution has been, or may be, sought in a position where they can, between themselves, deprive another tortfeasor of its statutory right to contribution. As Lord Denning observed in Nana Ofori Atta II v Nana Abu Bonsra II :

'The general rule of law undoubtedly is that no person is to be adversely affected by a judgment in an action to which he was not a party, because of the injustice of deciding an issue against him in his absence.'" 17 However, this view does not represent the law and cannot avail Mr Orcher or Bowcliff in this case. Mr Orcher and Bowcliff may not have been parties to the amended second cross-claim but they were parties to the action. There can in the particular circumstances of this case be no suggestion that some issue was decided against them on the amended second cross-claim in their absence or that any injustice attends the entry of judgment in favour of QBE to which they each consented. 18 Mr Orcher and Bowcliff also sought to emphasise what Callinan J had to say at [125] to [127]. Those paragraphs are as follows: "[125] Contrary to the submission of the appellant, the respondent here does not in my opinion fall into the latter category. The use of the words "if sued" leads to the conclusion that those who fall within that category must be tortfeasors who have not in fact been sued by the plaintiff.

[126] Nor can the respondent fall into the former category for it is not liable for the damage, that is, the damage to the plaintiff to which the sub-section makes reference. Indeed it is the final judgment in this case that establishes that the respondent is not liable for the damage suffered by the plaintiff.

[127] The final judgment, which is a judgment of a Court of Record, is no less a judgment of that kind because it was a judgment entered by consent." 19 Mr Orcher and Bowcliff submitted that the principle in James Hardie v Seltsam only operated when the party sought to be joined had been sued by the original injured party, in this case Mr Orcher. They placed particular emphasis upon the words "who have not in fact been sued by the plaintiff" as they appear at the conclusion of [125] of Callinan J's judgment in support of the contention that only a defendant to a settled or adjudicated cross-claim who had also been sued by the plaintiff, whose loss was in issue in both the principal proceedings and the cross-claim for contribution, was entitled to the conclusive protection that the judgment provided. According to this argument, as neither Mr Orcher nor Bowcliff had sued QBE, QBE remained or was somehow still to be treated as a tortfeasor "who is, or would if sued have been, liable in respect of the same damage", and so amenable to be re-joined as a defendant or cross-defendant, rather than as a tortfeasor who was sued by Australian Corporate Protection and by consent found to be not liable, and therefore beyond the terms of s 5(1)(c). 20 In my opinion, the words "sued by the plaintiff" appear in his Honour's judgment where they do because it was only the plaintiff who had in fact sued all three defendants in that case. His Honour was dealing in terms with the appellant's submission and was emphasising that the respondent fell within the terms of s 5(1)(c) as a party who had in fact been sued. The words "sued by the plaintiff" conveniently and accurately reflected the particular facts of that case and were not intended to be a more general statement of limitation or exclusion as Mr Orcher and Bowcliff suggest. 21 The reasoning of the majority in the case forecloses such a submission in any event. Mr Orcher and Bowcliff were complicit in the judgment in favour of QBE and raised no opposition to the Court's final disposition of the cross-claim in its favour. It was open to either or both of them, at any time prior to the entry of the judgment in favour of QBE, to have commenced proceedings against QBE by claim or cross-claim respectively, which would not have been affected by the conclusive nature of the judgment entered on the amended second cross-claim. They chose not to do so. In the present litigation the order dismissing the claim against QBE "was a final order which brought that action to an end". I consider in this case, as in James Hardie v Seltsam (see [40]), that it would be a distortion of s 5(1)(c) to hold in these circumstances that QBE answered the description of one yet to be sued only because it was not sued by Mr Orcher or Bowcliff. QBE is a tortfeasor who was sued in respect of the same damage and who was found not to be liable. I do not express a view about whether any cause of action available to Mr Orcher or Bowcliff in respect of the damage suffered by Mr Orcher as a result of the tort must also have merged in the judgment that has been entered on the amended second cross-claim "thereby destroying its independent existence", as neither Mr Orcher nor Bowcliff was a party to that cross-claim. Conclusion 22 It follows in my opinion that the applications to join QBE should be dismissed with costs. 23 Alternatively in each case, the amended notices of motion also seek orders that leave be granted pursuant to s 471B of the Corporations Act 2001 to commence proceedings against DSSS Cousins Pty Ltd (in liq) and that it be joined as a party to the proceedings pursuant to UCPR 6.24. In the circumstances of this case, I have proceeded to deal with the limited issue considered in these reasons as a matter of some urgency. In the same context, and at the request of the parties, I have not dealt with the alternative prayers for relief under UCPR 6.24 or s 471B. 24 I will therefore hear the parties with respect to what they now propose should occur.

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