PRITCHARD v TRIUS CONSTRUCTIONS PTY LIMITED & Ors

Judgment 1HIS HONOUR: Nature of application Judgment was handed down in the principal proceedings on 20 July 2011 ( Pritchard v Trius Constructions Pty Limited & Ors [2011] NSWSC 749). The background to the judgment was that the plaintiff, an employee of Trius, which was a subcontractor of Oceanic, suffered serious injuries while he was working at a coal preparation plant conducted by Oceanic. The plaintiff brought proceedings in negligence against Trius and Oceanic. In due course the plaintiff settled his claim against Oceanic and discontinued against Trius. 2The judgment related to the cross-claim by Oceanic against Trius for contribution to that settlement pursuant to s5(1)(c) Law Reform (Miscellaneous Provisions) Act 1946 and for a full indemnity for breach of contract. 3The effect of the judgment was to reject Oceanic's claim for breach of contract and to apportion liability for the plaintiff's injuries as to 60 percent against Trius and 40 percent against Oceanic. Oceanic and Trius were directed to prepare Short Minutes of Order in accordance with the judgment. 4When Oceanic and Trius again came before the Court, they were unable to agree as to the form of the orders to be made because two matters remained outstanding. These were the rate of interest which was to be paid by Trius in respect of its contribution and whether Trius was entitled to any special costs order. Interest 5The parties did not dispute the following: (i) Oceanic paid the consent judgment to the plaintiff on 1 March 2010. (ii) Oceanic was entitled to prejudgment interest pursuant to s100 of the Civil Procedure Act 2005 (CPA) on that part of the judgment which it was entitled to recover from Trius from that date. (iii) The amount which attracted that prejudgment interest was $78,000. 6The matter at issue between Trius and Oceanic was the applicable rate of interest. Trius submitted that the rate of interest was determined by s18 of the Civil Liability Act 2002 (CLA). Oceanic submitted that s101 of the Civil Procedure Act 2005 (CPA) applied and that interest should be calculated in accordance with Supreme Court rates. 7Trius relied upon the following provisions in Part 2 of the CLA . "11. In this Part: "Personal injury damages" means damages that relate to the death of or injury to a person. 11A(1) This Part applies to and in respect of an award of personal injury damages, except an award that is excluded from the operation of this Part by s3B. (2) This Part applies regardless of whether the claim for damages is brought in tort, in contract, under statute or otherwise. (3) A court cannot award damages, or interest on damages, contrary to this Part ..." "18(2) If a court is satisfied that interest is payable on damages (other than damages in respect of which a court cannot order the payment of interest under subsection (1)), the amount of interest is to be calculated: (a) For the period from when the loss to which the damages relate was first incurred until the date on which the court determines the damages, and (b) In accordance with the principles ordinarily applied by the court for that purposes, subject to subsection (3). (3) The rate of interest to be used in any such calculation is: (a) Such interest rate as may be determined by the regulations, or (b) If no such rate is determined by the regulations - the relevant interest rate as at the date of determination of the damages. (4) For the purposes of subsection (3) the "relevant interest rate" is the rate representing the Commonwealth Government 10 year benchmark bond rate as published by the Reserve Bank of Australia in the Reserve Bank of Australia Bulletin ... (5) Nothing in this section affects the payment of interest on a debt under a judgment or order of a court." 8Trius correctly identified the issue as whether Oceanic's judgment against Trius, pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 was "in respect of an award of personal injury damages". 9Trius developed its argument as follows. Oceanic's liability to the plaintiff was for personal injury damages as defined in s11. Oceanic's claim for damages against Trius for contribution was a claim for contribution to the amount of personal injury damages which it had paid to the plaintiff. As such, it was a claim "in respect of" an award of personal injury damages. 10Trius submitted that while there was no authority directly on the question, assistance was provided by Firth v Sutton [2010] NSWCA 90. That was a claim in negligence by a plaintiff against her solicitors for failing to commence proceedings on her behalf for personal injury damages. The plaintiff's entitlement to damages against the solicitors was successful at first instance and was upheld on appeal. When assessing the damages to which she was entitled, Allsop P (with whom Macfarlan JA and Young JA) agreed said: "187 However, interest needs to be dealt with. The value of the lost cause of action was based on recovery of $330,596.42. With a one third deduction for the contingencies of that lost chance the sum of $220,397.61 was reached less the costs of $25,000 producing $195,397.61. 188 This was the value of the chose in action on 1 September 1999 valued at the date of the notional trial. A component of interest should be added to that sum to reflect the deprivation that Ms Sutton suffered in not receiving it in 2000. That interest calculation should, however, take into account the timing of payments of workers compensation entitlements received to the date of the professional negligence trial. These totalled $87,193.70. They were received during the period 1998 to 2009. For present purposes, I will simply deduct that sum from the net value of the chose in action at 1 July 2000 ($195,397.61) giving a rounded down sum of $108,000. This backdating of the amounts received in WC Act benefits to 1 July 2000 is probably to the disadvantage of Ms Sutton. One of the benefits of the lump sum payment was its ability to earn interest. The lump sum could have earned interest, although it would have been drawn down upon for various expenses from time to time. 189 The primary judge dealt with interest in a separate judgment from which there was no appeal. His Honour, correctly in my view, characterised this as a loss of opportunity action and saw interest controlled by the Civil Liability Act 2002 (NSW), s18. His Honour awarded interest therefore on the basis of the long term bond rate. However, his Honour awarded interest only after taking into account the benefit of future entitlements under the WC Act." 11Trius submitted that this was a stronger case for the application of the CLA than Firth v Sutton . In this case the claim was "in respect of" personal injury damages paid to the plaintiff whereas Firth v Sutton was a professional negligence claim against the solicitor for a lost opportunity to bring a personal injury claim. 12Oceanic sought to distinguish a claim for personal injury damages by a plaintiff against a tortfeasor from a claim for contribution or indemnity between two tortfeasors. Oceanic submitted that once the plaintiff had obtained a consent judgment against Oceanic, the character of that which Oceanic was claiming from Trius changed. What Oceanic was seeking was contribution towards a judgment which had been entered against it. It did not matter that the judgment had been entered in respect of a claim for personal injury damages. 13Oceanic also sought to rely upon the provisions of s18(5) CLA that "nothing in this section affects the payment of interest on a debt under a judgment or order of a court". That submission can be quickly dealt with. It is correct to say there was a judgment but it was a judgment between the plaintiff and Oceanic. As of 1 March 2010, there was no judgment in favour of Oceanic against Trius only a right to obtain judgment if ultimately it was successful. Accordingly, s18(5) CLA provides no assistance to Oceanic on this issue. 14Oceanic also relied upon such cases as Westpac Corporation v Tomassian (1992) 32 NSWLR 207 which held that the statutory claim for repayment of compensation to which an employer was entitled pursuant to s151Z(1)(d) could not be characterised as a "claim for damages under the Motor Accidents Act 1988" and therefore did not have to comply with the procedural provisions of that Act. Oceanic submitted that by analogy this was the same kind of claim and should be characterised in the same way. 15Oceanic sought to characterise its claim for contribution against Trius in another way. It submitted that from the time when it settled with the plaintiff and paid that judgment, it had taken over the liability of Trius to the plaintiff. It was from that time that Trius as a matter of law owed a debt to Oceanic in respect of its liability to the plaintiff but the amount of that debt did not crystalise until liability was apportioned between it and Trius in the principal judgment. That being so, the claim for contribution was not a claim for personal injury damages. 16Oceanic submitted that the observations of Allsop P in Firth v Sutton relied upon by Trius were made in passing and did not constitute a considered opinion by his Honour. Consideration 17In deciding how to characterise a claim pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 it is useful to set out that the terms of that section: "5(1) Where damage is suffered by any person as a result of a tort ... (c) Any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution of 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 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; ..." 18Were I coming to this matter unassisted by authority, I would favour the position of Oceanic. Claims against solicitors for professional negligence where that negligence involves a claim for personal injuries, have always been treated as different in character to that which formed their basis. It is for that reason that such claims have a statute of limitations of 6 years whereas a claim for personal injuries has a statute of limitations of 3 years. As Tomassian indicates, the statutory claim for the recovery of workers compensation paid, although it was based on negligence in the driving of a motor vehicle, did not have to comply with the provisions of the Motor Accidents Act 1988 because it was a claim of a different character. The entitlement to bring the action did not arise because compensation was paid as a result of the negligence of the tortfeasor in using a motor vehicle, but from a specific and separate statutory right under the WCA to make such a claim. 19An employer seeking the recovery of compensation paid from a tortfeasor has an entitlement to interest at either the Supreme or District Court rates. That entitlement does not arise from the statutory power to bring the claim but from the fact of the claim being brought in a court. Cases such as Howard Rotavator Pty Limtied v Wilson (1987) 8 NSWLR 498 and Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 make that clear. 20By analogy with those cases, I would have thought that because the right to make a claim for contribution is given by statute and the claim is brought in the Supreme Court, this would give an entitlement to interest at the Supreme Court rate from the date when Oceanic's right to make the claim came into existence, i.e. 1 March 2010. 21However the approach to interest of Allsop P in Firth v Sutton at [189] is inconsistent with that analysis. I have no reason to regard the observations of his Honour in that paragraph as anything other than considered and I am obliged to follow them. His Honour's observations have particular force because they are made in the context of a claim for professional negligence which has traditionally been regarded as something different to a claim for personal injuries even where the basis for the action arises from a failure to pursue a personal injury claim. 22I have concluded that I am bound by the authority of Firth v Sutton to find in favour of Trius on this issue. Accordingly, I conclude that the rate of interest payable by Trius to Oceanic on $78,000 is to be in accordance with s18 of the CLA. Costs order 23Trius sought a special costs order against Oceanic. The basis for this claim was a document which purported to be an offer of compromise, dated 10 May 2011, which was sent by Trius to Oceanic. In order to understand the argument, it is necessary to set out the contents of that document: "AGREEMENT The first defendant and defendant to the second amended cross-claim (the cross-defendant) offers to compromise the second amended cross-claim on the following terms: