(5) I therefore regard it as open to me to have regard to the analysis of the policy considerations in Trendtex and Giles (and in cases in England that follow them), and to the recognition of those changed, or revealed, policy considerations in decisions in this country.
54 In relation to contractual causes of action, I find the distinction between liquidated and unliquidated claims difficult to follow. I have already noted that a debt is assignable even if it is overdue. As is pointed out in Meagher, Gummow & Lehane at 281 [6-480], where the debt is overdue, "there has been a breach of the contract to pay and … in fact, all that is assigned is the right to sue to recover the debt. The case of an overdue debt merely points up the problem inherent in the distinctions drawn in this breach [sic] of the law: for what is a debt but a right to sue to recover a sum certain? In what other sense is a debt to be regarded as property?" I do not think that a rule based on public policy which encourages illogical distinctions of this sort should be applied unless there is no alternative. I do not regard the obiter statements in Poulton, limited as they are to assignment of bare causes of action in tort, as providing a compelling reason to accept such illogical distinctions and their consequences.
55 If then, in principle, an assignment of a cause of action in contract (to recover unliquidated damages) should be accepted where the assignee has a sufficient interest to support the assignment, what justification is there for denying the same view where the cause of action is one in tort? As Debelle J said in South Australian Mangement Corporation at 57-58, the distinction between causes of action for unliquidated damages for breach of contract and for damages in tort "has little weight in an action where … the causes of action in both contract and in tort both [sic] stem from the same facts, where the test of causation will be the same, and where, in large part, the measure of damages for the pecuniary loss which directly flows from the breach will be the same … For the purpose of determining whether an assignment is valid, it is possible to draw a valid distinction between torts of a personal nature and torts which affect the plaintiff's commercial interests or his interests in property."
56 My conclusion makes it necessary to consider the nature of the interest required to support an assignment of a cause of action. As Lloyd LJ (with the concurrence of Sir John Donaldson MR) said in Brownton v Edward Moore Inbucon Ltd [1985] 3 All ER 499 at 509, "[t]here is no difference between the interest required to justify maintenance of an action and the interest required to justify the taking of a share in the proceeds, or the interest required to support an out-and-out assignment."
57 In Giles (a case of alleged champerty), Lord Mustill said at 163 that it is necessary to consider "whether the transaction … is validated by the existence of a legitimate interest in the person supporting the action distinct from the benefit which he seeks to derive from it". That is consistent with the approach in Trendtex, where their Lordships suggested that the interest acquired was one arising other than by the terms of the assignment.
58 In Re Timothy's, Needham J concluded at 712 that "the principle of the Trendtex case can be applied to an assignment of a right of action by a debtor to a creditor where the evidence shows that, without that assignment, the creditor is not likely to be paid his debt. In such a case the rule of public policy would be inapplicable because the assignment would not be champertous." His Honour concluded that the debtor did not have the capacity to pay, so that, without the assignment, the creditor would remain unpaid. Thus, his Honour concluded that the creditor "had a sufficient commercial interest in the proceedings to entitle it to accept an assignment of them." It cannot be suggested that Mayne Nickless is or was unable to pay any debt properly owing to Rickard Constructions for the rectification works. Thus, in the sense identified by Needham J, it cannot be said that, without the assignment, Rickard Constructions was not likely to be paid its debt.
59 Cohen J analysed the concept of "genuine commercial interest" in Monk. In that case, the plaintiff sought to take an assignment of a cause of action against the defendant so that he would have something to set off against a judgment debt recovered by the defendant against him. Cohen J said that this was not the requisite genuine commercial interest. He said that what was required was something beyond a mere personal interest in profiting from the outcome of the proceedings; an interest by the assignee in the assignor or its business affairs or activities which might be protected by the assignment:
"In my opinion [the interest claimed by the plaintiff] is not a genuine commercial interest in the way that the phrase has been used in the judgments. Examples may be given from the facts in the various cases concerned. For instance it was held that there was such an interest where the assignee was already a substantial creditor of the assignor with a right to enforce the debt ( Trendtex, Re Timothy's) or where the assignee was the sole shareholder who was a guarantor of the overdraft of the assignor ( Re Daley) or where the assignee was a debenture holder with an interest in protecting the value of its security ( First City Corporation).
The plaintiff's only apparent interest is in the possibility of his becoming a creditor of the bank. That is, his interest is in using the debt which might arise from the cause of action for his personal benefit. That no doubt is the interest of any assignee. The using of the debt as a set-off against the judgment debt is merely an example of obtaining some personal benefit. … In the authorities where the Trendtex test has been applied, the commercial interest has gone beyond a mere personal interest in profiting from the outcome in the proceedings and has required an interest by the assignee in the assignor or its business affairs or activities which the assignment may in some way protect. … "
60 In Beatty, Smith J at 215 emphasised that the interest relied upon must exist prior to the assignment. He concluded that such an interest existed where, prior to the assignment, the creditors were owed money by Brashs and they were only likely to be paid if the debtor succeeded in recovering damages. That interest, his Honour held, was sufficient; and clearly it predated the assignment.
61 In National Mutual Property Services, Lindgren J held that, even if the Trendtex test applied, there was no requisite interest. He said at 540 that the interest must exist independently of the assignment:
" … the genuine commercial interest referred to in Trendtex is not a nebulous notion of the general commercial advantage of the assignee but something more specific and limited. In particular, it does not embrace an interest arising from an arrangement voluntarily entered into by the assignee of which the impugned assignment is an essential part, like the arrangement in the present case. Rather, the expression refers to a commercial interest which exists already or by reason of other matters, and which receives ancillary support from the assignment."
Rickard Constructions has no sufficient interest
62 It is clear that the "Timothy's" or "Beatty" interest does not exist. As I have noted, it cannot be suggested that Mayne Nickless would be unable to pay (assuming, of course, that it was liable to pay) unless it recovered damages (and the payment of those damages) in an action against Rickard Partners or Jeffery & Katauskas. In this context, it is necessary to bear in mind the position as between Rickard Constructions on the one hand and Mayne Nickless and MPG Logistics on the other. If Rickard Constructions had performed the work required by the contract in a workmanlike manner and in accordance with the drawings and specification, then it had fulfilled its contract. Rickard Constructions had no part in the design of the pavement and was not liable for any deficiencies in the design. On the assumption that the original work was properly done, Rickard Constructions was entitled to be paid for the rectification works done at the request of Mayne Nickless and MPG Logistics. If, on the other hand, Rickard Constructions had not fulfilled its obligations under the building contract, and if the failure of the pavement were a result of that, then Rickard Constructions would have been obliged to rectify the defective works at its own cost.
63 The position taken by Rickard Constructions is, and so far as I know has always been, that it fulfilled all its obligations under the building contract. Thus, its position is that it was entitled to be paid for the works as a variation. It appears from the recitals to the 3 May agreement that Mayne Nickless and MPG Logistics may have taken a different view. However, by cl 3.2, they agreed to accept Rickard Constructions' "Variation Claims" - including its claim for the cost of the Rectifications Works: although they did so on the basis that Rickard Constructions would take in full payment any amount that it recovered pursuant to any Assigned Action.
64 In substance, it was the 3 May agreement by which Rickard Constructions undertook to carry out the Rectification Works (see cl 4) and by which the assignment was effected. In my judgment, it follows necessarily that the genuine commercial interest claimed by Rickard Constructions in the subject matter of the assignment is an interest arising under and by virtue of the instrument of assignment.
65 It does not appear that, prior to 3 May 2000, Rickard Constructions had performed any substantial work of rectification, that it had made any demand for payment, or that payment had been refused. There is no basis, in the evidence or as a matter of reasoning from what is known, for thinking that, prior to 3 May 2000, Rickard Constructions had any interest in any action that Mayne might have against Rickard Constructions or Jeffery & Katauskas.
66 There may have been commercial advantages to Rickard Constructions in reaching the agreement that it did; in particular, it may have assisted in the resolution of the other claims that was effected by cl 2 of the 3 May agreement. However, those other claims did not relate to lot 1 or to the failed pavement; and it could not be said that the existence of those claims, relating as they did to other properties and other works under other contracts, gave Rickard Constructions any interest in any action relating to work done on lot 1 under the building contract.
67 I therefore conclude, applying the Trendtex test, that Rickard Constructions had no interest sufficient to justify the assignment effected by cl 3 of the 3 May agreement.
68 If I am wrong in thinking that Trendtex applies, then the same result would be reached, at least in respect of the assigned claims in tort, by application of the dicta in Poulton.
69 Finally, to the extent that the claims purportedly assigned included claims under the Trade Practices Act for misleading or deceptive conduct, then the assignment fails, alternatively, for the reasons given by Davies J in Park: namely, that Rickard Constructions, as an assignee, is not a person who has suffered damage "by" such misleading or deceptive conduct as is proved so as to give it a claim for damages under s 82.
70 The second and third assignments were intended, in substance, to perfect or complete the assignment effected by the 3 May agreement. They are not supported by any separate interest, and in my judgment they must fail for the same reason.
71 Further, the second assignment fails because, at the time it was purportedly effected, the assignors (Mayne Nickless and MPG Logistics) had no interest in the purported subject matter of the assignment. Whatever interest they had, had passed to the Patrick Parties under the business sale agreement made on 23 November 2000.
Conclusion on the assigned causes of action
72 I therefore conclude that the assigned causes of action fail, because the assignments relied upon are ineffective for the reasons that I have given. This makes it necessary to consider the application to join Mayne Nickless as a plaintiff, and to amend consequentially.
The joinder application
73 Mayne Nickless and MPG Logistics were joined as defendants by the filing of a further amended summons on 13 July 2001. The relief claimed against them (either alone or in conjunction with other defendants) included declarations as to the efficacy of the assignment effected by the 3 May agreement and, in the alternative, a declaration that to the extent that the assignment was ineffective, they held the relevant rights and causes of action on trust for Rickard Constructions. Alternatively, Rickard Constructions sought an order that Mayne Nickless and MPG Logistics take proceedings against Rickard Partners and Jeffery & Katauskas to enforce the rights and causes of action that (it said) they held on trust for it. The proceedings were discontinued as against Mayne Nickless and MPG Logistics at some time after the making of the second assignment, whereupon they ceased to be parties.
74 At the end of the hearing before me, Rickard Constructions sought leave further to amend the summons so as to include a direct claim by Mayne Nickless against Rickard Partners and Jeffery & Katauskas to enforce, in the event that the assignments were ineffective, the causes of action that were purportedly assigned.
75 Rickard Partners and Jeffery & Katauskas submitted that Mayne Nickless should not be joined as a plaintiff and that leave to amend should not be given.
76 Rickard Partners submitted that Mayne Nickless was not a party that "ought to have been joined" within SCR Pt 8 r 8(1)(a), and was not someone "whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon" within SCR Pt 8 r 8(1)(b). It submitted that the purpose of Pt 8 r 8 was not to permit the substitution of a new plaintiff with a new cause of action for an existing plaintiff whose action is not maintainable: relying upon the decision of McClelland J in Knight v McCann Erickson Pty Ltd (26 August 1991, unreported; BC-9101623).
77 In Knight, McClelland J said (at BC 4):
"Pt 8 R 8(1)(a) applies where the party to be added ought to have been made a party in the first instance …
Pt 8 R 8(1)(b) cannot properly be construed to authorise the reconstitution of proceedings by the substitution of a new plaintiff with a new cause of action for an old plaintiff whose cause of action is no longer maintainable.
The addition of parties contemplated by Pt 8 R 8 is an addition which is ancillary to, not in substitution for, the proceedings as theretofore constituted."
78 I do not think that the joinder of Mayne Nickless is justified under para (a). Rickard Constructions' case is that it, as assignee, is entitled to enforce the cause of action in question. A decision on that claim (including the decision indicated in the preceding section of these reasons) will not impact in any way on such rights as Mayne Nickless may have, or retain. Compare Pralle v Scharka [1978] 2 NSWLR 450, where a person ought to have been joined because his rights in land might be affected by the outcome of the litigation; and Cambridge Credit Corporation Ltd v Parkes Developments Ltd [1974] 2 NSWLR 590, where a land owner ought to have been joined because its interests might be affected by proceedings concerning the validity of a planning approval.
79 Nor do I think that Mayne Nickless is a "necessary" party under para (b). The question of Rickard Constructions' entitlement under the deed of assignment can be litigated effectually and completely without the joinder. Again, no commercial or other interest of Mayne Nickless will be affected by that process. See Gordian Runoff v Price & Ors [2004] NSWSC 535 at [10] and following, where I analysed the cases on SCR Pt 8 r (1)(b) and its equivalents. For the reasons that I there gave, I think that the test expressed by Lord Diplock in Pegang Mining Company Ltd v Choong Sam [1969] 2 MLJ 52 at 55-56 is appropriate. His Lordship said, in substance, that the test required by the rule was whether the rights or liabilities of the person sought to be joined against or to any party to the action in respect of the subject matter of the action be directly affected by any order which might be made. As I noted in paras [12] and [13], his Lordship's test was cited with approval by the Full Court of the Federal Court of Australia in News Limited v Australian Rugby Football League (1996) 64 FCR 410, and by McHugh J State of Victoria v Sutton (1998) 195 CLR 291 at 316-317, [77] to [78].
80 On that analysis, Mayne Nickless is not someone whose joinder is "necessary" within para (b). Its rights (if any) remain unaffected by any decision (including that set out in the preceding section of these reasons) on Rickard Constructions' claims against Rickard Partners and Jeffery and Katauskas.
81 Even if, contrary to my conclusions, there were power under SCR Pt 8 r 8 to join Mayne Nickless as a plaintiff, I would have declined on discretionary grounds to do so.
82 The sole purpose of the joinder would appear to be to enable Mayne Nickless to seek to recover the rectification costs. However, in substance, it would not be doing so for its own benefit (because it incurred no rectification costs), but for the benefit of Rickard Constructions (which carried out the Rectification Works in consideration only of the assignment). Mayne Nickless had been a party but it agreed with Rickard Constructions to be let out of the proceedings following the making of the second assignment. That is the clearest indication that Mayne Nickless did not regard itself as having any interest to be protected by its continuing presence as a party in the proceedings.
83 I have not overlooked the fact that, under cl 3.4(b)(5) of the 3 May agreement, Mayne Nickless has a contingent interest in the fruits of the action: if they exceed all costs incurred by Rickard Constructions in connection with the Assigned Action and the amount of the Variation Claim. But in circumstances where Mayne Nickless did not think that its presence as a party was necessary to protect whatever the real value of that contingent interest might be, I do not think that the Court should substitute its own judgment.
84 In the absence of any explanation for the lateness of the application to join Mayne Nickless as a party, it could be inferred (as both Rickard Partners and Jeffery & Katauskas submitted) that it stood aside from the proceedings so as to avoid exposing itself to any adverse costs order. It is possible that (if the joinder were authorised by SCR Pt 8 r 8) leave to join Mayne Nickless could be on terms that it was liable for any costs ordered in favour of the defendants, including costs relating to work done or things happening before its joinder. But Mayne Nickless has not indicated that it would accept such a term; and has not been heard in opposition to the imposition of it.
85 There are two other matters that I regard as of greater - indeed dispositive - significance on the discretionary issue (assuming, as I have indicated, that one gets so far as considering discretionary issues). The first is that, because Mayne Nickless has not been a party for most of the time that these proceedings have been current, it has not been exposed to orders for discovery. The second is that Rickard Partners and Jeffery & Katauskas have not had the opportunity of considering their position as against Mayne Nickless and (for example) making an offer of compromise or otherwise seeking to reach some resolution with it.
86 In answer to these propositions, Rickard Constructions submitted that subpoenas for production had been directed to Mayne Nickless and it had produced documents; and that there was no evidence to show that Rickard Partners or Jeffery & Katauskas might have sought to make an offer of compromise, or otherwise to treat, with Mayne Nickless.
87 The first of those responses does not seem to me to deal with the problem. The effect of an order for discovery is to require the party obliged to give discovery to produce all available documents that fall within the terms of the order. It does not put upon the party seeking discovery any requirement to forecast, or more accurately guess, what documents or classes of documents might be held. However, a subpoena must be directed towards clearly defined documents or classes of documents. It is no substitute for discovery; indeed a subpoena that is cast so wide as in effect to require the party to whom it is addressed to give discovery is liable to be set aside as an abuse of process. I do not regard the ability to serve subpoenas as any substitute for the inability to require discovery; and, having regard to the issues in these proceedings, the inability to require discovery is a real, rather than a theoretical, detriment to Rickard Partners and Jeffery & Katauskas.
88 Nor do I think that the second proposition answers the submission to which it was responsive. The application to join Mayne Nickless as a party was intimated after the conclusion of the evidence. The parties were then engaged in the preparation of written submissions. It is hardly to be expected that Rickard Partners and Jeffery & Katauskas should have diverted themselves from that task (a task that, it will be seen from the written submissions that were filed, was onerous and, no doubt, time-consuming) and turned their attention to the application for leave to join Mayne Nickless. It is unrealistic to expect Rickard Partners and Jeffery & Katauskas to have dropped what they were doing and to have turned to preparing evidence in opposition to the joinder application. In some circumstances, the courts have said that prejudice (in relation to amendments) may be inferred even in the absence of direct evidence: see Bishopsgate Insurance Australia Ltd (In liq) v Deloitte Haskins & Sells [1999] 3 VR 863. Although the circumstances of this case, and the nature of the prejudice suggested by the relevant defendants, are far removed from the circumstances and suggested prejudice of that case, I think that the general principle is applicable. Some kinds of prejudice are demonstrable by argument; others may require evidence. The particular prejudice - inability to serve an offer of compromise, or otherwise to treat with Mayne Nickless - falls into the former category.
89 Further, the loss of that opportunity constitutes real and not merely hypothetical prejudice. As I have said, it is open to infer that Mayne Nickless has no real continuing interest in the outcome of this litigation. Had it been joined as a plaintiff at some earlier stage, I consider that it is quite plausible to think that the relevant defendants would have sought to compromise with it and that, if they were not able to do so, they might have sought to put pressure - legitimate pressure - on it by serving offers of compromise. I therefore think that the loss of that opportunity is, as I have indicated, a source of real prejudice.
90 Accordingly, even if, contrary to my view, there were power to join Mayne Nickless as a plaintiff, I would have exercised my discretion to do so adversely to the application.
Conclusion on the assigned claims
91 Because I have concluded that the assignments are ineffective, and because I have concluded that Mayne Nickless can not be joined (and that, even if it could be joined, it should not be), the assigned claims must fail. Because the assignments are ineffective, Rickard Constructions cannot enforce them. Because Mayne Nickless is not to be joined as a plaintiff, it cannot enforce them in these proceedings, either for the benefit of Rickard Constructions or otherwise.
92 I therefore do not propose to consider the merits of those assigned claims. This means that issues 23 to 25 and 51 to 53 should be answered adversely to Rickard Constructions and that, accordingly, it is not necessary to deal with issues 12 to 22 and 43 to 50. That having been said, at least some of the issues that remain for consideration involve questions that would also be relevant to issues 12 to 22 and 43 to 50.
93 That leaves for consideration, apart from the direct claims by Rickard Constructions against the defendants, the subrogation claims (issues 26, 27 and 54) and the contribution claims (issues 28 to 31 and 55 to 57). I will deal with the direct claims and then return to the subrogation and contribution claims. But before I turn to the detail of the direct claims, I will deal with the pavement design and the criticisms of it, and with the cause of the collapse.
The pavement design and the criticisms of it
94 The person within Rickard Partners who had principal responsibility for design was Mr Hails, then a senior associate. Mr Rickard, however, agreed that it was he who had instructed Mr Hails to prepare the design and that he "oversaw and controlled the work that was carried out" by Mr Hails pursuant to that instruction (T 133.19-.30).
95 The starting point of the design was the (apparently successful) pavement constructed at 60 Friendship Road. However, in the case of lot 1, Container Park wanted an asphalt layer 100 mm thick overall, compared to the 50 mm asphalt wearing layer at 60 Friendship Road.
96 Mr Hails was not called to give evidence, a circumstance that excited some criticism from some parties. However, his working papers, showing the evolution of the design, were proved. As I have noted, the basic design comprised an asphalt wearing layer over a DGB20 base course over a crushed sandstone sub-base over compacted sand sub-grade. Mr Hails appears to have produced a number of articulations of that scheme, with different thicknesses for the various layers. In doing so, he made certain assumptions as to the weight of the forklift machine that would be used on the pavement, so as to assess the loading that would be applied to the pavement.
97 The draft (for want of a better word) designs were analysed and tested by a computer programme known as "CIRCLY". A number of design variables (or, in the jargon of the trade, "parameters") are input to the programme: including the likely loading, the thickness, degree of compaction and stiffness of the layers - and the programme calculates the number of repetitions (ie, the number of times that the pavement is subjected to the design loading) before it will fail. If assumptions are made as to the number of repetitions that will occur over an average working week and year, this produces a projection of the design life of the pavement.
98 The design upon which Mr Hails settled comprised the following layers (from the sub-grade up):