Separate trials
45 It is convenient to start with the applicants' notice of motion dated 24 November 2006. I heard submissions on this notice of motion on 18 and 19 January 2007. I did not rule on the notice of motion until after I had heard the various applications for leave to defend the applicants' claim against Landmark.
46 Order 5, rule 12 of the Federal Court Rules sets out the directions a Court may give on a directions hearing or on the trial or hearing of a cross-claim. It provides (relevantly):
"(2) On any directions hearing, or on the trial or hearing of the cross‑claim, the Court may:
(a) make any order or direction it may make under Order 10 (which relates to directions hearings);
(b) order that any claim, question or issue in or arising on the cross‑claim be tried in such manner as the Court may direct;
(c) give to a respondent to the cross‑claim leave to defend the claim on the originating process or any other cross‑claim in the proceeding, either alone or in addition to any other party;
(d) give to a respondent to the cross‑claim leave to appear at the trial or hearing of the claim on the originating process or on any other cross‑claim in the proceeding and to take such part in the trial or hearing as the Court thinks fit;
(e) dismiss the cross‑claim;
(f) determine the extent to which the cross‑claimant and a respondent to the cross‑claim shall be bound as between themselves by a judgment (including a judgment by consent or by default) or decision (including a decision by consent) on the claim on the originating process or any other cross‑claim in the proceeding;
(g) pronounce such judgment as the nature of the case may require;
(h) give such directions as the Court thinks fit for having the rights and liabilities of the parties determined and enforced, including any order or direction which may be made or given under this Order."
47 In the course of the submissions the applicants indicated that in addition to the order that their claim against Landmark be heard separately and before the other claims in the proceeding, they sought an order that the cross-claimants and respondents to those cross-claims be bound as between themselves by the judgment and findings of law and material fact on the applicants' claim against Landmark.
48 It is appropriate to make the following observations on the state of the proceeding at the time of the submissions in January 2007 on the applicants' notice of motion.
49 At that time Landmark had not pleaded that its liability to the applicants should be reduced by reason of the proportionate liability provisions in the TPA or the Proportionate Liability Act 1990 (NT) ("the PLA"). It does not raise that matter now. It was a number of the cross-respondents who raised in argument the proportionate liability provisions and submitted that they were a powerful reason not to make the orders sought by the applicants. At that point none of them had sought leave to defend the applicants' claim on the ground of the proportionate liability provisions. One of the cross-respondents suggested that the proportionate liability provisions went to the jurisdiction of the Court and needed to be considered irrespective of whether the provisions were pleaded.
50 The proper construction of the proportionate liability provisions in the TPA and the PLA loomed large in the submissions on the applicants' notice of motion and the various applications for leave to defend the applicants' claim. Some of the cross-respondents advanced a construction of the proportionate liability provisions, which I do not think is arguable. The details are set out below. That construction formed the basis of their submissions on the applicants' notice of motion, although it was suggested the case may fall within the proportionate liability provisions on what I have found is their proper construction. However, that was a subsidiary argument and at that time there was no real evidence to suggest that the case might fall within the proportionate liability provisions as properly construed.
51 It is appropriate that I now consider the rival contentions which were made as to the proper construction of the proportionate liability provisions.
52 Section 87CB of the TPA is in Part VIA and it provides as follows:
"(1) This Part applies to a claim (an 'apportionable claim') if the claim is a claim for damages made under section 82 for:
(a) economic loss; or
(b) damage to property;
caused by conduct that was done in a contravention of section 52.
(2) For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).
(3) In this Part, a 'concurrent wrongdoer', in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.
(4) For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).
(5) For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died."
53 The applicants make a claim against Landmark for damages under s 82 for economic loss caused by conduct that they allege was done in contravention of s 52. They also make claims for the same loss and damage based on other causes of action. Subsection (3) of s 87CB defines "a concurrent wrongdoer" for the purposes of Part VIA. The applicants contend that a concurrent wrongdoer includes other persons whose acts or omissions caused, either independently or jointly, the damage or loss that is the subject of the claim and who are liable to the claimant for that loss or damage. The cross-respondents agree that such persons are concurrent wrongdoers for the purposes of the Part. However, Selected Seeds and other cross-respondents contend that concurrent wrongdoers also include another category of persons, namely, persons who are wrongdoers although, importantly, not necessarily wrongdoers liable to the claimant who have caused, independently of each other or jointly, the damage or loss that is the subject of the claim. A simple example illustrates this submission. A is the claimant and he suffers loss and damage as a result of B's conduct. If C's conduct is wrongful such that B, but not A, has a cause of action against him and if it can be said that C's conduct has "caused" A's loss and damage then on this submission C would be a concurrent wrongdoer for the purposes of Part VIA. According to the submission that would be so, even though A has no cause of action against C.
54 Section 87CC deals with wrongdoers who act in such a manner as to cause intentionally economic loss or damage to property or who act fraudulently. This section is not relevant here and need be noticed no further.
55 Section 87CD is a key section in Part VIA. It provides:
"(1) In any proceedings involving an apportionable claim:
(a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and
(b) the court may give judgment against the defendant for not more than that amount.
(2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim:
(a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and
(b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
(3) In apportioning responsibility between defendants in the proceedings:
(a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and
(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.
(4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.
(5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as plaintiff) whether joined under this Part, under rules of court or otherwise."
56 Section 87CE deals with a procedural requirement. Section 87CF deals with potential claims for contribution and indemnity by concurrent wrongdoers. It provides:
"A defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim:
(a) cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant); and
(b) cannot be required to indemnify any such wrongdoer."
57 Section 87CG deals with subsequent actions, s 87CH deals with joining defendants in proceedings involving an apportionable claim and s 87CI deals with vicarious liability, the several liability of partners and other cases of several liability.
58 There is no doubt that Part VIA effects a significant change in the law in those cases to which it applies. A claimant can no longer recover all of his damages from one of a number of wrongdoers who were previously jointly and severally liable to the plaintiff. The claimant can recover from each wrongdoer only that proportion of the loss and damage claimed that the court considers just having regard to the particular wrongdoer's responsibility for the damage or loss.
59 In my opinion, the Part was not intended to go any further than this and the construction of the proportionate liability provisions advanced by Selected Seeds must be rejected. As initially put and applying it to the circumstances of this case, it was submitted that providing it could be said that one or more of the cross-respondents had caused the loss or damage claimed by the applicants within s 87CB(3), and providing they were liable to another party, albeit not the applicants, then their responsibility for the loss and damage was to be taken into account in assessing the extent of Landmark's responsibility for the damage or loss. Without more, such a construction of the proportionate liability provisions of the TPA would result in a very significant erosion of a plaintiff's rights as they were before the introduction of the provisions. As the submissions were developed it became clear that Selected Seeds was contending that although the cross-respondents or one or more of them could be concurrent wrongdoers under s 87CB(3) even though they were not liable to the applicants under the substantive law, the effect of the proportionate liability provisions was that the applicants were given a right of recovery against such cross-respondents as fell within s 87CB(3). That construction would involve a significant alteration of the substantive law. In my opinion, however the argument is put it must be rejected because clear words would be required before one would accept a construction involving such a substantial erosion of a plaintiff's rights or a change in the substantive law as to the circumstances in which one party is liable to another. There are no such clear words in the provisions and there is no other indication that Parliament intended to change the law so radically or why it would be considered appropriate to do so.
60 The extrinsic material supports the conclusion I have reached.
61 The explanatory memorandum for the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2003 was put before me. The following passages are relevant:
"4.97 The CLERP 9 paper discussed the accounting profession's ongoing concerns about the present unlimited liability regime to which auditors are exposed for professional default. The accounting profession, and other professional groups, have proposed that the current rules of joint and several liability should be replaced with proportionate liability as one of the possible remedial measures to address their concerns about the consequences of unlimited liability.
…
4.100 The objective of the proposed action is to:
(a) Prevent the 'deep-pocket' syndrome which is synonymous with professionals. The 'deep-pocket' syndrome occurs when professionals are the targets of negligence actions not because of culpability but because they are insured and have the capacity to pay large damages awards.
(b) Allow insurers to more accurately price risk. Currently under joint and several liability insurers have to price for the negligent actions of third parties. Proportionate liability enables insurers to insure only against the negligent conduct of the insured.
(c) Assist professionals to obtain suitable cover at more reasonable premiums.
(d) To limit the liability of defendants for the loss suffered by a plaintiff to the extent to which each defendant is responsible for the plaintiff's loss.
…
4.111 Proportionate liability will overcome the 'deep pocket' syndrome inherent in a joint and several liability regime which often sees one party bearing full responsibility for loss or damage despite the fact that a number of parties may have contributed to the loss. Proportionate liability means that liability rests with all defendants in proportion to their contribution to the plaintiff's loss. This is contrasted against joint and several liability where a defendant can be held liable for the total loss sustained, even if they contributed to the loss in a small way.
…
4.124 Proportionate liability has been under consideration by SCAG and MINCO since 1994. One of the threshold issues that was required to be addressed was whether proportionate liability could be confined either to the auditing profession or to the professions generally.
…
4.130
…
s Second, procedural rules associated with proportionate liability for economic loss are designed to provide the appropriate balance between the interests of plaintiffs and defendants.
s It operates so that, in applying proportionate liability to a claim, a court should have regard to the responsibility of any potential defendant who is not a party to the proceedings. Further, it requires defendants to notify a plaintiff in writing of the identity and alleged role of any other potential defendants of whom they are aware would also provide protection to plaintiffs. Defendants who fail to co-operate would risk being ordered to pay costs.
…
4.131 Given these procedural protections, it is highly unlikely that consumers will be materially disadvantaged by these reforms. Fundamentally, they are intended to ensure that professional indemnity insurance can be purchased at reasonable prices and that consumers therefore can have greater confidence that the professionals with whom they deal are in fact covered by such insurance.
…
5.346 The Bill will amend the ASIC Act, the Corporations Act and the Trade Practices Act 1974 (Trade Practices Act) to ensure that proportionate liability applies to claims for damages for economic loss or property damage arising from misleading or deceptive conduct.
…
5.352
…
s in applying proportionate liability to a claim, a Court will be able to have regard to the comparative responsibility of any wrongdoer who is not a party to the proceedings;
s a defendant to a claim to which proportionate liability can apply, will be obliged to notify the plaintiff in writing, at the earliest possible time, of the identity and alleged role of any other person(s) of whom the defendant is aware, who could be held liable for the plaintiff's loss or any part of it."
62 The above references suggest that the mischief to which the amendments were directed was a plaintiff being able to recover 100 per cent of his damages from any one of several wrongdoers when that wrongdoer's "fault", when compared with the other wrongdoers, was less or far less than that. In other words, the amendment was directed to what were considered to be the undesirable consequences of the joint and several liability rule. There is no suggestion that the mischief the amendments were designed to remedy was any wider than that. The definition of concurrent wrongdoer seems to be the critical subsection and, in my opinion, the word "caused" in s 87CB(3) should be read as meaning such as to give rise to a liability in the concurrent wrongdoer to the plaintiff or applicant.
63 In my opinion, the PLA should be interpreted in the same way. An "apportionable claim" is defined in s 4(2) of that Act as follows:
"(2) An apportionable claim is -
(a) a claim for damages (whether in tort, in contract, under a statute or otherwise) arising from a failure to take reasonable care; or
(b) a claim under the Consumer Affairs and Fair Trading Act in respect of loss or damage arising from a contravention of section 42 of that Act.
(3) However, none of the following is an apportionable claim:
(a) a claim arising from a personal injury;
(b) a claim under the Consumer Affairs and Fair Trading Act arising from a contravention of Part 4 of that Act;
(c) a claim specified by the Regulations not to be an apportionable claim."
64 A "concurrent wrongdoer" is defined in similar, although not identical, terms to the definition in the TPA. Section 6 provides as follows:
"6. Concurrent wrongdoers
(1) A concurrent wrongdoer is one of 2 or more persons whose acts or omissions caused (either jointly or independently) the loss or damage that is the subject of a claim for damages.
(2) In applying this Part to an apportionable claim, it is immaterial that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died."
65 Sections 8 and 9 deal with cases in which there are two or more apportionable claims and cases in which there is an apportionable claim and a claim which is not an apportionable claim. Section 13 is in similar, although not identical terms, to s 87CD. It provides as follows:
"13. Determination of liability of concurrent wrongdoers
(1) In a proceeding -
(a) the liability of a defendant who is a concurrent wrongdoer is limited to an amount reflecting the proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and
(b) the court may give judgment against the defendant for not more than that amount.
(2) In apportioning responsibility for loss or damage between the defendants -
(a) the court must exclude any proportion of the loss or damage in relation to which the plaintiff is contributorily negligent under any relevant law; and
(b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceeding."
66 The Attorney-General said in the course of the Second Reading Speech on the Proportionate Liability Bill the following:
"This bill deals with issues arising where a court finds that more than one respondent has contributed to a claimant's loss. In such a case at common law, the law of negligence operates so that the principle of joint and several liability determines what damages are paid for the loss and damage caused.
The effect of this general principle is that the claimant only needs to identify one respondent against whom a case can be proved. That respondent is then potentially liable for all the damages payable to the claimant. Where all contributing respondents have sufficient assets or are insured and can be found, damages are apportioned according to each respondent's contribution to the loss. However, this usually only occurs when these respondents bring actions against each other. Problems arise where only one respondent can be located or where only one respondent is financially viable or insured. That one respondent can be held liable for all the claimant's loss regardless of how much he or she contributed to that loss. This common law principle protects claimants by allowing them to recover the total damage suffered from at least one of the respondents."
67 The PLA should be construed in the same way as Part VIA of the TPA.
68 Before the various cross-respondents made their applications for leave to defend the applicants' claim against Landmark there was a good deal to be said in favour of the applicants' application. I acknowledge that even at that time there were reasons not to order separate trials. They were the matters often present in cases involving third party proceedings such as the desirability of having all parties bound by the decision between the plaintiff and the defendant so as to avoid the possibility of inconsistent findings, the additional cost and expense of two trials and the disadvantages to a defendant in two trials including possibly having to satisfy a judgment in favour of the plaintiff well before his claim against the third party is determined: Barclays Bank v Tom [1922] 1 KB 221; New World Oil and Developments Pty Limited v 163 Clarence Street Pty Limited [1995] FCA 138. However, in this case there were a number of weighty considerations on the other side. First, there was a large number of factual issues raised on the various cross-claims all of which at that point appeared to be of no relevance to the applicants' claim against Landmark. That was so because the proportionate liability provisions as properly construed appeared to be irrelevant because there was little to indicate at that time to suggest that any of the cross-respondents were directly liable to the applicants. Secondly, the applicants' claim against Landmark was a good deal more advanced in terms of being ready for trial than were any of the cross-claims. Thirdly, the applicants' difficult financial situation was relevant as was the fact that, if liability was established, that had been brought about by Landmark's conduct.
69 However, before I ruled on the applicants' notice of motion the circumstances changed because I heard and determined in Selected Seeds' favour its application for leave to defend the applicants' claim against Landmark. My reasons for doing so are set out in the next section of these reasons. It is sufficient to say at this point that the defence of proportionate liability now raised by Selected Seeds is in fact one that involves an allegation that a number of cross-respondents are directly liable to the applicants, and although the applicants submit that ultimately the allegations supporting that contention will not be made out, they accept that the defence now pleaded is arguable. It follows that many of the factual issues raised on the cross-claims are potentially relevant on the applicants' claim against Landmark. That means that the balance is now firmly in favour of refusing the orders sought by the applicants in its notice of motion dated 24 November 2006.