Sky Channel Pty Limited v Tszyu

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

JUDGMENT 1 HIS HONOUR: This is an amended notice of motion to deal with problems that have arisen after the appeal in this matter was lodged and partially decided. 2 The underlying facts are set out in my judgment of 24 August 2000, which was a judgment on appeal from a decision of Master McLaughlin. 3 There are three issues that have been ventilated under the amended notice of motion which was filed by the appellant on 31 October 2000. These are, in summary:

(1) whether further evidence should be admitted to base a possible finding that the contribution between the plaintiff and the defendant should be in an unequal amount;

(2) whether the amount found due by the Master should be reduced in view of the admitted fact or possible proved fact that the appellant is, after the present contribution is adjusted, possibly still liable to the principal creditor for $767,269.20; and

(3) various technical and procedural questions such as whether the appellant should be permitted to withdraw admissions, whether he needs to demonstrate special grounds before being able to adduce further evidence and, if that be the case, whether such further grounds exist. 4 I have gratefully received written submissions from counsel on both sides which have been extremely helpful and have enabled me to make my decision fairly early on today. 5 (1) In New South Wales there is no statute that deals with contribution generally. There are two varieties of contribution in this State:

(a) rights between tortfeasors arising out of the Law Reform (Miscellaneous Provisions) Act 1946, s 5 (the 1946 Act); and

(b) rights of contribution in equity. 6 Rights of contribution in equity were thoroughly considered by the High Court in Albion Insurance Co Limited v Government Insurance Office (NSW) (1969) 121 CLR 342, particularly per Kitto J at 349-352. 7 Almost all the textbook writers make it clear that the basis of the principle of contribution other than that which flows out of the 1946 Act is the maxim "equality is equity". As Goff and Jones, Law of Restitution, 5th edition (Sweet & Maxwell, London, 1998) say at p 397: "Consequently, the equitable and not the statutory principles governing contribution claims apply if the liability of debtor is in solidum ; the co-obligors, being aequali jure must bear any loss equally." 8 This principle very clearly comes out in the cases where a loss has occurred to a trust where one trustee is a professional person who was left with virtual control of the trust and the other trustee is unskilled. In some cases the unskilled trustee will be entitled to an indemnity against the other but, unless the right of indemnity can be established, contribution is equal. The matter is well discussed in Scott on Trusts, 3rd edition, para 258.1, the leading cases being Bahin v Hughes (1886) 31 Ch D 390 and in this State Goodwin v Duggan (1996) 41 NSWLR 158. 9 There are, however, some situations where equal contribution will not apply, but those situations do not depend on fault. The exception is, as the Court of Appeal said in Robinson v Campbell (No 2) (1992) 30 NSWLR 503, 508, that equity will not permit people to enforce rights of contribution where it would be inequitable to do so. However, for it to be inequitable in this area of the law there must be a common intention by contract or looser arrangement to that effect. When one is considering whether there is such a common intention one bears in mind what Giles J said in Morgan Equipment Co v Rodgers (1993) 32 NSWLR 467, 477: "While equal sharing should not be lightly departed from, where the rationale for equal sharing is that the parties are taken to have intended to share equally then the contrary intention must suffice to replace the general rule." 10 The thrust of the submissions of Mr Aldridge SC and Mr Morris for the appellant is that in this case the appellant is not a person who is experienced in commercial transactions; he is not fluent in English, he is a sporting man, a boxer. He is in difficulties. In these circumstances, at any trial he would be shown to be a person who is labouring under special difficulties. I do not know whether that is so, I am merely repeating the submissions. 11 The submissions then proceed that the respondent is a large and experienced corporation in commerce and that its culpability for the damages caused to the principal creditor are almost entirely in the respondent's court. "Equality is equity" means equality so far as people paying what is their fair share of the coordinate liability because of their respective culpability. Although this is a relatively recent concept, cases such as the last two I have cited and the decision of the Full Federal Court of Australia in Burke v LFOT Pty Limited (2000) FCA 1155 show that the law has moved away from the strictness of earlier decisions. 12 The answer is, I think, in the words of Mr Wood for the respondent in his written submissions, that the authorities are "dead against the concept of apportionment sought to be propounded by the Appellant. Both authority and principle negate the Appellant's argument, and to adduce evidence on the subject would be futile." 13 It may be that the law one day will develop to the stage where "fairness" in the legal sense of the term as used in Mr Aldridge SC's argument can be accepted. However the fact that in other places such as England and Victoria statutes have been passed to cover the situation tends to show that the law will not develop quite so far as the appellant would have it in this case. 14 In my view the case never proceeded before the Master or before me on an indemnity basis. The question of whether there should be contribution has been examined in the submissions which culminated in my judgment of 24 August 2000. If there is to be contribution it must be equal and that, subject to the second argument, is what I ordered on 24 August 2000. 15 The second matter is one that troubled me when I gave my reasons on 24 August 2000. What appears to have happened is that after judgment for the full amount was pronounced in separate proceedings against both the plaintiff and the defendant, the plaintiff paid the reduced amount on 13 December 1999 in full satisfaction of its obligation to the principal creditor. The present proceedings were commenced on 27 January 2000. The details of the settlement between the defendant and the principal creditor are not clear but it is clear that, despite the settlement with the respondent, the principal creditor is still claiming $767,269.20 against the appellant. 16 The appellant for present purposes admits such debt although he may wish to withdraw that admission. Whether the admission stands or falls, it seems to me, after hearing the submissions of both sides, that although suits for contribution in general should settle once and for all the contribution between the parties, in the exceptional situation such as we have here, the only practicable way of dealing with the problem is to permit a second cross-suit for contribution to be brought if and when any further liability is found from the appellant to the principal creditor, and any additional moneys have been paid. It may be that at an earlier stage it could be a cross-suit for contribution in accordance with normal equitable principles, but the fact that there are potential bankruptcy proceedings may affect that issue. 17 However, for the present, the possible discount, to use a simplified term, of about $383,000 does not come into the picture and the amount found by the Master should stand. 18 Because of my decision on the merits there is no need to explore the technical matters which were raised by Mr Wood in his submissions. However, in case the matter should go further I will retain these submissions on the file. 19 The order accordingly is that the amended notice of motion must be dismissed with costs. Judgment will now be entered in accordance with my reasons of 24 August 2000. The order for costs will include the costs of the proceedings, including the costs of the amended notice of motion.

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