Toomey v Scolaro's Concrete Constructions Pty Ltd and Ors

Supreme Court of Victoria|2001-12-11|Before: Eames J

CONTRIBUTION between joint tortfeasors - apportionment - primary and vicarious liability. COSTS - plaintiff seeks direction to Taxing Master under R.S.C. 63.34(4) as to increase in allowance for costs - whether special grounds exist - costs on discrete issue - R.S.C. 63.04 - whether plaintiff failed on issue - notice to admit facts. INDEMNITY whether corporate surveyor entitled to indemnity from negligent employee - Lister v Romford Ice and Cold Storage Co [1956] UKHL 6; [1957] AC 555 - Insurance Contracts Act 1984, s. 66 - whether benefit of section only available to current employee - meaning of "is". INDEMNITY AND CONTRIBUTION - claims as between principal and agent - whether indemnity claim pleaded. - whether costs of late joinder of defendant to be borne by one defendant only.

(Scolaro's Concrete Constructions Ltd (In Liquidation))

I have delivered judgment for the plaintiff in this matter[1] and there now remain a number of disputed questions concerning costs and issues of indemnity and contribution.

PLAINTIFF'S APPLICATION FOR A DIRECTION UNDER RULE 63.34(4)

Counsel for the plaintiff have sought a direction pursuant to Rule 63.34(4) that the Taxing Master have the authority to allow an increase not exceeding 30% of the costs of the plaintiff's solicitors.

Relevant sub-sections of Rule 63.34 are as follows:

"(3) The Court may on special grounds arising out of the nature and importance or the difficulty of the case allow an increase not exceeding 30 percent of the solicitor's charges allowed on the taxation of costs with respect to the proceeding generally or to any application, step or other matter in the proceeding. (4) Where the Court so directs, the Taxing Master shall have the same authority as the Court under paragraph (3) to allow an increase in the fees set forth in Appendix A."

Although I would have the power under R63.34(3) to make that order myself, the plaintiff does not ask that I do so, but adopts the approach that it is appropriate that the Master be supplied with comprehensive evidence in support of the claim for costs and that he deal with all costs arguments, and be specifically authorised by me, should he, in the exercise of his own discretion, rule that it is appropriate to make allowance in that way. The application therefore seeks to expand the taxing Master's authority, but to leave the exercise of discretion to him.

The plaintiff's counsel accept that for an allowance to be made for additional costs pursuant to the rule it would be necessary to demonstrate that there was something special about the case to justify it. In effect, I am being asked to conclude that generally the case was capable of being viewed as special in that way, to empower the Master, but otherwise to leave it to him to determine whether that is so, having heard detailed submissions.

The relevant principles have been discussed in a number of cases. In Jenkins v G.J. Coles & Co[2] Hayne J held that the Rule required that special grounds arising out of the nature and importance, or the difficulty or urgency of the case be established. In City of Warrnambool v Tabone[3] in the judgment of the Full Court Fullagar J held that the Rule was confined to cases "where the nature and importance or the difficulty or the urgency gives rise to some special ground, over and above the importance or difficulty or urgency itself, for ordering that the charges available in accordance with the scales in the appendices should be increased[4]." His Honour added:

"merely to say that the case has been especially difficult and substantial is only to say that it was very difficult and substantial. The Rule requires something over and above difficult and substantial which arises out of the difficulty and substance and something which is special in its character or very much out of the ordinary"[5]

In Alucraft Pty Ltd (In Liq) v Grocon Ltd[6] Smith J held that notwithstanding the fact that the case was long, hard fought and had issues requiring considerable preparation: "it must be shown that there was something more and significantly more involved than simply the conduct of heavy litigation".

This case ran for some 57 days. There were many witnesses and at various times up to ten defendants actively participated through counsel. There were a multitude of issues, both legal and factual, and responsibilities of counsel and solicitors for the plaintiff, I have no doubt, were considerable. It was "heavy" litigation in those senses, and I would not be surprised if it was concluded by the Taxing Master that recognition need be given to that when allowing particular items claimed on costs. This Rule is concerned with an application to increase solicitor's charges. Counsel for the plaintiffs indicated that when the matter comes before the Taxing Master it is likely that allowance will be sought for three counsel and also for daily preparation fees to be allowed for counsel.

Mr Gillies QC, whose submissions were adopted by the other defendants, submitted that this case was not capable of being deemed "special" for the purpose of the Rule. He submitted that it was necessary for me to make the decision as to that question, and given that the plaintiff's solicitors had supplied no material to support the contention that it was special, then I should refuse the application.

In my opinion, whilst there is no doubt that I could make the decision myself as to whether the case is special or not, that is a decision which can also be made (or not) by the Master, if pursuant to sub-section (4) I authorise him to consider that question for himself. I do not consider that I should give such authority, however, unless I am first satisfied that the nature of the case was such that it was capable of being deemed special. That approach is consistent with authority. In Secton v Delawood Pty Ltd[7], King J accepted that interpretation of the Rule, and cited decisions of McGarvie J[8] and Gowans J which reflected their acceptance of that interpretation. In Fell v Vale[9] Gowans J held:

"It is true, of course, that those special matters are to be considered by the Taxing Master himself, subject to any directions the court may give, but I do not think that the court should give a direction to the Taxing Master to consider whether an allowance should be made upon such special grounds unless it considers itself that those special grounds could exist in the circumstances of the case"

In my opinion, this is a case which could be deemed special for the purpose of Rule 63.34. It is appropriate that the Taxing Master have the authority to increase the solicitor's costs by reference to the Rule if he so rules, and then deems it appropriate to make any such allowance. His decision will depend on the evidence presented to him, having regard to the principles discussed above. The application to him for a general increase in solicitor's costs may be accompanied by applications, in the exercise of his general discretions under the Rules, to allow for three counsel and for daily preparation fees. In the event that such evidence is provided it is a matter for the discretion of the Master as to whether to make such allowances[10].

I propose, therefore, to order pursuant to Rule 63.34(4) that the taxing Master have authority to make an order under sub-section (3) to allow an increase, not exceeding 30% of solicitor's charges, should he deem it appropriate to do so. In the event that he deems the case special when exercising his own powers - as now extended, under Rule 63.34(3) - it does not, of course, mean that he must allow 30%. He could allow a lesser increase.

DEFENDANT'S APPLICATIONS AS TO COSTS CONCERNING THE ALCOHOL ISSUE

Mr Gillies, supported by other defendants, submitted that pursuant to Rule 63.04 I should make special orders with respect to those costs which related to the litigation of the issue of the extent of the plaintiff's intoxication at the time of his injury. He submitted that the plaintiff should not recover his own costs with respect to that issue but instead should pay the costs incurred by the second defendant in joining issue as to that question. Each of the other defendants also sought that their own costs as to that issue be paid by the plaintiff.

The second defendant argued the claim as to costs first by reference to what was said to be the plaintiff's failure to admit facts which were identified in a document served by the second defendant, and, secondly, by reference to what was said to be the failure of the plaintiff to establish his case as to the alcohol issue, thereby causing the prolongation of the case and unnecessary costs by his having contested that issue.

A significant question in the trial was the extent to which the plaintiff was intoxicated at the time when he fell from the second floor landing. Two blood alcohol readings were conducted, one from a blood sample taken at Box Hill Hospital at 3.29 am on 2 March 1996, which recorded a blood alcohol reading of .25 percent, and a second reading taken at Austin Hospital, from a sample taken at 9.46 am, which produced a reading of .15 percent. In his opening address senior counsel for the plaintiff advised me that the plaintiff put the defendants to their proof that the readings accurately reflected the blood alcohol concentration of the plaintiff, and said that evidence would be led which suggested that the plaintiff's appearance did not reflect a person who was as intoxicated as those readings would suggest. The defendants had pleaded a defence of volenti non fit injuria and had also pleaded contributory negligence, both defences being substantially related to the plaintiff's consumption of alcohol. The question of intoxication was, therefore, a very important issue in the case.

Faced with the requirement that the defendants prove that the readings were accurate as to the plaintiff's blood alcohol concentration at the time of his accident the defendants chose not to simply tender the certificates which recorded the two blood alcohol concentrations, pursuant to s. 55B of the Evidence Act, but instead called the authors of the certificates and called witnesses to establish an unbroken chain of evidence from the taking of the samples on each occasion to the analysis which was conducted. In choosing to call those witnesses Mr Gillies advised, in his opening address for the second defendant, that his client did not wish to rely merely on the certificates lest there be an argument that the certificate should be treated as unreliable or that some technical failure must have occurred in the taking or analysis of the sample. He submitted that the plaintiff might make such claims by contending that the readings were so substantially at odds with the evidence of other witnesses as to the appearance of the plaintiff, and the consumption of alcohol by the plaintiff, on the night of the accident.

Mr Gillies did not strongly press the court's argument insofar as it was based on the notice to admit facts, but advanced his claim for costs on the more general grounds. His approach recognised that the notice to admit facts was deficient in that it sought an admission that at approximately 4 am on 2 March 1996 the plaintiff then had a blood alcohol concentration reading of at or about .25 percent. The facts in this case did not establish that the plaintiff's blood alcohol reading at that time was in that amount.

The broader question upon which the court's application was advanced was whether it could be said that the plaintiff failed as to the propositions he contested concerning the question of intoxication.

Apart from calling witnesses at the hospitals as to the chain of evidence with respect to the tests the second defendant also combined with the third defendant in that counsel for the third defendant called a large number of witnesses who had attended the bucks party but had not been called to give evidence by the plaintiff. Having called those witnesses, usually without knowing what they would say, the third defendant provided the opportunity to counsel for the second defendant to cross-examine them in the interests of all of the builder defendants. In calling those witnesses the second and third defendants were seeking to explore the question whether the relatively sober appearance of the plaintiff (as described by witnesses called by the plaintiff) would be confirmed by witnesses whom the plaintiff had not called. Thus, the second defendant was challenging the proposition that the plaintiff's appearance and rate of drinking was, in fact, inconsistent with the readings which were subsequently obtained. In calling those witnesses the second and third defendants were acting in cooperation with counsel for other defendants, by producing the witnesses and then having them cross-examined by other counsel who had an interest in common on the issue with the second defendant.

Among the witnesses who were called as part of the chain of evidence was Dr Valentine Young the head of the Biochemistry Department at Austin Hospital at the relevant time and Dr Byron Collins a Consultant Pathologist with expertise as to the absorption and elimination rates of alcohol. Although called by the second defendant cross-examination by counsel for the plaintiff of those witnesses produced some significant concessions. In particular Dr Young gave evidence that the readings represented a plasma alcohol reading rather than a whole blood reading, the former producing a reading between 10 to 33 percent higher than the latter. Both witnesses also gave evidence as to the factors which could produce a variation between the reading and a plus or minus statistical allowance which should be given for that reading, and as to the likely blood alcohol concentration which the plaintiff would have had at the time of the accident.

Mr Gillies submitted that the plaintiff should have admitted the accuracy of the blood alcohol readings recorded at the times the readings were conducted at Box Hill Hospital and Alfred hospital.

It was submitted by counsel for the second defendant that had the plaintiff admitted the accuracy of the readings which were shown in the certificates taken at the two hospitals, then the plaintiff would have been able to have obtain the same advantage for its case merely by cross-examining Dr Young and Dr Collins as to the factors which might have produced a variation between those readings and the likely alcohol level in the plaintiff's blood at the time of his accident.

In my findings I concluded that the reading of .25 percent taken at Box Hill Hospital was an overstatement of the plaintiff's true alcohol concentration expressed in serum terms, at 3.29 am. I concluded that at the time of the accident the plaintiff's reading was probably more in the order of .13 percent to .15 percent.

Those findings represented a significant victory for the plaintiff on the important question of the level of intoxication. In my view, although it may be said that the plaintiff did not demonstrate any deficiency in the chain of evidence as between the taking of blood samples and their analysis, nor any defects in the machines which conducted the tests, that particular aspect was only a small part of the evidence which related to the alcohol issues and it was not unreasonable for the plaintiff's advisors, in my opinion, to put the defendants to their proof in circumstances where the alcohol reading was so important.

Although it is true, as counsel for the second defendant submitted, that the finding of contributory negligence was based on a very high reading of blood alcohol in the plaintiff's system, and that that reading in turn related back to the certificates of the blood alcohol concentration taken at both hospitals, the reduction between .25 percent and the finding which I made of the plaintiff's alcohol concentration at the time was a significant victory for the plaintiff.

In Cretazzo v Lambardi[11] Jacobs J dealing with an application for costs in similar circumstances expressed what he called "a note of cautious disapproval" of applications to apportion costs according to the success or failure of one party or the other on particular issues of fact or law. His Honour stated[12]:

"But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

The statement of Jacobs J was cited with approval by me and by Tadgell J in Victoria v Master Builders Association of Victoria[13].

In Hughes v Western Australia Cricket Association Inc[14] Toohey J held that ordinarily costs should follow the event in the absence of special circumstances justifying some other order, which special circumstances might arise where a litigant has succeeded only on a portion of the claim and it is reasonable in the circumstances that that party should bear the expense of litigating the portion on which he had failed. In addition, as to the issues on which the party was unsuccessful, he might be ordered to pay the other side their costs.

I accept that it is not necessary for the second defendant to establish that it was unreasonable conduct on the part of the plaintiff to contest issues concerning intoxication in order for the second defendant to obtain the benefit of costs orders in these respects.[15] Furthermore, I accept that the court should be anxious to ensure that litigation is not unduly prolonged by parties contesting issues which, realistically, should have been conceded.

I am not persuaded, however, that this is a case where it is appropriate to make orders as sought by the second defendant.

This case was always going to be lengthy given the fact that there were ten defendants with significant areas of dispute as between them. Whilst some discrete topics might now be identified as having been areas which in hindsight did not justify disputation, that was not apparent at the time, and in any event, such topics occupied only a small portion of the time devoted to alcohol and related issues.

In any event, I am not persuaded that the alcohol issue generally or specifically can be regarded as one on which the plaintiff "lost". Whilst it is true that the findings which I made might have been made had the plaintiff's counsel merely cross-examined Dr Young and Dr Collins it seems to me highly likely that the defendants would have wished to call many if not most of the other witnesses on the alcohol issue who were called in any event. In calling witnesses from the hospital the defendants were interested not merely in establishing the chain of evidence but also in establishing prior inconsistent statements made by the witness, Ritchie Toomey, as to the plaintiff's history of alcohol consumption.

I therefore decline to make the orders sought by the second defendant on the alcohol issue.

COSTS OF JOINDER OF HUDSON CONWAY MANAGEMENT LIMITED ("HCML")

Mr Gillies submitted that the plaintiff's costs arising out of the late joinder of HCML should be paid solely by Davidson Hughes Estate Pty Ltd (hereafter referred to as either "Davidson Hughes" or "DHE"). He submitted that the joinder only occurred because Davidson Hughes refused to admit that HCML was its agent for the purpose of the claim, a position which was untenable, so it was submitted. I held that HCML was the agent of Davidson Hughes, and the issue was really not the subject of any serious contention once HCML became a party. Mr Gillies submitted that it had been an issue which was unreasonably contested by Davidson Hughes.

Mr Casey made it clear at the time of his application for joinder that had agency been admitted by Davidson Hughes the application for joinder would not have been pursued.

Mr Watkins, for Davidson Hughes, submitted that his client was entitled to have refused to concede agency, given the very late stage at which the question of agency was made an issue, by virtue of the evidence of Scolaro and Caverzan, who very belatedly raised the question of actual knowledge of the deficiency of the handrail being held by servants of HCML.

In my view, it is reasonable that the plaintiff's costs of joinder of HCML should be paid solely by Davidson Hughes. This is a case where it is plain that HCML would not have been a party but for the refusal to admit agency. I have no doubt that there were insurance considerations which motivated that refusal, but the fact remains that it was an issue which was never really argued. Whilst the presence of HCML as a party was undoubtedly to the benefit of the other builder defendants (and the application for joinder was supported by them for that reason) they should not be obliged to pay costs of the joinder when by an admission of agency the joinder would have been abandoned.

I have held that the builder defendants were jointly responsible to the extent of 50% for the plaintiff's injuries, loss and damage, the other 50% being the responsibility jointly of Moore and Spreadborough. The builder defendants have exchanged contribution notices seeking apportionment of liability as between themselves, pursuant to s.24 of the Wrongs Act 1958. That section requires that apportionment be made according to what is just and equitable having regard to each defendant's responsibility for the plaintiff's injury loss and damage.

The issue of apportionment was described by the High Court in Podrebersek v Australian Iron & Steel Pty Ltd[16] in the following terms (citing British Fame (Owners) v Macgregor (Owners)[17]):

"a finding on a question of apportionment is a finding upon a `question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds'."

The nature of the exercise was further emphasised by Winneke P in Esso Australia Ltd v VWA[18], where the President observed that the apportionment of blame is to be "assessed by making a comparison of the significance of the respective departures from the relevant standards of care required". The President added that: "Such a comparison involves matters of relative emphasis, proportion and value judgment upon which reasonable minds might differ and which does not readily admit of articulation."

I received substantial written and oral submissions on this question. The great variations between those submissions as to the suggested apportionment between the builder defendants reflects the accuracy of the statement that the task of apportionment is one on which minds may differ. There is some limited area of agreement among those defendants other than HCML and Davidson Hughes, in that the former group assert that the greatest share of responsibility must be held by the latter two defendants.

The contention that the majority of responsibility must be attributed to HCML and Davidson Hughes derives from my finding that the site manager of HCML, James, at a time very late in the project, learned that the balustrade had been built below the Code requirement of 1000mm. I concluded that his decision to do nothing about that deficiency was probably due to considerations of cost and time. It was submitted that the failure to act on that knowledge was a very serious departure from the duties owed by HCML and DHE in an area of public safety.

In my opinion, the contentions that James' knowledge should have the bulk of responsibility sheeted home to HCML and DHE can not be accepted. In the first place, James was the most junior of the management team and I concluded that had he told those above him what he had learned the deficiency would have been corrected. He himself agreed that he had no authority from HCML to tolerate a Code violation. In this regard, I agree with the submissions of Mr Riordan, who cited Kondis v State transport Authority[19] and the decision of Higgins J in Betts v White Constructions (ACT) Pty Ltd[20] in support of the contention that in assessing contribution the issue involves the assessment of the relative degrees of actual fault of the defendants, and where a defendant has been held vicariously liable for the neglect of an employee, it is the degree of negligence of the employee which is to be assessed, and the question should not be approached as one might when primary liability was found to exists rather than merely vicarious liability. In other words, the actual fault of the employer is not made greater by virtue of such matters as the size of the company, and the relative modest cost to that company of correcting the fault in the balustrade, when the company, as in this case, did not personally know of the fault and had no primary liability.

In reaching that conclusion I also agree with the submission of Mr Riordan, for HCML, that James' position was not so senior as to constitute his knowledge being that of the company in the sense of there being primary liability[21]. James did not represent "the directing mind and will of the corporation"[22]. The liability of HCML was vicarious only, by virtue of the knowledge of its employee James. I did not conclude that his failure to act was due to a conscious decision to ignore a Code breach. He may well have believed that there was no danger in taking the course he did. Indeed, he may well not have appreciated that the Code was necessarily broken, or else he may have considered that the deficiency was capable of being waived later by an application to the Building Appeals Board. Whatever his motives it was not a contumelious disregard for safety on his part, let alone on the part of HCML. Although James' inaction was the last act in a chain of acts and inaction which produced the outcome that the balustrade was built and remained at less than 1000mm I am quite unpersuaded that it represented a more significant departure from the applicable standards of care than was the case for any of the other builder defendants.

In my view, in assessing the responsibility of HCML and DHE their degree of responsibility should be taken jointly. DHE was, itself, in breach of a statutory duty imposed on it as owner of the building not to carry out work which was not in compliance with the Code. Its breach of both its common law and statutory duty was caused by the failures of its agent, HCML. The liability of HCML which arises from the failure of James, in turn makes DHE liable vicariously. But whilst I will have to address the question of contribution as between DHE and HCML separately, so far as the apportionment of liability to the plaintiff's losses is concerned I consider that they must be treated together.

In my opinion, the breaches of duty of HCML and DHE together constitute 20% liability for the total sum for which all builder defendants are liable (i.e. it is 20% of the damages represented by the 50% of the total loss and damage of the plaintiff for which I have held the builder defendants are liable).

I adopt a similar approach with respect to Bigridge Pty Ltd ("Bigridge") and Young. I put to one side the question of any contribution and indemnity as between those two parties. The surveyors had two fundamental areas of responsibility, checking of the architect's plans and checking that the work complied with the plans and the Code. The failures of the surveyors as to those tasks were significant. The findings made by me in my reasons for judgment are well summarised in the written submissions as to contribution filed by the third-named defendant, and I will not elaborate further on these questions[23]. I assess Bigridge and Young jointly as being responsible as to 20%, of the total of 50% liability for the plaintiff's total loss and damage which I attributed to the builder defendants.

The architect must also bear a substantial burden of responsibility. Had the plans been correctly drawn in the first place, and without ambiguity, then Scolaro would not have made the error which led to the final result. In my view the architect is also liable for 20% of the sum represented by the 50% total liability of the builder defendants. Mr Settle submitted that any claim for contribution brought against the architect by DHE should fail by virtue of the imputed knowledge of DHE as to the height of the rail. He cited Lambert v Lewis[24]. In my opinion, that case is distinguishable, it being a case of actual, rather than imputed knowledge, and, in any event, the relevant question before me is the respective degrees of fault of the various defendants, and the fault of the architect arises long before any knowledge is acquired directly or indirectly by DHE. It is on the basis of its own, direct, negligence that I attribute 20% blame to the architect.

The builder made the error in reading the plan in ignorance of the Code requirement and/or not checking the ambiguity contained within it. In my view, Scolaro's Concrete Constructions Pty Ltd (in liq) were also responsible as to 20% of the builder defendant's liability.

Finally, there is Smith, the inspector. To Smith was passed the task of actual inspection and certification. In all the circumstances, I do not consider his responsibility any greater than that of other builder defendants. I therefore also attribute to him 20% of the builder defendants' liability for the plaintiff's loss and damage.

My conclusion therefore as to the total liability of the builder defendants towards their 50% combined responsibility for the plaintiff's loss and damage is as follows:

Architect: 20% Builder 20% Bigridge/Young 20% Smith 20% HCML/DHE 20%

Counsel for Young conceded that Lister v Romford Ice[25] continued to apply in Victoria. Bigridge sought an indemnity from Young, as its employee, pursuant to the principles of that case, with respect to all responsibility which was attributed to it. Bigridge contended that any liability attributed to it was solely by virtue of vicarious liability for the failures of its employee, Young. Young disputed that contention, contending that Bigridge was itself personally liable, not merely vicariously liable.

It was accepted that Bigridge was not insured for acts and omissions which occurred before 23 December 1994. It was conceded that insofar as any liability for the plaintiff's injuries was attributed to negligence of Young (for which Bigridge was vicariously liable) prior to that date, then the principles of Lister v Romford Ice applied, and Bigridge was entitled to an indemnity from Young with respect thereto. That is so because it is agreed that the contract of employment with Bigridge had an implied term that Young would exercise reasonable care so as not to cause loss and damage for which Bigridge would be vicariously liable.

Insofar as Bigridge sought to apply Lister v Romford Ice to any negligent acts or omissions after 23 December 1994, as against Young, counsel for Young made two answers. In the first place, he contended that it was not Young alone who was negligent during that period, and that Bigridge was itself negligent, by virtue of acts or omissions of its principal, Thomas. Secondly, insofar as Bigridge was vicariously liable for any negligence on the part of Young, counsel for Young submitted that he gained the benefit of s.66 of the Insurance Contracts Act 1984. That provision reads as follows:

"66 Where: (a) the rights of an insured under a contract of general insurance in respect of a loss are exercisable against a person who is his employee; and (b) the conduct of the employee that gave rise to the loss occurred in the course of or arose out of the employment and was not serious or wilful misconduct; the insurer does not have the right to be subrogated to the rights of the insured against the employee."

Mr Gillies submitted that that section had no application because although it was conceded that the insurer was exercising its rights of subrogation under the policy with Bigridge which related to acts or omissions after 23 December 1994 it only has application with respect to a person who "is" the employee, and Young had ceased to be an employee of Bigridge.

In my opinion, that section should be read as meaning that it applies to persons who are now or were at the time of the negligent act employees of the insured. Such an interpretation is consistent with authority[26] where the word "is" is used in such circumstances, and makes sense of the section. To interpret the section as Mr Gillies suggests would produce the improbable outcome that by sacking an employee an insured employer would enable his insurer to make a subrogated claim against the former employee, without that employee having the benefit of s.66, which was obviously intended to apply. As Young J held in Gaffey v Chief Commissioner of State Revenue[27]:

"The word `is' in its most common use indicates an immediately present situation: Public Trustee v McKay[28]. However, as McCarthy J pointed out in that case at 1002, the use of the present tense does not necessarily focus on a point in time because it is quite customary to use the present tense as though the past, and indeed the future, were present such as `the steamer leaves every Tuesday in winter'. The word `is' is also often used in a continuous sense, such as `where the court is satisfied' of something, referred to as the `continuous present' by Gee J in Penza v Penza[29]. Occasionally the word can have a past significance such as in Hargreaves v Hopper[30], where the Act gave the vote to a person who `is on the last day of July in any year' a person who possesses the prescribed qualifications. The word can mean `shall be' or `will be': Botts v Simpson[31]; Jersey City v Flynn[32]. Sometimes the word has no temporal significance at all: Pye v Minister for Lands NSW[33]. See generally Darkingung Local Aboriginal Land Council v Minister for Natural Resources[34]. In all cases it is a matter of looking at the word in context. It seems to me that in the present context, the word `is' plainly refers to the land tax year in question, particularly the time when the Chief Commissioner is considering the liability for land tax on land owned on 31 December of the previous year. Unless the land has an attributed part value from the Valuer General at that time, then the section is not applicable."

In the context in which s. 66 is intended to operate I consider that the word "is" must be given a broader meaning, and that the fact that Young ceased to be employed by Bigridge does not deny him the benefit of the section.

In submitting that Bigridge had only vicarious and not primary liability for the injuries suffered by the plaintiff Mr Gillies relied on a passage in my reasons for decision, at paragraph [306]. In that paragraph I spoke of "Young and vicariously Bigridge" being in breach of their duty of care to the plaintiff with respect to on site responsibilities. That paragraph must be read with findings made by me in paragraphs [252] and [253]. In paragraph [253] I again referred to the vicarious liability of Bigridge, but in paragraph [252] my finding, although not fully spelt out, was that although Thomas was aware that the earlier versions of the plans which he had seen were deficient in that they did not give the necessary dimensions for the balustrade, Bigridge (through Thomas) did not escape all liability simply by virtue of his having advised the architect of that deficiency and by having passed the files to Young which contained that notification to the architect.

As I believe my reasons made clear, I was unimpressed with Thomas' total lack of involvement in a project for which the company of which he was the principal was being paid handsomely, and where, pursuant to a contract with DHE, the company had an obligation to exercise reasonable care. It was unnecessary for me to differentiate as between Bigridge and Young when making my findings as to negligence. The case was contested to that point without there being any need for analysis of the extent to which there was personal or vicarious responsibility held by Bigridge.

In my view, as between Bigridge (through the role of Thomas) and its employee, Young, both had a direct personal liability. In my view Thomas, as Bigridge's agent, could not avoid attribution of personal responsibility to Bigridge, merely by passing all obligations to Young, and, then in turn, having Young pass all obligations for inspection to Smith. Thomas knew that the plans had not adequately provided dimensions for the handrails on the stairway and landings, and took no step to ensure that Young had ensured that that omission had been addressed.

As to the matter of planning responsibility, it is undoubtedly the case that the main bulk of responsibility for failure to check the plans properly must rest with Young, but Bigridge, through Thomas, does not avoid responsibility in this area. In my assessment the failures with respect to checking the plans, as between Bigridge (i.e, per Thomas) and Young are in the order of 25% Bigridge and 75% Young. With respect to the planning phase there was no insurance and accordingly Bigridge is entitled, in its own name to an indemnity on Lister v Romford Ice principles as against Young with respect to the extent that the loss suffered by Bigridge in having to pay sums to the plaintiff was attributable to Young's negligence for which Bigridge incurred vicarious liability. In other words, to the extent that liability of Bigridge to the plaintiff was a result of the component of negligence being related to planning, Young must reimburse Bigridge to the extent of 75%.

As to the question of inspection I held that Young was negligent but, once again, I did not conclude that Bigridge, through Thomas, carried no personal responsibility. As I noted in par [275], Thomas made no check of the work that Smith was doing and yet expected that Smith would report back to Thomas if he had any uncertainty as to his task. Thomas was not sure to whom Smith was meant to report, and it was Thomas who advised Smith as to how the Form 14 was to be completed, a query by Smith that should have alerted Thomas to the limited awareness of Smith and the dangers of the approach Smith was adopting.

Although primary responsibility with respect to the supervision of inspections fell to Young (he being the person who took the statutory role of surveyor, and the one who delegated the function of inspection to Smith), in my view Thomas had a more significant role here than in the case of the planning function. Thomas knew that it was he and not Young who had any relationship with Smith; he must have known that Young was adopting a "hands off' approach to the job, placing all responsibility on Smith without himself conducting inspections. Thomas knew the new Act gave the opportunity for a surveyor to adopt such a role. In my view the responsibility of the surveyors for the failures on their part to ensure proper inspections was equally shared. I would attribute 50% to both for any deficiencies in the surveyor's role as to inspections.

In my opinion, it was the failure of inspection which was the more important area of negligence so far as the responsibilities of the surveyors were concerned for the plaintiff's damages. I would evaluate the respective categories of negligence in the following manner. In my view the failure as to inspection and supervision was responsible for two thirds of the end result and the failure to check the plans as to one third. All failures with respect to checking the plan occurred before 23 December 1994. That then raises the question of the extent to which the deficiencies of the surveyors, with respect to inspection of the work, arose before and after 23 December 1994.

This is a difficult question to resolve, but some factors may be identified. In the first place Andrew Smith was not engaged by Bigridge to carry out on-site inspections until 19 August 1994. Secondly, the site meeting in which the defects in the external balustrades were discovered was 5 April 1995, and at about that time the internal balustrade deficiencies became apparent. Smith said that Young told him on 25 May 1995 that he was to follow the plans (I did not accept that he was told this, but the date he chose is relevant because it shows that he was actively engaged in the process of inspection at about that time, and was, I am satisfied, in contact with Young). The Form 14 Certificate of Compliance was signed by Smith on 17 July 1995. The balustrades in Block 3 were installed towards the end of the project, probably all relevant work being performed in 1995.

Those factors all point to the conclusion that the period during which the surveyors failed to meet their duties with respect to inspection of the balustrade was wholly after 23 December 1994. Thus, insofar as any portion of the sum due to the plaintiff for loss and damage related to deficiencies in inspection by the surveyors (and, as I said, I assess that as being two thirds of the total responsibility of the surveyors) then that liability all arose after 23 December 1994, at a time when the insurer of Bigridge carried liability. By virtue of the fact that insurance was then in effect, Young was able to resist a Lister v Romford Ice indemnity because it was the insurer which brought a subrogated claim for such indemnity with respect to negligence of Young after 23 October 1994.

There was one additional claim brought against Young by Bigridge. In its submission Bigridge contended that under the terms of its insurance policy it was liable to pay an excess of $2000, and was entitled to recover that sum from Young[35] as a direct claim, and not one made as a subrogated claim by its insurer.

No doubt because of the smallness of this claim, Mr Thompson, for Young, did not address the issue. I have no evidence that the excess has actually been paid, merely that it must be paid, but it seems to me that in the absence of any challenge I can presume that it has been paid, and in the absence of any argument to the contrary it seems to me that the Lister v Romford Ice principle might well apply. I do not know, however, whether that sum would have been payable by Bigridge in any event to ensure coverage for the liability for its own negligence that I have found occurred, quite apart from its vicarious liability on account of Young. A reading of the policy which was handed to me with the submission of Bigridge suggests that the excess would have been payable in any event, to gain coverage with respect to Bigridge's own negligence.

I am not prepared in those circumstances to make any order with respect to this sum I am not satisfied that liability has been established.

Young made a claim against Bigridge for contribution, but insofar as any such claim relates to Young's own negligence such a claim for indemnity or contribution against Bigridge could not stand alongside of the liability of Young to indemnify Bigridge under Lister and Romford Ice principles. Insofar as Bigridge was itself negligent then in my view Young would be entitled to an indemnity from his employer and the contribution as between these two parties will be in the terms and in the proportions which I have discussed above. The findings which I have made in the above paragraphs should enable those parties to determine as between themselves what adjustments need to be made to the respective contributions.

Counsel for Davidson Hughes submitted that his client should receive 100% contribution from HCML. That submission was predicated on the fact that DHE was held liable both on account of breach of statutory duty and by reason of its vicarious liability for the knowledge of HCML (through James) of the height of the balustrade. Since both categories of liability were caused by the acts and omissions of its agent HCML, then so it was submitted, DHE was entitled to be fully indemnified by HCML

The submission made by DHE was actually a claim for indemnity, not a claim for contribution towards the damages payable to the plaintiff. The claim for contribution requires that I assess their respective degrees of fault producing the plaintiff's loss. I ruled that HCML was the agent of DHE, a fact which DHE had not admitted, thus causing the joinder of HCML. In my opinion, however, the question before me is not what were the terms of that agency, but what role did either play in producing the plaintiff's loss.

Although it was contended that the breach of statutory duty should be regarded as being entirely the fault of the agent, HCML, in my opinion that is not the correct analysis of the situation. DHE, whether or not through the omissions of its agent, was liable for breach of statutory duty as the owner of the property on which the work was performed in violation of the Code. The statutory breach, in my view was no less and no more the cause of the plaintiff's injuries, insofar as the respective roles of DHE and HCML were concerned. In my view they should be regarded as being equally responsible in their own right for the omissions and acts of the builder/developer. Accordingly I attribute 20% of the builder defendants' liability to DHE and HCML jointly, and as between themselves they are equally liable to meet that joint share.

As I will next discuss, by virtue of its contractual relationship with them DHE is entitled to receive contribution from the first, second and fourth defendants towards any damages which DHE is liable to pay the plaintiff. As will be seen the contribution of those three defendants towards the liability of DHE is as to 60% of DHE's share of damages payable to the plaintiff. Counsel for DHE sought to recover the balance of its liability towards the plaintiff by looking to HCML.

Mr Watkins sought to amend the claim for contribution brought by DHE against HCML by pleading a contractual relationship between them. I did not allow the contribution notice to be amended to make such a claim. Mr Watkins submitted that DHE was nonetheless entitled to a complete indemnity from HCML by virtue of the fact that I had found that HCML was the agent of DHE. Mr Riordan, for HCML resisted that claim.

In my view, the only claim before me as between DHE and HCML is a claim for contribution with respect to the plaintiff's damages, which requires that the respective contribution of DHE and HCML to the plaintiff's injury must be evaluated. That claim does amount to a claim for damages by DHE against HCML based on breach of duty as an agent. Whether such a claim may be brought by separate proceedings is a matter which I do not need to consider In my view, the only contribution which DHE can obtain from HCML in these proceedings is to have it contribute equally towards the joint 20% liability of DHE and HCML which I have held to be their responsibility for the plaintiff's loss and damage as allocated by me between all builder defendants.

CONTRIBUTION SOUGHT BY DHE AGAINST FIRST, SECOND AND FOURTH DEFENDANTS

Davidson Hughes brought claims for contribution as against the first, second and fourth defendants, and by its amended contribution notices claimed that each of those defendants owed it a complete indemnity, because each was under a contractual duty to DHE to perform its building work competently and in compliance with the Code.

There was no serious dispute that each of these parties was under such a contractual duty to DHE. The only argument against the claim for contribution brought by DHE related to the finding that James had knowledge of the deficiency in the balustrade, and that HCML and in turn DHE assumed vicarious liability for that knowledge.

As I have discussed, however, DHE did not itself have such knowledge, and in my view, it is entitled to claim contribution from these three defendants insofar as its own liability to the plaintiff was contributed to by their failure to perform their contractual obligations to DHE.

In assessing the extent of the contribution owed by these three defendants to DHE, it seems to me that each can only be liable to the extent of their own degree of fault (20% each) towards the plaintiff's overall loss, and Mr Watkins conceded that to be so. That means that DHE would not achieve a total indemnity from any of these three defendants individually, nor when their respective degrees of fault were combined.

CONTRIBUTION AS BETWEEN MOORE AND SPREADBOROUGH

Counsel for Spreadborough submitted that I should differentiate as between Spreadborough and Moore in attributing responsibility between them with respect to the 50% liability I attributed to them for the plaintiff's loss and damage.

The argument as to this turned mainly on the fact that it was Spreadborough who had been chased up the stairs by Moore, and had only fallen on the landing because Moore had either knocked him down or had caused Spreadborough to trip. It was contended, thereafter, that all that Spreadborough was doing was trying to get Moore off him, and that it was Moore who was the initiator of, and the person who prolonged, the struggle which caused the plaintiff to fall.

In my opinion, the role of these two men cannot be differentiated in contributing to the plaintiff's fall. Although Spreadborough ran off he had done so after splashing Moore and after a prolonged period of skylarking which had commenced shortly after leaving the hotel and which, in my opinion, was continuing in the stairwell.

In my opinion, Moore and Spreadborough must equally share responsibility for the role they jointly played (when distinguished from the role of the building defendants) in the plaintiff's injuries, loss and damage.

Some issues remain to be decided in this case, if agreement is not reached as to them between the parties. Counsel for Bigridge noted that it has an outstanding cross-claim against DHE alleging failure to effect proper insurance pursuant to the contractual arrangements between those parties. DHE denies that allegation and asserts that it did effect insurance, but that insurance has not been honoured, thus causing it to issue its own proceedings against CIC Insurance Limited, a company now in liquidation. The third party claim by DHE against CIC Insurance will need to be resolved before the claim by Bigridge against DHE on this question can, in turn, be resolved.

Mr Watkins advised me that the first and fourth defendants had made similar claims against DHE as had Bigridge, with respect to the alleged failure to insure their risk. The future disposition of those claims will similarly await the outcome of the litigation between DHE and CIC Insurance. There are other proceedings, too, between DHE and HCML, and also between DHE and the second and fourth defendants concerning disputes as to the obligation to insure. Those proceedings are not before me and I mention them only for completeness.

There is also an outstanding third party claim by HCML against Royal and Sun Alliance Insurance Australia Ltd. That remains to be resolved.

I will hear counsel as to the terms of the orders which should flow from these rulings, and as to the need for further directions for the disposition of outstanding claims between the defendants.

[1] Toomey v Scolaro's Concrete Constructions and Others (No. 2) [2001] VSC 279.

[2] [1993] VicRp 10; [1993] 1 VR 155, at 156, per Hayne J.

[3] Unreported, Full Court, 25 August 1992.

[8] The decision was not named by King J, although extracts from it were quoted.

[10] Prudential Finance Ltd v Davander Nominees Pty Ltd [1992] VicRp 32; [1992] 1 VR 468.

[15] See Rosniak v Government Insurance Office [1997] 41 NSWLR 608, at 615, per Mason P. See, too, Meadowgem Pty Ltd v ANZ Executors and Trustees (unreported, 11 June 1996, per Byrne J).

[16] Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492, at 493-4.

[17] British Fame (Owners) v Macgregor (Owners) [1943] AC 197, at 201.

[18] Esso Australia Ltd v VWA [2000] VSCA 74; (2000) 1 VR 246, at 253.

[19] Kondis v State transport Authority [1984] HCA 61; (1984) 154 CLR 672;

[20] Betts v White Constructions (ACT) Pty Ltd (No.2) (1992) 107 FLR 352, at 358.

[21] See Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121, at 127;

[22] Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705, at 713-714, per Viscount Haldane L.C.

[23] Putting to one side the submissions concerning HCML and DHE, the summary of my findings contained in the third-named defendant's written submission on contribution is a useful and generally accurate summation.

[24] [1982] AC 225, at 276-277

[25] Lister v Romford Ice & Cold Storage Co Ltd [1956] UKHL 6; [1957] AC 555

[26] Gaffey v Chief Commissioner of State Revenue (2000) 44 ATR 309; Re M (a minor) [1994] 3 All ER 298; Johnson v Territory Insurance Office [1989] NTSC 48; (1900) 69 NTR 9; Bergin v White (1956) St.Rep.Qd 432.

[31] 167 P (2d) 231, 233 (1946) (Cal).

[32] 70 A 497, 510 (1908) (NJ Chancery).

[35] See Read & Read v McNamara & Anor [1999] VSC 101, Harper J.

At a glance

Court

Decision date

Before

Source

Judgment (130 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (6)