[2012] VSCA 158

[2012] VSC 70 (J Forrest J)

TORT - Defences - Proportionate liability - Application to amend defence to rely on proportionate liability provisions in pt IVAA of the Wrongs Act 1958 - Another defendant alleged to be a concurrent wrongdoer - Transfer of responsibility for causal conduct to that defendant by statutory privatisation scheme for electricity supply industry before plaintiff suffers damage - Meaning of 'concurrent wrongdoer' - Amendment not futile - Appeal allowed - Wrongs Act 1958 pt IVAA, ss 23B, 24AF, 24AH, 24AI and 24AP.

1 I agree with Beach and Dixon AJJA that the applicant in this case should have leave to appeal and that the appeal should be allowed. Like Beach AJA, I consider that the question of SPI's liability is not unarguable for the reasons given by Dixon AJA. As the trial judge was not finally determining the question of SPI's liability prior to trial as a separate question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2005, the pleading amendment sought should have been allowed.

2 The argument in this Court on this application concentrated on the proper construction of the proportionate liability provisions of the Wrongs Act 1958. Little attention was paid to the Electricity Industry Act 1993 and the possible interaction between its provisions and those of pt IVAA of the Wrongs Act 1958, particularly, perhaps, s 24AP(a) of that Act. A closer examination of this interaction may yield a further argument for the conclusions we have reached on this application.

3 The background to this proceeding is set out in the judgment of Dixon AJA, which I have had the benefit of reading in draft form.

4 By summons filed 31 January 2012, USC sought leave from the judge managing this proceeding, J. Forrest J, to make certain amendments to its defence and counterclaim. A number of the amendments sought were sought in reliance upon the provisions of Part IVAA of the Wrongs Act 1958 ('the proportionate liability provisions'). These proposed amendments ('the derivative liability amendments') involved an allegation that SPI was liable for the negligent acts and omissions of the State Electricity Commission of Victoria ('SEC') and Electricity Services Victoria Limited ('ESV') from whom, in practical terms, SPI acquired the electricity distribution network for eastern Victoria in September 1994.

5 On 23 March 2012, J. Forrest J refused USC leave to make the derivative liability amendments. His Honour ordered:

(6) The second defendant, USC, have leave to amend its defence and counterclaim to the plaintiff's statement of claim in accordance with the reasons for judgment of Justice J. Forrest of 13 March to be served and filed by 23 March 2012.

6 By summons filed 11 April 2012, USC seeks leave to appeal paragraph (6) of the orders made by his Honour on 23 March. On 31 May 2012, this Court ordered that the hearing of the application for leave to appeal and the appeal, if leave is granted, be listed for 25 June 2012.

7 J. Forrest J refused USC leave to make the derivative liability amendments because he concluded these amendments were futile. While I was initially persuaded that the construction of the proportionate liability provisions preferred by J. Forrest J which led to this conclusion was correct, Dixon AJA's analysis shows that there are arguments for the contrary construction that are at least as powerful as those for the construction preferred below. As was said by McHugh J in News Limited v South Sydney District Rugby League Football Club Limited,[1] 'Questions of construction are notorious for generating opposing answers none of which can be said to be either clearly right or clearly wrong. Frequently, there is simply no 'right' answer to a question of construction'. In my view the present is such a case.

8 That said, it is to be remembered that the derivative liability amendments were refused because they were futile in the sense that they were unarguable. The application below was not the trial of a preliminary question concerning either the interpretation of the proportionate liability provisions or the application of those provisions to the present proceeding: it was merely an application to amend. The derivative liability amendments being arguable, it follows that, in my view, the application for leave to make the amendments should not have been refused. In the

circumstances, I agree with Dixon AJA that leave to appeal should be granted and the appeal allowed.

9 This proceeding is a group proceeding commenced under Part IVA of the Supreme Court Act 1986. The plaintiff claims loss and damage arising out of the Kilmore East bushfire, which occurred on 7 February 2009. SPI Electricity Pty Ltd ('SPI'), the first respondent, was the owner and operator of the electricity distribution network in the Kilmore East region at the time of the fire. The claims made by the plaintiff against SPI include allegations that:

(a) a single wire earth return conductor owned and operated by SPI failed and ignited a fire which became the Kilmore East fire;

(b) the Kilmore East fire was caused by breaches by SPI of duties it owed to the plaintiff and group members, including:

10 At all relevant times, Utility Services Corporation Limited ('USC'), the applicant, provided technical inspection services in respect of the electricity distribution network to SPI pursuant to an agreement. Claims are made by the plaintiff against USC for failing to exercise reasonable care in the performance of those services.

11 USC sought leave to make certain amendments to its defence and counterclaim. Some of the amendments sought were allowed. The amendments that were refused relied on the provisions of Part IVAA of the Wrongs Act 1958 ('the proportionate liability provisions'). These proposed amendments alleged that a judgment against USC should be proportionally limited, having regard to the

comparative responsibility of SPI, liable to the plaintiff for the negligent acts and omissions of the State Electricity Commission of Victoria ('SEC') and Electricity Services Victoria Limited ('ESV') prior to 1994, which caused her loss and damage. It was from SEV and ESV, in practical terms, that SPI acquired the electricity distribution network for eastern Victoria in September 1994.

12 SEC and ESV are not parties to the proceeding. The liability of SPI to the plaintiff for the acts and omissions of SEC and ESV allegedly arises under the statutory privatisation framework found in the Electricity Industry Act 1993, by which the SEC was corporatised and then disaggregated, and its assets and liabilities sold to a number of companies.[2] It is alleged that the liabilities transferred to SPI in 1994 by allocation statements under the statutory framework included liabilities that may mature from negligent acts and omissions of SEC and ESV employees. That transferred liability was not confined to liabilities existing at the time of the execution of relevant instruments, but extended to contingent or prospective liabilities or obligations.[3] Thus, it is contended that when the plaintiff suffered damage in the Kilmore fire in 2009, any responsibility that SEC and ESV would have had for that damage caused after 1994 by their failure to exercise reasonable care prior to September 1994, was a liability for which SPI is legally responsible. Because the application is a pleading summons, it is assumed that these, and other, allegations are capable of being established at trial.

13 On 23 March 2012, the judge managing the proceeding refused USC leave to make these amendments. USC seeks leave to appeal the order. On 31 May 2012, this Court ordered that the hearing of the application for leave to appeal and the appeal, if leave is granted, be listed for 25 June 2012.

14 Since the order under appeal was pronounced, the plaintiff has amended her statement of claim to allege that SPI is liable to her for her loss because of the transfer to it of liability for the acts and omissions of SEC or ESV by the statutory privatisation framework. However, this amendment by the plaintiff neither affects the issue in the appeal, not renders the appeal otiose.

15 The issue is whether it is futile for USC to allege that its liability for the plaintiff's damage suffered in the Kilmore fire in 2009 may be limited by regard to the comparative responsibility of SPI in respect of the acts and omissions of SEC or ESV before September 1994, legal responsibility for that conduct having been transferred to SPI, because SPI cannot be, in relation to that claim, a concurrent wrongdoer.

16 For the reasons that follow, I consider that USC's proportionate liability defence is not futile or untenable.

17 The proportionate liability provisions (ss 24AE to 24AS) are contained in Part IVAA of the Wrongs Act. Section 24AE defines an 'apportionable claim' to mean 'a claim to which this Part applies'. It is common ground that claims by the plaintiff in the proceeding are apportionable claims. The sections that are relevant on this application are ss 24AF, 24AH, 24AI, and 24AP.

24AF Application of Part

(1) This Part applies to -

(a) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care; and

(b) a claim for damages for a contravention of section 18 of the Australian Consumer Law (Victoria).

(2) If a proceeding involves 2 or more apportionable claims arising out of different causes of action, liability for the apportionable claims is to be determined in accordance with this Part as if the claims were a single claim.

(3) A provision of this Part that gives protection from civil liability does not limit or otherwise affect any protection from liability given by any other provision of this Act or by another Act or law.

24AH Who is a concurrent wrongdoer?

(1) A concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.

(2) For the purposes of this Part it does not matter that a concurrent wrongdoer is insolvent, is being wound up, has ceased to exist or has died.

24AI Proportionate liability for apportionable claims

(1) In any proceeding 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 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) judgment must not be given against the defendant for more than that amount in relation to that claim.

(2) If the proceeding involves 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 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 proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.

24AP Part not to affect other liability

Nothing in this Part -

(a) prevents a person from being held vicariously liable for a proportion of any apportionable claim for which another person is liable; or

(b) prevents a person from being held jointly and severally liable for the damages awarded against another person as agent of the person; or

(c) prevents a partner from being held jointly and severally liable with another partner for that proportion of an apportionable claim for which the other partner is liable; or

(d) prevents a court from awarding exemplary or punitive damages against a defendant in a proceeding; or

(e) affects the operation of any other Act to the extent that it imposes several liability on any person in respect of what would otherwise be an apportionable claim.

18 There are claims by the plaintiff in the proceeding for damages for personal injury that are not apportionable claims. Such claims arise from the same causes, and there are, in respect of such claims, contribution proceedings under Part IV of the Wrongs Act with which we are not concerned.

19 The primary judge set out the terms of the proposed amendments in full. I need not do likewise, but I will summarise them.

(a) SPI was incorporated, under another name, in May 1994.

(b) SPI is the successor to the electricity supply business carried on by SEC until December 1993 and ESV from December 1993 until September 1994.

(c) SPI acquired all liabilities, duties and obligations, whether actual, contingent, or prospective of SEC and ESV by and in accordance with the legislative framework pursuant to the Electricity Industry Act 1993.

(d) USC alleges that if the causes of the Kilmore fire included a break in the conductor caused by a faulty, defective, deteriorated in condition or incorrectly assembled asset and that asset was created or brought into existence before in or around 1994, then the asset was created or brought into existence and in that condition in the performance of a function of the SEC or ESV and in respect of an act done or omitted to be done by the SEC or ESV, or their officers employees or agents and/or arises from the negligence of or other actions or omissions of employees of SEC or ESV.

(e) All liabilities, duties and obligations whether actual, contingent or prospective incurred in the performance of a function of SEC or ESV, in respect of an act done or omitted to be done, and/or arising from the negligence of an officer, employee or agent of the SEC or ESV, have been transferred to SPI.

(f) The material facts upon which USC alleges that SEC or ESV owed the plaintiff a duty of care, and the material facts that constitute the breach by SEC or ESV of that duty of care are then alleged. It is unnecessary to describe these allegations in detail.

(g) USC alleges that if the plaintiff suffered damage as a result of the Kilmore fire, that fire was caused by the breaches by SEC or ESV of the duties alleged and was a natural and foreseeable consequence of such breaches of duty.

(h) By reason of these matters, SPI is 'liable for the claimants' loss and damage'.

(i) The proportionate liability defence is completed by allegations that:

(i) the plaintiff's claims, for economic loss and property damage arising from failures to take reasonable care, are apportionable claims,

(ii) SPI, the Secretary to the Department of Sustainability and Environment, and the Country Fire Authority are concurrent wrongdoers in relation to these claims, and

(iii) the liability of USC for the plaintiff's damages is limited to the amount that the court considers just having regard to the extent of USC' responsibility (if any) for such liability.

20 The primary judge refused USC leave to make the proportionate liability amendments because he concluded these amendments were futile. The primary judge reasoned that the proposed amendments involve a question of statutory construction that could be immediately determined. Although the primary judge identified six reasons why there was no reasonable prospect that the proportionate liability defence based on the derivative liability argument could be made out at trial,[4] I do not need to canvass them all.

21 The essence of the primary judge's reasoning is that s 24AI cannot be engaged unless the defendant is a concurrent wrongdoer. Section 24AH defines concurrent wrongdoer in clear and unequivocal terms. The natural meaning requires the relevant acts or omissions leading to the damage to be caused by the alleged concurrent wrongdoer i.e. direct causation. A claim based upon liability inherited from another party does not fall within this definition.[5] The acts or omissions must be those of the alleged concurrent wrongdoer, unless s 24AP of the Act extends the ambit of the circumstances that can bring that person within the scope of the statutory definition. While there must be a causal connection between the act or omission of the wrongdoer and the loss or damage sustained, a concurrent wrongdoer must also have a legal liability for that loss.[6]

22 Thus the primary judge concluded that Part IVAA requires that to be a concurrent wrongdoer, the acts or omissions of the wrongdoer must in fact directly cause the loss or damage claimed and result in a legal liability for that loss or damage. The acts or omissions of third parties are irrelevant to this determination. The amendments alleged, as causing the damage, the conduct of third parties, not any direct conduct of SPI. Liability of those third parties to the plaintiff could never be established in the circumstances of the legislative privatisation framework. SPI could never be a concurrent wrongdoer in relation to the claim that the plaintiff might have against SPI based on the conduct of those third parties. A concurrent wrongdoer's liability under s 24AI is limited by consideration of the relevant acts or omissions that are productive, directly, of the damage identified for the purposes s 24AH (1). At trial, USC's liability under s 24AI could not be determined by having regard to SPI's comparative responsibility for its derivative liability for the acts or omissions of SEC or ESV, if so found.

23 This construction was supported by reference to other provisions of the Act. Section 24AP extends the ambit of the relevant acts or omissions of a concurrent wrongdoer beyond those identified in s 24AH (1), to include other specific circumstances,[7] beyond the direct acts or omissions of the wrongdoer. The Victorian legislature chose not to extend liability to transferred liability.[8] Further, the legislature did not to adopt the breadth of the wording of the contribution provisions found in Part IV of the Act, where s 23A(1) and s 23B(1) permit recovery of contribution from any other person 'liable for the same damage'. The wording of s 24AH (1) stands in contrast: on its face, demanding direct causation. If the draftsperson had wished to do so, the language of s 23B could have been applied in the proportionate liability provisions. The provisions of s 24AP (e) do not militate against this construction.

24 To establish a tenable[9] proportionate liability defence, a defendant must allege:

(a) that the claim against it is an apportionable claim;

(b) that in relation to that claim the defendant is a concurrent wrongdoer;

(c) that another defendant to the proceeding is a concurrent wrongdoer, or, that another person, not a party to the proceeding, who is dead or has been wound up, is a concurrent wrongdoer in relation to the plaintiff's claimed loss and damage; and,

(d) in relation to all of the apportionable claims in the proceeding for the same damage, the material facts by reference to which the court is to assess the extent of that defendant's responsibility for the plaintiff's damage, which can include regard to the comparative responsibility of other defendants for the plaintiff's damage.[10]

(e) if the plaintiff has not alleged a claim against a concurrent wrongdoer whose comparative responsibility is alleged by the defendant to be material, the material facts that establish the responsibility of that other concurrent wrongdoer[11] for the loss and damage claimed by the plaintiff in the proceeding.

25 No issue was taken that the amendments otherwise fail to plead a tenable proportionate liability defence. The amendments were refused because the claim that SPI was a concurrent wrongdoer in relation to the plaintiff's damage, in respect of the conduct of SEC or ESV that occurred prior to 1994, was untenable.

26 As the reasoning set out above shows, the construction of s 24AH is open to debate. Kirby J remarked in another context: 'It is of the nature of contestable statutory provisions ... that persuasive arguments can commonly be mounted in support of the alternative interpretations'.[12] I do not disagree with the primary judge when he said that St George Bank v Quinerts[13] now establishes in this State that a concurrent wrongdoer must not only have caused the loss or damage but also be liable to the plaintiff for that loss. Nonetheless, I cannot accept as correct the construction of s 24AH that the primary judge has applied.

27 When considering whether acts or omissions for which a defendant has a transferred or novated liability caused the plaintiff's damage, the proper construction of s 24AH (1) requires focus on the phrase 'whose acts or omissions caused'. The sense in which the statute uses the underlined words reveals the proper meaning of the section.

28 The word 'directly' is not used in s 24AH (1). It is not necessary that it be read in. However, the notion of direct causation, if thought appropriate, is not offended by the proposed amendments. I can see no reason to conclude that the defendant SPI has not caused the loss by its own acts on an assumption, to be made out at trial, that SPI has been substituted, effectively in law, for the actor whose acts or omissions are the basis for the allegation. Responsibility for the causative conduct may be vicarious in the true sense of the word, but it is imposed in novel circumstances by force of a statutory framework. Rather than creating an indirect responsibility, arguably, upon the substitution of a new actor for the original actor, responsibility for causative conduct is transferred or novated. In that circumstance, the phrase 'whose acts or omissions caused' now refers directly to the conduct for which an alleged concurrent wrongdoer is responsible, not the original actor. Of course, at trial USC must make out its allegation that, by the statutory privatisation framework under the Electricity Industry Act 1993, such a transfer or novation of the responsibility for the acts or omissions that, in breach of a duty of care, caused damage to the plaintiff, was effected to SPI.

29 In my view, a concurrent wrongdoer is not someone other than a person liable in respect of the same damage. The concept of cause in s 24AH is tempered by a concept of 'being liable' or 'responsible' that emerges from consideration of the whole of Part IVAA and its intended purpose. The word 'caused' in s 24AH can accommodate the possibility that apportionment may be ordered in relation to a defendant who was not originally liable but who is presently liable because responsibility for the relevant acts and omissions of the original wrongdoer, that is, responsibility for cause, was transferred or novated from the actor to that defendant, when, but for that transfer and cessation of the prospect of liability for such conduct, the original wrongdoer would still be liable.[14] Such a defendant is 'liable for the same damage'. Such a defendant is a concurrent wrongdoer.

30 Section 24AI speaks of apportioning responsibility and of the 'comparative responsibility' of the defendant and other concurrent wrongdoers. This focus on responsibility - the attribution of blame, not just factual cause - demonstrates the statutory purpose. Legal responsibility, or blame, the concept of being 'liable', is to be understood in the context of the purpose and framework of proportionate liability as it is created by the provisions of the Act.

31 The word 'whose' in s 24AH(1) is critical but, before turning to that I will say a little more about how the concept of 'being liable' assists to properly construe the concept of 'cause' in s 24AH(1). It is the relational sense in which that concept is used that requires careful consideration

32 Where damage arises from a failure, by multiple wrongdoers, to take reasonable care,[15] the proportionate liability provisions create a relationship between concurrent wrongdoers, in relation to that damage and the conduct of the concurrent wrongdoers, of legal responsibility for a just proportion of the plaintiff's damage. This relationship is encompassed in the phrase I have identified. That relationship of legal responsibilities on the claims against the multiple wrongdoers guides the court's assessment of the proportion of the plaintiff's damages to which a judgment against an individual defendant is to be justly limited. When the court makes that assessment it is apportioning, amongst the wrongdoers who caused the damage, responsibility - the blame - for the plaintiff's damages. In apportioning responsibility and limiting the judgment entered against a defendant, the court gives effect to the purpose of proportionate liability discernible from the statute. That purpose guides the requirements of justice and equity in the case.[16]

33 The purposes of Part IVAA are readily discernable. In St George Bank v Quinerts,[17] this court explained the legislative background against which Part IVAA falls to be construed. After referring to Palmer J's description in Yates v Mobile Marine Repairs Pty Ltd[18] of the perceived injustices from undesirable consequences of the joint and several liability rule, which the national co-operative proportionate liability scheme was designed to overcome,[19] Nettle JA remarked that it is important to keep in mind that the proportionate liability provisions were not designed to do any more than that. Nettle JA said:

In particular, there is no suggestion in Part IVAA that it was intended to do more by way of apportionment than in theory could previously be achieved by contribution under s 23B of the Act. As appears from the Second Reading Speech on the Commonwealth Proportionate Liability Bill, the object of the apportionment legislation was to put a defendant in exactly the position it would have been if all other concurrent wrongdoers liable to make contribution under the Commonwealth equivalent to s 23B were before the court and of sufficient means to meet their obligations to make contribution according to their respective responsibilities for the loss and damage suffered by the plaintiff.[20]

34 If that is so, why are there differences in the language of Part IVAA when compared with Part IV? Does not the use of the word 'caused' in s 24AH(1), rather than the word 'liable' which is used in s 23B on contribution questions, bear the consequences identified by the primary judge: that the wording of s 24AH(1) stands in contrast to s 23B; on its face, demanding direct causation? This court in Quinerts did not think so.

35 I would add to what Nettle JA said about what the proportionate liability provisions were not designed to do. It is not the object of the proportionate liability provisions to deny a plaintiff exactly the position he or she would have been in if all of the concurrent wrongdoers liable to make contribution under s 23B were before the court and of sufficient means to meet their obligations to pay their proportionate judgment, but no more, according to their respective responsibilities for the plaintiff's loss and damage.

36 The statute entertains, but only for its objects and purposes, a proportionate limitation on the plaintiff's judgment where a wrongdoer, whose acts caused the plaintiff's damage, no longer exists or is insolvent. The statute does not encompass such a wide concept of cause that a defendant can contend for a judgment against it limited to a proportion of the plaintiff's damage on a consideration of cause for which the plaintiff has no remedy. The perceived injustice that proportionate liability seeks to remedy is not addressed where a liability to the plaintiff does not cease to exist because responsibility to the plaintiff for conduct causing damage is transferred or novated to another. On USC's allegations in its proposed amendments, responsibility for causative acts or omissions and liability for the plaintiff's damage, when speaking of a claim based on pre-1994 conduct, belong to SPI.

37 Nettle JA in Quinerts[21] examined the differences in language between Part IV and Part IVAA (s 23B and s 24AH), stating:

It might be thought that the differences were intended to signify that 'a person whose acts or omissions caused ... the loss or damage that is the subject of the [plaintiff's] claim' within the meaning of s 24AH is something other than a 'person liable in respect of the same damage' within the meaning of s 23B. In my view, however, that is not the case. As Besanko J held in Shrimp v Landmark Operations, a 'concurrent wrongdoer' includes a person whose acts or omissions caused the damage or loss that is the subject of the plaintiff's claim only if the person is 'liable' to the plaintiff for that loss and damage. In light of s 24AI(3), however, 'liable' in the sense identified by Besanko J must include both presently liable and liable in the sense of having been liable and, but for ceasing to exist, would still be liable. It would be inapposite to describe a person who was liable, but has ceased to be liable because they have ceased to exist, as being 'liable'. Hence, it appears to me that the drafter of s 24AH chose 'cause' rather than 'liable' to accommodate the possibility that apportionment may be ordered in relation to a concurrent wrongdoer who is not presently liable but who was liable and, but for ceasing to exist, would still be liable. (citations omitted)[22]

38 I agree, with respect, with Nettle JA's view that a concurrent wrongdoer is not someone other than a person liable in respect of the same damage. The reasoning explained in Quinerts does not address the allegations that USC wishes to make. SEC and ESV, the actors, have not literally ceased to exist. Each has ceased to be 'liable' for such conduct, but the question is not whether SEC and ESV are persons 'liable for the same damage'. On the assumed facts, that cannot be. SEC and ESV are alleged not to be legally responsible for their past conduct from a time well before it caused the plaintiff's damage. The amendments raise a converse proposition to that of the wrongdoer who has ceased to exist: can a defendant have caused the plaintiff's claimed damage and be 'liable', in the sense identified by Besanko J, when that defendant is presently liable for another's causative conduct only because responsibility for the causative conduct has been transferred or novated to the defendant. The original actor has not ceased to exist or become insolvent but has no liability for its conduct. In my view, this converse proposition is answered in the same way.

39 The purpose of s 24AH is to define concurrent wrongdoers. The principle that qualifies 'caused' in s 24AH in most cases might conveniently be stated as the wrongdoer having a 'legal liability' to the plaintiff for its conduct, but this is not such a case. The better perspective from which to evaluate the notion of 'being liable' is to focus on the causal relationship between conduct and damage. The drafter of Part IVAA has made this clear. The wrongdoer, as defined by s 24AH, must be liable to the plaintiff for the damage and responsible for the conduct that caused it. While such a person is nearly always the actor, Part IVAA is not so limited in terms.

40 The concept of concurrent wrongdoing informs the process of apportioning responsibility for loss under section 24AI. The responsibility of each concurrent wrongdoer is measured by reference to the criteria that makes them concurrent wrongdoers - namely their acts and omissions that caused the relevant loss in the context of their legal responsibilities to the plaintiff. This responsibility for conduct returns the focus to the word 'whose' in s 24AH (1). The word 'whose' is used in the operative phrase 'whose acts or omissions caused' in its relative sense, defining the acts or omissions of, or that belong to, the concurrent wrongdoer. Although that will usually be a reference to the actor, the concept is broad enough to incorporate a transferred or novated liability for acts and omissions of another that caused the plaintiff's damage by substitution of the defendant for the actor. To read into the phrase the word 'directly', as in 'whose acts or omissions directly caused', restricts the natural meaning of the word 'whose' in a manner that is inconsistent with the purposes and intention of the proportionate liability provisions.

41 The respondent submitted that the requirement that to be a concurrent wrongdoer a person must not only have caused the loss but also have a legal liability for that loss, does not entail the converse proposition that a person legally liable for the loss will be considered to be a concurrent wrongdoer when they were not the person whose acts or omissions caused the loss. So much is, I think, clear from the terms of s 24AP. If that submission extends to the suggestion that a defendant, legally liable to a plaintiff for damage because direct legal responsibility for the later consequences of the acts and omissions of another was lawfully imposed upon that defendant by transfer or novation before damage occurred, will not be considered to be a concurrent wrongdoer because they were not the person whose acts or omissions caused the loss, then I reject it.

42 The concept of a concurrent wrongdoer in s 24AH accommodates a defendant who is presently responsible, although not the actor responsible at the time it occurred, for the consequences in law of the conduct that later caused the plaintiff's damage, provided that the circumstances of the defendant's present responsibility for the causative acts or omissions show that such conduct is, in law, conduct of, or that belongs to that defendant.

43 Consistently with this analysis, in other cases the requirement of cause with liability has been expressed, not in terms of the legal liability of the target wrongdoer, but in terms of the rights of the plaintiff against all concurrent wrongdoers.[23] In order to prove that another defendant is a concurrent wrongdoer, it is necessary that the defendant pursuing a proportionate liability defence establish that the plaintiff has an enforceable cause of action against other concurrent wrongdoers. If the plaintiff has not sued that wrongdoer or alleged that cause of action, then the defendant raising the defence must do so, including by joining that wrongdoer as a defendant.[24] This is so because it is not the intention of the statute to reduce the plaintiff's judgment on account of the conduct of another against whom that plaintiff could never have had legal recourse; that is, a person who is not 'liable for the same damage'. It is misconceived to suggest that the concept of a concurrent wrongdoer under s 24AH (1) may extend to third parties who are causally linked to the claimed loss but 'innocent' in the sense that they have committed no legal wrong.

44 Plainly is it not the intention of the statute to constrain the defence to the detriment of a concurrent wrongdoer by excluding the comparative responsibility of a wrongdoer against whom the plaintiff has, apparently, legal recourse. Thus, there is no limitation on the defence when another concurrent wrongdoer is insolvent, dead, or otherwise ceases to exist. It is the purpose of the statute, by placing with the plaintiff the risk of incomplete recovery when such circumstances occur, to limit the judgment recovered by the plaintiff. The risk of incomplete recovery also rests with a plaintiff who cheaply releases a concurrent wrongdoer defendant prior to judgment. A plaintiff may settle with a concurrent wrongdoer and withdraw allegations against that wrongdoer. For the remaining defendants pursuing a proportionate liability defence, the settling defendant must remain a party to the proceeding and the remaining defendants must allege and prove the plaintiff's claim against the settling defendant to establish that their liability for the plaintiff's damage is justly limited by the comparative responsibility of that wrongdoer.[25] Nor should the ambit of the defence be constrained to the detriment of a concurrent wrongdoer, in the case of transferred or novated responsibility for cause, if the court is satisfied, whether by USC or by the plaintiff, that a defendant is responsible to the plaintiff for damage caused by that conduct.

45 In the context of the USC allegations as assumed facts, SEC or ESV are wrongdoers whose acts or omissions caused the plaintiff's loss. But for the transfer of contingent and prospective liabilities away from them by the scheme established by the Electricity Supply Act 1993, it is assumed they would have become liable to the plaintiff once damage was suffered and would still be liable to the plaintiff. Because responsibility for their assumed causal conduct was transferred to SPI before loss was suffered, SEC or ESV will never be liable to the plaintiff. The conduct of SEC and ESV was not 'innocent', but they are not 'presently' liable to the plaintiff. USC further alleges that SPI is presently liable to the plaintiff for damage she has suffered caused by that conduct after the transfer of that responsibility from SEC and ESV to SPI.

46 Whether a defendant is a concurrent wrongdoer is assessed by reference to particular claims against that defendant. A finding that a defendant is a concurrent wrongdoer must necessarily involve analysis of responsibility for causing the plaintiff's damage in respect of each apportionable claim. The analysis of comparative responsibility between concurrent wrongdoers undertaken under s 24AI when determining the just apportionment requires a broad discretionary evaluation of the conduct of the wrongdoers in terms of both causation and culpability.[26] The court's findings of the basis for a defendant to be a concurrent wrongdoer inform the discretionary evaluation of that defendant's responsibility. This evaluation is not compromised, rather it is facilitated, by the exposure of the interrelationship between the acts and omissions of SEC or ESV, the causes of the plaintiff's damage, and the sources of the legal obligations to the plaintiff of SPI. The evaluation of the relationship between the comparative responsibilities of concurrent wrongdoers will also be facilitated.

47 Finally, the applicant submitted that s 24AF (2) somehow informs the construction and operation of section 24AH (1). This submission is misconceived. The s 24AH inquiry is 'in relation to a claim'. Section 24AF refers to determining liability for multiple apportionable claims. When responsibility is compared and damages apportioned under s 24AI, multiple claims are determined as if the claims were a single claim because the concurrent wrongdoers are liable for the same damage. The analysis in Quinerts of the phrase 'loss or damage that is the subject of the plaintiff's claim' in s 24AH explains why that is so.

48 For these reasons, I consider that the allegation of USC that SPI is a concurrent wrongdoer in relation to a claim by, or put in the mouth of, the plaintiff that SPI caused, by the acts or omissions of SEC or ESV prior to 1993, the plaintiff's damage is not fanciful or futile. The allegations must be permitted to go to trial.

49 It is unnecessary to consider the other submissions that were put to the court.

50 I am satisfied that USC would suffer substantial injustice if leave was refused, because it would be deprived of the opportunity to contend for its liability to the plaintiff being limited by reference to the comparative responsibility of SPI for the conduct of SEC and ESV prior to 1994.

51 For these reasons, I would grant USC leave to appeal, and allow the appeal.

SECRETARY TO THE DEPARTMENT OF SUSTAINABILITY AND ENVIRONMENT

[1] [2003] HCA 45; (2003) 215 CLR 563, 580 [42].

[2] The explanation of the statutory privatisation framework that is set out in the reasons of the primary judge was not challenged on the appeal. Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Limited (Ruling No 6) [2012] VSC 70, at [1] - [26] (14 March 2012).

[3] As provided by the definition of liabilities in the Electricity Industry Act 1993.

[4] Matthews v SPI Electricity Pty Ltd; SPI Electricity Pty Ltd v Utility Services Corporation Limited (Ruling No 6) [2012] VSC 70, at [79]-[102].

[5] Citing Ucak v Avante Developments [2007] NSWSC 367; Perpetual Trustees Australia Ltd v Paladin Wholesale Funding Pty Ltd and Another (2011) 83 ACJR 410 [48].

[6] Citing St George Bank Ltd v Quinerts Pty Ltd, [2009] VSCA 245; (2009) 25 VR 666, at 684 [64]; Shrimp v Landmark Operations Ltd [2007] FCA 1468; (2007) 163 FCR 510 [59]-[62].

[7] For example, the vicarious liability of an employer for the acts or omissions of an employee (s 24AP(a)) and the liability of one partner for the actions of a another (s 24AP(c))

[8] This is to be contrasted to the position in South Australia.

[9] Meaning a real (not a fanciful) prospect of success; s 63 Civil Procedure Act, 2010 (Vic).

[10] It is important to bear in mind the requirement, peculiar to Victoria, that a concurrent wrongdoer must be a party to the proceeding - see s 24AI(3), s 24AL and the definition of 'defendant' in s 24AE. See generally Woods v De Gabriele and ors [2007] VSC 177, (Hollingworth J); Atkins v Interprac Financial Planning Pty Ltd and Anor [2007] VSC 445, (Hargrave J); P & V Industries Pty Ltd v Secombs (a firm) [2008] VSC 209 (Judd J); Suncorp Metway Ltd v Panagiotidis & Anor [2009] VSC 126 (Evans AsJ); and Main Road Property Group Pty Ltd & Ors v Pelligra & Sons Pty Ltd & Ors [2010] VSC 5 (Croft J).

[11] The wrongdoer must be joined as a party to the proceeding to satisfy s 24AI(3) - see s 24AL.

[12] Sons of Gwalia Ltd v Margaretic [2007] HCA 1; (2007) 231 CLR 160, 209[116]

[13] [2009] VSCA 245; (2009) 25 VR 666.

[14] Unless that wrongdoer had ceased to exist, which is not the case in this proceeding.

[15] or from contravention of s 18 of the Australian Consumer Law.

[16] Compare the observations in the context of s 82 of the Trade Practices Act 1974 (Cth) in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41; (2002) 210 CLR 109, 119 [26] (Gleeson CJ).

[17] [2009] VSCA 245; (2009) 25 VR 666, at 682 [59].

[18] [2007] NSWSC 1463, [93]-[94], in relation to the comparable provisions of Part IV of the Civil Liability Act 2002 (NSW).

[19] See also Godfrey Spowers (Victoria)Pty Ltd v Lincolne Scott Australia Pty Ltd & Anor [2008] VSCA 208; (2008) 21 VR 84, at 101 [88] - [96].

[20] (citations omitted), with Mandie JA and Beach AJA agreeing. When in Mitchell Morgan Nominees Pty Ltd & Anor v Vella & Ors [2011] NSWCA 390 (15 December 2011), a five member bench on the NSW Court of Appeal convened to consider whether the decision of this court in Quinerts, that the decision of the primary judge in that appeal was wrong, was correct, the court agreed with the reasoning in Quinerts.

[21] [2009] VSCA 245; (2009) 25 VR 666.

[22] Ibid, at 683-4 [63] - [64]. Nettle JA's full discussion, at 681-4 [57] - [64], repays careful consideration. This analysis was accepted, although in a slightly different context, in Mitchell Morgan Nominees Pty Ltd & Anor v Vella & Ors [2011] NSWCA 390 (15 December 2011), at [49] and [60].

[23] Chandra v Perpetual Trustees Ltd [2007] NSWSC 694 (6 July 2007) [110] (Bryson AJ); Shrimp v Landmark Operations Ltd [2007] FCA 1468; (2007) 163 FCR 510, 520-1 [53]-[58] (Besanko J); S Sali & Sons Pty Ltd v Metzke [2009] VSC 48 (19 February 2009) [280]-[282] (Whelan J) (upheld on appeal: Metzke and Allen v Sali [2010] VSCA 267 (15 October 2010)) and St George Bank Ltd v Quinerts Pty Ltd [2009] VSCA 245; (2009) 25 VR 666, 681 [57]-[60], 684 [64].

[25] Gunston v Lawley, [2008] VSC 97; (2008) 20 VR 33.

[26] As explained in Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALR 529 and Alcoa Portland Aluminium Pty Ltd v Husson & Anor [2007] VSCA 209; (2007) 18 VR 112 at [86].