Contribution proceedings - Compromise between two of three defendants - Whether Rules of the Supreme Court 1971 O 23 r 2 applies - Unfairness to non-consenting defendant

Leave to discontinue contribution proceedings refused

Wintle v Stevedoring Industry Finance Committee & Ors (No 3) [2002] VSC 369

1 STAUDE DCJ: This is an application on behalf of the first defendant for leave to discontinue its contribution proceedings against the second defendant and the third party, following a compromise of the issues in those proceedings, and for consequential leave to amend the statement of claim of the first defendant in the remaining contribution proceedings.

2 A minute of proposed amended chamber summons dated 4 March 2010 was handed up prior to the hearing, and I would grant leave to amend the chamber summons in the terms of the minute dated 4 March 2010, and dispense with service of that document. The minute of proposed amended chamber summons will stand as the chamber summons.

3 The application is opposed by the third defendant.

4 The action, in its present form, derives from a claim for damages by the plaintiff against the defendants in respect of injuries suffered due to a work accident on 5 December 2003. The plaintiff was the employee of the third defendant, a labour hire company which assigned him to work for the first defendant, a drilling company, at the second defendant's mine. The party is an entity related to the second defendant, and for present purposes their interests are identical.

5 The accident involved the rupture of a pressure hose which caused a fiery explosion, which resulted in the plaintiff's injuries. The plaintiff's claim was settled in 2007 by payment of an agreed amount by the first defendant. The other defendants and the third party agreed to the settlement.

6 The plaintiff's claim having been thus disposed of, what remains to be determined in the action are the contribution claims between the defendants and the third party proceedings. The trial of these proceedings is set down for 12 April this year. Essentially, the third defendant's position is that it would be unfair in the circumstances, where there are competing claims for contribution between the parties, if the Court permitted the discontinuance for which leave is sought.

7 The first point made by the third defendant is that the rules do not permit a grant of leave to discontinue contribution proceedings. The third defendant points out that O 23 r 2 of the Rules of the Supreme Court 1971 expressly provides for the circumstances for which a plaintiff, but no other party, can discontinue an action with or without leave, according to the circumstances. Use of the expression "the plaintiff" as opposed to "the party" or "a party" makes it clear, in the third defendant's submission, that it has no application in contribution proceedings between defendants and/or third parties.

8 The third defendant's submission draws support from the wording of O 19 r 7, which expressly provides power to order judgment in third party proceedings, contribution proceedings being in that category, where an action is decided after trial or other than by trial.

9 Against this, the first defendant and the second defendant - and the expression "second defendant" for the present purposes would include the third party - argue that the first defendant is in the position of a plaintiff, and that the provisions of O 23 r 2 apply mutatis mutandis.

10 In my view, there is force in the third defendant's submission that the rules do not expressly empower the court to grant leave to discontinue contribution proceedings, certainly in the manner which is sought for by the first defendant in this case. Order 23 is concerned with discontinuance of actions by plaintiffs and withdrawal of appearances by defendants. It does not, in my opinion, have direct application to the circumstances at hand.

11 Order 19 deals with third party and similar proceedings, including contribution claims between defendants. It does not provide for a means of discontinuance, although I do not doubt the power of the court to give effect to an agreement by all affected parties to dispose of such proceedings in an agreed way. In this case, all affected parties do not agree to the disposal of the contribution and third party proceedings.

12 The third defendant is affected because in the substantive action it claimed contribution from the first defendant and the second defendant, and those parties have claimed contribution from it. In that context, the third defendant is likely to be disadvantaged if the contest became two-way instead of, effectively, three-way, remembering that in determining the contributions of the defendants, if any, the court, by operation of the Law Reform (Contributory Negligence and Tortfeasors Contribution) Act, would have to determine the contributions according to what is just and equitable. The apportionment between two parties will necessarily be different from that between three, assuming that all are liable in each case.

13 Order 19 r 10 contemplates that parties to contribution proceedings may, in order to protect themselves as to the costs of the trial, offer to settle their respective contributions by means of a Calderbank offer; although, it does not expressly refer to an offer in that form. The rule requires that any offer of that kind not be disclosed to the trial Judge. In my view, absent the consent of all of the parties, the means by which the parties to a partial settlement of the proceedings can protect themselves is limited to the making of such an offer.

14 Against this position, the first defendants and second defendant contend that their right to dispose of the issues between them by a compromise should not be obstructed. In my view, even if leave to discontinue could be given, that is, if I am wrong on that point, discretionary considerations militate against the grant of leave.

15 For the second defendant, it is submitted that if the settled contribution claim is discontinued in the manner proposed then the second defendant would be out of the proceedings altogether and the third defendant would not have a claim upon it as it is submitted there cannot be a contribution to a contribution.

16 If that is correct then it weighs against merits of the application. And, here, I am proceeding on the basis that if there were a power to grant leave to discontinue contribution proceedings, discretionary considerations would apply: for illustration, see Wintle v Stevedoring Industry Finance Committee & Ors (No 3) [2002] VSC 369.

17 It would not be fair or reasonable, in my view, for the third defendant to be left to argue the contribution of the second defendant in the second defendant's absence. I rather think that even if leave to discontinue were granted, an application by the second defendant consequential upon that grant of leave, for dismissal of the contribution claim against it by the third defendant, would fail.

18 If the third defendant is found to be negligent then it is entitled to argue that its liability to contribute to the settlement made by the first defendant should be reduced, not only to the extent of the first defendant's liability, but also by, and to the extent of, any liability which it can prove against the second defendant. That opportunity should not be denied to the third defendant by reason of any compromise reached between the other defendants.

19 For those reasons, I am of the view that the first defendant's chamber summons for leave to discontinue should be dismissed.