Victorian proportionate liability scheme: transitional provisions

In Taylor v Gosling [2010] VSC 75, Justice Hargreave of the Supreme Court of Victoria has decided that whether the proportionate liability regime applies to a proceeding depends on whether the writ was issued before or after the end of 2003, even if some of the concurrent wrongdoer defendants were joined to the proceedings before and some after 1 January 2004. In other words a case started before the end of 2003 is governed by the old regime of joint and several liability between co-defendants, who may seek contribution against one another, and that is so even in respect of those defendants who come into the proceeding only in or after January 2004. My friend Tyson Wodak’s arguments on that question convinced Justice Hargreave not to follow an earlier decision of Justice Byrne of the same Court (Premier Building and Consulting Pty Ltd v Spotless Group Ltd (2007) 64 ACSR 111, see para 34(b)). His Honour’s reasoning was as follows:

‘Does the proportionate liability regime apply to the claims against Mr Gosling?

156 Part IVAA of the Wrongs Act 1958 (Vic) introduced a proportionate liability regime. Where that regime applies, the liability of a defendant who is a ‘concurrent wrongdoer’ in relation to an ‘apportionable claim’ is limited to an amount reflecting the proportion of the plaintiff’s loss or damage which the Court considers just, having regard to the extent of the defendant’s responsibility for the loss and damage.[14] Further, where the regime applies and a defendant is adjudged liable as a concurrent wrongdoer in relation to an apportionable claim, that defendant cannot be required to contribute to the damages recovered or recoverable from another concurrent wrongdoer, or to indemnify that wrongdoer, under Part IV of the Wrongs Act. Accordingly, the regime effected fundamental changes to the existing law. Where it applies, a plaintiff has been deprived of the right to seek full recovery from any defendant who is jointly liable for the same damage.

157 Section 24AS of the Wrongs Act provides that Part IVAA ‘applies to proceedings that are commenced in a court’ on or after 1 January 2004. This proceeding was commenced in 2003, before that date. However, Mr Gosling was not one of the original parties. Mr and Mrs Taylor sued only Urban, Mr Pennicott and Ms Li. Mr Gosling was not joined as a party until 20 September 2005, when amended originating process was filed in the Court following an order granting Mr and Mrs Taylor leave to join him as a defendant.

158 In the circumstances, it was submitted on behalf of Mr Gosling that Part IVAA applies to this proceeding, insofar as it relates to Mr Gosling. Reliance was placed upon r 9.11(3)(a) of the Supreme Court (General Civil Procedure) Rules 2005; which relevantly provides that where an order is made adding a defendant to a proceeding ‘the proceeding against the new defendant commences upon the amendment of the filed original process’. Further, reliance was placed upon the decision of Byrne J in Premier Building and Consulting Pty Ltd v Spotless Group Ltd.[15] In that case, Byrne J made ‘brief mention of particular complications’ arising in the claims for contribution and apportionment as they affected the trial before him. His Honour was concerned with the interaction of four separate and different statutory regimes. In the course of describing the particular complications before him, Byrne J stated that:

Premier brings its claims in negligence against the Spotless Parties, Kilpatrick and Collie Planning. The transitional provisions of the Part IVAA apportionment legislation provide that the regime applies only to claims brought after the commencement date. (Section 24AS of the Wrongs Act) This proceeding was commenced on 16 October 2003, before the commencement date, but against Spotless and North Suburban and Ensign Aust only. All of the other parties were joined after 1 January 2004 so that the claims against them were commenced after the commencement date. (Rule 9.11(3)(a). A proceeding against an added party commences on the date of the amendment of the originating process.) This means that apportionment is available with respect to Premier’s negligence claims against all defendants other than Spotless, North Suburban and Ensign Aust.Since contribution is not available where apportionment is available (Section 24AJ of the Wrongs Act) the defendants other than Spotless, North Suburban and Ensign Aust may not seek contribution against those defendants.[16]

159 With respect, I do not accept that this statement by Byrne J reflects a correct interpretation of Part IVAA. Accordingly, I reject the submission made on behalf of Mr Gosling based on that decision and the operation of r 9.11(3)(a).

160 In my view, s 24AS means what it says. Part IVAA applies only to proceedings which are commenced on or after 1 January 2004. This proceeding was commenced in 2003, and accordingly Part IVAA does not apply. There are not two proceedings, one against the original defendants and one against Mr Gosling. That is not what r 9.11(3)(a) states. It states only that the date of commencement of the proceeding against Mr Gosling, as an added defendant, is the date that the amended originating process was filed. However, r 9.11(3)(c) provides that:

(c) unless otherwise ordered, where the new defendant is an added defendant, the proceeding shall be continued as if the new defendant were an original defendant …

Accordingly, r 9.11(3)(c) maintains the reality that there is only one proceeding before the Court, not two separate proceedings. Rule 9.11(3)(a) may have real significance in a limitation of actions context, in determining questions of interest and costs, or for other reasons; but it does not mean that there are two separate proceedings. Part IVAA does not apply to this proceeding.

161 The result which I prefer is in accordance with commonsense and justice. If Part IVAA applies to the claims against Mr Gosling only, and not to those against Mr Pennicott and Ms Li, an absurd and unjust result would follow. Assume a case where a plaintiff sues A before the operation of the proportionate liability regime, and later joins B after the commencement of the regime. If the proportionate liability regime applies to the claims against B, and both A and B are held jointly liable for the same damage, the plaintiff would recover a judgment for the full amount of the loss against A, but only a proportion of the loss against B. A would be prevented by s 24AJ from recovering contribution or indemnity from B. In these circumstances, the plaintiff could execute for the whole of the loss against A, and A would have no rights to recover any contribution from B. This would be so even if the Court adjudged B to be the person primarily responsible for the loss. Such a result cannot have been intended by Parliament, as it would deprive A of rights of contribution which would otherwise have been available. In the absence of Parliament expressing such a result with irresistible clarity, s 23AS should be interpreted to avoid that result.[17]

162 It was also submitted on behalf of Mr and Mrs Taylor that the apportionment regime had no application in this case because Part IVAA applies only to claims for damage arising from a failure to take reasonable care, and it was no part of their case against Mr Pennicott and Ms Li that they failed to take reasonable care in any respect. That submission was based upon s 24AF(1)(a) of the Wrongs Act.[18] The submission ignores s 24AF(1)(b), which provides that Part IVAA applies to a claim for damages for contravention of s 9 of the Fair Trading Act 1999 (Vic). The claims made by Mr and Mrs Taylor against Mr Gosling, Mr Pennicott and Ms Li are all based upon s 9 of the Fair Trading Act. Accordingly, if Part IVAA applied, those claims would be apportionable claims within the meaning of that part.