Part Two: Wrongs Act 1958 Part IVAA Proportionate Liability with a Focus on the Civil Division of VCAT where an Additional Respondent is Joined Pursuant to s.60 VCAT Act - VCAT Barrister

Third Party Notice:

A claim for contribution by one defendant against another may be carried on notwithstanding that after service of the notice of contribution the plaintiff discontinued the proceeding against the defendant from whom the contribution is sought: Harper v Gray & Walker [1985] 2 All ER 507.
1. Although a proceeding is continuing between the plaintiff and defendant, a third party claim by the defendant may be dismissed for want of prosecution if the defendant is guilty of delay in the conduct of the claim which is inordinate and inexcusable. Conversely, if the plaintiff and defendant settle the plaintiff’s claim, the proceeding is not ended. The defendant can pursue the claim raised by the third party notice and is not required to commence a fresh proceeding.
  1. Where a defendant claims as against a person not already a party to the proceeding (in this Order called the third party):
    1. any contribution or indemnity;
    2. any relief or remedy relating to or connected with the original subject matter of the proceeding and substantially the same as some relief or remedy claimed by the plaintiff; or
    3. that any question relating to or connected with the original subject matter of the proceeding should be determined not only as between the plaintiff and the defendant but also as between either or both of them and the third party.
    4. the defendant may join the third party as a party to the proceeding and make the claim against that third party by filing and serving a third party notice.

Apportionment and a claim (or not) by the Applicant or Respondent and the costs consequences of each situation:

In Watson v Richwall Pty Ltd (Building and Property) [2015] VCAT 1191 which concerned a claim by the applicant owner against the respondent builder for defective work in the construction of a residential home.
1. The respondent builder was successful in joining the structural engineer as a party to the proceeding.
2. Applicant owner did not elect to pursue a claim against the engineer opting to maintain her claim for compensation solely against the respondent builder. Shortly after its joinder, the engineer obtained an order from VCAT excusing it from further participation other than in respect of discovery.
3. The matter proceeded to hearing where, unbeknown to the engineer, the respondent builder did not press for the apportionment of liability as against the engineer notwithstanding the engineer having remained a party to the proceeding.
4. Ultimately, the respondent builder was found liable to the applicant owner and no liability was apportioned to the joined party. To this, the presiding VCAT member, Senior Member Walker, observed that the respondent builder’s own evidence did not substantiate its pleaded allegations against the engineer.
5. In a subsequent costs application, which was not the subject of written reasons, Senior Member Walker ordered the unsuccessful respondent builder to not only pay the costs of the applicant owner but also the costs of the engineer in circumstances where, taking into account the operation of section 109 of the VCAT Act, ‘it was fair to do so’.
The decision in Hyndman v Hurtob Homes Pty Ltd (Domestic Building) [2014] VCAT 380 concerned a claim for damages by the applicant owners against the respondent builder for defective and incomplete work in the construction of units, including defects related to rendering of the internal floor tiling.
1. The respondent builder joined, amongst others, Unitex, the supplier of the materials used in the cladding and rendering for the purposes of apportionment of liability.
2. In response, the applicant owners claimed that, if the claims that they made were apportionable, which they denied, they were entitled to recovery from Unitex of damages equivalent to its liability for the loss.
3. Ultimately, the matter proceeded to hearing where relevantly there was no apportionment as against Unitex.
4. Following the hearing, an application for costs was made by various parties, including Unitex, which sought an order that the party that joined it to the proceeding, being the respondent builder, pay its costs.
5. In assessing Unitex’s application for costs, the presiding VCAT member, Senior Member Walker, observed there was no real evidence lead by either the Builder or the Second Owner to substantiate any claim against Unitex. Since the Builder had sought to have Unitex released from the proceeding earlier and since this could have occurred without any cost, it must follow that the costs that it now seeks arise because the Owners would not agree to release it and so by refusing to agree to let Unitex out of the proceeding the Second Owner must share responsibility for the resulting costs.
6. Senior Member Walker held that the costs of Unitex be paid equally by the applicant owner and the respondent builder.
In Renaissance Parquet Pty Ltd v Manshtein[2015] VCAT 546 concerned a claim by the applicant owner of a residential home against the respondent supplier of defective parquetry floor, who in turn joined Mr Androsov, the party who laid down the flooring, as the second respondent to the proceeding for the purposes of apportionment.
1. The applicant owner pursued claims against both respondents and it was common ground that the claim was apportionable within the meaning of Part IVAA of the Wrongs Act. The Tribunal found that the liability of each of the respondents should be limited to 50% of the loss and damage claimed by the applicant owner.
2. The Tribunal ordered that the first respondent pay the applicant owner’s costs up to the date of joinder, and that the first and second respondents pay the applicant owner’s costs ‘in the same proportions as [the Tribunal has] apportioned their responsibilities’, being 50% each.
In Guston v Lawley[2008] VSC 97 it concerned an appeal from VCAT, where among other things, the appellants challenged the costs orders made by the Tribunal.
1. These orders ‘were intended to make each of the unsuccessful respondents liable to pay the separate costs of the owners’ claims against it.’
2. The owners’ costs could not be allocated in such a way, presumably due to the difficulties in separating its costs between the different claims, the Tribunal ordered that ‘each of the unsuccessful respondents should bear an equal share of these allocated costs to the owners’.
3. While the appellants argued that the owners’ costs should be distributed in the same proportions as the liability of those parties, the Court disagreed. The Court held that ‘[i]t was not put that the provisions of Part IVAA require this to be done; it was said that, in the exercise of its discretion, the Tribunal should be mindful of and have regard to this philosophy’.
4. The Court upheld the Tribunal’s costs orders, stating that the Tribunal correctly exercised its discretion in being mindful of the proportionate liability scheme but ultimately allocating costs in terms of the time occupied in dealing with the difference claims and their outcomes.
5. A respondent will generally be liable for the costs of a party joined to a proceeding for apportionment of liability if there is no apportionment and no claim for compensation by the applicant, such as the case in Watson.
Generally the respondent is likely to remain primarily liable for costs of a party joined to a proceeding for apportionment of liability if there is no apportionment, the applicant may also have an exposure if it contributed to the joined party’s costs, such as the case in Hyndman.
1. However where an applicant is successful against both a respondent and a joined party, the respondent will generally be liable for the applicant’s costs up until the date of joinder, and then costs will be shared between the respondent and joined party hereafter, such as the case in Renaissance Parquet.
2. When awarding costs against unsuccessful respondents, liability for costs need not be in proportion to their apportioned liability under Part IVAA of the Wrongs Act, such as the case in Guston.

Who is a concurrent wrongdoer?

Section 24AH defines concurrent wrongdoers. A concurrent wrongdoer is a person who has not only caused the loss or damage which the plaintiff has suffered but who is also liable to the plaintiff for that loss: Quinerts Pty Ltd (2009) 25 VR 666; [2009] VSCA 245; BC200909697 (Quinerts) and see Utility Services Corporation Ltd v SPI Electricity Pty Ltd [2012] VSCA 158; BC201205343 at [26] but now see Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 296 ALR 3; [2013] HCA 10; BC201301509 .
Adapting the question identified by the High Court in Hunt & Hunt (at [53]), it may be that a concurrent wrongdoer is simply a person who has, separately, or jointly, material contributed to the loss or damage suffered.
According to Nettle JA in Quinert at [64], “(i)n 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.” Besanko J had relevantly stated in Shrimp v Landmark Operations Ltd (2007) 163 FCR 510 at 521; [2007] FCA 1468; BC200708057 at [59]–[62] that 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.
1. Nettle JA also held that “loss or damage that is the subject of the claim” in s 24AH has the same meaning as “the same damage’ in s 23B (Wrongs Act)”: Quinerts , above at [68]. Accordingly s 24AH may relevantly read: “A concurrent wrongdoer in relation to a claim is a person … whose acts or omissions caused … the same damage”. See discussion in Quinerts at [69]–[76] as to what is meant by “the same damage” in s 23B of the Wrongs Act. Nettle JA referred to Alexander v Perpetual Trustees WA Ltd (2004). The “same damage” in s 23B is a narrower concept than that of liabilities arising out of, or by reason of, some transaction or related transactions; omissions of wrongdoers may result in different damage to the same plaintiff (which would not be an apportionable claim), there was no warrant for construing the phrase “the loss or damage that is the subject of the claim” by reference to the meaning of the words “the same damage”.
2. As to the “same loss” requirement, see further Metzke & Allen v Sali [2010] VSCA 267; BC201007550 at [90]–[94].
In Utility Services Corporation Ltd v SPI Electricity Pty Ltd , above, at [24]ff, Dixon AJA (with whom Bongiorno JA and Beach AJA agreed) examined the construction of s 24AH and what is a “concurrent wrongdoer”. It was held that amendments sought to be made by Utility Services Corporation to its defence and counterclaim referred to by Beach AJA as the derivative liability amendments (which involved an allegation that SPI was liable for the negligent acts and omissions of the SEC and ESV from whom it had in a practical sense acquired one of the Victorian electricity distribution networks in 1994) were arguable and accordingly the application to make the amendments should not have been refused. Dixon AJA stated at [42] that:
1. [t]he concept of a concurrent wrong doer in s24AH 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.

Daniel Epstein of Counsel