JAMES HARDIE & CO PTY LTD v SELTSAM PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, BEAZLEY and STEIN JJA 26 September 1997, 26 September 1997 [1997] NSWCA 164 Negligence — concurrent tortfeasors — claim for contribution in face of consent judgment — respondent not liable — Law Reform (Miscellaneous Provisions) Act 1946. George Wimpey & Co Ltd v British Overseas Airways Corporation (1955) AC 169; followed. Mason P Mr Gannon, the plaintiff, sued three defendants in the Dust Diseases Tribunal. He claimed damages for injuries and disabilities flowing from asbestos-related pleural disease. The second defendant, Elcom was sued as employer between 1970 and 1991. The first defendant, James Hardie & Co Pty Ltd ("James Hardie") and the third defendant, Seltsam Ltd ("'Seltsam'') were sued as the manufacturers of asbestos products during the periods of the plaintiff's working life. Three periods were involved (a) 1953 to 1968, when the plaintiff was employed in the building industry; (b) 1967 to 1973, when the plaintiff was involved in constructing dwellings for his own family; and (c) 1970 to 1991, the period of the plaintiffs employment with the second defendant. It was claimed that Hardie's products were involved in the third period and that products from each of Hardie's and Seltsam were involved in the two earlier periods. Nevertheless, despite these distinctions the defendants were sued as concurrent tortfeasors responsible for the same injury and damage. On 8 and 9 November 1995 there was a hearing before his Honour Judge Johns. This Court was informed that at that hearing the plaintiff gave evidence and was cross-examined. On the second day of the hearing, 9 November, James Hardie filed a cross-claim seeking indemnity or contribution from Seltsam under the Law Reform (Miscellaneous Provisions) Act 1946. It would also appear that Seltsam filed its own cross-claim that day seeking contribution from each of the other defendants. The judge was informed about these claims for contribution. Nevertheless in view of the settlement that had been reached between the plaintiff and the respective defendants the judge proceeded to make the following orders at the request of the parties: (1) the first defendant was ordered to pay $340,000 to the plaintiff; (2) the second defendant was ordered to pay $120,000 to the plaintiff; and (3) a verdict and judgment for the third defendant were entered against the plaintiff. There were also orders for costs. The orders touching the first and second defendants were made with the consent of those parties and the plaintiff. The order touching the third defendant was made with the consent of those parties and, although nothing turns on this, the knowledge of the other parties. The cross-claims were stood over to a date to be fixed. 2 UNREPORTED JUDGMENTS On 21 May 1997 the respondent, Seltsam, applied to have the appellant's cross-claim struck out. At the hearing of the application it was conceded by the appellant that it had satisfied the judgment entered in favour of the plaintiff against it. His Honour Judge Maguire QC granted the relief sought. He ordered James Hardie's cross-claim of 9 November 1995 to be struck out with costs. From this order the appellant appeals. In its written submissions the respondent advanced two separate arguments supporting dismissal of the appeal. They were (1) the judgment in the respondent's favour against the plaintiff precluded the claim for contribution; and (2) the satisfaction of the judgment in the plaintiff's favour against the appellant discharged the liability of the respondent as a concurrent tortfeasor. In support of each of these arguments the respondent relied upon Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR NSW 159. In my view the appeal could be disposed of by reference to the first argument which I accept and which was a basis for the judgment below. Entry of the judgment in favour of the respondent against the plaintiff means that the respondent has been held not liable for the plaintiffs injury. This is a final judgment which is unchallenged and, as such, is fatal to the claim for contribution. George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169 has been accepted as authority for the proposition that this is sufficient to preclude contribution under the statute. The correctness of this decision was reserved by Barwick CJ in Brambles Constructions Pty Ltd v Helmers (1966) 114 CLR 213 at 219 but I am unaware of any case which directs this Court not to follow what I have said was established in Wimpey (supra). The relevant passages from Wimpey are set out in Castellan at 183. At that page Asprey JA concluded: "\..The attempt to give to a claimant for contribution a cause of action against a class of persons who have been sued by the injured party and found not liable to him, but who might be proved to be liable in some further proceedings, was plainly rejected. Unless the High Court of Australia has taken a different view of the meaning to be given to this particular aspect of s5(1)(c), I am of the opinion that I should follow the interpretation of the section which has found favour with Parker J, the majority of the English Court of Appeal and Viscount Simonds and Lord Tucker because it is directly upon the phraseology of s5(1)(c) with which the instant case is concerned, ie 'who is...liable'"'. Asprey JA summarised his conclusion on his aspect of Castellan 's case in the following terms, at p188: "...Contribution cannot be successfully claimed by one tortfeasor against the other alleged tortfeasor who, having been sued by the injured party, has been found in that action not to be liable to the injured party no matter on what ground... " (See also Walsh JA at 177 and Holmes JA at 188-9. See also Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 670 and County of Parkland (Number 3) v Slettar [1975] 2 SCR 844, a decision of the Supreme Court of Canada). The appellant sought leave to challenge so much of Castellan's case as was, in my view, authority for the propositions just stated. Alternatively, it was submitted that the principle there stated does not apply in a case where the relevant verdict was entered by consent. URJ JAMES HARDIE & CO PTY LTD v SELTSAM PTY LTD (Mason P) 3 Reliance is placed upon a passage in the judgment of Windeyer J in Brambles (supra) at 221 where his Honour said: "A person from whom contribution can be claimed is, as I read the Act, anyone who would had he been sued have been held liable for the same damage. The description, a tort-feasor who if sued would have been liable, denotes any person who would have been held liable in tort had he been sued in a competent court, by proper process, at a proper time and on evidence properly presented - that is anyone whose liability as a tort-feasor could have been ascertained in an action. " In my view this passage does not assist the appellant. In the first place it is addressing the situation of a person who "would if sued have been liable". The Wimpey case draws a relevant distinction between such a person and a person who was in fact sued and found not liable. Secondly, the respondent satisfied all of the criteria stated by Windeyer J in the passage quoted. At the end of the day the appellant's submission stands as an assertion that a consent judgment declaring non-liability is relevantly distinguishable from such a judgment entered by a judgment at trial. The Court was referred to para21 of Spencer Bower, Turner and Handley on Res Judicata (3"" ed) where the following appears: "...no consent judgment or order has any operation against any third person or against any party not shown to have consented... " In my view reliance upon this principle is misplaced in a situation such as the present. The plaintiff and the respondent were the parties to the judgment which albeit by consent determined conclusively as between those parties that the respondent was not liable. This event alone put an end to the appellant's right of contribution simply because it had the effect of taking the respondent out of the class of persons against whom an order for contribution under the statute could be made. In Hart v Hall & Pickles Ltd [1969] 1 QB 405 at 410 Lord Denning MR made reference to the decision of the House of Lords in Wimpey. He read s6(1)(c) of the Law Reform Act 1935 and continued: "those words as construed by the House of Lords cover two situations: (1) where a tortfeasor has been sued and has been held liable and (2) where a tortfeasor has not been sued, but, if he had been sued, he would have been held liable. The words do not cover a third situation: (3) where a person who is alleged to have been a tortfeasor has been sued and has been held not liable... " Immediately after the passage I have just read his Lordship added: "If has been held not liable on the merits of the case, clearly he cannot be sued for contribution... " It was a statement such as this, and similar statements in the judgments of the other Lords Justices in Hart's case that were relied upon by senior counsel for the appellant as the basis for the submission that the consent judgment, though final, is not to be seen as putting to an end the issue of liability as between the plaintiff and what was referred to as the target tortfeasor, the party in this case corresponding with the respondent. In my view Hart's case casts light upon the scope and rationale of the decision in Wimpey and does not, properly understood, support the proposition to which I have just referred. In Hart's case the target tortfeasor had had the effect against it dismissed for want of prosecution. Such an interlocutory judgment had the effect that the party remains exposed to a future action. It had not been "sued to judgment" in the sense that a final judgment had been entered against it. In a passage at p411 of the report, which I will not set out, the Master of the Rolls 4 UNREPORTED JUDGMENTS indicates to my satisfaction that the critical fact, and what his Lordship was referring to when using the expression "no finding on the merits", was the fact that the dismissal that occurred there was merely an interlocutory order. It was its lack of finality which meant it did not affect substantive rights and therefore did not fall within the first category of the two situations his Lordship had identified from the Wimpey case. The Court was taken to passages in the judgment of Davies LJ and Wynn LJ which, read in isolation, may be seen to provide some support for the appellant's contention in their reference to adjudication on the merits. I would not, however, read those judgments as proceeding on a different tack to the Master of the Rolls. Each Lord Justice commenced his judgment with a statement of concurrence with the judgment of Lord Denning, and each referred to the interlocutory aspect of the judgment in the instant case. I would also reject the reliance upon Brambles as casting any doubt upon the proposition drawn from the Wimpey case to which I have adverted. Brambles was a case which is clearly distinguishable because it related to the category of the person who would, if sued, have been liable. While it is true that there is a reservation in the judgment of Barwick CJ at 219 about the correctness of the Wimpey decision, I would not grant leave to reopen Castellan, which accepted the correctness of that decision, merely upon the basis of that reservation by the Chief Justice. Unless and until the appellant can show that the respondent should have been found liable to the plaintiff then a vital step in its claim for contribution is missing. Since no attempt was made either below or here to challenge the judgment in the plaintiff's favour against the respondent, whether by appeal or otherwise, the fact that that judgment stands precludes the right of contribution. In Oceanic (supra) at 670 Brennan J said with reference to the facts of that case: "...So long as the judgment holding Pilbara not liable stands on the record, the shipping company is unable to assert that Pilbara is a tortfeasor who 'is or would if sued have been liable' to Hamersley... " He cited George Wimpey & Co Ltd v British Overseas Airways Corporation, W H Wright Pty Ltd v Commonwealth and Castellan v Electric Power Transmission. See also at 643 per Wilson J and 680 per Deane J. I leave entirely to one side for another day the situation that might apply were it contended that the consent judgment were affected by collusion. It would seem unfair if a collusive judgment could have the effect contended for, and there is Scottish authority referred to in Fleming on Torts, 8th Edition p262, note 67 that suggests that such a judgment is in the same category as the judgment dismissed merely for want of prosecution in Hart v Hall & Pickles Ltd. As I say, that is a matter for another day. It was suggested that the result is unfair and creates difficulties in practice because it places an impediment upon the settlement of claims between plaintiffs and defendants. Whether or not that is the case, and I emphasise I am not expressing a view either way, this is legislation that for at least a generation has been marked as needing reform, as having gaps, and as creating invidious distinctions between the class of parties who are able to invoke it successfully and those who are not. In that situation I think the Court should be cautious before setting out upon its own law reform exercise. URJ JAMES HARDIE & CO PTY LTD v SELTSAM PTY LTD (Mason P) 5 For the reasons I have given I would not give leave to reopen so much of Castellan as stands for the propositions I have stated. Nor do I consider that the case may be distinguished upon the basis that the judgment in question was a consent one. Reliance was placed by the appellant upon the decision of this Court in Government Insurance Office of New South Wales v C E McDonald Industries Pty Ltd (1991) 25 NSWLR 492. In my view the judge below was correct in rejecting this case as a precedent of any assistance. It is true that it was a case where a consent judgment was not fatal to a right of contribution. However, the right of contribution was expressed in what I consider to be materially different terms; in particular, in terms that do not throw up the either/or distinction derived from the Wimpey case. It is also a case where the contribution that was sought was not contribution with respect to the verdict entered. The verdict in the McDonald case was entered against the insurer of a motor vehicle. The contribution claim was brought by the injured worker's employer, a different party. For those reasons I do not find any assistance in the Government Insurance Office case. I would dismiss the appeal with costs. Beazley JA I agree. Stein JA I also agree. Mason P The appeal is dismissed with costs. The order for costs will include costs referable to the application for leave to appeal that was addressed on 4 August 1997. Appeal dismissed with costs. Order for costs included costs referable to the application for leave to appeal addressed on 4 August 1997. Counsel for the appellant: C Gee QC with J McIntyre Solicitor for the appellant: Diamond Peisah & Co Counsel for the respondent: G Downes QC with G Rundle Solicitor for the respondent: Toomey Pegg & Drevikovsky