Baxter v Obacelo Pty Limited & Anor S99/2000 [2000] HCATrans 758 (15 December 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S99 of 2000

B e t w e e n -

PHILLIP JULIUS BAXTER

Applicant

and

OBACELO PTY LIMITED and RICHARD THOMAS MOON

Respondents

Application for special leave to appeal

GAUDRON J

KIRBY J

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 15 DECEMBER 2000, AT 11.07 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR D.P. ROBINSON, for the applicant. (instructed by Baker & McKenzie)

MR A.J. SULLIVAN, QC: May it please the Court, I appear with my learned friend, MR D.T. MILLER, for the respondents. (instructed by Moray & Agnew)

MR JACKSON: Your Honours, as it is apparent from the summary of argument, the application gives rise to two issues relating to the extent of the liability of a joint tortfeasor where two things have happened: one is that a consent of judgment has been obtained against another joint tortfeasor - - -

GAUDRON J: Well, let me stop you there, Mr Jackson. Page 53, paragraph 9 - - -?

MR JACKSON: Well, your Honour, your Honour will see at the top of page 54:

the argument in this Court, proceeded on the basis that judgment was entered.

And then - - -

GAUDRON J: But that seemed to me to be in the context of raising this case about a defence.

MR JACKSON: I am sorry, your Honour, I am not quite clear what your Honour - - -

GAUDRON J: Well, there were two issues to start with: the first was to stay or strike out.

MR JACKSON: Yes.

GAUDRON J: And, clearly enough, if judgment was not entered then the decision in Thompson would prevent that course, would it not?

MR JACKSON: Yes, your Honour.

GAUDRON J: Then in the Court of Appeal - and I thought presumably because of that - the issue changed to whether or not there was a defence, almost a demurrer point.

MR JACKSON: Yes. Your Honour what happened really was that, as you will see at page 55 there are various paragraphs of our defence there set out, including paragraph 20, which pleads the relevant fact that there was the entry.

GAUDRON J: Yes.

MR JACKSON: Then the proceedings before in the two courts below the Court of Appeal had been on the basis that the nature of the application was one which gave rise to a discretionary element in the sense that the proceedings, although the point might prima facie be good, should not yet be disposed of at that point. That is why one sees then the discussion in the pages following page 55 on whether the issue should be dealt with as a separate issue in the Court of Appeal.

GAUDRON J: Yes, but I thought it was almost dealt with or in fact was dealt with and could only have been dealt with as a demurrer point. I know that the rules are now somewhat laxer than they used to be and you get confused, but if it was not clear whether or not judgment had been entered, then it seemed to me this could only be on a demurrer basis.

MR JACKSON: Well, your Honour, at page 58 the question is set out at line 32 and that is:

whether the matters of defence in paragraphs 16-22.....provide a defence to the opponents' claim -

and one of those matters, of course, is the fact alleged.

GAUDRON J: Yes, but that is then a demurrer, as it were, so that eventually the defence is struck out.

MR JACKSON: Yes, if they did not amount to a defence, that would be the end of that, yes, that would go.

GAUDRON J: So the only question then is whether, what appears in section 5(1)(b), is a matter of defence, is it?

MR JACKSON: Your Honour, it is whether the matters in paragraphs 16-22 - and they, your Honours will see, include not just the fact of the entry of judgment, but also the fact of payment of the judgment. Now, that certainly gives rise to the section 5(1)(b) issue and also, your Honours, it gives rise to the question whether to recover, which is the second question, would infringe the rule against double satisfaction.

GAUDRON J: Well now, that is why I am confused about this case, because, it seems to me, the recovery question was never a question before the Court of Appeal, and although they have made statements about it, the proceedings never gave rise to that question and anything they said there is simply obiter and of no effect and the recovery question, it seems to me, is quite different from the defence question.

MR JACKSON: Your Honour, could I say a couple of things, with respect: the way in which the issue is described in the reasons of Justice Giles at page 91, when he comes to resolve the issue - it is in the last sentence of paragraph 83, commencing at line 15 on page 91:

In my opinion, judgment for an agreed settlement amount does not necessarily bar the plaintiff from proceeding against a joint or concurrent tortfeasor.

So the basis of decision there is on the basis that it is a matter of defence.

GAUDRON J: But that comes to section 5(1)(b), does it not?

MR JACKSON: His Honour is there dealing with the dual, double-satisfaction issue. That appears from page 90, the opening words of paragraph 82.

GAUDRON J: But, so far as concerns double satisfaction now, you have to factor in Thompson, have you not?

MR JACKSON: Well, of course, your Honour, but this - - -

GAUDRON J: Yes, so it is only if there was satisfaction of a judgment debt that you get to section 5(1)(b), is it?

MR JACKSON: Your Honour, so far as section 5(1)(b) is concerned, that is so, your Honour, because of the terms of 5(1)(b), but that is on the assumption, of course, that the case is one to which 5(1)(b) applies and that is the first issue we seek to raise, whether the opening words of 5(1)(b) refer to two separate legal proceedings or encompass the same proceedings in the one action in the court. That is the first issue, your Honours.

GAUDRON J: Let us assume in your favour that it encompasses the present proceedings, where does that take us?

MR JACKSON: Your Honour, it takes us to the point that in terms of 5(1)(b) the plaintiff is not able to recover more than the amount of the judgment and your Honours will see that the amount of the judgment has already been paid, so there is nothing more that could be - - -

GAUDRON J: Well, the amount of what we do not know whether or not it is a judgment has already been paid.

MR JACKSON: But, your Honour, in the way in which the issue was determined in the Court of Appeal, the fundamental assumption was that the pleading - - -

GAUDRON J: But on a demurrer point - really on a demurrer.

MR JACKSON: Well, your Honour, the demurrer involves necessarily facts that are admitted and, indeed, facts that were not challenged in the first place. Your Honour, one cannot really get, in a sense, a better way of having the facts determined; they are pleaded and not in issue.

CALLINAN J: Justice Giles said it did not matter whether the amount of the judgment had been paid or whether it was a compromise amount in satisfaction of the judgment, is that right?

MR JACKSON: Your Honour, that is one way of putting what his Honour did, but what his Honour said really was that the fact of judgment played no part. It might be a relevant feature, but, in the end, there was no difference between a case where there had not been a judgment and a case where there had been. Your Honours, could I just add one thing - I was going to say in response to your Honour the presiding judge a moment ago, and it is this, that if it be that the nature of the application of the double-satisfaction rule may or may not be a matter of defence, your Honour, that itself is a question of importance, in our submission.

GAUDRON J: Yes, well, that really is the question, is it not, in this case. Assume everything else in your favour, does 5(1)(b) give rise to a defence or does it come into operation only after judgment has been obtained?

MR JACKSON: Your Honour, it has, if I can put it this way, an ambulatory operation. What I mean by that is, if I could just take your Honours to its terms for a moment - it should be behind tab 1 of the materials your Honours have, I think. Your Honours will see that section 5(1)(b) commences - if I can just take the words that are germane:

if more than one action is brought in respect of that damage.....against tortfeasors liable in respect of the damage.....the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed -

Now, your Honours, if it be that no amount of money has been actually recovered under the first judgment, there is no doubt that the plaintiff could proceed to judgment for a different higher amount in the second proceeding. Your Honour, if, however, the money has been paid, then, in our submission, the operation of section 5(1)(b) would be that that would be a defence to those proceedings.

GAUDRON J: It is a question whether you construe it strictly or otherwise, in this sense. It seems to proceed on the hypothesis that you can proceed to judgment several times over.

MR JACKSON: Yes.

KIRBY J: But there are two sanctions: one, you cannot get more in action aggregate than you could have even if it had all been against the one person; and two, if you keep doing that, you do not get your costs.

MR JACKSON: Yes.

GAUDRON J: "The sums recoverable under the judgments", which seems to suggest you can proceed to judgment, although you will get nothing, which seems to me to say that if there is a judgment, which is not known in the present case, the proper course, if you are right, is a stay or to raise it after judgment.

MR JACKSON: Your Honour, if it be that that was the answer to the answer the court gave, I do not know that we would be very unhappy about that, but the - - -

GAUDRON J: No, but you did not know that there was a judgment?

KIRBY J: Do you say that in the Court of Appeal everything proceeded on the foundation that there was a judgment, that a judgment was entered, and that that is the way in which we should proceed with the matter, that we are invited to proceed in the same way?

MR JACKSON: Yes, your Honour, that is certainly so, so far as - - -

GAUDRON J: On the stay or on, what I will call, the demurrer point?

MR JACKSON: Well, your Honour, the decision of the Court of Appeal was, of course, based upon answering the question that the court, in effect, framed, and your Honour will see that from the decision of the Court of Appeal, where the order is set out at page 95 and the questions were answered in the negative. That was put as a matter of defence and no other issue has been finally decided by the Court of Appeal.

GAUDRON J: Well, the appeal was dismissed, was it not?

MR JACKSON: Yes, your Honour, the application for leave to appeal was dismissed.

GAUDRON J: Well now, you do not challenge that?

MR JACKSON: No.

GAUDRON J: You only challenge the answer to the demurrer question?

MR JACKSON: That is so, your Honour.

GAUDRON J: Am I right in thinking, to succeed on that, you have to say that 5(1)(b) provides a defence and not only makes the money irrecoverable under a judgment.

MR JACKSON: Or, your Honour, that the case is one in which the rule against double satisfaction applies. If 5(1)(b) does not apply, or does not have the operation that we would suggest - - -

GAUDRON J: But, notwithstanding Thompson.

MR JACKSON: Yes, your Honour, yes, because this is a case where, we say, there is a judgment and the issue is one that is not an issue decided by Thompson.

GAUDRON J: But did the rule against double satisfaction preclude your proceeding to judgment? I do not think it did, did it?

MR JACKSON: Your Honour, in our submission, it did. If one looks at some references to it: in the English Court of Appeal in the Bryanston Case [1975] 1 QB, at page 724, which your Honours will see behind tab 2 in our materials. Could I give your Honours references to three pages in that, page 724 - - -

GAUDRON J: I thought this was, in fact, the case in which Lord Denning said it went only to recoverability and not judgment.

MR JACKSON: Your Honour, if one looks at page 724 between letters A and B, you will see at letter A it is said:

Before this appeal came on for hearing, Mr de Vries wrote to Lord Carbery asking him whether he had complied with the consent order - - -

that is for the judgment -

or had given alternative consideration.

Then, if I could pass on two lines further down:

If the plaintiffs have received the 1,000 damages and 1,250 costs.....it would be quite unjust that Mr de Vries should have to pay another 500 and costs in respect of the selfsame damage.

And, your Honours, whilst I appreciate that it does not go quite to the point your Honours are putting to me, if one goes to page 733, Lord Diplock, between letters G and H, referring to the assumption:

the suggestion that the judge ought to have proceeded on the assumption that the consent judgment against Lord Carbery had been satisfied by the time of the trial.

Then said:

Had this in fact been true it would have been a good defence to the claim to recover damages against Mr de Vries for the publication of the defamatory circular to his clerical employees.

And then, your Honours, at page 739, Lord Justice Lawton, the paragraph commencing just after F, said:

He was very much concerned with the question whether the consent judgment had been satisfied - - -

GAUDRON J: Sorry, whereabouts?

MR JACKSON: Page 739, your Honour. It is the paragraph commencing a little below the letter F.

GAUDRON J: Yes, I have it, yes.

MR JACKSON:

because if it had, no judgment could be entered against Mr de Vries. The plaintiffs would have had their remedy; they could get no more.

Your Honours, no doubt one does not see more than the statement of the proposition there but, in our submission, that does demonstrate - - -

KIRBY J: Could you explain to me how the policy of the Act is supposed to work in those circumstances, because, on the face of things, a plaintiff might settle against one co-tortfeasor and recover only part of the damage. For example, if the co-tortfeasor was a person of limited means, and then proceed against the other tortfeasor and seek to recover the full amount, was credit for the damage that had already been done, why should that not be possible under the statute?

MR JACKSON: Well, your Honour, so far as the statute is concerned, if one looks at the terms of section 5(1)(b) then, in our submission - - -

KIRBY J: That is an argument against double recovery, not getting the judgment.

MR JACKSON: Yes, your Honour, I would accept that the terms in which section 5(1)(b) is expressed speak of the sums recoverable under the judgments, but, if the situation which obtains is that the sum, under the first judgment, has been recovered, then, in those circumstances, our submission would be that the fact that that has occurred is something that falls within the terms of the statute in the sense that it does, at that point, provide a defence.

CALLINAN J: Mr Jackson, the respondent was unable to controvert and accept that the respondent was unable to controvert paragraph 21 of your defence on page 55, is that right, which is the allegation the judgment has been paid to the plaintiff?

MR JACKSON: Your Honour, I think it is an agreed fact.

CALLINAN J: Yes, certainly there is no suggestion that the other party would be able, in any way, to controvert that, but you say it went further than that, it was actually agreed, do you?

MR JACKSON: Well, that is what I am told about the matter.

KIRBY J: It is an agreed fact and it is not contradicting on the record.

MR JACKSON: Yes.

CALLINAN J: That is the point you make; you not only establish that there was a judgment, but also that there was recovery under it?

MR JACKSON: A judgment for $250,000 and it has been paid. Your Honours, could I just say one other thing: your Honour Justice Kirby asked me about the policy of the statute, but, of course - - -

KIRBY J: But it was to cure a common law rule, was it not? It was to correct an anomalous common law rule.

MR JACKSON: Yes, your Honour, because one did have a situation of where there was a case of a joint tort there was only one tort. With the case of several torts, there is the same damage, different torts. The effect of section 5(1)(a) is, as the Court said in Thompson, effectively make them two torts, but by doing that, that brings into being the possible application of something that was not there before and that is the double-satisfaction rule. Your Honours, I see the time.

GAUDRON J: We have extended it for others because of our failure to properly grasp things. Do you have anything else to support your argument that the double-satisfaction rule was a matter of defence? Well, certainly it must have been for joint torts. Well, it would not have arisen in terms of joint torts; it would only have arisen in several torts. How could it then be a matter of defence? Except by way of no damage, I suppose?

MR JACKSON: Because damage is an essential element in tort and, your Honour, the damage had been satisfied. One could not say no original damage, but the damage had been satisfied. Your Honour, there is, in fact, another passage in Bryanston, [1975] 1 QB at page 724, which I missed when dealing with that, and that is in Lord Denning at the same page, the last paragraph above the heading, and that is paragraph D:

In these circumstances, I would hold that the consent order against Lord Carbery is a sufficient bar to any claim for damages against Mr de Vries.

Your Honour, that is all I was going to take your Honours to.

GAUDRON J: Yes, but was he there suggesting that the proceedings should be stayed or that it was defence?

MR JACKSON: Well, your Honour, it was expressed in terms in the three judgments to which I have referred as being something which was a matter of defence. Now, your Honour, that must have been one where it was the defence to the action and the ultimate result in the case, as your Honour would see from page 742, was that there was a judgment for the defendant, but your Honours will see that was, first of all, on the question of privilege as well.

GAUDRON J: Did Chief Justice Gibbs say something about it in XL Petroleum?

MR JACKSON: Yes, your Honour, he said something, but not a great deal. You will see at page 458, your Honours, in XL Petroleum, which is behind tab 5, there is a reference at the bottom of that page to the earlier decision, but, your Honour, I do not know that he is touching the particular point.

KIRBY J: Apart from these cases you have not found anything that deals with this, although the statute was first enacted in 1935?

MR JACKSON: Your Honour, that is so, apart from the cases that are referred to in the reasons, and so on.

GAUDRON J: The matter I am thinking about is at page 459 at the bottom.

MR JACKSON: Yes, your Honour, we will accept the proposition that once section 5(1)(a) operates and is given the operation of applying to one action as well as to two actions, then the situation is that the joint tort rule goes, but the question that arises in relation to the ruling against double satisfaction was one that applied in situations where there were several tortfeasors.

CALLINAN J: Was not Chief Justice Gibbs speaking in a context though in which the respective defendants were liable for different damages, one for exemplary damages and the other not?

MR JACKSON: Yes.

CALLINAN J: And everything that his Honour said seems to have been in that context on those pages.

MR JACKSON: Yes, your Honour, this issue, in our submission, is not resolved by any of the Court's decisions. Your Honour, those are our submissions.

GAUDRON J: Yes, thank you. Yes, Mr Sullivan.

MR SULLIVAN: Your Honours, in our respectful submission, the judgment of the Court of Appeal is manifestly correct and should not be interfered with.

GAUDRON J: Well that is a brave ambit claim.

MR SULLIVAN: It is a brave ambit claim, your Honour. It is the Christmas Season and I am feeling bold. Your Honour, my learned friend has to establish two propositions, or at least one of two propositions, in order to attract special leave to appeal. First he has to demonstrate that section 5(1)(b) can apply in a circumstance where there is only one actual proceeding.

GAUDRON J: Well that is clearly arguable.

MR SULLIVAN: Well, in our respectful submission, your Honour, it is not clearly arguable for two reasons, if I might develop it, first because it is - - -

GAUDRON J: Well, once you have settled there has to be two actions, that is the end of the matter. If you have settled and entered a judgment - I do not know whether you have or you have not - but that is the end of one action. You have notionally got two actions in one. There has to be two actions - - -

MR SULLIVAN: In our respectful submission, what was said by the Privy Council in the Wah Tat Case, what was said by the Chief Justice Sir Harry Gibbs in XL Petroleum and by Justice Brennan in the same case, also stand for the proposition that it is separate proceedings, as indeed does the purpose behind section 5(1)(b), which is to avoid a multiplicity of proceedings. That is pointed out by the Privy Council, and indeed by the High Court, that a multiplicity of proceedings is not prevented or has nothing to do with a number of causes of actions being brought in the one matter, and one looks at the purpose of section 5(1)(b), as explained and expressed in those judgments which we have expressed, and is the purpose of avoiding a multiplicity of proceedings, as quite rightly found, in our respectful submission, by the Court of Appeal.

It also, your Honour, produces this very anomalous result. If my learned friend's submission is correct, then conformably of the decision of this Court in Thompson, if a plaintiff was to settle with one of the defendants by way of a release document and receive full satisfaction for payment, then he or she would not be precluded from going on.

GAUDRON J: Exactly, but that anomaly has already been highlighted in the James Hardie Case, where the same consequence applies in terms of contribution proceedings, depending on whether there is a judgment or a release. So another anomaly in this legislation would not surprise, would it? There have been many exposed.

MR SULLIVAN: No, your Honour, but when one is looking at the proper interpretation of section 5(1)(b), it is proper first of all, of course, to look at the literal words, which we strongly submit point in favour of separate sets of proceedings. It is required to look at the purposive approach and the purpose could not be made any more clear, in our respectful submission, than by reference to the sanctions which are set out in section 5(1)(b) and the findings of the purpose, by both this Court and by the Privy Council.

KIRBY J: The word you are latching on is "recoverable", is it?

MR SULLIVAN: Yes, your Honour.

KIRBY J: Is one to read that as recoverable by judgment?

MR SULLIVAN: Your Honour, the words I am latching on in 5(1)(b) are, first of all, "recoverable under the judgments given". I also latch on, to use your Honour's expression, the use of the word "first given" and latch particularly on the last phrase:

the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action.

Now axiomatically, where proceedings are brought in the one set of proceedings, a plaintiff, situated as a joint tortfeasor, is not going to be able to determine whether there are reasonable grounds or not for not bringing an action against both tortfeasors. That would have no effective operation unless the contemplation was, of this section, that there were two sets of proceedings so that the plaintiff could have an opportunity after the first set of proceedings to determine whether he should bring the second set of proceedings knowing full well that the cost sanction would apply unless there was reasonable grounds for putting those second set of proceedings.

GAUDRON J: And the double-recoverability rule.

MR SULLIVAN: And the double-recoverability rule, your Honour.

GAUDRON J: There is a double-recoverability rule there and for you to succeed, ultimately - forget about judgment, but ultimately to succeed, you are going to have to establish, are you not, either judgment was not entered, and you are in Thompson territory - - -

MR SULLIVAN: Yes, I accept what my learned friend said on that, your Honour. I should say that the appeal was argued on the basis that the relevant paragraphs of the statement of claim were admitted.

GAUDRON J: Well I still do not understand what that means, because at one stage it goes forward as a stay, and that decision is not challenged, and then it looks to me like a demurrer, and I do not know what the point of that - I mean, your better argument, it seems to me is, given the way these proceedings developed and the questions are isolated, it is not a suitable vehicle for anything, but it is nonetheless an important question.

MR SULLIVAN: Your Honour, we would respectfully submit that is so also, but only in the alternative. Our primary point is - - -

GAUDRON J: Yes, well I would suggest you adopt that. Well, let me go back, you have either to bring yourself within Thompson.

MR SULLIVAN: Yes, your Honour.

GAUDRON J: Say 5(1)(b) has no application, and say that there is no double-satisfaction rule of the common law, which now applies.

MR SULLIVAN: Yes, we do.

GAUDRON J: That is to do it ultimately, but at this stage, it seems to me, do you agree, that although there are statements in the Court of Appeal decision which would tend to support you on that, they were never the questions before the Court of Appeal, other than the defence?

MR SULLIVAN: With respect, your Honour, they were the questions before the Court of Appeal. I share, I think, some of the doubt my learned friend, Mr Jackson, was feeling. The questions before the Court of Appeal, in essence - and if they are not well framed, that is a fault perhaps of - - -

GAUDRON J: It is not just a question of the question; what about the answers? The question was whether there was a defence. It seems to me, what was said on that does not determine the question of recoverability.

MR SULLIVAN: No.

GAUDRON J: And if this matter comes forward it may well only determine defence and not the question of recoverability. Do you accept that?

MR SULLIVAN: Yes, I do accept that, and if I do accept that then it is not an appropriate vehicle, on that very basis, but if the matter does go forward, then there are two substantive issues - your Honour has identified the three matters.

GAUDRON J: Three issues.

MR SULLIVAN: We do not say that we come within Thompson, as such.

GAUDRON J: No. So you have to say section 5(1)(b) - - -

MR SULLIVAN: Section 5(1)(b) does not apply, which we do say - - -

GAUDRON J: - - - because there is only one action.

MR SULLIVAN: That is the reason we give, and the second matter, we say, that when you look at the matter of double satisfaction, it is clearly founded - indeed it is articulated this way in Justice Gummow's decision in Thompson, with which your Honour agreed, but there is an equitable notion to it; it is a concept of being unjustly enriched, and what is emphasised in Justice Gummow's judgment, indeed in a whole series of others, is that where there has been full recoupment of the loss, then it is unjust to permit double satisfaction by enabling a plaintiff to recover more.

What has been articulated in the Court of Appeal judgment and in the House of Lords decision in Jameson and then in a series of Scottish and other cases referred to, is the concept that when you are looking at a settlement, be it by way of the judgment or a consent order, or be it by way of agreement, not founding itself in a judgment, one looks to see whether it was intended to be in full settlement or not, and one has a very limited confine to look at that, and that, on any view of it, as the Court of Appeal found, there was no intention that the amount recovered from Mr Whitehead was to be in full satisfaction.

GAUDRON J: Nor was that the intention in James Hardie.

MR SULLIVAN: But the point was not argued in James Hardie, with respect.

GAUDRON J: No, but except that it does indicate that a judgment does bring about certain consequences that do not exist if there is just a deed of release.

MR SULLIVAN: Your Honour, that might be an argument which is relevant to the 5(1)(b) argument, but it cannot be, with respect, an argument relevant to the double-satisfaction point. In our respectful submission, on the double-satisfaction point, once it is accepted the equitable underpinnings of the rule about unjust enrichment, then the statements which have been made in the cases, the Privy Council, as I say, in Thompson, by your Honour and by Justice Gummow and by the Court of Appeal, must, as a matter, we say, not only common sense, but fairness, be correct, namely that, if it can be shown as a matter of fact that the sum accepted was not in full satisfaction of the loss - - -

GAUDRON J: But why would not the entry of judgment have the same effect in relation to the double-satisfaction rule as it would under 5(1)(b)?

MR SULLIVAN: Because the entry of judgment, the double-satisfaction rule, as found by his Honour Justice Giles, operates independently of entry of judgment, because it is a concept designed against double satisfaction, however way that satisfaction is obtained.

KIRBY J: Your point is that the judgment might be entered in an amount which is less than the total recoverable amount and therefore there is not double recovery.

MR SULLIVAN: Of course.

KIRBY J: There is separate recovery.

MR SULLIVAN: Yes, and your Honours will know, many times cases are settled against one defendant, because he or she may be impecunious, or the like, in order to save costs. It would be anomalous, with great respect, to think that in such a situation that someone, seeking to save the courts time, et cetera - - -

GAUDRON J: But it has been known for years, ever since I was an articled clerk, that if you did that you did it by deed of release; you did not do it by way of judgment.

MR SULLIVAN: But, with great respect, your Honour, it has been known for years, it also was known for years before Thompson's Case came along and told us we were wrong in thinking that, in respect of section 5(1)(a), but it would elevate, in our respectful submission, improperly form over substance, if the form was to take any significant part, and also be contrary to public policy, because the one advantage from the court's point of view of a consent judgment is that the court's processes are not going to be likely to be used again to recover the agreed amount, because that can be done by way of execution.

GAUDRON J: Yes, but are we not a little bit off the track here. The defence is struck out, as it were; no, Mr Jackson says the defence is not struck out. The answer to the question is, there is no defence.

MR SULLIVAN: Yes.

CALLINAN J: Mr Sullivan, how could your damages possibly be different?

MR SULLIVAN: How could the damages be different, your Honour?

CALLINAN J: I know that there was a slight change in the nature of the allegation against your client from the allegation made against the employing solicitor. I mean, the claim was in tort, it was in respect of Mr Jackson's client's actual acts and omissions, was it not?

MR SULLIVAN: Yes, your Honour.

CALLINAN J: How could the damages possible be different?

MR SULLIVAN: Your Honour is talking about it as a matter of theory or practice?

CALLINAN J: Practice; this case.

MR SULLIVAN: Practice very easily, your Honour, because in a case where damages against Mr Whitehead had been determined by a court, by a judge and a judge or jury, they could not be different because the law says, quite rightly with great respect, that were a judgment is entered, but when it is done by consent - - -

CALLINAN J: All right, in theory, how could they be different?

MR SULLIVAN: In theory they could be different, your Honour, because the amount which is received may not be intended, in any shape or form, to be a full recoupment of the loss, because the amount is judged by how much someone can pay.

KIRBY J: Yes, but what about this case? I mean, this thing hung around forever and suddenly it is revived and - - -

MR SULLIVAN: The amount claimed in these proceedings - and your Honours do not have this, so you will have to accept it from the Bar table, and this is in practice - the amount claimed and particularised, was well in excess of $250,000. So that, in other words, the full amount was not recovered against Mr Whitehead.

KIRBY J: Full amount claimed.

MR SULLIVAN: Full amount claimed was not claimed against Mr Whitehead and, in practice, your Honour, the reason is, with a settlement figure, invariably there are a huge number of factors which come into account in arriving at such a figure and it cannot be safely assumed that it is the amount which is the real amount of the plaintiff's claim and the most obvious one is the question of impecuniosity of a particular defendant: how much could that person receive? Is it worthwhile keeping that person in the proceedings at vast extra expense, when you are not going to get anything more than a small amount?

CALLINAN J: The damages claim against both was the same though; the amount actually claimed was the same.

MR SULLIVAN: Yes, it would have to be the same because one was being sued vicariously for the - - -

CALLINAN J: Exactly.

MR SULLIVAN: So, in theory, the damages would be the same, but in practice the amount received could be very well substantially different.

GAUDRON J: Amount recovered under the judgment or the amount - you have to go so far as to say that the amounts in the judgments can be different, in the one action.

MR SULLIVAN: Yes, your Honour, we do.

GAUDRON J: That is a big step, is it not?

MR SULLIVAN: No, your Honour. If it falls outside the resume of section 5, it is not a big step at all. In our respectful submission it does fall outside the regime of section 5(1)(b).

GAUDRON J: Well, I think 5(1)(b) is your best argument for saying that they can be different judgments.

MR SULLIVAN: Yes. Your Honour, in our respectful submission, if one has a situation where, in separate sets of proceedings, there are different amounts recovered, then - the limitation by section 5(1)(b) is you cannot recover more than you recovered in the first judgment.

GAUDRON J: What I am putting to you is this: you have to, it seems to me on fundamental principles, say that it was more than one action, to be able to get separate judgments.

MR SULLIVAN: No, your Honour.

GAUDRON J: It just seems to me, you have to bring yourself within 5(1)(b); what else would give you that?

MR SULLIVAN: Your Honour, in XL Petroleum the Court held you could have separate judgments in the one action and, indeed, in Wah Tat - - -

GAUDRON J: Yes, but for different damage.

MR SULLIVAN: No, but in Bryanston, the case relied upon by my learned friend, both Lord Diplock and Lord Denning accepted the English equivalent of 5(1)(b) only applied in respect of successive proceedings and, in our respectful submission, that is the established pattern of the law and, in that case, of course, and indeed in all the cases which are referred to in his Honour's judgment in the Court of Appeal, it is quite clear you can have separate judgments against separate people in the same action and for different amounts.

GAUDRON J: For the same damage? You have to make that additional step

MR SULLIVAN: Yes. Well XL Petroleum is an example though for different damage - - -

GAUDRON J: Not for the same, but for different damage.

MR SULLIVAN: Yes, but it is quite plain you could have separate judgments against two people in the one action. Indeed here, if the matter had gone to trial, there would have been two judgments, a judgment against Mr Whitehead for an amount, the same amount, as would have been in a judgment against Mr Baxter. There would be two judgments in the one action.

GAUDRON J: For the same amount, for the same damage?

MR SULLIVAN: Yes.

KIRBY J: Is there a question of the timeliness of the proceedings before us? In other words, this has gone off on the answer to a separate question that may ultimately disappear or be resolved or settled. It is a question of whether or not the applicant should be entitled to ventilate it now or later when, if in fact, it becomes a real issue - - -

MR SULLIVAN: We do not take that point, your Honour, because we concede that the whole idea of the separate question before the Court of Appeal was to reach the determination which may or may not obviate the - - -

KIRBY J: Yes, but that is at a level where you have rights. Here you only have rights by special leave.

MR SULLIVAN: Yes, your Honour.

GAUDRON J: It just demonstrates yet again that separate questions, far from shortening matters, prolong litigation, give rise to vehicles that, more often than not, are unsuitable for the resolution of any question and, if it were up to me, there would be a rule that special leave were never granted from decisions in separate questions. However.

CALLINAN J: Well I would have a rule that separate questions should not be tried and it would not even be here before us. Time and time again, what Justice Gaudron said, is occurring and is causing enormous difficulties.

KIRBY J: As everybody is unburdening themselves, I would certainly permit them in some cases where they are entirely suitable, especially in large commercial litigation where they will settle the whole matter.

MR SULLIVAN: Yes.

GAUDRON J: Perhaps you are ahead at that point.

MR SULLIVAN: I will retreat with some dignity and retire while we are ahead. For the reasons your Honours have mentioned so helpful from the Bench, it may not be an appropriate vehicle in that case. If your Honours please.

GAUDRON J: I would not assume that to be correct, though.

CALLINAN J: We have to deal with what we have got, Mr Sullivan, and the way it comes to it.

GAUDRON J: Yes, Mr Jackson.

MR JACKSON: Your Honours, may I say two things, one descending to the more grubby detail of what happened, and that is that it was the other side that sought many of these questions as your Honours will see from page 57 - - -

GAUDRON J: Sorry, the other side sought this, yes.

MR JACKSON: Leaving aside that, the - - -

GAUDRON J: Whereas, you were asking for a permanent stay.

MR JACKSON: We were, but could I say, your Honours, that so far as the decision of the Court of Appeal is concerned, your Honours will see the order made at page 95 and if you look at paragraphs 2 and 3, that issue has been decided against us.

GAUDRON J: And you do not complain about that?

MR JACKSON: I am sorry, your Honour; what I am complaining about is 2 and 3.

GAUDRON J: Yes.

MR JACKSON: And what I am saying in relation to that is that the decision of the Court of Appeal precludes us from succeeding on the issue whether there is, for example, the rule of double satisfaction in the form in which we have been seeking. So that issue is precluded, your Honour.

GAUDRON J: Well, I do not think it is, I am sorry, but that is neither here nor there. Can I just ask you something, because this does illustrate the problems where separate issue get decided. You concede that you could not have got a stay unless judgment were entered, I take it?

MR JACKSON: Yes, your Honour.

GAUDRON J: And it is not clear that judgment was entered?

MR JACKSON: Well it is, your Honour; it is agreed.

GAUDRON J: Well, you see, that is what is so unsatisfactory about this. The Court of Appeal says it is not clear, which is why I asked about the question. This question seems to proceed like a demurrer point on the basis, "Let us assume everything can be proved, and see whether there is a defence", and even on that assumption there is not a defence seems to me to be the answer, as it has come about.

MR JACKSON: Well, your Honour, all that seems to have happened really is that before the master and before the judge, the actual entry of judgment does not seem to be in evidence. The point that your Honour is raising is one sees at page 53, paragraph 9, the judge saying, and no doubt referring to the actual evidence:

It is not clear whether judgment was formally entered in accordance with the terms of settlement.

But then saying:

The application before the Master and the Judge, and the argument in this Court, proceeded on the basis that -

although the fact has not been strictly proved, it is true. Your Honours, you heard our learned friends say, "We do not dispute it, that is what happens." And your Honours will see at page 57, my learned friend has reminded me, at paragraph 19:

The opponents sought the decision of separate questions. They admitted the facts .....for the purposes of any such decision.

GAUDRON J: Well, yes, but that just seems to be to be admitting them as you would on a demurrer. I do not know; I do not know what these courts do these days with these separate questions, I have to say.

KIRBY J: But I think in fairness, Mr Sullivan has been perfectly candid and very correct before us; he has said, he takes no point on this, they were agreed facts below, they were agreed on the record and the Court is invited to act on that basis.

GAUDRON J: Do you agree that judgment has been entered and did you agree below that judgment had been entered.

MR SULLIVAN: We agreed below that for the purpose of application, that could be taken, your Honour, yes.

GAUDRON J: For the purpose of your application?

MR SULLIVAN: Yes, your Honour.

GAUDRON J: Did you agree that for all purposes judgment had been entered?

MR SULLIVAN: Your Honour, I cannot on the run answer that question, I just do not have a recollection. I would like to look at the transcript. It is not a matter I have turned my mind to. I just do not remember precisely - - -

GAUDRON J: It is a matter of some importance.

MR SULLIVAN: My recollection is, no, but I would not like to give a definitive answer on that. I recall that we were asked by Justice Giles whether, for the purpose of the application, we would be prepared to admit the paragraph. That is my recollection, but I could stand corrected.

CALLINAN J: And that is all you would have to do, Mr Sullivan, is it not, for the purpose of - - -

MR SULLIVAN: Indeed, your Honour.

KIRBY J: Yes, but that admission holds in this Court or - - -

MR SULLIVAN: It does hold to this Court, your Honour, yes.

CALLINAN J: The ultimate issues, yes.

GAUDRON J: Yes, but for the purposes of that question, which is to say, do you see it as a demurrer-type question?

MR SULLIVAN: It was a demurrer-type question saying, "Take all these facts as admitted, as a matter of law, no defence." That is the way we understood it being argued.

GAUDRON J: Well I interrupted you, Mr Jackson.

MR JACKSON: Your Honour, I had concluded what I wanted to say.

GAUDRON J: Well, it does not help me.

MR JACKSON: Well, I am sorry, your Honour, I do not know that I can take it beyond what has been said already and the point I am seeking to make is that this issue is one that was decided, as part of the case; it has been decided; it has been decided against us, and we are not able to raise, in the case, again, the issue which we have sought to argue.

GAUDRON J: You are not able to raise it by way of defence?

MR JACKSON: Well, the defence is the defence that part of the case is decided.

GAUDRON J: And you say you cannot raise it - that in the event the judgment goes against you for more than $250,000, which it may not, you say you cannot raise it then?

MR JACKSON: Your Honour, we might be able to endeavour to do something, but one would have to determine that at the time really, but at the moment the issue that has been decided is one that says that section 5(1)(b) does not apply and also - - -

GAUDRON J: No, I only read it as saying, 5(1)(b) does not provide a formal defence.

MR JACKSON: Well, the basis of decision in the Court of Appeal, your Honour, was different, with respect, and that is what will apply unless the Court changes it.

GAUDRON J: Yes, well we will announce the outcome of this application at 2.15 pm.

MR JACKSON: Your Honour, may I be excused at 2.15? There is a matter, not of a social nature, which - - -

GAUDRON J: You do not want to be asked any more questions.

MR JACKSON: I have had enough for the year - - -

GAUDRON J: Yes, certainly, yes, thank you, Mr Jackson. The matter will be listed again at 2.15 pm.

AT 12.01 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.21 PM:

GAUDRON J: There will be a grant of special leave in this matter. We add, however, that there is a real possibility that the application may be premature, in which event the parties should not be surprised if the grant of special leave is revoked by the Court that hears the matter.

The Court will now adjourn to reconstitute.

AT 2.22 PM THE MATTER WAS CONCLUDED