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High Court of Australia Transcripts |
Sydney No S130 of 2001
B e t w e e n -
WILLIAM ROBERT BURKE
First Appellant
HANAVE PTY LIMITED (ACN 001 416 226)
Second Appellant
and
LFOT PTY LIMITED (formerly JAGAR PROJECTS PTY LIMITED)
(ACN 050 049 182)
First Respondent
PAUL EWEN MITCHELL TRESIDDER
Second Respondent
JOSEPH RAYMOND GLEW
Third Respondent
GAUDRON ACJ
McHUGH J
KIRBY J
HAYNE J
CALLINAN J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 4 OCTOBER 2001, AT 10.18 AM
Copyright in the High Court of Australia
MR B.W. WALKER, SC: May it please the Court, I appear with MR P.T. TAYLOR for the first and second respondents. (instructed by Horowitz & Bilinsky)
GAUDRON ACJ: I have a certificate from the Senior Registrar who certifies that she has been informed by Messrs Horowitz and Bilinsky, solicitors for the third respondent in this matter, that the third respondent does not intend to take any part in these proceedings or make any submissions. Yes, Mr McVay.
MR McVAY: Your Honours have the written submissions and I take those as being read. The error that the appellants say that the majority of the Full Federal Court made appears at appeal book page 108 point 5, if I can take your Honours to that. At paragraph 102 Justice Heerey set out the basic concept of the critical element of the liability for contribution and his Honour said at about point 10:
A critical element of liability for contribution between two parties is that payment by one is for the benefit of both. That element is present here -
The appellant takes issue with that statement of the principles, your Honours.
GAUDRON ACJ: Is there not an earlier question, Mr McVay, whether the Act allows room for the operation of equitable principle?
MR McVAY: That certainly is something that no doubt I will address in due course, your Honour. Whether it is a first step is - perhaps I can come to it.
McHUGH J: Tied up with that must be the equitable doctrine of "clean hands".
MR McVAY: Yes.
McHUGH J: You have somebody who is in breach of the legislation seeking equitable contribution.
MR McVAY: Yes. The thrust of my two broad submissions, your Honours, is this: first of all, if the correct principles had been applied, it would not have been held that it was inequitable for Mr Burke not to contribute because the loss that was suffered by the second appellant was a corresponding benefit to the respondents, who retained the entire benefit and in circumstances where section 87 makes respondents liable to repay a loss, or pay compensation equal to the loss or part of the loss, then it is inequitable, in my submission, to require the appellant, who received nothing from his breach of retainer, to contribute to the repayment of that loss.
Your Honours, in my submissions I have not referred to a case of Lingard v Bromley, but I have the nine copies here, and my submission in relation to this case is that it has been recognised for almost 200 years that a payment by one contributory which relieves another contributory is not only the only basis for contribution or is not without more a basis for contribution.
KIRBY J: But what is your answer to the Acting Chief Justice's question concerning the importation of these whole cases? We are, after all, dealing with a statute.
MR McVAY: Yes. My submission is that in the face of the statute there can be no contribution because section 87 says clearly that the respondents are required to compensate the appellants for the loss. Now, if there is room for equitable contribution in the face of that then I make the submissions. Your Honours, I hand up - - -
HAYNE J: Why can there not be contribution? The statute is regulating the rights as between someone who contravenes the Act and someone who suffers loss and damage as a result of that contravention. Why is that inconsistent with the imposition of general law remedies between two who have contravened the Act?
MR McVAY: Between two persons who have contravened the Act there is, as I understand it, no opposition to contribution because Bialkower, as I understand it, is authority for the proposition that where three persons have contravened the Act, (1) who has engaged in misleading or deceptive conducted, and (2) who have aided and abetted, contribution is available between those persons who have breached the Act, but this case is different. This case is persons who have breached the Act are seeking contribution from a person who has not.
HAYNE J: Yes. I just need to understand why you say, or whether you say the regulation and creation of remedies by the Act cuts across what otherwise may be or may not be a general law principle. Now, do you say there is some inconsistency? If you do say that why do you say that?
MR McVAY: Yes. If I can take your Honours to section 87, your Honours will see that it does not limit the generality of section 80 which deals with injunctions and other matter but about halfway down the section the court is empowered to:
make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention . . . if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part.
Now, in my respectful submission, your Honours, first of all, the section indicates that it is the persons who have contravened the Act who are liable to pay compensation; and, secondly, they are liable to pay compensation in whole or in part.
Your Honours, given the statutory power to order the respondents to pay compensation in whole or in part, in my respectful submission, that is apposite to indicate that the section deals with the question of whether or not the person who has contravened section 52 should be liable for the whole of the loss or not, which is precisely what the respondent is trying to do by way of contribution. The respondent, instead of saying before the trial judge, "Well, I am only liable in part under section 87", he said before the trial judge, "I want contribution because you are a tortfeasor or in breach of your retainer". So my submission in relation to - - -
HAYNE J: But, no. Is that not a proposition which, expressed in that form, omits the object of the sentence, liable to whom? Do we not need to bear steadily in mind that the Act is regulating rights between contravener and person who suffered damage. Now, that is not to say that there does not remain a question about the intersection between the Act and rights as between those who have either contravened the Act or breached a common law retainer or a contract, but the proposition you just advanced was that, as I understood it, 87(1A) regulates liability in whole or in part for loss or damage and that is inconsistent with contribution. But is that right? Is it not regulating liability to the loser, the person who has suffered loss or damage?
MR McVAY: It is, but the person who suffered loss and damage may be liable to be compensated only in part by a person who has contravened the Act. In other words, if the person who has contravened the Act can show that there was a cause other than the contravention of the Act of the applicant's loss, then the court can order that the person who has contravened section 52 only pay part of that loss.
GAUDRON ACJ: How did the first appellant become party to these proceedings? Was he a claimant?
MR McVAY: He was a cross-defendant, your Honour.
GAUDRON ACJ: He was joined.
MR McVAY: He was joined.
GAUDRON ACJ: By - - -
MR McVAY: By the respondents.
GAUDRON ACJ: - - - LFOT and Tresidder.
MR McVAY: Yes.
GAUDRON ACJ: I suppose that is a separate proceeding, is it, under the Act, or is it all part of the one matter?
MR McVAY: Certainly, it was heard together.
GAUDRON ACJ: I know. What does either the Federal Court Act or the Rules say about joining cross-defendants? Was it cause of action assigned as against the cross-defendant?
MR McVAY: Off the top, I do not know that, your Honour, but I will have a look at it. To answer your Honour's question fully, the second appellant commenced the proceedings against the respondents seeking relief for breach of section 52 and the respondents joined the first appellant, who was the second appellant's solicitor, alleging breach of retainer and negligence and seeking contribution from him on equitable grounds.
GAUDRON ACJ: So it was not really a cross-action, was it, as that is ordinarily understood? I ask these questions, Mr McVay, because, at least under section 87, it seems that the only orders that can be made are against the person who engaged in the conduct or a person who was involved in the contravention. So I am looking for some other basis for orders against Mr Burke and I would just like to know what was pleaded against him.
MR McVAY: Nothing under section 87 was pleaded against him. What was pleaded against him was that if the respondents were liable to the second appellant for any loss or damage, that the principles of equitable contribution applied and in the court's accrued jurisdiction the court had jurisdiction to make those orders in equity.
KIRBY J: Not under the Law Reform (Miscellaneous Provisions) Act, that was disclaim.
MR McVAY: No, that is right because the persons who breached section 52 were not tortfeasors and because they were not tortfeasors, there could be no contribution sought by one tortfeasor from another tortfeasor.
HAYNE J: Can I go to the pleading and just make sure I am reading the right pleading. At page 31, do we find the last version - no, page 35 seems to be the last version, is it, of the cross-claim in which, is it Hanave or Hanave?
MR McVAY: Hanavé.
HAYNE J: Hanavé. Sorry, in which LFOT makes its cross-claim against Mr Burke.
MR McVAY: Yes, that is right, your Honour.
HAYNE J: We find, do we, at 35 and following allegations that Burke was solicitor for Hanave, owed various obligations, breached them, and is the real pleading, paragraph 11, page 37?
MR McVAY: Yes.
HAYNE J: That LFOT is entitled to indemnity?
MR McVAY: That is right. The content of the previous paragraph 10 was, as her Honour said, expressly disclaimed.
HAYNE J: Yes.
MR McVAY: So, it is a claim for equitable contribution only and not under the provisions of the Act. So, the question is: in these circumstances, can someone who has breached section 52 claim contribution from someone who has been negligent or in breach of a retainer? Your Honours, I have stated in my submissions that - and this does not seem to be in contest - the principle underlying contribution is unjust enrichment or the concept of unjust enrichment underlies or underlines the principle of contribution.
KIRBY J: That would not have been the way it was originally expressed, given that a contribution has a much longer history than the modern development of unjust enrichment.
MR McVAY: Yes.
KIRBY J: Am I right or wrong in this? Tell me if I am wrong.
MR McVAY: I think that is probably right. If I could take your Honours, first of all, to the Lingard v Bromley Case 45 ER which I handed up. This was a case, your Honours, where there were a number of trustees and one trustee had to pay a judgment and he sought contribution from the other trustees who had simply acquiesced with full knowledge in what he did and the trustees from whom contribution was sought simply said, "Well, we didn't do anything. We just acquiesced in what our brother trustee did, so we ought not be liable for contribution". What the court had to say about that is at the bottom of page 45, your Honour:
The Master of the Rolls [Sir Wm Grant]. The first Defence made in this Case seems to me to be quite untenable. Where entire Damages are recovered against several Defendants guilty of a Tort, a Court of Justice will not interfere to enforce Contribution among the Wrong-doers: but here is nothing but the Non-performance of a civil obligation. The Lord Chancellor held, in the first Place, that the Assignees were bound to convey; and secondly, that a Loss being occasioned by their not having conveyed, they were bound to make good that Loss, with the Costs, arising by their Refusal. The Liability therefore is not at all ex Delicto . . . As to the second Defence, there are, no Doubt -
and this is what I rely upon, your Honours -
many Cases, in which Persons may be all liable, severally as well as jointly, to indemnify a third Party -
and that is the case here. Burke and the two respondents, by virtue of the orders made, are liable jointly and severally to indemnify the second appellant -
and yet ought not in Equity to bear the Burthen equally among themselves.
So, as far back as 1812, your Honours, it was recognised that even though two or more persons may be jointly and severally liable to indemnify a third person, they "ought not in Equity" bear the burden among themselves.
But what are the Circumstances of Distinction between these Persons: It is not alledged, that the Plaintiff derived any exclusive Benefit from the Acts, in which he concurred with the Defendants.
So, your Honours, it seems there that the Master of the Rolls was saying that one of the circumstances which would prevent - which equity would not allow a plaintiff to derive contribution from defendants is where the plaintiff derives an exclusive benefit. Now, that goes back to 1812 and to answer Justice Kirby, that is the way it was put in those days. Your Honours, in this case there has been the derivation of an - - -
KIRBY J: What do you say is at the heart of the idea? What is the essence of the reason though?
MR McVAY: The essence is this, your Honour: where a creditor has rights against one or more debtors - call them debtors, but they are co-sureties, co-obligors - and that creditor inequitably enforces his rights against one only, unjust enrichment operates to prevent the debtor who did not pay or who was not called upon to pay from - unjust enrichment allows the debtor who did pay to call upon the debtor who did not to pay him a contribution on the basis that otherwise he would be unjustly enriched by not paying his fair share. Your Honours, the authority for that proposition is a decision of this Court. It is contained in a judgment of Justice Brennan. It is Mahoney v McManus [1981] HCA 54; 180 CLR 370.
KIRBY J: Which page?
MR McVAY: Page 387, your Honour. This is authority for the proposition I just put to Justice Kirby. At about point 5 on the page:
A co-surety's right to contribution cannot arise out of a payment of the former kind -
What follows is important -
the right to contribution does not arise because the sureties all derive a benefit from the payment made. The right to contribution arises because in the view of equity a creditor ought not exercise his legal rights inequitably, enforcing disproportionate contributions from co-sureties.
If your Honours go to the top of page 388, his Honour states the principle in a slightly different way. At about point 2:
It is not the common benefit derived by co-sureties from the payment made but the inequality of burden resulting from the enforcement or satisfaction of the creditor's rights against the sureties which gives rise to the equity.
In this particular case before your Honours, Hanave sued only the respondents and not Burke. The perceived equity on the part of the respondents which allowed them to gain contribution was the holding that Burke was unjustly enriched in terms of principal by the fact that the respondents had to pay all of the loss. That gave rise to an equity, so the majority said in the Full Federal Court, in the respondents to claim contribution from Burke. But the appellants' argument is that no such equity exists because, in the words of Lingard v Bromley, the respondents obtained an exclusive benefit from their contravention of the Act and equity will not allow the situation where the persons who breach section 52 to in effect keep half of what they obtained by reason of the breach by virtue of obtaining contribution from Burke who benefited not at all.
HAYNE J: Or is it simpler than that? Is it simply that Hanave could not have, and as a matter of fact did not, sue Burke, other than for contribution? Hanave had no cause of action against Burke. It was owed no duty of care. There was no relevant misleading or deceptive conduct, or the like.
MR McVAY: It was pleaded against Burke by the respondents in its cross-claim that Burke was the Hanave solicitor and owed it duties of care and contractual duties and that if Burke had carried out those duties, he would have made certain advice and this misleading and deceptive conduct - or the true state of the tenancy would have been picked up.
GAUDRON ACJ: The duty in question being to advise the client to make inquiries?
MR McVAY: Yes.
GAUDRON ACJ: Not to rely on what on what transpired to be a misleading statement?
MR McVAY: Not quite that, your Honour.
GAUDRON ACJ: What could it be?
MR McVAY: The duty was that if Burke had carried out his duties as a solicitor reasonably he would have advised Hanave to make certain inquiries about the rental history of the tenants in these shops. The anchor tenant was there for 10 years.
CALLINAN J: To go behind the property report, in effect?
MR McVAY: Exactly.
CALLINAN J: That was a substantial document, was is not, that contained the misrepresentations?
MR McVAY: It was.
GAUDRON ACJ: It was really that he was under a duty to advise them not to rely on the statements made, which in turn LFOT, under section 52, was under a duty not to make.
MR McVAY: That is right.
GAUDRON ACJ: So we sort of chase our tails around here.
MR McVAY: We do, and it is even more circuitous when Burke was not only the solicitor for Hanave, but he was also a director. He was the one who - - -
GAUDRON ACJ: Yes. Well, leave that little complication aside. The duty that is said to arise is to warn them really that people may be breaching the Trade Practices Act.
MR McVAY: That is not how the majority put it.
GAUDRON ACJ: But, in effect, that is what it amounts to, is it not?
MR McVAY: It is, in effect, saying you should not accept - - -
GAUDRON ACJ: The word of these people.
MR McVAY: The contents of the property report, you should go behind it, yes.
CALLINAN J: I suppose that is the sort of situation that arises in every contract because searches are always undertaken, or should always be undertaken, as to the title and the rate and land tax situation and all the other matters, just as perhaps a director of a company should be undertaking a due diligence investigation of any property that the company is buying.
MR McVAY: In effect, I think that is what the majority held below, that if Mr Burke had advised the company to take due diligence, it would have gone beyond the property report and checked out the rental history of these tenants, rather than accept the content of the property report.
CALLINAN J: It is hardly exculpatory of the misrepresentor though, is it?
MR McVAY: No, not at all.
GAUDRON ACJ: But how would that be done? I mean, I understand how you can check out title details and public records. How do you check out the accuracy of something like the property report? Do you go to the tenants who are - - -
CALLINAN J: Is there is a standard requisition form in New South Wales? There is a standard requisition on title. It would not strictly be a requisition on title, I would not think, but sometimes requisitions go to matters customarily that do not really relate to title.
MR McVAY: It was canvassed below that one thing that Burke could have advised Hanave to do was go and talk to the tenants themselves.
McHUGH J: Mr Moses gave evidence to that effect, did he not? He was the Challis lecturer and a very well-known solicitor in Sydney.
MR McVAY: Yes. You could go and talk to tenants and whether they told you the truth or not is another thing but that is one thing you can - - -
CALLINAN J: I must say, I have never heard of that.
MR McVAY: Nor have I.
CALLINAN J: It might be practical in the case of a building with seven tenants but how could you possibly do that? If it were a large shopping centre, for example, I would think there would be literally dozens of tenants there.
MR McVAY: One can imagine the answer you would get if you rolled up to Woolworths and said, "Are you paying your rent? Let us see your cheque book and see if you are paying the rent correctly". That is by way of answering the question that was put to me as to what was found to be the content and extent of the duty. It was really to say, as I have said, "Make further inquiries".
CALLINAN J: Do you challenge the finding that there was in fact a duty to make these sorts of inquiries that the court said should be made?
MR McVAY: Not in this Court. We challenged them in the Full Federal Court, with no success whatsoever, and we did not challenge them here. Your Honours will know that there was a majority against us on the question of contribution and one for us but the three judges were against us on the issue of the liability of the solicitor. I have taken you to what Justice Brennan said is the theoretical and jurisprudential basis of unjust enrichment underpinning the principles of unjust enrichment.
I propose just to continue on a little on that theme and ask your Honours to go to, in the first instance, Pavey & Matthews 162 CLR at 221, but the relevant passage is at 256. If it is right to say that unjust enrichment underpins contribution then - this is what Justice Deane had to say about the concept of unjust enrichment in this case. At the bottom of page 256, if your Honours would not mind, three lines up from the bottom:
That is not to deny the importance of the concept of unjust enrichment in the law of this country. It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, injustice, recognize such an obligation in a new or developing category of case -
I rely on what his Honour said there to underpin the importance of the concept of just enrichment in determining whether Burke should make restitution to the respondents for the benefit that he has obtained by not being called upon to make a payment in compensation of Hanave's loss.
HAYNE J: An odd statement of benefit. Benefit he has obtained by not being called on to meet a loss is an unusual statement of benefit.
MR McVAY: It is. I did not put it very well. By not having been sued by Hanave for breach of his tortious and contractual duties, which may have resulted in a judgment against him in favour of Hanave. That would be unjust if the respondents did not obtain any exclusive benefit from their actions, but they received the benefit of $750,000, which was the difference between, as your Honour would be aware, the purchase price, which was $2.55 million, what was paid for it be the second appellant, and what was found to be its real price, which was about $1.8 million. So the first respondent obtained that exclusively and what it sought by this order of contribution was to retain half of that by having to pay Hanave all of it back, but recouping $375,000 from Burke, which, in my submission, equity will not allow, for the reason that - - -
GAUDRON ACJ: I wonder if there is not some other disabling equitable aspect at work here. Why, if you go around and make a representation - and this may not have been deceit at common law, but I take it inequity nonetheless would be regarded as a misrepresentation - why should you be allowed to turn around and say to the person, "Forget about the capacity in which you received the misrepresentation, but you should have checked on what I sent".
MR McVAY: Generally that is not acceptable.
GAUDRON ACJ: And I am wondering if there may not be some sort of estoppel operating in your - - -
MR McVAY: The principles of estoppel, your Honour, do apply, in my respectful submission, because they apply in this way, that generally equity will not allow a person to unconscionably exercise his full legal rights. If, by virtue of the respondents paying full compensation to Hanave, it becomes entitled as a matter of law to contribution from another person who is a tortfeasor, because that tortfeasor contributed to the loss, equity will prevent the respondents exercising that full legal right of contribution, because to do so would allow it to recoup an amount of money which it obtained by virtue of breach of section 52, and that is inimical to equity. Your Honours will find that referred to - I will not take you to it, but I will just read it to your Honours - in Waltons Stores v Maher 164 CLR at page 419. This was talking about an estoppel:
"This equity has been differently expressed from time to time . . . It has . . . been expressed from time to time as operating by a form of estoppel. The foundation of it, however, in all these instances, is the recognition by the court that it would be unconscionable in the circumstances for a legal owner fully to exercise his legal rights."
And it would be unconscionable in this case for the respondents, in effect, to allow to be kept half of the money they obtained by virtue of section 52 because of an order for contribution.
Your Honours, all that goes to saying that there is a bar in equity to the respondents being able to recover contribution, because the result of it is that they do not pay full compensation for the breach of the section. But if that is wrong, your Honours, if there is no bar in equity to contribution, then there still has to be co-ordinate liabilities between the contributories before contribution will be ordered. What "co-ordinate liabilities" means has been expressed in a variety of ways but, in my submission, it can be pretty well encapsulated by saying that there has to be a common interest between the contributories. It is often expressed as common burden, common interest and mutuality, but the term "common interest" seems to cover all those.
In my respectful submission, the interests of Mr Burke, as someone who has breached his retainer or as someone who has been guilty of negligence, are entirely different to the interests of the respondents in this case. It was not in the interests of Mr Burke to mislead or deceive his own company or himself, but it was the interests, of course, of the respondents. So even at that basic level, your Honours - and I will take you to some cases - it cannot be said that the liabilities are co-ordinate.
The first case I would ask to take your Honours to is James Hardie v Wyong Shire Council [2000] NSWCA 107; 48 NSWLR 679. The relevant passage is at page 687, at the bottom, your Honours:
So far as the principle -
that is, the principle of contribution -
requires that persons be under co-ordinate liabilities, it has been said that the notion of co-ordinate liability "defies exclusive or narrow definition" . . . There are established categories -
for example, co-sureties, co-insurers, et cetera -
but what underlies the notion is not common liability to be sued but a common risk the burden of which should, if it falls unequally, be adjusted -
and there is a quote then from Chief Justice Bray in the case of Floreani:
"The doctrine [of contribution] is an old one. It exists both at law and in equity, though the right in equity is more extensive -
The case of Dering v Earl of Winchelsea established:
that it is not founded on contract but on general principles of equity and justice.
There is then, about the middle of the page, an approval of what appears in Rowlatt on Principal and Surety:
"If as between several persons or properties all equally liable at law to the same demand, it would be equitable that the burden should fall in a certain way, the court will so far as possible, having regard to the solvency of the different parties, see that, if the burden is placed inequitably by the exercise of the legal rights, its incidence should be afterwards readjusted."
That is what the majority of the Full Federal Court held here, that the full burden ought not to have fallen on the respondents. It should have fallen at least as to half on Mr Burke because he was the one who should have advised them to make further inquiries. My submission is that it is equity, as I have submitted, it is not equitable to share that burden around.
Your Honours, at the bottom of that page 688, there is a quote from the case of Bonner v Tottenham and Edmonton and I rely particularly on what begins at about four or five lines from the top of that quote:
The equitable principle seems to me to be based upon natural justice requiring that equity should neutralise "inters se" the accident that the burden had been borne by one for the benefit of others associated with him in interest, whether such incidence of burden is the result of election of a plaintiff who might have sued all those interested, or whether it is the result of the requirements of the law as to the parties to actions, or whether it is the result of what may be more properly called "accident" like the "jettison" of a part of a cargo severally owned, or the seizure of wines . . . In each of these cases the application of the equitable principle depends on community of interest in something in respect of which one has borne a burden for the benefit of another or others.'"
That is the basis of the equitable principles, your Honour.
There are some cases which give effect to those principles. The first case I would seek to take your Honours to is the case of Retravision v Street [1995] FCA 1197; 56 FCR 588. This was a decision of his Honour Justice Gummow when he was in the Federal Court. Your Honours, this looked at, as you can see from the second part of the headnote:
Equity - Contribution - Co-ordinate liabilities -
Now, his Honour was asked to decide whether persons who had a liability to a creditor under some guarantees could recover contribution from persons who may also have had a liability to the same creditor by reason of sections 592 of the Corporations Law which is trading whilst insolvent. So the persons who are liable for the debt under the guarantee had to pay the creditor and those persons who paid under the guarantee said, "Well, there are other people over here who managed the company whilst it was insolvent and I require contribution from them because they are liable also".
CALLINAN J: Breach of directors' duties.
MR McVAY: His Honour held that those two liabilities were conceptually different: the liability of a guarantor under a guarantee; and a liability imposed by statute on persons who managed a company was conceptually different to the other. That your Honours will find at page 597. Between E and F, your Honours, his Honour said:
It would be taking too narrow a view of the matter and give insufficient weight to the preference equity has for substance to form to hold that there could be no common obligation if there were different "causes of action" against the co-obligors.
He then returns to BP Petroleum, which I will come to -
Lord Ross preferred the statement of the criterion as whether the liability "is of the same nature and the same extent".
I will come to BP in due course. So, his Honour was moved to accept the description of the liability as being present if it:
"is of the same nature and the same extent".
His Honour then went over on page 599 between B and C. His Honour referred to a case brought from the Supreme Court of Victoria and he quoted from that case:
"Contribution is founded on the principle that equality is equity, and there is no room for the application of this doctrine unless the surety against whom contribution is claimed has placed himself on the same level of liability as the surety who claims contribution from him."
He discusses that particular case. It is not relevant here. At the bottom of page 599 his Honour said:
The winding-up of Terry's -
who was the principal debtor -
brought into operation the principles as to the effect of a winding-up upon current obligations and the lodgment of proofs . . . This may have had the result that the obligation of Terry's to Retravision -
who was the creditor -
to pay its indebtedness is not, in the sense of cl 1 of the guarantee "enforceable against [Terry's]" -
At the top of page 600:
However that may be, in either case cl 1 of the guarantee places the applicants on a level of liability, to use the phrase of the Judicial Committee, which is conceptually distinct, as a matter of basic legal principle, from that of those having a direct primary liability, joint and several, to the creditor in respect of the guaranteed debt.
That is under the law.
In my view, nothing turns upon the circumstance that the liabilities under the instruments of guarantee have been pursued to judgment in favour of the creditor.
There is no common interest and no common burden, with joinder in a common end and purpose by the several obligations, to repeat the language of Eyre LCB in Dering. In my opinion, even on the assumption I have been making, no ground is made out for the existence of a right to contribution as contemplated -
So, his Honour said that between those two different sorts of people there was a different level of contribution and not a common interest.
Your Honours, that brings me to the BP Petroleum Case [1987] SLT 345. This case was referred to by Justice Gummow. Your Honours, this was a case where BP, under a contract with a harbour authority, was required to pay any damage which its ships may have caused to a dock, loading docks, and Esso was required under statute to make good the same damage if it caused any damage to the docks. I think Esso was using one of BP's ships or something like that, but there was damage done to the dock, to the wharf and BP was liable under contract and Esso was liable under statute for the same damage to the same wharf. BP paid the damage and sought contribution of one half from Esso.
The result of the case was that contribution was ordered, but the reason for it was this: if your Honours go to page 347, the right-hand column between I and J, the court recorded the crucial question:
The crucial question is whether the pursuers and defenders are properly to be regarded as liable for the same debt. Counsel for the defenders argued strongly that where, as here, there was no connection between the two debtors and no nexus, there could be no question of a common or joint obligation. Counsel for the pursuers, on the other hand, argued that the fact that the pursuers and the defenders were both liable to Shetland Islands Council for the same debt was sufficient; liability for the same debt is sufficient nexus; this was clearly a case of joint obligation and there was no rule of law which provided that the common obligation must arise out of the same contract or association.
They were at the opposing contentions. The court settled the contentions on page 348, your Honours, between C and D in the left-hand column:
In my opinion, where two parties are made liable for damage done to the jetty, they can properly be regarded as under a common obligation or liable for the same debt even though the obligation of each has a different source; the origins of the obligation placed on the pursuers and the defenders are separate and distinct, but the obligation is a common one because each has to perform substantially the same obligation.
That is, not damage the wharf.
It was held there that because both had a common obligation, they were both liable. But in this case, your Honours, certainly Mr Burke had an obligation not to damage his client by being negligent and he had an obligation not to damage his client by breaching his retainer. The respondents had an obligation under section 52 not to damage the second appellant by engaging in misleading or deceptive conduct, but they are two vastly different interests, two vastly different sources of the obligation.
CALLINAN J: Mr McVay, are there any cases before the contribution legislation in which one fraudulent tortfeasor has sought to recover equitable contribution from another tortfeasor? What I am thinking of, of course, is the doctrine of "clean hands", whether there might be a distinction between, say, an intentional colourable act and an act of mere negligence.
MR McVAY: I am not aware of any, your Honour. Of course, since the legislation, contribution is only obtainable if it is equitable to do so. Prior to the legislation - no, perhaps I can answer that better. As I humbly understand it, your Honour, before the legislation, contribution was never ordered between tortfeasors because it was held that the principle was that no one should benefit from their own wrongdoing. So, if you had one tortfeasor and another tortfeasor and one paid up, there could be no contribution on the basis of the principle that the court will not assist a wrongdoer, even to recover from another wrongdoer.
CALLINAN J: No matter what the tort was?
MR McVAY: I think no matter what the level of - - -
CALLINAN J: So, the level of doctrine of equitable contribution just did not apply in the case of any wrongdoing, whether it was by act or omission or deliberate or not?
MR McVAY: As I understand it, and there are some words to that effect in Bialkower which I will take you to, shortly, and I will take you to that now.
CALLINAN J: All right, thank you.
MR McVAY: Your Honours, Bialkower v Acohs 83 FCR 1. If your Honours go to page 10 between E and F their Honours are setting out what Justice Davies said in an earlier case:
Common law and equity earlier refused relief by way of contributions -
between tortfeasors -
in a case such as this not because of the absence of a common or coordinate obligation but because it was considered, as a matter of principle that such relief should not be granted to wrongdoers.
Now, there was no suggestion in that case that one wrongdoer was more negligent than another one. That was the principle where tortfeasors - before the Contribution Act - were not allowed contribution between themselves.
CALLINAN J: That looks as if might come from Merryweather v Nixan, does it?
MR McVAY: I think it does, your Honour, yes. I think it does. Yes, it does.
The next case I will take you to on the concept of what is called co-ordinate liabilities are is the case of a New South Wales Court of Appeal in Capita Financial Group v Rothwells 30 NSWLR 619. Your Honours, I do not have that case in front of me but I have a good memory of it. In that case there was contribution ordered between two parties who had each given some sort of letter of comfort.
KIRBY J: Would you like to borrow my copy of the volume?
MR McVAY: I would be grateful to your Honour.
KIRBY J: I sat in it, so I have a memory of it too.
MR McVAY: Yes, your Honour did.
KIRBY J: Probably not as good as yours.
MR McVAY: Your Honour, in that case two parties loosely undertook to supply sufficient finance to enable a particular project to remain solvent. It was argued before the Court of Appeal that because there are a hundred ways that persons cold provide finance sufficient to keep a project solvent, that the liabilities could not be co-ordinate, because one promisor paid up and the other one did not when contribution was sought. But the court held that just because you could finance a project by way of equity or by way of loan or by way of debentures or by any other way, by gift, did not make the obligation not co-ordinate for the purposes of contribution - it held that it was.
It is plain and easy to see that there was a common interest between the two parties. Both had a common interest in keeping this particular project afloat. The only difference between them was how they chose to do it. So that case does not in any way take away from my submissions that there has to be a common interest, because there was a common interest in that case, just a different way of fulfilling it.
The final case I invite your Honours' attention to is a recent case of the New South Wales Court of Appeal. It is not reported in any bound volume. It is Cockburn & Ors v GIO Finance [2001] NSWCA 177, 14 June 2001. In that case a young man was hurt in an accident and recovered some compensation. His father, in breach of his fiduciary duty to his son, used the money for his own purposes. It was held that GIO was constructively on notice of the father's breach of fiduciary duty and a mortgage that GIO took over the son's property was set aside ab initio as a result of the GIO being constructively on notice of the father's breach.
The other party was a solicitor who it was held that had he given proper advice to the son, the son would never have signed the mortgage. So GIO, when its mortgage was set aside, sought contribution from the solicitor, the solicitor being negligent and GIO being on constructive notice of the father's undue influence. Your Honours, what is relevant to this case is the statements of principle which are set out. If your Honours go firstly to what the President, Justice Mason, said were the principles at paragraph 24 of the judgment. I rely on this because his Honour relied on the concept of unjust enrichment:
The injustice prevented by an award of contribution or recoupment is the enrichment of the defendant at the expense of the plaintiff -
and your Honours will see that he refers, amongst other cases, to Mahoney v McManus, which I took you to, the judgment of Justice Brennan. At paragraph 30 of the same judgment his Honour said:
Nor is it sufficient that the claimant's payment has benefited or relieved the defendant financially . . . Something more is required to enliven a right of contribution.
Something more is required, not just a payment, which relieves another potential contributory and that something more, your Honour, is where a creditor has inequitably exercised his legal rights against one contributory rather than another.
So, your Honours, on two bases the decision of the majority of the Full Federal Court is in error. First of all, the court should have found that there was a bar in equity to contribution for the reasons that I have given and, secondly, it should have found that if it applied the correct principles as to co-ordinate liabilities, it should have found that there was no common interest between the two contributories and, on that basis, no co-ordinate liability, which is an essential element of contribution. That is all I propose to say in-chief to supplement what I have put in writing in my submissions in-chief.
GAUDRON ACJ: Yes, thank you, Mr McVay. Yes, Mr Walker.
MR WALKER: Your Honours, may I first attempt to answer the question raised by your Honour Justice Gaudron in relation to the cross-claim, then may I try to answer some of the questions falling from a number of your Honours about the availability at the threshold of contribution with respect to, a deliberately vague phrase, a liability under the Trade Practices Act. As to each of those topics, which are, in fact, related in the context of this dispute as it now stands before you, there are complications arising from the way in which issues have been run and, more importantly, not run in the courts below.
There is also a difficulty concerning some of the nomenclature that my learned friend has repeatedly used this morning concerning the bases of some of the claims now being debated. The two examples which are important for the answers I am about to attempt relate first to my friend's immediate and exclusive focus on section 87 of the Trade Practices Act, notwithstanding such traces as one finds in the reasons of the courts below shows that section 82 was either the main or, more likely, the sole focus in the debate before their Honours.
May I give you, without taking you to them, some references that make good that suggestion of what I will call forensic archaeology. If one goes, for example, to the following references one will see section 82 as the topic of summation by their Honours in the Full Court about the nature of the issues: Justice Lee, appeal book 77, paragraph 2; Justice Heerey, appeal book 97, paragraph 86, appeal book 100, paragraph 79, appeal book 110, paragraph 108 and Justice Lehane, appeal book 118, paragraph 131 and appeal book 120, paragraph 135.
That may be of significance, or it may not be. There is, as your Honours know, an explicit reference to part compensation in section 87, which has hitherto played no role of any kind in any of the argument that one can trace in the reasons for judgment below and your Honours will recall, of course, that there are four sets of reasons for judgment, two first instance decisions and two appellate decisions.
The other matter of nomenclature which is of some importance is the repeated reference to equitable contribution. There it is true that one finds in the reasons for judgment that that language and, perhaps, that concept has been used, though perhaps not exclusively, in the debate. We rely, as your Honours, I hope, have gathered from our written submissions, in the main, upon the reasoning on the question of contribution of Justice Lehane. His Honour makes it very clear, we seek to emphasise as vehemently as I can, that we are not asserting an equity of contribution, simply and solely in the sense of invoking and invoking only a doctrine of chancery. Rather we will use the word "equity" in its older, broader 18th century sense just as we use the phrase "natural justice" in its older, broader, 18th century sense.
McHUGH J: Is not the difficulty with that that where there is any conflict between the rules of equity and the common law concerning the doctrine of contribution, the rules of equity prevail?
MR WALKER: That is a difficulty. There is a difficulty, however, for the appellant, of two kinds, one low level, another high level. The lower level one is there has been not the slightest attempt, either in the evidentiary sense to adumbrate any material in support of any peculiar equitable defence and one looks in vain in the pleading for anything which would have alerted the parties or the trial judge to that matter and, second, they have not pointed to any authority of any kind upon which they rely for a peculiarly equitable "clean hands" defence to a contribution which can be as well-founded in equity as in law.
Your Honours, I will come back to that matter. It is of some importance, as I say. I make it quite clear at the outset we do not disavow equity in the sense of chancery. Of course not, bearing in mind that we have not, in fact, paid the money or, indeed, we seek the contribution without having paid the money and Wolmershausen v Gullick would suggest that we may need equity in the modern sense to give us contribution in such a circumstance, rather what we depend upon is the availability of an answer to a claim for contribution and we will submit that, in fact, there is no conflict so far as the books reveal between equity and common law.
Now, of course, I am bound to observe that your Honours write books. This may be the case but it is a peculiarly, inapt vehicle for the argument, bearing in mind the lack of factual and legal exploration of this issue at any of the levels below. I will come back to that.
Your Honours, we are bound to observe, however, and somewhat against ourselves, at first sight that before one gets to doctrinal thresholds one gets to the procedural threshold: how were we in the Federal Court in any event in a cross-claim? The short answer, I hope, is Order 5 rule 1(2) of the Federal Court Rules.
It may be that by starting at Rules, I start somewhere off the foundation of the matter, but that is where we would like it to stay. That reads that a respondent - and my clients were respondents:
may cross-claim against any person whether another party or a third party for any relief which is related to or connected with the subject of the proceeding.
Our short proposition - in answer to an argument about jurisdiction never ventilated below - our short answer is that the connection between what might be called a "claim over" and a "claim" is integral. It is organic. "If I am liable, you should be, too".
McHUGH J: I am not sure about that. There would certainly be some support for the jurisdictional basis of the claim in the judgments of Justice Gummow and Justice Hayne in Wakim. I am not sure my judgment went as far as that. After all, it has nothing to do with federal law, this claim.
MR WALKER: Your Honours, I am bound to observe at the outset that this is in the Federal Court not because it lies under any federal statute. It is in the Federal Court not because it is jurisdiction explicitly, that is, specifically, invested in the Federal Court by this statute. It is - and this point has never been ventilated before, and this is a jurisdictional question - within the court pursuant to a rule, the validity of which has not been challenged by anybody - - -
McHUGH J: Well, it may be a matter of how you construe the rule.
MR WALKER: Yes. We, of course, accept that one construes Rules, if one can, so as to keep them within constitutional power. At that point, however, I am bound to observe: no section 78B notices have been issued.
McHUGH J: Both parties asserted that there was no need for - well, they certified that they had considered 78B.
MR WALKER: We have never, with respect, taken the position there is no jurisdiction. The terms of the rule upon which our cross-claim was filed are plain, and no one has ever suggested - not only in this case, but no one has suggested about this kind of claim which has, as Justice Lehane recorded, been the subject of a number of strike-out applications from time to time in the Federal Court - our researches do not reveal that any of those strike-out applications were on jurisdictional grounds. So it is a bit difficult for the appellants to take advantage of this. If they have thought about 78B, then they have obviously rejected jurisdictional challenges because, ultimately, that will depend upon Chapter III making a 78B notice available.
On the other hand, I hope without infringing section 78B, I accept that a jurisdictional question is a question that cannot be brushed over by acquiescence. My simple point is that the rule, drawn in terms to which I have drawn attention, is a rule which accepts the notion of "matter", and embraces within the notion of matter claims over with respect to a claim. Section 22 of the Federal Court Act does not really assist us, but I should refer to it for completeness. It is the familiar provision, in that court, for the complete and final disposition of matters, but I have to observe against myself that it uses the word "parties" in a way which may start me on illogical circularity, by asserting that that includes cross-respondents who were not applicants.
So section 22 helps me only if I assume my conclusion; I will try not to do that. But the rule, with respect, is a rule which in terms - sub-rule (2), that is - applies to our case, and, in our submission, whatever else one might say about the notion of matter, or whatever else one may say about the notion of an accrued or an associated jurisdiction, necessary to enable the whole of the matter to be determined in what might be called an efficient and appropriate manner for the administration of justice, the relation of a claim over to a claim is so integral and organic as to demonstrate jurisdiction. That is my answer to the first matter which we accept, with respect, is a primordial matter in the case. It is just that that is the first time it has ever arisen.
The next question, which I think has come from all of your Honours, concerns ultimately a simple matter of statutory interpretation which so far has been determined in favour of our position by courts below, including the Federal Court. Your Honours have already had a reference to Bialkower. That is a slightly different position but it is a position which is a fortiori. That was a case of asserted contribution between people who were each liable under section 82. That is a fortiori because each of the people there is subject to the kind of statutory liability that my learned friend has correctly quoted as being conveyed or imposed in terms, rendering someone liable for relevantly that which is necessary to compensate. If one needs to elaborate, that means the whole of that which is necessary to compensate, that being the point of compensation.
There is not yet an authority to the effect that those words - my friend relied upon section 87 but, for reasons I have already pointed out, in the context of this case it would more appropriately have been section 82 which will serve his purposes just as well. My friend must be submitting that those words contain a command or direction or something in the nature perhaps of a prohibition preventing the application of general principles of law which preceded, and to the extent that they can coexist with, ought to be seen as surviving the enactment of the Trade Practices Act.
Can I explain that. It is common ground at the Bar table, and is, with respect, far too well established in this Court for us to strive against it, that the liability in this case under section 82 of the Trade Practices Act is a statutory liability, to the understanding of which common law and, if necessary, equitable, but basically common law, principles, particularly with respect to damages, may, to the extent that particular cases reveal it, be useful, but only by analogy and guardedly, given the tendency of analogy if pushed too far to mislead.
Your Honours have several times referred to the use to be made of common law principles, particularly with respect to compensatory damages. Because it is statutory, we accept that, subject to this very general and not directly applicable general law background, the words are to be construed simply as self-contained enactment. There is nothing in the self-contained enactment which says that somebody liable under this Act cannot invoke in the 18th century sense natural justice and equity to have that liability shared in what might be called a proportionate or pro rata or equal fashion with somebody who has what the general law calls a co-ordinate liability, be that under the Act or otherwise.
HAYNE J: Given that the liability of which we speak is a liability arising on contravention, that is on contravention of statute, what, if anything, is left, do you say, of principles of the kind reflected in Merryweather v Nixan that say that those are liabilities which are not to be shared?
MR WALKER: Yes. The beginning of any answer about Merryweather v Nixan is to observe two things about its continued force. The first is that it would be futile to resist the historical view that its - or the understanding of it is why the 1946 statute and statutes like that were enacted. It would be futile to resist that.
HAYNE J: Against a background of a view of tort which can now be seen to have moved on.
MR WALKER: That was my second point I was about to say, yes.
HAYNE J: But, the fact that the view of delict has moved on may or may not say anything about whether the view of statutory contravention should be regarded as moving on.
MR WALKER: No. Indeed, against ourselves, we immediately have to grapple with the fact that the utterance of Parliament making, as section 52 did, something actionable in damages which may not have been actionable in damages at all beforehand is an utterance about public policy of the most explicit kind which may give new and different life but with old effect to what the judges had done in Merryweather v Nixan.
HAYNE J: At its most acute, and understanding the example is different, could there be contribution between those who are found liable under criminal compensation legislation to compensate a victim for the assault that they jointly committed upon him or her?
MR WALKER: Your Honour, intuitively, no. The intuition comes from what I was about to say as to my second point concerning the so-called rule in Merryweather v Nixan, that is, that there is a continued public policy which though it may not have anything to do with benefiting from your own wrong, may have a lot to do with ex turpi causa non oritur actio, from the wrongdoing no action arises. The Highwayman's Case suffices as a colourful example.
HAYNE J: Now, accepting that this is not crime, but it is contravention of statute, why should the law permit contribution between those who have contravened the law or at the suit of someone who has, not simply between?
MR WALKER: Your Honours, can I try to steer between two poles, at the moment. There is Merryweather v Nixan, on the one hand, and what may or may not have happened to it, and there is, for convenience, both the facts and reasoning of Justice Gummow's decision in Street v Retravision to which I will come back, but it is behind the answer I am now embarking on. Merryweather v Nixan, in the manner explained by Justice Lehane in his reasons from which this appeal is brought, was a decision at a time when - whether one calls it delict or tort, but using the word there used "tort" - the understanding of what I will call the characteristic of unlawfulness of the conduct giving rise to such liability was very different from what it is nowadays.
In particular, there were still, if that is the right word, or at least there were then, colours of moral disapproval which are difficult to maintain in a world or burgeoning tortious liability for negligence where the standard of reasonable care may be breached by conduct that in ordinary parlance we might call careless but would find difficult morally to disapprove unless we lived perfect lives ourselves.
There "but for the grace of" is a proper moral reaction to the plight of people held liable in negligence nowadays. There is no trace whatever of that view, particularly of liability and negligence, in Lord Kenyon's comments in Merryweather v Nixan.
If it be correct then that the notion of tortious liability as something which is unlawful only in a very general and low level sense of being something upon which the law visits adverse consequences, if that be correct now, then the application of the very briefly and perfunctorily reasoned approach in Merryweather v Nixan to the multifarious positions of both statutory and general law liabilities nowadays would be open to question because it is far too simplistic an approach to have been taken continually in light of new and different kinds of liability arising, importantly, as in section 52's case, even in the absence of negligence, simply being wrong, being unfortunately wrong, being unwittingly wrong will impose a section 52 obligation.
It would be extraordinary if the ex turpi causa approach of Merryweather v Nixan could really be applied to section 52 liability without any intentionality, without any malevolence, without even any carelessness being involved, the Latin adjective "turpis" would have been totally eviscerated of substantive meaning.
HAYNE J: Does it at least reflect on what is meant by "common interest"?
MR WALKER: It does, your Honour. That is where we are headed.
McHUGH J: It certainly does, does it not?
MR WALKER: Yes.
McHUGH J: Because is not the true principle really this, that where in substance there is an equality in the nature of the obligations that two or more persons owe to a third person, equity insists that they should share the payment or indemnification of that obligation equally and equity, in fact, treats those obligations as if they were the same and in the same instrument? That is what is meant when one talks about the commonality of burden.
MR WALKER: And whether one means common interest, or common end, or common purpose, and end or purpose have, in our submission, been understood in a sense different from how they should be understood by arguments which equate them in ordinary English with common design.
McHUGH J: Is that not part of the problem with Justice Lehane's judgment in this particular case, that he proceeds on the payment being a benefit theory?
MR WALKER: May I come back to that?
McHUGH J: Yes.
MR WALKER: Yes, your Honour, I have to deal with that. My learned friend, after all, started this appeal by conveniently identifying the error which provides his point of departure.
McHUGH J: We have just got off what Justice Hayne was asking about, and I joined in to talk about - that the real basis is that in substance there is inequality in the nature of the obligations. Does not that throw up the real question in this case as to whether you can really say there is inequality in the nature of the obligations, or, as was said by the Privy Council, the obligations of the same level when one constitutes a breach of this legislation and the other one is an action in tort?
MR WALKER: We prefer to put contract, if only to distance ourselves, but I suspect that is mere superstition on our part, but contract will do.
HAYNE J: But even more fundamentally, the interests of the two persons liable here were fundamentally opposed and they were opposed in the sense that one is held liable for not discovering, or not advising about discovery of, the misleading and deceptive conduct of the other.
MR WALKER: It is very hard for me to construct an argument that entirely refutes what your Honour has just put but the way in which my learned friend answered your Honours on that point left out of account something which was obviously important at trial - there was cross-examination upon it - and plays a role in the reasoning of all the judges below, particularly Justices Heerey and Lehane. I will come to it later, but it is clause 11.3 of the contract. One finds it, for convenience, at appeal book page 95, paragraph 60:
"The Vendor makes no warranty as to the solvency or financial standing of any tenant and the purchaser is taken to have satisfied itself in this regard."
Now it was the vendor's agent, Raine & Horne, which had made the high quality representation, which is at the heart of the misleading and deceptive conduct sheeted home to my clients, but it was made in dealings which included a draft contract including that clause. Mr Burke's evidence about that clause was part of the evidence which the trial judge described as striking him as disingenuous and it is suffice to say that in light of expert evidence, including that of Mr Moses, to which your Honour Justice McHugh has referred, and also the late Mr Macquarie, from the Illawarra, there was a finding that with a provision like that in a proposed dealing of considerable moment by which a client is buying a property whose value inheres mostly in its revenue stream, or certainly importantly in its revenue stream, that to do nothing by way of inquiry would be careless.
Your Honours Justice Callinan has raised, as others of your Honours have raised, difficulties factually with that finding, but it is not challenged, and those conflicts, those contests are now over. In short, if one were to ask a tenant, "Are you up to date?", far from being put off that by the possibility of being thought impertinent, one would have thought that a response of other than open book would be enough to put one off. There is no practical difficulty in saying to Woolworths, "I want to know if you are up to date", and if Woolworths said, "None of your business", to somebody who was an incoming landlord, one would be entitled to think all was not well.
CALLINAN J: What about the inducement though, Mr Walker?
MR WALKER: That is also a "no contest" now.
CALLINAN J: I understand that, but it really completes the picture; there was another aspect.
MR WALKER: There is even more to the picture, as your Honour knows from the reasons below, but stripped to its essentials on this point, there is no doubt that on the one hand the brochure referring to high quality tenant and non-disclosure of the $60,000 incentive as characterised by their Honours, that is to be held to have induced, in the relevant sense, that is materially contributed to, the conduct of the purchaser in paying what the valuation evidence, which was also a huge contest, showed was a property worth less the day it was bought than the price which was paid for it. There is no doubt about that.
CALLINAN J: What about the other factor? What importance, if any, did it assume? That was the payment that the vendor made to Mr and Mrs Slatyer, the loan.
MR WALKER: The so-called bribe. Although it finds a position in my learned friend's written submissions, it is perhaps not surprising it finds no part in his address because it played no part in the findings of fact concerning either the inducing or what would have happened in the hypothetical case which is required, as your Honour Justice Hayne has pointed out, in assessing damages, nor did it play any part in the factual findings concerning what would have happened if the solicitor had done his work properly.
CALLINAN J: There was a finding that those events occurred though, Mr Walker, is that right?
MR WALKER: There are findings about an arrangement. I will have those references - - -
CALLINAN J: At 105, I think it is, is it not?
MR WALKER: That is not the only reference, but your Honour is right. At paragraph 92 the story is told starting at the foot of 104 appeal book, because this was thought to be relevant to the result of hypothetical inquiries by Hanave. That is, what would have happened if there had been the inquiries? That should have been advised by the solicitor. Paragraph 95, appeal book 106:
Counsel for the appellants argued that this amounted to a bribe to Mr Slatyer -
Mr Slatyer, your Honours, was the guiding mind, if that is the right expression, for Barbara's Storehouse -
not to talk to a purchaser. In those circumstances, counsel submitted, it cannot be inferred that Mr Burke would have been told the truth.
So this was a fall-back answer to the argument which in the courts below, as your Honours know, was a causation argument and not merely a contribution argument.
McHUGH J: When you look at the conduct of various parties in this case, it is no wonder there is a need for a Trade Practices Act.
MR WALKER: "In pari delicto" is another piece of Latin that springs to mind, your Honours, except, and very importantly, as Justice Lehane pointed out, the Court should not equate Mr Burke with Hanave. Not only were there other directors but, as Justice Lehane points out, it was a trustee. There are beneficiaries about which we know nothing. This is not a case where Mr Burke can consult his own private interests according to the record, so we cannot equate the whole.
CALLINAN J: Mr Walker, if we were purely in equity, the Court would be entitled to have regard to that conduct in approaching the principal of Barbara's Storehouse - Mr Slatyer, is it? Yes. Would not that be right - the colourable conduct that would bear on the question of "clean hands" if we are in equity?
MR WALKER: If one goes to the first instance findings quoted in paragraph 94 at appeal book 105 around line 50:
However, it is relatively clear that Slatyer was seizing the opportunity created by the impending sale of the property to seek a commercial advantage from Jagar.
Mr Slatyer does not emerge, your Honours, with credit from any of this.
He did so by demanding the payment of money. It is also relatively clear that both Tresidder and Glew -
and those are the second and third respondents before your Honours -
were prepared to accede to Slatyer's demand in order to pacify him, in the sense of offering him a sufficient inducement not to speak to the purchaser of the property.
Pausing there, your Honour Justice Callinan, I suppose that is both the height and the nub of the matter that one might have looked at, had a "clean hands" argument ever been run.
An element in pacifying Slatyer was Glew's offer to see the purchaser with Slatyer if Slatyer had a purchaser for the business.
That is the Barbara's Storehouse business.
I do not infer that the offer was made because Glew knew that Barbara's Storehouse could not pay the rent.
That is not quite as bad as one might have thought.
Glew and Tresidder were anxious to ensure that Slatyer did not say anything which would deter the purchaser from buying the property.
That does not look too good.
It is not entirely clear why there was a delay of nearly a month . . . Glew's evidence was that he had no idea and Tresidder was not asked directly about the issue. Tresidder did say, however, that after the arrangement was reached he gave thought to how he could avoid paying Slatyer the money.
The Highwayman's Case comes more and more to mind. In any event, what can be said is that it did not play a role in the findings of fact about causal connections which had been much traversed in two trials and two appeals and are no longer contested. This is not a case which gave rise to the kind of issues that this Court has recently looked at in Henville v Walker. There are not causal questions now of that kind. There may once have been. There are not now.
CALLINAN J: But even though that may not have a bearing on cause, if it is relevant there are findings of fact which may or may not - you would submit, of course, are not - but arguably might be relevant to other issues which are still live. Specifically, the extent to which equitable principles are to be invoked and applied. In short, the "clean hands" argument, if it is available.
MR WALKER: I should not talk in general terms about the pleadings. I should take your Honours to them. It is page 40 of the appeal book. If there is "clean hands", this is where it will be found. In 8ii there is a reference to the allegation in the main pleading that it was the:
contravention of sec 52 -
by my clients that -
prevented the said William Robert Burke from discovering matters -
Well, that has been rejected and Mr Burke did not sue. In 8iii there is a characterisation of the cross-claim said to be effectively pleading "contributory negligence". That does not advance the matter. In 8iv it is said that that character of claim:
contributory negligence is impermissible because the said William Robert Burke did not make the said inquiries due to the misleading and deceptive conduct of the respondents.
That is not factually made out and, again, does not - - -
GAUDRON ACJ: Were there any findings about - - -
MR WALKER: Lack of "clean hands"? No.
GAUDRON ACJ: No, no. Were there any findings about Mr Burke's state of mind, though?
MR WALKER: Yes, there are.
GAUDRON ACJ: Well, perhaps you can come back to it.
MR WALKER: In particular with respect to warranty 11.3, to which I have referred, clause 11.3, there is a finding to which I will give you a reference to the effect that he may have misunderstood that. Mind you, it would appear he misunderstood it as being entirely futurative rather than speaking as at the date of the contract which, with respect, would tend to make as to the expectation of continued receipt of rent the matter all the more important to investigate as to the present state of affairs.
There was a reference concerning Mr Burke's state of mind on that matter, your Honours, in the passage appeal book 52 commencing paragraph 16 and then running through with the quotation - this is at trial, Justice Moore - running through to page 54 paragraph 18. I think that is the complete answer to your Honour Justice Gaudron. If there is something to supplement we will supply that.
Your Honours, could I go back really to an answer to your Honour Justice Hayne's question? I flagged that I would be referring to Justice Gummow's decision, and particularly the factual position of that with respect to the rule in Merryweather v Nixan, what your Honour asked me concerning contravention of statute.
Contravention is, perhaps, not the right word in Street v Retravision [1995] FCA 1197; 56 FCR 588 but, as a matter of what I will call public policy, there could not be a hair's-breadth difference because the provisions in question were those provisions which visited liability upon those who were responsible for the management of a company which trades insolvently. So the public policy of visiting financial consequence upon someone who does something which Parliament does not wish to happen is very close in its nature to the consequence financially visited upon somebody who contravenes another norm which Parliament puts in place, namely no misleading or deceptive conduct.
One can go, in particular - first of all, one conveniently finds section 592 of the Corporations Law, which was in question, set out at 56 FCR 592. We draw to attention, as his Honour draws to attention twice in his reasons, subsection (5) which is part of an argument to answer the overall question, "How can there be contribution in the face of the Trade Practices Act?" Well, in the Corporations Law subsection (5) made it clear there could be no liability which would comprehend anything in the nature of contribution sought by somebody liable to pay under that provision, and one hopes, for a self-evident reason, bearing in mind the purpose of that loss-spreading provision.
HAYNE J: But account must also be taken of 594, Mr Walker.
MR WALKER: Yes, your Honour.
HAYNE J: And there is nothing in 592(1) "effected any right of a person to indemnity, subrogation or contribution" - an explicit legislative recognition in section 594 that - - -
MR WALKER: Quite, but on the same page, at G, your Honour sees there - and this is on the same level, same degree, same kind matter that underlay his Honour's actual decision:
That the obligation of the class is not in the same degree as the obligation of those who have given an indemnity or guarantee is emphasised by s 592(5) . . . Persons who had given an indemnity or guarantee would have a right of exoneration by the debtor company.
HAYNE J: Yes.
MR WALKER: At page 595 between A and B:
However, if liability to pay a debt incurred by a company has been imposed by s 592(1), payment by a person so liable of the whole or any part of that debt does not render the company liable to recoup that person: s 592(5).
Now, that played a part, clearly enough, in his Honour's reasoning as to the difference of level of liability which was the ratio for his decision in that case. There is no provision in any way resembling or bringing about the same result as section 592(5) of the Corporations Law referred to in Street's Case in the Trade Practices Act. There is nothing in the Trade Practices Act which says, in effect, as a rider or kicker to sections 82 and 87, "And nothing may be done, whether by way of guarantee, contract or contribution to share this loss", just as nothing is said to make it an uninsurable liability, that is, nothing is said to render illegal a contract of indemnity against such a liability.
Why would, in public policy, one expect that when the critical feature of section 52 which renders directly Merryweather v Nixan inapt, plus also by extension on this argument prevents the statute from excluding contribution? The critical feature is that section 52 liability may be imposed, and often is, in the absence of anything which would attract moral opprobrium or even disapproval. No negligence, no fraud, and sometimes even no knowledge.
So, for those reasons, in our submission, finally in answer to your Honour Justice Hayne, one reason why contravention of a statute which sounds a serious matter, and no doubt is, ought not, of itself, exclude a right of contribution is that there is lacking entirely that which was understood in Merryweather v Nixan to be the reason why there could not be contribution, that is, what I will call the antisocial or immoral aspect of tort, and, second, there is not the express provision which one would expect to find in a new statutory code for this kind of liability of a kind which Parliament has well and truly demonstrated by provisions such as section 592(5) of the Corporations Law could be done, had they so chosen.
McHUGH J: Well, that may be right as a matter of theory, but in practice, it may be that there are very few cases where a person liable under a statute can obtain contribution, because the nature of the obligations are so very different.
MR WALKER: Can I - - -
McHUGH J: Yes.
MR WALKER: I am sorry, I may have interrupted your Honour.
McHUGH J: I mean, the BP Case might be said to be an exceptional case because they are both, in effect, liabilities for breach of a duty of care: one imposed by statute, one imposed by common law.
MR WALKER: Your Honours, try as I might, I am conscious every time I speak about Scottish law that I am sure to make a mistake. Can I step back from the Shetlands, I think it was, for a moment and go back to Albion. I mean Albion the case, not the country. That is Albion Insurance Co Ltd v Government Insurance Office (NSW) [1969] HCA 55; (1969) 121 CLR 342. It may at first sight be thought, "Well, this is a case about insurance". They are obviously the same kind.
McHUGH J: But Justice Kitto specifically said in Albion that the liability arose from the fact that each was contract of indemnity, so the nature of the obligations was the same.
MR WALKER: Yes, your Honour, but he came to that conclusion with respect to liabilities - or engagements - I will use another word first - with respect to engagements which were capable of giving rise to certain liabilities which were themselves sufficiently different so as to make it plain, and we would say beyond peradventure of doubt, that when one talks about similarity in this area, one is talking at a level of generality which either ignores, or is not fazed by, real legal differences. The real legal difference in that case, after all, had been dealt with - and with great respect, not unrespectably dealt with - by Mr Justice Myers in the case which was followed at first instance by Mr Justice Street, pointing out that there is a difference between an insurance for workers compensation liability which does not require negligence and an insurance for liability sounding in negligence. That is a difference, without doubt.
McHUGH J: That was what Justice Kitto set out to answer at 352, when he - - -
MR WALKER: Quite so, and in so doing, elevates this notion of similarity to a level of generality which says of certain distinctions, which are real distinctions in law, real distinctions for certain factual cases, it means that, in some cases, the workers compensation policy would bite and the motor vehicle would not bite, for example.
McHUGH J: But it is a - - -
MR WALKER: In this case, they had both bitten, and the intersection, where they had both bitten to compensate for the same loss, being the liability found with respect to the injured worker - that is what brought in the right of contribution, and for the reasons that your Honour Justice McHugh has been putting to me. What that certainly demonstrates is that the engagement does not have to be the same and, for the reasons elaborated by Justice Gummow in Street, neither need the cause of action be the same, so long as what we will call, with great respect, the liability - meaning the burden, not the liability meaning the capacity to be sued, but the liability meaning the burden - is, in the particular case - all these cases are driven by their particulars - in this particular case, is the same.
HAYNE J: Well, by that do you mean only that the damages awarded would be identical?
MR WALKER: Be it damages by way of compensation or money relief by way of ordering performance of a money obligation, yes, your Honour.
HAYNE J: So do you thereby challenge the proposition that common interest, same nature, other expressions which find their place here, are irrelevant considerations?
MR WALKER: No, they are not irrelevant.
HAYNE J: Why is it not enough, on your argument, to find bare identity of award? What more, if anything, do you say must be found?
McHUGH J: Can I add to that, it seems to me in substance you are really saying liability to payment is enough.
MR WALKER: And I would understand, with respect, that that is very similar to what Justice Hayne has just asked me. Can I work backwards. The first thing is without liability to same award or payment, subject to the qualifications that need to be uttered for guarantees and insurance, to which I will come in a moment, then there will be no right of contribution. We accept the suggestions in the case law that if, for example, the measure of damages - not this case, but maybe another case - and I should not use just damages, the measure of monetary remedy be materially different, then contribution would not apply.
Now, your Honours, I apologise for the fact that one retreats again into circularity or assumed conclusions, but whatever co-ordinate liability means, it appears to require a tolerable, perhaps almost exact, identity of what your Honour Justice Hayne has called "award", what Justice McHugh has called "the liability to be paid".
HAYNE J: Well, here we have a case of at least assumed or demonstrated identity of award.
MR WALKER: Yes. Now, there is a very important qualification to that, important if only because it comes from the area out of which it would appear this right springs, historically. In both insurance and in the later analogous class surety, it is clear that contribution is not defeated by the fact that some insurers may have unlimited indemnity, others may have limited indemnity, some sureties may have unlimited liability, some sureties may only be liable up to a certain amount. So long as they are liable with respect to the same, I am going to call it "accident", again in an old-fashioned sense, then relevantly in the particular case the intersection of their perhaps different and, until contribution claim is made, perhaps mutually unknown, engagements be known, once that intersection is demonstrated they have that similarity, as it was said in Albion, of risk.
HAYNE J: But how then do you accommodate the different level of surety cases like Scholefield Goodman to which Justice Gummow referred in Street?
McHUGH J: And Justice Dixon's question in Spicer as to whether there was an inequality of obligations or were they primary and secondary obligations. The same concept is there.
MR WALKER: In one sense I seek to sidestep that by disavowing any intent to escape the strictures of same level or whatever co-ordinate may mean. In other words, I accept that I lose if your Honours hold that, as understood in the cases hitherto, we are not on the same level of liability.
McHUGH J: Well, can I put to you about the same level. You see, you insist on suing on the contract.
MR WALKER: Well, I think we did raise both.
McHUGH J: But the contractual obligation arises by virtue of a voluntary agreement, so it is an obligation arising out of the voluntary imposition of the parties on each other. The other obligation is imposed by law. So they are two different types of obligations. One is a consensual obligation. The other one is an obligation imposed by law.
MR WALKER: Again, it depends at the level at which one traces what I have called in very general terms "the engagement". If one makes utterances in trade or commerce, voluntariness may be assumed; utterances do not happen inadvertently. It is only in a relatively remote and abstruse sense that it therefore becomes a voluntary liability or engagement that one is, by being bound by section 52, liable to make good any losses caused by people relying upon what one says, which happens to be wrong or misleading or deceptive.
McHUGH J: Can I put to you for your assistance, because this is what troubles me. I am naïve enough to believe that the rules of the common law and equity should basically accord with common sense and ordinary notions of justice. Here, your client has been guilty of making a misrepresentation in commerce under which the client got $750,000 more than it ought to have, and now in substance it wants to keep $375,000 of it so it will profit by $375,000 and make a person who received no benefit pay that $375,000. It just seems to me it is completely wrong and that if the rules of the common law or equity lead to that result, that one has to examine one's premises.
HAYNE J: Especially is that so, so that you may see all the knives in the napkin, at least for the moment - - -
MR WALKER: Some of them at least, your Honour.
HAYNE J: - - - in circumstances where there is a contradiction or conflict between the interests of the two parties whom you seek to have contribute.
MR WALKER: Yes.
GAUDRON ACJ: Added to that, where the duty you assert is to find out that you have breached the Act.
MR WALKER: That last may be a little unfair, your Honour, in a sense that - - -
HAYNE J: It is uncomfortable.
MR WALKER: It is certainly uncomfortable.
GAUDRON ACJ: I put it in those terms because in a way - I hate to mention it, but it seems to me that we may be talking about not simply different levels of liability but different levels of causation and that you might, in fact, be driven back to the notion of causation in section 82 and section 87.
MR WALKER: Your Honours, there is a deal of reason on reading the judgments in this case to see it as a case where the issue of causation, including that which might be called "concurrent liability"; I appreciate that is a tendentious expression, but "alleged concurrent liability", may have played a different role, one suspects both at trial but certainly on intermediate appeal, different from what was in fact ventilated. Special leave was not sought. In fact, it does not appear to have been argued in the Full Court on that ground at all, or not recognisably so. It does not appear in the reasons in the Full Court. Special leave was not sought on that basis and, although causation is clearly something about which one thinks on reading these judgments, your Honours, it has not been an issue in this appeal.
GAUDRON ACJ: I know it has not been, but there is something about it there. For example, let me put it this way. There would be no way, I take it, that your client could argue that the solicitor's neglect broke the chain of causation?
MR WALKER: I suspect that that was argued, your Honour, but I do not argue it.
GAUDRON ACJ: Then what did it do? In this respect you come to the difference between a positive act and an omission.
MR WALKER: There was both in this case, your Honour. There was the positive act of high quality tenant and there was the omission of the incentive.
GAUDRON ACJ: No, forget yours. You have a positive act. The solicitor only has against him an omission. It seems to me that somehow that makes a difference, or should make a difference, although I do not know why. It seems to me that is why, when you come to what Justice McHugh said, you feel uncomfortable with the notion that the person who is guilty simply of an omission should be asked to contribute to the positive act.
MR WALKER: Your Honours, can I first say this, that it is no part of our argument to deprecate the use of judicial intuition of that kind, and in particular it is no part of our argument that this is an area of law where what your Honour calls common sense is out of place. Indeed, a lot of our argument stands or falls on the proposition that whatever the phraseology one employs, what was called in the 18th century the natural justice or the justice of the thing or the equity of the thing in a sense transcending Chancery, is the be-all and end-all of the doctrine. That does not mean that it is a palm tree justice doctrine, far from it, but it does mean that results ought to satisfy principles which are expressed in terms which provide favourable rather than unfavourable intuitive responses of the kind your Honours have just raised with me.
None of our argument should be understood as departing from that. Indeed, that is one of the reasons why, in answer to the question about Merryweather v Nixan, we called in aid the change in both the number and range of civil liabilities, particularly under statutes, which, being imposed upon people in trade or commerce or otherwise, give rise to a question whether they should bear the burden alone when others also owe civil liabilities to make good the same loss. That is not the expression of the principle but is the expression of the question which gives rise to whether impressionistic or intuitive responses in particular cases.
Once one puts to one side the ex turpi causa approach, the disapproval of the moral quality of the contribution plaintiff and its conduct as, in our submission, one should, one then goes to the question as to whether or not there is a sufficient relation not between the contribution plaintiff and defendant in an antecedent fashion but a relation in terms of the natural justice and equity of the position brought about by judgment against one of them and not against the other for a loss for which both are liable to compensate. I am now using the language not generally of engagement such as insurance and guarantee, but I am using the language of civil liability generally.
GAUDRON ACJ: It seems to me in putting it that way you are in effect putting it that the only thing that is relevant by way of disentitlement, assuming the relationship, is what you have referred to as "ex turpi causa" or "clean hands" or what have you. But there may be an estoppel operating there that is a disentitlement as well, may there not?
MR WALKER: Not in this case, your Honour.
GAUDRON ACJ: Well I just wonder whether, if you go around saying the trees are green, to put it neutrally, you can be heard to say, "He should have found out that the trees were bare".
MR WALKER: Yes.
GAUDRON ACJ: And certainly there are some cases where you are disentitled by your own misrepresentation from going behind them or your own representation.
MR WALKER: Whether it be framed in causation terms or in more fundamental terms concerning the nature of the responsibility for conduct measured against the section 52 norm, this Court has quite a few times looked at, what I will call, the standard of self-care, which is either required or not required, in order for a plaintiff to recover and, plainly enough, the law does not require that somebody who has sought information from another is bound not to rely on it. Now that is the simplest way we can think of to put on it. That would be absurd; bad for commerce, bad for morals, one would have thought.
So that if one is looking at a basal policy approach to this question, the discouragement of reliance would be abandoned as a mainspring of the law in this area. On the other hand, there will be, as the cases have recognised, if only in theory, cases where lack of care for one's own interest is so extravagant or cavalier as to prevent injustice, the defendant being held liable. It is not easy to look to authorities where that is actually the case.
GAUDRON ACJ: No, but you have to say something like, it was unreasonable for him.
MR WALKER: Yes. It is very difficult however for me to put before you, because they do not exist, a suite of authorities decided cases, let alone in this Court or in Full Courts, which enables one to understand, as it were, the level of self-care, which needs to be breached, in order for a defendant to escape on that ground. It is not just reasonableness in the sense that one understands in the law of negligence, for example, and it would not appear to be reasonableness in the sense one understands it in terms of contributory negligence and, in any event, contributory negligence finds no part in the Trade Practices Act.
Now that, of course, is a matter which falls out from Henville v Walker and it is a matter which might be thought, on a very broad view of matters, to be against our position. However, we answer it thus: contributory negligence is a matter between plaintiff and defendant; contribution does not affect the plaintiff's statutory entitlement at all. There is a conceptual difference, a yawning gap, between, on the one hand, a doctrine, namely contributory negligence being a defence or breaking causation, which cannot possibly stand in the fact of sections 52, 82 and 87 and, on the other hand, a doctrine which attaches to liabilities, whether imposed by statute, contract or the like and looks to a liability to make good the same loss or to bear the same burden, and that is one of the reasons how we answer, what might have been, a reliance upon Henville v Walker.
Your Honours, I will stand corrected. I have to proceed upon the trace of matters that one finds in the appeal book. There does not seem to have been explored factually the question whether the retainer - which, after all, Mr Burke resisted all the way up to the Full Court as even existing, but now accepts - was seen by him as one where he could discharge the duty of care - be it contractual or tortious does not matter for this - by relying upon what the real estate agents said about the tenants, namely, high quality. Not surprisingly, because, however he may have read clause 11.3, he was told that the purchaser was going to be bound by the result of its own inquiries which is a polite way of saying your risk, not our risk, as to the quality of the tenant.
Now, without being excessively cynical about puffs and the like in all commerce, but particularly real estate transactions, it is nonetheless of importance that the way this case was run factually below does not include the proposition, and certainly yields no favourable findings to Mr Burke, to the effect that he was put off that which he would otherwise have done by reason of the Raine and Horne brochure. If that were the case, that may have cast a very different light on matters. Mind you, it would appear also to have given rise to the occasion for a second cross-claim. This one, unquestionably within federal jurisdiction, namely, a section 52 claim by Mr Burke personally against either the real estate agent or its principal, arguing that if there be any liability in Mr Burke for his breach of duty owed to his client, then it was brought about by conduct on his part, in turn induced by - that is, caused by - the breach of the real estate agent or its principal.
GAUDRON ACJ: Now, that is what I thought was pleaded. That is why I asked you were there any factual findings about his state of mind.
MR WALKER: Your Honour, what I have just referred to is an actual claim under section 52 by Mr Burke against someone else - one of my clients or its agent. That is not only not pleaded, that was not instituted.
GAUDRON ACJ: I mean, it does not have to be pleaded. It seems to me if you concede as much as you have, then you concede it must be a defence to a claim for contribution or an answer to a claim for contribution.
MR WALKER: Yes, and - - -
GAUDRON ACJ: It would seem to me that that precisely was what was pleaded, but pleaded as an answer to the claim for contribution.
MR WALKER: Yes.
GAUDRON ACJ: But it does not seem to have the factual findings.
MR WALKER: No. I think your Honour in particular is referring to paragraph 8(ii) on page 40 of the appeal book. I am not sure.
GAUDRON ACJ: In particular, 8(v).
MR WALKER: Is it (v)? Yes, I am sorry.
GAUDRON ACJ: Although they refer to it as contributory negligence - - -
MR WALKER: Yes, that is right. It is 8(v), your Honour.
GAUDRON ACJ: - - - which seems to me to be as good as a way of describing your claim as - - -
MR WALKER: We do not take a point about that language.
GAUDRON ACJ: You see, it has it in (iv) - - -
MR WALKER: (iv) is even more direct.
GAUDRON ACJ: Yes. It is in (ii) - - -
MR WALKER: No claim for relief is made under section 52.
GAUDRON ACJ: No.
MR WALKER: The plea of what I will - - -
GAUDRON ACJ: Without a claim for relief, why would it not be an answer, as I understand it is, to a claim for contribution: "Well, you have to indemnify me because". And I would have thought, once we moved to the modern form of pleadings, that precisely was really what it was saying.
MR WALKER: I do not take a pleading point about the infelicitous use of the expression "contributory negligence". I take a real pleading point about the lack of any claim under section 52. There was no claim before the court.
GAUDRON ACJ: It is plain that he was misled and deceived by the conduct.
HAYNE J: This is an answer. It is pleaded as an answer, not as a claim.
GAUDRON ACJ: And if you wanted to have it in traditional equity pleading terms I suppose you would say, "Not liable to contribute because LFOT or somebody is liable to indemnify me by reason that it engaged in false or misleading conduct upon which I rely".
MR WALKER: Can I take your Honours beyond page 40 where the pleading was, then to the second trial where some findings were made, starting at page 56 of the appeal book, paragraph 28 at the foot of that page. His Honour Justice Moore then turns to the question and in the succeeding part of paragraph 28 encapsulates the appellate history of the liability and causation decision, and then on page 57 at about line 15 or so:
Kiefel J appears to have accepted, however, that Burke had been careless and his carelessness may, at the least, have contributed or did contribute to Hanave's decision to purchase but, as a matter of law, that carelessness provided no answer to a claim founded on the combined operation of ss 52 and 82 -
we note not 87 -
of the TP Act. Wilcox J did not expressly deal with Burke's carelessness but his Honour can be taken to have agreed with Kiefel J's observations given his general agreement with her Honour's reasons -
et cetera. Paragraph 29:
It must be assumed that - - -
GAUDRON ACJ: Yes, but this is the critical part, is it not?
MR WALKER: Yes -
that Burke, as director of Hanave, was induced into believing that each of the tenants, and in particular Barbara's Storehouse, was a high quality tenant by the combined effect of the property report which he was sent on 28 June 1994 and the draft contract he was sent on 11 July 1994 which did not disclose the incentive payments.
GAUDRON ACJ: Now, does that not entitle him to indemnity against you?
MR WALKER: That is the question, your Honour, yes.
GAUDRON ACJ: If it does, does that not defeat your claim for contribution?
MR WALKER: Yes, unquestionably. That would remove it from being the same level. You cannot have contribution from somebody to whom you owe indemnity. That much must be true in principle and natural justice and equity would require that, in any event.
Now there is, in fact, in the notice of appeal - I am sorry to jump around, your Honours, but it is apposite to what your Honour Justice Gaudron has just raised. There is, in fact, a claim in ground 5 to that indemnity, page 125 of the appeal book, ground 5:
The court should have found that the conduct of the Respondents being proscribed by s.52 of the Trade Practices Act would entitle the First Appellant to an indemnity from the First & Second Respondents and thus was a bar to making any order for contribution.
Now, we have no quarrel with the consequence, everything that follows thus must be right. However, it is what precedes the premise which is difficult to see in the way this case was fought and decided. The claim for indemnity does not figure in the reasons below. The ground upon which it was sought does not figure.
GAUDRON ACJ: But if you look at that sentence, at line 29 on page 57, "It must be assumed", now I do not know why it must be assumed.
MR WALKER: Yes, I think his Honour is accepting the findings of the Full Court contrary to his own at that point.
CALLINAN J: Under some degree of protest when you look at line 5.
MR WALKER: That is for your Honour to say, not me, but, yes. Yes, I think that is why he says that.
GAUDRON ACJ: If it is assumed that Burke - and it is all very well to say, as director, and I do not think it matters - if he was induced into believing by reason of the misleading statements, then why is he not entitled to claim indemnity?
MR WALKER: Partly, at least, because of then the findings of fact which include taking into account all the expert evidence, as well as the trial judge's assessment of Mr Burke in the witness box.
HAYNE J: But if he was not deceived - if Burke was not deceived, how could the 52 claim have succeeded? Burke was a director, was he not?
MR WALKER: Yes, and he is relevantly the controlling mind for the purposes of the reliance of Hanave.
HAYNE J: So, if he was not misled and deceived, the 52 claim necessarily would have failed?
MR WALKER: On the facts of this case which are exiguous as to the role of other natural persons in Hanave's affairs, yes, your Honour. I am bound to answer a simple "Yes" to your Honour.
HAYNE J: Yes. Therefore, it is not a matter of assumption, is it, that Burke was misled and deceived?
MR WALKER: No, it is a finding. It may not be there but it is elsewhere.
HAYNE J: It is a finding that Burke was misled and deceived by what was done.
MR WALKER: That was what the trial judge rejected the first time around and was corrected on in the Full Court the first time around.
CALLINAN J: That is why he said, "I have to find, I must assume, I must accept that Mr Burke was misled, otherwise I could not have been reversed on this issue".
MR WALKER: That is right, to which we add, as well - - -
HAYNE J: He was careless to be misled because he, for a dozen reasons, should have gone on to make some inquiries, but if it was - - -
MR WALKER: If it rested at "he was careless to be misled", I would be in all the trouble that comes whenever a section 52 defendant, in effect, says, "You shouldn't have relied on me. Why rely on me?" That would be real trouble for us. It may be we are in that trouble, but the facts of this case which were obviously not fully adumbrated in the evidence - we do not know much about the management of Hanave. We are, as it were, assured by the appellants, "Just treat Mr Burke as Hanave". As Justice Lehane points out, that is a bit odd, bearing in mind as a trustee with beneficiaries about whom we know very little.
But there was also the stout resistance leading to strictures upon his reliability as a witness by Mr Burke under cross-examination as to his acting as solicitor and there were finally findings accepted in this Court, but only after resistance at all the hearings below, there is now an acceptance, Mr Burke comes to this Court as somebody accepting that he was under obligations, as a solicitor to Hanave, not just as a director to Hanave, before exchange of contracts. Certainly after exchange of contracts, he is named as the solicitor in the contract. Notwithstanding being named as solicitor in the contract he says, presumably, it was only upon exchange with those words typed in as "purchaser's solicitor" that he actually became a solicitor. The courts below have united in rejecting that. Now, it is against that background that the importance of paragraph 29, for the present case, which is highly particular on its facts, comes into play. Your Honours, is that a convenient time?
GAUDRON ACJ: How much longer do you expect to be, Mr Walker?
MR WALKER: About another 40 minutes, I think, your Honour.
GAUDRON ACJ: How long would you be in reply, Mr McVay?
MR McVAY: I do not plan any at the moment.
GAUDRON ACJ: You do not plan any. We will adjourn now, but we will resume at 2 o'clock. There are some other business that the Court will need to attend to this afternoon, so we will be relying on your statement as to the times you require.
MR WALKER: I will try to make shorter, your Honour.
GAUDRON ACJ: Yes, thank you. The Court will now adjourn until 2 o'clock.
AT 12.44 PM LUNCHEON ADJOURNMENTUPON RESUMING AT 2.01 PM:
GAUDRON ACJ: Yes, thank you, Mr Walker.
MR WALKER: In answering a number of your Honours' questions about the interaction of the now dead issue of causation, once very live, about the nature of the comparison between the quality of my client's breach of section 52 and my friend's client's breach of his solicitor's duty, I was about to take your Honours' to what are, in answer to your Honour Justice Gaudron, the relevant findings of fact. They do not take a lot of space, but they are comprehensive.
At trial - I was at paragraph 29 in Justice Moore's second decision and that starts on page 57 of the appeal book. The first sentence we have already been to, which refers to that which is dictated by the Full Court's first decision, namely, that Mr Burke as director of Hanave was induced into a certain belief about the quality of the tenants. In the second sentence, line 39:
However it was when he received the draft contract that he should have appreciated, as Hanave's solicitor, the desirability of undertaking inquiries about the solvency and financial standing of the tenants.
Pausing there to interpolate, it being clear that that contract included, in its draft form, that which it contained in its final form, namely, clause 11.3 to which I have made reference.
There was no practical or commercial reason why those inquiries could not have been undertaken prior to exchange -
and your Honours will recall that his Honour by then had had the benefit of both expert evidence and cross-examination on that point -
and, if properly advised, Hanave would have undertaken them.
That is also a finding based upon having seen and heard witnesses.
In my opinion a cause of Hanave's loss was Burke's failure to advise Hanave to undertake the inquiries.
That is the subject of co-ordinate findings in the Full Court, to which I will be coming.
It is inconceivable, in my opinion, that the combined effect of the description of the tenants as high quality tenants and the failure to disclose the incentive payments would have caused Burke, in his capacity as a director of Hanave, to reach such a level of confidence about the solvency and financial standing of the tenants as to ignore or not act on advice that should have been given about making further inquiries.
CALLINAN J: Mr Walker, that is an inference, is it not, really?
MR WALKER: Yes.
CALLINAN J: An inference from facts. It is not an immediate factual finding, as it were.
MR WALKER: That is right. I accept that.
CALLINAN J: Well, your point is that is not attacked here.
MR WALKER: That is right.
I do not read the reasons of the majority of the Full Court as precluding this conclusion. It is, of course, somewhat artificial -
which is, I think, litotes -
to speak of Burke effectively giving himself advice though it must be borne in mind that it was Hanave which was entitled to the advice.
That is more than just Burke, of course.
However as a practical matter Burke, because he was also acting as Hanave's solicitor, should have realised that further inquiries were desirable because of the terms of clause 11 of the contract and realised there was no impediment to them being made on Hanave's behalf. Had he realised they should have been made, he would have made them on behalf of Hanave even if, in making them, he was doing so in his capacity as director. Had this occurred and had, for example, he read the tenancy files maintained by Jagar -
that is the vendor - my client's former name -
and accessed rent records, the position of the tenants would have been made apparent to Hanave at least in substantial part. Burke, in my opinion, should share the burden with Jagar (and indirectly Tresidder) for the loss Hanave suffered. In my assessment, it is for Burke to bear one half - - -
HAYNE J: Well, is the proposition there that is put, although Mr Burke was misled because he should have made inquiries to dispel the misconception brought about by your client's misleading he should share responsibility with your client who committed the misleading?
MR WALKER: No.
HAYNE J: What is the difference?
MR WALKER: The difference is that the duty on him, particularly triggered by the nature of clause 11 of the draft contract, was one which arose quite regardless of what he had been told or not told about tenants.
HAYNE J: Undoubtedly so, because he had a duty. If he had pursued it, he would have found that he had been misled. He did not. The fact is he was misled. You say because he did not pursue his duty he should share responsibility with the misleader. That is the proposition, is it not?
MR WALKER: Ultimately that is the proposition, but it derives not from the status of having been misled, but from the status of not having, quite independently of what anybody had said to him or not said to him, pursued his duty. It so happens - - -
HAYNE J: A duty to find out that your client had misled?
MR WALKER: No. A duty to find out matters about more than just the high quality and no incentives matter, your Honour; about a somewhat broader topic than that. On the facts of this case, it certainly would have contradicted or disabused him of the burden, or at least the main burden, of the siren song of the real estate agent because, as part of the clause 11 excited inquiry, he would have discovered a number of things, including that Barbara's Storehouse could not sensibly be called a high quality tenant. However, that is a question of a particular element of fact in this case and it does not involve conceptually seeking to make him liable in contribution for having been misled as the human manifestation of the corporate mind of the purchaser.
In the Full Court Justice Lee in paragraph 1 agrees, except on the question of contribution, with the reasons of Justice Heerey. In Justice Heerey's reasons starting at page 107, one has paragraph 99, where his Honour is referring back to the earlier Full Court's decision:
However, the Full Court held that Jagar's -
that is LFOT's -
misrepresentation was an operative cause of the decision to purchase, and the loss thereby sustained. Consistently with this finding, his Honour held that a failure to advise the purchaser to make enquiries by which the falsity of the same misrepresentation would have been discovered was also a cause of the loss.
And that picks up what I think your Honour Justice Hayne has just asked me about.
This conclusion is logically compelling and was well open on the evidence, applying the common law practical or common-sense concept of causation.
Now, that once was a contest between the parties; it has not been raised in this Court. Paragraph 101, at the foot of page 107 of the appeal book:
Both the negligence of Mr Burke and the representation of Jagar (to which Mr Tresidder was a party) were effective causes -
so there are two effective causes isolated -
(albeit not the only causes) of the same loss by Hanave, viz the purchase of a property worth less than the purchase price. There is the further circumstance that both Mr Burke's negligence and Jagar's misrepresentation related to the same subject matter namely the viability of the Barbara's Storehouse/Adelights tenancy.
Finally, on page 120, paragraph 136, Justice Lehane's reasons in the Full Court:
Contribution would not be required, of course, if it were established that Jagar was obliged to indemnify Mr Burke.
I have repeated that concession.
In my view, however, Mr Burke is not entitled to an indemnity simply because it was through him, as the controller of Hanave, that Hanave was led to act to its detriment by the misleading conduct of Jagar.
We interpolate. Before the luncheon adjournment I took your Honours to page 40 of the appeal book, which is the relevant part of the pleading on the part of Mr Burke against the claim for contribution made by my clients, and your Honour Justice Gaudron in particular pointed out that reading with appropriate charity the terminology of that pleading, the point about the role of the section 52 breach in Mr Burke's conduct, which is said to render him negligent, has been raised.
It is still of some moment, however, to observe that nothing in the nature of an indemnity is pleaded or raised on that page and there is a limit to the charity which should be extended to the pleader or to the party for whom the pleading is prepared. Returning to paragraph 136 of Justice Lehane's reasons:
As Hanave's solicitor, Mr Burke had, and breached, duties which he owed irrespective of Jagar's conduct.
There can be no doubt that both the existence of the duty of care and in this case the breach of that duty comes about quite regardless of what was said by the real estate agent on behalf of my client or not.
It is not theoretically impossible that a solicitor in the position of Mr Burke could maintain a claim for an indemnity against a contravener of s 52, such as Jagar. But that would require, I think, that the solicitor (here, Mr Burke) establish that he suffered loss, resulting from his liability for breach of duty, by reason of the contravening conduct.
I have already volunteered before the adjournment, your Honours, that one could perhaps see that either in common law or under the statute. Then, going on:
That causal connection is not established, in this case, merely because Mr Burke caused Hanave to act on the basis of the conduct and thus to suffer loss. It is one thing to say that both Jagar's contravening conduct and Mr Burke's breach of duty were effective causes of the loss suffered by Hanave; it is quite another to say that Jagar's contravening conduct was, relevantly, the cause of the loss sustained by Mr Burke through his liability for breach of his duty as Hanave's solicitor.
HAYNE J: Now, was his Honour right to speak of "the cause"? Surely, in a negligence claim "a cause" would suffice, would it not?
MR WALKER: Yes. It will not make a difference there because, first of all, I, with respect, entirely accept what your Honour says. The indefinite article would have been much better used there. It makes no difference, perhaps because of the previous word "relevantly", because his Honour is not distinguishing between sole or contributing causes in this passage, that is, sole or contributing causes of Mr Burke's conduct. But, with great respect, your Honour is right. Line 10:
In any case, Mr Burke did not clearly plead -
and that, with respect, is a gentle but accurate admonition -
appears not to have sought to make out at trial and certainly did not seek to make out on appeal any such case.
In our submission, it is too late for that to be revived now. One last thing we would say about this indemnity-style argument concerning the relation between my client's section 52 liability and Mr Burke's liability. First, as recently as the written submission by my learned friend, paragraph 27 on page 10, last sentence, there is, without qualification, an acceptance that Mr Burke's "breach was also a cause of the loss". That is the first thing. Second, one does not find, notwithstanding ground 5 of the notice of appeal, an indemnity argued in the written submission. Third, your Honours did not hear that this morning.
McHUGH J: It does seem to have been an issue in the Full Court though, to some extent, because did not Justice Lee decide the case on that basis?
MR WALKER: Do you mean on the contribution point, your Honour?
McHUGH J: On the indemnity point, yes.
MR WALKER: It is difficult to reconstruct exactly how it appeared. It is certainly - that is the relation between the section 52 liability and the solicitor's breach of duty is at the heart of all three judgments on contribution and Justice Lee's dissenting judgment on that point - - -
McHUGH J: I thought he specifically referred to questions of indemnity.
MR WALKER: Yes. Page 86 of the appeal book, paragraph 31, just towards the end of that paragraph, I think is what your Honour has in mind. There is an expression: entitlement "to be indemnified".
McHUGH J: Yes, that is one, but I thought - - -
CALLINAN J: What about page 81, line 15, is it not?
MR WALKER: Yes. Well, that is a principle, I think, recited by all judges - certainly accepted by us, found in the books, and in principle must be correct. That is, there is such an antimony between contribution and indemnity that one cannot have one if the other is going in the opposite direction. While on this question of indemnity, because words have been used in perhaps an unfortunate way by both sides, may I remind your Honours that for some reason our pleading in contribution asked for indemnity and/or contribution, which is, with respect, a solecism in this area.
It seems to have been brought about because of the terms of section 5 of our statute, and I need to remind your Honours, with some embarrassment, that section 5 of our statute was in fact pleaded. It was abandoned but it had been pleaded. That may explain the unfortunate wording of our claim for contribution, which is said to be a claim at law. I do not make too much about that because the word "equity" appears in the record, particularly the reasons. The word "indemnity" has been used in a number of different ways, and one of them was inaptly by us.
So far as what your Honour Justice McHugh has raised, yes, it is true that there is what might be called a "claim over never made" by Mr Burke against my client, which seems to be the shadowy presence which provides the reason for Justice Lee's conclusion. That is met, in our submission, by paragraph 136 of the reasons for judgment, the passage from Justice Lehane concerning the course of the trial apparently, and the course of the appeal certainly, to which reference is made. There is nothing to suggest that Justice Lehane is incorrect in that description of the course of the trial and appeal. It is strongly corroborated by the absence of any such language or concept in the written submissions in this case or, indeed, in the address by my learned friend before the adjournment.
Your Honours, there is one loose end I should have cleared up before the adjournment. In addressing your Honours on Street v Retravision, in extended answer to a question by your Honour Justice Hayne about the availability in the first place at all of contribution with respect to the statutory liability under section 82 of the Trade Practices Act, particularly when your Honour put to me the perhaps significant factor that the liability arises from contravening a statute, it is of importance to note that the provision which is at the basis of Justice Gummow's decision was a provision, as noted by his Honour, which could give rise to criminal consequences - in other words, constitute an offence. So that it is, a fortiori, our case, and it was not in that case held to be a reason why there could not be contribution. There were other reasons in that case.
I have given some references already in Street v Retravision [1995] FCA 1197; 56 FCR 588. The particular references are at page 592, to which I have taken your Honours, 594 G, to which I have taken your Honours, and one could add 599 E.
My learned friend put in chief that there could not be contribution in this case because the Trade Practices Act says my clients are liable to compensate his client, that is, his client the second appellant. Of course, if it were as simple as that, that would also be true of the private dealings - I accept not a statute - comprised by insurance policies or contracts of suretyship. Now, true it is there is a reason why effect should be given to what Parliament says quite differently from the effect which should be given to the transactions of private parties. But the reason does not compel a different result in this case, bearing in mind it is talking about the financial burden to be borne. Perhaps, indeed, there is a stronger reason why when one has contracted to pay X, one should pay X and not complain that you are not paying X on 2 or X on 4 or X on 7.
In principle, the natural justice and equity of both the common law and the Chancery sides found that that was not an answer and, in our submission, the same is true and that is the background intellectually and morally by which one should approach the question whether the Trade Practices Act by its terms excludes contribution. It was, as I say, opened by my learned friend that the error to be found in page 108 paragraph 102 of the reasons of the Full Court was in finding that there was significance in the fact that the payment or the adjudged liability is made or would be paid for the benefit of both. My learned friend took you to that. No doubt in the interests of brevity, having identified the error in the sentence commencing, "A critical element", there was not an attempt made, understandably, to suggest that the citation from Albion was inapposite, but neither has there been any attempt made to persuade your Honours that there are passages in Albion which ought not to be followed or which misunderstood the relevant principles.
The passage at Albion which renders that citation entirely appropriate is found at 121 CLR 346 and the last paragraph of a sequence of reasoning just from the foot of that page contains this very sentence:
Thus -
admittedly this is a conclusion and summation -
Thus, payment by one is made for the benefit of both, and, contribution is equity.
Now, of course - - -
McHUGH J: But that records a result, not a principle.
MR WALKER: Yes, but that does not make the citation inapposite in the Full Court's reasons, nor does it identify any error for them to use exactly the same words to describe what ought to be exactly the same result. Your Honours will remember, of course, the passage in the joint judgment in Albion that commences at 345 just after halfway down and it is confined, as one might expect, on the facts of that case to questions of insurance. It refers to Lord Mansfield's decisions, decisions at law relevantly, and at the top of page 346 continues the language of risk. For example, about line 5:
the question whether or not each insurer has insured against the same risk so as to give rise to some contribution. The element essential for contribution is that, whatever else may be covered by either of the policies, each must cover the risk which has given rise to the claim.
In the metaphor I have offered, that is the intersection point to which I have referred. Then there is a reference to the nature of "double insurance". For reasons which do not need elaboration however, it is the reasons of Justice Kitto which have become, in our respectful submission, classical, and there has not been identified by my learned friend any reason why they should be regarded by this Court now as betraying error, or misunderstanding, or incompleteness.
McHUGH J: But it may be that they need to be explained because the circumstances of this case and other cases are quite different.
MR WALKER: Yes.
McHUGH J: At the moment it appears to me that what I a moment ago described as a result and not a principle has been applied as a principle by Justice Lehane, and that appears very clearly at page 119, line 10, where he said:
What the principle expounded in Albion requires, in my view, is that two or more persons are each liable in respect of the same debt or to make good the same loss sustained by a third party, in circumstances where discharge of the obligation by one relieves the other(s).
Now, that relies on the payment being a benefit theory.
MR WALKER: Yes, and none the worse for that. There would be no natural justice or equity if there were not something of that nature. That is not the beginning of the reasoning. One starts with two obligations and it is where there are two obligations but only one is sued on that then the natural justice and equity of the position comes about. Your Honour Justice Hayne made a comment this morning that there may be something odd about seeing benefit in being spared the discharge of an obligation but, in our submission, it is, in fact, a very palpable benefit in commerce to be spared the discharge of an obligation by another, by another with a co-ordinate obligation meeting the whole of it, for example.
It is precisely that which in the 18th century, admittedly at first in pure mercantile ventures, but clearly broadened beyond that so as to include people who did not know of each other's existence but whose obligations met at the point of the primary plaintiff's claim, so as to include the natural justice and equity of the benefit being pro rata or equally shared. Pro rata is, of course, the words of Lord Mansfield, repeated by others since, in 1758 in Godin's case cited by Mr Justice Kitto and it is pro rata which provides, perhaps, the better way of understanding the "equality" in the maxim "equity is equality" which ought to obtain in relation to this contribution.
CALLINAN J: Mr Walker, if this had been a case before the reform legislation and the cause of action had been fraud rather than section 52 of the Trade Practices Act but everything else was the same, what consequence would flow would you say?
MR WALKER: Your Honour is positing that fraud was found?
CALLINAN J: Yes.
MR WALKER: If the case is decided before 1946 in New South Wales, your Honour, there would be no contribution. Fraud was pleaded but not found in this case, your Honours, as a general principle which will embrace certainly misleading and deceptive conduct absent fraud, absent the intention to mislead which was not found in this case.
CALLINAN J: But why in principle should it be different?
MR WALKER: Because the law does care still about the difference between honesty and dishonesty, about the difference between carelessness and dishonesty, about the difference between malevolence and carelessness.
CALLINAN J: But it was not an omission by your client. It was actual positive misconduct falling short of fraud.
MR WALKER: High quality tenant, yes.
CALLINAN J: It was held to be deceptive though, Mr Walker.
MR WALKER: Yes, deceptive in the sense that that word is used in section 52 which, alas, is far removed from its ordinary English.
GAUDRON ACJ: But there can be no doubt that your clients knew of the true position with the tenants.
MR WALKER: It is difficult to avoid that, your Honour.
GAUDRON ACJ: Yes, and they made a statement that conveyed a meaning that was contrary to their knowledge.
MR WALKER: There is a finding. First of all, Mr Glew was acquitted. Mr Tresidder, the relevant mentality therefore - there is a finding that he regarded the expression "high quality tenant" as defensible. I do not try to defend it but it is very important in terms of the intention to mislead, which is at the heart of the fraud plea. It did not matter for section 75B because the knowledge of the essential elements of the cause of action, which Yorke v Lucas requires for the aider and abetter under section 75B, was simply satisfied by the statement being made, "high quality tenant", and relevantly those matters, namely its rent performance which, in the court's eyes, meant that that was wrong.
But he was cross-examined on the point and not disbelieved, so it would seem, on the question. There is a passage commencing with the word - perhaps if I could take your Honours to appeal book 45 to answer this other than by recollection. This is the second first-instance decision in which his Honour incorporates and uses findings following the first trial, and what Justice Moore says at page 45 paragraph 4 is that he is going to quote from his earlier reasons about "The aiding and abetting allegations". About line 40:
The case against both of them -
that is Messrs Tresidder and Glew -
as it relates to the conduct of Jagar -
that is LFOT -
I have found contravened s 52, proceeded on the basis that each knew of the contents of the property report. That is, they knew it described Barbara's Storehouse as a high quality tenant. Glew said he did not know that description had been used in the property report. I accept his evidence.
He is out of it.
Tresidder's evidence was to the effect that he did know but believed the description was appropriate.
In other words, he was wrong or negligent but not intending to deceive.
He believed this because while a description of a tenant as a high quality one conveys, he accepted, that the tenant would pay the rent, it did not convey, he thought, that the tenant paid on time in accordance with the lease.
Now, that may either be extremely realistic or a form of pathological projection but, in any event, it has some plausibility. The judge does not find that is to be rejected as a colourable piece of evidence. His Honour says:
However, aiding and abetting specified conduct is established by proof of the knowledge of the essential elements of the conduct: see Yorke v Lucas . . . Tresidder knew of Barbara's Storehouse's record of payment, knew of its description as a high quality tenant and knew the property report would be provided to intending purchasers. Tresidder's conduct satisfies the precondition to personal liability created by section 75B.
The reasoning is not diminished in its quality by the brevity of those steps. They are, with respect, correct. It is for the court to say whether or not the statement conveyed by conduct said to be in breach of section 52 is correct or not and if it is incorrect by reason of facts known to the alleged aider and abetter, that will suffice for Yorke v Lucas purposes. But it is one example, and only one example, of the difference, not so subtle in this case, between common law fraud or deceit, on the one hand, and section 75B ancillary liability, on the other.
The knowledge in this case did not involve knowledge which will import intention to mislead. That is why this case ought not to be argued as a case of fraud or deceit. Certainly there is no fraud or deceit found against my corporate client, albeit the same artificiality emerges because, relevantly, Mr Tresidder is one of the most important components of its corporate mind.
Your Honours, I should then refer you also in Mr Justice Kitto's reasons in Albion 121 CLR at the foot of 351 - in an attempt to persuade your Honours that what Justice Lahane has said is not new, is not different and is not wrong, that in the course of the citations making up Mr Justice Kitto's reasons, starting with the reference to:
the principle being universal "that the right and duty of contribution is founded in doctrines of equity" -
which can be picked up by footnote (5a), a third of the way down the page -
and the reference was not to doctrines peculiar to chancery but to doctrines of equity in the sense of "reason, justice and law" . . . The judgment in Dering v Winchelsea itself had said that "If we take a view of the cases both in law and equity, we shall find that contribution is bottomed and fixed on general principles of justice"-
et cetera. Then after the citations from Halsbury's, his Honour goes on:
The right arises at law -
and this must be seen as a form of summation of his Honour's reasoning -
when "one of several persons has paid more than his proper share towards discharging a common obligation" -
Now, your Honours, the language and concept of "more than a proper share" conjures up exactly the same idea of bestowing a benefit or making a payment to the benefit of others. A proper share is the most one should pay. The normative statement obviously means that somebody else should also be bearing it and that is somebody else who is spared unless equity in the general sense is deployed so as to force contribution. It is for those reasons, in our submission, that unless and until Albion and, in particular, the passage from the joint judgment to which I have referred and these passages from Mr Justice Kitto's reasons, unless or until that is overruled or departed from, in our respectful submission, no error is shown in the Full Court majority judgments.
On page 352 his Honour again by way of summation and evokatively using the word "simply" says the following, the first full paragraph:
What attracts the right of contribution between insurers, then, is not any similarity between the relevant insurance contracts as regards their general nature or purpose -
we emphasise that word -
or the extent of the rights and obligations they create, but is simply the fact that each contract is a contract of indemnity and covers the identical loss that the identical insured has sustained -
so it requires the actual case, it requires the actual loss -
for that is the situation in which "the insured is to receive but one satisfaction" . . . and accordingly all the insurances are "regarded as truly one insurance".
Now, if there is any contribution at all, outside suretyship and insurance and, in our submission, there is a line of authorities cited in the Full Court which shows that hitherto it has been thought there is, then the principle to be gathered from statements such as that shows that it does involve co-ordinate liability being seen where, in the absence of any indemnity or other reason between the contribution parties to deny it, the one has paid where the other was also obliged and, in our submission, that suffices as a principle.
Of course, in relation to common purpose and in part answer to an earlier question of your Honour Justice Hayne's about the notion of the conflict of interest or competing interest between Mr Burke, on the one hand, with whatever of his hats, and my client, on the other hand, one must observe that insurance is not a charity, even if it is not always profitable. It is carried on as a business by people who compete for business with each other and it is not the case that all insurers choose just one area of insurance to practice in.
So, when one is talking in the classic cases to which no challenge has been made or, in our respectful submission, could now be made at common law or in equity, that is contribution between insurers, one knows beyond any doubt that in many cases the contribution will be sought and obtained between people who are competitors, one with the other, for the very kind of business, and for all we know for the very business, which resulted in one giving the workers comp policy and the other giving the compulsory third party motor vehicle policy.
So that when one talks about common end or purpose or being united in some common design, those words must be understood in a context which includes within their ambit people who are competing with each other for the same premiums, or might be, these words are being used in a somewhat special sense. We would offer this suggestion, that common end purpose or design is to be judged after the main plaintiff has demonstrated the loss and it could be seen that there is more than one person obliged to bear that loss or to meet that claim. It is by reason of that similarity or that identity or that coincidence and to the extent of it that there may be contribution. That is how one can understand the pro rata-ing between insurers, some of whom have unlimited indemnity obligations and some of whom have limited indemnity obligations.
It was raised with me before the break that there was, intuitively or otherwise, an unattractive aspect of someone who has breached a statutory norm, relevantly by misleading and deceptive conduct, in saying things which objectively must have been known at least to have been questionable - the high quality tenant point - as against another person who did not have any of the vendor's interest that my client, or one of my client's had.
The first point to be made is that the case my learned friend drew to attention earlier, namely, Lingard v Bromley, is a case where, for the reasons put by Justice Lehane in - it may be Justice Heerey. I will have that turned up. It is a case which answers the proposition that it matters if the contribution defendants allege that the contribution plaintiff was in fact the one responsible for the liability. In Lingard, the Court will recall, the contribution plaintiff was the one active trustee.
Now, the reason given for rejecting that as a defence was that that would be encouragement to idleness as a trustee, a reason which finds no analogy in our case, but it certainly explodes the notion that actual responsibility by action, by act - that is, as opposed to omission - made a difference between the parties in a claim for contribution. The reference I was looking for is in Justice Lehane, paragraph 135, appeal book 120, line 29. So that is the first point, that that is not in principle a reason to distinguish between these parties to a contribution claim.
The second is that in the nature of the equity and natural justice involved, one would expect that a badge of the availability of contribution is mutuality. Why one would expect that to be a badge of it is because it arises because of the choice by the main plaintiff. Now, my learned friend uses the word, "inequitable" to describe the choice of the main plaintiff to sue one. None of the law upon which we rely involves a moral or social judgment upon a plaintiff in selecting what Justice Lehane called "its victim" or as one could put it more dispassionately, selecting whom to sue, bearing in mind that suing more than one is more expensive than suing one.
So it does not involve any moral judgment upon the plaintiff that they have picked only one. It is the equity of the position which then arises that two people who are obliged have been discriminated between so that one has a judgment debt for the whole and the other has no judgment debt at all which gives rise to the contribution. So mutuality would appear to be a badge of a claim for contribution because if it depends upon the chance of whom the plaintiff selects to sue, then it ought to apply whichever they select to sue.
One could therefore put a converse and put slightly different but familiar facts to this case in order to test the principle that might otherwise be deduced from the rather odd and artificial facts of this case, be it supposed that Hanave's controllers decided it was actually not a good idea to have one of them themselves as the professional adviser, that would not be surprising, so that there was a truly independent solicitor who had owed the duty held by the Full Court in this case to have been owed, in fact, by Mr Burke as Hanave's solicitor.
Be it supposed that Hanave had sued that solicitor, confident in the insurance policy, for example, rather than the real estate agent or the real estate's principal, my clients, can it be doubted, in our submission, that if one could say, true it is I was careless not to be excited by clause 11.3 and to finding out about the rent roll, but you had earlier misled my client, and for what it is worth, you had also lulled me though not satisfying my duty of care accordingly, and I want contribution from you. In our submission intuitively, that is, that natural justice and equity of the thing, would suggest there should be contribution.
McHUGH J: Why?
MR WALKER: Because, your Honour, in that - - -
McHUGH J: If this is a claim over the statute. I would have thought it was just and equitable to award you nothing.
MR WALKER: Your Honour is there talking about the solicitor?
McHUGH J: No.
MR WALKER: I am sorry, I am not talking about the section 5 "just and equitable", I am talking about the foundation of the whole notion of the availability of contribution at all, that is, two people obliged. The solicitor sued for professional negligence ought, in our submission, be able to say there is contribution against the person also liable, also obliged to my client, for exactly the same loss; namely, the real estate agent or the real estate agent's principal, who made the misleading and deceptive comment about the rent roll. If contribution be available in that case, which intuitively it seems it ought to be, then, in our submission, mutuality suggests that it ought also be available in our case.
Next, there is the question whether there is some difficulty about, as it were, an innocent non-benefiting solicitor, which is the impression sought to be presented in this case, being held liable to contribution at the suit of somebody like my client who was, after all, as to one of them - not both of them, one of them - a vendor with a financial interest.
One answer to that, of course, is that if the solicitor had been misled by us then that could have been both pleaded, proved and found. For the reasons I have already pointed out, and in particular from the course of the trial and appeal to which I have made reference, that is not this case.
Finally, we come to an issue which is argued in the written submission but was not touched upon in spoken address this morning and that is the notion of the proportion of contribution if one reaches that stage at all. I have already made reference to the pro rata which is at the root of the doctrine in the middle of the 18th century and which, in our submission, is still the appropriate law, that is, the relevant form of equality, not so-called mathematical or what I would call nominal equality.
There are two points to be made about it. The first is that we do take a Suttor v Gundowda point, as your Honour's have seen in our written submissions. There are matters concerning the firm of which Mr Burke is the principal, which is entirely unexplored, and as my learned friend has frankly and properly put in his written submissions, this point was not put at any of the trials and was not put on the relevant appeal. It appears for the first time in this Court.
Next, if one simply counts heads, regardless of what I will call the "cause of action channel", by which they arrive at the status of being obligees or persons liable to compensate Hanave, then there are arbitrary and odd consequences, for example, with partnership. It would mean that contribution would differ according to whether one solicitor was a partnership of two partners or of 200 partners. It would differ according to whether the partnership of 200 had become incorporated so it was one corporation only.
It would differ according to whether there were agents also held liable under section 52, as well as a principal. It would differ according to whether one did one's own real estate salesmanship or whether one employed somebody to do it for you. Agency, of course, not being a defence to a section 52 claim. In our submission, that arbitrariness bespeaks the notion of pro rata being, as in this case, decided according to the relation of the obligations owed to the main plaintiff, the main plaintiff being Hanave.
There is, on the one hand, the stream which is the professional duty. There is, on the other hand, the stream which is the norm against misleading and deceptive conduct. In the latter stream, as the way in which the judges have printed it in their reasons demonstrates by putting brackets, "and Mr Tresidder", close brackets, there is what is correctly to be called "ancillary liability" by Mr Tresidder. For those reasons, in our submission, there are two, not three, streams upon which contribution could have been called. Though the point was not argued below, for those reasons the result below ought not to be disturbed. May it please the Court.
GAUDRON ACJ: Yes, thank. Yes, Mr McVay.
MR McVAY: Your Honours, Albion was a case concerning double insurance and contribution between - - -
MR WALKER: I apologise to everyone. Your Honours, my learned friend cited from Mahoney v McManus 180 CLR. We simply wish to draw to attention that Justice Brennan at 387 is dissenting in the result. The principle in question is not a principle which was in terms looked at by the majority. The majority is comprised by Chief Justice Gibbs and the relevant passages are to be found at the top of 376, just above the middle of 378, and it is agreed in by Justice Murphy at 381, point 6, and Justice Aickin just below.
MR McVAY: Albion, your Honours, was a case about double insurance and contribution between insurers. It was decided, of course, before the Trade Practices Act was even brought into existence, but the history of equitable contribution traced by Justice Kitto on page 351 supports the submissions that I have been putting to your Honours. First of all, it is a doctrine not peculiar to chancery but the doctrines of equity in the sense of reason, justice and law and I adopt what Justice McHugh said before the break that notions of commonsense and common reason indicate that contribution is not available where, as here, there has been a benefit obtained by the respondents without a corresponding benefit to the solicitor. My friend went to some extent to invite your Honours to take note at page 351 of Albion that:
The right -
that is the right to contribution -
arises at law when "one of several persons has paid more than his proper share towards discharging a common obligation" -
and the relevant word is "proper share". In this case I submit that the proper share of Mr Burke is nothing because it has not been demonstrated that if the respondents repay the $750,000, which was the difference between the purchase price and the real price, that that is not the respondent's proper share of discharging its obligation - it is its proper share. So, your Honours, Albion is easily distinguished, for those reasons that I have just described. I have nothing further, your Honour.
GAUDRON ACJ: Thank you. The Court will consider its decision in this matter and adjourns until 10.15 am on Tuesday in Canberra.
AT 2.51 PM THE MATTER WAS ADJOURNED
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