L & A Fazzini Pty Ltd v Amaca Pty Ltd

1. [1]

   PAYNE JA: I have read the judgment of White JA in draft. I agree with his Honour’s analysis of the primary judge’s reasons.

2. [2]

   The real question is whether Amaca’s notice of contention point, which counsel for Fazzini Mr Walker SC accepted was open to be argued without filing a document, is correct. That is, in circumstances where two defendants are sued by an injured plaintiff in a dust diseases case, and each by settlement or order under a contribution assessment determination (CAD) makes a payment to the injured plaintiff, who bears the onus of proving in a cross-claim seeking restitution that the defendant seeking restitution was not in truth liable to the injured plaintiff.

3. [3]

   Fazzini contended that, for the purposes of its cross-claim seeking restitution, in circumstances where the evidence established that Amaca was a tortfeasor, Amaca was required to establish that Fazzini was also a tortfeasor liable to Mr Muskardin in order to be entitled to retain the benefit of Fazzini’s $300,000 contribution towards settlement of Mr Muskardin’s claim.

4. [4]

   If, as the primary judge found, Amaca had gained a benefit at Fazzini’s expense by Fazzini paying money to Mr Muskardin when Fazzini had no liability to him, or by paying more than what might be concluded after a hearing was its proper share (thereby relieving Amaca from having to pay its full share), then Amaca’s retention of the benefit would be unjust and the appeal must be allowed. Framing the relevant question in terms of this case it is as follows: is Fazzini entitled to recoup from Amaca the money it paid to the injured plaintiff in the settlement, without itself proving that Fazzini had no liability to Mr Muskardin?

5. [5]

   Authorities in this Court, in particular Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107, make clear that the purpose of the contributions assessment determination process is to encourage settlement with the plaintiff. To require a defendant to contest liability to the plaintiff at the outset, rather than in a later cross-claim against another defendant or cross-defendant following payment of the settlement sum, would be inimical to the scheme.

6. [6]

   For that reason, I was initially attracted to Fazzini’s submission that an implication of the scheme was that an original defendant in Fazzini’s position was materially indistinguishable from the cross-defendant in Power Technologies.

7. [7]

   As White JA explains, the strength of Fazzini’s case is that if Amaca had been the only defendant to Mr Muskardin’s claim and Amaca had joined Fazzini as a cross-defendant, in any claim by Fazzini for restitution, Amaca would have had the onus of proving that Fazzini was liable to Mr Muskardin. The question posed by this case is whether Fazzini would be in the same position if it had not been sued by the plaintiff as an original defendant but had only been joined as a cross-defendant by Amaca. If the answer is yes, then the reasoning in Power Technologies would apply. Consequently, given that Amaca now admits that it was liable as tortfeasor to Mr Muskardin (and would have been liable for the full amount of damages of $500,000) and given that Amaca also admits that it had not alleged that Fazzini was also a tortfeasor, Fazzini would be entitled to restitution from Amaca of the moneys it had paid to Mr Muskardin.

8. [8]

   Upon analysis, however, I have concluded that White JA is correct to conclude that the onus of proof in this cross-claim remained on Fazzini to show that it had no liability to Mr Muskardin. Although not the present case (Amaca having ultimately admitted liability to Mr Muskardin), to test Fazzini’s suggested implication arising from the scheme, counsel for Fazzini was asked what the position would be if two defendants sued by a plaintiff in a dust disease case made a payment in accordance with a CAD to settle the claim without admission of liability, and both defendants later made a restitution claim against the other on the basis that it did not admit that it was a tortfeasor liable to the plaintiff.

9. [9]

   Senior counsel for Fazzini’s principal response was that each defendant could maintain its position of no liability and bring a cross-claim for restitution. In such a case the defendant/cross‑claimant would need to prove that it was not a tortfeasor liable to the plaintiff. I agree with counsel for Fazzini’s conclusion. That is, in such a case the onus of proof in making the restitution claim would be placed upon the particular defendant/cross‑claimant to prove that it was not liable to the plaintiff (and the other defendant was so liable).

10. [10]

    My problem with Fazzini’s claim in the present case is that the scheme comprising the Dust Diseases Tribunal Act 1989 (NSW) and the Dust Diseases Tribunal Regulation 2013 (NSW) would not have a coherent operation if the onus of proof was different in circumstances where, as here, one of two defendants sued by a plaintiff admitted liability to the plaintiff and a CAD ordered both to make a payment. That is, in a subsequent restitution claim, the onus on proof is not different to the example addressed immediately above. That onus of proof remains upon the defendant/cross‑claimant, here Fazzini, to prove that it was not liable to the plaintiff. This is something that Fazzini did not set out to do before the primary judge. By reason of the notice of contention, the orders made by the primary judge were correct.

11. [11]

    I recognise that this conclusion has a potentially undesirable consequence, namely that there is an incentive for a defendant in the position of Fazzini to have “required Mr Muskardin to run his claim against it”, as Amaca submitted it should have done. In that case Mr Muskardin would have borne the onus of proving that Fazzini was liable to him.

12. [12]

    For the reasons given by White JA, however, the onus of proof in a restitution claim brought by one of two defendants sued by a plaintiff who have made a payment to that plaintiff remains on that defendant/cross-claimant. I agree with the orders proposed by White JA.

13. [13]

    WHITE JA: This is an appeal from orders of the Dust Diseases Tribunal of 27 November 2020 (Scotting DCJ) (L & A Fazzini Pty Ltd v Amaca Pty Ltd [2020] NSWDDT 12). The appeal lies on a point of law (Dust Diseases Tribunal Act 1989 (NSW), s 32). There is no dispute that the appeal is competent.

14. [14]

    The appellant, L & A Fazzini Pty Ltd (“Fazzini”), and the respondent, Amaca Pty Ltd (“Amaca”), were defendants to a claim brought in the Tribunal by a Mr Anton Muskardin who contracted mesothelioma as a result of his exposure to asbestos.

15. [15]

    Mr Muskardin pleaded that he was employed by Fazzini from about 1964 to about 1968 as a labourer and sprayer of vermiculite, as a consequence of which he was exposed to and inhaled asbestos dust and fibre.

16. [16]

    Amaca was sued on the basis that from about 1978 to 1983, as a self-employed plasterer, Mr Muskardin was exposed to asbestos dust and fibre from his exposure to cement building materials supplied by Amaca.

17. [17]

    The claims resolution process provided for by Pt 4 of the Dust Diseases Tribunal Regulation 2013 applied to the claim.

18. [18]

    Neither defendant filed a cross-claim seeking to join any other party as a cross-defendant, nor did either defendant file a cross-claim against the other defendant, within the time provided by cl 26 of the Regulation. That did not affect the right of either defendant to pursue a cross-claim in separate proceedings (cl 26(9)).

19. [19]

    The defendants did not agree as to the contribution that each was liable to make to the damages claimed by Mr Muskardin. Accordingly, the Registrar referred the matter to a Contributions Assessor. In accordance with cl 53(4) the Contributions Assessor was required to determine the contribution that each defendant was liable to make, and to make that determination on the assumption that the defendants were liable, and solely on the basis of the plaintiff’s statement of particulars, the defendants’ replies on the claim, and the standard presumptions as to apportionment determined by Ministerial Order. (The relevant order was the Dust Diseases Tribunal (Standard Presumptions-Apportionment) Order 2007).

20. [20]

    The Contributions Assessor determined that Fazzini was liable to pay 60% of damages payable to Mr Muskardin and Amaca was liable to pay 40% of such damages.

21. [21]

    Fazzini does not dispute that notwithstanding the terms of cl 56(1) of the Regulation it would have been open to it to deny liability to Mr Muskardin and put him to proof. It does not challenge the Tribunal’s decision in Broers v Australian Co-Operative Foods Limited [2008] NSWDDT 38.

22. [22]

    Clause 53(9) of the Regulation provides:

23. [23]

    The purpose of the claims resolution process is to facilitate settlement of a plaintiff’s claim. That purpose was achieved. On 17 June 2019 orders were made as follows:

24. [24]

    Fazzini and Amaca paid their respective shares of the judgment.

25. [25]

    Judgment was consented to by both Fazzini and Amaca without admission of liability. In their replies to Mr Muskardin’s statement of particulars, both Fazzini and Amaca denied liability. Amaca admitted that it manufactured and supplied Villaboard and compressed fibro, and said that it was one of a number of manufacturers of asbestos cement fibro sheeting.

26. [26]

    Fazzini’s consent to judgment by Mr Muskardin was given without admission of liability. That judgment created no estoppel against Fazzini’s denying it was a tortfeasor (Isaacs v The Ocean Accident and Guarantee Corporation Ltd and Winslett (1957) 58 SR (NSW) 69).

27. [27]

    On 4 September 2019 Fazzini filed a statement of claim in a new proceeding (324/2019) against Amaca claiming contribution or indemnity pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

28. [28]

    Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 relevantly provides:

29. [29]

    Fazzini does not admit that it was a tortfeasor liable in respect of the damage suffered by Mr Muskardin. It consented to judgment against it but without admission of liability.

30. [30]

    In its defence to Fazzini’s statement of claim, Amaca pleads that the relief sought by Fazzini assumes that Fazzini is a tortfeasor liable to Mr Muskardin. Amaca pleads that, absent an admission by Fazzini that it is a tortfeasor liable, there is no cause of action for contribution or indemnity available against Amaca.

31. [31]

    In its defence to Fazzini’s statement of claim Amaca also denied that it was liable to Mr Muskardin. As purported particulars of that allegation it repeated against Fazzini the allegations made by Mr Muskardin against Fazzini in his statement of claim.

32. [32]

    On 11 March 2020, Fazzini filed a cross-claim against Amaca in the proceedings commenced by Mr Muskardin (whose claim had been resolved by the consent orders made on 6 May 2019). Fazzini sought restitution from Amaca of the $300,000 it had paid to Mr Muskardin pursuant to the consent orders of 17 June 2019. (Amaca took no point about the late filing of that cross-claim. No issue in relation to cl 26 of the Regulation arose on appeal.)

33. [33]

    Fazzini pleaded that Mr Muskardin had alleged:

34. [34]

    Fazzini pleaded its denial that Mr Muskardin had been exposed to asbestos during the course of his employment with Fazzini and its liability to him (para 4). Fazzini pleaded the contributions assessment determination and that Mr Muskardin’s claim had been resolved by Fazzini and Amaca agreeing to pay him $500,000 in accordance with the apportionment prescribed by the contributions assessment determination (paras 7-10).

35. [35]

    All of those matters were admitted.

36. [36]

    Fazzini pleaded that the contributions assessment determination was only an interim or provisional determination of issues of apportionment between Fazzini and Amaca (para 11).

37. [37]

    In its defence to Fazzini’s cross-claim, Amaca pleaded that the determination was no longer interim or provisional as to the liability of Fazzini in circumstances where Fazzini elected not to defend Mr Muskardin’s claim (para 4).

38. [38]

    Fazzini pleaded that in order for Amaca to retain the benefit of the moneys paid by it in accordance with the determination, it was necessary for Amaca to pursue a claim for contribution against Fazzini (para 12). Amaca denied this allegation and pleaded that for Fazzini to establish an entitlement to restitution it was necessary for Fazzini to demonstrate at least that it had no liability to Mr Muskardin. It pleaded that Fazzini was estopped from doing so as it had not defended Mr Muskardin’s claim (Defence para 5).

39. [39]

    Fazzini also pleaded:

40. [40]

    Notwithstanding the particulars included in Amaca’s defence to Fazzini’s statement of claim claiming contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946, referred to at [31], Amaca admitted paragraphs 13 and 16. It denied paragraphs 14, 15, 17 and 18. It repeated its allegation that to establish an entitlement to restitution, Fazzini was required to demonstrate, at least, that it had no liability to the plaintiff and was estopped from doing so by not having defended Mr Muskardin’s claim (paras 6-9).

41. [41]

    Fazzini did not allege in its cross-claim against Amaca that it was not liable to Mr Muskardin. Counsel for Fazzini submitted to the primary judge that Fazzini did not have to prove that it was innocent and did not seek to do so. Counsel submitted:

42. [42]

    Over Amaca’s opposition Fazzini’s cross-claim was fixed for a separate hearing. The primary judge observed that Fazzini had pressed to have its “restitution claim” heard first because it contended that it could be decided on the pleadings and by legal argument ([2]).

43. [43]

    Notwithstanding Fazzini’s contention that the cross-claim could be decided on the pleadings, it adduced some evidence directed to showing that Amaca was a tortfeasor and to indicate that there was an absence of evidence suggesting that Fazzini was a tortfeasor. In regard to the former issue, Fazzini tendered notices under s 25B of determinations made in other proceedings as to Amaca’s liability for the supply of asbestos products. In regard to the latter issue, Fazzini tendered the transcript of evidence given by Mr Muskardin before a mediator following the settlement of the claim. That evidence was taken in accordance with cl 43(1) of the Regulation. Mr Muskardin’s evidence was to the effect that he did not know whether or not the vermiculite he sprayed when employed by Fazzini contained asbestos.

44. [44]

    In oral submissions before the primary judge, counsel for Fazzini relied on the decision of this Court in Power Technologies Pty Ltd v Energy Australia [2010] NSWCA 107. He submitted that the effect of that decision was that where a tortfeasor (Amaca) received the benefit of a payment through the claims resolution process, by another party that did not accept that it was a tortfeasor, that other party did not have to prove that it was innocent, if the tortfeasor did not positively prosecute a claim to vindicate its entitlement to retain the benefit of the payment. Rather, pursuant to s 90 of the Civil Procedure Act 2005 (NSW) and s 11(4) of the Act, the Court may make orders requiring the tortfeasor (Amaca) to pay Fazzini the contribution that it made pursuant to the Contribution Assessor’s determination. [1] Fazzini submitted that this was a consequence of the scheme provided by the Regulation for the interim or provisional determination of the liability of defendants or cross-defendants to contribute to the plaintiff’s claim. It did not rest on any “equitable basis” or need to prove unjust enrichment, unjustness or innocence. Fazzini submitted that the onus remained with Amaca to prosecute a cross-claim which it had not done.

45. [45]

    The primary judge did not accept this analysis of the effect of Power Technologies. His Honour said:

46. [46]

    The primary judge also held that Amaca had additional defences to the claim of election and estoppel ([36] and [37]). On appeal Amaca did not seek to uphold that part of the primary judge’s reasons.

47. [47]

    The primary judge dismissed Fazzini’s cross-claim with costs. On 3 February 2021 the primary judge ordered that Fazzini pay Amaca’s costs on the ordinary basis up to 31 July 2020 and thereafter on the indemnity basis (L & A Fazzini Pty Ltd v Amaca Pty Ltd [2021] NSWDDT 1). This order was made on the basis of an offer of compromise served by Amaca.

48. [48]

    Amaca supported the primary judge’s orders on different grounds. Fazzini accepted on appeal that this court should entertain those submissions without the need for the filing of a notice of contention. Amaca submitted that the appeal should be dismissed because no finding was sought below that Fazzini was not liable to Mr Muskardin. In essence, Amaca’s oral notice of contention turns on the onus of proof.

Consideration

1. [49]

   The claims resolution process that led to the Contribution Assessor’s determination is a rough and ready process that provides an interim and provisional determination of Fazzini’s and Amaca’s liability to contribute to Mr Muskardin’s damages. As noted above at [19] the determination was made on the assumption that both named defendants were liable, on the basis of the plaintiff’s statement of particulars and the defendants’ replies, and by applying the standard presumptions as to apportionment determined by the Ministerial Order.

2. [50]

   In QBE Insurance (Australia) Ltd v Wallaby Grip Ltd & Ors [2007] NSWCA 43 (Handley AJA, with whom Hodgson and Campbell JJA agreed), the plaintiff sued one defendant who filed a cross-claim seeking a contribution from two cross-defendants who had not been joined as defendants. The appeal concerned the operation of the Dust Diseases Tribunal Regulation 2001 (NSW) dealing with the resolution of contribution claims. The cross-defendants were bound by the contributions apportionment determination to contribute the determined amounts towards the plaintiff’s damages. Handley AJA held:

3. [51]

   This observation as to the cross-defendants’ onus was obiter.

4. [52]

   Power Technologies also concerned a claim for contribution made by the defendants against companies whom they joined as cross-defendants and who had not been joined as defendants by the plaintiff. Sackville AJA said:

5. [53]

   Although Amaca had denied that it was liable as a tortfeasor, it accepted, on appeal, that it was so liable.

6. [54]

   Although Amaca did not file a pleading in which it alleged that Fazzini was a tortfeasor, it did not admit that Fazzini was not a tortfeasor. It made no claim against Fazzini. Rather, it resisted Fazzini’s claim for restitution of the amounts that Fazzini had paid towards Mr Muskardin’s damages.

7. [55]

   Fazzini did not seek to prove that it was not liable to Mr Muskardin. It said that it had no such onus to discharge.

8. [56]

   The essential issue between the parties was as to the onus of proof.

9. [57]

   This was not how the primary judge addressed the question. His Honour accepted (at [29] quoted at [45] above) that Amaca had gained a benefit at Fazzini’s expense because it had to pay less than the full amount of the damages for which it was liable to Mr Muskardin.

10. [58]

    This finding assumed both that Amaca was a tortfeasor liable to Mr Muskardin and that Fazzini was not a tortfeasor liable to contribute 60% of the damages.

11. [59]

    The primary judge did not address the issue of whether Fazzini was or was not also liable to Mr Muskardin, or who bore the burden of proving that Fazzini was or was not liable. Rather, his Honour held that Amaca was not unjustly enriched by Fazzini’s payment because Fazzini could have chosen to defend Mr Muskardin’s claim.

12. [60]

    Fazzini does not dispute that it could have defended Mr Muskardin’s claim ([21] above). But the purpose of the provisions for a rough and ready determination of the proportions in which both defendants and cross-defendants should contribute to an award of damages to the plaintiff is to avoid delays in an assessment, and to allow both defendants and cross-defendants to litigate later who should bear the burden of the damages paid to the plaintiff. If, as his Honour found, Amaca had gained a benefit at Fazzini’s expense by Fazzini paying money to Mr Muskardin when it had no liability to him, or by paying more than what might be concluded after a hearing was its proper share, then Amaca’s retention of the benefit would be unjust. The scheme of the contributions assessment process is to encourage settlement with the plaintiff. To require a defendant to contest liability to the plaintiff rather than in a later cross-claim against another defendant or cross-defendant would be inimical to the scheme. It would be inconsistent with the observations of Sackville AJA in Power Technologies at [120] that Division 5 of Part 4 of the 2001 Regulation (now Division 5 of Part 4 of the 2013 Regulation) does not have a different meaning when applied to cross-claims between original defendants.

13. [61]

    With respect to the primary judge, his Honour did not address the real issue between Fazzini and Amaca. That issue was whether Fazzini could claim restitution from Amaca, whom his Honour implicitly found was a tortfeasor liable to Mr Muskardin, without asserting that it was not a tortfeasor liable.

14. [62]

    Sackville AJA’s reasoning in Power Technologies was that, where a defendant had brought a cross-claim for contribution against a cross-defendant, the contribution apportionment determination, being only an interim and provisional determination not made on the evidence, did not impose an onus on the cross-defendant to show that it was an innocent party. If a defendant sought to discontinue its cross-claim, having received a favourable contribution apportionment determination, it would need leave. Such leave should only be given if the defendant/cross-claimant paid the cross-defendant the moneys paid by the cross-defendant pursuant to the contribution apportionment determination.

15. [63]

    Sackville AJA added:

16. [64]

    The clauses of the 2001 Regulation to which his Honour referred have their equivalents in cll 26(2)-(4), (9), 52 and 53 of the 2013 Regulation.

17. [65]

    Sackville AJA did not consider where the onus of proof would lie as between defendants where a defendant who initially denied but ultimately admitted it was a tortfeasor (Amaca), did not itself bring a cross-claim but did not admit that another defendant (Fazzini) was not a tortfeasor.

18. [66]

    The issue is whether Fazzini’s denial that it was a tortfeasor, and Amaca’s ultimate admission that it was a tortfeasor, means that Fazzini is entitled to restitution of the moneys it paid to Mr Muskardin, where Fazzini does not allege and does not seek to prove its innocence.

19. [67]

    The strength of Fazzini’s case is that if Amaca had been the only defendant and Amaca had joined Fazzini as a cross-defendant, Amaca would have had the onus of proving that Fazzini was liable to Mr Muskardin. Given that Amaca now admits that it was liable to Mr Muskardin (and would have been liable for the full amount of damages of $500,000), should Fazzini be in the same position as if it had not been joined as a defendant but had been joined as a cross-defendant by Amaca? If so, because it was admitted that Amaca had not alleged that Fazzini was a tortfeasor, in accordance with Power Technologies, Fazzini would be entitled to restitution for the moneys it paid to Mr Muskardin.

20. [68]

    Ideally questions of onus of proof between defendants and cross-defendants should not depend upon the plaintiff’s choice as to whom to sue. But absent findings or admissions as to a defendant’s or cross-defendant’s liability, the onus of proof will depend upon how proceedings are constituted.

21. [69]

    In Power Technologies the onus of proof remained on the defendants because they had joined the cross-defendants. It was fortuitous for the cross-defendants that the plaintiff had not joined them as defendants. In this appeal the primary judge implicitly found that Amaca was liable to Mr Muskardin, and Amaca accepted that it was so liable.

22. [70]

    But Fazzini’s cross-claim depended on either its alleging and proving that it was not a tortfeasor liable to Mr Muskardin, or on its successfully establishing that Amaca bore the onus of proving that it was. It did not seek to establish the former. Accordingly its claim depended on its establishing that Amaca bore the onus of proof.

23. [71]

    Power Technologies did not change the principle that he who asserts must prove. Rather it affirmed that principle. It was because the defendants in Power Technologies were required to join the cross-defendants (they not having been joined as defendants by the plaintiff), that the defendants as cross-claimants bore the onus of proof, rather than the cross-defendants bearing the onus to prove that they were not liable for the amounts determined by the contributions assessment.

24. [72]

    Accordingly I would uphold Amaca’s oral notice of contention. I propose that the appeal be dismissed with costs.

25. [73]

    McCALLUM JA: I agree with the orders proposed by White JA. Subject to the following remarks, which are intended by way of further explanation rather than any qualification to my agreement with White JA, I also agree with his Honour’s reasons.

26. [74]

    White JA has noted at [21] that Fazzini did not dispute that it would have been open to it to deny liability to Mr Muskardin and put him to proof. My agreement with his Honour’s conclusion is not predicated on an acceptance of that proposition, which seems to me to be unrelated to the question of onus as between defendants in a dispute as to apportionment.

27. [75]

    Fazzini’s concession that an available course was to put Mr Muskardin to proof of his claim against Fazzini evidently reflected an acceptance of the decision of the Dust Diseases Tribunal in Broers v Australian Co-Operative Foods Limited [2008] NSWDDT 38 (Broers). That decision was concerned with the provisions of the Dust Diseases Tribunal Regulation 2007, particularly cl 52. The effect of the contribution assessment in the present case was governed by cl 56 of the Dust Diseases Tribunal Regulation 2013. There is a small but potentially important difference between the wording of the two clauses. Clauses 52(1) and (2) of the 2007 regulation provided that an agreement or determination as to apportionment among defendants was “conclusively binding on the defendants for the purposes of the settlement, or determination by the Tribunal, of the plaintiff’s claim and payment of the plaintiff’s damages” but “not binding for the purposes of the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment”. Clauses 56(1) and (2) of the 2013 regulation were in identical terms save for the fact that the specified effect of a determination on any dispute between defendants as to apportionment was confined to a dispute “in a separate proceeding”. The proposed 2013 regulation was foreshadowed in a Regulatory Impact Statement published in July 2013 which explained, enigmatically:

28. [76]

    The fact that any dispute between defendants as to apportionment is constituted a separate proceeding under the 2013 regulation tends to reinforce the conclusion that the onus of proof in such a case is on the person making the assertion. Whether the decision in Broers warrants revisiting in light of the 2013 amendments is a question for another day.