The decision of Justice Hansen in McAskell v Cavendish Properties Limited [2008] VSC 328 refers favourably to the decision of Justice Byrne in Gunston v Lawley [2008] VSC 97 and provides further guidance on the operation of Victoria's proportionate liability regime under the Wrongs Act 1958 (Vic).
Background
Mr and Mrs McAskell, the plaintiffs, owned a residential property in Patterson Lakes, Victoria. The plaintiffs alleged the property suffered foundation subsidence resulting in cracking and deterioration, to the extent that it was necessary to have the property demolished and rebuilt.
The plaintiffs brought proceedings against numerous parties involved in the design and construction of a nearby circulation drain (circulation drain defendants) on grounds that they breached duties of care owed to the plaintiffs. The plaintiffs also brought proceedings against the builders of the property (the sixth and seventh defendants) (builders) on the basis that they breached duties of care owed to the plaintiffs, to properly carry out site preparation works and to properly construct the property.
The plaintiffs settled their claims against the circulation drain defendants on confidential terms. However, it was agreed that the circulation drain defendants would remain parties to the proceedings, for the purpose of the plaintiffs' claims against the remaining defendants (including the builders). The builders sought discovery of the terms of settlement between the plaintiffs and the circulation drain defendants.
It was accepted that the claims against the circulation drain defendants were 'apportionable claims' within the meaning of Part IVAA of the Wrongs Act 1958 (Vic).
Parties' submissions
The builders argued that the terms of settlement were relevant to the plaintiffs' claims against them in the context of double recovery. The builders argued this was because the amount recovered by the plaintiffs from the circulation drain defendants would impact on the amount the plaintiffs should be entitled to recover from the builders.
The plaintiffs, opposing the builders' application, argued that the terms of settlement with the circulation drain defendants were not relevant to the builders' proportionate liability for the plaintiffs' loss and damage. This was because the settlement did not alter the builders' liability to the plaintiffs. In arguing this, the plaintiffs drew a distinction between 'solidary liability' (where defendants are jointly and severally liable for a plaintiff's loss and damage) and proportionate liability (where the defendants are only liable for their respective proportionate responsibilities for a plaintiff's loss and damage).
The plaintiffs further argued that if the terms of settlement were relevant, the relevance would only arise after the Court had determined issues of damages and proportionate liability, as it is only at this stage that any issue of double recovery will arise. The plaintiffs also argued that, from a policy perspective, the making of orders for discovery of terms of settlement prior to determining issues of damages and proportionate liability, as sought by the builders, would operate as a disincentive to settlement as defendants could use the discovery process against a plaintiff to obtain a tactical advantage by ascertaining the figure at which the plaintiff had settled with a co-defendant.
Decision
Justice Hansen referred favourably to the decision of Justice Byrne in Gunston and held that, as argued by the plaintiffs, the terms of settlement were not relevant to the builders' liability to the plaintiffs. His Honour also held that the issue of double recovery does not arise until a Court has determined whether the defendant is liable to a plaintiff. By way of example, Justice Hansen reasoned that if a defendant was ultimately found to be not liable, no damages would be ordered in favour of the plaintiff against that defendant, and the issue of double recovery and any adjustment to prevent double recovery would not arise.
Consistent with the dicta of Justice Byrne in Gunston, Justice Hansen held that in a proceeding involving apportionable claims, 'a settlement by the plaintiff against one concurrent wrongdoer does not affect the liability of any of the other concurrent wrongdoers, at least insofar as the plaintiff does not recover an amount in excess of his or her total loss or damage'. Issues of double recovery will only arise once a defendant has been held liable to the plaintiff by the Court and until that occurs, terms of settlement between a plaintiff and a co-defendant are not relevant to the issue of double recovery.
Implications
The decision is part of a growing body of jurisprudence relating to the proportionate liability regime in Victoria. It is a decision that will preserve the integrity of the confidential nature of terms of settlement in multi-party disputes thereby providing a degree of certainty to plaintiffs who wish to settle proceedings with some, but not all, defendants.
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