Baxter v Obacelo Pty Ltd

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: Gleeson CJ,Callinan J,Gummow,Hayne JJ,Kirby J
• Judgment Date: 15 November 2001
• Neutral Citation: [2001] HCA 66,2001-1115 HCA B
• Docket Number: S10/2001
• Date: 15 November 2001

[2001] HCA 66

HIGH COURT OF AUSTRALIA

Gleeson CJ, Gummow, Kirby, Hayne and Callinan JJ

S10/2001

Phillip Julius Baxter

Appellant

and

Obacelo Pty Ltd & Anor

Respondents

Representation:

D F Jackson QC with D P Robinson for the appellant (instructed by Baker & McKenzie)

A J Sullivan QC with D T Miller for the respondents (instructed by Moray & Agnew)

Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5(1).

Law Reform (Married Women and Tortfeasors) Act 1935 (UK), 6(1).

Baxter v Obacelo Pty Ltd

Torts — Joint tortfeasors — Satisfaction — Settlement with one tortfeasor — Entry of consent judgment against one tortfeasor — Settlement figure less than total damages claimed by the respondents — Whether settlement prevented respondents continuing claim against other tortfeasor — Whether cause of action against joint tortfeasors is one and indivisible — Whether settlement was paid and received in ‘full satisfaction’ of respondents' loss.

Practice and procedure — Rule against ‘double satisfaction’ – Settlement amount in first action less than amount otherwise recoverable in second action — Respondents conceded that credit is to be given for the amount recovered upon settlement of the first action — Whether second action in breach of rule against ‘double satisfaction’ – Nature of the rule against ‘double satisfaction’.

Words and phrases — ‘full satisfaction’ – ‘double satisfaction’ – ‘action’ – ‘cause of action’.

ORDER

Appeal dismissed with costs.

1 Gleeson CJ and Callinan J. The respondents commenced an action for damages against two alleged joint tortfeasors, one of whom was the appellant. They settled their case against the co-defendant, and entered judgment against him. The amount of the judgment was satisfied. They continued their action against the appellant. The appellant contends that it was not open to them to do so. Whether that contention is correct depends in part upon the meaning and effect of s 5(1) of the Law Reform ( Miscellaneous Provisions) Act 1946 (NSW) (‘the Act’), which was transcribed from s 6(1) of the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) (‘the UK Act’), and in part upon principles concerning recovery and satisfaction in the case of claims against persons subject to co-ordinate liabilities.

2 There are many circumstances in which a person with a claim against a number of joint tortfeasors may wish to settle with one, or some, of them, and continue with, or commence, proceedings against others. The situation which arose in the present case is not unusual.

3 Section 5(1) of the Act provides, so far as presently relevant:

‘5(1) Where damage is suffered by any person as a result of a tort (whether a crime or not) -

• (a) judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage;

• (b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered … against tort-feasors liable in respect of the damage (whether as joint tort-feasors or otherwise) the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given; the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action;

…’

4 Paragraph (a) does not assist the appellant, and is not relied upon by him. The appellant relies upon par (b), and also, if necessary, what was described in argument as the rule relating to double satisfaction. The appellant contends that since judgment for damages has been given in an action against the co-defendant, and has been satisfied, no further sum is recoverable against him.

The proceedings

5 The appellant was employed as a solicitor in a legal practice conducted by Mr Whitehead. The respondents retained Mr Whitehead's firm to act for them in a conveyancing transaction. The appellant had the conduct of the matter. The respondents allege that the matter was handled negligently. The details of that allegation are not important. The respondents claim to have suffered damages in excess of $430,000. The manner in which that claim was assessed is presently irrelevant.

6 The respondents sued both Mr Whitehead and the appellant, in one action, in the Supreme Court of New South Wales. Originally, the respondents, acting under the mistaken belief that Mr Whitehead and the appellant were partners, framed their statement of claim on that basis. They sued both defendants in contract and tort. In the claim in tort, they alleged that Mr Whitehead was vicariously liable for the appellant's negligence.

7 The respondents then learned that the appellant was an employee, and could not be liable in contract. At about the same time, the respondents and Mr Whitehead reached an agreement to settle the claim against Mr Whitehead for $250,000 inclusive of costs.

8 A deed of release was executed by the respondents and Mr Whitehead. It included the following provisions:

‘1. In consideration of payment to the Releasor by the Releasee of the sum of $250,000.00 as hereinafter described the Releasor does for itself, and its assigns by these presents remit release and forever quit claim unto the Releasee, all manner of actions suits causes of action claims expenses and demands whatsoever which they have or which they could or might but for these presents at any time or times hereinafter have against the Releasee, by reason or on account of the hereinbefore recited circumstances or any manner cause or thing whatsoever arising therefrom.

2. PROVIDED HOWEVER that payment of the monies payable pursuant to paragraph 1 hereof shall be subject to the Releasor amending the Statement of Claim filed in proceedings issued in the Supreme Court of New South Wales Common Law Division bearing the number 14486 of 1987 herein in accordance with the annexure hereto marked “A” and the filing of Terms of Settlement in the said action in accordance with the terms annexed and marked “B”.

4. The Releasee shall pay the said sum of $250,000.00 to the Releasor within 21 days from the date of this deed or within 3 days from the date of filing of the amended statement of claim (annexure A) and terms of settlement (annexure B) in the said action, whichever shall be the later together with interest from that date at the rate of 19.5% per annum on the sum of $250,000.00 or any part of that sum outstanding on the expiration of the said period.’

9 An amended statement of claim in accordance with annexure A was then filed. It still named Mr Whitehead and the appellant as defendants, but it alleged that the appellant was an employee, and sued him only in negligence. The claim against Mr Whitehead was framed in contract and tort. In tort, he was said to be vicariously liable for the appellant's negligence.

10 Terms of settlement in accordance with annexure B to the deed of release were then filed. They provided for judgment for the respondents against Mr Whitehead for $250,000. Mr Whitehead, in the terms of settlement, undertook to take no further part in the proceedings. The argument in this Court, and in the Supreme Court of New South Wales, was conducted on the basis that judgment against Mr Whitehead was entered, and satisfied.

11 The appellant filed an amended defence which included the following:

‘16 In further answer to the whole of the Further Amended Statement of Claim at all material times Baxter was employed as a solicitor in the law practice of Whitehead and acted in the course of that employment in carrying out his duties in relation to the affairs of the Plaintiffs.

17 At all material times Whitehead was vicariously liable for the acts and omissions of Baxter acting in the course of that employment in carrying out his duties in relation to the affairs of the Plaintiffs.

18 If (which is denied) Baxter was a tortfeasor with respect to the Plaintiffs by reason of the matters alleged in the Further Amended Statement of Claim then Whitehead was a joint tortfeasor.

19 By deed of release dated 16 December 1987 and in consideration of the sum of $250,000 the Plaintiffs released Whitehead from all actions claims expenses and demands whatsoever in respect of the circumstances which allegedly gave rise to these proceedings.

20 On or about 11 February 1988 the Supreme Court entered judgment for the Plaintiffs against Whitehead in these proceedings in the sum of $250,000.

21 On or about 16 February 1988 Whitehead paid the judgment sum to the Plaintiffs.

22 In further answer to the whole of the Further Amended Statement of Claim Baxter says the action on behalf of the Plaintiffs is brought in respect to the same damage as that sought and fully recovered against Whitehead.’

Decisions in the Supreme Court of New South Wales

12 The appellant applied for summary dismissal of the respondents' action against him pursuant to Pt 13 r 5 of the Supreme Court Rules (NSW). In brief, he argued that the facts set out in pars 16 to 22 of the defence, which (subject to one qualification) were not in contest, meant that the action was bound to fail, that the test for summary dismissal formulated in General Steel Industries Inc v Commissioner for Railways (NSW)1 was satisfied, and that the case should be dismissed without the parties being required to litigate the issues of negligence and quantum of damages.

13 Master Harrison ruled against the appellant, declining summary dismissal of the action. An appeal to Hulme J failed. The appellant then sought leave to appeal to the Court of Appeal 2. In the Court of Appeal, for the purpose of avoiding the...