DLA Piper: Australian High Court Finds a Judgment Is Not Always a Judgment

DLA Piper: Australian High Court Finds a Judgment Is Not Always a Judgment

By Melissa Joyce and Mark Williams, Attorneys, DLA Piper

A person who has suffered damages as a result of a tort and brings separate actions against tortfeasors liable in respect of the same damage cannot recover more than the amount of damages awarded by the judgment first given.  In Newcrest Mining Limited v Thornton [2012] HCA 60, the Australian High Court found the limit on recovering damages in successive actions does not apply where the 'judgment first given' is a consent judgment filed to give effect to an agreement to settle the first action. The decision will allow plaintiffs to settle an action with one tortfeasor via a consent judgment and use the settlement proceeds to potentially fund subsequent actions against the remaining joint tortfeasors.

Background
Michael Thornton alleged he was injured on 16 February 2004 while working at a mine occupied by Newcrest Mining Limited. Initially, Mr Thornton did not claim damages from Newcrest Mining, and instead claimed workers' compensation payments from his employer, Simon Engineering (Australia) Pty Limited (Simon Engineering). He later commenced an action against Simon Engineering in the District Court of Western Australia, claiming damages for negligence.

Mr Thornton's action against Simon Engineering was settled by way of a consent judgment for $250,000 plus workers' compensation and costs. Simon Engineering paid the settlement sum to Mr Thornton in full and the judgment was discharged.

A year later, Mr Thornton commenced a separate and new action against Newcrest Mining and three other defendants in the District Court. In this second action, he claimed damages against the defendants relating to the same work accident and the same injuries.

Summary judgment
Newcrest Mining applied for summary judgment in light of the settlement of the first action. The District Court granted the application on the basis Mr Thornton had already been awarded damages for the same injuries, and therefore could not be awarded damages again. When reaching this decision, the District Court found that at no time prior to the settlement of his claim against Simon Engineering did Mr Thornton expressly reserve his rights to pursue a claim against any other tortfeasor.

Court of Appeal decision
Mr Thornton appealed the summary judgment decision to the Court of Appeal. The appeal focused on the interpretation of s7(b) of the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) (Law Reform Act), which is designed to preclude plaintiffs from being awarded damages for the same injury in successive actions. This section relevantly provides that sums recoverable under judgments given in successive actions 'shall not in the aggregate exceed the amount of the damages awarded by the judgment first given'. The question before the Court of Appeal was whether Mr Thornton had been 'awarded' damages in his first action against Simon Engineering when the consent to judgment was entered.

The Court of Appeal held that a payment further to a consent judgment was not an award of damages. As such, the court found there was nothing to stop Mr Thornton from bringing his further claim against Newcrest Mining. In doing so, the Western Australian Court of Appeal reached the same conclusion as the New South Wales Court of Appeal in Nau v Kemp & Associates [2010] NSWCA 164, which considered the interpretation of a similar provision in the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and which was handed down two months after the District Court had entered summary judgment against Mr Thornton.

High Court appeal
In the appeal, the High Court was asked to consider whether the restrictions on recovering damages in multiple actions under the Law Reform Act (and its equivalent legislation in New South Wales, Queensland and the Northern Territory) only applied to damages awarded by a court following a judicial assessment or if the provisions have broader application and applied to a judgment entered by a court by the consent of the parties.

In support of the appeal, Newcrest Mining challenged the construction of s7(1) of the Law Reform Act and the findings of the Court of Appeal on the basis it prompted multiplicity of actions. In doing so, it contended that a judgment delivered by a trial judge based on agreements between the parties to all or part of the elements required to quantify damages prior to trial could not be superior to, and should have the same effect as, a judgment entered by consent of the parties. Newcrest Mining also submitted the findings of the Court of Appeal could allow plaintiffs to adopt a scattergun approach to litigation against potential tortfeasors, with the knowledge that a consent judgment would be no bar to further pursing others defendants and seek to improve their position with each defendant.

Mr Thornton disagreed and submitted the interpretation of the phrase 'damages awarded by the judgment first given' must require judicial determination on the question of damages recoverable for the damage or injury.

The majority of the High Court (comprising Chief Justice French and Justices Heydon and Bell) found a consent judgment which merely gives effect to the settlement and cannot amount to an award of damages for the purposes of s7(1) of the Law Reform Act because there had been no judicial determination of liability and no consequent award of damages. Instead, a consent judgment gives legal effect to the parties' settlement agreement and does not confine the plaintiff's common law right to recoup the full amount of their loss against several concurrent tortfeasors.

Implications
The decision challenges the previously perceived benefit of using consent judgments as a mode of settlement of court proceedings. While this was seen in the past to be a proper and effective means of recording full and final settlement of an action against a particular defendant and end all further potential claims against that defendant, defendants who resolve claims against them by consent judgments are now exposed to being joined as third parties in subsequent actions the same plaintiff commences against separate tortfeasors, and having to pay more than they originally settled for.

This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.

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