In M Johnson Building Pty Ltd v O’Toole [2026] ACTCA 8, the Court (Mossop, McWilliam, and Taylor JJ) upheld the builder's appeal on the basis that the primary judge erred in failing to reduce its liability from $270k to $173k due to double recovery by the O'Tooles based on earlier settlement with the certifier, in circumstances where the causes of action against the builder and certifier overlapped, but only partially.
MJB constructed a residential dwelling for the O'Tooles in Latham. The O'Tooles alleged failures to build according to the plans and required standards, as well as defective construction. They commenced proceedings against MJB and the Certifier. The claim against the Certifier was settled prior to hearing. Consent judgment was entered against the certifier in the sum of $200k. The O'Tooles were successful against MJB in the amount of $287k, but MJB was only ordered to pay $270k. This was because s 141 of the Building Act operated requiring the judgment against MJB for its proportion of the total amount of damage the Court considered just. There was a complicating factor because some of the items for which damages were awarded were not subject to the Certifier's supervision, so MJB was 100% liable for those. MJB appealed.
The first ground of MJB's appeal concerned liability for an inadequate site cut. MJB argued that it should not be liable before the contract made the Owners' responsible for those expenses. This was dismissed by the Court on the basis that MJB did not include this in its pleadings, and also because the Contract did not limit or exclude site works as contended for by MJB, and because MJB's evidence was consistent with the site cut being included in the contract.
The second ground of MJB's appeal concerned potential double recovery by the O'Tooles because the settlement with the certifier should have been fully taken into account in determining the quantum of MJB's liability. The Court agreed that in the circumstances where part of the damages sought against MJB were also sought against the Certifier, and settlement was paid before delivery of the primary judgment and where the parties were heard on the issue before final orders were made, the settlement sum was required to be taken into account.
The rule against double compensation is well established and cuts across actions in tort, contract and statute. The fundamental question is whether the claims are concurrent or overlapping in respect of the damage sustained. If the claim is for the same damage settlement with one wrongdoer (and subsequent recovery) will have a consequence for what may be recoverable from the second wrongdoer. The principle still operates where the losses are not entirely concurrent. While it is for the defendant to prove that double recovery has or will occur, it is for the plaintiff who receives the payment to clear up any uncertainty about the allocation of the money paid.