470 St Kilda Road Pty Ltd v Robinson

REASONS FOR JUDGMENT 1 By an interlocutory application filed on 27 November 2012, the cross-respondent, Chubb Insurance Company of Australia Limited ("Chubb"), seeks an order pursuant to r 15.13(a) of the Federal Court Rules 2011 (Cth) ("the Rules") that the hearing of the cross-claim proceed separately and prior to the hearing of the claim in the principal proceeding. The cross-claimant, Mr Glenn Roy Robinson, concurs that such an order should be made. The applicant, 470 St Kilda Road Pty Ltd ("470 St Kilda Road"), made no contrary submission. 2 Chubb's interlocutory application is supported by the affidavit of John Kirk Hunter Edmond sworn on 6 December 2012. Mr Edmond is Chubb's solicitor. 3 Chubb and Mr Robinson each filed written submissions, which they relied on at the hearing today. For the following reasons, I am satisfied that an order of the kind sought should be made. 4 The applicant, 470 St Kilda Road, commenced the principal proceeding on 3 April 2012 against Mr Robinson, who was the Chief Operating Officer of Reed Constructions Australia Pty Ltd ("Reed") at the time of a statutory declaration declared by Mr Robinson on 12 December 2011. The statutory declaration was submitted in support of a payment claim under a design and construct contract between Reed and 470 St Kilda Road. In its statement of claim, 470 St Kilda Road alleges that Mr Robinson did not have a reasonable basis for making the statutory declaration, and that as such he engaged in conduct that was likely to mislead or deceive and acted negligently in breach of his duty of care. Mr Robinson has filed a defence and the applicant, a reply. In consequence, the issues in dispute in the principal proceeding are ascertainable. 5 By his cross-claim, Mr Robinson claims indemnity under the directors' and officers' section of a liability insurance policy ("the D&O Policy") issued by Chubb. Chubb has filed its defence to cross-claim. The parties to the cross-claim agree that the only issue that remains outstanding in the cross-claim is whether Chubb is entitled to refuse to indemnify Mr Robinson by reason of exclusion IV(A)(v) to the D&O Policy. This exclusion states: The Company [Chubb] shall not be liable for Loss in respect of any Claim: … (v) for any actual or alleged act or omission, including but not limited to any error, misstatement, misleading statement, neglect, or breach of duty committed, attempted or allegedly committed or attempted in the rendering of, or actual or alleged failure to render any professional services to a third party. 6 The parties agree that the only issue is whether the making of the Statutory Declaration was "in the rendering of, or actual or alleged failure to render any professional services to a third party". 7 The prima facie position under r 15.10(1)(c) of the Rules is that the trial of a cross-claim occurs at the same time as the trial of the principal proceeding. Nonetheless, as the authorities confirm, the Court has power to order the separate trial of a cross-claim under r 15.13(a): see New World Oil and Developments Pty Ltd v 163 Clarence Street Pty Ltd [1995] FCA 138 ("New World Oil"). 8 Although the Court in New World Oil indicated that a cross-claim would be separately determined only in exceptional circumstances, the Court's approach to applications such as the present may have shifted since the enactment of s 37M of the Federal Court of Australia Act 1976 (Cth). I accept that the preferable approach, consistent with s 37M, is that set out by Lander J (then a judge of the Supreme Court of South Australia) in Port Pirie City and Districts Council v Leenders & Partners Pty Ltd [2001] SASC 208 at [44]-[47]. In any event, even if I were to apply the "exceptional circumstances" principle favoured by earlier authorities, such as New World Oil, I would reach the same result in this case. 9 Having regard to the written submissions filed by Chubb and Mr Robinson, I accept that: the split hearing will be unlikely to result in an overlap of evidence and witnesses before the Court; the resolution of the cross-claim first will be likely to result in cost savings with minimal delay to the hearing of the principal proceeding; the resolution of the cross-claim will lead to greater procedural certainty for the balance of the proceeding; and the resolution of the cross-claim will increase the chances of early resolution of the principal proceeding. 10 For these reasons, the making of an order in the nature of that sought by Chubb will lead to a more efficient and less expensive outcome. Accordingly, I would make such an order under r 15.13(a) of the Rules. Chubb and Mr Robinson agreed that the following order would be appropriate: The question - whether the cross-claimant's statutory declaration made on 12 December 2011 was an actual or alleged act or omission "in the rendering of, or actual or alleged failure to render any professional services to a third party", within the meaning of exclusion IV(A)(v) of the Directors' and Officers' Liability Coverage Section of the Policy of Insurance referred to in the statement of cross-claim as policy of insurance number 93301062 - be tried separately from all other issues arising in these proceedings. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.