Ahmed El Hayek v Josslyn Vasic & Anor; QBE Insurance

LEGISLATION CITED : Civil Procedure Act 2005 Uniform Civil Procedure Rules

Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 Idoport Pty Ltd v National Australia Bank [2000] NSWSC 1215 CASES CITED : Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 Perre v Apand Pty Ltd (1999) 198 CLR 180 Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Ltd v Water Board (2001) 206 CLR 1

2006/266976 Ahmed El Hayek (P) Josslyn Vasic (D1 & XC1) Charles Fairey (D2 & XC2) PARTIES : Ibrahim El Hayek (XD to XC)

2010/208525 QBE Insurance (Australia) Limited (P) Wesfarmers General Insurance Limited (D)

FILE NUMBER(S) : SC 2006/266976 and 2010/208525

2006/266976 D. Baron (P) A. Renshaw (D1 and D2) COUNSEL : 2010/208525 A. Renshaw (P) P.A. Horvath (D)

2006/266976 Michael Abboud & Co (P) A R Connolly & Company (D1 and D2) SOLICITORS : In person (XD to XC)

2010/208525 A.R. Connolly & Co (P) DLA Phillips Fox (D)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2010/208525 QBE INSURANCE (AUSTRALIA) LIMITED v WESFARMERS FEDERATION INSURANCE PTY LTD

Application for Determination of Separate Questions

1 HIS HONOUR: QBE Insurance (Australia) Limited seeks an order that the Court determine separately, and in advance of all other issues in the proceedings, a number of questions which touch upon one aspect of the litigation. 2 In order to understand the relevance of those questions to the issues in the litigation, and the importance of the separate questions which are sought, it is appropriate that I set out some background and the relevant procedural history.

An injury to Ahmed El Hayek 3 The plaintiff, Ahmed El Hayek, by a statement of claim filed on 2 June 2006 brings proceedings claiming damages from the cross-claimants for negligence arising out of injuries he sustained on 4 July 2003 whilst in the course of a visit to Mulga Creek Station, Byrock, a property owned by the first cross-claimant, Josslyn Vasic and managed by the second cross-claimant, her brother, Charles Fairey. The property was situated near Bourke in New South Wales. The plaintiff was born on 20 May 1987. He was a little over 16 at the time of his visit to the property. He visited the property in the company of his father, Ibrahim El Hayek for the purpose of hunting for feral animals. 4 In his statement of claim, the plaintiff alleges that he attended the property on 3 June 2003 with his father and there made contact with the second cross-claimant. He pleads that at that time an amount of money was paid to the second cross-claimant for accommodation and hunting. 5 He pleads that he was directed together with his father by the second cross-claimant to the shearers quarters, namely a building located on the property which had formerly been used to accommodate shearers whilst they worked in their profession on the property. 6 It is appropriate to set out some paragraphs of the statement of claim. It includes the following "6 In approximately December 2000, the defendants agreed to allow a group known as 'Inland Hunting' to source sporting shooters to have accommodation and use of the property for the purposes of hunting.

7 On 3rd July 2003, the plaintiff with his father attended the property and made contact with the second defendant.

8 At that time an amount of money was paid to the second defendant for accommodation and hunting.

9 Immediately or soon thereafter, the second defendant directed the plaintiff and his father to the shearers quarters being the accommodation provided to the plaintiff and his father.

10 At or about 4.30am on 4 July 2003 the shearers quarters caught alight.

11 At that time the plaintiff was asleep in the shearers quarters.

12 As a result of the fire the plaintiff suffered severe injury, loss and damage as particularised in the Statement of Particulars filed herewith."

Procedural History 7 The reference to sub-paragraph (f) of the amended defence which is said to describe the documents in these terms seems to be a reference to sub paragraph (d). That is the way I shall understand it.

8 The cross-claimants submitted that the QBE Policy consisted of a number of documents. The first document which they rely upon is Ex XC3 which is a closing advice dated 21 August 2002 from SSAA Insurance Brokers Pty Limited to Concord Underwriting Agencies (SA) Pty Ltd. That document notes the cover in the following terms: "Covering the insureds for legal liability to third parties for bodily injury and/or property damage caused by an occurrence in connection with the insured's activity of allowing licensed shooters on their properties for the purpose of hunting only."

9 Exhibit XC3 also has on it a stamp and an annotation in the following terms: "Cover is confirmed from … am/pm 21/8/02 to 4am/pm 21/9/02 according to the terms and conditions of the PLB policy …".

10 There is then a signature placed on the document on 21 August 2002 on behalf of the Insurers.

11 Also written on the document is a reference to the deletion of the words "property owners cover only". It is agreed between the parties that these words were not part of any policy and accordingly can be put to one side.

Contribution Proceedings 12 On 28 June 2010, QBE commenced proceedings against Wesfarmers General Insurance Limited claiming an entitlement to contribution to any verdict or judgment in favour of Ahmed El Hayek and against Jocelyn Vasic and Charles Fairey. The claim for contribution was based upon the proposition that Wesfarmers were insurers of the same risk as QBE and accordingly QBE had an entitlement to contribution. 13 In the course of the hearing of that dispute, QBE accepted that the Wesfarmers insurance policies did not name Mr Charles Fairey as an insured. 14 It was an agreed fact that Ms Vasic was named as the insured on the policies. Accordingly, the claim for contribution proceeded but only with respect to any judgment which may be suffered by Ms Vasic. 15 On 4 August 2010 I delivered judgment with respect to that claim. I found that under its Farm Liability Policy, Wesfarmers was obliged to indemnify Ms Vasic with respect to the claim of Mr Ahmed El Hayek. 16 On 6 August 2010 I made declarations and orders to give effect to this judgment. The declarations were as follows: "1. Declare that upon the true construction of the Farm Liability policy contained within the Rural Plan Policy of Insurance No. 03RPL2002243 dated 24 June 2002, the defendant is liable to indemnify Mrs Josslyn Vasic in relation to proceedings No. 2006/266976 in the Common Law Division of the Supreme Court of NSW.

Order that the question of whether the bodily injuries which Mr Ahmed El Hayek sustained on 4 July 2003 at Mulga Creek Station, Byrock NSW were caused by, or arose directly or indirectly from, the farming business conducted by Mrs Josslyn Vasic, be stood over for further hearing and determination concurrently with proceedings No. 2006/266976 in the Common Law Division of the Supreme Court of NSW.

Order that all remaining issues in these proceedings and proceedings No. 2006/266976 in the Common Law Division of the Supreme Court of NSW be heard together with the evidence in each proceeding to be evidence in the other proceeding.

Order that the defendant pay the plaintiff's costs of the proceedings to date.

Order that, under s 26 of the Civil Procedure Act 2005 the proceedings be referred to mediation, which is to be concluded on or before 9 September 2010.

Order that the proceedings is listed for directions before me at 9.30 am on 10 September 2010." 17 I also made orders of a procedural kind to enable the efficient case management of the contribution proceedings jointly with the proceedings brought by Mr Ahmed El Hayek. I ordered that the proceedings be heard together, and that the evidence in one proceeding be the evidence in the other. 18 But for an appeal which Wesfarmers has lodged against my judgment, both sets of proceedings have continued to be case managed together and to have similar orders made in each proceedings. 19 An appeal by Wesfarmers is due to be heard by the Court of Appeal on 14 April 2011. The claim of Mr Ahmed El Hayek is to be heard in the Common Law Division of this Court for a period of weeks commencing on 28 February 2011. Wesfarmers have not sought a stay on the declaration and orders which I made on 6 August 2010. As will be apparent from those orders, there remains at least one, if not more, factual issues to be determined in that proceeding.

Separate Questions 20 On 16 November 2010, QBE made an application that the Court order, in both proceedings, pursuant to rule 28.2 of the Uniform Civil Procedure Rules that there be a separate determination of a number of questions. 21 Those questions are as follows: "1. At all relevant times, was Mr Fairey an employee of Ms Vasic?

2.2 If the plaintiff proves that Mr Fairey was responsible for each of the acts or omissions set out in paragraphs 16(a) to 16(p) of the Statement of Claim, were those acts or omissions undertaken as part of his employment with Ms Vasic?

2.3 If the answer to 2.2 is yes, then is Ms Vasic liable for Mr Fairey's acts or omissions pleaded in paragraphs 16(a) to 16(p) of the Statement of Claim?

3. At all relevant times, was Mr Fairey an agent of Ms Vasic?

4.2 If the plaintiff proves that Mr Fairey was responsible for each of the acts or omissions set out in paragraphs 16(a) to 16(p) of the Statement of Claim, were those acts or omissions undertaken by Mr Fairey as agent for Ms Vasic?

4.3 If the answer to 4.2 is yes, then is Ms Vasic liable for Mr Fairey's acts or omissions pleaded in paragraphs 16(a) to 16(p) of the Statement of Claim." 22 It can be observed that these questions centre upon the relationship between Mr Fairey and Ms Vasic and whether Ms Vasic will ultimately be legally liable for the conduct of Mr Fairey.

QBE's Submissions 23 QBE's submissions were brief and comprised of the following: "1. In dispute between Wesfarmers General Insurance Limited and QBE Insurance (Australia) Limited is the position of Mr Fairey since the Wesfarmer's Policy does not name Mr Fairey as a co-insured with Mrs Vasic.

2. The determination of the separate question will bring the status of the insurers into a parity, that is, that they both effectively insure the named Defendants, QBE by nomination and Wesfarmers by operation of law.

3. Although no pre-agreement has been reached between the insurers, it is very likely that after the determination of this question that the prospects of settlement of the matter would significantly increase. We believe that there is no prospect of settlement between the insurers and the plaintiff until this issue is determined.

4. Determination of the separate question would thereby facilitate a more beneficial usage of the Court's time, namely dispensing potentially with the need for a three week trial.

5. The issue of the status of Mr Fairey will need to be determined in any event, and a determination of the separate issue provides a significant chance of settlement between the parties and more useful disposition of the Court's time."

Wesfarmers' Submissions 24 In a letter dated 1 November 2010 from DLA Phillips Fox, solicitors for Wesfarmers, to AR Connelly & Co, solicitors for QBE, Wesfarmers, in order to comply with a direction which the Court had made, set out a history of the matter, and then proposed separate questions for determination. Those questions have been embraced by QBE and form the questions which QBE now seeks to have separately determined. 25 However, the letter of 1 November 2010 made it plain that Wesfarmers did not agree that it was appropriate that there be a separate determination of those questions in advance of all other issues at the trial. 26 In the letter, the solicitors for Wesfarmers expressed their position in this way: "In the process of considering a separate determination on the nature of the relationship between Mr Fairey and Ms Vasic, we can see some cause for concern about whether such a determination is feasible as:

we anticipate that each of Ms Vasic and Mr Fairey will need to give evidence on this question and at least Mr Fairey will no doubt be giving evidence in the substantive proceedings;

it is likely that at least Mr Fairey's evidence in the preliminary question will be relevant to his evidence in the substantive proceedings having regard to the alleged particulars of negligence contained in paragraph 16 of the Statement of Claim; and

if the plaintiff subsequently seeks to amend (or add to) his particulars of negligence any such addition may mean that the question of Ms Vasic's exposure for Mr Fairey's conduct needs to be reviewed." 27 When the matter was before the Court for directions on 5 November 2010, counsel for Wesfarmers indicated that although her client, through its solicitors, had formulated the questions in compliance with a court order, her client was of the view that it was inappropriate for such separate questions to be determined. 28 Although directions were made for the provision of further submissions in writing, I have received no further submissions from either Wesfarmers or any other party which wishes to oppose the making of orders for the determination of separate questions. 29 Although the submissions which I have received from both parties are limited, it is nevertheless convenient to consider whether it is appropriate to order these questions be determined separately.

Uniform Civil Procedure Rules 30 The appropriate rule to be considered is r 28.2. It is in the following form: "28.2 Order for decision (cf SCR Part 31, rule 2) The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings."

Principles Relating to Application of r 28.2 31 In exercising the discretion which exists in r 28.2 to make an order of the kind under consideration here, it is essential that the Court gives effect to the provisions of s 56 of the Civil Procedure Act 2005. By s 56(2), the Court is obliged to seek to give effect to the overriding purpose of the Civil Procedure Act and rules of Court when exercising any power given to it by the Act or rules of Court. 32 Section 56(1) provides that: "The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick, and cheap resolution of the real issues in the proceedings." 33 The commencing point for the consideration of a motion such as this is that it is ordinarily appropriate that all issues in proceedings should be disposed of at the one time: Commonwealth Bank of Australia v Clune [2008] NSWSC 1125 at [5] per Johnson J. 34 In Perre v Apand Pty Ltd (1999) 198 CLR 180 at 332 [436], Callinan J said: "Care does need to be taken in deciding whether to conduct separate trials of different issues. It sometimes happens that they may turn out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which they are intended to avoid. In tort cases in which damage is the gist of the action, it will be generally undesirable to accede to requests for them, or to order them, unless all parties accept that compensable damage has been sustained by the plaintiffs or applicants as the case may be". 35 In Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 55, Kirby and Callinan JJ said at [168]-[170]: "168. The appeal should be allowed. However, we should not leave this case without making four comments. Both Mason P[75] and Fitzgerald JA[76] were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd [77] attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

169. The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests.

170. Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question." 36 Although these remarks were made prior to the introduction of the Civil Procedure Act, and whilst there may be room for a debate as to whether the Court should take a more interventionist role in identifying and separating issues which can resolve significant parts of litigation expeditiously: Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 at [6], I am satisfied that it remains the case that determination of separate questions is an unusual, perhaps exceptional, course which is only to be taken when the benefit can be seen to clearly outweigh the disadvantages of the kind discussed by Kirby J and Callinan J in Tepko. 37 Einstein J in Idoport Pty Ltd v National Australia Bank [2000] NSWSC 1215 has helpfully summarised the principles to be applied by a Court in considering whether to order the determination of separate questions. I will not set out the entirety of those principles. I derive from his Honour's judgment, with which I express respectfully, my agreement, the following principles of relevance in this case:

(a) it is for the party seeking the order to show to the Court that it is desirable for the determination of the separate question to occur: Idoport at [7(3)];

(b) the determination of a separate question may be appropriate where the resolution of the separate issue carries with it a strong prospect that the parties will be able to resolve their dispute themselves: Idoport at [7(4)(b)];

(c) the determination of a separate question will be unlikely to be appropriate where there is a commonality of witnesses and issues of credit as between the separate issue and the other issues in the case which will, or may, necessitate a ruling on the credit of one or more witnesses: Idoport at [7(5)(b)]; and

(d) a determination of a separate question is unlikely to be appropriate unless it is possible to clearly see that the determination will facilitate the just quick and cheap resolution of the proceedings or the central issues in the proceedings: Idoport at [7(6)]; 38 Giles CJ in Comm. D (as his Honour then was) said in Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141: "Part 31, r 2 of the rules empowers the court to make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings, and for the statement of a case and the question for decision. In the ordinary course all issues in proceedings should be decided at the one time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of rights of appeal is borne in mind) brings delay, expense and hardship greater than that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties dispute." Discernment 39 The questions posed address in effect two issues. One of fact, namely what was the relationship at the relevant time between Mr Fairey and Ms Vasic, and one of law, namely, in the circumstances of the conduct, the subject of the plaintiff's statement of claim, was Ms Vasic, having regard to the relevant relationship, legally liable to the plaintiff for Mr Fairey's conduct. 40 No party has indicated with any precision what evidence, if any, may be called on the determination of the separate questions posed. It is necessary for me in this judgment, upon the basis of what I already know, to make some assessment of the likely course of the evidence to be called. 41 I have not been provided with statements indicating the extent of the evidence to be called on this question, let alone the extent of the evidence which will be called at the hearing of all of the remaining issues by relevant witnesses. 42 The likely evidence in support of the answers to those questions will come from at least Ms Vasic herself and Mr Fairey as to their relationship and the facts and circumstances which surround the question of whether Ms Vasic is liable for Mr Fairey's conduct. 43 I can anticipate that it may be that there will be some documentary evidence which could be relied upon as demonstrating what the relationship between Ms Vasic and Mr Fairey was, and as well, it is possible that there may be other witnesses who can give evidence which is relevant to the issue of what their relationship was, including perhaps the issue of how Mr Fairey conducted himself in undertaking his work at the property. 44 I would observe that the facts which the plaintiff himself or his father are capable of giving in evidence, about the exchanges which occurred between them and Mr Fairey upon arrival at the property and leading up to the plaintiff's injuries being sustained, are very likely to be facts and matters which are themselves capable of giving rise to inferences about the relationship between Mr Fairey and Ms Vasic. It would be surprising if any hearing of the proposed separate questions proceeded without including this evidence, from one or more witnesses. 45 Equally, what Ms Vasic and Mr Fairey would say about their relationship may be impacted upon by the particular facts in the plaintiff's case. Since their evidence on this proposed separate question would need to proceed upon the basis of assumption rather than actual evidence of what happened, the result would be likely to be imprecise and unconvincing, unless the plaintiff and his father were called to give evidence. 46 This review demonstrates that it is likely, in my opinion, that there will be a commonality of witnesses who will deal with the employment issues and also the general issues of liability as they relate to the plaintiff. 47 It is also possible, and indeed likely from the little which I know about this case at this stage, that there will be issues of credit surrounding the conduct of, at least, Mr Fairey, at the time that the plaintiff and his father attended at the property, and when the building which they were sleeping burnt down. 48 There will certainly be likely to be conflicting accounts as to what occurred and what was said which will mean that the Court will inevitably be asked to make a ruling as to the reliability of the evidence of each of the participants and perhaps their credibility. 49 Whilst QBE's submissions confidently assert that it is very likely that the prospects of settlement would significantly increase if a determination of the proposed separate questions was undertaken, the fact that the solicitors for Wesfarmers indicate opposition from their clients to the course proposed, does mean that I cannot share the confidence of QBE as to the likelihood of resolution. 50 As well, the history of this matter does not suggest that either of the parties to this application, if a determination of separate questions is made, are unlikely to seek to persuade the Court of Appeal to grant leave to appeal. This would not achieve either speed or cost savings. 51 In all of the circumstances, I am not persuaded that the suggested benefits are likely to arise if the proposed questions are determined separately, from, and before, the principal proceedings. 52 I am persuaded that issues of credit are likely to arise, in circumstances where there will be a commonality of witnesses and factual issues between the hearing of the separate questions and also the final hearing. 53 It is unlikely that there will be any savings of time in first determining the separate questions. 54 In those circumstances, the applicant, QBE, has not persuaded me that it is in the interests of justice for me to make an order that there should be a separate determination of the questions posed.

(1) Dismiss the application of QBE for the separate hearing and determination of the questions relating to the relationship of Mrs Vasic and Mr Fairey.

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