CPB Contractors Pty Ltd v Liberty Mutual Insurance Company

Texts Cited: N.A.

Category: Procedural rulings

Parties: CPB Contractors Pty Ltd (first plaintiff)
John Holland Pty Ltd (second plaintiff)
Liberty Mutual Insurance Company (first defendant)
AAI Limited (second defendant)
XL Insurance Company SE (third defendant)
Allianz Australia Insurance Limited (fourth defendant)
Catlin Australia Pty Ltd (fifth defendant)
Great Lakes Insurance SE (sixth defendant)
Swiss Re International SE – Australia Branch (seventh defendant)
Swiss Re International SE Singapore Branch (eighth defendant)
MTR Corporation (Sydney) NRT Pty Limited (interested party)
UGL Rail Services Pty Ltd (interested party)

Representation: Counsel:
P Braham SC; M Sheldon; K Woodforde (plaintiffs)
D T Miller SC; M F Newton (defendants)
H Chiu SC (interested parties)
Solicitors:
King & Wood Mallesons (plaintiffs)
Wotton Kearney (defendants)
Herbert Smith Freehills Kramer (interested parties)

File Number(s): 2024/449461

Publication restriction: N.A.

JUDGMENT

1. These proceedings involve a claim by the plaintiffs against various insurers. The claim arises out of the design and construction of a railway line in Sydney, called the Northwest Rail Link.

2. By a notice of motion filed on 9 July 2025, the defendants seek an order under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) that a question be determined separately from and before all other questions in the proceedings. The plaintiffs oppose the order.

The proposed separate question

3. The proposed question is as follows (omitting footnotes):

If the Plaintiffs are otherwise entitled to indemnity from the Defendants under Extension clause 3.2 of the Policy for the following expenses:

(a) in respect of the example claim identified in paragraphs C47 to C52 (‘Issue 3’) of the Amended Technology and Construction List Statement:

(i) the Down Under Pipeline invoice number 7327 dated 23 August 2016 as identified in the Affidavit of Ryan Madden dated 31 January 2024 at paragraph 72(a);

(ii) the Infraworks Rail invoice number 18167 dated 20 November 2016 as identified in the Affidavit of Ryan Madden dated 31 January 2024 at paragraph 80,

(b) in respect of the example claim identified in paragraphs C113 to C118 (‘Issue 16’) of the Amended Technology and Construction List Statement:

(i) the Select Quarry Materials invoice number 24495 dated 4 May 2018 as identified in the Affidavit of Chris Byrne dated 30 January 2024 at paragraph 38(o);

(ii) the Select Quarry Materials invoice number 30571 dated 8 March 2019 as identified in the Affidavit of Chris Byrne dated 30 January 2024 at paragraph 38(ww),

what was the date on which the Plaintiffs’ cause of action in relation to those expenses accrued within the meaning of section 5(1) of the Limitation Act 1958 (Vic)?

4. The question is framed in terms of the application of the Limitation of Actions Act 1958 (Vic). However, the defendants contend that what the question raises, as a matter of substance, is a short question concerning the proper construction of the contract of insurance. The plaintiffs oppose the separate question, but contend that if there is to be a separate question, there need to be some changes to the question propounded in order to draw out the issue of construction. The precise form of any changes has not been ventilated.

5. The defendants do not contend that the determination of the separate question will entirely dispose of the proceedings if answered favourably to them. They contend that the answer to the question, if favourable to them, will result in real cost savings in preparation and hearing time. They assert that a favourable answer will mean that a significant part of the plaintiffs’ claim will be statute barred and will not need to be addressed at a final hearing. They also submit that an answer to the question will contribute to the possibility of settlement.

The claim on the insurance policy

6. The relevant insurance policy is styled as “Professional Indemnity Insurance for Construction Projects”. It is a project specific policy. Various companies are named insureds. The policy limit is $100,000,000. The policy includes a loss mitigation and rectification extension.

7. The plaintiffs claim under the extension. The relevant policy wording is in clause 3.2, which provides:

3.2 Loss Mitigation & Rectification

Liberty will pay to the Insured the reasonable direct costs and expenses incurred by the Insured in taking action necessary to rectify, or to mitigate the effects of, any act or omission of the Insured or its Agent in the performance of Professional Services that would otherwise result in a Claim covered under the Policy, provided always that:

(a) the Insured first discovers such act or omissions during the Policy Period and notifies Liberty of such act or omission during the Policy Period; and

(b) the Insured notifies Liberty during the Policy Period of its intention to take such action and obtains **Liberty’**s written consent (which shall not be unreasonably withheld) prior to incurring any such direct costs or expenses.

No cover is provided for:

(i) indirect costs and expenses such as loss or diminution of the **Insured’**s profit, bonus, incentive payment or opportunity cost; or

(ii) costs and expenses of material or Professional Services, which result in an increased quality or standard from that specified in the design parameters of the relevant contract.

Notification under this extension must be given to Liberty in accordance with Claims Condition 5.1(a) and the Insured must give Liberty such information and cooperation as it may reasonably require in accordance with Claims Condition 5.1(b).

8. The proceedings were commenced on 3 December 2024. It does not seem to be disputed that the claim is founded on a simple contract and that actions cannot be brought after the expiration of 6 years from the date on which the cause of action accrued: see section 5 of the Limitations of Actions Act 1958 (Vic). Causes of action that accrued before 3 December 2018 are statute barred.

9. The proceedings concern a significant number of items of costs and expenses. It is common ground that a large portion of those costs and expenses were incurred prior to 3 December 2018. The defendants have estimated that slightly less than 15% (or $23,410,201.47) of the pleaded total claim reflects costs alleged to have been incurred after 3 December 2018. Those calculations were not contradicted.

10. The defendants contend that any cause of action the plaintiffs have against them accrued as and when the costs and expenses were incurred. They contend that approximately 85% of the claims by value are time-barred. They submit that the evidence to deal with all of the time-barred claims would be complex and detailed and would involve months of Court time at a hearing to resolve.

11. The plaintiffs contend that the defendants’ liability to give indemnity under clause 3.2, and hence any breach, did not occur until the defendants gave notice of the relevant act or omission. Notice was not given until well after 3 December 2018. Hence, the plaintiffs contend none of their claims are out of time.

12. The proposed separate question is intended to tease out whether the plaintiffs or defendants are correct about when the relevant causes of action, or cause of action, accrued.

The principles

13. In exercising power under UCPR r 28.2, the Court must seek to give effect to the overriding purpose of the Civil Procedure Act 2005 (NSW), which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: see section 56.

14. The plaintiffs referred to various statements in the authorities about when the Court should order a separate question, being:

(a) “when there is a critical matter which if dealt with in a preliminary hearing will far more likely than not be convenient and save significant expense”: Strathfield Municipal Council v Poynting [2001] NSWCA 270; 116 LGERA 319 at [113], per Young CJ in Eq; (b) where it results in the “disposal of the whole action”, or where it “narrows the issues for trial substantially”: CBS Productions Pty Ltd v O*’*Neill (1985) 1 NSWLR 601 at 607, per Kirby P; (c) where its “utility, economy, and fairness to the parties are beyond question”: Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 at [170], per Kirby and Callinan JJ; and (d) where it is possible “to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings”: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7], per Einstein J.

15. The plaintiffs drew particular attention to the remarks of Kirby and Callinan JJ in Tepko v Water Board at [168] (with which Gaudron and McHugh JJ agreed at [52] and [90] respectively, and which the majority did not consider):

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 preparing and the factual matters relevant to one issue are relevant to others, and they all overlap.

These remarks have been applied by the Court of Appeal in several cases, including: Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103; 195 LGERA 182 at [91], per Ward JA; Mehmet v Carter [2018] NSWCA 305 at [8], per Bathurst CJ; State of New South Wales v Dargin [2019] NSWCA 47 at [6]-[9], per Leeming JA; and Doyle’s Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) (2021) 106 NSWLR 41; [2021] NSWCA 246 at [24], per Leeming JA.

16. The plaintiffs also referred to the following observation in Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 at 533, per Mason CJ, Dawson, Gaudron and McHugh JJ:

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.

17. The defendants have referred to the practice in the Federal Court of Australia’s Insurance List. They contend that although the Federal Court contemplated that the List was principally intended for “short matters”, the utility of the List and its procedures is not limited to them. In Prestige Form Group NSW Pty Ltd v QBE European Operations Plc [2023] FCA 749, Jackman J at [2] described it as the “usual practice” in the List for parties to identify a separate question to be determined separately from and prior to other questions in the proceedings. In Commens t/as Subsonic Music v Certain Lloyd*’*s Underwriters subscribing to Policy No ALTCNX1900332 [2023] FCA 1434 at [5], his Honour spoke of the:

…strong inclination in case management of the Insurance List for the identification and determination of separate questions …, in the expectation that that will be the most efficient way of dealing with the proceedings and will also increase the prospect of compromise of the other issues which may be time consuming and expensive to litigate.

The defendants submit that these considerations should equally apply to insurance proceedings conducted in the Commercial List and Technology and Construction List of this Court.

18. I note that in Prestige Form Group v QBE European Operations, the parties joined in identifying a separate question which concerned a short question of construction. In Commens v Certain Lloyd*’*s Underwriters, the separate question that was ordered to be heard meant that questions of quantification would be heard separately and subsequently to the other issues in dispute. Jackman J took into account that there was a real prospect that questions of quantification may be suitable for referral pursuant to s 54A of the Federal Court of Australia Act 1976 (Cth). In both cases, it appears that an order that separate questions be determined facilitated the just, quick and cheap resolution of the real issues in the proceedings.

19. It cannot be said that it is the usual practice in the Commercial List or the Technology and Construction List, when dealing with insurance proceedings, for the parties to identify a separate question to be determined separately. That is not to say that the Court will refuse to order or even discourage the identification of separate questions in the conduct of insurance proceedings. Insurance proceedings may lend themselves to the determination of a separate question where, for example, there is a discrete question of construction that can be answered without reference to extensive or contentious evidence. This was the approach taken by McDougall J in Metlife Insurance Ltd v RGA Reinsurance Company of Australia Ltd [2016] NSWSC 416 at [8].

20. I recognise that there will be occasions when it is possible to identify a discrete question which can sensibly be decided separately and in advance of the hearing of all other issues, and the overriding purpose is served by answering the question. Relevant considerations to take into account include the time that will be taken to address the separate question, whether there is a prospect that an answer will dispose of the proceedings, the length and complexity of the remaining issues and the risk that credit issues of the same persons will arise in answering the separate question and in a hearing of the remaining issues. The prospect of delays occasioned by an appeal against a judgment on a separate question will often have to be taken into account.

21. The best candidates for separate questions are often those that the parties advance on a consensual basis. The parties are under a duty to assist the Court to further the overriding purpose. That duty requires them to consider whether a separate question will facilitate the just, quick and cheap resolution of the real issues in the proceedings. It is a breach of that duty if a party rejects a proposal for a separate question because they perceive that their forensic purposes are best served by a slow and expensive resolution of the proceedings.

22. I approach my task on the basis that I am required to focus closely on the particular circumstances of the case and to come to a decision about what will facilitate the just, quick and cheap resolution of the real issues in the proceedings. In doing so, I am mindful that it will often be the case that the allure of saving the Court and the parties time by ordering a separate question will prove to be a false economy. Nevertheless, there will be cases where a separate question will have utility. I am mindful of the practical realities of modern commercial litigation, including the obligation on the parties to assist the Court to further the overriding purpose.

Some late complications

23. At the hearing before me on 3 November 2025, the defendants sought leave to amend the notice of motion to seek to add a further question as follows:

2. Is the ‘Limit of Liability’ (or maximum amount payable by the Defendants collectively) provided for under clause 6.2 of the Policy:

(a) progressively ‘used up’ as and when each cause of action accrues for an amount payable under the terms of the Policy subject to the Limit of Liability; and

(b) reached when a cause or causes of action have accrued for an amount or aggregated amounts of $100,000,000 payable under the terms of the Policy subject to the Limit of Liability?

3. If the answer to question 2(b) is ‘yes’, after the Limit of Liability has been reached, can any further causes of action accrue or amounts become payable under the terms of the Policy subject to the Limit of Liability?

The defendants contend that these questions should be answered as follows: 2(a) – yes; 2(b) – yes; 3 – no.

24. The proposed amended notice of motion also seeks the following order:

1A. Pursuant to rule 6.24 of the UCPR, MTR Corporation (Sydney) NRT Pty Limited and UGL Rail Services Pty Limited be joined as defendants to this proceeding.

25. The plaintiffs only received notice of the proposed amendments late on 29 October 2025. At the hearing before me, the plaintiffs contended that the application caught them by surprise and that they had asked the defendants some questions about the proposed amendments that had not been answered. I was not disposed to compel the plaintiffs to deal with the amendment given that it was served shortly before the hearing. I indicated to the parties I would hear argument on the notice of motion that had been fixed for hearing.

26. However, during the course of argument, senior counsel for the defendants explained the connection between the separate question that was originally propounded and the new separate questions and the application to join other parties. It became apparent that this gave rise to some complications.

27. The defendants wish to join to the proceedings two other companies, MTR Corporation (Sydney) NRT Pty Limited and UGL Rail Services Pty Limited, who are also insureds under the policy (and are generally referred to together as “SJV”). There is evidence that they have made claims on the policy. The evidence is that the $100,000,000 policy limit has been eroded and the cover available is limited to $40,000,000. The claims by the plaintiffs comfortably exceed $40,000,000. Accordingly, there is a prospect of a priority dispute between the plaintiffs and SJV.

28. The defendants contend that the priority question arises on the plaintiffs’ current Technology and Construction List Statement and the plaintiffs should have joined SJV as necessary parties to the proceedings. The plaintiffs do not accept that contention. This is not something I need resolve for present purposes.

29. The proposed second and third questions are directed to the priority dispute. It can be seen from the form of questions that an issue that would arise in answering them is the question of when a cause of action accrues relevantly for the operation of the policy. The issue of when a cause of action accrues is also relevant to the separate question posed in the original notice of motion. This suggests, at least as a possibility, that SJV would be interested in the answer to the original question. It also suggests that the question of joinder of SJV should be resolved before the Court contemplates any separate question.

30. The defendants have also made an offer, subject to conditions, that if the first question is answered in the plaintiffs’ favour and if the proposed second and third questions are answered as the defendants contend, they will accept that they are liable to pay the remaining $40,000,000 to the plaintiffs. One of the conditions is that SJV is joined. There are other conditions, including in relation to costs. The plaintiffs have not had sufficient time to absorb and respond to the offer. They contend that they need to know more about the SJV claim.

31. SJV were represented at the hearing. I was told that they do not oppose the joinder. Joinder was opposed by the plaintiffs, but really on the basis that they need some more information and time to consider their position. I consider this to be a reasonable position for them to take (for a short time).

32. The prospect of the first question being an appropriate one may be enhanced if the second and third questions are also determined separately and if there is a likelihood that answers to the questions will (if answered particular ways) bring the proceedings to an end. It is too early to say whether that may be the case.

33. It is possible that the wisdom of the separate question raised in the notice of motion now before the Court will be affected by a joinder of SJV and proper consideration of the new proposed questions. It is possible that the attitude of the plaintiffs will change upon further reflection. Their position may change once they have been given an opportunity to refine the questions and negotiate aspects of the conditional offer made by the defendants (which could result in payment to them of the balance of the insurance cover). As I have said, the plaintiffs are obliged to assist the Court to further the overriding purpose.

34. Whatever else might be said about the separate question propounded by the defendants, I do not consider that there should be any order that the question be decided separately before the status of SJV as a party to the proceedings has been resolved.

Observations about the merits of the separate question

35. As things currently stand, I would not be inclined to make an order for the determination of a separate question, even apart from the complications that I have just addressed.

36. As I have noted, the defendants contend that the answer to the question, if favourable to them, will result in real cost savings, for the parties and the Court. They recognise that the answer, if in their favour, will not dispose of the proceedings, but they say it will significantly reduce the issues that have to be determined, which means less evidence to be prepared and possibly many weeks of saved hearing time. The plaintiffs have served their evidence but the defendants have not yet done so.

37. The plaintiffs submit that it is not so simple. They accept that there is a possibility, perhaps even a likelihood, that the trial would be shortened if the separate question is answered in the defendants’ favour. But they say that there are reasons why the trial would not be any shorter, or why there is at least uncertainty about the complexion of the hearing of the remaining issues. The plaintiffs’ contentions can relevantly be distilled into two main points.

38. First, they submit that if the question is answered in the defendants’ favour, it would not mean that matters relating to costs and expenses were incurred prior to 3 December 2018 can all be put to one side. That is because they make substantial claims for what are said to be “thickening preliminaries” and “labour and plant disruption”. They submit that claims under these categories arise from design deficiencies that occurred prior to 3 December 2018, with the consequence that much of the evidence concerning the alleged pre-December 2018 design deficiencies will still be relied on by them, even if the defendants have the separate question determined in their favour. The plaintiffs contend that even if the defendants are successful at the hearing of the proposed separate question, evidence from the affidavits of 44 of 51 lay witnesses will still be pressed and 15 of 17 expert reports will still be relied upon. The defendants contend that large parts of these affidavits and reports will become irrelevant. The plaintiffs did not disagree with that contention. But the point remains that there is the prospect of significant live issues in the proceedings about pre-December 2018 design issues.

39. Second, they submit that there is good reason to suppose that at a final hearing (without any separate question) the defendants may not, acting rationally and reasonably, take a position that is all that different to the position that they would take if there was a separate question and it was determined in their favour. That is for several reasons. One is because the defendants could take the view that they have the limitation point that can be advanced at trial and proceed on the basis that either: (a) the limitation point succeeds and pre-December 2018 claims will fail; or (b) the limitation point fails in which case the damages are likely to be so far above the $40,000,000 limit that it is not worthwhile contesting the pre-December 2018 causes of action. This means that there may be little incentive for the defendants to agitate the pre-December 2018 claims at trial (or all of them). The plaintiffs contend that it is not necessarily true that an answer to the separate question in the defendants’ favour will result in cost and time savings.

40. The plaintiffs point to delays that may arise from applications for leave to appeal from the answer to the separate question. This is partly addressed because the defendants indicated that they are willing to undertake not to make such an application (reserving their right to appeal against the interlocutory decision after judgment in the final hearing). However, if the plaintiffs fail at the determination of the separate question, they would be likely to seek leave to appeal and may expect to have reasonable prospects of obtaining leave given the significance of the answer to them. This may occasion delay. I do not consider, however, that delays would be lengthy. That is because the parties agree that the hearing of the separate question would take 1 to 2 days. That could probably be fixed in the reasonably near future. Any application for leave to appeal and appeal after that could probably be determined within a matter of weeks or months. The overall delay would likely be measured in months, not years. But it is still delay.

41. It is also relevant to note that the defendants contend that they understand the plaintiffs’ argument on the separate question involves the proposition that the plaintiffs can sidestep the operation of the limitation statute by their own conduct, being the failure to comply with the notification provisions in clause 3.2. This raises a possibility that the character and consequences of the plaintiffs’ conduct in respect of notification will arise as a relevant consideration at the hearing of the separate question.

Conclusion

42. I am not going to order that the question identified in the defendants’ notice of motion be heard separately from and before all other questions in the proceedings.

43. It is at least premature to fix the question for determination while the position of SJV as parties remains unresolved. Moreover, I am not presently persuaded that the question will facilitate the overriding purpose. Given the uncertainty of how an answer to the question will impact the conduct of the proceedings more generally, I am not presently persuaded that there is wisdom in fixing the proposed question for separate determination.

44. It is possible that considerations will change if SJV are joined and if questions resolving the issue of priority can be advanced. It may be that in those circumstances there will be questions which could, if resolved one way, bring the whole proceedings to an end. The attitude of the plaintiffs may change.

45. If SJV is joined, it would be desirable for the List Statements of the parties to draw out the priority dispute (assuming there is one) so the Court and the parties are properly informed about the issues that relevantly arise. It is probably desirable to consider proposed changes before deciding whether there should be a joinder.

46. In my view, the most efficient way forward is to give the defendants an opportunity to serve any evidence in support of their application to amend the notice of motion filed 9 July 2025 to join SJV and (if it wishes) to refine the wording of the proposed amendments. The plaintiffs should have a chance to respond. The matter can come back before the Court after that time so that the Court and the parties can consider the most efficient way to advance the matter.

47. The parties should confer about the future conduct of the matter, including in light of the matters raised in these reasons.

48. Costs should be reserved because the orders I propose will not dispose of the defendants’ notice of motion and the issue of costs is best addressed in the context of the final disposal of the notice of motion.

49. I make the following orders:

50. The defendants are to file and serve any proposed amended notice of motion and any evidence in support by 14 November 2025.

51. The plaintiffs are to file and serve any evidence in response by 20 November 2025.

52. The matter is listed for directions in the Technology and Construction List on 21 November 2025.

53. Costs reserved.

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