Green and anor v AMP Financial Planning Pty Ltd and ors No 3

SECOND RESPONDENT AMP Life Limited (ABN 84 079 300 379)

THIRD RESPONDENT AMP Capital Investors Limited (ABN 59 001 777 591) FILE NUMBER: 1028 of 2002 CORAM: Marks J CATCHWORDS : Unfair contract - application by applicants to separate hearing of unfairness/avoidance/variation issues from hearing of claim for monetary compensation - relevant principles - held inappropriate to allow separation by reason of the nature of the proceedings and witness common to both issues - application dismissed - costs reserved. LEGISLATION CITED : Industrial Relations Act 1996 ss 106(2) 106(5) ABB Engineering Construction Pty Ltd v Freight Rail Corp (1999) NSWSC 1037 CASES CITED : Idoport Pty Ltd v National Australia Bank and ors (2000) NSWSC 1215 HEARING DATES: 09/07/2004 DATE OF JUDGMENT: 09/10/2004

APPLICANTS Mr J Trew QC with Mr J W Murphy of counsel Solicitor: Mr M J Wright Trust Co of Australia Limited LEGAL REPRESENTATIVES: RESPONDENTS MR J West QC Solicitor: Mr R Forbes Mallesons Stephen Jaques

JUDGMENT: - 9 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Friday 10 September 2004

Matter No IRC 1028 of 2002 GARY SYDNEY GREEN AND ANOR v AMP FINANCIAL PLANNING PTY LTD AND ORS NO3 Application under s 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT ON APPLICANTS' APPLICATION TO SPLIT CASE [2004] NSWIRComm 264

1 These proceedings, brought under s 106 of the Industrial Relations Act 1996 ("the Act") are currently constituted by a third further amended summons. The applicants are Gary Sydney Green and Gary Green Pty Ltd. The three respondents are respectively AMP Financial Planning Pty Ltd, AMP Life Limited and AMP Capital Investors Limited. The nature of the proceedings are described in a judgment I published on 4 June 2004 in Green v AMP Financial Planning Pty Ltd and anor [2004] NSWIRComm 135. It is sufficient for present purposes that I describe the complex nature of the proceedings in the following terms. The applicants were engaged in marketing financial products developed by the respondents. The applicants marketed those products to their clients. It is alleged by the applicants that they relied upon advice, information, training and instruction given to them by the respondents which traversed inter alia the nature of the products being marketed and the legislative environment in which those products were being sold. The applicants said that they relied on extensive research undertaken by the respondents and the respondents' administration of the sales of those products. There was a complex set of documentation by which the applicants were appointed agents of the respondents, part of which was required by the relevant legislative environment which regulated the sale of those products. Included in those products was a facility to provide margin loans to clients of the applicants which allowed those clients to effectively increase the amount invested in various products subject to the repayment of the loans. The applicants allege that the respondents withheld or declined to provide certain information with respect to some of those products as a result of which clients of the applicants and the applicants themselves suffered loss. In addition, it is alleged that the respondents unfairly terminated the agency arrangements thereby depriving the applicants of a livelihood.

2 The applicants' third further amended summons was filed on 21 June 2004. The next step in the preparation of the proceedings is the filing by the applicants of all of the evidence upon which they seek to rely. Overhanging the preparation of the proceedings is an application brought by the respondents before the Supreme Court of New South Wales for these proceedings to be cross-vested in that Court with the hope that ultimately certain proceedings instituted by former clients of the applicants in the Supreme Court of Queensland can also be cross-vested into the Supreme Court of New South Wales so that the one court will be able to deal with all the issues between all parties. I should add for completeness that the Supreme Court of Queensland proceedings as currently constituted involve claims by one or other of the respondents to these proceedings against the applicants for indemnity because the plaintiffs in those proceedings have settled as against one or more of the AMP companies. Furthermore, the applicants in these proceedings seek to resist the cross-vesting applications brought by the respondents.

3 The applicants have moved the Court for an order that their case against the respondents be split so as to deal substantially in the first instance with whether a finding should be made that the contracts upon which the proceedings are based should be found to be unfair and whether orders should be made that they be declared void or varied. The applicants seek that the remaining question, namely whether any order for the payment of monetary compensation should be made under s 106(5) of the Act, should be dealt with at a further trial. It was asserted on behalf of the applicants that it was practical to split the proceedings in this way and this would allow the applicants' claim to be litigated without involving, in the first instance, any unnecessary expenditure and the application of resources to the question of monetary compensation.

4 The respondents resisted this application asserting that it was impossible, given the nature of the proceedings, to separate the litigation of any notional liability from the assessment of monetary compensation. Rather than shorten the proceedings it was the position of the respondents that splitting them in this case would effectively lengthen them. Importantly, also, it was clear from affidavit material relied upon by the parties for the purpose of this interlocutory application that at least one witness, the applicant Mr Gary Sydney Green, would be required to give evidence on both the first issue as to unfairness and as to the latter issue concerning monetary compensation.

5 Whilst there is always a superficial attraction in allowing applicants or plaintiffs to split cases, there are many instances where the attraction is more apparent than real. Whilst it might be said that thorough case management can avoid some of the problems, it must also be borne in mind that under the adversary system which is fundamental to the administration of justice in New South Wales, the parties are to be given a reasonable and appropriate opportunity to develop their respective cases and to test the cases of their opponents. In situations where evidence is common to both issues of what I shall describe colloquially as "liability" and "damages", it is inappropriate to endeavour to split cases and this is more so where evidence on both issues is to be given by the one person. In this latter regard I refer to the dangers inherent in endeavouring to split a case where there is an overlapping of witnesses on the issues of liability and damages discussed by Rolfe J in the Supreme Court of New South Wales in ABB Engineering Construction Pty Ltd v Freight Rail Corp (1999) NSWSC 1037. As his Honour said [15]: "A case should be conducted on the basis that the witness is cross-examined on all issues at the same time and in the context of all issues, because his or her evidence on one issue may impact on the acceptability of his or her evidence on the other. If there is not adherence to this practice difficult questions arise for the Court as to the extent to which cross-examination on the matter not being litigated should be allowed, and for the cross-examiner as to how far matters not in issue can and/or should be pursued, and how that evidence should be treated in the overall assessment of the witness". I respectfully agree with the observations of Rolfe J in those proceedings and I refer in particular to the material contained in paragraphs [15] to [20] of his Honour's reasons for judgment.

6 The issues to be considered by a court in determining whether to order the trial of separate issues have been comprehensively summarised by Einstein J in the Supreme Court of New South Wales in Idoport Pty Ltd v National Australia Bank and ors (2000) NSWSC 1215. At paragraph [7] his Honour said: " Without examining specific cases in relation to the power conferred on the Court in Part 31, Rule 2, I proceed on the basis of the following principles. (1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J. (2) In exercising the power under Part 31, Rule 2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules ; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Part 1, Rule 3 (1), (2) Supreme Court Rules . (3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur. (4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances: (a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy : CBS Productions Pty Ltd v O'Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J); (b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D); (c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O'Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA. (5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where: (a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J). (b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq ) (1992) 26 NSWLR 441 : Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5 ; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J). (c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra). (6) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra)."

7 In order to consider this matter further it is also necessary to have regard to the nature of these proceedings. The making of any orders and the granting of any relief under s 106 is conditional upon the court finding that the relevant contract is "an unfair contract". Without such a finding having been made, the court has no power to make any subsequent orders. If such a finding is made it is then necessary for the Court to consider whether to make an order either declaring the contract wholly or partly void or varying the contract either from its commencement or from some other time. It is only if such orders are made that the court is empowered to make an order for the payment of money in connection with any contract declared wholly or partly void or varied as the court "considers just in the circumstances of the case" (s106(5)). Furthermore, in making any order the court is required to take into account whether the applicant took any action to mitigate loss. Overarching all of this is the necessity for the Court to find that the contract was unfair either at the time it was entered into "or that it subsequently became an unfair contract because of any conduct of the parties" (s106(2)). It will be seen from these brief observations that whether any loss is suffered so as to eventually found an order for the payment of monetary compensation as is sought by the applicants in these proceedings, may become intricately bound up with a determination as to whether the contract was or became unfair and as to whether it should be avoided or as to whether and to what extent it should be varied. Mitigation of loss also assumes significance in connection with avoidance, variation and monetary compensation. Accordingly, I agree with the submissions made on behalf of the respondents that it may be impossible to consider whether there has been the requisite unfairness without having regard to any loss or detriment suffered by the applicants. The question of whether the respondents should indemnify the applicants or the applicants should indemnify the respondents with respect to any losses suffered by clients of the applicants is also at the heart of these proceedings.

8 If follows that the court cannot be satisfied that there is a clear demarcation between the issues which the applicants seek to have litigated separately and all other issues in the case. It follows also that the Court cannot be satisfied that there are not intertwined issues of fact or law between each of the issues which the applicants seek to have determined separately.

9 Whilst there must be some sympathy for any step which will result in any proceedings being determined in the most cost effective and efficient manner, I am not satisfied that in the circumstances of these proceedings this will be achieved by splitting the issues in the manner advocated by the applicants. Accordingly, the application is dismissed.

10 I have not heard submissions as to costs. Normally costs would follow the event. In the event that the parties cannot reach a sensible resolution of this issue, I will grant liberty to apply.

11 The parties agreed at the conclusion of the hearing that they would reach agreement on a timetable to further progress these proceedings. I will make orders in chambers reflecting any reasonable consent position reached by the parties in this regard, otherwise the proceedings may be re-listed by either party at short notice pursuant to the liberty to apply which continues to operate in connection with the case management process.

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