A notice of motion filed 21 March 2019 seeks orders pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") that specific questions arising in respect of the amended second cross-claim be determined separately from any other questions in the proceedings and before the trial of the other questions in the proceedings.
On 18 June 2019 I made the orders sought in the notice of motion. These are my reasons for making those orders.
The applicants are the second and third defendants who are the second and third cross-claimants in the proceedings. They are in effect the sub-lessee operating a business from premises known as the Civic Hotel and the licensee of that hotel.
On 16 February 2011 the plaintiff fell down the stairs at the premises on his way to a bathroom in the basement level of the building.
There is, to put it neutrally, an issue as to whether and to what extent the basement level operated as a nightclub. That issue, amongst others, has significance as to whether an insurance policy issued by Neon Underwriting Ltd formerly known as Marketform Underwriting Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468, ("Neon"), (the third cross-defendant) responds to the circumstances of the plaintiff's claim against the defendants.
In its Defence to the amended second cross-claim filed on 5 March 2018, Neon admits that it issued an insurance policy covering the relevant period (31 January 2011 to 31 January 2012) and says that it relied upon information in a proposal form completed by the third defendant which entailed failures to disclose relevant matters and misrepresentations of other relevant matters. As a result it is alleged the defendants breached their duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) ("ICA") and accordingly Neon is entitled to avoid the policy or reduce its liability to place it in the position it would have been, if full disclosure had been made in accordance with s 28 of the ICA.
Specifically Neon pleads that had the relevant non-disclosures and misrepresentations not been made, Neon would not have issued the policy on those terms, or at all.
The notice of motion identifies three specific questions that would have the effect of disposing of the issues on the cross-claim and thus provide the defendants with a finding as to whether insurance cover would respond or not.
It is common ground that the determination of these issues would have a flow on effect in fostering progress in the primary proceedings brought by the plaintiff, who was very severely injured when he fell down the stairs, now over eight years ago.
Unsurprisingly these insurance issues proved an impediment to resolution of the primary proceedings at a mediation in 2017, and continue to do so.
The plaintiff consents to the orders proposed. Neon took the position that it neither consented to nor opposed the orders being made, stating that it was a matter for the Court.
I have had the substantial benefit of succinct written submissions from the applicants outlining the principles to be applied on the application. I was also well assisted by cogent oral submissions from Mr Williams SC addressing the salient background and factual matters.
[2]
Principles
Rule 28.2 of the UCPR provides as follows:
28.2 Order for decision
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.
Sections 56 and 57 of the Civil Procedure Act 2005 (NSW) provide relevantly as follows:
56 Overriding purpose
(1) 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.
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.
…
57 Objects of case management
(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:
(a) the just determination of the proceedings,
(b) the efficient disposal of the business of the court,
(c) the efficient use of available judicial and administrative resources,
(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).
A summary of the principles to be applied to the question of whether separate questions should be determined was given by Hallen ASJ in Southwell v Bennett [2010] NSWSC 1372, at [15] and recently restated by Wilson J in Lake Maintenance (NSW) Pty Limited v Todd Hadley Pty Limited & Ors [2019] NSWSC 297. The relevant principles here are:
a. The rule speaks of "questions" and not "issues" and does not differentiate between questions of fact, or law, or partly of fact and partly of law;
b. The judicial determination of a "question" must involve a conclusive, or final, decision based on concrete and established, or agreed, facts, for the purpose of quelling a controversy between the parties: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334, at [45] and [51];
c. Whether such an order should be made is a matter for the Court's discretion, which discretion must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; [1978] VR 669, at 670; Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7];
d. As a general rule, the discretionary power to order separate determination of a question should be approached with caution: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at [436], per Callinan J; Tepko Pty Limited v The Water Board [2001] HCA 19; (2001) 206 CLR 1, at [168]-[170] per Kirby and Callinan JJ: Commonwealth Bank v Clune [2008] NSWSC 1125 at [6], per Johnson J; Bailey and Bailey v Director-General Department of Energy Climate Change and Water and Ors [2010] NSWSC 979 at [4] per Studdert AJ;
e. In exercising its discretion, the overriding purpose of the Civil Procedure Act 2005, namely the just, quick and cheap resolution of the real issues in the proceedings (s56) must be given effect;
f. Generally, all questions of fact and law should be determined at the one time. If the Court is to depart from that position, the party seeking the separate determination of a question must satisfy the Court that it would be 'just and convenient' for that order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [8]- [9], see also Energy Australia v Australian Energy Limited [2001] FCA 1049;
g. Before a question 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 at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported);
h. Factors that tend to support the making of an order, include that the separate determination of the question may:
i. contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings; and
ii. contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 602 per Kirby P at 607).
i. Whilst the decision is ultimately one for the Court to determine, it will have regard to the attitude of the parties: TVW Enterprises Limited v Duffy (Federal Court of Australia, 28 March 1985, unreported) Toohey J;
j. It is a relevant consideration to weigh the time likely to be taken in the hearing of a separate question and the availability of hearing dates for that purpose, against the time and expense of a substantive hearing and the length of time likely to elapse before such a hearing will take place: TVW Enterprises Limited v Duffy at pp 4-5; and
k. Each case will have its own dynamics that dictate the relative importance of various factors to be considered in exercising the discretion conferred.
The following submissions were made as to why I should exercise my discretion to accede to the orders:
First, the questions of indemnity raised by Neon have no common facts or questions with the plaintiff's substantive claim. Whether the Hotel operated a nightclub is not a fact in issue in the plaintiff's action;
Second, the separate determination of the questions set out in the Notice of Motion filed on 21 March 2019 will be in the interests of the just, quick and cheap determination of the real issues of all of the parties;
Third, the parties (in effect) agree the questions ought to be determined as preliminary matters;
Fourth, the facts relevant to the questions will be largely established by a Statement of Agreed Facts by way of ongoing negotiation between the parties;
Fifth, the area of disagreement on the facts relates to the general manner in which the Hotel was used at the time of renewal of the Neon policy. Evidence on this matter falls within a narrow compass and does not affect the balance of the proceedings; and
Sixth, the parties will call their own evidence on those few facts that are not agreed. Such evidence could be heard within less than a day.
In short, the parties are desirous of having the question of indemnity under the policy separately determined because:
a. This question is truly a distinct and separate question to all other issues in the substantive proceedings;
b. At a prior mediation of the substantive proceedings this unresolved dispute proved fatal to any agreement to compromise the plaintiff's case;
c. The applicant and the respondent cannot agree on who should be conducting the defence of these proceedings. The default position that the insured may need to defend the proceedings and recover its costs is impeded by reason of the lack of funds (by reason of its trustee status only) available to the primary applicant;
d. The facts are substantially agreed. The narrow area of dispute will be able to be wholly contained to matters that will not arise in the balance of the proceedings;
e. There is no risk of inconsistent credit findings;
f. Not only the applicant and the respondent but all of the parties in the proceedings are desirous of having the question separately determined; and
g. It is efficient as to private and public resources and substantially increases the prospect of the resolution of the whole of the proceedings.
[3]
Decision
I am required when determining any application before me pursuant to the UCPR and the Civil Procedure Act to bear firmly in mind what would be in the interests of just, quick and cheap resolution of the real issues for determination between the parties. In my view this application is an obvious example of a genuine pursuit of such an approach to the case.
I accept all of the submissions made by the applicant on the motion. I accept that the separate determination of the questions set out in the notice of motion are truly distinct and separate questions to all other questions in the substantive proceedings. I accept that there is no commonality of witnesses who would be called on those issues as opposed to the primary proceedings. I note that all of the parties are in effect desirous of having that question separately determined. No doubt this is so that the defendants can know what their insurance status is and can respond accordingly to the demands of the primary proceedings.
Overarchingly there is a real prospect that resolution of these questions will substantially increase the prospect of resolving the whole proceedings once the competing parties know of their obligations and exposure, and to be blunt, whether the insurance policy responds or not.
Accordingly I made the following orders:
1. Pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) the following questions are to be determined separately from any other questions in the proceedings and before the trial of the other questions in the proceedings:
1. Whether the Second Cross-claimant on the Amended Second Cross Claim (Universal 1919) breached its duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) (ICA) by reason of the matters pleaded in paragraph 3 of the Third Cross-defendant's (Neon's) Defence to the Amended Second Cross Claim.
2. Whether Universal 1919 made a misrepresentation within the meaning of s 28 of the ICA by reason of the matters pleaded in paragraph 3 of Neon's Defence to the Amended Second Cross Claim.
3. Whether Neon is entitled, pursuant to section 28 of the ICA, to:
(i) avoid the policy; or
(ii) reduce its liability under the policy and, if so, to what extent.
[4]
Amendments
08 April 2020 - typographical amendments to Order (1) and 1. on cover sheet (Decision) and at paragraph 21.
29 July 2022 - Par 18, line 1 replaced "that I" to "to"
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Decision last updated: 29 July 2022