HIS HONOUR: This is a Notice of Motion filed by the Workers Compensation Nominal Insurer seeking orders under Uniform Civil Procedure Rule 28.2 for the severance of the contract claims that are said to arise in the proceedings from the balance of all other issues.
To explain the context in which the motion arises, it is necessary to describe the proceedings. The plaintiff, Russell Milne, has filed proceedings in this division seeking damages in respect of an injury that occurred while he was at work on 11 April 2011.
Mr Milne sued two defendants, Rocla Pty Limited ("Rocla"), and Interstate Enterprises Pty Limited ("Interstate"). As I understand it, Mr Milne alleges that Interstate was his employer at the time of the accident, although the place of the accident was under the care and control of Rocla. Rocla has been described in submissions as his "host employer".
As is usually the case, both Rocla and Interstate have filed cross-claims against each other. Those cross-claims each seek contribution under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the "1946 Act"). Moreover, each of their cross-claims plead that the other party breached the terms of the labour hire agreement between them and thus is contractually obliged to indemnify the party making the cross-claim.
Milne v Rocla Pty Ltd [2016] NSWSC 1501 | Case summary | Zoe
These contractual claims have caused difficulty for the insurance position. Interstate, as the employer of Mr Milne, has made a claim for indemnity upon its workers compensation policy with its extension for common law damages against the Workers Compensation Nominal Insurer (the "Nominal Insurer"). QBE acts as the agent for that body.
Consistent with what I understand to be the established position, the Nominal Insurer has advised that it will indemnify Interstate in respect of the claim made by the plaintiff and to the extent of any claim for contribution under the 1946 Act but will not indemnify it for any contractual liability that it may have to Rocla. By an amended statement of cross-claim filed on 8 August 2016, Interstate joined QBE as the representative agent for the Nominal Insurer and formally sought indemnity under the policy.
QBE has brought this motion on behalf of the Nominal Insurer seeking an order severing out the contractual aspects of the cross-claims so that they may be decided after the other issues in the proceedings; specifically, the plaintiff's claims against both defendants and the claims for contribution under the 1946 Act.
The main motivation for the application is a practical one because, as I understand it, if that were to occur, then QBE accepts that it would conduct the defence of the balance of the issues on behalf of Interstate in its defence of the plaintiff's claim and the contribution claim by Rocla. There would, in that respect, be no conflict of position between Interstate and the Nominal Insurer in that both would have an interest in having Interstate defeat, or minimise, the plaintiff's claim and both would have an interest in having Interstate defeat, or minimise, Rocla's claim for contribution.
The various affidavits that have been filed on the application debate the efficiencies that may or may not be achieved by severing the contractual issues from the balance of the proceedings in terms of reduced costs and hearing time. It suffices to say that having read that material, I am not persuaded that there would be any great improvement to be achieved in terms of reduced costs and hearing time from a severance of the contractual issues, except that there may be some reduction in costs from the fact that, instead of both Interstate and QBE being represented, there would be only one legal representative for both parties at that point.
However, it is not that aspect of the matter that I consider to be fatal to the application. An interlocutory order for the separate determination of the issue is an exceptional measure which is distinct from the ordinary course of determining the issues at trial in their totality (see Street v Luna Park Sydney Pty Limited (2007) NSWSC 697 at [5]). The applicant for the order, in this case QBE, consequently bears the burden to demonstrate that the order is appropriate (see Integral Home Loans Pty Limited v Interstar Wholesale Finance Pty Limited [2006] NSWSC 1464).
If the order sought by QBE was to be acceded to then what would proceed to trial would be a hearing of the plaintiff's claim for damages against each of Interstate and Rocla and their respective claims for contribution under the 1946 Act. However, the right to bring the latter claim rests upon s 5(1)(c) of the 1946 Act. That provision makes it clear that there is no such claim for contribution in circumstances where one party is entitled to be indemnified by the other person in respect of a liability in respect of which the contribution is sought. In other words, if either of Interstate's or Rocla's contractual claim was upheld then there would be no right for contribution between the parties. Further, even if there was no right of indemnity established, an assessment of the parties' respective responsibilities for the purposes of determining what is just and equitable in terms of contribution might require a consideration of what, as between those two parties, they contractually agreed to do.
The consequence then of severing a contractual claim in a case such as this would be to produce an exercise for the trial judge that is simply far too unwieldy. The resulting judgment would be one that was highly contingent upon a further consideration of the contractual issues that might arise.
During the course of argument, Counsel for QBE, Mr Rickard, raised the possibility of the severance of all of the cross-claims from the hearing of the plaintiff's claim. However, the more one starts to embark upon an exercise of that nature in my view the more artificial the exercise becomes. The finality of any such resulting judgment would, in my view, be very doubtful.
Further, as Counsel for Rocla, Mr Stockley, pointed out, until there has been some form of notional assessment of the respective contributions of each of the two defendants then, by operation of the Workers Compensation Act 1987 (NSW), an assessment of the amount by which the plaintiff's damages might be reduced could not be undertaken.
The end result is that in a case such as this I do not consider that it is realistically possible to sever issues from the trial in any manner that was formulated in argument.
One matter that was discussed was whether, as an alternative to the orders sought, I would make orders in respect of QBE's participation in the proceedings. As the matter stands at the moment, absent some agreement between Interstate and QBE, there is the potential for a conflict between them in that Interstate has a strong interest in avoiding any contractual liability to Rocla as that will not be covered by its policy with the Nominal Insurer, while the Nominal Insurer has an interest in maximising the possibility that if Interstate is otherwise liable it is also liable to Rocla for a contractual indemnity. In stating that, I am not suggesting that the Nominal Insurer is angling for any such outcome. Indeed, its conduct in bringing this motion would suggest quite the contrary.
The result, however, based on the pleadings is that absent some agreement between Interstate and the Nominal Insurer, the Nominal Insurer would appear to have a real interest in appearing at the hearing and being heard in respect of issues that may affect its obligation to indemnify Interstate. It was suggested that I should make orders to allow that to occur. However, given that it is already a party in the sense that it has been joined to a cross-claim, I do not see what further orders are required at this stage. The extent to which QBE may be able to participate in the proceedings as a whole I think is a matter that needs to be taken up with the trial judge. The trial judge's discretion in that regard should not be fettered by orders made beforehand.
Accordingly, I dismiss the notice of motion filed 16 September 2016. I order the second cross-defendant to pay the first defendant's costs of the Notice of Motion.
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Decision last updated: 26 October 2016