Joinder and severance of defendants
12The basic principle for joinder of relevant parties is that "the court should take whatever course seems to be most conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation": Bishop v Bridgelands Securities (1990) 25 FCR 311 at 314. If inconvenience is claimed, it must be shown that there are factors which make it inconvenient for there to be a joint trial, rather than that a separate trial is more convenient: Mann v Board of Health (ACT) (1996) 67 FCR 383 at 399F. Disadvantages to a defendant seeking a separate trial, including the possibility of unfairness, must be weighed against identified advantages to the parties as a whole, and to the efficient use of the court's resources, having regard to the commonality of issues raised by each claim: Dean-Willcocks v Air Transit International Pty Ltd (2002) 55 NSWLR 64 at [34]. The court should be concerned to determine what is the most efficient use of the resources of the parties and also of the court: Carter v Commissioner of Taxation (2001) 109 FCR 215 at [23].
13In ASIC v Axis International Management Pty Ltd [2009] FCA 250 at [12] -[13], Gilmour J summarized the relevant factors as follows:
"[12] Factors which have been held to weigh in favour of exercising the discretion to order separate trials include:
(a) the issues concerning the party seeking the separate trial are distinct and discrete: Bishop v Bridgeland Securities at 314;
(b) a joint trial will involve the respondent in the expense of being present at the trial of questions with which they are not concerned and it would be unfair for the respondent to be compelled to participate in a large and costly proceeding where it has only marginal involvement: Hinze v Zed [1926] SASR 77 at 84; Knight v Beyond Properties Pty Ltd (No 2) [2006] FCA 192 at [30] and Newman v Hold Pty Ltd [2001] VSC 282 at [17].
[13] Factors which have been held to militate against making such an order include:
(a) the potential overlap of evidence and argument, including the need for the same witnesses to be called at both trials: National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd [1996] FCA 1228 at [17]; Dean-Willcocks v Cmr of Taxation 2003 45 ACSR 298 at [18];
(b) the interrelationship between issues which are not capable of being resolved independently of each other: Mann v Board of Health (ACT) at 400F;
(c) the potential disqualification of the judge that hears the first trial, if adverse findings are made as to the creditability of witnesses: National Mutual Property Services (Australia) Pty Ltd v Citbank Savings Ltd at [16]; Dean-Willcocks v Cmr of Taxation at [18]; and
(d) the undesirability of inconsistent findings as to the same transactions: Henschel v Brittany Crepe Co Pty Ltd [1981] Qd r 173 at 175-176."
14The principles applicable to applications for severing a party and for a separate hearing of a legal issue between the parties are not dissimilar. The relevant legal principles for determining separate questions have been helpfully summarised by Rares J in Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438; [2011] FCAFC 69 at [42] as follows:
"[42] In AWB Ltd v Cole (No 2) (2006) 233 ALR 453; [2006] FCA 913 at [26]-[40], Young J reviewed the authorities from which (without reciting the authorities to which his Honour referred) the following principles can be distilled:
(1) As a general rule the starting point is that all issues of fact and law should be determined at the one time.
(2) A party seeking the determination of separate questions must satisfy the court that it is "just and convenient" for the order to be made. The order must be made on concrete facts, either established or agreed, for the purpose of quelling a controversy between the parties so as to produce a conclusive or final judicial decision on the issue, which is of a real, not hypothetical, importance to the determination of the controversy.
(3) There are special problems where the separate issue involves a mixed question of fact and law, although it may still be able to be decided as a separate issue. However, care must be taken in precisely formulating the question and specifying the facts upon which it is to be decided.
(4) The court must have all relevant matters before it as a precondition of it being asked to exercise its discretion if the separate question involves the grant or refusal of declaratory relief.
(5) It may still be appropriate to determine a separate question even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided or if the decision will obviate unnecessary and expensive hearings of other questions.
(6) Generally speaking an issue will not be appropriate for separate determination if it is simply one of two or more alternative ways in which an applicant or plaintiff frames its case and its determination would leave other significant issues unresolved.
(7) It is relevant to consider whether:
· the separate questions will contribute to the saving of time and cost by substantially narrowing the issues for trial or even lead to the disposal of the proceedings;
· they will contribute to the settlement of the proceedings;
· they will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the trial;
· there will be any significant overlap between the evidence adduced on the hearing of the separate question and a trial;
· the questions will prolong, rather than shorten, the proceedings: see too City of Swan v Lehman Brothers Australia Ltd (2009) 73 ACSR 86 ; [2009] FCA 784 at [26]-[27] per myself."
15A similar list was set out by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd (No 15) [2000] NSWSC 1215 at [7] as follows:
"[7] Without examining specific cases in relation to the power conferred on the Court in Pt 31, r 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 Pt 31, r 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: Pt 1, r 3(1), r 3(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)."
16The principles set out in Idoport Pty Ltd v National Australia Bank Ltd (No 15) have been endorsed and followed in judgments following the introduction of the Civil Procedure Act and in particular the following:
(a)In Fitzgerald v Parramatta Leagues Club Ltd [2010] NSWSC 1126 at [16], Barrett J said:
"[16] Counsel on both sides agreed that the question whether separate determination should be ordered is to be approached in the manner stated by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7] in a passage which has been quoted with approval in a number of later cases and identifies several propositions of particular relevance to the present motion:
- 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.
- In exercising the power, the court must give effect to the overriding purpose of the rules of court which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
- The court begins from the position that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time, so that it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.
- 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;
(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;
(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."
(b)In Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66 at [4], Harrison J referred to Einstein J in Idoport Pty Ltd v National Australia Bank Ltd (No 15) at [7].
(c)In Owners SP 75903 v Dix [2011] NSWSC 245 at [10], Hall J referred to Barrett J's observations in Fitzgerald v Parramatta Leagues Club Ltd [2010] NSWSC 1126 at [16].
(d)In Ramsay v Schiller [2012] NSWSC 596 at [33], Hallen AsJ said:
"The power of the Court to order the separate determination of a question is discretionary and must be exercised judicially, but is otherwise not fettered. In determining whether to make an order, the Court is under an obligation to seek to give effect to the overriding purpose of the Civil Procedure Act 2005 and of rules of court to facilitate the just, quick and cheap resolution of the real issues in the proceedings: Civil Procedure Act s 56(2)."
17The severing of an entire case against one of a group of defendants who has already been joined (albeit in their absence) requires a careful examination of the whole of the proceedings. Counsel for Wesfarmers drew my attention to four relevant decisions:
(a)In D G Madin Ltd v Gordon [1964] SASR 64 at 66, Bright J noted the test required that the cross-claim and the principal claim should "overlap";
(b)In Wood v Cross Television Centre Pty Ltd [1962] NSWR 528 at 532, Walsh J held that a cross-claim for defamation should not be permitted in a claim for a liquidated debt on the basis that this was "in accordance with the trend of authority". I pause to note that this was at the time a standard response of courts to cross-actions for defamation generally, not least because of the requirements for jury trials in defamation proceedings;
(c)In Waters v Smith [1969] 1 NSWR 151 at 152, Macfarlan J held that the determination of liability as between an insurer under a policy between the insurer and an employer should be determined in a separate trial on the basis that the plaintiff's action and the action by the defendants were "distinct and separate";
(d)In Martin v Cassidy (1969) 90 WN (Pt 1) (NSW) 433 at 436, Macfarlan J made a similar order on the basis that the third party proceedings raised matters of insurance law unconnected with the issues in a negligence action between the plaintiff and defendant.
18As to the last two authorities cited by Wesfarmers, it has historically been the case that joinder of an insurer required there to be some connection between the insurer and the insured in relation to the proceedings (Beneficial Finance Corporation v Price Waterhouse (1996) 68 SASR 19 at 35). Even where there was a justiciable issue between the insured and insurer, there was a reluctance to permit an insurer to be joined as third party, particularly in personal injury proceedings where a jury trial was involved. As the footnote at [6.19.30] of the Ritchies Uniform Civil Procedure NSW point out, these cases need to be read with caution because the reluctance sprang from use of jury trials in personal injury actions. The learned authors go on to note:
"The more contemporary position is illustrated by JN Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432; BC9304569 where a plaintiff was permitted to join an insurer as a defendant in order to bind the insurer on the determination of facts which were relevant both to the plaintiff's claim against the principal defendant and to that defendant's entitlement to indemnity from the insurer."
19This is particularly the case where the insurer has denied liability to indemnify the insured, as the Full Court of the Supreme Court of South Australia noted in Beneficial Finance Corporation v Price Waterhouse at 54-56 per Lander J (discussed on this point in Hyder Consulting (Victoria) Pty Ltd v CGU Insurance Ltd [2001] VSC 449 at [44]-[45] per Byrne J).
20It is nevertheless the case that, if the liability of the insured and the insurer involve different issues, this may require a separate trial either before or after the hearing of the principal proceedings, although the authorities are not united on this point (compare GPI Leisure Corp Ltd v Yuill (Supreme Court of New South Wales, Young J, 6 August 1997) and AMP Fire & General Insurance Co Ltd v Dixon [1982] VR 833). The question is generally one of fact in each case, and it is the factual matrix of the case, and not merely the pleadings, which must be examined in relation to this question.
21The provisions of the UCPR relied upon by Wesfarmers are drafted in general terms, in order to permit the facts of the case to be the dominant feature of any application. UCPR r 2.1 refers to the "just, quick and cheap" principles enunciated by s 56 Civil Procedure Act, but does not provide specific guidelines for applications such as the present. Rule 6.22 UCPR provides that the court may order separate trials if the joinder of a party or cause of action is "inconvenient". This was the basis upon which the libel cross-action was severed from the plaintiff's debt claim in Wood v Cross Television Centre Pty Ltd. However, the principal matter that is put to me as being matter which "may embarrass, inconvenience or delay the conduct of the proceedings" is that the insurer would be required to be present and represented in court proceedings where other parties would be present, as being the sole defendant if the portion of the cross-claim relating to Wesfarmers were severed.
22The convenience of all parties must be considered, and not merely the inconvenience to Wesfarmers. This requires a consideration of the prejudice caused to Jones & Jones by separate proceedings in which a number of matters would have to be proved for the second time, a list of these being set out below. The position of the other parties is also of importance. The other parties to the litigation have made no complaint about the joinder of Wesfarmers, and they do not support Wesfarmers' motion, although it was open to them to join in (or merely support) this application if there was concern that there would be embarrassment, inconvenience or delay by reason of the Wesfarmer joinder.
23Rule 6.29 UCPR entitles the court to remove a person who has been "improperly or unnecessarily joined" or "who has ceased to be a proper or necessary party". This provision is aimed at the removal of parties who should not be there at all, and is not appropriate for the making of orders for a separate trial of contested issues of fact between an insured and an insurer.