For the reasons I have given, Smart Trike's interlocutory application will be dismissed with costs. I will make case management orders for the parties to confer and provide by email to my associate proposed short minutes of order for the future preparation of the proceeding for hearing.
[2]
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.
Parties
Applicant/Plaintiff:
Target Australia
Respondent/Defendant:
Smart Trike
Legislation Cited (3)
Court Rules 2011
Court of Australia Act 1976
Consumer Act 2010
Cases Cited (5)
The general principles to determine an application for a separate determination of liability and quantum are summarised by Stone J in University of Sydney v Resmed(No 5)[2012] FCA 232 at [41]- [47]. The principles relevant to this application are:
(1) First, in general all issues in proceedings should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd(1996) 22 ACSR 130 at 141-142; Reading AustraliaPty Ltd v Australian Mutual Provident Society[1999] FCA 718; (1999) 217 ALR 495 at [7]. However, that is not invariably the case and the court may determine that consistent with s 37M of the FCA Act, the most efficient and inexpensive approach will be to separate some issues or questions for earlier determination: Olbers v Commonwealth (No 3)[2003] FCA 651 at [8].
(2) Second, the party seeking to have a separate determination bears the onus of demonstrating that there should be a departure from the ordinary course: Liberty Financial Pty Ltd v Scott[2003] FCA 226 at [35]; Energy Australiav Australian Energy Ltd[2001] FCA 1049 at [5].
(3) Third, factors which tend to support the making of an order include that the separate determination of the question may:
(a) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action: Reading Australia at [8(f(i))]; or
(b) contribute to the settlement of the litigation: CBS Productions Pty Ltd v O'Neil(1985) 1 NSWLR 601 at 607 (Kirby P); Reading Australia at [8(f(ii))].
(4) Fourth, factors which tell against the making of an order include that the separate determination of the question may:
(a) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial: GMB Research & DevelopmentPty Ltd v Commonwealth[1997] FCA 934; Reading Australia at [8(g(i))];
(b) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding: GMB Research & Development; Arnold v A-G (Vic) [1995] FCA 727; Reading Australia at [8(g)(ii)]; or
(c) prolong rather than shorten the litigation: GMB Research & Development; Reading Australia at [8(g)(iii)].
(5) Fifth, in separating liability from quantum there is always a risk that the efficiencies of time and cost will be more illusory than real. That is, it is an argument against the separation of liability and quantum that until the parties have some assessment of the amount to which a successful plaintiff claims to be entitled they can give no "meaningful consideration" of the financial stake involved and therefore proper consideration of an "appropriate commercial settlement": ABB Engineering Construction Pty Ltd v Freight Rail Corp[1999] NSWSC 1037 at [19] (Rolfe J).
Smart Trike bears the onus of establishing that it would be appropriate to depart from the ordinary course and separate the hearing of liability on the ACL Cross-claim from the balance of the proceeding. Before making any such order I would need to be satisfied that it was consistent with the overarching purpose which informs the conduct of proceedings in this Court. The assessment which is called for is specific to the particular facts and circumstances arising in the case in which the application is made.
Smart Trike submits that the ACL Cross-claim, as a misleading or deceptive conduct case, is part of a certain class of case in which a bifurcation order is particularly likely to contribute to the just resolution of the dispute. Smart Trike refers to the orders made by Gleeson J in Reckitt Benckiser(Australia) Pty Limited v AFT Pharmaceuticals (AU) Pty Limited[2018] FCA 1552 at [10]. I reject that submission.
As I have said, the question of whether it is appropriate to separate the determination of liability and quantum will turn on the particular facts and circumstances of the individual case and an assessment of how the overarching purpose expressed in s 37M of the FCA Act is best served. It is not an exercise which is determined by reference to broad generic categorisation of the type of case based on the claims advanced or the relief sought. Smart Trike's contention to the effect that certain classes of cases should generally be bifurcated is advanced without reference to authority and does not accord with principle.
In addition, I find Target's submissions on this issue persuasive. Target refers by way of illustration to three authorities which support the view that in misleading or deceptive conduct cases it can be difficult to separate the determination of liability and damage completely: Energy Australia at [7] (Stone J), Reading Australia at [12] (Branson J), and Shape Shopfitters Pty Ltd v Shape Australia Pty Ltd[2016] FCA 610 at [28], [30] (Mortimer J). Target further notes that the making of the bifurcation order in Reckitt Benckiser does not appear to have been contested and is not the subject of reasons. Smart Trike's reliance on the order made in as mandating a similar approach in this case is not developed beyond assertion.
(1985) 1 NSWLR 601
(1999) 217 ALR 495
Reckitt Benckiser
Smart Trike next submits that by separately determining liability, the later determination of quantum will be more focused in scope and cost. Smart Trike maintains if liability is established on the ACL Cross-claim then the parties may be able to negotiate and agree the amount of damages that should be awarded. Further, that the parties will be in a position to confine the scope of discovery and expert evidence so that there will not be substantial duplication of evidence, discovery and witnesses. Having regard to the close interrelationship between the principal proceeding and the ACL Cross-claim, I am unable to accept Smart Trike's submission. The factual premise which informs the ACL Cross-claim is in many ways derivative of and dependant on the same threshold factual issues that arise for determination in the principal proceeding. Determination of the factual issues in the ACL Cross-claim in isolation and in advance of determination of the substantively similar, closely related basal issues in the principal proceeding would carry significant risk of introducing procedural complexity and is better to be avoided.
On the material before me, I consider that to bifurcate the proceeding will likely cause delay and substantial inefficiency. If the proceeding is bifurcated and Smart Trike is successful on the ACL Cross-claim, then the proceeding will be prolonged beyond the determination of Target's underlying claim in the likely event that the parties dispute the causation and quantum of any loss suffered by Smart Trike by the alleged misleading or deceptive representations. A likely consequence of bifurcation is that the parties will be put to two separate rounds of discovery, and it is likely that Smart Trike's lay witnesses will be required to give evidence on both questions of liability and quantum in separate hearings. Acceding to this application will likely result in both parties undertaking considerable duplicative work at both stages of hearing. Smart Trike has not promulgated any draft case management orders addressed to mitigating these risks.
A further factor which weighs against making the order sought by Smart Trike is that there is considerable opacity about the quantum of damages that Smart Trike seeks as part of the ACL Cross-claim. That being so, if bifurcation is ordered, Target's potential exposure on the ACL Cross-claim will be difficult to gauge until the service of Smart Trike's lay and expert evidence on the proposed bifurcated issue. This weighs against Smart Trike's claim that to bifurcate the proceeding will enhance the prospect of a consensual settlement of the proceedings at an earlier point in time. I accept Target's submission to this effect.
I am not satisfied that Smart Trike has discharged its onus by demonstrating that there should be a departure from the ordinary course that all issues in the proceeding be determined at the one time. I am not convinced that this is a case where the proposed separation of liability and quantum would be consistent with and promote the overarching purpose embodied in s 37M of the FCA Act. Bifurcation may prolong rather than shorten the litigation and may increase costs unnecessarily. There is the potential for significant overlap between the evidence adduced on the hearing of the proposed separate question and at trial, including the calling of the same witnesses at both stages of the proceeding. Further, Smart Trike has not demonstrated that bifurcation will likely enhance the prospects of settlement of the litigation. This is a case where the perceived efficiencies of bifurcating the proceeding in terms of time and cost are likely to be more illusory than real.
For these reasons, the Bifurcation Application will be dismissed with costs.