Vendiovski v Renisso P/L

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20860/97 - BLAGOJ VENDIOVSKI v RENISSO PTY LTD & ORS

JUDGMENT (Leave to file cross claim) 1 MASTER: By notice of motion filed 30 January 2002 the applicant Meriton Apartments Pty Limited (Meriton) seeks an order that leave be granted to file a cross claim against GIO General Limited (GIO). Renisso Pty Limited is the defendant/cross claimant to the first cross claim and first cross defendant to the third cross claim (Renisso). Meriton is the cross defendant to the first cross claim, cross claimant to the second cross claim, second cross defendant to the third cross claim and cross claimant to the fourth cross claim. Dynamic Formwork Pty Limited is cross defendant to the second cross claim and cross claimant to the third cross claim (Dynamic). On 30 January 2002 Simpson J made an order separating the cross claims from the substantive issues between the plaintiff and defendant. The claim between the plaintiff and defendant has been settled. The cross claims have yet to be resolved. 2 Meriton now seeks to file a cross claim against GIO. There is a contract of insurance between Dynamic and GIO. It is alleged that in September 1996 Meriton contracted with Dynamic for the construction and erection of formwork. Dynamic in turn sub-contracted the whole of these works to Renisso. The plaintiff was employed by Renisso. The plaintiff's claim arose as a result of a personal injury sustained during the course of his employment, on a construction site, with Renisso. Both Dynamic and Renisso have been placed in liquidation. On 9 November 2001 leave was granted for Meriton to proceed against Dynamic in liquidation. GIO has not refused to indemnify Dynamic. 3 At the time of the accident Meriton had public liability insurance with the HIH group, which is now in liquidation. Meriton does not qualify for assistance under the Federal government scheme. As a result of the failure of Meriton's insurance with HIH in 2001, subsequent inquiries were made by Meriton to determine whether any other insurances might assist it. 4 GIO submitted that leave should not be granted to file the cross claim against it because Meriton does not have an arguable case; secondly, it will suffer prejudice; and thirdly, separate proceedings should be commenced once these proceedings are concluded or alternatively that this insurance issue raised in this cross claim should be determined separately, and after liability under the cross claims have been heard in these proceedings. 5 On 27 November 1998 Renisso filed a cross claim against Meriton seeking contribution and indemnity pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946. On 13 May 1999 Meriton filed a statement of defence to the cross claim. On 6 September 1999 Meriton filed a second cross claim against Dynamic seeking contribution and indemnity. On 25 June 2001 Dynamic filed a statement of defence to the second cross claim. On 10 August 2001 Dynamic filed a third cross claim against Meriton. 6 On 19 September 2001 Meriton's solicitor wrote to Dynamic's solicitors asking that they confirm details of the applicable insurance effected by Dynamic. On 4 October 2001 Meriton's solicitor wrote to Dynamic noting that they were instructed to seek leave to proceed directly against their insurer GIO. On 2 November 2001 Dynamic's solicitors wrote to Meriton confirming that Dynamic was insured by GIO for the period 30 September 1996 to 30 June 1997. On 30 January 2002 this notice of motion was filed. 7 On 25 February 2002 the solicitors received a copy of the insurance policy. Paragraph 4 defines the insured as "every Principal of the Named Insured or of a Company designated in item 2 above in respect of the liability of such principal arising out of the performance by the Named Insured or by a company designated in item 2 above of any contract or agreement for the performance of work for such principal, to the extent required by such contract or agreement". 8 Meriton asserts that upon the proper construction of paragraph 4, it falls within the definition of "principal" and is entitled to be indemnified by that policy. 9 Section 48 of the Insurance Contracts Act 1984 overcomes the privity of contract issue. 10 Section 48 states: "Entitlement of named persons to claim (1) Where a person who is not a party to a contract of general insurance is specified or referred to in the contract, whether by name or otherwise, as a person to whom the insurance cover provided by the contract extends, that person has a right to recover the amount of the person's loss from the insurer in accordance with the contract notwithstanding that the person is not a party to the contract. (2) Subject to the contract, a person who has such a right: (a) has, in relation to the person's claim, the same obligation to the insurer as the person would have if he were the insured; and (b) may discharge the insured's obligations in relation to the loss. (3) The insurer has the same defences to an action under this section as the insurer would have in an action by the insured." 11 Dynamic's defence to Meriton's cross claim does not admit that there was a contract or agreements in existence. In a letter (Ex B) by Dynamic to Meriton dated 27 June 1996 it states: " Attention: Ernest PROPOSED RESIDENTIAL DEVELOPMENT Pitt Street Sydney Quotation for formwork as per plans:- TOTAL CONTRACT PRICE $2,159,556 The above contract price does not include the construction of retaining walls nor stormwater retention tanks. 1,954,000 " 12 This is the only document that Meriton has been able to provide to show that a contract existed. From the pleadings, it is not disputed that Dynamic carried out some work on the construction site. In Dynamic's defence to Meriton's cross claim it alleges that it was Meriton (not Dynamic) who was responsible for inserting the wire mesh in the penetrations. Although the documentation to prove that a contract or agreement existed is scant it is my view that Meriton has an arguable case that it is entitled to be indemnified under the contract of insurance issued by GIO in favour of Dynamic. Thus, this issue should be permitted to be argued at trial.

PREJUDICE 13 On 28 October 1996 the plaintiff was injured. The accident occurred 6 years ago. Any agreements or contracts between Meriton and GIO would have been entered into shortly before construction commenced about 6 years ago. On 23 September 1997, these proceedings were filed. As previously stated on 6 September 1999 Meriton filed a cross claim against Dynamic. HIH went into liquidation last year. 14 On 31 January 2002 proceedings as between the plaintiff and defendant were settled and an order made, by consent, that the cross claims be heard separately. On 30 January 2002 this motion was filed. On 25 February 2002, Meriton's solicitors received a copy of the insurance policy. I accept that with the passing of nearly 6 years, there will be presumptive prejudice. However since 1999 Dynamic, (the insured who is currently indemnified by GIO) has been involved in these proceedings. GIO did not put on any evidence of actual prejudice. In the circumstances, GIO is not significantly prejudiced and it will receive a fair trial.

Separate action 15 Meriton referred to Barclay's Bank v Tom [1923] 1 KB 221 at 224 where, in relation to third party procedures, Scrutton LJ stated: "The object of the third party procedure is then in the first place to get the third party bound by the decision between the plaintiff and the defendant. In the next place it is directed to getting the question between the defendant and the third party decided as soon as possible after the decision between the plaintiff and the defendant, so that the defendant may not be in the position of having to wait a considerable time before he established his right of indemnity against the third party while all the time the plaintiff is enforcing his judgment against the defendant. And thirdly, it is directed to saving the extra expense which would be involved by two independent actions." 16 GIO referred to Martin v Cassidy; Federal Insurance Ltd (third party) (1969) 90 WN (Pt 1) (NSW) 433 and Waters v Smith & Anor [1969] 1 NSWR 151. In Walters at 152 MacFarlan J stated: "It appears to me in this case that there may be some overlapping between the evidence to be adduced in support of the plaintiff's action and the evidence which will touch upon the question of whether or not the defendants were in breach of a condition of the policy requiring them to take all reasonable precautions. But it is also, in my opinion, clear that the issues arising out of the plaintiff's action and in the action by the defendants against the third party will be distinct and separate. It is, in my opinion, clear that it is not necessary for the plaintiff in his action against the defendants to prove facts which would show a failure to take all reasonable precautions by the defendants. Nor is it sufficient for the insurer, in third party proceedings, to show that the defendants were guilty of acts of negligence against the plaintiff for the purpose of proving failure to take all reasonable precautions. …It seems to me in this case that a determination of the issues arising in the plaintiff's action does not involve or result in any determination of the issues arising in the proceedings brought by the defendant against the third party. There is not any risk, as I understand the matter, that there could be inconsistent findings by different tribunals of fact on these two separate issues. I am also of the opinion that it is undesirable that these two issues being separated in the way I have described them, that the second issue, that is to say that arising between the defendants and the third party, should be tried at the same time as the issue between the plaintiff and the defendants. It is I think of some significance that the plaintiff in this case himself desires a separate trial and although that is not a matter that controls my decision, it is a matter to which I have given some consideration." 17 Similar statements were made by MacFarlan J in Martin. 18 However, more recently in Tepko Pty Ltd v Water Board [2001] HCA 19; 75 ALJR 775, Callan and Kirby JJ made comments in relation to the use of severing issues to be determined by the court. At 168 to 172 their Honours stated: "The appeal should be allowed. However, we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court's, rather than the parties', interests.

Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.

The fourth of our comments is related to evidence compiled, committed to writing and filed in advance of the hearing. Parties frequently, either together or separately, compile "books of documents". Although most of these have the potential to be admitted in evidence, often they are defective in form. Many of them are often irrelevant, or their significance is either not recognized or adverted to during the hearing. Their status, as in the case of the letter written by Mr Rhodes, can be ambiguous. Discrimination and economy should be exercised by those who prepare cases in which documentary evidence is likely to be extensive and important. Those who conduct such cases should ensure that what is actually in evidence, and its relevance and significance, are clearly identified." 19 In a recent Court of Appeal decision in the Nominal Defendant v Niko Cencic [2001] NSWCA 69, Meagher J expressed a similar view when he said that great caution should be exercised when separating an issue for determination. 20 Each case depends on its circumstances. As previously stated GIO has for a number of years been actively involved in the trial as the insurer for Dynamic. Although GIO is now being sued in a different capacity it would already have carried out investigations and prepared for trial. It will now have to meet an extra issue, a legal one, namely the interpretation of paragraph 4 of the insurance policy. There will be overlapping facts and circumstances in determining and apportioning liability. The matter will be dealt with more expeditiously and justly if all the issues raised by the cross claims are determined at trial. It is my view this legal issue raised by the cross claim should not be commenced by way of separate proceedings after the conclusion of these current proceedings nor should it be the subject of a separate determination. 21 Leave should be granted to Meriton to file a cross claim against GIO. Paragraph 4 of the proposed cross claim needs to be amended by adding the words "to the extent required by such contract or agreement". 22 Costs are discretionary. Taking into account the delay in brining this cross claim and that GIO has been unsuccessful, it is my view that the appropriate order for costs is that costs be costs in the cause. 23 I make the following orders:

(1) Meriton is to file a cross claim against GIO within 14 days.

Pursuant to Part 20 r 20 SCR paragraph 21 of the above reasons are amended to read "Paragraph 5" not "Paragraph 4". **********

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