Warragamba Winery Pty Ltd v State of New South Wales

CATCHWORDS: PROCEDURE - civil - interlocutory issues - challenge to primary judge's decision not to partition hearing

CASES CITED: Micallef v ICI Operations Australia Pty Ltd [2001] NSWCA 274

Warragamba Winery Pty Ltd (Applicant) PARTIES: State of New South Wales (First Respondent) Sydney Catchment Authority (Second Respondent)

COUNSEL: D Nock SC/K Odgers (Applicant) L King SC/N Newton (First Respondent and on behalf of Second Respondent)

McLachlan Chilton (Applicant) SOLICITORS: Gild Insurance Litigation (First Respondent) Wotton & Kearney (Second Respondent)

LOWER COURT JURISDICTION: Supreme Court - Common Law Division

LOWER COURT DATE OF DECISION: 16 February 2010

LOWER COURT MEDIUM NEUTRAL CITATION: Warragamba Winery Pty Ltd v State of New South Wales [2010] NSWSC 66

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2010/62894

MACFARLAN JA HANDLEY AJA

19 JULY 2010 WARRAGAMBA WINERY PTY LIMITED v STATE OF NEW SOUTH WALES Judgment 1 MACFARLAN JA: This is an application by Warragamba Winery Pty Ltd, the plaintiff in the court below, for leave to appeal from a decision of Harrison J dated 16 February 2010 to revoke an order that his Honour had previously made for the determination of the defendants' liability separately from the assessment of the plaintiff's damages. 2 The proceedings in which the decision was made and some 14 related proceedings arise out of a large bushfire that commenced on 24 December 2001 in the Blue Mountains National Park, west of Sydney. 3 The plaintiffs in the various proceedings allege that fire damage to houses and commercial premises owned by them resulted from the negligence of the National Parks and Wildlife Service, of the Rural Fire Service, (for which two Services the first respondent is said to be responsible) and of the second respondent, the Sydney Catchment Authority. 4 In a judgment dated 1 October 2008, Harrison J concluded that it was appropriate to order that the assessment of damages be separated from the hearing concerning liability. His Honour's reasons were expressed as follows: "9 The plaintiffs' arguments for a separate hearing on liability are essentially as follows. The plaintiffs contend that if the trial is to be conducted on all issues that taking into account the calling of lay and expert witnesses and the cross-examination of such witnesses, the estimated length of the plaintiffs' cases will be 131 hearing days. Some modification to the estimate must necessarily be made having regard to the settlements that have occurred since that estimate was made. In making that assessment the plaintiffs are said not to have taken into account any time for legal argument over the admissibility of documents, possible challenges to the expertise of witnesses or any other interlocutory arguments that might arise.

10 With respect to the issue of quantum, the plaintiffs' claims cover a wide range of losses and will require a number of expert valuers in various fields. On the question of liability the plaintiffs' cases will consist of manifold documents, two expert witnesses and possibly some lay evidence. The plaintiffs anticipate that their cases will seek to rely on more than 200 documents produced by the defendants. To that extent at least the plaintiffs' claims on the question of liability would appear to be somewhat more confined. According to Mr Torrisi, the expert evidence on the question of liability does not overlap at all with the expert evidence in relation to the question of quantum.

11 Mr Torrisi has also given evidence about the relative costs of conducting the proceedings limited to liability on the one hand compared to a joint hearing on all issues on the other hand. It is hardly controversial that the latter is likely to occupy more time both in court and out of court, including significant preparation, and that a hearing on the question of liability only will be both shorter and cheaper. According to the plaintiffs' estimate, the plaintiffs' cases at a trial limited to the question of liability might be reduced to a period of less than half the plaintiffs' estimate for the trial of all issues.

12 The defendants oppose separate hearings, principally upon the basis that settlement of some of the cases so far has been facilitated by uncertainty about the question of liability. The defendants argue that a decision on liability that turned out to be unfavourable to them would have the potential significantly to reduce the likelihood of further settlements.

13 Secondly, the defendants oppose a separate hearing on the question of quantum if the liability questions identified in schedule "B", or some similar identification of limited liability issues, is to be proposed in distinction to a separate hearing on all questions of liability generally. In other words, the defendants' concern is that any attempt to separate or to distil specific liability issues at this stage is both premature and suffers from the potential danger that significant liability issues may be inadvertently overlooked and thereby excluded from the list. If that were to occur, any benefits or other advantages flowing from a separation of the issues would potentially, if not actually, be lost.

14 It seems to me that this is one of the rare cases where a separation of the issues of quantum and liability could produce significant cost savings and corresponding time advantages. I am not satisfied that an order in terms of prayer 2 in the notice of motion should be made. I consider that an order in terms of prayer 3 in the notice of motion is more likely to give effect to the efficiencies contemplated by a separation of the issues without the danger of running foul of unforeseen circumstances". 5 The essence of his Honour's reasons for reaching a different conclusion in his judgment of 16 February 2010 was expressed as follows: "3 The first defendant's application to revisit that issue is based primarily upon the proposition that there will in fact be no procedural or related cost advantages flowing from the order that I made but that on the contrary there will instead be a considerable duplication of witnesses with associated problems. This is said to be because the very nature of the issues in dispute means that witnesses who will have to be called by the plaintiffs on liability will in due course be the same witnesses who will have to be called to establish the plaintiffs' losses. The first defendant submits that significant issues of credit are likely to arise and, in circumstances that have often been referred to in cases on the topic, that likelihood ought ultimately to inform any decision about what should occur. … 22 This Court has the power to revisit and to set aside or vary its orders in an appropriate case, either pursuant to specific rules of Court or in the exercise of its inherent jurisdiction. The Court has power to order that issues of liability and quantum be rejoined and that all issues in the proceedings be tried at the same time: see, for example, Hoban v New South Wales Land & Housing Corporation [2008] NSWSC 1121. At the time that I originally ordered that there be a separate determination of the questions of liability and quantum I had not appreciated, and the first defendant had not emphasised, that there would be such an extensive cross-over between those giving evidence touching both the issues of liability and damages. The procedural disadvantages that are likely to be occasioned to the parties by revoking my order, including some further delays, must on the one hand be compared to the potential forensic disadvantages to the first defendant, as well as the potential for conflicting determinations upon the credit of witnesses, if that order is not made, on the other hand. The former can be corrected, or at least ameliorated by an appropriate costs order, but the latter cannot. I reiterate in the (quite proper) absence of any challenge to the assurances given by senior counsel for the first defendant, that significant issues of credit touching both areas will arise, and accepting that there is the potential for creating problems of the type identified in some of the cases if the issues remain separated, I consider that the order I made on 1 October 2008 should be set aside". 6 It is well established that parties who seek to challenge a discretionary interlocutory decision on a matter of practice and procedure, such as that of Harrison J, face a difficult task. In Micallef v ICI Operations Australia Pty Ltd [2001] NSWCA 274 Heydon JA (with the agreement of Sheller JA and Studdert J) accepted that, to succeed, it was necessary for an applicant challenging such a decision to establish that the decision-maker: "(a) made an error of legal principle, (b) made a material error of fact, (c) took into account some irrelevant matter, (d) failed to take into account, or gave insufficient weight to, some relevant matter, or (e) arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning" (Judgment [45]). 7 The applicant has not in my view established that there is any basis that conforms with these principles on which this Court could, or should, intervene. The matters that the applicant relied upon were in substance as follows. 8 First, it contended that the primary judge had not had regard to the cost savings that would result from a split hearing. This was however a matter to which his Honour was very much alive as it was in essence the basis of his decision of 1 October 2008, a decision which he revisited in his decision of 16 February 2010. 9 Secondly, the applicant submitted that his Honour should not have acted upon assurances given by counsel for the respondent that there would be serious issues as to the credit of some of the lay witnesses who were likely to be called in both parts of the hearing (assuming the hearing were split). This course was in my view open to his Honour, as his Honour was, by reason of his case management of the proceedings over a substantial period of time, familiar with them and with the nature of the issues likely to arise and the evidence likely to be given. Further, the fact that the applicant did not submit to his Honour that he should not rely upon the assurances of counsel for the defendants supported the course his Honour took. 10 Thirdly, the applicant submitted that his Honour failed to take into account delay by the defendants in seeking to have the order of 1 October 2008 revoked. However, the first defendant's motion seeking that revocation was filed promptly, on 14 October 2008. It was stood over by his Honour on a number of subsequent occasions. At least one reason that the motion was stood over was that the parties were engaged in mediation during 2009. 11 Through his case management of the proceedings his Honour was well aware of the chronology of events and he referred in his judgment of 16 February 2010 (at [18]) to the applicant's submission that it had been prejudiced by delay in the first respondent seeking to have the order of 1 October 2008 revoked. In these circumstances, it cannot in my view be said that his Honour failed to take this matter into account. 12 Further, bearing in mind the authorities to which his Honour referred as to the difficulties that can ensue when trials are split, particularly where the same witnesses may have to give evidence in both parts of the trial, his Honour's order does not appear to me to be plainly unreasonable or unjust. 13 In conclusion, I would add the following comment. In his judgment of 1 October 2008, his Honour said that the claims of the various plaintiffs "cover a wide range of losses and will require a number of expert valuers in various fields", and that according to evidence before him, the expert evidence on the question of liability will not overlap at all with the expert evidence in relation to the question of quantum (at [10], quoted above at [4]). 14 I would encourage the parties to consider whether there are means by which the need to call such obviously extensive expert evidence on damages can be deferred until after the plaintiffs have established, if in fact they are able to establish, the liability of the respondents and have proved the factual foundations for the expert evidence on quantum. Referral of some questions to a referee might be a way of achieving this. This is a matter for the parties to consider, and if considered appropriate, to raise with his Honour with a view to appropriate directions being made. 15 For these reasons I propose that the application for leave to appeal be dismissed with costs. 16 HANDLEY AJA: I agree. 17 MACFARLAN JA: The order of the Court is that the application for leave to appeal is dismissed with costs.

26/07/2010 - Grammatical error - Paragraph(s) [5]

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