ACK Pty Ltd v Mercy Human Services Limited - [2023] WASC 448

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   ACK PTY LTD -v- MERCY HUMAN SERVICES LIMITED [2023] WASC 448
CORAM:   ARCHER J
HEARD:   10 NOVEMBER 2023
DELIVERED          :   24 NOVEMBER 2023
FILE NO/S:   CIV 2620 of 2019
BETWEEN:   ACK PTY LTD
First Plaintiff
JEFFREY MARKOFF
Second Plaintiff
AND
MERCY HUMAN SERVICES LIMITED
First Defendant
MERCYCARE LIMITED
Second Defendant

Catchwords:

Application for preliminary determination of issues - Complex expert evidence involving 14 experts in seven different fields to be obtained in four stages - Risk of overlap in lay witness evidence - Risk that a second judge would be required to preside over a second trial - Not presently clear that separate trials should be ordered - Application may be revisited

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	S K Dharmananda SC & R A Collins
Second Plaintiff	:	S K Dharmananda SC & R A Collins
First Defendant	:	P E Cahill SC & A L Spencer
Second Defendant	:	P E Cahill SC & A L Spencer

Solicitors:

First Plaintiff	:	King & Collins
Second Plaintiff	:	King & Collins
First Defendant	:	HWL Ebsworth Lawyers (Perth)
Second Defendant	:	HWL Ebsworth Lawyers (Perth)

Case(s) referred to in decision(s):

Building Corporation WA Pty Ltd v Marshall [2021] WASC 242
Carlo Nobili SpA Rubinetterie v Militaire Nominees Pty Ltd [2004] WASC 47
GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934
Herridge v Electricity Networks Corporation t/as Western Power [No 2] [2017] WASC 204
Inpex Operations Australia Pty Ltd v AIG Australia Ltd [No 2] [2023] WASC 61
Instyle Contract Textiles v Good Environmental Choice Services (No 3) [2010] FCA 466
Jacobson v Ross & Jacobson [1995] 1 VR 337
Jinxin Inc v Aser Media Pte Ltd [2022] EWHC 2431
Landsdale Pty Ltd v Moore [2009] WASCA 176
Reading Australia v Australian Mutual Provident Society [1999] FCA 718; (1999) 217 ALR 495
Woodley v Woodley [2014] WASC 377

ARCHER J:

Overview

These proceedings involve the sale by the first plaintiff (ACK) to the first defendant (Mercy) of a residential aged care facility business. The second plaintiff, Mr Markoff, is and was at all material times a director and controlling mind of ACK. The second defendant is the parent company of Mercy and guaranteed Mercy's performance under the sale agreement. The plaintiffs commenced proceedings claiming that Mercy engaged in misleading and deceptive conduct prior to the completion of the sale agreement. They also claim that Mercy breached terms of the sale agreement.
The defendants have brought an application seeking that four questions be determined on a preliminary basis, prior to the balance of the issues being determined. The plaintiffs oppose this.
What follows are my reasons for dismissing, for the moment, the application.

Background

The background to the proceedings is set out in the parties' submissions. For present purposes, it is sufficient to reproduce[1] paragraphs 6 to 16 and 21 to 24 of the defendants'…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] WASC 448
Decision Date: 24 NOVEMBER 2023

CaseChat Overview and Summary

The case of ACK Pty Ltd v Mercy Human Services Limited involved an application for a preliminary determination of issues, given the complexity of the case involving expert evidence from fourteen experts across seven different fields to be obtained in four stages. The potential for overlap in lay witness evidence and the risk that a second judge would be required to preside over a second trial were also factors considered by the court. The application for separate trials was not definitively decided upon, as it was not yet clear if separate trials were appropriate.

The legal issues that the court had to decide included whether the complexity of expert evidence and the potential overlap in lay witness evidence justified separate trials, and whether the risk of requiring a second judge to preside over a second trial warranted separate trials. Additionally, the court considered whether the potential for a second trial to be required due to apprehended bias of the first trial judge, or significant contested factual issues in both trials, would be a factor against separate trials.

In reaching its decision, the court referred to McKechnie J's summary, which stated that separate trials are inappropriate when a preliminary question is one of mixed fact and law. The court noted that Order 32 r 4 expressly allows for the court to order that any question or issue, whether of law or fact or partly of law and partly of fact, can be tried separately. However, the court also acknowledged that a preliminary trial to determine questions of mixed fact and law should not be conducted unless certain conditions are met, including that the questions must be precisely formulated and all relevant facts must be identified and specified. Additionally, factors weighing against separate trials include the risk of requiring a second judge due to apprehended bias, and significant contested factual issues in both trials.

The court ultimately decided that separate trials may be revisited in light of the factors discussed above, and did not make a definitive decision on the application for separate trials at that time.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

That these are not blanket rules is further confirmed by the statement in the eighth point in McKechnie J's summary that '[s]eparate trials are inappropriate … when a preliminary question is one of mixed fact and law'. Order 32 r 4 expressly provides that the court may order 'that any question or issue … whether of law or fact or partly of law and partly of fact [can] be tried separately'.[59] [59] And see Building Corporation WA Pty Ltd v Marshall [2021] WASC 242 [26] ‑ [28]. That said, a preliminary trial to determine questions of mixed fact and law should not be conducted unless certain conditions are met. First, the questions must be precisely formulated.[60] Second, all of the facts that might be relevant to the determination of each question must be identified. Third, in relation to each relevant fact, it must be specified whether the fact is to be assumed to be correct for the purposes of the preliminary determination, or is a fact which both sides accept as correct, or is a fact which is to be judicially determined.[61] [60] This requirement applies to all questions to be determined in a separate trial, regardless of whether the question is one of mixed fact and law - see Jacobson v Ross & Jacobson [1995] 1 VR 337, 340.[61] See Building Corporation [26] ‑ [28], [72] and [74]. See also Herridge v Electricity Networks Corporation t/as Western Power [No 2][2017] WASC 204 [13]. In addition to the matters outlined by McKechnie J, a factor weighing against separate trials is any risk that the trial judge of the first trial would be unable to hear the second, due to apprehended bias. This may arise if the judge in the first trial makes credibility findings in relation to witnesses who are to give evidence in the second trial. Even where credibility is not in issue, it is undesirable for witnesses to have to give evidence in two separate trials, for reasons of convenience and efficiency. Accordingly, if separate trials may have this effect, this would be a factor weighing against separate trials.[62] [62] Instyle Contract Textiles v Good Environmental Choice Services (No 3) [2010] FCA 466 [42]. See also Jinxin Inc v Aser Media Pte Ltd [2022] EWHC 2431 [45]. Another factor weighing against separate trials is where there would be significant contested factual issues in both trials.[63][63] Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718; (1999) 217 ALR 495 [8(g)], citing GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934. In Landsdale Pty Ltd v Moore,[64] the Court of Appeal reviewed a decision by the learned Master to order that there be separate trials of liability and damages in an action for negligence. Newnes JA, with whom Buss JA[65] agreed, said that separate trials 'will generally only be appropriate in cases where there is a clear line of demarcation between those issues, and the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense'. [64] Landsdale [22].[65] As his Honour then was.