Bankrupt Estate of Mike Stewart v William Paul Nettleton

[2015] NSWSC 1242

Supreme Court

New South Wales

Medium Neutral Citation:	Bankrupt Estate of Mike Stewart v William Paul Nettleton [2015] NSWSC 1242
Hearing dates:	10 July 2015
Date of orders:	10 July 2015
Decision date:	10 July 2015
Before:	Garling J
Decision:	1.   Notice of Motion of 10 April 2015 is dismissed. 2.   Order the Cross Defendant to pay the Cross Claimant’s costs of the Motion. 3.   Order the plaintiff to pay his or its own costs of the Motion
Catchwords:	PROCEDURE – civil – notice of motion – proceedings on cross-claim to be heard separately from principal proceedings – r 9.8 UCPR – opposed by cross-claimants – commonality of factual issues – risk that facts found differently if heard separately – not in interests of justice to separate proceedings – notice of motion dismissed
Legislation Cited:	Civil Liability Act 2002 Uniform Civil Procedure Rules 2005
Cases Cited:	Not Applicable
Texts Cited:	Not Applicable
Category:	Procedural and other rulings
Parties:	Trustee for the Bankrupt Estate of Mike Stewart (P) City Plan Gosford Pty Ltd (D1) William Paul Nettleton (D2)
Representation:	Counsel: S Clemmett (Plaintiff/2nd Respondent) S E Gray (D1, D2) M Scott (Cross-Defendant/Applicant)   Solicitors: Makinson & d’Apice (P/2nd Respondent) Pikes & Verekers (D1, D2) Henry Davis York (Cross-Defendant/Applicant)
File Number(s):	2012/248552
Publication restriction:	Not Applicable

_________________________________________________________________________________

Ex tempore Judgment

1. This is an application by Notice of Motion filed on 10 April 2015 by M & R Insurance Brokers Pty Limited, which company is the cross-defendant to a Cross-Claim brought against it by City Plan Gosford Pty Limited (“CPG”) and William Paul Nettleton. It will be convenient to refer to the two cross-claimants as CPG, and to the cross-defendant as the Broker.

The Principal Proceedings

2. The Cross-Claim is filed in proceedings commenced against CPG by the Trustee of the Bankrupt Estate of Mr Michael Stewart. The principal claim arises out of a relationship between Mr Stewart, who was the registered proprietor of a development site in North Gosford, and CPG, which at all relevant times, was a registered and accredited certifier. For the purposes of this judgment, it is sufficient that I record that CPG is alleged to have been retained to provide the developer with services with respect to certifying the North Gosford development.

3. The allegations encompass the proposition putting it, as simply as is relevant, that a Construction Certificate issued by CPG was issued by reference to incorrect plans for the development. The version of plans that were attached to the Construction Certificate were those that were originally submitted to the Gosford City Council as part of the original development application. Following a review by the Central Coast Design Review Panel, amendments were made to the original plans and a second development application was lodged with the amended plans. It seems not to be in dispute that the Council ultimately approved the development application on the basis of the amended plans, and that the amended plans were those that were stamped and endorsed by the Council.

4. Consequently, the thrust of the central allegation is that the certifiers, CPG, were negligent, or in breach of their retainer, in issuing a Construction Certificate on the basis of plans which were not certified by the Council as being approved, or alternatively put, not issuing a Construction Certificate by reference to the correct plans.

5. It is alleged that CPG came to recognise that the construction which was taking place did not accord with the Construction Certificate and that, accordingly, in June 2007 it required that work on the development be stopped. The plaintiff in the principal proceedings claims that the Construction Certificate was issued in breach of its contract with CPG and that the order to cease work on the development led to its default with respect to significant loan facilities, which ultimately led to the failure of the development and the bankruptcy of the plaintiff.

6. In the principal claim, CPG pleads, amongst other things, that the plaintiff was negligent in and about his own interests and was guilty of conduct which contributed to his alleged loss. CPG also nominates other parties as being concurrent wrongdoers within the meaning of s 35 of the Civil Liability Act 2002.

7. The principal proceedings will, amongst other things, include evidence which will require findings by the trial Judge touching upon the nature and content of the retainer between the developer and CPG; the flow of documents between the plaintiff and CPG, including what CPG was told, if anything, about the existence of original plans and amended plans; whether requests by CPG for documents to be provided to them for the purpose of the Construction Certificate were met, and whether, or alternatively, how CPG responded to the requests for, or the failure to provide, the requisite documents.

8. In particular, the principal proceedings will canvass the role of the Stop Work Order issued by CPG which it is said, was the prime causal event leading to the demise of the developer.

The Cross-Claim

9. In the Cross-Claim, CPG pleads against the Broker that it had a relationship with the broker for a number of years prior to the critical events covered in this litigation, and that the Broker was retained, amongst other things, to arrange for professional indemnity insurance. The Cross-Claim pleads that in 2007, acting upon the advice of the Broker, CPG agreed to change the underwriters of their professional indemnity insurance from Vero Insurance to Allianz Insurance.

10. The Cross-Claim pleads that the new policy being offered by Allianz, did not affect adequate coverage because it contained within it a limited retroactive date for the coverage of facts and circumstances, and also that the Allianz policy excluded known claims and circumstances. The Broker defends the Cross-Claim by denying that it was in breach of its retainer, or in breach of any duty of care which may have existed between CPG and itself.

11. There are a number of issues which will arise in the determination of the Cross-Claim which bear no relationship whatsoever to the principal proceedings. One such issue is who the actual party was who retained the services of the broker. For example, the Broker in its Defence, does not admit that it was retained by the particular company, which is the defendant in the principal proceedings. It does not admit that it owed that company a duty of care. Undoubtedly, that will be one fact which will need to be determined which bears no relationship to the principal proceedings.

12. On the other hand, in the Defence, the Broker pleads that any loss suffered by CPG was caused by its own conduct in failing to notify in June 2007, the circumstances of which it had become aware that might give rise to a claim against its then insurer, Vero.

13. It is pleaded that those circumstances were that the cross-claimants knew on or about 4 June 2007:

“At the time of issuing a Stop Work Notice, that the circumstances and events giving rise to the allegations were complained of in the statement of claim.”

14. Necessarily, the determination of the Cross-Claim will involve an exploration of all of the circumstances and events surrounding the issuing of the Stop Work Notice on 4 June 2007 which were, as the Broker's pleading demonstrates, those which gave rise to the allegations complained of in the Statement of Claim.

15. As well, the pleading of the Broker asserts that in assessing the Broker's liability, the Court will need to take into account the liability of Allianz in issuing a policy that mistakenly provided a different retroactive date or a different deductible. These are matters which, so it seems to me, will touch upon whether there ought to have been a disclosure of known facts and circumstances of the kind to which I have earlier referred. As well, the Broker's defence pleads contributory negligence on the part of CPG and relies upon, in that respect, the "true situation regarding issuing the Stop Work Notice".

16. In my view, this review of the issues raised by the Broker's pleading demonstrates that there are a number of factual issues in common between the principal proceedings and the proceedings to be mounted on the Cross‑Claim.

The Application

17. The Broker, by its Notice of Motion filed 10 April, seeks an order pursuant to r 9.8 of the Uniform Civil Procedure Rules, that the proceedings on the Cross‑Claim ought be separately tried from the principal proceedings. The submissions in support of that order essentially put that such are the differences of the issues on the principal Claim and the Cross-Claim, that the over-riding purpose of the Civil Procedure Act is best furthered by ordering that there be a separate hearing of the two claims.

18. The cross-claimants who are the defendants in the principal proceedings, oppose the relief and point to a number of reasons why the proceedings should be heard together. There is no doubt that if the proceedings are heard together, there will be a number of witnesses and a number of factual issues on the principal Claim, which do not intrude on the Cross-Claim. If the broker decides during the course of the hearing, to be present in court when those issues are being canvassed, it will undoubtedly incur legal costs that it otherwise might not if the principal Claim and the Cross-Claim are separated.

19. On the other hand, if the claims are separated, one or other or both parties, when dealing with the hearing on the Cross-Claim, will need to adduce evidence that was adduced in the principal Claim so as to address various of the factual pleadings which presently exist on the Cross-Claim. This runs the risk that facts may be found differently, if a different judge constitutes the Court hearing each issue, and also will result in the incurring of some additional cost.

Discernment

20. It is necessary for this Court to make an evaluative decision of what is in the best interests the administration of justice and how this case can best be conducted so as to further the over-riding purpose of the just, quick and cheap determination of the real issues in the proceedings.

21. In my view, such is the extent of the commonality of the factual issues that it would be contrary to the over-riding purpose to make the orders sought in the cross-defendant's Notice of Motion.

22. In my view, it is an anathema to the efficient conduct of proceedings to require a court, whether constituted by the same or different judges, to enquire into and decide matters of fact twice that are more efficiently dealt with by being decided once only.

23. Secondly, I am not satisfied that the issues are so discrete that the additional costs to be occasioned by leading the facts on two occasions would be justified.

24. Thirdly, to the extent that the Broker will incur additional costs by being present during the conduct of the principal proceedings for witnesses who do not touch upon the issues relating to the broker, that is a matter for its own assessment and decision. To the extent that a cross-defendant is not interested in or does not wish to ask questions of a witness, or a series of witnesses, they do not have to be present in court. It is a matter entirely for the cross-defendant to control the extent of their expenditure.

25. In all of those circumstances, I have not been satisfied that I should make the orders sought in the Notice of Motion filed 10 April 2015, and it will be dismissed.

Orders

26. I order the cross-defendant to pay the cross-claimant's costs.

27. I order the plaintiff to pay his or its own costs of the motion.

**********

Decision last updated: 28 August 2015