Chapman v Gibbo's Transport Pty Ltd (No 3)

[2023] NSWSC 754

Supreme Court

New South Wales

Medium Neutral Citation:

Chapman v Gibbo’s Transport Pty Ltd & Ors (No 3) [2023] NSWSC 754

Hearing dates:

30 June 2023

Date of orders:

30 June 2023

Decision date:

30 June 2023

Jurisdiction:

Common Law

Before:

Weinstein J

Decision:

(1) I dismiss that part of the second defendant’s motion seeking an order pursuant to r 28.2 of the UCPR.

(2) I grant leave to the second defendant to file and serve the third cross-claim found at annexure “A” to its motion within 7 days, i.e. by 6 July 2023.

(3) The third defendant is to file and serve a defence to the third cross-claim by 3 August 2023.

(4) Costs of each party are costs in the cause.

Catchwords:

CIVIL PROCEDURE – notice of motion – separate question - separate trial severing liability and quantum – whether severing of liability and quantum will create delay – application dismissed

CIVIL PROCEDURE – notice of motion - cross-claim – whether cross-claim is arguable – leave granted to file cross-claim

Legislation Cited:

Civil Procedure Act 2005

Motor Accidents Compensation Act1999

Uniform Civil Procedure Rules 2005

Cases Cited:

Chapman v Gibbo’s Transport and Ors (No 2) [2023] NSWSC 186

Hoban v New South Wales Land & Housing Corporation [2008] NSWSC 1121

Idoport Pty Ltd & Anor v National Australia Bank Ltd & Ors; Idoport Pty Ltd & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd “JMG” v National Australia Bank [2000] NSWSC 1215

QBE Insurance (Australia) Ltd v Mordue [2015] NSWCA 380

Southwell v Bennett [2010] NSWSC 1372

Tepko Pty Limited v Water Board (2001) 206 CLR 1; [2001] HCA 19

Wipro Ltd v State of New South Wales & Anor [2022] NSWSC 907

Category:

Procedural rulings

Parties:

Michael William Chapman (Plaintiff)
Gibbo’s Transport Pty Ltd (First Defendant)
Qube Logistics (SL) Pty Ltd (Second Defendant)
QBE Insurance Australia Limited (Third Defendant)

Representation:

Counsel:
R de Meyrick (Plaintiff)
G J Parker SC (Second Defendant)
J Catsanos SC (Third Defendant)

Solicitors:
CBD Law (Plaintiff)
HWL Ebsworth Lawyers (Second Defendant)
Sparke Helmore Lawyers (Third Defendant)

File Number(s):

2020/104131

Publication restriction:

Nil

JUDGMENT

1. By way of notice of motion, in part filed in August 2022 and later on 7 March 2023, the second defendant Qube Logistics (SL) Pty Ltd (Qube), seeks the following orders:-

“1. An order pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 that the question of liability be heard and determined in advance of and separate from the question of damages.

2. Leave for the second defendant to file the third cross claim found at annexure “A” to the motion, naming the third defendant QBE Insurance (Australia) Limited, as the cross defendant.

3. An order that the third defendant pay the second defendant’s costs of and incidental to the orders sought in paragraph 2 above.

4. Such other order as the Court thinks fit.”

2. The relief claimed by Qube in its proposed cross-claim is a declaration that it is entitled to be indemnified by QBE, subject to policy limits, pursuant to the terms of its compulsory third party (CTP) policy, of all loss arising from the claim made against Qube by the plaintiff in his Second (now Third) Amended Statement of Claim, including all costs and expenses Qube has incurred in defending that claim. Qube further claims damages for breach of contract representing all loss arising from the claim made against Qube by the plaintiff in the Second (now Third) Amended Statement of Claim, including costs and expenses, as a consequence of the failure of QBE to indemnify the cross-claimant with respect to the plaintiff’s claim against it.

Background

3. I set out the procedural history of the matter, extracted from my judgment in Chapman v Gibbo’s Transport and Ors (No 2) [2023] NSWSC 186:-

“[2] The procedural history of the matter is set out in full in the judgment of Adamson J, as her Honour then was, of 1 June 2022. On that date her Honour considered a notice of motion by the second defendant, Qube Logistics (SL) Pty Limited. It sought leave to amend its defence and the summary dismissal of the plaintiff’s second amended statement of claim on the basis that the plaintiff’s claim was prohibited by s 108 of the MACA on the grounds that the claim fell within s 3A of that Act (i.e., that the circumstances of the plaintiff’s accident were such that it was subject to the provisions of the MACA).

[3] Her Honour determined that where the characterisation of the alleged fault is unclear and may depend on contested evidence, it would be inappropriate to determine the matter on a notice of motion. Rather, it was a triable question that should be reserved for the final hearing. Thus, her Honour found that it was premature to determine whether s 3A of the MACA applied and whether the plaintiff was in breach of the prohibition in s 108, particularly in circumstances where the plaintiff had then submitted a claim form to QBE on 31 March 2022 under the MACA against the possibility that it may subsequently be held to apply.

[4] Her Honour granted leave to the second defendant to file an amended defence (relying upon s 3A) and otherwise dismissed the second defendant’s notice of motion.

[5] Before her Honour and before me, it was common ground that the plaintiff was at all material times employed by Gibbo’s Transport Pty Limited (the first defendant) and that the first defendant had contracted with the second defendant for the haulage of flour. On 1 August 2016, the truck which the plaintiff usually drove, and which was owned by the first defendant, was being repaired. A truck which was owned by the second defendant was allocated to the plaintiff. While the plaintiff was driving the truck, which was hauling flour from Manildra Flour Mills to Sydney, the truck rolled causing the plaintiff substantial injuries including a traumatic brain injury.

[6] Since her Honour’s judgment, the plaintiff has filed and served a third amended statement of claim naming QBE as the third defendant and pleading the MACA in the alternative, so that he no longer requires the leave sought in prayer 1 of his notice of motion.

[7] All procedural requirements of the MACA having been complied with (i.e., a claim form has been served on the insurer and the Personal Injury Commission issued an exemption certificate on 15 July 2022).

[8] The third defendant has rejected the plaintiff’s late claim on the grounds that the explanation for the delay is neither full nor satisfactory as required by s 109(3)(a) of the MACA.

[9] At the commencement of the hearing of the matter, Mr Catsanos SC, who appeared for the third defendant, called on a notice to produce to the plaintiff. Documents responsive to paragraphs (a) to (e) of the notice were produced by Mr de Meyrick who appeared on behalf of the plaintiff.

[10] Mr Parker, who appeared for the first defendant, and Mr Parker SC who appeared for the second defendant, took no active part in the proceedings before me which concerned only whether the plaintiff had provided the third defendant with a full and satisfactory explanation for the delay in commencing proceedings pursuant to s 109(3)(a) of the MACA. It was conceded by Mr Catsanos, appropriately, at the outset that due to the severity of the plaintiff’s injuries there was no issue with s 109(3)(b). I observe too that there was no issue about prejudice, actual or presumptive, caused by the delay which would mean that the third defendant could not have a fair hearing.

[11] As matters transpired, the third defendant ultimately conceded in oral submissions that the plaintiff’s explanation was full, so that the only issue for determination is whether the plaintiff’s explanation was satisfactory.”

4. On 7 March 2023, I granted the plaintiff leave to proceed pursuant to s 109 of the Motor Accidents Compensation Act 1999 (MACA). There are now three active defendants in the proceedings. The second defendant mentioned the appearance of the first defendant on this application.

Evidence

5. Qube relies on affidavits of Michael Valdes sworn on 11 August 2022 and 7 March 2023. Mr Valdes is a solicitor at HWL Ebsworth Lawyers, who are on the record in these proceedings on behalf of Qube.

6. In his first affidavit, Mr Valdes expresses his reasons why there ought to be a separate trial on liability (to which see below). He also attaches correspondence to both the plaintiff and the first defendant and a Schedule of Damages which was provided to him by the plaintiff’s solicitor on 12 February 2021, more than 2 years ago. At that date, the plaintiff estimated his damages to be in the range of $2,220,000 plus costs.

7. In his second affidavit, Mr Valdes attaches correspondence which sets out his reasons why a cross-claim ought to be filed. That correspondence discloses that Qube first sought indemnity under the CTP policy on 21 January 2021. QBE has at all times maintained a denial of indemnity. In a letter to QBE’s lawyers dated 10 November 2022, HWL Ebsworth Lawyers said that the purpose of the cross-claim (and in particular the breach of contract claim), is “to give rise to an entitlement to recover Qube’s defence costs from QBE should Qube be successful in its claim for insurance cover pursuant to the CTP policy”. They say that if QBE agrees “that if Qube wins its case against QBE then it will pay all reasonably incurred costs of defending the action by the Plaintiff and also costs in bringing the claim against QBE, then we can proceed as you suggest.”

8. A letter dated 29 March 2023 from Mr Ian Jones of Sparke Helmore Lawyers to HWL Ebsworth Lawyers was tendered by the third defendant and marked as exhibit “1”. Mr Jones notes that Qube’s CTP policy is not governed by the Insurance Contracts Act 1984 (Cth) (the Insurance Contracts Act), but is a statutory policy invoked by s 10 of the MACA. Mr Jones says that QBE (as third defendant) acknowledges in paragraph 6(a) of its defence that if the circumstances of the accident are covered under Qube’s third party policy, then QBE is liable to indemnify by s 16 of the MACA. He says:-

“Presently, QBE cannot go on record for the second defendant because there are allegations in the third amended statement of claim that relate to causes of action other than under the MACA to which the third party policy does not respond. It would be a different situation if the plaintiff were to only plead a cause of action under the MACA; Qube’s interests are not properly protected by QBE defending the allegations of a motor accident only and leaving Qube open to the plaintiff proving his pleaded cause of action under the Civil Liability Act.

The approach QBE has taken to the defence of the claim is entirely consistent with its obligations under the MACA. It was clearly contemplated in the drafting of the MACA that circumstances such as what occurred in this claim would arise from time to time with there being multiple causes of action to which the CTP insurer cannot respond. It is for that reason QBE sought joinder as a party to the proceedings under section 79 of the MACA.

…

QBE states that the third statement of cross-claim that Qube now seeks to file is an abuse of process. With QBE having been joined to the proceedings under s 79 of the MACA, there will be a determination by the court of its obligations to indemnify Qube. If a finding that QBE is obligated to indemnify Qube is made by the Court, then QBE will have a liability for the plaintiff’s claim (subject to its merits) from the date that claim was made against QBE, namely 31 March 2022, to the date of judgment.

…

We again state that the manner in which QBE has managed this claim is entirely consistent with its obligations under the MACA. There has been no breach of the statutory policy in s 10 of the MACA and any relief claim by Qube for breach of contract is ill-founded.

…

We are instructed that QBE opposes the filing of the cross-claim. QBE pleads in its defence an obligation to indemnify on findings of the Court that this is a motor accident within the MACA. It is a matter for the Court to determine the plaintiff’s rights against each of the named defendants and it is not a matter for Qube to act in these proceedings contrary to its obligations under s 77 of the MACA. The filing of the cross-claim will be in direct contravention of that duty.

Further, QBE states that Qube has a collateral purpose in filing the cross-claim which is evident from the various letters you have forwarded us to date regarding your client seeking costs. The recovery of the entirety of Qube’s costs in relation to the plaintiff’s claim is the primary purpose of the cross-claim and as much is evident from the relief claimed. In the absence of exceptional circumstances, of which QBE is aware of none, costs should follow the cause. QBE opposes any order of costs being made against it for proceedings between the plaintiff and Qube before the plaintiff had made his motor accident claim against QBE on 31 March 2022.”

9. An affidavit of the plaintiff’s solicitor John Hamish Giles Finney, affirmed on 5 June 2023, was read in the proceedings. He notes that previously qualified experts in the areas of neurosurgery, psychiatry and occupational therapy had previously been served but each of those experts is no longer in practice. The plaintiff has therefore qualified and served new reports of experts in each of those fields. He further says that the first and second defendants have not served any reports from medical experts and that the third defendant has not qualified any medical expert. The plaintiff has served an expert report on liability, and the second and third defendant have served the same expert report on liability.

Legislation

10. Section 90 of the Civil Procedure Act 2005 (CPA) provides:-

90   Judgments generally

(1)  The court is, at or after trial or otherwise as the nature of the case requires, to give such judgment or make such order as the nature of the case requires.

(2)  If there is a claim by a plaintiff and a cross-claim by a defendant, the court—

(a)  may give judgment for the balance only of the sums of money awarded on the respective claims, or

(b)  may give judgment in respect of each claim,

and may give judgment similarly where several claims arise between plaintiffs, defendants and other parties.

11. Rule 9.1 of the Uniform Civil Procedure Rules 2005 (UCPR) provides:-

9.1   Making of cross-claim

(1)  A party (the cross-claimant) may make a cross-claim—

(a)  in proceedings commenced by statement of claim, within the time limited for the party to file a defence, or

(b)  in proceedings commenced by summons, before the return day specified in the summons,

or within such further time as the court may allow.

…

12. Rule 28.2 of the UCPR provides:-

28.2   Order for decision

The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings

…

13. Section 3A of the MACA provides:-

3A   General restrictions on application of Act

(1)  This Act (including any third-party policy under this Act) applies only in respect of the death of or injury to a person that is caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and only if the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during—

(a)  the driving of the vehicle, or

(b)  a collision, or action taken to avoid a collision, with the vehicle, or

(c)  the vehicle’s running out of control, or

(d)  a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle’s running out of control.

14. Section 10 of the MACA provides:-

10   Third-party policies

(1)  A third-party policy under this Act is a policy that is in the following terms—

Third-party Policy

The insurer insures the owner of the motor vehicle and any other person who at any time drives the vehicle (whether or not with the consent of the owner) against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle—

(a)  if the motor vehicle is not one to which paragraph (b) applies—in the use or operation of the vehicle in any part of the Commonwealth (whether or not on a road), or

(b)  if the motor vehicle is subject to an unregistered vehicle permit under the Road Transport Act 2013—in the use or operation of the vehicle on any road in any part of the Commonwealth.

In this policy, words and expressions have the same meanings as in the Motor Accidents Compensation Act 1999.

(2)  A policy does not cease to be a third-party policy under this Act merely because the policy refers to an unregistered vehicle permit under the Road Transport (Vehicle Registration) Act 1997 instead of an unregistered vehicle permit under the Road Transport Act 2013 (as specified in paragraph (b) of the policy set out in subsection (1)).

15. Section 77 of the MACA provides:-

77   Insured not to admit liability or act in respect of claim

(1)  A person may not, without the consent in writing of the person’s insurer—

(a)  enter upon, or incur any expense in, any litigation, or

(b)  make any offer or promise of payment or settlement, or

(c)  make any payment or settlement, or

(d)  make any admission of liability,

in respect of a claim. However, this section does not prevent any person from truthfully answering any question reasonably asked of the person by a police officer.

(2)  An offer, promise or admission made in contravention of this section is of no effect.

16. Section 79 of the MACA provides:-

79   Power of insurer to intervene in legal proceedings

An insurer may apply to the court to be joined as a party to legal proceedings brought against a defendant who is insured under a third-party policy with the insurer in order to argue that in the circumstances of the case it has no obligation under the policy to indemnify the defendant.

The parties’ submissions

Separate Question

17. Mr Parker SC, on behalf of the second defendant, submits that liability ought to be determined separately from damages, to which the first defendant consents. The plaintiff and the third defendant oppose that application.

18. Mr Parker submits that the predominant issues in a liability trial (assuming that it includes the proposed cross-claim) are likely to be the explanation for the rollover of the truck which was driven by the plaintiff, whether the circumstances of the accident bring the matter within s 3A of the MACA (and whether the injury caused to the plaintiff was caused by the fault of the owner in the use or operation of the vehicle during the driving), and whether in the event the CTP policy is engaged, QBE is liable to Qube for breach of contract. He submits that the factual argument relevant to the proposed cross-claim will be resolved at the determination of any liability hearing.

19. Mr Parker submits that the expert evidence will take a considerable amount of time as it will involve automotive engineering evidence, although I observe that an order that there be concurrent evidence (which is probably inevitable) would likely shorten this evidence. Mr Parker also says that the second defendant proposes to adduce evidence from at least 3 lay witnesses.

20. As to the issue with the third defendant set out in its proposed cross-claim, Mr Parker submits that whether or not the CTP policy covers the circumstances of the accident is contested, and until that issue is resolved, Qube has to defend the action as a prudent insured, which causes complexity and ambiguity as to appropriate source of instruction to advance the matter. The resolution of this issue, he submits, will depend on a discrete finding as to whether or not the accident was caused by the fault of Qube in the use and operation of the vehicle. If QBE succeeds in denying coverage, then Qube will be left to conclude the proposed damages trial without QBE present. A separate trial on liability, he submits, would determine the plaintiff’s entitlement to recover damages and resolve the proposed cross-claim.

17. Mr Parker acknowledges that the court is generally reluctant to grant separate trials on specific issues for reasons advanced by Kirby and Callinan JJ in Tepko Pty Limited v Water Board (2001) 206 CLR 1; [2001] HCA 19 at [168] – [171]:-

“[168] … 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.

[169] 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 courts, rather than the parties', interests.

[170] 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.

[171] 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.”

22. In Mr Parker’s submission, those concerns fall away where what is to be determined is an entire case on liability rather than a separate issue. He submits that a separate trial will facilitate the just quick and cheap resolution of the real issues in these proceedings.

23. Mr Catsanos SC, on behalf of the third defendant, submits that the question of a separate trial is a matter for the court, but observes that the severity of the plaintiff’s injuries is a matter of common ground, and that the limited heads of damage are such that the undesirable consequences of severing issues are not displaced. Thus in his submission it would be a more efficient use of resources and more cost effective for all issues to be determined at the same time.

24. Mr de Meyrick, on behalf of the plaintiff, opposes the application and submits that the separate determination of issues is an exceptional measure distinct from the ordinary course taken of determining the issues in their totality. He says that the question of liability in fact involves several separate determinations, including the liability of each of the three defendants and the issue between the second and third defendant, if the proposed cross claim proceeds. He notes that if there is a separate trial on liability, the plaintiff is likely to give evidence at both the liability and damages trial, which I accept. It is the case that the plaintiff, who suffered a traumatic brain injury, would have to participate in two separate trials which, he submits, is inefficient. He says that it is possible that there may be issues as to the plaintiff’s credibility, which would be undesirable. He further submits that a separate trial on liability is inappropriate as it will not resolve the proceedings entirely.

25. Mr de Meyrick relies upon a recent judgment of Bellew J in Wipro Ltd v State of New South Wales & Anor [2022] NSWSC 907, where his Honour, quoted from a judgment of Hallen AsJ, as his Honour then was, in Southwell v Bennett [2010] NSWSC 1372 at [15]:

“I take the principles that apply in determining whether to make an order for the separate determination of a question under the rule to be:

(a) The rule speaks of “questions” and not “issues” and does not differentiate between questions of fact, or law, or partly of fact and partly of law.

(b) The judicial determination of a “question” must involve a conclusive, or final, decision based on concrete and established, or agreed, facts, for the purpose of quelling a controversy between the parties: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334, at [45] and [51].

(c) The rule permits the Court to hear and determine the separate question at any point before, at, or after, any trial or further trial in the proceedings, rather than only as a preliminary question.

(d) Whether such an order should be made is a matter for the court’s discretion, which discretion must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VicRp 62; [1978] VR 669, at 670; Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7].

(e) As a general rule, the discretionary power to order separate determination of a question should be approached with caution: Perre v Apand Pty Ltd [1999] HCA 36; (1999) 198 CLR 180 at [436], per Callinan J; Tepko Pty Limited v The Water Board [2001] HCA 19; (2001) 206 CLR 1, at [168]–[170] per Kirby and Callinan JJ: Commonwealth Bank v Clune [2008] NSWSC 1125 at [6], per Johnson J; Bailey and Bailey v Director-General Department of Energy Climate Change and Water and Ors [2010] NSWSC 979 at [4] per Studdert AJ.

(f) In exercising its discretion, the overriding purpose of the Civil Procedure Act 2005, namely the just, quick and cheap resolution of the real issues in the proceedings (s 56) must be given effect.

(g) Generally, all questions of fact and law should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-42; SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd [2006] FCA 14. If the Court is to depart from that position, the party seeking the separate determination of a question must satisfy the Court that it would be ‘just and convenient’ for that order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [8]- [9], see also Energy Australia v Australian Energy Limited [2001] FCA 1049.

(h) While it may appear attractive, superficially, to order the trial of a separate question, experience often shows that it will not be so, for example, because of the complications that can arise in relation to appeals, or to overlapping factual issues, or to questions of credit, if the same witnesses have to give evidence in relation to a question that is separated and those questions that are not: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7(6)] per Einstein J.; Owners Corporation Sp 70672 v Trustees of Roman Catholic Church [2010] NSWSC 946 at [16] per Ball J.

(i) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings, but often has the reverse effect. It sometimes happens that it turns out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which it is intended to avoid: Idoport Pty Ltd v National Australia Bank Ltd; Tepko Pty Limited v The Water Board at [168].

(j) Before a question is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported).

(k) Where findings as to the credit of a witness is, or of witnesses are, or may be, involved in the consideration of the evidence relevant to the question, it is inappropriate to order a separate trial: ABB v Freight Rail [1999] NSWSC 1037.

(l) Often, a separate question is heard on the basis of:

(i) agreed statements of fact;

(ii) a narrow point to be determined; and

(iii) a hearing that is able to be conducted within a short time (or a short time relative to the total length if the hearing of the separate question were not to be dealt with).

(m) Factors that tend to support the making of an order, include that the separate determination of the question may:

(i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings;

(ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 602 per Kirby P at 607).

(n) It may be appropriate to determine a separate question, even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided, or if the decision will obviate unnecessary and expensive hearings of other questions: City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784; (2009) 73 ACSR 86 at [27] per Rares J. The determination of the one question should enable a sensible reassessment of litigation risks, which is generally likely to encourage some form of settlement discussions.

(o) Relevantly, one factor that may tell against the making of an order would be where there is likely to be a 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: Reading Australia Pty Ltd v Australian Mutual Provident Society at [8]. There is always a risk of inconsistent findings arising from determination of separate questions.

(p) Whilst the decision is ultimately one for the court to determine, it will have regard to the attitude of the parties: TVW Enterprises Limited v Duffy (Federal Court of Australia, 28 March 1985, unreported) Toohey J.

(q) It is a relevant consideration to weigh the time likely to be taken in the hearing of a separate question and the availability of hearing dates for that purpose, against the time and expense of a substantive hearing and the length of time likely to elapse before such a hearing will take place: TVW Enterprises Limited v Duffy at pp 4-5.

(r) Each case will have its own dynamics that dictate the relative importance of various factors to be considered in exercising the discretion conferred.

(s) It is necessary that there be precision, both in formulating the question, and in specifying the facts upon which it is to be decided: Jacobson v Ross [1995] VicRp 24; [1995] 1 VR 337 at 341.”

26. In Mr de Meyrick’s submission, the second defendant has not demonstrated that the court should depart from the usual position that all questions should be determined at the same time.

Cross-claim

27. As to the proposed cross-claim, Mr Parker accepts that the cross-claim is out of time, but he submits that in all of the circumstances, the second defendant should be granted leave. There is no suggestion that the third defendant has suffered prejudice caused by the effluxion of time.

28. The plaintiff and the first defendant neither consent to nor oppose a grant of leave to the second defendant to file the proposed cross-claim.

29. Mr Parker gleans from exhibit 1 that QBE’s objection to the filing of the cross-claim is based on an assertion that the statutory policy issued under the MACA is not a contract of insurance governed by the Insurance Contracts Act, that the CTP policy does not respond to all aspects of the pleading advanced by the plaintiff, that the proposed cross-claim is in breach of s 77 of the MACA, that the cross-claim is an abuse of process because QBE is joined pursuant to s 79 of the MACA, that the cross-claim is to be issued for a collateral purpose being for a recovery of costs and is to be issued contrary to s 77, that Qube has acted contrary to s 77, that there is no breach of the statutory policy and that the claim based on breach of contract is ill-founded.

30. Mr Parker submits that the proposition that the CTP policy is not a contract of insurance (if that is what is being asserted) raises an important legal issue with potentially wide-ranging consequences. He concedes that whilst theoretically the court can give judgment without a formal cross-claim in accordance with section 90 of the CPA, in his submission the better course is for a pleading of the cross-claim to be in place so that the parties can plead their relevant positions and the court can then adjudicate on the issues as defined. In his submission, the matters raised in exhibit 1 are matters that ought not to be disposed of as a preliminary matter on the basis that the court declines to extend time for the issuing of a cross-claim. Rather, he submitted that it is desirable that all issues arising from the plaintiff’s accident – including any relevant insurance issues – be determined in the same proceedings.

31. Mr Catsanos relies upon exhibit 1. He says that QBE’s position, and that of the plaintiff, is that the subject accident does not fall within the ambit of s 3A of the MACA and thus is not covered by the CTP policy prescribed pursuant to s 10 of the MACA. I observe that the primary position of the plaintiff is that the accident does not fall within the ambit of s 3A, but his fallback position is that it does. The essential point of QBE’s opposition to Qube’s application to file a cross-claim, in Mr Catsanos’s submission, is that it is of no utility, that it reflects a breach of s 77 of the MACA and that it will only generate delay and unnecessary costs.

32. Mr Catsanos submits that the issue said by Qube to generate the cross-claim involves ground anticipated by the legislature, and that s 79 of the MACA deals with the not uncommon situation when injuries arising out of an accident involving a motor vehicle can give rise to controversy as to whether or not particular fact situations satisfy the requirements to engage a CTP policy. He says that if the plaintiff’s allegations in the Third Amended Statement of Claim are made out, they fall outside the scope of s 3A of the MACA, which he concedes is a triable issue requiring determination by a court. He observes that the third defendant has been joined to the proceedings as a result of it intervening pursuant to s 79 of the MACA, the purpose of which is to permit CTP insurers to intervene in proceedings with respect to their liability to indemnify the person allegedly at fault, particularly where there may be a dispute about whether or not the liability of a defendant is under a CTP policy, employer’s liability, public liability or some other cause of action. Mr Catsanos re-iterates what is contained in Mr Jones’s letter – that there is no dispute that Qube held a valid CTP policy and that there would be no impediment to QBE indemnifying Qube under that policy were this purely a claim under the MACA. Rather, in his submission, it is a confluence of circumstances which puts QBE in the position where it cannot act for Qube in relation to the dispute because of the plaintiff’s categorisation of the accident.

33. Mr Catsanos says that the proposed cross-claim does nothing more than engage the indemnity issue specifically addressed by s 79 of the MACA. He submits that this is so is reflected in the symmetry between ss 79 and 77 of the MACA. Section 77 prohibits an insured from incurring expense in any litigation without the consent of the third party insurer. Thus it follows, in his submission, that the proposed cross-claim necessarily puts Qube in breach of s 77 as QBE has not consented to the costs generated by the proposed cross-claim. He further submits that the proposed cross-claim is unprecedented in practice.

34. Mr Catsanos points out that the CTP insurer manages the liability for the claim, as the claim is made on the insurer rather than the insured. So much can be accepted: see QBE Insurance (Australia) Ltd v Mordue [2015] NSWCA 380 at [86] per Simpson JA. He submits that there is no occasion for an insured to cross-claim in circumstances like the present, where there is a dispute as to whether or not the policy responds. He says that there is no point in granting leave to file the proposed cross-claim as the objects of the MACA have been satisfied and the court will ultimately determine the controversy as to the categorisation of the accident.

35. Finally, Mr Catsanos says that the real motivation for the cross-claim is the recovery of costs. He submitted that if the court ultimately finds that the CTP policy is invoked, all parties will be able to address on the question of costs. He says that Qube seeks to forestall the issue by suggesting that the opposition to the filing of the cross-claim is a matter requiring the court’s adjudication at some later time and should not be dealt with on a preliminary basis. In his submission, that adjudication should take place now, on this application.

Consideration

Separate question

36. The principles which apply to the ordering of a separate question are well-settled. In Idoport Pty Ltd & Anor v National Australia Bank Ltd & Ors; Idoport Pty Ltd & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd “JMG” v National Australia Bank [2000] NSWSC 1215 (Idoport), Einstein J said (dealing with Part 31 r 2 of the then Supreme Court Rules 1970) at [6] – [8]:-

“[6] Pt31, r2 of the Supreme Court Rules contains the power of the Court to order the determination of separate issues in the proceedings:

The Court may make orders for -

(a) the decision of any question separately from any other question, whether before or after any trial or further trial in the proceedings; and

(b) the statement of a case and the question for decision.

[7] Without examining specific cases in relation to the power conferred on the Court in Pt31, r2, I proceed on the basis of the following principles.

(1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J.

(2) In exercising the power under Pt31, r2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Pt1, r3 (1), r3(2) Supreme Court Rules.

(3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.

(4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances:

(a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy: CBS Productions Pty Ltd v O'Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J);

(b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D);

(c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O'Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA.

(5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where:

(a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J).

(b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 441: Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J).

(c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra).

(6) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra).

[8] As Giles CJ in Comm D (as his Honour then was) said in Tallglen (supra, at 142):

"Pt31, r2 of the rules empowers the court to make orders for the decision of any questions separately from any other question, whether before, at or after any trial or for the trial in the proceedings, and for the statement of a case and the question for decision. In the ordinary course, all issues in proceedings should be decided at the one-time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one-way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of right of appeal is borne in mind) brings delay, expense and hardship - that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties dispute." [emphasis added]”

37. See also Hoban v New South Wales Land & Housing Corporation [2008] NSWSC 1121 (Hoban) per McCallum J, as her Honour then was. That case, which concerned a child who had suffered brain damage, was about re-joining liability and quantum when an order severing them had previously been made.

38. I start from the position that in the usual case, all issues will be heard and determined at once. In this particular case, the resolution of the proposed separate issue will not entirely dispose of the proceedings. Assuming his success on liability, the plaintiff, who has suffered a traumatic brain injury, will have to give evidence twice, both in the proposed liability and damages hearings. Further, there will likely be a delay between the hearing of liability and damages, in circumstances when the plaintiff was injured in August 2016, some 7 years ago. That in itself, in my opinion, militates against the order sought. I observe that there is no consensus as to the likely length of any hearing. The plaintiff estimates that the trial will take 8 days – 5 days for liability and 3 days for damages. The second defendant estimates that the trial will require 15 days – 5 days for liability and 10 days for damages. Moreover, such is the dispute between the defendants, that there is every possibility that there will be an appeal from the decision on liability with the result that the plaintiff’s case will be even further delayed. I note that delay has already created circumstances where three of the plaintiff’s medical experts have retired, so that he has suffered the additional expense of briefing three new experts.

39. In Idoport, Einstein J observed that it was the experience of the courts which suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings, but has the reverse effect, adding delay and expense to the resolution of the litigation. I would add that, if I were to separate liability and damages, there would likely be little prospect of the matter settling until after the determination of the separate question (and after an appeal if that eventuates). If I refuse the application, a court ordered mediation is likely to occur in the foreseeable future, and the matter has a much better chance of resolving within a reasonable time period.

40. Whilst I accept that a separate trial on liability will likely result in a quicker and cheaper hearing for one or some defendants, as McCallum J observed in Hoban at [12], if that were the guiding principle, all cases would have liability and quantum separated.

41. I have taken into account the matters set out in paras [38] and [39] above, the well-known overriding purpose of the UCPR and the dictates of justice. The overall consideration in this case is that there should not be any undue delay for the plaintiff, who it is agreed, has suffered a debilitating brain injury. In my opinion, the just and timely determination of the proceedings as a whole at a cost affordable to all parties, the efficient disposal of the business of the court and the efficient use of available judicial and administrative resources all favour both liability and damages being heard at once. I have come to the view that there ought not be a separate determination of liability and I dismiss that part of the second defendant’s application.

Cross-claim

42. It should be noted that the second defendant attempted to have the cross-claim issue determined early in 2022. For various reasons, beyond the parties’ and the court’s control, that did not occur. I accept for present purposes, that the genesis of Qube’s dispute with QBE occurred in January 2021 when its solicitors first wrote to QBE seeking indemnity pursuant to its CTP policy.

43. QBE is on record saying that it will indemnify Qube if the accident falls within the ambit of s 3A of the MACA. There remains a dispute between the second and third defendant about the extent of that indemnity, and in particular taking into account QBE’s statements found in exhibit 1 that “if a finding that QBE is obligated to indemnify Qube is made by the court, then QBE will have a liability for the plaintiff’s claim (subject to its merits) from the date that claim was made against QBE, namely 31 March 2022 to the date of judgment”, and “QBE opposes any order of costs being made against it for proceedings between the plaintiff and Qube before the plaintiff had made his motor accident claim against QBE on 31 March 2022”.

44. This is not a summary dismissal or a strike out application, but in my opinion the question is whether Qube has an arguable claim such that it should be granted leave to file a cross-claim to ensure that all matters in dispute are determined at once. It seems to me (notwithstanding Mr Catsanos’s submission that such a cross-claim is unprecedented), that the extent of QBE’s indemnity to Qube (if any), including any liability for its costs, and its claim in contract are triable issues. I make no comment about the strength or weakness of the proposed cross-claim. I find only, on the very limited evidence before me, that it is arguable. QBE is not without remedy. No doubt if QBE is successful, there will be an application by it for indemnity costs as against Qube.

45. I propose to grant leave to the second defendant to file its proposed cross-claim, which will be known as the third cross claim in these proceedings.

Costs

46. The parties agree that costs of each party are to be costs in the cause.

Orders

47. I make the following orders:-

1. I dismiss that part of the second defendant’s motion seeking an order pursuant to r 28.2 of the UCPR.

2. I grant leave to the second defendant to file and serve the third cross-claim found at annexure “A” to its motion within 7 days, i.e. by 6 July 2023.

3. The third defendant is to file and serve a defence to the third cross-claim by 3 August 2023.

4. Costs of each party are costs in the cause.

**********

Decision last updated: 03 July 2023