Cowell v BHP Billiton (Olympic Dam Corporation) P/L
[2017] SADC 14
•24 February 2017
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
COWELL v BHP BILLITON (OLYMPIC DAM CORPORATION) P/L; VEOLIA ENVIRONMENTAL SERVICES (AUST) P/L & AXA CORPORATE SOLUTIONS
[2017] SADC 14
Ruling of Her Honour Judge McIntyre
24 February 2017
PROCEDURE - COURTS AND JUDGES GENERALLY - JUDGES - POWER TO CONTROL PROCEEDINGS - MISCELLANEOUS POWERS
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - DECLARATIONS - REQUIREMENT THAT ALL MATTERS IN CONTROVERSY BE DETERMINED
The plaintiff, Brian Cowell, sued BHP Billiton (Olympic Dam Corporation) Pty Ltd for damages for personal injury that he sustained at BHPB’s Olympic Dam Mine Site on 25 October 2008. BHPB settled Mr. Cowell’s claim against it on 11 April 2016. Mr. Cowell was an employee of Veolia Environmental Services (Australia) Pty Ltd. the first third party. He was employed as a refractory brick layer. Veolia performed work at Olympic Dam under a three year services contract which it entered into with the mine owner BHPB on 19 June 2007. At all relevant times Veolia held policies of public and products liability underwritten by AXA Corporate Solutions Assurance, the second third party.
Two issues remain to be determined in these proceedings. First, the liability of Veolia to indemnify BHPB or to contribute to the settlement between BHPB and the plaintiff under the service contract and, second, AXA’s liability to indemnify BHPB under one or more of the policies of public liability insurance held by Veolia. On 27 July 2016 the defendant made application for a separate trial of the insurance point namely BHPB’s entitlement to indemnity under two AXA policies. That application was made under Rule 211 of the District Court Rules. It was opposed by AXA. It is unclear whether such an order was in fact made but all parties proceeded on the understanding that it had.
This matter was listed apparently for hearing of the insurance issue.
Held:
1. Court has the power to revisit any orders made by the Master in relation to a separate trial of the insurance issue
2. It is not appropriate in all of the circumstances to order a separate trial of the insurance issue.
District Court Rules R116; R117; r210; R211; District Court Act s8, referred to.
Port Pirie City & Districts Council v Leenders & Partners Pty Ltd [2001] SASC 208; FAI General Insurance Co Ltd (In Liq) v Sherry [2002] SASC 431; Duke Group (In Liq) v Arthur Young (1993) 4 ASCR 355; Rogers v Bailleu Bullock (1981) 28 SASR 5943; The Tap Inn Pty Ltd v Matthews [2015] SASCFC 118; rOGERS V bAILLIEU bULLOCK wILKINSON pTY lTD (1981) 28 SASR 5943; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; Speno Rail Maintenance Australia Pty Ltd v Hammersley Iron Pty Ltd (2000) 23 WAR 291, considered.
COWELL v BHP BILLITON (OLYMPIC DAM CORPORATION) P/L; VEOLIA ENVIRONMENTAL SERVICES (AUST) P/L & AXA CORPORATE SOLUTIONS
[2017] SADC 14
This matter was listed before me for a two day hearing between the defendant, BHP Billiton (Olympic Dam Corporation) Pty Ltd (‘BHPB’), and the second third party, AXA Corporate Solutions Assurance (‘AXA’). The parties understood that this was a hearing on a preliminary point. Upon receiving the written submissions of the parties I raised with the parties whether such an order had in fact been made and whether it was, in all the circumstances, an appropriate order.
Background
The plaintiff, Brian Cowell, sued BHPB for damages for personal injury that he sustained at BHPB’s Olympic Dam Mine Site on 25 October 2008. BHPB settled Mr Cowell’s claim against it on 11 April 2016 in the sum of $300,000 inclusive of interest and costs. It is agreed by all parties that this was a reasonable settlement.
Mr Cowell was an employee of Veolia Environmental Services (Australia) Pty Ltd. (‘Veolia’) the first third party. He was employed as a refractory brick layer. Veolia performed work at Olympic Dam under a three year services contract which it entered into with the mine owner BHPB on 19 June 2007 (‘the services contract’).
Under clauses 16.1 and 16.3 of the services contract Veolia was required to maintain a comprehensive policy of public and product liability insurance which named BHPB as “an indemnified principal”.
At all relevant times Veolia held policies of public and products liability underwritten by AXA. BHPB maintains that it is entitled to coverage under one of the AXA policies effected by Veolia specifically either policy number SYCL-0075-8752 which was current at the time of the plaintiff’s injury (‘the 2008-2009 policy’) or policy number 201009-0006 which was current when BHPB first received notice of the plaintiff’s claim on 17 April 2012 (‘the 2011-2012 policy’).
BHPB claimed indemnity from AXA initially by letter dated 3 October 2014. By letter dated 23 October 2014 AXA denied indemnity.
The proceedings relating to the plaintiff having been settled the remaining parties to this action are the defendant, BHPB, and the two third parties, Veolia and AXA. The two third parties are represented by the same firm of solicitors. Two issues remain to be determined. First, the liability of Veolia to indemnify BHPB or to contribute to the settlement between BHPB and the plaintiff under the service agreement and, second, AXA’s liability to indemnify BHPB under one or more of the policies of public liability insurance held by Veolia.
On 27 July 2016 the defendant made application for a separate trial of the insurance point namely BHPB’s entitlement to indemnity under the two AXA policies. That application was made under Rule 211 of the District Court Rules. It was opposed by AXA.
BHPB’s application was listed for a three hour argument before a Master on 3 November 2016. On 24 October 2016 that argument was vacated due to BHPB’s non-compliance with orders for the filing and serving of its outline of argument. The Master adjourned the matter to a 15 minute hearing on Thursday 24 November 2016 for the stated purpose of considering the relisting of the argument of the separate trial application.
On 24 November 2016 the Master made a number of orders as follows:
1. This action is referred to the trial list on Thursday 1/12/16 with an allocation of two days.
2. This action is also adjourned to a special directions hearing at 9am on 28/11/16 to enable the court to evaluate the continuing utility of the trial date; articulating the precise issue which will be the subject of the trial referred to in paragraph 1 by reference to specified paragraphs of the existing pleadings, the preparation and content of a trial book for the use of the judge.
3. Costs reserved.
4. The listings officer has attended today and this hearing is therefore a combined directions hearing and listing conference.
The parties thereafter proceeded on the basis that the orders made by the Master on 24 November 2016 were orders for a separate trial of the insurance issue under DCR 211 as between BHPB and the second third party AXA. On the face of the record this does not appear correct given what was said to be listed for hearing was “the action”, the fact that there was no specific order under DCR 211 nor was there any order or apparent agreement as to the precise articulation of the issue to be determined. Indeed I note that there has never been an order about the issue to be determined as this remained unresolved as at the last directions hearing on 30 January 2017.
Both parties filed affidavits concerning the interlocutory steps leading to the listing of this matter.[1] Despite some differences of emphasis it is clear that both parties considered that the insurance question, albeit not precisely articulated, had been set down for hearing between BHPB and AXA. Further it is plain from the affidavits that there was no proper argument concerning BHPB’s application for separate trial of the insurance issue before the Master. The solicitors for AXA were not prepared for argument on 24 November 2016 having understood that this was to be a short hearing to list the matter for argument if BHPB maintained its application. AXA’s solicitors had not filed a written outline of argument nor had they instructed counsel to attend.
[1] Second affidavit of Michael Ricketts sworn on 15 February 2017 and Affidavit of Alexandra Cobiac sworn on 15 February 2017.
BHPB contends that there was opportunity for argument to take place after the orders made on 24 November 2016 specifically at the hearing on 28 November 2016 when counsel for the second third party did attend. It is said that there were five further directions hearings at which this issue could have been raised. Alternatively BHPB contends that the proper course for AXA to have taken was to appeal the order made in 24 November 2016. In either case it is said that it is inappropriate for me to interfere with the orders for a separate trial of the insurance issue.
There are a number of difficulties with BHPB’s contentions. First, there is the ambiguity of the orders made on 24 November 2016. In my view they do not amount to orders for a separate trial of the insurance issue under DCR 211. Second, even if they did, plainly they were made in the absence of proper argument and in circumstances of unfairness to the second third party. To say that AXA should have presented its argument after it is said that the order was made is a curious submission. AXA did not seek to appeal the order it understood the Master had made but took the view, as it was entitled to do, that it ought to prepare the separate issue for trial. It is plain on the material before me that AXA has never conceded that a separate trial of the insurance issue was appropriate.
Do I have power to revisit the Master’s order?
I heard argument about whether I had power to revisit the Master’s order and, for expedience, I also heard argument on the question of whether there ought to be a separate trial of the insurance issue under DCR-211.
This is not an appeal, both parties were ready to proceed with argument concerning the insurance issue albeit AXA did so under protest. Rather I raised the issue of the proper disposal of these proceedings at the commencement of the hearing having read the written submissions of the parties. First, I was concerned that AXA’s position, as articulated in those submissions, was that there had been an order made under Rule 211 on 24 November 2016 in specific terms. The Court record did not reflect what was set out in AXA’s submissions. Further the submissions stated AXA’s position that the issues in dispute between BHPB and AXA are inseparable from the issues in dispute between BHPB and Veolia. The second third party further contended that the issue of whether or not BHPB is entitled to indemnity under either policy would not be resolved by separate determination of the insurance question.
Section 8 of the District Court Act sets out the civil jurisdiction of the District Court. DCR-116 sets out the Court’s power to manage litigation and DCR-117 sets out the power to make orders controlling the conduct of litigation. Bearing the principles applicable to the exercise of those powers in mind, it is my view that the Court has the power to revisit any orders made by the Master in relation to separate trials in the circumstances of this case and notwithstanding the lack of appeal. This is because of the confusion as to whether the Master in fact made such an order. If such an order was made, it was plainly made without proper argument and without taking into account the matters to be put by AXA in opposition to the order. This constitutes a lack of procedural and substantive fairness that the court ought to address. Further, if the position taken by AXA is correct, which I do not determine, then the hearing of the preliminary point will be largely redundant.
Ought there to be a separate trial of the insurance issue?
BHPB maintains that the evidence in the insurance dispute is entirely documentary and confined in its scope. BHPB does not anticipate calling any witness evidence in the proceedings against AXA. It is said that the contribution claim against Veolia on the other hand calls for witness evidence including evidence from the plaintiff who is not resident in this State. BHPB says that its third party claims against Veolia and AXA are parallel means of achieving the same objective namely contribution to or indemnity in respect of BHPB’s settlement with the plaintiff. It is said that if the insurance dispute between BHPB and AXA is separately determined in BHPB’s favour the third party proceedings against Veolia would become otiose and therefore would be discontinued.[2]
[2] First affidavit of Michael Ricketts sworn on 28 July 2016
AXA on the other hand contends that BHPB is entitled to indemnity under the policies of insurance but only to the extent that BHPB’s liability to the plaintiff arises from a negligent act of Veolia in the performance of the services contract and for which Veolia is obliged to indemnify BHPB. AXA says that that evidence of what in fact occurred on the day of the plaintiff’s injuries including whether or not it amounted to gross negligence on the part of BHPB are matters relevant to the indemnity proceedings against Veolia and thus to the insurance issue against AXA. AXA contends that the issue of whether or not BHPB is entitled to indemnity under either policy for the settlement with Mr Cowell cannot therefore be resolved on the documents but also requires a determination of a number of issues of fact.
The deed of release and discharge entered into between Mr Cowell and BHPB specifically provides that the deed does not constitute an admission of liability by BHPB.[3] There is no evidence put before the Court as to what occurred on the day that Mr Cowell sustained his injuries and so the Court is in no position to make findings as to whether those injuries were caused by the negligence of BHP if that is a relevant consideration.
[3] Clause 8 Deed of Release and Discharge (undated) between Mr Cowell & BHPB
Generally the expedient resolution of litigation is best facilitated by convening one continuous hearing at which all relevant evidence is adduced and adjudicated upon.[4] However Rule DCR-211 provides that:
The Court may order the separate trial of an issue of fact or law (or an issue involving mixed questions of fact and law) involved in the action.
[4] DCR-210
DCR 211 provides a discretion which is to be exercised judicially. The test is whether it is just and expedient to order a separate trial in all of the circumstances.[5] A number of factors are relevant to the exercise of the discretion:
·Would a separate hearing be expected to dispose of a substantial issue in the action or to substantially narrow the area of dispute between the parties?[6]
·Considerations of fairness, convenience and expense are to be taken into account in determining whether to conduct a preliminary hearing.[7]
·Is there a clear demarcation in the evidence relevant to the separate issues arising in the action?
·Is there a risk of overlap of evidence across the issues?
·The point to be determined must be defined in clear terms as not merely as those points of law raised by the pleadings.[8]
There is a danger in dealing with preliminary questions without the underlying facts to the dispute being resolved.[9] I further note the case law to the effect that the Court ought to be reluctant to enter into the determination of issues that may be described as hypothetical.[10]
[5] Port Pirie City & Districts Council v Leenders & Partners Pty Ltd [2001] SASC 208
[6] FAI General Insurance Co Ltd (In Liq) v Sherry [2002] SASC 431
[7] Duke Group (in Liq) v Arthur Young (1993) 4 ASCR 355
[8] Rogers v Bailleu Bullock (1981) 28 SASR 5943
[9] The Tap Inn Pty Ltd v Matthews [2015] SASCFC 118
[10] Rogers v Baillieu Bullock Wilkinson Pty Ltd (1981) 28 SASR 5943 & Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
In this case, the issue is not whether BHPB is insured under a policy taken out by Veolia with AXA because, on the documents, plainly it is. The issue is rather what is the extent of that cover? Or, to put it another way, what is the extent of the cover that Veolia was obliged to take out under the services contract?
It is my view that to determine whether BHP is entitled to indemnity under one or other of the policies may well require findings of fact. It would certainly require findings of fact if the court was to accept AXA’s argument that the insurance obligation under Clause 16 of the service contract between Veolia and BHPB is intended to support and be co-extensive with the indemnity obligations under Clause 17 of the service contract. Whilst recognising that this is a contentious issue it is my view that it is not practical or efficient to hear argument on the insurance point solely on the documents because of the possibility that AXA’s argument might succeed.
To that I would add that the documents are themselves contentious. The service contract[11] contains handwritten annotations to clauses 16 and 17. I am told that the circumstances of those handwritten amendments are not agreed. It is likely that evidence will need to be called concerning the circumstances in which those changes were made. They are not in my view irrelevant to a determination of the insurance issue. For example clause 16.3 requires the contractor, Veolia, to include BHPB in its insurance arrangements. The printed form of the requirement is as follows:
The contractor must ensure that all policies of insurance required to be taken out by the contractor under this contract include BHP Billiton as a named co-insured to the extent permissible at law. (emphasis added)
[11] 2nd Trial book – p22-59 – FDN44
That clause has been amended in handwriting by striking out the words “a named co-insured” and inserting instead “an indemnified principal”. BHPB submitted that the two expressions were effectively the same. This begs the question as to why the amendment was made BHPB further refers to clause 16.10 and clause 17.3 which it contends stress the separate nature of clauses 16 and 17. BHPB contends that the insurance issue requires only a consideration of clause 16 with no reference to clause 17. AXA, as outlined above, takes a different view.
AXA says that the change to clause 16.3 is significant particularly given that the defendant relies, in support of its insurance argument, on the decision in Speno Rail Maintenance Australia Pty. Ltd. v Hammersley Iron Pty Ltd.[12]That case deals with an obligation on the part of the contractor to include the principal as “a named co-insured”, the very wording that has been crossed out and substituted in the present case.
[12] (2000) 23 WAR 291
The second third party argues that the change from “a named co-insured” to to “indemnified principal” takes its colour from a further handwritten amendment to the service contract; namely the inclusion of clause 17.8 which provides as follows:
The contractor’s liability to indemnify and/or compensate another under or in connection with this contract is reduced proportionally to the extent that the breach, illness, injury, death, negligent or wilful act or omission, claim, penalty, loss and/or damage is caused or contributed to by any of an act, omission and/or negligence of any BHP Billiton, its related entities, their employees, contractors, other than the contractor agents and/or third parties.
I do not resolve this issue. I simply raise it to highlight the fact that determination of the insurance issue likely requires evidence in relation to the handwritten amendments.
Finally, whilst not decisive of the separate trial issue, the parties indicated during the course of argument, the witnesses that might be required for a full hearing of this matter. Based on that information, a full hearing should take no more than 5 days. It may take less if matters can be agreed.
Accordingly, I do not consider that it is appropriate in all of the circumstances to order a separate trial of the insurance issue.
I make the following orders:
Insofar as it may be necessary to do so I revoke any order made under DCR211 for a separate hearing of the insurance issue.
This matter is to be set down for a listing conference before Judge Slattery to set a trial date noting that the current estimate is 5 days.
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