Larsen v Grace Worldwide (Aust) Pty Ltd

[2014] NSWSC 90

Supreme Court

New South Wales

Medium Neutral Citation:

Larsen v Grace Worldwide (Aust) Pty Ltd [2014] NSWSC 90

Hearing dates:

15/11/2013

Decision date:

28 February 2014

Jurisdiction:

Common Law

Before:

Garling J

Decision:

(1) Notice of Motion filed 8 November 2013 be, and hereby is, dismissed.

(2) Costs of the Notice of Motion be costs in the cause.

Catchwords:

PROCEDURE - civil - interlocutory issues - separate question - whether order for determination of separate question would cause undue delay, expenses and uncertainty of outcome - whether of no benefit - whether would facilitate the just, quick and cheap resolution of the proceedings - no point of general principle

Legislation Cited:

Civil Procedure Act 2005
Insurance Contract Act 1984 (Cth)
Trade Practices Act 1974 (Cth)
Uniform Civil Procedure Rules

Cases Cited:

Crawley v Vero Insurance Ltd [2012] NSWSC 593
Southwell v Bennett [2010] NSWSC 1372
Thiering v Daly [2011] NSWSC 1345

Category:

Interlocutory applications

Parties:

Terry Larsen (P)
Grace Worldwide (Aust) Pty Ltd (D)
CGU Insurance (1XD)
Jardine Lloyd Thompson Pty Ltd (2XD)

Representation:

Counsel:
In person (P)
Mr Donaldson / R Potter (D)
Mr Purdy (1 XD)
Mr Peadon (2 XD)
Solicitors:
Marsdens Law Group (D)
Curwoods Lawyers (1XD)
Colin Biggers & Paisley (2XD)

File Number(s):

2010/212858

JUDGMENT

The Proceedings

1. In 2010, Mr and Mrs Larsen commenced proceeding in this Court against Grace Worldwide (Aust) Pty Ltd t/as Grace Removals Group ("Grace Removals").

1. The claim made by Mr and Mrs Larsen is for damages arising out of the transport of their goods from Australia to Germany by Grace Removals in 2004.

1. Mr and Mrs Larsen allege, and Grace Removals deny, that when the goods were delivered to their property in Germany, a number of items had been damaged in a variety of ways; that the items had been subject to being vandalised (in the case of two of the boxes by having a swastika drawn upon them); and that the items had toxic substances on them, or else had been exposed to toxic substances, with the result that the plaintiff suffered personal injury and their home in Stahringen in Germany has been contaminated and was, and has been, unable to be lived in.

1. Mr and Mrs Larsen claim that it will be necessary to demolish and reconstruct their home at Stahringen and that they have suffered other consequential loss and damage. As well, Mr and Mrs Larsen claim aggravated or exemplary damages.

1. Their cause of action is based upon the Trade Practices Act 1974 (Cth), and upon the obligations at common law of a bailee for reward.

1. The proceedings between Mr and Mrs Larsen and Grace Removals have been complex and there have been many directions hearings. Mr and Mrs Larsen presently represent themselves. Although I am sure they have done their very best, the fact that they represent themselves and lack of familiarity with the Court's processes, has necessitated many more interlocutory hearings than would otherwise have been so.

The Cross-Claims

1. In August 2012, I granted leave to Grace Removals to file a number of cross-claims.

1. Pursuant to that leave, Grace Removals filed cross-claims which have later been amended against CGU Insurance Ltd ("CGU") and also against Jardine Lloyd Thompson Pty Ltd ("JLT").

1. In the Amended First Cross Claim filed on 16 May 2013, Grace Removals seek the following relief with respect to CGU:

"1. A declaration that CGU is liable to indemnify Grace Removals under the terms of the policy for any amount which Grace Removals is held liable to pay the plaintiffs in respect of the insured claim;

2. Alternatively, rectification of the policy by deleting subparagraph (2) of the provision of the policy entitled Geographical Limits and replacing it with the following words: "The performance by the insured of contractual services outside Australia or New Zealand, or";

3. Damages in an amount representing:

(a) the amount of damages, if any, recovered by the plaintiffs in respect of their insured claim; and

(b) the costs incurred by Grace Removals in defending the insured claims.

... "

1. The substance of that cross-claim is that Grace Removals allege that, in February 2004, they entered into a contract of insurance with CGU by which they are indemnified for:

"... all sums which Grace Removals became legally liable to pay as compensation for personal injury or property damage caused by an occurrence anywhere in the world in connection with the business of Grace Removals."

1. Grace Removals claim relief which is based, amongst other things, on s 54 of the Insurance Contract Act 1984 (Cth).

1. Grace Removals has also filed a second cross-claim against JLT, which is an insurance broker. As against JLT, Grace Removals claim damages in an amount representing the amount of damages, if any, recovered by the plaintiff in respect of their claims, and the costs incurred by Grace Removals in defending the proceedings brought by Mr and Mrs Larsen.

1. Grace Removals alleged that JLT was retained as its insurance broker to arrange for insurance for removals carried out by it, and that pursuant to its retainer, it was obliged to arrange appropriate insurance with CGU - which, in light of the failure by CGU to indemnify Grace Removals, it is claimed that JLT did not.

1. It is clear that the claim by Mr and Mrs Larsen against Grace Removals is denied by Grace Removals, and equally the claims by Grace Removals against CGU and JLT are also disputed.

Present Notice of Motion

1. On 8 November 2013, by Notice of Motion filed that day, CGU sought orders of the Court in the following terms:

"1. Pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005, the following issues be decided separately from, and before, any remaining issue in the proceeding:

a. Whether CGU Insurance Limited (CGU) is liable to indemnify Grace Worldwide (Aust) Pty Limited trading as Grace Removals Group (Grace Worldwide) under the terms of the Broadform Liability Insurance Police with policy number 10M2239503 for the period 31 January 2004 to 31 January 2005 (Policy) in respect of the claim by the Plaintiffs against Grace Worldwide for damages for personal injury.

b. Whether Grace Worldwide is entitled to rectification of the Policy by deleting subparagraph 2 of the provision of the Policy headed "Geographical Limits" and replacing it with the following words:

'the performance by the insured of contractual services outside Australia or New Zealand, or'.

c. Whether section 54 of the Insurance Contracts Act 1984 (Cth) is engaged so as to preclude CGU from denying indemnity under the Policy."

1. When the Motion was called on for hearing, Mr and Mrs Larsen indicated that they did not have any interest in the orders being sought, and had no view one way or the other. They did not participate in the arguments on the Motion.

1. Grace Removals opposed the relief in the Motion. It opposed it on a number of bases, one of which was that if there was to be any separation of issues, then all "insurance" issues, including those raised by its claim against JLT, ought be heard at the one time.

1. JLT opposed the orders sought by CGU and submitted that, if any orders were to be made for a separate hearing of the issues, then the appropriate course in the circumstances of the case, was for all of the insurance issues to be heard together, but after all of the issues had been determined in the claim of Mr and Mrs Larsen against Grace Removals, and judgment had been given in that matter.

1. Accordingly, shortly put, there was no agreement by any party to any of the possible combinations of hearing separate questions raised.

Submissions of CGU

1. CGU filed an affidavit of its solicitor who deposed in general terms to the nature of the dispute between Grace Removals and it. She deposed to the fact, without challenge, that it was likely that a reasonable estimate of the hearing of the claim of Mr and Mrs Larsen against Grace Removals would take some weeks.

1. For my part, based upon what I know of that claim and the issues to be raised, it is likely that such a claim would take between three to five weeks, with a reasonable mid-point estimation of four weeks. Whether, in light of the fact that Mr and Mrs Larsen are likely to be representing themselves, the whole of that period would be occupied in a smooth unfolding of the case in one continuous sitting or not, remains to be seen.

1. CGU's solicitor went on to depose of the following matters:

(a)   that if the insurance issues were heard separately from the principal proceedings, then the costs likely to be incurred by CGU would be significantly reduced;

(b)   the hearing of the insurance issues as between Grace Removals and CGU, would be likely to occupy two to four days. In oral submissions, counsel submitted that it was more likely to be at the lower end of this estimate;

(c)   the issues between Grace Removals and CGU were discrete issues and entirely separate from the issues contained in the claim being brought by Mr and Mrs Larsen.

1. In oral submissions, counsel for CGU submitted that it was likely that to the extent necessary, any outstanding matter of fact would be likely to be agreed. However, upon examination of the factual issues in the course of submissions it became apparent that counsel for CGU accepted that there would be a need for affidavit evidence and cross-examination of at least two witnesses, or perhaps more, albeit on a limited factual issue. This tends to suggest that the hearing of the Motion would take three days.

1. In addition, in considering the issue raised by s 54 of the Insurance Contract Act, which traditionally requires some evidence, in particular from an underwriter, counsel for CGU submitted that it would be likely to be a purely legal argument in the circumstances of this case and not one which would give rise to any additional evidence.

1. Counsel submitted, particularly in the context of the claim by Mr and Mrs Larsen not being ready for a final hearing, that one benefit to be obtained by a hearing of the issues identified in CGU's Motion was that those proceedings could be heard quickly with the result that Grace Removals and CGU would know where they stood with respect to the claim being made by the plaintiffs, and that would promote the orderly determination of the plaintiff's claim in due course.

Submissions of Grace Records

1. Grace Removals opposed the Motion on three bases. Firstly, it was submitted that if insurance issues were to be heard separately, then all issues raised by both of its cross-claims against CGU and JLT ought be heard and determined together and with the final hearing of the claim of Mr and Mrs Larsen. As indicated earlier, this is not a course supported by either CGU or JLT.

1. Secondly, counsel submitted that as Hallen AsJ (as his Honour then was) had recognised in Southwell v Bennett [2010] NSWSC 1372 at [15], the experience of courts is that the apparent attractiveness of separate question proceedings often turns out to be productive of delay, extra expense, appeals and uncertainty of outcome rather than any beneficial result.

1. Thirdly, counsel for Grace Removals submitted that there was a real risk that if the insurance issues proceeded before the principal issues, and there was an appeal by one party or another from the decision with respect to those issues, then there would be no benefit to Grace Removals in having the principal proceedings heard and determined prior to the disposal of any appeals from the insurance claims. Counsel submitted that this would result in the principal claim being delayed further than it ought.

1. Counsel pointed to the fact that savings of cost could easily be made by both CGU and JLT by not attending all of the principal proceedings when all issues were being dealt with by the Court. For example, counsel submitted, that where there were witnesses or groups of witnesses who were giving evidence solely in relation to the issues between Mr and Mrs Larsen and Grace Removals, if the insurers were not interested in those issues or were not interested in asking any questions of the witnesses, then they did not need to attend and thereby could avoid incurring undue expense.

Submissions of JLT

1. JLT opposed the orders being sought by CGU, submitting that all insurance issues should be heard together and that, as their clients had no interest in the principal proceedings, the most convenient course was to allow the principal proceedings to be heard and, should the plaintiff succeed and should it become necessary, then all of the insurance issues raised by the cross-claims could be heard. JLT submitted that, if the hearings were arranged in this way, there would be significant cost savings to it.

1. Grace Removals opposed the course proposed by JLT. In light of that opposition, and in light of the fact that there is no motion before the Court seeking orders of the kind that JLT sought, it is unnecessary to formally deal with the proposal as though it were an application.

1. However, a determination on when, if at all, insurance issues should be heard will necessarily effect whether JLT brings any such application in the future.

1. Counsel for Grace Removals submitted that the real difficulty with JLT's proposal is that it worked either a great injustice upon his client or upon the plaintiffs, Mr and Mrs Larsen, depending on whether or not the principal judgment was stayed pending the hearing and disposal of the insurance issues. He submitted that it would be a great injustice to his client to have to fund a verdict while it then pursued its insurer, and a great injustice to Mr and Mrs Larsen to have a stay on any verdict whilst Grace Removals pursued their insurer. He did not for those reasons support the submission, but rather opposed it.

1. CGU saw no benefit in the proposal and opposed it.

Applicable Principles

1. The parties were agreed that the principles generally applicable are conveniently to be found in the decision of Hallen AsJ (as his Honour then was) in Southwell, and decisions of judges of this division including mine in Thiering v Daly [2011] NSWSC 1345 at [19]-[27] and Crawley v Vero Insurance Ltd [2012] NSWSC 593 at [16]-[20] per Beech-Jones J.

1. It is unnecessary in the course of giving this interlocutory judgment to set out all of those principles - they are encapsulated within those judgments. I gratefully adopt the eloquent expression of the principles to be found in Southwell, which was adopted by Beech-Jones J in Crawley.

Discernment

1. The essence of any order of the kind sought in the Motion is to further the overriding purpose which is to be found in s 56 of the Civil Procedure Act 2005 and of the Uniform Civil Procedure Rules. That is to say, the Court should attempt to ensure that the real issues in the proceedings are resolved in a just, quick and cheap manner.

1. There is an apparent attraction to hearing the issues separately as counsel for CGU submits. No doubt, it would be less expensive for CGU than if it was obliged to have those issues determined at the same time as, and together with, the other issues in the principal proceedings. However, I am not satisfied that the benefits which CGU would apparently obtain would, insofar as the proceedings are concerned, achieve the savings and benefits contended for by CGU.

1. CGU can make significant savings on the legal costs which it may incur by not attending all of the hearing of the principal issues. Clearly, any evidence adduced by the plaintiffs, Mr and Mrs Larsen, in an attempt to prove, and by Grace Removals in an attempt to resist, their claims as to the deficiencies in the transport of goods, are unlikely to directly impact upon the insurance issues identified by CGU with respect to the cross-claim made against it. Those issues and the evidence are readily able to be identified, and there is no reason to think that they could not seek to be excused from attendance during the hearing of those issues. In that way, if CGU or JLT so choose, they can significantly reduce their exposure to legal costs. Any saving of cost to CGU brought about by hearing the insurance issues separately, is therefore likely to be minimal.

1. If the orders for the separation of the issues are made there is a real risk that any appeal, whether taken by right or by leave, with respect to the insurance issues would delay the hearing of the plaintiffs' principal claim. It is not uncommon in my experience, particularly where the insurance issues are intended to be clarified in advance of a trial for the principal proceedings to await the eventual outcome of the appeal. Such a course would not benefit Mr and Mrs Larsen or Grace Removals and would be to their detriment. As well, such a course would not promote the overriding purpose of the Civil Procedure Act.

1. Finally, the separation of issues as proposed by CGU or else as proposed by JLT, is not conducive to an early commercial resolution of the proceedings.

1. Accordingly, because I am not satisfied that there is any benefit to be gained from a separation of the proceedings, and I am satisfied that there is likely to be significant disadvantage, I have concluded in an overall sense that the orders sought by CGU will not promote or further the overriding purpose of the Civil Procedure Act, and I am not satisfied it would be in the interests of justice for those orders to be made.

1. CGU's Motion must be dismissed.

Orders

1. I make the following orders:

(1)   Notice of Motion filed 8 November 2013 be, and hereby is, dismissed.

(2)   Costs of the Notice of Motion be costs in the cause.

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Decision last updated: 28 February 2014