Swanline Pty Ltd v Ace Global Lloyds Syndicate 2488
[2006] FCA 1318
•5 OCTOBER 2006
FEDERAL COURT OF AUSTRALIA
Swanline Pty Ltd v Ace Global Lloyds Syndicate 2488
[2006] FCA 1318PRACTICE AND PROCEDURE – application for separate hearing to determine preliminary questions – whether just and convenient to order separate hearing
Federal Court Rules 1979 (Cth) O 29 r 2
Save the Ridge Inc v Commonwealth (2005) 147 FCR 97, referred to
Meat Industry Employees’ Union and Another v G & K O’Connor (2000) 104 FCR 80, referred to
Rainsford v Victoria and Another (2005) 144 FCR 279, applied
Reading Pty Limited v Australian Mutual Provident Society and Another (1999) 217 ALR 495, citedSWANLINE PTY LTD (ACN 096 170 339) v ACE GLOBAL LLOYDS SYNDICATE 2488, EUCLIDIAN UNDERWRITING LLOYDS SYNDICATE 1243, ABA LLOYDS SYNDICATE 225 and AAW SUTCLIFFE LLOYDS SYNDICATE 1411
WAD 239 OF 2005
MARSHALL J
5 OCTOBER 2006MELBOURNE (via videolink to Perth)
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 239 OF 2005
BETWEEN:
SWANLINE PTY LTD (ACN 096 170 339)
ApplicantAND:
ACE GLOBAL LLOYDS SYNDICATE 2488
First RespondentEUCLIDIAN UNDERWRITING LLOYDS SYNDICATE 1243
Second RespondentABA LLOYDS SYNDICATE 225
Third RespondentAAW SUTCLIFFE LLOYDS SYNDICATE 1411
Fourth RespondentJUDGE:
MARSHALL J
DATE OF ORDER:
5 OCTOBER 2006
WHERE MADE:
MELBOURNE (VIA VIDEOLINK TO PERTH)
THE COURT ORDERS THAT:
1.The applicant’s motion of 14 September 2006 is dismissed.
2.The applicant pay the respondents’ costs of the motion.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WAD 239 OF 2005
BETWEEN:
SWANLINE PTY LTD (ACN 096 170 339)
ApplicantAND:
ACE GLOBAL LLOYDS SYNDICATE 2488
First RespondentEUCLIDIAN UNDERWRITING LLOYDS SYNDICATE 1243
Second RespondentABA LLOYDS SYNDICATE 225
Third RespondentAAW SUTCLIFFE LLOYDS SYNDICATE 1411
Fourth Respondent
JUDGE:
MARSHALL J
DATE:
5 OCTOBER 2006
PLACE:
MELBOURNE (VIA VIDEOLINK TO PERTH)
REASONS FOR JUDGMENT
The applicant, Swanline Pty Ltd, applies, pursuant to O 29 r 2 of the Federal Court Rules 1979 (Cth), for a separate determination prior to all other questions arising in this proceeding of certain issues in the matter.
In the substantive proceeding, Swanline claims it is the assignee of all of the rights of a company (Falkirk Nominees Pty Ltd (ACN 008 796 272)) under a policy of insurance. The company made a claim against the respondents under the policy. The respondents deny any liability to Swanline.
The separate questions which Swanline seeks to be resolved in advance of other issues at trial concern:-
· whether an exclusion clause in the policy applies; and
· in the event that the exclusion clause does not apply, whether other conduct of the insured company excuses the respondents from liability under the policy.
The competing contentions
Swanline contends that if either of the proposed separate questions is determined adversely to it, the proceeding will be dismissed without the need for other issues to be raised. Alternatively, it submits that if it succeeds on the issues raised by the separate questions, that development will contribute to the settlement of the litigation.
Swanline submits that the issues which it seeks to be determined separately do not give rise to significant contested factual issues and that none of the evidence relevant to the issues sought to be determined separately will be relevant to any remaining issues in the litigation.
The respondents oppose the application to split the trial. They say that a determination of the proposed questions may leave other significant issues unresolved. They also refer to Swanline’s proposal to amend its statement of claim, thereby raising further substantial issues which will require resolution later. The respondents also dispute that the prospects of settlement would be enhanced by Swanline succeeding on the separate questions. They say that substantive defences would remain available to them. They contend that there is no obvious cost or time saving in splitting the trial.
Importantly, the respondents submit that Swanline has not identified the facts which are relevant to the determination of the separate questions, or whether they are capable of being assumed, agreed, or proved at the preliminary stage.
Consideration
In Save the Ridge Inc v Commonwealth (2005) 147 FCR 97, Black CJ and Moore J said at [15]:
‘The formulation of separate or preliminary questions is authorised by O 29, r 2 of the Federal Court Rules 1979 (Cth). But it is a procedure that should be adopted with caution and can be fraught with difficulties.’
In Australasian Meat Industry Employees’ Union and Another v G & K O’Connor (2000) 104 FCR 80 (‘O’Connor’), the Full Court of this Court said at [70]:
‘It is sometimes useful to determine, by way of a preliminary question, an issue between parties that, if resolved in a particular way, may terminate the litigation. However, if this is to be done, it is essential the question be firmly grounded on specified facts; whether found by the court, agreed between the parties or alleged in a pleading. Without that, the answer to the question may not only be academic but can have the effect of confusing or misleading the parties, rather than enlightening them.’
The Full Court in O’Connor then noted that in the case before it no facts were specified and it was inappropriate to determine the separate question determined at first instance.
Further, in Rainsford v Victoria and Another (2005) 144 FCR 279 (‘Rainsford’), the Full Court of this Court said at [35]:
‘Whilst the use of the separate questions procedure can, in some circumstances, avoid delay and lessen the expense in resolving a proceeding, the cases show that there can also be significant difficulties in adopting the procedure, “especially where no findings of fact have been made and the questions are capable of different interpretations”: see Anderson v Wilson (2000) 97 FCR 453 at [28] per Black CJ and Sackville J.’
Importantly, in Rainsford, the Full Court said at [36]:
‘In order for a court exercising federal jurisdiction to utilise the separate questions procedure, either the parties must agree upon the relevant facts or the court must determine the facts before seeking to decide the question.’ (Emphasis applied.)
In the current proceeding, Swanline and the respondents have not agreed on the relevant facts necessary to be found to determine the proposed separate questions. Further, Swanline has not placed before the Court in any affidavit the facts which it proposes the Court rely on to answer the proposed separate questions.
Swanline submits that the respondents’ defence clearly identifies the material facts relevant to the determination of each separate question. However, that is not the case. The relevant parts of the defence merely raise the issues which Swanline wishes to have the Court determine separately. It is no answer to say that the respondents carry the onus of proving the matters pleaded in their defence that bear on the separate questions. The Court is still in the position where the test referred to in Rainsford at [36] is not satisfied.
In those circumstances, I am not satisfied that Swanline has discharged its onus of satisfying the Court that it is ‘just and convenient’ for the trial to be split in the manner sought; see Reading Pty Limited v Australian Mutual Provident Society and Another (1999) 217 ALR 495 at [9]-[10]. Apart from the difficulty caused by the absence of a factual foundation for the resolution to the proposed separate questions, there are other issues that will need to be addressed if Swanline succeeds on the separate questions. Any potential saving of time and cost may be minimal.
In any event, if I am overcautious in refusing the motion for determination of the proposed separate questions, such caution is justified by the fact that the pleadings in the proceeding are not finalised. Swanline has foreshadowed further amendments to its statement of claim. Until the pleadings are complete, it is difficult to assess the true utility of seeking to split the trial. However, as things currently stand, in the absence of a firm factual foundation for the resolution of the proposed separate issues, I consider that Swanline’s application pursuant to O 29 r 2 should be dismissed with costs.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate:
Dated: 9 October 2006
Counsel for the Applicant: Mr G Rabe Solicitor for the Applicant: Williams Ellison Pty Ltd Counsel for the Respondents: Ms Cahill Solicitor for the Respondents: Ebsworth & Ebsworth Date of Hearing: 5th October 2006 Date of Judgment: 5th October 2006
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