Wallaby Grip (BAE) P/L (in Liq) v Amaca P/L (ACN 000 035 512) (Under NSW Administered Winding Up) - [2015] SADC 173

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WALLABY GRIP (BAE) P/L (IN LIQ) & ANOR v AMACA P/L (ACN 000 035 512) (UNDER NSW ADMINISTERED WINDING UP)
[2015] SADC 173
Reasons for Ruling of His Honour Judge Hannon
22 December 2015
PROCEDURE
Application for separate trials of third party proceedings – Whether the applicant had established grounds for such an order having regard to considerations of fairness and justice as between the parties – Application declined.
District Court Rules 2006 (SA) rr 210 and 211; Dust Diseases Act 2005 (SA) ss 8(3) & (4), referred to.
Abigroup Contractors P/L v Hardesty & Hanover International LLC [2008] SASC 369, applied.
Amaca P/L v CSR Ltd [2015] VSC 582, considered.

WALLABY GRIP (BAE) P/L (IN LIQ) & ANOR v AMACA P/L (ACN 000 035 512) (UNDER NSW ADMINISTERED WINDING UP)
[2015] SADC 173
Introduction

Mr Whiteman (“the plaintiff”) brought proceedings against BHP Billiton Ltd (“BHP”) claiming damages with respect to injuries which he alleged were caused by the negligence and breach of statutory duty of BHP by exposing him to various asbestos insulation materials during his employment with BHP at its Whyalla shipyards in South Australia between about 1967 and 1977.
BHP denied liability and brought third party proceedings against Wallaby Grip (BAE) Pty Limited (in liquidation) as the First Third Party and Wallaby Grip (NSW) Pty Limited as the Second Third Party (referred to as “BAE” and “NSW” respectively or “Wallaby Grip” collectively).
BAE and NSW separately issued third party proceedings against a Third Third Party, Amaca Pty Limited (ACN 000 035 512) (under NSW Administered Winding Up) (“Amaca”). In turn Amaca issued third party proceedings against a Fourth Third Party, CSR Limited (“CSR”).
During or following settlement conferences in February and March 2015 some of the actions settled. The outstanding proceedings now before the Court are those between Wallaby Grip and Amaca, on the one hand, and Amaca and CSR, on the other.
Wallaby Grip has filed an interlocutory application under rule 211 of the District Court Civil Rules 2006 (“the Rules”) which seeks an order that the claim by Amaca against CSR be heard separately from, and after, the claims by Wallaby Grip against Amaca. That application was opposed by Amaca. CSR took no position on the matter.
The basis of the actions and the course proceedings
The background described below is drawn from the pleadings and further information set out in two affidavits filed in support of the application,[1] and in an affidavit in response from Amaca.[2]
[1] Affidavits of Ms Wearne sworn 28 July 2015 and 24 November 2015.
[2] Affidavit of Ms Knight affirmed 4 September 2015.
The initiating action between the plaintiff and BHP was issued on 8 July 2014. The plaintiff alleged that he suffered injuries described as “asbestos related pleural plaques” and “asbestosis”. It was common ground that these were “divisible injuries”, with the result that the extent of the liability of any negligent party to contribute to any damages awarded to the plaintiff would be considered having regard, among other things, to “exposure evidence”, that is, evidence as to the level of and period of exposure of the plaintiff to a particular asbestos product manufactured or distributed by one or other of the third parties.
The subsequent third party proceedings were issued over the period up to 28 November 2014, when Amaca filed its cross-claim against CSR.[3] Some further pleadings have been filed and served since that time.
[3] One of the Wallaby Grip actions against Amaca was issued later but that is not relevant for present purposes.
Four settlement conferences took place over the period between 13 February 2015 and 27 March 2015. The plaintiff’s claim against BHP was settled, leaving what were described as “the cascading third party claims” unresolved.[4] No specific reference was made to the resolution of the BHP third party proceedings against Wallaby Grip, but I assume, given that BHP was not involved in the interlocutory proceedings, that the BHP action either has resolved or is not relevant for present purposes.
[4] Affidavit of Ms Knight paras 4.10 – 4.12.
At one stage in the course of the settlement conferences Wallaby Grip intimated that it would consider issuing third proceedings against CSR, and was given leave to do so by 1 May 2015, but later chose not to take that course and instead issued the severance application on 29 July 2015.
Wallaby Grip alleges that Amaca was the sole Australian manufacturer and supplier of asbestos insulation products of the type used by the plaintiff or others in his vicinity from which asbestos dust and fibres were liberated and inhaled by him during the course of his employment by BHP. Wallaby Grip pleads that if the plaintiff suffered loss and damage, which was not admitted, and that if such loss and damage was caused by their negligence, which was denied, it was entitled to contribution from Amaca on the basis that the plaintiff’s injuries were caused or contributed to by the negligence of Amaca. Particulars of the alleged negligence were set out.
In its proceedings against CSR, Amaca pleaded that if it was negligent, which it denied, it was entitled to contribution from CSR on the grounds that the plaintiff’s injuries were caused or contributed to by the negligence of CSR. By way of factual background in this regard, Amaca alleged there was a Deed of Arrangement dated 24 September 1964 (“the Partnership Deed”), under which Amaca, CSR, and Bradford Insulation Industries Pty Limited (“Bradford”) had entered into a partnership known as the Hardie-BI Company (“the Partnership”), for the purpose of jointly manufacturing, distributing and selling certain products containing asbestos in Australia (“the Partnership Products”), with Bradford acting as the sole selling and distributing agent.
Amaca alleged that between 28 September 1964 and May 1974 both Amaca and CSR manufactured the Partnership Products in accordance with the Partnership Deed. Further that CSR, as a partner in such activity, would, if sued by the plaintiff or as a third party, be liable as a tortfeasor for any damage suffered by the plaintiff referrable to the Partnership Products, and with respect to which Amaca might be held liable in the third party proceedings. Amaca referred to and relied upon provisions as to joint and several liability of partners under the Partnership Act 1891 (SA).
Amaca alleged that CSR knew, or ought to have known, that if persons such as the plaintiff worked with, or in the vicinity of, other people working with asbestos containing products such as the Partnership Products, they would be exposed to and would inhale asbestos dust and fibre, and as a result would be at risk of developing a dust disease. To the extent that the plaintiff suffered injury loss and damage, Amaca alleged that it was caused or contributed to by the negligence of CSR. Particulars of the alleged negligence were set out.
The submissions
Wallaby Grip acknowledged that the presumptive position in terms of efficient disposal of litigation involving primary and secondary actions, in accordance with r 210(1) of the Rules, was that, unless otherwise directed by the Court, “all issues involved in both primary and secondary actions are to be tried together”. However, it contended that, on a proper evaluation of considerations such as fairness, convenience and expense, and justice as between the parties, there were questions arising in the proceedings as between Amaca and CSR which ought to be litigated separately from the proceedings between Wallaby Grip and Amaca.
Wallaby Grip contended that whereas its proceedings against Amaca would focus on evidence as to the relative exposure of the plaintiff to Wallaby Grip and Amaca products, the Amaca proceedings against CSR would involve a discrete issue as to the effect of the Partnership Deed on the respective liabilities of those parties only, being a matter in which Wallaby Grip had no involvement. Reference was made to a recent decision following prolonged and complex litigation between Amaca and CSR in the Supreme Court of Victoria,[5] with the concern being expressed that, unless Amaca’s proceedings against CSR in this matter were severed, Wallaby Grip was likely to be put to the expense and inconvenience due to it being a party to proceedings involving the same issues as those arising in the Victorian litigation.
[5] Amaca Pty Ltd v CSR Ltd [2015] VSC 582.
Wallaby Grip contended that, in the context of dust diseases litigation, it could be accepted that the usual outcome of third party proceedings of the nature of those now before the Court would be a negotiated settlement, being an outcome which, it could be inferred, was commonly achieved because each of the parties knew where they stood in terms of contribution. The failure of the settlement conferences in this matter was submitted to be an indication that some particular issue was holding up settlement, the inference being that it may be the discrete issue of the partnership as between Amaca and CSR, which was unconnected to the exposure issue which concerned Wallaby Grip.
Wallaby Grip submitted that any perceived prejudice to Amaca, due to its exposure to the cost and inconvenience of two sets of proceedings, could be ameliorated by CSR availing itself of its right to participate in the proceedings between Wallaby Grip and Amaca, and to cross-examine witnesses in those proceedings. Further, it submitted that under s 8(3) of the Dust Diseases Act 2005 (“DD Act”) the Court could order that the evidence taken and findings made in the Wallaby Grip proceedings be taken as evidence and findings in the proceedings between Amaca and CSR. Wallaby Grip contended that the monetary amount that might be recovered by Amaca from CSR, in the event of successful contribution proceedings against CSR, was not of such significance as to cause any particular prejudice to Amaca if the contribution proceedings were delayed to await the outcome of the Wallaby Grip proceedings.
Amaca opposed the application and submitted that, having regard to the interests of justice as between the parties, there was no proper basis for departing from the normal approach under r 210 that the primary action between Wallaby Grip against Amaca be tried together with the secondary action between Amaca and CSR. Amaca submitted that this would be the most cost effective way of deciding the competing rights of the parties, as it would avoid the expense of two trials, and a delayed outcome to its action against CSR. Amaca contended that, contrary to the submission of Wallaby Grip, a severance order would not result in CSR being bound by the outcome of the Wallaby Grip proceedings, whether or not CSR chose to participate in those proceedings. Amaca contended that it was possible that whatever the outcome of the Wallaby Grip proceedings, the exposure issues may have to be relitigated as between Amaca and CSR, with a potential for a different outcome, a result which it submitted would be inimical to the administration of justice.
Amaca contended that whilst the partnership issue might give rise to discrete arguments as between Amaca and CSR in which Wallaby Grip had no interest, nevertheless there would be exposure evidence common to both sets of proceedings. It submitted that once the Partnership Deed was tendered, it would follow that Amaca and CSR would share equally in whatever joint liability arose having regard to the exposure evidence.
Consideration
An application for a separate trial under r 211 of the Rules must be considered having regard to the general rule in r 210(1) of the Rules that, unless otherwise directed, all issues involved in both primary and secondary actions are to be tried together. Given that the primary action between the plaintiff and BHP has resolved, the Wallaby Grip actions against Amaca, and the Amaca action against CSR, are properly considered as primary and secondary actions governed by the approach enshrined in r 210.
In exercising my discretion as to whether an order should be made for separate trials notwithstanding the general rule, I must consider whether it would be just in the circumstances to so order, having regard to the positions put by each of the parties to the primary proceedings.
In Abigroup Contractors Pty Ltd v Hardesty & Hanover International LLC,[6] a decision of the Supreme Court of South Australia, Justice White summarised some of the relevant principles as follows:
The general rule is that all issues should be dealt within a single trial. The trial process should not be unduly fragmented. In particular, it is inappropriate that one Judge be asked to hear and determine disputed issues of fact, which involve an assessment of the credibility and reliability of the same witnesses, in more than one trial arising from the one action. Further, the experience of the courts has been that splitting issues arising from the one action for separate determination with a view to shortening proceedings and saving costs frequently results in a prolongation of the proceedings and the incurring of additional costs. In this regard I respectfully agree with the following remarks of the Judge at first instance:
Attempts by Courts to separate out discrete issues for determination often lead to complication and confusion, and have the consequence of delaying ultimate judicial determination of a dispute. The splintering of the case, consequent appeals, cost and delay are unattractive. The Court has a responsibility to provide an expedient and cost effective procedure for the resolution of disputes.[7]
[6] [2008] SASC 369.
[7] At [93].
The main concern raised by Wallaby Grip in support of its application was that, whilst its action against Amaca will focus on exposure evidence, legal and factual complications may arise in the action by Amaca against CSR on account of the Partnership Deed. Whilst I accept that, if such complications were to arise, Wallaby Grip would suffer detriment through the expense consequent upon a prolongation of proceedings over issues which did not concern it, I am not persuaded that the chances of that occurring are such as to warrant a departure from the general rule.
In the statement of claim in the proceedings brought against CSR, Amaca relies upon the Partnership Deed as the basis upon which it should be found that any liability which attaches to it in the proceedings brought by Wallaby Grip be shared equally by CSR. The sparse defence filed by CSR denies most of the allegations in Amaca’s statement of claim including those relating to the existence and effect of the Partnership Deed. It does not inform one way or the other as to whether the existence or effect of the Partnership Deed ultimately will be in issue. However, it is not unreasonable to observe that if there was an issue in that regard, CSR would be expected to have pleaded the relevant facts and matters in support of its position in accordance with the r 98(2)(d) of the Rules.[8]
[8] Which provides that “A pleading…must plead such facts and matters as give fair notice of the party’s case at trial”.
Wallaby Grip points to the complex litigation between Amaca and CSR in the Victorian Supreme Court in support of its concerns over the risk of it being caught up unnecessarily in extraneous issues. Whilst such concerns cannot be dismissed, I consider it unlikely that the proceedings between Amaca and CSR will become diverted by similar issues at all or to that extent.
In the Victorian litigation Amaca sought contribution from CSR and Bradford with respect to over 200 settlement agreements Amaca had made in proceedings against it to which neither CSR nor Bradford were parties. There was a major issue as to whether, in each of the separate actions settled with Amaca, the individual claimant was exposed over a particular period to products manufactured or distributed either by Amaca alone, before the commencement of the Partnership, or by Amaca and CSR in Partnership. That element of the dispute between the parties does not appear to arise in the secondary proceedings now before the Court. Further, whilst the Partnership Deed formed part of the background to the Victorian proceedings, and whilst initially there appeared to be a dispute between Amaca and CSR as to their relative levels of control of the Partnership, and thus as to their consequential contribution liabilities under the Partnership Deed, the issue disappeared when, for the purposes of those proceedings only, CSR agreed that if the proceedings reach the stage of contribution orders, it should be on a 50% basis.[9] That is not to say the issue, if it arises, will be sidelined in a similar way in these proceedings, but it is a distinct possibility, particularly having regard to the current state of the pleadings.
[9] [2015] VSC 582 at [39].
I am not attracted by the submission of Wallaby Grip that Amaca will be protected from the detriment of having to participate in two sets of proceedings by the making of an order that evidence taken and findings made on the exposure issue in the primary proceedings should be received as evidence and findings on that issue in the secondary proceedings.
Section 8(3) of the DD Act does not facilitate such an order. Under s 8(3)(a), the Court may admit evidence admitted in an earlier dust disease action against the same defendant, but that does not allow the making of the suggested order as CSR would not be a defendant in or party to the Wallaby Grip proceedings if a severance order is made.
No specific reference was made to s 8(4), but it appears to be the only provision of the DD Act that might be relied upon for the purpose of Wallaby Grip’s submission. It provides:
If—
(a) a finding of fact has been made in a dust disease action by a court of this State, the Commonwealth or another State or Territory; and
(b) the finding is, in the Court's opinion, of relevance to a dust disease action before the court,
the Court may admit the finding into evidence and indicate to the parties that it proposes to make a corresponding finding in the case presently before the Court unless the party who would be adversely affected satisfies the Court that such a finding is inappropriate to the circumstances of the present case.
I do not consider this provision permits the making of an order at this stage that a finding of fact in the primary action between Wallaby Grip and Amaca be admitted into evidence in the secondary proceedings between Amaca and CSR. The provision assumes that the finding of fact in question is known, and that the question of its admission is considered in the course of a subsequent or separate secondary action before the Court. There has been no finding of fact, and consideration of its admission into separate proceedings is premature. Further, once there is a relevant finding of fact which the Court contemplates admitting into separate proceedings before it, the Court must hear from a party which may be adversely affected as to whether it is appropriate to admit the finding. In my view no order can properly be made at this stage as to the admission of factual findings made in the Wallaby Grip actions into the action between Amaca and CSR. In any event, even if I had the power to do so, either under the DD Act or otherwise, I do not consider that justice as between the parties would warrant such an order.
On the material before me, I accept the following propositions. The exposure evidence will be critical to the primary proceedings. It is also likely to be of significance in the secondary proceedings. No issue has been raised by CSR as to the binding nature or effect of the Partnership Deed in the secondary proceedings. However there is a potential for separate issues to arise in that regard in those proceedings. There is an impasse in settlement negotiations between the parties to the two sets of proceedings. Beyond these matters, one strays into the field of speculation. It may be that the impasse is because of the position taken by CSR, as was implied, and it may wholly or partly relate to some view taken by CSR, but not yet revealed, or to be taken by CSR, which introduces issues over the Partnership Deed in which Wallaby Grip has no interest. However, I am not able to proceed on the basis that negotiations have stalled for these reasons. In these circumstances the utility and fairness of an order for a separate trial is questionable. The matter should be beyond such a level of uncertainty to justify an order for a separate trial.

I consider that, on the material before me, the granting of an order for severance of the proceedings is more likely to cause prejudice to Amaca than is a refusal of such an order to cause prejudice to Wallaby Grip. The making of a severance order, in my view, is likely to expose Amaca to disadvantages of a nature which favour a trial of the primary and secondary actions together. These include considerations of the nature adverted to by White J in Abigroup,[10] such as the possibility of the same witnesses having to give evidence on the exposure issue on more than one occasion, the prospect of inconsistent findings and outcomes, and the potential for delay, expense and inconvenience to Amaca. These considerations outweigh those favouring a severance order.
[10] At [93].
Conclusion
I am not satisfied that Wallaby Grip has made out a case warranting departure from the general rule that the outstanding third party actions be tried together.
I dismiss the application for separate trials.