Wool International v Sedgwick Ltd (No 1)

[1997] FCA 710

FEDERAL COURT OF AUSTRALIA

Practice and procedure - application to amend defence.

WOOL INTERNATIONAL v SEDGWICK LIMITED (No. 1)

NG 721 of 1993

JUDGE:	BEAUMONT J
PLACE:	SYDNEY
DATED:	25 JUNE 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	)  NG 721 of 1993
)
GENERAL DIVISION	)

BETWEEN:	WOOL INTERNATIONAL Applicant
AND:	SEDGWICK LIMITED Respondent

JUDGE:	BEAUMONT J
PLACE:	SYDNEY
DATED:	25 JUNE 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The hearing of the application made in para 1 of the amended notice of motion, filed in Court on 25 June 1997, be adjourned to a date to be fixed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	)   NG 721 of 1993
)
GENERAL DIVISION	)

BETWEEN:	WOOL INTERNATIONAL Applicant
AND:	SEDGWICK LIMITED Respondent

JUDGE:	BEAUMONT J
PLACE:	SYDNEY
DATED:	25 JUNE 1997

REASONS FOR JUDGMENT (No. 1)

Before the Court is an amended notice of motion filed in Court today, which seeks in para 1 that leave be granted to the respondent to file an amended defence in the principal proceedings.  The amendment in question appears in para 42 of the proposed amended defence, which is annexure A to the original notice of motion dated 21 March 1997.

As I have already indicated in the course of argument, it seems to me that the matters sought to be raised in para 42 are, in substance, collateral in character.  It is true that, in sub-para (k) of proposed para 42, it is alleged that there was a release of the respondent, with the authority of the applicant, from the material liability and that this authority was either express or implied.  However, on the evidence before me at this point, there does not appear to be any material to warrant the conclusion that the applicant had expressly authorised the release of the respondent from the liability asserted in the principal proceedings.  Whether, of course, such a release might be implied is another question.  On any view, that will be a contentious issue between the parties and as I followed the written submissions made by counsel in this behalf, it will be an issue of some complexity, both of fact and of law.  As I mentioned in the course of argument, if the respondent had been able to point to the existence of an express release of the subject liability, there would be much to be said for dealing with that issue in advance of the trial in the principal proceeding.  However, counsel for the respondent made it clear in the course of his argument, that the existence of any such express release was not a matter within his knowledge, so that the respondent would need discovery, and perhaps interrogatories, in order to pursue the point.

The other substantial claims made in para 42 in sub-paras (l) and (m) are also, in my view, truly collateral in character.  By collateral, in the present context, I mean that they appear to arise independently of the claim made by the applicant in the principal proceedings that the respondent is liable to it on the several causes of action alleged by the applicant.

The application to amend by raising these collateral matters, is, and has always been, vigorously opposed by the applicant on substantial, as well as discretionary, grounds.  A reading of the full written submissions which counsel has helpfully provided in advance of today's hearing, makes it clear that, in addition to discretionary considerations, the applicant seeks to argue that, amongst other things, there are reasons of fact and of law why the matters sought to be raised in para 42 provide no answer to the applicant's claim.  It is said, for instance, on behalf of the applicant, that there is no evidence that the settlement agreement had been executed.  It is further contended that there is no evidence that the conditions precedent, specified in the settlement agreement, had been satisfied.  Moreover, the parties have joined issue on many other aspects of the settlement agreement.  As well, the applicant has raised the significance of the existence of a choice of forum provision in the settlement agreement.

To compound the difficulties that now arise at this interlocutory stage the respondent, through its submissions, has made it perfectly clear that it is seriously at issue with the applicant on these contentions.  The result is that this application presents itself as a true “case within a case”.  Not only that, but, as I have said, almost every aspect of the application is contentious and complexities abound.

A further complication, and to my mind the most significant, is the circumstance that, if I were to allow the amendment at this stage, it would then be necessary that the parties incur expense, which could be substantial, in terms of discovery and, possibly, interrogatories.  Given the circumstance that the settlement agreement was made in London and involved not only the parties in that country but parties in North America, I further regard as significant the possibility - upon which, of course, I can express, and do express, no view at all in terms of its prospects - that the applicant may fail in the principal proceedings on the issue of liability, as it presently stands on the existing pleadings.  If that were so, or if the applicant were to succeed on the issue of liability but to recover only nominal damages, then the collateral defences sought to be raised in para 42 would be of academic interest only.  In other words, it seems to me that there is much merit in treating the issues sought to be tendered in the proposed para 42 as properly the subject of a separate hearing in any event.

That is to say, if I were to proceed upon the footing that what is sought to be raised in para 42 was already before the Court and properly tendered as an issue for determination, I would have, in any event, ordered that such issue be determined as a separate question.  This course would accord with the modern approach to case management, as Lord Woolf's recent Report reminds us, that separate questions should be isolated where possible in complex litigation;  also, on any proper approach to the management of litigation, it is conventional that a question of this kind, collateral as it is, being akin to a cross-claim made against an insurer, should be divorced from the principal proceedings and dealt with separately.

In all these circumstances, I have come to the view in the exercise of my discretion, that the fairer course and the way in which justice could best be achieved between the parties at this stage, is to defer for the present time dealing with the application for amendment.  In the interim, the principal proceedings should proceed on the issues already joined on the existing pleading.  It may be - and I will hear further submissions on this - that there should, in any event, be a separate trial ordered on the issue of liability, which I foreshadowed as a possibility in the course of argument.  I will come to that at a later directions hearing.

For the moment, I think that the appropriate course is for the matter to go forward as it stands and then, whether or not there has been a separate hearing on the issue of liability, the present application may be revived and dealt with after the Court has dealt, at least, with the issue of liability and possibly also with the issue of damages.  It can then be seen whether para 42 is of any more than academic interest.  If this aspect remains of substantial concern, I will deal with the present application at that point.  I will do so, as I have already mentioned to counsel, on the footing that the respondent will suffer no prejudice in terms of the lapse of time that will inevitably occur between today and the date upon which I may ultimately deal with the application for leave to amend.

For those reasons, I order that the hearing of the application made in para 1 of the amended notice of motion, filed in Court today, be adjourned to a date to be fixed.  It should also be noted for the purposes of the record, that it is my view that judgment should not be entered in the principal proceedings until I have dealt with the application to amend and, if the application to amend is successful, until I have dealt with the defence there sought to be raised.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont

Associate:

Dated:            25 June 1997

Counsel for the Applicant:	C C Hodgekiss
Solicitor for the Applicant:	Norton Smith & Co
Counsel for the Respondent:	J B Simpkins
Solicitor for the Respondent:	Phillips Fox
Date of Hearing:	25 June 1997
Date of Judgment:	25 June 1997