New South Wales Supreme Court CITATION : Waste Recycling and Processing Corporation Trading As WSN Environmental Solutions v United Resource Management Pty Limited [2006] NSWSC 1140 HEARING DATE(S) : 19/10/06 JURISDICTION : Equity Division Commercial List JUDGMENT OF : Einstein J EX TEMPORE JUDGMENT DATE : 10/19/2006 DECISION : Notice of motion seeking separate question regime to be dismissed. CATCHWORDS : Separate question orders LEGISLATION CITED : Trade Practices Act 1974. ABB v Freight Rail [1999] NSWSC 1037 CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 CGU Insurance Limited v AMP Financial Planning Pty Limited [2006] HCA Trans 534 Energy Australia v Australian Energy Ltd [2001] FCA 1049 GMB Research & Development Pty Ltd v Commonwealth of Australia [1997] FCA 934 Griffiths v Northern Territory of Australia [2003] FCA 1177 CASES CITED : Idoport v NAB [2005] NSWSC 1273 Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 Liberty Financial Pty Ltd v Scott [2003] FCA 226 Olbers Co Ltd v Commonwealth of Australia (No 3) [2003] FCA 651 Perre v Apand Pty Ltd (1999) 198 CLR 180 Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 Tepko Pty Ltd v Water Board (2001) 206 CLR 1 PARTIES : Waste Recycling and Processing Corporation T/as WSN Environmental Solutions (Plaintiff) United Resource Management Pty Limited (Defendant) FILE NUMBER(S) : SC 50111/06 COUNSEL : Mr D Studdy (Plaintiff) Mr M Dempsey SC (Defendant) SOLICITORS : Gilbert & Tobin (Plaintiff) PricewaterhouseCoopers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Thursday, 19 October 2006 ex tempore Revised 30 October 2006 50111/06 Waste Recycling and Processing Corporation T/as WSN Environmental Solutions v United Resource Management Pty Limited JUDGMENT 1 These proceedings were commenced by the plaintiff by summons filed and served on 8 August 2006 with a first return date of 11 August 2006. On that day the proceedings were fixed for hearing for five days commencing on 27 November 2006. 2 At the time the proceedings were so fixed the defendant, by its counsel, informed the Court that: 1. it had a number of substantial cross-claims against the plaintiff, including claims under the Trade Practices Act and for breaches of contract. 2. there had been insufficient time since service of the summons for full instructions to be taken in relation to those cross-claims, and 3. the defendant could not be certain that the November hearing date would be practicable having regard to the likely cross claims. 3 The Court accordingly fixed a directions hearing to be held shortly after the cross-claim was to be filed to review the position. 4 On 5 October 2006 the defendant filed and served its cross-claim, including a cross-claim statement running to more than fifty pages, which raises claims relating to the dealings between the parties over a three year period, from mid 2003 to mid 2006, including claims arising out of alleged breaches by the plaintiff of various agreements, as well as alleged misrepresentations by the plaintiff and alleged breaches of the Trade Practices Act 1974. 5 On 13 October 2006 makes plain that on that day an order was made listing the proceedings for motion today, "as a special fixture relating to the nature of the trial to be heard on 27 November 2006 and/or the vacation of that trial date". 6 As I have understood the submissions by Mr Studdy of counsel for the plaintiff, his client has always made plain its particular difficulties with respect to suggested urgency, albeit never proceeding to an interlocutory injunctive hearing, generally for reasons that the Commercial List Judge was apprised of the urgency of the matter, to the extent of fixing what I would regard as an extraordinarily quick final hearing in the circumstances. 7 I propose to return to the question of the nature of the trial and/or vacation of the trial date following giving reasons dealing with the notice of motion which is before the Court. The notice of motion 8 The plaintiff applies by notice of motion for the determination of certain issues raised in the proceedings ["the Termination for Convenience Issues"] to be heard and determined separately and prior to the remainder of the issues sought to be raised by the cross-claim cross summons and the commercial list cross-claim statement. As I understand the position, the occasion for this motion is that the defendant has made clear that URM will not be in a position to properly prepare and present its case on the allotted days for the hearing commencing on 27 November 2006 bearing in mind the amount of evidence the parties will need to prepare, the likely volume of discovery and the situation with respect to pleadings in respect of the cross-claim. The solicitor for the defendant has deposed that in view of those matters he does not consider that the proceedings can be finalised within the five days allocated, and that in his estimation the hearing would take between ten and fifteen days, depending on the number of witnesses called by the plaintiff. In dealing with the motion, a number of matters need to be treated with. Dealing with the matter 9 I commence with the proposition that it is unnecessary to repeat the record. The Court has had an opportunity to look through the pleadings. They constitute the record. 10 Both parties have relied upon extensive written submissions. In the events which have happened, Mr Studdy has also addressed from the Bar table but the view which the Court has taken has meant that the Court did not call on Mr Dempsey [briefed by the defendant], to address from the Bar table. Overview 11 As a general matter the following observations are apt: i. The Plaintiff seeks declarations as to the validity of a notice from it terminating the transfer Station agreement and seeks ancillary relief. ii. Although no relief is sought in the summons by Waste Recycling in respect of the wider commercial relationship, if Waste Recycling terminates the Transfer Station Agreement and absents some enforceable and unequivocally clear accommodation to give up such contractual right, it thereby becomes entitled to terminate the other project documents and to bring the commercial relationship to an end (BMA clause 27.2). iii. By the cross-summons and cross-claim, URM: a) seeks relief under the Trade Practices Act (Cross-claim 106 – 109) for contravention of section 52 and by way of estoppel (Cross-claim 110-113) to prevent and invalidate the purported termination of the transfer Station agreement. b) alternatively, seeks relief in terms of the alleged contravention of section 51AC of the Trade Practices Act for alleged unconscionable conduct arising from the purported termination of the transfer Station agreement and the MRF lease and in other respects (Cross-claim 133-135). c) seeks specific performance of Waste Recycling's obligations under clause 25.1 of the Master agreement to relocate the MRF lease, the office lease and the truck parking licence (Cross-summons 11). d) Claims damages for breach of the MRF lease for additional costs and loss of profits as a result of the receipt of the KRG waste (Cross-claim 122-124). e) Claims damages for additional parking licence fees for breach of the truck parking licence (Cross-claim 125). f) Claims damages for breach of the KRG agreement (cross-claim 126). Or alternatively under the BMA (cross-claim 127-128). g) Seeks damages under the Trade Practices Act in respect of the KRG representation (Cross-claim 114-117) and by way of estoppel (118-121). 12 By the motion filed 13 October 2000 the plaintiff seeks orders that the following issues be determined separately and before other issues in the proceedings: (i) the validity or otherwise of the termination by convenience by the plaintiff of the transfer station agreement in accordance with clause 19 as raised by the summons, (ii) the relief restraining or invalidating that termination as sought under the Trade Practices Act or by way of estoppel under paragraphs 1 – 3 of the cross-summons, (iii) the matters raised in the following paragraphs of the cross-claim: a) paragraph 10 (the making of the BMA representations), b) paragraphs 97-99 (the purported termination of the transfer station agreement. Contrary to the BMA representations), c) paragraphs 106-109 (the pleading of misleading and deceptive conduct), d) paragraphs 110-113 (the pleading of reliance, assumption and estoppel), and e) sub-paragraph 135 (a) (the pleading of the claim for unconscionable conduct in contravention of section 51AC of the Trade Practices Act in respect of the purported termination only). The relevant principles 13 There is no serious issue as to the relevant principles. The defendant's short summary is accepted as generally stating those principles and is adopted in what follows: i. The relevant principles are summarised in Idoport v NAB [2005] NSWSC 1273 at [11] – [17]. ii. There have been many recent judicial statements cautioning against the making of an order splitting issues in the High Court, the Federal Court and this Court. iii. In Perre v Apand Pty Ltd (1999) 198 CLR 180 at 332 Callinan J identified the dangers in conducting separate trials of different issues. He stated (at p 332): "Care does need to be taken in deciding whether to conduct separate trials of different issues. It sometimes happens that they may turn out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which they are intended to avoid. In tort cases in which damage is the gist of the action, it will generally be undesirable to accede to requests for them, or to order them, unless all parties accept that compensable damage has been sustained by the plaintiffs or applicants as the case may be." iv. In Tepko Pty Ltd v Water Board (2001) 206 CLR 1 Justice Kirby and Justice Callinan in the High Court of Australia reiterated those concerns at 55, [168-170](Gaudron J agreeing at [52]): 168 The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap. 169 The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the courts, rather than in the parties', interests. 170 Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question. v. Their Honours restated those concerns during submissions in CGU Insurance Limited v AMP Financial Planning Pty Limited [2006] HCA Trans 534 (29 September 2006). Kirby J said "…I have learned the danger of separated issues". Callinan J said in the High Court of Australia "…it nearly always creates a disaster. I do not know why judges persist in doing it when facts of any kind are in issue." vi. The issue is whether the making of the order is "just and convenient": Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 Branson J at [9]. vii. It is ordinarily appropriate that all issues in a proceeding be disposed of at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141-2, Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 Branson J at [7]. viii. Orders for separate determination should only be embarked upon when their utility, economy, and fairness to the parties are beyond question : Tepko ibid, applied in Liberty Financial Pty Ltd v Scott [2003] FCA 226 by Weinberg J at [25-26]. ix. The supposed benefits of splitting often prove to be illusory: (1) In Olbers Co Ltd v Commonwealth of Australia (No 3) [2003] FCA 651 French J stated at [31] "Experience in the courts over many years has demonstrated that fragmentation of proceedings rarely result in any saving of time in the long run and that projections as to costs savings are likely at best to be speculative.'' (2) In ABB v Freight Rail [1999] NSWSC 1037 Rolfe J stated at [4] "… the making of such an order usually results in litigation becoming more and more time consuming, costly and inefficient. My experience has been that the ordering of separate questions is only appropriate…when there is a discrete question, which will be determinative of the litigation, and the parties agree what judgment will follow from the answering of that question." (3) Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7] per Einstein J. "Experience suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated but often has the reverse effect merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings." x. In ABB v Freight Rail [1999] NSWSC 1037 Rolfe J set out the reasons why in general such orders are not appropriate:- (1) Where certain witnesses will give evidence on liability and quantum this gives rise to difficulties in cross-examination and the assessment of credit by the Court: at [15] (2) If the applicant does not succeed on the issue of liability there is a strong likelihood that an application will be made for leave to appeal and, possibly to further appeal: at [17]. (3) In the event of appeal, additional delay and expense will be incurred in respect of any further hearing: at [17]. (4) Assuming the applicant is successful, the costs of proving damages will be incurred in any event: at [18]. (5) Until the case on damages is made the parties are unable to give meaningful consideration to appropriate commercial settlement: at [19]. (6) In most cases, the trial judge should determine as many issues as possible to enable the Court of Appeal to dispose of the matter finally on appeal: at [20]. [See similarly Liberty Financial Pty Ltd v Scott [2003] FCA 226 Weinberg J at [35] – [38].] xi. In Reading Branson J summarised the principles including: "(f) factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may - (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation ( CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 per Kirby P at 607); (g) factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may - (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial ( GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934); (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding ( GMB Research & Development Pty Ltd v The Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation ( GMB Research & Development Pty Ltd v The Commonwealth )." xii. Generally, splitting of issues is not appropriate in actions for tort or actions seeking relief under ss. 82 or 87 the Trade Practices Act 1974: (1) In actions where relief is sought under ss. 82 or 87 of Trade Practices Act 1974 it "is not possible to separate liability and damage completely": Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 Branson J at [11-12], Energy Australia v Australian Energy Ltd [2001] FCA 1049 at [6] Stone J. xiii. A factor favouring the making of an order is where there is a strong prospect that the parties may resolve the dispute upon the determination of a separate issue: Tallglen ibid at 141-142, Griffiths v Northern Territory [2003] FCA 1177 Mansfield J at [5]. 14 During the making of submissions, Mr Studdy strenuously argued that the instant circumstances were sufficiently unusual to warrant the making of the separate question orders. His submissions went the distance of contending that in this particular case there would or should be no difficulty with the Court being required to form a view as to the credibility of witnesses who may give evidence at both stages of the separate question trance (if ordered) and at the hearing of the balance of the proceedings. 15 During those submissions Mr Studdy also indicated that the plaintiff had given instructions that until the Court had determined the various cross-claims pursued by the defendant, it would not rely upon cl. 27.2 of the Master agreement with respect to the Belrose site [cl. 27.2 being the clause which in the event that the plaintiff had the right to terminate any project document, gave it the right in its discretion by notice to terminate any or all of the other project documents]. 16 In my view there are real difficulties with the proposed undertaking, not the least of which involves the imprecision in precisely what was being proposed. Short of a consensual variation of the material provisions of the contract, there are a number of areas where minds may differ as to the proper working out of any such proposed undertaking. Decision 17 In my view and for the following reasons the proposed questions are inappropriate for separate determination. 18 An assessment of the principled exercise of the discretion to make the separate orders requires the Court very importantly to take into account the possibility that there will be a significant overlap between the evidence adduced on the hearing on the separate question and at the trial, most particularly where real questions of the probability of the calling of the same witnesses at both stages of the hearing of the proceedings constitutes a significant factor. 19 Notwithstanding the submissions of Mr Studdy, the pleadings and the evidence before the Court justify the Court having a considerable apprehension as to the difficulties which are likely to arise where the Court is likely to be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceedings. 20 As has been observed in the authorities referred to above, experience has proven that the danger of separated issues should not be underestimated. Nor is this a circumstance in which the proceedings will be determined by the proposed separate questions. Further, the number of causes of action relied upon in the cross-claim speak against there being utility in the making of the separate question order. 21 I accept that taking into account the ambit of the issues raised in the cross-claim [including a claim of unconscionable conduct embracing, inter alia, an allegation of lack of good faith] in respect of the purported termination of the transfer station agreement, such claims raise particular problems if required to be considered in isolation from the balance of a claim which is based upon all of the circumstances pleaded in the cross-claim, paragraph 134, and is said to arise out of a broader commercial relationship involving a number of inter-related agreements. 22 Further and in the absence of a binding variation to the contract or other accommodation of real precision, if the plaintiff's proposal were followed and if the plaintiff was successful then (subject to an appeal and to any stay granted pending the determination of that appeal), the plaintiff would be free to terminate the remaining agreements and thereby to render nugatory the relief sought by the defendant for specific performance of the relocation options for the MRF lease and office lease and truck parking licence (cross-summons paragraph 11 and related relief paragraphs 12 - 14). 23 Even if a stay were granted, if any preliminary judgment in favour of the plaintiff on that issue (or a concession given that the plaintiff would not act on any such judgment pending determination of the balance of the proceedings) there would not seem to be any particular benefit in a separate trial and the detriments to which I have eluded would seem to be pervasive. Further, the following may be said: i. The various disputes arise out of a single commercial relationship under an umbrella agreement. As the defendants have contended, there will inevitably be crossovers and duplication of evidence and witnesses if the Court had split trials or separate question orders were made. Indeed it is appropriate to note that the plaintiff itself accepts that there will inexorably be some overlap between some aspects of the claims in respect of the Truck Parking Option, the KRG Agreement, the MRF relocation and the MRF lease termination, the Warringah Tender Deed and the BMA. As I have said, the submission by the plaintiffs that there is no overlap with the termination for convenience issue does not treat with the material complexities and the likely difficulties to be encountered where common witnesses would likely have to be called and common issues treated with in the several tranches of any bifurcated hearing. ii. As the defendant has submitted, it is likely that either party, if unsuccessful on a separate question order regime would appeal and in that event inevitable delays and duplications would follow. iv. As the defendant has also contended, it is likely that separate trials would inevitably lead to a duplication of cost and delay. v. I repeat again, that on the evidence there are likely to be common witnesses whose credibility will be at issue to be called on the proposed separate issues and the balance of the claims. Suggested urgency 24 In terms of the suggested urgency it is appropriate to observe as follows, again accepting certain of the submissions put by the defendant: i. Urgency is not itself a sufficient justification to order a separate trials where as here the usual difficulties, duplications and inefficiencies apply. ii. The dispute has a long history. WSN first issued a notice purporting to terminate the transfer station agreement and the transfer station licence on 5 May 2004. iii. In my own view, questions of substantial prejudice in terms of the maintenance of the status quo and the matters broadly treated with in the evidence before the Court from the plaintiff in a case such as the present, whether fortunately or unfortunately, can only be treated with by interlocutory claims for appropriate relief pending the final hearing. iv. Finally, and as already observed, it is fair to say that it is likely that the proceedings would not be finalised after a first instance judgement in respect of the separate issues in any event (appeal or stays pending determination of the balance). 25 For those reasons, the notice of motion seeking the separate question order regime is appropriate to be dismissed. Costs 26 Submissions have been taken from both parties in relation to costs of the motion for the separate hearing. In my view, the appropriate and principled approach to costs is to order that costs of the motion be the defendant's costs in the cause. 27 During the course of the giving of the ex tempore judgment the background to the filing of the motion was generally referred to. The circumstances are unusual for a number of reasons. One is the swiftness with which the proceedings have been treated by the Court. Another is the timing of the first occasion when the defendant's communicated to the plaintiff that they would not be in a position to litigate on the day fixed for hearing, it being the very next day when the notice of motion, which was treated with today, was heard. 28 In my view, the appropriate order is as I have indicated for the costs of the motion to be costs in the cause. 29 In those circumstances, the Court orders as follows: 1. the notice of motion filed by the plaintiff on 13 October 2000 is dismissed. 2. order that the costs of the motion be the defendant's costs in the cause. 3. direct that the proceedings be before Justice Bergin in her Honour's list at 9.15 a.m. on 20 October 2006 for directions in terms of the giving of a new hearing date. 4. order that the hearing date fixed for five days to commence on 27 November 2006 be vacated 5. reserve costs of the vacation of the hearing date. ************************* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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