New South Wales Supreme Court CITATION : Integral Home Loans Pty Ltd & Anor v Interstar Wholesale Finance Pty Ltd & Anor [2006] NSWSC 1464 HEARING DATE(S) : 21 December 2006 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 12/22/2006 DECISION : Order made for determination of separate questions. CATCHWORDS : PROCEDURE – Separate questions – where evidence on separate questions would be in narrow scope – where separate questions would resolve significant part but not all of case – where prejudice to applicant for separate determination from delay and more to respondent - Civil Procedure Act warrants interventionist approach to isolate and determine significant issues. LEGISLATION CITED : (NSW) Uniform Civil Procedure Rules 2005 (NSW) Civil Procedure Act 2005 Integral Home Loans Pty Ltd (first plaintiff) PARTIES : Integral Financial Pty Ltd (second plaintiff) Challenger Mortgage Management Pty Ltd (formerly Interstar Wholesale Finance Pty Ltd) (first defendant) Challenger Non-Conforming Finance Pty Ltd (formerly Interstar Non-Conforming Finance Pty Ltd) (second defendant) FILE NUMBER(S) : SC 4009/06 COUNSEL : N A Cotman SC (plaintiffs) M J Cohen (defendants) SOLICITORS : Vosnakis & Associates (plaintiffs) Deacons (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Friday 22 December 2006 4009/06 Integral Home Loans Pty Limited & Anor v Interstar Wholesale Finance Pty Ltd & Anor JUDGMENT (Ex Tempore) On application for order under rule 28.2 of the Uniform Civil Procedure Rules 1 HIS HONOUR: This is an application for an order under (NSW) Uniform Civil Procedure Rules 2005, r 28.2 for the determination, as preliminary questions, of two issues, namely (1) whether, on the true construction of the Loan Originator and Management Agreement (LOMA), clause 20.3(c) is void as a penalty, and (2); if the answer to (1) is in the affirmative, whether the plaintiff is entitled to trailer commission, notwithstanding the termination of the LOMA by the defendants. 2 The proposed separate questions assume, adversely to the plaintiff, one of the major issues in the case, namely that the defendants were entitled to terminate the LOMA for fraud under clause 20.1(c). Accordingly, for the determination of those questions, it will be unnecessary to embark on resolution of whether or not the defendants were entitled to terminate or to investigate the alleged fraud, it relevantly being assumed that they were entitled to terminate, and to do so for fraud. 3 It is conceivable that, if the first question is answered in the affirmative, clause 20.3(c) might be held void, to the effect not that the plaintiff was entitled to the whole of the trailer commission, but that, if the defendants have exercised their right under clause 20.3(a) to assume management of the settled loans - which their counsel asserts today they have, though there is no suggestion in the pleadings or evidence at this point that they have done so - then the trailer commission might be subject to deduction for the reasonable costs of the defendants assuming such management, by analogy with clause 21.3(b). Whether or not that is so is a subsidiary question, which will arise under the second question to which I have referred above. The consequence is that there may be some necessity for evidence, at least on the second question, in particular for the purpose of showing whether the defendants have exercised their entitlement under clause 20.3(a) and, if so, what is the amount which the defendants have reasonably determined to be the remuneration or compensation which they are entitled to receive under clause 20.3(b). Such evidence, it seems to me, would be within relatively narrow scope. 4 Resolution of the proposed separate questions will not determine the whole of the case, but they will determine whether the plaintiff is entitled to a significant ongoing source of revenue. If the plaintiff is right on that point, quite apart from the merits on the allegation of fraud, then it is being kept out of a source of revenue on account of what, at this stage, seems to be a single allegation of one particularised allegedly fraudulent application. 5 In those circumstances, I think that the interests of justice are better served by proceeding to determine the separate questions. In particular, I do not see that any prejudice is occasioned to the defendants by that course, whereas some considerable prejudice might be occasioned to the plaintiff by deferring until a final hearing of the whole suit the proposed separate issue. 6 While much has been said against the resolution of separate questions in Courts of high authority, nonetheless, since the (NSW) Civil Procedure Act 2005, it is my view that the Court should take a more interventionist role in identifying and separating important issues which can resolve significant parts of the litigation expeditiously. 7 I make orders 1 and 2 in the notice of motion filed on 15 December 2006. 8 I direct that the defendants serve any evidence on which they intend to rely on the separate questions, including any evidence as to whether they have exercised their entitlement under clause 20.3(a) and of any determination under clause 20.3(b), by 2 February 2007. 9 I direct that the plaintiff serve any evidence upon which it proposes to rely on the separate questions by 12 February 2007. 10 I direct that by 19 February 2007 each party serve on the other and lodge with my Associate a skeleton argument, a list of authorities, and an agreed bundle of documents to be tendered, indexed, paginated and arranged either chronologically or in some other logical manner, or, to the extent that agreement cannot be reached, separate bundles of the documents proposed to be tendered by each party, together with a working bundle of the pleadings and affidavits to be relied upon by each party at the hearing of the separate questions. 11 I grant liberty to apply on two days' notice by arrangement with my Associate. 12 I stand over the proceedings for hearing before me on 22 February 2007. I will reserve Friday, 23 February, if necessary, also. 13 The costs of the motion will be the plaintiff's costs in the proceedings on the separate questions. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.