Supreme Court New South Wales Medium Neutral Citation: Bettergrow Pty Ltd v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid [2017] NSWSC 658 Hearing dates: 22 May 2017 Decision date: 22 May 2017 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Declare that first defendant entitled to select legal representation independent of its insurer Catchwords: PRACTICE AND PROCEDURE – where first defendant represented by solicitors retained by its insurer – where first defendant wishes to make claim against that insurer – whether leave should be granted permitting first defendant to have separate representation for the purpose of prosecuting its claim against the insurer – whether preferable course is to declare that first defendant is entitled to appoint a legal representative independent of its insurer Cases Cited: Elphick v Westfield Shopping Centre Management Company Pty Ltd [2011] NSWCA 356 Category: Procedural and other rulings Parties: NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (Applicant/First Defendant) Bettergrow Pty Limited (First Respondent/Plaintiff) Powercor Network Services Pty Ltd (Second Respondent/Defendant) TTR Construction & Excavation Pty Limited (in liq) (Third Respondent/Defendant) On-Line Pipe & Cable Locating Pty Limited (Fourth Respondent/Defendant) Representation: Counsel: D Priestley SC (Applicant/First Defendant) (on instructions from the insurers for TransGrid) T Mehigan (Applicant/First Defendant) (on instructions from TransGrid) A Shearer (Second Respondent/Defendant) Solicitors: Meridian Lawyers (Applicant/First Defendant) (on instructions from the insurers for TransGrid) Rockliffs Solicitors & Ip Lawyers (First Respondent/Plaintiff) Marque Lawyers (Second Respondent/Defendant) Kells The Lawyers (Third Respondent/Defendant) Argyle Lawyers (Fourth Respondent/Defendant) File Number(s): SC 2016/322249 EX TEMPORE Judgment (REVISED) 1. The plaintiff, Bettergrow Pty Limited, operates a waste facility at Vineyard. Bettergrow was not, and has never been, licensed to receive any asbestos. Bettergrow claims that between 30 and 31 March 2016, material that was contaminated with asbestos was delivered to its facility for processing. 2. That material originated from the Beaconsfield West electrical substation, then owned by the first defendant, TransGrid, and managed by the second defendant, Powercor. 3. Thereafter, by an order made by the Environmental Protection Agency, Bettergrow's facility was closed for some 50 days. Bettergrow now seeks damages from TransGrid, Powercor and other parties for the loss it claims to have suffered. 4. Currently, TransGrid is represented in the proceedings by solicitors instructed by its insurer, AIG Australia Limited, under a "Contractors Pollution Liability" policy. 5. There are three claims currently made in the proceedings and one further claim which has been foreshadowed. 6. The primary claim is Bettergrow's claim for damages against TransGrid, Powercor and other parties. AIG accepts it is liable to indemnify TransGrid in relation to that claim and, as I have said above, it is currently conducting the defence of that claim on behalf of TransGrid. 7. By a document that the parties have called the first cross-claim, Powercor makes a claim against TransGrid alleging breach of a contractual obligation whereby it contends TransGrid was obliged to take out asbestos liability cover to protect Powercor. Powercor has made a claim for indemnity under the AIG policy to which I have referred. AIG has denied liability to indemnify Powercor, thus giving rise to the first cross-claim. 8. As will emerge, TransGrid argues, and AIG disputes, that the AIG policy does cover Powercor (or at least should be rectified so as to have that effect). 9. The next claim is a claim the parties have described as a second cross-claim which is made by TransGrid against Powercor, claiming damages for breach of contract for alleged failure to take appropriate action to prevent the asbestos contamination of which Bettergrow complains. 10. The fourth (and at the moment only proposed) claim is in the form of a draft third cross-claim prepared by TransGrid's corporate solicitors naming AIG as cross-defendant. In this proposed cross-claim, TransGrid argues that, on its proper construction, the policy does extend cover to Powercor or, alternatively, that the policy should be rectified to have that effect. 11. The proceedings have reached the stage where all of Bettergrow's evidence has been served; the defendant's evidence (other than in relation to the third cross-claim) has also been served. In due course, directions will have to be made for service of the defendants' expert evidence. 12. Now, by a notice of motion filed on 8 May 2017, TransGrid, on instructions from its insurer AIG, seeks an order that TransGrid be granted leave to have separate legal representation (from that retained by its insurer to defend Bettergrow's claim against it) for the purpose of defending Powercor's first cross-claim and prosecuting TransGrid's proposed third cross-claim against AIG. Leave is sought because of the obvious conflict that the solicitors and counsel, retained by AIG for TransGrid, currently have between their duty to their insurer client AIG on the one hand and to the insured client TransGrid. 13. TransGrid appears before me today by two counsel: Mr Priestley SC appears for TransGrid on instructions from AIG; and with my leave Mr Mehigan appears on this application for TransGrid in its corporate, that is, uninsured, capacity. In that capacity, TransGrid opposes what I will call Mr Priestley's application. 14. Mr Mehigan, on behalf of TransGrid in its corporate capacity, submitted that there should be no order granting leave for TransGrid to be represented by two sets of legal representatives and that "the solution is for TransGrid to appoint solicitors who are free of any professional duties owed to AIG" and for AIG to "appoint its own solicitors to defend the proposed third cross-claim". 15. It is common ground before me that, generally speaking, the notion that one party can be represented by two sets of legal representatives in the one proceeding is regarded as being contrary to the proper practice of the court: Elphick v Westfield Shopping Centre Management Company Pty Ltd [2011] NSWCA 356. 16. It is easy to see why. Numerous practical and likely unforeseeable difficulties may well arise if one party is represented by two sets of legal representatives. Such difficulties could arise in relation to the question of which counsel cross-examines which witness and in what order, and in relation to the question of orders of addresses and subject matters of addresses. Obviously to permit one party to be represented by two sets of legal representatives would also increase the cost of proceedings. 17. Although I was referred to much authority on this question, none involved a situation such as that here, where (a) an order is sought that a party be separately represented against the wishes of that party and on the application of the insurer; or where (b) that party has available to it a legal representative prepared to and able to represent it across the entirety of the proceedings. 18. Mr Priestley submitted that it would be "no solution" for TransGrid to retain independent (that is independent of AIG) legal representation as such parties would themselves be in a position of a conflict because, for example, TransGrid itself would have "no interest" in resisting Bettergrow's claim and be "unconcerned" about prosecuting TransGrid's second cross-claim against Powercor by reason of the fact that TransGrid was covered by the AIG policy. 19. I see no reason to conclude, as was inherent in that submission that TransGrid (through its "independent" legal representative) would, as it were, "run dead" on those matters and not defend or prosecute TransGrid's interest in the proceedings in accordance with their merits. Indeed, I would think TransGrid's independent lawyers would be anxious not to behave that way, lest such conduct were to jeopardise TransGrid's cover under the policy. 20. In those circumstances, I am not persuaded that I should make the orders that are sought in the notice of motion of 8 May 2017. Although TransGrid in its corporate capacity has not itself filed a motion setting out the orders it seeks in relation to this question, it is common ground that I should proceed upon the basis that the orders foreshadowed by Mr Mehigan in his submissions be treated as if made by notice of motion. 21. In those circumstances I make the following orders: 1. Declare that the first defendant (TransGrid) is entitled to select an independent legal representative to act for it in these proceedings, being a solicitor who can act against the interests of the other parties to the proceedings and AIG Australia Limited (AIG). 2. Order that TransGrid file and serve any notice of change of solicitor under Uniform Civil Procedure Rules r 7.26(3) by 26 May 2017. 3. Grant leave to TransGrid to file by 1 June 2017 the third cross-claim statement referred to in the affidavit of Robert James Crittenden sworn 8 May 2017. 4. Order that AIG, in its own right and not by way of any reduction of the proceeds of any applicable insurance policy, pay the costs of the plaintiff, TransGrid (in its uninsured capacity) and of the second defendant, of the notice of motion brought by TransGrid (on the instructions of AIG) of 8 May 2017. 5. Direct that by 5pm on 1 June 2017 the defendants inform the plaintiff whether they consent to the filing of the further amended technology and construction list statement. ********** 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. Decision last updated: 26 May 2017