Supreme Court New South Wales Medium Neutral Citation: J Annan v FSS Trustee Corporation [2017] NSWSC 1453 Hearing dates: 13 October 2017 Decision date: 13 October 2017 Jurisdiction: Equity Before: Black J Decision: The Court will order the determination of a separate question subject to its reformulation by the parties. Catchwords: CIVIL PROCEDURE — Separate determination of questions – where separate question would reduce length and costs of hearing if balance of hearing no longer required – whether risk of prejudice – whether separate question should be ordered – form of question. Legislation Cited: - Civil Procedure Act 2005 (NSW), ss 56–58, 62(2) - Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 28.4 Cases Cited: - Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103 - Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 - Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 - Re Metal Storm Ltd (Subject to Deed of Company Arrangement) [2014] NSWSC 615 - Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 - Wild v FSS Trustee Corporation as trustee of the First State Superannuation Scheme [2017] NSWSC 237 Category: Procedural and other rulings Parties: James Annan (Plaintiff) FSS Trustee Corporation as Trustee of the First State Superannuation Scheme (First Defendant) MetLife Insurance Limited (Second Defendant) Representation: Counsel: E O'Neill (Plaintiff) M Windsor SC/C Purdy (Second Defendant) Solicitors: Cardillo Gray Partners (Plaintiff) HWL Ebsworth Lawyers (Second Defendant) File Number(s): 2015/328707 Judgment – ex tempore 1. By Notice of Motion filed 26 April 2017 the Second Defendant, MetLife Insurance Limited ("MetLife"), seeks an order under s 62(2) of the Civil Procedure Act 2005 (NSW) or alternatively rr 28.2 and 28.4 of the Uniform Civil Procedure Rules 2005 (NSW) that a question be decided separately from and before any other questions in the proceeding. 2. That question was initially formulated in the Notice of Motion, and in orders that were proposed, as whether, in refusing to accept the claim by the Plaintiff, Mr Annan, for total and permanent disability, MetLife had acted in breach of its statutory and/or general law duties or had breached its duty to act reasonably in considering the claim made by the Plaintiff. Mr Windsor, who appears with Mr Purdy for MetLife, has accepted, in the course of submissions, that it is likely that that question could be formulated more precisely. I should add that I recognise that the initial form of the question proposed by MetLife is in similar form to that which was put before, and ordered by, Stevenson J in Wild v FSS Trustee Corporation as trustee of the First State Superannuation Scheme [2017] NSWSC 237. It does not follow that form cannot be refined or clarified. It appears that the intent of the application is to determine, by the separate question, those matters which have commonly been recognised as involving a first stage inquiry in matters involving claims of this kind, namely whether MetLife's determination of Mr Annan's claim was valid, and to exclude those matters which would be involved if the Court found that MetLife's determination was flawed and that the Court was entitled to proceed to make its own determination of the relevant question. I will deliver judgment as to the questions of principle on the basis that a reformulation is likely to be achievable, while deferring any orders until that reformulation is available. 3. Mr Annan had originally opposed the order for a separate question, but now does not oppose that order, on terms that would protect his position, in particular, if he chooses to and is entitled to give evidence (which MetLife contends he is not) in respect of that question. Those terms provide that MetLife undertakes that it would not cross-examine Mr Annan in that situation. 4. The case law relevant to whether the Court should order a separate question is well established and it will be sufficient briefly to refer to it. In determining whether to make such an order, the Court must have regard to the matters referred to in ss 56–58 of the Civil Procedure Act including the overriding objective of bringing about the just, quick and cheap resolution of all matters in dispute in the proceedings. I recognise that, in the ordinary course, all issues arising in a hearing will be determined together and that care should be taken to avoid fragmentation of proceedings, potentially causing further delay and expense: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141–2. I also recognise that the authorities indicate that the court may need to take a more interventionist role in ordering separate questions to reflect the requirements of ss 56–58 of the Civil Procedure Act and to bring about the just, quick and cheap determination of the real issues in dispute: Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 at [6]; Re Metal Storm Ltd (Subject to Deed of Company Arrangement) [2014] NSWSC 615 at [5]. 5. I have also had regard to the observations of Ward JA (as her Honour then was) as to the applicable principles in Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103 at [87]–[92]. Her Honour there noted that a separate determination of an issue may be appropriate, not only where it will resolve the entirety of the controversy, but also where it will substantially narrow the field of controversy, and that does not require that the determination of the question will necessarily finally dispose of the litigation or one or more of the issues in it. Her Honour recognised the need for caution in ordering such a question, but also pointed out that there is a balancing exercise as to the likely utility of a determination of that separate question in the expeditious and cost-effective case management of the proceedings, having regard to the interests of justice as between the parties. Her Honour noted some circumstances where a separate question may not be appropriate, including where there are intertwined issues of fact and law, or where there is a real possibility that the resolution of the separate issue will not determine the relevant questions. I also have regard to the risk of overlap between witnesses and evidence in a separate issue and a trial, and overlapping issues as to credit, which would ordinarily be reasons that a separate question would not be ordered: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7]. In this case, that concern is displaced by the fact that MetLife's case as to the separate question is, it appears, documentary in nature, and that Mr Annan's position would be protected by the undertaking offered by MetLife that he would not be cross-examined, if he gave evidence as to that question. 6. I have regard to the fact that, in Wild v FSS Trustee Corporation as Trustee of the First State Superannuation Scheme above, in dealing with a corresponding application in respect of a claim for total and permanent disability, Stevenson J was satisfied that a similar order should be made, on the basis of a similar undertaking that the defendant would not cross-examine the plaintiff, if the plaintiff gave evidence in respect of the separate question. His Honour there reviewed the relevant factors, including the risks attached to separate questions generally, but also the advantage of saving of costs to the parties and the benefit to other litigants in the Court from a saving of time in respect to the proceedings generally. 7. MetLife in turn relies on the affidavit of its solicitor, Mr Harding, dated 7 September 2017 which refers to the background of the application, and to the dealings between Mr Annan, who is a former Senior Constable in the New South Wales Police Force, and MetLife in respect of his claim for total and permanent disablement under two policies. The policy language in the two policies is in slightly different terms, but that difference is not material when dealing with this application. Mr Harding gives evidence, which is not contested for the purposes of this application, of a significant reduction in the length of a hearing if only the separate questions are determined, with such questions involving a likely one day hearing, by contrast with a hearing of between five and seven days, for all issues including those issues which would only arise if the Court were to determine Mr Annan's entitlement to the benefit claimed for itself. Mr Hardy points to a corresponding difference in the costs which would be incurred, which is predictable given the difference in the lengths of the likely hearings, between total estimated costs for both parties in the order of something less than $50,000 for a single day hearing in respect of the separate question, by contrast with costs in the order of $220,000 in respect of the longer hearing of all issues. 8. I have also been taken to some of the matters on which MetLife would rely, in order to seek to support its determination of Mr Annan's claim. It is plainly not appropriate that I express any views as to those matters, other than to note that, as one might expect, there is likely to be a dispute in respect of the question whether that decision made by MetLife can or cannot be challenged, on the bases typically recognised in the case law, as to whether it was made in accordance with the contractual terms or fairly and reasonably. It seems to me that, in this case, there would be a significant potential saving of costs to the parties from a determination of a separate question, if the balance of the hearing is not then required and that is a matter which has particular weight where an individual brings proceedings of this kind against an insurer. It seems to me that there is a benefit to the efficient conduct of the proceedings, so far as the determination of the separate question adversely to Mr Annan would likely resolve the proceedings subject to appeal, and the determination of the separate question favourably to Mr Annan would then place the parties in a position to move, in a focused way, to the issues which would arise if it were open to the Court to substitute its own decision for that of MetLife. 9. It seems to me that there is no substantial risk of prejudice arising from the separate question, by way of inconsistent views of credit or otherwise, given the limited scope of the issues raised by the proposed separate question and the undertaking that has been offered by MetLife not to cross-examine Mr Annan, if he were entitled to give, and chose to give, evidence on the separate question. I recognise that there is a risk, which is unavoidable in respect of any separate question, of fragmentation of the appeal process. That risk cannot be treated as determinative, since otherwise a separate question would never be ordered, since that risk always exists. 10. It seems to me that an order for determination of a separate question should be made, subject to any appropriate clarification of the terms of the separate question. I will stand the matter down to a time convenient to the parties, for the reformulation of that separate question to be brought in with a view to making the orders in the form agreed between the parties. ********** 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: 27 October 2017