Legge v Universal Hospitality Group Pty Limited

1. [1]

   A notice of motion filed 21 March 2019 seeks orders pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that specific questions arising in respect of the amended second cross-claim be determined separately from any other questions in the proceedings and before the trial of the other questions in the proceedings.

2. [2]

   On 18 June 2019 I made the orders sought in the notice of motion. These are my reasons for making those orders.

3. [3]

   The applicants are the second and third defendants who are the second and third cross-claimants in the proceedings. They are in effect the sub-lessee operating a business from premises known as the Civic Hotel and the licensee of that hotel.

4. [4]

   On 16 February 2011 the plaintiff fell down the stairs at the premises on his way to a bathroom in the basement level of the building.

5. [5]

   There is, to put it neutrally, an issue as to whether and to what extent the basement level operated as a nightclub. That issue, amongst others, has significance as to whether an insurance policy issued by Neon Underwriting Ltd formerly known as Marketform Underwriting Agency Ltd for and on behalf of the Underwriting Members of Syndicate 2468, (“Neon”), (the third cross-defendant) responds to the circumstances of the plaintiff’s claim against the defendants.

6. [6]

   In its Defence to the amended second cross-claim filed on 5 March 2018, Neon admits that it issued an insurance policy covering the relevant period (31 January 2011 to 31 January 2012) and says that it relied upon information in a proposal form completed by the third defendant which entailed failures to disclose relevant matters and misrepresentations of other relevant matters. As a result it is alleged the defendants breached their duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) (“ICA”) and accordingly Neon is entitled to avoid the policy or reduce its liability to place it in the position it would have been, if full disclosure had been made in accordance with s 28 of the ICA.

7. [7]

   Specifically Neon pleads that had the relevant non-disclosures and misrepresentations not been made, Neon would not have issued the policy on those terms, or at all.

8. [8]

   The notice of motion identifies three specific questions that would have the effect of disposing of the issues on the cross-claim and thus provide the defendants with a finding as to whether insurance cover would respond or not.

9. [9]

   It is common ground that the determination of these issues would have a flow on effect in fostering progress in the primary proceedings brought by the plaintiff, who was very severely injured when he fell down the stairs, now over eight years ago.

10. [10]

    Unsurprisingly these insurance issues proved an impediment to resolution of the primary proceedings at a mediation in 2017, and continue to do so.

11. [11]

    The plaintiff consents to the orders proposed. Neon took the position that it neither consented to nor opposed the orders being made, stating that it was a matter for the Court.

12. [12]

    I have had the substantial benefit of succinct written submissions from the applicants outlining the principles to be applied on the application. I was also well assisted by cogent oral submissions from Mr Williams SC addressing the salient background and factual matters.

Principles

1. [13]

   Rule 28.2 of the UCPR provides as follows:

2. [14]

   Sections 56 and 57 of the Civil Procedure Act 2005 (NSW) provide relevantly as follows:

3. [15]

   A summary of the principles to be applied to the question of whether separate questions should be determined was given by Hallen ASJ in Southwell v Bennett [2010] NSWSC 1372, at [15] and recently restated by Wilson J in Lake Maintenance (NSW) Pty Limited v Todd Hadley Pty Limited & Ors [2019] NSWSC 297. The relevant principles here are:

4. [16]

   The following submissions were made as to why I should exercise my discretion to accede to the orders:

5. [17]

   In short, the parties are desirous of having the question of indemnity under the policy separately determined because:

Decision

1. [18]

   I am required when determining any application before me pursuant to the UCPR and the Civil Procedure Act to bear firmly in mind what would be in the interests of just, quick and cheap resolution of the real issues for determination between the parties. In my view this application is an obvious example of a genuine pursuit of such an approach to the case.

2. [19]

   I accept all of the submissions made by the applicant on the motion. I accept that the separate determination of the questions set out in the notice of motion are truly distinct and separate questions to all other questions in the substantive proceedings. I accept that there is no commonality of witnesses who would be called on those issues as opposed to the primary proceedings. I note that all of the parties are in effect desirous of having that question separately determined. No doubt this is so that the defendants can know what their insurance status is and can respond accordingly to the demands of the primary proceedings.

3. [20]

   Overarchingly there is a real prospect that resolution of these questions will substantially increase the prospect of resolving the whole proceedings once the competing parties know of their obligations and exposure, and to be blunt, whether the insurance policy responds or not.

4. [21]

   Accordingly I made the following orders:

   1. (1)

      Pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) the following questions are to be determined separately from any other questions in the proceedings and before the trial of the other questions in the proceedings: 1. Whether the Second Cross-claimant on the Amended Second Cross Claim (Universal 1919) breached its duty of disclosure under s 21 of the Insurance Contracts Act 1984 (Cth) (ICA) by reason of the matters pleaded in paragraph 3 of the Third Cross-defendant's (Neon’s) Defence to the Amended Second Cross Claim.