Chaina v The Presbyterian Church

Procedural history

1. These proceedings have a long history. The claim originally made by the appellants (the Chainas and two companies associated with them) were brought against The Presbyterian Church (NSW) Property Trust in 2002. They arose out of the tragic circumstances of the death of one of the Chainas' children in the course of an event organised by the school (Scots College) run by the respondent. The respondent admitted liability and made offers of payment in specified amounts. The defence was filed in June 2003. As it turned out a hearing, limited to the assessment of damages, did not commence until 4 March 2013. The interlocutory proceedings were extensive, mainly because a major element of the damages was based upon a claim made by the two companies for loss of profits due to the disabling psychiatric injury which was suffered by Mr Chaina, as a result of the tragedy which had befallen his son. Senior counsel for the respondent outlined briefly the restructuring of the appellants' case after evidence was collected contradicting the initial basis on which it had been pursued.
2. The hearing ran before Davies J in the Common Law Division for a period in excess of 60 days. Judgment was delivered on 31 July 2014. The judgment resulted in an order in favour of the respondent because the amounts which had been assessed as payable by way of damages failed to exceed a Calderbank offer made by the respondent in 2003 and, in the case of the companies, an offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR") in 2007. Although the respondent was required to pay the costs of the claimants up until June 2003, thereafter the claimants were required to pay the costs of the respondent on an indemnity basis. The trial judge awarded lump sum costs in an amount of $8.3m, an amount which was set off (pursuant to s 90 of the Civil Procedure Act) against the judgments that would otherwise have been entered in favour of the claimants, leaving a net amount due to the respondent of $7.77m.
3. A notice of intention to appeal was filed within time and an initial notice of appeal was filed on 31 October 2014. It contained nine grounds of appeal in somewhat discursive form. It is clear that they did not purport to cover the issues now sought to be raised in the appeal. On 29 November 2014 the respondent filed a notice of motion seeking to strike out the notice of appeal and, in the alternative, a stay pending the provision of security for costs.
4. Throughout the proceedings the appellants have encountered difficulties in obtaining and retaining representation. On 9 February 2015 they appeared before McColl JA on a motion seeking pro bono assistance which application was initially adjourned, but ultimately granted by Emmett JA on 16 March 2015. It appears that advice was provided in June or July 2015. On 20 July 2015 a notice of appeal was provided to the respondent which contained three grounds of appeal. It was not ultimately filed and the appellants do not rely upon it.
5. On 22 July the appellants sought further time to obtain legal representation and file an amended notice of appeal. The matter has been before the registrar and judges of appeal on numerous occasions in the course of 2015 and earlier this year. A further directions hearing occurred before Emmett JA on 14 September 2015, at which time leave was given to the appellants to file and serve an amended notice of appeal by 9 November 2015. [1] That did not happen; however, on 20 November the appellant served an amended notice of appeal but it was not filed. It contained 42 grounds.
6. The matter came back before the Court on 23 November, the appellants informing the Court that further time was required to settle the grounds of appeal. Emmett AJA adjourned the matter for 14 days to allow that to occur. On 7 December 2015 there was a further hearing before Emmett AJA. At that stage an order was made for the appellants to file any amended notice of appeal by 31 March 2016. An amended notice of appeal and application for leave to appeal dated 31 March 2016 was in fact filed.
7. In the meantime, on 14 September 2015, the Court had directed the appellants to provide $50,000 by way of security for costs in a form deemed sufficient by the registrar and ordered a stay pending lodgement of an acceptable security. That amount was not lodged and on 15 April 2016 the respondent filed a further motion seeking security in the sum of $165,384.
8. In addition to the orders regarding the notice of appeal and security for costs, directions were made that the appellants file and serve written submissions. The initial directions required submissions by 2 February 2015, a direction which was varied to 2 September 2015. It may be accepted that the obligation to file submissions was dependent upon settling grounds of appeal. Nevertheless although an amended notice of appeal was filed on 31 March this year, no submissions have been provided.
9. The primary relief sought by the respondent is that the appeal be dismissed for want of prosecution. Section 59 of the Civil Procedure Act 2005 (NSW) empowers the Court to take such steps as are deemed appropriate for the elimination of unnecessary delay. Further, the Court has powers pursuant to s 61(3) to dismiss proceedings for non‑compliance with orders of the Court. Pursuant to the UCPR, r 12.7, the Court has power to dismiss proceedings if the moving party does not prosecute the proceedings with due dispatch. This rule applies to proceedings in this Court pursuant to r 51.1(3).
10. Some indication as to what is meant by due dispatch can be obtained from considering the standard rules in relation to the filing of documents. First, and relevantly in this Court, a period of three months is permitted for the filing of a notice of appeal where notice of intention to appeal is given within 28 days of the orders from which it is proposed to appeal. Generally, under r 12.8 and quite apart from non‑compliance with the timetable for appellate proceedings set out in Pt 51 of the UCPR, there is a power conferred to dismiss or stay proceedings when no party has taken any step for five months. That is not this case, but it indicates the extent of the delay which will not ordinarily be tolerated.
11. The Court must also be mindful that any order it makes, and any direction it gives, must conform to the requirement that proceedings be dispatched in a just, quick and cheap manner pursuant to Pt 6, Div 1, of the Civil Procedure Act.
12. Counsel for the appellants has emphasised the fact that these are no ordinary proceedings. In that she is entirely correct. It is clear that proceedings which took so many days at trial involve a range of issues and a level of complexity which must allow a degree of tolerance in relation to departures from the standard time periods permitted. However, there comes a stage at which both the interests of the parties and of the administration of justice require that consideration be given to calling a halt to the continuation of a proceeding in which no progress is being made.

Security for costs

1. Against that procedural background it is convenient to consider first the application for security for costs. Where it is clear that such an order would prevent an appeal from proceeding at all, it should not be made without giving close attention to that consequence. In the present case it is clear that such would be the effect of an order providing for the additional security requested by the respondent, that being in addition to the $50,000 on the basis of which Emmett JA ordered a stay and which has not yet been paid.
2. There is no doubt that the appellants are presently impecunious. That may have different meanings in different contexts, but in the present case an affidavit of the solicitor for the appellants, Mr Jakimoski, dated 2 May 2016, noted that the appellants had recently sold their residential property in Vaucluse. However, after paying expenses and the mortgagee, the solicitor recorded that they received no funds at settlement. The affidavit stated that they had, in the meantime, organised with family members to borrow the $50,000 and deposit the funds via a bank cheque as security for costs. A copy of a bank cheque in that amount was subsequently provided to the solicitor for the respondent, however, it was not deposited. On 9 May 2016, counsel appearing for the appellants noted that the appellants had decided not to provide the security which had been obtained by scraping together money from relatives.
3. An affidavit of the solicitor for the respondent also indicated that simply photocopying material for the appeal books, in accordance with the Court rules, would cost approximately $34,000.
4. Counsel for the appellants referred on a number of occasions to her clients being impecunious. In these circumstances it is doubtful that the appellants will have the funds to proceed with the appeal in the foreseeable future, let alone provide security for costs. It is therefore necessary to consider whether the appeal should now be dismissed for non‑compliance with earlier directions of the Court and more generally for delay in prosecuting the proceedings in circumstances where the effect of ordering a stay pending payment of security would almost certainly merely delay, without resolving, the outstanding issues.

Dismissal application

1. In support of the proposal that the proceedings be dismissed, counsel for the respondent submitted that the grounds of appeal were very general in nature and without any precise detail which would be necessary to enable the respondent to consider whether they have any proper basis. That characterisation is fairly based given the form in which the grounds are presently articulated. It also qualifies the ability of this Court to assess the merit of the appeal.
2. Many of the grounds deal with rulings on the admissibility of evidence and the fairness of the conduct of the trial. Other grounds challenge findings of fact. There is a ground which alleges bias, or alternatively apprehended bias, on the part of the trial judge. There is also a challenge to the costs order in favour of the respondent which awarded a lump sum of $8.3 million. (That is the figure which outweighed, by several times, the limited success obtained by the appellants at trial.)
3. None of these grounds have any detail put in support of them and it is not possible to know even the basis upon which they are sought to be proffered, let alone to assess their prospects of success. Although, as the respondent correctly noted, the grounds fall well short of satisfying the criteria specified in the UCPR, r 51.18, it is fair to say that the case is not unique in that respect. Counsel for the appellants made that point and it is valid. However, there are three factors which render the failing of unusual significance in the present case.
4. The first is that the appellants have had many opportunities to revise and re‑plead the grounds upon which they seek to rely. Directions have been given by the Court that they do so. There may be understandable reasons why that has not occurred, nevertheless the fact is that it has not occurred.
5. Secondly, deficiencies of this kind can sometimes be overlooked because the details of the grounds to be relied upon are clarified in written submissions filed at the appropriate time, again a point made by counsel for the appellants and fairly so. The problem is that this has not happened in this case. There are no written submissions which would allow either the respondent or the Court to assess the prospects of any appeal.
6. Thirdly, the length and complexity of the trial render the failure to provide coherent grounds supported by relevant submissions of greater than usual importance. While that length and complexity may cause difficulty in formulating the grounds, it is also fatal to the orderly process of the appeal when grounds are not properly formulated.
7. Counsel appearing for the appellants could give no satisfactory assurance that these problems would be remedied in the foreseeable future. The result is that, two years having elapsed since the judgment was delivered at trial, the likelihood of an appeal proceeding to the preparation of appeal books and the provision of written submissions, let alone a hearing within a reasonable time, is at best remote. In these circumstances, the costs and prejudice incurred by the respondent in attending hearings where directions are given and orders are made which are not complied with, together with the uncertainty arising from the fact that no clear timing for determination of the appeal can be established, amount to a significant degree of ongoing prejudice. That prejudice also extends to the failure to be able reasonably to enforce the judgment which has been obtained, although the basis upon which it has been challenged is as yet unassessable.
8. Whether there would be any prejudice to the appellants from dismissal of the proceedings is less clear. First, for reasons already explained, it is quite unclear that they would be able to pursue the appeal in the foreseeable future if it remained on foot. Further, they are not necessarily foreclosed from reagitating properly pleaded grounds supported by appropriate written submissions. To do so would require an application for leave to appeal out of time. But if it were sought expeditiously, they would at least have the ability to argue that the respondent had not been greatly prejudiced by lack of notice of their intention to appeal given the steps which have already been taken.
9. There is one other matter which needs to be addressed in relation to the proposed order dismissing the proceedings, that is that the appeal grounds relating to the costs orders are articulated with greater precision and with a level of understanding of the issues involved which does not attend the grounds relating to the merits of the damages proceedings.
10. The suggestion made by counsel for the appellants in the course of argument was that the orders of compromise which had been made in 2007 in relation to the companies, did not comply with UCPR, r 20.26 as in force at the relevant time and as explained in Whitney v Dream Developments Pty Ltd. [2] I do not have the offers of compromise and I have no idea whether they comply with the rule or not. The answer, however, is one which would be readily accessible if that issue were to be raised on an appeal.
11. The practical significance of such an issue, however, rests upon the orders for costs flowing from the offers of compromise. The orders were made against all four of the outstanding appellants jointly and severally. The orders were based upon the fact that compromises had not only been contained within the defence filed in June 2003, but had been the subject of Calderbank offers. It was on that basis that the appellants were ordered to pay the costs of the respondent on an indemnity basis from June 2003, that is, some four and a half years before the formal offers of compromise were made to the companies in December 2007. In these circumstances it is difficult to see that there is any practical significance in the specific ground relating to the offers of compromise.
12. Counsel then noted that the question about whether the Calderbank offers should properly have been the subject of an indemnity costs orders, raised a separate question as to whether the conduct in refusing to accept them was unreasonable. On one view, that might be a separate question which could be the subject of the appeal and is sufficiently identified in the grounds. Nevertheless, there is an issue as to futility which arises from the outcome of the proceedings. The defence not only admitted liability but proffered a payment in response to that liability by way of damages. The issue which was therefore to be determined at trial was not whether the appellants were entitled to damages, but whether they were entitled to an amount in excess of that proffered in the defence. Because they failed on that issue, it is undoubtedly arguable that the event which costs should normally follow was a failure to obtain relief in respect of that which was in dispute. On that approach, the plaintiffs, and now the appellants, would have been ordered to pay costs in any event, assessed at least on the ordinary basis. The amount involved would have been a large proportion of the amount which was in fact ultimately ordered.
13. Further, a challenge to the Calderbank offers based on the reasonableness of the appellants' conduct in not accepting them might well have raised broad issues as to the conduct of various aspects of the proceedings. In these circumstances, it does not seem appropriate to hive off questions as to costs, and allow the appeal to proceed in relation to those issues.
14. In the end, this is not a case in which the expeditious administration of justice is the predominant factor. The basis for ordering that the appeal should be dismissed is the ongoing prejudice to the respondent, together with the lack of prospect of compliance by the appellants with the rules and directions governing this appeal and appeals generally in the foreseeable future.
15. The Court orders that - 1. the appeal be dismissed, and 2. the appellants pay the respondent's costs of the respondent's motions of 1 December 2014 filed on 3 December 2014 and of 15 April 2016.

Endnotes

1. Emmett JA retired on 30 September 2015, but received a commission as an Acting Judge.
2. (2013) 84 NSWLR 311; [2013] NSWCA 188. 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: 08 July 2016