Cook v O'Neill

Supreme Court of NSW|2013-08-15|Before: Adamson J

Introduction 1The plaintiffs move on a Notice of Motion filed on 7 August 2013 for leave to rely upon a report prepared by Edmonds & Associates dated 25 July 2013. Leave is required because the matter is listed for final hearing to commence on 26 August 2013 for a period of five days. It is common ground that if leave is granted it will be necessary to adjourn the proceedings since the expert report in respect of which leave was sought was served on 25 July 2013 and the defendant has had insufficient time to respond to that report in time for the hearing.

History of the proceedings 2The proceedings were commenced in September 2010. The plaintiffs' claim is for damages for negligence against her solicitor in respect of the sale of their business. An agreement to sell the business for a sum in the order of $2m was entered into. Subsequently there was a variation to the agreement. Issues arose as to the true construction of the variation that were determined by the Court of Appeal on a basis which gave rise to the plaintiffs' claim for loss against the defendant. The construction of the agreement and the variation by the Court of Appeal is pleaded in [8] of the Amended Statement of Claim as follows: "The first agreement and variation did not give effect to the sale including the sale price and the first agreement and the variation agreement was such that their true operation and effect was that the sale price provided for by them was $933,333 and not $2,001,219." 3Following several directions hearings, a hearing date in February 2013 was allocated. On 28 November 2012 the hearing date was vacated because the plaintiffs sought, and were granted, leave to amend their Statement of Claim to add to the particulars of loss or damage pleaded in [11] the following new particular, (ab): "The First and Second Plaintiff lost the ownership of the business, and the benefit of its value, as compared to the $933,333 received for it in the outcome. The business if retained by the First and Second Plaintiff could, and would, have been sold at its market value (in excess of $2,000,000) to a different purchaser. The First and Second Plaintiff would not have sold the business for the sum of $933,333 received for it in the outcome if the First and Second Plaintiffs had been advised by the Defendants that the first agreement and the variation agreement would, or may, lead to the outcome, and would not have executed the variation agreement, and would only have executed a document varying the first agreement that did not change the sale price." 4In my view, the addition of this new particular is an indication not only that the market value of the business was an issue in the proceedings which could be germane both to the issues of causation and quantum of damages, but also that its relevance was, or ought to have been, appreciated by the plaintiffs' legal advisers. 5On 28 November 2012, when the first hearing was vacated, the plaintiffs confirmed to the Court that all their evidence had been filed and that the amendment would not require any further evidence to be filed. Subsequent directions of the Court required the defendant to serve her evidence and the plaintiffs to serve their evidence in reply. 6On 3 April 2013 the plaintiffs briefed Mr Cavanagh SC to lead Mr Romaniuk, who had been briefed as junior counsel in the matter for some time. On 24 April 2013 junior counsel and the plaintiffs' solicitors conferred. At the conference junior counsel identified the need for further damages evidence and confirmed his advice by letter dated 30 April 2013. Notwithstanding junior counsel's advice that further evidence may be required to establish the plaintiffs' case, no indication was given either to the defendant or to the Court of the possibility that further evidence might be filed. 7When the matter came before the Registrar in the morning of 1 May 2013 it was listed for final hearing on the dates referred to above on the basis that all evidence had been served by both parties. 8Later in the afternoon of 1 May 2013, a conference was held between Senior Counsel, junior counsel and the plaintiffs' solicitors in which Senior Counsel advised that in his opinion further valuation evidence was required. There was then a conference on the following day between junior counsel and the plaintiffs' solicitors to review valuation materials and a teleconference was held on the following week between a valuer, junior counsel and the plaintiffs' solicitors. 9Notwithstanding that the plaintiffs' legal advisers were endeavouring to prepare the evidence that Senior Counsel had advised was required no notification was given either to the defendant or to the Court that the basis on which the hearing date had been allocated may prove to be mistaken in that the plaintiffs would seek in due course to rely on the evidence that was being prepared. 10On 16 May 2013 a statement of a valuer, Mr Edmonds, was prepared for to which was annexed an earlier valuation report of the business for a bank which Mr Edmonds had performed. This statement was served on the defendant on 21 May 2013. The defendant did not respond to this report at the time. I am informed by Mr Darke that the defendant will object to the report on several bases if it is tendered at the hearing. 11Written advice from Senior Counsel dated 28 May 2013 on the need for valuation evidence was received by the plaintiffs' solicitors on 31 May 2013. As a result of that advice the plaintiffs' solicitors instructed the valuer, Mr Edmonds, to prepare a further valuation report in accordance with the Expert Witness Code of Conduct for the purposes of proving the market value of the plaintiffs' business in the proceedings. 12A further letter of instructions was sent to the valuer on 18 June 2013. There was a conference between the valuer, junior counsel and the solicitors on 26 June 2013. A draft valuation report was prepared and considered by senior and junior counsel and the plaintiffs' solicitors in a conference on 24 July 2013. The valuation report was served on the defendant on 25 July 2013. 13By letter dated 1 August 2013, the defendant notified the plaintiffs' solicitors that she objected to late service of the valuation report. The plaintiffs filed the motion on 7 August 2013 for leave to rely on the report, which is listed for determination before me today. 14Mr Romaniuk, who appears on behalf of the plaintiffs, accepts that an adjournment would be required if the orders sought in the notice of motion were granted. However, he submitted that it was important in the interests of justice that the plaintiffs be permitted to rely on Mr Edmonds' report, and that, if leave is not granted, there would be a lacuna in the plaintiffs' case which may lead to the plaintiffs' case failing for lack of evidence on the issues of causation and damage. 15Mr Romaniuk submitted that it would not be just for the plaintiffs to have to bear, as it were, the consequences of the forensic decisions made by her legal advisers in circumstances where it could not be shown that she was at fault. He contended that there has more than adequate explanation for the delay and referred to the very detailed evidence which has been given of the chronology of advice and conferences to explain to the Court that the plaintiffs' solicitors and barristers were diligently seeking to advance the plaintiffs' interests and to put them in the best position for the trial. He submitted that the only identifiable prejudice to the defendant was costs thrown away and that that could be ameliorated by an order for that the plaintiffs pay the defendant's costs thrown away by the adjournment, if need be. 16In the course of debate between bar and bench Mr Romaniuk accepted the proposition that unresolved litigation could hang like a dark cloud over a litigant, although he did not concede the blackness of such cloud was any darker for the professional litigant, such as, in the instant case, a solicitor, than it would be for any other litigant. Mr Romaniuk submitted that the importance of the evidence to the plaintiffs' case was a very significant matter which should weigh in the interests of justice and incline this Court to grant the relief sought. He submitted that, if leave were not granted, the plaintiffs' claim might fail. 17Mr Darke, who appears on behalf of the defendant, submitted that I should decline to grant the relief sought by the plaintiffs in their notice of motion. He relied on the chronology I have set out above, including that from the time the amendment was made in 2012 by the adding of particular (ab) to [11], it was apparent that evidence of the market value of the business might be required by the plaintiffs. 18He submitted that it was a significant matter that notwithstanding the substance of this amendment, the plaintiffs had nonetheless, assured the Court on several occasions, either expressly or by implication from silence, that no new evidence was required. Mr Darke relied on the fact that new evidence was contemplated by the plaintiffs' legal advisers in April 2013 but notwithstanding this, when the matter came before the Court and the matter was fixed for hearing on 1 May 2013, neither the defendant nor the Court was told of what was going on behind the scene in further preparation of the plaintiffs' case for hearing. 19Mr Darke points to the following four separate matters that militate against the grant of leave: (1)the exceptional nature of the delay; (2)the lack of adequate explanation for the delay; (3)the prejudice that would be suffered by the defendant were leave granted; (4)the importance of appropriate and efficient allocation of Court resources, not only to this case but also to other cases.

Exceptional delay 20I accept Mr Darke's submission that the delay was exceptional. The application for leave was made a mere 1 ½ weeks before a 5-day trial which had subsequently been set down for hearing on 1 May 2013, the first hearing date for which had been vacated. The application for leave was made three months after the matter was listed for hearing on the basis that all the evidence had been served. It is also of significance that the evidence in respect of which leave was sought related to amendments which were made in 2012 at which time the plaintiff had told the Court that no further evidence would be required.

Lack of adequate explanation for the delay 21Although substantial evidence has been adduced to establish what was occurring behind the scenes to repair the perceived deficiency in the plaintiffs' evidence, the delay has not, in my view, been adequately explained. I accept Mr Darke's submission that the plaintiffs made a forensic decision not to raise this matter with either the defendant or the Court for their own advantage, namely, they would see what evidence was forthcoming from Mr Edmonds before potentially jeopardising the hearing date. 22The true explanation for the delay appears to me to have been that the plaintiffs, through their legal advisers, wanted to see what the valuation evidence would be before they raised the prospect of its existence and the need for an adjournment. In other words they wanted to obtain, and retain, the hearing date on a pretence since until the expert report had been prepared they were not in a position to make a forensic decision whether to rely on it. 23The expert valuation evidence which had been obtained by the plaintiffs was not a matter outside the plaintiffs' control. An expert could have been engaged at any time for that purpose. This is not a case where a party does not have control of a witness who comes forward at a late stage. Furthermore Mr Hillyard, a real estate broker, had prepared a report which had been served in which he opined as to the market value of plaintiffs' business. This was the very issue to which Mr Edmonds report was relevant, albeit that Mr Edmonds was qualified valuer and therefore might be regarded as having expertise superior to that of Mr Hillyard.

Prejudice to the defendant 24Mr Darke submitted that the defendant is a sole practitioner, that serious allegations have been made against her regarding her professional competence in these proceedings, and that she has been living with them for three years hanging over her head. He submitted that no costs order would compensate her for the ongoing stress and anguish that these proceedings cause her. 25Mr Darke relied on what the High Court said in AON Risk Services Australia Ltd v Australian National University (2009) HCA 27, 239 CLR 175 (Aon) at [98] and [100] where the plurality said, in substance, that an order for costs may not provide sufficient compensation for an adjournment and justice cannot be measured merely in money. I accept Mr Darke's submission that there is prejudice to the defendant which cannot be compensated for in costs by reason of the nature of the proceedings and the inevitable delay were leave to be granted since an adjournment would necessarily result. 26Although Mr Romaniuk did dispute that the principles in Aon apply to the instant case, and indeed referred to them in his written submissions, he sought to distinguish them on the basis that they related to an amendment to the pleading rather than late service of evidence. In my view, the principles in Aon apply to a case such as this where one party is seeking an indulgence which would inevitably result in the adjournment of a hearing date. The principles articulated by the High Court in Aon are not in any way limited to amendment applications but apply to case management and procedure of courts generally.

Efficient allocation of court resources 27I accept Mr Darke's submission as to the importance of efficient allocation of court resources. The lateness of the application makes it highly unlikely that the time allocated for the case could be used by this Court to hear another case. As the High Court said in Aon at [93] the question of what is just requires account to be taken of other litigants as well as the parties to the proceedings before the Court.

Civil Procedure Act 2005: s 56, s 57, s 58 and s 59 28Section 58(2) of the Civil Procedure Act 2005 (the Act) makes the matters referred to in s 56 and s 57 of the Civil Procedure Act mandatory relevant considerations for the purposes of determining the dictates of justice. 29Section 56 identifies the overriding purpose of the Act and UCPR as being "to facilitate the just, quick and cheap resolution of the real issues in the proceedings." I do not consider that it would be just for leave to be granted and these proceedings be adjourned because of the prejudice to the defendant which cannot be compensated by costs. The consequences of a grant of leave would be neither quick nor cheap since the proceedings would be inevitably delayed and additional costs incurred. There would be significant costs thrown away as a result of an adjournment. 30The matters which I am obliged to take into account under s 57 are listed in s 57(1)(a) - (d). They relate to the just determination of the proceedings, the efficient disposal of the business of the Court, the efficient use of available judicial and administrative resources, and the timely disposal of the proceedings. It would be repetitive for me to go over the matters which are relevant to those factors to which I have already referred. It is sufficient to say that I accept that these matters weigh heavily in the balance against the grant of leave. 31In terms of matters which I may, as distinct from must, take into account, they include, as s 58(2)(b) provides, the degree of difficulty or complexity to which the issues in the proceedings give rise. Mr Romaniuk submitted that issues of causation are not necessarily straightforward and minds might differ as to the way in which causation can best be proved, and indeed as to the need for particular evidence to establish causation and quantum in any given cases. Put in those terms, the submission cannot be gainsaid. However, I am persuaded by Mr Darke's submission that although causation is a potentially difficult question, it is relatively straightforward in the instant case where the market value of the plaintiffs' business was self-evidently in issue. Indeed it was the subject of the added particular (ab) to [11] which resulted in the vacation of the first hearing date and therefore must have been squarely in the minds of the plaintiffs' solicitors from 2012. 32Dealing with the other matters in section 58(2)(b), the degree of expedition which the respective parties have approached the proceedings including the degree to which they have been timely in their interlocutory activity, I accept that the plaintiffs' investigation of the further expert evidence required has been approached with a degree of expedition since Senior Counsel was briefed in April 2013. However, the fact that it was conducted behind the scenes and in the shadow of a hearing date which had been granted on what must have appeared to the plaintiffs' solicitors and barristers was a false premise tends to weigh against any credit being given for such degree of expedition. 33The next matter is the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective party. I accept the plaintiffs themselves had no part to play in the lack of expedition in obtaining this evidence. Whilst it may seem at times unjust that forensic decisions taken by the parties' legal representatives have consequences which are visited on the parties themselves, nonetheless, in my view, it can fairly be said that the lack of expedition was not beyond the control of the plaintiffs because it was well within the control of her legal representatives. 34Another matter which is germane to the exercise of my discretion is the use that any party has made or could have made of any opportunity available to the party in the course of the proceedings. In my view, the appropriate course would have been for the plaintiffs to relist the matter shortly after the conference with Senior Counsel on 1 May 2013 to apply for the hearing date to be vacated in order to prevent the Court allocating that time to this case rather than to another case and also to ensure that the defendant was not spending money and costs unnecessarily in preparation for a hearing that might not eventuate. 35In my view the risk that the hearing date would be jeopardised by the further evidence must have been apparent to the plaintiffs' legal representatives as of May 2013. The consequences of their forensic decision to take the risk of retaining the hearing date notwithstanding the further evidence ought not, in my view, be visited on the defendant. 36The other matter to which Mr Darke referred was section 59 of the Act which provides that in any proceeding the practice and procedure of the Court should be implemented with the object of eliminating any lapse of time between the commencement of the proceeding and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case. 37I accept Mr Darke's submission that the principles to which I have referred in s 56, s 57, s 58 and s 59 weigh very heavily against any discretion in the plaintiffs' favour. Although Mr Darke submitted the grant of leave was completely foreclosed by those sections, I would prefer to consider that I have a discretion, although I consider that I ought properly exercise it to refuse a grant of leave. 38I appreciate that this may seem from the plaintiffs' point of view to be a harsh result. Nonetheless for the reasons already given, I consider it to be in the interests of justice that the leave sought in prayer 1 of the Notice of Motion be refused. 39It is also appropriate to order the plaintiff to pay the defendant's costs of the motion and I confirm the hearing date of 26 August 2013. 40I note for the record, having regard to the material to which I have been privy in the course of determining this application, I do not think that the matter should be listed for hearing before me or that this judgment should be read by the judge who hears the matter without prior consultation with the parties.

Orders 41I make the following orders: (1)Refuse leave to the plaintiffs to rely on the report of Edmonds & Associates dated 25 July 2013. (2)Dismiss the plaintiffs' notice of motion filed 7 August 2013. (3)Order the plaintiffs to pay the defendant's costs of the motion.

Amendments 08 November 2013 - removed publication restriction notation Amended paragraphs: coversheet 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 November 2013

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