Hunter Valley Skydiving Centre Pty Limited v Central Coast Aero Club Limited & anor

Supreme Court of NSW|2008-02-05|Before: Brereton J

CITATION : Hunter Valley Skydiving Centre Pty Limited v Central Coast Aero Club Limited & anor [2008] NSWSC 83

JURISDICTION : Equity Division Expedition List

DECISION : Grant leave to defendants to rely at hearing on affidavits, notwithstanding that they were served outside time limited by directions previously made. Order defendants to pay plaintiff's costs of and incidental to application, on an indemnity basis. Indicate that if plaintiff wished, hearing appointed to commence on 11 February would be vacated and refixed to commence on 31 March or, if available, on 10 March, with defendants to pay on an indemnity basis the costs of and thrown away by the adjournment.

CATCHWORDS : PROCEDURE - where defendant serves large number of affidavits outside time limited by pre-trial directions - where plaintiff unable to meet same in time for hearing - where hearing has been expedited due to hardship to plaintiff - where default unsatisfactorily explained - where refusing leave would deny defendant opportunity to adduce evidence on central issue in case - where case could be heard with a deferral of seven weeks without disrupting list and without incompensible prejudice to plaintiff - whether leave to rely on late affidavits should be granted.

LEGISLATION CITED : (NSW) Civil Procedure Act 2005, ss 56, 57, 58

Cohen v McWilliam (1995) 38 NSWLR 476 CASES CITED : State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 United Motors Retail Ltd v Australian Guarantee Corporation Ltd (1991) 58 SASR 156

Hunter Valley Skydiving Centre Pty Limited (plaintiff) PARTIES : Central Coast Aero Club Limited (first defendant) Warnervale Air Pty Limited (second defendant)

COUNSEL : Mr R M Foreman (plaintiff) Mr DJ Fagan SC w P C Silver (defendants)

SOLICITORS : Chamberlains Law Firm (plaintiff) Turnbull Hill Lawyers (defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST

4278/07 Hunter Valley Skydiving Centre Pty Limited v Central Coast Aero Club Limited & anor JUDGMENT 1 HIS HONOUR: The first defendant Central Coast Aero Club Limited ("the Aero Club") seeks leave to rely at the hearing, presently fixed to commence next Monday 11 February 2008 for five days, on 20 affidavits that were served outside the time limited by pre-trial directions for the service of the defendants' affidavits. After argument on 5 February 2008, I indicated that I would grant the leave sought, order the defendant to pay the plaintiff's costs of and incidental to the application on an indemnity basis, and, if the plaintiff so wished, vacate the hearing at the defendant's cost. These are my reasons. 2 In the substantive proceedings the plaintiff Hunter Valley Skydiving Centre Pty Limited ("HVSC") claims orders restraining the Aero Club (which is the controlling authority of the Warnervale aerodrome pursuant to an agreement with Wyong Shire Council), and the second defendant Warnervale Air Pty Limited (which operates a flying school and charter operations at Warnervale aerodrome) from treating as terminated a consent given by the Aero Club to HVSC for the conduct of parachute operations from and at Warnervale aerodrome. The Club claims to have withdrawn the consent by a notice dated 16 August 2007, which particularised a number of matters said to entitle it to do so, including persistent aviation safety breaches (which were not then further particularised by reference to dates). Although HVSC obtained ex parte injunctive relief, it was not continued on an interlocutory basis. HVSC applied for an expedited final hearing on account of the hardship occasioned to it by being excluded from the aerodrome. In the meantime, HVSC has been conducting its operations from Cessnock aerodrome. 3 On 31 August 2007, directions were made that HVSC file and serve an amended statement of claim by 6 September, and its affidavits by 20 September. There was some (but slight and immaterial) delay in the service of some of those affidavits. The Aero Club moved to have the matter removed from the Expedition List on that basis, invoking the slight default and technical deficiencies in the service (by facsimile) of some of the affidavits, but wiser counsel ultimately prevailed, and when the matter came before me for directions on 19 October 2007, I granted leave to the plaintiff to rely at the hearing on the affidavits it had served to that point, dismissed the application for removal of the matter from the Expedition List, adjourned to 26 October the defendants' application for leave to amend their defence, ordered that the question of liability be determined prior to and separately from the assessment of damages if any, and set the matter down for an expedited final hearing for five days to commence on 11 February 2008. I also granted both parties leave to adduce expert evidence in relation to the aviation safety issues, but refused the plaintiff leave to adduce expert evidence in relation to the suitability of Belmont Airport for HVSC's operations because it was not apparent how that could be a relevant issue. And I made my standard pre-trial directions, including, relevantly, that no party may read at the hearing without the leave of the court any affidavit which had not already been filed and served save for: · Defendants' lay affidavits served by 9 November 2007; · Defendants' expert affidavits served by 20 November 2007; and · Plaintiff's affidavits in reply served by 19 December 2007. 4 The plaintiff had at first contended that the time proposed for the defendants' affidavits was too long, but when it became apparent that it was not possible to list the matter before 11 February, that objection was not pressed. It appears that counsel who then appeared for the defendants did not make an accurate record of the directions, but although it was at first trenchantly disputed by the defendants' solicitor, it is now conceded that on 22 October the plaintiff's solicitor by facsimile letter informed him of the directions made on 19 October 2007. 5 On 14 November 2007, HVSC's solicitors wrote to the Aero Club's solicitors, observing that other than affidavits which had been served prior to 19 October, no further lay evidence had been served by the defendants, and presuming that the defendants did not intend to rely on any additional lay evidence, requesting that if that presumption was incorrect, the defendants' solicitor advise by close of business that day what additional lay evidence the defendants intended to rely on, when it was to be served. and why it had not been served within time. The Aero Club's solicitors answered on the same day: It is the intention of our clients to rely at the hearing of this case on the following affidavits: 1. The affidavits referred to in our letter to you of 10 October 2007; 2. The affidavit of an expert yet to be commissioned; 3. Affidavit of Andrew Allan Coulthard sworn 18 October 2007 a copy of which is enclosed herewith by way of service; 4. Affidavit of Andrew William Smith sworn 1 November 2007 a copy of which is enclosed herewith by way of service; 5. Affidavit of Matthew Webber sworn 9 November 2007 a copy of which is enclosed herewith by way of service. 6 The answer also alleged (now admittedly incorrectly) that the plaintiff's solicitors had not informed the defendants' solicitors of the timetable, so that as a result they were unaware of the deadline, and that the failure to provide the timetable was deliberately in order to induce the default. Whether any apology has been forthcoming for this grave allegation is not apparent. 7 On 14 November 2007, the plaintiff's solicitors replied: We confirm your advice that the lay evidence to be relied on by the defendants in these proceedings is limited to that evidence referred to in your facsimile dated 14 November 2007. 8 The reply continued that, on the basis that the defendants did not intend to rely on any further evidence than that already served, the failure to serve evidence to date on time would not be further pursued. However on 15 November 2007, the Aero Club's solicitors responded: We did not say that the lay evidence to be relied on by the defendants "is limited to that evidence referred to in our facsimile of 14 November 2007". In that regard we invite your attention to numbered paragraphs 1 to 5 of our facsimile of our facsimile of 14 November 2007. 9 However, reference to those paragraphs 1 to 5 of that facsimile (see [5] above) does not convey any intention or suggestion that there would be any further evidence served. 10 On 6 December 2007, HVSC's solicitors wrote that they had not been served with any expert evidence (which was due by 30 November) and sought confirmation that the defendants did not intend to adduce any expert evidence. The defendants' solicitors answered on the same day: Our clients do indeed intend adduce expert evidence in these proceedings …. We acknowledge that our client's expert evidence is late but advise that the expert engaged by our client must travel from Adelaide and will need to visit the airport at Warnervale for the purpose of preparing his report. In addition, we are instructed that he has suffered bereavement in his family. We will contact you again shortly with our expert evidence when this is available.

11 It is worth observing that there was no hint in that letter that there was to be any further lay evidence, nor of any difficulties in obtaining it. 12 On Friday, 21 December 2007, at 4.32 pm (the last business day before Christmas), the defendants served nine lay affidavits. Two of them had been sworn as early as 11 December, and three on 16 December. Why those affidavits were not served promptly after they were sworn has not been explained. A few minutes later, the defendants' solicitors advised by facsimile letter that they had commissioned an expert "whose affidavit we will serve as soon as possible", and proposed a joint conference of experts. This correspondence was received at a time when all solicitors in the plaintiff's solicitor's firm had left the office for the long vacation. On 28 December, the defendants' solicitors served by facsimile a further three affidavits. On 2 January, they served another affidavit. On 10 January, yet another affidavit (sworn on 24 December) was served.

13 HVSC's solicitor was on leave until 14 January, when the material served on and since 21 December first came to his attention. On 16 January he wrote to the defendants' solicitor, pointing out the directions and that there had been no application for an extension of time, inviting such an application but observing that it would be opposed, and adding "Our client is prejudiced to the extent that it is not in a position to deal with the evidence in the time available". The defendants' solicitors replied on 17 January, that they had been instructed to have the matter relisted at the first opportunity after the commencement of term for the purpose of seeking an extension of time. 14 By facsimile letter on 25 January 2008, the defendants' solicitors served yet another four affidavits. One had been sworn as early as 5 January and another 7 January; the third was an affidavit of the president of the Aero Club sworn 24 January, and the fourth was an expert report, on which the defendants have since indicated that they do not intend to rely. On 25 January the defendants, pursuant to the pre-trial directions, served a list of the affidavits upon which they intend to rely, which included all those that had been served out of time. On 29 January, the plaintiff's solicitors wrote, observing that the matter had not been relisted. On 30 January, the plaintiff's solicitors made contact with my associate to request that the matter be relisted to "confirm the original directions"; they were informed that there was no need to relist a matter to confirm directions already made. On 31 January, the defendants' solicitors furnished "further particulars" on the alleged aviation safety breaches, proof of which depends upon the late affidavit evidence. Eventually, on or about 1 February, the defendants' solicitors arranged to have the matter relisted, for the purposes of the present application, today 5 February 2008. 15 Save for the affidavit of Mr Hunt, each of the 16 affidavits and the expert reports served on or since 21 December make reference to an alleged incident involving the plaintiff's aircraft said to have occurred at some time since 2005. None of those incidents was specifically identified in the purported notice of termination, nor at any earlier stage of the proceedings by way of particulars, nor in the earlier affidavit evidence served by the defendants. The defendants' solicitor says that he encountered considerable difficulty in locating and proofing the witnesses (many of whom were pilots) and then obtaining their execution of affidavits. In the light of this evidence, the plaintiff's evidence to the effect that it would not be able to meet this evidence and obtain witnesses to answer it in time for a trial commencing on 11 February is entirely credible. I am amply satisfied that the late affidavits cannot be, and could not reasonably have been, met by the plaintiff in time for the trial to commence on 11 February. 16 (NSW) Civil Procedure Act 2005, s 56, commands the court to seek to give effect to the facilitation of the just quick and cheap resolution of the real issues in the proceedings in exercising any power in connection with case management and interlocutory matters. Pursuant to s 57, the objects of case management, for the purpose of furthering that overriding purpose, are 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 and all other proceedings in the court at an affordable cost. By s 58, the court, in deciding whether to make any order or direction for the management of proceedings, must seek to act in accordance with the dictates of justice, for which purpose it must have regard to the provisions of ss 56 and 57, and may have regard to other considerations - including the degree of expedition with which the respective parties have approached the proceedings, the degree to which they have been timely in their interlocutory activities, the degree to which any lack of expedition has arisen from circumstances beyond the control of the relevant party, the degree to which the respective parties have fulfilled their duties to facilitate the just, quick and cheap resolution of proceedings, the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, and such other matters as the court considers relevant. 17 Although these statutory provisions authorise the court to take into account considerations of judicial efficiency and court time, nonetheless, consistently with the decision of the High Court in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, the just determination of the proceedings remains at the forefront, although policy considerations relating to the need for maximum utilisation of the court's resources and the consequent need for orderly processing and disposal of cases, which entitle the court to insist that the parties proceed with applications and trials on the dates fixed for those purposes, are also relevant. In United Motors Retail Ltd v Australian Guarantee Corporation Ltd (1991) 58 SASR 156, King CJ said (161-2): Where there is a late application to amend which, if granted, would necessitate postponement of the trial or there is an application for the postponement of the trial whether made at or shortly before trial, the case flow management principles adopted by the court as the basis of its procedures will be an important and often the dominant consideration in considering the application. It will always be necessary for the court, however, to take all factors into account. The necessity of the amendment or postponement may arise from causes which involve no fault on the part of the applicant or its legal representatives. In such cases the need to do justice to the party will ordinarily take precedence over policy considerations. The necessity for a late amendment or a postponement of the trial may result from circumstances which are genuinely, to repeat the language of r 89(2), 'exceptional and unforeseen'. Here again the need to do justice to the party will ordinarily prevail. There are other cases in which the impact upon a party of a refusal of an amendment or an adjournment, may be so severe, particularly when considered in relation to the nature of the neglect or other conduct which has brought the situation about, that the court will feel it necessary to subordinate the policy considerations to the need to avoid such impact.

18 In Cohen v McWilliam (1995) 38 NSWLR 476, Sheller JA (with whom Priestley JA agreed), after citing that passage from the judgment of King CJ, said (at 491B): Applying King CJ's language to the present case, the question is whether the impact upon Mrs Cohen of a refusal of an amendment and the consequent adjournment is so severe, particularly when considered in relation to the nature of the neglect or other conduct which has brought the situation about, that the court will feel it necessary to subordinate the policy considerations to the need to avoid such impact. 19 In Cohen v McWilliam, Sheller JA considered that the fault was that of Mrs Cohen's former solicitors (who had failed to plead an obvious defence and who appeared to have acted on her husband's instructions without regard to her separate interests), and that while the plaintiffs would suffer the injustice of losing a hearing date through no fault of their own, with the usual consequences, if a late amendment were permitted (with the inevitable consequence of an adjournment), the proceedings had already taken nearly five years to come to trial, and there was no apparent material prejudice from some further delay. On the other hand, the potential injustice if the indulgence Mrs Cohen sought were not granted was that she might suffer judgment for $100,000 when she had a defence. The court was unattracted by the proposition that Mrs Cohen should be left to a remedy against her former solicitors, and by majority allowed her appeal from the refusal of leave to amend at first instance. 20 In the present case, therefore, the question is whether the impact upon the Aero Club of a refusal of an extension of time is so severe, when considered in relation to the nature of the neglect or other conduct which has brought the situation about, that it is necessary to subordinate the case management policy considerations to the need to avoid that impact.

21 In this case, the risk is that the Aero Club might be held to the contractual consent and compelled to continue to perform the contract (or to pay damages for its breach) when it may be able to justify its termination. To my mind, this is significantly less detrimental than Mrs Cohen's plight, particularly given that in the event of a future breach the Aero Club could (again) terminate.

22 Moreover, there is nothing in this case corresponding to the circumstance that Mrs Cohen's former solicitors had largely overlooked her interests acting on her husband's instructions. The defendants and their solicitors have not offered any explanation as to why they never informed the plaintiff's solicitors (before 21 December 2007, or subsequently) that they were preparing and intending to serve additional affidavit evidence, nor why they did not apply for leave during vacation or promptly at the commencement of term, nor why they did not serve affidavits promptly after they were sworn but sat on them for 10 and in one case 20 days, nor why the affidavit of Mr Hunt (who could not have been the subject of the difficulties to which the defendants' solicitors referred) was so late. The impression, conveyed by the defendants' solicitors' letter of 9 November, that there was no further lay affidavit evidence to be served, was never corrected; to the contrary, it was reinforced by the correspondence of 6 December, indicating that there was an expert report to come and that there were some difficulties with the expert's availability, but silent on the question of lay evidence.

23 The defendants argued that public interest considerations weighed in their favour, since the alleged aviation safety breaches involved an important matter of public interest and public safety which should not be allowed to go, as it were, by default. As the regulatory authorities - in particular the Civil Aviation Safety Authority - have ample powers in respect of aviation safety, and there is no evidence of any complaint to or action by CASA, I do not consider this a weighty consideration.

24 And regard has to be had also to the plaintiff's position, including that while presently operating from an alternative airport it has no tenure there and the operations are less profitable.

25 The effect of acceding to the defendants' application would be to require the plaintiff, relevantly without fault on its part, to meet a case at trial on what appears to be the main issue (breaches of aviation safety) in circumstances where, because of the defendants' defaults, the plaintiff cannot and could not reasonably have done so. On the other hand, the effect of declining the application would be to preclude the defendant from adducing a substantial body of evidence on the main issue in the case, which conceivably could result in the case being decided other than on the merits. 26 The plaintiff has indicated that even if the leave sought by the defendants were granted, it would wish to proceed on 11 February, because of the urgency of the matter to it. The plaintiff submitted that any deferral would be prejudicial and occasion loss and damage to it, because while it was trying to mitigate its losses and preserve its business by operating from Cessnock, those operations were not sustainable in the long term and the plaintiff could obtain no security of tenure anywhere with these proceedings pending, and the plaintiff's resources were being committed towards the proceedings rather than growing the business. Additionally, the plaintiff is of the opinion that its reputation is in jeopardy so long as it is unable to operate from Warnervale.

27 The defendants submitted that the circumstance that the plaintiff was prepared to have the matter run next week in any event - even if the late evidence were admitted - indicated that the prejudice to it was slight. I completely reject this. The circumstance that due to commercial hardship it prefers to conduct the case even under those adverse conditions in no way detracts from the prejudice occasioned by the late affidavits. Contrary to the defendants' submission, I do not regard it as any reason for granting the leave sought that even if leave is granted the plaintiff wishes to proceed next week. The circumstance that commercial necessity presses the plaintiff to retain the earliest hearing it can, even despite disadvantages, does not begin to establish that it should as a matter of justice be required to bear those disadvantages when occasioned by the defendants' default.

28 Had the matter stood there, I would have refused the defendants' the leave that they seek. In the context of the already established entitlement of the plaintiff to an expedited hearing, the responsibility of the defendants or their camp for the defaults, the magnitude and the extent of the defaults, the absence of satisfactory explanation for them, and the impossibility of the plaintiff meeting the late evidence at the trial, justice dictates that where one or other party will be prejudiced - the defendants if leave is refused, and the plaintiff if leave is granted - the defaulting defendants should be those that suffer. 29 But the matter does not stand there. The plaintiff has suggested that it would need three weeks to respond to the late affidavits. If the hearing were adjourned, to afford the plaintiff an opportunity to respond to the late affidavits, the court could hear this matter in the week commencing 31 March (a deferral of seven weeks), and (if, as appears likely, another fixture in the expedition list settles) may be able to hear it in the week commencing 10 March (a deferral of only four weeks). Although I entirely accept that any delay involves some prejudice to the plaintiff, the evidence of prejudice adduced by the plaintiff, which refers to the "long term" sustainability of operations at Cessnock, does not suggest that a deferral of that order will occasion irremediable prejudice that cannot be remedied by damages. 30 In those circumstances, despite the unacceptable and inadequately explained default of the defendants, in circumstances where it has been indicated that the plaintiff could respond to the late evidence in three weeks, where the case can still be heard speedily after that period without disruption to other matters, and where the prejudice involved in an adjournment for that short period is not disproportionately great and can be remedied by an award of damages, the balance of justice and prejudice favours, if only slightly, facilitating the hearing of the case on the merits by permitting the late evidence to be adduced and affording the plaintiff an opportunity to answer it, over insisting that the matter proceed on 11 February in circumstances which would exclude a party from adducing a substantial body of evidence on a central issue. 31 Accordingly, I granted leave to the defendants to rely at the hearing on the affidavits identified as Items 6 to 26 inclusive in the document entitled "Summary of Affidavits to be Relied on by Defendant" and being exhibit DX02, notwithstanding that they were served outside the time limited by directions previously made in the proceedings. I ordered the defendants to pay the plaintiff's costs of and incidental to the application, including the two affidavits of Mr Tallboys read on the application, on an indemnity basis. I indicated that if the plaintiff wished, I would vacate the hearing appointed to commence on 11 February and refix the matter to commence on 31 March - or, if the earlier week became available, on 10 March - and order the defendants to pay on an indemnity basis the costs of and thrown away by the adjournment. 32 The week commencing 10 March since having become available and the plaintiff having indicated that it desired an adjournment to that week, I subsequently ordered that the hearing appointed to commence before me on 11 February be vacated and that the matter be fixed for hearing before me to commence on 10 March 2008; and that the defendants pay the plaintiff's costs occasioned and thrown away by the adjournment on an indemnity basis.

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