Hussain v Haynoum Developments Pty Ltd

Court of Appeal (NSW)|2014-05-26|Before: McColl JA, Coll JA

Judgment 1McCOLL JA: Emad Hussain and Buthaina Said, the applicants, move on two notices of motion. The first was filed on 22 April 2014. Paragraph 1 seeks, "[s]ubject to paragraph 2", an order that "District Court Proceedings 2012/299804 be stayed, pending the determination of this appeal" (the "stay notice of motion"). Paragraph 2 seeks an order that the stay sought in paragraph 1 be subject to "the condition subsequent, that the Appellants file a Summons for Leave to Appeal by a date to be specified by this Court". 2On 22 April 2014, the applicants also filed a document entitled "Summons (Supervisory Jurisdiction)" (the "SJ summons") in which they sought an order that the District Court proceedings referred to in the stay notice of motion be stayed "pending the hearing of the appeal against decision [sic] of Sorby DCJ on 25 February 2014". The following appeared under the heading "Details of Decision": "1. The decision maker was Sorby DCJ. 2. The decision to be reviewed is the decision made on 25 February 2014, to vacate the hearing of the matter and grant leave to the Plaintiff to file further evidence. 3. The applicant seeks relief from the whole of the decision below". 3Under the heading "Grounds" the SJ summons stated: "1. Not Applicable. (This summons is to seek a stay of the judgment below, and not to seek leave to appeal the decision below)" 4The second notice of motion was filed on 20 May 2014 (the "amendment notice of motion"). It sought the following orders: "1. Leave be granted to the Appellant to amend the Summons, in accordance with the draft Amended summons attached and marked "A" ("Amended Summons"); 2. Pursuant to section 14 of the Civil Procedure Act, the requirement under UCPR Rule 51.12(1) that 'a person seeking leave to appeal or cross-appeal ... must file, in triplicate, a folder (the White Folder)', be dispensed with in relation to the filing of the Amended Summons; 3. Leave be granted to the Appellant to file in Court the Amended Summons." 5The proposed amended summons is entitled "Amended Summons Seeking Leave to Appeal". Leaving aside the formal parts of the document, it is entirely different to the SJ summons. It describes the application for leave to appeal as being brought under s 127(2) of the District Court Act 1973 (NSW) (the "DCA"). It also refers to the fact that the applicants filed and served a notice of intention to appeal with service of that document, service being effected on the last proposed respondents on 19 March 2014. However, notwithstanding its title and the substantive departure from the SJ summons, Mr H Stowe of Counsel, who appeared for the applicants on the application and below, explained that the order in paragraph 1 of the amendment notice of motion was sought "to transform [the] supervisory summons into a summons for leave to appeal" pursuant to s 127(2) of the DCA.

Background 6The applications concern proceedings which were commenced in the District Court of New South Wales on 26 September 2012 by the filing of a statement of claim by the respondents, Haynoum Developments Pty Ltd and Boulos Haykal. The statement of claim was served on 4 October 2012. 7To avoid confusion I shall refer to the parties by reference to their roles in this Court. Thus I shall refer to the defendants below as the "applicants" and the plaintiffs below as the "respondents", including when describing the District Court proceedings. 8The proceedings arise out of a dispute in respect of engineering services and finance the respondents provided in relation to a property development project conducted by the applicants at Telopea. The dispute was settled by a Deed of Agreement (the "Deed") executed in November 2010. The respondents seek to enforce the Deed which provides for the applicants to pay them $434,000 plus interest. The applicants deny liability and seek to have the Deed set aside on the grounds of duress and unconscionability. By way of cross-claim they also seek damages for breach of what they contend were agreements in relation to the provision of engineering services, project management services and finance. 9In August 2013 directions were made concerning the filing of evidence. The respondents were required to file and serve their evidence by 26 September 2013 and the applicants were to file and serve their evidence by 24 October 2013. Evidence in reply was to be filed and served by 7 November 2013. The matter was set down for hearing on 24 February 2014. 10The applicants had already served their main affidavit in the proceedings on 30 July 2013. On 23 December 2013 they served a further short affidavit. 11The respondents did not comply with the August 2013 timetable. However on 14 February 2014, 10 days before the date fixed for trial, they delivered two affidavits, one sworn by the second respondent and the other by a Mr Ghannoum (the "14 February affidavits") to the applicants' solicitor. The applicants advised they would not consent to that evidence being led at the trial. They foreshadowed an application to the court, in substance, to obtain an order that the respondents not be permitted to rely on any evidence in the proceedings. The respondents' solicitor's response was to point out that the parties had been trying to settle the matter to avoid the substantial legal fees which would be incurred if a trial had to be conducted. 12On 18 February 2014 the applicants filed a notice of motion in the District Court seeking an abridgement of time for service, secondly an order that the proceedings be dismissed, alternatively an order that the plaintiffs not have leave to read the 14 February affidavits or any other affidavit in the proceedings, and in the further alternative, an order that the hearing be vacated on the basis that the respondents pay the costs thrown away by the vacation on an indemnity basis. 13The notice of motion was heard by her Honour Judge Truss on 19 February 2014. On 20 February 2014 her Honour delivered judgment. There is no copy of her Honour's actual judgment in the papers. Rather, Mr Dikha, the applicants' solicitor, prepared an account of that judgment in accordance with the notes he took as it was being delivered. The parties agreed before Sorby DCJ that those notes were "generally accurate". According to Mr Dikha's notes of Truss DCJ's judgment, one of the submissions Mr Stowe made to her Honour concerning prejudice was that even if the 14 February affidavits were excluded and the Deed set aside, the plaintiffs would still secure some relief "because it is not contested that $309,000 was owed by the first and second defendants". Before me, Mr Stowe said that the applicants' admission that they owed that amount to the respondents was subject to the damages claimed in the cross-claim. 14According to Mr Dikha's notes Truss DCJ made an order in accordance with "order 2 [sic, as in original]" of the application and confirmed the hearing date on 24 February 2014". Mr Stowe and Mr P E King, who appeared for the respondents in this Court, accept that Truss DCJ did not make order 2 in the notice of motion which sought the dismissal of the proceedings but, rather, made order 3 refusing leave to the respondents to read the 14 February affidavits. 15The trial was called on before his Honour Judge Sorby on 24 February 2014. The respondents made three applications. First, to allow their evidence to be by way of the 14 February affidavits. Secondly, to allow oral evidence from two witnesses they had subpoenaed, a Mr Abbas and Mr Alqadoumi. Thirdly, the "principal application", as his Honour described it, was to vacate the trial date. The applicants opposed all applications. Sorby DCJ heard argument on the matter on 24 February and delivered his judgment the following day: Haynoum Developments Pty Ltd & Anor v Hussain & Anor (District Court (NSW), 25 February 2014, unrep). 16His Honour set out by way of the background the gist of the proceedings before Truss DCJ. He noted that her Honour had considered the prejudice and injustice to the parties, observing that these were matters which Mr Stowe had "focussed upon when opposing the application to vacate". His Honour then referred to s 58 of the Civil Procedure Act 2005 (NSW) (the "CPA"), emphasising when extracting s 58(1) the requirement that when deciding whether to grant an adjournment "the court must seek to act in accordance with the dictates of justice": s 58(1)(a)(ii). His Honour also emphasised when extracting s 58(2) (which deals with how to determine what "the dictates of justice" are in any particular case), the discretionary consideration of "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). 17Next, his Honour referred (at [11]) to the fundamental requirement that a court considering the dictates of justice must have regard to whether "the particular circumstances require that a party should be deprived of a judicial determination of the merits of their position in the proceedings", citing Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230. His Honour then said: "[12] ... When a case comes before the trial Judge for hearing, case management, as set out in the Act and Rules is concluded. The role of the Judge is to conduct the trial, including making orders as to the evidence to be called, if called upon to do so." 18His Honour then considered Mr Stowe's submission in effect as to lack of prejudice to the respondents which proceeded on the unstated but implicit premise that if the respondents' application to rely upon the 14 February affidavits was rejected, nevertheless, the Deed would be before the Court and, too, that the respondents could cross-examine the applicants' witnesses on their affidavits. His Honour viewed (at [14]) the consequence of that submission as meaning that he would be asked to "administer justice between the parties on [a] limited basis" and (at [15]), that the respondents would be unable to lead any evidence to defend the allegations in the cross-claim of duress, unlawful conduct, unconscionable conduct, unlawful and undue pressure and failure to act in good faith by the second respondent and a Mr Haynoum who, I infer, is a principal of the first respondent. 19Mr Stowe did not criticise his Honour's description of the allegations made in the cross-claim. As his Honour said (at [16]), these were "serious allegations". He concluded that "[t]o deprive the Plaintiffs of the opportunity to deny these allegations and offer rebuttal would, in my view, constitute an injustice to them." He added (at [17]) that on the applicants' approach, the respondents would be "running their case and defending the Cross-Claim with one hand tied behind their back [sic]." 20Accordingly, his Honour determined (at [18]) that justice dictated that the application to vacate the trial be granted. However, he ordered the respondents to pay the applicants' costs thrown away on an ordinary basis from 4 October 2012 until 15 August 2013 and on an indemnity basis from that date until the date of his judgment. His Honour stayed the costs order until the conclusion of the proceedings. The effect of that order was that the applicants' costs were to be paid from the date the statement of claim was served until 25 February 2014. 21Sorby DCJ also gave the respondents leave to file a notice of motion seeking leave to call oral evidence from any witness. He directed the parties to draft further consent orders to be presented to the Registrar for further directions, such order to include the serving of further affidavits and any affidavits in reply. 22On 6 March 2014 the applicants served on the respondents a draft copy of a notice of intention to appeal from Sorby DCJ's order, a draft summons seeking leave to appeal and a draft notice of appeal. 23The matter came before Truss DCJ again on 7 March 2014 on which occasion, according to the respondents' chronology (which Mr Stowe accepted was accurate), her Honour gave directions for the progress of the matter, including the service of evidence. Her Honour also listed the matter for pre-trial directions on 17 April 2014 before the list judge in order for a hearing date to be set. 24On 19 March 2014 the applicants filed and served a notice of intention to appeal. On the same day they also filed a motion in the District Court seeking a stay. That motion came before Sorby DCJ for hearing, however, according to the applicants' submissions, his Honour declined to entertain it on the grounds that it was his general practice not to entertain such motions in respect of his own judgments when they were the subject of appeal but, rather, it was his practice to let the Court of Appeal "entertain such motions". 25The respondents served their evidence in the District Court in accordance with the 7 March timetable. The applicants were required by that timetable to serve any further evidence by 4 April 2014 but did not do so. On 1 May 2014 Sorby DCJ suspended the timetable and stood the matter over before him to 10 June 2014.

Procedural route to this Court 26At this stage it is necessary to say something about the reasons for what Mr Stowe himself described as the "slightly tortured" procedural route the applicants have taken in this Court. This, in short, has been driven by the applicants' desire to avoid incurring costs. Mr Dikha in his affidavit of 4 April 2014 explained that while the applicants had filed the notice of intention to appeal and had prepared a draft notice of appeal and a draft summons for leave to appeal, the latter had not been served. The decision as to whether to do so was, in effect, said to be dependant upon whether or not a stay of the District Court proceedings was granted. If that stay was granted, Mr Dikha deposed, then the applicants would institute and prosecute the appeal. However if it was not granted the applicants were uncertain as to what steps they would then take. This was because they did not consider they had sufficient finances both to conduct the appeal and to prepare for the adjourned trial. Accordingly, if the stay was not granted the applicants contemplated they might need to consider abandoning the appeal. 27In an earlier affidavit of 19 March 2014 Mr Dikha estimated the costs of complying with the 7 March timetable to serve further affidavit evidence and the costs of the appeal. He said that when he communicated the projected costs to his clients they explained their exiguous financial circumstances in detail it is unnecessary to recount. Mr Dikha said his clients would experience "significant financial strain if they are required to prepare their further evidence in reply to the late evidence served by the plaintiffs and make payment associated with proceeding with the appeal". 28As is apparent, no substantive relief was sought in the SJ summons. Mr Stowe explained that the reason for that approach and for the failure to file a summons seeking leave to appeal pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") 51.44 consequent upon the filing of the notice of intention to appeal was that if the latter course was taken, the applicants would have incurred the expense of having to prepare White Folders: UCPR 51.12. As Mr King pointed out, a similar obligation applies when a summons commencing proceedings in the supervisory jurisdiction is filed: UCPR 51.45(3). The applicants did not comply with that obligation. 29The stay notice of motion was listed for directions before the Court of Appeal Registrar on 12 May 2014. On the same day the respondents' solicitors wrote to the applicants' solicitors referring to discussions between the Court and the applicants' counsel and advised that it was their contention that the proceedings as commenced were incompetent - the letter referred to UCPR 51.44. The letter invited the applicants to discontinue, failing which the letter said it would be relied upon on the question of costs including an order for indemnity costs. 30The matter was adjourned on the applicants' application. It was relisted again on 19 May 2014 and, again, adjourned on the applicants' application in order for them to amend. On 20 May 2014 the applicants filed the amendment notice of motion. Mr Stowe explained that that course was taken, rather than simply filing a summons seeking leave to appeal, in an attempt to avoid having to pay the filing fees consequent upon taking the latter course.

Submissions 31Mr Stowe submitted that the case warranted a grant of leave to appeal and that the prospects of success on appeal were high because there was a strong basis for arguing that Sorby DCJ both erred in the statement he made in [12] and in failing to apply appropriately case management principles. In particular, Mr Stowe contended that his Honour failed to place any, or any sufficient, weight on the strategic implications from which the applicants had benefited as a result of Truss DCJ's ruling which had the effect of limiting the duration of the trial and afforded them an obvious forensic advantage in that they could prosecute their cross-claim without any opposing evidence. 32As I have outlined, Mr Stowe explained that the procedural route the application had taken with the initial filing of the SJ summons was intended to minimise the costs and that, if the applicants were unsuccessful in their application to, in effect, "transform" the SJ summons into a summons seeking leave to appeal, they would file such a document in Court. Indeed, after hearing Mr King's submissions and before I ruled on the amendment notice of motion, Mr Stowe sought in reply to file such a summons in court and proffered an undertaking from his instructing solicitor to pay the filing fee. 33Insofar as the amendment notice of motion sought an order dispensing with the filing of the White Folder, Mr Stowe said that that dispensation was, again, costs driven and was only sought insofar as it was an obligation which had to be complied with at the time a summons seeking leave to appeal was filed. He emphasised that a White Folder was not necessary when the stay application was sought and that if the stay was refused and the applicants determined not to proceed with their application for the leave to appeal, the costs of preparing the White Folder would be wasted. 34As to the substantive stay application, Mr Stowe submitted, that the applicants had good prospects of persuading the Court of Appeal to grant leave to appeal and of success on appeal because Sorby DCJ erroneous held that "case management as set out in the Act and Rules is concluded" when a case comes before a trial judge. He also submitted that a grant of leave would be warranted because his Honour erred in failing to take into account a number of relevant considerations including the respondents' failure to provide any explanation for the delay in their service of the 14 February affidavits, that prejudice to the applicants could not be adequately remedied by costs and, too, the fact that there had been no material change of circumstances since Truss DCJ's orders. He also contended that the proposed appeal related to questions of general public importance concerning the scope of the application of case management principles and whether they applied to the conduct of a final trial or were limited to introductory procedures and, too, to public policy principles which weighed against the re-agitation of interlocutory applications and in favour of the finality of the determination at an interlocutory level. 35Accordingly, Mr Stowe contended that it would be open to the Court to revoke the leave Sorby DCJ granted to the respondents to file further evidence. 36As to the balance of convenience, Mr Stowe submitted that if a stay was not granted there was a significant risk the appeal would be stultified having regard to the applicants' financial inability both to prosecute the appeal and, at the same time, prepare further evidence for trial. Secondly, he argued that if the appeal did proceed without a stay there was a substantial risk that the parties might expend substantial legal costs in preparing for the trial which could be of five days or greater duration, all of which costs would be wasted if the applicants were ultimately likely to succeed on appeal. 37Next, Mr Stowe submitted that there was no strong countervailing consideration weighing against a stay in the sense that there was no basis to infer that there was any particular urgency in the conduct of the trial below, nor that the conduct of the appeal would cause significant delays and that even if there was prejudice to the respondents arising from any delay such prejudice should not weigh significantly in the discretionary balance because the trial date was vacated because of their default. 38Mr King's primary submission was that the Court should not accede to any of the applications as each was futile as the applicants had not filed any originating process: UCPR 51.44. However once Mr Stowe sought, albeit in reply, to file in Court a summons seeking leave to appeal, Mr King accepted that as the three months limited for the filing of such a document (UCPR 51.9(1)(a)) expired on Sunday 25 May 2014, by virtue of the operation of the "weekend rule" (UCPR 1.11(4)), that summons could be filed before me on Monday 26 May 2014. 39Next, Mr King emphasised that the proposed appeal was from an interlocutory judgment on a matter of practice and procedure (as to which a high threshold had to be surmounted to attract leave to appeal) which, he argued, was without error but, rather, demonstrated reasoning which was entirely correct. 40Mr King also submitted that, despite what Sorby DCJ said (at [12]), his Honour had, in fact, appropriately applied case management principles. His Honour had referred to those principles at the outset of his reasons and had emphasised when referring to s 58 of the CPA, the obligation placed upon the court, which he submitted his Honour's reasons discharged, to act in accordance with the dictates of justice. In such circumstances, Mr King submitted the applicants could not satisfy the high threshold required to be satisfied on an application for a stay of proceedings pending an application to challenge a decision on a matter of practice and procedure. Mr King also argued that Sorby DCJ had not made a direction permitting the applicants to rely upon further evidence but had merely vacated the trial date and that it was Truss DCJ who had permitted the further evidence to be filed when her Honour gave directions on 7 March 2014 - directions which were not the subject of any application for leave to appeal. 41Finally, Mr King submitted that the applicants had not demonstrated that they would suffer prejudice or damage if a stay was not granted which could not be redressed by a successful appeal. 42There was little elaboration from either party as to the nature of the evidence upon which the respondents sought to rely in their 14 February affidavits, although Mr Stowe did accept that it went substantially to defending the applicants' cross-claim. As much might be inferred from Sorby DCJ's reasons.

Competence of the stay application 43The power of this Court to grant a stay of proceedings in a court over which it exercises supervisory jurisdiction pending appeal is incidental to the existence of a right of appeal to the court and derives from the inherent power of the court, (reinforced by s 23 of the Supreme Court Act 1970 (NSW) (the "SCA")), to do whatever "may be necessary to prevent any injustice occurring with respect to matters which come within its cognizance: Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285 (at 287) per McLelland J, referring to Ex parte Farren; Re Austin (1960) 77 WN (NSW) 743 (at 744) (Macfarlan J). 44The power to grant a stay pending appeal also finds expression in UCPR 51.44(1) providing that "[s]ubject to the filing of a relevant originating process, the Court may order that the decision below or the proceedings under the decision be stayed". 45The applicants did not file any competent originating process when they filed the SJ summons and the stay motion on 22 April 2014. They had not, therefore, filed any process to which the Court's incidental power to grant a stay could attach. Mr Stowe did not suggest that the SJ summons could be described as originating process, no doubt because its intent, as appears from the entry under the heading "Grounds" was to seek a stay only, rather than to seek any relief or a remedy afforded under the Court's supervisory jurisdiction: see ss 65 - 69, SCA. Rather, the intention of filing the document in that form was to avoid incurring the costs which would be incurred by having to prepare the White Folder to be filed contemporaneously with the filing of the Summons seeking Leave to Appeal. 46When it became apparent that that "strategy" was futile, as the respondents contended, the applicants filed the amendment motion yet again in an attempt to avoid incurring further fees. It is unnecessary to determine the aspect of the amendment motion that sought to "transform" the SJ summons into an "Amended Summons seeking Leave to Appeal", because Mr Stowe effectively abandoned that application by finally filing a summons seeking leave to appeal in Court. Although that document was filed late on the day of the application for a stay, it was filed within the time limited by UCPR 51.9(1)(a); see also UCPR 51.10. Accordingly I am satisfied that I have jurisdiction to entertain the application for a stay. 47However the reasons underlying the adoption of the SJ summons route do heighten, as I said to Mr Stowe in the course of argument, the necessity for parties and their legal representatives to ensure their compliance with the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings (s 56, CPA) and, too, ensuring the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute: s 60, CPA. I return to this issue below. 48Once Mr Stowe filed the summons seeking leave to appeal in Court, Mr King did not advance any argument as to why I should not make the dispensation order sought in the amendment notice of motion. In my view, having regard to the constrained financial circumstances of the applicants it is appropriate to do so at this time. Should the applicants determine to pursue their application for leave to appeal, the White Folder will have to be filed within a time the Registrar should determine. As the dispensation order is an indulgence granted by the Court, the respondents should not have to bear any costs associated either with it or the abandoned attempt to "transform" the SJ summons.

Consideration 49The primary judge's decision was an interlocutory one concerning the application of his discretion on a matter of practice and procedure. Such a decision required leave to appeal (s 127(2), DCA) and can only be challenged on the grounds identified in House v The King [1936] HCA 40; (1936) 55 CLR 499 (at 504 - 5); see also Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 (at [45]) per Heydon JA (Sheller JA and Studdert AJA agreeing). 50There is an anterior practical constraint on this Court entertaining appeals from decisions of the nature of that which the applicants seek to challenge, that is to say, an interlocutory decision on a matter of practice and procedure. In In re the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 (at 323) Jordan CJ stated that a "tight rein" had to be kept on interference in an exercise of discretion on a point of practice or procedure or otherwise the "disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant ... could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal." In Partnership Pacific Ltd v Killen (Court of Appeal (NSW), 10 April 1979, unrep) the Court of Appeal (Moffitt P, Reynolds and Hutley JJA) disapproved of attempts to litigate on appeal first instance intermediate decisions having the effect that "the proceedings at first instance [are] delayed while these distracting diversions are indulged in." 51In Nikolaidis v Legal Services Commissioner [2005] NSWCA 91 (at [18]), Bryson JA observed that: "Judicial decisions relating to the enforcement of judgments which are under appeal cannot be readily applied to an interlocutory stay of proceedings, but in principle the inherent power of the court extends to appeals in interlocutory proceedings. The power exists because it is necessary for the administration of justice, and it is to be exercised where it is necessary to exercise it. The power to order a stay is discretionary and such an intervention should not take place lightly. The outcome which is likely if there is no stay must be so adverse and severe that the attainment of justice requires interlocutory intervention. It must be shown that it is likely that there will be some adverse consequence of allowing the proceedings under challenge to continue and that the outcome will be so difficult to remedy, or otherwise so adversely severe in its impact, that intervention by the Court of Appeal should take place notwithstanding that there has not been an opportunity for full consideration." (Emphasis added) See also Rockdale Beef Pty Ltd v Industrial Relations Commission [2005] NSWCA 369 per Hodgson JA (at [12]). 52In Nikolaidis, Bryson JA declined an application for a stay sought in relation to proceedings in the Administrative Decisions Tribunal although he accepted (at [15]) that the applicant had a reasonably arguable case for a grant of leave to appeal despite the Court of Appeal's "strong general disposition against interventions at interlocutory stages" because (at [20]) it was "quite important in the ordinary course the ordinary functioning of ADT should be allowed to proceed". 53More recently, Macfarlan JA (Ward JA and Tobias AJA agreeing) observed in Cornelius v Global Medical Solutions Australia Pty Ltd [2014] NSWCA 65; (2014) 98 ACSR 301(at [21]): " ...For good reason, leave to appeal against interlocutory decisions is required (Supreme Court Act 1970, s 101(2)(e)). Appellate courts are reluctant to intervene in relation to decisions made prior to the termination of proceedings at first instance. It is not usually conducive to the 'just, quick and cheap resolution of the real issues' in proceedings for that to occur (Civil Procedure Act 2005, s 56(1); In re the Will of F B Gilbert (1946) 46 SR (NSW) 318 at 323; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177). As a result, an applicant for leave to appeal in such a matter will normally be required to establish at least a clear case of material error in the decision at first instance in order to obtain leave to appeal." (Emphasis added) 54Leeming JA considered the difficulties faced by a party seeking to challenge an interlocutory decision of practice and procedure, and obtain a stay in support of that challenge, in Thomson v Young [2013] NSWCA 300 (at [6] ff). In that case an application was made for a stay of proceedings in the District Court pending the determination of the summons for leave to appeal seeking to challenge a trial judge's rejection of an application to amend a defence. His Honour observed that "a special case - must be made out" to warrant this court's interference, referring to Symonds v Egan National Valuers (NSW) Pty Ltd (Court of Appeal (NSW), 26 February 1996, unrep) per Mahoney P (Priestley and Handley JJA agreeing). 55Leeming JA opined (at [13]) that the effect of these authorities was to demonstrate the "high threshold required to be satisfied on an application" for a stay of proceedings pending an application to challenge a decision on a matter of practice and procedure. He concluded (at [13]) that he should not grant a stay because, in substance, the applicant had not persuaded him the case was one warranting "the exercise of an exceptional jurisdiction by this Court". 56With those observations in mind, I turn to the stay notice of motion. 57In my view the applicants have not demonstrated a clear case of material error (Cornelius) or an outcome so adverse that justice necessitates interlocutory intervention: Nikolaidis; Rockdale. 58Sorby DCJ's statement in [12] that "when a case comes before the trial Judge for hearing, case management, as set out in the Act and Rules is concluded" taken at face value is clearly wrong if his Honour was intending to say that such principles whether generally or as expressed in the CPA did not apply to the application he was considering. 59Sections 56 - 60 of the CPA expressly apply whenever a court is exercising any power given to it by the CPA or by rules of court, all of which deal with matters of practice and procedure. Sorby DCJ was being asked to grant an adjournment as contemplated by s 66(1) of the CPA. 60However, despite his Honour's statement (at [12]), it is apparent, in my view, that his Honour considered the adjournment application in accordance with s 58 of the CPA and, in particular, the obligation to act in accordance with the dictates of justice. The latter obligation pervades Part 6, Division 1 of the CPA in which ss 56 - 60 of the CPA are found. Thus, for the purpose of furthering the overriding purpose referred to in s 56(1), proceedings in any court are to be managed having regard, inter alia, to the just determination of the proceedings: s 57(1)(a), CPA. I note, furthermore, the requirement in s 62 (Part 6, Division 2) of the CPA, that a court giving directions as to the conduct of any hearing must not detract from the principle that each party is entitled to a fair hearing, and must be given a reasonable opportunity, inter alia, to lead evidence. 61Section 62 clearly informs the overriding purpose of, inter alia, the just determination of the proceedings, a matter emphasised in Hans Pet Constructions Pty Ltd v Cassar (at [43] ff) per Allsop P (Campbell and Young JJA agreeing). As Allsop P explained (at [46]) the powers conferred by the CPA are "not intended to be used to punish the litigant" and "[t]he proportional use of the powers in s 61 is brought about by giving the fundamental weight to the (sometimes competing) considerations in ss 56 and 57 required by s 58(2)(a) and bringing to bear such of the matters set out in s 58(2)(b) as the Tribunal thinks appropriate". 62I accept that Sorby DCJ did not refer expressly to the prejudice the applicants might suffer if he acceded to the respondents' application. He did however refer to Hans Pet and, I infer, followed its instruction about the proportional use of his powers. Accordingly, he ameliorated the practical prejudice, at least, to the applicants to some extent by his costs order. While, again, it is the case that the adjournment application was not to be considered solely by reference to whether any prejudice to the applicants could be compensated by costs (Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 (at [5]) per French CJ (Gummow, Hayne, Crennan, Kiefel and Bell JJ substantively agreeing (at [116])), that costs order was appropriate once his Honour had determined that the interests of justice were such that he should accede to the respondents' application. 63Insofar as the substantive prejudice of the applicants' loss of their forensic advantage is concerned his Honour clearly rejected the applicants' submissions in this respect as leading to an unjust outcome. In my view the applicants will have little prospect of persuading this Court that it was a material error for his Honour to conclude that, in effect, a fair trial could not be conducted if the respondents could not call evidence to defend the serious allegations made in the cross claim - particularly when that was the vehicle by which the applicants sought to resist their admitted liability of some $309, 000 64Insofar as Sorby DCJ departed from the course Truss DCJ had taken, it is not apparent, with respect, that the significance of the allegations in the cross-claim was brought home to her Honour. If they were, as much is not apparent from the notes of her Honour's reasons. Moreover it is clear on the case as presented to Sorby DCJ that his Honour was of the view that to apply case management principles in the manner for which the applicants contended would turn those principles into an instrument of punishment, contrary to the instruction in Hans Pet. Making a discretionary decision of that nature was a matter on which reasonable minds might differ. In my view it could not be said that his Honour's exercise of his discretion was so manifestly in error in a House v King sense that this Court would arguably intervene. 65Further, there is an air of unreality in the applicants' contention as to the forensic prejudice they will suffer if a stay is not granted. Vacating the trial date was one of the alternative orders the applicants sought before Truss DCJ on 19 February 2014. They clearly recognised that an adjournment to allow the respondents to get their house in order was an available option and that they would have to fight a trial in which the respondents were able to call evidence. 66The applicants have not persuaded me that it is in the interests of justice further to delay the trial of the matter by staying the proceedings in the District Court. Rather, that trial should be allowed to take its course to facilitate the "just, quick and cheap resolution of the real issues" in the proceedings and not be interrupted by "distracting diversions". If the matter was to come down to the balance of convenience that factor too, in my view, would favour that course especially having regard to the applicants' straitened financial circumstances. Refusing a stay fulfils the obligation of implementing the practice and procedure of the court with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute: s 60, CPA. 67Finally, I would make a brief observation on the premise that Mr Stowe's contention that the reason Sorby DCJ declined to entertain the applicants' stay application was because of his practice that such applications should be made in this Court is correct. Adoption of such a practice is not, with respect, an appropriate course. Indeed, an application for a stay should first be made in the court in which the matter is pending and which is familiar with the matter: Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [1986] HCA 84; (1986) 161 CLR 681 (at 684) per Brennan J; see also Frith v Sipple (Court of Appeal (NSW), 11 September 1978, unrep) per Moffitt P, Hutley JA agreeing.

Orders 68I make the following orders: (1)Give the applicants leave to file the summons seeking leave to appeal in the form handed to the Court by Mr Stowe on 26 May 2014, such filing to be taken to have been validly effected on that date. (2)Direct the applicants to pay the filing fee for that originating process in accordance with Clause 4, Schedule 1 of the Civil Procedure Regulation 2012 (NSW) on or before 3 June 2014. (3)Dispense with the requirement in UCPR 51.12 that the White Folder be filed contemporaneously with the filing of the summons seeking leave to appeal. (4)Dismiss the application for the stay with costs, such costs to include the costs associated with the filing of the SJ summons. (5)Dismiss the amendment notice of motion with costs. (6)Stand the matter into the Registrar's list on Wednesday 4 June 2014 for directions as to the filing of the White Folder and the respondents' response.

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: 30 May 2014

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