Irwin v Pamplin

Supreme Court of NSW|2021-08-12|Before: Parker J

Judgment - EX TEMPORE Revised from transcript; issued 20 August 2021 12 August 2021:

Before the Court is an application under r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"). The plaintiff seeks to have certain of the prayers of relief claimed in her statement of claim deferred until all issues have been dealt with, including all issues of liability. This course is opposed by the defendants.
The application arises in circumstances where I have been, in effect, case-managing the proceedings since they were first referred to me last year to deal with an application for discovery which came out of the Applications List. Over that time, other procedural issues have arisen, including an application for interlocutory injunctions which I dealt with in March: Irwin v Pamplin [2021] NSWSC 208.
On 27 July, at a case-management hearing, counsel for the plaintiff proposed short minutes of order which included an order under UCPR, r 28.2, similar in terms to the order now sought. Counsel for the defendants indicated that he wished to obtain further instructions with a view, if possible, to seeing whether agreement could be reached between the parties on the identification of suitable issues or claims for relief for separate determination. But counsel made it clear that there was no certainty that he would obtain instructions to agree to any particular order for preliminary hearing, and in those circumstances, I made directions that if the parties could not agree, the plaintiff was to file a notice of motion returnable today.
The parties proved unable to agree, and the plaintiff's notice of motion was filed yesterday together with an affidavit in support which is essentially formal. Overnight, counsel for the defendants sent to the Court written submissions in opposition to the orders sought in the plaintiff's application. Counsel's contention was that the motion should be dismissed with costs.
The application had been formally made returnable before me today for directions, but the receipt of counsel's submissions appeared to confirm that I would deal with the application today. This was reinforced by my perception that the case-management process is taking too long. Delay is something which counsel for the defendants has complained about on several occasions before now, and, as will be seen, featured in counsel's submissions in opposition to the application.

Recusal

Counsel referred to remarks that I had made at the previous hearing which suggested that, in counsel's language, the application was one that I had "effectively sponsored". The suggestion was that a fair minded observer might consider that I had already made up my mind on the application. In those circumstances, counsel asked me to refer the application to the Registrar so that it could then be referred to another judge.
I asked counsel to develop his contention in more detail, but he replied that he did not currently have access to the transcript of the previous hearing. Although counsel did not say so in so many words, I understood that I was, in effect, being invited to defer dealing with the recusal application until the transcript could be obtained.
In a procedural context such as the present, an application for an adjournment of the recusal application, which itself was made informally, has minimal attraction. I find it hard to see why, if the remarks that I made at the hearing on 27 July gave rise to some difficulty or embarrassment in my dealing with the plaintiff's notice of motion, that point should not have been identified at the hearing itself, thus avoiding the delay which counsel for the defendants now asks me to impose on the conduct of the proceedings by referring the separate hearing application to the Registrar.
Furthermore, once counsel had decided to make an application for recusal, I think it was incumbent upon him to pursue the application immediately. For these reasons, I declined to adjourn my consideration of the recusal application and proceeded to deal with it on its merits.
Traditionally, the rule requiring a judge to recuse himself or herself as a result of apparent pre-determination refers to prior determinations of an issue of fact or law arising in the proceedings: Livesey v NSW Bar Association (1983) 151 CLR 288 at 300. The doctrine is concerned with a fair trial, and in that context, references to issues of fact or law have traditionally been understood as references to issues which determine the substantive rights of the parties to the proceedings; that is, issues of fact or law to be determined at trial. Thus, in British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 it was held that an interlocutory ruling against the defendant required the judge to recuse himself from a later hearing, but the later hearing was a hearing of the plaintiff's substantive case at trial, and the reason why recusal was required was because the interlocutory ruling dealt with an issue which arose substantively at trial.
The context for the present application is quite different. It is entirely interlocutory. The "issue" which it is suggested that I may have apparently pre-determined is not one which will have any impact on the substantive rights of the parties. There is no reason to think that I will necessarily even be the trial judge in these proceedings. In these circumstances, it is hard to see how the rule against pre-determination can have any application.
Moreover, case-management is an area of litigation where, more than in any other area, the judge is expected to take an active role. It would be quite inimical to the efficient conduct of case-management proceedings if a judge who had expressed a preliminary view, even in the strongest terms, about the way in which the case should be conducted, could then be required not to entertain any further case-management application, so that another judge would be required to familiarise himself or herself with the matter for the purpose of later applications.
For these reasons, I considered that there was no reason for me to recuse myself from the hearing of the present application. In the course of today's hearing, I read the transcript of the hearing on 27 July (which was on the Court file, although the parties did not have access to it) and it seems to me that all I was really doing in the passage to which counsel has drawn attention, was making comments on the way in which, if the parties were able to agree, orders for a separate hearing might be formulated.
I do not think that a reasonable observer would think that I had closed my mind to counsel's eventual submissions, if he ultimately found himself opposing the making of any order for a separate hearing at all. But for reasons which I have given, even if the transcript did display a more settled attitude to that question, I still do not think that the rule against pre-determination would have required me to recuse myself.

Application for separate hearing

This brings me to the merits of the application. I have set out the background to the plaintiff's claim and the procedural history in my March judgment (at [2]-[22]) and will not repeat it here. For present purposes, it is enough to say that the plaintiff's principal claim is that the first defendant, by her arrangements with her sons, constituted herself as a trustee of the properties and businesses identified in the statement of claim, or alternatively, that the effect of the arrangements between the individuals was to constitute the corporate defendants as trustees. The plaintiff seeks declarations to this effect followed by an account and orders for the transfer of property identified as being held on trust for the estate of which she is administrator. Alternatively, the plaintiff contends that the arrangements in question amounted to a contract and claims damages for breach.
The plaintiff's motion seeks an order that her entitlement to certain relief in the statement of claim, and two other questions, be determined separately and in advance of the other matters pleaded. The other two questions are: (1) whether the first defendant held specified assets on trust for the deceased; and (2) whether the first defendant should give an account of her dealings with the assets in question and benefits derived therefrom and, if so, on what basis and on what terms.
Although cast in the form of an order for preliminary determination, as a matter of substance what the motion really seeks to do is to have certain of the prayers for relief deferred. These are the orders for the defendants to account to the plaintiff for the assets the subject of the claim (to the extent successful); the orders for transfer of trust property; and the claims for what are described as "equitable damages", compensation, accounts of profits or damages for breach of contract.
As will be seen, in so far as the orders seek the deferral of an account, they may not, strictly speaking, be necessary. As I understand it (and this is reinforced by the form of the order sought in the notice of motion), when the court is asked to order an account, the usual course is to determine at the hearing only whether the plaintiff is entitled to an account, leaving the process of taking the account to be undertaken later. On one view, no order for separate hearing is necessary to defer that process, but it is not necessary to go into that point in any more detail in order to dispose of the application.
The parties agree that in deciding whether or not to make an order for separate hearing, the Court is obliged to take whichever course appears best calculated to achieve the overriding purpose specified in s 56 of the Civil Procedure Act 2005 (NSW) ("CPA"), namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Counsel for the plaintiff submitted that a hearing on "liability", with the remedial consequences in terms of an account or quantification of other pecuniary remedies being dealt with later to the extent that they arise, is the preferable way to do so. If the plaintiff fails in her central allegation that the first defendant agreed to hold her sons' assets for them, no further financial enquiry (which would no doubt be extensive) will be required at all. If she succeeds only with respect to some of the assets the subject of the proceedings, the scope of the further enquiry will be correspondingly lessened.
Counsel for the defendants reminded me of the well-known statements at appellate level that the court needs to be wary of making orders for separate determination. Counsel instanced the comments of Kirby and Callinan JJ in Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at 55 [168]-[170]. The pitfalls of a separate hearing are well-known but the question is one very much of practical judgment which depends upon the circumstances. Different types of claims and different types of proposed separation orders differ in the benefits which they may secure and the risks of ultimate delay and duplication which they may cause.
Counsel for the defendants observed that it has been frequently said that the court's general practice is to deal with all issues at the same time. Certainly in most claims which come before the court that is so. It is especially the case where damage is the gist of the cause of action. In contract it is the breach which is the gist of the action and therefore the determination of breach by the court, with quantification of damages to be dealt with afterwards, is more common. But it is still true to say that the court assumes that damage will be dealt with at the same time as liability and if a plaintiff (or a defendant) wishes to have damages separately determined, the onus is on that party to make such an application well in advance of the trial.
But where an account is sought, different considerations arise. An account is a specialised procedure. It involves, first, the provision of a written statement of account by the accounting party, followed by the notification of surcharges and falsifications. That may be preceded by a process of vouching, or some other type of disclosure by the accounting party, so that the party to whom the account is provided can make a decision about which items in the statement to challenge.
Once ordered, an account thus has its own individualised procedures for identifying the specific items in dispute and hence the specific issues which need to be determined. The process is usually a much more fine-grained one than the process of joining issue on pleadings.
In these circumstances, I think it is fair to say that the usual practice where an account is sought is that the court decides at the hearing whether an account should be ordered (and the scope of the account), and the account is then undertaken separately at a later point. Certainly that is my experience. All the plaintiff has to do in such a case is to seek the account in the prayers for relief; no application for an order that the account be undertaken separately is necessary.
As counsel for the defendants pointed out, the court is given, under UCPR, r 46.2, wide powers as to how an account may be conducted. It may be conducted summarily and it is certainly open to the court, in a simple case, to conduct the account at the same time as dealing with the liability issues which arise. But that is far removed from the present case.
The plaintiff's claim depends upon establishing the existence of agreements and arrangements between the deceased and her sons which, on the plaintiff's case, were first made in about 2002 and which were then continued by the parties up until the death of the plaintiff's de facto husband in 2013. No doubt the factual canvas will be extensive but on any view the scope of enquiry, should an account be ordered or should damages need to be assessed, will be much wider still.
In many cases an objection to a separate hearing is that there will be overlapping factual issues, including issues about the credibility of witnesses, which are common to both of the hearings. It was not suggested by counsel for the defendants that this was an objection to the current application, and for good reason. It is simply too early to identify what factual issues, if any, will arise if the plaintiff is successful in obtaining orders for an account or for the assessment of damages.
Many of the warnings in the authorities about the pitfalls of separate hearings are directed to proposals which involve the separate determination of issues which it is said, should it be resolved one way, will determine the proceedings as a whole. Thus the Court may be asked to determine whether a particular element of the plaintiff's cause of action has been established or a defence put forward by the defendant is sustained.
In such cases, the risk of ordering a preliminary hearing on supposedly decisive questions, especially if they involve issues of fact, is that the parties may, upon the questions being determined, find that they are not so decisive as had been thought. But in the present case, where the plaintiff accepts that all liability issues will be determined at the hearing, and all that is being deferred is the form of relief, such a risk is much reduced, if not eliminated.
I have said that the usual course is for an account to be undertaken separately and after the determination of whether the plaintiff is entitled to one and no order for a deferred hearing is necessary. In a claim of breach of contract with damages resulting, the usual practice is to the contrary. But where, as here, damages are sought as an alternative to an account there is good reason to depart from the usual practice and defer the assessment of damages.
Counsel for the defendants made two other points. First, he referred me to CPA, s 58(2)(b), and in particular, sub-paragraph (ii). That enactment enables me to take into account, to the extent that I consider it relevant, the degree of expedition with which the respective parties approached the proceedings, and in particular the degree to which they have been timely in their interlocutory activities.
Counsel observed what I described in my earlier judgment as the "campaign of litigation" which began in 2013 or 2014, with the earlier proceedings concerning who should be the deceased's legal personal representative. Counsel pointed out that the first defendant is 74 years old and was entitled to have claims against her determined as quickly as possible. Counsel suggested that in the event of a separate hearing, the proceedings might not be fully determined for several years yet. Counsel also submitted that the plaintiff had been responsible for many of the delays which have attended the proceedings.
I accept that delay may, in some cases, be relevant to an application of this sort but, if relevant at all, it can hardly be determinative. In entertaining an application of the present type, the court is looking to the future of the litigation and seeking to achieve the best possible balance between justice, speed and expense for the resolution of the proceedings from this point. To spend time debating the rights and wrongs of what has happened up until now is likely to be an unprofitable diversion which, by distracting attention from the important objective, would itself be contrary to the achievement of the overriding purpose enshrined in s 56. Certainly I do not think that anything is to be gained in the present case by my investigating the procedural history further for the purpose of deciding which of the parties is responsible for the situation in which they and the Court now find ourselves.
Counsel also referred to the fact that the plaintiff has now completed the filing of her affidavit evidence in chief. Counsel observed that that evidence contains no material going to the quantum of damages or compensation. Counsel submitted that, as a result, the plaintiff is unable to make out any such claim and that to grant the relief sought in the motion would give her an opportunity to do so for no good reason, as well as leading to further delay and expense.
I do not accept this submission. The plaintiff has no or very little direct knowledge of the financial dealings between the first defendant and her sons which are the subject of this claim. The whole point of the plaintiff seeking an account is to find out about them. It is therefore not surprising that the plaintiff's affidavit evidence does not deal with questions of quantum. That, however, does not mean that the plaintiff can have no case on damages. It is just that her case in that regard is likely to be documentary. Once the defendants have filed their evidence the plaintiff, if no separate hearing is ordered, will have to make out her damages and compensation cases by reference to the evidence given by the defendants and the documents produced by them on discovery.
As I have mentioned, this case first came before me on an application for discovery. I refused that application, not because I considered that the plaintiff was not entitled to discovery, but because I thought that discovery would be much more sensibly and cheaply dealt with after the defendants had put on their evidence. That has not yet happened but it is the next step in the management of the litigation.
Everything that has happened since the matter first came to me has confirmed me in my judgment that the best way to achieve the overriding purpose in s 56 is for the Court to determine the plaintiff's central allegations about the arrangements between the first defendant and her sons as soon as is reasonably practicable. In my view, on the information that is currently available to the Court, the proposed separation is likely to assist by focussing the parties' attention on what I consider to be the critical issues in the case. Accordingly, I propose to make an order for separate hearing along the lines sought.

Orders (The parties submitted a minute of order giving effect to the above decision) 20 August 2021:

The orders of the Court are: 1. Order that the defendants' oral application made on 12 August 2021 that Parker J recuse himself from hearing or determining the plaintiff's notice of motion filed on 11 August 2021 is dismissed. 2. Order that pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW): 1. prayers 9, 10, 16, 17, 19, 21 and 26 to 28 in the Second Further Amended Statement of Claim filed 21 July 2021 (Statement of Claim); and 2. the taking of accounts; be determined separately and after determination of whether: 1. the plaintiff is entitled to the relief identified in prayers 1 to 8, 11 to 15, 18, 20, 22 to 25 and 29 of the Statement of Claim; 2. the first defendant held on trust for the late Adrian Pamplin, a one-half share in the assets identified in the schedule annexed and marked "A" to these orders (Assets); and 3. the first defendant should give an account of her dealings with the Assets and the benefits derived therefrom and, if so, on what basis and on what terms. 1. Order that the defendants pay the plaintiff's costs of and incidental to the defendants' application for Parker J to recuse himself and of the notice of motion filed on 11 August 2021. 2. Order that the plaintiff's notice of motion filed on 11 August 2021 is otherwise dismissed. 3. Direct that the defendants are to serve their evidence in chief by 29 October 2021. 4. Direct that the matter stand over for directions before the Equity Registrar on 8 November 2021.

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: 20 August 2021

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