Supreme Court of the NT|1993-11-25|Before: Kearney J

Kennedy v Cynstock Pty Ltd & Ors [1993] NTSC 98; 3 NTLR 108 (25 November 1993)

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA KEARNEY J CWDS Practice and procedure HRNG DARWIN, 11 October 1993 #DATE 25:11:1993 Counsel for plaintiffs: Mr Morris Counsel for first defendant: Mr Schneider Counsel for second defendant: Mr Wyvill Counsel for third defendant: Mr Berner ORDER Various orders made. JUDGE1 KEARNEY J Several months ago the trial of this consolidated action was listed to commence on 15 November 1993. That trial did not take place. It was adjourned on 15 November, and is now fixed to commence on Monday 1 August 1994. The last-minute adjournment gave rise to applications by the plaintiffs and the second and third defendants that the fourth defendant pay the costs they had thrown away as a result. I rule on those costs applications today, and other applications, and also set out a programme so as to ensure as far as practicable that the case will be ready in all respects to proceed to trial on 1 August 1994. For the purpose of dealing with the various applications it is convenient to trace this litigation from its commencement, properly to understand the significance of and responsibility for the events which led to the trial being aborted on 15 November. THE CHRONOLOGICAL BACKGROUND TO THE TRIAL OF 15 NOVEMBER 2. By Originating Motion of 11 April 1989 the plaintiffs instituted proceedings no. 230 of 1989, seeking damages from the first and second defendants under the , for the death of Edward Kennedy on 10 July 1988 in a helicopter crash. They claimed as the widow and children of the deceased. The proceedings were instituted one month after the commencement of a coronial inquiry into the crash. The first defendant was served on 19 December 1989 and the second defendant on 12 March 1990. The first defendant was sued as the lessee of the helicopter, the second defendant as its pilot and owner. 3. The coronial inquiry was conducted between March 1989 and June 1990; the Coroner made his finding on 31 August 1990. During that period of 17 months the plaintiffs were no doubt engaged in the coronial inquiry and awaiting its outcome before taking further steps in their civil claims. 4. Ten months after the Coroner's finding, on 9 July 1991, they issued a Writ for damages against the third defendant Sarah's Jane Pty Ltd (herein "Sarah's Jane") on the basis that it had negligently carried out maintenance on the helicopter. On 19 October 1992 this Writ proceeding was consolidated with proceeding no. 230 of 1989. 5. It can be seen that few formal Court steps were taken by the plaintiffs in pursuing their claims, for over 2 years after the coronial inquiry had concluded. No doubt there were negotiations to settle the claims. The Court file was reviewed from time to time by the Master and the Registrar at status assessment meetings, commencing on 27 November 1991, and continuing throughout 1992. 6. An amended consolidated Statement of Claim was filed on 24 December 1992; the defendants at this time were still the first and second defendants and Sarah's Jane. Sarah's Jane filed its Defence on 21 December 1992. The first and second defendants entered an Appearance some 8 months ago, on 12 March 1993, by their solicitors Mildrens. This was the first appearance on the Court record by these defendants and Messrs Mildrens; it will be recalled that there had been a coronial inquiry in 1989 and 1990, in which the defendants must have taken part. 7. On 11 May Sarah's Jane claimed contribution against the first and second defendants, under r11.15(5). This was superseded on 3 September by detailed Statements of Claim. 8. Prior to the closing of the pleadings under r14.08, the plaintiffs filed a notice of trial (despite r48.02) on 26 May, and a memorandum of pleadings on 7 June. At that time, the first and second defendants had not filed their Defences, which should have been filed before the end of March (r14.04); they attended to this on 23 June, some 2.5 months late, and pleadings formally closed 14 days later, on 7 July, under r14.08(a). 9. On 18 June the first and second defendants claimed contribution from Sarah's Jane, under r11.15(5). On 22 June the plaintiffs discovered their documents. 10. On 24 June the parties were informed by the Registrar that this consolidated action was listed for hearing as a 4-week "back-up" trial on 8-19 November and 13-24 December, and that the head trial listed for those dates was "likely to settle". That is, all parties were then firmly on notice that they had less than 5 months to ready themselves for trial; clearly, it was necessary that they all then commence to pay the most assiduous attention to the preparation of their respective cases to meet that deadline, despite the benefit to all parties of having had the proceedings before the Coroner. In particular, in a case of this nature and particularly as between defendants with competing interests, early attention to obtaining full discovery of documents and then administering interrogatories was required. 11. Eight days later, on 2 July 1993, at the first directions hearing, I informed the parties that it was "highly probable" that the November period constituted "very realistic dates for trial", and would be available. Both Mr Crane (for the first and second defendants) and Mr Farquhar (for Sarah's Jane) agreed that the major issues for trial would be those which arose between the first and second defendants on the one hand, and Sarah's Jane on the other. The question whether there should be pleadings as between the two sets of defendants was raised by Mr Farquhar; I noted that the 4 plus months to trial was a "fairly minimal" period to resolve all the issues between the defendants by way of pleadings, and observed that the pleadings as between the defendants should be completed by October; that is, within 4 months. At that time Mr Crane, unlike Mr Farquhar, had not briefed counsel to appear at the trial although he had several barristers in mind; like Mr Farquhar, he was giving consideration to pleading as between the two sets of defendants. As it turned out, neither the first and second defendants nor Sarah's Jane initiated their pleadings inter se as quickly as was obviously necessary to complete them within 4 months, with concomitant discovery and interrogatories, although Sarah's Jane clearly made a much greater, more effective and timely effort in that regard than the first and second defendants. 12. Both Mr Farquhar and Mr Crane considered that the issues of fact to be resolved were clear enough, though Mr Crane reserved his position in that regard. I noted that it was "necessary that attention be given to" the issues of fact, and that they should be resolved by the pleadings as between the defendants. It is to be expected in cases of this nature that the evidence which had emerged at the coronial inquiry would assist the parties greatly in clarifying the issues; accordingly, I consider that with diligent application from 2 July there was no reason at that time why the parties should not have been ready for trial in November. Nor did any of them suggest that they would not be ready. 13. Mr Crane considered that legal issues between the defendants could arise in this trial, relating to statutory negligence under the Civil Aviation Regulations and other statutory measures. It was not suggested that these issues should be dealt with separately and pre-trial, under r47.04(a). 14. Mr Crane observed that his clients would rely heavily on the documents produced before the Coroner; that is to be expected, in cases of this nature. Mr Farquhar stated he was then in the process of discovering the documents of Sarah's Jane; he made discovery over a month later, on 6 August. Mr Crane had not discovered the documents of the first and second defendants (and in fact did not do so until 23 September, some twelve weeks later, and then only in (late) compliance with a Court order of 6 September). Mr Farquhar formally requested that the first and second defendants discover their documents, and I stated that it was "highly desirable" that this discovery be made "within a reasonable period"; I should say that I do not consider, in the circumstances, that the 12 weeks which then elapsed before that discovery was made, was a "reasonable period." Far from it. It was gross and inexcusable delay, in circumstances where on 2 July the trial was only 4 plus months away. In this jurisdiction discovery is mandatory under O.29, and all parties were required to discover their documents by 28 July (r29.03(2)), as the pleadings then stood; Sarah's Jane was 9 days late, and the first and second defendants were 8 weeks late. 15. As at 2 July no party was in a position to serve interrogatories. Mr Farquhar said that he would not interrogate the plaintiffs, but would probably interrogate the second defendant. Mr Crane had not at that stage briefed counsel, and was unable to say whether he would interrogate. I observe that it should by then have been clear to all parties that counsel would need to be briefed as soon as possible on matters preliminary to trial, particularly on evidence, and to appear at the trial in November. I pointed out that it was desirable that counsel be briefed in good time, so that they would be firmly committed to the dates fixed for this "reasonably major trial". I consider that failure by the first and second defendants to brief counsel at a sufficiently early stage on evidence, and generally, was a prime underlying cause of the trial not proceeding on 15 November. 16. The topic of expert evidence was raised in terms of O.44. Both Mr Farquhar and Mr Crane stated that no non-Territory experts would be called, but both anticipated calling resident Territory experts. I raised for consideration the possibility of prior consultation between the experts, to reduce time and costs at trial. This topic then "died" and was not raised again until 11 October (pp29-30), 3.5 months later, when I was informed that no experts' reports had been served. Clearly, all parties were waiting until the last minute (15 October) before doing so. 17. Ms Martin for the plaintiffs stated that the plaintiffs would call at trial a "limited" number of witnesses; Mr Farquhar, 6; and Mr Crane "something like that", though he had "no precise instructions on the point." 18. No parties sought specific directions on 2 July, but they agreed that the hearing be adjourned to 6 September, all parties being at liberty to apply meanwhile on 1 day's notice. In fact no party availed itself of that opportunity, until Mr Farquhar issued a summons 9 weeks later, on 3 September. Ms Martin said that she would subpoena the Coroner's file; she attended to that on 8 July. 19. It can be seen that at this time all parties were well aware of the limited time before trial - 4 plus months - and should have been aware of the steps which each required to take to be ready for trial at the appointed date. By and large on 2 July I left it to the parties' solicitors to take those steps in timely fashion, rather than imposing on them a strict timetable for action; in hindsight, this was a mistake, as was the adjourning of the directions hearing on 2 July for 2 months instead of 1 month. It is desirable to emphasize solicitors' duties in this situation. EXCURSUS: THE DUTY OF SOLICITORS TO PREPARE FOR TRIAL ONCE THE TRIAL DATE IS FIXED 20. The Court expects that parties' solicitors will act sensibly at these directions hearings to achieve the end stated by Sheppard J in Du Pont de Nemours v Commissioner of Patents at 500:- "Courts have an overriding obligation to see to it that those using their facilities are proceeding in a way best calculated to bring litigation to an end at the earliest possible moment so long as the primary goal of achieving justice is not lost sight of." 21. Where solicitors have not adequately prepared their case within the time allowed, without good reason, then even though the presentation of their client's case at trial may be detrimentally affected by their lack of readiness, they need not expect the trial dates set to be vacated. 22. As Lord Roskill said in Ashmore v Corporation of Lloyd's at 488:- "It is part of (the trial judge's) duty to identify the crucial issues and to see they are tried as expeditiously and as inexpensively as possible. IT IS THE DUTY OF THE ADVISERS OF THE PARTIES TO ASSIST THE TRIAL JUDGE IN CARRYING OUT HIS DUTY. Litigants are not entitled to the uncontrolled use of a trial judge's time. Other litigants await their turn." (emphasis mine) So both the trial judge and the parties' solicitors are responsible for the orderly and prompt disposition of cases. During the preliminary, pre-trial stage the solicitors know much more about the case than the judge, and their responsibility is correspondingly greater to ensure that the case is kept within manageable proportions and that their efforts are directed to the resolution of issues really in dispute. THE CHRONOLOGICAL BACKGROUND (CONTINUED) 23. After the hearing on 2 July nothing further appeared on the Court file for 5 weeks. On 6 August Sarah's Jane sought further particulars of certain matters in the plaintiff's Statement of Claim, and discovered its own documents. Three plus months were then remaining to trial. Another 4 weeks elapsed before the next step was taken in Court, some 2 plus months before trial. 24. On 3 September Mr Farquhar initiated the pleadings between the defendants he had mentioned 2 months before on 2 July, by applying by summons for an order that Sarah's Jane have leave to file Statements of Claim on the first and second defendants, and that those parties file their Defences to those Statements of Claim within 14 days, and discover their documents. This application was supported by his affidavit of 3 September, detailing his written request of 17 August to Mr Crane that the first and second defendants make discovery within 14 days and their non-compliance with that request, and asserting the need for prompt discovery and inspection in order that Sarah's Jane could obtain the opinions of experts, and serve interrogatories. On the same day, 3 September, Sarah's Jane filed those Statements of Claim, setting out details of its claims against the first and second defendants for contribution or indemnity in the event that it was found liable to the plaintiffs. No explanation was ever given by any of the defendants for the delay in instituting the pleadings between them which they had contemplated on 2 July (p5); it is clear that both sets of defendants should have moved much more quickly in this regard after 24 June. 25. Sarah's Jane's summons of 3 September came on before me on 6 September, at the adjourned directions hearing. There was discussion as to the period set aside for the trial in November; Mr Crane stated that he had received "express instructions" on Friday 3 September to apply to have the November trial dates vacated so that the trial could be dealt with "in a single hit" of 4 weeks, as there were "going to be very many witnesses." I offered the parties a continuous period of 4 weeks for the trial, from 8 November to 3 December, but Mr Crane said that he had been "unable to obtain any of the (3) counsel" he had named on 2 July, for a trial in November. I refused Mr Crane's application, which was not supported by affidavit, ruling that insufficient reason had been shown to have the November trial dates vacated, and observing that they had been "set for some time". This was the first overt indication that the first and second defendants did not wish to proceed to trial in November; their apparent inaction prior to 6 September in preparing for trial, and their apparent lack of any real sense of urgency afterwards until Mr Wyvill appeared temporarily in October, evinced an enthusiasm for trial akin to that of a Fabius Cunctator. 26. Ms Martin stated that the plaintiffs had now inspected the documents discovered by Sarah's Jane on 6 August, and expected to supply that defendant "in the very near future" with the particulars it had sought on 6 August. I ordered, by consent, that those particulars be supplied by 20 September; they were in fact supplied on 23 September, but it has not been suggested that this 3-day delay occasioned any difficulty to Sarah's Jane. A matter of subpoenaing certain medical records prior to trial was attended to. 27. Mr Farquhar's summons of 3 September (p10) was then dealt with. Mr Crane submitted, in effect, that it was premature for his clients to make the discovery sought, because the issues between the 2 sets of defendants had not yet been resolved by pleadings; see r29.02(1). That was correct; Mr Crane, for one, had not instituted any such pleadings. The process of pleading as between the defendants had been initiated by Sarah's Jane only 3 days before when it filed its Statements of Claim against the first and second defendants, while they had taken no steps whatever in that regard despite the consideration they were giving to it 2 months before, on 2 July (p5). This was a 'Catch 22' argument. Referring to the particulars of the plaintiffs' claim which Mr Farquhar had sought on 6 August, Mr Crane observed that it appeared that the pleadings between the plaintiffs and defendants were not yet complete, advancing this as a further reason why the first and second defendants should not be required to make discovery at this time. As to that, I should say that the pleadings between the plaintiffs and defendants had formally closed some 2 months before on 7 July (see p4); we were here concerned with issues solely between the two sets of defendants, and in any event the first and second defendants had never shown the slightest concern to have the plaintiffs particularize their Statement of Claim, although they had had it by that time for some 6 months. The submission had no merit. 28. As to pleadings between the two sets of defendants, I informed Messrs Farquhar and Crane that it might now be necessary to shorten the time in the Rules for the taking of various steps. I asked Mr Crane when he would be able to serve Defences to the Statements of Claim of Sarah's Jane of 3 September. He explained that he had difficulty in informing the Court on the point, stating that his instructions came from an "insurance broker", and were "minimal". This was the first formal indication that the case for the first and second defendants was being conducted by a liability insurer. I digress at this point to make some observations which may be of utility to some of the parties and their solicitors in charting their future course of action, in light of the events which led to the November trial being aborted. Excursus: matters which may arise when an insurer conducts its insured's defence 29. In a case of this nature it is the norm for a liability insurer to be involved and for it to exercise a contractual right under its policy with the insured to undertake his defence against a claim potentially covered by the policy. In these circumstances I sometimes find that the solicitor instructed by the insurer wrongly treats the named defendant/insured, for whom he becomes the solicitor on the record, as more akin to a witness than a party to the action. A named defendant is no mere witness; he is the party sued in the action, and thereby subject to any orders made in the litigation, while the insurer, as a non-party, is not. 30. Where the insurer exercises its contractual right to conduct the defence, there is always a potential conflict of interest between the defendant on the record and his insurer. See, for example, State Government Insurance Commission v Paneros , where the defendant's wife's action for damages for injuries in a car accident was settled by the defendant's insurer, which had conducted the defence. It then sued to recover those damages from the defendant/driver on the basis that he was intoxicated at the time of the accident, a fact which if true gave the insurer the right to repudiate its liability under his policy. He successfully restrained the insurer from using in that action a statement he had given his (and his insurer's) solicitors in the course of defending his wife's action, a statement which with other evidence could amount to evidence he was affected by alcohol at the time of the accident. Lunn AJ held that - (1) The defendant was in a solicitor-and-client relationship with the solicitors when they took the statement from him. As his solicitors, they owed him a fiduciary duty. (2) By virtue of the solicitor-and-client relationship, the

defendant's information to the solicitors was given in confidence and the requirement for an actionable breach of confidence had been established. The information had the necessary quality of confidence, it was imparted in circumstances importing an obligation of confidence, it had been disclosed by the solicitors to the insurer without the defendant's authority and there was a reasonable potential for detriment to the defendant. (3)(a) The defendant had disclosed the information to the solicitors in the belief that it was to be used solely for the purpose of defending his wife's claim. Legal professional privilege therefore attached to the information. (b) The privilege was that of the defendant alone, because of the potential conflict of interest in that the solicitors were solicitors for both the defendant and the insurer, and he had never waived that privilege. (4) Where a client provides information to his solicitors who communicate it to other clients in breach of confidence or legal professional privilege, those other clients can, and should, be restrained by injunction from using that information to the detriment of the client who provided the information. Accordingly, the defendant was entitled to the injunction sought.

(5) It was possible that the insurer was also estopped from using the information in question. The insurer, through its agents, the solicitors, had represented to the defendant that the information was required only to defend the wife's action and the defendant had acted to his detriment on that representation by not seeking to protect his position when giving the information. 31. I note in passing that in our legal system an insurer exercising its contractual right to conduct the defence does not have to admit that it is liable to indemnify the insured; it may reserve the right to deny that it is liable to indemnify him. Meanwhile, as the defendant on the record, the insured must make discovery and answer interrogatories. 32. Unless the policy contains a term by which the insured waives the solicitor-client relationship he would normally have with the solicitor, it is clear that a solicitor-and-client relationship exists between an insured/defendant and his solicitor on the record, as well as between the insurer exercising its contractual right and the solicitor; see Groom v Crocker (1939) 1 KB 194 at 201. The duty of the solicitor in that situation is stated at p222. Groom v Crocker (supra) states the law in this respect in Australia; see the authorities discussed in Paneros (supra) at 351-2. 33. As a consequence, the solicitor owes fiduciary duties to both his clients, the insurer and the insured/defendant, and must act reasonably in both of their interests. His role is to defend the insured against those claims which the insurer wishes to defend. He owes them both his undivided loyalty. While they have a community of interests, this bifurcated professional responsibility usually presents the solicitor with few practical problems. However, his ethical situation may become difficult if, as happened here, during the course of the litigation the insurer decides to repudiate its liability under the policy to the insured; see, for example, Paneros (supra). This gives rise to what may be termed a 'coverage' issue between the insurer and insured. The solicitor may well then be in a situation where the interests of his two clients have suddenly come into actual conflict - on the point whether the insured is covered - yet he cannot breach their respective confidences to him, or act without their authority, or act contrary to the interests of either of them. 34. In such a situation of conflict of interest between his clients, the solicitor's duty is to recommend to both insurer and insured that they obtain independent advice. He cannot simultaneously represent two clients with conflicting interests in litigation, actual or contemplated. He cannot as a matter of professional ethics continue to act in litigation where there is a real and sensible possibility of a conflict of interest between his clients; see r9A3 of the Professional Conduct Rules of the Law Society of the Northern Territory. If necessary, he must withdraw entirely from the litigation; he must do so where there is a substantial risk that information given to him in confidence by the insured may be disclosed to or used by the insurer against the insured in the coverage issue. He cannot then represent the insurer on the coverage issue against the insured. See, for example, In the Marriage of MAGRO (1989) 93 FLR 365 at 373-4, Mallesons Stephen Jaques v KPMG Peat Marwick (1990) 4 WAR 357 at 361-3; MacDonald Estate v Martin (1990) 77 DLR (4th) 249 at 254-270 per Sopinka J, and 272 per Cory J; Fruehauf Finance Corp. Pty. Ltd. v Feez Ruthning (a firm) (1991) 1 Qd R 558 at 565-6; Re a firm of solicitors (1992) 1 All ER 353 at 358-362, per Parker LJ; and Wan v McDonald [1992] FCA 4; (1992) 105 ALR 473 at 494. Should the insured lose the benefit of his privilege in his communications with his lawyer, because the lawyer in breach of duty discloses those communications to the insurer, the insured will have remedies against the lawyer. 35. Should information come to the insurer's attention during the course of the litigation which permits it to repudiate its liability to indemnify the insured, and the insurer with that knowledge nevertheless continues to conduct and control his defence, in the absence of any non-waiver agreement it may be estopped from relying on that information to deny its liability to indemnify the insured, or, alternatively, it may be treated as having waived its right to do so: see Halsbury (4th ed.), Volume 25, par703; MacGillivray and Parkington on Insurance Law, (8th ed., 1988), pars2000-3; Derrington and Ashton's 'The law of liability insurance' (1990), pp610-611; Suttons 'Insurance Law in Australia' (2nd ed, 1991), pars11-21 to 11-26; and Hansen v Marco Engineering (Aust) Pty Ltd [1948] VicLawRp 37; (1948) VLR 198 at 209-211. THE CHRONOLOGICAL BACKGROUND (CONTINUED) 36. On 6 September I gave Mr Farquhar and Mr Crane an opportunity to see if they could agree as to "times within which things have to be done" as between the two sets of defendants. Mr Crane sought, unsuccessfully, to obtain instructions on this aspect. I then ordered that the first and second defendants file their Defences to the Statements of Claim of Sarah's Jane by 20 September, discover their documents to the other parties by that date, and give inspection of those documents by 27 September. 37. Mr Farquhar confirmed that Sarah's Jane was ready for the trial in November. I then said to Mr Crane, who said his client was in London:- "Your client, of course, no doubt will be informed by you that so far as the court's concerned, this is a very definite fixture for 8 November and, as already must be apparent, it's not exactly that it would take hell and high water to move the date but the date is very firm. The other parties involved seek it, there's the question of the

court's capacity to deal with the case as well, so 8 November is really a date to which your clients should be firmly directing their attention." (transcript, p39) 38. At this time the trial was due to commence in 2 plus months. The directions hearing was adjourned to 4 October, in 4 weeks time. 39. Two weeks later on 21 September Sarah's Jane filed a summons returnable on 24 September seeking that judgment be entered in its favour against the other defendants, because they had not filed their Defences by 20 September as required by the order of 6 September; and, by way of emphasis, that they be ordered to indemnify Sarah's Jane against, or contribute to, any damages and costs for which Sarah's Jane was found liable to the plaintiffs. In his supporting affidavit of 21 September Mr Farquhar deposed that the first and second defendants had also failed to discover their documents by 20 September as required by the order of 6 September. 40. On 23 September, as noted on p12, the plaintiffs supplied particulars of their Statement of Claim to Sarah's Jane, 3 days late. On the same date, the first and second defendants discovered their documents, some 3 days later than required by the order of 6 September. On 24 September the first and second defendants filed their Defences to the Statement of Claim of Sarah's Jane, 4 days later than required by the order of 6 September. 41. On 24 September I dealt with the summons of Sarah's Jane of 21 September. Mr Crane informed me that the delay of some 4 days in filing the Defences largely arose from problems in contacting the second defendant, an itinerant helicopter pilot, and to "the difficulties with the office of the people who instruct me in Sydney". Mr Farquhar stressed the lack of time he now had (some 7 weeks to trial) to put the matters now discovered to his experts, and then to interrogate the first and second defendants. He also submitted that in its terms the Defence of the first defendant was not a "substantial" defence, in that it largely consisted of a simple denial of various paragraphs of the Statement of Claim. I agree that the Defence in that respect clearly inadequately complies with r13.12(1); see Williams "Civil Procedure", Volume 1, par13.12.50, p2929. I also note that the first defendant may thereby suffer a self-imposed handicap at trial, in view of the non-compliance in its Defence with r13.12(3). 42. I described the behaviour of Mr Crane's clients in complying with the orders of 6 September as "abominable and insufficiently excused", and "very dilatory"; I said that "all I can see so far is a continued history of delay by the first and second defendants". I adhere to those opinions; in the face of a rapidly-approaching trial they appear to have been lethargized rather than energized. However I refused the application by Sarah's Jane of 21 September for default judgments in its favour. 43. The Defence of 24 September of the second defendant also consists largely of simple denials of various paragraphs of the Statement of Claim of Sarah's Jane; in that respect it is also an inadequate compliance with r13.12(1). It then sets out a Counterclaim, claiming $100,000 as property damage to the helicopter on the basis that its crash was caused by the negligence of Sarah's Jane, largely as alleged by the plaintiffs. Mr Farquhar submitted that this property claim was barred under the Limitation Act and was not in its nature, as it was required to be, a proceeding for contribution. Mr Crane submitted that the Counterclaim was competent and within time; he relied on the Limitation Act and the provisions of O.10. These were preliminary submissions; argument on this question was developed in detail on 4 October (p22). 44. Mr Farquhar also attacked as inadequate the discovery made by the first defendant on 23 September, in particular its failure to discover contracts with Gunbalanya Meat Supply Pty Ltd relating to the use of the helicopter for the mustering of buffalo. 45. Mr Crane referred to the fact that there had been intervening settlement discussions. 46. Mr Crane filed in Court a summons of 24 September, supported by his affidavit of that date, seeking under r9.06(b) to join in Helicopter Resources Pty Ltd as a further defendant to the action. I understood him to say that this application flowed from instructions he had received some 2 months before, but this may well be inaccurate. I refused that application. 47. On 28 September Mr Farquhar filed a summons returnable on 4 October formally applying to dismiss or stay the second defendant's Counterclaim; he relied on his affidavit of that date in which he contended that the claim of $100,000 for property damage raised "an entirely new issue" with which Sarah's Jane would not be ready to grapple at the trial on 8 November. 48. At the adjourned directions hearing on 4 October, with the trial some 6 weeks away, (since it was now to commence on 15 November for 2 weeks and continue on 13 December (1 week) and in March 1994 for 1 further week) I dealt with Mr Farquhar's summons of 28 September. In the course of argument Mr Wyvill of counsel for the second defendant said that his client "would strongly support the trial dates (commencing 15 November) going ahead"; and to that end he would support the concomitant acceleration of times for pleading as between the defendants, and for discovery and answer to interrogatories. This was a welcome indication of a different approach by the second defendant to readying himself for trial. I reserved on the question raised by Sarah's Jane's summons of 28 September, and ruled on 7 October (p24). 49. On 4 October Mr Farquhar informed me that he had now inspected the documents discovered by the first and second defendants on 23 September, and was preparing interrogatories. On 11 October I ordered, by consent, that they be delivered by 19 October; I also ordered that they be answered by 2 November. 50. On 4 October Mr Wyvill filed in court a summons seeking further discovery by the plaintiffs and Sarah's Jane. In support he relied on Mr Crane's affidavit of 4 October, also filed in court. On 15 October I ordered that the further discovery sought be made by 19 October (p31). 51. On 4 October Mr Wyvill filed a further summons seeking Third Party discovery against Helicopter Resources Pty Ltd, under r32.07. Leave was granted to serve that summons on that company by facsimile transmission by 6 October, the summons being returnable on 11 October. Ultimately, this application was not pursued, as the company was joined as a defendant (p30). 52. Mr Wyvill foreshadowed a fresh application by the second defendant to join Helicopter Resources Pty Ltd in the action, on a different basis to that relied on in the application of 24 September (p21). This application (p24) was ultimately dismissed by consent on 15 October, in view of developments after 4 October (see p28). 53. It can be seen that with the briefing of Mr Wyvill the second defendant was now engaged in a flurry of intense activity as he sought to prepare his case for trial in the 6 weeks remaining; no reason was advanced as to why these matters had not been embarked on earlier, over the 13 weeks since 2 July. Furthermore, the pace of preparation appeared to slacken when Mr Wyvill ceased to appear, after 15 October. 54. On 6 October the first and second defendants filed a lengthy affidavit by Mr Crane arising from company searches of Sarah's Jane and Helicopter Resources Pty Ltd; it related to documents which these defendants sought that Helicopter Resources Pty Ltd discover by way of Third Party discovery. It disclosed a commonality of shareholders and management as between Sarah's Jane and Helicopters Resources Pty Ltd. 55. On 7 October I published reasons for refusing the relief sought by Mr Farquhar in the summons of Sarah's Jane of 28 September (p22). In the course of that ruling I said: "I have been very unimpressed in the past with the apparent dilatoriness with which Stiles and Cynstock Pty Ltd (the second and first defendants) have hitherto approached their preparation for trial." 56. On 8 October the second defendant filed a summons returnable on 14 October seeking leave to file a Third Party Notice under r11.05(b), in the form annexed to the summons, directed to Helicopter Resources Pty Ltd. This was supported by Mr Crane's affidavit of 7 October. It was ultimately dismissed, by consent, on 15 October (p30). 57. On 8 October Mr Crane filed a summons seeking leave under r20.03(3)(b) to file a notice that Messrs Mildrens had ceased to act for the first defendant. This application was supported by his affidavit of 7 October to which various letters were annexed, and in which he deposed - "My instructions to act for Cynstock Pty Ltd t/as Outback Helicopters have been withdrawn." 58. Annexure A to that affidavit is a letter of 7 October from Messrs Mildrens to Cynstock Pty Ltd in which Mr Crane stated, inter alia:- "We are presently the solicitors on the court record for Cynstock Pty Ltd trading as Outback Helicopters and Stephen James Stiles. ...

The trial of the proceeding is due to start in the Northern Territory Supreme Court on 15 November 1993. The present full dates for the hearing are 15-26 November 1993 and 13-16 December 1993. Our instructions to appear in the proceeding for Cynstock Pty Ltd have now been withdrawn." 59. It will be recalled (p13) that on 6 September Mr Crane said his instructions came from an "insurance broker". 60. On 11 October the directions hearing resumed. In addition to the representatives of the parties (other than the first defendant) Mr Schneider announced his appearance to look after the interests of Mrs Karen Stiles, a director of the first defendant until 1988, having been notified by Messrs Mildrens on 7 October that their instructions to act for the first defendant had been withdrawn. 61. Mr Wyvill of counsel for the second defendant raised Messrs Mildrens' application of 8 October (p24) for leave to file a notice that they had ceased to act for the first defendant. Mr Ian Morris for the plaintiffs expressed concern that in that event the first defendant would be left unrepresented "a month before the trial." I said: "That's so, but under the new regime of court management there is no sympathy for the defendant who, by its own act, puts itself in that position. You need not think that in any way your trial date will be prejudiced by this application, because it won't be." 62. Mr Morris then observed that it did not appear from Mr Crane's affidavit of 7 October and his letter to his client, the first defendant, of 7 October (p25) that the first defendant had instructed Messrs Mildrens to cease to act for it; rather the withdrawal of instructions to appear seemed to have emanated "from some party other than the first defendant." I now consider that this is clearly correct, and some of the considerations in the excursus at pp14-18 should then have been contemplated by Mr Crane. 63. Mr Morris stated that the first defendant had not admitted in its joint Defence with the second defendant of 23 June that it "owned" the helicopter as alleged by the plaintiffs in their Statement of Claim of 24 December 1992. I observe that in their Statement of Claim the plaintiffs' allegation (par1) was that the first defendant was "the lessee" of the helicopter and that (par3(c)) the second defendant was "the registered owner of the (helicopter) which was subject to lease to the first defendant." Mr Morris said that the plaintiffs were now concerned "that the party who is insured - and we believe that to be Cynstock - is not represented, and that the insurer has cast the owner of the helicopter adrift." In that event - that is, if the insurer was now going to dispute that it was liable to indemnify the first defendant - Mr Morris said "we would like to take steps to join the insurer in the proceedings", under ss26 and 27 of the Law Reform (Miscellaneous Provisions) Act, and thus avoid the necessity to institute separate proceedings against the insurer, if the plaintiffs ultimately succeeded against the first defendant. To that end he stressed the importance to the plaintiffs of knowing now from whom Mr Crane had received his instructions to withdraw from the defence of the first defendant. This was 11 October, 5 weeks before trial. Clearly, Mr Morris wanted to know the identity of the insurer. This information was not forthcoming; why it was not volunteered by Mr Crane, or sought out and supplied by him, I do not know, bearing in mind his statement 5 weeks before on 6 September (p13) that he was instructed by an "insurance broker". The identity of a client is not, in general, capable of being the subject of legal professional privilege, and a solicitor should disclose the identity of his client when properly called on to do so; see Bursill v Tanner (1885) 16 QBD 1. The ultimately pointless lack of apparent frankness by those instructing Mr Crane as to the identity of the insurer, was to prove expensive in terms of time lost by the plaintiffs at a crucial time before trial, in taking action to join the insurer; they did not ascertain its identity until 4 weeks later, on 8 November, one week before trial. 64. Mr Morris foreshadowed that he would take steps on 15 October to ascertain the identity of the insurer of the first defendant, for the purpose of joining it in the action as a defendant. EXCURSUS: THE POSITION WHEN AN INSURER IS JOINED 65. The joinder of an insurer as defendant in an action, under ss26 and 27 of the Law Reform (Miscellaneous Provisions) Act and r9.06(b)(ii), when it disputes its liability to indemnify its insured/defendant, will usually give rise to the need at trial to determine further issues of fact. These are normally raised in pleadings between the insured and the insurer to determine the coverage issue - for example, whether there was non-disclosure by the insured of material facts in breach of the Carter v Boehm rule, or a misrepresentation by the insured, or some breach of warranty by the insured, or whether the insurer has by its conduct waived its rights, and so on. The joinder of the insurer means that both issues - the insured's liability to the plaintiffs, and whether he is indemnified against that liability by the policy

will fall to be determined in the plaintiffs' action, though at the cost of expanding the issues for trial in that action. THE CHRONOLOGICAL BACKGROUND (CONTINUED)

Mr Wyvill informed me on 11 October that all parties now agreed that Helicopter Resources Pty Ltd be joined in the action as a defendant. There was some discussion as to whether that company should be joined as a fourth defendant, or as a third defendant with Sarah's Jane; that question was stood over to 15 October (p30). Mr Wyvill did not press at this time his application of 4 October for Third Party discovery against Helicopter Resources Pty Ltd, or to join that company in the action, as the Rules would require it to make discovery when it became a party. In that regard, Mr Berner of counsel for Sarah's Jane, said that Helicopter Resources Pty Ltd could make discovery by 19 October; as in fact it did (p32).
Mr Wyvill informed me that no experts' reports had been exchanged by the parties. It will be recalled that the general subject of expert evidence had been raised on 2 July, 3 months before (p8). The parties must all have been well aware as a result of the coronial inquiry, of many of the matters in which expert evidence was required; indeed, Mr Wyvill conceded as much. Rule 44.03(1)(b) requires that experts' statements be served one month before trial, that is, by 15 October, now 4 days away. Mr Wyvill said that the first and second defendants could not meet that deadline; he had in mind 29 October "at the minimum", noting that prior proper discovery by Sarah's Jane and Helicopter Resources Pty Ltd (p32) was important to the second defendant, in order that the documents discovered could be put to his experts. On 15 October it was ordered that this discovery be made by 19 October; the third defendants met this deadline.
Mr Ian Morris said that the plaintiffs had proposed to serve their experts' reports by 15 October; he considered that the expert evidence in the case would be largely directed to "the servicing and maintaining by the third defendant of - - the helicopter". However, in view of the possible importance of the documents to be discovered by Helicopter Resources Pty Ltd and Sarah's Jane (ultimately, on 19 October), Mr Morris said that he would wish to inspect those documents before serving his experts' reports. Mr Berner for Sarah's Jane proposed that all parties serve their experts' reports by 29 October.
On 12 October I published reasons for various rulings made as a result of the directions hearing of 11 October. I granted Messrs Mildrens leave to file the notice that it had ceased to act for the first defendant noting, inter alia, the rule in Re Creehouse Ltd (1982) 3 All ER 569. The notice was filed on 15 October; thereafter, the first defendant has remained unrepresented and has taken no part in pre-trial hearings, and did not appear at the trial. I ordered that the plaintiffs and defendants serve their statements of experts' evidence by 25 and 29 October respectively; this appears to have been complied with (p35).
On 15 October the directions hearing resumed, with all parties appearing except the first defendant. Mr Berner for Sarah's Jane placed on record that both that company and Helicopter Resources Pty Ltd were "insured and indemnified" by the same insurer. After that was recorded, an order was made by consent joining Helicopter Resources Pty Ltd as a third defendant with Sarah's Jane. Mr Berner, who now appeared for both third defendants, said that "hopefully" the addition of Helicopter Resources Pty Ltd would not entail any amendment to the pleadings. By consent, Helicopter Resources Pty Ltd was ordered to make discovery by 19 October; it met that deadline.

The insurer was C.E. Heath (Marine and Aviation) Insurance Limited."
I consider that par2 is very misleading, in that it does not in fact identify the entity which now accepts any liability which might arise under the policy. It is a further indication of the fuliginous obscurity in which the identity of the current insurer of the second defendant remained wrapped for a further 3.5 weeks until one week before trial. However, Mr Morris was not to know that, on 15 October; no doubt he believed what he was told. I should add that I accept that Mr Crane's misinformation of 15 October stemmed simply from the fact that he did not then know the name of the current insurer and in fact did not ascertain that name until 8 November (p36).
Doubtless with what had happened to the first defendant (pp25-7) in his mind, Mr Morris was now concerned that if the insurer decided prior to trial that it would not indemnify the second defendant, the plaintiffs might, if successful against the second defendant, have to sue the second defendant's insurer in a separate action, and prove the same issues once again. In that second action no plea of res judicata or issue estoppel would be available to the plaintiffs. Accordingly, he stated he proposed to write to Mr Crane enquiring whether the insurer would consent to being joined as a defendant in the action; if it did not consent by 22 October he proposed to apply during the week commencing 25 October to have it joined, though he was "aware there's very little time before the trial comes on." At that time there was some 4.5 weeks to trial.
On 19 October pursuant to the order of 15 October (pp30, 31) the third defendants discovered their documents. On the same day, pursuant to the order of 11 October (p22) they served extensive interrogatories on the second defendant which were to be answered by 2 November. At the trial on 15 November I was informed by Mr Anderson QC of senior counsel for the plaintiffs that those interrogatories had been answered by the second defendant on 25 October; if so, the answers have not yet been filed in Court by Messrs Mildrens. Mr Anderson said that the answers gave rise to the second defendant being denied indemnity; see p54.

On 25 October the third defendants filed their Defence to the second defendant's Counterclaim. 79. On 27 October the plaintiffs filed a summons returnable on 29 October directed to C.E. Heath (Marine and Aviation) Insurance Ltd (the entity named by Mr Crane on 15 October (p31)) and the defendants, seeking to join that company as a defendant. In support, Mr Morris relied on his affidavit of 27 October in which he deposed that he understood that the insurer's agent was a Mr John Davies of Australasian Aviation Claims, Sydney, who had informed him on 25 January 1990 that:- "We confirm that we are the Aviation Claims Management Agents appointed by solicitors on behalf of Underwriters for Outback Helicopters (that is, the first defendant)." 80. Annexure "B" to Mr Morris' affidavit of 27 October is a copy of his letter of 16 October to Mr Crane; in that letter Mr Morris noted that the insurer had admitted that the first defendant was its insured, but had not yet decided whether it would indemnify the first defendant. He enquired whether the insurer would agree to be joined in the action. In par19 of his affidavit of 27 October Mr Morris deposed:- "I say that, in view of the fact that the insurer seems to have had conduct of this claim from at least January 1990, the insurer would suffer no prejudice by its joinder to these proceedings." 81. It is obvious that at this time neither Mr Morris nor Mr Crane knew that the entity named in par2 (p31) no longer existed. 82. On 29 October the directions hearing continued, this time by way of a telephone hook-up. All parties appeared, except the first defendant. 83. Mr Farquhar informed me that no party had as yet sought to inspect the third defendants' documents discovered on 19 October; they were available for inspection in his office. I observed that any inspection should be carried out "promptly." 84. Mr Crane informed me that the Defence of the second defendant was now being re-engrossed, and it would incorporate the defence of contributory negligence as par17. 85. Mr Morris stated that he had that day received from counsel the interrogatories as settled, to be served on the second defendant in relation to the new par17 of his Defence; these interrogatories were to be served by 1 November, but this deadline was not met (p36). 86. Mr Riley QC of senior counsel for the plaintiffs informed me that that morning they had ascertained that C.E. Heath (Marine and Aviation) Insurance Ltd had changed its name and in any event was now deregistered. Since the plaintiffs were still unable to identify the current insurer of the first and second defendants, they sought an order under r32.03(1)(b) that Mr R.J. Davies of Australasian Aviation Claims make discovery of his documents identifying the first and second defendants' insurer under the policy, and any insurer to whom liability under the policy may have been assigned. That order was made, with leave to serve it by facsimile service on 29 October, the discovery to be made by Mr Davies by 4.30 pm on 2 November. Mr Riley foreshadowed that the plaintiffs would apply to join the insurer as a defendant, when identified by that discovery. Mr Crane stated (transcript, p154) that he was still being instructed by Mr R.J. Davies in relation to the defence of the second defendant; why those instructions did not extend to the identity of the current insurer (p36) is an enigma wrapped in a mystery. 87. Mr Farquhar informed me that experts' statements had now been exchanged as between the second and third defendants; Mr Crane stated that the second defendant may still have two further experts' statements to serve. 88. Ten days later, on 8 November the third defendants filed a summons seeking that C.E. Heath Casualty and General Insurance Ltd (herein "Heath") be joined as a Third Party, and ancillary relief. This was supported by Mr Farquhar's affidavit of 8 November in which he referred to documents now discovered by Mr Davies, and annexed a form of Statement of Claim which he proposed to serve on Heath when it was joined, for purposes of claiming contribution from it. 89. On 8 November the directions hearing resumed, with all parties appearing other than the first defendant. The trial was to commence in 1 week. I noted the need for an up-to-date set of pleadings to be filed by 12 November, to incorporate all amendments to the pleadings to that date. 90. Mr Morris said that the plaintiffs had not yet interrogated the second defendant, as they had been required to do by 1 November; however, he proposed to serve interrogatories on 9 November and they would, by agreement, be answered on 15 November. 91. Mr Morris informed me that he had served the order for discovery directed to Mr Davies on 29 October, as required, and Mr Davies had since discovered his documents. This included a copy of the insurance policy and a handwritten list of documents, some of which Mr Davies claimed he should not be required to produce, on the grounds of privilege. Mr Morris stated that he had learned the identity of the current insurer of the first and second defendants, Heath, at 2.30 pm on 8 November. He applied to have Heath substituted for C.E. Heath (Marine and Aviation) Insurance Ltd in his summons of 27 October (p33); this application was granted. He then relied on that amended summons to apply to join in Heath as a fourth defendant. 92. Mr Crane, who was now instructed to appear for Heath, neither opposed nor consented to the application to join Heath as a fourth defendant. He said (transcript, p170) "on 29 October it was unsure who my client was. Under the instructions today my client is (Heath) ... so I can be served". Mr Crane stated that he appeared - "... for the second defendant on instructions, the source of which is (Heath), and the fourth defendant (Heath) on instructions from (Heath), all of which instructions come through this person, Mr Davies." (transcript, p170) He stated specifically:- "... the insurer (Heath) reserves all its rights against the plaintiffs and its insured - or its purported insured - that's Mr Stiles. Its rights include any defences against the plaintiffs, and for and against Mr Stiles, in relation to the policy." (transcript, p168) 93. I granted Mr Morris' application to join Heath as a fourth defendant; the plaintiffs were given leave to amend their Statement of Claim, and to file and serve it on all parties by 10 November. 94. Mr Farquhar then stated that he would continue with his application (p35) to seek contribution from Heath, though now as a fourth defendant rather than as a Third Party. He proposed to serve his Statement of Claim, seeking contribution, on the fourth defendant's solicitors on 9 November. Mr Crane opposed that application, which I granted. In opposing it, Mr Crane said (transcript, p171): "The basis for that application is not presently known because my clients (HEATH) DISCOVERED ONLY TODAY THAT IT WAS THE INSURER INVOLVED ... I ... have instructions to oppose Mr Farquhar's application because this insurer presently does not know exactly the consequences". (emphasis mine) 95. Comment on this statement is superfluous. 96. Mr Farquhar then asked that certain concerns he had be recorded, viz: "... within a week of trial we have the solicitors for the second defendant (Mr Crane) advising the court that he discovers today (p36) who the insurer is. I asked Mr Crane whether his client was indemnifying Mr Stiles, the second defendant, and thereby avoiding the (need for the) last few days in court, and we've not been given a positive reply. We wish to rely on the affidavit of Ian Morris (of 27 October 1993) and my own (of 8 November 1993) to set out the activities of the agent of the insurer, Mr Davies ... because, quite bluntly, we don't wish to be the only ones at the Bar Table, (that is, presumably, the only defendants with an insurer behind them) with an application on the day of the trial, that the insurer does not appear for Mr Stiles. We've already lost (legal representation for) Cynstock (the first defendant) on the instructions, obviously, of an insurer and not on the instructions of that company. IF THERE ARE GOING TO BE ANY APPLICATIONS TO REFUSE INDEMNITY AND THEREBY LEAVE MR STILES WITHOUT LEGAL REPRESENTATION, WE ASK THAT THEY BE MADE FORTHWITH, Your Honour, so that, at the worst, we can lose perhaps the first week of the trial, allowing Mr Stiles to get his own legal representation and allowing (Heath) to get its own legal representation, because I have to place ... on record my view that Mildrens (solicitors for the second and fourth defendants) would be in an intolerable conflict situation. If Mr Stiles is to be indemnified, then basically the trial will be ready to proceed on Monday (15 November)" (emphasis

mine) (transcript, p172) 97. I observed that this "placed various people on notice" so that "there must, if certain eventualities take place, be a serious matter of costs involved". I should say this proved to be a remarkably prescient statement by Mr Farquhar. At this point there was still a week to trial; it was not until the morning of the trial (or 12 November) that the second defendant was told that his insurer declined to indemnify him, and his solicitors Messrs Mildrens would no longer act for him. Mr Farquhar also clearly had in mind considerations of the kind mentioned at pp14-18. 98. Mr Morris proposed that Heath file its Defence by 12 November. Mr Crane considered that that time limit "does seem reasonable", and that it was not "impossible to achieve", but he was not in a position to consent to it. I directed that Heath file its Defence by 12 noon on 12 November. 99. Mr Morris referred to item 4 in Mr Davies' discovery by way of his list of documents. Item 4 comprised documents listed (a) to (j); Mr Davies asserted in making his discovery that all of these were privileged from production. Mr Morris submitted that privilege did not in any event attach to the documents listed (b) to (j), by their nature; and further, Mr Davies as an assessor was able to claim privilege for those documents. Mr Farquhar submitted that all of the documents (a) to (j) should be produced. I ordered that the documents listed (a) to (j) be submitted by Mr Davies to the court in sealed form by 15 November. This order was to be served on Mr Davies by 9 November. The question of privilege could then be argued when any party sought leave to inspect any of those documents during the trial; this in fact is what occurred - see pp50-53. 100. Mr Crane stated that a decision as to whether Heath would indemnify the second defendant "may be - - made in the foreseeable future." He said with reference to Mr Farquhar's statement (pp37-8):- "... what Mr Farquhar said about not giving him a clear answer is accurate. The fourth defendant has not yet elected one way or the other (to indemnify), as essentially shown in the letter (of 15 October) handed to the court (see p31) where Crane said he acted on instructions of an underwriting agent, and the plaintiff should not take it for granted that indemnity had been granted." (transcript, p176) 101. I observe that at least since 15 October, some 3.5 weeks previously, the Heath interests had been on notice (p32) that the plaintiffs proposed to join the insurer in the action; in fact, they were on notice since 11 October (5 weeks before trial) when, as a result of Messrs Mildrens ceasing to act for the first defendant, the plaintiffs indicated they wished to join in the insurer (pp26, 27). It is impossible to accept that Mr Davies, the "underwriting agent" (p31) or "Claims Management Agents" (p33) who was instructing Mr Crane throughout, could not much earlier have with reasonable diligence ascertained the identity of the particular company within the Heath Group which had assumed the liability of that member of the Group which had originally accepted the risk but had been deregistered in August 1992. Apart from the manifest energy put into readying the second defendant's case for trial when Mr Wyvill appeared - he did not appear after 15 October - the preparation of that case thereafter once again appeared to be steeped in lethargy. 102. Mr Farquhar sought an order that the fourth defendant Heath discover its documents by 12 November. Mr Crane opposed that application on the basis that the second defendant had already "made a considerable discovery.". Mr Farquhar stated that the discovery by the first and second defendants did not extend to any documents relating to insurance; he said:- "The reason why we are seeking discovery from (Heath) is to have in particular the original insurance policy before the court, showing who the parties are on that policy; it's a matter now where we've been granted leave to issue contribution proceedings.

It is relevant to the court to have the terms of that contract of insurance before you." (transcript, p178) 103. Mr Crane said that Mr Davies had actually sent a facsimile copy of the relevant insurance policy to the plaintiffs, when making discovery. Mr Morris agreed, but considered that the actual policy must be placed before the court. Mr Crane then agreed to obtain the original policy and bring it to court. 104. Mr Farquhar then sought to ascertain whether there was a "paper trail" which linked Heath with the policy, in which it was not named as insurer. Mr Crane informed me that:- "... ON MY INSTRUCTIONS, THE NOTIFICATION THAT THE PRESENT

FOURTH DEFENDANT (HEATH) WAS THE INSURER CAME THIS MORNING from ... Mr Bob Austin who was apparently the chief executive of the fourth defendant ... We are dealing, Your Honour, with a large public company which has ... clearly restructured itself with the original insurer striking itself off and being dissolved (in 1992), and the insurance ... being taken over by another major public company" (emphasis mine) 105. I ruled that:- "It is absolutely essential that the new fourth defendant (Heath) make discovery at least to this extent: to show why it is that it is, in fact, putting itself forward as an insurer in these proceedings." 106. I ordered that discovery to that extent be made by Heath by 12 November. 107. On 9 November Mr Farquhar filed the third defendants' Statement of Claim against Heath, seeking contribution. 108. On 12 November the plaintiffs filed an up-to-date set of pleadings. Mr Crane filed Heath's Defence to the plaintiffs' Statement of Claim in the course of which it denied (par5(b)) that it was obliged to indemnify the first or second defendants against any alleged liability on their part to the plaintiffs. On the same day Heath discovered its documents, in the sense that it stated it had no relevant documents "relating to the assumption of liability" by Heath under the policy, while also noting that its Defence admitted it had "assumed any liability" under the policy "relevant to the proceeding." On 15 November Mr Anderson QC of senior counsel for the plaintiffs characterized this discovery as a "disgrace". THE TRIAL: PROCEEDINGS ON 15 NOVEMBER 1993 109. Mr Anderson QC appeared for the plaintiffs with Mr Ian Morris; Mr Farquhar and Mr Langmead appeared for the third defendants; and Mr Brian Morris appeared for the fourth defendant, instructed by Messrs Mildrens. There was no appearance by the first defendant. The second defendant appeared in person. Later, Mr Barr appeared for Messrs Mildrens, solicitors, with a general watching brief. I turn to the five subjects that were raised. (i) THE SECOND DEFENDANT'S LAWYERS CEASE TO ACT FOR HIM; HE SEEKS AN ADJOURNMENT OF THE TRIAL AND THEY SEEK LEAVE UNDER R20.03(3)(B) 110. The second defendant immediately applied for the trial to be adjourned. Mr Brian Morris initially sought to file in Court a summons by Messrs Mildrens supported by an affidavit, by which these solicitors sought leave under r20.03(3)(b) to file a notice that they had now ceased to act for the second defendant. Later, he tacitly withdrew that application. 111. Mr Anderson sought leave to be heard on that application; he submitted that the second defendant should first be asked certain questions relating to when he had first been informed that Messrs Mildrens would not act for him at the trial; and he should be advised of his rights, and so on. 112. Mr Morris informed me that Mr Crane had told the second defendant on 12 November that Messrs Mildrens would not appear for him at the trial and that Heath refused to indemnify him, that situation having arisen "through the fourth defendant (Heath) being joined as a defendant (on 8 November) and forced to put on a Defence (on 12 November)." He said that the conversation between the second defendant and Mr Crane of 12 November was now contained in the supporting affidavit of Mr Crane, the contents of which should not be disclosed to the other parties as that "would be prejudicial to the case of Mr Stiles and the fourth defendant." 113. Mr Morris explained that until 12 November "Messrs Mildrens were acting for the second defendant Mr Stiles on behalf of the fourth defendant (Heath)". My understanding was that Messrs Mildrens wished to continue to act, but now solely for Heath in this action to which the second defendant, for whom they were solicitors on the record, remained a party. I therefore enquired of Mr Morris:- "How can Messrs Mildrens continue (to act) in these proceedings?" 114. Mr Morris submitted that Mr Stiles had at all times been told by Messrs Mildrens that the fourth defendant did not accept that they were liable to indemnify him against any liability to the plaintiffs; and that Messrs Mildrens were acting for the insurer and "representing him because they are acting for the insurance company." To my mind this submission did not address the nature of the relationship between a solicitor and an insured for whom he is solicitor on the record, and the consequences of that relationship when a conflict of interest arises between the insured and his insurer. 115. Mr Morris submitted that a similar situation had arisen in C.E. Heath Underwriting and Insurance (Australia) Pty Ltd v Campbell Wallis Moule and Co Pty Ltd [1992] VicRp 25; (1992) 1 VR 386. In that case the insurer by its solicitors took over the conduct of an action against the insured, by an express agreement with the insured to do so, and without the insurer waiving its right to decline liability under the policy; in the latter respect that parallels what occurred here. The Full Court held that this was not a case of the insurer exercising its contractual right under the policy to take over the conduct of the action. That is one point of difference to the present case, but not a significant one. A date for trial was fixed; 9 days before trial the insurer informed the insured that it declined liability. Thus, as here, a conflict of interest between insurer and insured appeared to arise shortly before trial. The insured then instructed other solicitors to act for it, and joined the insurer as a Third Party. I note that the insured's original firm of solicitors then appeared throughout for the insurer; this aspect was not touched on in the judgment, and may have involved the use of "Chinese walls". The plaintiff's claim was settled; the insured sought to recover an indemnity from the insurer under the policy The Appeal Division held that indemnity for the claim was excluded under the terms of the policy, and that the insurer was not barred by its conduct from relying on that exclusion. I note that Brooking J, in the leading judgment, said at pp397-8:- "To notify the insured on 21 February that the underwriters denied liability and that the action against the insured was to be heard on 2 March put the insured in an extraordinary position. I confess I have found it difficult to avoid allowing my approach to this case to be coloured by the way in which the insured were treated. No doubt the solicitors owed a duty of care to the insured notwithstanding the arrangement made between the insured and the underwriters by virtue of which the solicitors were to act, JUST AS THE SOLICITORS WOULD HAVE OWED A DUTY OF CARE TO THE INSURED HAD THEY BEEN INSTRUCTED IN THE EXERCISE OF THE RIGHT OF THE UNDERWRITERS TO DEFEND THE PROCEEDINGS UNDER THE POLICY: Groom v Crocker (1939) 1 KB 194." (emphasis mine) 116. I respectfully agree with these observations, which I consider apply to the present case. I do not see how this case supports Mr Morris' submissions. It is clear that an insurer may take over the conduct of the defence of an action brought against its insured, in the exercise of its contractual right to do so under the policy, without conceding that it accepts liability to indemnify the insured. 117. Mr Morris submitted that the plaintiffs "could well have joined the fourth defendant in the years that have preceded this action", yet Heath had "been brought in at the last minute." This submission takes no account of the actual events which led to the late joinder of Heath, in particular, the difficulty the plaintiffs and third defendants encountered in ascertaining over a lengthy period the identity of the current insurer (pp25-27 and 31-38), and the role of Heath's representatives in relation to that difficulty. 118. Mr Morris said that the last minute joinder of Heath had compelled it to make its last-minute election to deny any indemnity to the second defendant. Heath was "sympathetic" to the second defendant and did not oppose his application for an adjournment. Mr Morris then said that he would apply, during that adjournment, to a differently constituted Court to obtain leave for Messrs Mildrens to file the notice that they had ceased to act for the second defendant; the purpose of doing so was that as the putative trial judge I would not then be "tainted by reading the affidavit material" in support of that application. 119. Mr Farquhar referred to the history of the pre-trial proceedings. I have set this out as a chronology at pp2-41. He noted that Heath's Defence alleged, inter alia, various breaches by the second defendant of the terms etc., of the policy, and that the second defendant had "been represented by Mr Crane throughout the entire proceedings." He did not consent to any adjournment. 120. I then spoke to Mr Stiles, explaining the position as I understood it. I stated that ultimately I considered Messrs Mildrens could not be refused the leave they sought under r20.03(3)(b). Mr Stiles said that he would "like an adjournment to try and get Legal Aid", and that on 12 November he was told he "had been dumped". He said he felt "that these guys acting against me now, it's pretty weak", and that - "... they've ... talked to me, it seems like they've drained me like a sponge and just thrown me out the window and now they're against me." I said that Mr Stiles "should certainly have an opportunity to get legal advice". 121. Mr Anderson neither opposed nor supported Mr Stiles' application for an adjournment. 122. I ruled that it was clear that Mr Stiles' application must be granted and the trial must be adjourned, noting that it would have to be adjourned "for some time", and that therefore Mr Stiles' new solicitors would "have ample time" to look into the case. 123. Later, I drew r9A of the Professional Conduct Rules of the Law Society of the Northern Territory and Wan v McDonald (supra) to the attention of Mr Barr on the point that Messrs Mildrens had ceased to act for the second defendant while continuing to act for the fourth defendant in the same action, where these two parties had a conflict of interest inter se. I enquired whether Messrs Mildrens could properly continue to act in this action for any party. Mr Barr referred to a lengthy affidavit sworn by Mr Crane, which had not been handed up because if I examined its contents I "would have to withdraw from the further hearing of this matter, and possibly would have to refrain from determining the issue of costs" (dealt with at p53). Further, Messrs Mildrens did not wish to have the contents of that affidavit disclosed to parties other than the second defendant. 124. Mr Barr submitted that in this connection 2 questions had to be decided. The first was whether Messrs Mildrens should be granted leave under r20.03(3)(b) to file the notice that they had ceased to act for the second defendant. The second question was whether Messrs Mildrens could properly continue to act for Heath in this action. Mr Barr stated that Messrs Mildrens were instructed on 11 February 1993 by Mr Davies to appear for the second defendant. They believed that Mr Davies was the agent for the "appropriate insurer", of whose identity "they weren't aware exactly". That seems something of an understatement. He submitted that Messrs Mildrens were not instructed to contact the second defendant "until ... September of this year", and, initially, their instructions were to act for the insurer, which "had a right to ... conduct the litigation (for the second defendant)". This submission does not appear to address the questions of professional responsibility to which I have adverted, generally, at pp14-18. 125. Mr Barr appeared to submit that although Messrs Mildrens were solicitors on the record for the second defendant they had never in fact obtained any information from him. It appeared to me that that aspect may have to be gone into at some time, possibly by way of evidence. Mr Barr informed me, very properly, that on 12 November the second defendant had indicated "he had some objections to Mildrens acting for the insurer". I should say that Mr Stiles made his objection quite clear on 15 November; see transcript, p63. 126. I do not know whether the second defendant has yet managed to secure new legal representation. Clearly, he may wish to contend that Messrs Mildrens should no longer continue to act for Heath in this action; he may seek to restrain the use against him by the fourth defendant of information he has given Messrs Mildrens. I have not seen Mr Crane's affidavit; neither that document nor the summons seeking leave to file the notice under r20.03(3)(b) were ultimately handed up. The application was not pressed; see p43. 127. I consider that the appropriate resolution of the question of leave under r20.03(3)(b) and the associated question whether Messrs Mildrens should continue to act for Heath in this action, should be argued before and determined by the Master or another Judge. The summons and supporting affidavit material should be promptly filed and served on the second defendant but kept not on the file for this action but on a separate Court file, access to which is not available to any of the other parties. At the hearing of that application for leave only the second defendant and Messrs Mildrens may appear. As Lawton LJ said in Re Creehouse Ltd (supra) at 663:- "... this should be done without bringing the other parties into the matter at all, because in many cases the contents of the affidavits may reveal matters which are confidential between solicitor and client." (ii) DISCOVERY BY THE FOURTH DEFENDANT 128. Mr Anderson submitted that Heath's discovery of 12 November was a "disgrace", and he asked that Heath be required to provide "full discovery" of its documents. 129. Mr Farquhar said that Heath's Defence in par13, for example, referred to a proposal for insurance, and Heath must have that proposal in its possession. He pointed out that Heath's discovery should relate to its Defence. 130. Mr Brian Morris ultimately produced this proposal. He stated that Heath had no documents which indicated "... the assignment or the assumption of risk from one insurer to (Heath)", and pointed out that Heath had never been asked to make a general discovery of its documents, and its discovery of 12 November was limited to that which it had been ordered on 8 November to make (p39). He submitted that if the other parties sought a full discovery by Heath, they should apply for it. Mr Farquhar then orally applied for Heath to make discovery of its documents. 131. Under the system of mandatory discovery in the Territory it is sufficient to note that Heath is required by r29.03(2) to discover its documents by 3 December. The order of 8 November was made for the purposes of trial on 15 November, and was not an order under r29.05. (iii) MR DAVIES' CLAIM FOR PRIVILEGE: DOCUMENTS IN ITEM 4 OF HIS LIST OF DOCUMENTS 132. Mr Anderson observed that he had not yet seen the documents discovered and ordered to be produced to the Court by Mr Davies; the plaintiffs would therefore in any event have been prejudiced had the trial continued on 15 November. 133. Mr Morris handed up the documents listed (a), (b), (d), (f) - (h), one of those listed in (i), and (j), in item 4 of Mr Davies' list of documents, and stated that Mr Davies, as the agent for the fourth defendant Heath in this litigation, claimed that those documents were privileged from disclosure on the basis that they related to this litigation and - "Mr Davies is the author or recipient of the documents, he is the agent of (the fourth defendant Heath) who has been appointed to manage the aviation claim; and they are communications either from a solicitor through Mr Davies to (Heath), the principal, or from (Heath) through Mr Davies to the solicitors." (transcript, p32) 134. This was clearly a claim that the documents were subject to legal professional privilege. No claim for privilege was made in relation to the other documents in Item 4 of Mr Davies' list of documents. 135. Mr Anderson who, from the nature of things, was not permitted to inspect the documents in question, submitted that this claim for privilege could not be sustained because Mr Davies could not, by acting as a "post box" between solicitors and others, found a claim for privilege. Mr Davies was not a solicitor, and there was no suggestion that the documents were privileged from disclosure on any basis other than legal professional privilege. 136. In reply, Mr Morris submitted that - "Mr Davies is, for the purposes of this action, an officer of Heath's, and the solicitors communicated with him and he records the communication that solicitor made to him; and that we submit, is a record of a privileged conversation which is for information and advice to other members of the Heath organisation. We would say it's the privilege of a communication by a solicitor to a company, and a memorandum recording it." (transcript, p34) 137. Mr Farquhar submitted that the documents in question must satisfy the "sole purpose" test set out in Grant v Downs [1976] HCA 63; (1977) 11 ALR 577; I accept that. He noted that according to the list document (j) was the only document in which Heath was named as a party. He submitted that on the face of it, the other documents described in the list were "internal business arrangements for an insurer running a claim", and that only document (a), directed to a firm of solicitors, might be within the proper scope of a claim for legal professional privilege. 138. The law provides that certain communications between persons in a lawyer/client relationship are privileged from discovery if made for the sole purpose of being used in litigation, present or then reasonably anticipated, or for the sole purpose of enabling the client to obtain legal advice or to enable the lawyer to give it. As to the underlying principle, see generally Attorney-General (Northern Territory) v Maurice [1986] HCA 80; (1986) 161 CLR 475 at 490-1, per Deane J. This privilege extends to communications for the purpose of pending or contemplated litigation which pass between a third party and the client or his agent, or between a third party and the client's solicitor; see the non-exclusive classes of documents set out by Lockhart J in Trade Practices Commission v Sterling [1979] FCA 33; (1979) 36 FLR 244 at 245-6. The privilege thus extends to communications for the required purpose by an agent appointed by the litigant for the purposes of the litigation; see Ritz Hotel v Charles of the Ritz Ltd (No.22) (1988) 14 NSWLR 132. 139. There was no objection to my inspecting these documents to see if they fell within the category of legal professional privilege, and as a matter of discretion I thought it desirable to inspect them, and have done so. 140. For the purposes of this application I treat Mr Davies as the agent of Heath appointed to manage this litigation, and as owing an obligation of confidentiality to Heath. 141. Having inspected the documents the subject of the claim, I am satisfied that they are all privileged from disclosure to the other parties to this action on the basis of legal professional privilege, and direct that they be returned to the fourth defendant which produced them. (v) THE COSTS THROWN AWAY AS A RESULT OF THE ADJOURNMENT OF THE TRIAL 142. Mr Anderson submitted that Heath should pay on a full indemnity basis all costs thrown away by the other parties as a result of the trial being adjourned on the date it was to commence. The basis of his submission was that the need that the trial be adjourned in the interests of the second defendant, who had been left without legal representation at the last minute, had "been occasioned by the misconduct and/or incompetence of Mr Davies and Mr Crane", who had obtained "(the second defendant's) whole story." In an endeavour to establish this basis Mr Anderson took me through some of the chronology of the pre-trial proceedings (set out in detail at pp2-41), noting that:- "... on 18 (sic, 19) October ... the third defendants ... issued interrogatories directed to (the second defendant) and these were answered and sworn on 25 October by Mr Stiles, filed by Mildrens on his behalf. ... it's in large part the answer to those interrogatories which forms the basis of the denial of indemnity against Mr Stiles in the Defence filed on Friday (12 November). ... in

general terms, the questions (the second defendant) was required to answer by Mr Farquhar, those answers obtained by Messrs Mildrens have been effectively incorporated in the Defence (of Heath)." (transcript, p39) 143. As noted earlier, the Court file does not disclose that any such answers by the second defendant have yet been filed in Court. 144. Mr Anderson referred to a letter written as late as 2 November, 13 days before trial, from Mr Davies to Mr Ian Morris in which Mr Davies said "I do not know if any liability has in fact been assigned", that is, from the original insurer; it stated that if liability had been assigned, it could have been to any one of 3 companies in the Heath Group, including Heath. 145. Having gone through the pre-trial chronology, Mr Anderson submitted that either Mr Crane or Mr Davies had "elected to keep the identity of the insurer from the parties and the Court". He submitted that it should be inferred that Mr Davies either knew, or should have known, the identity of the insurer, and should have revealed it prior to 8 November. 146. He submitted that the chronology showed that the plaintiffs could not have joined the insurer earlier than they did, because they were unable to ascertain its identity prior to that time. 147. He noted Mr Davies' statement of his role in his letter of 25 January 1990; see p33. 148. Mr Anderson said that the plaintiffs would not seek to adduce expert evidence at trial. 149. Mr Farquhar adopted Mr Anderson's submissions, and submitted that the - "Costs should be on an indemnity basis, taxable forthwith, and ... should include all fees and preparation for this trial since then ... including the costs thrown away (by) the trial being vacated." He stressed that it was the late notification by Heath (on 12 November) that the second defendant would not be indemnified, and would not be legally represented, that had caused the adjournment of the trial. 150. Mr Brian Morris for the fourth defendant vigorously contested these submissions. He submitted that the alleged "misconduct and/or incompetence of Mr Davies and Mr Crane" had not been particularized or supported. He sought more time to deal with that submission. 151. He submitted that if at the end of this litigation Heath succeeded in establishing its Defence that it was not liable to indemnify the second defendant, it would then be seen that any order that it pay the costs now thrown away would be erroneous. I do not accept that submission; the ultimate merits of the case have nothing to do with the issues relevant to the determination of who should pay for costs thrown away as a result of the adjournment of the trial. 152. He submitted that Heath had been forced to decide whether or not to indemnify the second defendant, by the plaintiffs' action in joining it as a fourth defendant. Otherwise, "we were prepared ... to continue acting for Mr Stiles and give him the benefit of the Court proceedings." I accept that; it is understandable that Heath was compelled to elect one way or the other once it had been joined in the action since thereafter judgment in the action would bind it. 153. Mr Morris submitted that since the plaintiffs had caused the last-minute election to be made, it was the plaintiffs who were responsible for the consequences and should pay the costs thereof. There was no reason for Heath to pay for the dilatoriness and lack of preparation of the plaintiffs and the third defendants. Heath had not been dilatory; it had acted promptly on 12 November, after being joined on 8 November. 154. I consider, with respect, that this analysis is somewhat glib and simplistic. It does not trace the chain of causation far enough back, to ascertain why it was that the plaintiffs had joined Heath as a defendant only one week before trial. To treat the plaintiffs and the third defendants as dilatory and guilty of lack of preparedness, and Heath as not having been dilatory, is, in the light of the chronology at pp2-42, to regard that which is white as black, and vice versa; but this is not Alice in Wonderland. Bearing in mind these considerations, Mr Morris submitted that the appropriate course to adopt was to defer ruling on the question of the costs thrown away, until the trial had concluded. By that time the evidence would be in, the issues resolved, and evidence could then be taken on the question of costs. 155. He submitted that issues relevant both on the trial and on the present question of costs thrown away included: whether Heath was correct in refusing an indemnity to the second defendant; the propriety of the conduct of the second defendant and his actions; and the propriety of joining Heath. Setting aside the question of the conduct of the second defendant, which may be relevant on the question of his recovery of costs thrown away, I do not consider the first issue is relevant to the present question, while the third issue was never sought to be agitated when the question of joinder arose. 156. Mr Morris submitted that the purpose of the application for costs was "to force us to put evidence before the Court now", in the sense of making a case against the second defendant, "so that part of our case is given before the plaintiff is called or (has) closed his case." I do not consider that to be the case at all, once the question whether the second defendant should have his costs thrown away, is set aside. 157. He submitted that the plaintiffs were to a degree unprepared for trial on 15 November. For example, they had not served any experts' reports. I noted earlier that Mr Anderson said the plaintiffs would not call any experts. Mr Morris submitted that Heath would not "surrender" the second defendant to the plaintiffs, or to the third defendants who "are endeavouring to prove that it's the pilot, not the aircraft's maintenance (at fault)." 158. He submitted that Heath had been "grossly prejudiced" in a situation where it had been joined as a defendant "at the last minute on virtually no notice". That this should be so is far from clear to me, in light of the history of the proceedings; in any event, it is irrelevant to the question of costs thrown away. 159. Mr Morris submitted that had proper searches been made by the plaintiffs they would have seen that C.E. Heath (Marine and Aviation) Insurance Ltd had changed its name on 14 November 1988 to C.E. Heath Insurance Ltd, and was dissolved on 25 August 1992 "as part of a ... consolidation of a number of companies". There was no question of the policy being assigned from one company in the Heath Group to another, because the sheer volume of policies and the requirement of notice rendered such a course impractical. I observe that all of these matters could, and should, have been made clear by the Heath interests weeks before trial. 160. He stated that at the time of the accident "Cynstock ... were not trading as Outback Helicopters and were not insured"; and that the insurer had ceased to provide legal services to Cynstock in October because it had "mistakenly put itself on the record for a business name which at the time of the accident was unregistered and was not the property of Cynstock who were not insured by it and never were." This appears to give a new and interesting spin to the pleadings, and does not speak well of the care taken by those who had assumed the conduct of the defence of the first defendant, but is irrelevant for present purposes. 161. Mr Morris informed me that the question whether Heath was liable to indemnify the second defendant initially arose as a result of what emerged during the coronial inquiry. That does not bear upon the present question; it is common for an insurer in such a position to exercise its contractual right to conduct its insured's defence, as Heath did here until 12 November. 162. He complained of the lateness of the delivery of interrogatories by the third defendant on 19 October, the answers to them being "material to the reasons why (Heath) denied liability." I observe that these interrogatories followed inspection of documents discovered by the first and second defendants on 23 September, pursuant to an order of 6 September. This explains their lateness; the first and second defendants should have made discovery much earlier. As to the substance - that the second defendant's answers raised "further questions ... regarding liability" - it is not germane to the present question. Mr Morris rightly pointed out that the second defendant was obliged to answer interrogatories truthfully; it is unnecessary to embark upon the duties of the solicitor on the record, in that connection, whose instructions come from the insurer. 163. He submitted, in summary, that the delay in ascertaining that Heath was the insurer, lay with the plaintiffs and that:- "The fourth defendant has been put into this position by the actions of the plaintiff(s) and the third defendant(s), and we would strongly resist that there be any interim order or any order at this stage as to costs." (transcript, p70) 164. I have already commented on some of the submissions on costs when setting them out. I do not find that either Mr Crane or Mr Davies consciously decided to conceal the identity of Heath as current insurer from the parties and from the Court. It may well be that the question of the identity of the current insurer was swallowed up in the vortex of the major company reorganisation within the Heath Group, and what I am told was the impracticality of actually assigning liability under individual policies. It follows that it may be that responsibility for what I have called the fuliginous obscurity which surrounded the identity of the current insurer for so long, lay somewhere within the Heath Group. What is crystal clear, however, is that neither Mr Crane nor Mr Davies have showed that they had made the timely effort necessary to ascertain that identity when the importance of the question became obvious early in October. It is not necessary to characterize their apparent inactivity in that regard in pejorative terms such as "misconduct" or "incompetence". 165. I accept Mr Anderson's submission that Mr Davies in his role as manager of this litigation for the Heath Group should have ascertained, and made known, the identity of Heath as the current insurer, well prior to 8 November. I also accept Mr Anderson's submission that it was this failure on the part of those acting for Heath which resulted in the plaintiffs being unable to join Heath as fourth defendant until very much the last minute, on 8 November. That in turn led to the decision by Heath on 12 November not to indemnify the second defendant and to cease to fund his legal representation. And that in turn resulted in the trial, the dates for which had been fixed months before, having to be adjourned at the last minute in the interests of justice for the second defendant. The fault for the chain of events which ultimately resulted in the adjournment lay squarely at the feet of Heath, when the chronology is examined. Accordingly, I order that Heath pay the costs thrown away by the other parties, other than the second defendant, as a result of the last-minute adjournment of the trial on 15 November until next year. I direct that those parties may tax their costs thrown away immediately, under r63.04(4). I direct under r63.29(1) that those costs be taxed on an indemnity basis, under r63.27. To the extent that it may be necessary I certify for counsel and, in relation to the trial, for senior counsel for the plaintiffs. 166. I set aside the question whether the second defendant should be able to recover from the fourth defendant any costs or expenses he has thrown away as a result of the adjournment of 15 November. Mr Stiles informed me on 15 November that he had been told by Mr Crane to keep himself available for several weeks, and had therefore given up his work for that period. Mr Brian Morris submitted that the affidavit by Mr Crane to be used in support of Messrs Mildrens' application for leave under r20.03(3)(b) was also relevant to the question of the second defendant's costs. I have already indicated why it is that I should not deal with the question of leave under r20.03(3)(b); and accordingly it seems desirable that the Master or another Judge also deal with any application by Mr Stiles to recover from Heath any costs he claims he has thrown away as a result of the adjournment on 15 November. MATTERS PRELIMINARY TO TRIAL ON 1 AUGUST 1994 167. I note that the 4 week period 1-26 August 1994 has now been set aside for the trial of this action. That is 8 plus months away, but in practical terms the useful time available is probably some 6 months. In the light of the experience between July and November 1993, that period is not over-long for the parties to ready themselves for trial. It is vital that they now pursue assiduously all necessary pre-trial matters. To ensure that this occurs there will be a directions hearing in 2 weeks time, at 9 am on Thursday 9 December. At that hearing I will deal with any matters which any party then wishes to raise. I would expect to be informed as to the following:- (a) Whether the second defendant has now obtained legal representation; (b) What is proposed to be done, if anything, about the first defendant; (c) Whether the second defendant has filed his answers to the third defendant's interrogatories of 19 October; (d) The state of pleadings, and any proposed timetable for pleadings, discovery and interrogatories: as between the plaintiffs and the defendants; as between the first and second defendants on the one hand, and the third defendants on the other; as between the third defendants and the fourth defendant; and as between the second defendant and the fourth defendant; (e) Whether Messrs Mildrens have applied for leave under r20.03(3(b), and the outcome of that application; (f) Whether the second defendnat has filed any application in relation to Messrs Mildrens continuing to act in this action for the fourth defendant. 168. The following directions hearing is tentatively listed for 9am on Thursday 3 February 1994. 169. The orders of the Court are as I have indicated in this judgment.

Kennedy v Cynstock Pty Ltd & Ors [1993] NTSC 98; 3 NTLR 108

At a glance

Court

Decision date

Before

Source

Judgment (11 paragraphs)

Kennedy v Cynstock Pty Ltd & Ors [1993] NTSC 98; 3 NTLR 108 (25 November 1993)

Parties

Cases Cited (11)