Matthew Chaina v Graham Douglas Bates and each of the partners of Mallesons Stephen Jacques, as it was known at the relevant time, listed in the revised schedule A in the amended statement of claim
HIS HONOUR: These are proceedings for professional negligence against the defendants, the partners of the law firm Mallesons Stephen Jacques, as it was known at the relevant time. The firm had represented the plaintiffs in proceedings against the Presbyterian Church (NSW) Property Trust, as the operator of the secondary school, The Scots College, and the principal of the college and members of its council, for damages for nervous shock and consequential loss arising from the death by drowning of Nathan Chaina, a pupil at the college, during an outdoor education program. I shall refer to these earlier proceedings as "the college proceedings."
There are six plaintiffs:
1. Matthew Chaina, Nathan's younger brother;
2. Jean-Pierre Chaina, Nathan's older brother;
3. George Chaina, Nathan's father;
4. Rita Chaina, Nathan's mother;
5. Proton Technology Pty Ltd ("Proton"), a company of which George and Rita Chaina were the sole shareholders;
6. Deluxe Chemicals Pty Ltd ("Deluxe"), a company of which George and Rita Chaina were the sole directors and the major shareholders.
The companies were parties to the college proceedings on the basis that the psychological harm suffered by George and Rita Chaina from the death of their son affected their capacity to conduct the business of each company, causing financial loss. The claim by the companies was per quod servitium amisit.
Nathan Chaina died on 24 October 1999. The plaintiffs retained the defendants, initially for the purpose of the inquest, in February 2000. On 5 October 2001, shortly after the coroner's report was handed down, George and Rita Chaina instructed the defendants to prepare nervous shock claims on behalf of the family and to advise whether the companies had a claim for economic loss available to them. The first defendant, Graham Bates, was the partner handling the matter. On October 2001, he advised the family members that they had until October 2002 to commence proceedings. Preparation for the proceedings ensued, including the obtaining of medical reports and the consideration of the position of the two companies, and on 23 October 2002, just before the expiration of the limitation period, the college proceedings were commenced by statement of claim.
In the meantime, in late 2001 and early 2002, there was publicity about calls for reform of public liability laws, engendered, at least in part, by extensive increases in premiums for public liability insurance. It was this that led to the enactment of the Civil Liability Act 2002. The bill was introduced in the Legislative Assembly in late May 2002, and passed on 18 June 2002. By s 2 it had retrospective effect, so as to apply to proceedings commenced on or after 20 March 2002. Accordingly, it applied to the college proceedings.
In the college proceedings the pleadings on behalf of the Presbyterian Church admitted duty of care to the first 4 plaintiffs, that is, the family members, and breach of that duty. That being so, in respect of those plaintiffs the only issue was damage. As to the fifth and sixth plaintiffs, the companies, the Church's position was that awards for loss and damage in a claim per quod servitium amisit were fixed and limited by Part 2 of the Civil Liability Act.
The present proceedings against the defendants were instituted by statement of claim on 19 March 2008, at which time the college proceedings were still in train. Put shortly, the claim is that the defendants were in breach of duty imposed by their retainer by the plaintiffs in failing to advise them that the proposed changes to the law might limit their recovery of damages and that they should take any further steps necessary to enable a statement of claim to be filed before 20 March 2002, the date of the retrospective operation of the Civil Liability Act, and in failing themselves to prepare and file a statement of claim by that date. It is alleged that by about 1 February 2002, or 17 March 2002, the defendant had sufficient instructions and evidence to prepare a statement of claim to the effect of that which was filed in October of that year.
In an amended statement of claim in the present proceedings, filed on 30 July 2008, the history which I have recited is set out. In particular, the publicity surrounding the potential change in the law is pleaded in para 33, and the introduction and passage of the Civil Liability Act in paras 38 - 43. Retainer, duty and breach are pleaded in paras 51 ff, and causation in paras 59 - 62. Damages are claimed in para 63, and in particulars reference is made to Part 2 of the Act with its provisions limiting the award of damages for non-economic loss, economic loss, exemplary, punitive or aggravated damages, and interest. Reference is also made to the Presbyterian Church's contention that Part 2 applies to the claims by the companies.
Before me is a motion by the defendants for an order, pursuant to UCPR r 28.2, for the separate determination of the issues of duty and breach. Two other orders are sought, and I shall turn to them later. At the hearing of the motion the defendants were represented by Mr Kabilafkas of counsel. Mr Safi, solicitor, appeared for the first, third, fourth and fifth plaintiffs: Matthew Chaina, George Chaina, Rita Chaina and Proton. The sixth plaintiff, Deluxe is in administration. The second plaintiff, Jean-Pierre Chaina, is separately represented. Mr Kabilafkas mentioned his appearance and conveyed his consent to the order for separate determination.
[2]
Separate determination
Affidavits of two members of the firm representing the defendants, Peter Tredinnick and Cecilia Wright, were read. From this material it emerges that the college proceedings and the present proceedings have had a long history. The primary reason for the defendants' application for separate determination of duty and breach is the delay which has occurred, and which is likely to continue, before the present proceedings come to finality. In July 2008, the defendants agreed that any further steps in the present proceedings should await the outcome of the college proceedings. The progress of the college proceedings was very slow. They were ultimately heard by Davies J, who delivered reasons for judgment on 23 May 2014 and pronounced final orders on 31 July 2014. The history of both proceedings, which included several changes by the plaintiffs of their legal representation after they parted company with the defendants in April 2005, is traced in the affidavits and need not be recited.
In May 2008, the first and second plaintiffs in the college proceedings, the brothers of Nathan Chaina, settled their claims. The outcome of those proceedings for the remaining plaintiffs was not favourable to them. Davies J found that the third and fourth plaintiffs, Nathan's parents, were entitled to damages, as was the fifth plaintiff, Proton. However, numerous costs orders had been made against them in interlocutory proceedings, and offers of compromise had been rejected by them, with the result that the Presbyterian Church's costs were considerably in excess of the amounts awarded to those plaintiffs. In the event, after a set-off, Davies J gave judgment in favour of the Church in a substantial sum.
The plaintiffs, at this stage unrepresented, filed a notice of intention to appeal on 25 August 2014 and a notice of appeal on 31 October 2014. On 16 March 2015, Emmett JA referred the matter to the Pro Bono panel on a limited basis, that is, for advice in relation to the appeal, drafting an amended notice of appeal and representation at the next directions hearing. At the time the present motion was heard that directions hearing was yet to take place.
In the meantime, Mr Bates retired as a partner of the defendants' firm in June 2003. He remained as a consultant until his retirement in September 2013, since which time he has not worked at the firm in any capacity. In conducting the plaintiffs' case Mr Bates had been assisted by an employed solicitor, Marnie Prater, but she left the firm in September 2007 and now lives and works in Singapore.
Mr Kabilafkas pointed out that in the present proceedings the issues of duty and breach would turn upon what instructions were provided by the plaintiffs to the defendants, and when they were provided, together with evidence of what was, as he put it, "in the wind" about proposed reforms in this area of the law and whether a solicitor "should have appreciated that legislative change was coming." These issues, he submitted, are distinct from the issue of damage, which would turn upon what damage, psychologically and economically, the plaintiff suffered as a result of the death of Nathan, and the impact of the Civil Liability Act upon any award of damages. That issue would turn upon the factual findings of Davies J in the college proceedings, and whether those findings were overturned by the Court of Appeal. Accordingly, that issue could not be determined until the college proceedings come to finality.
In Idoport Pty Ltd & Ors v National Australia Bank & Ors [2000] NSWSC 1215, Einstein J had occasion to review the principles governing the separate trial of issues in civil proceedings, citing relevant authority, in relation to the predecessor of the present rule, Part 31, r 2 of the Supreme Court Rules 1970. His Honour said at [7]:
"Without examining specific cases in relation to the power conferred on the Court in Part 31, Rule 2, I proceed on the basis of the following principles.
(1) The power of the Court to order the separate determination of an issue is a discretionary power which must be exercised judicially, but cannot otherwise be fettered: Dunstan v Simmie & Co Pty Ltd [1978] VR 699 at 670 per Young CJ and Jenkinson J.
(2) In exercising the power under Part 31, Rule 2, the Court is now enjoined to give effect to the overriding purpose of the Supreme Court Rules; namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings and cannot be stated in a more confined way: Part 1, Rule 3 (1), (2) Supreme Court Rules.
(3) The Court begins with the proposition that it is ordinarily appropriate that all issues in a proceeding should be disposed of at the one time: Tallglen v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141 per Giles CJ in Comm D, Hadid v Australis Media Ltd (unreported, Supreme Court of NSW, 29 March 1996 per Rolfe J). Accordingly, it is for the party who wishes to have a question separately determined to show that it is desirable for that to occur.
(4) Without being exhaustive, the separate determination of an issue may prove to be an appropriate procedure in at least the following sets of circumstances:
(a) where the resolution of that separate issue will have the effect of resolving the entirety of the litigious controversies or of substantially narrowing the field of litigious controversy: CBS Productions Pty Ltd v O'Neil [1985] 1 NSWLR 601 at 606 per Kirby P, Dunstan v Simmie & Co Pty Ltd (supra, at 671 per Young CJ and Jenkinson J);
(b) where the resolution of that separate issue carries with it a strong prospect that the parties will thereafter be able to resolve their dispute themselves and thus avoid further litigation: Tallglen v Pay TV Holdings (supra, at 141 - 142 per Giles CJ in Comm D);
(c) where there is a clear demarcation between that issue and all other issues in the case, including issues going to the credit of witnesses: CBS Productions Pty Ltd v O'Neil (supra, at 606 per Kirby P), Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Rajski v Carson (1988) 15 NSWLR 84 at 88 per Kirby P and Hope JA.
(5) Conversely, the separate determination of an issue will rarely be an appropriate procedure where:
(a) there are intertwined issues of fact or law between the separated question and the other questions such that the determination of the separate question will not have any substantial effect upon the width of the field of litigious controversy or the prospect of the settlement of the balance of the litigation: Law Society of NSW v Bruce (unreported, Supreme Court of NSW, 23 April 1996, per Rolfe J), Parramatta Stadium Trust v Civil and Civic Pty Ltd (unreported, Supreme Court of NSW, 27 August 1996, per Hunter J).
(b) where there is a commonality of witnesses and issues of credit as between the separate issue and other issues in the case which will or may necessitate a ruling on the credit of one or more of the common witness, thus possibly precluding that same judicial officer from again dealing with the matters going to the credit of the common witness in accordance with the decision of the Court of Appeal in Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 441: Story of Sydney Pty Ltd v Ling (unreported, Supreme Court of NSW 15 November 1994, per Rolfe J), Century Medical v THLD [2000] NSWSC 5; (unreported, Supreme Court of NSW, 3 February 2000, per Rolfe J).
(c) there is a possibility that the resolution of the separate issue will not finally determine the issue but will merely result in an appeal from that decision in relation to that separate issue, creating a multiplicity of proceedings, interruption to the court and undesirable fragmentation of the proceedings: Story of Sydney Pty Ltd v Ling (supra), Century Medical v THLD (supra).
(6) The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings as anticipated, but often has the reverse effect, merely causing added delay and expense to the resolution of the litigation. Thus, before an issue is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd (supra, at 142 per Giles CJ in Comm D), Parramatta Stadium Trust v Civil and Civic Pty Ltd (supra), Century Medical v THLD (supra)."
In McLean (by her tutor) v Marshall [2013] NSWSC 1400, Barr AJ cited that passage, and observed at [13] that in more recent times, "no doubt in response to legislative changes, the courts have been readier to separate issues." His Honour continued at [14]:
"Another significant legislative change has been the introduction of the UCPR and an increasing emphasis in the Court on early determination of issues in order to achieve a just, quick and cheap resolution of proceedings. The Courts have, consistently with the view stated by Brereton J in Integral Home Loans Pty Ltd & Anor v Interstar Wholesale Finance Pty Ltd & Anor [2006] NSWSC 1464 at [6], to be more prepared to intervene to separate issues in order to resolve significant parts of litigation expeditiously."
Mr Kabilafkas noted the many years that have passed since the defendants had acted for the plaintiffs in the college proceedings and, in particular, since the period leading up to the passing of the Civil Liability Act. He noted the position of Mr Bates, now an elderly man, and of Ms Prater, and the need to examine communications between the plaintiffs and them (and, perhaps, others in the firm) at the relevant time. In light of the slow process in bringing the college proceedings to trial, he predicted that it may be a considerable amount of time before the appellate process comes to an end.
Mr Kabilafkas acknowledged that there might be overlapping questions of credit on the issues of duty and breach, on the one hand, and damage on the other. However, he added that the "primary determinative" of what passed between the parties would be the defendants' file, so that there would be "very little cross-over" of questions of credit on those issues.
The position of Mr Safi, for the plaintiffs, was that the application for separate determination was neither consented to nor opposed. He pointed out that, because of the stance of the parties thus far to await the outcome of the college proceedings before progress in the present proceedings, the defendants have not yet filed a defence, so as to elucidate the matters in issue. I take his point, but that would not dissuade me from ordering the separate determination which the defendants seek. The reasons Mr Kabilafkas has advanced for the separate determination of the issues of duty and breach are sound, and I am satisfied that the order should be made. Obviously, if either issue were resolved adversely to the plaintiffs, that would be the end of the matter. To adapt the words of Barr AJ in McLean v Marshall at [14], quoted above, the early determination of those issues would contribute to a just, quick and cheap resolution of the proceedings.
[3]
Other matters
Also sought in the notice of motion are orders that the plaintiffs file and serve a further amended statement of claim and that the defendants file and serve a defence, each on or before specified dates. As to the statement of claim, Mr Kabilafkas noted that the settlement of the claims of the first and second plaintiffs, Matthew and Jean-Pierre Chaina, have not been pleaded, a matter which he argued went directly to the question of their damages and was an essential part of the pleading. For the first plaintiff Mr Safi put no submission to the contrary. However, as I have said, the second plaintiff was not represented at the hearing of the motion.
In addition, Mr Kabilafkas submitted that the current amended statement of claim is irregular because it was filed and certified by one solicitor despite the fact that Jean-Pierre Chaina is separately represented. He referred to the decision of Garling J in Konneh v State of New South Wales (No 2) [2013] NSWSC 390, in which a statement of claim by several plaintiffs purported to be filed and certified by two legal representatives. His Honour dealt with this issue at [73] ff, referring to authority for the proposition that it was irregular for two solicitors to be placed on the record as representing co-plaintiffs, although the court might grant leave for that course where necessary in the interests of justice. The situation in that case is somewhat different from the present case, but Mr Kabilafkas submitted that the same question of principle is raised. He argued that a separate statement of claim by Jean-Pierre Chaina should be issued, or that leave should be sought to file an amended statement of claim for all plaintiffs with the two solicitors on the record.
I am not prepared to make orders on these matters until Jean-Pierre Chaina has had the opportunity to be heard about them. I shall give directions to that end, and any other directions which might be required, when I hand down this judgment on the separate determination issue.
It is agreed that costs of this motion should be costs in the cause.
[4]
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Decision last updated: 10 December 2015
Parties
Applicant/Plaintiff:
Matthew Chaina
Respondent/Defendant:
Graham Douglas Bates and each of the partners of Mallesons Stephen Jacques, as it was known at the relevant time, listed in the revised schedule A in the amended statement of claim