Moresload Pty Limited v Hebden Quarries Pty Limited

Judgment - ex tempore 1This is a case that the Registrar referred to the Associate Judge. Parties came to this Court by mistake; however, efficiency required that I hear the application. It is an application brought by the plaintiff, Moresload Pty Limited, to transfer the proceedings from the District Court of New South Wales in Newcastle to this Court. The District Court proceedings are between the plaintiff and the defendant, Hebden Quarries Pty Limited, in these proceedings, as plaintiff and defendant respectively in the District Court. Those proceedings were commenced on 23 October 2009 and the plaintiff seeks damages from the defendant in respect of a contract that was entered into in June 2008 in respect of quarry business. 2The contract between the parties is in evidence, annexed to the affidavit of Carolyn Ann Middleton sworn 10 May 2011. The pivotal clause in the contract to which the defendant points is clause 20.2, which provides as follows: Neither party will be liable to the other party for any economic, financial, indirect or consequential loss or damage whatsoever suffered or incurred by the other party including but not limited to loss of production, loss of rent, loss of income, loss of profit or anticipated profit, business interruption or the like. 3The proceedings were case managed in the District Court and the parties corresponded in relation to the preparation of the matter for hearing. On 10 August 2010, the plaintiff's solicitors wrote to the defendant's solicitors in terms that included the following: The cost of the proceedings will be increased if the matter has to be conducted in the Supreme Court. As you know, the hearing of an action in the Supreme Court would have to take place in Sydney. The principals of the parties, the witnesses and the solicitors are all in Newcastle. There is no reason that this matter should not be dealt with by the District Court. If it becomes necessary to seek an order transferring the proceedings to the Supreme Court we will seek an order that the defendant pay the costs of the application. At this stage we have not made an application because we think that this is a suitable case for mediation. We would appreciate your comments. 4On 13 August 2010 the defendant's then solicitors wrote back in terms that included the following: In the event that the plaintiff intends to abandon its claim to the extent that it exceeds the jurisdictional limit of the District Court in accordance with section 23 of the Civil Procedure Act 2005 (NSW), then we agree that there is no reason for the matter not to be dealt with by the District Court. However, as the matter currently stands, the plaintiff's claim significantly exceeds the jurisdictional limit of the District Court. How the plaintiff intends to deal with those circumstances and at what stage of the proceedings is a matter for the plaintiff. Any inconvenience caused to the plaintiff by the jurisdictional issue may have been avoided by the plaintiff investigating the quantum of its claim prior to commencing proceedings. In this regard we refer you to the plaintiff's obligation under District Court Practice Note 1, many of which have not been complied with. The plaintiff's failure to adequately prepare its claim prior to commencing proceedings can hardly be pressed against a defendant in the form of a costs order. The plaintiff has commenced the proceedings in the jurisdiction of its nomination and the defendant is entitled to defend the proceedings. Further, the defendant is obliged to give notice of its objection to the extension of the jurisdictional limit of the court, following Richards v Cornford [2010] NSWCA 99. Accordingly, any application by the plaintiff for costs or other penalty against the defendant arising from these circumstances is without basis and will be vigorously defended. We look forward to receiving notice of the plaintiff's proposed action in relation to the jurisdiction of the proceedings. That action and the general progress of the proceedings should not be delayed by any form of alternative dispute resolution between the parties, which will be the subject of separate correspondence. 5On 19 August 2010 the solicitors for the defendant wrote again to the plaintiff's solicitors advising amongst other things as follows: In your letter to us dated 10 August 2010, you assert the cost of the proceedings will increase if the matter is conducted in the Supreme Court and that the 'principals of the parties, the witnesses and the solicitors are all in Newcastle'. In respect of those assertions: (a) As we have said previously, it is a matter for the plaintiff to determine the Court in which it wishes to conduct these proceedings, and, accordingly, the amount of any limit to its recovery in the proceedings. The defendant will meet the claim against it in whichever Court that claim is in. The defendant considers that it will not be put to any disadvantage (by reason of costs or otherwise) for the proceedings being transferred to the Supreme Court if that is what the plaintiff wishes to do. (b) If the proceedings are transferred to the Supreme Court in Sydney, we are instructed that the defendant intends to appoint Sydney solicitors. That will avoid the need for local agents and the costs of such. (c) You are not correct in saying that the principals of the parties and the witnesses are all in Newcastle. The defendant has a number of witnesses (including Mr Newman who executed the written agreement upon which you apparently rely and who is the defendant's "principal") who are in Wollongong. If the plaintiff intends to transfer the proceedings to the Supreme Court in Sydney, please advise us of that within 7 days. If we are not so advised within 7 days, the defendant will proceed on the basis that the plaintiff does not intend to transfer the proceedings to the Supreme Court and that the plaintiff's claim is accordingly subject to the jurisdictional limit of the District Court. 6The plaintiff's solicitors then took issue with the defendant imposing a seven-day time limit. By letter of 26 August 2010 the plaintiff's solicitors said in a letter to the defendant's solicitors: If this matter cannot be resolved without going to a hearing then our client will have to consider whether to seek an order transferring the proceedings to the Supreme Court. At this stage there is no basis on which your client can impose an arbitrary time limit on our client's consideration of that aspect." 7The parties held discussions in relation to the preparation of the case and in October there was communication in relation to a mediation. It turns out that the parties were at odds as to who should mediate their differences. One side chose a more senior and experienced lawyer, the other side chose a less experienced lawyer but a very experienced mediator. It would seem that they could not agree on much in relation to the mediation, and the plaintiff also expressed the view today in court through its counsel that it was concerned that there was a lack of good faith in the approach being adopted by the defendant. I do not need to decide that issue. What is obvious is that the District Court Judge made an order for mediation with which the parties have not complied. That is a most regrettable situation. 8The plaintiff received a report from an expert, Suzanne Delbridge-Bailey, dated 16 June 2010. That expert was retained for the purpose of assisting the trial judge in respect of the quantum of the plaintiff's alleged loss by reason of the alleged breach of contract. The plaintiff today pointed out that the defendant had failed to instruct an expert to provide an expert opinion in response to Ms Delbridge-Bailey's opinion. The explanation as to why the defendant did not do that is because the defendant submits that the expert opinion is irrelevant, having regard to the fact that the plaintiff is prohibited from achieving the result in respect of which the expert opinion would be relevant by reason of clause 20.2 of the contract. 9Nothing was done by the plaintiff to make an application to transfer these proceedings to this Court in 2010. Indeed, the parties communicated in relation to the setting of a trial date in the District Court. On 8 February 2011 the District Court set the matter down for hearing on 23 May 2011 for five days. That would appear to have been set down over the objection of the defendant but, in any event, the matter proceeded and is ready for hearing and the trial commences on Monday week, 23 May 2011 in Newcastle District Court. 10In April 2011 the defendant made application in the District Court for security for costs. Colefax DCJ dismissed that application and ordered that the defendant pay the plaintiff's costs. It was not until three weeks later, then a mere four weeks before the hearing date in the District Court, that the plaintiff notified the defendant that it was going to make an application to this Court to transfer the proceedings to this Court. A Summons was filed on 29 April 2011 with a return date for hearing a week later than the trial date in the District Court. That was rectified by the plaintiff then filing a Notice of Motion for expedition of the application for transfer. It is that Motion for expedition that came before me this morning. I have taken the view not only that I should expedite the application but also hear the case today in the duty list because of the impending trial date on Monday week. 11Mr E Chrysostomou, of counsel, who appears for the plaintiff, submitted that the defendant's admission in their solicitors' letter of 19 August 2010 that there was no disadvantage to it in transferring the matter to the District Court must be the same position today. I disagree. When the defendant made that admission in August 2010, the matter had not been set down for hearing. The mediation had not failed by reason of the non-attendance of the parties at the mediation. The parties were in a very different mode in August 2010 when that admission was made to that in which they find themselves today, with a hearing date only five working days away and with no prospects of getting the trial on for some months in this Court. 12Mr PB Walsh, of counsel, for the defendant, submitted that the matters for consideration include the extent of the plaintiff's delay in seeking to transfer the matter; the costs associated with the delay; the prejudice to the defendant; the nature and importance of the need for transfer; the point the litigation has reached relative to its commencement date; prejudice to other litigants awaiting trials and the plaintiff's explanation for delay: Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175. 13As to the last matter, the explanation for delay, Mr Chrysostomou relied upon the affidavit of a director of the plaintiff, Gregory John Gilson, sworn 28 April 2011. The explanation relied upon is as follows: At the time of receipt of the report [that is the expert's report] I formed the view that the proceedings should be continued in the District Court, notwithstanding its jurisdictional limit, because I still believe that if negotiation were undertaken it was likely to lead to a sensible commercial resolution of the dispute, and that the costs involved in keeping the matter in Newcastle were less than those which would be incurred if the proceedings were in the Supreme Court and the directions hearings were held in Sydney. 14The other evidence relied upon by the plaintiff in respect of the explanation for delay was that of the plaintiff's solicitor, Scott Kingsley Lewis, in an affidavit sworn 6 May 2011 which is as follows: As appears from the affidavit of Gregory John Gilson, the principal of the Plaintiff, sworn 28 April 2011, and from my affidavit of 3 May 2011 (item 2 in the exhibit), Mr Gilson had believed that the parties should be able to resolve the dispute the subject of the District Court proceedings at a settlement conference or mediation, but that would only be possible if negotiations were based on acceptance that the Plaintiff, if successful, may recover more than $750,000.00. Arrangements were tentatively made for mediation...but in response to my requesting assurance from the defendant that it would approach the mediation on that basis the Defendant's solicitor advised that the Defendant maintained the position taken in the defence, by which it pleaded the District Court's jurisdictional limit, and will not consent to extension of the District Court's jurisdiction pursuant to section 51 of the District Court Act 1973. 15These explanations demonstrate that a tactical decision was made to reduce or keep costs low and negotiate a commercial settlement. It is imperative if that process is to be adopted and the tactical result sought is not achieved, promptitude in case management called for an application for the matter to be transferred at an earlier time. The problem that the plaintiff faces is that it left this application effectively to the eve of the trial. Everyone is ready to proceed on Monday week in Newcastle in a trial that has been listed for three months, since 8 February 2011. The outcome of this application must be consistent with the dictates of justice. Aon was a very different case. It was a case in which the delays were extraordinary. This case has a much shorter life-span, but there are real issues in relation to the failure of the plaintiff moving when it should have to apply to transfer the proceedings to this Court. 16Another matter for consideration is any prejudice to the defendant. It is not clear to me that the extent of the prejudice is greater than costs thrown away associated with the preparation of the case and the readiness and availability of all witnesses next Monday week in Newcastle who may not be available at a later time. 17Another matter to be considered is the real likelihood of the matter going over the jurisdictional limit if the plaintiff is successful in its claim on liability. Prima facie, there does not seem to me to be a real answer to clause 20.2 of the contract. The parties agreed to conduct their commercial arrangement in relation to the quarry business on the basis that neither of them would be liable to the other in respect of the matters referred in the contract. The expert does not seem to have dealt with that matter because the assumptions that were made in paragraphs 4.1 and 4.2 of the expert report do not recognise or refer to clause 20.2 of the contract. Obviously, that will have to be a matter to be addressed in due course should the plaintiff succeed on liability on a different basis from that which is propounded in the expert's report. 18The plaintiff refused the defendant's invitation in August 2010 to make an application to transfer the matter to the Supreme Court. It refused the defendant's proposal in February 2011 that a trial date should not be fixed. It pressed on in the District Court because of the perceived forensic advantage it wished to enjoy whilst the defendant readied itself for trial. If parties are advised, as this party was, to proceed in the way that it did, and not bring an application before the Court until five days before the listed trial, then the dangers are obvious for that party. I dismiss the plaintiff's application. The plaintiff is to pay the defendant's costs of the application.