O'Keefe v Seafresh Holdings Pty Ltd trading as Westmore Seafoods [2009] NSWSC 1090 | Case summary

JUDGMENT 1 HIS HONOUR: The Court is asked to determine two issues that come before it by notice of motion, or arising out of that motion. The two issues are whether to order security for costs, payable by the plaintiff, James Lyons O'Keefe, and, subsidiary thereto, an issue relating to the production of documents. 2 The substantive proceedings are a claim by Mr O'Keefe that either the first defendant, Seafresh Holdings Pty Ltd, trading as, Westmore Seafoods, or the second defendant, Romport Holdings Pty Ltd, trading as Australia Bay Seafoods are liable in damages for an injury he suffered, whilst a share-fisherman on board a vessel owned by one or both of them. Because, for present purposes, there is no difference in interest between the first and second defendants, I will hereinafter refer to them collectively as "Seafresh". Liability is in issue in these proceedings. While not strictly relevant, the issues raised on liability included: whether a duty of care is owed to a share-fisherman, including the effect, if any, of the agreement relating thereto; the nature and scope of any duty, if one were to exist; whether there has been a breach of any such duty; whether the Uniform Shipping Laws Code affects the plaintiff's capacity to obtain damages; the extent and nature of the injuries sustained; and the effect of the Civil Liability Act 2002 in circumstances of alleged contributory negligence and obvious and/or inherent risk. Facts 3 The facts, upon which the current issues before the Court turn, are within a very short compass. Mr O'Keefe sustained injuries on 23 January 2006, when engaged as a crewmember on a fishing vessel, owned, operated and managed by Seafresh. Mr O'Keefe, it is alleged, fell down the hatch way and stairway between the wheelhouse deck and a galley mess room. At the time of the accident, the fishing trawler, which is owned by a company registered in Western Australia, was fishing in Northern Territory waters. The crew at that time came from more than three States (but not Western Australia) and Territories. 4 When Mr O'Keefe was injured, he was airlifted to Royal Darwin Hospital, where he was admitted. He underwent a left craniectomy with ventricular drainage. He spent 13 days in intensive care. He sustained, as may be obvious, traumatic brain injury. On 28 February 2006, Mr O'Keefe transferred to Sydney for further rehabilitation at the Royal Rehabilitation Centre in Sydney at which he was an inpatient from 13 March 2006 until 27 April 2006. All of his treating medical practitioners are located in New South Wales. Further surgery (cranioplasty) was performed at Royal North Shore and Mr O'Keefe was an outpatient at Royal Ryde Rehabilitation Centre. An expert consultant Marine Engineer, also located in New South Wales, has been qualified by Mr O'Keefe and will give evidence in the proceedings. Previously, there had been an application to transfer the matter to Western Australia, which application was refused. 5 Because of Mr O'Keefe's brain injury, he has allegedly been unable to work and he has returned to Ireland to live with his parents. On the evidence currently before the Court, he is still unable to work, has few assets and lives on the pension. By affidavit sworn in Ireland on 25 June 2009, Mr O'Keefe attested to the fact that he does not have any funds to pay for security for costs. By further affidavit, also sworn in Ireland on 6 July 2009, Mr O'Keefe detailed his assets. He made clear that he was not seeking to suggest, by his earlier affidavit, that he had "no money" but rather that he "did not have sufficient monies to cover the amount sort [sic] by the defendant for security." 6 Mr O'Keefe set out his current assets in more detail in that later affidavit. He attests to having just over $2,300 (although that may be Irish pounds). Further, he has a superannuation fund in Australia to the value of approximately $7,000. He has a car, computer and personal items, including a rowing machine and armchair, the total value of which is $5,150. As a result of the accident, in or about September 2008 he received a lump-sum payment of $45,000 from a sickness and accident policy. Almost half of that amount has been spent on maintenance for his son and Mr O'Keefe's education at college. That which is left from that amount will be spent in a like manner. Mr O'Keefe has incurred the aforementioned education expenses for the purpose of seeking to effect rehabilitation. 7 I take the view that Mr O'Keefe is, for any relevant purpose, impecunious. He has some superannuation funds in the jurisdiction, but lives in Ireland. Privilege 8 During the course of the hearing of the motion, an issue arose as to a claim of privilege in relation to cost agreements between Mr O'Keefe and his legal representatives. Leaving aside whether a costs agreement is ever privileged, the submission was put by counsel for Seafresh that the provisions of s 131(2)(h) of the Evidence Act 1995 rendered the document not privileged. 9 The terms of s 131(1) and s 131(2)(h) of the Evidence Act are in the following terms: "131(1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. (2) Subsection (1) does not apply if: ... (h) the communication or document is relevant to determining liability for costs, or …." 10 The submission based upon the provisions of s 131(2)(h) is misconceived. While it may be arguable that the costs agreement is relevant to "determining liability for costs" and that such a term may possibly extend to an issue as to "security for costs", s 131(2)(h) only overcomes the privilege created by s 131(1) of the Act. Relevantly, s 131(1) creates a privilege relating to communications between persons in dispute, and between such persons in dispute and third parties, related to an attempt to negotiate a settlement of the dispute. The costs agreement is not a communication between parties in dispute, nor is it a communication between one of them and a third-party, in the sense used in this section. Moreover, and more importantly, it is not a communication or document prepared in connection with an attempt to negotiate a settlement of the dispute. 11 During the course of the proceedings, the Court raised some issues with the parties, relating more generally to the question of privilege that may or may not apply to costs agreements, and the claim for privilege was withdrawn. The document was marked as a confidential exhibit and made available to the parties. Security for Costs 12 Rule 42.21 of the Uniform Civil Procedure Rules 2005 deals with security for costs. The Court is empowered to order security for costs, in such manner as it directs and in such amount as it thinks fit, if, relevantly, a plaintiff is ordinarily resident outside New South Wales, or the plaintiff is suing, not for his own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant, if ordered to do so. This exercise of discretion is informed by the Civil Procedure Act 2005, particularly the terms of s 56 and following. While balancing the relative justice and injustice of each of the parties, the Court must facilitate the just, quick and cheap resolution for the real issues between them. 13 Mr O'Keefe is now, as earlier stated, living in Ireland, because, on account of his inability to work, said to be occasioned by the injury from the accident caused by the defendants, he is no longer able to afford to live away from his family and has returned to Ireland to live with them. As a consequence, the power, reposed in the Court by the terms of UCPR 42.21(1), is capable of being exercised. 14 Seafresh submits that the terms of UCPR 42.21(1)(e) also apply. Counsel for the defendants relies upon a conditional cost agreement (confidential Exhibit 1) to argue that the plaintiff is suing not for his own benefit but for the benefit of some other persons. Counsel relies on certain statements by the Court of Appeal (see Jazabas Pty Ltd & Ors v Haddad & Ors [2007] NSWCA 291 and Green (as liquidator of Arimco Mining Pty Ltd) v CGU Insurance Ltd [2008] NSWCA 148), but these submissions and the statements in the Court of Appeal relate to independent cost funding arrangements. The conditional cost agreement between Mr O'Keefe and his solicitor and/or counsel, even with a maximum 25% success fee, does not give rise to a presumption or inference that the plaintiff is suing not for his own benefit. It may be that some such agreements would fall within these principles, but, here, if liability were established, the damages would, it seems, be significant and would render the litigation costs insignificant (and more so the 25% success fee). 15 There is a wide range of considerations that are relevant to the exercise of the discretion to order security for costs. In this case, while liability is in issue, the plaintiff's claim has been made in good faith and appears to be reasonably arguable. There is no doubt that the plaintiff lacks funds to meet most of any costs order that may be made against him, if he should be unsuccessful. However, largely, that lack of funds has been caused or contributed to by the alleged conduct of the defendants. Moreover, the plaintiff's impecuniosity, brought about by the accident, would mean that, if security for costs were to be ordered (and the proceedings stayed pending the payment), the plaintiff would be unable to pursue these proceedings. While the plaintiff has some funds in New South Wales, it is not appropriate to require the plaintiff to cease spending that money on the maintenance of his child and his attempts at rehabilitation and re-education. 16 The foregoing factors outweigh the difficulty associated with the plaintiff currently residing in Ireland. Given the rules of enforcement under the common law (see RDCW Diamonds Pty Ltd v DA GLORIA [2006] NSWSC 450), and modern communication and travel, the fact that the plaintiff lives outside the jurisdiction, but in a jurisdiction that is operating under a common law system and amenable to mutual service and enforcement (even if not under the relevant international treaties and legislation implementing them), does not outweigh the other factors, which the Court has addressed. Nor does the existence of a conditional costs agreement, or the combination of both. Conclusion 17 The Court makes the following orders:

O'Keefe v Seafresh Holdings Pty Ltd trading as Westmore Seafoods

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