Rodrigues v Fitness First Australia Pty Ltd

Supreme Court of NSW|2013-08-21|Before: Garling J

District Court Proceedings 1John Rodrigues, the plaintiff, claims that on 2 July 2009, whilst exercising in a gymnasium, conducted by Fitness First Australia Pty Ltd ("Fitness First"), the defendant, he was injured when a weight machine toppled over onto him. 2On 2 September 2011, he commenced proceedings in the District Court of NSW, by the filing of a Statement of Claim against Fitness First and against Future Floor Services (NSW) Pty Ltd, as second defendant. 3Both defendants filed Defences in which they each objected to the District Court exercising jurisdiction in the matter because the amount claimed exceeded the jurisdiction of that Court. Those Defences were filed on 5 June 2012 and on 29 June 2012 respectively. 4Proceedings have now been discontinued against the second defendant so that Fitness First is the only defendant.

Course of the District Court Proceedings 5On 7 February 2013, the Judicial Registrar of the District Court of NSW listed the proceedings for hearing, for an estimated period of three days, to commence on 6 August 2013. 6At that time, an order was made that the parties attend a mediation. That mediation took place on 22 April 2013. 7On 21 May 2013, the plaintiff's solicitors, Brydens, wrote directly, and somewhat curiously, to Fitness First, informing it that as consent to unlimited jurisdiction was not forthcoming, a Summons to transfer the proceedings to the Supreme Court would be filed. The letter concluded: "Obviously, in the circumstances, the scheduled hearing date will not proceed." 8It is necessary to remark, that in light of the provisions of the Civil Procedure Act 2005 ('the Act'), and the overriding purpose there set out, this was an entirely unwarranted assumption on the part of the solicitors for the plaintiff. 9Fitness First forwarded the letter to their solicitors, who responded to it on 29 May 2013. Consent to unlimited jurisdiction was not offered. 10Nothing further seems to have happened until 25 June 2013, when the solicitors for Fitness First wrote a further letter to the plaintiff's solicitors in an attempt to clarify the position. The letter was in these terms: "We refer to your letter dated 21 May 2013. To clarify our client's position, the First Defendant does not consent to any extension of the District Court's jurisdictional limit. Given the matter is listed for hearing on 6 August 2013, we look forward to receiving the Plaintiff's Summons to transfer the proceedings to the Supreme Court of NSW as soon as possible. If the Plaintiff does not intend to file such a Summons, please advise and we will prepare the matter for hearing on 6 August 2013. In the event that the proceedings are ultimately transferred to the Supreme Court of NSW and the hearing date in the District Court of NSW is vacated, we put you on notice that our client will seek an order that the Plaintiff pay the First Defendant's costs thrown away by reason of the vacation of the District Court hearing."

Application to Transfer to the Supreme Court 11Coincidentally, on the day that letter was sent, the plaintiff's solicitors filed a Summons in this Court seeking orders for the transfer of proceedings to the Supreme Court. That Summons was accompanied by an affidavit from the plaintiff's solicitor, Mr Stephen Cahill, which was sworn on 21 May 2013. 12As is now apparent, that affidavit omitted to include any reference to the Defences filed by the original two defendants, each of which included a specific articulated objection to the case proceeding with unlimited jurisdiction in the District Court. The affidavit did not include any description of the facts and circumstances which existed at the time the proceedings were listed in the District Court for hearing. Nor did it make plain that the first Statement of Particulars filed in the District Court on 28 September 2011 at the same time as the Statement of Claim, articulated a claim which, when properly assessed, significantly exceeded the jurisdictional limit of the District Court, and described a claim for damages which was not a routine one. 13Rather, the affidavit suggested that the likely quantum of the plaintiff's claim had emerged, in the course of preparation for the mediation in April 2013. It suggested that the formal advice about the likely quantum, which was delivered by Senior Counsel for the plaintiff on 8 May 2013, was the precipitating event for the transfer. 14Indeed, the advice contains this explanation: "The main purpose of this advice is to provide my opinion as to quantum since the matter is presently listed for hearing in the District Court in August and I have already expressed the view that the claim exceeds the jurisdictional limit of that court. I have however, been waiting for all of the plaintiff's tax material as well as the tax material of his company JR's Marine Engineering Pty Ltd so that I can calculate the economic losses involved." 15This advice, by reference essentially to the events which had occurred since the proceedings were commenced in 2011, expressed the opinion that the likely outcome of the plaintiff's claim significantly exceeded the District Court jurisdiction. 16On 9 July 2013, when the Summons for transfer was returned before the Court, it was referred by the Registrar of the Common Law Division to the List Judge. 17Counsel appeared for the plaintiff. He mentioned the appearance of the solicitor for the defendant, and indicated that the solicitors for Fitness First had provided consent to the transfer. He handed up Short Minutes of Order which were agreed by the parties. 18However, it was immediately apparent at the hearing of the Motion that the lateness of the transfer, which was less than one month before the hearing date which had been fixed in the District Court, would adversely affect the interests of the parties to the proceedings because a hearing would be delayed, and as well, would adversely affect the interests of other litigants in the District Court whose case or cases could have been listed on the days set aside for this proceeding. A very late adjournment of a three day hearing in the District Court list was obviously not a result, which meant that the Court was able to give effect to the overriding purpose as contained in s 56(2) of the Act. 19During the course of submissions on 9 July 2013, counsel for the plaintiff told the Court that the matter was prepared, all evidence had been served and, save for the question of transfer, the matter was otherwise ready for a hearing on the allocated hearing date in the District Court on 6 August 2013. 20The Court then raised with counsel whether, if the order for transfer of the proceedings to the Supreme Court was made, as the Summons requested, the Court ought make an order under s 146 of the Act, to transfer the matter back to the District Court so as to enable the hearing to take place on the date fixed. 21The effect, in this particular case, of that order would be that the hearing, which the parties were apparently ready to proceed with, on 6 August 2013, could go ahead but without any limit to the District Court's jurisdiction. Counsel indicated, after a short adjournment to obtain instructions that the plaintiff consented to that course. He added: "My instructing solicitor is concerned that the first defendant might want to have something to say about it." 22In light of the absence of any representative of the defendant being present, and in light of the somewhat conditional expression about the defendant's position, including that no opposition to the making of the order was being conveyed by counsel's retelling of his instructions on 9 July 2013, the Court proceeded to make the following orders: "1. I order pursuant to s 140(1) of the Civil Procedure Act 2005, that the proceedings in the District Court of NSW No.2011/311124 be, and hereby are, transferred to the Supreme Court. 2. I order pursuant to s 146(1) of the Civil Procedure Act 2005 that the proceedings in this Court constituted by the recently transferred District Court proceedings be and hereby are, transferred to the District Court of NSW. 3. I note that the proceedings are listed for hearing in the District Court of NSW on 6/8/13 with an estimate of 3 days. 4. I grant the parties liberty to apply to the District Court if any further directions are required. 5. I order that the costs of the Summons for Transfer being the costs in proceedings 2013/189752 be costs in the proceedings in the District Court of NSW." 23The Court said to counsel for the plaintiff this: "It follows, Mr Chia, that I didn't make the order having any effect that the hearing of the proceedings is vacated. No doubt you will make sure the first defendant knows that."

Motion to Vacate the Court's Orders 24There the matter remained until some days later, when the Court was approached by counsel for the defendant who wished to have an opportunity to make submissions about the orders which had been made. Directions were made that if any challenge was to be made to the orders of the Court, then a formal Motion ought be filed, accompanied by an affidavit containing the evidence upon which the defendant sought to rely. 25On 16 July 2013, the defendant filed a Motion seeking that the orders transferring the proceedings back to the District Court be vacated. The Court's power to vacate the earlier orders is contained in r 36.16(3A) of the Uniform Civil Procedure Rules 2005. 26In support of that Motion, the defendant relied upon the affidavit of Greg Carruthers-Smith of 16 July 2013, who was the solicitor for the defendant. 27In his affidavit Mr Carruthers-Smith explains that he thought that it was appropriate for the solicitor for the plaintiff to mention the defendant's appearance because the parties had reached agreement about the proposed orders. He deposed that he had an understanding that only one of two things could happen in the Supreme Court on 9 July 2013 - namely, either the Court would make orders transferring the matter to the Supreme Court in accordance with the Short Minutes of Order or, alternatively, the Court would refuse to make the order sought in the Summons, in which case "... the District Court hearing would proceed on 6 August with the jurisdictional limit in place." As is apparent from what happened, Mr Carruthers-Smith's understanding was erroneous. 28Mr Carruthers-Smith then deposes to a sequence of conversations on the morning of 9 July 2013. Apparently Mr Cahill, the solicitor for the plaintiff, telephoned Ms Winkler, an employed solicitor at the firm acting for Fitness First, and informed her that the Court was proposing to make an order that the proceedings be transferred back to the District Court, and for the hearing to proceed on 6 August 2013. Apparently Ms Winkler replied: "They are not the orders we contemplated or agreed to. I will make a phone call and I will call you straight back." 29Ms Winkler telephoned Mr Carruthers-Smith about 20 minutes later. It is not clear why there was such a delay. Ms Winkler was instructed to attend Court straight away, and oppose the making of the order. 30Some time later, although the time is not clear, Ms Winkler telephoned the solicitor for the plaintiff to say that she was on her way to Court. She was informed that the orders had already been made. 31The current Motion to vacate the earlier orders effecting a transfer to the District Court was heard on 18 July 2013, when counsel appeared for both parties. Judgment was reserved. 32On 30 July 2013, the Court made the following orders: "1. For reasons which will be delivered in due course, the Court orders that Orders 2 and 4 made on 9 July 2013 be, and hereby are, vacated. 2. Proceedings 2011/311124 are listed for directions at 9am on 27/8/13 before the Registrar. 3. Motion filed by the defendant on 16/7/2013 be otherwise dismissed. 4. Costs of the motion are costs in the cause." 33These are the reasons for those orders.

Discernment 34The defendant submitted that there were significant reasons why the orders ought be vacated, namely: (a)the complexity of the plaintiff's economic loss claim which justified the matter being heard in the Supreme Court; (b)significant prejudice would be caused to the defendant if the matter was returned to the District Court to be heard on 6/8/2013; (c)the interests of justice, and in particular the absence of any submissions being advanced by the defendant prior to the order being made, favoured the vacation of the earlier orders. 35Counsel for the defendant did not argue that the order for transfer to the Supreme Court ought not to have been made. This position was consistent with that which the defendant had adopted prior to the return of the motion for transfer.

Nature of the Plaintiff's Economic Loss Claim 36Counsel for the defendant submitted that the economic loss claim being made by the plaintiff was the most complex that she had ever encountered. She added "that might not be saying a lot". Quite. But that is not an adequate basis for judging the plaintiff's economic loss claim, nor the relief sought in the Motion. 37The information with respect to the plaintiff's economic loss claim is very limited. 38The particulars of economic loss set out in the Statement of Particulars, which the Court was informed was filed in 2011, at the same time as the Statement of Claim, are these: "At the time of his accident, the plaintiff was the shareholder and director of his own company known as JR's Marine Engineering Pty Ltd. In the year prior to the subject accident the plaintiff had earned a taxable income of $107,981 from employment within this firm as well as dividends of an additional $67,375. His taxable income in the 2009 financial year was $175,522. Additionally, the plaintiff was entitled to the profits of his company. Following the accident, the plaintiff has been unable to satisfactorily devote his attention to the business. The company has been required to engage additional sub-contractors. A claim is made for the difference between the plaintiff's pre-accident earnings and his subsequent earnings. Additionally, a claim is made for the downtown (sic) of profits of the company. The plaintiff had been employed by his company for a period of approximately four years prior to the accident and remains so employed." 39The Statement of Particulars added the following by way of particulars of loss of future earnings and earning capacity: "The plaintiff makes a claim at the rate of $3,000 net per week until age 70 years." 40The Statement of Particulars does not address in any rational way, by the provision of focussed particulars, the principles by which damages for the loss of a future earning capacity are to be assessed. 41In Husher v Husher [1999] HCA 47; (1999) 197 CLR 138 at [18], Gleeson CJ, Gummow, Kirby and Hayne JJ said: "The financial loss occasioned by impairment of earning capacity is the loss of what (if there had been no accident), the injured plaintiff would (as opposed to could) have expected to have had under his or her control and at his or her disposal by exercising that capacity. We refer to 'control' and 'disposal' because what the plaintiff has lost are the financial rewards from work that are rewards the plaintiff would have been able to direct to whatever purpose or destination he or she chose." 42Their Honours went on to say this at [23]: "Deciding what value is to be ascribed to loss of future earning capacity of an injured plaintiff requires close attention to the facts of each case. The task is not one to be undertaken by seeking to classify cases as concerning 'sole traders' or 'partnerships' or 'wage earners' or 'trading trusts', and then attempting to deduce some rule of general application to all cases falling within the classification thus devised. Rather the enquiry is about what could the plaintiff have done in the workforce but for the accident, and what sum of money would the plaintiff have had at his or her disposal. Only when those enquiries are pursued can a judgment be made about what capital sum to allow as damages for the impairment of the plaintiff's earning capacity. In doing so, regard must be had, of course, to all those contingencies of life that might reasonably be expected to affect the course of events in the future." 43It appears, only somewhat obliquely from the evidence on the Motion, that the plaintiff will seek to make a case that he is the sole director and shareholder of a company which undertakes a specialised business in welding. 44It seems to be suggested, although this is not clear, that the plaintiff is the principal financial earner of the income of the company. If this is so, then the plaintiff's claim, as expressed, is inapt. In any event, a claim thus expressed, although a relatively straightforward one, to enable a Court to understand it, and to ensure that it is properly presented to the Court, would need the benefit of expert evidence. 45The Court was informed on the hearing of the Motion that neither the plaintiff nor the defendant had served an expert accountant's report. It must be said that, even given the existing content of the Statement of Particulars, this seems to be extraordinary. 46The presentation of the plaintiff's claim for economic loss must necessarily take into account his capacity to earn income prior to the relevant accident, and the way in which that income has been earned, controlled and directed. It would need to examine what component part of the company's income derived from the plaintiff's personal exertion, and what derived from the exertion of employees (if any). As well, having regard to the manner in which the plaintiff's earning capacity has been economically rewarded, namely by, inter alia, receiving wages and a dividend stream, there may be questions as to the taxation impact upon the receipt of such income, which would need to be considered in determining what the capital value of his lost earning capacity was. 47Whilst the assertion in the particulars of $3,000 per week approximating his loss, may be an adequate warning of the anticipated size of the claim, it is dubious that the plaintiff's earning capacity could be so easily assessed. 48In those circumstances, the absence of any expert reports dealing with this claim does not suggest that either of the parties have given adequate attention to the proper preparation of the claim.

Readiness for Hearing 49This claim, by reference to the Statement of Particulars filed at the same time as the Statement of Claim, is one which manifestly exceeded the jurisdiction of the District Court. That excess of jurisdiction was noted and objected to at the first reasonably available opportunity by the defendant. Nothing the defendant did indicated that it had, or may have, changed its attitude. The taking of a hearing date in that knowledge was irresponsible on the part of the plaintiff's solicitors. That was because no decision had been made prior to that time whether to abandon the excess of the claim insofar as it exceeded the jurisdiction of the District Court, or to or seek a transfer to this Court. 50In the absence of any explanation of this course, the Court can only conclude that there seems to have been a lack of diligent attention to what this case required. Either it was to be run without any restriction on jurisdiction by seeking a transfer to this Court, or else the plaintiff needed to be content to limit the entirety of the claim to the District Court's jurisdictional maximum. The plaintiff did not make the relevant election, but rather seemed to be content to proceed on the basis that if the claim was not settled at mediation, then it would be transferred to this Court in due course as a matter of right at a time which suited him.

Interests of Justice 51In the absence of any clear submission from the defendant at the time of transfer as to the way in which the plaintiff's claim for economic loss had been put, and the economical way in which the defendant had prepared its Defence of the claim for hearing, the Court made the orders transferring the matter back to the District Court with unlimited jurisdiction. Such a course was manifestly in the interests of justice. 52In light of the additional evidence, it is now clear that such an order was, in the circumstances, not in the interests of justice, hence the Court pronounced the orders on 30 July 2013. However, some remarks about this are necessary. 53The provisions of ss 56, 57 and 58 of the Act are applicable in circumstances where, as here, proceedings are sought to be transferred from the District Court to the Supreme Court. The fact that a case has a date fixed for hearing will ordinarily be a most significant matter for this Court to take into account in considering whether to order the transfer in the first place or, alternatively, a transfer having been ordered, whether or not the matter should be transferred back to the District Court so that the proceedings can be heard on the day fixed for hearing. 54It is not open to practitioners, or parties, to conduct litigation in the District Court and to rely upon a transfer, in effect, as of right to the Supreme Court if the proceedings are unable to be settled at a mediation. To act in that way would not ordinarily comply with the duties fixed by s 56 of the Act. In particular, to expect that a Court would compliantly transfer a matter would not be sufficient for a Court in making the orders, to give adequate recognition to the overriding purpose fixed in s 56 of the Act. 55The reason for this, at least, are the consequences which flow to other litigants. The conduct of one piece of litigation in a court affects the conduct of other litigation in the same court. Parties who do not attend to their obligations under the Act adversely affect the interests of other parties whose litigation is before the Court. This is a significant matter when considering what the interests of justice require. 56To adopt the course taken in this case by the plaintiff will certainly be to take a very substantial risk that this Court will refuse the transfer from the District Court, and, accordingly the plaintiff will be limited to the maximum of the District Court's jurisdiction, particularly in circumstances where a date for hearing has been taken, and the District Court has fixed the matter for hearing. That is because that is likely to be the best way of giving effect to the overriding purpose in the Act. 57However, the question remains for this Court to determine what are in the interests of justice in this case, having regard to the provisions of the Act, and in the particular circumstances which have happened. 58The Court was confronted with an apparent assumption by the solicitors for the plaintiff that, providing they could establish that the value of the claim exceeded the District Court's jurisdiction, then there would be an automatic transfer to the Supreme Court. Further, they seemed to accept that as a consequence the trial would not proceed on 6 August 2013. Preparations for trial were apparently put into abeyance by the solicitors. Indeed, the solicitors for the defendant accepted such a view. 59In those circumstances, it would not be in the interests of justice to confine this plaintiff to the maximum of the District Court's jurisdiction, particularly in circumstances where it is said by counsel for the defendant, that it understands a reasonable assessment of the plaintiff's economic loss based upon all of the plaintiff's assumptions of fact which it intends to ask the Court to accept, is in the order of $3.4M. 60In those circumstances, not withstanding the conduct of the legal representatives for the parties, it is appropriate that the matter be heard in the Supreme Court and, accordingly, appropriate that the orders for transfer back to the District Court be vacated. 61It is for those reasons that I vacated the orders which, as I have earlier indicated, were first made on 9 July 2013.

Orders 62On 30 July 2013, I made the following orders: (1)Orders 2 and 4 made on 9 July 2013 be, and hereby are, vacated. (2)Proceedings 2011/311124 are listed for directions at 9am on 27/8/13 before the Registrar. (3)Motion filed by the defendant on 16/7/2013 be otherwise dismissed. (4)Costs of the motion are costs in the cause.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2013

At a glance

Court

Decision date

Before

Source

Judgment (10 paragraphs)

Parties

Cases Cited (2)

Cited By (1)