Smith v Hardie; Walsh v Hardie

20974/2001 David Smith PARTIES : (Plaintiff) Layne Hardie (Defendant)

20411/2002 Shane Anthony Walsh (Plaintiff) Layne Hardie (Defendant)

20413/2002 Margaret Walsh (Plaintiff) Layne Hardie (Defendant)

FILE NUMBER(S) : SC 20972/2001, 20973/2001, 20974/2001, 20411/2002, 20413/2002 Mr A Naylor for plaintiffs in matters numbered - 20972/2001; 20973/2001; 20974/2001 COUNSEL :

Mr K Smith of Oates & Smith for plaintiffs in matters numbered - 20972/2001; 20973/2001; 20974/2001

SOLICITORS : Mr R Walsh of Carroll & O'Dea for plaintiffs in matters numbered - 20411/2002; 20413/2002

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20972/2001 - DAVID SMITH v LAYNE HARDIE 20973/2001 - EMILY SMITH by her next friend DAVID SMITH v LAYNE HARDIE 20974/2001 - DAVID SMITH v LAYNE HARDIE 20411/2002 - SHANE ANTHONY WALSH v LAYNE HARDIE 20413/2002 - MARGARET WALSH v LAYNE HARDIE

JUDGMENT (Separate determination of liability - house fire) 1 MASTER: By notice of motion filed 27 August 2003, the defendant now seeks orders that in proceedings numbered 20972/2001, 20973/2001, 20974/2001 (the Smith matters) liability be determined separately, followed by liability being determined separately in proceedings numbered 20411/2002 and 20413/2002 (the Walsh matters). The defendant relied on the affidavit of Terri Outtrim sworn 27 August 2003. David Smith relies on affidavits sworn by Kim Smith on 2 and 9 December 2003. 2 On 30 September 2003 Assistant Registrar Howe made orders by consent that the Smith matters be heard together. By consent the Walsh matters are to be heard together. Pursuant to Part 31 r 7(a) of the Supreme Court Rules (SCR), Assistant Registrar Howe ordered that the Walsh matters be heard immediately after the Smith matters. The Walshs have neither given their consent nor opposed the orders sought. The Smiths oppose the order for the separate determination on liability. 3 By way of background, David Smith and Winsome Allatt entered into a tenancy agreement with the landlord, Layne Hardie, the defendant. David Smith and his de facto wife Winsome Allatt resided in these premises at 2 Lukin Street, Helensburgh with their family, Emily Smith, Shannon Walsh and Daniel Smith-Allatt. On 28 November 1998 the premises caught fire. It is alleged that this fire was caused by a defect in a power point located on the northern wall of the lounge room area of the demised premises. Tragically, Winsome Allatt, Shannon Walsh and Daniel Smith-Allatt died. David Smith and Emily Smith suffered personal injuries for which they seek damages. The father of Shannon Walsh, Shane Walsh and paternal grandmother Margaret Walsh have sought damages for nervous shock.

The law 4 Part 31 r 2(a) of the SCR provides: "2. Order for decision The Court may make orders for:

(a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings…"

5 In Idoport Pty Ltd & Anor v National Bank Ltd & Ors [2000] NSWSC 1215, Einstein J helpfully summarises the authorities on the separate determination of issues. The summation by his Honour at 7 is as follows: "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). As Giles CJ in Comm. D (as his Honour then was) said in Tallglen (supra, at 142): "Part 31, rule 2 of the rules empowers the court to make orders for the decision of any questions separately from any other question, whether before, at or after any trial or for the trial in the proceedings, and for the statement of a case and the question for decision. In the ordinary course, all issues in proceedings should be decided at the one-time, but separate decision of a question may be appropriate where, for example, the decision of the question is critical to the outcome of the proceedings and (at least if decided in one-way) will bring the proceedings to an end. In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end, such as where there is a strong prospect that the parties will agree upon the result when the core of their dispute is decided or where the decision will obviate unnecessary and expensive hearing of other questions, but such occasions must be carefully controlled lest fragmentation of the proceedings (particularly when the exercise of right of appeal is borne in mind) brings delay, expense and hardship - that which the making of an order was intended to avoid. It is often the case that the need to make findings of fact for a decision of the separate question, especially findings which may involve issues of credit, tells strongly against the making of an order because related facts, and renewed issues of credit, will or may arise at a later stage in the proceedings. Experience teaches that it should be able to be seen with clarity that decision of a separate question will be beneficial in the conduct of the proceedings and the resolution of the parties dispute." [emphasis added] 6 More recently in Tepko Pty Ltd v Water Board [2001] HCA 19; 206 CLR 1, Callinan and Kirby JJ made pithy comments in relation to the use of severing issues to be determined by the court. At paras [168] to [172] their Honours stated: "The appeal should be allowed. However, we should not leave this case without making four comments. Both Mason P and Fitzgerald JA were critical of the course of limiting the issues to be tried that the primary judge adopted. In Perre v Apand Pty Ltd attention was drawn to difficulties that can be caused when that course is adopted. In light of the experience in this case, what was there said should be restated with emphasis. The attractions of trials of issues rather than of cases in their totality, are often more chimerical than real. Common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have, as here, had the necessity of making full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap.

The second and related comment is this. A party whose whole case is knocked out on a trial of a preliminary or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the courts, rather than the parties', interests.

Thirdly, there is an additional potential for further appeals to which the course of the trial on separate issues may give rise. Indeed, that could occur here were this appeal to be allowed and a retrial had in which the remaining issues of causation and damages were decided. Single-issue trials should, in our opinion, only be embarked upon when their utility, economy, and fairness to the parties are beyond question.

The fourth of our comments is related to evidence compiled, committed to writing and filed in advance of the hearing. Parties frequently, either together or separately, compile "books of documents". Although most of these have the potential to be admitted in evidence, often they are defective in form. Many of them are often irrelevant, or their significance is either not recognized or adverted to during the hearing. Their status, as in the case of the letter written by Mr Rhodes, can be ambiguous. Discrimination and economy should be exercised by those who prepare cases in which documentary evidence is likely to be extensive and important. Those who conduct such cases should ensure that what is actually in evidence, and its relevance and significance, are clearly identified." 7 In a recent Court of Appeal decision in the Nominal Defendant v Niko Cencic [2001] NSWCA 69, Meagher J expressed a similar view when he said that great caution should be exercised when separating an issue for determination. 8 The defendant has submitted that the separate determinations would save court time and expense because if liability is determined in favour of the defendant, the matter would be brought to finality. However, if liability is determined in favour of the plaintiffs, the quantum claims may need to be resolved although they could, in the first instance, be referred to mediation. The Smiths submitted firstly, that there is no clear demarcation line between issues of liability and quantum; secondly, if Mr Smith is required to give evidence on more than one occasion it will be detrimental to his recovery from post traumatic stress disorder; and thirdly, it is not clear that it will save court time and expense to the parties. 9 In both sets of proceedings there is a common issue to be determined namely the cause of the fire. There is voluminous material on this issue including a statement of Mr B D Doherty of the Forensic Services Group dated 29 March 1999. This statement includes 63 photographs of the fire scene, and a report by Mr G M Kelly dated 11 January 1999. Statements by Senior Constable Cox dated 21 December 1998, Mr G J Dillon dated 28 November 1998, Ms L Barry dated 28 November 1998 and Ms G Hardie dated 28 November 1998. House plans details supplied by Mr L Hardie. Record of interview of Detective Senior Constable Lynch and Mr D Smith dated 29 December 1998. Statements by the NSW Fire Brigade members Captain D A Hope, 23 December 1998, Inspector R G Alexander dated 19 December 1998, Inspector D Walshe 19 December 1998 (including 4 photographs of the remnants of the GPO which was the alleged fire source) and a document by Inspector C Lewis dated 15 June 1999. There are experts' reports such as that of Professor Blackburn dated 25 October 1999. Some issues of negligence and breaches of statutory duties are common to all matters. The determination as to the cause of the fire will be time consuming and involve evaluation of technical evidence. If liability is determined together but separately from quantum, the numerous witnesses referred to above would most likely only be required at court during the time the liability hearings were listed. 10 The Walshs and the Smiths, at this stage plead some different particulars of negligence. The Smiths assert that there was a failure by the defendant to undertake any or any proper inspection of the property whereas the Walshs assert that there was a failure to inspect the premises adequately. However, even if the pleadings remain unamended these differences do not loom large in the factual matrix. 11 The more difficult issue that arises is that by adopting this course of hearing Mr Smith is caused undue hardship. Mr Smith will give crucial evidence both in relation to the cause of the fire and in the assessment of damages. On 9 December 2003 Dr Jonathan Phillips opined that Mr Smith would find the process of giving evidence extremely difficult, with a significant risk that the process would exacerbate his disorder especially if the issue of liability and quantum were to be heard separately as Mr Smith would have to give evidence twice. Dr Phillips was of the opinion that, if possible, given Mr Smith's risk of developing further psychiatric problems, he give evidence only once. 12 However, as the orders currently stand Mr Smith may be called to give evidence on liability in both the Walsh and the Smith proceedings. If liability and quantum are heard separately, Mr Smith may have to give evidence on one additional occasion. 13 If the defendant were found not to be liable, all proceedings would be at an end. If liability is determined in favour of the plaintiffs, the quantum of the plaintiffs' claims may settle at an informal settlement conference or by mediation. However, I acknowledge the possibility of issues of quantum not being resolved without a trial. 14 After taking into account the factors above and in particular Mr Smith's psychological state I have reached the conclusion that it is not just and convenient to have a separate determination of liability in the Smith matters followed by the separate determination of liability in the Walsh matters. It may be that all the matters are capable of resolution once liability in the Smith matters are determined. The motion is dismissed. 15 Costs are discretionary. In my view, the appropriate order is that costs be costs in the cause. 16 The Court orders that:

(1) The defendant's notice of motion filed 27 August 2003 is dismissed.

(2) Costs be costs in the cause. **********

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