HER HONOUR: This is an application by notice of motion filed 29 May 2019 by the plaintiffs seeking an order for the temporary stay of these proceedings pending resolution of their application for compensation pursuant to s 97 of Victims Rights and Support Act 2013 which has been brought in the District Court relating to the same subject matter as these proceedings. The background to the matter, and the procedural history of the proceedings currently on foot, are set out in the affidavit sworn 29 May 2019 of Alexander Trevena, the solicitor for the plaintiffs, which I have read on the present application.
The application has been heard in the absence of the defendants. There has been no appearance for the defendants on successive occasions when this matter has been before the Court. Directions have been made for the notification to the defendants of this application and I understand that there has been at least on an occasion in the past an appearance on behalf of the first defendant. There are on the court file notices of appearance filed on behalf of the third defendant and an earlier notice of appearance filed for each of the defendants but when the matter was called before the Court there was no appearance by any of them.
The background to the current application arises out of transactions that have been found to have been fraudulent transactions conducted at Royal North Shore Hospital and the Royal Hospital for Women from 2008 to 2009.
These proceedings were commenced by way of statement of claim filed 21 July 2014. The claims made against the first defendant, as pleaded in the statement of claim, include the making by the first defendant of knowingly false and fraudulent representations, with the intention that the plaintiffs, by their employees or agents, would act in reliance on the said representations. The representations include representations as to the use of various devices to perform diagnostic tests and the like.
It is alleged that the first defendant also owed the first plaintiff a fiduciary duty and breached the fiduciary duty she owed to that plaintiff; a body corporate also constituted as the South Eastern Sydney and Illawarra Area Health Service under the Health Services Act 1997. It is also alleged that the first defendant breached a fiduciary duty owed to the second plaintiff, which was, at all material times, constituted as the Northern Sydney and Central Coast Area Health Service, a body corporate constituted under the Health Services Act 1997.
South Eastern Sydney Local Health District v Sandra Lazarus [2019] NSWSC 649 | Case summary | Zoe
It is alleged that the first defendant is liable to account for loss and damage incurred as a result of the alleged breaches of fiduciary duties.
The claim made against the second defendant is a claim that the second defendant aided and abetted the first defendant in defrauding one or both of the plaintiffs. A claim for damages is made against the second defendant in that regard.
There is also a claim against both the second and the third defendants for receipt of moneys with knowledge that the moneys were received by reason of breach of the first defendant of the fiduciary duties she owed to each of the plaintiffs; and there is an allegation that the respective defendants hold their interest in certain property on constructive trust for the benefit of the plaintiffs.
No defence has been filed to the statement of claim.
Mr Trevena deposes (in his affidavit sworn 29 May 2019) that on 27 November 2014 the first defendant, Sandra Lazarus, was convicted in the Local Court of 42 sequences of charges for contravention of ss 178BB and 300(1) of the Crimes Act 1900. Ms Lazarus appealed her conviction and sentence to the District Court. The conviction appeal was dismissed and the severity appeal was determined in December 2017.
More recently, in 2019 (see Lazarus v Independent Commission Against Corruption [2019] NSWCA 100), the Court of Appeal (Basten and Meagher JJA and Sackville AJA) dismissed an application brought by the first and second defendants in the present proceedings in relation to the District Court's summary dismissal of the conviction appeals.
Following the decision of the Court of Appeal on 8 May 2019, the plaintiffs' solicitor has consulted with the relevant Crown representative as to whether the Crown representative would make a compensation order on behalf of the plaintiffs. On 14 May 2019, the Crown representative advised that such an application would not be made.
The plaintiffs now have, by a notice of motion filed in the District Court on 30 May 2019, sought payment of a specified sum to be determined out of the property of the first defendant to each of the plaintiffs by way of compensation for loss sustained through and by reason of the offences of which the first defendant was convicted on 12 December 2017. That notice of motion as been listed for directions in the District Court on 7 June 2019.
The current application is made pursuant to s 67 of the Civil Procedure Act 2005 (NSW), which provides that, subject to rules of the Court, the Court may at any time and from time to time by order stay any proceedings before it, either permanently or until a specified day. Section 67 confers a general power to stay proceedings, without identifying any particular criteria for its exercise. The scope of the power and the appropriateness of its exercise are informed by considerations which include, amongst others, the incidental power of the Court to control its own ordinary processes.
The plaintiffs contend that they are entitled to an order for compensation under the Victims Rights and Support Act 2013 for a substantial part of their claim in the present proceedings. I am informed that once (if this be the case) compensation is ordered, it will be a matter of instructions from the plaintiffs as to whether it is considered that there is any commercial utility in pursuing the balance of the claim for compensation in the present proceedings.
In the plaintiffs' submission, staying the Supreme Court proceedings (pending the hearing of the compensation application), provides an efficient use of both the Court's and the parties' resources, because the Crown has already tendered in the criminal proceedings evidence grounding the first defendant's conviction and compensation order. It is submitted that, were the matter to proceed by way of a summary judgment application in this Court pursuant to r 31.1 of the Uniform Civil Procedure Rules 2005, the plaintiffs would need to provide evidence of the facts on which the claim is based. I am informed that the factual matrix is complex, with the criminal brief of evidence including statements from well in excess of 50 witnesses.
It is submitted that, should a compensation order be made and the plaintiffs then wish to proceed to seek to recover the balance of their claim in the present proceedings, the scope of evidence required to establish the claim would be reduced. I am satisfied that it is consistent with the overriding mandate provided under the Civil Procedure Act, for the conduct of litigation with regard to the just, quick, and cheap resolution of the real issues in dispute, that these proceedings should be stayed pending the outcome of the application for compensation in the District Court; not least because in those circumstances, even if the application is ultimately to be pursued in this Court for compensation, it is reasonable to assume that it would be significantly narrowed.
In those circumstances, I will make the orders sought in the notice of motion, but I will also make a direction that will facilitate the revival and/or disposal of these proceedings within a reasonable time once the compensation order is dealt with in the District Court. I therefore order as follows:
1. Pursuant to s 67 of the Civil Procedure Act 2005, these proceedings be temporarily stayed pending resolution of the application for compensation pursuant to s 97 of the Victims Rights and Support Act 2013 which has been commenced by notice of motion filed 30 May 2019 in the District Court relating to the same subject matter as the present proceedings.
2. Direct the plaintiffs to notify the defendants of the stay of these proceedings and the orders that have been made today.
3. Direct the plaintiffs, within 14 days of determination of their application for compensation in the District Court, to relist the matter for further directions as to the conduct of the present proceedings, with notice to the defendants accordingly.
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Decision last updated: 04 June 2019